Monday, July 4, 2022

OPINION AND ANALYSIS | 26-10-2019 13:01

Development is no longer what it used to be

To avoid getting left behind, countries whether big or small have no choice but to do whatever they can to encourage not only the outlandishly talented but also the many who can help them achieve their goals.

To the unabashed delight of Cristina Fernández de Kirchner, her devotees and many others, Chile has just become the latest country in which large numbers of people have taken to the streets to demand the government give them more stuff. They think this proves that the “Chilean model”, which by most standards has been highly successful, is worse than useless and should be replaced by something radically different.

Like Mauricio Macri after he got walloped in the “primaries,” President Sebastián Piñera, seems to agree; in an attempt to placate the malcontents, he humbly begged forgiveness for his government’s shortcomings and moved quickly to put more money into the pockets of hard-pressed workers and pensioners. Unsurprisingly, his efforts to persuade them he was not a flinty “neoliberal” monster were met with contempt.

The Chileans who have gone on a wrecking spree are not the only people who feel that there is something badly wrong with an economic set-up which, while delivering decades of growth, taming inflation and reducing greatly the number of down-and-outs, leaves the majority unsatisfied with its lot. In Europe, North America, Japan and South Korea, there are plenty of disgruntled youngish men and women who are every bit as pessimistic about their own prospects and equally prone to join violent protest movements. They see that a snooty minority is getting richer and richer, while their parents have to struggle to make ends meet, and do not like it at all.

Can all this be changed? Though politicians of all stripes, influential thinkers and even most billionaires insist that they are egalitarians at heart and believe that everyone deserves to get a proper share of the available wealth, throughout the world the increasingly interconnected national economies have taken to evolving in a way that makes nonsense of their alleged preferences. For those who are blessed with certain abilities, the rewards awaiting them can be mouthwatering; for those whose talents, if they have any, lack commercial value, merely getting by will continue to be very difficult.

It is easy to argue that the rulers of democratic societies should even things up by making sure that the economic system they are in charge of caters to the needs of the majority, but while many politicians say this is precisely what they are aiming at, few are willing to do much about it. The reason is straightforward; taking steps to narrow the yawning gap separating the incomes of the top people and those of the rest would in all likelihood make their country less competitive and therefore more vulnerable. Socialism fell out of fashion in Europe because people realised that it would never be as efficient as free-market capitalism; in the United States, it is experiencing something of a boom in the Democratic Party, but few really think that Bernie Sanders and his admirers would be able to put their hastily cobbled-together version of the creed into practice.

Like many others, the Chilean rioters want their country to be far more inclusive than it is so those near the bottom can enjoy the benefits which are currently restricted to members of the relatively prosperous middle class and a small minority of plutocrats. Could this be done without making the economy less productive? As it would mean creating millions of decently paying jobs for individuals who, as things stand, are only qualified to perform menial tasks or routine ones automation threatens to do away with, the answer to that question must be a resounding no. When politicians such as Macri, Alberto Fernández and their counterparts elsewhere go on about making it easier for the unemployed, many of whom are barely literate, to find “high-quality jobs,” they overlook the evident fact that these could only be filled by people who possess the appropriate skills.

Much of what is happening is driven by an ongoing technological revolution, itself the product of applied intelligence, which privileges the cleverest, especially those who are lucky enough to come up with a bright idea at an opportune moment. In a remarkably short time, companies formed by such individuals have emerged from smelly basements to acquire proportions that allow them to dwarf the oil and automobile giants that not so long ago dominated the economic landscape.

To avoid getting left behind, countries whether big or small have no choice but to do whatever they can to encourage not only the outlandishly talented but also the many who can help them achieve their goals. For good or ill, these include company bosses whose decisions can make a huge difference in a firm’s earnings; this is why in many places not just CEOs but the financial operators and cunning lawyers who advise them rake in many times the amounts earned by most of their low-level employees.

Strange as it may seem, much of the blame for increasing inequality in the West, and for the inability of governments to allay it, can be pinned on the allegedly Marxist Chinese Communist Party. By going hell-for-leather for growth, and investing heavily in computer-enhanced intelligence, the Chinese force everybody else to do much the same and subordinate almost everything to economic prowess, which is why almost all education systems in other parts of the world are concentrating more and more on preparing young people for the labour market. Many universities are discouraging students from taking courses in the humanities because those who graduate will find it hard to earn money in societies in which the only thing considered important is the size of the GNP.

For many, the growing gulf between the rich and the rest that we see almost everywhere is a scandalously reactionary phenomenon which is taking the world back to where it was in the late 19th century, when in most places a moneyed minority lorded it over systematically downtrodden plebeian multitudes put there to serve their betters. Such sentiments are understandable, but the situation that followed World War II when, in the developed countries at least, mass production was accompanied by mass consumption by an adequately remunerated working and middle class, now belongs to history. Though the expectations that then seemed reasonable have wilted, they are still with us, which no doubt is why so many people in Chile and other countries feel they too are innocent victims of a huge political swindle.

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James Neilson

James Neilson

Former editor of the Buenos Aires Herald (1979-1986).


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