So, if it’s not true, and I think demonstratively and based on facts it is not true, and the fact that the USA and Canada aren’t turning into a Third World country, and they are in fact doing really really well, why does it feel like it is all going wrong?
And I think that’s an important thing to examine because again it also impacts on what we are going to do about infrastructure.
They’re doing great economically and socially, but we feel people – and I’ve had a conversation with the US and Canadian colleagues, that there’s this feeling that it’s not right.
And I think the first thing is that it’s megaphone effect of the media or the internet which magnifies problems and the extremes of the problems.
There’s been high unemployment during the recession years over the last seven or eight years. There’s higher inequality during recessions and we have the graphic is showing that in a second.
There’s diminished expectation that comes about during recessions as well and but they also end. And then there’s also the geopolitical considerations. Let’s have a look at that in a bit more detail.
First of all, this graph on the left, of the slide here shows the unemployment; and the blue line at the top is actually the true unemployment and of course, it peaked quite high and it’s still at 10 percent.
This is not the published unemployment. This is unemployment figures plus people who stopped looking for work. So, what you would say as a true unemployment.
And so again in the US, everybody is going to know somebody in their extended friend group or their extended family who is either given up looking for a job or doesn’t have a job that wants one. And so that impacts on how you feel about how things are going.
The other thing is and this is in the Economist graphic on the right here – is talking about GDP per person. You can see those figures turned by 2009 for both the UK and the USA but the earnings haven’t.
And they’re only just ticking up in the last year, just starting to. And I think there’s a lot of data points around that that would demonstrate that.
So, there was a big lag between the economy GDP per person ticking up but the earnings per person haven’t in general and of course that creates the feeling that things aren’t right either because the cost is snaking up but incomes haven’t been.
And then there’s equality. Obviously, there’s been global projects about that over the last few years and a lot of talk about it, a lot of commentary about it, but society’s become unequal in recessions. The rich get richer and the poor get poorer. That’s just an effect of recessions.
So, there’s the feeling that the system is unfair and people can’t get ahead.
But the interesting thing is, if you look at the figure here, again from the Economist, inequality is measured in Gini coefficients, zero equals perfect equality, and 1 equals perfect inequality.
The US has gone from .35 in 1985 to .34 – .4 in 2013; so, .06.
In the same period, Sweden and New Zealand have actually changed more in terms of Gini equality coefficient. That’s been to do with, in Sweden’s case, I think the immigration and in New Zealand’s case the liberalization of the economy and the changes that are brought on.
But a lot of places that haven’t been anything near that. Obviously, Australia as the case in point over that period, hardly any changed at all in terms of inequality.
And over the whole of the OECD, not a huge amount but some, and of course, that creates – that doesn’t help with the feeling that people can’t get ahead and things aren’t quite right.
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PHOTO CREDIT: Stephen Melkisethian via Flickr Creative Commons License