Knowledge economy is the answer

Britain is setting a new record every month but there are no reasons to cheer. Many more than a million people have been made jobless in the three months ending October. This despite all the tall talk of David Cameron and George Osborne that the British economy is gradually getting to terms with the new economic reality. What is more worrying is the continuous rise in youth employment, which now has reached a new height of 1.027 million.

The figures on rising unemployment (and also rising youth unemployment) were announced on the day when a BBC Radio 4 poll shows that parents in Britain are losing control of how their children behave. The survey also suggested that more than three-fourth of people interviewed think the way parents raise their children in Britain has deteriorated in the past decade.

Both the findings are seriously worrying for Britain but do we have reasons to equate them?

There is a structural side to the woes Britain is facing economically. The global economic balance has now significantly shifted towards Asia with the rise of  China and India. Technological changes have made sure that the chain of production continues uninterrupted. Abundance of labour force in China and India have transformed these two countries into global production houses. The huge internal markets have not only stretched the innovative and productive capabilities of the domestic industries and service providers there but also lured foreign companies. Anxious parents of school going students are now abandoning Latin and German for Mandarin and Hindi. 

The number of products and services that Britain can now sell to the outer world are very limited. Even its internal market is dominated by cheap Chinese, Indian, Malaysian and Indonesian  products. Large number of immigrants and a significant floating population are also draining out a  proportion of  British financial wealth outside its national territory. Dadabhai Naoroji had attributed India’s poverty to the drain of resources by the British. Had he been alive today, he probably would have been very happy to see some form of a reverse flow.

Britain has sacrificed its manufacturing heartland, citing the rise of  The City as the global financial capital. The so called British supremacy of the financial world is also not without risk and challenges. The neglect of the real economy in favour of  financialisation has created a pool of  workforce who have nothing to offer nationally and are also unable to compete globally. This is probably where Radio 4’s findings call for serious introspection.

"Three-fourth of the parents surveyed admit they have no control over their children’s behaviour and 65 per cent of the respondents blame the teenage gang culture on poor parenting". My hunch is that a survey on primary and secondary school teachers would have produced nearly similar results. Britain has chosen libertarianism overlooking the importance of discipline in individual life.

Given the decline of British manufacturing and the tumbling of the British financial empire, it seems Britain can now rely on the knowledge economy  (using knowledge as an economic good). Even today  thousands of  foreign students make a beeline  for British universities, which are still considered to be of global standard. But for the knowledge economy to deliver, Britain first needs to look internally and assess the standard of primary and secondary education that are on offer as compared to other leading countries of the world.

A meaningful engagement with the youth is necessary for Britain to brave the current social storm. This can take place by inculcating a sense of belonging among the disenchanted youth and impressing upon them, right from their childhood days, the virtues of  modern life and the challenges that lie ahead. A way out of the social mess is likely to halt the downturn of the British economy.


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Light still not in sight

There is a nip in the London air and with it an increased sense of gloom. The unemployment figure in the United Kingdom is now 2.62 million and over one million youth (16-24 years) are out of job. Despite the personal tragedy of the jobless people, politicking continues. David Cameron and his team blame the Eurozone crisis for the plight in Britain, while Labour leader Ed Miliband terms the path followed by the government as flawed. Whatever the reason, there is no denying that millions of Britons are facing a tough time and the policymakers have no clue to get over the crisis.

When I first arrived in Britain over 12 years ago, those were the bright days of neoliberalism. The Thatcher days of high inflation and unemployment were gone. The benefits of free trade and globalisation were reaching fruition. Britain was getting things cheap from all around the world. Walking along any London street you would bump into an Indian techie, who was in town to meet the ever increasing technological demand of London, the financial capital of the world.

Under the eyes of New Labour, the business districts of London thrived but the signs of decadence in the manufacturing heartland of Britain were overlooked. As factories closed one after another in the Midlands, the then Chancellor of the Exchequer Gordon Brown carried out road shows in The City, encouraging speculation. Risk averse were considered to be outdated and trade was the mantra as manufacturing was left with the dusty world of the developing countries.

There was a sense of global merrymaking then. Indian software companies rejoiced as their business increased manifold, the manufacturers of garments in countries like Bangladesh plunged into new ventures as Primark provided cheap shirts in British high streets, The values of western modernity were muted for profits as the garment worker in a dingy room in Bangladesh sweated all day in exploitation to deliver the fruits of neoliberalism.

We were all happy then. Money was in the air. The parents and relations of people working abroad were exposed to foreign trips, western lifestyle and gadgets. Foreign cosmetics and gifts were presented to friends and relations at a much cheaper price than what was available back home. That was the day when capitalism was blooming at its best. It was spring time of financialisation. Much of the world overlooked manufacturing with the hope that financialisation would take care of all the global demands. Urbanisation was the order of the day, as if we can do without villages.

"The days of boom and the bust are over", remarked an arrogant Gordon Brown as if a new form of capitalism had unfolded. But the good days were soon to be over.

The global economy could still survive the bust of the dotcom bubble but the sub-prime mortgage was too big a burden for the American banks. The instrument which was used to justify the validity of neoliberalism, to show that even the Spanish Americans and Afro Caribbean, who are at the lower strata of the economic ladder in the US, had a stake in the system, collapsed like a pack of cards. Financial waste, as bad assets were termed, spread like wild fire and the mighty western world stood powerless.

We are yet to get over the crisis. Look at what is happening in Spain, Greece, Italy and the worst of all in Britain. People have been jobless for years; fresh graduates are languishing out of jobs after spending a fortune in higher education. The social fabric is cracking leading to economic consequences like the riots witnessed during the summer. Yet there is no solution in sight.

John Maynard Keynes provided the solution to the Great Depression of the 1930s. Could he provide an answer to the economic mess this time round and still be alive in the long run? Peter Clarke claims "Yes" but there are doubts about the Keynsian prescription of spending out of the crisis. Merely creating effective demand is not good enough. The cheap Chinese products are there to capitalise. China already pays for the huge budget deficits in the US and now there is call for them to bail out the crisis ridden Europe. Adam Smith has finally settled in Beijing but only after watching his economic doctrine of laissez faire crumble back home.

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Global World

We are living a very exciting moment in history. The changes in the world order have thrown open new opportunities and at the same time exposed the mankind to innumerable challenges, like never before. As the global population reaches seven billion, we are reminded of the scarcity of resources to meet astronomical demand.

The world needs to work out innovative ways to meet the difficulties that lie ahead. Possibly, we need to recycle more to meet the increased demand for goods. Probably, the media needs to share the responsibility of educating the people as the number of formal schools may not be enough to reach a large section of the population. May be the big corporate houses and non-governmental organisations need to play a supportive role in sustaining the global health system. Be it food or energy shortage, all we need to do is to break from the past and work out innovative ways to meet the challenges of the future.

The list of global problems doesn't end only with the scarcity of resources. This has been an area of concern for the world leaders and policymakers for a very long time. Challenges also come from the opportunities that have been created with the advancement of science and technology. While, new technology has made life easier for many, it has also increased the threats of unemployment. The current form of globalisation, with its compression of time and space, has made capital more expansive, yet increased inequality in the society.

Conventional wisdom has taught us for decades that as we move to higher stages of development the economy becomes more formalised. However, in the current phase of capitalistic expansion informality is the norm, leading to formation of sweat shops in the developing world, resulting in increased exploitation.

Then there are problems related to the environment - climate change is threatening to punish those who are in no way responsible for the emission of greenhouse gases, making the atmosphere warmer.

The social changes are also throwing up enormous challenges. Various forms of social, economic and earthly threats are making people more insecure, resulting in serious familial consequences. Urbanisation is exposing the children to unhealthy competition; nuclear families are retarding their physical and mental growth. Invasion of dominant cultures are undermining cultural pluralism and pushing indigenous knowledge to oblivion.

Addressing these challenges cannot be the work of only the national leaders, policymakers or professionals - like the economists, scientists, and environmentalists etc., each one of us has a stake in the well being of the planet and needs to take responsibility in finding a solution to the difficulties that lie ahead.

My new blog 'Global World' is going to be a forum for reflecting on the problems and working towards their solutions, however small and insignificant the contribution might be. This blog will thus deal with issues involving development, economic problems, environmental concerns and social challenges, to say the least.

Over the past couple of months, I have got tremendous response and support from my friends, well wishers, pals in social networking sites, in promoting Stray Thoughts. As a tribute to such magnanimity all my posts for Global World will be reproduced in Stray Thoughts.

When I decided the name of my new blog, my wife was very confused. She found the combination 'world' and 'global' very trivial. However, I stuck to the name for a definitive reason. The new challenges that lie ahead have placed us in a strange predicament. The world has become smaller and now the actions of each one of us living in this planet affect the others. Our world now is not confined only to ourselves, our families, communities, states, countries or even continents. Each and every member of the global community is now intrinsically linked and we share the same future.

Finally, like the Stray Thoughts, Global World is also monetised. Any proceeds, however small it might be, will go to a charity. The name of the charity will also be published on the blog site.

Any proceeds from this monetised blog will go to a charity.

All comments are personal and have no bearing on others.

Comments on the post are welcome at the blog site.