by Sanjeev Kulkarni
For now it seems the familiar monotonous routine drama of kicking the can down the road is over in US, Europe and India. Or perhaps it has just been suspended for a while. However, the next drama promises to be equally dreary. The unemployment situation continues to be grim. Econintersect authors have been consistently arguing that job creation is the primary criterion for healthy and sustainable economic growth. In that regard, the recent report by the International Labor Organization (ILO) published by the U.N., “ The Global Social Crisis,” is somber reading.According to the report, global unemployment rose sharply from 178 million persons in 2007 to 205 million in 2009. Based on its study it says that the full social impacts of economic crises, especially on public health and education, become known only after a long gestation period.
More recently, 2010 has not shown any growth nor does the year 2011 promise to be anything different. Assuming a straight line extrapolation the cumulative job losses from 2007 to 2011 will be 230 million. This estimate is before the world wide austerity measures ranging from budget cuts in US, haircuts in Europe and to merciless successive rate hikes by India kicked in. And then figure provided by China are always suspect. The actual job losses might turn out to be higher than estimated due to long term domino effect of various recent measures.
Sticky rising food prices worldwide have already pushed more than a billion people into hunger in 2009, according to the ILO report. The 2011 figure for hunger is anybody’s guess.
The blinding faith of various governments in their measures to fix the world economic order is indeed touching. As we have argued elsewhere the long term trends, namely mismatch between consuming and producing nations, formation of new trade routes, structural employment problems in developed economies and major fiscal and financial systems breakdown in developed economies is causing a massive paradigm shift. This author does not believe that BRIC’s will be left untouched and the slowdown trend is already evident.
One thing is certain: no one seems to have the answer. But the throttling of the world economy through deficit cuts, haircuts, aggregate demand cuts or merciless interest hikes, is going to take a toll on employment and the consequential negative social impacts.
Give us poor folks a break, please, and stop kicking the can down the road in Washington DC, Brussels, London, New Delhi, Beijing….[take your pick].
The world got out of depression of 1930’s through a massive stimulus package – WW 2. Surely the human race in general and economists in particular are not suggesting WW3 as the stimulus package?
I can only hope the human race in general, and the worldwide politicians-economists teams in particular, run out of the WW3 type of imagination. We sure could use something big that was actually productive.
Otherwise the world seems to be destined to an economic death by billion cuts.
Signing off from India, until the next drama of kicking the can down the road – or the next rebirth – arrives. Or maybe just until I need to vent some more.
References:
The Global Social Crisis (United Nations 2011)
Charting the ripples of the global financial meltdown: Unemployment. (Al Jezeera, May 2011)
Global Economy ‘Stinks,’ So Don’t Make It Worse (CNBC Aug. 3, 2011)
Death by a 1,000 Cuts or an EU Bond? (CNBC Aug. 3, 2011)
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Sanjeev Kulkarni is an entrepreneur based in Pune, India. He worked for large organizations in board level position before venturing on his own. He is currently involved as an investor in health care software company and as an investor, mentor in an automation company. Very widely traveled, he has experience of working in different geographical areas with people of varying nationalities. He did his BS from Indian Institute of Technology, Delhi.
