During the past 40 years or so, a huge numbers of people in the poorer nations have been paid not much for doing a lot, while in the developed world many people have been paid a lot for doing not much.
And that, dear readers, is why there is now an irrevocable shift in the world’s economic order.
Those in the UK will be aware of the scores of thousands of jobs in the public sector, created by Labour and Conservative governments, which are not in the slightest bit productive. Many, but by no means all, are necessary to make our society run more smoothly, to help the disadvantaged, to regulate, to administer, to advise.
The private sector is also teeming with well paid overstaffed functions which produce little of value at one end of the scale, and hugely overpaid executives and directors at the other.
The service industries are particularly good at paying their staff a lot of money by providing services that might add value, but produce little that has a tangible long term worth.
In private and public sectors, the pay and conditions have been protected first by trade unions and later by the collective greed of workers and bosses scratching each others’ backs, unified by the shallow values of the baby boomers. Lots of people shouting ‘Me, Me, Me!’ soon becomes ‘Us, Us, Us!’.
Until only a short time ago, our pay increased every year, bonuses went up, pensions rose and our working life reduced. As we live longer, our retirement extends and with it the time greater numbers of people are being paid for doing nothing.
We are now facing the consequences of an economy which has for decades been based on unproductive overpaid employment as our population grows increasingly old.
Meanwhile in countries such as India, China, Brazil, Vietnam, Korea, and increasingly in Africa and South America, vast and growing numbers of people have been working very hard from an early age until they expire making goods or harvesting food or extracting raw materials, all of which are sold for a profit. Their pay has been low, and kept low – talk of workers’ rights getting you imprisoned or laughed at.
In the UK, the increased income was used to borrow to buy property on the erroneous assumption that this would permanently gain in value. With our property as a safety net, we cheerfully got further in debt to buy more goods and foodstuffs, most of them made and grown by the millions upon millions of people in the by now fast developing world.
And so those countries grew richer as we got more in debt. That debt couldn’t be sustained once the property edifice started to shake and values dropped. Banks had huge books of toxic debt, interbank lending ceased and overstretched banks had to be bailed out by the government.
In many other developed states without a solid manufacturing base and without a well developed service sector, the situation is worse. In the southern European countries productivity per head is falling from a low figure, pensions are over generous, retirement age is in the 50s, working hours are low, unemployment high and tax payments a small proportion of what they should be.
Contradictions within the EU mean that a common currency is untenable; Germany will be able to make the financial rules, and enforce the austerity measures for a two tier Europe.
The electorates in these countries won’t like being told to accept reduced hand outs, pensions, to work longer and harder, but fundamental economic decisions won’t be influenced by the ballot box as much as by the markets and credit rating companies.
Funding the bail out of bankrupt economies are those countries in the developing world who have become very rich as money has flowed into their treasuries from the developed nations. China, India and the emerging economic countries will get us out of this mess, because it’s in their interest to do so, but the rules will be forever changed.
So the world is now one where in the west our lives are less influenced by democratic decisions than by the bond markets; Germany has gained economic and political hegemony in much of Europe, and countries such as China and India are more powerful than the UK, France, Italy, Spain and before long the US.
It was never supposed to be like this, but we had better realise that the old order, shaped by statesmen and industrialists after the second world war, has changed forever.