by Ath. Ch. Papandropoulos
Three trips to California in 1982, 1992 and 2017, I must admit that have helped me decisively in detecting and understanding today’s reality.
On the first trip I had the opportunity to meet and talk with the then famous economist George Guilder, 82, now president of the Discovery Institute and the Investment Fund that bears his name. Known especially in California for his books Wealth and Poverty and Entrepreneurship, George Gilder, a close friend and adviser to President Ronald Reagan, emphasized that "innovation and business are the main fuels of the economy. and more, for this reason it will be under conditions of rapid change and therefore relative instability".
"Unfortunately, most economists study the economy based on aggregate demand, monetary variables and consumption trends. They are thus consciously degrading the fact that entrepreneurs are the ones who are constantly creating markets, taking risks, which often turn out to be fatal and through jobs offer jobs. Entrepreneurs, thus, are the ones who accumulate capital, use the land and transform the working landscape. And from this point of view I must say that the role of the businessman in economic and social development was first conceived by Marx and describe much more aptly than Adam Smith, who did not have a sense of the industrial revolution and its role as a means of generating wealth and social transformation," George Gilder told me.
On my second trip to California, I had the opportunity to meet for an hour the late Peter Drucker (1909-2005), who, in addition to his role in business and innovation, explained to me how valuable a raw material it was in the "new economy". knowledge. "Managers who do not understand this and keep their businesses stuck in the standards of 1930, lead them safely to disaster.
“Innovation," the great management thinker told me at the time, "primarily involves new ways of doing something better." So is what inventive and daring entrepreneurs can achieve. But in order for an innovation to proceed, a favorable dominant mental environment is a necessary condition. Without it, an innovative process can hardly be accepted.
Califomia has great advantages in this regard, which is why it is evolving into an ancient Athens of innovation. In other words, it plays in the business and its strengthening the role that 2.500 years ago the prosocratic philosophers played in thinking... and the spread of correct reason".
On my third trip to Los Angeles, again with the help of an important expatriate businessman, extremely relevant today, managed to get in touch with the vendetta economist in 2017. Robert Gordon (82 years old today), author of a much acclaimed book about role of durable goods in the economy.
A great theorist of "secularized stagnation", which he explains in his best-selling book " The Rise and Fall of American Growth", Robert Gordon finally agreed to tell us a little about a phenomenon he describes in his work and which is a pity that other colleagues do not take into account.
"The great inventions to improve human life were made from 1870 to 1970. Most of man’s basic enduring needs were met during this time. The elevator, the radiator, the air conditioners and other inventions, such as the bathrooms in the houses, have radically changed people’s lives, changing the field of consumption. Nowadays, there is not much room for such radical inventions. Today we have an improvement of these inventions, which does not require high levels of productivity, as was necessary in the past.
Take houses, for example. In 1870 in America they were isolated. They had to be connected to electricity, gas, telephone, running water and sewers. All of these required projects that did not offer highly skilled work but nevertheless gave work to many people. It was a major source of income, which grew as production and consumption of durable consumer goods increased, with the latter making people’s lives much better. At the same time, however, social relations were changing, with the middle classes gaining much weight. The whole system culminated in the culture of the car, which was a decisive turning point in social mutation. Today, the only problem a household may have is connecting to the Internet and the number of mobile phones it uses.
So in the West we have a change of economic example and we have to understand that. As this change widens, so do the inequalities. For example, the digital economy and entertainment offer incredible incomes that other industries cannot. The problem, then, is that of moving from one era to another.
Consider that a footballer like Cristiano Ronaldo earns 350 times the average per capita income of an American citizen each year and in 15 years has made a fortune 200 times larger than the average American. These phenomena are precedented and, therefore, have unprecedented effects, as they affect the economy. The latter is now playing a leading role in the new economic reality and, in conjunction with globalization, is affecting those classes that present with serious inability to adapt. "This weakness creates uncertainties, which have unpleasant political implications."
So what can be done, in the face of a situation that seems to be perpetuated? According to Nobel Prize-winning economist Robert Schiller , ignorance of how the economy works must be fought first.
"The crisis that occurred in 2007 also has a mental character. Capitalism does not sell people what they really want. He also sells them what they think they want. Especially in the financial markets, this leads to excesses and bankruptcies, which cause general economic inadequacy. In an economy, buyers and sellers are not always rational, as many economists assume. First of all, people do not always have the time and energy to analyze the information they have. They have psychological prejudices that make them vulnerable to manipulation and deception. Thus, they easily fall victim to tactics, whose only concern is profit for profit - even if this is on the verge of legality", the Nobel Prize-winning professor tells us.
The same is supported by the French professor Daniel Cohen. He also stressed that the West has a serious demographic problem and that as it gets older, inequalities within it will grow.
"With such economic rules, inequalities will block growth, a phenomenon that worries both the International Monetary Fund and the OECD," said Professor Jean-Pizani-Ferry., Adviser to the French Government on Economic Strategy. "Our people must believe in progress again and move away from the Sirens of populism and impulse. Through promoted investment in education, we must not allow the digital age to become one of the destruction of the middle classes. But at the same time, we need to find new rules for protecting people whose workplace is being destroyed by digitization. And this protection requires new terms of perception of reality. "The new rules of economics in developed economies dictate new social policies, resistant to demographic change, technological rifts and economic shocks."
"We need to understand," says British author Paul Mason, "that with the onset of the pandemic, the world economy is entering a new era of permanent turmoil. The era of post-capitalism as I call it in my book is already present. The system of wealth production, despite the crisis of 2008 and the pandemic twelve years later, is unrestrained. Moreover, in developed societies, the pandemic will create demographic rearrangements that will play a major role in shaping the future. And the latter remains uncertain, because the new rules are by nature unstable."
By: N. Peter Kramer
