How to Make Sure the Next Generation Is Better Off Than We Are
How to Make Sure the Next Generation Is Better Off Than We Are - Mohamed A. El-Erian - the Atlantic
Every once in a while—and it does not happen very often — something comes along that deserves to have a strong influence on government policy, individual behavior, and how business leaders align the pursuit of profit with their social responsibilities. I believe that two issues warrant such a designation today; and the implications are consequential.
The first is something I have written a lot about and it worries me greatly — as an economist, a parent, and someone concerned about the most vulnerable segments of our society.
What I am referring to here is the real risk that, for the first time in nearly a century in most western countries, our children’s generation may end up worse off than that of their parents. This sad state of affair is the result of a number of multi-year developments.
For too many years, our job creation engines were excessively re-oriented from competitive global markets to inwardly-oriented sectors that were taken to unsustainable levels (e.g., construction, finance, housing and retail). The result was an unbalanced and vulnerable labor force.
Our generation also overdosed on debt and credit entitlement. We got seduced by financial engineering, even believing that “finance” was the next (natural) stage of capitalistic economic development.
So we opted to de facto subsidize our financial sector. We sacrificed safety for the allure of the unquestioned efficiency of unfettered markets. And we fell in love with easy borrowed money, as opposed to earned income.
Too little genuine growth, too much debt, and a risk culture gone crazy culminated in the very messy global financial crisis of 2008 and its aftermath - a costly shock to society whose impact will be with us for quite a few years still.
Understandably, crisis management mindsets have dominated companies, governments, and individuals. And, as often happen, this has crowded out the important but seemingly not urgent.