I was having dinner with a friend who is smart about business and I asked him what he thought was needed, what with the Euro crisis, America’s anemic recovery and China’s slowing growth, to get the global economy going again. His answer was one word: war.
It is true that periods of great growth often follow wars. There’s all that rebuilding to do, and fewer people to do it. It’s kind of depressing, though, to think that war is the only way back to prosperity. My friend suggested that a worldwide plague might also do the trick. Anything that would reduce the number of workers, so that those who remain have more to do.
Another approach, he said, would be to figure out how to get Africa to buy more stuff. Jobs and wealth come from making and selling things, and the worldwide supply of buyers is not growing fast enough. Getting a continent like Africa rich enough to buy iPads may be tough, though, when it isn’t currently rich enough even to eat.
What we have here, to paraphrase the old movie line, is a failure to innovate. I’m not talking about microprocessor speed or social networks, I’m talking about economic systems. We’ve got the oldest system in the world, the only one really: producing and selling. A half century ago, John Kenneth Galbraith said we needed to develop something different, not to replace production as the means of economic growth, but to supplement it. He suggested public works. Build roads and schools, improve electric grids, desalinate seawater, vaccinate against disease.
Infrastructure investments usually don’t make money quickly enough to attract private capital, so they depend on government funding. That’s a tough sell these days, with austerity being the buzzword in many capitals. Even those who want to invest in public works have a hard time finding the money. In the midst of recession or fragile recovery, not many have the stomach for raising taxes. So I’m not holding my breath for a surge in public projects that would employ current workers and lay the foundations for a better society for their children.
On Memorial Day we mourn those who have fallen in combat. We pray others will not die as they have. My friend doesn’t think war is the preferable answer, he just thinks it may be the inevitable one. If populations continue to grow worldwide without sufficient economic support, they will end up fighting over resources. They will end up at war. That will be good for business, but little else.
If we really want to honor those who have made the ultimate sacrifice, we must face the reality that governments have to invest in their people, in their future. If they don’t, scarcity will be dealt with the way it always has been: the strong will take, the weak will surrender, and many will die in the process.