A WEEK IN ECONOMICS (10/06/13 – 16/06/13) THE HUMAN MACHINE

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Week-in-Economics

The global economic malaise continues without abatement. Europe is in the doldrums; the US is in the throes of fear. Japan are still looking at ways of tackling deflation and finding unenviable solutions, and China’s startling growth over the last few decades appears to be running out of steam. Perhaps this is the economic narrative – the purported boom and bust cycles are meant to be symptomatic of a system that functions by continuous production. Sometimes there needs to be a slow down to stop overheating.

But our constant quest for GDP growth requires human capital to be in work. Unemployment is regarded negatively and no country wants high unemployment.  The Eurozone’s unemployment rate is at 12.2%  (Greece’s unemployment is at a shocking 26.8%). The OECD reports that since 2008, the number of unemployed people had risen by 13.7 million people. For individual economies, this is a significant burden.  Benefits have to be provided to long time unemployed. Failure to do so would result in high numbers of homeless people and increase in social problems. Other problems include disenfranchisement, especially amongst youth, as has been seen with the riots in Sweden.

Optimally, individuals should be in employment. Not only are they ensuring their own survival, they are contributing to society with whatever service they have to offer. Governments want the services to be productive leading to increased GDP, increased country wealth and distribution amongst its citizenry. This is considered axiomatic. But it has its drawbacks.

Many are in awe of China’s growth but it came with a loss of lives. It has been half a century since the Mao Zedong’s Great Leap Forward in which he aimed to rapidlytransform the country from an agrarian economy into a communist society through rapid industrialization and collectivization. However, according to some figures 45 million people lost their lives. China may be less oppressive today, but there are still instances of terrible repression that have benefited China at the expense of workers.  Zambia copper mines are being excavated by the Chinese, with very little of the profits going to the Zambian workers. Moreover, safety conditions in these mines are poor compounding the misery of the workers.

It is easier to force a population on the brink of poverty, or those who have limited opportunities to uphold their rights, to escape the strong arm of moneyed and military backed leaders.  Education provides avenues for the people to gain more power to control their lives. Economic systems are now tailored to consider people who have more years in education to be superior in terms of productivity than those who do not. More years in education, the higher your pay is likely to be.

As more people stay longer in the education system, the higher the costs of maintaining institutions are becoming. In the UK, tuition fees for universities have increased from £1000 to £9000 in the last ten years.  For US universities, it is far more. Students are feeling the burden of debt to go to university, which is meant to result in better wages once students go into work.

Yet, even this idea is being challenged. Many qualified graduates are finding it difficult to find jobs or are securing jobs that pay less than market rate or require a lower skill set than what the individual possesses.  In the UK, GDP in the last three years has grown less than 2.5%, while employment has increased by 6.8%. The discrepancy would suggest worker capital is inefficient, or what is more likely the case, the job itself produces less to growth. Consequently, wages are lower.  This is worrying and makes the efficacy of higher education questionable.

Many believe that more investment into subjects such as the physical sciences will be more beneficial to the economy than the human sciences. Universities are promoting the former, which have the luxury of better access to grants for research. It is likely that in the future, there will be less demand for human sciences (history, politics, philosophy). In the end  graduates of these subjects are not productive.

But the overt focus on productivity assumes that it is possible for the world to be continuously creating goods. In fact, GDP is composed of how many goods (and services) are produced. An endless quest to produce more is unsustainable. Yet this is the focus, and this has the possibility of creating automatons: labour focused on just production.

There is then a numerical value placed on the individual, and the population are seen as units. The interest in big data is indicative of a belief that men behind a computer screen can predict the behaviour of individuals. Facebook and Google have gathered swathes of data on individual online activity. This allows more focused advertising. It also has a price, and companies are fighting to possess access to this data. More disconcertingly the data is being used by security services to make judgements on individuals.

Many do not see a problem in this; others worry about the encroachment of privacy.  But by seeing humans as units, only as good as the return they produce, can lead to a dehumanization of the individual. It is how slave masters saw their black slaves; it is how Chinese managers look at Zambian miners. The human story is more than just productivity; there is culture, religion, love, the soul, etc. It can be argued that increased productivity allows the sustenance of more “human” activity, but most of our time is spent in the workplace. We are workers, and we are encouraged to be workers in order to produce. But production has a limit meaning our worth has a limit. The human sciences are there to show us we are more than that.

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