Wednesday, February 20, 2013

Problems with the new global economy

Looking at the new global economy, I believe the developed countries have come to a point where there must be a choice between GDP growth, or happiness growth.

The reason is quite simple. The problem with growth of GDP is that it assumes that demand will always be greater than supply. That's why some liken it to ponzi growth. Some countries create demand by either having more citizens, or getting more immigrants, or having both. Purpose? To create demand.

Are there other ways to boost salary and create jobs? You may be able to boost salary by improving productivity, but it is difficult to create jobs just purely by improving productivity. Harley Davidson is now producing 41 bikes per worker per year, compared to a decade before (33 bikes per worker). What does that indicate? Salary increment? Maybe. Lesser workers, definitely.

What I know that could create jobs is innovation. Creating something out of nothing. That will create new jobs and sometimes, even new industries. However, there is a catch. Do you think you have time for innovation if you spend your time working your butts off at your current job? Not likely. Innovations actually could also help to increase salary, but it's harder to achieve though.

Chicken and egg problem. A salary increment comes with increased productivity, which not surprisingly enough usually comes with more work. If you spend your time working, innovation is difficult because you spend your time meeting deadlines after deadlines, or fighting "fires" all the time.

It's a vicious cycle if you're trying to have both. But... What if you're only concentrating on innovation?

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