Last weeks’ summary: In 2012 EVT, Everstate (the ideal-type corresponding to our very real countries created to foresee the future of governance and of the modern nation-state) knows a rising dissatisfaction of its population. Alarmed by the rising difficulties and widespread discontent, the governing authorities decide to do something when new elections start, which starts the second scenario, Panglossy. Dependent upon programmes created to face efficiently past challenges, prisoners of entrenched political groupings, the major parties campaign to come back to the order ante. Meanwhile, the polarisation and rise of a new opposition that took place during the election is temporarily frozen by the last hope thus created. The new Everstatan government decides that a return to economic efficiency through growth is the key to the crisis. It chooses and starts implementing specific policies. 

(The reader can click on each picture to see a larger version in a new tab navigating map of posts is available to ease reading – research note before the references).

The logic underlying what presides to the level of satisfaction of Everstate’s population, or to any population for that matter, does not change according to the decisions of a government. Everstatans will assess the security that their government provides through the lenses of their expectations, of their constructed beliefs, considering all the pressures, present and anticipated, to which they are subjected and that impact, directly or indirectly their lives (for more details, see the whole series of post on 2012 EVT, starting with Rising Discontent).

All those pressures lead people to seek a security that becomes increasingly more difficult to achieve, which implies that the task of governing for any government becomes more complex, more demanding. Besides, the new pressures also directly affect the way to govern, contributing to make the task of governing even more difficult.

Meanwhile, the newly elected Everstatan government chose to focus all its policies on restoring growth, which means, in its eyes, the efficiency of the economy. The increase of the minimal wage, to start with, definitely gives a short breathing time to those Everstatans who are paid through wages.

However, it changes nothing to the anxiety and low-income created by imposed temporary employment and economic short-term employment, or to the fear to be laid off and only find back mini jobs, as is increasingly common in Germany.  It does not either impact this unknown share of the population who finds work only in unpaid jobs, such as the voluntary sector, internship, or the virtual “gift economy,” or in jobs where it is less paid than it should (wage dumping – Der Spiegel 2012).

Considering self-employed and temporary employment, rather than only full-time employment is indeed crucial. The OECD underlined this point in its December 2011 report (see figure below): when self-employed and part-time workers are included in statistics, the inequality rises. It is likely that if unpaid work were considered, inequalities would be even stronger.

OECD - Levels of earnings inequality are much higher when part-timers and self-employed are accounted for

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As young people are most often in those unfortunate categories, underpaid and under-recognised, their parents, worried, are more inclined to spare than to consume.

Other factors play in favour of cautiousness for Everstatans. The price of oil remains volatile and relatively high and with it the price of electricity. In turn, this has an impact on the general cost of resources, of trade and thus of manufactured goods.Besides, the price of most natural resources is increasing, be it because supply is reduced, because extraction costs increase, because demand rises, or because of a combination of those three factors.

Even more worrying, nothing has changed compared with 2012 EVT as far as food is concerned and food is increasingly expensive.

Real hourly minimum wages OECD countries (top line Estonia) – Online OECD Employment database

Media, concerned scholars, advocacy groups and social networks all relate, document, and monitor the rising price of all resources, and the inevitability of this trend. Thus citizens anticipate more and worse increases.

As the rise of the minimum wage is not as high as the past increase of prices for the products bought most commonly and frequently (which is very different from the inflation indices that include other types of goods bought much less frequently and for which prices decrease, as well as wages), then the new wages only allow to loosen the straitjacket into which Everstatans feel trapped. They do not permit finding back the level of consumption that existed beforehand, even less catching up, and, considering expectations of continuing soaring prices, the feeling of safety that use to exist remains absent. As a result, the expected boost to growth does not take place.

Meanwhile, the strong and rising inequality that has been at work in Everstate as in the other OECD countries (with variations according to countries) since the mid to end of the 1970s, and that went worse with the crisis in Everstate as in many countries will not change, and will only fuel the feeling of relative deprivation and injustice, despite the new government’s efforts.*

International Institute for Labour Studies (IILS), World of Work Report 2012, ILO

As the new Everstatan government has also planned other policies, could those, giving them some time to bear fruits have more favourable impacts? Yet, if more delays are necessary, will Everstatans accept and be able to wait?

To be continued….

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* Research note:

It is interesting to note that few questioned the rising inequalities not only until the financial and economic crisis but also – and maybe mainly – until food (and resource) prices soared or strongly rose according to cases and thus when the larger mass of citizens became impacted in its everyday life, as suggested by Timothy Harper’s finding in The End of Empire and the Making of Malaya, Cambridge University Press, 2001. Further research should be done on this phenomenon, building upon, for example, work already done such as Marco Lagi, Yavni Bar-Yam, Karla Z. Bertrand, Yaneer Bar-Yam, The Economics of Food Prices and Crises, New England Complex Systems Institute, 2012, but considering all countries, including OECD ones. Harper’s argument is larger than those focusing on food prices and protests.

Although those inequalities were pointed out in some reports on globalisation (including in internal reports of quasi-states organisations and IGOs) and by the initial anti-globalisation movement at the end of the 1990s (notably by ATTAC), it was far from being on the political agenda, outside the aid and cooperation world and, there, was limited to approaches to “the  South” or “the developing world” (see the excellent post by Jay Ulfelder on those outmoded categories). The crisis, with the fear of social unrest, changed this, and, for example, the OECD produced in October 2008 a complete report titled Growing Unequal? Income Distribution and Poverty in OECD Countries, followed by another one in December 2011.

References

Jay Ulfelder, There Are Two Kinds of Countries in the World: _____ and _____, Dart-Throwing Chimp Blog, 25 May 2012.

Eurostat, Unemployment statistics, Data up to March 2012.

Online OECD Employment database.

OECD, Growing Unequal? Income Distribution and Poverty in OECD Countries, October 2008.

Facundo, Alvaredo, Anthony B. Atkinson, Thomas Piketty and Emmanuel Saez, The World Top Incomes Database.

FAO, “The April FAO Food Price Index down slightly from March,” World Food Situation, FAO Food Price Index, 03/05/2012.

International Institute for Labour Studies (IILS), World of Work Report 2012 ‘Better Jobs for a Better Economy’, ILO, 2012.

OECD, Divided We Stand: Why Inequality Keeps Rising, December 2011.

The Local, Germany’s News in English, “Low-paid ‘mini-jobs’ on the rise,” 26 Apr 11.

Der Spiegel, “Millions Left Behind in Boom The High Cost of Germany’s Economic Success,” 05/04/2012.

Durden,Tyler  Europe’s Scariest Chart Just Got Scarier-er, Zerohedge, 05/02/2012.

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