This transcript of President Obama’s speach published in the Social Europe Journal is a MUST READ. Check it out!
As usual there are fine words from President Obama but the acid test is that inequality has increased significantly on his watch.
If you interested in other recent important articles on inequality see an excellent blog from Paul Krugman and his followed up, both published in the NYT. For another perspective, see the viewpoint of Oxford economist, Simon Wren-Lewis; Wren-Lewis’s blog examines inequality in the UK.
For convenience, let me restate my views on Wren-Lewis’ article:
Whilst I recognize the thrust of Wren-Lewis’ argument, I disagree that the right wing are necessarily painting poverty as laziness.
Surely, the less fortunate are suffering from having the wrong skills in an increasingly globalized labor market? Most public and private sector organizations have endeavored to simplify their product or service offering – this has led to widespread outsourcing and off-shoring. Along with technological improvements, there is just not the same need for unskilled or semi-skilled jobs.
On the other hand, I strongly endorse Wren-Lewis’ views that UK austerity has been excessive. Recent statistics have shown that investment, both in the public and private sectors in the UK, has collapsed in 2013 – this is because George Osborne did not provide the fiscal incentives. Stimulating inflation in private property with government guarantees is a poor substitute for real investment.
Large swathes of the unemployed are effectively unemployable. One solution is to create more jobs, with investment in infrastructure etc. BUT in the main, the problem is to do with a mismatch of available labour and demand from business. The skills mismatch is often the reason that highly-skilled immigrants get the UK’s available jobs.
Whether it’s a left or right-wing UK government, there are some clear things that are required.
The UK Government needs to take a hard, strategic look at UK competitiveness, identifying sectors for growth and sectors for slow withdrawal. The growth sectors should be encouraged to invest for growth and exports. Most importantly, there should be a clear strategy to increase the UK labour market‘s skill-set to meet growth sectors. Sectors that are effectively the “dogs”, like UK healthcare, need to be heavily transformed based on global best-practice. Jobs in the “dogs” industries need serious attention to increase productivity or be replaced by outsourcing, offshoring or mechanization.
Similarly, a strategic review is required of the indigenous labour market, analyzing age, skills, location, potential for relocation (including offshore) – two important sectors that need urgent attention are the millennials and the baby-boomers.
Finally, if you are interested in a response to my own recommendations above, see John Gelmini’s proposed policy recommendations for the UK.