Quote
“Government
is like a baby. An alimentary canal with a big appetite at one end and no
responsibility at the other.” Ronald Reagan
News
The
World Economic Forum’s annual meeting at Davos brings together global leaders,
including 800 CEOs whose companies represent 25% of the world’s GDP.
So it is perhaps surprising that one of the major topics of conversation
this week is pay differentials – a crucial indicator of how fair the economic
system is. Despite the economic downturn, CEO salaries of top companies
are 145 times the average salary of their employees.
The
BBC’s Robert Peston says that rising inequality used to be accepted as a
necessary price for growing prosperity during the boom years. But
something is badly wrong when salaries of top earners, whose high risk
strategies led to the financial crash of 2007-8, continue to spiral upwards
when most people face years of stagnant wages (executive pay of the FTSE100
companies rose by 49% last year, compared to just 1.5% for average UK workers).
Compounding
the problem of inequality is large scale unemployment; across the EU, over 16
million people are officially unemployed, 10% of the working population (these
figures exclude those who want to work but are not registered).
Governments are responsible for running the largest economic entity in
their country (called the public sector), but the actions they take (such as
raising levels of taxation) to try and keep that “business” solvent are often
at odds with what’s needed to encourage job creation in the private sector.
At
heart is the question, what is the purpose of the economic system? Is it
about maximising rates of growth (which assumes that the whole population will
thereby be better off) or should it be about ensuring that every person of
working age has the opportunity to earn a decent living for themselves and
their dependents? Crudely speaking, do people serve the economic system
or does the economic system serve the people? The current form of global
capitalism is geared towards maximising profits, but is failing society as a
whole. Is there a road from Davos towards a more relational economic
system?
Read on…
150
kms to the west of Davos lies Ibach, home to a company famous for Swiss army
knives, which puts jobs first. This relational business has managed to
avoid making anyone redundant for economic reasons for the last 80 years, and
yet has survived several recessions to become a global brand. Read the
Victorinox story here.
Walk the talk
Our
spending decisions usually reflect a trade-off between financial and relational
wealth. For example, buying something in the local store instead of an
out of town supermarket will cost you more financially, but you become
relationally more connected with people in your neighbourhood, and help keep
someone employed locally. Next time you go shopping, why not practice
taking the relational costs or benefits into consideration, not only the
financial ones?
The last word
From the Bible, Proverbs 28, verse 20: “The
trustworthy person will get a rich reward, but a person who wants quick riches
will get into trouble.”
No comments:
Post a Comment