An endless catalogue of gloom & doom
Satyajit Das used to be a successful banker, trader and consultant. He has now morphed into an author and a thinker. His latest book The Age of Stagnation is based on his pet theme—that the world is in a crisis. If you are sucker for gloom & doom, this book is for you. For this review, I have picked the last para of almost every chapter of the book which will give you sense of how bad the global situation is, according to Das.
Global Financial Crisis & the Great Recession: Governments now lie to their electorates about the magnitude of economic problems, the lack of painless solutions and the cost of possible corrective actions. Irish literary critic Vivian Mercier observed that, in Samuel Beckett’s play Waiting for Godot, nothing happens, twice! Vladimir and Estragon while away time with distractions, waiting in vain for Godot to arrive. Policy-makers too await an elusive recovery. Like the two characters in the play, they pretend they are in control but do not know what happens or why. Their ability to influence events is limited. Global economy, in the aftermath of the global financial crisis, resembles Beckett’s absurdist plot.
The Power & Impotence of Economic Policies:
The position of the global economy is akin to a black hole from escaping which gravity prevents anything, including light, escaping. Excessive levels of debt and fundamental imbalances now prevent escape from stagnation or worse. Black holes form when massive stars collapse at the end of their life-cycle, an appropriate metaphor for the recent period of economic history.
The End of Growth: Economic expansion is not a continuous process that can persist forever. Growth and improvements in living standards will slow significantly.
Running on Empty: At a minimum, resource scarcity and global warming will constrain economic growth. Geographer Jared Diamond thought the effects may be more severe: “Population and environmental problems created by non-sustainable resource use will ultimately get solved one way or another: if not by pleasant means of our own choice, then by unpleasant and unchosen means, such as ones that Malthus initially envisioned.”
Globalisation in Reverse: A confluence of economic self-interest and necessity is reversing global integration, favouring closed economies with narrowly based strategic links between nations. The growth in trade and cross-border investment that underpinned prosperity and development is weaker, removing a key driver of economic growth.
The Rise & Fall of Emerging Markets: In 2014, slumping, oversupplied real-estate markets prompted embattled Chinese developers to try different approaches to entice buyers. These included attractive women dressed as imperial concubines, discounts for people who lost weight, and appeals to patriotism. The most novel involved the offer of 1,000 free live chickens to prospective customers. After a desperate scramble by locals, only chicken feathers and a few lost shoes were left. It was an apt postscript to the latest instalment in the rise and fall of emerging markets.
Impact of Rising Inequality on Growth: Inequality remains a serious issue, constraining economic recovery and improvements in living standards globally. Chilean President Michelle Bachelet complained that “in the end, the same old people keep losing out, and the same old people keep winning.”
How Democracy Deficit Harms Economic Activity: The widening gap between the views and concerns of the people and the political and bureaucratic classes threatens the trust which is central to modern societies.
The Fallout for Ordinary Lives: In 2014, Dutch graphic design student Zilla van den Born’s bachelor’s thesis on ‘Facebooking’ garnered attention. Using photo-editing software on social media, she faked a five-week trip to Laos, Cambodia and Thailand, while spending the entire time at home in Amsterdam. She deceived family, friends and even her academic supervisor, who thought her thesis was on a different subject. Van den Born wanted to illustrate that the virtual world we take to be real is, in fact, manipulated .Today, ordinary people everywhere are fakebooking their lives.
This is one side of the story. On the other side, Warren Buffett wrote in a letter to his shareholders this year: “It’s an election year, and candidates can’t stop speaking about our country’s problems. As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do. That view is dead wrong: The babies being born in America today are the luckiest crop in history. America’s economic magic remains alive and well.” Take your pick.