A friend asked about the post I wrote the other day, speaking about how government align with corporations, under the assumption it is what is best for the people governed. He didn't really understand what I meant by this, and wanted some clarification.
I think a pretty easy way to look at it is through the education system, something a lot of Finn's take for granted. They also assume that because it is free, it is some kind of inalienable right that won't change. However, centralized schooling is an economic decision, ad when it no longer makes financial sense to provide education, they won't. At least, not for free.
I don't have the current figures handy, but about a decade ago, it cost the tax payer about 250,000 euros to educate a child through to year 12, ad another 200k through university. That means that by the time a student is ready to work, they are indebted to the taxpayer to the tube of almost half a million euros.
The per capita GDP in Finland is about 55k, so that means in tax, that is essentially a full working life to pay it back. But, the other income is spent in the economy, which generates value too. So, what the government is doing is offering basic training in exchange for employment positions in companies. And, as a incentive to hire employees, corporations even get tax breaks, so that while their employees are paying up to 45% tax, the companies are paying as little as 11%, which increases profits. These profits then go to shareholders to give them an inflated return.
But, what all this means is that in a system that equates money as wellbeing, and also profit maximization as the goal of business, the incentive is continually there to pay less for people. So,. one way or another, the overall cost of people to a corporation is looking to be minimized with automation and crushing salaries the best they can. More profits, means more returns to investors, which means more investments, which will drive more growth and more GDP, which the government use as a metric for the wellbeing of a country.
GDP has nothing to do with wellbeing of people.
But, as that profit grows based on shrinking opportunity for employment, so too does the need for skilled staff, especially the basic skills that are provided by schools for average people. This means that in time, the competition goes up for high level skills, but the cost of schooling the average goes up too, with no way to recoup the value spent, since most are going to struggle to get well-paid employment that will offset the costs. So, the cost of schooling increases too, or the quality diminishes.
Probably both.
Regardless, it is not what is best for the people, as it tak3es away even more opportunity to improve personal finances and meet human needs, but the governments don't care about this, because their "wellbeing" KPI is GDP. They can keep growing the economy, while people starve in the streets.
Sounds bleak.
And yes, this is somewhat of an extreme illustration, but it is not an illusion. We are losing our wellbeing because there is a disconnection in the economy between what is good for business, and what is good for people. The incentive is for people to look after themselves, invest into their own future, make as much money as possible, so they can buy more opportunity. However, this comes at the overall expense of the majority.
Business is about the monopolization of the economy, government about the monopolization of power over people. They both work together to maximize their endgoal, and we only factor in as a metric, a resource to be leveraged.
If we want to improve general wellbeing, we have an alignment problem.
Taraz
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It is easy to get caught in the trap that all politicians and business people are evil and in the business of grifting people and lining each others pockets. Believing that is 100% the case would pull us completely out of that stupid game and things would fall apart for everyone. Denying that it is a factor would be naivety and walking right into that trap.
Those kinds of discussions have their place but I find them tiring and unproductive if the narrative doesn't pivot to "what are we going to do about it?" Not necessarily about righting the huge wrongs that are out of our control and bearing the weight of the world. Just focusing upon what is in our circle of influence and not having the prevailing winds blow our untrimmed sails like victims.
Here in Canada, SOME education and medical care is "free." That term bugs me because the money that pays from it comes from the tax payers and the big business profits the government collects to pay for those. Definitely not free.
It does seem that the capitalist system is a little out of control now, but maybe that is just because I am paying closer attention from a perspective of greater knowledge? Has it always been a runaway train?
Either way, it will be a balance of yin and yang and I choose to work on influencing the things I can to take care of my family, not obsess on the injustices of the (precarious?) balance that currently is, and try to make things better without taking away from others. Naïve? Denial? Misdirected optimism? Probably all of the above but my roads are paved, kids have food and medicine, and there is a roof over our heads while we find our way in this imperfect system so far.
It isn't about being evil, it is just about the alignment of incentives. The incentives aren't aligned for wellbeing, so that isn't what we get out of business.
Precisely. However, in order to really make a change, enough people have to understand what is happening in the system, otherwise not enough shift, and too many support the status quo.
Always, yes. But, it is heading down a hill and terminal velocity is when there is total monopoly. The growing wealth gap is an indicator of things to come. Once those boomer trillions land in the inheritance pockets of millennials with low financial understanding and hygiene, it is going to be siphoned very quickly away from them, unless the learn a different way between now and then - and then isn't far away.
The best we can do, is keep doing our best.
The good side of financial hardship of the people on the wrong side of that divide could be that they value living beneath their means and appreciate the value of money more than the spoiled fruit of the elite. Taking care of the things in our control and acting magnanimously can be the same thing and perhaps it is our vintage that is making us feel the weight of the world. I use it as context to make smaller progress in my circle of influence to stay sane and progressive.
I kind of miss the days when you didn't really go to school but you became an apprentice under a master. You were basically an indentured servant, but you were learning a skill. Then eventually you passed that skill on to your own apprentice or more. It would still apply today, they just wouldn't make as much money on it and it wouldn't be a mass thing, the quality would probably be better though.
I think, unfortunately, the invention of the steam engine killed that whole process.
Before the steam engine, people were absolute masters of their craft and people would pay for the varying levels of quality and skill levels of the different tradespeople... but with factories powered by steam engines, suddenly all sorts of stuff could be mass produced and the masters could no longer compete.
But I guess, also, apprentices learnt all about that particular skill, but didn't get a well-rounded education so I imagine changing disciplines wasn't easy.
That is a good point.
And, the production line created narrow skillsets that were designed to do a slice of a job, not the entire piece of work. Efficiencies went up, broad skills went down.
It is a bit like going back even further, where surnames were attached to tradecraft - thatcher, butcher, baker. Families would pass down the inheritance as skill.
For sure!
I agree that the GDP doesn't affect most of us. In the end, I think the business tends to focus on their own profits. The middle class is being hollowed out and the rich get richer. Most of the money doesn't seem to make it to those of us who really need it.
This is by design - how else are profits to be made? If there is broad distribution, then the rich won't get richer - that is crazy talk!! ;D
The primary objective is to produce more "unit of labour".
It has a complex tapestry of growth and wellbeing, may not necessarily complement each other the time. Divergence could be apparent.
That's because of the viability gap. Since the time of French revolution they have habit to give marginal concession for the wellbeing fo the people to make it appaer like their primary objective is wellbeing of the people. Ultimately they objective is to wield power, means of production, and that results in circulation of elites, not circulation of weelbeing.
Yes, but when that labour isn't needed, what then?
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Hmm
The world actually made it look like and made us believe that GDP is based on the well-being of people
Wow!!!
Government funded education is basically the government putting a loan on the students, in hopes that they will pay them with their taxes when they start working. In some countries, graduates from state universities are required to work for the government or government related companies for a time. It will be interesting to see how the rise of AI and robotics changes things though. With lesser needs for workforce, and AI being able to teach in the future, they might lessen the funds of the Education department.