Watch this lecture at the LSE by Jon Moynihan of PA Consulting to realize that western economic decline will continue and that the central cause is the massive wage disparity between the advanced economies and developing countries. The figures he cites – from the OECD and the UN:
Labour Pool Average Daily Wage ($)
Advanced Economies 500 million 135
Developing Economies – Urban 11oo million 12
Waiting to Urbanise (rural) 12oo million 1-2
One can liken the advanced (western) economies and the developing economies to two large tanks of water directly adjacent to each other, separated by a sealed partition, with the volumes of the tanks representing the sizes of their respective labour pools and the water levels in each tank analogous to average wages. As long as these tanks are hermetically sealed, then each will have it’s own water level. Should the partition between them be removed, creating in effect one larger tank, then over time a common water level will be reached. This common level will be determined by the volumes of water in the tanks in relation to each other (size of labour pool) together with the starting level in each tank (average wages). The globalisation of the past 20 years has been the removal of this partition. Moynihan suggests that, depending on various factors, the average global wage could come out at around $60/day after several decades.
Moynihan thinks that the West, if it makes certain responses to this situation, can manage the process ‘in a much more clever way’. Otherwise he says catastrophe will result. He sees these measures, such as more investment in education or the curbing of excess banking profits, only as a means of smoothing the decline. However, his own presentation makes clear that the chances of managing the decline effectively are small, given that the suggested measures are all too little, too late, or face too great a resistance.
So if you are living in the West, what are you to do? Given that there can be no effective societal response, the only answers are individual ones. Raise your game by developing your skill set and acquiring new knowledge, instead of resting on what you have already achieved. Save instead of going into debt, develop several streams of income, consider migration. Perhaps above all, avoid looking to the state or society for solutions.