Tag / economy

by sheilasingapore

When The Economy Speaks … Reversing National Unemployment Statistics

6 Things A National Leader Does.

View at Medium.com
https://medium.com/series/when-the-economy-speaks-cdb62e49ad36

Peter looks down at his high school examination results transcript for the first time. It is not a pretty picture. He had been praying hard the results that would peer back at him would be different but he also knew deep down that it may not. He had been dreading this moment. It has arrived.

Still, he had wished for otherwise. He is a bright student. But it had not been an easy past few years. He had just lost his older sibling to a debilitating illness. They had been very close to each other. He is also dauntingly aware his parents are not close to each other and fears they may find other partners and break-up. What would that mean as a family? Where would he seek his counsel? Will he be intruding? That bothers him.

Turning his eyes back at the results, he knows he can do much better than what he sees. The reality is dawning at him. He is facing it squarely. These results are not going to help him get into his dream course at the university of his choice. It hurts him. What should he do now?

Suddenly he is remembering that he has to announce these results to his family. He has been known to be the one with a sound head on his shoulders. But now. With this. What would they think of him? Maybe they would not ask. He consoles himself.

But they did. He chose to keep quiet. Perhaps they will understand. He hopes. But meanwhile, he needs to come up with a strategy. Fast. So that his peers do not leave him behind.

He thinks.

He needs to get grades. Good grades. Fast. What subjects will help him do so? French. Perhaps. Grades that would help him put his foot through the door of a tertiary institution. What can he do so that he can catch up with his peers in the shortest possible time? He has the coming summer months to do so.

What jobs are out there that he should prepare for? He really did like the sounds of the field of nautical engineering. He had really enjoyed seeing and fiddling in the cockpit of a cruise ship during one of his summer vacations. It had made him feel happy and come alive. And he loves his Maths and Physics. But he has been told that manufacturing here is not a big deal in terms of jobs. What should he do? How should he decide?

Are his days of plain-sailing through life over? Will he face the same dilemmas when he out there in the big wide world looking for a job? With only four jobs available for every ten working age population, what will become of his chances with not so great grades? Supply of labour is now outstripping the demand for labour. Will jobs become too slim for his picking?

He will need to figure this out. He needs time. But does he have the time?

We all know a story like this.

One way or another.

And so. Here is the situation. You are now charged as the Head of this State. What would you do to turn around the situation?

Run, you say? Oh, you did not say that. Good! Invite more investors, locals as well as foreigners, to invest in the country?

Your predecessors have done that. Poured trillions for decades over with the help of past heads of states and a cabinet of citizen representatives. Yet, widespread unemployment today, has grown to now prevail at 60%! How did that happen?

You say perhaps “they” have not done enough. That you will do more than them. That is possible. For how long would you do more of the same? What went wrong? What else could we do?

Some measures are drastic and feels more like a bitter pill to swallow. But I hope it will make the tough actions we would need to take instead become easier to bear with. So here goes.

1. “EXPORT” UNEMPLOYMENT

Don’t have an agricultural and manufacturing bases? It has been too hard to build them? Well, no worries. Export unemployment at the same rate that we have been importing manufactured goods and the raw materials that were produced so that the unemployed follow the money you have spent buying them from outside the county (or the region).

2 “MATCH” BIRTHS TODAY TO JOB CREATION TOMORROW

If you know we will make more jobs tomorrow, go forth and multiply. But if you know, that we will not, … well, you get the drift.

A runaway population just means runaway unemployment figures that becomes hard to manage.

Supply of labour does not come from our education “system”. It is as the result of rates of births, not today, not just last year but from twenty years back. This is the time it takes for a young person to mature and readies himself for the job market.

Of course, it becomes tricky matching what happens in the bedroom today to the decisions we make in the boardroom twenty years on. The only consolation we can make is, the one who “creates” the child is the same one who plans today to “create” those jobs tomorrow. Well, no, I was not talking about God.

It is you and I. We needed to believe that we can create companies that can create those jobs for our children tomorrow. Companies are more than about hustling for clients to make money for us today or a shell to be used and discarded when we got what we need today. They are meant to create a legacy that makes jobs tomorrow. So, do you believe you can do that?

3 NATIONAL & COMMUNITY DIALOGUES AS FAMILIES Q: what allows industries to grow?

The decisions we make as nations and as families are strongly intertwined.

The decisions to be skilled for the agriculture and manufacturing sector bases are happening within families and households But the data used to inform the decision is based on what they would hear and say is happening “out there”.

If we think the population is not skilled to do manufacturing and in turn as families we think the country is not doing enough to create jobs in manufacturing then there right there, we have a lose-lose situation as a nation.

So make the intentions and the reasons clear and talk through the concerns surrounding the issue and figure a way to share the information as a nation. If countries around the world today can do grocery shopping online, this is not as big a step as we believe it to be.

Community Dialogues on household decisions and impact on national unemployment and vice-versa

4 CONSTRUCT REGIONAL MATRIX-ED GOODS VALUE CHAINS MAP

Get your backyard in order. Know what you want and go for it.

Figure what the latticed structure of chains of raw material supplies that are driven by what customers need as a region looks like and develop a vibrant agricultural and manufacturing bases:
– Do not be led by products that you have but rather focus on what customers want when building the matrix. Construct a map.
– Identify how one good feeds into another cost-effectively for end-customer needs within the local, regional and the global markets
– Know what is available. And what is not.
– Forget the who has what at this point. That is for a later stage when the map is completed.
– Focus on identifying critical processes on the chains, those if unavailable would stall the development of the production and the chains.
– Do not wait for another region to develop their maps and approach the country or the region to conduct the manufacturing for them. You will lose the clout you would need in managing the process and gaining value.

When the mapping is complete, you now have a working document to get your act together and move forward as a nation and the region.

5 ALIGN AND BUILD HUMAN RESOURCES

Align and, where needed, develop human resource skills dedicated to the agriculture and manufacturing sectors with a particular emphasis on acquiring both core across the nation and advanced skills in English, Mathematics and Science, particularly with Physics and Chemistry, that makes them resilient & inclusive in the two sectors.

6 BUILD UP THE PYRAMID OF THE ECONOMY

Concerted setup of corporations in the sub-sectors of: the agriculture (crop or plant / raw material production) and manufacturing that fits in with the regional industry value chain matrix map and schedule.

Economies that rely heavily on extraction industries will have large pockets of unemployment that continue to persist in the nation. These industries gross high returns but they do so by employing fewer people and more machines to keep costs of operations under control and growth of the industry. This way the GDP would certainly look good (but not the food on our tables, which is the real GDP).

Machines do not create jobs for the unemployment rates.

Plant and animal based primary production and manufacturing economic sectors when well-developed have greater potential for creating and absorbing significant employment. Extraction based industries are typically technology driven and has lower capacity for employment of human resources.

As the nation shifts its focus to production, particularly in plants, it will learn to mitigate climate effects country-by-country that would allow the region to produce consistently throughout the year to keep the manufacturing sector humming.

Invite regional and global industry leaders global industry leaders or; incentivise and groom local captains of industry (by long-term overseas stints) to lead, chart and build the sub-sectors bottoms-up including from within households and education sectors.

by sheilasingapore

Regional Article 17: Is unemployment real?

UNEMPLOYMENT = SUPPLY OF LABOUR > DEMAND FOR LABOUR

In a country, where levels of unemployment stay persistent over time, then it is a sign that the rates of growth of the supply of labour (population numbers -” child creation”) each year is growing at rates faster than the rate of growth of the demand for labor  (job creation).  And we as a nation are not noticing these two trends.  Period.

When the supply consistently outstrips demand over time, we have persistent unemployment.  It is an unhealthy situation (as we would have with when supply of manufactured goods exceeds their demand we would have a drop in prices, when supply of rainfall exceeds demand for water, we have  rising water levels, when supply of migrant influx exceeds rate of city planning we have slums, and so on).  Unemployment is a function of how these two variables are behaving relative to each other.  Period.

And should the problem be led by the supply of labour, we need to be realistic to expect that the demand for labour (be they by job vacancies by the private (employment) or the government sectors (education, employment) will grow fast enough to overtake and get rid of the state unemployment in the country.  Seeing scenes of citizens walking the streets looking for jobs is here to stay.  Period.  Again.

What influences the supply of labor?

The rate of supply of labour is influenced by the rate of the population’s growth (i.e. procreation).  The only issue is the supply we see today of twenty and thirty-year olds in the labour market, was set into motion twenty or thirty years ago.  By the population.  The children born then have today become the youth and labour of today …. and therefore today’s unemployment.

In most cases, the populace do not see the relationship of the birth-rates of yesteryears (well pretty much like what happens between the sheets and the timing of births) and much less so their impacts on the labor supply for tomorrow.  It is and is likely to stay “unrelated” in our minds for as long as these inter-relationships are not raised and discussed by all.  Instead, our mind replaces that (“vacuüm in our) thought by fears of our survival or security for our future should “if “the one, two or three” dies or moves away tomorrow?” (this is the voice of the grandmother in the lesser developed  countries).  So, we multiply … mindlessly.

But there is a misconception and it is unfortunate!

Supply does not drive the demand for labour.  This  means, that ‘should there be excess labour’, it is not to say that the demand for labour should go up.  It could go up for compassionate reasons but not on economic grounds.  We forget that in reality, it is the demand for labour that drives its supply.  Period.

What influences the demand for labour?

I sometimes joke, it is often easier to “create children” than it is to “create jobs”.   But in both cases,  the “jobs” are done by the “same person” – Adults.  So well, how is it then that we do not see how we are attempting to solve a problem we have created by our own volition?

Also the mind that ‘looks for a job’ for oneself to feed my children, is not the mind that learns to ‘create jobs’ for others, including for our children.

So it is the fault of the ‘bosses’ for not creating jobs, or the ‘fault of the rest of us’ for not thinking about creating jobs for others (while we are busy trying to find one for ourselves)?

What influences our ability to create  jobs?

It is dependent on the propensity by the same adults of the country to grow the economy, i.e. the private sector.  It includes us defining the ability of the country (and sector / industries) to see :

  1. Capital, flow into the economy (and not the family only)
  2. Increase of the economy’s revenue and
  3. Reduction in the costs of running the economy
  4. Diversification of the economy (systemic growth)
As the margin between the two widens, so to does the country’s / industry’s capacity to see:
  1. Creation of further posts for existing employees to progress into
  2. With progression of existing employees in moving to higher level jobs, it leaves the posts vacant for younger entrants (youths) to more easily enter the labour market
  3. More likelihood of higher wages increase across the board for all

This is dependent on the systemic development (what diversification could look like) of the economy, e.g. the story of the dairy milk production.

So, is this just a case of “not enough jobs”?  Yes? Given what?  We would need to complete the sentence … for everyone!

  1. What should we be doing today to solve the problem of  unemployment?  Who is the ‘we’?  The government?  The private sector?  The public sector?  The citizens?  The male or the man (the demand for labour?)?  The female or the woman (the supply of labour?)?
  2. What, in your view, would  citizens need to understand about these realities before they begin ‘discussions about unemployment’ in the country and to figure their own ways to turn the situation around?
  3. When should we be thinking about the solution to the problem?  When we create the problem or when the problem leads us to another problem?

What are the roles of the wife, mother and the man in turning these situations around?

Which role as a woman does she have an impact on the growing the demand for labour?

Which role does she have an impact on growing the supply of labour?  What is motivating her?

What roles are the men play in each of their relationships with these women?  As the son or the man?

Which role of the man helps grow the demand for labour (job creation) in the economy?

As the son or the man?

But this reasoning almost also begs the question, what were we doing when ‘the spark’ sparked the problem?

Sleeping, you say?

Ahh ….. SURE!

World map showing countries by nominal GDP per...

unemployment rate

English: unemployement rates in OECD countries...

Image via Wikipedia

English: Unemployment rate in Europe (UE) and ...

Image via Wikipedia

English: selfmade image of U.S. Unemployment r...

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Population, Landscape, and Climate Estimates, v3: Population Density 1990, Africa (Photo credit: SEDACMaps)

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Global: Settlement Points (Photo credit: SEDACMaps)

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by sheilasingapore

Regional Article 2: What really caused the eurozone crisis? BBC News Dec 22, 2011

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As you read the article. notice how many times we broke the laws of dynamic complexity.  These laws govern the nature of dynamic (recurrent problems) complexity.

I see three laws here.  They are laws 8, 6 and 4.   I have listed the laws against the text of the article below and the explanations at the end of the texts.

There are more.

Show us what you see.

“What really caused the euro zone crisis? Dec 22. 2011 BBC News”

World leaders probably spent more time worrying about the euro zone crisis than anything else in 2011.

And that was in the year that featured the Arab Spring, the Japanese tsunami and the death of Osama Bin Laden. What’s more, 2012 looks set to be not much different. But as euro zone governments hammer out new rules to limit their borrowing, are they missing the point of the crisis?

Follow the path to find out.

Continue reading the main story

The euro zone has agreed a new “fiscal compact”

  • Euro zone leaders have agreed to a tough set of rules – insisted on by Germany – that will limit their governments’ borrowing each year to just 3% of their economies’ output. This is to stop them accumulating too much debt, and make sure we avoid we another financial crisis.

But didn’t they already agree to this back in the ’90s?

  • Hang on a minute. They agreed to exactly the same 3% borrowing limit back in 1997, when the euro was being set up.  It was the  German finance minister Theo Waigel who insisted on the “stability and growth pact”. What happened?

So who kept to the rules?

  • Italy was the worst offender. It regularly broke the 3% annual borrowing limit.  But actually Germany – along with Italy – was the first big country to break the 3% rule. After that, France followed. Of the big economies, only Spain kept its nose clear until the 2008 financial crisis; the Madrid government stayed within the 3% limit every year from the euro’s creation in 1999 until 2007. Not only that – of the four, Spain’s government also has the smallest debts to the size of its economy. Greece, by the way, is in a class of its own. It never stuck to the 3% target, but manipulated its borrowing statistics to look good, which allowed it to get into the euro in the first place.  Its waywardness was uncovered two years ago.
  • 3/9 Italy
    Worst offender
  • 5/9 Germany
    First to break rules
  • 6/9 France
    Offender
  • 9/9 Spain
    Top of the Class

But the markets have other ideas

  • So surely Germany, France and Italy should be in trouble with all that reckless borrowing, while Spain should be reaping the rewards of its virtue? Well, no.  Actually Germany is the “safe haven” – markets have been willing to lend to it at historically low interest rates since the crisis began.  Spain on the other hand is seen by markets as almost as risky as Italy.
  • So what gives?

So what really caused the crisis?

  • There was a big build-up of debts in Spain and Italy before 2008, but it had nothing to do with governments. Instead it was the private sector – companies and mortgage borrowers [@1  LAW #8] – who were taking out loans [@2 LAW #4] . Interest rates had fallen to unprecedented lows in southern European countries when they joined the euro. And that encouraged a debt-fuelled boom.
  • Good news for Germany…
  • All that debt helped finance more and more imports by Spain, Italy and even France. Meanwhile, Germany became an export power-house after the euro zone was set up in 1999, selling far more to the rest of the world (including southern Europeans) than it was buying as imports. That meant Germany was earning a lot of surplus cash on its exports. And guess what – most of that cash ended up being lent to southern Europe.
  • …bad news for southern Europe
  • But debts are only part of the problem in Italy and Spain. During the boom years, wages rose and rose in the south (and in France). But German unions agreed to hold their wages (and their personal spending) steady. So Italian and Spanish workers now face a huge competitive price disadvantage. Indeed, this loss of competitiveness  [@3 LAW #3]  is the main reason southern Europeans have found it so much harder to export than Germany.
  • …and a nasty dilemma
  • So to recap, government borrowing – which has ballooned since the 2008 global financial crisis – had very little to do with creating the current euro zone crisis in the first place, especially in Spain (Greece’s government is the big exception here). So even if governments don’t break the borrowing rules this time, that won’t necessarily stop a similar crisis from happening all over again.
  • Spain and Italy are now facing nasty recessions, because no-one wants to spend. Companies and mortgage borrowers are too busy repaying their debts to spend more.  Exports are uncompetitive.  And now governments – whose borrowing has exploded since the 2008 financial crisis savaged their economies – have agreed to drastically cut their spending back as well [@4 What Law is that?].  But…

Cut spending…

  • …and you are pretty sure to deepen the recession. That probably means even more unemployment (already over 20% in Spain), which may push wages down to more competitive levels – though history suggests this is very hard to do. Even so, lower wages will just make people’s debts even harder to repay, meaning they are likely to cut their own spending even more, or stop repaying their debts. And lower wages may not even lead to a quick rise in exports, if all of your European export markets are in recession too. In any case, you can probably expect more strikes and protests, and more nervousness in financial markets about whether you really will stay in the euro.

Don’t cut spending…

  • …and you risk a financial collapse. The amount you borrow each year has exploded since 2008 due to economic stagnation and high unemployment. But your economy looks to be chronically uncompetitive within the euro. So markets are liable to lose confidence in you – they may fear your economy is simply too weak to support your ballooning debt load. Meanwhile, other European governments may not have enough money to bail you out, and the European Central Bank says its mandate doesn’t allow it to. And if they won’t lend to you, why would anyone else?

http://www.bbc.co.uk/news/business-16301630

@1    When we state country, the one that comes to mind (obviously), it is the government (and therefore) the public servants are spending (the Ministers must be corrupt , etc.).  But the areas of the highest leverage, the citizen, the family, the industries stayed hidden behind the ‘name of the country’.  Law #8 says, the areas of the highest leverage are often the least obvious.  We need to be understanding this about ourselves and use it to turn the situation around.

@2   Taking loans out, which is borrowing money and spending money we do not have, is easier than freezing wages (and choosing not to spend the money).  Notice what we are avoiding.  We usually do not watch what we are avoiding.  We need to be watching both should we expect to turn a situation around.

@3  Loss of competitiveness shows how things have got worse after some time of seeing things become easier or better.  This indicates that the two (when things got worse and the things that got better) are interconnected.  As we appreciate the interrelatedness of these issues, we now begin to have a handle on the situation.

@4  What law is broken here?  Why do you say that?  Do explore the reasonings with each other.