Wednesday, 16 January 2013

Inequality in an age of economic slowdown

The economic aphorism 'a rising tide lifts all boats' posits that when times are good, everyone benefits, from the richest to the poorest. Wealth trickles down through society as oligarchs and plutocrats spend their billions on yachts, and yacht manufacturers spend their profits on new mansions, and mansion builders' bricklayers spend their earnings on haircuts, restaurant meals and consumer durables, thus passing money on to hairdressers, waiters and shop assistants. And haircare product manufacturers, cattle farmers and truck drivers. And so the whole economy turns, and growth begets growth.

But when growth stutters to a halt - for whatever reason, a bubble bursts, easy money runs out, greed turns to fear - what then? Does a receding tide lower all boats?

This question was prompted by an e-mail I received last week from a reader referring to an article about Łódź which appearing in British tabloid The Sun. (Moni said that this piece did the rounds of students Łódź film school too.)

Now, Łódź is an outlier among larger Polish cities in that its unemployment rate is about double that of the rest (November registered jobless rate in Łódź 12%; Warsaw and Poznań 4%, Katowice 5%; Kraków, Tri-City and Wrocław all 6%). Yet even so, I was shocked to read in the e-mail that the author's uncle, a security guard, was earning two years ago 7.50 złotys an hour, then had his contract changed to 5.60 złotys an hour, and it has now been cut to 5.30 złotys an hour. That's £1.05, UK readers! How can one survive on such money?

This e-mail has haunted me all week. Inequality has always been with mankind and will remain so as long as we remain mammals. "There's only winners and losers/Don't want to get caught on the wrong side of that line," sang Bruce Springsteen in Atlantic City (from his utterly excellent album Nebraska, which belongs to the ages). "Poor man wants to be rich/Rich man wants to be king/ And a king ain't satisfied until he rules everything," sang Bruce Springsteen in Badlands, staking his claim to understand human nature as well as Shakespeare himself.

Take a peek at John Steenbeck's Grapes of Wrath, an earlier, far deeper, economic crisis - at times like this the Top Dog will growl more fiercely to exploit the exploitable. There is another aphorism in business: "Why does a dog lick its testicles? Because it can."

I remember the campaign against a national minimum wage in the UK - it failed. Society, through its elected representatives, decided to draw a line on how little man can pay fellow man. The dog no longer could.

Is inequality a measure of a lack of civilisation? Some ten years ago, I was talking to the boss of a Finnish company based in Poland. He'd just arrived here from Moscow. "In Helsinki, I was earning four times more than my office cleaner. In Poland, I'm earning 40 times more. In Moscow, I was earning 400 times more."

And here's a slight flaw in my argument; we nice Europeans can enact Directives to determine the limits of man's exploitation of fellow man, but in other less enlightened parts of the globe, it is the Directive of the Jungle that determines wage rates.

Porsche, Rolls-Royce and Jaguar Land Rover have all enjoyed record sales last year. "Kryzys, Panie! It's the crisis, mister! We have to cut costs! Tighten belts! More for me, less for you." This, then, is the nature of man, an intelligent mammal, but a mammal nonetheless.

We need to understand our nature, and rise above it.

This time last year:
The Palace of Culture: Tear it down?

This time three years ago:
Conquering Warsaw's highest snow mounds

This time four years ago:
Flashback on way to Zielona Góra

This time five years ago:
Ursynów, winter, before sunrise


Bob said...

Ewa's brother is making about 5.5 PLN an hour as a security guard up in the Tri City area.


DC said...

Finally some love for the little guy. Hooray!