Recently a whole series of reports have started to suggest that we may be nearing the “end of the tunnel” of the economic crisis where, in bright sunlight, we will, no doubt find the “green shoots” that have been referred to so many times before. But if you read behind the lines designed to restore trust and optimism in our economic institutions, there is almost universal consensus that the recovery packages should be kept in place and that unemployment is likely to continue high and rising for a lot longer.
At the same time, many economists are starting to argue that the origins of the economic crisis do not lie in the irresponsible greed of financial managers – even though this may have triggered it off and made it worse – but in certain structural imbalances in the real economy. There is increasing evidence, that technological change is creating an increasingly polarised labour market and depressing the real wages and purchasing power of the “middle classes”. In parallel, inequality, poverty and insecurity is holding down domestic consumption in the emerging economies and creating massive balance of payments problems elsewhere.
In this context, who and where are the new consumers that are going to pull us out of the tunnel? What will they buy and how will this affect the economies of different types of country and city? When we venture a little further down the tunnel, other uncomfortable questions start to emerge. How can it be possible to raise the standard of living of the six billion people to the levels currently enjoyed by the one billion in the rich world without totally overheating our little planet – or radically changing our patterns of production and consumption? If those shoots are really going to grow in our cities it is going to take all our “innovation and creativity” – and quite a bit more.
Paul Soto
