Up to the mid 1990s, the advanced economies largely succeeded in delivering the promise of growing prosperity for the majority of their citizens. Prosperity was built on post-colonial systems exploitation of resources … and by and large the sharing of that prosperity was anything buy equitable for those outside the advanced economies. The people who created wealth by providing the resources (raw materials, minerals, labour) benefited the least from it.
But that huge issue aside, the promise of growing prosperity in advanced economies has disappeared for Millennials, and is risky for those aged up to 30 – and for women most of all.
In its place is a blame culture – a desire to deflect the failings of a political elite by scapegoating groups within society.
I digress, back to our subject …
Since World War II each generation has assumed they would be better off than their parents. And that assumption has largely proved correct. Economic and employment growth over the past 70 years has seen households experience rising incomes, both before and after taxes and transfers.
BUT, as recently as 2005, all the indicators started to show another picture.
Between 2005 and 2014, real incomes in the advanced economies flattened or fell for 65 to 70 percent of households – that’s a real impoact on more than 540 million people (see above).
Sure, government transfers (welfare benefits) and lower tax rates (another kind of welfare benefit) mitigated the impact in some ways. But the fact remains that up to 25% of all households still saw disposable income stall or fall in that decade.
The longer term picture doesn’t look much different, for some, it looks worse. Automation and the way jobs change as a result will still affect up to 20% of the population. Add to that low birth rates and an ageing population. It all adds up to a greater proportion of money going out in transfers relative to income. All this disproportionately affects the young, and single women.
Poverty wears a young face. This is the new reality. We need to look at things differently, and fast.