Every once in a while--and it does not happen very often -- something comes along that deserves to have a strong influence on government policy, individual behavior, and how business leaders align the pursuit of profit with their social responsibilities. I believe that two issues warrant such a designation today; and the implications are consequential.
The first is something I have written a lot about and it worries me greatly -- as an economist, a parent, and someone concerned about the most vulnerable segments of our society.
What I am referring to here is the real risk that, for the first time in nearly a century in most western countries, our children's generation may end up worse off than that of their parents. This sad state of affair is the result of a number of multi-year developments.
For too many years, our job creation engines were excessively re-oriented from competitive global markets to inwardly-oriented sectors that were taken to unsustainable levels (e.g., construction, finance, housing and retail). The result was an unbalanced and vulnerable labor force.
Our generation also overdosed on debt and credit entitlement. We got seduced by financial engineering, even believing that "finance" was the next (natural) stage of capitalistic economic development.
So we opted to de facto subsidize our financial sector. We sacrificed safety for the allure of the unquestioned efficiency of unfettered markets. And we fell in love with easy borrowed money, as opposed to earned income.
Too little genuine growth, too much debt, and a risk culture gone crazy culminated in the very messy global financial crisis of 2008 and its aftermath - a costly shock to society whose impact will be with us for quite a few years still.
Understandably, crisis management mindsets have dominated companies, governments, and individuals. And, as often happen, this has crowded out the important but seemingly not urgent.
For years, western societies have under- and mal-invested in education. As we slipped down global rankings, we convinced ourselves that our traditional global edge in entrepreneurship and innovation (which, thankfully, is still with us) could compensate for the failure to maintain a dynamic curriculum, engage our kids, and deliver to them an exciting and rewarding educational environment.
Not a week goes by -- indeed, not a day passes -- without a reminder of the toll that all this is having on society.
Government and market failures have fueled excessively high unemployment, unusually sluggish growth, loss of trust in key institutions, and recurrent concerns about the deficit. Absent a course correction by several western economies, we risk encumbering our children with lots of debt, structural unemployment, poor growth dynamics, a discredited financial intermediation process, and a dysfunctional political system.
It doesn't need to be like this. There are immediate steps that can -- and should -- be taken by governments to reduce the real and present danger of declining living standards.
It is about initiating proper reforms, setting sensible priorities, sticking to multi-year commitments, and nurturing a more enabling environment. And, as detailed elsewhere, effective implementation requires the trio of much faster political consensus on what ails the western economies, broad buy-in for a multi-year vision of reform, and detailed policy markers.
We should all hope that our politicians will step up to this important responsibility. But we cannot rely just on them. We also need to do more to help the next generation stand a better chance of overcoming the real threat of declining living standards - and this is even before we take into account critical sustainability issues that have to do with the multiple abuses of our environment and natural resources.
This leads to the second critical issue: how to better empower and enable our kids to take control of their destiny.
Critically, this starts with doing all we can to enhance education. You need only look at the latest monthly U. S. employment report to gasp its importance. Within the aggregate 8 percent unemployment, the rate for those with a bachelor degree is 4 percent compared to 11 percent for those that lack a high school diploma.
The prospects are even worse for those teenagers out of school. Joblessness among 16-19 year olds in the labor force is a stunning 24%. And the longer this persists, the greater the risk that this generation goes from being unemployed to unemployable. This possibility must not and should not be allowed to occur.
The implications go beyond encouraging the young to remain in school and a more effective financial commitment to the sector. Further progress is needed in evolving curriculums to ensure their relevance for today's quickly re-aligning world. And this evolution needs to be made more global, interactive and engaging, thus fueling the type of intellectual curiosity that anchors mental agility that is so helpful in today's fluid world.