Job loss and the inability to find a new one breeds a cesspool of discontent, people feel marginalised and depressed, radical and splinter groups then swoop in to take advantage of people who have lost hope and brainwash them into believing in less idealistic futures for themselves and their families. The sooner people wake up to that the sooner we can put things right.
Governments need to focus less on cheap money and more on ways to encourage the creation of good jobs, that is the simple answer. One can dance around any issue any way they like but the bottom line is that when people lose their job they also lose hope and that then starts a contagion.
Individuals are the global economy and right now they need confidence not credit. Good jobs aren’t created by cheap credit, it’s not that the Banks won’t lend, it’s more that at this current point in time small and medium-sized businesses aren’t asking for loans because they are not in a state of mind to stick their necks out and grow, and it’s because they lack confidence because they don’t have the spirit to grow.
Right now big companies are reducing jobs in order to cut costs and continually move the needle on their share price, however we need to remember that it’s the small and medium size businesses that ultimately fuel job growth. And the entrepreneurs and innovators start small businesses, not big ones. America will not have new good jobs in a thriving economy until GDP is growing consistently. There is however a disconnect in the generally accepted formula of how much GDP growth is needed in order to have a significant effect on the unemployment rate.
Much of this can be attributed the the technological advances that have been moving through economies and reducing the need for workers, increases in robotics and artificial intelligence have also been a factor. Deflationary fears in Europe continue to haunt authorities, and no matter how much cheap credit becomes available until enough confidence is restored to be job accretive these fears will persist and most probably worsen.
Coworking and collaboration centres can save economies. Rather than having individuals working remotely in coffee shops or alone at their kitchen table put them all together in a cool Coworking environment with fast internet and connectivity then let the creativity of the individual loose.
As people collaborate and communicate they grow, their businesses expand and they need more people. Coworking can save the the economy, it is just that in many countries it is ahead of its time. Recent studies are showing that cities with a growing Coworking population are becoming the global innovation leaders and are creating jobs.
Behavioural economics holds that men and women are more irrational and emotional than rational when making life decisions. For instance, why do people tend to sell their best performing stocks and hold their worst performing when they need liquidity?
The answer lies somewhere in the fact that losing $100 feels worse than finding $100 feels good. Classical economics assumes that they would feel exactly the same.