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The age of fear is here: why social cohesion can blow up


When the Great Recession began to be left behind, the covid arrived, then the war and now the energy crisis. Society seeks new economic answers to the many uncertainties that surround us

All societies that arise will one day perish.

In one of the most influential books of the end of the last century,

The Collapse of Complex Societies

(1988), Joseph Tainter, an anthropologist, argues that “societies are fragile and transitory”.

“Almost all that have ever existed have disappeared.”

In recent years, society has equated the concept of collapse with that of "fragility", "resilience", "risk" and "sustainability".

And while the past never solves the problems of the present, it does give clues.

The Bronze Age (about 1177 BC) faded from Europe by droughts, earthquakes, famines, political strife, mass migrations, and the closure of trade routes.

So far, so familiar.

Credit Suisse bank warns that we have created “worried societies”.

The pandemic, inequality and poverty, unemployment, financial and political corruption, violence and inflation lead those nights when sleep hides in the corners of the room.

"The great problem of our time is inequality," Daron Acemoglu, professor of economics at the Massachusetts Institute of Technology (MIT) and recurring Nobel candidate, observes by telephone.

People are worried.

High rates of inequality mean that the economy is not working well and is contrary to the inherent sense of fairness.

In Spain —latest data available from the OECD, 2020— the Gini coefficient was 0.32 (0 is total equality and 1 is complete injustice).

“The silver lining is that if people really care,

they could force our lethargic and corrupt politicians to do something”, criticizes Acemoglu.

For now, people trust the leadership of companies (55%) more than the res publica (44%).

Who transforms these percentages into a poem?

That other question from Vargas Llosa appears.

"At what point was Peru screwed up?"

In Spain, during 2019, there was an average of 566,000 households without income from work.

A year later it increased to 619,000 and in 2021 it remained at 620,000.

It is the memory of Carlos Martín, director of the Economic Cabinet of CC OO.

“Too much uncertainty —despite the positive effect of ERTEs and benefits for the self-employed— in thousands of houses and thousands of futures,” he reflects.

They cut the shards of time.

What will happen to my job and my family?

“It is unlikely that the policy will be able to reduce inequality to the level of previous decades,” laments Nicholas Barr, Professor of Public Economics at the London School of Economics (LSE).

Although progressive income taxes and redistribution of profits can help.

limited hopes

Statistics provide limited hope.

In the first quarter of 2022, the level of employment (20.08 million employed) was higher than that registered before the pandemic and the unemployment rate (13.6%) was only one point below that supported in the months pre-coronavirus.

Despite everything, unemployment continues to be the greatest concern (49%) in Spain.

It carries that echo of historical trauma just like inflation in Germany.

Faced with the cracks in the system, many economists look for an adjective that humanizes capitalism.

From “integrative” to “progressive”.

In Greece, its current thinkers are pursuing a new rhetoric.

“If they could choose, most capitalists would opt for an inclusive capitalism that generates less inequality, CO2 or injustice,” says Yanis Varoufakis, a former Hellenic Finance Minister and parliamentarian.

“But the truth is that no one does anything to achieve it.

And even if several heroically try, there are very few thinking of making a difference.

This type of capitalist is extinct.

In other words, capitalism cannot be the solution to the failures that capitalism itself produces”.

Geopolitics has crossed the red borders.

Europe is tired of counting the wars it has suffered and the sense of collapse grows.

"There is a lot of talk about inclusive capitalism, but you don't see it much," admits Serbian-American economist Branko Milanović, one of the world's leading experts on inequality.

“It was seen at the peak of covid-19, when rich governments made extraordinary transfers in support of SMEs, people who are unemployed or at risk of losing their jobs.”

It was the murmur of a collective conscience that was soon extinguished.

“The lesson is analogous.

We need social solidarity at a time of crisis: epidemics, trade confrontation, high inflation and wars that are real”, he sums up.


Between the last quarter of 2020 and the first quarter of 2021,

the value of Russian oil exports doubled.

From 16,000 to 32,000 million dollars.

During 2020, his war machine cost him 62,000 million (about 61,000 million euros).

The West has financed the offensive.

The oil companies want income, and society wants energy security.

Another almost virgin territory is an inflation unknown in four decades.

The Bank of Spain has warned that half of the collective agreements signed with 2023 in mind have indexation clauses.

Wages will rise according to rising prices.

“Germany, the United Kingdom and the Netherlands”, analyzes Swarnodeep Homroy, Professor of Finance at the University of Groningen (The Netherlands), “replicate this mechanism”.

Classical economics teaches that inflation can be controlled in a year.

But it will burn for a while.

“Deglobalization, the commercial split into two blocks and gaps in supply chains represent an added cost to product prices,” warns José Montalvo, Professor of Economics at Pompeu Fabra University (UPF).

Russian soldiers patrol the Ukrainian city of Mariupol on June 13. AP

And Ukraine is a vanishing point.

Never the center of the blue and white house.

The problems came before.

World trade in goods (sum of imports and exports) has fallen by four percentage points (47%) of global GDP since its peak in 2008. The planet's activity will only grow by 2.9% this year.

"And in many countries, recession will be very difficult to avoid," said David Malpass, president of the World Bank.

Meanwhile, we continue to turn around with the hope of the circular economy.

The Goldman Sachs bank calculates that it can add 4.5 trillion dollars to production in 2023 and about 25 trillion during 2050.

However, an unusual phenomenon occurs.

Inflation is polarizing.

In Mallorca or Marbella there are vacancies in the market, for example, for waiters, but their salaries (proportionally higher than the average) are barely enough to pay the rent.

A study by Rebecca Diamond, professor of economics at Stanford Business School, reveals the differences in the cost of living between cities in the United States according to their size and population density.

"There are brutal distances between the giant metropolises and small urban centers or rural areas," Montalvo stresses.

The same thing happens in Europe.

Our destiny is interconnected.

“There is no escape for complex societies.

No nation can individually collapse.

The entire world would disintegrate as a whole,” writes Tainter.

Despite slipping near the cliff.

The US military budget has grown from $138 billion in 1980 to $759 billion today.

Destruction defines our existence.

The cities are 6,000 years old.

A drop of dew in an ocean of time.

Human beings have lived on Earth for 300,000 years.

The Hebrew scriptures recall the annihilation of Sodom and Gomorrah, and in The Republic, Plato compares cities to animals and plants.

They are born and they perish.

In between, worry.

“We need to get a lot better at providing a social safety net in countries,” explains Kenneth Rogoff, professor of economics at Harvard University and former chief economist at the International Monetary Fund (IMF).

"But most of the interventions that have been proposed to redistribute income (for example, raising minimum wages) risk doing harm rather than help."

Rogoff believes that the withdrawal of globalization will help reduce many of the concerns of developed societies.

"Although it will be a disaster for poor and middle-income countries," he predicts.

Oil and wheat futures are already up 53% and 89%, respectively, since the start of 2020.

In Rome, the walker easily finds the FAO (United Nations Food Organization) building.

In a city where everything seems like it happened yesterday, the present is hunger that doesn't stop.

Between 702 and 828 million people (July data) suffered this misery in 2021. Some 46 million more human beings than during 2020. The future brings suffering.

In 2030 almost 670 million lives will face hunger.

8% of the world population.

It is the same figure as in 2015. That year the 2030 Agenda and the Sustainable Development Goals (SDGs) were created.

Ruins emerge.

“Food prices will remain expensive as long as energy is.

Because this means high costs for fertilizers and fuel for agricultural machinery”, forecasts Máximo Torero, the organisation's chief economist.

The problem is asymmetry.

Extracting more oil can be almost instantaneous, growing more grain requires waiting for nature's cycle.

The shortcut is to avoid food waste.

A way to feed 1,260 million people a year.

growing outrage

Along with economic scarcity, outrage abounds.

Credit Suisse has developed its own metric system to measure it.

It combines the crime rate, real house prices, their relationship to income, GDP per capita, life expectancy, and corruption.

They have measured six countries: Brazil, China, France, Germany, the United Kingdom and the United States.

And the graph is a steep climb.

More anger.

The pandemic has increased the billionaires in the United States to 686 people.

No matter how many problems they have, they don't even resemble the 700 million who go hungry.

Behind the desks limp.

"The educational system, which should offer opportunities following a principle of equity, has become the greatest source of inequality," emphasizes Mauro Guillén, dean of the Cambridge Judge Business School.

The family where one is born weighs more than the formation.

Virtual education (in the United States generates 2,000 million dollars) promised equity.

"But the widening of the digital divide during the pandemic does not bode well," admits the teacher.

A dashed dotted line unites education, business, and values.

Economists have a passion for coining terms.

The penultimate: “Woke Capital”.

progressive capital

Although there is no precise definition.

They are large corporations that “defend” social causes but without changing their own values.

“Chase Bank's Instagram post of a rainbow flag during New York Pride Week is an example of fake change,” writes Jay Caspian, columnist for

The New York Times .


Companies are part of the concern.

His narrative is, above all, demographic.

What will happen when the baby boom generation (over 55 years old) retires?

And from there, to the recurring discourse of youth and caring for talent.

“As workforces move away from the older generation and closer to the younger, organizations that offer flexibility, or convey that the work they do matters, will have an advantage in hiring,” predicts Vanessa Burbano, a professor at the Columbia business school.

Although the flexibility of the American labor market is not even similar to the Spanish one.

Americans used the pandemic to rethink the meaning of their working lives.

It was the famous Great Resignation in 2021 of 40 million workers.

"A profound wake-up call for companies to invest in their culture and their people," says Aymeric Gastaldi, manager at Edmond de Rothschild.

But they do not share thought.

The latest Supreme Court decisions reveal a highly polarized society.

One world collapses and another rises.

In between, worry.

"The war, the pandemic, the rise in prices and the climate crisis complicate the change towards a 'new normal', which we still do not know very well what it will be like," says Nuria Rodríguez-Planas, professor of Economics at the City University of New York (Queens College).

“We are in the middle of a transition without knowing where we are going, and with a huge need for leaders with a great vision.

Convulsive times are coming and there will be winners and losers from this whole process.”

Although perhaps we should leave pessimism trapped in its own fog.

A group of women displaced by drought walk with their children through the streets of Mogadishu, the capital of Somalia.

Farah Abdi Warsameh (AP)

Something difficult in a summer of fires.

However, the climate emergency is not among the concerns included in the index of discomfort developed by Credit Suisse.

Perhaps due to the attacks of populist politicians, a certain financial industry and activist who shake the three billion euros destined for sustainable funds.

The ESG (environment, sustainability and governance) ecosystem has been under threat for years.

Elon Musk calls it a "fraud";

Tariq Fancy, a former director of sustainable investing at BlackRock, warns of “a dangerous placebo”, and Desiree Fixler, former head of ESG at fund manager DWS, thinks the acronym is meaningless.

Entrepreneur Vivek Ramaswamy argues, in the

Financial Times

, that the real struggle of our time is not between the left and the right, but “between the managerial class and modern citizens.

It is the reincarnation of what happened during 1776 [Declaration of Independence] in the United States.”

Surprise the Church.

He understands, better than finance, that the market is incapable of guaranteeing social inclusion or care for the environment.

Pope Francis writes during 2015 in his Alabado seas (

Laudato si

): “The lessons of the global financial crisis have not yet been assimilated, and we are learning too slowly the lessons of environmental deterioration”.

Poor acronym.

“The integration of ESG into investment decisions is at a very early stage.

However, with time it will improve.

But you have to start somewhere!” exclaims Andrew Clare, Professor of Management at Bayes Business School (University of London).

Although the latest estimates advance a rise in the global average temperature between two and three degrees Celsius.

Too many powers disregard.

biblical plague

We were late.

The concern is already installed, because the families are not responsible for a pandemic or the war in Ukraine.

It's just like a biblical plague.

If they were locusts they would be like black flakes of snow devouring golden fields of grain.

But the deep risk is to weaken social cohesion.

The great threat is through the loss of purchasing power of salaries, pensions and social benefits.

One response —proposes Carlos Martín— would be an income pact that distributes the costs of the external increase in prices, energy and raw materials among companies, workers, rentiers and taxpayers;

protect the most vulnerable.

The anger in the streets is already being the response of Ecuador (allocating 3,000 million dollars a year to freeze gas prices), Ghana and South Africa to the rise in fuel and taxes.

Social unrest costs one point of GDP six quarters after the event that triggered it.

“The war in Ukraine has dealt a great blow to the prospects for economic recovery in Spain and Europe.

Unfortunately, if we are unable to tackle these problems [disillusionment, inflation], they could generate social frustration that would be very damaging to the cohesion of our societies”, warns Javier Solana, president of EsadeGeo and former secretary general of NATO.

Hope remains in the lyrics of Francis Fukuyama, perhaps the most respected political scientist of our time.

In September he will publish in Spanish Liberalism and its disenchanted (Deusto).

Let's trust his success.

The defenders of enlightened liberalism seem few but they are committed.

In Ukraine, millions of candles burn waiting for their prayers to be answered.

Humanity is tripping over its worst nature.

But it is heading towards a state of grace, a society that seeks a balance between economic freedom and inequality, that protects individual rights and promotes justice for all.

Sure, it's hard.

It requires committed citizens.

Although, as political analyst Joe Klein writes, any other fate "is unimaginable."

The gift of making a cactus wither

There are people who have the ability to walk into a room and wilt a cactus with their glow.

Donald Trump, Viktor Orbán, Vladimir Putin (who wants to turn Ukraine into a charnel house), Recep Erdogan or the populist architects of Brexit would be part of this unnamed economic school.

Personal security is one of the concerns that the Credit Suisse bank has detected.

It is moving that secret trunk that is memory.

The 20th century was 100 years lost.

Some 187 million people died in wars and conflicts.

The Spanish flu alone killed an estimated 675,000 Americans between 1918 and 1919.

The world has come through tougher times than the coronavirus and Russian greed.

Concerns are updated.

For example, cybersecurity.

The attack on the Colonial Pipeline in the United States in May 2021 demonstrated the virtual fragility of infrastructure.

The consequences were long lines at gas stations and flight cancellations.

"This shows how serious these attacks can be," endorses Reto Hess, senior analyst at the financial institution.

The FBI anticipates that this year the offensives will increase.

And the value of hygiene (something that the Greeks and Romans already taught) returns after centuries in a certain exile. 

But, fortunately, it illuminates a blue moon arc breaking on the western sky.

A carefree image.

This century is, without a doubt, that of women.

Companies with more than 20% in management positions —according to the work of Credit Suisse Gender 3000— achieve an EBITDA (earnings before interest and taxes) of 19%, compared to 17% of companies with only 15% or less in positions of responsibility.

True to its inertia, the world rotates and history returns to its main concern: inequality.

"I don't think anyone today can seriously argue that American democracy works well," reflects Daron Acemoglu, professor of economics at the Massachusetts Institute of Technology (MIT).

"And while we lack evidence that this is due to inequity, there is plenty of plausible evidence that high levels of injustice have been a force for corruption."

For example, quite a few people have turned to Trump's "authoritarian populism" because they feel they have been left behind economically.

"And at the same time, a small elite has been strengthened that controls, thanks to its contributions, the campaigns of politicians of both parties," warns the economist. 

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Source: elparis

All business articles on 2022-08-07

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