What We Don’t Know…Is Hurting Us!

By Shlomo Maital


“What you don’t know can’t hurt you!” I wonder if anyone ever said anything dumber. What you don’t know will hurt you and always does. And what is worse, what you don’t know that you don’t know, THAT will do you in for sure.

I am an economist. We pretend that we understand how the world’s economy works. Do we really? Didn’t the 2008 global crisis, and aftermath, prove anything? That we did not know enough to predict it, and worse, did not know enough to know how to dig the world out of the mess it was in (the ‘austerity’ camp fought the ‘spend/spend’ camp, confusing the world totally).

   So the first step in dealing with this problem, is to try to KNOW and define what we don’t know. Here is a partial list:

   *  Globalization: Globalization is the process in which nations of the world together moved toward freer movement of goods and services, people, information, technology and capital across borders.   It has generated unprecedented wealth for those individuals, businesses and nations clever enough to become globally competitive and join the globalized ecosystem — $150 trillion worth, according to McKinsey Global Institute.   This is mainly true of Asia, including China but not solely.   It also left left out individuals, businesses and nations not able or willing to become part of the global system.   Some have thrived in the globalized world; many have suffered.    Economists say opaquely, it’s “Pareto-optimal” (winners can compensate losers, with lots left over).   I say, economic borders are being restored because those losers are finally revolting, after being ignored and neglected.

   In the era of Trump and his Wall and anti-globalization backlash:   How can the benefits of globalization be distributed more fairly and how can the inevitable losers to globalization be compensated, without ruining the energy and freedom that drive globalization and without seriously disrupting its benefits?  

* Global aging:   Large parts of the world are aging demographically. Yet the issue of how to set aside adequate resources for the retired and elderly has barely begun to be addressed.   How can we ensure that the retired and the elderly live in dignity without imposing an unfair or unbearable economic burden on working people and the young, and prevent a war between the generations?

*   Global Capitalism:   History shows that socialism, based on state ownership of key assets, has failed.   But it also shows that capitalism, the system of free open markets, has not fully succeeded and continues to endanger our fragile global ecosystem. The fundamental causes of the 2008 financial crisis and ensuing recession have not been remedied.     What new, basic economic architecture can create a system that is good at both generating new wealth and ensuring its distribution is fair and equitable, within a system that is not prone to repeated, frequent collapse?

   *   Global Social capital:   Social capital is the summed present value of the bonds of love and friendship among family, friends, neighbors and communities, that generate mutual support and security. Financial capital is tracked to the last dollar; social capital is hugely important, gigantic in size, yet is not measured, tracked or fostered. Growing urbanization has begun to diminish social capital and hamper its formation.     How can we reverse the decline of social capital, measure it and expand it, in a world where urbanization and the anonymity it creates are destroying the crucial social bonds that once enhanced lives everywhere?

*   Global Search for Meaning:   How can better-off individuals, businesses and nations the world over find new meaning and purpose in life, other than acquiring more and more goods and services — proven to be ultimately disappointing, unable to bring true happiness? How can we rebalance present-future choice and make the future what it once was, without crashing the borrow-and-spend system?

     Economists and politicians lack viable answers. They’re hopeless. Can social entrepreneurs can come up with some initial answers and find ways to try them out? At the least, we will know what we don’t know, before it kills us. Let entrepreneurs everywhere work on these global life-or-death dilemmas, rather than invent another app that will show how far we’ve jogged.