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How to ignite economic growth

26/02/2012

How to ignite economic growth

The desperately needed economic grow in EU, to solve the debt crisis rises the question how to ignite economic growth in Europe. Economic growth can be created only by additional demand, while the supply in today’s under exploited production capacities will follow automatically. It has to be said, demographics of stagnant aging population of Europe, with essential needs mostly satisfied, can not bring within the existing paradigms the additional demand. So question is how could be created additional demand, and in what field of economic activity this demand is expected? Essentially it can’t come from housing, not from consumption goods (food + gadgets), not from transportation solution, (except only on the local level in underdeveloped regions), not from education and probably not from communication as well. The only field of expected growth in demand will be health care and medication, mainly in geriatrics. It seems to me not enough to compensate the downward trend in other fields.

So what could be the alternative to create the demand for the future economic growth? The answer has to be, technological breakthroughs, creating entirely new range of products, bringing with them new system of perceiving our daily life. As to the field of economic activity this breakthrough is expected, i would mention the fields with great deficits as Alternative Energy, Environment, Municipality and Public services. Is there any technological breakthrough in the horizon in these fields?  I am quite sure the answer is Yes!!!!….The predisposition to every technological breakthrough is an economic need. It happens (not surprisingly), the new technological findings, are focused in the same fields with great deficit.

Then, when the breakthrough will be? Hard to predict. Can we speed up the process of technological breakthrough? Probably not, but maybe in this very moment, somewhere in the world, a new breakthrough idea is incubating in a laboratory of research institution, or in a private basement or garage of a teenaged boy or girls home. Obscurely the economic crisis increased the chances for this kind of development. Before the crisis, after the dot.com crisis of 2000, the talents and energies of the creative-inventive people were focused on “financial manipulations”, the economic crisis changed it all, and with some help from the private and public institutions, a new environment of technological inventiveness can be created, that can help focus the talented into the fundamentals, “The invention of new technology”.

Can we help the process of incubation? Yes, by not letting the Politicians to follow their tendency to solve short term problems, and neglecting the long term solutions. To use resources to encourage consumption as tool for economic growth is short term solution and wasted in long run as non effective. To use resources in education and science is a long term fundamental. To save Greece is a short term solution, to save Euro and integrating European institutions is a long term vision. It can focus the effort of the talented elites into increasing productivity and not into manipulation of the national or whole European institutions. To bail out Banks from bankruptcy caused by short term approach of financial leaders is a short term step, to change the banking and corporate system, by taking the management of these entities out of hands of small group of self nominated oligarchs, and democratizing it, by giving it into the hands of the real owners, THE PUBLIC, is fundamental. To protect jobs for veteran employees is short term solution, to open the labor market to the unemployed youth is fundamental.

There is an urgent need for a new social and political contract, to push up hill the heavily loaded European and Western economy.

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