Political economy and employment, effects of the financial crisis 2008-2009

One of the worse consequences of the financial crisis was the unemployment increase. According with the International Labor Organization between the years 2007 and 2009, the number of unemployed in the world passed from 177.7 millions of persons to 211.5 millions and the projection for the year 2010 is of 213.4 millions.
It is in the developed economies and in the countries of the European Union where the impact of the crisis was felt with most intensity. According with the ILO Global Employment Trends, January 2010, the number of unemployed in the developed economies and the European Union passed from 29 millions of persons in the year 2007 to 45.6 millions in 2010, 57% more in only two years. In the following table you can appreciate the change in the unemployment rates between the years 2000 and 2009.

These figures confirm that was in the developed nations and in Europe (Western and Eastern) where the financial crisis affected more the employment.
In September 2008 the crisis exploited with the collapse of one of the most important investment banks of the United States and since that moment began a chain of banks downfall in that country and in Europe, especially in the United Kingdom and Germany. The financial crisis it became in a social crisis and thousands of people loosed their homes, their goods and jobs in the rest of the world because of the relations of dependence and complementary between the economies.
The figures of unemployment in the United States are enough illustrative of the reality.

In the United States the unemployment passed from 7 millions of persons in the year 2007 to 14.2 millions in the year 2009, seven millions more in hardly two years, it means 100% more. These figures reveal the magnitude and effects of the financial crisis.
It do not reflect all the true
The official figures of the national and international agencies do not reflect the total unemployment reality. For a simple reason: those figures includes as employed the self-employed people, the workers of the informal sector of the economy and the workers that do not have legal rights. If these workers are excluded of the statistics of employed the unemployment figures would be very different. Important amounts of this type of workers exist in the underdeveloped nations, where millions of workers are out of the formal economy.
A growing demand
According with the International Labor Organization document “Recovering of the crisis, a global job pact”, page IV, of June 2009, “45 million new entrants to the global jobs market annually --most of them young women and men—some 300 million new jobs will need to be created from now to 2015 just to keep pace with the growth in the labor force…”
Is it possible to reach that goal?
The experience demonstrates that there is a gap between the supply and demand of employment.
The creation of jobs is linked to the economic expansion. Nevertheless, it is necessary to say that the modern economy is dominated by the intensive use of the resources of capital that –by mean of the technology-- everyday reduce the employment of workers; they are substituted by machines. That is the global trend.
The traditional economy sustains their development in the principle of the most benefit. The economy is very practice and would not change that concept by humanitarian reasons, as the creation of jobs. So that a change in the policy of intensive use of the resources of capital do not seems likely so far.
Other obstacle for the creation of jobs is the situation of the natural resources. A global shortage of resources as water and petroleum are already visible. The abundance of these vital resources is concentrated in too few regions of the globe: the petroleum in the Middle East and Venezuela and the water in the Amazonian region, but both resources are overexploited.
In South America coexist two contradictory phenomenons: the abundance of water in the Amazonian region of Brazil and the scarcity of water in the neighbors’ territories of Bolivia and Peru, as a consequence of the destruction of the Andes glaciers that provide the water to those regions.
The Inter American Bank of Development considers that in 5 or 6 years the Andes glaciers will disappear. It was assured by Juan Pablo Bonilla, Chief of the Climatic Change Department during the Annual Meeting of Governors of the bank in Cancun, March 2010.
The Andes glaciers are part of the mountain system of South America and are present in Argentina, Chile, Bolivia, Peru, Ecuador, Colombia and part of Venezuela.
A similar situation occurs with the glaciers of Himalaya that feed the main rivers of Asia; so that the crisis of water is a global problem that will be more intense in the coming years, affecting the live of the people and the economy.
A different vision
If there is not a change in the political and economical vision the problems of humanity will acquire an unmanageable dimension.
For example, it is necessary a new approach of the economy. The financial benefit must not be the most important objective of the economy and the business. The economy and the business should take in account the ecological and social consequences of the economic activities.
The scientist and technological development is something essential, but it is something essential also to give employment and just wages to the world population. It must have a balance between the economic objectives and the social reality; for that reason the economy should favor the technologies that give more employments to the workers.
Those technologies should consider also the ecological dimension. The pattern of consumption of natural resources employed until now is unsustainable at long term; the best example is how the forests have been destroyed in the entire world. We are now paying the consequences of the depredation.
In the Millennium Goals should be included in the first places the recovery of the forests. That is the unique form of to keep the live at long term.
The creation of ecological employments is a road for to achieve the economic and environment objectives. For example, the establishment of a Global Program of Reforestation sponsored by the international agencies and the governments is a way for benefit the world population. Millions of new jobs may be created through that program.
Other similar ideas might contribute to generate wellbeing for the citizens of the world. The political economy of the 21st century should have as main objective these proposals.

Political economy, overpopulation and demography

Which is the amount of inhabitants that the world economy and the individual economy of each country can feed?
In the last two centuries and especially in the 20th century the population growth had an extraordinary increase. For the 13th century the world population was approximately 250 millions of inhabitants. Five hundred years after, in the middle of the 19th century (1850) the population it multiplied by 4 until 1,000 millions of inhabitants, a growth of 300 per cent. In the following one hundred years, for the year 1950, the world population was 2,529,346 millions of inhabitants, 150% more. In the next fifty years, for the year 2000, the population grew 141% and reached 6,115,367 millions of inhabitants. The projection for the year 2030 is of 8,308,895 millions of inhabitants, 20% more in only twenty years, as you can see in the table:


Source: United Nations, Department of Economic and Social Affairs,
Population Prospects: the 2008 Revision, New York, 2009 (Advanced Excel tables)
Last update in UNdata: 18 Jun 2009
Next update in UNdata: Apr 2011

In the mentioned historic period only a small number of countries accumulated an extraordinary wealth, the United States, Japan, and some nations of the Western Europe, while the rest of the world stayed in condition of poverty.
For a best comprehension of the reality it is necessary to say that inside the own developed nations exists the same pattern of wealth distribution that exist at international scale, because a good part of the developed nations population is affected too by the poverty.
Which are the true causes of the poverty?
Is the great population growth one of the poverty causes?
In 1798 the philosopher Thomas Robert Malthus (1766-1834) published his Essay on the Principle of Population as it Affects the Future Improvement of Society. Malthus foresaw two essential issues: a) the accelerated population growth and b) the limitations of the food production.
The figures showed in the previous paragraphs demonstrate how the population has increased in the last centuries. The projections for the coming years confirm the trend until now. A very important fact is that the most growth will occur in the underdeveloped nations.
What is overpopulation?
In a region, a nation or a city there is overpopulation when the economy ---with their available resources--- is not able of producing neither the food (basic goods) nor the formal employments for a portion of the population of that region or place.
It is different when the economy produce enough goods but maintain the most of the inhabitants employed with miserable wages or sub employed; this situation occur in many regions and in many countries; in this case does not exists overpopulation but overexploitation of the workers.
The economy may generate a great production (surplus) and, nevertheless, do not create sufficient number of employments ---with appropriate earns--- for giving welfare to the population.
In the modern world the productive systems use intensive methods of capital that displace the workers and substitute them by machines; when this happen the jobless affects an important number of people. In other societies the workers are practically slaves with large work-days and insignificant wages.
There is overexploitation of the resources when the production surpasses the needs of the market and big stocks of goods remain accumulated.
On the contrary, there is sub production, when the economy can not generate the sufficient goods for satisfying the market needs, the demand of a region, a country a city at accessible prices.
Population and production
They are two faces of the same coin. In theory, the objective of production is the benefit of the people and the objective of the people is producing for fulfill its necessities.
But this does not happen ever in all the societies. Sometimes, the objective of the producers and the merchants is to obtain the most income, no matter how, employing the minor effort, this mean, speculating with the goods and services that they produce or sell; it is the culture of the speculation.
When that behavior is followed by an important number of entrepreneurs, the consequences are the big economic crisis; the modern world has many experiences in that sense.
Causes of the overpopulation
There is an optimal amount of inhabitants that can live in a place; when that number is surpassed begin the problem of overpopulation.
It exist many causes for the overpopulation, among them, the natural birthrate increase, the development of effective health programs and the reduction of mortality. But there are other social important social causes like the search of employment or best conditions of live that attracts big human groups toward determined regions, countries or cities.
The migrations are a form of to export the overpopulation problem since a place toward other place. It occur inside the own countries from a region to other or between nations.
These big movements of human groups generate important politics, economics and social changes; one of them is the concentration in determined geographical areas. This concentration, in turn, provokes other new big problems.
Effects of the overpopulation, the collapse of the cities
In many countries of the world there are clear examples of overpopulation; some emblematic nations are China, India and Japan.
In America, cities as Mexico, Sao Paulo and New York are considered overpopulated zones.
The economic and social problems in the overpopulated areas are growing: jobless, sub employment, drugs, destruction of the family, crimes, traffic chaos, pollution, problems with the basic services supply as electricity, water, waste, among other effects.
One week ago I visited a Latin American city that in only few years ---as consequence of the overpopulation--- changed its style of live. I knew that city ten years ago but now I could not recognize it: lack of electricity, traffic jam unbelievable and pollution. This was one of the most pretty touristic cities of the region but in only few time the situation changed radically. That experience inspired me to write this reflection.
The concentration in the urban areas is a phenomenon proper of the industrial development. In the underdeveloped nations the number of farmers and peasants that leave the rural areas is everyday superior. This fact contributes to enhance the population en the urban areas that usually can not answer to the demand of the new inhabitants.
Impact on the agriculture
The abandon of the country has other grave consequence: the food production diminishment. When a farmer leaves the country the agriculture loses an important support.
One of the pioneers of the economy, the Physiocrats (18th century) thought that the agriculture was the main source of the wealth of nations. They were not very far of the true, because is from the Mother Nature from where man obtain the resources that employ for to satisfy its needs.
The secondary and tertiary sector of the economy receives their inputs from the primary sector; this confirms the importance of the last one.
Policy of population
There is some indifference regarding the policies of population. Few states have integral policies in this matter. Usually the affairs of population are considered since a partial point of view, for example, when the migrations become a problem, but a holistic vision of the theme is not common.
An integral policy of population has to consider the politics, economic and social effects of the changes in the behavior of the big human groups, their natural growth, their distribution in the space, the natural resources use, environment, employment, basic services and the immigration, among other issues.
Some experts have assured that the demographic explosion and the nuclear war are the two great threats to the humankind surviving. And it is true that if the growth pattern followed until now continues, in too few time the world will face most serious global problems of surviving.
Already it is visible the water scarcity, the running out of petroleum in some areas (Indonesia, for example) and the vulnerability of other regions like the North Sea. The resources of the oceans are diminishing in an accelerated form while the contamination affects the agriculture lands worldwide by effect of the use of pesticides and other chemicals. Moreover, the destruction of the forests is causing a huge damage to the live in the entire world.
The food production, especially of cereals, is concentrated in few countries and the scarcity of water is a true menace for the vegetable and animal agriculture.
While some developed countries face the situation known as demographic transition (a growing number of senior citizens) and a reduction of the birth rates, the underdeveloped nations experiment the contrary phenomenon. This fact lead to an unavoidable situation: the poverty increase at medium term.
Demographic policy
The policy of population is the macro, the global concept. In change, the demographic policy it refers only to the population reproduction. So that a demographic policy encompasses the measures for enhancing or diminishing the population birth rate of a region, country, area, etc.
The demographic policy is not only a problem of each country; it is a global problem that deserves to be deeply studied by the international agencies, the universities and the prospective studies centers. It is a problem that affects the present and the future of the entire humanity.
Together the climate change and the preservation of the forests, the population growth perspective should be a priority for the countries and the international community. It is not enough to attend the climate change but the population growth too.
The political economy main objective is linked to a purpose: the wellbeing of man and this depend of the amount of goods available for to distribute; in turn, this depend of the population size.