Its my Friday lay day blog and today I have been working on social psychology and group dynamics today. I am trying to dig into how economic ideas forms and how they are reinforced by language, media, and the educational system. Many people have researched topics like this but we are aiming to bring it all together into a coherent framework with the added aim of developing a progressive language guide to advance the conceptual ideas that I research and write about. The events in the last few days in Paris have also given me cause for thought within this overall research agenda, given the obvious link with a particularly zealous interpretation of a religious script and the role of economic disadvantage and austerity in fostering what some might call medieval, at best, behaviour. The role of language and conceptualisation is also implicated. I don’t intend to write about the events though. I am not professionally qualified to provide any meaningful input and as an individual I have mixed views on it. I certainly wouldn’t be perpetuating the ‘Je Suis Charlie’ campaign but that doesn’t mean I excuse the behaviour of the barbarians. But barbarism has many forms as does terrorism, and one could easily argue that the sort of austerity that has been inflicted on nations like Greece and France has created a responsive form of terrorism that is more random and very dangerous.
The neo-liberal Groupthink has managed to convince societies that unemployment is an individual failing when before the 1980s we clearly understood that it was the result of a systemic failure of the economy to produce enough jobs.
It has been an extraordinary exercise involving associations between ridiculous and spurious articles being published in mainstream academic journals, vehement hectoring from politicians and business leaders etc, which has contrived a new nomenclature that has been relentlessly rehearsed in the media – dole bludgers, leaners, cruisers, job snobs, etc
Surveys show how successful this three decade campaign has been. Even though the robust research shows that a miniscule fraction of those who are unemployed would prefer to live on income support and never work, the reality is ignored as this carefully crafted message is pumped out without cessation.
There is a resistance from the inner crowd (the Group), which perpetuates the myth about unemployment, to anyone who dares challenge the mainstream view. The Groupthink is very powerful.
It then leads to poorly crafted policies, which fail to achieve any desirable goals and amount to state terrorism. But these failures have unintended consequences, most of which arise from the extreme social alienation that accompanies unemployment.
I became an economist because I considered unemployment to be a shocking blight that failed systems inflicted on innocent people. That was my motivation. I was completing my professional education (post graduate etc) as the neo-liberal onslaught was getting underway.
In the past, we (researchers at the Centre of Full Employment and Equity) have done work on estimating the costs of unemployment.
The following blogs (and one academic paper) provide our more detailed treatment of this topic:
- The daily losses from unemployment
- Daily macroeconomic income losses from unemployment
- Costs of Unemployment – academic working paper
It is well documented that sustained unemployment imposes significant economic, personal and social costs that include:
- loss of current output;
- social exclusion and the loss of freedom;
- skill loss;
- psychological harm;
- ill health and reduced life expectancy;
- loss of motivation;
- the undermining of human relations and family life;
- racial and gender inequality; and
- loss of social values and responsibility.
The Groupthink that devalues these costs and imposes harsh sanctions on the unemployed individuals and families who have to bear, disproportionately, the costs, is oblivious to the further consequences that arise from the losses.
I see the sort of terrorism we are worried about these days as fitting squarely within that frame. I consider one form of deliberate and well-organised state terrorism (fiscal austerity, deregulation etc) leads to a more random form of terrorism (for example, idiots who chant religious slogans and kill coppers in cold blood as they lie on a footpath and plead for their lives).
There was an interesting article in the Fairfax press today (January 9, 2015) – Recession hurts Japan’s fight to change suicide culture – which touches on some of these ideas.
It argues that:
Japan’s recent slide into recession wasn’t just a blow to Abenomics. For some in the G-7 nation with the highest suicide rate, it may pose a question of life and death.
As Japan has gone back into recession the suicide rate has risen again in Japan. The data shows a tight “between economic developments and suicide”.
The “optimism generated” by the early days of Abenomics “helped bring the number down” after the troubles of the 1990s had seen it rise sharply.
The article notes that Japan has a particularly cultural inclination to use suicide as a solution to personal issues.
However, the long-standing tradition of “harikari” aside, the link between suicide and economic performance (particularly unemployment) is a global phenomenon.
This article from the British Medical Journal (Published September 17, 2013) – Impact of 2008 global economic crisis on suicide: time trend study in 54 countries – is representative.
The Authors concluded that:
After the 2008 economic crisis, rates of suicide increased in the European and American countries studied, particularly in men and in countries with higher levels of job loss.
Last year, a comprehensive paper was published (April 2014) – The Impact of Fiscal Austerity on Suicide: On the Empirics of a Modern Greek Tragedy – which concentrated on the role of fiscal austerity and suicide in Greece.
It found that “Greece has historically had one of the lowest suicide rates in the world” but “in the aftermath of the 2008 financial crisis it has increased markedly”.
They also found that “Suicide rates in Greece and other European countries have been on a remarkable upward trend following the global recession of 2008”.
Their overall finding was that:
… fiscal austerity, higher unemployment rates, negative economic growth and reduced fertility rates lead to significant increases on overall suicide rates in Greece, while increased alcohol consumption and divorce rates do no exert any significant influence on overall suicide rates.
So the Groupthink that leads to governments around the world deliberately creating and perpetuating unemployment kills people even if indirectly. There are no ‘national manhunts’ for the policy makers and technocrats who are responsible for this form of terrorism. Instead, they all seem to be rewarded with high salaries and generous superannuation pensions.
Here is some evidence from Japan. The data is from the World Health Organisation (suicide rates) and the Japanese Cabinet Office (Real GDP growth). The suicide rate per 100,000 is available at 5-yearly intervals and goes back to 1950.
The first graph shows the suicide rate from 1950 to 2010 (blue) and the black straight line is a simple linear regression which excludes the first three observations (1950, 1955, and 1960) and shows the trend since 1060.
The first three observations were in a period of Post-War chaos and shame and appear to be outliers.
The point of the graph is that there has been a rising trend in the period after reconstruction and during the transition from strong growth to crisis (early 1990s) and then slower growth.
I constructed 5-year annual average real GDP growth rates in the previous five years of each suicide rate observation. The idea is that the last five years of economic outcomes conditions the mood of the day. It is just a rough measure.
The next graph has these real GDP growth rates on the horizontal axis and the suicide rates on the vertical axis. The black line is the linear regression trend between the two variables.
The red markers exclude the three observations for suicide rates (1950, 1955 and 1960) and the two trend lines correspond with the two samples.
Irrespective of whether I include or exclude the earlier suicide outliers, the relationship between economic activity (horizontal axis) and the suicide rates (vertical axis) is significantly inverse – higher real GDP growth rates are associated with lower suicide rates.
If I had more finely grained data (the constraint being the suicide rates) and used more sophisticated statistical techniques I would still find a strong inverse relationship between economic activity and the suicide rates.
Now, cross plots do not necessarily mean anything. To understand data we have to be able to relate the observations to conjectures about behaviour. It could be that these two variables are driven with a third causal variable and there is not actual causality between suicide and economic activity.
But more detailed research provides fairly solid evidence that in some nations, suicide rates are driven, among other things, by economic opportunity, unemployment rates, poverty etc. So it is highly likely that the inverse relationships shown are explanatory rather than spurious.
Back to my research on Groupthink.
No music post today – but have been listening to Jamaican singer Delroy Washington. Very smooth.
The Saturday Quiz will be back again tomorrow. It will be of an appropriate order of difficulty (-:
That is enough for today!
(c) Copyright 2015 Bill Mitchell. All Rights Reserved.