Never Die EU The Unthinkable!

Before talking about any economic solution, we should start by doubting the impact of the welfare model! Then we should be doubting the impact of endogenous growth theory! Then the digitalization and finally GDPR! 

Why this doubting? 

My perspective is to move forward from these doubts towards one fair solution that eliminates them all with detailed know-how. 

The corona crisis, when it eventually passes, will leave recession, unemployment and extensive damage to European industry. The right blueprint to relaunch the EU economy is therefore needed now. The compass of this blueprint should point at basics of the future welfare economy. It is the time for re-thinking the overall approach and launching a new initiative for real welfare for the next generations.

Endogenous Growth and Welfare Paradox

After 30 years of work, in 2018 Paul Romer won the economy Nobel prize for his work “Endogenous growth theory”. Romer’s work, called the “idea economy”, puts people and their ability to innovate at the heart of the economy. Knowledge is the basis of economic growth, the enhancement of human capital is therefore the key for pursuing technical knowledge to drive sustainable, long-term economic growth.

Paul Romer was the first economist who linked the economics of ideas to the economics of growth within a coherent macroeconomic framework. Endogenous growth theory will continue to play a role in the expansion of the frontier of knowledge on the determinants of long-run prosperity from a macroeconomic perspective, and of the process of economic development through catch-up growth. 

At this point, innovations are mainly happening inside institutions, start-ups, open innovation platforms etc. and usually, companies, innovators, researchers are the ones who get compensated through claiming their rights.

On one hand, this is great for them but on the other hand, the mainstream citizens are overwhelmed by the rate of innovations and their limited buying capacity (consumerism). In the same time due to the advances in automation technology, companies prefer to reduce costs and jobs, leaving again, more citizens feeling tightened hands. This is not the end of the story, companies in the open market developed personalized targeted advertisement technologies, which aims to increase consumption. This limitation is a built-in problem in the economy, of course, the loan is a temporary analgesic but unfortunately, it makes the problem even worse in the long run. 

It is quite unusual to hear that the global financial debt has never declined since it started, rather it's ever increasing. This goes in a vicious cycle of loss on both sides of the labor and financial markets.

The big economic question is – and has always been – what will happen if debts cannot be paid?

Something Michael Hudson, Professor of Economics at the University of Missouri, is talking about in his book “Killing the host”. In all eras – from antiquity to the present – debts have tended to mount up faster than the ability of most debtors to pay. That is a basic mathematical fact: economic growth is arithmetic and can’t keep up with the exponential growth of debt with growing compound interest.

Meanwhile the rate of innovation is affecting consumerism. This vicious debt cycle will go on forever until there is a relative solution comes to tie the rate of growth of business with the growth of people’s income. 

Digitalization and Talent Paradox

The increasing role of technology and the globalization of today’s world have significantly influenced the way people live, work and do business. Digitalization has transformed our careers by generating an enormous number of career options and possibilities, fostering mobility, facilitating communication and cooperation. At the same time, it speeds up the pulse of life and work rhythms, enforcing individuals to cope with constant change in their lives and environment. 

When change is normal, people face multiple transition phases throughout their lives. Careers no longer are built on seniority and experience within a sole company, and individuals will pursue careers with multiple employers rather than a job for life. Discontinuous work biographies become more usual; periods of job-seeking, unemployment, and re-orientation are becoming the norm. As a consequence, career security - a person’s ability to move on or up, independent of their employer - is replacing job security. The youngest generation at work (the Millennials) are very open to jumping from job to job: 44% are not expecting to stay in a job for longer than two years, and only 16% of Millennials are expecting to still be in the same job after a decade.

On the other hand, in 2018 OECD published a report about the hazards of digitalization on mental health especially with children and young people, That the reliance on digital technology has fueled concerns from parents, teachers, governments and young people themselves that digital technologies and social media are exacerbating feelings of anxiety and depression, disturbing sleep patterns, leading to cyber-bullying and distorting body images. In response to these and other concerns, some countries are taking action e.g. legislation prevents Korean children from playing online games that require a resident registration number between midnight and 6 am without parental permission; while the government of the United Kingdom is reviewing how social media affects children's wellbeing, as well as how much screen time is health

Digitalization has significant impacts on labor markets, and the world of work could see a lot more cognitive and physical instability. The old approach to career life, development of skills and qualifications won’t be effective any more until there is s proper standard technology protecting people from digital hazards.

GDPR and Consent Paradox 

We have to accept the reality of the dual world since the digital world i.e. internet became a place for people to spend their life more or less in the same way as in the real world. Now internet is already a place for learning, healthcare, economics, financing, business, socialization, entertainment ect. 

GDPR obligates the technology provider only to collect data from users after a written consent. Consequently, providers enforce users to sign the consent as it is very unlikely anyone is going to read it since otherwise, they can’t use the service. It happened, that the consent became a flaw in the GDPR giving the technology providers a legal agreement to collect and use the data for more targeted advertisements and once again more consumerism pressure.

Right now, with this flaw in the GDPR, nobody knows what they are giving up for sure. And because the monopolization is taking place by giant technology companies mainly from outside EU, people don’t know what they are going to be involved in the future. It might be that with the progressive speed of emerging technologies, 5G,6G and quantum computing, the advertising models will become the digital cancer of the economy, and it is the job of the governments to stop it. 

This potential threat can’t be avoided except by inventing another model for advertisement that allows win-win situation between businesses and consumers. 

Eliminating the Doubts 

Economic growth has been the interest of all the economists and Romer’s work “Endogenous” growth came as contradictory to Robert Solow’s work Exogenous Growth. Solow was awarded the Nobel Prize in 1987. Although, the fundamental difference between Solow and Romer, is in their opinion about what are these factors which promoting economic growth, is it external or endogenous! As they both won Nobel price, it sounds that both together are right but not individually correct. Growth is much more dynamic and complex subject rather than a single theory and a matter that needs testing in labs through modeling. 

In this regards I’m quoting the Europe Correspondent from Irish Times, Naomi O’Leary in her article Apr 29, 2020, why it is time to throw out old certainties, starting with economics: 

“It’s closer to sociology than chemistry. Think of it this way. Biochemists searching for a vaccine can test in the laboratory whether it works, or it doesn’t. Economists can’t do that to test their hypotheses about unemployment or the relationship between oil prices and the housing market. These are hugely complex phenomena that depend on the whims of the most mysterious and unpredictable of variables: human beings. Economists will tell you they build mathematical models to simulate these conditions that are just as clever and complex. These can be useful. But their limits are demonstrated by their poor record in predicting the future.” -End of the quote-

She questions if economy is a mathematical science and if its math can be created in a lab.

Solow, Romer and O’Leary; again, we will find that they are all right, and they made their point but again none of them has individually got it all! If we check this paradox phenomena more closely, we can see that the main reason is uneven growth and power between people and businesses.

The businesses would like to obtain data, use the talent, increase innovation and utilize more targeting advertisement technology. On the people’s side this means more consumerism as well as physical and cognitive exhaustion. This uneven relation is the main issue in this dilemma, but if there is a way to bring people and businesses in one economic environment with relative growth relation, then we can eliminate the paradox.

This is where the Relative Growth Theory comes to the picture! 

Never Die Volume I – “3.0 Paul Romer’s” is about finding out what is wrong with the endogenous growth and moreover moving quickly to proposing the know-how to fix it, taking the Digital Single Market (DSM 2.0) as an ideal example to show quick results on the EU digital economy. 

Never Die Volume II – “Innovating Citizen” is an easy and simple innovation learning for every Citizen based on Carl Jung Psychology. As the main and first step to help people to gain even power to grow at the same time as a business.

The science behind this knowhow is carl Jung psychology, I have been working on the digitalization the innovation process standard 10 years ago and the proof of concept is done. I have described it in volume II of the relative economic theory “Innovating Citizen” how Carl Jung Psychology can be helpful to create easy learning for the innovation process.