The Cruel truth of Growth and Inclusiveness
יוני 19, 20111. Growth can be achieved without inclusiveness – There are many who say that for growth to be sustainable it must be inclusive, meaning that the fruits of growth be divided among all who are a part of the society experiencing growth. But when one takes a look at case studies around the world one sees the opposite: In Israel today the economy is on a high-speed growth of around 5% (in 2011 it was 5.4%), which when compared to other countries in the world is spectacular (see Israel's central bank chancellor's, Stanley Fischer, announcement.
Never the less, in Israel today socio-economic gaps, reflected in all aspects of life, are of the largest ones around: Israel is ranked fifth in the severity of social gaps ranking in OECD countries (being 22% above the average of OECD countries, right after the US).
If the thesis of an inverse correlation between growth and social-gaps is right, how can this be true? Maybe this correlation holds only for the long run but not in the short and medium run? mmm, hardly so. Socio-economic gaps in Israel are an old and "grwoing" story.
So what about this correlation? well, Israel's case shows that growth and social-gaps may have a direct relationship; that growth can and may be sustained by the rise of socio-economic gaps (just to give a quick peek, Bedouins living in southern part of Israel, some 600,000 people, are not given proper health care and child death rate is 12 for every 1000 deliveries, while for Jews this ratio is 2 deaths for every 1000 deliveries).
2. Other case studies of growth and socio-economic gaps – Looking back on history gives us plenty of case studies to pick from. One sees that not only is there no clear correlation between growth and socio-economic gaps, but that the opposite is true – socio-economic gaps and growth in many cases come together.
Some good examples:
Colonialism – colonialism is a phenomenon which is researched through and through. For our matter, colonialism is a case where one society takes over another for the benefit of the other's resources, be they labor, money, minerals, wood, land etc. . When taking the United States it was shown that one of the reasons for its economic success is its history of slavery, which gave the US a large and cheap labor force for a long period of time. Israel itself enjoyed access to a cheap and large labor force – the Palestinians. But Israel chose the end of the 20th century to more or less give up this labor force for political reasons, preferring to import labor from developing countries, such as China, Hungry, India etc. Not a smart move on Israel's part but Israelis are still thinking on how to think so there is not much surprise there.
3. What can we learn from all this? Well, the way I see it, there is no necessity to create a policy of growth which is correlated with diminishing socio-economic gaps. This correlation is a political matter, not an economic one. When countries decide to link the two, they do it for political reasons while sometime giving up on potentially higher growth rates. I restrict this argument by saying that in some cases the choice of economic development on the back of the people instead of for the people gave rise to the collapse of nations or at least severe political upheavals and uprisings (such as seen in the Middle East).
One should be careful when concluding that "there can not be growth without eliminating socio-economic gaps" and give more time for case-studying. Marx said that exploitation (and so socio-economic gaps) is an inherent characteristic of capitalism; one should give more thought to this.
