Business commentators and politicians alike highlight that the economic downturn has bottomed-out and slow recover, has begun - even if metric indicators and general sentiment don't necessarily reflect that optimism. Even so, with the crisis period behind us, it is now time to review the very foundations of society and commerce.
The very fact that alternative measures of social development to GDP growth have been discussed - best exemplified by the criteria of a 'happiness index' - intrinsically demonstrates that a different philosophical light is being applied to this post near-melt-down era.
In short the party is over and we must re-attune to the post belle-epoch.
This unfortunately has haunting echoes reminiscent of the end Austro-Hungarian empire. A time when conflicting macro forces fragmented what had previously been a large and complete entity. Today we see the fractures appear through the EU and even calls for the continued UK's devolution of its component parts. That down-turn in the Balkans a century ago created a weak cellular structure across the region, one which after a period of geographic separation, economic isolation and populus demoralization saw a red-curtain, drawn over what had been a prosperous empire.
That curtain latterly fortified with 'iron', and the positive capitalist tenants of freedom and social / technical / economic progress generated by the individual's will eliminated under a cloud of non-progressive, static, 'state-imbued' homogenity.
It would 60 years and three lost generations to banish that cloud.
Fundamental historic change is slow, and as such we may presently be at the thin-end of such a wedge, yet Europe and the United States cannot be allowed to fall into such a trap. One where a slowly increasing level of statism (as we've arguably already seen develop here in the UK)morphs into an ever deepening Nanny state which approaches a subtle genre of totalitarianism; within which the forward-thinking individuals becomes part of the disillusioned masses as a result of ongoing socio-economic stagnation.
Yet realistically economic stagnation is where the West presently stands, and is in real danger of repeating and possibly extending beyond Japan's lost decade. Economic eyes are most definitely focused upon the primary and secondary EM regions as the previous decade's and future decades' growth engine.
Today the West, saved from collapse, sits in stagnant economic circumstances, with now even BRIC demand slowed and global liquidity seemingly decisively split. directed either towards 'systemic survivalism' by national and intra-regional bodies, or toward volatile, event-driven 'risk-on' / 'risk-off' moves by capital markets players viewing disperse asset classes and global regions.
The once steady and secure capital markets could be presently said to be almost bi-polar in its behavior. The prime tenants of (global) market exchange – the rational value of mutually beneficial goods and services – is seemingly increasingly eroded, the economic woes affecting political relationships, and hence political relationships effecting economic woes.
The arisen consequences of the almost broken western capital markets has incurred an era of hyper-Keynsianism, one in which government involvement moves well beyond the basic guardianship of Adam Smith's free-market economic rational, towards an ever increasing false 'magic roundabout' model; one in which an ethos of seeking true practical added-value to engender growth is substituted for an ethereal notion of added-value.
For the UK that means the massively enlarged circulation of 'wooden pounds', initially through the 1990s and 2000s by ever fatter state employers expensed by a ballooning PSBR and budget deficit, and now under a 'survivalist' policy of QE. The increased generation and distribution of 'wooden pounds' obviates lost innate value.
So what we in effect witness is a renewed clash of the opposing forces of the UK's mixed economy, stretched to their limits and ending in a plausible 'snap'. The expense of creating the euphamistic 'social good' having become fiscally intolerable as the realistion hits that any real value creation in the UK is created by an ever slimmer section of educated, pro-active society via market demanded specialist activities.
Without the emergence of economic model change the UK heads ever quicker towards the ridiculous anathema seen in 2nd world countries, where a plethora of lowly paid government officials push paper through an inefficient system or effectively dig and re-fill holes - the archetype being the policemen who stands on a remote isolated roundabout guiding non-existent traffic.
The fact is that only small sections of specialist industry within the UK has kept abreast of global change and the pace of global competition. China and India forge ahead in developing domestic capabilities, typically riding 'piggy-back' on western knowledge through JV enterprise to achieve in 25 years what took the west 100 years. This is the qualitative, yet on a quantitative front the ravenous demand by EM nations supercharges standards of living and so educational aspiration and so intellectual capability and so commercial achievement.
Few beyond senior business spheres have spelled out this truism, but a country, region or individual whilst positively becoming 'psychologically centered' by diverting attention away from on 'material fetishism', cannot truly develop on the world stage by sticking its head in the sand and extolling a creedo of quango-pressured false-happiness when the excruciating reality is slow a economic decline as the falling living standards create a macro-destructive downward spiral..
For the UK, where the commercial core of a once tangible manufacturing base was supplanted by a post-industrial service economy which was turbo-charged by credit and asset bubbles, today's 'sine qua non' of value-addition must relate both to practical domestic need and international demand.
Ironically, just like its supposedly poor-cousin Southern European counterparts, it must address the fact of finding new inward facing and new outward facing avenues for meaningful national economic development.
As perhaps the world's greatest historic social mobility enabler and economic trickle-down contributor, the car and the auto-industry undeniably have a massive part to play in this development. The high-value activities undertaken at the top of the vehicle-value pyramid can and should contribute as alongside the greater hailed sectors of: Finance, IT, Media, Telco, Pharma, Bio-Gen etc etc.
But critically market and industrial reality, private funding and the hyper-rational investment eye, must conquer over the all to apparent innate idealism that misdirects publicly funded grand-scheme social change programmes. Change must come through a process of slow stable evolution, not radical revolution, which links the PESTEL realities of today to a preferential future context.
As Ben Bernanke and Mervyn King seek to defer their QE exit strategies and the 2 economies continue to falter, so the need for critical structural economic reform to attain high-value productivity becomes increasingly necessary.
The car and the US and UK car industries could and should be used as a vehicle to aid the visibility of such practicable change.
