Hope springs eternal

Global hope and happiness have been decreasing around the world. Fears of economic difficulties remain high and have steadily grown in the last few years. The global COVIDpandemic has particularly hammered the world.

According to a recent Gallup poll, there is hope for a brighter future in 2022, although not reaching the high levels measured some years ago. Some 38% of the world’s population now think that 2022 will be better than 2021, but 28% expect a worse year and 27% believe 2022 will be the same as 2021.

According to Gallup’s Hope Index, the top five optimists are Indonesia, Albania, Azerbaijan, Nigeria, Mexico and Vietnam, whereas the top five pessimists are Turkey, Bulgaria, Afghanistan, Poland, and the Czech Republic.

Europe, particularly Eastern Europe, seems more pessimistic as a whole ─ a pattern that has emerged over the years since the 2008 financial crisis. Developing regions, on the other hand, are often more cheerful and hopeful. As often, Latin America, Africa and East Asia are among the happiest places in the world. National optimism is not usually just a matter of wellbeing but also matter of age of the population and perceptions of growth possibilities ahead.

Some 38% of the world’s population now think that 2022 will be better than 2021.

According to Gallup’s Kancho Stoychev, “The unprecedented state financial support on personal and business levels during the pandemic so far played a positive role and, in a way, limited the spread of mass pessimism around the World. But it didn’t stop it.”  

Limited it, yes, but some people seem to have lost hope and fallen into a depression.

The Kaiser Family Foundation of Germany has found that the share of all adults reporting symptoms of anxiety and depressive disorder has quadrupled. Even more striking is that young adults (18-24 years) reporting such symptoms has been 56%, compared to 39% of older adults (50-64 years) and to 29% among senior citizens. Broadly similar percentages have been reported in many other European countries.

Most people living in advanced economies used to take for granted the idea that tomorrow would likely be better than today. Real positive incomes have been the norm since World War II. Sure, there have been very brief periods when this wasn’t the case, notably during the 70’s where inflation was high, but the trend had been positive and steady. Up until 2008, when it all ended.   

The Global Financial Crises of the early 21st Century ushered in an economic recession which has had lingering effects.

A recent McKinsey & Co report provides us with the unfortunate reality. Talking of the advanced economies, the report mentions that:

“Between 65 and 70% of households in 25 advanced economies, the equivalent of 540 million to 580 million people, were in segments of the income distribution whose real market incomes — their wages and income from capital — were at or had fallen in 2014 compared with 2005. This compared with less than 2%, or fewer than ten million people, who experienced this phenomenon between 1993 and 2005.”

Thank God, the financial crises did not bring about the feared Great Depression, and there has been a recovery of sorts. But not all economic indicators resumed the previous promisingtrajectories. Thus, household incomes have grown only modestly in this century, and household wealth has not returned to its pre-recession level. Economic inequality, whether measured through the gaps in income or wealth between richer and poorer households, continues to widen.

Of course, I am talking in general about the developed economies in Europe and North America, because Malta has had a different experience in the last decade or so, with rising household income due to an economic boom. But we have not been spared some of the downside, because income inequality has been problematic here too.

Whether this will continue in the next few years is one of the biggest conundrums we are facing, with unprecedented challenges ─ many provoked by external  circumstances such as the pandemic, rising energy prices, and disruptions in the global supply chain, but some self-inflicted such as the FATF grey listing and corruption scandals.

We all know that well-off people have little incentive to disturb the status quo, even if they don’t agree with it. They have too much to lose and so, while they’ll sit down with Fredu at the bar or with Ġanna at a coffee morning and grumble about this and that, they won’t actually do anything about it.

But will the expectation that tomorrow should be better than today remain a reality? As we stumble through the debt super-cycle that the European Commission and the central bankers have created to cope with the severe economic impact of COVID and its aftermath, we find ourselves with not only the largest debt levels the world has ever seen but also large and rising wealth inequality. Malta is no exception.

Ironically, it is not the health effects of the pandemic that may be the longer-lasting, but the economic changes and consequences. It is the income inequality and changes in the job market which are driving political change, mostly through the rise of populist politics. In some countries, this has taken the form of outright populist parties exploiting anger at Big Business, the Establishment, and Immigrants. In some other countries, including Malta, populism has been absorbed into the two main political parties.

Some weeks ago, I wrote about the Zeitgeist of NextGen in Malta. But all people, not just young ones, are framed by the Zeitgeist. The true question of the matter is whether or not Maltese society will be able to transcend the current one and steer itself on a path towards reconstruction. For now, the answer remains hidden, as it is with all Zeitgeists that have occurred before.

Like homing pigeons, the ramifications if we don’t, will eventually come home to roost. They are economic, social, and political. There is still nothing to show that the Labour Party won’t win the next general elections with a large margin, but if the economic prospects of citizens do not advance they will lose faith. 

There is no doubt that anger at the people who have lied, cheated, stolen, and murdered and should have been put behind bars but weren’t, would bubble over.

This is all that the crop of current leaders need to know.  It is their responsibility to shape the future as best as they can. While the plot of the future may change, let this theme echo through the next few months.

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