The definition of recession is that the GDP of a country declines for two consecutive quarters. Oh my god! Recession is a scary word. It means lay off, unemployment, and economic pains and sufferings for many people.
I am still not totally convinced. Is there a balance that is good for the environment and people’s holistic well-beings? Economy should be a tool rather than the end goal.
The world population just hit 8 billion and the climate change is a ticking bomb. The birth rate of many countries including China is declining. Should this be a piece of good news? However, many countries are very concerned about it.
First, it is the aging population. The current pension and welfare system can’t support more retirees with fewer workers to contribute to it. Any major change to this system could risk causing social unrest. Some people do prefer to work after retirement age for many reasons. People don’t hate work itself but they do hate unpleasant and stressful work. How about high tax high welfare system? If the tax is low to begin with, there is much less room to maneuver. Governments need to set up a rainy-day fund now and invest the money wisely for this aging population problem.
The other concern is lower GDP could trigger high unemployment. Can employment rate still be good when GDP declines. Fewer people in population naturally means few people who need jobs, no? It is the friction or miss-match in the labor market. Therefore, government policy to encourage hiring or unemployment welfare is key to act as a buffer to lessen the pain.
GDP is such a key measurement in our psyche that every business is staring at it for direction on hiring or spending. It is also a score card for politicians. Perhaps what we need is a cultural change. GDP should not be used or used alone at least. People’s happiness and well-being should be instead just like the small country Bhutan.