How Can The Economy Grow if Consumption Does Not Pick Up?
- By Professor Prabhu Guptara
- Published 08/10/2009
Professor Prabhu Guptara
Professor Prabhu Guptara is Executive Director, Organisational Development, Wolfsberg (a subsidiary of UBS - one of the largest banks in the world). He is also Freeman of the City of London and of the Worshipful Company of Information Technologists, and Chartered Fellow of the of the Chartered Institute of Personnel and Development; he is also Fellow: of the Institute of Directors, of the Royal Commonwealth Society, and of the Royal Society for the Encouragement of the Arts Commerce and Manufactures; and he continues to supervise PhD research at the University of Fribourg (Switzerland) as well as to be Visiting Professor at various Universities and Business Schools around the world.
Earlier roles include: a Governor of the Polytechnic of Central London, Member of the Council of the British Institute of Management, of the International Federation of Training & Development Organisations (IFTDO), of the Association for Management Education and Development (UK), of the South East Regional Council of the Confederation of British Industry.
Judge, 1988 National Training Awards, 1980 Commonwealth Poetry Prize, 1990 & 1991 Deo Gloria Prize for Fiction; Chair of the Panel of Judges, Deo Gloria Prize 1992 & 1993.
Experience with an enormous range of organisations including: Akzo Nobel (Netherlands), the Associated Banks Institute (Germany), Barclays Bank (UK), British Petroleum (UK), the Council of Europe, Cultor (Finland), Deutsche Bank (Germany), Groupe Bull (France), Federation of Finnish Engineers (Finland), the International Management Association of Japan, Kemira (Finland), Kraft Jakob Suchard (Switzerland), Leadership Academy (Finland), Nokia Telecommunications (Finland), Novo Nordisk (Denmark), Sedgwick International Insurance and Reinsurance Brokers (UK), Singapore Institute of Management, Sonatrach (Algeria), Sun Alliance (UK), UNCTAD, Valeo (France), and so on.
Organiser, chair and lecturer by invitation for numerous international conferences, he has contributed widely to radio and television in the UK and other countries (The Money Program, Any Questions) and has written for Financial Times (London, UK), The Guardian, The Times and other publications; articles, for example, in The Gower Handbook of Management, The Gower Handbook of Quality, and the International Encyclopedia of Business & Management (Routledge).
A CD-ROM has been issued of his lecture at the Professorenforum, University of Zurich, titled "Making the World Better - Why it does NOT happen...and what TO DO about it"
Further information available from email@example.com
His best-known research publication is "Top Executives in the Global 100 Companies and their IT-Competence" (ADVANCE: Management Training Ltd., UK, and Wolfsberg Executive Development Centre, Switzerland, 1998); and he is included in Debrett's People of Today and in Who's Who in the World. Professor Prabhu Guptara lives in Switzerland.
I have made my view quite clear in this blog: unfashionably, I maintain that the fundamental problem is still toxic assets - and, while a temporary reprieve has been provided by governments being persuaded by our elites to spend an unprecedented amount of tax money, the result is the economic decline is merely slowed or halted, at the expense of massive public liabilities that will haunt the relevant countries for decades to come.
And "slowing down or halting the decline" is not the same thing as an economy that is growing healthily!
In the global economic model that we have at present, economic health depends entirely on consumption.
The US has been the primary consumer in the world, with private consumption in 2008 amounting to some US$10 trillion, which accounted for 16% of global output. By contrast, private consumption in the EU, even though it is a much more populated region, was about US$9 trillion; and the largest population group in the world, Asia, provided less than US$5 trillion of consumption. This was already in the middle of the crisis, with spending in the US and Europe slowing from their usual highs, and spending in Asia being artificially boosted by government actions.
US and EU consumption is continuing to slow due to more people being "let go" from their jobs, and those who have money becoming much more careful about when and how they spend.
Will Asia be able to take up the slack? As far as I can see, not in terms of private consumption. Even in the case of governments with cash, e.g. China, they have not so far succeeded in encouraging private consumption, rather the governments has spent money on things such as highways (which is of course very good, and which does indirectly put money in the hands of employees).
So we have two choices: either re-expand global consumption with all the ecological consequences, or we can re-orient the global economy towards a more rational and sensible model - on which I have written at several points in this blog and in various articles.
Professor Prabhu Guptara