Thursday, August 4, 2011
Those people who commute to work in overcrowded trains and roads must wonder why the economy is still in such a mess. All of these people still have jobs, they are still getting a monthly pay cheque. Why, then, has the economy not started to recover?
The answer, of course, is that people are worried about what might be around the corner for them. They are generally pessimistic about their futures and worried that the might lose their job. (Actually, very few people worry about losing their job; almost everyone worries about losing their source of income – the two should not be confused). So they have cut back on their discretionary spending. The difference between a healthy growing economy and a flat or declining economy is determined by the level of discretionary spending.
Prior to the banking crisis, discretionary spending was too high. Now it’s too low. When people are worried about losing their income they batten down the hatches.
So how can the government encourage people to have a more positive outlook on their future without pouring billions of pounds into a black hole? The solution can be found by studying the content of the Full English Breakfast!
For those of you who aren’t familiar with The Full English Breakfast (otherwise known as a ‘Fry Up’), this consists of any mix of eggs, bacon, sausage, tomatoes, fried bread or toast, black pudding (very optional), baked beans, mushrooms and a recent addition – hash browns.
In providing the ingredients for a full English breakfast, it’s fair to say that the chicken is involved but the pig is committed. The chicken carries on its life after laying its eggs, the pig which provides the bacon and sausages, sadly, does not.
In the current economic climate, everyone feels like the chicken. Involved in worrying about losing their job, paying more for their pension or that their standard of living is declining. Yes, that’s true, but by worrying and reducing their discretionary spending they are generating a self fulfilling prophesy. Living standards are declining as companies and organisations cut back and don’t recruit new talent because people aren’t buying their products. The economy contracts or grows very slowly.
Those who lose their jobs, on the other hand, are the pigs. They are committed. They aren’t worried about losing their jobs because they’ve already lost their job. They aren’t worried about paying more for their pension or a drop in their standard of living because they are bearing the brunt of the recession. They have no income and need a new job. They have fallen off of the roundabout and need to find a way to get back on.
The effect of the recession is being uniquely felt by those who have lost their job. Everyone else plays the role of the chicken, those that have lost their job are the pigs in this production.
So what is the answer? Reduce VAT? Reduce Income Tax? Perhaps, but these measures benefit everyone including those who don’t need help and those who don’t contribute.
The answer would seem to be quite straightforward. Take away the fear from the chickens and the number of people who become pigs will dramatically reduce. Introduce measures which will protect people if they lose their job, to take away their fear and apprehension. Do this, and confidence will return.
How about this? Guarantee that if someone loses their job they will be paid an amount equivalent to their salary by the state for a year, on top of their redundancy pay. That would give people a realistic breathing space to find a new job and take away the fear of redundancy.
Obviously this must be done in such a way to avoid paying the workshy. So people who lost their jobs wouldn’t receive the maximum payment unless they’d worked for say four out of the last five years. But that’s detail to be agreed. The important thing is to focus on taking away the worry from the ‘chickens’ of this world (most of us), to encourage a more positive outlook on life which will grease the wheels of commerce and drastically reduce the number of ‘pigs’ who find themselves out of work.
This should be followed up by funding training – real training, not lip service – to help the jobless to find new careers.
The focus of recovery investment must be on those who lose their jobs, not on everyone. To take away people’s fears of not being able to pay the mortgage or the rent. Do this and people’s ‘chicken’ fear will subside, the number of ‘pigs’ will fall dramatically and the world will look a much better place to all of us.
Rob Horlock has established The Mid Life Opportunity (www.midlifeop.com), a community for people in Midlife. Advice and Guidance is available from The Mid Life Coaching Panel. It’s free to join - click here
Midlife Joke of the Week
A man wakes up in the hospital, bandaged from head to foot.
The doctor comes in and says, "Ah, I see you've regained consciousness. Now, you probably won't remember, but you were in a pile-up on the motorway. You're going to be okay, you'll walk again and everything, but...something happened. I'm trying to break this gently, but the fact is, your willy was chopped off in the wreck and we were unable to find it."
The man groans, but the doctor goes on, "You've got £9,000 in Insurance compensation coming and we have the technology now to build you a new willy that will work as well as your old one did - better in fact!
But the thing is, it doesn't come cheap.. It's £1,000 an inch."
The man perks up at this. "So," the doctor says, "It's for you to decide how many inches you want. But it's something you'd better discuss with your wife. I mean, if you had a five inch one before, and you decide to go for a nine incher, she might be a bit put out. But if you had a nine inch one before, and you decide only to invest in a five incher this time, she might be disappointed. So it's important that she plays a role in helping you make the decision."
So the man agrees to talk with his wife.
The doctor comes back the next day. "So," says the doctor, "have you spoken with your wife?"
"I have," says the man.
"And what is the decision?" asks the doctor.
"We're having granite worktops……"
Posted by The Mid Life Opportunity at 10:00 PM