By Morf Morford
Tacoma Daily Index
We’ve written on these pages about the “K” economy before on these pages (most recently here: https://www.tacomadailyindex.com/blog/the-k-economy-continues/2449004/).
The principle of a “K” economy is as simple as it is relentless; for some, the economic prospects look better than ever, for others they look worse.
Most of the focus has been on individuals, or even industries.
As some industries falter, even sink into permanent oblivion, others emerge, prosper, even triumph.
Housing prices rise steadily (1 and 1/2% a month in Tacoma according to a recent study).
Rents increase while pay for most workers stagnates.
And that is for those who are employed. Record numbers have filed for unemployment in the past year or so.
This is difficult and challenging enough, but extrapolating these same dynamics on a global scale is even more unsettling.
China, for example is the only major economy that saw economic growth in 2020.
Every other major economy went backwards or, at best, sideways in 2020.
And the future look even more lopsided.
Vaccines and vaccine “passports” are tilting global economies even more.
Various nations are using “stimulus” checks to maintain the economy through a difficult stretch.
Other nations flounder and sink further behind.
Nations, like businesses or individuals, try different strategies to stem the flow of cash, workers and investors.
From raising interest rates to raising (or lowering) taxes to imposing lock downs, nations are approaching a state of panic in too many areas to count.
The United Kingdom, for example, according to Bloomberg News, is attempting to emerge from its worst recession in 300 years. (If that’s accurate, that means that the UK has not seen a recession to this degree for longer than the US has existed). (https://www.bloomberg.com/news/articles/2021-04-04/johnson-pushes-covid-tests-for-all-to-help-reopen-u-k-economy?)
The entire nation is essentially on lock down. COVID tests, restrictions and quarantines dominate and define business status, if not survival.
And with spring in motion, major tourist season is rapidly approaching.
Other European countries, like Italy, Spain and Greece, even more dependent on tourism, are seeing even more lock downs and COVID surges.
Thanks to COVID, the IMF (International Monetary Fund) projects a 3% drop in global output.
And, as with every average, some will fare better, and some far worse.
As with individuals and businesses, it’s about far more than money.
Several nations (including Germany, Russia and Mexico) have national elections coming up later this year.
Economic contractions lead to even more political volatility if not chaos.
More and more of those on the receiving end of economic uncertainty are voting with their feet (and families) and heading for the borders of whatever country they have been led to believe will take them and offer them refuge, if not opportunity.
To put it mildly, this only increases the instability as nations from Germany to the UK to the USA barely cope with their own economic and COVID related restrictions.
As the reverberations of the “K” shaped recovery reveal themselves ever more unequally, tensions and resentments – racial, ethnic or economic – will only increase.
As we revise laws and policies in response to an ever more convoluted economic and political landscape, our goal should be to moderate the “K” aspects of the economy.
Stability in those countries many of us have never heard of can directly affect the quality of life for more of us than we might first acknowledge.
The word “economy” we might recall, originally referred to keeping to keeping one’s own household.
We, especially those of us in the Puget Sound region, are connected to a thousand economies around the world.
Each one is a contribution and a strand in the fabric of our sustaining, and for the time being at least, growing economy.