Wednesday, 15 October 2014
GDP growing but the deficit is still there and income per capita is falling
GDP figures do not reflect reality. Although GDP has grown in nominal terms, in real terms income per capita has fallen. We have more people who earn less and save even less.
For years and years, we have heard about Pensions Blackhole.
Well, with people working today with Zero Hour Contracts and people not earning enough and therefore not paying enough taxes and unable to save, the country will have to spend even more to keep vast numbers of people alive and this means more expensive public services and higher welfare payments that will have to be supported with higher taxes and higher deficits.
What is more, the vast majority of those growing up below the poverty line will be disadvantaged and will inherit the state of deprivation that will be transferred from one generation to the next and this is the point when poverty becomes chronic poverty.
So then, what are the prospects for a country with entire segments of its population living in chronic poverty? You only have to look at countries where chronic poverty is a reality. If you don't earn enough, you don't feed yourself properly and you are plagued by illnesses, in time intelligence levels will fall creating an underclass that will be completely dysfunctional.
Children coming from disadvantaged households or unstable family relationships face an uphill struggle that will condition them for life.
The financial reality and the social reality walk hand in hand.