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The waterfall economy

I’ve always liked the idea of coining a phrase or saying that goes on to become commonplace, but never managed it. Damn Malcolm Gladwell and his appropriation of “tipping point” merely weeks after I had called the same phenomenon something not quite as catchy (I can’t remember what).

2015.08.07_The-Tipping-Point-Malcolm-Galdwell_21

Anyway, I have been thinking for ages about how best to describe the economy in the town in which I live. If you reside in south-east England’s commuter belt, I’m sure your high street looks much like mine: lots of estate agents, coffee shops, cafes, restaurants and mobile phone stores, interspersed with poundshops, charity shops and vacant premises.

It’s not pretty. On a busy Friday night, with the bars and restaurants full, it feels like a thriving, wealthy town. But by day, the town is divided: affluent mums, dads and their toddlers are queueing out of the door at Costa Coffee and Caffe Nero, while the down-at-heel retail establishments stand almost empty; the passing trade (and I am aware how this might sound) generally being either elderly, infirm, unemployed or a mixture of all three. It looks and feels like a deprived town somewhere more than 35 miles north of one of the richest cities in the world.

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None of this is news, I know. And the reasons for the decline of the high street have much to do with internet retailers as anything else. But it has seemed apparent for years now that in the south-east, our economy is massively reliant on the immense wealth of a very few high earners at the top of the income pile: the stockbrokers in our stockbroker belt and ‘hedgies’ in our country homes.

The ‘trickle-down’ theory of economics has, I think, been pretty discredited over the past 30 years. In short, it doesn’t work; certainly not in terms of enabling those not eating at the top table to see their living standards rise at the same pace of others. Inequality in the UK is growing quicker than anywhere else in the world. The haves and the have nots never used to be this easily distinguishable.

But in an economy built on service industries, ‘trickle down’ is what we have: a huge proportion of the local population in my town seems to me to be entirely reliant on the wealth of the very few.  Again, I acknowledge that this is the model we have built and, of course, one which most people subscribe to. But I believe that a more accurate description of our turbo-charged ‘trickle down’ economy is ‘waterfall’. A small percentage of people have a massive amount of disposable wealth and it is this torrent of money which is cascading on to the vast majority, waiting at the bottom of the cliff. There’s an awful lot of water – enough to enable most to stay afloat. There’s so much that it enables us to fund our public services too. But if the amount of water falling from the top decreases, there will be big trouble. And Brexit is the equivalent of building a huge dam upstream.

Now this isn’t an anti-Brexit diatribe: I am merely arguing that the inevitability of our economy shrinking as thousands of the very highest earners leave the City of London will have an obvious effect on those dependent on that wealth. My assertion is that there are more people dependent on this money than anyone realises and that the south east in particular is going to suffer a significant and potentially brutal period of readjustment.

This readjustment – away from such an unbalanced, top-heavy economy – might well be necessary. However, I’m pretty sure that’s not what people were voting for when they decided to leave the EU, and I’m equally sure that the fallout – socially, politically and culturally – will be unpleasant.

We’ve built a world that relies on exponential growth and the creation of shareholder value; a world that can only work if it encourages ever more people to spend ever more money and generate ever more ‘wealth’. I think that ‘Waterfall Economy’ sums it up pretty well – not well enough to become a common phrase, but it’s the best I can do.

Over to you, Malcolm.

 

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  1. yzf750
    November 1, 2017 at 1:23 pm

    Hey. Beer soon mates? Dan Simmons.

    Sent from my iPhone

    >

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