Let's Talk About Economic Decoupling

iWrite Essay Competition: 3nd Winner

The Indian School of Business and Finance conducted an essay writing competition, iWrite, for its students, providing them with an opportunity to express their knowledge on Economics, Management and Finance by citing real-world examples or issues and their possible solutions. The competition received tremendous response from the students, where the jury shortlisted three participants for the prizes. These students were honoured during ISBF’s first virtual assembly called iAssembly. The assembly was conducted online where Chiraag Mehta, Associate Director of ISBF announced the winners and congratulated them. Vignesh Balasubramaniam, a student of the BSc. Economics & Management programme for 2020-23 bagged the 3rd position in the iWrite competition.

Let’s talk about Economic Decoupling

Vignesh Balasubramaniam | BSc. Economics & Management (2023)

Economic decoupling relates to today’s reality that we are not creating enough jobs. The growth in productivity and employment started to decouple in the early 2000s, after decades of positive productivity and massive increases in jobs. The internet tackles this question with ideas such as globalization, major changes in policies, tax, and offshoring. I am going to talk about how the effect of decoupling can be reduced so that we can strive towards collectivism.

We need a different economic model, not from a political standpoint, but a shift in the system. This has to be along the lines of what happened before the early 2000s. During this time period, there was more emphasis on governments working with corporations and companies in order to increase the standard of living and encourage collectivism. The market structure ensured that the world progresses in such a way that would benefit at least a vast majority, specifically in the area of education and healthcare.

During the last two decades, the focus has been on free markets, demand and supply shaping the market, and attempting to get rid of government intervention and questioning by means such as false reports and evading tax. The modern market structure tends to focus more on individualism than collectivism because it puts self-interest on a golden plate. This approach contradicts morals followed during the previous century, where the focus was not on growth but on increasing human wellbeing.

Now that we understand this is in fact a prevalent problem, let’s discuss why this shift took place right in front of our eyes and no one did anything about it. The biggest driver of decoupling is technological advancement. It is crucial at this point to draw a link between decoupling and technological advancements. Progress in tech has led to a massive decrease in jobs for less-skilled and educated workers. Robots have the ability to work three times longer than a human on a daily basis and work seven days a week, which is two days more than the average man.

Moore’s Law – refers to Moore’s perception that the number of transistors on a microchip doubles every two years, though the cost of computers is halved. Moore’s Law states that we can expect the speed and capability of our computers to increase every couple of years, and we will pay less for them. This law will continue to prove true for decades together till computers completely take over human jobs. The fact that there is such a high percentage drop in jobs in the last 20 years is alarming! Additionally, we have only started a new era of technological advancement. In other words, the worst is yet to come.

To conclude, it is clear that economic decoupling will continue until and unless there is a valid effort to focus on human wellbeing and not on monetary growth. Tech will keep improving, it will keep replacing more jobs, and it will continue to be ignored until it is too late unless people’s eyes are opened to modern individualism. This will require a total rethink of our education system, re-skilling workers, and encouraging entrepreneurs to invent, invest, and develop new products, services, and industries.