The low and middle income earners need have enough purchasing power to keep production going via their consumption. At the same time, consumption is not enough to keep the economy going. We need green technology and a high-quality production system where we refine goods and services.
Low interest rates don't last forever
Journalist Per Lindvall warns of one generational war as younger generations cannot get the same value development for their capital as previous generations. This is because GDP and green technology do not develop at the same pace as share prices. The reason why share prices and the prices of privately owned homes are increasing even though GDP is not increasing is that the government is trying not to run a deficit. This drives people to borrow to buy stocks and privately owned homes, the prices of which then rise. This became a bit more difficult after Corona when the interest rate made it more expensive to borrow. In a good economy, the increase in value of shares corresponds to the increase in productivity and turnover in the company.
Productivity growth is too weak in Sweden because low and middle income earners do not have enough money to support the same. The price of a home should correspond to the home's technical quality and geographical location, but when loans were cheap for a while and there are no low-rent rental properties for those who want them, people trump each other in loans and it becomes a loan-based price bubble. Per Lindvall believes that the loan-based capital bubble will not be able to continue for any length of time. Today's elderly and others who have been in the capital market for a long time can realize a good standard of living through their capital in the near future. In the long run, the capital increase cannot continue in the same way if we do not increase GDP at the same time.
How to start productivity growth
How then should we increase GDP without people having to work harder? Economist Mariana Mazzucato claims in her book The entrepreneurial state that the state needs to invest sufficiently in business- and technology-oriented research and development, for this the companies themselves do not. Research and development is an expensive, slow process with many failures along the way. In the long run, only the state can afford this. In order for the state to be able to do this, it must take out loans. Such loans only need to be the state creates money. The state does not need to borrow like a private person. However, the basis must be sufficient, progressive tax revenues. The tax should be lowered for low and middle income earners and raised for the upper middle class, upper class and the very richest to benefit production. Mazzucato saw the article in the financial magazine that laid the foundation for the austerity policy. The article was poorly supported scientifically when it claimed that it was dangerous for economies if the national debt was over 90% of GDP.
The state's investments increase technology development
Sweden is a good example of one of many countries that started a strong economic and technological boom when the state, with the support of both the right and the left from the late 1800th century to the first decades of the 1900th century, incurred an enormous national debt to provide all of Sweden one railway. The production of this generated a lot of technical know-how in Sweden and had positive economic spillover effects on the whole society. Oskar Brandt writes about this in his book "Survival - for society and individuals". As for the societies that end up in a debt crisis, such as Italy, it is usually not that the public sector borrowed too much, but that the public sector invested too little in technology and technical-economic research and only in the minimal administration that neoliberalism allows.
Hard work and insecurity the wrong way
Investing in hard work and insecure employment, which is the intention of the January agreement and later on The tide team is the wrong way to go. Very modern brain research which, among other things, is reported in the research overview "Your Brain at Work" by David Rock strongly suggests that people create more and better when they are allowed to be playful, relaxed and safe in equal, non-hierarchical work environments.
A technical-economic development is already underway that favors the social initiatives we advocate above. The Corona pandemic has made international supply chains for just-in-time production unstable. In addition, wages in developing countries have increased so much and industrial workers in Sweden, among others, have become so cost-effective through increasing robotization and automation that many companies choose to take back industrial production. If we combine the re-industrialization trend with government research investments in green technology and green energy, there is hope for the world and life. Göran Värmby, former head of the environment in the city of Gothenburg, writes in the Gothenburg Post about the green opportunities with reindustrialization of Sweden. 2024 however, Tidölaget fights progressive attempts within the EU to start a green re-industrialization of the region.
This is an example on the economic-historical fact that high wages for low- and middle-income earners push forward technological labor-saving development. Already the Romans and Greeks had steam engines but used these as toys and a way to mystify power with self-opening temple doors. The argument for this was that the slaves must have something to do. In order for the majority of the population not to become too poor, we must keep the public sector sufficiently large. In this way, those who do not get work in the business world still get employment and income.
Also recommend Alice Amsden's books on how the East Asian countries have risen from poverty in the last generation. Something to learn from! They have least of all adapted to the "market".
https://gemensam.wordpress.com/2020/11/04/de-asiatiska-metoderna-duger-at-oss-ocksa/
(And then there are Chang, Reinert and Mazzucato to read).