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David McWilliams: A female-led economy is coming – and it will be better

Those with money shape society. An economy where women earn more will be different

It’s been a long time coming but the feminisation of the economy, wealth and the commanding heights of power, is on its way. By 2030, there will be more female millionaires in the world than male. The percentage of global wealth held by women will have jumped from 15 per cent in 2000 to 55 per cent by the end of this decade.

These are massive transformations in society. As American journalist Candace Bushnell put it, “women with money and women in power are two uncomfortable ideas in our society”. We’d better get comfortable with it because the economic trends are unambiguous.

The culmination of two generations of gender struggle – including battles for contraception, divorce, education, equal pay and abortion – is a society where Simone de Beauvoir’s The Second Sex is on the cusp of coming first, in the west anyway.

The combination of more education, joining the paid workforce and having fewer babies, have all catapulted women upwards financially

By the 1980s, it was well noted that girls in developed countries did better than boys in school; by the 1990s, they were outperforming in universities; and, in the past decade, women in professions have been out-smarting and will soon be out-earning men.

There are still serious underlying inequalities and clear examples of a gender pay gap, but the overall momentum is going in the right direction.

In my own field, the former bastion of “extreme maleness” that is economics, the change in leadership at the top has been dramatic and welcome.

Consider this list: Janet Yellen, US treasury secretary; Christine Lagarde, president of the European Central Bank; Kristalina Georgieva, chairwoman of the International Monetary Fund (IMF); Ngozi Okonjo-Iweala, director-general of the World Trade Organisation; Carmen Reinhart, chief economist at the World Bank; Gita Gopinath, chief economist of the IMF; and Katherine Tai, leader of the United States Trade Representative.

Until recently, these global power positions were the exclusive preserve of men.

Such changes at the very top are a reflection of tremors further down the food chain. In the US the figures are revealing. Women now receive most undergraduate and postgraduate degrees. More than 40 per cent of married mothers earn more than their husbands. About 70 per cent of mothers work full time outside of the home. Women are also, critically, starting businesses much more than ever before.

While still outnumbered by men in most areas, women are starting an increasing share of all new companies. According to a recent report from the Kauffman Foundation, an average of 300 in every 100,000 women became new entrepreneurs in the US in 2020 – this compares to 480 among men; both increased sharply from 2019 but women are catching up.

Another consultancy, Boston Consulting Group, contends that in 2020 women controlled 32 per cent of the world’s wealth but are increasing their wealth faster than before, adding $5 trillion to the wealth pool globally every year, outpacing the growth of the wealth market overall.

Women will spend differently from men. As the brilliant American feminist Gloria Steinem has quipped, 'We can tell our values by looking at our checkbook stubs'

American women hold the largest relative share of the female regional wealth pool followed by (at some distance) western Europe, with Asia and Japan way behind. However, one of the most striking aspects of the growth in Asian economies in the past two decades has been the prominence of female entrepreneurs.

In Ireland, the figures on education – usually an accurate social leading indicator – reveal our near future. Here, women are more likely to have a third-level education than men. This is particularly true of younger age cohorts such as those aged 25-34 (63 per cent of women v 57 per cent of men) and 35-44 (62 per cent of women v 52 per cent of men).

The combination of more education, joining the paid workforce and having fewer babies, have all catapulted women upwards financially. Now, as has always been the case, the people who have money shape socio-economic life.

An economy where women wield more influence will feel very different, across almost every aspect of the society. Women will spend differently from men. As the brilliant American feminist Gloria Steinem has quipped, “We can tell our values by looking at our checkbook stubs”. By this Steinem means people’s identities – both profound and cosmetic – are reflected in our spending patterns. Even a modest shift in economic power causes a significant shift in the parts of the economy that are likely to expand.

An economy with more successful women will be one that spends more on healthcare, education and insurance

It's still worth considering that question, asked so often in the post-2008 recession: would Lehman Brothers have gone bust had it been called Lehman Sisters?

Having worked in the macho world of trading many moons ago, I can attest to testosterone having been a more explosive motivational factor than balance sheets or financial smarts.

The Lehman Brothers saga was one of extreme machoness, a male unwillingness to doubt one’s own decisions and ultimately a fine example of what psychologists call the Dunning-Kruger effect – whereby the truly incompetent, fuelled by their own self-regard, overestimate their competence with disastrous results.

An economy with more successful women will be one that spends more on healthcare, education and insurance. Survey data reveal that women – perhaps because of millennia of not earning enough – show a marked preference for security, saving more than men and planning considerably more meticulously for an uncertain future.

When it comes to luxuries women purchase more and cheaper items than men, who buy fewer but more expensive status signifiers.

Ultimately, however, the issue is not about economics but about fairness, reciprocity and esteem – which is ultimately about decency. As Martin Luther King observed, “the arc of the moral universe is long, but it bends towards justice”. Hallelujah!

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