Solving
America's Economic Problems:
What's
the First Step?
by Rev. Paul
J. Bern
(excerpt
from chapter 7 of his book, "Occupying
America: We Shall Overcome")
As the
financial industry’s largest players have been unleashed to pursue
profit for themselves at all costs, the dreadful consequences have
surely impacted everyone. Pensions have been wiped out. Family homes
have been stripped of value, with millions taken away altogether.
Small businesses have been locked out of credit markets. More than 14
million people are exiled from the labor force, with one in four
workers over the age of 50 never returning (I know because I was one
of those people – that's what gives me the time to write books). An
absolutely galling one in three black children and nearly as many
Latino children are growing up in poverty right now, while the
president brags about ferreting out fraud in the food stamp program
rather than getting more money for it. Our chosen political leaders
have tolerated all of this in order to maintain the fiction that our
economic system still works, that the organizing principles of our
society remain valid. So the central question of 2012’s likely
all-consuming political debate must be simple: How do we acknowledge
that our current economy is built on lies and then start erecting a
new one based on equity and sustainability? It is far better than
what we currently have; an economy where we steal from the future,
sell it in the present, and call it Gross Domestic Product. GDP and
economic growth are simply an inter-generational Ponzi scheme biding
its time while our government continues to steal from its own
treasury. Obviously this cannot continue indefinitely, yet our US
government remains in a state of denial regarding its existence.
What is it
that has clouded humanity’s judgment to such an extent? We as a
species have, on balance, performed extraordinarily well. We've been
around for hundreds of thousands of years. It has only been within
the last couple thousand years that we have had running water
indoors, only the last 150 years since indoor plumbing was invented,
and only 50 years since the last remaining houses in the US were
refitted with electricity. As we’ve evolved, we have created a
quality of life for billions that was unimaginable at this scale even
a few decades ago. Where we have failed, we have often (but not
always) attempted to correct. So, why are we collectively failing to
recognize that our current trajectory of development is not
sustainable?
I believe
that the core of our problem lies in humanity’s delusion that we
can have infinite quantitative economic growth on a finite planet.
This overarching belief is largely driven by our current model of
consumer-driven economic growth, and is reflected in the mistaken
notion that you can capture progress via one measurement alone: GDP.
Our obsession with growth is not just a fleeting idea or a temporary
policy. It is the idea that supports the global economy and society
in general. It structures the political and economic strategy for
nearly every government on the planet. And individually, it is for
most the critical measure for progress both personally and
professionally.
The
prosperity and stability promised by economic growth has not always
delivered. Certainly in developing countries, impressive GDP growth
figures can represent the crossing of the poverty line for millions
of individuals. However, GDP growth does not always represent a magic
formula for a better quality of life. On an individual and local
level, our endless obsession with imbuing material things with social
and psychological meanings has not led to a better quality of life.
According to Prosperity Without Growth, UK incomes have roughly
doubled since the 1970s, yet the “loneliness index” increased in
every single region measured. In fact, “even the weakest
communities in 1971 were stronger than any community now.”
How do we
break ourselves out of this mindset? Society needs to develop a
different, more sophisticated economic model. There has been
admirable progress, led most outstandingly by the New Economics
Foundation (NEF) in the UK, in addition to the Happy Planet (an NEF
initiative) and OECD Better Life indexes. We need to find a way out
of the institutional and social constraints that lock us into a
failing, self-perpetuating system. We need an extensive change in
values, lifestyles and social structure. We need to break the
shackles that bind us to the failing logic of quantitative economic
growth. And just as society as a whole needs to move away from
viewing economic growth as the ultimate measure of progress, the
business world must distance itself from a mindset that is primarily
focused on creating growth in shareholder wealth. We will achieve
this not only by asking ourselves the following question, but being
guided by it in all of our interactions: Will we be good ancestors?
It no longer takes a visionary to recognize that the paradigm of
endless growth risks undermining every conceivable economic and
social purpose at which business and policy are aimed.
No matter
how one looks at the economic woes plaguing America, in essence they
are simply costs of all kinds – costs that keep escalating and
accelerating at the same time. Rising unemployment, budget deficits,
housing foreclosures, rising energy and food prices, unaffordable
healthcare, accumulating credit card debt, bailouts, devaluation of
the U.S. dollar, outsourcing, global trades, products built with
planned obsolescence and obsolete technologies, global warming,
natural disasters, depletion of natural resources, nuclear wastes,
wars – all these represent costs, either recurring, periodic,
catastrophic, or some other types. Reducing the general cost of an
economy requires the implementation of a series of well-measured
economic, monetary, fiscal, political, and technological policies. It
would be a disaster to try to reach this goal by mimicking the CEOs
of some corporations, who can think of no way to cut costs other than
firing employees, downsizing, and outsourcing production to
low-cost-labor countries. These methods may generate profits for
corporations and their shareholders but ultimately are destructive
and cause the middle class – the most important base of an economy
– to break down, shrink, and disappear. It's just one more reason
for all of us to rise up and fight back.
The first
and foremost goal of any economic-political policy must be to avoid
the conventional method of increasing poverty in the interest of
maximizing profit. This method is morally and socially wrong because
no one should have the right to damage anyone's livelihood for the
sake of profit. In addition, it is shortsighted because in the long
run everyone loses – even the rich and super-rich. Maximizing
profit in an environment of uncertainty and at any expense should be
given low priority. Acquiring wealth through methods that make others
poor and homeless is no great achievement. Instead, the trick is to
make others well-off while accumulating wealth for oneself.
The
vicious cycle of cost is paralyzing our economy. To break out of this
cycle, we cannot simply take imprudent and shortsighted steps such as
firing people, or reducing their salaries and benefits to balance the
budget without taking the most necessary measure! Energy is the most
devilish cost and must be eliminated – totally, rigorously, and
permanently – before we can tackle any other cost. The cost of
energy, whether for private households, corporations, or government,
is the plague of our economy. Why must we tackle the cost of energy
first? Because it is the root source of the vicious cycle of cost.
The cost of energy does not just escalate and accelerate as energy
goes through the different production stages until reaching the
consumer. It reduces the purchasing power of private households,
companies, and governments. As the cost of energy rises, the entire
economy becomes less mobile, leading to a decline in economic
activity and eventually to a recession.
The
increasing cost of imported energy such as crude oil leads to
increased deficits, which compounds the cost of interest further.
Unemployment rises as the cost of energy escalates. Rising energy
costs put America's wealth at risk of ending up in the hands of
hostile Middle Eastern countries. The future cost of developing
alternative energy sources becomes tremendously more expensive.
Social costs stemming from environmental degradation and depletion of
natural resources increase. Ultimately, the United States will lose
its economic, technological, and military superiority in the world.
No other type of cost comes with such severe consequences. Therefore,
the first and most crucial step towards reducing the cost of an
economy is to reduce energy costs mercilessly. This will channel our
economy in the right direction and give it a bright future such as we
have never experienced.
What is
needed is a crash program to reorient and reallocate our existing
energy resources while bringing new ones online. First and foremost
on the minds of the American people will be to find a way to
eliminate our need for imported oil from countries that are hostile
to us, a good strategic move on the part of America if ever there was
one. Coal and nuclear power must be replaced with solar, wind,
off-shore hydroelectric and hydrogen fusion power, the same as what
powers our sun and the stars in the heavens. Other energy innovations
are already in the works by a number of inventors, with a race to
perfect the ultimate clean energy source similar to that of putting a
man on the moon in the 1960's.
Our cars
and trucks must be converted to run on domestically plentiful natural
gas, which burns much cleaner than gasoline, in order to end our
dependency on foreign oil. Putting the infrastructure in place
nationwide will take several years or more and create one to three
million new jobs. That's why those who are in a position to should do
the patriotic thing and implement such a program and put millions of
your fellow Americans back to work. Then there is the problem of our
antiquated, energy-hungry power grid as it currently exists on the
American continent. Whenever we plug an appliance of one kind or
another into a power plug in the wall, we are running that appliance
on 110 volts DC, or direct current. Direct current has been around
since the 1800's as a source of energy, and it is long past due for
replacement. The reasons are simple so allow me to offer a brief
explanation.
The use of
direct current involves the usage of relatively high voltages of 110
volts and up. According to an old truism about electricity known as
Ohm's law, whenever the resistance across a circuit is constant, an
increase in voltage is accompanied by an increase in current. The
more voltage being maintained on a circuit or a grid, the more
electrical current is necessary to keep that voltage at a constant
level, and the more energy is required to generate that much
electricity. Conversely, if our power grid only needed to generate,
say, about one twentieth or 5% of the electricity that it currently
needs to generate to maintain the necessary power levels, then it
would only need about 5-10% of the fuel that it currently requires.
That, to say the least, would completely change the playing field as
far as electrical usage and costs were concerned for all of North
America, and could be exported overseas to parts of the third world
who have not yet fully developed their electrical grids. So, it is no
exaggeration to say that converting our power grid from analog to
digital would reduce America's energy use for electricity generation
by up to 95%, since digital usually runs on +5 or -5 volts, or on +/-
12 volts. Converting America's electrical grid from analog to
low-voltage digital is a project that would take 10 years and create
a minimum of 3 million jobs, and possibly as many as twice that
number. It should be made part of a much larger overall public works
program to generate millions of urgently needed American jobs. We
already have the means and the knowledge to implement such a mass
overhaul of America's electrical grid, and Congress and the President
should provide the funding through legislation. If they are unwilling
to do that, then it will be up to us to vote such a public works
project by way of popular referendum. One way or another, we have the
power to make these improvements a reality, and it is crucial that we
do so at the first opportunity.