Sunday, August 26, 2012
Economic Injustice Equals Social Injustice
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.