Sunday, April 20, 2014

Economic Injustice -- America's Workers Severely Need a Turnaround

Solving America's Economic Problems:
What's the First Step?
by Rev. Paul J. Bern (excerpt from chapter 7 of his 2012 book,

As the financial industry’s largest players have been unleashed by the US Supreme Court (among others) to pursue profit for themselves at all costs, the dreadful consequences have made a huge impact. 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, and that the organizing principles of our society remain valid. So the central question of any related 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. In so doing, our leaders have lost all touch with reality.

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 at least a couple hundred thousand years, maybe even longer. 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? One probability is that our problem lies in humanity’s collective delusion that we can have infinite quantitative economic growth on a finite planet. This prominent fallacy is largely driven by our current model of consumer-driven economic growth. Our obsession with growth is not just a fleeting idea or a passing fancy, it is the idea that supports the global economy and society in general. It structures the politics and economic strategies for nearly every government on the planet. And individually, many people measure their progress both personally and professionally based on how much money they make, or that of their overall economic status.

The prosperity and stability promised by economic growth has not always delivered. Certainly in developing countries such as the BRIC (Brazil, Russia, India and China) 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. How do we break ourselves out of this mindset? Society needs to develop a different, more sophisticated economic model. 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, and our economic system would be a good place to start. All the wrong things with our political and economic systems, starting with capitalism as a debt-based economy, simply have no place in the 21st century. Just as society as a whole needs to move away from viewing economic growth as the ultimate measure of progress, the business world must divorce itself from a mindset that is primarily focused on creating growth in shareholder wealth. The era of shareholder-owned businesses and corporations will be replaced with a worker-owned business model. Competition must change to cooperation in order to make livable a world whose population will exceed 8 billion in just a few short years. We will achieve this not only by asking ourselves the following question: What kind of legacy do we want to leave our ancestors? 

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 health care, accumulating credit card debt, Wall St. bailouts, the impending devaluation of the U.S. Dollar (which will occur no later than the end of 2016), outsourcing middle class US jobs overseas for pennies on the dollar while putting over 1/3 of America's middle class out in the street, products built with planned obsolescence and obsolete technologies, global warming, depletion of natural resources, rumors of nuclear wars – all these represent costs. Reducing the general cost of an economy requires the implementation of a series of well-measured economic, monetary, fiscal, political, and technological policies. Many US corporations 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 fat cat 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 planned transition from a capitalist (debt-driven and shareholder-owned) economic system to a more balanced (resource-based with worker ownership) free enterprise system 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. 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, or possibly in a face-off with China and Russia over dwindling oil stockpiles. America currently has enough natural gas to last for the next 200 years. Besides, the future cost of developing alternative energy sources becomes tremendously more expensive the longer we wait to tap into those resources. No other type of cost comes with such severe consequences. Therefore, the first and most critical step towards slashing economic costs is to reduce energy costs mercilessly. America needs to find a way to eliminate our need for imported oil from countries that are hostile to us. Coal and nuclear power must be replaced with natural gas, as I wrote above, followed by 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 North 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 direct current, which has been around since the 1800's as a source of energy, and it is long past due for replacement. 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 equation as far as electrical usage and costs were concerned for all of North America. The excess could even 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 occasionally on +/- 12 or 24 volts. Converting America's electrical grid from analog to low-voltage digital is a project that would take up to 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, “we the people”, 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.

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