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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