Existence, Economics, and Ecological Intelligence

                                                                An Earth Manifesto publication by Dr. Tiffany B. Twain  

                                                                                                                        December 7, 2011

Eleven score and fifteen years ago our forefathers brought forth upon this continent a new nation, conceived in liberty and dedicated to the proposition that all men are created equal.   Now I imagine the entire body politic gathered here together, one nation, supposedly indivisible and committed to liberty and justice for all, pledging allegiance to these great ideals and yet divided asunder by highly unequal and growing extremes of economic security and social justice and political representation. 

The gap in fortunes and privileges between the super-rich and all other Americans has been radically widening in the past thirty years.  As a result, economic inequities have become almost as extreme as they were in Mark Twain’s days.  Recall that the phony patina of prosperity that Mark Twain and Charles Dudley Warner wrote about in The Gilded Age: A Tale of Today was characterized by corporate and political corruption, abuses of power by “robber barons”, wanton speculation, unethical lobbying, and conspicuous consumption by the wealthy.  The era unfolded with assaults on unions, low wages, child labor, unsafe workplaces, dangerous products, gender discrimination, and widespread monopoly practices that made competition unfair while wasting resources, exploiting workers, harming consumers, polluting the commons, and damaging the environment.

Mark Twain decried rapid increases in economic inequality during the Gilded Age.  The historian Vernon Louis Parrington later called the period “the Great Barbecue" because all the eminent people at the time were figuratively roasting the country to enjoy special privileges and amass enormous amounts of wealth.  A very narrow concentration of income and wealth developed in those days, as it has again today.  This deep inequity eventually sparked a powerful reaction in the far-reaching reform movement of the Progressive Era that flourished from the 1890’s to the 1920’s.  Then, when the Roaring Twenties culminated in a crash of wild speculation in the stock market in 1929, the Great Depression began.  This stoked massive social unrest and forced the economic and political elites to agree to a fairer deal in which the concentration of income and wealth was reduced for a few generations and the middle class was strengthened and America was made truly fairer.

Today, the wealthiest Americans are abusing their power in astonishingly effective ways to steadily increase their relative advantages over all others and to subvert fairly-representative decision-making.  CEOs, lobbyists, Wall Street fat cats, and our political representatives are lavishly entertaining themselves with sumptuous banquets at the public’s expense, and they are jealously rationalizing their good fortune by collaborating together to pay low tax rates and to impose austerity on workers, young people and future generations.  Inequities are widening between people in many areas, including opportunities available, income earned, tax rates paid, wealth accumulated, and overall privileges enjoyed.  This trend is creating grave risks in our econopolitical system, as well as dangers to our national solvency and collective well-being.

The hallowed idea of government of the people, by the people, and for the people is being perverted into government of corporate interests, by corporate interests, and for rich people.  This is simply wrong.  It is a betrayal of our national ideals.  This betrayal is being perpetrated by a small cadre of unethical, selfishly greedy, and ideologically uncompromising rich people who are betraying the public trust by gaming the system to diminish the power of working people and exploit natural resources for their own narrow benefit.  In demanding both historically low tax rates for themselves and austerity for the masses, they are helping create giant budget deficits and greater pressure for cuts in funding to wise investments in things like good public education, our nation’s infrastructure, innovative change, renewable energy, family planning programs, and protections of public lands and the environment. 

By allowing this abuse of power to persist, we are collectively undermining vital ecosystems and unconscionably allowing people in future generations to be cheated.  Even the Vatican has called for an overhaul of economic systems in the world.  The Catholic Church is ostensibly concerned about economic instability and the trend toward ever-widening inequality of income and wealth between people in nations worldwide.  These issues transcend the ability of national governments to address them individually.  The Vatican indicated on October 24, 2011 that new international institutions are needed which are capable of addressing these issues, “now that vital goods shared by the entire human family are at stake, goods which the individual states cannot promote and protect by themselves.” 

These ideas are consistent with rallying cries of sensible ecological economists and of people involved in recent protest movements like the indignados in Madrid and the Occupy Wall Street protestors in New York City and their kin around the planet. 

“My role in society, or any artist’s or poet’s role,

  Is to try and express what we all feel. 

   Not to tell people how to feel. 

      Not as a preacher, not as a leader, but as a reflection of us all.”

                                                                                       --- John Lennon (1940 – 1980)

The opening salvo of these introductory paragraphs has insistently risen to the fore, occupying the highest priority among these ideas.  Readers can be assured that the vitally important understandings of ecological economics are contained in this essay, and I encourage you to read on to find them.  The urgent sometimes supersedes the important -- and sure enough, more urgent ideas have cropped up to delay the exploration of ideas of ecological economists.

Great economic thinkers weigh in below, and their ideas are synthesized with those of arcane economic theorists like Hyman Minsky and Arthur Cecil Pigou.  Important Big Picture ideas are also explored regarding democracy, capitalism, socialism, taxation, sensible incentives and disincentives, government financing, deficit spending, proper accounting, and systemic corrupting influences.  And recommendations are provided for good plans to improve our societies. 

A Call for a New Square Deal

The exuberant ‘Rough Rider’ Republican leader Theodore Roosevelt advocated “Square Deal” policies during his presidency in the early years of the twentieth century.  This was during the last decade of Mark Twain’s life.  Distinct parallels exist today to economic conditions back then.  Many corporate entities like railroad conglomerates and big oil companies used their influence in monopoly-like manners to quash competition and exploit workers. 

Teddy Roosevelt presided over a “trust-busting era” in which many large businesses were broken up into smaller and less powerful organizations so that they would be less able to abuse their power.  Inequities between wealthy people and the working class had grown pronounced, so the Square Deal policies were designed to curb abuses of power by corporate entities and to root out corruption and to reduce the excessive exploitation of workers and farmers and consumers.  As a part of his Square Deal, Teddy Roosevelt also worked to ensure that resources were conserved and public lands were protected. 

Today, a new Square Deal is needed which has similar goals.  This initiative should be designed to guarantee people reasonable rights within guidelines that include fair-minded responsibilities to everyone in society and all in future generations.  To overcome the entrenched status quo, a sustained movement is needed that will create an effective coalition with principled political leaders.  Occupy Movement protests have helped inspire a sustained national conversation about today’s extreme level of inequality, and they are refocusing our politics on economic fairness. 

The anger and hope of Occupy movements must now be channeled into strategies that will forge a new politics and a new economic order.  We should all hope that the forces of decency and humanity will prevail over those of reaction and division and inequality.

The new Square Deal should focus on reducing the concentration of wealth in the hands of the top 1% of Americans and addressing the fact that 46 million Americans are living below the official poverty level, as reported by the U.S. Census Bureau for 2010.  This is the highest number of people in the 52 years that the bureau has been publishing figures on poverty.  Shame, shame, shame!  We must remember the important understanding expressed by President Franklin Delano Roosevelt:  "We cannot be content, no matter how high the general standard of living may be, if some fraction of our people -- whether it be one-third or one-fifth or one-tenth -- is ill-fed, ill-clothed, ill-housed and insecure." 

Another disparity between Americans highlights the extreme and misguided level of unfairness in our system today.  It is an intergenerational wealth gap.  According to an analysis done by the nonpartisan Pew Research Center, the wealth gap between older and younger Americans has widened sharply in recent years.  The average net worth of people over the age of 65 increased by 42% between 1984 and 2009, but the average net worth for those younger than 35 actually decreased by 68%.  The average net worth for those in the 35-to-44 age group went down by 44% during this period.  These statistics confirm that the interests of older people have been given significantly more weight than those of younger people.  Meanwhile, we are piling up debt and interest expense obligations on people in future generations, and this is radically increasing the inequities they will face by ensuring that they will start their lives with an ever-increasing negative net worth.  These outcomes are socially undesirable.

Our courageous forefathers famously declared in 1776 that when a system of governance becomes destructive of the unalienable rights of its citizens, it is their right and indeed their duty to alter that.  When the system facilitates “abuses and usurpations”, we need to change it with the goal of creating new foundations that will most likely effect the safety and happiness of the governed.  Common sense tells us that NOW is the time to revolutionarily alter our current system.

Our Founders embraced the ideals of the Enlightenment Era such as equality and the vital importance of the general welfare.  In creating a supposedly fair representative government of the people, by the people, and for the people, this brilliant system was unfortunately susceptible to becoming entrenched against fundamental reforms.  Now the gap between our country’s ideals and its reality is growing wider and wider.  It is clearly time to unshackle our imaginations and cast off discredited ideas and work with determined idealism and grounded pragmatism to begin building a healthier, fairer, fiscally sound, and more sustainable society.

A Call for Fairer and More Progressive Taxation

Regressive changes in taxation tend to concentrate wealth and to increase the disparities between the fortunes of the Few and the Many.  This results in increases in inequality that make everyone in society less safe.  People in the middle class and poor people become less secure economically because their struggle is made harder to pay for safe housing, good nutrition, and adequate healthcare.  The rich become less secure because a heightened impetus develops in society toward stress-engendered conflicts and criminal activity, and impulses for revolutionary change increase.  More money is consequently needed for police forces and prisons to enforce this inegalitarian state.  More money is also spent on wars to distract people from their lack of fair opportunities and the daunting existential dilemmas associated with our unfairly gamed and gimmicky econopolitical system.

Occupy this thought:  The rich have pressed their luck too far by abusing the power of their influence to get the lowest tax rates in generations at a time of wide-ranging socioeconomic crisis.  We should now take action to make sure that the Bush tax cuts expire as scheduled at the end of 2012 on all earnings in excess of $250,000.  Once tax rates are restored to their Clinton era levels for all annual earnings above $250,000, projected additional deficit spending over the next 10 years would be reduced by an estimated $700 billion.  We simply cannot afford to allow the richest 1% to benefit so lavishly from historically low tax rates at the expense of the other 99% of Americans, and of all persons-to-be in future generations.

One observer notes:  “Time and again we have proven incapable of addressing major national concerns without the boot of acute crisis bearing down on our necks.”  This is so true, and yet today, in the throes of the most severe economic crisis since the Great Depression, gridlock ensnares our politics.  We seem to be incapable of making fundamental changes like fair-minded campaign finance reform.  We seem to be unable to make really smart changes to our corrupt banking system like restoring the Glass-Steagall Act to make banking and investment systems safer.  No serious efforts have yet been made to reform the Commodities Futures Modernization Act of 2000 to sensibly regulate risky financial derivatives which contributed to the severe credit crisis of 2008.

We also seem incapable of sensibly improving our highly unfair and costly healthcare system.  Our political representatives have denied people the freedom to buy a public option that would compete with the profit-obsessed health insurance industry.  We have been unable to rein in the ludicrously profitable Big Pharma industry.  We apparently cannot find any common ground to reform our fragmented immigration policies.  We are failing to invest adequate amounts on important infrastructure maintenance and improvements.  

Our schools are deteriorating and student debt is becoming much too burdensome, with interest rates that are too high.  We are failing to address the looming insolvency of the Social Security or Medicare systems.  We seem to be unable to pass a sensible climate protection bill, or to come up with a rational national plan for independence from our addiction to fossil fuels.  We are proving to be completely incapable of coping rationally with budget deficits caused by our expedient propensities to borrow money to finance wars and give people tax cuts and bailout the economy and otherwise give vested interests more perks. 

We simply must boldly and honestly address these issues!  The Earth Manifesto points the way.

Introductory Reflections

The first twelve years of the twenty-first century will soon have staggered into the history books.  Wow – what a doozy they have been!  First there were the terrible 9/11 terrorist attacks and then a colossally costly unending global ‘war on terror’ in reaction.  Economic bubbles in technology stocks and real estate and oil prices, and even in contemporary art, were inflated and then burst.  Globalization trends intensified as the economies of China and India grew at very rapid rates and millions of jobs in manufacturing were lost in Western nations to cheap labor competition in other nations.  Environmental impacts of fast growth in consumption and increasing rates of the exploitation of resources became more distinctly detrimental.  Devastating floods, hurricanes, earthquakes, tsunamis, droughts, and wildfires wreaked havoc on many areas.  The population of human beings on Earth experienced a net increase of more than 800 million people.   

And then there is the economic meltdown that began in 2007 and reached its worst point in late 2008 and still distinctly impacts the global economy in 2011.  Think of it!  We have been living through one of the most sensational and scandalous debacles in the history of capitalism, and in many ways it has been an “Inside Job”.  The ideology of laissez-faire capitalism is taking a serious hit as unprecedented interventions by governments worldwide have been necessitated to get credit flowing again to prevent another Great Depression.  Bank losses and write-offs have exceeded $1 trillion.  In addition, Western governments have committed an amount in excess of $10 trillion to shore up their financial systems, according to estimates made by the International Monetary Fund.  About half of this astonishingly large cost has come in the form of direct financial commitments, and the other half in various kinds of guarantees and insurance schemes. 

Despite all these emergency measures, tens of millions of people have lost their jobs and many people have lost their homes or a discouraging portion of their retirement savings.  The enormous costs of this economic bust are being foisted upon workers, taxpayers and future generations, who are being obligated for gigantic liabilities and unprecedented levels of debt.  This outcome is exceedingly unfair, and the policies which contributed to it are unacceptable.

Our economic system obviously does not work acceptably when it fosters boom and bust cycles that force different people to shoulder the burdens of the bust than those whose rash leveraging of risks significantly contributed to the economic cataclysm and who have profited the most from the inflation of the bubbles.  Tens of millions of people are being hurt by the economic recession, so it seems absurd to allow those whose management decisions led to this disastrous outcome to receive big bonuses for their risk-taking leadership.  The White House, Congress, the business community, and shareholders take heed!

There is much to be thankful for in the world, but this is certainly not the “best of all possible worlds” that Pangloss wryly postulated in Voltaire’s famous tale, Candide.  We could, however, work together to create a much better world, and the ideas in the Earth Manifesto point the way to a wide range of salubrious possibilities.

A Clarion Call for Reform

Journalist John Cassidy has written a book titled How Markets Fail: The Logic of Economic Calamities.  In this book, Cassidy points out the need for fundamental reforms in our economic and political systems.  He sagely observes that it is not enough to merely tinker with the status quo.  Our systems are structured in ways that ensure the perpetuation of the status quo, or even worse, they facilitate changes in the way things are which benefit entrenched interests at the expense of the greater good.  Consequently, our systems are dysfunctional, and it is proving to be far too difficult to reform them.  This makes it increasingly important for us to collectively demand that our econopolitical system is fairly and honestly restructured.

Everyone can see that there are many serious problems which need to be addressed in our societies.  To truly solve these daunting existential challenges, we must develop an accurate and comprehensive understanding of these problems, and of their relative importance.  And we must better prioritize the efforts and resources devoted to solving these problems. 

As Albert Einstein wisely observed, “We can't solve problems by using the same kind of thinking we used when we created them.”  Einstein also noted that insanity is doing the same thing over and over again and expecting different results.  So, let’s get creative!

The existentially challenging problems we face include a wide web of environmental dilemmas and a variety of complex conundrums related to proper long-term priorities, social justice, peaceful coexistence, fiscal irresponsibility, record numbers of people living in poverty, interferences with personal liberties, and the critical need for greater respect for the ecological commons on our beautiful home planet.  To solve these problems, we need to make a passionate commitment to the greater good.

“Technique in art is like technique in lovemaking:  heartfelt ineptitude has its charms, and so does heartless skill, but what we all really want is passionate virtuosity.”

Ecological Economics to the Rescue!

A scientific and philosophical discipline called ‘ecological economics’ has been in the process of being articulated in the past 25 years.  Ecological economics is guided by the need for humanity to find ways to live sustainably and to leave a fairer legacy to future generations.  This discipline is concerned with the depletion of resources and the carrying capacity of natural ecosystems and the implications of environmental damages caused by human activities. 

Ecological economists recognize a broad range of unintended consequences of human actions.  They point out that we must take into account these bigger-picture perspectives in all public policy decision-making.  They question economic ideologies that advocate a gospel of wasteful consumerism and reckless growth and deregulated capitalism.  They contend that it is foolish to measure economic activities in distorted and misleading ways and to make dubious assumptions in the analyses of costs and benefits of public policies.

Ecological economists emphasize the vital importance of natural capital and the valuable ‘services’ provided by healthy ecosystems.  It makes much more sense to give serious consideration to these underpinnings of our well-being than to ignore them.  We simply must begin to recognize the hidden costs associated with courses of action that deplete resources and cause irreversible harm to ecosystems.

One of the cautionary lessons of history is that an economic collapse is often the end-game result of unchecked growth and the exploitation of resources.  Civilizations must not ignore resource depletion and ecological damages.  The ancient civilization on remote Easter Island collapsed because the native Rapanui people failed to see limits on the amount of native forests and arable farmland and fresh water on their small island, even as they depleted these vital resources and their population grew beyond sustainable levels.

Economic catastrophes pose risks far too serious to ignore.  When people pay too little heed to long-term considerations, such shortsightedness can create terrible hardships for billions of people.  During economic boom times, people tend to develop “disaster myopia” and ignore the chances that things could actually go wrong.  They thus forget the vital importance of sensible embraces of precautionary principles.

Damages to important environmental resources could be disastrous for humanity and practically irreversible on any meaningful time scale.  This is the reason that ecological economists say we must take precautionary measures in our public policy approaches.  It is also why they advise that we make smarter investments in fairer and more sustainable economic activities.

Most people want something for nothing, so they are against “paying as we go”.  Our various representatives in Congress consequently resort to the risk-laden expediency of borrowing enormous quantities of money from people in the future to finance the demands of vested interests and the dictates of short-term-oriented goals.  This myopic strategy compounds the wide variety of negative impacts that will be a part of our legacy to our descendents.

Ecological economics must become the mainstream of economic understanding, for the simple reason that the short-term orientation of other economic ideologies is proving to be too destructive and unsustainable.  It is time that we make a clearer distinction between the quantity of growth and factors that relate to improvements in the quality of life, which are assuredly more important. 

The efficient allocation of resources cannot be considered alone without assessing the best and fairest uses of resources and the sustainability of our activities.  We cannot continue to ignore the carrying capacity of ecosystems.  We must clearly recognize and honor the overarching value of undiminished ecosystem services and biological diversity.  We must take into account the full range of problems created by industrial agriculture and the unmitigated burning of fossil fuels.  We must find ways to protect critically important rainforests and wetlands and estuaries and coral reefs, and to prevent further declines in wild fisheries.  We must courageously address the problems associated with impending water shortages and damages to vital habitats.  And we must take bold actions to prevent further disruptions of global weather patterns which are being caused by the billions of tons of greenhouse gas emissions that we are spewing into the atmosphere every year.

On Rational Rationality

Our decision-making about the best courses of action to pursue is unfortunately dominated by “rational irrationality”.  This is the situation where rational things, from the point of view of individual choices, lead in aggregate to outcomes that are collectively irrational.  As Garrett Hardin almost poetically pointed out in his 1968 article, The Tragedy of the Commons, “Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons.”

Ideas promulgated by economists and politicians powerfully affect people’s lives and our societies.  Good ideas are becoming ever more urgently important in our world, beset as it is by financial crises, high unemployment, widespread poverty, growing inequities, the rapid growth in human numbers, and activities that deplete resources and damage ecosystems and contribute to the disruption of normal precipitation and weather patterns.  Bad ideas, and ones that are misguided and inflexibly applied, can lead to disastrous consequences.

The bottom line is that we must manage our societies more fairly and more intelligently.  This is the secret!  Part Four of the Earth Manifesto contains numerous specific ideas on how humanity should be heeding ecological understandings and improving our societies and addressing the valid concerns of ecological economists and other visionary thinkers.  Check out the compendiums of ideas found there!

Great songwriters beseech us:  “Come together, right now, over me!”

Awareness of the Population Connection

Ecology is a comprehensive field of study which looks at broad interrelationships between plants and animals and ecosystems.  Ecology takes into account human impacts on natural habitats, and it cultivates perspectives that are longer-term oriented than current dominant economic ideologies.  Ecological understandings are thus basically more valuable ways of comprehending our species’ gambits in the struggle to prosper and pursue meaning and find happiness.

Economic growth is the overriding goal of most economic policies.  Growth is stimulated, in part, by continuous increases in the number of people on Earth.  From a long-term point of view, economic growth is structured like a Ponzi scheme which is predicated on both a growing population and a continuous expansion of the money supply.  This inadvertent ‘plan’ is ultimately not sustainable, so we should get our economic house in order by heeding the insights of ecological economists!

    “Living is easy with eyes closed
        Misunderstanding all you see.”

                             --- The Beatles, Strawberry Fields

We can no longer afford to misunderstand all we see.  There are now SEVEN BILLION people on Earth.  Within 15 years, there will be EIGHT BILLION.  By 2050, current trends indicate our population will exceed NINE BILLION.  This means much more than that we will have worse traffic!  There will be a greater intensity of competition in the struggle to survive and get ahead.  This will cause an escalating rate of resource exploitation, and limits will become more viscerally clear.  More daunting ecological problems will becoming apparent, as well as associated worsening poverty and more starvation and more violent conflicts.  These global challenges loom before us like a tsunami gathering force and magnifying its deadly potential as it approaches the shore.  This wave seems to be converging toward a crescendo, as if a Rapture-mad deity is wrathfully working itself into a frenzy.  But folks, it is us!

Compelling correlations exist between the rapid growth in human population on Earth and the long litany of daunting environmental challenges that face us, as articulated by organizations such as the Cousteau Society and the Natural Resources Defense Council and Population Connection.  I highly recommend that readers consider the ideas of Professor Jared Diamond in his insightful book, Collapse: How Societies Choose to Fail or Succeed.  Diamond’s observations about the depletion of native forests and other natural resources by the people of Easter Island, and similarly shortsighted actions by other failed civilizations in history, make it clear that we would be wise to give much more serious consideration to the implications of our own similar courses of action on island Earth.

It is startling to realize that the more than 200,000 people who died in the tragic earthquake in Haiti on January 12, 2010 were ‘replaced’ in total number on Earth in less than one day.  The number of human beings alive increased by about 80 million in 2010 alone.  This is stunning!  And it is surely not a sustainable trend for much longer.  We should find ways to restructure our economies and societies worldwide that make it sensible to reduce the growth in the number of people on Earth.  This would be a smarter strategy than marching lockstep toward unfathomable tragedies when we have exhausted resources and damaged the vital ecological foundations of our well-being. 

Thomas Paine was eminently wise to suggest that the best way to ‘confederate and embrace’ all the various competing interests throughout a nation would be through a representative democracy that fairly takes into account ALL interests as best possible.  Shall we try it?!

Note that people in the future must be taken into account more formally with an overarching commitment to a Bill of Rights for Future Generations.

A Valuable Insight into Competing Interests

Professor Robert Reich, former Secretary of Labor, discusses in detail a distinct conundrum of human behavior in his insightful book Supercapitalism.  As consumers, we generally want cheap prices and good deals.  By providing such things, companies like Wal-Mart and CostCo have been remarkably successful.  In our roles as investors and speculators, we want the best possible returns on our investments.  Cyclical periods of irrational exuberance and rash risk-taking are defining characteristics of our Bull/Bear markets, and the fees generated by this volatility make Wall Street interests wealthy and powerful.  Money talks! 

As citizens, on the other hand, we want to have important things that are often contrary to what we want as consumers and investors:  we want social justice and healthy communities, for instance, and safeguards of our liberties.  We want good quality affordable public education and a fair shake for workers.  We want reasonable access to health care for all.  We want at least a minimal social safety net, and security in retirement, and equitable institutions, and peace, and clean air and water.  We want protected parks and open spaces and public lands and wilderness areas.  And we want a stable economic system with credit adequately available at a fair cost. 

In other words, as consumers and investors we do NOT want products and services to contain all of the costs of a healthy society, because we want prices to remain low and profits to be high.  As citizens, however, we DO want prices to include the fair and sane treatment of workers and communities and the environment.  Over the last few decades, things have generally gotten better for consumers and investors, but they have gotten worse with regard to long-term good citizen goals. 

This way of looking at our economy makes it clear that the competing interests we should be trying to “confederate” are not just some clear-cut strife between “us and them”, but also a conflict between the goals within each and every one of us.  We must all recognize this and agree to require all production costs to be included in goods and services, so that consumers will pay a little more for them and investors will receive a little less return on their investments, but better assurances will be made that common good goals will be achieved.

A Big Perspective on the Failings of the Capitalist System

There are a variety of shortcomings of capitalist economic systems.  In addition to the propensity within capitalist market systems to create destabilizing economic booms and busts and to stimulate the unsustainable depletion of natural resources and the degradation of the environment, capitalism has a socially irresponsible propensity to create ever-more extreme concentrations of wealth and power in the hands of a small minority of rich people.  This money and power is used to buy influence, effectively subverting the fairness principles in a democracy by seducing politicians into doing the bidding of wealthy people at the expense of the greater-good interests of the vast majority of people. 

These dynamics of capitalism are facilitated by reprehensible activities in which profits are privatized while costs are socialized and environmental protections are ignored or violated.  It is precisely because money buys influence that our national policies are so severely skewed to benefit the Few at the expense of the Many.  Rich people, giant corporations and established interests thus manipulate our democracy to the detriment of small businesses and innovative entrepreneurs and the majority of Americans and all people in future generations.  This is how the system works, not just how it fails.

The overwhelming majority of Americans are members of the Many.  Together we have the collective power to demand the formulation and implementation of policies that would strengthen the middle class, make success easier for entrepreneurs and small businesses, and alleviate the hardships of the poor.  Simultaneously, we could ensure that our nation provide at least minimally secure social safety nets of health care and affordable retirement.  And we could make sure that the environment is reasonably protected by following sensible precautionary principles. 

To accomplish these goals, we need to reject much of the propaganda of giant corporations and right-wing think tanks, and instead cultivate clear visions of the nature of human impulses and social institutions and political policies and economic exigencies and ecological truths.  We need to demand action that is consistent with these larger visions.

“In the nineteenth century, anti-capitalist critics like Marx insisted that economics must be contained within an ethical context;  they contended that social justice counted for more than industrial efficiency or private profit.  In the late twentieth century, the environmental movement is trying to teach us that both economics and ethics must be contained within an ecological context.”

                        --- The Voice of the Earth, An Exploration of Ecopsychology, Theodore Roszak

The Giant Pool of Money

This essay follows a long and winding road of fascinating insights and historical perspectives.  But urgent economic developments are taking place which require Big Picture understandings.  Let’s start by considering “The Giant Pool of Money.” 

This American Life, a National Public Radio show, presented a compelling discussion in 2008 about a giant pool of money, estimated to total about $70 trillion abound the globe, which prowls the planet seeking good investment returns.  During boom times, this pool of savings seeks high returns, but during economic busts those who control this money are much more obsessed with safety of principal.  This pool of money is generally invested in stocks, bonds, real estate and commodities.

Financial planners, incidentally, say that the best plan for individuals is to avoid putting all of one’s eggs in the same basket by making a balanced allocation of assets to all these classes of investments, so that losses in one category will be offset by gains in others.  Who can stick with that strategy in the face of dramatic market volatility, low interest rates, zooming gold prices, and heightened international economic and geopolitical risks?

This giant pool of money got burned by the mortgage-backed securities debacle of 2007-2009.  Bond portfolios have done well in recent years due to low interest rates, but eventual higher rates will create definite risks even there.  Investors realize that nations worldwide have been pursuing fiscally irresponsible monetary policies that will eventually lead to higher inflation.  These factors create their own set of winners and losers, and they carry a variety of heightened risks. 

The U.S. national debt has skyrocketed in the past few years, and the percentage that this debt represents relative to the GDP has been radically increasing.  Twelve years ago federal debt was 35% of GDP, and now it is more than 90%, and increasing.  It is madness to allow this to happen.  How and why is this taking place?

Business As Usual: Courting Economic and Ecological Calamity

Irony cruelly mocks us.  First, the Senate refused in early 2010 to create a commission to look into the extremely shortsighted expediency of record levels of deficit spending and the ongoing rapid increase in the national debt.  So President Obama, recognizing our national avoidance of tough choices needed to solve our daunting fiscal problems, established a National Commission on Fiscal Responsibility and Reform by executive order in February 2010.  We do have, after all, an overriding need to honestly examine the expediently popular but extremely irresponsible tactic of mortgaging the future for short-term benefits.

This so-called Deficit Commission spent nine months struggling to come up with a comprehensive set of proposals to deal with the growing national debt and the pending explosion of interest expense on this debt.  Ideologies clashed, and vested interests practically gnashed their teeth to influence the purportedly “bipartisan” commission to get it to sacrifice everyone else’s sacred cows rather than their own.  Finally, when the Commission submitted its sobering proposals, they included a conflict-of-interest-generated, counterproductive and lame-brained idea of cutting taxes on rich people and corporations, which would serve mainly to make the deficits worse. 

There was preposterously little in the report about providing powerful incentives to corporations for them to stop exporting millions of jobs abroad.  There was little about investing in higher education and research and development, or helping build a green economy, or undertaking a modernization of our crumbling national infrastructure.  Yet such plans are essential to maintain our competitiveness and to create a stable foundation for healthy economic growth.  There was no consideration given by the Commission to broader factors that affect deficit spending like regressive tax policies, the implications of Peak Oil, the climate-disrupting impacts of unlimited emissions of greenhouse gases into the atmosphere, or the negative impacts of rapid population growth. 

The biggest irony of all came several days after the Commission submitted its recommendations.  Our political leaders chose to reject common sense and once again resort to embezzling money from future generations by compromising amongst themselves to continue the highly regressive Bush tax cuts for all Americans for two more years until 12/31/12.  This tax break primarily benefits millionaires and billionaires who are gaining extravagantly from this action.  A whopping $858 billion increase in the national debt is being added due to this decision.  And by extending the Bush tax breaks that are so heavily tilted toward the rich, one of the best options has been temporarily eliminated to honestly address our deficit spending and national debt problems.  This shortsighted strategy will cripple the potential for positive efforts to actually solve many other daunting challenges facing us.

What this action really does is to compromise the hopes and potential prosperity of people in the future in order to avoid making the difficult decisions that we really should be making today.  This compromise was made behind closed doors between President Obama and Mitch McConnell and it violated one of the idealistic visions that the president had been elected to pursue.  “We lose ourselves when we compromise the very ideals that we fight to defend,” Mr. Obama had stated early on.  “And we honor those ideals by upholding them not when it is easy, but when it is hard.”  Oops!

We are collectively risking the financial stability of our nation by refusing to courageously deal with the true implications of this dangerously undisciplined deficit madness.  We are ensuring that the U.S. dollar will be devalued by the irresponsibility of our fiscal and monetary courses of action.  We are also sowing the seeds of another possibly-even-more-severe economic crisis than the one which our leaders helped create in the past few years.  This is recklessly imprudent!

The extension of the Bush tax cuts is allowing rich people to continue to pay historically low rates on their incomes and capital gains and dividends, and on their estates after they are dead.  This gambit is a form of tyranny and intergenerational treachery.  By borrowing from future generations, we are compromising their well-being in order to make rich people richer.  This is prolonging the trend toward an ever-more extreme concentration of wealth in the United States.  It is also increasing inequities and exacerbating the economic insecurity of the vast majority of Americans, and undermining our democracy in the process.  The decision to give two more year’s worth of this multi-trillion-dollar folly to rich people is irresponsible, and to the extent that it crowds out financing for important social and infrastructure and environmental priorities, it is pathetically misguided.

Once again it occurs to me that Big Picture perspectives and overarching guiding principles are sorely needed to create a higher level framework for formulating public policies and making national spending and taxation decisions.  This is another reason we need the guidance of a Bill of Rights for Future Generations, one that should soon be debated and developed and passed and ratified. 

In the face of the myriad ways we are fleecing the future with our profligate consumption and resource depletion and pollution and habitat destruction and climate disrupting activities, our collective complacency toward budget deficits and rapidly increasing national debt is obscene.  These myopic expediencies reflect a selfish, undisciplined, and weak-willed inability to make difficult choices which would be fairer to our descendents.

Human nature does not change, but our habits and behaviors can be modified with properly-designed incentives and disincentives, and it is high time we act to create more responsible societies.

An Aside on the Partisan Intransigence of the “Super Committee”

A “Super Committee” of politicians was established in August 2011 to come up with ways to reduce the enormous additional budget deficits projected to be incurred in the next decade.  The committed abjectly failed after three months to find a reasonable compromise on reducing deficits.  This failure of the political class reflects the corruption in our political system.  Conservatives have taken the most outrageous stance in these “negotiations” by refusing to accept responsibility for this failure even though their absolute opposition to increasing revenues or eliminating tax loopholes is the primary contributing factor to the impasse.

At a recent Republican debate between presidential candidates, all of the candidates were asked if they would accept a deficit reduction deal that would include ten dollars in real spending cuts for every dollar in revenue increases.  Every Republican candidate declined to accept any such deal.  Ten times!  It is obviously not a good year for reasonable people.

One need not be a particularly keen observer to realize that the $10 trillion in additional deficits projected to be incurred in the next decade cannot possibly be reduced without both spending cuts and additional revenues.  Sacrificing the security and well-being of tens of millions of Americans to protect the privileges of the top 2% of Americans who annually earn more than $250,000 is not a practical or sensible plan.  Dismantling the social safety net and making education and healthcare more expensive for people is shortsighted.  So is the idea of cutting funding for first responders to emergencies.  And plans to hold funding for disaster relief programs hostage by insisting that offsetting cuts are made to other programs is heartless.  Proactive planning by creating a rainy day fund would make a lot more sense!

A Vast and Rash Uncontrolled Experiment

The Earth Manifesto treatise Comprehensive Global Perspective: An Illuminating Worldview makes a compelling point:

The worldwide impacts of human activities have never been as all-encompassing as they are today.  The course upon which humanity is embarked has many parallels in history, but at the same time it is unprecedented in global scope.  Technological and demographic changes are affecting societies and the natural world with a broad scope and astonishing and accelerating speed.  

We are all inextricably involved in a rash uncontrolled experiment in (1) industrialization, (2) urbanization, (3) stimulated consumerism, (4) profligate resource use, (5) rapid population growth, (6) large-scale monoculture agriculture, (7) economic globalization, (8) extensive habitat modification, (9) the generation of a myriad of pollutants, toxins and wastes, (10) the alteration of the gaseous composition of the atmosphere, (11) asset speculation, (12) financial deregulation, (13) status-seeking behaviors, (14) inegalitarian social policies, (15) militarism, and (16) divisive political strategies.  Almost every other species of life on earth is affected by these courses of action.  No one knows exactly what the outcome and consequences of this risky experiment will eventually be.  ...

To better manage our economic and social and environmental challenges, we must cultivate new ways of thinking, and behave and act with more broad-minded intention.  Strong resistance always rises in opposition to ‘paradigm shifts’, but once we are able to embrace new ideas, the opportunity accelerates for achieving vital progress and propitious change.  Among the things that we must unflinchingly reform are the socially irresponsible aspects of unbridled capitalism and unfair imbalances in globalization and policies that create speculative bubbles and lead to a need for costly bailouts.  We must also boldly address our dependence on oil, and emasculate hawkish nationalism and imperial aggression.  We must adopt sensible open-minded attitudes toward contraception and family planning policies.  And we must reform our electoral system that obeys Big Money over all other influences.

Visceral Connections:  The Intimate Impacts of Creative Destruction

Capitalist economic systems tend to facilitate a process that the economist Joseph Schumpeter called ‘creative destruction’.  By allowing businesses to fail which do not compete successfully, a winnowing-out takes place that ensures a kind of survival of the fittest organizations.  This can have positive effects by letting innovative forces transform markets and products and equipment and methods.  This makes capitalism quite adaptive, when the competition is fair.  But it can be extremely maladaptive when vested interests use unfair tactics like monopoly practices, or when they take advantage of the power of their size to quash competition or corrupt government policies and agencies to get special advantages and privileges and subsidies. 

Creative destruction arguably can have salubrious effects on production processes and product quality and consumer prices.  But it can wreak terrible dislocations and hardships on workers and passive investors and the environment.  To manage change well, individuals and businesses and the government must be more flexible and forward-thinking. 

When the federal government is forced to bail out organizations that are “too big to fail”, this thwarts market processes.  Under such circumstances, taxpayers should be generously rewarded for their rescue of organizations that indulged in speculative risks and other types of “moral hazard”.  This fair reward to taxpayers should come in the form of significant stakes in the profits that the bailed out entities earn after they recover.  It is unfair that we have risked national bankruptcy to save banks and other institutions without requiring them to make significant contributions to taxpayers from their resurgent profits.  It was, after all, the speculative gambits taken by CEOs and other players which are responsible for the havoc being wreaked upon millions of people and our nation as a whole.

Creative destruction sometimes merges with ruthlessly exploitive aspects of capitalism, as explored by author Naomi Klein in her book Shock Doctrine: The Rise of Disaster Capitalism.  When this occurs, not only is our standard of living at risk, but so is our financial and physical and ecological well-being.  Even our liberties and basic human rights are at stake.  It is my contention that we can begin to take control of these dysfunctional aspects of capitalism by understanding them better, and by boldly acting in accordance with these more enlightened understandings!

Lessons Learned from Observations of the Mark Twain Bank in St. Louis, Missouri

We are living in a period when the inherent instability of our capitalist economic system is starkly apparent.  Economists call this “a Minsky moment”, after a little-known economist named Hyman Minsky who developed a “financial instability hypothesis” in connection with his personal observations as a director of the Mark Twain Bank in St. Louis, Missouri.  I’m not making this up!

Hyman Minsky noted that stability begets instability in a cyclical progression.  In the early stages of economic cycles, banks lend cautiously to borrowers and they sensibly require loans to be safely collateralized with underlying assets.  When a boom begins to develop, competition between lenders intensifies, and finance becomes more speculative as banks make loans to less creditworthy borrowers.  Eventually, banks throw caution to the wind in a bubble frenzy, and they indulge in “Ponzi finance”.  This is a scheme in which borrowers are much more vulnerable to default because they cannot even afford the payments on their loans.

A primary contributing factor in this boom and bust cycle is the irresponsible actions of bankers and traders.  This is why the rules governing the financial industry must keep the leveraging of borrowed funds within safe parameters.  It is also why effective rules must be designed to prevent systemic risks and vulnerabilities from developing that lead to credit crises and economic recessions.  It just does not make sense to allow the ‘rational irrationality’ of self-interested players to subvert the greater good in such significant ways.  This is not only an economic problem, but also a serious political and social one with distinct ethical dimensions.

Some say that corporations should be allowed to regulate themselves.  Joel Bakan, author of The Corporation, cogently disagrees.  He points out: “No one would seriously suggest that individuals should regulate themselves, that laws against murder, assault, and theft are unnecessary because people are socially responsible.  Yet oddly, we are asked to believe that corporate persons -- institutional psychopaths who lack any sense of moral conviction and who have the power and motivation to cause harm and devastation in the world -- should be left free to govern themselves.” 

We simply cannot continue to allow these entities to abuse their influence.  Deregulation, corporatism, privatization and bubble economics have caused too much financial turmoil in the past few years to allow the views of economic fundamentalists and laissez-faire proponents to dominate our politics.  Surely the primary reason that our government does not work better for the majority of Americans is that it has been bought off through the unfair influence of wealthy people and big corporations and other vested interests.  For some extensive insights into the details of this state of affairs, see the Earth Manifesto essay Common Sense vs. Political Realities: An Anatomy of Dysfunctionality.

Important Steps to Greater Fairness and Justice

The Founders of modern democracies essentially embraced a social contract in which greater fairness and justice for a nation’s citizens are honored and respected.  To actually create such a state of affairs, we must re-structure our economic and political systems so that they actually do provide for fairer and more just conditions. 

Foremost, we should require businesses to include all currently externalized costs in the price of every product and service, particularly those costs related to pollution, the safe disposal of wastes and toxins, healthcare for workers, provisions for the depletion of resources, and methods for preventing environmental damages that are associated with production processes.  We should additionally evaluate all federal government expenditures and tax loopholes that subsidize big corporations.  Those that impede innovation and restrict competition and cost taxpayers money without benefiting the greater good should be eliminated.  The influence of vested-interest money in our election campaigns and politics and Congressional decisions should be limited so that the policies we implement are more consistently and honestly focused on the common good.

The Perspectives of Arthur Cecil Pigou

Economic arguments can become quite complex.  But it is important to understand them in a comprehensive way to create the best balance in decision-making.  Take, for instance, the insights of Arthur Cecil Pigou, the British economist who was amongst the first to articulate the nature of imperfections in markets and to examine failures due to “cost externalities”. 

A wide variety of deep interdependencies exist between people, and there are many “spillover effects” of one person’s actions onto the well-being of others.  The same is true for businesses.  For this reason, Pigou advocated subsidy incentives (“extraordinary encouragements”) and tax disincentives (“extraordinary restraints”) to properly reflect both social goods and costs to society that are not accounted for in private transactions.

This idea of properly designed and boldly implemented incentives and disincentives is one of the best plans to make our societies healthier and more sustainable.  A “Pigou Club” of prominent economists and pundits advocates that we enact higher gasoline taxes or other forms of carbon emissions taxes in order to make sure that markets affix a price to cost externalities associated with risks created by our dangerous addiction to fossil fuels and the rapidly increasing quantities of greenhouse gases we are spewing into the atmosphere every year.  We should listen to these Pigou Club experts in this regard;  they include a wide range of people like Al Gore, Alan Greenspan, Thomas Friedman, Lawrence Summers and Paul Volker.

Imagine the effect of a graduated incentive system designed to increase fuel efficiency on all new vehicles sold.  If vehicles that get less than 20 mpg were assessed much higher sales taxes, and the proceeds were used to provide rebates for all vehicles that get more than 40 mpg, it is easy to see how demand for vehicles would be shifted to more fuel efficient vehicles.  This new system of incentives would powerfully influence people’s choices.  We could even begin to wean ourselves from our Achilles’ heel dependence on imported oil from foreign countries, and from related extremely costly needs to position our military forces in and around nations that have the biggest oil reserves in the world.  At the same time, we would burn less oil and cause less pollution and create fewer greenhouse gas emissions, and hence there would be smaller impetuses to cause damaging changes in the global climate.  This would be a smart course of action!

People buy insurance to cover potential calamities like floods and fires and auto accidents.  When it comes to larger considerations of our probable impacts on the health and well-being of our descendents, however, we seem to be unwilling to pay a modest premium in the costs of products and services to prevent the externalizing of costs onto society and to mitigate the adverse public health impacts of polluting activities.  We essentially are collectively unwilling to minimize the damages done to ecosystems, or to reduce the pollution of waterways, or to prevent the inadvertent impacts of human activities on the gaseous composition of the atmosphere and the stability of earth’s climate.  It is time we remedied this state of affairs by making ecologically intelligent changes in the systems which encourage these wrong-headed outcomes!

Both free market economists and advocates for better-managed capitalism admit that incentives are important.  But free markets give far too little emphasis to aspects of existence that are vital to our collective well-being by failing to adequately take into account the guidance of socially fair and environmentally enlightened understandings.

Instantaneous Lucidification

To get economic incentives right, we need to see the big picture.  We should not continue to blindly act as though corporate prerogatives and inflexible laissez-faire business doctrines are the end-all of policy making.  Too many of the incentives that corporations and the government create are “perverse incentives”, like those in the banking industry that facilitate speculation and encourage rash leveraging and risk-taking and predatory banking practices.

Incentives should be designed to encourage people to behave in more socially and environmentally beneficial ways.  Disincentives should be formulated and instituted to prevent costs from being externalized onto society.  Cost-shifting from corporations to citizens and taxpayers and future generations must be reduced.  Once the magnitude of this cost shifting is understood, we should be better able to make wiser determinations of how to structure incentives and disincentives to reflect these realities and to mitigate their adverse impacts on society.

A study by the federal Office of Management and Budget in 2003 sought to evaluate the cost and impact of environmental laws over the 10-year period from 1992 to 2002.  The extensive analysis found that the cost to businesses and government of environmental and health regulations was 5 to 7 times less than the costs to society related to dealing with pollution and toxic waste clean-up and related adverse healthcare expenses for workers and children and communities.  These findings prove that it is downright stupid to let lobbyists rewrite environmental laws to weaken protections like those of the Clean Air Act. 

The Environmental Protection Agency completed a six-year study in 1997 that also took into account the human health and welfare and environmental effects of the Clean Air Act.  The EPA found that the total benefits of Clean Air Act programs in the 20-year period from 1970 to 1990 ranged from about $6 trillion to about $50 trillion, with a mean estimate according to varying assumptions of $22 trillion.  These benefits represent the estimated value Americans place on avoiding the dire air quality conditions and dramatic increases in illness and premature death which would have prevailed without the 1970 Clean Air Act and the 1977 Amendments to it and associated programs at the state and local level. 

The actual costs of achieving benefits of the pollution reductions observed over the 20 year period were only $523 billion.  This is a small fraction of the estimated $22 trillion in monetary benefits.  From this perspective, it seems obvious that we should collectively be making choices that respect environmental protections rather than allowing them to be undermined!

Many of the incentives in our economic and political systems are sadly wrong-headed.  They provide big benefits to small constituencies while costing significant amounts to the general public.  These incentives should instead be targeted to provide overall benefits at reasonable costs.  We should keep in mind that these costs are not just about money.  They include harmful impacts upon real people’s health and the quality of their lives. 

The Implications of Systemic Unfairness on Our National Health

Think about the profit-making and red tape in the health insurance industry.  The combined profits for the five largest health insurers in the U.S. increased 56% in 2009 over 2008.  The employees and investors in these companies may be happy with these results, but they represent a heavy burden of high costs to millions of people whose lives are detrimentally impacted by high annual increases in premiums and health insurance care denials and exclusions for pre-existing conditions.  Large increases in insurance costs, especially for policies for individuals and small businesses, are causing growing numbers of Americans to be unable to afford to buy health insurance.  Almost 50 million American do not have health insurance today.  This fact makes it urgently important that we make more significant reforms to the U.S. health insurance system.

Look at it this way.  Each and every person is born, and gets older, and eventually dies.  No one knows what the vicissitudes of destiny have in store for them, and infinite are the variety of individual circumstances.  Health adversities can happen to anyone at any time, so we should have a health insurance system that covers everyone fairly. 

On average an American today lives to be 78 years old.  This longevity is shorter than the average lifespans of people in 37 other nations, according to the CIA World Factbook 2009 (see Wikipedia “List of countries by life expectancy” for details).  Why does our supposedly advanced nation perform worse than so many other countries? 

The reason is to be found in a curious place:  inegalitarian public policies.  Our healthcare system has a primary focus on profit-making by health insurance companies and drug companies, NOT on fairly providing for the health of American citizens.  As a result of things like the very high cost of health insurance and coverage denials, 45,000 people die each year, according to estimates by Harvard Medical School researchers.  Why do they die?  “In large part because they lack health insurance and can not get good care.” 

Fairer societies tend to have greater average longevity because all people have better access to preventative care and affordable care.  These understandings should be given much greater consideration in the national debate about how to reform the U.S. healthcare system!

STAND AND DELIVER!

Mark Twain was once robbed by “highwaymen” in 1866 during his stay in the vicinity of the silver mining boomtown of Virginia City, Nevada.  He reported that a bandit “thrust a horrible six-shooter in my face and demanded, ‘Stand and deliver!’”.  In those gun-toting Wild West days, life and property were not particularly respected, so a person was well-advised to comply with such an imperious command, no matter how criminal it may have been.

I’m not a big fan of the use of force or widespread gun ownership in these more modern times, but as an organizational imperative, I like the sound of this command.  “STAND AND DELIVER!”  Say, can’t we tell our political leaders and the CEOs of big corporations, and investors, and the small number of wealthy people who make half of all the income and own half of all assets in this country, to STAND AND DELIVER!? 

Deliver fairer democracy and more progressive tax policies!  Deliver a greater equity of educational and job opportunity in our nation.  Help create truer social justice, and fairer economic policies, and saner environmental policies, and cleaner sources of energy, and universal healthcare, and more honest fiscal responsibility.  We want and need these things now!  STAND AND DELIVER!!

A Bill of Rights for Future Generations should be enacted so that our short-term-oriented addiction to mortgaging the future is constrained.  Cease and desist with this on-going orgy of irresponsible expediency.  STAND AND DELIVER!!

Two Theories of Socioeconomics

Deepening disparities of wealth --à  Greater financial and health insecurity for most people --à

       ---à  More societal stresses and anxieties ---à  More civil unrest ---à

                    ---à  Worse personal and national security for all.           

                                                                                                    (BAD IDEA!)

Also:  More People ---à  More consumption ---à  A less sustainable future ---à

   ---à More waste ---à  More ecological damage ---à  More species extinctions ---à 

      ---à A faster diminution of the Carrying Capacity of the Earth for our species.      

                                                                                                               (POOR PLAN!)

The Opportunities Implicit in the Economic Crisis of 2008-2011

The word “crisis” in Chinese is represented by two symbols, one that means “danger” and the other, “opportunity”.  There is profound wisdom in seeing a crisis this way.  Every crisis presents us with a dangerous opportunity to learn the lessons the crisis reveals, and to act accordingly.  Unfortunately, vested interests are shrewd at exploiting opportunities during times of crisis for their own narrow advantages.  They generally strongly defend business-as-usual rather than allowing reforms. 

The current economic crisis contains distinct promise by highlighting the obscene nature of extreme economic inequalities and the increasing barriers to upward mobility, and thereby creating a powerful people’s movement with the potential to bring about fundamental change.  Significant peril also exists in the current economic crisis because the forces of reaction and entrenched power and big money are ferocious in their opposition to fair-minded reform.  The failure to heed the revelations of a crisis after its acute phase passes can result in a greater risk of more serious consequences in the future.

Consider this.  A destructive earthquake warns us that sensible structural building codes are vitally important.  Hurricane Katrina taught us that wetlands destruction on the Gulf Coast caused dramatic increases in costs and vulnerabilities to the levee-protected city of New Orleans.  Tsunamis teach us that warning systems in coastal areas are necessary to prevent the loss of life in the wake of powerful offshore earthquakes.  The BP Gulf oil spill demonstrated vividly that government regulations must not be formulated exclusively by corporate lobbyists, and that regulators should not be in bed with the industries they regulate.

A back injury caused by lifting heavy objects, or the onset of diabetes caused by obesity, or a heart attack caused by eating too much high-cholesterol fatty foods, or a car accident caused by texting while driving all teach us lessons about the inadvisability of actions that lead to harmful outcomes.  Thus, sudden health adversities serve to make us cogently aware of activities and behaviors that lead to such setbacks. 

It is a terrible shame for us not to learn the lessons that a crisis reveals to us.  Consider the economic crisis of 2008 to 2011.  The overly cozy partnership of government with business is creating an anemic economic recovery from this calamitous crisis, and yet our business and political leaders seem hell-bent on preventing far-reaching reforms from truly addressing the undesirable underlying causes and vulnerabilities that contributed to this crisis.  Political partisanship and forms of gamesmanship and government gimmickry and greedy advantage-seeking and struggles for domineering power are preventing us from responding to this crisis in more intelligent ways.

Stimulated consumerism, bubble economics, inadequately-regulated speculation, banks that are “too big to fail”, our undiminished addiction to declining reserves of fossil fuels, and our reliance on irresponsible deficit spending and wanton increases in the national debt all make us more vulnerable in the future to setbacks that are potentially more risky and devastating for billions of people worldwide than what have been suffered in the past several years.

In the wake of the Great Depression of the 1930’s, bold corrective actions were taken to make our economy fairer and more fiscally sound.  More egalitarian social policies were created to build a stronger middle class.  Labor relations reforms were instituted.  A protective wall was created between depository banks and investments banks to ensure that conflicts of interest were minimized between the goals of safeguarding depositor’s money and risking it.  These actions helped set the stage for the United States to become more prosperous for decades. 

Keynesian economics became fashionable at that time.  Economic stimulus was applied when it was needed during contractions of the economy, and then the proverbial “punch bowl” was removed as economic activity heated up and economic expansions began to cause spiking prices and wasteful usages of resources.   

Today, perverse forces dominate our decision-making, threatening to make us drastically less secure.  We are like the proverbial ostriches that supposedly stick their heads in the sand to avoid perceived dangers.  Even ostriches aren’t actually so stupid!  How could this state of human affairs have come about?  How could they be so foolishly perpetuated?

Perhaps it is as John Fowles observed in The Aristos:  the more clearly we see that our own individual deaths are inevitable, and the more clearly we see the seriousness of the risks we are taking to our well-being, the more rash we become in selfishly striving to get all the things and pleasures we can get right now.  Each of us at least dimly realizes that there will be only this one fleeting life to enjoy in all of eternity.  As a result, we are both rational and irrational in over-consuming material goods, and in over-indulging in eating and drinking, and in over-exploiting resources with mindless abandon.  This may be a principal reason why we ignore the lessons of crises and the cautionary voices that advocate voluntary simplicity.  It may also be a reason that we ignore the wise understandings of those who counsel moderation and ecological intelligence and social and inter-generational fairness.

Understanding the grand sweep of lessons learned from previous crises, it becomes obvious that we must collectively find ways to re-structure our economic and political systems so that every person becomes more responsible for their actions toward others, including those in future generations.  The Earth Manifesto contains an integral assembly of dozens of ways for us to move in directions that are distinctly more propitious.  Read on!  For a summary of specific proposals, see the comprehensive compendiums of ideas in Part Four that summarize the steps we should be taking to create fairer, more peaceable societies that are more likely to be sustainable. 

The greatest good for the greatest number of people over the longest period of time must be our primary goal.  This objective contrasts starkly with our current tendencies to stimulate the opportunities for a small group of hyper-privileged people to gain and maintain their significant advantages at the expense of all others over a short time horizon!

The Story of Stuff

The promotion of consumption is an enterprise which is contrary to the long-term greater good when it contributes to the wasteful depletion of resources and the production of toxic wastes and the generation of excessive volumes of climate-altering greenhouse gases.  The filmmaker and activist Annie Leonard explores the risk-laden madness of wasteful consumerism in her compelling twenty-minute video The Story of Stuff.  She points out, startlingly, that 99% of all the stuff we extract, produce, distribute and consume every day becomes a waste product within 6 months. 

Annie Leonard has also created a new animated video titled The Story of Broke.  In this film, she succinctly encapsulates important issues related to the misuse of our tax dollars and the misleading idea that our nation is completely broke.  She refers to the established status quo as “The Dinosaur Economy”, pointing out that far too much money is given to entrenched companies in tax subsidies, risk transfer subsidies, freebie subsidies, and resource extraction subsidies.  She also examines the folly of allowing businesses to externalize pollution and toxic waste clean-up costs upon society for things that corporations should be required to include in their determinations of real bottom-line profits.  These illuminating videos can be viewed online right now.

With our human numbers having now exceeded 7 billion, and seemingly destined to reach 9 billion before the year 2050, we are going to run up against harsh limits in the supply of food and raw materials and fossil fuels and fresh water.  The capacity of the environment and the atmosphere to absorb all the waste products and toxins and climate-disrupting greenhouse gas emissions that result from this profligate consumption will also become a crucial consideration. 

“Socialism collapsed because it did not allow the market to tell the economic truth, and capitalism may collapse because it does not allow the market to tell the ecological truth.”

                                                                                                  --- Norwegian Oystein Dahle

The Republican Party and its angry and simplistic Tea Party wing may deny these understandings, but such denials will only have the effect of speeding the pace at which our runaway train of consumption is lurching toward calamitous outcomes.  No matter how fervently the myopic Tea Party crowd waves its <Don’t Tread on Me> flags, and no matter how desperately our leaders strive to ramp up consumerism again to create wealth and jobs, overarching ecological truths cannot be ignored indefinitely.

“The survival of a species, by definition, is indefinitely sustained existence.  The human race must recognize and respect the fact that we cannot continue to consume far more than can be sustained by natural resources and healthy ecosystems.  The carrying capacity of compromised and damaged ecosystems is less than that of healthy ecosystems, so we should act to prevent harm to habitats and the providential balance of nature.”

                                                    --- Comprehensive Global Perspective, the Earth Manifesto

Moving in Positive Directions

“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; 

   that is, the search for a superior moral justification for selfishness.”

                                                                       --- American economist John Kenneth Galbraith

Amongst the most serious shortcomings of our economic and political systems are business-as-usual provisions which encourage profligate consumerism in order to maximize short-term profits while allowing many costs and damages and risks to be socialized.  Bailouts are the mechanism by which bad speculative financial risks are socialized and paid for by taxpayers and borrowed money.  Some of the costs of doing business are socialized when big corporations are allowed to evade the costs of pollution mitigation and clean-up, and to consequently foist them upon taxpayers and future generations.  It is foolish not to require the costs of activities that harm people’s health to be borne by the companies that cause the harm. 

Subsidies, depletion allowances and tax loopholes for special interests are other means by which we allow costs to be socialized.  The future costs of environmental damages are also effectively socialized when vested interests are allowed to control policy-making.  Vested interests oppose the creation of “rainy day funds” that would provide financing to deal with cataclysmic future costs which are being made more likely by resource depletion, global warming, related climate changes, natural disasters, species extinctions, and the potential for ecosystem collapse. 

Deficit spending is another expediency by which future generations are being forced to pay for costs in order to increase profits for large corporations and rich people today.  It is important, parenthetically, to accurately understand the details of the budget deficits that were incurred from 2001 to 2008.  The primary causes of these deficits, according to the authoritative Center on Budget and Policy Priorities, were NOT due to domestic government spending.  George W. Bush’s tax cuts accounted for 49% of the deficits;  the military buildup and wars, another 34%;  increased entitlements, mainly the new 2003 Medicare Drug benefit with its indirect subsidies to drug companies, 10% more.  Just 7% was the result of all nonmilitary spending, so it was actually only a trivial source of the increases in federal deficits. 

One overarching idea comes to mind by which we could collectively improve our societies.  This simple proposal would result in a fair and far-reaching, positive transformation.  It involves aligning the most powerful segments of our societies with fairness and responsibility and greater good goals, instead of having the elites in society allied against such goals.  In other words, instead of allowing the guardians of the status quo to be aligned against the common good and antagonistic to the best interests of people in the future, we must strive to make these interests coincide and to make them mutually reinforcing.

Our economy is currently structured so that good citizen goals are contrary to the interests of the segments of society which have the most power.  Robert Reich articulates this concept clearly in his aforementioned book Supercapitalism.  He points out that the dysfunctionality of our societies today is partially caused by our allowing consumer and investor goals to be paramount, while at the same time giving good citizen goals a distinctly lower set of priorities.  This is just the opposite of what should be done for a saner and healthier future.

A redesign of our economic system is required.  I harken back to the brilliantly sensible author and businessman Paul Hawken, who wrote in The Ecology of Commerce:  “We must design a system … where doing good is like falling off a log, where the natural, everyday acts of work and life accumulate into a better world as a matter of course, not a matter of conscious altruism.”  Think about this great and revolutionarily simple idea!

The Earth Manifesto essay The Common Good, Properly Understood provides a clear synopsis of the varying goals that we all have as consumers and as investors, and the contrasting goals that we have as good citizens who want things to be consistent with the greater public good.  If we were to choose to revolutionarily restructure the current state of affairs by altering the rules which encourage ‘tragedy of the commons’ outcomes, we would discourage harmful impacts on other people and the environment and future generations.  This would be more advantageous by far for us than collectively continuing to foolishly encourage undesirable impacts. 

Adverse outcomes arise from two general categories of harmful impacts:  social ones and ecological ones.  Negative social impacts of our current economy include activities that cause increasing inequalities amongst people, and destabilize the economy, and serve to financially mortgage the future and harm the aggregate well-being.  Negative ecological impacts include the wasteful depletion of resources, the degradation of wild lands and ecosystems, the pollution of streams and lakes and oceans, the altering of the climate, and widespread species extinctions that are causing a dramatic reduction in biological diversity on Earth due to habitat destruction and pollution and toxic wastes and water diversions and greenhouse gas emissions and other activities. 

Some say we are like sleepwalkers shuffling toward a planetary ecological disaster.  So here’s a bold plan.  To align the most powerful interests in our society with good citizen goals, we should alter the rules in our economies in two ways.  First, we should enact a Social Justice Taxation Act that will make fair Tax Code revisions to ensure that taxes are more progressively structured.  Second, we should enact a three-year plan to balance the federal budget by giving the primary deciders in our economic and political systems -- wealthy people and big corporations -- powerful motivations to achieve balanced budgets.  The details of these two proposals are contained in One Dozen Big Initiatives to Positively Transform Our Societies in Part Four of the Earth Manifesto. 

Seven Proposals to Align Costs with Responsibilities

We should collectively take courageous steps to make sure that all costs incurred in making products or in providing services are included in the prices of the goods and services.  By making this change from our current jerry-rigged system, we would allocate costs properly to where they are incurred.  This would limit the socially undesirable “privileges” that entities currently enjoy when they are allowed to externalize costs upon society as a whole. 

Here are seven specific plans to fairly and providentially accomplish this smart goal by shifting incentives and disincentives to fairer and more proper priorities.  These seven changes in policy would probably have a regressive effect, in the sense that they would have a greater impact on poor people and the middle class than on rich people.  In recognition of this fact, taxes should be reduced equally for every taxpayer to partially offset this inegalitarian affect.  The fairest and easiest way to do this would be by increasing the Standard Deduction exclusion of income from taxes on everyone’s tax returns.  Here are the proposals:

First, since more than 440,000 people die each year as a consequence of tobacco use and more than 8 million people suffer from at least one chronic disease due to smoking now or to having smoked in the past, the medical cost of treating these people should be borne by those who buy and use tobacco products, not by everyone in the general population.  We should assess additional taxes on tobacco products to pay for these healthcare costs. 

Second, obesity is estimated to be responsible for more than $150 billion in health care costs each year.  More than half of this total cost is paid by taxpayers through programs like Medicare and Medicaid.  The most significant contributing factor to this cost is the excessive amounts of saturated fat, salt, refined sugars, simple carbohydrates and preservatives that are contained in fast foods.  A surcharge on all sales of fast foods should be implemented to cover these obesity-related costs.

Third, the cost of health damages and crop losses caused by air pollution are estimated to exceed $100 billion in the United States each year.  Half of this cost is caused by motor vehicle emissions.  These costs should be paid for by those who contribute to the problem.  To allocate costs accordingly, a provision for these externalized costs should be included in the price of gasoline.  Americans collectively drive more than 2 trillion miles each year, using more than 100 billion gallons of gasoline, so an increase in gasoline taxes of $.50 per gallon would cover this half of the externalized costs.  The other half of the damages are caused by industries like those that generate electricity from the burning of coal and oil and natural gas.  Again, costs should be included in the processes that are responsible for generating them, so these industries and all electricity users should be required to pay for them instead of being allowed to dump the costs indiscriminately upon all.

Fourth, alcohol is responsible for the deaths of more than 100,000 people each year.  The costs of alcohol-related afflictions should be paid for by those who drink beer and wine and hard liquor.  Higher taxes on alcohol should be imposed to raise money to pay for these costs.  These increased duties would also serve to reduce the abuse of alcohol and the sheer amount of adversities suffered as a result of the abuse of the consumption of alcoholic beverages.

Fifth, the costs of natural disasters in the past 10 years have averaged more than $30 billion per year.  There have been wide swings in such costs due to epochal events like extremely damaging hurricanes and periodic storms and floods and droughts and wildfires.  All of these events are being caused with increasing frequency due to climate disruptions associated with greenhouse gas emissions.  A national carbon tax should be implemented to create a ‘rainy-day fund’ that covers these costs, so that a direct correlation is created between the primary contributors to global warming emissions and those who pay for the consequences.  Air pollution is also caused by oil-burning and coal-fired power plants and other industrial activities, so assessments should be made to these polluters to pay for these costs.  The funds generated from these taxes should be used to help finance an incipient and necessary ‘green transition’ to a cleaner energy future.

Sixth, tens of thousands of people are killed or injured every year through the use of handguns or assault weapons.  The related cost of emergency room visits and law enforcement and court costs should be covered by assessments in the price of all sales of guns and ammunition.

Seventh, the cost of national security and wars and domestic homeland security and intelligence gathering services is somewhere around $1 trillion per year in the United States.  This enormous cost is beneficial to industries and investors that are part of the status quo of the military-industrial complex and the profligate use of oil.  A portion of this cost should be covered by taxes on the primary beneficiaries of wars, like armaments manufacturers and Big Oil companies, instead of allowing these costs to be foisted upon all Americans and future generations.  Military interventions in the Middle East in the past two decades have cost more than $1 trillion, and these aggressive actions have been directly related to our addiction to oil, so it would be only fair to finance such military adventurism with a tax on imported oil.  The premise, once again, is to sensibly raise revenues from products and services that are directly responsible for these costs. 

The Inauspicious Expediency of Out-of-Control Deficit Spending

The newest and most insidious way that costs are being externalized onto society and future generations is the popular but fiscally irresponsible NO-WAY-WE-WANT-TO-PAY-AS-WE-GO tactics of the past 10 years.  This is another modern contribution to the ‘tragedy of the commons’, one in which we borrow gigantic sums of money from people in the future to avoid making the difficult decisions that would be required to actually balance the budget.  If we did not indulge in this risk-laden expediency, we would be forced to squarely face the need to cut things like military expenditures and the compensation and benefits paid to federal government employees and the cost of entitlement programs AND at the same time to increase revenues by reversing a portion of the overly generous tax cuts that Ronald Reagan and George W. Bush have succeeded in giving to wealthy people and large corporations in the past 30 years.

Modern societies have serious problems which tend to get worse as nations become more populous.  Financially successful segments of every society are composed of people who have benefited the most from the ways a society is structured.  These are the people who gain outsized benefits from law and order and a strong military and low taxes on capital gains, and from public investments in education and infrastructure.  They are also the primary beneficiaries of economic provisions that encourage the exploitation of resources and the concentration of wealth and the externalizing of costs upon society. 

Considering these facts, it is sensible and fair to require well-to-do people to shoulder a greater share of the tax burden required to maintain society.  It is, in fact, the only practical thing to do.  It is also the only morally responsible way to make the society work more fairly.  This leads to the inescapable conclusion that we need a more progressive tax structure in which everyone pays the same amount of taxes on all levels of earnings, and those who earn higher levels of income pay progressively higher marginal tax rates on their higher levels of earnings. 

Progressive taxation is eminently fair.  Understand this.  Every taxpayer essentially pays the same rate of tax on every dollar they earn.  A person earning $500,000 pays exactly the same amount of tax on their first $50,000 of income as a person making only $50,000.  This is simply how tax tables are structured.

Tax policy in effect reflects our social values and moral stances.  The design of tax policy has far-reaching consequences, so this is not merely an arcane accounting issue.  No one particularly wants to pay taxes, and many people today are angry at having to pay them.  This anger has been shrewdly channeled into a retrogressive agenda that allows taxes to be shifted from those who can most easily afford to pay taxes, i.e. the wealthiest of Americans, to everyone else, and to all people in future generations.  This is pure scheming genius by the ruling class.  In the long run, however, this is a form of class warfare and intergenerational treachery that undermines the prospects and health and well-being of all Americans. 

It seems obvious that higher marginal taxes on the 2% of people who earn more than $250,000 per year, coupled with unchanged taxes on everyone else, should be supported by a 98 to 2 vote in a democracy that functioned rationally and properly.  But our political system and propaganda are controlled by those with the most money, so we seem to be practically incapable of altering our tax system in this sensible direction.  Nonetheless, our political leaders must find a way to make our tax system fairer sometime soon.

Congress should also pass a bill like the Tax Haven Abuse Act proposed by Senator Carl Levin, in order to control “offshore secrecy jurisdictions” and money laundering schemes.  This would result in the collection of an estimated $100 billion each year in revenues from tax-evading corporations and high-income individuals who use sophisticated gimmicks to avoid U.S. taxes. 

A Digression on Rich Kids’ Inheritances

   “I’ll have a bottle of your tawniest Port.”

                                                      --- Vinnie del Mar

Theodore Roosevelt gave a remarkable speech 100 years ago in which he indicated a strong belief in “a graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate."  We need to reinstitute inheritance tax plans to be consistent with this idea, instead of giving away the farm and thus figuratively fiddling while Rome burns!

One would think that the schizophrenic status quo of estate tax law would have put a hot burner under our leaders earlier in the year 2010.  After all, the Bush Administration’s regressive tax cuts that favored rich people finally chipped away at taxes on rich kids’ inheritances so much that what was 55% on all inheritances over $675,000 in the year 2000 had been reduced to 45% tax on amounts inherited over a much larger $3,500,000 exclusion in 2009, and then ZERO TAX on any inheritances in 2010.  Estate taxes would have reverted to 55% on all inheritances over $1 million in 2011, but the Obama/McConnell tax “compromise” in December 2010 gave rich people an outlandish $5 million tax free exclusion for each parent, and then it taxes inheritances only 35% on amounts in excess of these high totals.  

This governmental gimmickry is a ridiculous result of vested interest domination and unethical gamesmanship in action.  We need taxation that is more progressive, and we need greater social fairness and smarter national planning!

It is crazy to have allowed the 1% of people who have a net worth large enough to be subject to any estate tax at all to get off ‘scot-free’ in 2010.  Our budget deficits are too large to allow rich people to continue to pay historically low tax rates on their estates after they die.  Our representatives must courageously and honorably address this issue.  They must also act to close tax haven loopholes.  All these things, together with more steeply-graduated tax rates on incomes and capital gains, are needed to help finance governmental institutions and needed social programs and our irresponsibly accumulating national debt.  STAND AND DELIVER!

This applies particularly to scheming Republicans, who made so many of our national problems worse in the years from 2000 to 2008.  Since then, they have stubbornly obstructed almost every effort to solve the serious challenges we face.  Their overarching goal is to make President Obama fail.  They gained some traction and political power in the national elections of November 2010, but their overreach and economic sabotage became disadvantageous in the November 2011 mid-term elections.  The perversely single-minded Republican obsession for power and domination has come at a terrible cost to tens of millions of Americans, and to all in future generations.  This is simply unacceptable.  STAND AND DELIVER!

Another Inequity Is Revealed

Another substantial inequity is being created which is extremely unfair to retired people and those who save money.  In response to the recent recession, the Federal Reserve reduced interest rates to the lowest levels in 50 years.  The purpose of this strategy has been to stimulate the economy by encouraging borrowing and spending and investments and risk-taking and real estate speculation.  This policy, in effect, causes a massive wealth transfer from savers to borrowers.  This is one outcome of the “financial instability hypothesis” which Hyman Minsky described when he noted the cyclical progression in banking from safe lending practices to more intense competition to a speculative bubble frenzy of “Ponzi finance.” 

The extremely low interest rate policy now in effect constitutes an estimated $350 billion annual penalty to savers and retired people.  The benefits of this policy go primarily to banks and investors rather than individuals.  Banks make profits by leveraging the spread between the cost of funds and the charges they make for loans, and banks never give borrowers the full benefit of reductions in their interest costs.

“Perversely, coming after a devastating financial crisis caused by companies and households that feasted on borrowing, ultra-low interest rates are now penalizing people who have paid down their debt and are trying to save.  It is also punishing those who rely on the proceeds of their nest eggs to pay the bills.”

        -- “Debtors Feast At the Expense of the Frugal”, Graham Bowley, New York Times, 9/9/10

Reflections on Conflicting Goals of Consumers and Investors and Good Citizens

Federal government policies are practically schizophrenic in the way they treat competing and conflicting interests in our societies.  These policies often encourage overproduction and overconsumption rather than conservation or the efficient use of resources or a sensible and wise allocation of resources.

The 2008 Farm Bill, for instance, was typical of poorly prioritized and misguided government policies.  The first Farm Bill had been enacted during the Great Depression to protect farmers against low crop prices and environmental disasters like the drought-devastating ‘Dust Bowl’.  But the Farm Bill has evolved into a massive subsidy program that principally benefits large farm corporations even when food prices and profits are high.  It is curious to see how life preservers that are thrown to the most vulnerable people in our society almost always eventually end up being entitlements for the most affluent and the best connected.  There is ostensibly no ‘women-and-children-first’ chivalry here!

In The Omnivore’s Dilemma, author Michael Pollan delves into the patchwork insanity that has evolved from the federal government’s early efforts to help small farmers who were severely affected during the Depression by low crop prices and the loss of millions of family farms.  As seems to be the inalterable nature of our skewed and screwed-up political system, powerful and highly focused special interests have exploited the Farm Bill to pervert it into a misguided misallocation of taxpayer funds and borrowings. 

The net effect of Farm Policy is to subsidize the vast overproduction of a small number of crops like corn and soybeans.  Farm Policy also encourages a monoculture system of agriculture that is distinctly favorable to giant agribusiness corporations.  This system is dependent upon the extensive use of chemical fertilizers and pesticides and fossil fuels and the capital-intensive mechanization of planting and harvesting.  One side effect of these policies is to drive many small farmers out of business.  Another consequence is that innovations in marketing and technology are developed that unwisely stimulate overconsumption of the food stuffs which are being overproduced. 

The unintended consequences of this industrial Farm Policy are far-reaching, and in many ways insensibly foolish.  The most serious impact that comes to mind is the fact that we have, to an unprecedented extent, become a “fast food nation” in which obesity has become a costly national epidemic.

Let’s shift our frame of reference concerning the proper role of the federal government in our national policies.  The government is neither categorically bad, as the Tea Party crowd alleges, nor is it always better than poorly managed laissez-faire capitalism, as more liberal-minded people believe.  Neither unregulated private business activities nor the rapid growth in government involvements in our economy are ideal.  And no collaboration of Big Government and Big Business is acceptable that seeks to maximize private profits while allowing costs to be socialized at the expense of the public.  A better, more proper, and more providential balance is clearly required than the status quo.

Passionate arguments are made about an Invisible Hand of self-interest that guides collective outcomes toward the greater good.  Some people, like the philosopher and novelist Ayn Rand, embrace spin about the nobility of heroic industrialists.  But the simple fact remains:  whether or not one fervently believes that governments should have less involvement in economic activities and people’s lives, or more responsibility and involvement, a deeper understanding of unintended consequences and more intelligently prioritized principles is needed to ensure that our societies become economically stronger, fairer, more ecologically sound, and more likely to be sustainable.  There is a kernel of truth in every good argument, but this does not mean that the conclusions people arrive at are necessarily valid.  We need to find the best understandings!

A Perspective on Those who Oppose Ideas like These

Americans have been dishonest enough with themselves to allow anti-tax ‘conservatives’ to succeed in getting taxes reduced to inter-generational lows for rich people.  We have effectively bought the story that cutting taxes would result in a shrinking of the size of the federal government.  The simple fact of the matter is that tax cuts have not resulted in less government spending, but consistently high increases in the national debt.  One consequence of deficit spending is a large “debt tax”, which is the amount of interest expense that is incurred every year on the national debt.  Since our national debt is now almost $15 trillion, our nation is more vulnerable to financial insolvency and potential national bankruptcy.  We must face this fact and remedy the insidious risks created by such fiscal negligence. 

Anti-tax forces are beginning to severely crimp state and local governments, forcing cutbacks in such things as education, public services, oversight of businesses by government agencies, law enforcement, court staffing, and the maintenance of State Parks and open spaces and wild lands and national parks.  These outcomes are deleterious to millions of people.  A better balance is needed in our efforts to control government spending and waste without crippling the many good and necessary functions that governments serve.

The federal government’s efforts to stimulate the economy have alleviated the danger that would otherwise have prevailed if severe cutbacks in government spending and employment had been made during the credit crisis of 2008-2009.  The 6% annual rate of economic shrinkage at the end of 2008 would have gotten much worse without economic stimulus spending and bailouts of banking, insurance and auto industries by the federal government.  A long-lasting economic depression could have resulted.

Shrinking the size of government until it can be drowned in a bathtub, as advocated by anti-tax people like Grover Norquist and his fat cat supporters, may appeal to some people, but it can be seen that en route to the dismantling of the public sector, a good portion of Americans would likely be hurt.  Deregulation, tax-cutting, laissez-faire competition and increased leveraging may sound good in principle, but the devil is always in the details.  As with anything not sensibly balanced, such things in aggregate can lead to highly undesirable consequences.

Established conventional wisdom is not necessarily right.  The dogma of deregulation, for instance, involves an almost religious regard for “free markets”.  But the failures of supposedly free markets are well-known, including market instability, monopoly dislocations, extremes of inequality, cheap labor sweatshops, distorted incentives, high levels of unemployment, irrational exuberance during speculative bubbles, overwhelming fears during economic recessions, and the externalizing of costs that can cause disastrous impacts on the environment.  Unfettered competition may result in low prices for consumers, but it can also encourage waste and create a “race to the bottom” by competitors who strive to evade environmental protection costs and to minimize worker wages and benefits. 

Like deregulation, tax-cutting is an ideology fervently propounded by special interests.  This ideology has been disguised as a populist initiative, but in reality, it is a gambit by the rich to get outsized benefits for themselves by enlisting the ignorance and insecurity and anger and frustration of the masses to support goals that are a boon principally to an extremely small proportion of the population. 

Any honest analysis of the effects of regressive changes in taxation that were implemented under Ronald Reagan and George W. Bush reveals that these changes have caused adversities to the majority of Americans.  They are an outright disaster for tens of millions of people who have seen the purchasing power of their wages decline, or have lost their jobs or savings or homes, or who are incarcerated in prisons, or who have been forced to choose to risk their lives fighting wars because it is the only opportunity they can find.  Since tax-cutting has led to such large increases in the national debt, this narrow ideology is also decidedly negative to the prospects of all people in future generations.  Hell of a job, guys!

    “Push the frappe button again, man!”

                                                 --- Vinnie del Mar

Human nature intrinsically plays a defining role in our societies and our economies and our politics.  So we should find a way of understanding human nature that is rational as well as intuitive and honest and true.  Human nature does not change, but habits and behaviors can easily be manipulated by policies.

Once again the need to implement socially and ecologically smarter incentives to motivate people to do things that are collectively advantageous is highlighted.  So is the accompanying need to enact disincentives and green taxes that discourage harmful activities.  Wrong-headed subsidies for industries like the oil industry and war services industries should be eliminated.

It is high time that we begin acting with greater responsibility toward the generations that will follow us.  Politics oriented to the short term and narrow “we win, you lose” partisanship is becoming an extreme disservice to the American people, now and in the future. 

“Ideology is not some arbitrary penchant for clinging to stale ideas.  It is a principled set of beliefs about how the economy and society work, and should work.  To be a conservative Republican is to believe that markets work just fine, and that people mostly get what they deserve, and that government typically screws things up.  To be a liberal Democrat is to believe that market forces are often cruel and inefficient;  that the powerful take advantage of the powerless;  and that there are whole areas of economic life, from health care and Social Security to regulation of finance, where affirmative government is the only way to deliver defensible outcomes for regular people. …

The problem afflicting America is not ‘ideology’.  It’s the hegemony of right-wing ideology.”       

                    --- Robert Kuttner, A Presidency in Peril – The Inside Story of Obama’s Promise,

                              Wall Street’s Power, and the Struggle to Control Our Economic Future

A new era of cooperative problem-solving is needed soon!  Stubborn intransigence and extreme obstructionism are contrary to what we need.  Step forward, Republicans.  Your dishonest spin and knee-jerk opposition are often not constructive, and in many ways they are sabotaging our nation.  This is not something about which to be proud!!

Narrow-mindedness:  “There but for the grace of God go I!”

A Plug for the Wisdom of Investing in Public Education and the Social Good

When the budgets for higher education are cut, according to one professor, “it is like eating our seed corn”.  A strong case can be made that universities are the most powerful economic engines in every state, so their budgets should not be slashed.  The prosperity of the United States today is significantly based on technologies developed by government-funded research and development in universities and by publicly-funded research institutes and the U.S. military and NASA.  Realizing this, it becomes clear that it is foolish to severely cut funding for higher education and research.

Only the most desperate farmer would eat the seed corn which is critical to growing crops in future years.  Eating the seed corn is just so starkly shortsighted!  Such a course of action is even more foolhardy than letting one’s home fall apart by failing to maintain the roof or caulking, or by neglecting to keep good batteries in smoke detectors.  An adjunct to this kind of myopia would be to let whole neighborhoods deteriorate, or entire communities, or the whole country.  Surely we can do better than this!

In thinking about the vital importance of seed corn, consider the strategies of corporations like Monsanto and other biotechnology companies which obtain patents on genetically-modified seeds in an effort to create a monopoly on plant and animal life-forms themselves.  The creation of plants that produce no vital seeds makes it necessary for farmers to buy new seeds every year.  The invention of sterile ‘Terminator seeds’ is a corporate ambition that is almost as potentially nefarious as efforts to privatize water supplies and create monopolies of fresh water sources.  These are cynical and insidiously exploitive methods of making bigger profits! 

Paradoxes We Collectively Face

Daniel Goleman writes in Ecological Intelligence that “radical transparency” is needed to reveal to consumers the true environmental and social costs of the goods they buy.  It is Goleman’s theory that once consumers know the extent of harmful impacts in each and every competing good, they will tend to choose greener ones.  Well, that may be true to an extent, but then again such knowledge may not lead to significant changes in consumer behaviors.  The idea of greater transparency may be a good one, but I personally feel we need changes that are far more transformational.  We simply must come to grips with the necessity of limiting our waste and aggregate consumption and our population growth, rather than merely trying to find ways to get people to buy things in greener and more socially responsible manners.

If fewer people in aggregate were to buy less stuff, it would help mitigate problems related to the depletion of resources and increasing amounts of pollution and greenhouse gas emissions and toxic wastes.  Such a development, however, would present us with an obvious paradox.  Our economies are largely predicated upon growth in the consumption of goods and services, so a reduction in consumption on a per-capita basis, or a slowing in the growth of the number of consumers, would reduce profits and could cause an economic recession.  The growth of government spending and borrowing would then become completely untenable, and Ponzi-like schemes of Social Security, Medicare, inflation, and high government spending would falter and collapse.

This means that we are faced with a conundrum similar to the odd “paradox of thrift”.  The paradox of thrift recognizes the fact that, whereas it makes good sense for an individual to save some of the money they earn by spending less, if everyone were to do this at the same time, the overall level of spending would fall and businesses would cut back on production, resulting in worker layoffs.  Individual thrift could thus cause unemployment to increase and total savings to actually fall. 

The complexity of such interconnections makes it more necessary than ever to think in aggregate terms and to focus our considerations on longer term outcomes.  We must use a new form of overarching ecological intelligence that emphasizes living on planet Earth in ecologically sound and sustainable ways.  To accomplish such a propitious goal, we surely need our political system to work much better and more fairly!

The Paradox of Profligacy

An even more complex conundrum confronts our civilizations in the form of a curious Paradox of Profligacy.  Since economic growth is practically predicated on advertising-stimulated demand for products and services, and on conspicuous consumption, fashion obsolescence, the wasteful use of resources, stimulative monetary policies, the “wealth effect” of encouraged economic bubbles, the Keynesian stimulus of deficit spending, and a continuous growth in the number of people on Earth, this profligacy will eventually, inevitably, cause our Juggernaut of consumerism to crash headlong into limits that are inherent in finite resources and the carrying capacity of natural ecosystems for our needy and mindlessly greedy species.

We have recklessly used up more resources in the last century than in all of the 200,000 years of our species’ existence, as is cogently made clear in the hauntingly thought-provoking film Home by the famous aerial photographer and ecologist Yann Arthus-Bertrand.  I strongly recommend that everyone check out this beautiful 93 minute film.  Find it on the Internet by searching for Home Project, or click the hyperlink, http://www.youtube.com/homeproject.

It is sheer madness to blithely pursue courses of action that deplete resources and harm the environment which sustains us.  We must collectively find some way to stop rushing blindly toward ecological collapse.  This increasingly-likely outcome is not some doom-and-gloom expectation like a traditional mythological End Times prophecy in which humanity is condemned by God as a means of retribution for supposedly moral sins.  No, this is a more fact-based understanding that we are gambling with the well-being of all people in future generations by our actions, both intentional and inadvertent. 

Our true salvation will be found in developing solutions to the overarching global challenges that face us, not in remaining ignorant or in denying greater truths or slavishly obeying fears and backward-looking dogmas.  We must boldly and courageously choose to embrace the most honest and farsighted understandings and actions that will help create a safer, healthier, and more likely sustainable future.

Questioning the Wisdom of Bubble Economics in Real Estate

Some friends and I had an interesting debate about whether or not it should be a national goal to have an appreciating real estate market.  The rapid inflation in home prices from 1997 to 2006 exceeded 10% annually in many locations.  Obviously it would have been better to have a smaller, steadier increase in home values, roughly keeping pace with inflation, rather than the volatility of an epic boom and then a devastating bust. 

Home prices increased rapidly in the years after 1997 because Congress had enacted a capital gain tax exemption on the sale of homes of $250,000 for an individual and $500,000 for a married couple.  This extraordinary encouragement stoked home prices and made real estate into an asset subject to economic bubble conditions.  The real estate bubble was essentially engineered by banks, mortgage lenders, ratings agencies, and Congress, amongst others, and it was aided and abetted by speculators and the Federal Reserve.  The government strongly promoted the expansion of home ownership under both the Clinton and Bush Administrations.

After the stock market dot-com bubble burst in March 2000, the Federal Reserve reduced interest rates to very low levels, creating even further speculative impetus in the housing market.  People borrowed heavily from their increasing home equity, setting up greater risk of foreclosures when the market went bust.  Lax lending standards proliferated, just like the economist Hyman Minsky said they do in the latter stages of economic cycles, and this contributed to the severity of the bust.  Regulators also failed to prevent predatory lending practices or to limit subprime mortgages or to regulate mortgage-backed-security derivatives.

The real estate bubble also had significant undesirable effects on rent increases, and on the sprawling growth of suburbs, and on homelessness.  The bubble also substantially increased the national debt because of bailouts of Fannie Mae and Freddie Mac.  The fact of the matter is that homes actually depreciate as time passes because of weathering and physical deterioration.  Roofs must be periodically replaced, and new paint and repairs and maintenance are costly. 

Today, in late 2011, a stunning 28.6% of homeowners have negative equity, i.e. are “underwater”, according to Zillow, the online real estate database.  Taking into account the fact that one must pay a 6% Realtor fee to sell a house and then have a minimum 10% down payment on another home, more than 50% of all mortgaged households in the U.S. are effectively underwater.  The real estate bubble trapped people into this position, and this is having a highly negative impact on the lives of millions of people.

Another reason that home prices have increased so much is that average home sizes have gotten significantly bigger.  The average house size was less than 1,000 sq. ft. in 1950.  The average home size increased to more than 1,700 sq. ft. in 1980, and then to over 2,300 sq. ft. in 2010.  In housing, it seems, there is little respect for the idea that “small is beautiful”.  The understanding that there is great virtue in simplicity and moderation has seemingly been lost.

A Sensible New Proposal on Property Taxes

The average property tax rate in the U.S. is a startlingly high 1.38% of assessed home value every year.  That’s a lot of money for millions of homeowners to pay annually.  The state of Hawaii has the lowest rate at .40%.  Texas has the highest rate at 2.57%.  What, are Texans really closet socialists?  (“There you go again, Tiffany!”)

Considering the fact that bigger homes use much more energy and water and construction materials than smaller homes, it would be a fair-minded plan to assess property taxes on a graduated basis that rewards the ownership of smaller homes and charges more for bigger homes. 

Here is a fair-minded and forward-thinking proposal for all states to consider for residential property taxes.  Such revisions in the tax structure would provide powerful incentives to reduce the amount of energy and materials consumed in the construction and maintenance of mega-homes.  I propose the following progressively-graduated changes in property tax rates, according to home size:

            House Size                         Proposed Change in Real Estate Taxes

      Under 1,000 sq. ft.                  Reduce current property taxes by 25%.

      1,001 to 1,500 sq. ft.                Reduce current property taxes by 12%.

      1,501 to 2,000 sq. ft.               Leave tax rates unchanged.

      2,001 to 3, 000 sq. ft.              Increase current property taxes by 25%.

      3,001 to 5,000 sq. ft.               Increase current property taxes by 50%.

      5,001 to 7,500 sq. ft.               Increase current property taxes by 75%.

      7,500 and bigger                      Double current property taxes.

The net result of this change should be calibrated to result in a net increase in property tax revenues.  The additional funding should be used to provide more support for improvements in the physical infrastructure of our communities, as well as to finance costs of first responders to emergencies and to create a rainy day fund for natural disasters as well as the maintenance of local, regional and state parks.

Some communities have given eminently sensible consideration to a maximum limit on the size of homes, like a maximum of 15,000 sq. ft. in Aspen, Colorado and less than 2,800 sq. ft. in Crested Butte, Colorado  Since Americans love freedom to do as they please, a property tax plan like the one recommended above would allow people the freedom to build monster homes, but sensibly require them to pay significantly more for the profligacy of that privilege and the lavish use of the Earth’s resources.

A Fascinating Fact and a Related Observation

Consumer spending in the United States was the highest it has ever been in 2010, relative to total incomes earned.  Spend, spend, spend!  This situation cannot continue for an indefinite period.  Debtor’s prisons may be a thing of the past, but I’ll bet big banks and their friends in Congress will be thinking of new ways to make sure that their enormous profits are not jeopardized by the declining solvency of the American people.  I wonder if it’s possible that they will flip to the far side, and think like Henry Ford, who believed that by putting policies in place that help build a healthy middle class instead of padding the pockets of the superrich, we might thereby put the majority of Americans on a path toward earning more money so that they can actually afford to buy more of the products businesses produce.  Hmmm …

Another Angle in the Dysfunctionality of Political Problem-Solving

Almost every state in the United States faces severe budget shortfalls because of the current economic crisis.  Opposition by conservatives to tax increases of any kind is causing most of the states to make draconian cuts to education and social programs and even law enforcement.  By this refusal to find ways to responsibly raise revenues, conservatives are causing spending to be slashed on important public services and programs that benefit important constituencies like children and college students, as well as poor people.  Better management and more sensible compromises must be made to solve such challenges.

California, which generally leads the nation in trends, passed a ‘taxpayer revolt’ initiative in 1978 known as Proposition 13, the “People’s Initiative to Limit Property Taxation”.  This law reduced property taxes by 57% at the time.  Now, more than 32 years later, provisions of this law have created bizarre inequities in taxes on real estate.  New home owners pay much more in taxes than their neighbors who have owned homes for a long time.  This tax inequity also extends to commercial real estate, creating absurd tax unfairness for newer businesses.  This has the regressive effect of shifting a larger share of the overall tax burden from long-time home owners and businesses to new homeowners and businesses and other taxpayers. 

Proposition 13 thus creates another form of ‘generational injustice’ that is somewhat similar to the federal government’s debt-financed mortgaging of the future and the squandering of natural resources and the facilitating of gambits that allow costs to be externalized onto society. 

Another seriously detrimental aspect of Proposition 13 was that the law included a provision that required a two-thirds majority of state legislators to approve any kind of tax increase in the state, not just increases in taxes on property.  This has made it difficult to govern the state sensibly.  The impacts on cities and localities have been distinctly negative.  The devil being always in the details, what made sense in many respects in 1978 has become calamitously unfair and dysfunctional for most Californians today.  It has also contributed to the extreme ineffectiveness of politicians in the state.  If conservatives have their way, giving tax cuts in response to every issue, California’s experience will become the norm for all states.

Larger and More Comprehensive Considerations

We must cultivate big picture understandings which attempt to assess the consequences of all public policies.  Unintended consequences can be seen to abound in all of our national decisions.  Consider, for instance, the North American Free Trade Agreement (NAFTA), which was signed in 1992 by the United States and Canada and Mexico.  This agreement resulted in a substantial increase in the export of corn to Mexico, corn that was produced by highly-subsidized American agribusiness corporations.  Some say that this contributed to the loss of as many as two million jobs on small farms in Mexico.  Many of these farmers were forced in desperation to migrate to the U.S. where they work for low wages and effectively push down wages for all wage earners. 

The problems posed by this massive influx of largely illegal immigrants causes extensive conflicts and strengthens anti-immigrant sentiments.  It also undesirably stimulates the energy behind reactionary politics and empowers right-wing ideologues who thus gain power that they use to obstruct sorely needed progressive policies. 

Fair trade would have been a far better plan for almost all concerned than unfair “free trade”.  The negotiation of NAFTA significantly benefited giant agribusiness corporations in the United States, giving bigger profits to a relative few while causing high social costs that have adversely affected the lives of many millions of people.  This is one more way that social instability and the ruthless aspects of competition and human nature are stimulated in our economic and political systems.  It is crazy to continue to encourage this “race to the bottom” that allows good citizen goals and worker and environmental protections to be undermined or evaded. 

A good case can be made that gross inequalities and inequities are an inevitable part of the capitalist system.  This being so, capitalist societies should undertake a sensible partial redistribution of wealth in a more just manner by using fairer and more steeply graduated tax policies and powerful incentives for businesses to include all production costs in products rather than allowing them to be foisted onto society as a whole.

While we are redesigning the incentives in our society, perhaps we should start by creating more effective incentives for politicians to make bipartisan compromises for the greater good, rather than having them continue to use the politics of inequity and animosity and division and fear on each other and on the American people.  I’ll bet we could come up with clever ways to prevent shortsighted expediencies and mean-spirited, elitist, self-serving politics from undermining our capacity to solve problems.  Surely we can find a way to create a more stable and stronger financial system and a healthier, fairer, more sustainable economy.

The Positive Ramifications of Educating and Empowering Women

As these mega-trends play out, politics in the United States has become increasingly polarized.  In the past decade, a culture of confrontation has replaced any semblance of working together to find a consensus for win/win solutions to problems.  Both sides of our American partisan political divide seem to be more interested in gaining power and getting money from corporations and wealthy donors than in actually solving problems. 

This undesirable aspect of intense competition has resulted in increasingly bitter partisanship and accompanying political gridlock.  It is principally because of this partisanship that we have had so difficult a time reforming our costly and unfair healthcare system, or enacting stronger regulations on banks and Wall Street financial institutions, or extricating ourselves from costly wars abroad.  The dog-eat-dog character of our capitalist system amplifies this trend.  As a result, inequities and anxieties and stresses in our society are getting worse and our national debt is burgeoning out of control.  At the same time, the competition for power and influence is getting more intense between social conservatives and progressives, and it has become increasingly hard to enact policies oriented toward the true greater good.

But it need not be this way.  One interesting idea comes from President Clinton’s first press secretary Dee Dee Myers, who makes a convincing case in her book Why Women Should Rule the World that very positive alternatives exist.  She points out that by taking steps to educate and empower women, we would likely improve cooperation in our societies and make our world more collaborative and peaceful.  This would be one form of salubrious ecological intelligence!

This makes me think of Woody Allen’s 2009 film Whatever Works.  The story presents a provocative set of relationships that center around Boris, an eccentric New Yorker who is cynically realistic about life.  Boris is played by Larry David, the co-creator of the television comedy Seinfeld.  Boris is philosophically cerebral, but after meeting a young Mississippi woman who is sleeping on the street, he has provocatively rich experiences with her that brighten his life and help him realize that each of us should seek to be less judgmental of others and to try to find greater meaning in our lives.  “Whatever works!”  A long train of entertaining developments take place in the film before Boris concludes that each of us should seek whatever satisfactions and love we can find in our personal relationships in this challenging world. 

In addition to such wisdom, it seems to me that there is an overarching importance for us not to neglect the importance of leaving a fairer legacy to our descendents. 

On Economics and the Government

Economics is a field of speculation about the aggregate behavior of human beings as reflected in markets and prices and the production and consumption of goods and services.  It deals with issues like supply and demand, employment, monetary policies, resource allocation, theories of value, rational choices, opportunity costs amongst alternatives, and incentives and disincentives.  Microeconomics (‘small’ economics) examines the economic behavior of individuals and businesses, while macroeconomics (‘big’ economics) addresses aggregate issues of unemployment, inflation, and monetary and fiscal policies for an entire economy.

Every nation in the world follows its own unique hybrid of private and public enterprise, of decentralized activities and centralized supervision.  Our goal should be to optimize this balance.  We need to honestly debate where this balance lies.  The only fair way for people in a democracy to determine where this balance lies is to listen well to those on the left, and to those on the right, and to those in the center, and to evaluate the merits of the various contentions, and to sort out the facts, and to discount ideas that are beneficial only to narrow constituencies.  Then, we must boldly implement the smartest compromise for the greatest good.  Common sense tells us that to achieve this goal, we must reduce the domineering influence of Big Money on our decision-making process!

A Brief History of Economics

Economists have been called “worldly philosophers” because they seek to explain the most worldly of all of humankind’s activities – the drive for wealth.  Economists seek to understand the expression of human nature that is reflected in markets and in the hard-fought struggle between capital and labor.  The first famous economist was Adam Smith, who in the year 1776 propounded his best-of-all-possible-worlds interpretation of how the mechanisms of supply and demand naturally lead to fair prices and proper resource allocations and progress toward making everyone better off.  He optimistically believed that an “invisible hand” guides people through their natural self-interested human impulses and competitive striving.  He opined that this guidance tends to increase both profits for entrepreneurs and investors as well as wages for workers.

Subsequent worldly philosophers were less sanguine and less optimistic.  They recognized the risks of rapid population growth and systemic failures and resource depletion as well as the anti-social nature of monopoly power, unfair competition, ruthless exploitation, rash risk-taking, and disastrous “tragedy of the commons” outcomes.  As economic thought evolved after Adam Smith, Thomas Robert Malthus pessimistically pointed out that, in the year 1800 at a time when there where just one billion people on Earth, human beings reproduce at such rates that human numbers would inevitable outstrip all possible means of subsistence.  Fellow economist David Ricardo saw bitter conflict between industrialists and workers and landlords which would tend to reward only the narrow interests of land owners.

The early decades of the Industrial Revolution were characterized by brutality and disruptive demographic upheavals and extensive social ills.  As a consequence, Karl Marx and Friedrich Engels in 1848 wrote the Communist Manifesto.  They called for workers to unite to triumph over capitalists, predicting that capitalism would inevitably collapse of its own serious shortcomings.  These faults include monopoly abuses, a propensity toward the exploitation of workers by ruthless capitalists, and disruptive and damaging boom-and-bust cycles.  By the end of the nineteenth century, the conglomerate power of corporations had grown to such an extent that giant companies like Standard Oil had to be broken up during the trust-busting Progressive Era and many fair-minded reforms were enacted to limit long working hours and child labor abuses and to correct harsh working conditions and to control corruption and injustices somewhat.

Further changes in economic understandings and governance took place as a result of the cataclysmic Great Depression of the 1930’s.  Far-reaching reforms were made to the banking system and labor laws, and a social security safety net was created to protect workers from the calamitous effects of speculative excesses and boom-and-bust cycles and increases in economic inequities.  After World War II, many initiatives like the enactment of the G.I. Bill were undertaken to build a strong middle class.  These programs helped to foster a general prosperity that resulted during the 1950’s and 1960’s. 

By 1980, powerful forces reacted to the reforms which had limited their ability to dominate the economy and gain the most benefits for themselves.  Ronald Reagan launched his revolution to bring a new ideology to dominance which advocated higher military spending and regressive changes in taxation to primarily benefit the wealthy.  His doctrines unfortunately involved risky banking deregulation and union busting and large increases in deficit financing.  Since then, conflicts of ideas and the strife between powerful dominating interests and the common good have intensified.  Despite economic disasters associated with deregulation, excessive speculation, inegalitarianism, political corruption and the overweening power of the military-industrial complex, it has proven extremely difficult to propitiously reform our dysfunctional systems.

Observations Concerning the Current Economic Doldrums

Ben Bernanke, the current Chairman of the Federal Reserve, once said that the search for the root causes of the Great Depression is an intellectual and practical challenge that he called “the holy grail of macroeconomics.”  Bernanke is a scholar of the Great Depression and of the mistakes made at the time by the Federal Reserve Bank which caused the severe downturn to worsen.  The Fed at the time raised interest rates and tightened credit and let thousands of banks fail. 

In order to address the severe 2008-2009 financial crisis, Ben Bernanke pursued different policies than those used by the Federal Reserve at the onset of the Great Depression.  The Fed reduced interest rates, flooded credit markets with enormous amounts of money, and bailed out big banks.  This strategy has warded off the liquidity crisis, so Bernanke seems to have been the right man in the right place at the right time to deal with the risk-laden collapse of the amped-up real estate bubble and the confidence-shattering wake of associated credit availability problems.  He has been flexible and creative, and even desperately improvisational, in aggressively acting to prevent the financial crisis from developing into a full-blown economic depression. 

Confidence, it turns out, is critically important to a healthy economy.  When customers feel secure enough to spend the money they earn, and lenders are willing to freely lend money, employers feel optimistic enough to hire more workers.  Financial markets, once disrupted, can enter a vicious spiral of self-fulfilling uncertainties that can result in constricted availability of credit and intensified systemic risks that exacerbate economic downturns.

But Ben Bernanke’s success has depended on flooding the system with newly-printed money.  He has effectively laced the proverbial punchbowl with stimulative credit.  Congress has reluctantly gone along to stimulate the economy by spending enormous amounts of money, rashly increasing budget deficits and the national debt.  This strategy will almost certainly prove to be the basis of the next serious economic problem.  It will be a risky high-wire act to remove this debt-financed stimulus before the financial party gets out of control once again.  Alan Greenspan failed to do this years ago when his policies encouraged the inflation of the real estate bubble, and he did not take steps to prevent the bubble from getting too large.  So it will be a serious test of the effectiveness of the Federal Reserve to manage better in the coming months and years, as discussed in detail below. 

We have sown the seeds of the next crisis with all of this unprecedented borrowing and spending.  I strongly believe that the Fed should take a stronger and more courageous position on the inadvisability of enormous amounts of deficit spending and large increases in the national debt.  Unprecedented government spending and borrowing are the very remedies being used by the federal government to prevent a worse recession in these challenging times, so they will no longer be tenable if the next crisis is caused by too much money in circulation and too much debt, and too much government spending, and a dollar seriously devalued because of irresponsible fiscal policies. 

The reason that such shortsighted expediencies are likely to be the cause of the next potentially more severe economic bust is that China and Japan and other nations help finance our deficits by buying U.S. Treasury securities, and they will eventually be forced to realize that the U.S. is unable to rein in its undisciplined finances.  If they stop buying these securities, this would dramatically drive up interest rates and cause an economic emergency that could come in the not-so-distant future.  This disaster could be avoided by responsibly controlling government spending and enacting more responsible progressive taxation plans to significantly narrow our on-going deficits.  But will we be able to accomplish this?

Do Deficits Matter?

John Talbott, the author of Obamanomics: How Bottom-Up Economic Prosperity Will Replace Trickle-Down Economics, wrote that the United States is hamstrung by its reckless reliance on the expansion of debt by individuals and corporations and government to finance unsustainable rates of consumption.  Talbott argued that since the federal government must print more and more money to finance its deficit spending ways, this inflation of our currency is “the only way to deflate the value of debts on everyone’s balance sheets at the same time.”  This strategy is foolish and risky because inflation has the extremely damaging effect of undermining real economic growth and true prosperity.  Our nation has been irresponsible to base economic well-being on such shaky foundations as stimulated consumerism financed by inflationary monetary policies and ever-greater levels of borrowing.

We’ve backed ourselves into a desperate corner, and now we are gambling that hyper-spending and ever-higher levels of borrowing by the federal government will succeed in bailing us out of the current economic crisis.  Addicted to bubble economics, we gamble desperately that we will be able to get the real estate and equities bubbles inflating once again.  This is essentially a way of doubling down on our gambles --- a generally risky and unwise course of action!

Strategies that cause boom-and-bust cycles lead to economic recoveries after recessions, and to big corporate profits before the next down cycle.  If we were to use this crisis to honestly address the problems that underlie our short-term oriented and expedient plans, it would be smarter.  Our economy arguably must be restructured to bring productivity and work earnings and saving and spending and taxation into better balance, and to ensure financial stability rather than short-term-oriented booms and ruinous busts.

Deregulation of financial markets may provide high rates of return in the short run, but it helps create economic bubbles that inevitably burst and create severe economic instability.  The housing bubble was inflated by many means, for instance, and it may have been ‘great’ while it lasted since it facilitated enormous amounts of borrowing against increases in home equity and thus stimulated consumer spending and highly-leveraged investing.  But this risk-filled course of action is now having devastating impacts.  Stimulating the real estate bubble had the collateral effect of making housing less affordable for millions of people, and it eventually destabilized the international economy, with extremely harmful consequences.

High levels of deficit spending guarantee higher inflation in the long run, and this has the insidious effect of eroding the purchasing power of people’s savings.  This acts as a form of hidden tax on everyone in the future.  This is why $100 today is worth the equivalent of only $20 in 1972 dollars.  The value of our currency has been deflated by this national policy, as set by the Federal Reserve in a tacit collaboration with our representatives.  Inflation is regressive, like a flat tax, so it disproportionately affects the least prosperous people.  Inflation thus acts as an insidious force that is the opposite of fairer ideas like balanced budgets financed by more steeply graduated taxes. 

Deficit spending and increases in the national debt have the effect of creating wealth for people today by borrowing money from people in the future.  This expediency, together with inflationary monetary policies, results in shortsighted and unfair outcomes.  It eventually stokes inflation which effectively exploits the poor and the middle class by disproportionately affecting them.  It also benefits capital at the expense of workers, whose wages are the last thing to increase during inflationary periods.

Actually balancing the federal budget would force our representatives to be more honest in making difficult spending decisions and deciding what trade-offs to make in our messy and poorly prioritized budget process.  We avoid making these hard choices by allowing the expediency of ever-growing deficits and national debt.  However, we should not make the mistake of thinking that in the long run this will be less disastrous and less costly than more responsible fiscal decisions.

If American citizens more clearly understood the correlation between the level of deficit spending and the long-term average rate of inflation, they would likely be more supportive of national mechanisms that mandate balanced budgets.  Reining in deficit spending will certainly entail more difficult spending and revenue-raising decisions and challenging determinations of which programs to support.  Fiscal responsibility and respect for the rights of people in the future make it necessary that we stop using the short-term expediency of deficit spending all the time. 

Several years ago, a national newspaper presented opposing perspectives concerning this question of the national debt.  Respectable economist James K. Galbraith argued that deficit spending is nothing to worry about;  he contended, in fact, that the fear of deficits itself poses a greater danger.  An opposing point of view was given by a financial planner named Lawrence Grossman who claimed that the United States is a “negative-amortization nation” in the sense that we are adding the liabilities for government obligations and interest expense to the principal of our national debt every year.  “We as a country are heading for a fiscal train wreck”, he asserted.  Rapid increases in the national debt in recent years are very risky, he noted, pointing out that the real national debt is far greater than the official national debt because of financial obligations like U.S. Treasury bonds and unfunded commitments by the government to provide benefits like Social Security and Medicare far into the future.

My intuition tells me there is truth in both points of view, but that the latter one is more valid as a cornerstone of necessary precautionary action.  Tax cuts financed by money borrowed from people in the future are surely a form of inter-generational exploitation that is highly unfair to our descendents.

Perspectives of John Maynard Keynes

We have been irresponsibly avoiding making sensible decisions about the trade-offs involved in budgetary decisions, but we should begin to use deficit spending only in the way that the famous British economist John Maynard Keynes (pronounced ‘Canes’) originally recommended:  as a needed stimulus during economic contractions to mitigate the economic and social harm of recessions, and NOT as an acceptable policy each and every year even during economic expansions.  By allowing our representatives from both political parties to indulge in the expediency of deficit spending ALL THE TIME, we are choosing the insidious and regressive, but very real costs, of eventual higher rates of inflation.

Keynes’ most influential work, The General Theory of Employment, Interest, and Money was published in 1936 during the Depression.  In it, Keynes argued that "recessions don't fix themselves", so to correct the severe problems caused by downturns, a proactive effort by governments is needed to stimulate the economy.  This book helped establish Keynes as “the father of macroeconomics”, and his ideas still guide governments and fiscal policymakers worldwide to stabilize economies and to keep them from growing too fast or too slowly. 

Keynes essentially suggested that, when the economy is growing quickly, governments ought to raise taxes and decrease spending in order to rein in inflation.  When the economy is in recession, he recommended, governments should lower taxes and increase spending to kick-start the economy.  This concept of balanced growth, if followed, would likely have softened the blow of the Great Depression.  Such forms of government intervention continue to work reasonably well today;  the Federal Reserve still raises and lowers interest rates to balance growth and to moderate the rate of inflation.

Keynes was a participant in the conference that led to the creation of the World Bank and the International Monetary Fund.  These two institutions helped to shape and stabilize the postwar global economy.  Keynes poked fun at conservative bankers in A Tract on Monetary Reform saying that the bankers strived “to shift public discussion of financial topics off the logical onto an alleged moral plane, which means a realm of thought where vested interests can be triumphant over the common good without further debate.”  Gee, this version of history seems to be repeating itself these days!

A challenge to Keynes’ theories came during the years of stagflation following the 1973 and 1979 oil shocks.  Keynesian theory had no appropriate policy responses to the supply shocks and the high rate of inflation during the 1970s.  The economist Milton Friedman argued convincingly that high rates of inflation were due to rapid increases in the money supply.  One key to good stable policy is thus to reasonably and responsibly control the money supply.

The nature of our system, perversely, is that our representatives fight tooth and nail over which domestic priorities to spend money on, always cushioned by the expediency of deficit financing.  Our national priorities, being unduly determined by corporate interests, are not generally consonant with the best interests of the common good.  Additionally, we never seem to consider the financial costs of wars, which we commit to without adequate regard for how the wars will eventually be financed, and by whom.

Keynes is notorious for having observed, “In the long run, we are all dead.”  Sure, John Maynard, but we will have descendents, and we cannot neglect their interests in our corrupted willingness to allow narrow constituencies to gain unfair advantages!

Cultivating a Better Understanding of the Federal Reserve

A big picture evaluation of mega-trends and overarching considerations is needed to assess the global economy and our addiction to growth in consumption and an increasing money supply and an ever-bigger human population.  We need to clearly comprehend the aggregate risks associated with these strategies.  We need to see where we’ve been and what has happened with initiatives that eliminated regulations on banks and other corporations.  We need to understand how economic bubbles have been inflated and why they have collapsed.  We also need a better crystal ball and greater courage in the face of the astonishing force of inertia and the power of vested interests in dominating the jerry-rigged status quo. 

We arguably must think like firefighters in a burning building, but we must also think like the fire chief who is responsible for mitigating the risks posed by conflagrations to come.  Better yet, we should think like leaders with responsibilities for bigger picture plans like fire safety codes and zoning restrictions and the environmental ramifications of building developments.

The “Lords of Finance” during the period from just before World War I through the Roaring Twenties and the Great Depression were the most influential bankers of the United States and Britain and France and Germany.  Their names -- Benjamin Strong, Montagu Norman, Emile Moreau and Hjalmar Schacht -- are practically unknown today, but these men had enormous power during some of the most turbulent times in the history of the world.  The Panic of 1907 had made it clear that a central banking institution of some sort was needed in the United States to deal with the systemic risks that capitalist economies faced when credit crises periodically occurred and economic bubbles burst and depositors made panicky runs to take their money out of banks. 

The Federal Reserve System was created by Congress in 1913 as a result of the need made clear by such economic crises.  Just before the outbreak of war in Europe, the economies of the world were still anchored on fixed exchange rates and currencies backed by gold.  The enormous costs of the First World War were financed by debt and rampant printing of money in all the warring nations.  This led to crippled international finances and inflation. 

After the war, Germany was saddled with enormous “reparations” obligations, so it continued to print vast quantities of money.  The German currency, the Deutsche Mark, had had an exchange rate of 4.2 to the dollar in 1914, and it depreciated to 4.2 trillion to the dollar by 1923.  This devastating hyperinflation practically destroyed the German economy.  This is a cautionary tale that motivates responsible central bankers to remain mindful of the risks of printing too much money.

The four main responsibilities of the Federal Reserve are: (1) to conduct monetary policy in a way that leads to stable prices and maximum employment; (2) to maintain the safety and soundness of financial institutions; (3) to contain systemic risk in financial markets; and (4) to protect consumers against deceptive and unfair financial practices and products.  Some say that by any sober assessment of the facts, the Fed has not been successful enough in ensuring the stability of the financial system, or in keeping economic bubbles from growing too large, or in creating maximum employment, or in protecting taxpayers from bailout costs or consumers from predatory banks.

The emphasis by central bankers on the growth of the money supply at the maximum rate that can be sustained without causing too rapid a rate of inflation actually serves to increase the potential for systemic crises.  So do their vigorous actions whenever deflationary pressures arise.  We must honestly strive to understand the trade-off between unemployment and inflation, and who the winners and losers are in Fed monetary policies. 

Economic uncertainties are beyond full comprehension, and the Fed may actually be doing a generally good job of managing capitalism within the constraints of our political system.  But the system itself has deep underpinnings of folly and unfairness.  The Fed’s sophisticated role in managing our economy by manipulating the money supply and interest rates can be seen as an official means of slowly expanding the money supply and causing an insidious inflation that diminishes the value of savings.  Not only does this act as a “hidden tax” on money saved, but it also tends to weaken the dollar relative to other currencies.  This has far-reaching ramifications and undesirable consequences.

Policies like these are another way that vested interests and banks and large corporations accomplish the privatization of profits and the socializing of costs.  I personally believe that this “socialism for the rich” is more unfair and distorting and costly than entitlement “socialism”, which social conservatives rail about with increasing fervor these days.

Congressman Ron Paul of Texas, writing in The Revolution – A Manifesto, points out that when the Fed prints up more money, the increase in the total supply of money diminishes the value of all money already in the system.  This strategy has the effect of redistributing wealth from the poor and middle class to those who are politically well-connected.  This occurs because of the “distribution effects” of the inflationary process, in which big banks and other insiders are enriched at the direct expense of everyone else.  As prices increase, wages are the last thing to go up in response to inflationary monetary policies, so workers pay more for things long before their earnings increase.  Inflation thus disproportionately hurts workers as well as those who save money and those who live on fixed incomes. 

Two hundred years ago, the founder of the House of Rothschild made the following observation:  “Let me issue and control a nation’s money and I care not who writes the laws.”  The Federal Reserve controls the money supply, so it is crucial we understand its role.  We must make sure that the Fed is effective in ensuring the common good and not just the best interests of bankers and privileged people and self-interested constituencies.

To better understand just how our system has been rigged by the financial and political elites, I highly recommend watching Charles Ferguson’s documentary film, Inside Job.  Consider the case of Brooksley Born, who was the head of the Commodity Futures Trading Commission in 1997.  She recommended regulatory oversight for complex financial derivatives like mortgage-backed securities and credit default swaps.  Ms. Born suffered rude and harsh criticism from financial decision-makers and insiders like Treasury Secretary Robert Rubin and Fed Chief Alan Greenspan for her courageous advice.  The upshot was that these financial instruments were not regulated, and this contributed significantly to the extremely costly global economic meltdown of 2008-2009.  This reveals another way in which the crisis should truly be regarded as an inside job! 

A report issued January 27, 2011 by the Financial Crisis Inquiry Commission concluded:  “The enactment of legislation in 2000 to ban the regulation by both the federal and state governments of over-the-counter (OTC) derivatives was a key turning point in the march toward the financial crisis.”  Deregulatory dogmas, in other words, helped spark risky speculation and uncontrolled leverage, concentrations of risk, a lack of transparency, and inadequate loan requirements for capital and collateral.  Today, more than three years after the depths of the financial crisis, “the U.S. financial sector is now more concentrated than ever in the hands of a few large, systemically significant institutions,” according to the Financial Crisis Inquiry Commission Report. 

Filmmaker Charles Ferguson says that before making Inside Job, he had “grossly underestimated the level of extraordinarily unethical and even fraudulent behavior that had occurred on such a large scale.”  Our prisons are full of people who commit small crimes, but it seems that those who think big and rip off the nation for enormous sums of money are never held accountable.  Here is another reason people with lots of money should be required to pony up more of their high-end gains in taxes, if only to finance the obscene cost of prisons!

Audit the Fed!

Central bank monetary policies can cause misallocations of resources and distorted investment decisions.  The motives of private bankers and the Fed in getting the federal government to pursue the policies they do should be better understood.  Representative Barney Frank of Massachusetts and Congressman Ron Paul have called for an audit of Federal Reserve policies to determine the actual role of the Fed in the destabilizing Wall Street schemes of the last decade.  One can just imagine how politicized such an audit could become.  But it would be foolish to suppose that a high-level evaluation of Fed actions by a group of prominent economists of all stripes would not be a good idea for better planning today and in future economic crises.  A detailed consideration of the impacts of Fed actions could provide clarity so that we would better understand the ways that private bankers benefit elite segments of society at the expense of all others in our capitalist economic system. 

Such a blue-ribbon commission could make some valuable recommendations.  Maybe they would suggest that we tend more to fundamentals and simplify our laws and remove some of the favors and subsidies and complexities and dysfunctionality in our economic system.  As Thomas Paine expressed in Common Sense, “the more simple any thing is, the less liable it is to be disordered, and the easier repaired when disordered.” 

Does the Fed Contribute, by Design, to Booms and Inevitable Busts?

Federal Reserve policies are an art, not a hard science.  The Fed is supposedly independent within the government, and yet it serves the interests of the establishment, and not necessarily the interests of the common good.  The Federal Reserve is a prime enabler, for instance, of the overarching schemes of deficit spending and inflationary money supply growth and stimulated consumerism and economic bubbles.

The Fed unquestionably operates within a complex constellation of competing objectives and powerful economic and social and political forces.  Federal Reserve officials make an arcane cost-benefit calculus in their decisions of how to use monetary policies to affect interest rates, the money supply, inflation, employment, the ups and downs of economic activity, the national debt, behaviors of consumers and investors and bankers, and the stability of prices and of the financial system itself. 

According to Friedrich August von Hayek, the 1974 Nobel Prize winner in economics, the Fed’s manipulations of interest rates and the money supply “cause havoc throughout the economy, and set the stage for an inevitable bust.”  The policies of the Fed are arguably boom and bust by design, whether or not the decision-makers admit this.  The Fed strives to avoid deflation at all costs, and to maintain an insidious rate of inflation that will benefit the rich, because the wealthy can exploit heightened opportunities for profit-making during good times and, if they are smart, they can also find ways of protecting themselves and doing well on the downside.  Policies that contribute to economic booms and busts create periods of high unemployment, so they directly victimize middle class workers and poorer Americans. 

The boom-and-bust nature of our economic system is directly related to the Federal Reserve’s monetary policies.  Inflationary increases in the money supply cause inequities and misallocations in the economy and an artificial prosperity in the short term.  When these activities eventually drive up interest rates, the higher rates have the effect of crowding out sensible investments and giving greater impetus to recessionary forces. 

The Fed has rapid increased the money supply during the severe recession, and continues to do so today.  This guarantees that the economy will be whiplashed when the extremely low interest rates have had their stimulative effect of encouraging people to once again make unwise spending decisions and unsound investments.  The short-term false prosperity that is generated has the unfortunate adverse effect of assuring future dislocations.  Far from contributing to sustainable growth and wise investments, this aspect of our casino capitalist system is destabilizing and unfair.  This is not an acceptable strategy for our long-term well-being!

By holding interest rates at extremely low levels, the Fed is effectively discouraging savings and penalizing frugal people.  It is encouraging wasteful spending and foolish risk-taking.  It is creating the beginning of another series of rash misallocations of capital.  It is encouraging market participants to take on bigger risks than they would otherwise, so people make bigger speculative gambles and wrong-headed investments. 

“Spending trillions of dollars trying to fix Wall Street is a fool’s errand.  Our hope lies not with the Wall Street phantom-wealth machine, but rather with the real-world economy of Main Street, where people engage in the production and exchange of real goods and services to meet the real needs of their children, families, and communities, and where they have a natural interest in maintaining the health and vitality of their natural environment.”

                                                                     --- David C. Korten, Agenda for a New Economy

Insightful journalist John Cassidy makes a similar argument in the well-considered ideas he presents in How Markets Fail – The Logic of Economic Calamities.  He analyzes all the ideological arguments of ‘Utopian Economics’ in Part One of this book, and the provocative ideas of ‘Reality-Based Economics’ in Part Two.  It would be a better world if all members of Congress and think tanks were to read this book, and to take it to heart by heeding the ideas it sets forth.

Financial markets can clearly be seen throughout history to be prone to the creation of asset bubbles, so regulators like the Federal Reserve, the Treasury Department and the Securities and Exchange Commission should be given greater responsibility for seeing that economic bubbles do not grow too large in the future.  Speculative bubbles can be controlled by tightening the money supply and by maintaining sensible margin and minimum capital requirements for speculators.  The amount of leverage and risk that market participants can employ must be reasonably limited.  Smart and sensible new regulations and government oversight and supervision should be implemented, especially of the tens of trillions of dollars of arcane unregulated derivatives like mortgage-backed securities and credit default swaps.  At the same time, regulatory overkill and bureaucratic red tape should be eliminated.

The Wisdom, or Folly, of Central Planning

Centrally-planned economies were proven to be much less effective than capitalist economies during the ruthless competition of the Cold War.  It is thus deeply ironic that we have allowed our monetary system, which is the very heart of our economy, to be centrally planned by a group of bankers at the Federal Reserve who game the system with highly unfair favoritism of bankers and insiders, and insidiously unfair exploitation of everyone else.

The former Fed Chairman Alan Greenspan made the observation in The Age of Turbulence that centrally-planned economies have been proven to be failures.  But this casts a curious suspicion on the wisdom of having the money supply and interest rates planned and controlled by a central bank.  The Fed is a centrally-planned regulatory institution in a jerry-rigged market economic system, and it is ironically antagonistic to sensible regulation of banks and Wall Street and derivatives.  It is also positioned in opposition to any form of central planning -- other than its own.  Even market fundamentalist Milton Friedman was in favor of abolishing the Federal Reserve System, so more thought needs to be given to the Fed’s role in our economy.

The ruthless competition between nations with centrally planned economies and nations with free market economies during the Cold War gave proof through the fight that a relatively free market is better at motivating people to be productive than one which is planned by government bureaucrats.  Free market forces allocate resources in a more responsive way than in totalitarian economies because they respect the aggregate forces of supply and demand, and they are much better at facilitating the creation of wealth and prosperity.  For exactly the same reasons, it would seem that the control of interest rates and the money supply by a central bank is less desirable than letting market forces determine rates through supply and demand mechanisms.  It also seems probable that a stable money supply would be better and fairer in the long run than an inflationary supply. 

The purpose of the Fed should essentially be to foster sustainable economic growth and price stability and competitiveness and the safety and integrity and fairness of the banking system.  Some say the Fed does a good job at this, and that it is an unbiased and honest institution which is full of rectitude and integrity.  Others have a much more critical view of the Fed, and say that its policies are designed to help the wealthy, and to take advantage of poor people and workers and the middle class.  The Fed definitely seems to work to perpetuate the status quo of a banking system that is dominated by big banks which treat small borrowers unfairly in the pursuit of ever-bigger profits.

The Goldilocks Syndrome and the Chairmen of the Federal Reserve

Investors hang on every word of the Fed chief, who is regarded as one of the most powerful people in the world.  Bob Woodward, in his November 2000 biography of Alan Greenspan, called him ‘Maestro’.  When the economic bubble was perking along just right and banking deregulation and leveraging and rampant risk-taking had not yet wreaked havoc on the economy, it seemed that Greenspan was a genius. 

Investors have a love/hate relationship with the Goldilocks gurus of the Federal Reserve.  As these supposed sages slowly inflate the money supply and keep interest rates low, and print up money to finance the growth of the national debt, investments in equities seem to benefit from rising prices in the short term, and from the economic bubbles that this strategy facilitates.  This causes investors to feel confident that they can trust the Fed not to inflate the money supply too rapidly -- to do it “just right” -- and to staunchly prevent market forces from ever actually undergoing any deflation. 

Alan Greenspan was regarded as the inscrutably wily apostle of economic brilliance and integrity during his tenure as Fed chief.  Wall Street investors lionized Greenspan, and latched onto his every pronouncement with awe and gullible belief.  They loved his steady leadership because they had figured out how to profit from just the right amount of inflation in the money supply.  But then the eventual and inevitable bursting of the equity and housing bubbles revealed that his leadership and his deregulatory enthusiasm had contributed to rash risk-taking and a dangerous and destabilizing growth in these economic bubbles.  In retrospect, people have come to regard this policy-making as distinctly less smart or salubrious. 

Systemic risks introduced in the course of business-as-usual turn out sometimes to be too risky to justify allowing the status quo to remain unchanged.  Resulting economic hardships and stock market volatility and home foreclosures and high rates of joblessness and overly tight credit markets and deepening social stresses seriously disrupt many people’s lives.  The brunt of these adversities are borne by workers who see their wages stagnate or lose their jobs or their homes.  These same people are being affected most adversely by cuts in outlays for State government social programs and an increase in the insecurity of people’s retirement incomes.

When the boom turned to a bust, the system was shown once again to have been constructed so that profits are privatized while the risks of bailing the system out are socialized, i.e. paid for by taxpayers and people in the future who are saddled with the debt that is engendered by government largesse and emergency bailouts.  This is a negative outcome for most Americans!

Today’s Fed Chairman Ben Bernanke was named the “Person of the Year” for 2009 by Time Magazine.  His leadership of the Fed helped avert a potentially much worse global financial fiasco when the real estate bubble burst and the severe credit crisis ensued.  Bernanke seems to be committed to doing the right thing, and I find his words to be cogent when he says, “I want to be very, very clear: too big to fail is one of the biggest problems we face in this country, and we must take action to eliminate too big too fail.”  But when, and how, will this be done?

The severe financial crisis of 2008-2010 makes it clear that we should prevent firms from conglomerating to the point that they are too big to fail.  We should reinstate the Glass-Steagall Act to separate investment and depository banking, helping to prevent conflicts of interest which encourage too much risk-taking.  Adequate regulation and supervision of banks and other entities is needed, and financial derivatives need to be subjected to oversight and sensible regulation to ensure the greater public good.  Must we bring back the trust-busters of the Progressive Era to achieve these goals?

“Quantitative Easing” Explained

An entertainingly funny six-minute YouTube cartoon video, Quantitative Easing Explained, became a surprise hit after Fed Chairman Ben Bernanke announced in November 2010 that the Fed would print up more money to buy as much as $600 billion in long-term Treasury bonds.  This action by the Fed is deceptively termed because it is qualitatively a questionable move that has serious potential negative ramifications like higher inflation and a weaker dollar. 

The move was dubbed QE2 because it follows a first round of similar stimulus in the form of a $2 trillion increase in the money supply in 2009.  That increase has not had the intended effect of promoting economic growth and stimulating real estate prices and increasing the number of jobs in the economy.  The move is partially responsible for stimulating bank profits and encouraging investments in riskier assets like stocks and commodities and gold, but it is a short-term oriented maneuver, not a sober and fair-minded policy.  Ben Bernanke promises to pay attention this time, and when the economy heats up and inflationary forces begin to appear, he will be sure to dampen the stimulative effect of the increased money supply.  Stay tuned!

The Industrial Revolution, the Accumulation of Wealth, and the Conglomeration of Power

Ever since the Industrial Revolution gained a full head of steam, corporate conglomerates and industrialists and robber barons and top executives have seized advantages to make bigger profits for themselves, and wealth has become ever-more extremely concentrated in the hands of the Few.  This process has taken place in benign ways by means of fair competition, innovation, economies of scale, efficiency and increased productivity, but it has also been accomplished by means of reprehensible business practices that are distinctly unfair and undesirable, including such gambits as monopoly practices, market manipulation, fraud, price fixing, predatory banking, misappropriations, misrepresentations, deceptive advertising, trade libel, corporate espionage and institutionalized bribery.

It is my opinion that, in a vibrant democracy, the people would be protected from these underhanded business activities by effective rules of law designed for the greater good.  Instead, we have policies designed by corporations and lobbyists and the privileged class that provide loopholes and tax avoidance schemes and institutionalized practices which facilitate these fraudulent scams and corrupt schemes.

Egregious Instances of Corporate Abuses of Power

The Sherman Antitrust Act was passed in 1890 to address the unfair competition that had come to prevail in monopolistic industries like the railroads and big oil and big tobacco.  The status quo had gotten so bad, back then, that workers and ‘muckraking’ writers and Progressive Era politicians managed to force President Theodore Roosevelt and President William Howard Taft to use the Sherman Act to break up more than 130 business conglomerates like Standard Oil.

Corporate lawyers and sycophantic politicians since then have made it more difficult to prevent corporate conglomerates from growing in size and power.  This has made corporate influence dominant in our economy and across the globe.  Our entire market system has arguably become one big ‘casino capitalist’ enterprise that violates the principles of fair competition.  This system creates extensive harm and wrong-headed priorities in most of the laws enacted by Congress and other legislative bodies.  Our government may be “the best government that money can buy”, as Mark Twain once said, but too often our government betrays the public’s trust.  The system itself must be reformed!

Today, one of the most nefarious exemptions from anti-trust law is that of health insurance companies.  The McCarran-Ferguson Act of 1945 exempted health insurance companies from federal antitrust regulations which theoretically apply to nearly every other industry.  Such rules were originally designed to protect consumers from anti-competitive business practices.  The suspension of these laws has led to a dramatic consolidation in the industry, allowing health insurance issuers to engage in price fixing, bid rigging, and other monopoly practices.  These developments occur to the distinct detriment of competition and consumers and the vast majority of Americans.  Partially as a result, health insurance premiums have increased far faster than the general rate of inflation for every year this century.  This makes real people’s lives far more challenging than necessary!

The anti-trust exemption for health insurance companies has allowed near monopolies to develop in many regional markets.  One or two companies control 75% to 95% of the market in many states.  This dominance leads to inadequate price competition. 

Senator Patrick Leahy of Vermont introduced a bill in 2009 that was called the Health Insurance Industry Antitrust Enforcement Act.  This law, if enacted, would have repealed the antitrust exemption for health insurance companies and fostered more competition.  President Obama stated that it was time to repeal the McCarran-Ferguson Act, and hearings were held in the Senate Judiciary Committee in October 2009.  Since then, however, the health insurance industry has succeeded in using its powerful influence to the detriment of the American people to preclude such a sensible plan from being enacted, just as they have managed to torpedo a competition-fostering public option for health insurance.  They have also helped subvert any really sensible and fair-minded reforms of our costly and highly unfair healthcare system.

Since the rate of inflation in health insurance premiums has far exceeded price increases in almost anything else, it has contributed to the outrageous increase in profits at the largest publicly-traded health insurance companies in the U.S.  These company’s profits are estimated to have increased 428% from 2000 to 2007.  The CEO’s of these companies each routinely make more than $10 million per year, and the bureaucratic red tape is absurdly costly and often discriminatory.

The health insurance industry has prevented reform of its practices for decades.  This has cost Americans hundreds of billions of dollars and contributed to the deaths of tens of thousands of people every year because they cannot afford health insurance.  The costs of healthcare have increased so much that they now account for more than 16% of all economic activity in the U.S. each year.  This system cries out for reform!  Please!!  Unfortunately, our corporate-dominated system prevents reforms from being enacted that are in the best interests of the majority of people.  

The 2010 “Lie of the Year” award was given by PolitiFact to the Republican refrain that the health care bill enacted by Congress (the Affordable Care Act) was a “government takeover of health care.”  PolitiFact stated that “it is inaccurate to call the plan a government takeover because it relies largely on the existing system of health coverage by employers.”  Not only is the plan NOT a government takeover of health care, but the new bill gives the profit-obsessed, red-tape-propagating insurance companies a central continuing role in health care by denying people the choice of a public insurance option.  Power once again triumphs over common sense!

Last year’s 2009 PolitiFact “Lie of the Year” was “death panels”.  It occurs to me that if any entity wanted to form real death panels, it would not be the government, which gives extra weight to the needs of old people who vote and to health insurance companies whose investors give generously to politicians.  The primary people really interested in denying critical care to people who cannot afford it are those who are apologists for profiteering corporations and the unlovely ilk of Republican politicians in Arizona, who are eager to externalize costs onto people other than rich people or residents of Arizona.

Why is it that people’s health can be the subject of more dishonesty than any other issue in our nation?  Read all about the billionaire Koch brothers’ fierce self-serving opposition to healthcare reform in Common Sense vs. Political Realities: An Anatomy of Dysfunctionality.

The Truth about Big Lies

The fact-checking organization PolitiFact analyzes political claims to separate rhetoric from truth.  They do so in order to enlighten voters and the general public.  While both the 2009 and 2010 “Lie of the Year” concerned healthcare reform efforts, there are far bigger deceptions than “death panels” and the “government takeover of health care.”  There are Big Lies that distort our worldviews.

The “Big Lie” is a term first coined by Adolf Hitler in his 1925 autobiography Mein Kampf.   This term was made famous by Josef Goebbels, the propaganda minister for the German Third Reich.  The idea was simple enough:  if you tell a ‘big lie’ often enough, most people will come to accept it as if it were the truth.  During World War II, the U.S. Office of Strategic Services (which was the predecessor of the CIA), described how the Germans used the Big Lie:  “Their primary rules were:  never admit a fault or wrong …;  never leave room for alternatives …;  never accept blame;  concentrate on one enemy at a time and blame him for everything that goes wrong;  people will believe a big lie sooner than a little one;  and if you repeat it frequently enough people will sooner or later believe it."

The following is an analysis of the most significant deceptions in our world today.

Big Lie Number One.  Economic goals and environmental protection goals are not compatible.  The truth of the matter is that economic prosperity in the long run is entirely dependent on healthy ecosystems.

Big Lie Number Two.  It is a preposterous Big Lie to pretend that either the delegates to the Constitutional Convention in 1789 or our representatives who ratified the 14th Amendment in 1868 intended to give excessive power to large corporations and rich people at the expense of the common people.  The five "conservatives" on the Supreme Court, in chorus, may mouth the words, "Not true!”, but their corporate biases are so transparent as to be laughable.  Ha Ha!  Unfortunately, it is not at all funny that the corruption of our democratic republic by a small minority of people has so inimically affected the well-being of so many.  We Americans do not want to eat our cake and have it, too;  we want real positive change, and we want it NOW! 

Big Lie Number Three.  Some say that the “war on terror” is the most pernicious modern example of the “Big Lie” phenomenon.  The “war on terror” has been sold as an undertaking designed to make us safer.  Yet in truth this can be seen, in the larger context, to be a gambit to gain a global hegemony that is not unlike that of Adolf Hitler when he invaded other nations.  The so-called war on terror has created a more dangerous world.  Our national actions since September 11, 2001 have been imperialistic and wrong-headed and illegal under the Nuremberg Principles and other international law.  The multi-trillion dollar cost of this broad war, and the extensive casualties that have been incurred, far exceed the actual threat of terrorism.  This money could be spent in far better ways to make the world a fairer and safer place.

Big Lie Number Four.  The economic health and the well-being of our country can best be achieved by assessing low taxes on the wealthy and by using our military aggressively to protect U.S. business interests.  The opposite, in actuality, is true.

Big Lie Number Five.  The Social Security program is an entitlement program.  In fact, it is simply NOT an entitlement program.  Social Security is actually a retirement income insurance system that workers pay into over their working lives.  In treating the program as a kind of entitlement plan, every person that pays this insurance receives money back from current workers after they retire.  This insurance plan should properly pay out no more than is financed by payroll taxes.  And it should arguably be paid on a graduated basis to those who need it in retirement, not to every person no matter how much money they have.  See Radically Simple Ways to Make America Fairer, and to Fix Both Social Security and Health Care So We Can Move On to Address Much Bigger Issues.  This can be found in Part Four of the Earth Manifesto.  It provides a good understanding of how the Social Security system could be treated to make it truly secure.

Fairness and the Nature of Shortsighted Expediencies

One pundit wrote this:  “Monetary policies are not and cannot be aimed at such big issues as the distribution of income, economic welfare, or social fairness.”  Accepting that it’s true that the Federal Reserve’s role is not to address unfairness in our society, the White House and Congress and the Federal Court system must be the entities which should properly assume this serious responsibility.  These governmental entities, however, are much too beholden to vested interests to significantly change our national priorities and policies.

Golden Rule fairness principles are at the heart of our democratic republic, and increased inequality is fundamentally contrary to these principles.  There are good arguments in favor of greater equality in our societies from the standpoint of opportunities and economic fairness and legal justice, and even better arguments from moral and religious and spiritual points of view.  A maximum number of citizens should be given as much control over their lives as possible, and they should be allowed as much say as is feasible over the direction their lives will take. 

This is a core principle of our American democracy.  This principle has unfortunately been subverted by the nature of our current economic and political institutions, which give big businesses too much power and ordinary people too little power. 

Economic pressures often lead to political expediencies, which are similar to our individual embraces of short-term-oriented courses of action rather than healthier long-term priorities.  The most powerful pressure comes from corporations and special interest groups.  Corporations, whose primary purposes are to make profits and to shield their owners and executives from personal liability, act in ways that are simply amoral.

Political propensities to follow the easiest path are similar to people’s personal tendencies to embrace expediencies.  People eat fast food, for instance, because it is quick and cheap and easy, and it provides a burst of flavor and satisfies hunger.  But fast food is filled with inordinately large quantities of sugar and salt and fat, so in the longer term, it is unhealthy and causes weight gain and many other negative consequences.  So fast food is a kind of foolish expediency.

Likewise, it is expedient and easier for a superpower to resort to the use of force than to fairly and peacefully compete for limited supplies of resources.  It is easier to fight wars with an ‘all volunteer’ army of paid soldiers than to require all citizens to serve a mandatory tour of national military duty.  It is easier to launch wars with borrowed money rather than to require people to pay today for such rash adventurism.  War is the ultimate expression of unbridled competition, and a good argument can be made that all of our international bluster and domineering actions are a reflection of our weak national commitment to Golden Rule fairness and the subversion of our economic system by profit-seekers and ambitious politicians in the thrall of greedy avarice.

It is easier to let vested interests control our political system than to fight to change our system of institutional bribery.  It is easier to allow Big Business to prosper at the expense of society and the environment than to overcome the power of corporate money and dictate fairer terms in all legislation.  It is easier to encourage profligate usages of natural resources than to conserve them.  It is easier to maintain the status quo than to change it to be fairer and greener and more sustainable.  It is easier to use credit cards and borrow money than to pay cash up front, so millions of people run up large debts and incur exorbitant interest expense costs.  It is easier for the government to borrow money to finance wars and social programs and operations than to rigorously balance spending with income.  It is easier for the Federal Reserve to slowly inflate our American currency than to maintain a stable dollar.  

Our economic system itself is to blame.  CEOs and managers who are responsible for the financial debacle of recent years should pay the price for the ‘moral hazard’ of having taken big risks to make enormous profits and bonuses.  But too often, our leaders bail them out using taxpayers’ money and borrowed funds, and then once again allow them to make outsized earnings.  We let banks become too big to fail, and then bail them out instead of letting them go into bankruptcy proceedings, despite the fact that such proceedings would be a more sensible and fairer way to get all involved parties to agree to compromises that will make organizations leaner to survive. 

Every economic system is defined by rules.  In a simple barter economy, all participants are free to choose to make a trade or not, and at what terms of exchange.  The use of coercion is not acceptable in such primitive economies.  In a free market economy, likewise, the rules of law are theoretically designed to stimulate commerce in the fairest ways.  But because the political influence game is so tilted toward insiders and rich people and ambitious power-hungry control freaks, those people who have the most money have the most influence to game the system in ways that give them subsidies and unfair advantages.  Legislation that is enacted under these circumstances is generally regressive in its impacts.  This is undesirable!

Knowing that human beings are motivated by impulses like envy, jealousy, avarice, and pride, in addition to more noble virtues, we must take these things into account and redesign our systems so that they are fairer and oriented toward the longer-term best interests of all.

Ideas and Ideologies

The history of ideas is a vast and intriguing one.  The study of pivotal thoughts in the evolution of knowledge and perspective can be classified into broad domains.  There are ideas about the physical world, ideas about human nature, ideas about historical events, ideas about religions and philosophies, ideas in literature and art, and ideas about economics and politics.

The word ‘ideology’ was coined in the wake of the turmoil of the French Revolution by the French writer Comte Antoine Destutt de Tracy.  It meant ‘the study of ideas’.  Comte Antoine was passionate in particular about notions such as individual liberties and fair societies, and a free press, and secular government, and freedom of thought and expression.  He held a high regard for logic and rationality and reason and realistic understandings. 

The meaning of the word ideology, however, has shifted over the years to a narrower sense.  Ideologies are now specific sets of beliefs and values that form the basis of an economic system or a political rationale or a religious orthodoxy.  Political ideologies today are manipulative constructs that are often advocated to justify self-oriented interests and political partisanship.  Many of these ideologies are focused on economic advantages.  This is true of ideologies that espouse laissez-faire capitalism, corporatism, free trade, fair trade, and even socialism, fascism, communism, nationalism and militarism.

Not long after primitive barter economies evolved in the prehistory of humankind, trade no doubt began to become increasingly complex.  Some people chose to cooperate fairly and peaceably in trade, and others chose to follow more aggressive instincts and compete ruthlessly or use intimidation or coercion or violence to obtain what they wanted. 

The ruling class of most nations uses their power and influence and the propaganda of their self-interested ideologies to assert that the economic interests of the ruling class are identical to the economic interests of the entire society.  This is absurd!  It is about as ridiculous as a similar assertion which claims that the best interests of big corporate entities are the same as the best interests of the majority of people.  Often they simply are not!

Mainstream economics has become a science that is almost like a religion in its tenets of obsessing over growth and justifying actions and policies that may be distinctly contrary to the greater good.  The misguided drive for growth in consumption and increases in spending by the government are artifacts of the dominant materialistic economic ideology of modern times, which is becoming outdated as the need for more ecologically intelligent initiatives increases.  Prosperity cannot much longer rely so exclusively on activities that deplete resources and contribute to the destruction of the environment that supports us.

Ideologies are generally coherent systems of ideas that rely upon a number of basic assumptions about reality.  But these assumptions may or may not have any definite basis in actual fact.  These assumptions serve as the seeds around which further assertions grow, and they provide guidance for actions and behaviors and political initiatives or obstructions.  Ideologies are often fraught with one-sided thinking and the denial of opposing perspectives.  They often use emotionally manipulative kinds of propaganda to promote specific ways that believers feel the world ought to be organized.  And they are generally used to get people to go along with narrow doctrines. 

    “Reality --- What a concept!” 

Ideology is not the same thing as philosophy.  Philosophy is an open-minded branch of knowledge or academic study or speculative metaphysics that seeks to understand basic concepts and truths.  Ideologies are more narrowly focused.  They can have positive features like passionate conviction and vigorous energy, but they also can have negative aspects like excessive certitude and stubborn rigidity and sometimes wrong-headed attitudes of domineering righteousness.

Philosophy is not mere intellectualizing or the propagation of some ideology.  Ideas definitely can have important practical consequences, and it is vital that our ideas become broader and fairer and more accurate.

Liberality

When our American democracy fought against communism during the Cold War, it brought anti-communist leaders to power who had little appreciation or respect for the virtues of liberal democracy.   Joseph McCarthy and Richard Nixon are two prime examples.  Interestingly, it was right-wing fascism that created the biggest threat to world peace during World War II.  But then in the early years of the Cold War, the threat posed by ideology came from the left extremes of the political spectrum in the form of communism and socialism.  Today, the biggest ideological threats again come from the right, this time in the form of the Tea Party and free-market fundamentalism and opposition to needed reforms, as well as in the form of unrealistic hopes of what military power can achieve.

“Liberalism is truest to its heritage when it rejects ideological thinking in favor of

 the idea that the first step necessary in changing the world is to understand it as

   it actually exists.”    

                      --- Professor Alan Wolfe, The Future of Liberalism

Our Founding documents were based on the liberal ideas of the seventeenth century English philosopher John Locke and his philosophical follower Thomas Jefferson, the author of the Declaration of Independence.  John Locke insisted that government should be democratically based on the consent of the governed.  The core liberal principle of democracy holds that we should strive to maximize the number of people who are able to exert control over their lives. 

Procedural liberalism is valuable to everyone, whatever their views, because it supports rights and protections and rules of law that are enacted by representatives of the governed.  To scorn the liberal temperament seems to be incredibly perverse.  Liberalism, after all, seeks to include rather than to exclude, to accept rather than to censor, to respect rather than to stigmatize, to welcome rather than to reject, and to be generous and appreciative rather than stingy and mean-spirited. 

Jesus Christ was clearly a liberal in preaching greater fairness to the downtrodden and in his opposition to the domineering pharaohs and high priests of the society in which he lived.  It is thus ironic that religious fundamentalists in the United States have joined conservatives and wealthy people and CEOs and the entities of the military-industrial complex to oppose liberal ideas.

Conservatives often support the dysfunctional status quo, or they alternatively advocate reforms that are regressive, repressive or distinctly unfair to the majority of Americans.  Social conservatives, swayed by the spin and manipulative propaganda of right-wing think tanks and religious fundamentalists and corporate interests, have managed to cast deep suspicion on liberal ideas.  They have practically made “liberal” a dirty word.  Modern conservatives sneer with seeming malice at liberals and liberal ideas and progressive plans, and they attack liberals with shrill invective and preposterous distortions like the disingenuous allegations of ‘death panels’ when the national healthcare bill was being formulated.

The fact of the matter is that the United States was founded on liberal ideas such as concepts of fair dealings amongst citizens, and of representative democracy governed by a constitution and rules of law, and of rigorous constraints against tyranny and authoritarianism.  The U.S. Constitution was based on Enlightenment Era ideas, so it is laughably absurd to see radical conservatives spinning it into strict-constructionist dogmas and unenlightened ideologies.

 “Out of the crooked timber of humanity, no straight thing was ever made.”

                                                                                            --- Philosopher Immanuel Kant

Rabbi Michael Lerner calls for the revival of the American Liberal Movement.  He says that it is nonsense to think only of what seems politically realistic.  He points out that we should not restrict ourselves to 'what is realistic' as defined by the media and our elected officials.  “The most significant social changes have happened because the civil rights movement, the anti-war movement, the Women's movement, and the GLBT movement refused to be realistic in this sense.  And precisely because they refused to be realistic they succeeded in changing reality in dramatic ways.  Or to put it in terms that should be on everyone's banner:  you cannot know what is realistic in politics until you engage in fierce struggle for your highest ideals, because what looked unrealistic before you engage in that struggle can suddenly become very realistic when others get the sense that it is safe for them, too, to fight for their highest ideals.  So, to our politicians, we must insist: Don't be realistic - be principled, and even a little utopian - because that is precisely what will make major steps toward a more humane, just, peaceful and loving society possible."

Hallelujah!

An Aside on Prohibition and Other Issues

Temperance movement activists early in the twentieth century were opposed to allowing people to drink hard liquor and wine and beer.  For a variety of social and health and religious reasons, they were against allowing people to enjoy alcoholic beverages.  These activists succeeded in getting the Eighteenth Amendment to the Constitution passed in January 1920.  This made it illegal to manufacture, transport and sell all forms of alcohol.  This Prohibition assessed severe penalties against people who made illegal ‘bootleg’ alcohol.  As a result, organized crime became involved in the sale of various forms of alcohol, and rampant corruption took place among law enforcement agencies.  The law was extremely costly and unpopular, however, and it infringed upon and ruined many people’s lives, so it was finally repealed in December 1933 with the ratification of the Twenty-First Amendment. 

Social conservatives today generally support the federal government’s ‘drug war’, which is an attempt to achieve a kind of modern-day Pyrrhic victory against people who use drugs.  The ideology behind the drug war provides support for an intrusive government that repressively prohibits things like the medical and recreational use of marijuana.  This impractically costly crusade against the use of cannabis ironically seems to actually encourage the use of this drug, judging from the higher rates of use in the U.S., where it has been prohibited since 1937, as compared to its use in the Netherlands where it is tolerated and practically legal.

The ‘war on drugs’ creates a black market for illegal drugs.  This policy ensures that the supply of drugs is provided in a dangerous and undesirable manner.  It also gives criminal sectors of society additional wealth and power and influence.  It ruins the lives of millions of Americans through unnecessary arrests and costly legal travails and harsh incarceration.  The insane escalation of public costs for the entire infrastructure of prison-building, prison administration and prison guards is absurd in the face of urgent needs for spending money on more sensible priorities.  There is an extremely high cost to society in arresting more than 700,000 people every year for drug-related offenses.  It is damaging to individuals and society to abandon the victims of these arrests to harsh fates.  Such Draconian prohibition-oriented initiatives, from this perspective, are stupid and counterproductive.

Many people are accustomed to eating and drinking to excess in all kinds of celebrations and parties and get-togethers from Thanksgiving to New Year’s Day.  Alcohol is consumed by millions of Americans, and it is a social lubricant that is a distinctive feature of our culture.  Moderate consumption of wine, beer or an occasional cocktail can be quite pleasurable.  But alcohol does create significant social problems, especially when it is used in excess.  More than a hundred thousand people die ever year as a result of cirrhosis of the liver and other afflictions that are associated with alcoholism.  Likewise, more than 500,000 people die from lung cancer caused by smoking cigarettes. 

Marijuana, in contrast, is not known to cause any diseases.  It can be providentially used to mitigate the pain associated with a variety of afflictions.  Its use sometimes enhances one’s pleasure and broadens one’s perspective, but it can also cause a variety of personal and societal problems.  Those who overuse it with frequent long-term use can become a bit dopey.  But the prohibition of marijuana is a costly anachronism of public policy.  The use of marijuana should be decriminalized, and more sensible government policies should be formulated.  Sales of marijuana should be taxed, and its production and use should be fairly regulated.  The money collected should be used to deal with problems caused by the abuse of this drug.  This is much more in accord with the common good than is prohibition!

Marijuana, n.  Generically, a curiously intoxicating drug that produces madness in total

  abstainers and born-again refrainers. 

                                 --- Ambrose Bierce, The Devil’s Dictionary (paraphrased from Rum, n.)

Congress should reclassify marijuana from a Schedule I drug under the Federal Controlled Substances Act of 1970 to a Schedule II drug, in recognition of the fact that marijuana has accepted medical uses, as do other more powerful Schedule II drugs like morphine and opium.  The improper classification of cannabis preposterously implies that marijuana has a higher potential for abuse than drugs which are much more addictive.  This wrong classification has led to absurd conflicts between federal and state drug laws.  Marijuana’s Schedule I status breeds widespread injustice and disrespect for government.  It also forces the Drug Enforcement Administration to waste resources on such things as raiding the homes of sick people.  It prevents reasonable testing to see which maladies really benefit from the use of marijuana.  The stigma of federal illegality deters some sick people from seeking help from a drug that could help make them feel better and suffer less pain.  And, really, shouldn’t the police focus on protecting Americans from sociopaths and predators rather than spending so much time and money on faux-crimes like the use and sale of marijuana?

Organizations like Alcoholics Anonymous and various Rehab centers are much better suited to addressing problems associated with addictive behaviors than police forces.  Let’s leave the province of dealing with these problems to them, and cease using draconian punishments that cause costly consequences by imprisoning so many people!

A British study published online on November 1, 2010 in the medical journal Lancet reveals what should be crystal clear:  alcohol is far more harmful to society as a whole than marijuana use.  Researchers analyzed the extent to which substances are addictive and how they harm the human body, as well as other criteria like the amount of environmental damage caused by drugs and alcohol and their role in breaking up families and their economic costs like health care and remedial social services and prisons.  

Alcohol, tobacco and caffeine are substances that happen to be conducive to workaholic behaviors or drowning the sorrows of workers, so society condones them, despite the fact that they cause widespread harm and can be quite addictive.  Marijuana, on the other hand, seems to be prohibited partially because it is likely to make users less mindlessly accepting of work routine and materialistic consumerism.  These are hardly adequate reasons for the harsh suppression of cannabis!

An Aside to Book Club Members

I challenge book club members to read and discuss Earth Manifesto ideas, and to provide me with incisive feedback.  I will make Wikipedia-like modifications for important and convincing points of view.  And check out the Recommended Reading for a Broader Understanding and Appreciation of the World in Part Five for great thought-provoking books that explore some of the most compelling philosophical ideas in the history of the world.

As Huck said in The Further Adventures of Huckleberry Finn, this ought to “give the bullfrogs something to croak about for days, I bet.”

An Interim Conclusion of These Thoughts

It is time that we begin to make more rational, intelligent and honest public policy decisions that respect the greater good and the broadest interests of humanity.  These decisions should take into account various motivations and propensities innate in human nature, as well as the best understandings of scientists and philosophers and religious leaders and ecological economists.  Our principal national goals should be to find better ways to redesign our economic and political systems so that they are fairer for people now and in posterity. 

We would be wise to always measure public policy choices in the context of an awareness of the impact these actions will have on our legacy to people in the future -- to our children, and theirs, and theirs, and theirs, and theirs, and theirs, and theirs, not just to the fabled Seventh Generation, but indefinitely! 

Thanks for your consideration of these ideas!

    Truly,

       Dr. Tiffany B. Twain

           Hannibal, Missouri     

               SaveTruffulaTrees@hotmail.com