February 9, 2009
Vision of Hope Speaker Series, Xavier University
It’s impossible to explore economics, economic systems, and a vision for an inclusive economy in a vacuum. Economics is not a silo but rather a web with vast interconnections
We live in a time of immense crisis - multiple crises which together threaten not only our economy, but society and like support system itself.
We also live in a time of immense opportunity with vast possibilities for improvement of the human condition and a more right relationship between human beings and the rest of the natural world.
The crises and opportunities are at their root more than any single or even multiple issues. It involves the prevailing economic myth, what others might call the dominant paradigm, still others the accepted story, while still others the major framework.
Whatever you’re preferred term (I’ll use framework), it’s the one that says economic growth is good and more growth is better because it means more stuff is created which we can consume -- which is the definition of self-worth and meaning since, as Madison avenue says “You are what you drive.”
“Endless more” is the major economic goal.
Another element of the dominant framework is the belief that econometric, macro/micro, monetary/fiscal, inflation/deflation, the federal reserve, fiat currency, the GDP, and other economic stuff is so incredibly complicated that only a select few can understand it all -- only the paternalistic and benevolent economic sages. Economics is treated as a virtual branch of physics because we’re told the economy seems to operate by forces beyond human control via “the Market,” the “Invisible Hand,” or some other cosmic force akin to gravity. Government should have little or any regulatory or controlling role because to try to tinker with natural forces is inefficient or impossible – similar to trying to regulate the tides or the sunset.
Well, it turns out the uncontrolled and unregulated economic tides have created a global economic and ecological tsunami that has washed away jobs, companies, pensions, home values, security, and a good deal of the ozone. That’s the negative. The positive is that the economic crisis has exposed the inherent failure of the dominant economic framework – an economic system one that has become increasingly detached from serving the interests of people, our communities, and the earth’s caring capacities.
The economic paragons who we were told to entrust all power and authority pursued their own interests at the expense of everyone else and the planet. The Invisible Hand was actually a clenched fist that landed in the midsection of the middle class and poor. The Market it turns out is incapable of addressing serious environmental problems.
Fashioning an economy for all, an inclusive economy, must begin not with an economic prescription but a political one, actually a human prescription. The basic principle should be this: people must have a right to decide issues that affect their lives, their communities, their environment. People must possess the right to decide.
Under our current economic system, this is for the most part not possible. Economic decisions are considered private decisions – even those made by transnational business corporations – top down economic institutions with the power to determine the fates of millions of workers and communities and where the Bill of Rights have no relevance.
The most important sector of the economy to address is the financial sector. The power to coin and distribute money is at the root of all others. Banks and other financial institutions have long been deemed as potential threats to self-governance – from Revolutionary times through the Populists of the 1870’s-1890’s to the present.
In an 1802 letter to his Treasury Secretary Albert Gallatin, President Thomas Jefferson reflected:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
My vision of hope in constructing an inclusive economy…and inclusive government, thus, is focused on financial institutitions.
I’ve developed a 10 point plan – the first 5 focused on the financial sector, the 2nd 5 on related issues.
1. Hold those responsible for the current crisis responsible – both individuals and companies. Bank CEO’s and other officers who have used bank bailout money for lavish bonuses or golden parachutes should be jailed and funds returned. Banking corporations that have misused bank funds for CEO buyout or bank acquisitions should be forced to return taypayer funds. Companies responsible for the home foreclosure crisis should have their corporate charters revoked and reorganized. This would serve as an important deterrent of future abuse.
2. It’s time to democratize banks. Bailing out banks simply because they’re too big to fail means their too big to exist. More bailout funds, as economist and Nobel Prize laureate Joseph Stiglitz says in a recent article calling for government take over of banks, would simply waste hundreds of billions of dollars and not solve the credit crisis. Banks would simply further consolidate with the few that remain more politically and economically powerful. Democratizing banks would mean bank investors would lose out. It would also mean money could finally be directed to help those facing home foreclosures.
3. Democratize issuance of currency by making the Federal Reserve a total public entity – a 4th branch of the government with checks and balance of issuing money decided by Congress – as many are suggesting. It’s absurd to permit a entity that is partially private to determine our nation’s money supply.
4. Fundamentally restructure the International Monetary Fund and World Bank. It’s time to abolish odios debt of underdeveloped nations who in most cases long ago paid back the principle of their original loan with hefty interest. End the Structural Adjustment Program which link loans to gutting a nation’s economic sovereignty. Focus on micro loans promoting sustainability and decentralization.
5. Fund a new federal program that provides financial and technical incentives to democratize banks and corporations via cooperatives. Other nation’s have hundreds, if not thousands, of economic cooperatives that supply everything from manufacturing to banking. They are democratically run. It’s time for our nation to provide major incentives for that here.
6. Abolish corporate personhood. The notion that business corporations can possess Bill of Rights and other constitutional protections must cease. Corporate rights threatens the economic health of communities but also what is little left of our democracy.
7. Reverse Buckley v Valeo, the 1976 Supreme Court decision equating money with free speech. Money isn’t speech. It’s property. When invested in politics, money from the wealthy drowns out the voices of those without money. The ever-widening income and wealth gap, perpetuated by government policies, will never be narrowed unless the political power of the wealthy is minimized. Reserving Buckley is an important step in this direction.
8. Keep public assets public. It seems every public asset has at one point or another been targeted for sale at the municipal, state and federal government. Privatization/corporation of public assets reduces public control. Keeping public assets public is the surest way to maximize transparency and responsibility of workers and directors who are unable to hide behind the legal shield erected by corporations in the name of protecting “trade secrets” or “propriety information.”
9. Develop new measurements of well being. The Growth Domestic Product (GDP) merely measures economic growth – be it good or bad. Building a needed house or a unneeded nuclear bomb factory both add to the GDP. We need a different economic ruler – one that measures not just economic advancements but also quality of life which involves more than mere economics – such as happiness.
10. Replace the “endless more” growth economic model with a sustainable and just model based on tenants of respect, dignity, equity, democracy, cooperation, and meeting basic physical needs, not insatiable wants. This involves two tracks. We need macro economic institutions and policies (some of which mentioned earlier) along with programs like social security, environmental protections, green technologies, minimum wage, and labor regulations. We also need micro economic alternatives (i.e. cooperatives, land trusts, local currencies, community supported agriculture, participatory budgeting).
It is time for us to take charge of our economy. It is complicated but we can not be intimated. We can demystify and demythologize it. There are people who are working on popular economics. We the People have in the past come together in powerful social movements to educate ourselves and then take action on nuclear power, nuclear weapons/war, the wars in Central America and Iraq, and numerous environmental problems. Each time we were told: “leave it to the experts,” or “they know best.” Each time we educated ourselves and came to know enough to know what we were being told was not true and was against the interests of the vast majority of our fellow citizens.
When it comes to economics, we all have PhDs in what it’s like to live through what is arguably the most severe economic crisis in the history of this nation outside of the great depression.
At its core, we must remember that economics is about morals and values -- not pie charts, graphs, percentiles, or trends. It’s not a cosmic force. Virtually everything that has, is and will happen is due to conscious and willful decisions made by human beings – often times who are accountable and responsible to few if any others. That’s the problem. Others making decisions for us.
Shouldn’t we have the power and authority to make decisions affecting our lives and communties? Real democracy. Real participation. Real inclusion. And real soon.