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The
US economy as it is, is not sustainable and the economic policies being
pursued by the current administration are not helpful. They
are unhelpful. The new economic team that is scheduled to come
to power in the next administration is somewhat more sensitive
to what is needed but it is becoming more obvious every day
that the improvement is likely to be marginal. Unfortunately,
being marginally better will not be good enough to save the
economy. More economists, more public officials and more
citizens would need to commit to what is really needed, and be
willing to sacrifice their own egos to really help, if we are
to pull out of this tailspin any time soon. The political and
cultural environment in which we live is not encouraging. I
just hope that this is not as hopeless as looks.
The American people do not need
access to more credit. That is not the heart of the matter
even though it is the heart of the efforts made so far to
stabilize the economy. What they have done so far will not
stabilize the economy. What they have done so far is to create
a hodge-podge of knee jerk reactions to fear and pandemonium
in the credit markets. They have reacted to cries for help but
nothing they have done or said publicly indicates that they
understand the problem. Or if they do understand the problem,
nothing they have done or said indicates that they have any
intention of doing anything substantive to solve it.
It is not entirely accurate to
say that the American people do not need more access to
credit. They will need access to credit, but like I said,
that’s not the main issue. The American people have already
borrowed too much money. They don’t need to borrow more. The
American people were encouraged to spend every last cent they
had and then to borrow more, so that they could spend even
more… and that is what they did. They spent more than they
could afford to spend, and thereby ruined their chance to have
a successful and sustainable standard of living. But some people
did benefit by all this spending: All this spending made a
small percentage of the population wealthy and successful…
all the credit that was made available to a lot of people ended up
making a few people financially secure. And even though it
enabled some of those who borrowed to accumulate a
significant amount of goods and services… the standard of
living that those goods and services represented, as we can
now see, was not sustainable. Re-inflating the price of assets
(be it real estate or stocks) so that more borrowing can take place will not make what is
unsustainable, sustainable.
A great majority of Americans
are now tapped out and dejected. They know they can’t afford
to borrow more just so they can buy more, because they no longer
believe they will be able to pay off any new debt they now add
to their portfolios. And
this is what the current policymakers do not understand or
acknowledge. For an economy to be sustainable, citizens must
have confidence that they will become financially successful.
Financially successful is something most of the current population does not
now believe
in their heart of hearts, they are, or ever will be.
I am defining a financially
successful person here as someone who has an accurate and confident
belief that now and into the extended future they will have
more income and or wealth than they will need to maintain
their desired standard of living… which is to say… after
spending what they need to live comfortably, they will have
enough money or wealth left over to pass something significant
on to their
loved ones when they die, even if they live a very long time.
You will not find this definition in economics text books.
If we want our economy to
recover, we will have to take whatever steps are necessary to
allow people to experience being financially successful as
I've defined it. People who are financially successful spend money
for what they want. They gladly will even borrow money for
something they want today even though today they don’t have the
cash to pay for it… because they are confident that they
will have sufficient income in the future to pay off the debt.
The trouble is, policy makers
and their advisors have not been willing to do what is
necessary to give the larger population this experience. They
instead have attempted to perfect their ability to trick
people into believing that they are or will be financially
successful knowing all the while that it is a public relations
trick, a sleight of hand, an illusion. Now the jig is up. Now
everyone knows it was a trick and how many times can you trick
someone and still have them come back for more. Well, you can
keep trying to improve the quality of your deceptions or you can actually try to do something
meaningful to make life progressively better for people on a
sustainable basis.
Among the tricks used
extensively is paying people to do jobs that create nothing of
value (the hidden agenda being a desire to simply pump money
into the economy and/or to earn points with unscrupulous
politicians who believe it’s their job to ‘bring home the
bacon’). A lot of military spending falls into this
category. The problem is, this is a waste of real wealth and
real human capital. It
is unsustainable, which after all this time, we are finally finding
out. We have been squandering a lot of our wealth this way
inside and outside the military industrial complex for many,
many years.
So the bottom line is this, if
we really want to save the economy, what we need to do is
pursue economic policies that have a real chance of giving
people the experience that they need: a real chance of becoming financially successful. If we try to do that, our
policies will look a lot different than the policies we have
pursued so far. I can tell you this: monetary policy alone is not going to get us
there.
The question is this: is it at
all possible to bring all Americans (particularly our
policymakers) into alignment with what is needed? Will they
ever be willing to pursue strategies that will make most people
better off?
Here are some ideas that would probably
help, some of which have been alluded to by others. Once you
get the idea, it should not be too difficult to think of other
strategies (tax reforms, defending the rule of law, ending
corporate personhood, etc.) that would be aligned with my
stated objective:
1. Single Payer Healthcare
System that really works. If all Americans had a health
care system they could depend on… one that might be similar
to what has been accomplished in other countries, it would go
a long way to giving them some financial security. Not only
would it do that, but our society would become healthier, we
all would enjoy longer life expectancies, infant mortality
rates would decline, and people would be happier. But this
would have to be a well thought out program unlike anything
politicians have been willing to pursue or talk about
seriously.
2. Election reform. The
reason that politicians are unwilling to do intelligent things
with competence and integrity is that it is the influence of money and
power—rather than a simple desire to do what’s
best for democracy and our society—that has been driving their agendas. So one must conclude that to do any of
the things I might suggest would require political reform as
well as economic reform.
3. A real energy policy
designed to make America energy independent. The trick
here is to develop an energy policy that is efficient and
sustainable and is not compromised by those who have a
financial interest in doing things that are not sustainable,
intelligent, or honorable. Such a program would create a lot
of jobs and save a lot of money and lives; to wit: We could
stop making war on other people in order to control their oil
or other resources, and we could then stop wasting so much
money on useless weapons and other foolish behaviors.
4. A much better educational
system that provides a good education to all children.
Right now funding education is largely based on local real
estate values. Every child is entitled to an excellent
education no matter what the economic status of his or her
household is. If every child had approximately the same opportunity
to learn that a child whose parents are financially secure
has,
in a generation or two more people would have the tools they
need to accept the responsibilities of citizenship, and at the
same time have
the skills and confidence they need to think critically and succeed financially.
5. An efficient Food and
Drug Administration. An effective food and drug
administration would help protect consumers and educate all citizens about nutrition
and other health maintenance issues,
independent of the corrupting influence of corporations which
are often more motivated by money and profits than they
are by the possibility of improving human health. Again this ties in with
political reform.
6. A world class
transportation system. A world class transportation system
would save everyone a lot of money and make more people feel
confident about their economic future. Affordable, dependable
transportation would help give everyone a chance to succeed.
It would be tied into our sustainable energy policy which in
turn might save the world from global warming and other
related maladies.
All of the above examples, if
pursued with integrity, could give more people a chance to
pursue the American Dream and find sustainable financial
success. They would create jobs, real wealth, happiness and
good will. But of course, “pursued with integrity” is the
key. Is it possible to transform our society so that more
people are willing to give up their selfish agendas for the
good of the whole? This of course is the key question and the most
difficult one to answer or create. Predictably, people will
accuse me of being a socialist. But calling me a name that has
negative connotations is
not an argument. The objective here is to do what needs to be
done so that every citizen has a real chance to become
financially successful. If you tell the truth about it, it is
clear they don’t have this opportunity now. Not
understanding or appreciating this is killing
our economy and destroying the social fabric of our culture.
My point in all of this is that
economic policy must address real economic issues. If we keep
doing what we are doing I think we are all going down (rich
and poor alike). If we can’t make ourselves behave with
compassion, intelligence, and integrity we will continue to go
through the pretense and the motions but in the end accomplish
nothing more than going in circles. I don’t think most
economists are oblivious to how economics really works… they
are just subject to constraints put on them by those who wield
money and power for selfish purposes, consciously or unconsciously.
An awful lot of us cave in to the pressure put on us
by such people in our culture usually without even realizing
or thinking about it. Everyone wants to succeed and so a lot
of us have a tendency to want to work for very successful
companies or people, so that we can learn from them or at least
earn a lot of money being of service to them. We end up doing
their bidding, adopting their state of consciousness, and
arguing for things that will please them… thereby getting
ahead and winning favor… sometimes getting rich ourselves in
the process. But alas, this is destroying our culture, our
economy, and civilization itself.
We’re going to have to look
for a better way to become successful. If we pursue the real
‘science of economics,’ I believe our policies will look
more like what I’ve described than the policies being
pursued. Some economists will tell you what I'm
suggesting takes too long and we don't have that much
time. What I'm saying is, the sooner we start doing what
needs to be done, the sooner the healing process can begin.
We all have a part to play in healing
our economy and transforming our culture to meet the
challenge. Let me suggest that a good place to start, would be
right here: www.gpln.com
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