The “New Economy” moniker is bubbling around lately, with a meaning recast far from President Bill Clinton’s neoliberal usage 20 years ago. The venerable Washington DC-based Institute for Policy Studies has its New Economy Working Group, a partnership with Yes! magazine and the 22,000-member Business Alliance for Local Living Economies (BALLE). At the core of the call for a New Economy is an effort to come up with practical alternatives that democratize the control of the economy—including workplaces, finance, and the structure of the firm—in ways that are ecologically sustainable.
The focus on finance—on shrinking a dangerously unstable, extractive banking sector and nurturing an alternative one—is powered by such people as John Fullerton, the former JPMorgan managing director who launched Capital Institute to promote the idea of finance “not as master but as servant” and sees a role for “social impact” investing in the New Economy.
It is in the New Economy movement that you’ll hear people talk about how to build a “no-growth” economy that shares more and taxes the earth less, a view promoted in the United States most notably by Boston College professor Juliet Schor. On the board of the new NEI are thinkers like Peter Victor of York University in Toronto, author of 2008’s Managing Without Growth: Smaller by Design Not Disaster, and Stewart Wallis, head of London’s New Economics Foundation, which has been popularizing the no-growth idea for years.
“Even if everybody was to rediscover Keynes, that’s not the answer,” Wallis told the NEI crowd, referring to the British economist who popularized government investment in the economy during downturns, even if it means running deficits, in order to boost demand and employment. “We can have an economy with high well-being, high social justice” that destroys the planet. “We need a new model, an economy that runs on very different metrics, maximizing returns to scarce ecological resources, maximizing returns [to] human well-being, good jobs.”
new economy
Rome is burning while Congress fiddles. The president is out on the road trying to secure a second term, while the economy once again teeters on the brink of bad possibilities. The governors of the Federal Reserve Board seem to understand this better than most of Washington’s power hitters. But what can the Fed do? The central bank has already dispensed trillions to the financial system and pulled interest rates down to rock-bottom levels. Yet the economy doesn’t respond. Banks won’t lend, businesses won’t hire. Anxious consumers stopped buying, the order books are bare. The Fed has supplied trillions in cheap loans to the country’s largest banks, so why can’t it offer the same deal to struggling consumers?
Miles Kimball, an imaginative economics professor at the University of Michigan, has stepped forward to propose an ingenious solution for the Fed’s dilemma. The government should create a “federal credit card” and send one to every adult in the nation, enabling each person to borrow $2,000 at a very low interest rate and not pay back any of the money until after the economy has fully recovered. The provocative kicker in Kimball’s proposal is that the Federal Reserve would itself provide the financing, not Congress or the president through the federal budget. And he argues that the central bank can do this with its unique power to create money.
A federal line of credit, Kimball suggests, could become a new, fast-acting channel for economic stimulus—more potent than the usual methods like tax rebates, and far less costly. That’s because consumers would not get any benefit from this government assistance unless they use the card—that is, borrow and spend—and do so before the government’s offer expires. After all, this is exactly what the economy needs. Why give the money in tax breaks for banks or businesses, which may not use it for the intended purpose? Why not deliver the aid to consumers, who will?
Kimball argues that this novel approach could deliver a strong, quick jolt to the stagnant economy, $400 billion or more. Yet it would add very little to the federal budget deficit, because the Federal Reserve operates under its own, independent balance sheet. Further, it’s not free money but a temporary loan, like the trillions in short-term loans the Federal Reserve gave the banking system at the height of the crisis. The low-priced credit would immediately help pressed families scrambling to pay the rent, young people without jobs and especially the desperately poor, who are “unbanked” and victimized by predatory lenders charging usurious interest rates for “payday” loans. “A big advantage of national lines of credit,” Kimball explained, “is that, once triggered, the details of spending are worked out through the household decision-making process, which is relatively nimble compared to corporate and government decision-making processes.”
Those who have the largest megaphones in our corporate state serve the very systems of power we are seeking to topple. They encourage us, whether on Fox or MSNBC, to debate inanities, trivia, gossip or the personal narratives of candidates. They seek to channel legitimate outrage and direct it into the black hole of corporate politics. They spin these silly, useless stories from the “left” or the “right” while ignoring the egregious assault by corporate power on the citizenry, an assault enabled by the Democrats and the Republicans. Don’t waste time watching or listening. They exist to confuse and demoralize you. Chris Hedges ☀
I saw an El Pais spread on this, which I cannot find on-line. Here are the European countries with the highest owner occupancy rates:
Romania, 97.5%
Lithuania, 93.1%
Croatia, 90.1%
Slovakia, 90.0%
How about the lowest rates?
Switzerland, 44.3%
Germany, 53.2%
Austria, 57.4%
The first step toward public ownership is recognizing that it is not the radical departure most imagine it to be. Two of the most cost-effective health providers in the United States—one a far-reaching insurance system, Medicare; the other a direct hands-on healthcare delivery system, the Veterans Administration—are run by the government. So, too, the largest pension manager in the country is a public entity: the Social Security Administration.
The US Postal Service, which employs 645,000 men and women, is another public enterprise that is generally regarded as well run by most experts—despite the recession, a reduction in the volume of mail because of electronic communications and a highly unusual 2006 Congressional requirement that the USPS pre-fund its pension benefits for the next seventy-five years. Recent cost-saving proposals for closing many small-town post offices and reducing services have triggered a popular backlash against the possible loss of an institution the public still values.
Another public enterprise, the Tennessee Valley Authority (TVA), is one of the largest energy companies in the nation. In fact, more than 25 percent of electricity in the United States is supplied by local public utilities and cooperatives. And, of course, though corporate influence has distorted a potentially powerful opportunity, the government owns timber, mineral, oil and other resources on public land covering almost 30 percent of the nation’s territory.
Public enterprises do not spend large amounts on advertising or brokers’ fees to sell their products. They do not add a profit margin to every service they provide or article they sell. Nor do they pay exorbitant executive salaries. The Medicare administrator made a base salary of approximately $170,000 in 2010. Stephen Hemsley, CEO of UnitedHealth Group, made a base salary of $1.3 million and received $101.96 million in compensation that same year. Because of added expenses like these (along with many other irrationalities), our private healthcare system costs the nation up to twice the share of GDP spent on equal or better care in many other countries—a large-scale “inefficiency” that wastes perhaps a trillion dollars a year! When conservative defenders of private corporations focus on internal efficiency alone, they ignore (or deliberately obscure) not only the demonstrated truth that corporate financial institutions have the power to force the nation to lose trillions of dollars in economic output, but also that our extraordinarily wasteful healthcare system costs twice as much as that of other nations.
If there is pressure to increase the productivity of human workers, the serious question to ask is, why can’t a machine do this? The fact that a task is routine enough to be measured suggests that it is routine enough to go to the robots. In my opinion, many of the jobs that are being fought over by unions today are jobs that will be outlawed within several generations as inhumane. New Rules for the New Economy ☀
I guess some of this mad right-wing love comes from the idea that in America, anyone can become a Rich Guy if he just works hard and saves his pennies. Mitt Romney has said, in effect, “I’m rich and I don’t apologize for it.” Nobody wants you to, Mitt. What some of us want—those who aren’t blinded by a lot of bullshit persiflage thrown up to mask the idea that rich folks want to keep their damn money—is for you to acknowledge that you couldn’t have made it in America without America. That you were fortunate enough to be born in a country where upward mobility is possible (a subject upon which Barack Obama can speak with the authority of experience), but where the channels making such upward mobility possible are being increasingly clogged. That it’s not fair to ask the middle class to assume a disproportionate amount of the tax burden. Not fair? It’s un-fucking-American is what it is. I don’t want you to apologize for being rich; I want you to acknowledge that in America, we all should have to pay our fair share. That our civics classes never taught us that being American means that—sorry, kiddies—you’re on your own. That those who have received much must be obligated to pay—not to give, not to “cut a check and shut up,” in Governor Christie’s words, but to pay—in the same proportion. That’s called stepping up and not whining about it. That’s called patriotism, a word the Tea Partiers love to throw around as long as it doesn’t cost their beloved rich folks any money. This has to happen if America is to remain strong and true to its ideals. It’s a practical necessity and a moral imperative. Stephen King ☀
When the U.S. economy was healthier, corporations had multiple responsibilities. They provided their employees with good jobs, paid taxes that sustained their communities, and offered valued services to customers. Then, as now, they delivered dividends and profits to shareholders. Corporate leaders and managers understood that meeting these obligations were necessary for long-term success. They built their companies to last.
But Verizon and too many other large companies have rapidly moved to a new model, one built on the primacy of shareholder returns above all else. Built-to-last companies have given way to corporations that are built to loot.
What the lobbyists want, what Wall Street wants, is they want Etch A Sketch Senators. They want the ones who will clear the screen and change their minds to do whatever big money tells them to do. That’s what they want. Elizabeth Warren ☀
A new national solution is ultimately likely to come either in response to a burst of pain-driven public outrage or, more slowly, through a state-by-state build-up to a national system. Massachusetts, of course, already has a near universal plan, with 99.8 percent of children covered and 98.1 percent of adults. In Hawaii, health coverage (provided mostly by nonprofit insurers) reaches 91.8 percent of adults in large part because of a 1970s law mandating low cost insurance for anyone working twenty hours or more a week. In Vermont, Governor Peter Shumlin signed legislation in May 2011 creating “Green Mountain Care,” a broad effort that would ultimately allow state residents to move into a publicly funded insurance pool—in essence a form of single-payer insurance. Universal coverage, dependent on a federal waiver, would begin in 2017 and possibly as early as 2014. In Connecticut, legislation approved in June 2011 created a “SustiNet” Health Care Cabinet directed to produce a business plan for a nonprofit public health insurance program by 2012, with the goal of offering such a plan beginning in 2014. In California, there is a good chance a universal “Medicare for all” bill may be on the governor’s desk for signature by mid-2012. (Similar legislation passed by both the House and the Senate was vetoed by then-Governor Schwarzenegger in 2006 and 2008.) In all, nearly twenty states will soon consider bills to create one or another form of universal health care.
The current political regime in Washington is a great example of the fundamental conservatism of global leaders. I think that’s one of the explanations for why you have young people finally showing up in the streets. We had this guy who ran as a candidate of change. He didn’t run as a radical, but he had all the social-movement rhetoric that made you think that actually he was going to do things differently. His candidacy mobilized grass roots supporters as if this were a social movement. It was all very self-conscious, and all these young people became politicized and thought this was going to actually mean some kind of profound change. And what do we get? We get this guy who is basically a classic conservative. The word conservative has changed in contemporary American English; now it means “extreme radical reactionary” or “right-winger.” But in the old-fashioned sense of wishing to conserve existing institutions in as much a viable long-term form, that’s what Obama turned out to be. Pretty much everything he’s done is along the lines of “How can we save the auto industry? How can we preserve the banking system without nationalizing it, without changing it in any fundamental way?” He did not map out a great new vision of a health system. He said the system we have is not viable, but here’s a plan where we can preserve the same principles of profit-driven private health in a form that will be sustainable. So basically this is a guy who is willing to make heroic efforts not to change. David Graeber ☀
It’s understandable that politicians say this: it was America’s experience in the past. In the years following World War II, we built a solid middle class on the foundation of high-paying, mostly unionized jobs in the manufacturing sector. But those days are history. Today, automation and computers have eliminated millions of jobs, and private-sector unions have been crushed. On top of that, in a globalized economy where capital can hire the cheapest labor anywhere, it’s no longer credible to believe that America’s middle class can prosper from labor income alone. So why don’t we pay everyone some non-labor income — you know, the kind of money that flows disproportionally to the rich? I’m not talking about redistribution here, I’m talking about paying dividends to equity owners in good old capitalist fashion. Except that the equity owners in question aren’t owners of private wealth, they’re owners of common wealth. Which is to say, all of us. How to Restore the Middle Class ☀
A GNT creation ©2007–2013
