Ethical economy

For growth, focus first on jobs

by Edward Hadas

Breaking Views – Agenda-Setting Financial Insight (May 23 2012)

In the labour market, there is a fine line between inefficiency and wastefulness. “This place is so inefficient”, it is said, often with justification, especially in rich economies. “We could do everything we’re supposed to with a third fewer people”. Factories can be streamlined, high quality new equipment can save on labour, and offices are prone to the incubation of worthless bureaucracy.

It also said, sometimes by the same people, that “The unemployment situation is terrible. My young friends can’t get jobs and lots of not-so-old people I know are retiring early.” Such statements are also accurate. In many countries, the Lesser Depression has sharply worsened a longstanding problem of inadequate job creation. Spain’s official unemployment rate is 24 percent. Almost half of the young adults in Greece are jobless. And the employed portion of the working age population in the United States has fallen by three percentage points over the last four years.

Politicians and other leaders have watched the job destruction with something like horror. They shouldn’t have been surprised. The unending fight against inefficiency leads to a natural employment asymmetry. As technology advances, businesses and governments usually find it easier to cut than to add jobs. Some businesses can progressively expand headcount, but in tough times there are more employers looking for ways to use less labour.

Most politicians and economists believe that GDP growth is the cure. It is considered not only the highest economic good but also the best way to create jobs. In search of higher output, governments run huge deficits, while central banks pass out money for free. The policymakers often invoke the name of John Maynard Keynes. But they twist the great economist’s ideas. As Pavlina Tcherneva points out in a recent article in the Review of Social Economy, Keynes thought “the real problem” governments should address during the Great Depression was “to provide employment for everyone”. In Keynes’s view, output follows jobs, not the other way around.

Keynes’s own preferred solution was for governments to organise projects with a high “elasticity of employment”. “There are things to be done; there are men to do them”, he said. “Why not put the two together? Why not put the men to work?” The best way for governments to create jobs quickly is still to hire people directly. A look at the dilapidated infrastructure of the United States suggests that Keynes’ prescription is still relevant.

Enthusiasts for small government might want to privatise such programmes, but they should still agree with the true Keynesian principle: it is better to pay people to work than to pay them not to. Programmes which protect the unemployed and disabled serve a valuable social purpose and payments for early retirement may be defensible, but programmes which create jobs are far preferable to either.

This Keynesian message has largely been lost in the current official policy mix, which aims at growth and hopes for jobs. Policies which support the financial system, put money in consumers’ hands and cut bloated government bureaucracies may eventually encourage job creation. Four years into the Lesser Depression, however, these highly indirect methods are at best working slowly.

Employment asymmetry should be attacked more directly. Governments are even better placed to lead the charge than in Keynes’s day because their economic role has expanded so much. An eight-year experiment in Germany shows the power of relatively minor tweaks to the rules on jobs and benefits. Little more than tougher conditions for unemployment benefits and more helpful employment agencies have cut the number of people unemployed for more than a year from 1.7 million, about four percent of the potential workforce, to 800,000.

The precise German recipe is not applicable everywhere, but the principle is. The prime goal of government economic policy should be to fight the natural employment asymmetry of industrial economies. Lower taxes on workers’ income would make new jobs cheaper for employers and more lucrative for employees. In many countries, more stringent limitations on benefits would also help. Almost everywhere, the desire to establish and expand enterprises should be encouraged. In the United States, it would be helpful to find a way to give the rich a smaller share of the nation’s income. The money they don’t receive could be paid out to workers in newly created jobs.

The employment problems of the Lesser Depression are not grave enough to require a major reconsideration of the economy’s goals. A combination of short-term programmes and more gradual shifts in regulation and taxation should do the trick. But as the economy becomes more efficient, the surplus of labour is likely to become a more pressing social challenge. Keynes wondered “how to organise material abundance to yield up the fruits of a good life”. The answer is certainly not found in frequent periods of wastefully high unemployment.

Related Article:

Ethical economy: Bad ideas spawn Lesser Depression (May 16 2012)

Why Building Community Wealth is a Key Challenge to Corporate Power

by Steve Dubb

AlterNet (May 16 2012)

As our political system sputters, a wave of innovative thinking and bold experimentation is quietly sweeping away outmoded economic models. In ‘New Economic Visions’, a special five-part AlterNet series edited by Economics Editor Lynn Parramore in partnership with political economist Gar Alperovitz of the Democracy Collaborative, creative thinkers come together to explore the exciting ideas and projects that are shaping the philosophical and political vision of the movement that could take our economy back.

As resistance has grown to America’s widening gulf between the “one percent” and the rest of the population, something new has exploded in America’s communities; “community wealth building” is an explicit strategy to democratize the ownership of wealth from the ground up. With traditional regulatory and tax-and-spend approaches faltering at every level, the notion that we should create new democratic economic institutions to build wealth, community by community, is quietly gaining traction. We now have the potential for larger and longer-term transformation throughout the nation.

Power for the People

The central idea is simple: people join together through some form of public, community or employee-owned business to meet local needs and thereby regain a measure of local economic democracy and control. Partly self-help, partly community mobilization, and partly sketches for future system-wide expansion, community wealth-building efforts can be found in virtually every region of the country. The range of efforts is vast. Community wealth-building institutions include community development corporations, community development financial institutions, social enterprises, community land trusts, employee-owned enterprises, and cooperatives. All pool capital in ways that create new jobs and anchor jobs in communities.

The efforts also define a new approach to challenging corporate power – a strategy that changes who owns, controls and benefits from the underlying economic wealth of the system. It involves not merely replacing private capital, but displacing it through developing community ownership of business. In other words, profits should flow to workers, consumers or the community  –  rather than outside investors. And these businesses need to succeed! Increasingly, too, ecological concerns are structured into the very core of many models.

Transformation Everywhere

Examples of the new approach are evident around the world, including worker-cooperatives in Argentina; the Grameen Bank of Bangladesh (which, with its founder, Muhammad Yunus, won the 2006 Nobel Peace Prize); and the Mondragon cooperative network in northern Spain, which employs nearly 85,000.

Non-profit social enterprise is a community wealth building strategy through which nonprofits independently secure resources to meet their missions in the absence of adequate government support. In San Francisco, a group known as REDF (formerly the Roberts Enterprise Development Fund) has helped boost the business activity of fifty social enterprises that have employed 6,500 people and earned revenues of more than $115 million. Three-fourths (77 percent) of social enterprise employees interviewed two years later were still working. Average employee wages had increased by nearly one-third (31 percent) and monthly incomes had almost doubled (ninety percent). One of the enterprises in REDF’s portfolio is Buckelew Programs, a mental health agency with 220 employees that provides a continuum of services to roughly 7,000 clients each year and operates three social enterprises, including a green cafe and a green cleaning service, as well as a staffing service. This year, it intends to open a fourth social enterprise, a fresh-cut produce processing business.

In Grayland, Washington, Coastal Community Action  –  a nonprofit agency that operates a range of housing, food, healthcare, and employment programs  –  has built a six megawatt wind farm consisting of four wind turbines. The wind farm, which sells energy to the electrical grid, generates enough power to satisfy the energy needs of more than 1,500 households. The nonprofit estimates that its ownership of the $14-million wind turbine project generates $720,000 in unrestricted income each year, enabling it to increase service delivery options, lessen its local dependence on outside funding, and supplement the community’s ongoing projects and to meet more of the community’s needs.

In Seattle, Pioneer Human Services, founded in 1963, offers drug- and alcohol- free housing, employment, job training, counseling, and education to recovering alcoholics and drug addicts. It employs a total of 1,000 people and finances 99 percent of its $70 million budget through fees for services and earnings generated in the manufacture, distribution and sale of products. Businesses include retail cafes, sheet metal fabrication, aerospace precision machining (it’s a contractor for Boeing), wholesale food distribution, and contract packaging. Not only do these enterprises build community wealth and provide independent resources that finance social services, the businesses themselves are central to Pioneer’s mission of helping “people on the margins of society” stay out of prison and off the streets, enabling Pioneer to employ more than 700 men and women drawn from the ex-offender, homeless and drug-recovery populations it serves.

Community development corporations (CDCs), formed initially in the 1960s in a crucible of urban riots and rural neglect, now perform important community wealth-building and planning roles in cities and counties across the United States. CDCs can be found in virtually every major city. A Massachusetts study found that between 2003 and 2011, Massachusetts-based CDCs created or preserved over 9,000 homes and 14,000 jobs, while supporting more than 8,000 businesses and 160,000 families, generating nearly $2 billion of economic activity. A 2005 survey found that nationwide an estimated 4,600 CDCs help create 75,000 jobs per year.

Community development financial institutions (CDFIs), first given federal recognition in the 1990s, have the explicit aim of building wealth in low-income communities through providing financing where conventional lenders fear to tread. Even in the face of contracting conventional finance, assets in community investing institutions rose more than sixty percent – from $25.0 billion in 2007 to $41.7 billion – in 2010. In 2008 alone, credit unions financed and assisted businesses and microenterprises that created or maintained 35,624 jobs, financed the construction or renovation of 60,205 units of affordable housing, and provided 16,405 responsible mortgages to first-time and other homebuyers.

Community land trusts provide still another powerful illustration of community wealth building. Beginning in the 1960s and 1970s, pioneers like Bob Swann in western Massachusetts and Charles Sherrod in Georgia struggled against huge odds to develop modest land trusts efforts, often also involving other concerns, like respect for environmentally sound land use practices and rural community development. Today hundreds exist; in Irvine, California, the city’s strategic plan calls for 5,000 units of housing to be developed using land trust strategies.

Trusts of this kind keep the ownership of land underlying housing in non-profit or public ownership. Appreciation in land values is split via a formula between the homeowner and the trust, thereby avoiding gentrification. A study of a community land trust in Burlington, Vermont – the nation’s largest – also found that during its first two decades, 61.9 percent of residents who sold their land trust home after an average residency of six years were able to “step up” to traditional homeownership. Meanwhile the equity gain that the trust retains enables it to continue providing affordable housing to future generations. In a down market, community land trusts are even more important. Simply put, community land trusts keep people in their homes. A 2011 study found that land trust homeowners were ten times less likely to be in foreclosure proceedings than conventional homeowners.

Employee ownership is another powerful community wealth-building strategy. The National Center on Employee Ownership (NCEO) estimates that in 2009 there were 9,800 companies owned in whole or part by workers through their pension contributions through a form of ownership known as an employee stock ownership plan or ESOP. As of 2009, there are 10.3 million employee-owners of companies owned in whole or part by ESOPs, with net assets of $869 billion. In other words, the average ESOP employee-owner has an ownership stake of over $84,000. NCEO estimates that since 2009 the number of ESOPs has climbed over ten percent to 10,900 companies.

Employee ownership also has powerful economic stabilizing effects: between 2000 and 2008, while the number of manufacturing jobs fell 29 percent in the state of Ohio, employee-owned manufacturing jobs held steady, dropping only one percent. Nationally, in 2010, 12.1 percent of all workers – nearly one in eight – had faced a lay-off in the previous twelve months; by contrast, only 2.6 percent of workers who were employee-owners were laid off.

Sharing the Wealth

Perhaps the most visible form of a community wealth building is the cooperative. More than 130 million Americans are currently members of a co-op or credit union. Because many Americans own shares in more than one co-op or credit union, the total number of co-op memberships in the United States exceeds 350 million. Overall, a 2009 University of Wisconsin study found that nearly 30,000 cooperatives in the US account for more than $3 trillion in assets, $514 billion in total annual revenue, and provide 856,000 jobs.

Credit unions are governed by the core cooperative principle of one-member, one-vote. Importantly, they make their loans directly to their members – member-owners of credit unions can be confident that their deposits will be reemployed productively through loans that help finance local consumer purchases, create jobs and build wealth at home.

Another powerful community wealth-building mechanism is the state-owned bank. In North Dakota, a state-owned bank has operated since 1918, earning the state more than $300 million over the past decade, while helping support local banks and local community investment. Legislation exploring or creating such banks has been introduced this past year in more than a dozen states, including Arizona, California, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Montana, New Mexico, New York, Oregon, Virginia, and Washington.

As experience with the various democratized forms has become increasingly enriched over time, innovative strategies of collaboration among enterprises and/or with local governments have also begun to emerge. In California, a comprehensive, community-owned development project consciously links individual and collective wealth building in the diverse working-class Diamond neighborhood in southeast San Diego. With the support of the Jacobs Family Foundation, the community raised philanthropic and government funding to develop a commercial and cultural complex, anchored by a shopping center. A key element was the community public offering, which provided community residents and employees an exclusive opportunity to buy shares (valued at $200 and capped at $10,000) for a total twenty percent ownership stake in the project. As one community owner noted, “That we own stock, and that we have an opportunity to make a difference in what type of business goes in the community [is unbelievable]. We have some say – so in the community environment.”

The Neighborhood Unity Foundation also has a twenty percent ownership share that provides it with a sustainable source of funding for its community wealth building efforts. The Jacobs Family Foundation, which retains sixty percent ownership, intends to turn over its share to community owners by 2018. Ultimately, area residents will own fifty percent of the project and the neighborhood foundation the other fifty percent, retaining the profits generated to benefit the community rather than outside investors.

In Cleveland, Ohio, an integrated group of worker-owned companies, supported in part by the directed purchasing power of large hospitals and universities, has opened a major new vector of urban strategy. The first of Cleveland’s planned network of cooperatives opened its doors for business in September 2009. The co-op industrial scale laundry is a state-of-the-art, ecologically green, commercial facility capable of handling ten million pounds of healthcare linen a year. Its sophisticated business plan provides all employee-owners a living wage and health benefits. If current projections are realized after seven years on the job each employee will have a $65,000 equity stake in the enterprise.

In October 2009 a second employee-owned, community-based energy company began large-scale installations of solar panels for the city’s largest nonprofit health, education and municipal buildings. (Additionally, it provides home weatherization services.) A third business scheduled to start operations this year is a year-round hydroponic food production greenhouse capable of producing three million head of lettuce and approximately 300,000 pounds of basil and other herbs a year.

More to Come

Many other enterprises are in the planning stage. Cleveland mayor Frank Jackson praised the co-ops for being “a model for how we can put our people back to work and rebuild our community”. A growing number of economic development officials, tired of chasing corporations with public subsidy dollars, like the idea of creating anchored, community-owned enterprises that won’t get up and move. Already, the Cleveland co-ops have inspired efforts in other cities to develop similar networks, including Amarillo, Texas; Atlanta, Georgia; Pittsburgh, Pennsylvania; and Washington, DC.

Community wealth-building strategies offer powerful possibilities for longer-term change. First, in most instances, the new wealth-democratizing approaches provide responses (or suggestive directions of response) to economic dislocation and social pain where traditional political approaches have failed. Second, in many instances, they involve quite unusual local alliances, frequently including small business and religious leader support. Third, often the institutional trajectories have also begun to define (and secure) new supportive measures from local, state and national policy makers, thereby also beginning to define new directions for potential ongoing and more expansive policy and political action. Finally, that they are based in local, everyday experience may also lead to changes in the foundations of political and democratic cultural development over time.

Together the above suggest a long, slow developmental arc left in the wake of the failure of conventional politics and economics. And already, a growing number of Occupy activists are looking to worker-owned cooperatives as a way to self-fund the movement, displace corporate economic space, and develop an economic base that can support alternative economic and political formations. The path to building a truly democratic economy may be long, but the growing base of community wealth building institutions provide some building blocks that, over time, suggests the quiet development, potentially, of the basis for a community-sustaining economy that serves the interest of all Americans, rather than our current system which disproportionately benefits the wealthiest at the expense of the 99 percent.


Steve Dubb is research director of the Democracy Collaborative at the University of Maryland.

(c) 2012 Independent Media Institute. All rights reserved.

Night Thoughts in Hagsgate

by John Michael Greer

The Archdruid Report (May 23 2012)

There are times, at least for me, when the fate in store for industrial society can be seen with more than the usual clarity.  I’m thinking just now of the time I looked out a train window and saw an abandoned factory, not yet twenty years old, with foot-high saplings rising incongruously from the gutter around the roof; or of another time, in a weekend flea market here in Cumberland, when I found a kid’s book on space travel I’d loved as a child, flipped through the pages, and found myself face to face with the gap between the shining future we were supposed to have by now and the mess that was actually waiting for us when we got here.

I’m pondering another of those moments now, but the trigger this time isn’t a trackside glimpse or a memento in a repurposed warehouse. It’s the current flood of news stories, opinion pieces, and public statements by pundits of various kinds, all focused on one theme – the supposed irrelevance of peak oil.

Those of my readers who have managed to miss that torrent so far may find it helpful to spare a glance at this typical example {1} of the species, which was forwarded to me by one of this blog’s readers (tip of the archdruidical hat to Hereward).  The author, Timothy Worstall, is a senior fellow at the Adam Smith Institute in London, and a specialist in rare earth elements; he starts off by complaining that he doesn’t understand peak oil, goes on to demonstrate that fact in impressive detail, and finishes up with the sort of whopper that normally earns an F on a freshman paper in Geology 101. (No, Mr Worstall, kerogen shales such as the Green River formation are not at all the same thing as oil-bearing shales such as the Bakken formation, and nobody yet has a viable way to extract oil from kerogen shales; I trust you provide better information to clients who ask your advice about rare earth elements.)

I wish I could say that this is an extreme example, but it’s not. Worstall has at least grasped the fact that peak oil has to do the rate at which oil can be produced, which is more than most critics of the concept manage, and his confusion between kerogen shales and oil-bearing shales – though it could have been cleared up by five minutes of research – is common among people who are poorly informed about petroleum geology.  Look at other efforts to dismiss peak oil and you’ll find worse.  The question I’d like to raise is why this outpouring of misinformation and denial happens to be in full flood right now.

It’s a very odd time for peak oil to be dismissed, all things considered. Back in the late 1990s, when the first peak oil researchers began to exchange data and forecasts, several leading figures in the newborn movement made very straightforward predictions about what was going to happen. They predicted that global production of crude oil would peak in the near future, and decline thereafter; they predicted that this would cause the price of oil and petroleum products to skyrocket, imposing severe costs on the global economy and triggering economic contraction; some, though this was controversial, predicted that attempts to replace petroleum with alternative energy sources would fail because of net energy and other noneconomic factors.

These assertions were rejected with quite some heat by the few people outside the scene who bothered to notice. Critics of peak oil insisted, first, that increasing demand for petroleum would make additional capital available for the hunt for new oil fields, which would of course be found, and thus allow petroleum production to grow indefinitely; second, that if the price of oil did rise sharply, that would simply make other energy sources viable, releasing a flood of energy onto the market that would drive prices back down; and third, that human ingenuity, the free market, or some other allegedly omnipotent force would certainly be able to find limitless new energy resources and prove all the pessimists wrong.

A decade and a half later, it’s instructive to see how those predictions turned out. The short form is that the peak oil researchers were correct while their critics were shoveling smoke. The production of crude oil peaked in 2005; the price of oil spiked to levels that pundits insisted it could never reach, and has moved raggedly upward since the initial spike and crash to today’s value well above $100 a barrel; the global economy proceeded to lurch into serious trouble, and remains in a state of perpetual crisis that nobody in charge seems to be able to understand or fix; and a series of boomlets in hydrogen, ethanol, algal biodiesel and other much-hyped alternative energy sources rose and crashed as it turned out that no matter what oil cost, they cost more.

The current bubble in shale gas is to some extent an exception to that last rule, but it’s hardly the bonanza that the media likes to claim.  Partly, shale gas production is simply a side effect of the fact that natural gas liquids, which occur in some shale gas deposits, can be sold as a petroleum substitute at very good prices; partly, shale gas has morphed in recent years into what Wall Street aficionados call a pump-and-dump operation – a bit of dubious marketing in which operators boost the price of a stock, then sell it at the inflated price to suckers, who are sure the price will go up further and  are therefore left holding the bag when it goes down instead. (I trust none of my readers have put their life savings into shale gas companies.)

Still, there’s another factor to the shale gas bubble, and also to the boom in oil-bearing shale that has filled so many glowing headlines in recent years, and will fill so many gloomy headlines a few years further on. Both are being ballyhooed as game-changing breakthroughs, even though they’re nothing of the kind – hydrofracturing (“fracking”) has been a common practice for forty years, and the Bakken shale was discovered long ago.  The fracking boom is simply one of the many ways in which the world is scraping low-grade fuels out of the bottom of the barrel, just as peak oil researchers have predicted it would. Their breakthrough status is entirely a product of hype. Behind that hype, I’ve come to think, and the comparable hype that surrounded the hydrogen economy, corn ethanol, and all the other failed pseudosolutions to our predicament, lies a very specific motive: the desire to find some reason, however fatuous, to insist that it’s all right to keep on wallowing in the benefits of today’s wildly unsustainable energy and resource consumption, instead of getting ready for the far less lavish world that’s going to follow in short order.

That motive shapes a dizzyingly large share of the collective conversation of our time. Consider the book review {2} I critiqued in last week’s post. One of the bits of rhetoric the reviewer used to dismiss my suggestion that social change has to be founded in personal change was the claim that “you can’t end rape [just] by not raping anyone”. Perhaps so, but as one of my readers pointed out (tip of the archdruidical hat here to Ozark Chinquapin), someone who claimed to oppose rape would normally be expected to demonstrate that commitment by, at the very least, not raping anyone; an antirape movement that claimed that rapes committed by its members didn’t matter, because it was working to end rape everywhere, would rightly be dismissed as an exercise in extreme hypocrisy. Yet you’ll hear the identical logic from people in a good deal of the environmental movement, who insist that they can’t be bothered to lighten the burden their lifestyles place on the planet because they’re going to save the Earth all at once.

Work out the practical implications of that argument, in other words, and it amounts to a justification for clinging to the comforts and privileges of the modern industrial lifestyle even at the expense of one’s supposed ideals. That’s also the implication of the denunciations of peak oil I discussed at the beginning of this post, of course, and there are plenty of other ways of cloaking that same desire. Whether you expect solar power, thorium reactors, algal biodiesel or some other exciting new energy source to save the day; whether you anticipate the imminent arrival of the Rapture, the Singularity, the Space Brothers, a world-ending cataclysm, or a great leap of consciousness to some higher plane; or whether you simply tell yourself, as so many Americans do these days, “I’m sure they’ll think of something” – if you look at that belief honestly, dear reader, doesn’t it work out to an excuse that lets you claim that it really is okay for you to keep enjoying whatever you see as your share of the goodies churned out by the industrial machine?

It’s here, in turn, that I glance down and see the void opening up beneath the foundations of that same machine – and it’s also here that I find myself remembering a harrowing detail from one of the favorite books of my teen years, Peter Beagle’s brilliant fantasy The Last Unicorn (1968).

I’m not even going to try to sketch out the plot of the book as a whole.  The point that’s relevant here centers on a place, the town of Hagsgate, and its people, who are very rich. They live in the kingdom ruled by King Haggard, the villain of the story; they profit mightily from his rule, and are exquisitely careful not to notice anything that bears too closely on the terrifying evil that lies at the heart of his realm. They are also, as it happens, under a witch’s curse.

It occurs to me that some of my readers may not be familiar with the structure and function of curses. (What do they teach children these days?) The sort of thing you get in bad modern remakes of fairy tales, where someone inoffensive gets burdened with a dire fate that would not otherwise befall them, is strictly amateur stuff.  Professionals know that the curses that matter are the kind that unfold by their own inexorable logic from the actions and attitudes of the accursed.  The witch or wizard who finds it  necessary or appropriate to pronounce a curse doesn’t have to make anything happen; he or she simply says aloud the unmentionable realities of the situation, states the necessary consequences, and leaves. The efforts of the accursed to avoid falling victim to the curse, without actually changing the things that make the curse inevitable, then proceed to drive the curse to its fulfillment.

The witch who cursed Hagsgate was a thoroughly competent professional. Here’s what she said:

You whom Haggard holds in thrall,
Share his feast and share his fall.
You shall see your fortune flower
Till the torrent takes the tower.
Yet none but one of Hagsgate town
May bring the castle swirling down.

You’ll notice that, like any good curse, this one includes an escape hatch:  skip Haggard’s feast and you skip the fall, too. Beagle’s story doesn’t mention anyone who used the escape hatch, but there will have been somebody.  There always is; whether we’re talking about Numenor, the City of Destruction, the warren of the shining wire, or some other place where a curse is at work, someone’s going to walk away.  That sounds very heroic in retrospect, but that’s not the way it works in practice. In practice, those who walk away are as often as not weeping hysterically, torn between the fear of giving up everything they know and the knowledge that leaving is the only choice left for them, and trying without much success not to listen to the taunts or feel the stones flung by those who stay behind.

If, as Ursula LeGuin says in one of her best stories, they seem to know where they are going, it’s because “anywhere but here” is an easy course to chart at first. Mind you, some never even make it out the city gates; some come stumbling back to town a few days or weeks or years later; some are never seen again, and pebbles will grow into moss-covered boulders before anybody finds out exactly what happened to them; still, there’s always one, or a few, or nine tall ships sailing from Andunie with stormwinds howling in the rigging, who leave and do something less foredoomed with their lives.

It’s the ones who stay behind, though, who are more relevant to the point I want to make. It’s very easy to stay behind. Early on, when walking away is an easy thing, the threat of the curse is so far off that it’s seductive to think you can stay in Hagsgate for just a little while longer and still escape.  Later on, you’ve come to enjoy the practical benefits that being a citizen of Hagsgate has to offer; you’ve got personal and financial ties to the place, and so you come up with ornate theories packed with dubious logic and cherrypicked data to convince yourself that the curse isn’t real or that it will only affect other people. As the curse begins to work, in turn, you start making excuses, insisting that you did everything you could reasonably be expected to do, and it’s all somebody else’s fault anyway.  Finally, when the full reality of your fate stares you in the face and your last chance of escape is almost gone, comes the terrible temptation to treat the price you’re about to pay as a measure of the value of what you’ve gotten by staying in Hagsgate, and you cling to it ever more frantically as it drags you down.

Now of course a witch didn’t actually put a curse on industrial society – at least, if one did, I haven’t heard about it – but fairy tales keep their hold on our collective imagination because they contain a wealth of valid wisdom, wrapped up in a compact and memorable form.  To say that there’s a curse on industrial society is simply to use an archaic metaphor for a point I’ve been discussing in these essays since The Archdruid Report began six years ago, which is that the consequences of industrial society’s mismanagement of its relations with the planet will not go away just because we don’t want to deal with them. That metaphor has a range of relevant features, and one of them is that any effective response to the curse – or, if you will, the predicament of our time – has to begin by taking stock of the ways that each of us, as individuals, contributes by our own attitudes and actions to the mess we’re in, and then making appropriate changes.

After six years, I shouldn’t even have to say that daydreaming about running off to some conveniently unaffordable eco-homestead in the country doesn’t count.  Unless you’re in a position to do that, and the vast majority of us aren’t, that’s simply another evasion. What’s required instead is the less romantic but far more productive task of adapting in place: figuring out how, living where you live now, you can place much less of a burden on the biosphere, and help other people do the same thing. It probably has to be said that perfection isn’t a reasonable expectation here – there’s a long learning curve, and our culture and built environment place significant obstacles in the way – but a great deal can be done nonetheless  That can easily lead into activism of various kinds, for those who feel called to do that specific kind of work; it can also lead in plenty of other constructive directions.

Still, that’s not a popular message just now, and I’m guessing that it’s going to become a great deal more unpopular as industrial civilization stumbles deeper into crisis. It doesn’t require a witch’s curse to make people cling frantically to exactly those things that are destroying them and their future, just the psychology of previous investment and a few other standard self-defeating habits of the human mind.  Still, there’s the choice: share the feast and share the fall, or wake up and walk away. Which will you do?


End of the World of the Week #23

Comet Kohoutek, the otherwise inoffensive deep-space snowball that provided the excuse for David Berg’s 1973 prophecy of imminent doom, was hardly the first comet to become the center of a frenzy of misinformation centered around a supposed threat to Earth’s very survival. Sixty-three years earlier, Halley’s Comet had a great many people trembling in imminent expectation of apocalypse, and it was all because of a nifty new scientific advance.

Spectroscopy, the process by which light can be used to determine the chemical composition of things in outer space, was the hot new research technology in astronomy in those days, and as Halley’s Comet came swinging along its accustomed orbit in early 1910, astronomers turned their telescopes on the tail, hoping that light passing through it would give them a glimpse of what comets are made of. The new technology performed to spec, and one of the chemicals that was detected in the tail was cyanogen, (CN)2, a poisonous gas. Meanwhile, astronomers tracking the comet’s orbit announced that the Earth would pass through the comet’s tail on May 20 of that year.

The contemporary equivalent of the tabloid press in America jumped on those details, combined them, and announced that the comet’s tail was a vast cloud of poison gas that would exterminate life on Earth as the planet passed through it. There was quite a respectable panic in some American cities as May 20 came close. America being the land of the entrepreneurial spirit, some public-spirited souls began manufacturing “comet pills” that people could take to protect themselves from those billowing clouds of cyanogen, and they sold extremely well.

As it happens, the tail of a comet isn’t a billowing cloud of anything; it’s not far from hard vacuum, and the molecules of cyanogen in it were so widely scattered that they never posed a threat to anything at all.  May 20 passed, nothing happened, and Halley’s Comet wheeled back out to the far reaches of the solar system, leaving the manufacturers of “comet pills” richer and their customers, hopefully, a little bit wiser.

— For more failed end time prophecies, see my book Apocalypse Not {3}


John Michael Greer is the Grand Archdruid of the Ancient Order of Druids in America {4} and the author of more than twenty books on a wide range of subjects, including The Long Descent: A User’s Guide to the End of the Industrial Age (2008), The Ecotechnic Future: Exploring a Post-Peak World (2009), and The Wealth of Nature: Economics As If Survival Mattered (2011). He lives in Cumberland, Maryland, an old red brick mill town in the north central Appalachians, with his wife Sara.

If you enjoy reading this blog, you might want to check out Star’s Reach {5}, his blog/novel of the deindustrial future. Set four centuries after the decline and fall of our civilization, it uses the tools of narrative fiction to explore the future our choices today are shaping for our descendants tomorrow.







Modern Money Blog – Number Forty Nine

Should Growth Drive Jobs, or Jobs Drive Growth?

by L Randall Wray

New Economic Perspectives (May 24 2012)

Sorry for the hiatus, but a family emergency is consuming all of my time. I hope to be able to post something next week – to move to finish up the MMP blog. Meanwhile I offer the following.

In an article yesterday in Reuters, Edward Hadas discussed an excellent piece by Pavlina Tcherneva. And, by Jove, he got it. It is much better to create the jobs and then let growth follow, rather than to try to pump up growth in the hope that some jobs might trickle down. That is all the more true when you’ve got 25 million people who need a full-time job. Let me quote the first part of his article; go here for the rest:



Politicians and other leaders have watched the job destruction with something like horror. They shouldn’t have been surprised. The unending fight against inefficiency leads to a natural employment asymmetry. As technology advances, businesses and governments usually find it easier to cut than to add jobs. Some businesses can progressively expand headcount, but in tough times there are more employers looking for ways to use less labour.

Most politicians and economists believe that GDP growth is the cure. It is considered not only the highest economic good but also the best way to create jobs. In search of higher output, governments run huge deficits, while central banks pass out money for free. The policymakers often invoke the name of John Maynard Keynes. But they twist the great economist’s ideas. As Pavlina Tcherneva points out in a recent article in the Review of Social Economy, Keynes thought “the real problem” governments should address during the Great Depression was “to provide employment for everyone”. In Keynes’s view, output follows jobs, not the other way around.

Keynes’s own preferred solution was for governments to organise projects with a high “elasticity of employment”. “There are things to be done; there are men to do them”, he said. “Why not put the two together? Why not put the men to work?” The best way for governments to create jobs quickly is still to hire people directly. A look at the dilapidated infrastructure of the United States suggests that Keynes’ prescription is still relevant.

Enthusiasts for small government might want to privatise such programmes, but they should still agree with the true Keynesian principle: it is better to pay people to work than to pay them not to. Programmes which protect the unemployed and disabled serve a valuable social purpose and payments for early retirement may be defensible, but programmes which create jobs are far preferable to either.

This Keynesian message has largely been lost in the current official policy mix, which aims at growth and hopes for jobs. Policies which support the financial system, put money in consumers’ hands and cut bloated government bureaucracies may eventually encourage job creation. Four years into the Lesser Depression, however, these highly indirect methods are at best working slowly.



He’s right. And Pavlina has been producing a series of great papers on this topic. Read his piece and then go to And her most recent paper on Keynes’ Approach to Full Employment (just published in the Review of Social Economics)  is a must-read.

Capitalism Has Failed

Five Bold Ways to Build a New World

by Sara Robinson

AlterNet (May 16 2012)

As our political system sputters, a wave of innovative thinking and bold experimentation is quietly sweeping away outmoded economic models. In New Economic Visions, a special five-part AlterNet series edited by economics editor Lynn Parramore in partnership with political economist Gar Alperovitz of the Democracy Collaborative, creative thinkers come together to explore the exciting ideas and projects that are shaping the philosophical and political vision of the movement that could take our economy back.

The problem, in a nutshell, is this: The old economic model has utterly failed us. It has destroyed our communities, our democracy, our economic security, and the planet we live on. The old industrial-age systems – state communism, fascism, free-market capitalism – have all let us down hard, and growing numbers of us understand that going back there isn’t an option.

But we also know that transitioning to some kind of a new economy – and, probably, a new governing model to match – will be a civilization-wrenching process. We’re having to reverse deep and ancient assumptions about how we allocate goods, labor, money, and power on a rapidly shrinking, endangered, complex, and ever more populated planet. We are bolding taking the global economy – and all seven billion souls who depend on it – where no economy has ever gone before.

Right now, all we have to guide us forward are an emerging set of new values and imperatives. The new system can’t incentivize economic growth for its own sake, or let monopolies form and flourish. It should be as democratic as possible, but with strong mechanisms in place that protect the common wealth and the common good. It needs to put true costs to things, and hold people accountable for their actions. Above all, it needs to be rooted in the deep satisfactions – community, nature, family, health, creativity – that have been the source of real human happiness for most of our species’ history.

As we peer out into this future, we can catch glimmers and shadows – the first dim outlines of things that might become part of the emerging picture over the next few decades. Within this far-ranging conversation, a few dominant themes crop up over and over again. For the final chapter in this series, we’ll discuss five robust visions that are forming the conceptual bridge on which our next steps toward the future are being taken.

Small Is Beautiful

Many people imagining our next economy are swept up in the romance of a return to a localized or regionalized economy, where wealth is built by local people creatively deploying local resources to meet local needs.

Relocalization is a way to restore the autonomy, security and control that have been lost now that almost every aspect of our lives has been co-opted by big, centralized, corporate-controlled systems. By bringing everything back to a more human scale, this story argues, we’ll enable people to connect with their own creativity, their communities and each other. Alienation and isolation will dissipate. We’ll have more time for family and friends, really free enterprise and more satisfying work. Our money will be our own, accumulated by us and re-invested in things we value. And it’ll be a serious corrective to our delusional ideas about what constitutes real wealth, too.

This vision is deeply beloved. It’s front and center in both the resilience and Transition Towns movement. You hear it from foodies who extol the virtues of local food, Slow Money investors who back local banks and businesses instead of Wall Street, community gardeners, and ten million Makers. David Korten argues that capitalism is actually the enemy of truly free markets – the kind where anybody with ideas and initiative can make a tidy living working for herself, doing something she loves. And that kind of freedom is, very naturally, small in scale.

This vision is also seductive. It holds out the promise that if people dare to let go of what they have and reach out to the future, there’s a better life waiting within their grasp – a core piece of any effective change story.  However, this model also has a few problems that haven’t yet been engaged by most of its proponents, but which compromise its ability to serve as a global framework.

First: the infrastructure that will enable us to relocalize isn’t thick on the ground right now. City and regional governments across the country are broke, devastated by the devaluation of their tax bases. Ironically, relocalizing may require significant federal investment – but do we really think that the corporations that control our federal government will actually back a model that will ultimately undercut the economic and political chokehold they have on us? It seems unlikely.

Also, localization often involves trade-offs between making things efficiently – which, in the industrial age, has meant making them in large, centralized factories – and resilience. Making stuff locally in small batches increases resilience, and decentralizing the process means that many more people will have jobs. For example: A single factory farmer can manage thousands of acres. An organic farm might have half a dozen workers on just twenty acres.

But the fact remains that our world depends on at least a few large, complex systems (the Internet, for example) that require national or even international coordination to manage properly. Where does that coordination come from when all the power is pushed down to the regional level? Also, many of our biggest problems – climate change, damage to the oceans, loss of species, the threat of epidemics and extreme weather events – also require a larger and more coordinated response than any one city or region can mount. In a relocalized world, who has the authority to manage these problems?

Furthermore, what becomes of our currently high national and global standards on things like civil rights, infrastructure codes and the environment when all the power is devolved to local governments? Some places will no doubt forge ahead and raise the bar even further, but it’s not hard to imagine that quite a few others will be all too glad to get back to oppressing their minorities and raping the land.

These are questions that few theorists, so far, have addressed, but it’s possible they may be answered in time. A lot of the people doing the best work on relocalization right now are young, and the new enterprises they’re building are untried and new. As they grow in skill and experience, and their trust in these structures grows, they may find ways to start scaling up.

Marx 2.0

Another group of theorists are updating Marx for the 21st century, proffering models that put both control and profit of enterprises into the workers’ hands. In some of these, workers are also owners, with a full stake in the success or failure of the business. In others (such as the one proposed by philosopher David Schwiekart, which was based on Yugoslavia’s industrial policy), the state is the owner and primary investor in the business. The workers lease the means of production, run the business, return some of the proceeds to the government, and distribute the rest of the profit between themselves.

Ironically, most of these schemes share capitalism’s biggest flaw, which is its inherent reliance on growth. As a business owner, it’s very hard to say, “We’re big enough now. Let’s stop here.” (Though some, like Patagonia founder Yvon Chouinard, have done just that.) Most businesses have competitors who, if they’re allowed to get bigger than you, will swallow you whole. If you don’t stay big enough to compete, you don’t survive – and since the competitors are facing the same imperative, the race can never really end.

As noted, this kind of constant growth simply isn’t sustainable on a finite planet. People will always trade – it’s an essential human activity – but going forward, we need small-scale businesses that can stay happy and healthy without being pushed to grow. Worker ownership doesn’t really address this problem, though relocalization, which roots businesses deeply in their own local markets, limiting their reach beyond those boundaries, may provide one natural brake on growth.

For many large and necessary enterprises (utilities; essential centralized manufacturing; big, capital-intensive tech industries; and so on) public ownership may be the only way to ensure that they grow no bigger than they need to be to fulfill their mission. If there are other solutions that will allow us to have complex enterprises minus the growth imperative, they’re still lurking out beyond the horizon.

Systems Theory

One of the great breakthroughs in human understanding over the past forty years has been the realization that all complex systems – economic, political, biological, mechanical, environmental, or social – behave according to a simple set of common principles. The rules that govern the behavior of one set of systems usually apply to other kinds of systems as well.

For example, much of what we’ve learned about how ecosystems work is now informing new thinking about the economy. Successful enterprises don’t exist in a vacuum. They only thrive in interdependent communities of customers, suppliers, investors, employees, and related businesses. The most economically productive places – for example, Silicon Valley – are as dense in these interrelationships as old-growth forests are. This complex landscape allows for endless combinations of new interactions, which in turn leads to constant, easy, productive innovation. At the same time: these ecosystems are every bit as susceptible to thoughtless disruption when some critical element is disturbed.

This new awareness of the intense interdependence within healthy economies undercuts the “rugged individualist/self-made man” story that undergirds conservative economics. Seeing the world in systems makes it abundantly clear that no individual or enterprise ever succeeds on its own, or that [no] one business alone can bring about the kind of change we need. Fostering healthy economies is the work of generations, and thanks to systems theory, we understand more about how to build them than we ever did before.

A World Like the Web

A related framework, which is being driven by technologists rather than economists, posits that economic systems like capitalism, fascism and communism all belong to an industrial age that’s now passing. In the old era, we saw the world through the metaphor of the machine. Our systems were static piles of unchanging parts that you designed, defined, tinkered with, and deployed toward a desired result.

This framework argues that our transition to the Information Age (which includes not just the Internet revolution, but other technologies like nanotech, biotech, 3D printing, and so on; and which will be playing out through the rest of this century, at minimum) will require us to rearrange our economic and political orders to more closely fit the Internet metaphor. Closely related to this are emerging human-centered economic models, like behavioral economics, which jettison the mechanistic “rational actor” assumption for a more nuanced and organic understanding of how human decision-making actually works.

In these models, the economy is seen as a series of simultaneously interrelated and self-sufficient nodes, each embedded in a complex matrix of relationships that are redundant and self-healing. These could easily be strong regional economies based on natural bioregional boundaries, which are then bound together in a tight global network that fosters robust trade in goods and ideas. The foundation of capital is ideas and information – resources that don’t deplete the physical wealth of the planet. Membership in the network increases scalability and adds extra layers of resilience.

This model also implies big changes in governance. It demands new constitutions that push control down to the local level, while also integrating these regional governments into the global network. If political power can move like the Internet, we might get the best of both worlds: the small-is-beautiful dream embedded in so many of the current alternative models, plus a genuine global governance structure that’s capable of getting its arms around our biggest and most universal problems (like, say, managing the global commons, creating needed accountability, or intervening collectively when one regional node has a crisis of some kind). These new governments would also establish a raft of new rights and privileges, updated for this age.

It’s implicitly understood that this leap will facilitate global investment in new infrastructure that will, in turn, enable the next advance in the complexity of human systems. Technology has introduced a deep-level paradigm shift that is rapidly destroying the current order, while also providing the ontological map that shows how the distribution of power, money, organization, governance, and control should play out in the next one.

Reform, Revolution, and Evolution

All of the above discussions are also being informed by an evolving understanding of how transformative social change happens.

As long as most people assume that market capitalism is sustainable,  they’ll focus on reforming it – cleaning it up around the edges, rewriting regulations, making it work in the public interest, and so on. Many Americans, in fact, still hope that this is all it will take – that technology, political reform and market forces, working in some magic combination, will be enough to save us from ourselves.

Others among us are holding out for a full-on revolution that overthrows the whole system in one massive push, clearing the way for something entirely new. Revolutions are tricky, though: historically, a lot of them have gone sideways when the revolutionaries couldn’t hang on through the chaotic aftermath of what they’d wrought. They often get swept away by some other force that’s better organized, and thus better equipped to step in and take over. Anything can happen in the wake of a revolution, and all too often, it’s not the thing you hoped for.

Gar Alperovitz offers “evolutionary reconstruction” as a better alternative to either reform or revolution. Visionaries from Gandhi to Buckminster Fuller have agreed with him. This model focuses our change energy on building new parallel institutions that will, in time, supplant the old ones. Don’t fight the existing system, this strategy argues. Instead, just sidestep it entirely and create a new one. As the old system collapses under its own decay, yours will gradually fill in the gaps until it becomes the new dominant paradigm.

America’s right wing has used this model very successfully to take control of our culture over the past forty years. Starting in the 1970s, they invested in a wide range of parallel education systems, media outlets, professional organizations, government watchdog groups, and so on. These groups groomed a new generation of leaders, while also developing the intellectual, policy and cultural basis for the change they wanted to create. As time passed, they took advantage of opportunities to insert people and ideas from these alternative institutions into the mainstream ones. The result was that ninety percent of the conservative revolution took place almost entirely under the radar of most Americans. One day, we simply looked up to find them in charge of everything that mattered.

We lost the country this way. And we are well on our way to getting it back this way, too. As we steadily, carefully build a new set of enterprises, the new reality will inevitably and naturally take shape around us. There’s nothing stopping us from starting co-ops or worker-owned businesses or triple-bottom-line corporations; we can do all of that today, in full faith that these businesses will be far better adapted to the future than the old capitalist forms we’re seeking to supplant. In time, these structures will become the new normal, and people will barely remember that we ever did it any other way.


Sara Robinson, MS, APF is a social futurist and the editor of AlterNet’s Vision page. Follow her on Twitter, or subscribe to AlterNet’s Vision newsletter for weekly updates.

(c) 2012 Independent Media Institute. All rights reserved.

Occupy the G-8

by Brent Blackwelder

Center for the Advancement of the Steady State Economy (May 20 2012)

This is the text of an address delivered by Brent Blackwelder to the Occupy Movement, in Frederick, Maryland, May 18 2012 on the occasion of the annual meeting of the G-8 at Camp David.

Terrible economic times are facing billions of people worldwide. Where are the jobs? Roughly half of new college graduates in the US cannot find work. Who’s getting all the money? The gap is widening between the one percent and the 99 percent.

At the same time, the world’s oceans are being devastated by overfishing, forests are being obliterated, mountains are being blown apart to get at the coal, and rivers around the world are being dammed, diverted, and drained of their water. A quarter of the species on the planet are headed toward extinction. Compounding these effects, the earth’s climate is being destabilized by emissions of greenhouse gases.

Driving this fiasco are casino economics, cheater economics {1}, and futureless economics. It’s not a pretty picture. Why can’t we do better? What can we do about it? Are the powerful leaders of the G-8 nations gathered here going to provide the solutions?

If the past record of the G-8 is any guide, promises will be made, the World Bank will be assigned the role of savior, but monetary pledges won’t be fulfilled, and nothing major will happen to shift the status quo.

I propose to you today a bold paradigm shift in our economy – away from the futureless economics, away from the casino economics, and away from the cheater economics that run the global economy. We need an economics for the earth, its people, and all the life on this planet.

I suggest that the Occupy Movement could bring about an economic paradigm shift by adopting the steady state economy {2} as its macroeconomic policy goal. That means an economy with stabilized levels of production and consumption, which means stabilizing population and per-person consumption. It means an economy that operates within the carrying capacity of the Earth and does not threaten present and future generations with its overbearing, bloating size.

Cheater Economics, Casino Economics, Futureless Economics

The global economy treats natural resources as if the Earth were a business in a liquidation sale. The global economic system of today is undermining the life-support systems of our planet.

One major shortcoming of capitalism is that it does not reveal the real ecological costs of commercial products. Furthermore, today’s capitalism allows corporations to externalize the damaging health and environmental costs of their activities. Today’s capitalism also tolerates massive taxpayer handouts to highly polluting corporations.

In the Casino Economy billions in profits are made without providing any goods or services – they are made with complex financial instruments sometimes referred to as derivatives. Complex financial instruments enable the avoidance of taxes. The financial sector in today’s US economy is now about three times as large as the manufacturing sector.

In the aftermath of the big bank bailouts and the passage of the Dodd-Frank law to curtail high-risk lending, JP Morgan Chase recently announced a loss of $2 billion from its risky trading (now the bank says it’s over $3 billion). Hand-in-hand with cheater economics, many huge corporations put their profits in offshore tax havens and escape paying an estimated $100 billion to the US Treasury.

In current economic practice, corporations are evaluated on their quarterly returns. There is little long-range thinking. Mainstream economists tell us 100 years from now is not worth worrying about. (One dollar a century from now is only worth pennies today.)  But such thinking runs counter to the values of most people. Parents are concerned about what kind of world their children and grandchildren will live in.

Futureless economics, casino economics, and cheater economics have no place in a steady state economy. But here are some examples of the damage they cause in the current economic sectors of energy extraction, agriculture, mining, and forestry.

1) Fossil fuels. Extractive industries are going to the most remote and riskiest places, such as the Arctic Ocean, to obtain oil. Uncleanable spills will be the inevitable result. Some of the most biologically diverse regions, such as the tropical rainforests, are being decimated by oil drilling. Oil and gas companies are extracting the dirtiest of fuels, such as tar sands in Alberta, Canada. Coal companies are using techniques like mountain-top removal to get at the coal in West Virginia. In the process they are creating a Martian landscape by obliterating the forested green mountains and destroying the entire hydrologic cycle.

Most extractive industries enjoy substantial handouts from governments. The US is set to provide $110 billion over the next decade to the oil and coal industries. That’s right – some of the world’s richest companies enjoy taxpayer handouts, and some do not even pay income tax.

The health and environmental costs of oil extraction in places like Nigeria over the last fifty years are huge, but oil and gas companies like Shell have not cleaned up the more than 5,000 spills that have wrecked fisheries, polluted drinking water, and harmed the health of local people who have borne the brunt of the contamination.

2) Agricultural lands. Powerful agribusiness giants like Monsanto are trying to patent all seeds and control agriculture from top to bottom. Major meat companies like Smithfield operate gigantic animal factory slums that cause serious water pollution and load the air with noxious fumes that harm people’s health and displace local family farms.  As with fossil fuels, governments subsidize the polluters. Time Magazine showed that some of the biggest animal factory farms receive all sorts of handouts from state and local governments.

3) Forests. The world’s forests are rapidly being destroyed. The US has set a horrible example going back to the 1800s when, for example, the state of Michigan was almost totally deforested. Instead of creating sustainable logging operations for the state, the timber industry abandoned Michigan and kept moving west. After seeing some of the horrendous logging along the West Coast, President Franklin Roosevelt said, “I hope the bastards who did this are roasting in Hell”.

The US Forest Service is notorious for providing “below cost timber” sales in our National Forests. Corruption and bribery characterize logging operations around the world.

Friends of the Earth England and Friends of the Earth Ghana combined efforts to show that lumber in Ghana was being extracted, but taxes were not being paid on the real volume of timber being cut.

4) Minerals. Leonardo DiCaprio’s film Blood Diamond (2006) illustrates a typical problem with mining operations that seek gold, copper, diamonds, and other minerals. The use of cyanide to extract gold causes major pollution all over the world. The mining lobby in the US has been so strong that the 1872 Mining Law and its subsidies have not been changed. The “pollute-and-run” practices of the past continue today on steroids.  As with oil, coal, and gas extraction, the damages to health, crops, and the air, land, and water are externalized on the public.

Elements of an Economics for the Earth: A Steady State Economy

There is no magic formula that can move the world to a sustainable, steady state economy. However, by pursuing any of the following actions, countries and localities can move in the right direction and set the stage for a paradigm shift to occur.

1) Get rid of polluter subsidies.  Give subsidies only to clean energy; no more subsidies for fossil fuels, agribusiness, and the like. About half the states exempt pesticides from their sales tax. Senator Sanders (Independent, Vermont) and Congressman Ellison (Democrat, Minnesota) have introduced legislation to eliminate all subsidies to the fossil fuel industry – a measure that would save $110 billion over the next decade.

2) Shift to a clean-energy basis for the global economy. It is technically feasible to run the global economy on a carbon-free and nuclear-free basis. Amory Lovins has a new eloquent description {3} of his plan. Arjun Makhijani in Carbon Free, Nuclear Free {4} provides another. California physicists Jacobson and Delucchi offer a slightly different plan in Scientific American (November 2009) as does Lester Brown in World on the Edge (2011).

3) Adopt the measures proposed by Senator Levin on tax dodging. Senator Levin (Democrat, Michigan) is chairman of the Senate’s Permanent Investigation Subcommittee and has exposed a wide range of scandalous tax-dodging activities by corporations in American that deprive the Treasury of over $100 billion annually. A miniscule tax on global financial transactions and on currency transactions would yield hundreds of billions, while forcing players in the casino economy to pay at least something.

4) Change the indicators. The gross domestic product (GDP) is taken as a measure of society’s well-being, but in reality it measures how fast a nation is converting its natural resources into waste. It fails to account for the depletion of natural resources. Some states, including Maryland, have adopted the genuine progress indicator. And Bhutan has adopted Gross National Happiness as a better measure of well-being.

5) Restructure jobs. Adopting a four-day workweek can help reduce unemployment, spread the work, and provide time for people to spend with their families. The clean energy strategies described above would provide vastly more jobs per dollar than the fossil fuel industry. These jobs can materialize from dispersed renewable energy projects while our energy dollars remain in the community.

6. Support local investing. Michael Shuman’s new book Local Dollars, Local Sense: How to Shift Your Money from Wall Street to Main Street (2012) provides evidence that local investment does better than Wall Street stock purchases. The book presents a variety of examples of opportunities for investing in local businesses, local banks, and local exchanges. About two dozen studies have shown that such local spending and investments can provide several times as many jobs compared to investments in nationwide business. For example, for every $100 spent in a national book chain about $13 would remain in the local economy, whereas with $100 spent at a local bookstore, about $45 would remain.

Is a steady state economy just an idle utopian dream? Tim Jackson’s report, Prosperity Without Growth (2009), prepared for the UK Sustainable Development Commission, provides a detailed discussion that makes a convincing case. Canadian economist Peter Victor has shown how the transition to a new economy can be accomplished in such a way that per capita income increases, unemployment declines, and poverty decreases.

In a world where propaganda and big money have undermined governance and the media, the Occupy Movement has a vital role to play by confronting decision makers, protesting polluting corporations, calling for an economic paradigm shift, and giving visibility to the paths for a healthier future.


Brent Blackwelder is the emeritus president of Friends of the Earth.  Brent was a founder and first chairman of the board of American Rivers,  our nation’s leading river conservation organization. He was also one of  the founders of the Environmental Policy Institute, which merged with  Friends of the Earth in 1989. He has testified in front of Congress on  pressing environmental issues more than 100 times. As a leader in the  effort to save rivers, Brent helped expand the National Wild and Scenic Rivers System from eight rivers in 1973 to over 250 today. He also  worked to eliminate over 200 dams and other water projects that would have destroyed rivers, wetlands, wildlife and areas of special  scientific value. Brent initiated campaigns to reform the World Bank and succeeded in getting Congress to enact a series of significant reforms  directing the Bank and other multilateral lending institutions to pay  more attention to the environment. He graduated summa cum laude from  Duke University and received an Master of Arts in mathematics from Yale, and a  PhD in philosophy from the University of Maryland.

Article printed from Center for the Advancement of the Steady State Economy:

URLs in this post:

{1} cheater economics:

{2} steady state economy:

{3} new eloquent description:

{4} Carbon Free, Nuclear Free:

Copyright (c) 2011 Center for the Advancement of the Steady State Economy. All rights reserved.

In the Name of Austerity, Stimulus and Growth, Amen!

by Dmitry Orlov

Club Orlov (May 22 2012)

Here’s some food for thought. If you’ve been listening to the muffled and incoherent noises coming from the G8 and the surrounding political chattersphere, it’s starting to sound like a prayer meeting: “In the name of Austerity, Stimulus and Growth, Amen!” And if you look at the individual leaders, what is there for them to do except pray?

Starting from the bottom, there is The Man Who Wasn’t There : the newly reinaugurated Russian president Vladimir Putin. He didn’t even show up, but sent his obedient deputy Medvedev instead, who made positive noises about how wonderful the meeting was. Putin is a lonely man: he’s been seen in public with his wife a total of twice over the last two years; his two daughters are living incognito somewhere in Europe, there are mobs of people outside chanting “Russia Without Putin!” over and over again, and even the VIPs present at the inauguration seemed to be half-concealing a message behind their idolatrous smiles: “Wish you weren’t here, Vova!”

The situation in the US isn’t that much better: even his (once) ardent supporters see Obama as slightly worse than ineffectual, while many others are happy to vilify him for things he had nothing to do with. One thing is certain: the office changed him far more than he has managed to change the office. Even if he gets reelected, it will be four more years of ineffectual waffling, futile attempts to stay the course laid in by his manifestly incompetent predecessor, and frontal assaults on our remaining civil liberties. And if his opponent gets elected, it will much the same, except without the thin plastic veneer of pretending to give a damn.

Germany’s Angela Merkel doesn’t have much of a reason to be cheerful either. Her political support is eroding with each election. The task of pleasing the Germans while holding Eurozone together is an impossible one: the Germans are fed up with carrying the weaker European countries on their shoulders, but if they don’t, then all fall down. The European dynamic is different because there the states that make up the EU negotiate with each other directly rather through the opaque proxy of Washington. If New York and California had a choice as to whether to give Louisiana, Missouri and Arkansas an endless series of financial piggyback rides, they would tell them to go ask Jesus for a loan, and then these three states would be worse off than Greece. But eventually something has to give, both here and in Europe.

The new face, the freshly elected socialist François Hollande, hasn’t had a chance to do much yet, but, uncharacteristically for an elected official, he seems to want to fulfill his campaign promises: he said that he will withdraw French troops from Afghanistan by the end of 2012, as promised. But his hand is weak: financially, France is not far ahead the Eurozone laggards; politically, Marine Le Pen’s National Front is breathing down his neck.

And so, all they can do is pray: “In the Name of Austerity, Stimulus and Growth, Amen!” Growth is the holy grail, and austerity and stimulus will help us find it. But how?

Austerity is meant to bring deficit spending under control, curb the uncontrolled expansion of public debt, and avoid national default. But it has the unwelcome effect of triggering a severe recession, shrinking the tax base, and causing budget deficits to increase, not decrease.

Stimulus is meant to provide a way to kick-start economic growth, but the money for stimulus spending has to be borrowed, and this results in the expansion of public debt. And even an economist will tell you that a higher debt-to-GDP ratio results in lower growth.

This brings us to growth. The world is resource-constrained: the supply of most of the essential industrial commodities cannot be increased without triggering a price spike, which, in turn, will trigger another, even deeper, recession. Even with all the deep-water drilling (and spilling), fracking, tar sands and so on, there just isn’t much growth potential for the US or the Eurozone, with their already high levels of per capita resource consumption.

Contrary to the ardent prayers of the world’s leaders, the three-legged stool of austerity, stimulus and growth is a rickety piece of furniture: no matter which combination of legs they try put their weight on, they will end up sitting on the floor, and we will end up sitting on the floor with them. Now, sitting on the floor does not have to be uncomfortable. Perhaps, instead of praying, they should try some yoga: I am thinking of the lotus position. Repeating the same thing over and over again doesn’t seem to be working; let’s try meditating instead. Growth is over; now what?