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Sustainable Economics

Mark A. Goldman                                                                     Dated: 11/29/08


The US economy as it is, is not sustainable and the economic policies being pursued by the current administration are not helpful. They are unhelpful. The new economic team that is scheduled to come to power in the next administration is somewhat more sensitive to what is needed but it is becoming more obvious every day that the improvement is likely to be marginal. Unfortunately, being marginally better will not be good enough to save the economy. More economists, more public officials and more citizens would need to commit to what is really needed, and be willing to sacrifice their own egos to really help, if we are to pull out of this tailspin any time soon. The political and cultural environment in which we live is not encouraging. I just hope that this is not as hopeless as looks.

The American people do not need access to more credit. That is not the heart of the matter even though it is the heart of the efforts made so far to stabilize the economy. What they have done so far will not stabilize the economy. What they have done so far is to create a hodge-podge of knee jerk reactions to fear and pandemonium in the credit markets. They have reacted to cries for help but nothing they have done or said publicly indicates that they understand the problem. Or if they do understand the problem, nothing they have done or said indicates that they have any intention of doing anything substantive to solve it.

It is not entirely accurate to say that the American people do not need more access to credit. They will need access to credit, but like I said, that’s not the main issue. The American people have already borrowed too much money. They don’t need to borrow more. The American people were encouraged to spend every last cent they had and then to borrow more, so that they could spend even more… and that is what they did. They spent more than they could afford to spend, and thereby ruined their chance to have a successful and sustainable standard of living. But some people did benefit by all this spending: All this spending made a small percentage of the population wealthy and successful… all the credit that was made available to a lot of people ended up making a few people financially secure. And even though it enabled some of those who borrowed to accumulate a significant amount of goods and services… the standard of living that those goods and services represented, as we can now see, was not sustainable. Re-inflating the price of assets (be it real estate or stocks) so that more borrowing can take place will not make what is unsustainable, sustainable.

A great majority of Americans are now tapped out and dejected. They know they can’t afford to borrow more just so they can buy more, because they no longer believe they will be able to pay off any new debt they now add to their portfolios. And this is what the current policymakers do not understand or acknowledge. For an economy to be sustainable, citizens must have confidence that they will become financially successful. Financially successful is something most of the current population does not now believe in their heart of hearts, they are, or ever will be.

I am defining a financially successful person here as someone who has an accurate and confident belief that now and into the extended future they will have more income and or wealth than they will need to maintain their desired standard of living… which is to say… after spending what they need to live comfortably, they will have enough money or wealth left over to pass something significant on to their loved ones when they die, even if they live a very long time. You will not find this definition in economics text books.

If we want our economy to recover, we will have to take whatever steps are necessary to allow people to experience being financially successful as I've defined it. People who are financially successful spend money for what they want. They gladly will even borrow money for something they want today even though today they don’t have the cash to pay for it… because they are confident that they will have sufficient income in the future to pay off the debt.

The trouble is, policy makers and their advisors have not been willing to do what is necessary to give the larger population this experience. They instead have attempted to perfect their ability to trick people into believing that they are or will be financially successful knowing all the while that it is a public relations trick, a sleight of hand, an illusion. Now the jig is up. Now everyone knows it was a trick and how many times can you trick someone and still have them come back for more. Well, you can keep trying to improve the quality of your deceptions or you can actually try to do something meaningful to make life progressively better for people on a sustainable basis.

Among the tricks used extensively is paying people to do jobs that create nothing of value (the hidden agenda being a desire to simply pump money into the economy and/or to earn points with unscrupulous politicians who believe it’s their job to ‘bring home the bacon’). A lot of military spending falls into this category. The problem is, this is a waste of real wealth and real human capital. It is unsustainable, which after all this time, we are finally finding out. We have been squandering a lot of our wealth this way inside and outside the military industrial complex for many, many years.

So the bottom line is this, if we really want to save the economy, what we need to do is pursue economic policies that have a real chance of giving people the experience that they need:  a real chance of becoming financially successful. If we try to do that, our policies will look a lot different than the policies we have pursued so far. I can tell you this: monetary policy alone is not going to get us there.

The question is this: is it at all possible to bring all Americans (particularly our policymakers) into alignment with what is needed? Will they ever be willing to pursue strategies that will make most people better off? 

Here are some ideas that would probably help, some of which have been alluded to by others. Once you get the idea, it should not be too difficult to think of other strategies (tax reforms, defending the rule of law, ending corporate personhood, etc.) that would be aligned with my stated objective:

1. Single Payer Healthcare System that really works. If all Americans had a health care system they could depend on… one that might be similar to what has been accomplished in other countries, it would go a long way to giving them some financial security. Not only would it do that, but our society would become healthier, we all would enjoy longer life expectancies, infant mortality rates would decline, and people would be happier. But this would have to be a well thought out program unlike anything politicians have been willing to pursue or talk about seriously.

2. Election reform. The reason that politicians are unwilling to do intelligent things with competence and integrity is that it is the influence of money and power—rather than a simple desire to do what’s best for democracy and our society—that has been driving their agendas. So one must conclude that to do any of the things I might suggest would require political reform as well as economic reform.

3. A real energy policy designed to make America energy independent. The trick here is to develop an energy policy that is efficient and sustainable and is not compromised by those who have a financial interest in doing things that are not sustainable, intelligent, or honorable. Such a program would create a lot of jobs and save a lot of money and lives; to wit: We could stop making war on other people in order to control their oil or other resources, and we could then stop wasting so much money on useless weapons and other foolish behaviors.

4. A much better educational system that provides a good education to all children. Right now funding education is largely based on local real estate values. Every child is entitled to an excellent education no matter what the economic status of his or her household is. If every child had approximately the same opportunity to learn that a child whose parents are financially secure has, in a generation or two more people would have the tools they need to accept the responsibilities of citizenship, and at the same time have the skills and confidence they need to think critically and succeed financially.

5. An efficient Food and Drug Administration. An effective food and drug administration would help protect consumers and educate all citizens about nutrition and other health maintenance issues, independent of the corrupting influence of corporations which are  often more motivated by money and profits than they are by the possibility of improving human health. Again this ties in with political reform.

6. A world class transportation system. A world class transportation system would save everyone a lot of money and make more people feel confident about their economic future. Affordable, dependable transportation would help give everyone a chance to succeed. It would be tied into our sustainable energy policy which in turn might save the world from global warming and other related maladies.

All of the above examples, if pursued with integrity, could give more people a chance to pursue the American Dream and find sustainable financial success. They would create jobs, real wealth, happiness and good will. But of course, “pursued with integrity” is the key. Is it possible to transform our society so that more people are willing to give up their selfish agendas for the good of the whole? This of course is the key question and the most difficult one to answer or create. Predictably, people will accuse me of being a socialist. But calling me a name that has negative connotations is not an argument. The objective here is to do what needs to be done so that every citizen has a real chance to become financially successful. If you tell the truth about it, it is clear they don’t have this opportunity now. Not understanding or appreciating this is killing our economy and destroying the social fabric of our culture.

My point in all of this is that economic policy must address real economic issues. If we keep doing what we are doing I think we are all going down (rich and poor alike). If we can’t make ourselves behave with compassion, intelligence, and integrity we will continue to go through the pretense and the motions but in the end accomplish nothing more than going in circles. I don’t think most economists are oblivious to how economics really works… they are just subject to constraints put on them by those who wield money and power for selfish purposes, consciously or unconsciously. 

An awful lot of us cave in to the pressure put on us by such people in our culture usually without even realizing or thinking about it. Everyone wants to succeed and so a lot of us have a tendency to want to work for very successful companies or people, so that we can learn from them or at least earn a lot of money being of service to them. We end up doing their bidding, adopting their state of consciousness, and arguing for things that will please them… thereby getting ahead and winning favor… sometimes getting rich ourselves in the process. But alas, this is destroying our culture, our economy, and civilization itself.

We’re going to have to look for a better way to become successful. If we pursue the real ‘science of economics,’ I believe our policies will look more like what I’ve described than the policies being pursued.  Some economists will tell you what I'm suggesting takes too long and we don't have that much time.  What I'm saying is, the sooner we start doing what needs to be done, the sooner the healing process can begin.

We all have a part to play in healing our economy and transforming our culture to meet the challenge.  Let me suggest that a good place to start, would be right here:


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