What to do about a recession--Part II

In their article, "Don't Fix The Economy - Change It", published in December , 2008 by The Toronto Star, Peter G. Brown and Geoffrey Garver offer "...six steps we can take toward a truly balanced budget that will allow Canadians, and all people on Earth, to live fulfilling, healthy, yet more ecologically compatible, lives."

The six steps are: Recognize that the economy is part of the biosphere; acknowledge that we need new institutions; acknowledge that unlimited growth on a finite planet makes no sense; expand the discussion; look beyond technological fixes; and greatly increase investment in educational and civic institutions.

To me, the two most important steps are to "recognize that the economy is part of the biosphere," and to "acknowledge that unlimited growth on a finite planet makes no sense", the second following naturally from the first. They lead also to a fundamental question: How are we to make a decent living while cutting back on consumption? My job so often depends on your consumption, at least under the present economic system.

Having used the term twice, what do I mean by a 'decent' living? It includes personal basics--shelter, food, clothes, mobility, and communication--within a context of clean air, water and soil, meaningful work, beauty, and leisure, which together constitute a civil society.

Many of these goods can be provided through education, health care, public transit, waste management, and other public services, which do not require individual entrepreneurship, or wealth (in fact, the private provision of public goods too often see service to the public sacrificed for profits for shareholders) but rather collective financing, co-operation, ingenuity, and use. There is still a place for private enterprise and profits, but they should be legally required to put service to the community on an equal footing with, or even ahead of, enriching their shareholders (which is their current legal obligation). In a highly civil society, investors would be motivated more by the desire to create some good--some useful product or service--than by merely the desire to make money. Money-making may be a necessary component of economic activity, but it should be regarded as a tool, a means to other, better, ends, and not as an end in itself. And let us not forget that it is the love of money which leads to all evil, not money per se.

But perhaps, the first step of all is to "expand the discussion" to introduce, and keep re-introducing, these concepts in order to bring about the recognition that our economy is utterly dependent on the biosphere, as are we all, and that we cannot have an infinitely expanding economy on a finite planet.

Since the West initiated much of, and has benefited the most from, the present lethally unrealistic economic system, it is up to us to begin the change, and not demand that China and India and others make sacrifices that we are unwilling to make ourselves. With regard to developing countries our aim should be to work with them to leap-frog over our mistakes and achieve a decent living without indulging in the orgy of consuming selfishness, led by the West, the planet is currently suffering from.

Therefore, what we should do about the recession is to use it as an opportunity to begin to take these six steps--which obviously must begin at the bottom--with the 'feet', the 'grassroots', most of us--and work its way up to the leaders who are still enmeshed in old-style, combative, money-worshipping capitalism. Stephen Harper, for example, may be relatively young chronologically but he has an old mind, aged in the brine of the love of money and ideology, and the hatred of opposition. He is capable of changing his tactics only when he thinks it will win him the next election, but has so far not shown any capacity for accepting that the old doctrines of competition and profit-maximization (which have always been injurious to many), are now outmoded, obsolete, useless, and incapable of benefitting anyone for longer than the shortest of short terms.

To enable the 'feet' to walk, we must first maintain and increase the purchasing power of those with the lowest incomes and those who have lost their jobs, including support for both renters and mortgage-payers. Government shouldn't give a penny to banks or credit unions but only to their customers and members.

Government and citizens alike must jettison the paralyzing and false dichotomy between the environment and the economy. The best way to ensure sufficient and sustainable economic activity is through investments in eco-friendly sources of energy, small-scale organic farms and local distribution channels, in increasing the wages and training of home support workers to keep as many elderly people out of institutions as possible, and to boost investments in students and post-secondary institutions, and in scientific research and the arts, to name only a few practical policies which will both support the economy and save money in the long run, giving tax-paying citizens a double benefit for each tax dollar invested--the services we need and a productive economy. Infusing as much cash as possible at the bottom will achieve, by 'trickle up', what 'trickle down' has never done, provide people with the resources they require to meet their needs, while beginning to lay the foundation for a less consumer-driven, more humane, more environemnt-aware, and sustainable economy.

What to do about a recession--Part I

A common government response to a recession is to cut taxes (and consequently, spending, wherever it is deemed politically acceptable). Tax cuts, however, in addition to depleting the government's resources, benefit only those who have incomes large enough to be taxed, and ignore many of those most in need of support. Instead, the government should ensure that the purchasing power of those with the lowest, and/or the most jeopardized, incomes is maintained or even augmented. The Federal Government should, for example, make access to Employment Insurance much quicker, easier, and last longer (the fund has generated enormous surpluses while only 40% of those who have paid into it are able to obtain benefits from it; this number should be materially increased); introduce a negative income tax, and a refundable tax credit for volunteer work; and invest significant funds in affordable housing, public transit, local agriculture, and alternate sources of energy. These investments would not only address immediate needs, but also form part of changing the basic concepts and practices of our economy.

The Federal Government should also increase purchasing power by granting the provinces funds to increase welfare rates. These grants should be protected by contracts which stipulate that these funds are to be added to provincial payments, and expressly forbid the provinces from using them as a substitute for their own welfare funding (which would keep recipients on the same inadequate stipend). As a federal taxpayer (except for equalization payments), I don't want the provinces handed my tax dollars to spend as they wish (on a tax cut, for example, instead of welfare), but to receive them for specific purposes protected by contract. If a province, be it B.C. or Quebec, or any other, doesn't like the conditions, it can refuse the money and face the consequences from their respective taxpayers.

The policies suggested above would not only address people's immediate needs, but would also be effective in stabilizing the economy. When people's incomes are adequate for their basic needs--shelter, food, mobility, and communications--they are in a position to benefit from low prices on the expense side of their budgets, even though they may suffer from them on the income side.

From a certain perspective, it doesn't matter whether the interest rate or the dollar is rising or falling; or whether the price of wheat or gas or housing is falling or rising; whether we are in an inflationary phase, or a depressing one, or whether it is my price and your cost, or your price and my cost--these are all opposite sides of the same coins. This means that, whatever is happening, some people are going broke, while others are amassing fortunes--in either case, often through no particular fault or virtue of their own. Therefore, regardless of what the government may do to 'correct' the economy, some people will benefit, and others will be hurt. Usually, under present circumstances, it is too often the well-off who benefit from a tax cut, while the less well-off--particularly low income earners and the chronically un- or under-employed, who generally have the fewest monetary resources to cope with economic adversity--suffer from cuts to government services.

In the long run, however, taxpayers also suffer from service cuts, because social problems, when unattended to, don't go away, but grow worse and more expensive--witness the growing number of homeless people, and their associated growing costs, because governments simply will not fund sufficient affordable housing, or raise welfare rates to adequate levels. (To digress a bit, in this province, the B.C. Liberal Government's penny-saving/dollar squandering habits have led to the offer to buy out homes along the Tsawwassen power line for $70 million when the line could have been buried for $18 million, and the whole long, expensive wrangle with homeowners, and its even more expensive outcome, avoided.)

The economy does not need the government's attention and care; people do, and when their needs are addressed, the economy will improve. 'Trickle up' is the key; not 'trickle down', for not enough resources ever trickle down to make a real difference to those at the lower end of the income scale.

Beyond such immediate short term concerns, however, is the larger issue of humans learning to live within the finite restrictions of the earth's resources. In my next blog, "What to do about a recession--Part II", my starting point will be an article by Peter G. Brown and Geoffrey Garver called "Don't Fix The Economy - Change It", published in the Toronto Star in December, 2008, which suggests a number of concepts which need to be brought into play to bring about the fundamental changes required for humans to live within the carrying capacity of the planet.

Wet Wren

This Bewick's wren looks as bedraggled as many of us feel after an unusually snowy and cold and wet December and early January for Victoria.