This is the first part of an article which was published in this month's The Lower Island News. It appeared as one piece in the paper, but for the blog I've divided it into two parts.
In these days of climate change (however caused), 'peak oil', world-wide pollution of air, water, and soil, and countless other environmental ills and hazards, the concepts of 'sustainable economy' or 'sustainability' have become popular among environmentalists and the public alike. There are a number of definitions of 'sustainable'. The Brundtland Report, published in 1987, recommended that sustainable development should ". . . meet the needs of the present without compromising the ability of future generations to meet their own needs." (Unfortunately, the Report focused on 'sustainable development' which accepted growth; rather than 'sustainable economy', which doesn't.)
Herbert Daly, author of Steady-State Economics, first published in 1977, has defined sustainable development as development that doesn't lead to growth beyond the environment's carrying capacity, with 'development' meaning qualitative improvement, while 'growth' means a quantitative increase. The definition that I find the most satisfying is that attributed to various aboriginal cultures, "We do not inherit the earth from our parents; we borrow it from our children".
The role of a democratic government in a sustainable economy is to serve the public good; serving the public good requires government to approach citizens and their concerns with a co-operative philosophy and attitude that centres its attention on the well-being of individuals and their families, viewing them, not in isolation, but as members of one or more communities which overlap to various degrees.
The citizenry, in our turn, needs to view government as a tool which enables us to provide ourselves with the means--education, transportation, medical care, a healthy environment, and so forth--which not only create opportunities for earning a reasonably comfortable living, but also lead to a higher quality of life--including, but not limited to, breathable air, drinkable water, wildlife and wilderness (which we may never see but which enrich our lives merely by existing); fewer material goodies, and more immaterial ones--time and leisure, more relaxed relationships, both professional and personal; altogether less stress, to name only a few examples of the improvements we could enjoy if the focus of the economy was taken off making money as an end in itself, and turned to satisfying our needs in the most environmentally-effective manner possible.
Government is an essential player in the complex interweaving of human, financial, physical, and political elements which result in the kind of economy and society we choose to live in. From the point of view of the individual, government, and business economic activities flow to and from each other. To be useful, money must be pooled--saved--in sufficient quantities to invest, when it flows out of one pool and into one or more other pools. But the economy doesn't care where the money comes from--public or private sources are all one to it; what matters is that the money keeps moving--pooling and flowing out, pooling and flowing out.
The capitalist economy that we operate in today is incapable of becoming a sustainable economy for three reasons. First, capitalists regard government as, at best, a necessary evil, to be minimized as much as possible. They ignore the fact that capitalists and their corporations depend on government for their very existence, from the laws creating limited liability, for example, to protection for intellectual property--copyrights, patents and trademarks--to the arbitration and enforcement mechanisms of the police and justice systems, and the negotiation of international trade treaties. Of lesser, but still considerable, value to business success are the benefits of various social programs, such as welfare (which helps support purchasing power), to a single payer health care system, (which minimizes a firm's health care costs for its workers).
Second, capitalism depends on ever-increasing growth to remain viable, and takes insufficient cognizance (to say the least) of the finite nature of the planet's resources, organic and non-organic, alike.
Third, capitalism cannot foster sustainability because it is focused--as business people never tire of telling us--entirely on making money, and increasing shareholder value, and nothing else. It is almost irrelevant to the true capitalist what product or service they invest in as long as they receive the expected return. As a corollary, capitalists regard making money as a sufficient excuse for foisting so-called 'externalities on the public--fish stocks depleted around the world by trawlers and other high-tech fishing boats; soil ruined and eroded through industrial farming; lakes destroyed to accommodate the toxic wastes of converting the tar sands into oil--are only a few examples of how capitalism encourages present generations to rob future ones of the planet's resources. But simply because we were born sooner does not give us the moral right to deplete the planet's wealth.
Unfortunately, far too many business people are proud of the fact that all they're interested in is making money, and non-business people have allowed themselves to be bamboozled into thinking this point of view is acceptable. It is not. Capitalism's buccaneering ways and Midas touch--which reduces all life to inedible gold--can no longer be tolerated in a sustainable society. If we are to evolve an economy which meets our real needs, other values must take precedence over mere money-making, which should be regarded as a means of achieving other ends, and not as a laudable end in itself.
Wednesday, August 19, 2009
The Role of Government in a Sustainable Economy--Part 2
How we make our money is equally, if not more, important than what we make it from. It can no longer be seen as admirable, or even 'good enough', to invest merely to earn a monetary return; the admirable investor must become someone who reaps monetary return from investing in goods and services which serve real needs. (One might think this would rule out investing in sin stocks, such as tobacco. However, since the legal production and sale of tobacco to adults serves the needs of nicotine addicts while returning taxes to government, and preventing the development of a black market in tobacco, one can morally invest in a tobacco company, but not in a company like Plutonic Power, which intends to carve roads and transmission lines through the British Columbia wilderness to make money by selling hydro-electric power to the Americans.)
Business people and other capitalists often assert that only the private sector creates wealth; by 'wealth' meaning a surplus or profits, the difference between costs and revenues. But this assertion is nonsense. First, the private sector creates nothing without the necessary government legislation, investments in essential infrastructure such as education, and services such as police and fire; and second, government enterprise can create as much monetary wealth as private, as its surplus is also the difference between its costs, and its revenues (taxes, fees, and royaltie)). At the same time, government investment creates real public wealth and human capital--a well-educated citizenry, flourishing arts and sciences, high quality medical care and the promotion of health, organic agriculture, public transportation, and public broadcasting, to name just a few of the basic elements of a civilized society which governments can provide, not only more efficiently, but also more effectively, than private enterprise, which really cares only for its balance sheet.
For example, investing in public transit systems which attract large riderships by providing a high degree of mobility and convenience, would in turn help to reduce air pollution, and traffic-related deaths, and injuries, thus generally increasing our health and well-being, and reducing our need to use expensive acute-care medical facilities. Similarly, government investments in small, locally-oriented, organic agriculture enterprises (including value-added activities), would help to reduce smog and greenhouse gases, as well as providing nutritious food, both of which, again, would increase health and well-being, and decrease reliance on medical care. These benefits do not accrue to private businesses because they do not have a sufficiently wide base of returns. Government, because it raises taxes and fees from many different sources, can benefit from revenue flows no private company, however large, can command. Furthermore, a large proportion of government expenditures eventually flows back to government in various taxes and fees.
Of course, it is the revenues from taxes that capitalists object to, since they view taxation solely as a burden, a diminution of profits, to be minimized for themselves as much as possible (preferring that individual citizens bear most of the burden, while corporations reap most of the benefits). Businesses tend to regard government investment and spending (much of which, in fact, goes for salaries and benefits, and for the purchase of goods and services from the private sector) as a nuisance, a burden, an endless imposition, as if the money vanishes like water down a drain. Of course, it does not. As previously discussed, government spending and investment circulate throughout the economy, supporting purchasing power, and thus a wide variety of economic activities, just as private sector spending and investment does. Taxes create pools, and government investments and expenditures create outflows. In the process, we get two bangs for our buck, the good or service itself--health care, public transit, wilderness--plus the attendant and consequent economic activity.
Adam Smith's 'invisible hand' of the market, if it ever operated as theorized even in Adam Smith's day, cannot be relied on to deliver a sustainable society, or an economy that does not depend on endless growth to prosper. The market, in addition to serving private, not public, goals, only works properly for those who have sufficient funds to make the choices economists theorize that we make, and very often does not provide the paid work that is necessary to support the purchasing power on which the market depends. Only government has the scope and the resources to establish and maintain the indispensable elements of a civilized life and human-centred economy--education, health, mobility. Markets alone cannot serve the public good because marketeers have neither sufficient means nor sufficient interest in serving any other goals but their own.
Government is not our master, our parent, or our guardian; it is an instrument of our will; 'us' not 'them', and we should not allow capitalism's frequent and self-serving attacks on government to deter us from making government a better and better instrument for our public purposes by taking it, and the politics involved in its functioning, seriously enough to become engaged in them at all the various levels, and in all the various ways, open to any citizen who cares.
Business people and other capitalists often assert that only the private sector creates wealth; by 'wealth' meaning a surplus or profits, the difference between costs and revenues. But this assertion is nonsense. First, the private sector creates nothing without the necessary government legislation, investments in essential infrastructure such as education, and services such as police and fire; and second, government enterprise can create as much monetary wealth as private, as its surplus is also the difference between its costs, and its revenues (taxes, fees, and royaltie)). At the same time, government investment creates real public wealth and human capital--a well-educated citizenry, flourishing arts and sciences, high quality medical care and the promotion of health, organic agriculture, public transportation, and public broadcasting, to name just a few of the basic elements of a civilized society which governments can provide, not only more efficiently, but also more effectively, than private enterprise, which really cares only for its balance sheet.
For example, investing in public transit systems which attract large riderships by providing a high degree of mobility and convenience, would in turn help to reduce air pollution, and traffic-related deaths, and injuries, thus generally increasing our health and well-being, and reducing our need to use expensive acute-care medical facilities. Similarly, government investments in small, locally-oriented, organic agriculture enterprises (including value-added activities), would help to reduce smog and greenhouse gases, as well as providing nutritious food, both of which, again, would increase health and well-being, and decrease reliance on medical care. These benefits do not accrue to private businesses because they do not have a sufficiently wide base of returns. Government, because it raises taxes and fees from many different sources, can benefit from revenue flows no private company, however large, can command. Furthermore, a large proportion of government expenditures eventually flows back to government in various taxes and fees.
Of course, it is the revenues from taxes that capitalists object to, since they view taxation solely as a burden, a diminution of profits, to be minimized for themselves as much as possible (preferring that individual citizens bear most of the burden, while corporations reap most of the benefits). Businesses tend to regard government investment and spending (much of which, in fact, goes for salaries and benefits, and for the purchase of goods and services from the private sector) as a nuisance, a burden, an endless imposition, as if the money vanishes like water down a drain. Of course, it does not. As previously discussed, government spending and investment circulate throughout the economy, supporting purchasing power, and thus a wide variety of economic activities, just as private sector spending and investment does. Taxes create pools, and government investments and expenditures create outflows. In the process, we get two bangs for our buck, the good or service itself--health care, public transit, wilderness--plus the attendant and consequent economic activity.
Adam Smith's 'invisible hand' of the market, if it ever operated as theorized even in Adam Smith's day, cannot be relied on to deliver a sustainable society, or an economy that does not depend on endless growth to prosper. The market, in addition to serving private, not public, goals, only works properly for those who have sufficient funds to make the choices economists theorize that we make, and very often does not provide the paid work that is necessary to support the purchasing power on which the market depends. Only government has the scope and the resources to establish and maintain the indispensable elements of a civilized life and human-centred economy--education, health, mobility. Markets alone cannot serve the public good because marketeers have neither sufficient means nor sufficient interest in serving any other goals but their own.
Government is not our master, our parent, or our guardian; it is an instrument of our will; 'us' not 'them', and we should not allow capitalism's frequent and self-serving attacks on government to deter us from making government a better and better instrument for our public purposes by taking it, and the politics involved in its functioning, seriously enough to become engaged in them at all the various levels, and in all the various ways, open to any citizen who cares.
Tuesday, August 4, 2009
B.C. Health Bonds: Public Investment in Public Health Care
Now that the election is over, the B.C. Liberals are no longer pretending to care about the welfare of British Columbians, as the current budgetary bloodletting by the regional health authorities demonstrates. The Liberals care only for money, and the wealthy men who control money, and they are much more worried about maintaining as small a deficit as they can (and keeping corporate taxes down), than about investing in health care. They are indifferent to the fact that their refusal to adequately fund operating rooms, and acute- and long-term-care beds (the latter being needed to free up the former) will, literally, hurt many individuals needing so-called 'elective' operations.
If the Liberals were sincerely concerned about health care, and if they also had any interest in easing the impact of the recession, they would address both issues by increasing funding for health care providers, instead of forcing the regional health authorities to cut both jobs and surgeries. By increasing health care budgets, the Liberals could tackle health and economic problems together, but their narrow, ideological view prevents them from seeing this. Instead, the Liberals are doing their utmost to undermine the public health system in order to create opportunities for private corporations to make a profit from the sick.
Where is the money for investing in public health care to come from? One source could be B.C. Health Bonds--government bonds, the income from which would be reserved entirely for health care. We'd still be increasing our deficit and debt, but taxpayers could also benefit from such government borrowing even as we were paying for it. And if the price of the bonds were modest, say $50, or even $25 each, then those on lower incomes could also afford to buy them.
Some may argue that such bonds have been tried before, and found wanting. True, a previous issue of B.C. Bonds lost money. However, those bonds were offered when competition for savings was relatively high, and were therefore sweetened with a tax break in addition to an attractive interest rate. These days, when many investors are seeking safety for their capital above all else, a decent rate of interest in government-backed bonds (which could be purchased only by permanent residents of B.C.) would likely prove very popular with the B.C. investing public, and no tax break need be added.
Properly spent, temporary deficits in the provincial budget would enable British Columbians to better weather the recession, especially if the government borrowed from us instead of from the banks, which, whether national, or international, suck their profits from our debt out of the province to the benefit of shareholders elsewhere. As long as we borrow from the private banks, our debt is only a liability. By borrowing from ourselves through B.C. Health Bonds, our debt would be both a liability and an asset for B.C. taxpayers.
If the Liberals were sincerely concerned about health care, and if they also had any interest in easing the impact of the recession, they would address both issues by increasing funding for health care providers, instead of forcing the regional health authorities to cut both jobs and surgeries. By increasing health care budgets, the Liberals could tackle health and economic problems together, but their narrow, ideological view prevents them from seeing this. Instead, the Liberals are doing their utmost to undermine the public health system in order to create opportunities for private corporations to make a profit from the sick.
Where is the money for investing in public health care to come from? One source could be B.C. Health Bonds--government bonds, the income from which would be reserved entirely for health care. We'd still be increasing our deficit and debt, but taxpayers could also benefit from such government borrowing even as we were paying for it. And if the price of the bonds were modest, say $50, or even $25 each, then those on lower incomes could also afford to buy them.
Some may argue that such bonds have been tried before, and found wanting. True, a previous issue of B.C. Bonds lost money. However, those bonds were offered when competition for savings was relatively high, and were therefore sweetened with a tax break in addition to an attractive interest rate. These days, when many investors are seeking safety for their capital above all else, a decent rate of interest in government-backed bonds (which could be purchased only by permanent residents of B.C.) would likely prove very popular with the B.C. investing public, and no tax break need be added.
Properly spent, temporary deficits in the provincial budget would enable British Columbians to better weather the recession, especially if the government borrowed from us instead of from the banks, which, whether national, or international, suck their profits from our debt out of the province to the benefit of shareholders elsewhere. As long as we borrow from the private banks, our debt is only a liability. By borrowing from ourselves through B.C. Health Bonds, our debt would be both a liability and an asset for B.C. taxpayers.
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