Art Pearl Against the World, The Mess We Are In. Part 3 In 3 sub parts

Art Pearl Against the World,  The Mess We Are In. Part 3

 In 3 sub parts this one 3b

Why liberal economics that did so well from WWII to 1970s won’t work today

These problems are:

1.      high unemployment, high underemployment, too many of the existing jobs are part time and low
       pay
2.      “outsourcing,” shipping of high wage, good benefits jobs to areas where wages are very low 
       and neither environmental nor worker safety measures exist

3.      The impact of technology -  machines replacing human workers

4.      Widespread inequity wage income and wealth -- the rich get richer, everyone else become poorer

The boom days are over no longer is wealth distributed to all segments of society, more and more of 
wealth is concentrated in the upper one percent

One reason, unions lost their power.
     Over the second 30 years post-WWII—an era highlighted by an impasse over labor law reform in 
     1978, the Chrysler bailout in 1979 (which set the template for “too big to fail” corporate rescues 
     built around deep concessions by workers), and the Reagan administration’s determination to 
     “zap labor” into submission—labor’s bargaining power collapsed.

                Colin Gordon Union decline and rising inequality in two charts, Economic Policy Institute.

Another reason, a president who liked rich people

. . . In the early 1980s, . . .  Ronald Reagan began a “massive decades-long transfer of national

       wealth to the rich.”

                  Bill Moyers Welcome to the Plutocracy!" speech at Boston University on October 29, 2010.

                       

Given where we are could a New Deal type intervention end the economic mess?

With Roosevelt as president? Francis Perkins and Henry Wallace in the cabinet? A supportive 
congress? In 1933 Democrats held a majority in both houses;

And an electorate that was involved and had confidence in government?

 Who knows?

It isn’t what we have. So why even ask?

We have just the opposite.

A president for the rich dedicated to make the very rich even richer. A Republican majority in both 
houses. And an electorate far more interested in the Super Bowl than in a presidential election.

If anything, the results of the 2016 elections tightened the grip of fascism.

What if Bernie or Warren become president in 2020?

That would depend upon whether their supporters take over congress, whether the various
movements -- the women’s movement, Black Lives Matter, the peace movement (totally non-
existent at the moment), various environmental movements, gay and lesbian rights movements, 
etc. -- unite under one umbrella (democracy?).

If not, not a chance.

The only reason we have a right wing majority is the left works at cross purposes, and each 
movement effectively neutralizes each other.

Unless there is a massive change, the best we can hope for from a Bernie –Warren ”revolution” is 
what they have pledged to do. Tax the wealthy, end university tuition, raise the minimum wage. 
That would make things a little better, but it wouldn’t change substantially the distribution of 
wealth, the insufficient number of good jobs or the loss of jobs to technology. The economic 
problems we have will remain, only slightly altered. We would have moved a half-step away from 
fascism. That is the best we can hope for, more likely fascism will have tightened its grip,

Think, Trump reelected. Of course that couldn’t happen, no more than he could be elected in the 
first place. Well, he wasn’t elected

Hillary Clinton got 3 million more votes. The electoral college will still determine who is president  
in 2020.

Add another serious factor, economics as almost universally understood no longer works!

Both conservative and liberal economics share the identical problem. Both are infinite earth 
economics, Both see the answer to depressions in growth.

That means that there is an irreconcilable conflict between economics and environmentalism and 
explains to a large extent the hostility toward efforts to address climate change by those whose 
responsibility is the economy.
    It is cost-effective to postpone global climate action, It is profitable to let the world go to hell. 
    I believe that the tyranny of the short term will prevail over the decades to come. As a result, a 
    number of long-term problems will not be solved, even if they could have been, and even as they 
    cause gradually increasing difficulties for all voters.

Jørgen Randers, Will Capitalism Doom the Planet?" 2015,

To save the earth and also resolve the economic problems an economics compatible with a livable 
environment has to be established.
Not all economists are committed to growth. There are Green economists, among the most noted are 
Manfred Max-Neef and Herman Daly. Manfred Max-Neef is renowned for departing from traditional 
economic thinking. He calls for an economics that gratifies basic human needs. His is a carefully 
conceived and well-developed approach to economics but more importantly than his economic 
thinking is his recognition that it will take a significant movement in the direction of democracy to 
bring his economics to life. Here is what he has to say:

Human Scale Development assumes a direct and participatory democracy. This form of 
democracy nurtures those conditions that will help to transform the traditional, semi-
paternalistic role of the Latin American state into a role of encouraging creative solutions 
flowing from the bottom upwards. This is more consistent with the real expectations of the 
people

-                       1991. Human Scale Development. (apex Press), p. 198

While Max-Neef is very specific about what is needed economically, he has nothing to say 
about how the democracy to make possible such an economy can come into existence. He and 
his colleagues have worked very hard, done enormous amount of research. However all their 
work comes to naught because without significant progress toward a functioning democracy, 
his economics can’t happen.  Both here and in Latin America, the movement to democracy 
starts by defining it and developing an understanding of its fundamental principles. Democracy
becomes a possibility when it is talked about and ways are found to take steps in its 
direction. Because Max-Neef never talks about a transition strategy except invert vague 
generalizations there is very little likelihood that his ideas, as important as they are, will ever 
be more than that unachievable ideas.

If there is one person who exemplifies sustainable environmental economics it is Herman Daly. I have
had both the honor and the pleasure of working with Herman Daly. No one has done more or better 
to develop a coherent theory of a steady state economics – an economics that is compatible with a 
healthy environment. No one has made clearer its necessary conditions.

His ten crucial steps to attain an ecologically viable economic future are:

1. Cap-auction-trade systems for basic resources – Cap limits to biophysical scale according to 
     source or sink constraint, whichever is more stringent. Auction captures scarcity rents for 
     equitable redistribution. Trade allows efficient allocation to highest uses.

2. Ecological tax reform – Shift tax base from value added (labor and capital) and on to “that to 
    which value is added,” namely the entropic throughput of resources extracted from nature 
    (depletion), through the economy, and back to nature (pollution). Internalizes external costs 
    as well as raises revenue more equitably. Prices the scarce but previously unpriced 
    contribution of nature.

3. Limit the range of inequality in income distribution – A minimum income and a maximum
    income. Without aggregate growth, poverty reduction requires redistribution. Complete 
    equality is unfair; unlimited inequality is unfair. Seek fair limits to inequality.

4. Free up the length of the working day, week and year – Allow greater option for leisure or 
    personal work. Full-time external employment for all is hard to provide without growth.

5. Re-regulate international commerce – Move away from free trade, free capital mobility and 
     globalization; adopt compensating tariffs to protect efficient national policies of cost 
    internalization from standards-lowering competition from other countries.

6. Downgrade the IMF-WB-WTO to something like Keynes’ plan for a multilateral payments 
    clearing union, charging penalty rates on surplus as well as deficit balances – seek balance
    on current account, avoid large capital transfers and foreign debts.

7. Move to 100 percent reserve requirements instead of fractional-reserve banking. Put control
    of money supply and seigniorage in hands of the government rather than private banks.

8. Enclose the remaining commons of rival natural capital in public trusts, and price it, while  
    freeing from private enclosure and prices the non-rival commonwealth of knowledge and 
    information. Stop treating the scarce as if it were non-scarce, and the non-scarce as if it were scarce.

9. Stabilize population – Work toward a balance in which births plus in-migrants equals deaths 
    plus out-migrants.

10. Reform national accounts – Separate GDP into a cost account and a benefits account. 
    Compare them at the margin, stop growing when marginal costs equal marginal benefits. 
    Never add the two accounts.

Herman Daly, Towards A Steady-State Economy, DrumBeat: May 5, 2008

What Daly proposes makes very good sense. It requires political action that can only happen if there is

significant movement toward democracy. Only when there is extensive democratic discussion will  
there be any progress to steady state economics or to an economics designed to satisfy human need.

In the 1980s, Herman Daly invited me and a University California Santa Cruz colleague to talk to his 
environmental economics group during the annual American Economics Association Meeting. About 
100 people attended our session. Next door, interrupting our presentation were the roars and clapping 
of a few thousand economists responding to a noted establishment economist. They may not have the
 ideas but like Arby’s they have the meats, dominating every university economics department, 
informing corporations as well as governments.

It will take a well-designed thoughtful ever developing campaign to establish an environmental 
economics. Without it nothing much will be accomplished, but such a project is doable.

We have reached a condition in which the only alternative to fascism –the total corporate control of 
every facet of society - is democracy. There is no midway point. There is no possibility to modify

corporate control to humanize it, reform it.

The critical issue: democracy is an unknown.

What is called “democracy” has become meaningless, a ploy of fascism. To make democracy the
alternative to fascism it needs first to be understood and once understood, steps need to be taken to 
make it a reality. That is what this blog attempts to do.

But first a the little more on the environment, war, social justice and civil liberties; the focus of the
next blog