Wednesday, September 23, 2009

A brief roadmap toward a better economy

The general consensus in economic circles is that as the economy becomes more technologically sophisticated, the productivity of each worker will increase. Therefore, the aggregate level of demand must also increase if it is to absorb these increases in production without decreases in employment. This is understood, and the erstwhile politically expedient approach is to manipulate currency and allow the free promotion of corporatist advertisements and consumer ideologies in an effort to stimulate demand further.

However, stimulating the tastes of the individual may not be possible or desirable. Evidence suggests that individual consumption is not truly unlimited - we reach a bliss point beyond which our total consumption does not increase our happiness and beyond which we will not consume unless in a mental state of derangement. Furthermore, theoretical limits begin to come into play: the budget of actual time to consume is limited - production of increasingly luxury goods and trivial services also cannot meaningfully absorb the excess production; the marginal value of public goods and shared services begins to skyrocket after a certain point; wealth concentrations may run ahead of wealth creation, preventing demand from being able to keep up, thereby causing a failure of self-correction due to market withdrawal of firms rather than selling at a loss; and the spurious nature of fashion undermines the ability of producers to consistently serve at a level of adequate efficiency. The desirability of even pursuing such a strategy is really rather questionable: do we want to exhaust the earth's resources, work our people to the bone, and critically pollute ecosystems simply to avoid a paradigm shift? Are we setting the economy up for cruel boom-bust cycles, and are we critically undermining the opportunities available for young people to meaningfully interact with their society? If so, we should admit that we are forced to the paradigm shift option, that we should move away from a free-market dominated model and start to see markets as nothing more than essential efficiency seeking and accountability preserving components of a modern system of governance (in truth, this is what they always were, and we have simply been participating in an economic cult of sorts).

I begin with the economy of modern woes: excessive consumerism and persistent high unemployment; anomie and a public sphere in which the average citizen is either not at all engaged or marginalized. Assume that for the sake of environmental preservation that we desire to limit the rate of resource extraction with a goal of eventually living in a more-or-less sustainable fashion. Then it follows that there are only two options at the policy level to address this disparity:

  1. Decrease the amount of work done by each worker
  2. Sustain the employment levels through public works programs

Obviously the latter of these options is the more politically palatable. Quixotically, this is the option that is the most expensive and should therefore in theory be the most difficult to implement politically. However, the idea that Americans should share work is so foreign to their consciousness and so counter factual to their perceived universe, model of ethics, and workaholic habits that it seems that there is no hope of ever actually reducing our level of production per worker in a controlled way - the only politically palatable option seems to be to allow the economic busts to occur.

Fortunately, we do not have to launch into the first option until the second has become well enshrined in our consciousness. Given the horrific pattern of American urban and suburban development, institutional erosion, and neglect of scientific programs over the past 64 years, there are more than enough Government jobs waiting to be funded:

  1. Jobs in civil engineering, urban studies and design, sustainable practices research, and infrastructure planning to help turn our cities and suburban areas into livable spaces in which individuals no longer require cars to do basic tasks like buy groceries and get to work. Everyone agrees that we cannot achieve sustainability without actually reorganizing the structure of our cities. This is such a mammoth undertaking that planning for it must begin now, and in fact new channels of action should be created because the processes for approval and change are just too slow to accommodate real progress.
  2. Jobs in our neglected institutions, particularly the judicial and legislative branches of government, the revenue service (because there are so many tax cheats that each new revenue employee actually earns money for the state), government policy advisors and researchers, Human Services, education, and so many other little places where we are letting our society fall apart. These services increase the quality of life of the citizens and also reduce the unemployment level, making them win-win political propositions. The only way they lose is when the lies of business people are believed by the general public. The business people should be confronted when their credibility is weakest - when we are in economic crisis.
  3. Jobs in the academic world and the arts, where we should have rotating positions for every Ph.D to spend time without curricula or research requirements, simply to allow them time to think and develop philosophy or reflect on current events. Everyone who wishes to obtain a Ph.D should have the chance to attend graduate school and write a thesis - and these should be judged by blind panels of visiting scholars on their merits, transforming them into something other than the political products that they so often are today. Higher education should not limit itself to being a servant of politics and business, it should be a vibrant and politically influential institution, and we should stop pretending that some of us are "not smart enough to have good ideas". Musicians and artists should receive support from the state, and programs like Concerts in the Park should become national standards.
As these jobs gradually expand to absorb the excess demand, we will have a period that is remarkably similar to the economic boom of the 90's. At the end of this period, projects of public works and development will complete. We will then be living in a very functional society with sustainable, livable communities and a much higher standard of living for the masses than they experience today. Even the wealthiest will have a higher standard of living because there will be many more opportunities to become popular in their community and participate in events, philanthropy and a great many things that simply cannot be provided by the free market alone.

This is the point when we must execute the most radical paradigm shift. We must begin to curtail the large bureaucracy of urban development and design (job group 1) and bring it to a maintenance level regime. This will help to ensure, among other things, that useless and wasteful projects do not occur. As we dismantle the large bureaucracy, we must absorb these employees into (2), (3), and the private sector. This will necessitate a modest decrease in the work week and possibly a lowering of the retirement age so that companies will hire these workers.

The economic development pattern, as evidenced by history and surely what we shall also see in the future, is one where technology and fashion work hand in hand to supplant existing regimes. The technological aspects of changes are of increasing complexity and therefore require greater and greater commitments by government to plan these changes. Our current economy is mired in its state because of the unwillingness of Democracies the world over to engage in the coordinated planning effort within their own legislative bodies, ie. they cannot work together.

We should either elect leaders who have a vision of a sustainable future, are not petty or prone to infighting, and who are not beholden to corrupt business interests who oppose change, or resign ourselves to the strife, environmental destruction, and the needless human suffering that is the mark of all ideological backwardness. I fear the thought of bequeathing to my grandchildren a world where many beautiful plants and animals are extinct, where we kill indiscriminately, and where we all work ourselves to the bone only to receive the pittance that will pay our debts and buy meaningless trinkets at Christmas time.

My vision of what is possible is not Utopian - I do not declare it the best or perfect. But the escape from ideology that this vision requires makes it less susceptible to catastrophic failures or the rise of totalitarianism when compared to our current system and where its probable trajectory would take us. It is, really, common sense: when there is unemployment, create jobs doing what needs to be done. When there is nothing to be done, do not work. These are subtle truths of economics that none can deny. They are self-evident, and we should act sensibly, starting today.

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