The Big Crunch
Our current economic model, premised on profits and returns, consumption, and growth — on greed, has proven to be problematic for the environment, society, and governance.*
Over time, humans have inflicted grave damage to the land, forests, rivers, streams, and atmosphere. Some of this was in the interest of survival. A lot more was done in the interest of greed. Of late, we have done especially grave damage to the atmosphere by burning increasing amounts of fossil fuels. Gasses emitted from this burning of fossil fuels have induced Global Warming – aka – Climate Change. Today, our species and many others face extinction because of the accumulation of these greenhouse gasses in the earth’s atmosphere. Much of this damage, too, was and is being driven by greed.
Now, the protection of this avaricious economic model is being held over our heads by the thread that we are damned to economic collapse if we don’t continue employing it. Continue doing the very things threatening to kill us all.
The problems with the current economic model have always been there. For too long, it has been heresy to question constructs like capitalism, free markets, and free enterprise, constructions meant to serve the interests of wealth. An economy should serve the people’s interests, be considerate of all species, and protect the environment. Our current model doesn’t. Climate Change is but one of the things telling us to have a closer look at our current economic model. The responsibility is ours.
Now, it is about survival. To survive, it is all-important that we stop burning fossil fuels. To date, the progress in reducing greenhouse gas emissions has been far too slow, hindered, in the main, by the interests of those vested in fossil fuels. Their interests are of no concern; aren’t the problem. The problem is that burning fossil fuels is destroying the environment — the environment that allowed for our evolution. The one we depend on to survive.
Without the efforts of the American Petroleum Institute (API) and the coal industry lobbying groups in the interest of profits and returns — greed, and wealth; we would be much further along in transitioning off fossil fuels. Without the influence of such special interest groups, we would have acted more rapidly and decisively to develop alternative sources of clean energy; the damage from Climate Change would be less. Without our current economic model, we would not so easily have been deterred. With a better economic model, we would not have promoted consumption and growth as much; would not be burning so much fossil fuel; would not be in such dire straits.
Given that much of the burning of fossil fuels was for the production, transportation, and marketing of consumer goods; reducing consumption would be an effective way of reducing the emission of greenhouse gasses. Producing goods that last longer reduces the need to consume. Buying only what we need reduces consumption. Stop teaching our children to be consumers would be a good idea. Stop teaching the citizenry that consumption for consumption’s sake is good — another. Doing these things along with developing and adopting an economic model that isn’t dependent on consumption could greatly help reduce greenhouse gas emissions while we transition to clean alternative energy sources, and would reduce energy requirements going forward.
Today, consumer goods by the billions of tons are being shipped all around the world. Much of this is due to the current model’s appetite for cheap labor. Much of it is in quest of returns. The practice of shipping goods great distances over oceans, of hauling goods from one side of a country to the other, begs another look. Both increase greenhouse emissions and thus accelerate climate change. Producing goods that last longer near the point of consumption would greatly reduce the emission of greenhouse gasses. Would also reduce the defense budget.
No doubt trade advanced and spread civilization up through the first part of the 20th century. These days, radio, television, the internet, and cell phones do so at the speed of light. Trade for the sake of making money may not be a good and sufficient reason for hauling goods over great distances. Plus, there are all sorts of benefits from being self-sufficient.
There are still far too many shopping malls left in America. These abominable things were invented to increase consumption, to stimulate growth (“add jobs”). For decades, Americans dutifully got in their cars, drove miles, and shopped until they dropped. What could go wrong?
For one thing, the cars they drove spewed tons of the greenhouse gas CO2 into the atmosphere. For another, onshore production of goods was/(jobs were) offshored in the name of profits. In their enthusiasm, people bought more than they needed — could use. The shopping malls had replaced local stores within walking distance and downtown stores accessible by public transit. — Goodbye and good riddance.
The current economic model requires constant growth, ever-increasing consumption, the pursuit of cheap labor, a lot of imagination and rationalization, and the constant feeding of oodles of propaganda to the populace — is now face-to-face with reality. Now would be an ideal time to develop an alternative model. One to carry us forward.
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This same greed that brought on and exacerbated Climate Change does harm in numerous other ways. For three-plus decades, private equity firms have been buying up residential units en masse, then squeezing them for more return on investment. Rents in these units have increased as much as 200% shortly after purchase. The tenants in these units have to do without in order to pay rent that may exceed half their income. Many are becoming homeless due to these rent increases. These purchases of housing units by private equity firms do not increase goods and services.
Private equity firms are also buying up nursing homes and hospitals. In those nursing homes and hospitals, we are seeing more people suffering and dying from neglect. This neglect is in the name of profit, in the name of return on investment (making money off money) — in the interest of greed. For these private equity firms, it isn’t about providing goods and services. They are buying up existing facilities and then maximizing the rate of return. There is no net economic benefit from this practice.
How different is the private equity firms’ right to profit and return on a market they control from that of the drug cartels?
Many of life’s necessities, like housing, food, clothing, and healthcare have long since been commodified. Now, there is pressure to commodify k-12 education. Should any of these essential goods and services be commodities?
Universities now structure their curriculum around what is marketable. Many university students take only those classes associated with future employment. Should higher education be about training people for jobs? Be a trade school for high-paying jobs? Or, should higher education be about personal development and trade and professional schools separate?
Are we seeing the consequences of this trend in the form of high-tech billionaire man-boys like Musk, Zuckerberg, …? In a wealthy elite sans introspection? In an underclass with little respect for others? In our politics?
When asked in an interview about the causes for the increased popularity of authoritarianism, Nobel Laurette Maria Ressa posited that the main reason was that the media’s pursuit of profit gave rise to the increase in false information which in turn enabled the rise of authoritarianism.
We hear that markets are magic. This, of course, is just propaganda in the interest of wealth. That free markets were heaven-sent is more B.S. on top of B.S.. Sometimes, if well-regulated, markets do work well. Sometimes, they don’t work so well. Sometimes, they fail spectacularly. The question for designing a new economic model is: When, if ever, would markets be the tool of choice?
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In designing a new economic model: How best structure an economy to produce/provide and equitably distribute the requisite goods and services?
When considering an alternative economic model, questions like ownership of the means of production, private property, wealth accumulation, and compensation arise. There are questions about how best to decide what products to produce, how much of a product to produce, and how much wealth a society should expend on research. Questions such as whether a society needs to incentivize its population. About opportunity.
A government representing the people could build and own the means of producing the requisite goods and hire people to manage and staff them. A government could build and own the means of producing the requisite goods and let out contracts for the operation to private entities. A government could contract out the production of requisite goods in toto. Or, a government could use any combination of these.
How best to equitably distribute the requisite goods and services? A society could decide that only those able and willing to work were eligible. It might decide that all living members were eligible. A society could agree to compromise on some combination of these. A society could make these economic decisions via a democratically elected, representative government.
In a society that cares for all its members, each member gets sufficient food, clothing, housing, education, and healthcare. Because: A well-nourished, well-clothed, well-housed, well-educated, and healthy society makes for a better society and a stronger nation.
Sufficient food, clothing, housing, education, and healthcare could be basic. Members who contribute to the production and distribution of requisite goods or the provision of requisite services might be entitled to more compensation commensurate with their contribution. In regards to healthcare, would a society want to deny any member access to good healthcare? Education plays a significant role in inequality. Wouldn’t a society be better off if all its children got a good education? Were given equal opportunity?
Expertise in re: what products to produce, how much of a product to produce, and how much a society should expend on research abounds within the current society.
Under our current economic model, compensation is often in the form of money. Does an economy need money? Do we even know what money is? People buying cryptocurrency don’t. Nothing is new here; after all — capitalism, too, was always a Ponzi scheme. What is new, and perhaps is adding to the confusion about what money is, is that money in the form of currency is disappearing. What was thought of as money is becoming an account. Any facilitation previously afforded by currency is now afforded to us electronically. In a new and better economic model, everyone will have an account. In what units, this?
Positing that any currency’s worth is a function of the issuing nation’s inclusive wealth, the worth of any account held in a nation will also be a function of that nation’s wealth. Perforce, all citizens of a nation would have an account. Other nations might.
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Is wealth accumulation in and of itself good for a society? Under the present economic model, some can save enough for their retirement. A good thing to do if one can afford to do so. Unfortunately, the current economic model doesn’t accord about one-half the population enough income to do so.
Should one’s food, clothing, housing, education, and healthcare be wealth dependent?
The current economic model allows some members of society to accumulate wealth enough that the income from investing that wealth is sufficient to provide them with lavish lifestyles for their lifetimes and those of generations of their heirs. Today, much of this income may come from hedge funds and private equity firms, neither of which positively contribute to the economy. Quite a lot of it may come from squeezing workers’ salaries. Such accumulations of wealth come at the expense of and lessen the opportunities for others in society.
Should the wealth of a nation, a society, be in the hands of individuals? Or should a nation’s wealth belong to all its citizens? Under the current economic model, a significant part of our nation’s wealth is in private hands. Private ownership of wealth has grown so much that a few oligarchs may dictate a nation’s policies — the world’s. Some of these oligarchs are more powerful than most governments; collectively, they may be more powerful than any. Now seems a good time to look again at wealth, what it is, and who should own it.
Voices for wealth like the American Enterprise Institute, the Heritage Institute, the CATO Institute, and even the Constitution tell us that private property is the bedrock of economics. Saying that this is so is the sole reason for the creation, for the existence of the first three of these. As for the Constitution — at the time of our founding, this saying was held by many to be true. Was it? Or did the idea come to us whole cloth from 18th century England? We imported, and still have, laws designed to protect the property rights of England’s wealthy. This fact might give us reason to question who was in charge of the writing of such laws.
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Changing one’s thinking can be difficult. For most people, the familiar is how things should be. Even when the familiar is flawed. People who live under authoritarianism come to believe that that is the way it should be; is the norm. In 21st-century America, a large part of our population still subscribes to a 17th century European model of economics — of society. This in a time of tremendous change — in a world of ever more multicultural societies.
Beyond this inherent resistance to change, perhaps due in part to it, wealth exerts, has long exerted, an excessive – an inordinate – amount of power over our politics, thus also our economy. In a government of the people, the people should choose which economic model to employ. Our current economic model was imposed on us by the wealthy in the interest of the wealthy. An economy should be an integral part of government. Not the other way around. An economy should serve the populace. Not the other way around.
Our Declaration of Independence was a giant step forward. We could hardly ask for more. It is good and proper that the shedding of other vestiges of the old way of thinking was left to succeeding generations.
Sometimes, someone comes along who can see around corners. Sometimes, a whole generation. Starting with our founders, and then the likes of Abraham Lincoln, Francis Perkins, Martin Luther King, Cesar Chavez, Robert Kennedy, …, …, — America has been fortunate. Now would be an especially good time for a visit from fortune.
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There is probably more than one economic model that could work. Perhaps even our current economic model could have been made to work had it not been for the pervasive influence of wealth on government.
Regarding which: It is not by accident that Trump’s scheme to overturn the 2020 election depended on bouncing the decision to the state legislatures through a loophole in the Electoral Count Act or to the U.S. House of Representatives.
What was to become the American Legislative Exchange Council (ALEC), was founded by Paul Weyrich and Henry Hyde in 1973 in response to the 1971 Powell Memorandum to counter such egregious governmental actions as establishing the Environmental Protection Agency. The Heritage Foundation, founded in 1973 by Weyrich and Joseph Coors, was also in response to the Powell Memorandum. The Powell Memorandum itself was a clarion call to action. To defend the power of wealth in American politics. Its author, Lewis Powell, seemed more a subscriber to the 17th-century European social model than a 20th or 21st-century one.
For more than four decades, ALEC helped Republican state legislators write legislation that led to the Republican supermajorities we now see in 26 states. In some swing states, there are nearly as many, maybe even more, Democratic voters than Republican voters. But with the ALEC-assisted state legislative district gerrymandering, the states have Republican supermajority legislatures. If Trump could have denied Biden 270 electoral votes, the election would have gone to either the House or the state legislatures. Either way, Trump would be the president by a majority of 26 to 24. ALEC’s decades of work, combined with the flawed electoral college, could give us a president who receives less than 40% of the popular vote.
ALEC-assisted state legislative district gerrymandering allowed for ALEC-assisted congressional district gerrymandering within those same states, thus allowing these same states to send unrepresentative Representatives to the House of Representatives — sometimes, enough to give them the House majority, the House Speakership — with far less than the majority of the national congressional votes.
None of this was by accident; all was well planned and executed as a means for wealth to retain power in American politics. John Roberts’ appointment to the Supreme Court and ascension to Chief Justice were well planned and executed to assure the continued power of the wealthy. Too, the Citizens United, Shelby, and Rucho decisions.
Likewise, the appointments of Justices Gorsuch, Kavanaugh, and Barrett were well planned and executed, well funded, and were in the interests of the wealthy.
Private equity firms buying up tracts of housing and then increasing rents and corporations paying out more to their shareholders than to their workers are examples of the wealthy squeezing money out of the working class — of the same greed that brought us slavery and Jim Crow laws — that worked workers to death in mines and factories — that to this day, employees children — that imposed an economic model that wasted resources and exploited its workers was enabled by the power of wealth.
After the success of these most undemocratic efforts in the interests of the wealthy, it is no longer possible to rescue the current economic model.
The wealthy have always known that an economy is a part of government. The Powell Memorandum warned them not to take any chances on democracy. Following Powell’s call to action, they have acted in manners that gravely wounded, likely killed, democracy.
Thanks, Lewis Powell — thanks lots.
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Consequent to this pursuit of ever greater returns, ever more profit, and the right to do so, we now have a coopted moribund government. Consequent to having a moribund government, we haven’t been able to: adequately address climate change, regulate social media, or enact effective gun control; and, struggle to establish guardrails around artificial intelligence, …. Under the current economic model, motivated by greed, the power of wealth has subverted our democracy and endangered our nation’s and our species’ future.
*Hat tip to Bill Haskell
“When Private Equity Becomes Your Landlord,” ProPublica, Heather Vogell.
“What links Rishi Sunak, Javier Milei and Donald Trump? The shadowy network behind their policies, George Monbiot,” The Guardian.
“Democracy on the ballot—the “‘independent state legislature theory'” will not empower state legislatures to override presidential election results, Brookings, Fred Wertheimer.
Must devise something better than Capitalism, also better than Communism, it would seem.
… A Failed Vision of History
@Fred,
Yes. According to Marx, the transition wasn’t from capitalism to communism, it was from capitalism to socialism. Once that transition was complete, Marx predicted that the state would wither away, resulting in communism.
In the event, all the so-called “communist” states were really socialist states, where the state owned the means of production. And what happened in every case is that the state grew stronger and more invasive, rather than withering away.
None the less, the Marx-Engels scheme for economics was tried in Russia, later the USSR, and that experiment was ended about 30 years ago. They gave up.
It would be extraordinarily difficult to devise & implement any such scheme. Capitalism favors the wealthy, who become politically powerful, and are essentially selfish & greedy, for the most part. Various utopias have been attempted & they have failed.
Capitalism at least seemed to have evolved, in Western society, to they point where it sort of works & is entrenched. (Even in China, last large bastion of ‘Communism’.)
Star Trek Gave Us a Utopian Vision of an Egalitarian, Postcapitalist Future (jacobin.com)
Gene Roddenberry’s scheme is offered as a worthy replacement. I can practically hear the scoffing. ‘Make it so!’ I say.
Smith, Marx, and… Picard?: Star Trek and Our Economic Future | Star Trek
@Fred,
Actually no, the Marx/Engels scheme was *never* tried in Russia. The Marx/Engels scheme envisioned an industrialized capitalist society in which a workers revolution replaced the capitalist state with a Socialist state. Marx believed that the Socialist revolutions would begin in Germany and England. The Bolsheviks imposed a totalitarian Socialist dictatorship in Russia on an overwhelmingly rural and agrarian society only recently emerged from a monarchy. The goal of the Bolsheviks was to establish Socialism while bypassing the necessary industrialized state envisioned by Marx/Engels economic theory. Mao followed the Bolshevik paradigm in agrarian China. It was phony Marxist rhetoric used to smuggle in dictatorships that were cults of personality (Stalin, Mao), not Marxist dictatorships of the proletariat. The West bought into the phony Marxist/Communist branding.
Indeed, I should have said Marx/Engels as adapted by Lenin & the Bolsheviks.
I suppose you are suggesting that ‘pure’ Marx/Engels principles would have worked. In some universe. If only given a proper chance.
We only need to wait for current society to crumble to dust, as many think is right around the corner, and then surely something better will come to pass.
I don’t personally think anyone is going to synthesize a better scheme than we have, because it’s beyond our capability to do so. Unfortunately, what we have isn’t close to good enough to hold together much longer, it seems.
Maybe Marx/Engels will get a proer chance next time around.
@Fred,
“I suppose you are suggesting that ‘pure’ Marx/Engels principles would have worked.”
You suppose wrong. I neither wrote nor suggested any such thing. I doubt they would work on a national level. Socialism and communism have worked sustainably in religious orders and small communes, but they don’t appear to scale, and they didn’t come about through Marx/Engels theory. Indeed, they represented retreats from modernity.
Of course you do. It is probably impossible to come up with an economic architecture that is beneficial to all, and gentle on the planet.
Why do we try? It’s something written into various creeds. But in the end, there is selfishness, looking after your own people, as it were.
I don’t hold out much hope. After the next round of Dark Ages, which might not be too far away, maybe something better will rise from the ashes.
OTOH, it doesn’t cost anything to be hopeful. Although it does cost something to be charitible. Anyway, be as generous as you can.
Unfortunately, this is insufficient for building an economic scheme that works.
This might be better if narrower and deeper. For example, education gets some brief treatment here, but I am unsure of what is meant exactly. While I agree that universities do market on the basis of after-graduation prospects, they were doing that when I was leaving high school 50 years ago. As for commoditization of k-12, I do not see much sign of that really. If anything, I think there are actually more options out there. Public schools still dominate but at least in my area, the combination of Catholic, Lutheran, other religious education, plus charter and private secular and homeschooling present a broader k-12 space than when I was that age. You can argue the merits of any of these options, but it feels perhaps less a commodity now than 50 years ago.
What’s next?
‘Speculative history’ tells us that what’s coming in a couple hundred years is the Startrek Economy, where there is no money as such, that everything is produced by replicators, which already exist (primitively) as 3-D printers but figure prominently in Neal Stephenson’s Diamond Age:
What the economics of Star Trek can teach us about the real world – The Washington Post
The Economic Fantasy of “Star Trek” – Foundation for Economic Education (fee.org)
Ken, you cover a lot of ground here, and much of the thought seems to be an extension of your previous post, “Divine Right” to which I offered an extensive comment.
In that comment, I focused on the section of the Declaration of Independence that says:
I, like you, agreed that the existing system isn’t working. While I agree with nearly everything you say about the faults of our existing model and its associated interrelationships with our governance, I believe most of the inherent flaws are baked in. It is my belief, however, that solutions to most of the major issues you identify abound, and can be resolved with some basic, fundamental alterations in the decision‐making process. So I would focus on the “alter” option that Jefferson presented in the Declaration, rather than attempting to propose and adopt some totally new economic/governance model.
My frustration lies in the fact that solutions to even the simplest problems require leadership, recognition of facts, acceptance of the rule of law, and a good faith willingness to solve problems; and that is what is lacking.
Donald Trump has unleashed an ugliness in the American underbelly that enables and rewards hate, hostility, alternate facts, lies, and misinformation; and discourages and shames cooperation, negotiation, pragmatism, and bipartisanship. Before Trump, during the John McCain days, our governmental decision-making process was by no means without many flaws, but we had a degree of Congressional “regular order,” transparency & public input in Congressional committee meetings, Conference Committees, and negotiated solutions to many problems.
Yes, before Trump we had already begun to slide down the slippery slope of dysfunction and lack of civility, but Trump let the genie out of the bottle. He made it okay to be a liar; okay to be a white supremacist; okay to be a misogynist; okay to be discourteous, arrogant, and obnoxious. Okay to disrespect governmental norms and the rule of law.
The very first step in addressing the issues of climate change, energy, social media, AI, gun control; immigration, racism, voting rights, abortion rights, international relations, trade, and the myriad of other critical issues facing our country and the world is to defeat Donald Trump in November 2024.
The framers picked out a few essential rights to which ‘all’ are entitled.
All men, all property owners, all men & women, all humans, all intelligent creatures? Pick one.
And then asserted that guv’mints are instituted among (them) to protect these rights.
That leaves out a whole lot of what proved to be necessary, it seems.
Including medical care for many who can’t afford it on their own.
Thanks, J.P.
I think that some tightly regulated form of what came to be known as capitalism could once have been made to work. At this point, probably not. That communism in theory became another form of its corrupt predecessors in both Russia and China. Funny how that works.
As I’ve written here several times; I think both socialism and what we know as capitalism were specific to the industrial age. Don’t see either as applying to the digital/information age. Democratic socialism might be worth looking at. Then, democracy itself is fraught with problems. Even if you were able to keep money out of politics, an ill-informed, uninformed electorate can easily be misled.
I believe that the better approach is to start with, “What should an economy do?”
Curious, do you agree that there is a war raging between evangelical Christians and liberals? If so, have you dared give it any thought?
Your comment on Divine right was terrific!
Thanks!
I’m curious about your curious question re: evangelical christians v. liberals & why you would pose it that way? I haven’t really thought of it that way. First off I am not a religious person. I certainly don’t understand or relate to evangelical christians. I believe you must be a hypocrite if you claim to be any kind of christian and at the same time support Donald Trump. Since I believe most evangelical christians are conservatives, yes I believe there is a war raging between them and liberals; particularly on the abortion issue.
“I believe there is a war raging between them and liberals; particularly on the abortion issue.”
Which is odd if you think about it. Reproductive choice is a core conservative value–get the nanny state out of the business of controlling women’s personal choices.
I think there’s something going on there. That evangelicals see liberals, even Modernity, as a threat.
That’s when I chicken out.
Ken,
Now, you’re getting way over my head in social theory… that’s when I chicken out. Meanwhile back on planet earth. . .
While it may be intellectually interesting to contemplate a different economic-social model, I can’t imagine how you get from here to there in today’s world. My solution is to work on ways to minimize or frustrate the influence of money and maximize transparency in our governing system. E.G. . . .
1. Campaign finance reform
2. House representation reform
3. Congressional Committee reform
4. Electoral College elimination
5. Senate representation reform
6. Congressional rules reform
7. Election reform; open primaries
8. Income & tax reform
9. Etc.
Even these reforms may seem unachievable and futile, but they are refinements to improve the existing Constitutional republic model as the Founders envisioned and allow us to “keep it” as Franklin reminded.