Vision Statement

Vision Statement: Our analysis of what went wrong

We are a group of concerned citizens who in the face of the economic melt down are studying the economy to understand it better and to create a vision of a more just society and ecologically sustainable earth. We have come to understand that it is far more dysfunctional and unfair than the dominant corporate media portrays it. We must rethink and restructure the ruling economic institutions which, by very nature, are destructive to people, communities, and the earth. We would like to share some of our ideas with you.

Money, debt, and "growth"

Everywhere we hear commentators saying the economy must grow or crash. Yet this is rarely really explained. The truth is our economy is based upon a system of debt controlled by banks. It is not our government that creates new money, but banks every time they give a loan. (This is allowed by law and regulated by the FDIC). Their reward is the interest paid on the debt, an amount far exceeding the bank costs of operation. Our economy must continue to “grow” by at least the amount of interest owed per month so that this interest can be paid. This is the reason why such a huge pressure exists in our society to consume. It is why President Bush said after launching the Iraq War that what Americans could do to help was shop! However we live on a finite planet with finite resources and so the notion of an economy growing forever is fatally flawed.

The economic meltdown

The worldwide economic downturn in the fall of 2008 resulted from the collapse of a dishonestly created housing bubble. Loans made to people who could not afford the loans were bundled and sold as high performing bonds on the stock market and to investors abroad. The bond rating agencies gave the highest ratings to these very risky investments because they were being hired by those selling them (who wanted an attractive high rating). Thus, when the loans started defaulting, it caused cash shortfalls for banks, hurting the availability of loans, slowing and stopping the economy, while Wall Street crashed.

Once the economy began to falter, businesses began to fail and laid people off in an attempt to balance their budgets. The Obama administration has basically picked up where the Bush administration left off, trying to fix it by infusing the economy with huge monetary “stimulus” and with an attempt to bail out the banks and financial institutions, and some of the largest failing US businesses. (And there has been little or no effective accountability for how Wall Street and megabanks have spent the bailout billions of tax payer dollars). Unfortunately this approach is still based upon the old paradigm notion that we must have a continuous “growth” economy. We cannot return to something that did not work in the first place – it never really worked for the 80% of Americans that own just 15% of all the “wealth” of America!

Banks and bailouts

Our immediate suggestions for recovery...

Let the banks fail; stop bailing them out! This does not have to be chaos, with bank runs and losses for those with deposits. Under the Prompt Corrective Action Law already passed during the Saving and Loans crisis of the ‘90’s the President can (and in fact is required) to have the FDIC take regulated institutions with insufficient capitalization into receivership in order to minimize long-term losses. Instead of getting bail outs these big banks could be broken into smaller banks or turned into smaller community owned banks or consumer credit unions responsive to the consumer/owners. Their deposits and the member customers would still be protected by the FDIC.

We could give the Federal Government (instead of the banks) the responsibility for creating money, and put the Federal Reserve under the Department of the Treasury (at the present time the Federal Reserve is controlled by a consortium of private banks that governs it). This would put the responsibility for the economy back directly in the hands of the government (as most Americans have always believed it was) rather than in the hands of a small profit motivated, foreign and domestic financial elite. Both these ideas have successfully worked in other industrial countries for decades. The government under legislative oversight would then spend the money into circulation for infrastructure, education and conversion to a wind, solar, sustainable energy system. In addition, the US should gradually switch to a 100% reserve banking. In such a system, “money would be a true public utility rather than the by-product of commercial lending and borrowing in pursuit of growth.” *

To have a just economy there are a number of wrong turns this country has taken in the past which would need to be corrected. We passed strong regulatory laws after the Great Depression which protected us well for 50 years. Then slowly, in the 80’s and 90’s, powerful private interests undermined these laws opening ourselves to this current crisis. We need to re-regulate banks. We need to restore the anti-trust laws that prevented large monopoly companies from controlling the cost of goods we buy. In what was probably an error in court reporting, the Supreme Court Decision of Santa Clara County vs. Southern Pacific Railroad, corporations were granted the same legal rights as human beings. This is something our founding fathers never intended. This allows many actions corporations take that negatively impact masses of citizens to go unchallenged. The corporations use their huge wealth to defend themselves. We need to rescind corporate personhood.

Corporate domination: the rich and the poor

Many US corporations control more wealth and profit than the economies of multiple countries put together. Thus the economic sovereignty of these countries is undermined by corporations operating within their borders and by policies of global economic institutions like IMF and treaties like NAFTA, etc. We need to restore the ability of countries to make the economic decisions in the best interest of their own citizens. Just as the Bible suggests, one possibility would be a year of Jubilee where debt is canceled for third world countries, which were forced into debt by the IMF and now threatened by a burden of debt so great that the principal can never be repaid. Then these countries can turn their resources to internal development and cease losing it in debt repayment, keeping a vicious cycle of poverty in place.

A just and sustainable economy for the world suggests that the United State and other developed countries through their reduced use of resources can “free up resources and ecological space” * for those countries that still need to provide basic human needs for their people. Richer nations can also foster an international aid model that shares knowledge (technical skills, education, etc), offers small grants and limits the offering of large interest-bearing loans. Free trade, which now includes the free flow of capital, must be eliminated or at least severely regulated so that it counts costs to the environment as well as the costs to host countries’ social structures.

Similarly we need to strengthen local economies everywhere and narrow the huge national and international gap between the few very rich and the many very poor. Many studies show economies function better when there is a smaller economic gap and when money primarily circulates in the local economy. From the time income tax was introduced in the US in 1913 till the 1980’s it was progressive – meaning that the rich paid the highest percentage of their income. Income distribution between the rich and the poor was relatively stable. During and since the Reagan years, we have seen the roll back of taxation for the wealthy from its high in 1944 of 94% to its present low of only 35%. At the same time capital gain tax (income investments, not a person’s own labor) has been capped at 15%. Everything above 15% is total profit. As a result from 1980 to 2005, the highest earning 1% of the US increased its share of taxable income from 9% to 19% while the rest of the country got poorer.

Buying Locally

Studies show that money spent at locally owned businesses is re-spent at other community businesses at three times the rate of money spent at businesses that are not locally owned. Most of the money spent at national chain stores, for example, goes outside the local area, even overseas. Some communities have experimented with creating a local currency accepted only by local businesses which encourages the use of local business and builds the health of the local economy. People can do this every time they decide whether to shop at a local mom and pop store or a national chain where 80% of the money leaves the community or even the country. When things are produced and sold locally it also greatly reduces the negative environmental impact of packaging, transporting and use of fossil fuels. Communities are much more resilient and less vulnerable to economic downturns when more of their needs are met internally. Locally-owned businesses also tend to be smaller and more imbedded in the community so more responsive to local citizens, and more humane in their treatment of employees.

War spending

Another repair we need to make to the economy is to stop the hemorrhaging of funds the US spends upon waging war and defense. U.S. military expenditures are roughly equal to the military budgets of all other countries combined! Historically, the US has had inflation during every war it waged and then returned to baseline after the war ended. The exception is that, since WWII until the present day, the US has never dismantled its war-making apparatus. Instead, it has engaged in a cold war and many hot wars. Additionally the US has continuously maintained and "improved" its nuclear arsenal. This has contributed significantly to inflation in the US for the past 60 years. However, the cost of waging war in Iraq and Afghanistan has brought this country into trillion dollar debt! Fighting Afghanistan and the nuclear arms race in the ‘80’s is what broke the Soviet Union. Every time a weapon is built we use valuable resources for something that does not contribute to the economy.

Vision Statement: Our Analysis of how to create a more equitable economy

A healthier, sustainable society

We have talked about some needed repairs to recover our economy. But we would like to go beyond the past to a broader vision of a much healthier and more sustainable economy and society. We must abandon the debt and growth model, we must leave behind a paradigm based upon phantom wealth created on paper and move towards wealth based upon real production and well being. We must develop an economy that allows everyone to have their basic needs met and to be productive, and an economy that shares the resources of the planet fairly and uses them in sustainable ways that do not damage the planet.

Measuring costs and quality of living

Rather than measuring GNP, we need to develop a tool that measures the ways a product or service contributes to well-being (Bhutan formally measures happiness) and impacts on the environment. The pricing system needs to include all costs of pollution and carbon output, the true costs of resources, and the cost of recycling. We need to perceive the air, the water, the oceans, the minerals, the topsoil, and all the resources as the global commons provided to all living beings, not to be claimed, used up, or polluted by those most skilled at taking. Honest pricing (reflecting all real costs) will help us see those values. We need to accurately measure cost and quality of living and employment levels (unlike current measures which drop off those who have been unemployed after a certain period of time.) We need measures that serve all of us rather than only the profit makers, for example, some indicators may be high school graduation rates, infant mortality, percentage of jobs that pay a living wage, life satisfaction.

Health and fairness in the workplace

For a healthy economy we need to create fairer workplaces. We should outlaw CEO salaries that are 1000 times what a line worker makes. No one works a thousand times harder than another person or adds that much more value! When laborers have a greater voice in their workplace, work becomes more efficient and productive and workers can build a healthier, happier society. More worker-owned businesses would insure that people familiar with the work would make decisions that nourish them and the business, rather than businesses run by boards of directors whose primary motivation is taking out maximum profit out of the business – often to its long term detriment.

The news would cover labor and the environment, the concern of all of us, not just Wall Street, the interest of a small elite. Health care in the US needs to stop being a commodity that some profit from and become available to everyone, everywhere (as it is in all other industrialized nations!) Without the costs of middle guy the economy would be much more efficient. When we stop polluting the planet, over stressing workers, putting people in dangerous work situations, and instead provide affordable preventive medicine we will greatly reduce the numbers needing healthcare. We currently produce enough food to feed the planet but it is not equitably distributed – this too could change.

In a sustainable economy we will move away from waste, no longer producing goods with built-in obsolescence to facilitate continuous “growth. We will build things to last and to be functional. We will respect the real value of the resources we use and the labor that creates them, narrowing the price differences around the globe and preventing some countries from abusing others as sweatshops and polluting grounds. To achieve sustainability we will need to stop the exponential population growth to stay within the carrying capacity of the earth’s resources. Studies show this is most easily achieved by making birth control easily available to those who want it, providing literacy training to all women and reducing worldwide poverty.

A just and sustainable economy will necessitate radical changes in life styles: it need not mean a diminishing of the enjoyment of life. We can learn to live simply, travel less, enjoy our neighbors and families more and rejoice that our adjusted life styles will enable others also to live with satisfaction and joy. When we collectively move towards this vision of a sustainable economy, instead of an inequitable “growth” economy, a more just and ecologically sustainable earth could be the future of our children’s children.

Is this a vision you can join us in creating?

* Herman Daly, “Steady State Economy” April 24th 2008