Growth is Unsustainable
August 9, 2009
A late mentor of mine, Leslie T. Wilkins, told of how the British humor magazine commissioned a study to explain the collapse of the Saturday Evening Post of Norman Rockwell fame. The best predictor of the death of journals was a sudden sharp increase in circulation. In economics as in the building of empire, what goes up must come down. Social growth is inherently unsustainable.
It is pretty taken for granted in the United States that for-profit corporate managers have a legal duty to shareholders to maximize profits. The reason so many people suddenly can’t afford to retire is that they gambled that if they invested with the right people in the right places like AIG and Citigroup, they could make money simply by having money. They would profit by returns on investment that vastly exceeded increases in the cost of living. Many worldly wise wealthy investors went with the pitch that returns with Bernie Medoff would bring in 14 percent a year as long as investors lived. From its earliest years, the United States has been a boom and bust economy. The longer and bigger the boom, the bigger the bust. Sadly the boom in U.S. military conquest from Plymouth Rock to occupation of Iraq and Afghanistan is now going bust as well. As the Soviet Union collapsed under the weight of military and penal expenses, so the United States at this moment of economic bust has peaked out on military occupation and control, in itself a historical foundation for U.S. recovery from last century’s Depression and economic growth after we won WWII. In this period of moving nowhere but downhill for the first time in this nation’s history, anger lashes out at any politically convenient target, as in name-calling going on in the current health care debate, which leaves scant room for any discussion of health care we DO want. Declining empires are volatile, globally places dangerous to themselves and to others, where efforts are redoubled at righteousness good intentions.
It is tautological, true by definition that the relative size of real profits is a measure of how much more someone gets out of economic exchange than someone else, controlling for inflation. That is, at its root, the bigger anyone’s winnings in the real for-profit game, the bigger others’ losses, however distributed, have to balance the income statement. We shouldn’t be surprised that inequality is growing when profits. That’s simple logic. Nor should we be surprised that in harder times for the rich, they take it out of the hides and lives of the poor, who always remain poorer, always predominate in prison populations and on foreign war fronts.
We cannot “grow” our way out of this problem. From eighties on, I almost felt I should have a bumper sticker reading “Consumption is the Health of the State.” We succeeded in digging ourselves, personally, corporately and governmentally (particularly militarily and in jails and prisons) a deeper and deeper hole (or mountain?) of debt.
It is a supreme irony that economic so-called neo-liberalism traces its roots to Adam Smith’s 1776 book, Wealth of Nations. Smith labeled state charters for for-profit corporations the greatest threat he saw to the operation of his “invisible hand” of taking care of consumers in a free market. What made a market free to Smith was that sellers’ own reputations and entire livelihoods and assets were on the line in all transactions. Smith pointed out that corporate investors “limited” their liability, and hence could gamble with others’ lives with limited adverse consequences and without personal regard for workers or consumers. Right on, Adam. At this moment of my retirement, I am acutely aware of how much my future, including whether I die with family or alone, rests with increasing economic exchange, in kind and otherwise, which depends on my investment most of all in face-to-face relations, locally, in family, in friendships, including straight-up economic exchange, as in growing and buying food, or in exchanging services.
We in the United States have a bigger barrier to reform than do countries in Northern Europe, where the lion’s share of taxes are collected and distributed by local authorities, the equivalent of U.S. counties. Local governments get the more progressive taxes. In the US, as by proposition 13 in California, local taxing is the most regressive limited tax and the US government collects the most progressive (i.e., least politically objectionable), most tax money, a large portion of which it uses to fund a military/prison-industrial complex.
The more people can follow time-honored traditions of local exchange and investment, the more people everywhere can shield themselves from the global growth imperative. Here’s to developing real sustainability. Love and peace--hal