The Economic Crisis Opportunity – The Short Term Response

With the global environmental crisis comes a global economic opportunity. Just as the response to climate change involves solutions that we should be undertaking anyway, so does the global economic crisis. In the long term we have to change our way of living to save the global environment and the global economy.

In the long term we have to move from an unlimited growth economy to a limits to growth economy. In the short term we have to preserve the livelihoods of working people while preparing for long term changes. That means we need short term economic stimulus and job creation.

Short term governmental budget deficits are going to be a necessary part of this response. We must bear in mind that budget deficits shift payments to future generations so they should be utilized in a manner that benefits future generations.

First of all they must not be used to transfer money from future generations to the present generation via tax cuts. The use of tax cuts at this time to stimulate the economy is a flawed approach anyway as people are more likely to save during times of economic uncertainty, rather than spend, because it is the prudent thing to do. The only people who will spend the tax cut funds are those that do not need them. Using deficit funding for tax cuts is simply stealing from our children and grandchildren.

The most important thing we can spend stimulus money on is dealing with the infrastructure deficit. If your roof was leaking and you had to borrow money to fix it – would you do that or leave it to deteriorate till the repairs could not be avoided and the costs had multiplied many times over what borrowing to fix it would cost you. That is what we have done with our infrastructure, except future generations will be saddled with those inflated costs. In our short-sighted concern about avoiding budget deficits we have let our country's infrastructure go into a deficit. Using deficit financing to eliminate the infrastructure deficit will save, not cost, future generations money.

As well, damaged transportation infrastructure increases transportation costs, as poor infrastructure leads to more necessary repairs on private vehicles, as well as public transit vehicles, and greater fuel consumption with it's environmental costs. Decaying water and sewer systems have health and environmental implications. Inadequate educational infrastructure affects the quality of our children's education and our society's readiness for the future.

The other component of economic stimulus that should provided by deficit spending is preparing for the new future. We should not be spending any government funds, and in particular funds that future generations will be paying for, on the old failed economy.

No funds should go to fossil fuels or nuclear energy. Funding of the energy sector should be targeted at renewable and environmentally friendly energy sources,

Industrial funding should be targeted at low energy and environmentally friendly infrastructure and sustainable industries. Funding for the automobile sector should be target to next generation environmentally friendly vehicles and public transit infrastructure.

We must prepare our economy, and the public, for the transition to a limits to growth economy and for the need to share the planets limited resources more equitably between those who now live in abject poverty and those who live in wasteful abundance driven by greed. This will be an economy with the emphasis on self-sufficiency and environmental sustainability, an economy based on a sense of community, locally and globally.

Building A New Society From The Collapse of Capitalism

This is the first of a series on the economic crisis opportunity.

Karl Marx said “from each according to his ability, to each according to his needs”. In other words we are all expected to contribute to society what we can and only expected to take what we need. Under socialism laziness and greed are both vices.

Unfortunately under modern capitalism greed is considered more of a virtue than a vice and has become the driving force of the economic system. It is greed that has brought capitalism to where it is today.

So is socialism the answer. Rather than try to insert a lengthy treatise into the middle of this post let us just all agree that we are not ready to move to that stage at this point in time.

But we do need to change our way of thinking and the way we live in this world for the good of the planet and it’s peoples.

Capitalism has simply gotten out of control, especially American capitalism where most corporations today operate on the principle that “corporate officers have a fiduciary duty to maximize shareholder value”, that is profits, without regards for employees or customers, or communities, or the broader public good.

We have seen it in our communities with the decline of local businesses and the growth of mega corporations. As owners become more disconnected from their businesses concerns for workers and customer value disappear to be replaced by the pursuit of, not just a fair profit, but maximized profit.

And we are all complicit as we sell out our friends and neighbours who worked in the locally owned businesses and local factories, for cheap goods produced abroad by near-slave labour.

Alongside greed, but driven by it, are false assumptions. The first false assumption is that wealth creation is all that matters, and wealth redistribution is an evil of socialism. The assumption being that as long as we keep creating wealth the rich will keep getting richer but enough “crumbs” will trickle down to working people and the poor to keep them happy. This is based on the same theory that sees recessions as the worst thing that could possibly happen. But it is a theory based on continuous and unlimited growth, a dangerous false assumption, The planet simply does not have the resources to support unlimited economic growth without self-destructing.

So where do we go from here. For the moment those responsible are still living their lavish lifestyles, pausing only to fly to Washington in their corporate jets to ask the common people to bail them out with their tax money. But the fact is that the American economy, and even the Canadian economy is so dominated by these mega corporations that their failure would have serious implications for working people.

In the short term governments need to keep the economy from collapsing, for the broader good, But they should not do it on the corporations terms but in a way that serves the common people. In the long term this is an opportunity to change the way the economy works – to an economy that serves the common good, not just corporate interests.

We have seen that countries with mixed economies, in particularly Canada, with a greater degree of government regulation and involvement in the economy have done better than the American pure capitalist approach. We need to learn from that, and build on it. But we need to go much further in building an economy for the people and the planet rather than an economy just for the corporations.

We can build an economy that can provide everyone with a decent quality of life if we responsibly and sustainably utilize and distribute the planet's resources.

Future posts will look in more detail at what we need to do in the short and long term.