"What’s the Economy for Anyway?" John de Graaf asks.

“What’s the Economy for Anyway?” John de Graaf

With an economic down turn to the economy, the United States trying to push more money into the economy (read that in terms of printing money), many citizens of France protesting the rise of the retirement age from 60 to 62, Britain reminding her citizens that their will need to be some serious cuts, one wonders how John de Graaf would respond after this article. Yet, it seems that the European countries are looking at what the cuts, etc. mean for them as a whole, while here in the USA we tend to reflect on what this means for us as individuals. The reality is that both systems are in trouble.

And I still think the question is worth asking:

What’s the Economy For Anyway?

Again, this article comes from the anthology Less Is More.

Originally this was first published in The New American Dream, "What's the Economy For Anyway?", or watch it on YouTube "What's the Economy For Anyway?". I’m merely posting tidbits/sound-bites to get you interested in reading the entire article.

When positing any alternative to the status quo, often the first question asked is “What will that do to the economy?” de Graaf asks if they really believe that the economy’s purpose is to achieve the grossest domestic product and allow the richest among us to multiply their treasures without limits?

But what happens if we frame the question in different terms, like those used by Gifford Pinochot (first chief of the US Forest Service) did a century ago: “The greatest good for the greatest number over the long run”?

After increasing social equality and greatly improving health and other quality-of-life measures (including major increases in leisure time) from World War II until the mid-1970s, the United States abruptly changed its economic trajectory.

“It will be a hard pill for many Americans to swallow," Business Week predicted in October, 1974, "the idea of doing with less so that big business can have more. Nothing that this nation or any other nation has done in modern history compares in difficulty with the selling job that must now be done to make people accept the new reality."

Emboldened by Richard Nixon’s landslide 1972 victory, extreme conservatives moved to reduce the responsibilities (and increase the wealth) of wealthy Americans, while cutting back on public services for the poor and average working Americans. These policies accelerated during the 1980’s and early 1990’s and are now enshrined in the “you’re on your ownership” attitude of the present federal policies.

Meanwhile, Western European nations took a different course, maintaining their social contracts and at least modestly improving their safety nets for the poor. Their provision of more public goods – health care, education, transportation, common space, etc. – supported by higher and more progressive taxation measures than in the United States reduced the need (or desire) of individuals to maximize their own incomes (pp. 236-7).

Productivity per worker hour: On average, in 1970 Western European workers were producing 65% as much as American workers. But by 2000, Western European workers was 95% of American workers.

Consumption of Goods and Services: Western European (measured in GDP per capita) remained close to where it was in 1970 – roughly 70% of that of Americans (year 2000).

Working hours: 1970 – European working hours were slightly longer than Americans, but by 2000 dropped to 80% of American working hours.

We could say that Europeans traded major portions of their productivity increases for free time instead of money, while Americans – consciously or otherwise – put all their gains into increasing their per capita GDP.

Pose the question, ‘What did that do to the economy?’ and the answer appears clear – Americans, with a much bigger GDP, are the obvious winners.

But ask instead, ‘What is the economy for anyway?’ and a different answer emerges. For most of the final quarter of the 20^th century, Europeans improved their quality of life relative to Americans in almost every measure (237-8).

Heath: The United States once ranked near the top in terms of overall health, Now the US rates below that of every other industrialized country, despite spending more on health care.

Equality: The US was near the median among industrialized countries in terms of economic equality in 1974, now has the widest gap between rich and poor.

Savings (a key indicator of security for many people): 1970 – American personal savings rates (10%) slightly higher than Europeans, “Last year” [2007?] Americans (-1.6%) were much lower than European EU members (12%).

Sustainability: “EU countries require only half the energy consumption per capita as that of Americans, while producing 70% as many goods and services. The average American has an ecological footprint (the productive land and water necessary to produce his or her lifestyle) of 24 acres; for Europeans, the average is 12 acres” (239).

Genuine Progress Indicator (an alternative to GDP that measures 24 quality-of-life indices): “shows a fairly consistent decline in well-being in the United States since a peak in 1973. Similar indices for Europe show consistent improvement in most areas of life, even if increases are sometimes slow or spotty” (239).

Economic Competitiveness: “According to the World Economic Forum, the United States ranks second in world economic competitiveness. So it’s possible to do things our way – reducing government, slashing taxes, cutting the safety net and widening the divide between rich and poor – and be competitive.

“But is it necessary? Consider that the other four most competitive nations are Finland (ranked first), Sweden, Denmark and Norway. In fact, European nations make up most of the top ten. All are far more globalized and far more subject to international competitive pressures than we [USA] are and have been for years. And all of them are far more egalitarian than the United States.

“Finland has, in fact, the smallest gap between the rich and poor of any nation. The Finnish social safety net is a generous one, and workers enjoy a great deal of leisure time – an average of 30 days of paid vacation. The story is similar in other European countries. Clearly, it is possible to have a more just and people-friendly economy and compete globally” (240-1).

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Page numbers refer to Cecile Andrews and Wanda Urbanska’s Less is More: Embracing Simplicity for a Healthy Planet, a Caring Economy and Lasting Happiness. New Society Publishers, 2009.

Lagom

To continue our discussion ... another article.

The following is from Alan AtKisson's “The Lagom Solution” found in Andrews & Urbanska. Less Is More. 2009.

Lagom is a Swedish word that has no equivalent in English, yet appears “often in Swedish conversation. For many people here [in Sweden], it captures something essential about Swedish culture as well. Lagom has to do with quantity, with the “how muchness” of something. Lagom is neither too much nor too little, but neither is it just ‘enough.’ (There is another word for that.) Meaning ‘exactly the right amount,’ it can be applied to anything: stuff, people, the size of a room, the food on your plate … even the atmosphere at a party. If it were a place, it would like somewhere north of sufficiency, but south of excess. It is hard to say exactly how much it is, but you know it when you experience it. When something is “just right,” it is lagom. …

“Understanding lagom will help you understand why Scandinavian design tends to look minimalist. Materials should not be wasted. Function precedes form. Nothing is gained by excess; and very likely, something important is lost.

“The general belief about the origins of lagom dates back tot eh Viking era. When a bowl of beer was passed around the circle, it was expected that everyone would drink exactly the right amount for them…and leave exactly the right amount for everyone else as well. Lagom is two worlds together, lag (‘team’) and om (‘around’). Embedded in the concept is a sense of togetherness, or ‘social solidarity.’ …

“What if our economic aspirations were organized not around the concept of ‘growth,’ but around the concept of having exactly what you need – lagom? Not that all of Sweden is organized that way; … There are plenty of cases of modern-day ‘affluenza’ here, including a creeping incursion of SUVs on the roads. And Sweden does have a history of occasionally taking a bit more than it needs. (Imagine the Vikings taking only lagom when they plundered!) …

“Lagom may be tricky for English-speakers to pronounce. But it has an attractive quality that ‘enough,’ ‘sufficient’ and even ‘simple’ often lack. Most people in the world do not want enough. They want more. They certainly want more than the bare minimum, and research suggests they want more than those around them. This desire for more seems to be deeply wired in the human organism. We developed over millennia in hostile environments, both natural and social. To have more than we need has always been our first defense against the vagaries of an uncertain future. Hoarding is the first act to those who believe themselves to be in the path of a storm (or a marauding army of plundering Vikings, for that matter).

“So while there will always be those of us who love the idea of ‘enough-ness’ and ‘Voluntary Simplicity,’ it seems likely that such concepts may never quite be … well … enough to transform the marauding army of global corporations vying to fill our houses with stuff, in a kind of reverse-Viking-plunder operation.

“But it does seem possible to promote a sensible Swedish sense of lagom worldwide – and to find other good words for it – because it speaks more to what people actually want. Let’s admit that it is very nice to have good shoes. No one can be faulted for wanting them. But does a person really need 15 pairs? No. But is one pair enough? Perhaps not. Lagom acknowledges that people have varying needs and desires at different times. They want nice things, and comfort, and security. They want more than the bare minimum, and they might even need it. If their desire for more than enough is accepted, even supported, perhaps they would be more willing to consider how much is too much. …

“Nobody really needs too much, and in fact, most people don’t really want it. But nobody wants too little. Perhaps our vision for a sustainable world should include not just enough for all, but lagom for all, with fewer temptations to take too much” (101-106).

Jim Merkel’s Sustainability Strategy

Jim Merkel (author of Radical Simplicity) has written an essay by the same title included in Cecile Andrews and Wanda Urbanska’s Less is More: Embracing Simplicity for a Healthy Planet, a Caring Economy and Lasting Happiness. New Society Publishers, 2009.

I’ve mentioned Merkel’s ideas before on this blog: Questions of Equity, Interhuman Equity, Interspecies Equity or 4.7 acres, 1978 or Intergenerational Equity, Self-Imposed Limits, and IPAT. (see February and March, 2009)

In this particular article Merkel reflects upon his work with Dartmouth College. Like many colleges, Dartmouth is attempting to reach a carbon neutral campus. “By fall of 2008, 582 campuses had signed the American College and University Presidents Climate Commitment, agreeing to establish a date for becoming carbon neutral and completing a carbon inventory and reduction plant. Carbon neutral – that’s right – means no net carbon emissions from campus operations. Now that’s radical” (223). In part, this drive is driven not just by philosophy by also be economics. Around 2005, Dartmouth’s energy bill had increased from four to seven million dollars in just one year (222).

What I found interesting, Merkel shares a strategy that campuses and individuals like us can reduce Green House Gases (GHG) can use to meet or beat the call to cut GHGs by 80 percent by 2050 just by using current technology.

1^st Step: “identify as many independent factor that influence an institution’s or individual’s impact for a given activity. Let’s start with a big-ticket item, the automobile. Independent factors include:

• How many people share the vehicle?
• How many miles per month are driven?
• How efficient is the vehicle?
• How long might this vehicle last?” (223)

How it works in practice: Say you drive alone, getting 20 mpg, spending $160 a month on fuel (translating into a four-acre footprint to sequester CO2 from the tailpipe, manufacture and infrastructure). After thinking about it, “you organize enough ride-sharing to average two people in your car. Determined to halve the miles traveled a month, you make detailed shopping lists, bike and walk more and prioritize visits to nearby friends. From the classifieds, you purchase a used 40-mpg vehicle. Without ecological heroics, you now buy five gallons of gas per month, use half an acre of ecological space and only spend $20.

“But you’re not done yet. You start a logbook for tire pressure, oil changes and maintenance. You drive slower and care for the vehicle enough to double its longevity, halving both its manufacture and disposal footprints. Because it’s an older vehicle, you save money by removing collision from your insurance policy” (223-4).

Merkel calls these “advance techniques” “sharing, caring and conserving contribute to a phenomenon known as multiplication” (224). The above example just reduced the GHG footprint for the vehicle by 80 percent.

Merkel goes a step further to talk about institutional buildings (but the same could be done with houses, and boats, too).

“If we were to assume that over 20 years, a plan would:

A Reduce the area per occupant by 20%

T Upgrade the technology of systems to enhance efficiency by 30%

E Upgrade the building’s insulation and reduce drafts by 30%

O Improve operational sensors and timers to heat/cool/ventilate only when needed by 30%

M Manage building schedule to have less empty space by 20%

U Inspire sustainable user habits to reduce impact by 20%

[As an example: Pacific Lutheran University was experimenting with having recyclable and composting bins in each dorm room, but one or two trash bins per hall in their dorms – to great results]

L Care fro building and extend useful life by 30%

F Use cleaner fuels with lower emissions/BTU by 20%

C Use solar, wind, geothermal, landfill gas and hydroelectric by 30%

“In this example, each fact is relatively independent, resulting in multiplying benefits. In 20 years, this building’s emissions could be calculated as follow:

A (0.8) x T (0.7) x E (0.7) x O (0.7) x M (0.8) x U (0.8) x L (o.7) x F (0.8) x C (0.7) = 0.069 or roughly 7% of the original emissions, a 93% reduction.

“At this point, installing more wind, solar and hydroelectric energy are feasibly ways to bring this building close to carbon neutral. Notice that we haven’t purchased carbon credits yet or made dirty deals like trading toxic waste for reduced carbon (nuclear) or taken land from food production or habitat to decrease dependency on foreign oil (bio-fuels).

“While some argue that the technology is not yet ready, others, including the College of the Atlantic, announced carbon neutrality on December 19, 2007, through the purchase of offsets, low-impact hydroelectric power and on-campus energy reductions. The University of New Hampshire’s COGEN plant reduced emissions by 21 percent, and when its 12.7-mile pipeline to the landfill is complete in 2009, combined GHG reductions are estimated at 67 percent.

“Technical feasibility is not the issue. Willingness is”(my emphasis, 224-5).

How willing are we?