"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.