There are endless examples today of policymakers willing to sacrifice the environment upon which we depend for life itself in order to lower the unemployment rate and to kick-start the economy. Think off-shore drilling in the Arctic, fracking in the New York City watershed and building a pipeline from Alberta to Oklahoma, just for starters.
All of this activity is generated by our frantic effort to continuously grow and create jobs. Economists have not been greatly concerned about whether the Earth could even support endless growth.
The GDP, the traditional gauge of how prosperous we are, depends on some really negative activity, the ill-health of the public (17 percent of GDP) and repairing the damage to the environment caused by certain economic activities. But these facts appear to be of little interest to policymakers.
What is wrong with this picture and how did we create it?
How we got here
After WWII the U.S. economy was intentionally redesigned to get the public to consume. The infrastructure built up during the war had to be used somehow and getting the public to consume seemed the perfect solution.
Over time, politicians came to depend on the steady growth of the economy as a hedge against deficit spending and unemployment. Continued economic growth was considered the most effective means of lifting the population out of poverty.
Now 40 years later, the U.S. economy is absolutely dependent on the public”™s urge to splurge, with consumerism taking up a hefty 70 percent of the GDP. A significant part of that percentage involved the out-of-control housing market. That was, until the crash of ”™07-”˜08.
Now the public is way overspent, many houses, having been used as piggy banks, are under water or foreclosed, and the public is refusing to be kick-started into more deficit spending. The average American”™s debt, as of the end of last year, is $43,874, or about 122 percent of annual disposable income.
Economist and author Robert Reich says most analysts believe a sustainable debt load is around 100 percent of disposable income, assuming a normal level of employment and normal access to credit ”“ neither of which we are likely to have for some time.
In spite of all this, Congress is blaming the administration”™s excessive borrowing and spending for the poor jobs report.
Who exactly is recovering?
To be sure, the corporations are making money and executive pay is in the stratosphere but it is dominantly in the foreign market of the multinationals. More than 2 million jobs were lost here while slightly less were created in foreign workplaces. Meanwhile U.S. wages continue to drift downward, further hampering the ability to boost the consumer economy, while unemployment is not budging.
How can this be called a recovery and who exactly is recovering? What about the long-term unemployed? What exactly are the indicators for recovery? If the corporations are making money overseas does that mean this country is in recovery?
Something is very wrong with this picture.
Peter Victor, an independent economist, asks, “Can the earth support endless growth?” Clive Thompson, in his article “Nothing Grows Forever,” says: “In essence, endless growth puts us on the horns of a seemingly intractable dilemma. Without it we spiral into poverty. With it, we deplete the planet. Either way we lose.” (This is a must-read article for anyone wanting to understand the unemployment picture.)
What exactly does create jobs?
To be sure, there is a role for government in supporting infrastructure jobs such as the WPA provided in the Great Depression but that type of program, even though desperately needed, is only a small portion of the economic employment picture.
Jobs in the private sector are built on demand no matter the rhetoric emanating from Washington. Demand can be created by producing the latest “must-have” electronic gizmo but another part of the equation is severely hobbled ”“ the consumer”™s ability to buy.
The bottom line ”“ we must begin to deal with a shrinking economy.
The evidence is everywhere.
Surviving the Future explores a wide range of subjects to assist businesses in adapting to a new energy age. Reach Maureen Morgan at maureenmorgan10@verizon.net.
