Enthralled to Finance

We don’t have to be captive to the financial institutions, but we will continue to be so long as we try and use money as a substitute for security.

This requires attention: the reason we are controlled by “finance” is because we have given our lives to finance, meaning we have tried to use money as a store of life. We try to save up enough money to be safe in our old age (pensions), we send people money to keep them safe when the industrial economy has no job for them (benefits), and we invest the money we have to make more money (funds) so we can afford to live far enough away from people who don’t have money to feel safe.

We will not escape the grip of bankers until WE let go of abusing money as a store of security. We are creating our own unhappiness.

Read this interview with an aging German banker, who says banks act “… on behalf of pension funds, very large hedge and sovereign funds and wealthy investors. Never in the history of mankind has there been so much money in circulation, and never before was it possible to trade with it so quickly. And never before has this money used the entire planet as a playing field, as is the case today in the era of globalization. That’s the way it is and the way it will remain. There can be no turning back the clock. How shortsighted people must be when they hold bankers responsible for this development!”

He is wrong about it staying this way – read www.standardsoflife.org/sustainable_economics to see how to change this, how to create our own happiness.

 

The Path to a Future: Flat Sharing

For my entire working life the conventional wisdom seems to have been that only a mug would pay their full share of taxes, and that it was every citizen’s duty to reduce their responsibilities in this area to a minimum. Those who succeeded in paying the least amount of taxes have generally been lauded as heroes.

Continue reading “The Path to a Future: Flat Sharing”

The Path to a Future: The Mind of Production

To support super-democracy, super-security and build a thriving super-economy we to need to make substantial investments in our societies. To make those changes to our infrastructure we will have to leverage the strengths of private enterprise to help us reach our public policy objectives.

We struggle with the interface between public initiatives and private enterprise, and the debate tends to be rather crudely proposed as pitting right intention against effective action, as if they were incompatible. In fact they are mutually complimentary, and both absolutely necessary if we are to reach our goals.

Continue reading “The Path to a Future: The Mind of Production”

More money is not the answer

We need to occupy our communities and demand less money, rather than occupying corporate spaces and demand more money.

More money for banks. More money for governments. More money for small businesses. More money for social services. More money for everything – who could disagree with that!?

Apparently the US and the UK are so short of money that their central bankers have had to print trillions more just to keep the wheel of society turning. Banks whose capital base consists of nothing more than bits of paper have apparently run out of the ability to write more bits of paper and now need others to print paper for them. Whole nations that voluntarily gave up the right to print their own pieces of paper are apparently on the brink of collapse without someone else lending them more bits of paper.

This situation is evidently insane. The problem is NOT too little money! The problem is TOO MUCH MONEY!

We talk of not being able to provide for our old age security without money… horse shit! You’ll only need money if no one else will help you. We talk of unemployment, when there is evidently so much basic work to be done around us building and maintaining and improving our communities. We have come to conceptualize ourselves as living in a world of individual separateness in which transactions can only occur when greased by the flow of printed pieces of paper. But this concept does not withstand even the merest scrutiny, in fact it requires deliberate denial all the time. We all know that we are people, living with others and largely dependent on each other to get through any single day. We are dependent on each others good graces, compassion, empathy and generosity – even for the most basic restraint of not running us down with their car in the carpark!

We have not run out of money, we have just run out the capacity for money to substitute for reality.

The frail reality of the theater set we have built to act out our life-play in is upon us. Soon it must surely become too obvious to ignore: neither we, nor our world, are built from money. We are flesh and bone progeny of the earth beneath our feet, and “our world” is but a social construct designed by us to support our huge number.

Money has a role, an important role, but it is just a role in the wider context of our society. Enterprise is a natural aspect of human society, and business is a good thing. But lack of money and lack of economic activity are not what ails us – there isn’t enough money in all the world to fix our social disconnectedness. Money cannot be used to pay for everything, it is an instrument for the exchange of surplus value and if we try to use it as a substitute for the value of life it loses its value, and its role collapses. This is the lesson of our times: we must learn to see the reality of our mutual interdependence and lose the illusion of separateness that our plunge into industrial capitalism pulled over our eyes.

We need to occupy our communities and demand less money, rather than occupying corporate spaces to demand more money. When we start giving ourselves the right to live in the reality we are already in we will not need to protest others to give us permission.

LIFE SPAN – 2011.08.20 – Europe’s Future

Special edition of LIFESPAN : A LIFE Plan for Europe.

LIFE SPAN 2011.08.20 – Europe’s Future

Situational Policy Analysis & News from LIFE

Situation – Debts and Dangers

Like the rest of the industrial world, the only way forward for Europe is to “grow” its economy, otherwise it cannot sustain repayment of its debts. Those debts in the short past are national debts, that were inherited in the medium past from profligate banks and governments, and in the long past belong to everyone in Europe because in the aggregate everyone was supping at the same table and gave their permission to those that sat at the head of the table.

While the discussions now are centered around the €uro as a currency and how to prevent individual countries inside the €urozone from going bankrupt; the real, underlying, critically important issue is how to foster growth. By “growth” what is meant is an increase in the economic activity that creates wealth, because if the interest on what you owe is greater than your rate of wealth-growth (which it is in pretty much every European country) you can never get out of debt.

All of these currency and growth issues are exacerbated by the fact that today’s practice of the European social model in not yet fully mature (see Policy below for the mature model) and so the European countries are continuing to rack up more debt every year!

If your situation looks like this (which it does in pretty much every European country), you’re in serious trouble:

  • Debts are already > 80% of your annual output
  • Interest on your debts is > 2.5%
  • Growth is < 2%
  • Annual additional borrowing is > 5%

But what comes next is the REALLY dangerous stage for Europe. This is not a prediction of what will happen, but it is a picture of what could happen if we don’t work to change course soon:

  1. In order to stave off the collapse of regional economies that would result from the failure of the Euro currency: the larger, more export-orientated countries will have to assume responsibility for the debts of all EU countries.
  2. Ironically, because the EU was not built on firm democratic ground there will be political backlash across the continent against a political class making fundamental decisions about what Europe looks like and works like, without gaining the support of their citizens for such moves. The “leaders” making the decisions lack the legitimacy of pan-European democratic representation.
  3. Despite the best attempts of Europe, America and China to maintain the financial world order, they will fail to achieve sufficient growth to make the system financially sustainable; never mind the fact that they aren’t even focussed on making it socially sustainable.
  4. European politics will polarize and degenerate to reactionary stances with insular perspectives, all the while sucking on the teat of petro-energy and destroying each other and the planet.

The situation is serious and dangerous. Serious because without growth in demand, there cannot be growth in the economies; and without economic growth pretty much every nation’s debts are unserviceable and, therefore, so is the entire world financial system. Dangerous because the collapse of the world economic order will result in conflict, and distract everyone from the urgent task of reaching sustainable balance. If we don’t want the middle of the 21st C to look like the middle of the 20th C, bathed in the added stench of climate rot, we need to come to grips with the situation we are in, and devise a path out of here that serves our most civilized intentions. The European model MUST succeed, and show the rest of the world the path away from conflict, towards sustainable prosperity – this is Europe’s responsibility and opportunity.

Policy – The LIFE Plan for Europe

The LIFE plan to get us from where we are now to where we want to be, consists of three major milestones:

  1. Re-establish the proposal for “Europe”, with a clearly laid out structure and schedule that leads to voluntarily unified social, political, fiscal and monetary union(s).
  2. Stabilize the short term, by defining the intermediate status of the currency, the nation states and all debts.
  3. Initiate the rapid re-democratization of regions and nations on the continent with the goal of being able to have pan-continental elections of voluntarily associated states within 7 years.

This ambitious plan is substantially more achievable than you might at first imagine. The nation states that make up the vast bulk of the European content already have well established democratic systems that allow their populations to make informed choices, so they can all reasonably conduct their normal democratic schedules and elect representation that can express their desires for or against specific unifications with other nation states, and do so within the given timeframe.

The dire need to stabilize the current situation makes a clear annunciation of intention in everyone’s interests, including all of the bond holders. The proposal is not complicated, it is simply that: the communities, regions and states that comprise the continent of Europe will freely choose their association, and in so doing create one or more transterritorial, integrated socio-political-fiscal entities which will in turn assume the assets and debts ascribed to them under the constitution, Section 1.

In the meantime, all existing bonds will be guaranteed in full and attract interest at their current rate or 2.5%, whichever is lower. Any bonds falling due between now and 7 years will be automatically rolled over for 5 years from their date of maturity. This protects the interests of the bond holders while removing the Sword of Damocles from the existing sovereign states.

The proposal for “Europe” shall be the creation of one or more Transterritories, each comprised of no less than 3 States, each of which shall be comprised of no less than 3 Regions. A skeleton Constitution will be universally adopted at the outset to provide the framework for the formation of the new, freely-associated memberships. Upon the election of each transterritorial Assembly, that Assembly will be at liberty to amend their constitution according to the wishes of their citizens.

Crucially the new Europe will be based on a new citizen contract in which the social welfare model is transformed into a wellfair model that provides comprehensive and universal social services, instead of the cash grant system in place today. That every citizen is endowed with access to basic services that support life and opportunity is maintained, but that such support is a mutual gift provided to the extent that it is affordable for all. This maturation of the empathic social model resolves the fundamental unsustainability of the cash welfare system by absorbing the hygiene portion of labour costs into the society and liberating the commercial economy to deliver on its full potential.

The growth that will make the inherited debt burdens sustainable will come from the unleashing of the latent microeconomic potential that industrial capitalism stifles. This large engine of wealth is obscured by the immature practice of both economic and social policy that is the norm in current European societies. It will require effort and diligence for Europeans to meet their obligations, but it is most definitely an achievable task within the standard timeframe for sovereign debt (i.e. 20 to 30 years). And at the same time that Europe is proving that it understands responsibility, it will also be proving that sustainability is achievable.

Analysis – A Light for the LIFE of the World

Change is not an option, it is a requirement. The truth is that the situation in Europe is not merely a circumstance that provides an opportunity for change, it is the eventual destination of all societies with immature social and economic systems. The confusion at the root of the industrial economic model and the arrogance of early democratic models means that they were fatally flawed from the outset. They were never capable of being permanent structures for a sustainable world, and yet we have persisted in their agenda beyond the end of their useful remit. Now we must face our responsibility to refine and develop our social and economic structures, to advance them beyond the visions of our ancestors, to fashion human civilization that honors, justifies and respects the influence over all life on Earth that the development of our species has imbued in us.

The achievement of a civilized and peaceful resolution of Europe’s problems, through the creation of freely-associated populations, working peacefully together for our mutual prosperity, while laying a sustainable foundation for our societies and our economies, will provide a shining beacon of light to the whole world that progression out of the darkness of conflict and the misery of crony industrial capitalism is not only dreamable, but is also practical. The whole world looks to Europe to show what they know is possible, and the people of Europe are ready to meet the challenge and shoulder the responsibility of demonstrating that sustainable peace and prosperity are the inalienable rights of all.

All of the great civilizations that proceeded Europe have enjoyed extended periods of peace and prosperity, some lasting for 100s of years. Europe has not competed a single century in the last 2,000 years that wasn’t defined by conflict and war. The modern world is a cake largely baked by Europeans, and now it is time to complete the process and ice the cake. Talk of Europe’s fading relevance and ossification are but excuses, it is plain to see that people in the rest of the world look to Europe to prove that the model they are adopting can be made to work.

News – LIFE Party launching in the UK in 2012, and the rest of Europe in 201… ?

Starting next year the LIFE Party will launch in the UK to run for the 2015 General Election. We can start LIFE Parties in every European democracy during 2012 to bring responsive politics to every corner of the continent that is the cradle of democracy. To make that a reality and be part bringing sustainable prosperity to your part of the world, send an email to start@lifeparty.org and we will help you get started with tools, frameworks and campaigns.

This the third issue of the newsletter from LIFE: Situational Policy Analysis and News (SPAN). LIFE SPAN is published online and provides more in-depth coverage of situations at the forefront of public policy at the current time.

To keep information flowing we encourage you to sign up for direct delivery of LIFE SPAN to your mailbox, so that any disruptions in the availability of Facebook, the blog site or the web wiki site do not affect your ability to get the latest news and updates from LIFE. Just subscribe to this website, you can always unsubscribe at a later date if you want to. We will never share your email with any other organization.

The Path to A Future: Economics 001

The economy, and implicitly the development of wealth, is a core issue that too often suffocates the debate about our options for change. Many of us come to the table with assumptions about the relationship between wealth and prosperity. We need to reevaluate these assumptions if we are to develop solutions to our problems. In this section we will revisit the basic constructs of economics and wealth creation, to make sure we are operating from a realistic and accurate foundation when we formulate the framework for our economies.

The typical policy debate today is about the balance between the social ills of the free market, and economic ills of a state-controlled economy. This suggests a built-in assumption that we must compromise our social security to let markets be free.

Why is that true? Why is it that market freedom is a function of social insecurity? What is it about economic theory that stipulates a need for the population to be prepared to pay a piece of their personal freedom, in order to get to a piece of the market freedom pie? The conventional answer to this is that the labor force needs an incentive to work, and that sometimes the appropriate incentive is survival. Apparently, without the threat of destitution, people will not take the jobs on offer in a free market!

Which leads to the next question: why would a free market create work that only those threatened with starvation would want to perform?

Oh I see, a free market doesn’t necessarily create undesirable jobs, it’s just that the free market rewards low cost, and low cost means work and reward conditions that only the potentially destitute would agree to work in.

Right?

This cyclical assumption that low cost requires undesirable work, which demands an insecure workforce, is fairly deeply embedded in our current cultural psychology, especially in the West. In fact it isn’t really challenged, because it is so widely held and so subtly integrated.

As I will show, the opposite is actually true. Secure populations, working voluntarily in jobs of their choosing, is the most productive economic model available. The “market” is not a policy model, it’s only a mechanism; it is no more an economic, or political, model than the explosion in a cylinder is a car.

Our desired outcome is prosperity. That is the destination everyone understands we are aiming for; everything else is just a means of achieving prosperity. The free market is not the destination, any more than collective bargaining is. So the first link to unhinge in our minds is that the “free market” is what we need. Keep your eyes on the prize: prosperity.

The “market” is a set of mechanisms that naturally directs resources to meet needs. While its principles are simple, in operation it accommodates a bewildering array of inputs, influences and outcomes. It’s like our brains: we know the principles on which they work, but that doesn’t mean we know how to work them.

Cost is a significant input to market mechanisms. When all else is equal, cost drives decisions to the most efficient outcome; that is the raison d’être of the market. But we should note that, almost always, cost is the last criteria in the decision tree; the item has to be fit for purpose first, and affordable second.

What about trade? Within a given market, does the locality need to be the lowest cost producer of the good or service? If trade is possible the answer is no, because if equal and lower cost items are available through trade, then trade will fill the need. Unless… unless the item is so vital to the survival of the population or the basic functioning of the society, that a breakdown of trade, for any reason, would be a strategic threat to everyone. There are certain items that are so strategically important that higher cost is not a barrier to local production, and the market must necessarily be modified in order to accommodate the higher priced, locally secured items.

This leads us to an important place on our journey and we would do well to stop and clearly annunciate our conclusions:

  • The market is a great system for almost everything.
  • The market is not an appropriate mechanism for the most important things.

Whoa! How did we get here? I’m a freemarket capitalist and I’ve been around for a while so I know a thing or two about the world I live in, and this doesn’t sound right at all! I’m going to have to go back and read those last few pages again. You’ve used some crazy commie logic to trap me into believing that the free market won’t solve these problems. Wait here while I reread.

Okay, back again. Well, um, I can’t see where I could disagree. It’s not like it’s complicated, right? There’s just some stuff in the world that’s too important to outsource. I can see that.

Thanks.

Now the other news: if there is no strategic imperative, there’s no reason to interfere in markets. This is where some get caught up in a different false linkage: they think that we can intervene in markets to make them produce social welfare and justice. In fact, the basic social welfare of our societies is not an output of markets. Markets do not have “well-being” as an output in any of their functional logic. Markets efficiently direct resources to fill the needs of consumers, that is all they do. The welfare of society and our quality of life have to be outputs of human endeavor, they are a function of choice. We do not have to choose the common good or a high quality of life, and we certainly won’t get either if we wait for markets to deliver them.

Let’s be fair to markets while we’re here: they don’t know how to benefit society, and it’s extremely unfair to ask them to do so. Markets, especially those catalyzed by modern banking systems, are good at creating wealth; but wealth is not the same as prosperity. Prosperity is a mixture of wealth, peace and freedom that delivers a high standard of life. So if we want prosperity, we have to mix the output of markets, with the output of our choices to promote peace and freedom.

When we can clearly see these distinctions, and the properly differentiated roles for economics and politics, we can formulate more coherent policies that are more likely to deliver our intended outcomes.

Economic policy should concern itself with:

  • the maintenance of markets
  • the management of the monetary system
  • the administration of strategic resources

Political and social policy should focus on:

  • the cessation of hostilities
  • the protection of liberty
  • the general welfare of society

Let’s look at each of these policy areas in turn, so that we may more clearly demarcate their boundaries. Once we have separated them in our minds, we will be better able to act in the right places to produce our desired results.

Economic Policy

The maintenance of markets involves trying to ensure that they function as freely as possible by correcting naturally occurring defects as much as is possible. The two most common defects in market function are the imperfect distribution of information and the exclusion of external costs.

  • Making as much information as possible available to consumers, with the lowest barriers to acquisition, is the best we can hope for; you can take a consumer to information, but you can’t make them know.
  • External costs, “externalities” in official parlance, are those costs that can be directly attributed to the lifecycle of a product or service, but for which there is no one to demand payment during that lifecycle. Nature is a good example of a non-payment-demanding party to many transactions. When these externalities are recognized, the proper maintenance of market function requires that these costs are imposed on behalf of the non-paymentdemanders, usually in the form of some kind of tax, duty or other loading of the item’s cost profile.

The management of the monetary system is primarily about preserving the value of the currency. Given that there is no real basis of tangible value in a modern currency unit, it is important that the quantity of money in circulation be managed in line with the output of the economy. Furthermore it is essential that the banking system charged with the care of private deposits, debts and equity be regulated for stability. Modern economies based on monetary systems require a trusted banking function in order to operate, and so the maintenance of that system’s stability is paramount. (Banking is entirely different than investment management, which is not really a banking function at all, and should be kept separate from banking. In fact, the term ‘investment bank’ should be abolished.)

The third leg of economic policy is the administration of strategic resources. As discussed earlier, there are resources that are so important to the sustenance of a society that trade cannot be relied on for their procurement and distribution. These resources must be identified and their supply purposefully managed, such that their availability is as guaranteed as it is possible to achieve. Chief amongst these resources are shelter, food, healthcare, education, transport, energy, information and the legal infrastructure of democracy (the same services that form super-security). In most situations only a subset of the total market for each of these resources is strategic, and only that subset need be the subject of public policy. For example, the availability of clean drinking water is a matter for public policy but this does not need to extend to the bottled water market. Similarly the provisioning of primary health care as a public service, does not preclude the availability of specialized procedures in the private market.

Those are the elements of economic policy and maybe you’ve noticed certain absences that you might normally expect to be part of contemporary policy portfolios. Before going further, let’s do a quick review of the complementary political policies that accompany our economic policies, to shed some light on those absences.

Political Policy

We have said already that political policy should concern itself with the establishment of peace, the protection of freedom and the provision of welfare. As regards the economy, the establishment of peace and the rule of law are precursors to enterprise and trade. The freedom of the people is necessary for proper market function, the development of business and the fostering of innovation. Indeed, the freedom to choose and the freedom to fail are essential to the fluidity and effectiveness of market mechanisms.

The provision of public welfare is commonly understood to be the primary function of government, but the policy framework to deliver effective results has eluded most, if not all, to date. Public welfare policy has been colored by our history and has yet to free itself from the shackles of our legacy perspective. During the last century or so we have developed levels of efficiency and productivity that have created the capacity to provide universal welfare. The capability of the population to sustain itself, without reliance on the grandesse of a ruling elite or the magnanimity of magnates, means that we can truly deliver the bare necessities of life to all, at a reasonable cost to all.

The cost of universal shelter, sustenance, healthcare, education, transport, information and democratic freedom is about one third of the total output of modern economies. That’s right, for about 30 cents on the dollar we can afford basic housing, a healthy diet, primary health care, reasonable education, local public transport and universal digital information access for everyone. Not everyone is going to want or need every service, but if they did, we can afford to provide them today; with the same tax rates we are already paying.

So why aren’t we doing it? The primary reason goes back to the starting premise of this section: the idea that the provision of such welfare would fatally undermine the economy, the very system that produces the wealth that makes it all possible. And we’re back to the same logic we questioned at the start. Do we believe that the motivation to work, to innovate and to be more productive will disappear if we aren’t afraid of starving to death in the gutter? This is not reality. It misunderstands human nature, and the meaning of “welfare”.

Human nature is full of aspiration; that is what has driven our development over time. Once we have filled our bellies we desire taste; once we have rested we desire comfort; once we have seen color we desire lights and once we are satisfied we wish to contribute. The religions of the world are the ultimate examples of our capacity for aspiration, far beyond the mundane practicalities of life. Providing a roof, a bed and a bowl of soup does not satisfy the aspirations of anyone. Would it satisfy you? Wouldn’t you still want to see a movie, eat some chocolate or wear different clothes? Perhaps you’d rather own a mountain bike, become a photographer or grow some vegetables? To believe that providing the bare necessities of life to someone will blunt their motivation and dull their aspirations, is to negate what you know about yourself. It’s simply not a reality, not of anyone, anywhere.

So what should public “welfare” policy actually provide? The policy should aim to satisfy a basic, mutual social contract between neighbors: that no matter what fortune befalls you, you will have the bare necessities of life, and as much opportunity to make the most of your life as can be afforded. Viewed in this light, welfare policy is not a benefit that anyone is entitled to, it is a service delivered to the best of their neighbor’s ability.

Public welfare policy is really about delivering personal security and opportunity. As such it does not involve the transfer of payments, instead it delivers services that fulfill the social contract. Housing is made available to provide secure shelter, food sufficient to maintain health and medical services as can be afforded for all. Think of them as services, not dependent on the largess of some individual or group, but provided universally, as a birth right of citizenship. No cash, no luxuries and only what can be universally afforded from a reasonable tax.

Now start to imagine the impact of such a public welfare system on the economic system. No need for a minimum wage. Everyone has their basic sustenance taken care of, so they are free to provide or pay for labor at whatever rate they choose. On almost every level required for a flourishing market economy the situation is improved: workforce mobility, propensity for risk, innovation capacity, skills development, productivity, confidence and satisfaction. The implementation of universal personal security will have a dramatically beneficial impact on economic output, at the same time that it enables “low cost” production.

Because delivering universal services frees labor to be priced according to its marginal value added, the “cost” of labor throughout the economy is significantly reduced, especially at the lower skill levels. This in turn, has the knock on effect of reducing the nominal cost of delivering the universal services themselves, because a high proportion of the cost of delivering those services is labor related. In effect, providing universal services reduces the cost of delivering those same services.

A fundamental and progressive effect of universal personal security will be the stimulation and expansion of micro-enterprise. Freed from the pursuit of mere survival, the population will be able to use their more unique skills and interests to create micro-services and products that meet the needs of very small markets. This micro-economy has the ability to boost general satisfaction by allowing specific needs to be met more directly, at the same time that it further enhances the economy by dramatically increasing transaction volumes and efficiency. Child care that allows bicycle repair, that saves resources, that are diverted to power buses, that get people to work faster, that allows more family time. The feedback loops that reinforce the productivity, efficiency and diversity of the economy are endless. Additionally, as more needs are satisfied more directly by micro-suppliers, the dependence on mass production and long-distance transport is lessened, the resilience of local economies is strengthened and production becomes more environmentally sustainable.

Conclusion

When we can separate and distinguish between economic and political policy, we can make effective choices that will lead to the prosperity we desire. We don’t need an economic policy that creates jobs, we need a political policy that allows jobs to be created. We don’t need economic policies that encumber businesses with social responsibility; we need political policies that deliver real social security.

For our economy we need economic policies, and for our welfare we need political policies; each, unto their own. Far from economic growth resulting in social ills, or social growth resulting in economic ills; economic and social growth are mutually enhancing. Delivering universal social security will not erode productivity, it will enhance it. Unfettered markets will not drive social well-being into the ground, they will lift it up.

If we can just uncouple our unfounded assumptions about the relationship between enterprise and welfare for long enough to see again with clear eyes, based on what we know about ourselves, we can pave a Path to prosperity for all.


Part 17 in the serialization of the The Path to A Future.
A new section will be posted every 2 weeks during 2011. Enjoy!
To get a free PDF of the book go to www.standardsoflife.org/thepathtoafuture.

LIFE SPAN – 2011.08.10 – Fire, Riots & Remedies

LIFE SPAN 2011.08.10

Situational Policy Analysis & News from LIFE

Subscribe at lifespan@standardsoflife.org


Situation – No Growth without Fire

The industrial world is trapped, surrounded by a ring of fire. The only way forward for them is to “grow their economies”, but they are finding that they cannot grow. They cannot grow for two reasons, a double ‘liquidity’ trap:

  • Their economies are based on oil, and every time it looks like growth might be picking up, the price of that liquid shoots up and sucks the gas out of the engine, so to (s)peak.
  • There is insufficient ‘demand’ (i.e. people can’t afford to, or won’t, buy).

Today’s industrial economies everywhere are hydro-carbon economies: they are reliant for the majority of their power on oil, gas or coal (except France at 78% nuclear – see SPAN 2011.05.01). The supply of these non-renewable resources is constrained and possibly dwindling, so whenever the expectation is that industrial economies will grow the price of these energy resources goes up, the higher the expectations are for growth the higher the price of the energy. Basically we are in a trap, the cost of growing is too high and any wealth generated by growth is syphoned off to the sellers of oil, gas and coal.

Demand growth is non-existent because wealth-creating production has been separated from wealth-spending consumption. Production is now located in economies that cannot afford to consume the output, and the proposed consumers are located in economies that are no longer producing sufficient wealth because the production has been relocated to somewhere where people can afford to consume even less. This is true of Germany, USA and just about every other industrial “economy”. So, on top of the heavy debt burden that people (aka “consumers”) in the developed nations have assumed, their means of wealth generation has been removed.

There are two options proffered by the old, left of center traditions: increase government spending and borrowing to increase aggregate demand, and increase the supply of money so that money is so cheap it will be worth investing in almost anything rather than have it lying idle. Both of these have been tried in the current situation and both are failing. Governments and people are already so debt laden than they cannot borrow any more without reaching evidently beyond their capacity to repay, so they cannot spend any more without raising taxes, meaning that they would not be increasing aggregate demand. The second option of increasing the money supply has already been done as much as it possibly can be, and now central banks are tapped out and in a ‘liquidity trap’ (where printing more money does nothing, and interest rates cannot be lowered because they are already at 0%).

The situation is terminal. Without growth in demand, there cannot be growth in the economies; and without economic growth pretty much every nation’s debts are unserviceable and, therefore, so is the entire world financial system. This is a serious situation: for the last 100+ years we have been investing the security of our civilizations in the development of an internationally and intercontinentally accepted trading system (aka ‘finance’). We need a way out of this before too many people notice the emperor has no clothes, otherwise our common advances in civilization will be set back by more than a few riots. This is not to say that we should save the bankers, far from it! But we can transition peacefully to sustainable prosperity, if we decide to – it takes more work and greater courage than sitting back and watching it all burn down, but that’s what being civilized is all about.

Policy – Fighting Fire with Water

There are two ways to grow without running straight into the fire:

  • Unleash the internal markets in our local and regional communities.
  • Decarbonize our infrastructure.

Deliberate policies focused on these two objectives will deliver wealth-producing growth in the economies and societies that have the foresight to enact them. And the industrial societies are best placed to engage in them.

The water that will nourish our local communities is symbolized by water itself: water is a natural resource that everyone recognizes as being the free entitlement of everyone else, to procure in sufficient quantity to sustain their life. Through this easy example we reveal to ourselves that we all believe that everyone else has the right to the bare necessities of life. Now if we take that insight as a principle, we can easy develop a social structure that embodies it as policy, and in so doing we unleash the natural microeconomic potential of our societies to generate wealth. There is no such thing as unemployment, there is only wasted time.

The most urgent task in front of us is also where we will be able to generate the greatest wealth: developing and modernizing the infrastructures on which our civilization stands. We have much work to do to simply achieve the basics of clean water for everyone and renewable energy for all; these two endeavors will keep a generation busy in productive work.

But both of these simple turns require that we deliberately develop policies in our societies that make them a priority and a reality. That means having governments aligned with them, and that means electing representatives who will ensure they are the priorities. Are you waiting for someone?

Analysis – A Bonfire of the Polities

The riots in London, the student protests in Chile, the drug wars in the Americas, the uprisings in the Middle East and the protests in China all point to the same chasm separating the ruling polities and the politics of the people. Even in the most established democracies we have disjointed the interests of the ruling classes and the interests of everyone else. To see the politicians consistently and continuously act against the interests of the great majority of the people they purport to represent, you’d think that they’d have to lie to get elected!

Here’s a sampling is widely held opinions in the populaces of today’s industrial ‘democracies’ that the elected politicians don’t seem be able to bring themselves to enact:

  • we shouldn’t be imprisoning people for taking drugs
  • better quality education needs to be more widely available and more accessible by all
  • nuclear power is just too dangerous and too badly managed to be better bet than renewables
  • we need to do big things to decarbonize our infrastructures now
  • the banks should be working for the people, not the other way around
  • banks that go bust, should go bust
  • there should be more social services universally available, especially medical care
  • more local control
  • more responsive, accessible and accountable politicians
  • no wars, no arms trading, no nuclear weapons
  • more freedom and better information

There is a basic disconnect between the people and their politicians, and lot of that has to do with scale – the world’s population has multiplied many times over and we are still using the same government structures we were 100 years ago. Without multilayered democratic structures we cannot have accountable representation.
Fixing the disconnect is going to mean making big changes to the way we organize ourselves and our politics, so we have to be prepared to make big changes. We are going to have give up on our “not as bad as the other guy” voting, we are going to have to accept that we are all in this together and we are going to have to grow into our full responsibility for each other and the planet that homes us. Many of our tired attachments will have to go onto the bonfire if we are to escape the backdraft. Burn, baby, burn! It’s OK, it wasn’t working any way… time to try something new.

News – LIFE Party launching in the UK in 2012

Starting next year the LIFE Party will launch in the UK to run for the 2015 General Election – to win! We will be looking for strong local candidates to stand in every constituency on a LIFE Party ticket to bring responsive politics to every corner of the land that is the grandmother of democracy. To be part of the movement that will bring sustainable prosperity to the UK and then the rest of the world, send an email to uk@lifeparty.org and we will keep you informed of developments as they happen.

This the second issue of the newsletter from LIFE: Situational Policy Analysis and News (SPAN). LIFE SPAN is published online and provides more in-depth coverage of situations at the forefront of public policy at the current time.

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