A New Economy Policy Agenda
BALLE Policy Panel
May 23, 2009
Our panel this morning is about public policy and my role is to frame our discussion in the large context of the BALLE commitment to bringing forth a New Economy. I will be drawing on ideas presented in my most recent book Agenda for a New Economy: From Phantom Wealth to Real Wealth. Why Wall Street Can’t Be Fixed and How to Replace It..
We formed BALLE with a recognition that a corporate global economy that marches to the tune of Wall Street is leading our nation and the world on a path to collective suicide. The human future depends on bringing forth a New Economy based on the design principles of healthy living systems that are rooted locally everywhere and function as cooperative communities.
National attention is currently fixated on the Wall Street financial collapse. The financial meltdown is in fact the least of our problems, because it is just about money and is relatively easy to fix. Environmental collapse born of excess consumption and social collapse born of unconscionable inequality are potentially terminal threats to our collective future.
The first step toward corrective action is to be clear that our problem is not a broken economic system in need of repair. It is a failed economic system in need of replacement. Specifically, the problem centers on Wall Street and its captive corporations.
The financial collapse has exposed the reality that Wall Street is best understood as a criminal syndicate engaged in counterfeiting, usury, fraud, and extortion rackets to generate unearned profits for those in control. It creates money out of nothing, engages in predatory lending at exorbitant interest rates, falsifies accounts and securities ratings, and uses its control of money to hold the public purse hostage to its demands.
Furthermore, over the last few decades, Wall Street players, in alliance with the Federal Reserve, have used their power to suppress wages, strip away environmental protections, dismantle social safety nets, capture the total benefit of productivity gains for owners and managers, shift the tax burden from financial speculators to working people, and reduce the poor to debt slavery.
The Wall Street excesses that brought down the U.S. and global economies provide a powerful demonstration of the failure of a false economic ideology that maintains there is no public interest—only private interests—markets work best when freed from rules and accountability, and everyone does best when we each pursue our unrestrained personal greed. We tested that ideology in a bold and reckless social experiment over a period of some thirty plus years. The results are now in. It turns out that markets do need rules and the great religious prophets were right. We do have to care about one another and act with mindful consideration of a larger common good.
As BALLE we are engaged in a three fold strategy to bring forth a New Economy aligned with this eternal truth.
1. We are working to change the framing cultural story about wealth, the economy, and the purpose of business.
2. We are working to create a new economic reality by growing the new economy into being from the bottom up.
3. We are no committed to changing the rules to shift the balance of power from the old Wall Street phantom wealth economy to the new Main Street real wealth economy.
Since the founding of BALLE, we have been engaged in creating the new economy from the bottom up as the core of our work. In so doing, we have also been also challenging the perverse Wall Street story that money is wealth, making money is creating wealth, and greed is good. By our story, money is merely a number, an accounting chit, a useful means of economic exchange. It has no intrinsic value or utility. Financial assets not backed by anything of real value are phantom or wealth, a fiction that within an instant may appear or disappear unrelated to any change in anything real. Land, labor, knowledge, and natural resources are all forms of real wealth. Most valuable of all are those forms of wealth that are beyond price: a healthy happy child, a strong family, a meaningful job that pays a living wage, a caring community, and a vibrant natural environment. These are the real wealth values that define the very purpose of a healthy economy. By our story, the proper role of business is to serve the community through contributions to growing real community wealth. Our ultimate success as BALLE depends making this story the new framing cultural story of business and the economy.
BALLE is new to the rule making piece which is our focus this morning
Current rules governing the economy favor Wall Street greed in most every aspect, from the indicators used to assess economic performance to the way in which money is created. Wall Street spoke as the voice of business to put the old rules in place. We must join with other progressive business organizations to create the new voice of businesses that recognize that profit is a means, not an end, and that the first responsibility of business is to serve the community. This will be a focus of Elliot Hoffman’s presentation based on the work of New Voice of Business.
Here are some items I suggest need to be on the New Economy Agenda. Do be clear that these are my suggestions. BALLE does not as yet have a formal positions on any public policy issue.
Item 1: Performance Indicators: The old Wall Street economy evaluates evaluate economic performance only against financial indicators like GDP or stock indices. GDP actually measures the rate at which the economy is extracting useful resources from nature, running them through the economic system, and disposing of them as toxic waste into our air, water, and soils. Wall Street has convinced the world that the faster we convert useful resources to toxic garbage in order to create phantom wealth financial assets for the very rich, the richer we all are. We best treat GDP as a measure of the economic cost of producing a given level of human well-being and seek to shrink it rather than grow it.
We properly assess economic benefits by indicators of what we really want: healthy children, families, communities, and natural systems. This will place life values ahead of money values and dramatically reframe both our public and private economic priorities.
Item 2: Support Action on Climate Change and Clean Energy. Elliot Hoffman will be elaborating on this theme.
Item 3: Tilt the Playing Field in Favor of Responsible Community Enterprises. Eliminate foreign tax havens. Implement strict anti-trust enforcement to break up concentrations of monopoly power. Eliminate tax abatements for outside corporations. Limit intellectual property rights monopolies. Establish and enforce standards that require corporations to internalize social and environmental costs. Establish compensating tariffs on imported goods to offset lower social and environmental standards in exporting countries. Support unionization of any firm of more than 500 employees that is not organized as a cooperative or a worker owned corporation in which management is accountable to workers.
Item 4: Advance Economic Democracy. A strong middle class with broad participation in ownership, and an absence of extremes of wealth and poverty is an essential foundation of good physical and mental health, a strong sense of community, environmental restoration, and effective, accountable political democracy. This requires strong living wage policies, an effective progressive tax system that restores the top marginal rate of 91% that was in place under the Republican Eisenhower administration, a strong estate tax, and policies that support broad participation in home ownership and the ownership of productive enterprises.
Item 5: Expand public support for small and micro enterprises that meet community and develop entrepreneurship, particularly in underserved communities. Connie Evans will fill in this agenda based on the work of the Association for Enterprise Opportunity.
Item 6: Revise and Federalize Corporate Charters based on a uniform standard that clearly establishes that a corporate charter is issued only to serve a specified public purpose and that it extends only such rights as the charter clearly specifies.
Item 7: Restructure the Banking System as a Well Regulated Public Utility Designed to Serve and Be Accountable to Main Street.
Item 8: Replace the current system by which private banks create our money supply through the issuance of loans at interest with a system by which government issues new money as needed by spending it into existence to fund public investments in infrastructure, education, or research. This will increase financial stability while reducing debt, taxes, inequality, and the pressure to grow consumption simply to keep the economy from going into a credit default. Take the failed Wall Street banks into receivership, break them up, and sell their individual branches to local investors to operate as individual community banks, mutual savings and loan associations, or credit unions within a strong regulatory framework.
In most every instance, existing rules favor the private financial interests of the very wealthy. To create a world that works for all people and the whole of life for all the many generations to come, we need appropriate new rules and BALLE is committed to taking up the challenge.