Thursday, January 03, 2013

The Right Economy

Eastside Road, January 3, 2013—
•John de Graaf and David K. Batker: What's the Economy For, Anyway? (Bloomsbury Press, 2011, ISBN 978-1-60819-510-7>

This is a fine book, I think. It's entertaining, informative, and provocative: you can't ask for much more than that. The authors base their discussion on the assumption that a national economy exists to provide, in the words of one Gifford Pinchot,
the greatest good, for the greatest number, over the longest run.
This assumption is married quickly to another, found in the second paragraph of our Declaration of Independence:
…all men are created equal, … endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
No one, it seems to me, can deny that this means that the federal government is therefor under orders to provide our physical security and a social context in which we remain individually at liberty, free and enabled to pursue a happy life.

The objections will come quickly, and they have to do with definition, that cliché of a devil lurking in all details. "Liberty": I'll let Luciano De Crescenzo define that:
the simultaneous desire not to be oppressed oneself and not to oppress others.
Luciano De Crescenzo (tr. Avril Bardoni), Thus Spake Bellavista (Grove Press, 1989), p. 107

(I'll get to a discussion of De Crescenzo's equally fine book next time.)

But what did Thomas Jefferson mean by "the pursuit of Happiness," capital in the original? Maybe he was influenced by John Locke, whose formula was at various times "life, liberty, and estate"; or "life, liberty, health, and indolency of body; and the possession of outward things." (I find these quotes here.) Theories of the organization of civil society were much in the air in the last third of the 18th century, when monarchy was giving way to democracy, and intelligent, educated men — they were nearly all men, in those days — read, discussed, and reformulated their ideas concerning civil society and its government thoughtfully as well as passionately.

Far back in history, near the beginnings of such discussions, stands always the shade of Epicurus (341-279 BC), whose philosophy famously argues that a contented life depends on freedom from fear, absence of pain, moderation in pursuit of pleasure, and common sense in place of superstition. Epicurus's teaching was quickly given a bad reputation by the early Christians, because he directly attacked the idea of god-determined influences on human activity.

(The persistence of beliefs in the supernatural is one of the besetting evils of our time, like all other times; but that's a subject best left to another discussion.)

Locke, Rousseau, and Jefferson clearly considered Epicurus's teaching carefully in their own discussions of civil society, which led to the (literally) revolutionary idea that it should be governed not by divine right but by the people themselves, as stated famously in the preamble to the U.S. Constitution:
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
(or, as Lincoln later formulated it more concisely, "government of the people, by the people, and for the people".)

Tranquility, welfare, pursuit of happiness: they, it's argued, define the "good" component of Pinchot's formula; and a national economy exists to provide for it. Not to provide it; to provide for it, by regulating economic systems so as to allow individuals to engage in their own individual pursuits of happness.

De Graaf and Batker investigate the concept of societies directing themselves to providing for happiness, turning to Bhutan's implementation of Gross National Happiness rather than Gross National Product as an index of the state of the economy. GNH is measured, to the extent that as subjective a quality as "happiness" can be measured, by requesting individual citizens to respond to carefully written and weighted surveys.

The survey measures responses to thirteen "domains":
Overall Satisfaction With Life
Positive Affect
Mental Well-Being
Time Balance
Community Vitality
Social Support
Access to Education, Arts & Culture
Material Well-Being
You can see one of these surveys, and take it yourself (thus contributing a tiny bit more to its statistical value), here. I took it: my own scores range between a low of 54 ("Governance") and 90 (Social Support), making me happier than the average U.S. respondent on all but two Domains (Access to Education, Arts & Culture and Neighborhood, probably because I live in a rural setting), but below the international average in only one Domain (Time Balance: a typical American complaint).

It turns out an individual's happiness, as defined by spontaneous definitions gathered from great numbers of people living in greatly differing societies, has a lot to do with security, health, freedom from stress, and availability of community. (De Crescenzo neatly lays this out on a coordinate system, whose abscissa is a line from Hate to Love and whose ordinate is one from Power to Liberty. But that's for another day.)

Now you can object that all this is subjective, unquantifiable; that the whole point of Economics is that it's the study of something inherently measurable, quantifiable. But the argument of this book is that to the extent that that is true it deals with only the materialistic aspects of organized society: while government should unquestionably address the organization (and, ahem, regulation) of quantifiable components of the public good, it must not neglect other ones less easily defined or measured.

The evolution of democratic society has been characterized by its address to the increasing complexity and opacity of the systems impinging on individual liberty and the public good. Technology, finance, corporate trading, transportation and communication have all contributed to this increased complexity and opacity, and the great increases in population and in the physical size of nations have contributed further.

This of course has led to a quandary: a society organized and governed for the greatest good for the greatest number, and over the long run, can only be achieved in so complex a context through a great deal of social engineering — engineering and maintenance of finance, health, housing, security, agriculture, occupation and leisure activity, education, the arts.

This can be achieved to an amazingly successful degree, though it has proved easier to achieve in relatively small and ethnically (or culturally) simple societies. Bhutan, the Scandinavian countries, and Netherlands do pretty well, de Graaf and Batker find.

The United States began to address these matters seriously in the early Twentieth Century, though you could argue that Lincoln's pursuit of the Thirteenth Amendment was an earlier declaration of "greatest good for greatest number" as a governmental obligation. President Taft, of all people, argued — in July 1910! — that
The American people have found out that there is such a thing as exhausting the capital of one's health and constitution, and that two or three months' vacation after the hard and nervous strain to which one is subjected during the Autumn and Spring are necessary in order to enable one to continue his work the next year with that energy and effectiveness which it ought to have.

It took the Great Depression to begin a real effort to train the national economy more toward GNH than GDP, through FDR's New Deal. The most compelling pages of What's the Economy For, Anyway? are its last three chapters: "When (or How) Good Went Bad," the first of these, traces the attacks on and erosion of the institutions of New Deal social engineering, singing the familiar litany of Senator McCarthy, Vietnam, the Kennedy and King assassinations, Watergate, Reaganism, and Clinton's misguided economic policies, and deregulation.

Chapter 12, detailing the crisis of 2008 in housing, banking, and finance, is pretty depressing reading, but as clear and at times even entertaining as these gifted popularizers can make it.

But the real value of What's the Economy For, Anyway?, I think, is that it ends with a practical and optimistic list of specific acts that could resolve both the present crisis and the continuous problem of instituting "an economic Bill of Rights," rights specifically listed by President Roosevelt in an address on January 11, 1944:
The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;

The right to earn enough to provide adequate food and clothing and recreation;

The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;

The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;

The right of every family to a decent home;

The right to adequate medical care and the opportunity to achieve and enjoy good health;

The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;

The right to a good education.

All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.

America’s own rightful place in the world depends in large part upon how fully these and similar rights have been carried into practice for our citizens.

De Graaf and Batker list 41 specific actions, distributed among ten general areas*, that could and should be addressed by government. Some are simple, like mandating three weeks' paid vacation for every working American, ensuring physical education classes for students, banning corporate campaign contributions, funding railroads. (Simple to define and execute; not necessarily simple to arrive at through the political process.) Others are more complex, like rewriting the tax code. But all are simply and coherently stated, and should be addressed by everyone engaged in the political process.

Addressing these points will not only move the country to a more just and prosperous society; it will also provide employment and, ultimately, lower the financial cost of governance.

Some of the 41 points might be best addressed at the State or local levels of government, though with Federal encouragement and funding; but most need to be addressed wholly at the federal level. Given the current political situation there's not much chance these points would be negotiated; given our present Congress, there's not much chance many of its members would even read them — though it's only the work of a quarter hour.

Still, we have to make the attempt. I'm going to try to condense this post to something the size of an op-ed piece; and I'm going to write President Obama and my representatives in Congress to see what they think of these points. I'll post any follow-ups here in the future.

(Thanks, Thérèse, for bringing this book to my attention)

*The ten "general areas":
1: Give us time
2: Improve life possibilities from birth
3: Build a healthy nation
4: Enlarge the middle class
5: Value natural capital
6: Fix taxes and subsidies
7: Strengthen the financial system
8: Build a new energy infrastructure
9: Strengthen community and improve mobility
10: Improve governance

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