The Economic Crisis, Greed, and a New Society

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The current crisis in the credit markets and its impacts on
the larger economy have got me thinking about whether it
is simply greed that ultimately explains current events or
whether there is a need for systemic change in the way we
order our social, economic and political lives.
There are at least two major ways in which the welfare of
society as a whole, that is, the health and wellbeing of all
individuals making up society, will improve under capitalism.
The first is by having government establish health,
labor and environmental standards (among others) which
ensure that competition and greed are regulated, that is,
pursued within certain acceptable channels or in ways that
avoid certain unacceptable outcomes.
The second is by having government tax the
income/wealth of the rich and redistribute it, as needed, to
meet the basic economic and welfare needs of those who have
not been served as well by the competition. Such redistribution
will give the latter access to resources that will improve
their ability to compete more effectively themselves in the
future—assuming, of course, that they choose to use these
resources to compete in economic or other realms as opposed
to simply living more enriched leisure lives. Tax revenues
would also be used to support projects/programs that protect
or promote the common good of all members of society (e.g.,
building roads, bridges, power plants, parks, etc.)
But there is a third way that society as whole could benefit
under capitalism, but it would require a significant adjustment
in our values that government action alone could not
achieve. This would be to redirect the major object of greed
from the acquisition of financial/material gain to the enhancement
of public welfare itself. What if society shifted its basis
for allocating status from achieving personal financial gain
(demonstrated primarily through material accumulation and
display) to making personal contributions to public welfare
(demonstrated through devoting one’s career to public service,
paying one’s taxes, making charitable donations, and/or
volunteering time and effort to help others or improve the
public environment)? One step to encourage such a change in
values, of course, would be to implement the tax policies
described above. Projects that provide goods or services to the
public as a whole (public works) would have the additional
benefit of providing employment to workers of widely varying
backgrounds and skills.
Could we create a society which retained free markets for
their value as highly effective and efficient means for allocating
money, labor, and natural resources to produce and distribute
goods and services for human use, but insist that
their major beneficiaries (financially successful individuals
and corporations) be taxed, as needed, to promote the general
welfare in the ways described above? In such a society,
the highest honor conveyed upon individuals would be for
their contributions to the general welfare made through any
of the avenues described above, but especially through paying
high taxes. Individuals and corporations that contribute
to the efficient production and use of consumer goods and
services in the private economy would still be rewarded
with wages, salaries and other benefits commensurate with
what the markets will bear, but they would pay, with pride
garnering social recognition and esteem, graduated taxes
needed to meet public needs and enrich public life.
Such a society would of course presuppose that government
officials, elected or otherwise, refrain from corrupt/selfish
behavior themselves and use the tax revenues collected to
effectively/efficiently promote the general welfare. In short,
government workers, too, would need to be motivated by
public service and receive recognition for their contributions
to the public good. Furthermore, to prevent either tax fraud
by private individuals and corporations or the misuse of tax
money by public employees, highly transparent accounting
systems that accurately track the income, assets, and other
benefits received by both public and private sector workers/
organizations would need to be developed, applied, and
continually monitored; the same would apply to the income,
assets, and other benefits received by nonprofit and charitable
workers and organizations.
Another argument for supporting social and economic
changes of the sort just described relates to the environmental
need to move away from values and lifestyles that are highly
materialistic and that consume or destroy irreplaceable natural
resources and ecological cycles that maintain all forms of
life. In such an economy, there should be no positive social
incentives for successful individuals to be extravagant material
consumers. Instead, they
should be encouraged to demonstrate
life styles that are sustainable
because of the way they use
energy and materials—often
minimally! The new aesthetic
would be a minimalist aesthetic—
or one that achieved aesthetic
embellishment through the
hand-crafted labor of human
beings themselves rather than
through the work of complex
machine technologies that consume
high levels of both energy
and materials.
To the extent that a new economy/
society recognizes and rewards minimizing the production
and use of material goods and services in order to
achieve satisfying and meaningful lives (public and private),
and yet retains a reliance on free markets and jobs (earned
incomes) to distribute these goods and services, there will be
a critical need for government to design mechanisms that
provide access to income for those who lose their jobs. Why?
Because in our current system as demand for material goods
and services declines, so will the jobs of those who have produced
these goods and services. Without jobs and thus
income, these individuals will have no way of purchasing
what they need for basic survival, let alone for living satisfying
and meaningful lives.
Back in the 1960’s, social theorist and planner Robert
Theobold suggested mechanisms of the sort that might be
needed. He proposed that government use new social
security and/or other tax revenues to establish a “guaranteed
annual income” (GAI) that would provide basic economic
security to all members of society. In addition to a
GAI, Theobold suggested that government provide a program
called “committed spending”(CS) that would continue
(or extend) the income of individuals who lost their
jobs, with the amount of this income starting at the average
salary/wage level earned over the past three years and
declining on a percentage basis over time (for up to four
years). CS would thus allow individuals who have lost
their jobs to pay most of their major financial obligations
(e.g., rent/mortgage, food, health, utility, and transportation
expenses) without radically reducing their lifestyles,
but only for a limited period of time until they found new
jobs or other private sources of income—perhaps after
obtaining additional education or training. In the worst
case scenario, GAI would be there to provide basic economic
security after four years of unemployment.
Under both GAI and CS, recipients of income would be
responsible for purchasing their own goods and services in
society, including their own insurance programs, thus eliminating
the need for expensive in-kind or voucher-oriented
welfare programs with their extensive bureaucracies. Benefit
levels could be established high enough to allow recipients
to manage their own health care services or a separate
mandatory government (single-payer) health care system
could be implemented. If the latter were created, taxes to
support it could be paid out of any of a variety of federal
taxes: the same social security taxes used to pay for GAI and
CS, separate Medicare-type taxes, income taxes, etc. The
same applies to retirement income/services or pensions.
Given the complexity and unreliability of privately arranged
IRA investments, I would probably recommend administering
retirement income/services through
social security.
Theobold even suggested that CS in a slightly
varied form (let us call it CS-V) be made
available to individuals who choose to voluntarily
give up their jobs in order to simply
relax and refresh, reconsider the direction of
their lives/careers, pursue additional education
and/or training, try to establish new
businesses of their own, or whatever.
Today, I would add that another attractive
feature of both CS and CS-V is that, over
time, recipients would learn to live their
lives with a decreasing dependence on
income and material goods and services.
They would be given an opportunity to discover
that many of the best (most rewarding) experiences of
life are “free”—or at least do not cost a whole lot of money!
Such discoveries would bode well for their living more ecologically
responsible lives. CS-V would also result in limited jobs
“turning over” more regularly and thus being more widely
shared—a topic that deserves further discussion, but not here.
Let me close by suggesting the possibility of an even
more radical reform to discourage successful competitors
in the private economy from using their income for the
accumulation and display of material wealth with all of the
harm this does to the planet. This would be to place caps
on the amount of income/profit that could be retained
from economic activity. What if we were to tax all income
above, say, $250,000/year at a 100% tax rate, transferring
all of this income into a government fund available to support
projects undertaken in the public good? The budget
surplus generated from such a policy could be distributed
among various levels of government (global, national,
state, local), and if governments were sufficiently democratic
(another topic deserving future discussion), the decisions
about how this money should be spent would be
made by citizens collectively. If $250,000/year were
judged to be too high or too low, it could be revised
through democratic decision making—but with full recognition
of the environmental costs usually associated with
high levels of material consumption.

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