April 19, 2008

"It's The Economy, Stupid"??

At the end of his column in today's Bee, Paul Krugman wrote "the very good economic record of the only Democratic administration most Americans remember."

It's absolutely true that the U.S. annual deficit was turned into an annual surplus for a few brief years at the end of 1990s, and the U.S. accumulated debt began a slight decline. (However, it's not news that since then the Republicans have tripled or quadrupled the total debt, which will be funded by future borrowing at oil-fueled interest rates.) 

More unfortunate even than that perhaps was the Clinton administration's failure to understand that "It's Not The Money, Stupid." The infatuation of both parties with trade and globalization was based on a widespread and mistaken idea that money is essential and inherently positive, and that it is reliably related to economic benefit. In effect, economists typically recast the standard definition of efficiency used by physicists into a calculation about the amount of money attracted by a given input of energy and other resources.

The annual Earthday season is a good time to review what the economy is about. An earth-friendly economy would look at overall human efficiency, the amount of human welfare available from a given input of physical energy and resources. The physical part of human welfare is: clean air and water, healthy food, and protection from extremes of heat, cold, and rain. If the rules of money suggest that funding my retirement through investing in the stocks of corporations that are raping Mother Earth and selling us junk food is a good idea, then the rules of money are wrong.

In times of stability, money can provide an efficient shortcut to evaluate what's economically good and bad. But in times of turbulence such as we confront, the true relationships between moneys and realities are equally turbulent, and a return to fundamental principles is the only way to keep one's bearings. Maslow's hierarchy builds on the foundation of physical needs listed above. Other things like sleep, affectionate touch, meaningful work, community are all important for a happy natural human life, and his schematic offers a perspective outside of the box of business as usual.

A balanced economy would integrate all these human needs into a culture of life that would support sustainable and relocalized societies, as well as all the other species without which life in this ecosystem would be boring (like my cat) or impossible (like insects).

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