Thursday, February 12, 2009

Stimulating a New Economy

Since I started investigating the financial crisis last fall in cooperation with a classmate at BGI, I have become more and more enamoured with the idea of recreating local economies. The more I hear the rhetoric coming from our institutional leaders, the more I fear for a future ruled by an ever-shrinking economic elite; it seems to me that we are being sold a repair package for the business-as-usual model that is clearly on its way out. I can't help but believe that financial systems that allow (encourage) massive movements of capital in short periods of time are detrimental to sustainable development. Is that the elephant in the room when it comes to sustainability, capital mobility?

I have not read Mr. Korten's book (yet - see below), nor have I received my Ph.D. in economics, yet I cannot help but believe that the collective knowledge about building human-scaled economies is already here; we're too busy being dependent upon institutions to make the rules and fix the problems to recognize it (image form

How might I contribute to the creation of the independent economic future?

from CSR Wire newsletter:
"We can't solve problems by using the same kind of thinking we used when we created them," Albert Einstein famously said, as if specifically referring to current solutions being floated for reversing the economic meltdown. For example, President Obama proposed a $500,000 cap on executive pay at banks receiving TARP (Troubled Asset Relief Program) money. Great! Except that executives can fly Lear jets through the loopholes, according to compensation expert Graef Crystal in a Bloomberg commentary.

And the Congressional Oversight Panel (COP), the federally-appointed watchdogs of TARP spending, noted in its latest report that the US Treasury is getting 66 cents worth of toxic assets for every taxpayer dollar it spends to bailout failing banks. "Treasury got less than it spent," said Elizabeth Warren, COP Chair. In other words, we're throwing taxpayer cash at bad money, like pouring water into a leaking bucket.

And the Senate approved President Obama's $838 billion stimulus package. Yes, we need economic defibrillation. But just as energy guru Amory Lovins characterized revitalizing nukes as "trying to defibrillate a corpse" (indeed, the stimulus includes an additional $50 billion in loan guarantees for nuclear power), so too is the stimulus plan propping up failed economic models (such as nuclear power) while under-funding new-economy models (the stimulus includes $13 billion in extended tax credits for wind, solar, and other renewables).

Back to Einstein: can we solve our current economic woes by patching holes in the bucket? No, according to David Korten, author of The Great Turning, who likens our current strategies to "treating cancer with Band Aids." In his new book, Agenda for a New Economy, Korten exposes that the emperor wore no clothes - that the Wall Street economy created "phantom wealth" through economic bubbles, debt pyramids, and predatory lending that we are now seeing disappear before our very eyes.

The solution? Shift from a Wall Street economy that creates illusory wealth to a Main Street economy that creates real value, says Korten. He proposes "an economic blueprint for the 21st Century" (according to Business Alliance for Local Living Economies Chair Judy Wicks) that prioritizes people and planet over profits, while still tapping the entrepreneurial energy of Main Street business.

1 comment:

Robert said...

wayno, glad to see you blogging, I've enjoyed what I've read...