Friday, December 27, 2013

New economic model

Jason: We have to come up with a different economic model.
Sonja: You and I?
Jason: Yes. You work. I reap the fruits. No, of course I mean we as a society.
Sonja: Let me guess: communism?
Jason: Definitely not that. I mean a model not based on constant growth.
Sonja: What's wrong with growth?
Jason: What's wrong is that it can't go on forever. Even cancer grows only until it kills its host.
Sonja: Oh, that's such a cliché. Economy is not cancer.
Jason: OK. You are right - it isn't. Yet the fact remains that it can't keep on growing and growing.
Sonja: And why not?
Jason: Because its resources are not unlimited. That includes human resources, or populations, if you wish. You do know that currently many societies in Europe have a negative population growth? That is, these societies are shrinking because of low birth rates.
Sonja: That is counterbalanced by immigration, I suppose?
Jason: Yes, but that brings its own set of problems. It's not a solution, it is a stalling tactic. The current model is based in the assumption that there always be more people, so those who are no longer productive, for example, retirees,  will be supported by the ever growing army of the employed. This is starting to fall apart for two reasons: people live longer and so the number of those who need to be supported is growing. At the other end, the number of young people who should be doing the supporting is shrinking.
Sonja: Sure, that may be true in some countries, but there is no reason to believe the sky is falling. Just look at the unemployment numbers in many of these same countries - it's not like they are having difficulty finding workers. And those unemployed have to be provided for, through welfare, or education subsidies, or healthcare, increasing the burden on the productive members of these societies.
Jason: Indeed. I don't remember where I read it, and whether I recall it correctly, but apparently close to 40 per cent of adult Americans are out of the workforce, either through unemployment, disability, or by choice. That's a staggering percentage.
Sonja: Oh, I saw that number, too. I believe Washington Post was one of the media outlets to have reported it. So you see, one could perhaps assume that if the population shrinks, the ratio of the productive to the dependent will stay roughly the same.  What's the problem, then?
Jason: The ratio may stay the same, but the supporting ability of the workforce will diminish. As we discussed before, more and more wealth is concentrated in the thin layer of the richest Americans, with the wages of the middle class stagnated or going down in real terms.  Meanwhile, life expectancy continues to climb. What if, as some people claim, may of us will start reaching the age of 12,0 or more?
Sonja: OK, so what's your solution? Tax the rich until they are rich no more? You know where this leads, don't you?
Jason: I do, and I certainly don't advocate that. I think confiscating 50 percent or more of someone's income - as it is done in certain societies - is a state-sanctioned robbery. And shortsighted.  On the other hand, we have a long way to go before we reach that threshold here; just closing some tax loopholes would probably help quite a bit.  But, as you know, I'm no great friend of taxation. Too much of our money is being wasted.
Sonja: What then?
Jason: What if we collectively decided that a certain level of affluence is enough. Let's face it, two people do not need a 5,000 square feet house. Or five cars.
Sonja: Sure. That's why we don't have that.
Jason: Oh, but many people do. Or strive to. That's the "American way" - you always want more.  All I'm saying is, let's collectively slow down, so that others can catch up with us. Wouldn't this make for a happier society? With many more people satisfied with what they have?
Sonja: Maybe. But how on earth are you going to convince people to stop being greedy? Or to stop comparing themselves to others?
Jason: I don't know. Maybe we can start pointing out that gluttony and envy are sins. This is a Christian country, after all. Shaming people who consume in excess. We could also make it more difficult to do that. We could have a progressive tax on consumption. Things like recreational boats would be taxed at a higher level than cars, for example. First cars of course - the more cars you have, the bigger the tax on each one.
Sonja: That smells too much like communism.
Jason: Only if you equate some religious principles with communism. Think of it as Kant's "categorical imperative" put into practice at a societal level: what if every person on Earth had a mansion and multiple cars? How quickly would we run out of space and resources?
Sonja: OK, but who decides what level of affluence is appropriate and what is in excess? For many people just having a shack with a tin roof is a dream to strive for. For others, a tiny apartment in a high-rise. Yet you or I would not accept that. Should we move out of our comfortable house, because our standard of living is higher than 80 or 90 per cent of people on this planet? This kind of thinking scares the daylight out of me... Isn't this what Pol Pot and the Khmer Rouge were trying to achieve? Build a better, happier society by going back to a simpler, agrarian model?
Jason: I'm not talking about equality enforced through coercion. I'm talking about having a serious re-evaluation of our goals as individuals and as a society. We have to come up with a new model before this one crumbles or is replaced through a bloody upheaval. The fate of Cambodia is exactly what I would like to avoid.