The Potomac — Norman Ball
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Winter 2009
Emerson Meets Wall Street: Systems Think, the Citizen Dividend, and Economic Democracy

D.R. Thompson Contemplates Utopia

RECENT ECONOMIC TURMOIL BEGS the question of whether or not we've created, with globalization, a monster without limits as Joe Biden would say 'Wall Street Gone Wild'. It seems a lot of intelligence combined with a great deal of greed has created an interesting financial box for the world to work itself out of. At work is an economic syndrome that cannot be looked at in black and white terms and is thus outside of the realm of most politician's tendency toward a mythic, good-guy/bad-guy outlook. Over the past 25 years, certainly since Reagan's term in office, we have been intent on dumbing down our politicians and our population just during the historic period when we most need them to be able to think. Yet, there is still hope, because enlightened thinking is no longer a luxury, but a requirement of survival as the world of high finance is being stripped bare of any vestige of credibility.

What I'll explore here are three areas that could lead us toward a more humane and enlightened economics. These include the power of systems thinking, the benefits of a citizen's dividend and/or basic income guarantee for all people, and the general concept of Economic Democracy. A quick google on any of these terms can provide a good basic education, as well of a sense of the individuals promoting these ideas, should after reading this essay you find the concepts intriguing.

At the root of the current conundrum we face is our economic crisis. However, it is my feeling, and I believe many Obama supporters would agree with me, that the issues outside of our economy are of equal importance. These would include, listing the most pressing: energy, the environment, poverty, debt addiction, and the failings of health care, and education to name a few. And that is just within the United States. My sense is that to address the fundamental economic issues outside of the others would be a mistake, and that we indeed have a unique opportunity with this election to start on a path of sustainable economic growth that in fact enhances the environment, empowers individuals, creates 'green' prosperity, enlarges the educational opportunities for our young people, and enables us to address the problems of health care. But 'how' do you ask can we do all of this at once?

A rigorous approach to systems thinking would eliminate what seem intuitively to be bad choices from our policy making process.
First, we need to think systemically. There has in fact developed an incredible discipline in recent years surrounding systems thinking and, for lack of a better term, systems architecture, which can be applied to just about any set of human problems. One area where systems thinking and architecture has been aggressively applied to a very complex issue relates to aviation. The result of that architectural effort has been the Federal government-led NextGen initiative that is 25 years in scope and deals with very complex modeling of relationships between private-public sector relationships, technology, the physical air space, and a myriad of other factors. This complex, interrelated and interdependent modeling effort has then resulted in a series of concrete changes and proposals for how aviation, air traffic control and the relationship between regulation and free markets can work most effectively. Run through the Joint Planning and Development Office (JPDO), this cross-agency effort can and should be replicated for the economy. What we need, in other words, is a Joint Economic Policy Office that coordinates economic policy between agencies, including Health and Human Services, Education, Environment, Housing, Labor and so on.

Such a cross-agency systems approach can and should be accomplished with our economic sphere in such a way to confront the myriad of problems we have confronting us. So, for example, we should not "knee jerk", respond in a linear fashion to our energy problems by freeing up all of the drilling off shore. To do so is not thinking systemically, as it is painfully obvious that fossil fuels are not the primary energy of the future, i.e., are not a viable sustainable energy solution. So why pursue that path if it is so obviously not a long-term option? A rigorous approach to systems thinking would eliminate what seem intuitively to be bad choices from our policy making process.

But doesn't this smack of central planning? It won't be as long as the primary goal is to develop policy, and policy by its nature is not intended to dictate, but to influence change.

Ultimately I believe systems thinking as related to the economy can lead us to an enlightened economics that frees us from our current plight of perpetual war, perpetual debt and perpetual prescriptions by seeing that solutions to war, economy, debt and ultimately even human and environmental health are inter-related.

Debt-addiction, over the long term, is unsustainable as it ultimately leads to a society of debt-slaves, even if this was not the intended result. In the end we wind up with a society which is literally unable to function outside of debt ...
As a first step, I believe that systems analysis must be applied to our current method of debt-financing the gap between what we can produce and what we can consume. I for one am convinced that what could result from such an analysis is some kind of minimum guaranteed income program that rewards the overall productivity of our society and world rather than 'punishes' us through interest. This idea should be put through the rigors of systems analysis, along with many others such as social investment programs and public-private banking, all part and parcel of what the next wave of progressive policy that many call 'Economic Democracy', some of which is already showing up in legislation backed by the Bush administration and Henry Paulson, as he pushes to solve the finance mess through social investment in private sector banking. Bush himself even coined the term 'democratic capitalism' when referring to the agenda of the upcoming Bretton Woods-like economic summit (Bretton Woods being the financial confab in 1944 that defined the post WWII financial environment) a series of meetings that will bring together world leaders in late 2008 (including President-Elect Obama) in an attempt to further shore up a new approach to the economic crises.

The idea of a citizen dividend and/or basic income guarantee (aka, BIG) within the context of economic democracy assumes that all people have equal worth and that all individuals, simply by being born into the planet, should be able to live without, for lack of a better term, having to pay for the right to do so. Thus all eligible individuals should receive a BIG and/or dividend that would, over time, empower what is currently a perpetually indebted underclass. Debt-addiction, over the long term, is unsustainable as it ultimately leads to a society of debt-slaves, even if this was not the intended result. In the end we wind up with a society which is literally unable to function outside of debt and where everyone is caught in its web, even, strangely, many of the wealthy themselves. What needs to be questioned, therefore, is the validity of our current form of finance capitalism, and whether or not this is the only viable model at our disposal. If we decide on a different path, it is completely within our power to re-organize the debt relationships, our banking systems, our methods of valuing labor, our ideas related to 'productive' and 'non-productive' endeavors in order to shift from debt-addiction to citizen ownership and economic empowerment. All of this could be done equitably, with currently wealthy individuals being compensated for any losses and in many ways benefiting enormously by increased consumer spending.

To be sure, inflation can show up in economic bubbles (i.e., stock or real estate), as we have just experienced but a systems approach could model what those potential bubbles are and address potential problems with sound policy.
How do we afford this? First, revenues currently tagged for Social Security and unemployment would be moved to an overall BIG fund. Second, income tax for most individuals and families could be removed and replaced by other revenue sources, including an intelligent licensing and fee system for corporations (many use fees essentially allow corporations to pay nominal fees for access to publicly-owned resources), coupled with a consumption tax and/or corporate assets tax that would allow the government to intelligently influence consumerism and/or invest in industries that provide a green-friendly and sustainable future. Moreover, above a certain level, individuals and families could still pay a progressive income tax (for example, families making over $250K a year). The fact of the matter is that a large swath of low-income persons already pays no income tax at all.

In addition to the revenue sources already mentioned, a citizen dividend could also be funded through government ownership of large percentages of the financial system (currently part of the Bush/ Paulson financial plan!), essentially channeling those profits across a broader level of society -- profits that had heretofore been limited to a minute percentage of the population.

Finally, we can work on an international level to create a regime of debt forgiveness for all nations, including industrialized nations such as the United States, in order to free future generations from the shackles of unsustainable levels of debt.

Wouldn't this all be inflationary? Well, if George Bush's policies have done anything they have proven the resiliency to the modern, productive economy to inflation; Bush has, in fact, increased federal spending more than all previous president's combined, with relatively minor impact on inflation. To be sure, inflation can show up in economic bubbles (i.e., stock or real estate), as we have just experienced but a systems approach could model what those potential bubbles are and address potential problems with sound policy. The same level of analysis could be brought to bear on the international impact of such policies. But if we taxed intelligently, and channeled our resources from a war economy to a green and virtual one (i.e., the next level of the Internet), we could very well find ourselves with increased wealth, reduced deficits, massively reduced poverty and homelessness, and a much happier population that should able to avoid to a great extent the downside of inflationary bubbles.

To date, all efforts toward guaranteed income, including Social Security and minimum wage, have been beneficial for the overall health of the economy, and Social Security has helped millions of retirees be more self reliant.
Would such a scheme actually cause more wealth? The recent economic stimulus package (2008) showed us an example: while GDP shot up by at least a couple of percentage points due to the stimulus totaling perhaps 'a mere' US $100 billion in Q2 2008, massive injections of liquidity by the Fed into the banks totaling hundreds of billions (through loans) during the same period did not serve to un-freeze the credit crisis because the banks did not loan the money but instead hoarded cash, and we were in recession by Q3. In short, people spend money out of necessity while institutions, if lacking direction, will tend to hoard cash out of fear. This behavior is a microcosm of what a larger move toward economic democracy could portend if we unleashed the power of a citizen dividend.

But do we 'deserve' a basic income and/or dividend? According to Robert Reich in his recent book Supercapitalism:

" American is far more productive than it was 20 or 30 years ago, but most people haven't shared much in the bounty. Had median household income continued to grow at the same rate productivity grew over the last thirty years, the typical household would have earned $20,000 more in 2006 than it actually did."

Given these statistics, a $10,000 or even $20,000 a year citizen dividend begins to make sense.

At first, one might cringe that the idea of a citizen dividend and/or BIG is too socialistic and makes the people much too dependent on what is essentially a universal government handout. But in a technological age, when the romanticized, agrarian-based self-reliance of some of our country's founding philosophers such as Thomas Jefferson and Henry David Thoreau is an ideal that can never be realized, a universal, no strings, guaranteed income could in fact create a kind of stable post modern economic infrastructure that would actually enable self reliance to flourish. To date, all efforts toward guaranteed income, including Social Security and minimum wage, have been beneficial for the overall health of the economy, and Social Security has helped millions of retirees be more self reliant. Why shouldn't a citizen dividend/BIG have the same kind of effect? By the way, early in the last century conservatives fought long and hard against both Social Security and minimum wage, and certainly have been proven wrong on both fronts.

Economic Democracy is simply an extension of the legacy of Emerson, Thoreau, Gandhi, Martin Luther King Jr. and others into the realm of economics ...
One of America's most influential (and underrated ) philosophers, Ralph Waldo Emerson (the founder of the American Transcendentalism), would in fact be quite happy with a movement toward a citizen dividend, basic income guarantees and Economic Democracy, even though at first this might not seem intuitively evident. I mention Emerson because he is so important and fundamental driver of many modern progressives, including (in the United States) Martin Luther King Jr. and thus Barack Obama. Emerson, along with David Thoreau, literally forged the unique idea of American individualism and self reliance, the use of non-violence as a tool for change, and the need for education to be student-centered. And this student-centered approach to education is one of the primary reasons why American society is so much looked to for creativity and innovation. It is largely because Emerson and his colleagues stressed the right and need for individual awakening and the nurturing of the individual creative spirit that the American society is so innovative and flexible. And it is because of the creativity and flexibility that we have fostered Universities that are, to this day, the best in the world and, one could argue, the direct result of the educational influences of the Boston intellectuals such as Dickenson, Alcott (both Bronson and his daughter Louisa May), and Channing that were the contemporaries of Emerson's.

Economic Democracy is simply an extension of the legacy of Emerson, Thoreau, Gandhi, Martin Luther King Jr. and others into the realm of economics (Gandhi, King and Thomas Paine in fact supported a guaranteed minimum income!), allowing us to create a bedrock of economic freedom and stability, enabling people to pursue a variety of individual goals outside of those that are 'productive' in the eyes of those that control capital. By creating an guaranteed national citizen dividend, quite contrary to creating a citizenry content to 'live off the dole' people would instead turn to a myriad of business, creative and personal pursuits that will in turn generate massive economic growth in areas that are fostered by the desires of individuals for personal fulfillment, a movement toward green economics and virtual economics, and away from the shallow, consumerist, controlling and profiteering agendas of a the capitalist elite. While a majority of people would use the dividend as a supplement to a larger income (thus the idea of 'living off the dole' is a myth), many would also pool their resources and begin, for example, communities dedicated to local and individual improvement, philosophy and the arts, alternative universities and media (all via a new level of the Internet, AKA Internet II), and a plethora of other enterprises as yet unknown that could be steered, with enlightened leadership, toward a sustainable future. Even if a section of the population chose simply to live off of their guaranteed income, those people would by design need to choose a simple, more environmentally friendly lifestyle maybe not such a bad thing in our current age. Moreover, less people in the labor pool could force more innovation through more production software (empowered by Internet II) and other advances in technology such as robotics.

In short, many biases against so called 'socialist' ideas are cultural, and are the result of an implicit, long-term propaganda effort that allows the purveyors of the economic status quo to control the range of and access to ideas via the media.
Again, this is not socialism in the Soviet style. Why? First, and foremost, while any dividend or BIG would be guaranteed, the government would not directly influence how it was spent. This makes it, in this sense, a market stimulus that would drive market demand. It is only because the American population has been force fed by the current, corporate-owned media to fear of anything hinting at the socialized, and that most truly progressive economic ideas are completely locked out of the debate within the mass media, and as a result that people are clueless as to range of options in front of them. With the Internet, and its democratization of ideas, many people have been supplementing their corporate media experience with Internet searches that broaden their perspective and allow them to see that there are indeed alternatives to the current system of finance capitalism that is patently unsustainable even in the eyes of a ten year old. Even some of the pundits of the corporate mass media are getting that point, whether that is Lou Dobbs or Glen Beck of CNN or those within Fox News and MSNBC. And while Glen Beck and Fox News would not necessarily support the ideas of Economic Democracy, they should certainly respect the choice of the people to head in that direction.

In short, many biases against so called 'socialist' ideas are cultural, and are the result of an implicit, long-term propaganda effort that allows the purveyors of the economic status quo to control the range of and access to ideas via the media. Rather than trap people in the false promises of credit-laced prosperity which creates an incredible reliance on the financial services sector, becomes demeaning to people over time, and creates an ever-growing reality of income inequality, why not provide basically a no-strings applied grant or dividend that, coupled with an intelligent morphing of bankruptcy laws into debt forgiveness programs including debt forgiveness on the national level becomes a de facto investment in people that will mitigate income disparities and, ironically, as described, create a better opportunity for overall prosperity than we currently have. We can look to the third world to micro-lending and grants as examples as to what people can do if given even a modicum of support and incentive. Moreover, it is precisely this investment in people and their potential that Emerson and Thoreau would support, because it is the power of the individual that they sought to unleash. Certainly Emerson would cringe if he were to learn that we launch our best, young, university-trained minds into the workforce and their post-educational life not with a sense of hope and opportunity, but often saddled with huge educational debt, sometimes mounting to hundreds of thousands of dollars!

We should move forward with these ideas now, and create an economic future for ourselves and our children that is worth living. I for one am sick of watching the DOW move up and down 500 points on a regular basis like some annoying child trying to constantly get my attention. It's time to wake up and smell the credit card offer for what it was and, as adults, introduce some much-needed maturity into the playground.
The ideas of Economic Democracy will not eliminate individualism, self reliance and capitalism. Rather, they will enhance individual potential and democratize capitalism much as the Internet is and will continue to democratize media and is itself an experiment in the power of individualism. And the result will be for the benefit of the many over the long term.

It is time we "reset" the world economy and shape a new model of market-based, hybrid public-private social capitalism, and do it quickly for the sake of our long term survival.

Martin Luther King Jr. spoke of this kind of hybrid or balanced economy:

"Communism forgets that life is individual. Capitalism forgets that life is social, and the Kingdom of Brotherhood is found neither in the thesis of Communism nor the antithesis of Capitalism but in a higher synthesis. It is found in a higher synthesis that combines the truths of both".

And it is a stable synthesis of the social and the individual economic requirements that we should focus on moving forward, for our emphasis on the short term, while seeming to be quite the joy ride to some, has left the rest of us holding the proverbial bag. We might look back to Martin Luther King Jr., and forward to Barack Obama and Congressional progressives, for those ideas.

In 2006, the basic income guarantee was in fact proposed on the national level by State Representative Bob Filner (D-CA) as H.R. 5257, supported by author Matthew Rothschild. Moreover, economists such as John Kenneth Galbraith and even Milton Friedman have supported the idea of BIG.

We should move forward with these ideas now, and create an economic future for ourselves and our children that is worth living. I for one am sick of watching the DOW move up and down 500 points on a regular basis like some annoying child trying to constantly get my attention. It's time to wake up and smell the credit card offer for what it was and, as adults, introduce some much-needed maturity into the playground.

For further reading you can Google: Economic Democracy, Citizen Dividend, Basic Income Guarantee (BIG), Systems Thinking

 


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