The Happiness Factor: What’s the Point of Having an Economy anyway?

Globalization is widely touted in the mass media as both inevitable and good. But why? It is claimed that products are more efficiently produced, labor is more productive, technology is improved by greater innovation, and capital is more efficiently allocated. But wait, there’s less!

According to Paul Hellyer, former Deputy Prime Minister of Canada,

“Globalization is really a code name for corporatization. It’s an attempt by the largest corporations in the world, and the largest banks in the world, to re-engineer the world in such a way that they won’t have to pay decent wages to their employees, and they won’t have to pay taxes to fix potholes and to maintain parks, and to pay pensions to the old and handicapped.”

Corruption of Economic Purpose
We have to ask, what’s the point of having an economy anyway? Is the purpose of an economy to serve the special interests of giant transnational corporations? Or should it be to serve the needs of the human population? (No, corporations are not persons.) I would have to answer that the only excuse for having a particular economy is to better support the happiness of the people. When basic needs are met, happiness is maximized. How is that achieved? If an economy provides enough jobs and income for people to live comfortably in a stable safe environment, I’d say it has succeeded.

If an economy grows at a healthy pace by eliminating jobs and reducing household income of ordinary workers to secure higher corporate profits, then it has failed. If work is available and wages are livable, then it has succeeded. Social science research has shown that income improves happiness only up to the point of a modest middle-class life. After that, it fails to contribute to happiness. Today’s accelerating and extreme disparity in wealth and income between the 1% and the 99% reflects a dangerously defective economy.

In fact, the wonders of globalization all accrue to the giant transnational corporations that control the world economy. These enormous organizations are constrained only by nations’ laws meant to protect people and the earth. Environmental laws, labor laws, safety laws, all protect populations and ecologies from damage due to uncontrolled exploitation. The “globalists” make international trade deals in secret to exempt themselves and override the protection of people and the planet. Having bought off Congress, they “fast track” legislation that circumvents national sovereignty to liberate capital, enslave labor, and exploit the planet.

NAFTA (North Atlantic Free Trade Agreement) and now the “Trans Pacific Partnership” (TPP), are secretly negotiated, then “fast-tracked” through Congress, without deliberation. They actually take precedence over the sovereignty of nations that agree to them. Their corporate courts can overrule national environmental, labor and safety laws. Nothing is allowed to interfere with the freedom of international capital to exploit labor, and generally plunder the planet. Does that contribute to human happiness? In this equation, people are the dependent variable; their happiness is irrelevant. Human needs and happiness are not the determinants of globalization; they are its victims.

An Intentional Economy
For an economy to be morally justified, it must serve human needs and not destroy the ecosphere upon which we all depend. Human survival in the very near future will depend upon whether we can re-cast the economy to reflect human needs under local conditions. That will mean distributed food and energy production, re-designing technology to fit the needs of communities, and reorganizing the flow of capital to serve the needs of local democratic ecological economies. All of these things will require both lots of labor and a major reallocation of capital.

A huge amount of imaginary capital exists today in the “Too Big to Fail Banks.” That phantom “money” was created by the Fed buying the largely worthless debt of the Big Banks to cover their speculative losses. All that must simply be abandoned and a banking system re-created to serve local and regional needs for investing in ecologically creative ways. That alone will create many jobs. An ecological economy will directly serve the needs of humans where they live while intentionally reducing carbon emissions. Such choices will build a survivable future for people and the planet’s diversity of species. An intentionally ecological economy is necessary to sustain the environment we depend on. Any chance for human happiness depends on it.

In the New Ecological Economy, if we will have it, industrial and trade policies will be determined by human needs and the necessities of sustaining the ecosphere of which we are a part. There is simply no getting around it. But to support human happiness, who would want to? Today, those who would traffic in any kind of human misery for a profit still rule the global corporate-growth economy. Any movement in the exact opposite direction toward building an economy intended to serve human happiness must begin from the ground up.

Independence: Illusion and Reality

I get It. We’re celebrating the American Revolution and our independence from England today.  But the idea of independence has an odd history in the U.S.A. We treat the concept as a cultural icon, we fight “for freedom” around the world – or so we claim. We give little thought as to the real functions of any particular war of choice we allow our leaders to start. We live in a bubble of self-congratulatory national glorification. We excuse our elite’s attempts to dominate the world for their profit and power — and our debt. We give a blank check to the military-industrial-congressional complex President Eisenhower so emphatically warned us against in his farewell address.

Independence and Human Rights

So, you could say we deceive ourselves about just how “independent” each one of us really is. We hold up our ideals of personal freedom, free markets, free trade, free press, and freedom from government intrusion in our lives. Yet we willingly submit to the violation of our civil and human rights by corporate and government agencies. We tolerate mass surveillance of every citizen who has a phone, credit card, or computer by the NSA and its corporate collaborators.

We buy the argument that we should not be upset “if you have nothing to hide.” We ignore the fact that “big data” allows mass manipulation. We tolerate congressional oversight committees that allow spy-agency officials to lie to them. We accept police military assaults on homes — modeled on our night raids in Iraq — on “suspicion” that there might be some marijuana present. We endure regulators giving free reign for Big Banks to speculate with borrowers’ money and bring down the economy with impunity. We put up with local homeowners associations micromanaging property owners’ private lives over illusions about ‘property values.’ We permit the oppression of others. We value the “right to be left alone.” But we tolerate unwarranted “stop and frisk” harassment of young men of color and we ignore their mass incarceration.

Interdependence is Real

The contradictions in our misapplication of the principle of independence seem unbounded. But let’s look at what “independence” really means and how it relates to “interdependence.” I think that may give us a clue about why we are getting ourselves into so much trouble, both at home and around the world. In our relations with each other and the planet itself, we assert our rights to plunder everything in sight. But in a finite world where we are already upsetting the ecological balance to where survival is dubious, that just does not work any more.

In practical terms, our independence is an illusion. It doesn’t fit reality. In a more modest framing independence is very important. But what’s the difference? The reality of human “interdependence” needs to be considered. We have been living on the basis of an illusion of total independence ever since the dawn of the industrial revolution. It worked fairly well for the entrepreneurs as long as there was room for expansion. The industrializing nations did invade, occupy, and exterminate native populations all over the world.  They destroyed the independence of others wherever they found it in order to expand their own. That’s how those opportunities were kept available for the “independent entrepreneurs” of Empire.

Conquistadors, robber barons, and pioneers, as well as the likes of Bill Gates, Mark Zuckerberg, Hank Paulson, and Donald Trump have been the prime beneficiaries of independence. Yes, an odd assortment. All of these folks were/are innovative — and often ruthless. One person’s entrepreneur is another person’s oppressor. So called independent actions do not happen in a vacuum. Pure independence would be approximated only by a hermit.

But we must not forget social-economic power; that is what most entrepreneurs seek and gain, usually by using/exploiting others. Our idealism implies that independence is for all. Our political elites pretend to “export democracy” to the world. We equate independence with economic growth, the dominant value of American culture. But that has been achieved by the few dominating the many.

Moral Economy

Underlying it all is the fact that all human life is grounded in one way or another in inter-dependence. The very richest of the 1% are clearly dependent upon the willingness of others – such as banking regulators – to tolerate their “independent” financial speculations. In a moral economy, risk would fall on the risk taker, not the rest of us; only then could he be truly independent.

But a truly moral economy would be based in equitable interdependence, where risk and reward would be shared by all who are interdependent in their relationships. That is not about to happen in the corporate state that has evolved with over-indulgence in an illusion of independence. The most powerful elites control the most powerful institutions that now constrict the independence of “the 99%.” They squeeze the earnings of employees. They conduct mass surveillance to “manage” the population. They impose various restrictions on political participation to protect their power. To attain true independence we need to establish a morality of equitable interdependence — we have our work cut out. Happy 4th!

Why a Return to Progressive Taxation is necessary…and Right

The accelerating concentration of income and wealth in the upper 1% of the upper 1% of the population and the failure of the “growth” economy to serve the population that supports it, are not only moral questions of fairness. The distribution of income and wealth are also important elements of the health of the economy itself. Between 30% and 75% of aggregate income in the past 30 years has gone to the top 10% and most of that has gone to the top 1%. After the “great recession” of 2008, almost all of new income went to the top of the top 1%. If this trend continues, the circulation of money and therefore the health of the economy will stagnate even further.

It is fortunate that French economist Thomas Piketty’s new book, Capital in the 21st Century, is making such an international splash. Piketty raises fundamental questions about the economy that most economists, in their pandering to the power elites, have avoided ever since crowning Adam Smith patron saint of mainstream economics.

What classical economics, as practiced throughout the industrial era, has ignored is the inherent tendency of capital to concentrate among the wealthiest individuals and corporations, unless mitigated by social policies that assure the broader circulation of money throughout the economy.  It’s really quite simple. The economic power of those who control the most wealth and income gives them advantages that enable them to accumulate wealth at increasing rates, to the disadvantage of everyone else in the economy.  Without economic regulations that dampen the special advantages of wealth, such as the progressive income tax that once benefited the economy, extreme disparities in income and wealth cause all sorts of problems.

The evidence of that destructive process is grossly obvious in the current economies of the industrial nations, especially in the United States. That is exactly what happened before the Great Depression of the 1930s, causing economic collapse due to excessive concentration of wealth among the richest class in America. Yes, class, that concept so long banned from discussion in the U.S. Forget the fancy academic analyses of socioeconomic class and status in social relations. It’s simply a matter of an inevitable distortion of the distribution of wealth and circulation of money when the tendency for concentration is not tempered by some kind of social policy designed to limit concentration by re-balancing the circulation of money in the economy. Such policies were enacted in the 1930s, but, under pressure from the most privileged, have been abandoned, allowing further distortion of income and wealth.

The concentration of wealth and income was moderated when we had a progressive income tax system. The simplest and most practical approach to staving off plutocracy (rule by the wealthiest members of society) and reducing damage to the economy that results from unfettered accumulation of wealth, is to return to a progressive system of taxation of income and the return of the tax on inheritance. There is simply no economic reason, let alone moral justification, for allowing the economy to spin out of control and fail to serve the public interest in order to allow the wealthiest members of society to become that much wealthier, simply because they already have excessive economic power.

At the same time, the obsession with reducing the federal debt by further cutting expenditures that support the general population, such as social security, medical insurance coverage, and public education, serves no earthly purpose other than to make the rich richer. The biggest con of all these days is the one that characterizes the ‘rentier’ class – those who merely make money on the value of the wealth they have already accumulated – is that their income and wealth ought to be protected from taxation because they are the “job creators.” They are no such thing, and their excessive income is of benefit to nobody, not even themselves – you can only spend so much before reaching absurd redundancy.  But the quest for power knows no bounds.

Restoring the progressive income tax would be fit medicine to help restore the health of an economy suffering from the cancerous growth of the ‘cells’ of the richest class of Americans and the corporations they control. The federal revenue gained thereby could be applied not only to the national debt, but to investing the desperately needed transformation of the fossil-fuel driven economy to a carbon neutral economy in order to minimize the damage of climate disruption. After all, it is the 1% and their fossil fuel related investments that have driven us to the brink of climate catastrophe.

Bottom line: an economy is not an economy of the whole society without consistently adequate circulation of money throughout the population.  It is both immoral and foolish to continue on the path of accelerating concentration of wealth to the detriment of the entire society. Privilege and wealth will not disappear with progressive taxation. Look at the post WW-II 1940s and 1950s, when the marginal tax rate on income above $200,000 — the tax rate on the part of income above the first $200,000 earned, and there were 23 brackets below that with progressively lower rates — was 91%; adjusted for inflation, that would be the rate for income above $2.41 million today. We should have such a healthy economy today!