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Our current economic crisis is a result of the commonly held view that individuals can advance themselves financially while ignoring the effects of their actions on others. In our lending industries, in our manufacturing sector, and even in our service professions our emphasis often has been on doing well rather than doing good – making money instead of taking pride in the quality of the products or services offered. We also have been on a binge of unsustainable overspending – based on borrowing – which has resulted in an overuse of natural resources. This way of seeing and interacting threatens to be our undoing.
We create a sustainable economy when we consider the long-term effects of our actions on others, ourselves and our environment. If we promote respect and cooperation between people – and between us and our planet – we will live in a more stable world where prosperity will be the byproduct. The way out of our economic dilemma is seeing that cooperation – rather than competitiveness – is the route to long-term survival. Saving our economy – and thus ourselves – depends on working together to meet our common human needs. We all benefit when our economy functions well. Our commitment to this vision for our planet is what will determine the viability of our economy.
Many economists over the last generation have emphasized a free market economy, but a totally free market has not been effective at meeting the needs of a vast majority of people. As Adam Smith warned, one danger of a free market is the bulk of wealth ending up in a few hands. This impedes the circulation of goods and services that makes an economy viable. The accumulation of money for its own sake is self-defeating. A viable economy promotes a healthy economic flow between people rather than only the creation of wealth for some. The American dream has long been that we can “pull ourselves up by our bootstraps” – that we can prosper with hard work and some luck and little or no help from others. But in the real world everyone depends on a network of support to succeed.
Prosperity for any nation is greatest when the largest number of people prosper. When a disproportionate amount of funds are held by relatively few individuals, the number of customers for products and services shrinks. In recent decades the buying power of the average American has steadily declined. We now have the greatest disparity in income between the wealthiest individuals and the rest of our population since just before the Great Depression. Economies expand or contract based on whether people – who are the customers that businesses need – can afford the goods and services they require. As people have less money to spend, more businesses fail and more unemployment is created as we spiral downward toward economic instability.
The economy of any nation is like a human body – it requires good circulation throughout to remain healthy. An over-accumulation of funds in any one segment creates imbalances that threaten the health of the whole. A viable economy demands a spirit of working together to sustain the financial flow that creates jobs and allows funds to trickle to – and then up from – the majority of people to sustain our businesses and those they employ. Continued viability then requires a reinvestment of those funds – especially by those who are at or near the top of the economic scale – to create long-term sustainable jobs. We cannot rely on continuous infusions from the outside – in the form of borrowing – without threatening our economic health, just as individuals cannot indefinitely use new credit cards to pay off debts. As our debts mount a growing portion of our productivity goes toward paying what we owe rather than meeting our needs.
In challenging economic times money doesn’t disappear. It remains concentrated in the hands – or accounts – of those who made the latest sales. There are individuals who do well even in poor economies. For some people, the word taxation implies a drain of resources, but investment in jobs that bring prosperity positively affects everyone, and in difficult times a huge program of reinvestment is required. This has worked to reinvigorate our economy in every major war, with the exception of the wars in which we are currently involved. In 1993, during a serious economic downturn, the result of investment was a record recovery for our country. In California, taxes were raised under two recent Republican governors and the economy recovered. Because of our unwillingness to invest in ourselves we have gone from being a creditor nation to being a country mired in debt.
Many of us can – and should – be called upon to contribute a larger amount of our income toward investing in the creation of jobs on a massive scale. This will create a positive economic climate and will bring our businesses back into profitability. Our investments will more than be rewarded by a resurgent economy that benefits everyone. Imagine, for example, that taxes were to increase 10% for people in higher income brackets and then that money is invested in creating jobs that serve the needs of society. People with those jobs will make purchases; businesses will improve their profits; the stock will market go up; the economy will once more be on a solid footing. A small investment thus is amply rewarded with positive results for those at all levels of society.
An important element of a sustainable economy is offering quality goods and services. If I sell cars or operate a bank, I will only succeed in the long term if I have a base of loyal customers who are satisfied with what I provide. If my customers like and can afford what I offer my business will thrive, but if they become dissatisfied with my goods or services my business will falter. I will need to lay off workers, who also will reduce their spending. When this happens on a large scale the economy begins to decline. Thus jobs are more stable in industries that manufacture quality products. If these products are made using sustainable energy – rather than energy that is in limited supply – still more long-term jobs will be created.
A sustainable economy can only be achieved within the limits of what our natural resources can support. We seem to believe that more and bigger is always better, and there is no end to the list of things we pursue in the name of comfort and convenience. Our environment is showing the strain of our perpetual quest to fulfill our ever-expanding desires. We use more resources than our planet can replenish. We must hold our consumption to what we can produce without overwhelming the resources that sustain us. This means being willing to do with less so that our children and their children can have a viable future. We can create environmentally friendly products and services that do not threaten our future. We must continue developing innovative means of producing materials and energy that revolutionize our communications and how we get around.
This will lead to new industries with millions of jobs that further strengthen our economy. We also can prepare ourselves for the effects of possible disasters such as earthquake or drought, which again will lead to new industries and jobs.
To ensure a sustainable economy our government must provide regulations to curb those short-sighted companies and individuals who accumulate excessive profits at the expense of those they should serve. Also, it is the legitimate role of government to ensure that we contribute to maintain the things from which we all benefit – roads, bridges, schools, police and fire protection, national security, prisons, healthcare, and programs for those who cannot support themselves. These are investments that pay benefits for everyone because support for each of these industries creates jobs. Those with new jobs then will spend money and pay taxes which will help to maintain the economic flow that allows everyone to succeed. Our economy can get moving again quickly by soliciting bids for programs that promise to create the most long-term jobs, and then loaning money –if needed – to allow these programs to begin.
We must set aside our partisan ideologies and do what has been historically shown to lead us out of economic crisis. Civilizations collapse when they fail to adjust entrenched habits to changing realities. We must vigorously take on the economic and environmental challenges of the present to have a viable and sustainable future. To do this will take courage and a commitment to a vision of how the lives of all improve when we work together. We can choose a competitive world or one of cooperation for the common good that will improve the viability of our economy.
A basic tenet of capitalism is individual success, hard fought and hard won. But no one succeeds in a vacuum. Economic success for our society – including our companies and entrepreneurs – depends on a well of support from customers that continuously flows upwards to sustain those at all levels. When this well dries up the financial structure of our society stagnates. The basis of economic stability is the creation of sustainable jobs for a large number of people who become customers of the very industries that employ them. This is the form of capitalism that sustains nations and their industries, as well as the inhabitants of those nations.