Moving Beyond the Economics of Neediness

One of my daughters was angry with me yesterday. She was actually frustrated with the weeks of being shut in, away from her friends and activities, not able to live with the innocent normalcy her life has been gifted thus far. In her anger, she told me to, “Stop telling me to be grateful.” I share her frustration.

As a family, we spent time recently discussing Anne Frank. It wasn’t an attempt by parents to shame away selfish feelings — feelings I know I share — but to keep some perspective, appreciating how luxurious a quarantine that still allows us to move about, play music, watch movies, plant flowers, and enjoy the sunshine in peace and security really is.

The great debate of the moment is over how much economic damage to suffer in order to slow the spread of the coronavirus. The great irony is that we are uniquely fragile in both our system of economics and human health. We have allowed financial fragility to build up over decades of suppressed feedback, pain we have put off by bailing out corporations, enterprises, and endeavors that should have failed and been replaced by stronger operations.

We’ve done the same in the human realm, allowing fragility to accumulate by saving and extending the lives of people weakened by diseases and other ailments. These are people that, in a prior age, would have passed away, but now can live long and fulfilling lives. No decent human would deny the time given so many, nor the life lived in that time, just so the present stock of humans could be more resilient to this particular virus.

I draw this comparison so we can recognize that our natural instinct — the very nature that makes us so beautifully human — is to resist the limitations put upon us. One of the most common aspirations shared by humans is the power to remand death. Indeed, this very weekend, my family and I will joyously celebrate a religious faith based on such a promise. Yet, even Christians know that death is inevitable, that we must all confront what it means to live with limits.

"In recent decades, our debt has risen not out of shortage but out of surplus, excessiveness. Our society is not suffering from famine, but it must solve another problem—how to host a meal for someone who is full."

-Tomas Sedlacek in Economics of Good and Evil

Years ago I put together this Strong versus Fragile graphic as a way to help people think about the nature of productive cities. In the rain forest, you have a complex, adaptive system that has emerged in a way that is highly resilient and adaptable. The corn field, in contrast, is a managed (not emergent) system based on the goal of efficiency, constantly increasing the amount of output for a given unit of input. The corn field is fragile; one hail storm, a few weeks of drought, or a swarm of locusts and it's gone.

We might think we prefer the human equivalent of the rain forest, but do we? 

Let's pretend we were made king/queen of a portion of a rain forest and, magically, we had the authority and resources we needed to right the wrongs, correct the deficiencies, that we saw in the world around us. What would we do?

As we delved into the situation, we would quickly realize that the process of emerging, of developing a resilient equilibrium, is a brutal one. In the rain forest, one creature's cruel death is the essential nutrients for many others. A tree grows strong and creates an ecosystem of winners and losers. Another tree falls and an entirely different system of winners and losers takes over. Would any of us have the wisdom to decide which winners are best? Which is the optimum path for that moment in time?

Or would we, as ecologists suggest, let well enough alone so that the infinitely complex interactions that give the rain forest its adaptive resiliency can run their course?

Since World War II, Americans have seemingly had the power and the resources to right the wrongs, correct the deficiencies, in the world around us. Whether the wrongs identified emanate from concerns of the political left or the political right, there have been enough resources available to move ahead as far as political consensus would allow. There is something noble in this -- who doesn't want the world to be a better place -- but also something dangerous and destructive. Just as with meddling in the rain forest ecosystem, how do we know what is actually the best course of action? How do we know what set of winners is optimum? How do we weigh the future catastrophic impacts of a decision against the present level of harm?

Enter modern economists. If there is one thing American society has been able to achieve broad consensus on it is that more growth provides us with more resources and, whatever problems we are actively trying to solve, more resources are really helpful. The paradox of our economy, as we've discussed this week, is that we create more collective resources -- growth in GDP -- by individually consuming more resources. This system worked for a long time -- we leveraged individual appetites to accelerate collective growth -- but now, as Czech economist Tomas Sedlacek suggests, we've reached the point where individuals are unable, or unwilling, to consume enough to keep it going. From the Economics of Good and Evil:

Economics mainly counts on situations when a person is unsaturated and would like to consume more (and also make more money). What would economics look like without this? Our resources have grown so much that we can allow much more than full satiation. Economics is the study of “allocation of scarce resources,” but what happens when they are in abundance?

Reflexively, this may sound wrong to you — so where are all these abundant resources, Chuck? — yet, by any modern or historical comparison, Americans live in the most affluent country in the most affluent time in human history. The fact that our economy is crashing down around us is not because we have had too few resources. If anything, it’s because we’ve had too many.

Today, it feels like we're stuck in a negative feedback loop. We have so many problems to solve. The way we go about solving all these problems -- largely top-down, centrally directed efforts -- always requires more and more resources. We obtain these additional resources through growth, by accelerating the level of activity in our economy. Yet, now we struggle to get our economy to grow sufficiently because we can't (due to debt or other obligations) or won't (due to choice or insecurity) consume at the necessary rate.

The ultimate irony is that, in this system, the only way we have to satisfy our needs is to increase our neediness.

Photo from Wikipedia.

I've spent a great deal of time thinking about the business model of a newspaper. A local, family-owned newspaper is the ultimate invisible hand kind of undertaking. It is a business proposition that, if done well, is also a great service to the community. I've known a number of local news publishers who make a good living reporting on the local comings and goings, breaking the occasional big story, crying with families when they have tragedy and celebrating success when it is found. In time they often come to own a building, maybe some equipment, and can someday pass on the entire enterprise — with some modest gain — to a new generation. Few find riches but many have experienced enough success to make them among the privileged and powerful within their communities.

Now take the modern corporate media company. I won't suggest that these endeavors don't also struggle to be a service to the community, but the risk and reward are much different. It isn't adequate for a publicly traded company to simply do good work and make a modest profit year after year. The dictates of shareholders and debt markets are that profits must increase at sufficient rates year after year. New efficiencies must be found. New opportunities must be exploited. Capital must be leveraged by a leadership team required to return value to shareholders.

Pretty soon, the paper lays off senior reporters, the ones with sources and community knowledge, in a cost cutting measure. Then the team that actually designs the paper, the ones who grasp local nuance and culture, are let go so assembly can be outsourced. Pretty soon, the software used to track and file stories is standardized to the low bidder, even though it doesn't really work. And on and on and on.

The product here — a local newspaper — is very similar between these two approaches, and they both exist in a market-based system, but the motives and incentives in the underlying production are vastly different.

Here’s my question: Would our lives be worse off if our local news was brought to us by a locally-owned newspaper rather than a publicly-traded corporation? It's hard to argue that it would. Yet, if it were locally produced, that paper would be free of the continuous need to increase efficiency, the constant pressure imposed on it to increase profits and expand margins. Sure, a good business owner would still do some of that, but as part of the community they would also balance those urges with the other competing interests, many of them social and without direct economic payoff. For the local owner, if 3% year-to-year growth materialized, that would be great. If it didn't, that wouldn’t be a catastrophe.

We cannot have a centralized, corporate-driven, debt economy without continuous growth, but we cannot sustain continuous growth. Our efforts to try and avoid that reality, to extend things a little further, have given us the ridiculousness of the current fiscal and monetary policy. Across all of society we have low savings and high debts, yet interest rates — the equilibrium between savings and investment — are at historic lows. Today we are literally watching an insolvent government bail out insolvent corporations, so they can employ insolvent people, so they can pay their insolvent landlords, so they can continue to make their debt payments to insolvent banks.

We need a different model, one that doesn't require continuous growth. One that doesn’t require us all to be so needy.

That model is only going to be found at the local level, by localizing as many of our endeavors as possible. As a matter of public policy, we should be doing everything we can to end the subsidies and incentives that promote the big and the centralized — banks, corporations, governments — and focus our efforts on seeding the small and localized wherever possible.

If we do this, the economic system that emerges will be more moral. More just. More human.

From The Economics of Good and Evil:

In our constant desire to have more and more, we have sacrificed the pleasantness of labor. We want too much and so we work too much. We are by far the richest civilization that has ever existed, but we are just as far from the word “enough” or from satisfaction, if not further, than at any time in the distinct “primitive” past. In one sentence: If we ourselves did not have to constantly increase GDP and productivity at all costs, we would not have to also constantly overwork ourselves in “the sweat of our faces.”

I'm going to return to the rain forest because I suggested earlier that locally complex systems are brutal, that their resiliency is the byproduct of frequent failure and adaptation. How can a system like that be more just? How can we call something like that moral? There are many of you eager to vote for your brand of tyrant for president, someone who will enforce your version of righteousness and morality on the country, often because you don't trust your neighbors to do the right thing.

The rain forest is brutal, yes, but nature is filled with countless examples of altruism. From plants that interlock roots to share water during drought to birds that warn others of danger. Humans are the most social of all species. We're wired to work together. Let's stop trying to bypass that wiring.

I end this series with one last quote, this from John Maynard Keynes, on what life could be like in an economy where growth is good, but not the only good, where people are more than consumers, more than some theoretical Homo Economicus, where our fate is not directed by economists or central planners but by our relationships with each other:

When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues.

I see us free, therefore, to return to some of the most sure and certain principles of religion and traditional virtue—that avarice is a vice, that the exaction of usury is a misdemeanor, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow.

We shall once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin.

I wish you all a weekend full of delightful people and deep enjoyment. Let’s come back rested and dedicate ourselves, in this time of transition, to the ongoing effort of reducing our neediness by building a nation of Strong Towns.

(Top photo from Wikimedia.)

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