Monday, March 31, 2014

Sacred Economics


I'm reading the Sacred Economics right now and the timing couldn't be more perfect because I've been feeling very discouraged about our future -- the time will soon come when the planet will no longer be able to support all 7 billion of us.  I'm troubled because I am complicit to this system of unfettered growth, exploitation,  over consumption and resource depletion.  And the only option that seems viable to me right now is to check-out of the system altogether -- homestead and become self-sustaining.  But without electricity how could we realistically survive?  I have no life skills.  I have office skills FFS.  I am not resilient either.  Nor do I feel that separateness is the solution. So instead I just throw up my arms and resolve to wait for my families eventual demise.

But then I started reading this book and it put forth some solutions that 'could' work.  Today's problems were created from growth which is necessary to keep money in circulation. I'm finally beginning to see the problem -- money is created from debt, so that there is always more debt than actual money in circulation.  Repayment of debt (principal + interest) means that more goods and services need to be created, regardless if we truly need it.  Hense the need for growth.  Today we live in a world where everything is for sale.  Resources have been sucked dry, chemicals have been pumped into our water and air, people have been exploited .... and yet we are not happier.  How ironic is it that more 'goods' don't actually mean more 'goodness'. Externalities, such as the environment, our health, safety and freedom are not built into the cost of anything we consume.  Corporates take their profits and everyone else pays for the mess.  This book proposes embedding the things we hold sacred into the price of goods and services.  For example, the price of strawberries from California would reflect the transportation costs (including road maintenance) to bring them here, the cost of depleting their acquifers and eroding their soil to grow them, and the emissions cost to plant and harvest them such that they would be way more expensive then local produce.  Companies would have an economic incentive to not pollute or exploit.  We would buy less things because products would be built to last, healthy food would be more affordable than junk food and people everywhere would earn a living wage.  Bliss!  A carbon tax/cap and trade system is similar, but only looks at one facet.  This system would factor in multiple externalities. It sounds complicated to implement, but it's the right thing to do.  I believe people want to know the effects of their actions, and want to take responsibility for them.  This system simply makes producers pay for what they currently take from 'the commons', thereby contributing to future sustainability.  It's kind of like an indirect tax -- you pay for what you take, not for what you earn.

The other concept is of negative interest.  Money is the only resource that grows by doing nothing.  Everything else decays.  The author's example:  if I have 12 loaves of bread, I will give you some because I can't possible use it all before it goes stale.  If in the future, you  have extra loaves, you would most likely give them to me.  This is how a gift economy works.  But with money, we have a liquidity preference to hold on to more money (hoard) and not share.  This book proposes negative interest such that money would lose it's value by holding on to it -- kind of like a depositor's tax.  Imagine having to pay to affix postage-style stamps to your money to keep it's value up.  You'd want to spend it on what you need and not accumulate what you don't need. This is a huge mind shift from the current system and sadly I can't see it ever taking hold because those with accumulated wealth stand to lose the most.  I'm just starting to read the details of such a system and have many qs.  For starters, how would the financial system work?  The author explains that banks would make money by lending at zero or negative rates which would be less than the rate of depletion (e.g. loans at -5% interest is better than -7% depletion).  Borrowing money would not create more money and growth would occur naturally rather than out of necessity (to pay down debt).  It's kind of an out-there concept, but one that's starting to make sense for me.

Looking forward to see if other share these ideas and if they have any hope of becoming a reality.  Because our current system is not working and will not last.