The economy is sometimes referred to as an entity outside of human control – it isn’t. We control the economy through policies and practices in each nation. The last half century focussed on growing the economy at the expense of all else from social care to the environment. We’ve seen massive growth in inequality alongside easier access to consumer growth. Given the state of the planet we know this won’t work for much longer. Accordingly, it’s time to rethink what we do to support economic growth and what kind of world we want to live in.
Meanwhile we could begin to boost quality of life simply by tracking it more explicitly: instead of focusing government policy on boosting GDP (the total dollar value of all goods and services produced domestically), why not aim to increase?Gross National?Happiness?— as measured by a selected group of social indicators? These are ways to make economic shrinkage palatable; but how would policymakers actually go about putting the brakes on growth? One tactic would be to implement a shorter workweek. If people are working less, the economy will slow down — and meanwhile, everyone will have more time for family, rest, and cultural activities. We could also de-financialize the economy, discouraging wasteful speculation with a financial transaction tax and a 100 percent reserve requirement for banks.
Ontario Premier Doug Ford was elected earlier this year and already started implementing his plan to increase inequality in the province. Obviously, this is a bad a plan. One of the things Ford cancelled thus far was the basic income pilot program which was praised around the world, and before the study showed results Ford axed. As a response to this stupidity, CEOs have responded by demanding that the basic income pilot continue and that the concept of basic income needs support. The good thing here is that CEOs are openly supporting basic income despite the “pro-business” Ontario government stopping the basic income test.
Here’s part of the open letter from CEOs to Doug Ford:
As Canadian business leaders, we urge the Ontario government to continue the Ontario basic income pilot. We see a guaranteed basic income as a business-friendly approach to address the increasing financial precarity of our citizens and revitalize the economy.
It is urgent that we let this pilot run because we see basic income as part of a solution that could help Canadians stay competitive in the face of:
Accelerating technological job displacement due to advances in automation, software, and AI1
Globalization of jobs which has gone beyond manufacturing and textiles to entry and mid-level information work2
The ongoing transition of work to part time, contract, and gig-work3
Winner takes all markets where companies such as Amazon are absorbing greater shares of economic activity4
These global trends are causing structural changes to the economy that are depressing wages,5 reducing the number of middle class jobs available to Canadians, and affecting a decline in entrepreneurship.6
Attacks on unions isn’t anything new, even when workers are asking for safer conditions or a little job security. What is new is that economists are starting to realize that we need stronger worker groups to advocate for labour or the economy as a whole suffers. Over the last few decades we’ve witnessed the rise of massive corporations that bully governments and workers; inevitably this process will gut the productive parts of planet (with fantastic short-term gains!). So, if we want our economy to do well for decades on end we need to ensure that all people involved in it get a share of the benefits.
A complementary approach would be to increase workers’ power. Historically, this has been most effectively done by bringing more workers into unions. Across advanced economies, wage inequality tends to rise as the share of workers who are members of unions declines. A new paper examining detailed, historical data from America makes the point especially well. Henry Farber, Daniel Herbst, Ilyana Kuziemko and Mr Naidu find that the premium earned by union members in America has held remarkably constant during the post-war period. But in the 1950s and 1960s the expansion of unions brought in less-skilled workers, squeezing the wage distribution and shrinking inequality. Unions are not the only way to boost worker power. More radical ideas like a universal basic income—a welfare payment made to everyone regardless of work status—or a jobs guarantee, which extends the right to a government job paying a decent wage to everyone, would shift power to workers and force firms to work harder to retain employees.
We’ve all heard about how downtowns have failed in smaller cities while big box stores like Walmart succeed; what we don’t really talk about is why and what’s the solution. First we need to establish that suburban big box stores are horrible for people and the economy (which is easy); then we need to address those core issues. The folks over at Strong Towns do exactly that and recently published a great piece exploring how the costs of running a big box operation from the perspective of a city is high. The solution then should be easy: reinforce local economies for success.
And we should also recognize where our wealth really comes from. It comes from our downtown and our core neighborhoods (those within walking distance of the downtown). It certainly doesn’t come from people driving through those places. It doesn’t come from people commuting in. It doesn’t come from tourists or developers or the potential of land development out on the edge. Our wealth — the wealth built slowly over generations — is slowly seeping away in our downtown and its surrounding neighborhoods.
Put these things together — the need to build resilience and the historic wealth that still remains in our core — and the strategy becomes too obvious to ignore: We need to piece our economic ecosystem back together. We shouldn’t spend a penny on the mall — we should be willing to let it fall apart and collapse if the market can’t support it. But we should support those investments in the core that are already paying our bills.
And here’s the really sweet thing: the downtown doesn’t need millions of dollars of investment. There are some trying to force that down the city’s throat, but we don’t need it. It’s already the most successful area in the region. We just need to start reconnecting things.
Usually when economists talk about efficiencies they means firing people so executives can get better returns, this time efficiency is found by using electricity in smarter ways. The myth that increased energy consumption means a better economy has been “decoupled”. The global economy is using less energy for every dollar produced – a sign that economic progress doesn’t have to mean the destruction of the environment.
The EIA also measured energy productivity, which is the inverse of energy intensity, measuring units of economic productivity for every unit of energy consumed. The world also saw significant increases here over the past two and a half decades. China came out far ahead, with a 133 percent increase in energy productivity between 1990 and 2015, largely due to the fact that increases in economic output were twice that of increases in energy consumption. The US saw a 58 percent gain in energy productivity over the same 25 years as well.