Wednesday, March 18, 2015

Semi-Secret Fundamentals of Economics

If I could walk into the budget talks going on I would like to say, “I just thought I should remind you of the fact that two plus two equals four; it always has and it always will. Furthermore there is nothing any of you will ever be able to do to change this fact,” then turn around and walk back out. Judging by the way they’re handling things I don’t get the impression they understand that. OK perhaps it isn’t quite that simple but they’re still ignoring an awful lot of incredibly simple facts that should be obvious to them; and this isn’t limited to the current budget talks it has been going on for decades; so I’ll get back to what I would prefer to say. 

The free dictionary describes the Fundamentals of economics by saying “The study of how people produce, trade, and use goods and services. Economists look at how different actors, such as individuals, companies, and governments, interact with one another to maximize the fulfillment of their needs through the use of scarce resources…..” (Source; the free dictionary by Farlex)They go on to consider different ideological points of view without saying quite simply, “economics is a system used to pool the resources of a large group of people to improve the quality of life for the participants.” This seems fairly simple and it is hard to imagine how anyone would refute it yet there are probably many people that would do just that judging by the way many of the most distinguished economists address the issue. 

Most economics go on to talk about the stock market, the unemployment rate, the GDP and the inflation rate; they rarely if ever do much to talk about whether or not the economy is actually doing much to improve the quality of life for the majority. The Capitalist ideology spends little or no time considering the best interest of the workers, the consumers or the environment. They often seem to imply that all economic activity helps improve the quality of life without actually considering the evidence to back this up or refute it. If they did so it would be incredibly obvious that an enormous amount of economic activity isn’t designed to improve the quality of life for the majority at all; instead it is designed to maximize the profits for those that control the most powerful institutions. There are several economic indicators that the best known economist discuss over and over again without trying to find additional ones that may have an impact on the quality of life like how much of the economy is based on fraud; the environmental deficit; ways to improve the quality of life that don’t involve economic activity, perhaps instead they involve spending more time with family, conservation, producing goods in the home without trade or simply cooking for yourself instead of eating out. 

Both Dwight Eisenhower and Robert F Kennedy have indicated that they understand that some of these things may not be the best way to consider the economy in the following quotes from more than forty years ago:

"Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product...if we should judge the United States of America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. 

Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans." 

(source RFK quotes 1967) (also cited in “Third World America” by Arianna Huffington)

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone.

It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.

The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities.

It is two electric power plants, each serving a town of 60,000 population.
It is two fine, fully equipped hospitals. It is some 50 miles of concrete highway.
We pay for a single fighter plane with a half million bushels of wheat.
We pay for a single destroyer with new homes that could have housed more than 8,000 people.
(source Eisenhower “The Chance for Peace” speech 4/16/1953)

Both RFK and DDE seemed to understand, at least to some degree that all major institutions in the modern world are interconnected at least partially. They may not all be directly connected but these complex institutions somehow distribute the wealth that we all work together to produce and few would agree that they do so fairly. In some cases simply understanding supply and demand will help; if we spend money on the military then that money is no longer available for consumer goods that improve our life; if more people join the military then they’re no longer available to do the work necessary to produce products and services that improve our life. Therefore it may be a simple conclusion for many that the use of the military should be kept to a minimum; perhaps only for self defense. Of course that hasn’t been the way it has often been presented by others and since I went into this more in other blogs including If war isn’t the answer then what is? I won’t go much farther into it here. It is simple enough to understand that spending a lot of time building cities then blowing them up and shooting people then giving them expensive medical care to save their lives when possible isn’t the most effective way of producing an economy that improves the quality of life.

During the middle of the twentieth century the politicians that ran the county understood that there were also some things that the government could do better than the private industry and the recent rush to privatize everything has only confirmed the success, or at least partial success of many of these projects. When Eisenhower was president he oversaw some of the largest road building projects in history. Before that, in the aftermath of the great depression, Franklin Delano Roosevelt initiated many other projects that included providing electricity for many rural areas; building the Hoover Dam; improving many parks and school for the use of many poor and middle class people and the construction of Mount Rushmore. These projects couldn’t have been done solely for the profit of the corporations. Unfortunately they weren’t perfect and may not have done the most that they could have to improve the quality of life but they may have done as much if not more than the private sector does and they included many projects that the private sector would never do at all. In the case of the Hoover Dam it was, unfortunately, used primarily to provide electricity for the Las Vegas area which involves an economy that is based primarily on gambling, which is all fraud despite claims that it is for entertainment; most people don’t find it very entertaining, in the long run, when they lose all their money to a rigged game.

Mount Rushmore may not have been the most effective way to improve the quality of life either but if this type is only a modest portion of the economy it can be a good tourist activity; as the saying goes “all things in moderation.” The point is that once we decide that certain jobs would improve the quality of life then we can figure out the most effective way to ensure that those jobs get done without automatically assuming that one narrow ideology or another, often either private sector or government, will do everything best. And also it is worth considering whether or not the rewards are going to those that do work that actually improve lives not those that are involved in fraudulent activities.

As stated before there are at least three additional ways that we might be able to measure our ability to improve the quality of life or focus our priorities, the volume of fraud in the economy, the environmental deficit and the ability for people to improve their own life without excessive reliance on big institutions. These may not always be easy to measure but that doesn’t mean we can’t try and simply by considering them we can surely come up with ways to improve the way these ideas are implemented even if we can’t measure them right away.

When it comes to fraud it may help to decide on how to define it in the first place. Under the current circumstances the people that have been providing the definitions have often been those involved in the fraud. A different way to define it could be any economic activity that uses deception to benefit an individual or group; this could include any economic activity that doesn’t improve the quality of life for the consumer either directly or indirectly. There should be some potential exceptions or examples where some elaboration would be required; one example would be teaching. Teaching doesn’t directly improve the quality of life; instead the teacher enables the student to learn how to participate in society, including the democratic process, as well as many trades, in a more effective way. This clearly provides many benefits and the teaching profession should be much more valued than it is in the capitalist system. The Communist ideology clearly addressed this issue much better in principle even if they didn’t always put it into practice. In the second chapter of the Communist Manifesto they call for “Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production….” (source: This doesn’t mean that the whole ideology is is as good as this one point but this point should be pursued much more if we’re going to have an economy that enables people to improve the quality of life in the most effective way possible and there has to be a way to pay for this when putting it into practice. In the long run this won’t cost more than we’re already spending as a society since the money put into education will reduce the demand for prisons and other social problems.

Not all exceptions will hold up so well; one example of this is planned obsolescence. This involves the practice of making products so that they will fall apart much sooner than they should and the consumer is forced to buy them again. The only one that benefits form this is the business people that take a cut when more trade happens. They have argued that this is good for the economy since it produces jobs; however this isn’t completely true and even when it is the jobs are in sweat shops where people are abused without receiving more pay than they need to survive; a state of virtual slavery. If they want to create more jobs they should either produce things that people actually need or they should allow people to have more time off to enjoy themselves.

Another example where there is blatant fraud on a large scale would be marketing, which is almost entirely fraudulent.

There has been plenty of spin on this by those who control the Mass Media but that doesn’t change the fact that advertising is designed to sell products in a manner that will increase the profits for the customer at the expense of the consumer.

Advertisements don’t do this by providing honest information about their products; instead they rely heavily on appeals to emotions and the fact that the vast majority of the information sector or Mass Media is dominated by a small segment of the public that can use it as an indoctrination tool.

One of the clearest examples of this was the episode of All in the Family where Edith is asked to do a commercial.

She doesn’t get the job because she isn’t a good liar which could just as easily apply to any commercial currently on the air.

At best some commercials may avoid blatant lies instead relying on hype to promote their products but this still presents a distorted version to the consumer. Advertising and planned obsolescence are both almost complete frauds; although the products they sell may have some value they’re used to overcharge and over sell them. In some cases they don’t even have any value at all like smoking which is promoted for all the wrong reasons and makes the quality of life for the consumer worse not better. Given time I’m sure that I or you could find many more examples for an epidemic of fraud that is going on now and it is clearly contributing to the massive debt that everyone is worrying about.

The environmental deficit is also a major issue that isn’t being addressed by the most powerful institutions. A simple way to understand this would be to consider the strength of the economy on Mars; there isn’t any. Without an environment there can be no life and therefore there can be no economy; not complicated. Yet this inconvenient fact is being ignored since the planet is so large and the majority of the environmental damage is directed primarily at those with the least amount of political power. This means that the damage is being allowed to accumulate without adequate attention in the media. This can only go on for so long before the planet is destroyed and it will finally reach those in the gated communities that are living in denial. By attempting to calculate the environmental deficit we can help learn where we have to change things and pay for it as we go. The fiscal conservatives are always talking about this, not doing just talking, when it comes to money; this should also be considered when it comes to the environment and they should also follow up with action.

One example of this could be to measure the amount of trees that are being cut down and require that they be replaced one way or another. Those that cut them down should be required to pay for this as they go since the cost will catch up eventually with us. If they avoid clear cutting then nature could do part of the job so the need to grow more could be reduced. Another example could be to measure the carbon dioxide in the air and require that we move more towards cleaner energy.

There is enough evidence to indicate that there is an enormous amount of expense to health care and lost lives that isn’t being figured in. If poor people polluted the yard of the rich and it killed the rich they would be charged with murder the same should go the other way around. One way to do this could involve taxing dirty energy like oil or coal to subsidize clean energy until we convert completely to a more sustainable system then we may have to find other ways to finance them. The savings in health care cost could be put towards other uses at that point.
It is also worth considering the fact that there are many things that people can do to improve their lives without relying on big institutions or corporations. One of the easiest examples of this could be diet programs or cooking. There is an enormous amount of misleading advertising to convince us that we need to rely on the corporations to sell us things to do both these things.

In the case of cooking we could do much more with basic ingredients and use them more efficiently if we cook them ourselves. There are already plenty of cooking recipes available on the internet many of which are or should be free. If they’re not as organized as well as they could be people can work together to improve that.

This could do a lot to improve the quality of life while reducing the GDP; which doesn’t always benefit the consumer. Another example of this could be the exercise industry. This should be very simple generally speaking; eat less and exercise more. This doesn’t involve increasing the economy quite the opposite. One of the biggest problems with this is motivation; this could be solved by forming exercise groups that help motivate each other in communities where people get along with others. They could use local parks or in some cases, when they’re not being used for kids, schools which are already paid for by taxpayers. The goal could be to improve the quality of life with the least amount of economic activity. One thing we could do for entertainment while reforming the system could be watching the corporate board members pull their hair out when the public doesn’t submit to their indoctrination anymore. OK maybe some of you might leave that one out.

Similar ideas, including the economics of happiness, have been considered by several other people including Carol Graham of the Brookings institute and Tom Green who wrote for Adbusters. Graham also cited two other right ups on the subject; they or I may have also missed many other ideas but the fact that this is being discussed at all may eventually lead to significant progress; assuming it is presented to the majority of the public. This may be the tough part since the corrupt people that benefit from the current system control the Mass Media; so at least in the short term it may be necessary for people to spread the word about this at the grass roots level. Once media is reformed then it could happen much quicker.

In the opening title I referred to this as the semi-secret fundamentals of economics; these ideas are so simple and easy to understand that they can never be kept completely secret since people can just come up with them again on their own if they think about it. However by saturating the airways with a misleading ideology and declining to provide alternative points of views the elite have succeeded in controlling what a lot of people are thinking. This is most effective against people that have been raised in an authoritarian manner; however they can’t continue this if the public is no longer complacent and speaks out more on their own. When that happens then we can finally have election reform that leads to a government that is truly controlled by the people.

Past blogs on the economy include it’s the economy stupid and are job losses good?

(For more information on Blog see Blog description and table of context for most older posts.)

The following are the original replies when this was first posted on Open Salon.

I can remember my Dad ranting about planned obsolescence decades ago, but nothing changes. I used to work at a DOE weapons facility and saw taxpayer money flow into the production of weapons of mass destruction.

Sarah Cavanaugh August 18, 2011 03:35 PM

there is endless talk about the failures of american society. no one ever has anything to say about fixing it. except, of course, "maybe the next politician will be our fairy godmother."

if you won't act, if you can not even imagine acting, you're not a progressive, you're a mollusc.

al loomis August 18, 2011 06:45 PM

There are so many great insights in here I agree with (and have espoused for many years). From a post I did a few weeks ago, titled "Watching the Empire collapse on a sunny summer afternoon":

"You can blame the politicians of your choice with leading us to this point, but the participation of the public in what I call “Amway America” (land of those manipulated by the key marketing motivators of greed, insecurity and envy) and it’s long, post WWII orgy of fantasy and indulgence, is really to blame. Morrie Schwartz (Tuesdays With Morrie) said: “We live in a culture that does not make people feel good about themselves.” “If what they’re selling is not what you need, you have to have the courage not to buy it.”

Unfortunately, America not only bought it, they bought it all on credit (both public and private) and shot it up wholesale. After several generations of that, they can’t even dream of a different paradigm and while they dither away their lives with diversions and get off on blaming the WWF (two-party system) teams that keep them entertained, the wealth continues to flow one way and the infrastructure rots while the new “I-products” multiply."

There are so many things which represent the true values of human existence, that have been subsumed in the perversion of our self-worth by an addictive materialism and the deft manipulation of our vulnerabilities. A huge corporations marketing guru once said to me, “No matter how warm and fuzzy any successful marketing campaign you've ever seen seems to be, examine them and you'll find they all operate by appealing to greed, insecurity and envy”.

Until some paradigm evolves to instill a sense of self-worth in people which gets beyond that, we are fucked. The latest Ken or Barbie doll of a politician is really just the same thing (as Al says) – A “product” that's going to miraculously heal us and make us whole. Perhaps the best way to do that is to stop giving others the power to decide when we are whole and when we are the damaged goods that their shiny trinkets will redeem.

Samasiam August 19, 2011 02:41 AM

Sarah, the military has been an easy target for some members of society but due to the authoritarain upbringing of others it is often above reproach and continues to get away with epidemic amounts of fraud while appealing to emotion especially fear anger and paranoia.

Al, sometimes I feel like a mollusc; I rant and rave on line and do a few other minor things but much more needs to be done and it needs to be done by a much larger number of people. Then us milluscs can take over.

Sam, I agree with you and will have to take a closer look at your blog including the one about "Watching the Empire collapse on a sunny summer afternoon" when I get the chance.

zacherydtaylor August 19, 2011 10:10 AM

"One example of this could be to measure the amount of trees that are being cut down and require that they be replaced one way or another. Those that cut them down should be required to pay for this as they go since the cost will catch up eventually with us. If they avoid clear cutting then nature could do part of the job so the need to grow more could be reduced."

Just to let you know, this already happens, at least in Oregon. After logging reforestation crews replant the logged areas. (By the way, reforestation is one of the most physically demanding, backbreaking jobs on the face of the earth. I've done it.)

Douglas fir trees take about 80 years to grow to the point where they can be logged again. I've also planted trees in the swamps of South Carolina. Those trees are used for poles and paper pulp, and take around 15 to 20 years before harvest.

I can't say that every tree logged in the U.S. is replaced, but certainly reforestation is the norm and not the exception. There are also ways of logging that don't involve clear-cutting.

mishima666 August 19, 2011 03:50 PM

Mishima, I'm sure you're right about the way they handle this in certain parts of the USA especially those with the most political power but most parts of the world are almost certainly not receiving the same courtesy from the logging industry. In the long run this is going to have to happen on a global scale; the longer it takes to do this the more looting there will be that will eventually have to be paid for by society one way or another either by breaking backs or by allowing the environment to collapse and no longer having the resources to support the existing population let alone the expanding one. Perhaps with more rational policies and less clear cutting we can reduce the amount of backbreaking necessary.

zacherydtaylor August 20, 2011 10:33 AM


If we can't get you into that meeting zachd, we should at least wallpaper the walls with this article! It deserves to be spread around. It needs to be read and heeded!

You will give me that "jobless recovery" is an obscene oxymoron, right?

The "economics of happiness". Why aren't we hearing more of this?

I want to read this again and again and share it.

It has been buzzed!

[r] libby

libbyliberalnyc August 21, 2011 10:37 AM

Thanks for the Buzz Libby, I’m not familiar with that site but will take a closer look when I get the chance. I’m not opposed to a recovery of jobs if they involve productive jobs that help people; just make work jobs that serve only the purpose of increasing profit without helping the consumer. The business community complain about make work jobs that help the public without enabling them to take their cut instead; they don’t care about improving the quality of life for the public unless it helps them make a profit.

zacherydtaylor August 22, 2011 09:37 AM

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