Oftwominds.com is honored to present a profoundly forward-thinking three-part essay by frequent contributor Zeus Yiamouyiannis, Making a Living vs. Making a Killing: Creating a Healthy Democratic Foundation for Economies. Part 1 was published yesterday; today we present Part 2.
Without a distinction between productive activities and parasitic activities there is no viable way forward economically. This three-part essay (“Part 1: Introduction”; “Part 2: Making a Living”; and “Part 3: Unmaking a Killing”) will begin to make those distinctions and provide recommendations on increasing healthy productive capacity and eliminating harmful parasitic activities. If the sick care industry is booming due to a dramatic increase in obesity and diabetes in the population, this ought not boost the GDP if one is interested in macro indicators reflecting the health of the economy and its people. You would not treat a cancer patient by considering cancer cells on par with healthy ones, and you should not attempt to heal economies without analogous distinctions.
Part 2: Making a living: Cultivating productivity, ingenuity, diversity, and diligence in a verdant economy
“The only “real wealth” here revolves around ability to produce real and needed goods (to allow us to survive), and the ability to create something that increases quality of life (to promote our thriving).” (https://www.oftwominds.com/blogsept11/Zeus-debt-forgiveness-9-11.html)
“Free enterprise, well understood and executed,… prizes productivity, quality of life, quality of goods and services, innovation and creativity, transformative learning, honest and diligent labors of love, and enjoyable and engaging relationships and experiences for its citizen members. These are functions that create health synergistically both for the smaller and the larger, a win-win.” (https://www.oftwominds.com/blogjun10/zeus06-10.html)
“We are coming to the big face-off between top-down control by those who would be gods over us and impose value on us, and bottom up creativity which recognizes that any “god” (energy, good, intelligence) comes up through us and is connected between us. It is this “within” and “between” well-negotiated and exchanged that produces real value.” (https://www.oftwominds.com/blogjan11/Zeus-three01-11.html)
"Making a living” is “making a life,” adding something to an economy, providing a necessary good or service that enhances survival and thriving. In making a living, you are producing something for exchange. You are not merely consuming, nor are you merely taking up space, pushing paper, selling snake oil, or exploiting other people’s production. In other words, you cannot make a living by simply being self-serving. You have to provide something of real value to others.
Large corporations and even bureaucracies can contribute to making a living, providing everything from swimming pools to social work. Their problems, if anything, center upon what portion of their resources goes into direct service, production, and exchange and how much gets consumed in indirect, personally and institutionally self-serving ends—job justification, bonuses, extravagant salaries, etc. A healthy society maximizes the former and minimizes the latter.
A sane and healthy economy recognizes the need to be “lean and clean,” cutting out the fat of self-service and optimizing giving and circulation of pro-social goods and services. This principle is at the root of “value added.” This means that corporate welfare in the form of tax breaks for corporations paying their CEOs hundreds of millions of dollars and government workers with gold-plated benefits both need a reality check. They tend to consume a lot more value than they add.
In this, it is time to call out the fallacy of a zero-sum war between personal and social interest. People admit that the most fulfilling personal activities rely upon healthy relationships. Healthy relationships are impossible without giving to others. Our problem stems from failing to practically follow through on our purported convictions:
“What is the economy and society meant to serve? What is most fulfilling and important in life? When asked these questions for themselves and their societies, most people offer answers like: health, family, community, friendship, love, learning, creativity, collaboration, liberty, new experiences, diversity, meaningful work, cultural enjoyment, literacy, curiosity, responsibility, spirituality, faith, and so forth. If you ask those same people how much time, energy, and money they are spending enacting these practices, principles, and values, the answer would likely be (if they were honest), “Comparatively little.” (https://www.oftwominds.com/blogjun10/zeus06-10.html)
Aristotle said, “We are what we repeatedly do.” He was right. So how might we do something different beyond mere talking and imagination? How might we transform economic practices to reflect those activities—giving, production, caring— that we know to be revitalizing. Here are some recommendations meant to provoke possibility:
Investment for the productive long haul: Short term, speculative investing is one of the economy’s greatest thorns, distorting stock valuations, bond markets, etc., and destabilizing economies. This is perfectly embodied in the phrase, “play the market.”
The lion’s share of stock market “playing” is not investment or stakeholdership; it is simply gambling and looking for a greater fool to pay more money for a stock. This mentality incentivizes insider trading, artificially produced volatility, naked short selling (phantom selling to depress value), and a host of other parasitic ventures. Often more profit can be made when a company fails, so there exists an inducement to aid failure, rather than success, in our current unhealthy system.
We certainly could discourage speculation by charging people per transaction for day trades and high frequency trades. However, there are also ways we could reward stalwart investors with a stake in a company’s health: Give increasingly greater dividends per share (up to a reasonable point) to people who have stayed with a company longer. Call it a loyalty premium. This would incentivize sticking through tough times. It would also create a good gauge of stability.
If a public record was assembled to display the relative percentages of different types of investors (long-term vs. short term), this could both unmask manipulation and inform potential future investors. If a stock has a high percentage of long-term investors, their satisfaction and return are reflected in their actions, and this provides evidence for a stable investment.
Governments as supporters of individual and community life, not social engineers: Even as a progressive, I support the largely libertarian position on government intervention. For instance, it is not a government’s job to subsidize home ownership but to make sure people have a roof over their heads. Keep it simple. Focus only upon those things that promote the core elements of citizens’ surviving and thriving.
Surviving: Make the means available to provide for 1) basic food, shelter, and clothing to those who don’t have it, 2) medical care for wounds or illnesses, 3) common defense only (not a world-dominating military-industrial complex), 4) environmental protection (so we have clean food, air, and water).
Thriving: 1) Ensure political integrity and proportional representation in voting, legislation, and campaign contributions, 2) uphold both opportunity and ability in developing talent and enforce laws that protect against discrimination on the basis of age, race, sex, sexual orientation, etc., 3) civilly and criminally prosecute financial fraud, counterfeiting, “misreporting,” etc., 4) promote pluralistic cultural opportunity, exchange, and practice. Whether it be public prayer, intellectual dissent, or “offensive” forms of freedom of speech, or some other chosen, non-harmful means of expression, government policy should support tolerance and even appreciation of other perspectives.
Local currencies, what Bernard Lietaer in his must-read book, The Future of Money, (https://www.lietaer.com/writings/books/the-future-of-money/) calls “complementary currencies” and “work-enabling currencies” apply to community transactions taking place alongside the commercial transactions covered by mainstream economies and monies.
Local currencies are “cooperative and sufficient” in operation rather than competitive and scarce, generating additional work and wealth at the local level without causing inflation. How? Such currencies create a system of formalized exchange of local goods and services in voluntary, rather informal networks that are self-regulated by choice and local supply. This positions local currencies to better and more quickly meet basic needs in a community. They also personalize markets in terms of seeing where one’s money goes, keeping wealth circulation local, and better enabling local, small-scale businesses to compete with “big box” stores.
Responsive national monetary policy combined with local currencies creates a workable framework for macro meeting micro and helps ensure that local economies and taxpayers will not be bailing out “too big to fail” banks. As shown in another excellent book, The Truth in Money Book, (https://www.truthinmoney.com/main.html), there is a way to design debt-free monetary creation, supply, and management such that it expands and contracts with national economies and populations and challenges the delusions of unending exponential growth.
“A properly balanced money system doesn’t do away with borrowing or debt. But it does do away with the impossible demands of an all-debt money system… (A) channel is provided for money to flow into the economy which can be used by people to pay the interests on their debts. This money is debt-free money and when it is extinguished it does not cause a critical money shortage…” (p. 152, The Truth in Money Book, 3rd ed., Thoren and Warner).
In this design for the U.S., money is created by the U.S. Treasury and lent to banks, rather than vice versa. The U.S. Treasury has capital requirements guided directly by the needs and size of the national economy. There is no need for fractional reserve, leverage, or original debt.
Independent, non-profit, multi-stakeholder agency setting monetary policy. It is clear that U.S. money creation, supply, and management can neither be handled by Congresspersons beholden to their own careers nor by The Federal Reserve, an agent for private, profit-seeking banks. Politicians have proven they will use fiscal policy to bribe voters by pumping up the welfare state and by cutting special favors for major funders. The Federal Reserve has been a one-stop anti-capitalist shop for bailouts of banks.
Public interest does not align with either of these constrained purposes. We need an independent body governing monetary policy accountable to the democracy at large, involving the spectrum of stakeholders in proportion to their representation in the populace. Qualified individuals could be nominated/elected by groups representing various stakeholders. Their qualifications and conflicts of interests could be checked, and they could be appointed to a panel that sets monetary policy. Congress would create money, and this agency would regulate its lending into the economy.
Policy-setting would require deliberation, advocacy, and sacrifices, and hopefully larger citizen education as well. House parties could be crucibles for invested, aware citizen discussion of monetary policy trade-offs and options.
Citizen lending and micro lending. We have the technology to skip private banks in the lending process, lend directly from peer to peer, citizen to citizen (https://www.fundingcircle.com/), and possibly do to banks what Craigslist did to newspaper want ads. We could lend to one another in local currency and national currency and in amounts smaller than would be feasible for profit-seeking banks. Banks and their profit margins and interest rates would have to compete.
Perhaps we could even allow regulated community or non-profit groups to apply for direct lending from the U.S. Treasury at the same rates as private banks. Again the national interest is upheld by a much more diversified risk, a more stable base of lending, and an economy built on productive real investment and return rather than financialized mumbo-jumbo.
From the national level money supply could be regulated and inflation managed by interests and taxes in tune with the expansion and contraction for the productive real economy. Strong standards would be established for lending. Lax lending standards for banks would end in borrower default and their own bankruptcy. The value of savings would be magnified as purchasing power would be maintained, and when prices fell due to lower demand, savers could be rewarded for their prudence and foresight.
Savers could buy, invest, and lend and thus expand the economy again creating grass-roots liquidity. When prices for commodities and wages dropped, the national agency regulating monetary agency could work in collaboration with Congress to create money to prudently invest in infrastructure, and thus take advantage of value and spur the job market in a way that makes constituents happier and the economy healthier.
“Service swaps” and the end of work as we know it: Jeremy Rifkin and Charles Hugh Smith have spoken extensively about the “end of work” as we know it. There is increasing awareness, due to automation, environmental limits, saturation of the world with material things, open source software and content, etc. and a growing trend away from possession and toward experience as the arbiter of the good life, that we simply need fewer jobs. Spurring job growth merely for the sake of earning a living, i.e. expanded bureaucracies, is simply no longer sustainable or desirable. We don’t have the money to pay for unneeded jobs.
And yet there are multitudes of real needs out there that need to be addressed beyond the purview of mere volunteerism, charity, or government agencies. There is a huge oversupply of indebted, educated, idealistic young people raring to use their skills and engage their passions. Let’s simply have a trade.
Make it the business of educational and community groups and institutions to identify, strategize, organize, and meet real needs. “Hire” people who are unemployed but eager to be active and create a currency exchange where debts, services, and surplus goods can be exchanged (perhaps with local currency) for this pro-social work.
This takes care of joblessness, waste, and unmet community needs in one fell swoop. Supermarkets alone throw out an ungodly amount of perfectly acceptable food, because it exceeds the sell-by date or its apples have a few spots on them. There is every reason to embrace such an obvious opportunity to integrate productivity and waste reduction.
Zeus Yiamouyiannis, Ph.D.
My interview with Max Keiser and Stacy Herbert (recorded live in Paris).
Zeus's interview with Max Keiser and Stacy Herbert.
Source: Of Two Minds
