Wall St. vs Main St.: The Measure of Econ. Democracy By Tadit Anderson
Posted by Tadit Anderson on November 18th, 2007
There are multiple reasons that our communities are in trouble economically. Racism and elitism are a part of the package, and there is a lot more. The privatized banking/monetary system is a driving force of the need for endless growth and as essentially a trade organization it does not act in the public's interest. The effects of the ending of cheap oil upon which both industrial centralization and long distance commerce depend. The hyperinflation of the US Dollar that is returning to roost as asset inflation as a result of a fiat petro US Dollar and its imperial corporate agenda. The simple running out of time on the disregard of both the base infrastructure and the abuse of the environment through the externalization corporate costs onto the community as public debt in favor of private profits. Faith based economics was never enough to address the limitations of the real world or capable establishing a sustainable commons based economics.
Serious attention must finally be applied to the issues related to community economics apart from the empty promises of local politicians inspired by corporate contributions to their election campaign funds. The attendant assumption that the success of economic development policies should be measured by the number of upper class and upper middle incomes has produced in place of a generalized prosperity an aggressive form of class warfare. The typical rationalizations includes blaming the absence of the much promised generalized prosperity upon the remaining regulations of all variety, unionized labor, the shadow immigrants, the increasingly numerous victims, or upon other countries acting to protect their resources and populations. The core vision is imperial, utopian, ahistorical, corporatist and has no general relevance to the real world.
If measured by the increased incomes of the very few and the already wealthy, perhaps it is a roaring success. However if it measured against what has happened to the majority of the population, is a thinly disguised form of economic class warfare whose political agenda has been unsurprisingly well funded by its elite advocates and their front organizations. We as a nominally educated civilization have long been misled into accepting that the economic health of a nation is closely identified with the interests of its corporations rather than with its flesh and blood citizens. Likewise the economic health of our communities is often assumed to be measured by submission to corporate profit margins. We clearly need a new appreciation for economic democracy in its multiple forms. We need to remember that although the relentless misery seems quite sustainable, that once upon a time in a not so distant decade the greed of the few caused the economic collapse of the US and much of the rest of the modern world. Since that time when corporate capitalism was temporarily rescued from its own vices and the prosperity of communities was more widespread we have retreated into a form of pompous and sanctimonious cannibalism.
The cover story that is usually offered at the local level features the promise of new jobs in exchange for tax credits, tax abatements, and other subsidies or exemptions typical of the wealth-fare form of economics. Not so mysteriously the manifestation of new jobs never seems to measure up to the glitter and the promises, but the tax breaks, subsidies, exemptions, and other amenities are produced as per expectation. The political advocates and personal beneficiaries of these public relations campaigns predictably avoid any accountability fully confident that at some point they can shrug their shoulders, scratch their heads, and again blame the actual victims and every remaining vestige of government acting in protection of a sustainable commons. Eventually the time for electoral accountability rolls around again, with a new round of recently re-gilded political lies, and promoted as a new menu of economic fairy tales.
To paraphrase Michael Shuman, the connection between conventional municipal plans for economic development and the actual results is something on the order of raining money from the rafters, and then declaring “See, we created jobs.” The typical outcome is actually much worse in that the majority of the tax burden to support that economic activity usually falls in an even more concentrated form upon the community whose incomes are thereby measurably reduced. The sweet giveaways by the politicians usually cut into the taxes levied to support local public education, health, safety, infra-structure, and other typical public services. In that the jobs that are produced for local people tend to be minimum or low wage, there isn't much in the way of positive effects. Instead of experiencing a full tilt collapse, the community is simply bled to death.
A full program of tax reform is necessary toward discouraging land speculation and the wide variety of “the race to the bottom” economic subsidies. Clearly the random shot version of deficit based economics is simply a form of corporate welfare, the primary beneficiaries being the banks, bond holders, and the corporate predators. This is one necessary component in restoring an economy that serve the natural citizens. Drastically reforming the process of campaign fund financing by corporations is another piece of the restoration process.
Economics as it typically occupies academic departments is also seem widely uninterested in the actual outcomes of economic policies and truisms. The once popular enterprise zone notion of an economic redevelopment strategy was less economic and more political in its impact. The concept basically turned inner city areas into zones roughly equivalent to third world countries under the exploitive rule of an indigenous elite supplied with subsidies from the US for military hardware and training. The supposed validation provided the Laffer Curve, both then and now, also known as “the No Progressive Tax Left Unreduced, paradigm.” As a mathematical metaphor posing as science, it truly deserves to be described as “laughable.”
By the reliance upon the race to the bottom handbook of conventional economic truisms and debt based finance, local economic development departments are leaving all homework to whatever corporation shows up offering to bestow their presence upon that community and receive gifts, tributes and submission in return. The point here is that apparently the norm is for local economic development departments to be either near clueless about how economics operates within a community and/or they are in charge of providing cover stories for political priorities that are driven by actual or potential campaign fund contributions. Wal-Mart is the running worst bottom-feeding, predator corporation in existence in the world today. Many other corporations compete as closely as they can manage, all at the expense really of the communities where their products are produced and where they are sold. The notion of building new sports stadiums as a path to economic revival has proven equally to be a drain upon local resources, that end up producing little benefit except to a few contractors and bringing in more occupants at the management level of upper middle class, and a number of highly salaried players and their managers. This coliseum strategy also provides little more than bread and circus, and often less.
At the most basic level local economic development departments do not recognize that preventing wealth from leaving a community is equal to or more valuable than bringing in new economic activities. What is to blame really is a long cultivated economic illiteracy that replaced an informed discourse at the highest levels.They have also not realized that there is a major vulnerability that goes with accepting the premise of having communities play to the limitations of “comparative advantage.” To the extent that a local economy becomes a “company” town and/or concentrated upon one particular product or service, it will share a similar concentration of industry. This might be a reasonable approach if the location, product and the process that produces are sustainable in every way.
Another way for an area to be remain poor is to have its economy become based upon the extraction of raw materials where labor is paid at the low end of the scale and finished goods are returned to those areas with significant embedded costs including shipping, more highly skilled labor, profit return for the investors and shareholders, advertising, and other costs. The results once again are a wide disparity in the availability in the currency and resources necessary to survive. This scarcity is a device in itself, also used to impoverish some and to make others wealthy, rather than making a general prosperity possible. When the skill sets within a community are diverse the community as an economy has a greater chance toward adapting to changes of all kinds. When the skill set is limited and concentrated a community has a greater chance to collapse unredeemably.
A second level of the bias and trained incapacity of conventional economics is that the scriptures, sermons, and homilies of conventional economics favor the elites and those who serve them. Apparently it follows quite naturally that the persons hired to promote municipal economic development to increase the political credibility and re-electability of their politician liege and the continued profits of their present and probable patrons. The business schools and academic economists represent a culture in clever service to profit at any cost as long as that cost is to someone else. This cleverness is always rewarded and is described generally as the externalization or socialization of costs and the privatization of profits. It also helps to have the ability to persuade less skeptical people of the implausible and improbable.
It is thereby unsurprising that the studies by Walter Goldschmidt in the 1940's of the quality of life in rural towns was suppressed for some fifty years. The conclusions drawn by Goldschmidt were that communities with smaller land holdings and a diverse community of businesses tended to have a higher standard of living. Trade was conducted within the community and thereby more wealth was retained and distributed with those communities. In this context currency is used as a legal institution to facilitate trade. Rural communities which were characterized by larger land holdings tended to be less diverse and had a lower general level of prosperity.
The period of US history which has had the highest level of general prosperity was the same period in which the banking and finance business sectors were the most regulated. Corporations generally in that same period paid a much higher level of taxes toward supporting the community infrastructure and other services. Through the incessant and self serving promotion of greed and usury justified through the marginalization of any economic perspective which challenges the supposed wisdom. This is essentially a politicized capitulation to fascism. Our current stalemate is largely a multiple layered problem of culture. This is not a product of happenstance, but of political preferences, priorities, and patronage by the wealthy and the incentives provided to the eagerly deluded. The concept of the commons as something other than to be exploited for the wealth of the few is absent.
But this is contrary to the amassing of wealth as a function of scarcity, rather that as a product of trade. The deferral to economists with the conventional set will predictably produce the wrong set of priorities and outcomes. The frequent deferral to retired individuals who in their autumn activism bring with them the fiat supposition that they need to validate their own investment in a career of based upon their adaptation to corporatized culture produces only more of the same. By the trained incapacity of their adaptation they are ill-prepared to respond critically or creatively. Those skills are routinely suppressed in a corporate environment.
The remedy would seem to be to regard the commons as something having a common interest and as a common asset. Shifting the base paradigm of a local economy would be difficult, as would the shifting of the international standards by which economies operate would seem fairly inconceivable. Foremost it would eliminate the practice and privilege by which people could extract wealth without producing really any product or service of value. Rather than privatizing or sustaining the privatization of what should be public institutions actually serving the interests of the public, it has to be asked if there is another set of choices that have been erased and marginalized. The notion that a government should be by, of, and for the people, real flesh and blood people was once a revolutionary concept sometimes described as democracy. Further, much of what has driven the decline of our democracy, communities, and general environment has been the premise that the economies of our communities and nation might be best managed if they were privatized. It is fairly clear except to the most steadfastly delusional that the current franchises are unsustainable.
There is actually a whole body of theory and practice which has been either subverted or marginalized. The list can begin with Mary Parker Follett and progressive management , the Georgist policies relative to land rent, consumer and producer cooperatives, mutual insurance companies, credit unions, and the entire history and practice of community currencies and exchange systems, and more. A measure of how far our culture has drifted is evident by the performance of cooperatives as if they were competitive and hierarchic corporations. We each need to begin to clear away the murk from our own eyes and join together with others to remember by practice the nature economic democracy. When the English colonists resisted English rule their complaints were primarily economic in nature as enforced by a government involved in wars of conquest and supporting the economics of plunder.