When bridges weaken, we rebuild. When houses age, we renovate. When technology no longer serves its purpose, we replace it.
So why do we continue to use economic structures that aren’t meeting modern needs?
That’s the question behind the new book What’s the Economy For, Anyway? by John de Graaf and David K. Batker. De Graaf is the author of Affluenza: The All-consuming Epidemic. Batker, an environmental economist who has worked for the World Bank and Greenpeace, is director of the non-profit Earth Economics in Tacoma.
“Our economics of today is dated; it was created in the 1930s,” Batker said in an interview. “Prior to then, we had no GDP, no measure of inflation, no measure of money supply, no measure of unemployment. The idea that you managed a national economy wasn’t there.”
With the Depression came a new set of economic goals, such as managing unemployment and providing retirement security, and new measures, such as GDP. Batker says the 20th century economy served us well in its time. But that time is over.
“Now, we don’t face scarcity of asphalt and plastic toys anymore; our system has done well in producing those things,” he said. “Now we’re getting scarce of flood protection, climate stability, drinking water, and things like that. We no longer have an economy that reflects the 1930s. So we need new measures, for instance, time-work balance.”
Batker and de Graaf explore the systemic connections between areas of society and the economy often treated in isolation, such as health, productivity, the environment and life satisfaction.
“We need to think about the 21st century, and what policies are really going to bring about a better economy for us,” said Batker. He argues that U.S. policies – such as agricultural subsidies that underwrite cheap sugar and fatty foods, arguably contributing to rising obesity and diabetes – must be reassessed.
“We need to focus a little more on happiness. In the past, clean drinking water and indoor plumbing, that was a path to happiness, no doubt about it. But today, does another 1,000 square feet of house, plus the debt you incur, does that bring about greater happiness or greater stress?”
The book offers solutions for new economic structures and policies that could help re-tool our aging economic system to better meet our needs.
“It’s really important to think about how to produce the goods and services that we’re actually scarce of – including leisure time. Because right now, the message to a lot of people is you need to work harder, for less pay and fewer benefits. And forget retirement.”
Batker says Canada, with stronger banking regulations, as well as policies such as paid maternity leave (the U.S. joins Lesotho, New Guinea and Liberia as the only four countries in the world with no mandated maternity leave), has fared better than the U.S. in terms of focusing economic policy on well-being and stability. Still, our over-reliance on clumsy measures such as GDP and our lack of ability to incorporate true measures of sustainability point to a need for innovation.
“Now that scarcity has shifted away from produced material goods and services, we’re becoming short of what we were plentiful of in the 1930s,” said Batker. “We’re getting short of natural capital.”
For example, where salmon once seemed limitless, we now face a scarcity of acceptable salmon habitat. Similarly, Batker argues that accounting structures must be updated so that the services rendered to us by a healthy ecosystem – such as water filtration performed by a natural watershed – are captured and valued appropriately.
“Economic policy really does make a difference whether an economy collapses or does better; whether a country falls apart or succeeds,” said Batker.
“The U.S. at one time, after [the Second World War] and into the 1970s, had the longest vacations, the shortest working hours per week, the highest productivity and the highest pay of any nation in the world,” he says. “But because we didn’t keep up on policy, now we’re lagging. Real incomes have declined in the U.S. since 1999. We had a whole decade where we had no net job growth. Then add the increase in crime, in obesity. In our book we look at revisioning the good life – food policy, housing policy, health care, personal safety, lower working hours, equity and fairness, sustainability.”
Batker says updated policies aimed at overhauling our economic structures for the 21st century – if introduced incrementally – should involve the business community as innovators and be nothing to fear. (Unless you’re a U.S. corn producer with a business model based heavily on subsidies.) And he says choose it or not, such change will come.
“Otherwise we only have growth in areas like diabetes treatment – that’s not building a healthy economy or a high quality of life.
“I think this transition is going to take place. The question is whether we’re going to do it more quickly and have a jump on a more successful economy, or whether we’re going to let things get worse and have further economic decline, then start changing. I don’t think it’s a choice between maintaining the status quo or doing something new.”
For those of us with serious doubts about the ability of today’s economic system to lead us to a sustainable future, Batker and de Graaf have outlined a welcome road map. •
