Understanding Growth, Part 5

The following article is part of a series. Read Part IPart IIPart III and Part IV.

"In recent decades, our debt has risen not out of shortage but out of surplus, excessiveness. Our society is not suffering from famine, but it must solve another problem—how to host a meal for someone who is full."
-Tomas Sedlacek in Economics of Good and Evil

A couple years ago I put together this Strong versus Fragile graphic as a way to help people think about the nature of productive cities. In the rain forest, you have a complex, adaptive system that has emerged in a way that is, as a byproduct of how it emerged, highly resilient and adaptable. The corn field, in contrast, is a system based on efficiency, constantly increasing the amount of output for a given unit of input. One hail storm, a few weeks of drought or a swarm of locusts and it's gone.

We might think we prefer the human equivalent of the rain forest, but do we? 

Let's pretend we were made king/queen of a portion of a rain forest and, magically, we had the authority and resources we needed to right the wrongs, correct the deficiencies, that we saw in the world around us. What would we do?

As we delved into the situation, we would quickly realize that the process of emerging, of developing a resilient equilibrium, is a brutal one. In the rain forest, one creature's cruel death is the essential nutrients for many others. A tree grows strong and creates an ecosystem of winners and losers. Another tree falls and an entirely different system of winners and losers takes over. Would any of us have the wisdom to decide which winners are best? Which is the optimum path for that moment in time?

Or would we, as ecologists suggest, let well enough alone so that the infinitely complex interactions that give the rain forest is adaptive resiliency can run their course?

Since World War II, Americans have seemingly had the power and the resources to right the wrongs, correct the deficiencies, in the world around us. Whether the wrongs you've identified emanate from concerns of the political left or the political right, there have been enough resources available to move ahead as far as political consensus would allow. There is something noble in this -- who doesn't want the world to be a better place -- but also something dangerous and destructive. Just as with meddling in the rain forest ecosystem, how do we know what is actually the best course of action? How do we know what set of winners is optimum?

Enter modern economists. If there is one thing American society has been able to achieve broad consensus on it is that more growth provides us with more resources and, whatever problems we are actively trying to solve, more resources are really helpful. The paradox of our economy, as we've discussed this week, is that we create more collective resources -- growth in GDP -- by individually consuming more resources. This system worked for a long time -- we leveraged individual appetites to accelerate collective growth -- but now, as Czech economist Tomas Sedlacek suggests, we've reached the point where individuals are unable, or unwilling, to consume enough to keep it going. From the Economics of Good and Evil:

Economics mainly counts on situations when a person is unsaturated and would like to consume more (and also make more money). What would economics look like without this? Our resources have grown so much that we can allow much more than full satiation. Economics is the study of “allocation of scarce resources,” but what happens when they are in abundance?

Today, it feels like we're stuck. We've so many problems to solve. With the way we go about solving problems -- largely top/down, centrally directed efforts -- we need more resources. Yet, we struggle to get our economy to grow because, individually, we can't or won't consume at the levels needed to generate those collective resources. Is this the ultimate irony? Can we only satisfy our needs by increasing our neediness?

For reasons that are not important to this conversation, I've spent a great deal of time thinking about the business model of a newspaper, and I'd like to use those insights to contrast our current approach to what was and could be again. When we look at a local, family-owned newspaper, we see an endeavor that is the ultimate invisible hand kind of undertaking. It is a business proposition that, if done well, is also a great service to the community. I've known a number of local news publishers who make a good living reporting on the local comings and goings, breaking the occasional big story, crying with families when they have tragedy and celebrating success when it is found. In time they often come to own a building, maybe some equipment and can someday pass on the entire enterprise -- with some modest gain -- to a new generation. Few find riches but many have experienced enough success to make them among the privileged and powerful within their communities.

Now take the modern corporate media company. I won't suggest that these endeavors don't also struggle to be a service to the community, but the risk and reward are much different. It isn't adequate for a publicly traded company to simply do good work and make a modest profit year after year. The dictates of shareholders -- rightfully, as is our system -- are that profits must be maximized, to increase year after year. New efficiencies must be found. New opportunities must be exploited. Capital must be leveraged by a leadership team required to return value to shareholders. Pretty soon the paper lays off senior reporters -- the ones with sources and community knowledge -- in a cost cutting measure. Then the team that actually designs the paper -- the ones who grasp local nuance and culture -- are let go so assembly can be outsourced to corporate offices on the other side of the country. Pretty soon the software used to lay out the paper is standardized to the low bidder, even though it doesn't really work. And on and on and on.

The product here -- a local newspaper -- is very similar between these two, but the motives and incentives in the underlying production are vastly different. So, would our lives be worse off if our local news was brought to us by a locally-owned newspaper rather than a publicly-traded corporation? It's hard to argue that it would. Yet, if it were locally produced, that paper would be free of the continuous need to increase efficiency, the constant pressure to increase profits and expand margins above all else. Sure, a good business owner would still do some of that, but as part of the community they would also balance those urges with the other competing interests, many of them social and without direct economic payoff. And, if 3% year-to-year growth didn't happen, that too would be okay.

We cannot have a centralized, corporate-driven, debt economy without continuous growth, but we cannot sustain continuous growth. We therefore need a different model, one that doesn't require continuous growth. That is only going to be found at the local level, by localizing those endeavors that can be localized. As a matter of public policy, we should be doing everything we can to end the subsidies and incentives that promote the big/centralized -- banks, corporations, government -- and focus our efforts on seeding the small/localized wherever possible. More chaotic but smart and less orderly but dumb. We can have growth, but not be a slave to it.

If we do this, I believe we'll have an economic system that is more moral, more just. From Economics of Good and Evil:

In our constant desire to have more and more, we have sacrificed the pleasantness of labor. We want too much and so we work too much. We are by far the richest civilization that has ever existed, but we are just as far from the word “enough” or from satisfaction, if not further, than at any time in the distinct “primitive” past. In one sentence: If we ourselves did not have to constantly increase GDP and productivity at all costs, we would not have to also constantly overwork ourselves in “the sweat of our faces.”

I'm going to return to the rain forest because I suggested earlier that locally complex systems are brutal, that their resiliency is the byproduct of frequent failure and adaptation. How can a system like that be more just? How can we call something like that moral? There are many of you eager to vote for your brand of tyrant for president, someone who will enforce your version of righteousness and morality on a country badly needing both, often because you don't trust your neighbors to do the right thing.

The rain forest is brutal, yes, but nature is filled with countless examples of altruism. From plants that interlock roots to share water during drought to birds that warn others of danger. Humans are the most social of all species. We're wired to work together. Let's stop trying to bypass that wiring.

One of the most positive things about recent reflections on Urban Renewal policies is the acknowledgement that the African American communities that were bulldozed may have been poor, but they were also vibrant. They were full of strong social connections, the kind that makes a place resilient. The great injustice that was done in these places had economic ramifications, for sure, but the worst aspect was social. We tore apart the complex fabric of the community. That we would now out of fear resist the restoration of this fabric, in poor and affluent neighborhoods alike, defies all that we have learned. Are we still so lacking in humility?

I end this series with one last excerpt from The Economics of Good and Evil. This a quote from John Maynard Keynes on what life could be like in an economy where growth is good, but not the only good, where people are more than consumers, more than some theoretical Homo Economicus, where our fate is not directed by economists or central planners but by our relationships with each other:

When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues.
I see us free, therefore, to return to some of the most sure and certain principles of religion and traditional virtue—that avarice is a vice, that the exaction of usury is a misdemeanor, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow.
We shall once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin.

Thank you for allowing me to share these thoughts with you over the past few days and for all the encouragement with this intellectual exploration. 

Read the concluding article in this series.

(Top photo from Wikimedia.)