Now this is fun. The new economics foundation in the UK has come up with a report they call "The Great Transition". Here's the BBC viewpoint by Andrew Sims the nef policy director. Below is the description from their website.
A year on from the collapse of major banks, and less than 50 days before the UN Climate Change talks in Copenhagen, the new economics foundation is providing policymakers with the first comprehensive blueprint for an economy based on stability, prosperity, fairness, sustainability and well-being.
The report sets out seven main interventions, including a 'great revaluing' to ensure that prices reflect true social and environmental costs, 'a great rebalancing' that sets out a new productive relationship between markets, society and the state, and 'a great economic irrigation' that builds an 'ecology of finance' so that money and investment flows where it is most needed.
Specific policy proposals include:
This is a bold vision. But nothing short of a Great Transition will be up to the task of tackling climate change, ending cycles of boom and bust and putting a stop to inequality. We show that not only is such a bold vision necessary, it is possible.
- Creating a universal Citizen's Endowment of between £40,000 and £50,000 to give every adult an equal chance in life and the opportunity to invest in education, a business or local productive assets. This would be funded by a phased rise in inheritance tax on all estates up to 67% and go a major way to reducing the massive inequalities of inherited wealth in the UK.
- Land and property transferred to state and then redistributed to communities, forming community land trusts, where land is commonly owned and managed on a stewardship basis by communities, underpinning the provision of affordable or social housing.
- Redistributing working time by instituting a four day working week for all that would enable the 1/3rd reduction in GDP without major loss of jobs
- A major reorganisation of business, with publicly listed companies progressively transferring shares to their staff, giving them a real stake in and control over the companies where they work. This would lead to the creation of a series of co-operatives, operating in regulated markets, and subject to competition from new companies. Such a process would fundamentally change power relations within workplaces, creating a form of 'economic democracy'.
- New variable consumption taxes, replacing income tax, reflecting the social and environmental costs of goods. A windfall tax on the profits of fossil fuel companies, for example, could channel funds into clean energy projects.
- Direct government created credit for large-scale green energy and transport projects, channelled through a national Green Investment Bank
- A new national Housing Bank, offering people the opportunity to transfer a portion of their mortgage debt into equity and paying social rent on the balance.
- New regulations on private banks' reserve requirements directly related to the social and environmental value of investments, creating a 'race to the top' and reducing speculation and 'credit bubbles'
Sandwichman,
ReplyDeleteWhy is reducing the work week by 20% going to be associated with a reduction of GDP by 33%, and why on earth do you think anybody out there is going to be excited by the prospect of such a lousy deal? It is one thing to tell people that there will be more people employed with a shorter work week (presumably involving a smaller decline in output than the reduction of the per person work week), but this is absurd (although it may be that seriously reducing CO2 emissions will involve GDP reductions).
All of this and in the US we can't even get a Health Care Bill through the corporate owned Senate.
ReplyDeletePossible? Maybe in some other nation on some other planet. And if you really believe that the economics profession is going to revolt against the lords of the manor or bite the corporate hand that feeds then perhaps you also believe in the Big Rock Candy Mountain, The Good Fairy, and Santa. Bald fascism and "nobility" will trump economics every day of the week.
But there may be a long and possible way to get there: The 17th amendment, that took appointment of national Senators away from the state legislatures and called for state wide elections of them simply gave the Senate to the Washington DC lobby. It was turned into "whoever has the most money wins". And until that is repaired, rational/environmental economics will be the last thing that will ever drive legislation in the United States.
It is just barely possible (I think/hope/wish) for the people of each state to take to the streets in peaceful numbers here in the USA and demand that their state legislature call for a meeting of the states in convention specifically to repeal the 17th amendment. This is quite Constitutional and would be politically possible because such a move would empower the state legislatures to appoint the Senators in the US Senate. And _all_ politicians lust for power.
I see no other peaceful means by which the people of the United States can ever reclaim their country from the national and multinational corporations. Max Baucus is the poster child of what is really wrong in America.
Barkley,
ReplyDeleteI'm not endorsing the specific prescription or analysis in this report beyond the general observation of "this is fun" meaning here's something to think about instead of just more of the same old same old. My own view on GDP is that a great deal of it is superfluous and toxic. Yes, indeed, I would LOVE to see a 33% reduction in GDP -- military expenditures, FIRE fiascos, crime prevention, sickness care etc., etc. Better to have peace and health instead. But I don't think really that is a practical possibility in the short term.
I don't see how we are going to avoid global climate change and expanded resource wars without a reduction in our standard of living as it is currently understood. A transition from one-passenger automobiles to mass transit, for instance, would be seen by most economists as a reduction in the standard of living in the "developed" world, as would a transition from 6,000-square-foot suburban houses on two-acre lots to row houses or the elimination of passenger airlines.
ReplyDeleteThis transition, difficult under ideal circumstances, would be impossible without a significantly more equal distribution of wealth, particularly in the U.S.
The 6,000 square foot suburban house gives no material advantage over the row house. What it gives is a status advantage -- but only so long as conspicuous consumption is looked upon with esteem by other people. If the 6,000 sq. ft. home comes to be socially regarded as loutish and obscene, then its owners can actually improve their standard of living by moving to the row house. The fallacy of the GDP is that dollars and cents just don't measure these kinds of things.
ReplyDelete"The 6,000 square foot suburban house gives no material advantage over the row house."
ReplyDeleteEvidently, you have never smelled my cooking...
ANON 4:18: "I don't see how we are going to avoid global climate change and expanded resource wars without a reduction in our standard of living as it is currently understood."
ReplyDeleteHow do you understand "our standard of living" as it applies to global climate change and resource wars. Since we do not set out to produce either one of these things, it would appear they result from waste and spoilage.
How many hours of rudimentary labor are needed to secure the average retirement? You can make up whatever you want as the "average retirement", but is has to include food, a place to live, and medical care along with some clothing without being part of the work force. You can look at it as "saving up for retirement" or you can look at it as the current workers supporting the current retirees. That latter is the reality anyway.
ReplyDeleteRudimentary labor is the labor of those with a public education only. In the US that is a high school diploma. If you increase the "free" education then you may well reduce the hours of work. If you reduce the adverse effects of privatizing economic rents then you will also reduce the hours necessary to secure retirement. Technological innovation and capital development reduce rents while population growth increases rents. The price of the average acre of land in the sovereignty (or the land rent) as compared to the average hourly rudimentary wage will tell you if the _economy_ is getting better or worse. The objective is to reward innovation and at the same time reduce the loss to privatized rents. That reduces the hours of labor.
Nobody really "likes" work.
Anon 10:08:
ReplyDeleteOur standard of living involves driving around in single-occupant automobiles and having access to inexpensive passenger air travel. I am assuming that eliminating these options and making a transition to surface mass transit would be considered a reduction in our standard of living. Please forgive me if I am misusing the phrase "standard of living."
The status quo has empowered the military-industrial complex to meddle in the affairs of countries in oil-producing areas of the world and this appears to be intensifying. The status quo has also resulted in emissions of greenhouse gases that, it is becoming increasingly apparent, are causing global climate change. To make matters worse many people in the rest of the world don't understand what entitles us to consume and emit so much more per capita than they do and are taking steps to bring their consumption and emissions up to our level.
The fact that we don't set out to produce either greenhouse gas emissions or the political empowerment of militarists is irrelevant. These are unavoidable consequences of our behavior since there is no credible substitute for fueling these activities that does not have similar or worse adverse environmental and/or geopolitical effects.