Posts Tagged 'economic growth'

Making ourselves at home in an economy that has enough

authors together

by Katherine Trebeck and Jeremy Williams

As we enter 2019, there is one thing that all the commentators and punters seem to agree on: no one can really predict what will happen as the months unfold.

What form will Brexit take? Will Trump’s trade wars lead to hostility between nations or will he pull off a peace deal with North Korea? What will the gadget be that people flock to? Will 2019 be the year that plastic bags increase to 10p each in the UK and plastic straws become a thing of the past?

“So many of the factors that shape one’s life are determined in realms beyond your control.”

Against these multilayered uncertainties is the uncertainty that the majority of people have been dealing with for some time: so many of the factors that shape one’s life are determined in realms beyond your control. In boardrooms that decide your pay and hours. In algorithms that shape political decisions. In weather that is more extreme due to the pollution and emissions of the richest. In navigating social interactions charged with pressure to look a certain way, own certain things, or even to pose and pout in a certain way.

It is no wonder that more and more people are grasping for something different, whether it is apparently simple solutions offered at the ballot box or stepping outside the mainstream into alternative lifestyles.

This individual searching is mirrored in the economy writ large, which also needs to find a different direction. It needs a new project that recognises that the growth-oriented economy of the 20th century has delivered, but that now, many parts of the world are entering a period where growth is bringing a diminishing suite of benefits and often even increasing harm. The institutions and policies that once rendered growth positive (such as progressive taxation, collective provision of health services and education, or labour market arrangements that balanced power more equally between workers and the owners of capital) are being eroded. This is leaving the benefits of growth to be enjoyed by fewer and fewer people. Pursuit of ever more growth is often driving increasing problems that require yet more resources to fix.

“The pursuit of more poses ever greater risk for people and planet – and yet it, the idea of growth, has a stranglehold on our political and economic systems.”

The pursuit of more poses ever greater risk for people and planet – and yet it, the idea of growth, has a stranglehold on our political and economic systems.

It is time for such economies to recognise that they have arrived.

‘Arrival’ is about adequacy, being able to meet basic needs. It is primarily a material notion, a matter of having the resources to deliver a good life.

It confronts the ostensibly forbidden question of whether development has a destination.

Crucially, however, having enough resources collectively does not necessarily mean everyone individually has enough. Arrival does not imply that everything is resolved and everyone has what they need. Rather, it is the idea that a society collectively has the means for this.

“Failure to share the world’s harvest, both within and between countries, is one of the most enduring frustrations and tragedies of our time.”

Failure to share the world’s harvest, both within and between countries, is one of the most enduring frustrations and tragedies of our time. It is the cause of so many of the challenges and uncertainties that people, politicians, businesses and communities are wrestling with as 2019 unfolds.

Perhaps 2019 will be the year in which people recognise that growth has reached a point where a high standard of living could, theoretically, be universal.

Realising that possibility demands a new project – using resources in a smarter, fairer way, rather than wasting or hoarding them; focusing on the quality and distribution of economic activity and material resources. That is the task of ‘making ourselves at home’.

Once the delusion of growth as both an end in itself and the best of all possible means is discarded, discussion can then turn to what sort of economy we can create, to making better use of what has already been accumulated and, perhaps more than anything, ensuring it is fairly distributed.

Many aspects of this ‘grown up’ economy are already in existence – and indeed flourishing. From pro-social businesses to the ‘remakeries’ that are popping up in high streets. From policy makers creating incentives for the circular economy, to the city mayors using participatory budgeting.

Making ourselves at home is an economy in which there is scope for continuous improvement. Science and technology will advance. Human creativity and imagination are boundless. The economy will remain dynamic.

What changes is the ultimate goal. Making ourselves at home is an ethos of qualitative improvement that is a very different system-wide goal to the sometimes meaningless, sometimes harmful, and sometimes unnecessary, pursuit of more.

 

the economics of arrival_fcThe economics of arrival by Katherine Trebeck and Jeremy Williams is available on the Policy Press website. Order here for £11.99.

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If the US economy is so good, why does it feel so bad?

Salvatore Babones, author of Sixteen for ’16: A progressive agenda for a better America, explains why fixing the US jobs crisis can’t wait for the next president to take office…

Salvatore Babones

Salvatore Babones

With a 2 percent annual growth rate, 5 percent unemployment, and zero inflation, the US economy is the envy of the world. Growth seems to be rising and unemployment seems to be falling, which means that most analysts expect an even better US economy in 2016. Throw in low gas prices and a strong dollar, and what’s not to like?

If the US economy is doing so well, why are ordinary people so unhappy with their own economic prospects?

Where are the jobs?

The aggregate US economy may be growing but most people’s personal economies are not. Census Bureau data show that real per capita income is still below 2007 levels — despite six years of solid economic growth. And Bureau of Labor Statistics data show that despite today’s low unemployment rates the jobs still haven’t come back.

Back in 2006 the employment rate of the civilian population — the proportion of adults who had jobs — was over 63 percent. Allowing for people who are still in school, people who are retired, people who are disabled, and people who prefer not to work, that was just about everyone. When the economy is doing well, people who want jobs can get jobs.

“Over the last six years, the economy has recovered. Employment has not”

Compare that with 2015. For all of 2015 to date the employment rate has been stuck below 60 percent. In fact, the employment rate has been not risen above 60 percent since the technical beginning of the “recovery” in June, 2009. Over the last six years, the economy has recovered. Employment has not.

The difference between the 63 percent employment rate of 2006 and the (well under) 60 percent employment rate of 2015 is roughly 7.5 million people. That’s the number of jobs missing in today’s roaring economy. Bringing today’s employment rate back up to 2006 levels would require the creation of more than 7.5 million new jobs.

Full-time to part-time

What’s more, since the Global Financial Crisis there has been a shift from full-time to part-time employment. Some 2.5 million full-time jobs have disappeared, to be replaced by part-time employment. Assuming that people have basically the same preferences as they had before the recession hit, this means that the US economy is really short 10 million full-time jobs.

And remember, this is the economy at its best. The current “recovery” won’t last forever. It is already the fourth longest expansion of all time and about to overtake the World War II period to become the third longest. If the next recession hits while the economy is already 10 million jobs short of full employment, God help us.

“If the next recession hits while the economy is already 10 million jobs short of full employment, God help us”

The managers of the US economy don’t seem to be worried about this. On December 16, 2015 the Federal Reserve raised interest rates (albeit by a tiny amount) for the first time in seven years. The Fed expects that “economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen.” In other words, the Fed expects more good news.

More good news for whom? As analyses from the Financial Times show, banks are increasingly parking their money at the Fed, not lending it out to businesses and consumers. Along with the Fed’s increase in lending rates (from 0 to 0.25 percent) came an increase in the interest rate the Fed pays banks on their own deposits at the Fed (from 0.25 percent to 0.5 percent).

Excess funds

For the last six years banks have parked trillions of dollars of excess funds in their accounts at the Federal Reserve. After all, they can earn 0.25 percent risk-free by borrowing money from the Fed and placing it directly in their own accounts at the Fed. Banks now hold some $2.5 trillion in excess reserves in these accounts. Those holdings give banks collectively an extra $6 billion in annual risk-free profits.

Before the Global Financial Crisis, US banks held virtually $0 in excess reserves in their Federal Reserve accounts.

“What we see today is…great for banks, great for bankers, and not so great for ordinary workers”

What we see today is a US economy that is great for banks, great for bankers, and not so great for ordinary workers. Employment rates are down, employment hours are down, and wages are down. Bank profits are up, up, up to record levels. It’s no wonder that ordinary people are not as optimistic as the Board of Governors of the Federal Reserve System.

In the end, the Fed can’t fix the problems of the US economy. The Fed can help the banks (and the bankers who serve on its boards) but it can’t make companies hire more people. Only government can do that, and the US government has shown no willingness to create jobs in this recession, or even in this century.

The US government should be borrowing that cheap Fed money and using it to put people to work. Education, healthcare, and infrastructure could all absorb millions of workers to do jobs that desperately need to be done. President Obama should make this clear to Congress and put people to work. Fixing the jobs crisis can’t wait for the next president — or the next recession. It is already long overdue.

Sixteen for 16 [FC]Salvatore Babones is Associate Professor of Sociology & Social Policy at The University of Sydney. His new book Sixteen for ’16: A Progressive Agenda for a Better America is the first book in the Policy Press Shorts series. For more information about the policies proposed in Sixteen for ’16 see the book website at 16for16.com.

Sixteen for ’16 is available to purchase here  from the Policy Press website. Remember that Policy Press newsletter subscribers receive a 35% discount – if you’re not a member of our community why not sign up here today?

The views and opinions expressed on this blog site are solely those of the original blogpost authors and other contributors. These views and opinions do not necessarily represent those of the Policy Press and/or any/all contributors to this site.

Planning and prosperity

As the UK economy teeters on the edge of a depression, a debate has emerged on the value of economic growth as the key indicator of prosperity. Tim Jackson is the leading proponent of the argument that society needs a different metric. This argument puts particular pressures on the planning system as it seeks to shape our built and natural environment to meet our needs and desires. Since the state today has only a facilitative role in relation to urban development, we collectively depend on private market processes to deliver urban change and maintain beloved features of our environment. We need private sector-led urban development to deliver urban regeneration; we need a buoyant property market to safeguard historic buildings. The planning system struggles to meet its objectives in the absence of economic growth.

Is there no way out of this trap? Well, the planning system could decide to operate in a different way in at least some locations, probably those most subject to the flight of capital. Here it could promote community-based activities and low value land uses. It could decide that consumption-led regeneration is not the way forward. It could instead use the voluntary resources of communities to deliver environmental improvements and, most importantly, protect the results from any renewed interest by the private market. A bold form of localism for the planning system to pursue but perhaps one with genuine benefits for at least some communities.

Yvonne Rydin, author of The purpose of planning, publishing this month
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Prosperity Without Growth or Ferraris for All? Tim Jackson and Daniel Ben-Ami’s Online Debate

By Gudrun Freese. Originally published at http://www.earthscan.co.uk/blog on 11 November 2010

Is more economic growth the solution? Can it deliver prosperity and well-being for a population projected to reach 9 billion? Or is it driving us towards collapse?

In a series of blog posts on the Earthscan website (and reproduced here), Tim Jackson (Prosperity Without Growth: Economics for a Finite Planet) and Daniel Ben-Ami (Ferraris for All: In Defence of Economic Progress) will move this crucial debate forward by tracking down their points of departure on economic growth and its benefits, human exceptionalism and natural limits.

These blogs will continue a public conversation they began at their recent Battle of Ideas encounter, which moved online with:

(1) This blog post from Tim and

(2) This response from Daniel.

NEXT…

(3) Tim Jackson’s response to Daniel Ben-Ami’s latest blog will be posted here and on www.earthscan.co.uk/blog shortly.

Tim Jackson
Tim Jackson is Economics Commissioner on the soon to be axed UK Sustainable Development Commission. He is also Professor of Sustainable Development at the University of Surrey and Director of the ESRC Research Group on Lifestyles, Values and Environment (RESOLVE). In addition to his scientific work, Tim is an award-winning dramatist with numerous BBC radio writing credits to his name. You can watch his public lectures and talks, including his 2010 TED talk and his Deakins lecture here.

Daniel Ben-Ami
Daniel Ben-Ami has worked as a journalist specialising in economics and finance for over 20 years, during which he has contributed to many national newspapers and specialist publications. His book on global finance, Cowardly Capitalism (Wiley, 2001), was recommended by the Baker Library of Harvard Business School. His website and blog can be found at www.danielbenami.com

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