Change the Rules of Engagement

Aug 15, 2011 | By: Mr_Blue | Tags: cooperatives, new economy, worker ownership

Fighting a class war based on the old rules is a losing proposition for poor and working class Americans. It’s time for new rules. A new way of thinking when it comes to our economic system.

Traditional media and some talking heads are starting to recognize the huge level of income inequality and wealth gap in the U.S. U.S. hasn’t experience this level of inequality since time preceding the Great Depression. There are serious consequences to this level inequality. One of which we are seeing today - those at the top do what ever they can to keep what they have by controlling the political system. Yep, we’re talking a plutocracy.

To some it’s obvious what is happening. In fact, Warren Buffett, famous stock investor, even called it:

“There’s class warfare, but it’s my class, the rich class, that’s making war, and we’re winning.”

Mr. Buffett was at it again today in an op-ed in New York Times titled “Stop Coddling the Super Rich” where he called for higher taxes on the super-rich.

There’s no question that Mr. Buffett is right about class warfare but raising tax rates on the super-rich is not enough. We have serious structural problems in our economy that will not be addressed by simply raising tax rates on the super-rich. Stagnate wages and household incomes is one the problems that will still remain. What do we do about that?

My concern is that this one thing - increased tax rates on super-rich - is being sold as the end all be all to our economic ills. It’s not. The problems we have relate in large measure to our economic system.

Fighting class warfare by the old rules is obviously a losing proposition for poor and working class families. This debate over taxing the super-rich is part of the old rules. We know that tax rates can easily change again under another presidential administration and another party controlling congress. What we need is fundamental and transformational change to our economic system. This won’t happen using the old rules.

We must change the Rules of Engagement on this class war. Or in non-military lingo - we must challenge the status quo. We can do that by starting a New Economy - one that competes with the current economic system that’s the root cause of our economic problems. This involves creating new institutions that could eventually replace existing ones. One example would be to increase the use of credit unions and local/community banks and snubbing the big banks. Another would be increase use of business models that prioritize people and environment over profits.

David Korten has written extensively on a vision for a New Economy. He offered ten principles for a New Economy that are worthy of consideration. Here are just a few:

  1. The proper purpose of an economy is to secure just, sustainable, and joyful livelihoods for all. This may come as something of a shock to Wall Street financiers who profit from financial bubbles, securities fraud, low wages, unemployment, foreign sweatshops, tax evasion, public subsidies, and monopoly pricing.
  2. GDP is a measure of the economic cost of producing a given level of human well-being and happiness. In the economy, as in any well-run business, the goal should be to minimize cost, not maximize it.
  3. A rational reallocation of real resources can reduce the human burden on the Earth’s biosphere and simultaneously improve the health and happiness of all. The Wall Street economy wastes enormous resources on things that actually reduce the quality of our lives—war, automobile dependence, suburban sprawl, energy-inefficient buildings, financial speculation, advertising, incarceration for minor, victimless crimes. The most important step toward bringing ourselves into balance with the biosphere is to eliminate the things that are bad for our health and happiness.

There are two things that I would explicitly add to these principles (because that’s just how I roll) and those are to encourage more cooperative businesses and worker ownership. Both would go a long way to improving local economies and overall democracy, increasing community wealth and promoting business models that put people and environment before profits.

Economic empowerment gained from creating a New Economy and building local, self-sufficient economies will lead to political empowerment. Now, that’s Change that we can believe in.

Good luck.

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