Supply Side Economics, Resource Depletion, and Wage Gap Suicide

by EW Wilder

You hear a lot about how America has a “jobs” problem, and sometimes hear about how it has a “competitiveness gap” with the rest of the world and occasionally about how it has an “education gap,” and far too often about how it spends more than it takes in.

None of this is terribly accurate. Here’s why:

The US economy is not exactly capitalist, and it hasn’t been for quite some time. It is an industrial economy of the supply-side type. It has used a system of capital investment combined with government incentive and government-subsidized access to resources to create and fuel the industrial base of that supply-side system.

Access to forests, coal, oil, copper, aluminum, and other natural resources has always been underwritten and incentivized by Washington because these resources were abundant in the United States and because easy and cheap access to them made the creation of products out of them cheap and therefore profitable. One ancillary effect was the creation of massive oversupply: factories made more stuff than there was a ready market for. For a long time, that was okay: the creation of millions of factory jobs was another ancillary effect of industrialized capital, and it allowed for excess wages, which the magic of marketing then turned into demand for the massive oversupply.

But excess wages required relatively well-paid factory workers, a situation created by widespread unionization and the early model of Henry Ford, who paid his workers enough to buy his cars, thus creating a market from his very workforce.

A few generations of this and you have consumerism, the merits and demerits of which we won’t go into here, but suffice it to say, the culture of excess wage and excess production made for material comfort for the masses and massive wealth for the capitalists. Among capitalists, though, it also created the expectation of continual growth: if we know our level of success through how well we dispense with oversupply, the only way to measure our success against our competitors is in how much more profit we make from that oversupply than our competitors do. Thus mere profit is not enough; success must be measured in the continual growth of profit quarter-to-quarter, fiscal-year-to-fiscal year.

Investors’ expectations of continual growth eventually ran up against the realities of the consumer market: while there are always new things to buy, once an established pattern of buying develops, and once a population becomes saturated with consumer products—the situation of a so-called “mature” market—growth slows down to something resembling the overall growth in population. And middle-class, consumer people have few children: their futures are supplied by their own retirement benefits and government-run social security.

This was the case in the US in the 1970s, and it was exacerbated by the realization that natural resources were in fact limited, a realization brought on when the US reached peak oil production in 1970 and then our supplies from the Arab world were interrupted.

Traditional, industrial-based supply-side economics are difficult under these circumstances. How were investors’ expectations to be met? This is when American businesses became more clever than wise. They realized that their major expense was labor (remember the well-paid factory workers from above?) and so the quickest, easiest way to show growth in profitability was to get rid of the biggest-cost item, namely the workforce. And outsourcing, downsizing, “rightsizing,” and “efficiencies” through automation were rewarded not only by CEOs but by investors as well: a good way to get your stock price to rise in the ’80s and ’90s was to lay a bunch of people off.

In the ’90s this was packaged as a brave new world of being “information” workers instead of brute, blue-collar laborers. We were going to educate our way to a new era with a kinder, gentler, smarter workforce. It didn’t turn out that way, of course: first of all, automation quickly took over many information jobs industry promised, and the rest were outsourced to the increasingly well-educated populations of India and China. But there’s another, more important reason this didn’t work: having just gotten rid of an expensive industrial workforce, American companies were not going to risk the cost of hiring them all back at even more costly white-collar wages. Besides, the oversupply of goods were now even cheaper than before, flooding in from China and India and Mexico; we needed even more people to sell goods than before. Thus retail exploded, and industrial workers found their way to the sales floors of Home Depot instead of the factory floors of Ford and GM.

Sadly, these retail jobs had traditionally paid considerably less than factory work, and they continued to do so. But, by training and necessity, we were still consumers; we were making less than we used to, but we still needed to buy to live and believe ourselves successful, especially to live out that American Dream we had grown up pursuing. In order to keep that dream going, the Fed and financial institutions drastically slashed interest rates; we went from being a nation of producer-consumers to being a nation of seller-borrowers. And the last place we found to squeeze credit from was our homes.

When banks and financial institutions found this last, great well of American equity, people’s homes, they went after it with a vengeance, upselling home equity loans, pushing mortgages on people who could never afford them, and packaging these in collateralized debt obligations—all in the pursuit of that one value they still retained: the need for continual growth.

Hopefully, I need not recount how that worked out. I assume that the readers of this blog will, unlike most Americans, recall the years since 2008.

And so we’re faced with a situation in which our supply-side system is stressed on the bottom end by lack of excess wages for workers and on the top end by dwindling resources, by two political parties that fail to understand this relationship, and by investors and corporations that have managed, through bailouts and complex financial instruments, to finally fire not merely the vast majority of the workforce, but the vast majority of actual business investments: as long as they have stock to play with, they can make money. As long as they can make more money betting on the market than the next guy, they can maintain the illusion of continual growth. As long as they can obtain and market somebody’s resources, even if they have to waste the nation’s blood and treasure to do it, they can tell themselves that this is how capitalism is supposed to work and this is how markets stay “free.”

First and foremost, we need to stop thinking in terms of overproduction. Our world is finite, and we need some mechanism, market-based or governmental or cultural or some combination of these, to bring demand in line with actual supply.

Second, we need to abandon the virtue of continual growth. Metastasis will kill the host.

Last, we need to rethink the relationship between wages, human value, and a dignified life. Excess wages and consumerism make us believe that we are more successful if we can buy more stuff. But, really, in the end, do we miss our loved ones who have passed on any more for having had more things, or do we miss them more for having been better people?

There are a few ways this can happen—and it will happen; the availability of resources will dictate that. These ways all fall into two broad categories: one is relatively easy and relatively planned. It involves cooperation between The People and the employers, between the citizen and her government. The other is hard and chaotic. It involves carrying on like we have until the crash that reduces us to a world of pre-industrialism, perhaps even of pre-history.

Which would you choose?

Cultural Creation and the Power to Change

Poems and plays and novels and films must be culturally powerful, that is to say they must have the potential to change culture by changing people, or they would not exist.

Artists may create for very limited audiences—even just for ourselves—but do so for some reason having to do with real change in the real world. I am a First Amendment extremist not because I take the “what’s the harm?” attitude but because I believe the exact opposite: words and images and music can cause great good or great harm, and, under circumstances when great harm is called for, they must be asked to do just that.

Documents as problematic and small as the Declaration of Independence, novels as flawed as Uncle Tom’s Cabin or polemics as wrongheaded as Mein Kampf, can cause actual shooting wars. This is why our ability to survive the onslaught of ideas must be developed with the same attitude the Spartans took toward combat. Our problem with free speech in this country arises because of our intellectual unpreparedness: we have not trained to deal with the realities of ideas, and therefore we are slaves to weak and preposterous ones.

We are being ruled by idiots because we have shown by our lack of intellectual strength that we deserve to be.

Because words are dangerous and should be dangerous, their use in public requires great responsibility: both in the sense of being held accountable for their misuse and also in the sense of a duty to use them when we need to. We ought to take Sarah Palin to task for her inane non-sequiturs. We ought to hold Obama responsible for not speaking with the kind of force and conviction this moment in history calls for. We ought to ridicule John Boehner for the abject disingenuousness of his pronouncements. We ought to call a lie a lie and we should reveal it as such, loudly, publicly, mercilessly.

The press has failed in this across the board. It has confused bipartisanship with objectivity and fairness with frivolity. It can’t distinguish between tactics and strategy, rhetoric and reality. Its obsession with opinion polls is the simulacrum of democratic thought, and those in the press are too desperate of avoid real controversy to realize their role in fulfilling the prophecy of the pollsters.

The weakness of our professional political communicators is amplified by an educational system that rewards rote learning and punishes analysis and critique. It is enhanced by workplaces that quash creativity and incentivize compliance and acquiescence. It melds with a consumer marketplace that infantalizes people into ids and an entertainment regime that never passed the seventh grade. The result is culture artificially flavored, art popped to froth and fizz, ideas the equivalent of cognitive Twinkies.

We have to push ourselves back from the table and venture out beyond the pre-packaged, harvest the produce of our culture the old fashioned way. If we do, we’ll be made hearty by its nutritive value, but also shocked at its succulence.

–EW Wilder

The Linden Party

The linden tree north of the administration building on the campus of Hesston College is one of those sprawling old souls that seems, in its weary sort of way, to be holding up the sky. The bigger branches vault above the green; the trunk is more round than tall—a stout, barrel-chested sort of fellow.

Until I noticed the plaque below, naming the tree as a linden, I’d never known what a linden looked like. The linden is the kind of tree that you read about as taking on some symbolic meaning or other. Perhaps the founders of a new nation met beneath a linden; maybe a new philosophy was born there.

I can see why: the boughs are rooflike and protective, the leaves like greaves of armor. It’s a very reassuring tree, the linden, and so a good place for those who may be unsure about their new ventures toward solidarity, toward solace.

I associate the linden not with Kansas but with the Old World and the East Coast. It seems like it might not be well suited to harsh winds and drought; out here, to survive as a tree is to lose parts of yourself in the process like the cottonwood or to grow small and gnarled, too twisted to care, like the Osage Orange. But this particular linden has been nurtured. And maybe that’s the lesson: you’ve got to cultivate that upon which you rely. This is the lesson of agriculture—of culture in general—of good governance, of responsive, responsible citizenship. The linden, with its greybrown bark and dark green leaves and forthright shape, could be a good symbol for us.

Not that we need a symbol. But we do need an idea about how we can cultivate citizenship, how we can work at becoming more strong instead of more fractious. We need an idea about how we are going to deal with our problems through individual agency, through responsibility that’s backed by support, through empowerment and mutual assistance instead of constant struggle. That’s the model for a functioning liberal democracy; it’s one that enlists the government as an asset, an arm making real, making strong, the will of the people, uplifting them and aiding their endeavors, “promot[ing] the general welfare, not sacrificing the individual at the altar of profit or security, power or privilege.

 

–Lael Ewy

Beyond Illness, Towards Mentally Healthy Communities

Almost our entire response to mental health is reactive: we create hospitals and mental health centers; we develop drugs and apply therapies. Our response assumes that mental health problems come out of nowhere, have no discernable etiology other than perhaps a ”genetic propensity” that’s “poorly understood.”

Some “strengths-based” models have tried to correct the traditional “illness-based” approach to the understanding of psychological processes by asking what a healthy mind looks like. However, like the illness model, it is simply too limited: the strengths model places the locus of mental health too completely on the individual. It is not far to go from the strengths-based standpoint right back to a morality model in which suffering people are blamed for not maintaining their mental health, even in light of obvious stressors and triggers in their cultural environment.

If we approached the treatment of, say, cholera this way, we would spend incredible effort and copious amounts of cash coming up with drugs and treatments and therapies while utterly ignoring the place where the crap meets the well.

What I am suggesting is an approach that asks a simple question: “What are we doing to create mentally healthy communities?”

Progressive thinkers have long asked this of physical health and have influenced city planners to produce bike paths and green spaces, walkable town centers and recreation-friendly workplaces.

But a mentally healthy environment goes beyond these (though it does include them). In order for it to work, we must also look at how our public services deal with people. We must look at what our public schools do to our sense of self and agency, how they present the matter of possibility in our intellectual and social development. A mentally healthy environment would be one in which there are places for reflection, in which noise is smartly managed, in which public space is both welcoming and safe.

More controversially, a mentally healthy environment would be one in which work is organized so that people can manage its stresses, in which people’s livelihoods are, as much as possible, stabilized, but their aspirations are honored. A mentally healthy environment would therefore necessarily be one of managed risk and of individual control over how that risk is managed. A mentally healthy environment would be one in which the common abuses of the public sector are minimized not merely because they’re bad business but also because they’re bad form, properly the subject of social opprobrium, not lauded as the way “tough-minded” business people ought, really, to act.

This vision is far from utopian: our lives will never be perfect. There will still be disagreement and misunderstanding; there will still be conflicting egos and disease and privation and sadness and strife. A mentally healthy environment won’t keep us from being heartbroken or accident-free.

But it will make things easier when those difficult inevitabilities arise. And as humans, equipped with this great tool that is culture, is that not what we have worked eons to do?

 

–Lael Ewy