Editor’s note: This commentary is by Will Patten, who is a former executive with Ben & Jerry’s Homemade and past executive director of Vermont Businesses for Social Responsibility. He and his wife now own the Hinesburgh Public House in Hinesburg.
[T]he election of Donald Trump was a revolution. No pitchforks and torches, not a shot fired. But the status quo was upended and, like all revolutions, we don’t have a clue what is to fill the void.
But amid the rancor, sleaze and polarity, there was remarkable harmony on one single issue. Across the political spectrum, candidates all agreed that we had to get our economy growing again. Their proposals for doing so were wildly different and they all claimed to be the only ones who could get it done. But there was a shared sense of urgency about restoring growth. Why?
If we chart per capita GDP growth over the last few centuries, it is one of those hockey stick graphs with phenomenal year-over-year GDP growth in the 20th century. Those are the “good old days” that politicians promise to bring back.
However, over the last eight years, with interest rates near zero and inflation under control, GDP growth has struggled to reach 2 percent despite a massive injection of federal cash.
Beginning in 2009, the government pumped a half trillion dollars in ARRA money and $3.5 trillion in quantitative easing into the economy. That’s $4 trillion pumped into a $17 trillion economy. And all we got was a piddling 2 percent growth.
Why is that such a bad thing? Why is there such urgency to get our economy growing again? Because tomorrow’s growth services today’s debt.
Seventy percent of the U.S. economy today is driven by consumption. We buy things we don’t need with money we don’t have because we’re sure we can pay for it tomorrow. A century of constant growth has spawned a culture of debt.
Credit card debt is approaching a trillion dollars … at 15 percent interest. Student debt is at $1.2 trillion with more than seven million debtors in default. Pension funds are frantically treading water. And our collective national debt is the biggest of all, growing at $1 trillion a year. (We’ve been assured that the federal debt is not a big deal because it was a small percentage of GDP.) All this debt was incurred on an assumption of constant economic growth.
Now a lot of people are suggesting that the good old days of economic growth are over and not coming back. They cite a number of reasons why. I find at least four of them very credible.
• One is simply supply and demand. The marketplace is not supplying any “must have” products. Only faster, cheaper, more efficient models of the stuff we already have: cars, computers, refrigerators, phones, TVs. And demand is waning. The boomers, who control 75 percent of our wealth, are shedding possessions and millennials are completely turned off by the hype and hucksters of the marketplace. The boomers and millennials make up 50 percent of our population and they’re not consumers.
• Another reason is that we now live in resource-restricted times and so we are intentionally imposing limits on economic growth in order to slow the depletion of our resources. Zoning laws to preserve open spaces, environmental regulations to protect our water and air, financial regulations to preserve a sense of ethics.
• Third, recently created wealth from technological innovation and globalization never found its way into the pockets of the middle class and so the middle class stopped believing in the American Dream which has produced the political dysfunction and economic despair that are so prevalent today.
• Finally, we have seen in our own communities how technology is replacing many of the good-paying jobs in manufacturing, banking and retail that used to sustain the middle class.
So I agree that the good old days of 4, 5 and 6 percent GDP growth are not coming back. Is there life after growth? Of course, once we confront our spending habits.
Businesses will be born. Some will prosper and some will fail. Goods and money will continue to change hands. There will be winners and losers. The economy, like nature, is a zero sum game. Constant economic growth violates the laws of nature. That tide that floats all boats … it can’t just keep rising without becoming a damn flood.
In my opinion, we can no longer afford to invest tax revenues in “the job creators” who promised that the dollars will eventually trickle back down to the people. That hasn’t worked.
Many believe that technology is going to guide us into the future and protect our wonderful lifestyle while avoiding environmental disaster. If the 20th century was the age of the consumer, the 21st appears to be the age of artificial intelligence.
Yes, AI can increase productivity and make our lives easier. And it can devise solutions to the crises ahead of us. But they won’t mean anything unless we have the will to act on them, unless there is a shared commitment to do something.
Anthropologists tell us that the single human trait that distinguishes us from all other species is our ability to cooperate, to work together toward common objectives. Whether it’s chasing down an antelope to share for dinner or finding a cure for cancer, humans have been able to organize around a common good.
But it seems to me that the more we indulge in artificial intelligence, the less able we are to identify and appreciate the common good. We stare at our screens and filter reality to our own liking without regard for fact or truth.
This “post-truth society” is enhanced by an excessive patriotic blather about our individual freedom. Unbridled personal freedom was a wonderful luxury afforded us by an abundance of natural resources but it cannot survive the new realities without limitation.
So I believe that life after growth begins by reasserting and teaching the common good — those things that benefit the most people most often – and by relearning how to work together to accomplish them.
There are four common goods that must become our priorities:
• The first is a continuum of exploration and education, beginning at age 2 when brains are growing the fastest and extending through adult learning programs. Our stratified education system allows us to believe that we can “complete” our education with a diplomas or degree, neither of which assures economic stability these days. We can never complete our education.
• Health care is another area that touches every one of us on a regular basis. The world has figured out how to design and run efficient health care systems and we’ll catch on soon. But we have to recognize health as a common good and teach healthy behavior as a personal and civic responsibility
• We also have to commit to the health of our planet. We are 7 billion souls growing to 9 billion in 35 years and 11 billion by the end of the century, marching across the earth like locusts in a wheat field. We have to get control of ourselves and save the one planet that feeds us all.
• Finally we have to build and maintain the infrastructure that we all depend on and cannot build on our own. Energy, communication, transportation, housing and public safety are essential ingredients of a dynamic, competitive economy and have to be a priority.
The engine of any economy is small business and the engine of small business is people. Investments in people will create and maintain economic vitality in Vermont. These investments in the common good are the highest and best use of our tax revenues. In my opinion, we can no longer afford to invest tax revenues in “the job creators” who promised that the dollars will eventually trickle back down to the people. That hasn’t worked.
Today, too much of our tax revenue is spent dealing with our failure to invest in people. The Agency of Human Services consumes 50 percent of our state budget.
As an entrepreneur I am helplessly optimistic. I think that economic vitality — without economic growth – can be accomplished and it’s going to be much easier to accomplish here in Vermont than in other states.
First, we are better than other states at living within our means. We can learn zero-sum budgeting. Vermont is a place where we don’t expect to get rich; we just hope to get by. (Reportedly, there are 40 billionaires living in Vermont. We just don’t know it because they all drive Suburus.)
Second, we have maintained an appreciation of the common good. We call it community and we work hard to support it. It’s part of our culture.
Third, our scale is a major asset. Our 625,000 people are divided into 251 small governments with an average population of 2,500. Unlike much of the country, we can govern ourselves. We can work together toward shared objectives.
So there are some difficult cultural and financial adjustments ahead as we wean ourselves off an addiction to consumption and debt, but I think here in Vermont we can learn to live within our means and to live in harmony with Mother Nature. It’s not going to be such a great stretch for us. It’s something I look forward to.
