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Asean Affairs 5 February 2013
AMERICA’S ECONOMIC SUICIDE
By PROF. ARNOLD A. McMAHON
The U.S. is committing economic suicide. It is doing so because of the economic system that it has embraced. When a country commits economic suicide, it does not die overnight. It bleeds to death gradually. The U.S. is now bleeding to death. Can its death be prevented? Yes, if it takes the right steps.
THE BAD NEWS
The deficit of the federal government is now over $16 trillion. It spends $10.65 billion every day, about $6.85 million per minute. It borrows $3,129,720 every minute.
In 2008, America’s private debt was 310 times that of its GDP – over $45 trillion.
Homes are being foreclosed on, wages slashed, benefits eliminated, jobs sent overseas, infrastructure neglected. For many, the American dream has become a nightmare.
Since 2007, about 12 million foreclosures have been filed. More than 4 million homeowners have lost their homes. Since 2006, housing losses exceed $7 trillion.
The debt load of college students is now over $1 trillion – more than all credit card debt. It has risen 511% between 1999 and 2011.
In 1979, the U.S. had 19.5 million manufacturing jobs; in 2011, 11.6 million.
In 1979, 18.2% of jobs were in manufacturing; in 2011, 9%.
The furniture industry lost 70% of its productive capacity between 2000 and 2010.
In 1992, furniture imports were 19% of the domestic market; in 2009, 70%.
90% of all roses sold in the U.S. are grown in Columbia.
In 2011, 50% of solar photovoltaic panels installed in the U.S. were made in China.
Between 2002 and 2012, 59,160 factories closed – 14% of the total.
Between 2002 and 2012, circuit board manufacturing shrank by two-thirds.
In 1976, 172,000 were employed in the shoe industry; in 2011, less than 15,000.
In 1984, there were 746,000 textile industry workers; in 2011, 120,000.
In 1990, there were 565,000 computer programmers. In 2008, 427,000.
Since 1983, the average earnings of flight attendants decreased by 31%.
In 2008, the Department of Transportation said that 27% of heavy airframe maintenance on aircraft was outsourced – often to developing countries in Africa or countries like El Salvador. The reason? Wages in those countries are a lot less.
In 1990, there were 400,000 aerospace workers; in 2010, 210,000.
70% of Boeing’s 787 Dreamliner is foreign content. The original 727 had only 2%.
Since 1990, over 43,00 trucking companies have gone out of business, and the earnings of truck drivers declined by approximately 50%.
Yet, the CEOs of 50 companies that laid off the most workers in the Great Recession received about $12 million each in 2009.
The last trade surplus was in 1973. Since 1976, the cumulative trade deficit has totaled $10 trillion. In 2011 alone, it was $560 billion. With Mexico, the cumulative debt total is $700 billion since NAFTA came into effect in 1994.
In 2008, the U.S. imported 38% more than it exported.
In 2006, the U.S. was # 1 in infrastructure. In 2011, 16th. It needs $2.2 trillion to fix it. The U.S. comes in 14th. in internet speed, behind such countries as Latvia and Romania. Hong Kong is # 1.
1 in 2 Americans live in poverty. Yet, the Koch brothers are worth an estimated $25 billion each.
In the golden years after World War 2, the number of Americans covered by guaranteed pensions (defined benefit plans that guaranteed a fixed income for life) had grown to 35 million by 1970. In 1985, there were 112,000 defined benefit plans. By 2011, U.S. corporations had killed 84,350 of those pension plans. Corporate America has substituted uninsured 401(k) plans, which for most Americans will pay a retirement benefit of about $80 per month.
The financial industry – stockbrokers, investment houses, securities firms – have spent almost $2 billion lobbying Congress to do this in the last 20 years. They make a lot of fees from this $3 trillion industry.
The growth areas for employment after 1990 was in such low-paying jobs as retail clerks and security guards.
This tale of woes could continue endlessly. And it is going to get worse. There may be temporary, partial respites, but the long term trajectory is down – more people losing jobs, deeper and deeper cuts in pensions, Social Security, Medicare and Medicare, more potholes in streets, more crumbling bridges, more antiquated and outdated versions of the internet, growing social unrest, loss of national prestige, emotional and economic depression.
But every illness has a cure. We may not always know it, but we have to keep looking for it. The economic and social cancer that we are experiencing has a cure, but we need to have the courage to see what that cure is. We need to ask – honestly and bluntly - why and how did the U.S. get itself into this disaster?
The short but bitter truth is that the seeds for our destruction were present from the very beginning, and are now reaching their logical conclusion. The very economic system that we espoused, caused both our rise and fall. This needs to be understood and acknowledged before a cure can be effected. A brief bit of history is necessary to accomplish that.
A BIT OF HISTORY
As the Modern era emerged from the Middle Ages, the idea that was used to overthrow the power structure of the past was the dazzling and appealing idea of individual liberty. This appeared in a variety of forums.
In the religious arena, Martin Luther used the idea to attack the might of the corrupt Catholic Church. He held that each person must interpret the Bible according to his or her own individual conscience, thus attacking the teaching authority claimed by the pope. As he said before the Diet of Worms in 1521, “I cannot and I will not recant anything for to go against conscience is neither right nor safe”.
In the economic sphere, this sense of individuality was prominently embodied in Johann Fugger, a 14 century German weaver. Under the medieval guild system, prices and wages were set by the respective guilds. Fugger changed that. He bought up the weavings of other weavers – about 1000 at its height – so that he could monopolize the market and charge higher prices than the old guild system allowed, and thus maximize profit. Within a few generations, his family was the richest in the whole of Europe. Kings borrowed money from it to wage wars.
Economics and the new religion seamlessly married together. R.H. Tawney in his classic work, Protestantism and the Rise of Capitalism, shows how the religious ideas unleashed by Luther were harnessed and married to economic ends. For example, he shows how these ideas were used to overturn the medieval ban on usury so that moneylenders could charge exorbitant interest. The greedy modern finance industry was born.
Greed was not new to human history. It had been the driving force behind the empires and kings, dukes and earls of the previous period to amass large land holdings, and to let the mass of humanity languish as their slaves and serfs. Calvinism blessed these greed by preaching that wealth was a sign of godliness.
This new world was being born with new players at the helm. The kings and dukes and earls were not the scientists whose work would usher in the industrial revolution, or the entrepreneurs whose commercial enterprise would begin to span the globe. But though the cloak that these new players wore was different from the old aristocracy, what lay behind the cloak was the same – unbridled greed.
Across the English Channel, similar ideas were brewing there. When Henry VIII could not get the pope to annul his marriage to Catherine of Aragon, he decided to start his own church and annul the marriage himself. He simultaneously confiscated the wealth of the abbeys.
In the secular sphere, it would lead to the emergence of English philosophers such as John Locke, who combined a materialistic epistemology with a doctrine of individual liberty. Everybody, according to him, had the right to life, liberty and the pursuit of property.
Some of the English, imbued with that desire for the pursuit of property and alleged spirit of freedom, headed several thousand miles across the ocean to America. They found a land of full of incredible resources and almost limitless horizons. However, though they espoused and believed deeply in the gospel of the right to private property, they paid little or no attention to the property rights of the existing inhabitants – the Native Americans – in their pursuit of property. They simply grabbed the land from them. Though they claimed to believe in freedom, they likewise did not apply this to those they brought from Africa in chains. As slave labor was free, it allowed for greater profits.
In the meantime, the scientific revolution led to the industrial revolution back in England. Some realized that by mass-producing goods in factories, they could make much more money. By paying a pittance to their workers, they could maximize their profit – the holy grail for them. The subjugation and oppression of the serfs by the previous aristocracy was carried over into the brutal and inhuman environment of the factory. The latter became the new face of feudalism.
So, it should not have been too surprising that when industrialization took off in the U.S. around 1820, those who built the factories paid scant attention to the rights and freedoms of those who manned the machines. The new serfs were paid paupers’ wages while their masters amassed great wealth. The Rockefellers and Carnegies are a testament to that.
But a curious thing happened.
The very doctrine of freedom that these titans of industry had used to propel themselves into great wealth had gradually seeped into the minds and hearts of the workers. They wanted to be free also, and freedom required better wages and working conditions. The titans, of course, struck back at the workers mercilessly when they went on strike – often gunning them down.
But slowly, the titans realized that if their products were to be bought, there needed to be people to buy them – and of course, this had to be the workers. Hence, especially under the pressure of the unions, they began to give better wages. The most famous example of this occurred in January 1914, when Henry Ford announced that he was doubling the pay of his workers to $5 a day. His workers could now afford to buy his Model T car, which was priced at $360. By 1920, he was selling 2 million a year. The American middle class was born. The boom years were underway.
These years were punctuated by the Great Depression, of course, which was precipitated by the greed of the financiers as they speculated recklessly, culminating in the market crash of 1929. In 3 years, the stock market went from a high of 381.17 to a low of 41.22. It would not reach its previous high until November 23, 1954.
The glory years for the American middle class came after World War 2, when the rest of the world was economically devastated. Family income doubled between 1946 – 1973 from $18,100 to $36,900. A blue collar worker in Detroit made more than a manager in Paris. The American middle class was the envy of the world.
But then, the next great transformation occurred.
Employers, especially the big corporations, had paid these high wages for two fundamental reasons.
First, because they had to. They did not want to, but the workers had successfully organized and would not work unless they got them.
Second – and more importantly – employers knew that unless they paid these wages, there would be nobody to buy the refrigerators, cars, T.V.s etc. which they made.
But the corporations always wanted to find a way both to avoid paying those high wages so that they could increase their profits, and to simultaneously have their products bought. In the economic environment prior to 1973, they sought to achieve this by, for example, establishing monopolies, whereby they could charge higher prices. But, of course, they were not satisfied with this.
By 1973, their wish to not pay high wages was beginning to come true. Three new forces began to emerge in the world – improved technology, transportation and communication.
Corporations now realized that they could achieve their dream of further maximizing their profits by re-locating their factories to countries of low-cost labor. At first, it was the Asian Tigers – Hong Kong, Singapore, Taiwan, South Korea. Then China with its hundreds of millions entered the fray, along with India, Indonesia, Malaysia and others. The Great American Job Exodus had begun. As it was euphemistically labeled, American jobs were being sent “off-shore” – as if there was some little island sitting just off the American coastline – not some teeming continent thousands of miles away.
Steve Jobs of Apple, for example, started out making his Apple computer in two factories – one near Sacramento, the other near Colorado Springs. The latter turned out 1 million Powerbook and desktop computers a year, creating jobs that paid $55,000 to $80,000. But realizing that he could make more money overseas, Jobs closed these factories and sent the jobs to China to the infamous Foxconn factories. The labor cost there was reportedly about $7 for an IPhone.
The millions of jobs sent overseas meant more and more unemployment in the U.S. Since World War 2, it has taken longer after each recession to reach pre-recession employment levels. The 2001 recession produced the first jobless recovery. After the latest recession of 2008, it does not look as if pre-recession employment will be reached before the next recession hits. There are currently 12 million still unemployed 4 years after the Great Recession. If one counts the underemployed – those working part-time because they cannot find a full time job – and the 2.4 million who have given up looking for work, the total is closer to 23 million. And it looks as if it will get worse with every succeeding recession.
This ultimately spells disaster for the U.S. economy for U.S. citizens, because fewer and fewer people will be able to buy the products made by U.S. businesses either here or overseas. Furthermore, the current practice of borrowing money from overseas – especially from China – to buy cheap overseas products – especially from China – cannot go on forever. That credit card does not have an infinite limit. People will be increasingly unable to shop even at places like Walmart – which in effect acts as the distribution arm for Chinese products. Already, multinational corporations are seeing the emerging middle classes of countries like China and India as being the next great markets, as the middle class of America fades into the rear view mirror.
As that day approaches – and it already appears to be on the horizon – the U.S. economy will sink deeper and deeper into the swamp of poverty. This will drastically reduce its ability to deliver health care to its citizens, to provide them an education, to feed them, to defend the country. This is economic suicide. The fundamental reason for this catastrophe is that its very own system has brought on its demise.
At the heart of this system is a belief that is masked in the appealing and glowing terms of freedom and liberty. The belief has a powerful, intuitive appeal. We desire to be free. We do not want others to lord it over us. We want to do what WE want to do.
But behind this glowing belief is something much darker. However attractive this appeal is - to do as we want to do - it is not, and cannot be, the whole story.
A BASIC TRUTH
The sobering fact is that we are not alone in this world. We depend on each other for survival and advancement in countless ways. The hard work of those in the past and present, the sacrifices of those who gave the lives that we might live – all these and innumerable other things put us in debt to others both of the past and the present. We have a part to play also. We cannot just be takers. We are all in a lifeboat together. This requires all of us to work together to keep the boat afloat. The boat cannot have sumptuous cabins where a few sip champagne and dine on caviar, while billions shiver on the cold deck.
The conquering of America may have given many an exaggerated notion of individual freedom. As they forged West into seemingly uncharted territory, this experience may have hidden what makes freedom possible.
Whatever the psychological, sociological, and other cultural influences that shaped early Americans, the result was the production of robber barons who believed that they had a right to unlimited wealth without any obligation to anybody else. These few replicated the same ideas that once imbued the kings, and lords and earls of the past. Across the waters in England, this was given expression by James Wilson, the founder of the Economist magazine, who claimed that “it is no man’s business to provide for another” – referring to the many who were dying in the Irish famine.
The maximization of profit was the supreme commandment of this new religion. Providing those who made profit possible – the workers – with decent pay, working conditions and respect was heresy. The proponents of this new religion would not call this “greed”, but instead would talk about “laissez faire capitalism”, as if using nice-sounding French words would hide the reality of the grasping, greedy hand.
One truth about history that some seem to have a hard time learning, is that the very beliefs that impel some to create empires, are the very beliefs that will ultimately bring them down. Greed and the concomitant lust for power led the Romans to conquer the Germanic tribes. The latter returned the compliment when they stormed the gates of Rome and laid it waste. The rest of the world today is now returning the compliment to the American empire.
Eric Nelson, an editor at OpEdNews wrote:
“Greed is most assuredly not good and it never has been and never will be. Greed has not put out a fire, Greed does not keep our streets safe, Greed has not helped an accident victim along the side of the road, Greed has never given a blanket to a homeless veteran, Greed has not taught a child, Greed has not given you the best possible health care coverage.”
The root cause of America’s economic suicide is that its economic system is built on unbridled greed of a few. Many cheered Gordon Gekko (Kirk Douglas) when he said that greed is good in the 1987 movie, Wall Street.
For awhile, this greed was forced to share some of its wealth with the people it employed. But as soon as circumstances allowed, the greedy (it is a great linguistic misnomer to call them the “elite”), shifted jobs to countries where they could get away with paying $2 a day. It is no accident that Apple – which shifted all its manufacturing to China – is the single richest company in the world. Ominously, Tim Cook, CEO of Apple, said in China recently that he sees Apple’s future primarily in China. Having exhausted the American middle class, the multinationals now see the emerging middle classes of countries like China and India as being their future markets – another sign of America’s decline.
GREED NOT NEED
But greed always wants more. It is insatiable. Not only did it want to earn more profits, but it wanted to keep more of those profits from being taxed. Thus, the great tax heist of the last 30 years ensued, enabled by the Congress to whom they had so generously donated.
According to the IRS, in 1955, the 400 richest households paid 51.2% in taxes. In 2007, 16.6%. In 2008, 18,783 filers who earned over $200,000 paid no taxes.
In 1981, the top rate on wages was 50%. In 2012, 35%.
In 1981, the top tax rate on unearned income – e.g. dividends and interest was 70%. In 2012, 15%.
Between 2003 – 2010, the reduced rate on dividends cost the U.S. Treasury $100 billion.
In 1980, the top rate on capital gains was 28%. In 2012, 15%.
In 1952, corporate taxes contributed 32% of federal tax collections. In 2011, 7.9%.
In 2004 – 2009, corporate profits exceeded $1 trillion each year. Boeing reported no federal income tax in 2009, 2010, 2011.
Corporations use tax havens such as the Cayman Islands to avoid paying taxes. The Caymans have more corporations than people – 93,000 to 53,000. It is estimated that U.S. corporations may have $2 trillion in cash overseas.
We may be spending more than $1 trillion in interest on the national debt by 2020.
As the tax rates on the rich dropped, the deficit increased. Did the rich cause the deficit?
In the 1980’s, taxes were cut, investment in infrastructure cut, spending on the military increased, and we had big budget deficits and slower economic growth.
In the 1990’s, taxes were raised on the rich, investment in infrastructure increased, and the economy grew healthily and there were budget surpluses.
In the 2000’s, taxes on the rich were cut, investing was cut, military spending increased, and there were massive deficits and weak economic growth.
IS THERE A SOLUTION?
Yes. There is always a solution if we are willing to do what is necessary. It will not be easy because the problem we confront is profound and multi-faceted. But it can and must be faced if we are to have peace in the world, and if all are able to live in dignity. As the problem is not just an American problem but also a global problem, we need first to lay out the fundamental principles for an ethical and successful global economy. Only then can we address the current situation in the U.S.
There are 7 fundamental principles that must shape our economic activity if we want to achieve a measure of peace and happiness in the world.
First, each human being, irrespective of his or her capabilities has a right to adequate food, clothing, housing, education and health care. Not minimum, but adequate. What this means in a particular situation has to be worked out. Obviously, for example, an Eskimo has a greater need for clothing than somebody from tropical Papua New Guinea. But these are practical problems that we can work out.
Second, everybody who works should get a living wage – not a minimum wage. We do not have minimum human beings.
Third, there should be equal pay for equal work globally. Not only is this the ethical thing to do, but in 1948, the nations of the world agreed to this when they signed the Universal Declaration of Human Rights. Article 23, Section 2 states:
“Everyone, without any discrimination, has the right to equal pay for equal work.”
Whether you make a pair of shoes in Jakarta or Los Angeles, the pay should be equal. This is tough medicine for some parts of the world but the alternative is even tougher – war, strife, destruction.
Fourth, everybody should contribute according to his/her ability. Obviously, some who are disabled may not be able to contribute. Others who are blessed with a strong physique and/or a good intelligence, will have to contribute proportionately.
Fifth, the economic activity of humanity cannot go beyond the resources of planet earth. Currently, it is estimated that if everybody lived on the same level of material affluence as the U.S., we would need many planet earths to support that.
Sixth, there has to be a cap on wealth and income. In the U.S. in 2005, 1% of households controlled more than $16 trillion in wealth – more than all the wealth controlled by the bottom 90%. According to IRS data for 2010, the average earnings for the top 1% was $950,000. For the bottom 90%, it was $36,000.
Seventh, no group, governmental or private, should have a lock on creativity and ingenuity. Humanity gains more when all have the freedom to contribute their insights and inventions. A cure for cancer could come from a farmer in Africa.
In light of these 7 principles, we can now begin to address the situation of the U.S.
First, everybody in the U.S. should have adequate food, clothing, housing, education and welfare. This is currently not the case.
17.9 million U.S. households were food insecure in 2011. These households were uncertain of having, or unable to acquire enough food to meet their needs because they had insufficient money.
Of these, 11 million had low food security. They coped by eating less varied diets, participating in Federal food assistance programs or getting emergency food from community food pantries.
There were 6.8 million very low food security households. In blunt terms, there were times when they were hungry because they had no money for food, and in some cases, had no food for an entire day.
In 2011, 8.6 million children lived in food insecure households.
In 2011, 636,017 Americans were homeless. About 1.56 million people used an emergency shelter or a transitional housing program during the 12-month period between October 1, 2008 and September 30, 2009. In Los Angeles County, 82,000 people are homeless on any given night. Though African Americans make up only 9% of the general population, 50% of the homeless are African Americans.
In education, 33% of U.S. 4th. graders scored “below basic” on a national reading test in 2009. 49% of these students came from low-income families. 26% of 8th. graders scored the same. In an OECD study, 15 year-olds in the U.S. placed 25th. out of 30 countries in math, and 21st. in science. In the U.S., most school budgets are tied to local property taxes. Schools in poor neighborhoods get about only 50% of the funds that affluent areas get. 55% of B.A. degrees go to students from families with incomes over $98,000. For families with incomes below $33,000, only 9.4% get B.A. degrees.
In 2012, almost 50 million Americans had no health insurance. While this will decrease under President Obama’s health care law, the transaction costs for private insurance are 13%, for Medicare 2%. The U.S. spends more on healthcare than any other country – 17% of GDP – yet comes in only 37th. in quality provided. Approximately 18,000 people in the U.S. die every year because they do not have health insurance.
The above statistics could be endlessly enlarged. In short, a significant number of people in the U.S. do not have adequate food, housing, education and health care.
Second, does everybody in the U.S. get a living wage? No. According to the Bureau of Labor Statistics, there were 1.7 million workers who earned exactly the Federal minimum wage in 2011 – which was $7.25. However, in 1996 dollars, this was worth only $4.97.
This means that because of inflation, the purchasing value of $7.25 had decreased by approximately 1/3rd. Workers on minimum wage are being paid less than they were 40 years ago. Company executives, on the other hand, have dramatically increased their own pay.
How much would a living wage be? The following chart is a sample study.
Category Month Month Percent Change Year Comments Source
(2008) (2010) (2010)
Rent $763.00 $811.00 6.29% $9,732.00 Fair Market rent for HUD
single bedroom apartment
Food $203.25 $203.60 0.17% $2,443.20 Average of low-cost food USDA
plan for males and
females ages 19-50
Transport-ation $167.52 $179.03 6.87% $2,148.36 Weighted average of amount ACS, BLS,
spent on cars and public EIA, TCAT
Communi-cation $61.49 $59.99 2.44% $719.88 Local calling and BLS, Verizon
long distance plan,
Health Care $143.53 $173.08 0.59% $2,076.96 Employee's share of BLS,
premium and out of pocket Alternatives
Recreation $100.00 $101.62 1.62% $1,219.44 Adjusted for inflation
Savings $59.81 $60.78 1.62% $729.36 Adjusted for inflation
Miscellaneous $111.13 $110.46 -0.60% $1,325.52 Apparel products, housekeeping BLS
supplies and personal care
products and service
Net (Subtotal) 1,609.73 1699.56 5.58% 20,394.72
Payroll tax $147.29 $114.28 22.41% $1,371.34
Federal tax $117.95 $149.23 26.52% $1,790.73
State tax $50.35 $59.56 18.30% $714.71
TOTAL 1,925.31 2022.63 5.05% 24,271.50
hourly @ 40hr/wk$11.11 $11.67
A living wage requires an hourly rate of $11.67.
In his book, A Living Wage: American Workers and the Making of a Consumer Society, Lawrence Glickman defines a living wage as one at “a wage level that offers workers the ability to support families, to maintain self-respect, and to have both the means and the leisure to participate in the civic life of the nation.”
Average wages, adjusting for inflation, are lower than they were in the 1970’s. Our minimum wage, adjusting for inflation, is lower than it was in the 1950’s. Yet the rich get richer. The income and wealth inequality now is similar to what it was in the 1920’s – before the Great Depression.
Third, there should be equal pay for equal work – globally. There are at least four arguments for this claim.
1. Ethically, no human being or group of human beings is worth more than any other. Whether we are American or Chinese or Indonesian, we are all human beings. Current disparities in wages are very often the result of past oppressions, and hence should not be tolerated.
2. Contractually, on December 10, 1948, 48 nations signed the Universal Declaration of Human Rights. The U.S. was one of the signatories. They agreed in Article 23, Section 2 that:
“Everyone, without any discrimination, has the right to equal pay for equal work.”
We signed an agreement. Are we not honor- bound to keep it?
3. Pragmatically, we should want equal pay for equal work. Most of the wars in history have been about economics – gaining more land, natural resources etc. China and other countries are challenging the dominance of the U.S., and that can only lead to more wars. We have already committed to establishing a Marine base in Northern Australia, and to sending a carrier group there also. Why? To counteract China. Where there is inequality between countries, there will be strife. Abiding by Article 23, Subsection 2 will do much to diminish that strife. In addition, as multinational companies will have no incentive to move American jobs “off-shore”, American could have a measure of prosperity and job security.
4. When American wages sink – as they are now doing – they could end up being lower than those currently in effect in third world countries. If there is equal pay for equal work, American wages will sink no lower than those of other countries.
Implementing Article 23, Section 2 remains one of the unfinished tasks of humanity.
Fourth, all should contribute to providing adequate food, clothing, housing, education and health care according to their ability. Those who have been blessed with above average intelligence and strength should contribute proportionately more than those who are less able. They should not use these gifts for self-aggrandizement. They did not earn these gifts, and if they had not been so blessed, they would have wanted those who were, to not act selfishly. All humans are endowed with some gifts. Sometimes, a person gifted with intelligence may lack, for example, a concern for others, which somebody with less intelligence may possess in a higher degree.
Fifth, the resources of the planet are limited. We may not know precisely what those limits are, but nevertheless we know those resources are finite. Several studies give different numbers, but all claim that our planet cannot support the lifestyle of developed countries. For example, there are only 4.5 biologically productive acres per person in the world, yet the average ecological footprint per person in the U.S. is 24 acres per person. Other estimates claim that we would need 7 planet earths if everybody lived on the same level as Americans.
In the U.S., there is one car for every 1.3 people. (Some countries in Europe are higher). China has one car for every 6.75 people – or 5 times less. As of 2012, China had 233 million vehicles, including 114 million automobiles and 103 motorcycles. If China had the same percentage as the U.S., it would have 1 billion cars – the total number of cars worldwide currently. One can only imagine the amount of concrete, steel, gasoline etc. that would be required to meet that goal..
Hence, considerable work has to be done to determine what standard of living is possible given the resources of our planet. Gandhi famously said that nature will provide for our needs, but not our greeds.
Sixth, there should be a cap on income and wealth. There maybe some debate about what that cap should be, but powerful reasons exist for a cap.
a. It is immoral, inhuman and atrocious that a small few can bask in billions of dollars, while billions of people live in starvation or on its edge. More than a billion people live on less than $1.25 a day – for everything, food, clothing, shelter, education and health care if any. Another 2 billion live on less than $3 a day. It is simply mind-boggling that a few can live on billions of dollars, while their fellow human beings live in such poverty.
b. Wealth conveys power, and it is not good for the peace of the world when a few have power, and billions are powerless. Inequality of any kind is not good. Inequality of power is especially pernicious, leading to all sorts of abuse against those who do not have it.
c. No one should have luxuries as along as there is anybody does not have the necessities. Our common humanity cannot justify any other way.
Seventh, the talents, creativity and ingenuity of all should be allowed to flourish without being stifled by either corporations or governments. It is impossible to calculate how much the human race has lost because so many of its citizens have not been able to contribute their gifts and talents to the human enterprise. Monopolies stifle the human spirit as do heavy-handed governments. Of course, individual contributions have to be channeled so that they do not weaken the total human enterprise, but clearly, the bias has to be in favor of freedom, not control.
Developing a world economy on sound ethical principles is one of humanity’s most urgent, unfinished tasks. The task is not easy, but the potential rewards are immense because peace is priceless.
Then no country will have to commit economic suicide. In the Middle Ages, greed was classed as one of the 7 deadly sins. This is true for countries as well as individuals. The U.S. is evidence of that.
But America does not have to die. No country has to die. If all follow sound, commonsense ethical principles, all can live happy, successful and productive lives. At times, humanity may find it hard to believe that, but part of our human task is to maintain that hope even in the darkest hours.