Response to The Way Forward Alpert, Hockett and Roubini

Response to The Way Forward Alpert, Hockett and Roubini

I wrote this as a letter to the authors of The Way Forward.  If they respond I will post their responses if they are on point.

Dear Daniel Alpert, Robert Hockett, and Nouriel Roubini,

As a long time student of and participant in community based economic development work who primarily writes about the way forward for Rhode Island, the title of your paper “The Way Forward” drew me in.  I bring a different perspective to this work than y’all, and am very interested in your response to my questions and comments.

My education was in ecology, evolutionary biology, and anthropology, while my work experience includes sweat shop labor in the NYC garment district, warehouse work in one of the last shoe shops in Maine, farming, work in the woods, and running my own carpentry business for 13 years.  For the last 15 years I have worked for small environmental and social justice non profits in Rhode Island while actively participating in many of the public economic development discussions in Rhode Island.  These days I am the coordinator of the Compost Initiative, an effort to get all the food scrap in Rhode Island composted so we can use it to grow food and run a small think tank/consulting business, where much of my writing is posted.  I have been writing about the economy since 1979, with a specific focus on prosperity since 1995.  Here is the link to the paper I contributed to the Maine Economic Growth Council when I served as a stakeholder .

I really appreciated your explanation of the bubble and your comments that austerity is not the way forward right now and that efforts to shrink the government will only make things worse in the short term.  It is always interesting when the ideologues of the right want to shrink the government because big government is a job killer except when it comes to the Pentagon or bacon in their home towns.  Krugman has been pointing out that hypocrisy quite well recently.  Please continue with the effort to undue that strange fixation. People are hurting.

As much as I appreciated your comments on what caused the bubble, and where to go, there are some things I think you missed.  My long explanation, written in 2009 is available here let me offer the very short version.

There was too much money chasing too little stuff, the classic definition of a bubble, because we are basically at ecological collapse and there are just not enough resources to fuel economic growth forever, or maybe ever again.  Immanuel Wallerstein has written about the absolutely critical role forests play in the building of modern industrial civilization.  The deforestation numbers are incredible, the loss of nearly half of the worlds forests in 50 years, almost doubling the losses from the last 10,000.  The harder it is to get wood, the harder it is to build cities.  For an example I offer up San Francisco in 1906 and New Orleans in 2005.  San Francisco was swiftly rebuilt because it was easy to cut the abundant Redwood forests in the nearby hills.  You could not do that today, the forest is gone. Louisiana is more forested than California, lots of drylands in CA, while LA is wet and wooded unless cleared. But every tree species of commercial value in Louisiana was already being over cut and depleted in 2005.  They would have been hard pressed to find enough wood to rebuild New Orleans even if they had really wanted to.

Other resources.  Fisheries are stagnant, or rather catch has stagnated for 20 years despite subsidies because fish are harder and harder to catch and more and more stocks are seriously depleted.  90% of the big fish in the ocean are gone and we are fishing our way down the food chain.  The dead zones grow every year.

More than 26% of the copper in the Earth’s crust is already in circulation, which is essentially all the high grade deposits on the planet.  Every metal shows serious declines in the grade of ores mined over the last 30 years, meaning that it takes more and more effort to get the same amount of metal.

The list goes on. Just about every current effort to increase farm acreage on a global scale means serious depletion of the remaining forests and all the attendant CO2 emissions and global climate weirding that will follow. Followed by a very rapid drop in fertility as organic matter leaches quickly from tropical soils unless you take great care.

I really think the bubble happened because there  really are few productive growth areas to invest.   No new places to invest means the wealthy have to play money games instead of actually developing industries. One obvious exception is the effort to rebuild our energy system to replace fossil fuels, and that is a race between building the solar panels and running out of the oil to build them, but that is an exception.  Housing bubbles clearly demonstrate the lack of something else to do with the money.  Other than basic infrastructure what else is there that will not just cause another bubble when it runs out of productive places to invest in 2 years?

When I talk about the way forward in RI I promote the idea that only ecological healing will provide new resources for the community, build our resilience to climate change, and provide work to absorb the labor force.  It turns out that other than the medical industrial complex, the only part of the RI labor force that is growing quickly is farmers. It is one of the reasons that we endeavor build a compost industry in RI despite the upside down tip fee structure.

The number of farms in RI increased 42% between 2002 and 2007.  860 to 1200 something. Farmers markets have quadrupled to 50 including some winter markets.

I have watched many efforts at economic development come and go.  Rhode Island has to do something.  It was the starting point for the industrial revolution, and has been sliding down hill since the textile mills started leaving in the 1920’s.   The official documents offer the same platitudes, only with the jargon and hot sector of the month changed, but they go no where.  One year it is Finance, Insurance, and Real Estate (we know what that got us).  Another report lauds high tech, the next bio tech. Go from one state to the next and all you have to do is change the names.  And poverty grows.

Disclaimer:  I tend to view all the money made as the result of financial gamesmanship that provides money to investors as funny money.  It has been seriously unmoored from the ecology of the planet and actual production, so that the dollar value can be frothed up nearly forever, but all it does is let a small class have more ways to steal while producing almost nothing of value. It is funny money, calling on resources, but in very destructive ways as it calls for resources that belong to communities, and therefore privatizes the commons.  Everyone else is poorer as a result. Not sure the result can really be called growth, progress or anything like that.

Besides ecological healing/growing food, restoring fish runs, rebuilding forests, the growth sector of the economy that is supposed to be helpful is the medical industrial complex, which you discuss.  In my community, Providence RI, it is the new bet of the government and the business community.  Grow the Knowledge District they say.  The problem is that the more we grow the medical industrial complex (medical schools, hospitals, bio tech, patenting life forms, research, as well as health care) the more unaffordable health care becomes.  If every dollar that fuels the medical complex comes ultimately from a consumer, then its growth from 5% of the economy in 1960 to the current 18%, and the projected 25% soon,  is clearly reflected in crazy efforts to create access to health care for everyone, while using medical care as a growth industry.  There is a fundamental disconnect between wanting to control costs and grow the industry quickly but to get public officials to admit that is exceedingly difficult.  I did some very simple calculations on how soon the medical industry growing three times as fast as the rest of the economy would start to shrink the rest of the economy.  It was pretty scary.   A single payer, prevention oriented system in the community would work better and be cheaper.   When medical costs bankrupt more Americans than anything besides a housing bubble, we have a problem. When every global export competitor has an advantage over the US because of our high costs, poor quality care and crazy quilt of policies and coverage, we must pause. When sewers add more to life expectancy than all the medical advancements since you have to question the system.

Genetically modified organisms in agriculture are mostly in this same circle of high tech/bio tech knowledge industries the business attraction community seeks to attract, despite the recent reports that they have not improved yields, have caused the evolution of much more dangerous pests, and provide much reduced yields under global weirding than organic methodologies.

Okay, we know this is not your run of the mill recession.  Has it been considered that the conditions have changed enough, 7 billion people and the concurrent ecological collapse, that this time round it is going to require something totally different to end the pain and suffering?  Have y’all considered that maybe this time the ecological crisis means that the resources to grow our way out may not be there, and that we might have to start redefining prosperity as something that we can achieve while the economy shrinks to fit the planetary limitations?

I would appreciate your thoughts.

Greg Gerritt
Practice focused on Community Prosperity on Planet Earth

2 thoughts on “Response to The Way Forward Alpert, Hockett and Roubini

  1. Thanks very much for these searching reactions, Mr. Gerritt. Of course I think you’re quite right in all that you say here. TWF is really just a prescription for how to get out of the immediate hole, over the next 5-7 years. In the longer term, much more fundamental change will be necessary to prevent (a) recurrence of the dynamic that got us into the present trap, and (b) destruction – alas, not far distant – of our home here on earth. Ultimately there is something fundamentally disordered about a system that requires incessant growth just to keep employment constant. There must be a more direct, less treadmillish way to ensure that all have opportunity to sustain themselves.

    • PS: Please visit my SSRN page (just Google ‘Robert Hockett SSRN’) for more writings on these subjects. See in particular the ‘Inequality,’ ‘Private Debt,’ and ‘Stock Ownership Plan’ papers.

      Thanks again,

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.