Given that the stock market appears to finally be taking a pause after a decade long run, this may seem like a terrible time to talk about subtleties like debt versus equity or how to finance federal debt. Yet this is exactly the time when something like what is proposed here would be useful for the government and investors alike.
Our national debt is financed through a complex system with fixed interest and market trading which is cumbersome and difficult. Worse, it ties the government down to fixed costs which are currently taking up 329B$ per year in interest payments, nearly $3,000 per household.
In short, there has to be a better way to manage the 21T$ or so of debt. Step one would be not creating more, but here is a plan for managing the potentially crippling debt we already have.
The layoff notices came right after Thanksgiving. GM, a symbol of American industry, was going to close four US plants and can over 14,000 workers. Despite the relatively low numbers of people involved, the symbolic value is tremendous. The company was once the symbol of American manufacturing might. Besides, after a bankruptcy and government bailout the company surely has had what it needs to bounce back, right?
Yet there is much more to the story than this. Automobile manufacturing is in a period of massive, completely disruptive change. GM has been in trouble for a very long time simply because it cannot possibly change, and there are reasons to believe that everything is only going to be worse.
Mary Barra, the CEO of GM, has been trying to explain the situation to members of Congress this week. It’s unlikely that she can, especially since the very fact that she is obliged to do so points to the real problem. The national industrial model is dead, and it is being replaced with a global market model. GM’s problem is that it simply has not adapted to this reality in any important way.
This piece is a re-run from over nine years ago, but it has been fleshed out considerably as People’s Economics. The topic at hand is 52 years old, so none of this is new. And yet we still aren’t exactly sure as to how we need to implement this “knowledge economy” in a way that truly benefits everyone. This was part of a series from 2009 entitled “Systemic Connections” and if you have some time the whole series is still worth a read.
The art and skill needed to put knowledge to practical use is more than just what technology is really about – it’s generally seen an increasing share of our economy. The term “Knowledge Economy” comes from Peter Drucker in his 1966 book, “The Age of Discontinuity”. It includes this:
“In a knowledge economy where skill is based on knowledge, and where technology and economy are likely to change fast . . . the only meaningful job security is the capacity to learn fast.”
True enough, since a lot of knowledge applied as an art went to revolutionizing economics itself since that time. But as many of us have learned, the ability to think fast means nothing without the right connections.
The suffix -ism is one of those handy things inherited from the versatile Greek language. The original usage was the creation of an active noun from a verb, such as baptism or criticism. It makes an action into a thing, allowing it to become a subject or object.
More recently, this suffix has taken on the use of defining a philosophy, often a political practice. It is a way of taking a series of beliefs or practices and putting them into a box which can be delivered as one unique practice. Far from making an active subject, in practical terms it becomes most useful as a way of preventing any action at all.
The great -isms of political economics are Socialism and Capitalism. The boxes these words describe were fixed long ago and remain rigid. Yet they retain their power to an opposing tribe and thus remain in use. It’s long past time to dump the -isms, useful as this linguistic construction once was.
A new approach to economics is essential to understand and master the changing nature of the world. Humans have mastered or at least learned to predict and cope with natural issues. Food is plentiful, even with a high global population. People are moving to cities everywhere, meaning that daily life is defined by interactions with people more than with the natural world.
People’s Economics is about mastering that world.
Our life, and the lives of everyone around the planet, are defined more and more by technology. Will this enrich our lives or enslave us? Will it make people happy or redundant? The answers to these questions are the difference between a future dystopia and a time of great abundance. It is essential for the implementation of Industry 4.0 as well.
The world has been coming together for a very long time. Trade between civilizations has given each of them a peek into new worlds which dazzled and challenged them in turns. From the Silk Road of 2,000 years ago to the shipping lanes of today, trade has often defined how the world comes together.
As important as this has been, it has never been even or reliable. Trade is defined by people and their desires. Economic value is always what the buyer is willing to pay for something, and far too often the definition of things like money and credit has had a large role in how it works out. Contact between people brings more than physical goods, too – it brings envy, greed, curiosity and concern among many other emotions.
A world defined by people and their needs is a connected world. But those connections have to be at a human level more than at a money level if they are going to be sustainable. Connection in and of itself is one of the Five Points of the definition of People’s Economics for this reason.
A world which seems to move faster all the time usually doesn’t feel like it at all. Like a car on a highway, speed is never what people sense. Yet the faster the speed, the more likely it is that every bump in the road or sudden gust of wind can cause an accident.
A few decades ago, cars felt simply dangerous at high speeds. As technology advances they become more comfortable and much safer because they are more stable. It’s not a static balance that they achieve, but a dynamic reaction to every bump and every change, correcting it back to controllable and level.
The same sense of dynamic stability is essential to a faster moving economy as well. This is why it is one of the Five Points of People’s Economics.