Threshold: The Crisis of Western Culture
Chapter 8 - Denmark: A Modern Beacon
How Not to Fail
The problems of the world cannot possibly be solved by skeptics or cynics whose horizons are limited by the obvious realities. We need men who can dream of things that never were.
—John F. Kennedy
Denmark: A Modern Beacon
Our best hope, both of a tolerable political harmony and of an inner peace, rests upon our ability to observe the limits of human freedom even while we responsibly exploit its creative possibilities.
—Reinhold Niebuhr, The Structure of Nations and Empires (1959)
If it’s happening in Danish politics (or, for that matter, Scandinavian or European politics), Peter Mogensen knows about it. An economist by training, he’s the chief political editor of Denmark’s second largest national newspaper, Politiken, and for four years (1997–2000) he was the right-hand man (“head of office” and “political advisor”) to Denmark’s then prime minister Poul Nyrup Rasmussen. A handsome man of young middle years, he also plays in a “Bruce Springsteen look-alike” rock band, and cuts a wide swath through Danish popular society.
So it was particularly interesting to see this normally unflappable man with a slightly confused look on his face.
We were in the studios of Danish Radio (their equivalent of BBC or NPR) in downtown Copenhagen, where I was broadcasting the week of June 23–27, 2008, and I’d just asked Mogensen how many Danes experience financial distress, lose their homes, or even declare bankruptcy because of a major illness in the family.
“Why, of course …” he blinked a few times, “none.”
I explained how every year in the United States millions of families lose their jobs and their homes, and must sell off their most precious possessions to satisfy the demands of creditors, because they can’t afford to pay the co-pays, deductibles, and expenses associated with developing cancer, heart disease, auto accident injuries, or other serious illnesses. “Over half of all the bankruptcies in America are because people can’t afford these expenses, and their insurance companies don’t cover all their expenses or they don’t have health insurance.”
Mogensen shook his head sadly. “Here in Denmark, we could not imagine living like that,” he said.
I asked him what the average Dane pays in taxes, and he noted that the average, middle-class taxpayer pays about 45 to 53 percent taxes, the most wealthy a bit over 60 percent, and the poorest (incomes under $31,000) around 30 percent.
In exchange for this, though, Danes don’t have the worries that wake so many Americans up in the middle of the night. If you lose your job, there is generous unemployment compensation while you’re looking for another. All aspects of health care are free, and if you need a treatment that isn’t available in the country, the government will even pay to fly you to another country where specialized health care is available, as well as covering all the costs of that health care. Education is free, from early childhood education (preschool) through public school, all the way up to Ph.D. or M.D. In fact, if you qualify to get into college or university (it’s based entirely on performance/grades in high school, not on income or social class), the government even pays students a monthly stipend to cover the cost of housing, food, and books; the same applies for trade schools. When Danes reach old age (the retirement age is sixty-seven, just recently raised from sixty-five because lifespan has substantially increased in the past few decades) they get a generous pension (Social Security) that allows them to live in comfort, all health care is free, and if they need to go into an extended- or assisted-care facility, or even a hospice, it’s all free.
Quite literally, from birth to death, while Danes have millions of choices to make with and about their lives, from partnership (gay marriages/partnerships have been legal here since 1989) to occupation to travel, they have few worries about the things that most nations in the world consider “quality of life” issues. Water is pure. Electricity is inexpensive (20 percent of Danish electricity is produced by windmills, with a goal of 50 percent within the next decade). Sickness and old age, while inconvenient, are not the threats to comfort or survival that they are in the United States.
So how, exactly, did the Danes get it so right? And why does the principle that their society is based on—higher taxes equals greater overall quality of life—seem so scary to Americans?
Taxes Don’t Matter
Dick Cheney famously said, “Ronald Reagan taught us that deficits don’t matter,” and the Bush Jr. administration used this as a rationale to run up the largest debt in the history of the United States. Now, of course, as we’re paying about $1,000 per family per year in taxes just to cover the interest payments on the nearly $3 trillion ($3,000,000,000,000) national debt Reagan ran up (and then spent during the 1980s to create the appearance of prosperity in the United States) and an additional $2,000 per working family per year for the added $5 trillion debt the two presidents Bush ran up, we’re discovering that deficits do matter. The U.S. government under just three presidents, Reagan, Bush I, and Bush II, borrowed in your name over $30,000 (for every man, woman, and child in America), and the people we borrowed it from (China, Saudi Arabia, wealthy U.S. families like the Bushes’) fully expect to be repaid that debt with interest.
These debts matter so much, in fact, that their cost has brought to a virtual screeching halt investment in infrastructure and quality-of-life government spending in the United States. We’ve even had to sell off our roads and bridges to Spanish and Australian companies to turn them into toll roads because our eroded tax base and huge public debt load have made it difficult to maintain them.
For the very wealthy in the United States—those three hundred thousand or so families who earn more than a million dollars (and in some cases hundreds of millions of dollars) every year—there’s a certain truth to multimillionaire Cheney’s assertion that deficits don’t matter. These families don’t use much of the public infrastructure we pay for with our tax dollars. Their children don’t go to public schools. They fly on private jets rather than commercial airlines, using public airport facilities. They never use mass or public transportation. Their food is from the very best sources, so they don’t need to worry about contamination, and their medical care is provided in private hospitals and by physicians who operate boutique services just for the very rich. They never shop in the local mall, don’t worry about crime, as they live in gated and guarded communities, and their children almost never go into the military.
If the country’s debt causes—as it has—a steady erosion in the commons, these wealthy families believe that it doesn’t much matter to them. And most of them have a sizable portion of their cash stashed in U.S. government bonds—like the trust fund George W. Bush was born with—which is the very debt I’ve just mentioned. They’re the ones we owe the money to, and when it’s repaid to them, their income from those bonds is most often not taxed at all. So, in fact, a huge government debt is arguably good for the dynastic families of America.
Taxes Don’t Matter, but Deficits Do?
But, I wondered, while deficits do matter for American working families, is it possible that for working people taxes don’t matter?
I laid out my theory to Peter Mogensen, along lines somewhat like this: If a person is working for (just to pull a nice round number out of the air) a $100,000-a-year base salary, and is paying a 25 percent tax rate, that person has $75,000 to take home every year. In effect, he’s really working for $75,000. And his employer knows that he’s willing to do his job for $75,000 in his pocket every year—that’s enough to cover his lifestyle, raise his family, cover medical and housing expenses and transportation, take a vacation, or pay for whatever else may be part of the overall costs of his life.
So if his taxes are dropped to 10 percent (to use a radical but again round-number example), he’s now taking home $90,000 a year from his $100,00 annual salary. Most workers in America think this means that they’d then end up with $90,000 a year in their pockets—in effect a substantial raise—and are therefore all gung-ho to have their taxes cut.
But the employer knows that this particular employee is both willing to and capable of living on $75,000 a year take-home. So if taxes are cut to where take-home becomes $90,000 a year, why wouldn’t the employer simply cut wages down to the point where the after-tax take-home income to the worker was still $75,000?
In point of fact, this is exactly what has happened in the United States. Reagan and Bush Jr. both slightly cut taxes on the middle class, and the result is that the median middle-class worker today is earning a before-tax wage that is less than it was in 1980, the year before Reagan became president.
Because the techniques used by employers to cut wages mostly took the form of using attrition (waiting for higher-paid workers to quit or retire, laying them off, or busting unions and replacing them wholesale—then replacing these various types of workers with lower-wage employees doing the same jobs), there was no big single announcement to (or realization by) the American workers that their pay was being cut in large part because their taxes had been cut.
For Americans (and working people around the world), when tax rates are cut, wages over time will be cut as well.
The flip side of this is what happens when taxes are raised on the working class, as is the case in Denmark. As government there took on many of the services that in the United States are provided by for-profit companies—from higher education to health care to retirement—they increased taxes to pay for them. Government is generally able to provide such public-sector or “commons” services at a lower cost than private industry because they don’t have to skim off 10 percent or more as profit to pay dividends to stockholders, they don’t have multimillion-dollar salaries and compensation packages to pay to senior executives, and they don’t have the costs of marketing and competition with other companies (and the attendant costs, ranging from advertising to fancy headquarters to corporate jets). Danes are getting more services for their dollars (actually kroners), but those services must still be paid for.
To use our hypothetical $100,000-a-year worker, if his taxes went from 25 percent up to 50 percent, his take-home income would drop from $75,000 a year to $50,000 a year. On the other hand, he would no longer be paying $10,000 a year into his employer-provided or private health plan (the low end of average in the United States; and even when companies pay part of the cost, they simply lower wages by the rest of the cost); he would no longer have to set aside money to educate his children; he would no longer have to pile up large savings to survive old age, and so on. But, still, that $50,000 may not be enough to maintain the same standard of living. So what will happen? Wages will go up.
And, sure enough, that’s the case in Denmark. When I asked Peter Mogensen what the minimum wage was in Denmark, he did a quick back-of-the-envelope currency exchange calculation and said, “About fifteen to fifteen and a half dollars an hour.” (It’s currently set at $7.25 an hour in the United States.)
Although half of that goes to taxes, the bottom line for the average worker remains the same regardless of the tax rate, at least over time.
If this is true—and economists such as the esteemed New York Times bestselling author Professor Ravi Batra of Southern Methodist University agree that it is —(it was the basis of much of the thinking that went into FDR’s New Deal), then why is it that so many Americans are so hysterical about tax rates?
The answer is simple. While higher or lower tax rates have very little effect on the ultimate lifestyle and take-home pay of working Americans, who spend most of their income every year on the necessities of life, they do have a huge impact on the very wealthy. And most of the commentators on radio and TV, and the most famous columnists in our newspapers, are either millionaires or, like the New York Times’s Thomas Friedman or TV gadfly commentator Mort Zuckerman, billionaires.
The same is true of members of the United States Senate, who are almost all at least multimillionaires. (Bill Frist’s family was worth billions—made from the deregulation of the healthcare industry.) And our TV stars, movie stars, and even many of the people who program and produce our daily entertainment and infotainment fare are usually among the wealthy to the very wealthy in America.
So American workers are treated daily to a steady diet of the concerns of the very wealthy, with almost never a mention of the concerns of average workers. And at the top of the list of concerns of the very wealthy: taxes.
After all, if all of a worker’s income goes to the necessities of life, his wages will rise and fall over time as taxes rise and fall. During the period from the beginning of the New Deal in the mid-1930s until Ronald Reagan came into office, taxes were fairly high, and in most places they steadily although slowly rose as states and townships provided more and better schools, hospitals, roads, water, sewage, and other basic “commons” infrastructure paid for with tax receipts. So, too, wages rose steadily during this roughly forty-year period.
From Reagan to today—as taxes were cut (and the balance was borrowed)—workers’ before-tax wages steadily decreased (with the exception of a few years during the Clinton administration, when taxes were raised to balance the budget and we also saw workers before-tax incomes go up).
But while the take-home pay of workers ultimately hasn’t been much influenced by taxes, the take-home pay of millionaires and billionaires has been hugely influenced. From Franklin D. Roosevelt to John Kennedy’s presidency, people earning over $3.2 million per year paid 91 percent in income taxes on every dollar after the first $3.2 million. The result was that this thirty-year period of American history saw virtually no “dynastic” wealth emerge. While the economy did well, the middle class did well, many people made up to $3 million a year, the mind-boggling wealth like we see with the
For example, after George W. Bush rolled back the modest income tax increase of the Clinton years, and more than cut in half the maximum income tax paid by people who “earn” their income by sitting around the pool waiting for the dividend or capital gains check to arrive in the mail (that tax rate, set in 2002, is still at the Bush maximum of 15 percent as of 2008), the September 20, 2005, issue of Forbes magazine noted that the combined worth of the Forbes 400 richest Americans went from $221 billion (combined) to more than $1.13 trillion. Just from 2002 to 2005—the first three years of the Bush tax cuts, the number of millionaires in America went up 62 percent.
At the same time, median household income remained unchanged, at around $44,000. Tax cuts to this income level of people were insignificant—a hundred dollars a year or so—but tax cuts to the wealthiest were huge.
And as the rich got richer, the income-starved corporations paying them had to cut wages to their poorest workers (the average publicly traded corporation pays out about 10 percent of its total earnings compensating just its top five executives (not 5 percent, but five people!). At the same time, tax revenue–starved governments have to slash antipoverty, unemployment, housing, transportation, and educational programs. The result is that in the first three years of the Bush tax cuts, the number of Americans who had to get food stamps just to feed their families jumped 49 percent, to more than 25.7 million people.
America’s Founders’ Fear of Wealth
During the Revolutionary War, virtually every person of great wealth left the United States, because the largest fortunes were held by virtue of association with the Crown or Crown-chartered companies such as the East India Company. As the Constitution was being framed, one of the biggest issues was the debate over the best way to keep in check the power of wealth.[xxxiii]
There were some among the body, though—those who would later be referred to as “Federalists” or “conservatives”—who believed that the rich would be the salvation of America, and they should be the only ones allowed to hold public office or even vote. A debate ensued about whether only people who owned land (“freeholders” was the term back then for landowner) should be allowed to vote, and on August 7, 1787, Benjamin Franklin rose to strenuously object. He pointed out that once the rich took over in England, they even passed a maximum wage law to keep labor cheap and prevent a strong middle class from emerging:
“I am afraid that by depositing the Right of Suffrage in the freeholders exclusively we shall injure the lower Class of freemen. This Class possess hardy Virtues and great Integrity. The revolutionary war is a glorious Testimony in favor of Plebeian Virtue …
“In ancient Times every free man was an Elector, but afterwards England made a Law which required that every Elector should be a freeholder.
“This Law related to the County Elections—the Consequence was that the Residue of the Inhabitants felt themselves disgraced, and in the next Parliament a law was made, authorizing the Justice of the Peace to fix the Price of Labour and to compel Persons who were not freeholders to labour for those who were, at a stated rate, or to be put in Prison as idle vagabonds.
“From this Period the common People of England lost a great Portion of attachment to their Country.”
It was the “common people” and their “welfare” that most interested the members of the Constitutional Convention who ended up prevailing in the debates that summer and fall of 1787, producing the Constitution we now have.
There’s long been a debate about why James Madison promised his peers—and kept the promise—to keep his notes on the Constitutional Convention secret for fifty years, or until all were dead. That anniversary would have been 1837, and in the years of the early 1830s, Madison, then frail and elderly, struggled to write a preface to the notes to provide some context. Unfortunately, he never finished—he died in 1836—and the notes were first published “raw” in 1840.
But many historians now believe that the main reason Madison agreed to keep his notes secret was because, in their lengthy and intense detail, they showed how many of the most “aristocratic” members of the Constitutional Convention were “betraying their class” in creating a document to guide our nation that they hoped would prevent a wealthy ruling aristocracy from ever emerging.
Doing away with primogeniture—an early form of Teddy Roosevelt’s later estate tax—was an important first step, something that Thomas Jefferson had advocated from his first days in the Virginia legislature (ironically, in that as the eldest son when his father died, he inherited everything, including responsibility for his mother, and although his father was not rich, he was comfortably middle class, and this provided a basis for Jefferson’s later life).
But the corporate form was, in that day, rare and narrowly circumscribed. The word “corporation” doesn’t even appear in the Constitution. And up until the late nineteenth century, no state would allow a corporation to exist for more than forty years, so that nobody could use a corporation to avoid probate and build an everlasting empire.
After John D. Rockefeller was indicted in Ohio for antitrust and antimonopoly violations, and offered a challenge to other states to change their laws to make legal what he had done with the Standard Oil Trust of Ohio, in the late nineteenth century began a decade often referred to as the “chartermongering” era, when states began competing with each other to see which could make their corporate charter laws most “Rockefeller friendly.” Although New Jersey won (Rockefeller moved Standard there), Delaware actually ended up with the least restrictive corporate rules, which is why today more than half of the corporations listed in the Fortune 500 are chartered as Delaware corporations (including many credit card companies).
Preventing Dynastic Families from Emerging
Denmark, like many of the highly developed nations of the world, did the same thing the United States did in the 1930s to stop Rockefeller-like dynastic “robber baron” families from emerging. It passed highly progressive taxation, so that after making around $3 million a year, a person found the taxes so high that it wasn’t worth the extra effort to earn more. The result is today a far more egalitarian society.
In a culture that values the “we” above the “me,” that holds every person as a sacred link in a cultural chain, even seemingly “individual” problems such as heroin addiction take on a new light. And the solutions to them become more apparent—and more effective.
Dealing with Social Ills Such as Heroin Addiction
Another guest in my borrowed studio during my stint on Danish Radio was an elected member of Parliament (MP), Sophie Haestorp-Andersen. Just a few days earlier, she had successfully been part of the leadership on a piece of legislation that would provide free, safe, clean heroin to all the heroin addicts in the nation’s six largest metropolitan areas. The bill passed Parliament with only one single dissenting vote, and even that MP had only dissented because he felt that instead of giving away free heroin to addicts, the government should be giving away free residential treatment (but without heroin).
Sophie talked about how when she was an activist within the Social Democratic Party (probably the most understandable—although imperfect—analogy to America would be to consider it like the Democratic Party), her offices were in the Christiania area, sort of the Haight-Ashbury of Copenhagen, and periodically through her office window she’d see the police sweep in and round up the drug addicts and drag them off to jail.
This was a problem, she said, for the police themselves. “The police don’t generally get involved in politics,” she explained, “but when they do they say that they can see that drug users have a lot of social problems, and they are tired of being the ones who have to deal with social problems on the streets.”
That day in the studio, Sophie took calls from my listeners, and one asked what level of popular support there was for providing heroin addicts with free heroin, and what the cost to the government was. “Popular support is over seventy percent,” Sophie said, citing a recent poll and noting that the vote in Parliament had been nearly unanimous. As to the cost, considering how America and other countries with a “war” on drugs have so many “victims of this so-called war” (prison populations, unemployable people, disease transmission, particularly AIDS), she said that the real question for a society was, “What is the cost not to do something about it?”
That cost is pretty clearly seen in the United States and other nations that have pursued a legal rather than medical “war on drugs.” As with alcohol prohibition in the United States in the early twentieth century, drug prohibition (particularly of natural herbal substances) has led to the rise of Dillinger-like criminals and crime syndicates, widespread addiction and disease, and an exploding prison population.
The “We” Society Instead of the “Me” Society
In some ways, Denmark is a microcosm for much of the developed world. Although 20 percent of their electricity is now generated by windmills, the balance is from ancient sunlight: coal. They’re living beyond their means energy-wise, and with some of the most modern (oil-based) agricultural practices in the world, are able to export food, although local fisheries are stressed. Much of the easily livable space (meaning access to resources as well as to geographic and architectural possibilities) is occupied or used, and the immediate result of this has been that the hottest debate in the nation right now has to do with immigration policies and whether more people should be allowed in to the country. Native plants and species are being crowded out by human activity, although this is a process that dates back ten millennia.
Despite these common concerns, what’s particularly fascinating about visiting Denmark and speaking with the nation’s political, economic, cultural, and energy policy leaders is the fundamental difference in perspective between Danes and Americans about the “we” of society and the “me” of the individual.
When Europeans first invaded North America, it seemed the supply of land, food, and natural resources was limitless, and as technology (particularly the technology of fossil fuel extraction, transportation, and increasingly efficient usage) progressed through the seventeenth, eighteenth, nineteenth, and twentieth centuries, these “supplies” were increasingly able to support larger and larger populations. While much of European society was socially ossified with a small, very rich nobility, a small (mostly mercantile or expert trades) middle class, and a very large poor working class, North America was viewed as the “land of opportunity.” As the comedy group the Firesign Theatre so aptly said in the 1960s, European immigrants of virtually any stock, class, or status could “carve a new way of life out of the American Indian.”
This produced an American mentality of “anything is possible,” along with a broad notion in our culture that the world represented limitless resources just waiting for human exploitation. While one aspect of that exploitation was the development of increasing technology and improved—in quantity, anyway; the quality is in doubt—food production, the biggest aspect of this was the increase in human biomass: population.
To the extent that technology (and oil) made it possible to do more with less (e.g., produce more food, increase housing density, speed up communications and transportation, develop new products and packaging), the combination of the “human capital” of innovation and the availability of cheap energy made the world “larger” in terms of its carrying capacity for human flesh. In the world of 1800, when the human population of the planet was about one billion, a population of three billion would have been impossible—it would have produced a true Malthusian nightmare.
No doubt, new technological innovations and, over time, a transfer from fossil fuel energy sources to renewable sources such as sun, wind, and geothermal will have the potential to continue the “expansion” of the world in terms of human population. But given how interconnected we are with every other form of life on earth, our criteria for expanding our population can no longer be limited to the availability of food, water, energy, and living space. We also have to leave/make room for other life forms.
The Politics of Density
Which brings us to the fundamental difference in the ways American and Danish cultures handle the human load on the land, and the way those humans interact.
Because of our Daniel Boone cultural past, America is the primary worldwide bastion of what some would call individuality and freedom, and others would call selfishness and callousness. Although there have been a few relatively short times in our history when laissez-faire capitalism was reined in (the first fifty years after our founding, the few years of Teddy Roosevelt’s presidency, and the New Deal period from 1935 to 1980), most of the history of America has been “anything goes.”
Huge concentrations of wealth—stored in the corporate form and in massive family fortunes—have been used to influence the culture of the United States. Think tanks ranging from the American Enterprise Institute to the Heritage Foundation to the Cato Institute to the Competitive Enterprise Institute and Independent Women’s Forum have been funded by wealthy individuals or the foundations under their control. The presence of their surrogates on radio, television, the Internet, and in our newspapers has become ubiquitous. “Freedom” means low taxes and little regulation. “Slavery” (or “socialism”) means a loss of freedom and a crushing burden of taxation.
The idea that markets are creations of humans and the institutions they control (from the rules of commerce, to courts to enforce those rules and contracts, to stable currencies to facilitate them, to a criminal justice system to protect them) has been replaced with an essentially religious belief that some sort of mythical “free market” will always be self-regulating and self-governing, and will lead to an utopian future. Thought leaders such as Dr. Yaron Brook of the Ayn Rand Institute even go so far as to suggest that capitalism trumps democracy, the latter being a simple “tyranny of the majority” while the former is an ineffable and ultimate system.
The most obvious result of this “me first” mentality is that in a market economy that at a certain level is a partial zero-sum game, the richer the richest get, the poorer the middle class and the truly poor must become. This gets played out not just at the national but also the international level.
But more important for the future and survival of life on earth as we know it, this libertarian perspective contains within it no concept whatsoever of either the investment in human capital, the investment in the commons, or the preservation of assets and resources for the future.
In the conservative/libertarian dystopia, private property is the ultimate and highest value—it is sacrosanct. As the Ayn Rand Institute’s president, Yaron Brook told me in a June 26, 2008, interview on my radio program, when “the majority” votes to limit how he can use his property, “that is a form of theft, and it is done with violence [the enforcement power of the police].” It’s the ultimate expression of the tyranny of the majority that makes democracy a flawed system, in Brook’s worldview. Government—the combined will of the people in a democratic republic—should have no power whatsoever to regulate or control the use of private property or land, as the ownership rights asserted over that land should be absolute.
The obvious problem with this worldview is that one person’s “land use” may be another person’s disaster. Should a farmer have the right to convert his five hundred acres into two thousand home lots if it means that the water table serving ten thousand acres will be depleted or contaminated? Or to use a less clear and more aesthetic perspective, should a person be able to build a multi-story office building—or a waste disposal plant—on his property if it means that your property will now forever be in shade, unable to grow food plants or flowers, or lacking a view?
These tend to be the levels at which arguments about zoning and land use are being fought in the United States.
Economically, a similar sentiment prevails. If you don’t have enough money to pay for the treatment of your disease, conservatives/libertarians say, why is that my problem? You should have saved more. You should have earned more. You should have paid better attention in school to earn good enough grades to win a scholarship and get into the university so you could be a high earner. (Not mentioned, but, in fact, the single major predictor of great wealth in the United States: ”You should have been born into a wealthy family or, lacking that, married into one.”)
The Danes have dealt with these issues in a more democratic and communitarian way. Health care is free. College is free. Old-age pensions are generous, and hospice care is free. The entire community has a say in the construction of new buildings and other land use issues. Unemployment is generous, job training is easy to get, and even paid maternity leave (for a full year) is mandatory.
The result is that there are fewer millionaires and billionaires, per capita, in Denmark than in the United States or most other “freer” countries. There is also less poverty, a higher literacy rate, very low unemployment, no fear of old age, and a broad consensus across Danish society that they rather like things as they are. Even the “conservative” politicians would never tinker with these fundamentals of the Danish social contract.
The Power of Memory
One possible explanation for why the Danes (and other Scandinavians) so readily tax themselves is their willingness to invest in human capital. For about a thousand years they’ve been a country with a unique and self-conscious identity. Every Dane knows that in the eleventh century there were famines. They know the history of the absolute monarchy and the modern parliamentary democracy. They live close together and interact with one another more than those in the suburb-oriented U.S. culture.
But perhaps most important, they take a multigenerational view of things. As more people are educated, the overall quality of life in the future will improve. Standards of living, of knowledge, of civility, will improve. As public monies are put into wind turbines, public education, child and elder care, and a modified road system for bicycling so extensive that currently 30 percent of workers in Stockholm safely and conveniently ride bikes to work (with the goal of 50 percent by the next decade), Danes know that every generation will—literally—be better off than the last.
During the early years of the American experiment, this was a significant topic of discussion, particularly among the Founders and the Framers of the Constitution. From the Civil War until the New Deal, it largely faded away, as the prevailing gestalt became “greed is good” and “get what you can while you can.” Only with the generation returning from World War II did it again become, in the United States, an important part of our national dialogue, with institutions such as the Federal Housing Administration and with the GI Bill set up to provide easy home ownership, inexpensive or free higher education, and extensive (massive, really) public works efforts to build an American infrastructure that would last generations.
Most of that died with the election of Ronald Reagan and the elevation of the conservative/libertarian think tank worldview, one that benefits only the wealthiest. Public works came to a screeching halt, so badly that it’s estimated that the nation is now in need of more than $2 trillion just in repairs to the infrastructure our grandparents put in place. Meanwhile, bridges collapse, water systems fail, hospitals and schools have become decrepit, and cities, counties, and states are forced to sell off public roads, water systems, and power systems to (often foreign) companies and wealthy individuals simply to get the money to continue basic services such as firefighting and law enforcement.
But even all this doesn’t truly address the future. Even if the United States were to do a massive U-turn, dramatically scale back the annual half-trillion-dollar transfer of taxpayer wealth to private corporations and redirect those funds to public works and reinvest in the human capital of our children, we’d still be way beyond the point where the future could be better than the past without going up to a whole new level of “investment.”
Investing in the World
The simple fact is that in the developed and developing world—about three billion of the planet’s roughly seven billion people—we are burning though the planet’s soil, water, air, and geological and, most important, biological resources at a rate that, if things don’t change quickly and significantly, will leave us bereft of our own life support system.
This requires a new type of economics, culture, and governance. Adam Smith didn’t consider the impact and the necessity of nature, and neither did Desuit de Tracy, David Ricardo, Karl Marx, John Maynard Keynes, Milton Friedman, or Friedrich von Hayek. While all gave homage to natural resources, all also functioned in an economic paradigm in which the “resources” of nature were here for us, and we were the sole arbiters of their future and the sole beneficiaries of their existence. Other species, the biosphere, genetic diversity, the impact of deforestation on desertification and weather change, and a hundred other obvious and subtle changes in the natural world were simply cogs in the great “machine” of nature, a machine that, if we could only find the right levers, would turn in any direction and work in any way.
Even those economists who have acknowledged, for example, the impact of unsustainable agricultural practices in ancient Samaria as leading to cultural and environmental collapse and the dispersal of people to other regions have done so in the context of “we can’t make that mistake,” but “there’s always someplace else where we can do it right.”
The “someplace elses” are vanishing.
I first met Dennis Weaver—the actor who famously played Chester in the Gunsmoke series of the 1960s—about thirty years ago, at a function for a meditation group we were both members of.[xxxiv] Over the years we became friends. He and his sons played a fund-raising concert for a residential treatment facility for abused children in New Hampshire that Louise and I had started in 1978, and I wrote the foreword to his brilliant autobiography, All the World’s a Stage.
In the 1990s, Dennis turned his considerable intellect and passion to a topic he felt was essential to saving the world: the synthesis of economics and ecology. In 1993, he coined the term “ecolonomics” to describe this new form of economics, which included the natural world in its equations, and in the late 1990s, I was honored to be part of a small group of friends who had a weekly conference call with Dennis as he developed his “Institute of Ecolonomics,” which has now expanded to a certificate program through the college Dennis attended, Missouri Southern State University.
Since Dennis’s death, his institute has become considerably less active, although it’s still easily found on the Web, at www.ecolonomics.org, and its ideas are still being taught at MSSU.
The natural world has long been a known factor in economics, and in ways far subtler than how many board feet of lumber can be taken from a forest. One of the prime directives of the corporate form has always been to “internalize profits and externalize costs,” and one of the main ways this has been done over the past two centuries since the advent of the industrial revolution is to use the resources of nature to generate a profit and to dump the “costs”—the waste—produced in the industrial processes back into nature at “no cost” to the corporation.
For example, while a gallon of gasoline as of this writing costs about nine dollars in Denmark, a bit more than half of that being tax (as is the case across most of the rest of the developed world), in a very real way it’s also a reflection of the actual cost of a gallon of gas. Of America’s $550-plus billion annual defense bill, a significant share of it goes toward protecting our oil-producing allies, helping maintain their shipping ways, and threatening or fighting wars to defend our oil companies’ access to crude. In addition, burning gasoline in our cars produces pollution that leads to cancers (mostly from the “high fractions” of petroleum such as benzene), asthma, and a whole host of related illnesses. The real cost of a gallon of gasoline to Americans is (as of this writing) four dollars at the pump, four dollars in income taxes for our military, and two dollars to help pay for that fraction of our health care that is covered by government (Medicare, Medicaid), treating people whose illnesses track back to gasoline combustion and its attendant pollution. The total is about ten dollars a gallon.
But because the oil companies in the United States have successfully “externalized” the “costs” of cancers, asthma, and military support, we pay for those with our income taxes (and out of pocket) instead of at the pump.
There are tens of thousands of similar examples: Entire communities experienced epidemics of asbestos-induced lung cancer as a result of vermiculite and asbestos mining—such as Libby, Montana. Downriver communities from gold mines, even to this day, experience higher cancer rates from the arsenic used to separate gold from gold ore. Hundreds of billions of tons of pollutants are dumped annually into our air, water, and soil—all with some sort of ultimate effect, and thus, cost—and virtually none of those costs is being paid by the corporations producing the waste.
At its simplest, ecolonomics would look for ways to quantify the “externalized” costs and charge them back to the corporate polluters. This is the essence of what’s being done with “cap and trade” carbon credits and carbon taxes, where companies are asked to pay a very, very tiny fraction of the cost to society of global warming caused by the carbon dioxide they are emitting.
Ecolonomics on Steroids
But Dennis’s vision for ecolonomics was hardly limited to identifying externalized costs and re-internalizing them to the companies that had managed to avoid them. Instead, he was looking for nothing less than a new form of economics that could move us forward into a world no longer threatened by traditional economic models.
We still have a long way to go. And it’s going to require more than just economics. As Karl Marx and Adam Smith both pointed out in their own very different ways, economics drives politics as much as politics defines economics. As such, we consider the needs and desires of people, balance competing interests, and create structures to facilitate everything from trade to transportation to eating and sleeping. At the core of all of it is the essential function of government: providing for the survival of the people.
In this regard, we have hit a threshold that constrains both capitalism and democracy in their ability to accomplish this goal.
Most people would readily assert that the purpose of government is to serve the people—from fire and police protection to education to a stable currency—and only the few remaining royalists among us would suggest the opposite, that the purpose of the people is to serve the needs of those who control and run the government. This is such a clear distinction between democracy and royalty that it almost doesn’t need to be made. When functioning properly, government serves the people, not the other way around.
But what about the economy? Because it’s been at least a generation since the takeover of our media by transnational corporations and the purging of civics and economics from our public schools (most all tracking back to Reagan’s stopping enforcement of the Sherman Antitrust Act, and to the “antisocialist” campaigns started during the 1980s to assault our high-school textbooks and the unionized teachers of America), few Americans today have ever even considered the question.
Are We the People here to serve the economy and its owners/leaders? Or is the economy here to serve the needs of society?
The Artificial Economic Superhuman
When I started my first business, I went down to the Ingham County Courthouse in Lansing, Michigan, to file for articles of incorporation. By simply signing a set of forms, I was granted by the state a whole new set of rights—particularly tax rights—that as a citizen/human I had not previously had. I could eat a meal and not pay taxes on the money I earned to pay for it—if I had the meal with a business associate and we discussed business. I could travel around the world, and as long as there was a business reason for doing so, there was no tax on the income my company generated and then used to pay for it. If I couldn’t pay my bills, my corporation could claim bankruptcy and cease to exist, but I could continue on as a person unscathed by the credit consequences of my company going out of business. And that’s just the beginning.
My company could do things no person could do. It didn’t need a passport to function in other countries. It could live forever. It could own others of its own kind. It could accumulate wealth indefinitely without it ever being subject to probate or estate taxes. It could choose to manufacture goods in other countries, to be sold in the United States, and as long as it kept its profits in those countries it would never have to pay taxes on them. (This is a particularly popular game right now: U.S. corporations are sitting on hundreds of billions of dollars in untaxed offshore income.)
The historical rationale for so liberally giving to the corporate entity tax and other advantages was that it would allow people to group together to do business in a way that was legal, transparent, and of value to society. For the first hundred years of our existence as a nation, every state required that any corporation formed in that state must first operate in a way that furthered the public good, and only then and in that context could it make a profit. Secretaries of state annually examined the books and behaviors of corporations, and those deemed not to be satisfying this requirement were routinely shut down, their assets sold, and their stockholders having to start over. Corporations couldn’t exist for more than twenty to forty years (depending on the state) and could perform only one single function or make a single type of product. Corporations couldn’t own other corporations.
All of this changed during the robber baron era of the 1880–1929 period. Between a corrupted Supreme Court decision (and a corrupted headnote for it: Santa Clara County v. Southern Pacific Railroad, 1886) that gave corporations rights of persons under the recently passed Fourteenth Amendment (ironically passed to free the slaves), and John Rockefeller’s open defiance of the State of Ohio when it notified him that his Standard Oil Trust was illegal. (Rockefeller simply asked other states which ones would change their laws to allow him to “become” legal, and thus a competition ensued between New York, New Jersey, Delaware, and a few others to liberalize their corporate charter laws, producing what was referred to in the late 1890s as the “chartermongering era).
Meanwhile, several Supreme Court decisions in the last forty years of the twentieth century (notably First National Bank v. Bellotti, and Buckley v. Valeo) have equated money with free speech, and since corporations are now “persons” (since 1886), they’ve been able essentially to take over the entire realm of public discourse and politics. More than thirty thousand lobbyists spend an average of $15 million every week that Congress is in session; most federal legislation is now written by lobbyists.
The result of all of this—and much of it is being aggressively replicated in other nations around the world (when South Africa reinvented itself as an egalitarian democracy, for example, a consortium of America’s largest corporations “donated” the services of their corporate lawyers to help the country write its new constitution, resulting in corporations now having the rights of “persons” in that nation)—is that the interests of a small (fewer than one 1/10,000,000th of 1 percent) of the people on the planet have achieved priority over the interests of every other human, every other government, every other institution, and, perhaps most ominously, over the biosphere.
We’ve Lost Our Margin for Error
Every life form on earth—and the incredibly complex web of life’s supporting systems—is now totally subordinate to the interests of a few thousand of the world’s most powerful institutions and the few hundred thousand humans who ultimately control them.
This is not the first time in history that a small group of people controlled the fate of pretty much everybody else in their realm. The history of Europe and their kings and queens—almost all interrelated by marriage—or the Inca and Mayan civilizations of South America, or the dynastic powers of India, China, and Japan, all remind us how often and how easily a small group can control everything from the commons to the people.
But this time is different. Today it’s not the political freedom of Boston’s patriots at stake; it’s not the economic rights of the European nobles; it’s not the fate of young Mayans conscripted into a Sun King’s army.
This time the very fate of humanity worldwide is at stake.
What is necessary is a new form of economics and a new form of politics. The new economic structure must consider, in every transaction, the environmental cost of all human (and corporate, and governmental) behavior, and appropriately mitigate that cost. The new political structure must function, using Madison’s metaphor, as the ultimate republic—a superstructure of law and governance that protects us all by protecting all life on earth. Denmark is close to getting it right for their culture. But they are just one small country in a sea of waste and greed. We need to find similar solutions for ourselves, solutions grounded in a fundamentally new (at least to us) worldview, which means the reformation not just of our economic and political systems, but of our religious and philosophical structures and systems as well. We must reform our culture.
This Idea Is neither New nor Radical
At first blush, calling for a new economic and political infrastructure—not just for the United States but for every nation in the world—may seem both bombastic and impossible. Cultures don’t change easily or quickly, political changes more often involve violence than not, and the idea of confronting something as “sacred” as religion is almost unimaginable.
But the simple fact is that throughout human history every single civilization that made the same mistake of unsustainable living that we have (which, apparently, is virtually every civilization or culture) ultimately did one of two things—died out (often in disastrous ways) or reinvented itself in a way to live sustainably. And that reinvention involved economics, politics, religion, and culture.
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