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WHAT’S THE ECONOMY FOR, ANYWAY?. Part 1 of 3. Two Competing Views of the Economy. The Private Ownership Society. Vs. The Public Good Society. The Logic of the Ownership Society.

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two competing views of the economy
Two Competing Views of the Economy

The Private Ownership Society

Vs.

The Public Good Society

slide3

The Logic of the Ownership Society

  • “If you own something, you have a vital stake in the future of our country. The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of this country.” -- George W. Bush.
  • We need an “ownership society [in which] individuals are empowered by freeing them from dependence on government handouts. . ., patients control their own health care, parents control their own children's education, and workers control their retirement savings.” -- The Cato Institute
criticisms of the ownership society cont
Criticisms of the Ownership Society (cont)
  • Some call it the “You’re on Your Ownership Society.” Others call it “The Risk Society.”
  • “Before they can join the ‘Ownership Society’ they…[Americans]…have got to pay their credit card bills, their rising variable-rate mortgages and their auto loans. After that, there’s no money left…” -- Robert Reich
the logic of the public good society
The Logic of the Public Good Society

Supporters of the public good society envision an economic system that provides:

  • Fair and Decent Wages
  • Good Healthcare
  • Affordable Housing
  • Secure Communities
  • Good Education
  • Efficient and Clean Transportation
  • A Healthy Environment
  • Time for Family
  • Time for Friends
  • Retirement Security
criticisms of the public good society cont
Criticisms of the Public Good Society (cont)
  • “The larger the slice taken by government, the smaller the cake available for everyone."” -- Margaret Thatcher
  • ”… And you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It's our duty to look after ourselves…” -- Margaret Thatcher
  • “Government is not a solution to the problem, it is the problem.” -- Ronald Reagan
evaluating current policies
Evaluating Current Policies

Before evaluating current policies we need to ask a fundamental question:

What’s the economy for, anyway?

the conventional view of the economy
The Conventional View of the Economy
  • The American economy's "ultimate purpose is to produce more consumer goods." - Arthur F. Burns, Chairman of President Eisenhower's Council of Economic Advisors, 1953
  • "Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction and our ego satisfaction in consumption. We need things consumed, burned up, worn out, replaced and discarded at an ever-increasing rate. - Victor Lebow, Retail Analyst, 1955
conventional measures of economic well being
Conventional Measures of Economic Well-Being
  • The various stock market averages

(DIJA, NASDAQ, S & P 500, etc.)

  • Housing Starts
  • The Inflation Rate
  • The Unemployment Rate
  • Consumer Confidence
  • Gross Domestic Product (GDP)
an alternative view of the economy
An Alternative View of the Economy
  • Gifford Pinchot was the first director of the US Forest Service (1905-1910) and a Republican governor of Pennsylvania.
  • According to Pinchot, the purpose of the economy is to promote
      • the greatest good
      • for the greatest number
      • over the longest run
how might we measure the greatest good
How Might We Measure the “Greatest Good”?
  • Wealth
  • Income
  • Health
  • Family Life
  • Community Life
  • Security/Safety
  • Education
  • Life Satisfaction
  • Freedom
  • Etc.
how might we measure the greatest number
How Might We Measure the “Greatest Number”?
  • Gap Between Rich & Poor
  • Poverty Rate
  • Social Mobility
  • Access to Health Care
  • Access to Education
  • Etc.
how might we measure the longest run
How Might We Measure the “Longest Run”?
  • National debt
  • Personal savings rate
  • Pension security
  • Health security
  • Environmental sustainability
  • Etc.
time series of the u s personal savings rate
Time Series of theU.S. Personal Savings Rate

Americans now have a net personal

savings rate of -1%, lower than

any European country except Greece!!!