“The economy,” as that term is used by economists, politicians, pundits, and ordinary people, generally refers to GDP, gross domestic product.

Here’s an op-ed from the New York Times entitled “G.D.P R.I.P” that discusses why GDP is seriously flawed as a measure of national welfare.

After discussing some of the flaws, the author states that:

[I]t would be fairly easy for President Obama to convene a panel of economists and other experts to join the Bureau of Economic Analysis in creating a new, more accurate measure. Call it net economic welfare. On the benefit side would go such nonmarket goods as unpaid domestic work and ecosystem services; on the debit side would go defensive and remedial expenditures that don’t improve our standard of living, along with the loss of ecosystem services, and the money we spend to try to replace them.

The complete piece is here.

That would be a good step in the direction of more meaningful and useful discourse. Though it’s just a small step, it would almost surely make a real difference in helping people understand the value of income security for all. Guaranteed income is the most direct way to promote economic welfare for individuals and society as a whole.

To learn more about these ideas, visit the home page and other material on this web site, www.IncomeSecurityForAll.org.

You can read the complete plan, the idea and how we can implement it, in Peaceful, Positive Revolution, which is available from Tendril Press.

I hope you’ll also comment on this blog. And please help spread the word.

Steven Shafarman

Aid to small businesses is a step, potentially, though only a baby step, in the direction of a guaranteed basic income for all Americans.

A New York Times story about President Obama’s announcement is here and a 15-minute video is here.

A story in the Washington Post, here, includes the following paragraph:

“Small businesses are the heart of the American economy,” Obama said in announcing the measures. “They’re responsible for half of all private-sector jobs, and they created roughly 70 percent of all new jobs in the past decade.

That’s well known and documented. Our government should be helping small businesses, not big ones. Obama’s announcement made that point, though only indirectly, when he began his remarks by criticizing AIG and the harms and waste that have been caused recently by big companies and government support for big companies.

When each of us has a guaranteed basic income, lots of us will start small businesses. Starting a business, after all, being self-employed, is for many of us a core part of the American dream. If the Obama administration really wants to create jobs and promote economic growth, it will make it a lot easier for every would-be entrepreneur to start a small business. Basic income will do that.

The AIG bailout is a clear indicator of the underlying problem. Last September, when the financial system was freezing up, our government set out to save AIG, Citibank, Bank of America, and other big finance corporations. That reflected a knee-jerk assumption that big businesses are good, deserving respect and support. Big is good, many people seem to believe, and bigger much therefore be better. That’s wrong.

Suppose our government had not been afflicted by those assumptions, and not further biased by campaign contributions from the finance industry. (For evidence of the biases and assumptions, see Henry Paulson and Robert Rubin and so many other Wall Street officials in our government.) When the credit markets froze, instead of bailing out AIG, Citibank, Bank of America, et. al., our government could have loaned funds to community banks and credit unions arounds the country. Restore the credit and finance system from the ground up, rather than trying to do so from the top down.

Obama began his remarks by praising community banks. It would be great if he put those ideas more thoroughly into practice. Truly great if he goes even further and endorses the guaranteed basic income. One step at a time.

Steven Shafarman

Too bad Herbert doesn’t go there. He’s mostly focusing on what he sees as the underyling causes and attitudes. Here’s a long quote:

The seeds of today’s disaster were sown some 30 years ago. Looking at income patterns during that period, my former colleague at The Times, David Cay Johnston, noted that from 1980 (the year Ronald Reagan was elected) to 2005, the national economy, adjusted for inflation, more than doubled. (Because of population growth, the actual increase per capita was about 66 percent.)

But the average income for the vast majority of Americans actually declined during those years. The standard of living for the average family improved not because incomes grew but because women entered the workplace in droves.

As hard as it may be to believe, the peak income year for the bottom 90 percent of Americans was way back in 1973, when the average income per taxpayer, adjusted for inflation, was $33,000. That was nearly $4,000 higher, Mr. Johnston pointed out, than in 2005.

The peak year, note, was 1973. That was also the end of the national debate about guaranteed income. Richard Nixon’s plan was blocked in the Senate; George McGovern lost the ‘72 election; neither Gerald Ford nor Jimmy Carter got very far in their effortrs to reintroduce the idea. And now it’s almost completely forgotten.

Herbert’s column clearly suggests that guaranteed income did not simply fall out of the political discourse. These ideas were excluded deliberately, systematically. Here’s another quote:

Working people were not just abandoned by big business and their ideological henchmen in government, they were exploited and humiliated. They were denied the productivity gains that should have rightfully accrued to them. They were treated ruthlessly whenever they tried to organize. They were never reasonably protected against the savage dislocations caused by revolutions in technology and global trade.

It’s class warfare, in other words, ideological henchmen on one side, with lots of money to invest in their cause, and naïve workers on the other.

The current economic crisis, however, is a good opportunity to recall that we’re all in this together. All of us, We the People, will benefit from Citizen Dividends.

Please help spread the word.

Steven Shafarman

Everyone is looking for the guy – the guy who can tell you exactly what ails the world’s financial system, exactly how we get out of this mess … But here’s what’s really scary: The guy isn’t here. He’s left the building.

No, Tom. You’re wrong about that last point. The guy didn’t leave the building. He wasn’t invited to the party. Though he knocked on the door and offered to contribute his ideas, as he has done many times over many years, he was kept out. Again.

Davos is for the elite. Heads of state and CEOs of global corporations, billionaires and celebrities and special guests, and scores of sycophants who report on the elite, their comings and goings and pronouncements. Tom attends regularly. That’s his scene. Those are his people.

Here’s what Tom and his friends want us to believe:

There is no magic bullet for this economic crisis, no magic bailout package, no magic stimulus. We have woven such a tangled financial mess with subprime mortgages wrapped in complex bonds and derivatives, pumped up with leverage, and then globalized to the far corners of the earth.

They believe it too, apparently. And they think they know what’s best for all of us. They must know – right? – because they’re heads of state and CEOs and billionaires and celebrities, and their thoughts are reported in the New York Times.

But their worldview doesn’t have to be ours. We can do much more than sit around and wait for them to supply the answers, and we must do more because sitting and waiting and expecting magic leaves us lost, powerless, and just as uncertain as the elites at Davos.

Income security for all is not magic – and that’s good for several reasons. First, it seems that Tom and his friends don’t believe in magic. Even though they didn’t invite us to their party, we want them to appreciate our ideas and join us in realizing income security for all.

Second, with magical solutions generally, and on stage invariably, the end result is the restoration of the status quo. The magician waves the wand and says the words, and everything goes back to normal. In reality, however, with our economic and political situation, that’s not good enough. The status quo wasn’t working very well. Too many of us were hungry, homeless, without health care. All of us were living with serious threats and uncertainties, most notably terrorism and climate change.

Third, and perhaps most fundamentally, the search for magical solutions maintains a fundamental and dangerous illusion: someone else is responsible, and he or she will take care of things and solve our problems for us.

Tom likes quotes, and here’s one from Einstein: “You can never solve a problem on the level on which it was created.” Income security for all is a new way of thinking. That’s what makes it so important and necessary.

That’s also why this idea and its advocates are not at Davos. Income security for all will upset the status quo. When everyone has a basic income for food and shelter, everyone will be more able to demand a stronger democracy, real equality of opportunity, greater social and economic justice. These are universal values, professed by ordinary Americans and the elites at Davos, so we can hope and expect that some of those elites will sacrifice willingly, will invite us to their party, will join us in our cause and campaign.

Another reason the Davos crowd might welcome income security for all: These ideas are not just for Americans. Versions can be enacted in any country, and the people at Davos are from around the world. Perhaps someone from somewhere will bring these ideas to next year’s forum.

Steven Shafarman

Let’s enact a basic income first. That will solve most of the problems.

Think about it. Give every adult citizen some amount, say $1,000 a month. People will spend, thereby promoting economic activity and creating jobs. (Yes, some of that spending will be for stuff made in China, but that’s a topic for another day.) People will also pay off mortgages, auto loans, credit card debt, and save some of the money, thereby giving banks more money to lend.

The conventional debates and commentary about the banks focuses almost entirely on the banks, the economy, “liquidity”, assuming that taking care of those issues will indirectly help ordinary people. The basic income approach says we should take care of ordinary people first, directly.

Basic income is the most rapid, reliable, and responsible way to end the recession.

For more evidence about the power of the basic income approach, think about this: If you had money to save or invest right now, where would you put it? There’s really no problem putting it in the big banks, of course, because deposits are federally insured and you’ll get your money back even if the bank fails. But a lot of us are angry at Citigroup, Bank of America, and other big banks, and we might prefer to put our money in credit unions and smaller banks, local banks – and those are the banks that lend money out in their communities.

That’s how, starting with a basic income, we can restore the integrity of the financial sector. We do it from the bottom up. That’ll be a lot more effective than the top-down approaches of either bailing out the big banks or nationalizing them.

Steven Shafarman

Stimulating “the economy,” we’re told, is necessary for creating jobs, thereby providing workers with an income. But a much better idea is to focus directly and give the workers, directly, an income.

Steven Shafarman