Saturday, February 16, 2013

3Rs and and an I

Over thousands of years there has been a steady progression away from the self-contained tribal economies of hunter gatherers to the multi-state interdependent economies we see in the world.  The Industrial revolution in Western countries enabled them to use their capital rich economies to dominate the entire world.  Western democratic governments, with occasional lapses into huge wars, have facilitated business development resulting in Northern and Western prosperity and Eastern and Southern poverty for most of our world

Business leaders were insular at first, recognizing the need to capture markets through tariff protection.  This however also confined sales as well as markets and hence the birth of free trade.  What has been currently surprising to the western countries is that non-European and North American countries could learn to compete successfully.  It  is becoming increasingly impossible to market merchandise that is produced in Western countries with their high cots of property and labor combined with the costs added by government regulation.,

This does not cause a problem for those who control pools of capital, simply see that labor is used from where it is cheap and unregulated, and sales are made where there are consumers willing to spend. The fact that money has to circulate in both directions seems to have escaped multinational entrepreneurs.  On the surface one would think that with this would immediately result in greater consumer economies in the third world but that fails to account the delay built in by a popular movement to allow people to borrow against the value of their possessions including property.  Up to 1996 the US ratio of household debt to income was around 60%.  After the tech bubble burst in 2001 Americans turned to their real estate to continue to fund their desire to live a comfortable lifestyle.  As a result debt rose to a high of 130% of income and by 2008 US households were 13.9 trillion dollars in debt which is 99.6% of GDP (Examiner.com)

This article is not about debt per se but about the need to develop economic policy so that demand for  iPhones laptops and cars based will stop causing us to spend income we simply don't have.  We need public policy to cope with our wealth addiction and it is too late and to hypocritical to stand in the way of the very free trade that helped create our wealth in the first place.  

The young are getting frantic in an effort to borrow and repay student loans in the hopes of pursuing fewer and fewer opportunities to create the lifestyle for themselves that boomers have had for so long.  At one time every department stores and restaurants and garages offered opportunities for real income,  Now the management of these businesses has been centralized,  There are hardly any non-chain stores in our small cities.  People have moved from the farms to the towns, to the cities and finally to the Internet to chase prosperity to find it retreating farther and farther away.

The solution may lie in tossing a wrench strategically into the consumer economy model of use and dispose.  Rather than stand in the way of consumerism, government needs a requirement that all items be sold in a way that generates what I will call a 3R &I economy, repair reuse and recycle and inform.  What if people who made watches had to make them repairable?  The result would be the gradual return of jewelers.  Similarly if cars had to be made so that they could be maintained for 20  years then mechanical jobs would return to our towns and cities.  If goods had to be warrantied (insured?)  for suitability, then heavy investment would go into Informing the public what they should be looking for in their purchase.  Professionalism would return to our big box department stores.

The immediate impact of this process would be to slow down purchasing, but I would maintain we would be largely slowing down the purchase of junk with planned obsolescence.  Slowly, painfully perhaps, jobs would return which would fund the kind of prosperity that would be modest but lasting.  We would not prevent goods from being manufactured where the labor pools are best suited, but we would control the suicidal consumption of those goods...forcing the newly prosperous pools of capital overseas to invest in sustainable consumerism throughout the world.