Overcoming Sustainability’s Single Biggest Obstacle

Photo by Tobias Weinhold on Unsplash

Humanity is on a path that is unsustainable. That is, we are consuming resources, creating waste, and polluting the physical environment within which we exist at a rate that cannot be sustained.

Eventually, that will catch up with us. That much is a metaphysical certainty.

Exactly what “catch up with us” would mean is perhaps impossible to predict, but there can be no doubt that life for humans as a species would take a turn for the worse. At this rate, at some point all of Earth will be like the most destitute, lawless places on the planet today — with no stable, productive nations in existence to provide any kind of relief.

At bottom, the single biggest driver of unsustainability — the obstacle that must be overcome to avoid a fate worse than we who are not already experiencing it can even imagine — is the ‘need’ in all nations to maximize the total output of goods and services. Nations need to maximize output for the most excellent reasons: to maximize employment, maximize total income, and maximize the amount of taxes collected (at existing tax rates).

So for every nation maximizing total output is a political imperative. Yet, it is an imperative that is creating an existential threat for civilization itself.

To be sure, no ideology provides a just solution. That includes, by the way, socialism. Socialists’ insistence on ‘full employment’ and using taxes to redistribute money/wealth without fundamentally changing the existing economic system places socialism as firmly within that paradigm as any other ideology. At best, ‘more equitable’ society would eventually suffer total collapse.

The only immediate political ‘solution’ would be the only such response humanity has ever had to a mismatch between numbers of people and available resources: to reduce the number of people that must be sustained, one way or another. There are ideologies available to rationalize such an approach. As I said, no ideology provides a just solution.

Politically, sustainability’s biggest obstacle is the economy as a system. Diddling about with fiscal and monetary policies instead of addressing the economy as a system is at this point as stupidly and inhumanly futile as rearranging the furniture on a sinking ship.

A just solution requires either a totally new system or a just solution within the existing economy as a system. This proposed paradigm falls into the latter category.

I have discovered a single change that can be made to the existing economic system to make life as we know it even in the U.S. sustainable. It is at bottom a different way of supplying the economy with money (as currency).

This proposal, this New Monetary Paradigm, could be implemented by any nation. It would enable all nations to provide for all their citizens a degree of material well-being that is now experienced only in the privileged few. Yet, it would involve no redistribution of income/wealth within any nation or among any nations. Still, it would make life sustainable at that level of material well-being for all. (Eventually, all nations could have the same, high level of material well-being.)

This proposed change to the existing economic system (specifically, the monetary system) would accomplish that feat by having demographics govern total output — passively, but effectively. It would be “governed” in the sense of having a flexible limit placed upon it. That limit would change in response to changes in demographics.

“Demographics” means random perturbations within a nation’s population. One such perturbation is the total number of citizens in a nation. Another is the number of retired citizens. Another is the number of adult citizens who are too incapacitated to work. Another demographic perturbation could be the number of people who happen to be employed in minimum-pay jobs.

In this New Monetary Paradigm all of those perturbations would affect the level of total output, but they would all be random. The number of people comprising any of those groups would ‘just happen’. No agency would be able in any way to influence the size of any of them. Total output would be governed by those perturbations because together they would determine the supply of money for the economy — as I’ll now explain.

The total number of citizens in residence in the nation would determine how much money government would have to spend. Government uses its money to purchase goods and services and to provide income to its employees (and, at present, certain other people — welfare — but that would no longer be needed). So the amount of money government has to spend affects total output.

Currently, nations can spend literally unlimited amounts of money, meaning there is no limit to what they can contribute to total output. With this proposed change government would be put on a real budget.

Immediately following the adoption of this new paradigm the amount of money government would have to spend would be equal to what it is already spending. Thereafter, however, government would be limited to that current per capita rate of spending (i.e. the amount spent divided by the number of citizens in residence). In the future the number of citizens in residence would simply be multiplied by today’s per capita rate of spending to determine how much money government would receive.

That does mean all government, from the central government to all local government. The money for government would be created — ‘printed’ — as needed and handed over to the central government at the start of each year. Such an up-front, lump-sum allotment would most easily allow government to adjust its pattern of spending, if necessary, due to events. How money would go from the central government to intermediate and local governments would be for individual nations to decide. (In democracies there would be an innate tendency to minimize spending by the central government in order to maximize the amount of money sent to the localities where the voters live.) [For that matter, money could possibly go first to local government, but I haven’t given any thought as to how that process might work.]

The money provided to government would contribute to the supply of money (as currency) for the economy. At this point it can be noted that this paradigm does have built-in safeguards against inflation. (The reader of just this essay will have to take my word for that — and other things, for that matter; I can’t reproduce a whole book here).

So, neither taxes nor public debt (which requires taxes for its repayment) would be necessary for all of government to continue to be funded in the amount to which it is accustomed. Again, however, government would be limited to that (per capita) amount from now on — or taxation/public debt would have to be reintroduced.

Money would also be created as needed to pay an income to retirees, adults too incapacitated to work, and people employed in minimum-pay jobs. They would all receive the same rate of pay, based on the current median (or perhaps average) income — so in the U.S., say, $15/hr.; $600/wk. That money, too, would be part of the supply of money (as currency) for the economy.

The people employed in minimum-pay jobs would not be paid by their employer. They would receive this other income. (Employers would have to pay in full for overtime.) Employers would use benefits to compete for people to fill minimum-pay positions. All employees making more than the minimum pay would be paid in full by their employers, as at present.

Government could be an employer of last resort, creating jobs that would be paid the ‘allotted income’, but without benefits. That would make the cost of those jobs zero.

More details are available in other places. The point here is that this New Monetary Paradigm provides the means to eliminate for any nation the political imperative to maximize total output. The funding of government would not be related to the level of total output. (With government as an employer of last resort) there would be no unemployment or poverty at any level of total output. In addition to the absence of unemployment, poverty, taxes, and public debt, as an added bonus the economy would be completely self-regulating — because the means to engage in ‘managing’ the economy through fiscal and/or monetary polices would not even exist. The level of total output would be determined by demographics — and only that.

This paradigm could be instituted through the existing monetary system (i.e. any central bank) or through a newly created Monetary Agency. (In the U.S. the Social Security Administration could be extracted from government to serve that purpose — so no new bureaucracy either way.) Either way, it could be implemented with a single legislative Act.

With this new paradigm available, diddling about with fiscal and monetary policies is like rearranging furniture on a sinking ship while a suitable, sufficient lifeboat stands at the ready, empty. We, the people now have something completely positive we can do, however. We can advocate for this New Monetary Paradigm.

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unaffiliated, non-ideological, unpaid, academically trained in economics and philosophy

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Stephen Yearwood

Stephen Yearwood

unaffiliated, non-ideological, unpaid, academically trained in economics and philosophy

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