Center for the Advancement of the Steady State Economy
Regular Contributors:  Herman Daly, Brian Czech, Brent Blackwelder, and Rob Dietz. Guest authors by invitation.

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Opportunities for a Different Economy in 2011

by Brent Blackwelder

With last November’s election there are new governors, state legislatures, and a very different U.S. House of Representatives. The issues of budget cuts, tax reform, corruption, the global financial collapse and the rise in unemployment are high on the agenda. We have an opportunity to shape the debate on these issues and bring the steady state economy into the discussion.

Here are some of my ideas for 2011.

Public Education

We need to conduct a series of seminars or teach-ins across the country to challenge conventional economic thinking, to expose people to the concept of a steady state economy, and to find workable solutions to all the economic problems we face. If you would like a seminar or teach-in for your community or your college, please contact me. Such sessions would involve audience interactions with leading advocates of new economic approaches and would feature dynamic discussions of what a steady state economy would look like, how to accomplish a transition to such an economy, and opportunities for financial and economic reform this year.

Financial Corruption and Tax Evasion

Financial corruption is undermining all aspects of governance. Tax dodgers are depriving governments around the world of essential revenues. The result is less money for enforcement of health, safety, and environmental standards and reduction of many vital social services. It doesn’t take long under such conditions for citizens to lose faith in the ability of the government to provide security and other meaningful services.

We can work on two tasks in 2011 to address these problems. First, we can solidify important legislative gains made last year to curtail corruption, by making sure new regulations have strong provisions to prevent tax dodging (note: the Administration will be writing regulations to put new agencies like the Office of Financial Research into action). Second, we can demand new laws to force disclosure of clandestine owners of offshore tax havens. Those who want to be part of grassroots efforts on these issues should contact me.

Tax Reform and Budget Cuts

The last election featured headlines about growing deficits, massive cuts in federal spending, and the influence of Tea Party activists. Republicans are demanding spending cuts on the order of $100 billion but are short on specifics. At the same time, Democrats are angling to avoid big reductions in domestic spending.

The win-win solution to the pending impasse on budget cuts is to go after offshore tax havens and other tax dodges that are costing our country $100 billion a year. More and more people and corporations are moving money they earn in the U.S. to offshore havens where taxes are inconsequential. Goldman Sachs used this technique to reduce the percentage of its income going to taxes from 34% in 2007 to less than 1% for 2009. Exxon avoided paying U.S. taxes in 2009 even though it had billions in profits. The Task Force on Financial Integrity and Economic Development reports that 83 of the top 100 U.S. corporations have subsidiaries in tax havens. Such tax avoidance by multinational corporations not only hurts taxpayers, but also costs the governments of developing countries an estimated $160 billion per year, according to a new report by ActionAid. Tax avoidance by corporations is a major factor in keeping poor people poor around the world. For example, in Ghana, SABMiller’s subsidiary Accra Brewery is the second biggest in the country with over $40 million in yearly sales, but through clever accounting, it has paid no taxes the past two years. At the same time Marta Luttgrodt, who sells this beer at her small food and beverage stall near the brewery, must pay a number of taxes to the Ghana Revenue Authority or she will be closed down. ActionAid estimates that the taxes SAB Miller has avoided paying could have put 250,000 children in school in the countries where the company operates.  Click here for more on this story.

Great Educational Movie

For a captivating picture of the global financial collapse of 2008, the bailouts, and the behavior of big bankers and Wall Street firms, the movie Inside Job is a must-see. Inside Job provides a comprehensible and dynamic overview of the collapse in the U.S. and around the world. If you are not already infused with a sense of outrage over the criminal behavior of so many involved in the scandals, you will be after seeing this movie. Help spread the word.

Key Changes in the Tax Code

Tax reform will be a major topic for action this year. Progressives need to be on the offensive and demand a better taxation framework. It is our civic duty to see that our tax structure is fair, that people live up to their responsibility to pay taxes, and that tax incentives do not encourage undesirable activities. For example, the tax code should impose fees on pollution and on products that harm public health. Often the reverse is true. The government has subsidized the purchase of gas-guzzling hummers and delivery of junk food into public schools. We should push both political parties to eliminate all government subsidies for the fossil fuel industry. If you want to be part of the subsidy debate on energy, please visit Friends of the Earth.

We have lot of work to do to build a sustainable and fair economy. But we also have a lot of opportunities to minimize perverse subsidies, eliminate tax dodging, create meaningful employment opportunities, and put the brakes on the financial roller coaster that is being driven by speculators. Contact Dr. Brent Blackwelder to follow up.

8 Responses to “Opportunities for a Different Economy in 2011”

  1. You wrote towards the end, “We have lot of work to do to build a sustainable and fair economy.” and, of course, that’s perfectly correct. But it is also so much more than a steady state economy, it has to become a steady state planet, and probably soon.

    http://www.independent.co.uk/life-style/health-and-families/world-is-one-poor-harvest-from-chaos-new-book-warns-2192127.html includes this, “In his new book “World on the Edge,” released this week, Brown says mankind has pushed civilization to the brink of collapse by bleeding aquifers dry and overplowing land to feed an ever-growing population, while overloading the atmosphere with carbon dioxide.”

    Brown goes on to say, “We’ve got to get our act together quickly. We don’t have generations or even decades – we’re one poor harvest away from chaos,” he said.

    “We have been talking for decades about saving the planet, but the question now is, can we save civilization?”

  2. vera says:

    “dynamic discussions of what a steady state economy would look like, how to accomplish a transition to such an economy”

    Dr Blackwelder, would you point us to this information please?

  3. Mark R. says:

    While I´d like to see some of Dr. B´s ideas for the SSE, I´m confident they will be consistent with sites like the Fair Trade Labelling Organization and the International Federation of Organic Agro.

  4. Bruce E. Woych says:

    http://deanhenderson.wordpress.com/2011/01/17/swiss-bankers-bis-the-house-of-rockefeller/#more-1007
    January 17, 2011 — Dean Henderson
    “The utilization of Eurodollar offshore bank accounts by the super-rich costs cash-strapped governments around the world trillions of dollars in annual revenue. In 1963 the Eurodollar market was worth around $148 million. By 1982 it was worth $2 trillion, while the US M-1 money supply stood at $442 billion.
    In 1950 US corporations footed 26% of the total US tax bill. By 1990 they were covering only 9%, contributing to massive budget deficits and the current $14 trillion US debt. In 2009 corporate leviathans such as Bank of America, General Electric and Exxon Mobil paid no US federal taxes. Exxon’s net profit for that year was over $45 billion. It utilized subsidiaries in the British Crown-controlled Bahamas, Bermuda and Cayman Islands to dodge the IRS.”

    The leverage of this monetary force transposes over poly-centric interests that displace resource utilization multilaterally across borders and from multi-regional sectors without regard to the environmental consequences of displaced markets. The direct consequences are off-set from the actors and providers of markets as resource, just as these off-shore displacements are isolated from the impact they initiate on economies themselves. Subsystems are multi-variables in negatively provoked ecological potentials that are being measured as “evoked” economic gains (an outcome that acts and performs like a floating independent variable on the damages (off-loaded “elsewhere” and “nowhere” in sight). Until we can assess realistic “steady state” data and establish the corollaries of a disequilibrium model between the economies of scope/scale vis-a-vis the ecological costs in counterbalance; the attainable measures for a steady state economic habitat is unpredictable.

    The massive offshore evasion of taxes is analogous to this escape from ecological responsibility in both scope and scale. Oddly enough, if the corporate greed is checked and placed back in line with the terrestrial economies, the limitations may well have a profound influence on environmental degradation all over the globe. It seems to me that demanding offshore tax reform and regulations would be a win-win solution for ecological restraints as well as the immediate benefits for the real economies carrying the burden of these profiteering hide-a-ways.

  5. Mark R. says:

    In my view, I also like that tax the rich approach, but without building the movements like fair trade, organics, credit unions, and cradle to cradle green tech certs, the foundation seems sandy to me.

  6. Mark R. says:

    Just to add to the position on the practical task of consumer and producer decision-making as the basis for implementing theoretical formulations and prescriptions, the financial numbers cited by BEW are formidable, such as

    “In 1963 the Eurodollar market was worth around $148 million. By 1982 it was worth $2 trillion, while the US M-1 money supply stood at $442 billion.”

    I recently finished my masters on community green enterprises in a few key European countries and their key roles in promoting renewable energy development. This research confirmed my interest in linking problems directly to the state of the solutions, since a firm hold on solutions is ultimately the objective.
    In terms of investment flows, for example, in Jan. 2007, all global stock markets handled some 50 trillion dollars. In 2010, managed funds reached some $25 trillion. The Dow Jones Sustainability Index, by contrast, has reached only some $8 billion, while social investment funds has reached some $3 trillion. http://www.sustainability-index.com/

    http://www.socialinvest.org/

    While petroleum industry profits are enormous (and despicable), renewable energy statistics report that in 2007 investments were over $140 billion. The individual benefits of individual and community renewable energy installations (or enterprises) is more modest in general terms, but reflects the greatest returns to individuals in reality and the long term.
    See stories about Germany´s Freiamt and the Washington, DC solar co-op, for example.
    sefi.unep.org/
    csmonitor.com/layout/set/print/content/view/print/199021

    http://www.washingtonpost.com/wp-dyn/content/article/2009/09/18/AR2009091800078.html

    Food co-ops and similar variations like CSA´s are becoming more popular as people learn about them, and the New York City area is showing some great efforts. Nevertheless, there are many co-ops that have been around since the early 1970s, like in Ithaca.
    In terms of industrial processes, films like A Civil Action with John Travolta and Erin Brockavitch with Julia Roberts brought home true stories about adaptation, but McDonagh and Braungart Design wrote the book Cradle to Cradle, and have started a certification that is an exciting step forward. A movie was also made about their efforts, named after an article they wrote in 1998 about The Next Industrial Revolution.

    greenstar.coop//

    http://www.mbdc.com/detail.aspx?linkid=2&sublink=8

  7. Mark R. says:

    My point in the previous post, then, is that even where the solution based efforts are dwarfed by existing financial flows and activity, solution oriented activity has already made big strides, and offers big impacts for any individual or group that can choose to get involved. Those individual choices then contribute to building a miniscule momentum. The power of changing minds promises potentially huge momentum if we can link concepts like ecological economics to practical movements, especially the certification of economic practices, is the view I am confident I share with the like-minded.

  8. vera says:

    Bruce, how exactly are we supposed to “demand” these reforms? The corps don’t pay taxes because they can get away with it. The havens exist because again, that’s the way those who set up financial systems like it.

    In the context of political power, what exactly does it mean when you call for “demanding offshore tax reform” and gazillion other reasonable ideas like it we both could think of?