Dear President Obama,
The main problem with the economy can be simply stated: We depend too much on selling. We depend too much for our daily of bread on selling something or other to get money to pay for it. Since there is nearly always a shortage of buyers, it is nearly always hard to sell. It is nearly always hard to sell ourselves; that is to say, it is hard to get a job. In other words, as John Maynard Keynes pointed out, if the market is left ungoverned full employment will occur rarely and when it does occur it will be temporary. As the same John Maynard Keynes eloquently explained, the market system depends on people having confidence that at some point their investments will pay off in cash. As we know from recent experience, very strange and convoluted behavior sometimes results from efforts to produce in investors confidence that what they are being asked to buy will sell for more than they paid for it.
For many reasons we need to become less dependent on the sales way of life –even though for many reasons we should not abandon the sales way of life altogether.
Simple as it is, our political leaders, our economists, and the public in general seem not to understand the problem of excessive dependence on sales. They continue to think that the solution to a slow economy is to create more buyers. They think in terms of stimulus and confidence-building, trying to crank up a system in which employment depends on sales and sales depend on customers.
Solving the main problem requires a different approach. It requires reducing our dependence on selling.
Some of the measures you are proposing are right on right track. As you said in your inaugural speech, the question is not whether government is too big or too small; it is whether the government works. Most people are now on board with you in acknowledging that there is no way to make the economy work without an expanded public role. This goes part way toward solving the simple problem I have defined as the main problem. Insofar as public services do not require market demand, the chronic shortage of buyers is not a barrier limiting either production or employment.
Further, as the experiences of sensible social democracies have shown, a strong public sector properly managed produces a strong private sector. Insofar as the private for-profit sector can accomplish the goal of creating jobs for all, it can do so much better when it partners with a strong public sector.
But still more is needed. The still more that is needed was the unifying theme of your inauguration speech. We need a positive attitude toward contributing to the common good; we need good will, responsibility, willingness to sacrifice for the benefit of others, a spirit of service, unity, patriotism in a constructive sense of the word, and all the wonderful communitarian values you talk about in most of your speeches. In their pastoral letters on economic and social issues the Catholic Bishops of the United States have rightly said that overcoming poverty requires not two sectors but three: the private sector, the public sector, and the voluntary sector. The voluntary sector is not a matter of selling things. It is a matter of giving.
On Wednesday the 21st when you meet with your economic advisors, I hope you remember what you said on Tuesday the 20th. I hope you will not fall back into the paradigm that is currently in meltdown, the one that treats profit-making as if it were the central and perhaps even sole human motivation. That is not what history shows, nor what anthropology shows, nor what psychology shows, nor what neuroscience shows, as you have learned by now if you have followed my advice and read Riane Eisler’s The Real Wealth of Nations, and as you probably knew already even before reading her book.
Peace and all good,