Dear President Obama,
You know that I do not expect any substantial improvements in foreign policy until there are substantial and constructive changes in the structure of the economy. Here –with breathtaking simplification—is a nine point outline of a plan for achieving substantial and constructive changes in the economy.
First, let the for-profit private sector shrink. Rely on the standard rational responses to the signals the market is sending when it determines that a business is no longer profitable: bankruptcy, downsizing, layoffs.
2. Rewrite the reorganization chapters of the Bankruptcy Code to make it easier to downsize without going out of business completely. Repeal the dogmatic requirements for prompt and full payment of administrative, secured and priority creditors. They too frequently make reorganization impossible.
3. A general (“Scandinavian”) principle: No flesh-and-blood human being should suffer from the demise of a legal fiction. The sunset business entity (the legal fiction) ceases to exist after it shuts down operations and files its last tax return. But the flesh-and-blood people who worked for it should still be regarded as members of what Martin Luther King Jr. (following Josiah Royce) called “the beloved community.” They should be, for example, funded to go back to school while they are between jobs. (Lifelong learning.)
4. Compensate as much as possible for the loss of jobs in the for-profit private sector by increasing employment in the public sector and in the “third” sectors (variously defined). Job creation to compensate for job loss includes the greening programs you are already proposing, the human services programs Martin Luther King Jr. regarded as an inexhaustible source of employment opportunity, self-employment, micro-credit, nonprofits including schools and hospitals, thrift shops, recycling centers, community supported agriculture, cooperatives, employee-owned businesses….and others.
5. Build inclusive local communities that provide basic security for their members while depending less on sales, less on money-based ties, less on market relationships. See www. gift-economy.com. This category includes many kinds of self-help, do-it-yourself projects, and do-it-with-friends projects; it includes faith-based cooperation, and neighborhood (territory-based) cooperation, e.g. in housing, in growing and distributing food, in child care, in care of the elderly. You learned all about this in your early Chicago years before you went to law school.
6. Nationalize the Federal Reserve Bank and the biggest private banks.
7. Define corporations as social institutions with social responsibilities, whose incomes should be used for socially legitimate purposes (cf. Keynes´ “euthanasia of the rentier class”) The corporate mission statement should define creating employment as achieving a corporate goal, not only as a cost.
8. Fund government (and charitable foundations) with rents from natural resources and other rent-yielding assets, collected as severance taxes, as other taxes, as royalties, or as revenue from outright ownership. Income from taxes on wages and profits is declining; printing money is inflationary; borrowing cannot go on forever; therefore the public purse must be filled to an increasing extent with income from rents.
9. Dissolve the World Trade Organization. In general reclaim American sovereignty and help other nations to reclaim their sovereignties, so that people can decide how they want to live instead of being compelled to live as the global economy dictates.
Compared to the currently prevailing mad rush to make ailing private for-profit businesses profitable at any cost, the nine point plan briefly outlined above has the following six advantages:
1. It will work.
2. It will lead toward a mixed economy, which is where we should be going in any case.
3. It will tend to make democracy real by moving toward liberating the governance process from the overwhelming systemic imperatives to establish a regime of profit accumulation and to compete in the global economy at all costs.
4. It will tend to make a peace economy possible by making the military-industrial complex and the global projection of military power unnecessary.
5. From an academic point of view, it relies on an intellectually defensible transdisciplinary social science, wider in scope than the prevailing mainstream economics that has been for many years discredited by the critiques of logicians and philosophers of science.
6. Parts of it can be implemented by civil society and local governments without waiting for the federal executive and congress to see the light.
One more point: in your daily conversations about the economy with Larry Summers please talk to him as well as listening to him. Repeat what you said when you spoke to Warren Buffet and his Wall Street friends. Tell him about the higher purpose. Tell him about revising the rules of the game from time to time to make them better serve the higher purpose. Tell him about your experiences with Asset Based Community Development when you were a community organizer in Chicago.
peace and all good,