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I know very little about economics, but since the onset of the Great Recession I’m beginning to wonder if economists trained under the standard paradigm(s) know much more about it. In any case, the BP oil spill has – for a few minutes, anyway – spurred me to mull over our conventional economic assumptions about the need for ever more growth (fueled, of course, by ever more oil until a more efficient and/or less dangerous energy source is developed). And I’ve recently discovered that attacking these assumptions is one of the main passions of Herman Daly, author of “Steady State Economics“. Here’s an excerpt from Chapter 5, which I found here-

One of the most popular arguments against limiting growth is that we need more growth in order to be rich enough to afford the costs of cleaning up pollution and discovering new resources. Economist Neil Jacoby says, “A rising GNP will enable the nation more easily to bear the costs of eliminating pollution” (1970, p. 42). Yale economist Henry Wallich makes a similar point:

The environment will also be better taken care of if the economy grows. Nothing could cut more dangerously into the resources that must be devoted to the Great Cleanup than an attempt to limit resources available for consumption. By ignoring the prohibitionist impulse and allowing everybody to have more, we shall also have more resources to do the environmental Job [Wallich, 1972 p. 62].

No one can deny that if we had more resources and were truly richer, all our economic problems would be more easily solved. The question is whether further growth in GNP will in fact make us richer. It may well make us poorer. How do we know that it will not, since we do not bother to measure the costs and even count many real costs as benefits? These critics simply assume that a rising per-capita GNP is making us better off, when that is the very question at issue!

If marginal benefits of physical growth decline while marginal costs rise (as elementary economic theory would indicate), there will be an intersection beyond which further growth is uneconomic. The richer the society (the more it has grown in the past), the more likely it is that marginal benefits are below marginal costs and that further growth is uneconomic. That marginal benefits fall follows from the simple fact that sensible people satisfy their most pressing wants first, whether in alternative uses of a single commodity or in alternative uses of income. That marginal costs rise follows from the fact that sensible people first exploit the most accessible land and minerals known to them, and that when sacrifices are imposed by the increase of any one activity, sensible people will sacrifice the least important alternative activities first. Thus marginal benefits of economic activity fall while marginal costs rise. Were this not the case, our previous “economic activity” would not have been economic — less pressing wants would have to have taken priority over more pressing wants, and the level of welfare could have been increased by reallocation with no increase in resources used.

…Once we have gone beyond the optimum, and marginal costs exceed marginal benefits, growth will make us worse off. Will we then cease growing? On the contrary, our experience of diminished well-being will be blamed on the traditional heavy hand of product scarcity, and the only way the orthodox paradigm knows to deal with increased scarcity is to advocate increased growth — this will make us even less well off and will lead to the advocacy of still more growth! Sometimes I suspect that we are already on this “other side of the looking glass,” where images are inverted and the faster we run the “behinder” we get.

Again, I don’t know enough about economics to evaluate Daly’s argument here, and in any case, utopian thinking is always dangerous. The devil (or the angel) is always in the details, and dogmatic presuppositions must always be guarded against. But I do have a sort of intuitive grasp on what a steady-state economy would involve (maybe because I seem to have reached a sort of steady-state of economic well-being myself, though perhaps not an optimal one), and the question is this: would a steady-state economy – one that aims to supply each individual with an optimal level of well-being, however ‘optimal’ is defined – really be any more utopian than an economic system predicated upon the occurrence of never-ending growth (even in the most well-off societies)?

Elizabeth Warren, Harvard law professor and Chair of the Congressional Oversight Panel, is probably the most passionate and articulate consumer advocate since the young Ralph Nader. She’s done many interviews, and if you’d like to hear her views on the current wrangling over financial reform in the House-Senate reconciliation committee, I recommend listening to her recent interview on NPR’s “On Point”. But here she is in July 2009, in a self-produced 7.5-minute video, explaining without any interruptions why she favors setting up a strong Consumer Protection Agency-

For more video messages delivered in her official capacity as the Chair of the COP, click here.

Warren claims to have no political ambitions, which is understandable given that she is around 60 and has a very good job. But I wouldn’t be surprised to see her on a ticket someday.

I recently received this sales pitch from Equifax-

Here’s the second page-

Notice the warm and fuzzy testimony from folks just like us: an office manager, a high school teacher, a systems analyst, and the all-important small-business owner. No doubt that asterisk next to each comment directs us to a footnote which will inform us that these are real consumer comments, names on file. The footnote, in a font so tiny it’s almost illegible, is at the bottom of page 2. See it down there? I’ve highlighted it in yellow, just like the comments. Here’s what it actually says:

Now, doesn’t that just make you want you to run right out and buy security “from the nation’s oldest and most trusted name in credit”? (I know that this sort of fictionalization is normal in t.v. advertising, but somehow it seems more egregious and deceptive in print…)

Shortly after the House passed the health insurance reform bill that, according to every Republican in Congress, will ruin the private health care sector of the economy, the stock market, recognizing the coming apocalypse… markedly rose? As Business Week reported-

Bristol-Myers Squibb Co. and Pfizer Inc. climbed at least 1.4 percent to help lead health-care companies higher after the House approved legislation that will ensure tens of millions of uninsured Americans will get medical coverage. Boeing Co. advanced 1.7 percent to help lead gains in the Dow Jones Industrial Average. Citigroup Inc. jumped 3.6 percent as Richard X. Bove at Rochdale Securities LLC advised buying the shares. “The health-care legislation approval removes the uncertainty,” said Richard Sichel, chief investment officer at the Philadelphia Trust Co., which manages $1.4 billion.

Surely this was just a brief mistake, a mere blip. No doubt the market would recognize the coming disaster to the U.S. economy today, having had another 24 hours to consider the dire consequences of the cursed legislation that that Kenyan Usurper Anti-Christ Commie Muslim Terrorist Obama signed into law today-

Dow rises 100+ points as Obama signs health insurance reform

(By the way, I know you can’t tell much from daily fluctuations of the stock market, but in this case you can at least tell that the market does not think that health insurance reform poses any danger to the private health care system).

I recently noticed that my Time Warner cable bill had increased by around 7% or so, so I took the time to actually look at the statement. I know that large corporations bet on their customers not carefully examining their bills over time (particularly in this age of electronic statements and automatic payments), and, let’s face it, it’s usually a very safe bet: generally speaking, it’s not worth the time it takes to study a statement every month. Like frogs in slowly heating water, we generally don’t notice small increases, or we do register them (barely), but they’re not significant enough to motivate action. Multiply this effect by several million customers, and we’re talkin’ some real money here.

Anyway, the relatively large recent increase managed to rouse me from my consumerist stupor, and I finally took a close look at what I was paying for. The company had recently rearranged its channel lineup, making it “theme based” instead of package based, and various promotional offers – which, of course, I had forgotten I’d accepted – had expired. For instance, HBO and Cinemax had been offered bundled together for a promotional price, and now they were separate (and more expensive). Other channels (now bundled together under the headings “Digital Variety” and “Digital Choice”) were mostly in those television wastelands above Channel 99 but below the HD channels we generally watch. There were also four channels bundled together under the “HD Plus Package” that we rarely watch. So, by dropping three optional packages and Cinemax (is there really any need for cable movie channels anymore, given streaming Netflix and the like?), we were able to save about $40 a month. I also decided to take Time Warner up on a digital phone deal that will allow us to drop our present land-line service, and that should result in about a $20 monthly savings, at least for the next year or two. So, by being a little more on top of my consumption, I was able to save over $700 this year (in return for an hour or two of work).

Now if I only remember to check my bill two years from now, when that promotional phone deal has expired…

Today was the dreaded deadline to submit your tax forms or an extension form to the dearly beloved IRS, in case you somehow managed to forget about it. Cheryl and I have managed to ease the pain by intentionally overpaying a bit during the year, so that we can actually look forward to filing our tax returns… because we actually get returns.

Meanwhile Ron Paulians and other disgruntled citizens have been organizing “tea parties” all around the country to protest… I’m not quite sure what. It can’t be about their taxes, since most people in this country will be paying less in taxes this coming year than they did last year. The signs being held at these social events include phrases covering most right-wing complaints, from over-spending to illegal immigration. Some are quite general, including one that seems to be against tax collection per se: “You Are Not Entitled To What I Have Earned”. I imagine a counter-demonstrator holding a sign that says: “Unless You Pay Taxes, You Are Not Entitled To Drive On Our Interstate Freeways, To Visit Our National Parks, To Be Protected From Pirates On The High Seas, To Benefit From FDA Regulation Of Contaminated Food, To Have Your Individual Right To Protest Protected By Our Supreme Court…” and so on.

The over-spending issue is certainly one over which reasonable folks can disagree. Although I thought Ross Perot was a bit of a nut, I appreciated his concern about massive deficits, and as it turned out, he probably deserves credit for having split the opposition in 1992 and electing Clinton, who actually did balance the budget and accumulate a surplus. But while I don’t hold much stock in economists’ opinions these days (pun intended), there seems to be a widespread consensus that some over-spending at present is necessary to keep unemployment at bay. So I’m hoping that Obama and the Dems in Congress can ease the future deficits by dealing with future entitlement costs, particularly those associated with medicare and social security. Yawn.

On a more whimsical note (and more whimsical notes are needed more than ever these days), I think I’ve stumbled upon a cure for world poverty. The idea is very simple… far too simple to be accepted, of course. But it goes like this…

Since governments can obviously create money out of thin air, let’s just forgo the illusion that money represents anything real (including hard work, since those with the most money clearly work less hard than nearly everyone else). Let’s just create several trillion dollars (we can do this and still save the trees, since we can deposit all that money into banks simply by entering a few zeroes into the right databases), and require all of the banks to fairly distribute that money to those with the lowest balances – especially to those with no accounts at all. The idea is to make everyone presently living in poverty millionaires. Sorry, those of you who don’t quite qualify as impoverished: we can’t afford to undermine your motivation to work by sharing the wealth directly with you, because we need you to fulfill the pent up demand of the impoverished. We need you to make millions of (green) cars, build renewable energy plants, pave roads, and then produce the zillions of goods and services the nouveaux riches will be buying with their sudden good fortune. With the tax collections (sorry Ron Paulians), all governments with impoverished populations – including our own – will be able to build schools and hospitals, distribute effective birth control, and create new, self-sustaining industries. I guess we’d better make this a requirement of receiving the money in the first place. Then the next generation, raised in material comfort and with ample opportunities, can begin working productively, without a handout. (Oh, I almost forgot: there has to be a global freeze on prices so inflation is held in check… That should be easy enough to accomplish by printing up an extra billion or two to bribe the lawmakers). By then the multi-trillion dollar infusion will have been distributed throughout the world economy, and everyone will be much, much happier.

You may have seen this before, but if you haven’t, it’s worth watching, if only to remind yourself of the amazing arrogance of ignorance. While self-styled pundits and stock-market cheerleaders like Arthur Laffer and Ben Stein helped to lead many off an economic cliff, financial advisor Peter Schiff was spot-on in predicting the current recession.

By the way, Ben Stein helps to confirm the theory that stupidity (or at least willful, ideologically-driven ignorance) is not “domain-specific”, unlike some forms of genius: in addition to having ridiculed the truth about the economy long after others had accepted it, he’s a major evolution-denier and “intelligent design” promoter, having been primarily responsible for the incredibly misleading “Expelled: no intelligence allowed“.