Reinflate the Old Economy? Get Real!

YES! Magazine - Summer 2009: The New Economy

Busted: 9 Economy Myths Reinflate the Old Economy? Get Real! NEW ECONOMY, NEW WAYS TO DO MONEY The measure of a healthy economy is a growing GDP. A healthy economy meets real needs within ecological limits. All you need is money. You can’t eat money. What we need is healthy families, communities, and ecosystems. Booms and busts are inevitable in a modern economy. The boom/bust cycle is a result of letting banks create money. We usually think of money as neutral—it allows buyers and sellers to make deals, and that’s good. But it’s not neutral when we give private banks the right to create money that we taxpayers have to borrow. It gets worse when banks get entangled in exotic speculation, creating trillions of electronic dollars that inflate financial bubbles. Then—because the paper wealth is disconnected from the real economy—the bubble pops, and finances crash. The banks don’t know how to untangle the mess, and they stop making loans. Even when things are going well, there’s this little problem about interest-based money—it concentrates more and more wealth in the hands of those lending it at the expense of your average home buyer, credit card holder, or tuition-paying college student. In the new economy, there are better ways to get money circulating. Money from Nothing :: How Banks Create Money Out of Thin Air :: Dollars with Good Sense: Local Currencies NEW ECONOMY, NEW WAYS TO DO FINANCE Wall Street is the engine that powers our economy. Most real economic activity is local. Corporate banks are too big to fail. We need them to keep our economy going. Small, responsible banks and credit unions build real wealth in our communities. The smart investor insists on high returns. Slow community investments pay back in dollars and quality of life. Finance begins with a simple idea—individuals or groups sell shares to investors or borrow money from banks, and use the funds to start businesses, buy land, or build houses, factories, or roads. Investors gain a stake in these ventures; if these companies are publicly traded, investors can buy and sell shares on stock exchanges. But as the small U.S. stock exchanges of the late 18th century grew into the vast institution that is now Wall Street, the relationship between trading and the real economy of goods and services fell apart. We’ve witnessed what happens when “owners” of businesses have no accountability for outcomes in the real world. Financiers are rewarded for generating short-term profit, even when the investments turn out to be phony or to cause harm. As mega-finance crumbles, many farsighted individuals are putting their money in enterprises and financial institutions that benefit working Americans and the places they live. Small Banks, Radical Vision :: My Best Investments are Down the Street :: Put Your Money Where Your Life Is :: Tips for Community Investment NEW ECONOMY, NEW WAYS TO WORK Well-run businesses require a hierarchy of highly paid executives. Worker co-ops are efficient and democratic, and workers keep the profits. The freedom to do ecological damage improves the business climate. If we destroy the environment, there is no business … or climate. Large corporations are efficient, innovative, and create jobs. Locally rooted small- and medium-sized businesses create the jobs and innovations we need. Do you want new jobs in your community? With layoffs and businesses closing, who doesn’t? The standard formula is to offer big corporations subsidies and tax breaks. Throw in lax environmental and labor standards, and you may win the new-jobs sweepstakes—until another city offers a better deal. There’s another way—build your economy from local assets. Worker co-ops, in particular, are enjoying a resurgence. The Mondragón cooperatives in Spaingreen worker co-op is reselling salvaged building materials. In Cleveland, co-ops will soon be servicing the city’s most stable employers—hospitals and colleges. These businesses employ the poor and keep jobs local. Many have a distinctly green tinge. Instead of flying off to distant shareholders, the profits go to the worker/owners who keep them circulating close to home. started up to provide jobs during an economic slump; today, they employ 100,000 worker/owners. In the South Bronx, a new Worker Co-ops: Green and Just Jobs You Can Own :: When Worker-Owners Decide How to Ride Out a Downturn :: From Rustbelt to Recovery