In Iceland, Unlike U.S., Democracy Defeats the Banksters
Published by Yes! Magazine on March 10, 2010
In a symbolic decision, democracy trumps capital as Icelanders say “no” to big bank bailouts.
by John Nichols
What if Americans had been asked whether they wanted to bail out big bankers and Wall Street speculators?
How many would have voted “no”?
A measure of patriotism feeds the hope that they would have made their opposition known as resoundingly as have the voters of Iceland, who on Saturday rejected demands by the United Kingdom and the Netherlands—working hand-in-hand with the rapacious International Monetary Fund—that the people of the tiny island nation cover losses triggered by the failure of a private bank.
A “yes” vote on Saturday’s referendum would have saddled each citizen of Iceland with $16,400 of debt, with the money to be paid to compensate the British and Dutch governments for expenditures to cover depositor losses stemming from the failure of the Icelandic bank Icesave.
The overall debt of $5.3 billion, or 45 percent of Iceland’s economic output for last year, would have impoverished the country.
As Icelandic President Olafur R. Grimsson explained this week: “Ordinary people, farmers and fishermen, taxpayers, doctors, nurses, teachers, (were) being asked to shoulder through their taxes a burden that was created by irresponsible greedy bankers.”
Fortunately, Iceland is a democracy. So those farmers and fishermen, taxpayers, doctors, nurses, teachers got to decide whether they were inclined to pay for a bank bailout.
They shouted “no” as loudly as that word could be uttered.
An early analysis suggests that roughly 98 percent of the Icelanders who cast valid ballots rejected the “deal.”
Only two percent supported it, while five percent of ballots were invalidated.
London’s Telegraph newspaper put the vote in the proper perspective when it declared: “On Saturday Icelanders became the world’s first rebels against the idea of clearing up after the mess made by a reckless private bank. This popular insurrection has been watched anxiously by the governments in Greece, Ireland, eastern Europe—and even Britain—concerned that this defiance could become contagious.”
It should become contagious.
Despite the threats made against Iceland by the economic powers that be, the reality is that the rejection of this particular agreement will result in a dramatically better deal being reached.
Indeed, in anticipation of the “no” vote, officials in the U.K. and the Netherlands had penned a letter to Iceland’s Finance Minister, Steingrimur Sigfusson, in which they committed themselves to seek a more equitable solution that is in line with international standards.
That fact has caused some to suggest that the referendum vote did not have much meaning.
In fact, as Iceland’s former Health Minister, Ogmundur Jonasson, who resigned last fall in protest of Icesave deal-making, said: “This is a dispute between people and capital, property rights and human rights. Maybe we need a little bit of revolution—this is why many people in finance dislike the referendum, because it is symbolic. It is people questioning the rights of capital.”
The debt demands on Icelanders amounted to nothing less than “economic warfare,” said Birgitta Jonsdottir, who was elected to parliament last year as an anti-bailout candidate.
On Saturday, Iceland fought back.
Their “little bit of revolution” should spread to other countries—including the United States, which has saddled taxpayers with huge debts in order to bail out big banks and bad speculators.
The point here is not to say that there must be no consequences for bad policies on the parts of banks and governments. Of course, there are some responsibilities that must be met.
But the people who pay the taxes have a right to be a part of the decision-making process. And, in a democracy, voters have a right to say “no” when they recognize that they are being forced to pay for the dirty deals of the big bankers and the failures of governments and international agencies that were supposed to regulate the bankers.
“What you are seeing here is an outcome of 97 percent in some districts—98 percent in others—voting no,” said Eirigur Svavarsson, a lawyer who headed a group that opposed efforts to impose a deal on Iceland, as the results of the referendum vote were reported.
“Democracy is a strong tool,” explained Skulason. “We are saying this is an unreasonable agreement and we want a new agreement.”
That’s a reasonable demand—for Icelanders and Americans.
This article is licensed under a Creative Commons License 
John Nichols is a Washington correspondent for The Nation magazine.
Copyright © 2010 The Nation—distributed by Agence Global
Want the Good Life? Your Neighbors Need It, Too
Published by Yes! Magazine on March 4, 2010
by Brooke Jarvis
New research shows that, among developed countries, the healthiest and happiest aren’t those with the highest incomes but those with the most equality. Epidemiologist Richard Wilkinson discusses why.
We live in a world of deep inequality, and the gap between the rich and the poor is widening. We in the rich world generally agree that this is a problem we ought to help fix—but that the real beneficiaries will be the billions of people living in poverty. After all, inequality has little impact on the lives of those who find themselves on top of the pile. Right?
Not exactly, says British epidemiologist Richard Wilkinson.
For decades, Wilkinson has studied why some societies are healthier than others. He found that what the healthiest societies have in common is not that they have more—more income, more education, or more wealth—but that what they have is more equitably shared.
In fact, it turns out that not only disease, but a whole host of social problems ranging from mental illness to drug use are worse in unequal societies. In his latest book, The Spirit Level: Why More Equal Societies Almost Always Do Better, co-written with Kate Pickett, Wilkinson details the pernicious effects that inequality has on societies: eroding trust, increasing anxiety and illness, encouraging excessive consumption.
The good news is that increased equality has the opposite effect: statistics show that communities without large gaps between rich and poor are more resilient and their members live longer, happier lives.
YES! Magazine web editor Brooke Jarvis sat down with Richard Wilkinson to discuss the surprising importance of equality—and the best ways to build it.
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Brooke: You’ve studied the impact of inequality on public health for a long time. Did any of your recent findings surprise you?
Richard: Oh, all of them. In fact, the relationship is weaker for health than for many other problems—we looked at life expectancy, mental illness, teen birthrates, violence, the percent of populations in prison, and drug use. They were all not just a little bit worse, but much worse, in more unequal countries. If I’d known how strong those connections would be, I would have looked for them a decade earlier. In fact, I’m still surprised that no one did look at them earlier.
There’s nothing complicated in what we’ve done. Epidemiologists and people working in public health have been doing this work for some time, not only controlling for relative poverty, but for all the income levels within, for instance, an American state. So once you know the relationship between income and death rates, for example, you should be able to predict what a state’s death rate will be. Actually, though, that doesn’t produce a good prediction; what matters aren’t the incomes themselves but how unequal they are. If you’re a more unequal state, the same level of income produces a higher death rate.
In fact, in more unequal societies, these problems aren’t higher by ten or twenty percent. There are perhaps eight times the number of teenage births per capita, ten times the homicide rate, three times the rate of mental illness. Huge differences. If social mobility were a perfect sorting system and everyone was sorted by ability, that wouldn’t make the number of problems in the society greater. It wouldn’t change the overall IQ of the population; it would just change the social distribution of IQ. We know from the findings that it’s the status divisions themselves that create the problems. We’re not making a great leap to say that this is causal. We, I think, show that it’s almost impossible to find any other consistent explanation.
Brooke: It seems possible that this link hasn’t been explored because we’re so used to thinking of these problems as linked to poverty. To find out that they’re tied not to the level of income but to the stratification of income—it’s sort of an unexpected conclusion.
Richard: We show that these problems aren’t affected by rich countries getting still richer. There are problems that we think of as problems of poverty because they’re in the poorest areas of society, but a country like the U.S. can be twice as rich as Greece, Portugal, or Israel—the poorer of the rich, developed countries we look at—and the problems are no better even though Americans are able to buy twice as much of everything as the poorer developed societies. That doesn’t make any difference; it’s only the gaps between us that matter now. And that’s really quite a striking thing to learn about ourselves and the effects of the social structure on us.
Brooke: How does thinking about these problems in terms of inequality rather than poverty change how we grapple with them?
Richard: I think people have been worried by the scale of social problems in our societies—feeling that though we’re materially very successful, a lot of stuff is going wrong, and we don’t know why. The media are always full of these social problems, and they blame parents or teachers or lack of religion or whatever. It makes an important difference to people to have an analysis that really fits, not only in a sort of academic way, but also that fits intuitions that people have had. People have intuited for hundreds of years that inequality was divisive and socially corrosive. In a way, that’s all the data shows. It shows that that intuition is much truer than any of us expected.
Brooke: Your findings related to crime and imprisonment rates seem to be particularly illustrative of the way inequality can lead to social corrosion.
Richard: We quote a prison psychiatrist who spent 25 years talking to really violent men, and he says he has yet to see an act of violence which was not caused by people feeling disrespected, humiliated, or like they’ve lost face. Those are the triggers to violence, and they’re more intense in more unequal societies, where status competition is intensified and we’re more sensitive about social judgments.
We also found very big differences in the proportion of the population that’s in prison in different countries and American states. But the differences aren’t driven by the amount of crime, they’re driven by the fact that people in unequal societies have more punitive attitudes about crime. It may have to do with fear across classes, lack of trust, and lack of involvement in community life. If you’ve got to go to prison, go to prison in Japan or one of the Scandinavian countries. You might get some rehabilitation. If you go to prison in some of the more unequal countries, you are very likely to come out a good deal worse than you went in.
Brooke: When I first heard about your work, I expected the book to deal with the material impacts of inequality. But your focus is different.
Richard: Yes. This is about the psychosocial effects of inequality—the impact of living with anxiety about our feelings of superiority or inferiority. It’s not the inferior housing that gives you heart disease, it’s the stress, the hopelessness, the anxiety, the depression you feel around that. The psychosocial effects of inequality affect the quality of human relationships. Because we are social beings, it’s the social environment and social relationships that are the most important stressors. For individuals, of course, if you’re going to lose your home, or if you’re terribly in debt, those can be more powerful stressors. But amongst the population as a whole, it looks as if these social factors are the biggest stressors because so many people are exposed to them.
Brooke: What psychological impact does living in an unequal society have on people who are at the top of the scale?
Richard: Status competition causes problems all the way up; we’re all very sensitive to how we’re judged. Think about Robert Frank’s books Luxury Fever or Falling Behind, or the great French sociologist Bourdieu—they show how much of consumption is about status competition. People spend thousands of pounds on a handbag with the right labels to make statements about themselves. In more unequal countries, people are more likely to get into debt. They save less of their income and spend more. They work much longer hours—the most unequal countries work perhaps nine weeks longer in a year.
If you grow up in an unequal society, your actual experience of human relationships is different. Your idea of human nature changes. If you grow up in a consumerist society, you think of human beings as self-interested. In fact, consumerism is so powerful because we’re so highly social. It’s not that we actually have an overwhelming desire to accumulate property, it’s that we’re concerned with how we’re seen all the time. So actually, we’re misunderstanding consumerism. It’s not material self-interest, it’s that we’re so sensitive. We experience ourselves through each other’s eyes—and that’s the reason for the labels and the clothes and the cars.
Brooke: What’s the effect of inequality on the way we perceive our communities—and how does that perception affect how they function?
Richard: Inequality affects our ability to trust and our sense that we are part of a community. In a way, that is the fundamental mediator between inequality and most of these outcomes, through the damage it does to social relations. For instance, in more equal countries or more equal states, two-thirds of the population may feel they can trust others in general, whereas in the more unequal countries or states, it may drop as low as 15 percent or 25 percent.
Let me tell you what I think is perhaps at the very bottom of all this. If you think of almost any animal species, there is a huge potential for conflict amongst members of the same species, because they have all the same needs. They eat the same food stuffs, they need the same nesting sites, they value the same feeding grounds or territories, they compete for sexual partners. It was that recognition in human populations that made the political philosopher Thomas Hobbes in the 17th century say that human beings, without a sovereign power to keep the peace, would war against each other and have “nasty, brutish, and short” lives. Amongst monkeys, inequality takes the form of dominance hierarchies, based on power and coercion and privileged access to resources: “I get it first because I’m stronger, and I don’t care if you’re hungry.” Human hierarchies are similar—it’s why power, status, and wealth all go together at the top and why powerlessness, hunger, and poverty go together at the bottom.
But human beings also have the opposite potential. We can be the best source of love and learning and cooperation and assistance of every kind. In a sense, Hobbes was wrong about people in a state of nature. He was right about the potential for conflict, but people have avoided conflict through food sharing, gift exchange, and great social equality (for example, in hunter-gatherer societies). The gift in a sense is a symbol that you and I don’t compete for the necessities of life. We don’t need to fight each other for them. You feel a sense of indebtedness and you reciprocate the gift, which anthropologists have suggested is a sort of basic social contract. That symbolism is still really important: You invite your friends over, sit around the same table, and share food, the basic necessity of life. The symbolism is also there in religious services and communion—these things are very fundamental, very deep.
Inequality is a reflection of how strong hierarchies are, how much we share or how much we don’t. It shows us which part of our potential we’re developing. What game do I play? Have I got to fend for myself? Or have I got to get people to trust me and cooperate with me? Is my survival dependent on good relationships? Are you my rival? Are you going to steal from me? Have I got to keep what I’ve got, defend it? Or can we share? Human beings can do both. We’ve lived in the most egalitarian and the most awful, hierarchical, tyrannical societies. It’s very interesting that we can measure how unequal societies are and how that can elicit more of certain kinds of behavior.
Brooke: Once we become aware of the impact of inequality on all of these social ills, what do we do about it?
Richard: Countries seem to get their greater equality in quite different ways. Sweden, for example, uses the big government way: There are very big differences in earnings, which are redistributed through taxes and benefits. It has a large welfare state. Japan, on the other hand, has smaller income differences to start with, does much less redistribution, and doesn’t have such high social expenditure. But both countries do very well—they’re amongst the more equal countries and their health and social outcomes are very good.
What we’ve learned is that the real quality of life for all of usnow depends on improving the social environment, and that we have a policy handle on how to do that. It’s not that we all need to have more therapy to try and make us nicer people. Income distribution, an issue government or big corporations can do something about, really affects the psychosocial well-being of the whole society. But we can’t just rely just on taxes and benefits to increase equality—the next government can undo them all at a stroke. We’ve got to get this structure of equality much more deeply embedded in our society. I think that means more economic democracy, or workplace democracy, of every kind. We’re talking about friendly societies, mutual societies, employee ownership, employee representatives on the board, cooperatives—ways in which business is subjected to democratic influence. The bonus culture was only possible because the people at the top are not answerable to the employees at all.
Changing workplaces can have an enormous effect—not only is that where wealth is created, it’s where income from production is initially divided up. It’s also where we’re most subjected to hierarchy and authority. Employee ownership turns a company into a community. The chief executive becomes answerable to employees. You might vote for your boss to have, I don’t know, three times as much income as you—not 300 or 400 times more. Embedding greater equality and more democratic accountability in our institutions does much more than just changing income distribution or wealth distribution. And, a number of studies show that if you combine an even partial employee ownership, you get quite reliable increases in productivity. This is about how we work better together.
Brooke: Which is more important than ever, given that solving many of our major problems—global climate change, for example—will require unprecedented levels of cooperation.
Richard: Global warming, more than almost any other problem you can imagine, involves acting for the common good. It involves public spiritedness. And in more equal societies, where there’s a stronger community life, less violence, and more trust, people give higher priority to the common good.
To test this out, we looked at the proportion of their income that countries give in foreign aid, and it’s higher in the more equal countries. We looked at the proportion of different waste materials that are recycled, and that’s higher in more equal countries. You don’t do those things for yourself; they both depend on an idea of the greater good. An international survey of business leaders included the question, “How important do you think it is that your government abides by international environmental agreements?” In the more equal countries, business leaders rate that as more important than in the less equal countries. Inequality changes our perceptions—are you out for yourself, or do you recognize that we’re in this together, that we’ve got to do these things for the common good?
This article is licensed under a Creative Commons License
Brooke Jarvis interviewed Richard Wilkinson for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Brooke is YES! Magazine’s web editor.
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Good Argument for Socialized Medicine
How do the countries of the rest of the industrialized world manage to provide health care for all of their citizens for 9 or 10 percent of GDP while the United States spent 17.3 percent of GDP in 2009, and is on track — even with the current proposals under consideration — to reach as much as one-third of GDP by 2050?
The answer, as Robert Kuttner explains, is “universal, socialized insurance.”
Apparently, in the rest of the “club of affluent countries” (excluding the US), national policy embodies the wisdom that an unregulated market is moderately efficient at producing profits but not at producing a fair distribution of social goods.
Kuttner explains:
In all of the debates about health care reform, one of the stubborn realities is that neither the Obama plan, nor any of the Republican alternatives, will seriously alter the trajectory of relentless cost-escalation in health care. If you look at the Administration’s own projections of federal deficits in the next decade and after 2020, virtually all of the alarming growth in deficit spending is Medicare and Medicaid.
… The consensus among the usual policy experts is that there is no good solution. The march of technology and demography will just continue to raise health costs.
But you can reach that conclusion only by ignoring how the rest of the club of affluent countries manages to insure everyone for 9 or 10 percent of GDP, and have a healthier and longer-lived population, to boot. They do it, of course, through universal, socialized insurance.
… The Canadians do it with a single payer system for the insurance part, but physicians are private. The Brits have an integrated National Health Service. The Germans achieve near-universal coverage through a system of nonprofit health insurance plans.
What every other nation has in common is that they have taken the commercialism out of their health systems. As a consequence, they can direct health spending to areas of medical need rather than letting the market direct health dollars to areas of greatest profit. And with everyone covered, they can use highly cost-effective strategies for prevention, wellness, and public health. That’s how you cover everyone for ten percent of GDP.
Kuttner has become uncharacteristically pessimistic. He feels that Obama has pretty much blown his best chance to succeed at health care reform.
Read the full article here: “The Cure That Dares Not Speak Its Name.”
Campaigning for State-Owned Banks
Published by Yes! Magazine on February 19, 2010
The public bank concept is gaining ground on the state level, attracting proponents across the political spectrum.
by Ellen Brown
While bank bailouts fatten Wall Street, states continue to battle the credit crisis. In the search for innovative solutions, some political candidates are proposing that states generate their own credit by setting up their own banks.
State budgets for 2010 face the largest shortfalls on record, totaling $194 billion or 28 percent of state budgets; and 2011 is expected to be worse. Unemployment has already officially hit 10 percent, and many economists expect it to rise higher. Continued high unemployment will keep state income tax receipts at low levels and increase demand for Medicaid and other essential services states provide. The existing alternatives are spending cuts or tax increases, but both will just serve to make the downturn deeper. When states cut spending, they lay off employees, cancel contracts with vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals. The result is a reduction in overall demand. Tax increases also remove demand, by reducing the amount of money people have to spend.
Amanda Paulson, writing in The Christian Science Monitor, quotes Arturo Pérez, fiscal analyst with the National Conference of State Legislatures, which released its survey of state budget situations in December: “Unless you’re North Dakota, you’re probably a state that has had some degree of difficulty or crisis involving finances. It’s the worst situation states have faced in decades, perhaps going as far back as the Great Depression in some states.”
“Unless you’re North Dakota,” that is—a state with a sizeable budget surplus, and the only state that is adding jobs when other states are losing them. A February 13 poll ranked that weather-challenged state first in the country for citizen satisfaction with their standard of living. North Dakota’s affluence has been attributed to oil, but other states with oil are in deep financial trouble. The big drop in oil and natural gas prices propelled Oklahoma into a budget gap that is 18.5 percent of its general-fund budget. California is also resource-rich, with a $2 trillion economy; yet it has a worse credit rating than Greece. So what is so special about North Dakota? The answer seems to be that it is the only state in the union that owns its own bank. It doesn’t have to rely on a recalcitrant Wall Street for credit. It makes its own.
Candidates Across the Political Spectrum Pick Up on the Public Bank Model
In the quest to find ways to divorce the well-being of their states from the financial sector, a growing number of candidates are picking up on the public bank alternative. Florida, Illinois, Oregon, Massachusetts, Idaho and California all have candidates whose platforms contain this proposed solution to the credit crisis.
A publicly-owned bank has also been proposed on the federal level. In 2008, presidential candidate Dennis Kucinich, a Democrat, and Cynthia McKinney, the Green Party candidate, advocated nationalizing the Federal Reserve (which is not actually federal but is owned by a consortium of private banks). In 2009, Nobel laureate Joseph Stiglitz said the government would have been better off funding a federally-owned bank than doling out trillions of dollars to private investment banks and CEOs who speculated their way into bankruptcy. Speaking at the New York Society for Ethical Culture on March 6, 2009, he said:
If we had used the $700 billion to create a new financial institution, allowed it to lever 10 to 1, which is very modest compared to the 30 to 1 that we were doing, 10 to 1 would have generated $7 trillion of new lending capacity, far in excess of what our country needs. So the issue here is not about lending. It’s really about saving the bankers. And what we confused was saving the banks versus saving the bankers and their shareholders.
Though the proposals to nationalize the Federal Reserve face powerful opponents in Congress, the public bank concept is gaining ground on the state level, attracting proponents across the political spectrum, including Democrats, Republicans and Greens. The issue transcends party lines. In North Dakota, a Republican state, the state-owned bank was inaugurated by a political party appropriately called the “Non-Partisan League.”
Oregon: The Bankers’ Bank Model
In Oregon, Bill Bradbury has included a state bank platform in his bid for governor. Bradbury, a Democrat, was formerly secretary of state and has been endorsed by former Vice President Al Gore. His website declares: “It is time to put Oregonians back to work. It is also time to declare economic sovereignty from the multi-national banks that in large part are responsible for much of our current economic crisis. We can achieve these two goals by creating our own bank.”
The Oregonian, Oregon’s largest newspaper, reported that Bradbury plans to deposit tax revenues in the public-interest bank, keeping Oregon’s money in Oregon. The bank would then lend the money to get the economy going again, targeting small and medium-sized businesses. Interest would be poured back into the state through more loans to start-up businesses, agriculture, and other key sectors. Currently, Oregon deposits hundreds of millions of dollars in tax revenues into large out-of-state banks, siphoning the money off from productive in-state uses. Many of these banks are the very banks that needed federal bailouts to keep from failing in 2008, after years of handing out risky mortgage loans. These banks have now grown tight-fisted with Main Street borrowers, making Bradbury’s plan to get money flowing again especially appealing to Oregonian voters.
Bradbury uses the Bank of North Dakota (BND) as his model. Like the BND, the Bank of Oregon would return a dividend to the state based on its earnings, while creating jobs and stimulating the economy through lending. The state bank would not replace private banking institutions but would partner with them, particularly with community banks, providing them with new customers and helping them provide new services. To assure the state bank’s independence from existing financial powers, Bradbury proposes that a board of directors appointed by Oregon’s Senate should govern the bank, while taking advice from an advisory committee of experts.
Idaho: Keeping State Assets in the State
In Idaho, James Stivers, a Republican candidate for the State Senate, has also proposed a state bank to fill state coffers and protect the local economy. In the first indication of a political shift among grassroots Republicans, Stivers swept a closed-ballot preference poll at the GOP District 2 Central Committee meeting in Coeur d’Alene on February 13, winning the non-binding poll 10 to zero. Stivers declares:
An important part of sovereignty is the monetary authority. Currently, banks are allowed to multiply many times over the tax receipts deposited in their institutions. This special privilege is partly responsible for the ‘sucking sound’ in our local economies, as regional banks send their assets to central banks that are playing the derivatives markets of the world.
A state bank would restore this privilege to the people in a public trust and would give us the opportunity to back our deposits with the wealth from our public lands.
Stivers sees the bank as a way to facilitate small business start-ups, end the ability of private banks to cream profits from the public treasury, protect key budget items, and stave off excessive influence from the federal government. He suggests the novel approach of expanding the role of Idaho’s Bond Bank authority into a full-fledged state bank. The current banking system, he says, causes inflation, one of the “greatest detriments to a living wage”:
Inflation is caused by the secret tax of the banking industry in which lenders use the multiplier effect to the benefit of their cronies. This secret tax takes the form of a decline in the value of the dollar and results in higher prices. Wages never keep up with this process because its very purpose is to extract wealth from the wage earner to support the privileged classes who curry the favor of lenders. A state bank would restore this privilege to the people in a public trust and would give us the opportunity to back our deposits with the wealth from our public lands.
Illinois: Using a State-owned Bank to Fund Infrastructure
In Illinois, Green Party gubernatorial candidate Rich Whitney has other ideas for a state-owned bank. Illinois is listed by the Pew Center for the States as one of nine states confronting historic budget problems. In a recent response to the governor’s State of the State Address, Whitney said:
I am the only candidate in this race who proposes to fund public improvements, and promote economic health, without any further tax increases, through the establishment of a state bank, a progressive idea that North Dakota adopted years ago, and that has helped keep that state debt-free even in these troubled economic times. Instead of going into more and more debt, to further enrich private banks, we should be using our tax revenue to further invest in our own State and its people, for the enrichment of our own economy.
The bank would use tax revenues and pension contributions as the financial base to expand credit where it is most needed. Illinois’ bank would borrow from the Federal Reserve at the same one percent rate as commercial banks. Once the budget was balanced, Whitney’s top priorities would be to use the new money to modernize energy infrastructure and promote solar and wind power. To achieve this, property owners of land where wind and solar generators could be located would be lent money through the state bank at a minimal one percent interest rate. To secure repayment, Whitney would require utilities to buy power from the solar and wind-based producers at a premium rate. One option would then be to require part of this premium to be paid to the state bank until the loan is returned. This arrangement, says Whitney, would create a win-win situation:
The bank is paid back. The homeowner, farmer or business investing in solar or wind generation realizes immediate savings on energy costs and in many cases will go from being a net consumer to a net producer of energy. Their greater income will further stimulate the economy. The utilities will have to pay the cost of the premium rate but in the long run will realize the benefits of having a greater, stable, more diversified and decentralized energy grid, ultimately cheaper in the face of rising fossil fuel prices. As economies of scale are realized in wind and solar power generation, the costs will fall, as will the necessary premium rate. And we all benefit from the reduction in greenhouse gas emissions.
Florida: The Commercial Bank Model
Economist and author Farid Khavari, a Democratic gubernatorial candidate in Florida, proposes a state-owned bank that would lend directly to borrowers. The Bank of North Dakota usually uses a “lead lender” such as a bank, savings and loan company, or credit union rather than doing commercial lending directly. Dr. Khavari maintains that the Bank of the State of Florida could be launched at no cost to taxpayers by using the state’s assets as the reserves for making loans, employing the same fractional reserve lending rules used by private banks today. In this way, he says, the bank could drive an “economic miracle” in Florida, instigating massive job creation, cutting costs in half or more, providing low interest financing to homeowners and businesses, and improving teacher salaries and care for veterans and the elderly, while at the same reducing taxes. He explains:
The economy is collapsing due to lack of demand. The economy needs money, but the banks are cutting credit, and then sucking all the cash out of the economy by raising interest rates to make sure no one has any cash left at the end of the month. The cost of interest is built into the cost of everything. People already work ten years of their lives just to pay interest in one form or another. The Bank of the State of Florida will end that for Floridians. And this model will work for every state. . . .
We can pay 6 percent interest on savings. Using the same fractional reserve rules as all banks, we can create $900 of new money through loans for every $100 in deposits. We can loan that $900 in the form of two percent fixed rate 15-year mortgages, for example, and the state can earn $12 every year for every $100 in deposits. That means Floridians can save tens of billions of dollars per year while the state earns billions making it possible for them.
State and local government budgets will balance without higher taxes when the BSF cuts interest costs. Six percent BSF credit cards will save people billions per month, money that stays in Florida instead of going to the big banks—and the state will make huge profits on that, too. Saving billions in interest costs will create millions of jobs without subsidies just by keeping those billions circulating in Florida. Eventually the state will earn enough to reduce and eliminate state and local taxes while every Floridian has economic security in a recession-proof Florida.
The Federal Reserve states on its website that the banking system as a whole leverages $100 in deposits into $900 in loans, but whether a single bank can do it alone has been challenged. Critics say that while banks do create money as loans, they have to replace the deposits when the checks leave the bank in order for the checks to clear. How this all works is a bit complicated and will be the subject of another article, but suffice it to say here in response that if a bank does not have the deposits to cover its outgoing checks, it borrows from the interbank lending market at very low rates, or issues commercial paper or CDs; and the state bank could do the same thing. It would not be fighting with the other banks for old deposits. Loans create new deposits, which can be borrowed back from the pool of “excess deposits” thereby created. Ninety-seven percent of the money supply has been created by commercial banks by turning loans into deposits, but that credit machine has frozen up. A state bank could get it flowing again.
California: Catching the Wave
California leads the nation in the sheer size of its budget gap. It, too, now has a gubernatorial candidate proposing to alleviate the state’s credit woes with a state-owned bank. Running on the Green Party ticket, Laura Wells is a former financial analyst who received 420,000 votes in her 2002 bid for State Controller, more than any other Green Party candidate has earned in a partisan statewide race. Her website says that, “rather than drowning in debt and begging Wall Street for loans, California can institute a State Bank that invests in California’s infrastructure, and future generations.”
She stated in a comment, “A state bank for California is part of my platform as a candidate for the Green Party nomination for Governor. I ran for State Controller to ‘Follow the Money.’ Now, we need to Fix the Money. A state bank would keep California’s wealth in the state. Rather than invest in Wall Street (we’ve hit the wall on that one) we can invest in our infrastructure and our future generations.”
Legislative Proposals
It is not just political hopefuls who are exploring the public bank option. Therese Murray currently presides over the Massachusetts State Senate. She has introduced legislation that would study the formation of a state-owned bank with the principal aim of boosting job creation in the state. Massachusetts now faces a 9.4 percent unemployment rate. “It wouldn’t be in competition with our small community banks,” she says. “We’ve got to free up some credit, and mortgage companies and banks have got to do a better job of allowing people to redo their mortgages.”
In Virginia, Congressman Bob Marshall, a Republican, introduced a bill in January to study whether to establish a bank that was owned, run, and controlled by the state. However, the plan was tabled in committee.
On February 16, the front page of the Huffington Post featured an article on the Bank of North Dakota and the precedent it sets for financially-strapped states. Along with political candidates, the article noted that a Washington State legislator and a Vermont House committee were exploring it.
North Dakota hit the Wall Street wall in 1919, when the Bank of North Dakota was established by the state legislature specifically to free farmers and small businessmen from the clutches of out-of-state bankers. For over 90 years, it has demonstrated the success of the public banking model. Other credit-choked states are finally taking notice and devising their own variations on the theme.
This article is licensed under a Creative Commons License
Ellen Brown wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Ellen developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are webofdebt.com, ellenbrown.com, and public-banking.com.
The Power of Local
Published by Yes! Magazine on February 18, 2010
Local businesses are educating communities, changing economic policies, and even outperforming chain competitors.
by Jeff Milchen
The 2009 holiday season was a tough one for retail businesses. In November, their sales increased just 1.8 percent over low 2008 numbers — failing to keep pace with inflation. December was worse, with sales actually falling three tenths of a percent from 2008.
But in more than a hundred communities across North America, independent community-based businesses had a more positive story to tell. A nationwide survey of more than 1,800 independent businesses by the Institute for Local Self-Reliance (ILSR) found them outperforming chain competitors. Most notably, the survey found independent retailers in communities with active “Buy Independent” or “Buy Local” campaigns reported an increase in holiday sales three times stronger (up three percent) than those in cities without such campaigns (up one percent).
Given the current inflation rate of 2.7 percent, the benefit of such campaigns could mean the difference between success and failure for many store owners. “Amid the worst downturn in more than 60 years, independent businesses are succeeding by emphasizing their community roots and local ownership,” says Stacy Mitchell, who executed the survey.
Jennifer Rockne directs the American Independent Business Alliance (AMIBA), a nonprofit organization supporting 70 independent business alliances across North America. She concurs with Mitchell, saying “When executed well, these campaigns are making a huge difference for local businesses and their communities.”
The increased interest in buying local isn’t lost on store owners. In a recent survey of its members, the Portland Independent Business and Community Alliance in Maine found 84 percent of its member businesses reported its “Buy Indie / Buy Local” campaign and related activities had positively impacted their business—that number has increased with each year.
The ILSR survey respondents hail from communities of widely varying size, geography and political leanings, but share an important quality. Like Portland, they gain support from AMIBA or the Business Alliance for Local Living Economies (BALLE) and engage in year-round, long-term community education that goes beyond mere consumer choices to focus on local independent business.
Mitchell and Rockne view many “buy local” campaigns started by government entities or chambers of commerce with some skepticism. “Many are launched without long-term commitment and are motivated by desire to boost city sales tax revenues, not concern for local entrepreneurs or community character,” warns Mitchell, who detailed the escalating problem of “local washing” last year. The term describes campaigns by some cities, chambers of commerce, and corporate chains to define a “local” business as merely a nearby location without regard to the crucial distinction between local and corporate ownership.
Rockne questions whether such campaigns can yield measurable impact and notes a key framing issue. “While we ask people to shift more of their spending to local independents, consumer choices alone cannot halt many of our destructive environmental, social and business trends,” he says. “We need to exercise our power as citizens as well.”
Why? Countless chains benefit from tax loopholes, subsidies, federal handouts and other preferential treatment that undermines fair competition and handicaps community-based businesses. Both ILSR and AMIBA help citizens to reverse such destructive government action and advance myriad pro-local measures, from local purchasing and contracting preferences to policies that promote neighborhood-scale building and prevent big box sprawl.
AMIBA is walking the talk of democratic action as one of four organizations to launch Free Speech for People, a coalition gathering support for a constitutional amendment to overrule Citizens United v FEC. The recent Supreme Court ruling granted corporations the power to spend unlimited company funds in efforts to elect or defeat judicial and political candidates. While recognizing the primary threat to our Constitution, indie business advocates also worry because, even prior to this ruling, corporate chains had little trouble translating their wealth into political favors such as those noted above.
AMIBA’s presence in the coalition has helped curtail previously routine media references to the Roberts Court as “pro-business” and has created some surprisingly honest reporting in major business news outlets. “High Court Wallops Small Business” was the title of a recent Kiplinger’s brief on the case.
While Rockne embraces this role, she focuses on the core mission of helping people to effectively execute local campaigns. She expects to see 100 Independent Business Alliances by year’s end.
Mitchell believes the recession creates added opportunity. “Recycling capital locally by spending and investing more with local independents is powerful economic stimulus for communities,” she notes. “As the evidence builds that Buy Independent and Buy Local campaigns can actually shift consciousness and purchasing choices, we’re seeing interest and results grow even more rapidly.”
This article is licensed under a Creative Commons License
Jeff Milchen wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Jeff is a co-founder of the American Independent Business Alliance, which hosts its second international gathering for advocates of community-based enterprise in Tampa April 8-11.
Interested?
Slow Money: Bringing Money Back to Earth Interview with Woody Tasch
Is there such a thing as money that’s too fast? Slow Money founder Woody Tasch says yes, and he’s trying to slow money down by connecting investors to their local economies.
Creating Real Prosperity by Frances Moore Lappé
Critics of “go local” movements warn that buying local deprives people in the Global South of jobs that could lift them out of poverty. But are multinationals really helping?
Building Cultures of Peace
Published by Yes! Magazine on February 11, 2010
If we are to build cultures of peace we have to start talking about something that still makes many people uncomfortable: gender.
We stand at a critical point in human cultural evolution. Going back to the old normal where peace is just an interval between wars is not an option; what we need is a fundamental cultural transformation.
As Einstein said, we cannot solve problems with the same thinking that created them. If we think only in terms of the conventional cultural and economic categories—right vs. left, religious vs. secular, Eastern vs. Western, capitalist vs. socialist, and so on—we cannot move forward. What we need is to look at social systems from a new perspective that can help us build not only a nuclear-free world but also the better world we so urgently want and need. I believe we must change our underlying social configuration: We must transition from a system of domination to one of partnership.
My Passion and My Work
I was born in Europe, in Vienna, at a time of massive regression to the domination side of the partnership/domination continuum: the rise of the Nazis, first in Germany and then in my native Austria. So from one day to the next, my whole world was rent asunder. My parents and I became hunted, with license to kill. I watched with horror on Crystal Night—so called because of all the glass that was shattered in Jewish homes, businesses, synagogues—as a gang of Gestapo men broke into out home and dragged my father away. As a little girl, I witnessed brutality and violence.
But I also witnessed something else that night that made an equally profound impression on me: what I today call spiritual courage. We’ve been taught to think of courage as the courage to go out and kill the enemy. But spiritual courage is a much more deeply human courage. It’s the courage to stand up against injustice out of love. My mother could have been killed for demanding that my father be given back to her; many people were killed that night. But by a miracle she did obtain my father’s release—yes, some money eventually passed hands, but it would not have happened had she not stood up to the Nazis. So we were able to escape to Cuba, and I grew up in the industrial slums of Havana, because the Nazis confiscated everything my parents owned. And it was there that I learned that most of my family—aunts, uncles, cousins, grandparents—were murdered by the Nazis.
These traumatic experiences led me to questions most of us have asked at some time in our lives: Does it have to be this way? Why is there so much injustice, cruelty, violence, and destructiveness, when we humans also have such a great capacity, as I saw in my mother, for caring, for courage, for love? Is it, as we’re often told, inevitable, just human nature? Or are there alternatives—and if so, what are they?
These questions eventually led to my research. I found very early I simply could not find answers to them in terms of the old social categories (right vs. left, religious vs. secular, Eastern vs. Western, capitalist vs. socialist, and so forth). These categories just look at this or that aspect of a social system, never its fundamental configuration. None of them answer the most critical question for our future: the question of what kinds of beliefs, values, and institutions support our enormous human capacities for caring, for consciousness, for creativity, for sensitivity—the capacities that are most developed in our species, that make us uniquely human—and which promote capacities we also have for cruelty, selfishness, and violence. Neuroscience teaches us that we humans are genetically capable of many different kinds of behaviors, but our experiences profoundly affect which of those genetic possibilities are expressed.
Connecting the Dots
I look for patterns, drawing from a large set of data that cuts across cultures and periods of history. It then becomes possible to see social configurations that had not been visible looking at only a part of social systems—configurations that kept repeating themselves. There were no names for them, so I called one the Domination System and the other the Partnership System.
It is in our primary human relations—within our families and friendships, the relations that are still not taken into account in most analyses of society—that people first learn (on the most basic neural level, as we today know from neuroscience) what is considered normal or abnormal, moral or immoral, possible or impossible.
If children grow up in cultures or subcultures where violence in families is accepted as normal, even moral, what do they learn? The lesson is simple, isn’t it? It’s that it’s OK to use violence to impose one’s will on others, both in intimate relationships and international ones.
I want to illustrate this with two cultures. One is Western, the other is Eastern; one is secular, the other religious; one is technologically developed, the other isn’t: the Nazis in Germany and the Taliban in Afghanistan. From a conventional perspective, they are totally different. But if you look at these two cultures from the perspective of the partnership/domination continuum, you see a configuration. Both are extremely warlike and authoritarian. And for both, a top priority is returning to a traditional family—their code word for a rigidly male-dominated, authoritarian, highly punitive family.
Now, this is not coincidental. Nor is it coincidental that these kinds of societies idealize warfare, even consider it holy. Neither is it coincidental that in these kinds of cultures masculinity is equated with domination and violence at the same time that women and anything stereotypically considered feminine, such as caring and nonviolence, are devalued.
I want to emphasize that this has nothing to do with anything inherent in women or men, as we can see today when more and more men are fathering in the nurturing way mothering is supposed to be done, and women are entering what were once considered strictly male preserves. But these are dominator gender stereotypes that many of us—both men and women—are trying to leave behind.
If we are to build cultures of peace, we have to start talking about something that still makes many people uncomfortable: gender. We might as well put that on the table; people don’t want to talk about gender, do they? But let’s also remember what the great sociologist Louis Wirth said: that the most important things about a society are those that people are uncomfortable talking about. We saw that with race: Only as we started to talk about it did we begin to move forward. We’re beginning to talk more about gender, and starting to move forward, but much too slowly.
This is important for many reasons, including the fact that it is through dominator norms for gender that children learn another important lesson: to equate difference (beginning with the most fundamental difference in our species between female and male) with superiority or inferiority, with dominating or being dominated, with being served or serving. And they acquire this mental and emotional map before their brains are fully developed (we know today that our brains don’t fully develop until our twenties), so they then can automatically apply it to any other difference, be it a different race, religion, ethnicity, or sexual orientation.
The Economics of Domination and Partnership
The roles and relations of the two halves of humanity can no longer be considered “just a women’s issue” (though we’re half of humanity, that phrase again shows how we’ve been conditioned to devalue women and anything associated with women). In reality, gender roles and relations affect everything about a society from its institutions (for example, whether families are more democratic or authoritarian) to its guiding system of values.
Let me give you an example from economics. Most of us would never think economics has anything to do with gender. At most, we think this refers to the workplace gender discrimination we’re finally beginning to talk about. But actually it goes much, much deeper. Economics has huge systemic effects.
Have you ever wondered, for instance, why it is that so many politicians always find money for weapons, for wars, and for prisons, but when it comes to funding health care, child care, and other “soft” or caring activities, they have no money? Nor do they have money for keeping a clean and healthy natural environment—rather like the “women’s work” of keeping a clean and healthy home environment.
Underlying these seemingly irrational priorities is a gendered system of valuations we’ve inherited from earlier, more domination-oriented times. To meet the challenges we face, we must make this visible.
Neoliberalism is actually a regression to dominator economics: to a top-down economic system where trickle down economics is really a continuation of dominator traditions, where those on the bottom are socialized to content themselves with the scraps dropping from the opulent tables of those on top.
This is an ancient economics of domination, which transcends labels like capitalism and socialism. Indeed, the two large-scale applications of socialism, the USSR and China, also turned into domination systems, highly authoritarian and violent, with horrendous environmental problems, because the underlying social system did not shift from domination to partnership.
That’s not to say we should discard everything from capitalism and socialism. We need to retain and strengthen the partnership elements in both the market and government economies and leave the domination elements behind. But we need to go further to what I have called a “caring economics.”
Now, isn’t it interesting that when we put “caring” and “economics” in the same sentence, people tend to do a double take? We’ve been told that caring policies and practices may sound good, but they’re just not economically effective. In reality, study after study shows that investing in caring for people and nature is extremely effective—not only in human and environmental terms, but in purely financial terms.
At the beginning of the 20th century, Sweden, Norway, Iceland, and Finland suffered from poverty and famine. Today, these nations are invariably in the highest ranks not only of United Nations Human Development Reports but of the World Economic Forum’s annual Global Competitiveness reports. This is largely due to the fact that their norm became a more caring economics, a more caring society.
These nations have government-supported childcare, universal healthcare, stipends to help families care for children, elder care with dignity, generous paid parental leave. In short, they economically support caring work in both the market and the household. As a result, they have very long life spans, very low poverty rates, very low crime rates, and a generally high standard of living for all. They are also in the forefront of moving toward sustainable energy and invest a larger proportion of their GDP in helping people in the developing world than other nations.
They are not ideal nations, but they have moved farther than most contemporary nations to the partnership side of the partnership-domination continuum. They have more democracy and equality in both the family and the state. They have been in the forefront of trying to leave behind traditions of violence inherent in domination systems. For example, they pioneered the first peace studies and the first laws prohibiting physical discipline of children in families. And, in contrast to domination systems that subordinate the female half of humanity to the male half, they have a much more equal partnership between women and men. For example, approximately 40 percent of their national legislators are female.
As the status of women rises, men no longer find it such a threat to their status, to their masculinity, to also embrace more caring practices and policies. These nations also have a strong movement to disentangle masculinity from its dominator equation with conquest and violence, including a strong movement for men to take responsibility for violence against women and children.
Between child-battering, wife-beating, sexual abuse of children, rape, bride burnings sexual mutilation of girls and women, so-called honor killings, and other horrors, the number of lives taken and blighted by intimate violence worldwide are much greater than those taken by armed conflict. And yet this violence is still largely invisible.
Our job is to make it visible. If we really want a more peaceful world, we can’t just tack that on to a system that idealizes violence as “masculine” and devalues caring and nonviolence as “feminine.”
Building Cultures of Equity and Peace
Let’s join together and move into that second phase of the peace movement: that integrated phase that takes into account the whole of human relations, from intimate to international. Let us muster the spiritual courage to challenge traditions of domination and violence in our primary human relations – the formative relations between women and men and parents and children.
Let us work for systemic change, for the new norms that will enable a future where all children, both girls and boys, can realize their enormous human potentials for consciousness, creativity, and caring.
This article is licensed under a Creative Commons License
Riane Eisler adapted this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions, from the speech she gave while accepting the Distinguished Peace Leadership Award from the Nuclear Age Peace Foundation. Dr. Eisler is a social scientist, attorney, and social activist best known as author of the international bestseller The Chalice and The Blade: Our History, Our Future and The Real Wealth of Nations: Creating a Caring Economics. She is president of the Center for Partnership Studies and is included in the award-winning book Great Peacemakers, as one of 20 leaders for world peace, along with Mahatma Gandhi, Mother Teresa, and Martin Luther King. Her website is www.rianeeisler.com.
Are Men Now Permanently Less Employable Than Women?
Kevin Drum, writing in Mother Jones (“Men Without Work“), argues that we may be “entering not merely a slow recovery in general, but an era in which the male employment ratio hovers permanently around 80% even for those in their prime working years.”
Here’s how he arrives at that speculation. First, he cites a book called Edge City by Joel Garreau, who explains why 1978 was such a pivotal year in the development of suburbs and in the transformation of the gender aspects of employment:
… 1978 was the peak year in all of American history for women entering the work force. In the second half of the 1970s, unprecedentedly, more than eight million hitherto non-wage-earning women went out and found jobs. The spike year was 1978.
That same year, a multitude of developers independently decided to start putting up big office buildings out beyond the traditional male-dominated downtown….The new advantage was proximity to the emerging work force … A decade later, developers viewed it as a truism that office buildings had an indisputable advantage if they were located near the best-educated, most conscientious, most stable workers — underemployed females living in middle class communities on the fringes of the old urban areas.
Drum also cites Don Peck in The Atlantic (“How a New Jobless Era Will Transform America“):
The weight of this recession has fallen most heavily upon men, who’ve suffered roughly three-quarters of the 8 million job losses since the beginning of 2008. Male-dominated industries (construction, finance, manufacturing) have been particularly hard-hit, while sectors that disproportionately employ women (education, health care) have held up relatively well.
….According to W. Bradford Wilcox, the director of the National Marriage Project at the University of Virginia, the gender imbalance of the job losses in this recession is particularly noteworthy, and — when combined with the depth and duration of the jobs crisis — poses “a profound challenge to marriage,” especially in lower-income communities. It may sound harsh, but in general, he says, “if men can’t make a contribution financially, they don’t have much to offer.”
Job Losses Under Bush and Obama Compared
This is a chart prepared by Nancy Pelosi’s office. It’d make a nice tee shirt, something for Democrats to wear at Town Hall meetings.
Josh Marshall explains: “The red bars are the accelerating rate of job loss during President Bush’s last year in office; the blue bars are the decelerating rate of job loss during President Obama’s first year of office.”
Meet the Radical Homemakers
Published by Yes! Magazine on February 1, 2010
How families are achieving ecological, social, and economic transformation… starting under their own roofs.
by Shannon Hayes
Long before we could pronounce Betty Friedan’s last name, Americans from my generation felt her impact. Many of us born in the mid-1970s learned from our parents and our teachers that women no longer needed to stay home, that there were professional opportunities awaiting us. In my own school experience, homemaking, like farming, gained a reputation as a vocation for the scholastically impaired. Those of us with academic promise learned that we could do whatever we put our minds to, whether it was conquering the world or saving the world. I was personally interested in saving the world. That path eventually led me to conclude that homemaking would play a major role toward achieving that goal.
My own farming background led me to pursue advanced degrees in the field of sustainable agriculture, with a powerful interest in the local food movement. By the time my Ph.D. was conferred, I was married, and I was in a state of confusion. The more I understood about the importance of small farms and the nutritional, ecological, and social value of local food, the more I questioned the value of a 9-to-5 job. If my husband and I both worked and had children, it appeared that our family’s ecological impact would be considerable. We’d require two cars, professional wardrobes, convenience foods to make up for lost time in the kitchen … and we’d have to buy, rather than produce, harvest, and store, our own food.
The economics didn’t work out, either. When we crunched the numbers, our gross incomes from two careers would have been high, but the cost of living was also considerable, especially when daycare was figured into the calculation. Abandoning the job market, we re-joined my parents on our small grassfed livestock farm and became homemakers. For almost ten years now, we’ve been able to eat locally and organically, support local businesses, avoid big box stores, save money, and support a family of four on less than $45,000 per year.
Wondering if my family was a freaky aberration to the conventional American culture, I decided to post a notice on my webpage, looking to connect with other ecologically minded homemakers. My fingers trembled on the keyboard as I typed the notice. What, exactly, would be the repercussions for taking a pro-homemaker stand and seeking out others? Was encouraging a Radical Homemaking movement going to unravel all the social advancements that have been made in the last 40-plus years? Women, after all, have been the homemakers since the beginning of time. Or so I thought.
The Origins of Homemaking: A vocation for both sexes
Upon further investigation, I learned that the household did not become the “woman’s sphere” until the Industrial Revolution. A search for the origin of the word housewife traces it back to the thirteenth century, as the feudal period was coming to an end in Europe and the first signs of a middle class were popping up. Historian Ruth Schwartz Cowan explains that housewives were wedded to husbands, whose name came from hus, an old spelling of house, and bonded. Husbands were bonded to houses, rather than to lords. Housewives and husbands were free people, who owned their own homes and lived off their land. While there was a division of labor among the sexes in these early households, there was also an equal distribution of domestic work. Once the Industrial Revolution happened, however, things changed. Men left the household to work for wages, which were then used to purchase goods and services that they were no longer home to provide. Indeed, the men were the first to lose their domestic skills as successive generations forgot how to butcher the family hog, how to sew leather, how to chop firewood.
As the Industrial Revolution forged on and crossed the ocean to America, men and women eventually stopped working together to provide for their household sustenance. They developed their separate spheres—man in the factory, woman in the home. The more a man worked outside the home, the more the household would have to buy in order to have needs met. Soon the factories were able to fabricate products to supplant the housewives’ duties as well. The housewife’s primary function ultimately became chauffeur and consumer. The household was no longer a unit of production. It was a unit of consumption.
Housewife’s Syndrome
The effect on the American housewife was devastating. In 1963, Betty Friedan published The Feminine Mystique, documenting for the first time “the problem that has no name,” Housewife’s Syndrome, where American girls grew up fantasizing about finding their husbands, buying their dream homes and appliances, popping out babies, and living happily ever after. In truth, pointed out Friedan, happily-ever-after never came. Countless women suffered from depression and nervous breakdowns as they faced the endless meaningless tasks of shopping and driving children hither and yon. They never had opportunities to fulfill their highest potential, to challenge themselves, to feel as though they were truly contributing to society beyond wielding the credit card to keep the consumer culture humming. Friedan’s book sent women to work in droves. And corporate America seized upon a golden opportunity to secure a cheaper workforce and offer countless products to use up their paychecks.
Before long, the second family income was no longer an option. In the minds of many, it was a necessity. Homemaking, like eating organic foods, seemed a luxury to be enjoyed only by those wives whose husbands garnered substantial earnings, enabling them to drive their children to school rather than put them on a bus, enroll them in endless enrichment activities, oversee their educational careers, and prepare them for entry into elite colleges in order to win a leg-up in a competitive workforce. At the other extreme, homemaking was seen as the realm of the ultra-religious, where women accepted the role of Biblical “Help Meets” to their husbands. They cooked, cleaned, toiled, served and remained silent and powerless. My husband and I fell into neither category, and I suspected there were more like us.
Meet the Radical Homemakers
I was right. I received hundreds of letters from rural, suburban, and city folks alike. Some ascribed to specific religious faiths, others did not. As long as the home showed no signs of domination or oppression, I was interested in learning more about them. I selected twenty households from my pile, plotted them on a map across the United States, and set about visiting each of them to see what homemaking could look like when men and women shared both power and responsibility. Curious to see if Radical Homemaking was a venture suited to more than just women in married couples, I visited with single parents, stay-at-home dads, widows, and divorcées. I spent time in families with and without children.
A glance into America’s past suggests that homemaking could play a big part in addressing the ecological, economic and social crises of our present time. Homemakers have played a powerful role during several critical periods in our nation’s history. By making use of locally available resources, they made the boycotts leading up to the American Revolution possible. They played a critical role in the foundational civic education required to launch a young democratic nation. They were driving forces behind both the abolition and suffrage movements.
Homemakers today could have a similar influence. The Radical Homemakers I interviewed had chosen to make family, community, social justice, and the health of the planet the governing principles of their lives. They rejected any form of labor or the expenditure of any resource that did not honor these tenets. For about 5,000 years, our culture has been hostage to a form of organization by domination that fails to honor our living systems, under which “he who holds the gold makes the rules.” By contrast, the Radical Homemakers are using life skills and relationships as replacements for gold, on the premise that he or she who doesn’t need the gold can change the rules. The greater one’s domestic skills, be they to plant a garden, grow tomatoes on an apartment balcony, mend a shirt, repair an appliance, provide one’s own entertainment, cook and preserve a local harvest, or care for children and loved ones, the less dependent one is on the gold.
By virtue of these skills, the Radical Homemakers I interviewed were building a great bridge from our existing extractive economy—where corporate wealth has been regarded as the foundation of economic health, where mining our Earth’s resources and exploiting our international neighbors have been acceptable costs of doing business—to a life serving economy, where the goal is, in the words of David Korten, to generate a living for all, rather than a killing for a few; where our resources are sustained, our waters are kept clean, our air pure, and families and can lead meaningful lives. In situations where one person was still required to work out of the home in the conventional extractive economy, homemakers were able to redirect the family’s financial, social and temporal resources toward building the life-serving economy. In most cases, however, the homemakers’ skills were so considerable that, while members of the household might hold jobs (more often than not they ran their own businesses), the financial needs of the family were so small that no one in the family was forced to accept any employment that did not honor the four tenets of family, community, social justice and ecological sustainability.
While all the families had some form of income that entered their lives, they were not a privileged set by any means. Most of the families I interviewed were living with a sense of abundance at about 200 percent of the federal poverty level. That’s a little over $40,000 for a family of four, about 37 percent below the national median family income, and 45 percent below the median income for married couple families. Some lived on considerably less, few had appreciably more. Not surprisingly, those with the lowest incomes had mastered the most domestic skills and had developed the most innovative approaches to living.
Rethinking the Impossible
The Radical Homemakers were skilled at the mental exercise of rethinking the “givens” of our society and coming to the following conclusions: nobody (who matters) cares what (or if) you drive; housing does not have to cost more than a single moderate income can afford (and can even cost less); it is okay to accept help from family and friends, to let go of the perceived ideal of independence and strive instead for interdependence; health can be achieved without making monthly payments to an insurance company; child care is not a fixed cost; education can be acquired for free; and retirement is possible, regardless of income.
As for domestic skills, the range of talents held by these households was as varied as the day is long. Many kept gardens, but not all. Some gardened on city rooftops, some on country acres, some in suburban yards. Some were wizards at car and appliance repairs. Others could sew. Some could build and fix houses; some kept livestock. Others crafted furniture, played music, or wrote. All could cook. (Really well, as my waistline will attest.) None of them could do everything. No one was completely self-sufficient, an independent island separate from the rest of the world. Thus the universal skills that they all possessed were far more complex than simply knowing how to can green beans or build a root cellar. In order to make it as homemakers, these people had to be wizards at nurturing relationships and working with family and community. They needed an intimate understanding of the life-serving economy, where a paycheck is not always exchanged for all services rendered. They needed to be their own teachers—to pursue their educations throughout life, forever learning new ways to do more, create more, give more.
In addition, the happiest among them were successful at setting realistic expectations for themselves. They did not live in impeccably clean houses on manicured estates. They saw their homes as living systems and accepted the flux, flow, dirt, and chaos that are a natural part of that. They were masters at redefining pleasure not as something that should be bought in the consumer marketplace, but as something that could be created, no matter how much or how little money they had in their pockets. And above all, they were fearless. They did not let themselves be bullied by the conventional ideals regarding money, status, or material possessions. These families did not see their homes as a refuge from the world. Rather, each home was the center for social change, the starting point from which a better life would ripple out for everyone.
Home is where the great change will begin. It is not where it ends. Once we feel sufficiently proficient with our domestic skills, few of us will be content to simply practice them to the end of our days. Many of us will strive for more, to bring more beauty to the world, to bring about greater social change, to make life better for our neighbors, to contribute our creative powers to the building of a new, brighter, more sustainable, and happier future. That is precisely the great work we should all be tackling. If we start by focusing our energies on our domestic lives, we will do more than reduce our ecological impact and help create a living for all. We will craft a safe, nurturing place from which this great creative work can happen.
Shannon Hayes wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Shannon is the author of Radical Homemakers, The Farmer and the Grill, and The Grassfed Gourmet Cookbook. She works with her family on Sap Bush Hollow Farm in upstate New York and hosts two websites, grassfedcooking.com and radicalhomemakers.com. Copies of her books are available through those websites.
Portions of this story are excerpted from Shannon Hayes’ newest book, Radical Homemakers: Reclaiming Domesticity From a Consumer Culture, Left to Write Press, 2010.
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The Clintonites Were Wrong
Published in Salon, MONDAY, JAN 4, 2010
The “new economy” was an illusion. Neoliberals have to admit that before they can stop the bleeding
by Michael Lind
Is the American economy facing a lost decade? That is the wrong question to ask. The right question is this: Is the United States facing another lost decade? During the past 10 years, inflation-adjusted wages have stagnated or declined for working Americans; net job creation has been zero; and temporary, bubble-driven gains in the stock market have been erased.
This isn’t what Bill Clinton and the other “New Democrats” of the 1990s promised us.
Remember “the new economy”? In the second half of the 1990s, after years of stagnation, the U.S. economy briefly boomed. Members of the New Democrat wing of the Democratic Party, associated with the Democratic Leadership Council (DLC) and the Progressive Policy Institute (PPI), made a number of claims.
First: The source of the boom was not a bubble associated with tech stocks, but rather a permanent increase in U.S. productivity growth produced by the information technology (I.T.) revolution. Second: Foreign money was pouring into the U.S. as a result of well-informed expectations that the U.S. would lead the world in economic growth for a long period to come. Third: Increased inequality in the U.S. was a result of the global market rewarding skilled Americans at the expense of unskilled Americans, and could be cured by more higher education.
Something like this was the cheerful and optimistic New Democrat party line in 2000, the last year of the Clinton administration. How do things look from the perspective of 2010?
It is now clear that the boom of the second Clinton term was driven by the temporary tech stock bubble. It did not mark the beginning of a “new economy” fundamentally different from the old.
It is true that official statistics showed a trend toward a higher level of U.S. productivity growth in the late 1990s and 2000s than in the period of prolonged slow growth from the 1970s to the mid-90s. But Michael Mandel and other economists (pdf link) have argued that government statisticians have exaggerated the rate of productivity growth in the Clinton and Bush years by mistaking the falling prices of imported ingredients from low-wage countries like China for gains in productivity on U.S. soil.
Between 1997 and 2007 U.S. productivity growth might have been overstated by as much as 20 percent. If this revisionist critique is right, then actual U.S. economic performance, when the stock and housing bubbles are factored out, has been much worse than anyone would have believed a few years ago. The illusory wealth generated by overpriced tech stocks and houses temporarily obscured the grim picture, but now its depressing outlines are becoming clear.
What about the claim of neoliberals in the 1990s that foreign money was pouring into the U.S. based on rational expectations of a permanent, technology-driven American boom? That pet theory of the New Democrats has been discredited by events (pdf) as well.
Investments in emerging markets have done better than investments in the U.S. in the 2000s. China and Japan have continued to buy U.S. debt, not because they are impressed with Silicon Valley’s growth potential, but in order to cripple American manufacturing by keeping the dollar artificially high and the yuan and the yen artificially low. Their debt purchases are part of their strategic industrial policies on behalf of their own export-oriented manufacturers, not a vote of confidence in future American economic dynamism.
Another New Democrat myth, endlessly repeated by Clinton in the 1990s and by President Obama today, is the theory of skill-biased technical change (SBTC). SBTC held that the growing polarization of U.S. society was the result of irresistible global technological forces, not local factors with political causes, like the de-unionization of the American labor force or the inflation-caused decline of the minimum wage.
The New Democrats and like-minded Republican conservatives told us again and again that the huge gains going to CEOs and investment bankers reflected the premium attached to skills in the global “new economy.”
Even in the 1990s, this explanation made no sense. After all, the skills of CEOs and investment bankers have undergone no significant change in the last half century. If the SBTC theory had been correct, you would expect scientists and engineers and office-tech specialists to be making the great fortunes, not bankers and corporate managers.
What’s more, you’d expect the same forces — technology, globalization — to produce the same explosion of incomes at the top in similar countries. But other industrial countries, apart from Britain (dominated, like the U.S., by its swollen, parasitic financial sector), have not seen anything like America’s growth in inequality.
As the economist Brad DeLong points out, “The big rise in inequality in the U.S. since 1980 has been overwhelmingly concentrated among the top 1 percent of income earners: Their share has risen from 8 percent in 1980 to 16 percent in 2004. By contrast, the share of the next 4 percent of income earners has only risen from 13 percent to 15 percent, and the share of the next 5 percent of income earners has stuck at 12 percent. The top 1 percent have gone from 8 to 16 times average income, the next 4 percent have gone from 3.2 to 3.7 times average income, and the next 5 percent have been stuck at 3 times average income.”
DeLong notes that this pattern does not fit the story of college-educated workers in general deriving a wage premium from the new economy. To make matters worse for the new economy school, from 1998 to 2007, earnings for Americans with B.A.s were practically flat after inflation while the youngest college graduates suffered a slight decline in real wages.
Here’s what the New Democrats of the DLC and PPI who chattered enthusiastically about the “creative class” of “knowledge workers” in the “new economy” failed to understand: The main jump in income inequality took place in the 1970s and the 1980s, before the alleged new economy created by the tech revolution.
The relative decline of wages at the bottom had little or nothing to do with technology or the global economy and everything to do with the weakening of the bargaining power of American workers vis-à-vis their employers thanks to declining unionization, an eroding minimum wage and the flooding of the low-end labor market by unskilled immigrants from Latin America, both legal and illegal.
Having misdiagnosed the problem, New Democrats, including Clinton and Obama, have consistently prescribed the wrong medicine: sending more Americans to college. According to the Bureau of Labor Statistics, most of the occupations with the greatest number of openings in the foreseeable future require only a high school education or an associate’s degree, not a four-year B.A.
The most effective way to raise wages at the bottom would be to increase the bargaining power of workers, by unionizing the service sector and by tightening the labor market through restricting unskilled immigration. That would probably spur genuine productivity growth over time as employers substituted technology for more expensive labor.
But more widespread unionization is opposed by the corporate sponsors of the New Democrats. And while progressives spend oceans of ink on the effects of outsourcing on the small number of workers in the manufacturing sector, they are silent about the effects of mass unskilled immigration on the much greater number of low-wage workers in the domestic service sector.
The experience of the last decade discredits the claims of New Democrat neoliberalism. But it does not necessarily vindicate progressives. Many progressives assumed along with the neoliberals that the economy really was growing rapidly and that business in general was robbing labor of its fair share of what were believed to be huge gains.
One of the few progressives to question this orthodoxy was James K. Galbraith, who argued that most of the spike in inequality was explained by a small number of Silicon Valley and Wall Street tycoons. The crash made it clear that a significant amount of the wealth of the super-rich in the 2000s had in fact been imaginary all along.
The grim truth is that the new economy promised by the New Democrats never materialized. Yes, we have the Internet and iPhones, but the gains in productivity that have resulted so far from I.T. have been pretty minor compared to the results of the introduction of the steam engine, electricity and the internal combustion engine.
Yes, you can use Google to shop for items and order them via Amazon.com, but the factories that make them and the ships and the trucks that bring them to you would have seemed familiar to engineers in the 1950s.
The moment when much-hyped alternative energy sources like wind and solar become competitive with fossil fuels and nuclear energy seems to perpetually recede into the future. The all-renewable energy sector is 30 years away — and always will be. A decade ago, there was a national debate about outlawing germ-line engineering of humans, on the expectation that large-scale genetic engineering was imminent. Instead, progress in biotechnology has been slower than opponents feared and supporters hoped.
The glib New Democrats who chirped in the 1990s about the wonders of the new economy were dead wrong. If ever a school of political economy has been discredited by events, it is Clinton-era neoliberalism. And yet the Obama administration’s economic team is made up of recycled Clintonites, the very people who misunderstood the actual trends in the U.S. and global economy for the past 20 years.
An acknowledgement of their mistakes would be in order. But they would first have to recognize that they were indeed wrong about the central issues of our time.
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Michael Lind is Policy Director of New America’s Economic Growth Program. He is the author, with Ted Halstead, of The Radical Center: The Future of American Politics (Doubleday, 2001). He is also the author of Made in Texas: George W. Bush and the Southern Takeover of American Politics (New America Books/Basic, 2003) andWhat Lincoln Believed (Doubleday, 2005). Mr. Lind has been an editor or staff writer for The New Yorker, Harper’s Magazine, and The New Republic. From 1991 to 1994, he was executive editor of The National Interest. He has also been a guest lecturer at Harvard Law School. Mr. Lind has written for The Atlantic Monthly, Prospect (U.K.), The New York Times Magazine, The Washington Post, the Los Angeles Times, The Financial Times, and other leading publications, and has appeared on C-SPAN, National Public Radio, CNN’s Crossfire, and PBS’s The NewsHour with Jim Lehrer.
Mr. Lind’s first three books of political journalism and history, The Next American Nation: The New Nationalism and the Fourth American Revolution (Free Press, 1995), Up From Conservatism: Why the Right Is Wrong for America (Free Press, 1996), and Vietnam: The Necessary War (Free Press, 1999) were all selected as New York Times Notable Books. He has also published several volumes of fiction and poetry, including The Alamo (Houghton Mifflin, 1997), which the Los Angeles Times named as one of the Best Books of the year, and a prize-winning children’s book,Bluebonnet Girl (Henry Holt, 2004). His ground-breaking study of American grand strategy, The American Way of Strategy: U.S. Foreign Policy and the American Way of Life was published by Oxford University Press in October 2006.
