American Consumption Shouldn’t Keep Economy Afloat

By John Lawrence

This is Part 2 of Buddhist Economics: Economics As If People Mattered. Part 1 can be found here.

The Buddhist approach is that consumption is merely a means to human well-being. The aim should be to attain a maximum of well-being with a minimum of consumption.

It would also be considered salutary to produce much of what is needed for human well-being by one’s own hands rather than being a total participant in the cash economy. This is anathema to capitalist economists and bankers who thrive on interest from bank loans in order that consumers can purchase more stuff on borrowed money and go into more debt.

Without debt based economics, Wall Street would be out of business and GDP would be lowered because GDP only measures cash transactions not self-subsistent production. Consumption represents 70% of U.S. GDP. Western economics considers consumption to be the end-all of economic activity. Buddhist economics considers economic activity to be that which is necessary for liberation of the spirit and for the provision of the right amount of goods and services without gorging on them.

Obviously, there is a relationship between “right consumption” and non-violence. Resource wars have been fought throughout human history, the main example of which is the invasion of Iraq by Lyin’ George W Bush (to use a Trumpism) and Dick Cheney who were all about oil. Saddam Hussein had given signs that he was about to take Iraq’s oil out of the petrodollar alliance.

When Nixon took the U.S. off the gold standard, he made a deal with OPEC. Oil could only be purchased with dollars. The dollars so gained would be invested back in the U.S. mainly in the form of Treasury bonds. This would give the U.S. government the ability to go into unlimited debt because there would always be a buyer for its bonds.

This strategy may eventually backfire due to the fact that holders of huge amounts of petrodollars may decide to spend them elsewhere rather than continue to buy U.S. Treasuries, leaving the U.S. no alternative than to print money to pay off its bonds. This was already done during the 2008 financial crisis when the Federal Reserve created trillions of dollars just with a few keystrokes on a computer in order to prevent the big Wall Street banks from collapsing.

Locally Sourced Products Least Likely to Cause Wars

Buddhist economics teaches that locally sourced products, which are less likely to produce international conflict and war, are preferable to products that have to be transported hundreds or thousands of miles. E. F. Schumacher in his section on Buddhist Economics in Small is Beautiful says:

Simplicity and nonviolence are obviously closely related. The optimal pattern of consumption, producing a high degree of human satisfaction by means of a relatively low rate of consumption, allows people to live without great pressure and strain and to fulfill the primary injunction of Buddhist teaching: “Cease to do evil; try to do good.”

As physical resources are everywhere limited, people satisfying their needs by means of a modest use of resources are obviously less likely to be at each other’s throats than people depending on a high rate of use. Equally, people, who live in highly self-sufficient local communities, are less likely to get involved in large-scale violence than people whose existence depends upon worldwide systems of trade.

Whew! What does that say about globalization?

Take that Thomas Friedman. Globalization, in which good paying jobs in the U.S. are shifted to low paying Third World countries and goods are transported thousands of miles to U.S. customers, is not in keeping with Buddhist economics.

(Photo Courtesy of John Lawrence)

NAFTA, CAFTA, LAFTA, SHAFTA and, most especially TTP or TTIP or whatever it is, are not what we should be about regardless of what modern pundits, economists and Presidents tell us. They are in the pockets of large corporations whose lobbyists write the laws and their only consideration is what is going to increase corporate profits, not what is best for the American people.

Some pundit once said, “The business of America is business.” Now it’s “What’s good for large corporations and Wall Street is good for America.” And by the way “the people” don’t matter.

The trend to globalization needs to be reversed with “self-sufficient local communities,” communities in which “right livelihoods” can germinate and grow, taking up the slack.

Schumacher continues:

From the point of view of Buddhist economics, therefore, production from local resources for local needs is the most rational way of economic life, while dependence on imports from afar and the consequent need to produce for export to unknown and distant peoples is highly uneconomic and justifiable only in exceptional cases and on a small scale. Just as the modern economist would admit that a high rate of consumption of transport services between a man’s home and his place of work signifies a misfortune and not a high standard of life (think of those long commutes in rush hour traffic), so the Buddhist economist would hold that to satisfy human wants from faraway sources rather than from sources nearby signifies failure rather than success.

Locally Sourced Products Create Good Jobs

Does it make sense to transport food that could be grown locally thousands of miles by container ship, plane and truck? Locally sourced products create “right livelihood” jobs and contribute to the self-sufficiency of local citizens.

We need to decouple ourselves from goods produced abroad, which could be produced right here at home. There’s a race to the bottom to produce the cheapest goods for consumers in order to get them to buy more stuff. But while the average consumer was thrilled with the falling price of big screen TVs, computers and smart phones, they are chagrined by the rising costs of health care and education. Perhaps college students should be home schooled instead of paying tens of thousands of dollars for knowledge that somebody else supposedly possesses to a greater extent than they do. Paying for knowledge? Meh. It’s available in libraries and on the internet.

We need to support artisans, craftsmen and local organic farmers in order to get Monsanto and their poison products off our backs. Industrial agriculture has put many farmers out of business in the developing world by underselling their products. This is what “free trade” has brought about.

Schumacher talks about the fact that modern economics doesn’t distinguish between renewable and nonrenewable materials in its computation of GDP and economic activity in general. It also doesn’t take into account externalities, the pollution that forms when corporations dump toxic chemicals into the rivers, ocean and atmosphere. When it comes to energy, only the cheapest form of it is taken into account. Thus as long as fossil fuels are cheaper than renewables, they will be used, although they are contributing to the fact that the planet is warming up and becoming unbearably hot in some parts. The disposal of brackish water from oil drilling injected down deep wells is making Oklahoma the earthquake capital of the U.S. But we continue to drill, baby, drill even though the by-products of drilling are destroying property in real time while contributing to the destruction of the planet long term.

Global warming is exacerbating torrential rains and flash flooding which is destroying lives and property, but corporations are only interested in the bottom line, not what’s good for the planet, and Wall Street encourages them to be so. Plus the clean-up adds to GDP! They don’t want to miss their projected profits or their stock value could tank leaving CEOs without the ability to buy back their own stock and cash in on their stock options.

Flash flooding in Louisiana recently was produced by having received 20 inches or rain in 24 hours.

Writing before global warming was even on the radar, Schumacher is prescient:

Just as a modern European economist would not consider it a great economic achievement if all European art treasures were sold to America at attractive prices, so the Buddhist economist would insist that a population basing its economic life on nonrenewable fuels is living parasitically, on capital instead of income. Such a way of life could have no permanence and could therefore be justified only as a purely temporary expedient.

He goes on to say that the exploitation of fossil fuels is an act against nature which can only lead to violence between men. Bear in mind that Schumacher is writing these words in the 1970s before global warming was even a consideration.

Furthermore, the results of modern Western capitalist economics are disastrous. Aside from the meltdown of the big Wall Street and international banks in 2008, there is a “collapse of the rural economy, a rising tide of unemployment, in town and country, and the growth of a city proletariat without nourishment for either body or soul.”

All over the world formerly self-sufficient farmers and villagers are losing their small holdings due to extreme heat caused by global warming and underselling by U.S. corporations. They then crowd into the favellas and slums of the big cities and increase the numbers of the poverty stricken and propertyless throughout the world. In the US the tide of homelessness is becoming an epidemic which the authorities are either ignoring or criminalizing in an attempt to sweep them under the carpet while they contemplate taking out billion dollar Wall Street bonds to finance football stadiums.

Gross National Happiness a Better Measure of the Economy

There are other measures of economic progress than GDP that is morally neutral about any activity that involves the cash economy. It treats the production of exploitative products like cigarettes, the production of implements of war and environment destructive products equally in terms of their contribution to GDP. The King of Bhutan has come up with a different measure of economic development called Gross National Happiness or GNH.

From The Story of GNH:

The folly of an obsession with GDP, as a measure of economic activity which does not distinguish between those activities that increase a nation’s wealth and those that deplete its natural resources or result in poor health or widening social inequalities is so clearly evident. If the forests of Bhutan were logged for profit, GDP would increase; if Bhutanese citizens picked up modern living habits adversely affecting their health, investments in health care systems would be made and GDP would increase; and if environmental considerations were not taken into account during growth and development, investments to deal with landslides, road damages and flooding would be needed, and GDP would increase. All of these actions could negatively affect the lives of the Bhutanese people yet paradoxically would contribute to an increase in GDP.

Material progress is not the only source of human well-being. Any reasonable measure of economic progress should take into account such factors as destruction of the environment and the effect on economic inequality. How equitable is economic progress if the result is to enrich a few people while leaving the majority of people in poverty? GDP doesn’t care if the increase in wealth and income only goes to a few; GNH does. I wrote previously that:

If I grow my own vegetables, fix my own car and live frugally, this does not add to GDP. George W Bush told us after 9/11 to go out and shop. This was his prescription for fixing the economy. Just go out and buy, buy, buy. Buy a whole lot of junk you don’t need. Then rent a storage locker to store the stuff that’s overflowing your garage. That adds to GDP.

All this worthless garbage that “grows the economy” could be better done without. The money saved would be better spent helping the most impoverished in the U.S. and around the world, helping the climate change refugees in Bangladesh and Indonesia, helping the people suffering from natural disasters in West Virginia and the Philippines.

The effect of economic growth or progress on the environment and on inequality must be taken into account if we are to create a sane world, a world where all have a chance to prosper, a world in which material progress means that no one goes without the essentials of life: a roof over everyone’s head, adequate food and nutrition, clean water, decent medical care and a good education plus a meaningful job. Instead, we have corporate welfare and tax breaks and loopholes for the rich who tirelessly lobby Congress for the same while poor people have no lobby and scarcely register on the government’s radar.

A sane and reasonable world is one in which the vast military-industrial complex budget is converted to peace time development activities. A good country is one which takes care of its least fortunate citizens at home and strives to help others throughout the world. This is what Buddhist economics consists of.