Having spoken to some of the municipal politicians and staff returning from the Federation of Canadian Municipalities conference in Vancouver, I heard the recurring theme of how there just isn’t enough money. In fact, they wondered if there will ever be enough to recapture the innovation and prosperity not only of communities, but of the country as well. Our options are growing more limited.
I have also been in correspondence with some economists and professors of economics and a theme is emerging from that sector as well. In a phrase, economics has become somewhat bi-polar, even multi-polar. There is a general acknowledgement that the “economies of people” and the “economies of systems” have become increasingly de-linked in the rapidly expanding technological age in which we find ourselves.
Israeli-American economist, Daniel Kahneman, won a Nobel Memorial Prize in economics in 2002 for his work on how the psychology of judgment and decision-making in the field of economics has resulted in what he calls, the “fast” and “slow” paces in how we live our lives. Applying economic fundamentals to an increasingly accelerated world has become far more perplexing.
While Kahneman grapples with why we make the financial decisions we do, others in the field have to contend with the how we have ended up with such a disconnect between the great wealth being generated and the decreasing list of options left to governments and their citizens. If Canadians get accused of painting politicians or economists with too broad a brush, what else are citizens to do? Somehow in the course of a generation, wealth is incrementally being lost to them and appearing in some of the most opulent places on earth and in the hands of an increasingly few elite individuals and financial firms.
As the New York Times recently noted, economists, including the academic kind, are in “generally ill repute”. It’s not hard to understand why. LIke politicians, economists argue effusively in venues in a manner that erodes the confidence of readers and watchers.
But there’s a bigger reason. Just like those in the political order who spout solutions to our economic malaise, economists, for all their models and research, haven’t as yet developed a successful formula for reconnecting wealth to people. Noah Smith, in the Atlantic this week, cuts economists a bit of slack when he observes,
Economists don’t really have enough good data to understand how the economy works, either. With chemistry or biology, you can put things in a lab and test them out with controlled experiments … But with macroeconomics – the study of the economy as a whole – you can’t put countries and entire economies in a lab.”
That perspective assists us in understanding the complexity economists face. Yet this movement of wealth ever higher has been going on for at least two decades and we appear no closer to the solutions we require to make the creation of wealth “pedestrian” again, moving in and through our economies and citizenship in a way that elevates all society. Sadly, political parties apply their particular ideologies to the aspect of economics that suits them – a practice which produces ever-greater disillusionment and surely doesn’t assist the economists creating progress in their respective fields.
Adding to the problem is the penchant of economists to become very good, “at pointing out each other’s logical errors,” to quote Noah Smith again. He goes on to state that, “Like everyone else, they (economists) are liable to overstate their confidence and rely too much on their own unproven theories.” Fair enough; we get it that economics is a tough and complex field. Why, then, are policy makers making economic decisions by selecting out of all that soup models that opt almost exclusively for austerity or global financial deregulation? If we actually aren’t sure of the best way forward, then it’s time we began pressing politicians and bureaucrats to start looking and experimenting with other options.
The underlying problem isn’t that there isn’t enough money; we hear repeatedly about how much is being acquired in the financial order. The key issue is whether any society, especially those democratic in nature, has a right and responsibility to access generated wealth to benefit all of society, not just those who can capitalize on their profits?
We are not in an impossible situation, no matter how much it feels like it. Austerity is not the only option on the table, no matter how many experts tell us it is. Yet these channels aren’t going to change unless we as citizens call for other options.
Economist John Kay is one who is respected in his field. In a report he is about to deliver he says that the world is a “ticking time bomb” and that the fuse is already lit. He observes, “A few good people are also trying to instill the banking profession with a better moral conscience. But ultimately we’ll need to fundamentally re-envision our concept of a national and world economy.” Let’s be one of those “few good people” until enough of us bring about some sober second thought about how we’re getting to where we’re headed. If our economic laws aren’t firm, then the old “laws” of caring for others, providing for our families, the dignity of work, and planning for a better future still apply. Let’s press for what we know before we start accepting blindly what we don’t know.