Wall Street WARZONE

11 Ways Our GDP “Growth Fetish” is Killing Our Soul & Your Retirement. And Will Eventually Self-Destruct Capitalism, Democracy & the “American Empire!”

by Paul B Farrell, JD, PhD
| | 10/10/2010

What do we do, oh great zenmaster? “When you get to a fork in the road … take it,” replies the wise one, Yogi Berra, greatest Yankee catcher of all time. His sage advice to economists, politicians and investors everywhere: “The future ain’t what it used to be. We made too many wrong mistakes. You’ve got to be very careful if you don’t know where you’re going, because you might not get there.”

At the crossroads: “Growth!” Capitalism’s most sacred commandment, “Grow OR Die” may itself be on death row. With us since 1776, it’s being challenged by a “New God of Reality” that’s flashing relentless strobe warnings of an emerging new command from critics, contrarians and eco-economists: “Grow AND Die.” Yes, you heard right:

· “Grow OR Die.” Traditional Economists: We need 3% GDP “Growth” to support 100 million new Americans in the 21st century. Drill Baby Drill. New jobs to fuel slow recovery. Worse, exploding growth demands as the rest of the world adds 2.9 billion new humans all chasing their unique “American Dream.”

· “Grow AND Die.” New Eco-Economists: They see Big Oil’s destruction of our coastal economies, the rape of West Virginia’s coal mountains, the unintended consequences of uncontrolled carbon emissions and ask: “When will economists, politicians and corporate leaders stop pretending Earth’s resources are infinitely renewable?” Unfortunately, even the new eco-economists fail to factor population growth, the big 800# Gorilla, into the equation.

Yes, we are all at a crossroads, all facing a dilemma, all confronting the ultimate no-win scenario: “Growth” is essential to support the global population explosion. “Growth” is also killing our world, wasting our planet’s non-renewable natural resources. As a result, the “Growth” mantra will eventually destroy civilization.

Put a face on this dilemma: Governor Bobby Jindal. Louisiana’s greatest economic and ecological assets—marshlands, coastal fisheries—are being destroyed by capitalism run amok, Big Oil’s greed. Yet, Jindal’s already telling the President to forget the oil drilling moratorium, forget new studies, forget regulations, forget restraining the Big Oil greed machine that got us here. Risk new disasters, “drill baby drill,” now! Yes, we’re at the crossroads. This politician’s a perfect example of the no-win scenario confronting all politicians, economists and citizens. He’s on the horns of a very sharp no-win dilemma: We’re damned if we grow. Damned if we don’t grow.

Ultimate sin: Turning a blind’s eye, failing to seek real solutions
“When you get to a fork in the road … take it.” But which fork? Flip a coin? Same result either way: Heads you lose, tails you lose. A no-win situation. Not just Jindal, Obama and America, but Greece, Brazil and China. All politicians, all economies, all trapped in Capitalism’s most sacred, rarely challenged, commandment: “Growth OR Die.” “Growth” has achieved biblical reverence … blinding us to its toxic collateral damage.

The difference between the mindset of traditional economists and the new eco-economists is actually very simple: Traditional economists think short-term, react short-term, pursue short-term goals. New eco-economists think long-term. Initially this may seem overly simplistic, but fits perfectly. Here’s why:

· Short-term thinkers: Traditional economists are highly-paid employees and consultants in organizations with short-term horizons; banks, institutional investors, big corporations, think-tanks, government. Quarterly earnings, tax season, election cycles are more important than what happens a decade in the future. If they can’t survive the next budget cycle, “long-term” is irrelevant.

· Long-term thinkers: New eco-economists see, think and plan for the long-term. They understand Yogi: “If you don’t know where you’re going, you might not get there.” They know short-term thinkers are setting America up for more and bigger catastrophes than the gulf oil spill. The hit film Avatar is a perfect metaphor: By 2154 Earth’s resources are exhausted forcing us to invade distant planets searching for new energy resources. Critics warn it’ll happen earlier: UN and Pentagon studies predict population increases that will create unsustainable new natural resources demands in excess of 100% by 2050.

The decision is yours. So sit back for a few minutes, take this little test. Read each of the following 11 news items from my clip files, edited for length. Several are hot off the press. A coupple from the winter months. The rest from earlier reports about “Growth,” the 800# Gorilla hiding in every nation’s living room, hiding in every quarterly economic report, hiding in the expectations that will make-or-break your own retirement plans.

Here’s how to keep score: If you think the message of one of these edited news items supports long-term growth, give it three points. Two points if it’s neutral. And if it favors short-term “Growth” plus has faith that technology and the American Spirit will take of the long-term, add one point. Your total score will be between 33 and 11.

One. “Most New Jobs Temporary …Unemployment High,” Peter Morici report
“The economy added 431 thousand jobs in May but 411 thousand were temporary census jobs. … Forecasters had expected 540 thousand new jobs … the big challenge is to keep GDP growing at least 3 percent to pull down unemployment.” (6/10)

Two. “OECD Raises Its Forecasts for Global Growth.” The Journal
“Organization for Economic Cooperation and Development, the Paris-based think tank, cited strong growth in developing economies and the rapid rebound in world trade to predict the organization’s 31 members will see their combined GDP increase 2.7% this year and 2.8% next year. … U.S. economy is expected to grow 3.2%.” (5/10)

Three. “Geithner Rallies Europe on Growth.” Ian Talley, The Journal
Geithner’s “growth” pitch is a fight to minimize change and preserve the status quo for American banks: “We all understand that part of recovery, part of growth, is to make sure that we make clear and credible commitments to restore gravity to our fiscal positions over time. But we’re also working to make sure our economies are growing.” (5/10)

Four. “Economic Outlook: Slow Growth At Best.” Gary Shilling’s Insight Report
“Our forecasts of slow U.S. growth through 2011 may prove overly optimistic … Most investors believe 2008 was simply a bad dream from which they’ve now awoken. We’re returning to the world they knew and loved, with free spending consumers supporting rapid economic growth, fueled by ample credit and backstopped by governments.” (6/10)

Five. “The New Normal.” Pimco’s Bill Gross, InvestmentNews Conference
“Investors will never again see the returns and profits of a few years ago. ‘New Normal’ returns are half what we have grown used to over the past 10 to 25 years.” (12/09)

Six. “Stiglitz Urges End to GDP Fetish.” Bloomberg News Report
“The Nobel Prize-winning economist urged world leaders to drop the obsession with GDP and focus more on broader measures of prosperity. … so many things important to individuals are not included in GDP.” But will short-term thinkers agree? (9/09)

Seven. “Numbers Racket,” Kevin Phillips, Harper’s Magazine|
The use of deceptive statistics has played a vital role in convincing many Americans that the U.S. economy is stronger, fairer, more productive, more dominant, and richer with opportunity than it really is.” Corruption taints CPI, GDP, unemployment stats. “How bad is it? Real numbers, a face full of cold water. Economic growth since the recession of 2001 has been mediocre, despite a surge in wealth and incomes of the superrich.” (5/08)

Eight. “Darker Future,” Robert Samuelson, Economist in Newsweek
“Americans are progress junkies. We think that today should be better than yesterday and that tomorrow should be better than today … we place more faith in opportunity and getting ahead. We may now be on the cusp of a new era that frustrates these widespread expectations. … Americans do not have a divine right to rapid economic growth. (11/08)

Nine. “New Jobless Era Will Transform America.” Don Peck, The Atlantic
“The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults … leave an indelible imprint on many blue-collar men … cripple marriage as an institution … plunge many inner cities into despair … ultimately, warp our politics, our culture, and the character of our society for years to come.” (3/10)

Ten. “Faustian Economics,” Wendell Berry, Harper’s Magazine
“The general reaction to the apparent end of the era of cheap fossil fuel, as to other readily foreseeable curtailments, has been to delay any sort of reckoning … the American Way of Life will somehow prove indestructible. We will keep on consuming, spending, wasting, and driving, at any cost to everybody but ourselves.” (5/08)

Eleven. “What’s So Good About Growth?” BusinessWeek book review
“Ben Friedman’s The Moral Consequences of Economic Growth has scored a dead-center hit on the critical question: Why do we value economic growth? The usual argument is that a bigger GDP—more goods and services—leads to happier, more satisfied citizens. But as the average income in a country goes up, so do expectations. As a result, the level of GDP per person in a country, taken alone, doesn’t necessarily say much about the level of happiness. The lack of a direct link between personal satisfaction and the level of GDP per person seems to undercut the purely economic arguments in favor of growth.” (11/05)

So what’s your total score? Folks in the “Grow And Die” crowd (longterm thinkers and eco-economists) will score above 22. Anyone in the “Grow OR Die” crowd (short-term thinkers and traditional economists) will score under 22. Me? I’m still at the plate talking to Yogi about “the fork in the road,” about Avatar in 2054, about why God let that bad umpire’s call kill a perfect game. Yes, still asking the wisest of all zenmasters which way to go? And after he repeats his answer for the umpteenth time, he pauses then silently shakes his head, turns away and walks off the field and into the dugout. He caught a perfect game, scored 33 points.

original: MarketWatch June, 2010

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