Money Talks

I appreciate the increasing debate about Universal Basic Income or a suitable minimum wage, and hope to contribute on what makes an economy ethical. I find that examining the foundations of systems to be most impactful and revealing, although I recognize I have only a rudimentary understanding of this topic. It seems most public and "expert" discussion about the hyper-capitalist economy in the U.S. assumes that it has nothing to do with "right and wrong". Money and economics are said to have nothing to do with ethics, because money is neither good nor evil, it is just a neutral tool. I will say this is nonsense, and not solely because it is heartless and demeans peoples' intelligence. As with most tools, it is use which determines right or wrong. Consequently, if I fail to use a tool to do good, then I am choosing to allow bad to occur. It is past time to own up to this, because it determines life-or-death outcomes for citizens.

First, a few basics. Gross Domestic Product (GDP) is the common gauge of "economic health" and is often measured in spending (as a way to calculate the amount of actual "product"). Most estimates place consumer spending in excess of two-thirds of GDP. That is, all the everyday citizens who spend their money on food, cell phones, clothes, and housing. This indicates how much an economy relies upon citizens having money to spend on goods and services. Money is collected by businesses-they do not "make" money in the sense of producing it for others to use. Nor do businesses make money useful by circulating it about the economy in quantities which rival that of regular citizens. Indeed, the money businesses collect tend to be given mostly to other businesses; businesses do not give their money back to citizens in a simple and direct cycle between the two. Further, businesses are not the cause of an economy, but the result; the desire and ability for citizens to spend their money on products would exist whether any particular business or industry was available or not. Finally, any business is owned by people, who are beneficiaries of the business's success-and also responsible for the business's impacts. This is all to point out that people remain more important than businesses, and that businesses are beholden to people in numerous ways.

This last should be self-evident; it really ought not require explanation that humans are of more value than a constructed legal fiction designed to allow commerce. However, in the time of Citizens United, economic downturns, and global pandemic, it seems things have been turned around. The rationale given is that businesses get the largest portion of relief because they are what cause citizens to be able to live and will draw us into a recovery. This would be absurd, and a repeat failure of the 2008-9 TARP plan wherein businesses were given the most money. This is, again, a problem with not acknowledging that money is used for good or bad. When the government gave its limited relief monies to businesses, it was choosing to allow humans to die. Citizens' money was given to businesses rather than used to directly pay for those same citizens' needs by giving them back their money to spend as necessary. This was especially true of citizens who ended up losing their homes, unable to pay back the banks which wanted that money to pay for the banks' own bad decisions. This lead to not just a loss of property or credit scores, but of peoples' lives as the reality of homelessness took its toll. While not bailing out businesses may have meant that some of them did not survive, more actual humans would have. A business can be replaced or rebuilt, but not so a human life. In truth, some businesses should fail; something we will come back to momentarily.

Currently, we are in the midst of a physical health crisis as the global pandemic progresses. Again, and even more directly this time, if citizens do not receive adequate support from the government, people will die. Rather than focusing on businesses this time, we should focus on human lives and preventing unnecessary suffering by providing government relief directly to citizens. This may be a good time to point out an additional fact of economics and further difference between business and person. Most large businesses hoard money, as do the wealthy who benefit from those businesses; they actually diminish the economy when they secret their wealth 'off-shore', as it becomes inaccessible to the economy it came from. In contrast, regular citizens will save a small portion of their income (if possible) and spend the majority of it. This is a two-fold point as it reinforces the importance of consumers to the economy, but also highlights the necessity of adequate regulation and taxation of wealthy individuals and businesses. When lamenting the lack of funds available to provide relief to citizens, and forcing people to work in harrowing, life-threatening circumstances, it is helpful to look at how much would be available if this simple step were taken. Again, businesses do not "earn" or "make" money. The money businesses collect from citizens owes as much back to the economy as those businesses get from it; the cycling of the economy demands that no individual or group stop the circulation of money. This goes back to the GDP and how vital spending is to the health of an economic system. Much as with a real person's budget, once a portion is set aside as savings, the rest can be disposed of. This is where a healthy tax system can benefit an economy, by making those excess monies available again.

Meanwhile, because an economy is comprised of humans and devised to serve human needs, it follows that the system must address such issues. That is, since life is unpredictable, the crucial function of an economy is allowing citizens to reliably obtain what they need to live. Ideally, it would also serve to improve their status, which is what proponents of capitalism have claimed it does. However, when government under-regulates vital industries and fails to prepare for inevitable disasters (especially when doing so due to the influence of private interests) then the economy nearly collapses and magnifies the impact of otherwise manageable events. This is what turns an urgent need for action into an emergent crisis which could cripple the nation. So far this century, the U.S. has seen two major economic "downturns" in which spending was significantly diminished. In each, those most impacted were the most economically vulnerable, which is to say poor. That disproportionate impact has been death, which is just an acceleration of the typical trend of the economy. Even in "good times", those without adequate income are not always able to manage and survive. These are clear signs that the economy is not healthy and our current approach does not work on the practical level, let alone the ethical.

Let us return, finally, to the idea of businesses not having a "right to life". Looking at the history of various industries, it is evident that long-term success or reliability has not been a goal. Beaver trapping, whale hunting, timber logging, commercial fishing, coal mining, and on along the list continues with examples of failure to account for anything beyond today. What does it benefit a nation if they have no future built upon their current practices? Each practice and industry ought to be building towards a better future, or else it is contributing to stagnation and failure. In economic terms, the practices which lead to each of the above-named industries being so lucrative were the same which lead to their collapse: exploitation. It's possible that analysis of these industries could have slowed the commercial pillage of resources and contemporary mitigation practices could have been implemented earlier. Possibly that collapse and the resulting unemployment of large numbers of loggers, fishers, and miners would have been avoided. The current practices around energy production have echoes of these past failures, as we are encountering the consequences of diminishing supply along with environmental damage. These are not businesses which need to continue, nor do citizens need to take on further burdens to sustain their out-sized profitability. Again, the purpose of an economy is to meet needs, and the basis of capitalism is supposed to be that as "markets" [potential customers] become available, then businesses will develop to meet the new needs. This necessitates the end of old or unfit businesses, as economic factors change.

Here is where the disparate strands of this post converge: the responsibility of economics. One way of explaining ethics is through who is responsible for what and to whom that responsibility is owed. General conversation about economies and economics takes the stance that there is no responsibility involved. I think we have established that is nonsense, and that any economy has impacts on the general populace. Anything that has an effect on a person has a responsibility to account for, and an economy is not exempt from that accountability. An economy does good and bad, and by choosing not to take this into account or denying those impacts we hamper our ability to make improvements.