A new economic model

January 27, 2009 at 2:00 am 2 comments

Today, I’m letting you know about a new book that you might want to think about getting. I’m getting this book from Amazon pronto. It’s called Agenda for a New Economy: From Phantom Wealth to Real Wealth by David C Korten.  I think we’ll increasingly see books that question whether pouring trillions into bailouts is the correct response to the GFHF and frankly whether we’ve lost our way and worship at the altar of financial values rather than a better set of values.

Phantom wealth of course refers to speculative traders who dabbled in derivatives, irresponsible residential mortgage lending, buying into asset bubbles and so on. Speculative trading resulted in the illusion of phantom wealth, nothing of true value being created.  Only about 3% of US money supply, for example, is in the hard currency of coins and dollars – the rest sits in paper accounts, promissory notes or on computer screens. US banks hold over $180 trillion in derivatives (basically a speculative wager).

We were lolled into a false sense of comfort because the economic mirage constructed helped us to buy the McMansion, afford THE BRANDS, get easy credit. At the same time, the corrupt practices of Wall Street led to devastation of the environment and social capital as we became more individualistic and selfish. We ignored our locality, preferring to hop on the globalisation gravy train. We lost traditional skills and crafts as we outsourced to China. We were duped by the notion that Wall Street (supported by Government) could create fat cats with enormous wealth and that this wealth would trickle down to Main Street so that we would all prosper and be happy. But we ended up grovelling at the door of private banks.

From the reviews I’ve read, seems that the book questions our current values. For the last 30 years or so, the world has been built on financial values – shareholder profits, increasing wealth, resources flowing into an economy – and not values that would benefit each and every one of us such as health and well-being, a protected and nourished natural environment, happy families and communities. So the book calls for a shift to a locally-based, community oriented economic model in which local resources such as water, food and energy are captured and shared beneficially for all. It calls for civic organisations to emerge and thrive, allowing for the entrepreneurial spirit of Main Street to be unleashed.

Local, independent co-ops, local farmers’ markets, local ownership of local businesses and community owned banks is the economic model of the future I hope for. Along with better physical and social infrastructure.  But Obama has essentially surrounded himself with Wall Street advisors. Will the Prez of Hope & Change hear the call of Main Street? Korten wrote an alternative inauguration speech for Obama, which outlines a new economic model. You can read it on Alternet.

And here’s a sobering fact for us: the bailouts so far have cost (wait for it) – US$$4.6165 trillion. How on earth can you conceptualise such a humongous amount of money? Here’s how:

  • Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
  • Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
  • Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
  • S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
  • Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
  • The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
  • Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
  • Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
  • NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion

Okay, so that means the bailouts to date have cost more than all of the above COMBINED. Unbelievable. I found these figures on Global Research when I was trying to find a way to conceptualise how much this is costing.


Entry filed under: Economics. Tags: , , , .

It’s been two years Treated like terrorists

2 Comments Add your own

  • 1. Paris  |  January 27, 2009 at 8:41 pm

    Who cares? anyone else but those with money=power…
    So no government, nor any exectuve is going to ASK for a major change.

    Bailouts, G20 or Davos speeches will only deal about cosmetic changes of our economical system.
    It’s only the people (from its ancient latin meaning) which has the theoretical power to change things.
    But I guess we’re already on a Roman scenario (Empire period before the fall): the mass people largely fed and entertained, has no more incentive, nor will to take any politic action.

  • 2. thinkingshift  |  January 27, 2009 at 10:44 pm

    Hi Paris

    The last days of the Roman Empire were spent watching gladiators tough it out with wild animals in the Colosseum; Romans having lavish parties; Romans celebrating the torture of wild animals in gladiator fights. The decline of the Roman Empire was accompanied by a populace more interested in blood sports and having a good time.

    A parallel with our own times perhaps? Are we more interested in the good life; cricket; football; soccer; accumulation of wealth? Meanwhile, our consumerist empire is crumbling around us.



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