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Steven Cohen

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We Don't Really Know How to Stimulate Sustainable Economic Growth

Posted: 08/08/11 09:33 AM ET

This has been a summer of bad and even scary economic news. We are finally focusing on the huge percentage of Americans that are out of work. The official number of 9.1% is only the tip of the iceberg -- even government data report a number that tops 16% when you add discouraged and underemployed workers to the mix. The debt disaster, the stock market decline and the potential for European financial collapse are all a backdrop to this summer of discontent. Missing from much of the discussion of causes and impacts is a persuasive presentation of the fundamentals. What is going on here? How much do we really understand? To what extent are we in new, uncharted territory, where we really do not know the answers?

Let's start by reviewing a few new realities that are the reason the old answers may not be sufficient:

  • There are nearly seven billion people on the planet. When I was growing up there were about 3 billion people here. Does anyone seriously think that doubling the population in less than half a century is a trivial issue?
  • The economic output of the world has grown dramatically. Emerging economic powerhouses like China and India are rapidly increasing their consumption of the planet's resources, and despite today's economic stagnation, the typical American family consumes far more today than they did in 1960.
  • The increased automation of production. Factories require less human labor per unit of production. Containerized shipping has automated a job that was once done by human muscle. Construction is increasingly mechanized. The modern economy runs on brainpower and energy-driven technology.
  • The technology of destruction is more widely available than ever before. The destructive potential of terrorism has never been greater.
  • The growing size of the globally interconnected economy. Products are no longer made in a single place, and capital flows with fewer and fewer obstacles from nation to nation. Can America truly control its own economy with China holding over a trillion dollars of our debt? Given the size of its holdings and the amount of stuff it sells us, China must also take care to ensure America's economic health. While U.S. economy, military, media and educational institutions remain dominant, our ability to influence is declining.
  • The continued stress on the planet's natural resources. Water, food and energy are at the heart of the issue. Seven billion people require more of that stuff than three billion ever did. To the extent that we use finite resources such as fossil fuels or geologic sources of water, we are on the road to economic oblivion.


In America's classrooms and an increasing number of its corporate boardrooms, "sustainability" is the mantra of the moment. Even the casual observer sees a planet under growing stress. Young people have this nagging sense in the back of their mind that we older folks may have used everything up. Despite the clear sense that new facts require new thinking, the old paradigm dominates Washington and the U.S. national media. We are still fighting the ideological war between communism and capitalism and many continue to believe that we need to trade off economic growth and environmental protection.

The Republican right wing is attacking EPA and federal funding for fundamental earth science. What chance do we have to solve these complex problems when many in our governing elite believe that the science of climate change is a hoax? We also see the Obama Administration giving the Shell Oil Company conditional approval to drill for oil on Alaska's North Slope. Our advancing technology enables us to find and mine fossil fuels from increasingly distant and ecologically fragile places. Has anyone noticed the trend? This stuff is not as easy to get out of the ground as it used to be. These days we find ourselves drilling deeper for oil, removing mountains for coal or just exploding a piece of the planet to release natural gas. No, we are not running out of these resources, yet. We probably won't for a long time, but isn't there a smarter, cleaner and hopefully cheaper way to power our economy? Why aren't we working to develop that technology? That would be something worth going into hock for if we had to.

That is where the idea of sustainability comes in. We may generate short-term solutions to economic needs by drilling in the Arctic. It may help Shell's shareholders in the short term, but in the medium and long term, it seems like a retreat to yesterday's technology. Like a data system using an old computer language. It reminds me of that old video game, Pong. When people talk about sustainable economic development, they are talking about wealth that is generated by renewable resources: the sun, the hydrologic cycle, sustainable systems of food production. The one-time use of a finite resource is by definition not sustainable.

All of which leads to a set of questions that we do not really know how to address:

  1. How does America stimulate economic growth when we are part of a globally interconnected economy?
  2. How do we restore investor and consumer confidence in a shared economic future? FDR said: "The only thing we have to fear, is fear itself," and we need to learn how to convey confidence and certainty in a vastly more complex global economy.
  3. As productivity increases through the use of more advanced technology, how do we ensure that we have enough jobs for the number of people who want to work?
  4. How do we get corporations, governments and their leaders to forgo short-term one-time gains for long-term sustainable benefits?
  5. How do we fund the fundamental science needed to develop renewable technologies and the capital cost of diffusing those technologies throughout the economy?

Eventually, just as cell phones are replacing landlines in America's households, new technology replaces old when it delivers something that is cheaper and better. The problem with waiting for the market to do this on its own is that if it takes too long, climate change will submerge our cities, and the process of extracting fossil fuels from the planet will cause irreversible damage to critical ecosystems. The same ecosystems that provide us with food and water.

As I look on this changing and uncharted economic and environmental landscape, I see more questions than answers. I am amazed when I hear economists, scientists, pundits and politicos arguing with great certainty that they have the answers. Who are they kidding? It is time to roll up our sleeves and get to work transforming our economy from one designed for the 20th century to one capable of thriving in the 21st. It's well past time to admit that there are no easy answers and we really don't know how to do this. Yet.

 

Follow Steven Cohen on Twitter: www.twitter.com/earthinstitute

This has been a summer of bad and even scary economic news. We are finally focusing on the huge percentage of Americans that are out of work. The official number of 9.1% is only the tip of the iceberg...
This has been a summer of bad and even scary economic news. We are finally focusing on the huge percentage of Americans that are out of work. The official number of 9.1% is only the tip of the iceberg...
 
 
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HUFFPOST SUPER USER
morshan
Freedom allows progress
12:26 PM on 08/09/2011
Good job of setting the stage. Where to start is really the question? I just read about the riots in London where they interviewed one of the rioters. He said they had a 2000 man march to Scotland Yard about loss of jobs, homes, future, etc. and nothing happened. He said they had a one night riot (now three) and the whole world is discussing their issues. So, I claim that media is the start. Do we need riots in the USA to get the message out?

During this entire debate on the deficit hardly any mention was made on cutting subsidies to old record profit making industries like fossil fuels. No mention was made about the $300B to $500B annual used to clean the fossil fuel mess. No mention was made on the $100B we need to spend to protect the middle east because of fossil fuel reserves. This needs to be in the conversation, but how? We need to figure out how, because the other options are all deadly and fatal.
HUFFPOST SUPER USER
longnow
Citizens United vs US
07:26 AM on 08/09/2011
Wow, Steve Cohen actually avoids saying, "with our polarized
congress" or "both party's have failed us". Whenever you see
statements like that run the other way. Mr Cohen actually
comes right out and says the republican right wing is defunding
the EPA (not to mention defunding medicare, Social Security,
the economy.)

The military budget? Now that's another story.
Where would the southern economy be w/o the military
and Gov. contracts? That kind of government good.
Military Good. Government contracts good,
deficits good & don't matter, except when republicans
are out of power then they very much matter.

I hear Rick Perry had a rare stem cell procedure
successfully done on his back that originated from
South Korea. Stem cells? Are they the good stem cells
or the evil ones? He now wants to make Tehas the go-to
place for stem cells which are now OK. It's a miracle. Hell yeah!!
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Vballboy60
The Dudes abides...with the moderation
07:11 AM on 08/09/2011
The societal metrics highlighted are worth greater discussion. How can a growing population and fininte resources not cause hardship for some on this planet. Ehrlich asked this question in the 1960's and it still remains an unanswered problem.

Those who choose to ignore these issues point to the creativeness of humans as an answer to the situation. New resources will be discovered or new technologies will improve food production or resource management. But population continues to grow so these solutions must keep growing and expanding to meet ever-increasing demand.

I am fearful that humans will be managed by their environment similar to rabbits in a non-predator environment. Rabbits multiply quickly until resources are expended and the environment itself causes dramatic reduction in population through under-nourishment. Humans have no predators, except ourselves in an odd fashion. Wars change population so if resources dwindle, and population continues to grow, then there may be defacto population management via warfare for water, food or other resources. Global Darwinism.

I hope we Earth residents might realize that gluttonous lifestyles are unsustainable over the long term. We might utilize improved resource management, energy efficiency, aim for reduced family size (though that strains certain religious doctrines) and other approaches to distance ourselves from future resource wars.

We will learn. The easy or hard way. Many of us, Cohen included, seek the easy path but the hard path remains the option should nah-sayers continue to ignore Cohen's issues.
07:56 AM on 08/09/2011
F&F.

My 10th grade Biology teacher used to say the same thing. The numbers are there, and the answers aren't complex:

1.) Smaller families. We're not re-populating after the Biblical flood.
2.) Use less gas. Walk. Bike. Use trains where available.
3.) Pick a goal for your life that's not measured in dollars.

Unfortunately, none of these answers work w/o mass participation.
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HUFFPOST SUPER USER
Malcolm Hensley
Last of the Reagan Republicans
12:45 AM on 08/09/2011
To Stimulate Sustainable Economic Growth requires regulated trade. We really don't have that in an unrestricted free trade world!

Start with green tariffs - build a green economy protected by tariffs no different from when Senator Daniel Webster proposed to protect American workers at the start of the industrial revolution.

Products sold in America should have a surcharge depending on its fossil fuel usage.

This will stimulate green energy projects here and in the developing world!
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Vballboy60
The Dudes abides...with the moderation
07:15 AM on 08/09/2011
It is difficult to regulate trade now that business has tasted globalization. Move manufacturing to countries where there are little or no labor and evnironmental standards. Starving people do not look at these predatory businesses as we do. They are more day to day survivors so they have limited long term vision.

I like the idea of bringing back tariffs. But we need a worldwide forum to debate and manage these tariffs.

As transportation fuels become increasingly expensive, globalization may strangle or limit itself by market reaction but that may be too late.

For now we need to ask these difficult questions. And press for credible answers.
12:38 AM on 08/09/2011
Maybe in a couple billion years, things will be different. Think about it.
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SteveM39
That's how dad did it, that's how America does it
12:26 AM on 08/09/2011
I think the answers are pretty straight forward and well known. Unfortunately, every time you fix a problem you hurt someone that is taking advantage of the problem. The bigger the problem the more there is at stake for the vested interests.

Until Americans can find common sources of information not controled by special interests, there is nothing we can do. We have been perfectly split down the middle through propaganda machines that keep us polarized and unwilling to see any other side.

Liberal education is being removed from the people through cost increases. Financial freedom and power is being systematically moved to the top. Our democratic government has been been marginalized and is dysfunctional.

There is a war raging in this country for the minds of the citizens. It has gotten very sophisticated and we are defenseless.

The answers are there. Everytime we find one that works, the special interests turn on the mind control machines and kill it. Health reform? Cap and Trade? Agricultural policy reform? Infrastructure? EPA? Financial regulations?

All are potential solutions to problems destroying this country and all are being demonized and dismantled right in front of us. It goes right up to and includes our very government. A government strong enough to solve problems is a very scary thing to the people who have so much to lose if problems get fixed.

But when the one thing that Americans agree on overwhelmingly is the failure of Congress, we've already lost the war.
HUFFPOST SUPER USER
LouGots
05:43 AM on 08/09/2011
The comment is a chilling call to censorship and to intellectual repression.. The left has lost, loses and shall continue to lose all those jkey debates, so the writer advocates "[a] government strong enough to solve problems," the problem being that enough people do not agree with the writer.

Orwellian? What is it the writer advocates, but a "Ministry of Truth"--some state organ of propaganda and enlightenment to get out the 'goodthink," and muzzle the bad?.
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HUFFPOST SUPER USER
Zilo
Indie--The GOP opposes critical thinking
06:30 AM on 08/09/2011
You totally misread the comment, of course. You totally inserted your own bias because you clearly cannot see anything but your own bias. How sad for you to be that blind.
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RedneckDem
The top 1% stole my made in china bootstraps
08:50 AM on 08/09/2011
Really? Sheesh....
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HUFFPOST SUPER USER
Zilo
Indie--The GOP opposes critical thinking
06:31 AM on 08/09/2011
I would fave you, but HP is not letting me fave people again today. So I'll just give you a "smart" badge, even though I hate those dang badges. HP is annoying me more often than not these days...
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Vballboy60
The Dudes abides...with the moderation
07:17 AM on 08/09/2011
At least there is this forum to discuss. There are not many others like it that are not hyper-marketed. Hopefully HuffPo doesn't get to silly with their blog management options.

Love the oxymoron micro-bio.
11:46 PM on 08/08/2011
It seems to me over the past 25 years or so a new class of people have emerged in American society. The government class.
The public sector has grown not just in numbers but in pay and benefits. It is a class of people that after working 20 - 25 years will receive lifetime benefits that most citizens can never even dream of. More important these benefits begin at a very young age well below the age when most people retire in private industry.
Our government has always said that growth in our economy comes from small businesses but with increasing taxes and regulations it is more and more difficult for these businesses to stay in business. These taxes, regulations and fines are a cynical way in which government pays for it's workers.
The Obama administration has done nothing to help small businesses to stay in business. And it has done nothing to really help the consumer. Instead this administration has continued a policy that is nothing more than a trickle down economy. Who did the Obama administration help? Banks, insurance companies, auto companies, government contractors and the public sector itself.
It may be time to change policy to a bubble-up economy. Help consumers and retail establishments
and maybe banks by having credit card interest deductible as it was before the Reagan administration. Insist on banks to free up capital to help small businesses get loans. Revise all pension and benefit packages of government workers.
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RedneckDem
The top 1% stole my made in china bootstraps
08:52 AM on 08/09/2011
Please show me proof of increasing taxes and regulations.

Nice cut and paste! Easier on your heavy mind to post talking points, eh?
10:44 AM on 08/09/2011
Real Estate Taxes, Tolls, Meters, Restaurant Regulations etc. and enforcement have increased on a steady basis in NYC.
If you should question why I would say that federal, state and local governments are primarily broke from the heavy benefits of government workers.
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sbyvssby
Is the center so radical?
10:04 PM on 08/08/2011
People and the effort of their work are at the base of any economy. This is the lion's share of what money is supposed to measure. Each new person represents a growth in demand of some things and supply of others. In that sense, population growth represents "sustainable" economic growth. Even when it gets too large, you can pay people to go to war or commit murder. The only "unsustainable" part of the equation are our energy sources, as you can't pay people to run out of energy.

The crux of the issue is how can we ensure that the correct things are supplied and demanded? The American worker used to be the most productive in the world, but the world is quickly catching up. The American educational system used to be the gold standard, and still is, but only at the university level. Public K-12 is a joke, and no one is laughing.

We have lost our comfortable lead, and we may never get it back. We will certainly never get it back without serious structural reforms like campaign finance and tax and public education reforms. There is no natural incentive to hire American workers and the government may no longer be able to afford artificial incentives. The inaction and lack of sobriety about these issues is staggering.
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Vballboy60
The Dudes abides...with the moderation
07:21 AM on 08/09/2011
There need not be leaders. How about we are all in the same boat and we need to realize that there is not a lot of resources in our same boat.

As for productivity, it may be an illusory metric. Research what it means, how it is measured and then consider that it may be an uneccessary variable. People only need be productive in order to match their consumption. And not all professions are equally "productive" from a social gain. So I question the metric.
HUFFPOST SUPER USER
Chris Herz
06:32 PM on 08/08/2011
Good article, and I hope AOL-Huffpost do more in a similar vein. The collapse of the American consumer economy may be a blessing in disguise -- although I admit that at the moment it sees a blessing rather well disguised!
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Vballboy60
The Dudes abides...with the moderation
07:23 AM on 08/09/2011
A consumer based measurement of healthy or unhealthy society is perverse. Business likes a high consumer rating but do we need consumption measured by those who seek to sll?

Less consumption, by individuals and small groups may prove that lifesylte is possible to the free markerteers who seek unregulated business and blind trust in markets. Capitalism is a good system, but it needs to be semi-regulated otherwise bad outcomes, that are preventable or managebale otherwise, result to catastrophically.
HUFFPOST SUPER USER
LATEACHER1X
Pay attention
06:15 PM on 08/08/2011
Great article. Environmental science should be the focus in US public education.
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HUFFPOST COMMUNITY MODERATOR
EthnicHeart
11:52 PM on 08/08/2011
Agree completely! F&F
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Vballboy60
The Dudes abides...with the moderation
07:28 AM on 08/09/2011
Completely agree.

Unfortunately there are some in our society who wish to manipulate educational methods and tools to lessen concerns discussed herein. They seek a blinded mass to steer as they see fit for their business or religious benefit. Of course, the same can be said for our green educational approach however, we seek no personal advantage from our educational approach other than sustainability..
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HUFFPOST SUPER USER
nsx 1
05:14 PM on 08/08/2011
What we need are jobs. The best way to create jobs, reduce the debt, and solve the infrastructure problems is to completely eliminate Social Security, Medicare, and Medicaid and use that money to hire contractors like Halliburton to repair America's infrastructure. Halliburton did a great job rebuilding Iran and saved thousands of dollars while putting hundreds of people to work. There is easily enough infrastructure in need of repair that everyone will be able to get a job, and therefore more revenue from the poor and middle-class to help pay down the debt. Plus, everyone will get a tax cut because there will no SSI withholding. It's a 3-way benefit. It will also have the benefit of providing employer supported healthcare insurance, thus creating jobs in the insurance industry. There, that's a 4-way benefit.
12:05 AM on 08/09/2011
Haliburton? Whatever you're smoking, I don't want any.
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HUFFPOST SUPER USER
Zilo
Indie--The GOP opposes critical thinking
06:36 AM on 08/09/2011
That's pretty ridiculous. The fact that you even mentioned Haliburton makes means you are easily dismissed. But the worst part of your "plan" is that it would just kick the poverty problem down the road. Americans are not in good health. They need Social Security, Medicare, and Medicaid just to *live*. Maybe you don't understand that. Actually, it's pretty clear you don't understand that. Perhaps because you have never known anyone ON any of those programs. The segment of society that cannot even afford rent without government help, or their medical bills will get shafted and you will celebrate that as a victory of some sort. You must be a Republican. Everything that falls on the poor is somehow a "fix".
HUFFPOST COMMUNITY MODERATOR
jeb50
Retired.
04:37 PM on 08/08/2011
From reading the comments it seems the only person who doesn't have a clue is the guy who wrote the article. Well, him and congress.
04:08 PM on 08/08/2011
We can only use so many TV producers, computer manufactures, shoe plants, or any product you can think of. So, we need new hit products coming all the time and that just isn't possible. We see new products come along every decade or so, but to build jobs at the rate of population growth seems impossible. We may be faced with a growing permanent underclass world wide and there isn't anyone giving this real thought. Do we let those without starve or do we create a world where all have the opportunity to earn their worth? It makes us face the idea of a purely capitalist society and its ability to address this growing issue. Do we ignore them when we see them on the street? Do we all move into our own guarded neighborhoods in the future? The idea that capitalism can somehow transform the whole world and create jobs for all is a pipe dream. There is a numbers point that it just cannot keep up with population growth and we need to figure out if we are going to let the have-nots starve or find a way to take care of all and offer all the opportunity for a dignified productive life? This is no time for any ideology if this is to be solved. It will take creative thinking, innovation, and pragmatism to find what can work.
12:09 AM on 08/09/2011
In years past, children cared for their elderly parents. Now, we wait for them to run out of money so they can be placed in a rest home, paid for by Medicare. I read somewhere that the love of money is the root of all evil (famous book), and that may explain a great deal of what is occuring today.
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HUFFPOST SUPER USER
Zilo
Indie--The GOP opposes critical thinking
06:51 AM on 08/09/2011
Really good comment. People don't seem to take that into account, that capitalism, especially *American* capitalism is self destructive. There's just no possible way we can employ all of these people and have them be able to live on their wages, not when you have people who need medical help, astronomically expensive help. And not unless rent and utilities come down for them. They could take multiple jobs, but they'll still just be barely surviving. There are problems like hours getting cut, companies not wanting to hire anyone full time anymore, that make it very difficult to save because whenever you hit a snag, your savings get wiped out.

Americans also consume more than is necessary. Actually that is the only reason I think the country has survived this long yet it's not sustainable at all. America was ALWAYS doomed to fail for this reason alone. You simply can't have a country with only 300 million people out-consuming the rest of the world for goods they don't even really need and enjoying every luxury at the expense of other people worldwide. It won't work. They think they are "exceptional" because they have unbelievable access to these luxuries, but they are more the benefactors of good timing than anything else. They want to arrogantly claim that god favors their country, that it's *all* due to their hard work, but it's just not. Their time is quickly passing, and many people are getting extremely uncomfortable with that.
HUFFPOST SUPER USER
larry putman
pyrgist
03:59 PM on 08/08/2011
It is a no brainer for most entrepreneurs. Even China and Cuba had massive lay offs at the beginning of the recession. The government entities is dependent on the private sector, the private sector is being smothered by government mismanagement.
The private sectors' income is shrinking, their wealth is shrinking, their competitiveness is being regulated away, the governments costs are destroying America.
This user has chosen to opt out of the Badges program
12:05 AM on 08/09/2011
Yes ... I remember not long ago when the private sector bailed out the government from its incompetence.
wiseapple
. just can not fail, if we never, ever stop
03:57 PM on 08/08/2011
I think a coordinated, state-by-state network of biorefineries should be constructed with public money. This would employ technologies that convert wastestreams and biomass to fuels, chemicals, electricity, as well as employ people to construct the plants, run them and transport the products. The financing can come from the savings from the decrease in imported oil over time. We need to be more self-sufficient.
HUFFPOST SUPER USER
DMDAY44
05:30 PM on 08/08/2011
If it were economically viable the private sector would be all over it. We don't need to pour any more public money into this kind of nonsense. Enough has been wasted on it already.
HUFFPOST SUPER USER
LATEACHER1X
Pay attention
06:20 PM on 08/08/2011
You think preservation of the planet and natural resources is nonsense??!!!
wiseapple
. just can not fail, if we never, ever stop
11:07 PM on 08/08/2011
It's a lot more viable than the status quo. Your private sector folks are feeding off the corporate welfare program and wouldn't want to invest in anything that might upset their livin' large at everyone else's expense.
HUFFPOST SUPER USER
LouGots
05:47 AM on 08/09/2011
Your problem is obvious, as the T-shirt logo goes, "public money."

There is no such thing. Not one penny of has not been taken from someone who produced it.
wiseapple
. just can not fail, if we never, ever stop
10:19 AM on 08/09/2011
Lou, you got gots. Haven't you ever heard of public-private collaboration.
How do you think the railroads were built? How about the interstates? How did we get to the moon?
Money is created either by printing it or through the normal fractional banking process. So start thinking for yourself. Lay off the simple answers and use some critical thinking.