HOW NATIONS ECONOMY’S WORK

from Murph

Sharon Astyk in her book “ Depletion and Abundance” introduced me to a different perspective on what she calls the informal economy, or the real economy, as opposed to the formal economy. Now before you gulp and the brain cells overheat on terms, this is not going to be an essay with a bunch of esoteric financial terms and theories. Frankly, I’m a bit burned out reading all the different perspectives and statistics and numbers being tossed around on the internet concerning the economy. Her book gave some interesting other ways of looking at this.

There is also a 1 hr 23 min lecture on how money works at; http://informationliberation.com/?id=26471
Worth the watch if you have interest in such things and is very well presented in very logical non technical way.

The formal or official economy is found in all of the rich countries, and involves tax forms, endless other documents, fees and statistics, the banks and other financial entities. In actuality, most of the world’s populations do not live in a formal economy. A great deal of our economy isn’t involved in that either. The informal economy is ‘under the table’, involves little if any forms, definitely no taxes or fees, and can be also referred to as a biological economy, or a survival economy. The formal economy got a real boost from the industrial revolution. Prior to then, most of what was called economy was the informal kind. In actuality, when you look at it from this perspective, the informal economy dwarfs the formal. It includes all volunteer work, all work within the family. How would you put a national value on all of the work a housewife does as an example? How much work is done ‘under the table’ with nothing in between the employer and employee? I know people that have been doing that for most of their work lives. The problem in western societies is that we have been taught that the formal economy is all there is, and what little of the informal economy we run into is considered negligible and unimportant, viewed with suspicion and often is illegal. Of course governments are not happy with that informal jazz, they aren’t getting their cut of the booty and it is difficult to control, it’s under the radar.

I agree with Astyk in that kind of economy is what we are going to have to develop. The concept that this will involve great hardship and not getting what you need for a good and happy life is not necessarily true. Relocalization of production and growing all or a great deal of your own food is part of this type of economy. While it probably does involve what is called a ‘lower standard of living’, it doesn’t mean you have to be impoverished in what you need to live a fruitful and satisfying life. It does mean doing without a whole lot of toys and non essential stuff. It does mean that families will have the time to interact with each other and spend time talking with the kids and spouse, something that appears to be lacking in most families.

Our Grange farmers market started last Saturday. There were vendors we had to turn away, not enough room for all of them. We had a vendor selling Cockatiels, other selling eggs, cookies, candies, hand made crafts while a guy played guitar and sang at one end of the room. A local massage therapist gave massages. We sold out our 10 dozen eggs in an hour. There was bartering going on between tables. We are thinking of having a local didgeridoo player come. Won’t that be a gas. The place was intensively busy from opening to closing time. All of the vendors made some money; everyone had a good time and new friends and acquaintances made. Just wait till the fruit and veggies start coming in. The trade and barter table got a lot of tradesmen and handymen signing on, we are going to be publishing a register of that. This is an example of an operating informal economy.

Now since the state doesn’t like this kind of shenanigans going on (the state figures it must control everything and get a percentage of the exchange going on), there is always the danger of someone not happy with it due to it cutting into their profits and reporting this activity to government agencies. Another good reason to involve as much of the community as possible. There is some safety in numbers, especially if most involved are quite determined to resist government control.

As a branch off of this subject, I am supposing some of you dear readers managed to sit through Obama’s speech to the combined congress critters on Tues night. About all he talked about was the economy and what he planned to do about it. Of course there was partisan cheering on his points. Interestingly, the Repugs have suddenly discovered financial responsibility and at least voiced criticism of the huge spending Obama proposes. Isn’t it interesting that they ignored 8 years of the largest expanding government spending and government expansion in our history but if a Democrat wants to continue it, they are against it.

Now I am going to admit that Obama gives a great speech, really clutches at the heart strings in many aspects. As Freeacre commented in the last post, it was intended to give hope and direction to the nation and appeals for support of his policies and plans. On the surface, the speech seems to really be concerned with the ‘common citizen’. He brazenly talked about taxing the rich (those with more than $250 grand a year income) and closing tax loopholes for the rich. And, we have a majority of people who are adamant about the concept that this problem is of such magnitude that massive government intervention and control is what it will take to drag us out of this economic mess.

Despite my dear spouse’s hopefulness and clear support of Obama, I remain skeptical. Speeches by a practiced orator are one thing, doing it is entirely something else. Let’s look at the situation;
1. Nothing that is publicly stated by Obama wants to significantly change the paradigm of how our money works. Yeh, taxing the wealthy will put more money under the control of the government. But then what? Has the government ever been truly reformist in concept?
2. Frankly, if Obama pushes too hard for restructuring how money works, I figure that the big money people (about 1% of our population) will try and assassinate him. I just don’t see these people passively allowing a reduction of their global power and wealth which is what redistribution of wealth entails..
3. When I look at history, redistribution of wealth is always precluded by a change or dissolution in governments and almost always is accompanied by active and violent rebellion.
4. All of Obama’s speeches contain the element of trying to recapture the momentum of economic growth through capitalistic economic system. For those of us that maintain that continual economic and material growth is simply unsustainable, this is just plain stupid to try and revitalize.

So, in relation to the original theme of this posting, it appears to me that somewhere down the road the concept and practice of an underground or informal economy and a vastly decreased ‘standard of living’ is a necessity. While I admit the possibility of Obama’s efforts might bring temporary relief to the crashing system that is going on right now, I maintain it is unsustainable. I also admit that Obama and his crew are completely unable to deal with this politically if they actually realize this and believe it to be true. Any policies that outright attempt to force a new paradigm and new way of living that proceeds toward sustainability will be met with overwhelming opposition by the very people it would be designed to help, much less the PTB.

While I listened to Obama’s speech, I had the constant thought go through my head that “God is he good at this”. It is such a pleasure, in one sense, to finally hear an articulate thoughtful, educated person lay out their thoughts and policies. That alone is quite a change from the last 8 years. But, keep in mind; it is still a speech, not the actions. And, while in an hour or so, nobody could give all the justification for what they want to do, we can judge what he said from what was omitted. You will notice that there was no solid data presented for his brief mention of his energy policy and why it would work. The main focus was to put people to work, and not what the outcome would be. Does this constitute another government boondoggle and excessive spending program? Do we really need gigantic government spending programs to update and repair roads and bridges to support more car culture and suburban living? Do we really need to spend the money for support of the suburban housing industry and financing? Should we really be spending huge sums of money to support the mafia types that have run our economy for years?

The bottom line is that as citizens we do not have the power to move the government in any particular direction, no matter how justified. Witness the massive opposition to the original bank bailouts. We now can only wait and see what transpires with the new crew. Personally, I hold no illusions that there will be a long term recovery of the system and on an individual basis, better be ready for it. If my gloomy outlook proves to be wrong, so much the better. I am still living the life style I want and in the meantime, will continue to prepare for the worst.