Wealth and Want
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Peter Barnes: Capitalism 3.0 — Chapter 1: Time to Upgrade (pages 3-14)

What’s more, many negative externalities aren’t even the result of meeting genuine human needs. The word thneed doesn’t appear in any economics text, but it’s symbolic of our modern predicament. The word was coined by Theodor Geisel — better known as Dr. Seuss — in his children’s fable The Lorax. A thneed is a thing we want but don’t really need. As many parents will recall, The Lorax pits a dynamic entrepreneur (the Once-ler) against a pesky Lorax who “speaks for the trees.” The Once-ler makes thneeds by cutting down truffula trees. When the Lorax protests, the Once-ler replies:

I’m being quite useful. This thing is a Thneed.
A Thneed’s a Fine-Something-That-All-People-Need!

Economists have no technical term for thneed; they assume that all “demand” in the economy is equivalent, as long as it’s backed with money. Yet surely it would be helpful to differentiate. One can imagine an axis running from needs to thneeds. On one end are such things as food, shelter, basic transportation, and health care. On the other end are Coca-Cola, iPods, and Hummers. (Significantly, needs are generic, while thneeds are typically branded.) Filling needs contributes more to human well-being than does selling thneeds, yet our economic system increasingly devotes scarce resources to thneeds.

Why do we have so much illth and so many thneeds? Because our economic operating system is far out of balance. On one side, representing owners of capital, are powerful profit-maximizing corporations. On the other side, representing future generations, nonhuman species, and millions of humans with unmet needs, are — almost nothing. The system lacks institutions that preserve shared inheritances, charge corporations for degrading nature, or boost the “demanding” power of people whose basic needs are ignored. Hence the system generates ever more illth, waste, and ever-widening disparities between rich and poor. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 2: A Short History of Capitalism (pages 15-32)

Why isn’t economic growth making us happier? There are many possibilities, and they’re additive rather than exclusive.

  • One is that, once material needs are met, happiness is based on comparative rather than absolute conditions. If your neighbors have bigger houses than you do, the fact that yours is smaller diminishes your happiness, even though your house by itself meets your needs. In the same way, more income wouldn’t make you happier if other people got even more. That’s why an affluent country can get richer without its citizens getting happier.
  • A second reason is that surplus capitalism foments anxiety. Millions live one paycheck, or one illness, away from disaster. When disaster strikes, the safety nets beneath them are thin. And everyone sees jobs vanishing as capital scours the planet for cheap labor.
  • Another reason is that surplus capitalism speeds up life and creates great stress. Humans didn’t evolve to multitask, sit in traffic jams, or work, shop, and pay bills 24/7. We need rest, relaxation, and time for companionship and creativity. Surplus capitalism can’t give us enough of those things.
  • Similarly, its nonstop marketing message — you’re no good without Brand X — breeds the opposites of gratitude and contentment, two widely acknowledged precursors of happiness. According to the Union of Concerned Scientists, the average American encounters about three thousand such messages each day. No wonder we experience envy, greed, and dissatisfaction. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 5: Reinventing the Commons (pages 65-78)

Thus far I’ve argued that Capitalism 2.0 — or surplus capitalism — has three tragic flaws: it devours nature, widens inequality, and fails to make us happier in the end. It behaves this way because it’s programmed to do so. It must make thneeds, reward property owners disproportionately, and distract us from truer paths to happiness because its algorithms direct it to do so. Neither enlightened managers nor the occasional zealous regulator can make it behave much differently. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 8: Sharing Culture (pages 117-134)

Mind-time is precious to me. I resent it when random outsiders, trying to sell thneeds, get inside my brain. I resent it even more when they get inside my children’s brains. What they claim is free speech, I experience as mental trespassing, and so do millions of others. As Kalle Lasn has written, “Our mental environment is a commons like air or water. We need to protect it from unwanted incursions.”

Advertising — and by this I mean all forms of commercial attention-seeking — is part of the dark side of surplus capitalism. (I say this as one who, during my own career, modestly added to the din.) It’s one of those borderline activities that’s necessary, or at least acceptable, in moderation, but becomes dangerous when it spirals out of control. The trouble is that advertising escalates inexorably. Every new product needs to announce itself. Moreover, the greater the ambient noise, the more each ad has to shout in order to be heard. If anything is a “tragedy of the commons,” this is it (though here, again, the commons is victim, not cause).

Here are a few statistics that confirm what everyone knows. Children in America see, on average, one hundred thousand television ads by age five; before they die they’ll see another two million. In 2002, marketers unleashed eighty-seven billion pieces of junk mail, fifty-one billion telemarketing calls, and eighty-four billion pieces of email spam. In 2004, a Yankelovich poll found that 65 percent of Americans “feel constantly bombarded with too much advertising and marketing.”

Advertising isn’t just an occasional trespass of one person against another; it’s a continuous trespass of relatively few corporations (the one hundred or so that do the most advertising) against all the rest of us. These companies want to — indeed have to — increase their sales, and for this they need access to our minds. But mind-time is a scarce resource. We have only so many hours of it a day, and so many days in our lives. Because of this scarcity, every neuro-minute occupied by an ad is one less neuro-minute available for our own thoughts and feelings. Every ad thus has an opportunity cost, a cost we experience but advertisers don’t pay.

Ads also have other side effects. They bias us to high-priced branded products, to junk foods rather than healthy foods, and to spending rather than saving. They diminish our self-esteem by suggesting that we never have enough or look good enough. And ultimately, they diminish our natural wealth by increasing pollution and depleting resources.

As individuals, we can do a few things to protect ourselves against ads: we can turn off our television, delete email spam, and toss junk mail in the recycling bin. But that doesn’t dampen the collective noise, or do much to reduce the external costs of ads. To do that we need economy-wide volume controls.

At present, there are no such controls. Though the airwaves belong to the people, no public agency limits TV advertising time. Until 1982, the major networks adhered to a voluntary code limiting ads to 9.5 minutes per hour in prime time. Then, profit maximizing took over, and the networks dropped their code. Today, a typical “one-hour” prime-time show has about forty-two minutes of content and eighteen minutes of ads and promotions, nearly twice the advertising intensity of two decades ago.

What if we managed advertising as we manage, or could manage, physical pollution? If corporations want to pollute our minds, they’d have to pay for the right to do so. As with physical pollution, the transactions could be brokered by a trust. This guardian of our inner commons would set caps on total trespasses and sell tradeable advertising permits to corporations. Our psychic costs would then show up as advertisers’ monetary costs. There’d be less advertising, more peace of mind, and if we so earmarked the revenue, more money for commercial-free broadcasting and the arts.

An advertising cap-and-trade system could have another benefit as well. At present, there’s only one macroeconomic valve for regulating the pace of economic activity: the Fed’s handle on money. If the economy is too hot, the Fed raises interest rates; if it’s too cool, the Fed lowers them. The trouble with this valve is that it has unpleasant side effects. When interest rates go up, so do credit card bills and mortgages, and millions of households suffer. But if we dampened an overheated economy by lowering the volume of advertising, we’d get the benefits of higher interest rates without the pain. In fact, households might save money by buying less. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 10: What You Can Do (pages 155-166)

What’s also nice about the new operating system is that, once installed, it can’t be easily removed. That’s because it relies on property rights rather than government programs that are subject to political ebb and flow. If you have any doubt about this, consider the staying power of Social Security and the Alaska Permanent Fund, both of which distribute periodic payments that have attained the status of property rights. Social Security is over seventy years old and has never been cut once; in 2005, it survived a privatization campaign led by President Bush. Similarly, the Alaska Permanent Fund, now more than twenty-five years old, repelled an attempt in 1999 to divert part of its income to the state treasury.

This third version of capitalism is a logical successor to the first two. In Capitalism 1.0 we had a shortage of goods, in Capitalism 2.0 a surplus. In Capitalism 3.0 we’ll have plenty, but not too much. We’ll have more things we truly need — healthier ecosystems, communities, culture — and fewer thneeds. We’ll have a proper balance between our “me” and our “we” sides. We’ll be more connected and less isolated, more secure and less stressed. Overall, I’d venture, we’ll be happier.

We’ll have some new traffic rules on this road. Rights now enjoyed exclusively by private capital will be matched, or even trumped, by rights held in trust for future generations. Similarly, the ability of private wealth owners to receive income and inheritances will be matched by the ability of everyone to receive them. And risks we now face individually, such as illness, will be tempered by shared risk pools that exclude no one.

The biggest change will be in the third algorithm I described in chapter 4: the price of nature will no longer be zero. Instead, the price of nature — or at least, of the scarcest and most endangered parts of nature — will gradually rise. This will compel corporations (and consumers) to internalize many of the costs they now externalize.

This, in turn, will drive them to invest and consume in ways that, over time, do less harm to nature. Businesses will invest in clean and renewable energy technologies. Farmers will use fewer chemicals, and local food will outcompete food grown far away. Consumers will shift from driving alone in gas-guzzlers to more convivial forms of transport and less dashing about. Housing will move from sprawling suburbs to small towns and tall cities. ... read the whole chapter



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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper