GANE: A General Agreement on a New Economy
For Full Employment, Equity and Environmental Sustainability
Summary of Working Paper
The flow chart illustrates a process we call community federalism which looks at community, regional and federal functions and how they might relate to each other.
Within the community, work is linked with the needs of the community. Once a community has developed its own vision, it will realize what it needs as a community. This becomes the basis for what has real value locally and for identifying what work will be meaningful in the local context. The flow chart indicates some general categories of desired outcomes. When work helps create a healthy and vibrant community, there is less need to spend money on social costs such as security guards and jails or on the environmental costs of cleaning up pollution.
The green feedback loops show sources of local capital, both time and money. As the community becomes more sustainable, it preserves its natural resources which are a form of local capital; and as the community becomes more healthy, it has more valuable human resources which are also a form of local capital. Federal funds supplement locally generated funds to help communities create opportunities for work that will allow them to realize their community vision. This also increases equity between communities.
There has been much advocacy of sustainable or self-reliant communities. Yet no community has all the natural resources it needs to sustain itself in today's world. Regional and federal functions need to support the functioning of local communities. This is why the flow chart shows the black feedback arrows. The chart also indicates some functions at the regional and federal levels which are discussed further in the GANE summary and full text.
For further discussion of community, local capital, meaningful work and federal functions click on the flow chart.
Problem: The GNP-growth/consumption-driven basis of the present economy generates increasing levels of global production that are environmentally unsustainable. This means we are not replenishing the natural resources we use so future generations will also be able to meet their needs.
Nor has this growth approach been able to ensure employment for all who want and need it. Job creation and maintenance of a decent standard of living in the United States are being hindered by the cumulative effects of corporate downsizing and large-scale layoffs, the increased reliance on temporary and contract workers to replace permanent workers, the transfer of production overseas in both the manufacturing and service sectors and the increasing use of technology to replace human labor.
We are told that things will get better if the GNP or GDP (Gross Domestic Product) keeps growing and if the country becomes more productive. The GDP measures the value of all the goods and services produced in this country. Productivity usually refers to labor productivity which means workers are expected to produce more goods or services in less time. When workers are constantly expected to increase their productivity, this will lead to less jobs unless growth in consumption takes place.
Under this system, the U.S. must increase its market share of existing products or market new products through successful competition in the global marketplace. Yet Japan, the newer economic "tigers" and now China are also increasing their production. This creates an upward spiral of production and consumption that feeds the unsustainable use of natural resources. We are bombarded with advertisements for many things we don't really need or want after we buy them. Continued consumption is driven by "planned obsolescence" and "manufactured needs."
How, instead, could the productivity of our work force be refocused to create places where we will want to live with our families? What if the goal of the economy was to increase ecological productivity which would maximize the value created with a minimum of natural resource consumption or pollution? What if we measured the economy by the Gross Nurturing Product or the Index of Sustainable Well-Being?
A new vision for the economy and a new structural framework for economic activity are needed, rooted in safe and rewarding work, the sustainable use of resources and healthy communities.
Historical Perspective: The globalization of business and the urgent requirement for environmental sustainability represent qualitative differences from 1945-46 when the first full employment act was debated and passed by Congress. Today the U.S. economy is no longer relatively isolated as it was after World War II. Growing numbers of Americans have become part of the global labor pool where an estimated 750 million people worldwide are looking for work. In the post WWII period, the search for miracle chemicals went forward without an understanding of their long-term environmental hazards. Nor were global warming, ozone depletion and other global environmental problems understood.
These changes require that the original full employment concept, which focused on maximizing employment and income through rapid economic growth, be updated to incorporate sustainability and reflect the reality of globalization.
Looking ahead: These are the challenges GANE seeks to address as it evolves through public debate. We need a people's agreement grounded in the right of all people to earn a living wage and be treated with respect, and in a commitment to protect our natural resources for future generations.
To achieve these goals --
Clearly defined local, regional, and national public functions are needed that will assist the market economy through democratic processes, regulatory mechanisms and provision of public funding. More specifically, all levels of government need to take actions that will accomplish the following:
Because the GNP and GDP only measure total economic activity, they do not reflect the changes in well-being of the population or the impact on the environment. They should be replaced by new indices that measure sustainable well-being that includes the following disaggregated components:
The indices should provide the basis for an annual "Report of the President to Congress on Sustainable Economic Development and Employment." This report should provide a detailed assessment of progress toward full employment and environmental sustainability and a plan for improving the indices in the next fiscal year.
Local and regional indices should also be developed locally to reflect goals established for environmental sustainability, equity and full employment in these areas. Such indices should supplement the national indices and be reviewed at the national level to assess whether new measures should be incorporated in the national indices.
New directions are required in the operation of our political system, in the ways we, as citizens, hold government and corporations accountable to the public and in the participation by workers in decisions affecting the work they do. These include the following:
Establishment of a process to achieve sustainable communities
A first step in moving toward community federalism is to develop a process for achieving a shared vision for the future of each community in keeping with the goals of the new economy. This process needs to provide all members of each geographic community with an opportunity to speak and be heard. By working with the private and public sectors to develop and realize their local vision, residents can then develop specific plans and projects to achieve full employment, meet identified needs and make their area sustainable.
To implement the vision, a democratic process that fairly represents all sectors of the community should be established to translate the vision into local sustainability and employment initiatives and to guide their implementation with ongoing full public participation.
Financing mechanisms can include locally generated funds through savings, local taxes, local venture capital and philanthropy. Many communities are also using "time dollars" for exchange of labor and local exchange currency (LETS) so goods and services can be exchanged without reliance on the global currency system. Local financing should be supplemented by federal funds allocated on an equitable basis. Such funding should reflect the severity of local problems, including unemployment and underemployment, differences in available natural resources and environmental degradation. In this way, federal taxes can actually help people create the kind of community they want.
Establishment of a regional sustainable development process
As each community strives to become sustainable, some social and environmental costs of economic activity may fall outside the community. Is the whole region becoming sustainable? Regional functions include:
Federal funds should be provided to regional bodies charged with the development and implementation of regional sustainability initiatives that supplement and complement local efforts.
Federal role is essential to process
While initiatives should be based at the local level, the federal role is essential to the overall success of building a sustainable, full employment economy. The federal government has three major functions.
Federal funds are needed to supplement community investment funds in order to provide an ongoing means of livelihood for all job seekers; to ensure regions have sufficient resources to carry out their functions; to provide income and services for those unable to work; to help create a sustainable infrastructure, with expenditures accounted for in a capital budget; and to pursue research and development of sustainable approaches to the provision of goods and services.
Corporations should be held publicly accountable for contributing to the country's sustainable well-being. All private investments, especially those by the largest corporations which control a major share of America's investment capital, should contribute to local and regional efforts to achieve sustainability and full employment.
Corporate charters were originally granted by states under strict control of state legislatures with limited duration and clear public purpose. Today, the public purpose of contributing to a sustainable economy should be included in all corporate charters. Specifically, corporate charters should require corporations to operate in conformance with sustainable practices and community sustainability plans.
Since multinational corporations are chartered in one state but conduct much of their corporate activity in other states and nations, a federal chartering process should replace state chartering to ensure accountability, including the rechartering of existing multinational corporations. Federal charters should be subject to a sunset provision which requires periodic rechartering to ensure ongoing public accountability.
Sustainability and employment
All corporations should be required to contribute to the sustainability of the communities and regions where they are located through their use of natural resources and labor practices
Corporations having a significant impact should be required to prepare and implement sustainability and employment strategies. Such strategies should be developed jointly by management and elected worker representatives. There should also be an ongoing process in place to provide for worker-management cooperation relating to the implementation of the strategies.
Changes in federal budget
Decrease in defense spending. With the end of the Cold War and the profound change in the international security environment, annual reductions of about $100 billion in U.S. defense spending can be achieved and used for sustainable public investments.
Decreases in social welfare costs. The achievement of full employment, defined as an ongoing means of livelihood for all job seekers, will generate additional tax dollars and free up billions of dollars now spent for income assistance, housing and food subsidies, and for costs related to social disintegration such as the building of jails.
Increased revenues from public resources. Additional revenue should be obtained via full-cost pricing of publicly owned natural resources that are leased or sold and the elimination of public subsidies for the unsustainable use of private resources.
Private sector funding. A combination of investment incentives and public regulation should be put in place to maximize private investments that contribute to building a sustainable future with full employment. For instance, the Community Reinvestment Act should be expanded to include mutual stock and bond funds and other financial instruments, with revenues going to regional sustainable development funds.
Tax policies. As a general principle, pollution, unsustainable consumption and natural resource depletion should be taxed rather than relying on the taxation of human resources in the form of work, e.g., the payroll tax. Compensating policies need to be in place to ensure that the net effect of federal tax policy is progressive.
Tax policies are also needed to refocus investments of U.S. residents from the global market place to sustainable domestic enterprises. Such policies could include taxation of international financial transactions and of capital gains on international investments.
Pension funds. A federally backed mechanism should be in place to allow private and public sector pension funds to be invested in sustainability efforts at the local and regional levels.
Sustainability loan funds. A network of local and regional sustainable loan funds should provide funding for the implementation of local and regional plans. Capitalization for these banks should come from both public funds and private sector funding.
Trade should enhance opportunities for useful work, improve residents' well-being and promote environmental sustainability in all communities engaging in trade of goods and services between regions and countries.
Given the reality of the global economy where investments can be made wherever labor and environmental protection costs are lowest, these goals cannot be fully achieved without action taken at the international level.
International agreements should protect the right of workers to associate freely, organize, bargain collectively, strike, and work in a healthy and safe environment with full disclosure of occupational hazards and exposures. They should also allow countries to refuse to import products not manufactured in compliance with minimum national environmental standards for safe and sustainable production practices in effect in the importing country.
The U.S. government should take the lead in creating a United Nations Code of Conduct for Transnational Corporations. Such a code should be adopted by state and federal governments in their provisions for the chartering of corporations and by local governments to prevent destructive bidding wars between localities as they seek new corporate investments.
Through ongoing dialogue with groups and individuals around the country, GANE will continue to evolve. We hope this will stimulate your creative thinking about our shared future. For more information or to share your comments and ideas, click here.
General Agreement on a New Economy/Project of the Alliance for Democracy
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