WORKING DRAFT #11
Background: Over the past several years the Economics Working
Group has brought together participants holding a variety of
perspectives on the environment and the economy. One outcome has been
a draft of a General Agreement on a New Economy (GANE), posited on
the need for fundamental conversion of the economy away from an
emphasis on growth in GNP and unsustainable consumption toward a
full-employment economy that provides work and builds healthy,
sustainable communities. It is a beginning, not a final answer.
This document is being developed as an evolving vehicle for public dialogue. It has been updated prior to and distributed at a number of national conferences over the past 10 months to get feedback. In the coming year, we hope to engage an even broader constituency in this dialogue. Once there has been sufficient public agreement on the goals, principles and program elements of GANE, there will need to be federal legislation to set the gears in motion.
Problem: The GNP-growth/consumption/competition basis of the present economy generates increasing levels of global production that are environmentally unsustainable. Further, this growth model has not been able to ensure employment for all who want and need it.
Job creation in the United States is being slowed by the cumulative effects of corporate restructuring 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, the increasing use of technology to replace human labor, and the impact of global trade and technological unemployment and decreased employment in the public sector. In the present model, unless rapid growth takes place, increased labor productivity leads to fewer jobs. Yet this model stands largely unchallenged as the basis for the operation of today's market economies that are increasingly linked into a global economy.
While increased labor productivity brings with it the potential for higher wages and a shorter work week, global competition has forced down wages while spurring still more labor productivity. 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 at the same time that Japan and the newer economic "tigers" are increasing their production. This creates an upward spiral of production and consumption that feeds the unsustainable use of natural resources.
If there were international environmental standards for material and energy use requiring that products are durable, repairable, reusable, recyclable and energy efficient, would corporations simply manufacture new needs and produce new products? How, instead, could the productivity of our work force be refocused on creating sustainable communities?
In addition to unsustainable levels of consumption and the need for rapid growth to prevent job loss, the present model also leads to loss of the richness of diverse economic and social structures grounded in other cultural values. We have belatedly learned the value of ecological diversity. Will it be too late when we understand the value of economic and social diversity? Will we be able to devise another basis for robust economic activity that produces needed work not grounded in rampant consumerism?
Any transformation to a sustainable, full employment economy is made more difficult by the inflation fearmongering that raises interest rates, inhibits fiscal policy initiatives, and makes investment funds difficult to obtain, especially for those who are not wealthy. While part of the needed transformation may be implemented through non-market initiatives and generation of local capital, fiscal and monetary policy are still relevant. However, with the globalization of the market economy, Keynesian strategies no longer provide a satisfactory basis for national job creation policies.
Such a transformation is also made difficult by the need for investment funds. Can initiatives that would create such work attract sufficient private investment by yielding competitively high returns? If not, how can the public sector provide them?
A new vision of work and jobs, based on sustainable livelihoods, and a new structural framework are needed, one rooted in safe and rewarding work, the sustainable use of resources, and healthy communities. The bottom line is that communities cannot be sustained unless they can provide a secure, ongoing means of livelihood for all citizens and unless their resource base is protected.
Historical Perspective: The original debate on full employment in 1945-46 raised many of the same questions and solutions as today: a shorter work week at the same wages, work sharing, non-monetary rewards for work sharing, greater structural adjustment funding, and sharing productivity gains on a more equitable basis.
Beyond these similarities, the globalization of business and the urgent requirement for environmental sustainability represent qualitative differences from the situation in 1945. With 700-750 million unemployed people in the world and the U.S. economy no longer relatively isolated as it was after World War II, growing numbers of Americans have become part of the global labor pool.
These changes require that the original full employment concept, which focused on maximizing employment and income through rapid economic growth, be reconceptualized to incorporate environmental sustainability and reflect the reality of globalization. This is the challenge the working draft of GANE seeks to meet by proposing steps that will:
Toward coalition: The process of developing a new economic vision --one that promotes environmental sustainability and useful work with a liveable income --provides a vehicle around which the energy of people from many different communities and constituencies can rally. Implementing elements of such a vision is obviously a very significant challenge, but one that has the potential to unite those who feel the growing threat to their livelihoods and their communities of the present path. It can be successful if it draws together diverse advocates and people from many walks of life. With these considerations in mind, we have developed GANE for the purpose of generating discussion and obtaining feedback on ways to begin creating a new approach to our political economy. We hope you will share your thoughts with us.
I. DECLARATION OF GOALS AND PRINCIPLES
We, the undersigned, in order to reclaim our economy and government
so that they serve our needs and those of future generations in a
sustainable manner, are committed to rebuilding our economy from the
ground up and endorse the goals and principles set out below.
GOALS FOR THE NEW ECONOMY
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:
II. MEASURING PROGRESS TOWARD FULL
EMPLOYMENT AND ENVIRONMENTAL SUSTAINABILITY
Because the GNP/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 a new index that measures sustainable well-being that includes disaggregated components.
A. COMPONENTS OF INDEX
B. USING THE INDICES TO ASSESS THE NATIONAL ECONOMY
Presidential Report. The President should prepare and submit to Congress at the beginning of each session an annual "Report of the President on Sustainable Economic Development and Employment" which sets forth a detailed assessment for the previous fiscal year of progress toward full employment and sustainability, including the following:
C. REGIONAL AND LOCAL INDICES
In order to measure progress at the regional and local levels in a
manner most appropriate to such areas, indices should be developed
locally that reflect the goals established for environmental
sustainability and full employment in these areas. Such indices
should supplement the national index and be reviewed at the national
level in preparing the President's annual report on the economy. An
assessment should be made as to whether any new measures should be
incorporated into the national index.
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III. IMPROVING SUSTAINABLE WELL-BEING THROUGH
COMMUNITY FEDERALISM
Structural changes are required in government institutions and the private sector in order to achieve these goals. Such changes should promote the strategic focus of federal, regional and local activity on achieving full employment, equity and sustainability. They should also ensure full local participation in the process.
It is especially important to ensure that private investments,
especially those made by the largest corporations which control the
major share of America's investment capital, contribute to the
improvement in the index. This should be implemented through
corporate charters tied to corporate, community and regional
sustainability plans as set out in subsection D below.
A structure of "community federalism" in which national, regional and
local planning and program implementation begins at the community
level allows residents to have a direct stake in the operation of
government. At each level, a democratic process needs to be in place.
Criteria including environmental protection, preservation of stable
communities, creation of humane work environments, inclusive public
participation in the planning process and equitable sharing of
benefits should be incorporated into the planning process at all
levels.
A. ESTABLISHMENT OF PROCESS TO ACHIEVE
SUSTAINABLE COMMUNITIES
The first step in moving toward sustainable communities is to develop a shared vision for the sustainable future of the community, building on efforts in Chattanooga and other communities. This process needs to provide all members of the geographic community with an opportunity to speak and be heard. While visioning allows for the free flowing of ideas, it also involves consolidation and selection of primary goals.
During this process, some specific issues should be raised relating to the creation of sustainable communities. These include the following:
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.
Whatever process is adopted, there needs to be a means for prioritizing implementation steps based on the contribution to sustainability and the opportunity for meaningful work by local residents. This may involve establishing local enterprises, creating public employment, undertaking work-related training programs, and providing services to meet unmet needs in the community.
Innovative ways to finance these efforts will be needed. Local venture capital can be redirected toward local projects, as occurred in Chattanooga after their visioning process. Community banks and revolving loan funds can be established using local savings and taxes and philanthropic gifts. The use of local currency for the bartering of labor (LETS and Time Dollars are already implemented in a number of communities) can also play an important role.
Local financing should be supplemented by federal funds allocated on an equitable basis. Such funding should reflect 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.
In the event private initiatives are not sufficient to meet prioritized needs, the community should consider whether it wants to allocate a portion of available investment funds for public institutions capable of providing the services and/or goods.
B. ESTABLISHMENT OF REGIONAL SUSTAINABLE
DEVELOPMENT PROCESS
As each community strives to become sustainable, some of the social and environmental costs of economic activity may fall outside the community, requiring an examination of whether the region as a whole is becoming sustainable. Equally important, the protection of ecological entities such as watersheds, which are not confined to individual communities, needs to be addressed on a regional basis. There are also appropriate regional roles for implementation of sustainable practices.
A regional mechanism is needed to perform the following functions:
Such initiatives should reflect the same goals and special considerations noted in Section III-A. Federal funds should be provided to regional bodies charged with the development and implementation of regional sustainability initiatives that supplement and complement local efforts.
C. THE FEDERAL ROLE IN COMMUNITY
FEDERALISM
While initiatives should be based at the local level, the federal role is essential to the overall success of building a sustainable, equitable, full employment economy. The federal government has three major functions.
One is to remedy ecological and social problems arising from past and ongoing unsustainable activities. This calls for a continuation and expansion of present federal functions, such as the following:
The second function is to assist in the conversion to sustainable economic activities. This includes federal funding of the community and regional efforts described above; setting appropriate standards based on feedback from the local and regional levels; and assessing national progress toward sustainability, equity and full employment.
The third function is to ensure that multinational corporations are not allowed to undermine efforts at building sustainable communities and regions. Existing federal policies should be reviewed and those that encourage such activities should be repealed or revised. Future policies, including tax and investment policies, and negotiation of international agreements should include provisions to prevent such damaging activities.
Federal funds are needed 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.
Federal funds are needed to supplement community investment funds in order to provide an ongoing means of livelihood for all job seekers; 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. Per capita federal funding to local communities should begin with small amounts to allow the local processes to become established without being distorted by the promise of large inflows of funds.
Establishment of Council for a Sustainable, Full Employment Economy and other appropriate bodies
A Council for a Sustainable, Full Employment Economy and other appropriate bodies should be established and given the necessary authority by Congress to carry out federal functions in converting to a sustainable economy in keeping with the local and regional functions described above.
These bodies should be responsible for identification of a consistent program for promoting the goals of the new economy through federal fiscal and monetary policy; research and development priorities; trade and labor policies; resource development and conservation policies; environmental, energy and transportation policies; national security policies; and public investments in natural resource conservation and in fixed and human capital. This program should contribute to the President's budget submission for the next fiscal year and should be reflected in proposed changes to the tax code.
Specifically, the council and other such bodies should perform the following functions:
The Council, in conjunction with other bodies as appropriate, should develop and provide to the President an annual plan which is supportive of local and regional initiatives and reflects the above considerations.
IV. PRIVATE SECTOR
MECHANISMS FOR INCREASING SUSTAINABLE WELL-BEING
Corporations should be held publicly accountable for contributing to
the country's sustainable well-being. All private investments,
especially those by the largest corporations, should contribute to
local and regional efforts to achieve sustainability and full
employment.
1. Corporate charters
a. Accountability. In the U.S., 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. Further, there should be a specific requirement to develop and implement corporate sustainability plans as outlined in Section 2 below.
b. Federal charters. 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 be established to ensure accountability. This should include the rechartering of existing multinational corporations. Federal charters should be subject to a sunset provision which requires periodic rechartering to ensure ongoing public accountability.
c. Enforcement. In the event that a corporation has failed to comply with the terms of its charter, most states provide for judicial review and dissolution of the corporation under specified conditions. For instance, "New York State requires dissolution when a corporation abuses its power or acts 'contrary to the public policy' of the citizenry." (quoted from "Taking Care of Business" by Richard Grossman and Frank Adams.) Once federal chartering is enacted, a grievance process should be established that allows the public to bring lack of compliance to the attention of the federal chartering agency which should have the authority to take appropriate legal action in federal court, including the revocation of the charter.
2. Sustainability and employment plans
All corporations having a significant impact on local and/or regional sustainability should be required to prepare and implement a sustainable production and product design plan that includes the following:
a. Contribution to and conformance with sustainability plans for communities and regions in which the corporation is located, including the provision of enhanced employment opportunities;
b. Steps to
c. Participation in planning for local and regional industrial
ecology zones geared to maximize recycling among industries and
communities, to minimize waste, and to protect and restore ecological
integrity;
d. Implementation of best available pollution-reduction and energy efficiency technologies and specific plans for approaching zero discharge of toxic chemicals and other pollutants and maximizing energy efficiency.
Such plans should be developed jointly by management and trade union or elected worker representatives. There should also be a permanent process in place to provide for worker-management cooperation relating to the implementation of the plans and the provision of sustainable jobs that provide a secure means of livelihood, full benefits at liveable wages, an improved quality of life, and protection of the local and global environment. Such plans and reports on their implementation should be reviewed by designated public bodies.
3. Public subsidies of corporate activities
a. Local. A local public subsidy of private corporate activity should be treated as an agreement between the community and the corporation which provides economic development and employment in return for the subsidy. If a business has benefited from special tax waivers and/or specific public infrastructure improvements such as roads and sewers and fails to abide by the agreement (e.g., relocating its operations before an agreed upon period has expired), it should repay the entire subsidy along with an appropriate penalty.
b. State and Federal. Any public subsidy of economic activities in the private sector should be premised on a clearly defined social purpose and should be evaluated by whether the subsidy is necessary to increase the index.
V. IMPROVING SUSTAINABLE WELL-BEING THROUGH
FULL EMPLOYMENT
A. GENERAL PRINCIPLES
To the maximum extent possible, full employment should be achieved within the private and non-profit sectors through work that improves sustainable well-being. Any shortfall in such work opportunities should be met by the public sector and should be part of the federal, state or local budget. However, policies must be in place that will ensure that the public sector is not being forced to substitute for the loss of private sector jobs when private investments are shifted to locations with unsustainable economies due to cheap labor and/or weak environmental regulations.
As a general rule, full employment should be ensured through permanent employment in the private and non-profit sectors and public institutions; however, temporary public sector employment should also be used to provide counter-cyclical employment or to deal with other temporary conditions such as plant closings.
B. CREATION OF HEALTHY COMMUNITIES
The index will be significantly increased by creating work that enhances educational opportunities, public safety, child and elder care, family stability, public health, community diversity and creative expression.
C. JOB AND COOPERATIVE WORK TRAINING
In order to ensure full employment and increase the index, job and cooperative work training programs are needed so workers can fill jobs or establish cooperative workplaces to meet identified needs. Further, to increase economic equity, employment opportunities and related training must be made fully available to women, minorities, youth and older residents.
D. PROVISION FOR THOSE UNABLE TO WORK
Any job-seeker who is unable to perform satisfactorily in a normal work environment, as defined in the Americans With Disabilities Act, should be offered employment in a sheltered workshop or other special employment program that addresses the job-seeker's particular incapacity. Whenever possible, the goal of such sheltered workshop or other special employment program should be to prepare the job-seeker to function in a normal work environment. Such programs should be established in local communities with technical and financial assistance from the regional and federal levels.
E. INCOME MAINTENANCE
An income maintenance program that provides income at a level comparable to moderate wage levels is needed for those who are unable to work or who are providing unpaid services (e.g., homebound child care) which increase the index more effectively than such work paid for within the market.
F. CHANGES IN HOURS WORKED
There should be an examination of ways to better distribute work in the economy and to make available time for non-market work activities. The following approaches should be considered as a basis for federal policy:
G. RETENTION OF INVESTMENT CAPITAL AND STRATEGIC DEVELOPMENT OF
WORK OPPORTUNITIES THAT CONTRIBUTE TO SUSTAINABLE WELL-BEING
Existing laws and regulations that encourage relocation of jobs to other countries and export of capital should be repealed or revised. At the same time, policies need to be developed that encourage investment in products and services that enhance local employment and resource use and contribute to sustainable well-being.
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VI. FUNDING CONVERSION TO A
FULL EMPLOYMENT SUSTAINABLE ECONOMY
A. SUSTAINABILITY LOAN FUNDS
A network of local and regional public 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; however,in order to strengthen communities, pooling of local funds in community-owned revolving loan funds should be encouraged so that such funds can be reused within the community. Banks, through the Community Reinvestment Act, can also contribute to local funds. such funds can be supplemented by the federal per capita payments to communities.
Regional loan funds should be developed for more capital intensive and/or regionally appropriate endeavors. The Community Reinvestment Act should be expanded to include mutual stock and bond funds and other financial instruments, with revenues going to regional funds.
A combination of investment incentives and public regulation should is needed to encourage additional private investments.
Other federally funded loan funds, such as the microloan programs under Housing and Urban Development (HUD) and the Small Business Administration in the Department of Commerce, should be operated in conformance with local and regional plans.
Both private and public sector pension funds should be invested in local and regional sustainability loan funds.
B. FEDERAL BUDGET
The President's annual federal budget should be designed to achieve the goals and carry out the policies set forth above and to overcome market failures.
1. Use of federal funds
a. Supplemental federal funds should be provided to the appropriate community and regional entities charged with the development and implementation of local and regional sustainability plans. Such funds should be allocated on an equitable, per capita basis, with adjustment for income, unemployment and underemployment within the area and for differences in local resources and severity of environmental and social problems.
b. The federal government should also assist in funding the creation of a sustainable infrastructure, with such expenditures accounted for in a capital budget. This includes support for a transportation system for goods and people using non-polluting, primarily renewable, fuels and water supply and sewage systems.
c. Federal funds should be provided to ensure full employment, income maintenance and provision for those unable to work as set forth in Section IV-D above.
d. Research and development funding should be targeted to further the creation of sustainable approaches to the provision of goods and services, where there are significant gaps between what is theoretically achievable and what is available. Product and service development resulting from such R&D should not be subject to intellectual property rights. Special attention should be paid to the following:
2. Sources of federal funds
a. Decrease in defense spending. With the end of the Cold War and the profound change in the international security environment, substantial additional reductions (on the order of $100 billion) in U.S. defense spending can be achieved and should be used to promote the goals of this program through public investment initiatives, rather than being used for further deficit reduction.
b. Decreases in social welfare costs. The achievement of full employment with liveable wages will generate additional tax dollars and will free up additional billions of dollars now spent for income assistance, housing and food subsidies, and for costs related to social disintegration (e.g., incarceration). It is essential that employment has to come before cuts in social welfare programs.
c. 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 elimination of public subsidies for the unsustainable use of private resources.
3. Capital investment accounting
To achieve an expansion of public investment in sustainable infrastructure and overcome resistance to such investments created by the existing fiscal deficit, federal budget accounting procedures should distinguish between capital investments that contribute to a future revenue stream and other expenditures.
C. TAX POLICIES
As a general principle, pollution, unsustainable consumption and natural resource depletion should be taxed as an alternative to relying primarily on 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. A progressive capital gains tax should be used to shift a portion of investment funds from the global marketplace to local communities through the per capita community payments and use of community revolving loan funds.
Among specific tax changes that need to be considered are the following:
VII. INTERNATIONAL LABOR, SOCIAL AND
ENVIRONMENTAL STANDARDS
Given the reality of the global economy where investments can be made wherever labor and environmental protection costs are lowest, the goals of GANE cannot be fully achieved without action taken at the transnational 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.
The federal government should develop a set of minimum environmental standards that would be incorporated into all international agreements and would promote the harmonization of environmental regulations on an international basis. These standards should encourage the development of safe and environmentally sustainable production practices.
Alternative language to consider is as follows:
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 creative thinking about our shared future. For more information or to share your perspectives, we can be reached at:
General Agreement on a New Economy/Project of the Alliance for Democracy
www.thealliancefordemocracy.org
National Office 781-894-1179
Project Office 202-244-0561
GANE contact: ruthcaplan@thealliancefordemocracy.org