2013-05-20 – I just read a book called Sacred Economics: Money, Gift, and Society in the Age of Transition by Charles Eisenstein. It was recommended to me by my friend and fellow eightoh9er John Florance.
I have a tough time with econ books. The science of economics is based on an assumption that goods and services are scarce, but the one thing in the world that is not scarce is gibberish. Most economics writers take ample advantage of this. Where one word would suffice, economics writers go on and on and on. So it is a tribute to Eisenstein that I stuck with his book. No, he doesn’t eschew gibberish (and it’s not just econ gibberish, it also includes new agey gibberish), but he’s not too bad.
The thing that makes this book a worthwhile read are the issues he brings up. He takes on the conventional wisdom that growth should be the foundation of our economy. In a world of scarce resources, growth has to come to an end at some point. He thinks we have reached that point. I’m not sure I agree, but I believe that it is prudent—even conservative—to recognize the limits of growth before we get there and not wait for the catastrophe.
The problem is, the deck is stacked very much toward growth. Our financial and tax systems promote overproduction, wastefulness, hoarding, class warfare, destruction of communities, and destruction of the environment.
Does it sound Marxist? Well he denies it. He claims that a transition to a better way will come about without coercion through a variety of measures that will naturally emerge as society copes with difficulties like the recent financial crisis.
Some of his measures are obscure. He talks about interest charged on debt as being the compulsion for growth. He advocates a regime of negative interest on risk-free investment. As a related measure, he advocates a type of money that declines in value over time. This is supposed to discourage hoarding and vast concentration of wealth. My question is: how do you bring this about? We’ve seen interest rates at nearly zero, even slightly below, but I don’t see this happening as a long-term thing. But it’s an interesting idea and I’m open to hearing more about it.
He talks about the money supply, as currently constituted, as being implicitly backed by the drive toward growth. This is a consequence of money creation always being offset by an interest-bearing debt, meaning that debt is always greater than the money supply. Is this true? I don’t know. He says that this drive towards growth was fine for a while, but ultimately reaches a limit. He advocates backing our money with the pristine and unspoiled resources of the earth. How? If he explained this, I didn’t get it.
But this discussion talked about how many businesses over exploit resources because they are either free or someone else pays. This is called externalization of costs. He believes these costs should be internalized through taxes and fees—rather than through regulation. Would this fly politically? Not in this world. He believes that adopting such a tax system would enable us to entirely drop the income tax and even pay a dividend to the citizens instead.
Would it work? Who knows? I’m not sure it needs to work to make the book worthwhile. It’s part of the discussion. It doesn’t call anyone names. It’s not shrill. It makes you think.