Economic recovery: Stimulus? or Austerity? How about neither?

This is a video, "300 years of fossil fuels in 300 seconds," produced by the Post-Carbon Institute.  It  summarizes the views of Richard Heinberg whose books, including a new one Beyond Growth: Adapting to Our New Economic Reality, argue the position in full. 

Unfortunately, so far at least, the mass media outlets in America have pretty much ignored the book and its lessons.  Not even a polite NPR feature has bothered to stir the pot.   From the standpoint of conventional economics, mainstream journalists and our political elites, Heinberg's down-to-earth reasoning about a planet in crisis are simply beyond the pale, justifiably excluded from today's "serious" debates about "economic recovery." 

Below is a segment from a recent interview, "How to Talk About the End Growth,"  in which Heinberg lays out the differences between his point of view and those of proponents of economic stimulus (mainly Democrats) and debt obsessed austerity (mainly Republicans).   While I'm  sympathetic to his arguments and conclusions, I do think he ignores a crucially important feature of our current predicament.  I'll explain that briefly at the end. 

He comments:  "Either you’re a political liberal and you think that more stimulus spending will get us back to job creation and consumer spending. Or you’re a conservative and you think the problem is too much debt  — government debt — and all we need to do is cut down on government spending and private enterprise will kick into gear and create more jobs and get the economy back in its traditional growth mode.

 

"I’m saying both of those arguments are wrong.

 

"And I think it’s really important that that point of view be out there. Because if all we have are these two failed options — and they have failed; you know, we tried the stimulus and it produced anemic and transitory results.

 

"And countries around the world are trying austerity packages and that’s not producing economic growth. It’s doing just the opposite. It’s causing economic activity to shrink for pretty obvious reasons. It’s causing people to lose their jobs and it’s just contracting economic activity altogether because the government’s basically the main game in town in most countries right now. ....

 

"So both of those prescriptions have failed. And they’ve failed for a reason. I explain why in the book. It’s not because these aren’t good people or smart people. It’s because we have been relying on a fundamentally flawed paradigm: the paradigm of continuous economic growth on a finite planet with limited resources. The limits to those resources are catching up with us, very rapidly actually. And that means that there’s no more growth available in consumption of energy and goods.

 

"So if we’re going to have economies that still support people, economies that don’t crash and collapse, then we’re going to have to start thinking very differently about how we organize our economies, and how we support people in what are inevitably going to be some pretty hard times."

 

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In both his book and the interview, Heinberg argues forcefully for a vision of economic possibilities beyond the orthodoxies growth, drawing upon conceptions of a steady-state economy adapted from Herman Daly and other thinkers.  He notes that recently there has support for these notions from a number writers.  " Paul Gilding, former head of  Greenpeace has just written a book called The Great Disruption. He’s coming to exactly the same conclusion from the standpoint of somebody who’s really, really at the core of the environmental movements .....Then you have Jeremy Grantham who founded one of the world’s largest investment funds. And he’s come to basically the same conclusion from his point of view."

 

I  applaud Heinberg for the brilliance of his writing and for the solid evidence he marshals to buttress his case.  What's missing here, however, is any hint of awareness of another dimension of the the economic, political, energy, and environmental mess in which we find ourselves  -- growing INEQUALTY and widening gaps of wealth and power within the world's population.  As Heinberg talks about the transition to a new economy -- local, far less resource demanding, more satisfying in it human relationships, etc. -- he leaves out the part of the story that includes what has actually happened to the dream of prosperity for all, namely, that beginning in the late 1970s (following the energy crises of that decade) those with a privileged overview (e.g., MBA globalist hot shots) settled on a particular proposition:  "Get yours while the getting's good, because the getting ain't going to be good much longer."  

 

Hence, during the past three decades we've seen the rapid, massive transfer of wealth, nationally and globally, from the lower and middle layers of the economy to the very top. I don't know why Heinberg takes little if any notice of the increasing inequality, plutocracy and landscape of "gated communities" that characterizes the early 21st century.  For readers looking for a more balanced understanding, a  good complement is the poignant essay by late Tony Judt's Ill Fare the Land that faces the situation head on.  For all their clarity and courage, Heinberg's reflections on the drastic transitions ahead seem to overlook the ugly ones carefully planned during the past several decades.