lft-arrow

Thursday December 18th 2014

40 years of foresight, insight and integrity

rght-arrow

Categories

Interesting Sites

Insider

Archives

Obama’s Challenge: Review by Hazel Henderson warning of the financial crisis challenging both presidential candidates

Obama’s ChallengeChelsea Green, 2008
By Hazel Henderson, author, Ethical Markets: Growing The Green Economy, Chelsea Green, 2006
Order at Amazon — discount code RGVTUIQY

Robert Kuttner has performed a service in Obama’s Challenge by bringing to the Democratic nominee’s attention the pitfalls to be faced by the next Administration. The USA is facing a profound transition in today’s global economy. Our citizens must adjust to the diminished role the US plays, economically, militarily and in its influence. While adapting to this new global reality and the rise of China, India, Brazil, Russia and other nations, the next US President must deal with the severest financial crisis since the Great Depression and the urgent need to shift our economy from fossil fuels to clean, renewable energy.
Kuttner lays out these festering issues: from ending the Iraq occupation to affordable housing, healthcare and education to re-negotiating trade agreements. Using historical contexts from earlier Presidencies, from Lincoln, FD Roosevelt to Kennedy, Reagan, Carter and Clinton, Kuttner emphasizes the role of leadership when bold new courses were necessary for the country. Many, including myself, have the audacity to hope that Barack Obama will become our 44th President an will rise to the huge challenge of changing course toward a new page in US history.

Like Robert Kuttner, I believe that dealing with the underlying ideology of “market fundamentalism” so deeply ingrained in US academia, business, government and civic society will be primary. This “laissez faire” ideology, still prevalent in economic textbooks, has been the guidance for business and finance and embraced by neo-conservatives and Republicans since Ronald Reagan and his economic advisor, the late Milton Friedman and his “Chicago Boys.” Their goal has been to dismantle the New Deal and impose their “Washington Consensus” model globally in crusades here and aboard to de-regulate markets, privatize public assets, impose “free” trade, open capital markets, float currencies and make the world safe for corporations and financial players.

Luckily for Obama, the collapse of Wall Street titans and the exposure of their reckless practices, faulty risk-analyses, over-leveraging, short-selling (often “naked,” i.e., without bothering to actually borrow or buy the stock they were selling short), have punctured the myths of “efficient markets” and showed again the limits of greed, avarice and other of the seven deadly sins many religions teach against .Meanwhile, neuroscientists ‘ research on the human brain and limbic system has invalidated the core tenet of economic theory : that we are all rational actors , maximizing our self-interest in competition with all others.

Kuttner brings his knowledge of such market failures to bear by outlining a plan of action and reform needed to halt the rot and restore the US economy. All of Kuttner’s proposals are viable, affordable and essential. He also performs a service by identifying many of the former economic advisers to the Clinton Administration, including Robert Rubin and others from Brookings and the Urban Institute whose counsel should be avoided. I would add Laurence Summers, Paul Volker and David Walker, whose ideas are still entrapped in the conventional economics box. I also worry about Obama’s younger economic advisors who have also imbibed the conventional economics Kool-Aid: Austan Goolsbee from the University of Chicago (which has just launched the new Milton Friedman Institute) and Jason Furman, who directed Robert Rubin’s Hamilton Project’s assault on “entitlements” at Brookings.

Not only are such economists suspect, but the entire discipline of economics must be exposed as “politics in disguise.” I have documented how economics, never a science, captured both private and public decision-making (Henderson, Building a Win-Win World , 1996) and how the Bank of Sweden lobbied the Nobel Committee in the 1960s with a new $1 million award to confer the economic discipline with scientific robes: the Bank of Sweden Prize in Economic Science in Memory of Alfred Nobel. Many real Nobelists, as well as Peter Nobel and other critics, including Nassim N. Taleb, author of The Black Swan

, 2007, have joined in exposing that this prize is not a Nobel Prize (see www.hazelhenderson.com).

Economic policies are much too important to be left to economists. In our complex modern societies, we must move to multi-disciplinary systems approaches for most of the issues we face. Putting economists in their place as one voice in such multi-disciplinary approaches will allow other relevant disciplines and scientific data and new indexes of well-being to be acknowledged.

I was present at the signing of Agenda 21 in Rio de Janeiro in 1992 where over 170 countries agreed to overhaul their GDP accounting. I presented at the European Parliament’s “Taking Nature into Account” conference in 1995. I created the Calvert-Henderson Quality of Life Indicators with the Calvert Group in 2000 (updated regularly at www.calvert-henderson.com). I was honored to present these indicators at the Parliament of Latin America, EUROSTAT and many other venues in China, Japan, Australia, and in Brazil at the ICONS conference where 700 business leaders and statisticians endorsed the many new “quality of life” metrics needed in national accounts (“Statisticians of the World Unite!” at www.hazelhenderson.com, click on Editorials).

I would hope that Kuttner agrees with me that Obama must go beyond economics and embrace broader systemic analyses, including the “triple bottom line“ accounting for corporate social and environmental as well as economic performance. There is much progress in displacing economics from its dominance of public policy. In 2007, I co-organized the “Beyond GDP” debate in the European Parliament where another 700 members of parliament and statisticians endorsed all these same corrections to GDP. Globescan of London and Ethical Markets Media, LLC, conducted a survey in 10 countries for the European Commission on the Beyond GDP issue. Huge majorities in all 10 countries supported correcting GDP to help steer countries toward sustainability (www.beyond-gdp.eu). Even the USA is awakening, and the Senate held hearings in March 2008 on “Re-thinking GDP.”

I hope that Obama, David Axelrod, David Plouffe and all of his team will read Robert Kuttner’s wise analysis and go beyond that outdated “economics box” so as to address more fully the systemic crises our next president will face.

* * * * * * * *

For Amazon

Robert Kuttner has performed a service in Obama’s Challenge by bringing to the Democratic nominee’s attention the pitfalls to be faced by the next Administration. The USA is facing a profound transition. Our citizens must adjust to the diminished role the US plays, economically, militarily and in its influence. While adapting to this new global reality and the rise of China, India, Brazil, Russia and other nations, the next US President must deal with the severest financial crisis since the Great Depression and the urgent need to shift our economy from fossil fuels to clean, renewable energy.

I hope that Obama, David Axelrod, David Plouffe and all of his team will read Robert Kuttner’s wise analysis and go beyond that outdated “economics box” so as to address more fully the systemic crises our next president will face.

Copyrightt © 2014 EthicalMarkets.com | Supporting the emergence of a sustainable, green, ethical and a just economy worldwide