Paying for Reform

November 13th, 2008

If we think about the challenges facing the new Obama Administration, at the top of the list has to be prioritizing the actions that are desperately needed, in so many different areas, and integrating them into a coherent strategy that will put the country back on track, that will get the economy going again, and will once again inspire both sacrifice and greatness.

Should the administration move first on health care, or on the environment, or on housing, or on the economy? Clearly the answer is that it has to do all of these. The question most often asked in the media, though, is how to pay for it.

In some ways this is a strange question, because it is the government that issues the means to pay for things in the first place. But we maintain the polite fiction that it is run like a household, and really ought to balance its budget (except when it shouldn’t). Underneath this is the fear that government will continue to issue money until it causes inflation, and we’ll all be pushing around wheelbarrows of worthless dollars.

Of course this is nonsense.

If the money that the government prints it uses to invest in infrastructure, in science, in health care, and in addressing the challenges of climate change, it strengthens rather than weakens society and the economy. Spending more money means creating new jobs, putting America back to work (and most importantly back to productive work that does not harm but rather restores the global ecosystem), unleashing creativity, and engaging passion. In this context, balancing the federal budget becomes again an interesting challenge, a long-term goal, based on growing the economy. This economic growth must however be based on the principles of sustainability; we need to make a shift from an extractive economy to a renewable, self-sustaining one. The issue is not whether or not to spend money; the issue is where to spend it, to get the most sustainable growth per dollar invested. And we need to think in terms of the long-term return on investment as well, to see this investment as being on behalf of all future generations as well as our own.

This also implies, to some degree, a new approach to economics. It is more than life-cycle costing, valuing environmental services, and incorporating such externalities as greenhouse gas emissions, though it includes all of these. It must be rethought based on the presupposition that the the goal of the economy is to accelerate fairly-distributed abundance, and not simply to increase the already highly concentrated wealth that exists today. And even the wealthy will gladly pay for a return to economic growth and prosperity.

The role of government, then, is help organize people productively and profitably to produce that which is in the society’s long-term best interest. By assisting and supporting the development of sustainable communities, businesses, and families, government fulfills a role that can be embraced by liberals and conservatives alike, that puts the economy at the service of its citizens and inspires them to create more wealth, by creating more value, more innovation, and more self-sufficiency.

3 Responses to “Paying for Reform”

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