For the Sake of Our Children
The Smarter Capitalist Manifesto
A New & Improved Economic Model
for the 21st Century
We, the People of the World, Face a Perfect Storm
We the undersigned, senior members of the world’s scientific community, hereby warn all humanity of what lies ahead. A great change in our stewardship of the earth and the life on it, is required, if vast human misery is to be avoided and our global home on this planet is not to be irretrievably mutilated. [a]
* We, the People of the World, face a Perfect Storm of biblical proportions. We’re poisoning our children and their world, we’re running out of planet and we’re running out of time.
* We’re using up natural resources and emitting pollutants each year what Mother Nature/Creation needs one year plus four months to replace or absorb, as best it can — and this global “Mother of All Deficits” is growing.[i]
* We’re overfishing our oceans having already wiped out 90% of large fish,[ii] we’re over-pumping and lowering water tables worldwide[iii], and eroding and exhausting topsoil faster than Nature can replace it.[iv]
* In terms of pollution, the heat’s on as we’re emitting more and more greenhouse gases faster than they can be absorbed, and logically causing more and more of a greenhouse effect. (If you’re skeptical of this simple cause and effect relationship, please see endnotes [v])
* As a result, our oceans have become warmer, and warmer water holds less oxygen.[vi] Consequently, we’ve lost 40% of the world’s cold water and oxygen-loving plankton — and plankton is not only the basis for most sea life, it provides half the world’s photosynthesis! [vii]
* In other words, we’ve lost not only almost half the world’s oxygen producer but almost half our world’s carbon dioxide absorbers! This leaves even more CO2 in the air, further warming the air and oceans, killing even more plankton, further increasing global warming in a classic, vicious circle.
* We’re also logging the world’s forests at unsustainable rates. And if that weren’t enough, due to global warming, forests are getting drier, weaker, they’re dying from diseases and infestations[viii] and they’re burning down. Because living forests absorb carbon dioxide (CO2) from the air and dying and burning forests give off CO2, forests that were once absorbing CO2 become carbon emitters, accelerating global warming even more.
* In the Arctic, we’re literally on thin ice. The summer Arctic Ice Cap is melting and is estimated to completely disappear some time between 2020 and 2050.[ix] Instead of its white surface reflecting 80% of the sun’s heat and absorbing only 20%, melted as much darker seawater it will now be absorbing 93% of the sun’s heat – over four and a half times as much as before! It will be as if three quarters of the U.S. flipped a switch and went from being a titanic heat reflector to a titanic heat absorber, further speeding global warming.
* Close by in Siberia, Canada and Alaska, another eco-time bomb is ticking. 11,000 years worth of frozen carbon in the form of permafrost, estimated at 1.5 trillion tons, is warming up, with an area as large as Germany and France that’s melted in just the last 3 – 4 years! In doing so, it’s releasing methane gas, 23 times more powerful as a heat-trapper than CO2, which then causes more melting. Yet another vicious circle with a truly colossal carbon sink estimated to become a colossal carbon source by the 2020’s.[x]
* With these self-accelerating processes and titanic energy flows reversing course, what we’re facing isn’t just a series of vicious circles spinning separately, each at a steady pace. Instead, we’re facing an interlocking series of vicious circles speeding each other up so that all together, if unchecked, they’ll spiral out of control. Then we’ve got runaway global warming.
* And what is one of the biggest threats, among many more, from this part of the Perfect Storm called global warming? A recent Stanford and UW study says by 2100, half of humanity could face severe food shortages.[xi] This is due to temperatures estimated to be 2.5 to 10 degrees Fahrenheit higher than now, which will both shorten growing seasons and cause droughts.
* Yet another storm front making up this Perfect Storm is the current, man-made sixth mass extinction of life since life began on Earth. Combining that front with yet another one, that of humanity growing by 10 million a month, and the rest of life is shrinking. We’re already losing an estimated 150 – 200 species a day and it’s estimated by some scientists that in our lifetime we could lose half of all species[xii] and by others that we could face world-wide ecosystem collapse by mid-century.[xiii]
* And yet still another front comes from the over 60,000 chemicals in our air, water, food, bodies, everyday products, homes and workplaces that have never been tested for health effects.[xiv]
* Dr. Trasande, Assistant Director of America’s first academic policy center devoted to the protection of children’s health against environmental threats put it this way. “We are in an epidemic of environmentally mediated disease among American children today. Rates of asthma, childhood cancers, birth defects, and developmental disorders have exponentially increased, and it can’t be explained by changes in the human genome. So what has changed? All the chemicals we’re being exposed to…We are the humans in a dangerous and unnatural experiment in the United States, and I think it’s unconscionable.”[xv]
* And finally, there’s the nuclear front. Nuclear weapons, power and the resulting waste, toxic for hundreds of thousands of years, are all proliferating. Combining that with the prospect of more droughts, famines, floods and climate refugees triggering what Gwynne Dyer in his book by the same name calls “Climate Wars” over water, food, borders, land, and natural resources such as oil — a possibility also recognized by the U.S. military which called climate change a “threat multiplier” and “national security issue”[xvi] —- and what we face is the growing possibility of nuclear blackmail, nuclear terrorism, and nuclear regional wars escalating out of control into World War III.
America’s Perfect Storm
* We, the majority of the American People face another perfect storm.
* Many millions of Americans are either out of work, have given up on finding work or are working less than they want to.[xvii] Many have had their hours, pay and/or benefits cut while many are also working harder for the same pay or less. As a result, most Americans have cut back on their spending and so many businesses, especially small ones, are struggling as well.
* During the 50’s, when America’s majority was arguably at its most prosperous, one average working person could provide their family a middle-class lifestyle. While there are many factors to explain this, amongst them federal programs helping veterans with higher education and housing, probably the single most important factor was that a third of working Americans were in unions whose collective bargaining power, like a rising tide, helped raise wages across the economy.
* In 1960, CEO’s of the largest corporations made 42 times as much as their average worker. But by 2007, they were making 344 times as much![xviii] Had average wages risen as fast as CEO compensation since 1990 when this wage gap really took off, the average employee making more than minimum wage would have been earning $110,126 a year in 2004 instead of $27,460.
* From 1947 to 1979, as American productivity increased, the average American’s wages kept pace but starting with President Reagan when anti-unionism became federal policy and more socially acceptable, wage increases fell further and further behind productivity increases.[xix]
* Instead of paying higher wages, easy credit, first in the form of credit cards, then later mortgages, and equity loans kept the purchasing power of America’s working families more or less intact while actually setting a debt trap for millions.
* Unfortunately, as part of that debt trap, there are 11 million households who owe more than their homes are worth,[xx] over 4 million who have already lost their homes and all the money they put into them[xxi] and millions of college students graduating with almost a trillion dollars worth of loans that can’t be discharged with bankruptcy. [xxii]
* In addition to the wage gap, there’s also a tax gap that’s severely narrowed since the 50’s. Back then, with over 20 tax brackets, everyone felt the same pain and burden of taxes with the average worker making $2990 and paying 20% in federal income tax and the very top tax bracket 91% — 355% more!
* Today, it takes two jobs to have a middle-class lifestyle and single Americans making between $34,500 and $83,600 have a 25% federal income tax rate while the very top tax bracket for singles is now only 35% — only 40% more![xxiii]
* While this gap between the top tax bracket and what most Americans pay has shriveled from 355% more to 40% more, there are many super-rich who actually pay less than most Americans. As Warren Buffett put it, “The ‘mega-rich’ pay about 15 percent in taxes, while the middle class fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.”[xxiv] Note these 7.5% payroll taxes now stop at $106,500 so those making more, who need it least, essentially get a 7.5% “pay raise” from the vast majority making much less. Social security would be much strengthened if this cap were removed.
* As Warren Buffett aptly summed it up, “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning” [xxv] and who they’re winning against is America’s majority —- its working families and middle class.
Fairer, More Ecologically, Long Term Realistic and
Key to the Human Race for a Healthy Planet
Its Purpose: Sustainable Health and Happiness
“Socialism collapsed because it did not allow the market to tell the economic truth. Capitalism may collapse because it does not allow the market to tell the ecological truth.” - Oystein Dahle, former Exxon Vice President [xxvi]
* Adding creativity, energy, fairness and opportunity, Smarter Capitalism transforms natural resources into the following eco-economic prerequisites for true wealth which is health and happiness — ample, clean air, water, food, clothing, shelter, education, healthcare and quality time for quality relationships with ourselves, our loved ones, our community and beyond. Moreover, it does so without degrading these for future generations.
The New Realism
* Smarter Capitalism recognizes and takes into account that Mother Earth/Reality/Creation, however one prefers to call it, is the real world wide web, with all parts being intertwined, interconnected and interdependent. We’re all in this together.
* Smarter Capitalism recognizes that matter and energy, intertwined per Einstein’s energy being matter sped up, also cycles in great loops. Some examples are the water cycle, creatures consuming and being consumed in return, treating others as you want to be treated, and what goes around comes around also known as reaping what one sows.
* Smarter Capitalism recognizes and takes into account that our world’s sunshine, plants, animals, water, soil, ecosystems and ecosystem services such as food production, water purification, flood control, climate moderation, pollination, oxygen production, carbon dioxide absorption, spiritual solace and recreation are all parts of natural capital.
* Smarter Capitalism recognizes though that the “World Bank of Natural Capital” is only so big. At any given time, there’s only so much sunshine, only so much air, water on the surface, underground and in the seas, only so much topsoil, species, fish in the oceans, trees in the forests and specimens of each species. All have their limits, some with a little variation, some with none, and as an example of the latter, with mass extinction, we’re increasingly hitting them.
* So apart from its spiritual value, what is the approximate monetary value of Nature’s ecosystem services? When global GNP was $18 trillion, international scientists estimated the ecosystem services provided by just the world’s major ecosystems were worth $16 – $54 trillion dollars a year.[xxvii]
* In other words, Nature/Creations’s annual contribution to the global economy and by extension to every organization on Earth was worth roughly twice as much as the annual contribution of its human members!
* Unfortunately, our current economic model does not take this into account – not the value or limits of natural capital including its ecosystem services nor the long term social and environmental costs of products, services and production methods.
* Smarter Capitalism, on the other hand, does give natural capital monetary value and spiritual value and acknowledges it as the foundation for every economy and society.
Natural & Social Capital:
The Largest Silent Partners in Every Organization
* Smarter Capitalism recognizes that layered on top of and intertwined with an economy’s natural capital is its social capital. This includes all of a society’s past and current investments of time, love, energy and money into its people, its human capital, their education, culture, values, social relations and connections.
* In Switzerland, just a part of this social capital, the annual unpaid work of women taking care of children, the elderly, the sick and the home has been computed to be worth 70% as much as this highly industrialized nation’s entire GNP! [xxviii] Presumably, the unpaid work of women everywhere else would be of a similar, very high value.
* Consequently, Smarter Capitalism considers that taken together, Nature/Creation and society, just by their contributions of natural capital and social capital, let alone society’s contribution of infrastructure, are together easily the largest annual contributor and investor in every private, public, for profit and non-profit organization.
* Because it’s also important though to fairly reward those who start and/or invest their time and money in companies, Smarter Capitalism advocates that the environment and society be legally considered not the largest but at least two very substantial stockholders in every for-profit organization and the two largest stakeholders in every non-profit organization.
* The result with Smarter Capitalism: social and environmental responsibility become legal requirements and part of the cultural DNA for every organization, public, private, for profit and non-profit.
More Pay, More Say and a Happier Workplace for America’s Majority
* In general, this would require new laws and attitudes so organizations would include the interests of society and the environment in their decisions. In regards to the former, it first means implementing these values with the part of society that contributes the most time and energy to organizations — the employees.
* Specifically, employees would have more say in decisions affecting them. Called co-determination and successful in Germany for decades, it has led to better communication, cooperation and internal harmony leading to higher pay, higher productivity, safer, healthier, happier working conditions, less stress and employees being treated with more respect, which for many is right up there in importance with pay.[xxix] It’s simple common sense and fundamental fairness: people should enjoy the fruits of their labor and organizations should treat their employees well, as they’ll respond in kind and the company will do better as a result.
* More say, pay and better working conditions leads to more jobs and social stability as Smarter Capitalism recognizes for the most part that the best job creator and social stabilizer is the well-paid, average American employee who is happier and able to spend more, which encourages businesses to hire more and investors to invest more. Where there’s demand backed by money, supply usually follows.
Lower Taxes for America’s Majority, Lower Budget Deficit for America
* Smarter Capitalism also means fairer, smarter taxation. Labor earning money would in general be taxed less than money earning money because it’s harder work. Fairer, smarter taxation is also everyone having an equal responsibility and bearing an equal burden and “pain”. It does not mean everyone being taxed at the same rate as a 20% tax on someone making $30,000 is much more burdensome than for someone making $2,000,000.
* It does mean lower federal, state and local taxes on America’s majority, the 99% and raising taxes progressively on the wealthy and the super rich like we had from 1942 to 1963. That was when America’s majority, its middle class and working families did best, America did best, prosperity was shared and the tax burden was shared with over 20 tax brackets and the very highest tax bracket was 91%. Everyone felt roughly the same burden and pain.
* Smarter taxation would go a long way toward reducing and eventually eliminating America’s federal budget deficit as not only the wealthiest but corporations as well have also been contributing less and less financially to society since the 50’s. At that time, their share of federal tax revenues was 28%, then 21% in the 60’s, then 10% on average since the 80’s. This was caused by the effective tax rate on corporations dropping from 49% in the 50’s to 38% in the 60’s to 33% in the 70’s to 25.3% in the 90’s, to even lower today as many pay no income tax at all. This ever smaller contribution from corporations was masked and “compensated” by America’s working majority continually paying higher payroll taxes, contributing 16% to federal tax revenues in 1960 and a whopping 35% by 2009!
Real World Pricing
* In general, organizations with new laws in place will be required to consider the environmental impact of their decisions on this major shareholder but there is another very key way that will automatically take much of society’s and the environment’s long term interests into account – Real Cost-Benefit Pricing, in other words pricing that’s in line with the real world.
* Real Cost-Benefit Pricing means, for example, if something like coal, oil, gas or nuclear power is truly more costly overall in the long run to society and the environment than solar and wind power — taking into account social, environmental, health, military and government costs and subsidies — then it should cost more upfront in the short run.
* For example, coal’s true upfront costs should include the costs of the following:
a) Its extraction kills miners while giving many others black lung disease.
b) Each year its fine particle pollution causes 24,000 premature deaths, 38,200 non-fatal heart attacks, tens of thousands of hospital visits and asthma attacks.
c) Its mercury pollution causes another 100,000 to 200,000 children to be exposed to dangerous levels in their mothers’ womb, levels high enough to impair performance on neurodevelopmental tests and cause lifelong loss of intelligence.[xxx]
d) Its acid rain poisons 1000’s of America’s and 14,000 of Canada’s lakes and streams, [xxxi]
e) Its waste from mountaintop removal and underground mining has polluted streams, valleys and the drinking water of communities throughout Appalachia.
f) Finally, its huge contribution to global warming threatens the future of our children and grandchildren.
* Moreover, these aren’t just “costs”. If your child has asthma caused or aggravated by the fine particulates from a coal-fired power plant, your child’s suffering and doctor bills are a backdoor tax on your child, budget and life as well as a deferred tax on your child’s future.
* As a result, Smarter Capitalism recognizes that pollution is a backdoor tax – whether it’s greenhouse gas, fine particle, chemical, radioactive, heavy metal, genetic, noise, outdoor or indoor.
* So how do we make coal’s price reflect its true cost? The Smarter Capitalist answer is this. At the most appropriate points of extraction, production, importation or time of sale, levy predictably increasing Real Cost-Pollution Prevention (RCPP) taxes on pollution and other externalized costs such as disposal. This predictability gives the entire market, consumers, businesses, investors, non-profits and governments, time and certainty to best figure how to make continuous reductions in pollution and ecological impact. (See [xxxii] for how these costs could be figured out.)
* Thus the smarter, reality and market-based game changer that can continuously reduce (and eventually) eliminate pollution:
Continually reducing pollution, and so reducing ones RCPP taxes, becomes more profitable than polluting!
* In other words, increasingly eco-friendlier goods, services and production methods will underprice, outcompete and replace their more heavily taxed, more polluting, counterparts.
* For example, wind, solar photovoltaic and solar thermal plants which make electricity 24/7 with molten salt that stays hot at night (!) will underprice, outcompete and replace coal, oil, gas and nuclear power,[xxxiii]
* Organic food will underprice, outcompete and replace chemical-laden, factory farm food,
* and healthcare costs will drop with healthier air, water, food, transportation, homes and workplaces. (See [xxxiv] for more examples.)
* The Smarter Capitalist bottom line: By businesses and consumers buying ever less expensive, less polluting goods and services, and saving money, we’ll all be:
* helping make America’s economy cleaner, safer, healthier, more sustainable – and more competitive in the next global growth industries of clean energy, clean tech and green chemistry, [xxxv]
* helping save our children’s future,
* and helping save civilization.
* Saving money helps save civilization? Now, that’s a gamechanger people will get behind!
A Green Recovery:
Putting America Back to Work While Also Cleaning It Up
* To help cushion America’s working majority from initial price increases with Real Cost-Benefit Pricing as well as help them buy eco-friendlier alternatives, (keeping mind other costs will drop like healthcare, garbage, heating, cooling and overseas military), 25% of these RCPP taxes would be rebated monthly into the bank accounts of all adult residents who contributed to our economy by working, paying sales taxes, FICA taxes and grossed less than $200,000 on their previous year’s tax returns.
* Most of the remaining 75% of 100’s of billions of RCPP tax dollars would be rebated back on a sliding scale, and where appropriate added to unemployment benefits so that America could :
- Help train and finance millions of unemployed Americans to install and start their own green businesses installing solar, wind, and insulation for homes and busineses
- Help train and finance oil workers, coal miners, construction workers and others in especially affected industries and areas to do the same
- Help homeowners, renters, businesses and family farmers buy these same solar, wind and insulation upgrades with a new slogan for America: Your Home and Business Is Your Castle, Make It Your and America’s Power Plant Too!
- Help millions buy their own hybrid and electric bikes, motorscooters, motorcycles, cars, vans and trucks powered by these same clean energy systems,
- help public transit districts lower fares and increase routes and services with clean energy-powered vans, buses, trams and trains as well as having hybrid and electric bikes, scooters, cars, vans, trucks available for low rental fees by the hour, half-day, day, weekend or week at transit stations, bus stops and well trafficked destinations like downtowns, industrial parks, malls, sports arenas, etc.
* The remaining portion of the 75% would be disbursed by in-country non-governmental organizations directly to communities around the world most impacted by global warming to help them cope. Included would be communities living in and adjacent to rainforests, the lungs of the world, who would be paid for protecting their biodiversity and their continuing absorption of the excessive CO2 already emitted by industrial economies (as opposed to paying them off as an “offset” for producing more CO2.)
* With RCPP taxes encouraging ever eco-friendlier innovation and RCPP tax rebates making these innovations cheaper still, Cleaner and Healthier will continuously underprice and replace Dirty and Dangerous.
* Moreover, millions of regular jobs and workplaces will get continually greener as well by using, making and selling ever eco-friendlier goods, services, transportation and production methods in ever cleaner, healthier work environments.
Smarter Capitalism’s Free and Responsible Market
* Just as our parents told us, with freedom comes responsibility. Smarter Capitalism therefore calls for a free and responsible market:
- free of the unacknowledged taxation without representation and toxic assault that pollution levies on the bodies and spirits of all of us, our children, other societies and future generations,
- free of the current competition among companies as to which can more effectively make society and environment pay the social and environmental health, disposal and other costs while cutting internal costs such as wages, benefits, quality, safety and durability in order to make the biggest profit and/or hit the highest stock price for the next quarter,
- free of this privatization of profits and socialization of costs aka making a profit at everyone else’s expense,
- free of inadequate federal government performance of its Constitutional role promoting “the general Welfare” as stated in the Preamble by being an inadequate check and balance against Big Business, where the most powerful private infringements against our “general Welfare” spring from,
- hence free of inadequate regulation from agencies “captured” by the very industries they should be regulating,
- free of inadequate governmental performance as referee of the marketplace,
- hence free of current ways to legally hide debts off the books such as structured investment vehicles
- free of financial institutions that are too big to fail,
- free of excessive leverage where a bank can loan or invest way too much money based on its deposits
- free of any financial institutions being able to gamble using taxpayer/FDIC-guaranteed deposits
- which is to say, free of the gross lack of oversight springing from the termination of Glass-Steagall in 1999, which since 1934 had prevented Wall St. gambling with taxpayer/FCIC-backed and guaranteed deposit money
- which is to say, free of a marketplace where the most prosperous and powerful sector is financial engineering and “innovation” instead of real-world engineering and innovation.
As for responsibility, every for-profit company’s purpose now becomes to maintain or maximize socially and environmentally responsible profits:
- by maintaining and/or increasing its own combination of quality, quantity and prices of its socially, environmentally beneficial goods or services,
- by reducing its external costs of pollution, waste and its ecological footprint, and thus reducing and ultimately eliminating its RCPP taxes,
- by helping its suppliers reduce their pollution costs, taxes and thus its own costs,
- and by reducing its own “internal friction costs” of production, miscommunication, duplication, turnover, turf warfare, low morale and wasted, overlooked talents and skills.
The Bottom Line to Smarter Capitalism
- Because it’s more just and eco-economically long term realistic, Smarter Capitalism has a much better chance than the current model of providing health and happiness now and for future generations. As such, Smarter Capitalism is a key part of the Human Race for a Healthy Planet.
- It is also a concept and work in progress.
- If you think America needs Smarter Capitalism and a Green Recovery, please click here: Petition for a Green Recovery, Economy & America and please forward them to your network of friends, family and any organizations you think might also endorse them.
Thank you and let’s see if we can persuade America to be a major force and leader in The Human Race for a Healthy Planet!
[a] http://deoxy.org/sciwarn.htm – This Warning to Humanity, including the majority of the world’s Nobel science laureates, was issued 20 years ago!
[v] Study led by climate skeptic scientist, Richard Muller and funded by the Koch Foundation, funders of climate skepticism, concludes global warming is real. http://www.popsci.com/science/article/2011-10/climate-skeptic%E2%80%99s-new-climate-study-confirms-%E2%80%98global-warming-real.
Richard Muller explains how skepticism no longer holds up: http://online.wsj.com/article/SB10001424052970204422404576594872796327348.html
NASA study shows global warming can’t be caused by the sun: http://thinkprogress.org/romm/2012/02/05/419064/nasa-human-activity-not-solar-activity-drives-global-warming-350-ppm/
1,700 senior scientists from around the world, including the majority of Nobel laureates in science, issued a similar WARNING to HUMANITY: http://deoxy.org/sciwarn.htm
[x] http://thinkprogress.org/romm/2011/02/17/207552/nsidc-thawing-permafrost-will-turn-from-carbon-sink-to-source-in-mid-2020s-releasing-100-billion-tons-of-carbon-by-2100/ http://www.guardian.co.uk/environment/2005/aug/11/science.climatechange1
[xv] http://www.upstrm.org/videos/leo-trasande/. Dr. Trasande’s Senate testimony: http://epw.senate.gov/public/index.cfm?FuseAction=Hearings.Testimony&Hearing_ID=d05f15aa-802a-23ad-4cb9-8380092cf5d8&Witness_ID=969dc467-a0a2-4da3-953f-a97a1683adb4
[xviii] Source: Executive Excess 2008, the 15th Annual CEO Compensation Survey from the Institute for Policy Studies and United for a Fair Economy.
[xix] See this excellent chart showing how this latest Great Recession is just a part of a Great Regression since 1979.: http://www.americanfuture.net/2011/09/04/great-prosperity-great-regression/
[xxv] N.Y. Times, 11/26/06
[xxviii] The Real Wealth of Nations, Riane Eisler, pg 84, 2004 Swiss gov’t study