Only Steady State Economy is Sustainable in Long Run

August 30, 2013 • United States, Daily Email Recap

Bring Back Hank Paulson – On One Condition
by Brian Czech

On and on the ironies go;
where they stop, nobody knows.
Biggest one last week for sho:
The Fed a-meetin’ in Jackson Hole!


That’s right. The entity as responsible as any other in the world for eroding our green space, all the way from grampa’s farm to the Grand Tetons, had the gall to meet again last week (as they do every August) at the Jackson Lake Lodge. From the third floor of the lodge, the Fed overlooks the Tetons while shifting the global bulldozer into overdrive, mining the mountaintops, overfishing the oceans, and releasing carbon by the gigaton.

Lest this become a baseless rant, let us base the rant in facts and logic. The Fed pulls out all the stops to “stimulate the economy.” Meanwhile growing the economy – increasing production and consumption of goods and services in the aggregate – trashes the planet. Furthermore, the economy of our grandkids depends upon a healthy and stable planet. Therefore, at this point in history with endangered species proliferating, growing dead zones in the ocean, and climate change melting whatever glaciers are left in the Tetons, the Fed is doing far more harm than good by “stimulating the economy.” Not only are they hastening the demise of the planet, they’re pulling out the economic rug from the grandkids.

The only baseless part of the rant would be to blame the members of the Fed for their insufficient education and background in ecology, or the “economy of nature.” The Fed can’t help it that their minds were inculcated at places like the University of Chicago, Columbia, and MIT. These bastions of neoclassical economics were all subject to the corruption of economics that took place early in the 20th century as well-endowed economics departments were geared to push back the populist followers of Henry George (who was to the land baron what Marx was to the capitalist).

Not to get carried away, because these academic institutions produced brilliant thoughts, for sure. But in the economics departments, students like Ben Bernanke were told again and again and again that “production is a function of capital and labor.” If you’ve ever taken a course in economics, you know the equation: Q = F(K,L). Quantity produced (Q) is a function (F) of capital (K) and labor (L). It’s called the “production function.”

Well of course production is strongly influenced by capital and labor, but what about the other crucial factor, the land! The classical economists of the 19th century all talked wisely about land, labor, and capital. Somewhere in the transition to “neoclassical” economics, land was dropped from the production function, reflecting the efforts to avoid the federal tax on land rents made so wildly popular by Henry George and the populist movement.

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