Beyond Industrialism: Building Communities That Work for People

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Summary

• The interview discusses Fred Block’s new book “The Habitation Society,” which explores the need to transition from an industrial economy to a “habitation economy” focused on providing the communities and infrastructure that people need to thrive.
• Block argues that current economic theories and policies are based on an outdated industrial model and do not adequately address the realities of the modern economy, which is dominated by the production of habitation (communities, services, infrastructure).
• He contends that this mismatch between economic theory/policy and the actual structure of the economy is a key driver of political polarization, as people feel dissatisfied with their living conditions but are unable to get the habitation they desire.
• To address this, Block proposes a major restructuring of taxation and public finance to empower state and local governments to invest more in the infrastructure and services that support human well-being and community development.
• He also argues for a rethinking of how we measure and understand economic “investment,” to recognize the critical role of household and government spending in building human capital and productive capacity.

Transcript

Rob Johnson:

I’m here today with Fred Block. He’s a professor of research and sociology at University of California Davis. He’s written many, many interesting books, one on democratizing finance with Robert Hockett from Cornell University. He’s written books on the future of International Economic Disorder, which now is upon us. But today we’re here because in all the turmoil that we are experiencing, I was fortunate to be able to preview a book called The Habitation Society that Fred has just written about, where we need to go to create what you might call a coherent and happy and dynamic society.

And boy oh boy, are people looking for that path right now. So Fred, I want to thank you for joining me here today, and I would encourage people to read all of your work. Your books on Carl Ani and his influence are just, it’s just extraordinary. And I feel very fortunate that you chose to join with me and explore what the Habitation society might look like. When I first started reading this book, I remembered a number of books. One in particular called ours by Peter Barnes, who’s from Northern California. And he once said to me, well, I had to write a book about what I thought was really going on because my father was an economist, meaning he had to get out from under what you might call the Youngian shadow and get to what the true picture looked like, that what you might call defines the challenge we’re all facing. And at the time, I remember offline saying to Peter, you really ought to get to know Fred Block’s work. And so it’s great that you’re back here today. And I guess I’ll start with a question. What inspired you to write the Habitation Society?

Fred Block:

Well, thanks so much for having me here. I guess the inspiration goes back a long time in the sixties. I was an undergraduate student of Daniel Bell, and in the seventies I was one of the people who was taken with post-industrial theory with the idea that our society was making a transition from an industrial society to something else that was post-industrial, that involved the much expanded role of services, the increased use of computerization, the dependence of the economy on scientific and technological advances. But the problem was that the various post-industrial theorists of the center right and left were essentially defeated in the intellectual battles of the seventies and eighties, that people like Bell were arguing that for this different type of society, we needed different institutional structures. Government had a larger role to play in the economy and so forth. And Bell and people like him were opposed by Milton Friedman and his allies of the free market market.

Fundamentalist economists and post-industrial theory got pushed to the side, the free market. People said, we don’t need more government to make this economy work. We need even less government. We need to roll back these regulations and this public spending and so forth. So I’ve been across all those decades still attached to this idea that the fundamental structures of the economy have changed. But I realized that part of the reason that the post-industrial argument had lost in the intellectual wars was that it was abstract. I mean, when you say industrial society, you think immediately of a factory. When you say agricultural society, you think immediately of a farm. These are concrete places where people exist. And it occurred to me, I guess about 10 years ago that we now had an understanding of what a post-industrial society is or a post-industrial economy. At the very least, it centers on the production of habitation.

And by habitation I mean the communities in which we live that have hard infrastructure of buildings, roads, office, et cetera. And they have soft infrastructure of education, healthcare, retail, trade, social services and so forth. And the reality is that what post industrialism means is that most people who are employed are employed in producing this habitation, this soft and hard infrastructures. And we also contribute to this habitation in our leisure time, I mean in the work we do around the home and the volunteering in the community and building social connections and so forth. So my argument is that we all produce habitation, we all consume habitation, but we’re not producing and consuming the habitation that we would choose because we’re doing this within the structures, within the theories, within the procedures that are derived from an industrial economy that operates according to very different principles.

So I guess one of the starting points is that one of the things that truly irritates me about most mainstream economics is that economists tend to argue that it doesn’t matter what an economy produces, that they have a basic set of formulas and procedures for maximizing output given the inputs. So Michael Boskin, who was head of the Council of Economic Advisors for George HW Bush, once allegedly equipped potato chips, computer chips, it doesn’t really make any difference. They both a hundred dollars of one is equal to a hundred dollars of another. And that reflects this kind of orientation of economists that the nature of what’s being produced doesn’t matter in terms of economic laws and procedures. And I think that is precisely and totally wrong, that if you think about what are the policies that make an agricultural economy more productive, they’re very, very different from the policies that you would use to make an industrial economy more productive. And by the same token, the policies and procedures that you would use to make a habitation economy more productive are very different from those that were dominant in industrial economy. So we’re essentially caught in this contradiction of trying to make a habitation economy work within the constraints within the straitjacket of economics of an industrial economics and industrial economic policy framework. And they are precisely wrong. They end up keeping us from the prosperity that we would desire to have.

Rob Johnson:

Well, isn’t part of what you might call the mythology or the parable that preferences from your desires, your utility function become demand and the market serves you. So if you intervene between the yearnings that create demand and the market, you’re creating inefficiency or instability. But that notion that preferences are not influenced by the context or the market or the outcomes seems kind of crazy to me. And I have a young friend who I’ll quote without giving attribution, but he said, Mr. Johnson, when I was younger, I was afraid not to study business administration in accounting. But what I really liked was Shakespeare, Dante and Homer. But I didn’t think I could ever get a job. And he said, now I ended up doing a PhD in economics, and I realize that my preferences were shaped by my fears that came from the structure of society. I thought it was kind of an illuminating quick blast as to where the mythology of economic and market servitude unrestrained by any policy or governance is the best place or the best pathway to choose.

Fred Block:

Well, and one of the arguments I make is that one of the ways in which a habitation economy is different from an industrial economy is that in an industrial economy, a lot of the things, or maybe even most of the things that we consume are fairly standardized commodities. I mean that the industrial era was all about standardization, but that in a habitation economy, much of what we consumer services and almost all of those services are supposed to be customized. I mean, we get not a standardized package of healthcare, but the doctor responds to what our particular medical problems are. Similarly, in higher education, everybody doesn’t get the same program. You get to choose your own mix of courses and majors and specialties and so forth. But even with financial services, the companies compete by saying, we are exclusively attentive to your particular needs. So the problem is that a lot of the economic theory and the belief that the market will essentially maximize the things that people want is based upon classical commodities, things which are produced by multiple producers that are transferred in a single moment in time and that are standardized.

So when you go to the farmer’s market, if you don’t like the tomatoes at Booth one, you go to the booth three, if you find out that they cheated you and put rotten tomatoes at the bottom of the bag, the next time you go to a different, you can in that situation get what you want by switching from one provider to another. But for most of what we’re consuming now, the products are specialized, the relationships are long-term, your contract for your cell phone service, for your cable tv, your insurance policies, all of these things are long-term contracts. And so exiting the transaction is often difficult. You’re not sure that the other firm is going to be any better than the one that you’re giving up. So, so the fundamental problem is that given the shift to non-standardized goods and services, that whole notion of consumer sovereignty falls away.

Producers have much more power. They’re not directly competing with each other. In most cases, the kind of business 1 0 1 is don’t produce a standardized product because it could be produced more cheaply in Asia. So almost everything that we purchase has its own specialized bells and whistles, and in that context, we have much less influence. The corporations that provide things have become much more powerful. And of course, that’s been exacerbated by before the Biden administration, a half century where antitrust wasn’t enforced. So that’s part of the reason that we can’t get what we want. And again, if you think about things like energy, healthcare, education, these are forms of collective consumption and the idea that individuals can shop around and get exactly what they want makes no sense.

Rob Johnson:

Yeah, I hear a lot of concerns about economic, which you might call presumption at this point. For instance, a friend of mine once said, when you’re out there and you can choose where to buy your tomatoes or whatever, you have elasticity of demand. When you’re sick and they take you to the hospital, you have very inelastic demand, and therefore they can charge you because you’re not going to get up and walk out the door when you’re afraid because you’re sick. So the nature of the structure of different challenges in different markets has very different characterization, and where governance, I think is then important is affected by the role of money in politics. Like you had mentioned, the corporations can decide what to do and what’s considered fair and not fair and so forth. Well, the judge and the jury needs to get reelected, and the people who give them money influence those probabilities, and that tends to contort things relative to what you might call the individual welfare of the citizen.

Fred Block:

Exactly. And many of these things which we’re talking about health, education, financial services, energy, are effectively co-produced between corporate entities and government because the government is playing a central regulatory role. But what’s happened over decades and decades is that, as you say, the corporations have been able to twist that regulatory process and capture the regulators so that in industry after, so for example, if you think about housing, local governments are heavily involved in setting, building standards, in zoning, in providing building permits. Federal government funds a great deal of the construction that goes on. They could use their power to say, we need many, many more units of affordable housing to deal with the housing crisis. But they don’t do that because as you say, the political influence of builders developers essentially turns that government action into supporting the builders, the developers and so forth. And so we get more and more unaffordable housing for rich people and less and less affordable housing for everybody else.

Rob Johnson:

So going to the structure of your book, which I had the good fortune to read over the last couple of weeks, you start with a title of chapter accounting for the morbid symptoms that, as I recall, kind of took us on tour of what the whole book would talk about in the subsequent chapters, but it was integrated. Describe, how do I say how that first chapter came to mind and what inspired you to begin with what you might call an overarching integrated awareness before you dug deep into each component?

Fred Block:

So the morbid symptoms is obviously a reference to Trump and the rise of the global far right as people in country after country feel a deep sense of dissatisfaction and are seeking alternatives to the mainstream political parties. And so I’m trying to make sense of that. And the sense that I make of it is that, as I said, that we have a habitation economy, but we’re not getting the habitation we want. We’re in a kind of stall transition that we can’t figure out how to use the economic potential, the economic resources, the wealth that we have to satisfy human needs. And so in that kind of fail transition, we get the intense political polarization with some people pursuing the solutions of the far right, other people turning to the left and creating a huge kind of political chasm and in some sense a stalemate where we can’t make any progress at all.

So my effort is to, on the one side, understand this polarization as a consequence of a failed transition, and then to try to point the way beyond that polarization so that we could in fact take advantage of the potentiality. So I should mention here that you earlier mentioned Carl Palani and the habitation concept I’ve taken from Palani, one of the early chapters in the great transformation is called habitation versus improvement. And it was about the enclosures in England in the 16th, 17th, 18th, and even 19th century, basically the big landholders would take the commons where everybody could graze their sheep, their sheep and cows and goats, and they would enclose the commons and plant crops. And when they did that, the landless people would suddenly lose their habitation because their livelihood depended upon being able to have their animals graze on the commons. So Palani pointed out that there was a kind of fundamental divide or tension between habitation the kind of communities of rural people and improvement, which was technological advance because the farmers who were enclosing the commons were increasing agricultural output, that it was technological advance.

So pal’s argument is that this conflict between habitation and improvement continued in the industrial revolution and continued into the 19th and 20th centuries that it’s a concept which is very similar to Schumer’s creative destruction. Only Palani is looking at it from a more negative point of view. Schumer was saying that capitalism destroys upsets things, but it’s also enormously creative in constructing something new. Palani agrees, but is kind of focusing on the downside, the destruction of people’s communities, of their way of life. That’s part of this process of factories moving from one area to another in search of cheaper labor and they destroy the community or tremendously weakened the community that previously existed. So I use this notion of habitation versus improvement to say that in an habitation economy, we finally have the way to overcome this historical tension because we can easily imagine using our technological advances in ways that improve the habitation for everybody. So for example, as we make a clean energy transition, we reduce the amount of fossil fuels, we get cleaner air, fewer cases of asthma and other lung diseases, and so we’ve improved people’s habitation.

But so there’s that potential to upgrade, to reconcile improvement and habitation, but we’re in fact not able to realize that because of these inherited structures and rules. So that failed transition, getting back to that argument is then the reason behind the polarization and the kind of political stalemate that we face. So the place where this takes me is that the way out of the dilemma is to give people much greater ability to control and shape their own habitation, the communities in which they live. And so this goes to the kind of fundamental economic reality that across all the development market societies, almost all of the tax money is controlled at the center of the political system. And localities, subnational units, whether they’re states or provinces or whatever, have been effectively starved for resources. We know in the US that for 50 years now, states have faced extreme budget pressure because they have lots of responsibilities, criminal justice, public health and so forth, and they have fewer and fewer resources to deal with that.

One of the most direct consequences we know of that is that 50 years ago states funded public higher education with generosity, and it was possible for people who came from economically weak families to get to college or university at a public state institution, and they had real mobility opportunities. But over the course of this 50 years states have dramatically cut back their funding of public higher education. And so tuition fees have gone way up, and that path of mobility has been closed off. For many poor and working class people, they would have to take on enormous amounts of student debt. And they know that sometimes that bet doesn’t work.

You borrow hundreds of thousands of dollars to go to university, and then you end up with a job that doesn’t allow you to pay that back, and you just live your whole life under this intense debt burden. So the resolution involves restructuring the system of taxation and finance so that federal governments, national governments that have the ability to tax need to shift resources back to the states and localities. We did this in the seventies with revenue sharing that there were federal grants back to state and local government, but Ronald Reagan did away with that. We need to go back to that, but on a substantially larger scale. And we need also to increase public finance, the ability for the subnational governments to borrow, to pay for infrastructure, to pay for increased resilience. So one of the ideas here is that we all have this sense that local politics, if you go to a city council meeting, they’ve become pretty ugly and unpleasant things because they’re always operating in a zero sum context that there’s a limit, a stressed local budget.

This neighborhood goes in and says, we want to have this amenity. The other neighborhoods say, well, why should they get it? We need this, we need that. It’s a zero sum conflict because there’s so little resources available. And so people then fight intensely over the crumbs that are available. And the consequence of that is that people retreat from politics at the local level. And that undermines the basic theory of democratic self-governance because the ability to participate in the local level and influence things is the way that people learn how politics works. They learn the ability to compromise, the ability to push for their own interests and so forth. And that skill is essential for being able to exercise some kind of control over the people that they elect to hire office. But because of this fiscal crunch, we’ve eviscerated local politics, and as a consequence, people have these extremely negative attitudes towards politics. They hate all politicians. And that’s part of the context in which Trump and other far right politicians run with a claim that they’re going to save people from all of this filibustering here a little bit.

Rob Johnson:

No, I think this is fascinating. As a doctor, doctor’s son, I always think about diagnosis and then remedy. And in some of these chapters, I know talking about the ironies of corporate dominance or what counts as an investment. Talk to us a little bit about what those structures are. I can see what you might call meta vision that you’ve just described of the frustration in the non-service and then the despondency. But how do these other modules in the structure play a role that is not of service to the common person?

Fred Block:

Right. So let me talk a little bit about the investment argument because essentially the kind of ongoing fiscal crisis for state and local government that I’ve been talking about is part of the kind of general logic of austerity, which has been part of the neoliberal dominance in the last 50 years. And the argument is clearly that we can’t increase taxation on rich people and corporations because that will undermine the fundamental dynamic of a market economy whereby everybody’s prosperity depends upon business investing for profits. And so if we push taxes too high, business will stop investing, and as a consequence, the economic pie will be smaller and will have even more intense fights over shares of that pie. So working people have to do with smaller salaries, fewer benefits government has to make due with less revenue in order to make sure that the profits are going to the Elon Musks and the Zuckerbergs of the world so that they can make the critical investments that feed our prosperity.

So what I did was decide to look in greater detail at where these numbers about government investment come from, and they come from the system of national income accounting that was developed by some very smart people in the 1930s and 1940s. But they did that. They developed that system at a time when we had an industrial economy where much of the economic output were coming from factories and farms. They were concrete things like tons of steel and bushels of wheat and so forth. So when they created the accounts in the US initially, the only thing which counted as investment was business expenditures for building machinery and equipment like vehicles, trucks and so forth that what government spent to build highways, airports, et cetera, didn’t count as investment at all. And they set up the accounts so that what households spent didn’t count as investment. So to make the accounts more simple, they attributed all housing construction, both building new buildings and making additions on existing buildings.

They counted all that as happening in the business sector, and they treated people who owned their own house as though they were renting the house from themselves or from the business sector. So what happened over the many decades, the seven or eight decades since the accounts were first published in 1947 was that economics changed and economists recognized that government spending to build roads and buildings and so forth needed to be counted as investment. And so it took them until 1996, the government agency that prepares the accounts to revise the accounts to include government expenditures on building machinery and equipment. But economists had also pointed out that expenditures for computer software were as critical to make computers work as the expenditures for hardware. So they later revise the accounts to include the outlays for software. But one big problem is that starting in the 1960s, economists recognized that one of the most important inputs into the economy are the skills and capacities that workers have, and they refer to this as human capital. And they’ve recognized that when we train a PhD scientist or engineer, that’s an expenditure that has a big impact on the economy’s capacity to produce. But even though all economists recognize that human capital outlays are extremely important for the economy, they’re not included in our measures of investment in the national income accounts. Basically the problem is that there are disagreements about the best way to measure human capital, and it’s also the case that the expenditures to produce human capital are entire education system from childcare to PhD.

That those numbers, the dollar value of everything that we spend to raise the quality of the skill level of people far exceeds the expenditures for new buildings or new machinery and so forth. So changing the accounts to reflect this would mean throwing out all the old numbers and having dramatically different numbers. So they haven’t bothered to do it. So what I attempted to do was to revise the accounts to recognize that households actually do invest. When you buy a washing machine or a dishwasher or a car, that’s an investment because you’re expecting it to produce a flow of services over multiple years. When you have a child and you pay for that child’s education, that’s an investment. And also much of the time that you’re raising children and reading books to them and teaching them about things, that too is an investment in their human capital.

So basically when I start this exercise and I look at the official data business accounts for 84% of all the investment in the economy, this is gross investment government accounts for 16%. So I rejigger the accounts recognizing that households make these significant investments in dollars and time and so forth. And when I’m through that process, the numbers that I have show that business accounts for 29% of all of the investment in the economy, government accounts for 28%, and households and nonprofits account for 43%. So contrary to the official view that we all have to sacrifice so that business can have big profits so they can carry out more investment because they account for 86% of all the investment, the reality is that they account for less than a third of all of the investment in the economy. And so from that, it follows that if we rejiggered our distribution system to provide more resources to government and more resources to households, we could actually increase the productive expenditures that expand our ability to produce. So again, this is an example. We’re using an industrial era accounting system to try to understand a habitation economy, and it leads us in exactly the wrong direction. It leads us to make false economies rather than making the investments in human beings in human capacities that are the real source of advances in our capacity to produce.

Rob Johnson:

I’m curious because I hear a lot now about the dilemma between paying for higher education and the advent of artificial intelligence, and a lot of people I know who have children say in high school or early college, are afraid to pay these very expensive tuition tickets because they’re not sure that that productivity enhancement investment that you’ve just described is going to lead to revenue when a machine might replace the individual and then leave you with a huge debt overhang, how do you see that challenge?

Fred Block:

Well, yeah, mean, I’m not ready to turn everything over to the robot.

It seems to me the fundamental thing here is that it’s human beings who are creating these AI systems and it’s human products that are training the AI systems to be better at doing certain operations. And so it’s going to continue to be human creativity, human ability to solve problems that drives that the technology will depend upon and that our prosperity will depend upon. So the first point is that this system of funding higher education by charging $80,000 a year or whatever that is, makes no sense. It stratifies the higher education system and excludes many of the people who would benefit, but it’s certainly the case that developing skills and capacities and intellectual abilities is going to be useful for people to forge their life. Course I right? I don’t have a full map for reforming the higher education system, but the fundamental reality is that the cost of it need to be, again, socialized, provided through collective money because that is the resource that’s making possible these productive advances.

Rob Johnson:

So you talked about what you might call the re-characterization of investment, which I think is in understanding what you might call the dynamism and understanding the coherence, where in a democratic society allegedly, I don’t know what that means quite now, but you need breadth of optimism. And I’ve seen data recently which has said if you make 1985, the ground zero, the starting point, that more than 70% of the people are worse off than they were in 1975, even though productivity is skyrocketed. And I saw, I think it was Oxfam put out something recently which showed that the three wealthiest people in the United States have a higher net worth in the bottom 50%, three people relative to 50%. And then when you take what I’ll call the citizens united decisions and so forth, the currency of votes has been trampled by the use of concentrated wealth in driving the politics.

How do you envision, I think, like I said, as a doctor’s son, your diagnosis is extraordinary, but the remedies being implemented, given the nature of our political system, raises the question, and it’s not a Republican versus Democrat thing. People who know me know I’ve worked in both parties in Republican budget committee, democratic Banking Committee in the 1980s, but the idea that whoever you are in whatever party, you need lots of money to get elected or reelected, puts you in a place where you have, can you be responsive to the currency people and votes and implement the breadth of prosperity that you have envisioned,

Fred Block:

Right? So I mean, one of the premises of this argument is that this movement towards oligarchy and the domination of politics by the extremely rich is one of the fundamental factors that’s making it impossible to resolve this tension between habitation and improvement. And a part of what I’m trying to debunk is the claim that these vast inequalities are justified economically. And so I kind of keep coming back to the fact that I think that Thomas Edison, when he died in the late twenties or early thirties, I don’t remember the exact date he was worth, I think something like $35 million. And Edison had more than any other single individual transformed the technologies of the society. And even if we include some inflation factor, the 35 million in 1930 would still be less than a billion dollars now. So the first thing is that the idea that people have 200, 300, 400 billion makes no sense at all.

But the even more fundamental point is that Edison did a tremendous amount of his work by himself or with the team that he assembled, but that our contemporary oligarchs, the Musks and the Zuckerbergs, have essentially relied on technologies that the government developed over many years with very substantial investments in order to make their profit. So for example, when Musk came into Tesla, he didn’t found Tesla. He came in after it was already going. Tesla was able to recruit engineers and scientific talent who had been on electric cars under various government programs, government and industry programs over the previous 20 or 30 years because as we know the discussion, the attempts to develop electric cars date back to the 1960s. So there was this body of knowledge and this teams of engineers and scientists who had been working on this problem, and Tesla was able to scoop them up and draw on the knowledge that the government had helped to fund.

And then as we know that Tesla’s big initial boost came from a government loan from the Obama administration, so that the idea that that Musk should be able to command this amount of money makes no sense at all. In other words, that we don’t need incentives on the order of hundreds of billions of dollars to promote innovation. That the reality now is that much of this innovation rests on long-term public sector investments in producing scientific and engineering talent, and increasingly on continuing government investments in institutes and centers that are designed to help the private sector overcome technological barriers. So let me just give you one example that under Obama, the federal government created a series of national advanced manufacturing institutes. And the idea was that each of these institutes would get a large amount of government money and then matching funds from state and local government and from private industry, and that these institutes would help industry overcome technological barriers.

So one of these institutes is the National Institute for Innovation in Biopharmaceuticals. And essentially the issue is everybody recognizes that the way in which we create vaccines and the big molecule monoclonal antibodies and the other advanced medicines, that the way in which we produce them through batch production is extremely wasteful of water, energy, raw materials. It produces a lot of waste and so forth. And so the issue for the industry is how do you produce these things through a continuous process production that would reduce the amount of waste, reduce the amount of labor, reduce the cost of producing these dramatically? So this institute has recruited all of the big pharma companies in the US and the firms that produce the computer managed bioreactors that are used to carry out these processes. And they’re creating a test bed that will teach the industry how to make this transition to continuous process production because it’s too difficult and too expensive and too risky for any of these firms, even though they’re worth tens of billions of dollars to do it themselves.

So I just got an announcement, I’m on the mailing list of this institute, that one of their projects was to develop equipment to produce mRNA vaccines like the Covid vaccine in one piece of equipment that would take the process through all of the stages. And so they announced that one of their teams of scientists had actually solved this problem and created an mRNA factory that’s reasonably small, that’s modular, that reduces the waste and so forth. But the point of all of this is that the public funds this institute, the institute holds the industry’s hands, but then when it comes time for the profits, they all flow to the big pharma, to big pharma firms and the corporate leaders of those big pharma firms are able to achieve these huge financial returns. But all of this makes no sense because it is the public that’s facilitated this.

It’s our investment. So we’ve socialized the risk and privatized the profit, but in fact, the profit should flow back to the public. So this is the vicious cycle that we’re in. The oligarchs know that they’re dependent upon government spending and they want to keep things that way, that they’re able to get the government to take the risk and let them walk off with all the profits. So we need fundamental changes in the tax system. We need to, as you suggested, rolling back Citizens United, we need to find a way to essentially get the money out of the political system because its influence is so deeply corrupting, it’s the single major obstacle why we can’t make this transition to a habitation society.

Rob Johnson:

Yeah, I’ve heard a lot of objections in two realms in that pharmaceutical realm. One is why wouldn’t we put all the money up as taxpayers? Don’t we get an equity bundle in the outcome? If the outcome is bad or zero, then we get zero. But if it’s lucrative as Pfizer Moderna and others have been, why don’t we go along for the ride because we invested collectively? And the other side of it that I’ve heard is that because people of extreme wealth can keep their money offshore, we always say we can’t afford it. But the people at Oxfam kind of surprised me on a podcast a couple of years ago where they said, over the course of the pandemic, the 10 wealthiest people in the world doubled their net worth. And if you had a wealth tax, not on their entire wealth, but on the increment during the pandemic, you could have vaccinated and provided systems for health support for everyone on planet Earth.

And instead the cent billionaires got even more. And a question, how would I say, what does this have to do with the Sharian and other kinds of notions related to innovation? It seems like according to these people, it’s really gotten far off course. And the, what I’ll call bipartisan capture in the realm of money politics leads to no one stepping up for the common man or woman. And as a result, the despondency for incumbents, how would I say, isn’t necessarily, they’re the greater of two evils, but they’re viewed as not embracing the real mission. And I don’t know what the ramification should be about that, but I do know people who have said to me, I come from Michigan, and people in Michigan have said to me, Donald Trump is a symptom of the failure of the system. And he’s acknowledging that the system is broken and others are not.

Whether he can fix it or not is still in the future. And a lot of people were quite, they felt seduced and abandoned in his first term. But it’s a fascinating thing. What I love is how you are painting the picture of where we are and what a real human caring system would look like in this tension, this angst about how do we get from here to there I think is very, very important because if we don’t start making progress, the despondency and the, which you might call charisma of authoritarianism in response to despair, may continue to increase. And I like what you might call the warning signal that you put up is not just, this is ugly. You’re saying this is where we should go. This is the real remedy. How do we get there? That’s still troubling, but it’s an extraordinary illumination that you’ve created at a critical time.

Fred Block:

Oh, thanks. I mean, one of the pieces of the argument is an argument that the Democratic party and progressives in general have been too focused in their politics on the federal level and have had somewhat of a notion that if you get control of the government in Washington and you kind of turn some valves and you release some funds for this and for that, that will solve the problem. And the Biden administration did some extremely promising and constructive things. But what was lacking in my mind is this notion of shifting back to empowering people at the local level, at the state level. And again, we know some of the history here, which is that state’s rights was a racist slogan to maintain a system of racial apartheid in the American South. And so in order to dismantle that, we had to emphasize federal powers. And I want to continue to use those federal powers to force inclusion and racial justice and so forth.

But I think we have to go back to this idea that the roots of democracy have to grow at the local and the state level, that we have to expand people’s ability to make decisions, their control of resources at that level for people to relearn the art of democratic government at the local and state level. And that that’s essentially the route to reclaiming our democracy more generally through increased power at the local level. Back in the sixties, the new left talked about participatory democracy, and that the idea was that representative democracy is not sufficient. People need to be involved in making the fundamental decisions that affect their lives, where this highway is going to be built, what the local energy system looks like. And so I think that if we begin to move in that direction, it’s a way to break through some of the polarization because if one’s involved at the local level in arguing about how the particular city or town should develop, what its priorities should be that you and your pro-Trump neighbor can actually have a conversation about should it be childcare? What are the priorities, the things which so deeply, deeply divide people with this kind of cultural polarization are not necessarily to divide them when they’re attempting to solve real problems at the local level. And so if you begin to restore that belief in self-government, that’s essentially the route ultimately reclaiming democracy.

Rob Johnson:

Like I said, I come from Michigan, which is with automation, machine learning, globalization, the bankruptcy of the city, outflow of almost two thirds of the population of the city. I’ve seen a lot of discord and a lot of skepticism. And people like Bernie Sanders come in and win the primaries convincingly, and in two different elections, Donald Trump has prevailed in the state. But when I listen to the people in Michigan, they feel like they don’t see a way out. They feel as if, for instance, Detroit bankruptcy, they don’t get any help, but when Wall Street crashes, they all get bailed out. And as one of my friends said, this is a sophisticated financial guy that grew up in Detroit. He said, is this the mother of all moral hazards? The upside is theirs, but if they take big risk and it crashes, we pay for it.

What does that have to do with the social wellbeing? Because I said to him, I used to work in the Senate banking Committee. Once a crash is upon us, it doesn’t make sense to sit and watch it devastate the whole economy. The financial system is interwoven in a way. But when you see that you’re having these crises repeatedly, you have to restructure the rules about what kind of risk they can take ex to diminish the likelihood of bailout as opposed to making the default risk premium on their funding smaller, give big banks a competitive advantage and knowledge that the upside is, there’s a lot of people said when they did the Dodd-Frank and all the bailouts from tarp, the polluters got paid, is what Joe Stiglitz called it. And we didn’t penalize the people even in their bonuses. And so there’s a skepticism that’s just one sector, that’s one that I’ve worked closely with.

But there’s a skepticism now not is there a vision of healing? You’ve articulated a much more convincing one than I’ve seen elsewhere, but people are saying, even if the vision is right there on the plate, we won’t implement it. And they talk about leading politicians who are worth a hundred million dollars or whose family’s taking in millions as consultants or as lobbyists. And as one of my favorite thinkers about the investment world, a man named Porter Stansberry said, there are three corruptions, the military industrial complex, Wall Street and the Federal Reserve as a combine. And what was the thought and K Street for just refracting everything for the people who can pay for them to buy what the government produces. And I sense right now, the reason I’m bring these things up is you are showing us a vision of what tooth make the world look like to get between here and there is important because the despondency of the body politic now, who can feel that the basic habitation ingredients are not being created or being under supported.

And these parables about unfettered innovation, growth and so forth are producing almost cartoon characters of mega wealth and how would I call it? It’s not uneducated working class people that are despondent. It’s everybody up and down the chain that is concerned right now.

I was just grateful that you sent me the book, but I really, I just zoomed in on it and I couldn’t let go. I had to go right through and felt like, how would I say, felt like medicine? Anyway, thanks very much. Thank you once again, folks, the name of the book, the Habitation Society, creating a Sustainable Prosperity, and it’s put out by Agenda Publishing. I’ve seen it on major sites for pre-ordering for roughly a month from now, which with today being January 23rd or 24th. So any rate, thanks again, and I look forward to staying in touch with all of your thinking and all of your writing. I’ve always been nourished by your scholarship. Thank you so much. And check out more from the Institute for New Economic [email protected].