Melissa Harris-Perry: It's The Takeaway. I'm Melissa Harris-Perry. Thanks for being with us at the start of this new year. We've been doing what millions of Americans are doing in these first days of 2023, taking stock of our health, our collective national health.
We come now to someone who's likely to take a lot of the blame or earn a lot of the credit for the state of our economic health, President Joe Biden. He's speaking here in mid-December.
President Joe Biden: In a world where inflation is rising at double digits in many major economies around the world, inflation is coming down in America. In fact, this new report is the fifth month in a row where annual inflation has fallen in the United States.
Melissa Harris-Perry: Although the president's assessment of an improving American economy is consistent with many experts, the Center for American Progress described the US economic recovery as the strongest among G7 nations, citing continuing growth of GDP and a tight labor market. If President Biden seems calm, cool, and collected under a macroeconomic pressure, perhaps it's because he's been here before. Back in 2009 when Biden began his two-term journey as vice president to President Barack Obama, the American economy was in full-scale tailspin of the Great Recession, which officially ended six months after the Obama-Biden team took office.
In 2021, Joe Biden entered the White House as president this time but inherited an economy battered by an unprecedented global pandemic. Maybe, for President Biden, it's a little bit like that sluggish slump that comes from indulging in one too many holiday pies. If you've gotten fit before, you know that with a little work you can get in top shape again. Is that what it feels like outside the Oval Office?
What does it mean to have a healthy economy if you had to charge Christmas gifts on a credit card with 15% interest? Does it feel healthy if you can't buy a house? Why is it that the economy seems so mad when we actually save our money instead of spending it? To get some answers, I'm joined by Dirk Philipsen, Associate Research Professor of economic history at Duke University and a Senior Fellow at the Kenan Institute for Ethics. Dirk, welcome to The Takeaway.
Dirk Philipsen: Thank you for having me.
Melissa Harris-Perry: Earlier on the show, we talked about key indicators of a healthy democracy. What do we look for to determine if we have a healthy economy?
Dirk Philipsen: I think that the two are actually very related. The way we think about it in economy is, I think, at this point, very narrow and deeply dysfunctional. The focus on growth and GDP growth and profit and increased output is, in fact, creating problems that are much, much bigger than things like inflation or whether my children are going to be able to buy a house because they address things like whether we are burning up the planet and trashing it and depleting all the resources. They're also addressing as to how we are creating societies that are not functioning anymore in terms of democratic governance and that are rifted apart between different factions of people and that are increasingly unequal.
The biggest problem is, for me, the sole focus on what's the gold standard is for the economy, which is output, which is, essentially, in financial terms, what we sell and buy in the marketplace. Very obviously, this ignores a wide range of things that, for you and me, make life worth living. Everything from democracy to freedom to equality to a healthy environment to all of those kinds of things are simply not part of our economic indicators, and that is an enormous problem that is now widely recognized by scientists.
Melissa Harris-Perry: Is there a way to measure those things? Are there quantitive measures for understanding how you and I experience either our microlocal economies or our more macro-national economy?
Dirk Philipsen: That's a great question. I, as you know probably, started this journey looking into these things by thinking that we could just simply design better metrics and replace GDP with these better metrics, and everything would be largely okay as people tend to follow what we measure. We pay attention to what we measure, and we don't pay attention to what we don't measure. I have since realized that we now are at a point where there are literally thousands of metrics for the economy, for society, for our well-being that are actually quite good, and it turns out that they have very little impact on policy-making.
I have realized that the problem is deeper. It's not just the bad metric in this case, mostly GDP, it is that we live in a system that incentivizes all the wrong things. It's essentially a system that really values only that which has a price tag attached to it, and it counts only those things that have a price tag attached to it. It doesn't matter to the system what that price tag is attached to, whether it is art or pornography or whether it is weapons or toys. It doesn't care about whether it creates inequality or alleviates inequality. It surely doesn't care about gender and race relations. It doesn't care about any of these things, certainly also not about democracy.
This is a system that is hardwired to produce more output. This is also in your opening piece. It's really interesting that we have all bought into this, that we think that growth is good, and lack of growth is misery and depression and crisis. Of course, nothing could be further from the truth. The analogy that I use sometimes is the growth of a human being. If you are poor/a child, we would like you to grow, but if I told you, at the age of 20, that I would like you to continue to grow the same way that you grew when you were 2, you would call me insane.
This is precisely where we are right now. You do not need growth in order to develop. What we do, as a 20-year-old, we still grow, but we don't grow in size, we grow in personality and in wisdom and in knowledge and so on and so forth. All of those things apply quite perfectly also for the economy. What we need is an economy that no longer requires us to grow in volume.
Melissa Harris-Perry: Dirk, I want you to take a quick pause right here because I want to dig into that notion of how we can grow through a deep development of our economy rather than simply in size. We're going to take a quick pause. When we come back, we will be back with more on the health of our economy and what a healthy economy looks like for healthy people and a healthy democracy. It's The Takeaway.
Melissa Harris-Perry: You're back with The Takeaway and more of my conversation with Dirk Philipsen from the Sanford School of Public Policy at Duke University. He's also Senior Fellow at the Kenan Institute for Ethics. Dirk, perhaps because you and I both spend time on college campuses, I love that you went to the 20-year-old development, that is, I really do love young people at that age thinking about how they grow and develop into new kinds of people even if they're not becoming 9 feet tall, which is what their growth would look like if they were still moving at the rate of being toddlers. Talk to me about the ways that economic boom time as actually a growing output might actually be bad for people.
Dirk Philipsen: This a long, complicated story, but there are some very obvious examples, of course, right now, that we have a window of about 10 years in order to not burn up the planet and leave a miserable future for our children. That is, by any reasonable standards, a monstrous task even under the best of circumstances, but we are not under the best of circumstances, and we still have a system that pushes us to keep growing.
Growing means exponential growth. This is something that most people have a really hard time wrapping their heads around. At a 3% growth rate, which most economists would consider to be a healthy growth rate, we would double the output of the economy every 26-27 years. If I show that graph to any five-year-old, they would understand it as patently absurd. Economists really don't want to talk about that graph because they don't really have an answer as to what that could possibly look like on a finite planet.
The most obvious example for why this does not work is that we would just simply deplete the very foundation, the ground that we stand on. Also, when you, again, think about what most people aspire in life, what they would like to have in life, it is things like community and safety and good work and these kinds of things, it's not more stuff. We have long passed the point, and particularly in the global north, where we need to continue to grow.
We can at the same level of economic output of course still continue to improve things. A perfect example is the computer that I am talking into right now which is millions of times more powerful than what I wrote my MA thesis on 30 years ago, and yet it is something that actually costs less than the computer that I bought 30 years ago. This is improvement and development necessarily without growth.
This is true across the board. Therefore what we need is an economy that doesn't need to grow. I just came back from Spain where there are a group of researchers that just got a $10 million European research fund grant to think about what exactly an economy would look like that no longer needs to grow, what capitalism does. We don't quite yet have figured out what that would look like but we do have a lot of where we're making huge strides in that direction.
Melissa Harris-Perry: As you're laying that out, I guess, as I'm continuing to think through this metaphor of New Year's and of making resolutions, I'm wondering if there are-- the resolutions that are bad ones, we are told from an individual perspective, are those that are vague, get healthier. The ones that work is, "I'm going to walk for 15 minutes every day at lunchtime," or something.
Are there clear and consistent concrete ways that we can begin to move towards a mindset--- and I mean collectively here. When you said people don't just want more stuff, my little radar went off like, "Is that true? Don't some people just want and maybe even whole nations actually need more stuff?" How do we move in the direction that you're suggesting?
Dirk Philipsen: Yes, that's a great point. I think that the research is pretty clear on what makes people happy. When people-- when they get really old, look back at their lives, they hardly ever say, "I wanted to be in more conferences, and I wanted to work longer hours, and I wanted to accumulate more stuff." They never say that. What they say is that they wanted to have better community, or they wanted to spend more time with their loved ones, or they wanted to create a more peaceful society, or whatever.
I think that the short answer is that we know from solid research that consumption for instance is both. It is oftentimes the result of depression and it also leads to depression. Whereas human contact and helping each other, and doing all the work that is actually not part of the official economy because it is not paid makes us happy. Yes, you're absolutely right, global south countries, poor countries in particular, are still in need of more stuff. Overall, as a world, we definitely are not.
Refocusing your life on things that build community, build relationships. A mainstream economist John Maynard Keynes was talking about this. He wrote this letter to his grandchildren in 1936 predicting that in 100 years, i.e. in 10 years from now, we would live in a world in which we would no longer have to work more than 15 hours a week. His idea was that we could finally get beyond the just being a very limited human being who does nothing but look out for him or herself and compete with others and constantly look for money and stuff and finally starts developing the finer aspects of life.
He was absolutely dead certain that would happen. The interesting reality is that we are actually at that place now where we could make that happen, but we live in a system that does not allow us to make it happen. It is not a human problem. I, as a college professor, have realized that the only people who ever really believe in this narrow neoliberal sense of economics are people who have taken too many economics classes, nobody else does. All the other students I work with, they have very different visions of life than just being out there and working all the time and making money.
Melissa Harris-Perry: Dirk Philipsen with a little bit of hope there from the future from our young people. Dirk Philipsen is Associate Research Professor of economic history at Duke University, and a Senior Fellow at the Kenan Institute for Ethics. Dirk thanks so much for joining us today.
Dirk Philipsen: Thank you.
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