Q: What’s your perspective on Barack Obama and the economy?
DR: Obama means the best, but we have to remember that he is working within a system; his perspective is presupposed by an economic model. And that model is biased toward those who have the means to accumulate capital, and against those who create real value. Obama said as much in his inaugural speech, when he spoke about finding ways to promote the interests of people who actually “do stuff.”
Most of America’s Founding Fathers foresaw this scenario. They had direct experience of the British East India Trading Company, a monopoly chartered by the crown. The monarchy wrote laws prohibiting colonists from generating value from the cotton they grew. They weren’t allowed to fabricate clothes, for example. They had to sell cotton to the Company, at fixed prices, and buy back clothes from England.
The contemporary corporate economy works the same way–extracting value from the periphery to support debt payments to central banks. We have two separate economies going on–a speculative economy, which is the Wall Street economy, and the real economy, which is Main Street.
Most people are judging Obama’s success through the metrics of Wall Street. Obama made a speech today and the Dow Jones average went down. Now, is that a good thing or a bad thing? It depends on your perspective. From my perspective, the stock market has already been exposed as a sham–a drag on the real economy. If it goes up after Obama speaks, it means then that people’s faith in the phantom speculative economy has increased and thus their faith in the real economy has decreased. If the market goes down after Obama speaks, then might that mean that people realize the pyramid shell game of a stock exchange is no longer the place to be invested in, and that it is much more important to be invested in real things or to be on the side of people who are creating value rather than that of people who are extracting it?
Q: Do you believe a Wall Street crash could be beneficial to the real economy?
DR: I think the crash of the speculative economy is very painful for the real economy because jobs are lost and we’re living on a landscape where it’s very hard to recuperate. We’ve grown so dependent on our corporations for money and for employment that it’s very hard to just create new employment in a non-corporate way. But it is entirely within our ability. We just forgot.
Q: What is the function of interest rates in a speculative economy?
DR: Interest rates are the way that most of the money is made in our economy. Money is created at an interest rate; it’s lent into existence, and there’s a ladder of institutions that lend down to each other until it gets to the business or person that is supposed to be the end user of that money. But money becomes too top-heavy when there are too many institutions to support with every dollar that’s borrowed. And eventually the system stops working. So then the central bank tries to lower the interest rates so that people can still borrow it.
I think the current problem is not that there aren’t enough people offering credit, but there’s not the demand for the product that the banks are creating. They try to generate demand for currency by giving out really cheap loans on houses. That really was not about real estate at all. The myth of an “ownership society” was developed in order to generate more business for bankers–more excuses to borrow money in order to “own.” It’s not a secret cabal of conspiring bankers. But the banking industry has become a purely extractive force, and it’s healthier to watch that crash now of its own accord than to have the big bloody revolution that would happen if we don’t. I’d much rather see the global economy level the playing field all by itself than to have our artificially wealthy nation stampeded by those whom we exploit.
Q: Americans are now reliant on foreign manufacturers. ls there any way this trend can be reversed?
DR: I think we have to decide what it is that we think we can do well. We can look at the law of comparative advantage, the basic premise of which is that at full employment if you do the thing that you do best and let others do what they do best, everyone’s going to end up doing well. At less than full employment, the law of comparative advantage no longer functions. So we can’t just say, “Oh, if we’re good at microchips we’ll do that, and let China do car manufacturing.” That’s only beneficial to everybody if everybody’s fully employed.
And we’ve reached the point of diminishing returns in terms of industrial age, mass-produced goods. We’ve found out that the only way to increase profits in a mass production scheme is either to make production cheaper or get more people to buy more stuff in less time. We’ve reached the limits of both. We have outsourced production, used poisonous materials, exploited populations and polluted vast territory. We’ve also reached our limits of consumption. People just can’t consume anymore, they don’t want to. They no longer find the sense of satisfaction in it–all our possessions separate us from each other rather than bringing us together.
By leaving the growth requirement of the speculative economy behind, we have an opportunity to make better stuff and more sustainable stuff, and actually look at ways to work less hours. It’s not a fantasy at all–just look at the many local and sustainable businesses in America today. There are enough around. Places where they design and manage and manufacture their stuff and even source the material in one area and either distribute really widely or distribute to a certain region.
If you’re no longer indebted to the bank or to an interest-driven economy, then you’re much freer to create a sustainable business model. So then it’s not a matter of saving industry as we know it, but rebuilding a scaled set of businesses tied to the real world and the communities in which they are operating. That’s not a pipe dream, that’s really possible.
Q: Doesn’t this concept reconstruct the entire idea of profit making?
DR: Not reconstructing, but reviving. It goes back to the people who are the supposed heroes of the corporate libertarians. Adam Smith was looking for a scaled economy of small businesses and farmers, and people doing things. He thought local businesses would always do. better and the people would always prefer to do business locally because they’re going to be biased toward the places where they live. It’s not really a step backwards, it’s more a step through. We don’t have to move back to the hunter-gatherer stage. Just a human one.
Q: Cities aren’t particularly sustainable. What practical advice do you have for urban dwellers?
DR: You can do urban agriculture and rooftop gardens and reduce the stress load and energy costs. But you’re limited. I would think that people in urban areas can certainly sign on for Community Sponsored Agriculture, subscribe to a farmer, go out every couple of months and actually help. There’s enough to do in the urban terrain as well. It’s not like cities need to go away. You can contribute to your public school rather than sending your kid to private school. Take the $20,000 worth of time that you would have spent [on a private school] and spend those hours making a public school better. That way you’re actually reinvesting in a city.
Cities do accomplish certain things well. Unless we have a sudden population decline, we’re going to need people who are willing to stack up on each other like that for the rewards of getting to see lots of people, getting better nightclubs, bigger bookstores or whatever you might get. That’s the only way we’re going to cope with overpopulation.
As we spend less money on insulating ourselves from the poor, and we have more money to reinvest in our infrastructure, we can start looking at things other than flushing massive amounts of human waste into toxic chemical sewage. We can look at ways for cities to consume a lot less stuff and produce a lot less shit. That’s not rocket science either; its really just a certain amount of retooling.
Q: Is this what you mean when you describe the current financial crisis as a “unique opportunity”?
DR: Yes. The other unique opportunity is the development of local and alternative currencies. In Washington and Oregon you’ve got the Fourth Corners exchange; there’s also the LETS (Local Exchange Trading Systems) system, there’s Time Dollars. There’s lots of ways to earn money into existence rather than borrow it into existence. It could be as simple as starting a babysitting club where people earn babysitting hours for every hour they babysit. And maybe people will start being willing to accept babysitting hours as a unit of currency, as a standardized unit. You know, if you give me three babysitting hours, I’ll give you this record, or I’ll give you this book I wrote, or I’ll give you this food I grew and then I’ll spend the babysitting hours hiring another kid to babysit.
Q: Do you mean a barter system as opposed to a Federal Reserve note system?
DR: In a sense, but it doesn’t have to be barter. Just real. Barter implies a two-way thing; that I get your thing and you get mine. Money–actual currency–allows for a third or fourth party to enter into the transaction. There’s a restaurant in my town that needed money to expand and the banks weren’t lending any more money. So the owner asked the community for money to expand, and the way we’re paying him is by buying restaurant dollars. For every dollar we spend we get $1.20 worth of redemption at the restaurant. If you put in $500 you get $600 worth of food. That gives me a twenty percent return on my money–and it’s money I’d spend anyway, because it’s the only organic restaurant in town. Meanwhile, the restaurant owner gets the money cheaper than he’d get it from a bank. What’s that? That’s an alternative currency.
Look at the Eldercare dollar system in Japan where people needed their elderly to get taken care of during a serious recession when no one had money or jobs. They created an alternative currency system through which people could invest their time; you’d bathe someone’s grandmother where you live, and you’d earn a certain number of credits for someone else to take care of your grandparents in a distant town. Each kind of task–like bathing, cooking meals or playing gin rummy–had a different, per-hour value attached to it. Hundreds of millions of dollars worth of health care was provided in this way in a country where no one had the money to buy it but everyone had time because they were all unemployed. And now that the economy has gotten better, the old people still prefer their health care to be given to them through the Eldercare system than through the professional retail system, because the care turned out to be better, higher quality and more human.
Q: Do you envision similar alternatives to housing, i.e., eco-villages, co-housing, etc.?
DR: People are going to come up with their own models. And there are a lot of alternatives in-between renting from an evil landlord and creating a commune. There are a lot of steps between those things. People are going to find the place that they’re comfortable. The most significant thing that could take place is simply for people to realize that there’s more than one model for life and commerce out there. As soon as we start to realize that there are things we need in this world other than money, we find out there’s ways we can pay and participate in society other than with money–certainly other than the centralized bank paper we currently call money.
Q: Do you believe people will start adopting these measures and moving away from the 7-Eleven consumer mindset?
DR: People don’t generally abandon consumer capitalism unless their feet are held to the fire. We have some very well constructed myths of wealth and currency. Sometimes the only way for those myths to get shattered is through shock and awe. The fact that America now has a crisis may be enough to jostle us loose from our death grip with bank-driven capitalism.
Q: Have you seen anything recently that has changed your perspective of what’s happening with the economic crisis?
DR: It’s bumming me out that the metrics people are using to gauge the economic crisis are actually the metrics that indicate how shackled we are to the failed model. Mortgage rates and stock averages are not true signs of prosperity. They are life signs of the dying capital infrastructure. But I’m encouraged by how innovative people are being and how they’re not seeing every social and economic innovation as part of a weird, lefty communal paradigm. And when people actually do it, it seems entirely normal and real.