What Is and ISN’T the Economy for?

John de Graaf and David Batker have done something wonderful – they wrote a book about the economy that is funny. Not only is What’s the Economy for, Anyway? funny, it is also simple, so that even those without advanced economic degrees can understand it. While the book may not exactly answer the question it poses, and may be too superficial for those with advanced economic degrees, it raises a multitude of important issues and addresses them in a clear and concise manner. Oh, and did I mention it’s funny?

A new book explores the function of the economy.

The authors’ main question is obvious from the book’s title: what is the economy for? They argue that this is the fundamental question that must be asked before any policy shifts. And they also argue that there must be policy shifts: a shift away from “grow, baby, grow” towards a sustainable economy. In order to make that shift, we need to understand what a sustainable economy entails, and that’s why their seemingly simple question is so important.

The economy is arguably for a multitude of things: material stuff, education, health, leisure, fairness, insurance, secure retirement, a sustainable environment, and the list could go on endlessly. De Graaf, a filmmaker and activist, and Batker, and ecological economist, ultimately side with Gifford Pinchot, and argue that the economy serves to provide “the greatest good for the greatest number over the longest run” (28). The rest of the book is taken up with explaining how our current (and their focus is on the U.S.) system fails to do this, and providing examples of how we could improve in different areas: labor, health, education, environment, poverty, food.

The book is highly dependent on examples of what they consider successful programs from other countries, mostly European, mostly Scandinavian. Indeed, while their examples are relevant and cogent, they could have done with more diversity. Everyone knows Denmark is full of highly taxed, very happy people; however, there must be examples from Latin America and Africa of policies that are moving those regions towards sustainable prosperity. While the United States is certainly more similar to Western Europe, it seems slightly shortsighted to limit our emulation to a certain region when there is surely a wealth of useful knowledge and examples throughout the world. However, that criticism aside, the examples they do use offer plenty of insight and deserve serious attention from policymakers here in the States.

If we had a policy similar to Germany’s Kurzarbeit, in which workers can reduce their hours and have some of the income loss compensated by the government, we may have faced less unemployment during the recent Recession. Bhutan may be onto something with their Gross National Happiness indicator (one of the most insistent argument in the book is that the GDP needs to quickly become an artifact of the past). Let’s guarantee mothers some time off after giving birth, like every country in world does, except Liberia, Swaziland, Papua New Guinea, and the United States. In fact, there were times while reading that the U.S. felt like a third-world country – we Americans don’t have vacation time, maternity (or paternity) leave, or a national health care system.  And at the same time, we are constantly told to make unhealthy choices – eat this processed food! Spend time in front of a screen instead of with people! Make sure you work really long hours so you can buy this fancy, cool, entirely unnecessary gadget!

Bhutan's Gross National Happiness is an inspiring new way to measure a country's success. (photo courtesy of ctsnow via flickr)

The book, while necessarily limited in depth (after all, it does need to end at some point), offers a brief course in U.S. economic history, following the rise and fall and rise of laissez-faire economics, particularly outlining our recent financial woes. It uses pertinent examples as a way to offer suggestions on how to ensure that the future economy does provide the greatest good for the greatest number of people for the longest time. And these goods are not simply material goods, but include social, cultural, and physical goods. The authors argue for a more equitable society, one that includes a safety net, one that rewards hard work, one that values more than consumption. You might disagree with some of their suggestions. In fact, sometimes de Graaf and Batker disagree, and that is one of the joys of reading this book. It’s not just a book about politics, or economics. It’s a book about people, written by two people, who speak about their lives – their families, their experiences, their doubts and fears. They intersperse relevant personal anecdotes, which are sometimes touching, sometimes provocative, and yes, oftentimes funny.

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