Consider what typically constitutes ”good” economic news: The stock market booming. Corporate earnings rising. Business growth. In general, any factor that contributes to an environment in which businesses can get bigger, hire more workers, make more profits, and enrich investors to a greater degree. This vision of the economy’s legitimate purpose is so deeply ingrained in the cultural fabric of America that any economic journalist or analyst who did not accept it would never be hired in the first place. Yet it is a fundamental misunderstanding of what the economy really is.
The grave distribution problem we have in our society of a few billionaires and many more poor people is treated as a second-order concern by traditional economic analysis.
The economy’s job is to work for people. It is not the job of people to sacrifice themselves on the altar of the economy. The subconscious feeling drummed into all of us that we should feel some sense of collective pride for being ground into dust in service of economic growth is a sick bit of indoctrination that is stubbornly hard to escape. The simple step of asking what the economy is doing for us—rather than what our lives are contributing to the economy—can go a long way toward reframing how we all think about this.
They say that behind every fortune is a crime; likewise, behind every mainstream economic analysis is a set of poisonous assumptions that exist to tranquilize us. Consider the problem of inflation. It’s rising around the world. The growing consensus in the financial world is that the era of low inflation is gone for good, because the era of globalization that enabled it is coming to an end. Another way to say this is that it is becoming harder for global corporations to leapfrog around the globe in search of poverty-stricken people to exploit for cheap labor. The generations of workers in China and Mexico and Bangladesh and elsewhere who served as the human fuel for low labor costs and cheap, abundant consumer goods would now like to imagine that they may one day have decent lives. These workers are getting the strange idea that a lifetime of hard work should lead to higher living standards for the next generation. This really throws a wrench into the capitalist formula of ceaseless hopscotching to increasingly poor nations in order to maintain desperately low wages. Like rapacious Magellans, these companies are finding that you can only offshore jobs so many times on Planet Earth before you end up back where you started.
If you arrange your economy, as we have, for the purpose of producing corporate profits, a permanent rise in inflation is bad. But if you look at it as a sign that it is not quite so easy these days to find millions of desperate people willing to work for pennies an hour, it seems like a historic reason for celebration. If human flourishing is our primary goal, the most obvious response to inflation is to ensure that people have enough money to cope with rising prices—to ensure that real wages are rising for low-income workers, that housing and health care and higher education are accessible and affordable. The human-centric response to inflation, in other words, is public investment in public goods, a broad push to provide everyone with their basic needs. There is no better way to fight high prices, after all, than to make things free.
If, however, you view the economy as a machine for pushing up stock prices, your natural response to inflation is the opposite: austerity. Engineering a recession, creating higher unemployment, and brutalizing workers so that they will once again grow desperate enough to accept lower wages is also an effective way to fight high prices—and one that requires much less work than, say, building a free public healthcare system. As long as you personally have enough money to insulate you from the consequences of this approach, it can be quite appealing. This is, not coincidentally, the consensus policy choice of the global economic establishment, a group of people who have the luxury of not having to view the issue from the perspective of a single mother clinging to a tenuous job at a factory in Nuevo Laredo. So when you see, for example, prominent Democratic economists arguing against the cancellation of student debt, ask yourself if they might feel differently if they were poor enough to be touched by the icy hand of ruinous debt themselves.
The idea that the proper function of our economy is to provide humans with decent lives carries with it the understanding that the distribution of material resources is of primary importance. Saying ”The United States is the richest nation in the history of the world” means nothing to a person who has no net worth and is sleeping in their car. The grave distribution problem we have in our society of a few billionaires and many more poor people is treated as a second-order concern by traditional economic analysis. The simple intellectual act of accepting that the wellbeing of humanity is the economy’s real function is enough to prove, with little room for argument, that having high inequality means your economy is broken. Policymakers prefer that the public thinks of economics as an arcane field that regular people can’t understand. But everyone can understand that human rights are more important than money. All policy ultimately flows from these priorities.
In the old days, the field of economics was called ”political economy.” This was a more honest formulation—it reflected the basic truth that the economy is inseparable from politics, and, by extension, from morality. The impoverishment of working people is good news for America’s worst employers, who can prey on that human need to extract more value for shareholders. That is an economic fact, but it is not a natural condition of the world. It is, instead, a collective choice we have made, to structure our system in a way that allows such a thing to be incentivized. That system does not exist in nature; we built it. We can change it. Money is a fanciful invention, a utilitarian creation, a method to smooth exchange and facilitate ease of life. It is a tool that is meant to help us. It is not, under any circumstances, a master to be served.