The Story of Debt

As long as we continue to create money as interest bearing debt, we have little choice but to accept bankruptcy as inevitable, or continue to grow the economy without limit.


Many of the grand challenges we face today are symptoms of this underlying cause. Enough people need to understand this to allow our politicians to speak out against economic growth.

How can we make this message more understandable and actionable?

Ordinal Language may undermine climate change deniers’ efforts.

While 97% of climate scientists concur on the causes and dangers of climate change, merely mentioning “uncertainty” often allow deniers to rally their following. Recent research suggests that using language that links increased risk to uncertainty can help orient people to the real dangers of climate change.


Genesis of Debt

In the beginning the earth formed, and people arose upon the earth, and it was good.

The people hunted and gathered food to feed their families. They built shelters and tools, and they sang, and danced, and worked and played together in small groups, tribes, and villages, and it was good.

Some groups had plenty, others suffered shortages, so the people were happy to share and help one another. Everyone could remember a time when they had suffered shortages and others generously shared, and it was good.

Some people were naturally better at hunting, some better at gathering, some better at making tools, and still others better at using tools. They were happy to share among each other, and it was good.

Great explorers brought back stories of other people, living in strange and distant lands, with their own ways and their own skills and their own things. The adventuresome and the curious visited. We gave them our gifts, and they gave us their gifts. Culture flourished, and it was good.

As the territory expanded the exchanges became too many to remember, so they began a tally to record each gift. Some used small stones, others gathered distinctive shells, some used beads, and still others recoded the tally as notches carved on animal bones. These records helped the people remember each exchange, and it was good.

Exchanges of food, clothing, tools, trinkets, materials, and help among people became more important as the culture became more enriched, skills specialized, and people became more interdependent, and it was good.

Eventually various signed notes were accepted in exchange for food, clothing, and other goods to record the agreement to repay later with something similarly valuable. The notes recorded the agreement to repay and after a timethe notes themselves became recognized within the community as representing value. These promissory notes were valuable because they made exchanges so much easier, and it was good.

In some villages an elder would make several distinctive metal disks decorated with various noble symbols. The elder wouldexchange these tokens at a standard rate for genuine notes signed by trustworthy villagers. The tokens were more durable, had a standard value, were recognizable, and were easier to exchange. Because they were trusted and accepted as readily as the signed promissory notes, they became widely used, and it was good.

Sometimes a family was unsuccessful in hunting and gathering; they needed food, and had no tokens. Other people were fortunate in having enough food and also had tokens they could share. The people with tokens to spare were generous in lending tokens to those in need. A record was made of this loan, backed by an earnest promise to repay the loan as soon as the misfortune passed. Conditions eventually improved, hunting became successful, food was exchanged for tokens, and the loan was repaid. This happened often enough that certain people became skilled in the exchange of tokens and recording loans. They became known as bankers, named for the benches where they worked counting tokens, and it was good.

Of course the people who worked as bankers also needed food, clothing, and shelter. What they had to offer in exchange were tokens. So it soon became the custom to lend ten tokens today for an agreement to return eleven tokens one year later. The eleventh token paid to feed, clothe, and shelter the bankers. It was called interest and this seemed fair.

One year ten hungry villagers each borrowed ten tokens with the promise to each repay the banker with eleven tokens next year.  They used the tokens to buy food for their families. Throughout the year they worked hard, their crops were successful, and they ate well. They even grew enough food to sell some surplus in exchange for tokens.  But only 100 tokens were available throughout the entire village while 110 tokens were owed to the bank, and it was not good.

An Unlikely Tale

Once upon a time the people of a great land were troubled and deeply divided by two difficult problems. Government throughout the land was nearly deadlocked. The Red team was certain the biggest problem was the growing national deficit. It was presently more than $17 trillion and growing quickly. The Blue team was unconcerned with the national debt and instead was focused on global warming, caused primarily by carbon dioxide emissions. Currently more than 5 billion tonnes of carbon dioxide is emitted into the atmosphere each year by fuels burned in the land. These issues caused a growing rift between the Red and Blue teams as each denied not only the importance, but the very existence of the problem the other team was focused on. The land was sharply divided and people were pessimistic.

Then a wise man suggested a solution. If we agree to sell the right to emit carbon dioxide and use the money to pay down the national debt, perhaps we can solve both problems at the same time.

Protests erupted far and wide. Why do we in this land have to pay for emissions that are dispersed globally and are free in other lands? How will we measure emissions and ensure each emitter is paying their fair share? How can we create such enormous value from almost nothing? Why do I have to pay to solve a problem that I do not even acknowledge exists?

Rare acts of remarkable statesmanship allowed the plan to move forward even as news programs continued to intensify the conflict and controversy. Issues large and small were hotly debated. The plan that was finally agreed to set the price of carbon dioxide emissions at zero for the first three years. This cost increased gradually each year and was set at levels designed to repay the national debt completely over a period of fifty years. Promising results eventually flabbergasted the naysayers. It was working. The deficits and emissions were both decreasing. Other lands followed the example and eventually a carbon dioxide based currency emerged world wide.

They lived happily ever after.


Reproductive success is the primary mechanism shaping life on earth for more than three billion years. Organisms that successfully reproduce the most offspring become most abundant within an ecosystem. Ultimately, what matters is total lifetime reproduction of the organism. Reproductive success has been a spectacularly successful pinnacle—an ultimate goal or final cause—leading to millions of distinct species, and billions of individual living organisms.

What does it take to succeed at reproduction? Bacteria only need nutrients, a non-lethal environment and a short time to grow until they divide asexually via binary fission. Bacterial populations can double as quickly as ten minutes. This is so successful that there may be billions of bacteria species. Insects reproduce sexually and the majority of insects hatch from eggs. This also seems to work well, resulting in about one million described insect species with estimates of perhaps five million species yet to be discovered and described. Increasingly complex organisms have evolved through speciation. Today there are nearly 65,000 described chordate species, including more than 5,000 described mammal species.

Animals, including humans, reproduce by surviving to sexual maturity and mating, followed by conception, gestation, and birth. This leads to the development of many of the most esteemed human traits. Survival requires successful strategies for obtaining food, shelter, and safety including protection from disease, injury, toxins, and predators.  Physical strength, mobility, hunting and gathering skills, appraisal of resources, and alertness to dangers, assessment of risks and benefits, planning, disease immunity, healing strategies, and endurance all develop as a result of the need to survive. But more is needed to mate successfully. Coercive approaches to mating rely on dominance—the threat of harm. Dominance is often obtained through a combination of physical size, physical strength, aggression, and fighting ability. The importance of dominance in mating leads to increases in these traits.

Rather than relying on coercion, modern humans increasingly attract mates through some combination of beauty, charm, wit, talent, and practical benefits such as being a good provider. Increases in intelligence, knowledge, humor, cleverness, boldness, charisma, resourcefulness, and other valued human traits are the result.

Mating only results in reproduction if both the male and female are fertile. Fertility requires good health, adequate nutrition, and other conditions. These favorable traits are also promoted to attain successful reproduction.

Placing reproductive success at the pinnacle of life has worked very well, steering human development in many beneficial ways. It has also brought us cockroaches, bacteria, mosquitos, overpopulation, and societal collapse. While reproductive success promotes flourishing as number of offspring, it ignores limits to growth, as it selects for mating success.

Mating also helped to popularize conquest as violent behavior could lead to reproductive benefits. As one famous example, consider Genghis Khan, who started the Mongol invasions that resulted in the conquest of most of Eurasia. These campaigns were often accompanied by wholesale massacres of the civilian populations. Genghis Khan was one of the most powerful warlords during his reign; as a result the harem that he kept was of enormous size.

Perhaps this orgy of fornicating and fighting, raping and pillaging, helped religion to elevate salvation to the pinnacle. The promise was simple and compelling. Follow the divine teachings of your chosen religion and you will enjoy eternal life in paradise. Anger a god or disobey a true prophet, and you will burn in hell.

This was certainly a profound advancement. Often beginning with beliefs about the cosmos and human nature, religions derive morality, ethics, religious laws or a preferred lifestyle. Religion provides a clear understanding of what is good, and can guide humanity toward that good. Religion also answers those nagging questions about life, death, and the origins of the universe.

With salvation at the pinnacle, magnificent places of worship were built, fabulous art work depicting significant people and events in the religious narrative were created, sacred music was written, performed and enjoyed. Study of sacred texts, notably the Gutenberg Bible, served to increase literacy throughout the populace. Codes of moral behavior such as the Ten Commandments, the Talmud, the Noble Eightfold Path, dharma, and sharia all guide the faithful in their daily lives. Flourishing took the form of the pious life.

But religious belief relies on faith, and the dogma preached by the various religions is inherently incompatible. Each distinct religion has its own origin myth, deities, sacred texts, prophets, leaders, beliefs, rules, and customs. Certain beliefs of one religion conflict with beliefs of other religions. This conflict often leads to discord, including religious violence.

Faith can become strained, especially when it is contradicted by empirical evidence. This famously happened when Galileo Galilei came into conflict with the Catholic Church over his support of Copernican astronomy. More recently, modern theories on the formation of the universe and the evolution of life challenge religious origin stories. As explorations continued and worldviews expanded toward a global perspective, the conflicts inherent in the various faiths became obvious.

If faith is not the ultimate answer, then perhaps we need to look toward reason and place Truth at the pinnacle. The age of enlightenment challenged ideas grounded in tradition and faith and began to reform society using reason, and advance knowledge through the scientific method. It promoted scientific thought, skepticism, and intellectual interchange.

And there were always bills to be paid, so it was not long before Adam Smith began to think about economics. In 1776 he published his landmark book An Inquiry into the Nature and Causes of the Wealth of Nations. Wealth became the pinnacle, as we learned how division of labor and free markets guided by the invisible hand formed the foundations of capitalism.

With Truth, science, and capitalism all unleashed, the industrial revolution was roaring ahead. This resulted in major technological developments in textile manufacture, metallurgy, mining, steam power, chemicals, machine tools, gas lighting, glass making, paper machine, and agriculture along with advances in transportation systems including, canals, roads, and railways. Material abundance was increasing almost as fast as knowledge. Flourishing took the shape of more. Prosperity was measured in material possessions and knowledge acquisition.

Driven by wealth at the pinnacle, technology advances continued through the second industrial revolution, the atomic age, the jet age, the space age, the digital revolution, and the information age. Progress has been astounding.  The measure of “Gross world product”—the combined gross national product of all the countries in the world—is one estimate of economic productivity. This has grown from approximately $128 billion in 1750—just prior to the industrial revolution—to approximately $71,830 billion in 2012. This represents an increase in production by a factor of more than 560 times over that time period.

Yet the world faces grand challenges, including inadequate access to safe drinking water, inadequate sanitation, and malnutrition for millions of people. Obesity, disease, substance abuse, poor physical fitness, and unreliable access to health care services affect billions of people. Many manifestations of poor mental health bring misery to so many people. Poverty, income inequality, homelessness, inadequate education, unemployment, oppression, and discrimination cause great suffering. Various forms of violence, including homicide, terrorism, child abuse, domestic violence, and sexual abuse cause billions of people to live in constant fear. Crimes including gang violence, gun violence, organized crime, human trafficking, hate crimes, and bullying disrupt our lives. Divorce, unintended pregnancies, incarceration, vandalism, and natural disasters upset many lives. Environmental degradation accelerates as we continue to ignore limits to growth. Global warming, destruction of natural habitats, depletion of natural resources, unusually intense natural disasters, accelerated extinction of species, and deforestation continue as we consume the very planet we live on.  Ineffective governments contribute to genocide, war, and other assaults on human rights.

Wealth at the pinnacle has exposed many economic faults that contribute to these problems. While so many of us are busy accumulating wealth and gaining knowledge, we seem to be lacking the wisdom we need to live better lives.

The pinnacle establishes a filter, drawing in resources that advance toward the pinnacle and screening out the rest. We were told that “the best things in life are free” but because economic models don’t assign value to so many valuable things, we are missing out on many of the best things in life. The pinnacle creates a sort of super organism that aligns the activities of isolated individuals in such a way that the pinnacle emerges almost unknowingly. Think of thousands of ants instinctively creating an ant hill, or busy bees unknowingly creating the bee hive. Wealth at the pinnacle has aligned us all in creating material wealth for those at the top, while it acts to suppress all else.  Knowledge is valued only to the extent it can help create wealth, while ignoring the wisdom that could help us all benefit from a deeper understanding.

We need a broader, more inclusive pinnacle that will help us focus on what matters and draw in clean fresh air, peace of mind, integrity, tranquility, quiet, clean water, the beauty of nature, a healthy environment to enjoy now and sustain for the future, awe, family, friendships, community, safety, stability, trust, leisure time, joyful play, meaningful work, authentic experiences, human virtue,  respect, good health, reduced stress, ongoing education, creativity, curiosity, exploration, discovery, deeper understanding and appreciation, enjoyment of the arts, transcendence, and making significant contributions that help others, while it filters out folly and misery. Can we place wisdom itself at the pinnacle?

There are many definitions of wisdom we could choose. I suggest focusing on the simple and practical definition of wisdom as “pursuit of well-being” as a working definition that can have broad appeal. People can easily conceive of well-being as the statement: “all things considered, I am pleased with my life.”  Each of us, all of us, can then do whatever improves our own well-being, without jeopardizing the well-being of others. Whenever it becomes possible to improve the well-being of others, we take the opportunity to do so. First, do no harm; reduce the folly. This is essential wisdom.

Well-being is a broader concept than wealth or knowledge, or even happiness. Too little research on well-being has been completed, but some results are available.  The book Wellbeing—The Five Essential Elements, by Tom Rath and Jim Harter, identifies these five components of well-being:

  • Career or occupational Well-being: how people occupy their time during the day and whether it is fulfilling. Do you like what you do each day?
  • Social Well-being: the quality of relationships in people’s lives
  • Financial Well-being: the degree of financial security people have
  • Physical Well-being: the extent to which people can do what they want to free of pain
  • Community Well-being: the extent to which people feel safe and are involved in giving to their community

The concept of flourishing, as explored recently by positive psychology, is “to live within an optimal range of human functioning, one that connotes goodness, generativity, growth, and resilience.” With that definition flourishing now becomes the pursuit of well-being.

Each of us can achieve well-being by focusing on what matters and applying wisdom as we live each day. There are so many things each person can do to live more wisely.


As history continues to unfold and our perspective broadens we can look back and see that each peak thought of at the time as an ultimate pinnacle is simply another foothill along the path to progress. Let’s work to make wisdom the next pinnacle. Imagine, describe, and help build the wise world we need and want. Pursue well-being. You can bring wisdom to life.

Economic Faults

People prefer to breathe clean fresh air rather than filthy polluted air. Clean air is obviously more valuable than polluted air. Yet this basic difference in value is not captured by our financial accounting systems and the economic systems based on them.  As a result anyone is able to pollute the air—diminishing its value to all who breathe—without incurring any financial cost. Public value is converted into private profit. This is one of many examples where economic theory, and the economies we base on such theory, fail to provide a rational result. This misallocation of resources is actually encouraged by today’s financial accounting systems.

The noble goal of economics is to allocate scarce resources to where they can best be put to use. Unfortunately several basic errors in our financial accounting systems and economic theories often cause the immense power of economics and the free market to work against the greater well-being. This essay explores these errors, their consequences, and proposes remedies.

Sharing the Commons

The air we breathe, ocean waters, ocean fisheries, public beaches, wild rivers, aquifers, forests, wilderness areas, animal habitat, and mountain vistas, are all examples of common-pool resources or simply commons—beneficial areas that are shared without cost. Because the benefits of these areas can be obtained without cost, it can lead to overuse of these areas. This is called the tragedy of the commons— the depletion of a shared resource by individuals, acting independently and rationally according to each one’s self-interest, despite their understanding that depleting the common resource is contrary to the group’s long-term best interests.  Air pollution, water pollution, waste disposal, overfishing, strip mining, mountain top removal, destruction of the rain forests, clear cutting, wildlife habitat destruction, depletion of aquifers, fossil fuel consumption, mineral consumption, and even traffic jams are all examples of the tragedy of the commons in our daily lives.

Several approaches to avoiding tragedies of the commons are known. These include:

  • Individual constraint motivated by enlightened self-interest and cooperative behavior,
  • Agreements among the users to allocate or limit use,
  • Government regulation controlling access to the commons or limiting use by any single party. Permit systems for activities such as mining, fishing, hunting, raising livestock and extracting timber are examples of this approach.
  • Usage fees, or
  • Privatization of the resource.

Free access to the benefits of the commons by organizations driven by economic gain leads to overuse of the commons and failure to allocate resources efficiently. This is a basic economic fault that is important to recognize, and to analyze in terms of fair allocation of the common resource. Advocates of free market solutions and opponents of regulation are obligated to offer some fair solution to allocating use of the various commons they seek to exploit.

Adoption of the Montreal Protocol on Substances that Deplete the Ozone Layer solved a tragedy of the commons that emerged during the 1980s. Free and unregulated release of halocarbon refrigerants, such as Freon, into the atmosphere caused significant depletion of the atmospheric ozone layer. The ozone layer is important because it prevents most harmful wavelengths of ultraviolet light from passing through the Earth’s atmosphere. It is suspected that a variety of biological consequences such as increases in skin cancer, cataracts, damage to plants, and reduction of plankton populations in the ocean’s photic zone may result from the increased UV exposure due to ozone depletion. Observed and projected decreases in ozone caused worldwide concern. This concern led to adoption of the Montreal Protocol that bans the production of CFCs, halons, and other ozone-depleting chemicals

Greenhouse gasses are a form of air pollution that contributes to global warming. This is an important example of overuse of the commons—the atmosphere in this case—for economic gain—the free disposal of waste products resulting from burning fossil fuels. Those who sell and consume fossil fuels are free to release greenhouse gasses into the atmosphere, while many people, including those in future generations, suffer the costs of global warming as a result. Economic principles and the free market fail to allocate resources efficiently in this case because a valuable assist is provided free of charge.

Valuing Ecosystem Services

We all benefit from a multitude of resources and processes that are supplied by natural ecosystems. Collectively, these benefits are known as ecosystem services and include essential products like clean drinking water and processes such as the decomposition of wastes. Although these services are essential, we rarely account for their value in our economic models. For example, pollination of crops by bees is required for 15-30% of U.S. food production. If sufficient numbers of wild bees are available this can be accomplished “for free” – that is, outside of traditional financial accounting.

Failing to place an economic value on ecosystem services causes another form of economic failure. Destruction of the wild bee population, for example by Colony Collapse Disorder, can take place without any financial cost to those responsible for destruction of this valuable ecosystem service. Yet if wild bee populations are displaced or destroyed, then crops relying on bee pollination will be lost, or some costly substitute to wild bee pollination will have to be found. In either case the economic costs, as traditionally recognized by financial accounting systems, would be substantial.

Placing a fair economic value on each of the ecosystem services we rely on but do not now pay for can allow economic systems to preserve and allocate use of these valuable resources. Alternatively, regulations that protect these resources could be put into place.

Another related accounting error is also very important. Under many accounting systems, natural resources represent income that increases as they are extracted rather than capital which depreciates as it is depleted. As a result, minerals have little value until they are extracted, and their cost represents only the extraction costs, not the value of the original resource. This accounting error encourages immediate mineral extraction and does not account for the value of the original, non-renewable, resource. Even though a non-renewable resource cannot be replaced, it is assigned little value under present accounting schemes.

Paying for Externalities

In economics, an externality is a cost or benefit that results from an activity or transaction that involuntarily affects an otherwise uninvolved party. Examples include air pollution, water pollution, overfishing, coal mining, and hydraulic fracturing, often called fracking.

The owners of coal mines increase their profits by carefully distancing themselves from financial responsibility for several important externalities. These externalities include the many dangers to miners, such as equipment accidents, suffocation, gas poisoning, roof collapse, gas explosions, and chronic lung diseases such as pneumoconiosis (black lung). These dangers are born by the minors themselves, rather than the mine operations.

Other externalities reaching far beyond the mining community are the many environmental impacts of coal. These include land use, waste management, and water and air pollution caused by the coal mining, processing and the use of its products. In addition to atmospheric pollution, coal burning produces hundreds of millions of tons of solid waste products annually, including fly ash, bottom ash, and flue-gas desulfurization sludge that contain mercury, uranium, arsenic, and other heavy metals.

There are severe health effects caused by burning coal. According to the reports issued by the World Health Organization in 2008 and by environmental groups in 2004, coal particulates pollution are estimated to shorten approximately 1,000,000 lives annually worldwide, including nearly 24,000 lives a year in the United States. Coal mining generates significant additional independent adverse environmental health impacts, among them the polluted water flowing from mountaintop removal mining.

The combustion of coal is the largest contributor to the human-made increase of CO2 in the atmosphere. Electric generation from burning coal produces approximately twice the greenhouse gasses per kilowatt compared to generation using natural gas.

A major European Union study estimates that including the cost of externalities would double the cost of producing electricity from coal.

Let’s leave coal in the dust and begin to talk about natural gas production.

Typical debates on the role of fracking often polarize into arguments for more jobs and energy independence on one hand and against the environmental impacts of fracking on the other hand. Consideration of externalities can help us shift toward a more reasoned discussion of how best to pay the full costs of the externalities that will occur if the fracking proposals proceed.

The environmental impacts of fracking include potential contamination of ground water, risks to air quality, water consumption, noise pollution, the potential migration of gases and hydraulic fracturing chemicals to the surface, the potential mishandling of waste, and the various health risks due to environmental contamination of fracking fluids.

An accurate assessment of the economic potential of fracking would include payment for the full costs of avoiding or compensating for each of these environmental impacts.

Economic arguments for or against proceeding with some activity are only accurate and honest when all the externalities are internalized and are fully included in the cost analysis. Avoiding payment for externalities requires others to incur the costs for activities you are profiting from. Failing to fully account for the full cost of externalities is closer to trespassing than it is to freedom.

Acknowledging Limits to Growth

When people talk about economic growth or the strength of the economy, they are often talking about the rate of growth of the gross domestic product (GDP). The GDP is a primary measure of a country’s overall economic output. It is the market value of all final goods and services made within the borders of a country in a year. For example, the GDP includes:

  • The costs associated with growing, harvesting, transporting, storing, and processing tobacco.
  • The costs of manufacturing, distributing, advertising, and retailing cigarettes and cigars.
  • The costs of doctor’s visits, medications, hospitalizations, and chronic care treatment for smoker’s cough, emphysema, and lung cancer.
  • The costs of FDA tobacco regulations and tobacco-related law enforcement costs.
  • Tobacco-related litigation costs,
  • The costs of advertising health warnings.
  • The costs of anti-smoking campaigns and stop smoking programs and products.

Each of these activities actually helps to grow the economy and create jobs even as they contribute to the misery of the unfortunate tobacco addict. Wouldn’t a leisurely hike with friends through the woods ending with a spectacular view of a beautiful sunset be a better way to spend time? But enjoying the splendor of sunsets does not help to grow our economy while dying a painful death from lung cancer does.

War, car accidents, chronic illness, cancer, and many other tragedies all contribute to economic growth and increasing the GDP. It is time to choose a wiser measure of progress. Despite the ubiquitous and unequivocal praise for growth among economist and politicians, there are always limits to growth. Assumptions of unlimited growth are false and dangerous.

An emphasis on more, including increasing the GDP, growing the economy, and a relentless focus on increasing stock prices has brought us: the subprime mortgage crisis, housing foreclosures, Enron and other accounting scandals, wars, hydrogen bombs and other nuclear weapons, the Holocaust and other acts of genocide, slavery, traffic jams, urban sprawl, the bridge to nowhere, wide-spread cheating, Vioxx and other dangerous prescription drugs, Twinkies, obesity, stress, anxiety, class struggles, pollution, paparazzi, deforestation, strip mining, overfishing, drought, failed states, global warming, and other waste, violence, destruction, and misery. We have become consumed.

Adam Smith never imagined how greedy the invisible hand would become. It is time to change our focus from economic growth to growth in human well-being.

We live in a world with ever-increasing levels of financial debt—public and private. We are also depleting the earth’s natural resources, including fresh water, fertile soil, forests, marine ecosystems, biodiversity, fossil fuels, minerals, waste dumps, and pollution sinks. Since debt represents a promise of future repayment of labor and resources it is inevitable that the aggregate promises to repay will eventually exceed the available resources for repayment. In fact, that may have already have happened.

However, in the economies of affluent nations, competition stimulates technology improvements that increase labor productivity to reduce costs. As labor becomes more productive, fewer people are required to produce the same goods. This would lead to unemployment unless demand grows at the same rate as labor becomes more productive. If growth stops, unemployment increases, household income drops, demand drops and the system collapses toward recession.

This presents the dilemma of growth:

  • Growth in its present form is unsustainable — unbounded resource consumption is exceeding environmental capacity, and
  • De-growth under present conditions is unstable — reduced consumer demand leads to increased unemployment and the spiral of recession.

A solution to this dilemma is essential for future prosperity.

We can begin to see a solution in the “Green new deal”. People need jobs and the world needs to manage a transition to sustainable energy. These two goals can be met simultaneously by directing investments away from opulent consumer goods and toward low-carbon systems that reduce climate change and increase energy security. In addition investments in natural infrastructure including sustainable agriculture and ecosystem protection provide long-term benefits. The engine of growth becomes creation and operation of non-polluting energy sources and selling non-material services. In addition, delivering the benefits of labor productivity to the workers would allow them more leisure and less stress as they enjoy a shorter work week.

Humans are Complex Actors

A key assumption in economic theory is that humans are rational actors. In most economic theory humans are modeled as homo economicus, or the rational economic human. This simplistic assumption is easily criticized and very often false. Economic anthropologists have demonstrated that in traditional societies, choices people make regarding production and exchange of goods follow patterns of reciprocity which differ sharply from the homo economicus model. Real humans face uncertainty and risk with only bounded rationality. Studies have shown that investors appeared as very risk-averse for small losses but indifferent for a small chance of a very large loss. Simplistic homo economicus models place excessive emphasis on extrinsic motivation as opposed to intrinsic motivation and ignore the inner conflicts that real-world individuals suffer, as between short-term and long-term goals or between individual goals and societal values.

A truly rational actor would be unlikely to choose to use tobacco products, yet the tobacco industry continues to profit from the sale of one of the most widely used addictive substances in the world.

The growing field of behavioral economics studies the effects of social, cognitive, and emotional factors on the economic decisions of individuals and institutions and the consequences for market prices, returns, and the resource allocation. This work directly contradicts a simplistic rational human model.

Money is Power

Money is a source of great power, especially to those who benefit from the status quo. Money exerts its immense influence in politics as lobbying efforts, campaign contributions, policy institutes, and political action committees all use money to distort the people’s voice in democracy.

Money influences research topics, research grants, publications, and curricula in academic institutions.

Big oil, large pharmaceutical companies, agribusiness,  mass media, the fashion industry, cosmetics industry, music industry, and financial services industries, automobile companies, airlines, and other large corporations use their dominant market positions and huge economic impacts to influence what we see, what we like, our buying habits, public opinion, and government policies.

Yet so much of this influence and power is based on economic faults.

An Inaccurate Model

Economics is an ideology with a simplistic yet incorrect premise that needs to be refined and updated.

It is essential to distinguish between economies—the exchange of valuable goods and services—and economics—a money-based model of an economy. Fractional reserve banking, debt-based currencies, and all of the faults in economic models described here allow the two to diverge significantly. As a result, our financial accounting systems are giving us false signals.

Economies are real, economics is a conceptual artifice. The two have diverged. The gap is getting wider. The gap must be closed.

Taking Action

Arguments defending the status quo or advocating expanding operations are often based on a promise of economic benefits and growth. Statements such as “drill baby drill” are often simplistic attempts to distract us from considering a more complete and accurate analysis of the externalities, benefits, risks, losses, costs, and other options.  Learn to identify the faults in these arguments and move the discussion toward identifying and preserving the commons, valuing ecosystem services, identifying and paying fully for externalities, acknowledging limits to growth, dispelling myths about humans as rational actors, and counteracting the power of money.

Compel advocates of economic systems, economic solutions, and free market mechanisms to identify and correct each of the errors in their arguments, presentations, plans, and actions.

What if more of us had the wisdom to shift our focus to what is truly most meaningful in life? What if we decided we had enough of the old thinking and decided to value: peace of mind, integrity, tranquility, clean air, clean water, the beauty of nature, a healthy environment to enjoy now and sustain for the future, awe, family, friendships, community, safety, stability, trust, leisure time, joyful play, meaningful work, authentic experiences, reciprocity, respect, good health, reduced stress, ongoing education and learning, deeper understanding and appreciation, fun, enjoyment of the arts, transcendence, and making significant contributions that help others. We can enjoy what is already available to us.

Focus on what matters. Choose the greater well-being over mindless growth. A first step is to examine our definitions of prosperity. A shift away from prosperity pursued as opulence — constantly acquiring new material satisfactions — and toward prosperity enjoyed as flourishing — deep and enduring satisfaction and well-being —  allows us to consume less while we enjoy life more. Learn to cope with abundance. Create wiser alternatives that improve the greater well-being.

We all must work to bring wisdom to life.

Alien Observations


Two wise aliens from outer space had volunteered for the curious and, to them, amusing task of observing life on Earth in order to make a report back to their civilization ten light-years away.

After at first being distracted by American football and TV game shows—two activities on which humans spend so much time that the aliens thought they must somehow be crucial to the functioning of Earthly life—the aliens began to recognize the real story, so to speak.

One day, the First Alien observed to the Second:

“Don’t you find it remarkable that the humans, who call themselves Homo sapiens, create so many problems for themselves, mess up the Earth so much, and seem to be on an immensely unwise and destructive path?”

As the two aliens had nothing else urgent to do, the following conversation ensued:

“Yes, it seems to me that many of the assumptions and paradigms on which their society is based, on which they’ve made it depend, and to which they seem stubbornly committed, are deeply mistaken.”

“Mistaken?!  Some of them are utter nonsense.”

“What’s worse is that those assumptions and paradigms aren’t merely mistaken; they’re also unhealthy, frequently destructive, and ultimately downright dangerous.”

“Yes, much worse!  Indeed, they’re ultimately self-destructive.”

“Wise words!”

“Thank you!  But how can it be?  Why do they continue to perpetuate and endorse the nonsense they’ve created?  After all, don’t they have the places they call ‘universities’, including some that they consider particularly great, such as the places called Harvard and Oxford and Cambridge and Stanford and Princeton and Berkeley and so forth and so on?”

“It seems strange to me too, and very hard to explain.”

“And within those universities, they even have departments called ‘Philosophy’!”

“What does it mean, their so-called ‘Philosophy’?”

“Are you ready for this?  Translated, it’s supposed to mean ‘love of wisdom’.”

“My goodness, where is the wisdom in what the humans, their universities, and their philosophy departments are doing?”

“That’s an excellent question, my friend.  It’s almost as if they’ve neutralized wisdom, or embraced a neutralized version of it that’s disconnected and disengaged from life, from the way things are going on Earth—in other words, not so well!”

“Of course, we might be mistaken about what their universities are supposed to be for.  Maybe they’re mainly intended as mating grounds for young humans?  Or, they also seem to be trying to prepare people—to indoctrinate them—to accept the mistaken assumptions and paradigms of, and to actually work within, the very institutions that are causing so many of their problems.  They call it preparing for careers, I think.”

“I hate to say it, but they almost seem enslaved to their foolishness.”

“Or, maybe it’s we who are missing the point?”

“Maybe.  Perhaps we should look again at their American football and TV game shows?  Still, it all seems very odd to me.”

“No, I think we’ve seen enough for now.  Let’s come back in a few thousand years to see how they’re managing.”

“OK, but I don’t see many reasons to be optimistic.”

“After all, some beings never learn.”

*   *   *

Dear fellow human philosophers,

As far as we can tell—acknowledging that we don’t have perfect knowledge, and probably never will—some of the most consequential mistaken assumptions and flawed paradigms, presently, in the real world, are those upon which our “modern society” is based and to which it seems foolishly committed.  The question for us is, What will philosophers actually do about it?

Be Well,