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The Two Deficits, Part Six:
How to Restore Prosperity

This is the final post in a six-part series that comprises Future 500 founder Bill Shireman's insightful essay, The Two Deficits: Why Conservatives and Progressives Are Both Right, from the book

This is the final post in a six-part series that comprises Future 500 founder Bill Shireman's insightful essay, The Two Deficits: Why Conservatives and Progressives Are Both Right, from the book Towards a New Agenda for America: Ideas To Bridge the Left and Right and Move the Nation Forward (Future 500, 2012). Read parts one, two, three, four and five. Shireman will discuss ways to bring the two together during his plenary session at SB '13 on June 4.

Two Systems That Drive Innovation

Politicians love programs, because programs win elections. If people are hungry, programs give them food. If they are poor, programs give them money. If an enemy attacks, programs exact revenge. If people are out of work, programs give them jobs. Programs enable politicians to deliver specific results to constituents they want to serve. Programs are proof points they use to convince voters and contributors they are doing their jobs.

Republicans, whose worldview suggests that people will be selfish unless disciplined, like programs that discipline people. They spend tax dollars on police to fight crime, on the military to fight wars, and on border patrols to keep out poor illegal immigrants desperate for a better life in a better system.

Democrats, believing that people will be selfless if liberated from all constraints, like programs that support people. They spend tax dollars on public schools to teach children, on jobs programs when people are out of work, on social security and welfare when they need more money, on Medicare when they need better health, and on open-border immigration regardless of the strains that may be placed on existing resources and infrastructure. These programs may be necessary, at least temporarily. But the assumptions underlying them are not always correct. People are a mix of selfish and selfless. Our programs and systems need to reflect that.

Programs cost money, and sometimes there is not enough money to pay for all the programs we might like, especially as they accumulate over the years. Systems are needed that drive prosperity by empowering and rewarding people to create it.

Systems are different from programs in three important ways:

  1. Systems are wholes. Programs are parts.
  2. Systems create value. Programs consume it.
  3. Systems always pay for programs.

Every system has qualities that are absent in its parts. These qualities are sources of new net value. When atoms and molecules join together in a cell, new value emerges: life. When cells join together in a human body, new value emerges: thought, consciousness and everything that follows. In society, when people come together to meet their collective needs, new value emerges: families, communities, businesses, economies, nations, civilizations. Each part in these systems imposes net costs. Those costs can only be sustained because, together, the emergent qualities make the whole system sustainable.

Parts can’t pay for themselves — ever. They lack the emergent qualities, the net value creation. Programs can only be paid for if they are part of larger systems that generate the net revenues. A tax program can’t be paid for unless it is part of an economic system that generates wealth. A health program can’t be paid for unless it is part of a system that cultivates health. An education program can’t be paid for, unless it is part of a system that fosters knowledge and learning. Programs are often necessary — they meet essential needs. Often, they are essential parts of larger systems. But they cannot be paid for without systems.

The two systems that pay for all programs — in fact, the two systems that pay for everything — are the economy and the ecosystem. These two are the root source of all prosperity. We don’t need to drill, baby, drill or spend, baby, spend until their sustenance is dry. We can harness their capacity to create value, by design.

But our economy suffers from two major breaks in the flow of feedback that drives innovation and creates value. These two massive subsidies, enshrined by government and supported by vested economic interests, retard genuine growth by concealing key costs of doing business. They artificially repress the feedback signal that drives innovation.

The economic subsidies come in the form of massive government spending, championed by the left, and supported by demonizers and deniers who pretend that economic limits don’t actually exist. The ecological subsidies come in the form of massive environmental exploitation that takes the form of pollution, depletion, terrorism, insecurity and war. These subsidies are championed by the right and supported by demonizers and deniers who pretend that ecological limits don’t actually exist. Through this massive double-dose of deficit spending, America is burying its children in both economic and ecological debt. It is time to stop spending down our prosperity and learn again to replenish it.

Living within our means will not be so difficult as we imagine. In fact, it is the surest way to increase our prosperity. Every good parent knows this and cultivates it in their children. The benefits will be beyond anything we can yet fully conceive, because they will be delivered by an invisible hand with a green thumb.

Fundamentally, the answer is not to start with expensive new programs or tough new regulations, commands and controls. Before we consider any of that, we need to make sure the overarching system is designed to create sustainable value. Here are some ways we might start.

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