CHAPTER 3
Long ago, Dave worked as a veterinarian’s assistant. One day, as he was helping stitch up a horse’s hind end, his employer, John Siemens, an outstanding and renowned veterinarian, asked him a question: “What’s the most important thing in the world to you?” For Siemens himself, the answer was simple: “A happy home.” He didn’t always achieve his goal, but he ordered much of his personal economy to reach it, and he did well. Right goals help us prioritize well.
The economy is a practical tool. It exists to provision us with goods and services, education, skills, conditions, and opportunities for achieving a good life. Americans are practical people. Working with goals and purpose, we have built an impressive economy. It has been constructed by solving very practical problems through assembly-line manufacturing, public libraries, lightbulbs, vaccines, rural electrification, water utilities, parks, public education, software, hardware, satellites, cell phones. The list is seemingly endless.
Americans have worked hard to solve problems of scarcity by providing goods and services that people here and worldwide need and want. These include a vast array of what we might call comforts or luxuries. Yet without provisioning and distributing the basics—food, water, shelter, and clothing—no economy can be successful. We need to start there. No discussion of the greatest good can ignore basic goods.
What Do We Need?
Orthodox economics assumes that the more stuff a person buys and consumes, the happier that person will be. In theory, each of us tries to maximize utility, or satisfaction. Every individual knows his or her wants and needs and makes spending choices to best satisfy them. According to this theory, a person’s utility function is largely a matter of income and purchases. When we earn and buy more, we get more utility, plain and simple. We are assumed to be better off. The happiness we receive or give to other people doesn’t count for the orthodox economist. But as we understand from chapter 2, it counts for the rest of us. Yet if the orthodox theory of utility, of what matters to people and how they make choices, is incorrect, what should take its place?
An understanding of human happiness is an important first step. We often don’t know what will really make us happy. A practical alternative economic theory should begin with a theory of human needs and an explanation of how an economy can best provide for them. Manfred Max-Neef, a Chilean economist, has been trying to figure that out for many years. Whereas orthodox economics blurs needs and wants, while assuming they are infinite and insatiable, Max-Neef argues that real needs are actually few, finite, and rather easily met.1
Max-Neef challenged the idea that an ever-increasing GDP really made people in Chile better off. Dissatisfied with the traditional definition of development that seemed to waste mountains of money without really improving most people’s lives, he and his students set about compiling lessons from psychology, biology, economics, and personal interviews to understand the essential ingredients for improving the human condition and provisioning the good life.
They developed a “taxonomy” of human needs by which individuals and communities could assess both their “wealths” and “poverties,” giving them a chance to see where scarcity is most pronounced and which of their needs require the most attention (see table on following page).2
Two years working and volunteering in the Philippines gave Dave an appreciation for Max-Neef’s framework. One rural area, Mountain Province, would score poorly by GDP standards. However, Filipinos there have close-knit communities. Despite financial poverty, people are genuinely quite happy, happier than some Americans who are far more affluent. Dave saw that people in Mountain Province would benefit with better livestock, higher incomes, formal education, credit, health care, and safer drinking water. These were areas of scarcity in Mountain Province.
On the other hand, neighborliness, belonging, safety, trust, and social cohesion were “wealths” of great abundance, more so than in many parts of the United States. Some communities had nightly meetings that anyone could attend—to talk about, work on, and resolve problems. There was plenty of laughter and fun at these meetings, too. And because they were held every night, problems were handled quickly, generally before they spiraled out of control. Everyone in the village knew everyone else, as in many rural communities in the United States. There was no jail in one village, just a railing where troublemakers could be handcuffed for a while. For example, drunks were sometimes sentenced to sober up at the railing. Max-Neef’s system seems far superior to the GDP for actually understanding economies and how to advance them. It is also useful on a personal level.
Dave and his wife, Isabel, posted Max-Neef’s taxonomy of needs on their refrigerator door. You can slap it down on your table and talk about it. Write on it. Scratch stuff out, add ice cream or your pet rock. That’s what Dave and Isabel did. Rather than argue about other things with your partner or friends, you can argue about the things in Max-Neef’s boxes, which seem to encompass everything else you’d argue about anyway while adding a dose of perspective.
It’s actually fun. Isabel and Dave went through the list to grade their quality of life, discovering where they were a bit impoverished and where improvements could lead them closer to “the good life.” They agreed they had both been working too much and needed a greater dose of the “party” and “peace of mind” categories at the intersection of “leisure” and “having.” They went to a party and hosted one. They took walks with their kids each week in a different park, and this activity contributed to a more enjoyable and balanced life for both of them.
The Base of the Pyramid
Manfred Max-Neef’s table is in some ways a more sophisticated version of an earlier, highly popular theory of needs developed by the psychologist Abraham Maslow during World War II. Maslow worried that the psychology of his day was focused on pathology, on what conditions led to neuroses and psychoses. Instead, Maslow believed that psychology should be asking what actions and what kind of societies improve mental health and human happiness. He developed a theory based on the satisfaction of actual needs that he believed would help every individual flourish, physically and mentally.
Maslow argued that human needs assert themselves in a “hierarchy,” a pyramid in which the most basic needs are represented by the lower levels, and nonmaterial needs, or metaneeds, are represented by higher ones.3 Maslow never believed that lower needs must be completely satisfied in order for higher needs to assert themselves. And he never believed that the higher nonmaterial needs could be fulfilled through the purchase of material products. But he thought it obvious that an individual who was starving to death would be more interested in obtaining food than in reading poetry or receiving compliments.
From bottom to top, Maslow’s pyramid comprises the following five needs.
1. Physiological Needs: air, water, food, shelter, minimal clothing, etc.
2. Safety Needs: health, security from crime or other traumatic stress, etc.
3. Belongingness Needs: friends, family, love, affection, etc.
4. Esteem Needs: education, competence, respect from others, opportunities to be productive, etc.
5. Self-actualization Needs: opportunities for creative expression, access to beauty, nature, leisure, etc.
While Max-Neef is an economist concerned about what development is and how economies advance, Maslow was a psychologist and the father of modern business management. Overall, John prefers Maslow, while Dave prefers Max-Neef. Yet we agree that no single theoretical lens is sufficient for understanding human needs and wants.
The Five Capitals
In order to effectively meet human needs, economies organize resources to serve people, more or less effectively. Economists often speak of “capital,” when describing such resources. Movement of capital from place to place within the economy led in theory by market forces is assumed to rationally allocate resources toward the most efficient uses. When economists talk about capital, they are normally referring to two types of capital.
• Built capital. The physical infrastructure humans create from natural resources, including the technologies, machines, and other products that comprise the economy.
• Financial capital. Paper and electronic money and other representations of monetary value including stocks, bonds, retirement funds, and so on. These assets are all dependent on trust, and their value is realized when exchanged for real goods and services.
But there are other types of capital, which are equally essential for meeting the needs recognized by both Max-Neef and Maslow.4 For example:
• Natural capital. Native plants and animals, topography, geology, nutrient and water flows, energy, and natural processes that nature provides. All built capital is created out of natural capital.5
• Human capital. A person’s body, skills, knowledge, education, and such interpersonal skills as listening, cooperating, and communication.
• Social capital. The social organizations, laws, informal networks, markets, relationships, and trust that constructively enable people to live and work together.
These general capital assets are required to secure economic progress and a high quality of life. Each of these capitals is vital and complementary to the others. Soil, climate, seeds, a farmer’s skills and knowledge, social systems such as markets, and money all fit together in the economy to grow food and put it on a plate.
What seems clear to us is that any theory of the economy based on the greatest good for the greatest number over the longest run should begin with an assessment of how our economy allocates resources and capital to meet the most basic of needs and move forward from there.
Because our forms of capital are so well developed, perhaps never in human history has procuring the basics of food, clothing, and shelter been so cheap in terms of human labor and time. The proportion of American household budgets dedicated to necessities has reached historic lows, at least for food and clothing. Yet many people in America still struggle to procure the basics.
Fat Food Nation
Some needs never change. We all eat. We need food. We also enjoy food. If your appreciation has waned, don’t eat. Try fasting. It’s cheap. It’s an inexpensive one-day education worth the pangs, requiring no special talent, location, or electronic device. It is neither complicated nor difficult. Consider it a day of empathizing with your ancestors. For most of human history people fasted, mostly involuntarily. You may feel grumpy or enlightened, ravenous or cleansed, desperate or empathetic when you get really hungry, but you won’t know unless you’ve experienced it. All the major religions and many health experts advise fasting on occasion.
Fasting for one day while writing this chapter did focus Dave’s attention on food. His stomach grumbled. But he was also unexpectedly clear-headed. He got a lot of work done and drank a lot of water. He felt more thoughtful about food. And he grew more troubled about the economics of our food production system.
At one time, many Americans died of starvation or hunger-related diseases. The old graveyards of New England are inhabited by whole families buried in rows, their deaths separated only by weeks in a hard winter, snuffed out by malnutrition and diseases like tuberculosis (then called consumption). For a long time in America, producing and distributing enough food was a difficult problem. In some parts of the world it still is; nearly one billion people suffered from chronic hunger in 2010.6
By contrast, modern agricultural science, machinery, and trade have given Americans a cornucopia of food beyond the imagination of our great-grandparents. The average supermarket stocks forty-eight thousand items. Hundreds of brightly decorated boxes of different kinds of cereal compete for our attention. Food is cheap and fast and, increasingly, sweet and fattening.
Today, more Americans die from eating too much rather than too little. Obesity is at an all-time high, affecting over 30 percent of U.S. citizens. The United States is first in fat among all industrialized nations.7 According to the U.S. Department of Agriculture, the number of daily calories that Americans ate rose from 2,234 in 1970 to 2,757 in 2003, an increase of 523 calories per day.8 Consumption of corn sweeteners increased 400 percent. On average, every American consumes seventy-nine pounds of corn sweeteners each year.9
The economic and health costs of overeating are gargantuan. As one prominent critic of our food system, Michael Pollan, noted, “Our most significant health problems are all related to food: obesity, type II diabetes, heart disease, stroke, diet-related cancers.” Pollan notes that these problems add $250 billion to our health care bill every year.10
In American drugstores, it’s easy to find a diet product called Hoodia. It is one of the world’s ironies that Hoodia, a cactuslike African plant, is used by the San people, or Bushmen, to fend off the pangs of hunger when they have too little to eat.11 Now it is used to keep obese Americans from pigging out. It is a metaphor for a divided world in which millions die from too much food and millions more from too little.
Feeding Hunger
Ours is a land of economic extremes. Despite our progress, wealth, and humongous GDP, hunger still bites in every American city and its fangs are getting sharper. The Washington Post noted in late 2009 that “the nation’s economic crisis has catapulted the number of Americans who lack enough food to the highest level since the government has been keeping track, according to a new federal report, which shows that nearly 50 million people—including almost one child in four—struggled last year to get enough to eat.”12 Poor and insufficient food stifles children’s learning and skills development. Can a nation with so many children struggling for healthy nutrition really be considered prosperous?
Yet ending hunger in America is more complicated than adding soup kitchens or increasing incomes. Some Americans are not eating well due to irresponsible choices. Two children in Dave’s neighborhood were recently removed from their father’s custody because while receiving state support to feed, house, and clothe them, he blew cash on drugs and partying, skipped his rent payments, and apparently did not care if his children ate, bathed, or went to school.
But in many cases, competing needs drive lower-income Americans to pay less attention to proper nutrition. The researchers Richard Wilkinson and Kate Pickett point out that of the 12.6 percent of Americans whose incomes met the official U.S. definition of living in poverty in 2008, “80 percent have air conditioning and almost 75 percent own at least one car or truck.”13 They argue that “what this means is that when people lack money for essentials such as food, it is usually a reflection of the strength of their desire to live up to the prevailing standards. You may, for instance, feel it more important to maintain appearances by spending on clothes while stinting on food.”14
Hunger and obesity degrade people’s quality of life, productive capacities, and economic well-being, adding significant costs to society. Yet these problems are not just matters of individual choice. In many ways our economy discourages healthy eating. Fast-food restaurants populate our poorest urban areas, for example, while grocery stores offering healthier food are absent. Foods filled with fats and corn sweeteners are made cheap through multibillion-dollar state and federal agricultural subsidies, while healthier foods are unsubsidized and cost more.
Food Problems and Solutions
The farmer and author Michael Ableman advocates for and practices a kinder, gentler way of producing food, both for the land and the people who work it.15 He runs Foxglove Farm, a thriving organic farm on Salt Spring Island in British Columbia, but his roots are in the United States. For years, he was the director of Fairview Gardens, an urban organic farm in Goleta, California, near the University of California at Santa Barbara. During his years at Goleta he observed what was happening to agriculture. His photos and writings documented the shift to ever-larger, more mechanized and chemicalized farms. In California’s Central Valley, vast fields harbored lonely workers driving huge tractors or wearing gas masks while spraying pesticides on fields. His photos documented soil turned to hardpan, cracked earth, and windswept dust clouds carrying off tons of fine topsoil. He wondered, “Where are the people? There are no people.” Heavy machinery and chemicals displaced people, compacted soil, and annihilated weeds, bugs, birds, and wildlife.
Is such farming “efficient”? With heaps of subsidies it produces more food, marketed at a lower price, but at what full cost? Ableman saw rural communities and the livelihoods of countless family farmers collapse as debt (for industrial farm equipment and inputs) drove them from the land. Costs included tasteless vegetables, increased cancer among farmers and migrant farmworkers, frogs with extra legs, endless feedlots of animals wallowing in their own waste and force-fed with antibiotics. Overuse of such drugs has produced superbacteria, reducing the effectiveness of these same antibiotics for curing human illnesses.16 These costs are all hidden by the low price of food. American agriculture is enormously productive, but with hidden and increasing costs to producers and consumers over the long run.
What Michael Ableman witnessed has been well documented in his books and those of other writers like Michael Pollan. But such writers have also documented a flourishing movement to smaller, more sustainable farms and local food production and distribution. In the last two decades, portions of states such as Iowa, Wisconsin, Washington, and Oregon have seen an enormous growth in small organic farms and cooperatives like Organic Valley, which market organic products. In Oregon, the percentage of the population involved in farming, which had fallen for decades, has doubled since the 1990s.
Dave is a supervisor for the Pierce Conservation District, dedicated to conservation and local farming. With farming in his family’s background, he’s seen both agricultural challenges and new promise. Pierce County, just south of Seattle, is the second most populous county in Washington State and hosts flourishing farmers’ markets and specialty crops, including hops for local microbreweries. Community-based agriculture contributes sustainable jobs, efficient production, and high-value agricultural goods to the local economy. Today, residents can buy locally produced meats, seafood, summer fruits and vegetables, and organic grains from eastern Washington.
Small farms in America can be growth centers for jobs and economic value. Here is a summary of what can be done.
Improving markets. Farmers’ markets are sprouting all over America. Once or twice a week, farmers sell their produce directly to the customers in public markets, providing healthy food and a sense of community. Market development often requires public investment. Cities are increasingly providing building and street space for public farmers’ markets, bringing people into the city core. Improving farm cash flow also supports market development. Community Supported Agriculture organizations (CSAs) facilitate urban dwellers paying in advance for food shares. That provides the farmer with dependable preseason income to produce crops while citizens receive healthy, delicious, usually organic in-season food farms produce every week. Traditional agricultural extension services also improve efficiency and local crop value.
Saving fossil fuel. Our agricultural system is highly dependent on fossil fuel for fertilizer, pesticides, packaging, and transportation. An average spoonful of food eaten in America has traveled more than one thousand miles from farm to palate. Such energy-intensive agriculture requires about ten calories of fossil fuel to provide a single calorie of food. Locally produced food is less carbon intensive, provides local jobs, and diversifies and strengthens the local economy. Local food production reduces oil dependency and lowers carbon emissions.
Changing subsidies. Since the 1950s crop farm subsidies have expanded and focused on five crops: corn, wheat, rice, soy, and cotton, often based on quantitative production favoring larger farms. This large-farm bias has expanded agribusinesses at the cost of smaller local farms. As structured, these subsidies also impede achieving other goals such as a healthier population and more prosperous rural communities where small-farm income is locally retained rather than wired to agribusiness corporate headquarters. Corn subsidies reduce the price of corn products, for example. The market price of corn covers about 45 percent of the cost of production. Tax dollars cover more than the rest, ensuring profitability. Over 500 million bushels of U.S. corn were exclusively devoted to high-fructose corn syrup production in 2010.17 This produced about 9 million dry-weight tons of high-fructose corn syrup selling at about thirty cents a pound. Subsidized high-fructose corn syrup is an ultracheap and unhealthy ingredient for anything. Fast foods, soft drinks, and processed foods can reduce product costs by adding corn syrup, while unsubsidized healthier fruits and vegetables are more costly. Shifting subsidies to promote the healthiest foods, and smaller farms, while taxing foods that damage human health makes better economic sense, providing positive externalities (extra benefits) and fewer negative externalities (costs to society not contained in the price of the product). Massive subsidies for corn ethanol have shifted agricultural land from food to energy production, increasing food prices. And, in the case of corn, the “return on energy invested” is marginal.18 Shifting subsidies is no simple matter. Chopping subsidies off too quickly would put most American wheat farmers out of business. But a careful shift in subsidies would improve the quality of our food, the lives of most farmers, and our health.
Reducing environmental damage. Overuse of pesticides and fertilizers causes significant environmental degradation. Agriculture is the nation’s largest water consumer and polluter. Agricultural runoff often contaminates aquifers, rivers, and marine waters. Fertilizers from Midwestern farms wash down the Mississippi River into the Gulf of Mexico, causing algae blooms that deplete oxygen in the water, killing fish and other life and creating a “dead zone” the size of New Jersey. Yet economic incentives still favor many of the most polluting industrial farming practices. Reducing farm inputs such as fertilizers and pesticides, while expanding wetlands which absorb fertilizers, filter and conserve water, can improve surface and groundwater quality, protect against flooding, and provide wildlife habitat and increase water availability. The use of no-till wheat farming conserves energy, soil, and water and increases farm incomes. New irrigation technology and soil moisture gauges can lower water usage by 50 percent or more. Reversing “distorting” policies, like tax exemptions for pesticides and costly organic farming certification, would level the competitive playing field and make the conversion to organic food production more farm friendly.
Protecting topsoil/acting on climate change. Agriculture is one of the largest contributors to global warming, And it will also be one of the sectors most affected by the increased frequency, intensity, and duration of droughts, freezes and floods, and climate chaos. Farming is also essential to solving the problem. Sequestering carbon in soils improves farmland quality. Utilizing farm animal wastes and methane for fertilizers reduces carbon emissions. Poor land use choices have wasted some of the nation’s best agricultural lands. Every hour, for example, thirty-eight football fields of prime farmland are sacrificed to suburban sprawl. Land is considered to be of higher value when used for a shopping mall than when producing food. A factory that processes applesauce is valued as a capital asset, while the nation’s soil, which actually produces our agricultural output, is not considered a capital asset or valued as such. Soil carbon and fertility need to be treated as natural capital lest we lose them and suffer the costs. (We look closely at the subject of natural capital in chapter 9.)
Providing ecosystem services. Farms provide many “ecosystem service” benefits in addition to food, including wildlife habitat, floodwater reduction, and aquifer recharge. Consider flood protection. In 1993 the Mississippi River flooded millions of acres of land and major cities. Over $10 billion was spent building higher levees on the river, while farmers “tiled” farmlands, to more quickly drain water, previously infiltrated into the soil. Despite higher levees, catastrophic floods hit in 2008 and 2010, flooding cities like Cedar Rapids. The Army Corps of Engineers built higher levees, ignoring the flood protection provided by farmlands, which was lost as farmers improved marginal lands by piping water from fields to rivers, and resulted in floods damaging cities with the highest property value. Giving farmers a small economic incentive for flood control would have been far cheaper than conflicting investments in levees and farmland drainage. The city of Beijing, China, pays upstream farmers for the flood protection their farmlands provide and for other ecosystem services. This has increased rural incomes, funded construction of more schools, and reduced flooding costs in Beijing. The ecosystem services that farmlands provide need to be supported by real economic incentives.
Implementing progressive property taxes. The United States has an income tax because farmers demanded it and Americans passed a constitutional amendment to ensure it. At that time, a sizable portion of the farm population got tired of paying high property taxes while wealthy industrialists and bankers paid very little. The income tax is a progressive tax because the wealthy pay a higher tax rate than middle-income Americans or the poor. But we have no progressive tax on land. We might do well to consider a system where large corporate landowners pay a higher property tax rate than small farms. This would slow the monopolization of farmland and encourage greater local land ownership.
Improving health. Healthier food provides for a healthier population and lower health costs. It makes sense to tax cigarettes and alcohol because they harm people’s health and increase health care costs. Increased prices for tobacco have changed behavior and reduced cancer rates and health costs. By the same token, targeted incentives could greatly increase the consumption of more healthy food and the percentage of American land that is used for organic production—now only about 0.5 percent of total agricultural land, as compared with 10 percent in Austria, for example.
Providing nutrition education. School gardens, local organic food in schools, better menus, nutritional education, and longer lunch breaks help children develop better eating habits. Cooking at home as a family using unprocessed foods improves the quality of food, family cohesion, and the health of the whole family.
Encouraging home gardens. Former first lady Eleanor Roosevelt promoted “Victory Gardens,” and our current first lady, Michelle Obama, also champions home gardening. During World War II, home gardens raised about 40 percent of the nation’s fresh vegetables. They can play a critical role in providing healthy food and reducing fossil fuel consumption. Providing even a small tax break for those who tend home gardens would easily pay for itself in better health and reduced energy use.
Increasing federal food supports. Subsidizing good food for poor pregnant women and families, using the Women, Infants and Children (WIC) federal program, has been successful in reducing infant mortality, while improving nutrition, health, and educational achievement. An expansion of this program and the federal food stamp program are necessary steps in the fight to reduce childhood hunger.
Training farmers. Training people to produce food sustainably, run small farms, build community businesses, and restore marginal lands would benefit the nation. These activities are more labor intensive and offer higher prospects of job creation than some other economic investments, including many contained in the recent stimulus package. There are thousands of young people who would relish the healthy, active, and meaningful life of producing quality food for America. A smart economy based on the greatest good for the greatest number over the longest run would massively expand efforts to increase the number of future farmers of America.
Food and agriculture are far more important to our economy than market measures such as GDP indicate. Nutritious food is closely linked to health, educational achievement, water quality, land use, energy consumption, even flood protection. Yet these values remain unmeasured. Climate change cannot be adequately addressed without improving agriculture. Water shortages and water quality in much of the United States are closely linked to agricultural practices. The everyday lives of all Americans could be greatly improved with more sensible economic policies for sustainable food production and distribution.
Cast into the Streets
Like food, housing is critical to health and quality of life. American shelter has improved vastly over the last century. Nearly all of our homes now include indoor plumbing, electricity, reliable heating, better insulation, communications, appliances, proximity to health care, and transportation access. Unimagined amenities spring forth from every room in houses, apartments, and condominiums. The average American home is more luxurious than most royal palaces of the past. Average house sizes doubled between the 1960s and the 1990s. Many new homes boast three-car garages.
For most Americans, home ownership represents their largest capital asset, a cornerstone of the middle class, an asset that fell in value in all fifty states after the 2008 financial crisis, a debacle from which the United States has not yet recovered (see chapter 12). At least 11 million mortgages were “underwater” by July 2010. The homes were valued at less than their buyers still owed on them. Some three hundred thousand homes were being foreclosed each month as of mid-2010. With high unemployment and cuts in unemployment benefits looming, the number of foreclosures will stay high.
Like food, housing cannot be separated from the rest of the economy. Income enables housing. Housing surplus, created by foreclosures, drives down housing values. As a leading financial magazine put it:
As each month passes, it has become clearer that unemployment is the single greatest cause of high foreclosure rates and falling home prices. The correlation between cities with high jobless rates and extremely high foreclosures is stunning. The 10 worst real estate markets in the country each had unemployment levels above 12 percent in June [2010]. Two cities in California, Merced and Modesto, had jobless rates above 17 percent, nearly twice the national average of 9.6 percent.19
Dave visited Modesto in December 2010. This once-prosperous agricultural city is increasingly occupied by vacant houses and homeless people. Banks have become landlords, renting houses to the people who once held equity in them and still have jobs to pay the rent. Thirty years ago Modesto did not smell of feedlots with tens of thousands of cattle, because farms were smaller and more diverse. A crumbling economy and lost housing make for a vicious cycle of unemployment, foreclosure, and business closures.
In Cleveland, Ohio, one of the epicenters of the housing debacle, many people were evicted from their homes and became apartment renters. But then they were evicted again from their apartments, as the owners of those apartments could not make mortgage payments on the buildings themselves, so they were foreclosed. As vandals demolished empty houses block by block, the value of abandoned houses fell, pulling down the value of all housing in the affected neighborhoods. As housing values fell farther, even people with good jobs found themselves underwater.20
Unlike hunger, homelessness was rarely present in most of America until thirty years ago. Like hunger, homelessness has been getting worse recently. In many cities, homeless people include more children and families. Traumatized or disabled veterans, at times cursing or mumbling to themselves, frequent the downtown core. Business owners and shoppers find them bothersome.
Buddy, Can You Spare a Room?
In Seattle, Paul Carlson shows a ready smile that belies the decades he has spent working on this painful problem. Carlson is the Northwest coordinator of the U.S. Interagency Council on Homelessness, a division of the Department of Housing and Urban Development. He remembers that in the 1970s, homelessness, while it existed, was not a common sight in the United States. But in the early 1980s, he says, “a perfect storm increased the problem immensely.”21
First, Reagan administration cutbacks in funding for mental hospitals resulted in “massive numbers of mentally and physically disabled people hitting the streets. But it wasn’t all Reagan.” Liberal groups, including the American Civil Liberties Union, successfully pressed the courts to release mentally ill people who were confined in hospitals against their will. Carlson points out that the blind devotion to ideology, both on the left and right, led to thousands of real-life tragedies, as mentally ill people were turned out homeless and without health care when the Reagan administration was also disinvesting in publicly funded housing. Gentrification in America’s central cities also led to what Carlson calls habitat destruction, as hundreds of inexpensive single-resident-occupancy hotels (SROs) were razed to make room for expensive development.
“Here in downtown Seattle,” Carlson remembers, “we had twelve thousand units of housing in SROs in 1980. They weren’t pretty, but they provided very low-cost housing to disabled and poor people. Six hundred of them were destroyed just to build one Wells Fargo Bank in 1984. The residents had no place to go. By 1990, there were only three thousand SRO rooms left for people. We got something for it. Downtown became a more lively place, and middle-class homeowners saw the value of their houses appreciate continually. But we thought there was no cost to it. There was.”
By the mid-1980s, some estimates put the number of homeless Americans as high as 3 million. Carlson says those estimates were too high, but the numbers are still shocking. “Most experts agree we now have about seven hundred thousand homeless, in shelters or on the street. Half to two thirds of them are mentally ill or otherwise disabled. A third are seriously mentally ill. We have a whole underclass of people whose life expectancy is fifty-five—lower than in Russia. Even in Seattle, a hundred of them die in the streets each year.”
Carlson believes the United States has no housing shortage. “There are more than enough units to shelter everyone. But we are emptying houses everywhere due to foreclosures.”
Often, the vacant residences fall into disrepair; whole rows of homes stand empty or become drug-dealing havens. One of the worst days of Dave’s summer work in construction during high school was being assigned to evict three heroin addicts squatting in a small apartment building in the Hilltop area of Tacoma, prior to the building’s renovation.
Two men and a woman, all emaciated, living in filth up to their ankles, called that ground-level apartment home. Appeals by the apartment building owner to the city and social workers met with no response. It is hard to find people leading more miserable lives than homeless heroin addicts. Far too weak and downtrodden to argue or fight, they cooperated as Dave rounded up their things and escorted them out of the building.
“I don’t want to move you out,” Dave told them, “but we’ll be ripping all these walls and ceilings out tomorrow or the next day. You guys should really just go right to the hospital or the county rehab. You’ll die if you live like this here or anywhere else.”
“Mac, you’re not making my life any better,” one man responded. “If you want to help, give me some money for food. I don’t need your advice.”
Dave offered to buy them a burger at lunch. Two of them took him up on the offer. One, a Vietnam veteran, had a life story to tell and the willingness to tell it. His story was well worth listening to. His companion said very little. At the end of the lunch they thanked Dave. But that just didn’t feel right, as a free meal hardly heals the loss of housing.
Even for someone used to recklessly bashing out walls and ceilings, in preparation for reconstruction, having to clean up the needles and feces of heroin addicts brings reflection, the drive to study harder in college, and zero interest in drugs. Unemployment, homelessness, rising health care costs for all, drugs, and crime are problems that cannot be solved with more unemployment, more homelessness, more jails, and less opportunity. See for yourself. Go to any hospital in any major American city and interview the homeless people waiting for treatment. Ask the health professionals how much treatment of the homeless costs.
For anyone who pays attention, the vicious cycle of bad individual choices, bad policy, and high costs is obvious. Two blocks north of the Earth Economics office, where Dave works, is the Pierce County jail. Three blocks west of the Earth Economics office is a halfway house for people being released from jail. One block south of the Earth Economics office is a homeless shelter and a kitchen where many of the residents released from the halfway house go next. Other countries treat homelessness differently.
Britain had about ten thousand chronically homeless people on its streets in 2005 (the percentage equivalent of about fifty thousand in the United States) when Tony Blair’s Labour government decided to do something to find them homes. “Now the number has been reduced to eight hundred,” notes Carlson. “It’s quite a success story.”
“Europe has a far greater housing shortage than we do,” Carlson says with a frown. “But [Europeans] have far less homelessness. They put people into housing. They subsidize housing on a bigger scale.” U.S. policies have often been penny-wise and pound-foolish.
Carlson continues: “We are really a third-world country that’s in the first world. Our scale of poverty is much more profound than in any other rich country.” However, he concludes, “We’ve learned from some of these things.” The solutions to even complex problems like homelessness exist. First, sufficient low-cost single-resident-occupancy rooms need to be available. Second, there should be funding for social workers to interview homeless people and develop individual solutions to drug, health, housing, and employment problems. (When the second strategy was employed in the United Kingdom, it reduced homelessness by 92 percent and dramatically cut overall costs.) Allocating funds to secure solutions like sufficient housing “upstream” is cheaper and better than paying for the results of homelessness (for example, treating frostbite in the emergency room).
What are our housing goals? That a few people live in castles while more Americans than ever live on the street? Or that more Americans enjoy housing and home ownership?
Fashion Statement
Food, shelter, and clothing are basic needs. Americans used to make clothes. Now we import them at absurdly low prices. Unlike housing, the price of clothing has been plummeting for decades. Used clothes are now so abundant they are sold by the pound. Check out these bargains: You can buy wholesale “Grade A” clothing for forty cents a pound. “Grade A/B” goes for thirty cents. In July, you can buy winter clothes for fifteen cents a pound.22
Even new clothes are cheap. You can get a T-shirt for $3.99 on sale, or $1.99 in a “multipack.” As Annie Leonard writes in The Story of Stuff, any T-shirt selling for $1.99 doesn’t include all true costs in that price. For example, the cotton purchased by the average American in one year requires 176 cubic yards of water to produce. Cotton production requires 2.5 percent of the world’s agricultural land, 25 percent of the world’s fertilizers, and 25 percent of its insecticides. Just the pesticides sprayed on cotton plants cost about $2.6 billion every year.23
Leonard describes a trip to Haiti where she met with women who earned about two dollars a day while sewing apparel for Disney, while Disney’s then-CEO Michael Eisner raked in $34,800 each day, and more than $100,000 a day if stock options and benefits were included.24 Apparel workers around the world cannot afford to buy the new clothes they make. We, however, can afford the clothes. The average American now has three times as many clothes as thirty years ago. The former Harvard economist Juliet Schor reports that in 1991, Americans bought thirty-four items of clothing a year. Now, they buy sixty-seven, one every 5.4 days.25 Few people wear three pairs of pants or six shoes at once however, so our drawers, closets, and houses are filling up with apparel.
One day at Dave’s house, a loud POP! announced that a big cabinet, stuffed with clothes, had blown out, popping three screws on a side panel and disgorging the contents onto the floor. It was his wife, Isabel’s cupboard. “Hey, don’t blame me; you have too many clothes too,” she replied when Dave ribbed her. “Why did I get the cheesy cabinet, anyway?” Isabel decided to get rid of half of her clothes, and Dave’s whole family was inspired. They got rid of half of their clothes and never missed any of them. Drawers were empty, closets roomy. Vacant bins appeared out of thin air. Even the dirty clothes hamper somehow seemed roomier. It was so cathartic that Dave tried to reduce his clothes by half again. He put all the questionable clothes in a liberated bin, marked the date on it, and vowed, “If I don’t wear these clothes within a year, out they go.” After a year went by, he took the bin to Goodwill without ever opening the lid.
The whole process motivated Dave, Isabel, and their two sons to get rid of one third of the toys, clear out extra sheets, and unload unused tools.
For most of its history as a nation, the United States had import quotas on clothing. That ensured that some clothes would be “Made in the USA,” at higher wage rates, creating jobs and raising the price of clothes. Those quotas were phased out in the 1980s and ’90s. Clothing production moved almost entirely to countries with the cheapest labor, and the American textile manufacturing industry collapsed, taking whole towns in the Southeast with it.
It seems clear that except for the poorest, most Americans easily meet the basic needs of food, clothing, and shelter. Many of us, if we care to admit it, are overeating, drowning in a sea of clothing, and living in homes far larger than are actually comfortable. To ensure this profligacy, we borrowed to the hilt and made a religion of cheap, lured by the slogan of Walmart: Always Low Prices. Always. But the cost of this excess has been high, if hidden: debt, sprawl, environmental degradation, loss of whole industries and the livelihoods of countless thousands of American workers.
The U.S. economy, driven by its focus on the GDP, is an open mouth and bottomless stomach for new products (mostly made overseas). It delivers cheap goods. But, as we show in the next chapters, it delivers expensive bads as well. The trade-off is questionable. There’s plenty of room for improvement, but not in the direction we’ve been going. Indeed, when it comes to quality of life, in a host of ways, the American economy is a dramatic underperformer.