Ways to strengthen local, community, state, national or regional economies
by Win Wenger, Ph.D.
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I hereby suggest five ways in which a local, community, state, national or regional economy can be readily moved toward a stably robust condition.
- Each of these five diverse ways makes stronger use of immediate local resources.
- Each of these five diverse ways is a self-reliant way of moving ahead without waiting upon external help or developments. Meaning, among other things, that no help is required from IMF, the USA, or other international power or institution before desired results can be brought about.
- Each of these five diverse ways can be actualized directly from local resources and through local people.
In economic hard times, nearly everyone suffers at least somewhat while waiting for someone else to do something that will make things work right again. Withheld products and services result in less wealth, less means with which to seek to find means of recovery. Many factors contribute, but it usually takes far longer than it should for economic arrangements to re-work in ways which enable people and resources generally to get productive again.
If we look at the most basic issue and principles, the problem becomes obvious and its solution apparently simple. Once we look at that simple point, then I will propose five different ways for restarting and augmenting the productive use and flow of people and resources characteristic of a stable economy at its most robust.
The Basic Issue
Ask most people what the most important things are that a market economy does, and they’ll say, “Production and distribution.”
Not quite.
While these are essential, they are not the most important aspect of a market economy. The main role of a market economy is to serve as a directory.
Usually through some sort of self-adjusting pricing mechanism, a market economy’s most crucial function is to serve as a directory steering people and resources toward more and more productive uses. It is precisely that function which falters or fails in economic hard times.
And, losing such direction, people and resources are no longer steered toward more and more productive uses; existing arrangements begin to unravel; and productivity drops, reducing wealth and reducing the resources from which new arrangements must be struck and supported in order for conventional economic recovery to happen. And so the slump goes on and on and on….
Even in economic normal times, for a variety of specific reasons, economies around the world are not doing this primary role of directory very well. Despite relative prosperity in a handful of advantaged nations, the economies of most nations (and in most inner cities in even the prospering countries) are a disaster in this most crucial regard.
And governments perform this directory service far worse, as we’ve watched the whole communist endeavor join the long dreary list of failed command economies in the dustbin of history.
Within the present defective mechanisms, most of you now reading this are not permitted to perform at your best in, or to properly develop, your most valuable capacities. A few of us get lucky in connecting up with the present system; far more of us are not so lucky. Maybe our own rocket scientists are no longer having to serve burgers at McDonald’s restaurants the way they were a few years back; but they are still functioning way below the levels they are capable of serving in—along with so many others.
I weary of talking with highly trained university professors managing copy shops, teachers and engineers who have to eke out a living as security guards. And our U.S. economy is one of the few advantaged ones in the world, booming along at close to what economists consider to be “full employment”! (Maybe the U.S. economic boom can buy Asia and Latin America out of their recessions, but I wouldn’t want to count on it.) I don’t consider highest-calibre professionals ekeing out a life as bus drivers to be “full employment.”
Even in its stronger examples, such as the advantaged U.S. economy of the late 1990s, the pricing mechanism falls far, far short of its essential role as a directory steering people and resources toward more and more valuable uses. It generally runs far better than do authoritarian, command-based systems, but not so much so that we in this country don’t hesitate to turn to from-outside-the-marketplace devices when the going gets tough and the pricing directory mechanism comes unglued, to help things get back on track.
How we in America helped deepen Russia’s economic woes
This is an aside, but it helps illustrate the point. When the Soviet Empire collapsed, it was with the expectation and implied promise that to turn to a free market system would bring about more human living conditions, material and otherwise. Then we betrayed that hope. Here is how we did so— We did send over some material aid, but what we also sent over was a flock of economists as advisors, advisors who had ideological blinders on. Among the many things they disregarded was America’s own use of outside-the-market devices when the market is out of kilter, to help things get back on track. Our economic advisors thought their mission was to get the Russian and eastern European economies, as quickly as possible, away from an authoritarian command system and throw off all the restraints standing in the way of unmitigated market forces.
Of course the economies in question were in infinitely worse condition to begin with than was ours during the Great Depression, where we most had to turn to outside-the-market mechanisms to contain the damage and to restart key sectors of productive activity. That in itself should have been one good alarm that what our economic advisors were insistently proposing would not work.
The worst part was this: Our ideological economic advisors were in such haste to cut loose the controls that
- They did not only do so without first bothering to ensure that competition was in place in every industry;
- They did so without first bothering to ensure that competition was in place in any industry.
Result: the most extreme case of monopoly pricing inflation on historic record, and a ruin of the economy so profound that, by conventional means at least, it will take a decade or longer before peoples of Russia and Eastern Europe can begin to find decent human living standards. (There are some possible solutions and shortcuts to that problem also, but these will need to be given in another presentation.)
I blame the quality of our educational system for this. I don’t think it was any malign intent on the part of the people sending the advisors and making the use of those advisors a requirement for the material resources they were providing as aid—much the way you see the USA and the IMF doing now in Asia or in Latin America.
I once had an amazed conversation with two doctoral Ph.D. candidates in economics at the University of Maryland: neither of the two had ever even heard of the original Adam Smith and The Wealth of Nations, much less had any understanding of the basic mechanisms of a market economy!
Maybe they were atypical, but I’ve had other amazed conversations in many different fields at many different university and teaching institutions. Don’t be too surprised to see my whole dear country, apparent world leader though it is and has been and generous-hearted to boot, not many years hence go shockingly down the tubes through some amazing stupidity or other. The people now running things here just don’t know any better. And developments have not yet sobered them to the realization that they’ve let things get very amiss.
Finding Solutions
Well, in these few paragraphs we’ve attempted to present what we see to be at least the key part of the problem. Behind the context of those paragraphs, we see the key to be that, within the present imperfect mechanism, most people and most resources and you who are (somewhat patiently, thank you!) reading this are not permitted to perform at your best in, or to properly develop, your most valuable uses and capacities. A few get lucky; most of us fall way short of our potential value.
Another statement of the key is this: potentially, at least, and probably right now, you have services and resources to contribute, in the complex joint societal endeavor which creates wealth. Other people are in need of your better services and resources—and they, in turn, have also services and resources to contribute. But an impaired Directory or pricing mechanism means that most of those who want and need what you have to offer, can’t pay for what you have to offer.—And you can’t pay for much of what you yourself need and want from them.
Another statement of the key is simply this: with those impaired mechanisms, you are left dependent upon questionable structures and focussed not on what you have but on what you don’t have.
You know of course from my other writings, and generally, of psychology’s first law of behavior: that you get more of what you reinforce. But the matter goes far beyond even that hugely comprehensive principle.
So long as you are focused on what you don’t have, you are dependent upon what others do in order to improve your lot. As you’ve seen historically and maybe are seeing now, that can be a slow process. And while you wait, you’re being unproductive (or at least far less productive than you could be). The very wealth you might be aspiring to doesn’t exist, in part because you aren’t creating it via your own high and best productive uses.
What’s crucial in a down economy is not what people don’t have, but what people aren’t doing!
Get people doing, get them doing productive things, and the economy starts moving up.
How can this be done? The first of our “five-fold paths” suggests the way to address this issue most directly.
First Path
Hit “barter” on almost any search engine these days and you will be taken to the sites of a good many different trading concerns whose main process involves some sort of barter exchange.
So what? Wasn’t that barter the cumbersome old anachronism we did so well to leave behind, centuries and millennia ago, in favor of currencies of exchange more easily handled?
Originally currency, around which market mechanisms evolved to become the present system with accumulated advantages to some and accumulated disadvantages to others, was a simplifying short cut from the more basic exchange system, barter. It got to be too complicated holding two chickens, three pounds of flour, seven cords of firewood, a screwdriver and three knit sweaters not for their own sake but in pursuit of further trades with various other people. So everything became expressed instead in terms of money, which is far simpler and more convenient to carry around and exchange for various goods and services.
Because a currency has to be backed by a system in which people have reflexive or automatic confidence, the money system becomes in effect the prisoner of many other dominant structures and institutions. Many of these in turn are themselves pursuing worthy purposes—but their net overall effect often clouds or deranges the directory aspects of a market economy.
Today there reportedly exist computer software programs sophisticated enough to handle the complexities of barter. Through some of these, a very high level of sophisticated economic activity can be maintained in even the worst general economic conditions.
Make no mistake about this: I am not an expert here; I am in no position to compare and evaluate the various softwares involved. But with the Internet being what it is, a little determined researching should go a long way toward providing you access to what you need, and toward some sort of reliability basis.
Reportedly, several major cities in the northeastern United States, among them Ithaca, New York, have used such computer-coordinated bartering systems to restore prosperity where poverty was dominant—and apparently with less concept to guide the process than you find in this one brief. Here is how the system they’ve been using reportedly works:
One puts into the system whatever one wants to, for whatever others in the system are willing to pay for it, and draws from the system whatever products and services one desires within the systematized price of the values one has put in. In the deepest inner cities, I’ve been advised that at times and in some neighborhoods the U.S. dollar currency has in many instances become only a secondary basis of economic activity, people having managed to build enough value from what they’ve put into the system to trade wherever they please to advantage.
All this simply means that, based on the competence of the software and the prevalence of networked computers, and the competence and integrity of the people supervising the largely automatic system, a kind of electronic currency under whatever name has grown up to provide a more even playing field to the participants than they had been finding from accumulated disadvantage in the national and world economy.
Most of the existing companies engaging in barter appear to have “global” in their names but not in their operations. (Nor am I in a position to evaluate adequately the relative merits of the existing companies currently pursuing some sort of barter system.) You may need to pull people together locally to comprise your own system in order to appropriately address local needs and resources, whether or not you link up with one of the existing companies to give your exchange capabilities greater clout. This is a system which, like conventional currencies and national economies, can be abused and can damage people. This first of the “five-fold paths” seems simple in principle and actually is, but also may require the utmost attention in terms of how well you select the people who will supervise it initially, and who and what will comprise it.
Even if most of the information on this one path, as compared to the other paths, has yet to be developed, one thing is clear: this bartering approach allows even the most poverty-stricken or recession-stricken region to focus, not on what it doesn’t have but on what it does have, and so can immediately start building from there. Again: what’s crucial in a down economy is not what people don’t have but what people aren’t doing. Get people doing, get them producing things, and the economy heads upward.
| A computer-coordinated barter system allows people a potentially far wider range of options wherein to pursue their most productive value and to exchange some of that for other things they desire. |
There are certainly problems to overcome, the main one that of safeguarding the system and the values it will contain. But it allows people to no longer have to depend upon the systems and institutions which have left them at cumulative disadvantage. As wealth is created, they can re-enter the main system but from strength instead of from dependent weakness.
You can get away from what you don’t control, by refocussing from what you don’t have, to what you do have and thus do control. What you do control, you can do things with immediately. When you don’t control, it can take you a long, long time to achieve desired things.
Your local economy doesn’t have to have “money.” You do have to have people producing—producing what they can do well, and exchanging for what they need. In a marketplace, money and barter are two alternative methods. Throughout the world, there are some regions where money is effective and appropriate … and there are all those places in the world where it is not. But there is no need for poverty to prevail there. In all those places where money is inadequate, a good barter exchange system is another way to steer people and resources to productive and more productive uses.
Regions Mired in Poverty
I keep seeing reports and analyses with 5-year plans, 10-year plans, and the general tacit understanding that, in some regions of the world, twenty or a hundred years could elapse and the people there would be no further out of poverty than they are now. That just is not acceptable. Nor should it be acceptable to the advantaged regions of the world, because they need good trading partners far more now than they ever needed cheap labor. We are now all the poorer for it when anyone is poorer—for partial explanation of this phenomenon, please see the article on Abundance vs. Scarcity in the Inventions section of this website.
Pretty clearly, people in poor economies are focussed, not on what they have and therefore can do immediate things with, but on what they don’t have, and that keeps them from being in control of their own lives.
It’s what people are not doing that keeps those economies poor.
| It certainly appears that a well-run barter system can let people become productive immediately, and in control of their own lives. Once people are productive, that economy is no longer poor. |
This effect can be within months or even weeks, not awaiting the five-year or ten-year or hundred-year pleasure of outsiders with only a bureaucratic stake in the outcome or who are following the agenda of those whose vital stake isn’t right there with you.
Get your first advice from people whose immediate vital stakes are right there with you. Entertain a wider range of ideas, including from outsiders such as myself and even from those bloomin’ advisors, but depend first upon those whose stakes are your stakes!
Finally, as regards this first of the five-fold paths: moving toward a world where a number of exchange systems exist in parallel at different levels, and in different locations, means moving toward a world in which people and corporations, finding themselves remorselessly disadvantaged in one system, can find an alternative which permits them to perform at or near their highest, which in turn creates more of the wealth in which we all variously seek to share. I don’t expect bartering systems to replace most existing national currencies, but I expect them to parallel these and to help cause the existing main systems to perform better.
I can be much briefer in presenting the other four of the “five-fold paths,” because in many instances I can just refer to existing resources already in hand or widely available, simply putting these into the context in which they answer the issue of the economy and level of well-being.
Second Path
Learn and teach as widely as possible, some of the many effective methods and systems of successful and creative problem-solving. There are hundreds of such methods and systems which work well. These need to be unleashed upon the general landscape in such a way that most of the people around you will become far more able and far more willing to solve the problems they find themselves in and the problems they find around them. Virtually by definition, that means more people finding their way to a better economic footing from which they can serve more productively. Also virtually by definition, some of the factors and problems inhibiting prosperity will be solved.
| At best, I’d like to see many, many people encouraged to create their own enterprises, out of local resources and conditions, armed with the problem-solving skills which will enable them to overcome difficulties and create, from the ground up, wealth for themselves and for everyone around them. |
Many of the better methods and systems of method are brought together in what amounts to an annual world congress on creativity: the Creative Problem-Solving Institute late each June in Buffalo, New York. Several of the better programs of method are sourced right there, including the original Osborn-Parnes Creative Problem-Solving Method. Contact the Creative Education Foundation at 1050 Union Road, Buffalo, NY 14224.
There is a very wide variety of methods available. By learning more than one system: when one system doesn’t produce for you, you can promptly use another as back-up, and vice-versa, thereby greatly improving the chances that you will in fact find your solution to whatever matter. A draft taxonomy, an organized catalog of different types of problem-solving technique, can be found in the appendix of my book, Discovering The Obvious: Techniques of Original, Inspired Scientific Discovery, Technical Invention, and Innovation.
Three very different major creative problem-solving methods are taught step by step in that book, as well as other procedures regarding the uses suggested in its subtitle. We’ve published a good many additional works in the creative problem-solving field which are intentionally self-instructive, putting such resources immediately into the hands of anyone who cares to learn and use them. See the CPS Techniques section of this website for a number of these.
With the methods and techniques for effective/creative problem-solving so widely and readily available, very simply I propose, as this second of the five-fold paths, pursuing locally programs to find, train in, train others in, various of the more effective creative problem-solving systems. This can be done as some sort of sponsored program. Or it could be done commercially, though that shuts out some of the people whom you want to be stirring into effective and economically productive activity. Or it could even be done through setting up your own team or group or the local community leaders in a creative thinktank. Project Renaissance will be offering a simple handbook of instructions for creating and conducting one’s own thinktank locally, generally and also with reference to schools as an extracurricular “club” activity for youth and children.
The thing I like most about this second of the five paths is that it not only solves economic difficulties, but opens the way for all kinds of improvement in people’s well-being at most or all levels and in the community.
Another thing I like about this second path is that even merely one individual, reading this, can do what it takes to achieve the desired goals, without having to wait upon anyone else’s approval, authority, money, or other arrangements. With Internet, and maybe a good appropriate book or two, you have already in hand just about everything you actually need to get things underway.
Third Path
This is really an extension of part of the second path. Bend part of that involvement toward:
- Solving local problems of infrastructure which affect mutual access to one another’s productivities and to global resources; and
- Innovating new products and services to trade to advantage in the world economy, especially products and services which draw upon and employ local resources and local people, whose recompense in turn becomes spending power expressed in your local economy as “multiplier effect.”
There are resources and economic opportunities all over the place, easy to spot if you train yourself in the appropriate methods. Several of the very best effective methods are right there together in the aforementioned and appropriately titled book, Discovering The Obvious, easily self-taught step by step.
Every country I’ve visited showed me resources and bases for many unique products and services it could trade to advantage in the world economy, should it choose to do so. A few hours’ application by one of the abovementioned thinktanks could generate dozens if not hundreds, most of which should with some effort be made profitable.
Fourth Path
Who’s going to provide the workforce, administrative force, and professional services for the economic growth which results from any of the above? And what could it do for even your present economy, were it to become easy, quick and inexpensive to train a very broad range of your local people to remarkably high levels of competence in whatever field or profession?
I’ve great admiration for the education system and effort in both Japan and Singapore, the two countries likeliest to be first out of the current recession, other things being equal. But I’m taken aback at the human cost being exerted therein. Theirs is a huge achievement, and their consequent ability to market professional services and professionals around the world has greatly mitigated the recent economic setbacks. But what if you could do far more than that, even, without the sacrifice? What if, in a far broader range of your people, you could establish true and effective and creative full understanding and not just subject knowledge or rote operations?
Each of the eight types of procedure self-taught in my book, Beyond Teaching And Learning, focuses on building understanding—intellectual understanding, aesthetic understanding, human understanding, even sensori-motor understanding (as in performing arts and in athletics). That understanding is far more readily built out of one’s own context and background of experiences, conscious and otherwise, than it can be taught. With some of these eight types of method, years of richly understanding competence in a field or subject can be built in weeks, even days, sometimes in only hours.
Because so much of what is being learned by one or another of these eight types of method is being built from and upon what is already within the individual learner, a far wider range of people can be brought up to very high levels of competency. Or they can bring themselves up to such competency, once we or someone works various forms of these methods into content fully accessible to such a range.
Some of these effects—which can be rendered with high reliability—really have to be experienced to be believed. We are seeking to make them more and more accessible. Sooner or later enough people will have tried out these techniques and experienced firsthand the results that these will come into general practice. In the meanwhile, with a bit of wisdom and forethought, any community or country could advance its economy by getting the jump on the world in systematic sustained use of these and similar methods.
By now one can pretty readily see that each of these paths represents an alternative way in which a local community, national or regional economy can be rescued or built into a stably robust condition. Some readers may see one path as plausible and others as implausible. Each in fact is an effective plausible way. None are without problems in application, but a little dedicated attention in any of these ways can go a long way toward bringing about the desired outcomes. And…
…In point of fact, these paths are not mutually exclusive choices. Paths Two, Three and Four draw in part upon somewhat similar techniques. The five paths, including #5 below, can be used together to yield synergistically even greater benefits.
Fifth Path
People do what they do for their own reasons. If they have positive reasons for what they do, they can draw upon more of what they are and be more productive, than if their activity is largely an avoidance pattern.
Adam Smith, creator of modern understandings of the marketplace as the archetypical self-governing system, showed us a number of areas of economic activity where the market should operate free of interference. In most of those areas of economic activity, the pricing mechanism reflexively guides people and resources “like an invisible guiding hand” toward their most productive, rewarding uses. In those areas and regards, government or other kinds of interference only reduce efficiency and general well-being. But:
Smith also showed us a number of sectors and regards of economic activity where this is not the case. Sectors and factors where “the invisible guiding hand” actually leads people away from contributing to their own and the general well-being. He wrote about this most cogently in 1776 in The Wealth of Nations. It is precisely these areas where a public need or hardship is generated, and which requires an intervention of some sort from outside the reflexive marketplace, usually some sort of government control or provision or policing. It is in this context that have raged most of the political and ideological struggles of the past two centuries.
Most of what government now does (and, alas, does poorly), directly in such intervention, could be achieved much more effectively and efficiently from the private sector, the marketplace, if incentives were in place to supplement the directions being provided by “the invisible guiding hand.” Controls could be very light and very subtle, with little motion or effort wasted. If the appropriate incentives were in place, people on their own and where situated as appropriate, would address the need in question and do so at least expense.
What incentives? At the level of government, prestige awards (like Japan’s “national treasure” awards system) can do some things, but so few people may aspire to most of the awards in question that you need something which will catch the attention of far more people, from whom enough will become involved to address the need. Government’s main resource for this purpose is—the tax system.
| People go to great lengths to avoid this or that bit of taxes.—Might as well make those very slight changes which, when people go to those lengths to avoid taxes, will result in the things which address the needs the taxes were being levied to pay for! This in turn can greatly lighten the tax burden itself, reduce the sometimes heavy-handed role of overt government control, and attract capital and firms which would prefer to live under a lighter tax load. |
On the level of corporations, as demonstrated by, among many other things, widespread complaints about “micromanagement,” direct control and supervision are expensive. They are far more expensive than well-designed incentives and a good information system which enables employees to know widely and readily what’s available to them, as well as ensuring they are well-informed on the context of the tasks they are pursuing on behalf of the company.
Far more can and should be said, but because so many have their eco-political ideologies so rock-solid predetermined, too much said here could get in some readers’ way in responding to other points of this paper and its other four paths. If anyone is open to considering options in this sector, I’ve said considerably more in my book Incentives As A Preferred Instrument of Corporate and Public Policy. Suffice it to say here that there are acceptable and unacceptable forms of incentive; that these are largely defined by terms of the local culture; that incentives as a rule of thumb cost between 1 and 5 percent of more direct means of intervention, control and supervision, whether governmental or corporate; and that few areas of public need exist which cannot readily be solved or improved-upon by careful, thoughtful, informed adjustment of the incentives which now and already are acting upon the people in and around each such situation.
Conclusions
There are already at hand a number of diverse means to bring an end to both poverty and to the present economic difficulty in parts of the world. These include:
- Computer-coordinated barter as a way to step aside from accumulated disadvantage in the main currency and accessing higher productivity to begin creating wealth on your own;
- Applying some of the many effective problem-solving skills yourself and finding ways to encourage others locally also to become skilled in and use such skills on the issues they are contending with or which are around them.
- Extending some of the same techniques to creating, from local resources and people and situations, new unique products which your community or country can trade to advantage in the world economy.
- Using related techniques to profoundly accelerate learning, with understanding. Create quickly and easily a far more valuable workforce and set of world-calibre professionals from the people around you.
- Using subtle incentives instead of more direct, heavy-handed and expensive means of control, policing and punishment, and supervision, as a preferred means to achieve the goals and satisfy the needs of your corporation, community or country.
In any case, such a resolution is much more likely to come sooner and more fully if people can work with what they already have and with local resources, rather than waiting upon far-off authorities and institutions and IMF-type programs to make their decisions and arrangements for them.
Jeremy Bentham’s argument may still hold, despite some of the ill effects in some areas of contemporary educational systems, that: people are likelier to know best for their own immediate affairs and to produce greater general benefit therefrom, than are far-off authorities. How many of you reading this really think that World Bank and IMF know better what’s good for you than you do? You can choose to continue to depend upon them, or you can choose to depend upon yourself.
It’s not that most of the people in those and related institutions lack good faith or good intentions. —But do you want to trust everything to their omniscient wisdom?
Or you can stand by and wait indefinitely for developments. Some have waited for decades; some for centuries. Serious application of one or several of these five ways could well bring an end to your country’s or your community’s part of the recession within months, with other parts of the world also consequently beginning to recover. You already have, or can readily access, the means by which to do so.
If any part of this makes sense to you, please bring it to someone else’s attention and discuss it with them, as thoughtfully and perceptively as you can. Please forgive any parts which don’t yet make sense to you. That could be from shortcomings in the proposition, or from speaking across a gap in cultural context, or it could simply be a shortcoming in my own way of saying things. I don’t want to mislead anyone any more than did most of those (I believe well-meaning) economic advisors wish to mislead their clients. But a little care and probing and observing and testing and comparison of actual observations may show much that can surprise you.
Whether any or some combination of these five proposed paths, or whether this paper has started your own thinking going on some different measure more directly your own, at least you don’t have to continue to sit there taking hits on your economic chin. I know you can solve matters sooner rather than later. I encourage you to look beyond these five paths toward your own solution because your own situation is necessarily somewhat unique and because each of these five paths involves some work and effort, and some other path you might find might be better.
—But let’s get the problem solved, one way or another, sooner rather than later, and preferably in a way that leaves you in control of your own life and of what’s happening to you.