It seems as though we may be seeing the consequence of our flawed economic theory in real time, and California may be our canary in the coal mine. We should be astutely observing what exactly their leaders do to climb out of their $20+ billion debt.  Aljazeera English, a global news channel forbidden in the States due to its relationship with the Middle East, has created a series called “Fault Line” covering this topic in the detail it deserves. But before we get into this detail let’s take a look at what got us here.

Our nation is experiencing an economic disaster that most generations have likely never seen. To simplify, it was caused by irresponsible financial practices motivated by high-level corporate short-sightedness, deregulation and irrational beliefs of fiscal immortality. We are living the consequence of these lies we Americans have been told for decades by those we trusted — patriotism is found in unregulated capitalism and unabated consumerism. We felt as though we must express and flaunt our freedoms through a public display of materialism and gross over-consumption. Of course, for nearly all Americans, this was unsustainable, so we looked to credit to help us continue our road to self-destruction.

Now, if you belonged to the few that warned of this inevitable disaster, then you were labeled as anti-American. What those that warned of this upcoming disaster understood that the rest did not, is our economic model was not properly aligned with reality. The current economic model does not take into consideration the fact that we live in a reality that has limited resources, and these resources have to be considered.

When one does not incorporate this new reality into our economic model, there are two things to consider. One, when a certain demographic of people become wealthier, they have to take resources away from the “other” demographic of people. Although there are answers to this problem, neither are sustainable. The attempt to compensate for the loss of resources, this “other” demographic then has to turn to credit and rely on the printing of new money. Both are no win situations since the “others” are both financially stretched too thin and are relying on a weak dollar to mobilize their assets.

A counter argument could be the trickle-down theory, but this is both inaccurate and disingenuous. Here’s how the math works (Quoted from New Scientist):

During the 1980s, for every $100 added to the value of the global economy, around $2.20 found its way to those living below the World Bank’s absolute poverty line. During the 1990s, that share shrank to just 60 cents. This inequity in income distribution means that for the poor to get slightly less poor, the rich have to get very much richer. It would take around $166 worth of global growth to generate $1 extra for people living on below $1 a day.

… under the current economic system, reducing poverty by a tiny amount will necessitate huge extra consumption by those who are already rich. To get the poorest an income of just $3 per day would require an impossible 15 planets’ worth of biocapacity. In other words, we will have made Earth uninhabitable long before poverty is eradicated. If we are serious about helping the poor rather than the rich, we need a new development model.

“So what’s the problem? Let’s just incorporate the new model and move forward, right?” Well, there is a big problem. This limited resource model completely destroys the rationale for the Republican’s basic political/economical theory, aka. Reaganomics. To this day, they still proclaim that this very model that we just debunked from above will be our saving grace. Unfortunately, we have already witnessed how flawed the theory is, but the Republicans are just not willing to accept this fact. They are still drumming the same broken drum expecting a different tune.

Unfortunately, this flawed economic theory is the very ideology that defines the political campaign slogan that Republicans run on. If they agree that it is wrong, what political leg will they stand on? This creates a scenario that forces them to continue the drum beating and continue the media coverage that their way is still the right way. What other choice do they have? 

We can’t count on the media to correct their misinformation. We can’t count on the Democrats to fight for what’s right as they couldn’t argue their way out of a 2nd grade classroom. So, how is this information going to disseminate amongst those that need to hear it? With the Republicans taking up all the air time, and President Obama too busy trying to be bipartisan, I am not optimistic.

Now let’s get back to California. I don’t mean to sound callous, but California’s demise may be the best example of how preposterous the Republican’s ideology is, and that may be our only saving grace to wake people up. Now, if you are not up-to-date on California’s situation, I emplore you to watch this great documentary that gets into the nitty-gritty to explain both sides of the this economic coin.