When some yell 'scarcity,' time to act abundantly

The US Senate may have passed a stop-gap spending bill Monday night, averting government shut down, but the controversy over disaster relief funds that sparked this latest bout of congressional gridlock remains relevant.

A few weeks ago, on the heels of hurricane Irene and Texas wildfires, the Federal Emergency Management Agency warned that it might not have funds to see it through the end of the fiscal year. In response, House Majority Leader Eric Cantor – who has since backpedaled from the statement – proposed that any new disaster relief funds must be offset by cuts elsewhere in the federal budget.

And though FEMA announced Monday that its funds will in fact see it through the end of the week (which is the end of the fiscal year), the idea that disaster aid would be subject to the balanced-budget principle remains unsettling.

Insisting on this principle betrays a certain worldview: Resources are scarce, and claims for resources always exceed what’s available. It’s a view beginning to dominate political decisionmaking in the name of deficit reduction, but it’s also a view that belies serious moral problems that may limit American society and prosperity. Seeing resources to deal with disaster relief, invest in the future, or meet other needs as scarce can undermine community and growth. But viewing resources and opportunities as abundant has the potential to transform neighborhoods and economies.

Mr. Cantor’s proposal, if not to be an empty gesture, had to allow for the possibility that hurricane aid would receive no funds at all. It creates a “zero-sum” game that would force every existing program to protect itself by opposing any new claims on a fixed budget, even if that means opposing emergency aid for hurricane victims.

Once scarcity becomes the lens through which individuals or institutions perceive everything, profound insecurity results. Lack may become acute. In a world of scarcity, aid to disaster victims threatens other programs’ funding and victims cease to be what they are: fellow citizens deserving aid in a time of need as an affirmation of the common good.

At the personal level, insecurity turns the colleague at work into a potential competitor for one’s promotion or raise, thus destroying collegiality and cooperation. It undermines the perception of neighbor as neighbor. People may initially withhold aid to their neighbor (or fellow countryman) on the grounds of perceived scarcity, but soon they may need to rationalize the non-response further. One such rationalization is to blame the victims for their own woes. In the case of disaster relief, this rationale says, “Well, they chose to live in the path of a hurricane. That’s not my problem.” The scarcity model thus erodes the attitudes that undergird community, whether at the institutional or personal level.

Cantor’s proposal, which held the potential to deny aid to disaster victims on the basis of scarcity, stands on an old tradition, however. The “dismal science” of Thomas Robert Malthus was a theory of the inevitable scarcity of food. Thus, poverty was portrayed as inevitable, and incurable. Those who actually could have done something were absolved of curing what was, after all, incurable.

Ironically, Malthus was writing at the end of the 18th century, just as science and technology began multiplying the productivity of resources and making the end of poverty a real possibility, given the social will to do so. (Malthus certainly never foresaw a Green Revolution in which new technologies would have the potential to create jobs and harness renewable energy, beyond the trap of limited resources.)

Thus the “dismal science” was on shaky ground almost as soon as it was proposed. For almost two centuries, scientific technology and investment have been increasing economic output per worker in developed countries by an average approaching 2 percent per year, compounded. In real terms, developed society has seen a huge increase in productivity and prosperity over the past 200 years.

A well-known economist of the last generation, John Kenneth Galbraith, once wrote convincingly of America’s “Affluent Society” – at a time when GDP was much smaller per capita than now. Galbraith argued that the idea of scarcity was outmoded, and argued for better use of the abundance that really existed.

Yet the scarcity doctrine dies hard, perhaps because America’s formative years overlapped the heyday of the “dismal science.” The saying “there’s no such thing as a free lunch” remains common in business circles and pays homage to the scarcity model.

American religious traditions help to counter the scarcity doctrine, however. Biblical literature regularly emphasizes abundance as a greater reality than scarcity. For example, the disciples of Jesus misjudged their teacher’s ability to feed huge crowds. The Good Samaritan is a symbol of rendering immediate aid to fellow humans in need without first engaging in a cost-benefit study. Manna in the wilderness overcame scarcity during the exodus. The emphasis on abundance is well placed: It replaces insecurity with attitudes that lead to generosity and other moral traits, long valued and practiced in American society.

Indeed, the Harvard economist, Benjamin Friedman, in his “Moral Consequences of Economic Growth,” argues that societies are most open and progressive in times of abundance and growth, while at their worst in times of scarcity. Seeing through the lens of abundance rather than of scarcity surely has moral implications. It may also have some practical consequences.

Following the recent financial collapse, a common pattern for some of the most richly endowed American universities was to focus on their financial losses, while ignoring the fact that they still remained incredibly wealthy in the relative scheme of things. As a result, they reacted by cutting educational and research costs by freezing hiring and salaries, postponing needed capital projects, or even cutting positions. In effect, they put their true mission in a holding pattern.

Meanwhile, almost unnoticed nationally, during this very same time period, High Point University, a small, private liberal arts university in High Point, N.C., under the leadership of a president with a large vision, decided not just to honor its plan for growth, but expand it. The college, with its relatively small endowment, found abundant resources to make a quantum leap. Facing down doubts and fears, it embarked on an aggressive fundraising campaign and began investing in new buildings. Its leadership saw opportunity, where others might have seen lack.

Since then, its size, programs, and facilities have all greatly expanded. Its national ranking has gone up. And the continued expansion plan is expected to create jobs and increase economic impact in North Carolina’s most populous metro-region. The university community and surrounding region will be experiencing the benefits of its transformation for many years to come.

If we perceive the world through the lens of balance sheets, then in times of economic downturn, we perceive only deficits and debts. This skews our perception toward scarcity and retrenchment. We believe, perhaps, that we cannot afford disaster relief. But the balance-sheet perception doesn’t give us the full picture.

The current economic downturn, viewed through the lens of actual resources, represents an abundance of workers and capital available. If some of those resources were used for hurricane relief, for example, they would be activated rather than being left idle and so wasted.

Now is not the time to raise balance-sheet scarcity as the reason to question the moral principle that we should provide humane aid to fellow citizens in their time of need. Such a denial would be weak on moral as well as economic grounds.

It’s time for politicians and community members alike to rethink the “scarcity doctrine” and open their eyes to the modern-day loaves and fishes waiting to be harvested and dispersed.

Donald Frey is a retired professor of economics at Wake Forest University and author of “America’s Economic Moralists.”