Wanted: Alternative Thinkers for a Change : Policy: Forget production and consumption; politicians should open their minds to new ideas because a slump looms.

Economists have managed to convince politicians and citizens that the central economic challenge is to determine how production can be increased. The real issue of the last 150 years has been how to achieve sufficient demand to absorb available production so depressions could be prevented.

Several patterns have been tried.

Ever since the beginning of the high industrial era, the question has always been how to enable people to afford the ever-growing flow of goods and services. First, Europe made credit available to the industrialized countries, including the United States. By the beginning of World War II, huge amounts of money were owed to Britain, Germany, France and others. This solution was quite effective throughout the 19th century, although severe economic depressions developed from time to time as production temporarily outran demand.

Second, Ford invented the $5 workday. For the first time, manual workers were able to buy more than necessities. The pattern provided enough demand through the end of the 1920s. The 1930s saw the worst depression ended only by war production. At the end of the war, Western democracies saw unemployment as an evil to be avoided at almost all costs.

Third, personal credit was made broadly available after World War II. Saving was no longer seen as culturally desirable but a threat to the economy by keeping consumption down. This new pattern kept demand high through the end of the 1970s.

The most recent technique for supporting demand is seldom acknowledged as such. Most countries now run significant annual deficits; this has prevented a major global recession.

Despite this latest pattern, the world-wide economic situation remains fragile. Japan’s economy has barely grown for several years. Unemployment rates in Europe hover around 10%. The percentage of national income going to wages in the United States continues to fall and those at the bottom of the income ladder are in worse and worse shape. Unemployment and underemployment in the developing countries exceeds as much as 50%.

Bleak as this picture is, problems will inevitably worsen in the next few years because countries are committed to reducing their deficits. In addition, many people have decided to change their priorities away from consumption. Ecological feedback loops require us to do more with less. These emerging realities will reduce demand still further and worsen job losses dramatically. In addition, the impacts of technology will hasten and broaden the emerging crisis.

We do know that Democratic strategies were no longer effective. Sweeping them away was inevitable. Republican policies are disastrously wrong-headed. Welfare reform, Medicaid changes and alterations in other policies toward the poor all assume that good jobs will be available if only people are educated and seek them. All the evidence is to the contrary.

The point that neither party has yet grasped is that the success criteria and reward systems of the 21st century will inevitably be profoundly different from those of the 20th. In the 20th century, we committed ourselves to maximum labor force participation and maximum economic growth. Now, we are actually losing ground if we look at the real costs of this set of policies.

What alternative directions might we develop? One obvious place to start is with the generally agreed priority on the family. There are a growing number of spouses who would like to stay home with their children; we have convinced them that they cannot afford to do so. Calculations show, however, that the net income from a second or third job is often low and sometimes even negative if all costs are taken into account.

Changes in tax policy and business strategies could also be developed. The tax code could be revised so that the deduction for children is increased for parents who choose to stay at home. Businesses that underwrite child care could also choose to encourage one parent to stay home by paying the same amount to the parent who stays home as they do for commercial child care.

There are many steps that can be taken once we recognize that we need to break out of an economy dependent on compulsive consumption. There are two obstacles. One involves our accepting that the old success criteria really are obsolete. A second is to imagine other policies.