The New Market: A Positive Way To Use Privilege

The last couple of my blogs have dealt with a very important topic; one that has had a huge impact on my life. A week ago we had a very tough discussion in one of my classes, but I will tell you it has changed the way I look at things. In today’s blog I want to discuss the market and how privilege can be used in positive ways to lead to a better standard of living for all. To accomplish this huge task I want to discuss what the market is, and its centrality to our society, and how its elements function. I will then discuss actions that can be taken to create equal opportunity, while not focusing on equal results.

Zulema Valdez, in her book “The New Entrepreneurs: How Race, Class, and Gender Shape American Enterprise,” eloquently describes the nuances of America’s market economy. She begins by describing it as “embedded and enmeshed in institutions.” I think what she is describing is the market system. In describing the Market,Valdez fisr identifies the element of market exchange. In my classes I describe this by using an experience I had in Kenya, Africa. While we were vacationing there we hired a cook named Jerome. We told Jerome we wanted to have fish for dinner with fresh fruit. Jerome and I then traveled to a palm tree where the sellers were located. The sellers were selling fruit and fish for a certain price, and I as the buyer went there to buy the product I wanted. The seller had set a high price, and I as the buyer did not want to pay the high price, so we negotiated an agreed too price. I gave the seller money, and the seller gave me a fish and fruit. Through this process both of us were better off. The seller made a profit and I purchased the product I wanted. This is what the market exchange is all about.

The second element of this embedded and enmeshed process involves reciprocity. Valdez describes this as “long-term symmetrical social relationships that elicit trust and obligation.” When I teach financial classes I will always discuss the fiduciary responsibility of businesses. Fiduciary is a world that means trust. The agents of the company, managers, have a fiduciary responsibility to the principles, owners, to properly use the owner’s property to produce a maximize return on their investment. However, I also discuss how important all stakeholder relationships are, and the importance of trust between leaders and followers. Reciprocity is critical to the evolution of the market.

The third element involves the concept of redistribution. Or as Valdez states, “asymmetrical collection, allocation and distribution of commodities by a central actor (that is the state).” She later describes this as an avenue of economic integration involving the collection of taxes that are subsequently redistributed to the “members of the polity.” This “government capital” will benefit people via “government lending programs to targeted individuals.”

When I teach economics, I always state that the market system is amoral. It is neither good nor bad, it just is. However, I also tell my students that what makes the market system good or bad is how the process is administered, or what is allowed to occur. Valdez states, “The American market economy is embedded within the larger social structure, made up of three interlocking systems of oppression and privilege, capitalism, patriarchy, and White supremacy.” I know some of my readers will bristle at this quote, but let me explain what is meant here.

Think back to how our country started. George Washington, Thomas Jefferson, and others were all male and all white. Our country was started by individuals who understood the “white-Euro-centric system,” which they brought to this country adjusting the system for more of a democratic emphasis, but it was still a white male dominated process. Then via policy, the Monroe Doctrine and Manifest Destiny, these leaders marched across this continent to create the great country we are today dealing with indigenous people in ways that we look at today as tragic. This history that I am describing, is, and there is nothing we can do about changing what has happened. This is not a value statement of right or wrong, it is just recognizes that our current social systems are still heavily guided by our Euro-centric beginnings.

I want to focus this discussion on the most embedded and central activity within our social interchange, the market, which is where we continue to see the influences of our cultural beginnings. Social stratifications based on wealth are a reality. There are still some folks that have an advantage over others when it comes to economic opportunity. Maybe some of us would be more open to this discussion if we remove “white” from the phrase and just say privilege?

Those that own more property and wealth have more privilege. These individuals are usually more middle to upper-class folks. It does not mean that people cannot pull themselves up from lower classes, but it has become less likely that this will happen. Those that don’t have access to better education and financial resources are less likely to be able to start businesses. Valdez states that those that have more capital “the stronger and more profitable the business and the more powerful and privileged the would-be entrepreneur.” I do think this is a pretty big assumption and too generalized for my liking.

The fact is our economic system is changing, but maybe not quick enough. The levels of women in leadership have changed, as has levels of Latino and black leadership, within large organizations. However, it may not be fast enough; because the world is changing, and America’s dominance within the world economy is being challenged by China and others., therefore, how we look at diversity needs to change.

Where we see the greatest disconnect between those who are privileged and those who are not is in the area of small business. This is where the greatest need for change has been identified. This is where I strongly agree with Valdez. By using group-based social capital and redistribution processes we can create stronger and more equal opportunities for all entrepreneurs, not just those who were lucky enough to have been born in the suburbs instead of the inner city. This will not produce an equal outcome, but equal opportunity.

Because “entrepreneurial outcomes are positively influenced by who you know,” finding successful entrepreneurs, no matter what race or ethnicity, who are willing to mentor your future economic and social entrepreneurs is critical. I also think the academic process is critical. By training future entrepreneurs, and connecting them with mentors, we can positively influence the current system in a positive direction. And lastly, I think businesses and the government should provided low interest loans to all future entrepreneurs as a way to continue to provide fair and equitable opportunities in the future.

I will end this blog with words from Valdez. “Market capacity is the sum total of market capital, social capital, and government capital.” By combining these three elements, “market capital, which includes skills, education, and work experience as well as tangible material goods related to class background; social capital, a more intangible resource that fosters group-based solidarity, trust, and reciprocal obligations; and finally, government capital, or access to resources based on polity membership, such as a government loan or subsidy,” we can mitigate the systemic stratification deeply entrenched.

I think the biggest issue facing our country today is not Democrats versus Republicans, although I hate the incompetency of our current government at all levels, but the issue of the growing disparity between the wealthy and the poor. Where this can be, must be, addressed is in the market. I tend to think that large companies, like Walmart, should pay a livable wage. I also tend to think that if we help entrepreneurs have access to needed resources they will more likely succeed (this is a huge generalization, I know). And I also think, like Valdez, “Under conditions of market disadvantage, reciprocal or redistributive relationships may act as compensatory mechanisms that serve to augment entrepreneurial outcomes through the use of social and governmental capital.” Phew, I think I am done.

And that is my thought for the day!

Crossed Lines And The Other

I have been a Christian for forty years. I have had my ups and downs in my faith, but I made a good decision many years ago when I committed my life to Jesus Christ. I have lost some things due to my faith and gained other things as I have walked down this road.

Years ago I was involved in what is called cult ministry. I studied Mormonism, Jehovah’s Witnesses, Islam, and other faiths understanding and arguing with people in these other faiths. I have learned there is a difference. There is a line, and the line is Jesus Christ! “He is the way, the truth, and the life. No one comes to the Father but by Him.” That is the line.

My worldview is based in my Christian faith. A worldview, Weltanschauung (German), “refers to the way one interprets the world.” A worldview is a socialized development via “home life, place of worship, and school.” Thus I can confidently say that my worldview was greatly impacted by my salvation and subsequent study of the Bible. However, it has also been influenced by the fact that I am an American.

The following ideals are a few of what is usually associated with being an American. “Democracy, achievement, activity over reflection, absolutism, efficiency, progress, rationality, individualism, and racial and group superiority.” At one point in time the Irish and Germans were hated as they immigrated to the United States. However, our history is filled with slavery and continued fight for civil rights of blacks. Immigration is still a problem that we can’t seem to agree on. I think we have a problem with the other.

The question is what is meant by other? “The other is a generic term used to signify members of the out-group. In-groups do not have the same worldview as do out-groups.” The battle in our society between the dominant culture and the other is usually around what is called intractable issues, or opposing views of right and wrong. Our current intractable issues are abortion, gay rights, immigration, and race. Each side seeks to demonize the other, rather than seek to understand.

If you read my blog from yesterday you would know that I am wrestling with white privilege and understanding my students. However, I am a Christian who follows the prince of peace, so in order for me to be a Christ-follower I think it is my responsibility to break down walls and create shared meaning. I also think that is what a good manager/leader does. So it is time not to be a hater, but someone who creates understanding.

Hatred is “powerful, extreme, and a persistent emotion” that rejects the out-group. Hatred leads to the denial of the humanity of another person or group, denial of security for another person or group, the placing of one group over another, and the dominant group controlling the resources “in a win-lose conflict.” I think these comments reflect accurately American history; the dominant white male disallowing women to vote, as well as reducing opportunities for people of color.

I know some of my readers are going to say, I am tired of hearing this, I thought we were beyond racism. But the fact is, until we have a serious conversation that leads to a shared meaning of the past we will never get past this. It will be like a festering abscess that continues to infect the body. All I want you to do is listen to me and think about what I am saying.

We need to analyze the power relationships in our country to understand and deal with oppression, exploitation, and injustice. This is critical. This reality is not only racial, but managerial. The gap between the haves and the have-nots is getting greater, leading to a stronger win-lose owning of resources.

Proponents of critical theory use the term praxis to reflect how this process occurs. “The primary method of critical theory is praxis, which is the reciprocal, dynamic, and reflexive relationship that practitioners engage in when their theorizing about societal oppression informs their actions taken to challenge that oppression.”

The question that I am answering for me, is what do I do from here? First, I intend to be sensitive to mistreatment, oppression, and suffering. This is definitely inline with my faith. Jesus was very concerned about the poor and marginalized. Second, I am going to provide opportunities for access of expression. If we can’t do this on a academic campus, where can we do this? Third, I am going to continue to seek a solution through communication and negotiation avenues.

So there you have it. I have really missed the boat for several years now, but I intend to rectify this. I am teaching students of all colors and ethnic backgrounds, I think I need to be better prepared to teach. I feel like I am Paul seeing a vision of a Macedonian telling him to visit Macedonia. I am being compelled to think about this in new ways. I am learning and growing.

And that is my thought for the day!

What A Week – Thoughts On White Privilege

Over the last few months I have had several experiences that have caused me to question my thoughts on racism in America. However, nothing has affected me more than what happened in my Tuesday class. I will explain.

Last summer my wife and I visited Virginia. We did all of the touristy stuff, Williamsburg, Yorktown, Jamestown, and many of the Civil War sites. The first few days we spent reviewing the revolutionary war and the last half was spent in the Civil War. I have lived in Vancouver, Washington for 37 years, and have worked with many different people, but I was amazed at how diverse Virginia was, and how un-diverse, relatively speaking, Vancouver is. Needless to say, that got me thinking. I also began to think about how freedom was expressed as everyone’s right, but even our founding fathers had slaves, even seeing themselves as benevolent white saviors.

The second event happened last weekend. I, and my family, took a trip to California. We did the Disneyland thing celebrating my wife’s birthday, my birthday, my daughter’s boyfriend’s son’s birthday (if that makes sense to you), my son and his wife’s anniversary (10th), and our anniversary (25th). We also travelled to the valley to see my Uncle. It was a great trip. I was impacted by the amount of so many different people that visit Disneyland. There were so many different languages, ethnicities, and styles of dress; it was truly a wonderful experience.

However, it was Tuesday’s class that really got me thinking. I had placed a question on a test that asked the students what characteristic was critical for the entrepreneur. It was a multiple-choice question that had several options as a choice. The entrepreneur could be a linear thinker, white male, non-linear thinker, and the last option escapes me right now. The answer to the question, based upon the text by Warren Bennis, was non-linear thinker. The phrase white male upset some of my students, which led to a discussion in class about white privilege.

Personally I have never thought of myself as racist. I grew up in the LA area, went to school most of my life with people of different races and ethnicities, and worked with and supervised diverse people. But after this conversation on Tuesday, I have come to the conclusion I have some personal work in this area of diversity. I have taught the subject, discussed it ad nauseum in graduate courses, but I am now convinced I had no idea how deep this issue is in our nation, and had no real understanding of the subject.

As the discussion in my class began I watched the students respond in many different ways. The students of color in my class began by saying all white students have a back up plan. The white students felt uncomfortable about saying anything, so they got quiet. Eventually, one white student did respond and said she did not have a back up plan and did not have white privilege. Another stated that this was a good discussion, but hopefully it is not just complaining.

Even some of the students of color got quiet. We then watched a Ted talk by a black woman, named Melody, who is married to a white man, about racism in America. After this event, I came to the conclusion I have no real understanding of this issue, and I have been fooling myself all this time. I am now on a crusade, if it is ok to use this term, to figure this stuff out. It is a complex issue.

I am a sixty-three year old white male, soon to be sixty-four, who has been fairly successful in my life. I have worked hard all of my life, so having someone tell me that I am privileged initially rubs me the wrong way. However, when we define white privilege as a “benefit associated with being white, or a part of the dominant group, that non-whites do not experience,” then yes I have benefited from white privilege. I don’t have to worry when I walk through my neighborhood that people are going to think that I want to rob them.

Peggy McIntosh says, “I was taught to see racism only in individual acts of meanness, not in invisible systems conferring dominance on my group.” Male versus female, white versus people of color are both examples of privilege, privilege that is a result of historical systems in place for many years. These privileges are social, political, and economic resulting from entrenched systems. The question that I am pondering is, what do I as a white, older man who is a college professor do about this?

First of all, I am going to educate myself on how people feel about this. I am going to read. I have purchased “The Myth of a Post Racial America,” by Roy Kaplan. I have purchased, “The New Entrepreneurs: How Race, Class and Gender Shape American Enterprise,” by Zulema Valdez and I am voraciously reading them. I want to know.

Second, I am going to talk to Blacks, Latinos, and whites about this issue. I want to know what people are really thinking and feeling about the subject of race and entrepreneurship. I want to prove that although Capitalism has been cited as a cause of racism, that Capitalism is not the culprit it is people and their use of the systems. I want to prove that our economic system is amoral and can be used to improve life for all people.

I think the biggest issue associated with this is the proper use of power. There are some who have power and there are others who don’t. So what is the proper use of power? Is it to enslave people to ensure your economic success, or is it the creation of systems that help people thrive? I will develop this more fully in a subsequent blog post.

I also think that as a Christian I need to address this issue. The colonization of the United States and exploitation of indigenous people is something that continues to fester. I will be thinking about this and discuss it later in my blog. However, I think this is enough for now.

These are my initial thoughts on the subject of white privilege. As a leader in my department and community I intend to make a difference with this subject. The only way this is going to really change is if we have the serious and difficult discussions. If we shutdown and not talk then we are not accomplishing anything. My eyes have been open, now I have a responsibility to do something with it.

And that is my thought for the day!

Lessons On Leadership From Marc Driscoll

I have been in the Church for forty years now, and have observed good and bad examples of what leadership should be. All of the Pastors I have met over the years claim to be examples of Christ, and have followed the Biblical examples for Church governance. I have even Pastored a Church making the same claims as others. However, as I have followed the travails of Marc Driscoll, I see some troubling things as I have thought about his leadership style and what we can learn from this event.

Driscoll was the Pastor who started Mars Hill in Seattle. He has been described as the “cussin Pastor,” and is the originator, supposedly, of live streaming a service to multiple sites. Something many large Churches are doing today.

Driscoll has resigned, and not for the reasons that have occurred so many times in the past. I can remember Jimmy Swaggert’s tear filled confession of multiple sexual/moral failures. Jim Bakker’s fall from grace was a media display of the abuse of power and sexual exploitation. Ted Haggard was another Pastor of a large Church that suffered from moral failures. There are many others that have failed in this way, some restored to ministry and others not so much.

Driscoll’s resignation is for different reasons though, reasons that resulted from a huge ego. I have known, and probably can be accused of, many Pastors with very large egos, egos that they try to hide from the regular Church attender.

Driscoll was an in your face Pastor. “I cannot worship a guy I can beat up!” Interesting comment, implying that Jesus was tough, which I have no doubt he was tough, as evidenced by what He experienced for us. However, I don’t think He would like to be known as a bully.

However, because of his views on women’s roles, his view on homosexuality, and a comment made fourteen years ago about creating a men’s group where men come together to hug each other and cry like a “homo Promise Keepers,” all fed into his demise. These are not views unique to Driscoll. There are many Church leaders that preach about stay at home moms, marriage relationships, and even hold to traditional views on homosexuality, but these are not the only reasons for Driscoll’s resignation. I think it is related to more of a basic leadership/management principle involving what constitutes Servant Leadership.

First, any organization that is a one man show will not continue with the demise of the one man. So Driscoll resigns and the result is the shutting down of the fifteen locations serving 14,000 people. Even as central as Chuck Smith was to the Calvary Chapel movement, his death did not signal the end of the denomination. Many others stepped up to lead, however, it will be interesting to see where Calvary Chapel goes.

Second, there are financial questions on how Driscoll used the funds of the Church. Questions were raised on the use of donations to fund Driscoll’s book “Real Marriage.” When it is a one man show, there is a tendency to think that all resources belong to you, the one man. This is where one gets in trouble. Billy Graham recognized this issue, and subsequently created mechanisms to ensure proper fiduciary control over the finances of his organization. Graham saved himself a lot of trouble by doing this.

Third, “It was a one man show, Mark’s way or the highway. He was in complete and total control.” As history shows us, “absolute authority, absolutely corrupts.” Now, I don’t know Mark Driscoll, and I don’t know how much of a dictator he was, but despotic leaders in the Church have strewn the road of Church history with many bodies. I am sure that is the case in Seattle and other Mars Hill locations. And as Sarah Bailey so eloquently stated this morning, “Mr. Driscoll had seemed to shape the Church more around himself than around God.”

What are the lessons of leadership from this event? First, I think proper accountability is important. Leaders that create mechanisms to keep themselves in check are saving themselves from future problems.. Second, exercising true servant and authentic leadership is critical. If we are going to be like Jesus, then lets serve and not call bullying service. And third, if sustainability of an organization is the goal, then make sure you decentralize decision-making. Allow others autonomy and the ability to control the future.

I will not fault Driscoll for his comments about women and gays, because he has the right to his beliefs. However, I will not support his arrogant style, which seems to me to be contrary to how I read scripture. If he was pushed out of ministry because of his beliefs about certain things, then that is wrong, and all of us should be concerned about that, but if he resigned because of tangible leaderships mistakes, which I believe was the case, then we are on solid ground.

And that is my thought for the day!

What Is The Purpose Of College?

CNN posted a very interesting article this morning. The tag line was “My College Degree is Worthless.” Needless to say as a college professor that caught my attention. As I read the article it focused on Everest College, which is in the stable of Corinthian College partners, all of which are for profit. It wasn’t anything I hadn’t heard before, but it did make me think, especially in like of our adult degree program at WPC.

We have been providing adult education for over twenty-five years in the Portland/Vancouver area. We have provided education to managers, accountants, social workers, and others who have gone out and made a difference in the community. I think we have done it pretty well, and we have a group of professionals who teach our students, and do a great job. These teachers are both educated and experienced in their fields, and care about what happens to our students. We are careful not to over promise to our students, but we are always working on our program to make it stronger. I can say I am proud of the work we are doing in the adult education world.

Now I want to shift gears to our traditional campus. In order to ensure our traditional and ADP students have the help they need WPC support staff work hard to ensure that tutoring is available. Finding the right students to tutor can be difficult, but Mr. Johanssen and his crew do a great job of ensuring the school has this covered. Yesterday, Rod, our FYLC coordinator, and myself sat down with an entrepreneur from PSU who has developed a process for organizing study groups. This gentleman is an entrepreneur, but he did not study business. His degree was in Social Psychology. As I watched this young man present I saw the passion of an entrepreneur come from someone who did not study the subject.

Thus the writing of this blog this morning, and an attempt to answer three simple questions: should someone go to college? And if they do what school should they attend; study? And what subject should they explore? I will attempt to answer these questions over the never several paragraphs.

I do think everyone should have some level of college. I think it is an important experience, however, I also see the value in the trades. The trades have educational processes too. Apprentice programs are educational activities. Many apprentice programs require you to have a two-year degree to get into them. The college degree signals that the person can complete something. Being an auto-mechanic has now become extremely technical. Computers, and other mechanisms have made working on cars complicated and requiring certifications, which is education. Regardless of what career you choose, education of some form is involved. Even as I wrote this paragraph my thoughts on the subject have evolved.

The question would be better phrased, what type of education should I receive? Should I go to college or a tech school? The second question involves the choice of school and subject? Expensive schools may not be all they promise. Anna Prior states, “Most venture capitalists care less about entrepreneurs college history than whether or not their startup is solving a big problem and if the founders are the right people to take that idea to a viable company.” This passion does not require an expensive education, but a particular way of thinking. I think it really depends on the person and the effort they want to expend.

The next question involves what to study. Education is an opportunity to develop the “diverse set of skills, a network of potential advisors and partners, and soak up the experiences” they need to be successful in life. I hope that no matter what path a person takes it lines up with their gifts and passions. As the old adage states, “if what you get paid to do, it what you love to do, you will never work a day in your life.” I love business, and it is a well rounded education, but you don’t need to study business to be an entrepreneur.

I do think that college is a great time to begin creating your social and professional network. You are developing relationships with other students, interacting with business where you intern, and getting to know professors. While you are doing this you are experiencing life. This is the best part of college. Grades are important, but when I was hiring I never looked at a GPA, I looked at their field of study and their experiences. What could the person do.

I hope that the problem children of education don’t ruin it for the rest of us. Although I don’t believe that people teaching at Everest are thinking about cheating their students out of a good education. I just think their system is based on revenue and not service. Therefore it is incredibly important to remember what the mission of education is. Education is there for people to provide themselves the opportunity to have a better life, not to be given one.

And that is my thought for the day!

A Capitalist Cure For Poverty!

We are entering into our midterm election. News reporters are speculating whether states are staying blue or turning red. It will be interesting to see what actually happens next week. I am a pretty simple man, and typically see things pretty simply. I think this election reflects what the argument entails – big government or small government. However, I don’t think this is just a first world problem, I think it is a worldwide issue, one that gets in the way of poverty reduction.

Several weeks ago there was a great article in the WSJ, that reinforced my thoughts on this matter. Hernando De Soto wrote an article discussing the impressive results in Peru when the government began to support its entrepreneurs. The article was titled, “The Capitalist Cure For Terrorism.” I think all of us agree that what our government has done to alleviate terrorism in the Middle East has not worked. Therefore, maybe we should look at a Capitalist cure for the problem?

De Soto Looks at Latin America and declares “a generation ago it was in turmoil.” He mentions the Shining Path and other Marxist-Leninist organizations that were leading the so-called rebellion against impoverishment and unemployment. The wisdom of the time felt that Latin countries did not understand free market processes. However, De Soto demonstrates that this was not the case. “The conventional wisdom proved to be wrong. Reforms in Peru gave indigenous entrepreneurs and farmers control over their assets and a new more accessible legal framework in which to run businesses, make contracts and borrow – spurring an unprecedented rise in living standards.”

De Soto also argues that between 1980 and 1993, Peru won the only victory against a terrorist movement since the fall of communism without the intervention of foreign troops or significant outside financial support for its military. Over the next two decades, Peru’s gross national product per capita grew twice as fast as the average in the rest of Latin America, with its middle class growing four times faster.”

The question in my mind at this point centers on why this worked? It wasn’t focused on corporate partnership. It wasn’t having Walmart come in to provide jobs, although I imagine that Peru probably has some Western corporate presence now, I just have not checked to see if that was true. Do they have a McDonald’s?

However, I think I know why it worked, and I would like to argue there were three things that helped make this successful change: a focus on a free market, private ownership of property (thus creating a strong middle-class), and a governmental/legal system that supported entrepreneurship.

This in essence is Capitalism, at least the type of Capitalism that I think can make a difference throughout the world. It is not the large Corporation focused perversion that creates an army of unemployed to limit paying a livable wage.

Don’t get me wrong, Corporations are critical to the economic health of our global economy, but when government/legal systems become cronyistic creating corporate monopolies we are undermining the ability of the middle class to thrive. The focus on corporate advantage through the legal system is an aberration to the Capitalism that early writers wrote about, and one that Marx rightfully warned us about. I don’t care what you call your political system, but from an economic perspective for an economy to thrive you need a strong middle class. To do that there needs to be opportunity. This means a focus on a free and fair market, private ownership of property, and a government/legal system that supports a strong economic system favoring the middle class. This is what will defeat terrorism, not more boots on the ground.

And that is my thought for the day!

Recovery For The Middle Class

My first thought this morning was “it has been forever since I’ve sat down and written and posted a blog.” But forever is a long time and that is not the case. It has been a few weeks, but here I am sitting at the computer writing again. The question then is what do I write about? It is not like there is nothing going on in the world. But, it seems like it is the same old thing. North Korea is nutty; Putin is a thug; Obama is just trying to stay out of the Democrat’s so they don’t lose the midterm elections, and Republicans have no idea what they stand for. So in that respect nothing has changed.

Economically nothing has really changed. I did read that our budget deficit is lower this year due to increased tax revenue. I think the revenue number was over $3 Trillion, and government spending was somewhere around $3.5 Trillion. Our budget shortfall has been reduced by 50%. I can’t say I am too happy about that, because it is still large, and our overall debt level is still increasing. Our economic growth is trudging along, leaving many who were middle class on the side of the road. Everyone is reporting that median income in this country has declined and continues to decline.

Although some economists have gone on record as criticizing Pitney’s work on Capital in the 21st Century, I think we can all agree with him when he states that when the owners of capital have greater financial increases than those who generate the income, we have a growing gap between the haves and the have nots. And as Galston states, “With the exception of the holders of capital, who have done very well in the past five years, almost no one likes what’s happening.”

So what needs to be done? How do we recreate a vibrant middle class? Well, one side of the aisle wants us to see the problems as “administrative policies, the stimulus, huge budge deficits during the recession, the Affordable Care Act, and the termination of Bush tax cuts for upper-income filers.” While the other side of the aisle say the problems involve “weakening of labor unions, the eroding value of the minimum wage, trade treaties that destroy middle class jobs, and an inadequate public-sector response to the biggest crisis since the 1930’s.” Maybe both sides wouldn’t say it quite like this, but I think Galston, in the WJS, has synthesized the issues quite well.

However, I think we need to remember what the definition of insanity is: Doing the same thing over and over, while expecting a different result. So looking back at either Johnson’s “Great Society,” or Reagan era policies is wrong. We are in a new age that requires new solutions. Our global economic situation is very different than how it has been in the past. The United States is no longer the only game in town. Europe and Japan, as well as China and India, are now major players in all industries.

Galston notes some very important facts. When the Soviet Union collapsed, and China opened its borders, “a billion low-wage workers” entered the labor force “coming into direct competition with American workers.” The obvious result would be the lowering of wages for all, which happened. “As new markets expanded and the costs of transportation and information declined, it became increasingly attractive to locate production facilities in those markets rather than in the U.S.” This makes perfect business sense, although the cost gap is diminishing, thus the moving of manufacturing back to the U.S. However, I do think the biggest issue facing the American worker is improving technology, which has allowed for a greater ability to substitute machines for labor. This is a cheaper option for businesses. Things have changed.

This is the reality of the new world. The American worker must be better prepared and willing to work harder if they want to maintain the current standard of living. The importance of innovation cannot be understated. The reality of Creative Destruction has reemerged. If we want to stay in the lead, we need to get hungry again. If we don’t, then we will have to learn how to live on government handouts. Glaston makes a great ending comment to his article, “Government can mitigate these trends but cannot halt them…In the longer run, wealthy Democracies will have to invest more in basic research that boosts innovation and education that raises skills while tearing down barriers to business formation and entrepreneurial minded immigrants.” I agree with this. The only thing that will bring back a strong middle class is innovation and the entrepreneurial spirit that made this country great.

And that is my thought for the day!