Happy Birthday Milton Friedman!

I can’t believe how excited I am. I just received a copy of Arthur Brooks new book entitled “The Road to Freedom: How to Win the Fight for Free Enterprise.” I am becoming a huge proponent of his philosophy, and the importance of free enterprise in this age of statism and cronyism. I have just cracked the book, so I am sure more information will be coming. First, I’d like to say happy birthday to an economist that would have been 100 years old today, if he were still alive.

I did not realize that Milton Friedman’s birthday is today. We discussed him in my Business Ethics class last night. His famous comment about Business Ethics is debated around the world. It is probably one of the few concepts of his that I disagree with. However, there is so much more to his economic philosophy.

Thomas Sowell wrote about Friedman today in his column. First, I did not realize my favorite Libertarian author was once a Marxist. Friedman did not convert Sowell to a conservative view of the economy, it was working for the government that did. Thus, Sowell believes that Friedman’s economic theory is needed today more than ever.

Stephen Moore discussed Friedman in today’s WSJ in an article entitled “The Man Who Saved Capitalism.” Moore starts the article with, “It’s a tragedy that Milton Friedman – born 100 years ago on July 31st – did not live long enough to combat the big-government ideas that have formed the core of Obamanomics. Its perhaps more tragic that our current president, who attended the University of Chicago where Friedman taught for decades, never fell under the influence of the world’s greatest champion of the free market.” Strong words, but definitely caught my interest.

What can we learn from Friedman? First, the reality of no free lunch. The increased government spending and the printing of money must be paid for. “If the government spends a dollar, that dollar has to come from producers and workers in the private economy. There is no multiplier effect by taking from productive Peter and giving to unproductive Paul.” The fact that we print more money only gives us a feeling that we are wealthy. It is very similar to increased stock value represented in the Dow. It is not real value in our pockets, but we feel wealthier, which means we spend more.

Second, thinking that centrally planned economies are efficient is fallacious. It is a free enterprise system that is the most efficient. Friedman would be appalled with our little country tax system and big country spending process. This process leads us to think that big government is our savior.

Third, be careful what you wish for when it comes to the state. “Friedman stood unfailingly and heroically for the little guy against the state. He used to marvel that the intellectual left, which claims to espouse power to the people, so often cheers as the state suppresses individual rights.” What I especially like about this guy was his ability to attack the pork of both political parties.

Last, Friedman was against high taxes because of the government’s ability to spend. “Higher taxes never reduce the deficit. Governments spend whatever they take in and then whatever they can get away with.” Does that sound familiar? Remember the term used is government, not Democrats. Thanks Milton for being a thinker, and challenging us to stop drinking the Koolaid.

And that is my thought for the day!

The Lakota, The White Buffalo, And The Seventh Generation

Last month in Goshen, Connecticut and event occurred that may not seem special to most of us, but to the Lakota it is viewed as a rare and sacred event. A White Buffalo has been born. The sacredness of this event emerges from the history of the Lakota. The elders tell of a time in history during a great famine that a beautiful women dressed in white appeared to the Lakota. She taught them the seven sacred rituals which are still practiced today.

The seven rituals of the Lakota are:
The keeping of the soul – a ceremony of spiritual healing performed after the death of a loved one.
The rite of purification -the sweat lodge used to cleanse the spirit and bring the person closer to the Great Spirit.
Crying for a vision – brings the person to a new level of awareness.
The Sun Dance – involves fasting and dancing for four days to help relieve suffering within the community.
The Making of Relatives – this is a bonding ritual.
Preparing for womanhood – ceremony occurs after the first menstrual period.
Throwing of the ball – no longer practiced.
The healing – this is a modern addition to the list. It is designed for healing and helping to see the way.

According to history this woman revealed the mysteries of the earth to them, and then laid down on the ground and turned into a black buffalo, then red, then yellow, and finally white. To the Lakota these represent the four colors of the wind. As she left she promised to return. Now an event that has a one in ten million chance of occurring has happened. Maybe, just maybe, this event is the catalyst that will change the current situation on the Res.

The owner of the Bison herd has extended an invitation to the Lakota to attend the naming ceremony for this little white Buffalo. According to the Economist “as many as 500 American Indians were expected to attend the ceremony which occurred July 28th.

A once proud people have degenerated into a negative demographic. White Clay, Nebraska sells about 4.5 million cans of beer a year. White Clay is located just outside of the PineRidge Reservation where alcoholism runs at 80% of the people. This problem results in many deaths each year due to car accidents. Tribal gangs and drugs are now becoming even bigger problems.

In 2007 at a prom banquet in PineRidge, Robert Ten Fingers reminds the young people of the Black Elk prophecy concerning the 7th generation of Lakota. That generation would mend the scared hoop, “the continuity of the Lakota people,” severed by the murder of innocents at Wounded Knee in 1890. It is believed by the Lakota that the current group of young people on the Res is the seventh generation.

So maybe the birth of a white buffalo and this group of Lakota millennials can make a difference. Maybe leaders will come out of this group of people that can provide spiritual, economic, and social renewal. The current system has done nothing but destroy the Lakota people, it is time to change the system and create a new hope. They are the only ones who can respond to the need.

And that is my thought for the day!

Does Capitalism Have An Image Problem?

I love my Economist subscription. I just received my new issue today, and several articles jumped off the page at me. Another Fine Mess, deals with the necessary debate of big versus small government. The article has a great picture of Obama as Oliver Hardy and Romney as Stanley Laurel. I love it. We should also have a picture of Reid, Pelosi, McConnell, and Boehner dressed as the Marx Brothers. In both illustrations we see the comedic value of our current crop of politicians. However, the debate over the size of state is a necessary discussion.

In addition to my wonderful magazine, Saturday’s WSJ had an incredible article dealing with the image problem of Capitalism. It was written by Charles Murray, who is associated with the American Enterprise Institute a conservative think tank in Washington D.C. He made several good points that I think are very important.

The term capitalist has become derogatory. If someone calls you a capitalist today, it is like someone calling you a communist in the 60’s. Murray describes this as, “The creative destruction that is at the heart of a growing economy is now seen as evil.” The question is why? Why has a system that from its inception has created national wealth, become viewed as from Satan? Murray identifies two reasons which to me makes a lot of sense.

The first involves collusive capitalism. In other words, the rich create systems that ensure their enrichment, while politicians collude to ensure their particular party stays in power. These cronies scratch each other’s backs to create a meritocracy based not in practical skill but a political one. Who cares about the people.

The second reason involves the emergence of “great fortunes made quickly in financial markets.” In the past people had worked hard and earned money over time, but now “great wealth is generated by making smart buy and sell decisions in the markets.” This seems intangible, and a result of special knowledge. We think this is horrible and is a result of insider cronyism.

I agree that both of these reasons are why some see capitalism as the reason for all of our problems. However, I see an even bigger problem. Murray calls this the separation of capitalism from virtue. In other words a recognition that there is a right way and a wrong way of creating wealth. Murray states, “To accept the concept of virtue requires that you believe some ways of behaving are right and others are wrong always and everywhere.” Murray adds to this point, “Correspondingly, we have watched the deterioration of the sense of stewardship that once was so widespread among the most successful Americans. . .”

Hard work, leaving the camp grounds cleaner than when you arrived, and caring for others used to be the hallmark of what it meant to be an American.  Somewhere along the way we have lost some very important virtues. Maybe capitalism isn’t the problem, maybe it is us.

And that is my thought for the day!

The City Of God And The City Of Man

Dan Cathy, the president of Chick-fil-A, made a statement that has once again demonstrated the tenuous relationship between the City of God and the City of Man. In the early 5th century AD, Augustine wrote his treatise on this relationship in order to help people during his time understand the chaos happening in the world at the time. The treatise was written in a time when Rome had been sacked by the Visigoths, therefore the reason to write  those words were for comfort of the believer. Augustine recognized the existence of two worlds. With Dan Cathy’s comments we once again see this existence clearly.

The news media announced that Cathy had made a statement that he was opposed to gay marriage. Immediately politicians in Chicago and Boston stated that future restaurants in their respective cities would not be welcome due to Cathy’s message of hate. My first thought in response to this was what happened to the right for free speech, but then I got to wondering about what Cathy really said.

Dan Cathy was asked a question about the company’s support for traditional marriage and opposition to gay marriage. Cathy stated in response to the above question, “Well, guilty as charged. We are very much supportive of the family – the biblical definition of the family unit. We are a family-owned business, a family led business, and we are married to our first wives. . . We want to do anything we possibly can to strengthen families.” He has every right to his beliefs.

In regards to how he operates his company is it very clear from its policy statement. “The Chick-fil-A culture and service tradition in our restuarants is to treat very person with honor, dignity, and respect – regardless of their belief, race, creed, sexual orientation or gender.” Thus we see the City of God and the City of Man.

Subsequently the city of man has backpedaled in regards to its response to Chick-fil-A. Chicago Alderman, Proco Moreno wrote in the Chicago Tribune, “Because of [Mr. Cathy’s] ignorance, I will deny Chick-fil-A a permit to open a restaurant in my ward.” Sounds like this individual has a problem with free speech. This is no longer the words coming from Chicago politicians. They are now stating that if Chick-fil-A meet the requirements for opening a restaurant they can.

Additionally Jeff Bezos, CEO of Amazon.com, has stated that he and his wife have donated $2.5 million to help assure gay marriage in Washington State. There will be a referendum for the people to vote on in November. Even though Bezos has taken this stand no one is calling him ignorant for his beliefs.

As I was thinking about Augustine’s earlier work as I was laying on the beach today, I remembered a book I read several years ago. The title of the book is “Kingdoms in Conflict” written by Chuck Colson. I decided to pick it up again and reread it. I have not been disappointed. In the first chapter titled Kingdoms in Conflict he stated this, “The Kingdoms are in conflict, both vying for ultimate allegiance. Not just in America, but around the world. By his nature man is irresistibly religious – and he is political. Unless the two can coexist, mankind will continue in turmoil. Tragically, we have lost sight of both the nature of man and the nature of God and His rule over the world.”

This conflict has taken many forms over my life time, but once again the need is clear.

And that is my thought for the day!

Jerry Springer, The Jacksons, And The US!

As I watched the news last night I was confronted with Janet slapping Paris, and then Paris slapping Janet. Grandma was in another state, while the siblings were fighting over three children who have the potential of being multibillionaires. It reminded me of the Jerry Springer show, if you remove all the money, because the conflict is over the money. I have no right to question whether this family cares about these children, I am sure they do, but whoever controls the children controls the millions left to them by MJ.

Before we start wagging our fingers at the Jacksons, and saying what a shame, we have to look at ourselves. Just like the Jacksons are divided, so are we as a country. The division is becoming more prevalent, and more defined. The wealth of this country is being distributed in a manner that the haves and have nots are lining up on two sides of the tracks. Ideologically the line between liberal and conservative is ineradicable. Politically and economically our country is divided, just like the Jacksons, over the wealth of this nation.

Econometrics have demonstrated that the wealth of this nation is shifting to the upper quintile. These same statistics demonstrate the number of people  falling under the level of poverty in this country has grown. With this division the tension in this country is seething just under the surface waiting to boil over.

Ideologically our country is horribly divided. A CEO is crucified for his personal comments about gay marriage. His company, Chic Fil A, has been targeted for his personal comments. The company itself has policies in place to prevent discrimination, and its CEO is a very caring man who believes like many people in the US that discrimination is wrong, but marriage is defined as a union of a man and woman in holy matrimony. Immediately people respond to this attack and create a movement for eating at a Chic Fil A restaurant. Both sides paint horns on each other, refusing to listen.

However, when the two sides sit down and talk, a new context is created. George W. Bush and his wife Laura have created a foundation for the eradication of Aids in Africa. Elton John made quite an observation yesterday. He stated that George W. Bush has taught him a lesson. John stated that at one point in time he hated Bush for his policies, until he met him in 2004. John said, “At the Kennedy Center concert we spent some time in the intermission with the President, George Bush, and he was amazingly informed about AIDS,” John recounted. “He treated us with such kindness. I had so much respect for him, especially when the PEPFAR thing was announced when he gave 15 billion dollars to AIDS. He knew what he was talking about.” I am sure there are other political divides between Bush and John, but coming together on this issue created civility and dialogue. Two things that seem to be missing from the civic arena.

The Economic and political divide will hinder this country’s ability to lead. Daniel Henninger discusses this divide today in the WSJ. He started his article with “For a long time, the United States had one economy.” This economy was based upon a circular flow between a buyer and seller, supported by the government. Our Democratic capitalist system flourished. Meltzer in his book, “Why Capitalism,” also discusses this one economy and the amazing result. After the WWII the United States and western Europe, which had capitalist systems grew exponentially. At this time some felt that centrally planned economies were more efficient, and Nikita Krushchev stated that the Soviet Union would bury the West. However, “By 1980, the competition was over. China and Vietnam accepted capitalist development, followed by India, which made the transition from socialist planning and direction to a more capitalist system.” Eventually, the wall would fall.

Now, many years later, we are arguing over two economies. One is a public economy based in large government. The other is a private one, based in private ownership of the means of production and minimal government intervention. This divide is the result of political polarization within this country. The desire to subordinate the private economy to the public one is being listed as a moral act. However, the privateers are crying out to allow the efficiencies of the capitalist system to work.

As much as I want to say woe is our country, we do subscribe to a Democratic Capitalist system. We have the power to decide between these two economies. If we want to create a public economy based in a government controlled system, that builds things for us, we know how to vote. If we believe in free enterprise then we know how to vote. This election does seem to have mandate written all over it. Or maybe there is another way? A way that Elton John and George Bush found? A way of meeting, discussing, and learning. Maybe, as Stephen Covey used to say, we should find a win-win!

And that is my thought for the day?

Business And Political Ethics

Tonight I start a new module for a cohort in the WPC MMOL program. This cohort is a good one, and I think we are going to have a good time discussing business ethics.

Usually I focus on the text written by DesJardin, but for some reason this time I plan on spending more time in the “Taking Sides” text. The first unit of discussion involves Capitalism and the Corporation. Issue #1 asks if Capitalism can lead to human happiness. Issue #2 involves risk, and with the JP Morgan fiasco seems like an excellent topic of analysis. Issue #3 deals with the age of question of what ethical responsibilities does a company have. Friedman has made the famous distinction that the only ethical responsibility a company has is to make money legally. Issue #4 asks whether individual virtue can survive working in a corporation. Issue #5 discusses how to build an ethical company. All are interesting subjects.

Just to remind my readers I believe that Capitalism is amoral. In an of itself it is neutral, it is what people do with the system that determines right or wrong. Thus when Adam Smith states that fundamental elements of capitalism involve voluntary exchange, competition, supply and demand, self-interest and efficiency there is no judgement call on whether the economic system is evil.

However, Thomas Malthus and David Ricardo argued that supply of food and wages drive an economic system to ensure that the majority of people will exist at levels of subsistence, and because of this phenomenon of a Capitalist system will create two classes of individuals, the wealthy and subsistence-level workers.

Marx would later describe this as an evolution beginning with the feudal system, and then morphing into the conflictual relationship between the owners of production and the worker. He would call these classes of people the Bourgeoisie and Proletariat. Marx prophetically announced the growth of Capitalism to a point where the alienated worker would rise up against the owners of the means of production, overthrowing the system, and for short period of time become a dictatorship. Eventually, the system would evolve into a worker controlled economy. However, with the fall of the wall there seems to be a different outcome than what Marx thought.

Marx wrote his words in the early 1800’s just before the revolutions of 1848. However, those revolutions were crushed, and Socialism did not revolutionarily emerge again until the Bolshevik uprising in Russia during the early 1900’s.

I tend to agree with Marx that “material conditions” generate a ruling class that want to maintain advantage for themselves, while maintaining subsistence levels for the masses. However, I disagree with Marx on the means of change. Those who are in charge, and have advantage, have a greater charge, one of service. Those who are subservient have the responsibility to improve their skills, make themselves more marketable. Thus their subsistence level grows.

My son sent me a link to a blog that I found very interesting. It is about poverty on the PineRidge Indian Reservation. There was a quote that I think is very appropriate for today’s thoughts. “The last chapter in any successful genocide is the one in which the oppressor can remove their hands and say, ‘My God, what are these people doing to themselves? They’re killing each other.’’ The responsibility of those who have, never ends, and the responsibility of those who do not have, never ends.

I reiterate the words of Jesus Christ in Luke 12:48, “when someone has been given much, much will be required in return.”

And that is my thought for the day!

Communication, Communication, Communication!

I’d like to start today’s blog with a quote. It comes from Meltzer’s book, “Why Capitalism?” Meltzer states, “Over 50 years, the United States fiscal program went from prudence to profligacy. The change has four underlying causes: discretionary monetary policy; absence of a rule to restrain government spending; foreign aid, and military spending; and pressures for income redistribution.” When Meltzer refers to income redistribution he means entitlements such as – social security, Medicare/Medicaid, and welfare. This quote comes at a point in his book where he has just laid out a history of budgetary surpluses and deficits for the United States. It was enlightening to see a timeline of how our country used to pay off its debt, but Republicans and Democrats have now taken it upon themselves to disregard debt and continue to spend at unheard of levels.

I am not a Tea Party adherent, but they seem to be the only ones communicating to our government the need to change spending habits. After I read a couple of interesting articles in this morning’s paper, I was reminded about the importance of communication.

The first article of interest had the title, “Auto Manager Was Left For Dead: India Police Hunt 12 Union Leaders.” It appears that India’s largest car maker has had a communication problem between its managers and employees. It was so serious that the union leaders are suspected in killing the HR manager Awanish Kumar Dev. “India’s automotive industry has been racked by labor strife and occasional violence in recent years.” How did this situation get to a point where a manager was killed? OBviously someone isn’t listening.

But it is a Peggy Noonan WSJ contribution that caught my attention this morning. She discussed our recent problems with communication in her article, “A Remedial Communication Class.” In her pontifications she focuses on three recent communication failures, and notes how we should learn our lessons from them.

The first failure involves our Olympic team uniforms. She describes what commercials could have been run using American garment manufacturers as the back story encouraging our athletes in their upcoming endeavors. Instead the garments were made in China. She calls this a missed opportunity, and I agree. Remember the Chrysler commercial a couple of years ago and the feelings of pride in our country in created. Instead we are confronted with berets and double-breasted tuxedo jackets that seem more European than American. Noonan describes the women’s uniforms as making them look like, “stewardesses from the 777 fleet on Singapore Airlines.” This is communicating that we are European wannabes.

The second communication failure involves Mitt Romney. He has refused to release anymore tax returns. What is funny is the reason Noonan gives for Romney not releasing the documents. “The reason Mitt Romney isn’t releasing anymore tax returns can be reduced to three words: Bill Clinton’s underwear. When he first ran for president, Bill Clinton put out his tax returns.” Enterprising individuals went through the forms and discovered that the Clinton’s were meticulous with the tax deductions, including the donation of “Mr. Clinton’s old underwear” to local charities.” I don;t know about you, but I don’t want to wear someone else’s underwear, not even Bill Clinton’s. You would think that Romney was preparing for his presidential run many years before he actually ran. You would think that he would be cautious regarding his taxes knowing that they could become public domain.

The third communication failure involves President Obama, and his understanding of how someone becomes successful. Obama believes, according to Noonan, that we should all feel guilty. If I am a wealthy business person I need to feel guilty because I became rich on the backs of the poor, and if I am a woman on welfare, I need to feel guilty because I am relying on my hard working neighbors. The implication in both of these cases is that government programs helped both sets of people via public projects initiated by the government. “We owe our wealth and growth as a nation to government programs.” We don’t owe our success as a country to our politicians and their pork. Noonan is arguing quite well that Obama’s communication style is an attempt to force a new narrative down our throats.

America was not built on European meritocracy, it was built on the back of regular people like us who came here looking for an opportunity. Noonan sums up the communication process of American success well.  “The American people tell you the narrative. They look at the facts produced by your leadership, make a judgement and sum it up. The summation is spoken – the story told – at a million BBQ’s in a million backyards.”

The bottom-up communication process will only get stronger as social media continues to growth. Honest communication is important.

And that is my thought for the day!