Populism And Changing Opinions!

Occupy, you put the name of the city in here, is a Populist movement. Zingales, in his book “A Capitalism for the People,” discusses Populism and the changing climate in the United States. It appears that we don’t want to work hard anymore, we want someone to give us what we need. I don’t know if this is pervasive as he is alluding to, but I think it should be mentioned and discussed. Zingales argues that populism is rising in reaction to promarket forces that lead to a meritocratic society. He argues this results from “globalization, a telecom revolution, and a widening income gap.” I think Zingales is right, but the Occupy movement, which seems to have died on the vine, is symptomatic of populist sentiment towards redistribution and egalitarianism. We want things to be fair. This is not necessarily a bad thing, but if we focus on redistribution and not hard work we diffuse the required energy to maintain our standard of living.

As I have written before in this blog, post WWII the United States enjoyed a huge competitive advantage over Europe and Asia. The European infrastructure was devastated by the war, and Japan was economically destroyed. China was not practicing Capitalism at the time, so we were the only game in town. US GDP grew on an average of 3.7% per year. Due to the economic growth and the many jobs available income distribution narrowed, the middle class grew, and we were all happy.

Zingales describes what has happened since. “The good news is that, over the last sixty-five years, American values have spread across the globe. Most communist countries and autocracies have become democracies [huge generalization]. Today, 55 percent of people in the world live in democracies.” With this gain in democratic philosophy the desire for free market principles have grown too, as well as the desire for education. Thus the world is catching up. Instead of stepping up our game, we have moved in an opposite direction.

In fact, an entitlement mentality is growing in our country. In 1998, 74% of Americans agreed that “Most people who want to get ahead can make it if they are willing to work hard.” That same question was asked in 2011, the number of Americans who agree has dropped to 58%. Obviously that reflects hard economic times, but it also demonstrates our changing focus. In a time when we need to roll up our sleeves and work hard, we are looking for others to blame. We are crying out that big brother owes us, instead of grabbing our bootstraps and working hard to earn success. I am concerned about this.

I agree with Stuart Hart when he says that Capitalism is at a crossroads. The philosophy hasn’t changed, but we the people have. Hart argues that the world has merged into three different economies: the money economy, traditional economy, and nature’s economy. With these three economies there is opportunity. I think he is on to something.

The money economy is centered within multinational business. Emerging and developed economics are at the forefront. Organizations that have the resources can discuss and solve major problems resulting from the money economy, as well as make some money along the way. Pollution, poverty, and urban issues can lead to opportunities for these multinationals. All one has to do is read the work of CK Prahalad to observe this in action.

The traditional economy involves entrepreneurship. Hart argues for the traditional economy to thrive the village needs to create opportunities for small entrepreneurs. I agree with this.

Nature’s economy involves green methods for doing business. This is nothing more than a triple bottom-line for sustainability. As much as we lament for the old days of American dominance, we should expend the same energy for exploring the new opportunities of competition.

Americans, the world has changed. We cannot rest on our laurels. WE are innovative and can work. Let’s not forget that. Partisanship will not get the synergy we need to compete with the rest of the world, and we need to work, not blame.

And that is my thought for the day!

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A Living Breathing Professor

Wow, where did the summer go. The traditional school year has started. I hit the road running on Monday and haven’t stopped. It is exciting and very fulfilling. Our faculty has been discussing online classes, and are attempting to integrate more technology in our learning events. However, technology can never replace human interaction.

Adam Falk in today’s WSJ argued this point very well. “As classes resume on our nation’s campuses, amid anxiety about high tuition, student debt and other concerns, it’s worth examining what we value in education.” This time of the year I think about what I want the students to get out of my classes, and what I want them to retain, which is why the topic for today’s blog.

One reason I like teaching at WPC is our view of the students. We do not look at the students as numbers, pushing them through their degree program, hoping they become the next Steven Jobs. If they are famous we can say they studied at WPC. The faculty, staff, and administration look at the students as human beings who’s learning is to be facilitated. After reading Falk’s article I have concluded that I agree with his points.

Regarding progress in student learning, Falk proposes that personal contact between the student and faculty is the strongest indicator of the student’s academic growth. “Not virtual contact, but interaction with real, live human beings, whether in the classroom, or in faculty offices, or in the dining halls.” This relationship is critical to the student’s engagement. This conclusion is the result of research accomplished at Williams College, where Falk teaches.

Falk also states, “Nothing else – not the details of the curriculum, not the choice of major, not the student’s GPA – predicts self-reported gains in these critical capacities nearly as well as how much time a student spent with professors.” This affirms what I have always thought, and will continue to do as a professor. I will make myself available to my students.

The tendency in major academic institutions today is the desire to commoditize education. Administrators want our educational processes to be efficient and effective. All of us want our institutions to be financially viable. However, we must never forget that education is first and foremost a social process. “Education is not a commodity. It is a social process, and its value, including its economic value, both to the graduate and to society is unquestionable. It is equally true that this value cannot be reduced to a single number, however the measurers of productivity – or those who rank us in magazines – may wish it otherwise.”

I teach business, and I believe in quantifying results. However, I also believe that life is more than a statistical assumption. Life is about people, and education is about connection.

And that is my thought for the day!

Grandpa, Amish, And Redistribution Or Social Currency

Yesterday I was missing my grand Children. G, who I have spent a lot of time with, has found a life with friends. A and I, who live in Seattle, are busy and have grown up. C, who also lives in Seattle, is young and I hope I get to know him. Due to family dynamics I spent very little time with A and I, which I regret immensely. P, B, M, and P are in Washougal, WA. Due to family dynamics I don’t get to see them which is painful. I guess I was feeling sorry for myself yesterday. The fact is as a grandparent there is always one thing I can do, that is pray for them. Our world is becoming more dangerous, thus the need to pray for these wonderful children. As a father I have never stopped praying for my children.

The Amish seem to be having a trying time. The Amish are a group of people who resist the world. This has now changed. Sex and manipulation within an Amish sect is now being reported in Ohio. Even the anti-world Amish demonstrate the infection of the fall.

All summer I have been thinking and reading about Capitalism. I have become convinced that a free market is best for society. The ability of people to own the means of production, choose their line of work, and earn their success is critical to the advancement of society. However, I also believe in the government acting as a referee, insuring that the playing field is level and all have the same opportunities.

With our upcoming election the question of redistribution of wealth is at the forefront. Do we pick the pockets of the rich and give that to the poor. First of all, as reported this morning, most people are willing to pay a little more to ensure elements of our social security net remains intact. I thought that was interesting. However, what would happen if we were to take all of the wealth of the rich and distribute it to the poorest 4 billion in the world? In the book “Capitalism at the Crossroads,” Stuart Hart addresses that question.

“Many believe that the problems of poverty can be addressed through the redistribution of existing wealth. Closer examination, however, reveals the impracticality of this approach: Even if all of the assets of the world’s seven million millionaires (totaling about $25 trillion), were divided among the world’s four billion poorest, that would give only about $6,000 to each in the form of a one time payment – clearly not a viable solution to the problem.” The solution lies not in the redistribution of wealth, but a free market system which allows people to generate value through productive enterprise. In the words of Dave, “everyone works today.”

Until that day arrives what can we do? Spain, which has a 25% unemployment rate may have a temporary solution for us. People in Spain have create what is called a time-bank. This time-bank is not a lending institution, but a coop where 400 members “barter their services by the hour.” This is called social currency. Silvia Martin is profiled in the WSJ demonstrating how this process works. “Ms. Martin, who doesn’t own a car and can’t afford taxes, has relied on other time-bank members to give her lifts around town for her odd jobs and errands, as well as to help with house repairs. In return, she has cared for member’s elderly relatives, organized children’s parties and even hauled boxes for a member moving to a new house.”

Social currency is nothing new. We in the US have bartered services throughout our history. Instead of relying on the government for handouts, taking care of one another seems to be a viable option.

My economic system then would include a free market system, with small government intrusion, where people can earn success. Through our success we can then take care of each other instead of relying on big brother. Social currency is just one way of accomplishing this.

And that is my thought for the day!

Free Enterprise And The Poor

Arthur Brooks makes a bold statement in a book I am reading. “Free Enterprise has eradicated poverty all over the world for billions of people.” It does seem counter-intuitive that as I pursue self-interest, value creation occurs, and people are helped. I’m still thinking about how this works so I can argue for or against this position. However, a couple of things have happened that gives me a sense that this is true.

Yesterday I was sitting next to “Jeff” in a meeting, and he showed me his KIVA account. KIVA is an organization that provides micro loans for small businesses around the world. Jeff has deposited $200 in this account and has loaned it out and been repaid several hundred times. This $200 has created over $7000 in value. Here is Jeff taking a little of his surplus and helping small businesses around the world.

The United States is a rich country built on a system that is considered free enterprise. But, the numbers also state we are a very generous country. Brooks gives these statistics in his book, while placiung the US in a juxtaposition with more collectivist countries to compare the level of giving between individuals who live under a more capitalist environment versus a more socialist system. “Seventy to eighty percent of American households donate money every year.” That seems pretty significant. The average household donates about $1,000 annually. “Between 50 to 60% of Americans formally volunteer their time each year.” Another significant number. The total chartable donations in the US are around $300 billion annually. Brooks goes on to state that, “In 1995, Americans gave three and one half times as much to causes and charities per capita as the French, seven times as much as the Germans, and fourteen times as much as the Italians.” Maybe there is something to this free enterprise system, our ability to choose how to make money, and how we intend to care for others not as fortunate.

I am a free market advocate, but I am not convinced that if we leave the market alone that it will take care of the poor. I am reading and thinking about this and will articulate it at some point in the near future. However, I would like to make two points regarding free enterprise and poverty.

One of the first longitudinal studies concerning the affects of school vouchers has been completed. This was a study initiated in New York in 1997, when students were in kindergarten, and continued until 2011, when students went to college. The findings were discussed in the WSJ this morning. An indication of the findings were stated in large print, “African-American kids in New York were 24% more likely to attend college if they won a scholarship to attend private school.”  The ability to choose freely where a child attends school, rather than being forced to go to an underfunded inner city school, was blatantly evident and supported by one parent’s comment. “I have an 8 year-old in the third grade, and she’s doing great. Its miraculous the way she has changed, said a voucher winning African-American mother at a focus group meeting in 1999.” The voucher system initiated in New York City affected only a certain amount of students, but it does give an indication that a free market system, involving choice, for education has an impact.

Donna Beegle, author of the book “See Poverty, Be The Difference” tells us about five elements that matter when dealing with education and students who have experienced great poverty. This is of interest to me as an educator.

Believe in the student’s ability to be educated.
Believe the student has strengths and talents.
Know the benefits of connecting students to others who are educated.
Know that assets are critical to success and how to build them.
Know how to navigate middle-class systems, procedures, and paperwork.

These elements may not be specifically related to a free enterprise system, but they are not specific to a socialist one either. The free market is truly amoral, but we are not. We the people care about others, My original ideas still work. Maintain a free enterprise system, have a government that acts as a referee and ensures mechanisms are in place to help the disadvantaged, and then individuals initiate moral responsibility individually and with a willingness to pay for those systems through charitable giving, not big government.

And that is my thought for the day!

Boeing And Putin – Lessons In Systems Thinking

Oh the problems with success. If you drive up to Everett, Washington, and visit the Boeing facility there, you will see a passel of 787’s parked in every nook and cranny available. In fact, the WSJ reported this morning that Boeing intends to deliver $23.5 billion dollars worth of those planes. The company plans on delivering 35 to 42 of them over the next few months. In order to accomplish this they will need to improve the number of test flights now required prior to the customer taking ownership. Currently Boeing is flying the 787 as many as eight times before the customer is given possession. This in contrast to the one time a 737 or 777 is flown prior to delivery.

The production system for the 787 is improving to the point where the latest 787 delivered, to Ethiopian Airlines, required only three test flights. This is a huge improvement, one that saves both time and money. It is a testimony to the overall system of producing this new aircraft. Everyone from parts manufacturing to final test are interconnected in a manner that produces a great product. I know the Boeing people and they are good. The process will be improved to the point that 787’s will be delivered after one test flight. The Putin system of justice may be a different story.

Madonna is being sued by Russia for her willingness to challenge the Russian government. Garry Kasparov was arrested for standing up for the young female punk rock group that was just sentenced to two years in prison for lip-syncing a song in a Russian Orthodox Church. I don’t applaud the young ladies for what they did, but I do stand with them concerning their right to speak their mind.

Everything that is going on in Russia reminds me of the Stalin years where people disappeared to Siberia. Outspoken opponents of Putin are disappearing, and even worse being murdered. Now with Garry Kasparov being arrested I wonder when he will disappear. Putin’s stand on civil rights is very clear. Putin is creating a social system based on intimidation and fear. Kasparov stated in the journal this morning, “Mr. Putin could not care less about winning public-relations battles in the Western Press, or about fighting them at all. He and his cronies care only about money or power. Friday’s events [the sentence for the young ladies was read] make it clear that they will fight for those things until Russia’s jails are full.”

Powerful leadership is not about creating a system of fear and intimidation. Powerful leadership involves creating an environment where people feel like they can take a chance, grow personally, and contribute to the overall community. Putin is creating an environment that is Stalinistic in nature. People will feel constricted and will turn on each other.

Several years ago, when I was in Russia, I met many young Ukrainians, Belarusians, and Russians. They were filled with hope, and hopeful for progressive opportunities. I am really curious how they feel today.

I know our Western press likes to skew information to make its point, but it appears that Putin is taking a regressive stance on civil rights. One that will change the social systems of Russia in a negative manner. We need to learn from both of these current events. In our Democracy we can work together to improve things, but if we don’t pay attention, the politicians will give us something we don’t want.

And that is my thought for the day!

Utilitarianism, Meritocracy, Capitalism, And The Poor

My summer is coming to an end. Looking at my schedule next week, I am on campus and in my office everyday. I have meetings scheduled for most of the week, starting with today’s BBQ with the faculty, but don’t get me wrong, I love it.

It has been a good summer. I taught a little, wrote some syllabi, and began developing a new program for WPC. Social Entrepreneurship has motivated me to think about Capitalism, which I have spent all summer reading, thinking, and writing about.

I teach a course on Business Ethics, and during that course we discuss Utilitarian philosophy. This is a consequentially based philosophy that determines whether something is right or wrong based on its consequences. It is a philosophy that looks for the greatest good for the most amount of people. Utilitarianism and Democracy go hand in hand, and is generally viewed as a good thing. However, without some type of moral foundation that defines right and wrong, Utilitarianism validates itself not by justifying the end and means, but by justing the means by the end. Thus a Hitler can say his genocidal actions were for the greater good of Germany, thus making the extinction of a people right.

Obviously that is an extreme example, and none of us would take that path. In contrast to a greater good the term meritocracy emerges.  The definition of meritocracy deals with elitist leadership based on ability. When applied to economics it contrasts with a greater good, by focusing on earned success. A success based on ability. The problem with meritocracy is the developing of social systems that eliminate opportunities that lead to the greater good, and replace them with systems that lead to cronyism.

Cronyism is a nepotistic system. Something I did not know about the word nepotism is that its origins are from the history of the Catholic Church. It seems that pope Alexander VI provided opportunities for his nephews. However, these nephews were actually his biological children. He was a pope, thus not supposed to have children. Cronyism and nepotism are elements of a system that is unfair. It eliminates opportunities for all, and gives them to the few who do not deserve them.

This is what people usually ascribe to Capitalism. Obviously, when you have an economic/political system that is probusiness, specifically pro-big business, that will lead to cronyism. On the other end of the spectrum, Robin Hoodistic socialism is not the answer either. It eliminates the meritocratic fairness that the American dream is all about.
Thomas Jefferson said, “To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.”

Alexis de Tocqueville, a French visitor to the United States in the early 1800’s stated that Americans are “contemptuous of the theory of permanent equality of wealth.” However, American is recognized as a country of opportunity, one where a person can earn success.

Our government’s responsibility then is to support a system where people have an opportunity to be successful. Where people can develop the skills needed for, if they choose to work hard, a successful career. When the government chooses to create elitist policies to undermine that, then the process becomes skewed. Capitalism is not for creating a probusiness agenda that “aims at maximizing the profits of existing firms,” it is for the creation of a promarket economy that allows people an opportunity to work hard and create a good living. Zingales sates, “Free and competitive markets are the creators of the greatest wealth ever seen in human history.” Opportunity and earned success lead to a better life style.

What do we then do with that success? Arthur Brooks states, “The views of Tocqueville and Jefferson follow an ancient truth: that to take resources from those who legitimately earn them and give them to another who does not is not fair. If it is voluntary, it is charitable. But if it is coerced, it is unfair. Aristotle put it best: The worst form of inequality is to try to make unequal things equal.”

There was an incredible statement made yesterday in the WSJ by Anthony Davies and Kristina Antolin. “Perhaps we dehumanize the poor when we treat them as nothing more than problems to be solved, and we dehumanize the rich when we treat them as wallets to be picked.” They don’t stop here, they continue, “Wealth and poverty are catalysts for bringing the rich and the poor together in community, and community is the hallmark of the Church’s mission on earth.”

There you have my philosophy. I believe in the free market, with government acting as a referee; I believe in a system that supports an equal opportunity to work hard and earn success; and I believe in a system to gives to those in need via charity not coercion.

And that is my thought for the day!

Lessons In Government

64 degrees on a Friday morning is almost perfect. Coffee on the deck, a beautiful sunrise, and golf at 9am. It just doesn’t get any better, especially after a morning of reading, prayer, and reflection.

I have chosen to read one of my old standards again. “Kingdoms in Conflict” is a book written by Chuck Colsen, which was publish in 1987. It deals with power, politics, and the pulpit. Some of the illustrations are dated, but the argument is the same. We the people must pay attention. In my reading this morning Colsen used Dietrich Bonhoeffer to make his point, one that is just as appropriate today as it was 24 years ago.

In 1933, Bonhoeffer gave a speech on a German radio station. The title of the speech was “The Younger Generation’s Changed View of the Concept of Fuhrer.” As Bonhoeffer was preparing for his talk on the radio he had an interchange with a young man. The young man, according to Colsen, stated, “People say that Hitler is just one more politician, but I don’t think so. Somehow, Dr. Bonhoeffer, I feel he is a different kind of man, a man who knows the soul of Germany.” This interchange demonstrates the danger of charismatic leadership. People assign some type of moral importance to the message of the leader, which then allows the leader to do whatever it takes to execute his or her agenda.

Bonhoeffer ended his speech with these words. “For should a leader allow himself to succumb to the wishes of those he leads, who will always seek to turn him into an idol, then the leader will gradually become the image of a misleader. This is the leader who makes an idol of himself and his office, thus mocking God.” This was a prophetic statement concerning Hitler, and a statement that should cause us to pause and think about the importance of being informed, aware, and involved.

According to today’s reports, the approval rating for congress is at an all time low. It would probably be more accurate to say that it is at a continued all time low. I have even thought to myself, I don’t like either candidate so I will not vote. That is not the path one should take.

Martin Neimoller stated, “In Germany they came first for the Communists, and I didn’t speak up because I wasn’t a Communist. Then they came for the Jews, and I didn’t speak up because I wasn’t a Jew. Then they came for the trade unionists, and I didn’t speak up because I wasn’t a trade unionist. Then they came for the Catholics, and I didn’t speak up because I was a Protestant. Then they came for me, and by that time no one was left to speak up.”

I can hear the comments, “that won’t happen today.” The fact is, it can happen and does happen. The ism, doesn’t matter. Capitalism, Socialism, Nazism, or Communism, all have exploited people in the name of power and wealth. The exploitation comes when people stop paying attention and stop caring.

In this up coming election, we need to pay attention. We need to vote and let our voice be heard. The heterogeneity of this country is what makes it a laboratory for studying Democratic Capitalism. We have the freedom to make choices concerning the way we want to live and earn. Don’t forget what leaders can do when no one pays attention.

And that is my thought for the day!