Jobs and Steel Tariffs in Wall Street Journal

Jobs and Steel Tariffs – WSJ

Well, what do you know? Trump’s trade war tariffs on steel imported into the United States have seemingly proved that Adam Smith was right to oppose trade wars and mercantilism.

As tariffs on imported steel raise prices, American steel companies are adding new capacity to profit from price rises and less competition.

But who is paying American Steel companies for their product at higher prices? Americans! Who are thus being “taxed” for their consumption by government policy.

The Wall Street Journal editorializes that Ford lost $750 million in potential 2018 profits from the tariff; Caterpillar expects to lose $200 million in profits in 2019; Whirlpool estimates $300 million. Crown Holdings passed its higher cost on to its customers.

Ayatollah Khomeini’s Revolution in Retrospect

Iranians just observed the 40th anniversary of the establishment of a theocratic state by the Ayatollah Khomeini. What lessons are there for us in this social experiment so at odds with the trend of modernity?

The Ayatollah and his followers and admirers practice Shi’a Islam, which originated among the Arabs as a consequence of arguments over who should lead the community of Muslims after the death of the Prophet Muhammad. But it seems to me the Shi’a faith found its deepest roots among the Iranians, an Indo-European people who over many centuries expressed themselves in the Persian Empire and successive regimes. Persian influence spread into what is now Iraq, where the Shi’a faith first grew into importance.

So perhaps it is not a coincidence that there are striking similarities between Indo-European Zoroastrianism, practiced in Persia for centuries, and Shi’a beliefs. The similarities pose a challenge to my understanding of ethics and right-minded, decision-making in a pluralistic, human community where human frailty and error are the norm.

Pluralism denies enforcement of any claim to possession of absolute truth and to the associated right to compel others to submit to such truth on pain of punishment or death.

Human frailty and error raise doubts as to the accuracy of any person to his or her claim to possession of the single, absolute truth.

Modernity, with its rationality and privileging of critical analysis, has pretty well exposed assertions to the possession of ultimate truth as pretentious. Nihilism is the current foundation of our authority to assess faith-based beliefs, leaving us intellectually in a live-and-let-live world community.

Perhaps as early as the second millennium BCE, Zoroaster, in what is now Iran, wrote poems (the Gathas) setting forth his perception of truth and reality. He believed there was a created cosmos, a divine order, which was good and true (Asa) but that there were oppositional forces (Druj) of ignorance and evil thinking which threatened that order with chaos. There was good in the world but he believed that it could be corrupted. Experienced life for him was a struggle between the tendencies towards good and right order and the tendency towards evil and chaos.

Humans had free will but were fallible. Our lot was to choose between either of two irreconcilable extremes: truth or lies; good or evil.

For Zoroaster, there was only one true path. All others were inferior. That path was to think good and do good, to be a co-worker with the spirit of Asa and so refresh creation.

In Shi’a faith, there is a conviction about ismah – that there are those without fault who are free from error and only they can show us to the right path with its right thought and right deeds.

Refusing to follow the path aligns such a reprobate with evil forces, with Satan. Thus, for the Ayatollah Khomeini, the United States was the “Great Satan” in the world, deserving unrelenting opposition until its power was fully suppressed for the good of creation.

Secondly, there is a calling among the Shi’a to direct others towards the good and away from evil.

Shi’aism points us towards a bipolar reality of only good and only evil, where toleration gives in to corruption and evil and compromise is impossible. Such a vision of life can easily justify violence against and oppression of those who are not seen as good.

It is not at all obvious to me that such bi-polarity is fundamentally good. It exacerbates our deeply rooted human tendencies to fear, despise and marginalize others.

But such bi-polar antagonisms between good and evil seem to be congenital to modern revolutions, from the Jacobins on down. When a revolution seeks to bring society back (to re-volve) to unquestionable first principles, it sets up a reign of oppression of free will, even of terror, in the name of virtue.

In the French Revolution, at the foot of the guillotine which was about to take her life, Girondist Madame Roland cried out “Oh Liberty, what crimes are committed in your name!”

Whoever or whatever created our cosmos and us did so leaving us imperfect creatures, condemned to live within limits and frustrations but also giving us a moral sense and the freedom to use it to link ourselves to others and to our surroundings in constructive and life-giving ways.

Reading the Qur’an has encouraged me to think that one can hold to an absolute truth, if at the same time one does not tread far from humility. Qur’an guides us to avoid Shirk, or making of ourselves, or anything else for that matter, the equal or partner of God.

The Old Testament book of Micah instructs us “to act justly and to love mercy and to walk humbly with your God.”

Aristotle thought that finding the Mean was the basis of ethics and that we needed inner strength (virtue) to do just that.

In the Confucian tradition, we find the Doctrine of the Mean, which advised us to keep to the balance of the Tao. And Buddha taught us in his first sermon to avoid extremes and find the middle path.

Our colleague Klaus Leisinger, by coincidence, just sent me this quote from Dietrich Bonhoeffer:

“Responsible action is no longer fixed from the outset and once and for all but is born in the given situation. It is not a matter of implementing a principle that ultimately breaks with reality but of grasping what is necessary, what is ‘commanded’ in the given situation. It must be observed, weighed, evaluated, all in the dangerous freedom of one’s own self.”

At the Caux Round Table for Moral Capitalism, we seek to follow this wisdom – to find principles of the good which must be applied in life in context where a humble, open-minded consideration of conditions avoids extreme judgmentalism and inflexibility.

Moral Capitalism Starts Going Mainstream

U.S. Representative Joseph Kennedy III has picked up “Moral Capitalism” as his program for the U.S. He called asking for my help, which I said I would give him.

Last week, he gave a talk on the subject at Harvard Law School, which you can read here (PDF).

A commentary in Bloomberg by Harvard Law Professor Cass Sunstein notes Kennedy’s attachment to Moral Capitalism.

This adoption of Moral Capitalism is a compliment to the authors of our Principles for Business and to the Minnesota heritage they brought forward.

Taking Care of Employees

I saw recently in the Wall Street Journal this anecdote (PDF) about a “boss” looking out for an employee.

It reminded me that even in the throws of making a living, we can make life better for those around us, especially those who can rise or fall thanks to our powers and decisions made as to how we use them.

Public Office as a Public Trust Workshop — Thursday, March 28th

We have just held an election in which the American people put what we are more and more calling “tribalism” on the front burner of our politics. While it is important to understand the passions and fears of our fellow citizens, our constitutional republic was not established to foster tribalism of any kind.

The Preamble to our Constitution holds that: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

Beating at the heart of our constitutional democracy is the ethical proposition that “Public Office is a Public Trust.” But what does this mean? Where did the idea come from? Is it still true? How can we tell a good public servant from an unworthy one?

Those who were elected to office on November 6th were chosen to hold public office. Before assuming such offices, they will be asked to take an oath to be faithful in the execution of that trust responsibility, faithful not just to those who voted for them but to all of us, our state and our country.

How can they more fully understand the law and the tradition setting forth the duties of office that will soon be theirs in service of our citizens? Through study and discussion as always since our founding as a nation.

I’m delighted to invite you to participate in the Caux Round Table for Moral Capitalism’s (CRT) workshop on Public Office as a Public Trust scheduled for 8:30 am on Thursday, March 28th at the Humphrey School of Public Affairs.

The workshop is a new initiative to encourage and professionalize elected and appointed public officials at all levels, as well as those who aspire to elective or appointive office, to live up to the highest standards of stewardship responsibility.

The mission of the workshop is to promote good stewardship in office, thoughtful trusteeship and enlightened fiduciary practices using the CRT’s Principles for Government as best practices. The commitment of the workshop is taken from George Washington’s remarks to the delegates at the 1787 Constitutional Convention that “Let us raise a standard to which the wise and the honest may repair.”

For some time now and to the great detriment of our state and country, a narrowness in serving the common good has dominated our politics, resulting in a system of government that is polarized, fractured and unable to effectively address even its most basic challenges. The workshop will train you in the tried and tested ideals of public service.

The workshop will present historic, intellectual and moral foundations for the ethics of public stewardship, including the Bible, John Locke, Adam Smith, Max Weber and the Federalist Papers, among others.

The agenda will include:

1. Pew Research Center findings on political polarization

2. Movie High Noon: public trust and personal courage

3. The Moral Sense: human nature and natural justice

4. CRT Principles for Government

5. History of trust responsibilities

The two main presenters will be myself and Doran Hunter, Emeritus Professor of political science at Minnesota State University, Mankato.

Tuition is $50 per person (does not include cost of lunch). Space is limited.

For more information or to register, please click here.

The session will adjourn at 4:30 pm.

The CRT is an international network of senior leaders from business, government, academia and non-profit institutions who work together to improve private enterprise and public governance around the world.

Moral Capitalism with Swedish Characteristics

In many of our discussions here in the U.S. about capitalism and our shortcomings as a nation, the example of Sweden and Nordic welfare-state capitalism is often raised as a better model for us to follow.

Thus, I thought it telling when the Wall Street Journal, no friend of socialism, recently published a commentary on stealth capitalism in Sweden titled “How Sweden Overcame Socialism.”

Science Stands Up for Moral Capitalism

Two new books make the case for moral capitalism irrefutable. According to two students of human evolution, it turns out that integrating social calculations into real world strategies for living well is what we humans are designed to do.

Therefore, being moral with the use of private property and with free-market entrepreneurship is feasible. We can expect those in capitalism to listen to “the better angels of their natures” because such angels can really be a compelling part of their natures.

Richard Wrangham has a new book titled The Goodness Paradox: The Strange Relationship between Virtue and Violence in Human Evolution and Michael Tomasello has a new book with the title Becoming Human.

Wrangham argues that as humans evolved physically out of their original primate bodily configuration, they turned from wild creatures to domesticated ones with their bodies changing shape as evidence of such growing socialization.

Tomasello argues that human children display “joint intentionality” with their caregivers to better succeed in cooperative living.

In other words, just as Aristotle postulated in the pre-scientific age, humans are social animals. In his Politics, Aristotle wrote:

“Man is by nature a social animal; an individual who is unsocial naturally and not accidentally is either beneath our notice or more than human. Society is something that precedes the individual. Anyone who either cannot lead the common life or is so self-sufficient as not to need to, and therefore does not partake of society, is either a beast or a god.”

Wrangham and Tomasello use science to validate the thinking of: Confucius, Mencius, Buddha, Jesus, the Qur’an, Saint Thomas Aquinas, Martin Luther, John Calvin and Adam Smith when he wrote on the moral sentiments in 1759 and today’s Catholic Social Teachings.

We would be fools not to follow what has been taught to us over so many centuries.

For ten years now, we have listened to Professor Doran Hunter, now a member of our board of directors, on the constructive lessons to be learned from evolutionary biology and neuro-science.

Because we are social animals, we can set expectations for each other to be ethical and responsible. Ethics and responsibility, duty that we use our powers thoughtful of the consequences, are part of human nature.

Social Darwinism, which is used by some to justify brute capitalism (think of Wall Street in the run up to 2008) – the Hobbesian law of the jungle where only the fittest in tooth and claw are said to survive – is inconsistent with our deepest needs as human persons.

As Harvard psychologist William James affirmed:

“The community stagnates without the impulse of the individual. The impulse dies away without the sympathy of the community.”

The implication of what Wrangham and Tomasello are telling us is that we cannot be well unless we are social. But as society is a reciprocal arrangement among the one and the many, society has its corresponding duty to keep us well as individuals.

But how we have evolved leaves us with decisions to make daily: do we listen to the “better angels of our nature” or do we behave as brutes do, or alternatively, seek to be Gods liberated from all obligation and moral sense?

The infusion of morality, ethics and the acceptance of personal responsibility into our decision-making is leadership. We must learn to lead by activating our moral sense.

Thus, as I wrote in my 2004 book Moral Capitalism, it can’t happen on its own; it must be made to happen, by us.

Cybersecurity and Business Responsibility Round Table – Thursday, February 21st

Since our first ancestor thought of using a tool to strike, maim or kill a friend, neighbor or foe, the technology which can make our lives better and more fulfilling can also be used nefariously for destruction and evil.

Defense against technology is therefore a necessary part of living well.

The Democratic National Committee could not defend itself against a hack and that did its presidential candidate no good. Huawei allegedly uses technology to steal intellectual property for its own advancement. Our own home computers need security protection against malware. These days, who doesn’t have so many usernames and corresponding passwords that they can’t remember most of them and need technology to keep track of their security codes?

Just the other day, I read that $1 billion in cryptocurrency had been stolen.

Cybersecurity is a new buzzword and necessity for living well. Few of us know about it. It is more and more a part of business success. Protection against those with malicious intent is a new ethical obligation of business, especially in finance.

Please join us and two local experts, Chip Laingen, Executive Director of the Defense Alliance and Corporate Vice President, Midwest Region, for Logistic Specialties, Inc. and Jeremy Swenson, CEO of Abstract Forward Consulting LLC, for a round table discussion on cybersecurity and business responsibility at 9:00 am on Thursday, February 21st at the University Club of St. Paul.

Registration and a light breakfast will begin at 8:30 am and the event at 9:00 am.

Cost to attend is $15 for Business and Public Policy Round Table members and $35 for non-members. Payment will be accepted at the door.

Space is limited.

To register, please contact Jed at jed@cauxroundtable.net or (651) 223-2863 (email preferred).

The University Club is located at 420 Summit Ave in St. Paul.

Parking will be available along Summit Ave.

The event will conclude at 11:00 am.

We Need Your Support!

This post is a request for your help and support.

As I look around our world with its achievements in improving living standards but its growing inequalities, antagonisms and rising mistrust of elites and others, I am reminded of David Livingstone’s last words:

“ALL I CAN ADD IN MY SOLITUDE, IS, MAY HEAVEN’S RICH BLESSING COME DOWN ON EVERY ONE, AMERICAN, ENGLISH, OR TURK, WHO WILL HELP TO HEAL THIS OPEN SORE OF THE WORLD”

Each of us has opportunities daily to help in healing; each of us can lead; each of us can make a difference.

I am grateful to all in our Caux Round Table for Moral Capitalism network for their contributions and their leaderships. We strive to contribute to the cause of healing and improving with ideas and recommendations – big picture and small bore – to put in the public domain for all to take up, improve upon and use in their many vocations.

During 2019, we plan to:

  • Implement new certificate educational programs in moral capitalism.
  • Deepen our understanding of common core values among wisdom traditions to give moral capitalism a universal foundation in human aspirations for the good.
  • Convene an international dialogue in Zagreb, Croatia, in June.
  • Convene round tables and collaborate in conferences in Mexico and China.
  • Schedule round tables to consider modernization of the methodology used to value companies and securities in 6 major global centers of finance and public policy leadership.
  • Publish 12 issues of Pegasus.
  • Publish books relevant to the theory and practice of moral capitalism.
  • In Minnesota, convene monthly round tables on important aspects of moral capitalism and hold quarterly workshops on ethical government practices, recognizing that public office is a public trust.
  • Launch a new website.

Your donations to our travel and organizational expenses are needed. Small donations can be particularly helpful:

  • $60 donation pays for distribution of one issue of Pegasus.
  • $100 donation pays for the staff cost of preparing one issue of Pegasus.
  • $500 donation pays for putting 4 e-books on Amazon for global distribution.
  • $500 donation pays for converting one e-book to a print-on-demand paperback available on Amazon Books for global distribution.
  • $500 donation pays for one workshop on public trust in Minnesota.

You can donate here and a contribution form can be found here.

Anything you can give would be most appreciated.

John Bogle, Moral Capitalist: A Tribute

John Bogle passed away recently. He understood financial markets, as we do, that they have a stewardship responsibility inside capitalism to support real wealth creation which raises the living standards of all fairly.

He opened financial markets for ordinary people – the arms and legs of capitalism – by making no-frills, low cost index funds easily available. He started a company, Vanguard Group, in 1975.

Vanguard’s business model allowed investors to minimize their risks by investing in a diversified portfolio of company stocks and so avoid the fees charged by fund managers who bought and sold individual stocks for their clients but who most often failed to outperform the market.

Vanguard was set up as a non-profit with its mutual funds and fund shareholders as owners of the business. Profits were plowed back into the business to reduce fees charged to buyers of its funds. Vanguard now manages $5 trillion globally. Vanguard has an expense ratio substantially lower than any other fund complex in the world.

Then, in 1977, Vanguard marketed its funds directly to individual investors and did not require them to go through brokers, who took fees for their service.

Bogle’s investment philosophy was to mimic the market, not try to outsmart other investors in the short run. Rather, his approach was to grow the market over time – little by little, but steady, year after year. This minimized the risk of loss which kept many with small or no fortunes from putting their assets at hazard in equity markets. Investors could obtain a market rate of return at lower cost with index funds. Even today, almost half of all American households don’t invest for the future at all.

Taken altogether, many Americans are richer and the financial industry poorer thanks to John Bogle. Warren Buffet said that John “did more for American investors … than any individual I’ve known.”

Bogle understood that it was the financial service industry that chased risk in order to get higher returns – greed for money. He saw Wall Street as “Financialism,” not honest capitalism. Bogle argued that financial advisors had a duty to be good stewards of the best interests of their clients only.

Bogle’s strategy was encouraged by federal government tax policies in the authorization of IRAs (individual retirement accounts) and 401(k) savings plans. These two arrangements allowed investors to defer the payment of taxes on their earnings in such funds. Index funds are now just under 30% of the stock market.

He received me graciously in December 2012. He had liked what I had written in my book Moral Capitalism – ”Moral Responsibility is a form of stewardship, of agency, of fiduciary undertaking. … it is a vision of mutuality, of service, of both self and others.”

In giving me a copy of his book The Clash of Cultures, he signed it with this word of encouragement: “Press on – Regardless!”

John differentiated between investment and speculation. The first was good use of money and the second was just gambling to make a money play off the misjudgment of others about the odds of future contingencies happening or not. He understood that speculation did not necessarily create new wealth; it just moved money around from some to others, as happens in any poker game.

Bogle called his industry “The poster-boy for one of the most baneful chapters in the modern history of capitalism.”

Another one of his books, which I have, is just called Enough.