Intangible, Yes; Reality, Very Much So; Measurable?

Goldman Sachs has just given us a demonstration of an article of faith for the Caux Round Table for Moral Capitalism – reputation is a capital asset.

With public disclosure that Goldman was negotiating with the U.S. government over its role in selling bonds for the 1MDB investment fund in Malaysia, the price of its stock dropped.

In the minds of investors – either speculators or real equity investors – something was now less valuable about the Goldman franchise.

One market commentator wrote last week:

“Shares of Goldman Sachs Group Inc. extended their selloff Monday, to fall 7.3% in afternoon trade to put it on track for the lowest close since Nov. 16, 2016. The stock was also headed for the biggest one-day decline since it fell 7.4% on Nov. 9, 2011. The selloff comes after the shares shed 3.9% on Friday, after Bloomberg reported that former Goldman Chief Executive Lloyd Blankfein was the unidentified high-ranking executive referenced in U.S. court documents who attended a 2009 meeting with former Malaysian Prime Minister Najib Razak involved in the 1MDB scandal. The stock’s two-day plunge of 10.9% would be the worst since it plummeted 11.4% over the two-sessions ending April 19, 2010. The stock has now shed 10.1% over the past three sessions while the SPDR Financial Select Sector ETF has lost 4.6% and the Dow Jones Industrial Average has gained 0.7%.”

On Monday, Goldman was criminally charged in Malaysia for its engagement on behalf of 1MDB.

Goldman’s involvement in servicing 1MDB began after the 2008 collapse of credit markets when the firm’s revenue fell by a third.

As ancient wisdom has it: the love of money is the root of all evil.

Or from the same text: “What does it profit a man to gain the whole world, yet lose or forfeit his very self?”

For Goldman, its stock price is a handy measure of its reputation. The market puts a price on the reality of an intangible.

Four Minnesota Think Tanks Tackle Poverty

I wanted to provide you with a set of essays titled “Grasping and Reducing Poverty in Minnesota” that the Caux Round Table for Moral Capitalism (CRT) and three other Minnesota-based, local think tanks recently released.

From my point of view, the important fact about these essays is the demonstration that collaboration and constructive discourse is both still possible in America and effective.

When one steps back from the infantilism of our current politics and the limited intellectual resources brought to bear on our challenges, the thought easily emerges that maturity of judgment implies ethics and ethics demands consideration of others.

Our powers, to be used ethically, must be under self-restraint and certainly never egregiously dismissive of others.

Thus, our project to engage with the Center of the American Experiment, Growth & Justice and the Citizens League is ethics in action.

We hope this precedent in collaboration can be a model for politics in Minnesota going forward.

Minimum Wage – Yes or No? Please Join Us Thursday

What is a fair wage? What is a living wage? What is a just wage? Why work at all? “From each according to his ability, to each according to his needs,” reasoned Karl Marx in 1875.

But who gets to decide my ability and who gets to decide my needs? Me, perhaps, or you?

The threat to employment coming from Artificial Intelligence, automation and robotics has many proposing a universal basic income to carry us through the ups and downs of life. The St. Paul City Council just voted to use municipal police powers to mandate hourly wages for certain employees, seeking to give those who work more money for the exercise of their abilities in order to help them meet their needs.

Is this a good idea? Is it a slippery slope leading us to the embrace of Marxist doctrine? Who will pay and in what ways when certain prices rise?

Please join us for a round table discussion of work and wages at 9:00 am this Thursday, December 20th 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.

Keeping the Mean

I returned home yesterday from a stimulating conference in Zhengzhou, China, discussing Chinese contributions today to a “community of shared future for mankind.” The gathering of scholars was the 10th International Symposium on Chinese Culture in the 21st Century. Opening the sessions was Mr. Wang Zhengwei, Vice-Chairman of the Chinese People’s Political Consultative Conference and a member of the 16th and 17th Central Committees of the Communist Party of China.

Zhengzhou is in the center of north China, along the Yellow River in Henan Province. Henan is the birthplace of Chinese civilization several millennia ago. The topic for discussion at the forum was how to apply to our world today perspectives from China’s ancient Yan Huang philosophies on human destiny, ideas which arose among peoples and kingdoms living in and around Henan.

My paper was an exploration of the over-looked essay in the Confucian tradition entitled The Doctrine of the Mean, which links Confucian social ethics to a never-ending cosmic dynamic of the Tao. Briefly, the Doctrine of the Mean advises that individuals must discipline their minds and hearts to find balance and equilibrium between the authority of absolutes and the realities of pluralism. Finding the Mean permits living in the Tao, which is sustainability and wholesomeness.

Delivered today to my home in St. Paul, Minnesota, the Wall Street Journal has two commentaries on the West – Europe and the U.S. – falling short of the Mean in their culture, economics and politics.

First, Willam McGurn writes on U.K. Prime Minister Theresa May having inadequate support for her plan to have her nation leave the European Union but maintain some advantages of association with that larger international confederation. The future of the U.K. is now up for grabs. He then notes that in France, President Emmanuel Macon has just retreated in concession to protests against his elitism by offering the “masses” a higher minimum wage and cuts in taxes on some pensioners. Thirdly, McGurn reports that in California, 200 civil rights leaders have gone to court to oppose the state’s greenhouse gas emissions regulations as discriminating against poor African Americans and Hispanics to favor the preferences of the very rich, who live in Hollywood and Silicon Valley.

Secondly, Walter Russell Mead opines that voter distemper in the U.K., France, Germany, Italy and the U.S. is happening when those economies are doing rather well. What is driving protest is therefore not simply economic discontent. The storm of populist angst has other causes. Our time is out of joint. Something is upset in how we are governed, in our levels of self-respect, in our expectations of the future and in the answer to the question of “Cui Bono?”

The ideas of the Caux Round Table of Moral Capitalism seek to provide such balance for the economy, public governance, civil society and the ownership of wealth.

Today’s Wall Street Journal also brought forth in a book review a most relevant piece of advice from Samuel Williams from his 1794 book History of Vermont: “Behold here the precarious foundation upon which ye hold your liberties. They rest not upon things written upon paper … they depend upon yourselves; upon your maintaining your property, your knowledge and your virtue.”

Confucius could not have said it better.

Nirvana, Right Here Where it has Always Been

I have just given a paper at a conference in Bangkok cosponsored with the World Fellowship of Buddhists and the World Buddhist University.

My paper attempted to apply some early teachings of the Buddha as best practices in this world for individual moral self-government and then, progressively, governance of communities and institutions, including nation states and multinational organizations.

I was given a copy of an old lecture by a famous Thai Buddhist monk, Buddhadasa Bhikkhu. On Nirvana, which I had largely understood as the ultimate goal of Buddhist thought and practice coming at the end of our possible reincarnations as a sort of heavenly existence.

To a different way of thinking, Buddhadasa Bhikkhu reminds us that the root meaning of “Nirvana” is only “coolness.” In other words, we can achieve “coolness” of mind, heart and personality in this life before any rebirth into a new incarnation. The word most simply understood indicates the cooling of the fires of upset and distraction, the feelings, anxieties, desires, passions, motivations and thoughts which unsettle us and give us unease instead of ease in this life.

I find this an important reminder that there are ways of living which are under our control in this temporal span between birth and death and in this physical space subject to what we know as natural laws of causation and which can prepare us for service of ends larger than our own ego-centricities.

In the sense of achieving “coolness” of heart, mind and spirit, Buddhism might take on new constructive importance for all of us no matter our traditions and our ambitions.

Do You Think There Should be a Minimum Wage? If So, Why? If Not, Why Not? Please Share Your Thoughts with Us on the 20th

What is a fair wage? What is a living wage? What is a just wage? Why work at all? “From each according to his ability, to each according to his needs,” reasoned Karl Marx in 1875.

But who gets to decide my ability and who gets to decide my needs? Me, perhaps, or you?

The threat to employment coming from Artificial Intelligence, automation and robotics has many proposing a universal basic income to carry us through the ups and downs of life. The St. Paul City Council just voted to use municipal police powers to mandate hourly wages for certain employees, seeking to give those who work more money for the exercise of their abilities in order to help them meet their needs.

Is this a good idea? Is it a slippery slope leading us to the embrace of Marxist doctrine? Who will pay and in what ways when certain prices rise?

Please join us for a round table discussion of work and wages at 9:00 am on Thursday, December 20th 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.

A Very Good Thought from Saint Theresa of Avila

As I was flying over the Pacific to attend a conference in Bangkok on sustainability and the first teachings of the Buddha, I read St. Theresa of Avila’s story of her life.

The book was sent to me by my cousin Lynn in Taos, New Mexico, who makes painted retablos of saints as her vocation.

On where we can find the moral insight and courage to stand against the dark sides of life and capitalism, St. Theresa advised that we should not let the “mirror of our soul” become so clouded that we cannot see the good that is there.

This practice “teaches [us] that the Lord resides very deep inside [our] souls. This notion is much more attractive and fruitful than the idea that God is outside us.”

“Absolutely, the best place to look for God is inside ourselves. We don’t need to ascend to Heaven or reach any further than our own beings. Trying to go beyond our own center only wears the soul out and distracts her. Such efforts do not bear fruit.”

This insight that a vision of the good is already inside us, somewhere, resonates with Buddhism and Chinese Taoism and with Marcus Aurelius, the Stoic. It is an insight which leads to the conclusion that a moral capitalism is possible.

Should There Be a Minimum Wage? Please Join Us on December 20th

What is a fair wage? What is a living wage? What is a just wage? Why work at all? “From each according to his ability, to each according to his needs,” reasoned Karl Marx in 1875.

But who gets to decide my ability and who gets to decide my needs? Me, perhaps, or you?

The threat to employment coming from Artificial Intelligence, automation and robotics has many proposing a universal basic income to carry us through the ups and downs of life. The St. Paul City Council just voted to use municipal police powers to mandate hourly wages for certain employees, seeking to give those who work more money for the exercise of their abilities in order to help them meet their needs.

Is this a good idea? Is it a slippery slope leading us to the embrace of Marxist doctrine? Who will pay and in what ways when certain prices rise?

Please join us for a round table discussion of work and wages at 9:00 am on Thursday, December 20th 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.

Ancient Wisdom Still True Today

Since the dawn of the industrial age, critics of its reliance on capitalism for continuous innovation and growth have pointed accusing fingers at systemic aspects of private property, free markets and limited government regulation for capitalism’s many unequal outcomes and power imbalances.

But what if the root cause of the shortcomings of capitalism are not in its architecture but in the minds and hearts of those who make use of its structure for their own purposes?

Recently, I read an essay on Thucydides’ History of the Peloponnesian War. Two insights from that first Western historian would incline us not to blame systems but rather look for causes and offsetting remedies elsewhere.

Thucydides thought that “…the usual thing among men is that when they want something, they will, without any reflection, leave that to hope, while they will employ the full force of reason in rejecting what they find unpalatable.”

Markets generate wants, as honey draws flies. Is it any surprise, then, that people in markets cling to hope when they should not and rationalize away what is inconvenient or unsettling in their transactions, especially any personal responsibility for doing good to others?

Thucydides also said: “War is a stern teacher … it brings most peoples’ minds down to the level of their actual circumstances.” War throws “the ordinary conditions of civilized life into confusion; human nature, always ready to offend even where laws exist, show[s] itself proudly as something incapable of controlling true passions, insubordinate to the idea of justice, the enemy of anything superior to itself.”

Many have pointed out the supposed similarities between war and markets: dog eat dog competition; to the victor belong the spoils; survival of the fittest; no empathy for losers. So markets, like war, expose the rawness of human nature, bloody red in tooth and claw.

There is something to the comparison. People do not lose their human natures when they go to market. So when market realities – no free lunch, prices too low or too high – bring them down to actual circumstances and sow confusion in their framing of expectations and aspirations, their passions take over and become insubordinate to justice. They consider their own interests paramount and not subordinate to the concerns of others.

So in a sense, it is a system that creates our disappointments, a natural system, if you will. But the market system of our own devising for production, finance and consumption, at times, brings forward human nature in the raw – untrammeled, unpolished, un-burdened by virtuous sentiments, unadorned by beauty.

The solution: reform the market system or change our natures?

CRT Responds to Australian Royal Commission on Banking

The Interim Australian Royal Commission report on abuse of marketing by financial firms was released last month. The executive summary of the report can be found here.

The techniques for enhancing firm revenues brought under scrutiny do not measure up to standards of moral capitalism. Once again. I s such taking advantages of customers inescapable in capitalism as a function of a human nature which is programmed to deviate towards selfishness or can market incentives be arranged to offset that propensity with more ethical fidelity?

Noel Purcell, Chairman emeritus of the Caux Round Table for Moral Capitalism who worked on CSR for WestPac Bank in Sydney, has submitted a response to the Royal Commission’s interim report, which can be found here.

In Noel’s distinctive and distinguished fashion, his response is short and forceful. I urge you to read it and let me know your thoughts.