Category: Commentary

Former U.S. Congressman Barney Frank (co-author of the Dodd Frank legislation adopted after the 2008 failure of private financial markets to responsibly price certain financial contracts) once observed to me that in modern times, much of the law is a response to new technologies brought to scale by private entrepreneurs.

The new technologies – steam engines, electricity, telephones, airplanes, the internet – change lives and provoke new behaviors and new ways of looking at the world.

The technology of the internet and the invention of the smartphone are new technologies which have changed our politics and our journalism. Politics has become more personal, more emotional and more tribal. Journalism is no longer a profession, but entertainment. Journalists have become narrators of stories designed to grab our attention so that we will tolerate viewing advertisements.

This not-so-brave new world has changed the business model for print media. Traditional newspapers and magazines have lost advertising revenue and subscribers. Since 2004, some 2,000 newspapers have gone out of business in the U.S. The new model for journalism is less a public service and more a hard-hearted commercial scramble for profit and the way to profit is to attract consumers. What consumers of media want now is a simple storyline, a quick, gossipy take on life; emotions, not facts, nuance or the complications which often accompany the truth.

In 1964, the U.S. Supreme Court provided traditional media with a high level of protection from libel litigation. The court did not want media to be intimidated and fearful of publishing the truth about government and those who were public figures. The court concluded that disclosure was such an important deterrent to abuses of power that it needed to be encouraged. Thus, the court provided free speech protections to speech that was untrue, but not knowingly or maliciously published by a media enterprise. That ruling came in the case of New York Times v. Sullivan.

But times do change. In the drive to secure reliable income, contemporary major media firms have, more and more, identified with one cultural mindset over others to gain a loyal consumer following. A number of major media firms – the New York Times, Washington Post, CNN – have closely aligned their narration of events with storylines most closely aligned with the Democratic Party’s policies, priorities and perspectives.

Under these circumstances, the high level of protection given the media by New York Times v. Sullivan has come into question. Does storytelling need the same degree of protection as truth telling?

Recently, Judge Lawrence Silberman of a lower federal court wrote a dissenting opinion in a case of libel which laid out reasons why the rule in New York Times v. Sullivan should not be overruled and replaced.

I have excerpted the relevant parts of Judge Silberman’s opinion here.

The rise of racialized wokeness as a major cultural and political challenge to free speech, human dignity, constitutional checks and balances and personal integrity is principally an American crisis of values conflict. But, you may have noted opposition to the importation of such post-modernist wokeness into France on the part of French President Emmanuel Macron and many French intellectuals. Wokeness, as a cultural movement in the U.S., has some similarity to the insistence of the Chinese Communist Party for the acquiescence by all to a cultural trope, proclaiming the superiority of “Chineseness” in a global context.

The case for wokeness has been made on moral grounds. Its proponents assert they are seeking social justice and remediation for past wrongs, for self-abnegation by some and assertion of priority and privilege by others. The Caux Round Table proposed ethical principles for business, a “moral capitalism,” in 1994, long before the first stirrings of wokeness and its application to all sectors of American society.

Thus, the relationship between wokeness and moral capitalism now comes to the fore. Are these two moral visions compatible with one another? Can they be harmonized? Or, as I believe, is wokeness seriously deficient as an ethic and so has no claim to moral authority in business enterprise, commerce and finance?

I put before you my reasoning in “Wokeness and Moral Capitalism” on the congenital infirmities of wokeness by placing it in the historical context of Rousseauist narrative.

Please do let me know your thoughts and concerns on this challenge to all of us in defining just what is social justice and just what each of us should expect from others in their acknowledgment of our human dignities.

Our Fellow, Michael Hartoonian, in his article “Our Circular Firing Squad” raises a very pertinent question: can cultures commit suicide?

I can think of many cultures being conquered and then having their culture suppressed. The Hittites, Trojans and Etruscans are no longer with us. The Chinese sinicized the ancient Yueh tribes living south of the Yangtze River and are at it again with Buddhist Tibetans and Muslim Uighurs.

Then, there are cases of assimilation. Did not the small Latin states become Roman and, later, Gauls and Goths Romanize themselves? Christianity pushed aside the pagan cults of the Celts and Germanic peoples. The Yueh peoples, except those we now know as the Vietnamese, accepted sinicization. The process of modernization (Westernization?) since World War II has brought many modifications to cultures and societies around the world.

But how many cultures have evolved their values in a way that lead to their collapse from internal discord or self-sabotage?

Gibbon’s explanations for the decline and fall of the Roman Empire pointed to an internal devolution of key value variables – trust, self-confidence, willingness to fight wars, personal assumption of responsibility and the rise of a rentier elite.

One might say that one of the most important existential functions of ethics is to forestall cultural, social and political collapse.

Michael brought these thoughts to my mind. His description of how a circular firing squad mentality takes over a culture exposes the consequences of turning against virtue ethics – in both ideals and practices.

In 59 BC, Cicero similarly exposed what was driving the Roman Republic to suicide: nos virtutem adligatam est – “our virtue is in chains.”

Thus, put on notice by Cicero, the Caux Round Table has chosen for its motto Virtus Non Adligata or “Virtue is not chained.”

As Santayana said, “Those who cannot remember the past are condemned to repeat it.”

I would appreciate your thoughts on the trends which are becoming more and more dire for my country.

The rise of narrative as an alternative to truth among the well-educated American elite is inconsistent with moral capitalism. Narratives belong to the genre of story, myth, fairy tales, horror and romantic fictions. Narratives must design characters to carry their story line.

Narratives, many times, are morality tales used to teach principles or warn of consequences and to present characters as role models for emulation or rejection.

Moral capitalism has a core set of understandings which seek to be grounded in reality and not just socially constructed. The Caux Round Table (CRT) Principles for Business do not embrace an “anything goes” mentality of entitlement.

Companies are bound to their stakeholders by interest and moral responsibility. Companies are now to have “purpose,” more meaningful than the making of profits.

But in this era of all ideas and ideals only being self-serving narratives, on what can the CRT principles be grounded?

I attach here a long essay proposing use of the Second Law of Thermodynamics as a basis for reasoning about good ethics. The Second Law is not a narrative; it is said to be a law of nature, beyond any social convention. If we want to deny it, we may, but that will not make it disappear.

I ask your indulgence in taking a look at the credibility of my argument for this fruitful intersection of science and ethics around the dynamic of entropy.

I would be very interested in your thoughts and feedback.

Yesterday, I sent you a short quip on application of the reality principle to economics and finance, what seems to me to be an ethical position of great integrity. Today, the Editorial Board of the Wall Street Journal added its own thinking about who will actually pay for “lunch” here in the U.S. I include excerpts from the editorial here:

Jerome Powell lobbied publicly for months for more fiscal spending in the name of spurring the economy. Congratulations to the Federal Reserve Chairman, who has succeeded in catching the fiscal bus. Now his wish is Treasury Secretary Janet Yellen’s command as the Fed has to finance the vast fiscal deficits to come.

That’s the context to consider as the Federal Open Market Committee meets this week amid rising interest rates and market inflation jitters. Fed officials have been telling the public there is nothing to worry about, that they have the tools to manage any rate or inflation breakout. But investors aren’t crazy to be watchful, no matter how blithely the Fed assures.

The sheer magnitude of the deficits to be financed is a rare experiment in U.S. fiscal history. Even before the $1.9 trillion spending bill passed, the Congressional Budget Office estimated the deficit as a share of GDP would be 10.3% in fiscal 2021. With the Pelosi-Schumer-Biden blowout, the deficit this fiscal year will now be in the neighborhood of 18% of GDP. That’s the highest by far since the four wartime years of 1942-1945.

That’s also a lot of Treasury bills, notes and bonds to sell. U.S. investors have historically been able to finance about 4%-5% of GDP. The appetite of foreign buyers will depend on relative interest rates, currency values and confidence in the U.S. economy. Treasury’s Feb. 25 auction of seven-year notes was a warning sign as low demand almost led to failure.

Treasury auctions since have been more robust, but there’s little doubt that the Fed will be a bulk purchaser of U.S. debt for years to come. The Fed is currently buying $120 billion a month of Treasurys and mortgage securities and (unlike in Europe) there is no limit on the amount it can buy.

The fortunate news is that the economy is about to zoom ahead as the pandemic and social distancing ease. This year could see the fastest GDP growth since 7.2% in 1984 and the economy is poised to make up all of the ground it lost during the pandemic as soon as this quarter. The main effect of the $1.9 trillion will be to rob growth from the future by giving consumers more money to spend now. The Fed will no doubt bask in this near-term happiness.

But eventually there is a price for everything in economics, notwithstanding the assurances of modern-monetary theory. The test for the Fed will come in future months as the economy recovers. The market may demand higher interest rates, even as the Fed will want to keep them low to finance continuing federal deficits. The political pressure from the Biden Treasury and Congress will be enormous to keep rates low as far as the eye can see.

One challenge will be maintaining a calm Treasury market. This probably means waiving again the Supplementary Leverage Ratio for banks, a measure of capital adequacy. The Fed waived the rule last April and the waiver expires March 31. Restoring it now would penalize banks for holding Treasurys as reserves. This is one way in which the government response to the pandemic will continue to block a return to normal monetary and regulatory policy.

Good luck to Chairman Powell and the FOMC in this brave new world in which politicians believe they can spend as much as they want without policy consequences. Mr. Powell won’t be able to say he warned us.

Today’s Wall Street Journal has a front-page article on the Biden Administration trying to find a way to pay for the $1.9 trillion infusion of liquidity into the American economy as transfer payments to many and then for the infusion of even more liquidity with spending on infrastructure, clean energy and education.

The article notes that the Biden team is caught between raising taxes or incurring more debt to pay for making their dreams become real.

In other words, Biden is eyeball to eyeball with reality and reality “sucks:” there is no free lunch.

Where spending is concerned, if you want to buy anything, then someone at some time – in the past, right now or in the future – has to create real wealth and you need to get a share of it. Money is only a claim to some part of real wealth. You can’t eat gold or paper money or build a house out of paper collateral debt obligations or digital options contracts.

This is an iron law of the cosmos. Something cannot come from nothing, except possibly the big bang. In the Judeo-Christian tradition, there was God before there was our created world.

Thus, the fundamental moral justification for capitalism is that it pays for lunch. More than that, it pays for more lunches (and even for leftovers to eat later) and for better lunches and leftovers than any other human system of mutual collaboration has done – ever.

Capitalism, to be sure, produces material, not spiritual goods. But to what end is the spirit in this life if you starve to death?

All lives in America will be better off (we presume) if the Biden Administration spends $1.9 trillion, but does not offer up one prayer of supplication.

And I note that in the New Testament, two of the most appreciated stories are of Christ miraculously feeding the multitude with loaves and fish and the Good Samaritan selflessly taking care of the robber’s victim lying by the side of the road. The New Testament also gives us the thought that by feeding the hungry, we also feed the divine. The spirit, thus, becomes part of the world through the use of wealth.

As we have reported, for the last two years, the Caux Round Table has facilitated a small study group seeking to learn more about covenants given to Christian communities by the Prophet Muhammad.  I would like to note in the context of our initiative the very auspicious visit of Pope Francis to Iraq last weekend.

I had hoped that some comment would be made during this remarkable, historic visit, holding up the Prophet’s covenants as a model for mutual respect and reciprocal appreciation.  While this did not transpire, very much in the spirit of the covenants, the Grand Ayatollah Sistani said, “You are part of us and we are part of you.”

His transcendent vision was written on public posters like this:

 

In the days leading up to the Pope’s visit, I was in contact with colleagues in our study network close to the Pope and others in contact with the close associates of the Ayatollah.  It is my sense from the tenor of my phone conversations and emails with them that our report on the covenants, which was shared with both leaders, quite possibly did help to reduce anxieties by providing an historical precedent for mutuality between Muslims and Christians and so contributed to confident expectations of good results from the visit and so to the goodwill and collegiality animating the historic meeting of these two spiritual leaders.

One of the organizers told me afterwards that the meeting resulted in a “new mentality and culture.”

I was particularly moved by the Pope’s decision to visit Ur – the birthplace of Abraham, the place from which he set forth on his life-long pilgrimage as inspired by God.  Personally, reminding us of the fidelity of Abraham, the Pope, with his presence there, brought into one heritage the three Abrahamic faiths, similar to the way of the Prophet Muhammad who, in his covenants, brought together, in mutual consort, both Christians and Muslims.

I was reflecting a day or so ago that could it be possible that a short visit by one man, a religious leader, to Iraq has done more to put out the fires of intolerance and violence than nearly two decades of American efforts to “win the war on terror” and “pacify” Iraq?

Then, I recalled the cynical quip of Stalin as reported by President Harry Truman (there are other versions as to when Stalin made his observation):

“I remember at Potsdam we got to discussing a matter in Eastern Poland and it was remarked by the Prime Minister of Great Britain that the Pope would not be happy over that arrangement of that Catholic end of Poland. And the Generalissimo, the Prime Minister of Russia, leaned on the table and he pulled his mustache like that (gesturing) and looked over at Mr. Churchill and said: ‘”Mr. Churchill, Mr. Prime Minister, how many divisions did you say the Pope had?’”

Many around the world today are still talking about the self-centered presentations on Sunday of Meghan Markle and her husband, Harry Windsor.

I was a bit taken aback after listening to them with the realization that the Caux Round Table Principles for Government set a standard for persons in their position as members of a royal family.

You can read my thoughts here.

Recently, I sent to our network some observations on the collapse of the center in American culture and politics. A few days ago, a friend sent me the poll results found below, revealing the inconsistent narratives in which the two poles of American culture and politics have separately adopted.

I cannot vouch for any degree of credibility in these poll results, nor in the polling methodology used to obtain them. That inability is one of the afflictions, I think, we suffer from, living in this age of Twitter truths – nothing is really demonstrably true, that all we read might be empty-headed gossip or worse.

Nevertheless, the different opinions reported do track my personal experiences with friends on the right and on the left. Thus, I wanted to share with you this quite dramatic demonstration of how far apart many Americans are from one another.

In such a culture, what can possibly lift-up ethical discourse or promote the common good?