Democracy in Decline: What Is To Be Done?

The ESGX platform is a new associate of the Caux Round Table.

At noon (CDT) on Tuesday, September 28, it is presenting a discussion about “Democracy in Decline: Impact Investing to Reverse Global Trends” and you are invited to join us.

I will be one of the discussants.

The questions raised by ESGX are:

The success of many developed economies has depended on strong and reliable rule of law – and on the reliability of democracy itself – as both provide critical reassurance to investors.  And yet, around the world, democracy appears to be in decline, threatened both by the rejection of science, logic and reason, as well as by political activists seeking to replace long-trusted power structures with new regimes.

In this special episode, we’ll explore the threats to democracy globally and how we can act to combat them.  We will discuss the following questions:

-Which countries provide the most free and fair labor markets?
-Are companies domiciled in more democratic countries at an advantage and more investible?
-What are the links between culture, values and democracy?
-What positive role can individuals, companies, investors and governments play? 

My perspective is a traditional one: the quality of a democracy is driven by underlying social, cultural and economic conditions.

If those fall short, democracy cannot thrive.

In June 59 BC, in writing to his friend Atticus on the rising threats to Roman constitutionalism from the triumvirate of Pompey, Crassus and Julius Caesar, Cicero noted that “virtue” had evaporated among many Romans.  His phrase was virtutuem adligatam – “virtue is in chains.”  It was a straight run from there to the collapse of the Roman Republic not too many years later.

Some of you may recall the quip of Benjamin Franklin on walking out of the meeting hall having just signed the proposed constitution for the new independent North American colonies.  He was challenged by a Philadelphia matron of some distinction: “Mr. Franklin, what kind of a government have you given us?”

Franklin replied: “A Republic, madam, if you can keep it.”

Karl Marx famously linked constitutional democracy as a political system to economics – to the rise of a middle class.  The corollary to his syllogism is “Lose your bourgeoisie and you will lose your constitutional democracy.”

We should also note what my professors Samuel Beer and Barrington Moore, a Marxist, taught me that a bourgeoisie is habits of mind and heart, as well as having an economic function to perform for society.

For more information or to register, please click here.

I do hope you can join us.

The Times – Are They a Changin?

A number of our fellows met for their quarterly meeting by Zoom back on September 7 to consider our times. The proceedings of their discussion follows:

On the cusp of a new era, do events in Afghanistan presage a shift in the Geist – the world spirit providing absolute meaning? Is the time of the West, with its faith in a common ground enthused by the human spirit, individualism, rationality and the rule of law, over? Are we one community at scale or an unhappy ferment of smaller collectivities unable to adjudicate a simple, but not simplistic framework to embrace the scale of all of our lives and our futures? What conditional hypotheses about the future should occupy our minds and test the quality of our educational institutions?

The comments took the thought that our time might be one of transition.

A concern was tabled that diplomats need courage and civilizations need co-existence. This presumes there is no widely accepted, authoritative, world order of peace among nations and peoples supported by societies open to economic growth for all and political participation for all. Such a world order was the promise of the 1941 Atlantic Charter and of the United Nations.

One driver of unease was growing awareness of climate change on an existential scale. The need is to do something, but the fear is that we don’t know what to do.

An answer might be local adaptation, with local ownership of the environment to avoid the “tragedy of the commons,” where no one is responsible for the common good.

People seem more at a loss to answer the question: “How can I get control of my life?”

The nature of our system seems increasingly threatening, its nature being to make us victims and inconsolable. Futility seems a reasonable response.

The nature of the current system is a contentless civilization floating on words without content, detached from reality.

Some words have become fetishes – tribal gods, priestly incantations promising security and control. Words without deep principles invoking strong values keep us on the surface of life, as if we are sliding around on thin ice. Reality has become nominal and words permit our personal realities to be invented and other, uncomfortable, realities ignored.

Populist nationalism has its place, where words and perceived realities intersect.

In the U.S., there is mostly instrumental reasoning, a preference for the tactile and the immediate, with an allergy to ideas. But content comes from character. Yet it takes courage to keep content front and center, to hold others to standards.

A lesson from the past is investing in social capital, in community and in shared values.

Yet, our lives are still grounded in relationships, where there should be order, justice, duty, responsibility.

There is decadence, the regime losing internal moral order as the beginning of a transition to a new order.

There are lessons in the past. A critical mass of 20% could make for a tipping point with creative destruction and innovation coming forth.

Prevention is an ethic; foresight provides content and grounds for reasoned action.

Another dynamic most worthy of note and concern is trust – we are not building trust: 1) work in the pandemic is more and more just transactional without community; 2) crypto currencies destabilize expectations; and 3) there is no trust in leaders.

Liquidity in Financial Markets – What Are the Consequences?

Just recently, I sent to you some graphs which cause me concern, as they seem to associate government injections of liquidity into the U.S. economy with rising fortunes for the very well-to-do.

Last Saturday, Andy Kessler in the Wall Street Journal documented something similar – associating very high nominal stock prices with the Federal Reserve’s monetary manipulations.

Kessler wrote:

Joby Aviation, which plans to begin an electric air taxi service in 2024, is worth more than Lufthansa, EasyJet or JetBlue.  Does that seem right?  In this market, why not?  Heck, earlier this year, Tesla was worth more than the next nine car manufacturers combined, though now only the next six.  Beyond Meat, made with pea protein, is worth more than the entire market for peas eaten globally—like the bumper sticker says: Imagine whirled peas.  Do fundamentals even matter?

I can go on.  Used-car sales platform Carvana is worth more than Volvo, Honda, Ford or Hyundai.  Airbnb is worth more than Marriott and Hilton combined.  Crypto-exchange Coinbase is worth more than the Nasdaq.  I live at the intersection of innovation and disruption, but when companies are worth more than any possible reality, watch out.

AMC Entertainment’s stock was scraping $2 at the end of 2020.  It is now $50 thanks in part to Robinhood speculators and the company has smartly raised cash.  But what about fundamentals? Theaters are still sparse and Disney and others are willingly putting blockbusters directly onto their streaming services—ask Scarlett Johansson about Black Widow’s ticket sales.  Theaters are the new roller rinks.

Venture capital is cuckoo.  After investing $120 billion in the 2000 dot-com frenzy and just $16 billion in 2002, U.S. venture capital invested $130 billion in 2020 and then $140 billion in the first half of 2021.  Startups these days raise money as “the Uber of gardening” or “Space as a Service.”  Oh wait, the latter was WeWork’s pitch, whose founder Adam Neumann declared in 2017, “Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”

And check this out: In June, an Italian artist auctioned an invisible statue for $18,000—in reality it was an empty box the artist claimed was a “space full of energy.”  WeWork energy?  Yeah, maybe fundamentals are a quaint relic of a bygone era.

The Federal Reserve deserves most of the blame.  Near-zero interest rates means the market has no true north to help compare stock valuations with reality.  We are navigating turbulent seas with a spinning compass.

Terrorism, Divine Right, and Our Times

Until yesterday afternoon, I was quite myopic in my thinking about the terrorist attacks on the Twin Towers in New York City and the Pentagon in Washington, D.C. on September 11, 2001.  I had put the crime too narrowly in a very parochial American context, limiting its implications for our global community.

As I understand it, the terrorists claimed to act in place of a God who governs all of us when they intentionally killed people innocent of all crimes in any court of law anywhere.  The terrorists were self-appointed agents of divine justice on earth.

Those who had given them a base of operations in Afghanistan, the Taliban, similarly then and now, claim justification for their use of power to kill and oppress others in that same divine mission of making humanity righteous.

When thinking of such intolerant religious and ideological extremists, I am reminded of the old phrase fiat justicia, ruat coelum – “Let there be justice though the Heavens may fall.”

This begs the question of who among us truly knows the will of God or the purpose of the cosmos?  Such conceit flies in the face of nihilism, but nonetheless champions a narcissism that purports to unite us with the divine in a pagan fashion.

This way of looking at how best to work for justice presents a problem for all of us, no matter what nationality, ethnicity, class, gender or religion.

The Caux Round Table asserts no such justification in promoting its ethical principles for business and government.  Our arguments are more failable and humane, subject to debate and seeking to avoid hubris.

A few years ago, I was invited to share some thoughts on religion and terrorism at Qatar University, College of Sharia and Islamic Studies.  I offered, as a non-Muslim, some observations on the text of Quran.  I was most humbled by the warm reception given to my approach by the audience.

My point was to apply to terrorists the Qur’anic guidance on seeking to be God’s equal, the making of ourselves a partner of God.  It is God, in his power and majesty over creation, who decides all things, Qur’an tells us.  It is God, not us, who decides who is righteous, who falls short; who lives and who dies.  God may ever show mercy and compassion.

Assuming to so elevate ourselves to have the power of deciding on life and death might just possibly be a great sin in Islam.  It would be Shirk.

Those who planned and executed the 9/11 attacks committed Shirk, in my judgment.  If so, they will be punished by the God who stands behind Qur’anic revelations.  But who am I to know?

You may read my paper on religion and terrorism, written about five years ago, here.

Fifty Years Ago: Ending the Gold Standard as Setting the Price of a Dollar – Cui Bono?

Fifty years ago, President Richard Nixon ended the gold standard so that the market value of a dollar was no longer tied to a fixed price for gold, but only to whatever price the market was willing to pay.  Since then, the dollar was only a fiat currency, having only the government’s order that it could be used as legal tender to support its value and subject to government decisions as to how many dollars would be in circulation.

According to one commentator:

With inflation on the rise and a gold run looming, Nixon’s administration coordinated a plan for bold action.  From August 13 to 15, 1971, Nixon and fifteen advisers, including Federal Reserve Chairman Arthur Burns, Treasury Secretary John Connally and Undersecretary for International Monetary Affairs Paul Volcker (later Federal Reserve Chairman), met at the presidential retreat at Camp David and created a new economic plan.  On the evening of August 15, 1971, Nixon addressed the nation on a new economic policy that not only was intended to correct the balance of payments, but also stave off inflation and lower the unemployment rate.

The first order was for the gold window to be closed.  Foreign governments could no longer exchange their dollars for gold; in effect, the international monetary system turned into a fiat one.  A few months later, the Smithsonian agreement attempted to maintain pegged exchange rates, but the Bretton Woods system of fixed exchange rates for currencies ended soon thereafter. The second order was for a 90-day freeze on wages and prices to check inflation.  This marked the first time the government enacted wage and price controls outside of wartime.  It was an attempt to bring down inflation without increasing the unemployment rate or slowing the economy.  In addition, an import surcharge was set at 10 percent to ensure that American products would not be at a disadvantage because of exchange rates.

Shortly after the plan was implemented, the growth of employment and production in the U.S. increased.  Inflation was practically halted during the 90-day wage-price freeze, but would soon reappear as the monetary momentum in support of inflation had already begun.  Nixon’s new economic policy represented a coordinated attack on the simultaneous problems of unemployment, inflation and disequilibrium in the balance of payments.

Since then, the federal government – Congress, President, Treasury and the Federal Reserve – have flooded our economy with trillions of dollars.  To whose benefit?

Consider these facts:

Currency in circulation per person has ballooned:

Source: Federal Reserve Bank of San Francisco

The assets held by the Federal Reserve, a mark of the amount of liquidity the government has provided to the private sector, have ballooned, as well:

The amount of money provided to the economy by the Federal Reserve, measured as M2, increased, as well, after 1980:

The spending of the federal government not covered by revenues (deficits) have also hit new highs.  Federal government debt is money added to the economy through expenditures:

Who has benefited most from having access to all this money created by the government?  Mostly those who own financial assets.  Consider the rising value of the stock market.  Those who have benefitted from rising prices for financial assets are those who were able to invest in stocks, bonds, options, etc.:

Government creation of liquidity has helped float the top 10% and especially the top 1% of Americans to possession of more and more wealth:

Since 1971, incomes for the top 5% and 20% of Americans have grown much more than the earnings for all the other families:

The global growth of central bank assets has similarly contributed to a floating of the boats of the wealthy around the world:


Are Journalists Responsible for Telling the Truth? Please Join Us In-person on September 28th

As we Americans recover from the “withdrawal” from Afghanistan and the 2022 election campaign for control of the House and Senate begins a bit earlier than usual, we seem as divided into different subjective epistemological and emotional living spaces as ever.  Each of us has seemingly been anointed as a truth bearer.

Whoever is not for us is against us.  The enemy of my enemy may be my friend.  What does not fit is misinformation or disinformation.  No one can be trusted, except fellow true believers.

So, who needs journalism anyway?  Or rather, what does journalism have to do with our truth?

There are media companies, private businesses selling information and entertainment to paying customers.  But are they in the business of journalism?

As private companies, they presumably come within the compass of business ethics pointing to their true north.  Under the principles of moral capitalism, they have stakeholders to consider.  But in what order of priority?  Owners first or the common good first?  Where does hucksterism end and citizenship begin?

The Caux Round Table has proposed a code of ethical conduct for persons working in journalism, which you can read here.

Please join us for an in-person round table on the ethics of journalism at 9:00 am on Tuesday, September 28, at Landmark Center.

We are very pleased to provide a meeting space at Landmark Center to continue its tradition of public service and to share with the community its spacious rooms and architecture of distinction.  In Landmark, one can experience the contributions of design to our self-regard and our feelings of citizenship, as being part of something larger and worthy of note.

Registration and a light breakfast will begin at 8:30 am.

The cost to attend is $10.00 per person.

Space is limited to 24 attendees.

To register, please email Jed at

Due to the Delta variant, the building is requiring face coverings for all who enter.

The event will last about 2 hours.

Animal Farm – 75th Anniversary of Orwell’s Tragic Parody of An Immoral Political Economy

George Orwell’s morality tale Animal Farm was published 75 years ago in August.  His disgust at the ethics of autocratic rule is as relevant today as it was when he wrote to expose Joseph Stalin’s police state.

As in the first Star Wars movie, also a morality tale about good and evil, about speaking truth to power, about standing up when the odds are long against you, Orwell brings right into our minds stark awareness of the “dark side of the force” in the character of Darth Vader.

In these stories, we can’t run away from evil.  And in life, we seemingly never run out of abusive, evil people – in culture, organizations, businesses, politics and government.

I like to think that in this way too are the Caux Round Table principles for moral capitalism and moral government – “morality tales” about right and wrong, narratives, if you will, speaking truth to power.

Another point made by Orwell in that fictional narrative of animals rebelling against humans, setting up a collective farm under their management and then the ruling class – the pigs – coming to live as their human enemies use to, is the evil that language can do.  We, especially intellectuals, too often forget that using language has its ethical obligations too.  So, who, these days of disinformation, misinformation, gaslighting, ad hominem marginalization and career cancellation of others and more, teaches the ethics of using language?

What I remember from Animal Farm is the perverted repurposing of the ideal that “all animals are equal” into “all animals are equal, but some animals are more equal than others.”

In modern totalitarian democracies, all persons are equal under the constitution but, in practice, some persons are far more equal than others.

Now, in Afghanistan, we will see whether this ancient working of darkness in the human heart will assert itself once again.

Those with power, the elites, again and again, pose as one thing and rule as another.  They are imposters, acting upon a stage before a servile audience, mouthing a fantasy discourse to legitimate their socially psychotic needs for power and relentless desires to exploit for themselves and their families the good things of this world.

Here, for those who have not read Animal Farm or did so long ago that, like me, the details have slipped your mind, is the synopsis from Wikipedia:

The poorly-run Manor Farm near WillingdonEngland, is ripened for rebellion from its animal populace by neglect at the hands of the irresponsible and alcoholic farmer, Mr. Jones.  One night, the exalted boar, Old Major, holds a conference, at which he calls for the overthrow of humans and teaches the animals a revolutionary song called “Beasts of England.”  When Old Major dies, two young pigs, Snowball and Napoleon, assume command and stage a revolt, driving Mr. Jones off the farm and renaming the property “Animal Farm.”  They adopt the Seven Commandments of Animalism, the most important of which is, “All animals are equal.”  The decree is painted in large letters on one side of the barn.

The original commandments are:

-Whatever goes upon two legs is an enemy.

-Whatever goes upon four legs, or has wings, is a friend.

-No animal shall wear clothes.

-No animal shall sleep in a bed.

-No animal shall drink alcohol.

-No animal shall kill any other animal.

-All animals are equal.

Later, Napoleon and his pigs secretly revise some commandments to clear themselves of accusations of law-breaking.

-No animal shall sleep in a bed with sheets.

-No animal shall drink alcohol to excess.

-No animal shall kill any other animal without cause.

Snowball teaches the animals to read and write, while Napoleon educates young puppies on these principles of Animalism.

Eventually, these moral standards are replaced with the maxims, “All animals are equal, but some animals are more equal than others” and “Four legs good, two legs better,” as the pigs become more human

To commemorate the start of Animal Farm, Snowball raises a green flag with a white hoof and horn.  Food is plentiful and the farm runs smoothly.  The pigs elevate themselves to positions of leadership and set aside special food items, ostensibly for their personal health.

Following an unsuccessful attempt by Mr. Jones and his associates to retake the farm (later dubbed the “Battle of the Cowshed”), Snowball announces his plans to modernize the farm by building a windmill.  Napoleon disputes this idea and matters come to a head, which culminate in Napoleon’s dogs chasing Snowball away and Napoleon declaring himself supreme commander.

Napoleon enacts changes to the governance structure of the farm, replacing meetings with a committee of pigs who will run the farm.  Through a young porker named Squealer, Napoleon claims credit for the windmill idea, claiming that Snowball was only trying to win animals to his side.

The animals work harder with the promise of easier lives with the windmill.  When the animals find the windmill collapsed after a violent storm, Napoleon and Squealer persuade the animals that Snowball is trying to sabotage their project and begin to purge the farm of animals whom Napoleon accuses of consorting with his old rival.  When some animals recall the Battle of the Cowshed, Napoleon (who was nowhere to be found during the battle) gradually smears Snowball to the point of saying he is a collaborator of Mr. Jones, even dismissing the fact that Snowball was given an award of courage, while falsely representing himself as the main hero of the battle.

“Beasts of England” is replaced with “Animal Farm,” while an anthem glorifying Napoleon, who appears to be adopting the lifestyle of a man (“Comrade Napoleon”), is composed and sung. Napoleon then conducts a second purge, during which many animals who are alleged to be helping Snowball in plots are executed by Napoleon’s dogs, which troubles the rest of the animals.

Despite their hardships, the animals are easily placated by Napoleon’s retort that they are better off than they were under Mr. Jones, as well as by the sheep’s continual bleating of “four legs good, two legs bad.”

Mr. Frederick, a neighboring farmer, attacks the farm, using blasting powder to blow up the restored windmill.  Although the animals win the battle, they do so at great cost, as many, including Boxer the workhorse, are wounded.  Although he recovers from this, Boxer eventually collapses while working on the windmill (being almost 12 years old at that point).  He is taken away in a knacker’s (British for roadkill collector) van and a donkey called Benjamin alerts the animals of this, but Squealer quickly waves off their alarm by persuading the animals that the van had been purchased from the knacker by an animal hospital and that the previous owner’s signboard had not been repainted.  Squealer subsequently reports Boxer’s death and honors him with a festival the following day.  However, Napoleon had in fact engineered the sale of Boxer to the knacker, allowing him and his inner circle to acquire money to buy whisky for themselves.

Years pass, the windmill is rebuilt and another windmill is constructed, which makes the farm a good amount of income.  However, the ideals that Snowball discussed, including stalls with electric lighting, heating and running water, are forgotten, with Napoleon advocating that the happiest animals live simple lives.

Snowball has been forgotten, alongside Boxer, with “the exception of the few who knew him.” Many of the animals who participated in the rebellion are dead or old.  Mr. Jones is also dead, saying he “died in an inebriates’ home in another part of the country.”

The pigs start to resemble humans, as they walk upright, carry whips, drink alcohol and wear clothes. The Seven Commandments are abridged to just one phrase: “All animals are equal, but some animals are more equal than others.”  The maxim “Four legs good, two legs bad” is similarly changed to “Four legs good, two legs better.”  Other changes include the Hoof and Horn flag being replaced with a plain green banner and Old Major’s skull, which was previously put on display, being reburied.

Napoleon holds a dinner party for the pigs and local farmers, with whom he celebrates a new alliance.  He abolishes the practice of the revolutionary traditions and restores the name “The Manor Farm.”  The men and pigs start playing cards, flattering and praising each other, while cheating at the game.  Both Napoleon and Mr. Pilkington, one of the farmers, play an Ace of Spades at the same time and both sides begin fighting loudly over who cheated first.  When the animals outside look at the pigs and men, they can no longer distinguish between the two.

Some Thoughtful Comments on July Pegasus from Hector Garcia

Hector Garcia has sent in some thoughtful comments which helpfully expand, I think, the questions posed in the essays in the July issue of Pegasus.

I am grateful to Hector for taking time to write up his concerns and insights and I want to share them with you right away after receiving them.

Hector has written Clash or Complement of Cultures?: Peace & Productivity in the New Global Reality (Rowman & Littlefield).

He was Executive Director of the Minnesota Council on Latino Affairs, a state agency which advises the executive and legislative branches on the Minnesota Latino community and which also serves as a bridge of communication and cooperation between public/private/nonprofit sectors and Latinos in Minnesota.  He was Vice President for International and Domestic Emerging Markets at Wells Fargo Bank.  He assisted in the formation and growth of the Mexican chapters for Initiatives of Change (formerly Moral Re-Armament, a global peacebuilding network) and the Caux Round Table.  His local community service has included being a board member for Twin Cities Public Television and Catholic Charities.

You can find July Pegasus here.