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Socialism – Really?

In something of a surprise, Americans are now debating, with some seriousness, Socialism as a public good to be generously funded through taxation.

The politics of this started in 2016 with an aging intellectual Jewish Socialist left over from the 1960’s born and raised in New York City’s robust and famous Jewish community – Bernie Sanders.

Bernie’s putting Socialism on the table of American politics in the 2016 Presidential campaign has attracted many young supporters. Bernie is running for president again this year.

Coming from a newer New York City ethnic community, U.S. Representative Alexandria Ocasio-Cortez has expanded Bernie’s dream of a New Eden for all into the Green New Deal which will save the world from climate change and bring social justice to all Americans, even those unwilling to work for a living.

From the hallowed halls of Harvard Law School, Professor Elizabeth Warren proposes seriously thought out legislation to replace much of capitalism with government fiat. She, too, is running for president.

Socialism can never succeed. It is a stupid idea, out of touch with human reality. So why all this foolishness from supposedly smart people?

I think Vladimir Lenin, no slouch Socialist himself in some ways, put his finger on the core problem of Socialist advocacy in his little book, “Left-Wing Communism: an Infantile Disorder, written in May 1920.

For the immature, Socialism is all at once 1) a superego-ideal, 2) a balm for their status anxieties and 3) a comfort for their Id-based drives for power and security. Socialism offers escape from reality through intentional human engineering of human relations. In the terms of psychoanalytical theorist Erik Erikson, Socialism provides delayed identity formation into adulthood.

Socialism ignores laws of nature, making impossible the achievement of its promises in the world in which we live and breathe and have our being. It is an anthropocentric fantasia.

Capitalism, on the other hand, both prospers under the laws of nature and suffers from them. It is the human condition, which Albert Camus and other French existentialists found to be absurd. Which is why if we want to improve Capitalism, we must work with the laws of nature and not run from them.

When I refer to the laws of nature, I am thinking of a materialism where patterns of life repeat themselves, permitting prediction of what others will most likely decide to do. Our species, Homo sapiens – each and every one of us, rich or poor, literate or illiterate, young or old – comes into this world through a natural process. We have evolved from nature and are subject to its physics, biology and chemistry.

And yet, the great mystery is that we also have a mind, a heart so to speak, a spirit, a consciousness.

To follow the spirit and ignore the material is just as foolish as to live only for the material and ignore the spirit.

The laws of nature, which I suggest created and shape Capitalism, are in human nature. To me, Capitalism can be analogized to fluid dynamics. There is a flow to life which seeks more flow and resists restrictions thrown in its way. The water in a downhill running creek will find a way around the rocks and the stones.

The private property and open markets of Capitalism are part of this natural flow, thrusting themselves up constantly from deep within the human experience.

Two great thinkers who have made this point are Frederick Hayek and Karl Popper. More recently, I refer you to the constructal law of thermodynamics proposed by Adrian Bejan of Duke University.

Flow is generally horizontal or downwards. As Mencius observed, water will not flow indifferently, up or down.

The core problem with Socialism is that it does not comply with thermodynamics. It is not designed for flow but rather for order – for what it calls “equality of outcomes.” It is top-down, hierarchical, directive and so is subject to stagnation, desiccation through evaporation, torpor and constriction of life force.

And given its hierarchy, even its promised equality is hard to thoroughly achieve.

Socialism does not have self-correcting checks and balances in its power dynamics. It depends on some people being right and correcting through regulation and discipline those who are wrong.

Roughly speaking, Capitalism is an open system working on frothy horizontal dynamics of change and innovation while Socialism is a closed system working on vertical dynamics of command and control. A solidly Socialist system has no circulation of its elites. Those on the top, stay on the top, as long as the top controls the “repressive apparatus of the state.”

The challenge for Capitalism is to sufficiently “capitalize” its inhabitants to permit them to take advantage of market opportunities. Where stakeholders are not attended too, where rent-extraction clogs up the workings of its markets and competition to restrict creative destruction, Capitalism takes on the top down exclusionary elitism of aristocracies – both traditional and Socialist.

Thus, the great experiments seeking to approach absolute Socialism – the Russia of Lenin and Stalin, the China of Mao, the Cambodia of Pol Pot – all stood upon a foundation of pervasive repression and death.

Even the first glimmers of living in an Edenic Socialist state under the Jacobins of the French Revolution were accompanied by repression and killing of undesirables. Revolutionary forces seeking a reign of virtue turned on their own – Danton, Robespierre, Saint-Just, Graccus Babeuf.

Anarchical Socialism – Bakunin, for example – never got off the ground.

Socialism has only been a success, of sorts, where it has compromised with Capitalism in welfare state economics. But even then, Socialism is limited in its achievements by the economic realities of taxability and private sector growth. Socialism needs a very big goose to lay all the golden eggs it wants to distribute. And under the laws of nature, presumably that big goose needs a big gander in order to meet its production goals.

The limitations inherent in Socialism also arise from human nature – greed, ignorance, self-promotion, faithless agents of the common good, inability to resist the temptations of power, factional loyalties, nepotism, narcissism, etc.

Just consider the present case of Venezuela.

Our challenge as a species is how best to live on this side of Eden in a very fallen world where ignorant armies clash by night.

Wealthy People Cheat!

Here in the U.S., there is a scandal: it has been revealed that wealthy people cheat. They paid money – lots of it – to arrange to get their kids into prestigious colleges and universities. The fixers paid bribes, falsified test scores and doctored photos to get the sons and daughters from wealthy families – many from Wall Street and Hollywood – into college on false pretenses.

This has enraged many ordinary families who play by the rules.

But it would not be news in so many countries where corruption, favoritism and use of social status and money knows no bounds. In some countries, even judges are swayed by more than the evidence of right and wrong. As Shakespeare’s King Lear noted: “Plate sin with gold, and the strong lance of justice hurtless breaks. Arm it in rags, a pigmy’s straw does pierce it.”

So what is the cause? Unjust social systems? Wealth itself? Racism and other identity politics sins? Classism? Fear of being left behind?

I would say the underlying cause is bad values.

In large institutions and social systems, organizational norms and practices are important but how they are used by individuals in any given case can make all the difference.

Self-interest is powerful but can be offset by traits of good character.

In the case of those American parents who cheated, it was their superficial values that made them sin. Many American parents today, the children of Baby Boomers, measure themselves by status symbols, not intrinsic goodness. Titles and money, connections and networking, the stuff of aristocratic one-upmanship, as applied to their children offset their insecurities.

The writer Peggy Noonan, who I believe has a keen eye for truth, calls these children “success robots” – morally vacuous, super-insecure, shaped by social media, extensions of their cell phones and computers. She reports that in one elite college, a very high number of students ask for and need psychological services. They are social capital basket cases being given entry to the American elite. They had been raised to be shallow and to see others just as commodities. Useless narcissism from one generation passed on to the next.

The challenge before America, then, is not a system of economics but a system of socialism – the socialization making for parental insecurity. It’s ironic that it exists so prevalently among the wealthy and the already socially powerful.

But again, where inculcation of good values is concerned, Lord Acton may have had the last word: “Power tends to corrupt. Absolute power corrupts absolutely.”

Capitalism and the Internet

Thirty years ago on March 12th, 1989, the idea was born which made the internet possible. A young British researcher working at the European Organization for Nuclear Research proposed a method for one computer to exchange information with another. Tim Berners-Lee suggested a “hypertext transfer protocol” – http for short. A protocol is a point of transfer and engagement. It overcomes isolation by providing for networking permitting geometric growth in aggregation of raw data, useful data, knowledge, insight and collective opinion.

The first remarkable conclusion to draw and treasure from what Berners-Lee did is to note that ideas make a difference. They can be foundational. They are the genius skill set over the centuries of Homo sapiens.

Less substantial than gossamer, ideas nevertheless have power for good – but also, let us not forget, for evil too – as we just witnessed in Christchurch, New Zealand.

Today, because of what Tim Berners-Lee thought of, there are some 2 billion websites in the world and how many uses of the internet every second and how many bits of data stored in servers?

Without Berners-Lee, there would be no smart phones, social media or Amazon.

The second conclusion I suggest we should always appreciate is that it was capitalism, not government, which brought the internet to humanity and changed its way of living forever into the future.

Since the dawn of the Industrial Revolution in northwestern Europe, it has been markets and private capital which have taken technologies, tested them, refined them and made them useful for customers. Money from customers happy to buy flowed to makers who grew new technologies to scale.

Thirdly, the internet revolution, like Guttenberg’s previous invention of moveable type – also starting with an idea, an insight, a brainstorm, a thought – has increased the importance and value of each individual person. The internet gives power to ideas by permitting them to expand anywhere others can access websites or engage in internet communications.

The internet has moved humanity beyond materialism as the principle source of wealth to intangible forces of mind and heart as the creators of wealth.

This means that we should invest in “human capital” more than ever before. People no longer need to contribute mostly labor to production. They can make themselves valuable to the system in many ways now. Marx’s proletariat has gone “mental.” Thus, the 19th century conception of social justice as a power struggle over cash – the “cash nexus” – which pitted the forces of capital against labor is no longer relevant. The zero-sum tug of war between capitalism and socialism has been dumped in the “dustbin of history.”

We need new “ideas” about how to achieve social justice in the internet age.

Technology, A Public Good?

On Wednesday, President Trump overruled administrative officials to ground all Boeing 737 Max 8 aircraft. Trump was reported in the Washington Post to consider himself something of an expert on commercial aircraft, saying modern planes are just too complicated to fly safely.

Apparent loss of pilot control on two Boeing 737 Max 8 airplanes in Indonesia and Ethiopia might justify Trump’s analysis of the cause of these two crashes.

Technology is the wonder of modern humanity, giving us modern civilization since the first days of the Industrial Revolution. Modern science – rational, logical and unyielding in its laws to human values – put technological progress into high gear. Homo sapiens became Homo faber. Homo faber went on to anthropocentralize our little part of the cosmos, remaking it after our own desiring.

Capitalism got its start with investing in practical uses of science and technology. Not only that, capitalism organized and funded the geometric advance of technology as the basis of human life.

But as in the fable of Dr. Frankenstein and the monster (written just 200 years ago), our skills with technology may outrun responsibility and prudence.

The Boeing 737 Max 8 is a commercial product, made by a commercial company to meet consumer demand. Negligence and liability laws have been imposed on free markets in order to promote prudence in the design, manufacture and use of technology.

Are they still enough to put proper restraints on the creation of super complex, computer-driven machines?

Is Good Character Important?

The great debate among ethicists is between Kantians – Deontology – and Utilitarians – interest.

Pure morality as an abstract form of thought true at all times and all places is juxtaposed against materialism and self-seeking in this world so fallen from a religious and idealistic perspective.

Business ethics and corporate social responsibility have been stuck in the quagmire of irresolvable irreconcilability between ethics and profit-seeking. How could they ever be integrated?

If one backs away from this confrontation of the intangible and the tangible, there is the approach of praxis – what works? Can a case be made that ethics “works” which does not slide all the way down into self-delusion and expedient rationalization of why what I want is the “right” thing to do?

Looking at what will work raises a perspective of science – say, laws of motion or chemistry which lead from here to there on a predictable basis.

Individual character – the ethos which drives our preferences and decision-making – might work as such a natural law. If I know your character, I can reasonably accurately predict your behaviors.

If you work for me and I know your character, I will have a sound basis for trusting or not trusting you to do what the firm wants and needs and not to get us all in trouble through your indiscretions and malfeasance.

Heraclitus said that character is fate or destiny. In the Greek, his point is more active: character is our daimon – our driving spirit, setting our course in life.

If we focus on character and if all people are helped to have good character, then the output of our social endeavors will be constructive.

The way to moral capitalism, therefore, might be through character education.

Oh, that’s just what Mencius, Aristotle, Cicero, Marcus Aurelius and Adam Smith recommended for living the good life.

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.

CRT to Publish Several Books on Amazon in 2019

Amazon’s emergence as a leading book publisher, as well as bookseller, is viewed as a threat to traditional publishing. At the same time, it presents an unprecedented opportunity, not just for budding writers of romance and mystery novels. It also offers non-profit organizations like the Caux Round Table for Moral Capitalism (CRT) a chance not only to publish books affordably but to promote ideas and reports to millions of Amazon customers.

Amazon is now the biggest seller of books in the world, bringing enormous pressure on traditional brick-and-mortar bookstores that face the challenge of finding ways to increase margins in order to survive. Some haven’t. And those that have are doing so by offering a host of products and services that go beyond book sales.

More recently, the online giant has mushroomed into the role of one of the leading book publishers. Since 2009, when it started publishing print, audio and e-books that can be read online or downloaded, Amazon’s list of publications has risen from 373 to more than 1200; each is produced by one of the company’s 15 imprints and promoted through Amazon apps like Kindle and First Read with monthly notification to a number of potential buyers that the traditional industry can only dream of – ten million customers in all.

Book publishing has traditionally been a low margin, high-risk enterprise in which publishing houses have accepted only a fraction of the manuscripts they receive from authors and agents. Despite this, many accepted books still fail to find an appreciable audience and publishing houses must often rely upon one or two best sellers each year to stay afloat.

But with Amazon, the margins are low and the cost of producing a book minimal when compared to traditional print costs with a high percentage – some 80 percent — of books in categories like romance self-published, meaning the company does not pay the author. The author finances the publishing of his or her manuscript.

This online revolution has created a backlash of criticism among traditional publishing houses. At the same time, Amazon’s low publishing cost, widespread promotion and ease of reader access has provided us the chance to reach a wider audience through self-publishing. Where once the only outlet for such organizations might be an academic press with limited runs and little money for promotion, now organizations like ours can potentially reach a much larger market with little cost. What’s more, once an e-book is published, it stays on Amazon’s list of books indefinitely, giving much greater weight to the ideas and opinions the organization wishes to promulgate.

And we are set to take advantage of this opening. At the moment, we have three e-books in the works, with more on the way.

“Amazon’s entry into publishing repeats the process of creative evolution improving humanity’s well-being which started with the first years of the industrial revolution and the birth of capitalism: enterprise takes a risk to introduce a new technology pioneered by science to change the ways in which we can live,” says Steve Young, Global Executive Director of the CRT.

“But as some Buddhists say, every gain comes with a loss,” he continues. “Those tied to old technologies lose out; their business models are no longer viable; their customers move on to new products and services.”

“For our non-profit enterprise, we see Amazon as an avenue to produce and distribute books at a cost we can afford,” Young says. “We have decided to join in the process of disruption to get good ideas and inspiration to more people all over the world.”

PG&E Says Its Equipment Was Probable ‘Ignition Point’ of Camp Fire (Wall Street Journal)

PG&E Says Its Equipment Was Probable ‘Ignition Point’ of Camp Fire (Wall Street Journal)

Culture costs company big money. Pacific Gas and Electric (PG&E) says probably its equipment sparked the deadliest wildfire in California history.

The company is taking a $11.5 billion charge against earnings as a result. The company has warned it may not survive as a going concern. Credit agencies have stripped the company of its investment-grade rating.

But for five years the PG&E delayed a safety overhaul of the century-old high voltage line that is a prime suspect in the huge Camp fire which killed 85 people and destroyed the town of Paradise last November.

The delay reflected decisions consistent with company leadership priorities. In other words, delay flowed from core company values. Those values, part of the company’s social capital, were financially speaking a source of risk and so a detriment to, and so a reduction of, its comprehensive asset valuation. The company’s culture was a balance sheet liability (an equity loss) for its owners.

Such a loss to its present value should have been measured and recorded somewhere to provoke remedial management response.

The PG&E case reminds us of the BP accident at the Macondo well in the Gulf of Mexico, a failure of company culture which cost the company and its owners billions.