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Sender: Lawrence Chickering
Subject: Re: A focus on empowerment vs. a focus on inequality
Date: Thu, May 22, 2014
Msg: 101014

I would like to hear Michael Strong's thoughts on this because he knows more about it than I do. John, your discussion of scarcity and profits deviates so much from my understanding of economists' traditional view of both that you need to say a lot more than this to make a convincing case that the traditional economist's view needs a major overhaul.

In the mainstream perspective, scarcity is not caused by anything; it is the defining characteristic of economic life. The challenge is how to distribute the scarcity. My natural instinct here is to start taking about capitalism and how it approaches these issues. My own perspective on capitalism, however, is broader -- more expansive -- than the traditional view, and I can't avoid saying something about this here.

My first thought here is that in an important respect all economic systems are 'capitalist'. My friend the late economist Milton Friedman captured an important part of the point when he said one reason he favored 'capitalism' (narrow sense) is that it is 'the only system that doesn't give all property rights to the ruling ("capitalist") class.' The essence of capitalism, that is, is a system of free exchange within whatever constraints are imposed on it. The Soviet Union was not 'capitalist'; yet anyone who actually went there and watched people interact, they would see frenzies of entrepreneurial, capitalist activities. In my own, personal experience, every taxi cab was a super market. It was the purest form of capitalism I have ever seen.

My second wish to broaden the meaning of 'capitalism' is beyond private spaces to public spaces. This is too large a subject to treat here; I encourage anyone wanting to know more to read Anjula Tyagi's and my article on EGG from Policy Review, which I have sent more than once (won't send again except to people who can't unearth it). EGG empowers people in a marketplace of social goods to do what they care about. The program sets off an explosion of entrepreneurial activity, people working together to common purpose. Creating private rights in public space like schools creates strong incentives to cooperation that highlight the impulse toward public spirit that is powerful in everyone in our connected world.

Now to your point emphasizing the distinction between 'making' and 'maximizing' profits. This point implies that profit is something wrongfully extracted from people in exchanges. (The alternative, conventional view is that people want to pay profits to get what they want [are willing to pay for].)

Let me focus on people you might see as the most extreme (reprehensible) profit-maximizeers. The common economist's generalization is that all profits, past the short-term, are the same, discounted for risk. 'Capitalism' (in the narrow view) is an allocative system -- not a distributive system -- that allocates resources to their highest valued uses. Who determines 'highest valued use'? Consumers, communicating through the price system. All investors seek to 'maximize profits'; that is why they hire financial advisors -- to advise them on where above-market profits are creating market signals for more capital. Profits tend to be 'maximized' only in the short term because when capital is reallocated to maximize profits, the profits are bid down, back to what economist's call equilibrium levels (the level at which all profits are the same discounted for risk).

In its pure form capitalism is a value-free system, responding to market signals. Many conservatives (Irving Kristol is an example) see this as a weakness. I would say this weakness is especially obvious when government institutions and policies are arrange to disempower people from freely engaging others to cooperate from their 'higher selves' (as happens powerfully when people are empowered with property rights in public spaces such as schools). The state has an obvious role to play in declaring certain activities criminal, outside this system; but there is of course much disagreement about which activities those should be.

This system works very well except for certain caveats, on which there are large economic literatures. One problem is distributive: the need to take care of people who can't take care of themselves. When doing that, it is better, from an efficiency standpoint, to avoid using the price system: better to give people money. An example is minimum wage laws, which discriminate against the unskilled by pricing them out of the market. The real effect of minimum wage laws, which have been studied to death, is grotesque, especially since they are promoted by people claiming to be 'progressives': what is progressive about increasing black teenage unemployment, the greatest effect of increasing the MW? Better to give people money rather (in effect) than telling them they cannot work.

Another, obvious problem is externalities -- when private activity has unpriced effects, when it imposes social costs people do not pay for. Here is where environmental issues arise, creating the need for governmental action to correct 'market imperfections'. I would say the failure to create private rights in public spaces (schools, housing projects, etc.) is also causes market imperfections, defined by the (centralized, bureaucratic) structure of government institutions. This bureaucratic structure disempowers the most disempowered people from important governance powers that, with empowerment, are shown to be transformative in all cultural settings.

I hope these thoughts are useful.

Lawry Chickering Educate Girls Globally Author: Beyond Left and Right (1993) and (with James S. Turner) Voice of the People: The Transpartisan Imperative in American Life (2008)

On May 20, 2014, at 20:15, wrote:

> > Inequality per se can't be the problem because economic equality is not the answer. If we all got X gallons of gas per week, that wouldn't be enough for those with a much longer commute, while it would be too much for those who walk to work. So we have to be talking about having basic needs met (which are different for different people) to achieve a good quality of life--that is, at the least, aim for overcoming scarcity. > > In a world dominated by scarcity, it is only natural for the have nots to want some of the excess goods of the haves (that is, to desire distribution to be more equal). So what, in our economic system, generates scarcity? I would offer that it is the goal of maximizing profits. Note that this is different than MAKING profits. The goal of maximizing profits is a moral affront, since it is based on a "take more than you give" mentality. Yet we accept this as a natural and just law of the market. > > But it's a non-systemic goal. In an ecosystem, wolves don't seek to maximize their deer kill. They satisfy their appetites. That is, they meet their needs. Yet our needs--this applies to most in the middle class as well as to the poor--are never met because we never pay off our debt. Instead, we spend our lives stressed while trying to pay off our debts. Certainly the loss of good jobs and their replacement by low-paying jobs in and after this recession only swells the pool of those who share this very common experience of economic life. Again, in such a situation, it's hard not to point at those who live in marked excess of their needs and to wish (or demand) that they spread the wealth around. > > But it makes more sense to look at what generates scarcity than at compensating for it by attempts at redistribution, which will always be flawed and resented. Is cap and prioritize the latter? If so, might it mostly be a short-term solution, most useful while we try to redesign the system--especially by reexamining and redefining its core values and paradigms? > > John Miller > (952) 797-2302 > Green Tea Party Movement > > > -----Original Message----- > From: Lawrence Chickering > Sent: May 20, 2014 12:27 PM > To: TRANSPARTISAN@LISTS.THATAWAY.ORG > Subject: Re: [TRANSPARTISAN] A focus on empowerment vs. a focus on inequality > > Michael expresses a position aligned with John Rawls's work: that our central > moral focus should be on improving the condition of the poor -- reducing > poverty -- rather than on reducing inequality. To believe otherwise (as > a thought-experiment) -- if the two values conflict -- is to prefer reducing > inequality to reducing poverty; or actually increasing poverty to reduce > inequality. An odd position, to say the least. > > Lawry Chickering > Educate Girls Globally > Author: Beyond Left and Right (1993) and (with James S. Turner) Voice of the > People: The Transpartisan Imperative in American Life (2008) > > On May 20, 2014, at 07:43, Michael Strong wrote: > >> Steven Johnson provides the usual talking points on inequality in response to Lawry's focus on empowerment. I would expect we have all heard variations on this data before. >> >> First of all, I agree that it is morally outrageous that some people, many of them wicked people, are rich and that others, many of them innocent children, are poor. >> >> Secondly, I have no a priori preference for an particular rate of taxation or redistribution. If I were to be convinced that a tax rate of 99% on incomes over x would improve the condition of the poor on a global basis, then I'd be all for it. >> >> But ultimately, no matter what the data is on inequality, if more spending doesn't improve the lives of the poor, then I'm against it. The entire goal should be to improve the quality of life for human beings - not to make an arbitrary set of numbers meet an arbitrary set of criteria. >> >> Two questions: >> >> 1. Can we agree that improving lives is more important than is "inequality"? >> >> 2. And, if improving lives is indeed more important than inequality per se, can we agree that something like empowerment of the human spirit, as so eloquently articulated by Lawry, is an essential aspect of improving lives? >> >> >> -- >> Michael Strong >> CEO and Chief Visionary Officer >> FLOW, Inc. >> www.flowidealism.org >> >> For the definitive Conscious Capitalism book, see Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the World's Problems, by Michael Strong with John Mackey, CEO Whole Foods Market, Muhammad Yunus, founder of Grameen Bank and 2006 Nobel Peace Prize Laureate, Hernando de Soto, Co-Chair of the U.N. Commission on the Legal Empowerment of the Poor, and others, and listen to John Mackey's audio CD Passion and Purpose: The Power of Conscious Capitalism, both available at amazon.com or www.flowidealism.org. >> >> Liberating the Entrepreneurial Spirit for Good >> >> When once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return. >> >> Leonardo Da Vinci >> >> To unsubscribe from the TRANSPARTISAN list, click the following link: >> http://lists.thataway.org/scripts/wa-THATAWAY.exe?SUBED1=TRANSPARTISAN&A=1 > > > A. Lawrence Chickering > Founder and President, Educate Girls Globally (EGG) > 1485 Main St., Ste 103c > St. Helena, CA 94574 > 415.235.6628 > email: lchick0203@gmail.com > www.educategirls.org > On May 20, 2014, at 07:43, Michael Strong wrote: > >> Steven Johnson provides the usual talking points on inequality in response to Lawry's focus on empowerment. I would expect we have all heard variations on this data before. >> >> First of all, I agree that it is morally outrageous that some people, many of them wicked people, are rich and that others, many of them innocent children, are poor. >> >> Secondly, I have no a priori preference for an particular rate of taxation or redistribution. If I were to be convinced that a tax rate of 99% on incomes over x would improve the condition of the poor on a global basis, then I'd be all for it. >> >> But ultimately, no matter what the data is on inequality, if more spending doesn't improve the lives of the poor, then I'm against it. The entire goal should be to improve the quality of life for human beings - not to make an arbitrary set of numbers meet an arbitrary set of criteria. >> >> Two questions: >> >> 1. Can we agree that improving lives is more important than is "inequality"? >> >> 2. And, if improving lives is indeed more important than inequality per se, can we agree that something like empowerment of the human spirit, as so eloquently articulated by Lawry, is an essential aspect of improving lives? >> >> >> -- >> Michael Strong >> CEO and Chief Visionary Officer >> FLOW, Inc. >> www.flowidealism.org >> >> For the definitive Conscious Capitalism book, see Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the World's Problems, by Michael Strong with John Mackey, CEO Whole Foods Market, Muhammad Yunus, founder of Grameen Bank and 2006 Nobel Peace Prize Laureate, Hernando de Soto, Co-Chair of the U.N. Commission on the Legal Empowerment of the Poor, and others, and listen to John Mackey's audio CD Passion and Purpose: The Power of Conscious Capitalism, both available at amazon.com or www.flowidealism.org. >> >> Liberating the Entrepreneurial Spirit for Good >> >> When once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return. >> >> Leonardo Da Vinci >> >> To unsubscribe from the TRANSPARTISAN list, click the following link: >> http://lists.thataway.org/scripts/wa-THATAWAY.exe?SUBED1=TRANSPARTISAN&A=1 > > > A. Lawrence Chickering > Founder and President, Educate Girls Globally (EGG) > 1485 Main St., Ste 103c > St. Helena, CA 94574 > 415.235.6628 > email: lchick0203@gmail.com > www.educategirls.org > > > > > > > To unsubscribe from the TRANSPARTISAN list, click the following link: > http://lists.thataway.org/scripts/wa-THATAWAY.exe?SUBED1=TRANSPARTISAN&A=1 > www.greenteaparty.us > FB: green tea party movement > Home: (952) 887-2763 > Cell (952) 797-2302

A. Lawrence Chickering Founder and President, Educate Girls Globally (EGG) 1485 Main St., Ste 103c St. Helena, CA 94574 415.235.6628 email: lchick0203@gmail.com www.educategirls.org

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