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Sender: Michael Strong
Subject: Re: A focus on empowerment vs. a focus on inequality
Date: Mon, May 26, 2014
Msg: 101026

"My question is, how can we minimize that shadow side and maximize the health-creating aspects of the global economic system?"

1. First, many people seem to be unaware that, thanks to the global economic system, more people are escaping poverty more quickly than ever before in history:

2. Second, global poverty largely persists because of excessive government regulation in poor nations. That is, if poor nations allowed for greater free enterprise, they would allow the global poor to become prosperous even more quickly. In particular, India and China have become more free market in recent decades, resulting in hundreds of millions of people escaping poverty. Meanwhile Africa remains the most heavily regulated region on the planet, forcing a billion Africans to remain (mostly) miserably poor. For an introduction to this topic, see here:

3. Despite the extraordinary moral achievement in reducing global poverty and expanding the global middle class, there are some people (a small fraction of the global population) that has been hit badly by globalization. In the helpful chart located here, those between the 75-90% percentile of the global income distribution have seen almost no gains at all in income over the past twenty years,

These people in the 75-90% percentile globally are the ones that progressives in the U.S. are most concerned about, the ones with "stagnant incomes" that get all the media attention in the U.S. Most other groups, including those from the 5% to the 75% percentiles of the global income distribution, have made amazing progress in the past few decades.

4. That said, "creative destruction," even if it benefits the global poor to an extraordinary degree, is painful for those who do lose their jobs to outsourcing or manufacturing going to other nations. A case could be made that the U.S. should provide a more generous provision for those who lose in the global competition. One such approach might be to provide direct payments to the poor, similar to the Negative Income Tax (designed and promoted by Milton Friedman) or Alaska's Permanent Fund (a form of a "citizen's dividend" promoted by various free market economists). At present, the U.S. spends roughly $30,000 per person below the poverty line,

If we gave those funds directly to the poor, rather than spending them on bureaucratic and ineffective programs, a household of four would receive $120,000 per year.

5. In addition, I'd like to see broader awareness of the ways in which unnecessary regulatory burdens increase costs for the poor, in particular. There is a large literature on this issue with respect to housing; here is one article,

In addition, absurd occupational licensing laws; see here for a way to think about them,

and, as an educator who has helped inner city children when allowed to do so, I regard the regulatory obstacles to providing a better education as essentially criminal. See here for an introduction to the issue,

In general we should all be aware that large scale government favors organized interests over diffuse interests. Established industry players, established unions, and other established interest groups will tend to twist regulation in their interests. Meanwhile innovators (who are diffuse and unorganized), the poor, and the uneducated are most likely to get screwed by the regulatory state.

6. Several people here seem to believe that "capitalism" or the "free market" somehow "causes" greed or selfishness. I believe that a more accurate assessment is that when we lived in small, radically conservative, tribal cultures we were extremely conformist and caring. As we gradually became "liberated" from these conformist, bigoted, and egalitarian cultures, on the plus side we became marvelously creative and innovative. On the negative side the sociopaths amongst us (often estimated at 1-2% of the population) obtained opportunities to be ever more selfish and destructive. The sociopaths often sought power in both government and business.

In some respects the prevailing challenge of modernity is to find a way to benefit from our radically liberating and liberated society, on the one hand, without allowing the sociopaths to destroy us all, on the other. But it is absurd to believe that the sociopaths only seek power in business. They are a problem even in non-profits, religious communities, and spiritual communities. When we knew all 150 people of our tribe, we could control those born without a moral conscience. Now that we have the freedom to leave our parents and their nosey neighbors, the sociopaths have the freedom to re-invent themselves and climb diverse paths of ambition (and destruction).

7. Good news: Ensuring environmental sustainability is in some respects a special case in which, more than most people realize, there are many transpartisan opportunities for collaboration. For instance, both free market economists and progressive environmentalists tend to support:

A. Elinor Ostrom's approach to "Governing the Commons,"

B. Property rights solutions to tragedy of the commons problems, such as Peter Barnes' environmental trusts,

and the Sulfur Dioxide trading program introduced by the Environmental Defense Fund,

C. A Green Tax Shift,

D. Green Scissors campaign,

That is, those progressives who believe that "capitalism" or "free market ideology" are somehow inconsistent with protecting the environment are uninformed at the intellectual level. Yes, there are corporate interests and the politicians in their pocket who will do whatever they can to externalize environmental harms and thereby make more money (both the corporate interests and the politicians who do so are among the 1% of sociopaths that are destroying our society, and I will readily acknowledge that many of them are associated with the Republican party). But at the intellectual level, free market economics, including the most extreme free market economics (e.g. Austrian economics) provides the tools one needs to provide robust protections for the environment. We can therefore create transpartisan alliances on these issues.

9. There is nothing intrinsic to free market economics that requires "profit maximization." Although Milton Friedman did, indeed, write an essay called "The Social Responsibility of Business is to Increase its Profits," I regard it as one of the two worst essays he wrote (the other is his essay on "positive economics"). Here is a debate between Milton Friedman and John Mackey, CEO of Whole Foods, on the issue,

Those that want an intellectually deeper understanding of the role of profit in a free enterprise system should read Armen Alchian's classic essay, "Uncertainty, Evolution, and Economic Theory,"

in which he interprets economic interaction from an evolutionary systems perspective, which is far more realistic and accurate than are the mathematical models of mainstream neoclassical economics. After Alchian wrote this great essay in 1950 most economists acknowledged that he was more or less correct about reality - and then continued to create models that assumed profit maximization because it was much easier to model that way.

But it is important to realize that the deeper understanding of how free markets work is much more about evolutionary systems of purpose-driven entrepreneurs. The mathematical edifice of neoclassical economics is mostly just a way to make the messiness of evolved systems tractable in models. I expect we'll see agent-based modeling, which can represent evolutionary systems more effectively than can formal mathematics, replace the current generation of formal models in the next few decades. Those models will be more realistic but at least 85-95% of the conclusions of microeconomics will remain the same (e.g. most of the time, if the price goes up, demand goes down).

The bottom line: Most of the arguments for free enterprise would apply even if human beings were entirely altruistic. This is because innovation is the real essence of the argument for free enterprise. Even perfectly altruistic innovators would have different ideas about what works, different beliefs about how to achieve their goals, different individuals willing to believe and invest in their crazy ideas, and the fact is no one knows a priori which ones will be correct. Without omniscience, we need to have lots and lots of simultaneous experiments (e.g. lots of entrepreneurs, most of whom fail) to discover what will actually work in the real world.

10. One of the reasons why I often recommend the exercise of an Ideological Turing Test is because I believe that very few (no?) progressives really understand the best of conservative and libertarian thought. The progressive stereotypes of conservatives as simply being resistant to change (e.g. being against gay marriage or abortion) or libertarians simply being for selfishness (e.g. being against taxes and regulations) doesn't begin to do justice to the best arguments. In each case, although there are certainly conservatives and libertarians with those attitudes, an entire worldview is being defined by means of a cartoonish element rather than by the most significant ideas that could contribute to human well-being.

Michael Strong CEO, FLOW

On Fri, May 23, 2014 at 8:48 PM, wrote:

> Hello Lawry, > > Steiner would agree with you that markets allow transactions that are > mutually beneficial, and he definitely saw a global economy as largely an > extremely positive thing. > > I would just say that any transaction involves more than an exchange of > money for goods or services, etc. It involves attitudes and relationship. > This is why the upside of a world economy is that it actually builds global > relationships (a brotherhood of all humanity, transcending racial, > religious, and national differences). This is another way in which the > economic system outpaces the political sphere, which is still at the stage > of nation-states (with signs of moving beyond that, such as the EU, but > even here the economic nature of the union is far beyond the political). > Another reason to try to use the enormous positive forces of the economic > system for good. > > In terms of attitude, however, I would say that Steiner's ideal of "I > offer my goods or services to those who need them, and I receive what I > need from others who offer theirs" is poles apart from the essentially > egotistical goal of maximizing personal profit (through unequal exchanges, > if possible). To ground this in current reality, look at the shrinking > middle class, the rise in low-paying jobs, and the decline in well-paying > jobs. If I as an employer can increase profits by paying employees as > little as possible, that is of course what I will do. One of the ways we do > this is through the hourly worker, who typically has few or no benefits (in > addition to low pay). Steiner thought that hourly pay treated people as > commodities--basically it dehumanizes them. Again, to ground this in > current reality, when there are hundreds of applicants for even low-paying, > low-benefit jobs, employees are expendable. There is no relational > commitment between employer and employee. This is a world of replaceable > machine parts, not one of human connections and brotherhood. > > So there's always a shadow side, even to an essentially healthy and > life-providing system. My question is, how can we minimize that shadow side > and maximize the health-creating aspects of the global economic system? > > > John Miller > (952) 797-2302 > Green Tea Party Movement > > -----Original Message----- > From: Lawrence Chickering > Sent: May 23, 2014 1:26 PM > To: TRANSPARTISAN@LISTS.THATAWAY.ORG > Subject: Re: [TRANSPARTISAN] A focus on empowerment vs. a focus on > inequality > > John, > > Your thought about Steiner and motivation does not completely turn > traditions thinking on its head. Market economies are about > mutually-beneficial exchanges. People can't support themselves unless they > do things that are valuable for others. So market economies are inherently > 'other-regarding'. > > Lawry Chickering > Educate Girls Globally > > Sent from my iPhone > > On May 23, 2014, at 10:55 AM, wrote: > > Hi Lawry, > > Steiner's main contribution is *World Economy. *Other writings on the > Threefold Social Order are also applicable and helpful, as the economic > sphere is one of the three. You may be aware that Steiner applied the > values (from the French revolution) of liberty, equality, and fraternity to > the three spheres, as follows: Liberty is the guiding principle of the > cultural (arts, religion, education, etc.) sphere (since we all freely > choose our individual pursuits, elective affinities, etc.); Equality is the > guiding principle of the rights (or political/government) sphere (as in, > we're all equal under the law, etc.); and Brotherhood or Fraternity is the > guiding principle of the economic sphere. > > So it's interesting that, while Steiner strongly valued freedom, in > economic matters he emphasized our (voluntary) service to one another. He > turned the whole idea of why we work on its head. Rather than working to > sustain ourselves, he said, we should work in order to make the products of > our work available to others. Thus, work is (or should be) an act of giving > rather than a means of receiving. > > So, in case I was unclear, for Steiner economic transactions were > inherently value-laden rather than value-free. It takes some getting used > to. . . . (It also seems tremendously impractical and idealistic, and I > have for many years lived and worked in organizations that attempted to > live in this way and can attest that it's not easy---but I still think his > key insight is valid). All the best! > > John Miller > (952) 887-2763 > Green Tea Party Movement > > -----Original Message----- > From: Lawrence Chickering > Sent: May 23, 2014 11:20 AM > To: > Cc: TRANSPARTISAN@LISTS.THATAWAY.ORG > Subject: Re: [TRANSPARTISAN] A focus on empowerment vs. a focus on > inequality > > Hi John, > > Although I have read more than twenty of his books, I think, I don't know > much about Steiner's view of money. It does not surprise me, however -- > given his strong emphasis on freedom -- that he regards money (I would > say, > like the market) as value-free -- to do with them as our freedom leads us. > > > Critics of capitalism tend to regard materialistic values as inherent in > capitalism. Their belief in governments to humanize markets comes from > their belief in governments run not by politicians and bureaucrats, but by > people like them. When you see capitalism in instrumental rather than > substantive terms -- as a *process *of free exchange -- then it becomes > clear > that 'capitalism' and 'socialism' operate in different dimensions that can > (even) overlap and integrate. Milton Friedman regarded the Israeli > *kibbutzim * > as a triumph of capitalism because they are freely chosen at the same time > that many people regard them as representing the best of socialism. > > I believe EGG, for the same reasons, represents the best of capitalism, > integrating all major stakeholders with 'ownership' in the schools to work > together and make them better. I would say that is also the best of > socialism, bringing people together for the public good, especially for > the > poorest people (tribal girls, who are afraid to speak up in front of boys, > show > greatest gains in learning from our program). > > Lawry > > A. Lawrence Chickering > Educate Girls Globally > > A. Lawrence Chickering > Founder and President, Educate Girls Globally (EGG) > Author: Beyond Left and Right (1993) and co-author (with James > S. Turner) *Voice of the People: The Transpartisan Imperative * > * in American Life *(2008) > > > On May 22, 2014, at 09:12, wrote: > > > Hi Lawry, > > Thanks for your very thoughtful response. You are obviously much more > educated in economic matters than I am, so I readily confess to a good deal > of naivete. And yes, I did know that you were also influenced by Steiner. > We may well be the only two in the conversation who are, so I'll say a > little bit at the risk of boring or losing others. What strikes me most > about Steiner's ideas about money--what seems utterly counter-intuitive to > my progressive instincts--is that he considers it a highly spiritual > process (not a thing)--at least when allowed to flow optimally. > > Two conditions strike me as applicable to the optimal flow of money. One > is that the whole danger of the flow of money (I believe, and I believe > Steiner says) is that it can operate in a way that is "value-free" (in > quotes, because I believe the value that this phrase assumes is > materialism, which considers itself the only true value because it is > empirical). Yet every monetary transaction is also a spiritual transaction. > I find this in Steiner's meditation on, for example, a paper clip. A paper > clip is not (just, or even mostly) a material object. It carries with it > the natural and human processes that have accompanied every step in its > extraction, production, and distribution. That is, it has a spiritual > fingerprint and--so to speak--a spiritual value (which may have positive as > well as negative aspects). Steiner asks us to do the impossible--because > following the trail of even a simple paper clip is impossible, due to the > world's complexity--yet it's a useful exercise (and one that is applicable > when we consider the Congolese rare minerals in our smartphones, etc.). So > I am encouraged when I see economists such as Eisenstein trying to view > money and the economy in spiritual terms. I think Steiner's main thrust was > that economic matters needed to be considered in spiritual terms as well as > material ones and that economic transactions should be viewed as > opportunities for highly positive spiritual deeds. So the context of my > distinction between making and maximizing profits is something like this: > Not too many decades ago, highly successful companies paid a lot of > attention not only to profits but also to the wellbeing of their workers > and that of the wider communities in which they were located. Thus, some > profitability was sacrificed in order to improve conditions for their > workers and to work positively within their local communities. I fear those > days are long gone, because maximizing profits has become the only value > that the market rewards. > > The second condition of the optimal flow of money, to me, is that it needs > to be somewhere between stagnant and chaotic--that is, dynamic and > life-giving. Steiner spoke of the dangers of stagnation--accumulating > capital rather than using it in productive manners. I don't recall him > speaking much of the other extreme, which is chaos (though I may well be > wrong on this). But Fritjof Capra speaks very presciently (2002) of the > dangers of the "global casino," citing the work of Manuel Castells. While I > think Capra gets it very laregely right, again I fear that we are much > farther down that road then when Capra wrote *The Hidden Connections.* The > rate of investment and exchange is so feverish that it has shifted from a > powerfully flowing river to a tumultously pounding waterfall--very much > skirting the edge of chaos and hence flirting with collapse. I think the > issues behind the 2008 recession are pertinent--how the collapse of Bear > Stearns (one investment firm, and far from the biggest) triggered events > that were very hard to contain (similar to Greece and the Euro, etc.). And > I would also note that the word "trust" was very widely used after that > recession, as the factor that kept people from buying houses and spending > in general, which would have improved the economy much more rapidly. To me, > this confirms Steiner's description of money as a covenant, not an > artifact, involving spiritual qualities such as trust, responsibility, and > even altruism (as Steiner makes clear when he speaks of gifts vs. loans or > purchases). Which brings us around again to the need for economic concepts > and policies that will incorporate ethical and--dare I say it--spiritual > values. > > And again, I think a truly free market economy (one that is genuinely > self-organizing) can function to bring this about--though it will take a > maturing of our worldview from one of fragmented scientific reductionism > and materialism to one of interconnectedness and wholeness, including the > span from physical to psychic to noetic (body, soul, and spirit). So I > would guess that there is a great deal more that we agree on than that we > differ on. But I do take to heart your warning about language and your > ideas on effective communication. And, again, I plead guilty to a > considerable degree of hubris in daring to speak on topics about which my > knowledge and understanding are severely limited (including, I'm sure, > Steiner's ideas on economics!). > > I hope that, in expalining to you--in terms of some of the concepts that > we both treasure--where I was coming from, I haven't lost everybody else! > With warmest regards, > > John > > John Miller > (952) 797-2302 > Green Tea Party Movement > > -----Original Message----- > From: Lawrence Chickering > Sent: May 22, 2014 1:49 AM > To: > Cc: TRANSPARTISAN@LISTS.THATAWAY.ORG > Subject: Re: [TRANSPARTISAN] A focus on empowerment vs. a focus on > inequality > > Dear John, > > Your response has me spinning about, trying to think how to respond in a > way > that will be useful. First, I think you know that Rudolf Steiner, for > more than > forty years, has been *the* great intellectual and spiritual influence on > my > thinking on almost every subject. I had the good fortune to have an > extraordinary > disciple of Steiner's (a psychiatrist and also an Austrian) mentor me in > his theories > and especially his spiritual practices at the end of the 1960s, when I > lived briefly > in New York. The path he set me on has guided me ever since. > > One area on which Steiner influenced me only implicitly was in > communication -- in > the uses of language especially to communicate thoughts 'for which we have > no > [universally accepted] language'. Language is a challenge, of course, > because > people code their messages differently; and the challenge of > *communicating * > (as opposed to mere emoting) is to communicate not in one's own code, but > in *the listener's code -- *thus to be understood in the spirit the > communicator > intends. When I responded to your statements about scarcity and profits, > I was > assuming -- perhaps incorrectly -- that this community is committed to > coding > messages in accord with the mainstream economic and political idiom. You > wrote what you wrote based on very different assumptions. > > Part of me now wants to caution you to be careful in using words and > phrases > commonly used (and with widely agreed meanings) in the mainstream debate > when you intend very different meanings. But perhaps it is *I *who needs > to be > cautious because I realize it is possible that our unusual transpartisan > community > may be much more aligned linguistically with you than with me. > > Although I regard my worldview as epistemologically very different than > the > worldview that dominates meanstream thought, all of my formal professional > work has been undertaken in terms of the mainstream idiom. I want to > influence > that idiom, and I see more opportunity to accomplish that from *inside * > the > mainstream debate than from outside. > > To touch on your points about scarcity and profit, one reason I believe > 'capitalism' > has been as associated as it has with materialism is that economists have > been > unwilling to open their inquiry into economic issues to include powerful > non- > material things that are valued in powerful ways by all human beings. > This is > the idea underlying the extraordinary success of the program I founded and > run, > Educate Girls Globally, which is institutionalizing the *spirit of *private > rights into > *public spaces *such as schools, with results on all major stakeholders > in schools -- > *including government bureaucrats -- *that are considered impossible by > the > mainstream debate. I will not repeat the 'lessons' learned from this work > other > than to say that the lessons are precisely the lessons that James Dierke > and I > are writing a book about public school reform, integrating my work in > India with > his in a middle school in the most dangerous neighborhood in San > Francisco. His > results in Visitacion Valley Middle School, for which he was given an > award as the > outstanding principal of a middle school in the entire country, are so > powerful > that at a time when teachers are straining to leave schools like his, no > one > wanted to leave his school while he was principal (he retired a year or > two ago). > > These are all things that he and I are writing about using a mainstream > vocabulary, > and Dierke's own success -- in winning his award -- has been achieved in > the > most mainstream institution of an inner-city public school. > > I feel I have written far more than will interest most people here on this > subject. > I wanted to be completely transparent about the assumptions that I bring > to > all of these subjects, which have preoccupied me for more than forty > years. > > Lawry Chickering > Educate Girls Globally > Author *Beyond Left and Right *(1993) and co-author (with James S. > Turner) > *Voice of the People: The Transpartisan Imperative in American Life*, > 2008. > > On May 21, 2014, at 18:41, < >> wrote: > > Hi Lawry and all, > > Here is Charles Eisenstein on scarcity: > > > > > I don't pretend to capture what he said, but I am influenced by ideas on > spiritual economics, including Rudolf Steiner and E. F. Schumacher. All the > best! > > John > > -----Original Message----- > From: Lawrence Chickering > Sent: May 21, 2014 12:26 PM > To: > Cc: TRANSPARTISAN@LISTS.THATAWAY.ORG > Subject: Re: [TRANSPARTISAN] A focus on empowerment vs. a focus on > inequality > > 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 > institutio

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