Leadership jobs

Steve Jobs told employees a short story when they were promoted to vice president at Apple. Jobs would tell the VP that if the garbage in his office was not being emptied, Jobs would naturally demand an explanation from the janitor. “Well, the lock on the door was changed,” the janitor could reasonably respond. “And I couldn’t get a key.”

The janitor’s response is reasonable. It’s an understandable excuse. The janitor can’t do his job without a key. As a janitor, he’s allowed to have excuses.

“When you’re the janitor, reasons matter,” Jobs told his newly-minted VPs. “Somewhere between the janitor and the CEO, reasons stop mattering.”

“In other words,” Jobs continued, “when the employee becomes a vice president, he or she must vacate all excuses for failure. A vice president is responsible for any mistakes that happen, and it doesn’t matter what you say.”

It is a story from John Rossman’s upcoming book titled Think Like Amazon. Steve Jobs had a simple theory about what separates great leaders from all the rest. If it is your job to lead, and a lot depends on you, there is no excuse for failure.

Read more:

https://www.businessinsider.com/steve-jobs-quality-sets-apart-great-leaders-2019-4

Was Marx right about capitalism destroying itself from within?

One of the core tenets of Marx’s work is that capitalism will be undone by internal contradictions that would manifest as ever-greater crises that would eventually destroy the system from within. If it turns out the current version of global capitalism is indeed unraveling due to its internal contradictions, it would be valuable to understand this now rather than later.

Read more:

https://www.oftwominds.com/blogjan20/marx1-20.html

Since the failure of communism Marx has been politically incorrect even though what he had to say about capitalism could be of great value.

There are two trends within capitalism, which are wealth creation and wealth concentration. Wealth concentration at some point may hamper wealth creation if the people at the bottom have not enough money to spend to make capital profitable.

The oversupply of capital or the lack of demand caused by lagging wages Marx foresaw may be the primary cause of the low and negative interest rates we have now. After the next recession we may never see positive interest rates again.

Read more:

https://www.naturalmoney.org/blog/190817.html

 

10 scientific reasons society is like it is and why we can’t fix it

Despite what the media would have you believe, we’re actually living in the most peaceful time in human history. There’s no doubt that the world is in a bit more chaos than it was, say, five years ago, but largely, it’s still way better than even fifty years ago. We’re just more connected than ever, giving us a direct glimpse into global human suffering we’ve never had before.

Read more:

https://listverse.com/2019/12/27/10-scientific-reasons-society-is-like-it-is-and-why-we-cant-fix-it/

So much progress has been made already. Perhaps we can’t fix everything that is wrong in the world but maybe we can improve things somewhat more. I hope you agree.

Beautiful countryside in southern California

Capital for the future

Making the economy sustainable may require an unprecedented amount of capital in the form of knowledge and outfits like solar panels, sustainable farms and energy-efficient transportation systems. It is hard to imagine that it can be done. And imagining it is still a lot easier than really doing it. It is going to require some economic magic to divert investment capital from destructive activities to the future of humanity. We may need more useful capital and less consumption.

Perhaps the invisible hand can be of some help. It is easier to finance a great endeavour from investments than from taxation because nobody wants to pay taxes but everybody is happy to invest. It is the secret of the success of the European empires that conquered the world after the Middle Ages. England, France, Spain and the Netherlands were much poorer and smaller than China, India or the Ottoman Empire, but they didn’t finance their conquests with taxation, but with the use of investment capital.1

Europe won out because European conquerors took loans from banks and investors to buy ships, cannons, and to pay soldiers. Profits from the new trade routes and colonies enabled them to repay the loans and build trust so they could receive more credit next time.1 The same logic may need to be applied to making the economy sustainable. The challenge is so enormous that it may never be possible to finance it by taxes. Nowadays interest rates are so low because there is plenty of investment capital.

It’s the economy stupid!

It is often argued that the economy is unsustainable because of short-term thinking. The economy must grow in order to have positive returns on investments. And it is believed that returns on investments need to be positive otherwise the economy would collapse. The economic time horizons of individuals are reflected in their time preferences. The time horizon of the economy as a whole is reflected in the interest rate.

The lower the interest rate, the longer the time horizon of the economy could be. The following example from the Strohalm Foundation can illustrate this:

Suppose that a cheap house will last 33 years and costs € 200,000 to build. The yearly cost of the house will be € 6,060 (€ 200,000 divided by 33). A more expensive house costs € 400,000 but will last a hundred years. It will cost only € 4,000 per year. For € 2,060 per year less, you can build a house that lasts three times as long.

After applying for a mortgage the math changes. If the interest rate is 10%, the expensive house will not only cost € 4,000 per year in write-offs, but during the first year there will be an additional interest charge of € 40,000 (10% of € 400,000).

The long-lasting house now costs € 44,000 in the first year. The cheaper house now appears less expensive again. There is a yearly write off of € 6,060 but during the first year there is only € 20,000 in interest charges. Total costs for the first year are only € 26,060. Interest charges make the less durable house cheaper.2

Without interest there is a tendency to select long-term solutions. Interest charges make long-term solutions less economical. Interest promotes a short-term bias in the economy. It may explain why natural resources like rainforests are squandered for short term profits. If interest rates are high, it may be more profitable to cut down a rainforest and to put the proceeds at interest rather than to manage the forest in a sustainable way.

Only, things are not as simple as the example suggests. For example, the building materials of the cheap house might be recycled to build a new house. And technology changes. For example, if cars had been built to last 100 years, most old cars would still be around. This could be a problem as old cars are more polluting and use more fuel. Nevertheless, the example shows that long-term investments can be more attractive when interest rates are lower.

This also applies to investments in renewable energy. For instance, a solar panel that costs € 100, lasts 15 years, and generates € 150 worth in electricity in the course of these 15 years, is feasible at an interest rate of 5% but not at an interest rate of 10%. Many investments in making the economy sustainable may have low returns and are only feasible when interest rates are low. Low and negative interest rates can also deal with low economic growth. That may be needed for living within the limits of the planet.

Living within the limits of the planet

When interest rates are negative, the time horizon of the economy could go to eternity so that it makes sense to invest in making the economy sustainable. A few examples from history can illustrate this. In the Middle Ages some areas in Europe had currencies with a holding fee like Natural Money. As there hardly was economic growth, interest rates were negative. It was the era of Europe’s great cathedrals. These cathedrals were built for eternity. As better investment opportunities were absent, wealthy towns people spent their excess money on cathedrals.3 For similar reasons, the people of Wörgl planted trees as the proceeds of the wood were expected to occur in the distant future.3

A bit of calculus shows why. At an interest rate of 5%, putting € 1 in a bank account turns into € 1,05 after a year, so you would rather have € 1 now than in one year’s time, even when you need the money in one year’s time. That’s because you can put the money on a bank account at interest. At an interest rate of 5%, € 100 in one year’s time is worth € 95.25 now. The distant future has even less value. The same € 100 in one hundred year’s time is worth only € 0.59. And € 100 after 1000 years has no value at all in the present.

At an interest rate of -5%, you would prefer to have the money when you need it, otherwise you would end up with less. At an interest rate of -5%, € 100 in one year’s time would be worth € 105. The same € 100 in one hundred year’s time would be worth € 13,501 now. And € 100 after 1000 years would be worth more than everything there is in the present. Income in the distant future is also very uncertain, so it is unlikely that investors will shift their time horizon to 1,000 years, but this logic may help us to come into terms with the limits our planet poses on human activities.

Living within the limits of the planet may require unprecedented investments in the future. These investments may require low or even negative interest rates as their returns may be low. Only low and negative interest rates can make these investments economical. Everyone who has money to save can help by shifting money from consumption to saving and investing. The more people act like capitalists, the lower interest rates may go, and the more sustainable the economy may become.

Capitalists think that money spent on a frivolous item is money wasted, because when you invest your money, you will have more money that you can invest again. Capitalists hardly care about interest rates. They will save and invest anyway because of their capitalist spirit. Rich people may be encouraged to save even more if luxuries that use a lot of natural resources and energy aren’t available any more. One can think of luxury yachts, private jets, but also of travel by airplane for holidays. When energy becomes a constraint, local products may replace long-distance trade.

Featured image: Beautiful countryside in southern California. James McCauley (2005). Wikimedia Commons. Public Domain.

1. A Brief History Of Humankind. Yuval Noah Harari (2014). Harvil Secker.
2. Poor Because of Money. Henk van Arkel and Camilo Ramada (2001). Strohalm.

New World Order

The direction of history

We are heading towards a single integrated world order, sometimes called New World Order. Humanity is converging in three major ways, intellectually, economically and politically. The spread of religions and ideologies made it possible to unify different peoples under the same set of ideas. Trade and money enabled the cooperation between strangers all over the globe. And the increased cooperation between nation states is paving the way for a for a single world government.1

The world is now run by a global elite of business people, politicians, bureaucrats, engineers, journalists, scientists, opinion makers, writers and artists. No matter where they live, whether it is New York, Buenos Aires, Shanghai, Dubai or Cape Town, these people increasingly have the same interests, the same viewpoints about the world, the same culture, and increasingly live similar lifestyles. The individuals in these elites have more in common with each other than with their fellow countrymen.1

Globalisation

Globalisation has transformed the world. People everywhere around the globe are now interconnected. They cooperate and compete on a global scale. Globalisation started more than 500 years ago when Portuguese explorers set sail for Africa to find new trade routes to the Indies. In 1492 Columbus discovered America while trying to do the same. In the centuries that followed the world gradually became more interconnected. Globalisation really took off in recent decades when several developments converged. These were:

  • the rise of neoliberalism around 1980
  • the fall of communism around 1990
  • personal computers and digital data storage
  • optical fiber and Internet making it possible to connect people around the globe
  • global standards for data exchange making it possible for every computers to exchange data with every other computer
  • software enabling cooperation between people and businesses around the globe

At the end of the 1970s economies in the Western world were stagnating. It was argued that poor business conditions and international competition were to blame. This marked the rise of neoliberalism. From the 1980s onwards regulations were reduced and the free movement of labour and capital were promoted. It became easier to move jobs to areas with lower labour costs. Entrepreneurs were seen as heroes and making profits became a goal in itself. It was the era of stock market capitalism and financial engineering. There was little consideration for people, communities and the environment.

The fall of communism gave further impetus to globalisation. In 1989 the Berlin Wall fell. A few years later the Soviet Union was dissolved and the European Union became enlarged. From then on it seemed that there was no alternative to capitalism.2 Countries like China, India and Russia realised that they had to compete on the global marketplace and began to transform their economies. Every country did this in its own way. For instance, India specialised in services and information technology. China became the global industrial powerhouse where everything is made.

Computers and data storage made it possible to store documents and other data like pictures and recordings digitally. In the 1980s the personal computer entered the homes of many people. Computers were also used in businesses but the impact of information technology remained limited. Exchanging data between computers was still difficult because computers often weren’t interconnected and software suppliers used different data formats.2

That all changed with the emergence of the Internet. Netscape turned out to be a crucial catalyst. It allowed people on personal computers to look at web pages anywhere around the world. Netscape turned out to be a killer application that made Internet very popular very quickly. Investors suddenly realised that Internet would change the world and that large profits were to be made. It resulted in a massive overinvestment in everything related to Internet during the Internet bubble of 2000. One of those overinvestments was in optical fiber. As a consequence the price of data transport dropped dramatically.2

Standards for data exchange emerged. Software suppliers were forced to support them and began to focus on facilitating the interaction, competition and cooperation of people around the globe, effectively enabling the world to turn into a global village where people everywhere can participate. This transformed the way people cooperate. The traditional way of organising is top down via command and control. The new way of organising is via teams of people sharing a responsibility for a task or a product, making more complex cooperations possible. China and India were able to develop and became integrated in the global economy. As businesses began to use more cheap overseas labour, workers in developed nations were faced with job insecurity and lagging wages.

In 1977 Chinese leaders realised that communist China needed to embrace capitalism. For two decades progress was was slow. That changed in the 1990s. Despite that doing business in China remained problematic until in 2001 China became member of the World Trade Organisation. From then on China conformed to international law and trade practises and it became attractive to do business with China. Corporations moved their production to China and China became the industrial powerhouse of the world.

The rise of China and India

Half the world’s population lives in Asia. In China or India alone live nearly two times as many people as in the European Union and the United States combined. The same is true for Africa. If people everywhere around the globe obtain a more equal portion of wealth then the relative importance of the European Union and the United States will decline. If current trends continue, China will be the most powerful nation in the near future. The Chinese economy may be the biggest in the world already.

Chinese leaders are preparing for a New World Order under Chinese leadership. China’s policies include economic colonisation of developing countries like the United States and European countries have done previously. For instance, China grants loans to developing countries to build their infrastructure. If they fail to pay back these loans, China may take possession of assets like mines, harbours and corporations as payment. If India is going to follow suit, it may become China’s main contender. At the same time the importance of nation states is declining and they may even disappear in the future.

Global cooperation

Businesses are closely integrated with their global supply chains. Doing business has become a global affair more than ever. Issues like trade, climate change, human rights, disease control, international crime and financial markets require international agreement and cooperation of governments. The Old World Order was based on the sovereignty of nation states, which means that at least in theory, there was no higher authority than the nation state. All nation states were equally sovereign, at least in theory, and their power was restricted only by the treaties they signed.

Nation states are increasingly under pressure to conform to global standards as actions of one nation affect other nations as well. The global elite influences the decisions on these issues but they can’t completely ignore ordinary citizens. The elite believes it acts for the benefit of mankind and that we need more international cooperation or even a global government. This is reflected, for instance, in the words of the British politician Denis Healey, who had been involved in Bilderberg Conferences in which members of the elite gathered in secrecy. He told the Guardian:

To say we were striving for a one-world government is exaggerated, but not wholly unfair. Those of us in Bilderberg felt we couldn’t go on forever fighting one another for nothing and killing people and rendering millions homeless. So we felt that a single community throughout the world would be a good thing.3

The elite is first and foremost a social network. Elite members have friends and they have friends and they have friends too. Meetings like Bilderberg are just the tip of the iceberg. Still these meetings can influence political agendas. For instance the European Union has been discussed at Bilderberg and it may well be that these meetings helped to make the elite agree on more European cooperation and integration.

Europe had just been ravaged by two world wars so it probably seemed a good plan. And it wouldn’t have succeeded if most Europeans didn’t feel the same. Indeed, it is not far-fetched to see the European Union as a model for a future world government. A side-benefit of globalisation is that war is becoming less likely. Wars disrupt global supply chains so businesses may leave warring countries and never come back.

Neo-liberalism or neo-feudalism?

Many people in China and India have seen their living standards improve. In fact, globalisation may have been the best development aid ever. Nevertheless, the greatest winners are wealthy oligarchs all around the world. A 2017 report from Oxfam points out that the world’s eight wealthiest people own as much as the poorest 50%.4 There is no global government or binding international treaties so nation states end up competing to please large corporations and billionaires. In a feudal societies ordinary people were mere serfs of the elites. Many people today find themselves in a similar situation, at least to some extent.

In the 1970s the situation in Western Europe and the United States was different. Most people were middle class. Since then a growing divide between the rich and the poor emerged. This coincided with the rise of neo-liberalism, which is the idea that more should be left to the markets and that governments shouldn’t interfere.

Neo-liberalism emerged in the 1970s when the ruling class was in trouble. The economy was stagnating. Unions had a lot of power. The cost of welfare states became a problem as businesses were struggling with competition from low-wage countries. And so the elite started to promote freedom of the markets, privatisation, entrepreneurial spirit and individual liberty. The power of labour was curtailed. Welfare was reduced. Wealth inequality began to increase. And many jobs moved to low wage countries.

Conspiracy theories

The elite has a secret plan to create a New World Order in which ordinary humans will be serfs, at least that is what a widespread conspiracy theory claims. Rather than seeing the globalisation and the emerging oligarchy as a result of social, political and economic developments, adherents of this conspiracy theory believe it was deliberately planned by the elites. It is true that if the elites aren’t checked by engaged citizens and institutions in society, power and wealth tend to concentrate. So far there has not been a global reform coalition that is strong enough to change this trend.

In the decades after World War II the secret services of the United States toppled democratically elected governments and supported dictators while claiming to promote human rights, freedom and democracy. The politics of trade and power often conflict with principles and morals. It was often argued that if the United States doesn’t play this kind of dirty politics, it will lose power and the world will not become a better place.

Politicians in the United States fund their campaigns with donations from corporations, interest groups and wealthy individuals so they represent their donors rather than their electorate. The likelihood of a law passing doesn’t depend on what voters want.5 Many people distrust the government. But distrust has also contributes to poor government. Checks and balances have been put in place that limit democracy also limit the effectiveness of government by allowing elites to influence the political process.

There is a market for ‘independent writers’ to constantly come up with new ‘disclosures’ of ‘plots’ to keep their readership entertained. Truth isn’t of the essence. It is about advertisement income. Social media enable people to ignore reality and to create their own universe of imagined facts as algorithms select the people you connect to and the news you look at based on your preferences. This keeps you hooked on social media and it generates advertisement income, but it doesn’t help to solve anything.

In the past people were confronted on a regular basis with news media that adhered to journalistic standards. Now ideas are spreading like the world being run by a satanic paedophile network. Many people do not trust traditional media because they are biased. Traditional media usually are supportive of the prevailing social order. But the same people tend to prefer websites and videos that spread false information and hatred. In the Netherlands the public broadcasting organisation now uses unmarked vans because its personnel are harassed and threatened. Civilisation is what people share and what holds society together. That is eroding because of the advertisement industry trying to sell advertisements.

High quality investigative journalism is time consuming and costly. If you don’t come up with interesting finds from time to time, your readers may get bored and your business may go bankrupt. News outlets are often guided by advertisement income so journalism is either non-offending or of an extremist nature. Political division further promotes this process. A moderate political climate in which facts and evidence take the centre stage can make people more willing to pay for high-quality content. In this way the government can be monitored more effectively.

The current situation in the United States has some historic parallels with countries just before a revolution. An oligarchy controls the state. The social order is contested from the left as well as the right, nuttery is spreading, while people at the political centre realise that the system is broken. In Europe there is a similar development but the situation has not yet advanced to the same point, perhaps because there is more trust in government because corruption in the political system is less endemic while most European political systems allow for multiple political parties so that diverging views can more easily get a voice in parliament.

Deep state

Politicians come and go but many officials remain within the governmental institutions for a longer period of time. Often they are specialised technocrats that have the best knowledge of the field they are working in. Most of them believe to work interest of the public but they can obstruct elected officials. An unresponsive or obstructing bureaucracy is an old issue. Chinese emperors already faced it 2,000 years ago.6 And one can as easily say that elected officials can obstruct the work of their bureaucracy.

Technocrats aren’t the biggest problem. Interest groups that have captured the government to profiteer at the expense of the taxpayers are a more serious issue. They are the lobbyists and think tanks who represent the interests of businesses that live off government contracts or benefit from favourable legislation, for instance the Military Industrial Complex. These people work covertly via social networks to influence politicians and other officials. This isn’t a new problem either.6

Improving the political economy

A social order is the result of the interplay of social groups in a society. In a capitalist economy wealth and income inequality tend to increase. If governments do not correct this issue, the economy may suffer and social tensions may rise. During the neo-liberal era the government has been partially privatised. Schemes to profiteer from the government proliferated accordingly. Rather than correcting wealth and income inequality, government policies came to enhance them. As the wealthy succeeded in reducing the taxes they pay, governments went into debt. This is a recurring pattern in history too.

The recipe is also well-known. It is standing up against the oligarchy and creating a clearer distinction between the private and the public realm. People must understand that collective action is the only way to realise certain goals in society. It is possible to have a good government. Countries like Denmark and Switzerland have it. It is only that the neo-liberal ideology tends to see government as a problem and society as non-existent. Governments can become overextended like in the 1970s and meddle with affairs they probably shouldn’t but they can have a positive role in society.

Neo-liberalism is not favourable to collective action and it helps the elite to remain in power and to exploit us with impunity. As long as societies are too divided, the situation is unlikely to be resolved. A resolution requires people setting aside their political differences and rallying behind common causes with regard to systemic improvements in government and society. This might attract a broad coalition in the political centre. A good government can either be socialist or free-market oriented. It can take up many tasks like in Denmark or be more limited in scope like in Switzerland. The size of government is now an issue of secondary importance. It is more important that governments do right whatever they do.

One improvement may be direct democracy as practised in Switzerland. Direct democracy gives citizens more control over their government . Making it work requires a culture of reason and compromise, issues rather than people taking the centre stage, and it requires an adequate education of the citizens. It may help to build credible government institutions. The Swiss have confidence in their government while political debates tend to be rational. Direct democracy it isn’t perfect. For instance, women in Switzerland received the right to vote as late as 1970 because men decided about the issue.

Insofar governments fail to halt wealth and income inequality, the market can help, but only if interest rates aren’t limited to the downside. In 1916 Silvio Gesell published his most important work The Natural Economic Order, in which he proposed a holding fee on currency, so that interest rates can go negative.7 It was first published in German under the name Die natürliche Wirtschaftsordnung, in short NWO. The idea already produced an economic miracle in the Austrian town of Wörgl during the Great Depression. It may become part of the financial foundation for the future world order so this may be one of those peculiar coincidences in history.

If you like this post, then you might also like:

Swiss democracy

The Swiss have the most trust in their government. That may be because of the unique features of Swiss democracy.

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The miracle of Wörgl

In 1932, during the Great Depression, the Austrian town of Wörgl embarked upon a revolutionary economic experiment. Soon the economy flourished.

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1. Sapiens: A Brief History Of Humankind. Yuval Noah Harari (2014). Harvil Secker.
2. The World Is Flat 3.0. Thomas Friedman (2007). Farrar, Straus and Giroux.
3. Who pulls the strings? (part 3). The Guardian (2001). [link]
4. Just 8 men own same wealth as half the world. Oxfam (2017). [link]
5. Testing Theories of American Politics:Elites, Interest Groups, and Average Citizens. Martin Gilens and Benjamin I. Page (2014).
6. The Origins of Political Order: From prehuman times to the French Revolution. Francis Fukuyama (2011). Profile Books.
7. The Natural Economic Order. Silvio Gesell (1916).