BUSINESS – REVIEWS AND VIEWS OF LIFE

CAPITALISM’S REFORM

Like abolition, women’s suffrage, labor, civil rights, LGBTQ, and MeToo movements of the distant and near past, capitalism’s reform is due.

Books of Interest
Website: chetyarbrough.blog

SAVING CAPITALISM (For the Many, Not the Few)

Author: Robert B. Reich

Narration by: Robert B. Reich

Robert Reich (Author, American professor, lawyer and political commentator that worked in the Geral Ford and Jimmy Carter administrations, and served as th secretary of labor in Bill Clinton’s administration.)

Robert Reich, as an advisor to Presidents of the United States is recognized by Time Magazine as one of the Ten Best Cabinet Members of the 21st Century and by the Wall Street Journal as one of the most influential business thinkers in 2008. In “Saving Capitalism” Reich criticizes corporate America for unethical and unfair capitalist practices that make a mockery of capitalist equality.

Economic class warfare in America is a time worn argument by many economists in the 20th and 21st century. Reich’s topical analysis has some truth, but his analysis of wealth and markets oversimplifies the complexity of American capitalism. One cannot deny the harm that capitalist greed has done to increase wealth of the rich and decrease wealth of the poor in America. The political system is rigged by the influence of wealth over political policy and economic equality.

American capitalism’s rigging begins at birth, carries through public education, and ends in low-income opportunities for the poor.

The power of wealth feeds American capitalist Democracy’s circle of life. Money of the wealthy is spent to birth and educate their children with the best medical care and schools in America. The corporations and super rich of America hire and fund lobbyists who promote corporate agendas to support government representatives’ campaigns for office. The aspiring representatives are people who owe their allegiance to corporations and the rich who helped get them elected. That circle is biased toward making the rich richer.

Equality of opportunity is rigged in ever-larger corporations that reap super profits and pay CEO’s millions of dollars per year while low wage earners are left to fend for themselves. Mega corporations should be broken up like the oil industry dismantling in 1911. Like Standard Oil, today’s conglomerates have too much power over consumer purchasing, advertising, social media, medical industries, and (most importantly) the election process of America. The rigging begins with healthy birthing of children of the rich, extending to less qualified schooling for the poor, and ending with low-wage family’s children having unequal economic opportunity.

One cannot deny that Reich’s book and this biased review are an ideological belief that distorts and oversimplifies reality, but it carries an element of truth that cannot be denied. How can one person be worth a potential trillion-dollar net worth for service as CEO of one company that makes electric cars. Corporations like Amazon, Google, Facebook, UnitedHealth Group, and Cencora control markets through their size to capture disproportionate shares of advertising, social media, retail sales, and medication industries without competition to moderate their power, and influence. Add billionaires like Elon Musk, Larry Ellison, Mark Zukerberg, Larry Page, Steve Ballmer, Warren Buffett, and Michael Dell and others of great wealth–one is inclined to believe American capitalism is rigged.

As brilliant as Musk shows himself to be, his fragile ego diminishes his genius.

There is an unfairness in criticizing the wealthy for their success in America. They are not wealthy because of luck but because of their innate abilities, risk taking, and hard work but influence should not come from the power of their wealth to change government policies that focus on enriching themselves. Just as the robber barons had their influence curbed by antitrust legislation, the same should be done today. The influence of lobbyists and their support should be more publicly disclosed. The federal government should play more of a financial role in improving public education. Cries of inequality should be exposed, critiqued, and adjudicated fairly.

Survival of global capitalism seems dependent on reducing the gap between billionaire/millionaire capitalists and the wage-earning public.

Capitalism remains the best economic system in the world, but it has its weaknesses. The best prescription for that weakness is equality of opportunity in the arena of employment competition. It begins with fair and equal access to medical care and access to a good education.

Like abolition, women’s suffrage, labor, civil rights, LGBTQ, and MeToo movements of the distant and near past, capitalism’s reform is due.

MANAGEMENT

“Radical Candor” about a creative idea can discourage employee creativity. Scott’s counsel on building trust is her magic potion, but potions can kill as well as heal.

Books of Interest
Website: chetyarbrough.blog

Radical Candor (Be a Kick-Ass Boss Without Losing Your Humanity)

Author: Kim Scott

Narrated By: Kim Scott

Kim Scott (Author, former executive at Apple and Google, coach for tech companies like Dropbox and Twitter)

The agricultural revolution dates back to 10,000 BCE, 1760 marks the beginning of the industrial revolution, the 1950s evolves into an age of expertise and work knowledge with computerization, in the 1990s connectivity and automation begins the information age. Today, Kim Scott addresses the 2020s along with the advent of artificial intelligence. Beginning when the industrial revolution takes hold, organization management evolves into a social science. In the industrial age training changes from demonstrating how to make things to managing people’s work in making things. Jumping to the Information Age managers of people become ringmasters for employee’s creativity.

Despite many changes in purpose for organizations a common thread is managerial skill which entails political and personal skills. Managers pursue understanding, influence, ability, and sincerity of purpose to elicit and manage human creativity.

Scott outlines management skills in “Radical Candor”. Her book is a useful tool for aspiring managers. Even reaching back to the agricultural age, there is relevance in Scott’s belief in “Radical Candor”. She defines radical candor as “Caring personally while challenging (organization employees) directly.” By personally caring, Scott explains good managers must gain the trust of people who report to them. My personal experience as a former manager in different careers shows that no manager knows everything about the company or organization they manage. The one thing a good manager must know is how to develop trust with people who report to her or him. Without trust between managers and workers, organizations are likely to fail.

Trust between managers and employees is even more true today because worker’ creativity drives technological invention and utility.

Being vulnerable by understanding you know nothing about people you manage is the starting point of your role as a manager. Scott explains the first thing a new manager must do is personally meet with each direct report to hear what they do for the organization, what they like and dislike about what they do, and what obstacles get in their way that impede accomplishment. The two-fold purpose of these meetings is first to listen, not judge or criticize what is being reported. The second is to build trust.

(I believe A.I. will always be a technological tool, not a controller, of society, contrary to those who believe human existence will be erased by machines. As a technological tool of humanity, the creativity of human minds is at the frontier of management change.)

Scott explains how important it is to let employees know their manager is interested in an employee’s goals and growth in an organization.

A manager must be both physically and emotionally present when building trust with an employee. There is a need for a manager to explain one’s own vulnerability and responsibility in managing others. Scott’s point is that gaining trust of an employee requires more than knowing their birthday. A good manager will ask for feedback about what an employee is doing and what support a manager can offer to improve their performance. A manager should be curious, not furious when things are not going well. It is important that a sense of respect be given for an employee’s effort to get their job done. With development of respect, it becomes possible to use radical candor to constructively criticize or complement an employees’ performance.

Scott notes there are many reasons for an employee’s failure to perform beyond expectations.

Those reasons include incompetence but also the failure of management to have a clear understanding of an employees’ strengths and weaknesses. Through development of trust between manager and employee, a different job may be in order. With reassignment and a performance plan, a manager may be able to tap a human resource that has been wasted. The performance plan is instituted with “Radical Candor” and offers either opportunity or, if performance improvement fails, dismissal.

Every organization has distinctive operational idiosyncrasies that a manager may not precisely understand.

This has always been true. It is even more true in the tech age because project uniqueness and employee creativity is more difficult to measure and manage. Kim Scott has worked with the most iconic tech companies of modern times, e.g. Apple, Google, Twitter. There are a number of anecdotes about famous tech giants and officers of Facebook, Apple, and Google, like Sandberg, Cook, and Page. Kim has also started her own businesses, some of which failed, and others that prospered. Her experience offers credibility to her arguments.

From personal experience as a manager of others, no manager ever knows all there is to know.

As Scott notes, this is not to say that geniuses like Steve Jobs did not know more than his Apple employees, but the iPhone idea came from a group of employees before approaching Jobs with a clunky mock-up of the idea. Jobs had a reputation for being a tough audience for people with creative ideas. This is the reason Kim Scott explains trust must be created between manager and employee so that candor about needs and expectations can be usefully employed to improve probability of personal and organizational success.

One takes Kim Scott’s counsel on “Radical Candor” with some reservation because misused “Radical Candor” about a creative idea can discourage employee creativity. Scott’s counsel on building trust is her magic potion, but potions can kill as well as heal.

WHO ARE YOU?

Greene explains self-awareness of introversion or extroversion is key to understanding one’s social limitations and blind spots in being a constructive part of society.

Books of Interest
Website: chetyarbrough.blog

The Laws of Human Nature

Author: Robert Greene

Narrated By: Paul Michael & 1 more

Robert Greene (Author, with several NYT’s bestsellers addressing human nature, graduated with a degree in classical studies.)

“The Laws of Human Nature” is a tour deforce of what one learns in life about being a good manager. The difference between a technically excellent employee and a manager is that the first has skill in doing things while the second has skill in managing those who do things. Occasionally, one can be both, but as the complexity of life increases, the likelihood becomes rarer. Human nature revolves around behavior and one’s psychological characteristics. Greene argues there are fundamental laws of human nature that can enlighten listener/readers about themselves and others.

Aristotle’s, Hobbes’, Rousseau’s, and Darwin’s views of human nature have different perspectives. Aristotle believes human nature is teleological with a belief that we all have purpose that is revealed by reason and virtue. Hobbes believes humans are innately self-interested and capable of both good and bad behavior. Rousseau believes humans are inherently good but corrupted by society. Darwin believes humans evolve through natural selection and will do whatever is necessary to survive. Of the four perspectives, Aristotle seems the most idealistic while the other three account for human nature’s irrationality.

Greene suggests humans can be irrational, narcissistic, misleading, and sometimes repressive.

What one can draw from his book is how those characteristics exhibit and what one can do about it. The potential of irrationality exists in everyone. It can cause fear, envy, insecurity, and desire. Bias is at the heart of these emotions. He turns to ancient history to give the example of the war between Spartans and Greeks that may have been avoided if heightened emotions had not been aggravated by a plague in Greece and the death of Pericles who had a rational plan to avoid war. Greene suggests Augustus defeats Anthony to become ruler of Rome because of Anthony’s neglect of his duty as leader of Rome for the desire of the Egyptian Queen, Cleopatra. Greene notes irrationality is a universal characteristic of humanity. The anecdote is to calm one’s emotions, clearly understand what it is that you fear, and to mirror back that clear understanding to yourself and change your behavior.

One can see narcissism in themselves or others when one seeks admiration, overreacts to criticism, has no interest in others perspective, or manipulates others by ignoring or emotionally withdrawing attention.

Married people often do this with their significant other. Greene explains self-awareness, seeing others through their eyes, redirecting your energy to something more important, and being more disciplined can abate narcissism. He notes narcissism is not a flaw but a force that can be turned to good. The history of Oppenheimer, considered by some to be narcissistic, is noted as an example of someone who saw the big picture of life and the consequence of war. He came to understand something bigger than himself and successfully manages other scientists to create the first nuclear bomb. The contrary of a narcissist who could not see the big picture is the story of Howard Hughes who could not manage his father’s company or his entry into the film industry because he could not get things done through other people. He believed only he could handle the complexity of a film production and plane manufacturing company. No one could work under him because of his uncontrolled narcissism that interfered with others he hired to help him manage businesses bigger than one mind could control. His managers resigned because he would not allow them to do the job they were hired to do. Hughes failed as a movie producer and plane manufacturer because of his narcissism.

Bernie Madoff (Born 1938, died in Federal Medical Center in 2021)

History is festooned with misleading information by people who distort the truth in order to achieve their personal goals. Greene recalls the history of swindlers like Bernie Madoff that lied to his investors about investments that were Ponzi schemes that fed his investment company’s growth, not from honest investment in publicly traded stocks or business enterprises.

Stalin in Russia, is the penultimate example of a psychological characteristic of repression. One suspects the same is true of Putin. Even America’s President Trump could be characterized as a narcissist. He used federal power to investigate and punish political opponents. Trump politicized the civil service by conducting mass firings to replace employees that were loyal to his agenda. Justice Department’ independence has similarly been restructured. Trump suppresses dissent and free expression by cracking down on student protests, detained and deported not only illegal immigrants but U.S. citizens. He ended asylum protections and militarized crackdowns with the use of the National Guard and U.S. marines to aid ICE in deporting undocumented immigrants and quelling public opposition. All of these actions are examples of an increasingly repressive American President. There were similar arguments about Franklin Roosevelt in his early actions to rescue America from the pre-WWII’ depression.

Greene goes on to explore personality types that are a combination of extroversion and introversion characteristics.

He notes both characteristics have strengths and weaknesses. Extroverts generally have more social fluency, have a more charismatic presence and higher social visibility. They can also become subjects of envy or derision because of their high profile. Greene suggests they are more vulnerable to manipulation because their habits reveal too much about themselves. They become more susceptible to groupthink rather than individual judgement. On the other hand, introversion has equivalent but different strengths and weaknesses. Introverts have more control over themselves because they reveal less of themselves to others. They are naturally less likely to succumb to groupthink. On the other hand, they tend to misread socially valuable influences because of their isolated view of the world. They fail to offer their opinion because of fear of self-exposure and ridicule which diminishes their understanding of beneficial social norms.

Greene explains self-awareness of introversion or extroversion is key to understanding one’s social limitations and blind spots in being a constructive part of society. However, his analysis of “The Laws…” of human nature becomes tedious because it offers too many examples and views of biases and their anecdotes for most listener/readers to be patient enough to complete his book. Nevertheless, Greene’s first chapters are enlightening and worth one’s time.

AI & HEALTH

Like Climate Change, AI seems an inevitable change that will collate, spindle, and mutilate life whether we want it to or not. The best humans can do is adopt and adapt to the change AI will make in human life. It is not a choice but an inevitability.

Books of Interest
Website: chetyarbrough.blog

Deep Medicine (How Artificial Intelligence Can Make Healthcare Human Again)

Author: Eric Topol

Narrated By: Graham Winton

Eric Topol (Author, American cardiologist, scientist, founder of Scripps Research Translational Institute.)

Eric Topol is what most patients want to see in a Doctor of Medicine. “Deep Medicine” should be required reading for students wishing to become physicians. One suspects Topol’s view of medicine is as empathetic as it is because of his personal chronic illness. His personal experience as a patient and physician give him an insightful understanding of medical diagnosis, patient care, and treatment.

Topol explains how increasingly valuable and important Artificial Intelligence is in the diagnosis and treatment of illness and health for human beings.

AI opens the door for improved diagnosis and treatment of patients. A monumental caveat to A.I.s potential is its exposure of personal history not only to physicians but to governments and businesses. Governments and businesses preternaturally have agendas that may be in conflict with one’s personal health and welfare.

Topol notes China is ahead of America in cataloging citizens’ health because of their data collection and AI’s capabilities.

Theoretically, every visit to a doctor can be precisely documented with an AI system. The good of that system would improve continuity of medical diagnosis and treatment of patients. The risk of that system is that it can be exploited by governments and businesses wishing to control or influence a person’s life. One is left with a concern about being able to protect oneself from a government or business that may have access to citizen information. In the case of government, it is the power exercised over freedom. Both government and businesses can use AI information to influence human choice. With detailed information about what one wants, needs, or is undecided upon can be manipulated with personal knowledge accumulated by AI.

Putting loss of privacy and “Brave New World” negatives aside, Topol explains the potential of AI to immensely improve human health and wellness.

Cradle to grave information on human health would aid in research and treatment of illnesses and cures for present and future patients. Topol gives the example of collection of information on biometric health of human beings that can reveal secrets of perfect diets that would aid better health during one’s life. Topol explains how every person has a unique biometric system that processes food in different ways. Some foods may be harmful to some and not others because of the way their body metabolizes what they choose to eat. Topol explains, every person has their own biometric system that processes foods in different ways. It is possible to design diets to meet the specifications of one’s unique digestive system to improve health and avoid foods that are not healthily metabolized by one’s body. An AI could be devised to analyze individual biometrics and recommend more healthful diets and more effective medicines for users of an AI system.

In addition to improvements in medical imaging and diagnosis with AI, Topal explains how medicine and treatments can be personalized to patients based on biometric analysis that shows how medications can be optimized to treat specific patients in a customized way. Every patient is unique in the way they metabolize food and drugs. AI offers the potential for customization to maximize recovery from illness, infection, or disease.

Another growing AI metric is measurement of an individual’s physical well-being. Monitoring one’s vital signs is becoming common with Apple watches and information accumulation that can be monitored and controlled for healthful living. One can begin to improve one’s health and life with more information about a user’s pulse and blood pressure measurements. Instantaneous reports may warn people of risks with an accumulated record of healthful levels of exercise and an exerciser’s recovery times.

Marie Curie (Scientist, chemist, and physicist who played a crucial role in developing x-ray technology, received 2 Nobel Prizes, died at the age of 66.)

Topol offers a number of circumstances where AI has improved medical diagnosis and treatment. He notes how AI analysis of radiological imaging improves diagnosis of body’ abnormality because of its relentless process of reviewing past imaging that is beyond the knowledge or memory of experienced radiologists. Topol notes a number of studies that show AI reads radiological images better than experienced radiologists.

One wonders if AI is a Hobson’s choice or a societal revolution.

One wonders if AI is a Hobson’s choice or a societal revolution greater than the discovery of agriculture (10000 BCE), the rise of civilization (3000 BCE), the Scientific Revolution (16th to 17th century), the Industrial Revolution (18th to 19th century), the Digital Revolution (20th to 21st century), or Climate Change in the 21st century. Like Climate Change, AI seems an inevitable change that will collate, spindle, and mutilate life whether we want it to or not. The best humans can do is adopt and adapt to the change AI will make in human life. It is not a choice but an inevitability.

RIGHT & WRONG

The story of “…Belle Lettres…” inelegantly reminds one of the effects of Trump on America’s reputation.

Books of Interest
Website: chetyarbrough.blog

The Belles Lettres Papers (A Novel)

By: Charles Simmons

Narrated By: Alex Hyde-White

Charles Paul Simmons (1924-2017, Author and former American editor for The New York Times Book Review, graduate of Columbia University in 1948.)

“The Belles Lettres Papers” is a fictional account about the destruction of an American book review company. Written by a person who worked as the editor for the NY Times Book Review gives credibility to its author. One wonders how the nationally famous paper felt about his book. Simmons writes a story of a magazine company that exclusively reviews new books that become literary successes, sometimes bestsellers, or dead or dying dust gatherers.

To this book critic, Simmons certainly seems to know what he is writing about but “The Belles Lettres Papers” falls into a dust gatherer category of books.

Book reading or listening is an educational, sometimes entertaining, experience. There are so many books written that it is impossible to know what to read or listen to without someone’s review of what has been newly or recently published. Of course, there are genres that a reader/listener will choose that influences their book choices. Even when one limits themselves to a genre, there are too many choices that require a way of limiting one’s choice.

Experience reveals “best seller” is not a consistently reliable way of choosing a book, but it is one of the most commonly used methods of selection.

What “…Belles Lettres…” reveals is the potential corruption that can inflate a books placement on a best seller list. Book review publications, like all business enterprises, have owners and employees that have various levels of honesty, capability, and ethical standards. What Simmons shows is how every business owner and employee is subject to the influence of money and power.

The potential weaknesses of humanity play out in every organization that provides service or material to the public.

Simmons shows how a fictional book review company has employees who are corrupted by the power of their positions and the money they make. The fictional company has a male business manager who thinks his female secretary wishes to have sex with him because of natural attraction. Ethically, no employee reporting to a manager they work for should have sexual relations with a direct report. This is particularly egregious in Simmon’s story because of sexual inequality that permeates society. As Lord Acton’s observation about power (power corrupts, absolute power corrupts absolutely), a person who has power over another is always at risk of self-delusion.

Simmons goes on to explain how undercompensating employees can corrupt an organization by incentivizing theft and other ways of undermining a company’s integrity.

Simmons addresses the incentive of owners or those in power of an organization to cut personnel employment to save money at the cost of product quality or service. America is experiencing that today with the actions of the Trump Administration in arbitrarily firing federal employees, regardless of what they do for American citizens.

In a last chapter, Simmons addresses the revisions that can occur in a company that decides on a wholesale turnover in employees.

The integrity of a company’s mission can be sorely challenged. In the case of “…Belle Lettres…” a decision for publication of salacious books replaces the company’s former studied reviews of good writers. The organization loses its reputation as a reviewer of high-quality publications.

Trump’s assessment of immigration.

The story of “…Belle Lettres…” inelegantly reminds one of the effects of Trump on America’s reputation as a supporter of western society by reducing foreign aid, undermining university independence, denying global warming, arbitrarily firing government employees, and expelling American immigrants.

MODERATION

Unless homelessness is addressed with affordable housing, America’s future looks bleak. A land of have and have-nots will grow to crush American prosperity.

Books of Interest
Website: chetyarbrough.blog

Abundance

By: Ezra Klein, Derek Thompson

Narrated by: The Authors

Ezra Klein (American political commentator and “NYT’ journalist.)

These two young Americans offer an insightful view of politics and American government in the 21st century.

Klein or Thompson could have voted for either Trump or Harris in America’s last election. Their book argues American government is both a boon and bane for citizen “Abundance” in the 21st century. They note America has contradictory economic policies that have created great abundance among Americans while exacerbating inequality. Evidence for their opinion is growing homelessness, an immigration crisis, loss of manufacturing jobs, and government’s failure to creatively adjust public policies to provide solutions.

Those who have shared in the abundance of America have voted for candidates to preserve their privileges.

The authors note homelessness is a function of affordable housing that is denied by government policies that regulate zoning and construction requirements. Government policies make affordable housing too costly to build and impossible to locate because of zoning restrictions. The number of people living on the street is a self-inflicted American tragedy. Some of the homeless are young, some are old, some have mental or physical problems, and others are victims of drugs or their own weaknesses. What they have in common is unaffordable housing.

Historically, immigration has been a great boon to American economic growth.

Klien and Thompson note restrictive immigration policies have created obstacles for workers needed for manufacturing in key industries like agriculture, auto industry assembly, housing construction, and clean energy infrastructure. Rather than wasting money on building walls and deporting workers, the authors advocate immigration reform that meets the needs of American business. One can imply the authors meaning is that to “Make America Great Again” requires immigrants willing to work in agricultural and manufacturing jobs. The end of the baby boom requires help from immigrants to meet the needs of increased manufacturing and construction in the United States.

Some believe what Trump is doing is good for the American economy in the long run.

The criticism is that in the short run, the economy may collapse. Tariffs being used as a ham-fisted way of negotiating fair international trade is a fool’s errand. America needs labor and material in the short run to achieve equal and greater prosperity than it had in the 1970s. Added manufacturing will aid American prosperity, but it will be surpassed in the long run by automation. It is the automation race America needs to win or compete with to remain a world leader. Competing in that race depends on education, and scientific research. The irony is that Trump is firing government employees who have responsibility for public education, research, and funding that have been the engines of America’s prosperity.

The government employees discharged by the Trump administration to solely reduce costs is short sighted.

In the 1980s, 60% of basic research in the U.S. was funded by the government. In 2022 that funding dropped to 40%. Advances in semiconductors, global positions systems, biotechnology, and aeronautics were government-funded discoveries in the 1980s. American government-funded scientific research gave America the internet, GPS technology, mass production of penicillin, Space exploration, human genome project discoveries, and renewable energy innovations. The Department of Health and Human Services has lost 20,000 employees, the Department of Education 1,300, the National Oceanic and Atmospheric Administration 800, and the National Institutes of Health 1,200. One wonders how many of these employees may have been on the edge of scientific discoveries that could change the world.

The truth of “Abundance” is that America has caused many negative ecological impacts and aggravated the gap between rich and poor.

Klein and Thompson have written a provocative book. However, the truth of “Abundance” in America has caused many negative ecological impacts and aggravated the gap between rich and poor. Looking only to abundance does not address either social inequality or the environment. The NIMBY (not in my back yard) resistance to affordable housing aggravates inequality and increases homelessness. Unquestionably, higher density housing impacts the environment.

Klein and Thompson fail to address the increased power of corporations in America.

The 2010 Citizens United v. Federal Election Commission gave corporations the power to spend unlimited amounts of money on political campaigns. The influence of corporations on elections has disproportionate power in the election of government policy makers. That decision by the Court is a distortion of one person, one voter’s influence on public policy.

Aristotle emphasized the importance of “All things in moderation”. NIMBY communities must open their minds and hearts to homelessness and moderate their resistance to neighborhood accommodation. Government agencies must supervise and service higher density housing impacts wherever they are built and after they are completed.

Unless homelessness is addressed with affordable housing, America’s future looks bleak. A land of have and have-nots will grow to crush American prosperity.

AMERICAN HOPE

From Fukuyama’s intellectual musing to our eyes and ears, one hopes he is correct about America’s future in the technological age.

Books of Interest
Website: chetyarbrough.blog

The Great Disruption (Human Nature and the Reconstitution of Social Order)

By: Francis Fukuyama

Francis Fukuyama (Author, political scientist, political economist, international relations scholar.)

Francis Fukuyama argues America is at the threshold of a social reconstitution. Fukuyama believes we are at Gladwell’s “Tipping Point” that is changing social norms and rebuilding America’s social order. He argues the innovation of technology, like the industrial revolution, is deconstructing social relationships and economics while reconstructing capitalist democracy.

Gladwell’s Revenge of the Tipping Point.

The immense power of big technology companies like Amazon, Google, and Facebook have outsized influence on American society. They change the tone of social interaction through their ability to disseminate both accurate and misleading information. They erode privacy and create algorithms tailored to disparate interest groups that polarize society. The media giant’s objective is to increase clicks on their platforms to attract more advertisers who pay for public exposure of their service, merchandise, and brand.

To reduce outsize influence of big tech companies, Fukuyama suggests more technology has an answer.

There should be more antitrust measures instituted by the government to break monopolistic practices and encourage competition with large technology companies. Algorithms created by oversight government organizations can ensure transparency and reduce harmful content to reduce big tech companies influence on society. (One doubts expansion of government agencies is a likely scenario in today’s government.)

On the one hand, technology has improved convenience, communication, and a wider distribution of information.

On the other, technology has flooded society with misinformation, invaded privacy, and polarized society. Technology has created new jobs while increasing loss of traditional industry jobs with automation. Trying to return to past labor-intensive manufacturing companies is a fool’s errand in the age of technology.

Luddites during the Industrial Revolution.

Like the industrial revolution, the tech revolution’s social impact is mixed with a potential for greater social isolation, and job displacement with the addition of wide distribution of misinformation. The positives of new technology are improvements in healthcare product and services, renewable energy, and climate understanding with potential for improved control.

Work-life balance in families has been disrupted by technology.

Face-to-face interactions become less and less necessary. Children’s access to technology impacts parental supervision and relationship. Fukuyama suggests setting boundaries for technology use needs to be a priority in American families. Technology can open the door to better education, but it also becomes a source of misinformation that can come from the internet of things. Employers have the opportunity to help with work-life balance by encouraging flexible hours and remote work. (Oddly, that suggestion is being undermined by the current government administration and many American companies.)

Economic growth, access to information, and global connectivity have been positively impacted by technology. However, the concentration of power, misinformation, and surveillance of social media has diminished privacy and eroded individual freedom. There are concerns about technology and how it is good and bad for democratic capitalism.

The good lies in increased efficiency, innovation and creation of new markets, through globalization. However, today’s American government shows how tariffs are a destroyer of globalization. Fukuyama implies A.I. and automation is displacing workers and aggravating economic inequality because it is being misunderstood for its true potential and also being misused. Personal data is used to manipulate consumers in ways that challenge the balance between corporations and consumers.

Fukuyama argues private parties will grow in America to create software that will filter and customize online services.

With that effort control of the influence of big tech companies will be diminished. With decentralization of big tech power and influence, society will theoretically become less polarized and more consensus oriented. The capitalist opportunity for tech savvy startups that diminish influence of big tech companies will re-create diversification like that which the matured industrial revolution gave to new manufacturers. Like Standard Oil and other conglomerates of the industrial revolution, businesses like Amazon, Google, and Facebook will have competition that diminishes their power and influence.

American Government will grow to regulate the internet of things just as it has grown to regulate banks, industries, and social services.

Service to citizens will become a bigger part of the economy as a replacement for manufacturing. Family life will re-invent itself as a force of society because of the time saved from manufacturing product to improve human relationships.

From Fukuyama’s intellectual musing to our eyes and ears, one hopes he is correct about America’s future in the technological age.

JAPAN

In planning a trip to Japan this year, it seems prudent to learn more about the history of Japan.

Books of Interest
Website: chetyarbrough.

Great Courses-Understanding Japan (A Cultural History)

By: Mark J. Ravina

Narrated By: Mark J. Ravina

Mark Ravina (Scholar of Japanese history at the University of Texas at Austin)

Professor Ravina’s lectures are a little too heavy on Japan’s ancient history but offers some interesting opinion about the rise of the Samurai, the evolution of women’s roles in Japan, Emperor Hirohito and his role in WWII, the democratization of Japan after WWII, and the cause of Japan’s current economic stagnation.

As is well known, the Samurai were a warrior class in Japan. Their role in Japanese history grows between 794 and 1185.

They began as private armies for noble families with estates in Japan. They became a force in Japanese politics and have had an enduring effect on Japanese society. They evolved after 1185 into a ruling military government called shogun that exhibited political influence through 1333, emphasizing Bushido or what is defined as a strict code of loyalty, honor, and discipline. That discipline extended to ritual suicide in defeat or disgrace to preserve one’s honor. Zen Buddhism entered into the Samuria culture, exhibiting a time of peace under the Tokugawa shogunate that lasted until 1868. After 1868, the Samurai era came to an end, but its cultural influence remains in a modernized military that adheres to qualities of discipline, honor, and resilience.

Traditional Japanese Woman.

The role of women in Japan has evolved from great influence and freedom for the well-to-do to a life of restricted domesticity.

During the Samurai era, the influence of women declined and became more restricted. The rise of Confucian ideals emphasized male dominance with women being relegated to domestic duty. Women turned to art, calligraphy, and religion as their societal influence decreased. In the Meiji Era (1868-1912) women’s education somewhat improved and they began to participate in political movements like voting and equal rights. Finally, after WWII, a new constitution granted women equal rights like the right to vote and enter the workforce. However, like America, traditional gender roles persisted. In today’s Japan, like most of the world, equal rights remain a battle for women.

Hirohito is the 124th Emperor of Japan.

He reigned from 1926 to 1989. Professor Ravina notes that a question is raised about whether the emperor was a follower or leader in Japan’s role in WWII. Ravina argues history showed Hirohito’s role was as a leader. In defeat, Hirohito renounced his divine status to become a constitutional monarch under U.S. occupation. Hirohito, as the crown prince of Japan, strengthened Japan’s diplomatic ties on the world stage. He was instrumental in scientific research in marine biology. He emphasized Japan’s drive to become an industrial nation and player in international trade. He militarized Japan in preparation for war and territorial expansion. He authorized invasion of Manchuria in 1931 to establish it as a puppet of Japan. Hirohito aids the American occupation, after WWII, to de-militarize and re-industrialize Japan.

With creation of a new constitution for Japan in 1947, Japan became a constitutional monarchy that made the emperor a symbolic figurehead, and guaranteed freedom of speech, religion, and assembly.

The constitution formally denounced war as a means of settling disputes. Land reform redistributed agricultural production to tenant farmers that reduced the power of wealthy landlords and promoted economic equality in rural Japan. Women’s rights were codified to allow voting and participation in politics. The constitution guaranteed equality but, like the rest of the world, culture trumped reality. Japan’s military was reorganized as a defensive force for national security. War crimes trials convicted Hideki Tojo, Iwane Matsui, Hei taro Kimura, Kenji Doihara, and Koki Hirota and sentenced them to death. In total 17 leaders were executed, and 16 others were imprisoned.

Free-market economy.

The democratization of Japan entailed economic reforms that broke up large industrial conglomerates to promote a free-market economy and reduce economic monopolies. However, the culture of Japan replaced the industrial conglomerates with networks of interlinked companies that operated cooperatively in ways that reduced competition in pursuit of financial stability. The education system was reformed to promote democratic values, and equal access to education for all citizens.

A free press was encouraged to foster transparency and accountability.

The results allowed Japan to rapidly improve their industrial productivity. That productivity was defined and improved by the teachings of W. Edwards Deming, a statistician and quality-control expert in the 1950s. His contributions led to the Deming Prize in 1951, an annual award recognizing excellence in quality management. (This is a reminder of Peter Drucker and his monumental contribution to business practices in the United States.)

In Ravina’s final lectures, he addresses the economic stagnation that has overtaken modern society in Japan.

It began in the 1990s. A sharp decline in asset prices wiped out wealth and triggered a banking crisis. Banks had made too many bad loans that became non-performing. Deflation ensued with falling prices that discouraged spending and slowed economic growth. Company profits declined. The demographics of Japan reduced the size of the work force because of an aging population and declining births. One suspects this demographic change is further burdened by ethnic identity that mitigates against immigration.

Japan’s consumption tax increases in 1997 impeded recovery.

The close ties between government, banks, and corporations resist reforms. And, as is true in America, global competition from other countries with lower cost labor eroded international trade.

INDUSTRY GREED

Sir John Anderson Kay calls for more training in ethical behavior and fiduciary responsibility in the financial industry. Kay believes “too big to fail” financial institutions should be broken up to reduce risk and encourage competition.

Books of Interest
Website: chetyarbrough.

Other People’s Money (The Real Business of Finance)

By: John Kay

Narrated By: Walter Dixon

Sir John Anerson Kay (Author, CBE, FRSE, FBA, FAcSS, British economist, dean of Oxford’s Said Business School.)

John Kay explains how the world’s finance system was designed to support national economies and international trade. However, he argues the world’s financial system, though designed to improve the lives of everyone, has evolved into a system that primarily benefits those within the financial industry, not everyone.

Kay offers the example of Ponzi schemes like that created by Bernie Madoff, and mortgage derivatives created by financial quants. Unlike Madoff’s personal enrichment, the financial industry’s’ mortgage derivatives enriched mortgage lenders, banks and brokers who sold them to other financial institutions like hedge funds, investment banks, mutual funds, foreign and retail investors. Mortgage derivatives were a national Ponzi scheme, greater than Madoff’s, that only enriched the financial industry. In 2008, the financial industry nearly bankrupted the world. The finance managers served no jail time while poorly qualified homeowners were thrown into the street because they could not afford their home mortgages.

What is puzzling is how so many people lost their homes in 2008 despite government regulation of the financial industry, which was ostensibly designed to protect consumers and stabilize the housing market.

“Other People’s Money” is managed by financial institutions that have nothing to lose if other people’s money is lost. A poor finance industry manager might lose his/her job because of poor sales received for selling financial products to other financial companies. However, if their sales are good, huge bonuses are given to top earners. Kay notes three faults in this system. One, it is a closed system that primarily feeds on itself as an industry. Two, the product of sale can as easily be worthless as valuable. And three, the money that is being used is primarily the public’s money, not the financial industries’ money. Mortgage derivatives became weapons of mass financial destruction. The public suffered more than the financial industry for the obvious reason that it was the public’s money.

In theory client funds are kept separate from a firm’s own assets. Though that may be true, the equity of lenders is small in relation to the loans made to others because the loan actually comes from “Other People’s Money”, i.e., those who deposit their paychecks in a financial institution. There are government entities like the SEC in the US that enforce separation of a lender’s equity from other people’s money but so what? Other people’s money is the bulk of what is lent out to others.

An example of the perfidy of the financial industry is the creation of mortgage derivatives that resulted in big bonuses to financial industry employees while many American citizens lost their homes.

Government regulations require record-keeping, transparency and risk management. So why did so many people lose their homes in 2008 while lenders were bailed out? If the Government regulated how other people’s money was being invested, how did the 2008 mortgage crises occur? It occurred because of the way the financial industry is regulated and the greed of financial institutions in selling a product that had less value than realized until it was too late. The fault within the industry grew bigger based on the packaging and resale of other people’s money in a product that became worthless.

The point is that there is little equity from money lenders that use “Other People’s Money” to invest in the economy. Financial institutions are required to have as little as 4.5 percent to 6 percent equity in loans for what they lend to others. The remainder is “Other People’s Money”. Most of the risk of institutionally loaned money is born by the public. Of course, there are insurance guarantees from the government, but they are limited.

Kay notes financial industries are motivated to expand their businesses by capitalizing on short-term gains for profit rather than long-term stability and growth.

Kay goes on to explain that financial institutions are the biggest contributors to candidates for public office. Just as the Supreme Court’s decision to give corporations personhood, the influence of corporate America distorts the influence of American citizens. Naturally, financial institutions push for favorable regulations designed to benefit owners and managers of the finance industry. He explains how financial risk is designed to fall back on taxpayers and less informed investors. Because financing institution managers are using other people’s money, they are more concerned about lender profit and their bonuses than loan default. Kay suggests there is a lack of transparency that hides the exploitive nature of lending that has minimal personal risk to lending institutions, its managers, and loan officers.

Kay argues financial products and services need to be simplified and made more transparent so consumers can understand how lending institutions and insiders are benefiting from their transactions.

Kay explains the primary functions of the financial industry should be focused on making payments simple with clearer explanations of risks so that capital is efficiently and wisely allocated. Government oversight should be exercised to promote transparency, accountability and long-term stability of the economy. Training in ethical behavior and financial responsibility is needed for agents of the financial industry so that incentives and rewards balance with the needs of the economy.

Kay notes there is nothing in the way of another financial crises like the 2008 debacle.

Kay suggests regulatory reform is necessary with greater transparency, and accountability for long term financial stability. He calls for more training in ethical behavior and fiduciary responsibility in the financial industry. Kay believes “too big to fail” financial institutions should be broken up to reduce risk and encourage competition.

THE DISMAL SCIENCE

It appears to this listener/reader, the rise of authoritarianism in the world today lays at the feet of Marx and, to a lesser extent, von Mises’ economic theories.

Books of Interest
Website: chetyarbrough.blog

Human Action: A Treatise on Economics

By: Ludwig von Mises

Narrated By: Jeff Riggenbach

Ludwig von Mises (Austrian-American economist, logician, sociologist, and philosopher. 1881-1973, died at age 92.)

Economics is defined as a social science that studies how individuals, businesses, governments, and societies allocate resources to satisfy the needs and desires of a community of people. Historically, one of the greatest explainers of this social science is Ludwig von Mises. Maturing at a time of the communist revolution, the advance of capitalism and both world wars, von-Mises offers one of the greatest books about economics since Adam Smith. The only economist of greater significance is Adam Smith (1723-1790) because of his origination of the principles of economics. Close behind are Karl Marx (1818-1883), and John Maynard Keynes (1883-1946).

KARL MARX (BORN TRIER, GERMANY 1818-DIED LONDON, ENGLAND 1883)

Of course, all economists are beholding to Adam Smith with his original conception of the dismal science. Smith conceived of the “invisible hand” of economics that postulated self-interest as the primary contributor to the overall good of society. Von Mises seems to guardedly agree but suggests self-interest’ market pricing can artificially distort distribution of economic resources. Von Mises infers the “invisible hand” is inefficient at the least and may artificially distort prices in the hands of authoritarian governments and business monopolies. Karl Marx suggests the invisible hand would evolve into a production system that would be owned by the public to ensure equality of distribution in an evolutionary economy that passes from capitalism to socialism, and finally communism. Marx argues self-interest will evolve into a common interest for all. Marx’s idea of change in the nature of human beings beggars the imagination.

Smith supported limited government intervention to maintain justice, defense, and public works.

Both Smith and Marx believed in a “labor theory of value” which argues the value of a commodity is determined by the labor required to produce it. Where Smith and Marx depart is in government enforcement of a balance between labor and the cost of goods. Von Mises opposed most forms of governmental intervention in the economy. However, Keynes argues government intervention is necessary during economic downturns. After WWII, Keynes theory became an important part of the American government’s support of European reconstruction.

Von Mises believed in human individualism which carries the risk of authoritarian domination.

Von Mises believed in human individualism while Smith and Keynes support limited government intervention. Marx argues human nature could be shaped by a melding of government dictatorship with societal pressures to support communal goals.

None of the economists seem to fully understand human nature will always get in the way of economic growth.

At extremes, von Mises endorses individualism and Marx endorses dictatorship. The middle ground seems held by Adam Smith and John Maynard Keynes that endorse limited government intervention. It appears to this listener/reader, the rise of authoritarianism in the world today lays at the feet of Marx and, to a lesser extent, von Mises’ economic theories.

The length and value of von Mises’ book overwhelms a non-economist listener with his esoteric statistical and lengthy explanations of economic theory. However, comparison with a dilatant’s understanding of other renown economists is enlightening.

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