Friday, May 22, 2015

OECD report confirms world-wide economic inequality

Confirming the sentiment of my previous posts about economic inequality primarily in the U.S.A., OECD's new report on world-wide economic inequality is sobering. This report, coupled with the analyses of economists who have already rung the alarm bell, identifies the countries where inequality has grown most dramatically even in the face of the 2008+ world recession. The richest have only grown richer and this poses a significant threat to the world's economies. Economies stagnate from those with the greatest wealth holding and growing their own net worth while middle class citizens would stimulate economic vitality by actively using their resources to purchase products and services.

Tuesday, May 12, 2015

Stiglitz - The Price of Inequality

Joseph Stiglizt paints a picture that many do not want to see, particularly those in the U.S.A. In The Price of Inequality (2013) he admits that it was hard to acknowledge “that the United States was no longer the land of opportunity portrayed by Horatio Alger stories of ‘rags to riches.’” One of the most important points of his book was that the blaming and framing for individual advantage that has become so much a part of the American debate has to stop. In its place we need a substantive conversations informed by “self-interest properly understood” (Alexis de Tocqueville) that has the potential to return U.S. economic policy to one that serves many, rather than the few. Before offering some reflections, no personal indictment is intended to anyone – I’m a humanist trying to understand economics and, more importantly, attempting to find ways to devise an economy that can serve all people more equitably.

The parallels between the Gilded Age of the late 19th and early 20th century and what is now occurring at the beginning of the 21st century is striking. The statement, “America’s concentration of wealth at the top was a result of rent seeking – including monopoly profits and the excessive compensation of some CEOs and, especially, that of the financial sector” is applicable across both times. Think of the names of the Gilded Age – Carnegie, Vanderbilt, Frick, Morgan, Rockefeller – and now those of the 21st century – Buffet, Walton, Gates, Trump… Using one example, the Waltons who are heirs to the Walmart empire control 69.7 billion dollars of wealth, equivalent to the total wealth of the bottom 30% of the entire U.S. economy. And what does Walmart do? It purchases and moves products made by others and makes them widely available at below market prices (sometimes) because of economy of scale. Walmart adds nothing to the general welfare of society and creates no innovation or advancement – it’s only a broker of the sweat and effort of others.

Rent seeking is extracting a natural resource or controlling access to a service or product that shifts wealth simply by taking it away from others. No contribution is made through innovation or the provision of any product or service. Countries that have abundant natural resources have classic rent seeking economies that gain access to their resources at prices and with terms that are lower than fair market value. The question about the rent-seeking economies is who owns these resources, especially when their extraction creates other impacts that create costs that are then laid at the feet of the public.
What happens among some of those with extreme wealth is that they credit their success to themselves, not recognizing the free gift of generations ahead of them, the opportunities of education and work they were accorded, and the infrastructure of a government and society that makes innovation and commerce possible. When this generational and public gift remains unrecognized, it becomes a sort of corporate welfare that no one acknowledges. “When the oil industry pushes for more offshore drilling and simultaneously pushes for laws that free companies from the full consequences of an oil spill, it is, in effect, asking for a public subsidy.” Beyond the financial costs associated with rent seeking, the greatest cost may be the “erosion of our sense of identity in which fair play, equality of opportunity, and a sense of community are so important.”

Ronald Reagan started the repositioning of the U.S. economy when he reduced taxation at the highest levels from 70% to 28% under the premise that the benefit to the rich would trickle down to the lower economic strata of citizens. The extreme inequality that is derived from the Reagan era, contradicting the trickle-down idea, has created a parallel and dysfunctional divide in the politics of the current generation. Those who have obtained great wealth are now able to more easily buy politician’s votes through campaign support, a dynamic that creates misinformation campaigns to manipulate the middle and lower class into thinking that maintaining an unrestricted economy that benefits the wealthy is in the interest of common citizens.

The solution that Stiglitz recommends is dramatic – focus “on community rather than simply on self-interest – both community as a means to prosperity and as a goal in its own right.” Return to an achievement model of income determination, one based on rewarding in income those who make the greatest contribution to society. Then reverse the government’s fiscal position by raising taxes at the top to reasonable levels, cut out corporate welfare and subsidies, increase taxes for corporations that don’t invest and create jobs in the U.S., impose taxes/charges on polluters, stop natural resource give aways, cut military waste, don’t overpay through government procurement (whether it’s a drug company or a defense contractor). Then invest in infrastructure, education and technology that will establish the base for growth in the future.

While these measures may seem draconian to some, they are likely in everyone’s best interest – even those with extreme wealth. The growing economic divisions among us all are dangerous because they result in hopelessness for some (resignation to poverty), unrest among others (public protest and violence), and complacency for those who do not recognize that economic disparity is one of the greatest dangers we face in terms of political and military conflicts around the world.

Thursday, April 09, 2015

April 9, 1939 - Marian Anderson's act of conviction

Seventy-six years ago today, Marian Anderson sung before an audience of 75,000 at the Lincoln Memorial because the Daughter's of the American Revolution (DAR) refused to allow her to sing in Constitution Hall in Washington, D.C.  Howard University had invited her to sign; because they didn't have a venue large enough to hold the crowd they anticipated, they asked for the use of Constitution Hall which was denied because of a policy that only allowed whites entry. First Lady Eleanor Roosevelt immediately resigned from her DAR membership and helped to move the much-anticipated concert to the reflecting pool in front of the Lincoln Memorial. While Anderson did not see herself as an activist for civil rights, her courage in proceeding with the concert in 1939 turned into what many recognize as the first-ever public protest concert in American history. Acting on principle turned a concert that would have been great into something even greater when both the music and message reached so many hearts. As Jessye Norman noted (in her memoir, Stand Up Straight and Sing) in reference to Marion Anderson, "When I think about how, despite the pervasive prejudice she experienced, she did not allow hatred to dampen the song within, I can only be grateful." Those who act on conviction should not allow resistance in any form to dampen the song within.

Wednesday, April 08, 2015

Still a question - Can you learn to lead?

The conversation about how, or if, we can learn to lead is raised by advocates and cynics alike. The latest version in the New York Times poses responses from Professor Cunliffe at the University of Bradford (UK) who says that leadership is essentially "being passionate about what you do" to that of Professor Van Maanen at MIT (USA) who is quoted as saying that the "idea that (leadership) can be transmitted... is ideologically vacuous." Articles like this continue in the litany of provocations that may eventually lead to concluding that we should give up, or that we have no choice but to try harder. Unfortunate that the author references Joseph Rost as proof that there is no agreement about what leadership really is. Duff McDonald's use of Rost for this purpose declines to acknowledge Rost's more important and prophetic role in proposing that leadership is more than privileged individuals with position and status in comparison to leadership that is often demonstrated as an unfolding dynamic among people seeking to work together toward a common goal.

Encountering power

I recently had the opportunity to work with some colleagues in conceptualizing and refining a new approach to leadership studies and development that they intend to launch as a point of distinction for their college’s student recruitment programs. The goal to increase enrollment was convincingly undergirded with the aspiration to improve students’ learning and better prepare them for the 21st century world they will encounter upon graduation. After review of planning documents, I determined to focus my remarks to this group substantially on the core ideas I advocated in Deeper Learning in Leadership (Roberts, 2007) – Leadership as “conviction in action” and supported by a framework of fostering habits or dispositions of presence, flow and oscillation in students’ lives.

During the question and response time after my remarks, a thoughtful political scientist raised the question of why I had not addressed power as an important dynamic of leadership. I responded in the moment but wasn’t really satisfied with what I said so the question has lingered in my thinking.

Over the years I’ve read untold numbers of leadership books and articles and entered into conversations that recognized power as an important dynamic of leadership. I have also experienced the exercise of power in many and varied forms – coercive, manipulative, challenging, undermining, and facilitative. The advocacy to include power in the conversations about leadership often comes from political scientists with Ron Heifetz and Barbara Kellerman of Harvard’s Kennedy School of Government being my favorites.

In my response to the question about power I acknowledged that power is an aspect of leadership that needs to be recognized and I asked the colleague who raised the question to work with others at the college to make sure that the political scientist’s perspective on power is, indeed, included in the leadership studies curriculum they are designing. I went on to say that I still believed that helping students find conviction in their lives and pursue it in ways that allow for authenticity (through presence) was the core of the question, as opposed to focusing on power as a controlling variable in leadership.

Models such as I’ve advocated in leadership as conviction in action, or Greenleaf’s “Servant Leadership,” or the “Social Change Model of Leadership” may seem na├»ve or uninformed among those whose discipline it is to study politics and power. In fact, the models focused on advocating for the common good rather than individualistic benefit may need to focus more on power and how it can be used to advance or undermine compassionate leadership efforts. The reality is that throughout history and in our own times there are those who seek to fulfill their own power hungers and these people have had a profound impact on us all.

On the other hand, the use of power to achieve ends that serve the needs of few to the exclusion of the broader good is quite often a short-gain proposition. History and international dynamics we now see demonstrate that self-serving, divisive or abusive use of power in the name of leadership will ultimately result in decline and failure. By contrast, compassionate leadership that considers the greater good will eventually surface and will defeat power wielding in the end. I propose that focusing on leadership learning that cultivates conviction among today’s students is the long-term strategy that will foster many who see themselves as capable of leadership and will encourage them to stay the course even when power dynamics may not temporarily be in their favor. And, leadership educators need to help those who aspire to leadership to understand power, its positive and negative uses, and to assist students in determining the costs and benefits when they encounter power.

Monday, March 16, 2015

Inequality of economic opportunity

Whether analyzed over history in Thomas Picketty’s, Capital in the 21st Century (2013), in relation to the patterns of inequality in the U.S.A. today by JosephE. StiglitzThe Cost of Inequality (2012), or from the stories of those who sought to challenge exploitive systems that perpetuate inequality in Michael Lewis’ Flash Boys (2014), the message is clear – inequality of economic opportunity, and how many of those privileged with wealth protect and exaggerate it, is one of the most entrenched and volatile problems we face in the modern day. I am not an economist and so qualify my reflections by acknowledging that I am a novice and was previously uninformed about economics and its impact. However, reading these three books has allowed me to integrate a variety of perspectives and to learn enough to know that economic opportunity is a problem that we must all face.

As a backdrop to my reflections, the intent is not to criticize anyone but to face honestly a system that is inherently unfair and perpetuates itself, with those fortunate enough to enter the ranks of extreme wealth acquiring opportunity that most others have no idea even exists. Some people with great wealth use it productively, putting it to use in providing services and products that offer employment opportunity to others. This is the legendary “trickle-down” economics theory that many espouse when they say that wealthy people should not be taxed on their worth but, instead, allowed to put it to work by feeding an economic system that benefits all. The sad reality is that “trickle-down” seldom works, with the seriously wealthy of today most often holding their wealth or putting it in places that create only more money rather than active investment that builds a vibrant economy.

Picketty’s analysis included review of tax records going back 250 years to determine patterns of inequality and how they shifted as a result of world phenomenon such as the French Revolution, World Wars, and depressions. The bottom line is that those lucky enough to gain a hold of even modest wealth in the developed world are automatically destined to proportionally increase that wealth over time. His assertion is based on the simple fact that capital return has always out-paced growth in all countries and all historic periods. So, if you have it, you will keep it and add to it. Thus the lower or middle class seldom break the bonds of their socioeconomic class. His proposal is to consider a world-wide progressive tax on the very, very wealth (.001 of the population) so that they still have return on their investments but not at the extreme levels that has allowed them to emerge from the 2007/08 world recession with more money than they had going in. Why world-wide – because extremely wealthy people have ways to hide money so that it cannot be taxed. Thus, a universal tax would require all countries to report deposits that can then be traced back to their owners. The revenues would be invested in infrastructure ranging from education to highways that extremely wealthy individuals/corporations use to make more money but invest little to establish or maintain.

Stiglitz, a Nobel Laureate credited for his insights on economics and an influential leader in U.S.A. and international organizations (chair of Clinton’s Council of Economic Advisors, the World Bank, and others) is credited for challenging the concept of free market economies, indicating in a 2007 interview that "The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith's invisible hand: individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency." Picketty's book described the way economic inequality has influenced politics in the U.S.A. in recent years, indicating that allowing campaign donations at unprecedented levels has resulted in “pay for hire” politicians who no longer represent much of a constituency beyond those who economically benefit from their policy actions. And the campaign funds spin the candidates’ images, making it look as if common citizens are being protected by these politicians. One of his assertions was that high wealth individuals frequently believe that they got where they are because of superior ability or hard work when, more likely, they prospered as a result of inheritance or utilizing systems provided by the government to support their businesses. One particular group within the high wealth strata are the managers who now command astronomical salaries by historic comparison and continue to demand more under the assumption that they possess unique and therefore highly coveted talent, even when their corporate ledgers reflect otherwise.

Lewis’ Flash Boys tells the story of an individual who discovered the practice of high frequency traders, realizing that HFT added nothing to the economy other than making more money for themselves and their clients simply by getting to information about equities trading before others did and then manipulating purchases in ways that resulted in positive yield not as an investment but as a timed intervention in financial transactions.  Flash Boys had a positive ending in that a team of insightful and cunning economic and technology experts established a new market that could not be manipulated by HFT, thus leveling the playing field for all investors, regardless of how fast their trading speed was. One of Lewis’ most disturbing assertions was that analysis of financial markets and the corresponding regulation of them over time indicates that every time policy is put in place, those involved in the markets go to work to undermine or to find other ways to produce their financial gains.

These three books have informed and disturbed me in very significant ways. The implications include:
  1. Extreme wealth perpetuates itself and offers little opportunity to strive for the “American Dream” that was so much a part of the identity of many in the U.S.A. from its founding.
  2. Those with extreme wealth, whether through their own action or more likely their advisors, intervene in public policy to protect and to add to their wealth, resulting in a system that cannot be self-corrected.
  3. As those around the world enter the economic elite circles, they often do so without a real understanding of the implications for their own citizens.
  4. Extreme wealth is often acquired by those who access publicly-provided systems and infrastructure, and worse they exploit natural resources or create environmental damage, for which they do not pay.
The point for those of all socio-economic strata and nationality is how a world economy will be created that is balanced and offers the opportunity of advancement that hard-working individuals/families seek. The global economic environment in which we now live has resulted in everyone being able to see the disparity that exists, a disparity that leads to hopelessness among some and for others becomes a catalyst for resentment – potentially planting the seeds for anarchy. Whether you are rich or poor, it’s hard to avoid a conclusion that the economic systems of the world needs to be monitored, improved, and based on fairness, stewardship of resources, and contributing to the public good.

Saturday, March 14, 2015

Who are "expats" anyway?

The Guardian carried a short article on the term "expat" or "expatriate" related to privilege. Having just passed my 3-month return date from 7 years in Qatar, I tend to agree with the assertion that expatriates are a privileged class of workers by contrast to others who are labeled migrant or immigrant workers. It is a mark of the privilege of an expat that I had never noticed the difference in language; however, I know I was never called a migrant worker and many of the really good people I knew were never dignified by being called expats.

For those who are accorded the expat title, perhaps a little reflection is in order. The article has a picture at the top which says it all. When expats work abroad, what kinds of systems and stereotypes might they be perpetuating? One of the benefits of expatriate work in Qatar was that salaries were good and the pay scales of migrant workers were very low - allowing the expats to hire nannies, house keepers, cooks, and drivers that they would never be able to otherwise afford. The rationalization was that the migrant workers benefitted from the extra pay they could earn from the many odd jobs they took in order to scrape by while sending most of their earnings back to their families. This rationalization is real - the migrant workers needed the extra income in order to support their families. But the reality of perpetuating classism and subjugation remains.

I have to admit that the privilege of being an expatriate worker was something I enjoyed. This article calls me to reflect on how I treated those around me. Did I treat these friends/colleagues with respect? Did I offer fair compensation for their labor? Did I do anything to challenge the systemic conditions that resulted in the migration of so many people from their homes? For those who have never worked abroad, the numbers are huge - primarily among Southeast Asians and Africans. Because of economic or political conditions in their home countries, these "expatriated" workers had no other choice. They had to take the risk of going to a place very different from their home, spending extended periods away from family and loved ones, and hoping that in the end they would be able to provide for their families.

Sobering thoughts...

Wednesday, January 07, 2015

Acute awareness

I thought I would blog more upon my repatriation to the U.S.A. However, I realized today that the persistent view that I didn’t have anything to say was more about my awareness. Looking back on blog posts from 2005 to 2015 (wow, 10 years of blogging!), it is obvious that I blogged more during periods of acute awareness which usually came during periods of transition to and from the U.S.A. to Europe, back again, and then the longer period of enculturation in Qatar. However, was the issue the stimulus (i.e. change) or was it awareness? I now think that it was awareness, something that has been stirred for me through some interesting experiences over the last week.

Over the last 2 months of being back in the U.S.A. I’ve noticed a couple of cultural differences that are not profound but nevertheless important. Americans are much more respectful and comfortable with lines (no crowding, cutting, or impatience), they tend not to engage informally with strangers, and their interactions are often quite transactional (get the task accomplished rather than establish a relationship). While I appreciate the respect for lines (especially when it comes to auto driving safety), I’ve been uncomfortable with the lack of engagement. My first attempt to cross the line was introducing myself to staff at the fitness center I joined this last week. The very first introduction resulted in a series of discussions with a fascinating guy, Chris, who is transferring from a local community college to the University of Southern California later this week. When he found that I had worked in higher education, he started pumping me with questions that took me back to the wonderful conversations I used to have in the fitness room in Doha. He asked about choice of major, where he should live, and how to make the most of his education. This is a young man who I assume is of relatively modest means but who now sees himself at a critical juncture of opportunity.

The encounter with Chris contrasted with an a cappella group performance this last Sunday in Wilmette. The group was from Yale and they were good enough musically but it was who they were and the way they presented themselves that caught my attention. First of all, all the 12 singers were White, something that just is not part of my worldview these days. Then when they each introduced themselves by indicating their hometowns, majors and aspirations, they proceeded to minimize the importance of their majors and often referenced very trivial aspirations compared to the weight of the institution they attend. I’m confident that the light introductions were intended to keep things humorous and entertaining but the impact for me was very different. What I saw was young White Americans taking their great privileged for granted and perhaps not even taking themselves as seriously as they might.

How do these fragments fit together? First of all, it feels good to return to a more reflective place where I am actively aware of what’s going on around me. Being acutely aware in a different cultural context is in many ways more natural and spontaneous but I can choose to be more aware in any environment where I am willing to cultivate perspective. Secondly, I am eager to reinforce the impression that I know many U.S.A. educators have – that American students are often complacent about their privilege and therefore miss great opportunity. This complacency of privilege occurs across cultural and national borders as well. I do not assert this concern as a criticism of contemporary students but as a challenge that educators need to address. The bombardment of information in today’s world is overwhelming. Whether it’s the hyperbole of news media turning everything into an event (i.e. the need to now name every storm front that moves across the U.S.A.) or the profusion of personalized messages and perspectives coming into our cell/mobile devices, how to sort through what is important and matters is a huge task and requires considerable discipline. While I know there is a place for light conversation and relaxation, it seems to me that acute awareness rather than complacency is what we should seek. This acute awareness would then hopefully (Insh’Allah) result in discerning and critical analysis, seeing ourselves and others more realistically and compassionately, and engaging in leadership and membership that has the potential to shape a justice and caring world.