Filthy Lucre

For hundreds of years in the West it was deemed vulgar to be involved in the making of more money than was required to live on, including lending at interest or simply hoarding. The notion that one would spend his or her time simply accumulating money and wealth was regarded, not only by the Christian Church but also by those “in the know” as beneath contempt. In Dante’s Inferno, for example, the usurers are placed beneath the murderers because they commit a sin against God, whereas murderers only commit a sin against man. Those who lend money at interest seek to make money appear where there was none before, creating money without laboring in any way, creating money ex nihilo. Only God can do this, it was thought. When man seeks to copy God he has stepped beyond a moral barrier that condemns him to eternal perdition. In Dante’s poem the usurers sit at the edge of a burning pit with heavy bags of gold around their necks, waiting for the gold to increase, presumably.

There can be no doubt that the deep prejudices that folks like Adolph Hitler drew upon against the Jews in Europe was based, in part at least, on the fact that the Jews saw nothing wrong with usury or the making of money while those who did not espouse that particular religious view were told in no uncertain terms that it was contemptible and trifling and even vulgar. There was one Jew, of course, who founded a new religion based on the notion that it is easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of Heaven. But he was an exception and has been widely ignored, especially of late. In any event, the accumulation of wealth as an end in itself was regarded as de-humanizing and even immoral.

How did this view change? How did we get from looking down at money-gatherers to regarding them as the most successful people on earth and worthy not only of our respect but even, in some cases, of our adoration? Bill Gates and Warren Buffet are held in high esteem in our culture. We even have elected a president whose only possible claim to that office is that he was a successful (?) businessman. They are examples of the fact that anyone can “make it” in America. The Horatio Alger myth lives on, though it gets a bit weaker when we discover that many were born with a silver spoon in their tiny mouths and we also discover that Balzac was right: where there’s a fortune there must have been a crime.

In any event, the attitude toward “filthy lucre” has changed radically and it is down to people like John Locke, Adam Smith, and John Calvin. The changes in attitude came in two stages. Firstly, the notion that the acquisition of great wealth, once regarded as a sign of grubby self-seeking greed, had been replaced by the eighteenth century, when capitalism was aborning, by the notion that the accumulation of great wealth was an example of virtuous behavior  — a point of view we find expressed again and again in Adam Smith who wrote that “probity and punctuality are virtues that invariably accompany the introduction of commercial relations into society.” And, secondly, it was said that commerce benefits not only the one who engages directly in the activity, but it benefits everyone else around him as well. It has a “trickle down” effect, if you will. Smith worried that capitalism displaced centuries-old morality, but he felt that, in the end, it was worth the trade-off.

But even before Smith we read that John Locke worried about the possibility that in a state of nature a man could accrue to himself more of nature’s bounty than he could possibly need and in the process leave little or nothing for his fellow humans. This was not a good thing. But once gold and silver were taken to be true wealth and John Calvin insisted that the gaining of wealth was a sign of God’s grace and favor, this no longer was a problem; now one could accumulate as much as he wanted whether he could ever spend it in his lifetime or not. It would never spoil and, presumably, there was plenty left for others to accrue as well. So was born the “Protestant work ethic.”

Thus, in our day, we have heroes who would have been pilloried in earlier times. We now regard the making and hoarding of money as not only acceptable but also as a sign of intelligence, imagination, and hard work, worthy of admiration, a measure of success. In the process the accumulation of capital, has become at the very least an a-moral activity, even though folks like Karl Marx continued to regarded it as immoral — because it necessarily involves the taking it way from others who need it more, who earned it, and therefore deserve to have it. This happens under capitalism in the form of the creation of “surplus value” which we have come to dismiss as, simply, “the earnings of capital.” The wealthy see their immense profits as something they have earned and therefore deserve, whereas others (like Marx) might view it as coming at the cost of unethical acts that involve the exploitation of those who actually do the work necessary to produce the wealth in the first place.

But no matter which way we look at it, the making and hoarding or money, no matter how great the hoard, is now viewed in our culture as a good thing. It is no longer “contemptible and trifling,” unworthy of human beings who have been touched by the hand of God. It is no longer “vulgar.” At the very least it is clear that the making of filthy lucre has become “demoralized.” Ethics and economics simply do not mix in our current commodified culture. No longer do the usurers have to worry about  being placed in a burning pit with heavy bags of gold around their necks through eternity. Now they build high-priced, low-quality mini-mansions, swim in their own swimming pools, and drive large, powerful gas-guzzling cars to Church every Sunday for an hour.  And the rest of us admire them and want to be just like them.

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Enlightened Despot?

Joseph Schumpeter. whose remarkable book Capitalism, Socialism and Democracy, I have referenced before, alludes to the difficulties that democracies have in passing necessary legislation — and the ease with which a dictator such as Napoleon had in making it happen:

“One of the most pressing political needs of the moment was a religious settlement that would clear the chaos left by the revolution and the directorate and bring peace to millions of hearts. This he achieved by a series of master strokes, culminating in a concordat with the pope (1801) and the ‘organic articles’ (1802) that, reconciling the irreconcilable, gave just the right amount of freedom to religious worship while upholding the authority of the state. He also recognized and refinanced the French Catholic Church, solved the delicate question of the ‘constitutional’ clergy, and most successfully launched the new establishment with a minimum of friction. If there ever was any justification at all for holding that the people actually want something definite, this arrangement affords one of the best instances in history.”

In the face of an inept and stupefied Congress in this country in our day, we find numerous changes that would make our democracy work more effectively and which we know full well will never get done. I am thinking of a Constitutional Amendment eradicating the absurd Supreme Court decision in “Citizens United” that gave the corporations the power to pull the political strings in this country; I refer also to another Constitutional Amendment clarifying the Second Amendment to make it crystal clear that it is the militia that has the right to bear arms — as was the original intent of the Amendment; the eradication of PACs which coerce the government in the direction of special interests; and, of course, term-limits for the members of Congress. We know these things will not happen because those who would make them happen prefer the status quo which favors themselves and their political party.

After Warren Buffet announced on CNN recently that “I could end the deficit in five minutes,” . . . You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election” there appeared  a petition making the rounds of social media  that insists that he could remedy the financial crisis in this country with the following seven step plan:

1. No Tenure / No Pension. A Congressman / woman collects a salary while in office and receives no pay when they’re out of office.

2. Congress (past, present, & future) participates in Social Security.

All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all Americans do.

4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the American people.

7. All contracts with past and present Congressmen/women are void effective 3/1/17. The American people did not make this contract with Congressmen/women.

Now, whether Buffet could manage to pull it off or not depends on whether he could be declared “despot for a day” and given the emergency powers to effect change. His hope that his foray into the social media will alert enough people to the problem and his solution to place sufficient pressure on the Congress to effect these changes is a bit of a pipe dream —  like the changes I noted above — much needed, but not bloody likely.

This sort of situation makes the heart yearn for an enlightened despot who would indeed be able to make the changes that are so necessary for the well-being and happiness of the citizens of this country — who are supposed to be the ones in whom the sovereignty resides. This softening of the heart goes all the way back to Plato who had a very low opinion of the democracy that condemned his beloved Socrates to death, and preferred a “philosopher king” who, like Napoleon or Warren Buffet, would make things right.

But, as we all know from reading our history (?), despots can become corrupt and instead of an enlightened despotism citizens often find themselves faced with a tyrant. At present we have a president who would be a depot if allowed — and the recent discussions in Congress about giving this man “emergency war powers” to deal with the situation in the Middle East would help bring this about. But we can see at a glance that such a man would turn that despotism into a tyranny in the blink of an eye and we shudder to think of the consequences — and sincerely hope the Congress stops such talk immediately, if not sooner.

So, perhaps, we should stop day-dreaming and simply be content to muddle through with a slow and inept (if not downright corrupt) Congress in the hope that while they accomplish nothing worthwhile they will at least keep the man in the Oval Office from making mistakes that would shake the globe and bring the democracy (or what is left of it) crashing down about out ears.

Like Rats…

Like rats leaving a sinking ship, Republican faithful are abandoning Donald Trump in growing numbers. The latest to abandon the Trumpet, as of this writing, is Meg Whitman the billionaire C.E.O. of Hewett Packard. As she noted in switching her allegiance to Hillary Clinton:

“As a proud Republican, casting my vote for President has usually been a simple matter. This year is different,” she said in a statement released Tuesday night. “To vote Republican out of party loyalty alone would be to endorse a candidacy that I believe has exploited anger, grievance, xenophobia and racial division. Donald Trump’s demagoguery has undermined the fabric of our national character. . . .

“Trump’s reckless and uninformed positions on critical issues -– from immigration to our economy to foreign policy — have made it abundantly clear that he lacks both the policy depth and sound judgment required as President,” Whitman said. “Trump’s unsteady hand would endanger our prosperity and national security. His authoritarian character could threaten much more.”

Whitman went on to praise Clinton for her “temperament” and “global experience” that she said would make the former Secretary of State a “far better choice” for President.

Whitman thus joins such Republican luminaries as Warren Buffet, Michael Bloomberg, Mark Cuban, and Representative Richard Hanan in swimming away from what appears to be a sinking ship. My blogging buddy Keith suggests that Mike Pence might be next as he tires from trying to explain what his boss meant to say but, typically, screwed up. Can we then expect Trump himself to decide the effort is simply not worth it and throw in the towel? I suppose in this crazy election year anything is possible. I have already suggested in a prior post that he really doesn’t want the office anyway. If he does abandon ship he will make it appear to have been someone else’s fault. That much we have learned.

There are two major concerns here in this comedy of errors: to begin with, there is the real possibility that Hillary’s camp will become complacent and decide to try to jog to the finish line. That would be a serious error and I suspect that Hillary is astute enough to try to see that this does not happen. But her followers will need to be sufficiently energized to continue the race to the finish.

At the top of the list, however, is the concern over what Trump’s followers will do if and when he withdraws or (worse yet) remains in the fight and loses. That fear has already surfaced among those who know the man and who have seen the kinds to scum that crawled out from under the rocks the Donald kicked over during the past few months. This is a major concern. One “expert” predicts it will be a “bloodbath.” Certainly, there will be massive protests, some violent, one would surmise. In a word, when it’s over it may not be over.

Alternative Energies

Germany is one of the countries leading the world in the switch to renewable energies. And like other countries that have seen large-scale switches to clean energy, the utilities are taking it in the shorts and crying “uncle.” This includes not only private homes but also the industries in Germany, 16% of which are now off the grid — double the percentage of the previous year. This is cutting into the profits of the utilities, Germany’s mega-utility company, RTE, claiming to have lost $3.8 billion lat year alone. The Swedish utility company Vattenfall, which has large investments in Germany, claims to have lost $2.3 billion last year.

Declining demand for electricity from the grid in Germany

Declining demand for electricity from the grid in Germany

Needless to say, this doesn’t disturb the clean-energy advocates one bit but, more to the point, it should have been seen coming by the energy companies. Germany has been shifting its energy priorities for some time now and it is inevitable that the utility companies would see their profits fall. As a recent story tells us:

When unveiling today’s dismal earnings, RWE’s Terium admitted the utility had invested too heavily in fossil fuel plants at a time when it should have been thinking about renewables: “I grant we have made mistakes. We were late entering into the renewables market — possibly too late.”

To which I simply add: Duhhhhh! One can only ask when Big Oil and Big Coal in this country will climb aboard the clean energy train. In its small way, alternative energies like wind and solar are already making inroads into the profits of the utility companies — in places like Hawaii, for example, as reported recently. And this despite the absence in this country of a clean energy policy and very little Federal support.  In fits and starts the switch to clean energy will continue to happen, despite the unwillingness of the Congress to get behind alternative energies and the necessity for private investors like T. Boone Pickens and Warren Buffet, and a few of the states, to lead the way. It will happen. This country will eventually follow Germany’s and China’s lead into the 21st century and if the corporations that blindly push for fossil fuels continue to ignore the handwriting on the wall, their overpaid CEOs will echo the cries of “foul” we now hear from Germany. It’s not rocket science, it’s just good business. One would think that American businessmen who are supposed to be among the best and brightest in the world would realize where their own long-term best interest lies. But, then, business doesn’t teach us much about the long term; it’s almost always about short-term profits. Brace yourself for the coming outcry! Relish it when it comes.

A Pleasant Surprise

It was surprising to read last week that the United States is vying with Saudi Arabia to lead the world in oil production. Surprising but also a reflection of our insatiable thirst for oil and other fossil fuels and our blind determination to do whatever it takes to extract oil, gas,  and coal from the earth. But after attempting to digest that news, it was even more surprising to read the delightful news that Saudi Arabia plans to focus its attention at home on renewable energy — clean energy (if we allow that nuclear is “clean.”) A recent story begins as follows:

Earlier this week, Prince Turki Al Faisal Al Saud, a top spokesperson for Saudi Arabia, said that Saudi Arabia intends to generate 100 percent of its power from renewable sources, such as nuclear, solar, and low-carbon energies.

“Oil is more precious for us underground than as a fuel source,” said the prince, whose country holds approximately 20 percent of the world’s oil reserves, according to the International Energy Agency. “If we can get to the point where we can replace fossil fuels and use oil to produce other products that are useful, that would be very good for the world.”

Nuclear energy is certainly not “renewable” by any stretch of the term. And one could argue that it is not “clean” either; despite the fact that it produces little in the way of greenhouse gasses it nonetheless produces highly toxic waste that we do not seem to be able to hide anywhere (a situation that recently led the Nuclear Regulatory Commission to order the cessation of licensing of new generating plants until further notice). And there is always the danger of a nuclear accident, as we saw recently in Japan.

But putting that aside, we must applaud a nation that sets an example for a world that is currently busy making that nation very wealthy. Given that many in our Congress are reluctant to even admit that global warming is a reality, one might hope that this example from one of our Middle-Eastern friends will have a positive effect on even the thickest skull in Washington. Further, one might dare hope that the oil and gas companies in this country will now read the handwriting on the wall and get on the renewable energy bandwagon and invest some of their huge profits and their considerable political influence in Washington (which is directly tied to their huge profits, of course) to the cause of clean energy. It is the wave of the future, whether or not they admit it.

There are small clean energy steps being taken by various state legislatures around the country and bold investors such as Warren Buffet and T. Boone Pickens. But the Congress has yet to get solidly behind the clean energy movement despite the studies showing that jobs can be created and a weak economy boosted by investing in alternative energy — and there is money to be made, as Al Gore has learned. Fossil fuels, to state the obvious, are a finite resource and at some point we will be forced to “go green.” Better sooner than later for the planet’s sake.

Who Are The Conservatives?

It has always struck me as strange that those who call themselves “conservative” are so often violently opposed to environmentalism. They love to throw stones at the “tree huggers,” even though the tree huggers are also conservatives, which is to say those who want to conserve what is important and beautiful. The stone-throwers are simply what my thesis adviser at Northwestern called “dollar conservatives.” These people just want to hang on to their money and watch it grow.

This all goes back to the loose ways we use words, a theme I have visited before in my blogs. And one of the loosest words is certainly “conservative.” There are a great many types of conservatives among whom I might number myself on occasion. Like George Eliot I enjoy it when “reforming intellect takes a nap, while imagination does a little Toryism by the sly, reveling in regret that dear, old, brown, crumbling, picturesque inefficiency is everywhere giving place to spick-and-span new-painted, new-varnished efficiency, which will yield endless diagrams, plans, elevations, and sections, but alas! no picture.” I am indeed eager to conserve tradition and the classical works of the human mind; I am no devotee of progress for its own sake. Such people, I am given to understand, are called “intellectual conservatives,” as distinct from “dollar conservatives.” The latter want to lower taxes by cutting social programs, such as education, environment, energy, and science, and even veterans’ benefits while at the same time increasing “defense” spending which already comprises 58% of this nation’s “Discretionary Spending” and is a misnomer if there ever was one. I hesitate to suggest that it is possible that dollar conservatives are more interested in conserving the contents of their own pocketbooks than they are the nation at large.

That is, those who seem preoccupied about lowering the taxes don’t seem to realize that lowering taxes might just destroy what is essential about this nation — not just its social programs, which they would as soon see dry up, but the fiscal well-being of a solid middle class which many would regard as the backbone of this society. In fact, lowering the taxes — without, say, reducing such things as defense spending, which is currently 15 times larger than the amount we spend on education — would put is in even deeper debt to nations like China and India to whom we now owe billions of dollars. The notion that we can save the country by reducing taxes is not only short-sighted, it is incredibly stupid. Like it or not, taxes are a necessary evil and we actually benefit by paying more, not less — though there is clearly a point of diminishing return.

As one of my fellow bloggers who understands high finance much better than I pointed out recently: So help me understand this concept of “taxed enough already” as this independent data  would seem to indicate we are not taxed enough. To this old fart, we have to be prepared to step up and pay for something. Back in the early 2000′s when I was a Republican when the GOP actually strived for better stewardship, I was very much against the Bush tax cuts. When Bush’s senior tax advisor resigned and Warren Buffett cited we do not need these tax cuts, it confirmed my reservations. Mr. Norquist is fond of citing Ronald Reagan as the paragon, but President Reagan increased taxes five times after he had cut them too much with Tax Reform early in his presidency. Citing Thomas Friedman and Michael Mandelbaum in their book “That Used to be Us,” President Reagan hated deficits, so he realized he needed to increase taxes. However, he was smart enough to call them revenue enhancements.

Thus, dollar conservatives are not true conservatives at all. The true conservatives are the tree huggers and those who want to save life on this planet together with those who refuse to let go of the beautiful and magnificent works of the human mind that have defined Western civilization for hundreds of years. In a word, conservatives are preservationists who are focused on things they regard as more important than their pocketbook.

Conflicting Interests

I taught business ethics for years and always found it a goldmine of interesting though at times disturbing cases for discussion. One such case recently surfaced online and it is worth a moment’s reflection. In this day of the infamous 1% it is always instructive to try to see what goes on in the minds of those who control the wealth (and government) in this country. One rarely finds thoughts of duty or honor — though there are always exceptions like Warren Buffett. The article I refer to does not focus on the exception, as it happens. It is more of the same: men at the top who are busy accumulating more wealth than they know what to do with.

The story begins: HOUSTON (Reuters) – Aubrey McClendon, the CEO of Chesapeake Energy Corp, has borrowed as much as $1.1 billion over the last three years against his stake in thousands of company wells – a move that analysts, academics and attorneys who reviewed loan documents say raises the potential for conflicts of interest.

The man himself sees no conflict of interest because he doesn’t seem to understand what the words mean. But, then, dealing with such huge amounts of money might tend to blind a person to even the most obvious moral truths. At some point when dealing with large figures, the mind positively boggles. It is difficult for me to imagine having a loose million to spend, but a billion dollars is almost meaningless. But the article goes on:

The size and nature of the loans raise questions about whether McClendon’s personal financial deals could compromise his fiduciary duty to Chesapeake investors, experts who reviewed the documents told Reuters. . . .The revelation comes as McClendon is scrambling to help Chesapeake weather a multi-billion-dollar cash shortfall amid a plunge in natural gas prices.

One wonders how a man could continue to worry about personal gain at a time when his company is at risk. There is a phenomenon in business known as “embeddedness” in which people become so involved in what is close up they lose sight of the things in the distance — things that, in the end, truly matter, like family and loved ones. . .  and the company that provides one’s livelihood in this case. One should also mention the man’s “fiduciary duty” to the investors. What becomes blurred in the process is  “the right thing to do.”

What is of main interest here is what passes for “ethics” in a world such as this. It really collapses into the word “legal,” as in whatever is legal is ethical. McClendoin, says, for example, “these are private transactions that the company has no responsibility to disclose or to vet . .. There are no covenants or obligations in my loan documents or mortgages that bind Chesapeake in any way.” In a word, I have done nothing illegal, therefore I have done nothing wrong. That, of course, is nonsense. There are many legal practices that are unethical — such as the conflict of interest in this case. I would argue that legally increasing personal wealth at a time when your company is in dire financial straits is unethical. It might even be argued that accumulating great wealth, more wealth than one could possibly spend in a lifetime, is unethical at a time when there are people who cannot put food on the table. Even John Locke thought there were limits on how much wealth a person could accumulate without crossing an ethical line.

I recall inviting the “ethics officer” from Honeywell to campus years ago when we were sponsoring a business ethics series of lectures on campus. The officer was, of course, an attorney and her job was to make sure Honeywell wasn’t doing anything that could lead to law suits. That was the company’s conception of ethics. The woman had no training in philosophy and had never even taken a course in ethics. She was not an ordained minister. But it didn’t matter, because it was all about keeping Honeywell out of court. Interesting. But what is even more interesting is the fact that this misconception is all too common in the corporate mindset. The focus on the bottom line, embedded as it is on profits, cannot see the ethical implications of the choices that are made and ignores the people who are effected by those choices.

It is a different world from the one I live in, I must say. And if given the choice, I prefer my own world where things are clearer.