Tuesday, March 26, 2013

Want To Change Society?

"Business is society's change agent."

Peter Drucker (1909 - 2005)

Peter Drucker is one of the most read, followed, best known and influential thinkers and writers on the subject of management practices and theories.

Anyone who has had any class at all in management theory or science has studied Drucker in one way or another.

His statements are short and to the point.  He used anecdotes effectively.

He was a student of economics and said, "While all of the other students were studying the behavior of commodities, I was studying the behavior of people."

Drucker's real aim was to find ways to bring out the best in people and how organizations can create a sense of community and cohesive group behavior.

I still refer to his 1973 book Management:  Tasks, Responsibilities, Practices all the time. 

So, as a student of economics, if business is society's change agent, it would follow that if one wanted to effect societal change in a positive way one would focus on how to encourage and facilitate business.
  • Gubment cannot create jobs, but gubment can create an environment that encourages job creation.
  • Gubment can certainly destroy jobs through practices that eliminate sector structures and stultify business development and innovation.
  • Gubment can tax and regulate business in such a way that scarce resources are developed, managed and fashioned in the most efficient and profitable ways.
  • Gubment can get out of the way of business and let the nature of the American spirit of free enterprise explode as it is so capable of.
  • Gubment politics should remain in the gubment sector and not extend into economic activity by favoring or disfavoring certain businesses.
  • Gubment can provide incentives to risk taking by not punishing success once risk rewards are realized.
  • Gubment so often acts without thinking which leads to failures in policies that it then tries to "fix" by ... adding more gubment without thinking.  This, of course, preserves and enlarges gubment (the true aim of bureaucracy), but does not enhance society.
So why not encourage societal change by encouraging business?

It would be too simple to use the word "politics." 

How about political philosophy?  Which political philosophy?  

That which would NOT discourage free enterprise, voluntary exchange, billions of unseen but interactive steps that work together to bring the simplest of goods and services to our availability. 

Those unseen but interactive steps could otherwise be called "The Invisible Hand."

The economy doesn't need a management expert like Peter Drucker.

No business executive can manage the economy.
No professor can manage the economy.
No bureaucrat can manage the economy.
No elected official can manage the economy.
No group of economists can manage the economy.

The economy can manage itself!  And it will, and society will change, if it is allowed to act for itself. 

What spurs economic activity?  Business!!  Business truly is society's change agent!


Tuesday, March 19, 2013

Preserving And Enlarging Freedom

"The end of the law is not to abolish or restrain, but to preserve and enlarge freedom."

John Locke (1632-1704)

Isn't that an interesting perspective of the purpose of law?!

And isn't that how the Founding Fathers, influenced every one by John Lockes' teachings, saw their future country, founding it as they did on the rule of law?

John Locke is regarded as the Father of Classical Liberalism.  Our modern vernacular would describe him as a "conservative."  His thinking is NOTHING like a modern "liberal's" thinking.  I use the word "liberal" in quotes intentionally.  There is nothing liberal about a big-gubment statist's thinking.  The very word has been hijacked.  A statist does not seek to preserve or enlarge.  A statists' policies seek to repress and confine -- AND CONTROL.  It is laughable to call a statist a "progressive."

How does a Classical Liberal like John Locke see the law?

The law is freeing!

The law provides protective guardrails!

The law helps one to act for oneself, and not to be acted upon!

The law is based in morality!  What morality?  That of the Judeo-Christian ethic.  Argue if you will, but from me you will get a nyah-nyah and a statement - "Your thinking is confined and stultified and wrong."  Religious commandments themselves are not restrictive.  They are themselves liberal in encouraging growth, and provide protective guardrails from mistakes and consequences, thereby allowing one to act and not be acted upon.  Like commandments, laws are moral codes.

How can the law preserve and enlarge freedom?  The way our Constitution is written it demonstrates how legal controls preserve and enlarge freedom.  Power is equally divided and decentralized.  Power has cross checks.  And freedom is preserved by providing restrictions and boundaries on gubment.  It preserves rugged individualism with guarantees and the preservation of God-given, unalienable rights. The purpose of the Constitution is not to control a citizenry.  It is to control the citizen's representative gubment.  Key word:  representative.

The Constitution seeks therefore to limit gubment's size.  Gubment can only grow too large when laws are passed outside the confines and restrictions of the Constitution.  Look and see.  For example, evaluate all the machination, totally outside the rules and much of it in secret, to get it passed and then the final legal square dance it took to foist "health" care upon a citizenry that did not want it and tell me that this program is intended to "preserve and enlarge freedom."  Show me how this program is a God-endowed and unalienable right.  

GUBMENT DOES NOT EXTEND RIGHTS!

All this is the opposite of what Locke saw as the very purpose of law - helping individuals to grow and become, and a country so founded to similarly expand as it allows its ordinary citizens to become exceptional people.  Locke's LAW is not about control.

Free enterprise as put forth by free-market economics and capitalism is the only economic system that can fit such a legal system.  Socialism cannot work in such a society.  Socialism cannot work at all as it does not preserve the natural yearning of humankind.  It is not natural to confine humans who, by virtue of their birthright, strive continually for freedom and personal expression.  It is not possible to economically and bureaucratically control voluntary exchange and the Invisible Hand of the market place.  Socialism lacks the Judeo-Christian ethic as its goals, and its objectives, are confining, stultifying and wrong.

Free enterprise does not abolish or restrain, but preserves and enlarges freedom.  John Locke and the Founding Fathers knew that.

Can I repeat that?

FREE ENTERPRISE DOES NOT ABOLISH OR RESTRAIN, BUT PRESERVES AND ENLARGES FREEDOM!  JOHN LOCKE AND THE FOUNDING FATHERS KNEW THAT.


Tuesday, March 12, 2013

The Utter Morality Of The Tax Cut

"I believe in budgets.  I want other people to believe in them.  I have had a small one to run my own home; and besides that, I am the head of the organization that makes the greatest of all budgets, that of the United States Government.  Do you wonder then that at times I dream of balance sheets and sinking funds, and deficits and tax rates and all the rest?

We must have no carelessness in our dealings with public property or the expenditure of public money.  Such a condition is characteristic of undeveloped people, or of a decadent generation."

Calvin Coolidge (1872-1933)
30th President of the United States

Oh, would that we had such a leader who would LEAD and not campaign!

Oh, would that we had such an executive at the HEAD of the Executive Branch!

Oh, would that we had such a leader who UNDERSTANDS that the word "execute" means to make things happen!

Selected to be Warren Harding's vice president, Coolidge became president upon Harding's sudden death.  

He took Harding's big plan, that of "normalizing" the gubment's interference in economics, focused on budgetary matters, got rid of all those who were involved in scandals, and immediately appointed his own budget director.

Together they began announcing deep budget cuts and Coolidge was impatient with anyone who would not go along.

He wanted everyone in the Executive Branch to immediately cut 2% from their budgets, calling it the "Two Percent Club."  When that was achieved he moved them to the "Woodpecker Club," and wanted them to keep pecking away at their budgets.

When asked about this by the press he said, "I am for economy, and after that I am for more economy."  And by the word economy he meant frugality.

He then went after financially-auspicious bills brought to his office.  "It is much more important to kill bad bills than to pass good ones."  He vetoed 50 bills, almost all having to do with gubment spending! 

HE EVEN GAINED THE ACCEPTANCE OF THE AMERICAN PUBLIC, WHO REGARDED HIM AS SOMEWHAT OF A SCROOGE!

When the Mississippi River flooded, he did not go, sending Commerce Secretary Herbert Hoover instead.  His presence, he thought, might indicate that he supported federal disaster relief, popular in Congress, and he wanted that notion discouraged.

His next big move - TAX CUTS!  He bundled tax cuts and the federal budget.

You've heard of the Roaring Twenties?  This is how those years began.  Lax banking practices as regards loans burst the bubble years later (sound familiar?), and the Hoover Administration made that dramatically worse by responding with federal spending (sound familiar?).  But the Coolidge years featured tax cuts.

His administration introduced what they called "scientific taxation," similar to today's Laffer Curve.  They said that reduced taxation would result in more revenue to gubment as more people would be paying taxes.  That more broad tax base would be larger and pay more taxes than any increase in taxes to a smaller group - which by our "leaders" today might be referred to today as "the rich."

He said, "I am exceedingly interested in tax reduction, but it can only be brought about as a result of economy.  Experience does NOT show that the higher rate produces the larger revenue.  Experience is all the other way."

MAKING A STICKING TO A BUDGET REMAINED IMPORTANT TO THIS LEADER!

But here is the key.  Coolidge did not see tax cuts as a means of gubment revenue OR political payoff to Democrats.

HE FAVORED TAX CUTS BECAUSE HE THOUGHT THEM "MORAL."  TO HIM, THE MORALITY OF THE TAX CUT RESIDED IN HOW THEY FURTHER REMOVED GUBMENT FROM THE PEOPLES' LIVES, GETTING IT OUT OF THE WAY OF THE CITIZEN.

This sounds like one of Reagan's campaign stump phrases, getting the gubment "off the peoples' backs."

Coolidge saw American freedom and prosperity at the root of SOUND gubment policy.  And that gubment policy should promote and preserve these principles!   

THAT is free enterprise!

And in that vein, Calvin Coolidge, "Silent Cal," spoke volumes about the UTTER MORALITY of gubment policy and the morality of creating and sticking to AN AUSTERE FEDERAL BUDGET AND OF THE TAX CUT.

The essence of leadership is to lead the way.  It is NOT to sit back, wait for others to lay out and propose policy solutions, and then whine and criticize.

Tuesday, March 5, 2013

Be Sure You Are Doing Good

"You are much surer that you are doing good when you pay money to those who work, as a recompense of their labor, than when you give money merely in charity."

Samuel Johnson (1709-1784)

We know that the word "charity" is used generically these days to mean "benevolence."  The true meaning of charity is Godlike love.  Benevolence is when we give of ourselves to others, either in time, talents or money.  This is what Mr. Johnson means when he uses the word charity.

So, providing someone a job is more loving, and one is more sure of its outcome, than merely giving freely of ourselves to others?

What does he mean by that?

When someone begins a company it's beginnings are usually very small.  The grand risk, and grand desire, is to reap enough profit (meaning that others approve of what you are doing and compensate you above your costs for your efforts) that you

1.  stay in business and
2.  grow the business.

As the business grows others are employed!  You provide jobs.

Mr. Johnson was a respected lexicographer.  He created the first reliable dictionary of the English language in 1755.  It was so respected that today it is still considered to be the "first" English dictionary, but it was not.  Saying that it was the first reliable, and well distributed, dictionary is more accurate.  Mr. Webster did not come out with his "Compendious" dictionary until 1806.

So to Samuel Johnson, words meant things.  When he used the word "sure," he meant it.  When he used the word "good," he meant it.

He is suggesting the truth of the old saying:  When we give a man a fish we feed him for the moment, but when we teach a man to fish we feed him for a lifetime.

When someone is feeding himself for a lifetime there is so much good produced! 

The satisfaction of working, and productivity, and enjoyment in one's pursuits, cannot be overestimated!  

That is GOOD!

The self esteem returns to oneself through growth, and development, and learning and increasing abilities cannot be overestimated!  

That is GOOD!

Earning a living, providing for oneself and family, and even employing others to work with us cannot be overestimated!  

That is GOOD!

THIS IS ALL THE NATURAL COURSE OF LIFE!  THIS IS WHY WE GO TO SCHOOL, LEARN FROM EXPERIENCES AND FIND OUR PATH.  ALL THE OLD STORIES REFER TO IT AS "SEEKING ONE'S FORTUNE."

Helping someone through a rough patch is benevolent.  Helping someone temporarily fill the cup when their abilities truly can't is benevolent.  Helping someone into a situation from which they can begin again on their own is benevolent.  THAT IS TRULY GODLIKE.  IT IS CHARITABLE.

Giving someone something to the point that it creates dependence, even generation to generation, is NOT benevolent.  It is cruel.  It is NOT natural.  It is cruel.  It is giving fishes when no fishing is being taught.  IT IS CONTROL.  Putting oneself in control of others is cruel.

Samuel Johnson is saying that it's unnatural to feed the animals.  He is saying that it is not sure.  He is saying that it is not good (if not temporary).

And to Samuel Johnson words meant things.  They still do.