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Mini-Factories

The Jefferson-Madison Debates: The Third Layer

July 17th, 2018 // 7:08 am @

“When technology advances too quickly for education to keep up,
inequality generally rises.”
—Eric Brynjolfsson and Andrew McAffee

“Your true greatness comes when you focus not
on building a career but on finding your quest.”
—Vishen Lakhiani

“Engaged students are 16 times more likely to report being academically motivated than students who are not engaged. Finding ways to engage the 40% of students who are not engaged would have a significant impact on their academic motivation.”
—Quaglia Institute

Foundations

Education is like a map. Or, more precisely, it mirrors the entire field of maps and map-making.

Understanding the massive change now occurring in how we make and learn from maps is in many ways directly applicable to the coming changes in education. And like in education, many people in the older generations (born before 1980, or even 2001), don’t understand that a major revolution is ahead—one so big that what we call a “map” today won’t even qualify as a map in twenty years. (And much of what we call an “education” today won’t even count as education two or three decades from now.)

The pre-modern map (Layer One) emphasized the physical traits of the earth: continents, oceans, seas, rivers, mountain ranges, islands, etc. More advanced pre-modern maps included things like ocean currents, the altitudes of mountain peaks, and the trade routes most effectively used by overland and shipping merchants.

During the modern era, we added governments to our maps (Layer Two): national borders, towns, cities, capital cities, provinces, states, counties, etc. This was part of the great shift from pre-modern to modern. Governments and their jurisdictions became as prominent in world affairs as the natural physical features of the earth. People using maps needed to know what government they’d be dealing with in a given spot as much as where the ocean currents would take them and what mountains or rivers they’d need to traverse.

Further Up and Further In

The current shift from modernism to post-modernism is equally momentous. Our maps now require another set of symbols, colors, and words—to tell us what we need to know about our world. The physical features on the maps (continents, oceans, rivers, mountains, lakes, etc.) are still there, as are the political borders that tell us what government controls each area on the illustration.

But now a third layer of understanding is superimposed on top of the physical and political levels of each map. Most people haven’t even seen such maps yet, so they think of a “map” as something made up of Layer One (mountains, rivers, oceans, etc.) and Layer Two (borders, cities, etc.). They barely fathom what else could be needed.

The post-modern Layer Three is based on what Parag Khanna calls “Connectography.” For example, look at a traditional map of Africa. The Nile is there, and the Cape. The Horn of Africa is obvious, along with the Sahara. There are regions of jungle, and large swaths of savannah. Then there are the many nations and their borders—most of them originally established by European plantation owners. Capital cities are listed in bold letters, the names of nations in larger type.

But where is Layer Three? At its most basic, Layer Three shows highways, airports, and hospitals. In a more detailed Layer Three map, you might find illustrations showing the route of pipelines, Internet cables, or even power lines. These were the simple beginnings of Layer Three maps. A little more advanced Layer Three maps don’t just tell you what road to take, they tell you how long it will take to arrive in current traffic—or redirect you if an accident occurs and is now blocking traffic. They are cast in real-time and they are always changing—truly interactive. Layer Three is a major upgrade.

But more is coming. For example, narrow the map of Africa to Kenya or Ghana. Where are the hotspots of Internet usage? Where are the Internet deserts? What about smartphone usage rates? What food is shipped to a place, and can you get the kind of banana and cereal you want while you are visiting? If you want salmon for dinner, will what you are served be farm raised or wild? – Come from the Atlantic or the Pacific? What nation’s laws governed the fishermen who caught your dinner? Such information tells you a great deal about the probable quality and freshness of what you’ll be eating, and whether or not to even order it.

Put these on the map, and you’ll begin to see how Kenya, Ghana, or any other nation in Africa, or anywhere else in the world, is actually connected. Not understanding such connectivity—or its absence in a certain area—is akin to not knowing what the political lines denoting borders signify on the map. Such ignorance basically renders the user of the map illiterate.

Consider an almost-absurd example, to illustrate:

“Are these lines just very straight rivers?” a total map novice might ask. The laughter that follows is kindly, but surprised. “How can anyone not know about government borders on a map?”

In the future, however, this will apply to much more than national borders.

A Missing Piece

Another Layer Three example is very important: For example, on the map of Kenya, what natural resources are owned by or contractually promised to Chinese companies or the Chinese government? Versus what resources are owned by or contracted to U.S. firms? Or Canadian?, Dutch?, Japanese?, Italian?, British?, French?, German?, Korean?, Indian?, etc. What multi-national companies have their own security forces at work in these place—governing, citing, controlling? Where have they blocked mobile phone and Internet service—and why? If you know the Layer Three map of Africa this way, you’ll understand the world in ways other people simply cannot grasp. As Khanna put it: “China’s relentless pursuit of [natural resource contracts around the world] has elevated…to the status of a global good on par with America’s provision of security.”[i]

In other words, if anything happens militarily in the world, the U.S. is sure to get involved (or at least consider getting involved); and if anything happens concerning natural resources—oil, minerals, food, wood, precious metals and gems, water, etc.—China is sure to jump in. It likely already has contracts signed and sealed. In fact, put alliances and treaty requirements on the map, and something stands out: China owns numerous economic resources around the globe that the U.S. does not. Moreover, as of 2015 the United was bound by treaty to defend 67 nations in the world; China was only bound to protect 1.[ii]

In short, a lot of global resources and money are slated to flow to China in the decades ahead (it has already begun), while huge assets and cash are scheduled to flow away from the United States. One has an economy that is programmed to head up, the other down. If you don’t consult a Layer Three map, this information is unknown.

Look at the map with the Layer Three approach, however, and the future becomes immediately clear: It belongs to China. The U.S. and Europe[iii] are falling further and further behind. This is obvious on a Layer Three superimposition.

But remove Layer Three and all you have are the continents, oceans, lakes, mountains, political borders, cities and towns. Nothing about Levels One or Two tell you that China is on the rise—with contracts across the globe, and a growth rate in ownership of natural resources and supply chains for these resources that all but assure them monopoly status in the decades ahead. And this example, China, is only one of the many hugely important things missing from Layer Two maps—which are the only ones most of us ever engage.

To reiterate: the pre-modern and modern maps fail us. They don’t even tell us what we need maps to communicate (rather than merely travel) in order to help us make the best local decisions. As a result, the old maps are almost worthless. They are historical relics, but not the most effective tools of decision-making or strategy.

For that, we need Level Three maps superimposed on the older models. As Joshua Cooper Ramo put it: “Ball up your right hand into a fist. Take your left hand and open the fingers wide. Hold the hands a few inches apart. You can think of your left hand as the vibrating, living network of connection and your balled-up fist as concentrated power. Right hand, Google Maps; left hand, millions of Android phones. This is the picture of our age.”[iv] But it is only an early picture. By the time you read this, will Google Maps and Android phones be replaced by something more advanced? Not unlikely.

What is Not Seen

Again, most people today have no idea this is happening. At least not at this scope, or pace. Many feel a general sense of a rising challenge, even a threat, from China, for example. But they don’t know what it means, why it is real, or how it is developing. They have no clue how to prepare for or address it.

The same is true of education. To wit: geography is still taught in two layers—much like it was in the 1960s. Technology makes it easier to teach and learn, but Layer Three tools and Layer Three thinking are absent in all but a very few out-of-the-box classrooms or learning environments. As Toffler put it, too many of today’s young are being raised to show up on time, do repetitive tasks without complaining, follow instructions, and memorize a great deal of knowledge without deeply understanding it. This is the focus of most schools.

These three lessons—punctuality, repetitive work, and rote memorization—routinely pass for what we call “education.” They are, in fact, the key lessons of schools in modernism. The pre-modern era emphasized “the 3 R’s: readin’, ’ritin’, and ’rithmetic,” and these prepared the young for success in the agrarian economy. Likewise, the three lessons above were often effective training for landing and keeping a job during the industrial age.

But today’s emerging information economy demands something different. Success now demands the Third Layer of education. It includes the kind of knowledge learned from the 3 R’s and also post-World War II schooling in history, literature, math, science, and social studies, but it also superimposes a Third Layer of education as well, which is more attitudinal and skills based: initiative, innovation, creativity, resilience, ingenuity, tenacity, recognizing opportunities, go-getter-ness, and entrepreneurial risk-taking.

The Third Layer is as different from most modern public and private schooling as the typical 1960s, 1980s, or 2000s high school or elementary was from the one-room schoolhouse. If the pre-modern age gave us Mary and Laura in the Little House series, studying at home or the local school (which was also the town hall, town theater, and community church), the modern age gave us the high school of Pretty in Pink, The Breakfast Club, High School Musical, Dead Poet’s Society, One Tree Hill, 90210, or even 22 Jump Street.

All are outdated now. All fail to prepare our nation’s youth for the actual economy of the 21st century. We are still training the young to succeed in a world they can only study about in history books. Indeed, it is no exaggeration to note that the more time they spend in the modern school system, including the increasingly outdated university campus, the less prepared they’ll likely be to compete effectively in the rough-and-tumble emerging global marketplace with it worldwide competition and demands.

For example, a university degree isn’t what it used to be: The average graduate from the class of 2016 had $37,000 in student debt and couldn’t get a decent job in his or her field—or in any other equivalent field. There are of course exceptions, but the numbers of those leveraging college degrees into effective careers significantly decreases each decade (Note: in North America, Europe, and Latin America, but not in China). In short, today’s young adults are too often receiving a Layer Two education in a world that demands Layer Three knowledge, choices, and skills.

Past, Present, and Future

Few current students are being taught the skills of success that are needed in the new economy. The real economy. Layer Two schools simply do not teach initiative, ingenuity, or innovation. They don’t purposely teach chutzpah, audacity, grit, wise risk-taking, entrepreneurialism, or nerve.

Note that these are precisely the character traits that made America the world’s superpower. And Britain before her, and earlier, Spain and Portugal. These are the very traits that put Egypt at the top, then the Greek city states, and later Rome. These are the characteristics that gave the Gauls, Franks, Anglos and Saxons their edge.

They didn’t have Layer Three maps, to be sure, but they engaged in their era’s “Layer Three” education of the youth, teaching them the skills of resourcefulness, inventiveness, and daring in the face of difficulties. Some of these societies emphasized good purposes (such as life, liberty, and the pursuit of happiness, etc.), while others embraced less noble goals (aristocratic rule of an elite class over the rest of the people, dominance over neighboring nations, a pursuit of wealth through violence, etc.).

But whatever their dreams—good or bad—it was Layer Three skills (initiative, boldness, pluck, enterprise) that lifted every great-power nation in history to the top. As the society that now holds this spot, we (North America, and to a lesser extent Europe) are stunningly lax about teaching these traits. We increasingly downplay them as unimportant and even unattractive. Even “against the rules”. As a result, we have lost our edge. We have largely lost our drive. Too many modern Americans have lost our shared vision and purpose. Unity is a thing of the past.

Indeed, Americans were once unified in the goal to spread freedom, opportunity, and prosperity to the world. Now, the best we seem to be able to muster is a hope to afford college for our kids, and that they’ll get a safe, secure career with good benefits—and as little fuss or struggle as possible. Most colleges themselves seem committed to shielding our young adults from challenges, difficulties, thinking, and any diverse or challenging ideas. This is not the behavior of a nation on the rise. It is the opposite. To paraphrase C.S. Lewis, we are castrating the stallions of the younger generations, then hoping they’ll be fruitful.

But apply Layer Three to the map. Where in the world do we find whole populations burning passionately with drive, initiative, innovation, nerve, entrepreneurial risk-taking, resilience, a hunger to achieve, audacity, ingenuity, resolve, and tenacity? Where do we find the largest concentrations of people who thrive in the face of uncertainty and embrace whatever is hard, and flourish even in an environment of impermanence and difficulty?

When you find a lot of people who have these traits, note where they live. Not in North American or Europe (at least not in large concentrations). In our modern American schooling/career system, for example, our major focus seems to be avoiding uncertainty, impermanence, and difficulty—yet these are the unavoidable realities of the global economy.

Through the Magnifying Glass

Look even closer. Enter this data electronically on a map and you’ll find these traits in China. Indeed, the heartbeat of China is a new “eye of the tiger.” A similar fire burns in India, and a less populated but angrier flame blazes across the Middle East. Layer Three also shows us the rise of such passion in parts of Latin America, Africa, and Russia. These are trigger-points of the decades just ahead.

Where such passion does show up in North America—from California to British Columbia, from Texas to New Hampshire to Newfoundland to Florida, it is usually personal, career-oriented, and commercial. A better job. A marketable education. A promotion.

These hardly match the resolve or intensity of China and its new economic allies across the developing world. They want to lead the world, change the world, and do great things. They want victory, and they see their lives as part of a battle.

In Europe the irony is even more pronounced. The Layer Three map shows numerous pockets of extreme passion in the nations of the E.U.—but zoom in, and you’ll note that most of the people with this kind of fire in the belly are usually recent immigrants from the Southern half of the globe.

The one great exception in North America and Europe is the entrepreneurial class, those who Steve Jobs called the dreamers, the rebels, and the risk-takers. They graduate from college and reject job offers from the Fortune 500 to pursue risky start-ups or launch non-profit charities. Or, increasingly, they skip college altogether, or drop out, and get started on their business or charitable ventures even younger, with an edgier, more idealistic and relevant education.

Their Layer Two parents and grandparents try to talk them out of such endeavors, but these young people have a hunger that typical education and careers won’t fill. They are a Remnant, throwbacks to the earlier Americans who got on the Mayflower, worked and died in Jamestown, went West by horseback or wagon to explore, start, create, and change things. They are the New American Founders, enlightened and ennobled by hindsight of the mistakes of the past, and impassioned by their view of the future – and we desperately need them.

We need a generation of them.

Now.

In the Now

If you are one of their parents or grandparents—worried that your youth are making such choices, decisions that make no sense to you—you can relax. Yes, the kind of risky leadership they are engaging is scary to the older generations who were raised to seek security. But the Third Layer maps clearly show that we no longer live in an era of security.

Even young people who follow the traditional path of college and career suggested by their elders will find that for most people it doesn’t endure in the new economy. We are in an era of tumult, change, and uncertainty—and this is only going to increase for the next few decades.

Those who try to live by Second Layer rules will fall further behind. College degrees won’t bring most of them secure jobs, and seemingly secure careers will suddenly be lost to recessions, new technologies, outsourcing, mergers, regulatory changes, companies sold to foreign investors, and competition, along with a host of other unforeseen realities.

Indeed, those who will do the best in the new economy—whose contributions and livelihoods will end up being the most secure—will be the new entrepreneurial class. The innovators. The roll-with-the-punches change agents. Those who can think, lead, initiate, and wisely assess risk. We are indeed entering the Age of Risk, and this massive shift in the world economy is here to stay. Business has already caught on and is changing things to meet the new reality. But education is still in denial, along with most in government.

Sadly for those who allow themselves to be swayed by the current denial of many in the educational sector and Washington, people caught in Second Layer thinking will be the losers of the next thirty years. The winners will be Third Layer risk takers who tenaciously create ways to succeed in the new environment. Who make a way.

Many of them are already looking at the world through the lenses of Third Layer maps and mindsets, and they understand something very real: The future is theirs. Moreover, our future is in their hands.

The more we can do to help and support them, the better things will turn out for all of us. The successes and failures of our entrepreneurs will determine the future. Just as it has determined the past.

Fall or Rise

This reality causes serious concerns. Anyone who takes a good look at the current university campus model of learning finds a number of problems. Not the kind of challenges that demand reform, mind you, but rather a systemic, structural network of problems that will require a true educational revolution. The need for change is, to put it lightly, drastic.

Just consider the following commentaries by some of today’s top thinkers on the topic of the emerging economy and its ties to the type of education we now need. For example, MIT’s Eric Brynjolfsson and Andrew McAffee wrote, in a section of their book labeled “Failing College”:

“Richard Arum and Josipa Roska…and their colleagues tracked more than 2,300 students enrolled full-time in four-year degree programs at a range of American colleges and universities. Their findings are alarming: 45 percent of students demonstrate no significant improvement on the CLA [Collegiate Learning Assessment, which tests ‘critical thinking, written communication, problem solving, and analytic reasoning’] after two years of college, and 36 percent did not improve at all even after four years.

“The average improvement on the test after four years was quite small…. What accounts for these disappointing results? Arum, Roska, and their colleagues document that college students today spend only 9 percent of their time studying (compared to 51 percent on ‘socializing, recreating, and other’), much less than in previous decades, and that only 42 percent reported having taken a class the previous semester that required them to read at least forty pages a week and write at least twenty pages total.

“They write that, ‘The portrayal of higher education emerging from [this research] is one of an institution focused more on social than academic experiences. Students spend very little time studying, and professors rarely demand much from them in terms of reading and writing.’

“They also find, however, that at every college studied some students show great improvement on the CLA. In general, these are students who spent more time studying (especially studying alone)…”[v]

The authors also wrote: “The good news, though, is that technology is now providing more…opportunities than ever before. Motivated students and modern technology are a formidable combination. The best educational resources online allow users to create self-organized and self-paced learning environments—ones that allow them to spend as much time as they need with the material, and also to take tests that tell them if they mastered it.”[vi]

Futures Past

The quality of learning in such online venues is very often extremely high. For example, when a graduate level AI course at Stanford was opened to participants on the Internet for free, over “160,000 students singed up for the course. Tens of thousands of them completed all exercises, exams, and other requirements, and some of them did quite well. The top performer in the course at Stanford, in fact, was only 411th best among all the online students. As Thrun [the instructor] put it, ‘We just found over 400 people in the world who outperformed the top Stanford student.’”[vii]

Likewise, “…Laszlo Bock, Google’s senior vice president of people operations, notes that college degrees aren’t as important as they once were. Bock states that ‘When you look at people that didn’t go to school and make their way in the world, those are exceptional human beings. And we should do everything we can to find those people.’ He noted in a 2013 New York Times article that the ‘proportion of people without any college education at Google has increased over time’—on certain teams comprising as much as 14 percent.”[viii]

Mindvalley founder and CEO Vishen Lakhiani wrote: “I’ve personally interviewed and hired more than 1,000 people for my companies over the years, and I’ve simply stopped looking at college grades or even the college an applicant graduated from. I’ve simply found them to have no correlation with an employee’s success.”[ix] Sadly, too many people still hold on to old educational models that no longer deliver what they once did, or what they now promise.

Lakhiani put it this way: “But here’s the problem. Most of us are using systems that have long [since] become obsolete. As Bill Jensen said in his book Future Strong: ‘Even as we enter one of the most disruptive eras in human history, one of the biggest challenges we face is that today’s systems and structures still live on, past their expiration dates. We are locked into twentieth-century approaches that are holding back the next big fundamental shifts in human capacity.’”[x]

Bestselling author Neil Pasricha told the following story: “A senior partner at a prestigious global consulting firm once said to me after a boozy dinner: ‘We find Type A superachievers from Ivy League schools who need lots of reward and praise…and then dangle carrots just over the next deadline, project, and promotion, so they keep pushing themselves. Over every hill is an even bigger reward…and an even bigger hill.’”[xi] This is enlightening. It’s not the actual education the big corporations are looking for as much as a sense of over-achievement and needing lots of rewards and praise.

Look at this same scenario from the student’s viewpoint. Is this really the career environment we want our young people to pursue? Is this the life we want for them, or the use of their talents that will best benefit the world—or bring them the most fulfillment and happiness? Sometimes, the answer may be yes. But very often, it isn’t.

Billionaire Paypal co-founder and educational innovator Peter Thiel said it even more bluntly: “Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking. For the privilege of being turning into conformists, students (or their families) pay hundreds of thousands of dollars in skyrocketing tuition that continues to outpace inflation. Why are we doing this to ourselves?”[xii] After happily reminiscing that he eventually took the entrepreneurial path of founding tech companies instead of following his major in graduate school, Thiel said[xiii],

“All Rhodes Scholars had a great future in their past.”

The Next Normal

The modern college/career system, which is increasingly Level Two education in the new economy, is more and more outdated. In the book Platform Revolution, technology experts Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary argue that the old-style university model is surviving largely because government regulations keep true innovators from competing on anything close to a level playing field.[xiv] If this were to change, no doubt online educational platforms would do for education what Amazon has done for bookstores (and other retailers), Uber has done for taxi services, Wikipedia has done to the encyclopedia publishing industry, and online news sources have done to many newspapers.[xv] Again, over 400 online students tested better than the top Stanford student in the exact same class.

Parker, Alstyne, and Choudary wrote: “The long-term implications of the coming explosion in educational experimentation are difficult to predict with certainty. But it wouldn’t be surprising if many of the 3,000 colleges and universities that currently dominate the U.S. higher education market were to fail, their economic rationale fatally undercut by the vastly better economics of platforms.”[xvi]

Just imagine much cheaper and higher quality higher educational offerings for all. Consider the work by Khan Academy,[xvii] Minerva,[xviii] Peter Thiel, and other educational innovators. If the government ever ends the current educational monopoly supporting the old-style conveyor-belt approach to higher education, the results will likely dwarf the kind of change we witnessed with the advent of cable television programs, or when Ma Bell was deregulated and replaced by an entirely different kind of telecommunications.

Parker and his colleagues also noted:

“In the years to come, the spread and increasing popularity of teaching and learning ecosystems will have an enormous impact on public school systems, private schools, and traditional universities. Barriers to entry that have long made a first-class education an exclusive, expensive and highly prestigious luxury good are already beginning to fall.

“Platform technologies are making it possible for hundreds of thousands of students to simultaneously attend lectures by the world’s most skilled instructors, at minimal cost, and available anywhere in the world that the Internet is accessible. It seems to be only a matter of time before the equivalent of a degree from MIT in chemical engineering will be available at minimal cost in a village in sub-Saharan Africa.

“The migration of teaching to the world of platforms is likely to change education in ways that go beyond expanded access—important and powerful as that is. One change that is already beginning to happen is the separation of various goods and services formerly sold as a unit by colleges and universities. Millions of potential students have no interest in or need for the traditional college campus complete with an impressive library, a gleaming science lab, raucous fraternity houses, and a football stadium.”[xix]

They’d rather pay a lot less and get a better learning experience.

Focusing In

“Education platforms are also beginning to unbundle the process of learning from the paper credentials traditionally associated with it.”[xx] The authors note that many students now “…appear to be more interested in the real-world abilities they are honing than in such traditional symbols of achievement as class transcripts or a diploma.”[xxi] They want to learn knowledge and skills that help them achieve their life and financial goals, not traditional symbols that no longer really work in the 21st century economy.[xxii] Results-Based Learning is increasingly in demand.

For example, “A high ranking on TopCoder, a platform that hosts programming contests, will earn a developer a job at Facebook or Google just as fast as a computer science degree from Carnegie Mellon, Caltech, or MIT. Platform-based students for whom a traditional credential is important can often make special arrangements to receive one—for example, at Coursera, college credit is a ‘premium service’ you pay extra for.”[xxiii] Another example is Duolingo, a crowdsourcing foreign language platform that is teaching more people a foreign language than all the students studying foreign language “in high school in the U.S. combined.”[xxiv]

“Once there is an alternative certification [to college degrees] that employers are willing to accept,” Parker and his colleagues affirm, “universities will find it increasingly difficult…. Unsurprisingly, developing such an alternative certification is among the primary goals of platform education firms such as Coursera.”[xxv] Other organizations are trying to build such educational platforms as well, including Udacity, Skillshare, edX, and others.[xxvi] Even top specialty schools, like MIT and Julliard, are offering open enrollment online courses. (Their selling point is often focused on “Learn from the MIT faculty,” or “Learn from the Julliard faculty,” a nod to the new reality that mentoring is becoming even more important than institutionalism.)

No doubt more innovative higher educational options will thrive (and at the high school level as well), until some of them restructure modern education like eBay, Amazon, Facebook, Uber, the Internet, or Google have done for other fields. As far as student learning is concerned, numerous self-produced online tutorials, on platforms like YouTube and others, provide excellent educational opportunities—both to learn and teach.

All of these developments and trends are part of Third Layer education, and they are almost universally moving away from outdated traditions, methods, and beliefs of conveyor-belt-style education and schools. A new economic era is already here, and for those who know what to look for, new educational models are rising to support what is now needed. Third Layer, Results-Based learning is the future of effective education. The focus is on individualized learning, thinking, and applying rather than conveyor-belt schooling.

The new maps are here, if we’re willing to look.

(This topic is addressed in more detail in Oliver DeMille, Hero Education, available here>>)

 

NOTES

[i] Parag Khanna, 2016, Connectography, xvii.

[ii] Harper’s Index, Harper’s Magazine, September 2015.

[iii] The Brexit and election of Donald Trump didn’t seem to make much difference in this trend. See, for example, Geoffrey Smith, “The Brexit Crisis That Wasn’t,” Fortune, October 1, 2016; See also, Jeff Immelt, “After Brexit, Global is Local,” Fortune, August 1, 2016, 71-72.

[iv] Joshua Cooper Ramo, 2016, The Seventh Sense, 122.

[v] Erik Brynjolfsson and Andrew McAfee, 2014, The Second Machine Age, 197-198.

[vi] Ibid., 199.

[vii] Ibid., 200.

[viii] Cited in Vishen Lakhiani, 2016, The Code of the Extraordinary Mind, 24.

[ix] Ibid.

[x] Ibid., 93.

[xi] Neil Pasricha, 2016, The Happiness Equation, 150.

[xii] Peter Thiel, 2014, Zero to One, 36.

[xiii] Ibid., 37.

[xiv] See Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary, 2016, Platform Revolution, 263-268.

[xv] See ibid.

[xvi] Ibid., 268.

[xvii] For example, see commentary in Brynjolfsson, 199.

[xviii] For example, see commentary in Parker, 268.

[xix] Ibid., 266.

[xx] Ibid., 266-267.

[xxi] Ibid., 267.

[xxii] Ibid., 265-268.

[xxiii] Ibid., 265.

[xxiv] Cited in ibid.

[xxv] Ibid., 8.

[xxvi] See, for example, ibid., 265.

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One Great Challenge Facing America Today

August 26th, 2017 // 4:51 am @

The Coming Fall

Only 15 percent of Americans are on target to fund 1 year or more of their retirement. One single year. Yet many will live twenty to thirty years after retiring. This one fact alone is a major blow against conservatism.

It may in fact kill conservative principles and ideals in the next two decades, and it could deeply hurt the American economy and our freedoms in the process. This is not an exaggeration. Put simply:

How can conservatives expect to win elections or, even if they are victorious at the ballot box, actually pass conservative laws and policies when more than 85 percent of the American people are going to be fully dependent on someone else’s money for housing, food and clothing, health care, and other expenses during retirement?

With the massive Baby Boom generation moving into retirement, many analysts ask: how can the United States implement anything short of collectivist socialism in the next thirty years?

To cut away the safety net, or to default on the promised Social Security and healthcare benefits workers paid into for decades, would be immoral and create widespread poverty for many of our most vulnerable. To buck up and pay for these obligations, and supplement them with what will be needed for millions of retirees to just get by, will require levels of taxation and regulation that will truly be nothing short of…well, socialism.

Bottom Dollar

Few people want to admit this reality—Republican politicians least of all. But over sixty years of government promises, spending money that should have been saved, inflating the currency, and putting numerous regulatory hurdles in the path of entrepreneurialism, innovation, and economic growth have taken their toll. A national debt north of $20 trillion dollars (more than $100 trillion when all the obligations and liabilities are met, and a lot more as these obligations and interest on the debt increase every month) leave us little wiggle room.

There are two realistic responses. First, we can go after major economic growth. This will require a systemic change in our economy—meaning mass deregulation and getting the government almost entirely out of the marketplace. Tax rates must come down drastically, and foreign-held corporate money must be encouraged to repatriate without penalty. Foreign direct investment must also be recruited (another reason tax rates must be significantly reduced).

The second option is to keep on the current path until we default, then allow an IMF bailout of the U.S. and the replacement of the dollar as the world reserve currency with International Monetary Fund SDR currency or some other (probably electronic) legal tender. This will result in a major reduction of the standard of living for most Americans and an explosion of additional government handouts. Most retirement and other savings that do exist will be wiped out, and nearly all Americans will go on the dole, with a few elites at the top, and both socialism and globalism will dominate.

The amazing thing, to me at least, is that many of our nation’s leaders right now—in both parties—actually prefer the second option. Moreover, a lot of them believe that this is the best course for our future. They deeply believe in globalism, collectivist economics, and the end of America’s attachment to free enterprise, gun rights, family values, and religion. They believe that government is the greatest power on earth, and deserves our universal allegiance and support. Even, ultimately, reverence. Anyone who disagrees, they believe, is small-minded or caught in the past—or both.

New or Old

Not only do many Democratic leaders hold this view, but a surprising number of Republican officials believe it as well, or at least they vote like they believe it (which brings the same results). This is a real battle, and the globalist elites are winning. The media, most of academia, and a majority of politicians are on their side. In their view, the future of the world is at stake—either a bright future of globalism (with elites in charge) or a return to dark-age tribalism, as they see it (where the regular people rule through small-minded, unenlightened democratic influence), will ensue. They are determined to ensure the globalist outcome.

They literally consider it a war–and one that is worth winning, whatever the cost. If academia, media, Hollywood and the lobbyist/D.C. bureaucracy/political party-apparatus can force the Trump administration to back down from anti-globalist policies and behaviors, so be it. That’s what the hubbub is about on the nightly news, investigations, etc.

But if not, they’ll take more drastic measures. A currency default might do it, causing bank holidays and massive layoffs. Or a serious shakeup in the White House—brought on by the Special Counsel, indictment of the President, or something else that circumvents the will of the voters and instead chases the goals of the elite. Something unexpected, of the same magnitude, could trigger a return of White House alignment to globalist goals. Today’s elites in government, media, finance, etc. can hardly remember a time when globalism wasn’t the clear agenda. Most of them are outraged at the very thought.

The rest of America has a serious problem. Remember the 85 percent of Americans who don’t (or won’t) have enough retirement savings to last more than a year? How are conservatives going to effectively promote smaller government and a return to genuine free enterprise in a nation strapped with the $20 trillion-plus national debt, $13 trillion in consumer debt, over $100 trillion owed in debt plus unfunded liabilities, and many millions (and growing) of retirees who will desperately need financial support?

The Next Step

I’m an optimist, because I believe the best days of America and the world are yet to come. Usually I infuse my writings with optimistic ideas on how we can really improve things in the days ahead. But right now I have to admit that I’m concerned. I’m not sure how we get past the economic hole we’ve dug for ourselves—not just politicians, but the regular people as well. We are culturally, if not actually, dependent on government spending and government growth.

Yes, a lot of people want the government to cut back, but they can’t agree on what to cut. Almost all Americans want the government to keep spending for things that benefit them directly. The ones that support cuts mostly only support cutting other people’s government benefits. Thus Congress doesn’t actually fix much.

Unless this changes, Democrats will continue to be the party of bigger government and increased socialism while Republicans will talk about smaller government, limits, and Constitutional boundaries—but when the votes come to the Senate, truly conservative changes won’t have enough Republican support to pass, and when cases make their way to the Supreme Court, free enterprising systemic changes to the government-corporate-K Street nexus won’t have enough Justices behind them. Too many officials simply aren’t willing to do what needs to be done. It’s too hard, and too unpopular.

I’m not sure what can change this.

Of one thing I am certain, however. History is absolutely clear on this point. As goes entrepreneurship, so goes our nation. Ultimately, a major increase in effective entrepreneurship, innovation, and business ownership is going to make or break us. It will create growth if it happens, and that changes everything. Also, the future of entrepreneurship is something each of us can influence. Our next three decades will either bring massive economic growth or the rise of rampant socialism to America. To choose the path of growth, our government can help (by deregulation and choosing to be smaller)—but a lot more people engaging effective entrepreneurship is the indispensible. Period.

Category : Aristocracy &Blog &Citizenship &Constitution &Culture &Current Events &Economics &Entrepreneurship &Foreign Affairs &Generations &Government &History &Leadership &Liberty &Mini-Factories &Mission &Politics &Postmodernism &Producers &Prosperity

Increase Your Influence By Ian Cox

April 19th, 2017 // 8:05 am @

by Ian A Cox

The Biggest Question

Wow! That’s deep.

The thought kept recurring as I read. The article, written by an innovator, filled me with numerous ideas—old and new—about Thoreau’s Civil Disobedience. The author showed how this classic work, and others like it, are relevant to national events right now, including the famous–not to mention great–maxim: “That government is best which governs least.”

The author showed how this applies to our current national challenges. The biggest question that came to me as I read  was something we all need to consider:

“How can we increase our influence in a world that seems to be heading in the wrong direction?”

This isn’t just a rhetorical question. We have more power than we might realize. The struggle for freedom resets with every new generation.[1]

We are always one generation away from potentially losing our liberty. Education is key, and understanding freedom is a must for those who hope to protect and spread freedom.

Moreover, the battle for freedom resets in certain predictable ways. In his book We Hold These Truths to Be Self-Evident, Oliver DeMille gives some perspective on this fateful struggle for freedom in the United States after we gained our independence.

Here’s a summary:

  • The House of Representatives was the first to vie for power, as early as the 1790’s. But the executive branch flexed its muscles as well and managed to stop the over-reaching House.
  • In the early 19th Century the Marshall Court pushed for widespread control, but the Presidents during the time were able to largely obstruct court expansion (checks and balances = obstruct).
  • Next, the mid-19th Century saw a resurgence of local governments as prejudices ran rampant and public servants and jurors turned a blind eye to injustice. This was eventually curbed by the exodus of many oppressed groups and minorities to the west, which created new regions and states, increasing the federalizing power (the Electoral College).
  • The States then pushed for dominance of power in the mid-to-late part of the 19th Century, but were beaten by the combined federal powers of the three branches of government.
  • An Aristocratic Senate was the leading power center of the early 20th Century, but it only gained influence where the Court allowed.
  • The Executive branch stole the baton from the Senate in the settling dust of the Second World War, and this continues today. In fact, its aggressive competitor for power is the Supreme Court—both take turns usurping influence.

A great strength of the United States Constitution is the multi-layered governmental system it created, including a network of intricate checks and balances, as outlined above. The price of human nature and usurping freedoms from others is that power doesn’t decrease; it only transfers to other branches that tend to increase their power in order to bring back a proper balance. In each of these eras a complete takeover was thwarted, but power was centralized and freedoms gradually slipped away.

Deciding Our Fate

This power pendulum persistently swings back and forth, from one group to another, until more individuals take up their true duties as citizens (real influence).

This can occur 1) peacefully, 2) when a violent reset happens (like the Civil War), or 3) when our society collapses and something new is established out of the ashes.

The peaceful option is clearly preferable.

These issues and problems are not merely something we need to think about for today and tomorrow. We must embrace these things with a generational perspective. Because they exist on a grander scale, we have to ask the important questions. Are we solving the problem, or are we stopping one problem by creating a new one?

For example, the Civil War was practically written into the original Constitution; it was a paradox in the fabric of the whole system. Either the joint founding ideals of “all men are created equal” and “life, liberty and the pursuit of happiness” had to be done away with, or slavery had to go. Both could not ultimately flourish together.

Likewise, the Mexican-American War (against Spain) was guaranteed as soon as the Monroe Doctrine was adopted. And, once we decided that extensive international relations via broad treaties were in our best interest, we accepted the wars of Europe as our own.

Phillip Bobbitt’s Shield of Achilles shows how we inadvertently embed the battles that future generations must fight into the chinks and weaknesses of the systems and programs we create today. The establishment of organizations like the Federal Reserve, Internal Revenue Service, and International Monetary Fund created the inevitable outcome of hyper-inflation, boom-bust cycles, and fiat currency, to name a few.

To a great extent, we are always creating our future crises.

Is this the society and government we want to fund with our taxes? Is this the group we want to endorse with our good name? To stand with confidence, with a clean conscience, and to fulfill each of our moral obligations, we must ask ourselves the hard questions. Here I reiterate the innovator’s call to action; we must not be the ostrich with our heads buried in the sand–but we also must avoid falling victim to a conquering Caesar (or a Byzantine bureaucracy[2]).

Revolutionary Options

There are a few options that have historically worked in changing a society’s fate. Some of these alternatives are still very possible today, while others are becoming less and less available to most people. Here’s a breakdown of the top three from history:

1) Exodus

You pack up and leave, in hopes of finding a better place to restart. This has happened successfully many times in many cultures, but it is risky. Today there are very limited options for this choice. We have different forms and styles of government to pick from, but there isn’t untamed land that can be cultivated and founded from the ground up.

2) Violence

This is probably the most common form of rebellion. A group raises up arms and fights, in hope of overthrowing or removing tyrants. This method usually fails—not that it doesn’t remove the tyrants from power, but it typically breeds revolution after revolution[3] and more often than not, ends with some new tyrant. In most cases, little actually gets fixed.

3) Civil Influence

In the modern world, civil influence has become the regular, expected, and non-violent form of change. This was brought about in large part by the spread of more democratic forms in societies and governments. As the people’s standard of living, education, and access to information worldwide increases, so does their ability to get involved and flex their muscles as the first and foremost branch of any governmental form.[4] This is the at times slowest method of change, but often the most successful in the long-term.

Where civil influence was once answered with the death sentence (if you weren’t in the ruling class), it is now a real and viable option for any member of society to initiate the spark of change. This requires us, as John Locke argued, to be tolerant. Like the original thirteen colonies, we have now reached a point where the regular people need each other in order to get the right things done. This means we need to work with people who don’t always perfectly agree with us in every detail—or even in many details.

Now, this doesn’t mean we don’t stand for what is right or shirk our moral duties, but rather that we pick our battles. If we are constantly coming out against everything that peeves us, nobody will listen when it really matters (e.g. “The Boy Who Cried Wolf”). Some things will absolutely happen in society that we dislike. But we can’t let disagreement make us disagreeable. It’s actually good that there are differing views on important issues. In fact, we should have a Hamilton and a Jefferson at each other’s throats in cabinet meetings, Congressional floor debates, and Supreme Court decisions–because it leads to more considered and effective solutions in the end.

More importantly, to really have influence, it is helpful not to be the guy who people hate at parties, always harping about the latest issue. Build friends, foster relationships, and focus your political influence when the time and topic are right. That said, be ready and watchful. The right time and topic will come.

Hope for a Better Future

A government by the people will largely be a reflection of the people. It could be a great government if a Moses, Marcus Aurelius, George Washington, Confucius, Muhammad, Cincinnatus, etc. is at its head; but as history has shown, it wouldn’t last. Maintaining a long-lived and successfully free society demands that a lot more citizens think and understand the principles of freedom (at the same level as, or better still, higher level than, our political leaders).

If you and I do this and we invite our communities to do the same, if “we the people” take on the responsibility to govern ourselves, we can and will have the best type of government—one that need only govern least. We must stop passing the buck on the hard things, or someone else will gladly take them up and decide for us. We the people, the first and original branch of government, have always had the most power to check and balance our government, and that hasn’t changed in today’s world.

An elite class can only rule when most of the citizens don’t have the same level of learning.

With persistence, civil influence really can provide proper checks and balances against the potential threats to freedom that naturally exist wherever power resides. In truth, it’s ultimately the only thing that does. It can be difficult. It takes patience, vigilance, study, understanding, and sacrifice.

But it does work.

Notes

[1] See, for example, the struggles of ancient Greece to unite city-states (unity vs. sovereignty), and the same issues in the nations of Europe and later the American colonies.

[2] A much more likely outcome in our situation.

[3] Consider the French Revolution, the Russian Revolution, the Chinese Revolution, etc.

[4] From the American Revolution to Brexit.

About the Author

Ian A Cox is an entrepreneur and consultant who mentors leadership and the Liberal Arts for students and business men and women of all ages and levels. Ian is a popular keynote speaker at educational and business events. He loves reading, basketball, and discussing deep ideas on history and political science. Ian and his wife Emma have two sons.

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PART TWO: Free Enterprise is Better than Capitalism

December 27th, 2016 // 7:50 am @

Part II: The Central Issue of the Trump Era*

“The median [U.S.] family debt went from an average
of $25,000 per family in 1989 to over $70,000 in 2010.
It’s getting harder to make ends meet,
and harder to stay financially afloat.”
—The 5 S’s of Money (citing the Center for American Progress)

A missing piece of entrepreneurship-Free enterprise rewardsLET’S get straight to the point. The biggest battle in the Trump Era probably won’t be capitalism versus socialism. It will be free enterprise versus crony capitalism. For America’s future, free enterprise simply must win.

But crony capitalism is far ahead in this battle right now.

To understand this, we need to define some terms. There are two major types of economies: market economies and command economies. The first is based on freedom, the second on force.

Within these two branches there are a number of subtypes, including various kinds of command economies such as socialism, communism, fascism, collectivism and different applications of economic authoritarianism and totalitarianism.

The divisions of market-style economies are sometimes more confusing to people from free societies, because most of us have been trained to evaluate political and economic issues in binary mode where we narrow any debate down to only two sides—such as liberal vs. conservative, socialist vs. capitalist, democratic vs. totalitarian, good or evil, Allies or Axis, believers and atheists, idealists and realists, free or not free, and so on.

That said, we live in an era where the various types of market economics are now in conflict. During the Cold War the world was divided between two great camps, with market economies of all types firmly allied against the command economies–the NATO nations of the West versus the Soviet Bloc and world communism.

But after the Cold War (and especially in the post-9/11 world), this has dramatically changed. There are forces supporting each of the various types of market economies, and these are often pitted against each other in ways unthinkable before the fall of the Berlin Wall in 1989.

Capitalism Deconstructed

Differentiating between these sub-types is important for anyone who wants to accurately understand what is happening in today’s world. When people use the term “capitalism,” they may be referring to any of the following five types of market economies. And the truth is that each of these models has drastically different goals and processes:

  • Mercantilism: A system where the law allows market forces but gives preference and special benefits to the sector of the economy owned (or directly controlled) by the government. Also known as “state capitalism.” This system was historically used by the British Empire. As Parag Khanna put it in 2016: “…all countries practice some form of ‘state capitalism’ today, whether subsidizing strategic industries, restricting investments in key sectors, or mandating financial institutions to invest more at home.” (Khanna, 2016, Connectography, 33)
  • Corporatism: A system where the law encourages market forces and also gives preference and special benefits to the sector of the economy owned by big corporations within the nation, sometimes referred to often as “Big Business,” “The Military-Industrial Complex,” or simply “The Establishment.”
  • Keynesianism: A system where the law allows market forces but gives preference and special benefits to companies and institutions that are so big that they tend to care more about their public image for societal responsibility and promoting social justice than about profit(s), market share or stock value. According to Keynes himself, Keynesianism seeks the goals of socialism through market means.
  • Capitalism (crony capitalism): A system where the law encourages market forces and also gives preference and special benefits to the sector of the economy owned by big capital—including big corporations like in Corporatism, but also wealthy foreign and multinational corporations, and highly influential non-corporate institutions such as rich foundations, moneyed trusts, political parties, well-funded lobbies and special interest groups, affluent non-profit entities, wealthy families, moneyed foreign investors, and others with large amounts of capital. Under this system, the rich rule society, and they naturally influence government to maintain policies that benefit the rich more than others.
  • Free Enterprise: A system where the law encourages market forces and gives no special preferences; it protects equal rights for all individuals and entities and leaves initiative and enterprise to private individuals, groups, businesses and organizations that are all treated equally and with minimal legislation by the legal code.

All five of these sub-types are market-based, and sometimes called “free market” or simply “market economy” systems. But please carefully re-read the differences between these five economic models, because, again – while they are all market systems, they differ drastically in theory and practice.

For the last three generations, these five types of market economics have frequently been lumped together under the label of “capitalism.” While this is technically inaccurate—because capitalism is a sub-type rather than the whole of market economics—this is the way the word “capitalism” has been used and understood by most people.

Under this popular definition, capitalism is synonymous with “market economics” and is a label for the entire free-market model. But even when people use this broader definition, it is important to distinguish which of the five types is being discussed—because the future of freedom under capitalism, corporatism or mercantilism will be a very different reality than it would be under true free enterprise.

So, to summarize, we have five definitions of “capitalism” in the current usage, and another definition which uses “capitalism” to refer to all the five types together. Naturally, these definitions are frequently confused in our contemporary language. Note that even the broader definition of “capitalism” includes every market approach from corporatism and Keynesianism to mercantilism and crony capitalism. In all of this, free enterprise is often forgotten.

Even worse, in the realm of modern politics all five of these systems are frequently lumped together and referred to as “democracy” or simply “freedom.” While this is a partially accurate definition, it confuses the fact that these five kinds of systems behave very differently and offer different results to society.

Madison Weighs In

Understanding the details and nuances of how these words are used is extremely important to maintain freedom. The American founders dealt with several similar language challenges, such as when Madison felt the need to write Federalist Papers 10 and 14 explaining the important differences between democracies and republics.

He also used papers 18, 19 and 20 to clarify the differences between federations and confederations, as well as national and federal governments. Without such clarity, the Constitution would have been confusing to many Americans who were deciding whether or not to ratify it. The fact that today most Americans don’t understand these differences illustrates how far we have devolved from the level of education exemplified by the founding generation.

There are numerous similar examples, and part of being a free people is taking the time to understand the nuances of economic and political freedom and the language of liberty. No nation in history has long maintained freedom at a level deeper than that understood by the regular citizens in the society. And note that few things are more essential for free people than clearly understanding what type of economic system they want.

Based on the definitions above, consider the following three observations:

  1. All five types of market economies are better (meaning they have more freedom, opportunity and prosperity for more people) than all types of command economies.

Even the market approaches with the least freedom (Keynesianism and mercantilism) are significantly better than the command systems with the most freedom (collectivism and socialism).

  1. Still, when comparing the five subtypes of market economies, free enterprise is significantly better (with more freedom, opportunity and prosperity for more people) than mercantilism, corporatism, crony capitalism, and/or Keynesianism.
  1. The United States, Canada, Britain, France, Switzerland, Japan and other leading free nations of the world today have far too much mercantilism, corporatism, crony capitalism, and Keynesianism—and not enough free enterprise.

This is surprising to most citizens of America and the free world. For example, many conservatives in the United States argue that we are a “capitalist” nation or vote for the “capitalist” candidate and conclude that all is well, when in fact free enterprise is under attack from socialism but also just as strongly from mercantilists, corporatists, Keynesians and crony capitalists.

Voters and citizens must know what to look for when a policy or candidate claims to promote “capitalism.”

Real Life Differences

Some might argue that most of this is mere theory, and that the United States today is a free enterprise society rather than a crony capitalist system as outlined here. Such an assumption is incorrect. The U.S. commercial code has numerous laws which are written specifically to treat people differently based on their wealth—and extending special benefits to those with more capital.

For example, it is illegal for those with less than a certain amount of wealth to be offered many of the best investment opportunities. Only those with a high net worth (the amount is set by law) are able to invest in such offerings. This is capitalism, not free enterprise. Under free enterprise, the law would be the same for all people.

Also, in many cities employees of the wealthy are allowed special legal benefits—such as carrying firearms (personally or through body guards), operating under false names, or traveling with different security measures—that are withheld from the regular citizens. However a person feels about gun laws or financial policies, such laws specifically treat the rich and powerful differently than the rest. Crony capitalism gives them special benefits.

This bears repeating: The laws of the United States stipulate that if you have more money you can invest in business opportunities that people with less money cannot (to study this in more depth, see the terms “sophisticated investor,” “accredited investor,” and SEC regulations on private investment offerings). The specific amounts and details are changed by law over time, but we are absolutely a crony capitalist nation where the laws give higher benefits to the rich.

In fact, many of these laws, including all the examples above, specifically benefit the wealthy to the detriment of wage earners. Regular working people are excluded by law from the best investments and various other perks and benefits. This system is called capitalism, and it is a bad system—better than socialism or communism, to be sure, but not nearly as good as free enterprise.

With all this said, the amazing thing is that this reality is basically ignored by almost everyone, mainly because those who point out the flaws of capitalism tend to be promoting socialistic solutions rather than free enterprise.

As a result, people are accustomed to attacks on the rich by those who want bigger government. But almost nobody has experienced those who want more free enterprise and much smaller government pointing out that the rich have terribly unfair legal advantages in our society—and that this is a bad system.

In fact, this is so deeply ingrained in most people that when they hear anyone criticizing the unfair benefits enjoyed by the rich, they seldom believe that the speaker is making a case for smaller, limited government and less socialism. We are so conditioned, that this possibility just does not compute.

Some may say that I am overstating this point. “Of course the rich and powerful are treated differently than the rest. After all, they are rich and powerful!” While this may be true, such a view is itself a symptom of aristocratic society with preferential class divisions. And in nations where the laws and government treat the rich and powerful differently, freedom is always in decline.

In free enterprise systems, the law allows all people to take part in any investments. If there are laws about bodyguards, firearms, using false names, or anything else, they are the same for every single citizen in the nation. This is what free enterprise means, because such a system gives everyone truly equal opportunities. In a system where Congress creates one set of laws for some, and different laws for those with wealth, status, or position, free enterprise isn’t allowed to give people the full benefit it should.

Indeed, in our system, Congress goes so far as to exempt its own members from certain laws and guidelines; this is especially harmful when members of Congress are allowed special financial opportunities that other people are not. Thus it isn’t surprising to see people elected to Congress and within a few terms become extremely wealthy, even though their actual salary could never generate such prosperity. They are allowed (by their own votes in Congress) to make deals that are illegal for regular people. This is crony capitalism, not free enterprise.

The Local Test

Another way to test the level of free enterprise in your society it to start a business in your local area. In fact, start two. Let the local zoning commissions, city council and other regulating agencies know that you are starting a business, that it will employ you and two additional employees, and then keep track of what fees you must pay and how many hoops you must jump through to gain the needed approvals.

At the same time, have your agent announce to the same government officials that a separate company, a big corporation, is bringing in a large enterprise that will employ 4,000 people—all of whom will pay taxes to the local area and bring growth and prestige. (Don’t really announce this—because if it’s untrue you might be breaking the law, unlike big corporations that are allowed to routinely float such trial balloons.)

Then simply sit back and watch how the two businesses are treated. In most towns, counties and cities in the United States, the small business will face an amazing amount of red tape, meetings, filings and obstacles—the big business will likely be courted and given waivers, benefits and government-funded publicity.

Add up the cost to government of both of your proposed businesses, and two things will likely surprise you: 1) how much you will have to do to set up a small business, and 2) how much the government will be willing to spend to recruit the large business.

This is the natural model in a crony capitalist system. Capital gets special benefits and a different level of treatment by the government. The result in such a system is that the rich get richer, the poor get poorer, entrepreneurialism is discouraged, and many jobs, innovation, investments and growth move to other nations.

In contrast, under free enterprise, everyone is treated the same by the law. Free enterprise is a better system than capitalism—it provides more freedom, opportunity and prosperity to many more people.

Bait and Switch

All of this is more than a mere philosophical or semantic argument about which word we should use. The truth is that many people, probably most people, who feel positively about capitalism actually mean free enterprise when they say “capitalism.” The things they admire about “capitalism” aren’t special benefits to the rich and different laws for the rich versus the poor or middle class, but rather a true free market where everyone is treated equally by the law and where each person has true and equal freedom of opportunity.

The problem is that this definition of capitalism seldom makes its way into official government policies or the law. People support free enterprise, which they call “capitalism,” and the government implements public policy that is certainly capitalism (because it favors those with more capital) but violates the principles of free enterprise. This “bait and switch” is one of the main problems with using the term capitalism.

If by capitalism we mean true economic freedom and laws that treat everyone the same, regardless of their level of wealth, and if this thing we call capitalism made it into our laws and became our operational policies, I would ardently support it. In fact, I would support such a system whether we called it free enterprise, capitalism, or even zebra- or giraffe-ism. The system, not the label, is the important thing.

The problem occurs when people support a thing called “capitalism” because they believe it is free economics for all, and then those in power take this popular support and use it to enforce something very different. This is the current reality, and it is hurting the middle and lower classes by decreasing their opportunities and abilities to prosper. Again, most people don’t even realize this is happening to them.

Freedom for All

In short, call it what you will, but we need a system of truly free economics with laws that treat everyone the same. Words mean things, and the word “capitalism” emphasizes special benefits to the wealthy with capital just as naturally as the phrase free enterprise promotes freedom and enterprise for all. Still, it is the actual system that matters, and all of us would do well to carefully observe political and economic details and nuances—regardless of how things are labeled.

When the laws are altered at all levels so that government entities treat all businesses and individuals the same, regardless of how much capital they have (or don’t have) in the bank or as assets, the natural result is the spread of more business, innovation, entrepreneurialism, jobs and economic growth. Free enterprise, not government favoritism of any sort, is the most effective economic model.

If we want to call the future of our society by the name capitalism, fine. But we must find ways to effectively change the current model to a system where the law treats everyone the same by maintaining true freedom and opportunity for everyone—without special government benefits for a few elites.

It is important to recognize that this is about more than quibbling over what word to use. As long as our society gives special legal and financial benefits to elites, while withholding them from the rest of the people, freedom will continue to decrease and the gap between the 1 percent, and even the .01 percent, and the rest will keep expanding. For the typical family, this means they will have to work longer and harder in increasingly scarce jobs in order to earn less and less. This is a bad economic model—bad economically, and bad for freedom and society.

Today’s Major Challenge

To put this all in perspective, the Trump Era is on target to emphasize mercantilism, corporatism, Keynesianism, and especially crony capitalism.

This needs to change. We need to focus on free enterprise.

But first, people need to realize that this is even an issue. The truth is, the battle between free enterprise and other types of capitalism isn’t just an issue right now—it is the central issue of the Trump Era.

We need to start acting like it.

*(Note to Reader: This post is part of an upcoming new book by Oliver DeMille, entitled Free Enterprise versus Capitalism: Battle for the Future of Freedom.)

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Free Enterprise is Better than Socialism or Capitalism

December 14th, 2016 // 8:08 am @

In light of the recent election, a deeper understanding of the real battle facing America in the year and decade ahead is incredibly important!
But surprise: It’s not what most people think.

A huge surprise-Freedom WorksTHERE is a hidden battle raging for the future of America. And, by extension, this battle impacts the prospects for freedom around the world. Indeed, if the great freedom system created by the Declaration of Independence and the U.S. Constitution is lost in the United States, it will likely take centuries before real freedom regains its current level of influence in the world.

This is the great struggle of this generation, but sadly the center-point of this contest is unclear to most people. Only a relative few understand what is actually going on behind the curtain. In fact, this battle for our future hinges on two main questions.

The first question is:
Will Socialism or Free Enterprise be the leading economic system of the 21st Century?

This conflict has been boiling for nearly two centuries, but it is now reaching its climax in the United States. If socialism wins the day, the future of freedom and economic opportunity in the decades to come will be bleak—in North America and around the world.

The decline of the free world will accelerate, China and other socialist-based nations will rise more quickly and gain global power (often by applying free enterprise principles), and the Founding Fathers’ experiment in constitutional self-government will end. Our standard of living will decrease in the decades ahead, the standard of living for our children will be much lower than ours, and their children will likely have a lower standard still.

If, on the other hand, free enterprise wins this battle, the future of American influence will be strengthened, freedom and economic opportunity will spread, and the free world will reboot and rekindle the philosophy of liberty for all humanity.

But the future of this battle is very much in doubt, mainly because the forces of free enterprise don’t actually know who they really are. Free enterprise is losing in both major American political parties, and in the media, academia, Hollywood, and among the political and financial elite. The combined supporters of socialism, though certainly not a unified team, are clear about their goals and strategies. In contrast, those who stand for free enterprise are fractured and unsure, because they are divided by a central confusion about what free enterprise really is. Even when they win elections, the divide remains.

In nearly all writings from the past five decades, when authors speak of socialism and its top competitor, the words used are socialism vs. capitalism. This brings us to the second great issue in the battle for our future:

The second question is:
If Socialism isn’t victorious in dominating the 21st Century, will the winner be Free Enterprise or Capitalism?

These two great questions (socialism vs. free enterprise on the one hand, and capitalism vs. free enterprise on the other) will be the guiding themes of the coming decades. If capitalism wins, the consequences won’t be as negative as socialistic dominance, but they will not be as positive as the results would be under free enterprise.

When a friend told me a while ago that he thinks socialism may be the only answer to our nation’s decline, I was surprised. It’s not what I’m accustomed to hearing from him over the years. But I think I understand what he was saying. Capitalism as we currently apply it too often wreaks havoc with our freedoms, our economy, and our future.

I don’t like the word “socialism” because it has too much baggage (totalitarianism, Marxism/Leninism, a string of failed nations that destroyed their society by attempting to adopt it, etc.) and because there is a better answer. But I do see the desperate need to deal with what modern society calls “capitalism” has done to us. When some people say “socialism”, they mean that capitalism is broken and we need a real solution—soon. And they’re right.

I’m not sure if this is what my friend meant or not, but a lot of people feel this way. It’s a common bond of many who are tired of the “politics as usual” options provided by the Establishment. The desire for something different cuts across the political divide, and its ranks are growing. It has won some surprising elections, but frequently such elections were followed by disappointment as those elected failed to bring true solutions that work.

What does this all mean? What’s behind it all? What is really happening?

Basic Training

Let’s start with the basics. Put simply, free enterprise and today’s system of capitalism aren’t the same thing. Free enterprise is strongly supportive of freedom for all people, while what usually passes for modern capitalism isn’t free enterprise at all, but actually crony capitalism. And crony capitalism deeply undermines freedom.

The problem is straightforward. Both socialism and crony capitalism are steeped in class divisions. Neither treats everyone the same before the law—whether they’re upper class, middle class, or lower class. Socialism claims to do this, but it has never created a society that actually delivered on its promises. In fact, socialist nations have some of the widest divides between the super-rich and poor in the world. And the underclasses in socialist systems are widely neglected, terrorized, and abused.

Crony capitalism is also a disaster. There is a different set of laws for the wealthy than for everyone else, laws that help the rich get richer and the powerful gain more power—while the under classes are routinely treated differently by officers of the government, regardless of what the laws say on paper. To repeat: Under a crony capitalist model, the elite classes have numerous special benefits in the law that allow them to increase their wealth and power at the expense of the rest of us. The law is written to help them, and to keep others from effectively competing with them.

The truth is, crony capitalism is a terrible system. Terrible for freedom, and terrible for prosperity. It lasts because a few elites at the top obtain huge wealth and inordinate power—and they like it that way. Likewise, socialism is terrible model. It almost never gets implemented in a way that even remotely resembles what its proponents idealize and promise. It nearly always becomes an Orwellian caricature of equality, freedom, and “prosperity for all.” Both systems are deeply flawed.

Crony capitalism gives too much power to the money elites, who frequently use it to influence government; socialism gives too much power to government elites, who nearly always use it enrich themselves and give special benefits to their families and colleagues. Both socialism and crony capitalism have proven repeatedly and consistently harmful for the regular people, the masses.

Binary Code

Part of the problem is the binary way in which most moderns see this struggle. Meaning: Many people think that if socialism increases in a nation, capitalism must be decreasing, while if capitalism declines then socialism is on the rise. The truth is that socialism and crony capitalism are natural partners. When the crony capitalists give great power to wealthy elites, the people naturally begin demanding socialistic programs from their government.

Likewise, when socialists increase the amount of money government takes from the wealthy to offer programs for the poor, they make the government bigger and bigger—and the elites who inevitably control such governments from behind the scenes naturally absorb this increased power. The bigger the government—even in the name of social benefits for the citizens—the bigger the power of the aristocratic elite class.

These processes happen simultaneously in most modern nations of the “free world.” Centralized governments get bigger, they control more things in the lives of regular citizens, and a small number of elites enjoy a rapidly increasing share of the money and power.

Best of all, for the elites–when the regular people get upset with an arrangement that is making life harder and worse for most of them, the elites use investment (in businesses, banks, lobbying firms, special interest groups, media, etc.) and donations (to academia, think tanks, hugely powerful private foundations, and political campaigns, etc.) to increase their own influence. It works, year after year, decade after decade. Elites get more powerful and own a bigger share of the wealth.

At the same time, the regular citizen finds it harder and harder to make ends meet, and has less and less influence. Many of the elite-owned and elite-funded media organizations, academic institutions, producers of entertainment, and other top influencers fuel the “socialism vs. capitalism” debate, often using other labels (such as conservative vs. liberal, Republican vs. Democrat, etc.).

This debate makes many of the regular people think that someone is on their side; and it also gives them someone to see as “the enemy.” But both sides, many in both major political parties, and the Establishment wings of both conservatism and liberalism, are funded largely by the same small class of elites.

Again: These elites win most elections, because they fund both sides. They win most policy battles, because they fund the opposing groups. They win at the bank too, because they manage each major political, media, and cultural conflict in a way that brings more of the regular people’s money into elite-owned business services, products, and corporate bank accounts.

The solution to such behind-the-scenes elite domination is a system that treats everyone equally before the law. Everyone. Rich, poor, elite, non-elite, fat, skinny, tall, short, smart, dull. Yes, there should be a separate set of laws for minors—as a protection. But all adults in a truly free system are treated equally by the laws and government officials. This is not the case under crony capitalism. Elites get special benefits.

The Moral Law and Economy

Moreover, truly free government doesn’t have any laws that are immoral. This may seem a strange concept when we are discussing economics, but it is in fact a central truth. As Bastiat explained, the people can only morally delegate to government authority to do something the people have the authority to do. You can’t morally delegate an authority you don’t actually have. Specifically, the force of government is moral only if it is used to defend inalienable rights. Any other use of force or government is immoral.

Together these two foundational principles are the key to free society:

  1. Laws and government actions can only protect inalienable rights.
  2. The government must treat everyone equally before such laws.

Socialism doesn’t do this. It recommends using government force to do myriad things beyond protecting inalienable rights. And, historically, socialist societies don’t treat everyone equally before the law—government officials are treated according to a different set of standards. What we call capitalism today has similar problems. It purposely sets out to give special benefits before the law to those with great wealth, with lots of capital.

Both socialism and crony capitalism operate like the Queen of Hearts in Lewis Carroll’s classic book Alice in Wonderland. When the Queen plays croquet with people from her realm, she must win every shot. Not just every game, but each and every swing of the mallet. Everybody lets her win, knowing that if she is bested in even one shot the person who bested her will hear the words: “Off with his head.”

What kind of system is that?

Actually, people who live in socialist nations or crony capitalist societies are used to it. They don’t usually lose their heads, but they know that the whole system is stacked against them and their children. An elite class rules things—regardless of how proponents of socialism or capitalism claim things are supposed to work—and the elites get their way, either by law or by the actions of government officials (despite the so-called law).

In our modern “capitalist” nation, there are a number of laws on the books that treat elites very differently from everyone else, and long-standing practices and policies that treat the underclasses even worse. That’s not socialism, it’s crony capitalism. And it’s a tragedy.

Still, the answer isn’t socialism. Marx’s model is just another flawed and broken system. The answer is true free enterprise—where the government only protects inalienable rights, and actually does protect everyone’s inalienable rights (no matter their social status).

Class Divides

It’s hard for many moderns to grasp just how effective such a model can be. We simply have very little experience with it. But with true freedom, everyone has opportunity. If the upper class wants to dominate, it can’t. The law won’t let it. (Which is precisely what the “pure socialists” are looking for.) If the government wants to dominate beyond it’s proper role, it can’t. (Which is precisely what free enterprisers seek.) When this is the system, as Tocqueville put it in Democracy in America, everyone belongs to the same class—all are treated equally and appropriately before the law.

The only ones who are let down by free enterprise are the crony capitalists or elites, who truly want to dominate. Their motto, as described by an article in The Atlantic on the culture of Wall Street investment bankers, is telling: “It is not enough to succeed. Others must fail.” No win-win is good enough for them. Control is the only acceptable outcome. That’s the driving mantra of elite rule, both in applied socialism and crony capitalism.

If the word “socialism” meant stopping such elite domination and spreading a system of true freedom, I’d be all for it. But the thing is, it already has a name: Free Enterprise. And it works, as long as we don’t let crony capitalism, elitism, or socialism creep in.

Sadly, few people understand the difference between free enterprise and crony capitalism. Yet the differences are largely driving our current decline. It is time for anyone who truly cares about freedom in our modern world to clearly understand this battle, its roots, and the future it is creating for us even as we speak. Moreover, it is time to remedy this situation before it entirely restructures our society. Freedom hangs in the balance.

This is about freedom, success and progress, and how all three are served better by free enterprise than either socialism or crony capitalism. It is about who we really are as people, Americans and members of the free world, and why the differences between these two ways of life—capitalism and free enterprise—are at the root of our future.

Semantic Power

For far too long free enterprise has been held back and watered down by the tenets of capitalism. In fact, perhaps the most significant reason socialism has been able to capture the support of so many people in modern times is a direct result of confusing free enterprise with capitalism.

When the differences between capitalism and free enterprise are clearly understood, and the flaws of capitalism are removed from our opinions of free enterprise, socialism will have little or no chance of winning this great battle for the hearts and minds of the people.

Before World War II many Americans combined their view of Stalin’s communism and Hitler’s Nazism into one group considered an axis of evil, and during the Cold War many people mistakenly saw communist China, Russia, North Korea, Vietnam, Cuba and others as one cohesive entity. This caused numerous flawed policies—and cost far too much in blood, sacrifice and treasure—because national leaders took action based on faulty assumptions.

Likewise, today many people erroneously lump capitalism, democracy, and free enterprise into one indistinguishable whole. But free enterprise is a system of true freedom, and while democracy is clearly better than totalitarianism and capitalism is in some ways superior to socialism, free enterprise is significantly better than all these alternatives.

Free enterprise deserves to be understood on its own merits, without the baggage of capitalism weighing it down. Nearly all of the legitimate criticisms levied against free enterprise are actually attacks on the flaws of crony capitalism. As a result, free enterprise has seldom received a full consideration on its own merits. Indeed, if the battle for the 21st Century comes down to capitalism vs. socialism, socialism may very likely carry the day.

True free enterprise, in contrast, is the best economic and political system known to mankind, and if it is understood as it truly is, free from the stains and blemishes of crony capitalism, few will see socialism as the right choice for humanity. Ideas have consequences, as the great Richard Weaver assured us, because all human actions aim at some goal, some ideal. What we hold up as our standard impacts our most important choices as a nation. As long as our ultimate objective is capitalism, socialism will always have its coffers full and its meetings packed. Capitalism is flawed; so is socialism.

In contrast, free enterprise is a very different model indeed. It is time to truly understand free enterprise, to decide as a generation if free enterprise or it’s de facto modern opponent, capitalism, deserves our support against socialism, and which model we want to pass on to our children and grandchildren.

Again, if the battle is between socialism and crony capitalism, as we have seen for generations, the victor is still unclear. But if free enterprise has a real opportunity in the full light of day, if every citizen in the free world has the chance to understand it for what it really is and choose to support or reject it, the days of socialism are numbered.

And free enterprise is not some idealistic dream. It alone is the proven system of widespread freedom and economic opportunity in mankind’s history. Free enterprise is the basis of most real and lasting freedom everywhere, whether people have recognized it as such or not. Even where capitalism has gotten credit for freedom and prosperity, the truth is that free enterprise was the actual source of success.

As free enterprise goes, so goes freedom—in every nation of the globe, and through every epoch of human history. It has seldom received its due, but it has been at work wherever freedom existed, spreading opportunity from behind the scenes.

It is now time to give free enterprise a bigger chance, to at the very least see what it stands for on its own, how it differs from capitalism, and what it promises for those who implement it in their society. This is a book about freedom, and the reality that the actual principles and processes underpinning all human freedom are found in free enterprise.

One thing the new leadership in Washington, and the people, need to clearly remember is this:

To the exact extent that free enterprise (not crony capitalism) flourishes in the 21st Century, we will see real freedom expanding its blessings in America and in the world.

 

(Note to Reader: This post is part of an upcoming new book by Oliver DeMille, entitled: Free Enterprise versus Capitalism: Battle for the Future of Freedom. Look for Part Two of this report, which will provide more details on this great hidden battle of our time, in another post coming soon.)

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