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Sun Jul 26 15:10:43 CEST 2015

[Moderator's Note: I just wanted to remind everyone that the discussion of
Peter Barnes's viewpoint will come to a close today. If you would like to
post a comment, please do so by tonight. I look forward to reading your
responses! - Jonathan Cohn]

I want to thank the GTI effort for allowing me to join this discussion. I=
also like to preface my comments on Peter Barnes=E2=80=99 Common Wealth Tru=
(CWTs) article by stating that my observations are based on studies of
breakdowns in human communication. I believe that unless humanity figures
out how to fix huge communication flaws that confound our ability to use
logic, based on reality, then society will fall back into simple minded
self-reliant feuding clans.

A prior experience provides a simple example. In the 1980=E2=80=99s, there =
over 46 =E2=80=9Cpeace=E2=80=9D groups in the Boston area. I met with many =
of them asking
why they needed to be separate. They always had =E2=80=9Cgood reasons=E2=80=
=9D. The irony
of peace groups unable to work together, was not overlooked by many in the
general public. The movement was not successful.

To be clear, the inability to work together is based on fundamental
problems of communication that have infiltrated almost every part of our
culture. The importance of this observation for CWTs is that most
corruption in institutions, which I believe will be a major hurdle for
CWTs, is due to communications flaws that prevent intelligent people from
finding mutual agreement about issues. My studies also suggest, that the
corruption is not due so much to a malevolence in human nature, as it is to
limitations in human thinking ability and communications breakdowns.

Barnes=E2=80=99s summary of Common Wealth Trusts includes two parts: 1. leg=
shells and 2. fiduciary responsibility to future generations. =E2=80=9CThe =
are necessary to enable managers of common wealth to bargain with
profit-seeking enterprises in the marketplace. Fiduciary responsibility
assures that the managers of common wealth act first and foremost on behalf
of future generations=E2=80=94which, de facto, means nature.=E2=80=9D

CWTs propose using a non-profit trust structure. The U.S. is currently
experiencing a major scandal with non-profit organizations. The concept of
a =E2=80=9Cnon-profit=E2=80=9D organization is actually quite old, being de=
scribed in
ancient Greek literature. In the early days of our modern business culture,
which accepts the rationale of motivational benefit through business
profitability, there were situations, like orphanages, that could not be
incentivized by profit. Not having a product to sell for revenue, these
organizations, more properly termed =E2=80=9Ccharities=E2=80=9D, were susta=
ined by
philanthropy. Insufficient donations led to gruesome operating conditions.
The =E2=80=9Cnon-profit=E2=80=9D corporate structure was codified and appli=
ed to charities
to expand management oversight and fund raising channels, and to eliminate
their =E2=80=9Cbusiness=E2=80=9D tax burden.

There was also another requirement for early charities. They were expected
to make a reasonable investment to eliminate the social problems that
created the need for their charity with the intention of eventually
eliminating their charity.

In our recent business environment, the original intentions associating
charity with non-profit structures has been corrupted. Non-profit
businesses, like hospitals, have become multi-billion dollar enterprises.
And while they don=E2=80=99t have =E2=80=9Cstock holders=E2=80=9D to reward=
 with =E2=80=9Cexcess revenue=E2=80=9D,
they can route it without limits to executives and employees. Multi-million
dollar salaries are common. Non-profits now exceed 35% of all businesses.
What made this possible is the acceptance by the public that government
should pay for services that were formerly accepted as philanthropy,
without establishing new rules to guide ethical operations and

The same corruption has affected many =E2=80=9Ccommons=E2=80=9D services, s=
uch as jails,
that were formerly run by the government, but now by non-profit and
for-profit organizations. The rules of competition, that were beneficial
for =E2=80=9Cproducts =E2=80=9C =E2=80=93 i.e. more is better =E2=80=93 are=
 completely reversed for a
product like prisoners. Also, the requirement that the institution directly
invest in eliminating the need for its existence has been completely
twisted into advertising disguised as =E2=80=9Ceducational=E2=80=9D outreac=
h services.
Where has economics included inverted supply-demand curves that model the
positive feedback loops introduced by this new economic structure?

An inherent business assumption is organizational growth. Without making
major changes in fundamental codified business principles, this will be in
direct conflict with the intended goals of CWTs to limit the production of
their =E2=80=9Cproduct=E2=80=9D =E2=80=93 i.e. resource - and eliminate the=
 need that created the
CWT. There will be no inherent incentive to control management income, or
stop =E2=80=9Cconflict of interest=E2=80=9D expenses. Specifically, without=
change in non-profit laws and corporate structure, the two parts set out
for CWTs: 1. legal shells and 2. fiduciary responsibility to future
generations, will be in direct conflict, anything stated in their bylaws

Barnes provides support for the need for CWTs with the statement, =E2=80=9C=
present form of elected government is simply not designed to balance the
rights of future generations against those of the living.=E2=80=9D Why are =
governments allowed to exclude such a need? This is where I believe a
serious communication flaw can be found. If we, as a study group, can find
a way to structure CWTs to remove the conflict of interest between
=E2=80=9Cbusiness goals=E2=80=9D and =E2=80=9Cfiduciary responsibility=E2=
=80=9D, then why wouldn=E2=80=99t that
solution be applicable to fixing corruption in government agencies?

For example, we have clear evidence that most government agencies, which
are set up like =E2=80=9Ctrusts=E2=80=9D with independence from legislator =
and executive
authority, and protection from legal prosecution, are failing to enforce
environmental and workplace protections. The whole Deep Water Horizon oil
spill fiasco is a case in point. Oil drilling in the Gulf of Mexico is
regulated by the Bureau of Ocean Energy and Management (BOEM). When the
spill occurred, huge pressure came down on British Petroleum for cleanup
and policy change. But BOEM was hardly touched for failure to regulate and
failure to prepare for the disaster. What if U.S. oil production was put
under management of an Oil Production CWT? How would the =E2=80=9Ctrustees=
=E2=80=9D resolve
the conflicts between national economic needs, pollution hazards, climate
change, AND extravagant gifts to board members from industry? That was
essentially the role BOEM played.

And what if we specifically added a provision for =E2=80=9Cfuture voices=E2=
=80=9D to be
heard? Who would have the =E2=80=9Cright=E2=80=9D to speak for them? Certai=
nly there will
be many volunteers: hundreds of religions, many political parties,
academics of all stripes, =E2=80=9Cexpert=E2=80=9D futurists, activist grou=
ps, future
employers? Who will get the authority to sort all of these voices out? The
media? The government? The people - through their democratic representative
process maybe? We clearly just end up back where we are. Society doesn=E2=
know how to communicate to resolve this.

A non-profit example is the entire U.S. medical industry. Physicians
traditionally take the Hippocratic oath as part of their matriculation. A
related professional code of =E2=80=9Cethical performance=E2=80=9D does not=
 exist as law.
The medical profession, and specifically, medical professional
organizations, despite many being non-profit organizations, are clearly run
as =E2=80=9Cguilds=E2=80=9D with the highest goals being maximizing physici=
an and medical
administration salaries, and immunity from malpractice. While concern for
patient welfare is promoted foremost in their public message and bylaws,
that welfare is tragically a much lower concern in practice.

In 1998, due to the malpractice death of the niece of Senator Edward
Kennedy, a government study was conducted to evaluate the extent of similar
deaths. The study estimated a staggering 90,000 such deaths per year. Much
academic funding was provided by the government to refine that study. The
major medical organizations initially rejected the report. They later gave
acknowledgement and also accepted large grants to research the problem.
Changes that would reduce the number of medical errors were minimal. The
latest update in 2014 put the number closer to 400,000 fatal medical
=E2=80=9Cerrors=E2=80=9D =E2=80=93 i.e. malpractice =E2=80=93 making it the=
 third leading cause of death to
patients admitted to hospitals.

The point is, placing the responsibility for this =E2=80=9Csocial commons=
=E2=80=9D =E2=80=93 the
life of citizens in U.S. hospitals =E2=80=93 in non-government =E2=80=9Cshe=
lls=E2=80=9D such as
non-profit corporations, religious =E2=80=9Ctrusts=E2=80=9D, and for-profit=
 businesses, in
addition to government oversight, has shown similar inability to solve the
problem. This is so even though these existing approaches, due to their
high visibility, have been made =E2=80=98very visible to markets, been exte=
organized and provided with clear property rights=E2=80=99, some of the key=
Barnes depends on in his trust model.

When the U.S. Constitution was written, one of the highest concerns of the
signers of the Declaration of Independence was that the power of government
would be captured by wealthy land owners, banks, and large corporations.
The three-element structure of government was specifically set up to
obstruct this using a circularly limiting scissors-paper-stone game model.
As we know, this approach failed from the beginning, not only in the U.S.
but for many modern democratic experiments. Similarly, giving trusts
=E2=80=9Cauthority to limit usage of threatened ecosystems, charge for the =
use of
public resources, and pay per capita dividends=E2=80=9D, while being well-r=
responsibilities, will only be achievable if they can be protected from
internal and external corruption when also facing the =E2=80=9Cexpected=E2=
=80=9D business
pressures to GROW the trust and reward its employees in competition with
other similar or overlapping organizations.

As leaders, the =E2=80=9Cfounding fathers=E2=80=9D, who were well aware of =
the =E2=80=9CAge of
Enlightenment=E2=80=9D sweeping Europe, could have taken responsibility for
codifying a structure for sustainability. The political swamp they were in,
however, and the extent of new resources available to them to the west made
it easy for them to kick the can down the road. Current political leaders,
however, can no longer make excuses of =E2=80=9Dnatural abundance=E2=80=9D =
in the face of
overwhelming shortages and the impending potential for catastrophe. Yet,
they still ignore and outright deny the problems. The implication to me is:
elected leaders, and =E2=80=9Cthought based=E2=80=9D institutions, while be=
ing well
intentioned and appearing alert, don=E2=80=99t have the mental ability and
communication tools needed to resolve the conflict of interest between
existing business structures and social needs. A goal of the Great
Transition should be to develop those tools. Whether they are used to
construct CWTs or fix democracy depends on what
tools are developed.

Bruce Nappi


Tuesday, June 30, 2015

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