No subject
Sun Jul 26 15:10:43 CEST 2015
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[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 l=
ike to post a comment, please do so by tonight. I look forward to reading y=
our responses! - Jonathan Cohn]<br>
<br>
I want to thank the GTI effort for allowing me to join this discussion. I=
=E2=80=99d also like to preface my comments on Peter Barnes=E2=80=99 Common=
Wealth Trusts (CWTs) article by stating that my observations are based on =
studies of breakdowns in human communication. I believe that unless humanit=
y 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 mi=
nded self-reliant feuding clans.<br>
<br>
A prior experience provides a simple example. In the 1980=E2=80=99s, there =
were 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 su=
ccessful.<br>
<br>
To be clear, the inability to work together is based on fundamental problem=
s of communication that have infiltrated almost every part of our culture. =
The importance of this observation for CWTs is that most corruption in inst=
itutions, which I believe will be a major hurdle for CWTs, is due to commun=
ications flaws that prevent intelligent people from finding mutual agreemen=
t 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 thi=
nking ability and communications breakdowns.<br>
<br>
Barnes=E2=80=99s summary of Common Wealth Trusts includes two parts: 1. leg=
al shells and 2. fiduciary responsibility to future generations. =E2=80=9CT=
he shells are necessary to enable managers of common wealth to bargain with=
profit-seeking enterprises in the marketplace. Fiduciary responsibility as=
sures that the managers of common wealth act first and foremost on behalf o=
f future generations=E2=80=94which, de facto, means nature.=E2=80=9D<br>
<br>
CWTs propose using a non-profit trust structure. The U.S. is currently expe=
riencing a major scandal with non-profit organizations. The concept of a =
=E2=80=9Cnon-profit=E2=80=9D organization is actually quite old, being desc=
ribed in ancient Greek literature. In the early days of our modern business=
culture, which accepts the rationale of motivational benefit through busin=
ess profitability, there were situations, like orphanages, that could not b=
e incentivized by profit. Not having a product to sell for revenue, these o=
rganizations, more properly termed =E2=80=9Ccharities=E2=80=9D, were sustai=
ned by philanthropy. Insufficient donations led to gruesome operating condi=
tions. The =E2=80=9Cnon-profit=E2=80=9D corporate structure was codified an=
d applied to charities to expand management oversight and fund raising chan=
nels, and to eliminate their =E2=80=9Cbusiness=E2=80=9D tax burden.<br>
<br>
There was also another requirement for early charities. They were expected =
to make a reasonable investment to eliminate the social problems that creat=
ed the need for their charity with the intention of eventually eliminating =
their charity.<br>
<br>
In our recent business environment, the original intentions associating cha=
rity with non-profit structures has been corrupted. Non-profit businesses, =
like hospitals, have become multi-billion dollar enterprises. And while the=
y 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 ex=
ceed 35% of all businesses. What made this possible is the acceptance by th=
e public that government should pay for services that were formerly accepte=
d as philanthropy, without establishing new rules to guide ethical operatio=
ns and accountability.<br>
<br>
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-prof=
it and for-profit organizations. The rules of competition, that were benefi=
cial 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 require=
ment that the institution directly invest in eliminating the need for its e=
xistence has been completely twisted into advertising disguised as =E2=80=
=9Ceducational=E2=80=9D outreach services. Where has economics included inv=
erted supply-demand curves that model the positive feedback loops introduce=
d by this new economic structure?<br>
<br>
An inherent business assumption is organizational growth. Without making ma=
jor changes in fundamental codified business principles, this will be in di=
rect conflict with the intended goals of CWTs to limit the production of th=
eir =E2=80=9Cproduct=E2=80=9D =E2=80=93 i.e. resource - and eliminate the n=
eed that created the CWT. There will be no inherent incentive to control ma=
nagement income, or stop =E2=80=9Cconflict of interest=E2=80=9D expenses. S=
pecifically, without fundamental change in non-profit laws and corporate st=
ructure, the two parts set out for CWTs: 1. legal shells and 2. fiduciary r=
esponsibility to future generations, will be in direct conflict, anything s=
tated in their bylaws notwithstanding.<br>
<br>
Barnes provides support for the need for CWTs with the statement, =E2=80=9C=
Our present form of elected government is simply not designed to balance th=
e rights of future generations against those of the living.=E2=80=9D Why ar=
e elected governments allowed to exclude such a need? This is where I belie=
ve 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 corrup=
tion in government agencies?<br>
<br>
For example, we have clear evidence that most government agencies, which ar=
e set up like =E2=80=9Ctrusts=E2=80=9D with independence from legislator an=
d executive authority, and protection from legal prosecution, are failing t=
o enforce environmental and workplace protections. The whole Deep Water Hor=
izon oil spill fiasco is a case in point. Oil drilling in the Gulf of Mexic=
o is regulated by the Bureau of Ocean Energy and Management (BOEM). When th=
e 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 un=
der management of an Oil Production CWT? How would the =E2=80=9Ctrustees=E2=
=80=9D resolve the conflicts between national economic needs, pollution haz=
ards, climate change, AND extravagant gifts to board members from industry?=
That was essentially the role BOEM played.<br>
<br>
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? Certainly there will be many volunteers: hundreds of religions, many=
political parties, academics of all stripes, =E2=80=9Cexpert=E2=80=9D futu=
rists, activist groups, future employers? Who will get the authority to sor=
t 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=80=99t know how to communicate to resolve th=
is.<br>
<br>
A non-profit example is the entire U.S. medical industry. Physicians tradit=
ionally 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 orga=
nizations, despite many being non-profit organizations, are clearly run as =
=E2=80=9Cguilds=E2=80=9D with the highest goals being maximizing physician =
and medical administration salaries, and immunity from malpractice. While c=
oncern for patient welfare is promoted foremost in their public message and=
bylaws, that welfare is tragically a much lower concern in practice.<br>
<br>
In 1998, due to the malpractice death of the niece of Senator Edward Kenned=
y, a government study was conducted to evaluate the extent of similar death=
s. The study estimated a staggering 90,000 such deaths per year. Much acade=
mic funding was provided by the government to refine that study. The major =
medical organizations initially rejected the report. They later gave acknow=
ledgement and also accepted large grants to research the problem. Changes t=
hat would reduce the number of medical errors were minimal. The latest upda=
te 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.<br>
<br>
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=9Cshells=E2=80=9D such as non-profit corporations, relig=
ious =E2=80=9Ctrusts=E2=80=9D, and for-profit businesses, in addition to go=
vernment 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 extensively organized=
and provided with clear property rights=E2=80=99, some of the key goals Ba=
rnes depends on in his trust model.<br>
<br>
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. T=
he three-element structure of government was specifically set up to obstruc=
t this using a circularly limiting scissors-paper-stone game model. As we k=
now, this approach failed from the beginning, not only in the U.S. but for =
many modern democratic experiments. Similarly, giving trusts =E2=80=9Cautho=
rity to limit usage of threatened ecosystems, charge for the use of public =
resources, and pay per capita dividends=E2=80=9D, while being well-reasoned=
responsibilities, will only be achievable if they can be protected from in=
ternal and external corruption when also facing the =E2=80=9Cexpected=E2=80=
=9D business pressures to GROW the trust and reward its employees in compet=
ition with other similar or overlapping organizations.<br>
<br>
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 take=
n responsibility for codifying a structure for sustainability. The politica=
l 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. Curr=
ent political leaders, however, can no longer make excuses of =E2=80=9Dnatu=
ral abundance=E2=80=9D in the face of overwhelming shortages and the impend=
ing 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 being well intentioned and appearing ale=
rt, 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 too=
ls. Whether they are used to construct CWTs or fix democracy depends on wha=
t<br>
tools are developed.<br>
<br>
Bruce Nappi<br>
<br>
************************************<br>
<br>
Tuesday, June 30, 2015<br>
<br>
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