Friday, December 26, 2008

Be Good and Grow Rich: Reversing the Economic Meltdown

Frank Kaufmann
December 23, 2008
"Insanity is doing the same thing over and over again and expecting different results."
Albert Einstein
Why is it that suddenly everyone seems lost. Only weeks ago, the pantheon of cable news finance wizards flooded our lives around the clock with pride, bluster, and "expertise." And while they frothed and “explained,” lust and frenzy infected world markets like bone cancer. A financial world was built with bedrock institutions packaging, selling, and buying less than nothing.

When natural laws of economics finally tore though the mirage, financial meltdown fell on us like a flesh eating virus that continues relentlessly and with a vengeance. Extreme responses arose in all sectors with leaders scurrying about like those on the deck of the Titanic hit. Makeshift measures to stanch hemorrhaging in this spot or that were passed in panic, but none brought about a settling, stabilizing, or passing of the storm. We wait with baited breath to see if, when, and how great the carnage, pain, and suffering finally will be. Fully one third of savings have evaporated.

Those working on fixes are not working on a level that matches the depth and nature of the crisis. Everything that breaks does so because essentials are violated, basic elements collapse under the strain. Analyses and proposed remedies must start with clear-headed investigation of what fundamentally broke. What was violated? What snapped? What basic laws and rules were stretched to the breaking point?

Current recommended remedies stem from and remain mired in this mentality of violation and untruth. The slide will pause now at 35% loss, giving us the opportunity to awaken, change, and begin to recover. If we do not acknowledge what we have wrought, the economy will drop its next third, leaving none from this generation to see recovery.

3 sectors are responsible for failures comprising the global economic crisis, the business and financial sector, the political arena, and the media. Great wrong, great greed, and great dysfunction took place under the watch of each of these 3 sectors, each having failed in their respective responsibilities to be sure that such things never happen. The reform of the economy cannot be achieved through the application of mere “economic” fixes. Recovery requires reform, acknowledgement of wrongdoing, taking responsibility for harm done, and commitment to change in each of these three areas.

The economic crisis happened by violating two basics: 1.Self interest cannot evolve into greed to the degree that personal, material lust is sated without regard for the human condition of “the neighbor.” 2. Production and consumption may not persist in a manner and degree that outstrips nature's capacity to repair and rejuvenate herself. The economic meltdown is not merely the fruit of greed. It more accurately occurred through the the deadening of the heart.

According to the UN Food and Agriculture Organization, almost 1 billion people suffer in this year's global food shortages. The number of undernourished, the FAO said, rose by 40 million, following a 75 million jump the previous year. This is simply forbidden. Prosperity and suffering in such magnitude are not coterminous.

Growth of value (perceived by many as growth of capital) cannot continue unchecked when doing so happens in ways that violate basic human norms and morality. The meltdown will not relent nor subside until approaches at resolution address real causes. Lust for personal profit and consumerist excess may not be sought in anti-human and anti-environment structures and patterns.

The way to genuine recovery, growth, and the return of wealth will come to enterprises oriented specifically to the causal factors of the meltdown. Industries that fit this bill will experience genuine growth and profit. These will produce jobs and wealth aplenty. On the other hand, proposals based on the persistent breaking of natural rules and rectitude not only will fail rescue the economy, but will drive the meltdown further. If we snap the 35% loss barrier through obstinately not learning, the collapse will become irreparable.

What is needed now for recovery is the very opposite of current approaches seeking desperately to resuscitate over-heated, self-gratification, and debt-fueled consumerist materialism.

Real solutions that will turn the tide to recovery will be led by industries and entrepreneurs devoted to the restoration of balance in human affairs, balance such that acquisitiveness is no longer admired if it fails to be coupled with minimum concern for vast numbers of suffering people, the millions who starve and die without hope. Industry that retools itself to create opportunity, housing, education, and work for the needy will prosper.

Secondly, everything entrepreneurial that is devoted to restoring nature's capacity to repair and sustain herself while keeping apace with non-excessive human consumption will prosper.

In short, consumption, growth, and wealth are fine. But gluttonous, consumerist materialism cannot be celebrated and encouraged 1. while able-bodied men and women with families cannot eat or lead lives with minimal opportunity and dignity and 2. when consumption happens in ways that break mother nature's ability to repair herself and sustain environmental balance and health.

In the present moment, industries designed to fix these abuses and violations naturally will inherit and enjoy the privilege of growth and profitability.

Frank Kaufmann is the director of the Inter Religious Federation for World Peace. The opinions here are his own.

16 comments:

Anonymous said...

Frank,
Thank you for this timely and insightful article. I fear that there are not enough voices in the general media or at the tables of decision making that are in sync with your viewpoint. Finding the correct balance in each of these 3 essentials areas, ie finance, government and media, is never easy, but especially challenging when attempted from tossing ships in the midst of a perfect storm, as we have now.
In one way or another, the essential ingredient for success in each of these "Big 3" is TRUST. It is telling that we are at a historical moment when no one with a modicum of their faculties, can trust any of these institutions. Every level of government in our nation or world has been invaded by scandal. The same in the business world, where Ponzi now seems like an inconsequential amateur. Not only have giant banks and credit card companies collapsed, but before that, their own customers experienced being ripped off with usury level interest rates, jacked up ATM charges, and with whatever scheming and greedy minds could conjure up to hoist upon them.

The media used to prize "objectivity", but that went by the boards some time ago.
More problematic is the media's ever growing penchant for hyping every story to disaster level with the mindset that fear and shock sell. In the current state of the media, Jerry Springer and Dick Morris (who once shared state secrets with a DC prostitute while in the Clinton administration) are now "respected" journalists. I nearly gag from revulsion every time I see Morris pontificating on the small screen.

Bottom line, unless these 3 "institutions" find leadership that can promote a truly altruistic outlook for humanity, there will be no re-establishment of trust,,,,and therefore no lasting recovery.

Anonymous said...

I always enjoy reading your articles.

George Jason Brunner

You cannot teach creativity - how to become a good writer. But you can help a young writer discover within himself what kind of writer he would like to be.
-Mario Vargas Llosa

Anonymous said...

good thoughts Frank. appreciated you including the media (as responsible) along with Wall Street & politicians.

The blame deserves to be spread evenly. Maybe it is God's judgement as you suggest for not being our "brother's & Mother's keeper."...Pat

Anonymous said...

Dear Frank,

Greetings. Thanks for a very relevant article. Truly, you cannot produce a "profit" unless you create a "value" from which you share.

At times I question when problems/disaster such as the economic meltdown now being experienced that they have occurred resulted from inherent faults in the "free market system" but then as you have underlined it it is -the violation of basics, regrettably it is the poor and dispossessed that will bear the brunt of the cost of the recovery of the economy.

I pray for good health, success, peace, love and good fellowship throughout the world.

God Bless you and your family and keep up the good work.



Brother Noble Khan

Anonymous said...

What a wonderfully thoughtful, incisive article...as usual...can this get in the hands of President elect Obama?

Cathy

Anonymous said...

My special thanks for sharing this article with me. I welcome your critical comments, and the suggestions for turning around, and developing new attitudes.

You will find some of these sentiments expressed in my new book published in October, The Search For Spirituality. Our Global Quest for a Spiritual Life (New York: Bluebridge, 2008)

May you and your family, as well as your work, go on flourishing.

Ursula King

Anonymous said...

This is an excellent article!

I've attempted to explain this same basic concept to others, though in a much simpler way. People just look at me with squinty eyes - how can I believe the financial crisis to be a result of spiritual imbalance?

Your explanation is much better expressed

Thanks for your wisdom & eloquence.

Mary

Anonymous said...

Fifty percent of any Economy is Social Psychology. So, I am able to utter something.

Lack of responsibility is number 1 determinant of any Economy. US Economy is not an exclusion. All leading personalities and organizations in the USA in the last 2 decades were in the same "wagon."

If corruption grows into an economic factor, progress can become only a dream, in other words Utopia. I suppose, change and/or reconstruction is an option.

Samvel Jeshmaridian
jeshmarid@yahoo.com

Anonymous said...

Dear Frank,

Loved your article. Could you elaborate on three questions which came up in the course of reading it?

You wrote:

"The number of undernourished, the FAO said, rose by 40 million, following a 75 million jump the previous year. This is simply forbidden."

Q1: Forbidden by who or by what?

You also wrote:

"Lust for personal profit and consumerist excess may not be sought in anti-human and anti-environment structures and patterns."

Q2: Why not? Aside from the meltdown itself what is different now that has fundamentally changed the rules of the game?

You also wrote:

"Industry that retools itself to create opportunity, housing, education, and for work for the needy will prosper."

Q3: Intuitively, I agree. Can you provide empirical evidence or statistics to support this claim? If so, I think it would strengthen your case.

Thank you for your valuable contribtution to humanity at this time of great economic uncertainty!

Anonymous said...

I have read with great interest your intelligent exposé of the on-going economic crisis. The points you have made are very relevant but I would like to add two view points of my own.

(1) that the entrepreneurs of tomorrow see themselves not only as creators of wealth but also as promoters of social justice and

(2) that as we all go along in search of more progress and wealth that we make sure we do not lose those things which money cannot buy.

Sir James R. Mancham, KBE

Member: Board of Advisors - World Future Council (W.F.C)

Anonymous said...

May you continue to write and guide the people with your penetrating analysis of important events.

S.A. Ali
Chancellor’s House
Hamdard University

Anonymous said...

While much attention is given to the failure within the U.S. economy, not much is publicly given to the stress causing it. This is the trade deficit.

If the U.S. is not creating value and selling exports, that is a problem to address. Now what to sell? Well food has limitations because it requires oil to ship it.

There is also media content, including software, and high tech. A serious problem for both of them, particularly the latter, is that the U.S. uses it's own system of units, which is only used also by Myanmar. However exports to Myanmar won't solve the problem. Many multinational companies are metric, but basically the U.S. is
not, and that hurts exports and therefore the economy.

There is a push to develop green technology. However if this is not metric, it won't be easily exportable.

A green technology solution is maglev trains. These uses electricity, from whatever acceptable source. It is a substitute for oil which shipping and planes use.

A basic plan for using this technology is for high speed long distance passenger and express package. An example plan would be a backbone line from New York to Paris, via the Bering straight. This would be a design compatible with freight. A maglev is being planned from Las Vegas to Los Angeles. However if this is not
a step toward the larger goal, that would be a problem.

Frank W. Bell

Anonymous said...

To me, your article seemed long on generalities and short on practical suggestions. As close as you got to a real policy was

"Real solutions that will turn the tide to recovery will be led by industries and entrepreneurs devoted to the restoration of balance in human affairs, balance such that acquisitiveness is no longer admired if it fails to be coupled with minimum concern for vast numbers of suffering people, the millions who starve and die without hope. Industry that retools itself to create opportunity, housing, education, and work for the needy will prosper."

This left me wondering, if I were an industry leader reading your article, what specific advice would you give me about how to retool. How do you define this "minimum concern" you speak of, and what changes do I need to make to meet it?

Yours with every best wish for a happy and prosperous New Year.

Dan

Anonymous said...

I really appreciate your commentary on the current economic reality.

The way out does beg specifics and you are prophetically pointing the way. My worry is watching the worst mistakes being made worse by the people who are making the decisions for the many (ie..in the top leadership positions in this nation). Something has to shake everything up in those higher echelons of power before clarity is going to come.

Write on! Good words can spur creativity and action.

Patricia

Anonymous said...

Frank,

Great article on selfish economics versus unselfish economics. As one has commented already, not many business leaders will be able to take direction from it, however. The lot of generalities fog your argument.

For example, you mention that recovery will come to those “enterprises oriented specifically to the causal factors of the meltdown.” Without clarity about what enterprises you speak of, I have not a clue where to look for them. Or, are you saying, those enterprises that “orient themselves to solving the causal factors?” Still it would be unclear. A bit later in the article you add some clarity to what you mean by saying those industries that retool to “create opportunity, housing, education, and work for the needy.” A mouthful, though it doesn’t get me closer to any specific industry. Those look like governmental and social service type of industries, which do not as a rule create wealth but merely transfer it. (Housing is a huge industry, of course, but it doesn’t sound like you mean contractors and builders here. Industries that create opportunity are those that provide jobs and promotions, right? Well, all viable ones do so already.)

Seeking balance, as you suggest, between what you call “consumerist materialism” and concern for the poverty-stricken “suffering people” of the world is poignant but rhetorical. Is it supposed to make me feel guilty for being a consumer in America and eating my $10 pizza without donating a corresponding $10 a month to a “feed-a-starving-child” world service organization? Where does someone’s selfishness start and end? What does balance look like? What about the Gates Foundation giving away millions? Is that what you mean by balance?

In America, the business philosophy that prevails is that if you provide a service or a product that helps others then you deserve to prosper from it. You usually do in America. We are built on enterprise thinking and free markets. Businesses require ethical decision-making, free from greed, misuse, and abuse. It, generally, requires a moral people, too. Government steps in when people abuse our economic reward system. The media can educate us about these abuses and the needs. Also, businesses that fail to keep sound business practices eventually fail. In a free system, in America, people can do something about it and the system helps sort out the bad apples. Where must your approach to unselfish economics be heralded? I see your article was published in the Middle East times. Yeah! I think that’s a good place to start.

Your overall philosophical solution is admired by me. I just think you need to define it better so that business leaders can understand what you are suggesting. You are daring to cross the chasm that separates spiritual people from economic people. So, get real.

Eugene

Hans Moyer said...

Frank,

Thanks for the many meaningful insights to our current financial issues. I came across a book by Muhammad Yunus, "Creating a World Withoug Poverty, Social Business and the Future of Capitalism" which proposes a solution to the issues you raise in your article.

Yunus writes that Social Business combined with Profit Maximizing Business could open avenues to solving the social and environmental problems you have raised in the article. Social Business being defined as "cause" driven rather than "profit" driven could potentially be the change agent needed to stem greed and allow the environment to recuperate.

A follow up question is, does the idea of Mutual Prosperity a pillar of the post 2013 developing culture, embrace this view or have an economic strategy of its own?