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Make Meaning – Not Money

    By   Shlomo Maital   

   My late grandmother Rivka, a small slip of a woman under five feet, with a crooked leg that had been broken and not set properly, was widowed early, with five children to raise and feed, (including my father), in a poor village in Bessarabia, today’s Moldova. Then, as now, there was deep poverty.

     She spoke only Yiddish. I remember her saying often, in Yiddish:   “Er iz nisht a mentsch.” (He’s not a good person).  It was the worst thing you could say about anyone.  …And “Zol ir zayin a mentsch”. (You should grow up to be a good person).

     Being a “mentsch” ( a good person, with strong values) was her core value for herself and her children and grandchildren.

      I often recall this when speaking to entrepreneurs and giving them guidance. Bobba Rivka’s sage words are echoed by an unlikely person:   entrepreneur, innovator and venture capitalist Guy Kawasaki, who said memorably: Make meaning, not money.     He added: If you make meaning, you may make money. But if you only try to make money, you probably won’t succeed.  It’s all explained in his fine book The Art of the Start.

       Today’s New York Times brings an Op-Ed by David Brooks, about Gen Z (those born after, say, 1995), the generation that follows Gen Y, born 1981-1994.

     The title of his Op-Ed: Will Gen Z fight to save the world? The answer is: happily, yes.

       Brooks cites a study by Pew Research Center (in the US), showing that “a shocking number of respondents described lives of quiet despair”.

    The data support this.   People do not find meaning in their lives.

       “Some 300 million people around the world have depression, according to the World Health Organization. 16.2 million adults in the United States—   6.7 percent of all adults in the country or one person in every 14 —have experienced a major depressive episode in the past year.”  Suicide is a major cause of death among the young.

       What has gone wrong? Per capita GDP in the US is $60,000. America is wealthier than ever before? Why are so many people depressed?

       Here is my take, echoing David Brooks.   America has embraced capitalism. Even those Trump calls “socialists”  (Democrats) embrace social democracy, which is capitalism combined with a strong safety net.

     Today’s Capitalism is based on a false premise. The premise is: If you make money, you will be happy. And the more money you make, the happier you will be.

     It doesn’t work. It just doesn’t work. Above a certain minimum necessary level of income, money does not bring happiness. Stuffed closets don’t bring euphoria. They bring clutter.

     The pursuit of happiness is guaranteed by the US Declaration of Independence, celebrated last Thursday. But this wonderful document doesn’t say HOW to pursue it.

     Bobba Rivka and Guy Kawasaki knew and know. Make meaning in your life, with your life.   David Brooks:  “Many seem to have rediscovered the sense, buried for a few decades, that one calling in life is to become a better person. Your current self is not good enough. You have to be transformed through right action.”

     That is what it is to be a ‘mentsch’ and to become a mentsch.

     If Gen Z is indeed rediscovering this old truth, we have cause for hope.

     Meaning in life comes from the love of those we love, whom we help and support,   from family, friends and even strangers, and from the value we create in the world.

      Capitalists love to quote Adam Smith, The Wealth of Nations, published in the year America got its independence, which praises capitalism and the struggle to gain wealth. But they forget Smith’s earlier book, on Moral Sentiments, 1758, which says that our happiness comes from the love and esteem of our fellow human beings.

         There is a solution. Reframe capitalism as the drive to use innovation and creativity to create value for others (‘make meaning’).   Dump the ‘greed is good’ credo.   Teach our children to become ‘mentschen’. Help them find a cause that brings meaning to their life. Help Wall Street rewire its brains.  And start early.

         Find meaning. Make meaning. It’s that simple. But so hard to do.

         

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What We Don’t Know…Is Hurting Us!

By Shlomo Maital

dunce

“What you don’t know can’t hurt you!” I wonder if anyone ever said anything dumber. What you don’t know will hurt you and always does. And what is worse, what you don’t know that you don’t know, THAT will do you in for sure.

I am an economist. We pretend that we understand how the world’s economy works. Do we really? Didn’t the 2008 global crisis, and aftermath, prove anything? That we did not know enough to predict it, and worse, did not know enough to know how to dig the world out of the mess it was in (the ‘austerity’ camp fought the ‘spend/spend’ camp, confusing the world totally).

   So the first step in dealing with this problem, is to try to KNOW and define what we don’t know. Here is a partial list:

   *  Globalization: Globalization is the process in which nations of the world together moved toward freer movement of goods and services, people, information, technology and capital across borders.   It has generated unprecedented wealth for those individuals, businesses and nations clever enough to become globally competitive and join the globalized ecosystem — $150 trillion worth, according to McKinsey Global Institute.   This is mainly true of Asia, including China but not solely.   It also left left out individuals, businesses and nations not able or willing to become part of the global system.   Some have thrived in the globalized world; many have suffered.    Economists say opaquely, it’s “Pareto-optimal” (winners can compensate losers, with lots left over).   I say, economic borders are being restored because those losers are finally revolting, after being ignored and neglected.

   In the era of Trump and his Wall and anti-globalization backlash:   How can the benefits of globalization be distributed more fairly and how can the inevitable losers to globalization be compensated, without ruining the energy and freedom that drive globalization and without seriously disrupting its benefits?  

* Global aging:   Large parts of the world are aging demographically. Yet the issue of how to set aside adequate resources for the retired and elderly has barely begun to be addressed.   How can we ensure that the retired and the elderly live in dignity without imposing an unfair or unbearable economic burden on working people and the young, and prevent a war between the generations?

*   Global Capitalism:   History shows that socialism, based on state ownership of key assets, has failed.   But it also shows that capitalism, the system of free open markets, has not fully succeeded and continues to endanger our fragile global ecosystem. The fundamental causes of the 2008 financial crisis and ensuing recession have not been remedied.     What new, basic economic architecture can create a system that is good at both generating new wealth and ensuring its distribution is fair and equitable, within a system that is not prone to repeated, frequent collapse?

   *   Global Social capital:   Social capital is the summed present value of the bonds of love and friendship among family, friends, neighbors and communities, that generate mutual support and security. Financial capital is tracked to the last dollar; social capital is hugely important, gigantic in size, yet is not measured, tracked or fostered. Growing urbanization has begun to diminish social capital and hamper its formation.     How can we reverse the decline of social capital, measure it and expand it, in a world where urbanization and the anonymity it creates are destroying the crucial social bonds that once enhanced lives everywhere?

*   Global Search for Meaning:   How can better-off individuals, businesses and nations the world over find new meaning and purpose in life, other than acquiring more and more goods and services — proven to be ultimately disappointing, unable to bring true happiness? How can we rebalance present-future choice and make the future what it once was, without crashing the borrow-and-spend system?

     Economists and politicians lack viable answers. They’re hopeless. Can social entrepreneurs can come up with some initial answers and find ways to try them out? At the least, we will know what we don’t know, before it kills us. Let entrepreneurs everywhere work on these global life-or-death dilemmas, rather than invent another app that will show how far we’ve jogged.

The Limitations of Ltd. Companies: An Insurgency

By Shlomo Maital

startup

   One of the great social innovations that made possible rapid economic growth and progress was that of the limited liability company.   The idea began in England and spread to America.   By limiting what you lose in starting a business, many were encouraged to do so.    According to Wikipedia:

     “By the 15th century, English law had awarded limited liability to monastic communities and trade guilds with commonly held property. In the 17th century, joint stock charters were awarded by the crown to monopolies such as the East India Company. The world’s first modern limited liability law was enacted by the state of New York in 1811. In England it became more straightforward to incorporate a joint stock company following the Joint Stock Companies Act 1844, although investors in such companies carried unlimited liability until the Limited Liability Act 1855.”

   Is it possible that public companies have outlived their usefulness? An article in The Economist, “Reinventing the company”, makes this point.  

“…after a century of utter dominance, the public company is showing signs of wear. One reason is that managers tend to put their own interests first. The shareholder-value revolution of the 1980s was supposed to solve this by incentivizing managers to think like owners, but it backfired. Loaded up with stock options, managers acted like hired guns instead, massaging the share price so as to boost their incomes

“In insurgent companies, by contrast, the coupling between ownership and responsibility is. Founders, staff and backers exert control directly. It is still early days but, if this innovation spreads, it could transform the way companies work.”

Here is an example of an insurgent company – a huge one, Alibaba, founded by Jack Ma in 1999 – a Chinese public company, of all things, listed in America.  

“In June, Jack Ma, the founder of Alibaba, a giant Chinese e-commerce firm, addressed the Economic Club of New York, whose members include many Manhattan luminaries and Wall Street chiefs. Mr Ma’s message was that his company exists for the long-term good of society, a far cry from the creed of shareholder value followed by many in the room.”  

Run that by us again? Alibaba exists for the long-term good of society? Alibaba wants to help millions of small American businesses sell their goods globally? (How come AMERICAN companies haven’t said the same, or done the same??).  

     U of Chicago Professor Milton Friedman and his group of free-market economists fiercely criticized companies that donate money to charity, saying the money belongs to shareholders, and is not the company’s to give away.

     We have seen where THAT kind of capitalism leads. Perhaps capitalism is evolving, in a positive direction, after all.

 

Why Capitalism is (Not) Committing Suicide

By Shlomo  Maital

Brooks

    David Brooks has another superb column in the weekend new York Times.  Titled:  The Ambition Explosion, he quotes work by sociologist Daniel Bell, who wrote in 1976 that “capitalism undermines itself because it nurtures a population of ever more self-gratifying consumers. These people may start out as industrious, but they soon get addicted to affluence, spending, credit and pleasure and stop being the sort of hard workers capitalism requires.”

    Add to that capitalism’s tendency to concentrate wealth, corrupting democracy with it, and you have two huge reasons for its demise.  Right?

    Perhaps not.   My wife and I are returning home today from a long trip, which included mainland China.  There, I found highly ambitious young people, full of aspiration and amibition,  some working as waiters while studying, and one,  who started a vending machine business while working one of seven jobs and studying for his B.A.   “For instance” is not a proof, as the Yiddish saying goes, but it sure convinced us.

    Brooks cites what he thinks is the real Achilles Heel of capitalism – not the lack of ambition, or even wealth concentration, but the lack of real meaning!  

        “The real contradiction of capitalism is that it arouses enormous ambition, but it doesn’t help you define where you should focus it. It doesn’t define an end to which you should devote your life. It nurtures the illusion that career and economic success can lead to fulfillment, which is the central illusion of our time.”

      In the end, the ‘toys’ you buy with great wealth – like Lamborghini’s, we saw a dealership for them in Hong Kong and it was active and profitable —  do not in themselves provide meaning or satisfaction or fulfilment.  So what does?  Some try philanthropy.  Others, social entrepreneurship. 

      Make meaning, not money, counsels Guy Kawasaki, serial entrepreneur, venture capitalist and Macintosh guru.  For young people  —    at the start of your career, define your legacy and your life goals, goals that will at the latter end of your life give you satisfaction and make your life meaningful.  THAT will make your boundless talent and ambition focused and directed toward a worthy goal.   It will also keep capitalism from committing suicide through sheer boredom.   Listen to what Brooks counsels: “Capitalist ambition is an energizing gale force. If there’s not an equally fervent counterculture to direct it, the wind uproots the tender foliage that makes life sweet.“ 

Panera – Innovation for People Who Have No Money

By Shlomo   Maital 

Panera    

Writing in the Boston Globe, Alyssa Edes tells us about Panera, a French bakery/café that has a new business innovation – give your stuff away, for free, or nearly free. 

   For example, “when Jonathan Diotalevi walked in to “Panera Cares”, a new Panera branch near Boston’s Government Center, “a smiling employee greeted Diotalevi at the door;  he waited in line, ordered a tomato- mozzarella panini, and then asked the clerk, “So, can I, like, just give you two bucks?”   Yes, he could. And he did, dropping the money into a nearby donation bin.”

   What?  No prices? No 30 per cent profit margin?  How in the world can you run a business like this?   Fox Network will scream that this is a Commie plot to undermine capitalism. 

  Here is how this branch works.  “The restaurant at 3 Center Plaza may have been as busy at lunch time as any of the chains’s other cafes nationwide — more than 1,600 of them — but there’s a reason cochief executive Ron Shaich calls this one “a test of human nature.”  The nonprofit outpost of Panera Bread Co. doesn’t have any cash registers, or set prices. Instead, it depends on donations from customers who pay whatever they can afford. The Government Center shop is the fifth of its kind for the St. Louis-based company — the first in this region.”

    Note: Some people pay more than the regular price.  “I think it’s awesome because it’s obviously beneficial for people who are a little less fortunate,” said customer Yanick Belzile of Lowell. “We can afford to, so we put in a little bit extra. If we can help someone else who can’t pay for a meal, why not?”   

    “Wayne Gilchrist, who said he lives under a bridge in Cambridge, said he made a modest donation for a coffee and French bread with butter. “I’m homeless,” Gilchrist said. “I got nothing and still gave because I want others to have.” “

   About one out of every six Americans, or about 50 million, are “food insecure” or have trouble coming up with enough money to buy food, according to the US Department of Agriculture.   “Many of those people work — some of them work two jobs,” said Kate Antonacci, Boston Panera Cares project manager.  “Hunger affects people of all types, so it’s not only the destitute we serve. “

   When I’m next in America, I plan to eat at Panera.  Let’s support capitalists who get it, and who build businesses on the idea that people are basically trustworthy. 

    This idea could spread.  What if businesses charged according to “pay what you can” and “pay what you think is fair”, rather than “pay as much as we can gouge from you, to keep our rich shareholders happy”?   Wall St. might never be the same.

    

Has Capitalism Run Out of Gas?

By Shlomo  Maital

                car wreck            

  Capitalism – free market economics – has run out of gas.  Here is why.

   We continue to blame the ongoing financial crisis. But in the U.S. that ended a while ago, and American banks have cleaned up their balance sheets, and J.P. Morgan has even agreed to pay a $13 b. fine (a tiny indication of how much money they’re making anyway).   But the ‘recovery’ is stalled, the government shutdown made it worse, and a nagging question arises: Has capitalism run out of gas?

   As New York Times columnist Paul Krugman asks in his latest column, “what if the world we’ve been living in for the past five years [unemployment, stagnation, shrinking trade] is the new normal? What if depressionlike conditions are on track to persist…but decades?”

    U.S. household debt is again at record levels and continues to rise, as Americans try to maintain living standards despite stagnant incomes, by borrowing – even though businesses are deleveraging (shedding debt).  GDP growth is anemic. 

    Krugman cites economist Larry Summers, who told the IMF’s annual research conference that even WITH the housing bubble, U.S. economic growth was not that great –let alone without it. 

    What is going on?

    I think the answer is clear.   With nearly 75 per cent of GDP coming from personal consumption, America’s capitalist system needs people to keep on spending and spending, to buoy the economy.  But we are beginning to wake up to a bitter fact – we work harder and harder, longer and longer, to earn more and more, to buy stuff that brings us no satisfaction or sustained wellbeing, and lose twice – we lose quality time with our families, and find the price we pay for the resulting income,  the useless stuff we cram into our closets,  brings no compensation.  Two-time losers.

     There is a solution.  If we could replace some of the wasteful personal consumption with useful business investment, in infrastructure, schools, highways, fast trains, public transportation, universities, airports, fast broadband —   all the stuff that could repair America’s obsolete  infrastructure —  the economy would indeed grow.  But businesses are simply sitting on their cash, holding it mostly abroad, seeing no reason to invest if consumers are not spending much.  It’s a doom loop closed circle.  China resolved it by having the government undertake infrastructure investment.  In America this is called ‘socialism’ and even Democrats dislike it.  Too bad.

     We need to rethink the whole capitalist system.  When it runs out of steam, because people tire of buying the same old stuff and nothing really new comes along,  we are all in trouble.  Nothing any individual does can help much.  We need to get together, rethink the system, and invent a new one that truly does focus on the wellbeing of individuals and families, on the question, what truly brings sustained happiness?  Here is a clue – you can’t find it in a shopping center.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
September 2019
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