You wonder where the money went ...

Henry Ford possessed the clarity that is perhaps lacking in today's corporate leadership. Ford gave his workers substantial salary increases so that they could afford the products of their labor. It worked. Soon, his employees were filling the factory parking lots with the "tin Lizzies" they were making on his innovative and successful production lines.

Our current crop of corporate leaders are products of the bottom-line thinking taught in business curricula. It began in the 70's.  Did you notice?

Right Thinking

Thoughts follow culturally defined paths, it seems. Not uniformly in every individual, but more or less in line across a given cultural group.

Did you know that the way you think about something may never cross the mind of someone from another culture?

Us and Them

"I was once in charge of an English language summer course in North Wales for adult students from three countries - Italy, Japan, and Finland. Intensive instruction was relieved by entertainment in the evenings and by day excursions to places of scenic or historical interest. We had scheduled a trip up Mount Snowdon on a particular Wednesday, but on the Tuesday evening it rained heavily. Around 10 o’clock that night, during the after-dinner dancing, a dozen or so Finns approached me and suggested that we cancel the excursion, as it would be no fun climbing the muddy slopes of Snowdon in heavy rain. I, of course, agreed and announced the cancellation.  Immediately I was surrounded by protesting Italians disputing the decision. Why cancel the trip - they had been looking forward to it (escape from lessons), they had paid for it in their all-inclusive fee, a little rain would not hurt anyone and what was the matter with the Finns anyway - weren't they supposed to be tough people? A little embarrassed, I consulted the Japanese contingent. They were very, very nice. If the Italians wanted to go, they would go, too. If, on the other hand, we cancelled the trip they would be quite happy to stay in and take more lessons. The Italians jeered at the Finns, the Finns mumbled and scowled, and eventually, in order not to lose face, agreed they would go. The excursion was declared on. It rained torrentially all night and also while I took a quick breakfast. The bus was scheduled to leave at half past eight, and at twenty-five past, taking my umbrella in the downpour, I ran to the vehicle. Inside were 18 scowling Finns, 12 smiling Japanese, and no Italians. We left on time and had a terrible day. The rain never let up, we lunched in cloud at the summit, and returned covered in mud at 5 o'clock, in time to see the Italians taking tea and chocolate biscuits. They had sensibly stayed in bed. When the Finns asked them why, they said because it was raining..."

~ Richard Lewis, from the preface to When Cultures Collide, 3rd Edition

The GAP - Part VI - global

Friends in Djibouti; they struggle against a 

difficult international economy.

What happens in the developing world when Wall Street extracts their profit from the international market place?

The billions made at the top of the marketplace come from the productivity and resources of workers around the world.  It doesn't trickle down, and the rising tide doesn't float all boats equally.  Wealth is extracted from developing countries in the form of debt, perhaps primarily, and from trade in goods and raw materials.

International participation in Kenya's marketplace affects local prices; did you know?

A family in Kenya, dear friends of ours, has an income of around $60 a month.  About half is spent on cornmeal (maize meal) which is their staple.  In '07 when a few hundred Wall Street players crashed the marketplace, the price of cornmeal doubled in Kenya.  They had to choose between school and food for their children.  Many kids lost a year from their schooling.
 Wealth didn't trickle down, it trickled away to the rich people.

Such things are deliberate.  One Wall Street executive at Chase Manhattan described his job as (1) analyzing a developing country and determining its max earnings, and (2) creating a debt instrument by which that max could be extracted in the form of interest payments.  Sucking wealth out of a developing country; deliberately maximizing the cash flow despite the deadly effect on the targeted country.

In the 80's, western businesses moved from multidimensional focus to just the bottom line of profitability.  Gone were the community benefit considerations, the fair business practices, and the win-win collaborations.  Just the money was left as the definitive metric.  Did you notice?

That's where we are today; what are the possible paths forward?

Note:  I was encouraged by a town in Texas; family there tells me the community is aggressively pursuing local business with no ties to the larger marketplace.  Local workers, local suppliers, local customers; seems to be going well, at least on the small scale.



The only way for a small group of people to become obscenely rich is for huge masses of others to be kept quite poor. 

The GAP - Part V - the money flow

Despite this administration’s rhetoric against oligarchy, we have seen a rapid concentration of wealth and depressed conditions for the middle class. The trend began in earnest in the Reagan years and is now firmly entrenched.  Is that good or bad?
In today's economy, money flows away from the communities where people work, off down the road and across the country it flows to the coffers of corporations.  These are the companies that now are larger than many of the world's countries, economically speaking.  Money now flows out from every community to the coffers of Wall Street and Wal-Mart.

Business began as local labor and collaboration and mutual benefit.  Farmers and stores, suppliers and consumers, locally connected.  As industries grew, some problems arose, like unfair competition.

It's been against the law for a hundred years to monopolize a segment of the business arena.  Monopolies emerged with large business ventures.  Steel mills and railroads were early examples.  Railroading was widely viewed as a “natural” monopoly.  It didn't make sense to have two railroads laid side by side in competition with each other because of the cost. Problems arose when the powers in that monopoly were left unregulated, and powerful people like Vanderbilt, Rockefeller, and Carnegie used those natural monopolies to capture control of other businesses that had to ride the railway to get to the market.

For a little while, the railroad corporations themselves became the most powerful enterprises in America, but then a few people figured out how to leverage the railroad monopolies to make something even bigger, like Standard Oil.  Rockefeller’s greatest skill was in leveraging the railroad monopolies to make his company more powerful.

Interestingly, the first public uprising against monopoly was the Boston Tea Party. Everyone nowadays says it was a rebellion against taxation. But if you go back and read the actual writings of that moment, it was a purposeful rebellion against the British East India company which had swallowed the trade and transport segment of the economy. 

So, we eventually made laws and limited the marketplace.  ITT got broken up into competitive smaller companies.  The goal was at least 4 or 5 companies in any business segment to keep things under control.  Mergers required federal approval and if they consolidated more than 5% or so of a business segment, they weren't approved.  The biggest company couldn't buy its nearest competitors.

During the Reagan years, the administration with informed congressional concurrence directed a reinterpretation of antimonopoly laws that opened the door to abuse by big business.  Mergers went ahead with government approval, citing 'efficiency' and lowered costs after they fired all the unnecessary people.

Today, we have all sorts of monopolies and near monopolies in the United States. Many are created simply by one company purchasing all their competitors. Some years back a company named Tyco decided to take over the business of making plastic clothes hangers. It went out and bought at least four companies, and that gave it the power to jack up prices to clothing retailers. 


In the glasses and corrective lens market, one company holds 80% of the market; the world market. Most brands come from the one company; Luxottica. Monopoly.

Small town stores, family businesses that are part of the community, they've failed and closed as Wal-Mart steps in across the country.  Small towns have changed.  Is it for better?  Or worse?


The real issue with Wal-Mart is not that it sucks to live in a small town, it’s that the Walton family now controls more wealth than the bottom third of all Americans. One family with as much wealth as 100 million Americans. Now, who’s gonna get listened to when they show up on Capitol Hill? Or in the State House? Or the Town Hall? Is it Mrs. Smith? Or is it going to be the Walton family? (cross check 1, 2 3)

Rather than business and profit going to local folks who do the work, the profit runs away to corporate coffers in another state.  Or country.  Wealth is sucked from every locale by big business with no commitment or involvement in the well-being of the communities.  

The GAP widens from such practices.  What is the impact and what are the future implications of the money flow?




The only way for a small group of people to become obscenely rich is for huge masses of others to be kept quite poor. 

The GAP - Part IV - the cost

Tip-over

At some point, the laborer will no longer work and sacrifice his life and the lives of his children for the benefit of another's opulence and privilege.

There are crimes and there are causes.  Among the many known causes, economic inequality has direct correlation to crime rate.  Our increasing inequality in the U.S. is visible in the crime and incarceration rate.

In a 2002 study by World Bank economists found that crime rates and inequality are positively correlated within countries and also between countries. The correlation is a causation – inequality induces crime.

This finding parallels crime theory by economist Gary Becker, who shows that an increase in income inequality has a direct effect of increasing crime. Not only that, but a country’s economic growth (GDP rate) has significant impact in lessening incidence of crimes. Since reduction in income inequality gap and a richer economy has an alleviating effect on poverty level, it implies that poverty alleviation has a crime-reducing effect.

A portion of the problem, therefore, theoretically rests on the two factors being able to produce the desired effects; poverty alleviation and lesser crime rate. For now, however, reality gives us shaky economic growth and worsening income inequality.

The U.S., which ranks 3rd among the most income-unequal nations, and the worst in terms of income gap growth, also has the largest percentage of its population in prison among industrialized democratic nations.  Is it a mere coincidence or does it reflect the social ills that a big wealth disparity and overt rich-poor distinction brings?

Besides criminal activity, other warning signs point to the cause.  Protests, resistance, public demonstrations, political divisiveness and radical movements are all the norm when faced with visible injustice and inequality.

Disappointingly, government appears to consistently favor the wealthy and their corporate counterparts.  Regulations, programs, decisions, and priorities all seem to favor the wealthy to the detriment of the bottom 90% of their citizenry.  Such has been the circumstance entering each of the nation destruction eras in human history.

While there are many ways to interpret the numbers, the common perception is of an ever-widening gap; a loss of substance, of representation, of opportunity, of equality, of fairness, of liberty and a voice in shaping your own life.  Ask.

The task ahead is a difficult one, both for us as individuals and as nations.

The only way for a small group of people to become obscenely rich is for huge masses of others to be kept quite poor. 

A Nation's IQ

Nonsense.  Suggesting a national or cultural or racial IQ is controversial, primarily because the science doesn't support such a characterization.  Intelligence has been shown to be distributed across all lines without inherent distinguishable differences.

The chart here is based on standardized tests but reflects exposure to test-taking and education rather than a measure of 'genius' intelligence.

One of the passionate hopes of America's founders was for the availability of education; that anyone could go as far down that road as they were willing and able.  The intent has been served well but not uniformly with poverty being the primary hindrance today.  In earlier years, race and class were the limiting factors.

In Kenya, tribe determines what opportunities are available for a youngster.  My friend Joseph, now in his twenties, is bright, gracious and well-spoken, multilingual, and a handsome fellow, but his education ended at the sixth grade, and his opportunities for employment are limited to day labor.  Wrong tribe; he's Mijikenda.  If he'd been Kikuku, the ruling tribe/class, he would have gone to college and would be employed in the business or government sector.

Poverty, corrupt government, economic oppression of developing regions, all contribute to inequality.  None are chosen circumstances by common folks; all are done to them by others, usually the rich and influential.  Yes, poverty is imposed, not chosen.  The way out of poverty is discoverable if, and only if, there's a just, equitable environment.

The opportunity for education isn't the same everywhere.
That's the challenge; we can make a difference.

www.TexasEx.Org

NOTE (see full article):  In recent years, researchers in Africa, Asia and elsewhere have found that people in non-Western cultures often have ideas about intelligence that differ fundamentally from those that have shaped Western intelligence tests.  Research on those differences is already providing support for some of the more inclusive Western definitions of intelligence, such as those proposed by APA President Robert J. Sternberg, PhD, of Yale University and Howard Gardner, PhD, of Harvard University's Graduate School of Education (see related article). Eventually, it may also help researchers design new intelligence tests that are sensitive to the values of the cultures in which they are used.