In a media environment filled with detailed, short-term
information, it is easy to feel as if one is lost in a forest of data. In such
a case, you need to get out of the valley and up a mountaintop to get
perspective of where you are and the direction to move.
The stock market moves on a short-term information of occurrence
and sentiment. An interest rate cut, uncertainty or a disaster can affect it.
But the real issue is the trend, where will it or a company be two-years hence
or ten-years hence?
To find an even higher mountaintop would be to understand the
long-term interplay of economics, politics, and culture. Karl Marx viewed
history as simply being economics in action. It was the key mover. Adam Smith
saw all of the interaction of internal values in his The Theory of Moral
Sentiment but broke out self-interest as the most powerful of his invisible
hand on which The Wealth of Nations was based.
Of the three arenas of power, economics, politics, and
media/culture, economics does the most to set the environment for the other
two. Quite often the moralities of the culture or the emotionalism of the
politics are used to hide or shield what may well be core economic goals.
However, that environment normally is controlled by the mindset,
values and economic status of the people as a whole.
It is often determined by whether the society is dominated by or
moving toward a strong middle class. The alternative involves varying degrees
of discrepancy between rich and poor. There is usually an economic equilibrium
in society. It has a lot to do with peoplesí impressions of the future and
their own level of opportunity. They envy the rich less if they or their
children have a chance to be one. If they perceive their future as a hopeless
struggle, they challenge the system.
Since wealth has a tendency to accumulate or concentrate because
of the economic advantage it gives if well used, the question of redistribution
replays through out the ages.
Sometimes revolution redistributes, other times politics enters
with policies toward that end or changes in governmental form.
Sometimes the economic system is such that it happens naturally.
Many families go from shirtsleeves to shirtsleeves in generations because
wealth is passed on, but not the wealth creation values. Other times the
currency is debased to help debtors or inflation/deflation serve as vehicles of
transfer. (Although inflation generally helps the wealthy who have hard assets.
The politics and culture do intervene with this process. You
effectively have two major systems of approach socialism and free market
capitalism. Socialistic approaches have given way to the free market in modern
times because they have been less efficient in a fast paced, consumer driven
environment and often had problems of bureaucratic corruption and limited
competence. Capitalism, unchecked, has its own history of greed and excess but
even with its problems lends more of a productive bias to the system. Markets
work, but to be most efficient, they need optimum competition, which comes from
a moral, honest market. That requires ethics in the culture and some oversight
for fairness from politics. It has a distinct bias toward liberty and freedom
of choice, and gives a concept of higher market value to certain skills rather
than others. Where socialism looks to equality of individuals, markets must
look to equality of opportunity.
To me, the goal to be sought is the market system with enforced
and natural cultural ethics, complimented by a strong middle class, given
opportunity at education and capital. It naturally provides a movement between
the stratas of society depending on oneís ability. The issue of charity for the
truly needy is a separate cultural issue.
If the system provides opportunity and it should if talent is
fully valued, then the rich are not resented as much as copied and movement in
the stratas of society take place.
We often view the present American system as being set, with
little movement between stratas, but that is not the case. Age makes a
difference regardless of race, religion or beginning economic class. When young
you have less assets, often college debts, at retirement you usually have
higher income and assets. Some born wealthy cannot manage wealth and fall.
Education is a big contributor as is access to capital. Debt can help greatly
or hurt as in the case of leveraged debt in a downturn. The point is, if the
opportunity for movement in the stratas exist, it dramatically changes the
perspective of the masses as to the need and degree for change in the system.
The old Chinese proverb that it is better to teach a man to fish than to give a
man a fish is on point. If government policies focus on redistribution for
political gain and not on creation of opportunity, you eventually change the
system such that opportunity is diminished.
What a family should want is not a structure that redistributes
them money, but the opportunity to build wealth that transcends generations.
That is usually a wealth creation set of values that is a great part of the
familyís values. Usually this value set learns that greed, over time, causes
mistaken judgment and alienates potential long-term partners. While many hit
home runs by being in the right place or by possessing a rare skill, on
average, families become wealthy over time through work and through each
generation, preparing a nest egg for the next and teaching them the skills or
giving them the education. They stairstep the family. If a man cares only about
three houses he might enjoy, he may take risks; if he cares about building a
solid inheritance, he may be more conservative.
But what he must consider is that if the system in which he
operates loses equilibrium in politics, economics, or cultural values, it may
diminish or take all he has or would leave. So he must care far beyond politics
and his self-interest to the vision of a system that carries forward stability.
A quotation attributed to Abraham Lincoln by a biographer (but
not agreed to by all historians), to me, captured not only Lincoln, but the
thoughts of all men who have pondered these issues from a mountaintop and
realize economics, politics, and cultural values are really an ever-changing
mix that affect each other. It gives some fundamental rules for stability:
"You cannot bring about prosperity by discouraging thrift. You
cannot strengthen the weak by weakening the strong. You cannot help the wage
earner by pulling down the wage payer. You cannot further the brotherhood of
many by encouraging class hatred. You cannot help the poor by destroying the
rich. You cannot establish sound security on borrowed money. You cannot keep
out of trouble by spending more than you earn. You cannot build character and
courage by taking away a manís initiative and independence. You cannot help men
permanently by doing for them what they could and should do for themselves."
In a totally different culture, Gandhi gave a close parallel
with what he called the seven deadly sins:
-Politics without principle
-wealth without work
-commerce without morality
-pleasure without consequence
-science without humanity
-work without sacrifice
-education without character.