Where Progress Comes From - and what we had best not blow up

In a time of crisis, everything is questioned. That makes sense but the West has made progress in certain ways that should never be undone. These things should not be questioned.

1. Freedom of religion and freedom from religion

Martin Luther's declaration that "We are all priests," is the claim that freed us from theocracy. There was a time when people looked to the church to explain causation and looked to supernatural causes rather than natural causes as reasons for why people got sick, crops failed or ships wrecked.

The Enlightenment thinkers who founded the US were among the first to free the community from the tyranny of one religious voice, allowing us all to freely choose how - and whether - worship. One of the biggest benefits of this is that it shifted the basis for social cohesion from dogma to science. Science builds on testable hypotheses and regularly generates new understanding. Scientific thinking is the stuff of progress.

The first amendment to the US Constitution captures beautifully the dimensions of this:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

2. Democracy

The notion that a community should be for all its members and not just the aristocracy is another essential layer to the prosperity of our modern world. Theocracies and democracies are just made up but the consequences are real. Of the 10 most prosperous countries in the world, 10 are democracies. 

3. The American Dream 

Retirement income. The possibility of early retirement. Owning one's own home. Time and money for vacations. Most importantly, enough affluence to choose what career and what company - perhaps even one's own company - to work at.

The notion that people can freely and easily participate in job markets, credit and stock markets, and be consumers in a world with millions of products and services is another foundation stone to progress. 

These three are foundations to the world in which we now live. They do need continual improvement and refinement.  They need to be offered more broadly. (We need to continue efforts to make it easier for everyone to vote and lift more people out of poverty.) We will not make progress by having less of these three; we will have progress by having more them, more independence of thought and reliance on scientific rather than superstitious thought, more ability for communities to define the laws and policies that define their world, and more widely shared affluence.

These three also represent a transformation of the dominant institution from a tool for the elites into a tool for the masses. "We are all priests," and "We the people," made church and state tools for the individual, overturning theocracies and monarchies. The 20th century story of how the average person was given access to credit and investment markets and department stores and online shopping is a story of widespread poverty giving way to widespread affluence. The 20th century included the story of how financial markets - like church and state before them - became a tool for the masses and not just elites. Progress will never come from blowing these up, or reversing any of these three major institutional changes. It will come from furthering them.

More dramatic than incremental improvements on these three previous victories, though, is a transformation of the corporation. Like church, state, and bank before it, the corporation is now the dominant institution.

In the early 20th century, we made dramatic gains as corporations learned how to mass manufacture goods, giving the common person goods that had previously reserved for elites. Ford's Model T might be the most dramatic example of this. 

Year  -   Number Sold  - Price
1910        19,050             $900

1925    1,911,705            $260

This is a wonderful example of the American Dream in action, a good once out of reach becoming accessible. A broad swath of people were able to enjoy what only a few had earlier been able to enjoy.

Today's corporation is less about making products than creating value. In the company of 1920 succeeded by making products that benefited more people, the company of 2020 succeeds by making value that more benefits more people. Because of the transformation that has come from the American Dream, every year more Americans are benefiting from this latter promise of modern companies.

What does this mean for the corporation? For it to become a tool for the common person, it needs to build mechanisms that allow its employees to more easily create - and share in - wealth through forms of entrepreneurship. Like church, state and bank before it, the corporation needs to be made the tool of the common person and not just elites.

Progress won't blow up the three freedoms that have come from making church, state, and bank our tools to be used for us rather than we for them. Progress will come from extending that pattern of progress once more into yet another dominant institution. 

The Silly Debate About Bannon and Free Speech and the Two Reasons That the First Amendment is So Vital

As I write this there is a bit of a furor over the fact that Steve Bannon was invited to an ideas festival hosted by the New Yorker and then disinvited, prompting a flurry of pieces like this one in the New York Times by Bret Stephens.

"The only security of all is in a free press."
- Thomas Jefferson

Steve Bannon is a white nationalist. He believes that white superiority and national economies are nonfiction. There are people who think that he deserves an audience for his tried - and spectacularly disproven - ideas. Some of these people argue that this is a free speech issue.

At some point in the evolution of science, astronomers presumably stopped inviting "scientists" who argued that the earth was at the center of the universe. Like white nationalists, geocentrists had been proven wrong and no longer deserved a hearing.

Free speech doesn't mean that any curator of content like the New Yorker owes you their audience. I wish that were the case because I would sue every major news outlet and conference host (as would every person with a set of ideas they were trying to get out into the world).

There are two reasons for the first amendment that guarantees the right to free speech, assembly, religion, and press, what is essentially freedom of thought and expression.

The first is simply because it is such a vital part of the human experience to hold beliefs and to express those. This is reason enough for the first amendment but there is more.

The second is that a community with freedom of thought and expression will make more progress. If you espouse a really dumb idea, I can refute it with a better idea. As I stand there smug and proud, another person can come along with an idea even better than mine. And as they accept their accolades for such insight and intelligence, another person comes along with an idea that refutes theirs. And so it goes in a parade of progress that all depends on people freely having ideas, sharing ideas, and refuting or refining ideas to evolve a worldview that lets them better deal with reality. The ultimate test of their ideas is whether these ideas enable them to travel across the ocean or sky or space, conquer diseases that once conquered them, feel happy and know how to make others happy, and do other things like create energy or knowledge. The first amendment is not meant as a tool for protecting old ideas but as a tool for creating new ideas that we can act on in new ways.

The real power of the first amendment is that the evolution of ideas drives progress. This evolution is driven by the free expression and exchange of ideas and animated by beliefs we're passionate about.

Old ideas like white nationalism that destroyed a country as great as Germany and resulted in 100 million deaths do not deserve a second chance or a new audience. We already know it doesn't work. The first amendment doesn't mean that it has a right to an audience. Properly understood, the first amendment means that it deserves to be discarded as we move on to something more practical and intelligent.

What Freedom of Religion Has to Do with Abortion

One sign that the Catholic Church is losing its monopoly over the opinions of the Irish is the vote there in May to end the ban on abortion.

Make no mistake about it, abortion is about religious freedom.

And on this side of the pond, here in the States, the Republican Party is strongly supporting a weak president for the simple fact that he'll get them Supreme Court justices who could overturn Roe v. Wade.

One group believes that at the instant a sperm and egg combine they deserve the legal protection of a newborn baby. For them, this is the start of life. At this point we can't even see this "baby." Even months later 99% of us would be unable to determine whether we were looking at an embryo that will later turn into cattle who we will later kill to eat or a child who we would later die to protect. The belief that a sperm becomes a human life at the moment of conception is essentially a religious belief.

Because we have religious freedom in this country, the group that believes zygotes at the moment of conception are no different from children are allowed to act on their belief. In this country women are not forced to abort. Their belief about when life begins is a religious or philosophical belief. We respect such beliefs in this country.

Because we have religious freedom in this country, the group that believes that life does not begin at the instant of conception but instead begins later (whether that be in the first or second or - in some states - in the third trimester) are allowed to act on their belief. In this country women are not denied the right to abort. Their belief about when life begins is a belief that we respect in this country.

The movement to ban abortion, to make it illegal, is a movement to end the religious freedom of people who believe differently from devout Catholics and some evangelists. Belief about when life begins falls into a category more akin to religion than science.

Curiously, it's not a ban against people who believe differently than Christ. We don't have a single word of Jesus pertaining to abortion. Abortion is something added since his time by some denominations of Christians. Most Lutherans think that abortion should be legal and most Jehovah Witnesses's think it should not. (And 57% of all Americans think it should be legal.)

Religious freedom takes many forms. Abortion rights is just one and it deserves as much protection as the right to be, to start being or to stop being a Muslim or Catholic or Jew or atheist. If you dig into the philosophy of someone who wants to take choice away from women you'll find someone who - at heart - does not buy into the notion of trusting individuals with religious freedom. They don't trust women who disagree that a sperm is just one moment away from having a soul.

And finally, let's talk about sex, pregnancy and raising a child. Sex is pretty awesome. A pregnancy with the expectation that you'll bring a little person into the world is kind of magical. But having sex forced on you - being raped - is one of the most traumatic things that can happen to a person. It rarely gets talked about, but it seems to me that having a pregnancy forced on you, being forced to have a child, has to be incredibly traumatic. Women know when they're ready to bring a child into the world and if this isn't that time, their lives are rocked. It's awful. Sex, pregnancy and children are wonderful ... when they're freely chosen. It's unconscionable to force them onto women.

All of progress results in more choice, more freedom. We have fireworks to celebrate national independence. We call this the land of the free. We fight for freedom. We've killed people from dozens of countries to "protect our freedom." Freedom is that cool and that important to the human experience. To deny women the freedom to choose when they bring a child into the world seems like a terribly medieval kind of oppression and one of the worst kinds of thefts of freedom, a theft even worse than stealing someone's freedom of religion.

The Switch That Triggered the Rise of the West (Can Also Be Switched Off)

"I am not an advocate for frequent changes in laws and constitutions, but laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy as civilized society to remain ever under the regimen of their barbarous ancestors."- Thomas Jefferson

From the time of Homer (roughly 1,000 BC)  until Marco Polo (about 1300 AD), incomes were stagnant.

Starting about 1300, productivity began to rise and with it came a remarkable transformation in life. In the 18th century, life expectancy in England was about 35 to 40 years and now it's about 80.  Incomes are up about 30X from when Shakespeare was buying ink. What happened in England was fairly representative of what happened in the US, Canada, Germany, France and the rest of what we now call the West.

Change in income from century earlier

Since the 1700s the median income for each century has steadily gone up. From 1700 to 1900, per capita GDP tended to be about 62% higher than it was a century earlier. That was the reward for creating more capital and making it more productive. From 1900 to 2000, per capita GDP tended to be about 158% higher than it was a century earlier. That was the reward for creating more knowledge workers and making them more productive. So far this century, per capita GDP tends to be about 250% higher than it was a century earlier. This is the result of continued gains in capital, knowledge workers and their IT, and - most importantly for this century - the increasing power of entrepreneurship.

The West started this parade but it no longer leads it. Singapore has higher per capita GDP than the US, England, or Germany. There is nothing uniquely British about industrial economies or uniquely American about entrepreneurial economies. Anyone can lead this parade but why did the West start it? I think it's because of a unique approach the West took to its defining institutions.

Social invention is an overlooked component of progress. Banks, corporations, and nation-states matter as much in this story of progress since 1300 as trans-Atlantic ships, steam engines, and computers. The very notion, though, that these institutions are merely tools - no different than engines or electronics - is what has made the West different.

People within the the West have taken three distinct approaches to institutions.

Social Conservatives and Social Inventions as Sacred
The first approach is the most obvious. You come to awareness as a small child, growing up with the wonder of a church, the splendor of a king, the wealth of a bank and when you become an adult you accept that this is the way things are. Realizing how instrumental are these institutions to your world, you fight to defend them as they are.

Social conservatives treat social inventions as sacred. These are the loyal Catholics who see in the Protestant Revolution a route to hell and social chaos. These are the royalists who see in challenges to the crown a tumult of conflicting claims for authority, a challenge to all that is sacred. These are the capitalists who see conspiracies in the Central Bank that "runs" things, feeling instead that the banker should be left inviolate and unregulated.

They are quite right that these institutions keep us from chaos. I personally feel like institutions - social inventions - are the simplest reason that we have more control over our lives than do the great apes.

Radicals and Social Inventions as Disposable
Radicals go to the other extreme. They are well aware of how awful the church or state or bank has been. The French Revolutionaries outlawed religion at one point. The Enlightenment was about science and rationality and religion was all about superstition and dogma; it had to go. Radicals knew the church was merely an obstacle to progress and had to go.

Whether it is atheists who want to eradicate the churches, communists who want to shut down financial markets, or anarchists who want to outlaw laws, the radicals quite accurately see all that is awful about these social inventions and want them gone.

They also don't have a clue about how important are these flawed institutions to civilization, to modern life.

The radicals and social conservatives are an important part of the conversation and should always be heard; left in charge, though, they'll only ruin things. They're important voices who should never actually be given power to change anything but instead should only have power to point out problems and make suggestions.

Power over these social inventions should instead be given to people who are not naive enough to believe we can live without them or naive enough to believe that they should be defended in some current or (more often) idealized past form.

Social Inventions as Tools
Progress has been made by the folks who see social inventions as tools. Not sacred things that need protection. Certainly not as disposable. Progress has followed from people who realize how important the church is to how people construct meaning and gain empathy and compassion, become more loving and happy even when life hits one with the inevitable tragedies of illness, death, financial setbacks or even wars and pandemics.

The ones who see church, state and bank as mere tools realize that - just as with cars or can openers - these tools are more valuable as more people are able to use and define them. "We are all priests," as Martin Luther claimed, or "All men are created equal," as Jefferson wrote express the sentiment of those who don't think that popes or kings should have a unique right to define the institutions that so define us.

And the social inventions as tools people are the ones who are unafraid to change these institutions to make them work better for who we really are and aspire to be than who we imagine our ancestors once were. A church is not sacred but it is precious. What does this mean? Everything about it should be challenged except for what it does for people; a church is more important than a juicer only because of what it makes. Fresh orange juice is lovely but meaning and compassion can make the difference between whether or not you even feel like it's worth it to get out of bed to make that orange juice.

The West has led the great parade of progress in no small part because it has treated its vital institutions as mere tools and subject them to challenge and redesign as if they were products no different than cars or radios. They're not sacred. They're not disposable. We've made progress by changing our relationship to church, state, and bank, making them tools for anyone rather than just popes, kings, and bankers. We will make progress again in this generation by making a similar shift in how we treat corporations, turning them into tools for employees to create wealth and jobs and not just tools reserved for CEOs (who, by the way, are also employees).  Freedom of religion, the spread of democracy, the American Dream and the popularization of entrepreneurship have treated - and will treat - our big institutions as mere tools. That orientation is essential to progress.

So why mention all this? Because in the wake of the Great Depression, extremists seized governments everywhere; fascists and communists took control and progress halted or reversed everywhere they did. Now, in the wake of the Great Recession, extremists are again gaining power.

On the left we have activists who see banks as evil. And on the right we have activists who see banks as sacred. The first group doesn't understand the importance of banks, the second group doesn't understand the importance of regulating them and subjecting them to a central bank. Those on the left aren't numerous enough in the states to spoil capital markets but those on the right actually are in Trump's government. Trump is moving to deregulate banks so that banks are tools for bankers and not the community, not for everyone. The social conservatives don't believe in Keynesian economics (most recent evidence of that is the fact that they protested deficits when unemployment was high and now want larger deficits now that unemployment is low) or monetary policy.

Social conservatives are also working to reverse democracy. In 1789, only white, property-owning Protestant men could vote. About every 50 years, another group gained voting rights until, by the end of the 20th century even minority women who rented could vote. Courts have repeatedly ruled that Republican efforts to reverse voting rights are actually targeted at reversing that, taking power from minorities and the poor to vote.

Finally the continued effort to impose a religious definition of when life starts (at the instant of conception) and dismissing any other reasonable definition is an attempt to encroach on freedom of religion, the freedom of women to follow their own conscience and belief about when sperm and egg become a baby.

Social conservatives are wonderful to have in a community. They remind us that family as an institution really does matter, that churches make lives better for so many, that banks and the state create order we would not have without them. We should listen to them. But social conservatives are better reminders than managers; put in power, they treat as sacred what any forward moving community treat merely as as tools that are best used by many rather than a few.

Prosperous and happy communities will continue to construct institutions that are tools that help people to create meaning and be compassionate. They may not even call these institutions churches - and that is part of the genius of lumping freedom of religion under the first amendment along with freedom of assembly, speech, and press, the realization that it is the freedom to form thoughts and express them that is at the heart of religious freedom.

Prosperous and happy communities will continue to construct institutions that are tools to allocate and create capital that helps to fuel progress in productivity and profits. Again, they may not even call these banks but they will be tools that make people richer and able to afford now what they cannot pay for until later.

Prosperous and happy communities will continue to construct institutions that are tools for governing, for creating policies that make their world safer, easier to navigate, and more likely to offer them lucrative options and freedom to live a life as they please - whether in the form of neighborhood planning boards or the UN or any level of government between.

Prosperous and happy communities will continue to construct and revise institutions that are tools for creating wealth and jobs, new technologies and new products and services and in the process of creating value for customers, suppliers, stockholders and the community.

And the communities that prosper the most will never pretend that these tools should be reserved for the elite. They will never pretend that they are not necessary. They will never pretend that they are anything but tools.

What has fueled progress for the West is treating these great institutions as tools. Every time we've instead treated them as disposable or sacred, progress stalls or even reverses.

Podcast - Social Invention, Progress & Trump

Here is my very first podcast:

Social Invention, Progress & Trump, one in a series of Fourth Economy podcasts.

"History consists of a series of accumulated imaginative inventions."

- Voltaire

The simple argument is that it is a struggle to understand politics and policy today without understanding social invention. A wave of social invention is simultaneously creating new opportunities and threatening old identities. Among the major points made in the podcast:

1. Social inventions like banks and nation-states are as important to progress as technological or product inventions like steam engines and computers.
2. 100 years ago the rate of product invention accelerated. Now, the rate of social invention (e.g., the EU, NAFTA, Uber-like employment, same-sex marriages) is accelerating.
3. Progress in the West has come from treating social inventions like tools rather than as either sacred or disposable.
4. The three major social inventions and reinventions that resulted in freedom of religion, democracy, and the American Dream (essentially the democratization of financial markets) inform us as to what strategies and measures result in successful social invention.

What Made - and Still Makes - Western Civilization Great

INSTITUTIONS AS TOOLS OR SACRED OBJECTS

The battle between social conservatives and progressives

In last week’s speech in Poland, Trump warned about a threat to Western Civilization. He mentioned “history” six times and spoke of          “the bonds of history, culture, and memory,” and “the bonds of culture, faith, and tradition.” Speaking for the right, Trump is proudly pointing to the West as having a superior tradition worth fighting for.

Douglas Murray, author of The Strange Death of Europe: Immigration, Identity, Islam, argues that the Left in Europe is essentially embarrassed to argue that their culture is really better than any other and authorities have actually looked away number of atrocities, including honor killings (families killing their own sisters and daughters because of their shame at who they’ve married) because it might seem racist to prosecute these as crimes.

So we have the Right arguing for tradition and the Left arguing for cultural relativism. The one would head backwards and the other would stand around awkwardly, apologizing for seeming to suggest that their ways are any better than that of any other people.

What seems to be missing is the appreciation for history without treating historical institutions as sacred or a culture as synonymous with race or nationalism (which it is not).

The West was seemingly the first to do something that set it apart and set it on the road to progress. This is worth defending.

INSTITUTIONS AS SACRED OBJECTS OR SIMPLY TOOLS

How we think about institutions defines our communities. Three ways to characterize the great institutions of the West like church, state, and bank are:

1       Sacred objects that must be preserved: this the attitude of the social conservative
2.      Obsolete objects that must be eradicated: this the attitude of the radical
3.      Simply tools that everyone should have access to: this is the attitude of the progressive

The debate in the West today is between social conservatives and progressives. The radicals who in past generations argued to outlaw religion (as the French Revolutionaries and Soviets did), financial markets (as communists throughout the world did last century) and even the nation-state (as anarchists have) are largely ignored in today’s political debates. Institutions separate us from the other primates and the real argument is not over whether we should have them but how we should treat them.

The most defining revolutions of the West were led by progressives and transformed these institutions:

1.      Church - the battle between Protestants and Catholics that gave us freedom of religion between about 1300 and 1700
2.      Nation-state – the battle between royalists and revolutionaries that gave us democracy between about 1700 and 1900
3.      Bank - the democratization of financial markets that gave us the American dream between about 1900 and 2000

Each revolution turned a dominant institution ruled by elites into a tool used by the average person. These were not one-time events. For instance, democracy was a revolution but it took centuries more to extend it from white, property owning Protestant men to even 18-year-old minority women. Early forms of religious freedom just gave you a choice between Catholic, Calvinist and Lutheran, not the thousands of denominations and religions (including atheism) available today. Like economic progress, this social progress isn’t something that happens one year and then stops; it is on-going and progress is as dependent on social change as it is on technological change.

Social conservatives are more likely to wonder about the intentions of founding fathers. If you see institutions as tools, though, the idea of protecting them from change is about as odd as insisting that Rudolf Diesel or Henry Ford never intended for us to drive cars with cup holders or GPS. Even if true it’s irrelevant to those of us alive now.

It’s difficult to understand how visceral is the reaction to Trump without understanding how differently social conservatives and progressives think about our major institutions.

FREEDOM OF RELIGION

First amendment:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

As it turns out, freedom of religion, free speech, a free press and political activism are all intertwined. Our founding fathers had genius enough to see that and packaged them into the same amendment. All have to do with freedom of thought but started with freedom of religion.

In 1302, Pope Boniface issued a bull that asserted his lordship over all of Christendom. By 1648 the Treaty of Westphalia essentially took away the pope’s power to dictate religion to a ruler and the ruler’s power to dictate religion to the people. The battle for freedom of religion played out between roughly 1300 and 1700 and gave us terrible atrocities like the Spanish Inquisition and the Thirty Years War that killed about ten percent of Europe’s population before reaching a resolution.

Had freedom of religion merely brought peace, that would have been enough. There is more, though. Once you’re free to choose your beliefs, you might just choose to base those beliefs on scientific evidence rather than religious revelation. As it turns out, freedom of religion allows scientific thinking to flourish.

In the early 1600s, the Church put Galileo under house arrest; by the late 1600s, England made Newton the Master of the Mint. Freedom of religion enabled the rise of science.

Progressives see in Trump’s travel ban targeted at Muslims not just a challenge to freedom of religion, which is reason enough to be upset. They see it as an attack on freedom of thought. Trump “knows” that Islam is the wrong religion and that climate change is not real and that he’s being attacked by “fake news.” Social conservatives see Trump as protecting their true and sacred religion; progressives see him as attacking freedom of thought.

DEMOCRACY

The next big revolution played out between about 1700 and 1900. At its beginning monarchs had absolute power and by its end those monarchs were either constrained by law or had been removed. The nation-state had become a tool for the average person and not just the elites. Rule of law and a representative government are foundational to democracy and both continue to evolve.

Newton defined laws that could apply universally to any object, from planet to moon to apple. His friend John Locke argued for laws that would apply universally to any person, from aristocrat to merchant to laborer. Laws that governed the natural world and should govern the social world were a focus of the Enlightenment thinkers who inspired democratic revolutions.

When Trump asks the head of the FBI not to investigate his National Security Adviser, this is a challenge to the rule of law, taking us back to the old system of personal privilege. When he leads a task force to investigate voter fraud (that all studies suggest is nonexistent), he is actually moving to make voting more restrictive. (Although he does seem rather sanguine about foreign interference, even if he’s trying to block Americans without photo ID.)

The invention of the car was dramatic but no one with a choice between a Tesla and a Model T would choose to drive the T. Like the car, democracy continues to evolve. If 1776 was the moment Americans “invented” modern democracy it is worth remembering that voting rights continue to expand to include more people over time. It took 200 years before the 18 year olds we sent to war could vote.

The real question is, who should be able to define the policies that define the community they live in? Put differently, is the government a tool for anyone to use or is it reserved for just a few? Progressives and social conservatives have very different answers to this.

THE AMERICAN DREAM

The most recent of our great institutions to be made a tool of the masses and not just the elites is the bank (or, more broadly, financial markets that include credit and investment markets). This access has helped people to become more affluent and more able to define their own lifestyle.

The levels of consumption that enable individuals to pursue the American dream would not be possible without modern capital markets. Warren Buffet argues that his upper-middle class neighbors in Nebraska live better than John D. Rockefeller did roughly a century ago. The cars, smart phones, TVs, and polio vaccines the average American now has rely on vast amounts of capital. The billions it takes to produce and purchase this vast array of goods would boggle the mind of any adult living in 1900, even John D. Rockefeller.

Access to financial markets gives the individual access to the American dream and the credit card and 401(k) account might be the simplest symbols of this broadening of access. Keynesian economics is another element of this revolution.

One of Keynes most overlooked insights into capital markets was this: capital markets could reach equilibrium before labor markets did. In other words, it was possible for capitalists to stop investing before a community reached full employment. If capital markets were just tools for elites, communities would have to accept this; if they were to be tools for the masses, communities would have to adopt policies that changed this. Keynes gave us options for this.

Unemployment during the Great Depression hit 25%; during the Great Recession, it peaked at 10%. One big reason for the differences in severity was the application of Keynesian stimulus; Bernanke did all he could to prop up credit markets to encourage investment and consumption. Like church and state before it, the bank has been made a tool for the average person. Interest rates were used to maximize employment, not returns to capital.

Social conservatives don’t like the Federal Reserve or its charter to subject financial markets to larger goals like employment. Again, as with church and state, they feel that what we’ve inherited is sacred and should not be changed. For them, Keynesian is a bad word. The battle between social conservatives and progressives over banking regulations and Federal Reserve policy often seems obscure but there is a reason that bank is the first part of bankrupt. The consequences of getting this policy wrong are severe.

INSTITUTIONS AS TOOLS

For centuries, progress has followed from letting more people have access to these great institutions, using them as tools for their own benefit. Life got better when our founding fathers extended the use of government from just aristocrats to landed gentry; it got better again when it was extended to women in the early 20th century and to minorities in the late 20th century. There is no evidence that progress now lies in the opposite direction, in restricting rather than broadening access to freedom of religion, democracy, and the American dream. The more that people have been able to use church, state and bank as tools for their own lives, the better the world has become.

Nobody Expects the Spanish Inquisition - Trump's Promise to End Religious Freedom

The West led progress for centuries. Not because of superior genes but because of superior memes. The social inventions that have transformed Western Civilization since about 1300 have made lives longer, happier, and more free.

Three big transformations have given individuals in the West freedoms that created this prosperity. The first of the major transformations was religious. In 1300, the church defined orthodoxy - proper belief. Today the individual has religious freedom. Religion went from something society imposed on the individual to something individuals freely chose, rejected or modified. In 1700, you were a subject of the king or queen in your country. Today the individual chooses who will rule and even votes directly on laws. In 1900, private banks controlled money. Today access to investment and credit markets is widespread and monetary policy is managed by a public agency, capital markets subordinate to labor markets and unemployment rates.

Freedom of religion, democracy, and the pursuit of the American Dream - as we now refer to the products of these three revolutions - have indisputably made life better. In the Fourth Economy I argue that doing to the corporation what past revolutions have done to the church, state, and bank is the next big transformation that will dramatically improve life again. (Or more accurately, continue the dramatic improvement of life that has been playing out for centuries.)  Progress stalls when we fail to take the next step; disaster strikes when we go backwards.

One of the reasons I'm so utterly baffled and angry at the fact that my fellow Americans elected Trump is that he promises to take us backwards. Not just a little. He promises to take us backwards by centuries. He promises a religious test for admission to this country, curtailing the freedom of religion guaranteed in this first amendment.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Freedom of religion is foundational to everything we enjoy in the West. For so many reasons.

First the obvious. People believe weird things. Yes, even you. You can kill people with weird beliefs in an attempt to rid the world of improper beliefs but believing that you can kill off all the people with weird beliefs is, itself, one of the weirder beliefs. Plus, even when you take measures that drastic, people with weird beliefs keep popping up. It is simply impossible to live peaceably with fellow humans if you believe that you can or should control their beliefs.

John Locke who defined the modern
separation of church and state.

In the century before our founding fathers defined our new country, Europe was devastated by the thirty years' war, a war with 8 million casualties at a time when Europe's population was about one-tenth what it is today. No war had killed off more of Europe's population. No war involving so many could ever be about just one thing but this war was mostly about religion. With such atrocities in mind, our founding fathers were committed to creating a country where religious freedom not only allowed people to live in good conscience (however weird their beliefs) but saved people from violence because of religious beliefs.

As it turns out, religious freedom is also great for invention and entrepreneurship. Innovation comes from thinking differently, from challenging norms and jettisoning tradition - things that no religion advocates. It wasn't just freedom of religion that our founding fathers granted. It was freedom of thought. You can't really separate those two because beliefs and thoughts are so intermingled they're effectively the same thing. Communities that have imposed no special beliefs on their people are the ones where invention and disruptive change have thrived and lives have improved.

In about two weeks we will swear in a new president who believes that Congress shall make a law disrespecting the free exercise of religion, banning Muslims from entry to the country.

Trump represents a reversal of the three revolutions that have brought us out of the Dark Ages. His minions are fans of the gold standard and gutting the Federal Reserve, essentially making capital scarce again and turning control of credit markets to private banks. He is contemptuous of the workings of democracy, denouncing it as rigged and cooperating with a foreign dictator to win the election. He denounces the free press, suggesting that we need to crack down more on critical journalists in the same way that Putin has, while praising fake news and suggesting that the National Enquirer deserves a Pulitzer. And as if it's not enough to reverse the revolutions of the 20th and 18th centuries, he wants to take us back even further to the 17th century and the time of the thirty years war when religious freedom was not trusted to individuals.

It is hard to over-state how far back into the bowels of history Trump's policies take us. He is a troglodyte who even our bewigged forefathers would look on as anachronistic.

Won't you at least give Trump a chance, friends have asked. A chance for what? To end religious freedom? To gut the people's ability to stabilize credit markets and make financial markets accessible to common people? To gloss over foreign powers' interference in our democracy? (And this doesn't even touch on his disdain for freedom of trade, another pillar of prosperity that inspired the Declaration of Independence but was not captured in the Bill of Rights.)

In my mind, the real question of how to make progress is a question of how to popularize entrepreneurship and that involves changing the definition of employee to someone who has the same sort of freedom within a corporation that a citizen has within a country. Few people believe this (it's a weird belief) but the number who do is growing. To the extent that we delay dealing with this issue, we delay putting median income growth on a path that ensures that each generation will do better than the last.  Freedom of work is a step forward and failing to address it is the one of the biggest reasons that median income growth has floundered in this century.

Not taking this step forward means stagnation. Reversing freedom of religion is, by contrast, a huge step backwards. It's almost comical that in this - 2016 - we would be considering such a move, much less have elected a man who has made it his policy.

How do I feel about 2017? I'm in disbelief that we - as a country - have gone medieval on religious belief, making proper religion a basis for acceptance within our community. I'm in disbelief but as Monty Python warned us, "Nobody expects the Spanish Inquisition."

When Freedom of Religion Means Freedom from Religion

This week, Angela Merkel proclaimed that Germany is a Christian nation and that the Muslim faith doesn’t really have a place in it. Ferdinand and Isabella made a similar declaration about Spain about 500 years ago before conquering Granada and driving the last of the Muslims off of the Iberian Peninsula.


We are still pretty clumsy when it comes to religion in the West. Maybe we'd do better going back to the distinction between objective and subjective reality than talking about which religions should be allowed and which should not.

Subjective reality is the domain of religion. It is the domain of personal revelations and convictions, opinions, tastes, and personal values. The experience of subjective reality is a large part of what it means to be human. No humane society can dismiss it or claim that it isn't "real."
What has made the West since the Enlightenment such a wonderful place to live is that this subjective reality is subordinated to objective reality. The objective realities of science, democracy, and economics define our modern world.

The subjective colors what scientists study, but good science means testable hypotheses. Science is objective. The subjective influences how people vote, but in a democracy it is votes that can be counted that determine what politicians hold office and what policy becomes law. Democracy is objective. And finally, the subjective influences what people do for a living or what goods and services they buy, but it is dollars that can be counted that determine which careers are funded and which goods are made. Economics, too, is objective.

Although the West rests on the subjective, it is objective reality that has the final vote in defining our world.

And that, it seems to me, is all that matters. As long as any subjective reality - from Christianity to Islam to atheism - only has access to the public realm through the front door of objective reality, we're likely to live in a "good" society.
And this leads to the conclusion that is rarely made. During the Enlightenment, Christianity was radically redefined. It was no longer the force that Constantine defined as the basis for rule; instead, it became a way that people made sense of their individual lives. Christianity - once the basis for theocracy as oppressive as anything found in the history of Islam - was reformed. To become fully a part of the West, Islam will have to go through a similar re-definition. Turkey alone proves that this is not impossible, much less the presence of so many Muslims living peacefully in the West.
 
This is not a matter of getting the right subjective reality. This is simply a matter of never letting any subjective reality rule over objective reality. It is this more than the particulars of religion that form the basis of the modern West.

Central Europe's Disturbing Intolerance

It seems a truism that inland regions are less tolerant. People who live on coasts around ports have been continually exposed to a variety of skin colors, religious persuasions, cultures, and lifestyles. Fewer people come through Nebraska than New York or San Francisco; fewer people come through Serbia than England. Insularity seems to make people intolerant rather than curious.

Which brings us to Switzerland's stunning vote to ban "the construction of minarets, the towers that typically stand adjacent to mosques and serve to issue the Muslim call to prayer."

The Swiss speak four languages and would seem a model of diversity, but it is also worth remembering that it wasn't until 1971 that they granted women the right to vote. These are not progressives.

So I guess one ought not to be surprised that the Swiss felt threatened by the construction of Muslim edifices. Muslims, of course, make up nearly 4% of their population and are obviously a threat to the country's laws and mores.

It seems to me, though, that the Swiss have got it backwards. Rather than ban the construction of minarets, they should insist that every Muslim household build one atop their domicile, making it easy for anyone else to see where they are. And once they've done that, I see no reason why they couldn't require Muslims to wear tattoos on their forearms.

If they want to borrow from the playbook of religious intolerance, Central Europe has plenty of examples to draw from. If they are heading down that path, they should know better than to ban the symbols of religious difference that could, instead, be used to identify minorities.

The Medieval Church: a necessary evil

I’ve taken my shots at the medieval church. Anyone who knows history has read of the atrocities. Heretics were burned at the stake, scientists were muzzled, and suspected witches were stretched out on the rack, forced to confess to the impossible. Where the church had a firmer grip on the community – in places like Spain and Italy – business and science fell behind the places – like the Netherlands and England – where there was more religious freedom. It was a wonderful thing to emerge from the control of the church. This is, however, a very different statement than saying that it was an awful thing for the West to come under the control of the church.

It’s worth remembering the condition of the West when Christianity became ascendant. I would argue that the church, however evil we now consider it, was an improvement on what came before.

The Roman Empire was powerful and made life comfortable – for a few. The economy and quality of life depended on slaves, conquest, and exploitation. Whatever one might say of the animating beliefs, it is not obvious that one could ascribe the golden rule to Rome: slave holders and colonizers hardly did onto others what they wanted done to themselves. (And this disinterest in the other is a major obstacle to the emergence of markets.)

Tribes like the Huns, Visigoths, and Vandals who gradually dismantled and conquered the Western part of the Roman Empire knew more about conquest than creating and sustaining a society as complex as the Roman Empire. Europe descended into the Dark Ages as Rome disappeared.

So this is the world as it was found by a medieval church with growing authority and influence. This world was awful. It is one thing for armies to know how to raid a village to take the food and women – it is another to know how to raise crops and children. Life was brutal and short and reliant on force. By our standards, the medieval church may have seemed oppressive, but its emphasis on caring for the weak and its insistence on order in thought and deed must have saved many a life.

It was from this starting point that freedom of thought slowly emerged. Order was created by the authority of the church. (In medieval times, the majority of the issues that the pope had to address involved property rights.) Imagine that each landlord or land owner was his own little government and you can begin to imagine the confusion surrounding even the disputation of the smallest conflicts. The church’s generally accepted authority saved many conflicts from becoming violent.
Obviously the religious wars fought in Europe to wrest control from the medieval church (and, initially, put it in the hands of a Protestant church that was typically just as dogmatic and violent) were atrocious. But again, the baseline of comparison was not the level of violence in Berlin or Paris today.

Was the medieval church evil? Only if it was compared to the community that evolved after its rule. But looking at it in the context of what preceded it, it might well be that the West had no better path to progress.

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The golden rule might be at the heart of a market economy. “Do unto others as you would have them do unto you,” puts one in the frame of mind of the other. It encourages a kind of empathy that can also be used for commercial gain. “People want a cheaper or better …” involves thinking about the perspective of the other, the consumer, and is the first step in developing a business plan. Concern with – and response to - the other is essential to markets.

Confusion About Freedom of Religion

Huckabee is on the cover of Newsweek. He's a likable guy. (My favorite quote of his is, "I'm a conservative, but I'm not angry about it.") He is seemingly compassionate and principled. The Republicans could do worse - much worse - in their choices for nominee.

But reading about Huckabee and Romney and their religious beliefs, (Huckabee saying he was going to bring this country back to Jesus, Romney talking about the dependence of freedom on religion) I had to admit to feeling more than a tad irritated. Okay. Angry.

In the West, we've got a simple and powerful formula for religious freedom. You are free to worship (or not) any way your conscience suggests you should. You are not free to bring that religious belief into the social arena. You cannot use your God as an excuse to abrogate the rights of others or as a basis for law.

Catholics, Baptists, Jews, Muslims and Smurfs are welcome to worship in this country as long as they express no aspiration to impose their beliefs onto the rest of us.

I grew up in, and still embrace, a faith that doesn't even make up 1/10th of 1% of the population. We don't own church property (we meet in homes) and our ministers are homeless. I was raised to be suspicious of organized religion and to this day am leery of paid ministers and church buildings. Yet even in my faith there are people who stupidly get excited about imposing their beliefs through policy. To me, nothing could provide more evidence of thoughtlessness. The best we can hope for is freedom to believe what we'd like. The instant someone starts to talk about imposing their beliefs onto others, that person ought to be shouted down in the public arena rather than lauded as a man of principles.

I understand conservatives in Europe who are hostile towards the Muslims who talk about changing European society. I don't blame our early American leaders who were hostile towards Catholics and Anglicans and other religious sects that hadn't learned how to stay out of the public arena. I simply don't see freedom of religion as a license to sneak religion into politics.

Freedom of religion for the individual and freedom from religion for the community. It's not a difficult concept, but any other formula just leads to madness. The next time someone decries the fact that things have gotten so secular, just sigh and say, "Yes. Isn't it lovely?" It is, in fact, religious people who ought to be the most happy about this.

Romney Advocates a Non-Denominational Theocracy

"We separate church and state affairs in this country, and for good reason. No religion should dictate to the state nor should the state interfere with the free practice of religion. But in recent years, the notion of the separation of church and state has been taken by some well beyond its original meaning. They seek to remove from the public domain any acknowledgment of God. Religion is seen as merely a private affair with no place in public life. It is as if they're intent on establishing a new religion in America – the religion of secularism. They're wrong."
- Mitt Romney

Reading this, it suddenly hit me. Like most Americans, Romney rejects the idea of a state religion. He does not, however, agree that politics should have the same requirement as law and science - that is, rely simply on testable hypotheses that can be built on. He does not believe that the practice of politics should be secular.

From this passage I can reach no conclusion but this: Romney is advocating a non-denominational theocracy.

Politics & the Comedian Conspiracy Theory

Rumor has it that Mitt Romney came across as most Reaganesque in the recent debates, leading the panicked Al Sharpton to say, “those that really believe in God will defeat him.” Meanwhile, Romney said that his favorite book was Battlefield Earth by L. Ron Hubbard. (Sharpton latter retracted his comment, as did Romney, who clarified that Battlefield Earth is merely his favorite novel and that the Bible is actually his favorite book.)

This raises so many questions.

One, does Sharpton blame his own past defeats as a presidential candidate on the fact that he, himself, doesn't "really believe in God?" or on the fact that "God doesn't really believe in Al?"

Two, could it be that Romney has actually read less than Bush? I mean, how else to explain the fact that his favorite book is by a man who actually began to believe that his own science fiction plots were the explanation of life on earth? Has Romney even read other novels? And if Battlefield Earth really was your favorite novel, would you actually tell anyone? Doesn't that show a terrible lapse in judgment? And if your given name was "Mitt," wouldn't you be more inclined to provide the title of a serious and respected novel?

Three, how did Reagan, the man who decided that ketchup could be counted as a vegetable in school lunches, get to be a minor deity in the Republican Party?

Four, are comedians like Jon Stewart, David Letterman, and Jay Leno actually the true force behind the vetting of politicians? Is it time to launch a comedian conspiracy theory that explains the fact that politicians seemingly can't get into the national limelight until they've passed a test proving some minimal level of absurdity?

Five, why couldn't I have just been fascinated by sports, like other guys?

Falwell Falls, Teletubbies Still Standing

Jerry Falwell died today. In 1979, Falwell founded the Moral Majority, a religious special interest group that worked to conform law and policy to their view of religion. At various times, he spoke out against scientists, secularists, Jews, gays, and teletubbies.

To me, Falwell was the epitome of what's wrong with politics. It is true that Jews and Romans killed Christ, but that's actually incidental. They just happened to be in power at the time. Christ's execution was the result of collusion between church and state.

I would argue that all progress we've made in the West traces back to a separation of state force and individual opinion - allowing the individual freedom to argue for, and live by, standards that aren't normal and aren't enforced by the state. Falwell was one of these reformed segregationist who was offended by the parade of abnormal that characterizes America, a man eager to stamp out deviation from his interpretation of God's true law.

My own faith represents about 1/100th of 1 percent of the US population. Nonetheless, there are members of my faith who feel an affinity with the political goals of Falwell and his ilk. That kind of thing just scares me. The best any of us can ever hope for is the freedom to live our own lives. I've no illusions about keeping my rights should there become a national conversation about the ONE way that should guide our politics. And in truth, although minority religions like Bahai or Jews are the first to go in a purge of religious deviancy, it doesn't take long before the Protestants and Catholics are casualties as well. There are very few winners in the battle to align church and state. My contempt for Falwell doesn't follow from my contempt for religion but, rather, my fondness for it.

Falwell was a throwback to the time when each colony represented a particular faith. That he was embraced by so many is proof that we still do a poor job of teaching religion in our schools. In a sane society, he would have received no more publicity than someone advocating the reinstatement of royalty or child labor.

Falwell is dead. One can only hope that the theocon movement he helped to inspire soon follows.

Among those happy to see him go:
Boing Boing
Sadly, no

Among those sad to see him go:
Founder's Ministry
Captain's Quarter's

The Post-Capitalist Corporation

The corporation will soon undergo a transformation akin to the change of the nation-state during the age of Enlightenment.

Once the medieval church lost its grip on Europe, the modern nation-state grabbed power. For centuries, religious wars defined European politics. Huge swaths of the population were murdered by competing religions that used monarchs and rebels to compete for ascendancy. It was not until religion was made a personal matter and nation-states focused on issues of politics that warfare became less frequent. Governments could focus on quality of life instead of imposing religion through force.

Today, power has shifted from capitalism, from "the bank," to the corporation. JP Morgan sat on corporate boards and formed corporations like General Electric and International Harvester. The purpose of these newly formed corporations was financial gain. The aims of the bank, financial returns, still define the aims of the corporation just as the aims of the church to impose a homogeneity of religious belief first defined the modern nation-state.

Talking about the aims of the corporation today without talking about profit is about as odd as it would be to talk about the aims of the nation-state in 1650 without talking about which religion it ought to enforce on its subjects.

The idea of financial gain within the corporation being a matter left to individuals may seem foreign to us, but our grandchildren will accept it as easily as we accept transcontinental flights or leaving the matter of religion to individuals. It is yet another dimension of turning employees into entrepreneurs, of giving the individual more autonomy.

You Can't Kill Chickens in Texas

Newsweek reports that the cops of Euless, Texas stopped Jose Merced from killing a chicken on his property.

Like most towns of 46,000, Euless has the usual array of eateries: Wendy's and Burger King, a couple of McDonald's, and, inexplicably, 29 Domino Pizza joints. One doubts that the people of this small Texan town are squeamish about eating meat and has to wonder whether the red meat eating contingent of Texas law enforcement aren't making plans to do away with chicken restaurants now that they've shut down all the diners featuring quiche.

But Jose Merced is not killing the chicken to barbeque it. He was going to kill the chicken as part of a ritual sacrifice he was performing as a Santeria priest. The officials of this small town won't grant him a permit to perform this act not because they are desperate to protect the lives of chickens but because they don't like the idea that such a strange religious ritual could be performed in their town. Hm.

Euless, TX. Odd name. Rhymes with Clueless, doesn't it?