from Warsaw
Globalization has its fans and its detractors. Human trafficking around the world has indeed spread new technologies and changed living conditions. But transportation as a human contrivance has its drawbacks as well.
I think of invasive species coming into the United States through international commerce: the Zebra mussel and Dutch Elm Disease and now Asian pythons loose in the Florida swamps and doing very well in their new habitat to the distress of older occupants.
But a visit to Cracow yesterday brought me an example of humans as invasion species. There is now a booming trourist trade from the UK and Ireland of people coming just to Cracow for a weekend to get as drunk as their bodies can stand. They fly in on cheap discount airline flights. They get so drunk they fall over over the streets around the old market square.
A brochure in my hotel room advertised the "booze cruise" - you sign up for a cruise on the river to get so drunk that you can't walk - but the boat has chaperons at the railing to keep you from falling in the Vistula River. But you are assured by the brochure, no matter what, the booze will keep flowing.
Cracovians are less than pleased with this turn in their tourist market. One said to me: "This is not what we had in mind when we joined the European Union."
They also worry over a Gresham's law of tourism - offensive tourists drive away the good ones.
and cheapen in all manner of ways the community that seeks to live off the largess of strangers.
Entrepreneurial cost-cutting as an innovation in service delivery has led to this threat to an existing environment. Do these innovative carriers have some social responsibility to correct the external costs to older Cracow customs and habits that their actions have caused?
Should they raise fares to reduce demand for the service? Screen their passengers? Demand damage deposits payable to the city of Cracow?
Should Cracow impose a tax on drinks? Ask tourists to get a license in order to drink within city limits?
Steve Young
Sept 9, 2007
Showing posts with label Moral Capitalism. Show all posts
Showing posts with label Moral Capitalism. Show all posts
Saturday, September 8, 2007
Thursday, September 6, 2007
Lessons from Warsaw
Warsaw is growing. As you land in the airport as I did yesterday, some dozen or more planes are at their gates, taking off or on the taxiways - more action that when I first came here in 2005. The airport itself has been expanded. The laying of new water mains has closed several main avenues in central Warsaw and created long delays in traffic - one of the signs of successful modernization all around the world. A new shopping mall is up - across from the Palace of Culture which was Stalin's gift to the Polish people and is kept by them as a simple reminder of past subservience to Communist dictat. Streets have been resurfaced; buildings and pedestrians have less and less of that pervasive brown/grey drabness of buildings, streets, clothing and facial expressions that one associates with all genuine dictatorships of the proletariat.
The Polish economy has been growing by 6% a year. Poland is part of the European Union - a full citizen of Europe at last.
The significance of all this: capitalism works; it really works. It is a system of human activity that meets human needs and grows and expands, changes and diversifies.
Is capitalism perfect - a heavenly ideal realized here on earth? No way. As a human system it is prey to all the errors and follies that the species exults in. Like any of us seeking to be better, it needs ideals to shape and constrain its ambitions, systems of checks and balances to keep it from excess, and laws and regulations to minimize its abuses of power.
It is always a work in progress. As is said about the price of liberty, eternal vigilance is also the cost of a moral capitalism.
Steve Young
Warsaw
Sept 6, 2007
The Polish economy has been growing by 6% a year. Poland is part of the European Union - a full citizen of Europe at last.
The significance of all this: capitalism works; it really works. It is a system of human activity that meets human needs and grows and expands, changes and diversifies.
Is capitalism perfect - a heavenly ideal realized here on earth? No way. As a human system it is prey to all the errors and follies that the species exults in. Like any of us seeking to be better, it needs ideals to shape and constrain its ambitions, systems of checks and balances to keep it from excess, and laws and regulations to minimize its abuses of power.
It is always a work in progress. As is said about the price of liberty, eternal vigilance is also the cost of a moral capitalism.
Steve Young
Warsaw
Sept 6, 2007
Monday, September 3, 2007
Labor Day in America
Today, Monday Sept 3rd, there is much commentary in the United States over the meaning of Labor Day.
I associate Labor Day with American Capitalism. As I remember, it was initiated to discourage American workers from celebrating May 1st, the day set aside by the Socialist International for honoring and elevating working men and women in the early phase of global capitalism.
The American political elite wanted no truck with socialism and, as a result of this political agenda, set aside a day for labor to be honored within a free market capitalism where individualism and rights of free association were regarded as correct socio-economic scripture.
Socialism is now discredited and Communism is dead. So May 1st seems to have become a superfluous holiday.
So too in many ways has "labor" day. "Labor" as a factor of production is becoming an historical artifact. Workers and employees will always be a part of product - but "labor" with its connotation of physical human efforts, sweat, and drudgery is less and less part of employment - especially highly paid employment.
Value in the free market increasingly goes to forms of capital - not physical power paid for as a commodity in hourly or daily units. Finance capital gets higher and higher returns. The rising share of national income in the United States held by the well-to-do is to a great extent a reflection of their participation in securities ownership and the rising return to securities over the last 40 years.
Reputation capital - brand equity - gets a good return.
Human capital - productive, education, specialized employees - gets more return than human labor power.
Management skills - human relations skills - bring more than assembly line or trade union work. White collar is more pervasive these days than blue collar.
Knowledge, invention, intellectual property rights - all get higher returns these days.
Manufacturing as a share of national income in the US is declining - not just because of outsourcing to low cost producers, but as a result of the information and computer chip revolution in human civilization. Just as agriculture in the US now absorbs a tiny fraction of the work force - about 2% I think - (once it was over 80% before the industrial age got going), manufacturing done under modern conditions takes in fewer and fewer workers. Each worker is more productive and can command higher wages, but the number of workers needed in shrinking.
In short, employees are moving from costs on the income statement to becoming an asset on the balance sheet.
In consequence, our entire way of thinking about workers and employees needs to change. If they are capital assets for society, then we need to ensure that they are properly "capitalized" - with life long education, good health care, with their own retirement savings accounts, with easy access to finance capital to start their own businesses. And, moreover, the wellbeing of our workers - those who have a large responsibility in making capitalism work - is important to us all.
Steve Young
I associate Labor Day with American Capitalism. As I remember, it was initiated to discourage American workers from celebrating May 1st, the day set aside by the Socialist International for honoring and elevating working men and women in the early phase of global capitalism.
The American political elite wanted no truck with socialism and, as a result of this political agenda, set aside a day for labor to be honored within a free market capitalism where individualism and rights of free association were regarded as correct socio-economic scripture.
Socialism is now discredited and Communism is dead. So May 1st seems to have become a superfluous holiday.
So too in many ways has "labor" day. "Labor" as a factor of production is becoming an historical artifact. Workers and employees will always be a part of product - but "labor" with its connotation of physical human efforts, sweat, and drudgery is less and less part of employment - especially highly paid employment.
Value in the free market increasingly goes to forms of capital - not physical power paid for as a commodity in hourly or daily units. Finance capital gets higher and higher returns. The rising share of national income in the United States held by the well-to-do is to a great extent a reflection of their participation in securities ownership and the rising return to securities over the last 40 years.
Reputation capital - brand equity - gets a good return.
Human capital - productive, education, specialized employees - gets more return than human labor power.
Management skills - human relations skills - bring more than assembly line or trade union work. White collar is more pervasive these days than blue collar.
Knowledge, invention, intellectual property rights - all get higher returns these days.
Manufacturing as a share of national income in the US is declining - not just because of outsourcing to low cost producers, but as a result of the information and computer chip revolution in human civilization. Just as agriculture in the US now absorbs a tiny fraction of the work force - about 2% I think - (once it was over 80% before the industrial age got going), manufacturing done under modern conditions takes in fewer and fewer workers. Each worker is more productive and can command higher wages, but the number of workers needed in shrinking.
In short, employees are moving from costs on the income statement to becoming an asset on the balance sheet.
In consequence, our entire way of thinking about workers and employees needs to change. If they are capital assets for society, then we need to ensure that they are properly "capitalized" - with life long education, good health care, with their own retirement savings accounts, with easy access to finance capital to start their own businesses. And, moreover, the wellbeing of our workers - those who have a large responsibility in making capitalism work - is important to us all.
Steve Young
Friday, August 31, 2007
What price virtue?
One of the seemingly yet-to-be-answered questions in Western ethics asks what is the quality that makes for real virtue?
Is it the quality of our intentions? Do we act from good motives or think the right thoughts?
Is it compliance with a norm or rule? Do the right thing!
Is it making a utilitarian contribution to society and the world?
In terms of markets, the question is often asked: if we pay somebody to do something and they response to our economic incentive, are they acting virtuously? Or just out of greed? Greed is presumed by many to be both unworthy and destructive of the common good. The Christian Apostle Paul wrote that the "love" of money is the root of all evil.
So, what are we to think of Mayor Michael Bloomberg's new experiment in New York City?
He will pay parents to be good: $50 for getting a library card; $100 to take a child to the dentist; $25 for attending partent teacher conferences; $100 per family for preventive health screenings; $150 a month for having a full time job.
Suppose a parent responds positively and changes his or her behavior to get the money. Is this change of behavior good or bad? For the parent? For the child involved? For New York City? For the World?
And, if the utilitarian consequences of such payments are good for all, then why should we care about the inner springs of motivation that bring them about?
I can see that at the level of society utilitarian advantages should be supported and the incentives that produce them applauded and used.
But should such a calculus be used at the level of the individual?
If we care about the individual and his or her perfection into a meaningful and happy life, then should not our conern for their motivations take a higher priority?
And their ethical orientation can't really be separated from their "ethos" - their culture and material conditions of life.
I feel that it can be right to change people's "ethos" with material incentives to trigger good and constructive behaviors that can become habitual and draw along with them a new sense of personal identity and accomplishment.
Afterall, sociologists have long observed that norms need to be reinforced and enforced by institutional arrangements of reward and punishment.
Steve Young
Is it the quality of our intentions? Do we act from good motives or think the right thoughts?
Is it compliance with a norm or rule? Do the right thing!
Is it making a utilitarian contribution to society and the world?
In terms of markets, the question is often asked: if we pay somebody to do something and they response to our economic incentive, are they acting virtuously? Or just out of greed? Greed is presumed by many to be both unworthy and destructive of the common good. The Christian Apostle Paul wrote that the "love" of money is the root of all evil.
So, what are we to think of Mayor Michael Bloomberg's new experiment in New York City?
He will pay parents to be good: $50 for getting a library card; $100 to take a child to the dentist; $25 for attending partent teacher conferences; $100 per family for preventive health screenings; $150 a month for having a full time job.
Suppose a parent responds positively and changes his or her behavior to get the money. Is this change of behavior good or bad? For the parent? For the child involved? For New York City? For the World?
And, if the utilitarian consequences of such payments are good for all, then why should we care about the inner springs of motivation that bring them about?
I can see that at the level of society utilitarian advantages should be supported and the incentives that produce them applauded and used.
But should such a calculus be used at the level of the individual?
If we care about the individual and his or her perfection into a meaningful and happy life, then should not our conern for their motivations take a higher priority?
And their ethical orientation can't really be separated from their "ethos" - their culture and material conditions of life.
I feel that it can be right to change people's "ethos" with material incentives to trigger good and constructive behaviors that can become habitual and draw along with them a new sense of personal identity and accomplishment.
Afterall, sociologists have long observed that norms need to be reinforced and enforced by institutional arrangements of reward and punishment.
Steve Young
Thursday, August 30, 2007
Chinese scandals
Recent scandals in China with respect to contamination of food products and lead paint in children's toys tell a business morality tale. Competition by becoming a producer of commodities, seeking the lowest possible commodity price, is not a good long-term business strategy.
The better way to go is by adding value, moving up the value chain.
Chinese difficulties show once again that low prices demand cheap inputs, low wages, exploitation of some factor of production, ignoring externalities. Seeking to compete with low prices is a road straight to some kind of dysfunction. One of those low-cost inputs will, in time, bite you badly. Avoidance of long-term responsibility in lowering costs over and over again does not bring sustainable success.
Steve Young
The better way to go is by adding value, moving up the value chain.
Chinese difficulties show once again that low prices demand cheap inputs, low wages, exploitation of some factor of production, ignoring externalities. Seeking to compete with low prices is a road straight to some kind of dysfunction. One of those low-cost inputs will, in time, bite you badly. Avoidance of long-term responsibility in lowering costs over and over again does not bring sustainable success.
Steve Young
Tuesday, August 28, 2007
Casinos and capitalism
Macao is expanding as a center of gambling. Native American tribes use their unique status as domestic dependent nations to open and run casinos. Las Vegas is more successful that ever. Gambling in Atlantic City filled coffers when the boardwalk was no longer so attractive to middle class tourists seeking sea air and amusement rides. Betting on sports and internet gambling are here to stay. Lotteries fund government programs. in many countries. And there is always Monte Carlo.
A lot of money changes hands in gambling every day around the world. And, a lot on money changes hands every day in securities markets too. Gambling has long been condemned by moralists as a vice but securities markets are key to getting the benefits of economic growth and higher standards of living.
Casinos nourish with care and skill our propensity to fall for "irrational exuberance." In casinos on Native American reservations here in Minnesota I have watched as the room of slot machines empties of patrons as the house wins over and over. Then, suddenly, as if by accident some machine gives forth a big payout. Bells ring, lights go one and off and - patrons rush back into the room to jump on the bandwagon by giving up more coinage.
One casino in Wisconsin advertised that it had the "loosest slots around" - paying back $.97 for every $1.00 wagered. It was a 100% guaranteed losing proposition for customers on average, but the ads worked - people came convinced that they would be the ones to beat the average.
So what drives gambling? Some greed gene in our core personality that drives us on beyond where mature consideration would take us? It is only about the money? I think not. Gambling allows us to think that we might be special, different, lucky, graced with inner advantage. We like, perhaps need, that feeling.
And there is the thrill of risk, of walking on the edge, of life having tension and excitement, of anticipation for the unexpected. "Maybe this time ... Look at me. I'm a daredevil and you're not!" It is a feeling of exuberance, somewhat rational actually, that we enjoy. Gambling is a kind of distraction and entertainment. It's more than the money, its the odds.
Capitalism is different; it is time on task.
Money is to be made in business, to be sure; and for some a desire to have money is a key driver of behaviors. But the profit incentive must be encased in relationships to bring about the desired result of wealth.
Gambling is all about me; capitalism is about us.
Steve Young
A lot of money changes hands in gambling every day around the world. And, a lot on money changes hands every day in securities markets too. Gambling has long been condemned by moralists as a vice but securities markets are key to getting the benefits of economic growth and higher standards of living.
Casinos nourish with care and skill our propensity to fall for "irrational exuberance." In casinos on Native American reservations here in Minnesota I have watched as the room of slot machines empties of patrons as the house wins over and over. Then, suddenly, as if by accident some machine gives forth a big payout. Bells ring, lights go one and off and - patrons rush back into the room to jump on the bandwagon by giving up more coinage.
One casino in Wisconsin advertised that it had the "loosest slots around" - paying back $.97 for every $1.00 wagered. It was a 100% guaranteed losing proposition for customers on average, but the ads worked - people came convinced that they would be the ones to beat the average.
So what drives gambling? Some greed gene in our core personality that drives us on beyond where mature consideration would take us? It is only about the money? I think not. Gambling allows us to think that we might be special, different, lucky, graced with inner advantage. We like, perhaps need, that feeling.
And there is the thrill of risk, of walking on the edge, of life having tension and excitement, of anticipation for the unexpected. "Maybe this time ... Look at me. I'm a daredevil and you're not!" It is a feeling of exuberance, somewhat rational actually, that we enjoy. Gambling is a kind of distraction and entertainment. It's more than the money, its the odds.
Capitalism is different; it is time on task.
Money is to be made in business, to be sure; and for some a desire to have money is a key driver of behaviors. But the profit incentive must be encased in relationships to bring about the desired result of wealth.
Gambling is all about me; capitalism is about us.
Steve Young
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