Tempest in a Tea Party Pot

Lois Lerner probably told the truth when she said, "I have not broken any laws," but she probably was suffering from truth amnesia when she said, "I have not done anything wrong," when she was hauled before Congress.  At least truth arbiter and multi-millionaire U.S. Representative Darrell Issa (R-CA) was pretty sure that she improperly used the Fifth Amendment invocation to dodge questions about the Tea Party targeting scandal brewing over at the IRS.  When you've got a Congressman with over $400 million and a rap sheet (what is it with him and cars anyway?) it is not surprising that his public consternation has some tiny glitches when you find out that he "approximately" knew about the Treasury Inspector General inquiries on these matters in 2012.  Lois and Darrell have probably steeped a couple minutes too few in the tepid integrity waters to make either one much of a model for Oversight and Reform.

The IRS behavior of selectively targeting non-profit supplicants is wrong.  On a scale of 1 to irreparable harm to the nation, this indiscretion pales in light some other more egregious targeting:  execution without trial (Obama's drone wars), Darrell Issa's beloved Cyber Intelligence Sharing and Protection Act (or CISPA) which allows the government to capriciously monitor individual internet browsing behavior, and Apple's legal base erosion and profit shifting.  In a week where there were genuine threats to citizens' rights and sovereignty, government was focused on conspicuous reviews of non-profits?  When you read CISPA and the amendments it makes to the National Security Act of 1947 and several of Issa's other legislative hallmarks, you'd probably want to launch an investigation into Oversight and Reform's own Issa for concerns far greater than the appropriateness of the use of the 5th Amendment - specifically Amendments 1, 4, 6, 7, 10, 16 and the list goes on.

Tax exemption as an inducement to social engagement and provisioning is an anachronism.  Covert operation financing - who can forget those wonderful charities that Reagan used to insure that Iranian arms dealers and South American drug lords helped secure his election? - would be greatly impeded if we actually eliminated these rackets as would countless other organizations.  Could we run a democracy without the billions in electoral charity?  When Andrew Carnegie published "The Gospel of Wealth", he argued that a wealthy person's "surplus funds" should be administered for beneficial community results.  Clearly that same wealthy person's "surplus" should be augmented with a return of more "surplus", right?

Charity, religion, and education dodged the taxman's bullet in the Wilson-Gorman Tariff Act of 1894 only to be gunned down by the Supreme Court the following year.  Between 1909 and 1918, individuals were given tax deduction benefits for charitable contributions.  In 1936, corporations joined the ranks of beneficiaries.  By the mid 2000s, "charitable organizations" held assets in excess of $2 trillion and reported nearly $1.2 trillion in revenue.  In longitudinal data from 1985-2004, charity growth expanded 107% while GDP grew at a cumulative 58%.

I'm sure some of you are already getting upset about the fact that I'm bashing your favorite charity or organization.  Chill out!  I'm not.  What I am bashing is the century-old illusion that you'd become a miserly Scrooge if you weren't bribed into provisioning said institution.  The Tea Party - that rage against government tempest - is upset that big government isn't subsidizing its rage against government!  Seriously?  Why didn’t the Tea Party actually make a point and, rather than seeking subsidy use the tax-exemption social engineering as a means of highlighting the irrationality of the tax code?  My guess - because they like the parts of government that benefit their interests and rail against those that don't.  Sounds pretty darn principled to me, doesn't it?

Darrell, Lois and Tax Eluder-In-Chief Tim Cook are all the latest cartoon characters in the faded celluloid story of a system that is only money deep.  In a world in which we surrogate all our values and activities through the monochromatic filter of money, both the collectors and evaders are equally dimensionless.  Tax exemption injustice claimed by the Tea Party is disingenuous if they really stand on principles.  Public-service-for-sale and systematic erosions of civility for the monetary benefit of the influence peddlers is a debate worth having.  But we're no closer to that this week than we were last.  And we won't stand a chance of getting the bigger conversation going until we realize that we need to provision our shared objectives with values of time, effort, labor, knowledge, engagement, networks, collaboration, innovation, and effusive participation rather than prostituting the same in the brothel of money. 

Would you like one lump or two? 

Ode to Oligarchs

Conspicuously absent from RT''s coverage of Federal Reserve Board of Governors member Sarah Bloom Raskin's speech to the Society of Government Economists and the National Economists Club was the equivalent data on the asymmetric wealth distribution of the oligarchs of Russia since 2009.  While one can cavalierly dismiss this absence as propaganda, such a response would reveal an imperviousness to the real strain in our social fabric.  In their report on the uneven American economic "recovery" from 2009-2011, the Pew Research Center reported that the mean net worth of the most wealthy 7% rose $697,651 or 28% while the lowest 93% saw their mean net worth decline $6,079 or -4%.  Eight million households with nearly 3/4 million more asset value and 111 million households with $6,000 less asset value - a disparity that is growing in 2013.  Now 2/3s of the denominated wealth of America is in the hands of 7% of the population.  Sarah and the Russians both saw fit to point out that this disparity has short term social consequences and long term fundamental economic consequences.

Before we dive into this information any further, let's put it in context.  America - that great capitalist experiment currently is precisely in the middle of the income disparity statistics for the world's 180 measured countries.  The "richest 10%" have nearly 16 times more than the "poorest 10%" according to the UN's data.  Scandinavia and Eastern Europe lead the world in parity while several African and South American nations enjoy the most egregious dispersions.  Reagan's rhetorical boast of America as, "that God-given place between two oceans… a shining house on the hill," appears to be more aptly described as the working class suburb invested equally  with fast-food joints,  bars,  Wal-Marts, strip clubs and Bible churches.  When "God" gave this place, he obviously had pre-ordained contempt for those who were the previous stewards - groups like the Lakota Nation surviving at Pine Ridge where the per capita income is the decline in net worth for the bottom 93% in the Pew data.  That's right, the Lakota earn what the bottom 93% lost in the "recovery".  In America, our heritage keepers die five times faster at birth and die twice as fast in adulthood all the while being forgotten by a world that entombed them in Franklin D. Roosevelt's Indian Reorganization Act.

Board member Raskin's speech is worth heeding as a vital commentary on the self-evidence of the fraud that is the much heralded "recovery".  The fact that Russian TV found it noteworthy is fascinating in that their treatment of her speech is actually quite reasoned and absent the "I-told-you-so" diatribes of an ideological past.  What's deeply alarming is that, apart from the Russian media, only the Federal Reserve's own site provided much coverage of her speech.  While everyone piled onto Ben Bernanke's effervescence on the innovation economy - the very economy that his banking policy has entirely neglected - no one seemed to hear the oracle that is Sarah Bloom Raskin.  The lonely Reuters report addressed her dissonance on the consensus sunny outlook but missed the moral implications of her address altogether.

Poverty.  I'm fascinated by our inoculation against speaking about inequality and injustice - about Pine Ridge and human trafficking to support Wal-Mart's Everyday Low Prices.  But what I find even more fascinating is the degree to which our society seems to be incapable of recognizing that monetary metrics miss the unraveling at our society's core.  The Pew data showed that most of the asset growth among the wealthy was not in activities that build the future - infrastructure, glorious architecture that once graced all with aesthetic beauty, or community spaces.  Rather it was in speculative trading bouyed by aggressive fiscal intervention and tax manipulations design explicitly for the effect they achieved - the largest wealth dislocation in modern times.  And while the EU finance ministers are responding to the base erosion and profit shifting imbalances that have fostered tax shelter booms, this week Tim Cook will assiduously circumvent Congressional contempt and blame tax policy for Apple's $100 billion tax evasion rather than taking moral leadership in reforming the legacy of Steve Jobs' profit obfuscation for egoic immortalization.   Who is poor?  Apple sycophants or Pine Ridge diabetics?  Tragically, both!

Poverty is a symptom of a more consequential disease.  Its absolute manifestation arises from an inflection in the human condition where individual future uncertainty and fear exceeds the impulse for network resilience.  The moment I decide that my hording for my uncertain future is more important than creating well trafficked exchanges of mutual value, I unleash the conditions for poverty to manifest.  Wealth is not measured in absolute assets.  Rather it is measured in the capacity to engage in value exchanges with reliability.  Sure, at times the hedge fund manager or venture capitalist who has amassed great monetary resources may be seen as "wealthy" but his or her true wealth is not in asset command but in transactional stewardship.  Equally, the poetic homeless magician who has the audacity to interrupt my walk on Charlottesville's Downtown Mall with an apparently random Tarot card "reading" winds up closing a circuit in my brain that unleashes a whole new venture - a venture worthy of venture capitalists!  Whenever we close ourselves off - whether through the illusion of abundance or want - we are impoverished.  Whenever we engage the resources we steward to build network resilience and value exchange - we unleash wealth.

Thank you Sarah Bloom Raskin and Pew Research Center for reminding us to care about the growing unraveling.   I trust that each of you readers share this with your networks and see if we can get a conversation growing that celebrates the value of transacting value so that We the People can regain a humanity that can illuminate a more suitable future.

Capital Complicity

G-7 leaders met this week to discuss tax evasion and currency manipulation.  Well, not really but I'm simplifying for those who didn't read the statements.  The former being an essential element in the illusory "recovery" of U.S. equities with countless U.S. corporations off-shoring their profits only to drip them back home in the form of dividends and corporate debt leverage basis.  The latter serving as the latest evidence of sanctioned collusion - currently a stimulation of last resort for the flagging Japanese Yen and Japanese corporations.  Against the backdrop of criminal conspiratorial allegations on LIBOR and CDS, I find it somewhat ironic that, as long as you meet in public to discuss inappropriate acts they cease to have their legal or moral consequence.  

Noteworthy, I think, that the finance ministers met in Aylesbury just outside of London.  During the English Civil War, Aylesbury served as a center for the Parliamentarians who sought to end the tyranny of a monarchy that was, in the best of days, oppressive and on the worst of days psychopathic.  Paradoxically, our modern metaphor for Charles I happens to be the tiny clutch of men who, armed with their divine right of economist acclaim, ignore the evidence of the futility of their outmoded models and, with patronizing contempt, steer the global economy into deeper ruin.

I am sympathetic to the struggle of the Japanese government and the businesses it seeks to support.  In the late 1990s, Japan's excessive consumption and opaque accountability triggered an economic collapse for which neither policy manipulation nor social reform has constructed an escape-hatch.  The Yen's further collapse will not aid in structural and social reform.  The G-7's willingness to go along with Bank of Japan Governor Haruhiko Kuroda's intervention is not because it's a good idea.  It's because those who are not already executing the same strategy want to know that they're complicity gives them a pass when they implement the same manipulation.  Kuroda's allegation that his intervention is to hit inflation targets by 2015 and not an attempt to "artificially help exporters" is a flagrant assault on integrity.

Base erosion, profit-shifting, currency manipulation and the like are all modern tools of accountability deferral.  The skullduggery in the legendary halls of William the Conqueror are no more beneficial today than they were nearly 950 years ago.  Tragically, while we go about our Hallmark-sponsored celebrations of matriarchal care, the very household stewardship we celebrate is being held in contempt.  This is hardly a surprise. 

Canada's Jim Flaherty is a career politician save his short stint as a lawyer specializing in personal injury cases.  France's Pierre Moscovici is a bureaucrat raised by a psychologist father and psychoanalyst mother who has no entrepreneurial credential.  Germany's accountancy tax lawyer turned minister Wolfgang Schäuble has a career that includes a little ethical hiccup when he resigned his post as Chairman of the Christian Democratic Union courtesy of a dubious donation from an arms dealer.  Italy's Frabrizio Saccomanni actually ran a bank (Italy's) for a considerable part of his career.  Japan's Tarō Asō worked in the Sierra Leone diamond mining business before becoming a politician.  The U.K.'s George Osborne pursued journalism and social research prior to entering politics.  United States Secretary of the Treasury Jack Lew studied the law and entered the political arena from the start and had that little stint at Citigroup where he invested in… uh oh, that little housing bet.  Oh, and did I mention that he also helped oversee the tax advantaged (avoiding) subsidiaries of Citi.  Nothing like experience to highlight how much profit-shifting and base erosion harms an economy. 

When you examine the biographies of those who are architects for the global economic reformation, it's little wonder that we're in pickle that besets us.  Like the Heads of State that appoint them, the G-7 ministers have not actually executed the strategies they believe to be efficacious.  They have accepted the dogma dished out by their affiliated Central Bankers who are not surprisingly interested in their member bank profits first and economic collateral implications remotely second.  It is amusing to see that the "Free Market Capitalist" doctrine is entirely based on central planning with socialist justification!  Amusing if it weren't so destructive.

Productive economic policies do not, at their foundation, start with currency manipulation and rate compression on bonds.  They start with an understanding of the enterprise mandate - to create and transact goods and services that have sufficient perceived value that producers and consumers will agree to their exchange.  Counter-productive regimes focus on the capital flow first and then seek to impose capital advantage to centrally-planned incumbencies.  Japan's present failure is not a capital failure and cannot be solved with capital intervention.  

I remember my early business interactions in Japan with remarkable alacrity.  I was a young business executive and found that my ideas - while accepted as prudent and productive - were constantly held to a critical review by 'experts' who themselves had never conceived of my approaches and had no competence upon which they could opine.  A few courageous firms in Tokyo finally realized that convention would smother them and they opted for innovative alternatives.  They were in the minority.  As the success of my endeavors manifested, my business expanded.  However, at no time did I ever experience decision makers who could react at the speed of the global market.  Defaulting to the 'safe' consensus is accepted.  Self-evident innovation is questioned and seldom reflexive.  In a Moore's Law world, the Meiji deliberative method is a friction that stymies adaptation.  Fixing inflation doesn't address that problem. 

While Japan got the spotlight this week, it's hardly the lead invalid with misdiagnosed maladies being treated with charlatan cures.  The ward is filled with ventilated comas.  Housing sales do not indicate economic growth - they indicate investors seeking to find 'safe' places to park money in a market where risk-free sovereigns are an oxymoron.  Employment statistics still do not reflect that actual employable base and still fail to demonstrate what economists predicted QE3 would deliver.  When William the Conqueror landed in England, he reportedly picked up sand and as it slipped through his fingers said, "See I grasp England in my hand."  Nearly a thousand years later, the G-7 ministers equally mired in the sodden muck held the elusive in their hands.  Unlike William, their solidarity to be complicit with one another so that none are held to account will earn them little quarter in march of history.  Emancipated from the divine right of arrogance, We the People need to build what our architects have never seen - productive, engaging enterprises worthy of transaction and accretion of value.

Fulcrumage

It's time to throw some Greek philosophers under the metaphoric bus.  More apropos would be some exotic form of Spartan chariot but those are hard to come by these days.  My speech on Friday at TEDx DelrayBeach highlighted the paradoxical conflict of the cognitive duality that we inherited from guys in togas.  Not surprisingly for TEDx, there were references to the social evolution that we're supposed to celebrate as we transcend the analog age for an ascent into the digital.  Digital?  Have we drunk so much hemlock as a society that we actually think that binary code is the best descriptor of the universe, of knowledge, of communication, of truth?  Are we really so blind that we think that the cosmos can be plumbed using a series of on-off impulses on a chip?  Is there any part of reality that we've ever experienced that actually shows up as binary?

In part, I blame Archimedes' flippant "Give me a lever and a place to stand and I will move the Earth," for our duality fixation.  He was probably inspired by the Egyptians or the Hittites who celebrated the idea of balance as a binary ideal and merely framed a inspirational poster cliché long before inspiration or posters packed self-help seeking conferences.  The 19th century woodcut that shows the 17th century clad Archimedes with a knee on a plank moving a globe is probably a good idea as you'd see a little too much Grecian virility if he was pictured in a toga in the same pose.

Duality - good vs. bad, rich vs. poor, educated vs. ignorant, sacred vs. profane - is the progenitor of our consensus observational framework.  From this myopic space we gather and celebrate "heroes" who "move the world" and hear motivational speakers "cracking the code" on "empowerment".  The bigger the "problem", the more magnificent the "solution".  From the existential bribe transacted by religion - be good and bathe in riches, fluffy bunnies, and effervescent light; be bad and roast on a pointy spit over a smoldering fire - to the post-modern Why Bad Things Happen to Good People, the pervasive nature of duality serves as the opiate to the masses. 

We like duality because we've been taught to love levers.  Not surprisingly, we've been taught to love levers by those who wield them.  Pass your exams and get a job.  Evidence competency and get promoted.  Good wins.  Bad loses.  O.K., or it least is should work that way, right?  We obsess about duality because we want to know cause and effect.  Our economist alchemists want to stimulate for growth.  Our governments want to decimate liberty so we can be safe.  Not surprisingly, from early education, our mathematical curriculum conditions us to favor duality bluntly indoctrinating the not-so-subtle ideal of equation before we know that we're being drugged.  It starts so simply with arithmetic and before long we're wallowing in regression predicting our own observations with the "scientific method".  Before we know it, we've subordinated experience and perception to the altar of digital models.

The manifestation of our social contagion may be most evidenced in our most celebrated social causes.  Millions "Occupied" Wall Street and called for a return to the nostalgia of 1932-33 Glass-Steagall Act paying no attention to the fact that it was default products traded in Chicago that were eviscerating the economy and transferring trillions of dollars from the public to a select few highwaymen.  Oh, and by the way Occupites, well done.  Your call to reinvigorate the powers of the Federal Reserve - yes that's precisely what your calls to bring back Glass-Steagall actually meant if you read the law you celebrated - were heeded and, since your protests, the Fed has expanded nearly 3 times!  Well done there!  Millions pushing on a lever to move an obstacle only to find that all their energy actually increased the opacity and momentum of a system they didn't know they were empowering.  Millions of people calling for armed response to genocide in central Africa while letting mining and munitions companies fill their 401(k) portfolios. 

Let's pull off the toga on this duality / digital idol.  Archimedes, like many other teachers and philosophers may have been misquoted.  The story of places to stand and levers moving the world may not be verbatim.  Because Archimedes spent a lot of his time describing geometric complexity too.  And in his defense, I might suggest that the real story he was trying to communicate - the one conveniently erased by those who wanted to pedal the perversion of digital levers - was actually about fulcrum. 

You see, the closer you move the fulcrum to the perceived moveable mass, the less the application of force at the end of the lever.  Yes, that means that to achieve the lever's greatest effect, the fulcrum placement has to get close to the thing it seeks to move.  In short, you can't merely get a wise (or idiotic) crowd massed at end of a lever and accomplish anything other than empowering the lever unless you've first discerned the nature of the mass from up close.  Oh, and moved the fulcrum near it without it knowing!  In a world in which we celebrate loud social calls for action, justice, equality, and the like - all laudable in their own right - if there's not a priori evidence of a discerned fulcrum placement, there's no chance that the desired outcome will succeed.

But better still is the realization that the fulcrum of greatest consequence doesn’t move a digital dynamic at all.  The ideal fulcrum is not external to the desired inertial mass requiring change but actually slightly off the center of gravity within the very behemoth.  You see, the most consequential transformation of intractable incumbent inertia comes  when you introduce a wobble within the spinning mass.  First imperceptibly and then with growing effect, a wobble harnesses the very system in need of transformation and uses its own mass and inertia to actually undo its thoughtless motion.  In near effortless consequence, the mass, now subtly imbalanced tips itself.

Rather than protesting the bad and celebrating the good, let's consider discerning objects in motion.  Then let's consider how we might embed ourselves and our ideas within the systems we seek to modify, change, transform, enhance, or destroy and from within use the existing inertia and mass to achieve the desired consequence.  That means that you have to understand the system, assimilate that which allows you access to the interior, and perceive the momentum throughout.  Having thus discerned the system, you then become the anonymous wobble agent - the ultimate fulcrumage - and the system tips itself.  No fingerprints.  No hero.  Just change!