Exporting Entrepreneurial American Socialism

Let's face it.  For the past 65 years, what has been heralded as entrepreneurship has largely been a concession that raw capitalism does not work without the barely hidden hand of the State.  From its birth in America during the second half of WWII, anti-competitive incentives were deemed necessary to induce scientists, engineers and industrialists to overcome the technological superiority of the Third Reich.  Through the cunning use of excessive profits in military and government procurement (without which the American entrepreneurial milieu would have been still-born), to protectionist concessions to ultra-wealthy investors, to modern revenue shifting and tax base erosion, the world became entranced by the formulaic illusion we marketed under the monikers of Silicon Valley, Research Triangle, Boston, and the like.

The ingredients of that illusion included a variety of schemes including: isolation of ideas behind the protectionist walls we politely call intellectual property; underwriting credit market ignorance with public funds; and, persistently holding 'capital-access summits' in hopes that through sufficient convening, we could overcome our fundamental incapacity towards capital markets adaptation.  But the problem with our incapacity to understand the economics of an innovation-fueled economy has its roots not in Silicon Valley but rather in the manipulations a century ago - the illusion provided by socialized infrastructure and property finance.  There would be no Stanford but for the socialized rail inducements demanded by its namesake from Congress when he concluded that building a railroad across the mountains was difficult.  And by the way, if you think out-sourcing of labor to China is a modern phenomenon, think again.  Much of the dynamite that blasted rail fortunes into the pockets of California industrialists and financiers was laid by, you guessed it, underpaid Chinese.  Laying track was never profitable.  Forcing Congress to grant land and money for each linear foot and degree of grade was.  Thirty year mortgages and thirty year Treasuries are not randomly equal in their duration.  Take a look at the Fed's balance sheet and ask yourself why it's not filled with market assets.  It's because both Treasuries and mortgages on their own didn't work.  With government subsidy, they create the illusion of working… until they don't.

I've been interested in the resurgence of international efforts to use sovereign balance sheets (citizens' monies) to subsidize banks in an attempt to get capital flowing to entrepreneurial ventures.  From the U.S. Small Business Administration to the state banks in China, this idea has been frequently attempted and, to date, has not succeeded.  And the reasons for the systemic failure are quite simple.

1.         The State as underwriter cannot indict its own asset origination.  Whether its negligence on the part of sanctioned credit rating agencies lying about mortgage quality to patent offices issuing fraudulent patents, no state agency to date has evidenced the ability to impose qualitative critique on its own promulgation of 'assets' and therefore has no capacity to measure asset risk.  If one wishes to see innovative small business grow, one has to first insure that innovative isn't a façade for "ignorant of the activities of others."

2.         Most businesses aren't.  The recent proliferation of low- to no-revenue acquisition transactions does not vindicate the notion that a business exists because someone bought it.  If you closely examine the frequently hyped corporate acquisitions, it takes no time to realize that the acquiring companies are providing liquidity for their venture firm benefactors seeking exits - not purchasing accretive assets.  In the end, the common equity shareholder is losing for the excessive gains flowing to the venture partners.  If a market or a country doesn't have this nepotism, it cannot build free market entrepreneurship.  And I'm not suggesting that this be done to reinforce the illusion.

3.         It's customer - not capital - access that's the real problem.  Since the formation of the WTO, the world was supposedly aspiring to the reduction of obstacles to trade.  And it's fair to say that in internet and telecom enabled businesses, this aspiration has been partially achieved.  But for the majority of business, multi-lateral and bi-lateral agreements have been overweight in their favoritism to certain industries while leaving the majority of industry in the cold.  Governments who really want to support entrepreneurship should aspire to being premium customers - not bad underwriting surrogates.

Building a system equivalent to the past 30 years of American entrepreneurial socialism may present a political expediency to short-sighted governments.  But any careful examination will conclude that alternatives may be worth considering.  In a functioning system - operating without State subsidy and taxpayer money - one might observe:

1.         Rights need to be granted for trade use, not for speculation and imagination.  The world receives no benefit for granting proprietary rights to someone who does not practice or intend to practice their innovative ideas in actual output.  Restraint of hypothetical markets or research with hypothetical claims of invention are actually ludicrous. 

2.         Connecting innovation to existing impulses with existing production, sales, distribution, and infrastructure is far more accretive than forming redundant companies with redundant capabilities.  This means that the focus of the public sector is on facilitating communication - not mandating public policy through the pocket of the Treasury.

3.         It's still all about the customer.  In a non-interventionist functioning capitalist marketplace, the consumer affirms the value attributed by the producer or servicer rather than having the producer dictate a state-sanctioned monopoly mandated premium.  In short, if the consumer, participant or community seeks to partake in a mediated experience, than the same community attributes the premium they are willing to exchange for what they receive.  Regression to commodity pricing is the perverse extension of market mean reversion which is a legacy of Adam Smith - not a necessity of markets. 

When the public sector underwrites any sector - banking, suppliers or the like - with the public treasury, it must do so with the explicit objective of merely overcoming a short term market failure.  Persistence in such undertakings over an extended period of time should be called what it is: state intermediated socialism for targeted benefit.  Since the GFC, the public has born the expense of this type of intervention without receiving the public good associated therewith.  If we're going to aspire to market interactions, let's call a spade a spade and stop misleading the public with policies that inure to their detriment.

Fifty Years Later - Let 'er Ring

 Public Law 88-352 was enacted 50 years ago this past July.  Over the vigorous objection of Georgia's Democratic Senator Richard Russell who insisted that the Senate "resist to the bitter end any measure or movement which would have a tendency to bring about social equality and intermingling and amalgamation of the races," a majority of House and Senate Republicans passed the Civil Rights Act.  And while this Act marked the beginning of a long march towards equal opportunity to access and employment, it conspicuously failed to contemplate the possibility that the previously disenfranchised could actually strive to transcend the state of their oppressors.  The high water mark in 1964 was to rise to the level of the status quo of the majority white population.

This week, I am deeply honored to stand with a few visionaries who foresee the possibility that We The People step beyond the limitations of "as good as" and work towards an actuality that recognizes that transparency, stewardship and opportunity are, in their perfect implementation color-blind, status-blind, gender-blind.  Fifty one years (just shy by a few days) from Dr. Martin Luther King, Jr.'s dream that his "children will one day live in a nation where they will not be judged by the color of their skin, but by the content of their character," a quiet alliance has assembled to take a remarkable step through the dream and into reality.  Duncan Niederauer, CEO of the New York Stock Exchange Euronext Inc. is hosting the Sustaining Success Summit with PRO2CEO, an organization led by Keith and Kevin Carr.  This S3Summit is bringing together athletes, entertainers, and entrepreneurs on the floor of the NYSE to discuss ways in which economic wealth can effect positive social change. 

Rather than focusing on the economic disasters that frequently attend stories of young athletes and entertainers who find themselves in excessive financial stewardship roles with little to no information on how to manage money, the S3Summit is explicitly highlighting individuals and best practices which show that profligate destruction of economic wealth is neither inevitable nor universal.  With a diverse contribution from individuals who have evidenced the capacity to take their achievements in one domain and transition into impactful positions in many other fields, this gathering proves to be one of the most understated but impactful milestones in reframing expectations and prejudice.

Dreaming and aspiring to a "new" or "different" experience of humanity is a legacy born of a predisposition to futility and hopelessness in far too many expressions.  It's an entirely different undertaking to look at the wealth that one has at hand and align it to achieve an outcome far greater than one could have imagined.  On August 19th, Dr. King, Presidents Kennedy and Johnson and Senator Russell will all have an opportunity to see what none of them could have resolved through the lens of history.  Far from marches for change, change will be ringing the closing bell on the most iconic trading floor in America.

"This will be the day when all of God's children will be able to sing with a new meaning, "My country, 'tis of thee, sweet land of liberty, of thee I sing. Land where my fathers died, land of the pilgrim's pride, from every mountainside, let freedom ring."

And if America is to be a great nation this must become true.

So let freedom ring from the prodigious hilltops of New Hampshire.

Let freedom ring from the mighty mountains of New York.

Let freedom ring from the heightening Alleghenies of Pennsylvania!

Let freedom ring from the snowcapped Rockies of Colorado!

Let freedom ring from the curvaceous slopes of California!

But not only that; let freedom ring from Stone Mountain of Georgia!

Let freedom ring from Lookout Mountain of Tennessee!

Let freedom ring from every hill and molehill of Mississippi. From every mountainside, let freedom ring.

And when this happens, when we allow freedom to ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God's children, black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old Negro spiritual, "Free at last! free at last! thank God Almighty, we are free at last!"

… and Dr. King, let's add to the mountains and hills the floor of the NYSE.  Thanks to the vision of its CEO Duncan Niederauer and Keith and Kevin Carr.

Trust? Me?

Actually, please don't!  Not because I intend you harm.  Not because I seek to mislead or coerce you.  Not because my motives are concealed.  In fact, the reason why I don't seek to be trusted is I have come to find trust entirely untrustworthy.  During three separate meetings within the last seven days, I encountered trust (or the lack thereof) in highly divergent venues and, in each instance, I found it entirely lacking. 

In the first instance, I was spending time with a gentlemen with whom I've been working to gain financial literacy around his capabilities to take responsibility in his investments.  Having recently seen the egregious evidence of a breach of trust at the hands of a celebrated investment advisor, he was conveying his experience of our interactions to others.

"What does David want for helping you?", he was asked by a friend.

"He hasn't asked for anything," was the truthful response.

"Then I wouldn't trust him if I were you," the friend replied.

A corrupt puppet President convinced a Parliament to pass a natural resources bill thoroughly entangling a corporate interest into the very fabric of law.  While denigrating his citizens as incapable of understanding legalese, he called on them to trust their leaders who, failing to read the massive bill, were acting in their best interest.  Dripping with condescension, this former priest administered an odious elixir of corruption as he offered up his land and his citizens to his patrons.

"The problem with what's happening here is that I don't trust you!"

This sentence punctuated an impassioned expression of total exasperation in an exchange within a relationship.  At the culmination of an intense dialogue on divergent experiences of life and perceived reality, the frustration of feeling that there was no shared grounding for expositions between two individuals resulted in the impulse to undermine all preceding exchanges with the blanket declaration of an absence of trust.

Why has trust become an agency of division in our social discourse?  Presented in either form - a declarative punctuation seeking to end further inquiry or objection ("trust me") or an affirmation or rejection of surrogated discernment and judgment ("do/don't trust you") - a central problem with "trust" is that, in its profligacy, it has been encrusted with prima facie evidence of its absence.  Our collective anaphylaxis towards trust is not without ample justification.  Wars, governments, churches, businesses, judges, religions have all appealed to trust (and its incarnate twin 'faith') when open inquiry and transparent disclosure do not serve the occult purpose for which all of these institutions are frequently organized.  Tragically, from a mismanaged billion dollar family office to a coffee table rending of relationship, not only do we eschew trust but we actually often settle into the comfort of known abuse, injury, and predation.

Ironically, often the only thing we seem to trust is our certainty in its manifest absence.  This paradox is fascinating on many levels.  If we receive kindness from a stranger or disproportionate care from an unexpected interaction with an associate, why is our instinct to question what ulterior motive must be present?  Is it possible that knowledge or life stories could be shared for their own sake without an expectation that they must belie an unspoken metaphor or occult meaning?

I wonder if the reason why we mistrust trust is because we despise the subtle hierarchy that so frequently attends its propagation.  The person imploring for trust may be cloaking true intentions and we're pretty sure that this is most likely the case.   By casting aspersions on interpersonal trust, the Agent Orange effect exfoliates every plant laying barren any semblance of verdant fellowship.  And once unleashed, mistrust has a lingering toxicity as, at any moment, it can be used to undermine intent, expression, or character.

We're probably at a state in our social systems where trust needs a to take a sabbatical.  Not that we don't need what it represents in an ideal form but, at present, it's capacity to evoke its antithesis is compelling.

In its place, I ingest and suggest the antidote of explicit manifestation devoid of contemporaneous exchange.  By this I mean developing devotion to service in which a counterparty can experience the evidence of integrity, fidelity, and loyalty without appealing to, or self-critiquing the absence of, trust.  Seldom is this practice more robust than the explicit interaction between people where value is exchanged but no mercantile impulse is denominated.  When the description of the context in which an impulse to exchange arises and explication of the relationship between and among parties is the sole focus of engagement and interaction, confidence - not trust - becomes possible.

What we want when we aspire to trust is most likely the confidence of those within our community or our sphere of influence.  However, community is likely more often harmed then helped when it's asked to set aside exhaustive inquisitiveness or blindly offer benign assent to a petitioner for trust.  Rather than pleading for or imposing a cognitive displacement aspiration in others, it's high time that we recognize the incomparable value of manifest evidence.  And, lest you infer that I'm optimistic, I'm not.  When you do this, it's still common for others to question intentions or incentives.  The difference is that if you recklessly engage in transparent, generative interactions in the world, you leave humanity somewhat more enriched than you found it.  And I trust that a few of you actually boldly enter that world with untrustworthy, integrity-filled abandon. 

If Tomorrow Never Comes

In the past several days, I've been too busy to write a blog post.  "I'll try to get to it tomorrow," I've said as I lay down in bed a night too tired to open up my computer.  Were it not for a late night flight to South Texas tonight, I wouldn't be writing now.  I'd be sleeping.  In my mobile office at 35,000' over somewhere dark the pale glow of my computer screen is beckoning to me and so, game on!

I had the honor of experiencing a four dimensional socioeconomic interaction in the past few days.  I couldn't help but see how much of what we tend to bring to our impulse to enter into enterprise is shaped by tacit perspectives that represent assent to volitional projections of others - sometimes across centuries or millenia.  Allow me to grossly simplify the dimensions for the purpose of elucidating some insight.

We were joined by stewards of North American First Nation, African American, Euro-American, and Asian Fusion heritage.  In our gathering, a number of energies were explicitly manifest in a rather ironic literal sense.  And, to be clear, we were assembled around a few common convergent impulses - the proliferation of meaningful and complete financial and economic literacy, ethical and transparent social impact, and, a shared sense that we could make a difference in the world.  As a participant-observer-orchestrator, I had the curious perspective informed by relationships with each of the assembled while many of them did not have a prior common link.

A couple observations.

There's a quantum difference between reacting to vs. conscripting engagement with perceived opportunity and challenge.  What did seem to define how people engaged in our collaborative weekend was the degree to which people felt capable of marshalling others into their sense of possibility.  When the convening impulse was presented as a response to a crisis or injustice, engagement foundered.  When the convening impulse was presented as an opportunity for an impactful contribution to the effort (not necessarily the outcome), engagement was immediate.  In short, if people were specifically equipped with knowing what they were asked to contribute based on their known capacity, enterprise flowed.  If people were presented with a potentially less consequential "cause", regardless of it's complexity, little emerged at all.  Conscription - the capacity to discern the specific contributions that individuals can make to an undertaking - outperforms conviction that something "should be done."

The currency of abuse is subject to counterfeit.  With modest perception, one can readily see massive social dislocation in each of the heritages represented.  Whether it's dislocation from homelands, dissolution of constructive familial ecosystems, susceptibility to environmental and political capriciousness or any of the myriad of challenges, each of the groups named above have experienced all or most of them.  However, when a perception of injustice or harm to a community with which one affiliates infects the capacity to engage with others, a strange dynamic emerges.  On the surface one could conclude that communities with the apparent longest exposure to persistent oppression should have the greatest sense of reactivity.  The casual reader could imagine, from the list above, the relative sense of reactivity vs. structural engagement represented in the societal classifications I used to describe the gathered above.  But such a projection would be in error.  Explicit first person experience of abuse (a more rational argument for reactivity) did not correlate with reaction vs. thoughtful engagement.  Let's face it: my ancestors who were imprisoned, tortured and, burned at the stake for their religious beliefs in Europe were no less displaced than North American First Nations.  When I hear ethnographers speak of "indigenous" or "aboriginal" knowing from land, sky, and flora and fauna, my heart yearns for the knowledge that was exterminated when my ancestors were driven from their homelands.  Is the remembrance of lost culture more painful than its temporal remote amnesia?  Of course not.  But invoking abuse as a means to alter present or future outcomes is empty.  The pain of separation and loss is a phenomenal opportunity to shun carelessness and expediency in unconsidered neglect today and a resoluteness to avoid repetition of callousness in the future. 

Our myths are broken.  With the aid of time machines travelling in any directional illusion, we'd likely find a distribution of decent people acting decently and a minority of bad actors acting badly.  And, I'd hazard to guess that in each period of any cycle, there'd be a complacent set for whom systems are working fairly well and for whom incumbency preservation is the mandate.  I suspect there'd equally be a large set operating under some imposed (self or other) subjugation for whom "change" would be the prayer.  Idyllic pasts are infused with as much revisionism as prophetic heavens.  And neither exist outside of escapist delusions.  From the Eden and Babel stories of a god that fears the created aspiration of his alleged own creation to the transcendental narcissism of sublimated auto-enlightenment, it's time that we discard the illusion of "creating a better" anything.  Our challenges do not arise from an absolute absence of anything other than our capacity and discipline to perceive and discern.  And when we organize our impulse towards a "better" outcome, it would be pretty helpful to accurately define the condition we seek to leave and the metrics used to discern arrival.  I'm getting dangerously close to a nut allergy around the "change for better" clamoring that I hear.  I'm far more interested in repurposing, co-opting, and inviting the system that is in place to consider its own self-interest in making things work with greater persistence and generative sustainability.

You can't see "diversity".  None of the social descriptors I used to introduce the assembled were effective at describing the life-force stewarded by each individual.  The more explicitly grounded to purpose and productive experience, the more effective the contribution; the more dissociated, the less effective.  And you'll notice that I referred to all the gathered as stewards of heritage.  None of them "were" the labels that can be irresponsibly applied.  The diversity that matters is that derived from assimilated experience and is manifest in receptivity to impulses to and from self and to and from others.  Our phenotypic profile is meaningless if we cannot enlist it to reintroduce our native self in engagement with the collaborating ecosystem.

Today was a great day.  The last several days were amazing and filled with productivity infused with fellowship.  I'm better for it and I trust, in its sharing, you picked up a little taste of what went down in our neighborhood.  But what really hit home was my resolution to live with all I've got now; make an impact; be stunning; be brilliant.  In that way, I'll continue to avoid the procrastinator paradox of piling into tomorrow what I should have engaged today.  Best of all, I'll be working with great people - as I was this weekend - with whom I'll get to celebrate the delicacy of each cumulative moment.

Radically Conformist

I'm not sure which I find more distasteful: the mindless corruption of the dominant socio-economic paradigm that drinks the blood of war to feed its supremacy and energy addiction or the post-modern counter-culture movements which predictably and futilely enter into utopian impulses engaging the utilities of the very systems they revile.  And my generalized contempt is predicated on a simple observation that seems to be neglected in the inertia of conformity as much as it's unconsidered by those who advocate for change.  Namely, the foundation of a system determines what can be built upon it and if you don't consider the foundation, you cannot credibly advocate for anything other than façade alterations.

In its present understanding, our economic system is inextricably an agency of war.  And by this, I don't mean low-grade animosity with occasional flare-ups.  I mean good old fashion murder, rape, pillage and plunder.  As far back as our revisionist modern histories take us, the utility of exchange for commerce has been predicated upon imperial conquest pure and simple.  And conquest - the indenture and enslavement of land and peoples - has never been done without the shedding of blood.  From the point of the spear to the white phosphorus hell fire chemical atrocities in Palestine today, we do not have a social narrative devoid of sociopathic foundations.  Today's Christian church doesn't exist but for the Edict of Milan and the 325 Council of Nicea paid for, and built upon the solidus - a gold coin minted by the converted emperor to control inflation across the empire.  Take away the coin of the realm and we'd still be celebrating Celtic and Norse feasts.  Faith didn't win - the compensated sword did.  We don't have bank notes or reserve banks but for the conflict justified as the purge of the infidels (both sides called each other that despite sharing the same God).  Land, life, and limb were sacrificed upon the altar of war consecrated by the forced tithe of the faithful - in both commodity and currency.  And while one can reasonably argue that the Japanese and Chinese feudal trade societies were not as persistently violent on a macro scale, the violent suppression endemic within social hierarchy had every bit of tyranny as did their European counterparts. 

Broken promises, hollow treaties, and violent extermination and dislocation are etched into the fabric of the great "experiment" known as the United States and Canada.  And, as if our Founders' tyranny wasn't sufficient, now that we know that the appalling lands that we used to extinguish the cultures who once stewarded the forests and plains are laden with gas and oil, we suddenly now covet the very cursed land to which we condemned these communities and use monetary slight of hand to rob the dispossessed with reckless abandon. 

Recently, several groups have asserted monetary sovereignty based on treaty obligations - many times using International Bills of Exchange or IBOEs - as an alleged basis for alternative monetary power.  Claiming compensation for things as varied as energy and mineral rights to one of the more obscure - compensation for keepers of British Crown lighthouses - those who have been marginalized now seek redress calling for accountability from and recognition by the very powers that enslaved and murdered them.  And countless "alternative" society impulses from the Pacific to Atlantic find themselves lured to contemplate their capacity to become powerful through their enlightened use of these artifacts of war crimes. 

Just to be clear - the U.S., Canada, and the U.K. - never intended to keep promises made to the stewards of the lands they stole anymore than the Catholic Church intended to "save" those cultures who happened to live on gold and silver mines.  The justification for murderous theft is no different today than it was 600 years ago and we still use the coin of the realm to seduce and deprive those who steward what our current system cannot otherwise afford.  An IBOE today is worth the same as the treaty that was first broken at its duplicitous construction.  Expecting accountability from treachery is a fool's errand.

Thoughtful construction of an economic system necessitates a considered discipline that accompanies few social transformation endeavors throughout human history.  There are a few general observations that I've made that may be worth contemplation if we really want to see a More Perfect Union.

1.         Stewards of commodities have been - throughout the whole of modern history - enslaved and impoverished.  Any system that seeks to align humanity with economics must integrate the world of the steward with the world of the consumer such that anonymity of supply chains is explicitly confronted and extinguished.  "Value add" must be transcended by "Values Persisted" in which the wisdom of the land, its peoples, and their values must be explicitly communicated to all subsequent users of commodities. 

2.         Consumption to extinction must be transcended to embrace utilitarian engagement in which our systems don't cul-de-sac in linear supply chains but persist in respiratory pulses.  Is the CO2 you exhale more or less important than the O2 you inhale?  The question is answered by whether you're a tree or a person.  And really the question is answered in the recognition that neither photosynthesis nor phosphorylation can claim preeminence over each other.  Both are woven into a delicate dance of perpetual, generative, motion.

3.         Promissories are only as relevant as the knowledge of the counter-parties of each other.  The average person has no more knowledge of the birth, persistence, or death of currency than they understand quantum physics.  While it is used with profligate abandon, it is not comprehended.  A meaningful economic transformation would involve making and keeping productivity-linked promises where bills of exchange would be for knowable and known goods and services provided by persons of repute and confidence. 

4.         Wealth would be defined by the capacity to access the flow of value across networks rather than the capacity to store and horde. 

If We The People aspire to a system that works for humanity and not for the selective few, it'll take emancipation from the manacles we place on ourselves forged from the utility of war, tyranny, and imperialist expropriation.  If we don't take this first step, we're just conforming to the timeless, futile reflex that has left us precisely where we are.   

In regione caecorum rex est luscus

I admit it.  This week my ego received a terrible blow.  As is always the case, such wounds are self-inflicted  because the perception of injury can only arise from the a priori notion that one is defined, in part,  by some externality (like the perceptions of others).  I was on a call with a colleague who wanted me to speak with an investment professional because, "you have so much in common."  This colleague has recently seen me as an advisor and has extolled my insight to others as someone "worth listening to."

To say that I shared nothing in common with the person with whom I was introduced would not be appropriate.  As we both have lived in the world of capital markets for much of our professional endeavors, we share a common lexicon.  Words and phrases between us justify the perception that we are similar or "alike".  However, in a few short minutes, I heard this individual promoting investment advice and behavior so entirely antithetical to my values that, for a moment, I was at a loss to know what to do.  Do I create an awkward situation for my colleague and abruptly point out that the dissonance is too great?  Do I accommodate the investment advisor's predatory arrogance and ignore the depth of moral depravity that I'm hearing?  Do I sit and say nothing?

For those of you who know me, you know that the third option doesn't stand a chance.  If I sit and say nothing, someone should check my pulse because I've probably sublimated into pure light and a corpse is all that's left to show for me.  The second possibility is problematic as I'm increasingly concerned with the error in accommodation when the fullness of a message, once delivered, can be assimilated by its audience as a plausible hypothesis - not on its merits but rather because of the contextual unfamiliarity of the hearer.  And, regrettably, the first option affords neither my friend nor his acquaintance the level of respect and decorum with which I choose to enter into communication.  And, seeing no good option, I proceeded to take an introspective view of the situation and there, staring me in the face, was the real paradox.  I am being judged to have valuable insight and experience by a person who does not have the foundation from which to discern the value, or lack thereof, of what I've got to say.  The evidence is in the simile.

It is disheartening to experience the uniform obsession people have with economics on a personal or macro scale when one sees the abject ignorance of the systems upon which economics stand.  Our willingness to allow intercessors to stand between us and our money is only rivaled by our cultural acceptance of consensus illusions about accessing the divine; and then, not by much.  And just because a person uses the same language in no way suggests that they share common values, motivations, or perceptions.  Whether you are an individual investing in a 401(k) - the great tax-deferred illusion that has seduced millions - or a wealth manager or family office; my trouble with 'advisors' is their predictable reflex to view 'safety' and 'risk management' (often pitched as "being conservative") as a justification for herd behavior.  The problem with this is two-fold.  First, herds by definition mean revert.  By this I mean that they collectively act, for the most part, together.  That's kind of the point.  But my bigger objection is that herds attract predators.  And predators have evolved to attack the weak, the young, the desperate, or the feeble.  If you wonder why your investment portfolio is not doing as well as the market, I've got news for you.  It is!  The problem is that you're market exposure is passing through the sticky hands of 'managers' and 'advisors' and they're collecting the return that your money is making.

I recently watched an amazing Planet Earth special on a few lion prides and their hunting behaviors around a watering hole in Africa.  Wildebeest after lumbering wildebeest fell prey to the hungry lions and their training cubs.  Gazelles and other small deer got blind sided by giant paws and teeth as they innocently bent to quench their thirst.  And all the while the monkeys were going nuts trying to scream and warn their quadruped neighbors to look out because there were lions.  The monkeys - none of whom got eaten - provided ample warning and the wildebeests and gazelles grazed on. 

What I realized this week is that I've failed to communicate my true financial insights adequately because I'm too often associated with the pride of predators.  Just because someone has a particular ethnicity, attends the right church, mosque or synagogue, or shows up in a gathering of 'enlightened', and uses the same words I use does not mean that they share my principles and values.

My values are simply articulated (and differentiated):

1.  Value exchange should be linked to productivity and mutual benefit.  Monetary returns that are solely based on manipulations of a market at a micro- or macro level are parasitic and predatory.

2.  Transactions must be done in full transparency when both parties confirm equivalent understanding.  If I'm taking benefit from you based on an incomplete set of information or because I know something that you don't know, that's unethical and unacceptable.

3.  Investments and returns must be understood before they're deployed or redeemed.  If you don't know the reason why there's a gain or loss, it's best not to place the assets you steward into that financial product or venture.

4.  Investment returns must have a basis in real transactions.  Value can be ephemeral but returns should be objective.  When these lines get blurred, someone loses. 

5.  Duration of investment and expected return should be defined and understood.  Nothing grows perpetually.  Nothing operates in perfect linearity.  This is to say that pulses and cycles must be understood so that expectations are appropriately set.

6.  Investing with ethical awareness up front obviates the need for 'charity' and other money-laundering exercises to buy back conscience later.  You can't ring the blood of the miners out of gold no matter how many NGOs receive your generous contributions to end slavery and abuse.  If you're ignorant or morally apathetic with your investment now, there's no "better you" or "better use" that can justify your greed-fueled neglect today.

There's so many more places to go with this but the moral to my story is simple.  I'm not an advisor and I'm going to be more cautious about how I'm promoted by others.  This is, to quote the title of this post - the domain of the blind - and we don't need more kings!  We need to heal the disease that has robbed the land of sight.  The 16th century Erasmus of Rotterdam diagnosed the social disease correctly - he just didn't offer a clear alternative.  But, maybe he was a Cyclops… who knows?

Too Bad to Be False

Let's say that I'm driving through Chicago late at night and I'm stopped at a traffic light.  A guy steps up to the side of my car, taps on the window and I look to see him pointing a Glock 9mm straight at my head.  He calmly tells me to get out of the car.  Looking around, I see two or three other shadowy figures each with guns drawn and I realize that stepping out is a risky proposition but staying in the car seems unlikely to end well either.  I step out of the car leaving behind my wallet with all my credit cards, my money, and my phone.  In a flash, the guys jump into the car and speed off into the night.  Only then do I look across the street and see a person slumped in the doorway of a convenience store.  He's bleeding but not fatally wounded.  At once I know that I've just provided armed robbers a getaway car and, in all likelihood they'll rob again. 

Pause.  Got the scene?

Let's say that I'm at a country club in Raleigh, NC.  I'm a basketball player with about $20 million in compensation and endorsements.  I've been invited to lunch with a wealth manager who I'm interviewing to be responsible for my investments.  "You really want to protect your hard earned wealth," one of the advisors says, "and we know that you're a responsible, conservative guy.  We think that you should probably put about 30% of your portfolio into fixed income, 25% in growth equities, 15% in value equities, 15% in real estate and the rest we'll put in a cash management account for you."  I don't know the difference between general revenue bonds, corporate high yield, short-term sovereigns.  While I eat my chicken Caesar salad, they don't stop and explain how they came up with the assets or proportional allocations other than to say that the last 5 guys they've worked with have done the same thing.  I wouldn't know the difference between "growth" or "value" anymore than these guys could dunk.  They've got a glossy brochure emblazoned with a logo of a bank that everyone knows.  And at the end of lunch, they tell me that they'll only charge 20 basis points to manage my money.  I've never heard the term 'basis points' but they explain that I'll be charged a fee for them insuring that my money is well-managed.  Sounds fair. 

What's the difference between the Glock and the Glossy?  The perps in the first story got away with $40,000.  The perps in the second story got away $400,000.  Both were opportunistic predators.  Both used fear and ignorance in a strange environment to destabilize good judgment.  Both will go on to rob again.

I met with a number of professional athletes this weekend.  We were engaging in an important conversation regarding financial literacy.  Like the work I do in community education in mining and energy extractive resource regions of the world, I have come to realize that the status quo economic system is incapable of acting in the absence of predation on fear and ignorance.  The wealth advisor in the second scenario and the armed robber in the first are indistinguishable save their - you guessed it - socio-economic status and selection of weapons.  But don't think for a minute that there's one shred of difference in the animating impulse between the two. 

Quick check: what's in your head?  Do you know the clothing each character is wearing?  Do you know their skin color?  Do you know the sound of their voice?  Do you know the scene and who else is around?  Why does this matter?  Just to be clear, the same thieves in the second story pull off the exact same heist with a few of the billionaires I know and it robs the billionaires of tens of millions of dollars that they're told is just the way the fickle market works. 

Now, here comes the tragic part.  We'd probably agree that in the first instance, I wouldn't track down the robbers, give them my cell phone, and tell them that I'm about to come into another few million bucks and that they should call again after I sign my next contract.  The truth is that in the second story - the real one - the player actually receives e-mails loaded with financial terms and jargon rife with phrases like, "you should feel good about how your portfolio is doing."  Once a quarter he gets a statement with pages upon pages of stocks, CUSIP numbers, and monetary amounts with gains and losses blurring down each page.  He's never been told that a geographic overweight to munis is not wise.  He's never been told what a benchmark to the MSCI Global means.  And in the few instances where new opportunities are presented, he's advised that investing in deals outside the careful management selection done by the manager's firm is "too risky" to consider. 

Deepening the tragedy, the fact that every other player in the league - well at least the ones who aren't just blowing their money on cars, women, luxury, and general hedonism - is basically working with the same advisors means that being exposed to the evidence of the theft triggers a remarkable and devastating reaction.  "I should probably set up a call with my investment advisor and see why they're doing this," is a frequent response.  That's right.  Call the thief and see if he'll confess to his crime!  Seriously?!

On more than one occasion I found out that being the bearer of facts and knowledge - both of which could actually emancipate individuals from their predators - is met with skepticism and mistrust.  "You're not asking for anything for this information," I was told with incredulity.  And here comes the kicker.  By the way - this is the reason why this post is a partial response to my dear friends and colleagues in the commercial spirituality and self-help business who are struggling with the monetary exchanges that make them feel uncomfortable and unsavory.  My life choices have been simple (albeit misunderstood). 

1.         If someone or a group of people is being harmed (or is inflicting self-harm), my intervention is not predicated upon a transaction for money.  I have not, nor do I ever intend to profit from interrupting the evil inflicted upon any person or group.  My reasoning is simple.  If you're engaging in a time of real or implied danger, expecting a counterparty to act in a fully informed fashion is impractical if not impossible.  Rational actors don't stay rational when they're in crisis.  I recall the evil of a church group I knew that agreed to build homes for victims of Hurricane Mitch in Honduras only for those who "accepted the Lord."  Blackmailing people into behavior with their own survival is consummate evil.  Charging admission to well-being and wholesome engagement is unjustifiable.

2.         I will not demand value before evidencing the ability to deliver it.  I've seldom encountered a situation in which I cannot provide something: knowledge, experience, resources, connections, etc.  When I choose to engage, I want to know that the counter-party with whom I'm working is fully informed of the expected outcome before I stipulate a value attribution to my involvement.  I can be entirely correct about the quality of an investment, for example, but if my insight cannot be enacted due to a lack of knowledge or an imposed incapacity, that insight is of no value in the impotent environment.

3.         I will not accept any value for investment or compensation unless I know that both the counterparty and I are equally aware of what I propose to do and what the expected outcome should be.  This means that I spend inordinate effort to educate those with whom I engage to make sure that I'm not running the risk of pulling the wool over someone's eyes.  In many instances, this means that I educate a person or group only to find out that they've elected to work with others - at times even expropriating what I've shared to my ultimate economic detriment.  That is a far more acceptable risk than being the perpetrator of abuses of information asymmetry. 

These three simple precepts are directly responsible for my success in my endeavors.  And, for the record, this means that much of my wealth comes in forms not denominated in monetary units.  In fact, it is my desire to never have my net worth more than 16.7% in monetary terms.  (For those of you who are puzzled here, read about Integral Accounting).  At the same time, living by these principles means that most people will chose to discount this alternative and embrace abuse through ignorance, fear, and scarcity because it's a more "understandable" path.

And it's this last point that leads to the title of this piece.  I've been accused of offering investments, corporate models, personal insights, and compassionate engagement that is "too good to be true."  It saddens me every time I see people experience kindness and generosity and then imagine that it must be coming with an ulterior motive leading to its derision and rejection.  This pain has attended most of my life and has been part of many relationships.  But I'll gladly wear this cloak rather than acquiescing to the tyranny of using my intellect, access, and experience to become another predator.  Whether it's a wealth manager in North Carolina, a thug with a Glock, a mining company corrupting governments to misappropriate mineral rights - they're all using the exact same modus operandi.  And until some of us step up to the plate and offer an alternative - equivalently accessed by ANYONE - we're guilty of complacency or complicity.  And both of those are too bad to be false.