Sorry Is Not Enough

Together with millions of others around the world, I was impressed by the words of Pope Francis when he was visiting Bolivia this past week.  “Many grave sins were committed against the native people of America in the name of God,” he said.  “I humbly ask forgiveness, not only for the offense of the church herself, but also for crimes committed against the native peoples during the so-call conquest of America.”  There can be no question that the Pope’s words were genuine and that the contrition they represent is a breath of fresh air in a world suffocating under the tyranny of colonial models that persist to this day.  However, the Pope’s impulse to apologize is a measure not only of his but also his advisers’ abject failure to end the futile catechism of contrition.  The gold and silver that adorn his churches came at the following cost to the very descendants to whom he apologized.

“The owners of the mines are such tyrants, with no fear of God or Justice… they hang the noble cacique (Inca) by his feet, and seat another one on a llama and whip him.  Others are bound stark naked to the whipping post…” Felipe Guaman Poma de Ayala, 1610

“Every peso coin minted in Potosi has cost the lives of 10 Indians who have died in the depths of the mines.” Fray Antonio de la Calancha, 1638

The genocide of the Andean peoples was not an oversight of the church or the random act of a few psychopaths.  No, the same church offering an apology had a perverse incentive for the genocide.  While the going rate for masses was 4 pesos, the mass for a “high burial” in the Andean mine boom towns was 40 pesos (a discount to 14 pesos was the rate for slaves!).  The church – yes, the one that offered an apology – serves the Sacrament with vessels cast and hammered from the very metal dripping with its complicit blood.  The only blood that’s in the Host is the blood of those very laborers who were forced into slavery and violently killed so the Spanish and Vatican elite could satiate their lust for gold and silver.  The genocide was so complete among the Andean peoples that the god-fearing tyrants had to resort to slaves from Africa to populate the mines because they had run out of Indians!

The Pope’s church currently has capital balances estimated at approximately $7.3 billion in The Institute for the Works of Religion (or the IOR, the name for the Vatican’s reporting bank).  Vatican City has the highest nominal per capita GDP at about $365,796.  Bolivia’s per capita GDP is about $3,000!  The church’s revenue is estimated to be between $800 million and a billion per year.  The IOR reportedly provides “valuable service that can be offered by the Institute to assist the Holy Father in his mission as universal pastor and also aid those institutions and individuals who collaborate with him in his ministry.”  With financial assets giving it over $100 billion of economic power, the IOR under the guidance of Cardinal Santos Abril Y Castello and Ernst von Freyberg have done precious little to evidence their capacity to provide such valuable services that their Communique of 2014 state.

And the same Pope who apologizes for grievous sins of 5 centuries past fails to connect the dots to the current actions being taken by his church in the present day.  This apologizing pontiff takes no account for the coastal plantations across the globe stolen by the church for the economic benefit of its priests which to this day are pumping revenue to foreign shareholders from oil palm, coconut, coffee, cocoa, and countless other crops.  He pays no attention to the priest-turned President John Momis in Bougainville who uses another mine stolen under the same crossed sanction to enrich his own political aspirations at the expense of the local communities who were nearly exterminated in the late 1980s in a bloody genocide.  Gilded alters and golden crosses apparently blind the faithful to their present complicity while giving reflection to those moments in history where the unconsidered acts of “others” are worthy of contemplative contrition.  

Well Pope Francis, the world is waiting for you to actually take a lesson from your namesake and be the transformation that your Encyclicals pronounce. 

Where’s your commission on stolen land repatriation?

Where’s your IOR when it could be offering sukuks and other Shariah compliant investment products to show that the church can no longer hold from the peoples of the Middle East that which it stole a millennium ago?

Where’s your advisory council on charity elimination – the ultimate aspiration of the teachings attributed to Christ?  After all, “The poor will always be with you,” was not a mandate – it was Christ stating the inevitability of callous neglect of humans that even he couldn’t imagine coming to an end. 

And where’s the acceptance of St. Francis’ own teachings about being paid in coin?  For a church that still encourages monetary charity over any other form, one would think that reading St. Francis’ own writings on money – so powerful that even Pope Innocent III was moved to bow and kiss his bare feet – wouldn’t be too far a reach for a Pope taking that name.

Sorry won’t do.  Doing something about inverting the alchemy of religion – the alchemy that turned human blood into shiny gold goblets and crosses – would be truly Christian.   Try that on for size.

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"Risk Free" Advisors

Over the past ten years, I've had intimate exposure to the world of Financial Advisors.  They have ranged from exceptionally good to criminally negligent with the distribution skewed towards the latter.  And the reason for this skew is quite simple - incentives!  While the CFA Institute - based here in Charlottesville Virginia - makes it exceedingly clear in their Standard I-B that integrity must be a core value of their certified professionals, they go to great lengths to discuss the sliding scale of corruption endemic within the profession.  After laying out their apology for the massive number of conflicts of interest, graft, corruption and related problems rampant within the Financial Services industry, they explicitly state that:

"No specific checklist of right and wrong is written into this Standard, but the mere appearance of conflict is a real issue in today's environment and one must be sensitive to perception."

In other words, after clearly identifying the problems associated with "temptation" (their term) and seduction, they go on to say that a professional should be "sensitive to perception."  But here's a problem.  What if the person relying on the advice is not sensitive to the things they should be sensitive to to even form a perception?  What if the client has insufficient knowledge of a product, prospective return, or risk to formulate an opinion?

In my experience from the Private Banks of UBS and Citibank to the private wealth managers that dot premium office parks in cities with adequate golf infrastructure across the country, I can count on one hand the number of CFAs I've met who can really explain what an ISDA determination is, what role ERISA played in credit rating inflation, and asset class correlation and clash risk.  In preparing for becoming an investment advisor and neglecting the actual experience of sovereign, municipal and corporate defaults over the past two decades (including unprecedented intervention in interest rate manipulations), CFAs are still taught to use concepts like "Real Risk-Free Rates", "Expected Inflation", and Liquidity and Default-Risk Premiums.  None of these have been useful in managing the non-recovery recovery in the markets since 2008 yet they are still used.  I've yet to meet a single Financial Advisor who can tell me what the compound risk is when a large cap equity manages its profitability by tax evasion (the official term is revenue shifting and base erosion but who cares?), borrows to pay dividends, and has massive exposure to multiple currency risks.  These real world variables don't show up in the hypothetical case examples in the CFA exam and they don't show up in conversations with clients about where their money is being invested.  And this is outright Negligence.  When you combine this negligence with graft and corruption, you get the distribution of the population I referenced above. 

According to Morningstar 377 out of 1,884 U.S. bond funds hold Puerto Rican bonds - you know the ones that are going bust!.  Does your Financial Advisor include this in his or her "risk-free" portfolio?  These are the "conservative" or "safe" assets that can be wiped out entirely because reality wasn't factored into the perception of "risk-free".

Which brings me to the real point of this post.  The citizens of Greece - for those of you historian buffs out there, the Hellenic bastion which gave rise to the current form of democracy - just voted to reject the EU imposition of austerity standards.  And, try as I might, I was trying to figure out what "austerity" actually meant.  Like my criticism above and having read the ridiculous Greek referendum question, I wondered what the heck the proposals from the  European Commission, the European Central Bank and the International Monetary Fund in the Eurogroup of 25.06.2015 were. So, I read them.  And tragically, since Greek citizens in the majority like Financial Advisor clients in the majority don't read what they're really being asked to consider, they make decisions based on perception rather than on fact.  A "No" vote meant that Greeks reject the principal of "social and financial fairness across society", aligning public finances to "support growth and jobs", and "reform pensions" so that they are actually managed to invest in ways that actually provide a return rather than the system that is run by financial advisors who have not been able to invest with positive performance in the last 6 years! 

And here's the ironic convergence.  Greek bonds have defaulted.  Fire anyone who uses the word "risk-free"!  Your risk free bond portfolio just goose egged and your advisor never told you that when they were hawking their "safe" product.  And to actually bring back some semblance of a chance that the Greek economy could get back on a positive GDP track with rational structural reforms designed to root out incompetence and corruption, the citizens of Greece were told by the media that they were voting for or against "austerity".  Far from it.  They were being asked to consider advice that would root out tax evasion, address public sector corruption, and hold pension investment managers accountable.

So who came up with the word "Austerity" for this vote?  The same people who came up with the nonsensical "Occupy".  When We The People are gullible enough to fall for a catch phrase rather than reading the substance behind the hype we wind up exposing our collective jugulars to the voracious predators who are more than happy to exsanguinate us.  They may be corrupt politicians.  They may be "financial advisors".  They may be priests, activists, or any other predator that hides behind sanctioned purveyance of fear and risk.  And there's the point.  If you are told to do something based on fear or risk of loss, the likelihood is high that you're in the presence of a predator.  You will not flourish.  Your fortunes will not rise.  You will simply be another in the long line of prey from which life is extracted until there is no more and then they'll move on.

In the past few months, I've been honored to work with some amazing people who are manifesting a new investment paradigm with us.  In the architecting of our newest fund, the newly energized partners with whom I'm working were asked, "What are the core principals you want to build into the fund's mandate?"  Their answers were evidence that the alternative is within our reach.

"Our fund should require total transparency of the positions in which it invests."

"Our fund should allocate a portion of its earnings to create scholarships for financial literacy for others."

"Our fund should only accept money from those who commit to their own financial education."

Is there a better way?  Absolutely.  And we're doing it.

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What's Forever For?

So what's the glory in living?

Doesn't anybody ever stay together anymore?

And if love never lasts forever

Tell me what's forever for

Throwing love away and losing their minds… good love is hard to come by…. Rafe VanHoy  penned these lyrics in the late 70s and Michael Martin Murphey launched it onto the top of the Billboard charts in 1982.  I remember painting the inside of our neighbor's stove shop on a cold February morning with my radio blaring Anne Murray's earlier rendition of this song in Ephrata Pennsylvania in 1981.  And the answer to VanHoy's question in 2015 is a resounding, "Not Many!"  Less than half of American households contain a married couple.  In a world where "settling down" was supposed to mark the end of promiscuity and a lifetime of "loving commitment", neither of these are seen as relevant to the majority of Americans.  The Puritanical notion that sex and marriage are inextricable has been vigorously promoted - often by those who themselves live with "guilt" from their own polyamorous physical pasts - as an ideal to which few aspire and even fewer uphold.  According to the Centers for Disease Control and Prevention nearly 1/3 of the entire U.S. population has a sexually transmitted disease so the odds of a health based argument for fidelity is a modern statistical fallacy.  Nearly a third of married men and women in Arkansas, Oklahoma, and California have been married more than twice making the idyllic "lifetime" marriage illusion an anachronism.  In short, the nonsensical "defense of marriage" campaign that alleged an apocalyptic end of days result from this week's Supreme Court decision upholding the 14th Amendment argument of equal protection picked a diaphanous fig leaf to mask their pretense of intolerant fear.

Marriage is now available to all Americans regardless of sexual orientation.  And this is consistent with the spirit and letter of the 14th Amendment.  The Supreme Court decision is not about sex.  This decision is not about morality.  This decision is about the FACT that the Constitution of the United States affords equal protection and, in an effort to legislate morality, financial incentives were created to coerce people into marriage with the cunning cooption and manipulation of the theater of religious endorsement.  When it was passed on July 9, 1868, the 14th Amendment had two objectives: first, to define the principle that people (regardless of origin) were people; and, second, to confirm that the public debts we incur we're obligated to repay.  It's ironic that, this week, we're demonstrating that our efforts to legislate equal treatment of humanity and faith and confidence in keeping the financial promises that we make are as inadequate now as they were in the sunset of the Civil War.  And for those who actually pay attention, the same Bible that is used to argue against homosexuality contains the presumption of slavery, instructions on polygamy, and endorsement of the abusive treatment of those not like the "chosen".  In 1868, plenty of end-of-days prophets railed against the notion that people with different colored skin should be treated as people.  Like this week, the defense of bigotry comes most loudly from those who allegedly take their cues from a man who encouraged tolerance for the other - including bureaucrats, tax collectors and prostitutes!

Behind every smokescreen - particularly when religious fervor is flamed into zealotry - there's usually a substantive issue that is not being discussed.  Why would States be so desperate to keep marriages from happening?  Why would we be more concerned about homosexual lifestyles than Blue on Black murders that seem to be epidemic in their frequency?  Why would self-proclaimed christians feign moral consternation about love and sex while staying silent in the face of state-sanctioned murder perpetrated in defense of "our values"?  I think that the answer is simple.  We The People are predictably manipulated into fearing the other for the economic benefit of a few. 

Who loses economically if gays and lesbians marry?  Well, for starters - taxation authorities.  Tax rates are lower for married couples.  IRA contributions are greater if spouses use each other's earnings for maximum contributions.  Transfers of assets in death are treated differently between spouses.  In short, marriage conveys real economic benefit.  And given that marriage and affluence have been strongly correlated (a correlation that is growing), extending marriage economic benefits to people who chose a homosexual partnership means that a broader swath of the affluent population may diminish tax collections.  Certain employers fear the possibility that they may have to extend benefits to more spouses failing to contemplate that respecting the quality of life of their employees could more than offset in productivity the cost of such benefits.  But chief among the losers are those politicians who have built their power dynasties on preying on "wedge issues" that conveniently divide "conservatives" and "liberals".  With the 14th Amendment losses to abortion and marriage, how is the average Bible belt extremist politician going to get elected?  How are they going to raise money?  How can we expect a democracy to function when we don't have the "other" to fear and hate?

And that's the real economic driver.  Fear and Hate.  We've built economic systems that measure and celebrate Fear.  Tomorrow when the markets take a hit, it will be blamed on Greece.  This is the same Greece who hosted the 2004 Olympics where, in the name of defense from terrorism, a country was forced to pay U.S. defense contractors exorbitant sums of money to "protect the games" while funneling millions to "freedom fighters" who have now turned their guns on their benefactors.  And we enrich our coffers on Hatred.  The U.S. Administration which swore to be the "most transparent" in history has used hatred for Chinese economic influence to craft the most secretive trade agreement in modern times paling against Reagan's economic cold war with Japan in the early 80s.  We haven't built economics based on productive engagement but rather on separation and defense of scarcity.    

Which brings me to the song.  Love lasting forever is and has been seen as an idyllic condition shrouded in make-believe illusions of marriage, patriotism, and religion.  Yet these very institutions in reality have been the bastions of intolerance, fear and hatred.  If we're ever going to answer the question of "forever", we're going to have to see the rainbow not as an emblem of tolerance against the tyranny of hatred but rather for what it actually is - the diffraction of light that allows us to see that it takes all wavelengths to illumine Reality!

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The Longest Father's Day

On this 9th Father's Day coinciding with a Summer's Solstice I have a lot of light hours to reflect on my writing and my friends in the Southern Hemisphere have ample hours of darkness to have nothing better to do than read my blog!  As this is the first Father's Day / Summer Solstice double header since I began writing Inverted Alchemy, I thought I'd use this week to reflect on two topics which converge for me around my father.

For those of you who don't know him, my Dad, Aaron E. Martin, is first and foremost a teacher.  There are few people who have mastered the art of conveying knowledge in such a way as to enthrall students rivaling my Dad's capabilities.  In subjects ranging from the minutia of mathematics to the cosmic grandeur of the boundless celestial expanses in astronomy, my Dad constantly embodied a passion for the transmission of that which is known in a form that placed it in the life of the learner. 

My Dad is the embodiment of generosity.  I don't recall a moment in my life when my Dad's passion and compassion for the well-being of others didn't equal or transcend his own.  When I was young, my three brothers and I shared our home and our Dad with many young men who - as Dad's students - needed shelter, mentorship, or a home away from the massive obstacles that life had placed in their path.  Our "big brothers" ranged from recovering substance abusers to young men from broken homes who never knew in their own life the love of a Dad.  On holidays - I remember most often at Thanksgiving - my Dad would find those who did not have a place to celebrate the holiday and bring them home to the feast that Mom prepared.  In Integral Accounting parlance, my Dad lives on the gnosis ordinate - the dimension of alchemy where knowledge and well-being live in dynamic flow.

These two attributes - passion for teaching and generosity - have infused the lives of my brothers and me.  When Ebola struck West Africa, my brother Dan generously and selflessly jumped at the chance to parlay his work at CDC to join the front lines seeking to eradicate this horrible humanitarian crisis.  My brother Jim has turned his research into the infinitely complex cosmology of the nature of matter, energy and transitional structures at the smallest and subtlest levels expressing the wonder of crystalline order in various states of matter.  My brother Tim rappels out of the ceiling of his Earth Science class to teach middle school students a love for the Earth carrying on Dad's love for the Love of Learning.  In short, my Dad's legacy is very much alive and well animating the generation of men he ushered into the world.

As I reflect on the events of this past week - the Federal Open Market Committee meeting to discuss the economy and interest rates, the massacre of worshippers in Charleston, the Jack Brewer Foundation Impact Investor Conference where I spoke, the torrential rains and parched droughts across the world, and Pope Francis' Encyclical on Climate - I was overwhelmed with the inventory of ideas that I had to reflect on in this week's blog.  And as I mused on these seemingly disparate topics on this Solstice Father's Day, I was fascinated by why these things all seem to perfectly inter-relate in my mind while they seem to be so disconnected in the minds of others.  It wasn't until last night when I was watching the twenty year-old film Powder that it dawned on me why I see connections where others see dissociated particles.

We live in a world where we've mistaken value for that which we denominate (from the Latin roots "to name" and "to set away from").  The FOMC tries to support the illusion of serving a public good - facilitating employment and monetary flows - while it in fact is the sanctioned collusive mechanism to enrich its stakeholders.  While banks are felons for rigging foreign exchange, the Fed has been rigging interest rates for years legally because it acts as its own law by virtue of a century of negligent public abdication.  Racism - one of the most insidious denominations in our culture - is reviled when a young shooter guns down worshippers in a church but is celebrated as patriotism when Muslims are in the scope of a U.S. sniper or drone.  We know that generosity is a value worth celebrating but we parasitically extract energy and matter from the Earth in such reckless abandon as to extinguish from present and future generations that which we view as "physical" or "natural" and therefore subject to our dominion.  Our impulse to name and separate - that which we've mistakenly called education, value, and belief - when it fully metastasizes becomes a cancer that robs our economies, kills the "other", and gouges the earth and belches poison into our skies so that we cannot see the stars that my Dad taught me to love.

My Dad's generous instruction allowed me to see the edges of consensus "knowing".  I often tested the boundaries of this view but, without his involvement, I may never have developed the capacity to breach those mythical limits and become the person that I know I'm here to be.  On this Father's Day and Solstice, I trust that the balance of my days are marked not with the impulse to denominate and separate but rather to embodied the quantum entanglement in which the greatest and least are equivalently served.  This, in the final analysis, is the ultimate acknowledgement of that which my Father entrusted to me. 

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Dueling for Dignity… A Burr-ied Legacy

Happy 800th Birthday Magna Carta... how little we remember thee!

On this Runnymede Eve I thought it would be helpful to reflect on the quality of thought evidenced by the tract written by Secretary of the Treasury Alexander Hamilton in 1791.  When you read this, realize that this was Hamilton's explicit adaptation of the Magna Carta and the Charter of the Forest in which he lays out his view that government should create conditions favorable to, but not interfere with, the commerce of the private sector.  These excerpts are a reminder of the quality of thought that framed the experiment of commerce in trade which now is shrouded by present demagoguery in secrecy and opacity. 

"To endeavor by extraordinary patronage of Government, to accelerate the growth of manufactures, is in fact, to endeavor, by force and art, to transfer the natural current of industry, from a more to less beneficial channel."  As you read this essay, think about substituting "industrial" for "knowledge" economies and ask yourself it we're closer to or further from The Grand (and failed) Experiment.  And when you are finished with this blog post, reflect on how much easier my weekly prose lands in contrast with the likes of Hamilton, Jefferson, and those we celebrate as our greatest continental philosophers!

The expediency of encouraging manufactures in the United States, which was not long since deemed very questionable, appears at this time to be pretty generally admitted.

There still are, nevertheless, respectable patrons of opinions, unfriendly to the encouragement of manufactures. The following are, substantially, the arguments, by which these opinions are defended. "In every country (say those who entertain them) Agriculture is the most beneficial and productive object of human industry. This position, generally, if not universally true, applies with peculiar emphasis to the United States, on account of their immense tracts of fertile territory, uninhabited and unimproved.”  To endeavor by the extraordinary patronage of Government, to accelerate the growth of manufactures, is in fact, to endeavor, by force and art, to transfer the natural current of industry, from a more to a less beneficial channel. Whatever has such a tendency must necessarily be unwise. Indeed it can hardly ever be wise in a government, to attempt to give a direction to the industry of its citizens. This under the quicksighted guidance of private interest, will, if left to itself, infallibly find its own way to the most profitable employment. If contrary to the natural course of things, an unseasonable and premature spring can be given to certain fabrics, by heavy duties, prohibitions, bounties, or by other forced expedients; this will only be to sacrifice the interests of the community to those of particular classes.”

It ought readily to be conceded, that the cultivation of the earth - as the primary and most certain source of national supply - has intrinsically a strong claim to pre-eminence over every other kind of industry.  But, that it has a title to any thing like an exclusive predilection, in any country, ought to be admitted with great caution.  It might be observed that the labour employed in Agriculture is in a great measure periodical and occasional, depending on seasons, liable to various and long intermissions; while that occupied in manufactures is constant and regular, extending through the year.  Manufacturing establishments not only occasion a positive augmentation of the Produce and Revenue of the Society, but they contribute to rendering them greater than they could possibly be, without such establishments. These circumstances are additional employment to classes of the community not ordinarily engaged in the business. The promoting of emigration from foreign Countries; the furnishing greater scope for the diversity of talents and dispositions which discriminate men from each other; the creating in some instances a new, and securing in all, a more certain and steady demand for the surplus produce of the soil.  

The objections to the pursuit of manufactures in the United States, which next present themselves to discussion, represent an impracticality of success, arising from three causes: scarcity of hands, dearness of labor, and want of capital.  With regard to scarcity of hands, the fact itself must be applied with no small qualification to certain parts of the United States. There are large districts, which may be considered as pretty fully peopled.   But there are circumstances that materially diminish every where the effect of a scarcity of hands. These circumstances are - the great use which can be made of women and children - the vast extension given by late improvements to the employment of machines, which substituting the Agency of fire and water, has prodigiously lessened the necessity for manual labor.  As soon as foreign artists shall be made sensible that the state of things here affords a moral certainty of employment and encouragement - competent numbers of European workmen will transplant themselves, effectually to ensure the success of the design.  The supposed want of Capital for the prosecution of manufactures in the United States is the most indefinite of the objections which are usually opposed to it.  The introduction of Banks has a powerful tendency to extend the active Capital of a Country. experience of the Utility of these Institutions is multiplying them in the United States. It is probable that they will be established wherever they can exist with advantage; and wherever, they can be supported, if administered with prudence, they will add new energies to all pecuniary operations.  The aid of foreign Capital may safely, and, with considerable latitude be taken into calculation. Its instrumentality has been long experienced in our external commerce; and it has begun to be felt in various other modes.

There remains to be noticed an objection to the encouragement of manufactures, of a nature different from those which question the probability of success. This is derived from its supposed tendency to give a monopoly of advantages to particular classes at the expense of the rest of the community.  It is not an unreasonable supposition, that measures, which serve to abridge the free competition of foreign Articles, have a tendency to occasion the enhancement of prices; but the fact does not uniformly correspond with the theory. A reduction of prices has in several instances immediately succeeded the establishment of a domestic manufacture.   But though it were true, that the immediate and certain effect of regulations controlling the competition of foreign with domestic fabrics was an increase of prices, it is universally true, that the contrary is the ultimate effect with every successful manufacture. When a domestic manufacture has attained to perfection, and has engaged in the prosecution of it a competent number of Persons, it invariably becomes cheaper.  There seems to be a moral certainty, that the trade of a country which is both manufacturing and Agricultural will be more lucrative and prosperous, that of a Country, which is, merely Agricultural.  The importation of manufactured supplies seem invariably to drain the merely Agricultural people of their wealth.  Previous to the revolution, the quantity of coin, possessed by the colonies, which now compose the United States, appeared, to be inadequate to their circulation; and their debt to Great Britain was progressive.

Since the revolution, the States, in which manufactures have most increased, have recovered fastest from the injuries of the late War, and abound most in pecuniary resources.  It is not uncommon to meet with an opinion that thought the promoting of manufactures may be the interest of a part of the Union, it is contrary to that of another part. The northern & southern regions are sometimes represented as having adverse interests in this respect. Those are called Manufacturing, these Agricultural states; and a species of opposition is imagined to subsist between the Manufacturing and Agricultural interests.  The idea of an opposition between these two interests is the common error of the early periods of every country, but experience gradually dissipates it.  Ideas of a contrariety of interests between the northern and southern regions of the Union, are in the Main as unfounded as they are mischievous. The diversity of Circumstances on which such contrariety is usually predicated, authorizes a directly contrary conclusion. Mutual wants constitute one of the strongest links of political connection.  If the northern and middle states should be the principal scenes of such establishments, they would immediately benefit the more southern, by creating a demand for productions.

Brevis sit et vana huius seculi fallax gloria

- Beware Invisible Hands

Jacques de Vitry penned these words after seeing the near naked, stinking, and looted body of Pope Innocent III lying in distressed state in Perugia.  Less than one year after declaring the Magna Carta null and void as a concession to his loyal subject King John, this most influential pontiff was desecrated by those who saw more value in his burial clothes than in the legacy he tried to carve out of the medieval hornets nest of Europe.  Having presided over the fourth Lateran Council giving Papal State rulers sanction to burn, behead, torture, and otherwise torment anyone capriciously deemed to question the lofty office of the church, Pope Innocent III, in many respects the perpetrator of such unspeakable acts of tyranny, played a central role in creating the conditions which made the Barons' demands at Runnymede so pressing. This week's 800th anniversary celebration of the Magna Carta reminds us of the sad tale of the power of dogmatic tyranny over pragmatic humanity. 

Pope Innocent III's objection to the Magna Carta is noteworthy for a number of reasons.  Like his own papal decrees, it is suitably anti-Semitic in its disdain for the necessary financial services provided by Jews.  Given the Christian predilection of consuming beyond ones means and thereby incurring debts - many of which survived the life of the debtor - the Jews who were capable of providing interest-bearing loans to Christians were taxed by the church and crown in a bizarre, morally remote money-laundering scheme.  The pope had a similar scheme.  Like the pope's rules, the Magna Carta made it clear that clerics had equivalent or higher preference to the feudal lords and enjoyed considerable favored treatment.  In short, when it comes to conscripted service, money-lending, and property rights, there's quite a high degree of similarity between Innocent's own rules and the Magna Carta.

So what is it that was so offensive that the Pope had to declare the Barons' mandates null and void?  The answer is really quite subtle.  In a regime defined by a supreme ruler who had dominion over every regent in the empire, the Barons made copious references to the need to have due process, witnesses to offenses, and independent juries of peers.  These procedural mandates - a cornerstone of modern jurisprudence - threatened the economic interest of the church and thereby constituted heresy.  And behind the Pope's objection to the Magna Carta for the benefit of King John was a not-so-well publicized spate between the two just a few years earlier which had resulted in the Pope excommunicating King John from the church.  When Pope Innocent III appointed Stephen Langton to serve as the Archbishop of Canterbury, King John objected.  The Pope proceeded to place a restriction on all rites (mass, marriage, etc) anywhere in England and in retaliation, John confiscated property of the church and imposed levies on the clergy.  Meanwhile, France's Phillip II was rapidly confiscating land in France occupied by John and, when both the Pope and John realized that they needed each other to check the aspirations of Phillip II and liberty-minded English Barons, John agreed to recognize Langton and the Pope reinstated John.

This week we will celebrate the 800th anniversary of the signing of the Magna Carta.  This celebration suffers greatly in its hopelessly romantic nostalgia.  While the document - like many other idealist impulses (the Hammurabi Code, the U.S. Constitution, the Declaration of Human Rights) - marks an important impulse in the response to abuse and dominion, it also reifies the hopelessness of such impulses in the face of the fisted "invisible hand".  While Adam Smith extolled the virtues of the invisible hand when it was associated with the beneficial field effects of actions taken by individuals which had greater than anticipated salutatory consequences, his recognition of benefit did not extend across the entire value chain. 

We are standing idly by while secret agreements are being forged by corporate privateers under the auspices of the White House in the Trans-Pacific Partnership agreement.  Like the Innocent III and King John secret negotiations of 800 years ago, the need for maniacal dictators to act in the paternalistic interest of the governed is as dangerous now as it was then.  And the expediency - the elusive siren seducing a President who vowed to run the most transparent White House - is to the TPP what the promise of France was to John - an empty illusion with hundreds of years of conflict insured to ensue. 

Why is this relevant to our discussions about the economy?  The answer is quite simple.  We all pay a price for risk.  Geopolitical upheaval adds costs to goods and services.  Supply chain disruptions effect employment and trade.  And the more we have cause to doubt the certainty of operating conditions, the more we see risk premiums in price.  Which brings me to the real point.  I think that the TPP secrecy has nothing to do with secrecy.  I think this is a phenomenally corrupt tool in the emptying toolbox of economic brinksmanship.  The TPP is America's last gasp at confusing the influence of China across the Pacific.  However, this is as wrong-headed as was John's calculus on Pope Innocent III's hollow support in his nullification of the Magna Carta.  Like the Papal States, China does not need to concern itself with the petty trade skirmishes with its Pacific neighbors.  If China wants, it can turn inward (as did Italy, Germany and France during the 13th - 18th centuries) and ignore the "heresies" in the periphery.  And if the U.S. insists on seeing China as a threat, we'll spend the next 500 years trading more violence than value. 

"Brief and empty is the deceptive glory of this world," was not a commentary on the world.  de Vitry gave us all a wonderful truism for those who imagine themselves to have obtained such exalted dominion as to no longer be accountable to anyone.  And while tweedy historians wax poetic about the 800 years of due process that was whimsically promised by a King who was known for expedient double-crossing and bad faith, a few of us should learn from the same history and agree that we won't be bamboozled at our Runnymede.

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Vis et voluntas

During the Norman Conquest of 1066, the dispossessing of traditional feudal title holders by William the Conqueror and the emancipation of Anglo-Saxon slaves offered clear advantages to those who had been oppressed, enslaved and indentured.  Trading land title holders for military victors and allies of the Conqueror, while shedding one form of tyranny to be sure, put in motion what would 149 years later be squarely addressed at Runnymede.  Commoners – farmers, tradesmen, and laborers – were introduced to the fickle whims of kings, earls, dukes and anyone who enjoyed the patronage of crown or church (largely indistinguishable at the time courtesy of Pope Alexander II’s cosy relationship with William).  A papal legate and the right flag and one could levy tax on money, commodities, and family members – particularly daughters!

As we stand on the eve of the mid-June 800^th anniversary of the signing of the Magna Carta, I found myself disheartened by the degree to which eight centuries have done little to fundamentally change the timeless tyranny of those who perceive to wield power and dominion over others.  Power and dominion rear their ugly heads in countless ways – most of the time barely gaining the attention of the average citizen.  At 3:59pm yesterday, the U.S. National Security Agency (NSA) reportedly stopped collecting information on American phone calls and the FBI lost certain access to corporate records that they used to “hunt terrorists”.  Under the USA Freedom Act, the NSA can’t collect phone records but can rifle through records held by phone companies with court oversight.  Clothing manufacturers across the globe are racing to find low cost labor to manufacture the clothes Americans don’t need at prices that are “too low to pass up” putting in jeopardy the lives of those who will never live to see the fluorescent glare of gluttonous consumption.   In recent reports by Human Rights Watch and Amnesty International, girls as young as 12 years old are being auctioned as sex slaves in Syria and being subjected to unspeakable violence.  Barrick Gold paid out-of-court settlements to women in Papua New Guinea for numerous rapes of local women in the vicinity of the Porgera Mine stating that, “the women will receive compensation under the Porgera remedy framework, and a payment in connection with their participation in the mediation process.”  We’ve changed the venues, made them more remote and less verifiable, but our current systems are as dysfunctional as they were in 1066 and our sterilization of the industrial forms of inhumanity are potentially more insidious than lords of a millennium ago.

As we approach the Magna Carta anniversary, I thought it would be appropriate to revisit a couple of the key principles that were contained within the Articles of the Baron’s which was drafted 800 years ago right now.  While our systemic violation of humanity seems to persist largely unabated, knowing what a group of Barons thought would be worth demanding of King John may remind us what we should care about in 2015.  The Angevin monarchs ruled “above the law” (a practice boldly embraced by the Bush Administration and canonized under the present administration) and ruled by force and will.  The Barons, sick and tired of paying tribute to John for the reclamation of lands he lost to King Philip II in 1204, defied both King and Pope Innocent III and demanded of the King a series of concessions that they designed to democratize their influence.  In what would become the Magna Carta, they sought to strip John of his unchecked abuses.

One of the most fascinating provisions in the Articles was the notion that common people should be capable of persistent livelihood.  In Article 7, minimum wage was established by insisting that no one should be forced to do more service for a “knight’s fee than is owed for it.”  Article 10 demanded equivalent ecumenical compensation to clerics.  Bailiffs and sheriffs were prohibited from taking land and commodities from a debtor who was capable of servicing debt.  And commodity seizure that would impair the livelihood of the debtor was prohibited.  In short, the Barons sought assurance that imposition of levies and debts would not enslave humanity nor subject them to inhumane treatment!

The Article that struck me most profoundly, however, was Article 9.  Some of us are unfamiliar with the principle of amercement.  This was the practice of being held “in the mercy of” the crown for offenses great and small.  Harvest a deer from the King’s forest – you were amerced a tariff.  Trespass on the wrong road or land – you were amerced a tariff.  In the 13^th century, if a crown wasn’t on your head, you were subject to someone who wanted to collect something from you for violating some petty rule they’d established – kind of like modern homeowners’ associations.  This death by a thousand financial cuts was so harmful that the Barons demanded that these penalties be commensurate with the offense rather than capriciously determined.  What is most profound in the demands of the Barons was the insistence that no offense should warrant the threat to someone’s livelihood.  

We’ve long forgotten the wisdom of the Barons.  The notion that laws and rules should ultimately be for social benefit but should never lead to the perversion or extermination of individual well-being is as relevant in the halls of Congress as it is in the tortured towns in Syria, Iraq, and East Africa.  Whether you justify your tyranny based on a perversion of “national security” or under some warped theology which places women under the crushing abuse of sex-crazed mercenaries, the notion that any cause justifies the removal of individual liberty is sadistic and evil.  And We The People must muster the courage and the audacity – like Barons of 800 years ago – to first identify and then demand alternatives to systems great and small which place dominion over mercy.  If not, 800 years from now, this time will be described as the darkest of ages when we could have known so much and chose to do so little.

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