Battling Wits when Death is On The Line

You fool! You fell victim to one of the classic blunders - the most famous of which is "never get involved in a land war in Asia" - but only slightly less well-known is this: "Never go in against a Sicilian when death is on the line"!    Vizinni in The Princess Bride 1987  https://www.youtube.com/watch?v=9mTlnrXFAXE

I don’t care for games.  I never have.  Given the choice to ride my bike, work in the garden, sit by a crackling fire, cook, do dishes, vacuum, or pretty much any other time-consuming activity or play games, I’d choose the former.  With one exception.  I love the game of Risk.  When French film director Albert Lamorisse invented La Conquête du Monde in 1957 and sold it to Parker Brothers in 1959, he had the benefit of a world war to observe the psychology of geopolitical intrigue.  The year before inventing Risk, Lamorisse won the Palme d’Or in Cannes for The Red Balloon – one of cinema’s greatest (and most depressing) short films.  In the film, a young boy pursues the meandering flight of a red helium balloon as it whimsically blows across Paris before being popped by a pack of hooligans atop a hill deflating the aspirational innocence of the young boy’s fanciful excursion.  As U.S. President Donald Trump prepares to meet with Russian President Vladimir Putin today in Finland, I’ve reflected on the life – and untimely helicopter crash accidental death – of Lamorisse’s artistic and diversionary contributions to the last century and mused if we’re more Risk or Red Balloon this week.

If you’ve never played Risk, you wouldn’t know that controlling Asia is nigh impossible until the end game.  While of equal value, North America and Europe do not represent equivalent ease of management with North America enjoying the most point value with the least risk of attack.  And the Southern Hemisphere (South America, Africa, and Australia) only serve to fortify their Northern Hemisphere masters and offer no strategic value beyond their geographical alliance.  And if you’ve never watched The Red Balloon you wouldn’t know that bullies with stones and slingshots always ruin the innocence of whimsy.  Or, on reflection, you wouldn’t have to play the game or watch the film.  You could just look at Twitter and arrive at the same social conclusion.

Whenever Trump opens his mouth or exercises his primate-inspired opposable Twitter thumbed intellect, you can count on elites like The Atlantic to lament the end of the American century.  From CNN to The Guardian, the status quo reflex is to shudder and cringe at the arrogant, misogynist, xenophobic, totalitarian, egomaniacal ravings of the golden fleeced puppet.  But this façade of indignation serves as a diaphanous veil on the arrogance (and ignorance) embedded in the assumption of nostalgic hegemonic illusions.  There wasn’t an American century. 

Yes, I said it!  While the United States has built the myth of the 20^th century being somehow its empirical zenith, the facts indict such a view as the whimsy of a school boy following a balloon blown about by the Parisian winds.  In World War I, 41 million casualties resulted from the conflict and the Central Powers’ GDP shrunk by as much as 40%.  The Allies outspent the Central Powers $147 billion to $61 billion.  In World War II, close to 3% of the world’s total population were killed with as many as 80 million people dead from conflict, disease, starvation, or other deprivation.  Germany and Japan had their manufacturing infrastructure obliterated.  Under the Potsdam Declaration, U.S. economic power was secured by treaty and expediency, not based on genuine competition.  Reinforced by the dubious Bretton Woods doctrine that “free trade would result in lasting peace”, globalization in the image of an American idealism sought to impose on the world a corporatocracy in which U.S. economic interest determined what “fair” would mean.  And for the record, “fair” meant favoritism.  If it was good for the U.S., it was free and fair.  If it harmed U.S. self-interest, it wasn’t.  So it’s no wonder that Trump’s “Make America Great Again” slogan is cursed not for its chauvinism but rather for its objective ignorance.  There’s no “again”.  The U.S. appeared to be “great” because we were playing Risk while the rest of the world was playing Go.  And, for the record, Go strategy upsets Risk every time – particularly when the world is digital in its trade!

Thirty years after Nixon leaned on China to back his unilateral default on the gold standard (August 15, 1971), China entered the World Trade Organization.  In the 17 years that have followed, China’s over 400% growth in middle class spending power has expanded market opportunities for domestic and foreign companies to be sure.  But while the U.S. was fighting Bush & Cheney “terror” phantasms, China was carefully playing Go.  Recognizing that the control of supply chains adds “suspenders” to the One Belt One Road resurgence of the Silk Road in Xi’s China, rather than engaging the Southern Hemisphere, the U.S. made the classic Risk error: namely, try to control the Ottoman Empire.  China played the right game.  The U.S. played the wrong game.  And the U.S. was playing the wrong game because it thought that it was the empire protected by the frozen landmass linking Kamchatka to Alaska and the Isthmus of Central America.  What it failed to realize is that its last chance to change games was at the reunification of Germany and the Two Plus Four Agreement in 1990 when George H.W. Bush lost the plot of the 20^th Century (assuming he had any clue about the plot at all).

And for those red white and blue fans out there – remember this.  Your blue jeans, computers, satellites, drugs, fertilizers, engines, and TVs have more Nazi and Axis engineering in them than they have American ingenuity.  What we did was take the technologies of others and deploy it at unprecedented scale.  But we did it on the back of a world that we forced into IMF indebtedness and corruption.  Now that others are cleaning up their own economies, we’re finding out that the we weren’t the best.  We were just less broken so appeared to have a moment of glory.  If you took the time to look at the reparations at the end of World War II, you’d realize that we’d still be on party-line phones if it weren’t for “the enemies” of a generation ago.  Our modern illusion of wealth is based on a story that we’ve yelled so long that we believe it to be true.  But the facts unfortunately tell a different story.  We took advantage of weakness.  We were not strong.  We imposed our will on the broken.  We did not rise to excellence of character and moral leadership.  And when Trump and Putin meet today, they’re merely repeating a tired refrain from Teddy Roosevelt’s 1905 Russian fantasies.  Those didn’t last the decade and neither will Trump’s touchy feely Putin fling.

x

Until Death Do Us…

I have had the great fortune of engaging in several intimate conversations lately about the recent epidemic of suicide among “successful” business, sports, entertainment, and other notable personalities.  As I watched Hannah Gadsby’s Netflix special “Nanette” (watch all the way to the end to get the point), I was overwhelmed with the importance of Hannah telling her lived experience – not the comedic theater she used to alchemically deflect the embodied pain of inhumanity.  I sat with a group of entrepreneurs just a few nights ago in New York and shared my lived experience.  These impulses converged to convince me that it’s high time I wrote about my life and why I’m sick and tired of people being shocked, surprised, or bewildered by those who end their lived torment!  My exhaustion comes from the simple fact that our social fabric seems incapable of withstanding honest critiques of what we’re doing to destroy our humanity and in so doing, leads those who are in positions of prominence to meet all too often, a hopeless end.

“David,” you ask, “what does suicide have to do with the economic and business themes of Inverted Alchemy?”

Well, here’s the simple answer followed by a much longer explanation.  Instead of focusing my efforts on the enterprises to which I have allocated much of my energy, most of my life my attention has been shame management and a struggle to find a reason to persist.  My professional and corporate success have been miniature triumphs over my self-deception and perceived worthlessness.  Had there been genuine conversations about what was really happening in my life, my effectiveness could have been significantly improved and the environments I managed could have been less filled with conflict.  And even in my writing here, I’m still entirely encumbered by the social shackles of propriety seeking to mute what could be considered criticism of individual actors in my life’s journey.  So even in this moment, I’m not at liberty to tell the whole truth.

As early as I can remember, I was indoctrinated into what Gregory Bateson referred to as the “double-bind” – in his view the precursor to schizophrenia first detailed in his 1956 paper Toward a Theory of Schizophrenia.  In Southern California during the late 60s and early 70s, my early life included an amalgamation of anti-war protests in San Diego, “spirit-filled” psychedelic religion, and exhortations to “critically examine” consensus thinking (provided that that thinking didn’t critically examine the wrong things… which I did).  Love peace… but beat a child to instill discipline.  Think critically… but ignore the inherent contradictions in Biblical texts or catechisms.  Be “filled with spirits”… but make sure that the hallucinations you have are sanctioned by the adults who know what is right.  Be non-conformist… but be sure that your selected path is “right”.

In my adolescence in Pennsylvania, my puberty emerged in a community that distorted “love” in every dimension.  In religion, “love” was a vindictive God using shame and guilt as his only instrument to extract adherence.  In sexual interactions, “love” was the reserved for the proprietary sacrament marriage.  Attraction was lust, lust was sin, and sin was to be hopelessly avoided at all costs.  “Truth” was the providence of religion or science.  Questioning the inconsistencies or hypocrisy in either was evidence of a social deficiency.  Material “wealth” was the basis for denigrating comments and doing “More With Less” was a monastic ego intoxicant.

From April 8, 1977 until August 8, 2017, I didn’t have a single day in which I didn’t feel worthlessness and shame.  Shame for my perspectives that were not consensus.  Worthlessness for my abject failure in most of my relationships.  Shame for my human desires that were constantly suppressed with social stigma and apathetic neglect.  Worthlessness when – celebrated for my loyalty, intellect, or capabilities – I knew that I couldn’t awaken basic kindness in those who most benefited from my existence.  And above all, from Thanksgiving Day 2007 until Thanksgiving Day 2013, the knowledge that every effort I had made in my most personal and familial relationships had placed me on a collision course with the inevitable end of my marriage.  For 14,732 days (40 years and 4 months), I saw this world as a place in which I had little relevance.  I had few adults with whom to speak.  And with the advent of social media, I began the insidious deception of projecting an illusion of success in my personal and professional life with the mistaken impression that if I promoted the best of life – celebrated with gratitude the amazing journeys that my efforts made possible – somehow that would awaken in those closest to me the values that I so deeply desired to see manifest.  And it’s this last thing that elucidated the most harm.  By making it appear that everything was great, no one saw that inside I was collapsing under the weight of the illusion I was propping up.

On October 2, 2013, I was done.  The psychological and physical pain with which I lived each day had grown into a malignancy in my mind so much that I spent most days thinking about the ways in which I could end my life without leaving my children in pain.  I had made a life of providing for others.  I had been a master entrepreneur building enterprises that spanned the globe and impacted the lives of billions for a better future.  I had loved relentlessly.  I had overcome pain, injury, torment, ridicule, treachery, greed, and every manner of inhumanity.  I modeled a life of generosity beyond anything I had ever seen or experienced.  But the broken, shameful, worthless man was louder than all these things.  I couldn’t see any path to persist.  I was my own unsolvable paradox and the cacophony in my mind was killing me.  And I didn’t make it on my own.  I’m still on this planet because of the love of 3 people.  One business colleague and my two children.  At the darkest end, my daughter held my hand to keep me here.

I don’t know what happens to others but I do know that once I decided that death was a plausible escape from the pain of living, a new level of despair sets in.  I resented a world that allowed a “me” to get to this point.  I resented relationships that didn’t respond to explicit requests for help made worse by the mere fact that I had to ask for something that was self-evident.  My public speaking was celebrated but my anger was ever-present.  My intrepid willingness to take on genocidal mining operations, corrupt governments, white collar crime, covert black-ops, corporate malfeasance bordered on reckless as I figured that my life’s futility might as well be used to stamp out tyranny.  If it got me killed, all the better because it would be the honorable way to go.  In point of fact, from the Nicaraguan war in 1986 until August 2015, I can confidently state that much of my global gallantry for the advancement of humanity was equally fueled by my indifference to my own survival as it was the genuine compassion and fortitude I had for the manifesting of a better world for others.  When being tortured by a gun-wielding guard, he yelled in my face, “I could take your life from you right now.”  I responded, “You cannot take what is not mine to give.”  This sounded stoic.  It was, in part, but it also was the statement of a man who had given up on living.

Today, I am choosing to Fully Live, not just survive like I did in October 2013.  That choice was ignited in 2015 when genuine humanity manifest in my discarded existence.  And while Kim has worked relentlessly to help me see the value in what my life has accomplished, she’s still sees the scars – both literal and emotional – that served as sentinels guarding the darkness in which I lived.  Slowly, I’m chipping away at the 5 decades of inhumanity that planted the seeds of shame into the mind of a little boy with an unusual sense of perception.  Those seeds, watered with blood, bruises, and neglect, grew into the vines that nearly choked the life from me.

And what am I doing about the suicide epidemic that now serves as one of the top 10 causes of death in middle aged men and women in affluent societies?  Well, thanks for asking.

• 1.      I’m asking people how they’re doing and actually listening for the answer – not just the words but how those words are spoken.
• 2.      I’m reaching out to people who I see struggling.  I’d much rather offend for asking than let someone suffer in silence.
• 3.      When asked about my business and commercial success, I’m sharing the uncomfortable personal stories that are about navigating my personal life.  Ironically, when I’m doing this, the conversation invariably becomes much more genuine and the commercial and business facades crumble in favor of authentic human interactions.
• 4.      I’m constantly honoring the lives of those who stood with me in my darkest hours and making sure to remind them that my life is an extension of their love and kindness.
• 5.      And when others are at the edge – or regrettably find themselves beyond hope – I am prioritizing their living over any of my own agenda.

Because, if we’re serious about our alleged concern about suicide, it’s high time we do something long before a man like me has to beg for mercy and kindness.  If we’re not emanating kindness and sharing love from a life worth living then we’ve broken a sacred trust with our fellow humans.  And if we pretend that the “workplace” is not a suitable place to have these kinds of conversations then that simply means that we’re fueling the very desperation that leads to lives that end for lack of meaning and value.  As a business owner, I know that I cannot succeed if those around me are not operating at the best.  I know I wasn’t for 3 decades and I’m done propping up the illusions of social indifference at the expense of my well-being and that of others.

Anthropomorphizing Light

This requires a slow read as it is dense...but I think, exceptionally important

In a race to possess the oppressive foothold with which the propagation of iniquity could be democratized to substantiate the delusion of Fallen Humanity and Original Sin, Greek and Roman philosophers appealed to Greed (pleonektes and cupidus, respectively) as a generalizable abhorrent trait.  Polycarp, Tertullian, Clement of Alexandria, Lactantius, and Sextus all echoed warnings against the impulse to seek to possess beyond reasonability.  By the 4^th century, the fledgling apostolic church knew that by ascribing to the teachings of their long-romanticized namesake the maxim, “the love of money is the root of all evil,” they could convince everyone of a fundamental sinful nature.  After all, who doesn’t love money?  For justification, they wove an elaborate thread around the oral tradition of the Abrahamic faith’s myth of a beginning in which the mortal crime of humanity – alleged to be resulting from the conspiracy of a snake and a woman preying on a clueless and malleable man – was the pursuit of knowledge and served as the basis for a persistent ubiquitous evil condition.  Ignoring the prima facie conundrum of an alleged “sin” derived from a deity who is the personification of Greed itself (after all, in the 10 Commandants, 1/3 are about an egotistical, self-absorbed deific greed demanding supremacy, attention and loyalty), the early ecclesiastical brainwashers took advantage of illiterate masses and manufactured a pervasive illusion of a flaw in character and made it the evidence for sinfulness.

Epiphanes of Cephalonia in the late first and early second century CE was critical of this restrictive and oppressive social construction.  Together with other Gnostics, he argued that as the sun equivalently shines on everything; nature provides for itself with equanimity; and therefor greed and avarice are born not of human nature but of the mistaken impulse to enclose thereby creating the illusion of relative abundance or scarcity.  Greed, and all other contrivances of ownership and enclosure, were evidence of manipulated darkness – not the equivalently available evidence of life-giving illumination.  This celebration of isomorphic nature was considered a heresy by the early 4^th century and the Dark Ages were set in motion!

 

In an effort to understand greed more fully, I took the time to read Dr. Vadim Kaplunovsky’s TheQuantum EM Fields and the Photon Propagator in which he weaves a mathematical quantum tapestry of Feynman, Green, Coulomb, Heisenberg, Lagrange, Yukawa, and others to explain attraction, repulsion, and other basic observations of photonic behavior.  He concludes his treatise with passing observation that mathematically, fermions and anti-fermions can be attracted to each other despite the clearly repelling natures of their charges!  If you take the time to read the paper, this last sentence is worth wading through all the Greek formulae.  For in his final words, we arrive at a conclusion which confirms that there remains – in the end – a mystery.

Greek philosophers gave us an obsession with geometry and, in so doing, the illusion of boundaries.  If we examine what physicists call ‘elementary particles’, we realize that they are neither particles nor are they thermodynamically limited.  All of our sense making in quantum mechanics presupposes conditions that are illusions as falsifiable as all the myths that precede the scientific revolution.  Distance, time, vacuums, laws and constants are all dimensional projections which serve to limit what is fundamentally unlimited.  Our obstacle to understanding quantum energy states is our manipulation of a projection of distance, time, or both.  Can two particles experience non-local effects through calculable deduction?  Almost.  But to model this phenomenon requires assumptions we know to be untrue.  Would it be simpler to see energy as an infinitely orthogonal dynamic without shape or boundaries?  Of course.  But if we did that, no one could be the arbiter of the dominant general theory and, as such, hierarchy, power, control, and manipulation would be inaccessible.

I’ve been drawn to understanding photonic propagation for a particular reason.  I’m intrigued by the phenomenon of experiencing a life in which the more incredulous individuals are in the presence of generous giving, the more beneficiaries rapidly move from gratitude, to distrust, to outright parasitic expectancy.  Together with the Gnostics, I find the source of emanation energy the object of inquiry.  Much of my life’s work and activity seems to arise from a rather mysterious energy that persists even at times of extreme emotional or physical depletion.  And the beneficiaries of my actions are seldom individuals with whom a ‘contractual’ agreement or exchange exists.  In other words, my default is to share and give without consideration.  This explicit mode of engagement without expectation of ‘return’ in an equivalence or in-kind fashion does not mean that I don’t have expectations.  Quite to the contrary, if I have been generous, my expectation is that generosity will propagate.  If I have been kind, my expectation is that kindness will flourish.  And while I don’t expect reciprocity per se, I do expect that in the emanation of propagated goodness, at times, I’ll be the beneficiary of that proliferated energy.  But this is seldom the case.  In fact, the more reproducible the adjacency to receipt of my energy, the less likely I experience the flow-on effect and the more I engender expectation and dependency. 

Current photonic physics suggests the paradox of vectors of propagation which imply some sense of momentum but grapple with the observation that a photon can at once be pushing light energy outward and in the same moment be receiving the same energy.  In other words, the error of individuation or identity is the geometric, spatial and temporal fallacy.  Like the sino-atrial node in the heart, the auto depolarization is both arising from within, and responding to, perceived ‘external’ activation.  But in the absence of distance, time, or space, the activation simply is.  Not from.  Not to.  Just activation.  Similarly, my impulse towards generosity is neither “mine” nor “given to”.  It simply is an impulse which is meant for propagation – not absorption.  Yet absorption seems to be more prevalent than passing the impulse along.

So, back to Dr. Kaplunovsky’s unintentional philosophy.  When discussing the oldest assumption of electrostatics – namely, like charges repel and unlike charges attract – he hastens to point out that in certain instances of kinetics (eg. gravity) attraction transcends this “law”.  Further, the linear model of propagation fails to stay within the Quantum Electro-Dynamics (QED) theory when infinite orthogonality and inertia are added to two dimensional planar (non-realistic) assumptions.  In other words, all we think we can understand about propagation of charged particles work in conditions that never exist, using projections of our own creation, built on dimensional assumptions we objectively know to be untrue.  Besides that, we’ve got it nailed down. 

Which brings me back to the two millenia and counting question.  Can Emanating Light co-exist in a world that presumes Greed?  In a context in which propagation of goodness was the infinitely orthogonal presumption of non-local inter-relationship, we would be able to see the following: 

• 1.      In the moment of goodness received, there would be an immediate recognition (not acknowledgement of or reciprocity to) the momentum vector of such goodness;
• 2.      In the same moment, the first impulse would be the transfer of received energy to  omni-directional propagation in favor of consumption;
• 3.      The experience of goodness would be confirmation of coherence within a field of goodness and a resolute intention to remain an active participant in such a field; and,
• 4.      The ‘recipient’ would propagate the impulse in all vectors including the directional flow from whence the impulse was perceived.

This last point is most critical.  This is NOT an admonition to “return the favor”.  This is acknowledging that if “I” am the source of generosity, “I” might not be.  It may be that I’m merely the conduit through which propagated goodness is flowing.  Given my earlier observation, this would be plausible considering that most of my best work occurs when “I” feel least capable of being elegant, kind, graceful, or generous.  What it DOES suggest is that a flow of gratitude in the direction of or through the steward of the impulse would reillumine that which is potentially obscured enhancing the energetic exchange.

QED does not answer the ancient question of the Gnostic’s Monad.  But it does demonstrate the length to which we’ll go to reify our illusion of separation and individuation.  In the end, it is not Greed and Avarice that beset us.  Rather it is absorption (gluttonous consumption of unconsidered energy) and narcissistic supremacy (jealousy for favored status) that serve to sclerose our vitality and propagative capacity.  Recognizing that no one can receive what I cannot give, I’m invited to see myself as a propagational steward rather than a source of emanated goodness.  And recognizing that equivalently no one can take what was never mine, the absorption impulse can merely serve to identify the dissonant fields in which I do not experience coherence.  The early church fathers insisted on separation as a presumption of all subsequent social calculations.  We know that this fundamental assumption is falsifiable in every manner.  And modern physicists continue to use a blur of rules, laws, and blinding formulae to confirm theory which evidence clearly indicts by adding constants of time and space.  In neither case did any crowd ask the sun where it defines its edge.  At no point did anyone ask the leaf whether it was producing glucose in photosynthesis or whether it sees itself as merely a component of our respiring lung from which it derives CO2.  And until we can see the inseparability of it ALL, we’ll go on hoarding and harming each other, consuming that which we did not need to satiate desires we’ll never appease.

Threadbare Jeans and the Unraveling of America

If you live in the Bay Area, you cannot escape the 145-year legacy of today.  On May 20, 1873 Levi Strauss and Jacob Davis received their patent on what would become one of the world’s most iconic items – blue jeans!  Their patent, U.S.#139,121 wasn’t for jeans but rather for the copper rivets that reinforced the pockets and hems of jeans making them more serviceable.  Jacob Davis was an immigrant from Riga, Latvia and came to the U.S. in 1854 and became a citizen in 1871.  Levi Strauss, an Ashkenazi Jew from Germany, immigrated to the U.S. in 1847 and became an American citizen in the same year he started his dry goods business in San Francisco in 1853.  Riding the speculator wave of gold seekers across California and later into the Yukon, the two men set in motion one of modernity’s most ubiquitous brands. 

Moses Cone was born in Tennessee in 1857 to Jewish German immigrant parents Herman Kahn and Helen Guggenheim.  Thinking that “Cone” was more American than “Kahn”, Moses’ father changed his family name upon arrival into the United States.  In 1887, Moses and his brother Ceasar invested $50,000 in the C.E. Graham Mill Manufacturing Company in Asheville, North Carolina and from there aggregated several mills throughout North and South Carolina.  By 1908 their factories near Greensboro, North Carolina were the world’s largest supplier of denim.  By 1915, their relationship with Levi Strauss & Co was cemented and together, the two firms would clothe millions. 

In 2003, bankruptcy ended the Cone business.  Over 10,000 people lost their jobs and thousands of others saw their livelihoods destroyed as the era of denim faded in the West with the rise of competition from the East.  And while China exports the largest quantity of denim, Pakistan, Turkey, Egypt and Brazil are expanding their role in the global supply chain. 

I was reflecting on the Strauss / Cone paradox as a case study for the current upheaval in the world’s trade imbalance perturbations.  And, given the protagonist’s shared Jewish heritage, I was drawn to the economic cautionary parable from Genesis 25:29-34. 

²⁹ Once when Jacob was cooking some stew, Esau came in from the open country, famished. ³⁰ He said to Jacob, “Quick, let me have some of that red stew! I’m famished!” (That is why he was also called Edom.^[a])

³¹ Jacob replied, “First sell me your birthright.”

³² “Look, I am about to die,” Esau said. “What good is the birthright to me?”

³³ But Jacob said, “Swear to me first.” So he swore an oath to him, selling his birthright to Jacob.

³⁴ Then Jacob gave Esau some bread and some lentil stew. He ate and drank, and then got up and left.  So Esau despised his birthright.

What strikes me about this story is the foreboding message it implies about U.S. economic behavior.  In the early days of the industrial revolution, cheap labor was an immigration issue.  When mines needed digging, railroads needed excavation, and mills needed tending, the affluent found ‘others’ to whom sub-standard wages could be paid in exchange for the promise of the ‘American Dream’.  At that time, the principal beneficiary was not a consumer paying less at the store but rather the industrialist pocketing greater profits.  As time went on, the laborers became slightly more affluent and started demanding access to goods and services – many of which they were responsible for making or assembling.  In response, in the 1970s and 1980s, a fatal decision was made to accomplish the Walmartization of the world by making vastly more products at vastly cheaper costs.  To prop up a consumer-credit financial system, the laborer-consumer demanded more stuff and bought it on credit.  That part of the equation was visible.  But what was not considered was that in exchange for sending manufacturing to ever cheaper labor markets, the ugly consequence of this would be the diminishment of the very labor that once paid the wages to support the consumer.  By demanding stuff rather than quality and value, we have ‘sold our birthright’ for thirty years of cheaper jeans. 

And now, when we want to “Make America Great”, we’ve got a tiny problem.  Our affluent expectations cannot be met by our own domestic production.  And while we’re pretty sure that the world will go on making cheaper jeans for us ad infinitum, the reality is that the world’s industrialized labor pools are themselves now growing their new lower middle class.  Domestic consumption rather than export is a growing reality for much of the world’s markets.  And what this means is that our temporary consumer orgy fueled by cheap labor is now starting to hit a wall.  The promise of perpetual growth, the always-better-tomorrow that would be the siren song of America’s capitalism, the illusion of our intellectual superiority always saving the day is now being shown for exactly what it is.  Hype and propaganda.  In his article in The Diplomat (“Chinese Consumers Will Change the Global Economy, April 6, 2017), Matthias Lomas highlighted the fact that the 400 million Chinese middle-class consumers are increasingly selecting quality, brand and status over price-sensitive consumption.  What if the world’s new middle class actually prefer ‘better’ to ‘more’?  In a world in which the American generation was based on ‘more’, we don’t have a clear picture on quality.  And this means that “Great” is a reach that may exceed our grasp. 

Our birthright – if there was one – was to be an experiment on democratized access to opportunity.  We turned it into a opium den of consumption.  And what did we get for it?  Cheap jeans! 

x

Australian Banking Royal Commission Chasing Smoke...While the Fire Burns

Australian Prime Minster Malcolm Turnbull and Commonwealth Treasurer Scott Morrison have been facing a tsunami of evidence of their negligence with respect to defending the behavior of the banking sector prior to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.  Australians have been witnessing the gradual unraveling of the executive cover-ups in Australian banks and have seen the abject failure of the political and oversight agencies to whom banks were ostensibly accountable.  Opposition Leader Bill Shorten has wasted no time in painting the Royal Commission proceedings as evidence of the counterfeit leadership of the seated government.  But before he jumps on the bandwagon of “I told you so” he would be wise to consider a far more egregious failure that his Labor Party has ignored.  In his class warfare appeal to the working class Australian (as opposed to his vilification of the “rich” and the “elite”), he has entirely ignored the fact that Labor’s stalwart supporters have preyed on the financial ignorance of working class Australians and have delivered pathetic returns year in and year out abjectly failing the public’s fiduciary interests.  And Labor’s supporters are quite happy to point the accusatory finger at banks – an easy populist target – without considering their own complicity in a bigger act of negligence.

The following is excerpted from an open letter that I sent to Australian State and Federal Treasuries and oversight agencies over 1 year ago.  The letter was also shared with national and regional media outlets.  In short, I highlighted that fact that both Liberal and Labor are fighting over banking fees and commissions while the real heist is happening in the superannuation business.  I was told that “the public wouldn’t understand” or “there’s really no interest” in examining the dismal state of affairs in the superannuation business because Australians are basically content with year-on-year growth. 

In the February 21, 2017 Australian Prudential Regulation Authority (APRA) Quarterly MySuper Statistics, the regulated entities in Australia report their target asset allocation by investment product.  In this report, 199 MySuper products report exposure to international equities representing an average of 27% total asset allocation.  For both the single strategy and multi-strategy products, the net return to members in the reporting period was just over 2% (High of 5.04% for Aon’s MySuper High Growth; Low -2.07% for the State Public Sector Superannuation Scheme). 
 
The equivalent of 36% of the GDP of Australia is invested in Global Equities ($483b) according to the Association of Superannuation Funds of Australia (AFSA).  A considerable number of superannuation managers have reported returns on these equities at less than 10%.  During the same period, the CNBC IQ100 powered by M·CAM has demonstrated a performance exceeding 20%.  Much of the international equity exposure is accessed through consolidated products (Exchange Traded Funds (ETF) and mutual strategies).  Due to the absence of domestically managed and deployed investment products, Australia lost as much as $86 billion in returns that could have built the Australian economy while preserving fee income to the local economy in the past 12 months.  In the reporting period we have examined, we've identified losses (underperformance and opaque fees) over the past two years of nearly $130 billion (almost 10% of Australia's GDP).  This represents a taxable income loss as well as an undisclosed management fee revenue taxation loss.   In addition, it has been unable to attract funds under management to a domestic pension or superannuation management offering while New York, London and other markets are flooded beyond capacity. 

When I proposed that we repatriate management of funds to Australia (as a taxable enterprise in Australia), I was asked, “how many jobs would you create in doing this?”  That’s right, faced with the possibility of bringing $130 billion into the economy (10% of the GDP of the nation), the dismissal of the idea was based on the fact that this wouldn’t lead to sufficient job creation. 

I trust that a few Australians wake up to the fact that the Royal Commission on banking is a smokescreen for the real failure.  Australian Superannuation – an invention of the Labor Government – has built a culture of contempt.  Because citizens must allocate funds to managers for each dollar they earn, the managers have no fiduciary incentive to work for their clients’ best interest.  In conversations over the past 18 months, managers across Australia echo the phrase, “No one ever got fired for buying IBM.”  This is code for managers justifying mediocrity based on consensus behavior.  And the tragedy is that consensus means that Australians are losing money at the hands of managers who have no incentive to see them succeed. 

The Royal Commission is hearing evidence on egregious abuses of fees for sham or bad advice.  This is an important problem.  But the Royal Commission doesn’t have the courage to ask the real hard questions.  These are about the returns that did not come to Australian investors based on a culture of complacency that pervades the financial services industry in Australia.  And if the public is to be served, attention should be paid to the conflagration of complacency masked as “risk aversion” rather than the back-burn brush fires of fee abuses.  Both are damaging Australia but the real fire is being ignored.

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Sore Losers in a 30 Year Game

On August 14, 2017, U.S. President Donald Trump released a document he neither read nor understood.  In the Presidential Memorandum for the United States Trade Representative, he recited the tired echoes of the 34^th U.S. Secretary of Commerce Donald Louis Evans about Chinese “unfair” “violations” of intellectual property rights.  In the memorandum, he asserted that China “potentially threaten United States firms by undermining their ability to compete fairly in the global market.”  The saber-rattling of the past few weeks has spooked markets and generated yet another media-fueled volatility that is a tempest in a teapot.

In July 1987, the Office of Technology Assessment of the U.S. Congress issued a report Technology Transfer to China.  Director John H. Gibbons, acting on behalf of the House Committee on Energy and Commerce and the Senate Committee on Banking, Housing and Urban Affairs, sought to conduct an objective review of the role U.S. technology could play in the transformation and modernization of China’s economic and social order.  In its preamble, the justification for technology transfer to China was based on the assumption that either U.S. or Soviet technology was going to support broader political and strategic implications on the future of China and the U.S. needed to use its technology as an agency for closer ties.  From GE’s first contract with the Chinese government for locomotive sales in 1976 until the time of the report, the company itself saw that the transfer of technology served its economic interests in securing contracts that had been going to German, French, Romanian, and Soviet suppliers.  The same could be said about AMC (which ironically was sold to the French the same year as this report), IBM, Wang Computers, and other early market entrants into China.

The media and markets are missing what the Trump Administration wishes to deny.

     

• Most intellectual property in the United States does NOT represent invention and is not associated with any product or service.  Most intellectual property is either subtle modifications of existing patents in attempt to “ever-green” market protections in violation of the law, outright plagiarism of competitors’ patents, or “defensive” patents procured for litigation avoidance or cross-licensing conflict resolution.

• China bought most of the technology (and associated intellectual property) from the companies that are alleging “unfair” practices.  When part of a sale includes know-how and intellectual property, alleging it to be stolen is not fair – it’s pathetic.

• The United States Patent and Trademark Office has had evidence for over a decade that over half of its patents, when challenged in court, are invalidated in part or in whole.  Yet no fundamental quality reform has been implemented.  As a result, when China independently reviews unenforceable intellectual property claims and elects to commercialize goods or services derived or enabled by disclosures in wrongfully granted patents, they’re not stealing.  They’re shrewd. 

It’s time for investors, markets, and the media to grow up.  We made a number of assumptions in the 70s and 80s about the China we wished to influence.  In many ways we succeeded.  We simply failed to appreciate that China wouldn’t stay “poor” and “incapable” of being a competitor.  That’s on us, not on them. 

IDEAS or Fixed Delusions?

It may be my recent move into the Kew Asylum atop a bluff on the Yarra River in Melbourne that triggered my renewed fascination psychology.  Built in the 1870s as the institution for the insane, the inebriate, and the idiot (wow, did they nail the branding back then or what?) I often muse about which category would most closely approximate the diagnosis that would have placed me in line for a room with the view that I now call home.  Over the last few weeks, I’ve been on a speaking tour of Africa and have encountered plenty of all three diagnoses – mostly in the form of political, academic and industrial self-proclaimed “leaders” and those who seek to reinforce said egos.  And while there are countless observations that compete for my fingers’ attention at this keyboard, the one that has immediacy is my abject abhorrence for the proliferation of “ideas”. 

In his 1829 writings, Analysis of the Phenomena of the Human Mind, James Mill gave us the linguistic gift of the term “ideation”.  In his use of the term and throughout the ensuing few decades, “idea” and “ideation” were used to describe the synthetic process of placing perceptions and sensations into a representational construct.  In the Journal of Psychological Medicine and Mental Pathology (Vol 9), Dr. J. Russell Reynolds’ 1855 essay on “The Diagnosis of Diseases of the Brain, Spinal Cord, Nerves and Their Appendages” clarifies the concept of ideation as the abstraction of reality which, in the extreme, leads to a perverted construction of “fixed delusions”.  As I listened to countless speakers recite the unconsidered doctrinal mantras of humans as “markets” or “consumers”, education as a means to the illusory ideal of employment, enterprise as an industrial manipulation of finite supply to extinguishing consumption for the purpose of rent extraction, and money as the single arbiter of social relevance, I was amused at the number of times I heard the term “idea” being used.  In the past three weeks, whenever I heard the word “idea” mentioned, I found it helpful to appeal to Dr. Reynolds’ notion of “fixed delusions”. 

Now, just in case you’ve been living under a rock, let me catch you up on the hottest new idea.  Nearly all human challenges can be solved with a blockchain cryptocurrency mobile telephony technology funded with an ICO deployed by Gen Xers who use their parent’s horded wealth or reputation to occupy shared workspaces in which echo chambers of ideas proliferate at the speed of caffeine.  The “developing world” will be “developed” when each wanna-be Silicon Valley incubator funds the sufficient number of developers coding in Python powering their lithium and cobalt off-grid mobile devices to more rapidly get ever decreasing tolls on ever diminishing-in-relevance urban transactions.  Oh, and if you’re at the cutting edge, you’ll have a solar panel on the roof to trickle charge your “solutions” to the world’s most pressing problems like ordering take-out food, booking your Uber, or purchasing your tickets to the next crypto conference in a hackathon warehouse.

I suggested to a room full of academics, policy-makers, and industrial engineers that the integration of lithium and cobalt batteries (for which said miners have life expectancies of 45 and 37 years, respectively) into a pacemaker to animate the heart of a 67-year-old white collar, obese, sedentary, steak gobbling retired executive may be more industrial disease management than healthcare.  I challenged them to identify a single component of “innovation” that they integrate into their devices that didn’t have – somewhere in its engineering history or supply chain – the unconsidered life or livelihood of person for whom their engineering can never be effective due to price, access, or entitlement.  The room was silent.  But when it came time to talk about “ideas” to build the economy, the room was alight.

“I think we need a professional association.”

“I think we need more funding.”

“I think we need a way to take our ideas to market.”

“We’ve got great ideas but don’t seem to convert them into business.”

“We’ve got to patent and protect our ideas.”

In the nearly 2 hours of “ideation”, not a single word was mentioned that I haven’t heard in EVERY U.N. Development, World Bank, World Economic Forum, YPO, WPO, business school, venture conference, entrepreneurial gathering for the past 25 years.  There were no “ideas” – merely the recitation of “fixed delusions”. 

With roughly 4.5 billion people on Earth who struggle to access potable water, adequate nutrition, commonly available sanitation and health technologies, how is it that we can continue to suggest that humanity’s future is somehow mediated on the proliferation of smartphones and digital devices?  Doesn’t anyone see that our lemming-like race to the sea of Apple, Samsung, Microsoft, Google and Huawei is lubricated by the genocide of extractive industries that continue to perpetuate a system in which:

• Utility is defined by Edison and Westinghouse at 60Hz on 110, 220, or 240 volts of distributed power;
• Communication is defined on narrow RF spectrum at 3G, 4G, or 5G;
• Value is defined by fiat currency accumulation; and,
• Education is defined by consensus facility with approved technology?

We’re using 140-year-old distributed power models to power 95-year-old radio technology to rent airwaves to disseminate propaganda for which we pay subscription access fees on the “free” internet.  And we congratulate ourselves on “development” with our modern “ideas”. 

James Mill and J. Russell Reynolds offered us a view of the cognitive process in which we observe the world around us and then abstract it into social forms which allow for the consensus acceptance or rejection of values and norms.  Upon the fabric of these normative perspectives, we embroider embellishments which attract more or less attention based on what we seek to highlight or obscure.  But what we don’t do is challenge any of the underlying compositions of the threads that form the warp, the weave, or the enhancement.  And by this I mean we don’t engage in:

• ·        the explicit consideration of the essence of matter and energy;
• ·        the unmasking of incentives behind the animating utility energizing the apparatus;
• ·        the beneficiary of the consensus technology that dictates incumbent modalities; and,
• ·        the introspection on what alternative mode or method might achieve equal or better results with less phase inefficiency from which rent can be extracted.

Until each of these four steps is routinized into our acceptance, adoption and integration of technology or behaviors, we haven’t innovated, we haven’t ideated.  We’ve merely reinforced the fixed delusions and, in so doing, cost someone somewhere their liberty and in many cases, their life.

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