A Religious Perspective (Index)

https://www.friendsofnotredamedeparis.org/the-stained-glass-of-notre-dame-de-paris/

R-E-S-P-E-C-T

https://www.freep.com/story/entertainment/music/brian-mccollum/2020/06/29/aretha-respect-movie-jennifer-hudson-pictures-photos-video-poster/3264208001/

Many Americans today cry out for “respect”. They see a social, economic and political system that does not work for them. A political party that really understands this situation would take strong action, IMHO. Some thoughts …

Reform unemployment insurance to provide 75% of historical income for 6 months and 50% of income for 12 months. Limit coverage to $60,000 of base income.

Provide a 50% “bridging subsidy” for individuals whose income has dropped by more than 25% for up to 3 years. This would handle the effects of international trade and firm bankruptcies.

Provide catastrophic health care coverage for all, covering single event expenses exceeding $25,000.

Set a $15/hour adult minimum wage, indexed to 70% of the median income.

Set a separate 10% income tax rate on hourly earned overtime income, excluding it from regular “adjusted gross income”.

Exclude the first $100K of owned homestead property from taxation and prohibit property taxes on first $250,000 for those aged 70 or above.

Offer $10,000 for 2 years for high school graduates for their education and training, including “career and technical” training.

Provide an annual $10,000 childcare funding source for up to 4 children aged 0-6.

Overhaul the “welfare system” to combine various programs into a single program combining a universal basic income (UBI) and the earned income tax credit (EITC).

Provide a $15/hour volunteer hour tax credit for up to 200 hours annually, including service with religious organizations.

Provide a government funded 100% matching for 401(k) plan contributions up to $10,000 annually.

Limit corporate type taxation to 10% for revenues below $1 million and 20% for revenues below $5 million.

Offer a 50% federal tax credit for first $10,000 of cross-state moving expenses.

Set all import tariffs at zero percent, eliminating the effective tax on purchases.

Limit combined state and local sales taxes to 5% of purchase values.

Provide a 50% federal 401(k) match on the first $5,000 of savings. Offer a federally backed guaranteed return fund for 401(k) accounts with an after-inflation return of 3%.

Revise the “independent contractors” social security law to require the 12.4% self-employed contribution to be identified and deposited for all income.

Changes like these would reduce income equality, provide income security, and better engage citizens in our economic, political and social systems. In total, they would require a 5-10% reduction in net income for the top one-third of income earners. Addressing a 40-50 year period of increased income and wealth inequality requires major changes to the system that has evolved.

How to Fund These Changes

Eliminate the “carried interest” loophole benefit for investors.

Limit the reduction of “capital gains” taxes versus labor income to a maximum of 20%. Increase the minimum period for long-term capital gains to 3 years. Provide a 50% of annual inflation above 4% credit in the detailed calculation.

Require income earners to pay social security taxes on $1 million annually.

Eliminate the mortgage interest deduction on second homes.

Levy an annual 0.25% of assets tax on banks and financial institutions.

Levy a 0.25% financial transactions tax on stock and bond investors and traders.

Levy a 20% tax on inherited assets above $5 million, allowing a 10-year tax payment plan.

Set a 10% “luxury tax” on all transportation asset transactions worth $1 million or more.

Set a 0.25% annual federal “luxury” real estate tax on all residences worth more than $2 million.

Levy a 0.25% of deal value fee on all “mergers and acquisitions” transactions of $100 million or more.

Levy a 0.25% excess profits tax on earnings above a 5% real, inflation adjusted return on assets (ROA) for firms with revenues of $100 million or more.

Reduce the depletion allowance base on mineral assets by 10% of the acquisition cost.

Increase the minimum foundation endowment spending from 5% to 6% to provide more current social benefits and limit the accumulation of assets by universities and other not for profits with $100 million plus of invested assets. Provide an option to pay a 0.5% of assets annual fee to keep 5% or a 1% fee to only spend 4%.

Increase the IRS audit budget by 50%.

Ouch, ouch, ouch! I’ve taught economics at 4 universities across the last 40 years. When we get to the “policy” weeks, I’ve always shared Ronald Reagan’s story about the disincentive effect of a 90% marginal income tax as a legitimate lesson in “toxic” income redistribution. There is certainly a limit to “progressive taxation” which undercuts the incentive of highly productive individuals to fully engage in the economy. The left is burdened with “the details”. Is a 50% income tax rate too much? 40%? 35%? 33%? 30%? I don’t think that Americans are ready, willing and able to embrace an increase in tax rates from 10-22-32-37% to 15-25-35-40%. Changes in the details of the tax code are easier to understand and support.

Analysis

Since the second world war, the US has greatly succeeded as an economic and military superpower. Productivity gains were widely shared as increased real incomes from 1945 to 1975, but not since that time. Real, inflation adjusted, gross domestic product (GDP) has increased 10-fold since 1945. The population is 2.43 times larger, up from 140 to 340 million. Real GDP per capita has increased 4-fold.

Let that sink in. The US economy is 10 times larger (in real terms) than the end of the FDR era when “the arsenal of democracy” was victorious in a truly existential conflict. 10 times as large. The population is now 2 and 1/2 times larger. In 1950 the US had just 15 metro areas with 1 million people totaling 50 million (1/3rd). Today we have 35 metro areas with at least 2 million people totaling 162 million (1/2). We are now a metropolitan society. Productivity, income and competition are much higher in the metro areas. Non-metro areas lag behind with limited hope for the future. This is the inevitable result of a capitalist, technical, global, meritocratic, neo-liberal economy.

Imports and exports have grown from a combined 6% of GDP to 30% of GDP. We all compete in a global economy.

https://fred.stlouisfed.org/series/B021RE1A156NBEA

The college degreed population has grown 6-fold since WWII, from 6% to 36%.

https://www.statista.com/statistics/184272/educational-attainment-of-college-diploma-or-higher-by-gender/

For better or for worse, we live in a “meritocracy”. Large organizations dominate the economy. They require “talented” individuals to perform key functions. They pay a premium for “talented” individuals. The increased inequality of income and wealth is partly due to the larger, global, complex, competitive economy better compensating the college educated and partly due to the “top 1%”, “top 0.1% and “top 5%” capturing a greater share due to their powerful roles.

Average income and lower income citizens broadly understand our situation. We have moved from 60% to 90% high school graduation rates. Average measured IQs have improved by 15 points. The “bottom 2/3rds” have not shared much of the four-fold growth in real output per person, even though they have greatly invested in their human capital, become two-income earning families, engaged at work and delivered for their employers in more demanding and strictly measured roles.

We have strong “populist” pressures today because our system has not delivered economically, politically or socially for the average family in the last 50 years.

“I work hard but I never get ahead”.

The Democratic party coalition of labor, immigrants, Catholics and southerners was shattered by the Civil Rights Act of 1964, the cumulative restriction of immigrants from 1910-70, the 1960’s counterculture, and the postwar decline of manufacturing from 30% to 10% of the economy. The party reassembled a new coalition of labor, minorities, urbanites and highly educated philosophical liberals in response to Reagan’s victory in 1980. Bill Clinton triangulated a “third way” in 1992 to win the presidency and to be re-elected in 1996. Newt Gingrich orchestrated a Republican revolution in 1994-98 that blocked any rebuilding of a solid Democratic majority. Other than “Obamacare”, Democrats have delivered few program results for their constituents or the broadly defined working and middle classes. Democratic apologists argue that they tried but were stopped by the other party, yet the public always focuses on “results”.

The Republican Party went “all in” on a consistent economic, social and international conservatism with Reagan’s 1980 election win. Following the “misery index” and “malaise” of the Carter years, there was renewed economic growth during the Reagan years which accelerated in the Clinton years. “Lifestyles of the Rich and Famous”, “Dallas” and “Greed is Good” shaped public perceptions in the last 20 years of the century. Republicans very effectively sharpened their anti-tax and “government is evil” views. Social wedge issues of abortion, crime, welfare, gun rights, gays, atheists and immigrants rose in importance. Democratic overreach on affirmative action, abortion rights, gay rights and the priority of individual rights versus religious rights helped the Republicans to solidify their appeal to socially “traditional” Americans, irrespective of their economic interests.

Democrats continued to blame “big business” for the relative decline of “labor” throughout the last 50 years, but the party’s recent general support for capitalism, bankers and international trade, followed by the bank “bail-outs” of the “Great Recession” undercut its legitimacy as a spokesperson for the “working man”.

The Republican party slowly left behind it’s East Coast and Midwest Rockefeller and Hanna roots as the party of “big business”. It adopted a more extreme libertarian, wildcat natural resources, Goldwater, Friedman, technological, entrepreneurial, Western, Texan, Floridian, Southern, rural and sunbelt perspective. These groups were aligned by their commitment to individual economic rights and opposition to a central government counterweight. Bush, Sr. and Bush, Jr., supported by Dick Cheney and Donald Rumsfeld, served as transitional figures from a conventional Main Street New England to a more populist Texan Republican point of view.

The Republican Party has successfully portrayed itself as the people’s representative of the individual against the government, the regulators, the bureaucrats, the judges, the lawyers, the intellectuals, the universities, the bankers, the teachers, the internationalists, the socialists, the anarchists, the counterculture, the atheists, the communists, the globalists, the mayors, the journalists, the mass media, Hollywood, the criminals, the immigrants, the deviants, the “other”. This is a very powerful political philosophy and tactic. Hence, many working class and middle-class individuals have chosen to vote for a party that supports their individual economic and social rights.

Conclusion

The working class and middle class have been left behind in the post-WW II era. The Democrats have failed to offer an attractive center-left option such as that outlined above. Perhaps someone will lead the party to address these opportunities. The Republican party promotes radical individualism as the cure for all social needs. Many Americans want to believe in this view. They strongly want “RESPECT” for their individual selves. Democrats increasingly focus on the rights of minority and interest groups rather than individuals. STALEMATE???

The Blind Men and the Elephant

https://www.peacecorps.gov/educators/resources/blind-men-and-elephant/story-blind-men-and-elephant/

This Indian story helps us to understand that the “whole” is different than the “sum of the parts”. “Everybody wants to rule the world” is another way to express this paradox. We each have a perspective. We errantly “know” that our perspective is right.

https://en.wikipedia.org/wiki/Everybody_Wants_to_Rule_the_World

Each of the blind men mistakenly “knows” that his perspective is “right” and dominant. In society, we experience this across the various professions and industries who also “know” that they are THE “most important, valuable and insightful”.

  1. Rulers, politicians, judges, and bureaucrats
  2. Advisors, consultants, lawyers, and lobbyists
  3. Entertainers, artists, media, journalists, travel and leisure
  4. Military
  5. Public safety, police and fire
  6. Priests, ministers, rabbis
  7. Intellectuals, philosophers
  8. Educators
  9. Engineers and scientists
  10. Builders, architects, construction staff
  11. Farmers, foresters, fishers, miners
  12. Owners, capitalists, executives, bankers
  13. Managers, administrators, business professionals
  14. Traders, wholesalers, retailers
  15. Skilled trades, essential workers
  16. Health care professionals
  17. Care givers, counselors, psychologists, and social workers

17 distinct groups by my accounting. Each group can put forth arguments for why they are the “most important”, adding the most value now and in the future, at the critical location, taking the highest view, most essential, largest, oldest, most appreciated, best paid, driven by leaders, lifesavers, building the future, leading the way, preserving and organizing society.

Historically, the rulers, advisors, priests and owners conspired to actually run society and collectively justify their leadership. In the last 500 years the historical rulers have been challenged by each of the other groups.

  1. populist leaders, Machiavelli, totalitarian justification, fascism
  2. spin doctors, social media influencers, investment bankers
  3. political pundits and commentators
  4. the secretary of defense, the military-industrial complex, neo-conservatives, coups
  5. public safety unions, associations and political influence
  6. ecumenical associations, direct and national political influence
  7. freedom of speech, tenure, existentialism, postmodernism, poststructuralism
  8. unions, PACs, professional rights, the therapeutic society
  9. STEM, analysts everywhere
  10. infrastructure, ratings
  11. farm bill, political influence
  12. Davos, consolidation of income and wealth, political influence
  13. Professional class, suburbs, UMC, elites, educated
  14. globalization, luxury goods, Amazon, Walmart, Dollar General, Costco
  15. unions, tea party, occupy Wall Street, pandemic support
  16. AMA, med school enrollment limits, health care % of GDP, big pharma, big insurance, hospital system monopolies
  17. the therapeutic society, hugs

Everybody wants to rule the world. The world is bigger. More people. More wealth. More assets. More potential. More productivity. More ideas. More perspectives. More art, entertainment and leisure. More education. More scientific understanding. More resources. More nature. More opportunities. More class perspectives. More minority groups. More voluntary associations. More nations. More globalism. More trade. More religious views. More communications and information channels.

There is no single reason why our society remains knitted together. There are many forces that drive it apart. I am hopeful that the various interest groups can perceive “the elephant”. Our political, social and economic society is the greatest ever known, but it is threatened by decay from all sides.

Fukuyama: Identity (2018)

Preface

The result of history remains the liberal state linked to a market economy as he claimed in 1992.

Yet liberal democracies face 3 inherent threats to their legitimacy.  Thymos, the need for individuals to feel that their dignity is respected.  Isothymia, the demand to be respected on an equal basis.  Megalothymia, the desire to be recognized as superior.  These demands don’t melt away with progress or modernity.  They can be interpreted at the individual or group level.  Individuals, especially those in less successful groups, can deeply feel their lack of respect by the government, economy, institutions, media, and culture.  The superiority craving folks can reach their desires through accomplishments but can also lead populist political movements.  Relatively equal treatment of citizens is a strength of many modern liberal states.

Liberal democracies with market economies surged during the last quarter of the 20th century, but have struggled in the 21st century due to economic crises, China’s rise and consolidation into an authoritarian state, resurgent nationalist and religious demands, and the difficulties of building and sustaining a  liberal democracy aligned with the modern international order.

“Demand for recognition of one’s identity is a master concept that unifies much of what is going on in world politics today”.  Universal recognition of human dignity is challenged by partial recognition based on nation, religion, sect, race, ethnicity, and gender.  Threats arise from the left and right.

1. The Politics of Dignity

Twentieth century politics was largely a left (equality) versus right (freedom) battle.  Politics today is more often based on identity.  The left focuses more on protecting the group rights of marginal communities: blacks, immigrants, women, Hispanics, LGBTQ, refugees, and workers.  The right focuses more on protecting the group rights of other traditional, rural, religious, national, racial and ethnic communities.  The “classic liberal” emphasis on abstract, universal, individual human rights supported by both the center-left and the center-right has been overshadowed.

Strength of the Soviet and Chinese models, weak Western response to 9/11, growth of terrorist groups, inherent EU tensions, the Great Recession and Euro crisis (Greece), growing inequality and the disruptions caused by rapid globalization have all contributed to a reassessment of the former consensus on the best way to organize politics and economics.

Underlying these changes is the concept of “identity”.   An individual’s “identity” is his perception of his true inner self, often in contrast with the rules and norms of society.  Starting with Jean-Jacques Rousseau, individuals and intellectuals have largely embraced a view of human nature as being intrinsically good, fighting against the constraints of society.  Modern individuals seek to become aware of and develop their true identity based upon introspection and feelings.  Making this identity central to their lives, individuals also demand respect for the inherent dignity of their individual and group identities from society. 

Fukuyama describes Putin, Jinping, Trump, Brexit, Terrorists, Orban, Black Lives Matter and Me Too within this framework of respecting identities.  Respect for identity can be a tool for constructive change or for victimization, populism, and authoritarianism.

2. The Third Part of the Soul

Humans are not driven by utility maximization as proposed by economists.  Fukuyama prefers Plato’s view in The Republic.  Individuals are driven by desire and reason, but also by thymos/spirit, the seat of judgement about worth.  Individuals want to feel good about themselves.  They care about their inner worth and dignity.  They want to be respected by society.  Hence, many social and cultural issues become hotly debated political wedge issues.  Abortion is not about minor public policy opinion differences or varied religious perspectives or framing communications as pro-life versus pro-choice, but a judgment about me and my perspective, my community, my essential values that must not be challenged!  It is a personal issue that demands respect.  Individuals who do not receive respect naturally become resentful.

3. Inside and Outside

Martin Luther developed the insight of an inner self distinct from an outer or social self.  Faith takes place only in the inner self, independent of the roles and influences of society, priests, and the Church.  With this shift in perspective began “a whole series of social changes in which the individual believer was prioritized over prevailing social structures”.  In traditional human societies social roles were fully defined.  No individual choice was required.  No conflict between “the individual” and society could be imagined. [Fukuyama does not explore the earlier steps towards awareness of individual identity seen in the Renaissance].

Jean-Jacques Rousseau expanded this gap between the individual and society.  The individual is inherently good and largely misshaped by society.  Religious faith was only one dimension of the choices that need to be made.  The depth of the individual’s true nature was hidden and required significant work to explore.  “Original sin” was incorrect.  Most “sins” were created by the demands of society.  Individualism existed before communities.  The real individual could be created.  The “individual” was now deeper, broader, and evolving.  He quotes Charles Taylor, “This is part of the massive subjective turn of modern culture, a new form of inwardness in which we come to think of ourselves as beings with inner depths.”

4. From Dignity to Democracy

Christianity emphasizes the central role of humans as agents capable of making moral choices, despite being hindered by original sin.  Hence, there is universal dignity for men.  Immanuel Kant also argued that humans can make moral choices and that human will is worthy of respect.  GWF Hegel agreed that this capacity for moral choice was praiseworthy.  He argued that human history was shaped by the struggle for recognition and that it was natural that political structures that recognized this need would evolve and be passionately adopted.  The stage was set for liberal democracies, the American Revolution, and the French Revolution.

5. Revolutions of Dignity

The Arab Spring and color revolutions in Georgia and Ukraine reflect the strong desire of ordinary people for the basics of liberal democracy.  Not a duplication of Europe and the U.S., but a state that recognizes “human agency, the ability to exercise a share of power through active participation in self-government”.  Voting, free speech, free assembly, equal dignity, moral agency as a member of a democratic political community. 

 “Successful democracy depends not on optimization of its ideals, but balance: a balance between individual freedom and political equality, and between a capable state exercising legitimate power and the institutions of law and accountability that seek to constrain it.  Authoritarian governments, by contrast, fail to recognize the equal dignity of their citizens.”

6. Expressive Individualism

The “classic liberal” tradition of individualistic identity has 3 sources.  Luther broke the individual free from the collective in order to better relate to God and follow his law.  Kant located the individual as a free moral agent capable of making choices following abstract laws of reason like the categorical imperative or logical golden rule.  Hobbes, Locke, and Mill expanded the universe of freedoms and placed them within a social contract system of political rights such as “life, liberty and the pursuit of happiness”.

Rousseau changed the game completely.  The individual is now clearly first, ahead of society and the traditional God.  The individual is inherently good, but often corrupted by society.  The individual can find that good self by looking inward, deeply and with feeling.  The individual has a moral obligation to find and express that good inner self.  This autonomy applies in all dimensions.  Creative powers become more important.  The garden of Eden story is directly challenged.

The shared moral view of the Christian church was challenged from many other directions: religious wars following the reformation and counter-reformation, the rise of the artist’s creative powers, romanticism and naturalism, the conflicts with the enlightenment and scientific revolution, and Friedrich Nietzsche who declared “God is dead” and that the individualistic superman can now define his own moral values.  The individual expanded to consider faith, rights, politics, values, religion, science, facts, meaning and reality.

“The problem with this understanding of autonomy is that shared values serve the important function of making social life possible.  If we do not agree on a minimum common culture, we cannot cooperate on shared tasks and will not regard the same institutions as legitimate; indeed, we will not even be able to communicate with each other absent a common language with mutually understood meanings”.    Many individuals don’t hear or respond to the call for in-depth exploration, creative expression, and superiority.  They honestly prefer to conform to social norms and interact with their neighbors based on the existing society.

Individual rights were much more widely recognized across the nineteenth century.  Collective identity, in the form of nationalism and politicized religion also began to grow with unfortunate consequences.

7. Nationalism and Religion

Luther, Rousseau, Kant, Locke, and Hegel set the stage for an individualistic and universal form of identity.  The equal dignity of all human beings was obvious, worthy of political protection and the basis for individual moral development (at a minimum).  Together with the scientific revolution, Adam Smith, urbanization, and industrialization, it promoted the modern capitalist market economy.  Free trade, free exchange, private property, limited government interference.  More growth, trade, investment, urbanization, profit, industrialization, government support, secularization, experimentation, and science.  Rinse, repeat.  Rinse, repeat.  The growing economy created pressure for standardized education, languages, units of measures and national laws to make trade and investment more effective.  The growing capitalist, trade, citizen, bureaucrat and bourgeoise powers competed against the traditional religious, economic, political, and social powers.

Johann Herder in the late 18th century began a movement against these universalizing views.  The individual local nation, region, city-state, culture, geography, traditions, customs, food, festivals, saints, music, and religion have a role to play.  Humans mostly live in their smaller communities.  They provide individual and social values which should not be discarded.  They are as real, authentic, and valuable as any newly discovered rights, science, trade, or philosophy.  In a world of overlapping dimensions, nationalism was born.  Nationalism emphasizes a collective identity, a set of rights and demands for respect.  It fights against smaller (US states rights) and larger political groups (EU).  It inspires passion and loyalty.  It often focuses on the collective, organic “will of the people” rather than arbitrary political results.  Nations are subject to capture by business, military, church, and political elites. 

The migration from traditional, agricultural societies with integrated community, social, political, economic, and religious norms, values, and beliefs to secular, urbanized, industrialized, multicultural, individual, separated values societies has played out for 500 years.  Rural to urban in Europe for centuries.  Rural to urban in the US for 150 years.  Immigrants to the US for 150 years.  Immigrants to Europe for 75 years.  Rural to urban migration across the world for 75 years.  In each case, there are strong conflicts between the integrated set of community oriented traditional values and the more diverse set of individual oriented values.  Sociologists decry the breakdown of traditional societies and the anomie or anxiety created.  Some individuals and families make the transition into the new world, while others struggle to adapt.

Passionate and sometimes violent nationalist, religious and populist reactions take place.  Individuals and groups who feel that they, their groups, and identities are out of place, react negatively towards the society that does not embrace them.  “Deplorables”.  “The Beverly Hillbillies, Green Acres”.  “Hang on to their guns and religion”.  “You didn’t build that”.  Nationalism, radical Islam, and U.S. populism share these roots.  “Radical Islam by contrast offers them community, acceptance and dignity”.  Fukuyama closes the chapter with the proviso that these groups clearly also represent other dimensions of political, social, economic, and religious life.   

‘8. The Wrong Address

The 20th century was dominated by a single left versus right political spectrum.  The far left (communism) and far right (fascism) were discredited by the end of the cold war and the results of WW II.  The center-left and center-right mostly competed on the same left versus right dimension focused on economic issues.  Equality, redistribution, fairness, labor, safety nets, and the welfare state versus economic opportunity, growth, property rights, innovation, entrepreneurship, capital, and freedom. 

In the US and Europe, income and wealth inequality have risen back to 1875 robber baron/laissez faire levels after contracting in the post-WW II era.  Yet, the center-left and populist economic left politicians have not benefitted from the reduced relative status of the working and middle classes.  The global financial crisis in 2007-10 sparked by the reckonings of unconstrained greed throughout the US banking and mortgage system did not benefit the political left, which was seen as complicit in globalization and “the third way”. 

Fukuyama doesn’t delve into the political details.  Instead, he simply refers to the growing political dimension of “identity”.  Nationalist, populist leaders have been able to position these situations and others as part of the disenfranchisement of “the people” by unelected, self-appointed elites.  Nationalist leaders in India, Japan, Hungary, Turkey, Poland, and the US have capitalized on these concerns.  [Fukuyama fails to highlight either the “traditional to secular transition conflict” outlined above or the bewildering complexity of modern life described by Robert Kegan in “In Over Our Heads”]

9. Invisible Man

It’s not “the economy, stupid” as claimed by James Carville.  It’s my dignity. [Fukuyama does not emphasize the possibility that once a society reaches a certain level of economic success, that it might then turn to non-economic dimensions as being much more important].  Relative status, qualitatively, matters to everyone.  No one wants to be Ralph Ellison’s “invisible man”.  The loss of status, like the loss on investments, has a strong negative emotional effect.  This matters to the middle class and the working class.  The loss of relative status is very painful.  Immigration becomes a major issue because immigrants can be viewed as the cause of a loss in status/economic position.

“The nationalist can translate loss of relative economic position into loss of identity and status; you have always been a core member of our great nation, but foreigners, immigrants, and your own elite compatriots have been conspiring to hold you down; your country is no longer your own, and you are not respected in your own land.  Similarly, the religious partisan can say something almost identical:  You are a member of a great community of believers who have been traduced by nonbelievers; this betrayal has led not just to your impoverishment but is a crime against God himself.  You may be invisible to your fellow citizens, but you are not invisible to God”.

’10. The Democratization of Dignity

Modern liberal democracies in North America and Europe were founded on the individualist view of identity.  Through time they expanded the set of citizens whose rights would be honored, thereby fulfilling their early idealistic promises about universal rights.

In the second half of the 20th century, the “therapeutic society” emerged in the West, championing Rousseau’s ideas.  “Philip Rieff  … argued that the decline of a shared moral horizon defined by religion had left a huge void that was being filled by psychologists preaching a new religion of psychotherapy.  Traditional culture, according to Rief, ‘is another name for a design of motive directing the self outward, toward those whose communal purposes in which alone the self can be satisfied’.  As such it played a therapeutic role, giving purpose to individuals, connecting them to others, and teaching them their place in the universe.  But that outer culture had been denounced as an iron cage imprisoning the inner self; people were told to liberate their inner selves, to be ‘authentic’ and ‘committed’, but without being told to what they should be committed.”

“The affirmation of the inner identity depended, in the final analysis, on the truth of Rousseau’s assertion that human beings were fundamentally good; that their inner selves were sources of limitless potential.”  “Ideas that ultimately trace back to Rousseau: that each of us has an inner self buried deep within; that it is unique and a source of creativity; that the self residing in each individual has an equal value to that of others; that the self is expressed not through reason but through feelings; and finally that this inner self is the basis of … human dignity”.

The author shares the work of the 1990 California Task Force to Promote Self-Esteem and Personal Social Responsibility, noting the inherent contradictions.  “The effort to raise everyone’s self-esteem without being able to define what is estimable, and without being able to discriminate between better and worse forms of behavior, appeared to many people to be an impossible – indeed, an absurd – task”.

The author notes some results of the adoption of a “therapeutic society” worldview:  rise of narcissism described by Christopher Lasch, growth of counseling industry at large and in schools, successful therapeutic versions of religion catering to those seeking personal growth, an expansion of the desired role of government from managing the infrastructure to directly ensuring the growth of self-esteem and recognition for all citizens,  a diminished role for personal responsibility since many personal outcomes are primarily driven by social structures, and universities embracing the individualistic ethos.

“The therapeutic model arose directly from modern understandings of identity.  It held that we have deep interior spaces whose potentials are not being realized, and that external society through its rules, roles, and expectations is responsible for holding us back … The therapist was not particularly interested in the substantive content of what was inside us, nor in the abstract question of whether the surrounding society was just or unjust.  The therapist is simply interested in making his or her patient feel better about themselves, which required raising their sense of self-worth … The rise of the therapeutic model midwifed the birth of modern identity politics … everywhere a struggle for the recognition of dignity”.

11. From Identity to Identities

Social movements in support of various “rights” exploded in the 1960’s: civil, feminist, sexual, environmental, disability, indigenous, immigrant and gender identity.  They began as new waves in the expansion of individual rights within the “classic liberal” political model.  In each case there were activists who promoted the importance of group rights as being even more important than equal individual rights.  “Equal individual rights” was deemed an inadequate goal.  Previously invisible and disrespected groups needed to be respected as groups specifically because of their differences.  The “lived experiences” of exploited group members were to be relished even though the majority population might not be able to understand their experience and perspective. 

Multiculturalism evolved from a high level political need to protect the basic rights of large minority populations to the goal of uplifting the superior distinctive cultures of previously disenfranchised groups.  The number of identity groups and intersectionality’s grew exponentially.  Much of this change in viewpoint was driven by a relatively small number of intellectuals and activists within the broad “new left” umbrella, but within a therapeutic society, support for this kind of identity-based perspective grew over time. 

Fukuyama argues that left-leaning political parties shifted their focus from the working class and economic issues to identity groups for several reasons.  Marxism and communism were discredited.  The center-left pursuit of a growing social welfare state had lost popular support due to its fiscal costs.  Some activists argued that the historical center-left approaches were too closely aligned with the “power structure” of politics, economics, patriarchy, science, religion, objectivity, elites, Western values and globalization and ought to be abandoned.  A cultural transformation could be done more easily through the educational, information and entertainment industries than via the difficult work of practical politics.  Postmodernism and deconstruction slowly increased their influence on Western societies after 1968.

The author notes the advantages of narrowly focusing on the “lived experience” of oppressed groups to make their suffering real and press for meaningful legal and cultural changes.  He also outlines some disadvantages.  Minority groups are not uniformly morally superior in principle or in all their actions.  Identity politics draws attention away from rising inequality of income and wealth.  The white working class loses support from the political left since it is not as obviously oppressed as other groups.  Attempts to address the common concerns of the broad working and middle classes are undercut.  Identity politics can conflict with historical views of a strong right of free speech, even when it offends the feelings of others.  The assembly, coordination, and maintenance of a coalition of identity groups is inherently difficult.  Identity group politics can clash with historic center-left views.

Identity politics on the left has since led to identity politics on the right.  Once groups decided that their rights, feelings, insights, and experiences were sacred and not subject to criticism from the outside, they adopted beliefs, norms and communications standards that can rightly be called “politically correct”.  We are right because we know we are right.  Everyone else is wrong and looked down upon.  The general population, members of majority groups, individualists, traditionalists, and others soon took offense. 

Politicians on the right have leveraged both polarization and populist feelings and then used the left’s framing and language to construct new coalitions that realign politics from a primarily economic to a primarily cultural axis.  My religion is right.  My race is right.  My traditional view is right.  My America is right.  American isolationism is right.  American nativism is right.  As many commentators have indicated, Trump took advantage of pre-existing concerns within the American public to redefine the Republican Party based on identity first.

Fukuyama highlights several issues with identity politics.  The number of groups proliferates.  Identity claims are often nonnegotiable, so trade-offs and negotiations are blocked.  Identity politics works against the need to achieve common goals via deliberation and consensus.  Communication and collective action are more difficult.

’12. We the People

“Political order both at home and internationally will depend on the continuing existence of liberal democracies with the right kind of inclusive national identities”.

Countries without a clear national identity, such as Syria, tend to fall apart.  Nations can be formed based on geography, ethnicity, race, religion, culture, language, or ideas.  “National identity begins with a shared belief in the legitimacy of the country’s political system.”  Identity can be reinforced through institutions, education, culture, and values.  Diversity provides benefits to nations but can also bring challenges.  National identity can be misused for political and military purposes.

“National identity can be built around liberal and democratic political values, and the common experiences that provide the connective tissue around which diverse communities can thrive.”  An effective national identity helps to provide security, good government, economic development, trust and social capital, social security, and the basis for liberal democracy.

“A liberal democracy is an implicit contract between citizens and their government, and among the citizens themselves, under which they give up certain rights in order that the government protects other rights that are more basic and important.”  Democracies also require a supportive culture, deliberation and debate, acceptance of outcomes, tolerance, and some degree of mutual respect.  Democracies require broad and deep support for constitutional government and human equality.

International governments cannot replace national governments.  They require shared norms, perspectives and cultures that are simply too varied at the global level.

’13. Stories of Peoplehood

National identities are insecure.  Regional and global institutions make conflicting claims upon citizen loyalties at a higher level.  Group identities in multicultural societies pull against the national forces.  Immigration and refugees add group identities, which often contrast with traditional national cultures, and raise issues of citizenship, loyalty, and nationhood. 

“The policies that do the most to shape national identity are rules regarding citizenship and residency, laws on immigration and refugees, and the curricula used in the public education system to teach children about the nation’s past.”  Stories of peoplehood have a large impact as well.

The European Union created a supra-national government without investing in citizenship, symbols, or political legitimacy.  Even though the EU has added functions and members through time and lightly shaped common values and institutions, it has not prepared well for any true common nationhood.  Brexit should not have been such a big surprise.  Anti-EU populism should not be a surprise either.

Immigration and refugees became a large real and political problem because the EU has complicated matters through its open borders agreements, the volume increased, many immigrants were from Muslim, Arab and African origins, many countries maintain descendant based rules and many countries had little experience building multicultural societies.  The rise of group identity politics changed the pressures for and against successful integration. 

’14. What is to be Done?

Address the real issues that trigger the need for a deep-felt group identity to demand special rights.  Promote greater appreciation for the multiple identities that each person holds.  Promote the creedal national identities that can effectively include many groups.  Invest in integrating immigrants into society.  Re-emphasize common economic, cultural, and political interests of the broad working and middle classes.  Revise the EU citizenship, immigration, and political structures to make them a more effective and politically legitimate body.  Eliminate laws that discourage naturalization of non-descendants.  Share the long-term progress in extending rights to a broader set of people within classic liberal democracies despite the history of slavery, colonialism, and inequality.  Adopt compromise laws on immigration that secure borders and enforce state control over who becomes a citizen on what basis.  Clarify dual citizenship and citizen versus resident rights to promote the benefits of citizenship.  Increase service requirements to boost national loyalty.

Modern Curriculum for Citizens

https://www.heraldtribune.com/story/opinion/columns/your-voice/2023/04/23/new-college-of-florida-needs-a-new-direction-to-become-a-top-school/70131713007/

Modern Curriculum for Citizens

Citizens today face a large, complex, dynamic environment with the requirement to make good personal, social, political, economic, and moral choices.  Citizens and society are impacted by the quality of these choices.

The American public must invest in our students and citizens to offer an educational curriculum that covers all the relevant topics with enough depth and applicability to make them lifetime tools.  Modern science has much to offer.  Advanced nations and economies have developed institutions and cultures that effectively perform the key functions of successful societies.  At the same time, the rapid technological changes, increased complexity, and huge scale of our world pose challenges.  The tension between secular and religious worldviews and across various political views is high and our skills at resolving these tensions or integrating individuals and communities have lagged behind the challenges.

A modern curriculum outlines the dimensions, structures, and challenges of our shared lives in all dimensions.  It highlights the successes that have been achieved in history and the failures.  It offers the various cultural, religious, social, political, and economic worldviews that have guided humans.  It critically assesses their strengths and weaknesses, contributions, and relevance today.

It raises the critical questions that are faced today.  It helps students understand how institutions, culture and politics all shape our world.  It outlines political and religious worldviews.  It encourages students to assume personal responsibility for their lives and participate in shaping our society at all levels.  The curriculum focuses on the role of the individual and the role of the community in each dimension of life.  An effective society requires voluntary engagement from its citizens.  This curriculum motivates individuals to participate and succeed.

These courses cover a great deal of material at a high level and provide time for an applications perspective.  They are courses for the citizen, not for those who expect to major in the relevant disciplines.

Ideally, the nation would adopt a single broad “model curriculum” outline and delegate the details of setting course content and standards to the states or regional educational accreditation agencies.

This proposal has 8 courses for high school students and 9 courses for university students.  It includes capstone courses on “My Future” and “Our Future” to integrate the courses in a meaningful way.  The university courses are designed to encourage states to offer them to all citizens at a nominal tuition rate through their state universities and community colleges.

101 American History

Full year course at the high school level.  Less biography and dates.  More about the major transformations of typical American life as the nation grew in size, expanded across the continent, invested in trade and infrastructure, transformed the land for changing waves of agriculture, adopted new technologies, embraced economic change, wrestled with manufacturing and urbanization, addressed racial, religious, ethnic and class differences, developed political parties, institutions and state versus federal roles, the role of communities and not-for-profits, the impact of religious diversity, economic theories of history, business cycles and panics, US expansion, conflicts, wars, empire, growing global role.  Major political parties and issues through time.  The role of communications technologies.  The expanded role of government.  The development of new institutions.  The expansion of individual rights and roles for women.  Government regulations.  Limits on laissez faire capitalism.  Taxation.  The self-sufficient man and the rugged individualist.  Immigrants.  Native Americans.  Relations with Mexico and Latin America.  Isolationism.  Globalism and trade.  The scale, social and economic nature of the country in 1800, 1850, 1900, 1950 and today. 

The US has a dynamic history of success in adapting its culture and institutions to meet the needs of the day.  It has a history of extending individual rights to more individuals and groups through time, despite opposition from some citizens.  Students can understand how existing beliefs, habits, laws, and institutions interact with technological, military, trade, economic, social, political, and religious innovations.  Change is slower than some desire.  Change is opposed on principle and because it has costs to some groups and individuals.  Some changes are reversed because they don’t work in practice, or they have unintended consequences.  The US has been relatively effective at maintaining individual rights and implementing changes on a decentralized basis.  This context is essential for understanding current issues and political differences.

Theories of history.  Evolution.  Adaptation.  Economic determinism.  Regional differences. Western civilization.  Land, labor, and capital.  Economic, social, and political power.  Cultural power.  Shining city on a hill.  Manifest destiny.  American exceptionalism.

102 Society / Sociology

The individual and the group, community, society.  Fundamental tensions.  Haidt and evolutionary psychology.  Empathy, language, trust, loyalty, free rider, game theory.  One on one.  Small groups. Groups of 150.  Hunter-gatherers.  Agriculture. Cities.  Leaders.  Power.  Religion.  Anthropological perspective.  Modern historical perspective.  Political theory perspective.  Contract theory. 

Roles of society.  Maslow’s hierarchy of needs.  Safety, protection.  Economic transactions.  Religion, explanation, myths, eternity.  Belonging.  Status.  Leadership.  Followership.  Law.  Compliance.  Entertainment.  Education.  Health.  Respect.  Property.  Children.  Deviants.

Interactions of power, status, wealth, and salvation/eternity.

Social capital.  Trust.  Institutions: family, neighborhoods, religious, professional, industrial, labor, intellectual, educational, economic, political, social services, libraries, ethnic.  Innovations through time.

Role of technological and economic change on social and political institutions.

Change, migration, stress, war, disruption, rootlessness, divorce, unemployment, bankruptcy, anomie.

Economic basis of power through history.  Labor theory of value.  Marx.  Existentialism.  Post-modernism.  Groups.  Class, gender, race, religion, ethnicity, nationality as potential victim groups.  Role of “others”.  Criminals and mental health. 

Functions of large organizations.  Political.  Economic.  Military.  Role of leadership.  Innovations through time.   Attraction, retention, and engagement. 

Special roles: opinion leaders, market influencers, pop culture examples, fashion influencers, media influencers, intellectual influencers, journalism and media influencers, social media influencers, literature, movie, and tv works, teachers, parents, ministers, and coaches.

Power of social norms and influence.  Desire for belonging and social acceptance.

High, medium, and low commitment communities.

Rise of nationalism.  Rise of global and supra-national groups.

How groups and communities are different from the sum of their parts.

Man is made to reside in community.

103 Economics

70% Microeconomics, 20% Macroeconomics, 10% International Economics.

Labor markets.  Product markets.  Competitive markets.  Rationale for government oversight.

Reinforce the American History overview.  Provide framework for Personal Finance, Business/Organizational Behavior and Globalization.  Outline one key model before Critical Thinking and Applied Decision Making.  Provide background for Political Thought and Shaping Our Future.

104 Civics / American Government

Historical and philosophical context for the US constitution.  Articles of Confederation.  Bill of Rights.  Checks and balances.  Rights of Englishmen.  Jefferson’s small farmer.  Hamilton’s trader.  The Federalist papers.  Federal and state roles through time.  US within European interests.  Supreme Court role defined.  Increasing role of government in the 19th and 20th centuries.  US and advanced economies.  Washington setting presidential roles.  Political parties.  Jefferson-Jackson support for farmers and small businesses.  Pre-civil war politics.  Civil war.  Reconstruction.  Post-reconstruction.  Isolationism.  Laissez-faire capitalism.  Political machines.  Progressivism.  Farmer-labor populism.  Nativist populism.  Socialism and radical unionism not.  Supreme Court as a conservative limit on progressive laws.  Local government reforms.  Income taxes.  Prohibition and its reversal.  New England and Middle Atlantic rule.  Midwest gains influence.  Democratic party in the South.  Southern Democrat political power in Congress.  Food safety regulation.  Regulating trusts and monopolies.  The Depression.  FDR and Democrats gain.  Reagan and the neoliberal revolution.

Political parties.  House and Senate.  Supreme Court.  Electoral College.  Legislation and budgets/funding.  Role of constitution versus congressional rules.  Presidential veto.  Line-item veto.  Independent agencies.  OMB.  Federal Reserve Bank.  International treaties.  United Nations.  Election funding.  Gerrymandering.  Lobbyists.  Military ruled by government.  DOJ.  FBI.  Rule of law.  Separation of church and state.  Filibuster.  Speaker of the House.  Majority leader of the Senate.  Voting rights, rules, and restrictions.  Presidential versus parliamentary system.  Two-party versus multi-party systems.  Simple versus ranked choice voting systems.  Third parties.  Direct election of Senators.  Direct election of presidential candidates.  Political parties as a moderating influence.  Sunset laws.  Zero-based budgeting.  Legislation versus appropriation.  Debt ceiling constraint.  Role of earmarks.  Economics of politics: public choice theory.  Role of politicians.  Representative or delegate.  Role of parties to simplify voting.  Role of character.  Recalls.  Citizen initiatives.  Role of political ideology.  Special interest groups.

105 Psychology

Standard introductory course.  Link back to evolutionary psychology in the society/sociology course.  Make clear that the simplified utilitarian model assumed by economists (maximize pleasure, minimize pain) is inadequate.  Address psychological views of religion, behavior, experience, and motivation.  Describe the overlap of social psychology with sociology and organizational behavior.  Describe the history of intelligence testing as a basis for critical thinking and multiple intelligences.  Clearly define personality profiles and talents so that these results can be used in the capstone course.  Describe the basic risk-averse nature of people that drives the risk/reward basis of financial markets.  Provide a basic outline of how experimental psychology performs experiments.  Outline the background for the fundamental challenge of organizations to align the interests of individuals and the organization. 

106 Personal Finance

Economic specialization.  Profession.  Industry.  Human capital.  Education.  Talents.  Multiple intelligences.  Income and wealth.  Retirement.  Saving.  Investing.  Risks.  Insurance.  Rent versus own.  Investing in education.  Accounting model of assets, liabilities, net equity, revenues, and expenses.  Risk versus reward.   Banks.  Checking and savings accounts.  Tax sheltered investments.  Capital gains taxes.  Strategies for saving.  Financial advisors.  Insurance agents.  Real estate choices.  Financial tracking tools.  Grocery shopping.  Clothes shopping.   Appliance shopping.  Medical services and insurance plans.  Personal services.  Home/construction services.  Car shopping.  Car buying versus leasing.  Just 15% more.  Buying status.  Using financial leverage.  Cost of borrowing: paycheck loans, credit cards, pawn shops.  Student loans and payment options.  The millionaire next door.  Negotiating employment.  Franchises.  Owning a business.  Side-gigs. 

107 Critical Thinking

General process and factors.  Individual or team.  Diverse sources, perspectives, models, contributors.  Inductive and deductive logic approaches.  Analogies.  Open-mindedness, active listening.  Identify and evaluate assumptions. Evaluate relevance and weight of evidence.  Evaluate data.  Is the goal proof, optimization, meets standards, or ranking?  Adequate research.  Meta-analysis of the decision process.  Likely errors. Lessons learned.  Devil’s advocate. Expert review.

Tools.  6 thinking hats.  Brainstorming.  Flowcharts.  Tables and graphs.  Descriptive statistics.  Hypothesis testing.  Formal logic.  Scientific method.  Math proof types.  Pattern identification.  Probabilities.  Expected value.  Legal logic.  Best practices.  Industry or discipline specific models.  Simulations.  Troubleshooting.  The rational financial decision-making model.

Pitfalls.  Probabilities, infinity, compounding, orders of magnitude, paradoxes.  Logical fallacies.  Portfolio effect; sum greater than parts.  Correlation and causation.  “Either/or” or “both/and” situation?  Is versus ought factors.  Objective and subjective factors.  Outliers.  Black swans.  Individual biases.  Thinking fast and slow.  Jump to conclusion.  Confirmation bias.  Anchoring.  Politics.  Personality.  Talents.  Experience.  False patterns.  Attribution error.  Abstract or applied.  Analog or digital.  Sales, marketing, legal and communications tricks.  Source biases.  We don’t get fooled again!

108 Shaping My Future

My personality, talents, and values.

Education, profession, industry.

Prioritizing and balancing competing claims.  Time and task management skills.

My advisors, mentors, coaches, and counselors.  Thanks for the feedback. 

My dating and relationship goals, limits, options, tactics, hopes, tools, beliefs, opportunities, advisors, and dreams.  Total commitment. 

My community and service preferences.

My religious explorations and commitments. 

Living a good life.  Building character and virtues.

Bucket list.  On my death bed.  Eulogy virtues. 

Rights and responsibilities.  Victimhood.  Choices. Investing in me. 

Setting goals.  Delivering results. 

301 World History, Cultures and Governments

Standard year-long high school or college textbook.  Some grounding in pre-historic development of humans.  Tools, iron, agriculture, leaders, religion.  Links to anthropology reinforcing the parallel development of similar social answers to universal questions.  Notion of “civilization”.  The individual and the community.  Free rider problem.  Role of language.  Central issues of cohesiveness within a society, power, and external threats.  Role of changing technologies.  Role of religion and institutions.  Role of military power.  Role of trade.  Role of changing economic assets.  Role of changing political and philosophical ideas.  Community and individual oriented societies.  Conflicts between traditional and modern views.  Nationalism, regionalism, and globalism.  Empires.  Maintaining power.  Prevalence of war and violence.  Individual rights, human rights, community rights.  The appeals of Marxism, capitalism, religion, democracy, and populism.  The tension between self-interest and larger groups at the individual, local government, organization, and nation-state level.  Religion, race, ethnicity, class, and ideals as ways to make a society cohere.

302 Applied Decision-Making

Rational financial calculation.  Cost/benefit analysis.  Strategic planning process.  Risk versus reward.  Managing a portfolio of investments or projects.  Task/project management.  Critical path.  Time management:  Getting Things Done (Allen).  Decision flow charts.  Process perspective.  Urgent versus important (Covey).  Expected value.  Financial modeling, sensitivity analysis, what if.  Simulations.  Scenario analysis.  Worst case scenario.  Committed versus flexible resources, undo.  Inquiry versus advocacy framework.  6 thinking hats (de Bono).  Brainstorming techniques.  Mission, vision, values framework.  Pareto analysis, prioritization.  Root cause analysis, 5 why’s.  Mind mapping, visualization (Buzan).  Cause and effect diagrams.  Force field analysis.  Expert Delphi groups.  T-account, “pros and cons”.  Game theory.  Mini-max.  Stable or unstable.  Data scrubbing.  Rule out some options to simplify.  Personal risk of recommendation.

Behavioral economics.  How we really decide.  Thinking, fast and slow (Kahneman).  Biases.  Satisficing versus optimizing (Simon).  Habits.  Heuristics.  Rules of thumb.  Fewer options.  First option.  Anchoring.  Framing.  Managing uncertainty.  Overconfidence.  Loss-aversion.  Mental buckets.  Nudges.  Limited information.  To a hammer every problem looks like a nail.  Follow the herd.  Social acceptance.  Confirmation bias. 

303 Business / Organizational Behavior

Standard introductory course.  Firms, capitalism, productivity, competition.  Government, industrial policy, trade policy, taxes, regulations, property, infrastructure, education, contracts, courts.  Ethics, stakeholders, social responsibility.  Comparative advantage, competitive strategy, international business, outsourcing.  Business forms, joint ventures, growth, corporations, business life cycle, creative destruction, entrepreneurs.  Returns to factors of production.  Strategy, leadership, management, specialized labor.  Departments, divisions, structures, matrix, project management, teams, agency.  Operations, quality, processes, planning.  HR, recruiting, engagement, motivation, retention, compensation, innovation, unions.  Customer wants and needs, marketing, products, product life cycle, services.  Distribution channels, physical distribution, logistics, suppliers.  Social media, e-business, IT, ERP, CRM, WMS, etc.  Accounting, planning, analysis and control systems, financing.

304 Political Thought

Standard university course often labelled “Western Political Theory”, covering both the historical and topical aspects of political, philosophical, theological, economic, and sociological views of how government level politics functions.  Greek and Roman experience, city-states, Cicero, Socrates, Plato, and Aristotle.  Christian views:  Augustine, Aquinas, Luther, and Calvin.  Pragmatism: Machiavelli, realpolitik, Nietzsche, Bismark, Kissinger.  The Individualistic Enlightenment: contract theory, Hobbes, Locke, Kant, Montesquieu, Rousseau, separation of powers, Jefferson, de Tocqueville.  Classical liberalism, utilitarianism, economics, Bentham, Mill, Smith, Spencer.  The organic state, nationalism, Hegel, Marx, Lenin, Gramsci, totalitarianism, fascism, Orwell, Arendt.  Modern liberalism, progressivism, socialism, welfare state, FDR, Dewey, Popper, Rawls.  Romanticism, historicism, utopianism, environmentalism, greens, spiritualism, art.  Conservatism, Burke, Hayek, Friedman, Rand, Nozick, Reagan, Thatcher, “neo-liberalism”.   Post-modernism, post-structuralism, existentialists, Foucault, Marcuse, new left.

Topics.  Politics, economics, culture, philosophy, and religion all shape society and compete for influence.  Integrated cultures focused on the community have strongly dominated through time.  The individualistic upheaval of the reformation, enlightenment and scientific revolution impacted political, philosophical, religious, economic, and social views.  Haidt’s 6 flavors of morality and politics remain in competition today.  Role of economic resources, systems, and theories upon politics.  Impact of religion on politics.  Separation of church and state.  Religion, community, and politics in a secular age (Taylor).  Expansion of individual and human rights.  Populism, anti-elite views in a meritocracy.  Attraction of authority figures.  Power.  The classic liberal state’s rights, Rousseau’s view of human potential and the success of mixed capitalist economies creates a very individual oriented world for politics with high expectations for respect, fulfilment, results, and identity affirmation.  Communitarian critiques of a “flat” classic liberal government model.  The scale of society and international complexity has grown, undercutting personal connections, social capital, and trust.  Rational, scientific, technical methods deliver results, but have limits for humans, politics, political structures, and organizations.  Evolution of Christian denominations, fundamentalism, and social conservativism.  Conspiracy theories.  Filtering institutions, experts, and parties in a complex world.  Centralized versus decentralized political structures.  Individuals seek a wide variety of results from political systems: identity, ideology, justice, rights, respect, opportunity, freedom, interests, wealth, status.  Citizenship duties.  International relations, trade, empires, global organizations, peace, and war.  Institutional characteristics that make governments succeed.  The End of History (Fukuyama)?  

This is a very challenging outline for “everyman”.  Yet, most thinkers’ key contributions can be summarized in a paragraph or two.  This course prepares the student for the “Religion in a Secular Age”, “Moral Lives” and “Living Our Future” courses.  Politics, philosophy, and religion overlap.  They are essential for modern citizens to understand our society and make choices.

305 Interpersonal and Communication Skills

The volume, diversity, complexity, and impact of interpersonal communications have continued to grow.  We use these skills at work, in teams, transacting, playing, influencing, negotiating, buying, selling, searching, researching, and building networks and brands.

Social psychology, talents, personalities, groups, forming, storming, norming and performing, trust, social capital. Haidt’s 6 moral flavors, free riders, game theory, exit, voice, loyalty.

Communications model, signal, noise, carrier, feedback, shared language, filtering, perceptions, framework, listening, process, nonverbals, framing.  Messages to inform, persuade, align, motivate, sell, organize, criticize, entertain.  6 thinking hats.  Attention, focus, understanding, confirmation, pauses.  Stimulus, gap, response.  Cognitive behavioral therapy.  Responsible, in control, engaged, not a victim.

Persuasion, influencing, negotiating, leading, managing, preconceptions, crucial conversations, shared goals, resources, languages, prejudices, thinking fast and slow, rider and elephant, get what you negotiate, everyone is selling, power as an asset, personality, gender, and culture differences.

Sales and marketing, universal customer wants, brands, products, win/win, features and benefits, lifestyle, identity, price, belonging, social aspects, trust, expectations, long-run, techniques, closing, disarming, overcoming objections, styles, human wants, status, power, winning, achieving, affiliation.  We won’t get fooled again.

Mass media, internet, social media, targeting, biases, economic models, personal information, cookies, search tools, trails, pausing, sites visited, demographics, click bait, different media, influencers, belonging, shared interests, identity, feelings, logic, digital assistant, effective search techniques and evaluating results.

306 Religion in a Secular Age

Religious history, anthropology, evolutionary psychology, sociology.  Integrated society, religion, economics, and politics.  Religious beliefs, drivers, varieties of religious experience, goals, benefits, purposes.  The individual and the community, nature, and God.  Thinking, feeling, and doing aspects of religion.

Scientific developments: Copernicus, Galileo, Newton, scientific method, geology, Darwin, Einstein, and quantum physics.  Church responses, new denominations, feelings, logic, liberal Protestantism, social gospel, spirit, born again, fundamentalism.

Social, political and philosophical developments:  Luther, individual religious choice, challenges to church, state and society, individual rights and political influence, classic liberal political model separates church and state, church shortcomings, religious wars, problem of evil, best of all worlds, historical criticism, Pascal’s wager, secular humanism, deism, growth of universities, Kierkegaard’s leap of faith, Nietzsche’s end of God, Marx’s opiate of the masses, Freud’s unconscious wish fulfilment, pragmatism, nationalism, world wars, welfare state, the secular age (Taylor).

Relations between science and religion.  Conflict, independence, dialogue, integration.  Only religion.  Only science.  Faith in God.  Faith in Science.  Material world.  Spiritual world.  Basis for truth.  Philosophy of science, scientific method, assumptions, simplicity, beauty, math, laws, research methods, logical limits, is/ought gap, models, paradigms, humans.  Theology, literal, principles, laws, rules, reforming, prophets, causes, moral focus, creation, nature, power, ends, methods, logic, holy scripture, priests, practices, sin, salvation, God.

Topics: big bang, creation, physics parameters, cosmology, sources of life, planets with life, quantum physics, attempts to unify physics, probability everywhere, wave/particle duality, complexity, dark matter and energy, miracles, supernatural, active God, challenges to Darwin’s evolution, intelligent design, intelligibility of nature, ecology and processes, genetics, human genome, mind, consciousness, neuroscience.

In a secular age.  Classic liberal political state leaves religion, morality, and community to individual and organizational choice.  Capitalist economy promotes worldly individualism, merit, and commercialism.  Reduced religious belief and participation.  Reduced trust and social capital.  Less social pressure for religious participation or moral judgments.  Default philosophy is now individualistic, Rousseau style” man is good” and journey of self-actualization.  Secular humanist, agnostic, naturalistic, atheistic, ecumenical and world religion options all exist.  Individual choice of religion is not required.  Individualist spirituality outside of organized religion is an option.  Religion can be a limited liability membership among others.  Religious choices are independent of other life choices and experiences.  Religious mentors are less common.  Individuals buffered from death, accidents, disease, hunger, crime, exploitation, heavy work, and family demands can live an “adequate” life without considering religious questions.

For most of human history, religion was deeply integrated into each civilization’s world view and daily life.  This began to change in Europe after 1500.  By 1900, the educated classes could consider both religious and secular options.  By 1950, the religious age was over, replaced by the secular age, where most individuals assumed away the spiritual dimension and viewed the world through a scientific, materialistic, deterministic, and commercial lens.  From practical, scientific, and philosophical perspectives this capitulation is quite suspect.

307 Globalization

Components of international economics, economic development, and “global issues” college courses.

Globalization: defined.  Economic, political, cultural, and environmental dimensions.

Goals: Economic, Happiness, Fairness, Justice, Human Rights, Equal Rights, Respect, Economic Equality, Opportunity, Liberty, Poverty, Exploitation, Security and Power.

History of ideas, institutions, policies, actions, and results for all 4 dimensions.

Economic markets, capitalism, welfare economics, government regulation, taxation, mixed economies.

International economics: absolute advantage, comparative advantage, intra-industry trade, relative resources, economies of scale, first mover advantage, regional clusters, industrial policy, rationales for trade protection, trade policies, industry transitions, middle income challenge, drivers of economic market power, barriers to entry, dynamic competitive advantage, patents, regulations, licenses, relationships, resource ownership.

Land, natural resources, commodities, energy, agriculture, resource curse.

Labor, human capital, education, migration, population supply, participation, aging, immigration, health, disease.

Capital, assets, equipment, manufacturing, processes, systems, logistics, products, brands, key assets, suppliers, distribution channels.

Technology, agriculture, science, computer, communications, artificial intelligence.

Management, organizational structures, legal structures, contracts, stakeholder relations, partners, ventures, outsourcing, crossholdings, innovation, change management, key worker appeal, entrepreneurship, risk-taking.

Financial capital, access, operating leverage, financial leverage, industry assets for lending, credit systems, insurance, leasing, legal protections, early-stage equity capital, industry variability.

Development economics: comparative advantage, industrial policy, economic institutions, taxation, regulation, financial markets, education, infrastructure, property rights, labor force participation, trade policy, labor markets, product markets, public health, fiscal policy, monetary policy, exchange rate and capital controls policy.

Political systems: nation-state, republics, democracy, individual rights, centralized power, decision-making, elections, rule of law, human rights, courts, bankruptcy.

Corruption, property rights, crime, terrorism, bureaucracies, political machines, organized crime, political spoils, good government, professional government staff, checks and balances, independent judiciary, military controlled.

Trade agreements, treaties, regional groups, trade alliances, military alliances, colonies, empires, shared currencies, travel, immigration, Bretton Woods, GATT, IMF, World Bank, UN, international law, UN agencies, NGO’s, development banks, international relations.

Policies: institutions, trade, industry, economic development, international organizations, human rights, fiscal, monetary, exchange, welfare state.

Culture: history, religion, ethnicities, language, traditions, food, institutions, ethics, trust, social capital, family structures, centralized government, individual rights, communities, education, property ownership, unions, guilds, not-for-profit organizations, clubs, entertainment, elderly, nature, arts, intellectuals, transportation, communication, media, interpersonal space, literature, myths, norms, land ownership, main industries, travel, trade, multicultural experience.  Changes, pressures, ideas, convergence, replacement from globalization.

Environmental:  resources, limits, population growth, food security, ag technology, sustainable agriculture, extraction, transportation and production, waste, pollution, water access, common resources, recycling, energy sources, chemical risks, global warming, species habitat and preservation, desertification, invasive species, labor safety, monocrops, biological diversity.

Human impact of accelerated globalization: the world is flat, abstract ideas, digital services, money, technology, markets, speed, compressed space, media volume, simultaneous communications, always on, standardization, processes, tools, language, business, production, units of measure, brands, connectedness, networks, transactions, global considerations, global markets, global sources, mobility, migration, remittances, travel, mixed global and local culture, traditional versus secular, multicultural experiences, risks, contagion, business, pandemics, war, technology, AI, climate, experts, terror, identity threatened, productive role, imposter syndrome, meritocracy, rat race, trust, social capital, change, professional insecurity, irrelevance, respect, humanness.

The “Establishment View” is that capitalism, relatively free trade, infrastructure focused development and representative democracy combine to provide an environment that drives economic growth for most countries and promotes the other goals as well.  Statistics from 1945-2020 generally support this claim.

Critics disparage this view and label it “neo-liberalism”.  The critics have become increasingly vocal and influential since 1992 when Francis Fukuyama proclaimed the victory of the establishment view and the “end of history”.

Communists criticize the capitalist base and promote the value of a single party and government ideally directing the economics, politics, culture, and environment for the common good.

Postmodernists view “neo-liberalism” as just the latest charade by the powerful to exploit the people and focus on highlighting the disenfranchised minorities.  Human rights, equality and diversity are elevated as the path to success.

While many examples of post-war economic, political, and cultural development progress can be highlighted and global growth and poverty reduction cannot be disputed, critics can still point to the inequality of results around the world.  Latin America, much of Asia, the Middle East and Africa have not benefited significantly from the overall gains.  Income and wealth inequality within nations has increased.  The “system” does not automatically serve everyone, and political leaders have not generally developed policies to better “share the wealth”.

Many traditional leftists accept the capitalist system, but struggle with the government’s inability to offset its growing powers and capture of disproportionate profits and power.  Globalization increases both the scale and “winner takes all” tendencies while reducing governments’ power to properly regulate.

Greens note the damage and risks posed by capitalist systems is expanded through international trade.  The damage is real and difficult to govern away.  They highlight the interconnectedness of natural systems and the threats posed by actors that view nature as merely a resource.  Romantic greens emphasize the inherent value of nature.  Scientific greens emphasize the detailed risks of chemicals and complex systems.

Citizens also note the “winner takes all” nature of larger economic systems.  The “global elites” who manage corporations and governments clearly win.  The meritocratic technical and managerial elite (STEM) also win.  Large corporations, their employees and owners also win.  Regular citizens will be relatively poorer and unprotected.  They see that governments have struggled to devise policies to meaningfully help those who are harmed by changes.

Citizens also see the cultural impact of accelerated globalization.  The world becomes a large, complex, uncontrollable, technical, digital, economic machine.  Individuals are cogs in the machine.  They lose their humanity.  Political and cultural leaders have not yet offered policies or solutions which truly address this threat.

Neo-liberal globalization tends to emphasize only individual and economic values.  This threatens traditional values and cultures.  Meritocracy and commercialism combine to lure citizens into a rat race.  They lose identity, community, family, balance and meaning.  Traditionalists, religious people, artists, communitarians, and sensitive people all oppose this threat.

Globalization is a major issue for our world.  Capitalist democracies and free trade have driven real progress for 75 years.  However, the progress has been uneven, and the cultural challenges have not been addressed.  Citizens have a responsibility to understand these complex issues and pressure political leaders for reasonable policies to take advantage of the opportunities of globalization while offsetting the side effects.

Globalization is a critical topic for all citizens because we live in a global world with large shares of international trade.  It is a hotly contested local topic.  Citizens need to understand the potential benefits, costs and risks of international trade policies.

308 Moral Lives

Morality, ethics, virtues, and values defined, principles, characteristics, and goals.  The essence is the relationship of the self to others.

History and current context: secular, individual, therapeutic, multicultural, meritocracy, neo-liberal, polarized (Sacks).

Many social roles, rights, duties, and responsibilities.

Society requires morality.  Individuals benefit from defining moral views and behavior.

Inherent challenges: multiple interests, priorities, application, complexity, situation dependent, conflicts, uncertainty, not derived from science, structure cannot be fully rationalized, absolute commitment.

Human nature: person, more than material, dignity, mind, consciousness, free will, nature vs. nurture, language, meaning, communication, community, religious dimension, growing, imperfect, honest, good, sinful, desires, selfish, partial control, intuitive, feeling, self-aware, analog and spiritual, abstract and concrete.  Every person thinks (knows) that they are “right” in their moral views.  Haidt’s “elephant and rider” analogy.  Moral life and material life.

Tensions of morality with the other dimensions of life.

Sources of morality: culture, history, art, science, religion, philosophy, and politics.

Science, evolutionary psychology, Haidt’s 6 moral foundations.

Philosophical insights: intent and results, duties, objective or subjective, relative or absolute, moral, immoral, skeptical, power, human rights, intuition, feeling, theology.

Ethical schools.  Stoicism, hedonism, skepticism, Plato, Aristotle, Augustine, Aquinas, scholasticism, natural law, utilitarianism, Kant, social contract, classic liberalism, pragmatism, Nietzsche, existentialism, intuitionist, Rousseau, romanticism, secular humanism, communitarian, virtue ethics.

Moral reasoning, errors, limits, decisions, truth, and knowledge.

Modern political schools, moral philosophies, and claims.  Classic liberal, conservatism, communism, socialism, labor, green, Christian Democrat, libertarianism, nationalism, populism, Christian nationalism, social conservatism, new left, postmodernism.

Religious ethics: God centered, universe and community before the individual, person as a moral agent, good versus evil, choices have consequences, alignment with reality, natural law, belief, sacred/holy, moral lives, human dignity, love, nonmaterialist/spiritual dimension exists, role of revelation, authority, tradition, holy works, all activities matter, commitments, covenants, commandments, orderly, absolute features, judging, forgiving.  Thinking, feeling, and doing as religious dimensions. 

Virtues ethics.  Aristotle.  Sample virtues and vices.  Modern virtues ethics (MacIntyre).  Risk of making a single virtue supreme.  Virtues to address our current situation.  Brooks’ “resume versus eulogy” virtues.

Personal ethics: adopt, DIY, or blended.  Degrees of engagement and general approaches.  Golden rule, golden mean, pay it forward, common core Tao (CS Lewis), love God and neighbor.  Moral journey: resources, organizations, practices, insights, feedback, advisors.  Interacting across differences.

Applied ethics, 4 of many topics: economic justice/equality, discrimination/equal rights, human sexuality, feminist views.

Community ethics: shaped by many sources.  Politicized today.  Role of personal identity.  Multiple cultures.  Urban/suburban/rural.  Class.  Race.  Religion.  Immigrants.  Is a common core possible? 

Not an “ethics” course for philosophy majors.  Society requires some form of shared ethical beliefs to function.  Our individualistic society and political system don’t provide answers.  Secular and religious perspectives for modern citizens.

309 Shaping Our Future

We collectively own our future.  Political, economic, social, and religious institutions are shaped by men and women. 

We live in a collective society.  Note the key role of institutions and social norms, laws, and politics.  Much greater specialization and trade.  Producing and consuming.  Benefits of living in society.  Myth of the self-made man.  Costs and risks of living in society.  Newborn individuals do not get to choose.

Responsibilities of citizenship:  voting, informed, producing, following laws and regulations, paying taxes, service, and loyalty.

Goals of government and politics:  safety, security, protect property, life, liberty, pursuit of happiness, human rights, opportunities, justice, moral laws, promote the common good, economic well-being, economic security, manage public goods, public investments, business and banking infrastructure, rights of speech, press and religion, protect minority interests, mutual insurance, avoid catastrophes, and international relations.

Six clusters of priority issues (Pew/Gallup):  Economy, inflation, jobs.  Budget, government, health care funding, social security, energy.  War, international relations, aid, terrorism, immigration.  Morality, crime, gun rights, abortion limits, education results and rights.  Education quality and access, poverty, hunger, labor, race, environment, gun control, climate change, abortion rights, human rights.  Campaign financing, election rules, rule of law, trust, polarization.

Context since WWII.  Economy.  Labor force participation.  Income and wealth inequality.  Median quality of life, after transfers, product quality, choices, and public goods.  Federal government share of economy and employment.  Budget deficits.  Business cycles.  Poverty.  Health care quality and costs.  Economic opportunities.  Social capital and trust.  Religious participation.  Crime rates.  Military costs, wars, and threats.  International trade, imports, and exports.  Technological change.  Education results.  Race, religion, ethnicity, sex, gender, disability access.  Environment.  Voting, political processes, polarization.  Global alliances, democracy, and capitalist countries.  Mostly “good news”.

The triumph of Western representative democracy and the mixed capitalist economy.  Fukuyama’s 1992 claim of the “end of history”.  Communism, fascism, totalitarianism.  The elements and benefits of a classic liberal political system.  Criticisms from neo-liberals, social conservatives, communitarians, progressive liberals.  The elements and benefits of a classic liberal economic system.  Criticisms from neo-liberals, labor, greens, mainstream Democrats, progressive liberals.  Churchill – “democracy is the worst form of government – except for all the others that have been tried”. 

Political system today.  Two parties equally matched.  Low voter participation.  Minority of motivated voters can rule.  Polarized parties.  Extreme policies, positioning, and platforms.  “Winner takes all” mentality.  Cooperation is not rewarded.  High fundraising costs to compete.  Gerrymandering.  Sorting of rural versus urban.  Polarized media options.  Special interests veto power.  Problem solving is not rewarded.  Perceived single left versus right political dimension.  Importance of political identity/team.  No limits to political tactics.  The “Rule of law” is threatened. 

Voters.  Party, character, policies, wedge issues, messages, ideology, special interests, transactions, protest.  Incentives to participate.  Limits: priorities, free rider, doesn’t matter, information costs.

Politicians.  Public choice theory, work for self-interest, respond to incentives.  Emotions, communications, simple issues, teams and brands, gerrymandering, voting rules, extreme positions, terminology, framing, blaming, attacks, straw man positions, own facts, stories, no costs or tradeoffs required, Overton window shifts, identity, exaggeration, end of universe, fear of low probability events, what people want to hear.  Great salespeople use messaging to connect buyers and sellers.

Parties.  Win elections, define issues, coordinate brand and messaging, field candidates, raise funds, allocate funds, choose candidates, build and maintain coalitions, set priorities, influence officials to support the party, define boundaries, craft legislation, manage special interests, define districts, maintain unity, manage conflicts between candidates or party wings.  Parties are weaker today due to better communications technologies, direct fundraising and “direct democracy” laws. 

Political subgroups.  Conservative, socialist, labor, green, mainline Democrat, libertarian, nationalist, populist, social conservative, Main Street Republican, business Republican, neo-liberal, progressive Democrat.  A higher share identifies as “independent” today, but a higher percentage lean left or right.  Subgroups vary in their priorities and policies for economic, traditional social, business, government, international, social justice, and environment dimensions. They vary in their participation, moral bases, and willingness to compromise.

The Civil Rights Act of 1964 realigned parties on a left versus right axis and Ronald Reagan consolidated the varieties of “conservatives” solidly into the Republican Party.  The Democrats also adapted.  Various attempts to summarize the essence of “left versus right”: sensitivity to risk/loss, nature of man good or fallen, realism versus idealism, tradition versus progress, authority versus independence, liberty versus state, proven versus progressive, local versus global, religious versus secular, Haidt’s 6 moral foundations.  Many individuals and subgroups do not align cleanly on this single dimension.  They oppose the simplistic, polarizing approach and argue that it works to prevent progress and gives undue power to extreme positions. 

Changes in political subgroups since WWII.  Southern Democrats migrated to Republican Party.  Moderate Republicans migrated to Democratic Party.  Labor, working class whites migrated to Republican Party.  Mainstream white Democrats a smaller share of Democrats.  Minorities a larger share of Democrats.  Progressives a larger share of Democrats.  International relations less important, but still Republican hawks and Democratic doves.  Social conservatives a larger share of Republicans.  Urban Democrats and rural Republicans are clustered.  Big business Republicans a smaller share of the party.  Democrats focused on the coasts and just 500 of 3,000 counties.  Republicans fill the middle and the Sunbelt.  Libertarians mostly support the Republican Party.  The young lean towards Democrats, but Republicans benefit from aging.  The Republican Party’s average income and education advantages have fallen.  Democrats once believed that demographic benefits of more minorities, urbanization, immigrants, and education would ensure a new “permanent majority”, but offsetting changes among working- and middle-class whites as well as minority voters challenge this projection.  Urban clustering, partisan gerrymandering and the constitutional rules for the Senate and electoral college provide Republicans with a 3-5% structural advantage in national politics.

Possible solutions for polarization and loss of political power by the center.  Public funding of elections, nonpartisan district drawing, political parties retain one-third of primary delegates, council of elders, ranked choice voting, new centrist party, Democrats move to center, Republican party splits and moderate Republicans attract moderate Democrats, centrist organization with approval power over candidates, compromise legislation to take wedge issues out of the mix, media legislation to separate news and opinion functions, larger Supreme Court with term/age limits and some non-political appointments, agreement among billionaires and major corporations to not fund extreme candidates, non-extremist rating by a nonpartisan group like League of Women Voters, congressional agreement to delegate more issues to the states, Congress in session 14 days on, 14 days off, return of earmarks for use in persuasion of swing representatives, fundraising limits for special interest groups, Bill of Responsibilities for citizens and representatives.

Populism.  Long history in the U.S.  Anti-banking, anti-city, anti-elites.  Farmer-labor party.  Unions within Democratic Party.  Disconnect between politicians, journalists, and intellectuals and the average person’s lived experience.  Democracy promises that “the people” will be represented.  Some political issues are abstract and remote.  Some political options contrast “lived experience” with ideas and ideals.  Economic changes, threats and disruptions can drive populism.  Social, residential, religious, and cultural changes can drive increased populist demands for solutions.  A larger, global, more complex economy undercuts security.  A meritocratic economy with greater spread of economic returns coupled with a weak “safety net” drives anxiety.  An economically focused society undercuts the non-economic tools used to ensure that all citizens feel respected and needed.  Both parties teach their children that they can achieve whatever they seek.  Working class social capital and trust are weak (Putnam).

Challenges.  Citizens/voters are imperfect, treat democracy as another consumer good rather than a duty, are suspicious of “others”, have unlimited wants and focus on most recent rewards.  Our political system requires tolerance, respect, trust, and compromise, but intolerance has grown.  The lag between decisions and results makes political feedback imperfect.  The rewards and incentives for compromise are weak.  Our political system leaves morality, values and community to individuals and organizations, yet relies upon some degree of shared commitment.  The decline in social capital, trust, and trust in institutions, especially among the working class, undermines the commitment of citizens to the system. 

Many political choices are inherently values based and contentious.  Political choices often involve limited resources and require trade-offs.  Capitalist systems drive consolidation of income and wealth.  The income and wealth in the US are so high at the top that the incentive to preserve them through politics is very high.  The ad revenue and click based media system reinforce extremist tendencies in politics.  The single left-right, red-blue team basis for politics overlaps with many dimensions of personal identity and is self-reinforcing.

Hope for the future.  The U.S. economy continues to grow, providing jobs, wages, choices, goods and services, tax revenues, low unemployment, and a weakened business cycle.  Growth buffers political conflicts and demands.  Resources address the budget deficit and allow for the investments to offset the side-effects of globalization, improve job security, offer respect to all workers and cap inequality. 

The U.S. has an encouraging history of political leadership and social progress (Meachem), innovations in social institutions and progress in science and management science, allowing organizations to better meet their needs.  The U.S. has world leading organizations that innovate to meet changing and conflicting needs.  There are thousands of great leaders in U.S. organizations.  States, government agencies, the military, universities, and large not-for-profits demonstrate winning ways for politics and program delivery.  Some states have adopted “good government” initiatives and found ways to cooperate in addressing the pandemic.  More and more countries around the world are successfully adopting the classic liberal model of representative democracy plus mixed capitalist economies, lending credibility to their overall effectiveness despite their shortcomings.

The very top economic elite have an incentive to make our political model function and maintain credibility and support despite contradictory incentives to maximize their share of income.  The US, Europe and China collectively have an incentive to define a new world order that preserves the benefits globalization, prevents war, and addresses global challenges like climate change.  The professional and managerial class in the U.S. has a strong incentive to maintain a system in which they thrive, even if they must give up some income, embrace compromises and oppose their chosen political party from time to time.

Our political system has built-in “checks and balances” and protections for self-preservation.  The failures of polarization may drive some political parties, first at the state level, to change their approaches.  Interparty conflicts may disrupt the simplistic liberal versus conservative axis and encourage individual policy voting once again.  One party or the other may lose so much from its extreme postures that it will be forced to move towards the center.

If national politics remains severely partisan and dysfunctional, a nonpartisan movement may push to restrict the scope of national politics.  Our federal system is built to delegate topics to the states.  Technocratic organizations like the OMB and Federal Reserve Board have demonstrated basic competence.  Other functions could be moved outside of direct politics.  The U.S. has a strong religion, not-for-profit and volunteer sector that could grow, especially given the number of retired people.

Generational politics is growing.  The elderly want to protect their retirement benefits and home values.  Young adults are struggling with housing costs, student loans, health costs, social security funding, budget deficits and climate change.  The cycle of new generations might produce individuals with greater interest in compromise and results.  An aging population might provide more voters with a wiser long-term perspective.  Overall, these generations could change the way we look at politics.

The newer generations might provide a greater sense of community versus individualism.  American pride might be tapped to rise above partisan differences and re-establish a government that works for the people.  A modern religious revival could promote key values, trust and community required for better politics.  The suburban professional class’s secular values could become standard for the nation, re-establishing the shared community values needed as a basis for aspirational politics.  Objective news is already available if citizens would choose it.  “Good news” sources that provide expert, historic and cross-national perspective are also available to guide well-meaning voters with open minds.  Multicultural examples of success are available in several U.S. states and provide a model for how the historically dominant culture can thrive alongside others as it loses its political advantage.

Promoting the General Good: A Council of Advisors, Elders, Guardians or Wisdom

The United States’ political founders understood the nature of man and the risks of direct democracy (rule of the mob). They designed a system of “checks and balances” to ensure that a system of representative government would not aggregate power at the center or allow the whims of the majority or any minority to be served.

Yet today we live in a time where the “cult of individualism” rules. Senators are directly elected, not by state legislatures. National political candidates are chosen by popular vote in primaries, with limited political party filtering or influence. Earmarks are considered “dirty business”, so they cannot be used to influence the votes of individual legislators. Representatives and candidates create individual brands and raise funds independent of political parties. A majority of political districts at the state and national levels are gerrymandered to ensure that incumbents are re-elected without credible opponents in the general election. There are effectively no limits to political fundraising by individual candidates. Only a small share of highly motivated, largely extremist individuals vote in the primaries where most elections are won.

As a result, we have either partisan monopolies or polarized governments. Almost 80% of states endure one party rule.

The Senate Does Not Advocate for the Whole or the Center Today

The US Senate was intended to play the role of offsetting or delaying the demands of popular government in the House of Representatives. The House could propose and the cozy, experienced, independent Senate could “dispose” of legislation. In our current polarized system, with disproportionate representation to rural and Republican leaning states, the Senate is as politicized as the House. Bipartisanship is rare. Seeking the public good is rare. Fighting to win for your party is the only goal.

Any number of reforms could make the Senate more effective in serving its intended function. Campaign financing reform. More senators for very high population states. Increased rules and committee power for the minority party. A 60-vote filibuster rule with time limits.

A Solution: A Council of Advisors

Congress should create a “Council of Advisors” to advocate for the country as a whole, highlighting representatives and legislation that are supported by a significant majority of the country rather than by one political party or the other.

Former governors or US Senators could choose to run in a biannual referendum where they would be required to earn 60% of the popular vote in order to be appointed to a single 10-year term as an advisor, elder or guardian. The body would have a minimum of 10 and a maximum of 30 members. The body would be qualified to offer opinions only when each of the two major parties had at least one-third of the representatives.

The Council of Advisors would have two functions. First, it would consider whether Senators who are seeking re-election have “generally acted on behalf of the American public in a bipartisan fashion during their last term of office”. Senators who earned 60% of the vote of the Council of Advisors who be designated as “approved” by the Council. Others would not have this seal of approval.

Second, the Senate could refer any single bill to this body each month and seek its approval as “generally supported by the American people as a whole” on the basis of a 60% affirmative vote.

The Council would be a solely advisory body. It would be composed of individuals who were approved by the people as representing the country as a whole. It would have moral authority to make judgments about Senators and legislation. This moral authority would help to pressure both parties to produce legislation that serves the majority of the public and that is supported by the majority of the public. In essence, it would be a counterweight to the many pressures for polarization and “winner take all” politics that is practiced today.

I believe that we have unintentionally arrived at the current state of affairs where political pandering to the lowest common denominator drives our political decisions. There ARE important political judgments that cannot be compromised in the long run. But most of our political issues do NOT require a one side wins and the other side loses result. Our elected officials are intended to represent our views and to provide results. Political results that involve creative solutions, imperfect processes and administration (sausage making), negotiations and compromise. Every for profit and not-for-profit organization lives by these same rules. They have owners, customers, employees and stakeholders with competing claims. Yet, the organization’s leaders must produce acceptable results and be held accountable. We need to have these same expectations and processes for elected officials.

Just as a president or CEO is faced with the judgment of a board of directors, our US Senators need to have a Council of Advisors review their performance.

Our Hamilton County: Cost of Living

https://www.firstib.com/about-us/new-headquarters/

Metro Indy Cost of Living is 7% Below Average

https://www.stats.indiana.edu/about/coli.asp

https://www.bankrate.com/real-estate/cost-of-living-calculator/

In general, Hamilton County’s costs are similar to those of the Indy metro area. It’s 357,000 residents account for just 17% (1 in 6) of the formal Indy metro area’s 2,075,000.

Solid county level data is not available for all areas, but limited comparisons helped to identify goods and services that might differ between Hamilton County and the Indy average.

https://www.bestplaces.net/cost_of_living/county/indiana/hamilton

https://www.epi.org/resources/budget/?gclid=Cj0KCQjwxuCnBhDLARIsAB-cq1rnk521GaWh6Evp4LUs2TaA2Tgx_oufafn9ywPIV32tpToZ0f0FVpwaAhnMEALw_wcB

Housing

Hamilton County’s housing is 8% more expensive than the national average rather than 15-17% lower as seen in metro Indianapolis. The housing stock is also newer, larger and higher quality. The full housing price difference would increase the total cost of living measure by 7%. Considering one-half being due to age/quality and one-half due to prices adds 3.5% to 93.1% to yield a revised 96.6% cost of living ratio.

https://www.towncharts.com/Indiana/Housing/Marion-County-IN-Housing-data.html

https://www.towncharts.com/Indiana/Housing/Hamilton-County-IN-Housing-data.html

The median Marion County house was built in 1971. The median Hamilton County house was built in 2000.

Taxes

Indiana local taxes average 9.3% of income versus 10.2% nationally. This 10% savings on a 10% cost factor reduces the overall cost of living measure back down to 95.6%. State sales and income taxes do not vary by county. Hamilton County’s property and income taxes are lower than its large population peer group in Indiana.

Food Prices

Historically, Indianapolis has been a competitive grocery market. Kroger has a leading market share. Cub Foods and Marsh have left the market, but Meijer’s, Trader Joe’s, Whole Foods, Fresh Thyme, Fresh Market and Market District now compete with the others.

https://www.indystar.com/story/money/2014/03/22/grocery-store-wars-indianapolis-shoppers-profit-foodie-fight/6715177/

https://www.axios.com/local/indianapolis/2023/05/02/indianapolis-grocery-stores-kroger

5% of low-income Hamilton County residents do not live near a grocery store, versus 6% nationwide. The supply of grocery stores is adequate.

https://www.countyhealthrankings.org/explore-health-rankings/indiana/hamilton?year=2023

Hamilton County’s retail sales per capita figure is 14% above the national average, despite the very high concentration of retail stores in Marion County along 82nd/86th Street. The county is well served by retailers of all kinds.

https://www.census.gov/quickfacts/fact/table/US/SBO001217

https://www.census.gov/quickfacts/fact/table/US,marioncountyindiana,hamiltoncountyindiana,hendrickscountyindiana,johnsoncountyindiana,hancockcountyindiana/HSG860221

Food away from home makes up almost 5% of the consumer price index. No restaurant food index is publicly available. However, the Big Mac price in Hamilton County is $4.59 versus the $4.39 national average price, a 5% premium. If this applied to all restaurant prices, the overall cost of living index would be 0.3 higher, 95.9. The average Indiana Big Mac price was just $4.11.

https://worldpopulationreview.com/state-rankings/big-mac-index-by-state

https://pantryandlarder.com/mccheapest

The Economic Policy Institute provides “modest income” food prices that are 19% higher in Hamilton County than in Marion County. Given the proximity of the counties and the long-standing coverage of “food deserts” in Indianapolis contrasted with nearly none in Hamilton County, this indicator is suspect.

https://www.epi.org/resources/budget/?gclid=Cj0KCQjwxuCnBhDLARIsAB-cq1rnk521GaWh6Evp4LUs2TaA2Tgx_oufafn9ywPIV32tpToZ0f0FVpwaAhnMEALw_wcB

Health Care

Hamilton County has 1.8 hospital beds compared with the national average of 1.9 and the Indiana average of 3.3. It has 1.5 primary care physicians versus 1.0 nationally and 1.3 in Indiana. 10% of Hamilton County households have medical bills in collections compared with 17% nationally and 19% in Indiana. Access to health care is adequate.

https://www.usnews.com/news/healthiest-communities/indiana/hamilton-county

The Best Places website uses a simple index of a standard hospital bed night, a doctor’s visit and a dentist’s visit indicating that Hamilton County health care costs are equal to the national average (100).

https://www.bestplaces.net/cost_of_living/county/indiana/hamilton

A Rand Corporation study indicates that Indy metro hospital rates are 25% higher than the national average. This is driving Indiana statehouse political battles with claims and counterclaims. Professional services fees were 25% below the national average.

https://www.rand.org/pubs/research_reports/RRA1144-1.html

https://www.wfyi.org/news/articles/why-are-indianas-health-care-costs-so-high

Although health care is as much as 18% of GDP in the US, the share in the consumer price index is only 5%. If Hamilton County consumer costs are the same as the nation, this would increase the cost-of-living index by 0.6 points to 96.5.

Utilities

Best Places pegs Hamilton County’s utility costs at 93 rather than 107.

Indiana natural gas prices are more than 20% below the 50 state median.

https://www.chooseenergy.com/data-center/natural-gas-rates-by-state/

Indiana and Hamilton County electricity prices are 10% below the national average.

https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a

https://www.electricitylocal.com/states/indiana/noblesville/

https://www.energysage.com/local-data/electricity-cost/in/

Local utilities are probably at least 10% lower than in the summary statistics, so the COL index should be reduced by 0.9 points based on their share of spending, reducing the index to 95.6.

Transportation

Indiana used car prices are the lowest in the nation, 11% below the average.

https://www.iseecars.com/used-car-buying-by-state-study

Indy fuel prices match the US average.

https://www.axios.com/local/indianapolis/2023/08/11/gas-prices-down-below-average

Indiana auto insurance rates are 40% less than the national average. Hamilton County rates are a little lower.

https://www.bankrate.com/insurance/homeowners-insurance/states/#home-insurance-rates-by-state

https://www.policygenius.com/homeowners-insurance/home-insurance-rates-by-zip-code/

The US Census Quick Facts tool reports that Hamilton County’s average commute time is the same as the country’s.

The 94 score may be high, but no specific change is indicated.

Other Goods and Services

Home insurance prices for Indiana and Hamilton County are variously reported as 10% below, equal to and 10% above the national average.

https://www.bankrate.com/insurance/homeowners-insurance/states/#home-insurance-rates-by-state

https://www.policygenius.com/homeowners-insurance/home-insurance-rates-by-zip-code/

https://www.insurance.com/home-and-renters-insurance/home-insurance-basics/average-homeowners-insurance-rates-by-state

Indiana’s state university tuition rates match the US average.

https://www.collegetuitioncompare.com/state/

Indiana has very high childcare prices.

The Economic Policy Institute and Indiana Family and Social Services Administration indicate that Hamilton County childcare costs are 13% higher than in Marion. Because childcare accounts for just 0.6% of spending, no adjustment is indicated.

https://www.epi.org/resources/budget/?gclid=Cj0KCQjwxuCnBhDLARIsAB-cq1rnk521GaWh6Evp4LUs2TaA2Tgx_oufafn9ywPIV32tpToZ0f0FVpwaAhnMEALw_wcB

https://www.in.gov/fssa/carefinder/provider-reimbursements/

Summary: Hamilton County Costs are 4% Lower than the National Average

County level housing, health care and grocery costs added more than 4% while lower taxes and utility costs subtracted almost 2% for a final score of 95.6, more than 4% below the national average.

One Page: Liberalism and Its Discontents – Fukuyama (2022)

Fukuyama defends “classical liberalism” as a political structure. Not US “liberals” or UK “liberal democrats” or neo-liberals. It was born in the 18th century, child of the enlightenment and religious wars, emphasizing the individual over the group, the equality of individuals, the human species rather than any subset, and practical political structures that provide reasonable results. Individual rights, rationality, human dignity, the rule of law, institutions, compromise and tolerance. Typically connected with objectivity, the scientific method and free trade versions of capitalism. The mixed economic and political systems that he celebrated in 1992 as the “end of history” when fascism and communism were defeated.

“Classical liberalism” is threatened from the right and the left. First, from the right with Reagan/Thatcher neoliberalism which elevates economic property rights as a super-value, undercutting other political and social values. Second, from populist, authoritarian leaders who are actively “illiberal”, campaigning against “free trade”, international bodies, immigration, elites and various “others”, discounting the value of institutions and the “rule of law”. Third, from the left as the progressive, new, radical left has adopted the postmodernist views that elevate “power” as the central political value/insight and claim that powerful elites always control society unless they are opposed by “marginalized” groups to lead a revolution against the dominant groups.

Fukuyama criticizes neoliberalism for being too extreme, opposing the role of government even where it is needed per elite opinion: some regulations, public investments, income redistribution, fiscal and monetary policy, international trade and development, public utilities, environmental externalities, etc. He challenges the notion that property rights are significantly more important than other “rights”. He agrees that the intellectual foundations for “classical liberalism” tend to result in a “thin” basis for morality and community, but argues that neoliberalism makes this even worse, ignoring the moral and community dimensions. He recommends that voters and politicians focus on improving the “quality” of necessary government services.

“Classical liberalism” was developed within a Christian religious and moral worldview, which provided the required moral and community dimension for their 18th century societies. However, Luther’s Protestant Reformation was radically individualistic, downplaying the church as an institution and elevating the individual’s reading of the Bible and personal relationship with God. Philosophers like Rousseau further elevated the role of the individual and criticized the potentially corrosive role of society. Philosophers like Kant developed frameworks that were independent of history and culture, using reason alone to develop morality. Fukuyama notes that a full-fledged individualistic society really grew after WWII, in the shadow of Darwin, Freud and Marx. He notes that John Rawls’ 1971 “Theory of Justice” provides an overly abstract approach to morality and politics, further eliminating the role of “community”. Fukuyama doesn’t have a simple solution to the individualistic imbalance in society.

Fukuyama invests two chapters outlining the development of the post-modernist philosophical and political worldview. 19th century philosophers like Nietzche declared that “God is dead” and that objectivity is dead. They tried to find a “subjective” basis for philosophy, rejecting the core tenants of “classical liberalism” and prior objective, idealistic models. Objectivity, causation and the scientific method were shaky foundations. Dynamic, organic, artistic, natural, revolutionary, evolving worldviews were proposed. After WWII this coalesced into the post-modernist approach. Post-modernism provided a new home for those who supported communism. The elites and power structure oppress the marginalized communities because “they can”. The intellectuals have the role of ensuring that the oppressed understand their abused role and work to overthrow the repressors. The parallel with Marxism is strong. Fukuyama admits that “power” is really important and that powerful people and institutions have used and sometimes abused their power. Yet, he points to the progress of “classical liberal” societies in providing economic success, making life better for poor and minority communities, expanding individual rights, providing a framework for progress, a forum for participation and safeguards against extreme policies or leaders, etc. Philosophically, he cannot support the singular emphasis on power or the subjective worldview. He claims that the “burden of proof” for overthrowing the “classical liberal” model remains on the critics.

Fukuyama leaves us with 10 principles: quality of government, inequality matters, federalism can help, freedom of speech is critical, privacy matters, the scientific method and rational problem-solving work, individual rights have a solid intellectual and historical basis, while group rights do not, the individual and group/morality both matter, civic participation matters and moderation is a virtue.

One Page: Why We’re Polarized – Klein (2020)

Trump’s 2016 election win was unremarkable statistically. He won the usual share of Republican voters in most demographic sectors and attracted extra non-college graduate white voters. Our political system has built an increasingly polarized electorate based on appeals to identity politics (red versus blue). We vote for our team or against the “other” team, setting aside our other concerns.

Both political parties contained liberals, conservatives and moderates in the 1950’s. The Civil Rights and Voting Rights Acts of the 1960’s broke the Democrats’ grip on the “solid South”. Regional, local, character, ideology and other factors mattered more to voters, politicians and parties through the 1990’s. By 2016 even self-identified independents were polarized, views of the “other” party dropped from 45 to 29 degrees and 43% of partisans saw their opponents as a “threat to the nation’s well-being”.

Voters and political parties are increasingly aligned by a single conservative to liberal dimension, with other dimensions of identity running in parallel: race, religion, region, urban/rural, and gender. This builds on the personality trait of openness, fluidity, and tolerance of threats.

Individuals are inherently attracted to group membership, like sports teams and easily oppose other teams and seek to win. As the two major political parties began to clearly sort on the “left versus right” dimension by the 1980’s wise political actors clarified the differences between the two parties in extreme terms. Political messaging is simpler, more extreme and more effective in this environment. Group identity and membership trumps facts, science, beliefs, thinking, policies, and detailed ideologies.

Rational individuals outsource politics to parties and politicians. Individuals adjust their views to match the views of the parties and politicians. More politically engaged individuals are more easily influenced. Higher knowledge and skilled individuals use their talents to challenge the opposition but not their own party’s views.

The decline of cultural and political power held by White Christians due to demographic changes has encouraged conservatives to emphasize traditional values and liberals to emphasize diversity. President Obama’s presidency punctured the “post-racial myth”, as the country became much more divided on racial issues. The cultural power of media, university and corporate elites and institutions threatens some conservatives while increasing Republican political power and actions threaten some liberals.

Modern journalists and media compete for attention. They are biased towards “loud, outrageous, colorful, inspirational and confrontational”. They reinforce the cycles of polarization, mostly leaving behind historical norms of objectivity and balance. More information and choices have not helped media consumers to better evaluate parties, politicians, messages or issues.

Polarized voters and media outlets have combined to make elections be based on national parties and wedge issues. Political candidates focus on these issues and raise more money from small donors, independent of the wishes and interests of political parties which tend to be more moderate, optimizing their chances of winning competitive districts. Gerrymandering, rural/urban political sorting, direct primaries and fundraising have undercut the power of political parties.

A polarized country, roughly evenly split politically, leads political actors to focus more than ever on “winning”, decreasing the role of norms, tradition, civility, pragmatism, patriotism and institutional preservation. The emphasis on national issues reduces the incentive and scope for transactional, local based politics, log-rolling, earmarks, and compromise. By 2012 the radicalization of the Republican Party was complete with Democrats not far behind. Klein uses former Attorney General William Barr’s words to highlight the increasingly expressed Republican view that they are fighting a war to preserve their culture from extinction by the secular elites of the other party. He doesn’t describe the coastal Democrats complementary view of a Trump-led nation.

Solutions

Agree to move some issues beyond politics: debt ceiling approval, longer-term budget program approval. Improve political system legitimacy: cut bias of electoral college overrepresenting rural voters through changes or the Popular Vote Compact. Use independent commissions to draw election districts. Eliminate the Senate filibuster. Award DC and Puerto Rico congressional representation. Consider a multi-party-political system and multiple seat districts and ranked choice voting. Increase the size of Supreme Court and make some appointments outside of politics. Reduce the Speaker of the House’s total control of the legislative agenda. Make everyone aware of their “political identity” and how media and politicians use this to persuade or control. Proactively choose, evaluate and challenge media sources. Invest time in politics, especially state and local politics.

Are We Heading Towards 2% Inflation?

The overall CPI index increased smoothly during the last 30 years until the pandemic. The Great Recession created a small blip up and down. Prices have recently increased by a very large 15% in less than 3 years versus the usual 5% in that time.

From June, 2020 through September, 2021 annual inflation jumped up to 5%. In the 9 months from October, 2021 through June, 2022, annual inflation spiked up to 10%.! This was mainly driven by durable goods prices as the unexpected rapid recovery from the pandemic encouraged consumers to buy “stuff” since they could not buy services. Since July, 2022 annual inflation is CLEARLY much lower, just 3% to 4% depending on the exact months chosen. Inflation appears to be decelerating as the May, November and May indices are 291, 299 and 303. The last 6 months’ inflation is just two-thirds of the prior 6 months.

Unfortunately, the core inflation measure, excluding food and energy, remains near 5%.

Energy prices have fallen quickly from their peak in June, 2022.

Auto gas prices are volatile, determined by the global oil market. The spike from $2/gallon to $4.50/gallon impacted American consumers. The return to $3.50/gallon is welcome, but prices are still 50% higher than the 2015-20 period.

In 25 years, durable goods prices had dropped by 25% due to globalization. In 2 years, they spiked up by 25% as global manufacturers were unprepared for the rapid recovery in demand. Manufacturers, wholesalers and retailers have NOT given back any of that 25% increase in prices, but durable goods inflation has returned to zero.

Nondurable goods followed a similar pattern with a 19% increase followed by flat prices.

The services sector experienced mild inflation during the first 18 months of the pandemic, but has increased to a 6% annual rate as businesses re-established their business models and labor supplies. This sector has slowed to 5%, but remains the greatest concern for reducing the overall inflation rate.

Medical care inflation remains at its 20-year level of 10% or more per year. As medical care has grown significantly as a share of the economy, it’s inflationary disease further infects the economy. Labor shortages play a minor role in this industry. The lack of competition or other incentives for real productivity improvements (Baumol’s disease) drive massive inflation even as US health results such as lifespans decline.

Transportation includes both durable goods and energy prices. A 25% price increase before it flattened off.

The used car and truck market experienced 50% price increases when the new car and truck pipeline was disrupted. Once again, prices have flattened, but not declined significantly to return to the pre-pandemic level.

Housing inflation jumped up from 2% to 7% as the pandemic and subsequent Federal Reserve Bank mortgage interest rate increase disrupted the housing construction market. While housing inflation has declined from its peak, the long-term imbalance between supply and demand predicts some future inflation.

The 40% spike in home values was even higher than that shown for durable and nondurable goods. Flat prices make sense for the next year or two.

The jump in imports was driven by the increased demand for durable goods.

Producer prices were flat for 10 years, then up by 30%. No inflation remains, but some deflation is possible.

From 2015-20 historically high demand for labor drove a 7% increase in real wages as unemployment reached a 30 year low of 3.5%. For the last 3 years wages have trailed inflation. No wage-price spiral.

https://bipartisanpolicy.org/report/deficit-tracker/

Until February, the federal government budget deficit had returned to the pre-pandemic 2019 pattern. In the last 3 months spending has accelerated, adding to aggregate demand and causing the economy to expand faster, perhaps beyond its limits, supporting greater price inflation.

The government response to the pandemic threat generated much greater savings and subsequent spending/aggregate demand than any recent recession situation. The benefits have now mostly run out. Consumer demand has remained high but will likely decline.

The unprecedented expansion of the money supply by the Federal Reserve Bank in 2020 is difficult to explain or analyze. The Fed responded to the clear risk of a banking system collapse by providing “loose money” access to all entities. This monetary expansion did not result in immediate consumer inflation, but it did help to inflate asset prices: investments and housing. The Fed has begun to reduce its holdings of assets as it tries to increase interest rates.

The Fed has more than doubled interest rates. This has slowed down the housing, stock and acquisition markets.

Corporate profits tripled from $500 billion in 2000 to $1.5 trillion in 2007. Profits slowly grew up to $2.0 trillion by 2019. Profits spiked by another 40% in response to the pandemic opportunities.

The drivers and components of inflation mostly point towards lower inflation in 2023 and 2024. The Fed is going to increase interest rates again this year which will reduce housing starts and corporate capital and inventory investments. The economy has so far resisted the higher interest rates, but the cumulative impact of tighter credit and lower savings will eventually offset the optimism of a historically positive labor market.

Summary

The pandemic caused producers to initially reduce their productive capacities. The unexpected rapid recovery of demand prompted by loose monetary and fiscal policies caused demand to greatly exceed supply. Inflation peaked at 7% and then began to drift back down. Corporations took advantage of the disruption to sharply increase prices, which have now flattened but not declined. Excessive fiscal policy (budget deficits) and high consumer spending driven by extremely tight labor markets driven by historically high corporate profits have maintained aggregate demand and prices.

There is a “tipping point” situation in this economy. The Fed is increasing interest rates. This is slowing consumer borrowing and housing demand in the face of demographic factors that normally promote new household formation and the economic benefits that typically accompany this investment. Consumers are using their pandemic driven savings to consume but are now running out of savings. The stock market very quickly recovered from the pandemic, but then declined and has since partially recovered based on a narrow set of AI based tech companies. The banking and credit sector is at risk, with several high-profile bankruptcies, but no clear evidence of a panic. Corporations are earning record profits, benefitting from prior low-cost debt, but struggling to hire employees. Overall, I think that prices will fall back to the 2% level by the middle of 2024.