Economics

Economic Growth

Economists and businessmen promote global economic growth as if growth were not subject the scarcity of resources. We know that the world is limited both in size (there is only so much land available) and in the amount of non-renewable resources it has.

Advertising

The advertising industry thrives on blurring the difference between necessities and wants. Advertising companies try to convince us that we need what we only want, and sometimes even don’t want.

Advertising and Prosperity

What is the relationship between the economic and the psychological condition of people consumer societies? Economic growth depends on spending that in part results from advertising. Advertising works by making us feel inadequate and even depressed, because we do not possess certain goods or services to satisfy various real or imaginary “needs.” When we arrive at this point, we are ready for treatment – shopping. In the process, businesses as well as the advertising industry, make bigger profits. We spend buy anti-depressant medication, the products and services that make us feel better. Then we feel better, at least for a while. Then the whole process starts all over again. In a few cases, we become shopaholics. How does one break out of the vicious cycle of advertising, feelings of deprivation, and temporary relief?

Reducing Unemployment

The number of jobs being made redundant by new technologies is greater than the number of jobs being created by new technologies.[i] In agriculture alone it takes far less labour now to produce a given quantity of food than was the case in the past. This has increased the levels of unemployment in the industrialized countries. The people that have employment work hard. At the same time, there is a large pool of the unemployed and underemployed persons. Would it not make sense to reduce the weekly hours of work so that additional people could work? Implementing a minimum amount of mandatory holidays per year might be another way to practice work sharing.

When more people get to share the available work, unemployment will decline. Appropriate legislation limiting the number of working hours per week and mandating a minimum number of holidays, is required.

People could spend the extra time obtained as a result of a shorter workweek in personally and socially useful ways. For example, they could spend more quality time with their children.

What are Corporations?

Corporations are organizations whose purpose is to make profit for their shareholders. Big business exerts much influence upon people’s lives. It advertises extensively in order to convince us that it has best interests of people at heart.

The corporation is like the medieval fiefdom. Despite all the talk about the de-layering, businesses retain the hierarchical structure of tribes. The chairman is the warlord. The chief executive officer is the chairman’s second in command. The board are the elders. The warlord plots strategy and the executives and workers implement it. The aim is to increase market share and enlarge the assets of the warlord and the shareholders.

Corporations and States

There are similarities but also significant differences between how companies and states function. Among the similarities is the structure of each. The political equivalent of the chairman is the Prime Minister or President. The political equivalent of the Board of Directors is the Cabinet. The company directors in turn find their counterparts in Cabinet ministers, while the different divisions of the company correspond to the different ministries of the government. The Annual General Meeting (AGM) is analogous to the general election.

One of the differences between a state and a corporation is that in representative system each person of voting age has one vote, that is a share of political power. However, in a corporation the principle ‘one person equals one share’ does not apply. In a corporation a person may possess the majority or all of the shares, and in that way exercise undiluted authority in the business.

Corporate Accountability

The degree of private accountability decreases as the public character of a business increases. Personal responsibility is reduced by dispersing possession of businesses among a large group of shareholders. Among many proprietors, personal responsibility is lesser than in proprietorships and partnerships. As if this was not enough, a person suggested re-inventing the business itself as a “person.” It is this person” that would be responsible for any misdemeanors and even crimes perpetrated by the company. The liability of the shareholders is limited to their investments.

Personal proprietorships and partnerships are fully liable for their actions. The owners of corporations do not risk personal assets to pay for any potential liabilities of the company in excess of the amount that they have invested in the corporation. What is the rationale for limiting the liability of corporations to the amount invested by shareholders?

As the vast majority of the shareholders do not play an active role in the day to day management of the corporation, it would be difficult to justify expecting them to take full responsibility for the actions of the corporation.

The day-to-day management of the corporation is entrusted to the executives of the company. But executives of corporations frequently possess a part of the corporation.

As owners of shares, their liability is limited to the amount they invested in the shares of the company. The executives and directors of companies are different from other shareholders in that they not only own a part of the company but also control it.

Should they be expected to be liable in excess of the amount they have invested in the company on the grounds that they control the company? Or should their liability be also limited, like that of the ordinary shareholders, only to the amount they have invested in the company?

Since decisions are made by those who control the company, and liabilities arise out of decisions, it would be very hard to maintain that control should not constitute grounds for liability. The real question is, therefore, how much extra liability rests on those who control the company because they control it, in addition to the liability they already have as a result of ownership.

The underlying problem is what exactly constitutes grounds for liability. This problem does not arise in the case of proprietorships and partnerships. It is clear that control is grounds for liability.

Matters are complicated by the fact that in the eyes of the law the corporation has the status of a ‘person.’ Only persons can be considered to be liable for actions or consequences that result from decisions made by persons.

The corporation as a person appears to have an existence independent of the persons who control or own the corporation. If the corporation is a ‘person,’ then the corporation should take full responsibility for all its actions.

The notion that a corporation is a person constitutes an incentive for the executives of a corporation to act in less than responsible ways. It is a way of allowing directors to escape full responsibility for their decisions and actions.

This may contribute to acts on the part of the corporations as would not have been undertaken if people were more directly responsible. Business history is replete with examples where directors and shareholders of companies escaped personal responsibility for the acts of the businesses they owned or controlled.

Audits

An auditing firm is a business like any other business in the sense that it is expected to maximize profits for its shareholders. An auditing firm is different from other kinds of businesses in the sense that it performs to a significant degree what could be called a public interest function. As a firm that examines the accounts of publicly owned companies, the auditing firm is expected to act in the public interest by providing an accurate and impartial assessment of a firm’s financial position and performance. It is a legal requirement that such information be made available to the public on a periodic basis.

The management of the company that hires an auditing firm naturally wants a favorable report, in order to look good in front of the shareholders. What will an auditing firm do if it has to be critical of the performance of the management of the company being audited? Will firms that want favorable audits hire auditing firms that might produce anything less than a splendid report?

The management might respond to a negative report by terminating the services of the auditing firm before the end of its appointed term. It might also respond by hiring another, less rigorous auditor the next time around. So the auditing firms with the higher standards may also be the firms less likely to get or keep the job.

The auditing services industry constitutes an example of an industry in which market forces alone cannot guarantee that quality services will be provided. Thus, legislation requires auditing firms to maintain minimum standards in the exercise of their profession.

Rich and Poor

Much has been said about the (growing) gap between the rich and the poor. The interesting question is not so much why a gap developed in the first place, but why it gets bigger. Those who are already well established can use their wealth to establish themselves even more firmly.

Being Fired

When a company fires an employee, it is saying to him or her that “you do not really fit into our company.” This is expressed in the popular saying that so and so was not a “team player.” It may well be the case that an employee does not fit into a particular company. But we should not jump to the conclusion that it was therefore the employee that was bad for the business rather than the company that was bad for the employee. The fired employee should be open to the possibility that his or her “dismissal” may have been a case of “this company does not fit me,” or “this company does not suit me.”

Paradox of Monopoly

Monopolies find themselves in a paradox. They are both more and less efficient than firms that have to compete. They are more efficient in that they can produce things at a lower unit cost, due to their ability to utilize economies of scale.

However, monopolies are less efficient in that, since they face no competition, they charge higher prices for their products than they would have to under competitive conditions.

Critical Thinking

Prisons of the Mind

We are assaulted daily by messages from every direction. These messages are frequently false or misleading. It appears hard to know what or whom to trust. Nevertheless, we must make the effort. Those who unthinkingly accept problematic messages run the risk of being prisoners of people’s views.

Prejudice

Prejudice is a view formed in advance, without thinking. Prejudiced people are unwilling to change their preconceived views. They rarely tolerate views that differ from theirs.

Appearance and Reality

Things are not always what they seem. How many times have we heard this expression, and yet how consistent are we in differentiating the two? We have become image conscious, individually and collectively; we hardly look beneath the surface of things.

Independent Thinking

People who think independently at times say things that may strike listeners as ‘off the wall.’ Independent thinking requires us to sail into uncharted arguments. Is it surprising that daring sailors brush against and even brush against a reef from time to time? Independent thinking requires courage: we must be willing to experiment and take risks, especially the risk that we might be wrong. The danger is not that we may get it wrong. Rather, it is in not realizing, with or without help, that we may be wrong. There may be a few that are too afraid of admitting an error. They will have to pay the price for stubbornness.

Critical thinking aims at the truth. Critical thinking seeks to be fair by remaining impartial. This means fairness in listening to all sides of a given issue. It doeas not mean fairness in the sense of refusing to take sides.

There is a time for everything. There is a time to be impartial, and there is a time to be partial. Critical thinking should be impartial in the way that a judge is expected to be impartial. He is impartial while he hears the evidence from all parties concerned. He withholds judgment until he hears and considers all evidence. To do otherwise would be to pre-judge the issue, to be guilty of prejudice. Yet the judge ends by being partial when he declares the verdict. At that time he very definitely takes a particular side in the case, the side of justice against injustice.

What makes thinking nihilistic is the ill-advised attempt to move beyond the difference between good and evil. Social science that does not differentiate between good and evil is nihilistic.

False Dichotomies

Too often we fall into the trap of establishing false dichotomies or distinctions.

Questioning

Asking questions is important. Questions, and the answers that they elicit, increase the understanding of an issue. Without questioning we are likely to remain in the dark. Teachers should therefore never forbid but rather encourage questioning.

Questioning is necessary for progress and improvement. Without questioning, no individual or institution is going to become aware of its weaknesses. Without questioning, even if we become aware of injustices, little will get done to correct them. If there is no recognition of problems, there can be no possibility of taking action to solve them. Discouraging questioning is a sure way of initiating a slow but certain process of decline, whether in education or in politics.

Perception

Two people look at the same thing and yet they see different things. Is it perhaps because we tend to see only what we want to see?

Lateral Thinking

It is the process of thinking ‘sideways’ rather than straight. Thinking in terms of cause and effect is an example of “straight” reasoning. When we think laterally, we take a term and examine it in different settings. For example, one could take the idea of ‘balance,’ and investigate its meaning in different settings.

The idea of ‘balance’ is present in almost all areas of study, including politics, economics, psychology, physics, biology, philosophy, accounting, finance, and mathematics.

In politics, we talk about the balance of power between different nations, as well as about checks and balances on the exercise of political power within a particular nation. We think of politicians as participating balancing acts. In economics, we have the idea of balance in the form of the concept of equilibrium or the balanced budget. In psychology and psychiatry, we talk about people’s mental balance or lack of it. In physics, we have the idea of balance in the form people and things keeping or losing their physical stability. In biology, we are concerned about the balance of the ecosystem. In mathematics we have the idea of balance in the form of the equation. In accounting and finance we talk about balance sheets and bank balances. In philosophy and the humanities we have the idea of a balanced point of view. In law justice is conceived of as a balance. In meditation, we aim at achieving spiritual balance.

When we think laterally, we traverse disciplines using a term that manifests itself in different environments in different ways. Lateral thinking enables us to escape the parameters of specialized knowledge, and perhaps make discoveries or gain insights that would have escaped us if we confined ourselves merely to linear thinking.

Abstract Thinking

Abstract thinking is a pared kind of thinking. It strips away from an object of perception its less essential properties. Abstract thinking is different from descriptive thinking. When we describe something, we think of it by picturing it in the imagination. In descriptive thinking, we remain on the surface of the object, as we see only what is visible to the naked eye.

In abstract thinking, however, we try to penetrate the surface and see what lies under the surface.

The danger in abstract thinking is that we might overlook important properties and focus instead on less significant ones.

One difficulty in abstract thinking arises from the difficulty in deciding which properties or features of a given phenomenon are more or less essential than others. To think of a thing abstractly, means to think of it apart from its properties, except for those we deem to be the most important.

Understanding

When we try to understand anything, we almost always do so in relation to something else. When we consider a given variable, we try to understand it in relation to another variable or variables, on the assumption that they are related as an effect is related to its cause or causes. In different academic pursuits, the factor under consideration is thought of as the dependent variable, while the cause or determining variable is thought of as the independent variable. Independent variables, in relation to other variables in turn become dependent variables. And so the linking of variables leads to a long chain of causes and effects. Accordingly, we have the Big Bang theory of the first cause, the story of creation, or a theory of evolution from most primitive forms of life.

Water under the Bridge

How many people justify not taking a critical look at the past using these words? Didn’t someone say that those who are not willing to learn from the mistakes of the past are bound to repeat them?

Community

Righteous and the Wicked

Communities banish persons from their midst upon different grounds. Heretics were excommunicated or burned, and criminals are jailed or put to death. But there are cases where persons were persecuted merely because they had different beliefs. How do we know the difference between righteous persons and the workers of iniquity?

Individualism

Individualism holds that everyone is responsible for himself or herself, that we all have to “go it alone.” Perhaps we have we taken individualism too far. It seems that all too often individualism appears indistinguishable from mere selfishness.

It has been said that the pursuit of self-interest is the driving force of economic activity. It is said that society requires individuals who are able to think for themselves. But the pursuit of self-interest, if not restrained, may turn into conflict. At what point does radical self-centredness begin to destroy communities, whether it be the states or families?

At the family level, self-centredness results in high rates of divorce and the abandonment and neglect of children. At the community level, self-centredness reinforces indifference to the fate of others. People say, “I am not my brother’s keeper. Others say, “I got to look out for number one.”

What Keeps Us Together?

Many of the ties that keep present-day groups together are weak: they break easily. An example is the tie of marriage. It does not appear to be very firm. Does freedom mean freedom from commitments? Or does living well require making and keeping commitments?

Friendship and Bonding

An illustration of the use of the language in the human subjects may be seen in the expression bonding. Instead of saying that people are forming a friendship, the psychologist will say that people are “bonding.” The use of this expression betrays a materialistic perception of relationships. It reduces friendship to a “glue.”

Fragmentation

This process appears in many areas. The products we buy fall apart, knowledge is becoming fragmented, states break up, the family is under pressure, even persons are falling apart.

Friendship and Individualism

Is friendship possible in a society where individualism is rampant? In a society characterized by individualism, each person is expected to assert his or her self-interest, to pursue his or her private interests. Everyone is in a state of competition with everyone else. Is real friendship possible in this kind of environment?

In a highly individualistic nation socializing for the sake of friendship rather than for economic advancement is a risk not many are willing to take. People are wary of becoming too friendly out of concern that their ‘friends’ might become enemies. We speak guardedly in order to protect ourselves from making potentially damaging revelations about ourselves to our ‘friends.’ We communicate as if anything we say could be used against us in a court of law. Debates tend to take place within a narrow and safe range of topics.

Civilization

Civilization, among other things, is the ability to coexist with others peacefully. Harmony between persons, communities and states is an important important mark of civilization. Harmony requires polite manners because it is manners that restrain us when we feel aggressive. In a well-organized community, there are means to resolve conflicts peacefully.

Global Village

Progress presumably culminates in the replacement of communities by a world community, the global village. In other words, social evolution is bringing people together. In certain ways it perhaps does. But in another sense, globalization also brings strangers together, while placing greater distance between members of local communities.

Communication

Quantity and Quality of Words

There is a way to use a large number of words to say very little; there is also a way to use a few words to say a great deal. An example of the first is the typical academic writing. An example of the latter may be found in the works of exceptional writers.

Missing Words

A few words appear to have gone missing. A missing word from our vocabulary means that some experience is missing from our life. Words such as “grace” and “disgrace” are no longer used that much in the discourse of the “advanced” states.

Cliches

There is a danger in treating wise sayings as cliches. Just because we may have heard an idea over and over again does not make it false.

Words of wisdom, precisely because they are timeless, are at risk of being dismissed as cliches. Parents and teachers must alert young people to this danger. Wise sayings, far from being cliches, are statements of truth. A few examples follow.

Loose Lips Sink Ships. We should speak cautiously. We need to consider the effects our words might have on others before we speak.

We Reap What We Sow. Our life turns out according to the foundations we have laid earlier.

A Stitch in Time is Worth Nine. Doing something important at the right time can avoid many troubles later.  

Pen and Sword

The pen is mightier than the sword. The force of argument is stronger than the force of arms.

Free Speech

How much or how little difference free speech makes depends on where it is practiced. In societies that tolerate freedom of speech, speaking freely appears to carry relatively little weight. On the other hand, in societies where freedom of speech is restricted, words spoken freely appear to carry more weight. Why?

In freer societies, there are so many different opinions being expressed at any given time that no single opinion is taken too seriously. The many diverse opinions all competing for a hearing tend to cancel each other out. More restrictive societies, attempt to maintain a monopoly on information, and thus generally propagate ‘official’ views. Anyone that expresses a perpective different from the official narrative immediately arouses interest.

Yet speaking freely is practiced with a degree of restraint even in the freer societies, especially by persons in official positions. Every government has its “party line” and its members are expected to adhere to it.

Independence of the Media

How independent is the mass media? How well do privately owned  instruments of mass communication serve the public interest? The ability of the mass media to report news of interest, and do it fairly, is limited to an extent by the fact that it is controlled by interested parties, public or private. May a privately controlled vehicle of mass communication be expected to serve the public interest? The instruments of mass communication are for this reason not entirely reliable providers of information. Which newspaper will print stories that may prove damaging to the interests of its shareholders? Which television network will run stories that may prove damaging to its clients, on whom the network depends for its biggest source of income, advertising revenue?