Thought for the day: Legal versus Moral

Thought for the day:  Legal versus Moral

Human beings evolved as an imperfect animal with complex behavior, both individualistic behavior and social behavior.  If you are looking for moral guidance, you are not going to find it in a political arena.

Economic Opportunity for the Working Man

Economics Without The B.S.**:  Thoughts on Economic Opportunity for the Working Man

[**  Double entendre intended.]

Thought for the Day:  Economic Opportunity for the Working Man

I have learned from the old prairie farmer of the 1930’s that is dirt rich and cash poor when someone comes around to better your life with economic opportunity, free enterprise, and personal freedom it is time to gather up the children for safe keeping and place one hand on your wallet.

Deflation Ahead?

Economics Without The B.S.**:  Deflation Ahead?

[**  Double entendre intended.]

IS A DEFLATIONARY SPIRAL AHEAD?

[This is not a prediction.  I have absolutely no qualifications, and a spotty past performance, when it comes to making predictions.  This is just a general interest discussion.]

          It has been six years since the Financial Crisis of 2008 and the Great Recession which started at the last three months of 2007, the most serious economic downturn since the Great Depression of the 1930s.  Our Federal Reserve and the Central Banks from the major economies around the world have taken extraordinary coordinated actions to avoid a deflationary spiral like we had in the 1930s.  They are limited to monetary policy; but, the fiscal policy of the various governments from around the world have been anything but coordinated.  While the monetary policy has been positive for abating the negative effects of the Great Recession, the fiscal policy measures have been quite lacking for any sustained positive effect and have even been negative in some circumstances.  We have spent the last six years muddling through with positive but sluggish economic performance.

          So, the question is:  With the negative reaction of the financial markets these past several weeks for stocks, bonds, some commodities, and gold, are we headed for more economic distress with the Fed and Central Banks out of ammo for more monetary stimulus and fiscal policy changes that would be too late and too weak to have any immediate positive effect?

Let’s take a look at the picture:

1.  GROWTH:  Growth in China, Japan, Brazil, and Europe are slipping.  In the U.S. growth has been tepid – around 2 percent when most economic recoveries are around 4 percent or better.  Only in India has growth been good during this year.    The poor growth is the result of weak demand.  How will poor growth around the world affect the U.S. economy?

2.  EMPLOYMENT:  There is some growth in employment in the U.S.; but, nowhere near full employment.  And there are still many who have dropped out of the labor force participation in a stagnant economy.  Europe is still plagued by high unemployment – even Germany has not been anywhere near a full employment economy and Germany has been one of the better economies.

3.  INCOME:  In the U.S., while there has been some growth in employment, income for hourly and salaried workers has been mostly flat (no increase) for several years.  This is why demand is weak – it has been positive, but not robust like you would expect during a recovery from an economic set-back.

4.  STILL A CONSUMER ECONOMY:  We are still a consumer economy – at least 50 percent of the overall economy.  The industrial and commercial sectors are still around 10 percent.  Government (Fed, state, and local) are running around 40 percent.  The consumer sector has a multiplier of about $.70 of output for each $1.00 of input.  Manufacturing has the highest multiplier of $1.40; Agriculture around $1.10; Info Tech around $1.00. 

It is difficult to stimulate the overall economy when such a large sector is made up of the lowest payback.  Plus, this sector requires the lowest demand for educational performance with respect to technical skills.  This affects young people coming out of school and landing in a job where they can climb a career ladder.  This is important to lower income families because traditionally this has been the pathway to the middle class – jobs requiring educated skills, paying well through time, and moving up in social status, spending money accordingly and engaging in the community accordingly.

This is important because the makeup of the economy will determine the social structure within that society.  What drives/determines public policy? – quality of life, environment, security and stability, opportunity and free choice, economic well-being?  The investment dollar will be influenced by public policy and flow to those sectors where the incentives and best payoffs are, whether they are here at home or overseas.  All societies have income inequality; but, when income is disproportionately distributed and you have concentrated wealth, that influence enters into politics and affects public policy.  We have many counties in the U.S. that have at least 30 percent low income to poor family households.  Should the economy reflect this or change this?  What investors do, makes a difference.  And what shape a society is in compared to other societies affects how other investors react, including foreign investors who buy our treasury bonds.

5.  TAX CUTS FOR STIMULUS:  Cutting income taxes benefits upper income Americans more than middle-to-low income Americans; and, will not be enough of a boost to stimulate consumer spending and probably not boost investment in capital equipment while demand is weak.  President Bush found this out with his massive tax cut in the early ‘00s.  To stimulate consumer spending you have to affect low-to-middle income Americans; and, because they pay so little in income taxes, this is now done by payroll tax cuts, namely reducing Social Security taxes that appear on the paycheck – since Social Security taxes (along with MediCare) are usually larger than income tax withholdings on paychecks for low-to-middle income Americans.  This is what Presidents Bush and Obama have had to do in 2008/2009 for a stimulus – but I have no idea what figure they use for each percentage of reduced tax amounts to how much more they get in consumer spending.  And I don’t think this will result in much of a stimulus – I would think you would have to couple this with other fiscal measures.

6.  CURRENCY MANIPULATION:  Countries used to devalue their currency during economic difficulties.  The U.S. did this when FDR first became president; and, Nixon did this also.  But this is no longer available as a tool in most cases.  Currencies are not fixed anymore – against Gold, or the Dollar – except in a few cases.  Today, currencies float against one another – the Dollar goes up, the Euro goes down, and the Yen and the Yuan act accordingly.  Actually, the Yuan is one that still gets some manipulation by the Chinese.  Commodities, like Gold and Oil, may be priced against the dollar; but, they adjust in the marketplace as the value of the dollar goes up and down.

7.  EXPERT PROJECTIONS:  Let’s title this missing projected economic targets.  In the United States, Europe, Japan, and China the experts who govern have set targets for economic performance:

          a.  Growth – they over-estimated

          b.  Inflation – they over-estimated, except in China where they vastly under-

                   estimated.

          c.  Deflation – they all under-estimated

          d.  Recovery – they are still at it six year later

NOW WHAT?

Well who knows?  But to be contrary, after all economists always talk about the ‘on the other hand’:  the U.S. economy is still improving, slow but improving.

          a.  Consumers carry less debt.

          b.  Corporate profits have been good.

          c.  Employment is improving.

          d.  By-and-large inflationary fears are not realistic.

          e.  Housing and construction, two of the sectors that were hit the hardest, have 

                  been improving.

So, what is the Stock Market doing:  selling off or taking a little breather?

Time to take profits?  Take some money off of the table?  If you don’t have profits after this run-up of the markets over the past several years, you haven’t been playing the right game and don’t belong in the stadium at this time.

Will it be an orderly retreat in stock prices to reflect realignment of future expectations; or, will a pullout by a major investor or two be followed by a stampede to get out?

WAIT AND SEE!

Thought for the Day: On Planning

Economics Without The B.S.**:  Thoughts on Planning

[**  Double entendre intended.]

Thought for the Day:  On Planning

“Everyone has a plan until they get punched in the mouth.”

                                                        Mike Tyson

TEACHING AMERICAN HISTORY

Economics Without The B.S.**:  Teaching American History

[**  Double entendre intended.]

TEACHING AMERICAN HISTORY

         We study history, as one branch of knowledge, to understand our place in the universe.  The human animal is the one animal that has a cultural evolution as well as a biological evolution.  We can shape and change that cultural evolution.  We are the one animal that can change its environment and move about anywhere on Earth and beyond.  The study of history is the link between the Past, the Present, and the Future – the link between knowledge and progress.  Our progress as a species is linked to our quest for knowledge; and, technological advance and an understanding of our past is the key to the pace of that quest.

          As one branch of knowledge, history involves inductive as well as deductive reasoning.  But unlike the sciences, which rely on empirical evidence and are objective in their analysis and conclusions, historical analysis is subjective but never-the-less still relies on making a rational argument.  The study of history is influenced by the social movements that affect people at any particular time.  So in our history, the role of the individual in a society and the role of government in that society, the expansion of the American nation westward and the conflict of cultures between a native inhabited people and new settlers, slavery and civil rights struggle, the industrialization of the American economy from a rural/agrarian economy along with labor/management issues in a corporate setting, immigration, the participation of women in society to include politics, are all topics , among others, that get discussed and can be influenced by the particular generation that deals with these issues.

          The American experience is a unique experience in the historical context.  The fundamental principle of our nation’s founding was that people could govern themselves.  We are not the oldest democracy; and, we are not the only republic that was ever created.  But our founders did create a system for governing with the consent of the governed while respecting dissenting opinions – a constitutional, democratic, republican form of government.

          Unlike other societies in history, institutionally and culturally we are not a status quo nation.  Institutionally we have a federal system of government that not only divides power among the branches of government but also between the federal government and state and local governments.  That division of power may cause competitiveness in our political system; but, it means that in order for something to get accomplished cooperation rules and the game plan is to build viable coalitions.  Those political leaders that can forge a consensus are successful in our political system.

          In addition to the institutional framework of our governing system there is also “We the People”.  While we are a representative democracy and not a direct democracy we do have a civic engagement of the governed.  Culturally we have always been a diverse nation, right from our beginning.  Very quickly in our history we spanned the continent to become a contiguous continental nation.  We have always had a mixture of people in our nation, non-English speakers and not of a European origin.  We are probably the only nation in history that is not defined by an ethnic or religious makeup but instead by a loose governing concept. 

      In our founding documents, the Declaration of Independence and the Constitution, you will find a variety of values stated: liberty, equality, promoting the general welfare, life and the pursuit of Happiness.  They are neither defined, delineated, nor ranked in order.  They can at times conflict with one another.  Sometimes we lean one way during a conflict; and, sometimes we lean the other way.  We are constantly re-examining our values.  During Andrew Jackson’s Presidency was the first deviation from the founding fathers,  giving a Western/frontiersman interpretation to liberty, rugged individualism mixed with an egalitarian spirit, and the ‘Common Man’ mythology that departed from the Jeffersonian concept of an educated, almost an elite, citizen.  Each generation that comes along does this, a re-evalution of our traditional values in a contemporary setting.  Even newly arrived immigrants eventually figure this out.  That is what makes us unique and has contributed to our greatness.

          The dynamism in our culture that comes from our makeup and institutional framework feeds our innovative spirit that drives our economy and well-being.  The competitiveness in our fragmented system allows individual initiative to function in an institutional setting.  The advancement of creative enterprise depends on the ability to convince others and gain cooperation.  For change to take effect and bring progress, the old order will likely be upset.  The American experience has linked progress with the individualistic enterprise found in a capitalistic economic system and the liberty and civic engagement of a democratic political system.

          An understanding of American history does not come naturally.  It takes effort.  Our diversity can pull us apart.  We have had a historical common thread as one nation, with its faults, but never-the-less with progress shown.  For the most part, the American people through history have not been won over by an idealistic notion of existence.  The collectivist society of New Harmony couldn’t make it for even twenty years.  And the fate of an idealistic New Liberty on the style of the Cato Institute or Koch Brothers would likely have no better an outcome.  Instead, Americans, for the most part, have been a practical people who have fumbled their way forward, sometimes making mistakes, but ever trying to right the way and do a practical justice for their forebearers and progeny.  If a teacher fails to drag (or is lead a better word) students, either children or adult learners, through this process of inquiry, they are failing in a good civics lesson; and, we are teaching ideology and not history.

          Hopefully, in studying the Past, we will come to understand ourselves better and where we are at Present.  The Past is not always Prologue.  As human animals we can learn from our Past and master our Present rather than be trapped by our Past.  We are capable of change.

                 The living shall not be in peace,

                         When the Past is not at rest.

                 The Present holds the Future's lease,

                         When We give not our best

Loosing Our Heads

Economics Without The B.S.**:  Loosing Our Heads

[**  Double entendre intended.]

Loosing Our Heads

The recent beheadings from the Middle East over the past several weeks only serve to illuminate the vast differences in our “civilized” world for expressing dissenting opinions versus theirs.  It reminds me of a point Jacob Bronowski made in his televised series from the 1970’s ‘The Ascent Of Man’, that we humans were not just lower than angels but also just one step above animal behavior.  However, we are, he notes, the one animal that use our brain, we reason, use our emotional being, to not accept things as they are, but to change.  Unlike animals, we humans have evolved not just biologically, but have shaped our cultural evolution and thus his title to the series, The Ascent Of Man.

When President Kennedy spoke at Houston, Texas in 1962 to explain why we are going to the Moon, he addressed the human quest for progress that was coupled to our thirst for knowledge.  As an example he boiled down human existence to a fifty year period to explain how progress and knowledge were linked and that most of that change had occurred quite recently giving the appearance of rapid change.

I believe the conflict we have with the extreme Islamic fundamentalists is basic to that rapid change of pace brought on by technological advancement forcing change in societies not adapted to cultural change.  I do not think religion has that much to do with it.  I think the extremists have identified Western cultures with pushing the technological advancement and in reaction to that oppose anything “Western”.  And to the extent they can use religion as a tool for resistance they do.  But I think it is more of an Arab and Middle East problem that just Islam.  After all there are plenty of Islamic people in Asia that fit right in with the “modernized” world as well as those from the Middle East region that have settled in the United States and live side-by-side with others from different cultural backgrounds.  And the democratic process for resolving conflict in society does not seem to be a natural fit for an Arab culture that remains too bound to tribal ties.  And this in spite of the wealth that has been produced in many of the Middle East states and advanced education received by the elite and some of the middle class in those societies.

While the beheading of Westerners receives a great deal of attention in the Western press, there are public beheadings by our friends the Saudis on a weekly basis.  Of course when sanctioned by the State, such an affair receives all the formality one would expect for such a ceremonial spectacle.  And, unlike the recent execution of Westerners, you can view these exhibitions on the Web – they are not removed from viewing for their grotesqueness.  Also on the Web are video of Islamic terrorists beheading “infidels” in less formal arrangements and with less proficient technique.  But there is still a crowd gathered just like an old time hanging in America in the 19^th or 20^th Century.  There is even one video of a child being given the “honor” to do in the “infidel” and with results not anywhere as efficient as a Saudi executioner.

One of the points that Jacob Bronowski makes is that technological advance, inquiry, is part of the human spirit and that intolerance is a betrayal of that basic human spirit.  The arrogance that comes with dogma promotes ignorance.  In the program, Bronowski stood at Auschwitz, where he lost members of his family, and said we have to temper ourselves by reaching out to others – “We have to touch people.”

We have had relations with the Saudis for many, many decades – militarily and commercially.  And I am aware it is a complicated relationship – as was testified to by several of our diplomats during the 9-11 Commission hearings.  I like to think of myself as a pragmatic ‘Realist’ rather than an ‘Idealist’ or ‘NeoCon’ when discussing foreign policy; but, I have to think that something has failed in the long relationship we have had with the Saudis.  And I think they have been the prime instigator in promoting extremists in Islam because of their brand of Wahhabism, the relationship of the religious leaders with the political leadership, and the distribution of wealth and economic opportunity within the country.  I have no idea what it would take to bring the country into the “modern” world; but, just looking at our part, I would think we could put more pressure on the ruling family by economic means – and that’s keeping in mind that they initiated the Oil Embargo of 1973 which not only affected our economy but also our military readiness at that time and they have been somewhat cooperative in our intelligence networks and behind the scenes dealing with Israel.

It took Southern Italy a long time to come into the “modern” world – aspects of feudalism existed right into the 20^th Century, even today.  If the paganism of Southern Italy could get enwrapped into Christianity and the Church-State relationship get realigned maybe there is a lesson for Saudi Arabia.  Let’s hope it doesn’t take as long.

The fact that this barbarity still goes on today reminds me of a book by Victor Davis Hanson, ‘A War Like No Other’.  Hanson is a classical scholar who wrote about the Peloponnesian War of the 5^th Century B.C. between the democratic and “civilized” Athens and the autocratic and regimented Sparta.  He describes how after thirty years of constant war, the “civilized” Athens descended into barbaric acts just as crude as Sparta.  And Hanson asks what is the nature of man?  That “civilized” man was shielded from animalistic instincts by a thin veil that could be pierced with so little provocation.

So, when do we touch one another and put our heads together, like at the end of the movie Rain Man, and advance the human spirit?

Thought for the Day: On Politics

Economics Without The B.S.**:  Thoughts on the Democratic Process

[**  Double entendre intended.]

Thought for the Day:  On Politics

Participating in the democratic process is like a contact sport.  You are not going to come out of it without some bruises.   

Social Security: A Financial Problem or a Political Problem?

Economics Without The B.S.**:  Social Security:  A Financial Problem or a Political Problem?

[**  Double entendre intended.]

Social Security:  A Financial Problem or a Political Problem?

Another annual report on the financial condition of the Social Security Trust Fund has just been released by the Trustees and critics of Social Security would have you believe there is a financial problem.

The political leadership needed to manage the long-term sustainability of the Social Security Program has been lacking since the Reagan Administration last faced a similar crisis and made the necessary modifications after forging bi-partisan support.

Since the inception of Social Security from the New Deal of the 1930s, there have been critics of the program, mainly Republicans, calling it ‘Socialism’ even though the concept of social insurance was initiated by the bulwark of German conservatism, Otto von Bismarck, in the 19^th Century.  However, regardless of who was president or in control of Congress, no one has been able to undo the Social Security Program as it was initially designed as the American version of a social insurance program.  Among the ‘Greatest Generation’ that was alive when Social Security was instituted, this program was considered the third rail for politicians who would not support the program – if you criticized the program, you got burned at the next election.  But as this generation passes and younger generations inherit the program, the aspect of it being a third rail has diminished.  But the administration of the program remains in the political realm.

As social insurance policy, and not just a retirement program, the Social Security Program was designed to have all Americans participate in the Program but would primarily benefit low-to-middle-income Americans who are often in a negative net-worth status or have difficulty putting enough savings aside for life’s contingencies.  Social Security addresses this by being a forced savings program, not voluntary; and, by being a guaranteed benefit, not one that is subject to the risks of the marketplace borne by the individual participant.  By having all persons participate, but by being more generous to low and low-middle-class beneficiaries, Social Security has always been re-distributive in nature and progressive in allotting benefits, the sine qua non of social insurance.

The data that has been collected by the Social Security Administration, and other organizations like the Pew Research Center, have shown, over the years, that higher income households of seniors have a greater mix of assets and income sources and are less dependent on Social Security; and, as you go from higher income seniors to middle income and lower income senior households, the asset base becomes less to non-existent and the income streams become more dependent, almost totally dependent, on Social Security benefits.  While the three-legged stool of retirement planning has been used as an analogy – one leg (Social Security) as forced savings, guaranteed benefit; a second leg (company pensions in the form of Defined Contribution or Defined Benefit Plans) consisting of professional management; and, a third leg of personal savings and investments (e.g., an IRA, a second home, etc.) – higher income senior households have all three legs, middle income senior households tend to have two legs (although the adequacy of their company pensions have been questioned), and  low income senior households tend to rely almost exclusively on Social Security.

With this data at hand and the lessons of the third rail of politics, we now have old time critics disguising themselves as the modern day “Reformers” bringing to our attention one inadequacy after another concerning the viability of Social Security and how to rescue the Program before the Great Collapse.  The vicissitudes of their reforms are reminiscent of the bumps and grinds of a tease joint obliquely situated in a side alley from the main thoroughfare.  The actuaries of the Social Security Administration, who are responsible for providing guidance for the sound management of the Program, have often stated, through the decades, that the Program with modifications that have been historically made – raising the income cap, raising the payroll tax, adjusting the retirement age, recomputing the benefit formula, etc. – and, gradually phasing these in to avoid shocks to the people affected – can restore the system to long-term sustainability, make it economically and financially sound, and keep it socially responsible.

If actuaries can make that statement then why the constant outbursts from the “Reformers” and the “Progressives”?  Could it be because the administration of the Social Security Program is entwined in the political process?  And it is the bedrock of the progressive agenda instituted during the New Deal of the 1930s and still ever present today?  And because it is identified with the progressive era of the New Deal, in other words Democrats and a Liberal agenda, it gets stuck in the craw of political opponents to this agenda and its programs?  Stephen Goss, the Chief Actuary, has said repeatedly over the decades that it is the political inaction in making the necessary modifications that has been the main obstacle and primary reason for the present state of affairs regarding the outlook for Social Security.  You can go to the C-SPAN web site and search on congressional discussions on the modifications recommended for Social Security since the late 1980s when they know (and they actually mention it) what the Program would look like in the year 2000, 2010, 2020, etc.  They discussed how gradual changes over twenty years would bring the Trust Fund into sound financial standing.  They discussed it in the late 1980s, the 1990s, the ‘00s, and since.  They discuss; but, they did nothing – in the 1990s, the ‘00s, and since.

The Social Security Program is one of the few federal programs that has always had broad support among the people who label themselves as Democrats, Independents, and even Republicans.  Even among the different generations it receives broad support – even the young generations even though they don’t think Social Security will be around when they reach their retirement age.  This was true in the past during the 1980s.  Well now for those youngsters from the 1980s it is thirty years later and as they approach eligibility for Social Security retirement, surprise/surprise, they are among the biggest advocates for keeping the Program as it was intended.

If there are no changes to Social Security it will only have enough money to pay $.75 for each dollar of benefits by sometime in the 2030s.  Is there some politician who thinks they can get re-elected after they tell Granny that she is only going to get $.75 for each dollar of benefits?

We live in a society governed by a democratic process.  Social Security is a part of that democratic process.  It is up to each generation that participates in the Social Security System to either renew that support or find a different approach.  Political will is not just a test for politicians, but also a test for the people they serve.  Lead, and they will follow.

The most dangerous woman in America

Economics Without The B.S.**:  Anat Admati:  The most dangerous woman in America 

 [**  Double entendre intended.]

Anat Admati:  The most dangerous woman in America 

James Pethokoukis of the American Enterprise Institute had an article out this week with this headline.  Binyamin Appelbaum of the New York Times had an article out this past week also, ‘When She Talks, Banks Shudder’.

Last month President Obama met with Anat Admati to discuss her views – about six years too late.

http://www.nytimes.com/2014/08/10/business/when-she-talks-banks-shudder.html?_r=0.

What do you think?

Fixing Social Security

Economics Without The B.S.**: Fixing Social Security

 [**  Double entendre intended.]

Fixing Social Security

In response to Star Parker's recent column on fixing Social Security:

http://townhall.com/columnists/starparker/2014/07/28/give-low-income-americans-exit-option-from-social-security-n1865841/page/full

The present Social Security Program, if fixed with the modifications that have been historically made, is sustainable over the long-term, economically sound, and socially responsible – so say the actuaries (namely Stephen Goss) who work on the program and are responsible for providing guidance for the sound upkeep of the program.

  

Star Parker’s recommendation to fix Social Security was to turn it into a retirement savings program; but, Social Security was designed from its start over seventy years ago as a social insurance program to primarily benefit low-to-middle-income Americans.  Her 30/30 Plan is inadequate to address the realities of someone who earns $30,000 or less.  To talk about savings at this income level is a non sequitur, often they are in a negative net worth status and so they are unable to build any kind of real savings.  Social Security addresses this by being a forced savings program, not voluntary; and, by being a guaranteed benefit, not one that is subject to the risks of the marketplace borne by the individual participant.

She talks about building on the first principles of our free society but ignores one of the basic ones, promoting the general welfare, which Social Security does by being redistributive in nature and progressive in dispensing benefits to the lower incomes in our society – the sine qua non of social insurance.

She talks about an ownership society and implies that Social Security is part of our welfare state, not recognizing that we all pay into Social Security and that it is not financed by tax payer dollars from the General Fund but from the Social Security Trust Fund, currently with a $2.7 trillion surplus, that we (and our employers on our behalf) paid into.  We earned it; and, that is why it is an entitlement program – not welfare.

The Social Security Program is not hopelessly broken.  Mr. Goss, the Chief Actuary, has plenty of statistical studies to show that the type of modifications that were made in the past – raising the income cap, raising the payroll tax, adjusting the retirement age, re-computing the benefit formula, etc. – and were gradually phased in so as not to shock people can restore the system as is to long-term sustainability.  The biggest obstacle to this has been political inaction because politicians would be labeled as tax increasers.  But President Reagan was able to gather a bi-partisan group to fix Social Security the last time it faced a similar crisis in 1983.  Is there any politician who expects to get re-elected after telling Granny that she is only going to get 75 cents on the dollar for benefits?

We live in a democratic system.  It is up to each generation that participates in the Social Security System to either renew that support or find a different approach.  Political will is not just a test for politicians, but also a test for the people they serve.

American Values – Part II

American Values – Part II

Our Constitution is not, and never has been, a static document.  The fundamental principle of our democratic process is that we govern by the consent of the governed while respecting dissenting opinions.  Each generation that comes along gets to renew its pledge to our Constitution.

Institutionally and culturally we are not a status quo nation.

(1)  In our founding documents, the Declaration of Independence and the Constitution, you will find a variety of values stated: liberty, equality, promoting the general welfare, life and the pursuit of Happiness.  They are neither defined, delineated, nor ranked in order.  They can at times conflict with one another.  Sometimes we lean one way during a conflict; and, sometimes we lean the other way.  We are constantly re-examining our values.  Each generation does this.

Andrew Jackson’s Presidency was the first deviation from the founding fathers – giving a Western/frontiersman interpretation to liberty, rugged individualism mixed with an egalitarian spirit, and the ‘Common Man’ mythology.

(2)  Institutionally we have a federal system of government that not only divides power among the branches of government but also between the federal government and state and local governments.  That division of power may cause competitiveness in our political system; but, it means that in order for something to get accomplished cooperation rules and the game plan is to build viable coalitions.  Those political leaders that can forge a consensus are successful in our political system.  Factions have never ruled.  [Read Federalist Paper #10 – Madison; and E Pluribus Unum, from many, one.] 

As independent individuals, we function through institutions.  Politics is the exercise of power; so, influence, money, organization come into play not only in our political sphere but also in the economic and social realms.  They are not separate, distinct entities.  One is the mirror image of the other.  The ability to organize is what determines the effectiveness of exercising power.

(3)  Culturally we have always been a diverse nation, right from our beginning.  Very quickly in our history we spanned the continent to become a contiguous continental nation.  We have always had a mixture of people in our nation, non-English speakers and not of a European origin.  We are probably the only nation in history that is not defined by an ethnic or religious makeup but instead by a loose governing concept.  As different people come here they eventually figure it out.  This also has fed into the re-examination of our values through time.  When Andrew Jackson became President in 1829, his Western outlook of individualism redefined democracy, a word and concept – albeit direct democracy – which was considered with great caution on the part of our Founding Fathers; and, has now been woven into the fabric of Americanism.

Unlike other cultures in history that upon reaching greatness become status quo, we are a dynamic system that has incorporated change into our system, institutionally and culturally.  You can refer to it as change; or, you can think of it as a self-correcting mechanism built into the political process.  What may be perceived as a wrong from a previous generation can be righted in a future generation.  That is what makes us unique and has contributed to our greatness.

I guess I should add the influence that popular American culture has on foreign cultures in spreading American values in a world connected globally.   As other cultures pick up on popular American culture like music (jazz, rock n’ roll, hip hop, etc.), the movies, and art and architecture they pick up on their interpretation of individual freedom, liberty, equality, gender and sexual equality and freedom, and a youth culture and the impact it has on these “foreign” cultures.  And these “foreign” interpretations get reflected back on America.

Leadership: from Warren Bennis

Leadership, from Warren Bennis

[**  Double entendre intended.]

Obiturary on Warren Bennis, from the Newy York Times

Warren G. Bennis, Scholar on Leadership, Dies at 89

By GLENN RIFKINAUG. 1, 2014

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Warren G. Bennis, an eminent scholar and author who advised presidents and business executives on his academic specialty, the essence of successful leadership — a commodity he found in short supply in recent decades — died on Thursday in Los Angeles. He was 89.

The University of Southern California, where he had been a distinguished professor of business administration for more than 30 years, announced his death on Friday. He lived in Santa Monica, Calif.

Professor Bennis wrote more than 30 books on leadership, a subject that grabbed his attention early in life, when he led a platoon during World War II at the age of 19.

“I look at Peter Drucker as the father of management and Warren Bennis as the father of leadership,” William W. George, a professor at the Harvard Business School and a former chief executive of the medical device company Medtronic, said in an interview in 2009.

As a consultant, Professor Bennis was sought out by generations of business leaders, among them Howard D. Schultz, the chief executive of Starbucks, who regarded him as a mentor. Presidents John F. Kennedy, Lyndon B. Johnson, Gerald R. Ford and Ronald Reagan all conferred with him.

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"Still Surprised" by Professor Bennis.

As an educator, he taught organizational studies at Harvard, Boston University and the M.I.T. Sloan School of Management.

Professor Bennis believed in the adage that great leaders are not born but made, insisting that “the process of becoming a leader is similar, if not identical, to becoming a fully integrated human being,” he said in an interview in 2009.  Both, he said, were grounded in self-discovery.

In his influential book “On Becoming a Leader,” published in 1989, Professor Bennis wrote that a successful leader must first have a guiding vision of the task or mission to be accomplished and the strength to persist in the face of setbacks, even failure. Another requirement, he said, is “a very particular passion for a vocation, a profession, a course of action.”

“The leader who communicates passion gives hope and inspiration to other people,” he wrote.

Integrity, he said, is imperative: “The leader never lies to himself, especially about himself, knows his flaws as well as his assets, and deals with them directly.”

So, too, are curiosity and daring: “The leader wonders about everything, wants to learn as much as he can, is willing to take risks, experiment, try new things. He does not worry about failure but embraces errors, knowing he will learn from them.”

But Professor Bennis said he found such leadership largely missing in the late 20th century in all quarters of society — in business, politics, academia and the military. In “On Becoming a Leader,” he took aim at corporate leadership, finding it particularly ineffectual and tracing its failings in part to corporate corruption, extravagant executive compensation and an undue emphasis on quarterly earnings over long-term benefits, both for the business itself and society at large.

He worried until recently about what he called a “leadership vacuum” in America, a problem he said was caused to a great extent by a lack of high-quality leadership training at the nation’s business schools.

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A dearth of visionary business leaders, he said, meant that companies were being led more by managers of the bottom line than by passionate, independent thinkers who could steer an organization effectively.

“We are at least halfway through the looking glass, on our way to utter chaos,” he wrote in “On Becoming a Leader.” “When the very model of a modern manager becomes C.E.O., he does not become a leader, he becomes a boss, and it is the bosses who have gotten America into its current fix.”

Warren Gamaliel Bennis was born in the Bronx on March 8, 1925. He grew up in Westwood, N.J., during the Great Depression. In 1933, his father, a shipping clerk, was fired “with no appeal and no justification,” Professor Bennis recalled in an interview for this obituary in February.

“I was struck at how he was left in a situation where you are helpless, where the next morning you are out of work,” he added. “For the next three or four months, he was loading illegal booze on the Mafia’s trucks to keep food on the table.”

The experience taught him about the power of organizations and their impact on lives. “That will never happen to me,” he recalled thinking. “I will never lose my power to affect my own life.”

With the outbreak of World War II, he enlisted in the Army and completed officers’ training at Ft. Benning, Ga. In 1944, as a newly commissioned 19-year old lieutenant, he became one of the youngest platoon leaders to serve in Europe, arriving just as the Battle of the Bulge was concluding. He was awarded both a Purple Heart and a Bronze Star. 

After the war he enrolled at Antioch College in Ohio and earned a bachelor’s degree in 1951. Its innovative president, Douglas McGregor, a social psychologist, had taken him under his wing and recommended him to M.I.T. for postgraduate work. There he completed a doctorate in economics, studying under Paul A. Samuelson, Franco Modigliani and Robert M. Solow, all of whom were later awarded the Nobel in economic science. Organizational behavior was an emerging academic discipline, and Professor Bennis immersed himself in it.

In the late 1960s Professor Bennis took a break from theoretical work and accepted an appointment as provost of the State University of New York at Buffalo for four years. That was followed by a seven-year stint as president of the University of Cincinnati.

A heart attack in 1979 during an academic conference in England sidelined him for three months of recuperation. After returning to the United States he joined U.S.C. in 1980 as a business professor.

Reinvigorated, Professor Bennis wrote a series of influential books, including “Leaders: Strategies for Taking Charge” and “Why Leaders Can’t Lead,” and began advising business and political leaders more regularly.

Professor Bennis’s first marriage, in 1962, to Clurie Williams, ended in divorce. He is survived by his wife, Dr. Grace Gabe, a physician he married in 1992; his children from his first marriage, Katherine, John and Will Bennis; his stepdaughters, Nina Freedman and Eden Steinberg; six grandchildren; and four step-grandchildren.

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Since 1999 Professor Bennis had been chairman of the advisory board of the Center for Public Leadership at the John F. Kennedy School of Government at Harvard. His memoir, “Still Surprised,” was published in 2010.

In recent years Professor Bennis became more optimistic about the next wave of business leaders, labeling it “the Crucible Generation,” which he said compared favorably to his own World War II generation.

Rather than hubris and arrogance, he said, this new generation’s brand of leadership may well be characterized by “respect, not just tolerance.” He saw signs that business leaders in the decades to come, inheriting a diverse and complex global environment, would have a better understanding of the territory in which they lead — what he called “contextual intelligence.”

“The truth,” he wrote in an essay in Forbes magazine in 2009, “may be that history, in its kindness, gave this new generation a grand crucible challenge, as it did my own. The young of today have been summoned to receive that same kindness through the collective failures of their elders.”