Interview with Ray Alden

Introduction by Richard Farson

My first encounter with Ray Alden was in 1983 in Washington DC where WBSI had assembled fifty CEOs of Fortune 500 companies, and some top labor leaders, in a Department of Commerce funded study of the declining rate of productivity growth in the USA, the face to face meeting to be followed by a five month online conference. In that stellar group, Ray was an immediate standout, both at the beginning and ending Washington meetings, and online. Ray has a most distinguished career in telecommunications--rising from a professional radio engineer, at the time of the laying of trans-Pacific cables, to vice president of Hawaii Telephone and eventually to president of United Telecom (renamed Sprint), the job he held when we first met. Ray has a voracious appetite for learning, not only in the technical areas where his studies ranged from radio to molecular manufacturing (nanotechnology) about which he was an advisor to the president, to information resources and the study of telecommunications and computers related to corporate leadership and organization. Ray has been a key member of WBSI's School of Management and Strategic Studies, and as we all know, an active participant in the ILF. Now we have a chance to explore the ways of this outstanding executive and keen observer of management in this interview. We are indeed privileged to have this opportunity, and we welcome Ray with great anticipation.

Participant
Ray, you violate all of the stereotypes of the engineering mentality and demeanor, not only by your personal affability, but by your strong interest in the management of human affairs. How do you explain that?

Raymond Alden
How do I explain that? Mostly by having learned, early on, that keeping silent tends to enhance one's illusion of having great wisdom. In recent years, I'm afraid, I've neglected that discipline -- but it served me well for a time.

Let's hope I can live long enough to live up the billing! <g>

Raymond Alden
Well, we need to start somewhere.

Where I've been and who I am: Most of my background is known to most of you. The rest of it will come out, if it matters, in the course of the discussion.

Subjects I've thought about and am willing to discuss if there is interest include: politics, economics, corporate governance, productivity, management communications, and where all of this fits into God's universe.

Just to have something "on the table" as a starter, I offer the following:

Nearly every publicized authority on the subject of our economy has said recently, one way or another, that prosperity depends upon two things: 1) Consumer spending, and 2) The creation of more jobs. In other words, the more consumers spend, and the more jobs that are filled, the better off we will be, and the recovery of our economic good health depends on these two things -- work hard and spend freely!

Most of us, I think, were brought up to conserve resources, avoid waste, save a bit for the proverbial "rainy day", and do our share of the chores required in and around a family home. No one suggested then that we’d all be better off if we dreamed up more work to do.

Recently, in an advertisement, I saw a quotation attributed to Samuel Butler:

"All animals, except man, know that the principal business of life is to enjoy it."

Our economic culture is designed to make us dissatisfied, and to keep us that way -- permanently. An enormous advertising industry is dedicated to that task, and many enterprises depend upon such advertising for their success.

In recent years, proponents of ecology and a sustainable life style have become increasingly outspoken, and they now field "Green" candidates in every major election campaign. Their position argues for less waste, less needless consumption, conservation of resources, etc.

What’s wrong with this picture?

Participant
Ray, since you're the interviewee now I won't undertake to answer your provocative question -- not just yet, at least. Instead, I think it would be helpful to all of us to know how a guy with such an capacity for provocative thinking, and such a sense of humor, could climb the corporate ladder and become CEO of a major corporation. You're too honest to claim that all CEOs are folks like you. So, how did you happen??

If we really knew how to select/educate/inspire leaders like you, we would revolutionize American business leadership and thus produce fewer scandals, more productivity, and even make business more fun.

Participant
Ray: In your # 3 you wrote:

"Nearly every publicized authority on the subject of our economy has said recently, one way or another, that prosperity depends upon two things: 1) Consumer spending, and 2) The creation of more jobs. In other words, the more consumers spend, and the more jobs that are filled, the better off we will be, and the recovery of our economic good health depends on these two things -- work hard and spend freely!"

These words are surely the conventional mantras of free enterprise economics. As the son of a department store owner, this was a "truth" that was drilled into me. But increasingly, as we learn more about both the dynamics of population increase and the fragility of resources on our planet, perpetual growth and the future of human well being are in conflict. From your perpsective of both philosophies, how do you see reconciliation of these truisms as we move along in the 21st century?

Raymond Alden
Harlan: "it would be helpful to all of us to know how a guy . . . . could climb the corporate ladder and become CEO of a major corporation"

Part of the answer may lie in a small misunderstanding. Dick said I was "president", and that is true, but I was never the CEO of anything of significance. When I was president, the chairman of the board was the CEO and a very active CEO at that. He was, mostly, the proverbial "Mr. Outside"; I was not quite the opposite, but when the audience was important and he was available, he spoke for the corporation. I should point out that we were growing very rapidly at the time -- a period of consolidation in the industry -- so he was a busy man. The deal was, he acquired the other telephone companies and I made 'em work.

This doesn't entirely answer your question, of course, but I never had any ambition at all to replace him. (A fact that a consultant from Meninger's refused to believe.) I was the son of a university professor (of English literature, mostly) -- not by any means a natural-born engineer. My aptitude tests always showed a flat profile; I was intelligent enough, but had no exceptional talent except to the extent that a flat profile IS exceptional. You might say, Harlan, that I was your test case for the "Generalist", natural born.

As a young professional, I was diligent and not a hardship case to work with. I had associates who had great imagination and overlooked detail -- so I supplied detail. Others were detailed to a fault and couldn't see the big picture -- so I supplied vision. We all got along, in part because I was not "driven" by exceptional ambition.

What made the difference in the long run, however, is, I think, purely a matter of genes. I grew up around people who used the English language correctly and pointed out my errors; and I was taught to think about what I saw and heard without assuming that all of it was the whole truth.

When my employer was displeased with the leadership of the Engineering Department, some review process turned up letters that I had written in a sales assignment. I guess they were good letters. I was put in charge of a very small (but important) section of Engineering -- a section the boss didn't really understand -- and was asked to prepare a paper explaining just what that section was for -- why it was important to the company.

My three helpers (who were good but not eloquent) pointed me to source documents and people. I studied, wrote, had them check the result, corrected it, and submitted a paper that so startled the president (two levels up) that I couldn't lose from that point on.

That's it in a nutshell -- coconut shell, that is.

Raymond Alden
Don: I'll be back later today to respond to your question. In the meantime, I hope there will accumulate some evidence that others, besides you and me, agree that the conflicting truisms are worthy of serious concern and attention.

Participant
I am thinking about your question in 8:3, which ends with "what's wrong with this picture?

What makes a society and its people wealthy? Is that the question? What is wealth, certainly not money, for money with out worthy things to spend it on is poverty. How do we break out of the cycle of fragmentation into small units of consumption - individuals and families, on the one side, and large business to large business on the other? It has ben said that business finds a need and fulls it, but the needs i have are hard to spend money on.

So you put two answers into the picture - increase consumer spending, and slow it down. How does a third alternative emerge? Am I getting your question more or less right?

[re the problem of perceptions between these two sides, i recently was paraphrased on the Dean website on this - the article is by Blankenhorn and I'm down in the text...

Small vs. Big

We can win it, starting now, by building a meme, a general election theme, that will appeal to Republicans, Democrats and independents, one that is positive and appeals strongly to the better angels of our nature.

Douglass Carmichael may have started that process with a workshop he led last week. The workshop asked, where is the emotional attachment we feel to the political left or the right.

And it came to the interesting conclusion that, in both cases, it's usually a bias against bigness. The left fears big business, the right big government. Both project their fears on the other, and bigness wins.

This makes Dean's unifying theme, based as it is on 18th Century concepts like the Boston Tea Party and Declaration of Independence, so important. The are not about business or government, they are about bigness.

It's this message, of anti-bigness, that explains Dean's appeal to Republicans. Republicans are crossing over, admittedly in a trickle, and they're crossing over to Dean because they see in him an ally against bigness in our lives.

This is what we need to pick up on, here at DeanNation. This is how we turn the boat around, from the nomination fight to the general election. We turn it around with a big theme, something that transcends the short-term problems of the economy or Iraq, something that creates, frankly, a new Democratic philosophy, and a new majority.

And, as usual, the Doctor is way ahead of us. I find it very easy to follow a candidate like that. ]

end quote.

Raymond Alden
Don: ". . . , how do you see reconciliation of these truisms . . .?

To say that I see a reconciliation would be a gross exaggeration. What I sense is a direction, and it will not, of course, be original with me, but comes out of fragments that I have heard and read. It addresses motivational forces that I think determine directions.

Take the first, consumer spending:

It is a "good thing", surely, for consumers to have the money to spend for everything they really need for good health, reasonable degrees of education and comfort, and some plain good fun. No one would argue seriously that such spending should be curtailed. Once those goals have been achieved, the motivation to spend on needless, wasteful extravagance ought to be examined and discouraged – but to say that out loud, today, would bring down a chorus of criticism using words such as, "trying to kill off the economic recovery".

I say, "That is nonsense!"

I will suggest a bit later that such spending (among adults, at least) is the result of fraudulent advertising and the absence of attractive alternatives. I may even suggest a remedy, but my point here is that our culture is pushing us in a direction that goes ‘way beyond the "good thing" of living the proverbial "good life" – without, of course, having achieved the initial "hygiene" level of even a decent life for large numbers of people.

We need to try another direction. But before that can be done effectively, we will have to agree on a desired destination and define it sufficiently to make an intelligent start toward it.

Raymond Alden
Now take the second truism, more jobs:

Some of us work because we truly enjoy what we do for a living; most, I dare say, could think of things they would rather do if they didn’t have to do whatever they are doing to support themselves and their families. When our economists and politicians praise the vision of "more jobs" they don’t really mean what they say. They want people to have more income – or at least the opportunity to get more income. They take it as a "given" that almost everyone depends upon a job in order to have enough income for a "good life".

Why? (Does this seem like a dumb question? I don’t think it is, as I’ll explain in a moment.)

You ask for a reconciliation of two seemingly opposing ideas in light of the state of the planet, its human population, and the trends in both. If we were to cut back a bit on counter-productive advertising and offer attractive alternatives to spending on consumption, we would lessen the dependence on "consumer spending" for the health of the economy. That will only be possible if we find a way to provide at least a modest income level for nearly everyone, derived from just enough jobs to produce the goods and services that people really want.

Raymond Alden
Doug: Thanks for being here. As usual, you challenge me and it’s a great help to be pushed to respond appropriately.

You ask: "Am I getting your question more or less right?"

No, I don’t think so. Possibly my response to Don, already posted, will help to clarify the question, but let’s see if I can do better here.

If we keep on pushing people toward more and more consumption we will obviously increase the pressure on the planet (among other problems). Therefore we must make the health of our economy less dependent than it is on the economic stimulus of consumption. The only reason, I think, for that perceived dependence, is to stimulate the creation of jobs, and the reason we need jobs is to get income.

Doesn’t it bring to mind the squirrel cages we used to see as kids? Run harder and harder in order to get . . . where?

I’d like to come back after more thought to address your "Dean" comments, but before doing so let me expand on what I’ve just said here.

Several of us have commented – along with lots of pundits – on the widening economic gap between the rich and the poor. Both groups seem to be expanding at the expense of the so-called "middle class" – whatever that means. I’m not sure how much of this is just perception and how much can be demonstrated with hard facts, but for the moment I accept it conceptually.

Let’s step back a bit in economic history. Marx used to claim that all goods and services were derived from human labor, and he built a reputation and a couple of temporary socialist empires on the concept – which was, of course, false to begin with. All goods and services are derived from human labor AND capital – by which I mean land, buildings, equipment, tools, etc., etc. that are devoted to the production of goods and services. We know this – at least I think we do – yet our economists keep on talking about the increased productivity of labor.

Labor is more productive than it once was, by a factor of two or three I suppose, because of better health and more education. In other respects I think it has not increased much in several centuries. A hand, a foot, a back, can do only so much. The smart use of capital, on the other hand, has contributed to increased goods and services by a factor of tens or hundreds.

So, I ask three questions:

1. Who owns the labor?

2. Who owns the capital?

3. Should the product of applied resources be distributed on the basis of

a) need?, or b) ownership?

Think about it for a moment.

Raymond Alden
Since the abolition of slavery, at least, adult men and women have "owned" their own labor; the return on the productive use of that labor is widely distributed, as it should be, in salaries and wages.

According to a book written in 1967 (figures quoted from memory and subject to correction), 80% of the capital in the USA (defined as the capital devoted to the production of goods and services) was owned by 2% of the population, and nearly all of the remainder was owned by another 8%.

The mid-60s saw the introduction of ESOPs and ESPPs, and a great increase in the use of stock options for incentive compensation. Since then, retirement funds have invested heavily in corporate securities, as have university and foundation endowments, etc., clouding the picture of just what "ownership" means from the perspective of ordinary folks. It’s just a guess, but I imagine that stock distribution may now be more like 80% of the capital being owned by 10% of the people, and another 20% by institutions that are economically supportive of the public. The details aren’t important at the moment if the concept is correct.

The ownership of capital is NOT distributed widely, nor are the derivative earnings.

Legislation enacted in the 60s was intended to establish a trend toward wider distribution of capital ownership, but the effort was nowhere near that needed to make a large difference. Progress toward the goal was blocked by shortsighted tax policy, and by the absence of needed reforms in corporate governance.

It wouldn’t take a revolution to broaden capital ownership and income distribution. The need was described in some detail 45 years ago by the financier & lawyer Louis O. Kelso, whose ideas have been publicized under several names. The one I like best is "Universal Capitalism". (Kelso inspired ESOPs and ESPPs as two modest parts of a much larger plan.)

Raymond Alden
Douglass: "It's this message of anti-bigness that explains Dean's appeal . . . . they see in him an ally against bigness in our lives."

I go along with that, and find the appeal attractive. Large concentrations of power are inherently threatening to people who feel they are on the fringes. That, to me, is very much a part of the appeal that "Universal Capitalism" holds for me.

Participant
Interesting that "increased productivity" that makes the commentators so happy can be produced by simply firing people while maintaining current production (since productivity is defined as output per man hour, not output per dollar - and it would be interesting to see those figures corrected for inflation).

We could have more consumption and less environmental damage - simply by shifting to a non extractive economy, more skill and social - i tech guitar you teach French, someone else helps us decorate out house for a party. The number of transactions could actually go up.

My approach to your three questions is to muse about scientific development, it used to be for the common good, but now ideas, instead of being a manifestation of the accumulated intellectual capital of a society, are treated as limited ownership goods.

This is pervasive. It started with the taking of the commons by the rich, and has progressed through copyright extensions. The trend is to make everything owned by somebody. Land, water, air, pictures (try to give a picture to the public domain - you can't).

The original principles purpose of ownership (Locke) was to guarantee freedom from harassment by the state because private property was inviolable. The extension of ownership to capital is a big swindle, just as are the laws of incorporation which, making a corporation a fictive person, takes away the states capacity to regulate them.

I think my moment is up..

Participant
Which happened while Ray you gracefully entered that amazing phrase "the appeal that "Universal Capitalism" holds for me". Tell us more..!!

Participant
Ray: Your last production of messages were, for me, one of the richest lode of ideas I had yet to see one the internet. Thanks and congratulations.

I have a process suggestion to run by you and others who are interested. I will illustrate this by referring to my questions to you on population and production. Your response was both inventive and challenging. There remains a great deal more valuable discussion related to these two conflicting "problems" that could involve others. And the same can be said of your responses to the comments of others. Furthermore, virtually all of them are related but the relationship is seldom recognized -- in part because of the difficulty of managing in discussion such a mass of details.

My suggestion is that, after the first round of exchanges between you and other participants, you - or possibly others with talents such as Doug Carmichael -- might try to list the related issues for more in-depth discussion.

None of this would be easy, but it just might begin to point us towards a common set of related goals.

For example, returning to my population/production. Your comments seemed to me to suggest a list of further ideas that would be well worth pursuing.

Excuse this jumble of ideas. If there is any response, I will try to make them more coherent.

Raymond Alden
Douglass: "Interesting that "increased productivity" that makes the commentators so happy can be produced by simply firing people while maintaining current production."

Ain’t it easy to lie with statistics? <g>

In college I majored, briefly, in economics. Ever since I’ve found many occasions to be thankful that I abandoned that field. Financial analysts aren’t much better, though. Look at all the daily explanations of why the market yesterday went up or down. Do you suppose they ask one guy on Monday, another guy on Tuesday, etc? There is more nonsense published on that subject than even on politics.

"We could have more consumption and less environmental damage simply by shifting to a non extractive economy."

That is something that might succeed as a movement of ants, but not by a political upheaval. More people are thinking about the environmental consequences of what they buy and what they do than did so say ten years ago. I wonder how long it will take before it becomes a groundswell. Some of the corporate advertising seen recently gives me hope on that point. The big corporations wouldn’t spend their money that way unless they thought someone was listening.

"I teach guitar, you teach French, someone else helps us decorate out house for a party. The number of transactions could actually go up."

Sure! Kelso’s first book was co-authored by Mortimer J. Adler, whose interest was in what people would actually DO with their extra time if they labored for wages, say, 30 hours a week instead of 40. He talked about art, literature, education, etc., but I’m sure he recognized that going to the races or teasing the one-armed bandits was also in the equation.

"The extension of ownership to capital is a big swindle, just as are the laws of incorporation which, making a corporation a fictive person, takes away the states’ capacity to regulate them."

I don’t understand your point here, Doug. Say more, please. When I invest in stock, or buy a productive tool, do I not "own" capital? And I thought the limitation on the states’ capacity to regulate corporations stemmed from their activity in inter-state commerce, rather than from treating them as "persons".

Raymond Alden
More on "the appeal that "Universal Capitalism" holds for me".

Diversity is a great and under-appreciated virtue, especially in the source of decision-making. That is one of the values of democracy, of course, but it also applies to financial decisions. I’ve long felt that individuals are often stupid, and mobs blind, but great numbers of people who are individually motivated by their own self-interest produce a sort of aggregate wisdom.

One aspect of corporate management that is never questioned (to my knowledge, anyway) is this: Who makes the decision to re-invest earnings in the business? Suppose, for example, that General Widgits Corp (hereafter GWC) earns $100,000,000 (after taxes) in a given period. The board and the executive managers – overlapped about 50% -- will consider what to do with this money. Some of it they will pay out in dividends – typically, I think, about 20% of it. Some they may use to pay off loans; some to pay bonuses to themselves and to middle managers; etc.

There will be a proposal on the table to buy a supplier, or a competitor, or to build a new factory and expand production, or to grow horizontally into a new line of business. Who will make the decision, and what are the relevant motivating factors?

Now consider what determines the compensation of the board and the executive managers. Earnings are a big factor, of course, but so is the sheer size of the corporation they manage. The bigger the ship, the more pay for the captain.

Suppose, for a moment, they had to pay 100% of the earnings out to the shareholders as dividends; and that when they wanted to buy a company or build a factory they had to go to the open market and sell shares to get the money to do so. They would have to convince outsiders of the wisdom of putting that capital to work in that way, and the motives of the outsiders would not be so tainted.

Typically, I suppose, the "outsiders" would be mutual fund managers, and I see no conflict of interest there. Or am I missing something?

Raymond Alden
Don: Your nice words are appreciated!

As to your suggestion that we "might try to list the related issues . . . it just might begin to point us towards a common set of related goals": You would begin with the issues; I would begin with the goals. Or, more exactly . . . .

We could try to agree on what things or conditions in our society are "good" – limiting ourselves, of course, to things and conditions that have some relevance to what we have been talking about. (I.e. Rembrandt vs. El Greco would be off limits.) If we found common agreement on at least a partial list, then we could consider which of them are really inter-dependent – i.e. we can’t hope to achieve "c" unless we first have achieved "f", or something like that. This exercise would put some sequential logic into an effort to have more "good" than we have now. Without that step we might just talk in circles.

For example, if we want there to be more ownership of stocks and bonds by ordinary folk, that could be one "good", and we could consider what steps taken now would lead us in that direction. One of them might be to have such investments more attractive, earning a higher return. If we were to agree on that, then we could look at the controllable factors that affect ROI. One of them is taxes on income at the corporate level (which are stupid, by the way, in case someone would like to talk about that). All sorts of questions about corporate governance can be raised in this context, also, as they affect the attractiveness of equity investments.

I know there are other arguments, other factors to consider, but if we want something to happen we must face up to what it will take to make it happen, and not duck the issues along the way nor be diverted to other issues until we have agreed on one first step to take us in the desired direction.

You can get from California to North Carolina by any number of routes, but you KNOW you have to go east (or take a long swim), and there will have to be some consensus about what to see along the way, or whether or not to climb high mountains. And then you’ll have to take that first step.

I’d enjoy your suggested approach, Don. What can I do to help?

Raymond Alden
Harlan's early comment got me to remembering 'way back when the telephone industry was being dismembered. I was part of that exercise, too, from Fred Kappel to John deButts, Judge Harold Greene, et al. Lots of memories!

Some days it looks as if they (whoever "they" are) are trying to put it back together again. "All your communications on one bill from one source." Great!

Participant
Ray, if, in order to make a major capital move, the corporation must inform the public, what happens to secrecy, negotiation, bidding, proprietary concerns, manipulation, conditions of sale, behind the scenes maneuvers?

Participant
Ray: Building on your # 19 as suggested - my "goal" will be to to enhance ILF by building on the potentials of both our membership and the medium that we are using. I am choosing my role as a "process" person and accepting your role as primarily a "substance" person willing to test my process as a path to your substance goals.

Now, to start with overly simplified goals for a case that we have already opened up above:

Goal to identify and seek agreement on good things in "Universal Capitalism" (your # 18) and to seek agreement on maximizing them. You have already listed several, others invited to expand the list.

Goal to identify and seek agreement on "bad" things in Universal Capitalism. I have already identified possible dangers to the environment from strong incentives to material growth in my #5, increased by the rapid growth in actual numbers (albeit declining rates) of population growth.

In my proposal, we would spend whatever time it takes to seek agreements on the above related two statements before moving on to possible changes that would maximize the "good things" and minimize the "bad things" in Capitalism, and Population growth.

Inevitably, other issues will be suggested that relate to these two initial concerns and consideration will be given to including them in our agenda. Once we have reached a measure of consensus on definitions and goals, but not before, we will turn to suggested changes. Way down the road, in discussions of this kind using modern e-mail connections, I foresee simplified methods of computer modeling for helping to reach a consensus.

I have written the above "as if" I had the skills to lead such an experiment. Not so. I have had the past experience and modest successes simply to give me a glimpse of what could be. If anyone reading this with more experience and facilitation skills is moved to try his/her hand at leading such an experiment, count me in as an enthusiastic participant!

As you can see, I am way over my head in trying to be more specific. But the following statements I do believe to be valid:

The medium we are now using will eventually incorporate skilled facilitation and simplified computer modeling that will permit groups like ours to discuss and seek solutions involving far more complexity than we can now handle without these aids. I now see us on the brink of an exciting break-through similar to the one for computer learning that the old WBSI pioneered so many years ago.

Perhaps there are some ILFers (perhaps some who are not now participating) who have the skills both for critiquing what I have tried to express above AND to lead experiments for making them come true.
Participant

Sounds like an interesting agenda.

Raymond Alden
Dick: "If, in order to make a major capital move, the corporation must inform the public, what happens to secrecy, negotiation, bidding, proprietary concerns, manipulation, conditions of sale, behind the scenes maneuvers?"

Some of these things would change, and some of them for the better. Some would continue but be conditional on funding yet to be obtained. Some would continue using funds already in hand. That is dodging the question, for the full answer would have to be "I don’t know".

The most recent book on this theme that I’ve read was written in 1967, and although working on it, I haven’t yet finished re-reading it. Kelso, whose personal profession was in corporate finance, would probably have an answer for each point.

I do think, personally, that much of the secrecy associated with major capital moves is not in the public interest. It isn’t clear to me that proprietary concerns, negotiation, and conditions of sale would necessarily be affected, but perhaps they would be.

As usual, the devil is in the details.

Raymond Alden
Don: In re your #22 – Bravo! It sounds like it would be both fun and a constructive effort.

I’m fond of using "journey" as an analogy for strategic thinking. First, where do we wish to go; second, how might we get there from here? First, what conditions or circumstances do we consider to be "good"; second, what steps taken now would move us in that direction? It isn’t necessary to plan every step of the trip before starting, and trying to do so often adds more effort than benefit.

One might even have a change of heart while en route, but the odds of wanting to reverse course are pretty slim. Which is why, of course, I have spoken generally about trends that many recognize as "bad", and deserving to be reversed – as trends, not necessarily quantifying everything or knowing how to overcome all obstacles before starting out.

Participant
Ray, on interstate commerce making it illegal for states to control business, yes, in so far as it is commerce, but not in so far as the parties are defined be state charters - that is, incorporations. Incorporations were a state matter until the courts declared that the "corporation" was a legal person and hence under freedom of speech could not be imposed upon by charter restrictions.

The origin , contemporary significance, and potential future implications of changes, are one of the major leverage points for significant social change.

Participant
Ray: In both your #25 and my #22, a facilitator chosen by the parties would try to keep the participants focused on a set of issues -- usually chosen by the active participants under his/her leadership.

The objective, by agreement of the participants, would be to find solutions to a problem that was also previously agreed to by consensus. This might be less fun for the participants than the kind of open exchanges that are more common here on ILF. But if successful in reaching a consensus, it might be both fun and more satisfactory in retrospect.

I am not suggesting that one format is "better" than another, but I am suggesting that it might be a good practice to label and chose one of these procedures and try to stick with it until the focus changes by participant choice or a clear decision of a facilitator.

Raymond Alden
Douglass: ". . . the courts declared that the "corporation" was a legal person and hence under freedom of speech could not be imposed upon by charter restrictions."

One more example of carrying too far a concept designed for a single purpose, applying that concept in ways never imagined.

Why, then, do corporations not have the right to vote in public elections?

Raymond Alden
Understood, Don. Any worthwhile discussion is going to be more or less fun at various times. What matters most is a feeling of accomplishment at the end -- as in any competitive sport, its the final score that counts the most. <g> Although some of us get the most pleasure from watching excellence at work during the match. I feel that way about both football and golf -- each of which I watch on TV occasionally, looking for the play that works as intended, or the masterful shot.

Participant
Your discussion of organized dialogue leading to consensus on policy matters calls up in me the feelings and hopes I had for ILF when we first started. As you may remember I was disappointed not to be able, through discussion or survey techniques, to get anything close to such consensus, even among, perhaps especially among, Fellows who share similar political positions. I concluded that consensus was not to be our product. Then I realized that even the ideologically pure think tanks, from left and right, do not operate on consensus statements. Their influence is through indivduals on their staffs who speak or write. My guess is that there is not full agreement among the staff on every point they make. But overall they like the effect.

We will not even have ideological purity working for us, but I regard that as a strength. I have always tried to free myself from ideology, and am proud of the range of opinion that is represented in our roster. But we can still have a product, and it is wisdom. I would be willing to present any or all of our Fellows to the public, particularly after they have participated in one of our policy dialogues. I'll take my chances with their ability to communicate some wisdom. And I'm happy to publish our edited dialogues in the ILF Digest.

But if you think consensus is possible on anything but the most superficial level, I'd be willing to help. Can you think of an issue that might garner such consensus among our group?

Participant
After 9/11 I started a group of fairly sophisticated folks here in the NW, to discuss "what sense can we make of 9/11?". After several meetings (we met every other week for 18 months) it was clear that people said things that had little impact, and that were in fact not understood. We took a detour at the next meeting and talked about who each of us was, what resources, especially spiritual, did we bring to the question? At the end of that meeting one of the people said "This is our best meeting here at the Institute ever, we know each other so much less well than we did when we came in here." The point was, instead of self congratulation on how wonderful we are, we faced our differences. they were profound- different beliefs, gods, methods, epistemologies..

Participant
Doug, that is so fascinating and funny and wonderful.

Participant
I'm afraid I was a bit of a wet blanket on the idea of consensus. Sorry. I don't mean to foreclose discussion on that at all. Indeed, if Don would be willing to lead us through a discussion of Universal Capitalism, I'd try to help out. Maybe that should take place in the Cafe or as a special conference, so that we don't become diverted from the opportunity to interview Ray at some length.

Participant
Ray, I've particularly appreciated your views of how advertising drives and even defines our society and culture. I assume that it will play an even greater role in the next few decades. Is there, do you think, any way to modify its impact? Or, perhaps, some logical peak to its effect?

Raymond Alden
Dick: ". . . even the ideologically pure think tanks, from left and right, do not operate on consensus statements. Their influence is through individuals on their staffs who speak or write."

You are correct, and I hadn’t thought about that before. Their ideological purity isn’t in their output, it’s in their choice of associates. Presumably they seek a harmony in general point of view before inviting someone inside. That makes them tough competition when WBSI/ILF can attract only a very few whose names are well known in high places.

So what can one do? Give up on consensus? Hardly that! But perhaps narrowing the effort would be useful. By that I mean do not attempt consensus on a big, broad subject, but instead try for agreement on a desired (and obvious) direction and on one or two (less obvious) steps leading that way. If the case can be made clear enough to be both convincing and potentially useful in a campaign for reelection, we might get attention. We might be able to trade off fifteen or twenty medium names for their one BIG name. <g>

Raymond Alden
Dick: ". . . we can still have a product, and it is wisdom. . . . I'll take my chances with [our Fellows’] ability to communicate some wisdom."

I can’t get online again until tonight but will look at the most recent ILF Digest then with the thought that from it one might be able to extract and package a marketable piece of "wisdom".

Raymond Alden
Douglas: "We met every other week for 18 months."

How did you manage that achievement? I’m amazed! What common denominator could hold together a group for that time?

Then: "We faced our differences. "

Did something useful come of that effort?

Participant
Ray, they were mostly the members of a board of the Whidbey Institute, central to the life in south Whidbey, and we are island bound, so it wasn't too hard. Actually the quality of the conversation centered around when we did and did not feel genuine in what we were saying.

The sadder part, for me, was that in the last session we concluded that since we had started meeting, the world had changed faster than we had. We were not keeping up. The forces were larger than our consciousness and knowledge.

But back to capitalism. I think it is a core conversation. For those who haven't seen it, an interesting site is the post autistic economics review. past issues and current on line.

http://www.btinternet.com/~pae_news

Participant
Ray, with respect to big names, I must disagree again. True, we do not have in the ILF people with the name recognition of an ex-president or a Henry Kissinger, but for all practical purposes neither do the think tanks we are talking about. Most of the people you see on Jim Lehrer's program, or any of the other talk shows, that come from think tanks, are ex-foreign service officers, ex-generals, and the majority are academics, none of which you would have heard of. They become familiar because they are on television. What recognition they have is because of the think tank they represent, not the other way around.

The real truth is just the opposite of your assessment. The ILF has the real leaders. Our roster is much more prestigious and experienced than the members of those think tanks. We just haven't mobilized all of them, and haven't put them into positions where they can speak out. The whole point of the ILF was to make it possible for these most experienced and well-placed leaders to confer--people who had never before worked in concert to address the great policy issues. Read through our roster again. They just don't come any better. That's not our problem.

But if you can help recruit some more famous people, I will certainly work with you!

Participant
Dick: re your #33 and subsequent discussions: It is not a question of consensus OR adversarial exchanges, it is a recognition that all humans have the ability to choose BOTH consensus and adversarial behavior as they move towards a solution. But for reasons others will be able to explain better than I, our slice of civilization has chosen to be more adversarial than cooperative. To phrase it in a differnt way, most successful Americans use their intelligence to fashion a solution, and then go on the adversarial tack to make it come true.

Doug has described his experience with consensus, and has stunned most of us by saying it took place over many months. As you know, Dick, you also helped lead a many month-long project here some years ago with Abortion in which the participants spent the first few months in developing a protocol to seek agreement on a definition of the issues and on exchanging possible solutions without calling each other evil or stupid. But to do this takes time (a rare commodity among our leaders). It is also less exciting and fun, another difficult thing to keep going especially among a group of volunteers!

Participant
Don, I so admire your understanding of the requisites of deep discussion, and your devotion to the exercise of constructive dialogue in the formation of policy. I only wish I had your experience in creating the collaborative atmosphere. My whole professional life has been on your side, and indeed, was the main motivation for starting the ILF.

Maybe, as Ray suggests, we can break off a piece of some larger issue, and by dealing with it carefully, reach a consensus out of enlightened discourse. But if you remember, although our WBSI dialogue on abortion that you and Gloria led so expertly was probably the best ever held, we did not reach consensus except on the most superficial level--that we were all for steps to discourage unwanted pregnancies. The major dividing issues, while not as polarized as at the beginning, remained relatively intact. The real strength of the discussion, and the power of reading it in its entirety, is that one understands the complexities, the richness and integrity in both pro-choice and pro-life positions, and that the abortion issue will never become anything but a permanent dilemma, which we will have to discuss over and over again, because new technologies, new insights, new demographics, new understandings will keep influencing any decisions we make that we think are immutable. That is the value of that dialogue. I was reminded of it by reading the excellent long editorial on abortion in this morning's NY Times. But how much richer was the dialogue you led! Anyone who read that discussion and failed to emerge with a new perspective on the issue would be narrow indeed. That's what should be published, and that is why I am now less concerned about the consensus role for the ILF than I am the dialogue role.

Americans are fused with an action orientation. We always want to know, "What are we going to DO about it?" It is clearly an American phenomenon, not characteristic of other cultures. It's been part of our greatness, and part of our trouble. It is certainly part of our foolish and hasty response to 9/11. American audiences want to know, "What can I do on Monday?" when they have barely heard about a problem or dilemma. We don't like to stew about issues. We want to act. We want to decide. We want consensus. We like doers, not thinkers. Our rush to decision is part of the problem we face. We need rather to deliberate, study, dialogue. We need to be in pursuit of wisdom. It's our only hope.

Raymond Alden
Kip asks how we might lessen the adverse effects of advertising. I’ve thought long and hard about that – and have come up blank!

Of course ‘there oughta be a law’! I really do think that what was once considered (and legally declared to be) "mere puffery" has been stretched to the point of being outright fraud. So maybe there ought to be a law. But beyond that, I can think of only one thing – teaching kids to recognize self-serving unsubstantiated statements, and to ignore them. Or even protest them.

Raymond Alden
Doug: Can you tell us more about "Post-Autistic Economics"?

I went to the site and read a bit of the history of the movement, but the language is for insiders; I didn't really get the message the movement is trying to deliver. Have you a plain-English version?

Raymond Alden
Dick on Think Tanks: "What recognition they have is because of the think tank they represent, not the other way around."

Have we a circular problem then? People of note are attracted into think tanks having, generally, views resembling their own; there is NO effort to achieve a consensus among the group on any one issue; yet the envoys are treated with respect because of the identity of the think tank. Which is the chicken; which the egg?

"The ILF has the real leaders. " Sure! <g>

"We just haven't mobilized all of them."

Why do we have to? – all of them, I mean. If we mobilized enough to make a difference, how would we recognize that we had done so? What is our criterion for success?

Raymond Alden
Dick: "I am now less concerned about the consensus role for the ILF than I am the dialogue role."

Dialogue helps only those who listen – is that not so? We dialogue; who listens? Dialogue is virtuous in and of itself, and it may be entertainment as well as a source of great learning for those who participate. But have we no goal beyond that?

Okay, so I’m one of those Americans fused with an action orientation. <g> Maybe it’s because I’m getting old that I feel the need to move forward. Not solve, perhaps, but at least move.

"Our rush to decision is part of the problem we face. We need rather to deliberate, study, dialogue. We need to be in pursuit of wisdom. It's our only hope."

Eloquent words, Dick! I’m back to the chicken and the egg. If people in a position to act on our "wisdom" paid attention to us, then we would become influential, and then people would pay attention to us.

A spark, a little kindling to start the fire. Could we publish ANYthing that Jim Lehrer would notice?

Participant
Ray, you understandably want a criterion for our success as a think tank. I guess it would be satisfying to be able to say something like, "We provided the answer Bush used to solve his Iraq problem." But I have no expectation that the influence we have will work in that direct way.

The other think tank I know best is the Center for the Study of Democratic Institutions where Robert Hutchins and Hallock Hoffman worked. Hallock could document this more fully, but I think that even though they held a dialogue every day for something like twenty years, with outstanding guests, and published those dialogues in a magazine and on FM radio, I don't think that they can trace their direct influence on world events at all. The only one I've heard of is that one of their Fellows, Michael Harrington, wrote a book about poverty called The Other America, and there is reason to believe that book influenced people who influenced President Johnson's decision to start the War on Poverty. Yet I have no question that there was lots of other influence indirectly from much of their good work.

Curiously, the things we value most rarely have measurable effects. Aesthetic experiences are the best example--great plays, symphonies, sunsets. But so is a Harvard education. Does a Harvard education work? It isn't even the right question. It is such a rich experience, but its effects are on a higher plane. What "works", what is measurable, are activities like training and advertising, which we don't value highly.

I think we are engaged in a process that is more like education than training, more like having enriching experiences that may or may not change us in specific ways, and may or may not influence others, and in any case, we probably wouldn't know it if we did. Even when someone comes up to us and says, "Your book on management is the best one I've ever read. I've read it twenty-five times. I keep it on my desk all the time" and then goes on to say something that is not entirely congruent with what I wrote, but developed in his mind out of something I wrote. Lectures and consulting are the same way. We simply cannot have the specific effects we might like to think we can. But that doesn't mean that these activities shouldn't be pursued. Not at all. They remain the higher order human activities, and we couldn't get along without them.

My first interest is in making our dialogues work for the ILF Fellows, who can learn from themselves and each other as they comment. If we could get these 75 leaders to engage the issues we present, that in itself would be quite an achievement. If they influenced their constituencies, that would be even better. I'd like to go further, of course, but I have few illusions about direct influence. It would be nice if we could get more of you to write commentaries, and if we had a PR staff to get you into press conferences and media appearances, but I'll just have to keep trying on those fronts.

Forgive me, Ray, for these lengthy exchanges.

Participant
Dick: My perception of what we accomplished in the abortion effort differs in important ways with yours. We have discussed this before without changing each other's understanding, but I think that what we each recollect about that effort is of importance to our current discussions. So I will take up a bit of space to try to highlight both views.

In your #41 message above you said: "Our WBSI dialogue on abortion was probably the best ever held, (but) we did not reach consensus except on the most superficial level--that we were all for steps to discourage unwanted pregnancies. The major dividing issues, while not as polarized as at the beginning, remained relatively intact. The real strength of the discussion, and the power of reading it in its entirety, is that one understands the complexities, the richness and integrity in both pro-choice and pro-life positions, and that the abortion issue will never become anything but a permanent dilemma, which we will have to discuss over and over again, because new technologies, new insights, new demographics, new understandings will keep influencing any decisions we make that we think are immutable. That is the value of that dialogue."

I agree that we did get to understand the complexities, the richness and integrity in both pro-choice and pro-life positions, and also we were all for steps to discourage unwanted pregnancies. And got to these small but important understandings because we first agreed to the discipline of exchanging viewpoints without anger, and stuck to little self-correcting bursts of hatred by obeying the protocol of opening all exchanges by saying "what I don’t understand about your position is xxxx, can you explain it better for me?" That sounds childish and seemingly superficial, but that small accepted ritual spread over a long period of time really worked miracles.

We spent over a month getting to establish such rules of behavior before we really began to exchange ideas.

You are of course correct that we did not reach consensus on abortion. But we did, towards the end, "agree" -- more in sorrow than in anger --, that we could never agree on abortion AND (and this is important) we did not want to disband without putting to some use our mutual respect cultivated over more than 6 months of civilized discussion.

In the final stages of our time together, in my perception, we did get out of the box of arguing about the pros an cons of abortion and sought other ways of minimizing what we also agreed were clashes of views that were of no benefit to either group.

It was then that we developed an agreement that contraception should be made available by the government to all without conflict and that this would reduce the number of abortions. All of the right-to-life participants agreed this would be preferable to the status quo.

As you know, I didn't consider this, as did you at the time and still do, a "consensus except on the most superficial level". There is not point in rearguing this now, and I wont.

The reason that we were never able to publish our record was that one of the participants on the right to life side felt it was sufficiently NON-SUPERFICIAL that he/she could not continue in a place of influence in the right to life movement if our record were to be published.

I have taken all this space because I do think that up-front time spent by the participants on developing mutually accepted procedures and definitions of the relevant issues is not only an important preface to innovative problem solving, but also a procedure that no long seems a disagreeable waste of time by participants who have previously experienced how it can in the end speed up the process and often solve problems that otherwise would go unsolved.

There have been many advances in this kind of facilitated discussion since this pioneering effort by WBSI -- most of it developed by the generation of children of most of us here. That is why I have been reluctant to offer my services here as a leader in such an effort. But I feel sure that there must be some ILFers who do have those skills.

Nor is this a suggestion that we move the whole ILF into a facilitated program. I totally agree that the kind of free flowing discussion that we have been having with such success should remain our standard process as most of our group have suggested.

PERHAPS, WHEN IN THE COURSE OF A TRADITIONAL ILF PROGRAM, THERE IS AN ISSUE THAT WOULD LEND ITSELF TO A FACLILITATED EXPLORATION, A FEW INDIVIDUALS COULD BE ASKED TO DEVELOP A MINI-SOLUTION TO THE MAIN DISCUSSION AND THEN REPORT IT BACK TO THE WHOLE GROUP.

This might be particularly "easy" in this space because so many of us have already gone through the GETTING TO KNOW AND RESPECT EACH OTHER so that the long period of de-fanging which is needed for groups like those in the abortion battle fields is not necessary.

Participant
Don, thanks for that amplification and clarification. There was nothing superficial about our discussion, and you're exactly right to say that this was largely the result of the pains that were taken to create the right structure and ground rules and expectations that characterized that conference. You did a simply great job with that, from beginning to end. With that conference we had twenty-five people who were deeply involved with the issue, especially recruited for that conference, and all willing and eager to participate. I just haven't known how to employ the initial structuring that you did to our conferences now. I'd welcome any help.

Participant
Ray, you indicated you'd be willing to talk about productivity. It was on that subject that we first met, in the Productivity Teleconference. By the standard measure, productivity per man hour, it seems that productivity in America is very much on the rise. That measure, however, has been criticized because so many people now are working longer hours, the extra work being done at home on their computers. Are we fooling ourselves? And are we making a mistake in working nine weeks a year longer than our European competitors?

Participant
And I hope we pursue that miasmic cloud, a better capitalism. What would it look like? The issues in it as I see are

1. relation to government

2. relation to technology

3. relation to quality of working lives (or lives that include work)

4. relation to spreading the economic results

5. the integration of these around a balance between individual freedom, individual challenge and development, and quality of the surrounding society.

Raymond Alden
Dick: ". . . the standard measure, productivity per man-hour . . . has been criticized . . . . Are we fooling ourselves? "

Yes, of course! We are fooling ourselves in several different ways, all of them contributing to bad trends that will eventually lead to disaster, in one form or another.

The saddest thing is the position of the unions, which complain about this for the wrong reasons, and therefore seek bad remedies that, in turn, add to the problem.

First, as said previously, the improved productivity of industry is attributable to capital and not to labor. The workers need a share of the ownership of capital far more than they need increased wages for their labor.

Second, by using this flawed definition of productivity, we encourage people to think that labor deserves increased rewards. It doesn’t! In fact, increasing labor rates push labor out of the market, contributing to both unemployment and inflation.

"And are we making a mistake in working nine weeks a year longer than our European competitors?"

Yes, we are. But it is not a problem that can be addressed directly without causing more mischief. We should be increasing the income ordinary people receive from capital ownership, and when we have done so, people will work fewer hours by choice – and, I hope, use that extra free time constructively.

Same song, second verse!

P.S. I’d be delighted to have someone shoot down my case as either a wrong objective or as incapable of achievement, or refer me to where this has already been done by someone else. I’m not certain that I’m right, but I’ve been shopping around (not diligently!) for 45 years looking for some authoritative refutation of Kelso’s thesis, and I’ve not found it yet.

Raymond Alden
Douglass: I do hope we can all be a part of that pursuit!

Your points 3, 4 and 5 I can address easily. Numbers 1 and 2 take some exploration.

"1. Relation to government "

Please enlarge upon the question. I take it you refer to the relationship between John Doe, citizen, ["JD"] and his government, and will approach it from that perspective.

These things, if achieved (or even approached), would be GOOD:

a. JD should see corporations as they were originally conceived, as a means for applying to a problem or opportunity more resources than any one person or partnership is likely to have available. That’s all!

b. There should be no incentive for a corporation to become larger than it needs to be in order to achieve its original objective. (Objectives may, of course, evolve over time and take new forms.)

c. JD should see government agencies, like corporations, as instituted among people to do things that individuals and small groups cannot do independently for themselves. Government agencies should be no larger than needed for their purpose. (Governments also do other things, some of them useful but beyond the scope of this inquiry.)

d. JD should NOT distrust bigness per se, whether corporate or governmental in form, because when institutions are no bigger than needed they will not appear threatening.

e. The power of big institutions should be diluted and dispersed back to the people they serve. They will then not be distrusted.

When trends in this direction are evident, the relationship between ordinary people and their governing institutions will be much more constructive, mutually respectful, more cooperative, and less adversarial.

A note in passing: The San Francisco Chronicle is currently running a series of reports on homelessness, characterizing it as the disgrace of the city. If an institution the size of city government cannot deal with such a problem effectively, then why should we expect larger institutions to be able to do so? The money all comes from the same place, ultimately. Looked at the other way around, if people and their city governments were to deal successfully with this problem, then we would not be looking to the federal government to do so from 3000 miles away.

Participant
Ray, I can't resist at least taking a stab at shooting it down.

The single thing that all of these rational arguments overlook is that very little of human behavior is rational. People betray their spouses, they lie, cheat and steal for personal gain. Not just some people, but most people. People in general are way too busy getting what they think they want to bother with really digging deeply into their lives.

People want a pleasant life. They want to eat well, live in a nice home, have sex often, give their children a good life, watch TV and sports, listen to music, read books, drive a nice car, wear nice clothes and jewelry, etc. etc. And they want it, as much as possible, now - not later.

For thousands of years we have had the knowledge available that this is not really what is important in life. Buddhism, Sufism, Taoism, Christianity, Islam, and any number of philosophies have clearly articulated the case. Many options have been offered, sometimes imposed, yet invariably people insist on doing those things they want to do, rather than what reason and logic show to be preferable. Countless societies have suffered severely from failing to heed that knowledge.

Aren't we then left to conclude that human behavior ultimately is the result of individuals simply doing what they want? Certainly with the freedom of information here in America and the education the average American receives, we can't claim ignorance as a reason for our general behaviors.

The idea that someone can come along and convince people to do - over the long run - what the ideator thinks is "better" doesn't seem to hold up in the face of the actual evidence. It's been tried by saints and tyrants and while we adore the one and vilify the other, in the end people inevitably return to the same old games.

If there were a system, demonstrably better, obviously better at satisfying people's real desires wouldn't people be demanding it? Insisting on it? Nobody had to convince people that they would enjoy nice clothes or good food. They pretty much figured that out on their own.

Participant
The dialogue between Kip and Ray is hitting at a core issue: democracy/capitalism as we now know and idealize it, has fallen behind in its attempt to keep up with the rapidly changing civilization caused by huge jumps in our population and technical powers. We need new thinking on how to manage democratic government in a way that can tame all of these rapid changes. Without taking the stump for Dean, he seems to be the only competitor for the White House who has acknowledged this need for new thinking.

New forms of governance may be less likely to emerge from here than from newer governments in other parts of the globe -- although there are no obvious candidates for this possibility right now.

I don't expect many agreements on the above, nor am I impressed by their wisdom myself! :)

Participant
We are moving strongly as a nation toward the privatization of just about everything. That permits more public ownership of stock. The same privatization has coincided here and elsewhere with heavier concentration of riches among the wealthy, a greater disparity between rich and poor, which is what you, Ray, are trying to avoid. You know, of course, that I believe that privatization is a dangerous road for professions and many government activities--even though you don't agree that they have different goals and ethics. But were we to privatize all these activities, how can we make sure that the wealth is more evenly distributed. People can buy stock now. Why doesn't it work that way?

Participant
Ray, one of the main reasons we have a large homeless population is that the mental hospitals were closed in the belief that communities would embrace those returning mentally ill and house them in community facilities. They did not. There was bipartisan support for closing the hospitals, but then no conservative support for the community housing. So the patients wound up on the streets.

How would you or Kelso deal with that kind of a problem?

Participant
Kip poses a difficult question. Why do social experiments sometimes become contagious, and sometimes not? Communism spread in the sixties to about a million people a day. These days, more countries are moving toward democracies. Some of the most successful countries, such as those in Scandinavia, are what people call social democracies, more involved with socialism than, say, our democracy. But those systems do not seem to be as contagious, even though they work quite well. For example, we learn very little from them.

Of course, some systems are imposed militarily, like Soviet and Chinese communism, and some social democratic systems are overthrown (often by us, such as Chile under Allende), but still the adoption of some systems does seem more contagious.

Educational experiments are the same. Very few are contagious, even though they are highly praised, e.g. Antioch's work/study program, Univ. of Chicago's great books program, etc. Ray, why do you suppose that is?

Participant
Ray, back to my number 1 above. I meant relation of *capitalism* to government. I have just found the following very interesting article on how Hayak, Keynes and such led us to where we are in language and focus.

http://www.ac.wwu.edu/~khoover/hkl.html

Raymond Alden
Kip: Thanks so much for "taking a stab" at my challenge. It’s very helpful to everyone, I think, but especially to me. Makes me think things through a bit further than previously attempted.

". . . very little of human behavior is rational."

Certainly much is done that is irrational, but wouldn’t you agree that most human behavior is an instinctive effort to do what feels good? Or perhaps what seems wise superficially, without thinking very hard about it? It isn’t clear to me, yet, how this works contrary to the thesis I’ve offered.

Perhaps I implied, erroneously, that if more and better opportunities were available for John Doe to defer gratification and save for the future that he, "JD", would think long and hard and then do the sensible thing. I didn’t mean to rest my argument on that assumption.

Let’s assume for a moment that JD is in the lower tiers of "middle management", and that he has the opportunity to sign up for shares of his employer’s stock on a payroll deduction plan. He’d likely do so. We know this because of the experience with ESOP plans in hundreds of corporations back in the early 70s. Now suppose the picture changes in some respects:

1. The dividend payout is 20% instead of 3% on the cost of the investment; (This comes about partly because of not taxing corporate earnings and partly by requiring full payout of earnings.)

2. More shares are available because that is the way the company adds to its equity capital (vs. re-invested earnings);

3. The board of directors is controlled by outsiders, and new investment decisions are made, in effect, by mutual fund managers, other portfolio managers, and other outsiders.

Whatever the response to ESOP offerings previously, I’m confident they would be greater under these circumstances.

It would help, Kip, if you’d explain what led you to think I was assuming that human behavior would be motivated differently, or be more reasoned, if the changes I suggest were to be made. I think no such thing! I believe that behavior – i.e. the end result – would be different, but only because the choices available would be different. The context of the decisions would be different – not the motivation nor the reasoning required.

Participant
Ray, granted that capital (facilities, automation, computers, acquisitions, etc.) not labor, is the determining factor in productivity, what about creativity and innovation? That is not capital intensive, is it? Yet crucial. How might we expand that within your scheme?

Raymond Alden
Re Don’s 8:54: Okay, so maybe it isn’t great wisdom. We might debate the causes of democracy/capitalism having fallen behind as perhaps more complicated than just population growth and technical prowess, but I don’t for a minute doubt that both have fallen behind.

You note, "New forms of governance may be less likely to emerge from here than from newer governments in other parts of the globe." That is wisdom, for sure. It is easier to invent something new than it is to change an established habit.

Raymond Alden
Dick: "We are moving strongly as a nation toward the privatization of just about everything."

You overstate the case, Dick. There have been efforts to privatize elements of traditional public services – that I acknowledge. Would you deny that some elements of public service might be performed as well by private enterprises?

Large industries throughout recent history have from time to time faced the proverbial "make or buy" decision, which in a service industry appears in the form of "do it ourselves or contract it out" – not a useful sound bite! My position is, when in doubt try it on a small scale. That keeps everyone honest, or at least helps to do so, and it may lead to improvements inside, outside, or both.

"The same privatization has coincided here and elsewhere with heavier concentration of riches among the wealthy,"

I had not realized that there was a cause / effect relationship there. Do you think there is? Surely you are not suggesting that any additional business opportunity contributes to a heavier concentration of riches. Are you?

Raymond Alden
In re Dick’s 8:56 about mental hospitals and the homeless:

"How would you or Kelso deal with that kind of a problem?"

Kelso was an authority on corporate finance. As far as I’m aware, he didn’t address that problem at all.

How would I do so? I’d re-open the mental hospitals.

You note that there was "no conservative support for the community housing." That may well be true, but I think it to be far less than the whole truth. Community housing has been tried in many places in many forms and, as I’m sure you know, with a mixed result. If there is a clear lesson on how to do it right, I haven’t heard about it; and if there were, I doubt very much if it would be a liberal vs. conservative issue.

Raymond Alden
In 8:57 Dick asks why some social and educational experiments seem to be "contagious" and some are not. Examples mentioned include the "social democracies" of Scandinavia and education programs associated with Antioch and University of Chicago. He might have added as examples the medical care systems of the UK and of Canada.

Well, of course this is over my head by quite a distance. I suspect that the answer is that they haven’t worked as well as their distant admirers think they have, or thought they would. A second reason may be that success is always seen in a context of some sort, and replicating the winning process doesn’t carry with it a duplication of the context. What worked ‘over there’ doesn’t always work ‘here’ – for any number of reasons. We have all seen examples of this in organizations of every sort.

For several years I had an active business association with L M Ericsson of Sweden (which I may have forgotten how to spell). My friends in that organization did not brag about their "social democracy" – they were more likely to complain about it. Usually they viewed it skeptically as an experiment associated with marginal income tax rates that were nearly confiscatory. (Lest you assume that I talked only with the executive officers, ‘tain’t so!)

A few years ago there was an educational conference here in the USA, billed in advance as an event of major import. One of the organizers was quoted as saying, "Every problem in education has been solved already – somewhere. All we need do is identify and replicate the solution", or something like that. I don’t recall having read about any results at all. Has anyone here?

Raymond Alden
In 8:58, Doug gave us a link to a fascinating scholarly work that I have only skimmed. But I sure do like the opening sentence:

"The central institutions of our society, the government and the economy, have become, in contemporary politics, objects of ideology. Rather than being perceived as entities that contain processes and practices of a diverse and complicated nature, they have become, like the gods of Greek mythology, actors imbued with motivation, an inner nature, and designs upon our individual well-being."

We see a good bit of that right here, in discussions about corporations and not-for-profits, and about liberals and conservatives. Let’s leave the neo-conservatives out of it – they deserve what they are getting! <g>

I wish I understood the concluding paragraphs of that paper as well as I do the opening! And I’d like to be able to address the affect of Universal Capitalism on the relationship of capitalism to government, but I don’t feel any profound statements bubbling to the surface.

Raymond Alden
Dick: "How might we expand [creativity and innovation] within your [Universal Capitalism] scheme?"

Any effect of Kelso’s economics on creativity and innovation would be indirect, and secondary, but it might be substantial down the road a ways. I think that was one of the things that Mortimer Adler (Kelso’s co-author) had in mind. His focus, of course, was on what people would do with the time they would have available if their livelihoods depended more on capital returns and less on labor returns.

Some would waste their time, as they do now. Some would study more, visit museums more, enjoy and participate in the arts, etc., leading, probably, to more creativity and innovation. The question comes down to, How might we stimulate less of the former and more of the latter?

The answer, I expect, is that we’d work at it the same way we do now, but without the constraint of people having to work at two jobs to make a living. (That language exaggerates the point, which is something I abhor.) It isn’t something that would come about quickly, easily, or automatically.

Raymond Alden
Dear Reader: I've dumped on you this evening, trying to catch up after four days of travel during which I had on-line access only briefly each day. Please excuse!

Participant
Ray: what a rich dump you have given us! So much of it is truly over my head -- or at least over the depth of my knowledge of the literature to which you and a few others here have absorbed.

What I missed is your understanding of the nature of "conservative" leanings toward more private ownership and management and "liberal" leanings towards more government ownership and management. Isn't this really a continuation of the Jefferson/Adams debates?

In a probably over-simplification of these debates, it seems to me that today the size of our population and the complexity of our society has made obsolete an understanding of the role of the citizen in our government. We still cling to cliches that "we, the people" are fundamentally in charge of fairness and humane treatment of the average citizen. But the links of this power between the average voter and those who represent him/her in the government have been diminished as more attention is paid by elected officials to election donors than to the citizens he/she represents.

I touched on this superficially in my # 54 above, and I still don't have a good handle on it. But what deeply troubles me is a perception that democracy, as we idealize it, is in trouble. What diminishes my concerns are the many efforts of researchers in small and still separate groups who are finding new ways of educating and utilizing citizen participation to make possible the "democratic" role they were slated to play by the early founders of our nation.

We still cling to these early blue prints of the citizen's role in democracy and in our fantasies and patriotic pronouncements, but find them somewhat troublesome when confronted with our current goals to spread democracy around the world. It seems to me that there is a serous gap between what we want to believe and what we are able to provide in the conduct of our government both here and abroad.

Which is a long road to asking you, Ray -- and of course others -- how better to express this troublesome and under recognized gap between the wonderful dream of democracy and the increasing gap between the dream and what we practice.

Participant
Ray, since we don't agree that there are fundamental differences between goal oriented and market oriented organizations, it probably would make no difference to you whether government farmed out its traditional responsibilities, since, to you , I assume, its a matter of efficiency, of creating and serving a market.

Take the national parks, which is one of the government services that the Bush administration is trying to privatize. Let's suppose Disney won the contract. They certainly know how to do parks. Or maybe they would simply buy Yosemite. Do I think that we would see the wilderness and wildlife preserved or would I expect substantial development of commercial activities? I'm afraid the latter. And people would love it, just as they do the for-profit University of Phoenix, or private health insurance. But something important would be missing, as it is in all these cases. People wouldn't understand that the commodification had corrupted something precious.

I'm afraid I'm not economically qualified to show a cause and effect relationship between privatization and the growing disparity between rich and poor. But plenty of analysts have said, for example, that the recent privatization of Medicare will lead to increased wealth in the drug, insurance and HMO businesses.

Participant
Ray, how do you reconcile the fact that while automation was also supposed to create leisure time to be used in the ways Mortimer Adler would approve, instead people work longer hours now? Is that simply because they don't sufficiently share in the profits?

Participant
Ray and all--I am only having time to read, not to write, but I wanted to say this is a very intriguing conversation all around.

Raymond Alden
Don: "What I missed is your understanding of the nature of "conservative" leanings toward more private ownership and management and "liberal" leanings towards more government ownership and management."

I don’t see this issue as reflecting "conservative" vs. "liberal" thinking, but it’s entirely possible that I’m not sufficiently informed about political traditions to see the connection. For example, Dick has raised the issue of private vs. public provision of traditional public services. Now if the question were, Should the government provide more or less of such services? I’d expect traditional conservatives and traditional liberals to differ on the answer, and you would find me just a wee bit to the "right" of the centerline between them. But HOW a particular service is provided is just a question of efficiency and effectiveness. If we are going to provide a service and the amount is not in dispute, let’s do it right and at minimal cost.

The concept of Universal Capitalism isn’t a conservative or liberal issue either. We all want people to have more income! The working classes will have the most to gain, and those few who own the bulk of capital will see their near monopoly on such ownership eroded – if that matters (as I think it does not). However, some of the steps required to take us in that direction probably will, as individual steps, be seen as controversial in the conservative vs. liberal dichotomy. The taxation of corporate dividends is an example, and will so remain until most voters are shareholders.

Raymond Alden
Addressing the question of who’s in charge of fairness and humane treatment of the average citizen, Don observes, "The links of this power between the average voter and those who represent him/her in the government have been diminished as more attention is paid by elected officials to election donors than to the citizens he/she represents."

I agree completely, and share your concern about it. I also agree that "democracy, as we idealize it, is in trouble", but there’s room for debate about how much trouble and why. Personally, I believe strongly in representative democracy, and am cool toward direct democracy when attempted on a large scale. That feeling has increased markedly as TV sound bites have become so influential in election campaigns. I’ve great faith in the people when they can / must think for themselves, but little faith in the behavior of groups swayed by the same pseudo-information.

Shucks, I’m so reactionary that I would favor a return to having State legislative bodies choose Senators! Over nearly a century, we have steadily diminished the importance of State political offices as we look more and more to the "Feds" for solutions that should be sought locally.

Which, Don, is a long road to addressing your question: "How better to express this troublesome and under-recognized gap between the wonderful dream of democracy and the increasing gap between the dream and what we practice." I can’t improve on your description of the problem, and I do share your concern about it.

Raymond Alden
Dick notes: "We don't agree that there are fundamental differences between goal oriented and market oriented organizations." And, "To you, I assume, its a matter of efficiency, of creating and serving a market."

Exactly. Well, almost exactly. I’m no fan of advertising, nor of the idea of "creating" a market. The description of a market is not always obvious – it has much in common with trying to describe the problem to be addressed by a not-for-profit institution – but once identified, I see serving that market (or solving that problem) to be the goal, and thus I see private institutions (if they are to succeed) as also being "goal oriented". The only important distinction that I see between the organizations that you contrast, above, is that one group has commonly recognized criteria for "success" and the other does not – which is NOT intended as a criticism or as a "put-down" at all. (The importance of the difference is frequently exaggerated.)

Okay, take the National Parks. I’d enjoy seeing Disney get a contract to manage one, of modest size, and see what they do with it. I wouldn’t take a big risk, but would welcome a small risk for the chance of introducing new ideas about park management. (Your suggestion that, "maybe they would simply buy Yosemite" is, as I trust you realize, simply absurd.)

Now, Dick we (i.e. you and I) get in trouble when you say, "And people would love it, just as they do the for-profit University of Phoenix, or private health insurance."

1. People, as a generalization, would NOT love it. The protests would rival those against the Iraq war.

2. Is there something wrong with the University of Phoenix, conceptually?

3. What do you have against private health insurance, as a business?

Sometimes, Dick, I think you like democracy only when you get to make the choices and the people do not. E.g. "People wouldn't understand . . . ." <g>

It is true that "plenty of analysts have said, for example, that the recent privatization of Medicare will lead to increased wealth in the drug, insurance and HMO businesses". Some others have noted that Medicare is NOT privatized by the recent legislation. Someone evidently thought it would be a good idea to contract out a piece of the action, to help keep everyone honest and see what we might learn.

That might be so.

Raymond Alden
Dick asks, "How do you reconcile the fact that while automation was also supposed to create leisure time to be used in the ways Mortimer Adler would approve, instead people work longer hours now? Is that simply because they don't sufficiently share in the profits?"

"Yes", to give a simplistic answer. More accurately, it is because they do not, generally, own the automating equipment and thus share in the rewards for its use.

All of those rewards flow – properly – to the people who DO own the capital goods, and the number of such people – IMproperly – is kept small by our tax laws and practices of corporate governance.

Exactly Kelso’s point! And Adler’s.

Raymond Alden
Gloria: Thank you for reading. I'm complimented greatly by having held your interest!

Participant
Ray, you break all records for an active and informative interview. I just love it (even if we don't always agree).

Theoretically, buying Yosemite is not out of the question. The government does sell land to private enterprises. Mostly it leases. But I was stretching to make the point.

Participant
In another conference I tried to explain the difference between a for profit educational institution like the University of Phoenix, and a nonprofit university, but I'll risk alienating those who remember that argument, so that I might persuade you that there are important differences, crucial to a free society.

The University of Phoenix is the nation's largest private university. It went public, and its founder John Sperling, who was among us in the WBSI School of Management and Strategic Studies, where he learned about online distance education, made $800,000,000. It serves a market it helped develop, mid-career adults. It is a huge tuition-based success.

However, it fosters neither research nor scholarship. It hires practitioners rather than Ph.D.s. It offers no academic freedom. It is not a place that stimulates inquiry. Instructors cannot deviate at all from a curriculum that is developed by a committee. It is more involved in training than education. For all these reasons, it cannot acquire, let alone retain, a distinguished faculty. And for the same reasons, that kind of university can neither foster the creativity necessary to advance society, nor stand as a bulwark against barbarians that would shut down inquiry.

If it is not clear that there is an inherent, crucially important difference between a for profit university and a nonprofit university, and a great danger if the success of the for-profit university became a model for our university system, I just don't know how to make it clearer. Valuing efficiency over these other dimensions will not serve society in the long run. A market orientation is now creeping into the value systems of university administrators at even the great universities. I regard that as ominous indeed.

Participant
Ray, you ask if there were parts of government that I would be willing to transfer to the private sector, and I suppose there are. But I would move cautiously. One department often talked about as appropriate for the private sector would be the postal service. The line goes that since FEDEX has proven its ability to do it better and faster, the service should be privatized. Of course, FEDEX cherry picks the materials it will mail, so the efficiency measures can't quite apply. I've never bought into the line that private enterprise is obviously more efficient because it is profit motivated. When the recession of 1990 hit, government was as quick to pull its Army generals or its state university personnel out of our WBSI programs as were the big corporations like Digital or Polaroid or AT&T. Is there an element of the postal service that should be protected from efficiency? Probably. It is surely more efficient to send emails, but is there something important about a hand written document that should not be eliminated? Something sentimental or romantic? Or more authentic and believable? And is facilitating communication so fundamentally important that it cannot be left to the private sector, to the market. I'm told that if at a four-way corner an ambulance, a police car, a fire engine and a mail truck all arrive at the same time, the mail truck has the right of way.

Or take libraries. Automated libraries are surely more efficient, but is there something precious about paper documents and books that have been with us for centuries, or about looking through the stacks, thumbing through books held in our hands, or any number of other aspects of scholarship, or inquiry, or pleasure that cannot be automated? Would librarians believe that the automated library is sufficient?

In short, Ray, there is much that government does now that is at least as important as efficiency.

Participant
The needs I have, family, dignity, participation, a home that feels good, education, are facilitated by capital but not reducible to it. The tendency of the market to reduce us to what it can provide and provide what competes is narrowing the range of human choices.

Economics must meet human needs, not become an autonomous game of gain for those who play.

Raymond Alden
Dick: "If it is not clear that there is an inherent, crucially important difference between a for profit university and a nonprofit university, and a great danger if the success of the for-profit university became a model for our university system, I just don't know how to make it clearer."

The difference is clear. If the U of P were to become the model, that would be disastrous! But there may be a place for both types of university. The successes of John Sperling and the U of P may be very good things; they need not imply the death of the conventional university; perhaps the latter may even learn something useful – things to do or to avoid doing – from those successes.

"A market orientation is now creeping into the value systems of university administrators at even the great universities."

I regard that as a good thing, as long as it just "creeps" -- as I think will be the case. University administrators do not know the absolute truth or have extraordinary wisdom. They will learn, make mistakes, and learn some more – just like the rest of us.

The expression "market orientation" can be viewed in different ways. I suspect that Dick sees it as implying, "Do whatever the public wants". I see it as, "Identify and define what the public wants". A small but important distinction.

Raymond Alden
Dick: "There is much that government does now that is at least as important as efficiency."

That’s a non sequitur, of course. I think you mean to say that some things the government does it should continue to do, even if the private sector could do them more efficiently. My response to that is, Maybe so. But why not let the private sector do them also?

You cite the postal service as an example. At one time it was protected from private sector competition. At one time, when so protected, it prohibited the mailing of letters sealed with adhesive tape. At one time you had three postal choices – First Class (meaning ground transport), Airmail, or Parcel Post.

Why do you have more choices now, if it isn’t because the protection against competition was withdrawn?

As far as I’m aware, there is no prohibition against privately run libraries, nor any good reason to either prohibit them or encourage them. All I’m advocating is tolerance for letting the private sector show what it can do, even with "public" services.

Raymond Alden
In re Doug's #80: Yes indeed!

Participant
For you and me, Ray, it boils down to the fact that you see no need to make any distinction between what is appropriate for the public or independent sectors and the private sector. It is not the existence of a robust private sector that bothers me, but the blurring of that crucial distinction. You welcome it. I abhor it. I think that we're just going to have to settle this by arm wrestling.

Participant
I want to echo the sentiments of others - this is indeed an excellent interview - both in content and in tenor.

I'd like to offer a couple of observations - sort of "here's what I see".

1. The majority of Americans are not middle tier management, rather they are clerks, plumbers, rerpairmen, and service providers.

2. The debt that is carried by most people suggests to me that they aren't all that prudent and rational.

3. The only legitimate purpose of government is to provide and ensure an environment in which all people can prosper in life - and not just materially.

4. We are not all equally equipped by nature to prosper equally.

5. If those who are best equipped, don't lend a real helping hand to those who are least equipped, social turmoil results.

Participant
Kip: your #85 beautifully states one of the most important and seldom mentioned problems with our democracy. I have touched on this several time, but it never really kindles any follow up. Perhaps your last message may do so.

Here is my follow up on your message, with a different ending:

1. One of the most important theories handed down by our founding fathers -- but not without a struggle -- was to give ultimate power to "we, the people" on large policy issues. This theory, even if not always practiced, is still in our self-image with shuttles back and forth between a democracy and a republic.

2. My concern with your #5 is that we have no official process for how "we better equipped folks" can lend a helping hand. Those with power -- either through money or the clout of high office -- can of course exert leverage where decisions are made. But those with such power are not automatically on the "right side" of sensitive issues just because of their power. I believe that the future of democracy/free enterprise is to provide better mechanisms for the clerks, plumbers, etc. to be able to exert their human wisdom under conditions where their education of the issues is assisted by the elite to reach better decisions than is possible when sound-bite one-sided arguments are the chief source of education.

3. We actually do this for certain kinds of issues via the jury system. Jurors receive their limited education from judges and lawyers. This is not to say that results from the jury system are always right, but on the whole it is, in my opinion, superior to a simple yes/no vote on issues that do not have a simple yes/no answer.

4.I know I am repeating myself -- but there is a new and increasingly successful group of programs that are now configured to mix up the plumbers and elites in decision making, with numbers of the participants over a million people -- all working on the same problem in groups of ten sitting with computers at round tables. One "elite" has a chance to "lend a helping hand" in ways that did not exist before the computer generation. I have had the privilege of being a participant in one of these programs and I found they worked in ways that I would never have believed before that experience.

5. Now this is a possibility that has not yet been tried, but if programs like the above could be tried for important issues, such a configuration of a random cross section of elites and clerks just might be a good platform to give elites and clerks a chance to revise democracy for these new and troubled times.

6. I believe that recent history shows that there are enough "best equipped" people whose "helping hand" without some further balancing procedures can and often do "result in social turmoil". I also believe -- and this may be more of a hope than a belief -- that if you mix elites and clerks in a common effort, the incidence of turmoil might be reduced.

Participant
Ray has just sent me a message saying in Hawaian "Pau hana" meaning it's time to quit work. Ray, you've done a masterful job with this interview, so rich in substance that we couldn't resist discussing practically every point you made. With 87 comments you've broken all records for an interview. We all loved it and appreciated it and learned from it. We are deeply grateful.

Participant
Hear, hear!

Participant
Just an interested "lurker" Ray but could not have improved on your presentation! Have a Merry Christmas!! Doug Strain

Participant
What, no new capitalism to take home for Christmas? But surely it was the right question well held for us. Many thanks.

Raymond Alden
And thanks to you-all. It was good fun. G'nite.