Last blog I suggested that human being pursue both individual and collective interests and that consensus is required of the latter, but not the former. This blog will address some of the puzzles associated with the identification of collective interests and why consensus is a necessary component of collectivism.
First, let's recall that interests are "ends" or "goals" and that our knowledge of interests is imperfect, therefore we all make mistakes. Because we change and the world changes over time, our knowledge of long-term interests (individual and collective) is highly fallible. Here's why collective interests are so puzzling.
One problem is that we often simplify the nature of "collective interests" by focusing on universal collective interests that correspond to basic biological needs: food, clothing, shelter etc. Then, these basic needs are interpreted as universal legal rights which imply corresponding legal duties to provide food, clothing shelter etc. But what's missing here is HOW to best meet human needs. The knee-jerk answer is usually that government ought to provide a social safety net for those whose basic needs are not met needs via taxation and redistribution. However, is that necessarily the only way to meet basic human needs, and is it the most efficient way? Libertarians generally avoid the imposition of collective legal duties in favor of individual moral duties. Collective rights (legal and moral) and collective duties (legal and moral) are essentially abstract, faceless, rhetorical devices, which must eventually connect to individual responsibility. In other words, only individuals have rights and duties, therefore beneficence (or benevolence) is best exercised as a moral duty. Then, it's up to individuals to figure out "if" and "how" to fulfill that responsibility. Sometimes it might involve feeding a particular homeless family. Sometimes it might involve contributing to a private charitable organization. Sometimes it might doing nothing at all.
Another problem with collective interests is that humans are social beings and therefore identify themselves with a variety of groups or collectives. These groups are created around common-interests, which are the products of our individual and collective imaginations. (For example, I am a Cincinnati Reds fan, which means that I "identify" with other fans that go to games, watch games on T.V.., or listen to them on the radio. We all prefer that they win games.) However, interest groups can be organized to greater or lesser degrees. The most common form of organizational structure is the "dominance hierarchy," where leaders (at the top) identify the ends pursued and the means by which these interests are pursued. Leaders can either use logic and/or rhetoric to attract and maintain followers, or deploy coercive force. For now, let's focus on the former, but there are many puzzles.
The first, and most serious puzzle, is that collective interests do not, necessarily, correpond to individual interests, therefore leaders attempt to convince individual followers that they must sacrifice a few of their lesser-interests for greater-interests; short-term interests for long-term interests; and/or sacrifice their own interests for the interests of other group members. Second, although many leaders believe they know collective interests and how to attain them, they really don't have access to that knowledge, but, nevertheless, have the ability to convince followers that they really do. Years ago, city council voted to use tax money to build new, state-of-the-art stadiums for the Reds and the Bengals. The argument was that those stadiums would advance the collective interests of Cincinnati. Many individuals benefitted from that stadium deal (ballplayers, team owners, hotel owners, restaurant owners) but not everyone. I've never been to the football stadium and I attend only 1-2 baseball games a year, but I pay taxes. Third, many leaders surreptitiously manipulate the concept of "collective interest" to advance their own individual interests. That's exactly the purpose of lobbying government...to advance the interests of one group at the expense of the interests of other individuals and groups.
So how can we make sense of "collective interest" within dominance hierarchies? Well, there's a longstanding tradition in philosophy (J.S. Mill) that says that "collective interest" is really nothing more than aggregated individual interests based on reciprocity. Individuals voluntarily identify with groups, and therefore, forge voluntary contracts with one another in order to advance what they believe to be their individual interests: hence, the dictum "You scratch my back and I'll scratch yours." Now the internal dynamics of this process is important. Contracts require the exchange of information between the individual and the group. Individuals must know the ends that are being pursued the means by which those ends are to be pursued. Then the contract must be based on freedom of entry (voluntary and non-coercive association) and freedom of exit.
Now obviously, social contracts can only function in a group that has a moral foundation. There are really only a few moral rules that are absolutely necessary for voluntary association. 1. You can't steal from others or harm others in pursuit of your individual interests. 2.) Everyone must tell the Truth or at least pursue the Truth (information)before the contract is agreed upon. 3. Once you forge a contract with a collective you must keep that contract (promise), unless it was based on deception or fraud. 4. You can't have leaders and/or majorities over-rule or nullify contracts between individuals unless either rule 1, 2, or 3 are violated. (Obviously, individuals need to be wary of long-term contracts with groups! NEVER purchase a Timeshare!)
Now if all human organizations were voluntary and non-coercive, over time those groups would naturally evolve: that is, over the long-run they would either survive, thrive, or become extinct. Economists call this process "creative destruction." When this principle is disabled by misinformation, coercive entry, and coercive exit we end up with dysfunctional organizations that pursue immoral ends through immoral means. NOTE: this is not majority rule. I didn't vote to pay for those two stadiums, so why should I be forced to pay the costs? Projects like this ought to be funded by voluntary association, or consensus. Let the individual sports teams, hotels, restaurants, and the fans voluntarily pay for those stadiums. I'd rather listen to Marty on the radio. .
Wednesday, December 5, 2012
Friday, November 30, 2012
The Philosophical Foundations of Consensus
My next few blog entries will address the philosophical foundations of the concept of consensus. Given that libertarians reject the use of coercive force in cooperative endeavours, the concept of consensus is important, but often ignored by libertarian scholars. So I'll try to clear up a few conceptual puzzles.
First of all, for libertarians consensus is only relevant to a limited sphere of human action; namely, what J.S. Mill described as other-regarding actions. When I sat down to write this blog I did not ask anyone else if it's OK. Why? Because it's purely a self-regarding action! It's my time, effort, and resources. The act of me writing this blog will not invade the interests of anyone else. Hence, the first concept we need to explore is the idea of an "interest."
As a libertarian in the utilitarian tradition, I associate interests with pleasure and/or happiness. Thus, as individuals we all have greater and lesser interests which correspond to degrees of pleasure and pain. I obviously have an interest in writing this blog, even though it prevents me from pursuing other interests, such as grading 38 essay exams. Interests are basically ends (or ) goals, which implies that they are realized via means. Thus we pursue knowledge of not only our interests, but also the means of achieving those interests. Rational agents often willingly sacrifice lesser interests in order to realize greater interests, and sacrifice short-term interests for long-term interests. Fortunately, grading those exams advances long-term interests, and therefore I can put it off until this weekend. It looks like a painful weekend for me! Knowledge of the magnitude (greater/lesser) and temporal scale (long-term/short/term) of our individual interests is imperfect. I hope I'll be able to finish this blog in the next 30 minutes, but I might not. I also hope I'll experience a degree of pleasure when I finish it. If it turns out lousy, I won't publish it. Then I'll regret that I spent time writing instead of grading. For individuals, knowledge of very long-term interests and knowledge of how to realize those long-term interests is highly fallible. I'm hoping to retire in 9 years, but a lot can happen before then. I might die, I might win the lottery (probably not...I never buy lottery tickets), I might decide that teaching is more fun than retirement. Short-term interests are much easier. I'll be in class today at 11:00 AM, barring some unforseen invasion of my interests. I know (with relative certainty) what room to go to and what we're going to do (discuss Walmart bribery in Mexico).
The inverse of an interest is a harm, or more precisely a harm is an invasion of an interest.Thus, there are greater and lesser harms depending on the magnitude of the invaded interest. Thanks to the structure of the human brain and spinalcord, we pursue what we believe to be our interests and avoid what we perceive to be harms. Hence, I'd prefer retirement over pre-mature death. Of course, death might be really great...even better than retirement. I might get to play guitar with Les Paul! But given what I know right now, I prefer retirement. On the other hand, retirement will invade my interest in teaching, but advance my interests in playing guitar and traveling. So self-regarding actions involve trading off interests and harms and adopting various means (or plans) for realizing conflicting interests.
However, my retirement is not a purely self-regarding action. There are other stakeholders involved, namely my college and my wife. That's where consensus becomes relevant. I know with a fairly high degree of certainty, that the my college has an interest in me retiring. I can easily be replaced by a young, good-looking, intelligent recent graduate that would work for much less than I'm getting. In fact, my college might prefer that I retire sooner rather than later. In that case, hopefully we'd reach a consensus...unless the college unilaterally decides to coerce me into retirement. In that case, subsequent deliberations will be based less on my interests and the interests of the college than determining who holds legal coercive power over the other. For libertarians the forging of consensus based on the interests of stakeholders is always preferable to legal coercion. As for my wife...we've already reached a consensus. The best time for me to retire will be in 9 years, unless our interests change between now and then. Then again, by then my college's interests might also change.
In sum,knowledge of one's own interests and knowledge of how to realize those interests is difficult to ascertain, and therefore highly fallible...but ultimately doable. I've done OK so far. However, knowledge of the interests of other individuals interests and the collective interests of communities is much more problematic. My next blog will explore knowledge of collective interests and knowledge of how to achieve those interests....and of course, how that knowledge relates to forging consensus among stakeholders.
First of all, for libertarians consensus is only relevant to a limited sphere of human action; namely, what J.S. Mill described as other-regarding actions. When I sat down to write this blog I did not ask anyone else if it's OK. Why? Because it's purely a self-regarding action! It's my time, effort, and resources. The act of me writing this blog will not invade the interests of anyone else. Hence, the first concept we need to explore is the idea of an "interest."
As a libertarian in the utilitarian tradition, I associate interests with pleasure and/or happiness. Thus, as individuals we all have greater and lesser interests which correspond to degrees of pleasure and pain. I obviously have an interest in writing this blog, even though it prevents me from pursuing other interests, such as grading 38 essay exams. Interests are basically ends (or ) goals, which implies that they are realized via means. Thus we pursue knowledge of not only our interests, but also the means of achieving those interests. Rational agents often willingly sacrifice lesser interests in order to realize greater interests, and sacrifice short-term interests for long-term interests. Fortunately, grading those exams advances long-term interests, and therefore I can put it off until this weekend. It looks like a painful weekend for me! Knowledge of the magnitude (greater/lesser) and temporal scale (long-term/short/term) of our individual interests is imperfect. I hope I'll be able to finish this blog in the next 30 minutes, but I might not. I also hope I'll experience a degree of pleasure when I finish it. If it turns out lousy, I won't publish it. Then I'll regret that I spent time writing instead of grading. For individuals, knowledge of very long-term interests and knowledge of how to realize those long-term interests is highly fallible. I'm hoping to retire in 9 years, but a lot can happen before then. I might die, I might win the lottery (probably not...I never buy lottery tickets), I might decide that teaching is more fun than retirement. Short-term interests are much easier. I'll be in class today at 11:00 AM, barring some unforseen invasion of my interests. I know (with relative certainty) what room to go to and what we're going to do (discuss Walmart bribery in Mexico).
The inverse of an interest is a harm, or more precisely a harm is an invasion of an interest.Thus, there are greater and lesser harms depending on the magnitude of the invaded interest. Thanks to the structure of the human brain and spinalcord, we pursue what we believe to be our interests and avoid what we perceive to be harms. Hence, I'd prefer retirement over pre-mature death. Of course, death might be really great...even better than retirement. I might get to play guitar with Les Paul! But given what I know right now, I prefer retirement. On the other hand, retirement will invade my interest in teaching, but advance my interests in playing guitar and traveling. So self-regarding actions involve trading off interests and harms and adopting various means (or plans) for realizing conflicting interests.
However, my retirement is not a purely self-regarding action. There are other stakeholders involved, namely my college and my wife. That's where consensus becomes relevant. I know with a fairly high degree of certainty, that the my college has an interest in me retiring. I can easily be replaced by a young, good-looking, intelligent recent graduate that would work for much less than I'm getting. In fact, my college might prefer that I retire sooner rather than later. In that case, hopefully we'd reach a consensus...unless the college unilaterally decides to coerce me into retirement. In that case, subsequent deliberations will be based less on my interests and the interests of the college than determining who holds legal coercive power over the other. For libertarians the forging of consensus based on the interests of stakeholders is always preferable to legal coercion. As for my wife...we've already reached a consensus. The best time for me to retire will be in 9 years, unless our interests change between now and then. Then again, by then my college's interests might also change.
In sum,knowledge of one's own interests and knowledge of how to realize those interests is difficult to ascertain, and therefore highly fallible...but ultimately doable. I've done OK so far. However, knowledge of the interests of other individuals interests and the collective interests of communities is much more problematic. My next blog will explore knowledge of collective interests and knowledge of how to achieve those interests....and of course, how that knowledge relates to forging consensus among stakeholders.
Monday, November 26, 2012
The Economics of Friendship
Ok...I'm not an economist...but I play one on the Internet. I've been trying to sort out some of the philosophical puzzles that contribute to economic disagreements. Here's one puzzle that often eludes both economists and philosophers. I call it the "Economics of Friendship." First some basics...
Classical economic theory is about the distribution of resources. Most often it focuses on buying and selling of products and services between strangers. Today, most economic activity is, indeed, between strangers. I don't know who manufactured the various components of this computer, who assembled it, who delivered it to the retailer. etc. I don't know the salesman that sold it. Classical economics says that when buyers and sellers reason about transactions with strangers, they at least try to maximize their own self-interest. Buyers prefer transactions (products and services) that maximize quality and minimize costs. When multiple sellers compete buyers tend to get a better deal and when multiple buyers compete, sellers tend to get a better deal. That's the beauty of a "free market." It allows strangers to benefit from exchange. But what can we say about transactions between friends and families?
When I buy musical equipment I always check, first, with my friend Gordon at Western Hills Music. I buy all my strings from him, even though I pay about a buck more per pack...which would be irrational if I didn't know him. Of course, if I didn't know Gordon, I might decide to get those strings from him, anyway, because I'd spend more than $1 in gas to drive all the way to Guitar Center. Why waste the time, energy, and resources driving all that way to save $1? But that's not how I reason about it economically. On the other hand, if I were buying an expensive guitar, say a Gretch, I'd talk to Gordon first and see if he could get one for me and how much he'd have to charge me. He would figure it out and if I could get the same guitar at Guitar Center for $200 less, he'd say: "Ron, get it at Guitar Center (Or better Yet, get it online at Musician's Friend, and save taxes!) That would be irrational econiomic behavior on his part, at least from the standpoint of traditional economics. Although I'd probably buy that guitar online, I'd bring it to Gordon to set it up for me. I'd never ask him, beforehand, how much it will cost, and I'd never, get a second price from Guitar Center. If it doesn't need a setup, Gordon would say: "Ron, the setup is perfect! I just removed the original .010 roundwound strings for you, and put a new set of #.011 Flatwound strings for you." Guitar Center, however, would probably do some minor adjustment, charge me for a full setup, and (might) call me and ask what kind of strings I'd like.
What does all this mean? Well, Peter Singer and many other philosophers have argued that "ethics" consists in treating strangers as if they were friends. Therefore, a good person is "impartial." On the other hand, I'd argue that it makes much more sense to treat strangers impartially and friends partially. No one in their right mind would criticize me for giving one of my sons a guitar (as a gift) and NOT doing the same for a stranger. I would probably sell one of my guitars to a friend, for a lot less than I would a stranger. There's nothing wrong with that either. In fact, there's nothing wrong at all with either nepostism or cronyism in the world of one-on-one transactions. Problems arise when government and large corporations conspire to undermine those personal economic relationships by passing laws (taxes, regulations etc.) that make it more difficult for small businesses to enjoy the competitive advantages (and disadvantages) associated friendship. I don't know about you, but I prefer an economy where I can deal with both strangers and friends. So let's NOT let the big corporations and government surreptitiously destroy small businesses.
Classical economic theory is about the distribution of resources. Most often it focuses on buying and selling of products and services between strangers. Today, most economic activity is, indeed, between strangers. I don't know who manufactured the various components of this computer, who assembled it, who delivered it to the retailer. etc. I don't know the salesman that sold it. Classical economics says that when buyers and sellers reason about transactions with strangers, they at least try to maximize their own self-interest. Buyers prefer transactions (products and services) that maximize quality and minimize costs. When multiple sellers compete buyers tend to get a better deal and when multiple buyers compete, sellers tend to get a better deal. That's the beauty of a "free market." It allows strangers to benefit from exchange. But what can we say about transactions between friends and families?
When I buy musical equipment I always check, first, with my friend Gordon at Western Hills Music. I buy all my strings from him, even though I pay about a buck more per pack...which would be irrational if I didn't know him. Of course, if I didn't know Gordon, I might decide to get those strings from him, anyway, because I'd spend more than $1 in gas to drive all the way to Guitar Center. Why waste the time, energy, and resources driving all that way to save $1? But that's not how I reason about it economically. On the other hand, if I were buying an expensive guitar, say a Gretch, I'd talk to Gordon first and see if he could get one for me and how much he'd have to charge me. He would figure it out and if I could get the same guitar at Guitar Center for $200 less, he'd say: "Ron, get it at Guitar Center (Or better Yet, get it online at Musician's Friend, and save taxes!) That would be irrational econiomic behavior on his part, at least from the standpoint of traditional economics. Although I'd probably buy that guitar online, I'd bring it to Gordon to set it up for me. I'd never ask him, beforehand, how much it will cost, and I'd never, get a second price from Guitar Center. If it doesn't need a setup, Gordon would say: "Ron, the setup is perfect! I just removed the original .010 roundwound strings for you, and put a new set of #.011 Flatwound strings for you." Guitar Center, however, would probably do some minor adjustment, charge me for a full setup, and (might) call me and ask what kind of strings I'd like.
What does all this mean? Well, Peter Singer and many other philosophers have argued that "ethics" consists in treating strangers as if they were friends. Therefore, a good person is "impartial." On the other hand, I'd argue that it makes much more sense to treat strangers impartially and friends partially. No one in their right mind would criticize me for giving one of my sons a guitar (as a gift) and NOT doing the same for a stranger. I would probably sell one of my guitars to a friend, for a lot less than I would a stranger. There's nothing wrong with that either. In fact, there's nothing wrong at all with either nepostism or cronyism in the world of one-on-one transactions. Problems arise when government and large corporations conspire to undermine those personal economic relationships by passing laws (taxes, regulations etc.) that make it more difficult for small businesses to enjoy the competitive advantages (and disadvantages) associated friendship. I don't know about you, but I prefer an economy where I can deal with both strangers and friends. So let's NOT let the big corporations and government surreptitiously destroy small businesses.
Monday, August 13, 2012
On Health Savings Accounts
Libertarian views on health care reform in the United States still focus on combining Catastrophic Health Insurance with Health Savings Accounts or HSAs. The idea of HSAs can be traced to John Goodman's, Patient Power (1992) and was later popularized by Michael F. Cannon and Michael D. Tanner's Healthy Competition (2007). Goodman's more recent book Priceless (2012) continues that argument. Although I agree in principle with moving public policy away from Comprehensive Health Insurance, I'm less enthusiastic with HSAs here's why.
Here is how HSAs are supposed to work. Basically they are a form of "self insurance" where U.S. citizens are expected to pay for more of their non-catastrophic health care needs via a tax exempt savings account. That tax exemption, in effect, reduces the cost of paying for health care out of pocket by about 1/3. Why pay for some health care out of pocket? Well, both Goodman and Cannon persuasively argue that the ever-spiraling cost of health care is fueled by third party payment. Health insurance insulates consumers from both price and quality, and therefore they over-consume. Comprehensive health insurance, they argue, incentivizes providers to provide more health care than those price and quality insensitive patients need, and incentivizes patients to demand more health care. Thus, over time, health insurance has gotten more "comprehensive" over time, and ultimately more incomprehensible and more costly. As long as employers could absorb the ever-spiraling costs, everyone was satisfied with comprehensive health insurance. However, as state governments required insurance companies to cover more-and more more products and services, the cost began to far outstrip the federal tax advantage offered employers.
Goodman's HSA idea was to limit insurance coverage to catastrophic insurance that covers only expensive, unanticipated, catastrophic illness and force patients to pay for most other everyday expenses (preventative care, doctor visits, pharmaceuticals etc.) out-of- pocket. The argument here is that if patients were forced to pay for these non-catastrophic products and services out-of-pocket, they would be more sensitive to cost and quality, and force providers to compete in a free market. I think that's all right-headed. Here are my concerns.
How do we get to a system based on catastrophic health insurance and HSAs from where we are today politically and culturally? Let's look at political reality first. How do we get politicians to NOT tinker with the basic legal requirements of HSAs? Right now government limits the amount of money that can be sheltered in HSAs, it also limits how long the money can be left in the account before it is confiscated by the bank that provides it. They even limit what counts as "health care." You can't use HSAs to pay for over-the-counter-drugs any more! But that's not the most serious problem.
The fact is that HSAs are incompatible American culture. We live in a society that "borrows" much more money than it "saves." Thus, most Amercans are already in debt via credit cards, home mortgages, automobile loans, and educational loans. How can we reasonably expect Americans to suddenly start saving for future health care needs? Most of us are already trying to pay off our existing debt and make ends meet day-by-day. Many American are unemployed. So where will all the HSA money come from? The basic problem with trying to incentivize Americans to save for future health care needs is that healthy Americans will choose NOT to purchase health insurance and will choose not to put money in that HSA. After all, why would young healthy adults save for future health care needs over other more immediate needs? Recent college grads inevitably find themselves saddled with onerous college loans, yet they're culturally expected to own their own home, drive a new car, and a save money for retirement, and even save for their children's college education! Now that just ain't going to work!
But most importantly, HSAs are based on a tradition that most of us libertarians really abhor. That is, the tradition of government using the tax code as an instrument for social engineering. Our tax code is already enormously complex, convoluted, and steeped in cronyism? How many tax advantages can be doled out before there's no one left paying taxes? The Feds have already doled out tax advantages to homeowners, college students, investors, the rich, the poor, churches, farmers and a slew of corporations. Meanwhile, local governments continue to generously dole out tax advantages to their cronies while finaning a growing number of "public goods," such as: sports stadiums, hospitals, orchestras, zoos, and airports. They also lavish public union members with Cadillac health insurance and generous pensions. So on the one hand we have a growing list of beneficiaries of tax money, and an ever-diminishing number of tax payers. Now that's the ultimate source of our current economic malaise. The only way to fix these deficits is to end tax-based cronyism once and for all and not allow Congress to reward its political friends and punish it's enemies. So that's why I'm not much of a supporter of HSAs. To me they are really just another highly-disguised form of cronyism.
Here is how HSAs are supposed to work. Basically they are a form of "self insurance" where U.S. citizens are expected to pay for more of their non-catastrophic health care needs via a tax exempt savings account. That tax exemption, in effect, reduces the cost of paying for health care out of pocket by about 1/3. Why pay for some health care out of pocket? Well, both Goodman and Cannon persuasively argue that the ever-spiraling cost of health care is fueled by third party payment. Health insurance insulates consumers from both price and quality, and therefore they over-consume. Comprehensive health insurance, they argue, incentivizes providers to provide more health care than those price and quality insensitive patients need, and incentivizes patients to demand more health care. Thus, over time, health insurance has gotten more "comprehensive" over time, and ultimately more incomprehensible and more costly. As long as employers could absorb the ever-spiraling costs, everyone was satisfied with comprehensive health insurance. However, as state governments required insurance companies to cover more-and more more products and services, the cost began to far outstrip the federal tax advantage offered employers.
Goodman's HSA idea was to limit insurance coverage to catastrophic insurance that covers only expensive, unanticipated, catastrophic illness and force patients to pay for most other everyday expenses (preventative care, doctor visits, pharmaceuticals etc.) out-of- pocket. The argument here is that if patients were forced to pay for these non-catastrophic products and services out-of-pocket, they would be more sensitive to cost and quality, and force providers to compete in a free market. I think that's all right-headed. Here are my concerns.
How do we get to a system based on catastrophic health insurance and HSAs from where we are today politically and culturally? Let's look at political reality first. How do we get politicians to NOT tinker with the basic legal requirements of HSAs? Right now government limits the amount of money that can be sheltered in HSAs, it also limits how long the money can be left in the account before it is confiscated by the bank that provides it. They even limit what counts as "health care." You can't use HSAs to pay for over-the-counter-drugs any more! But that's not the most serious problem.
The fact is that HSAs are incompatible American culture. We live in a society that "borrows" much more money than it "saves." Thus, most Amercans are already in debt via credit cards, home mortgages, automobile loans, and educational loans. How can we reasonably expect Americans to suddenly start saving for future health care needs? Most of us are already trying to pay off our existing debt and make ends meet day-by-day. Many American are unemployed. So where will all the HSA money come from? The basic problem with trying to incentivize Americans to save for future health care needs is that healthy Americans will choose NOT to purchase health insurance and will choose not to put money in that HSA. After all, why would young healthy adults save for future health care needs over other more immediate needs? Recent college grads inevitably find themselves saddled with onerous college loans, yet they're culturally expected to own their own home, drive a new car, and a save money for retirement, and even save for their children's college education! Now that just ain't going to work!
But most importantly, HSAs are based on a tradition that most of us libertarians really abhor. That is, the tradition of government using the tax code as an instrument for social engineering. Our tax code is already enormously complex, convoluted, and steeped in cronyism? How many tax advantages can be doled out before there's no one left paying taxes? The Feds have already doled out tax advantages to homeowners, college students, investors, the rich, the poor, churches, farmers and a slew of corporations. Meanwhile, local governments continue to generously dole out tax advantages to their cronies while finaning a growing number of "public goods," such as: sports stadiums, hospitals, orchestras, zoos, and airports. They also lavish public union members with Cadillac health insurance and generous pensions. So on the one hand we have a growing list of beneficiaries of tax money, and an ever-diminishing number of tax payers. Now that's the ultimate source of our current economic malaise. The only way to fix these deficits is to end tax-based cronyism once and for all and not allow Congress to reward its political friends and punish it's enemies. So that's why I'm not much of a supporter of HSAs. To me they are really just another highly-disguised form of cronyism.
Thursday, April 26, 2012
Political Leadership Under the Quantitative Regime of Higher Education
In my previous blog I argued that higher education has been dominated by the Quantitative Regime of Higher Education and it's mindless committment to measuring inputs and outputs expressed as numbers embedded within a "one-size-fits-all" system. In this blog I will describe the implications of the QRHE for political leadership.
In all societies, leadership is determined by a selective process. As I stated earlier, the principle selective tool of QRHE has been the multiple choice exam, which now serves as the primary qualifier for leadership and social status throughout the Western world. The overwhelming majority of QRHE leaders are persons who "earned" their status by demonstrating their ability to pick-out correct answers on standardized multiple choice tests: ACTs, SATs, GREs, and MCATs. The primary selective instrument for political leadership is the LSAT. There are other multiple choice instruments that also determine future leadership status, such as IQ tests, honestly tests, drivers tests, civil service exams etc. So.....what kinds of leaders do we end up with when we select them based on multiple choice tests and the QRHE?
First of all, anyone that becomes a leader under the QRHE already has resources to pay the fees required to take these standardized tests and purchase study materials, including test-taking classes, and can afford to pay the tuition for those elite colleges and universities that base admission on standardized tests. Leaders selected based on the QRHE, obviously, have demonstrated the ability to sit still at a computer (or with a piece of paper and #2 pencil) and focus their attention on a single task for several hours. And, of course the willingness to memorize vast quantities of information that someone else deems valuable, tends to support orthodoxy. Anyone that "can't focus" or "won't focus" is diagnosed with a disease called ADD (Attention Deficit Disorder) and prescribed expensive drugs to cure that disease. Focused leaders also posess the acquired skill of being able to choose the ONE right answer out FIVE (or less) possible answers; a skill reinforced since childhood, by their parents and teachers.
From childhood, our leaders have been taught to memorize the correct answers and expect to be punished for not memorizing the correct answers. In the real world, this acquired skill is valuable when there are only 5 possible answers and only 1 correct answer. Thus, before the President can decide what to do about genocide in Syria or the development of nuclear bombs in Iran, he must take a multiple choice exam comprised of questions with 2-5 possible answers presented to him by his advisors. There is never a "none of the above" option. Why do American presidents ultimately support institutional orthodoxy? Because they have been acculturated to answer questions, but not ask questions. Consequently, much of their time, energy, and resources are expended answering the wrong questions.
Western economies expend resources training future leaders to answer the questions posed by others and the ability to generate answers couched in meaningless numbers. The "best" students are rewarded for their diligence with hefty salaries serving as numerologists for the QRHE. The most coveted numbers generated by the QRHE are infinitely malleable numbers generated by politicians, which include unemployment rates, budgetary figures, public opinion polls, and election results. The ability to memorize vast quantities of information, misinformation, and disinformation and organize it into an entertaining speech is an indispensible political skill under the QRHE. Any speech that includes big numbers expressed on simple charts attracts votes. Of course, when almost everyone in the Western world is taught to believe these hollow numbers, politicians have little incentive to actually accomplish anything substantive. Political success, therefore, is based almost entirely on smoke and mirrors...the same smoke and mirrors that sustain standardized tests and the QRHE.
In all societies, leadership is determined by a selective process. As I stated earlier, the principle selective tool of QRHE has been the multiple choice exam, which now serves as the primary qualifier for leadership and social status throughout the Western world. The overwhelming majority of QRHE leaders are persons who "earned" their status by demonstrating their ability to pick-out correct answers on standardized multiple choice tests: ACTs, SATs, GREs, and MCATs. The primary selective instrument for political leadership is the LSAT. There are other multiple choice instruments that also determine future leadership status, such as IQ tests, honestly tests, drivers tests, civil service exams etc. So.....what kinds of leaders do we end up with when we select them based on multiple choice tests and the QRHE?
First of all, anyone that becomes a leader under the QRHE already has resources to pay the fees required to take these standardized tests and purchase study materials, including test-taking classes, and can afford to pay the tuition for those elite colleges and universities that base admission on standardized tests. Leaders selected based on the QRHE, obviously, have demonstrated the ability to sit still at a computer (or with a piece of paper and #2 pencil) and focus their attention on a single task for several hours. And, of course the willingness to memorize vast quantities of information that someone else deems valuable, tends to support orthodoxy. Anyone that "can't focus" or "won't focus" is diagnosed with a disease called ADD (Attention Deficit Disorder) and prescribed expensive drugs to cure that disease. Focused leaders also posess the acquired skill of being able to choose the ONE right answer out FIVE (or less) possible answers; a skill reinforced since childhood, by their parents and teachers.
From childhood, our leaders have been taught to memorize the correct answers and expect to be punished for not memorizing the correct answers. In the real world, this acquired skill is valuable when there are only 5 possible answers and only 1 correct answer. Thus, before the President can decide what to do about genocide in Syria or the development of nuclear bombs in Iran, he must take a multiple choice exam comprised of questions with 2-5 possible answers presented to him by his advisors. There is never a "none of the above" option. Why do American presidents ultimately support institutional orthodoxy? Because they have been acculturated to answer questions, but not ask questions. Consequently, much of their time, energy, and resources are expended answering the wrong questions.
Western economies expend resources training future leaders to answer the questions posed by others and the ability to generate answers couched in meaningless numbers. The "best" students are rewarded for their diligence with hefty salaries serving as numerologists for the QRHE. The most coveted numbers generated by the QRHE are infinitely malleable numbers generated by politicians, which include unemployment rates, budgetary figures, public opinion polls, and election results. The ability to memorize vast quantities of information, misinformation, and disinformation and organize it into an entertaining speech is an indispensible political skill under the QRHE. Any speech that includes big numbers expressed on simple charts attracts votes. Of course, when almost everyone in the Western world is taught to believe these hollow numbers, politicians have little incentive to actually accomplish anything substantive. Political success, therefore, is based almost entirely on smoke and mirrors...the same smoke and mirrors that sustain standardized tests and the QRHE.
Friday, April 13, 2012
The Quantitative Regime of Higher Education
Like many other institutions of higher learning, my college is currently in the process of revising our liberal arts curriculum: that is, we're changing the courses that we require all of our students to take...regardless of their major. The original impetus for a common curriculum is the belief that a single, unified, culture must underlie national identity. In the West, credential-bearing educational institutions spearhead this homogenization process, which is often referred to as a "Liberal Education." However, higher education today has devolved into a mindless form of behaviorism where all college students are required to take a specified number of credit hours in the Liberal Arts and Sciences, typically: mathematics, sciences (physical and social), history, literature, and philosophy. While I have no problem at all with private colleges and universities requiring students to take certain courses, I do have serious philosophical reservations with the behaviorist structure that now permeates higher education. Hence, in this blog I will explore the assumptions that underlie what I shall call the Quantitative Regime of Higher Education or the QRHE.
The underlying premises of the QRHE are rife with platitudes such as: "All students educated at college X "ought" to KNOW 1,2, and 3; and/or be able to DO a, b, and c. Once the "knows" and "dos" are specified, then further analysis determines HOW MUCH of 1,2, and 3; and/or a,b, and c? Today, the basic unit of measurement is the credit hour. Individual courses are usually "worth" 3 credit hours, however some are worth 4 credit hours or 1 or 2. Most colleges require students to take between 120 and 128 credit hours in order to graduate and receive their undergraduate diploma. There is also a tradition in higher education that says that a student ought to be able to earn an undergraduate degree in about 4 years. So, if a college requires 128 credit hours, students will have to take 32 credit hours a year, or 16 credit hours per semester. Most colleges prefer students to matriculate on a 4-5 year schedule, and therefore offer discounted tuition rates for full-time students; usually about 12 hours per semester.
Colleges and universities require students to take courses that fulfill clusters of related courses: Major requirements, Minor requirements, and LAS requirements. Typically, the majority the required 120-128 hours is consumed by required courses in the Major and the LAS curriculum requirements. When the sum total of courses required by the major and the LAS requirements is less than 120-128, students can "elect" to take other courses that are not required by either majors or the LAS curriculum. The more difficult the course the higher the number. Hence PHI 397 is supposed to be more difficult than PHI 100. Thus, most of what counts as a college education is based, not only on what colleges and universities believe their graduates ought to know and/or do, but also how well they know and do those things. Hence, we also have the well-embedded tradition of grading student performance based on that familiar scale of A,B, C, D, and F and resulting the accumulative Grade Point Average or GPA. In other words: education has become a "one size fits all" selection process based on numerically-defined dominance hierarchies.
Education reformers rarely question the QRHE regime and it's numerological underpinnings, even though it bears all of the markings of early 20th century behaviorism and logical positivism. This Skinnerian model of education reduces students, professors, and educational institutions to information processing "machines," or "Black Boxes." In order to secure a diploma from a college or university Student Black Boxes (SBBs) must be able to either know something or do something. Hence, colleges must test SBBs to see if there is a correspondence between intended input (taught) and output (learned). SBB that know and do all of the specified inputs, as evidenced by observation of output (tests) earn higher grades. This whole process, however, is contingent upon tranlating behavior into numbers. Quality points rang from 4 points (A) to 0 points (F). These numbers are calculated, documented, and eventually bundled into the students' GPA.
The primary instrument of the QRHE regime is the standardized test. Designed by teachers and/or institutions, these instruments manufacture an aura of objectivity by transforming value (good and bad) into a number (1,2,3). The tests consist of numbered questions (1-100), with each question valued proportionally (1 point per question). The standard multiple choice test asks students to answer questions with 4-5 possible answers. The tester then asks the SBBs to choose the correct answer out of a list of 4 or 5 possible answers. The more difficult multiple choice questions list several probable answers. Thus, the skills of standardized test-making and test-taking are deeply embedded in the QRHE regime. Fairness on standardized tests is reduced to uniformity in the amount of time allotted to take the test. Thus, by allowing equal quantity of time to take the test (1 hour) an illusion of fairness is manufactured. So the primary purpose of multiple choice exams is to transform input into output. Although multiple choice exams are most common in mathematics and science courses, they have also been adapted for use in the humanities, including philosophy. "Which of the following philosophers articulated the Categorical Imperative: a.) Kant, b.) Aristotle, c.) Hume, d.) none of the above." The most efficient way for SBBs to study for a standardized test is to memorize the correct answers. Even when philosophers resist the lure of multiple choice tests and assign essay tests, the keepers of the QRHE still require them to assign grades. At the end of the semester, final grades are quasi-objectively calculated based on the accumulated average of all those tests and a grade for the course is assigned. Consequentially, students with fast-moving neurons and short-term memory recall are routinely placed at the top of social, political, and economic hierarchies, along with students that have spent time, energy, and resources developing standardized test-taking skills.
Not only are students treated as Black Boxes subject to quantified input/output evaluation, but so are professors, programs, and colleges. Colleges and universities measure the teaching effectiveneess of professors by comparing what professors input into their courses and correlate that input with output in the form of student performance. High quality teaching is correlated with grades that are awarded to students, therefore, teachers have an incentive to award a lot of A's. At the end of the semester, students take another multiple choice exam where they evaluate the quality of their professors. Student evaluations are quantified based on what students observe about the behavior of their professors. Similarly, the quality of programs are evaluated based on whether the program's specified inputs match up with the outputs. Colleges also assess the value of their degrees based on the degree to which students can know or do what's specified in their major programs and LAS requirements. Thus, the "Holy Grail" of QRHE is the abilty able to "demonstrate" that students, programs, and institutions know and/or do what the leaders of the regime wants them to know or do.
Now all of this quantification requires the expenditure of time, effort, and resources. Professors must grade students, students must evaluate professors, Deans must assess programs. The cost of quantification is ultimately passed onto SBBs in the form of higher tuition costs. Unfortunately, in recent years, the cost of a college education has been rising exponentially, largely because of the contagion of quantification serving bureaucracies. That's why students and their parents now take out huge loans to pay their tuition, room, and board. After they graduate they will have to pay back those loans with interest, regardless of their income.
Now what exactly does the QRHE regime contribute to Western culture? Let's start with the woefully naive cultural belief that everything in life that has value, can be represented by numbers such as SAT scores, GPAs, tuition costs etc.? How about the equally perverse idea that the primary purpose of educational institutions is to arrange students, teachers, programs, and educational institutions in graded dominance hierarchies? Who are the primary beneficiaries of all this nonsense? Elite colleges like Harvard and Yale, which enjoy underserved reputations for ACT-based selectivity, high-quality education, at an enormously high cost. Students and parents buy into the QRHE ruse by believing that these selective institutions are "better" than other institutions and therefore are willing to go further into debt in order to secure those over-valued diplomas.
In sum, I would argue that one cannot escape the rather obvious conclusion that the primary function of the QRHE regime is to manufacture and sustain a status quo; that is, cultural dominance by a class of number-worshipping institutions that remain in power by quantifying meaninglessness. My next blog will explore the social and political consequences of identifying leaders based on fast moving neurons, short-term memory recall, and the ability to earn high scores on multiple choice tests.
The underlying premises of the QRHE are rife with platitudes such as: "All students educated at college X "ought" to KNOW 1,2, and 3; and/or be able to DO a, b, and c. Once the "knows" and "dos" are specified, then further analysis determines HOW MUCH of 1,2, and 3; and/or a,b, and c? Today, the basic unit of measurement is the credit hour. Individual courses are usually "worth" 3 credit hours, however some are worth 4 credit hours or 1 or 2. Most colleges require students to take between 120 and 128 credit hours in order to graduate and receive their undergraduate diploma. There is also a tradition in higher education that says that a student ought to be able to earn an undergraduate degree in about 4 years. So, if a college requires 128 credit hours, students will have to take 32 credit hours a year, or 16 credit hours per semester. Most colleges prefer students to matriculate on a 4-5 year schedule, and therefore offer discounted tuition rates for full-time students; usually about 12 hours per semester.
Colleges and universities require students to take courses that fulfill clusters of related courses: Major requirements, Minor requirements, and LAS requirements. Typically, the majority the required 120-128 hours is consumed by required courses in the Major and the LAS curriculum requirements. When the sum total of courses required by the major and the LAS requirements is less than 120-128, students can "elect" to take other courses that are not required by either majors or the LAS curriculum. The more difficult the course the higher the number. Hence PHI 397 is supposed to be more difficult than PHI 100. Thus, most of what counts as a college education is based, not only on what colleges and universities believe their graduates ought to know and/or do, but also how well they know and do those things. Hence, we also have the well-embedded tradition of grading student performance based on that familiar scale of A,B, C, D, and F and resulting the accumulative Grade Point Average or GPA. In other words: education has become a "one size fits all" selection process based on numerically-defined dominance hierarchies.
Education reformers rarely question the QRHE regime and it's numerological underpinnings, even though it bears all of the markings of early 20th century behaviorism and logical positivism. This Skinnerian model of education reduces students, professors, and educational institutions to information processing "machines," or "Black Boxes." In order to secure a diploma from a college or university Student Black Boxes (SBBs) must be able to either know something or do something. Hence, colleges must test SBBs to see if there is a correspondence between intended input (taught) and output (learned). SBB that know and do all of the specified inputs, as evidenced by observation of output (tests) earn higher grades. This whole process, however, is contingent upon tranlating behavior into numbers. Quality points rang from 4 points (A) to 0 points (F). These numbers are calculated, documented, and eventually bundled into the students' GPA.
The primary instrument of the QRHE regime is the standardized test. Designed by teachers and/or institutions, these instruments manufacture an aura of objectivity by transforming value (good and bad) into a number (1,2,3). The tests consist of numbered questions (1-100), with each question valued proportionally (1 point per question). The standard multiple choice test asks students to answer questions with 4-5 possible answers. The tester then asks the SBBs to choose the correct answer out of a list of 4 or 5 possible answers. The more difficult multiple choice questions list several probable answers. Thus, the skills of standardized test-making and test-taking are deeply embedded in the QRHE regime. Fairness on standardized tests is reduced to uniformity in the amount of time allotted to take the test. Thus, by allowing equal quantity of time to take the test (1 hour) an illusion of fairness is manufactured. So the primary purpose of multiple choice exams is to transform input into output. Although multiple choice exams are most common in mathematics and science courses, they have also been adapted for use in the humanities, including philosophy. "Which of the following philosophers articulated the Categorical Imperative: a.) Kant, b.) Aristotle, c.) Hume, d.) none of the above." The most efficient way for SBBs to study for a standardized test is to memorize the correct answers. Even when philosophers resist the lure of multiple choice tests and assign essay tests, the keepers of the QRHE still require them to assign grades. At the end of the semester, final grades are quasi-objectively calculated based on the accumulated average of all those tests and a grade for the course is assigned. Consequentially, students with fast-moving neurons and short-term memory recall are routinely placed at the top of social, political, and economic hierarchies, along with students that have spent time, energy, and resources developing standardized test-taking skills.
Not only are students treated as Black Boxes subject to quantified input/output evaluation, but so are professors, programs, and colleges. Colleges and universities measure the teaching effectiveneess of professors by comparing what professors input into their courses and correlate that input with output in the form of student performance. High quality teaching is correlated with grades that are awarded to students, therefore, teachers have an incentive to award a lot of A's. At the end of the semester, students take another multiple choice exam where they evaluate the quality of their professors. Student evaluations are quantified based on what students observe about the behavior of their professors. Similarly, the quality of programs are evaluated based on whether the program's specified inputs match up with the outputs. Colleges also assess the value of their degrees based on the degree to which students can know or do what's specified in their major programs and LAS requirements. Thus, the "Holy Grail" of QRHE is the abilty able to "demonstrate" that students, programs, and institutions know and/or do what the leaders of the regime wants them to know or do.
Now all of this quantification requires the expenditure of time, effort, and resources. Professors must grade students, students must evaluate professors, Deans must assess programs. The cost of quantification is ultimately passed onto SBBs in the form of higher tuition costs. Unfortunately, in recent years, the cost of a college education has been rising exponentially, largely because of the contagion of quantification serving bureaucracies. That's why students and their parents now take out huge loans to pay their tuition, room, and board. After they graduate they will have to pay back those loans with interest, regardless of their income.
Now what exactly does the QRHE regime contribute to Western culture? Let's start with the woefully naive cultural belief that everything in life that has value, can be represented by numbers such as SAT scores, GPAs, tuition costs etc.? How about the equally perverse idea that the primary purpose of educational institutions is to arrange students, teachers, programs, and educational institutions in graded dominance hierarchies? Who are the primary beneficiaries of all this nonsense? Elite colleges like Harvard and Yale, which enjoy underserved reputations for ACT-based selectivity, high-quality education, at an enormously high cost. Students and parents buy into the QRHE ruse by believing that these selective institutions are "better" than other institutions and therefore are willing to go further into debt in order to secure those over-valued diplomas.
In sum, I would argue that one cannot escape the rather obvious conclusion that the primary function of the QRHE regime is to manufacture and sustain a status quo; that is, cultural dominance by a class of number-worshipping institutions that remain in power by quantifying meaninglessness. My next blog will explore the social and political consequences of identifying leaders based on fast moving neurons, short-term memory recall, and the ability to earn high scores on multiple choice tests.
Sunday, March 4, 2012
The Human Brain: The Most Complex Machine on Earth
The human brain is the most complex machine on earth. It not only manufactures our perceptions, feelings, thoughts, and behavior; it is also enables us to communicate those feelings, thoughts and perceptions to other brains in the form of information. As you read the words on this page your brain is seamlessly transforming these black marks into information, or ideas. Hence, my ideas are in your brain right now! Of course, I stole most of my ideas from dead philosophers, so you’re welcome to store them in your brain too.
At the microcosmic level, the basic unit of exchange is the “neuron,” which processes both “matter” and “information.” Brains that study brains use the idea of neurons to explain predict, and control the feelings, thoughts, and behavior generated by the human brain. The brain itself contains about 100 billion of neurons, with about thirty billion of them located in the outer layer known as the cerebral cortex. We still do not know how brains transform matter into information, or whether information exists independent of brains.
At the macrocosmic level, the human brain evolved as an adaptive response to survival challenges experienced by our distant ancestors during the Pleistocene period, about 3.5 million years ago. The brains of brain scientists now say that, functionally speaking, the brain resembles a “Swiss army knife,” a multiple organ comprised of identifiable subsystems or “modules.” The matter of our brains really hasn’t changed much since then, but the cultural information contained within it has evolved much faster. Consequently, there is a “mismatch” between our hunter-gatherer brains and modern culture. Unfortunately, our mismatched Pleistocene brains still tend to identify with similar brains, which accounts for the persistence of sexism, racism, tribalism, nationalism, and speciesism.
Evolutionary scientists say that the brain resembles an archeological site that contains the history of other brain-carrying organisms from our evolutionary past. The oldest parts of our brains structures, which are located near the center of our brains, regulate our body functions. Scientists often refer to this as the Reptilian Brain. The more recently evolved structures responsible for thought, language, and reasoning are located closer to the surface. If the outermost structures that manufacture thought mind are damaged, your body can still survive for a long time, as long as your brain stem continues to function. Unfortunately, if your brain gets locked into this persistent vegetative state, it won’t have any perceptions, feelings, thoughts, or behavior.
The only machine more complex than the human brain is a network of brains, which also processes matter and information, only on a larger scale. The most basic brain network involves two brains. XX (female) and XY (male) networks, periodically get together to manufacture more brains. The process requires two distinct processes: a material process via the replication of DNA; and an informational process called education.
Brains also process matter. If you own one, it will consume about 33 % of your daily caloric intake. That means you will have to spend at least 8 hours a day networking in the production and exchange of matter and or information, which we call work. Networks of brain scientists manufacture information about brains and transform it black marks on white surfaces. These black marks are then replicated by brain networks called publishing companies and later distributed by other networks called bookstores, libraries, and Internet sites. The process of exchange is facilitated by an artificial form of matter called money, which can be exchanged for calories that feed brains. Networks of economists study this exchange.
The most important brain module is the one that facilitates the making and use of tools. In recent years, brain scientists have benefited immensely from new tools: especially, very expensive, state-of-the-art new imaging machines that allow researchers to observe the flow of matter within the brain. Networks called research laboratories, buy these expensive machines from a network of brains called General Electric Corporation. Brain scanners generate a lot of calories that feed a lot of brains: manufacturers, distributers, salesmen, technicians and researchers. These technologies are often located in larger networks called colleges and universities that use these scanners to generate pictures of brains, and then sell the information gleaned from these images to younger brains or students. Because colleges and universities need money to pay for these scanners and feed the brains of their professors, they charge students a sum of money, called tuition. Students usually borrow their tuition from brain networks called banks, which also generate a lot of calories, especially for the brains of their stockholders and CEOs. Many of the colleges and universities that buy these scanners are public institutions; governmental networks that extract money from the brains of citizens via taxation. My college does not own any brain scanners, but it does have many photocopy machines and computers, that replicate information; and a cafeteria and vending machines that sell calories to feed our brains.
At the microcosmic level, the basic unit of exchange is the “neuron,” which processes both “matter” and “information.” Brains that study brains use the idea of neurons to explain predict, and control the feelings, thoughts, and behavior generated by the human brain. The brain itself contains about 100 billion of neurons, with about thirty billion of them located in the outer layer known as the cerebral cortex. We still do not know how brains transform matter into information, or whether information exists independent of brains.
At the macrocosmic level, the human brain evolved as an adaptive response to survival challenges experienced by our distant ancestors during the Pleistocene period, about 3.5 million years ago. The brains of brain scientists now say that, functionally speaking, the brain resembles a “Swiss army knife,” a multiple organ comprised of identifiable subsystems or “modules.” The matter of our brains really hasn’t changed much since then, but the cultural information contained within it has evolved much faster. Consequently, there is a “mismatch” between our hunter-gatherer brains and modern culture. Unfortunately, our mismatched Pleistocene brains still tend to identify with similar brains, which accounts for the persistence of sexism, racism, tribalism, nationalism, and speciesism.
Evolutionary scientists say that the brain resembles an archeological site that contains the history of other brain-carrying organisms from our evolutionary past. The oldest parts of our brains structures, which are located near the center of our brains, regulate our body functions. Scientists often refer to this as the Reptilian Brain. The more recently evolved structures responsible for thought, language, and reasoning are located closer to the surface. If the outermost structures that manufacture thought mind are damaged, your body can still survive for a long time, as long as your brain stem continues to function. Unfortunately, if your brain gets locked into this persistent vegetative state, it won’t have any perceptions, feelings, thoughts, or behavior.
The only machine more complex than the human brain is a network of brains, which also processes matter and information, only on a larger scale. The most basic brain network involves two brains. XX (female) and XY (male) networks, periodically get together to manufacture more brains. The process requires two distinct processes: a material process via the replication of DNA; and an informational process called education.
Brains also process matter. If you own one, it will consume about 33 % of your daily caloric intake. That means you will have to spend at least 8 hours a day networking in the production and exchange of matter and or information, which we call work. Networks of brain scientists manufacture information about brains and transform it black marks on white surfaces. These black marks are then replicated by brain networks called publishing companies and later distributed by other networks called bookstores, libraries, and Internet sites. The process of exchange is facilitated by an artificial form of matter called money, which can be exchanged for calories that feed brains. Networks of economists study this exchange.
The most important brain module is the one that facilitates the making and use of tools. In recent years, brain scientists have benefited immensely from new tools: especially, very expensive, state-of-the-art new imaging machines that allow researchers to observe the flow of matter within the brain. Networks called research laboratories, buy these expensive machines from a network of brains called General Electric Corporation. Brain scanners generate a lot of calories that feed a lot of brains: manufacturers, distributers, salesmen, technicians and researchers. These technologies are often located in larger networks called colleges and universities that use these scanners to generate pictures of brains, and then sell the information gleaned from these images to younger brains or students. Because colleges and universities need money to pay for these scanners and feed the brains of their professors, they charge students a sum of money, called tuition. Students usually borrow their tuition from brain networks called banks, which also generate a lot of calories, especially for the brains of their stockholders and CEOs. Many of the colleges and universities that buy these scanners are public institutions; governmental networks that extract money from the brains of citizens via taxation. My college does not own any brain scanners, but it does have many photocopy machines and computers, that replicate information; and a cafeteria and vending machines that sell calories to feed our brains.
Monday, February 13, 2012
Religious Freedom v. Reproductive Freedom: A Pointless and Unnecessary Debate
OK..Some of you all have been trying to coax me into addressing the ongoing controversy between President Obama and the Roman Catholic Church over a new federal mandate requiring all employers to include health insurance coverage for contraception, sterilization and abortion. If your views have been shaped by corporate media, you probably believe that this is a straightforward, deontological dilemma between "religious rights" and "reproductive rights." Sorry...but I won't address that issue! Why not? Well...it's NOT because I teach at a Roman Catholic college and it's NOT because most of my friends and colleagues are liberal women. The reason that I refuse to address that debate is that it's not the ultimate source of the conflict and therefore, to do so would be tantamount to a physician treating the symptoms of the disease rather than the underlying disease.
So what's the disease? Well, it's President Obama's decision to "reform" the U.S. health care system by expanding and revising employment-based health insurance. Kronke and I have already dealt with the various problems associated with employment-based health insurance in our essay: The Modern Health Care Maze. So in this use blog I'll try to explain how and why this mindless system inevitably alienates not only religious employers like the Roman Catholic Church, but also their employees. Ultimately, I might even question why an otherwise saavy politician like Obama failed to "anticipate" the consequences of this policy.
First of all, let's ask the most basic question. Why would I want my employer, the federal government, and/or the state of Ohio to choose my health insurance coverage for me? Do these governmental entities or my employer know something that I don't know about what I need in terms of coverage? President Obama sent me an e-mail message the other day. It said: "Sorry Ron, but even though you and your wife are well beyond your reproductive years, I decided that you really NEED health insurance coverage for contraception, sterlization, and abortion?" Then the bishop sent me an e-mail that said: "Sorry Ron, but the Roman Catholic Church won't pay for that mandated coverage because we believe that contraception, sterilization, and abortion are immoral." Note that both the President and the Bishop believe that they are acting in good conscience on my on my behalf. But the fact of the matter is that I really don't need contraception, sterilization, or abortion coverage. I also don't need in vitro fertilization coverage. If I did, I guess it's good to know that if my wife and I end up with octuplets, my health insurance will cover up to $1,000,000. per child toward treatment in a neonatal intensive care unit. The government and my employer might also decide that we also need insurance coverage for mamograms, a hair transplant, cosmetic surgery, and/or a sex change operation. I know that pharmaceutical companies believe that I need insurance coverage for a test Low T (low testosterone), and for the expensive, patent-protected drug that cures it. That's why their lobbyists are are swarming state governments hoping to force insurance companies to cover those tests and drugs.
Now if the health insurance offered to me by my employers was offered as a gift, I wouldn't be so critical. But the fact is that I pay for that insurance via diminished salary and co-pays. Moreover, although the President and the Bishop are willing to force me to pay for insurance coverage that I mostly don't need, neither of them are anxious to provide me with reasonable coverage that I really might need someday: dental care, eye care, or long-term nursing care. So one of the unanticipated consequences of employment based health insurance is that I'm stuck paying for health insurance that I wouldn't otherwise purchase. And of course, over time, the quality of that insurance coverage has decreased, while the costs have increased. So as a result, every year I pay more for my health insurance and more out-of-pocket for my uncovered health care. Now I can't blame the Bishop for my lousy health insurance. There are only a few health insurance companies licensed in the state of Ohio, and they all are well-represented by powerful lobbies. But I do blame President Obama for attempting to recussitate such an irrational, convoluted health care system.
Now let's look at another related issue. Why do we continue to support a tradition whereby access to some birth control methods requires a prescription from a physician; a stranger that probably doesn't know much about you, or the drug being prescribed? Moreover, that same physician is financially motivated to prescribe expensive, recently patented new drugs and devices (whose safety and effectiveness are not well known), rather than prescribe generic old drugs and devices (whose safety and effectiveness are well known)? As a result of this wacky system, every few years these new drugs and devices, whose safety and effectiveness were initially declared by the Food and Drug Administration, turn out to be unsafe and/or ineffective. Then, we have those highly paid lawyers, specializing in "class-action lawsuits," taking pharmaceutical companies to court. When the pharmaceutical companies lose those class-action lawsuits and are ordered to pay out huge settlements to the victims, those payoffs are either covered by their own liability insurance and/or passed onto consumers in the form of higher prices. Do you got all that?
In conclusion, the debate over contraceptive covereage is really a sideshow; a byproduct of a woefully convoluted health care system. As much as I'd like to write a convincing deontological argument reconciling religious freedom with reproductive freedom, it's really not the real issue. I thought Kroncke and I articulated the problem pretty well! "In hindsight, did it ever really make sense to set up a health care system whereby fourth-party corporate employers purchase health care insurance for their first-party employees from third-party corporations, which in turn pay second-party providers for health care products and services? Does any other industry insulate buyers from sellers in this way?" So, the conflict between religious rights and reproductive rights disappears if we just dump employment-based health insurance, and replace it with a system where we buy our own health insurance (and health care). Unfortunately, insurance companies, physicians, pharmaceutical companies, and hospitals won't like that new system. They all want us to buy more health care than we really need.
Finally, we must ask the question: Why would President Obama risk politically alienating Catholics, Evangelical Protestants, Jews, and Muslims in an election year in order preserve such an irrational, ill-conceived, and convoluted health care system? God only knows!
So what's the disease? Well, it's President Obama's decision to "reform" the U.S. health care system by expanding and revising employment-based health insurance. Kronke and I have already dealt with the various problems associated with employment-based health insurance in our essay: The Modern Health Care Maze. So in this use blog I'll try to explain how and why this mindless system inevitably alienates not only religious employers like the Roman Catholic Church, but also their employees. Ultimately, I might even question why an otherwise saavy politician like Obama failed to "anticipate" the consequences of this policy.
First of all, let's ask the most basic question. Why would I want my employer, the federal government, and/or the state of Ohio to choose my health insurance coverage for me? Do these governmental entities or my employer know something that I don't know about what I need in terms of coverage? President Obama sent me an e-mail message the other day. It said: "Sorry Ron, but even though you and your wife are well beyond your reproductive years, I decided that you really NEED health insurance coverage for contraception, sterlization, and abortion?" Then the bishop sent me an e-mail that said: "Sorry Ron, but the Roman Catholic Church won't pay for that mandated coverage because we believe that contraception, sterilization, and abortion are immoral." Note that both the President and the Bishop believe that they are acting in good conscience on my on my behalf. But the fact of the matter is that I really don't need contraception, sterilization, or abortion coverage. I also don't need in vitro fertilization coverage. If I did, I guess it's good to know that if my wife and I end up with octuplets, my health insurance will cover up to $1,000,000. per child toward treatment in a neonatal intensive care unit. The government and my employer might also decide that we also need insurance coverage for mamograms, a hair transplant, cosmetic surgery, and/or a sex change operation. I know that pharmaceutical companies believe that I need insurance coverage for a test Low T (low testosterone), and for the expensive, patent-protected drug that cures it. That's why their lobbyists are are swarming state governments hoping to force insurance companies to cover those tests and drugs.
Now if the health insurance offered to me by my employers was offered as a gift, I wouldn't be so critical. But the fact is that I pay for that insurance via diminished salary and co-pays. Moreover, although the President and the Bishop are willing to force me to pay for insurance coverage that I mostly don't need, neither of them are anxious to provide me with reasonable coverage that I really might need someday: dental care, eye care, or long-term nursing care. So one of the unanticipated consequences of employment based health insurance is that I'm stuck paying for health insurance that I wouldn't otherwise purchase. And of course, over time, the quality of that insurance coverage has decreased, while the costs have increased. So as a result, every year I pay more for my health insurance and more out-of-pocket for my uncovered health care. Now I can't blame the Bishop for my lousy health insurance. There are only a few health insurance companies licensed in the state of Ohio, and they all are well-represented by powerful lobbies. But I do blame President Obama for attempting to recussitate such an irrational, convoluted health care system.
Now let's look at another related issue. Why do we continue to support a tradition whereby access to some birth control methods requires a prescription from a physician; a stranger that probably doesn't know much about you, or the drug being prescribed? Moreover, that same physician is financially motivated to prescribe expensive, recently patented new drugs and devices (whose safety and effectiveness are not well known), rather than prescribe generic old drugs and devices (whose safety and effectiveness are well known)? As a result of this wacky system, every few years these new drugs and devices, whose safety and effectiveness were initially declared by the Food and Drug Administration, turn out to be unsafe and/or ineffective. Then, we have those highly paid lawyers, specializing in "class-action lawsuits," taking pharmaceutical companies to court. When the pharmaceutical companies lose those class-action lawsuits and are ordered to pay out huge settlements to the victims, those payoffs are either covered by their own liability insurance and/or passed onto consumers in the form of higher prices. Do you got all that?
In conclusion, the debate over contraceptive covereage is really a sideshow; a byproduct of a woefully convoluted health care system. As much as I'd like to write a convincing deontological argument reconciling religious freedom with reproductive freedom, it's really not the real issue. I thought Kroncke and I articulated the problem pretty well! "In hindsight, did it ever really make sense to set up a health care system whereby fourth-party corporate employers purchase health care insurance for their first-party employees from third-party corporations, which in turn pay second-party providers for health care products and services? Does any other industry insulate buyers from sellers in this way?" So, the conflict between religious rights and reproductive rights disappears if we just dump employment-based health insurance, and replace it with a system where we buy our own health insurance (and health care). Unfortunately, insurance companies, physicians, pharmaceutical companies, and hospitals won't like that new system. They all want us to buy more health care than we really need.
Finally, we must ask the question: Why would President Obama risk politically alienating Catholics, Evangelical Protestants, Jews, and Muslims in an election year in order preserve such an irrational, ill-conceived, and convoluted health care system? God only knows!
Thursday, January 5, 2012
Stakeholder Theory of Corporate Management
Stockholder and Stakeholder Theory are theoretical perspectives within the Nexus of Contracts framework. The Stockholder Theory of Corporate Management says that CEOs (leaders) “ought” to manage the nexus in the interest of stockholders. Stakeholder Theory argues that CEOS are agents for all of the stakeholders, and therefore, “ought to” manage the nexus in order to advance the interests of all stakeholders: stockholders, employees, consumers, suppliers, financiers, and the local community.
Stakeholder Theory provides a pretty big tent for a variety of different views. Many argue that corporations are not the private property of stockholders, but “public property” and that the goal role of the CEO is to increase cooperation and not competition. One implication of this emphasis on cooperation is the notion that the various stakeholders ought to be treated equally, and/or that it is wrong to deliberately allow the most advantaged stakeholders (especially stockholders) to exploit the least advantaged stakeholders. So the basic argument is that the various stakeholder groups come to the bargaining table with competitive disadvantages, and that Stockholder Theory often leads to the exploitation of employees, consumers, financiers, suppliers, and/or local communities. In other words Stakeholder Management implies a special moral obligation to advance the interests of the “least advantaged” (or the most vulnerable) stakeholders.
But the most important difference between the two theories is their respective views on the role that government ought to play in economic matters. If Stockholder Theory targets policy at increasing competition and personal liberty, Stakeholder Theory seeks to empower government to protect the least advantaged stakeholders; usually employees and consumers. Hence Stakeholder theorists tend to support policies such as a social safety net and/or a living wage. However, Stockholder Theorists prefer to address the needs of the "least advantaged" via individual philanthropy and/or voluntary associations rather than government programs.
Stockholder theorists tend to emphasize private property rights and personal liberty (Locke). On global issues, they embrace the mantra:”When in Rome do as the Romans do.” Stakeholder theorists focus more on public property, economic security of all stakeholders, and follow their manta: “When in Rome do what’s right.” As a general rule, European countries tend to embrace Stakeholder Theory, while the United States defends Stockholder Theory. But don’t jump to the conclusion that business ethics can be reduced to Stockholder Theory v. Stakeholder Theory. Both theories are more subtle than that; and of course, not all business ethicists buy into that whole "social contract" approach to doing ethics. I would argue that Nexus of Contracts Theory, Stockholder Theory and Stakeholder Theory all represent ideals. And that Realists observe that in the “Real World,” there are (in fact) neither “perfectly free markets” (perfect information, perfect freedom, and perfect competition) nor “perfectly functional governments." Ultimately, business ethics cannot avoid the basic issues in ethics: knowing v. doing, facts v. values, individual v. collective responsibility, legality v. morality, public v. private, and contextualism v. universalism. Don't let anyone tell you that ethics is easy. It's not!
Stakeholder Theory provides a pretty big tent for a variety of different views. Many argue that corporations are not the private property of stockholders, but “public property” and that the goal role of the CEO is to increase cooperation and not competition. One implication of this emphasis on cooperation is the notion that the various stakeholders ought to be treated equally, and/or that it is wrong to deliberately allow the most advantaged stakeholders (especially stockholders) to exploit the least advantaged stakeholders. So the basic argument is that the various stakeholder groups come to the bargaining table with competitive disadvantages, and that Stockholder Theory often leads to the exploitation of employees, consumers, financiers, suppliers, and/or local communities. In other words Stakeholder Management implies a special moral obligation to advance the interests of the “least advantaged” (or the most vulnerable) stakeholders.
But the most important difference between the two theories is their respective views on the role that government ought to play in economic matters. If Stockholder Theory targets policy at increasing competition and personal liberty, Stakeholder Theory seeks to empower government to protect the least advantaged stakeholders; usually employees and consumers. Hence Stakeholder theorists tend to support policies such as a social safety net and/or a living wage. However, Stockholder Theorists prefer to address the needs of the "least advantaged" via individual philanthropy and/or voluntary associations rather than government programs.
Stockholder theorists tend to emphasize private property rights and personal liberty (Locke). On global issues, they embrace the mantra:”When in Rome do as the Romans do.” Stakeholder theorists focus more on public property, economic security of all stakeholders, and follow their manta: “When in Rome do what’s right.” As a general rule, European countries tend to embrace Stakeholder Theory, while the United States defends Stockholder Theory. But don’t jump to the conclusion that business ethics can be reduced to Stockholder Theory v. Stakeholder Theory. Both theories are more subtle than that; and of course, not all business ethicists buy into that whole "social contract" approach to doing ethics. I would argue that Nexus of Contracts Theory, Stockholder Theory and Stakeholder Theory all represent ideals. And that Realists observe that in the “Real World,” there are (in fact) neither “perfectly free markets” (perfect information, perfect freedom, and perfect competition) nor “perfectly functional governments." Ultimately, business ethics cannot avoid the basic issues in ethics: knowing v. doing, facts v. values, individual v. collective responsibility, legality v. morality, public v. private, and contextualism v. universalism. Don't let anyone tell you that ethics is easy. It's not!
Monday, January 2, 2012
Stockholder Theory of Corporate Management
Recall from my previous blog that “Nexus of Contracts Theory” (NOC) says that a corporation is a nexus of contracts between various stakeholder groups: stockholders, employees, consumers, financiers, sub-contractors, and the local community. Business leadership ethics, therefore, is about how to manage that nexus. Within the contractual constraints of the NOC framework there are two competing theories that offer different strategies for dealing with the inevitable stakeholder conflicts that arise: stockholder theory and stakeholder theory.
Now an agent is a person possessing technical knowledge that is paid by someone else to serve their interests. Stockholder Theory states that the CEO is an agent hired by stockholders (or owners), and therefore he/she is legally and morally obligated to serve their interests. Corporations are money machines owned by the stockholders (not persons) and the CEO is hired to manage that nexus. In order for the CEO to make money for the stockholders, he/she must make decisions that affect all stakeholder groups. Stockholder theorists, therefore, argue that the “free market” is simply a system of distribution based the non-coercive, voluntary choices made by the various stakeholders. One of the criticisms of Stockholder Theory is that it seems to justify the unlimited exploitation of other stakeholders for the benefit of the stockholders. However, CEOs cannot simply ignore the interests of the other stakeholders. Otherwise, they’ll withdraw from the nexus: employees will quit, consumers will buy from a competitor, financiers will not lend them money etc. For example, if the CEO offers most workers $8.00 in hourly wages, and if prospective employees can freely accept or reject that offer, then it’s a moral transaction. However, a “good CEO” (that makes money for the stockholders) will, out of necessity, serve the interests of the other stakeholders, within the constraints of the free market. Hence, if a "good CEO" cannot hire enough workers at $8.00 an hour, then he/she will try $8.25. If there are many willing workers available, the CEO will offer $7.75. The same market-based bargaining will be applied in dealing with the other stakeholder groups.
What about business ethics? Or better yet…whose moral values is a "good CEO" morally obligated to uphold? Most stockholder theorists are moral relativists, and therefore, argue that the CEO must decide whose moral values ought to guide his/her decisions. Since the stockholders own the company they can collectively agree to operate based on a set of shared moral values. If the CEO disagrees with those values he/she can refuse to take the job or resign. And of course, any corporate morality must be clearly disclosed to the other stakeholders. If some stockholders disagree with those expressed values they can sell their stocks, employees can quit, financiers can refuse to loan money etc. But then again, very large corporations have thousands of stockholders whom may not share the same moral values. That’s why the stockholders appoint or elect their own agent(s), the Board of Trustees. However, if the CEO chooses to “manage” based on his/her personal morality, which is in conflict with the stockholders values, the Board can fire the CEO. Unfortunately, sometimes the CEO and/or the Board do not act as reliable agents. In those cases, if the stockholders find out, they can either hire new agents, or sell their stock. Although Stockholder Theorists tend toward moral relativism, they are legal objectivists, in the sense that they require corporate leaders to abide by the laws where they are doing business. So when competing in global markets where the laws vary between nations, Stockholder Theorists uphold the mantra: “When in Rome, do as the Romans do.”
Finally, any theory of the modern corporation must also address the political question: “What role should government play in managing the nexus?” Within the Stockholder Model, there’s a considerable disagreement over what role the government ought to play in managing the nexus. Anarcho-capitalists argue that all government violates the non-aggression axiom, and therefore all government intervention in the market is morally unjustified. Minarchists, however, argue that the primary purpose of government is to protect the personal and property rights of individuals. Thus, at a bare minimum government must monitor and enforce laws against theft, fraud, and breech of contract. However, all stakeholders possess “negative rights” and therefore, as bargainers they are guaranteed the equal right to bargain, but there can be no governmentally enforced guarantee that any one stakeholder group will emerge victorious as a result of the competitive process. According to ST, government ought to be “impartial” or “neutral” in the competitive bargaining process, but should not pick winners and losers. Again, the primary purpose of government is to enforce contracts between rationally self-interested bargainers and promote free market competition. Stockholder Theorists argue that over the long run, the free market approach to corporate management unintentionally leads to a moral nexus.
Libertarians generally defend various versions of the Stockholder Theory of corporate management. My next blog will cover Stakeholder Theory, the other approach to corporate management.
Sunday, January 1, 2012
What is a Corporation?
What is the most influential social institution in the Western world? Now by “influential” I don’t mean just “positive influence” but also “negative influence.” Well, let’s look at some of the candidates. Given the cultural forces that are currently at work here in the United States, most of you would say either religion or government. Both are pretty good candidates. But let’s look a bit closer. Who produced the food that you ate this morning? Who sold it to you? Who loaned you the money to go to college? Who built your computer? Who sold it to you? Who printed your books? Who sold them to you? Who brewed the beer that you drank last Saturday night, and who sold it to you? Who produced your cigarettes and who sold them to you? Who owns the Reds and the Bengals? Who built your home? Who financed it? Get the point? For better or worse, I would argue that corporations are the most influential social institutions in the Western world, especially in the United States. But what is a corporation? The answer to any question requires a theory. Therefore, we need a “theory of the modern corporation.”
Orthodoxy in business management and ethics often cites “Nexus-of-Contracts Theory.” Rooted in in social contract theory, it argues that the firm, or the modern corporation, is a complex adaptive system comprised of definable subsystems, called stakeholders. A stakeholder is any individual or group of individuals that either benefits of suffers as a result of the actions of that corporation. Therefore, the modern corporation is essentially a set of contracts or agreements between various stakeholder groups. The corporate stakeholder groups, engaged in this bargaining process typically include: stockholders, employees, consumers, suppliers, financiers, and local communities. The interests of these various groups are often represented by “agents.”
Now in order for the Nexus-of Contracts Theory to be useful it must be both descriptive and prescriptive; that is, it must describe how the classes of stakeholders (stockholders, consumers, managers, employees, consumers etc.) bargain in the real world, AND prescribe how those stakeholders ought to bargain. It must also describe and prescribe the role that leaders ought to play in this process. Hence, any theory of the modern corporation must answer three questions:
1. Whose ends (rights or interests) are in fact served by corporate leaders? (E.g.: stockholders, consumers, employees, financiers, suppliers, local communities, nations, humanity etc.) AND, whose ends (rights or interests) ought to be served by corporate leaders?
2. By what means can leaders in fact employ in order to efficiently realize these stated ends (rights or interests) AND, what means can managers morally realize these stated ends.
3. What role does government in fact play in the realization of these various ends? AND, what role ought government (local, state, federal, international) play in this process?
Despite the idealistic ruminations of various “win-win” strategists, in the real world, what’s “good” for one group of stakeholders (stockholders, employees, consumers, etc) is not necessarily “good” for the other stakeholders. If you raise the pay of employees, generally, either the consumers pay higher prices, and/or the stockholders earn less. And, what’s “good” for any given society may or may not be “good” for individual industries or corporations. And, what’s “good” for United States may or may not be “good” for the rest of the world. And what’s “good” for present stakeholders, may not be good for future stakeholders. Hence, corporations are both cooperative and competitive.
Within the NOC framework, a “good leader,” is a leader that can reconcile the often conflicting interests of the various stakeholder groups. NOC scholars have identified two alternative sub-theories of corporate leadership.
Stockholder Theory: Leaders are morally and legally obligated to serve as agents of the stockholders, and advance their interests regardless of how those decisions might affect the other stakeholders.
Stakeholder Theory: Leaders are morally and legally obligated to serve as agents of all stakeholder groups, and try to advance all of these interests collectively and impartially.
The next two blogs will discuss these two theories.
Orthodoxy in business management and ethics often cites “Nexus-of-Contracts Theory.” Rooted in in social contract theory, it argues that the firm, or the modern corporation, is a complex adaptive system comprised of definable subsystems, called stakeholders. A stakeholder is any individual or group of individuals that either benefits of suffers as a result of the actions of that corporation. Therefore, the modern corporation is essentially a set of contracts or agreements between various stakeholder groups. The corporate stakeholder groups, engaged in this bargaining process typically include: stockholders, employees, consumers, suppliers, financiers, and local communities. The interests of these various groups are often represented by “agents.”
Now in order for the Nexus-of Contracts Theory to be useful it must be both descriptive and prescriptive; that is, it must describe how the classes of stakeholders (stockholders, consumers, managers, employees, consumers etc.) bargain in the real world, AND prescribe how those stakeholders ought to bargain. It must also describe and prescribe the role that leaders ought to play in this process. Hence, any theory of the modern corporation must answer three questions:
1. Whose ends (rights or interests) are in fact served by corporate leaders? (E.g.: stockholders, consumers, employees, financiers, suppliers, local communities, nations, humanity etc.) AND, whose ends (rights or interests) ought to be served by corporate leaders?
2. By what means can leaders in fact employ in order to efficiently realize these stated ends (rights or interests) AND, what means can managers morally realize these stated ends.
3. What role does government in fact play in the realization of these various ends? AND, what role ought government (local, state, federal, international) play in this process?
Despite the idealistic ruminations of various “win-win” strategists, in the real world, what’s “good” for one group of stakeholders (stockholders, employees, consumers, etc) is not necessarily “good” for the other stakeholders. If you raise the pay of employees, generally, either the consumers pay higher prices, and/or the stockholders earn less. And, what’s “good” for any given society may or may not be “good” for individual industries or corporations. And, what’s “good” for United States may or may not be “good” for the rest of the world. And what’s “good” for present stakeholders, may not be good for future stakeholders. Hence, corporations are both cooperative and competitive.
Within the NOC framework, a “good leader,” is a leader that can reconcile the often conflicting interests of the various stakeholder groups. NOC scholars have identified two alternative sub-theories of corporate leadership.
Stockholder Theory: Leaders are morally and legally obligated to serve as agents of the stockholders, and advance their interests regardless of how those decisions might affect the other stakeholders.
Stakeholder Theory: Leaders are morally and legally obligated to serve as agents of all stakeholder groups, and try to advance all of these interests collectively and impartially.
The next two blogs will discuss these two theories.
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