This article is one of an increasing number pointing to ways in which insurance companies are beginning to focus on the benefits of wellness.  The challenge is that company-sponsored wellness programs will be limited in the depth of their impact, because most employees only stay with an organization for a few years, and the benefits of wellness practices may take decades to reveal themselves.

It makes more sense for personal insurance to provide lower fees for those with good wellness habits, just as they do for non-smoking.  The fact that they are not doing so in a large way leads me to suspect that there are legal obstacles to the provision of such wellness-based insurance.  One of the biggest challenges to wellness insurance would be any racial disparities that might show up - if there are wellness practices that are correlated with race, then insurance that rewarded those who participated in wellness practices would penalize those who did not participate in wellness practices.  And if those penalized happened to be disproportionately of one race rather than another, the insurance might be ruled discriminatory and thus illegal.

The best hope around this dilemma is to focus on objective data showing correlations between specific wellness practices and health.  Better yet, it might be necessary to periodically monitor blood sugar, cholesterol, and other objective medical measurements in order to ensure that there existed objective medical evidence that those receiving discounts were indeed less likely to get chronic diseases.  This is similar to Progressive Insurance's voluntary monitoring of driving practices through the installation of a GPS in the driver's car.

More deeply, a change in attitudes around personal health responsibility, personal habits, and our role in diet and exercise would have to be accepted by our legal system.  Unfortunately, the concept of personal responsibility has been steadily eroding in our legal system for nearly 100 years.

There is a good article in U.S. News & World Report on Peter Barnes' Cap and Dividend proposal.  It differs from the existing proposed Lieberman-Warner proposal to Cap and Trade carbon emissions credits in that with Lieberman-Warner the energy companies are simply given carbon credits and then they trade them, whereas in Cap and Dividend a portion of the cost of the credits is returned to citizens as a dividend check each year.  There are estimates that a family of four would receive a check between $1,200 and $4,000 each year.  This would hellp compensate for higher energy prices; indeed, low energy users would come out ahead.

Moreover, the European system has been a disaster; it has increased energy costs while not reducing emissions and still giving energy companies unearned windfalls from a poorly designed government program - the worst of all possible worlds.

More importantly, Barnes comes out expicitly against incentives for clean energy or government programs "investing" in clean energy:

But in this system, you give the money to consumers instead of investing it in research on energy from sources other than fossil fuels.

I'm a retired businessman, and I believe obviously we need huge amounts of investments in new technologies and conservation and energy efficiency. But that's mostly going to happen in the private sector. It's not so much that we need public investments. We need to send a signal to the market to make the right investments. The market makes plenty of investments now, but they're the wrong investments.

This is exactly right; it should be considered Econ 101.  The government is incompetent to pick winners, but if you get the price signals right, then the private sector will discover what kinds of energy are worth investing in. 

I have a mild preference for Gore's proposal to exchange payroll taxes for carbon taxes, partly because economists I trust believe a tax approach would be less subject to abuse than cap and dividend, and partly because the payroll tax has rightly been described as "the worst tax."

That said, it is great to see Peter Barnes come out with such clarity on the issue of private investors directing investment dollars in the right direction once the price signals are corrected.  Quite aside from concerns about global warming, it has always seemed to me that dependence on foreign oil leads to a justification for a costly military and undesirable military intervention.

For those who are not already familiar with property rights solutions to tragedy of the commons problems, I recommend Barnes' Capitalism 3.0, a free download here.

The Congo Civil War, the most lethal war since WW II, has dragged on for a decade now.  War is always horrible, and often accompanied by the most brutal rapes.  For some years now graphic accounts of the most sadistic gang rapes imaginable have been pouring forth from the Congo.  For a relatively tame account from the New York Times, see this.  For far more horrifying accounts, simply Google "Congo" "gang rape" and read for as long as you can stomach it.

Yesterday I was standing in a kitchen listening to a debate about what type of water bottle was most environmentally friendly, with the advantages of different types of plastic and metal bottles compared.  The conversation was morally earnest, as if using one bottle vs. another might make a significant difference in one's personal health or the state of the global environment.

The day before, I was given a necklace made by Lovetta Conto, a 15 year old Liberian civil war orphan, from bullet casings left after the seventeen year civil war.  I met  Lovetta a few weeks ago, a lively, intelligent, dynamic, entrepreneurial young women.  Wearing the necklace each day provides me with a very powerful reminder of the reality of those who face bullets and for whom violent death is very much a part of their lives.  It is hard to focus on the advantages of aluminum water bottles when bullets are flying.

One of the projects we are working on is rebuilding the Liberian economy.  There are large numbers of unemployed young men.  Although the peace seems to be stable, violence could erupt again, and Liberia could collapse back into war.

The U.N. is ineffective at stopping the violence in the Congo.  No one really wants the U.S. to invade, and the U.S. wouldn't invade in any case.  So more millions continue to die, and more millions of women continue to experience the most horribly violent degradation imaginable.

I wish more people would focus on pro-actively providing a foundation for peace.  Once war has broken out it is very difficult to create peace.  But in places such as Liberia, Nepal, Afghanistan, and the Philippines, there are situations in which the creation of jobs and a healthy economy could make all the difference in the world between a collapse into violence vs. the beginnings of a stable peace.  We have contacts in all four locations working on creating Peace through Commerce, and on Accelerating Women Entrepreneurs.  Let us know if you would like to help.

An upcoming talk at Stanford; a marvelous validation of the core concerns of our Accelerating Women Entrepreneurs (AWE) program as well as all the focus on De Soto, North, the Doing Business rankings, U.N. Commisson on the Legal Empowerment of the Poor, and Economic Freedom Indices:

Laws, Liberty, and Livelihood: 
The Need for a Bottom Up Agenda of Economic Reforms

Madhu Purnima Kishwar is a Senior Fellow at the Centre for the Study of Developing Societies in Delhi. She is also the Founder President of Manushi Sangathan, an organisation committed to strengthening democratic rights and women's rights in India. She is the founder editor of Manushi - A Journal About Women and Society, which has been published continuously since 1978.


This presentation will focus on the absurd laws and regulations governing the livelihoods of two of the most visible and numerically large groups of urban self-employed poor--street vendors and cycle rickshaw pullers--showing how needless bureaucratic controls trap the hard working poor in a web of illegality and make them victims of extortion rackets.


While political theorists in India have engaged extensively with the need for greater political rights and freedom, far less attention has been paid to economic freedom. Political freedom has been understood very narrowly. Economic issues have been viewed largely through the prism of class struggle, with the state being projected as the sole 'protector' of the weak and vulnerable sections of society from the greed and exploitation of the rich and powerful. Neither our economists nor our political theorists have come to grips with the often predatory role of the State and how it works to wreck people's livelihoods and self-confidence. Obsessed with the political and electoral dimensions of democracy, our intellectuals and media tend to ignore the systematic and routine loot, extortion, violence, and indignities suffered by our people as they go about legitimate economic pursuits. The livelihood concerns of the vast majority of our people remain marginalized as even the agenda of economic reforms is focused on transnational corporations, the Indian corporate sector, and government-run public enterprises. Indian and foreign corporations and the PSUs together provide employment to no more than 3% cent of our population. As against about 10% who are self-employed in Europe and America, more than 90% of people in India work in the unorganized and self-employed sector.

Sunday, April 20, 2008, 3 p.m.
Building 200, Room 219


Map: http://campus-map.stanford.edu/index.cfm?ID=01-200

Dear FLOW Members,

Human beings evolved the cognitive and moral capacities needed to make
the judgments needed to survive in small tribes of 150 or so.  Given
the limitations of our cognitive and moral judgments, it is truly
extraordinary how we have extended our lifetimes several times over
and created a world in which the death of an infant has become rare
rather than typical.  But our path to the luxury of children who
typically live, rather than die, and who typically grow to an old age
has not been an easy one, nor will it be easy to continue to improve
human life around the world.

One of the primary challenges we face in creating a world of
widespread peace and abundance, is overcoming the hatred many people
feel towards the free enterprise system, or "capitalism," as the free
enterprise system is referred to by its critics and enemies. If we are
to dramatically reduce global poverty and war we need to re-vision and
re-brand capitalism.  In order to do so, those of us who seek to
create a new identity for capitalism need to identify those elements
of capitalism that are intrinsically virtuous while also admitting
those elements of capitalist practice which are, in fact, vicious,
much as the critics believe.  We also need to create and support ever
more virtuous manifestations of capitalism while also fighting the
deep-set bigotries against capitalism that prevail in so many
quarters.

John Mackey's preferred expression to represent the ever more virtuous
manifestations of capitalism is "Conscious Capitalism."  His two
criteria for the practice of Conscious Capitalism are:

• That it be based on a deeper purpose than profit maximization.
• That it understands the interdependent relationships between all stakeholders in the enterprise, including shareholders, employees, suppliers, customers, communities, and the environment, and addresses the interests of each and the relationships between the stakeholders to optimize the enterprise system for the highest good for all.

I won't add to his discussion of the stakeholder model at present, but
with respect to deeper purpose, John makes the sensible point that the
creation and management of enterprises ought to be regarded as a
profession, with ethical standards and lofty aspirations, so that we
understand the nobility of enterprising much as we understand the
nobility of law, or medicine, or education.  This is not to deny that
sometimes businesspersons, or lawyers, or doctors, or educators are
sleazy or unworthy individuals.  Some are, some always have been, and
some always will be.  But those who limit "capitalism" to a mechanical
notion of "profit maximization" are unfairly denying the nobility of
the nature, effects, and intentions of many in the business world.
Worse yet, by claiming that "capitalism" is somehow intended to be no
more than "profit maximization," they thereby encourage and support
those who are either mindless or vicious in the business world.

Moral purpose is an essential feature of human nature.  In the tribal
environment, it was crucial to survival that each member of the tribe
supports the norms of the tribe, which were often manifested in a
moral and cosmic order integral to the beliefs and identity of the
tribe.  Beyond loyalty to the customs and the gods worshiped by
individuals in the tribe, tribal leaders needed to exemplify support
for and commitment to the customs and the gods.  Contrariwise, tribes
disciplined those who failed to adequately support the cultural
integrity of the tribe by means of social disapproval as well as
harsher sanctions, ultimately including banishment or death. The code:
"Good people support the moral purposes of the tribe" has been bred
into us through its utility to tribal survival over millions of years.
 It isn't smart to ignore Mother Nature.

Indeed, despite the extraordinary diversity of recorded human history,
until the 19th century the centrality of moral purpose to human life
was self-evident.  There were many villains and criminals, but
typically even they claimed some higher purpose for their crimes.
Only in late 19th century Europe do we find a widespread decline in
belief in moral purpose among certain intellectuals, even a dogmatic
belief that the most advanced scientific thinking - sometimes regarded
as Marx, Darwin, and Freud - had shown that moral belief was a
delusion.  The evolutionary psychologists have shown (as did Darwin)
that the hunger for moral purpose is as real as is the hunger for
food.  And just as our evolutionarily optimized appetite for food
leads us to eat fats and sugars that are not good for us today, our
appetites for moral purpose have sometimes led us into dangerous moral
diets.

Just when the timeless belief in moral purpose was fading among some
intellectuals, there were violent conflicts between workers' unions,
on the one hand, and business leaders, on the other.  These conflicts
were exploited by intellectuals starved for meaning who believed that
they could create a better world through violent revolutions leading
to an idyllic Marxist communism.  By the 1920s the Marxists had taken
the moral high ground at many universities around the world.  While
there continued to be many noble business leaders who continued to
create and manage companies based on a deeper purpose, by the early
20th century almost no intellectuals were willing to defend them.
Anti-capitalist moral righteousness intimidated all but a very few
defenders of free enterprise into silence.  By the late 1930s, the few
remaining defenders had been effectively marginalized.

Rather than defend the moral purposefulness of free enterprise, as
classical political economy had done, neo-classical economics withdrew
into mathematical formalism and developed the notion that corporations
"maximized profits," an amoral but mathematically convenient notion
that was completely alien to the classical political economy of Adam
Smith and J.S. Mill.  And thus during a period in which we most needed
a moral theory and practice of capitalism, moral perspectives on free
enterprise almost completely vanished from the realm of ideas.  The
universities, widely believed to be temples of learning for the sake
of human advancement, often advanced Marxism, the most lethal moral
ideal the world had yet seen.  Our appetite for moral purpose had led
us grievously astray.

Ironically it was during this period in which defenders of capitalism
based on moral purpose were most needed that our business schools were
founded, almost all of which taught that profit maximization was the
goal of businesses, and which attempted to provide "scientific"
methods for maximizing profits.  This is not to disparage the
excellent technical analyses which have been developed through schools
of business that have, in fact, been very useful.  But it was not
necessary to neglect the moral dimension of business, and it is a
tragedy that it was so neglected.  Thus it came to pass that those
temples of learning were simultaneously advocating destructive
anti-capitalist ideas as well as destructive capitalist ideas based on
the notion that corporations are no more than machines for maximizing
profits.

In response to the generations who have been taught the mistaken
notion of "capitalism as amoral profit maximizer," we have seen an
increase in interest in making business more moral.  Unfortunately, in
the form of Corporate Social Responsibility (CSR) the primary
perspective has been that of the anti-capitalists:  Business is often
perceived as intrinsically guilty, and CSR campaigners sometimes
regard themselves as self-appointed moral police force out to force
business to be moral according to their beliefs.  Again, this is not
to disparage all CSR campaigners, who have often won important
campaigns that have, in fact, made moral improvements in the
functioning of capitalism.  But just as amoral "profit maximization"
was not an ideal, so to the notion that business is ipso facto guilty
is also not an ideal.  It is not true, and the notion of business as
"guilty until proven innocent" will never mobilize a generation to
utilize capitalism to transform the world for the better.

The moral purpose of capitalism has been largely asleep for a hundred
years.  It is time for capitalism to wake up, and become conscious,
more conscious than it has ever been before.  Many of the great
entrepreneurs and inventors of the past - Thomas Edison, Henry Ford,
Alexander Graham Bell, George Westinghouse, Samuel Insull, etc. - were
morally purposeful business leaders.  Unfortunately the intellectuals
were united against them and not enough of their colleagues came out
in their defense, and no one foresaw how close we came to losing the
free enterprise system altogether until it was almost too late.
Moreover the earlier generation of morally purposeful business leaders
were not as sophisticated in their moral entrepreneurship, in their
moral leadership, as they needed to be (for instance, although Ford
really did care about democratizing transportation, and did so, he was
also a bigot).

Thus it is important that the new Conscious Capitalists be more
sophisticated, mature, aware moral entrepreneurs, and use their
enterprises and their abilities to create and lead enterprises in ever
deeper and more morally inspiring ways.  The fact is that free
enterprise is the most powerful tool for human betterment the human
race has ever known.  We need to pick it up and use it consciously.
We need moral purpose and we need the nimble, scaleable, innovative,
versatile power of free enterprise.  We need organizations in which to
work, in which to invest, with which to trade, and from which to
purchase goods and services that are truly deserving of our highest
moral aspirations.

It is natural and good for human beings to want moral purpose, and for
young people to respect, admire, and seek to emulate those individuals
with integrity who exemplify moral purpose.  As business leaders,
business schools, economists, and others who believe in the positive
power of free enterprise increasingly commit to a Conscious Capitalist
model in which the moral purpose of business is central to the life of
every so called "for-profit" corporation, we will see capitalism
increasingly respected as the powerful force for positive change which
it has the power to be.

A parable on the power of purpose:  As a delegate at the U.N.
Commission on the Status of Women, I attended a panel on innovative
ways of financing women's causes.  At one point when the panel was
discussing ways of obtaining funding from corporations, a delegate
from Brazil raised her hand to say that she would never take money
from a corporation because all corporate money was morally tainted.

At that moment I paused to consider the fact that she, and all others
there, clearly respected the U.N.  But what would we think of a
for-profit corporation which had a "Human Rights Advisory Board" that
included many of the worst human rights abusers on earth, that had
"Peacekeeping Forces" that went to developing world countries and
raped the women, and which was involved in a billion dollar oil
corruption scandal involving the leader's son and one of the worst
dictators on earth?  Strictly based on the facts of the case, such a
for-profit corporation would be regarded as a corporate criminal far
more evil than Halliburton or Blackwater.  And yet alongside these and
other grisly facts about the U.N., the U.N. exemplifies some of the
highest aspirations of the human race, as exemplified in the U.N.
Declaration of Human Rights and other U.N. documents.  And to a
remarkable extent aspiration trumps behavior when it comes to public
perception.  Our evolutionary code apparently inclines us to swoon
before moral aspiration much as it causes us to crave sugar and fat.

Hardheaded economists and businessmen may snigger when John and others
talk of "moral purpose" and "Conscious Capitalism."  For those who
would snigger at the real world impact of moral purpose on public
moral regard and reputation, I would have them explain why the U.N. is
regarded around the world as a more positive global moral force than,
say, Johnson & Johnson or EBay.

The fact is that the U.N. is not and never will be capable of making
the U.N. Declaration of Human Rights a reality.  But business is
bringing those goals closer to reality every day.  Conscious
Capitalists need to commit to goals as lofty as those of the U.N.
Declaration of Human Rights - and higher.  A global league of
Conscious Capitalists, with the stated intention of bringing peace and
prosperity to all, and manifesting their intentions with integrity,
could make extraordinary progress towards those goals.

And as millions of our brightest and most ambitious young people pour
into ever more morally committed corporate entities, and as we create
a more conscious operating system for capitalism, we will thereby
create a healthier world with happier people, a world of
morally-inspired enterprises in which profitability is ever more
closely aligned with contribution to the good, the true, and the
beautiful.

Peace,



Michael Strong
 CEO & Chief Visionary Officer
 FLOW, Inc.

P.S.:  For a fabulous account of how our evolutionary mind is confused
by contemporary economies, see Michael Shermer's new book, "The Mind
of the Market."

P.P.S. Don't miss John and the FLOW team at 2008 FreedomFest, July 10
– 12 in Las Vegas.

Most of us have always known this, of course, but Virginia Postrel has a great article at The Atlantic on how scientific evidence has finally convinced hospitals that it is worth their time to begin making hospital rooms beautiful:

Such “evidence-based design,” which draws its principles from controlled studies, is the great hope of professionals who want to upgrade the look and feel of medical centers. Much of this research follows a seminal 1984 Science article by Roger S. Ulrich, now at the Center for Health Systems and Design at Texas A&M. He looked at patients recovering from gallbladder surgery in a hospital that had some rooms overlooking a grove of trees and identical rooms facing a brick wall. The patients were matched to control for characteristics, such as age or obesity, that might influence their recovery. The results were striking. Patients with a view of the trees had shorter hospital stays (7.96 days versus 8.70 days) and required significantly less high-powered, expensive pain medication.

Along similar lines, a 2005 study compared patients recovering from elective spinal surgery whose rooms were on the sunny side of a ward with those on the dimmer side. Those in the sunnier rooms rated their stress and pain lower and took 22 percent less pain medication each hour, incurring only 80 percent of the pain-medication costs of the patients in gloomier rooms. Other studies, with subjects ranging from the severely burned to cancer patients to those receiving painful bronchoscopies, have found that looking at nature images significantly reduces anxiety and increases pain tolerance. Not all distractions are good, however. Ulrich and others have found that inescapable TV broadcasts and “chaotic abstract art” can increase patients’ stress.

This is a great specific example of the phenomena described by Daniel Pink in A Whole New Mind, in which he points out that the future of the U.S. economy will consist largely of making things more beautiful, more comfortable, more empathetic, and more humane.

Dear FLOW Members,

Two Buddhist monks came across a river where a beautiful woman was trying to cross the deep rapids.  The older one picked her up and carried her across the water, gently setting her down on the other side.  That evening when they reached their lodgings, the younger monk chastised his companion, noting that he had violated his vows by touching a woman.  The first monk replied "I set her down on the other side.  You are still carrying her."

Buddhist practice aims at cultivating an inner clarity that is free from impulsiveness and desire.  There are similar strands of thought in the western philosophical tradition; the Platonic Socrates, and later his Stoic followers, similarly sought a life free from a "slavery to the passions."  The Enlightened Buddha in the East, or the Philosopher in the West, both dedicated themselves to a personal discipline of the psyche in which their minds were free from the motivations that come from the neediness of the ego.  One need not believe that the ego is necessarily to be extinguished to agree that the ego ought nonetheless be subject to a discipline that recognizes that our intentionality may have higher goals than the needs of the ego.

Most people associate "unbridled capitalism" with "unbridled egotism" and believe that it is a social system that is driven by greed and vanity, from the capitalist who pursues monetary wealth beyond all measure to the consumer who constantly puts herself in debt to buy the next object she doesn't really need.  Indeed, there are those who believe that capitalism as a system depends on the multiplication of needs, and that if we all developed Buddhist or Stoic wisdom and discipline that it would all come crashing down.

But this understanding of what I will call "the free enterprise system" is as misguided as if we came to believe that the only books were those that encouraged us to covet and hate, ignoring the enormous diversity of written materials.  The free enterprise system is a powerful tool, much as the written word is a powerful tool, and it can be deployed in endlessly diverse ways.  Now that the 20th century bigotries against markets are becoming a thing of the past we are obliged to pick up this tool afresh and discover new and beautiful ways to use it.  Those of us who are still hostile to acts of voluntary exchange have not yet let go of 20th century animosities.

For those of us who are committed to a personal discipline of the ego, and who believe that we will be happier and better people if we train our desire, it can be frustrating to see so many people engaged in such acts of personal indulgence and vanity, many of which will not bring them greater happiness.  Our frustration is apt to grow when we are acutely aware of the enormous human needs of the world's poor, and see such waste of talent and resources as takes place constantly.  When one adds an understanding that there are limited material resources on earth, some find the frustration overwhelming and give themselves over to a life of anger and resentment.

But surely such anger and resentment is not a mark of wisdom.  Once one has set aside such unbridled impulses, how can one then act out of compassion and justice to make a better world?

For me, there are three priorities:

1.  The creation and development of communities of practice in which we may learn to become our best selves day in, day out, for a lifetime.

2.  The implementation of property rights solutions to tragedy of the commons problems so that we no longer need to worry about the problem of environmental sustainability.

3.  Increase economic freedom around the world to the point at which we have seven or eight billion people, all prosperous and freely engaged in fulfilling, peaceful, constructive work.

These are goals that the world's wisdom traditions would largely endorse if they were equipped with adequate intellectual tools.  Unfortunately all too few are exposed to the intellectual tools needed to deploy the free enterprise system to make a better world.  Thus my ongoing attempt to share some beautiful and powerful intellectual tools more broadly so that we may all work together on creating a better world.

There are adults who are spontaneously creating small communities of practice, in their workplaces and in their personal lives, to help them become their best selves.  As adults, we tend to be set in our habits and busy with adult responsibilities, and thus the process of becoming our best selves is a slower and less effective process with adults than it would be with young people.  This is why I spent fifteen years creating schools that served as communities of practice, and why I continue to support anyone who attempts to do the same in K-12 education.  The unfortunate truth is that it is not possible to create lasting communities of practice in government-managed institutions.

Peter Barnes, in Capitalism 3.0, has provided a brilliant first draft of an integrated set of property rights solutions to environmental problems.  If we are able to implement something like Capitalism 3.0 in the coming decades, we will be able to enjoy a world of ever-increasing standard of living without worrying about environmental sustainability.

Through our Peace through Commerce and Empowering Women Entrepreneurs programs I am most focused on communicating the impact of increasing economic freedom.  For some time now I've been focused on creating a prediction market game on economic freedom indices.  In November of 2006 I met with my thesis advisor and economics Nobel laureate Gary Becker to discuss this idea with him, and he agreed that

"The idea of a prediction market in economic freedom indices is interesting and worthy  of exploration.  If such an idea could be made practicable, such a market could have a very positive impact in increasing awareness of economic freedom and thereby improving prospects for long-term growth."

At the time I was thinking more of a commercial market than a game version, and spoke with Leo Melamed, the head of the Chicago Board of Trade.  Leo was intrigued by the idea, but impressed upon me the challenges of creating a successful commercial predictions product (and he has introduced more of them than anyone).

I've thus turned more in the direction of game development, in association with a school-based curriculum, as a more realistic approach to introducing the idea of predicting economic freedom ratings.  While it may at first sound like an odd theme for a game, when I worked in schools I introduced students to stock market games and found that they loved the excitement of trying to out guess the market, and that eventually they became motivated to do research in an attempt to do even better.  In a very different context, a few months ago I discovered realius.com, a real estate prediction market that is based on the idea of fantasy football.  With no cash prizes, Realius has developed an active market among real estate professionals competing to see who can best predict the price at which a given property will sell.  Chuck Teller, the founder, points out that if Realius had been in existence a few years ago it might have prevented the mortgage crisis.

The stakes involved in an economic freedom prediction game are even higher.  Last fall I co-wrote a paper in which I challenged Jeffrey Sachs to a wager:  Let's compare the twenty nations with the highest gains in economic freedom against the twenty nations that receive foreign aid to determine which ones experience the most economic growth in the next twenty years.  After writing that paper, I decided to check the twenty nations with the largest gains in economic freedom in the past ten years, 1995-2005.  Of the 122 nations for which measures are available, the top twenty gainers in economic freedom average rate of growth 2000 - 2005 is 4.2%; this set of nations as a whole averaged growth of 1.7%.

Ah, but statistics are boring.  And yet it turns out that if the entire world had grown at 4.2% instead of 1.7%, by 2006 we would have had an extra $10 trillion in wealth - this is more than five times as much wealth as is generated each year in Africa, and nearly as much as is generated each year in the U.S.  Basically if we increased economic freedom around the world, we could add a U.S. economy to the world every five years.  Moreover poor nations benefit more from a given improvement in economic freedom than do rich nations.

Let's take the case of Malawi, at $750 annual GDP per capita one of the poorest nations on earth.  For 2000-2005, Malawi has grown at a rate of .44% per year.  In 45 years time at this rate of growth, Malawi's GDP per capita would be $914.  At 4.2% annual growth, in 45 years time Malawi's GDP per capita would be $4776.  This is much better.  But the nations with top ten gains in economic freedom (without losing ground in their legal structure) averaged a rate of growth of 6.1%; this rate of growth would result in 45 years in Malawi reaching $10,844, almost where Mexico is today.  Of course China has been growing at or near 10% for some time now; if Malawi could do that for 45 years, they would have a GDP per capita of $54668.  And, lest this seem like the top of possibility, Dubai has averaged rates of growth of 17% for more than fifteen years.  If Malawi could average 17% for 45 years, it would have a GDP per capita of $17,329 in 20 years, $83298 in 30 years, and $877,859 in 45 years.

This may seem absurd, and yet everything about our wealth in the developed world would seem fantastic to anyone living in 1800 or 1900.  Fred Turner, in his wonderful article "Make Everybody Rich," estimates that by 2100 the average family of four around the world will be earning $320,000 annually, with of course much of the population being millionaires and some "poor" families only receiving $100,000 per year in income.

The real task is not to react against these marvelous possibilities; it is to steer them so that they happen more quickly, with less environmental damage, and a deeper fulfillment of human potential, happiness, and well-being.  The numbers are merely numbers; they can represent great ugliness or great beauty.  Ultimately the wealth that will be created, be it ugly wealth or beautiful wealth, will depend on the legal structures within which the billions of acts of creation take place.  At present far too many people are still stuck in a primitive 20th century opposition, either for markets or against them, either for economic freedom or against it, either for economic growth or against it.  The next stage is to transcend the opposition and recognize that the creativity, innovation, and entrepreneurship of seven or eight billion people can be directed in any number of different directions, towards great violence and destruction or towards ever deeper humanity and adventures of the spirit.

Do not cling to the violation of your vows.  Let go of your attachment to the old conflicts, and move forward into our next adventure of the spirit.

Towards peace and prosperity for all,



Michael Strong
CEO & Chief Visionary Officer
FLOW, Inc.

“The Master in the art of living makes little distinction between his work and his play, his labor and his leisure, his mind and his body, his education and his recreation, his love and his religion. He hardly knows which is which. He simply pursues his vision of excellence in whatever he does, leaving others to decide whether he is working or playing. To him he is always doing both.”

Zen Buddhist Text

The quotation above is an excellent statement of one of my ideals as an educator. In addition to mastering the art of living as described above, I would want my students to be complete autodidacts: Capable of learning anything on their own by the time they are 18. They should be polite and respectful, independent and creative.

I believe that most young human beings can be educated in such a way that most young people, even those from the poorest families, could develop abilities that are superior to those of our most capable adults today. As an educator with 15 years experience in innovative education, I am certain that our existing efforts at education are analogous to medicine circa 1500: Primitive.

How could such gains be possible?

To begin with, when I hire teachers, I look for three things: Do they love young people? Can they set boundaries with young people? Are they truly masters in their area of expertise?

If I were allowed to select students, there would be one criterion: Is this person ready to commit him or herself whole-heartedly, heart and soul, to excellence in the chosen course of study?

Then, in a large, diverse market of seekers of excellence, an innovative dynamic among truly committed expert and novice learners would develop, capital would rush in to support research and development, and new ways of learning would be developed that are strictly unimaginable today. As the learning process began offering real results, more people would commit their lives to excellence in the various learning paths being offered.

Note immediately that, despite massive spending on education and participation in education that the description of teachers and students stated above describes less than .0001% of our existing teacher - student interactions. One would have to conduct a very careful search to discover any such interactions in today's world. Perhaps a music student here and a martial arts student there have relationships with teachers similar to that described above. Such simple and obvious pre-requisites to excellence in education are almost non-existent in today's world.

Suppose that a ruler once read a beautiful love story, in which two hearts' longing for each other was at last blissfully relieved when they found each other, consummated their love, and lived happily ever after.

Then suppose, having read this love story, and thus concluding that love was a good thing, this ruler forced everyone in his land to marry immediately. In order to ensure that marriages happened, police would enforce the law. Experts in marriage, who had received licenses from universities in their expertise, trained each participant using a state-approved textbook on marital happiness. Then people were forced together and required to use the "research-driven" techniques for "marital happiness." Worse yet, the "marital happiness" manuals continually emphasized the importance of "love." Individuals were trained in "love" and certified in "love" based on the scores they received on tests. The tests, of course, were based on "research."

People would come to loathe love and marriage. Young people, forced into their "marital happiness" courses, would hate the courses and rebel. While there would be earnest professors doing their best to write good books on "marital happiness," many people would realize that the whole system was a joke. Or, in terms of last Friday's post, it was all crap.

This is precisely where our education system is. Education should be based on love and a commitment to excellence, a longing for the true, the good, and the beautiful. Education should not be a forced marriage supervised by government-licensed experts.

Former communist nations are going through a long, painful process of re-creating the most basic human virtues and civic institutions. If we dismantled our education system, we would have to go through a similar long, painful process of re-creating healthy educational relationships. But it is important to realize that we cannot get to a better place by continuing in our present direction.

No Child Left Behind is a Kafka-esque extension of the insanity of our existing education system. The nightmare would be that, after it fails, the response is to increase control more, with more specified curriculum and more tests and more dishonesty about what is really happening to the hearts and souls of our young.

I await a time when the Berlin wall of government-controlled schooling is finally shattered, and we can begin to share the art of living with millions of young people in honest, straightforward, real relationships.

A new era of human happiness will begin at that point in time.

A California appeals court ruling clamping down on homeschooling by parents without teaching credentials sent shock waves across the state this week, leaving an estimated 166,000 children as possible truants and their parents at risk of prosecution.

The homeschooling movement never saw the case coming.

"At first, there was a sense of, 'No way,' " said homeschool parent Loren Mavromati, a resident of Redondo Beach (Los Angeles County) who is active with a homeschool association. "Then there was a little bit of fear. I think it has moved now into indignation."

The ruling arose from a child welfare dispute between the Los Angeles County Department of Children and Family Services and Philip and Mary Long of Lynwood, who have been homeschooling their eight children. Mary Long is their teacher, but holds no teaching credential.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/07/MNJDVF0F1.DTL

In Germany homeschoolers are routinely imprisoned.

See here as well.

 

 

I recently calculated that the 122 nations ranked by Fraser Index averaged a rate of growth of 1.7% from 2000-2005.  The twenty nations that had the highest gains in economic freedom from 1995-2005 averaged a rate of growth of 4.2%.  If the entire global economy had grown at a rate of 4.2% instead of 1.7% between 2000 and 2005, the world would have an extra $10 trillion in wealth, equal to more than five times the annual income of Africa and almost equal to the $13 trillion U.S. annual economy.

The nations with the top ten gains in economic freedom averaged growth rates of 6.1%.  At this rate of economic growth, by 2006 the world would have had nearly $20 trillion in additional wealth.

Those nations with the largest gains in economic freedom are likely to experience faster rates of economic growth, and the poor will usually benefit.  For example India, the 19th largest gainer in economic freedoms 1995-2005, experienced an average rate of growth of 5.38% in 2000 - 2005.  The McKinsey Quarterly reports that in 1985 93% of the Indian population lived on less than a dollar per day.  By 2005 that had been almost cut in half, down to 54% of the population.  They estimate that 431 million Indians were brought out of severe poverty by means of the economic growth that took place from 1985-2005.  They estimate that if India could achieve an average annual growth rate of 7.1% for the next 20 years, another 465 million would be brought out of extreme poverty.  There are no charities that can bring so many people out of poverty so quickly. 

Each year, tens of millions of Indians are buying their first wristwatch, transistor radio, blender, or bicycle, and feeling a sense of gratitude and satisfaction from these modest gains that most of us will never know.  Read Gurcharan Das' India Unbound for a beautiful description of this transition from an Indian who loves the spiritual India but also knows that her people need material goods to thrive.