Innovators World

Moral Innovator view of “Who Stole the American Dream” by Hedrick Smith

Hedrick Smith’s book highlights events in the USA between 1971 and 2011 that ended with a call for change at the grassroots level.  It illustrates the USA perspective within the Moral Innovation framework.

The Moral Innovations framework focuses on 5,000 year evolution of the four ancient civilizations.  Egyptians focused on innovations and evolved through the Roman Empire to become the 2.4 billion Christians today.  USA, with 75% Christian population (both Protestants and Catholics), continues to focus more on innovation in a democratic government.  When USA was born 240 years ago, China was the largest economy on earth with 33% of the global GDP.  Today, USA’s economy is double the size of the #2 China.  As a percentage of global GDP, USA and China together command 33% of the global GDP.

The author presents a logical story of how USA became a global leader by virtue of a vibrant middle class after Henry Ford started to pay his employees sufficiently high wages to command a comfortable living.  This was reinforced by labor unions which have been exempt from anti-trust laws, and thrived through the second world war and the civil rights movement.  Overall, USA was the “land of opportunity” with the most widely shared economic prosperity (to the majority of the US population) and the most affluent middle class of any place on earth.

There was a perfect storm that hit the USA Middle Class from three directions that favor the super-rich 1% of Americans:  1) government, 2) companies that make products, and 3) companies that provide services:

–        There was backlash against the social progress through the 1960s with Civil Rights, Voting Rights and 20 million people march on Earth Day.  The US Chamber of Commerce Lead Counsel and later Supreme Court Justice Lewis Powell woke up Corporate America to lobby in the best interests of the companies, specifically the CEO plus the shareholders of the companies.  This propelled the formation of 2,000+ pro-business entities that support the transfer of trillions of dollars from 99% of Americans to the top 1% super-rich in the form of “reverse Robin Hood” through trickle-down economics in the form of Reagan and Bush tax cuts (e.g. corporate tax decreased from 92% to 35%, preferential capital gains tax of 15% instead of 37% for ordinary income, and estate tax declined from 77% to 55% or lower).  The unlimited funding of the Super-Political Action Committees supported the US$6 billion 2012 political campaigns, down to the level of district gerrymandering where Democrats may win the popular vote, but Republicans would win the congressional districts.  With only 37% of eligible voters voted in the 2010 elections, the “minority tyranny” used filibusters to control the Congress despite a 52 year high of 46 million Americans below the poverty line, and 1% of Americans captured 93% of the nation’s recovery.  In 2013, Ted Cruz’s Tea Party used filibusters to shut-down the government.

–        In terms of product offerings, evidence that USA began to lose its innovation leadership includes the spin-off of the basic research performed by Bell Labs in Murray Hill to Lucent Technologies in 1996 to focus more on profit making.  Two major cost components that affected business profit were pension and health care expenses.  Businesses began to offload pension expenses in the form of 401(k) for employees to manage their own retirements, and Obamacare is beginning to offload healthcare expenses for employees to manage their own health care expenses.  Just as USA started to shift the pension and healthcare expenses, both China and India offered lower cost alternatives to businesses primarily in manufacturing and IT functions, respectively.  They facilitated the CEO decisions to lower cost by laying off high cost USA employees (in salaries, pensions, and healthcare expenses).  This shift meant millions of USA middle class jobs went overseas. For example, Microsoft had 12,000 permanent temporary workers without benefits in the 1990s.  In 2005, 43 million US workers were classified as contingent workers.  The lower employee costs meant higher company profits that CEO reported to shareholders under the façade of globalization.  CEOs were rewarded with high salaries, but more importantly, most of the CEOs compensation were in the form of stock and stock options with preferential capital gains taxation that dominated the wealth accumulated by CEO and shareholders.  With friendly bankruptcy laws that allowed the CEO to continue to work in the company, CEOs took out huge compensation packages no matter what happened – to reorganize, to sell, and to separate from the company. 

–        In terms of service offerings, the mortgage banks, the Rating Agencies (that determine the cost of borrowing based on the risks associated with the debt), and the Federal Reserve Bank enthusiastically supported George Bush’s call to increase home ownership (especially to minorities):  They offered mortgages to middle class Americans who cannot afford them.  The mortgage bankers had no risk because they sold their individual mortgages through two quasi-government entities Freddie Mac and Fannie May who, in turn, sold them to investment bankers and innocent investors who believed these Collateralized Debt Obligations (CDO) were low risk because they had equivalent AAA ratings from the rating agencies.  The 2008 housing bubble meant middle class Americans lost US$5.1 trillion of home equity primarily because the banks offered financing to people who could not afford the homes they purchased.  With government bailouts and support, CEOs took out huge compensation packages no matter what happened – to create the bubble, to solicit bailout from the government, and to tell the world what happened.

These three dimensions highlight the focus on innovations without sufficient consideration to have corresponding appropriate moral standards.  Two other issues were not covered in the book:  1) the valuation of the stock prices have been very subjective, dictated by “financial analysts” that are incentivized by higher valuation of the stocks, and 2) the impact of OPEC oil prices that transferred wealth to OPEC countries and large energy companies and their shareholders.

The use of “company” to build wealth is not new.  To bypass the authority of the Catholic Pope who gave the world to the Spanish and Portuguese in two treaties signed in 1494 and 1529, Britain and Dutch created British East India Company in 1600 and VOC in 1602.  They were both corrupt and vanished, but the British East India Company lasted longer because the British government gave the company monopoly power to trade in opium which led to the century of humiliation of the Chinese.

USA is becoming more like an aristocracy or plutocracy, not a democracy.  Changes will require grassroots organizations to hear the voices of the people, not the lobbyists.  From the Moral Innovator perspective, our ability to change the status quo in the USA will also impact India (the largest democracy on earth), because India has a very difficult task to separate the 1 million super-beings or angels from government decisions.  Without USA and India, we may lose democracy as a form of government on earth.

Innovators World

Voice your opinion when you oberve senseless things before they become Genocide

In 1996 Gregory Stanton, president of Genocide Watch, did a briefing paper called “The 8 Stages of Genocide” at the US Department of State.  He suggested that genocide develops in 8 stages, and all are “predictable but not inexorable”.

This was presented shortly after the Rwanda genocide. The analysis is based on why the genocide occurred. The preventative measures suggested, given the original target audience, were that the US could implement directly or use their influence on other governments to have implemented.




Preventive measures


People are divided into “us and them”.

“The main preventive measure at this early   stage is to develop universal institutions that transcend… divisions.”


“When combined with hatred, symbols may be   forced upon unwilling members of pariah   groups…”

“To combat symbolization, hate symbols can   be legally forbidden as can hate speech”.


“One group denies the humanity of the other   group. Members of it are equated with animals, vermin, insects or diseases.”

“Local and international leaders should   condemn the use of hate speech and make it culturally unacceptable. Leaders   who incite genocide should be banned from international travel and have their   foreign finances frozen.”


“Genocide is always organized… Special   army units or militias are often trained and armed…”

“The U.N. should impose arms embargoes on   governments and citizens of countries involved in genocidal massacres, and   create commissions to investigate violations”


“Hate groups broadcast polarizing propaganda…”

“Prevention may mean security protection   for moderate leaders or assistance to human rights groups… Coups d’état by extremists   should be opposed by international sanctions.”


“Victims are identified and separated out   because of their ethnic or religious identity…”

“At this stage, a Genocide Emergency must
  be declared. …”


“It is “extermination” to the killers   because they do not believe their victims to be fully human.”

“At this stage, only rapid and overwhelming   armed intervention can stop genocide. Real safe areas or refugee escape   corridors should be established with heavily armed international protection.”


“The perpetrators… deny that they   committed any crimes…”

“The response to denial is punishment by an   international tribunal or national courts”


Innovators World

Anti-Semitic does not make sense!

The word Anti-Semitic was coined in 1879 as being Anti-Jewish.

However, Semitic relates to the Semites people, and Semites are offsprings of a person named  Shem, who was an offspring of Noah, from the Noah’s ark fame.  Semites include both Jews and Arabs.  

To make this more clear, assume you are an American.  We all know that American could mean Chinese American, African American, Caucasian American, Indian Americans, etc…  Would it make sense if we arbitrarily define anti-American as anti-Caucasian only?

Henotheist World, Merchants World

How Buddhism fits in the Moral Innovator picture

Buddhism exists in both India and China, even though Buddha himself was born in what is now Nepal.  It is basically a combination of linguistics, psychology, and philosophy.  There is no “God” per se but there are super beings (or some believe the equivalent of angels), and not a single holy script…  The focus is to live a moral life, so the focus is on the “moral” element of the Moral Innovator balance.  The problem is the lack of “innovations” creates an imbalance that is difficult to sustain.

The following is the background and history of Buddhism passing through China and onto Japan:


Buddhism developed from the teachings of Siddhartha Gautama, son of King Suddhodana and Queen Maha Maya (Shakya Clan) who was born 2,500 years ago in (what is now) Nepal.  “Siddhartha” means “he who achieves his aim.”  At first living a life of luxury in three palaces, he had an arranged marriage at 16, bore a son Rahula 13 years later, but left to become a beggar – eventually reaching enlightenment (self- actualization) when he was 35.  He preached that the state of supreme liberation is Nirvana, and focused on the “Four Noble Truths” to remove human suffering. He himself possessed “Ten Characteristics.”  He lived an ascetic life for the next 45 years until his death. 

In terms of writings in China:

Between 265-618ce China was in turmoil and Buddhism penetrated China with the following well known events: Monk Fu Tu Cheng (佛图澄) (232-348ce) established 893 temples, Monk An Dao (道安) (312-385ce)  translated the meaning of Buddhism into books (综理众经目录), Monk Hui Yuan (慧远) (334-416ce) introduced paradise (极乐世界), before Indian Monk Jiu Mo Luo Shen (鳩摩罗什) (343-413ce) preached Buddhism in China between 403-413ce, and Indian Monk Pu Ti Da Mo (菩提达摩) (?-536ce) preached the “quiet self-reflection” (静虑) branch of Buddhism (禪宗).  Around the year 530ce, Buddhism was systemized into a compendium of ten categories.  These were documented in the book “Gao Seng Chuan (高僧传)” by 259ce and “High Monks (高僧)” led by Hui Jiao (慧皎)(497-554ce).

A 5th century book by Bing Song (宋炳) entitled “Treatise on Buddhism (明佛论)” has three quotations from Confucius that make this clear:

 – How can one know the afterlife if the living is not understood? (未知生,安知死?)

 – How can we know events in the afterlife when we have unknown events for the living? (未知事人, 焉知事鬼?)

 – There is no connection between our personality and the heaven. (性与天道,不可得闻)


Buddhism was exported to Japan when Jian Zhen (鉴真)(687-763ce) visited Japan six times to preach Buddhism beginning in 742ce.

In the year 845ce, Tang Dynasty Emperor Wuzong decided that foreign religions were harmful to Chinese society, Buddhism was persecuted along with Zoroastrianism, Nestorian Christianity, Manichaeism, etc…


Introduction, Overview

Response to Garry’s Post on Progress

There is an important story to tell through Moral Innovations, and we need to articulate this story in a way that says we need to change behavior going forward…
Your point of the founding fathers is only 240 years old.  In the Innovators World (from Egyptians through Roman Empire to the Christians that spread westward to the USA), there have been very innovative ways to accumulate wealth without enough consideration for moral standards, going back 5,000 years.  We can use the founding fathers’ control of voting as a vignette, showing an innovative way to exploit others, similar to the Egyptians formalizing slavery of Jews (or actually Canaanites?? because the Jews claim Abraham was the first Jew, and Abraham is only 4,000 years old)…  To your point about needing acres of land to vote, I found the First Supreme Court Chief Justice John Marshall to be incredibly innovative when he used a single case to transfer ALL land in the USA to the Caucasians in the 1823 landmark Johnson v M’Intosh lawsuit (21 U.S. 543 (1823).
If you feel strongly about Tom Wessel’s book, why not incorporate the relevant elements into this dialogue.  The Moral Innovator story on progress is very simple:  Anyone should be given opportunities to have a comfortable lifestyle by working hard and contributing to improvements (this is akin to globalizing our American Dream) as long as he/she has appropriate moral standards not to exploit others.  What has happened hitherto in the Innovator World has been to exploit others like slavery for the Jews that evolved to the Romans expanding their territory by offering bounties from future conquests to recruit soldiers from the conquered territories, then integrated faith when Catholicism was officially recognized as the religion of the Romans in 380ce.  Eventually this led up to extremist events like the Spanish Inquisitions that had slave-like treatment for both native Americans and the African Americans (among the first human rights activist recognized by Caucasians is a Spanish priest who said we should not abuse Native Americans, so he proposed to the Spanish King that slaves should be captured in Africa and moved to the Americas before he rescinded his recommendation just before he died – but by that time it was too late, African slave trade started and the population of the entire African continent stayed the same between 1600 and 1820 when the Chinese coolies started to come from Asia to the Americas…).  Protestant Reformation happened after the Americas had been given to Spain and Portugal by Catholic Pope Alexander VI in 1494.  Once in the Americas, Catholics exploited South America by taking everything back to Europe (including gold, silver, potatoes, etc – there are no native South Americans today who can tell us about South America because everything is coming out of Spanish mouths/stories/books!).  In fact North America was great compared to South America partly because it was the Protestants who established USA and partly because the Caucasians wanted to stay in the USA.  The John Marshall land grab was just their way of saying USA belongs to Caucasians, then the exploitations became simple slavery which, again, was better than what was happening in South America (e.g. the 124 tons of gold which is the largest ransom ever paid, was for the release of the Incas Emperor Atahualpa in 1532 when about 140 Spanish explorers led by Francisco Pizarro took their host as a hostage – then decapitated him after the ransom was paid, even after Atahualpa agreed to be a Catholic!!  The only wish granted Atahualpa was to be buried in Quito, in today’s Ecuador.  By the way, 20% of this ransom was given to the King of Spain…) .  Once USA became a stronger country, Henry Ford created the Middle Class with the Model T which is another very interesting innovation before we had globalization.  After we created a middle class through the 1960s the combination of civil rights and globalization fed well into Hedrick Smith’s book that the theme became “create shareholder value” and “cut and slash to prosperity” which I actually participated in my career and know well how it works.  The cut and slash mentality basically destroyed the middle class, and it did not matter if the middle was black or white, because the wealth changed hands to the investors/shareholders.  Outside the USA, and continuing today, the biggest transfer of wealth ever among humans has been happening with OPEC when TRILLIONS of dollars of wealth changed hands to the top 1% of Muslims, which also helped the related major oil and gas companies to deliver higher profit for shareholders.  There has not been many significant operational value add activities for many decades now.  Microsoft, Google, and the Internet in general are tools to increase productivity and sales.  Tesla, GPS, renewable energy and perhaps fracking are the noticeable operational value add activities.
What is happening in the USA today is the annihilation of the middle class partly because 1) they can not keep up with the rapid change in technologies that increase productivity, and 2) there is an available option to go overseas like China and India.  It was such an easy story to say the salary in the USA is too high and China is much cheaper because the work done in the USA was mundane and in fact could be done better in China and India.  For the middle class USA to survive, values in the form of skills, knowledge or systems processing (e.g. efficiently utilize the internet and application tools) must be demonstrated.  Otherwise, what happened was a perfect storm for globalization and annihilation of the American middle class.
Next, USA must narrow down the wealth gap through a united front of moral innovators who deliver operational value, not just paper profit.  99% of Americans have to come together, study and learn through Moral Innovations that a society can thrive only if there are more than 1% of the people who can defend the moral standards of being Americans.  Outside USA, we need to set an example with China to deliver operational value together.  The Muslims top 1% will become vulnerable when they lose the OPEC oil money, and Indians has to understand democracy can not be effective with a million gods/angels integrated into their governance (their first step towards democracy is separation of church/religion and state).  Over time, India will integrate with the Christians, and Muslims will integrate with the Chinese, after Chinese and Christians (led by Americans) will work together on delivering value together.  By that time, we will all be dead.
So… moral innovators need to know this story, beginning at the high school level in my mind, to learn what they want to do in this world with what moral standards…  We can not expect changes overnight.  Even Martin Luther King Jr. did not push civil rights successfully overnight.
The Moral Innovations framework says human nature has not changed in the last 5,000 years.  What we have are four ancient civilizations evolving with their respective strengths and weaknesses over time.  Egyptians have continued to innovate as they became Christians, Sumerians have continued their belligerence at the top 1% level which is currently financed by OPEC oil as Muslims, Chinese have continued to trade for 5,000 years, and Indians have a mixture through 2,500 years of being partially colonized, ending up with a million gods/angels in the world’s largest democracy. 
Volunteerism, air/water quality, human rights etc are red herring issues because they can not be addressed with the same standard or values across the globe.  China may have destroyed their environment, they need moral innovators to sustain a stronger economy that can also improve the poor environmental quality.  USA’s environmental quality is dying also, especially now with fracking (which is why USA may become an exporter of energy again) and you can tell that via the water quality in West Virginia.  In the Moral Innovation framework, readers have the freedom to improve the environment or regulations. 
Your statement:  “…all organized entities (organic or social) move towards greater complexity…” should be reviewed in light of the following example:  The cut and slash approach was a simple move high cost areas to low cost areas, and shareholders make more money.  It was so simple that everyone understood and supported, and the result was higher stock price, and (Hedrick Smith’s Book says) Al Dunlap made $166,000 every day he was cutting up divisions and people out of his company at Scott Paper before he sold it to Kimberly Clark.  One day, possibly before we die, the stock market will completely crash with more reasonable valuations.  We need to examine how stocks are valued these days…

Introduction, Overview

Remember our moral obligations for the future

When global human population reached about 1 million on earth, Egypt, Sumer, India and China dominated all civilizations 5,000 years ago. Egypt invented the system to enslave fellow humans (Jews) and continued to innovate through the Roman Empire, migrating mostly westward to become the 2.3 billion Christians around the world today. Sumer depleted its farmland and evolved through Babylonia, Amorite, Hittite, Persia and Ottoman, migrating mostly eastward to become the 1.6 billion Muslims around the world today. Africa has been evenly split between Muslim and Christian conquests. India and China, together, had the majority of global population 5,000 years ago and 2,500 years old. When the global human population reached 100 million on earth 2,500 years ago, we all learned the value of morality when Socrates in Europe, Ashoka in India, and Confucius in China all taught us to be moral people.

With the split of India into Pakistan and Bangladesh, plus the birth control efforts in both India and China in the last century, India and China make up only 40% of the global population today. India had been partially colonized for 2,300 years by Muslims, Chinese, and Christians before achieving independence with 1 million gods/angels in 1947, creating the world’s largest democracy. China is the only continuous ancient civilization that has lasted 5,000 years because its focus has been on trade. When global human population reached 1 billion on earth 200 years ago, China became a victim when the Christian dominated Europeans and Americans disregarded their moral obligations and forcibly imposed Opium onto the Chinese against the will of the Chinese government for 100 years. Chinese has ignored their moral obligations to their environment and offered low cost labor to become among the world’s largest economy again, after being among the largest economy in the world for 1,800 out of the last 2,000 years.

Let us not forget our moral obligations again when the global population will reach 10 billion people before the year 2100. Earth will never reach 1 trillion global human population and we will need another world to call “home.” Let us work together to make our current home last longer.

31Dec2013 Humanity Milestones Overview

Overview, Pre ancient civilizations 5,000 years ago

Human Milestones 2 (Homo Sapiens)

These are our milestones after modern humans (Homo Sapiens) emerged 200,000-400,000 years ago. This world evolved around the equator: When we experienced global warming, humans moved away from the equator. When we experienced global cooling (i.e. ice age), humans moved toward the equator. Note that the equator crosses landmass in Africa, Asia, and South America. A much larger rain forest was in Southeast Asia (close the size of the amazon in South America) as recently as 18,000 years ago. Most of the Asian rainforest was submerged when the sea level increased by 400 feet at the end of the most recent ice age 18,000 years ago, isolating many native aboriginals throughout Asia and the Americas.

After being designated the official religion of The Roman Empire in 380ce, Christians became the “kingdom” after the fall of the Byzantines in 1453. Even though the Chinese had superior armada of ships that explored the world at that time, it was the motivated treasure hunting Christians with ocean going ships beginning in 1492 who documented the re-connection with the isolated native aboriginals wherever they visited and extracted treasures, most of the time ignoring their moral obligations. Catholics destroyed MesoAmerican Mayan, Aztec and Incas cultures, while the USA, in a single lawsuit in 1823, declared all land ownership in the USA belong to the explorers, and the native aboriginals became tenants who had to pay rent or move. Between the years 1800 and 2000, the global human population increased from 1 billion to 6.8 billion, or 5.8 billion people. Only 1.8 billion out of this 5.8 billion or 31% were Indians and Chinese. In other words, people of faith (i.e. Christians and Muslims) increased by 4 billion or 69% of all humans in these 200 years.

31Dec2013 Humanity Milestones 2