Introduction, Overview

Moral Innovators perspectives on seeking knowledge through history

There are different levels of understanding the moral innovation framework. At the top level, it is the balance of innovations with morality. This can also be read as continuous improvements with integrity.

It is easy to introduce innovations without a morality balance. iPhone 7 is a continuous improvement over iPhone 6, and the original iPhone was clearly an innovation. The morality balance is more difficult to illustrate because of the multi-cultural complexities. For example, how do we judge the exploitation of the slave-like Chinese laborers as Apple’s vendors/suppliers get 10% profit when Apple’s intellectual property rights command 90% profit? Apple is among the most valuable companies on earth with these profitable products.

Morality was formalized about 2,500 years ago when the global human population reached 100 million. Socrates in Europe, Ashoka in India, and Confucius in China proposed that humans follow societal rules as we encountered more fellow humans. Humanity as a whole began to diverge at that time, mixed with faith and religion. Socrates followers, through the Roman Empire, became today’s monotheists such as Christians and Muslims. Ashoka followers, through the Persian (Muslim) and British/Portuguese (Christian) influences, became henotheists (e.g. Hindu is generally a monotheist religion at the individual level, but compatible with the existence of many other Gods followed by others). Confucius followers, who were taught “we do not know enough about the living, how can we possibly understand the afterlife?” lead the world of mostly atheists around the world.

Christians and Muslims have inherent conflicts in their beliefs of their God being the only God, resulting in many conflicts that include, but not limited to, the Crusades 1,000 years ago. These conflicts probably drove Christians away from the Middle East. 500 years ago, Spanish Pope Alexander VI and the Portuguese claimed possession of the entire earth through the 1493 Tordesillas Treaty, and later the 1529 Zaragoza Treaty, with no input from the Chinese, Indians, Africans or Native Americans. Note the signers of these treaties were the Spanish and Portuguese. Britain, for example, created economic conflicts among Christians when their pirates looted the mostly Spanish treasure fleets collected from the Americas. After the Spanish Armada failed in 1588 to defeat Britain, the emboldened pirates found an innovative path to the treasures through shareholder risk-sharing investments in the concept of “company” that we know today as stock or equity investments. The British East India Company was incorporated in 1600. The Dutch East India Company (aka VOC) was incorporated in 1602.

Without the corporate governance that we know today, both East India Companies were corrupt with unsustainable immoral practices. VOC took Jakarta, Indonesia as headquarters before the corporate charter expired in 1799. The British East India Company lived longer partly because the British government granted (in 1773) monopoly power to trade opium. This was the nadir of human morality. Opium production was introduced to farmers in India and Myanmar (or Burma), and sold into China in exchange for 70,000+ tons of silver and other treasures earned through Silk Road and other trades. China was the world’s largest economy in 1820 with 33% of the Global GDP when the global population reached 1 billion. In other words, China produced goods and services that represented 33% of all goods and services worldwide less than 200 years ago.

As opium was illegal in China, the opium trade led to two opium wars. China lost over 25% of Global GDP between 1840 and 1940. Even though China has grown very fast in the last couple of decades to reach the second largest economy on earth, her share of Global GDP is only 16% today, less than half the size of economy they commanded less than 200 years ago. Using percentage of Global GDP highlights the relative time scale. In absolute scale, the global economy has grown from $600 billion to $41 trillion (1990$ on PPP basis) between 1820 and 2003. Today, USA is the largest economy on earth and commands 17% of Global GDP.

The outcome: Christianity became the most powerful and wealthy community on earth, with about 35% of humanity following Orthodox, Catholic and Protestant bibles. Most Christians are also capitalists.

After the Chinese revolution in 1911 that established the Republic of China, the capitalist European Christians needed another innovative path to accumulate wealth. Between 1915-1920, Britain’s Mark Sykes (1879-1919) and France’s Francois George-Picot (1870-1951) led the European Christians to decide how the Middle East should be carved up after the first world war. In a region already inhabited by Arab Muslims with rapidly developing nationalist aspirations (called the Committee for Union and Progress), a Sykes-Picot agreement was signed in 1916 that promised the same region to Hashimites, Saudis, and the Zionists of Europe. If not for the dissolution of the Committee for Union and Progress in 1918, death of Mark Sykes due to Spanish flu in 1919, and the 1920 Treaty of Sevres between the Allies and Ottoman Empire, the Middle East may be a very different place today.

In 1948, Israel declared independence with the overwhelming support of Christians in an almost exclusively Muslim Middle East. Christians, especially the USA Protestants, average tens of billions of US dollars subsidy every year for nearly 70 years to help the isolated Jews grow in a Muslim world. Christians are not as passionate as the Jews in reclaiming the Jerusalem homeland, but there is a prophecy proclaimed by Abrahamic religions (that include Judaism, Islam, and Christianity) that lead us to an apocalypse. There are irreconcilable differences to impose a Jewish state in the middle of Islam, especially in light of this prophecy. Even with 7 million brave Jews living in Israel today, this population is only comparable to tiny Hong Kong, a Special Administrative Region of China. While Christians are fantastic tourists for the Israeli economy, Jews and Muslims need to return to their moral principles 2,500 years ago that humans must follow societal rules when they encounter fellow humans. Until we have these new societal rules for Jews and Muslims, our world will deteriorate into suicide bombers. The super majority of Americans suffer delays through the airport screenings due to a tiny fraction of potential terrorists, and trillions of dollars wasted down a path of mutual destruction.

In 1973, the fortune turned for hapless Muslims in the Middle East when Organization of Petroleum Exporting Countries (OPEC) established oligopolistic pricing, and an average of $2 trillion US Dollars equivalent per year has moved into the Muslim dominated OPEC world. This is the second largest transfer of wealth among humans, behind the Opium Wars. It should not be surprising that the current terrorists are likely financed by such wealth, and Saudi Arabia (the largest oil producer in OPEC) is sponsoring Wahhabism, an extreme form of Islam, into places like Malaysia and Asia, where most of the Muslims live.

What is illustrated here is the increasing conflicts financed by immoral actions. David Cameron, the former British Prime Minister, was asked in 2010 during a TV interview why India’s Kohinoor Diamond (at 186 carats the world’s largest natural diamond) cannot be returned to India: “If you say yes to one you suddenly find the British Museum would be empty…”

Humanity is projected to reach 10 billion people by the year 2100, less than 85 years from now. If we do not educate our children with a moral innovation framework, the opportunity to achieve a homologous world will likely give way to a self-fulfilled apocalypse prophecy that is being called for by the Abrahamic religions. Will 40% of humanity reflected by the Chinese and the Indians have a choice for their own destiny?

That is the basis for the Moral Innovator motto: Thrive with knowledge of your place in the world. Do the right things and make it better.

Innovators World, Overview

Moral Innovator perspectives on the nexus of for-profit and non-profit companies

In the Capital Region Board of Trade discussions on June 11, 2014, the dialogue between for-profit and non-profit companies focused on the metrics and business models that are often not clearly articulated. Moral Innovators can facilitate a framework for productive dialogues.

Companies, as we know them today, can be traced back to Christopher Columbus. After his first return to Spain in 1493, Pope Alexander VI drafted the Treaty of Tordesillas (and 35 years later added the Treaty of Zaragoza) that basically gave the continents of Africa and Asia to Portugal, and North and South America to Spain (and we know the exceptions are Portugal in Brazil, and Spain in Philippines). Countries outside Portugal and Spain were excluded and needed to find ways to participate. Their innovation was the British East India Company and the Dutch East India Company which were incorporated in 1600 and 1602, respectively. Their owners invested in the risks of exploration in exchange for profit. The company by-laws delegated the delivery of profit responsibility to managers who hired additional workers. To help these companies succeed, the countries of incorporation granted monopoly powers, backed by military forces. Over the next 200+ years, companies delivered profit to the owners, albeit with unsustainable corruption and exploitation. The Jakarta, Indonesia based Dutch East India Company became defunct in 1799. The British East India Company became defunct in 1874, a century after Britain established an opium monopoly in 1773 that led to two Opium Wars in China. With this in mind, we have come a long way towards Corporate Social Responsibility and Sustainability (CSR+S).

For-profit companies can not ignore the profit responsibility to owners who, led by some activists and/or institutional investors like pension funds, are driving “optimal return” over “maximum profit” to shareholders. Tobacco companies have openly displayed the health risks of smoking, in compliance with government regulations. Android® has shown that Windows® can not sustain its near monopoly in PC operating systems. What we have is not perfect, but we are rectifying problems by taking actions. CSR+S are moral obligations backed by resources that define each company’s unique “optimal return” in how social activities improve business performance over time. Ford’s Model T was a superior example of “optimal return” based on paying middle class (instead of minimum) wages that sustained both higher company profits and societal prosperity with a narrower wealth gap. For-profit companies that make known their “optimal return” attributes over time can facilitate interactions with non-profit companies.

The Board of Trade discussions mentioned Capital Region’s 6,500+ non-profit companies (or social enterprises) with niche needs that deliver social benefits. It is important to support these niche needs in ways that for-profit companies can both support and take action within their unique “optimal return” business model. For example, increasing workforce with GED can facilitate productivity improvement training, but requires sponsors with longer time horizon. The societal benefit of a more educated workforce is an additional step removed from “optimal return” unless there is government/other private support with incentives. The entire social entrepreneurship landscape has emerged to demonstrate “optimal return” is better than “maximum profit.” Social enterprises that clearly articulate the value of their niche needs over time in the “optimal return” business model can facilitate interactions with for-profit companies.

Innovators World

Moral Innovators review of events leading up to the USA

Contrary to popular belief, the truth is the fact that Christopher Columbus never discovered USA. The Italian adventurer reached only the Caribbean Islands during his voyage in 1492. Even though he received approval from the Portuguese King for the voyage first, it was funding from the Spanish King that financed his 1492 voyage. It also appears that the Spanish King (Ferdinand the Catholic and his wife Isabella) used his treasures after expelling (The Fall of Granada) the Muslim Moors from Iberia to pay for Columbus’ voyage. The Spanish Inquisition, original started in 1480 to exert social and religious control, led to the Spanish ultimatum in 1501 in Granada to convert to Christianity or be expelled from Iberia. Perhaps credit can be given to the Muslims who facilitated Columbus’ voyage with their funds…

Upon Columbus’ return to Spain with news of the New World, the newly elected Catholic Pope Alexander VI of Spanish descent (who was among the most corrupt Popes in history) drafted the Treaty of Tordesillas (Valladolid Province, Spain) which was signed in 1494 by Portugal’s King John II and Spain’s King Ferdinand II, his wife Isabella and son Prince John to dispel Portugal’s claim to the New World. Territories east of the 370 meridian belonged to Portugal, and west of the meridian to Spain. This meridian crosses the present day Brazil which explains why Brazilians speak Portuguese, and Spanish is spoken elsewhere in Americas. The longest continuously occupied city in the USA is Florida’s St. Augustine, founded in 1565 by Spanish admiral Pedro Menendez de Aviles. The Treaty of Tordesillas was the basis for Spanish Kings to collect 20% royalties on all trades with the Americas. This was an important source of wealth that made Spanish King Philip II one of the wealthiest humans on earth in the last millennium.

Since earth is round, two meridian lines were needed to define an area (or territories). The Treaty of Zaragoza (Aragon, Spain) was signed in 1529 by Portugal’s King John III and Spanish King Charles V that defined Moluccas Antimeridian in Asia as the second line, giving all of Africa and essentially all of Asia to Portugal, even though Portugal did not strongly object to the initial Spanish trading post in Manila, Philippines in 1565. In fact, Philippines was named in honor of the Spanish King Philip II.

Note: Think about what this means. Without any discussions outside Portugal and Spain, the world was divided between them, and the author of the 1494 Treaty of Tordesillas was Pope Alexander VI, who had oversight over all Christians before the 1517 Protestant Reformation. Through these treaties, innovative Christians were the first to declare the world belongs to Christians, without any consideration of non-Christians. It is crystal clear in these treaties that Christians did not follow the Golden Rule: Do unto others what you want others to do unto you.

No one, including Britain and other European Christians, cared at the beginning. It did not surface as a topic of interest until the informal (undeclared) Anglo-Spanish War of 1585-1604 over Christianity: Spain’s Catholic King Philip II believed England’s Protestant Queen (Elizabeth I) was a heretic and unworthy to rule England. In 1588, Britain and Europeans outside Iberia discovered the wealth available in the Americas as they pondered the source of wealth for Spain’s King Phillip II to produce 130 ships and 26,000 sailors and soldiers to invade English from the North (i.e. from Ireland).

The defeat of the Spanish Armada in 1588 had two major consequences:
1. Protestants gained confidence and grew as a major force within Christianity.
2. Britain, France, and Dutch Europeans observed the wealth accumulated by Spain from Americas.

There were many failed attempts to settle in the USA before 1600 by many countries. After 1588, there were more attempts but the risks were too high without government funding. To accumulate sufficient funds to explore the New World, Britain innovatively created the concept of “Company” and established the British East India Company in 1600, allowing multiple investors to accumulate sufficient funds to explore new wealth across the globe. British East India Company was formed to pursue trade with the Americas, but ended up trading mainly in Asia (and ruled India when it received monopoly power to trade in opium which the company taught the Indians in India to produce opium that likely spawned the illicit drug trade worldwide today). Netherlands followed with the Dutch East India Company (or VOC) in 1602 with monopoly colonial powers in Asia. In 1604, France granted monopoly rights of furs to Pierre Dugua Sieur de Monts that led to Canadian settlements like Quebec City in 1607. Britain sent over the first of 50,000 (criminal) convicts after first settling in Virginia’s Jamestown in 1607, before the arrival of the Mayflower in 1620.

It took about 150 years for Britain to impose the Stamp Tax in 1765. It was the hidden and illegal taxes that led to the Boston Tea Party (which was a tax revolt) in 1773 and eventually the US Revolution. It should be highlighted that factors that drove the rapid rise of Islam after its Hijra in 622ce also included high Christian taxes relative to Muslims who also offered higher religious tolerance than Christians. Today, USA is still working with a complicated tax system that has given us the biggest wealth gap ever, with 1% of super-rich Americans accounting for about 50% of all wealth. This is clearly against the referendum that led to the formation of our great nation.

Take this knowledge, do the right things together and make our world a better world.