Innovators World, Introduction, Overview, Uncategorized

Moral Innovator perspectives on 2016 Presidential Election

If we compare what is happening today to what have happened in history, USA is heading for a Civil War this century unless we collectively take action to protect our democracy.

Humanity has not changed much for 5,000 years. Four communities (Egyptians, Sumerians, Indians, and Chinese) represented over 90% of humanity 5,000 years ago. Egyptians became Christians; Sumerians became Muslims; Indians have been divided by religions, and Chinese remained largely atheists for 5,000 years. Today, Christians, Muslims, Indians and Chinese represent over 90% of humanity.

Among Christians, Catholics was the dominated sect between 1,600 and 1,000 years ago, when the Roman Empire controlled Europe. After the downfall of Western Roman Empire, Orthodox Christians split from the Catholics 1,000 years ago. Orthodox is still the dominant sect in Russia today.

Soon after the Roman Empire was extinguished in the form of Byzantine Empire in 1453, Catholic indulgences, including the infamous Pope Alexander VI who sold the reading of Rosary for a shorter time in purgatory before reaching heaven, led to the Protestant split in 1517 by Martin Luther and John Calvin. Today, our global leaders live in Protestant nations like the USA.

Without imperial influences after 1453, Catholics found an opportunity to sustain prosperity after Isabella of Castile and Ferdinand II of Aragon defeated the Muslim Moors in Granada and paid for the voyage by Christopher Columbus in 1492. It was the same infamous Pope Alexander VI (born in Spain) who drafted the Treaty of Tordesillas in 1493 that gave the world to Spain and Portugal. 20% of treasures extracted (i.e. taken) in North and South America were paid to the Spanish King and Catholics for several centuries. Britain started out as pirates and stole from the Spanish ships loaded with treasures from the Americas. After Britain defeated the Spanish Armada in 1588, British East India Company was formed in 1600, followed by the Dutch East India Company in 1602 to directly compete for global treasures.

For 200 years after the 1588 Armada defeat, Spain (and other Christians) took millions of Africans as slaves to the Americas (that kept the population in Africa the same between 1600 and 1850 while the rest of the world’s population more than doubled). The victims include Native Americans who were almost annihilated. Despite these amoral acts, Spain still lost North America to Protestants.

Spain was left without external sources of wealth. A large wealth gap became apparent that led to the 1936-1939 civil war which was won by Francisco Franco who became a dictator until his death in 1975. King Juan Carlos I succeed Franco and led the Spanish transition to democracy today.

USA became a global leader through industrialization when the cotton gin based economy succeeded with slave labor. We prospered as a munitions supplier in both world wars. However, Korean Armistice, Vietnam War, and the Iraq/Afghanistan conflicts have drained American wealth, and US companies helped Muslims in Saudi Arabia establish ARAMCO and later the OPEC cartel that is transferring an average US$2 trillion/year since 1973. Just like Spain, USA wealth gap has emerged. Ronald Reagan was the first to introduce trickle-down economics, and Donald Trump is a beneficiary of trickle-down economics. There is a large base of less educated Americans who seek opportunities for their own American dreams. By focusing on gun control, we are distracted from the historically low inheritance tax that sustains the wealth gap. If not Donald Trump, there will be a stronger representative similar to Spain’s Francisco Franco. This stronger representative today is Hilary Clinton. We must remain diligent in monitoring her actions, or we will head for another civil war. For 2017, three cheers for our first female President!

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Introduction, Overview

Moral Innovators’ Reality

Moral Innovators balance innovation with integrity, but we live in a real world…

Our reality is that we must make a living, sometimes to support ourselves and our family which require a source of money recognized by society which includes, among other things, a job. If you are among the 1-2 billion humans living in poverty, you have limited choices on what is available to you, with lots of hardship to prevent you from leaving poverty. If you are among the 3-4 billion with some education, there is a better chance to create your dreams. The key is your skills and how the world around you values the skills that you have. There are three categories of skills: Manual (physical), intellectual (mental), and people skills. If you have manual skills, you could be a farmer, street cleaner, factory assembler, auto mechanic, plumber, doctor, soldier, etc. who can command comfortable lifestyles, especially if you have the respect and loyalty of your paying customers. If you have intellectual skills, you could be a scientist, designer (of games, fashions, art, etc), computer programmer, engineer, teacher, marketing strategist, financial controller, lawyers etc. with good chances of commanding comfortable lifestyles when your skills are recognized by others who need teams and groups to deliver value through scales of economy. This is partly because “companies” have processes to produce and/or distribute goods and services that require trained teams of individuals. If you have people skills, you have the ability to formulate communities of people that combine both manual and intellectual skills that ranges from human resources department of companies, psychologist, entrepreneurs, sales, artists, etc. that, together, deliver greater value than any one individual.

We all have various degrees of overlapping (manual, intellectual and people) skills, and we must have language(s), as a minimum, to communicate. In general, the scale for which our skills apply determines the options available to us in our community. What is not within our control is who our parents are.

If you have very wealthy parents, you have more options to pursue your skills. You may not need any skills if you elect to only spend your inheritance, but this is not sustainable unless you have others to re-invest your family inheritance to generate more wealth.

If you have very poor parents, you have very few options to pursue your skills, as you are more likely pressured into a lifetime of menial manual labor not valued by others. The most likely scenario with opportunities is education, if you can survive the period of time you must be educated. Even the best schools today like Princeton University lack socioeconomic diversity. The opportunities are few and far in between. The largest example of success over 4,000 years is the Jewish people who were slaves for hundreds of years to the Egyptians. By creating hope through their unity in religion, their Judaism has transformed their former slave masters into supporters in the forms of Christianity and Islam.

The super majority of us are in the third category where we have supportive parents. It is incumbent upon ourselves to be motivated through structures like the Maslow’s hierarchy (based on a theory proposed by a US psychologist Abraham Maslow (1908-1970)). The more wealth your parents possess, the more opportunities you have to pursue your dreams. The “innovator” part of being a moral innovator is the value you dreams deliver, including being a social entrepreneur. Looking through history, it is the community with large middle class members that sustain healthy economic growth. China had maintained the world’s largest middle class, mostly through family based, self-sustaining small to medium enterprises, that made China among the world’s largest economy for 1800 out of the last 2000 years. USA started the 20th century with anti-trust laws to discourage the super-rich, and had the world’s largest middle class between the years 1950-2000 when companies like Henry Ford’s Ford Motor Company had policies to pay a premium to workers who, in turn, became loyal employees and customers. While globalization has taken a large slice of the US middle class away in the last 40 years, there are still practices like Costco’s policy of not pricing products at more than 15% profit margin that sustains a healthy economic growth rate.

Your reality is what you make of it, within the spectrum of the opportunities available to you. Whatever motivates you, give yourselves sufficient time to create hope within a framework of balancing your values with integrity. Our world will be more harmonious if we remember The Golden Rule as we deliver our dreams to our community.

Our realities are not always fair. Revenge is not the answer, because people will get what they deserve over time, even if it takes multiple lifetimes. Focus on your skills and values through innovations. Don’t be blindsided by your emotions. Make sure The Golden Rule is followed. Preserve USA’s democracy, and don’t let the wealth gap destroy what had been a great society with the world’s largest middle class fueled by The American Dream. Creolize The American Dream with The Chinese Dream, and we can create a better world.

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Overview

What are high priority issues for Moral Innovators today?

While we are guided by our beliefs, please do not let time’s pressure hasten our appropriate actions. Let us act based on knowledge (or beliefs verified with truths). Do not take actions based on beliefs alone because that have led us to conflicts and future problems.

The link to many issues we face today relate to how we view “companies” that started with a history of corruption like the 17th–19th century British East India Company and Dutch East India Company (or VOC). Companies have been risk-sharing entities for investors who focus on higher profits using continuous improvement methods (i.e. innovations). Even before we treated “companies” as legal entities, ancient civilizations had monopoly practices for several thousands of years where the “victims” have been the general public. In the USA, Rockefeller’s Standard Oil Company was broken up 100 years ago. Today, OPEC (as an oligopoly) has been transferring trillions of dollars of wealth to the (mostly Muslim) oil producing nations, and Bill Gates’ Microsoft created the world’s wealthiest person (and now a Foundation that is the largest shareholder of ExxonMobil) for decades. There have not been sufficient considerations for anything not related to generating higher profit which is the difference between sales revenue offset by expenses such as labor, material, and taxes. Higher profit can be achieved by a combination of higher revenues and/or lower expenses.

To generate higher revenues, we sell products supported by advertisement and marketing. For example, Marlboro Man and Virginia Slims encouraged cigarette smoking that we have learned over the last 30 years could be harmful to our health. The Chinese are still smoking 2.3 trillion cigarettes a year, or 8 times that of the USA on a per capita basis (1800/year/person, or 5/day/person). It is important that we organize efforts to fight intentional unethical practices while respecting regional differences.  Instead of confronting the Chinese by imposing ill-defined human rights practices, we could help the Chinese save many more lives by sharing our experience on the future health care burden from smoking.

Let’s address the expenses by their major components:  Labor, Material, and Taxes. 

To reduce labor expenses, we have squeezed the US middle class with alternatives such as globalization which started with manufacturing (and continuing with services today).  The top 1% of Americans has not been affected because 1) they benefit from the resultant higher profits, and 2) the CEOs and a few other executives have not been squeezed.  Let us illustrate with a public company that trades at 10 time Price/Earnings ratio.  The company can transfer an operation (say from USA to China) to release 100 “middle class” US employees at a salary of $40,000 per year and hire 300 Chinese employees at $5,000 per year.  This would save $2.5 million per year for the company, but the CEO gets $25 million credit towards his/her bonus (calculated from $2.5 million per year times the P/E ratio of 10).  The worst part of this scheme is the fact that the CEOs walk away with big severance packages if anything goes wrong. We know that Mr. Akerson left General Motors and the new CEO Ms. Barra is addressing the faulty GM products that have killed customers during Mr. Akerson’s (and his predecessors’) tenure(s).  Usually the beginning of the change of command carries continuous improvement or innovative ideas, until the change of command is no longer new, when the focus turns to the big severance package(s).

Under normal circumstances, there is not much savings on material expenses, especially if we focus on comparable quality of materials.  Often the savings relate to logistics expenses like transportation and customs expenses.  However, the assumption of comparable quality of materials cannot be taken for granted, as there have been false claims to quality (e.g. Chinese baby milk with toxic melamine).

To reduce taxes, there is an army of experts to address a wide variety of tax issues especially for globalized businesses.  This is partly why the manufacturing economy has shifted to the services economy – because logistics, financial reporting, treasury, taxes are all services to support globalization.

Moral Innovators seek knowledge of where we are in the world.  We do the rights things to make the world a better place.  The right thing to do, in this context, is to know this process, and reward appropriate value add contributors.   Should CEOs get credit for higher profits when they are not held responsible for the delivery of higher profits?  Should governments be responsible for the “victims” of achieving higher profits driven by the CEO?  Should governments subsidize failing companies (e.g. GM, Chrysler, Citibank, Carlyle, etc.) when the CEOs continue to receive incentives in the form of bonuses and severance packages?  Can we count on our faith (e.g. US Christians) to deliver the appropriate moral foundation to support doing the right thing?

This process partially explains why the wealth gap in the USA has widened to support the super-wealthy 1% while the middle-class (the 100 jobs eliminated in this illustration) has been squeezed.

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