Of Incentives and Jobs

Remember the early days of the recession and its intensification by the policies of Washington? Remember how the politics of envy ended up causing more job losses as the demagogues in the White House and on Capitol Hill lambasted incentives employers offered to successful employees? Good thing that the politics of envy are now behind us, that we have all grown up and recognized how foolish it all is to feel better by pulling other people down. Then again, maybe my blog post from 2009 still has some relevance today.

Weird things happen when we decide by law who should have jobs and who should not and we order how people and businesses should spend money. I am not referring to the legality of telling people who receive money from the government how to live their lives and run their businesses. I am referring to the wisdom of it. And by “weird” I really mean “bad.”

On Friday a press release came across my desk, issued by seven travel-meeting-event industry trade associations. Their basic message was that the public beating up of companies over the meetings they hold and the incentive programs that they have for employees is killing the travel, tourism, and meeting industry and the people who work in it. They estimate that 200,000 jobs were lost in that industry in 2008, and a larger number of job losses are predicted for 2009.

Even the old communist governments figured out that workers respond to incentives. Under the power of incentives people work harder, smarter, and more creatively. They may even enjoy their work more. Sometimes incentives that take the employee out of the normal routine can be very powerful. If left to their own devices, businesses will experiment with different packages of incentives to guide their employees into the most efficient ways to accomplish company goals and objectives. Will they get it right? Often they will not. When they get it wrong, they try something else.

What is the best set of incentives, and should the incentives include travel and recreation programs? I do not know, and neither do you. No one has enough information, smarts, or involvement to know. You may know what works for you, but are you willing to say that others should be offered the same rewards or that you should be given the same incentive program designed by someone somewhere else or in some other line of work? Everyone meeting company goals gets a set of golf clubs. That may work fine for Harry, but how about for you?

While it may be lots of fun to rant about businesses sending employees to Florida for a weekend, do we have any idea how that might figure into the incentive programs in those businesses? If you take that option away, what other option will work as well or as efficiently? Again, I do not know, and neither do you.

Up until recently, I did not have to know or pretend to know. We left it for businesses and their employees to figure out. In view of the efficiency of our businesses–which efficiency continued to improve and lead the world even in 2008–American businesses have been getting the incentives much more right than wrong. When we decide to make those decisions for other people, especially when we try do so through government force, we can be pretty sure we will get it wrong. Who wants to explain to the 200,000 travel and tourism industry people who are in danger of losing their jobs why businesses should not be holding meetings in Williamsburg or San Antonio or Nashville? Step up now; a frozen turkey if you get it right.

(First published February 8, 2009)

Of Demagogues and Big Problems

One of the common tricks of demagogues, as cheap as it is common, is to denounce in high dander something for being “Big,”—“bad” because it is “Big.” Some of the recent targets have been Big Banks, Big Pharma (the drug companies), Big Oil, Big Insurance, and Big Business in general. The target is apparently chosen for its relation to the prescription that the demagogue already has in mind. Invariably the prescription involves granting more power to the demagogue, sometimes ceded from the freedoms of the targeted Big, but not infrequently taken from the liberty of the people who are somehow harmed by the Big, who are to be somehow made better by being less free.

Obamacare is one example, Big Insurance, Big Pharma, and Big Medicine all denounced to some degree in the effort to generate popular support to pass the legislation. In the end, as more and more people are recognizing, it is individual choice that has been lost, personal freedoms to choose doctors, medical plans, and available treatments (along with substantial sums of money) that have been taken, passed on to big bureaucracies identified by the demagogues.

Demagogues on left and right and even in the middle resort to this device of denouncing Big Bad, because it resonates with many people who do not consider themselves “Big” anything. We all can feel intimidated by something in our lives and experiences bigger than ourselves, making us all potentially susceptible to the demagogue’s pandering. It is also a favorite device of demagogues, because it does not require much thought or creativity to make the anti-Big speech. It seems almost required that the demagogue at some point refer to the Big Target as “Goliath” and modestly identify himself or herself with “David.” That tired jape is now getting to be about 3,000 years old, but demagogues think that their audiences just cannot get enough of it.

To be sure, there are some cases where being big is a good thing and some things that can be too big to be good. It all has to do with why they are big and perhaps how they got that way. Big savings are usually good. The Grand Canyon is big and magnificent, and I would say that the Empire StateBuilding is, too, at least as I behold it. On the other hand, big debts are to be avoided, big pits can be dangerous, and the L Tower in Toronto is an eyesore in my estimation (though I will acknowledge that others could be fond of it).

Government can be too big or too small, depending on what it does with our rights and freedoms. There are governments too small to promote and protect freedom, while there are many—most—that are too big, and ever increasing at the expense of individual rights, freedoms, and opportunities. That includes governments that are big enough to help their cronies become bigger by robbing the competition and the public. Businesses that are big because of government favor would be better for everyone if they lost the government favor and let competition, efficiency, and customer choices determine how big they should be.

Some are just big because they grew that way. Is Microsoft or Apple too big? I do not know, and neither do you. Exposed to the full discipline of the free market they will be the right size, and so will their competitors. What is the right size for banks in the United States? I do not know, and again neither do you nor does anyone else. The more that they are exposed to market forces, the sooner we will get the best answer, which I expect will be along the lines of “many sizes and shapes” in order to match the many sizes and shapes and needs of businesses, families, and individuals who rely on banks for financial services. Free competition in open markets has the power to right size commercial enterprises.

A word of caution. Part of the success of the war on Big consists in making the listeners feel small and helpless—unless rescued and led by the fearless demagogue. Besides belittling most people, the demagogue’s device diverts attention from the fact that just about everyone is part of something Big, a Big that may eventually be the demagogue’s next target. Maybe your church will one day be considered too “Big.” Or maybe the industry in which you happen to work will become a “Big” target, the town or region where you live, your race or your ethnic group, your savings and investments, the cars or trucks that you drive, your appetite, your use of water, the size of the lot of your house, the wealth of your nation. All of these, and many others, have already been used by demagogues in their Big harangues. The demagogue’s insatiable appetite for power never has enough targets. He or she is always looking for more.

Sometimes there is a kernel of something genuinely amiss in the demagogue’s Big complaint. Often, when you boil down the genuine substance of any of the complaints to the hard facts, it is hard to discover what is the Big Deal—at least in the problem. The Big Deal is to be found in the solution, which is what the demagogue is really after. Were the Popes in Rome really controlling the lives and governments of England in the time of Henry VIII? No, but the solution of confiscating Catholic Church properties and awarding them to the King’s cronies was a very Big Deal. The Nazi demagogues in Germany played the same game with their own people, the German Jews, and with their property and possessions.

The demagogue’s solutions, resting upon emotion and panic, seldom solve anything and often lead to more problems. The Climate Wars—one year the coming ice age, the next year global warming, today just climate “change”—is an example we have all seen unfold, inflicting untold billions of dollars of costs while enriching favored cronies, but which in even the most enthusiastic promises of the demagogues will do little to affect the climate in reality in our lifetimes.

The next time you hear a public figure fume about something being Big, carefully inquire into and focus upon what he or she is after. You may be a target just Big enough.

Of Predictions and Prophecies

Two dangers to which members of our society—and perhaps members of many another society—have been prone is the eagerness to know the future, and dismay and disillusionment when the reality of the future does not play out as expected. That makes predictors of the future in high demand and always at risk.

Experience also teaches us that most predictors of the future do not know what they are talking about and are highly susceptible to failure. That probably explains why the oracles of history and modernity are sphinx-like in their pronouncements, offering up vague prognostications whose insightful value can only be appreciated after the ensuing events occur and are appropriately explained—or explained away.

In modern times our most prolific prognosticators are sports-wizards who tell you before the season begins and as it evolves who will be the champions and who the losers. Not far behind are the political experts who make a living pronouncing who will win in the next elections, hoping greatly that their predictions will take the energy out of the doomed candidates and make the prophecy self-fulfilling. Also high on the list in recent decades are the economic gurus who predict with assurance and precision everything from jobless numbers to economic growth to interest rates.

Some of these last are actually becoming reliable after a sort in terms of how consistently wrong they are. An oft-cited economist from Standard and Poors comes to mind, who you can now generally count on getting his jobless predictions backwards. I am reminded of Raymond F. DeVoe, Jr., who generously remarked that, “Economists use decimals in their forecasts to show that they have a sense of humor.” (Raymond F. DeVoe, Jr., The DeVoe Report, February 7, 1996) Economists love to produce charts with erratic lines displaying the recorded past and smooth lines presenting their forecasts. These are helpful in that you can be sure that the future will look nothing like the lines of predicted future performance. It would be wise to keep in mind the observation of Alex Pollock concerning the recent recession, “Among the many losses imposed by the bubble is a well-deserved loss of credibility on the part of central bankers and economists.” (Alex Pollock, “2007 Bust: How Could They Not Have Known?”, Real Clear Markets, September 21, 2011)

All of this is not to say that it is impossible to predict the future. There are certain trends that can be predicted within tolerable levels of probability, such as that flooding the money supply will usually produce inflation, that you get less of what you tax (be that income, jobs, investment, or healthcare, for example), or that the Yankees will before long win another World Series.

Aside from acting upon reasonable probabilities based upon experience, good data, and rational analysis, it is safe to say that man cannot reliably predict the future. We can learn from history, because although history never repeats itself it can teach us lessons. In the world of human action there is nothing new that is wholly new. All of this, however, is in the realm of managing risks and probabilities, something that we all have to do every day just in order to act. Nevertheless, while we expect certain things to happen, none of us on our own can know what will happen.

God can and does know. He sees it all, and He is never surprised. God’s omniscience is not limited by time or place. Moreover, our loving and generous Father shares or withholds from us knowledge of the future, depending upon our need. God has shared with me enough glimpses of the future to help me prepare and be prepared for when the events arrived. Yet many is the difficult experience of life that I am glad to have had and learned and grown from, looking at the experience in the past, that I am not sure that I could have mustered the courage to face had I known with any clarity that it was coming. God withholds from most of us knowledge of our manner of death, all the while equipping us with the knowledge that we need in order to live well.

There is much that God does want us to know about the future, our individual future as well as mankind’s future, to aid us in our daily living, to give purpose and direction to daily activities that might otherwise seem pointless or even hopeless, or to elicit from us extra efforts and undiscovered talents. From the beginning of time our Father has sent to us prophets, fellow humans like ourselves, to whom He has revealed prophecies important to His children. The prophet Isaiah brought comfort to Ahaz, the king of Judah, when his land was invaded. He prophesied that the invasion would fail and to encourage him offered the sign of the coming of the Messiah and His miraculous virgin birth (see Isaiah 7:14-16).

Amos was another such prophet, who declared, “Surely the Lord God will do nothing, but he revealeth his secret unto his servants the prophets.” (Amos 3:7) That is why Jesus Christ has sent us new apostles and prophets in our day, to inspire, counsel, comfort, uplift, and in many ways aid us by divine guidance in the difficult times in which people always live, we no less than God’s children in the past.

We need, however, to keep in mind the point that while God’s prophecies are reliable and never fail our loving Father is careful to tell us what we need while withholding what were better that we not yet know. That can leave room for misinterpreting God’s prophecies and assigning to them meanings and dressing them up with interpretations not included by God in the vision. When the prophecy is fulfilled in ways that vary from our own predictions and expectations it is not the prophecy of God that has failed but rather our own unwarranted assumptions.

Throughout ancient scriptures there were many prophecies of Christ’s mortal ministry as well as of His triumphal second coming. Many have confused the two, and such confusion led more than some to reject the Messiah when He walked among them in the land of Judea and Galilee. Jesus Christ fulfilled all that was prophesied for thousands of years about His mortal ministry, including His sacrifice and death. Yet many—but not all—eyes and ears were closed to Jesus because He did not fulfill mistaken expectations and traditions. A similar pattern is playing out today as the hour approaches for the Savior’s return.

Inasmuch as God sees all, there is much that He sees and knows that He could not possibly explain to men bounded by the extent of their own experiences. How would God explain to an ancient people some of the most common of daily happenings in our technological world? And certainly we are as far removed from the realities of heavenly experience as the ancients were from our daily 21st century experience. That is to say that God’s prophecies can be fulfilled in ways far beyond human expectation or even imaginings prior to their fulfillment.

When I was a missionary in 1979, I knew of the prophecy that the gospel of Jesus Christ would be preached to all nations, and I firmly believed it. Yet I did not have the slightest clue as to how missionaries would ever be allowed beyond the Iron Curtain. Little did I know that in less than a decade those barriers would come down peacefully and that the Soviet Union itself would cease to exist. Knowing of the prophecy allowed many to prepare. That preparation did not require knowledge of how God would work upon the nations to bring about His purposes.

I thank God for His ancient and modern prophets, and for the prophecies He has shared and continues to reveal, great and small, glorious and helpful. As the prophecies unfold, my plan is to adjust my expectations to the unfolding reality of God’s work and take comfort in knowing that all will be fulfilled as God continues to reveal to those who will listen everything that they will need to know.

(First published April 7, 2013)

Of Minorities and Society

The saddest chapters of history chronicle the breakdown of human society. Rights are abused, the innocent—if innocence is allowed to exist—are trampled. Poverty, hatred, violence, and uncontrolled human passion prevail. Destruction and degradation, physical and moral, replace human progress.

All society, except that of master to slave, relies upon an element of free association. Societies may have more or less elements of coercion as well, but it is the element of free association that allows the society to continue, that motivates its members to acquiesce in or even encourage the society’s continuation. Free, voluntary association is what gives a society its legitimacy. Without it, there is no society, just a group of people ruled by one coterie of thugs or another.

Cooperation in society cannot be taken for granted. When it is, when free cooperation, instead of being nurtured and encouraged, is replaced by coercive rules and compulsion, particularly rules and compulsion designed to benefit some at the expense of others, society declines, people interact more by will of others than by their own volition. With time either the situation is redressed or the society disintegrates, often to be conquered from the outside when its internal strength has turned to weakness.

In its latter years imperial China was prey to numerous foreign incursions because its society was a mighty empty shell, old traditions surrounding an empire of competing warlords. Ancient Greece, which twice when united proved too much for the Persian empire, became relatively easy prey to the Romans after the ties of Greek society had become tired and weak. Rome, in its turn, after a thousand years, was enormously wealthy but mightily weak in the internal strength to repel the roaming barbarians, vibrant societies powerful in their own internal cohesion. Much of Africa, Asia, and Latin America today remains mired in poverty from the inability of relatively young countries to develop cooperative societies that encourage the generation of wealth and its application to promote prosperity for the present and for the future.

With cooperation at the core of successful society, one would think that democracies must be the most successful. History records otherwise. There are no historical examples of a successful democracy, at least not one that lasted for long enough to matter. Like a match set to paper, democracies flare up brightly into power and glory but all too soon die away to ashes.

The problem with democracies has been that all too quickly the majority in the democracy learns that it can become wealthy by robbing the minority, under camouflage of statutes and government. That only lasts until either the minority successfully rebels, becomes a majority in its turn, or the wealth of the minority is exhausted. In reaction, the majority may seek to preserve its advantages by yielding to a dictator—a “mouth” for the majority—to govern in the name of the majority to discern and express its will. Few of these dictators have resisted the temptation to wear the mask of the majority to govern for the benefit of themselves and their cronies. That has been the case for every communist government, without exception.

But, is it not right and just for the majority to prevail? Perhaps, but to prevail over what? Everything? Consider: if majority rule is applied to deprive the minority of life, liberty, and the pursuit of happiness, why should the minority cooperate? All that such society offers them is slavery, unrequited labor and service to fill another’s belly and pockets. In a pure democracy, there is no check on majority avarice, no refuge for the minority. The majority must always have its way.

Republics, however, are built upon a foundation of minority rights. Republican governments are granted only limited powers, exercised by representatives of the people, within boundaries beyond which the government may not go. A written constitution serves to enshrine and strengthen those rights against violation by the majority. The system gives a stake to all—not just the current rulers—in the continuation and strengthening of the society. No democracy, hereditary monarchy, or dictatorship can provide that.

In a nation as great and diverse as the United States everyone is part of a minority. Whether we consider age, ethnic background, religion, geography, culture, profession, or a multitude of other distinctions, we are a host of minorities. We can only come together and remain as a nation, strong and vibrant, if we are confident of protection in our minority rights, for protecting minority rights in America means protecting everyone’s rights. That is why the Founders proposed and the nation embraced a Republic formed on a federal structure of divided and limited government.

In that context, what are we to make of the current direction of American society? Are we preserving the Republic? Does our society feel like it is coming together? Recent public opinion polls find that more than 60% of Americans believe the nation to be going in the wrong direction. In another poll, a mere 22% believe that the current government rules with the consent of the governed.

What is the national political leadership doing about this? We have a President who aggressively pursues a variety of programs that have in common the taking of wealth from one minority segment of the nation to reward others. These wealth transfers are lionized for the undenied purpose of political and electoral advantage for the President and his supporters.

You will recognize the pattern. A crisis is discovered by the President, and an industry or group is demonized in public speeches and echoed in the establishment media as causing the problem and/or standing in the way of its solution. A plan is announced that involves confiscations from the demonized industry or group to fund benefices bestowed on Administration favorites.

Consider a few examples of many. Global warming is hailed as an imminent crisis with disastrous consequences; the coal, oil, and gas industries are identified as the foes of progress; and a variety of taxes and other restrictive policies are proposed, together with planned subsidies for businesses and companies favored by the White House. Banks are declared to be the nefarious forces behind the recent recession, new laws and regulations are applied that confiscate billions of dollars from the industry, much of which is then channeled to hedge funds and other political allies of the administration. Some millions of people are discovered to be without health insurance, doctors and the health insurance industry—among others—are fingered as being at the root of the problem, so a major overhaul of the entire structure of the health system is enacted that favors some at the expense of others. Administration cronies receive lucrative contracts to develop and administer the new system. There are many other examples, large and small, in education, welfare, housing, transportation, law enforcement, and many other government programs.

Is there any wonder that there is gridlock in the national government, when policy after policy is aimed at transferring wealth from some to reward others? Where is the room for cooperation and compromise, when the issue is how much of your family’s wealth is to be taken and given to someone else? The Roman Republic fell into gridlock after decades of appeals to mass acclaim for schemes of popular distribution of public plunder. It ended in the triumph of the Caesars, and later their eventual fall to the barbarians. It is perilous to abuse social comity.

President Obama has announced the transfer of wealth to be the chief focus for the remaining three years of his administration. Can our society weather that?

Of Democracies and Demagogues

The demagogue has ever been the bane of democracies. By definition, democracies rest upon the choices of the people. When wisdom guides, democracies prosper. As history shows, wisdom does not always prevail, and it never does when demagogues do. Since the demagogue seeks his own power by taking power from others, once the people give him their voice they will be hard-pressed to get their power back; the democracy deteriorates into dictatorship, invoked in the name but never the reality of the rights of the people.

Why would a free people yield their power to the tyranny of the demagogue? It is not reasonable to place your own hands and feet in fetters. In every successful democracy there is a balance between reason and emotion. Rather than advise wisdom, demagogues appeal to the basest popular emotions to overcome reason. American Founder, James Madison, drawing lessons from the best known democracy of history, the democracy of Athens, warned Americans of the danger:

In all very numerous assemblies, of whatever characters composed, passion never fails to wrest the scepter from reason. Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.
(James Madison, Federalist no. 55, as quoted in John Samples, “James Madison’s Vision of Liberty,” Cato Policy Report, Vol.XXIII No.2, March/April 2001, p.12)

Madison recognized that in groups fiery emotion can make for a more persuasive pitch than cooler reason can. He recommended the Constitution as a defense against demagogues, a structure of fundamental limitations on government and against those who would seek to govern by preying upon the passions of the people. The formula has worked and the Constitution has held—against many trials, including a Civil War—for more than 200 years.

The typical demagogue is a forceful speaker who seeks power by stirring up the people, whom he sees as masses to be manipulated and managed rather than as a body politic of reasonable individuals. It does not particularly matter which emotions are invoked against reason; the most successful demagogues draw upon a variety. Perhaps the emotion most powerful to the ends of the demagogue is fear, but he will also use hatred, avarice, envy, sorrow, vanity, vengeance, vainglory, among others. He will even try to invoke love, though love is hard to make compatible with the demagogue’s message of contention, but it can be used to garner sympathy and to get people to let down their guard against an appeal to baser emotions.

Are Americans and the American constitutional democracy perpetually proof against the demagoguery that has destroyed democracies before? The Founders did not think so. A popular watch phrase among them was, “eternal vigilance is the price we pay for liberty”. They were referring more to internal dangers than dangers from foreign enemies.

How do we keep watch on the threshold of the 21st Century? Here are ten tests to help unmask the demagogue:

• He gives powerful, emotional speeches, as public speaking is one of his most powerful tools. “Facts” will usually play a minor role in the speech, and when used will often either be half-truths or outright lies, sometimes very big lies with passionate appeal.

• As discussed, emotion rather than reason predominates in his arguments, with fear the most prevalent emotion.

• He conjures up apocalyptic dangers and manipulates crises (and creates them when none are readily available). The sky seems to be always about to fall.

• Riding on the wave of crisis, he will offer sweeping “action plans” that would cede to him major powers and authorities and push aside sources of opposition. “Forward” is the frequent cry shouted to drown out objections, “the debate is over.” (In a real democracy, can the debate ever be “over”?)

• He dishonors the Constitution and violates it without regret; the Constitution and demagoguery are incompatible. Neither can survive while the other prospers, to paraphrase J.K. Rowling’s Harry Potter formula for her fictional demagogue.

• He accuses others of employing his own despicable tactics. In order to create fog and camouflage, and blunt criticism of his own actions, the demagogue will often claim opponents are lying, fomenting contention, engaging in petty partisanship, and so on, all the while employing those tactics himself. Note that the accusations will usually employ an appeal to sentiment.

• He points to enemies of the people, enemies that his plans will vanquish. These enemies are usually chosen to evoke emotion, such as “big business” to foster fear, “the rich” to stir envy, race or ethnic divisions to feed hate.

• He calls for unity while proposing plans that divide the nation, opponents of his plans being cast as those who would seek to divide a nation that would be unified by agreeing with him. Issues are chosen that find and feed emotional fissures in public opinion. Most effective, the demagogue will propose to take something of value from a group in a minority and “share” it with the group whose favor he seeks, such as targeted taxes or confiscations to provide some popular benefit.

• Following on that point, he develops classes of supporters dependent upon what he promises to give them from the government, benefits that will need his continued care to be sustained. That is what lies at the core of the difficulty in fixing problems with welfare, Medicare, and Social Security, and why the demagogues have a field day when anyone offers reasonable proposals to deal with these very real issues.

• He hates a free and independent press that raises objections of fact and evidence to challenge the emotional appeal, but he loves an obliging press that magnifies his message and drowns out dissident appeals to reason.

It is not hard to recognize demagogues among us today appealing for ascendancy. Democracy in our day demands that we retain our freedom and that we do not yield. More than our freedom is in the balance, but our freedom is in the balance.

(First published August 12, 2012)