Honor

“That Makes Me Smart”

“Mr. Trump is a highly-skilled businessman who has a fiduciary responsibility to his business, his family and his employees to pay no more tax than legally required.”-Statement by the Trump campaign.

I have not been posting here as much as usual because I have been hard at work completing a book about a circle of friends who lived in the Victorian and Edwardian era. Their culture was still much more focused on “honor” than “success.” (This sent them to the libel courts in foolish attempts to preserve their reputations on a regular basis.)

Aristocrats were, of course, entitled and out of touch with the needs of the working class. Yet they did have an ideal of “noblesse oblige,” that is to say, if God favored you by allowing you to be born Lord Wibblebottom of Wembley then this fortune came with a responsibility to society and to those who were less fortunate. The sense of duty and honor was positively fatal to the aristocracy during World War I when so many sons were killed in battle. There was no question that a man had a duty to defend his country. Nobles did not always live up to this ideal, nor were they always aware of their class assumptions, but at least the ideal existed.

In the rarefied air of today’s super rich this ideal is not even present. People like Donald Trump use the language of duty and honor, as in the Trump campaign’s “fiduciary duty,” but “duty” includes no obligation to the larger society whatsoever.

A couple of points, there is no “fiduciary duty” to avoid paying taxes. A 2013 article in The Guardian notes:

Farrer & Co was commissioned to look at the issue by tax justice commissioners who fear executives are trying to justify tax avoidance on the grounds that their priority is to enhance shareholder returns.

The legal assessment from Farrer & Co, which numbers the Queen among its clients, states: “It is not possible to construe a director’s duty to promote the success of the company as constituting a positive duty to avoid tax.”

Farrer says company directors have a wide discretion when calculating the social impact of their decisions. If they choose to pay tax responsibly, they would in fact be protected by the applicable law rather than at risk of liability, it explains.

It seems amazing that this should even be a question. What is fascinating about the 2013 article is that it quotes a representative who says executives “are being told by their tax advisers that they have a duty to adopt anti-social tax measures.”

Think about this for a moment. A duty– a moral obligation– not to contribute to your country.

The idea that it is a moral obligation to avoid taxes is related to another myth that has taken hold of our discourse, the idea that the CEO of a company is morally bound to focus on nothing but maximizing shareholder value.  Yves Smith wrote in Naked Capitalism:

…that board and managements are somehow obligated to “maximize shareholder value” is patently false. Legally, shareholders’ equity is a residual claim, inferior to all other obligations. Boards and management are required to satisfy all of the company’s commitments, which include payments to vendors (including employees), satisfying product warranties, paying various creditors, paying taxes, and meeting various regulatory requirements (including workplace and product safety rules and environmental regulations)…

this idea did not come out of legal analysis, changes in regulation, or court decisions. It was simply an academic theory that went mainstream. And to add insult to injury, the version of the Jensen formula that became popular was its worst possible embodiment.

And as John Kay has stressed, when companies try to “maximize shareholder value,” they don’t succeed

the most profitable companies are not the most profit-oriented…In their 2002 book, Built to Last: Successful Habits of Visionary Companies, Jim Collins and Jerry Porras compared outstanding companies with adequate but less remarkable companies with similar operations…in each case: the company that put more emphasis on profit in its declaration of objectives was the less profitable in its financial statements….When a corporation becomes financialized in this way, the top executives no longer concern themselves with investing in the productive capabilities of employees, the foundation for rising living standards. Instead they become focused on generating financial profits that can justify ever higher stock prices – in large part because, through their stock-based compensation, high stock prices translate into megabucks for these corporate executives themselves.

The Trump campaign has gone even a step further with this, making the case that Trump has a duty to avoid paying personal taxes. This is framed as a responsibility to his family. Imagine if you were to try to make the case that you were not going to pay your income tax because you have a duty to your family to provide them with more money?

My interest in this is in how language is used. We use a different standard for middle class and upper class individuals when we talk about income. Trump has profits. Profits are good because they fuel the economy and create jobs. You have savings. Savings are bad because they show a lack of consumer confidence. In both cases the words refer to money that is being hoarded for future personal use.

Then there is the word “responsibility.” I would like to go back to something I said on this subject in 2013 (you can read the full article via the link above):

…Asked what “Thatcherism” was he said, and I’m paraphrasing, Thatcherism was not a political philosophy, it was a way of thinking.  Thatcher, he said, stood for “responsibility.”

I was thinking about this and it occurred to me that this is not a completed concept.  You can’t stand for “responsibility” you have to finish the sentence.  Responsibility to what?

I got to thinking about classical literature and all of those tales about duty and honor.  I thought of something David Denby wrote about the Iliad in Great Books, “Accepting death in battle as inevitable, the Greek and Trojan aristocrats of the Iliad experience the world not as pleasant or unpleasant, not as good and evil, but as glorious or shameful.”

sing the world “responsibility” without saying “to what” calls these types of commitments to mind.  It calls to mind the responsibility of a parent to child.

Yet when I think of Thatcher and Reagan it is a different kind of “responsibility” that comes to mind.  This is often phrased as “personal responsibility.”  It means that each person should take control of his own life, pull himself up by his bootstraps and make his own way. As the name suggests “personal responsibility” is actually a limiting of responsibility from society as a whole to one person.  I am responsible for myself, you are responsible for yourself…

Pulling yourself up by your bootstraps is empowering when it means you have the opportunity to break out of rigid social hierarchies.  It is less empowering when it is used to explain why your boss does not have any responsibility to you.  “It is my responsibility to reduce costs and make the largest profits possible so that I can do my duty and create jobs.  It is not my responsibility to ensure that those jobs have living wages.”

Many of the super-wealthy got that way and remain that way by shielding themselves from personal responsibility while at the same time using the language of personal responsibility to justify not participating in the social contact that binds the rest of us.

The article linked above talks about and Wake Forest Law Review by Brent T. White of the University of Arizona that discusses how middle class borrowers were disadvantaged in the crash of 2008 because we held on to old concepts of honor and duty, which included paying mortgages even when underwater. “Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility.”

White called this, in his academic parlance, “norm asymmetry.” What it means in layman’s terms is that most of us feel honor bound to pay our bills, and to avoid taking advantage of the system. (For example millions of people who are eligible for food stamps do not take them as a point of pride and a belief in the virtue of self-reliance.)

If using every advantage the system can provide is, as Trump suggests, “smart,” then those proud people are, it seems, “stupid.”

We, every day Americans, are proud of these virtues. We are proud that we respect the system, work hard and “play by the rules.” Words like “duty” and “responsibility” are meaningful to us.

But if “responsibility” when I use it means I have a responsibility to be contributing citizen, and “responsibility” when you use it means “every man for himself,” then we are not having the same conversation.

In an era when most members of congress are millionaires, and most of us are not, I think it is worth stopping and asking, when a politician uses a word like “responsibility” if he is really speaking the same language.

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The Happy End vs. The Noble End III: Navy Seal Edition

A while back I wrote a pair of articles on “The Happy End vs. The Noble End.”  The first article discussed our preference for endings in which the main character emerges victorious compared to the popular 19th Century ending in which the hero’s good deeds went unrewarded and unknown.

I wrote in the first article:

The theme of nobility conducted in secret was popular a century ago. It doesn’t sit well with us now. It seems to fly in the face of our notion of a just world. At least this is the conventional wisdom about what audiences want.

We have occasional glimpses of noble self-sacrifice. Action movies often feature a secondary character who fills that role. Michelle Rodriguez’s role in Avatar, Trudy Cachon, comes to mind, but the film does not make her crisis of conscience central and her death for a greater good is in support of the real business of allowing the heroes pummel the bad guys and save the day.

(Incidentally, while we’re talking about Trudy Cachon taking the fall so our hero can save the day, you might want to read about a couple of TV/Movie tropes. “Black Dude Dies First” and “Vasquez Always Dies.”)

In the follow up article on the topic, I talked about how we are now living in what one cultural historian calls “The Culture of Personality” as contrasted with the 19th Century “Culture of Character.”  Susan Cain, in her book Quiet, described this shift:

In the Culture of Character, the ideal self was serious, disciplined, and honorable. What counted was not so much the impression one made in public as how one behaved in private. The word personality didn’t exist in English until the eighteenth century, and the idea of “having a good personality” was not widespread until the twentieth. But when they embraced the Culture of Personality, Americans started to focus on how others perceived them. They became captivated by people who were bold and entertaining….

I concluded:

The ideal hero has changed as well. The physical laborer owned his inner world, as did his hero. The service worker gets things by manipulating the impression he makes on people in the outer world. His hero acts in this realm and must win in this realm. In the culture of personality, what is not apparent to the outer world might as well not exist. If good intentions do not yield good results– directly for the person who is the viewpoint character– what is the point? We can’t abide by a story like Edith Wharton’s House of Mirth where the main character’s self-sacrifice is a secret shared only with the reader. We may not change the story to the extent that Lily Bart lives happily ever after, but in the modern film version we at least have to see that someone in her world learns what she did.

So building a “personality” and getting credit for your good deeds are matters of survival in the attention economy.

We are seeing a real world demonstration of the effects of these narratives among members of the military. In the past few weeks a couple of members of the Navy Seals have gone on record claiming to be the man who pulled the trigger and killed Osama Bin Laden.

The publicity seeking among the ranks of Seal Team Six has led Rear Adm. Brian Losey to write a letter reminding the elite forces that it is not part of their culture to take credit or seek the limelight.  As reported in the Navy Times:

“At Naval Special Warfare’s core is the SEAL ethos,” according to the letter, which was obtained by Navy Times. “A critical tenant of our ethos is ‘I do not advertise the nature of my work, nor seek recognition for my actions.’ Our ethos is a life-long commitment and obligation, both in and out of the service. Violators of our ethos are neither teammates in good standing, nor teammates who represent Naval Special Warfare.”

…“We will not abide willful or selfish disregard for our core values in return for public notoriety and financial gain, which only diminishes otherwise honorable service, courage and sacrifice,” the letter says. “Our credibility as a premier fighting force is forged in this sacrifice and has been accomplished with honor, as well as humility.”

Yet our culture does not tell the stories of those who sacrifice with humility. Yes, our politicians lay wreaths at the tomb of the unknowns and they utter stirring words about serving with honor. But in our popular narrative we have abandoned the character who acts with honor when no one is looking. If we do not tell stories that honor those who make unrewarded sacrifices, how can we expect our soldiers to feel truly valued when their deeds remain unknown?

“A Good Person”

ImageWhat does it mean to be a “good person?” What drive is it that makes us want to be “good people?”

Yesterday, I wanted to read a bit more about this notion of the “good person.”

When I typed “good person” into Google most of the top references were in some way related to Christianity.

This implies that people become Christians, at least in part, for some sort of reassurance that they are “good people.”

But what is a “good person?” How does being a “good person” compare to being “an honorable person?”

Both can be thought of as people who do right– but there are subtle differences between the two.

In older times people were more apt to speak about being a person of honor than a “good person.” Honor derives from what a person does, his actions in the world. Being “good” is more of a personal quality. It is who you are, not what you do. A person can behave honorably or dishonorably regardless of his personal qualities. In terms of how these expressions “feel,” being honorable is attached to righteousness while being “good” is attached to innocence or purity.

I imagine the angel representing the “honorable person” looking like this:

Image

And the angel of the “good person” looking like this:

ImageThere are plusses and minuses in each of these conceptions of moral identity.  One of the positives about “the good person” is that goodness is portable. That is to say that the good person’s sense of morality is internal and it is thought to be consistent regardless of changing external circumstances. If a nation is engaged in an immoral war, for example, the good person should follow his conscience rather than the will of the crowd even if it seems more honorable in the moment to be a war hero.

Honor is dependent on other people’s praise or scorn. To be honorable is to be aligned with what society considers moral. You can, as the heroes of the Iliad did, engage in all manner of brute violence and slaughter and still be praised for honor.

On the other hand, the “good person” model is passive. To achieve honor you have to do something. You can be a “good person” while sitting on your couch watching TV. It is nice if a good person does good things, but what matters in the good person model is not so much the actions as the quality of the person.

(It would be interesting to know if anyone has done a study to see whether forms of Christianity that are more focused on belief and faith use more “good person” language than those that are more focused on social justice issues.)

There is some evidence that seems to suggest aiming to be a “good person” might make people feel less able to make a difference in the world. Studies of children, for example, have shown that those who receive “person praise”– that is praise of their personal qualities as opposed to their action–develop a notion they have a stable, trait-like ability. “I am a good artist.” When they subsequently encounter feedback that challenges this notion of self they suffer a loss of morale and are more likely to give up on the task all together. “Oh, I guess I’m not a good artist after all. I guess I shouldn’t try.” On the other hand, children who are given process praise– that is praise for their specific actions– responded better to the criticism, and came up with ways to fix their mistakes. “I did a good job drawing the first time, but not as well the second, so let’s see how I can improve…”

It is probably no accident that the image of the angel was transformed from a male warrior to a cherubic female as our framework shifted from the “honorable person” to the “good person.” Men are more likely to receive process praise. Women are more likely to be praised for what are seen to be personal qualities. Thus we still have “men of honor” in the military and the image of the “good person” is represented by a passive female or a child.

It seems to follow, then, that praising people for being “good” would make people doubt their sense of self when confronted with their own misdeeds. Once a person has given up on being a saint and embraced the notion of being a sinner, there is not as much of a press to change one’s ways.

Whereas in a more instrumental model, the “process praise” of honor or dishonor, a person might do the right thing and then do the wrong without having to assume doing wrong one time means he is “bad” rather that he can learn to act more honorably.

As I wrote in an article last October:

The idea that we have one nature– good or bad– leads us to all kinds of crazy behavior in order to bolster and preserve our images of ourselves as the “good people” we want ourselves to be.  The things we do to preserve our self-esteem are not always the healthiest for society…There is no great moral value in  feeling good about yourself when you have done a wrong…

In a culture that attributes most behaviors to inner qualities and makes them one’s unchanging identity, the stakes are very high to think of yourself as a good person and to get to work explaining away your misdeeds…

So do those in a “good person” framework behave more ethically than those in an “honor” framework or vice versa? It’s hard to say. I suspect the truth is that neither model makes a person moral. That people, in general, want to do the right thing and not the wrong thing and that they have always slipped up from time to time and always will. They’ll get up, brush themselves off, and try again.

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Have We No Shame?

ImageIt is the anniversary of the Boston Marathon bombings and there’s another “don’t say the killer’s name” story making the rounds.

One of the victims refused to appear on an anniversary edition of Meet the Press because they couldn’t guarantee the killer’s names would not be spoken by someone in the panel discussion.

It is not something I should have to say, but just for the record, let me make it clear that my sympathies lie with the victims not the perpetrators of the violence. I am sympathetic to the anger and bewilderment victims must feel when they read that the younger Boston bombing suspect has a following of young women who believe someone with such big, brown eyes cannot be guilty and must have been framed. Yeah, he’s cute. He’s also a cold-blooded killer who was able to suspend all human compassion and commit a horrifying act.

We are shocked by this kind of anti-social behavior. It doesn’t compute, so we come back for more information and more. We look at killers with confusion, horror, fascination. What makes someone like that? We need to know who the perpetrators are to try to make sense of what happened. So we talk about them.

What I am trying to understand is how fame came to be understood as a universally positive category regardless of what a person is known for.  Speaking someone’s name, in and of itself, is not praising a person. You can make someone known in order to damn him.

In colonial times, as an example, people who violated community sensibilities were placed in the stocks. While they were out in the public square, their humiliation served as a corrective and a kind of entertainment. The people in the stocks were the most known members of the community at that moment. To put it in modern terms, they were the most famous.  Being gawked at, having your name on everyone’s lips, was not an honor but its opposite.

When you think about the axis of honor and shame both poles imply being known and talked about.  Both the honored and the shamed are famous.

The particular axis of values at play now seems neither to be about being moral or immoral nor in step or out of step with the community.  It is an axis of known vs. anonymous with known being equivalent to the “honorable” pole and unknown being equivalent to “shameful.”

Old value: Honor= Good  Shame=Bad

Current value: Fame=Good Anonymity=Bad

I had a conversation recently with a friend who is a fan of the kind of reality TV shows where catty rich women cheat with each others’ husbands and say snarky things about one another to the camera while brazenly social climbing. I told my friend that I couldn’t understand why anyone would want to be on a show like that and air all their dirty laundry in public.

She started to talk about all of the benefits these women received– fashion design contracts and perfumes and opportunities to appear as a “celebrity guest.”

Being known for bad behavior seems to be socially preferable to being unknown for behaving well. (Thus the ending of House of Mirth had to change when it was made for modern audiences so the protagonist’s noble sacrifice is not left a secret.)

Is it possible that we are judging our fellow citizens not on their inherent qualities or their actions but on their entertainment value?

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The Happy End vs. The Noble End Part II

Last November, I wrote a long post, The Happy End vs. The Noble End about how many 19th Century works are altered to give them more “happy ends” when they are adapted to appeal to a modern audience.  I talked about the popularity of tragic, noble endings in Dickens day vs. our own.

ImageYesterday I was skimming through Susan Cain’s Quiet again and I came a little bit closer to understanding the cultural change that has made happy ends, in which the characters get what they wanted at the beginning of the story, eclipse noble ends, in which characters perform good works in secret and receive no earthly reward for it.

Cain cites the influential cultural historian Warren Susman who dubbed our extrovert-focused culture a “Culture of Personality.”

“The social role demanded of all in the new Culture of Personality was that of a performer,” Susman wrote. “Every American was to become a performing self.”

Before we started to admire those with the greatest skills in self-promotion, we lived in what Susman described as the Culture of Character.

Cain writes:

In the Culture of Character, the ideal self was serious, disciplined, and honorable. What counted was not so much the impression one made in public as how one behaved in private. The word personality didn’t exist in English until the eighteenth century, and the idea of “having a good personality” was not widespread until the twentieth. But when they embraced the Culture of Personality, Americans started to focus on how others perceived them. They became captivated by people who were bold and entertaining….

Susman counted the words that appeared most frequently in the advice manuals of the early twentieth century and compared them to similar advice manuals from a century earlier. The earlier guides used these words: Citizenship, Duty, Work, Golden deeds, Honor, Reputation, Morals, Manners, Integrity. The new breed of self-help literature focuses on personality trait and uses words like: Magnetic, Fascinating, Stunning, Attractive, Glowing, Dominant, Forceful, Energetic.

This shift is not mere vanity, by the way. It is a survival tactic. In her book The Managed Heart by Arlie Russell Hochschild makes a good case that as our economy has shifted from a base in manufacturing and agriculture to one with more and more service jobs, presenting a pleasant personality has become a required job skill.  She sums up the difference in 19th century and modern labor this way: “in order to survive in their jobs, (workers) must mentally detach themselves– the factory worker from his own body and physical labor, and the flight attendant from her own feelings and emotional labor.”

The ideal hero has changed as well. The physical laborer owned his inner world, as did his hero. The service worker gets things by manipulating the impression he makes on people in the outer world. His hero acts in this realm and must win in this realm. In the culture of personality, what is not apparent to the outer world might as well not exist. If good intentions do not yield good results– directly for the person who is the viewpoint character– what is the point? We can’t abide by a story like Edith Wharton’s House of Mirth where the main character’s self-sacrifice is a secret shared only with the reader. We may not change the story to the extent that Lily Bart lives happily ever after, but in the modern film version we at least have to see that someone in her world learns what she did.

The most dramatic story in a culture of character, however, is one that gives the reader a glimpse of someone who has a strong moral center. The best test of that character is what a person does when his goodness goes completely unrewarded and unknown.  The tragic end of the 19th Century is just as idealistic and uplifting in its own way as the requisite “happy ending” of our times.

Both types of endings provide reassurance.  In modern culture we want to reassure audiences that they can win against all odds and that their efforts will be recognized eventually.  More reassuring to those living in a culture of character was the idea that a person could maintain ideals and morality in the face of the greatest hardship and unfairness.

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Success Secret of the Rich and Famous: Insulate Yourself From Personal Responsibility

From the blog Mercy Not Sacrifice, I learned about a list wealth guru Dave Ramsey had posted of 20 Things Rich People Do that Poor People Do Not. His source for the stats is something called The Rich Institute, which makes the stats fairly dubious to begin with. The list sets out to prove that rich people are in charge of their destinies and are rich due to their superior choices. The list has received a lot of commentary elsewhere. In some cases the items on the list presumably are meant to imply cause and effect. For example, Ramsey says the rich eat less junk food. I think we are to assume that this is a moral decision and that choosing not to eat junk food makes people wealthier rather than assuming rich people having the budget to buy healthier foods and poor people have the budget for junk food.

Then there is this utterly meaningless list item: “74% of wealthy teach good daily success habits to their children vs. 1% of poor.” What is a “good daily success habit”?

No one has done a better job summing up this kind of nonsense than G.K. Chesterton writing a century ago.  His essay The Fallacy of Success says:

There has appeared in our time a particular class of books and articles which I sincerely and solemnly think may be called the silliest ever known among men… On every bookstall, in every magazine, you may find works telling people how to succeed. They are books showing men how to succeed in everything; they are written by men who cannot even succeed in writing books. To begin with, of course, there is no such thing as Success. Or, if you like to put it so, there is nothing that is not successful. That a thing is successful merely means that it is; a millionaire is successful in being a millionaire and a donkey in being a donkey. Any live man has succeeded in living; any dead man may have succeeded in committing suicide. But, passing over the bad logic and bad philosophy in the phrase, we may take it, as these writers do, in the ordinary sense of success in obtaining money or worldly position. These writers profess to tell the ordinary man how he may succeed in his trade or speculation–how, if he is a builder, he may succeed as a builder; how, if he is a stockbroker, he may succeed as a stockbroker… I really think that the people who buy these books (if any people do buy them) have a moral, if not a legal, right to ask for their money back. Nobody would dare to publish a book about electricity which literally told one nothing about electricity; no one would dare publish an article on botany which showed that the writer did not know which end of a plant grew in the earth. Yet our modern world is full of books about Success and successful people which literally contain no kind of idea, and scarcely and kind of verbal sense.

…You may want a book about jumping; you may want a book about whist; you may want a book about cheating at whist. But you cannot want a book about Success. Especially you cannot want a book about Success such as those which you can now find scattered by the hundred about the book-market. You may want to jump or to play cards; but you do not want to read wandering statements to the effect that jumping is jumping, or that games are won by winners. If these writers, for instance, said anything about success in jumping it would be something like this: “The jumper must have a clear aim before him. He must desire definitely to jump higher than the other men who are in for the same competition. He must let no feeble feelings of mercy (sneaked from the sickening Little Englanders and Pro-Boers) prevent him from trying to do his best. He must remember that a competition in jumping is distinctly competitive, and that, as Darwin has gloriously demonstrated, THE WEAKEST GO TO THE WALL.”

What Chesterton makes perfectly clear is that it is useless to talk about the abstraction of “success.” What a person needs to succeed is specific instruction on the information he lacks to get by in a particular context. There is no “success” devoid of context.  Let’s say you were to take a rich kid and plop her alone into a poor neighborhood. Let’s say you were to put her in a struggling inner-city school and leave her to her own devices to get along. How would you expect her to do? Let’s say you were to put her on a small farm and tell her to go tend to the animals. How would she do? What if you were to ask her to work on an assembly line? My guess is that she would not enjoy great success. Why? She was not taught the “daily success habits” to thrive in those environments.

I do believe these statistics:

84% of wealthy believe good habits create opportunity luck vs. 4% of poor.

76% of wealthy believe bad habits create detrimental luck vs. 9% of poor.

That is to say, I do not have faith in any of these numbers, but I am quite certain that the rich are apt to attribute their good fortune to their own habits and other’s misfortune to their bad habits. In fact, the whole article is an exercise in exactly that. Just because this is their belief does not mean it is true. Nor does it mean that believing it caused them to be rich, it is much more likely that being fortunate you’re more inclined to think you get what you deserve, because you deserve good things and you have them.

The Mercy Not Sacrifice article in which I originally read about Dave Ramsey’s list was titled “Another Item for Dave Ramsey’s List of What Rich People Do That Poor People Don’t.” Morgan Guyton wrote “…I found a 21st item to put on Dave’s list. Apparently it’s a growing trend for really rich people to buy expensive artwork, and, instead of hanging it up in their homes, store it in giant, tax-free warehouses in places like Luxembourg to use as investment currency instead of stocks or bonds. These warehouses are called freeports. They are often located next to airports, so that super-rich people can fly around to look at each other’s artwork.”

I found this fascinating in light of the controversy surrounding the potential sale of the artwork at the Detroit Institute of Art in the city’s bankruptcy reorganization.

I would like to do my part and add a 22nd item to the list of things that rich people do that poor people don’t.

22. Rich people insulate themselves from personal responsibility for their failings.

In December 2012, after Robert Kiyosaki, author of the mega-best selling Rich Dad, Poor Dad filed for bankruptcy protection following an expensive legal judgment against him, another wealth and leadership guru Jeremy McCommons wrote an article on his blog to make sense of it.  Kiyosaki had not failed, McCommons argued, in fact, his bankruptcy simply proved his method works.

Upon analyzing the situation with the Rich Dad Poor Dad’s bankruptcy, I realized that Robert Kiyosaki himself did not file bankruptcy and in fact his businesses are still running strong… Suddenly I was reminded of some basic yet important information that is taught by Rich Dad Poor Dad.

  • Use corporate structures to protect yourself and your assets. If your corporation fails or is sewed [sic] you are limited to the exposure of only those assets held by the corporation.

  • Never put all your eggs in one basket. Form separate corporate entities for each brand of your business or group of real estate holdings.

  • Always pay yourself first. It is important to get the cash out of your business when possible. If you pay yourself from the corporation those assets are no longer at risk in the event that the corporation runs into trouble.

Upon analyzing the situation with the Rich Dad Poor Dad’s Bankruptcy, I realized that Robert Kiyosaki himself did not file bankruptcy and in fact his businesses are still running strong. What filed bankruptcy was a corporate entity within the Rich Dad Poor Dad umbrella.  Suddenly I was reminded of some basic yet important information that is taught by Rich Dad Poor Dad.

  • Use corporate structures to protect yourself and your assets.  If your corporation fails or is sewed you are limited to the exposure of only those assets held by the corporation.
  • Never put all your eggs in one basket.  Form separate corporate entities for each branch of your business or group of real estate holdings.
  • Always pay yourself first. It is important to get the cash out of your business when possible. If you pay yourself from the corporation those assets are no longer at risk in the event that the corporation runs into trouble.

– See more at: http://jeremymccommons.com/business/rich-dad-poor-dad-files-bankruptcy/#sthash.UZ2YPN2D.dpuf

Upon analyzing the situation with the Rich Dad Poor Dad’s Bankruptcy, I realized that Robert Kiyosaki himself did not file bankruptcy and in fact his businesses are still running strong. What filed bankruptcy was a corporate entity within the Rich Dad Poor Dad umbrella.  Suddenly I was reminded of some basic yet important information that is taught by Rich Dad Poor Dad.

  • Use corporate structures to protect yourself and your assets.  If your corporation fails or is sewed you are limited to the exposure of only those assets held by the corporation.
  • Never put all your eggs in one basket.  Form separate corporate entities for each branch of your business or group of real estate holdings.
  • Always pay yourself first. It is important to get the cash out of your business when possible. If you pay yourself from the corporation those assets are no longer at risk in the event that the corporation runs into trouble.

– See more at: http://jeremymccommons.com/business/rich-dad-poor-dad-files-bankruptcy/#sthash.UZ2YPN2D.dpuf

Consider this quote:

“A corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy…A person you control… yet cannot be held accountable for its actions. Imagine the possibilities!”

This is not a criticism– it is an advertising pitch for Wyoming Corporate Services. Reuters reports that the company “serves as a little Cayman Islands in the Great Plains.

For the rich, profits and losses are just business. It is not personal. When you launch a business and it utterly fails, or if there is a judgment against you for some kind of wrong doing, you just kill off the business entity, keep the money, and start again.

It is not only the poor, but the middle class, who are adversely affected by a pesky sense of moral responsibility.

An article in the Wake Forest Law Review by Brent T. White of the University of Arizona “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis” finds  that “Despite reports that homeowners are increasingly ‘walking away’ from their mortgages, most homeowners continue to make their payments even when they are significantly underwater. This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences…Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility. This norm asymmetry leads to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse.”

Perhaps if the less wealthy want to put some success habits into practice they should walk away from their underwater mortgages. White believes so. He concludes: “…it is time to put to rest the assumption that a borrower who exercises the option to default is somehow immoral or irresponsible. To the contrary, walking away may be the most financially responsible choice i it allows one to meet one’s unsecured credit obligations or provide for the future economic stability of one’s family… The current housing bust should be viewed for what it is: a market failure and a failure to regulate not a moral failure on the part of American homeowners.”

Well, I was reading through my dad’s Economist magazine last night and I found a 21st item to put on Dave’s list. Apparently it’s a growing trend for really rich people to buy expensive artwork, and, instead of hanging it up in their homes, store it in giant, tax-free warehouses in places like Luxembourg to use as investment currency instead of stocks or bonds.

These warehouses are called freeports. They are often located next to airports, so that super-rich people can fly around to look at each other’s artwork.

– See more at: http://morganguyton.us/2013/11/27/another-item-for-dave-ramseys-list-of-what-rich-people-do-that-poor-people-dont-do/#sthash.Gp9K615H.dpuf

Well, I was reading through my dad’s Economist magazine last night and I found a 21st item to put on Dave’s list. Apparently it’s a growing trend for really rich people to buy expensive artwork, and, instead of hanging it up in their homes, store it in giant, tax-free warehouses in places like Luxembourg to use as investment currency instead of stocks or bonds.

These warehouses are called freeports. They are often located next to airports, so that super-rich people can fly around to look at each other’s artwork.

– See more at: http://morganguyton.us/2013/11/27/another-item-for-dave-ramseys-list-of-what-rich-people-do-that-poor-people-dont-do/#sthash.Gp9K615H.dpuf

“Responsibility”… for What?

GrindstoneYesterday I was listening to NPR and the author of a biography of Margaret Thatcher was being interviewed.  He was clearly a great admirer of his subject. Asked what “Thatcherism” was he said, and I’m paraphrasing, Thatcherism was not a political philosophy, it was a way of thinking.  Thatcher, he said, stood for “responsibility.”

I was thinking about this and it occurred to me that this is not a completed concept.  You can’t stand for “responsibility” you have to finish the sentence.  Responsibility to what?

I got to thinking about classical literature and all of those tales about duty and honor.  I thought of something David Denby wrote about the Iliad in Great Books, “Accepting death in battle as inevitable, the Greek and Trojan aristocrats of the Iliad experience the world not as pleasant or unpleasant, not as good and evil, but as glorious or shameful.”

This is responsibility to your city-state, your people.  This military tradition of responsibility continues. It is an ethic of placing the good of the whole above your own personal needs.  Being willing to sacrifice even your life in defense of your society.

Religion presents another model of responsibility– responsibility to God, a commitment to living in accordance with eternal values even when this is personally difficult.  Ideally, religion is a model of people putting aside their own personal concerns and focusing on something larger than themselves and vowing commitment to treat other human beings with compassion.  Responsibility to God and fellow man.

Using the world “responsibility” without saying “to what” calls these types of commitments to mind.  It calls to mind the responsibility of a parent to child.

Yet when I think of Thatcher and Reagan it is a different kind of “responsibility” that comes to mind.  This is often phrased as “personal responsibility.”  It means that each person should take control of his own life, pull himself up by his bootstraps and make his own way. As the name suggests “personal responsibility” is actually a limiting of responsibility from society as a whole to one person.  I am responsible for myself, you are responsible for yourself.

In truth, there is no such thing as pure independence only interdependence.  The “trickle down” economic model implies that the business owner creates the jobs, but it is equally true that the workers make the business possible.

In Status Anxiety, Alain de Botton writes,.  “…for centuries, economic orthodoxy held that it was the working classes that generated society’s financial resources– which the rich then dissipated through their taste for extravagance and luxury.”

He traces the end of the view of wealth coming from the laborers as beginning in spring 1723 when a London physician named Bernard Mandeville published The Fable of the Bees.  Its premise, now very familiar, was that the wealthy by spending, allowed those who they paid to survive.  Wealth in this model is seen as flowing down from the top (trickle down economics) rather than growing up from the ground.

I have been reading lately about British aristocratic society in its period of decline at the end of the 19th Century and the beginning of the 20th.  As aristocrats saw their position being challenged, many of them made passionate defenses of the hierarchy  that placed them at the top.  Many of the arguments they made came right out of the Fable of the Bees.  Titled aristocracy was necessary because by living their lives of luxury and power they provided work for those who worked for them.

Indeed, the aristocrats felt that this was a duty, a responsibility.  Society put them at the top and they had the responsibility to remain there in order to take care of those less fortunate.  Someone once wrote “Power justified itself by pointing to powerlessness in others as proof of incapacity.”  The poor needed to be cared for by the compassionate rich.

The notion of “personal responsibility” grew in the era of the “self-made man” but it had a slightly different meaning back then.  It meant,  “Don’t worry Lord Such-and-Such, I can take care of myself quite well, thank you very much. Your lordship doesn’t need to maintain that manor house on my account.”

Pulling yourself up by your bootstraps is empowering when it means you have the opportunity to break out of rigid social hierarchies.  It is less empowering when it is used to explain why your boss does not have any responsibility to you.  “It is my responsibility to reduce costs and make the largest profits possible so that I can do my duty and create jobs.  It is not my responsibility to ensure that those jobs have living wages.”

A quote by Upton Sinclair comes to mind:

“…the priests of all these cults, the singers, shouters, prayers and exhorters of Bootstrap-lifting have as their distinguishing characteristic that they do very little lifting at their own bootstraps, and less at any other man’s. Now and then you may see one bend and give a delicate tug, of a purely symbolical character.. But for the most part the priests and preachers of Bootstrap-lifting walk haughtily erect, many of them being so swollen with prosperity that they could not reach their bootstraps if they wanted to. Their role in life is to exhort other men to more vigorous efforts at self-elevation…”

I read an interesting article yesterday on Work in Progress, the blog of the American Sociological Association’s Organizations, Occupations and Work section.  The article argues that as a greater share of national income has gone to profits rather than wages it has slowed GDP growth.

As Özlem Onaran explained in her summary of her ILO study, “mainstream economics continues to guide policy towards further wage moderation and austerity as the main response to the Great Recession. Mainstream economists and policymakers treat wages merely as a cost item. However, in reality wages have a dual role affecting not just costs but also demand.”

We can’t escape the fact that we are all in this together.   It is a world of interdependence, and mutual responsibility.

 

 

The image above is from the 1934 book “Wasn’t The Depression Terrible?” by O. Soglow.  It’s in the public domain and you can read it on line.  Many of the cartoons seem quite contemporary.

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