Capitalism void of the compliance to operating principles to secure a meritocracy is a lie of enormous and damaging proportion, leading to obtuse pillage and plunder of society. We must reinvent capitalism.
Mind you, socialism without merit is a lie too, a hollow lie. So do not even try to juxtapose capitalism and socialism here, not the point. Neither is the “rich” man’s black-or-white argument that the mere thought of criticizing capitalism defaults into sudden socialism.
Putting our economies in a box is the last thing we should be doing; it separates us further in an increasingly global marketplace that requires the opposite. The real issue here is how to revive our economy, knowing we have powerful capitalistic assets and a constant innovative drive in our back pocket.
We need to be ready to challenge the status quo, let go (yet not discard) of the past, and endure the rigor of change if we want to prevent the bottom from falling out from under our economy or face worse in ten years from now. Hope is not a strategy; change is. So, hang in there with me to redefine economic change.
The Lies We Tell Ourselves
We cannot change our economy for the better if we keep lying. And as a former leader of this country has proven, reiterating lies do not make them come true. The biggest myth is that we claim that we are freer than any other country in the world. As a polyglot immigrant, I can refute that argument flat-out; that is if we use the same definition of “free.”
Freedom is the foundation of free-markets that ensures that every willing-and-able participant can become an integral building block of our economy. While there will never be total freedom, the lies we tell ourselves prevent even fundamental freedom from taking hold.
Our Freedom Is a Lie
Freedom is not your compliance to your boss’s expectation to dress-up to go to work every day, nor your inability to challenge his leadership for fear of losing your job, health insurance, pension contribution, and other financial perks.
Freedom is also not a financial system eleven times the size of production that turns running a company into a Las Vegas gamble, demanding a focus on investors that precedes and overshadows the needs of customers. Freedom is also not an aging stock exchange (copied around the world) that promotes the economic agenda of short-sellers and forces companies to adopt a short-term agenda, rather than to build long-term sustainability (or however the company prefers to be measured).
Freedom is not the inability to say or write what you want, for fear of retribution from a bulging legal system that makes it so easy to file bogus claims, such as defamation of character. Freedom is also not our cunning ability to segregate the rich from the poor, the native Americans (in today’s Indian reservations) from the rest, or blacks from whites (I should know, I am part of an interracial family).
I can go on for a while, but I think you are getting my point. We are lying.
The Freedom To Abuse Freedom
Just because all 400 million of us live in the same country, does not mean we enjoy the same freedom. Freedom disenfranchises many of us; the freedom to abuse freedom and to create whatever walled gardens are needed to keep others out. And that is the freedom I am so against.
Our Government’s Delicate Role
We cannot blame Apple that it signed an exclusive arrangement for the iPhone on AT&T’s network to yield focus and produce higher margins. But we must blame the Federal Communications Commissions’ (FCC) for being asleep at the wheel of creative destruction that allowed device-to-network locking before the iPhone was even conceived (device locking was contrary to what the GSM standard was designed to do; I was free to use and roam my European GSM phone on any European network more than 20 years ago).
We cannot blame public companies for driving a short-term strategy, as the Security and Exchange Commission (SEC) has implicitly dictated that a string of positive quarterly earnings reports are the predominant way to measure company performance and, respectively, its CEO. And we should not be surprised that a temporary decline in revenues is then quickly followed by staff reductions to make those quarterly numbers still look good on paper. Are quarterly earnings indeed an accurate reflection of company performance for a company that has been in business for twenty years or more?
We also cannot blame Venture Capitalists (VCs) for taking advantage of the blind faith (and now delayed response) from Limited Partners if the SEC continues to treat participants and investments in private companies as under-the-table transactions, hiding important transparency from marketplace participants.
Cure the Disease, Not the Symptoms
But the delicate role of our government is not to regulate the symptoms but to prevent the disease. The government can’t keep tabs on the impurities of symptoms in all marketplaces. But the government must aggressively work towards enforcing the definition and implementation of free-market principles to each domain that poses what it deems a direct or indirect systemic risk to our economy (I can think of about ten depending on granularity, possibly all boiling down to a single driver: our financial systems).
I do not want our government to tell banks how to describe their interest rates to customers. Still, I do wish our government would require banks to file and freeze (for a specified period) their lending terms in a central database, so its customers can query a single website to get the rates from the bank that meet their needs.
The role of government is to establish the marketplace principles, not to determine what is merit. The marketplace participants will sort the latter out quickly.
Relevant Transparency Builds Merit
Transparency is becoming a buzz-word, and similar to the buzz-word, “experience” means nothing without the preceding adjective relevant. What is relevant is that all participants have immediate access to the transparency of marketplace transactions (between supply and demand) for that marketplace to be driven by merit. And that means that the performance of marketplace participants is measured solely by the nature of their unique offering in the marketplace, not a complex myriad of stifling walled gardens and derivatives.
The beauty of relevant transparency is that all marketplace participants become watchdogs. That the signals of impropriety are detected instantaneously by many rather than by a few, who choose to pay attention. That must be the reason why the Romans preferred a flock of geese over a single dog to protect their property.
The Merit of Marketplace Transactions defines economic Growth
No longer will merit be built by the posturing and decibel marketing of the supply side of a marketplace, that without transparency can make virtually any claims it wants. Merit will also not be built by the endless expression of desires from the demand side. What creates economic growth is the merit of the completed transactions between unlimited supply and unlimited demand.
So, to come full circle on our financial systems, our stock exchange needs to evolve into a free-market. Where the supply of stock will reflect the strategy by-and-of the company (not by the bourse), and the purchasing of the stock is based on investors buying into that strategy. Venture Capital needs to change from a closed market to a free market in which transparency allows Limited Partners and entrepreneurs to find VCs. The latter has the merit to pick, build, and monetize genuinely groundbreaking innovation.
Free Ourselves and The Rest Will Follow
Relevant transparency builds free-market principles that lead to merit in every economic circumstance.
Relevant transparency of our education system will improve the much-needed individual merit of teachers and the unique opportunities for children. Relevant transparency of our financial system will enhance the merit of investors and the innovative companies they spawn.
Relevant transparency of our economy will improve the opportunity for all people with merit. And all people do have merit. Many people, stifled by the constriction of artificial marketplaces, have just not discovered it yet. Opening up our marketplaces to become freer will allow each participant to explore and hone their merit and produce better customer value.
The world will be a much better place when every person can participate and validate their intrinsic merit in a thriving marketplace. So, let’s stop lying and demonstrate to the world what real freedom looks like.