Donut Economics

 I came across an article about donut economics and I really really really like it as a concept and way to think about HOW we organize and to what end.

Here is the link: https://time.com/5930093/amsterdam-doughnut-economics/

Basically – there is level of ecological sustainability that we cannot surpass without killing ourselves.

There is also a bottom level of social sustainability (basically poverty) below which people can’t participate in society.

The goal is to have everyone living inside the donut hole space where we have both social sustainability and ecological sustainability.

Humanistic Management and Humanistic Capitalism

If you read my blog you know that I am an advocate for both humanistic management and humanistic capitalism. http://humanisthappiness.blogspot.com/search?q=capitalism

Demand drives the economy. Capitalism only works as a way to efficiently distribute resources if people CAN participate in the economy. If they can't, because they are too poor to or because they are excluded by discriminatory laws, then capitalism simply doesn't work. 

We need to be looking for ways to both eliminate poverty, but do so in a way that makes sure we don't overload our ecosystem. 

To me, it is pro-capitalist to have a social safety net. It is pro-capitalism to ensure ecological and environmental justice.  We must start rejecting the either/or false dichotomies and start looking for ways to help people and help the environment because doing both, will help the economy. 

Why am I talking about this so much?

Because as people concerned with humanistic management and humanistic leadership, we have an obligation to be leaders in this area. Our collective individual decisions is what leads to the big decisions. 

We absolutely must find the courage and the language to argue for sustainability and all that that means. We must start making the business case for this. Or nothing will change. 

Learn more: 

If you are in a leadership position and want to learn how to make better decisions consistent with the reality we all face - take my  Reality Based Decision Making Course: https://humanistlearning.com/realitybaseddecisionmaking/

If you want a more comprehensive leadership mindset shift - become a Certified Humanistic Leadership Professional. https://humanistlearning.com/certified-humanistic-leadership-professional/

Our basic understanding about how the economy works - is wrong.

It’s not supply and demand – it’s demand and supply.

One of the blogs I really like to read is Evonomics. They have a really great essay on an arabic economist from the 14th century and highlight the similarities and difference between him and Adam Smith - who is usually the person western textbooks cite as the - father of modern economics. Here is the article - https://evonomics.com/amazing-north-african-scholar-beat-adam-smith-half-millennium/ 

To quote the article: "The invention of supply and demand analysis wasn’t invented in the 19th century: the Islamic scholar also described the relationship of demand and supply, and also took the role of inventories and merchandise trade into account."

There are some important things to learn from his work.

1) Demand matters. Creating demand is what creates the market. When supply side people say - we need to create a supply - they are missing something important - that is the customer. Without the customer - there is no demand for the supplies.

2) The government matters. Particularly - taxation matters. Taxation helps create civilization. Government helps people see themselves as a united group - which allows commerce to happen since we tend to want to trade with people - we view as friendly. This is expensive and requires money.  Money to build the infrastructure that allows all that trade to occur. 

The government is also one of the biggest creators of demand!  And this is true in most countries. The government hires more people than - pretty much anything else and spends more money than anything else. We don't need government to get out of the way - as much as we need government to use it's purchasing power for good - and not evil.

3) Greed/Hoarding wealth is bad. Basically - greed is what brings the downfall of the civilization.   Khaldun’s words are telling: “dynasty and government serve as the world’s greatest marketplace, providing the substance of civilization. Now, if the ruler holds on to property and revenue, or they are lost or not properly used by him, then the property in the possession of the ruler’s entourage will be small. Thus (when they stop spending), business slumps and commercial profits decline because of the shortage of capital”. “ […] Furthermore, money circulates between subjects and ruler, moving back and forth. Now, if the ruler keeps it to himself, it is lost to the subjects” (Khaldun p. 365).

Lowering taxes on rich people, allows the money to be hoarded and when this happens it is lost to the people. And when it is lost to the people, consumption slows and stops - and the economy crashes.

When we consider our current situation we should realist that companies are fine - when consumers are fine.  We don't need to bail out companies. We need to bail out consumers. The whole point of a free market is to allow consumers to decide which companies succeed and fail. Consumers should be deciding that - NOT the government. When governments bail out companies – they are picking winners and losers and interfering in the economy – not supporting it.

When I read the proposals governments put out to fix their faltering economies it really feels like NONE of the people currently running countries have even read The Road to Serfdom by Hayek.  Here’s what they need to know.

Capitalists capitalize on demand. If there is no demand - there is no business. Build up demand by building up consumers - who by the way - are workers - and the economy will work fine on its own. That is the proper role of government.

The other proper role of government is setting standards of behavior so that people aren’t defrauded or the commons ruined. Which brings me to the ecological impact our business activities have.  One of the things the Covid19 shutdown showed people all over the world – is just how much pollution we were creating. Governments can and should be setting pollution standards and NOT allowing businesses to destroy our commons. Commerce and business must start occurring in an ecologically sustainable way! Governments must regulate businesses. Business must become responsible for the pollution they create. Only then, will the pollution problem we all suffer from – be solved.

Humanism and Libertarianism: Are they compatible?

Not really.

At the risk of pissing off some of my libertarian leaning friends and fans, I personally don’t think libertarianism is compatible with Humanism.  In concept, they should ally with one another. Individual liberty. Yeah, we Humanists love that.  We just don’t love it when it stands alone.  

Humanists embrace the concept of embedded autonomy, where the individual is embedded in a community. If the community thrives, they thrive. As a result, as individuals, we encourage people to be responsible to the communities in which they live.  Our goal is to create a better place for ourselves and for everyone else. 

This is what enlightened self-interest is all about. Self-interest without concern for others is just selfishness.

There is a really great article debunking libertarianism over at the Evonomics blog: https://evonomics.com/what-happens-when-you-believe-in-ayn-rand-and-modern-economic-theory/

The list several problems with libertarianism. First, their idea of what humans are is flawed. Humans are not rational actors that will chose to maximize their gain while doing minimal harm to others. Ideally yes, we would, but in reality, we don’t. When we go selfish, we go short term. Short term problem solving discounts future harm and increases the value of current gain. Which is a fancy way of saying the value system is lopsided and there is no incentive to self-correct and take into account the the negative impact our actions may have on others.

For a Humanist like me, I think it’s out of balance and I would rather balance my autonomy with my responsibilities to others. I think this yield better results for me as an individual in both the short and long term.

Another way it seems to go off course is it discounts and diminishes our natural desire to act cooperatively. Humans are tribal animals. We like to work together. Individual is fine, but only to a point. Again, it’s not a realistic or healthy view of who we are as a species and as individuals.  I understand not wanting to be coerced into cooperation, but voluntarily cooperating with others in our community is what creates communities.  Cooperation is a good thing. Self-interest alone doesn’t encourage us to cooperate and the case studies of businesses and countries that have adopted Libertarian principles of government are proof of how badly things go when community investment and cooperation is eliminated and discouraged. Read the article for the details. It’s not good.

Which brings me to the last thing. It doesn’t work. This is one of those things that seems good on paper, but in reality-  leads to horrendous results, both for individuals and for the communities in which they live. At the end of the day, Humanists go with what is proven to work. And Libertarianism has proven, it doesn’t work.

As a Humanist, I celebrate individualism, but I am also firmly committed to being of service to my community. I get frustrated whenever I talk to libertarians who argue against voluntarily joining to pay for things like hospitals or schools or things like that. I understand philosophically why they are making that argument, but the level of selfishness that it exhibits is horrifying to me as a Humanist. I want to help. I want to pay taxes and purchase things collectively that help our community. I want to purchase health care for myself and my neighbors. I want to purchase schools for our kids and libraries. I like paying for cops and fire departments. These benefit not just me, but everyone.

The concept that everyone should be out for themselves and their own – lacks compassion. It’s selfishness rationalized.  And it really doesn’t seem very humanistic to me.  What are your thoughts?

To learn more - consider taking this free online course - Why Humanistic Managementhttp://humanistlearning.info/why-humanistic-management/

The true engine of the economy

I teach humanistic business management for the lay person. This combines practical skills with a specific philosophic approach. The philosophy is important.

Humanism is about taking responsibility for solving the problems we have and doing so in a way that is respectful of other people and of the environment since we are dependent on our environment for life.  This sounds wonderful but it has some very tangible effects on how we go about the business of business.

The first is to understand that people drive the economy.  Economic activity is about people, creating and distributing things. Every single thing that is created is created, presumably, to solve a problem someone has. If someone doesn’t have a problem that needs solving, they don’t need to purchase the goods or services of another person.

Individuals needing problems to be solved DRIVES economic activity!  Business owners building things don’t drive the economy. They are responding to it. They are trying to capitalize on the needs that people have. Which is fine. But the basis of their businesses is the needs of the consumers.  If consumers don’t need what you are selling, you don’t have a business.

This reality should have profound policy implications for how we run our companies and how government either supports or hinders economic activity.  Let’s start by talking about businesses.

Any business who forgets that they exist to serve the needs of their customers will find themselves sidelined.  Taking a humanistic approach to business helps you to recognize the centrality of the humans who are your customers, your employees, and the humans who are effected by your supply chain. All of them matter as individuals because they are the individuals who drive the economy. Every. Single. One. Of. Them.

When we talk about customer rights, understand you are talking about human rights. Fail to respect human rights and you fail as a business because you are failing at the central purpose of business which is to solve human problems, not create them.

As for government, let me put it this way, if a politician isn’t concerned about human rights or civil rights or the needs of all humans, including and especially for the poor and disenfranchised humans, then their policy proposals are as anti-business as they are anti-human.  Individuals drive the economy. Take care of individuals and the economy thrives. Harm and suppress individuals and economies shrink and collapse.  The choice is ours – but it’s pretty clear that Humanism is the only rational way forward.