FLOW Vision News - March 2008
Posted on Mar 19th, 2008
by 
FLOW
FLOW
Dear FLOW Members,
Two Buddhist monks came across a river where a beautiful woman was trying to cross the deep rapids. The older one picked her up and carried her across the water, gently setting her down on the other side. That evening when they reached their lodgings, the younger monk chastised his companion, noting that he had violated his vows by touching a woman. The first monk replied "I set her down on the other side. You are still carrying her."
Buddhist practice aims at cultivating an inner clarity that is free from impulsiveness and desire. There are similar strands of thought in the western philosophical tradition; the Platonic Socrates, and later his Stoic followers, similarly sought a life free from a "slavery to the passions." The Enlightened Buddha in the East, or the Philosopher in the West, both dedicated themselves to a personal discipline of the psyche in which their minds were free from the motivations that come from the neediness of the ego. One need not believe that the ego is necessarily to be extinguished to agree that the ego ought nonetheless be subject to a discipline that recognizes that our intentionality may have higher goals than the needs of the ego.
Most people associate "unbridled capitalism" with "unbridled egotism" and believe that it is a social system that is driven by greed and vanity, from the capitalist who pursues monetary wealth beyond all measure to the consumer who constantly puts herself in debt to buy the next object she doesn't really need. Indeed, there are those who believe that capitalism as a system depends on the multiplication of needs, and that if we all developed Buddhist or Stoic wisdom and discipline that it would all come crashing down.
But this understanding of what I will call "the free enterprise system" is as misguided as if we came to believe that the only books were those that encouraged us to covet and hate, ignoring the enormous diversity of written materials. The free enterprise system is a powerful tool, much as the written word is a powerful tool, and it can be deployed in endlessly diverse ways. Now that the 20th century bigotries against markets are becoming a thing of the past we are obliged to pick up this tool afresh and discover new and beautiful ways to use it. Those of us who are still hostile to acts of voluntary exchange have not yet let go of 20th century animosities.
For those of us who are committed to a personal discipline of the ego, and who believe that we will be happier and better people if we train our desire, it can be frustrating to see so many people engaged in such acts of personal indulgence and vanity, many of which will not bring them greater happiness. Our frustration is apt to grow when we are acutely aware of the enormous human needs of the world's poor, and see such waste of talent and resources as takes place constantly. When one adds an understanding that there are limited material resources on earth, some find the frustration overwhelming and give themselves over to a life of anger and resentment.
But surely such anger and resentment is not a mark of wisdom. Once one has set aside such unbridled impulses, how can one then act out of compassion and justice to make a better world?
For me, there are three priorities:
1. The creation and development of communities of practice in which we may learn to become our best selves day in, day out, for a lifetime.
2. The implementation of property rights solutions to tragedy of the commons problems so that we no longer need to worry about the problem of environmental sustainability.
3. Increase economic freedom around the world to the point at which we have seven or eight billion people, all prosperous and freely engaged in fulfilling, peaceful, constructive work.
These are goals that the world's wisdom traditions would largely endorse if they were equipped with adequate intellectual tools. Unfortunately all too few are exposed to the intellectual tools needed to deploy the free enterprise system to make a better world. Thus my ongoing attempt to share some beautiful and powerful intellectual tools more broadly so that we may all work together on creating a better world.
There are adults who are spontaneously creating small communities of practice, in their workplaces and in their personal lives, to help them become their best selves. As adults, we tend to be set in our habits and busy with adult responsibilities, and thus the process of becoming our best selves is a slower and less effective process with adults than it would be with young people. This is why I spent fifteen years creating schools that served as communities of practice, and why I continue to support anyone who attempts to do the same in K-12 education. The unfortunate truth is that it is not possible to create lasting communities of practice in government-managed institutions.
Peter Barnes, in Capitalism 3.0, has provided a brilliant first draft of an integrated set of property rights solutions to environmental problems. If we are able to implement something like Capitalism 3.0 in the coming decades, we will be able to enjoy a world of ever-increasing standard of living without worrying about environmental sustainability.
Through our Peace through Commerce and Empowering Women Entrepreneurs programs I am most focused on communicating the impact of increasing economic freedom. For some time now I've been focused on creating a prediction market game on economic freedom indices. In November of 2006 I met with my thesis advisor and economics Nobel laureate Gary Becker to discuss this idea with him, and he agreed that
"The idea of a prediction market in economic freedom indices is interesting and worthy of exploration. If such an idea could be made practicable, such a market could have a very positive impact in increasing awareness of economic freedom and thereby improving prospects for long-term growth."
At the time I was thinking more of a commercial market than a game version, and spoke with Leo Melamed, the head of the Chicago Board of Trade. Leo was intrigued by the idea, but impressed upon me the challenges of creating a successful commercial predictions product (and he has introduced more of them than anyone).
I've thus turned more in the direction of game development, in association with a school-based curriculum, as a more realistic approach to introducing the idea of predicting economic freedom ratings. While it may at first sound like an odd theme for a game, when I worked in schools I introduced students to stock market games and found that they loved the excitement of trying to out guess the market, and that eventually they became motivated to do research in an attempt to do even better. In a very different context, a few months ago I discovered realius.com, a real estate prediction market that is based on the idea of fantasy football. With no cash prizes, Realius has developed an active market among real estate professionals competing to see who can best predict the price at which a given property will sell. Chuck Teller, the founder, points out that if Realius had been in existence a few years ago it might have prevented the mortgage crisis.
The stakes involved in an economic freedom prediction game are even higher. Last fall I co-wrote a paper in which I challenged Jeffrey Sachs to a wager: Let's compare the twenty nations with the highest gains in economic freedom against the twenty nations that receive foreign aid to determine which ones experience the most economic growth in the next twenty years. After writing that paper, I decided to check the twenty nations with the largest gains in economic freedom in the past ten years, 1995-2005. Of the 122 nations for which measures are available, the top twenty gainers in economic freedom average rate of growth 2000 - 2005 is 4.2%; this set of nations as a whole averaged growth of 1.7%.
Ah, but statistics are boring. And yet it turns out that if the entire world had grown at 4.2% instead of 1.7%, by 2006 we would have had an extra $10 trillion in wealth - this is more than five times as much wealth as is generated each year in Africa, and nearly as much as is generated each year in the U.S. Basically if we increased economic freedom around the world, we could add a U.S. economy to the world every five years. Moreover poor nations benefit more from a given improvement in economic freedom than do rich nations.
Let's take the case of Malawi, at $750 annual GDP per capita one of the poorest nations on earth. For 2000-2005, Malawi has grown at a rate of .44% per year. In 45 years time at this rate of growth, Malawi's GDP per capita would be $914. At 4.2% annual growth, in 45 years time Malawi's GDP per capita would be $4776. This is much better. But the nations with top ten gains in economic freedom (without losing ground in their legal structure) averaged a rate of growth of 6.1%; this rate of growth would result in 45 years in Malawi reaching $10,844, almost where Mexico is today. Of course China has been growing at or near 10% for some time now; if Malawi could do that for 45 years, they would have a GDP per capita of $54668. And, lest this seem like the top of possibility, Dubai has averaged rates of growth of 17% for more than fifteen years. If Malawi could average 17% for 45 years, it would have a GDP per capita of $17,329 in 20 years, $83298 in 30 years, and $877,859 in 45 years.
This may seem absurd, and yet everything about our wealth in the developed world would seem fantastic to anyone living in 1800 or 1900. Fred Turner, in his wonderful article "Make Everybody Rich," estimates that by 2100 the average family of four around the world will be earning $320,000 annually, with of course much of the population being millionaires and some "poor" families only receiving $100,000 per year in income.
The real task is not to react against these marvelous possibilities; it is to steer them so that they happen more quickly, with less environmental damage, and a deeper fulfillment of human potential, happiness, and well-being. The numbers are merely numbers; they can represent great ugliness or great beauty. Ultimately the wealth that will be created, be it ugly wealth or beautiful wealth, will depend on the legal structures within which the billions of acts of creation take place. At present far too many people are still stuck in a primitive 20th century opposition, either for markets or against them, either for economic freedom or against it, either for economic growth or against it. The next stage is to transcend the opposition and recognize that the creativity, innovation, and entrepreneurship of seven or eight billion people can be directed in any number of different directions, towards great violence and destruction or towards ever deeper humanity and adventures of the spirit.
Do not cling to the violation of your vows. Let go of your attachment to the old conflicts, and move forward into our next adventure of the spirit.
Towards peace and prosperity for all,
Michael Strong
CEO & Chief Visionary Officer
FLOW, Inc.
Two Buddhist monks came across a river where a beautiful woman was trying to cross the deep rapids. The older one picked her up and carried her across the water, gently setting her down on the other side. That evening when they reached their lodgings, the younger monk chastised his companion, noting that he had violated his vows by touching a woman. The first monk replied "I set her down on the other side. You are still carrying her."
Buddhist practice aims at cultivating an inner clarity that is free from impulsiveness and desire. There are similar strands of thought in the western philosophical tradition; the Platonic Socrates, and later his Stoic followers, similarly sought a life free from a "slavery to the passions." The Enlightened Buddha in the East, or the Philosopher in the West, both dedicated themselves to a personal discipline of the psyche in which their minds were free from the motivations that come from the neediness of the ego. One need not believe that the ego is necessarily to be extinguished to agree that the ego ought nonetheless be subject to a discipline that recognizes that our intentionality may have higher goals than the needs of the ego.
Most people associate "unbridled capitalism" with "unbridled egotism" and believe that it is a social system that is driven by greed and vanity, from the capitalist who pursues monetary wealth beyond all measure to the consumer who constantly puts herself in debt to buy the next object she doesn't really need. Indeed, there are those who believe that capitalism as a system depends on the multiplication of needs, and that if we all developed Buddhist or Stoic wisdom and discipline that it would all come crashing down.
But this understanding of what I will call "the free enterprise system" is as misguided as if we came to believe that the only books were those that encouraged us to covet and hate, ignoring the enormous diversity of written materials. The free enterprise system is a powerful tool, much as the written word is a powerful tool, and it can be deployed in endlessly diverse ways. Now that the 20th century bigotries against markets are becoming a thing of the past we are obliged to pick up this tool afresh and discover new and beautiful ways to use it. Those of us who are still hostile to acts of voluntary exchange have not yet let go of 20th century animosities.
For those of us who are committed to a personal discipline of the ego, and who believe that we will be happier and better people if we train our desire, it can be frustrating to see so many people engaged in such acts of personal indulgence and vanity, many of which will not bring them greater happiness. Our frustration is apt to grow when we are acutely aware of the enormous human needs of the world's poor, and see such waste of talent and resources as takes place constantly. When one adds an understanding that there are limited material resources on earth, some find the frustration overwhelming and give themselves over to a life of anger and resentment.
But surely such anger and resentment is not a mark of wisdom. Once one has set aside such unbridled impulses, how can one then act out of compassion and justice to make a better world?
For me, there are three priorities:
1. The creation and development of communities of practice in which we may learn to become our best selves day in, day out, for a lifetime.
2. The implementation of property rights solutions to tragedy of the commons problems so that we no longer need to worry about the problem of environmental sustainability.
3. Increase economic freedom around the world to the point at which we have seven or eight billion people, all prosperous and freely engaged in fulfilling, peaceful, constructive work.
These are goals that the world's wisdom traditions would largely endorse if they were equipped with adequate intellectual tools. Unfortunately all too few are exposed to the intellectual tools needed to deploy the free enterprise system to make a better world. Thus my ongoing attempt to share some beautiful and powerful intellectual tools more broadly so that we may all work together on creating a better world.
There are adults who are spontaneously creating small communities of practice, in their workplaces and in their personal lives, to help them become their best selves. As adults, we tend to be set in our habits and busy with adult responsibilities, and thus the process of becoming our best selves is a slower and less effective process with adults than it would be with young people. This is why I spent fifteen years creating schools that served as communities of practice, and why I continue to support anyone who attempts to do the same in K-12 education. The unfortunate truth is that it is not possible to create lasting communities of practice in government-managed institutions.
Peter Barnes, in Capitalism 3.0, has provided a brilliant first draft of an integrated set of property rights solutions to environmental problems. If we are able to implement something like Capitalism 3.0 in the coming decades, we will be able to enjoy a world of ever-increasing standard of living without worrying about environmental sustainability.
Through our Peace through Commerce and Empowering Women Entrepreneurs programs I am most focused on communicating the impact of increasing economic freedom. For some time now I've been focused on creating a prediction market game on economic freedom indices. In November of 2006 I met with my thesis advisor and economics Nobel laureate Gary Becker to discuss this idea with him, and he agreed that
"The idea of a prediction market in economic freedom indices is interesting and worthy of exploration. If such an idea could be made practicable, such a market could have a very positive impact in increasing awareness of economic freedom and thereby improving prospects for long-term growth."
At the time I was thinking more of a commercial market than a game version, and spoke with Leo Melamed, the head of the Chicago Board of Trade. Leo was intrigued by the idea, but impressed upon me the challenges of creating a successful commercial predictions product (and he has introduced more of them than anyone).
I've thus turned more in the direction of game development, in association with a school-based curriculum, as a more realistic approach to introducing the idea of predicting economic freedom ratings. While it may at first sound like an odd theme for a game, when I worked in schools I introduced students to stock market games and found that they loved the excitement of trying to out guess the market, and that eventually they became motivated to do research in an attempt to do even better. In a very different context, a few months ago I discovered realius.com, a real estate prediction market that is based on the idea of fantasy football. With no cash prizes, Realius has developed an active market among real estate professionals competing to see who can best predict the price at which a given property will sell. Chuck Teller, the founder, points out that if Realius had been in existence a few years ago it might have prevented the mortgage crisis.
The stakes involved in an economic freedom prediction game are even higher. Last fall I co-wrote a paper in which I challenged Jeffrey Sachs to a wager: Let's compare the twenty nations with the highest gains in economic freedom against the twenty nations that receive foreign aid to determine which ones experience the most economic growth in the next twenty years. After writing that paper, I decided to check the twenty nations with the largest gains in economic freedom in the past ten years, 1995-2005. Of the 122 nations for which measures are available, the top twenty gainers in economic freedom average rate of growth 2000 - 2005 is 4.2%; this set of nations as a whole averaged growth of 1.7%.
Ah, but statistics are boring. And yet it turns out that if the entire world had grown at 4.2% instead of 1.7%, by 2006 we would have had an extra $10 trillion in wealth - this is more than five times as much wealth as is generated each year in Africa, and nearly as much as is generated each year in the U.S. Basically if we increased economic freedom around the world, we could add a U.S. economy to the world every five years. Moreover poor nations benefit more from a given improvement in economic freedom than do rich nations.
Let's take the case of Malawi, at $750 annual GDP per capita one of the poorest nations on earth. For 2000-2005, Malawi has grown at a rate of .44% per year. In 45 years time at this rate of growth, Malawi's GDP per capita would be $914. At 4.2% annual growth, in 45 years time Malawi's GDP per capita would be $4776. This is much better. But the nations with top ten gains in economic freedom (without losing ground in their legal structure) averaged a rate of growth of 6.1%; this rate of growth would result in 45 years in Malawi reaching $10,844, almost where Mexico is today. Of course China has been growing at or near 10% for some time now; if Malawi could do that for 45 years, they would have a GDP per capita of $54668. And, lest this seem like the top of possibility, Dubai has averaged rates of growth of 17% for more than fifteen years. If Malawi could average 17% for 45 years, it would have a GDP per capita of $17,329 in 20 years, $83298 in 30 years, and $877,859 in 45 years.
This may seem absurd, and yet everything about our wealth in the developed world would seem fantastic to anyone living in 1800 or 1900. Fred Turner, in his wonderful article "Make Everybody Rich," estimates that by 2100 the average family of four around the world will be earning $320,000 annually, with of course much of the population being millionaires and some "poor" families only receiving $100,000 per year in income.
The real task is not to react against these marvelous possibilities; it is to steer them so that they happen more quickly, with less environmental damage, and a deeper fulfillment of human potential, happiness, and well-being. The numbers are merely numbers; they can represent great ugliness or great beauty. Ultimately the wealth that will be created, be it ugly wealth or beautiful wealth, will depend on the legal structures within which the billions of acts of creation take place. At present far too many people are still stuck in a primitive 20th century opposition, either for markets or against them, either for economic freedom or against it, either for economic growth or against it. The next stage is to transcend the opposition and recognize that the creativity, innovation, and entrepreneurship of seven or eight billion people can be directed in any number of different directions, towards great violence and destruction or towards ever deeper humanity and adventures of the spirit.
Do not cling to the violation of your vows. Let go of your attachment to the old conflicts, and move forward into our next adventure of the spirit.
Towards peace and prosperity for all,
Michael Strong
CEO & Chief Visionary Officer
FLOW, Inc.
Access: Public
buddhism
May 2008
Michael, your article was really inspiring from begining to end, and I really have liked as in conversations with you and reading your material, the balance in which you take capitalism and the way you deal with issues such as environment, etc.
Thanks for your deep commitment!
Claudia