Thursday, February 25, 2010

On Economics, Values, and Meaning

As an undergraduate student at Wittenberg University in the late 1970’s, I chose to major in economics in the belief that no other subject so adequately explained the workings of everyday life. By understanding economics, or so I believed, one could understand the efficient allocation of resources, the affects of competition on prices and jobs, the distribution of wealth and income, the proper role of government and law in regulating business and the economy, the impact of advertising on the behavior of consumers, and the realities of business cycles and international trade. The true study of economics is not restricted to quantitative formulas and complex computer models – the stuff of Ph.D. programs – but concerns itself with matters difficult to quantify – political decision making, human psychology, sociology, and culture. Although the days when I debated the merits of John Maynard Keynes and John Kenneth Galbraith, Milton Friedman and Adam Smith, are long gone, the theoretical and practical distinctions of their philosophical differences continue to interest me.

I wish here to reflect not on capitalism or socialism, not on the relative merits of free enterprise versus a centrally planned economy – I wish instead to focus on the morality, values, and ethics of society’s grasp for excess wealth and the growing gap between the rich and the poor. What are the spiritual dimensions of our present economic circumstances? Is there a way to alleviate poverty and suffering, reduce gross inequalities, and improve the quality of one’s life?

Jim Wallis, the founder and executive director of Sojourners, poses such questions in Rediscovering Values: A Moral Compass for a New Economy (Howard Books, 2010). Wallis recently spoke at the Friends Select School in Philadelphia, where he argued that the global economic crisis “provides the rare opportunity to ask some fundamental questions about our most basic values.” He does not approach economics from a left or right framework – he is neither a capitalist nor a monetarist nor a Marxist, neither a liberal nor a conservative – rather, he examines the American economy from the pulpit, as a progressive, socially conscious evangelical preacher with an activist bent. He acknowledges that the 20th century created and distributed a great volume of goods and services with unprecedented efficiency. But he suggests that “with these great advances, the moral weight of our decisions becomes greater than ever before.” Is the purpose of business simply “restricted to turning a profit” or can it become something more? Does self-interest always have to be the prime motivational force of business conduct and personal behavior? Can one make sound financial and economic decisions without sacrificing moral values, fairness, and compassion?

Market forces are important, but the ability and power of markets to solve all social and economic needs has limits. Market values do not govern personal and family relationships, ethics and religion, service to the community, and matters of social justice. It is impossible to place a monetary value on a sense of personal contentment, or a life enriched by poetry, music, art, service to others, and closeness to family and friends. This occurred to me last weekend when I attended a fundraiser at the Abington Friends School, which in the Quaker tradition attempts to instill an appreciation for a simpler life, one of mind and spirit, a life committed to responsible stewardship and community service, with little emphasis on material accumulations. As several teachers and staff wowed the audience with beautiful poetry and song, including original compositions accompanied by piano and guitar, I was struck with how self-satisfied each appeared. Despite modest salaries and little public acclaim, these dedicated mentors and educators displayed a sense of personal contentment rarely seen in the corporate world.

Those who need validation from status symbols and accumulated wealth must often sacrifice a sense of purpose and meaning and personal fulfillment. “Without a clear sense of self, a strong identity, and a community of purpose,” Wallis notes, “our default mode is to identify ourselves by the things we own.” But such an identity is inherently weak and can easily dissolve and be taken away.

For some, the market is sacred and not to be questioned, more sacrosanct than religion. How else to explain a lack of outrage over $20 million severance packages handed out to CEO’s of failing companies, or billions of dollars in bonuses awarded to executives of the very institutions that contributed to our present economic woes, while the jobs of millions of Americans have been eliminated? Where is concern for the common good and a sense of neighborly compassion? Wallis suggests that “a sense of entitlement is not just an attitude we can blanketly attribute to the poor, but is a real problem of many rich people, who believe they are entitled to be treated like kings and queens of old, whether or not they are successful.”

American culture is fascinated with the super rich and the fabulously wealthy; we admire their mansions, covet their fancy cars, emulate their fashion trends and secretly desire invitations to their dinner parties. Our enchantment with wealth causes many of us to buy “things we don’t need with money that we don’t have.” We live in an age of materialism, where mass consumption results in an over emphasis on the clothes we wear, the cars we drive, the houses we own – important sources of identity for many Americans. But what does it say about the ethics and morality of a society that accepts excessive consumerism and gross disparities in income and wealth, while millions of Americans are unemployed, tens of thousands are homeless, millions more are undernourished and uninsured, and half the world lives in extreme poverty?

In the Theory of the Leisure Class, the classic 1899 treatise on wealth, Thorstein Veblen coined the phrase “conspicuous consumption” to describe the lavish excesses of the Gilded Age. He explained that, for a certain segment of the upper class, wasteful luxury and extravagance helped to demonstrate one’s wealth and status. Since Veblen’s day, these excesses have become more prevalent, and at times more profuse. In Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich (Three Rivers Press, 2007), Robert Frank describes the modern-day practitioners of conspicuous consumption. In one chapter, he examines the super-rich yacht culture, where 100-foot yachts are considered tiny and unimpressive, as 300, 400, and even 500-foot vessels are required to keep pace in this status conscious crowd. In a world where half the global population still lives in extreme poverty, paying upwards of $100 million for a boat seems morally unconscionable.

The gap between rich and poor – indeed, between rich and everyone else – is on the rise. In 1965, the ratio of CEO salaries to average worker pay was 24-to-1. By 2004, that same ratio had risen to 431-to-1. The family of Walmart’s founder, Sam Walton, has an estimated net worth of $90 billion, which translates into one American family with a net worth roughly equivalent to the combined net worth of the bottom 40% of Americans, or 120 million people. And while the CEO of Walmart makes 900 times the salary of the company's average employee, his $17.5 million salary is nothing compared to the salaries paid to CEOs of some of the big financial institutions. In 2005, Richard Fairbanks of Capital One Financial received compensation of $249.4 million. In 2006, Angelo Mosilo, the CEO of Countrywide Financial, which led the way in subprime mortgages and dishonest lending practices, “earned” $141.98 million, ranking him seventh on the Forbes list of best-paid CEOs.

Does anybody really believe that this is a good thing? Does society benefit from such gross income disparities? Wallis argues that “when wealth becomes more and more concentrated, bad things begin to happen to us: social bonds begin to unravel, societal morale erodes, and resentment sets in when we perceive great unfairness.” As I wrote in “Is This Guy Really Worth a Billion Dollars?”, a certain amount of income inequality is a good thing, necessary to promote efficiency, to provide appropriate incentives for hard work and productivity. However, some CEO salaries and wage disparities are simply not justified, and they represent a moral and spiritual failure of our corporate and economic structures. The survival-of-the-fittest mentality, that greed is good and self-interest a necessary force for a sound economy – the notion that, if left to its own devices, the market will work itself out – are concepts that have failed a great many people, even as a select few have prospered. Is it any surprise that the two years in which income inequality was at its highest in this country – 1928 and 2007 – were years that preceded economic collapses?

Some believe that economic inequality is a reflection of one’s value to society, and that those who are rich are deservedly so, while those who are poor have simply not tried hard enough, or have done something wrong. It is easy for many people to forget that wealth is not a reflection of self-worth, or one’s value to humanity, and that much of life’s riches are distributed to those who, through a combination of many complex factors – hard work (up to a point), chance, circumstance, opportunity, and luck – determines one’s fate in life. King Solomon, a man of great wealth in his day, recognized this in the book of Ecclesiastes:

The race is not to the swift or the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned; but time and chance happen to them all.
Recognizing that financial and economic success is not strictly or always the result of hard work, ingenuity, and merit – and that not all who fail to achieve great wealth are somehow less worthy human beings – is a first step in creating a more compassionate society. Somewhere along the way, we seem to have lost sight of the common good; we have failed to recognize that the human race is in dire need of a helping hand, some understanding, and kindness, and that we are all in this journey together. Perhaps a search for meaning and purpose, in our work, in our relationships, in our lives, will lead the way to creating a more just and compassionate world, and an economic system that rewards hard work and success without leaving all others behind.


  1. Thanks Mark for another great dissertation. I love to think that a more compassionate society can be something more than a utopia.

    In addition to having lost site of the common good, it seems so many have lost their sense of personal responsibility. Search for meaning and purpose, but also search for the responsibility that goes along with living a good, honest and true life.


  2. Thank you, Jenn, for the thoughtful comments. I agree with you wholeheartedly about the need for greater personal responsibility.

  3. Mark,
    You write so eloquently what so many of us feel. How sad it is that so many people work so feverishly to attain the things that they think will make them happy to find out later on that contentment can come with a simpler life like the example you cite at the Friends School.
    On the other hand, folks who have the absolute miniumum of resources, no insurance, etc. can have their life full of just trying to survive with little time or energy left for the simpler life. If only we could all help one another in ways available to us surely things could be helped if only slightly.

    Thank you for standing up for what you believe, expressing it so others can learn or feel that they are not alone in feeling and seeing the injustices that go on. I was happy to see an article in this month's Lutheran Magazine on page 49 entitled "Pensions Disaster" concerning Augsburg Fortress terminating their retirment plan and the injustices that the people losing their pensions face. The article written by a retired pastor of the ELCA and former member of Augsburg cites actual people and how these actions affect them. Pastor FLackman writes, "How can the church ask for money to feed the hungry and create hunger by such actions? How can the church advocate for justice aand stand by for such an injustice?"

    Keep writing.
    Ruth Elstad

  4. Ruth,

    Thank you for your kind comments. I will certainly check out the Lutheran magazine article, as it points out just one more aspect of the economic disparities that afflict so many in our society.

  5. Mark,

    The bogeyman of your post, it seems, is the yacht and all it represents.  When the yacht reaches some magical, undefined length, it becomes a symbol of greed and excess; in a world in which there is poverty, the very construction and purchase of yachts are immoral acts.  But in a world in which poverty is more often a direct result of tyranny and oppression or of do-gooders trying out their latest progressive cure, the yacht is a beautiful symbol of liberty; a tribute to man’s accomplishments; a work of art and of craftsmanship; and the key to understanding how poverty can be reduced.

    The world needs more yachts.  Bigger yachts.  They say that a boat is a hole in the water in which to pour money, but that isn’t true because the money doesn’t disappear.  It is, however, a great metaphor for much of government spending, which really does flush money away, while a yacht is the perfect tool for “spreading the wealth around.”

    The photograph you chose makes the point.  The gorgeous boat is the “Floridian,” but it started life as the “Aussie Rules,” Greg Norman’s labor of love.  But before we go there it would be useful, in light of success being only partly due to hard work, with “chance, circumstance, opportunity, and luck” playing important parts, to take a look at Norman.

    Norman didn’t take up golf until he was 16 but hard work soon liberated him from his $38 a week salary working in a golf club pro shop.  Anyone who has watched the Shark play knows that he has had his share of bad breaks and good luck, but as many fabulously successful people have observed, good luck is more often than not generated by effort and persistence; in other words, luck is created.  A perfect illustration of this, if not of a smooth segue, is a scene in the movie, “The Pursuit of Happyness,” in which Chris Gardner, a destitute father who would rather sleep in homeless shelters and public bathrooms than ask for government charity, spies a man getting out of a red Ferrari.  Many people see the same thing, some no doubt thinking, “The Nouveau riche, how gauche!” or “That will be my car some day,” or “Life is so unfair, why does he have that car and I can’t even afford new breaks on my 10 year-old piece of crap?”  But Gardner thinks, “What does he do to be able to afford that car?”  Then Gardner does what no one else does:  he asks.  Now the stock broker could have brushed him off as he locked his obscenely priced sports car – a car that if sold could feed thousands of homeless people – but he doesn’t and his answer changes Gardner’s life.  That was luck, but it was earned luck.  Gardner built his own bridge to cross that “gap” that separates the poor from the rich.

    Back to Norman, who could have lived comfortably on his golf winnings (he was the first golfer to surpass $10 million in career earnings) but chose to broaden his horizons by studying business.  Eventually he became a one-man conglomerate starting numerous businesses that has made his net worth measurable in the hundreds of millions (which begs the question: does anybody really “need” that second hundred million?).

    There is an upside to Norman’s quest for “excess wealth”: hundreds, maybe thousands of people are earning a living by either working directly for Norman or by riding his coattails.  But that may be nothing compared to the people who benefited from his “morally unconscionable” pursuit of that icon of “conspicuous consumption”: the yacht.


  6. Having developed an interest in the yachting culture, Norman decided to build his own, and like all of his endeavors, he pursued it with devotion.  He wanted to learn the business from the inside out and thought the best way was to design his own boat, from hull to masthead light.  It took two years of research, after which Norman made a shrewd deal with the boat maker Oceanfast:  they would build the yacht at cost in exchange for the future business that they believed would be generated by the publicity of being Greg Norman’s boat builder.  The cost: somewhere between $49 and 70 million dollars.

    Now that’s a lot of money for a boat, but like most who spend that amount, Norman wasn’t doing it so he could motor slowly past Haiti and shake his bare millionaire ass at all the poor people.  Norman viewed his yacht as an investment, and in fact, did sell it later at a profit, but we get ahead of ourselves.

    It stands to reason that Oceanfast, already the employer of over a 1,000 people, hired even more as soon as the ink was dry on the Norman contract.  Because Norman pursued his own self interest, Oceanfast provided employment to more people; some of those people could now afford a home providing a house builder with more business; some could now afford to trade in that crappy car with the bad breaks and buy a new car, hopefully from Ford, the company that didn’t take a government handout; some worked summers at Oceanfast to pay for college and in turn the college may have increased its aid to low income but promising students;  and still others may have gone to Oceanfast with hat in hand offering to work for next to nothing just for the opportunity to learn a trade (assuming Australia doesn’t have job killing minimum wage laws).

    But that’s only the beginning.  Take a look at the pictures of this beautiful boat and soon the number of likely sub-contractors becomes too many to count.  Norman’s money went into the pockets of tile cutters and marble top carvers, plumbers and electricians, furniture makers and retailers, electronic and computer manufacturers, carpet and hardwood installers.  There’s little doubt that some businesses got their start with the Norman deal; maybe the audio-visual guys that put in the home entertainment center, working out of their garage and at cost like Oceanfast just to be able to say they were Greg Norman’s geek squad.

    Simply follow the money:  beds and bars, cigar boxes and caviar, fresh flowers and flowing champagne, Oriental rugs and Orvis fishing rods, plasma screens and plastic pool toys, crystal chandeliers and china dishes.  None of it makes itself or delivers itself to the boat.  All of it is designed, manufactured, boxed, sold and moved by “real” people who are able to feed their families and take vacations to Disney World all because Greg Norman spent his money in a manner that pleased him.

    Even Robert Frank drives this point home when he recounts that the explosion of mega-yacht sales has resulted in a corresponding explosion in the demand for more crews, dock space and maintenance workers, which translates into more employment for more people at higher wages.

    And speaking of the crew, imagine the opportunities and not just for the highly skilled, as the captain and his Gilligans must be, but for the less skilled stewards, hostesses and deckhands.  The Aussie Rules/Floridian requires a crew of 14 and in the yacht world the less skilled often volunteer to work for free for the travel and adventure, but more importantly, if they are Gardner-smart, to network with the filthy rich. 


  7. Norman relates that one of the best times on his megayacht was three weeks his family spent in a remote atoll of French Polynesia.  Norman marveled at the night sky, filled with “a trillion more stars” because of the lack of pollution.  Norman’s millions bought him that memory, but it was a gift to the woman who made Norman’s bed for those three weeks.  She may spend the next 40 years cleaning rooms at the Holiday Inn or she may climb the ladder at Hilton Worldwide because of the rich vacationers she impressed with her work ethic, but because of Norman’s immoral spending habits, she’ll have a story to tell of being surrounded by coral and covered in stars that few of us, rich or poor, will ever experience.  Despite their gross disparities in income, the millionaire and the maid were equally blessed for a time and shame on the maid if she ends up at the Holiday Inn and not at one of the Shark’s dozen businesses.

    As mentioned before, Norman sold his boat at a profit and it was bought by a billionaire and can now be chartered for $375,000 per week.  The boat continues to make money and provide jobs for countless people from boat captains to Jacuzzi repairmen to travel agents.  Not to mention all those who supply, service and repair yachts around the world.  The only money wasted in the yacht cycle of life is a good chunk of the taxes paid at every financial transaction along the way.

    Demonizing the Thurston Howell, III’s of the world does nothing to help the bag lady pictured next to the Floridian.  In all likelihood, she is suffering from a mental illness or an addiction to drugs or alcohol.  Years ago our society, God help us, decided they had a right to live on heating grates instead of being institutionalized and cared for.  If, instead, she is homeless because of economic woes, it does her no good to penalize that segment of society that seems to be, thankfully, recession proof.  Instead, we should celebrate and encourage those Masters of the Universe, while those of us in need should figure out what services we can provide them.

    For too many years our government has treated 49 million dollars as the ante in a trillion dollar poker game, immorally gambling other people’s money with no sense of responsibility towards those who dutifully pay more than their fair share.  Factor out the taxes paid by Greg Norman in pursuit of his dream and you will find that every dime of his hard-earned money was used to benefit others less financially fortunate.  What this world needs is fewer politicians using the people’s money to build the Trent Lott Middle School, the Robert C. Byrd Bridge, The Governor Mike Huckabee Delta Rivers Nature Center and other temples to their unearned greatness.  What we are in need of more is filthy rich people using their own money to build the yachts that will make Aussie Rules look like a child’s bathtub tugboat.  That is how real wealth is spread.

    Rich R.

  8. Rich,

    You make some valid points. There is value to the economy, job creation, etc., when rich people spend their money on fancy commodities. Your eloquent description of Greg Norman's odyssey and the monetary flows emanating from his $70 million yacht was quite impressive. Essentially, however, what you described is trickle-down economics. That is not a criticism, it is just a fact. The point of my essay was not to suggest there are no benefits from the spending habits and, in many cases, largesse, of rich people. It is merely to ask some of the questions raised by Jim Wallis, who looks at it from a theological and moral perspective: What does it say about the ethics and morality of a society that accepts excessive consumerism and gross disparities in income and wealth, while half the world lives in extreme poverty?

    You make a lot of assumptions that may or may not be true (e.g., how many jobs were actually created in a company that already employeed 1000 people, and how many new employees were so well paid they could now afford to buy their own homes...), but I appreciate the enterprising spirit you described. I am just not so certain that the money spent on such luxury could not go much further and be put to much better use -- helping to feed, employ, and clothe many, many more people -- if Norman invested the $70 million in something you and I would agree is more socially productive and beneficial to society than a yacht; or even had he simply started a foundation with the money and financed projects around the world that help poor people start their own businesses.

  9. Mark, The reason Norman spent his money on a yacht is because he WANTED a yacht. He had the right to buy what he wanted just as you have the right to question the social value. But it was HIS money and he had earned it. If he had wanted to start a foundation or finance projects around the world he could have but that should be his choice as it was Bill Gates' choice to donate so much of his fortuen.

    I don't follow golf or even baseball but I would bet a guy like Norman or a multi-million dollar St. Louis Cardinal player worked many hours to get where he did. So he deserves to spend the money any way he desires.

    I hate it when I hear someone say a boxer got paid $3,000,000 for fighting 10 minutes before knocking his opponent out. Anyone who says this does not have any idea how hard it is to become a boxer or how many boxers actually make the big time.

    I have known you for quite a few years and you did not get where you are by working a forty hour week. You would probably feel guilty if you only did 40 hours.

    I think a large number of those earning only a small wage are doing so due to their own behavior and attitudes. Imagine a builder who is in a financial bind asking a union worker to work a few free extra hours to help the builder finish a job and maybe avoid a loss or make a samll profit.

    Other people are held back by their reluctance to put their capital at risk in order to start a business.

    Others think anyone who actually studies at school is a jerk. This seems to be the attitude of many of the students in the inner cities. And the schoool just keep passing them up through the grades for the purpose of their self-esteem. So, to paraphrase Newt Gingrich, these folks have no education, no motivation, no work ethic, and therefore no chance of getting a good job. But they sure have a lot of self esteem.

    I don't see where Norman or anyone else has a duty to share wealth with them.

    I see no problem with government programs that tax the rich and everyone else to help those who are truly unable to help themselves for reasons beyond their control.

  10. Bill,

    First, thanks for taking the time to comment. Your thoughts and comments are always welcome.

    I do not disagree that Greg Norman has the right to buy a yacht, or just about anything he desires, with his money. But while he may have the right to spend what you would consider his hard earned money (I really doubt he works harder than me, he just happens to be a much more talented golfer -- I could practice 20 hours a day and never be as good), he fails to earn my respect for spending his money on such frivolous luxury when the needs of the world are so transparent. But that is only my opinion on how he exercises his right to spend his money, it is not an argument for preventing him from doing so. And it is intended merely to raise the question as to how just and fair our economic system is when it results in such great wealth disparities. It may very well be the best system for a lot of other reasons, but the question is a legitimate one.

    It is a question of values -- thus, the title of my essay. I am not suggesting that rich people, or anyone for that matter, cannot freely choose to do what they want with their money (within the bounds of the law, and as long as they pay their fair share in taxes), but with that freedom comes responsibility. How we exercise that freedom goes a long way towards how we are remembered and what contributions we make toward bettering the world and improving the conditions on the planet. Does Greg Norman pass the test? Maybe, but I would need more evidence than his yacht.