"Morality and Evolution"

Sydney M. Williams

30 Bokum Road – Apartment 314

Essex, CT 06426

swtotd.blogspot.com

Thought of the Day

“Morality and Evolution”

December 17, 2018

“Science is the search for truth, that is the effort to understand the world:

It involves the rejection of bias, of dogma, of revelation, but not the rejection of morality.”

                                                                                                        Linus Pauling (1901-1994)

American chemist, educator, peace activist

Recently, a granddaughter, a senior in high school, was asked to write an essay on morality and evolution. It was a subject that caught my imagination. Was not Jesus, who lived two thousand years ago, the most moral person ever? Can one argue we are more ethical today? Do our grandchildren have better manners than did our grandparents as children? How did a world that produced the Enlightenment, two hundred years later create a Hitler and a Stalin? Would anyone suggest that Donald Trump, Barack Obama, George W. Bush and Bill Clinton are more respectful of others, have higher ethical standards and are less narcissistic than George Washington, John Adams, Thomas Jefferson and James Madison? It is hard not to conclude we have witnessed a reverse form of evolution, at least when it comes to morality

Evolution is a natural condition. Civilizations evolve, mostly for the better. Consider the buildings we live in, the food we eat, the clothes we wear, the cars we drive. Technology has changed the way we communicate, how we shop and the care we provide the sick. We have sent men into space. We grow more crops on less acreage. Evolutionary forces have reduced poverty and extended life expectancy. Even laws and prisons have become less draconian. Government has evolved – from authoritarianism to democracy. According to the website www.ourworldindata.org/democracy, 13 million people lived in democracies in 1830, while 3.92 billion did in 2012. Additionally, racial segregation has been addressed and government care is provided the elderly and impoverished. There has been a downside. War has become more horrific. A small number of social media companies influence how we think; privacy issues have been raised, and the prospect of cyber-war fare has increased. Still, technology-driven evolutionary forces have given us much, including time. But have they made us more gracious and considerate? Has compassionate government made us more respectful, thoughtful and thankful?

Different people will offer different answers, but one possibility is what William McGurn recently called “The Crisis of Good Intentions,” reminding this reader of Milton Friedman: “One of the great mistakes is to judge policies and programs by their intentions rather than results.” In his Wall Street Journalop-ed, Mr. McGurn noted that there are those who claim that capitalism is facing an existential crisis. He cited Alexandria Ocasio-Cortez (“wild-west capitalism”), Thomas Pikety (“patrimonial capitalism”) and the Archbishop of Canterbury (the gig economy is “the reincarnation of an ancient evil”). These are people who see capitalism as pernicious and government as the genesis for equality and social good. Yet California, the most socialistic of U.S. states, has the greatest income inequality of any state. It has the highest poverty rate, as measured by the Supplemental Poverty Measure, which allows for differences in cost-of-living; yet, with 12% of the nation’s population, it is home to 24% of the nation’s billionaires. In his op-ed, William McGurn quoted Chapman University’s Joel Kotkin and Marshall Toplansky: “California is creating a feudalized society, characterized by the ultra-rich, a diminishing middle class and a large, rising segment that is in or near poverty.” Does that not present a moral imperative?

Europe and California have become fiefdoms of hypocritical elites who brook no quarter with those with whom they disagree. Consider the climate change debate. To believers, man is principally responsible for the earth’s changing climate, reminding one of mythical King Canute’s conceit. Natural forces play no role. Salvation depends on obeisance to rules laid out by non-elected bureaucrats. If the end is worthy, so the well-intentioned proclaim, cost is immaterial. Yet carbon taxes – like those on lotteries, sports betting and marijuana sales – are regressive. Arrogance follows, as elites are segregated from average Americans. 

Politicians have found success in the obverse of John Kennedy’s famous dictum: promise what government can provide; disregard what voters can do. Yet all promises come at a cost – not only in dollars, but in ethical standards. The dollar cost is an inconvenient fact, studiously avoided. Diminution in morality is simply ignored. Promising more has become habitual, with voters rising to the bait. Government’s offer of low-interest student loans led to a rise in tuitions. A focus on regulation slows the pace of economic growth and perpetuates a permanent administrative state. Today, like Orpheus with his gifted voice, politicians charm the electorate, promising an Earth where oceans will recede, tuition-free college and birth to death care. The result is increased dependency and reduced self-reliance, habits that lead to sloth and irresponsibility. Morality stems from civility, decency, self-esteem and respect for others. It finds its foundation in the dignity of work, not the dishonor of idleness. It evolved from the Golden Rule of doing unto others what one would have done unto them – a rule once taught by parents to children and teachers to students. And it characterizes America’s middle class, which tribalism threatens to destroy.    

America’s middle class – a varied, un-compartmentalizable, but shrinking segment of the population – is unified by a value system based on a Christian-Judeo ethic, archaic in today’s global, multi-cultural world. These Americans are unique, in that they represent a cross-section of the world’s population – West and East Europeans, Asians, Africans and Latins. They believe in the rule of law, in the precept that hard work is fundamental to success, that strength comes from what we share, not how we differ. They are more likely to have nuclear families, to be church-goers and to be involved in their communities. Identity politics are useful to politicians, for they segment the electorate into identifiable groups. But the result is division, not unity, which, in turn, leads to personal greed – getting what one wants is more important than getting along.

           
Albert Schweitzer once allegedly wrote, “The first step in the evolution of ethics is a sense of solidarity with other humans.” It is an obvious truth, as morality is only necessary within a societal structure. The reason we were taught to be polite, to open doors, listen to others and to be respectful is that such behavior is imperative to civil relations. We understand the role smart phones and video games have had on social interaction. But this change in social behavior pre-dates the advent of the internet and social media. Church attendance has been falling throughout the post-War years. Out-of-wedlock births have risen. In his 2001 book, “Bowling Alone,” Harvard Professor Robert Putnam described the collapse of community organizations. There has been a concomitant decline in volunteerism, despite a rise in the over-65 crowd. The pending bankruptcy of the Boy Scouts of America, with its oath, “On my honor, I will do my duty to God and my country,” is not only a consequence of alleged sexual misconduct, but declining membership. What twelve-year-old boy today would recite that oath, so dated and out-of-sync in a world where honor is passé andwhere “God” and “country” are denigrated? We ask: are today’s PC police better than yesterday’s parents, ministers and teachers?

None of this fully explains why morality has failed to evolve, but perhaps provides clues. My granddaughter, who recently found out she will be attending Bucknell University next fall, was as perplexed as I, as to why ethical standards have retreated. Nevertheless, we both believe culture plays a role, and that the pursuit of happiness means traveling a road paved with a moral sense.

"Markets in the Trump Era"

Sydney M. Williams

Thought of the Day

“Markets in the Trump Era”

February 13, 2017

“Wall Street people learn nothing and forget everything.”

                                                                                                Benjamin Graham (1894-1976)

“It has become appallingly obvious that our technology has exceeded our humanity.”

                                                                                                Albert Einstein (1879-1955)

Investors get what they want (deserve?) from market pundits. If one is bullish, an expert is found who concurs. If one is bearish, a market seer will be uncovered. But the future is, at best, a guess. We can look to the past for guidance, but none of us are clairvoyants, especially in this “brave new world.”

The two decades that ended in 2000 were some of the best in stock market history, with the Dow Jones Industrial Average compounding at 14.0% over those twenty years. Since, the Average has compounded at 3%, a consequence of a difficult first nine years, followed by a big bounce off the 2009 lows. Multiples are high, but the euphoria of the late 1990s is gone.

Markets are deciphering what is happening globally, geopolitically, economically and technologically. One thing we do know is that the past few decades have not been good for large segments of the population. Since 1970, on an inflation adjusted basis, stocks, including dividends, have compounded at 4.3% and home prices at 2%. However, median incomes have compounded at only 0.5%. In the past ten years, these variances have widened. Since 2007, stock prices are up 60%, median house prices are up 30%, while median incomes are unchanged. Incidentally, over the last decade college tuitions have risen 40%. Labor force participation, over the last decade, declined four percentage points – a cost of six and a half million fewer jobs. Working Americans, who find dignity in what they do, are understandably upset.

There are many reasons for their angst: Immigration policies have let in cheap labor. Globalization has provided benefits to consumers, but at a cost of jobs. Politicians have provided entitlements to the nation’s poor and have focused on pet projects for the wealthy (like solar panels and Teslas), but have ignored the plight of the American worker. A politically-driven fixation with environmental issues has come at the expense of economic growth. Complex tax and regulatory rules have helped rich individuals and big businesses, but have hurt small companies and caused a net decline in new-business start-ups for the first time ever. And a technology boom, equal to the Industrial Revolution in impact, has obsoleted jobs.

There are still other reasons for their concern: Social Security and Medicare are at risk; an absence of defined benefit retirement plans and an aging population mean that millions are retiring without the ability to support themselves. The moral values that most Middle-American families grew up with are dismissed by coastal elites. Public schools cater to unions, not students and parents. Low interest rates have helped speculators, but have hampered savers. And, of course, 9/11 exposed a vicious and and different enemy – Islamic extremism – an enemy Obama’s Washington was unwilling to call by name.

Is there a way forward? Yes. There are things government should let alone, but there are steps they can take. Among the former is: Don’t impede technology, even though change is taxing, especially to the age-challenged. When Einstein uttered his famous quote, he was thinking of the Atomic bomb, but his words apply today. Robots have replaced factory workers and algorithms have replaced Wall Street traders. Doctors in Houston, using robots, can perform surgeries in remote New Hampshire towns. Hoteliers can deliver room service using robots. During the holidays, as many shoppers bought gifts online as went into stores – good for consumers and a blessing for truckers, but bad news for store clerks. And, when Drones and/or self-driving vehicles drop packages on our doorsteps, delivery drivers will be affected. Wireless communication has had a negative impact on copper producers and linesmen. Approximately 30% of the roughly $100 trillion in U.S. equity and bond markets are now managed passively, reducing management fees by perhaps $150 billion. MOOCs (Massive Open Online Courses) are changing the way we learn. Joseph Schumpeter’s “creative destruction” is affecting multiple sectors of the economy. And, such changes have a draconian impact on labor. Snapchat, Instagram and other forms of social media mean that we are, for good or bad, continuously connected. In the military, Drones are doing the jobs of manned aircraft and “boots on the ground.” Through our smart phones, we are trackable. But the internet also allows terrorist organizations to recruit and plan operations anonymously. Do we understand the full consequences of this revolution? I would guess not, but we cannot discourage innovation.

We must also be careful not to raise barriers to trade, a critical ingredient to global growth. We cannot retreat into a shell, to quit the world of which we are its most integral part. We must not lose sight of our responsibilities as a compassionate nation, but we must not be so naïve as to ignore evil that lurks. We have a responsibility to ourselves and our allies to be militarily strong. We should be the principal proponent of global trade that is fair to our workers.

But we can make this disruptive transition easier. We can ease regulation for those willing to start new businesses. We can reduce red tape, without forfeiting safety. We can make our tax code less complex and more competitive. We can legislate tort reform, without harming plaintiffs. We can improve schools by giving parents and students choice. We can limit government spending, by fixing run-away entitlements, which should allow moneys to be spent on infrastructure without ballooning debt.

As for markets, the Dow Jones Averages are up 10.5% since Mr. Trump’s election last November – a significant down payment on future policies. Despite protesters and the ridicule Mr. Trump receives from mainstream media and his Democrat opponents, risk markets seem unworried[1]. The spread between investment grade corporates and high-yield bonds has narrowed since the end of 2016’s third quarter from 284 basis points to 216 basis points. The VIX, a measurement of volatility, closed at 18.74 on November 8, and at 10.85 on February 10. And, during only one day out of the 67 trading days since the election has the market moved up or down more than 1.5 percent. There is, however to this oldster, something unsettling about complacency in markets, which brings to mind Benjamin Graham’s warning.

Mr. Trump, regulatory and tax reform should be first on the agenda.

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[1] Investors have exchanged riskless for risk, with the yield on the US Ten-Year having risen 25% since November 8.