GSC Key Issues

Global System Change

A Whole System Approach To
Achieving Sustainability and Real Prosperity

KEY ISSUES

Frank Dixon
Copyright © 2016

The following summarizes a few of the many systemic problems, solutions and overarching strategies discussed in this whole system book. The book provides extensive facts, logic, examples and references to support the system changes suggested within, including those summarized below.

Political Parties. George Washington called political parties the worst enemy of elected government. Vested interests use political parties to divide the people into debating, acrimonious factions, such as conservatives and liberals. When the people are divided, they are conquered. Establishing true democracy in the US and many other countries requires greatly weakening political parties and encouraging citizens to work together in their massive areas of common interest, such as protecting life support systems and our children.

The Supreme Court. The US Founders gave all ultimate power to We the People. As the branch most controlled by the people, the Founders made Congress the strongest branch of government. The Judicial branch is unelected, and therefore farthest from the people. As a result, the Founders made it the weakest branch of government. They established this in the Constitution by giving Congress substantial authority to structure and regulate the Judiciary. The Constitution does not give the Judicial branch the authority to void laws. But in 1803, the Supreme Court violated the US Constitution by unilaterally giving itself the authority to irrevocably void acts of the Legislative and Executive branches.

This essentially ended democracy and republican government in the US. When an unelected, aristocratic branch has absolute power over the elected branches, democracy largely does not exist. Influence of the judicial appointment process enables a small group of wealthy citizens and corporations to gain long-term control of the most powerful branch of government. The Supreme Court often protects those who paid to appoint justices, for example, by voiding campaign finance laws that limit the ability of wealthy citizens and corporations to unfairly control government. To restore democracy in the US, Congress must exercise its clear constitutional authority over the Judicial branch by imposing term limits and revoking the authority to void laws. This is one of the most important changes needed in the US government. It also is one of the easiest because no constitutional amendments are needed.

(As discussed in the Judicial Branch section, the Constitution establishes several mechanisms to ensure that laws do not violate the Constitution, such as Presidential veto, the two-house structure of the Legislature, regular Congressional elections, and the oath of allegiance to the Constitution. Additional mechanisms could be established if necessary, for example, by implementing the council of revision proposed by James Madison during the Constitutional Convention of 1787. Judges could be given some role in ensuring that laws abide by the Constitution. But unelected, aristocratic justices, who largely are unaccountable to the people, must not be given absolute power over the people’s elected representatives. The Founders rebelled against the aristocratic British government. They absolutely did not intend to establish aristocracy in the US. To end aristocracy, term limits must be imposed in the Legislative and Judicial branches.)

Measuring Success. A common business saying is, what gets measured gets managed. The US and many other countries use economic growth as the primary measure of success. But economic growth is not the ultimate goal. It is a means to an end. The goal is maximizing the well-being of society. Focusing the measurement and management of society on economic growth causes extensive unintended environmental and social degradation. Economic growth mostly measures the financial well-being of a small group of wealthy citizens, instead of the total well-being of all citizens. A whole system perspective shows that we must begin to measure the endpoint, not the means to the end. Ending environmental and social degradation and maximizing the well-being of society requires that we begin to focus the measurement and management of the economy, government and society on maximizing the actual, objective well-being of society.

Time Value of Money. Modern economic and financial systems are heavily based on the concept of time value of money (TVM). TVM provides a perfect example of how the failure to think systemically severely degrades society. TVM says that things are worth more in the present than the future. This makes sense from an individual perspective, but not from a whole system perspective. TVM says that beyond about 50 years, people and the environmental resources needed to keep them alive have little or no value. This frequently compels business and political leaders to degrade the environment and future generations. According to our suicidally-flawed economic system, protecting nearly worthless future people and resources would be a foolish economic decision. A whole system perspective reveals the extremely irrational and destructive nature of TVM. We have no right to discount future generations and the environment that they will need to survive. They are worth at least as much as we are, if not more. Like the implied economics of nature, sustainable economic systems would not discount future generations and resources.

Corporate Welfare. In the US, at least several trillion dollars of public wealth are transferred every year through many forms of corporate welfare to the small group of wealthy citizens and corporations that largely control government. This is the main reason why inequality has been rising rapidly for 35 years. Major forms of corporate welfare include externalized costs, limited liability and fractional reserve lending. Eliminating corporate welfare would enable the great reduction or elimination of income and property taxes on low and middle-income citizens, while also enabling the establishment of a strong social safety net, comparable to other developed countries.

Limited liability. Individuals and small business owners are held fully responsible for harm imposed on society. But owner/shareholders of corporations often are not. Limited liability is a highly deceptive term. Liability and risk do not magically disappear. They are transferred, largely to taxpayers. Therefore, the far more accurate name for limited liability is transferred liability or taxpayer liability. With limited liability, taxpayers frequently are compelled to act as the owners of business on the downside by paying for harm caused by corporations. But they get none of the financial upside. In other words, limited liability is socialism on the downside and capitalism on the upside. A limited liability corporation is not a private entity. It is a grossly unfair quasi-public structure.

Beyond the gross financial injustice of limited liability, the structure severely degrades society. Flawed systems usually compel companies to pursue the profit-maximizing strategy. High-risk activities, such as producing synthetic chemicals and burning fossil fuels, often are the most profitable. But high financial risk usually limits engagement in activities with high profit potential. By transferring financial risk and liability to taxpayers, limited liability frequently compels companies to engage in the most risky and destructive activities. People in the future (assuming there are any) will look back on limited liability the way we look back on witch burning. Under sustainable systems, large companies and their owners would be held fully responsible. Taxpayers would not cover the downside of private sector activities, unless they received fair compensation.

Money Creation. About 90 percent of the US money supply is created by banks through fractional reserve lending. The right to create money belongs to the people, not banks. Allowing banks to create money potentially increases taxes by over $500 billion per year (i.e. nearly half of federal individual income taxes). When government runs a deficit, banks create money out of thin air, loan it to government, and citizens pay interest on it (about $400 billion per year). If citizens created money, instead of banks, they often would pay no interest. The interest revenue from money creation largely belongs to the people, not banks. Beyond unnecessary interest payments, citizens potentially lose over $100 billion per year of interest income by allowing banks to create money.

The Federal Reserve (Fed) manages the US money supply. It is completely owned by private banks. Citizens have virtually no control over the Fed. When banks create and control the money supply, the goal largely is to maximize the wealth of bank owners. If the people took back their right to create money, the money supply would be managed with the primary goal of maximizing the well-being of society. Economic growth is needed in large part to pay interest on public and private debt. If the people controlled the money supply, interest rates and the need to pay interest would be much lower. This would reduce the need to continuously grow the economy. Under sustainable systems, the people, not banks, would create money and control the Fed.

Financial Sector. The US financial sector perfectly illustrates what happens when democracy is replaced with plutocracy (i.e. control of government and society by a small group of wealthy citizens). The financial sector and broader economy are supposed to be the servants of society. But in many ways, they have become the master. Prior to 1981, many corporations appeared to have some commitment to employees, customers and broader society. But since then, the financial sector has compelled corporations to increasingly focus on providing ever-increasing shareholder returns. This has pushed employees, customers, the environment and everything else aside. The financial sector-driven requirement to provide ever-increasing shareholder returns compels companies to degrade the environment and society.

As business influence of government began to increase in 1981, the financial sector was deregulated. Regulations put in place after the 1929 stock market crash to prevent another crash were removed. As a result, another major crash occurred in 2008. As much as $12 trillion of taxpayer funds were used to bailout wealthy speculators who made risky investments in derivatives and other areas. Most of the bailout funds were provided by the Fed. Federal Reserve obligations often become obligations of the US Treasury (i.e. taxpayers). Through the bank-controlled Fed, banks essentially used taxpayer funds to bail themselves out without taxpayer permission or disclosure (i.e. the Fed does not have to disclose information to citizens).

Hedge funds, private equity companies and other structures are used to extract massive amounts of wealth from society and concentrate it in the hands of a small group of wealthy citizens. For example, private equity companies often buy successful companies, load them up with debt, use the debt to immediately pay large dividends to new owners, and cut labor costs to pay higher debt expenses. Laying off employees and loading up companies with debt does not improve society. It cannibalizes it. Under sustainable systems, plutocracy would be replaced with democracy. Financial structures and transactions that degrade society would be prohibited. Corporations and finance companies would be primarily focused on maximizing the well-being of society, not shareholder returns. Reasonable investor returns would result from serving society well.

Food Production and Diet. The industrial production of animal products is a major cause of environmental degradation, chronic disease, premature death, hunger, animal cruelty and pandemic risk. Along with burning fossil fuels, animal product production is one of the most environmentally destructive activities on Earth. About 75 percent of people in the US die of chronic diseases, such as heart disease and cancer. These diseases are rare among populations that eat few or no animal products. Greatly reducing the consumption of animal products would vastly lower chronic disease and premature deaths, while also reducing healthcare costs by hundreds of billions of dollars per year.

Producing animal products is grossly inefficient compared to producing plant products. Substantially reducing the consumption of animal products would produce a huge surplus of food. This would enable us to end hunger and scale back intensive, unsustainable agriculture. Industrial animal product production causes extensive pain and suffering among food animals. Greatly scaling back the production of animal products would enable us to live up to our name – humanity (i.e. kindness, humaneness). Industrial animal product production also strongly promotes the development of H5N1 and other highly pathogenic viruses. Substantially reducing this production would greatly reduce influenza pandemic risk – perhaps the largest threat to humanity. A whole system perspective shows that, instead of heavily subsidizing animal products and refined carbohydrates, we should strongly promote the healthiest foods that humans can eat – organic vegetables, fruits and whole grains.

Crime. The US approach to crime is extremely expensive and counterproductive. Crime is a symptom of problems in society. Focusing the management of society on maximizing economic growth, instead of maximizing the actual well-being of society, produces vast and unnecessary unemployment and suffering among citizens. This strongly contributes to increased crime. Heavy policing and incarceration are ineffective, expensive, end-of-the-pipe solutions. The US has the highest incarceration rate in the world by far. But we also have the highest illegal drug use and near the highest gun murder and other crime rates among developed countries.

The US criminal justice system and society overall heavily discriminate against African Americans, as shown by higher unemployment and lower prosperity compared to whites, as well as vastly higher incarceration, even when white crime rates are similar. For-profit prison companies lobby for higher incarceration because this helps their shareholders. But it greatly increases taxes and degrades society. A whole system perspective shows that the most important solution to crime is addressing root causes. We must refocus the management of society on equally and fairly benefiting all citizens (instead of just wealthy citizens), in large part by implementing an economic system that provides good job and business ownership opportunities for all people who want or need them.

Africa. Among the worst hunger, suffering and human rights violations occur in Africa. Widespread political corruption enables wealthy nations and corporations to buy or lease vast amounts of African land at deep discounts. Industrial agriculture, mining and other activities are severely degrading the African environment. Extensive wealth essentially is being stolen from the African people. A whole system perspective reveals that every effort must be made to implement true democracy in African countries. The vast wealth of Africa should be retained in Africa and used to equally and fairly benefit all African citizens. Industrialized nations and corporations no longer should be allowed to abuse the African people by unfairly taking their wealth and degrading their environment.

Public Internet. Public roads greatly benefit the economy and society. All citizens and companies have equal access to public roads. Extensive economic and social activities are moving online. The Internet is becoming as important as public roads to the economy and society. The Internet in the US largely is run by for-profit companies. As a result, the US has nearly the most expensive, slowest Internet access among developed countries. Public utilities in Tennessee and other states often provide much faster Internet access for lower prices. Public entities do not have to continuously increase prices and reduce quantity/quality/costs to provide ever-increasing shareholder returns. As a result, public or nonprofit organizations frequently can provide higher quality services at lower prices. Healthcare provides a perfect example of this. Every other developed country proves that the public sector can provide far better healthcare coverage at far lower costs with similar or better results than the private sector.

Beyond frequently high prices and low quality, for-profit Internet and online service companies track and retain nearly all information about customers’ online activities. In the same way that government and business have no right to track the activities of law-abiding citizens on public roads, they have no right to track citizens online. Maximizing the well-being of the economy and society requires that Internet and critical online services be provided on a democratic, nonprofit basis. Reducing corporate welfare could easily fund a public Internet system that provides free, high-speed access to all citizens, businesses and other organizations, without violating citizens’ privacy. Like the public road system, a public Internet would greatly increase competition and reduce prices for telecommunications, entertainment and many other services.

Freedom-Based Education. Forced education severely degrades young people. It is incompatible with a free society. Modern education systems in the US and many other countries are legacies of the Industrial Age and Protestant Reformation. The goals were and largely still are obedience training and indoctrination (i.e. teaching young people to blindly believe prevailing ideas). Forced competitive grading lowers self-esteem and social skills by teaching average and below-average students that they are inadequate. Forced standardized curriculums teach young people that their unique interests and talents are irrelevant and that they are inadequate when they perform poorly on subjects in which they have no interest. Forced school attendance often compels young people to sit in sterile rooms for seven hours per day, five days per week, listening to adults talk to them. Humans did not evolve to learn this way. Much of the information learned in forced K-12 education is quickly forgotten and not needed for life success. Forced education teaches young people to obey authorities and tolerate boring jobs for the rest of their lives.

Young people have a natural desire to learn information that is interesting and relevant to their lives. Forced education suppresses curiosity, creativity and a desire to learn. Freedom-based education approaches, such as Self-Directed Learning, have been functioning for decades. Young people educated in these environments learn all they need for life success, develop stronger self-esteem and social skills, and perform as well or better in higher education and careers.

Business-focused education ‘reform’ in the US further degrades young people. World leaders in K-12 education use well-funded public education systems and strong teachers unions, the same approach the US employed when we were a world leader in education. Privatization shifts the focus of education from maximizing the well-being of young people to maximizing shareholder returns. For-profit education companies and their paid political servants mislead the public by arguing that poor academic performance is caused by lack of standardization and other business processes. But poor performance occurs mainly in low-income communities. Children in these communities often face many challenges outside of school that prevent them from doing well in school. The main cause of poor academic performance is not lack of business processes and privatized schools. It is the widespread and unnecessary poverty that results from myopically focusing on maximizing economic growth, instead of the actual well-being of society.

Maximizing the well-being of society requires that young people (and everyone else) be encouraged to critically examine ideas and think for themselves, rather than blindly believe authorities and prevailing economic and other ideas. To illustrate, business vested interests often protect shareholder returns by arguing that anyone who suggests that the public sector could outperform the private sector in certain areas must be a socialist or communist. The slightest amount of rational thought reveals the pure idiocy of this position. But emotional manipulation often trumps logic. Citizens are compelled to blindly believe this irrational, shareholder-protecting position. Young people should be taught to consider goals, critically examine practical options for achieving the goals, and select the strategy that objectively provides the greatest benefit for the least cost. Freedom-based education will empower young people to think for themselves, follow their hearts, live rich, full lives, and help to solve the immense challenges facing humanity.

Media Deception. In a true democracy, citizens cannot effectively lead society if they do not have accurate information. In a plutocracy such as US, business controlled media regularly provides biased, inaccurate information that divides and disempowers citizens. This prevents citizens from taking back control of government and promoting the general welfare, the primary goal of our Constitution.

Climate change provides a good example of how business controlled media misleads the public. About 97 percent of climate scientists say that humans are substantially contributing to climate change. But about 66 percent of Republican citizens believe that humans are not causing climate change. Deceptive media is the primary cause of this lopsided outcome. Radical media organizations often strongly promote the views of energy company-funded scientists who say that humans are not causing climate change. Of course, the radical news outlets usually neglect to mention that 97 percent of climate scientists disagree with the business-influenced, climate change-denying scientists. These media deceptions mislead citizens in ways that protect the shareholder returns of energy and other companies, but degrade society.

From 1949 to 1987, the Fairness Doctrine required major media companies to present both sides of controversial issues. But the requirement to honestly present major issues limited the ability to mislead the public and maximize shareholder returns. As a result, business controlled government removed the Fairness Doctrine. Radical media argued that the Fairness Doctrine inhibited free speech. But free speech is not an unrestricted right. In a democracy, media has no right to mislead the public in ways that protect shareholders, but degrade society. As democracy is established under sustainable systems, major media outlets once again will be required to provide honest, accurate information.

Wrong Perspective Deception. This book identifies over 30 deception techniques that are used to mislead the public. Wrong Perspective is one of the most important. The Wrong Perspective deception technique involves arguing or implying that substances and activities that potentially threaten individuals, the environment and society are innocent until proven guilty, or safe until proven unsafe. But the priority in society is protecting the health and lives of citizens, not shareholder returns. Fairness demands that humans be considered innocent until proven guilty. But maximizing the well-being of society requires that anything which threatens individuals and society be considered unsafe until proven safe at a high level of certainty (i.e. the right perspective).

Unfortunately, the big business controlled US government usually implements the wrong perspective. Producing synthetic chemicals, burning fossil fuels and many other potentially harmful activities often implicitly are considered to be safe until proven unsafe. As discussed in the Chemicals section, most chemicals are not tested for safety in the US. Overwhelming evidence of harm is required to ban or restrict chemicals. Under sustainable systems, we would adopt the right perspective. Overwhelming independent evidence that potentially harmful substances and activities are safe would be required before they were allowed in society.

Small Government Deception. Government regulations are intended to protect society by holding companies responsible for negative impacts and prohibiting unfair taking of the public wealth. But this protection frequently inhibits the ability to provide ever-increasing shareholder returns. To protect financial returns, large companies and their media and political allies often turn citizens against government and regulations. They regularly blame ‘big government’ for high taxes and problems in society. This of course is a deception. The problem largely is not the size of government. It is lack of democracy.

The US Founders gave the federal government the power to pass nearly any law it believed was necessary to promote the general welfare, and made these laws and the Constitution the supreme law of the land. But this strong power of government is not being wielded by the people and used to equally and fairly benefit all citizens, as the Constitution demands. As shown by rapidly rising inequality, a small group of wealthy citizens control government and use its great power to concentrate public wealth in their own hands. The solution to government problems largely is not to shrink government and regulations. This would enable even greater environmental and social degradation and unfair taking of the public wealth. The solution is to convert plutocracy to democracy. Democratic government is the agent of the people. Under sustainable systems, We the People would direct our servant government to maximize the well-being of all current and future citizens, as the Founders intended.

The preceding ideas illustrate just a few of the major system changes and issues discussed in this book. Beyond specific system changes, several broader movements are recommended to facilitate achieving sustainability and real prosperity. These include promoting whole system thinking, increasing wisdom in society, refocusing the sustainability movement on system change, implementing a sustainable society and economy, and uniting citizens.

Whole System Thinking. Expanding whole system thinking in academia, business, government and society overall is essential. In K-12 and higher education, young people first should learn about the interconnected whole system at a general or summary level, and then study the details of sub-elements (economic, political, social) in the context of the whole system. Business, government and society overall first should consider the endpoint (maximizing the long-term well-being of society), and then develop practical strategies for achieving this goal. We must stop blindly implementing destructive, myopic concepts and systems, such as the irrational idea that putting economic growth and shareholder returns before all else will maximize the well-being of society.

Wisdom. Increasing wisdom in society requires emulating nature and ensuring true equality between men and women. Nature displays essentially infinitely greater implied wisdom and intelligence than human society. A whole system perspective reveals that the overwhelming force in nature is cooperation, not competition. Many studies show that women manifest greater cooperation, empathy and other aspects of wisdom than men, in the same way that men manifest greater physical strength, aggressiveness and other aspects of power.

There is an imbalance between power and wisdom in human society. We have developed great power to manipulate the environment and society. But rapid environmental and social degradation show that we lack the wisdom needed to exercise this power wisely. The imbalance between power and wisdom probably results in large part from the imbalance between men and women. In our competitive, fear-filled world, those with more power (men) are honored. As we recognize the need for more wisdom and cooperation in human society, those who innately manifest more of these characteristics (women) naturally will be elevated to a position of true equality with men.

Collaborative System Change. System change is the 800-pound gorilla in the sustainability area. Achieving sustainability and real prosperity requires largely refocusing the sustainability, corporate responsibility and socially responsible investing movements on collaborative system change. The Total Corporate Responsibility model discussed in this book provides one way to do this. But many more collaborative efforts and mechanisms must be established to promote and facilitate mid-level (sector-level) and high-level (economic, political, social) system change.

Non-judgment is an essential aspect of successful system change. Business and political leaders do not intend to degrade society. Leaders and corporations are not the enemies. The true enemies of humanity are our myopic ideas and the flawed systems that result from them. Business can play an essential role in voluntary, collaborative system change. Non-judgment will greatly facilitate this collaboration.

Helping business is an important goal of this book. Flawed systems compel well-meaning companies and business leaders to degrade the environment and society. This ultimately degrades business. Protecting business and society overall requires evolving systems into forms that compel companies to act in a fully responsible manner. Under sustainable systems, companies will maximize profits by enhancing society and eliminating all negative impacts.

Sustainable Society and Economy. As noted, the economy is supposed to be the servant of society, instead of the master, as it largely is now. To define and develop a sustainable economy, we must first define a sustainable society. This sets the goals and parameters within which a sustainable economy must operate. A sustainable society obviously would be based on true democracy and primarily focused on maximizing the well-being of current and future citizens.

Over the past several decades, we could have used technology, automation and other human inventions and know-how to maximize the well-being of current citizens and protect future citizens. But maximizing the well-being of current and future citizens was not the measured and managed focus of society. Instead, we focused on maximizing economic growth and shareholder returns, and then ignorantly and myopically assumed that this would maximize the well-being of society. But as discussed, economic growth and shareholder returns mostly measure the financial well-being of a small group of already wealthy citizens. As a result, technology and know-how largely were used to enrich the already wealthy, while life became more difficult for nearly everyone else.

Many experts are concerned that automation will eliminate millions of jobs over the next 30 years, and thereby make life more difficult for much of society. This is a reasonable assumption and concern in a plutocracy, such as the US. However, if the US actually were a democracy, increased automation would be cause for great celebration among the masses. Instead of laying people off, cutting labor costs and making rich people richer, we would use technology and automation to enrich the quality of life of all citizens. With automation, we might reduce the average workweek of citizens from 40 to 20 hours. We also could make it easier to meet basic needs by lowering costs and increasing convenience. People would be able to spend more time raising their children and doing what they love.

When society is the master of the economy, as it should be, the primary focus of the public and private sectors would be on maximizing the well-being of society. Businesses would be structured in ways where they make the most money by benefiting society, not degrading it, as is the case with current flawed business structures and systems. In a sustainable society, we will use technology, automation and our great knowledge to provide ever-increasing well-being of all current and future citizens, instead of ever-increasing short-term profits, economic growth and shareholder returns.

We the People. One of the most important movements needed in human society is to unite citizens and empower them to work together in our massive areas of common interest. As George Washington correctly said long ago, political parties enable vested interests to divide and disempower the people. This enables them to take control of government, end democracy and unfairly take the public wealth through corporate welfare. In the US, the Republican and Democratic parties are controlled by a small group of wealthy citizens and corporations. As shown over the past 35 years, regardless of which party was in power, this group did phenomenally well, while life became more difficult for nearly everyone else.

The big business-controlled Republican and Democratic parties cannot and will not resolve major injustices and problems in the US. Focusing on beating the Democrats or Republicans keeps the people divided and conquered. This book suggests establishing a We the People movement that unites citizens. Once united, we can take back control of government from vested interests and use the public wealth to equally and fairly benefit all citizens.

Democracy largely has not existed for nearly all of US history. We the People are the sleeping giant of society. Our Constitution gives us all the power. But we give up our power when we allow ourselves to be divided by business vested interests and their media and political puppets.

It is time to stand up and do the right thing for our children and future generations. The Founders often used the word posterity. They were focused on the long-term well-being of society. We the People have free will. We do not have to allow ourselves to be manipulated and divided into conservatives and liberals. We can choose to finally do what our Founders intended – work together on our massive common interests and ensure the long-term well-being of society. This book shows how we can do this in the US and everywhere else on this planet.

 

Frank Dixon oversaw the sustainability analysis and rating of the world’s 2,000 largest companies for many years as the Managing Director of Research at Innovest Strategic Value Advisors, formerly the largest corporate sustainability research firm in the world. Institutional investors used Innovest research to develop high-performing socially responsible investing products. Extensive corporate sustainability experience made it clear that flawed systems compel all companies to degrade the environment and society. Frank Dixon developed the TCR® approach to provide a practical and profitable way for companies and investors to engage in system change. Following Innovest, he provided sustainability and system change consulting to companies in the US and Europe. Most recently, he wrote the Global System Change series of books. Using a whole system approach, the books identify the major economic, political and social system changes needed to achieve sustainability and real prosperity.

Frank Dixon has an MBA from the Harvard Business School.

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Copyright © 2016 Frank Dixon