"The greatness and the genuine trait of your thought and writings lie on the fact that you positively and interestingly make use of philosophical thoughts and thoughtfulness in order to deeply and concretely cogitate about America's social issues. . . . This does not mean that your thought is reducible to your era: your thought, being inspired by issues characterizing your era . . . , overcomes your era and will still likely be up to date even after your era, for future generations." Bruno Valentin

Thursday, December 8, 2016

The Golden Age of Innovation Refuted

“By all appearances, we’re in a golden age of innovation. Every month sees new advances in artificial intelligence, gene therapy, robotics, and software apps. Research and development as a share of gross domestic product [of the U.S.] is near an all-time high. There are more scientists and engineers in the U.S. than ever before. None of this has translated into meaningful advances in Americans’ standard of living.”[1] The question I address here is why.
For one thing, a lag follows big ideas before which they translate into increases in productivity related to labor and capital. Breakthroughs in electricity, aviation, and antibiotics did not reach their maximum impact until the 1950s, when “total factor productivity” stood at 3.4% a year.[2] In contrast, the figure for the first half of the 2010s was a paltry 0.5% a year. “Outside of personal technology, improvements in everyday life” were “incremental, not revolutionary,” during this period.[3] Houses, appliances, and cars looked much the same as they did twenty years earlier. Airplanes flew no faster than in the 1960s. This “innovation slump” is, according to the Wall Street Journal, “a key reason the American standards of living have stagnated since 2000.”[4] What had been revolutionary breakthroughs in the last century were still carrying the day into the next by means of incremental change based on product improvements. It could take a few decades before the fruitful research in AI, gene therapy, robotics, and software apps reach marketability and thus can impact productivity and radically alter daily life.
To be sure, the computer-tech revolution had altered daily life even by 2010—the smart-phone is a case in point. Yet personal computers go back to the 1970s so even in this respect the marketable innovations by Steve Jobs and Bill Gates can be viewed as incremental rather than revolutionary in nature. Software apps are themselves responsible for incremental changes based on the smartphone, which in turn is based on the personal computer. Even amid all the high-tech glitter, the developed world in 2016 stood as if a surfer waiting between two giant waves for the next one to hit.
Artificial intelligence, gene therapy, robotics, and software apps were poised to give rise to the next wave—first one of revolutionary change and then, after a lag, another wave—one of raised living standards. Unfortunately, revolutionary innovation “comes through trial and error, but society has grown less tolerant of risk.”[5] Furthermore, regulations “have raised the bar for commercializing new ideas.”[6] Lastly, “a trend toward industry concentration may have made it harder for upstart innovators to gain a toehold.”[7] In other words, the concentration of private capital may forestall the switch from continued incrementalism to revolutionary change. Breaking up oligopolies as a matter of public policy thus has more to it than merely preventing monopoly.
To be sure, companies and entrepreneurs in 2016 were “making high-risk bets on cars, space travel, and drones.”[8] Add in advances in AI and medical research—which could make death no longer inevitable for human beings—and some serious changes in daily life and productivity can be predicted. Yet, as potentially momentous as these efforts at innovation are, decades could separate the inventions and impacts on daily life and productivity. I suspect the world in 2016 was truly between two waves—the first of electricity, the telephone, sound recording, the automobile, the computer, and the airplane—and the second of space/astronomy, medical research, and AI/computer technology. Colonizing Mars, rendering death not inevitable, and combining AI, robotics, and software apps could result in wave that would dwarf the one of the previous century. The advent of smartphones, having all the glitter of a revolutionary product yet being an adaptation of the personal computer, whets appetites to look for the “big one” coming up on the horizon. Indeed, we have little time to waste; that wave could bring with it technology capable of arresting and even reversing the accumulations of CO2 and methane in the Earth’s atmosphere. The interesting dynamic of being able to save this planet just as we are able to colonize another is like the related one of making death something less than inevitable—due to stem-cell research on organ replacement, genetic therapy, and advances on curing diseases—just as we make the Earth habitable for our species for the indefinite future. Meanwhile, we are like children who have outgrown their clothes, still playing with adaptations of twentieth-century toys.

[1] Greg Ip, “Economic Drag: Few Big Ideas,” The Wall Street Journal, December 7, 2016.
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Ibid.
[7] Ibid.
[8] Ibid.

Wednesday, November 9, 2016

Societal Norms Understating Unethical Corporate Cultures: The Case of Wells Fargo

The case of Wells Fargo suggests that even when a massive scandal is revealed to the general public, the moral depravity of a company’s culture is skirted rather than fully perceived. Wells Fargo was fined a total of $185 million by regulatory agencies including the Consumer Financial Protection Bureau, which had accused the bank of creating as many as 1.5 million deposit accounts and 565,000 credit-card accounts that for which consumers never asked. The bank fired 5,300 employees over the course of about five years after it was revealed those employees had opened the accounts and credit cards. Wells Fargo's CEO at the time, John Stumpf, "opted" for a cushy early retirement after an abysmal performance before a U.S. Senate committee; he walked away from the bank with around $130 million, and none of the other members of senior management were fired, or "retired," obliterating any hope societally that any of the senior managers would be held accountable. This result is particularly troubling, given the true extent to which that management had turned the bank into an ethically compromised organization.

The full essay is in Cases of Unethical Business, available in print and as an ebook at Amazon.com.  

Saturday, October 29, 2016

An Anti-Obesity, Anti-Poverty Philanthropist Joins PepsiCo.’s Board: A Case of Reform from Within

In October 2016, Darren Walker, president of the Ford Foundation, became the newest member of PepsiCo’s board of directors. Whereas Walker worked at the time for a more just and equitable society, Pepsi was making the bulk of its money by selling sugary drinks and fatty snacks and there being a well-established link between obesity and economic inequality. Would he be working at cross-purposes? “There’s a risk that he will be viewed as inconsistent,” said Michael Edwards, a former Ford Foundation executive at the time.[1] The company itself could also be viewed as being inconsistent—lobbying against anti-obesity public-health legislation while putting Walker on the board of directors.

To be sure, the Ford Foundation had not funded organizations working to combat obesity or diabetes, so there does not seem to be a direct conflict of interest for Walker.[2] Yet he did acknowledge, “I know that my own credibility and the credibility of the Ford Foundation is tied to this decision. Those of us in philanthropy have to be discerning about the corporate boards we join, and be discriminating to ensure that our service on a board is aligned with our values.”[3]

So rather than there being a conflict of interest, the issue for Walker was whether he could act as a reformer from within. Even though he planned bring the perspective of a social-justice organization and his own perspective “as someone who is deeply concerned about the welfare of people in poor and vulnerable communities,” he would still bear responsibility should PepsiCo’s board go in another direction.[4] He would not, in other words, be chairman of the board. That the company had just pledged to further reduce the amount of sugar, fat, and salt in its products by 2025, however, suggests an appetite for accommodation with Walker’s perspective. Additionally, Walker would not be responsible for the company’s past unethical lobbying against anti-obesity legislation, use of unethical suppliers of palm oil, and deceptive marketing, and the company had since taken steps to remedy these ethical problems.[5]

As in politics, the matter for Walker and the other board-members concerning would be whether together they could wield compromises taking into account both Walker’s vantage-point and the legal and ethical fiduciary duty to act as faithful stewards of the stockholders’ capital. Reform from “the inside,” moreover, can be more productive than merely staying in the philanthropic sphere. In terms of American politics, the analogue would be moving from the Green Party, for instance, to the Democratic Party so as to work toward reform that could actually manifest in legislation. Admittedly, idealism is tested in such a strategy, but consequentialism tells us that even 50% of 10 is more than 0% of 10.

1. David Gelles, “An Activist for the Poor Joins Pepsi’s Board. Is That Ethical?,” The New York Times, October 28, 2016.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.

Tuesday, September 27, 2016

Facebook’s Zuckerberg Donates $3 billion to Medical Science: Some Major Implications

Facebook’s CEO, Mark Zuckerberg, and his wife, Priscilla Chan, announced in September, 2016, that they would invest more than $3 billion during the next decade to build tools that can facilitate medical research on diseases. The first outlay of funds ($600 million) would create a research lab of engineers and scientists from the area’s major research universities.[1] “This focus on building on tools suggests a road map for how we might go about curing, preventing and managing all diseases this century,” Zuckerberg said at the announcement.[2] Moreover, the couple had previously announced a year before that they would give away 99% of their wealth over their lifetimes through the Chan-Zuckerberg Initiative in the areas of education and healthcare. I would like to point out a few implications that may not be readily apparent.

Firstly, such funds going to preventing and curing disease could bring the day nearer when—along with advances in anti-aging and stem-cell research—death is no longer inevitable for a human being. Even before the Zuckerberg-Chan announcements, some scientists were openly predicting that that day might come as early as the 2050s. To be sure, being able to grow replacement organs, apply an anti-aging treatment to the body’s cells, and prevent major diseases (I suspect the common cold will still be around, just to keep us humble) does not guarantee that death will be put off; running into a train or bus, or jumping off a high building could still mean death. Nevertheless, the notion that death can be put off indefinitely dwarfs the combined impact from all the twentieth-century’s technological progress put together.

Considering the costs involved, access to rendering death no longer inevitable would doubtlessly raise ethical issues in terms of the distribution. Moreover, ethical questions would suddenly arise concerning the species’ increasing population and reproduction-rights. Secondary issues such as climate change could become even more pressing. It could be, for example, that a drastically increasing human population outstrips the planet’s food-capacity as well as the capacity of the atmosphere to absorb the species’ waste, including greenhouse gases. It would be highly ironic were the feat in removing the threat of death a major contributor to the extinction of the species. In short, the story could go as follows: we maximize our species’ size—which means success genetically—only for the increased numbers to cause extinction because the climate is no longer hospitable to human habitation or the lack of food causes wars ending in nuclear war. The first alternative would be particularly likely.

Secondly, that the couple could give up 99% of their wealth over their lifetimes may imply that they will have earned too much money, if being able to use it is at all relevant. Put another way, being able to give away almost all of their total earnings may suggest that they (namely Zuckerberg) earned too much. Does it even make sense for someone to get money that is beyond the capacity to be spent even through inheritance?

One implication is the question of whether Zuckerberg’s employees at Facebook should get a significant amount of what Zuckerberg earns, whether in salary or stock. Why such a huge difference in compensation? To be sure, ownership does have its privileges, but is there no limit? The fact that Zuckerberg, Bill Gates, and Warren Buffet could give vast sums of money to charity raises the question of whether founders and CEOs shouldn’t face some limit in terms of wealth, with a progressive tax system kicking in for multi-billionaires. Were elected representatives to decide how such vast sums should be spent, the legitimacy of the power behind such a decision would be greater.

1. Deepa Seetharaman, “Zuckerberg Fund to Invest #3 Billion,” The Wall Street Journal, September 22, 2016.
2. Ibid.