By John F. Sase, Ph.D.
Gerard J. Senick, general editor
Julie Gale Sase, copyeditor
"As we walked through deep pine forests on a silver winter's morn /
"We talked with tribal elders in the most subdued of tones /
"Of how the houses of the old land had scattered to reform /
"In a new world at a new time in a new land we call home
-John F. Sase,
"Silver Winter's Morn," Aessence
(Freezer Theatre Records, 1975/85)
Last month, we maintained a view from the bridge of Spaceship Earth and began to discuss the matter of Stewardship-a matter both simple and complex-on a global and a local level. This month, we take a "Small-Is-Beautiful" approach as we Think Globally and Act Locally.
In the recent decade, class complacency has quietly spread, causing us to live in a world that has become exponentially perplexing within the past year. We have grown accepting of the political situation of divisiveness on the global, national, and local levels and the stagnation of social and economic mobility in our culture. This has caused us to become more separated by class, a malaise that is disheartening to many. The choice is ours as to whether to remain complacent or to work together in unity in order to address our global and local challenges.
In his book "Small Is Beautiful: A Study of Economics as if People Mattered" (Blond and Briggs, 1973), German-born English Economist Ernest Friedrich Schumacher draws on ancient Buddhist principles and traditions to create an economic model of Right Livelihood. He states that we can blend our religious values with economic progress-the spiritual values of our heritage with the benefits of modern technology. The Luddites among us-those economists and attorneys who are metaphysically blind-and those of us who have grown complacent in our lives may object. However, an increasing number of us have taken to embracing this philosophy over the past four decades since Schumacher wrote his book.
In this article, we will explore the nature of Complacency and alternative actions that can be-and are-taken. We will focus on our local economy in Southeast Michigan/Southern Ontario and apply the process of creative thinking and allegory to addressing the challenges that face our economic base.
The Complacent Class
A recent episode of "Global Public Square," a television series hosted by Fareed Zakaria on CNN, addressed the phenomenon of Complacency. Zakaria recommended reading "The Complacent Class: The Self-Defeating Quest for the American Dream" by Tyler Cowen (St. Martin's Press, 2017). Cowen states that we have become more risk-averse and segregated as a society and have lost track of the spirit that made our nation innovative and productive. Furthermore, our psychological resistance to change has become progressively stronger while our information technology has allowed us to organize and confront new ideas in a more manageable and comfortable way.
Cowen suggests that we in America have become members of a Complacent Class "who accept, welcome, or even enforce a resistance to things new, different, or challenging." He concludes that a shift to "more righteous and tribal mentality was bad enough in the 1990s, a time of peace, prosperity, and balanced budgets. But nowadays, when the fiscal and political situations are so much worse, many Americans feel that they're on a ship that's sinking, and the crew is too busy fighting with each other to bother plugging the leaks." In a broad societal sense, this may be true, on average. However, I (Dr. Sase) feel that this view may pose an overgeneralization. With that in mind, let us explore this matter further.
In his book, Cowen treats the concept the Complacent Class as an overarching one that he divides into three class-tiers. Paraphrasing for summarization, these class-tiers include:
1. The Privileged Tier This tier includes those of us who generally are high wage-earners, are well educated, and are often influential. Members of this so-called Privileged Tier believe that their lives are progressing well at present and wish for them to remain at their status quo. On a whole, this tier, which constitutes the top 3 to 5% financially, tends to be above-average intellectually, articulate professionally, and most often socially graceful.
2. The Dug-In Tier-This tier includes those of us who have dug in to the illusion of the Great Middle Class. Generally, this tier is comprised of those with a middling education and income who hold either professional-level jobs or are small-business owners. Having long been the norm of the so-called Middle Class, members of this tier tend to hold most of its wealth in their family homes. As with most Americans who have limited economic and social mobility, they worry about long-term employment, affordable healthcare, paying for their children's higher education, and financing their own retirement. Unfortunately, the lower rungs of this tier have been deteriorating in America and other first-world countries in recent decades.
3. The Stuck-In Tier-This tier includes those of us who get stuck in highly segregated neighborhoods that typically have substandard K-12 education and greater exposure to environmental toxins. In addition, drug and alcohol abuse as well as the abuse of children tend to be more predominant in these neighborhoods. A greater percentage of household support comes from single parents who do not possess college degrees and work in retail and similar occupations. This tier also includes those on disability or welfare along with others who have dropped out of the job market altogether.
Despite their differences, all three tiers share a common social, emotional, and ideological acceptance of slow change, according to Cowen. This portrait of America has given me (Dr. Sase) much to ponder in recent weeks.
The Working Class
While walking along a sidewalk on the campus of Wayne State University, a political advocate on the street offered a flyer to me. Being an Economist, I endeavor to look at all sides of economic and social-science issues. I took the literature printed by the Working Class Party (WCP) (workingclassfight.com), chatted with the advocate for a few minutes, and later read the statements.
Similar to Cowen, the WCP addresses the challenge of separateness within our society as it iterates that we are not one big happy family. Furthermore, the WCP states the belief that such a goal of class unity is "not normal, not natural, and not inevitable." Resultantly, this political group proposes the formation of a third major party that appears to be similar to the Labour Party that grew out of the Trade Union Movement and Socialist parties in nineteenth-century England.
The position taken is one of "Us versus Them" while reflecting the interests of the Third Tier, the one to which Cowen refers as "Those Who Get Stuck." In respect to the Mantra of Complacency, the WCP recognizes that our economy of separateness continues to worsen for their constituency as social/economic problems multiply. In practical matters, the focus of this and similar groups concentrates on the funding and quality of K-12 and trade-skill education, rebuilding decaying infrastructure, improvement of the overall well-being of neighborhoods, improving access to reliable public transit, and promoting a national public healthcare agenda. The point to be made here is that there continue to be those who are willing to organize to take steps in an effort to improve our society. For readers who have been awake during the past half-century, this locus and momentum for change remains nothing new.
Industrial Age to Information Age
In advancing our society, the challenge involves weighing social needs against economic practicality and economic constraints against political weight. At the crux of the demand for change is the cry for jobs-employment for all who desire and need it. Our Information Age has taken on an air of complexity in that we no longer can match the creation of jobs to the traditional labor skills of the nineteenth and twentieth centuries. Today, most manufacturing jobs require an adequate level of computer literacy in order for employees to work on the floor of a manufacturing shop so as to keep quality at or exceeding the prescribed 99.9% level of deliverable product. In the retail trade, the nature of the market is changing once again as major companies seek an increasing level of online sales. Such change may lead rapidly to the demise of many brick-and-mortar stores. Anyone been to Sears or Kmart lately?
Sufficient Affluence in a Sustainable Economy
It appears that most of us desire what I term to be Sufficient Affluence in a Sustainable Economy. However, it is not the duty of businesses of any size to create jobs as a form of corporate welfare or to engage in make-work practices such as digging separate holes at far-apart locations and then moving the soil from each in order to fill the other. A point made by the Marxist group Spark (the-spark.net) on their site is the concept that if "companies won't create more jobs, [then] make them share out the work that does exist among everyone who wants to work." This sounds simple enough until we explore the economic issues of increasing costs due to diminishing returns to scale and other aspects of productivity that affect even the most basic technical skills.
In respect to work-sharing, we have seen large firms such as Wal-Mart willing to share out their low-tech/low-skill jobs among a workforce of part-time employees. Due to their employment status, most of these workers tend not to be eligible for company healthcare and other benefits. As a result, this spillover-burden places the delivery of benefits through federal and state governments onto the shoulders of all taxpayers. Other businesses that have full-time hourly and salaried employees in higher-skill positions and taxpayers who fill out their 1040s and a Schedule C or Subchapter S forms find themselves subsidizing lower-skill workers at job-sharing firms through public-sector benefit programs.
To put this burden into context, much of the current job growth occurs in the arena of small firms (less than 250 employees) and small local businesses that employ less than 25 persons. In order to remain competitive in markets where the pricing is beyond the control of any individual company, small businesses generally must keep wages, salaries, and owner-draws at levels below those of larger companies. The reason behind this challenge is the absence of economies of scale within small businesses. Usually, these businesses do not produce the quantity and volume needed to get their per-unit cost down to that of larger firms. However, small businesses continue to grow because of the increase in niche markets for limited runs of goods and services that can support higher prices or for the delivery of quantities too small to be profitable for larger companies to handle. Quite often, a successful small business is a firm that employs family and/or near-family members at a location that minimizes employee/owner commuting cost and time while providing a more desirable work environment than larger enterprises can offer.
A Few Big Firms
In recent months, we have focused on a series of economic topics of general interest. These have included healthcare reform and the North American Free Trade Agreement (NAFTA). Let us return to the NAFTA from the "Small-Is-Beautiful" approach. Since its early days, the American automotive industry has been centered in Southeast Michigan/Southern Ontario. The Big Three of General Motors, Ford, and Chrysler have been based in Michigan. Their Canadian counterparts are established in Essex County across the straits of Detroit and along the Canadian Pacific (CP) and Canadian National (CN) railways through Toronto to just past Montreal. We have had a bi-national industry for the past century. In addition, the CN connects to the world through the Port of Halifax, Nova Scotia, as part of the automotive supply-chain with Europe and as the output port to various destinations beyond.
The economics of this large, complex industry have developed and continue to function because of the free-trade movement of parts between Southeast Michigan and Southern Ontario across the current bridges and through the railroad tunnels at both Detroit/Windsor and Sarnia/Port Huron. This agglomeration along the waterway benefits not only the economies of the border cities but numerous smaller towns in the U.S. Midwest, and Southern Canada as well. The bi-national agreements date back to the U.S.-Canadian Free Trade Agreement and enlarged to include Mexico under the provisions of the NAFTA. As with all such agreements, these need to be adjusted and updated continually in order to ensure fairness and quality of trade. The wholesale removal of these trade agreements would trigger a large amount of economic destruction for the U.S. and our allied countries.
What to Do? Reflections on the Past
I grew up as an only child in the adult world of my parents and other elders. Occasionally, I would play with children my age at gatherings of mostly grownups. However, often I was the only youngster among many adults. Therefore, I found that being quiet and listening carefully to the discussion of my elders was very enlightening. Though I refrained from asking direct questions at these gatherings, my mother and father were happy to answer my questions afterward and to explain topics further. I listened and learned.
My mother had been an art teacher for two decades before I was born. Given that background, my preschool years were spent in "art school," at the library, at art museums, at art stores and art workshops, and at gatherings with my mother's artist friends. From this combination of exposures, I learned to integrate the sophisticated ideas that I had acquired from my elders by organizing my thoughts with diagrams and sketches of images visualized in my mind.
Outside of my home neighborhood, I associated with children of similar background and nature. Let it suffice to say that we focused our conversations on grownup topics such as the economy, the history of the nineteenth and twentieth centuries, and, more specifically, the future of manufacturing in Detroit. Many of us might consider these conversations as odd for most seven-year olds. However, our parents encouraged us.
This was in an era when Detroit society seemed to be an extension or a replay of the competition or battling of groups who claimed descent from the Tudor, Habsburg, Plantagenet, and various other European clans. In accord, local business and industrial investment divided into three major geographic camps along "tribal" lines. Dr. Robert Sinclair, who served on the committee of my doctoral dissertation, had done research on this phenomenon with others in the Wayne State University Geography Department. To find evidence to support his hypothesis, Sinclair stated that they surveyed the population of mid-level managers at the Big Three and determined that these managers fell into camps based on "tribal" lines.
Ancient Process of Creative Thought
As stated in the preceding section, I learned to integrate complex thoughts through visual imaging. Having pondered the nature of the automotive conundrum for the past six decades, I have settled on a visualization of our apparent "city-state" that encompasses the more than 125 different language groups that settled and have remained in this region over the past four centuries. I return to various sketching/mind exercises whenever I need to think about larger issues. The technique that I use draws upon the geometry of the Vesica Pisces (bladder of a fish). It is an approach that reflects the ancient art of the seed, flower, and tree of life found in the math and art of cultures throughout the world (see https://youtu.be/B_6s90XZMto). Though it may appear at first glance to be "rune-reading," it is really a concentrated geometric exercise used for focusing and integrating disparate information, facts, and evidence within the human mind. I suggest that our readers try this approach for pulling together the elements of a legal case.
The basic method of this thought process involves drawing a circle and connecting additional circles to the first one at points of tangency or placing the circumference of one at the center point of another circle. (The addition of straight lines and curves also can help in the thinking process.) However, such constructions become more lucid through an allegory rather than relating them through a mathematical construct. Plato often used this approach in his work (see "The Pythagorean Plato: Prelude to the Song Itself," Ernest G. McLain, Nicholas-Hays, Inc. 1978).
Allegory of the Fishing Boat
In our present allegory, the highlighted Vesica Pisces at the center of the sketch forms an ancient boat. A fishing crew rides upon this boat. At the four cardinal points and the center are those fishers who serve as navigators. The circles of varying diameters that extend beyond the boat represent the systems of currents in the sea below and in the air above. Using all six senses (Google "six senses, Eye of Horus"), four of the navigators read these currents as they sight positions along the horizon. The fifth one at the center of the boat lays upon his/her back and reads the movement in the sky above while sensing the undulation of the sea below. This task is especially vital during night-fishing because reading the moon, planets, and constellations of stars may be the only clear means of establishing position and direction on the open sea.
The other navigational tasks are divided among the remaining four along the sides and the interchangeable stern and bow. When heading outward to sea, the navigator at the seaward end of the boat must read the sky above and sea below in order to guide the craft and crew to a desired location. Upon their return from a successful venture, through which they have netted a large catch from the gross of fish that entered the area of their nets or succumbed to the spears of the fishers, the two navigators along the sides of the boat must watch for the point at which their craft begins to enter the shallower water of the bay or cove. This point is marked as that at which the liquid sea turns to solid earth along the lateral horizons on either side of the boat. In order to avoid shoals, rocks, and shallow areas, the two navigators situated along the starboard and port side of the boat help the remaining navigator at the bow by establishing the best route to bring their catch to shore.
The remaining navigator, who sits or stands at the bow, has two important tasks. As the water becomes shallower, a second boat comes alongside in order to transfer a portion of the catch. Loading the second boat relieves the stress on the fishing boat and allows it to rise as it enters the shallows. Then, this second boat moves inward to the rocks or beach where the crew doles out this portion of the catch to the larger community. The bow navigator, focusing his/her attention toward the horizon where the sky meets the earth, guides the fishing boat to land at a point along the shore where the remaining catch is unloaded, sorted, stacked, and prepared for trade with the people of the lands that lay beyond.
The Allegory Applied to Industrial Organization
I expect our readers to ask, "What does all of this fisher/dole/shore stuff have to do with our manufacturing industry in Detroit?" The people in the preceding allegory cooperatively bring in product (a catch of fish), dole out a portion to the community, and prepare the bulk of the catch on shore for trade beyond. Unlike them, the three major industrial camps in Southeast Michigan/Southern Ontario, gathered around General Motors, Ford, and Fiat-Chrysler, have been constrained to compete with one another with minimal cooperation due to mandates against collusion in the Sherman, Clayton, and subsequent Antitrust Acts. As circulated in past decades, the proposed solution, calling for the merger of the three companies, could not pass the market-concentration benchmarks established within the case of the United States v the Aluminum Company of America (Alcoa) in 1945. However, the concentration of the domestic market that the Detroit Big Three once enjoyed has shrunk from 90% to 50%. Though technically this concentration may pass muster for a merger of the three, such a configuration may not be optimal.
The Keiretsu Challenge
The largest challenge that the industry faces is the Automotive Big Six, which includes the three U.S. companies and the three Japanese companies of Toyota, Nissan, and Honda. The latter three still belong to a keiretsu, which traditionally has provided a system, a series, a grouping of enterprises, and an order of succession. This entity has its roots in the feudal system of a millennium ago. It developed as part of a business-and-trade organization that descended from five ruling families headed by the emperor.
Today, the keiretsu survives as a set of companies and informal business groups with interlocking relationships and shareholdings. The keiretsu includes banking, insurance, manufacturing steel, trading, electric, gas, and chemicals as part of its horizontal web. At its epicenter, a bank and a trading company have taken various preventive measures to avoid takeovers from foreign firms. One of these measures involves the "interlocking" or "cross-holding" of shares, a method established by Article 280 of the Japanese Commerce Law. By doing so, each company holds a stake in the other companies. This system helps to insulate each company from fluctuations in the stock market and from takeover attempts. Member companies abide to a "One-Set Policy" by which the groups avoid direct competition among member firms (for more detail, see en.wikipedia.org/wiki/Keiretsu). Though foreign nationals must adhere to U.S. antitrust laws for operations within the United States, what we would define as collusion still appears to be a feasible business practice within Japan.
Back in the USA
In respect to the Detroit Big Three, I remember hearing from my elders and my childhood friends that "they (whoever they are) want to see us fight." To me, it seemed like a ruse to avoid falling into the pit of collusion. Meanwhile, the case for unification was made on the basis that the employees and some owners (fisher, dole, and shore from the preceding allegory) were all part of the same subculture. The discussions during the 1950s included talk of bloodlines. I suppose that a similar communication today would center on the identification of DNA haplogroups, clades, and subclades. As for myself, I am identified as Y-Haplogroup I-M423.
With all of this being said, a complete business merger of the Detroit Three may be counterproductive in the long run. The industrial structure that has emerged since the 1960s has developed into the current global Big Six. In this configuration, each of two hemispheres host one set of three. Given the preceding discussion of keiretsu, the set of three that is based in Japan already may be considered functionally as one unit. However, an outright merger of the Detroit Big Three could set up the local industry for a wholesale takeover. The challenge that U.S. automakers face is their inability to meet the competition in good faith due to prohibitive constraints in our Antitrust Acts. At the same time, an outright revocation of any of these Acts, along with other laws that are being carelessly threatened, most likely would spell disaster on many fronts. As with Healthcare and International Trade, the Antitrust Acts leave room for revision and improvement through careful, well-paced, and prudent action. We do not live in a world in which we can afford to throw out any of these babies with the bathwater.
Can the Detroit Big Three learn something from the keiretsu? What is needed is a way to allow each of the Big Three to remain independent of one another and from the three Japanese firms in the Big Six. Perhaps our Big Three could join together in a legally cooperative organization. Such an entity might resemble the Grange, an American group that was founded in 1867 by farmers in order to protect and promote their social and economic needs in the face of financial crises.
I would like to entertain the following question for open discussion: Is it feasible and desirable to maintain our local industry as three separate and self-sufficient groups, but ones that are allowed to work in consort with one another under law? The creation of such a legal consortium also must address the revision and update of our free-trade acts. The Midwestern U.S. auto industry is joined at the hip for survival with the Canadian industry and supply-chain routes through Halifax. In addition, many U.S. automotive suppliers are dependent on free trade with Mexico because the demand from the U.S. auto industry is no longer sufficient by itself to keep many of the smaller businesses, their employees, and their towns afloat.
The (W)rap
As stated in the first paragraph of this article, we need to Think Globally and Act Locally. We have studied and defined the challenges that we face as well as ways to process, analyze, and gather together our intellectual tools. Finally, we determined that we need to apply our resources to find workable solutions to the set of challenges that we face in the twenty-first century.
Structurally, we need to find ways to eliminate the malaise of complacency that has led to the deterioration of what has become our Dug-In Tier and the impoverishment of those trapped in the Stuck-In Tier as described by Cowen. In order to achieve this goal, we need to develop our processes of Creative Thinking. By doing so, we can integrate all of our learning and knowledge effectively in order to overcome the separateness that threatens our world, our country, and our towns. I welcome any feedback and questions about this big-picture topic of Law and Economics.
--------
Dr. John F. Sase has taught Economics for thirty-six years and has practiced Forensic and Investigative Economics since the early 1990s. He earned a combined Masters in Economics and an MBA at the University of Detroit, and a Ph.D. in Economics at Wayne State University. He is a graduate of the University of Detroit Jesuit High School (www.saseassociates.com).
Gerard J. Senick is a freelance writer, editor, and musician. He earned his degree in English at the University of Detroit and was a supervisory editor at Gale Research Company (now Cengage) for over twenty years. Currently, he edits books for publication (www.senick-editing.com).
Julie G. Sase is a copyeditor, empath, and parent coach. She earned her degree in English at Marygrove College and her graduate certificate in Parent Coaching from Seattle Pacific University. Ms. Sase coaches clients, writes articles, and copyedits (royaloakparentcoaching.com).
Published: Wed, Jun 21, 2017
