Are We Raising the Bar or Lowering Our Standards?

The founders of the American revolution, fresh from carving a nascent society from the wilderness, understood that the protection of individual rights was an essential cornerstone of sustainable democracy. They also understood that the democratic process almost always erodes individual freedom over time, as democracies strongly favor the joining of forces around common causes, which indirectly attacks the individual.

“Democracy... while it lasts is more bloody than either [aristocracy or monarchy]. Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide.” — John Adams

This understanding, which frankly I did not understand for much of my life, is apparently why great effort was expended in an attempt to protect the individual within the Bill of Rights. The framers knew that the Bill of Rights would be pulled in every direction by competing interests, but in reading their work I suspect they would be shocked at the trends of today.

Of course in the early years more than half the population were not afforded equal treatment under the law, but thanks to the adaptable Constitution and courageous leadership by a few, most of these cultural oversights have been corrected, at least in the letter of the law if not in society and the economy.

“The Constitution, on this hypothesis, is a mere thing of wax in the hands of the Judiciary, which they may twist and shape into any form they please.” — Thomas Jefferson

Unfortunately, the clear trend observed by many in the U.S., including myself, has been consistent with the fears of the framers of the U.S. Constitution— constant erosion of the very self-evident truths found in the American Declaration of Independence: "that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness".

This erosion is pervasive across many areas I come into contact with in my work. In pure economic globalism, one of the many symptoms we see is what one of my mentors and friend describes as "Corporate Socialism", where corporations tap scale and technology to constantly raise the bar, not on quality, but rather on the minimum scale required in order to survive. In fact I have witnessed many times large corporations, institutional investors, and venture capital firms raising the bar of entry as a primary tactic for success. Indeed, this tactic is being taught in many leading MBA schools as I write. I argue that the primary goal should be better innovation that leads to solutions and healthy competition, not protectionism.

In so doing, and I am including venture capital squarely at the center of this issue in recent years, we have also "protected" society from a great many essential innovations and improvements. The driver of this trend found throughout our society is of course the self-interest discussed in the The Wealth of Nations, or perhaps more accurately described as perceived self-interest in the very near term, even with the knowledge of probable long-term self-destruction, for those who even consider sustainability.

At the core of protectionist policies, whether in jobs or market share, we often find the birth of a negative spiral that is very difficult to reform, or better yet pull inside out, thereby creating a positive spiral. Healthcare in America is an excellent example of a negative spiral where legions of small to large groups place their own immediate self-interest above everyone else's in society; quite literally raising the bar of entry above the ability of a huge portion of our society (around 50mm citizens and growing rapidly).

Another example I have witnessed closely is with employment policies. Look to the Airlines for an excellent case of a commonly held belief (apparently) that "we'll either be dead before the industry goes bankrupt, or if not then the Government will bail us out.... because we are so essential". This common short-term philosophy is perhaps the most damaging in our culture.

Higher education is another enormous industry where a negative spiral of protectionist policies have evolved over time to the point where many are seriously questioning the sustainability of the current model, as well as the credibility of the core values as represented in the "union card" policies.

The tipping point of the negative spiral in job protectionism, which may already be in our rear view, is when an individual can no longer gain employment unless they become part of the problem rather than part of the solution. I found myself in that position years ago when my work was being used as curriculum in many universities, but the rules in academia would not allow me to teach, even though I was in fact mentoring many professors and business leaders as part of my daily responsibilities.

At one point I was recruited as a Dean, but not considered "qualified" to teach? In discussing the position, I discovered that the school in question was interested only in growth, not in serving students or society. The school was in an industry niche that was far overbuilt in universities with a sharply declining enrollment worldwide, but the primary function of the Dean was to double the fund-raising and square footage of the school..... While I have great respect for learning, including many institutes for higher learning, education unfortunately too often reminds me of a mindless virus out of control with no counter balance in sight.

Could any politician be elected today by doing what by definition leaders do— tell the truth? Education, healthcare, government, non-profits, corporations, social groups... which among them do not need major reform? Which does not need to tighten their belts?

"Be not intimidated... nor suffer yourselves to be wheedled out of your liberties by any pretense of politeness, delicacy, or decency. These, as they are often used, are but three different names for hypocrisy, chicanery and cowardice." —John Adams

In my earlier years as a consultant, I witnessed the destruction of important businesses and organizations that had good intentions, but failed to align interests with the organizational mission. Lack of individual incentives to improve the organization combined with lack of accountability and authority to act as a self destruct mechanism. More recently we have all observed similar policies in the federal Government, which ironically were originally intended to protect individuals, contribute greatly to the breakdown in functionality, resulting in large numbers of individuals paying the price with their lives, fortunes, reputations, and/or happiness.

The legal profession is of course intimately involved in every aspect of our society, and many believe the worst offender in the erosion of individual rights, despite the heroic efforts of a few. Raising the bar of entry for justice is in direct conflict with their basic mission, and has effectively eliminated justice in many sectors of our society, but that is precisely what the legal profession has been doing for decades.

"The mission of the State Bar of (in this case Texas, but several are nearly identical) is to support the administration of the legal system, assure all citizens equal access to justice, foster high standards of ethical conduct for lawyers, support and provide services to its members, enable its members to better serve their clients and the public, and educate the public about the rule of law."

The reality is that not a week goes by that I do not find myself advising an emerging business to not pursue a potentially important advancement for society unless they can capitalize sufficiently to protect the invention. It is not uncommon today for an emerging business to spend $millions in defending intellectual property rights prior to becoming a viable business. I suspect that Adam Smith couldn't envision today's complex society when penning The Theory of Moral Sentiments.

All three pillars of our democracy are responsible for adapting to the current environment in making certain that the Constitution is upheld. In practice, it appears to me that all three are failing on the economic front. Was it inevitable? Our founding fathers believed so, and history supports their view.

Is the U.S. in a negative spiral that is beyond the ability of our self-interest driven democracy to correct? The optimist in me says no, and I continue to spend much of my time on specific solutions like our KYield venture that can move us in the right direction — minor revolutions are much wiser than major. But the forecaster in me wouldn't bet on it. Perhaps that's why so many of my peers are no longer investing in America?

We may have succeeded in the short-term in raising the bar of entry for a growing portion of our society, but in so doing we lowered the boom on certain unalienable Rights. - MM

"Restriction of free thought and free speech is the most dangerous of all subversions. It is the one un-American act that could most easily defeat us." — Justice William O. Douglas