Chapter 13 – The Last Lecture
Yale University
Roy Merritt is an economic professor at Yale University. He loves to engage his students in debate. But with the school year coming to a close and all the lectures for the course already completed, he decides to entertain his students’ request that he talk about his controversial book and his opinion and disagreement with other economists.
“What is an ideal economic model? Depends on what generation you were born in. Economy could simply be people trading with each other what they deem is a fair deal. It increasingly became more complex as trading grew in size. But later on there was an unnecessary introduction of complexity that deviates from the basic principle of trading to speculative and questionable practices. This new system allows fraud and unethical conduct to propagate.”
Morris Stark arrives in Yale to meet the dean of the department of economics. But he decides to drop in on the lecture of a wayward professor. The professor is in the middle of his lecture when Morris walks in and takes a seat at the back.
“While corporations recklessly speculate and lose big money, government bails them out with tax payers’ money. Some companies use derivatives to artificially inflate their earnings, misleading the investors. Some companies engage in questionable accounting practices with accounting and auditing firms increasingly colluding with them in the practice of 'cosmetic accounting', turning them into a sleazy jugglers instead of an honest, transparent public trust corporations. The supposedly reputable accounting firm paid by the company then helps them manipulate their financial statement to look more attractive than it actually is. They also remain silent and help sweep any irregularities that they find under the carpet,” Roy says, delivering his statement in a passionate tone. He continues.
“Meanwhile, a government who is supposed to look after the public's interest failed the investors, consumers, client and taxpayers by promoting the freedom sounding name 'Free Market'. Under this nice sounding name, they claim that for jobs to be created and business to prosper, regulations and oversight from the government should cease to exist. These big business can take care and police themselves we were told.”
“Imagine!” Roy pounds his fist in the air to emphasize. “Just imagine. The government must think that these people, who have control over billions of the public's money, can police themselves with no chance of fraud nor malpractice. Even in the face of evidence of fraud and malpractice, government bails them out with the taxpayers’ money with those fraudulent, or at best reckless, CEOs remaining in place. These CEOs, instead of being investigated, continue to be paid millions and some even get bonuses. Instead of taking them to task, the government appoints their employee to vital government positions of finance, economy and treasury. And when people protest, the government pays lip service saying ‘yes, we can and we will take care of the root of the problem.’ But their words sound hollow as they continue to appoint people from the company in question to government posts. The slogan that things will change is just that, an empty slogan.”
Roy pauses to take a sip of water from the glass on his desk. Morris Stark crosses his arm across his chest and thinks something has to be done about this inflammatory professor.
“Let's differentiate between what Free Enterprise and Free Market are. Free Enterprise is not the same as Free Market, although one is often confused with the other.”
“Free Enterprise is freedom to do business and trade goods and services.”
“Free Market is freeing the market from any government oversight resulting in freedom to commit fraud.”
“Free Enterprise promotes competition.”
“Free Market promotes monopoly and anti-competitive practices.”
“Free Enterprise relies on making customers happy to gain market shares. Making sure their needs are met.”
“Free Market relies on buying up competition and leaving customers no choice for they are pretty much the only game left in town.”
“Free Enterprise capital is spread out among many businesses and institutions.”
“Free Market capital is concentrated and controlled by the few.”
“Free Enterprise promotes a wider base of innovation.”
“Free Market limits innovation to few big companies.”
“Free Enterprise businessmen’s failures affect their own capital and investors.”
“Free Market CEOs failures affects taxpayers.”
Roy's lecture is interrupted by applaud from the class. But it only earns a smirk from Morris.
“We need a new economic model that is sustainable. A balanced economy not lopsided to favour just the big businesses and campaign contributors. But nor should it be lopsided to favour labourers alone. We have witnessed extreme socialism in the form of communism failing. We are now witnessing extreme capitalism whose only means of survival is exponential growth through ever increasing consumer debt and ever increasing consumerism achievable only if people continue to live beyond their means. And only if we have an infinite amount of resources. An exponential growth in consumption of resources with conservation looks at as a drag.”
Roy paces to the other side of the room where Morris is sitting. “We need a more decentralized government system to improve efficiency. A government that looks after social welfare of its citizens does not have to be big government. But it has to be an efficient and open government. Yes, there are things that could benefit from economy of scale, such as healthcare, pension, electricity and utilities to name a few. But these essential services should be run by co-operatives that are a non-profit, non-political appointee organizations. Overly big and centralized structures lead to big, inefficient bureaucracy. More localized structures would ensure people's needs are looked after more effectively and more input is obtained from the local level. ”
Roy paces to the opposite side of the room, earning him a scornful look from Morris as he walks away. “We need fairer and more stable minimum wages for the workers. A minimum wage should be enough for a person to meet their basic needs. Heating and clothing for the winter and a healthy diet. A family should be able to raise their children to live healthy lives. Minimum wage should automatically adjust with inflation. Don't let them tell you that businesses won't be able to pay minimum wage. If a business cannot afford to pay its workers wages that would allow them to meet their basic needs to survive, then that business is engaged in slave labour akin to sweatshops and should not be in the business. Just because you want a decent wage for workers does not mean you are a communist. Similarly, just because you want a competitive tax rate for businesses does not mean you are a free marketer.”
Ray looks around at the faces of his students and says, “Our youth are being neglected.. While politicians waste money on pork barrels during election time they only offer token spending for education and innovation. Both critical for helping our youth have a better future and for creating more jobs. Around the world, youth are becoming the marginalized sector of our society. Among this group, there is more than 50% unemployment rate. While the retirees are contented with the status quo and remain silent about political patronage, the youth suffers. One of my favourite quotes is:
'A society grows great when old men plant trees whose shade they know they shall never sit in' which is from a Greek proverb. We need to revamp our system from a politics with short term vision targeted only for each term in office, to one that emphasizes long term planning and more efficient use of citizen's money.”
A student raises his hand and is acknowledged by Roy. “What can you say about accusations that you are nuts and a left winger?” The class erupts in laughter and Roy smiles.
“We need to move away from having a binary logic of either you are left or right, of either you are my friend or my enemy. I know people who call for rightful regulation and investigation of fraudulent companies are being accused of being communist, left wing, nutcases and other nice sounding names. Also there is a dumbing down of logic. For ex
ample, just because John Doe is a criminal and eats ice cream does not mean all ice cream eaters are criminals.” Roy smiles as the class laughs.
“We are ridiculed and accused of wanting to see our corporations crumble and of being job killers. We are asking for none of this. But our detractors think by repeatedly making these accusations they can silence us. The result is what is called outcasting.”
Morris laughs silently and thinks, “No, actually the chief's art of effective deception calls that 'Shame and bully them into silence' but you are pretty close.”
Roy walks back to the centre of the room. “It is important that we have an open government. That would take care of a lot of conflict of interest and corruption right now. Right now we have a succession of governments that do not want to govern. They are more interested in tearing down the institution that is supposed to protect the public's interest. An institution that stands in the way of allowing their corrupt CEO and company to profit and defraud people without restraint. By open government, I don't mean the evanized form of open government.”
“What is an evanized form of open government?” One student asks.
“It is the open government that Eva Garcia campaigned for. But all her actions to date involve rolling back measures for government to retain their records and making them public. Roll back of measures that have been in place to ensure accountability.”
That comment results in murmurs among the students. Eva Garcia have recently been elected and still has a big fan base who have a hard time believing someone could have been such a blatant liar. So they choose to believe she is still the saviour they dreamt her to be. Morris saw another of the chief's teaching at work. The big lie that people would readily believe because they are unable to comprehend that someone could lie this much, while some quickly dismiss the thoughts that they have been had in a big way.
Another student raises her hand and asks another question. “Do you think the recent accident involving the Zeus 1, marketed as the electric car that would make oil extinct, has anything to do with anti-competitive practices?”
“Sorry I am not involved in the case and can just speculate at best so I'd rather not do that. But there was a case of a conspiracy and this is an actual case, not a conspiracy nutjob’s theory which they like to accuse me of these days.” Roy laughs as the class laughs with him.
“Major cities in the U.S. have had a good network of electric streetcars installed as early as the 1920s. But that nice network of streetcars has been dismantled. The major oil and car companies in the U.S. colluded to phase them out and replace them with oil reliant buses. They would later be convicted in what had became known as the 'Great American streetcar scandal'. But the damage has been done. It was a big setback for an efficient public transport system, which was privatized to a car company who would sell them out. At that time people relied on public transport. But the conspirators instead lobbied for creation of highways and the use of individually driven cars.”
Morris has heard enough and decides to leave for the dean's office. He has more pressing business that has worldwide implications. Morris thinks that as annoying as Roy is, he is an insignificant player in the wider scheme of things.
Yale University Dean's Office
Morris Stark is greeted warmly by the dean. “It is an honour to have you here.”
Irwin Fox is a popular economist with lots of connections in the banking industry. The university feels honoured to have him as the dean. However, there are a lot of things they don't know about Irwin Fox.
Morris takes a seat and gets down to business right away. “The chief is recommending you to the president's economic council. We need strong supporters against some Senators and Congressman who would like to weaken our ability to do business.”
“I will be more than happy to take on the job.”
“Good, so I'll waste no time and go on to brief you on our grand economic plan to conquer the world by economic means. You will be coordinating with our man at IMF, no other than the chief of IMF himself. The plan is to entice various countries to take up loans from the IMF. As part of the deal, they would have to privatize their utilities, water and other industry. This would allow us to buy them up and dictate policies as conditions for the loans. Policies will be mostly economic at first and we can eventually influence their political institutions also.”
“Sounds like a good plan.”
“Various European and Asian countries have also bitten on the bait of our shadow company. The stocks were marketed as triple A, top and secure investment. As the value of these investments fall, the losses from these countries banks will be substantial. Through our IMF chief, we will come in as the saviour giving them a rescue loan with the condition that they pass laws that would make it easier for our sister companies to take over their utilities and industries.”
“Brilliant idea.” Irwin Fox gives a naughty grin.
“We want to execute this as soon as possible.”
The meeting soon ends and as Morris reaches the door he turns around. “Oh by the way, that economic professor Roy Merritt, do me a favour and get rid of him. He is giving Yale's business friendly reputation a bad name.”
“I'll see to it that he does not come back next year” the dean promises.