Episode #363: The Ultimate Dragon Slayer, Daniel Morris

Ed and Ron were honored to welcome back Dan Morris, CPA, to the show. He's a master at the value conversation, and implemented Value Pricing back in his firm in 1996. He specializes in cryptocurrencies, wealth management, asset protection, multinational tax structures, tax optimization and much more. An excellent conversationalist, you don't want to miss this episode with one of the most innovative CPAs we know.

Before we get to the show notes, let’s learn a bit more about Daniel Morris

Dan began his professional accounting career in 1984 Ernst & Young in Silicon Valley, California. Today, he’s the Managing Director, Morris + D'Angelo, Senior Consultant with Strategic Global Advisors International Limited; Founder, VeraSage Institute. His Mission: “To be the Ultimate Dragon Slayer.” He is a sought after global expert in multi-national business structuring, tax optimization, and asset protection. As a frequent speaker at conferences, leadership development events, and seminars, and a consultant to professional knowledge firms on Ethics, Implementing Global Business Strategies, Asset Protection, Emerging Technologies, Total Quality Service, Cryptocurrencies, Blockchain, and Value Pricing, his work takes him around the world. He has been an educator with numerous professional associations since 1998 and has authored, developed, and presented fifty courses, seminars, and conferences on topics including asset protection, international tax strategies, emerging technologies, ethics, pricing, and customer economics. As the immediate past chair of the Regulatory Working Group for the Accountants Blockchain Coalition, Dan is actively engaged in all aspects of the blockchain and its associated parts. He has assisted over a dozen blockchain related enterprises including designing the global structure for DASH along with coordinating multiple ICO and/or pre-ICO engagements. Dan received his Bachelor of Science from the University of Oregon, and resides in Oregon.

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so that organizations can thrive. I'm Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. On today's show, folks, we have another VeraSage Institute colleague, and co-founder of the Institute, Daniel Morris. Hey, Ed, how's it going?

Ed

It's going great. I can't wait to talk to Dan again. This is number three, I believe. So he's two away from the gold jacket.

Ron

Although I couldn't find the second episode he was on because I think he did just a segment or two. But anyway, he's definitely been on at least once before. I'm not going to read his [full] biography, other than to say he did start his career at Ernst and Young in 1984, the same year I did. Today, He's Managing Director of Morris + D'Angelo, a co-founder of the VeraSage Institute. But get this, his mission is “To be the Ultimate Dragon Slayer.” How cool is that? It’s as good as your Knowledge Bad Ass. Daniel Morris, welcome back to The Soul of Enterprise.

So Dan, you have been experimenting in your firm, Morris + D'Angelo, with the subscription business model. And I only know this because I got to attend the board meeting at Pine Ridge winery. How's it been going?

That's awesome. What other challenges and opportunities—because they usually are the same thing, the same coin, just different sides—are you seeing out there for the profession, and which are you seeking? You mentioned one, cryptocurrency, obviously?

That's bright. Is that partly our fault, though, that we don't do a good enough job managing their expectations? Get their stuff in early, things like that?

You mentioned Daniel Susskind, and his book, The Future of the Professions, and we did talk to him [Episode #74]. And one of the themes in that book is artificial intelligence. Have you seen, yet, AI's impact on your operations?

Dan, I met you in 1996. So we’ve known each other for over 25 years. And when I met you, I was practicing. One of the things that has always blown me away about you is you have a very unique perspective on specialization. And I'm not talking about the generalist versus the specialist debate. We both know that's dead. But since I've known you, Dan, you've specialized in many different things. I think DISC and FISC might have been when I met you. And then you got into crypto, global business strategies, global tax structures, wealth planning, asset protection. You've specialized in at least a dozen things since I've known you, and there's probably more. What is your operational philosophy with regard to specialization?

Dan Morris 

I don't know if I'm smart enough to have an operating philosophy with specialization, I think I think I'm just curious, right, I think I probably have under diagnosed, you know, add or something, right. And after I've, I've always believed that in a professional kind of has a three year attention span a year to dig in and learn the core basics, right? And then a year to, to, to improve upon those and essentially master them. And then a year to figure out how to get somebody else to do the job for you before you get bored, right? I mean, that's a key and I and I've said that I think you see me say that on stage. I think that about S corporations or corporate tax or individual tax, but I think about it on everything else. So in my world, I try to pay attention to what's new and exciting. And it's helpful. I'm in the Silicon Valley as a general rule. And I try to listen and go well, that's interesting. What can I learn about that, and then I then I dig in, and and I go there. That's how I started this, right? I mean, I started it because I didn't candidly want to do the same thing for 40 years, because that would be meant to say to me, so that would be brain death. And I don't want to do that. So my operating philosophy is to be continuously engaged, and learn how to learn new things, and fail a lot. Sometimes hit a home run. Right? So I try to beat I tried to beat a high baseball average. I mean, look, if the Mets could barely get 275 percentage points, you know, God forbid, you know, I don't at least get 300

Ron Baker 

Be careful [mentioning the Mets with Ed here]. I love it because you're not looking at the data. You're not looking at demographic data. You may be listening to your customers and observing things, but you just seem to be intellectually curious and driven to certain topics. And I do love that philosophy of the second year you master it, but also you're monetizing it as well. And then the third year, you're looking for your successor. It's a great philosophy. Dan, we've only got two minutes. I know you do a lot of work in crypto, and I've got further questions for you on crypto with regard to regulation, but I'm going to ask you a bizarre question. Let's stress test Bitcoin for just a minute, a thought experiment. Let's say it becomes worthless. What's the impact on the global economy?

Fair enough. All right, well, we're up against our first break.

Ed’s Questions: Segment Two

On The Soul of Enterprise today with the ultimate dragon slayer, Dan Morris. Dan, what the hell does that mean? What is the ultimate dragon slayer?

So the question I have for you then is it's not a Don Quixote situation? It's not about being anti-reality. Do you take on people who say, “You know, Dan, I just need a tax return, it’s all I need”?

And the folks in your firm don't want to do that either, I assume.

And on that, you have gotten, I think, really good at drawing the box. And by that I mean the Tim Williams strategy box that says: you're more defined by who you say no to. And one of the things that you've done for years, and I know you're in the middle of updating this right now, is you've used an intake form that you've asked your customers, or even prospects to fill out before they come on board. Talk a little bit about how that process has affected your firm?

I just love that you've put up barriers to even getting to you. So few professional firms that I encounter are willing to put up some hurdles, it doesn't have to be big ones, but even little hurdles to say, “Hey, listen, before I talk to you, you've got to fill this little form out. It doesn't have to be 17 pages, but these seven questions before we even have the conversation.” So I think that's extraordinarily courageous. I wanted to pick up on something that you were talking about with Ron. I assume that after the intake form is done the next thing is the value conversation, and I refer to you in social media as the “savant of the value conversation.” I think you just have a natural affinity to do it. You mentioned that the value conversation has taken on a different meaning, or a different form, in the world of subscription pricing. Talk a little bit about that.

I've heard you say that you don't necessarily want your customers to [think of you or your firm] as the only ones they call, but you want to be the first one they call.

Well, Dan, we're against our next break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here with Dan Morris, the Ultimate Dragon Slayer, and he is a genius at the value conversation. That is so true. I've watched him in action. I've heard him in action. And I've role-played with him in various forums. You’ve got an unbelievable knack for getting the right questions come to the top of the mind. I have always admired that about you. Dan, you work in cryptocurrency a lot. We've been following it on the show for years, and it seems like there's a regulatory battle over it. The SEC thinks it's a security, the IRS wants it to be a commodity. You probably saw Gary Gensler, the new SEC Chairman, he said, “these tokens weren't means of exchange, but highly speculative stores of value.” And yet, Bitcoin and Ether don't fit that definition. I think of it simplistically. If I can put it in a Coke machine and get a Coke, then it’s currency. I can do that with a Bitcoin, metaphorically. I can't do that with a stock certificate. So I guess my question is, what are these things?

Right, our vocabulary is lacking. Anytime there's a new technology we struggle with the language. I think when television came out, it was called picture radio, because we just always relate it to the last technology. How do you navigate that minefield with your clients? Because you work internationally and I’ve got to believe there's different crypto regulations in various countries. How do you navigate that?

And the States get involved with it as well. Do you think we'll ever sort out this regulatory infighting?

Since I've known you, and because you're in Silicon Valley, you deal with a lot of startups, obviously. You've been willing to take options, or other forms of creative payment besides cash. Do you still do that?

You take a portfolio approach, and that's one of the ways I learned that concept, by having a few of those in your portfolio, if one strikes it pays off big. That's where you get those windfall profits.

China has a digital currency. My favorite new acronym is CBDC, central bank digital currency. Dan, should the United States of America have a digital currency run by the central bank?

Interesting. Janet Yellen, president Biden, and the OECD want a global corporate minimum tax of at least 15%, if not higher, Biden and Yellen want it hire. Should they get it? [Dan: No]. Why not?

Dan

…And the OECD. I've sat in the OECD building. Oh my god, Marx was to the right of these people.

Ron

Okay, that's the line of the show right there. Greg, I hope you tweet the heck out of that. That's beautiful. I couldn't agree more. In fact, we're watching Colorado, it might become a zero income tax state, which I find fascinating given the current governor there. Unfortunately, Dan, we're up against our break. I'm going let Ed take you home. I just want to say thank you so much for reappearing on The Soul of Enterprise. We'll definitely have you back, if you're willing.

Ed’s Questions: Segment Four

Wow, so many places to go, Dan, that you've teed me up for here, so I'm not quite sure where to go. The first one, I want to pick up on something you said. You said with regard to cryptocurrency and setting the tokens up, “I want to make sure that I'm outside the United States.” What does that even mean?

The servers in the United States? The people, like Ed we've got to get you out of the United States before we set this up? This is what I'm struggling with.

Okay, where is the corporation set up is what you were talking about there? It's that leadership, all of that. Alright, I think I understand because I just recall this is about five years ago now that some Senator wanted to pass a law that said on your custom’s declaration form you were supposed to declare the amount of Bitcoin that you're bringing into the United States, and I'm like, what the hell are you talking about?

Now I understand what you mean by that; I was just confused because of that. Alright, back to something with regard to subscription. Because I know you're doing this, you mentioned that you've been putting subscription in place and one of the things that Ron and I have talked about, and I know we've had conversations with the VeraSage Fellows on this, is that you understand that subscription is not taking your annual price and dividing it by 12. That is not what the subscription model is. What Ron and I talk about plussing, you've got to plus you're offering. Dan, I'm having a hard time trying to figure out how you would plus your offering with all of the stuff that you've done in the past. What are you doing to plus what you have to offer? You've already plussed everything I thought?

Now I'm going to go to sort of where Ron was going on some of this stuff and that is to ask you about some of the current proposals that are before Congress and what's potentially going to happen. Is it a good idea that we should lower the $10,000 federal threshold down to $600? Would that be a good idea for us?

I'm going to take a page out of Charles Murray and say that if they do lower this to $600 what we should do is all set up recurring transactions that happen every 10 minutes. I'll put $600 into your bank account and then five seconds later you send it back to me and we just keep doing that all day long creating millions of transactions, and with all of this noise they wouldn't be able to trace anything because we just filter it all. It would create so much noise that there would be no signal for anyone to see. That's my theory.

We’ve only got one minute left and this is a question not answerable in one minute so you will have to stay over on our bonus episode and talk about it there—this is the tease for those of you not on Patreon. Should we hire more IRS agents, Dan, because for every dollar we invest in IRS agents we're going to get back $3, $10, I don't know, $50, back?

Well, Dan, as always, fascinating conversation. We're happy to have you with us. And thanks for appearing on The Soul of Enterprise. We'll stay over and we'll talk a little bit more. Ron, what do we have coming up next week?

Ron

Next week, Ed, we have Marco Bertini, the co-author of The Ends Game, which is going to be a fascinating discussion.

Ed

Well I look forward, I'll see you in 167 hours

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Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #362: One Thing!

One Thing!

Inspired by A. J. Jacobs when he appeared on Russ Robert's great podcast EconTalk, Ron and Ed have each been keeping a "One Thing" journal for the last few years. In this episode, they shared some of the best "One Things."

• Russ Roberts had A.J. Jacobs on his podcast some time ago. Jacobs mentioned he keeps a “one thing” journal. That is the root of today’s show. Here is the background: https://www.econtalk.org/a-j-jacobs-on-thanks-a-thousand/

• Here is Ed’s first one thing from October, 2018 - “Give up your illusion of control.” —The Stoics

• What is Ron’s first ‘one thing’. It comes from Rabbi Lappin and one of his earlier radio shows: “What separates a religion from a tennis club? Three questions: Where did we come from? Where are we going? What are we supposed to be doing?”

• Another first thing from Ron also courtesy of Rabbi Lappin: “It’s hard to succeed at something we think is morally reprehensible.”

• Another one thing from Ed is from the Andy Duke book, “Thinking and Bets”. In it, she suggests if you have some stated belief then ask yourself what % do you believe your belief is true. If you can’t say “not zero” or “100” you will be able to stop thinking in absolutes.

• Did you know you can get commercial free episodes PLUS bonus episodes on our Patreon page? Check it out at Patreon.com/TSOE

• We’d like to give a shout out to our Patreon member Blake Oliver of EarmarkCPE.com. Did you know you can earn CPE for listening to podcasts? Check it out.

• Another ‘one thing’ from Ron hails from Thomas Sowell: Economists don’t ask, “What do you want?” but rather, “What do you want more?”

• Another ‘one thing’ from Ron also stems from Rabbi Lapin: The use of energy is a major difference between man and animals because it enables us to gain time. Let’s not forget language, clothing, and ice in our drinks.

• Here’s a ‘one thing’ from Ed courtesy of Peter Thiel: There is Marxian theory that Marxism will come when interest rates reach zero.

• Consider this ‘one thing’ from Ed - short but powerful: Use “I think” instead of “I feel”.

• ‘One thing’ from Ron: There are two types of government - bricks and stones

• Another ‘one thing’ from Ron: If my pet chimp can understand what I’m doing then that’s physical. If they don’t understand what I’m doing then that’s spiritual.

• Here is a ‘one thing’ from Ed. From our episode with Peter block (#183): “A clear process is only an invitation for someone to say that you are doing it wrong.”

• Another ‘one thing’ from Ed which stems from Jordan Peterson: There is no correlation between virtue and intelligence.

• A ‘one thing’ from Ron: Would a child rather have more material things (as an only child) or a sibling? That’s a rather profound thought, no? It probably depends on when you ask them.

• Our Patreon offering at Patreon.com/TSOE is commercial free AND includes bonus episodes. It is sponsored by 90Minds.com. Need a mind? Contact @90Minds!

• Here is a ‘one thing’ from Ed dated July 31, 2020: If you are reading a letter from the late 1700s and assumed the words mean the same thing then that they do today, you would be laughed at. But somehow folks reading the Constitution think that today.

• A ‘one thing’ from Ron: Arthur Brooks is the former president of AEI and said, “How do you get down the road to serfdom? One policy at a time.”

• Also from Ron and take from Rabbi Lapin: “Only acts of faith, not facts, are the most rewarding.”

• A ‘one thing’ from Ed and dated February, 2021: “If you resist your destiny it drags behind you. But if you follow your destiny it guides you.”

• Also from Ed (and sourced from the TSOE show #329 featuring Donald Hoffman): “Science is not dogmatic but scientists are.”

• Here’s a great ‘one thing’ from Ron - “Anything random can’t happen just once.”

• Here is a ‘one thing’ from Ron that comes from a Chinese saying: “The future is certain we just can’t agree on the past.” Capitalism is probably the opposite of that.

• Ron’s “favorite” acronyms: DRIP - data rich, insight poor; (related to project management and workflow) FISH - first in, still here.

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Here are the links we went through during the show:

• Tesla will move its headquarters to Texas, Elon Musk says - CNN

• The Grinch Who Conditioned Christmas on Covid Caseload

• iRobot Select

• Pret A Manger & the Rise of Retail Subscriptions

• How Much per Person Does Your State Collect in Excise Taxes

• No Longer 30 Years Away: Two New Major Fusion Breakthroughs

• Innovation Elusive Hard to Measure But Essential

• J.D. Vance Says Government Should Seize Assets of Political Nonprofits – Reason.com

• The Sad State of Accounting Standards

• PwC offers U.S. employees full-time remote work

• NFL Scorigami

• Free Ride (song) - Wikipedia

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Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

This pas week was bonus episode 362 - The Three Percent. Here are a few links discussed:

• August 2021 Quit Rate - The Three Percent

• Jay Bhattacharya on COVID vaccines, herd immunity, etc

• Household Makeup

• CBO Blows Up Democrats’ Spin on Taxes

• Microsoft shutting down LinkedIn in China - BBC News

• Biden’s Global Tax Cartel

• COVID-19's latest odd side effect: 'Restless anal syndrome'

• The Wrong Way to Reform the IRS

• Understanding the Difference Between Authoritarianism and Totalitarianism

• How I’m Responding to Australia’s Techno-Autocracy

• Political Sectarianism and the Presidential Cult | Cato Institute

• Keep Behavioral Economics Away from Our Kids

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #361: Free-Rider Friday Returns

We miss Free-Rider Friday's, so we brought it back, but just this once. We used to do this on the last Friday of every month. Most of our shows are “topic” driven, where we dive deep into one subject. Free-Rider Fridays were designed to be “event” driven, whatever issues are in the news that we (or you) find worthy of commentary. In economics, free riding means reaping the benefits from the actions of others and consequently refusing to bear the full costs of those actions. This means Ed and Ron will free ride off of the news, and each other, with no advanced knowledge of the events either will bring up. It's also a chance to clear out our stacks of stuff!

“… Come on and take a free ride
Free ride
Come on and take it by my side
Come on and take a free ride!”

-Edgar Winter

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Here are the links we went through during the show:

• Tesla will move its headquarters to Texas, Elon Musk says - CNN

• The Grinch Who Conditioned Christmas on Covid Caseload

• iRobot Select

• Pret A Manger & the Rise of Retail Subscriptions

• How Much per Person Does Your State Collect in Excise Taxes

• No Longer 30 Years Away: Two New Major Fusion Breakthroughs

• Innovation Elusive Hard to Measure But Essential

• J.D. Vance Says Government Should Seize Assets of Political Nonprofits – Reason.com

• The Sad State of Accounting Standards

• PwC offers U.S. employees full-time remote work

• NFL Scorigami

• Free Ride (song) - Wikipedia

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Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

This pas week was bonus episode 361: FRF Continued. Here are a few links discussed:

• Casa Bonita Update

• Melbourne overtakes Buenos Aires, is world’s most locked down city | news.com.au — Australia’s leading news site

• Single-Payer Banking and a USA CBDC

• Trillion-dollar platinum coin could be minted at the last minute - Axios

• The SEC’s Daddy Issues

• Taiwan asks for Australia's support in possible war with China

• Kevin Williamson on the Tax Debate, October 5, 2021

• China’s Housing Bubble Puts All Other Housing Bubbles to Shame

• Three Stories on Taiwan

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #360: Interview with Kimberlee Josephson

In an email, Dr. Kimberlee Josephson wrote to Ron and Ed saying, "I just began listening to your podcast and I’m glad to have stumbled upon it! I wanted to reach out about your Woke Capitalism/ESG segment since this is an area I am trying to voice concern over." It was a great conversation and we have included the full show notes and additional resources below.

But first, a bit more about Kimberlee Josephson…

Dr. Kimberlee Josephson is an Associate Professor of Business, Associate Dean for the Breen Center for Graduate Success at Lebanon Valley College in Annville, Pennsylvania, and Adjunct Research Fellow with the Consumer Choice Center. Her academic background is in international studies and strategic management and she teaches courses covering topics on global sustainability, international marketing, and workplace diversity. Prior to serving in academia, her professional career spanned from working in sales in Manhattan, as a producer for a web marketing firm, freelancing for on-air promotions at QVC, and as a research assistant for an international NGO. Her op-eds have appeared at University Business, Quartz at Work, and PA Capital Star. She holds a doctorate in Global Studies and Commerce from La Trobe University in Australia, a master’s degree in Political Science from Temple University in Philadelphia, another master’s degree in International Policy from La Trobe University, and a bachelor’s degree in Business Administration with a minor in Political Science from Bloomsburg University.

Ed’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ed Kless, with my friend and cohost, Ron Baker. And folks, on today's show we have our interview with Kimberly Josephson. Hey, Ron, how's it going?

Ron

Very good. How are you?

Ed

I'm doing great, great week. It will be fun to interview Kimberly, I’ve been looking forward to this all week. And without further ado, let me get the bio read and get her get her back on the program here. Dr. Kimberly Josephson is an Associate Professor of Business, Associate Dean for the Breen Center for Graduate Success at Lebanon Valley College in Annville, Pennsylvania, and Adjunct Research Fellow with the Consumer Choice Center. Her academic background is in international studies and strategic management where she teaches courses covering topics on global sustainability, international marketing, and workplace diversity. Prior to serving in academia, her professional career spanned from working in sales in Manhattan, as a producer for a web marketing firm, freelancing for on-air promotions at QVC, and as a research assistant for an international NGO. Her op-eds have appeared at University Business, Quartz at Work, and PA Capital Star. Welcome to The Soul of Enterprise, Kimberly Josephson.

How does someone who goes from an on-air promotion analyst at QVC to teaching economics at Lebanon Valley College in Annville, Pennsylvania?

You sent us an email, having listened to one of our shows, and we have actually been paying attention to your work, Ron and I do a bonus episode after this on our Patreon channel, and FEE is one of our go-to sources. So we are we were somewhat familiar with your work already, so we're happy to have you on. And you've been writing a lot about corporate social responsibility, woke capitalism. So let's start, it’s attributed to Socrates, but he didn't really say it, that all wisdom begins with the definition of terms. Let's try to define some of these things, shall we? Let's define corporate social responsibility, if it can be, maybe It can't be.

This is great, it's great background to talk a little bit about this. In fact, you anticipated some of my additional questions about stakeholder capitalism and woke capitalism, or as I like to call it, marketing.

As you were talking, I was reminded, didn't we settle this with David Ricardo and the division of labor, why don't we focus on the things that we're really good at and not try to produce cheese, and wine, and do corporate social responsibility? Because all that really is is just another division of labor? I think, if I'm not mistaken here, the not-for-profit sector is the third largest sector in the US economy. If we just as employees were able to keep more of our own money, well, then how about we'll donate because that's what Americans do anyway.

Ron and I talked about this last week, that there's a standard now in Europe to try to get everybody to use USB-C ports instead of Apple’s, so Apple would have to shift, and of course then you're locked in and there can be no new better creation of a plug-in, so very confusing. Well, we're up against our first break.

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with our interview with Kimberly Josephson, and Kimberly, great discussion with Ed. I'm going to pull back and go to a macro question. I think you cited a Richard Branson paper, or quote, or speech that he gave at the World Economic Forum. And they claim that our economic model is broken. And you point out, how can you say that when in the last 20 years we've dropped poverty into single digits, bone crushing, dollar-a-day poverty. So we've created all this wealth and brought all these people out of poverty. You were talking about Bono and his Red movement. Somebody asked him at a TED talk, “Can you name one country that's developed because of foreign aid or NGO aid? Name one, there's not one out there. It's just amazing, and I love how you point this out—we’ve done this all without ESG!

We've had Professor Deirdre McCloskey on the show twice [Episode #6 and Episode #293], and her trilogy on bourgeois virtues and equality. Her whole premise is the Great Enrichment started because we gave entrepreneurs and innovators dignity. It was a cultural, language, and rhetoric change. It wasn't about oil, or scientific invention, or any of these materialist explanations. It was because people can now have a go and make other people's lives better. And I just find that so compelling, even though it's very hard to prove.

I just listened to something that was talking about an article about accountants are going to save the environment, because they're going to be able to attest to these new ESG standards that are coming out, and the Sustainability Accounting Standards Board, which I think is BlackRock’s or someone’s. And I'm thinking, geez, we've got the Big Four now offering this as an attest service. I worry that this is a wet blanket on innovation and dynamism because creativity is supposed to take us by surprise, otherwise it could be planned. And you can't, like you say, have standards on something new. And that's one of my biggest concerns about ESG. It's just a wet blanket on dynamism.

And it's entrenching big businesses. Bloomberg estimates ESG funds could hit $53 trillion by 2025. And like you say, they're controlling the standard setters and the jargon, and they're the ones that are doing the assessment or teaching companies how to make the grade, or whatever. I'm just going to ask this, is this a Trojan horse? Is this a way for unskilled people without any merit, or skills in business, or wealth creation, to get into the boardroom?

You just put your finger on it with the term tradeoffs. Thomas Sowell [Episode #25] says there's no such thing as solutions, there's only tradeoffs. The thing that scares me, Kimberly, as a recovering CPA from a Big Eight, is we have a knowledge problem here. How can the Big Four come in and attest to something they know nothing about?

Well, this is flying by, as we knew it would.

Ed’s Questions: Segment Three

We are back with Dr. Kimberly Josephson. I want to ask you about something I came across last week. Jonah Goldberg, in his newsletters, talked about the James Beard awards. I'm not sure if you're familiar with this, but these are basically the Oscars of the food world. The organization itself uses that as its unofficial motto. But they have just recently announced that their prestigious annual awards are going to be retooled based on the decisions that candidates have shown and demonstrated a commitment to racial and gender equality, community and environmental sustainability, and a culture where all of that can thrive. Not on who makes the best hamburger. I'm all for all of those things, those are all wonderful things that we all should strive for. But does it really matter when it comes to making a chicken Kiev?

It's really, I think, also partially responsible for some of the things that we're seeing with regard to the vaccine and COVID because we've just politicized everything. Gone are the days when LeBron James can say Republicans buy sneakers as well. Now we have to have red sneakers and blue sneakers, I guess. This actually happened in the software industry before the election last year. There was a company that came flat out saying we are against Donald Trump. Are we really going to have red apps and blue apps? I mean, is this what we're going to do?

I think this this goes back to a misunderstanding that John Mackey, from Whole Foods, in his book, Conscious Capitalism, makes this great point, he says: look, the purpose of business is not to make a profit—profit is the result. And that is the big problem. Everybody thinks you go into business to make a profit. No, that's the result. You go into business to do something for someone else. It's actually other- directed, it's altruistic. And people don't get that part of it, that it's about serving the customer.

Kimberlee Josephson  51:49

for I mean, Adam Smith saying, right, the butcher and the baker right, they don't do it for themselves, like they have a talent they have a skill and they're leveraging that skill and they should get a return for that and if people are willing to pay a good amount for it and it's all voluntary, everybody wins you have that specialization and people pursue what it is within their means and and what it is that they desire so that's really important my I mean with with the stakeholder model, the concern is with money that's objective right? That's just that we can use that as the tool of measurement right? If my profit margins are good, if people are purchasing if my price if the elasticity of demand right if it that changes if I lower my price or raise my that signals to me the perception of value and what people are willing to pay it's very useful. So focusing on profits not a bad thing because that that tells you if you're doing something wrong or right so that's smart to focus on it I don't want students to lose sight of that profit is not evil. It's a functional faith and you need it to scale and to reinvest and you know, grow the business or whatever you want to do with it. But with the stakeholder model, a lot of that's subjective right? I actually to help my students remember the stakeholders we focused on the core stakeholders I call it the spice model because we think in terms of society partners partners in the industry, investors, customers and employees but you have so many other secret the government media right we could go on forever there are so many stakeholders and sometimes I do a little exercise with them like okay now prioritize them and they can't right some people owe you the employees employees are the most important because if you don't have employees, you know, how are you going to provide Okay, well if you don't have customers, there's no point of the business okay? If you don't have the investors, right, that's how are you even going to get the business but so it's just it's so contestable. And and it varies and how you prioritize to is going to vary according to the industry, what the needs are, what the expectations are,

And sometimes they just outright conflict with one another.

I’ve got about one minute left in my segment here and I don't want to finish on a downer. So I'm going to take you back to an article that you wrote in January of this year, entitled “Four Netflix Hits That Agenda-Driven Corporate America Could Take a Cue From in 2021.” And I'm just going to pick one of them, feel free if you want to go to a different one, but I want to know what can we learn from Beth Harmon in Queens Gambit on Netflix?

Well this is this is great, it is flying by, and Kimberlee I'm going to pass it over to Ron, he's going to take you the rest of the way home, but from me thanks for being on the show today.

Ron’s Questions: Segment Four

Welcome back, everybody. We're here with Dr. Kimberlee Josephson, and Kimberlee, I wanted to ask you about the 2019 Business Roundtable statement that basically threw out shareholder maximization theory [and replaced it with stakeholder theory]. It did move the Overton window, it seems pretty rapidly. You probably read this, The Wall Street Journal wrote a two year anniversary in 2021 of this statement. And they looked at these 181 members who signed the statement and said, You know what, nothing has changed with any of you. You haven't really done anything with this. Is this just virtue- signaling?

The stakeholder theory sounds so beautiful, because we have to watch out for our customers, and we have to watch out for the community, and pay our taxes, and all of that. But all of these things have conflicts. And for the C-suite, or the employees of the corporation, if they're accountable to more than the shareholders—in other words—now they're accountable to everyone, then they're accountable to no one. And a slave with two masters is a free man. And I worry about that, because how do they deal with these tradeoffs: As a customer, I want a lower price, as an employee I want a higher wage, as the government, we want more taxes. The price system deals with this beautifully without any conflict whatsoever, but now you lay over the ESG and the stakeholder theory, and it brings up all these conflicts that are unresolvable without a price system.

We made everything a Veblen good, all the way down. No luxury, just everything now is a Veblen good. Kimberly, this is great. I’ve got 15 seconds with you, but are you optimistic that we can push back on all this?

I'm glad to hear that. Well, Kimberly, this has been an honor. Thank you so much for appearing on The Soul of Enterprise. Ed, what do we have next week?

Ed

Next week, Ron, we are interviewing Marco Bertini, the author of The Ends Game.

Ron

I'm looking forward to it. I'll see you in 167 hours.
 

Other Resources

• The definition for Corporate Social Responsibility has changed over the years. Check out Carroll’s CSR pyramid for a modern day interpretation - https://thecsrjournal.in/understanding-the-four-levels-of-csr/

• Check out this article from Dr. Josephson - “Why corporations should cater to consumers not causes” https://fee.org/articles/why-corporations-should-cater-to-consumers-not-causes/ 

• Want to open your eyes into the harm that some foreign aid programs have caused? Check out the book, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa 

• Here is a link to Kimberlee’s FEE articles: https://fee.org/people/kimberlee-josephson/ 

• And here’s a portfolio of all her publications, including podcast interviews: https://muckrack.com/kimberlee-josephson-1/portfolio

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Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

This pas week was bonus episode 360 - No Longer Dollar Tree. Here are a few links discussed:

• John Hinckley to be released

• Dollar Tree breaks the $1 barrier as costs take a bite - ABC News

• The Debt Limit Can Save Us

• Warby Parker soared in its market debut, setting a high bar for online retailers

• The Zero-Cost Canard

• Hong Kong government seeks to wind up Next Digital and hammer final nail in the coffin of Jimmy Lai’s media company | South China Morning Post

• Can We Stop Pretending That Anybody Talks This Way

• John Stossel Sues Facebook Alleging Defamation Over Fact-Check Label - Variety

• The Tax-Gap Myth

• Jen Psaki's economic illiteracy

• Tesla Opening New Store and Service Center on Tribal Land

• How Artificial Intelligence Completed Beethoven's Tenth Symphony

• Cheers, jeers, &c.

• Autonomous Paccar trucks hit the road with FedEx deliveries | The Seattle Times

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