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Episode #377: Interview with Meriel Schindler - The Lost Café Schindler

Ron and Ed welcome author Meriel Schindler whose book The Lost Cafe Schindler they both highly recommends. When her father, Kurt, died in 2017, he left behind piles of Nazi era documents related to their family's fate in Innsbruck, Austria, and a treasure trove of family photo albums reaching back to before World War I. Meriel was forced to confront not only their fractured relationship, but also the truth behind their family history.

Below are the show notes. Use them to follow along while listening to the podcast:

  • Meriel talked about distancing herself from some of her immediate family members as she grew into adulthood. It turns out some of her distant family relationships had significant connections to rather (in)famous WWII figures.

  • The United States Holocaust Memorial Museum is highly respected by Meriel and worth several visits. https://www.ushmm.org/

  • Innsbruck, the capital of Austria’s western state of Tyrol, is where the Lost Cafe in Meriel’s book was located. It was one of the first places in Europe that you could hear jazz. https://en.wikipedia.org/wiki/Innsbruck

  • In Austrian folklore, if you serve a piece of cake and it falls to the side, you are destined to have a terrible mother-in-law. That explains a lot.

  • The Austro-Hungarian empire was…..progressive….for a monarchy. By 1867, the monarch had come to understand that the Jewish population in the empire was quite useful (engineering, building, and so on). As a result, Jewish families started to move to Innsbruck in favor of education and wealth.

  • The economics of the Third Reich was not one of free market. It was quite state controlled and heavily centrally planned. This is at the root of the transition of the Lost Cafe. https://en.wikipedia.org/wiki/Economy_of_Nazi_Germany

  • Life changed significantly for Meriel’s family when Germany took over Austria in 1938. Her grandfather’s cafe was now state controlled and he had to sell his family villa. It was a long game of dehumanization as everything was taken away.

  • Kristallnacht, or the Night of Broken Glass, was a pogrom against Jews carried out by the Nazi Party's Sturmabteilung (SA) paramilitary forces along with civilians throughout Nazi Germany on 9–10 November 1938. https://en.wikipedia.org/wiki/Kristallnacht

  • Franz Hofer was the Nazi Gauleiter of the Tyrol and Vorarlberg. As the Nazi party chief for the Tirol/Vorarlberg province he was the most powerful figure in the region. On May 3, 1945 Hofer surrendered Innsbruck to American troops. https://en.wikipedia.org/wiki/Franz_Hofer

  • The story of the REAL Inglorious Bastards was recounted by Meriel today during the third segment of the show today. There is also a documentary that *might* feature the Lost Cafe. https://www.imdb.com/title/tt3320110/

  • The Lost Café Schindler will celebrate a centenary THIS YEAR which is a testament such a great business. https://www.amazon.com/Lost-Caf%C3%A9-Schindler-family-search-ebook/dp/B08HHHGX5K

  • You should check out the Audible version of the Lost Cafe Schindler. It was “narrated by a professional” and not by Meriel. Her words, not mine!

  • A big THANK YOU to Meriel Schindler for spending time with us today and talking about her book, The Lost Café Schindler. Buy it at this link if you prefer https://www.amazon.com/Lost-Caf%C3%A9-Schindler-family-search-ebook/dp/B08HHHGX5K

 
 

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 week was bonus episode 377 - “Reagan on immigration” — Here are some of the links discussed:

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

Episode #376: Fourth Interview with Dr. Paul Thomas

Making his fourth appearance on The Soul of Enterprise is Dr. Paul Thomas of Plum Health DPC. Ron and Ed ask him how he scaled his practice from one to know three offices and what the implications are for his subscription model. In addition, we ask what regulatory barriers to providing care this way should be removed.

Below are the show notes. Use them to follow along while listening to the podcast:
It seems to Dr. Paul that Operation Warpspeed and 3 different vaccination options have helped with Covid. Omicron hit hard over Thanksgiving, Christmas, and New Years. Things are starting to fortunately slow.

  • Does mRNA technology mean vaccinations can be developed faster? Dr. Paul believes this remains a political question due to the regulatory bodies and their ability to streamline the approval process.

  • Use the car analogy (Dr. Paul is based in Detroit), mRNA technology is the chassis with an ability to build out capabilities as a delivery mechanism. Think cancer, cystic fibrosis, and many others.

  • Did you know that you can join us at Patreon.com/TSOE for commercial free episodes AND bonus episodes? At a certain level you can get a shout out like Mark Gandy (@g3cfo) of CFOBookshelf.com. Mark recently interviewed Ed - go check it out!

  • How can you scale a Direct Primary Care business? Doesn’t it suffer from the same challenges as other subscription services? It comes down to serving one patient at a time with excellent medical care, forming deep relationships, and delivering on our promise.

  • Dr. Paul WROTE THE BOOK on Direct Primary Care. It’s called Startup DPC. Ron recommends this book because you can learn a lot from Dr. Paul’s experience. Here’s the Amazon link: https://www.amazon.com/Startup-DPC-Direct-Primary-Practice-ebook/dp/B0886GYD9Z

  • During the second segment of the show today, Dr. Paul talked about what he looks for in new hires coming out of residency and how the compensation model works. Admittedly , it’s a bit more detailed than what is manageable in a tweet.

  • How does Dr. Paul reduce churn? It starts with overdelivering on what you promise. Some churn is unavoidable but most patients stay with the practice because they get more value than what they pay in.

  • Dr. Paul mentioned Ikigai. It is a Japanese term that means a reason for being and refers to something that gives a person a sense of purpose, a reason for living. https://en.wikipedia.org/wiki/Ikigai

  • After a long five years, Dr. Paul modestly increased the price of his services. While increasing business costs were a part of this, he has significantly increased the level of services offered by bringing on new doctors with specialties. Churn was minimal.

  • What can be done to lessen the regulatory issues to make it easier to get access to DPC? The DPC Coalition was formed specifically for this and other DPC access issues that need to be addressed. Find them at @dpccoalition or https://www.dpcare.org/

  • Above and beyond DPC, Dr. Paul recommends that patients hold a catastrophic loss policy as well. However, Dr. Paul firmly believes that low cost, high quality medicine is the guiding light for much of his work.

  • What does Dr. Paul measure as KPIs that you might not find on an income statement? He looks at new enrollments as a lagging indicator. Number of social media posts, number of blog posts, number of speaking events, and excellent Google reviews are all leading indicators.

  • Of the 1,636 DPC practices as of today, is there one near you? Check out the DPC Mapper to find out: https://mapper.dpcfrontier.com/

  • A masterclass in starting a Direct Primary Care practice? Yep! Dr. Paul now offers a DPC Master Class directly from his website, https://www.startupdpc.com/masterclass

  • A big THANK YOU to Dr. Paul for being transparent and sharing what he has learned about starting a Direct Primary Care business based on solid subscription pricing practices. Check him out at https://www.plumhealthdpc.com/ and, if you live in Detroit, consider becoming a patient!

  • Bonus link: Here is an interesting article on how to hire salespeople and ensure they are “accretive” under a subscription pricing model - https://www.saastr.com/a-framework-and-some-ideas-for-your-first-sales-comp-plan/

 
 

Episode #375: Woke, Inc. — Inside Corporate America's Social Justice Scam

One of Ron's number one books of 2021 was Vivek Ramaswamy's Woke, Inc.: Inside Corporate America's Social Justice Scam. An incredible read, with some very innovative ideas for how to push back on the wokeism that is infiltrating corporations. Join Ed and Ron for wide-ranging discussion of one of the most important books written in a long time (in Ron's opinion, we'll have to see what Ed thinks!).

Here are the show notes:
Vivek was born in Ohio, went to a Jesuit high school, then Harvard where he studied molecular biology, employed by hedge fund in 2007—where he made partner—that invested in biotech, then in 2010 went to Yale law school, started Roivant Sciences, co-founded a few tech companies, and is now philanthropically active. Harvard president Larry Summers fell from grace while he was a student there, back in 2007. He knows whereof he speaks. He stepped down as CEO of Roivant in January 2021 in order to speak freely on this issue. The country should thank him, profusely.

He describes Corporate America’s Prestige (the third act for a magician): “pretend like you care about something other than profit and power, precisely to gain more of each.” CEOs can now exercise quasi-political power without the hassle of having to be elected. He explains why he wrote the book: “Why am I defecting? I’m fed up with corporate America’s game of pretending to care about justice in order to make money. It demands that a small group of investors and CEOs determine what’s good for society…It’s not just ruining companies. It’s polarizing our politics.” How does he define woke?: “Basically, being woke means obsessing about race, gender, and sexual orientation. Maybe climate change too. Once corporations discovered wokeness, the inevitable happened: they used it to make money.” Without spoilers, what’s Vivek’s prescription?: “The antidote isn’t to fight wokeness directly. It can’t be, because that’s a losing battle. You’ll be canceled before you even stand a chance. The true solution is to gradually rebuild a vision for shared American identity that is so deep and so powerful that it dilutes wokeism to irrelevance.” He distinguishes between crony capitalism 1.0 and 2.0:

  • Wokenomics is crony capitalism 2.0, and here’s how it works: big business uses progressive-friendly values to deflect attention from its own monolithic pursuit of profit and power.

  • Crony capitalism 1.0 was straightforward by comparison: corporations simply had to make campaign contributions to legislators in return for favorable legislative treatment.

The book is a deep dive on the all the issues surrounding Wokenomics: dealing with Stakeholder vs. Shareholder [Profit] Maximization; the purpose of a corporation and the bargain society makes by granting limited liability (stay in your lane, out of politics, by limiting the scope of the Business Judgment Rule); ESG investing and what is wrong with these subjective metrics; China and Saudi Arabia using Woke corporations and investment funds for their own purposes (whoever has the gold makes the rules); Section 230 and how he’d reform it (when they engage in selective censorship of political viewpoints, treat them as state actors and bound the Constitution—under existing legal doctrines; return to the diversity that matters, one based on thought, not external characteristics; and add political affiliation to the list of protected categories of race, sex, religion, and national origin; also, what employers are forbidden to do—in the case of fired employee James Damore at Google, the legal question is not whether his beliefs were religious in nature—it’s whether Google’s were. Some of these ideas are incredibly innovative, but all are well thought out.

I love how he begins to sum up his thesis:

  • Part of what I’m saying is that bankers should shut up and bank. We crave justice, but all Wendy’s really has to offer is burgers, so it artificially ties the two together. …We’d be strictly better off if companies and their customers ended the shared fiction that every capitalist transaction must also be part of some grand fight between good and evil. Whatever justice is, surely it can’t be attained so incidentally, by just picking the right shirts, the right burgers, and the right bankers. Corporations used to try to convince you that buying their stuff would make you cool; now they tell you buying it will make you good. The difference is subtle but important. What’s cool is entirely subjective, but what’s good is not.

One of his most controversial proposals is to mandate civic service for high school summer break (four years). FDR, John Kennedy, and William F. Buckley proposed the same idea (the latter in his book, Gratitude). He cites Singapore who mandates two years in the military, police, or civil defense forces. Would this reduce intolerance, and young people separating into tribes? I don’t know, but it’s worth thinking about. No matter where you come down on this proposal, don’t let it overshadow his main ideas.

I can’t do this book justice. It’s simply the best book, by far, I have read in years, and it’s the best book I’ve read, by far, on this specific topic. His ideas need to be spread far and wide, and debated in our country’s legislators, among politicians, in boardrooms, in charitable organizations, think tanks, and everywhere else. I cannot express how this book has impacted me, because I’m still processing all of its ideas—and there many. All I can say is: READ THIS BOOK, AND SHARE IT WITH YOUR COLLEAGUES.

 

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 week was bonus episode 375 - “VW's Penance” — Here are some of the links discussed:

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

Episode #374: Interview with Chris Edwards - How Wealth Fuels Growth

Ron and Ed welcomed Chris Edwards to the show to talk about two recent reports he has authored for The CATO Institute. In How Wealth Fuels Growth, the role of wealth in the economy is the focus. In this recent study Chris examines wealthy individuals as “angel” investors, who fund startup businesses. Angel investors provide a unique source of support for America’s entrepreneurs, particularly in leading-edge industries. In Entrepreneurs and Regulations: Removing State and Local Barriers to New Businesses, Chris writes about how the U.S. economy was damaged by the COVID-19 crisis in 2020. Output plunged and unemployment spiked. Mandated shutdowns, social distancing, and altered consumption patterns resulted in many businesses closing permanently and laying off workers.

Before we get to the show notes, let’s learn a bit more about Chris Edwards.
Chris Edwards is the director of tax policy studies at Cato and editor of DownsizingGovernment.org. He is a top expert on federal and state tax and budget issues. Before joining Cato, Edwards was a senior economist on the congressional Joint Economic Committee, a manager with PricewaterhouseCoopers, and an economist with the Tax Foundation. Edwards has testified to Congress on fiscal issues many times, and his articles on tax and budget policies have appeared in the Washington Post, Wall Street Journal, and other major newspapers. He is the author of Downsizing the Federal Government and coauthor of Global Tax Revolution. Edwards holds a B.A. and M.A. in economics, and he was a member of the Fiscal Future Commission of the National Academy of Sciences.

Here are the show notes (in chronological order). Listen to the show and use these notes as a guide.

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 week was bonus episode 374 - “Las Casa Bonita” — Here are some of the links discussed:

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

Episode #373: The Best Books of 2021

“You don’t have to get people to burn books to destroy a culture. Just get people to stop reading them.” —Ray Bradbury, Sci-fi Writer.

As a part of what is now an annual tradition, Ron and Ed discussed the best books they read in 2021 for this episode. Tap or click the link above to listen and use these show notes to follow along.

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 week was bonus bonus episode 373 - “LinkedIn Audio” — Here are some of the links discussed:

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

Episode #372: 2021 – The Year In Review

2021 was….a year. Yep. It was definitely a year. It was after 2020 and before 2022. So what did Ron and Ed think about this self proclaimed year? Listen to the show in your favorite podcast player and use these show notes to help guide the way.

  • Ed is in a brain fog right now. He needs a "metal dealy used to dig food" https://www.youtube.com/watch?v=o2dtpnp8Jgo

  • Did you know that Betty White was honored by the Guiness Book of World Records for the longest TV career by a female entertainer? She was also the oldest person to host SNL. AND originally cast as the role of Blanche on Golden Girls!

  • Siegfried, Larry King, Cloris Leachman, Cicely Tyson… Ron and Ed went through a list of notable folks that left us in 2021. The list feels longer this year compared to others and they run through them all in segment one of the show.

  • Check us out at Patreon.com/TSOE! If you become a member at a certain tier, you get a shout out. Just like Mark Gandy (@g3cfo)! His podcast is at CFOBookshelf.com and last week’s show on “best books of the year” is highly recommended.

  • Continuing into the second segment of the show today, Ron and Ed STILL had a list of notable people we lost in 2021. George Holliday (who filmed the Rodney King beating), Norm McDonald, Dave Frishberg (composed how a bill becomes a law)

  • Our top 5 shows in 2021 (in descending order) according to our amazing partner, VoiceAmerica:

  • Our top 5 shows for the calendar year 2021 according to our own website statistics (in descending order):

  • Speaking of the year in review, check out this great list of charts from @Chartr! https://www.chartr.co/year-in-charts/2021-in-charts

  • Some of our favorite episodes of 2021 (in no particular order) feature: Virginia Postrel, Josh Gilder, Kevin Williamson, Matthew Stewart, John Tamney, Mustafa Akyol, David C. Baker, Marco Bertini, Mike Munger, Baruch Lev, Rabbi Lapin, and Auditing Santa!

  • Predictions for 2022: The Republicans will take both the House and the Senate

  • Predictions for 2022: We will hear more and more about NFTs (especially inside video games)

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 week was bonus bonus episode 372 - “Blowing up a Tesla” — Here are some of the links discussed:

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

Episode Reprise - Interview with Virginia Postrel (#325)

EDITORS NOTE: Ron and Ed are enjoying some much deserved time off for the show that would normally air on December 31st. Going back into the archives they selected one of the (many) MUST LISTEN episodes. This conversation with Virginia Postrel was a stellar episode. Her book made their list of best books they read in 2020 (the 2021 episode coming soon). Be on the lookout for this show in your podcast feed on Friday and now let’s get to the show notes…

Ron and Ed were honored to welcome Virginia Postrel, author of The Fabric of Civilization: How Textiles Made the World. Virginia is also a columnist and speaker whose work spans a broad range of topics, from social science to fashion, concentrating on the intersection of culture, commerce, and technology. Writing in Vanity Fair, Sam Tanenhaus described her as "a master D.J. who sequences the latest riffs from the hard sciences, the social sciences, business, and technology, to name only a few sources."

Ed 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 co-host, Ron Baker, and folks on today's show, we are honored to have our interview with Virginia Postrel. Let's do the formalities here and welcome Virginia Postrel, who is an award-winning journalist and independent scholar, a columnist for Bloomberg Opinion. She previously served as columnist for The Wall Street Journal, the Atlantic, The New York Times, and Forbes. She has authored highly acclaimed books, The Substance of Style, The Power of Glamour, The Future and Its Enemies, and the book we're going to talk about mostly today, The Fabric of Civilization: How Textiles Made the World.

Welcome to The Soul of Enterprise, Virginia Postrel. I became obsessed with this book around Thanksgiving. And I'm going to tell you a story. We have at Thanksgiving, we were able to go over to my in-law's house despite COVID which we're very excited about. And we have a tradition in the family that everybody goes around and says something that they're thankful for, which is very nice. Usually people say the usual, family and all kinds of stuff like that. Well, I said fabrics. And that got uproarious laughter from the dinner table. But Virginia, I really want to know, I think we should be. Why should we be thankful for textiles?

And later in the book, you have one of my favorite quotes, which is “We suffer textile amnesia, because we enjoy textile abundance.”

It really starts with thread, doesn't it? That's kind of the basis for it. So talk a little bit about the origins of thread.

And it's so interesting, you wonder what possessed somebody say, “If I do this, I'm going to get this long piece of whatever, right? I mean, where do we even start with that, that's the thing that amazed me?

And that's unbelievable. At one point you say a queen size sheet is 37 miles worth of thread. Stretching you from the Washington Monument to Baltimore.

Quickly, I wanted to just tell you this, I actually worked for a sheet producer at one time, I did their software installation. And one of the things that these guys told me was always buy irregular [sheets]. And the reason is, there's actually no difference between irregular sheets and regular sheets, except every so often we put like on 20% of them, we just say they're irregular. And those never come back. But the other ones we guarantee. But there's no quality control.

So I have so many questions, we’ve only got about two minutes left in this segment. What's the relationship of textiles to mathematics?

And the really fundamental algorithms built in the looms. So the first algorithms, you say, were those that were produced at the loom?

Which is actually the same way I believe that computers ultimately do division. That's how it works out in machine language. Anyway, we're already done with our first segments, it’s flying by.  

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with Virginia Postrel, one of my favorite authors, and Virginia, if you would have told me at any point that I would read a book about sewing and weaving and fabrics, I would have said you're nuts. But your book just held my interest the whole time. It's just a great, great story. And you're so right that we take this for granted.

Well the link between dyeing and chemicals was absolutely fascinating. Just by itself. You're right. This is a business book, really. In many dimensions.

Your discussion about how textiles were used for money, and the sumptuary laws, ff course, were absolutely fascinating, too. I love the line about how husbands used them as an excuse not to buy a nice wardrobe for their wives.

That's awesome. Well, you've convinced me that we should no longer call it the Stone Age, it should be called the String Age.

One of the most fascinating stories in the book, it just blew my mind. Ed and I have done a few shows on the history of medicine, surgery, anesthesia, and germ theory. Explain the link between silkworms dying which led to germ theory.

It makes sense because so many other things came out of thinking about all of this, such as dyeing and chemicals, polyester and nylon, and all of that.

That was an incredible story. So unfortunately, we're at our break, this is just flying by, Virginia.

Ed’s Questions: Third Segment

We are back on The Soul of Enterprise with Virginia Postrel. Her book is The Fabric of Civilization: How Textiles Made the World, and folks, I can't recommend this book enough, please go get it and read it. It's a great story. And we're only scratching the surface with Virginia today on what's in this book. And Virginia, I want to ask you a little bit about your process of writing this book, because it is so deep and so rich, was it like a term paper, like note cards? I have this vision of you having note cards all over your dining room table to try to put this together?

Do you use Microsoft Word, type it out, and then edit from there?

It’s just a fantastic book. And I love the fact that you include links to YouTube videos, because in many cases. I must have watched half a dozen videos that you recommended in your book, because you want to see, okay, this drop spindle thing that you're talking about, you really have to see that to fully appreciate it.

Well, I've got about five minutes left, I want to ask you a very specific question. And that is did you come across a song called “The work of the weavers” in your travels?

The Clancy Brothers did a version of it. It’s actually a Scots tune. I'm going to give you a little bit of a sample right now, are you're ready?

[Ed sings a part of this song. The printed word can’t do it justice—a must listen!]

And of course the weavers got themselves into a pinch, because…tell that story…

And maybe this is apocryphal. But the saboteurs, wasn't that a similar story, the sabo, with the shoes and such.

I think Don Boudreaux has something on it and that's where I remember reading it. But the last question I have for you is about your Afterword, which is really an essay that can stand on its own. It's just such a great piece. I'm curious, was there a rationale for putting it as an Afterword versus a Foreword, because you could almost argue that it would have set you up for the whole book? I was just curious about that.

It's a magnificent piece. But it can stand on its own as a tease for the book, because it really leaves you with all of these dangling questions. Well, Virginia, thanks so much for appearing. Ron is going to take you the rest of the way home the last 15 minutes. But I just want to thank you for coming on the show today. This is just a great honor for me. And as I said, I was obsessed with the book. So just a lot of fun to talk to you.  

Ron’s Questions: Fourth Segment

Welcome back, everybody. We're here with Virginia Postrel, and Virginia, another book of yours, I absolutely loved was The Substance of Style, which came out in 2003. In there, you talk about Maslow's hierarchy of needs. And everybody talks about this like it's Gospel, the Oracle of Truth. But you don't think it's a good explanation?

It’s like you say, you don't have to wait to have a full stomach or until your roof doesn't leak. The poor built cathedrals, and made pottery and jewelry. It's a really, really excellent point. The other thing I wanted to ask you, and another book of yours that I absolutely loved because, well, for one thing, you signed it for me, it's behind me, is The Future and Its Enemies. And we're going to link to all of your books, and more, on our show notes. But you write in the Introduction to that book, “The central question of our time is what to do about the future? And that question creates a deep divide.” Is that still true?

No, that's really true. It reminded me very much, the whole theme of the book, of Jane Jacobs. She wrote a lot about that bottom-up, trial-and-error process. Hayek, obviously, and George Gilder was another one who I thought of a lot. It's a fantastic book. The other thing I liked that you pointed out is Al Gore wrote Earth In the Balance but the earth doesn't have an equilibrium. There's no static standard for natural.

You wrote very eloquently articles in The Atlantic and on your blog about donating a kidney to an acquaintance, I think back in 2006. And I am, of course, interested in your ideas about the waiting list, how many people die waiting for a kidney and what a tragedy that is. But just that whole process, you talk about how the process is really difficult for the donor?

“Here’s Looking at You, Kidney,” June 2006

“The surgery was simple; the process is another story,” October 23, 2006

“With Functioning Kidneys for All,” The Atlantic, July 2009

It’s laparoscopic surgery, right?

I take it you support a market for kidneys?

I think Iran is the only country that allows that legally?

Well, Virginia, thank you so much. This has been such an honor to be able to talk with you. I'm really excited. And love your books. And we'll put up full show notes, where to contact you, and all the other stuff that we talked about. Ed, what do we have on store for next week?

Ed

Next week, Ron, we're going to be talking about our Best Books of 2020. And you may hear about this one again.

Ron

Excellent. I'll see you in 167 hours.

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 #371: Auditing Santa

auditing santa

We have a really special treat for you with this episode! Somehow we managed to get our recording equipment into the offices of Santa, Inc. during an audit! Join the conversation in progress and find out how naughty or nice Santa has been with the tax code!

(There probably should have been a “gratuitous dad joke ahead” warning on that one. Sorry, folks.)

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 #370: Third Interview with Economist Michael Munger

Ron and Ed were honored to welcome back, for the third time, economist Michael Munger. He's the author of many great books, including Tomorrow 3.0; Is Capitalism Sustainable?; and The Sharing Economy. Join Ed and Ron for what will surely be an enlightening and fun conversation with one of our favorite guests.

Before we get into the show notes, let’s learn a bit more about Michael Munger:

Professor Michael Munger received his Ph.D. in Economics at Washington University in St. Louis in 1984. Following his graduate training, he worked as a staff economist at the Federal Trade Commission. His first teaching job was in the Economics Department at Dartmouth College, followed by appointments in the Political Science Department at the University of Texas at Austin 19861990 and the University of North Carolina at Chapel Hill 19901997. At UNC he directed the MPA Program, which trains public service professionals, especially city and county management. He moved to Duke in 1997, and was Chair of the Political Science Department from 2000 through 2010. He has won three University-wide teaching awards the Howard Johnson Award, an NAACP Image Award for teaching about race, and admission to the Bass Society of Teaching Fellows. He is currently director of the interdisciplinary PPE Program at Duke University.

Here are the show notes from Michael’s interview with Ron and Ed:

  • Here is the most recent Wall Street Journal article written by Michael Munger: https://www.wsj.com/articles/no-biden-price-plan-wage-stagnation-inflation-money-supply-price-regulation-control-federal-reserve-11639517901?mod=opinion_lead_pos5

  • From the same article by Michael Munger: “Prices rise when goods become scarce or the money supply rises rapidly.”

  • (With extreme incredulity) “The Fed has been buying corporate debt with money it has been printing. What could go wrong??!!?” —Michael Munger

  • “The United States is in a uniquely powerful position because we can exploit the fact that we have a global currency.” —Michael Munger

  • “The problem with crypto is that people have two reasons for holding cash, speculative and transactional.” —Michael Munger

  • Most people are not overly familiar with Modern Monetary Theory. Michael Munger gave a great overview during the first segment of our show. Here’s a quick primer from Wikipedia: https://en.wikipedia.org/wiki/Modern_Monetary_Theory

  • Was inflation a result of greed? No. Let’s consider the huge increase in cash balances, sporadic supply chain, and difficulties with the labor market.

  • Profit is a signal that says “do more of this” but profit is less than 1% of the consumer surplus in the system.

  • There is not a single country that has solved the problem of poverty using socialism. They have all used capitalism.

  • “If you honestly care about poor people, you are a capitalist.” —Michael Munger

  • 40% of American imports come through one port. We haven’t built a port in decades. Is the Foreign Dredge Act partly to blame? https://www.heritage.org/trade/commentary/113-year-old-law-hurting-american-ports

  • In 2022, Michael Munger will run again for the North Carolina General Assembly. I would say “you heard it here first” but that’s probably not true. It’s big news nonetheless!

  • Let’s go back to September 2021 and talk about Michael’s article in AIER - “Nutzenschmerz” https://www.aier.org/article/nutzenschmerz/

  • We had a COVID-19 vaccine before the CDC had a working test to detect the virus. If the FDA can get out of the way, this might be the last pandemic. Ever.

  • Everyone should take this FREE course from Michael Munger over the holidays. Capitalism & Political Economy - https://sites.duke.edu/intrope/

  • Did you know that Michael Munger has written…..ahem…..a few books? Check out “The Sharing Economy” at this link https://www.amazon.com/gp/product/B09CDV3VS9/

  • We would love to have you as a part of our community at Patreon.com/TSOE. While Ron and Ed published a show about why you shouldn’t buy gifts for the holidays, we are willing to make an exception for bonus and commercial free episodes.

  • “If I think of it, some entrepreneur thought of it 5 years ago.” —Michael Munger

  • “If we can commodify excess capacity that’s what sharing is. And that’s what platforms do.” —Michael Munger

  • A big THANK YOU to Michael Munger for joining us today. Why not check out one of his books like “Is Capitalism Sustainable?” https://www.amazon.com/Capitalism-Sustainable-Michael-Munger-ebook/dp/B07VZ8ZP11/

 
 

Episode #369: Interview with Colin Rule, President and CEO of Mediate.com

Colin Rule

Ron and Ed first encountered Colin Rule's work when reading Richard and Daniel Susskind's book, The Future of the Professions (Episode 74) in which the online dispute resolution system used by eBay was touted as handling more cases per year than the entire US court system. In what promises to be a wide-ranging interview, Ron and Ed will explore this topic and more.

Before we get into the show notes, let’s learn a bit more about Colin rule:

Colin Rule was the first employee hired by Mediate.com when he served as Mediate.com’s first General Manager in 1999. With RIS support, Rule founded OnlineResolution.com in 2000, one of the world’s first online dispute resolution (ODR) providers. In 2003 Rule became the first Director of ODR for eBay and PayPal. In 2011 Rule co-founded Modria.com, an ODR provider he led as CEO and COO. In 2017 Tyler Technologies acquired Modria and Rule became Tyler’s first Vice President of Online Dispute Resolution. Colin is the author of Online Dispute Resolution for Business, published by Jossey-Bass in 2002, and The New Handshake: Online Dispute Resolution and the Future of Consumer Protection, published by the American Bar Association in 2017. He received the first Frank Sander Award for Innovation in ADR from the American Bar Association in 2020, and the Mary Parker Follett Award from the Association for Conflict Resolution in 2013. He holds a Master's degree from Harvard University’s Kennedy School of Government in conflict resolution and technology, a graduate certificate in dispute resolution from UMass-Boston, a B.A. from Haverford College in Peace Studies, and he served as a Peace Corps volunteer in Eritrea from 1995-1997.

Here are the show notes from Colin’s interview with Ron and Ed:

  • Colin has always been interested in dispute resolution and he “is also a nerd” - Two minutes into the show and we love him already!

  • It’s clear that we are digitizing our society from social networks, to iPhones, to wifi over the last 20 years. The next 20 will be even more disruptive. AI, the metaverse, quantum computing. We need to continually reinvent the way we deliver key functions in society.

  • eBay, PayPal, AirBNB, Uber. They have all built their own redress systems / resolution centers instead of relying on the traditional justice system.

  • Here’s a quick primer: Mediation is kind of like assisted negotiation. Any outcome is by agreement from both of the parties.

  • “The notion of decentralized justice is interesting because the outcomes can be automatically enforced.” —Colin Rule

  • Mediation is when two parties come together with a third party to help guide; Arbitration is when the third party has authority; Binding arbitration is when the result must be followed

  • “Rationality is in the eye of the beholder.” —Colin Rule

  • There are challenges in integrating artificial intelligence into the justice system. Colin has lengthy (positive) thoughts about this during the second segment of our show today.

  • Has there been an Increase in mediation with Covid? Yes, there has been a massive move online and it probably will not significantly revert back.

  • Take a moment and check out Patreon.com/TSOE where you will find both commercial free AND bonus episodes. Sponsored by @90Minds. Need a mind? Get one at 90Minds.com

  • The ICC International Court of Arbitration is part of the International Chamber of Commerce in Paris, France. https://iccwbo.org/dispute-resolution-services/icc-international-court-arbitration/

  • Younger generations are very comfortable with emotional expression via technology. This is an example of why online dispute resolution works for family matters.

  • Where could online dispute resolution fit where it is not being applied today? Video games. (With a hat tip to Anne Sawyer)

  • “The future is already here – it's just not evenly distributed.” —William Gibson

  • It’s really interesting to Colin when he thinks about an algorithm that can go out and advocate on your behalf. More details during the 4th segment of our show today.A big THANK YOU to Colin Rule for being such an amazing guest. Check out “The New Handshake: Online Dispute Resolution and the Future of Consumer Protection” on Amazon at this link: https://www.amazon.com/New-Handshake-Resolution-Consumer-Protection/dp/B072BX9BRQ

 
 

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 #368: Economic Lessons from Literature - The Verger and Harrison Bergeron

In the past year, two short stories have come to Ron and Ed's attention that provide some economic insights: Somerset Maugham's The Verger and Kurt Vonnegut's Harrison Bergeron. In The Verger, a church employee is fired even though he does his "work quite satisfactorily." Bergeron is a cautionary tale of the notion of equity - equality of outcome.

For those who would love to do read these short, short stories before catching up on the show, links can be found here:

Here are the show notes:

  • “The Young-Adult Appeal of Kurt Vonnegut”, Kyle Smith, National Review, November 23, 2021 - https://www.nationalreview.com/2021/11/the-young-adult-appeal-of-kurt-vonnegut/

  • “Kurt Vonnegut - Unstuck In Time” is a new documentary on Vonnegut. Here is the link: https://vonnegutdocumentary.com/

  • We have some seriously GREAT sponsors on The Soul of Enterprise and wanted to say thank you! So….THANK YOU to Fyle, next generation expense management software. You can find them at https://www.fylehq.com/ and @FyleHQ

  • “The damage done in pursuit of equality surpasses the damage done by inequality, by orders of magnitude.” —Ron Baker

  • “The envy of excellence leads to perdition; the love of it leads to the light.” —George Gilder

  • Our second story on today’s show was written by William Somerset Maugham. Here is a link to his background: https://en.wikipedia.org/wiki/W._Somerset_Maugham

  • Here is another seriously great sponsor! 90 Minds sponsors our Patreon page at Patreon.com/TSOE where you can find bonus and commercial free episodes. 90 Minds is a community for ERP consultants and resellers. If you need a mind, you can find one 90Minds.com or @90Minds

  • “Capitalism offers nothing but frustrations and rebuffs to those who wish - because of claimed superiority of intelligence, birth, credentials, or ideals - to get without giving, to take without risking, to profit without sacrifice, to be exalted without humbling themselves to understand others and meet their needs.” —George Gilder

  • “At the heart of capitalism is the unification of knowledge and power.” —George Gilder

  • “Nothing is more deadly to achievement than the belief that effort will not be rewarded, that the world is a bleak and discriminatory place in which only the predatory and the specially preferred can get ahead.” —George Gilder

  • “In every age everybody knows that up to his own time, progressive improvement has been taking place; nobody seems to reckon on any improvement in the next generation. We cannot absolutely prove that those are in error who say society has reached a turning point—that we have seen our best days. But so said all who came before us and with just as much apparent reason…. On what principle is it that with nothing but improvement behind us, we are to expect nothing but deterioration before us?” —Thomas Babington Macaulay

We also answer a listener email during the show from Askel:

Ron & Ed,

Love the podcast. Possible free rider topic re: AI stealing jobs

I hear a lot of people talk about how AI will take away jobs, and you guys even broached the topic briefly on the podcast 6 years ago. I don't understand this line of thinking. When the industrial revolution happened and multiple technologies replaced human labor (think agriculture) with machines, it wasn't like the 80% of the human labor force previously devoted to agriculture just sat on their bums and never worked again.

Instead, the technological innovations freed humanity up to pursue work that was far more productive than before due to leverage. Think of construction - 50 men digging with shovels can be replaced by one man piloting an excavator while accomplishing more in a fraction of the time. One man driving a combine to harvest a field can replace hundreds of laborers. So why are so many people still saying that when AI replaces truck and taxi drivers, or personal assistants, or bookkeepers, or ______, that there will be this large swath of humanity that just has nothing to do?

I, for one, welcome our future robotic AI overlords. I don't know what the jobs will look like in 50 years, but I would bet money that they leverage machines, AI, and other advances so that one human can produce and create far more than was possible today, and seemed unfathomable 50 years ago.

Keep up the great work guys, please feel free to chop this up into something usable if you address it on the show. Would love to hear both of your thoughts on this topic as well!

Thank you,
Aksel

Episode Reprise — Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays

[Editor’s Note: Some things are just too good not to share again. While our most ardent listeners are familiar with Episode #22, Scroogenomics, many may not be familiar with this specific show. This past Friday was Black Friday in the United States which means it’s time - once again - to talk about why you shouldn’t buy presents. Bah, humbug!!!]

On Black Friday, and right before Cyber Monday—the biggest shopping days of the year—Ed and Ron thought it would be fun to discuss the interesting, funny, and thought-provoking book by Joel Waldfogel: Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays.

The author makes the case that the deadweight loss to the economy from gift giving, in 2007, totaled $12 billion, out of approximately $66.5 Billion spent (about 12%). Citizens Against Government Waste would classify Christmas as a wasteful government program.

Gift giving severs link between buying decision and item’s value to its user—the transaction actually destroys value. To add insult to injury, we are obliged to pretend to be grateful!

His complaint is not the level of spending or the consumption, but the waste.

We discussed the four ways you can spend money in the economy:

 

Former Congressman Dick Armey pointed out how difficult spending is in Category II (Gift), let alone Category IV (Government):

Every year, I worry and fret select the right birthday gift for my wife, Susan. Every year, try as I might, I manage to choose the wrong thing. If I can’t figure the needs and desires of the one person who is closest to me in the world and who I deeply love and care for, how can we expect the government to do a better job?

Three groups spend other people’s money: children, thieves, politicians. All three need parental supervision.

Hierarchy of value of gift giving

  • Aunts & uncles & grandparents = 75%

  • Parents = 97%

  • Friends =91%

  • Siblings =99%

  • Significant others = 102%

Further, we spend approximately 2.8 billion hours shopping in December. To put that number in context, the old USSR—before it imploded—spent 35 billion hours annually standing in line for everyday products and services.

Infographic from Deloitte’s 2018 annual holiday survey

Economist Ian Ayres said this about Waldfogel’s book:

Joel Waldfogel is one of the smartest and funniest economists on the planet. I think of him every time I start to unwrap a present. Buy Scroogenomics for your friends and family. It makes the perfect Christmas gift.

Episode #367: Interview with Samuel R Staley, The Beatles and Economics

The Beatles are considered the most influential popular music act of the twentieth century, widely recognized for their influence on popular culture. The inability of other bands and artists to imitate their fame has prompted questions such as: How did the Beatles become so successful? What factors contributed to their success? Why did they break up? Ron and Ed explored these questions and more in their interview with Professor Samuel R. Staley, author of The Beatles and Economics.

Before we get to the show notes…

A Bit More About Sam Staley
Sam Staley became director of the DeVoe Moore Center in January 2014 after serving as Managing Director from September 2011 to December 2013. In addition to his responsibilities providing strategic direction and supervision of center operations and programs, he teaches advanced undergraduate and professional masters courses in social entrepreneurship, economic development, land use and regulation, urban policy, and research methods. Prior to joining Florida State, Dr. Staley was the Robert W. Galvin Fellow at Reason Foundation, an internationally recognized public policy think tank based in Los Angeles where he worked on issues such as transportation system management and performance, public private partnerships, growth management, and regulatory reform. While at Reason Foundation, he managed the China Mobility Project, traveling to China more than 30 times as supervisor of academic research projects on transportation policy and finance. He has more than 25 years of experience in urban policy and is the author, co-author, or editor of five books on public policy and more than 100 professional articles and reports. His research has appeared in leading academic journals, including the Journal of the American Planning Association, Housing Policy Debate, Town Planning Review, Transportation Research Part A: Policy and Practice, and the Journal of Transportation Engineering.

Here are some Twitter links for Sam Staley’s affiliations:

@FSUDSA
@DMCFSU
@FSUCOSS
@FSUsoccer

Show Notes:

  • Not a Beatles fan? Sam brings the lens of economics to The Beatles. Even if you are not a fan, this book will keep you glued to it. https://samuelrstaley.com/beatles-%26-economics

  • In the first chapter of The Beatles and Economics, Sam asks, “Were The Beatles a black swan?” The important thing about a black swan is that it is unpredictable and has a massive impact on the economy. Sam’s answer might surprise you.

  • The Beatles figured out their specialization and division of labor during their early residencies. This is an early economic lesson in Sam’s book.

  • “In economics jargon [The Beatles] formed a firm or an organization with a dedicated mission of producing a service for public consumption, in this case rock and roll music.” —Sam Staley

  • John, Paul, George, and Ringo were very open to creative direction in their music. They would ask questions like, “Is it new?” and “Are you adding something?” (Sound familiar to anyone versed in value pricing 2.0?)

  • Brian Epstein managed the Beatles from 1962 until his passing. From Sam’s book, he was “more than a manager. He was also a venture capitalist.”

  • There is a debate about who was the 5th Beatle. Based on Sam’s research it was George Martin who was very helpful in giving them structure and had an ear for the music that was going to breakout.

  • Sam commented on the show today that “All You Need Is Ears” is a FANTASTIC book and needs to go back into print. Here is a link: https://www.amazon.com/All-You-Need-Ears-personal/dp/0312114826

  • Apple took sales from the iPod and leveraged that into the iPhone. The Beatles leveraged their wealth for commercial art (and to innovate).

  • Businesses are told to stay in their lane. When The Beatles were in the studio they clearly DID NOT stay in their lane. They were creating new sounds and continuing to innovate.

  • “Entrepreneurship is about discovery” —Sam Staley

  • It’s hard for a company to disband because they recognize the end of the road. The Beatles all knew that they were at the end and could feel it. It just took them a bit to recognize it due to factors like marketing, momentum, and even personal feelings.

  • The Beatles are 4 out of 14 inducted into the Rock and Roll Hall of Fame both as solo acts AND members of a band.

  • Had John Lennon’s life not been tragically cut short, would The Beatles have faced economic pressure to “Get back” either into the studio or onto the stage? Sam’s answer today is summarized as “most certainly” but his answer is much more nuanced on the show.

  • “Those Damn Beatles” by Ron Baker: https://www.linkedin.com/pulse/20140406204656-38251380-those-damn-beatles/

  • A big THANK YOU to Sam Staley for joining us today to talk about his book “The Beatles and Economics”. More info is here: https://samuelrstaley.com/beatles-%26-economics

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 past week was bonus episode 367 - Those Damn Beatles — Here are a few links discussed by Ron and Ed:

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

Episode 366 - Interview with Matthew Feeney - Eye To The Sky

Drones are among the most exciting and promising new technologies to emerge in the last few decades. Photographers, firefighters, filmmakers, engineers, and retailers have all used drones to improve public safety, innovate, and enhance creativity. Yet drones pose unique regulatory and privacy issues, and lawmakers at the federal and state levels are adopting policies that both ensure the safety of our national airspace and restrict the use of warrantless aerial surveillance. At a time when low-flying drones are affordable and ubiquitous, how useful are the airspace regulations and privacy laws designed for traditional airplanes and helicopters? Is there a way to build a regulatory and legal environment that ensures entrepreneurs and hobbyists can safely use drones while also protecting us from intrusive aerial surveillance?

We spoke with Matthew Feeney, director of Cato’s Project on Emerging Technologies, about this. Before we get to the show notes, let’s learn a bit more about him.

A Bit More About Matthew Feeney
Matthew Feeney is the director of Cato’s Project on Emerging Technologies, where he works on issues concerning the intersection of new technologies and civil liberties. Before coming to Cato, Matthew worked at Reason magazine as assistant editor of Reason.com. He has also worked at The American Conservative, the Liberal Democrats, and the Institute of Economic Affairs. Matthew is a dual British/?American citizen and received both his B.A and M.A in philosophy from the University of Reading in England.

Show Notes:

  • Our guest today is the editor of Eyes to the Sky. Here is a link to the book: https://www.amazon.com/Eyes-Sky-Privacy-Commerce-Drone/dp/1952223083

  • The history of drone laws in the United States is yet another good example of how a new technology can be “born captive”

  • Part of the problem with regulating new and emerging technology isn’t that there are many obvious applications but non-obvious applications that pose difficult questions. Like the use of drones by police forces.

  • Matthew Feeney talked about the use of aerial surveillance in Baltimore on the show today. Here is some quick background from the Associated Press: https://apnews.com/article/baltimore-courts-503b2eb629abf94c25edf4111baf64bd

  • The benefits to law enforcement of drone technology have to be weighted against the costs of a liberal democracy.

  • Our Patreon channel - Patreon.com/TSOE - with both bonus and commercial free episodes is sponsored by @90Minds. If you need a mind, get one at 90Minds.com!

  • The FAA is the primarily federal regulator of drone technology in the United States followed by the FCC (due to the control mechanisms between the remote and the drone).

  • Amazon first tested its delivery drone in England. An American company needed to go abroad to test a “new toy”. Matthew Feeney shared his thoughts on the advantages and disadvantages of our regulatory environment in the second segment of our show today.

  • Is Matthew worried about risks to public infrastructure through drone strikes? To some degree yes. The technology is moving faster than the law can keep up with and that means, as with anything, there are risks.

  • We have hundreds of years of laws against nuisance, trespass, and related torts. Our existing common law is the best defense against drones from a property owner/privacy perspective.

  • Existing practical uses of drones include: photography, firefighting search and rescue, agriculture, building inspection, sports and entertainment — and DRONE RACING (which is incredibly cool on ESPN)

  • We’d like to give a BIG shout out to one of our Patreon members, Geraldine Carter! Check her out at SheThinksBigCoaching.com and her podcast, “Smart Strategy for CPAs”

  • Cars are a great technology but they are also really dangerous. This is why Matthew is a long term optimist on self driving technology.

  • Technology can displace jobs but it can also change (for the better) jobs. Think about long haul truckers. We will still need them in the near future but their jobs will certainly change as self driving technology on the highway system becomes more common.

  • It turns out Matthew has a deep philosophy background and had a great thought today about drones with missiles: “The decision to take a human life should be made by a human.”

  • Matthew is involved in the upcoming “Smart City Symposium” and is asking for people to submit papers. More at this link: https://www.cato.org/blog/call-papers-smart-city-symposium

  • From Matthew Feeney: “Today’s Internet speech debates are a dead end -- what’s next?” https://www.yahoo.com/now/today-internet-speech-debates-dead-100000265.html

  • “You don’t have to describe Facebook as a monopoly to express concern about them.” —Matthew Feeney

  • A big THANK YOU to Matthew Feeney for joining us today. Check out his book “Eyes to the Sky” and his upcoming “Smart City Symposium”.

Here are some additional links to Matthew’s work:

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 past week was bonus episode 366 - “Where's Gaven Newsom?” — Here are a few links discussed by Ron and Ed:

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

Episode 365 - Second interview with Baruch Lev

Ron and Ed welcome back Professor Baruch Lev from NYU Stern Business School. He was last on back in July 2016 and we discussed his book, The End of Accounting and the Path Forward for Investors and Managers. We talk more about that book and his more recent article in Accounting Today, The sad state of accounting standards.

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 their 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 our second interview with Professor Baruch Lev. Ed, how's it going?

Ed

Ron, it's going great. The birthdays continue to run, we were together for my birthday in Dallas here on Tuesday, and my wife's birthday is today. So we just got back from lunch and we're going to dinner, and it’s a birthday present getting to talk to Professor Lev. So I'm pretty excited about that as well.

Ron

Me too. Let me read his bio, even though he needs no introduction to our listeners. Baruch Lev is the Philip Bardes Professor of Accounting and Finance at New York University Stern School of Business. We just learned before we went live that he recently retired. Professor Lev taught courses in accounting, financial analysis, and investor relations. He's the author of five books, including The End of Accounting, which was published in 2016. We had him on right after that book came out in July 2016 [Episode #101]. Professor Lev, welcome back to The Soul of Enterprise.

Baruch

Thank you, happy to be here.

Ron

In The End of Accounting, when I read that, you dropped a bombshell statistic that still rattles my cage: Today's financial reports provide a trifling five to six percent of the information relevant to, and used by, investors. What's been the professions’ reaction to the book, The End of Accounting?

Like you say, download doesn't mean they read it. And I would add, even if they did read it, it doesn't mean they understood it. Did you have a chance to talk to the accounting regulators, did any approach you, such as the SEC, or maybe the European Union, or other regulators of accounting?

Yes, maybe when Ed comes on he'll ask you about that. Unfortunately, we're at our first break.

Ron asks Baruch during the break

Excellent, Baruch. Let me ask you this. Would society be better off without auditing?

Baruch

I'm not sure it will be much worse off. But I'm definitely for an experiment. So if I wrote the SEC, for example, I would free let's say, 5% of companies from auditing on a random basis, and I would like to see over two or three years if they really lose, significantly, investors. [Would] prices be significantly affected by this? I would introduce some natural experiment. Auditing is very expensive. And the question is, perhaps we can do without it, perhaps you can do with auditing once in three years, rather than every quarter? If you look at reputable firms, like Microsoft, Cisco, I doubt whether lots of investors will dump the stock.

Ron

Thank you, wow, that’s radical coming from an accounting professor.

Ed’s Questions: Segment Two

We are talking today with retired professor Baruch Lev from New York University's Stern School of Business. You were talking with Ron about the impact on investors, and I do want to hear what you have to say about that. But one of the things that is a constant drone from some people that I talk to is how is it that Tesla could be valued at over a trillion dollars, they don't make any money? But clearly the investors get it. Share with me what the impact of the book has been on investors?

It sounds like your paper was far more downloaded than the actual [financial] reports so that's a good leading indicator for you. Ron is an accountant, I'm not, so forgive me if this is a layman's question. Does some of this stuff that you're talking about, treating intangibles as expenses, when they should be assets, is that one of the reasons why companies like Tesla are perceived to be overvalued compared to what traditionally it would have been?

I think that's correct. They're perceived to be overvalued, but clearly I think that's a mistake. One of the things that the company that sponsors this podcast, Sage, we have some accounting programs, and one of the things that we have been working on for the last number of years is artificial intelligence that would allow for what we're calling a continuous audit. Through AI being able to find challenging transactions and things like that. Do you think that that's one of the other things that could happen that would make the audit, the annual audit, of less import?

Great stuff, we're up against our second break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here for the second time with professor Baruch Lev, accounting professor at New York University. Baruch, I want to ask you about an article you wrote that was published in Accounting Today, July 21 of this year, titled, “The sad state of accounting standards.” You conducted a study, and it's about earnings expectations. I thought it was a another bombshell finding of yours. Can you explain what you found?

Yes, you pointed out in that same article that 2.5 trillion dollars was invested, I think it was 2019, in intangibles, twice as much as physical assets for that year. I have to ask you [based on what you say about the irrelevance of financial report] that tells me that if I want inside information from a company, don't talk to the CFO, go to the HR director, see how many job posts they're listing, or something other than talking numbers. Because that's an astonishing finding, I think. And it brings up a question, I'll ask you again—I asked you during the commercial break—but I just want our listeners to hear your answer to this. If what you say is true, and I have no doubt that it is, would society be better off without auditors?

Do you think that there are other products that could take the place of an audit, such as financial statement insurance offered by insurance companies, or having the stock exchanges decide and pay for the audits of companies that they think need them for some reason?

I'm curious, Baruch, with this knowledge that you have shared, and the continuing irrelevance of auditing of these financial reports, what advice would you give to an aspiring college student that wanted to become a CPA?

Wow. Real quick, we've only got about a minute, maybe two. Why are you skeptical with respect to ESG standards? You had made a comment in the article in Accounting Today about being skeptical about it.

Right, that’s a brilliant point. Thank you so much, maybe Ed will follow up with you on that.

Ed’s Questions: Segment Four

From the article in Accounting Today, Baruch Lev writes, “Consider, for example, the current rush of investors to ESG-intensive companies. Whatever you think of the environmental, social and governmental reporting (and I have my doubts about it), a reliable information system which will report on corporate investment in ESG, and particularly on tradeoffs.” And that was just the point that you were making with Ron. I love when authors of articles have parentheticals near the end of the article, because it's clear that you have a whole other article. So keep going on ESG, and the other challenges with it.

Just what you read sounded to me like a word salad. How you could even understand what that meant, and then, by the way, be accurate about it, and complete. Oh my goodness. Well, Baruch, it's been a pleasure having you on. I don't want to ask you another question because I don't want to have you run out of time. But are you working on some other things? Is there going to  be some more from you?

I'm sorry, we're not going to have time for the example, but we look forward to the article or book that you're working on for it. It's going to be fun for us to dive into that when it comes out. Professor Baruch Lev thanks so much for being a guest on The Soul of Enterprise. Ron, what do we got coming up next week?

Ron

I don't know, Ed, you tell me.

Ed

You don't know, Ron, you're supposed to know these things. We have Matthew Feeney from the Cato Institute to talk about drones and drone policy. So we're on to another subject, further down the I-95 Corridor. We were at in Boston last week, so we're working our way down to Washington. Alright, well Ron, I'll see you in 167 hours.

Episode #364: Interview with Marco Bertini - The End's Game

What is The Ends Game? It’s a play on words, sure. But it’s more importantly the claim that thinking about where you generate revenue from should be less about the means (your costs) and more about the ends (value to the customer).

Before we get to more show notes, here is a brief background on Marco Bertini:
Marco is a professor of marketing at Esade and a visiting professor in the marketing unit at Harvard Business School. He is also a senior advisor to the marketing, sales, and pricing practice at the Boston Consulting Group. He received his doctorate from Harvard Business School, and previously served on the faculty at London Business School.

He is the co-author of the book The Ends Game: How Smart Companies Stop Selling Products and Start Delivering Value (MIT Press), which explores how modern technology stimulates accountability, challenging organizations to succeed from the quality of the outcomes they deliver rather than the offerings they bring to market.

Now let’s get to the show notes:

  • The main thrust behind The Ends Game by Marco Bertini is: How often and HOW do our customers use our solution?

  • An economist would say that you need three things to be successful with your product/service: 1) access is first, 2) consumption is second, 3) performance (upon consumption) is third. Without these three things the customer bears too much risk.

    • Let’s start with access: Financial access (I cannot afford this); Physical access (availability)

    • Then we move to consumption issues (which are easier): Do I have this product in my house and do I actually use it?

    • Lastly, we have performance which is pretty straightforward: Does it do what I want it to do?

  • The classic belief about price is “How much should we charge?” What we seldom ask is more fundamental which is, “What are we charging for?”

  • Is subscription a step in the right direction for (from left to right) access, consumption, and performance? Any time you move in a direction to the right you are getting closer to the customer. And that’s a great thing.

  • Customers should be paying for performance not promises. However, our own customer sometimes have something to do with the outcomes themselves and we have to acknowledge this.

  • If you have read the book, consider this: “The Ends Game is best played in the singular, not the plural.”

  • Why is the car industry seemingly going backwards on the subscription model? It’s all about direct to consumer vs intermediaries. Intermediaries add complications. Car companies do not have direct relationships with drivers. So how should they setup a DTC model without upsetting their dealers?

  • Services as a subscription are a fascination to our guest, Marco Bertini. Primarily because they are more intangible which makes it more difficult to measure an outcome. At the same time, it is a better industry to move to a performance based model and completely differentiate yourself from others.

  • Why does the subscription model not apply to our guest’s employer, Harvard Business School? In his own opinion, there are certain levels of schools. It’s hard for HBS to make a shift when they are doing VERY well. So there is a bit of legacy there. The greatest changes come sometimes when you have to change.

  • Can you have multiple revenue models in the same company? Yes and that completely depends on the outcome — ownership vs consumption.

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

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

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.

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:

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

Episode #361: Free-Rider Friday Returns

free rider friday

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

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:

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

Episode #360: Interview with Kimberlee Josephson

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.
 

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