Incentives and education

Our side is corrupt, but the other side is more corrupt.

Sixteen days ago, I returned from a Road Scholar tour of Cuba, one of 4 Communist countries. China, Russia, and North Korea are the others. Yesterday I said to my wife:

I noticed that in Cuba there is little incentive to produce things to improve their economy. In our capitalistic society, however, there is always the same incentive–to get more money for one’s self.

I must clarify. When I say economic incentives are lacking in Cuba, I am not saying Cubans lack incentives to improve their quality of life. Our tour group met many Cubans doing just that. It means their economy is not stimulated in the way our economy is–by the incentive to get more money for one’s self.

Here is how Steven Brill (Tailspin, 2018) describes America’s recent economic trends in the chapter entitled, “Casino Country:”

We should remember that the innovators of what became the short-term-obsessed, casino economy were not villains. With some exceptions, the world does not divide that simply into black and white. Joe Flom, his raider-clients, the stock buy-back engineers, Lew Ranieri and Blythe Masters, even Angelo Mozilo, didn’t set out to do harm, let alone create a crash that cost America $20 trillion in lost gross domestic product and boosted the have-a-lots far above everyone else. Even those who broke the law didn’t wake up in the morning determined to destroy the economy so they could make money. They simply responded–many with trailblazing ingenuity–to the incentives put in front of them and the culture of the times. Change the incentives and change the culture and the genius of their successors can be redirected. Short-termism, which has been so devastating to so many Americans, is not immutable. (p. 85)

So, dear educators:

Who is going to change the incentives? Who is going to change the culture? Brill (2018) claims the capitalists who made millions by crashing the economy were not villains. He says they were just incentivized to make more money. And he says they responded to economic conditions with “trailblazing ingenuity.”

Really? These imaginative geniuses had no idea of the harm they were doing to others? They did not think they were stealing from others? Where did they think their money was coming from? It looks to me like Brill felt a need to fudge his description so he could promote capitalism, while telling a story about its evils.

Or maybe I missed something. Maybe I missed the news accounts of how Joe Flom, his raider-clients, the stock buy-back engineers, Lew Ranieri, Blythe Masters, or Angelo Mozilo gave back some of their imaginatively gained millions of dollars. If they are so imaginative, and they are not villains, surely they want to give some back. Oh–I forgot–they are not incentivized to give back. They are incentivized to get all the money they can for themselves. And, evidently, they are not incentivized to care about others.

So, how does the argument go–the one about how capitalism is good and communism is bad? If you believe selfishness is our human nature, you can make that argument with glee. On the other hand, if you believe selfishness is our uneducated human nature, but generosity is our educated human nature, you can’t make that argument.

Educators must start teaching the six virtues of the educated person. Our capitalist economy depends on it. Even Steven Brill says so.


#1 Mark Steger on 01.30.20 at 1:06 am

I haven’t read Brill and I haven’t been to Cuba (I’m jealous you have). I understand the concerns about capitalism leading to a “Greed is good” attitude. But it occurs to me that even when capitalism is working well (i.e., people are working to maximize their own gain by providing a welcome and valued service to others, not just exploiting others), there’s still a hole in the heart of capitalism. To maximize returns, you have to go where the money is. Rich people have more money than poor people, so capitalism’s services are inevitably going to drift towards servicing rich people, not poor people. I think this natural tendency of capitalism can be controlled, but the history of the last fifty years shows us not doing that, and in fact we’re going in the opposite direction.

#2 casey on 01.30.20 at 2:14 pm

Yes, Mark. That is exactly Brill’s point in much of the book. His sub-title is “The People and Forces Behind America’s Fifty-Year Fall–and Those Fighting to Reverse It.” After returning home, I read the quoted paragraph and was reminded of how we traveled along a main highway in Cuba and saw not a single billboard. In some ways, lack of ownership is a good thing. Things are just different there. They are still not great for many of the people, but they seem are moving toward capitalism in some areas. Restaurants (paladars) are the best example. After being there and returning home, it appears to me that, just as you said, we need more checks on capitalism and they need to expand toward capitalism. (Fidel is turning over in his grave.) The trip was Bob H’s idea. It was worth it. As he remarked, later, “We spent six days together and we still talk to each other.”

#3 casey on 01.30.20 at 3:41 pm

As I kept reading Tailspin,. I came a cross another example of the way in which capitalism favors serving the wealthy:
After the election of Carter in 1976:
“Carter’s plan to change the tax code in favor of the middle class at the expense of the rich ended up being changed in Congress by lobbyists so that it did exactly the opposite: Capital gains tax rates were cut, other loop holes were preserved or expanded, and Social Security payroll taxes, which affect the non-rich disproportionately, were raised. In every case the Democrats’ agenda was blocked by wavering Democrats in Congress, who were recipients of business PAC donations.” (Brill, 2018, p. 107)
That is why I wrote the blog about the corruption of political parties. I say, “Both are corrupt, but the other side is more corrupt.” My reason is Republican support for trickle-down economics. It is just too convenient to say, “Tax breaks for those who fund my campaign are the best way to improve the economy.” It is another example of your point about how capitalism tends toward serving those with the most power–money.

#4 BRAUER INGE on 02.04.20 at 6:39 pm

Hi Casey,
Thanks for your thoughtful blog. It parallels my thoughts about Cuba. Until you mentioned it, I had not even realized that there were no billboards in Cuba. That’s probably why I enjoyed the bus ride to Vinales so much.

#5 Bonnie Harrison on 02.06.20 at 11:01 am

It’s great to hear from you! Your blog is very thought- provoking. The story I tell my friends in Florida is how well educated and medically cared for Cubans seem to be. Basic tenets of the democrats in this country. Capitalistic growth while maintaining the care and passion for others is what I’d hope to see in Cuba and USA. It’s tempering personal, corporate and political greed and corruption with kindness and concern for humanity.

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