Wednesday, December 10, 2008

The Leadership of Knowledge

Beautiful Balance Sheets and Trade Money

By John Taylor; 2008 Dec 10, 17 Qawl 165 BE

Last year I had one of my epiphanies. I still remember where the eureka experience hit me. It was at a talk in Dunnville by Anne Pearson about her grandfather, the former Prime Minister of Canada. Afterwards we talked about the sort of leadership we can hope for to answer the extreme demands of the hour. Will Canada ever get another world-level innovator and Nobel Prize winning peacemaker like Lester B? My revelation did not have anything directly to do with what was being said, I just remember suddenly thinking: "Eureka! That is it!" Ever since then I have been pussyfooting around, hoping for the perfect occasion that would inspire me do justice to this idea, which has to do with money. But even when the stock markets crashed this fall I still could not spit it out. For some reason I still feel deeply reluctant to expose it to the light of day; but I have determined to write about it today, no matter what.

Beautiful Balance Sheets

The background of the idea I had been mulling over for years before Anne's talk. I call it "Beautiful Balance Sheets." Pretty vague, I know. 

The idea is that you lock a group of accountants, mathematicians and graphic artists in a small room and refuse to let them out until they come up with a way of graphing the economic health of an institution -- as compared with the average for all institutions of its type -- so that the world would see its condition instantly and accurately without ever looking at a balance sheet. 

Sure, investors in stocks learn by patient study how to look down a listing of facts and figures about a public corporation (nobody knows how privately companies are doing, that is confidential) in its yearend report. Insofar as this data is reliable, an expert can assess, if not at a glance then fairly quickly, whether an organization is healthy or on the skids. 

But I am talking about a graphical representation that any untrained person, using their aesthetic sense alone, can tell at a glance whether a company is robust or not. Nature already does this, of course. You can tell at a glance whether an animal or human has good genes and is strong enough to hand them on to their progeny. All you do is look at the face and body. If they strike the eye as beautiful, then every law of evolutionary biology is telling you that this organism is a good bet. If it is ugly, its chances are slimmer.

Why would it not be possible to portray in a standard graphic the same instant picture of the health of a family, company, government or any other organization?

Having this idea in mind, I jumped for joy when I read in Comenius's Panorthosia his proposal for escutcheons. These mottos would picture the achievements and worth of individuals and institutions such as schools, families and governments. They would have to earn the right to display their escutcheon in prominent places, such as over their door or on the family website. This fall this blog looked in detail at the escutcheon for families.

For individuals Comenius proposes an escutcheon startlingly similar to the prayer in Baha'u'llah's "Great Announcement" to Humanity: "God grant that the light of unity may envelope the whole earth and that the seal 'the kingdom is God's' may be stamped on the brow of all its peoples." (Gleanings, 11; Proclamation, 112) In the last paragraph of two chapters of the Panorthosia, Comenius writes:

"Therefore no matter who you are, you must reform yourself according to God's good pleasure and with His help, so that angels and pious men are able, as it were, to read on your forehead the inscription: 'HERE IS A SPLENDID IMAGE OF GOD.'" (Panorthosia, Chapters 19 and 20, paragraph 24)

Soon I plan to look at the other escutcheons that Comenius proposed for school, church and state. Behind these earned honorifics and graphs data would be gathered openly according to transparency and other principles of open systems or the creative commons. Comenius saw this more broadly than we do now, as including opinions and ideas as well as technology. All thought must be examined, sifted and proven true. This he took from the following bon mot of Cicero,

"It is beneath the dignity of a wise man either to hold a false opinion or to defend without reservation any idea that has not been considered from every angle."

Now that we have the Internet, Cicero's "every angle" can be extended to include not only your or my "every angle" but everybody's "every angle." I never cease to wonder at the articles on the Web by larger newspapers. Even the most brilliant ideas and analyses are quickly followed up by reader comments offering insights and experience that one would never have thought of. Even with my tiny readership, I have greatly benefited from readers' ideas. Truly, there is no excuse to retain stereotyped opinions or unconsidered views in this day and age. Anyway, Comenius made this comment on the above statement by Cicero:

"Similarly it follows that churchmen, as they lead their fellow-men towards holiness, must consider it beneath their dignity to do or tolerate anything that is not holy; and politicians, as men of peace, must think it beneath their dignity to give rise to further disagreements or to tolerate them, far less to defend them." (Panorthosia, Ch. 15, para 2)

Okay, I was talking about beautiful balance sheets, integrated by means of open information reflected on a graphical escutcheon display.

For example, one principle of investment is diversification. If a portfolio represented by a graphic of a human body is not diverse, it might look unnaturally thin. If investments were too spread out, the body would become obese. If they are overinvested in one industry, that imbalance would make the body tilt to one side, and so forth. Following Comenius, similar displays could represent our opinions, our balance of diet and exercise, and other long-term measures of peace, health and well being.

Geez, I am still pussyfooting around. Let us get on with this Eureka idea, which I will call Trade Money.

Trade and Professional Money

So, we were talking about Lester B. Pearson and the sort of leaders we need today. It hit me that the sort of leader we need today is not an individual at all. Okay, we need individuals too, but we focus in on them far too much. The real default of leadership today, I realized, is in the trades and professions.

How do we increase the sway of bodies of expert opinion? Yes, a trade or profession can earn its own escutcheon and prove its worth as compared to other types of expertise; but we need the knowledge of experts to lead, not just passively serve, advice and obey. We need our farmers, doctors, teachers and other experts to be taking the initiative, not only telling us what to do but taking us to task when we fall short of fundamentals.

Take the Science Advisory Panel on Climate Change; its problem is that it is just that, an advisory panel. We need a leadership panel with teeth, that could say to governments, do this and that, or else. Or we are all cooked, literally. And climate science is just one of a thousand areas of expertise where we are not doing the right thing, or even the sensible thing. How can we possibly get leadership from our experts?

Then it hit me. The trades and professions can print their own money! They can stage ongoing simulated virtual worlds like Second Life and use virtual currency to run them. That virtual money could, just like Second Life, have either fixed or floating exchange rates that can be changed into outside legal tender. The value of its currency would be partly linked to the beauty of their escutcheon. If a trade were run by corrupt bosses, its virtual currency in terms of outside bank notes would automatically be devalued, along with the influence of the experts running it.

If a science or trade were overvalued, that is, it became more popular than its value to society really warrants, "inflation" might set in. As trades improve by becoming more scientific, helpful and democratic, their simulated world would "gain currency," that is, be used by more and more people. As a result their respective money would rise in value.

Then concerns or social goals that a trade or group of trades approve of, they would not only be in a position to praise and recommend it, they could offer substantial, direct funding to set them going. They could reward anybody who promotes projects or policies that they approve of, and even offer disincentives to damaging behaviour. Tradespersons would fund projects with their own money, both virtual and "real;" that is, not money given to them from outside but money that they literally made, earned and printed for themselves.

Trades could even stage their own virtual polls and elections. These might decide matters of concern semi-democratically (that is, in order to vote or be polled for your opinion, you must demonstrate current knowledge of the issue by passing periodic tests). Such internal educational activity would bring in more funds and promote informed opinion about their area of expertise in the public at large.

For example, farming. Last year's food crisis was caused by the fact that there are few farmers in our society (over the past century in North America they dropped from 95 percent to less than 5 percent of the population). The few farmers we do have get little influence in decision making, in comparison with the vital importance of food in keeping us all alive. When clumsy checks and balances do allow farmers a say, it is distorted by bribes and subsidies and becomes unconstructive, especially on a world level.

With farmer bucks would be possible to make farming as cool as it already is important.

If farming needs were bolstered by a powerful currency and strong leadership by farmers, there would soon be long lines to learn about and vote on farming issues. Strong leadership from local farmers would have local voters jostling to prove that their opinion about agriculture are worth something, that is, backed up by adequate, current knowledge. Farmers could use their simulation games and virtual world to teach and certify these voters in the general public who want to certify as a farming observers. 

Similar activity would make sure that professional farmers know what they are doing too. Being a qualified farming observer would allow you to participate in virtual gaming and simulations, vote and be polled for your informed opinion. For many the right to play in the best simulated farming games and virtual worlds would be incentive enough to qualify.

The next most important profession is education.

Teachers, like farmers, would issue their own educational dollars, redeemable for privileges in educational games and simulations, as well as the real-world school system. Edu-dollars they might be called. The same thing for medicine. It is one thing for doctors to say over and over to reluctant patients at their annual check-up: "Eat a varied diet of fruits and vegetables and get more exercise," and quite another for the patient to come to the check-up avid for a diet and exercise bonus paid in "Doc Bucks."

Law enforcement

The police already issue citations to members of the public for unusually good behaviour, why not actually put cop kopeks into their hands? If the police supervised a popular "cops and robbers" game on the internet and every cop carried around a bundle of Cop kopeks to hand out for cooperative behaviour, their relations with the general public would be lubricated, especially among the 95 percent of youths who are avid gamers. Who can doubt that a beat cop walking around with a fist full of cop kopeks could do more to stop crime among young people than any number of moles, informers and undercover agents?

When my nine-year-old son Tomaso came up with his idea for "mom-bucks" all on his own, I was astonished. He had invented exactly what I was stewing over and afraid to share on these essays, a monetary reward scheme for his own "boss" (or if you prefer, "employee"), his mother. Why not have real “mom-bucks,” not only money that can be used between mothers and children but that all mothers could make and distribute in their own, and their children’s interest? That way an otherwise vulnerable and unsupported mother might support herself entirely on "mom-bucks" by serving the professional interests of other mothers.

A Rudimentary Version of Trade Money is Being Researched

A recent edition of Macleans has an interesting interview with Roland Fryer, an economist and head of Harvard's Education Innovation Laboratory. He has been experimenting with "pay-for-performance," where kids are paid cash or cell phone minutes for getting good grades. He says that he came up with this idea when he realized that the reason it is so hard to motivate children and youth to try hard at school is that the rewards are so distant, usually ten or twenty years into the future. Although the results of his tests are not in yet, Fryer has already noticed that the idea is universally popular among kids, who are usually the last to be consulted on educational issues.

"Part of the resistance (to pay for performance) echoes part of the [problem] with public education: we consult mainly adults, and do things that are comfortable for adults. I think if the answer lay there, we would already have found it. One thing we are trying to do at Ed-Labs to push the envelope is to ask children how schools can better serve them. And the most important thing is that I never met a kid who did not like it. Though in D.C. a few weeks ago, there was a kid who surprised me. He said, `I do not think we should be paid for school. I think I should pay to come to school, because it is such a valuable resource.' I was so impressed. An hour later, we were giving out the first cheques in the auditorium, and this kid's name was called, so I put his cheque in my pocket. He said, `What are you doing?' I said, `You told me you did not believe you should be paid, so I would like to honour that.' He looked at me in a way that only a 13-year-old could, and said, `I never said that!'"

If this initiative among inner city children is proven scientifically to be effective, it would also validate the idea of simulated currency and trade bucks.

Nor can I think of a reason that kids should not be able to make up their currency too. As soon as my son Tomaso learned to make graphs, the first thing he did was start charting my progress as a father. For example, on Christmas day, my line went through the roof, then it plummeted when I asked him to pick up his clothes, and so forth. Maybe not the best application of his new knowledge from my point of view but I was pleased to see him applying it so fast to immediate practical purposes.

It is my observation that money, even fake money such as reward points, silly and insubstantial as they may seem to adults fixated on long-run values, are extremely effective as short term motivators. After all, was it not the economist J.M. Keynes who said that in the long term we are all dead?

Next time I will ask: what would happen if economists made up their own spending money?


No comments: