The Business Case for Empathy

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I noticed a Tweet in my email this morning that linked to a Wall Street Journal article warning us all about “The Perils of Empathy”. What I read next was a PhD’s eloquent, educated?, lengthy, well-written, seemingly intelligent by conventional accounts, explanation of why Empathy should be avoided diligently today.

The Wall Street Journal publication aims to speak to an insular community of haves and want-to-haves, with the top 1% of highest-wealth Americans very comfortably nested among them.

I’ve written three books in Economics that try to answer common questions of capitalism and inequality head-on. I wrote them because I wanted to understand how to go about the ideologies that are preferred by big businesses credibly; I didn’t care what was the outcome personally, I simply wanted the truth of it. Whatever I discovered, it was going to be clearly documented using easily confirmable online statistics and as few logic gaps as I could possibly avoid – because I wanted to believe the results myself too.

First, what is a Logic Gap? A logic gap is a conclusion drawn incorrectly based on loosely related statistics or facts: an example might be “the grass is green, so animals who eat grass must be green as well”. We see the gap in the logic of this statement easily because our observations in everyday life have taught us very well that rabbits, horses, cows, and other grass eaters are not green.

A logic-gap in politics and economics is a lot more difficult to correlate, and therefore their ideologies are also a lot easier for special interests to present as a cause-and-effect that benefits them directly.

Thinking that the inequality created naturally by unsustainable capitalistic policy – is somehow preferable – is a Logic Gap. Rich people make $3 million dollars a day for 30 years; so the notion that working hard at three jobs is going to catch you up somehow – is pure fantasy.

So let’s take a look at the Business Case for Empathy.

The stats that I found within GDP (Gross Domestic Production) Reports globally, support that failings in Empathy – as seen in Inequity, cost the United States as much as $8 trillion in Export Income annually alone.

This is the lost revenue and opportunity cost of leaving 160 million citizens unable to contribute to export production; see the bottom two quintiles (40%) in the Norton Airly summary chart here on your left taken from the 2010 U.S. Federal Reserve Budget. This group control nothing effectively – just 0.3% – of total U.S. Assets.

The actual costs of inequity might be much higher than this as well – if you add in tax evasion losses, incarceration rate spending (the US has five-times the prisoners that the next G7 has), Military Spending, and Costs of Terrorism and Policing.

This is a high price to pay to protect inequity. Universal Healthcare would cost around $1.7 trillion; Universal DayCare $300 million; Housing Bubble Controls – no cost; Guaranteed Incomes $233 billion; All in these are Chump-change compared to the Opportunity Costs recovered – by Empathy.

And this is as true in the U.S., as it is in the U.K., Canada, Australia and others. Let’s take a closer look.

According to Transition Economics Maturity (TE-Maturity) measures, 72% of all countries fail to actively maintain wealth distributions in policy are in Collapse Trending. Of the countries that do keep TE-Mature Policy, just  5% to 10% are in a Collapse Trending globally.

Here two chart that summarize exports and missed Opportunity Costs for a handful of countries:

GINI – is a statistic that measures country-wide wealth distribution pretty well; each country’s GINI score can be found here.

HDI – is the U.N.’s less-than-perfect Human Development Index; I say less-than-perfect because 45% of Hong Kong’s residents live in 8×8 apartments without a window – and still the country gets a very-high HDI scoring. Wealth Distribution is considered little in this calculation.

Export Quality – is an assessment of GDP Export quality. The diversity of exports and the per-unit profitability are important measures as well. For example, selling your mining resources at pennies a tonne, are low-quality exports that put a your country at much risk of commodity market fluctuation; far better to sell and ship manufactured pharmaceuticals, or engineered tunneling and automation equipment, at $1000 per box.

Compare the Exports per-Capita of your Country to understand how much export that your country is failing to earn every year when it fails to engage every citizen in creating export commerce (New Wealth). Read more about this chart in Chapter 11 and 12 of Transition Economics.

Opportunity Cost – is a term used to explain export incomes not realized. In the chart above, Opportunity Cost describes the export revenues lost because citizens are not generating as much Export per-Capita as Dutch Citizens. The United States

Exports & Export Per Capita stats are taken from Wikipedia – https://en.wikipedia.org/wiki/List_of_countries_by_exports_per_capita . Google and Wikipedia have forwarded the cause of Economic Solutioning not by yards but by light years in this past three years. Every thanks for this excellent and worthwhile work!

The Policies that enable the success of The Netherlands’ citizens, are some of the strongest economic controls in the world. The Dutch Government’s controls protect spending power, employment, housing, and foreign investment and business ownership – with a laser focus on Export (Wealth) per Capita creation clearly. In the Netherlands, education at all levels is free, daycare, healthcare, guaranteed incomes and even retirements are all paid for through a graduated tax structure that permits all citizens to participate in businesses and other commercial work.

Taxes are “higher” (in Holland) than in G7 countries presently, but these differences can be considered tax-equivalent and revenue-neutral in that they cover healthcare, retirements, and other costs of living that other countries call personal spending and not “taxes”. An apples-to-apples comparison of Cost of Living shows that they pay a total lower Cost of Living than other nations with a higher quality of life as well. Again, this discussion is covered in Transition Economics.

Collapse or Advance Trending – is a measure of a country’s present trade balance and debt load; see Transition Economics Maturity Index.

Lack of Empathy in History

The Nuremberg Diaries – summarized Evil as the Absence of Empathy in 1946. This was a summary meant to highlight not only death camp atrocities to 12 million Polish, Ukrainians, Russians, and European Jews  in World War II, but it was also a commentary on the starvation-wage treatment of labor by business interests and governments putting World War I’s Versailles Treaty compensations upon German’s until it drove them to prefer a second war, to untenable living conditions.

The Golden Rule – is a philosophical Lesson-learned and Sustainability Model that is repeated in every religion; even the ones that we know about and are no longer practiced. Remember also that Philosophy – is the basis of all education and science globally today. Our many, many secular education and government systems threw the baby out with the bathwater when we failed to recognize that flawed religious organizations should be separated from the infallible social sustainability lessons that these fallible organizations, and even teachers, were originally charged to protect. See more on the Golden Rule here…

Lack of Empathy in Inequity

When Inequity causes extreme suffering in society; where “have-nots” do have the basics of life, revolutions have occurred repeatedly in history. Desperate people are forced to decide whether the likelihood of death by lethal conflict is preferable to death by starvation – basically.

More often, these revolutions are prevented by compromises and solutions that ensured an ongoing distribution of wealth. One of the most famous examples in history is “Jubilee” (Universal Debt Forgiveness – every 50 years), the first documented proactive Economic Controls carved onto the Code of Hammurabi – 1763 BCE (seen right). The large stone can be seen in the Louvre in Paris – with copies located in other museums around the world.

Ready access to Incomes and Spending-Power sufficient to meet our minimum needs of food, water, shelter, security and other basic needs – was the basis of the American Dream. 2500 years ago Aristotle called this sustainable society a “Good Life”; and he called the Plan of worthwhile projects needed to build and sustain this Good Life a “Right Plan”.

What we learn from Transition Economics Maturity Modelling, what is good for societies is also very Good for Business as well – as supported by the actual statistics – and by not the logic-gaps showcased at the Wall Street Journal this past December 2nd.

Question 1:  Does a Good Life with strong Wealth Distribution and Wealth Equity, create more Wealth for a country? Yes – yes it does.

Question 2:  Are arguments about Religion, Race and Gender problems, merely symptoms of Wealth Distribution Inequities? Yes again. This is a logic as provable in hard numbers, history, and as realized in many fortunate countries today.

Collapse

What does Social Collapse from a lack of responsible government controls look like? 

1. Inequity increases, salaries drop below minimum living wages to slave-wages, and people no longer have spending power with their incomes
2. Incomes become scarce as well, job-loss and homelessness increases
3. Incarceration rates increase and social problems like divorce rate risk
4. Trickle-down is a proven failure due to business ethics failings and a lack of laws that make business accountable
5. Reliance on immigration revenue increases
6. Revolutions and war are not far behind as society continues to collapse – unless the Economy is Reset by TE-Mature Policies.

Canada, and most of the G20, hover around Step 5 of this list so you may well recognize this list feels familiar.

The Export per Capita statistics of Holland prove conclusively that citizens do take advantage of social benefits to improve both their productivity and the standard of living for their communities as well.

The last G8 country to support “The American Dream” was Russia when Perestroika ended support for a Good Life for all citizens in 1986. Once that universally sustained Good Life was lost, social problems began. Russia and the Ukraine are experiencing homeless people for the first times in their lives in recent years.

With increases in inequity, Incarceration Rates and Divorce increased; Longevity and Birth Rates decreased, and other stats confirmed too that social problems appear to be direct symptoms of economic inequity that is also leading to social collapse.

The Business Cases:

Incarceration Rates, Longevity, Social Problems including Terror, Divorce, Suicide:

Note that the top four countries are in Collapse Trending, and that the last three countries are Advancing.

Ireland and Italy are the first Advancing countries on this Richard Wilkinson chart as presented in his TEDTalk; all countries to their right and above are in Collapse Trendings.

The Business Case for Guaranteed Incomes

Statistics for a Guaranteed “Living Wage” Incomes Business Case indicate that every countries would benefit up to 36-times program cost by investing in  Guaranteed Incomes that ensure all can continue to support the economy.

Country	America	Germany	Canada	U.K	Australia
Export Per Capita (in billions)	$5,057	$  18,316	$ 13,286	$ 7,378	$ 10,446
Exports ($bill)	$  1,510	$  1,309	$ 411	$ 436	$ 188
Export Increase	665%	184%	253%	456%	322%
Annual_Opportunity Cost  ($billions)	$ 8,538	$ 1,096	$  630	$ 1,553	$ 418
Cost of Living	$ 2,500	$ 3,000	$ 3,000	$ 3,500	$ 3,000
Population (million)	324	82	36	65	24.2
Labor force (million)	155.4	44.2	19	30.8	12.4
Unemployment	5.0%	4.5%	6.8%	5.0%	6.8%
Current Benefits		15%	14%
Total Cost ($bill)	$ 233	$ 60	$ 40	$ 64.6	$ 30
GDP ($bill)	$17,348	$ 3,868	$ 1,785	$ 2,989	$  1,472
Tax Inc vs GDP	26.9%	40.6%	32.0%	39.0%	25.8%
Total Tax Revenues ($bill)	$  4,666	$ 1,570	$ 571	$1,166	$ 379
New Tax ($bill)	$ 3,618	$  1,466	$516	$997	$ 347
Tax Increase	-22.45%	-6.59%	-9.53%	-14.45%	– 8.5 %
Tax Rev New Export (15%) $bill	$ 1,280	$ 164	$ 516	$ 233	$ 62
ROI	3663%	1801%	1574%	2405%	1374%
Return per $	36-times	18x	15x	24x	13x

Housing

Without Housing Controls similar to those in the Netherlands (where there are no bubbles), Canada and other major countries have permitted Bubbles that are thirteen-times the value of inflation. This is correctable in policy as discussed in the book Transition Economics.

Conclusions

Ensure new incomes, and make sure that they are not channelled back into the same purses; by restoring spending power – in housing, energy, etc. – the economic turn-around is pervasive and provable statistically through TE Maturity.

I found that:

1. Citizens who enjoy excellent Wealth Distribution and a Good Life – a Life with free healthcare, education, family-friendly communities and good security –  Citizen-for-Citizen, did create more Wealth for their country. Therefore,  TE-Mature Policies like free University, Healthcare, and so on. See TE-Mature Policies here…
2. Thirty-eight-million to fifty-million citizens living in Countries with TE-Mature Policy and good Wealth Equality often report reduced incidents of race, religion and gender concern (recent E.U. immigration mistakes introduce a logic-gap or two so read more about Immigration Policy here).
3. There was an exactly reverse relationship between both GINI (Wealth Distribution) and Export per Capita with Incarceration Rate where more Inequity resulted in more Incarceration and shorter lifespans as well.
4. Wealth Distribution – Incomes with Spending Power – is the underlying Problem – and the Symptoms of that problem include Race, Gender, Terror and Religion “Crisis” in the News.

Why did it take G7 countries like Germany and Italy longer to adopt stronger Business Case Socialistic Policies? Because smaller population and GDP countries, saw the impact of unsustainable Policy quickly and widely. Larger economies took much longer to feel the impacts – and then they could hide social problems more easily too – frankly.

If you are arguing against empathy, no matter the context, you are arguing on the wrong side.

What did you find?

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Author: Edward Tilley

Read more about understanding solutions important to all of our futures in “Transition Economics” and “World Peace – The Transition“.