Clayton Christensen on Religion and Capitalism
Clayton M. Christensen is a professor of business administration at the Harvard Business School. He is the bestselling author of five books, including his seminal work, The Innovator's Dilemma, which received the Global Business Book Award for the best business book of the year, and most recently, The Innovator's Prescription, which examines how to fix our healthcare system. Christensen serves on several public and privately traded boards and is the founder of a successful consulting company and an investment management firm. He holds a B.A. with highest honors in economics from Brigham Young University and an M.Phil. in applied econometrics and the economics of less-developed countries from Oxford University, where he studied as a Rhodes Scholar; he received an MBA with high distinction from the Harvard Business School in 1979, graduating as a George F. Baker Scholar, and was awarded his DBA from the Harvard Business School in 1992.
Question: Why is there such a crisis in business leadership?
Christensen: Can I just maybe make two provocative comments, which are not that provocative but I really believe that they’re true. There is a fellow that came to Boston about 10 years ago who is a Marxist economist from China and he’d gotten a Fulbright Scholarship. And he came to Boston to study capitalism and democracy of all of the arcane topics. We got to know him very well while he was in Boston, so at the end of his time, we invited him and his wife and child to our home just to have a goodbye dinner. And I asked him, “So of all the things you learned about capitalism and democracy while you were here, was there something that was very surprising to you that you just did never thought about before?” And with no hesitation, he said, “Yeah. I never understood how critical religion is to the functioning of free markets and democracy.” And I’d never put these things together before but it’s like this guy flies in from Mars and this is what he sees. And he said, “You guys are living on cultural momentum that’s actually losing its momentum now. But if you go back 150 or 200 years ago, almost everybody in America on the weekend went to a synagogue or a church and they were taught there by people who they respected that they should voluntarily follow all the rules, because even if the police did not catch them, God will catch them.” And so you’ve got to be honest, whenever you make a commitment, honesty requires that you follow through. You’ve got to respect other people’s property and never take it from them. Their life and freedom are as just as valuable as yours. And he said, “Because most Americans most of the time have voluntarily followed the rules, democracy works.” Even if the police don’t show up on your doorstep to beat you up, you pay your taxes, because we’re conditioned and the root cause was it was our religion’s that instilled in us that ethic. Now, he said, you just look around the world where America has gone into a country and just snap its fingers and said we want democracy right here and we want it right now, if you don’t have a foundation of a religion there and you said it’s not any religion, that it’s got to be a religion that teaches those particular rules and has enough power over people’s lives that they instinctively follow those rules. If you try to put free markets and democracy into a country that doesn’t have that foundation, all you get is chaos like Haiti, for example, where they don’t have that foundation, we try to impose democracy and free markets and just get a complete breakdown of social order. It’s what happened in Russia to a large extent. So my first concern about our system is that if you don’t have an instinct and generally born from a religious tradition amongst the CEOs to voluntarily follow the rules, capitalism just doesn’t work. There is no way that you can police honesty if it doesn’t come instinctively for you. And, you know, I thought a lot about this conversation with that Marxist economist, and as so many institutions in our society try to push religion out of the public eye, what they don’t get is these are the very institutions that gives us our civil liberties in the first place. So it’s a broader issue than just CEOs, but if the CEOs don’t come with that commitment to honesty, it’s very hard to police it. It’s very hard to instill it later on. The second thought is that the economists have done a great disservice to capitalism with this notion that managers are responsible for maximizing shareholder value. It turns out God did not reveal this to any of the prophets of prophet, but rather economists in the 1800s as they were building mathematical models of microeconomic problems, the tools of economists are calculus. And calculus forces you to find some function that you can maximize or minimize, and so they began to make assumptions in these mathematical models that management’s responsibility is to maximize the return to shareholders. And the use of that assumption made the mathematics [tractable]. And so more and more economists began to use that assumption, they’d go into classrooms, teach that assumption and their models to their students. And somehow over the hundred years or so that intervened, it came to be believed that management is responsible for maximizing shareholders value. That even has gotten ensconced into some laws. And then another group of economists came in with this theory called the principal agent theory and the idea there is that the principals who are the managers have a different motivation than the… I’m sorry, the agents who are the managers have a different motivation than the principals who own the stock. And so in order to align their motivations, we have to have, we have to give to management a financial incentive to maximize shareholder value. And so, over the last 20 years, these principal agent economists have so influenced boards of directors that they’ve given the managers of these companies’ extraordinarily attractive financial incentives to inflate the stock prices and so on. And I think this is just, it’s a broken paradigm. In the 1960s, the average shareholder held the shares of your company in her portfolio for six years. Today, 40% of the trading on the stock exchange is done by hedge funds whose average holding period is 60 days. Fifty-five percent of the activity on a typical day on the stock exchange is executed by mutual funds and pension funds whose average holding period is 10 months. So, 95% of the volume is executed by people who don’t even hold the shares of your company for a year. Do you want to call these people shareholders? They’re not. They’re speculators or investors who temporarily find themselves owning the securities of your company. And so rather than the management believing that they’re responsible for maximizing shareholder value, it’s really time to say no. You guys temporarily find yourself in possession of the securities of my company and you’re responsible for maximizing the returns on your investments and God bless you. My responsibility is to invest to ensure the long-term health of this company, the prosperity of the employees who work within it and the communities in which the employees live in and which we do our work, and that really is what management ought to focus on doing well. And this business that managers aren’t incentivized, anybody who knows a manager knows that these are driven people to achieve and to build and to do good things. And what the economists have done to us by giving this people financial incentive is just really perverted the system. And so I think if we can get rid of those assumptions that you’ve got a principal agent problem and that managers are responsible for maximizing the income of speculators, if we took them out and brought people who just had a great grounding in the value of honesty because of their background, the CEO problems will disappear.
Clayton Christensen on rescuing free markets.
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What is human dignity? Here's a primer, told through 200 years of great essays, lectures, and novels.
- Human dignity means that each of our lives have an unimpeachable value simply because we are human, and therefore we are deserving of a baseline level of respect.
- That baseline requires more than the absence of violence, discrimination, and authoritarianism. It means giving individuals the freedom to pursue their own happiness and purpose.
- We look at incredible writings from the last 200 years that illustrate the push for human dignity in regards to slavery, equality, communism, free speech and education.
The inherent worth of all human beings<p>Human dignity is the inherent worth of each individual human being. Recognizing human dignity means respecting human beings' special value—value that sets us apart from other animals; value that is intrinsic and cannot be lost.</p> <p>Liberalism—the broad political philosophy that organizes society around liberty, justice, and equality—is rooted in the idea of human dignity. Liberalism assumes each of our lives, plans, and preferences have some unimpeachable value, not because of any objective evaluation or contribution to a greater good, but simply because they belong to a human being. We are human, and therefore deserving of a baseline level of respect. </p> <p>Because so many of us take human dignity for granted—just a fact of our humanness—it's usually only when someone's dignity is ignored or violated that we feel compelled to talk about it. </p> <p>But human dignity means more than the absence of violence, discrimination, and authoritarianism. It means giving individuals the freedom to pursue their own happiness and purpose—a freedom that can be hampered by restrictive social institutions or the tyranny of the majority. The liberal ideal of the good society is not just peaceful but also pluralistic: It is a society in which we respect others' right to think and live differently than we do.</p>
From the 19th century to today<p>With <a href="https://books.google.com/ngrams/graph?year_start=1800&year_end=2019&content=human+dignity&corpus=26&smoothing=3&direct_url=t1%3B%2Chuman%20dignity%3B%2Cc0" target="_blank" rel="noopener noreferrer">Google Books Ngram Viewer</a>, we can chart mentions of human dignity from 1800-2019.</p><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDg0ODU0My9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY1MTUwMzE4MX0.bu0D_0uQuyNLyJjfRESNhu7twkJ5nxu8pQtfa1w3hZs/img.png?width=980" id="7ef38" class="rm-shortcode" data-rm-shortcode-id="9974c7bef3812fcb36858f325889e3c6" data-rm-shortcode-name="rebelmouse-image" />
American novelist, writer, playwright, poet, essayist and civil rights activist James Baldwin at his home in Saint-Paul-de-Vence, southern France, on November 6, 1979.
Credit: Ralph Gatti/AFP via Getty Images
The future of dignity<p>Around the world, people are still working toward the full and equal recognition of human dignity. Every year, new speeches and writings help us understand what dignity is—not only what it looks like when dignity is violated but also what it looks like when dignity is honored. In his posthumous essay, Congressman Lewis wrote, "When historians pick up their pens to write the story of the 21st century, let them say that it was your generation who laid down the heavy burdens of hate at last and that peace finally triumphed over violence, aggression and war."</p> <p>The more we talk about human dignity, the better we understand it. And the sooner we can make progress toward a shared vision of peace, freedom, and mutual respect for all. </p>
Is Bitcoin akin to 'digital gold'?
- In October, PayPal announced that it would begin allowing users to buy, sell, and hold cryptocurrencies.
- Other major fintech companies—Square, Fidelity, SoFi—have also recently begun investing heavily in cryptocurrencies.
- While prices are volatile, many investors believe cryptocurrencies are a relatively safe bet because blockchain technology will prove itself over the long term.
Presentation slide from Sanja Kon's presentation on the evolution of money at 2020 Web Summit
Credit: Sanja Kon<p>The move came shortly after the payments company Square invested $50 million into Bitcoin, and after Fidelity announced that it was opening a Bitcoin fund into which qualified purchasers could invest <a href="https://www.bloomberg.com/news/articles/2020-08-26/fidelity-launches-inaugural-bitcoin-fund-for-wealthy-investors" target="_blank">(minimum investment: $100,000)</a>. Together, this institutional backing might have something to do with Bitcoin's recent surge back to near its 2017 price peak of $19,783. (Bitcoin is listed at 19,384.30 as of Dec. 3.)<br></p>
Presentation slide from Sanja Kon's presentation on the evolution of money at 2020 Web Summit
Credit: Sanja Kon<p>But more importantly, it suggests cryptocurrencies might soon have the opportunity to prove themselves in real-world use cases. After all, skeptics have long doubted the ability of cryptocurrencies to go mainstream as a form of everyday payment. But people seem increasingly comfortable with digital payment systems.</p><p style="margin-left: 20px;">"The entire world is going to come into digital first," Schulman said at Web Summit, adding that PayPal's services already go hand-in-hand with cryptocurrencies. "As we thought about it, digital wallets are a natural complement to digital currencies. We've got over 360 million digital wallets and we need to embrace cryptocurrencies."</p><p>Sanja Kon, vice president of global partnerships at the cryptocurrency payments processor company UTRUST, also spoke at Web Summit about the increasing adoption of digital payments:</p><p style="margin-left: 20px;">"Physical cash is becoming more and more obsolete. And the next step in the evolution is digital currency."</p><p>Kon noted some of the inherent advantages of cryptocurrencies, namely ownership. </p><p style="margin-left: 20px;">"For many people, this is really the main benefit of cryptocurrency: Users owning cryptocurrencies are able to control how they spend their money without dealing with any intermediary authority like a bank or a government, for example," Kon said, adding that there are no bank fees associated with cryptocurrencies, and that international transaction fees are significantly lower than wire transfers of fiat currency.</p><p>Kon said cryptocurrencies have unique growth opportunities in areas where people aren't integrated into modern banking systems:</p><p style="margin-left: 20px;">"With cryptocurrencies and blockchain, with the use of just a smartphone and access to internet, Bitcoin and cryptocurrencies can be available to populations of people and users without access to the traditional banking system."</p>
Bitcoin as 'digital gold'<p>Still, it could take years for people to start using cryptocurrencies for everyday purchases on a large scale. Despite this, many cryptocurrency advocates see digital currencies, particularly Bitcoin, as a way to store value—digital gold, essentially.</p><p style="margin-left: 20px;">"I don't think Bitcoin is going to be used as a transactional currency anytime in the next five years," billionaire investor Mike Novogratz recently told <a href="https://www.bloomberg.com/news/articles/2020-10-23/novogratz-says-bitcoin-is-digital-gold-not-a-currency-for-now?srnd=markets-vp" target="_blank">Bloomberg</a>. "Bitcoin is being used as a store of value. [...] "Bitcoin as a gold, as digital gold, is just going to keep going higher. More and more people are going to want it as some portion of their portfolio."</p><p>There are obvious parallels between gold and Bitcoin: Both are mined, do not degrade over time, are finite in supply, and aren't directly tied to the value of fiat currency, making them <a href="https://www.reuters.com/article/us-gold-inflation/gold-as-an-inflation-hedge-well-sort-of-idUSKCN1GD516" target="_blank" rel="noopener noreferrer">relatively invulnerable to inflation</a>. The obvious objection is that the price of Bitcoin, and cryptocurrencies in general, is far more volatile than gold.</p><p>But for investors who believe the inherent value of cryptocurrency technology will prove itself over the long term, these price fluctuations are just bumps on the long road to the future of currency. </p><p style="margin-left: 20px;">"It's no longer a debate if crypto is a thing, if Bitcoin is an asset, if the blockchain is going to be part of the financial infrastructure," Novogratz said. "It's not if, it's when, and so every single company has to have a plan now."</p>
A new study finds that some people just want privacy.
- Despite its reputation as a tool for criminals, only a small percentage of Tor users were actually going to the dark web.
- The rate was higher in free countries and lower in countries with censored internet access.
- The findings are controversial, and may be limited by their methodology to be general assumptions.
What do half of those words mean?<p> For those who don't spend all of their time on the internet, a few of these terms might be new to you. We'll go over them first before we continue. If you do know all of these terms, you can skip ahead to the next section.<br> <br> <em>Surface Web:</em> The regular internet that you can find with a search engine. You're on it right now; unless these articles are shared in places we don't know about. <br> <br> <em>Deep Web</em>: The part of the internet not indexed by search engines. This includes things like your email inbox; you can't get there from Google or Bing, but instead have to enter a password to find it from another page. You've probably visited the deep web today, too. </p><p><em>Dark Web</em>: A subsection of the deep web that requires special software to access. While not everything there is bad, there are social media sites, email services, hidden forums, and even puzzle games down there; this is also where you would find the places for illegal markets and other, extremely nefarious, things.</p><p> <em>Tor:</em> A kind of software that allows users to browse the internet in near-total anonymity. It does this by encrypting connection data and scrambling the route a computer takes to connect to a site, thus making it difficult, but not impossible, to find who is using a particular website. The potential value of this to criminals should be evident to you. <br> <br> While it often gets bad press for how it can be used for illicit purposes, it should be said it was created and used by the United States government for often banal purposes. The leaders of the Tor Project often remind the public that "normal people" use Tor for everyday internet activities as well.</p><p> As a personal example, I once used it to get around the <a href="https://www.wired.com/1997/06/china-3/" target="_blank">Great Firewall of China</a> when I wanted to get to the regular, uncensored internet.</p>
Back to the study<p> The study observed the final destination of a random selection of Tor users to determine if they went to surface websites or more hidden areas of the internet after connecting to the Tor network. This was done by monitoring the data from entry points in the Tor network, which would allow an observer to where someone was going, but not who.</p><p> Those going to surface websites were assumed just to be using Tor for anonymity and security, while those going into the dark web were presumed more likely to be using it for illegal reasons. <br> </p><p> Despite the popular conception of Tor as a tool for criminals looking to cover their tracks, only 6.7 percent of these users went to sites defined as the dark web, which were themselves not necessarily devoted to illegal <a href="https://www.sciencealert.com/only-a-small-fraction-of-the-dark-web-is-being-used-for-hidden-activity-study-finds" target="_blank" rel="noopener noreferrer">activity</a>. </p><p> The results were further broken down by country, which revealed another layer of information. The authors noted that in countries deemed "not free" by Freedom House, the rate of possible malicious use goes down to 4.8 percent. In countries considered free, the percentage nearly doubles to 7.8 percent.</p>
What does this mean for the internet?<iframe width="730" height="430" src="https://www.youtube.com/embed/MBh7K5ooF2s" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe><p> The dark web might be a little lighter than previously suggested. While it is true that there is some horrible stuff down there, this study suggests the people getting to it using the Tor network are mostly using it for legal, and perhaps even banal, purposes. This interpretation is additionally supported by the difference in usage across countries judged free and not free. In those countries with censorship, where a variety of tools must be used to get to sites like Facebook or Wikipedia, the percentage of users going towards locations on the dark web was smaller.</p><p>The authors conclude:</p><p style="margin-left: 20px;"> "The Tor anonymity network can be used for both licit and illicit purposes. Our results provide a clear, if probabilistic, estimation of the extent to which users of Tor engage in either form of activity. Generally, users of Tor in politically 'free' countries are significantly more likely to be using the network in likely illicit ways."</p><p> Additionally, they mention that the Tor network's infrastructure is predominately in free countries, which then see higher rates of its use to reach places that could advance illegal activities. This find may be of interest to policymakers looking to balance the promotion of autonomy and the freedom of information with the goal of preventing crime.</p>
What’s the catch?<iframe width="730" height="430" src="https://www.youtube.com/embed/2UNUMgM9Gwo" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe><p> It has been suggested that the internet is the first thing humanity ever created that we don't fully understand. If that is true, it should surprise no one that there are objections to the methods used to study it. <br> <br> The executive director of the Tor Project, Isabela Bagueros, explained their objection to the study's methodology and assumptions to <a href="https://arstechnica.com/gadgets/2020/11/does-tor-provide-more-benefit-or-harm-new-paper-says-it-depends/" target="_blank" rel="noopener noreferrer">Ars Technica</a>:</p><p style="margin-left: 20px;"> <em>"The authors of this research paper have chosen to categorize all .onion sites and all traffic to these sites as "illicit" and all traffic on the "Clear Web" as 'licit.'</em></p><p style="margin-left: 20px;"><em>This assumption is flawed. Many popular websites, tools, and services use onion services to offer privacy and censorship-circumvention benefits to their users. For example, Facebook offers an onion service. Global news organizations, including The New York Times, BBC, Deutsche Welle, Mada Masr, and Buzzfeed, offer onion services.</em></p><p style="margin-left: 20px;"><em>Whistleblowing platforms, filesharing tools, messaging apps, VPNs, browsers, email services, and free software projects also use onion services to offer privacy protections to their users, including Riseup, OnionShare, SecureDrop, GlobaLeaks, ProtonMail, Debian, Mullvad VPN, Ricochet Refresh, Briar, and Qubes OS…...</em></p><p style="margin-left: 20px;"><em>Writing off traffic to these widely-used sites and services as "illicit" is a generalization that demonizes people and organizations who choose technology that allows them to protect their privacy and circumvent censorship. In a world of increasing surveillance capitalism and internet censorship, online privacy is necessary for many of us to exercise our human rights to freely access information, share our ideas, and communicate with one another. Incorrectly identifying all onion service traffic as "illicit" harms the fight to protect encryption and benefits the powers that be that are trying to weaken or entirely outlaw strong privacy technology."</em><br> </p><p>The critique here is justified; there are legitimate websites hidden behind layers of security which were deemed "illicit" by this study's methods. Many people are just trying to protect their anonymity when using them. However, the study's authors based their assumption on previous studies that demonstrate that these hidden sites are used for illegal activities at a higher rate than other parts of the <a href="https://www.cigionline.org/sites/default/files/no20_0.pdf" target="_blank" rel="noopener noreferrer">internet</a>.</p><p>Until a more rigorous and ethically ambiguous method of determining what people using the network are doing on these dark websites is utilized, the findings of studies like this will be general and based on broad assumptions. </p><p>Despite all of this, we can take a few things from this study: most people using Tor to explore the internet aren't using it for evil, those using it in places with limited freedom of information are even less likely to use it for such purposes, and external factors can have significant impacts on how people use a tool such as the internet. <br></p>
Scientists find that bursts of gamma rays may exceed the speed of light and cause time-reversibility.
- Astrophysicists propose that gamma-ray bursts may exceed the speed of light.
- The superluminal jets may also be responsible for time-reversibility.
- The finding doesn't go against Einstein's theory because this effect happens in the jet medium not a vacuum.
Jet bursting out of a blazar. Black-hole-powered galaxies called blazars are the most common sources detected by NASA's Fermi Gamma-ray Space Telescope.
Cosmic death beams: Understanding gamma ray bursts<div class="rm-shortcode" data-media_id="cu2knVEk" data-player_id="FvQKszTI" data-rm-shortcode-id="c6cfd20fdf31c82cb206ade8ce21ba3f"> <div id="botr_cu2knVEk_FvQKszTI_div" class="jwplayer-media" data-jwplayer-video-src="https://content.jwplatform.com/players/cu2knVEk-FvQKszTI.js"> <img src="https://cdn.jwplayer.com/thumbs/cu2knVEk-1920.jpg" class="jwplayer-media-preview" /> </div> <script src="https://content.jwplatform.com/players/cu2knVEk-FvQKszTI.js"></script> </div>
Researchers dramatically improve the accuracy of a number that connects fundamental forces.
- A team of physicists carried out experiments to determine the precise value of the fine-structure constant.
- This pure number describes the strength of the electromagnetic forces between elementary particles.
- The scientists improved the accuracy of this measurement by 2.5 times.
The process for measuring the fine-structure constant involved a beam of light from a laser that caused an atom to recoil. The red and blue colors indicate the light wave's peaks and troughs, respectively.