By Bill Caswell
Special to Ontario Construction News
My dear business leader, I am unable to contain myself as I just finished reading one of the stupidest books I have ever read. It is about prison abolition, written by an overly educated silly person. I struggled through its 225 pages believing that at least one bright idea would appear.
My hope was that, just like my readings on corruption, this book would provide an answer, in this case, leading to ideas for us on how to abolish the human-talent wastage of prisons.
In fact, the book’s conclusion is that we should not abolish prisons, we should reform them, and he says we can’t reform them until we reform society. Duh! What magic wand is going to reform society?
I quite liked how the indigenous people in Canada dealt with miscreants. They made them the slave of the person they had abused (or whose child had been killed or raped) for an appropriate number of years. The indigenous people had no prisons.
The author of this prison reform book referred throughout to Angela Davis, who, at first in this book, I started to admire. Obviously, she is a very intelligent, highly principled, and determined person. But as the text droned on about her clever ideas, I realized she was short of the right kind of brain power, just as Marx (also referred to frequently) was.
(I did not notice Engels in the woodwork, but I thought adding his name to the title of this article would make it catchier.) My point is that these thinkers do not understand the basics of the subject before them – humans – so they deal with surface issues (and get nowhere).
One basic issue missed is that all animals are preprogrammed to protect their own interests – male or female, in order to survive. The human male is at the top of the protective power chain in the world, while the elephant rules in Africa, and the whale in the seas. Women left to their own devices are just as bad as the men – as noted by the hierarchy in female prisons, or females-only schools, or the pecking order of hens or cows.1
As for Marx and Angela Davis, they pick on the big bad boy called capitalism and suggest all its evils. If you look in a dictionary, it will show a definition for capitalism. But this seems to be a word invented by people who have never been in business and their unwritten definition of capitalism appears to be: “those big, bad, nasty guys who are screwing the little guy.”
Marx, Davis, et al., also hold, throughout this prison-reform book, the premise that people are in business for profits. Such profits are (incorrectly) implied to be mountains of ill-gotten gains obtained on the backs of their poor, more-deserving employees.
In my experience, capitalism is a term that capitalists never use. I believe it was invented by left-wingers to describe people they did not understand. In my four decades of business, I have never heard a businessperson seriously use the word “capitalist” to describe himself or herself.
The ideal world for Davis and Marx is where there is no business ownership, but rather the state owns the enterprises and distributes the wealth fairly. What a grand idea! Keep it in a book where it cannot hurt anyone. Russia’s century-long practical experience with such an idea showed what nonsense that story is, as it created nothing but enormous corruption and was accompanied by unworkable products, and by equally enormous poverty – unless you were a government official. And, of course, it ultimately failed.
The poor working stiffs often look at the business owners as selfish, money-hungry tyrants, while the facts are quite different. In most businesses, the working stiff goes home every night at five p.m., whereas the owner hangs around till nine or 10 p.m. trying to keep the mess together. Then, the owner, even while at home, including on the weekends and holidays, has to think about the difficulties of his or her enterprise.
All I, Bill Caswell, have to do is reach out to my son, Donny, in San Francisco and ask him to compare his working hours with his workers at his steel-fabricating company. I could ask him to state his true hourly earnings vs. his workers’ hourly earnings; his true hourly compensation will be much less than theirs. I had two restauranteurs as clients; in both cases the head waiter walked home with more cash every week than the owner did.
While many businesses such as Apple and Microsoft end up with mountains of cash, they are the exception, not the rule. Ninety-five percent of North American businesses (the capital of capitalism) are (struggling) small-to-medium enterprises. Ninety-five percent of all workers in North America work for small-to-medium enterprises. Those 95 per cent are the ones who are making your teacups, your sweaters, and your desk lamps.
Unfortunately, the news media dramatize only the big boys and that, of course, is the image that the public is left with about all business.
Now, successful business owners do benefit when they decide to cash in and that is usually for their children. For example, Eugene Melnick, the owner of the Ottawa Senators hockey team, lost money year after year while he owned the franchise. He paid $90 million for it, and it is for sale today by his children (he died last year) for $600 million. Eugene never benefitted personally, financially, from this effort – although the next generation will.
Businesses are built on hope. Most people go into business because of an idea: “I can do this better than my current boss,” for example. They also assume that it will someday (in the not-too-distant future, hopefully) make them rich – but money is not usually the reason for starting the enterprise. They do it to gain more control2 over their personal situation.
Contrarily, if making money is their initial driver, as I state in my book on business evolution, that enterprise is likely to fail because it started off with the wrong reason.
In fact, most new businesses gobble up the new owner’s past lifetime earnings in a few weeks or months. Little do these new “capitalists” think about the 65% failure rate in the first five years of an enterprise’s existence. Little do they imagine they will need to engage in a 60- or 80-hour work week just to hold the thing together.
The worldwide profit ceiling is about 5 per cent of sales as published each year in the Fortune 500 list of the 500 most successful companies in the world. Year after year the combined profit hovers around 5 per cent. Check it out yourself. There is a reason. If you earn more than 5 per cent, others will see your good fortune, copy your idea (without having to engage in your years of investigation and research), and sell your wonderful new product at a lower price.
Thus, you will have to match those prices if you want to stay in that business, and your profits will drop (to near 5 per cent). On the other hand, if you earn less than 5 per cent, you will not have the money you need to grow and build your business. We call this the 5 per cent profit constraint. Every time a person says, “All I want is profits,” I want to ask, “What profits are you talking about? How many dollars? What percentage of sales?” But those who hate “profits” never ask such questions. Rather they assume some unfathomable piles of enormous cash.
Yes, the reality is that business owners are obsessed with profits, but not the unfathomable kind, rather enough to keep the ship afloat. So yes, they are obsessed about profit – obsessed about the survival of their “baby” in which they have invested so much time, so much energy, so much money, and so much emotion – as have their families, who have chosen to go along on this roller-coaster ride with their mates.
By the way, I hope it has now become obvious that the difference between a For-Profit enterprise and a Not-For-Profit is only 5 per cent; they’re 95 per cent the same! Personally, I resent the holier-than-thou attitude of some people when differentiating between the two enterprise types.
Getting back to Marx and Davis, it appears to me that the missing fundamentals that escaped their attention are:
- All humans and all animals fight each other for power – footnote #1.
- Business gets results, consistently. Look around you: your desk, your laptop, your shirt, your bike, your TV – almost everything around you – came from some successful business.
- The mathematics of wealth demonstrates how money works. If we start off by giving everyone in the world the same cache of money, say $20,000 each, and allow time to progress, at the end of some period, one person will end up with all the money and everyone else will be broke. This is not a hypothesis; this is a mathematical fact.4
- Therefore, to have society work, and understanding that co-operation makes things better for us all, we need an overseeing body (government) to take money from everyone (taxes) and redistribute it to help those who are unable to accumulate money on their own.
A simple observable fact is that societies who perform best at redistribution (Sweden, Denmark, etc.) have far fewer social problems than those who do a lousy job at redistribution (US, UK). US states that perform best at redistribution (Vermont, New Hampshire) have far fewer social problems than those states that do a lousy job at redistribution (NY, California, Texas).5 The unfortunate conclusion is that poverty is a natural phenomenon, just as excessive wealth is. The question is: What is a society willing to do about it?
Profits (that, as we have explained, collectively hover at around 5 per cent) are the needed seeds of success of any free enterprise (“free” meaning not influenced by government largess).
What really motivates people to be business owners is to fix (i.e., control) the “damn” situation around them.
What I like about the corruption study and remedy is that it began with the correct basic premise about humans: Namely, everybody is a little bit corrupt and will attempt to get away with minor thievery if they feel they can and there is no consequence for taking that slightly selfish step: People will make small adjustments in their favour on tax returns and drive through a yellow-about-to-turn-red traffic light.
Understanding that tendency, then the solution to corruption becomes to make it unattractive to violate the community rules and create more transparency so everyone can see what is going on. Having fought corruption at its roots, Hong Kong and Singapore have turned from sleazy, crime-infested, backwater ports to thriving economies with extremely high per-capita GDPs.
Probably for the prison situation we have to begin with some basic premise about human behaviour. While I am no crime expert, it seems to me that if a human cannot find the sustenance needed to live, he or she will automatically reach beyond the rules of that society which has not been serving him (or her) so well. If that is the case, then the society has to create a means to serve more of its participants better.
Oops, it looks like our stupid author was right after all: we need to reform the society!
1W. Caswell, Power, CCCC Newsletter 222, Ottawa, ON, January 2023.
2The three strongest human (animal) drivers are: Survival, Procreation, and Control (over one’s personal situation); W. Caswell, 77 Ideas, Chapter 13: “Cooperation (and Control),” Asset Beam Publishers, Ottawa, ON, 2022.
3W. Caswell, 77 Ideas, Chapter 11: “How a Company Evolves,” Asset Beam Publishers, Ottawa, ON, 2022.
4Bruce M. Boghosian, “Is Inequality Inevitable?” Scientific American, 1 Nov. 2019.
5Richard Wilkinson and Kate Pickett, The Spirit Level (Allen Lane/Penguin Books: London, England, 2009).
Bill Caswell leads the Caswell Corporate Coaching Company (CCCC) in Ottawa, email firstname.lastname@example.org.
Thank you for the candid, practical and factual review Bill. To help reform our society, would you please get yourself added to public/secondary school curricula?