November 2020

Episode Reprise — Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays

[Editor’s Note: Some things are just too good not to share again. While our most ardent listeners are familiar with Episode #22, Scroogenomics, many may not be familiar with this specific show. This past Friday was Black Friday in the United States which means it’s time - once again - to talk about why you shouldn’t buy presents. Bah, humbug!!!]

On Black Friday, and right before Cyber Monday—the biggest shopping days of the year—Ed and Ron thought it would be fun to discuss the interesting, funny, and thought-provoking book by Joel Waldfogel: Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays.

The author makes the case that the deadweight loss to the economy from gift giving, in 2007, totaled $12 billion, out of approximately $66.5 Billion spent (about 12%). Citizens Against Government Waste would classify Christmas as a wasteful government program.

Gift giving severs link between buying decision and item’s value to its user—the transaction actually destroys value. To add insult to injury, we are obliged to pretend to be grateful!

His complaint is not the level of spending or the consumption, but the waste.

We discussed the four ways you can spend money in the economy:

 

Former Congressman Dick Armey pointed out how difficult spending is in Category II (Gift), let alone Category IV (Government):

Every year, I worry and fret select the right birthday gift for my wife, Susan. Every year, try as I might, I manage to choose the wrong thing. If I can’t figure the needs and desires of the one person who is closest to me in the world and who I deeply love and care for, how can we expect the government to do a better job?

Three groups spend other people’s money: children, thieves, politicians. All three need parental supervision.

Hierarchy of value of gift giving

  • Aunts & uncles & grandparents = 75%

  • Parents = 97%

  • Friends =91%

  • Siblings =99%

  • Significant others = 102%

Further, we spend approximately 2.8 billion hours shopping in December. To put that number in context, the old USSR—before it imploded—spent 35 billion hours annually standing in line for everyday products and services.

Infographic from Deloitte’s 2018 annual holiday survey

Economist Ian Ayres said this about Waldfogel’s book:

Joel Waldfogel is one of the smartest and funniest economists on the planet. I think of him every time I start to unwrap a present. Buy Scroogenomics for your friends and family. It makes the perfect Christmas gift.

Episode #318 - Fourth interview with Father Robert Sirico

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Ron and Ed were thrilled to have one of their favorite guests back on the show, Fr. Robert Sirico of The Acton Institute. He along with Rabbi Lapin inspired the name of our show. Among the topics we discussed were an update on the situation in Hong Kong especially Jimmy Lai, The Economy of Francesco, and the new papal encyclical Fratelli Tutti.

A Bit More About Fr. Sirico
Rev. Robert A. Sirico is the president and co-founder of the Acton Institute and the pastor of Sacred Heart of Jesus Parish, both in Grand Rapids, MI. A regular writer and commentator on religious, political, economic, and social issues, Rev. Sirico's contributions have been carried by the New York Times, the Wall Street Journal, Forbes, the Washington Times, CNN, ABC, CBS, NPR, and the BBC, among others. In his recent book Defending the Free Market: The Moral Case for a Free Economy, Rev. Sirico shows how a free economy is not only the best way to meet society's material needs but also the surest protection of human dignity against government encroachment.

Segment One: Ed’s Questions
Here's some good news, Father Sirico is ready to join us. Let me see if I can get him here and jump right in. Well welcome! We are live and on the air; we started without you father.

Fr. Robert Sirico 
They never do that at Mass. 

Ed Kless 
That's true. No matter what you go on, because three weeks ago, our my pianist didn't show up. And I had to do acapella, Father, as the cantor. 

Fr. Robert Sirico 
That was fun. I've done that on my own. 

Ed Kless 

  • It's great to be with you. For those of you who are joining us, Father Sirico has been on three-and-a-half times, because one time he was on with Rabbi Lapin [Episode #226], and you should know Father, we told him that he was now one up on you and he was very happy about that. 

  • If you want to hear father's bio, we'll print it in the show notes. But let's get right to the topics at hand. Ron and I are both following the story of Jimmy Lai in Hong Kong with much interest, and I know you happen to be personal friends with him as well. I know you interviewed him recently when you had an Acton Institute event. What's the latest Father, what's going on?

  • Absolutely. He’s a hero of mine, and Ron's as well. And we have Peter Robinson coming on in a couple of weeks [December 11th]. And Ron and I were both moved by Peter Robinson's interview with him as well. At the end of the interview he asks him, “Why don't you just leave, Jimmy? Why don't you just leave?”

  • Yes. And his family seems to have rallied around him as well and says we're with you. It's a very, very moving story. 

  • Well, I've only got about 90 seconds or so left with you in in this segment, and in my next segment I want to talk more about the papal encyclical, but one of the things in the interview that you did with Acton Institute, you talked about how the pope refused an audience with the cardinal from China? I had not heard that.

  • That's astounding. It is very sad. And as I said, we'll get back and talk a little bit about Fratelli Tutti – TL;DR in the next segment but unfortunately we're against our first commercial break.

Segment Two: Ron’s Questions

  • Welcome back, everybody. We're honored to be here for the fourth time with Father Robert Sirico. Father, I want to get back to Jimmy Lai with you, but before that, how have you been holding up under COVID? I know you've got your church and you run a school too, right? How's that been going?

  • Excellent. Well, you soon will have a vaccine, hopefully. 

  • Yes, it is a triumph of free markets, isn't it?

  • I'm here in California, Father, so you could imagine.

  • We can't have Thanksgiving, without a mask and we're not supposed to sing, it's just crazy, really is. I heard you the Acton Line podcast several times. And by the way, great podcast, I'm really enjoying it. I heard you talk about the school. And I'd never heard you tell that story before. But you really grew that school, didn't you?

  • That's incredible. What grades?

  • And Father, back to Jimmy Lai, in the last two minutes that I have in this segment with you. What should we do, but what can we do, about the situation other than perhaps offering Hong Kong residents citizenship [in the USA] like Great Britain and Australia?

  • I would love to see that. I just don't know if we have the political will to stand up to China. I mean, our companies are caving under their pressure, the NBA, Disney, the movies, we just don't seem to do anything.

  • Yes, I couldn't agree more. Well, Father, this has been great. We're up against our next break.

Segment Three: Ed’s Questions

  • We are back for the fourth time with our friend, Father Robert Sirico, from the Acton Institute. And Father, I want to talk to you about the papal encyclical Fratelli Tutti – TL;DR. But first, I have a question for you about last week's Gospel. I hope that if you feel your ears burning on Saturday, about five o'clock, it's because I'm thinking of you when I'm hearing a Gospel: “I wonder what Father's Sirico would think of this one,” because I know you are writing a book on the Parables. And last week, there was the Parable of the of the talents, one of the most well-known and beloved stories. I love this time of year just before Lent, especially with Matthew's Gospel, we get we get a run of them. And so this is the line that struck me: Should you not then not have put my money in the bank so that it could have gotten back with interest on my return? And what came into my mind was, there were banks? I thought banking as an institution came later? I’m sure the word “bank” wasn’t around?

  • I thought that was interesting. I guess it wouldn't have the same ring if he said, “Could you not have put my money with the loan sharks to earn interest?”

  • The encyclical issued by Pope Francis in early October [Fratelli Tutti – TL;DR]. And as a lay person who has slogged their way through it. And it was a slog. It was all over the place. And quite frankly, I'm used to a language in encyclicals that, even if I don't agree with it, is inspiring, is helpful. This just seemed to be a mishmash of like terms that the Holy Father just kind of threw out at us, with no real cohesiveness about it. Did I miss something?

  • Along those lines, it’s interesting that you bring that up. And by the way, I thought throughout reading the whole thing, I was saying “hashtag straw man, hashtag straw man.” We had Gary Hamel on recently who's written a book called Humanocracy [Episode #313], which is about getting rid of bureaucracy in business institutions and replacing it with humans. The institutions should be as human as the people who are in them, is his argument.

  • I mentioned Sage is the company that I work for, and the coming together that we have seen as a community, and I've been a 17-year remote employee with this organization. So I've never really been fully kicked in. I've always worked from home. But the coming together of the community that has happened inside this organization has been phenomenal. And I hear that over and over and over again from other people in business that they were missing the fact that their company was not a replacement for the family, but another institution that they could rely on, and I think that most people miss that about the places where they work. And in a way, I'm glad we've had the opportunity to experience that.

  • Along those lines on the institution, one of the things that struck me, and I hope I have this wrong, and I need to reread Fratelli Tutti again, but it almost struck me that Pope Francis has almost a lack of faith in the Church as an institution. Now he doesn't call for social programs, I get that. But he doesn't seem to say what he does want? He just doesn't seem to position that the Church could be the answer here.

  • I agree. I, I may have mentioned this to you in a previous conversation we have had, but I have a friend who has passed away, a libertarian, who wrote this fantastic song, a country song. It was called “Let's get Caesar involved.” And what he did was he took a couple of the Parables and it tells them in a country music way. And the response from Jesus in this this song is, well, sorry, we’ve got to get Caesar involved, and one of them is the Good Samaritan. It's hysterical because his point is good. The Good Samaritan didn't say, “Oh, there's a social program available for you.”

  • Anyway, we're up against our last break, Father. I could, as you well know, have talked your ear off at some events here in Dallas, and we missed you this year. Hopefully we'll be able to get back to normal on this.

Segment Four: Ron’s Questions

  • Welcome back, everybody. We're here with Father Sirico. Father, we're coming off a political election that looks like it's been settled. I guess my question is, do you think character is destiny? We used to have a certain standard for politicians about character and morality. And then of course, we’ve got the current person that's in there, do you think character will return? Or will it just be this pragmatic, transactional relationship with our politicians, as long as they do a few things that I like, or several things that I like, I don't care about their character. Where's character fit in, in all this?

  • I can't even imagine that.

  • Do you think we'll survive it? Adam Smith, didn't he say “there's a lot of ruin in a nation?” Do you think we will survive?

  • Michael Novak, who I absolutely loved, though I never got to meet him or even talk to him. But I know you knew him, he was just a wonderful thinker. He said something in one of his books that envy destroys civilizations throughout history. And when you think about all the talk about inequality, Piketty, and all these other people, they rarely mention poverty, but they talk a lot about inequality. Is inequality just disguised envy?

  • It's one of the seven deadly sins, right?

  • Father, I'd be remiss if I didn't ask you how your brother is doing, Tony. Has he been in anything we might have seen? I know he was in the Sopranos.

  • Beautiful. Last time we had you on you. You said here that you were working on a book on the parables. But you also had mentioned two other books you were working on, one hundred and one questions, and then your memoir.

  • Excellent. Well, Father, we'll have you back on. Thank you so much for appearing on The Soul of Enterprise. It’s always such a privilege to be able to talk to you.


Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

This week was Bonus episode 318 - “C-19-alifornia”. Here are some of the links we discussed:

Episode #317: Subscription Economy Update

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After the plethora of interviews these past few months, Ron and Ed return to their examination of the subscription economy. They looked at new subscription offerings they have collected including some in professional firms as well as the overall state of subscriptions in the face of C-19.

Subscription Economy Update

  • Ron’s sees his recent webinar audience moving beyond the “how to” questions about the subscription economy. These ideas are resonating.

  • Ed ran a CPE webinar called “Sell your brain, not your time” and the questions were more about the implementation of subscription pricing as opposed to a defensive posturing.

  • People are starting to go beyond the three choices for subscription. It starts to get confusing around 5 and you’ve lost them at 6 or 7. There is a propensity towards moving towards 3 subscription prices but with a toggle like annual vs monthly.

  • You can’t have a $50,000 a year customer and a $500 a year customer at the same time. This is obvious with subscription pricing but, honestly, you shouldn’t do it anyway!

  • A lot of the questions implicitly imply that their firms don’t have anything of value in which to compete. But how do they compete now? If you have customers now, you obviously have a value proposition. You just need to tease out the value proposition.

  • Jody Grunden, Summit CPA, removed growth constraints with a subscription model. He grew the firm from $600,000 in revenue in 2004 to $7,000,000 today! https://www.thesoulofenterprise.com/tsoe/subscription-pricing-summit-cpa

  • Can you have value pricing 1.0 (pricing the customer) and value pricing 2.0 (pricing the relationship) in the same firm? Ron’s long term answer is no. So is Ed’s. Maybe you can have one-offs, but the ultimate goal is to have a relationship with the customer, not a transactional relationship.

  • Areas of specialization in larger firms provide an opportunity for various subscription offerings. The Apple One service is a great model for professional firms to leverage.

  • Recidivist guest Rabbi Daniel Lapin has a subscription pricing option now at WeHappyWarriors.com

  • Tien Tzuo has been talking about freemium vs free trial in his newsletter: When it comes to freemium vs trial there is a clear winner. It’s a free trial. Freemium users have not bought into the value of your services.

  • Something that feels obvious but needs to be said: Psychology and behavioral economics play a big role in subscription pricing. 

  • A question to ponder: Would you subscribe to a pharmaceutical company? Yes, and we may start to see experiments in this area.

  • Americans tend to underestimate their subscription spend by 1/3rd according to a new study by The Atlantic

  • Tien Tzuo has also been writing about how “every day is prime day”. Here is the full post: https://medium.com/@tientzuo/every-day-is-prime-day-2322a6867d0

  • Unbundling of the automobile: https://medium.com/@tientzuo/the-unbundling-of-the-automobile-8a43bad390d3


Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

This week was Bonus episode 317 - “Non-POTUS election results”. Here are some of the links we discussed:

Episode #316: Interview with Jay Nordlinger

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As expected, the timing from Ron and Ed could not be better for this post-election episode. Thank you to Jay for being a wonderful guest!

A Bit More About Jay Nordlinger:
Jay Nordlinger is a senior editor of National Review and a book fellow of the National Review Institute. He writes about a variety of subjects, including politics, foreign affairs, and the arts. He is music critic for The New Criterion. Since 2002, he has hosted a series of public interviews at the Salzburg Festival. For the National Review website, he writes a column called “Impromptus.” With Mona Charen, he hosts the Need to Know podcast, and he also hosts a podcast called “Q&A.” In 2011, he filmed The Human Parade, with Jay Nordlinger, a TV series bringing hour-long interviews with various personalities. His latest book is Children of Monsters: An Inquiry into the Sons and Daughters of Dictators. He is also the author of Peace, They Say, a history of the Nobel Peace Prize. Some 100 pieces are gathered in Here, There & Everywhere: Collected Writings of Jay Nordlinger. A native Michigander, Nordlinger lives in New York.

Ed’s Questions: Segment One

  • Ron, I remember sending you an email and saying who would you like to have on the Friday after Election day and you said Jay Nordlinger. And I said, well go after him. And you got it. And here he is. Welcome, Jay.

  • Jay Nordlinger : I'm so easy, guys. If only you’d have known. I'm delighted and flattered to be here with you. And I love that Reagan quote. It reminds me, I believe, Warren Brookes, the great Warren Brookes, wrote a book called The Economy in Mind, right? It was wonderful to hear Reagan's voice.

  • Ed Kless: Believe it or not, in order to make that quote work in the segment with the music, I actually had to edit out his name because Reagan actually does mention it in the speech. Let's do the quick bio, so we can dispense with that and get right to it. Jay Nordlinger is a senior editor and a fellow at the National Review Institute. He writes about a variety of subjects including politics, foreign affairs, and the arts. He is the music critic for the New Criterion, and for National Review’s he writes a column called impromptus, and hosts a podcast called Need to Know with Mona Charan, and he also hosts a podcast called Q&A. His latest book, which Ron is going to talk to him about, is Children of Monsters: An Inquiry into the Sons and Daughters of Dictators. Officially welcome to The Soul of Enterprise Jay Nordlinger. What the hell happened this week? What's going on?

  • They will probably write opera about this at some point in the future, won't they?

  • Well, I'm thinking of yet another retelling of Romeo and Juliet with the Dems and the Repubs or whatever. Not many people know this, but the reason for Romeo not making the rendezvous with the person passing the message on to Juliet was because he got stuck in a quarantine. So it's perfect.

  • I was listening to John McWhorter’s podcast, Lexicon Valley. I don't know if you get a chance to listen to that? And he did a whole show on the word “why.” And one of the examples that he brings up is the “wherefore art thou, Romeo?” She he was not asking where he was. He was right there. It meant, Why are you a Montague? That was really the rationale behind it. Anyway, let's get back to this crazy election story. Is it best to describe you as an anti-Trumper? I know you're not a never-Trumper but sort of anti-Trump, but you really felt the office was far above him, he really should not have ever even been ascended to the presidency?

  • Yeah, it been interesting. I've been unfriended on Facebook from a number of people already this week because I'm a Libertarian; I should say staunch, dyed-in-the-wool. I was at the Joe Jorgensen campaign event here in Dallas to celebrate the end of this nonsense, which we never got to, and what people are saying is, “Well, you Libertarians, you stole this election from us.” I'm like, “Oh, no, it couldn't have been that Donald Trump couldn't have done like maybe one thing that was like a regular human being that would have probably turned the election completely over to him.” If he had just came out and said, “You know what, let's put some masks on. Let's just protect ourselves.”

  • I have heard it said that if Nancy Pelosi and Chuck Schumer had decided to just bend down and kiss the ring, maybe in the first year, he would have given them anything they wanted because he's not really ideological.

  • In a recent column you brought up the fact that one of the things that really set you off about Trump was his calling of Joe Biden in a tweet with the dictator from North Korea, Kim Jong-Un, and Trump piled on, on the side of Kim Jong-Un [Kim Jong-Un had called Joe Biden a fool of low IQ].

  • Yeah, pretty easy one. I think there's certainly starting to be some cracks in the veneer. I read an article earlier today that Marco Rubio said something to the effect of counting votes is not fraud.

  • Yeah, I had I posted exactly that on Facebook about a week before the election. Countdown to Republicans gaining fiscal responsibility once again, it begins. This has been fantastic.  

Ron’s Questions: Segment Two

  • Welcome back, everybody. We're here with Jay Nordlinger, the senior editor at National Review. Jay, it's not every day you get to talk to one of your favorite writers, but I have to ask you: in your book, Here, There & Everywhere: Collected Writings of Jay Nordlinger, which was published in 2007, you cite Natan Sharansky. And he talks about totalitarian, or what he calls “fear societies.” And he thinks there's three groups in those societies: 1) true believers; 2) dissidents who are in open opposition; and then 3) the double thinkers that talk one way and act another, which he thinks is a large and vital group. We were just talking about North Korea. Do you think there are enough of the third type, the double thinkers, in North Korea to cause change?

  • Do you think it will peaceful?

  • I know you've had the opportunity to meet some of the defectors [from North Korea], and actually interview them. I've read a lot of the books by the defectors and have watched their TED Talks.

  • Yeah, he's the one that met with George W. Bush in the White House.

  • You also cited in your book, Andrei Sakharov, who said he didn't want to talk about human rights. He wanted to talk about specific cases. And, Jay, I’ve got to ask you, what's your take on Hong Kong, because we keep an eye on Jimmy Lai, and I think he's another one of these incredible men that just amazes me. How do you see Hong Kong unfolding?

  • I know you probably know Peter Robinson. He constantly interviews Jimmy Lai on his show, and he keeps asking him, “Why don't you just leave? You’ve got billions of dollars.” Do you see people leaving Hong Kong because the UK is granting them citizenship, per Boris Johnson, and Australia, too?

  • I know you admire Ronald Reagan, as do I. In fact, I shouldn't say this, Jay, but I was named after him. My mom actually loved him as an actor, if you can believe that. All I can think of is the scene in Airplane when the woman who eats the bad fish or whatever, and says, “I haven't felt this awful since I saw that Ronald Reagan movie.”

  • He had this simple way, but not simplistic. Like I love his idea on the Cold War: We win, they lose. You know, he didn't like Détente and said, “Isn't that what the farmer has with his turkey until Thanksgiving?”  Did you ever get a chance to meet Reagan?

  • Well, I never got the chance to meet William F. Buckley. I was at an NRI conference, it was after Clinton won. And so they were trying to calm everybody down. I don't think he made it to that one because he had some type of conflict. Got any good Buckley stories?

  • That one line he had about Oprah, the woman who's alternatively skinny and fat.

  • So I have to ask you this for my dad, Jay, because he's big golfer, and you write about golf a lot. And you quoted a columnist from the Washington Post that wrote this terrible article about Augusta. And she called it the most famous tree house in America—it’s Spanky and Our Gang for millionaires. Have you ever played Augusta?

  • Have you gone to a Masters there?

  • No, but my dad's gone to a few masters [actually, just one]. That's his big dream in life. What did you think of Jack Nicklaus coming out for Trump in the last 30 seconds that we have?

  • Like you say, calling balls and strikes. You know, how do you Ump Trump? It's really interesting.

Ed’s Questions: Segment Three

  • And we are back with Jay Nordlinger from National Review. Jay, you quite publicly left the republican party when Donald Trump got the nomination in 2016. And I guess we're thinking it's a 95% chance that Biden is going to win. Donald Trump would really have to pull not only an inside straight but an inside royal flush, in order to pull this out. I’m wondering what you think the future of the Republican Party looks like sans Trump? And is that something that you envision you might be a part of?

  • And now we measure stuff in the trillions, we've moved on from the billions to the trillions. And there's a great cartoonist, and he talks about how for most people $900 billion is more than a trillion, in their head. I honestly do think that now that we're in this trillions. We spent $2 trillion, what's the big deal?

  • I want to turn your attention to journalism. I saw a speech that you made where you were talking about one of your books. And in it, you talked about yourself as a journalist. And one of the things I want to ask you about journalism is what do you think the state of journalism is today? True journalism?

  • We had author Warren Berger on the show [Episode #302], not the Supreme Court Justice, different guy, with an E. He’s written a wonderful book that Ron and I both love called A More Beautiful Question, referencing the E. Cummings poem. He thinks that journalists just have gotten lousy at asking questions. They just don't know how to ask questions anymore. As silly as that sounds, they just like to talk about themselves.

  • Well, it’s totally okay for you to be the hero of that story. I asked you the question.

  • I love that. That's fantastic. I heard you use that in the speech that I was watching to prep for this. It's a great, great quote. The example that I was thinking as you were talking is the Bob Woodward situation with his book coming out, where he revealed that Trump thought that the virus was worse than he led on. Didn't Woodward have a responsibility, if thousands of people were dying, to come forth with it instead of waiting for your dang book to come out?

  • It's all just a blur. The whole Trump administration is. Ron and I were joking, what's the Presidential Library going to look like? His twitter feed?

  • Well, thanks. We're honored by that comment. But we are unfortunately already against our last break.

Ron’s Questions: Fourth Segment

  • Welcome back, everybody. We're here with Jay Nordlinger from from National Review, and Jay there's so many things I want to say about your segment with Ed, but I want to jump to your book, Children of Monsters: An Inquiry into the Sons and Daughters of Dictators that was published in 2015. You focused on 20 dictators, most of whom ruled in the 20th century, except I guess Fidel Castro did make it into the 21st. What motivated you to write that book? Because when I saw it come out I said, “Do I want to read this?” And then something in me said “Yes, I do. This is interesting.”

  • You say something in there that I just think is so profound, you say, “We sometimes grade on a curve.” Franco, and maybe Pinochet, I rather live under them than Stalin, or Mao, or Pol Pot.

  • For sure. Because isn't this the point that Jean Kirkpatrick made in Dictatorships and Double Standards?

  • And Jay, I’ve got to ask about this, even though I know it's probably not true, but it just blew my mind when I read it in your book, that Hitler, we think had no children. But some guy's mother said, “Oh, no. This is my son [by Hitler]. And you have a picture of him in the book.

  • You go through 20 dictators, and you lay out their kids and tell their stories, and the one that's fascinating is Stalin's daughter, because she defected. Thanks to you, I went out and read one of her books. And it was just fascinating.

  • Didn't she say also that she wished her mother had married a carpenter?

  • You write in there, and I found it interesting, too. She said she was a registered Republican and a National Review was her favorite magazine.

  • Did she get hooked up with like Frank Lloyd Wright, and his wife, and live somewhere in Phoenix?

  • It's true, the sins of the Father, right?

  • I have to ask you, Jay, because we've been talking about this, too. What's going on with China and the NBA over there, and even Disney, giving credits, and even changing their movies, self-censoring. I think back 20 or 30 or maybe 40 years and ask, Would the NBA or Disney had done business with South Africa during apartheid?

  • You know, those of us who believe in free markets really got this wrong. We thought that if we traded with them and opened up, let them into the WTO, they would become more like us.

  • What are they supposed to do in the meantime? It's just an intractable problem, like Hong Kong, in some ways, isn't it?

  • Jay Nordlinger: Ron, do you think that do they have proper markets? Or is it more kind of mercantilism?

  • Ron Baker: You know, George Gilder, who I love and has been a mentor for years, came on the show [Episode #257] and said they're [China] more capitalist than the United States. This was during the Huawei kerfuffle. And that line from George killed me because he's been anti-communist his whole life. His conservative credentials are as good as yours or anybody else’s.

  • Very true. Well, Jay, unfortunately, we're at the end of our time. And I just want to say thank you so much for coming on. This has been a great honor to be able to chat with you.

  • Thank you very much. We'd love to have you back. Thank you so much.


Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

This week was Bonus episode 316 - “Rank Punditry”. Here are some of the links we discussed:

Episode #315: Second interview with Dr Jules Goddard

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Ron and Ed welcome back Dr. Jules Goddard, author of Uncommon Sense, Common Nonsense: Why some organizations consistently outperform others (co-authored with Tony Eccles). His brilliant observation that "Strategy is the rare and precious skill of staying one step ahead of the need to be efficient," continues to inspire us. We will continue to unpack this statement and more.

A Bit More About Dr. Goddard:
Dr. Jules Goddard earned his MA at Oxford, an MBA from Wharton, and his PhD from London Business School. He's a Guest Lecturer at INSEA and formerly Gresham Professor of Commerce and Mercers School Memorial Professor at The City University. He is currently Research Associate of the Management Lab MLab at London Business School. He's a teacher, writer and consultant in the areas of business creativity, strategic thinking, leadership and corporate transformation.

Ron’s Questions: Segment One

  • Jules, you were on back in January of 2015 (Episode #27). It seems like eons ago. How have you and yours been holding up under COVID this year?

  • That's excellent. How about teaching, you said you were still teaching, would that be remote or live?

  • That's interesting. You know, you wrote in Uncommon Sense, Common nonsense: Why Some Organizations Consistently Outperform Others, your book from 2013, which Ed and I just absolutely loved. You said in that book, “We believe that most enterprises today are insufficiently entrepreneurial.” Do you think COVID might be changing that?

  • I love that point, and it anticipates my next question. And I know this is incredibly subjective, and very anecdotal. But have you seen innovations, or new ventures, or just new ways of doing things? Like maybe knocking out some of this bureaucracy or these old management ideas that have impressed you?

  • Well, we're Austrian economists, Jules, we have to be optimist by definition. I think back to the Great Depression, and just the flowering of innovation that took place in that horrific decade was kind of amazing when you go back and look at it.

  • I'm sure you've read Matt Ridley's book, How Innovation Works. That was just a great tour of how innovation works. And what a surprise it always is, and we can't plan it. It's an act of creativity.

  • Jules Goddard: Have you had Matt on your show yet?

  • Ron Baker : No. I would love to get Matt on the show. We've had Dan Ariely on the show, too. And I remember, I think Tim's got some debates with Dan on YouTube, he challenges on certain things, and I just found that really refreshing as well. Brilliant guy. You wrote something in the book, too, that I just think is profound. You said “Businesses decline as the production of new insights dries up. A theory of business, therefore cannot be a substitute for insight.”

  • I think you quoted Russell Ackoff, who said, “The future is best dealt with using assumptions rather than forecasts.”

  • Great point, I mean, could this be why, despite all this move to remote work—because we have to—but if you listen to outfits like Apple and Google, they want people in the office to bang together and talk and meet in the hallway, because they think that's where innovation comes from. They're not big fans of remote work.

  • We've been saying since this COVID crisis, with people predicting the decline of cities, and we've been trying to make the point for the last few months on this show that says are you kidding, cities outlast governments.

Ed’s Questions: Segment Two

  • Our guest today on The Soul of Enterprise is Dr. Jules Goddard from London Business School. And Jules, I wanted to ask you a little bit about a session that I saw you deliver, I guess it was remotely since it was during COVID, a xmonks. The title of your talk was about the 4D model of Leadership. And you talk about destiny, drama, deliberation, and development. Can you expand on that if you would?

  • So true. In the book, The Coddling of the American Mind, one of the things that the authors point out in that book is that in a lot of ways we're doing a lot of harm to society, to ourselves, by coddling people, and I think we've seen a shift in leadership from command and control. But then over to this, what I'll call the white knight leader, the one who comes in and saves everyone. And that's, I think, just as damaging. Because it's just you fixing the problem for people, they're not able to fix it for themselves and be able to get out of the situation.

  • You know, during World War II, they didn't say you must go into the tubes, right? That was not a mandate. What I think is so interesting is that we have folks telling us that what came out of the College in London, that 2 million were going to die because of this model. And I see so much of this happening, this is this what's happening in governments, but I equate it to businesses as well. They're obsessed with this model. Ron says, I love this quote, he says, “All models are wrong, some are helpful.”

  • Wow. One of the things I talk to my mentor an awful lot about is this concept of leadership, where what we're concerned with is regulating the level of anxiety in ourselves and also in society. Anxiety and creativity are always inversely proportional to each other, right? The more anxious you are, the less creative you can be. And we can't turn on creativity, right? We have to do is as how do we lower our anxiety level? What's happened with leaders, not just in business but also in government, is they're feeding this anxiety. They're stepping up the level of anxiety like a transformer does with electricity. And I just don't think it's healthy for us as individuals nor for society. I mean, our response has been positively medieval to this COVID situation.

  • Yes, that's a great question. He [Rockefeller] didn't have access to antibiotics either. So, you know, we're talking about a vaccine for COVID being tested in less than a year since the disease has been identified. That is absolutely amazing.

  • Yeah, I think it is going to be incredible. As Ron said the innovation that came out of the Great Depression, I think we're going to find is the innovation that comes out especially in medical and healthcare, not dealing with vaccines per se, but out of healthcare, because of the research that was around it, we're not going to see it for another two, three, or five years, but it's going to be intense.

Ron’s Questions: Segment Three

  • Welcome back, everybody. We're back with Dr. Jules Goddard and Jules I wanted to ask you because I also just love this line. I know I'm throwing lines at you from your book from ten years ago. You say, “Beliefs and assumptions, rather than goals or values, separate winners from losers. Markets are battles between belief systems.” I don't know who said this, it's usually attributed to some Nazi, “That whenever I hear the word culture, I reach for my revolver.” But, how does one work on a culture? I mean, this seems to be the current buzzword, and culture is the sum of beliefs, assumptions, how we do things, our worldview? Is it really possible to change? I know it's possible to change a culture but that doesn't give me insight on how to do it?

  • There's a saying here that politics is downstream of culture. That it's culture, the mass media, Hollywood, that type of thing, but I think it does work in some ways, because you're right, I think a president, somebody like Ronald Reagan, can definitely affect the culture.

  • I think it's one of his best speeches.

  • I would agree. I'm glad you say that. I'm always interested to hear what outsiders think, peering into America, or listening to immigrants who seem to have a real deep appreciation because they know the other side. Jules, I hate to do this, because this is such a lofty conversation. But I’ve got to ask you about this because it's one of Ed and my pet peeves. We just despise the annual performance review process. We think it's Kabuki theater on steroids; it's the most ridiculous thing we subject ourselves to in these organizations. And you even pointed out in your book that the average European company spends 25,000 person days on planning and performance per 1$ billion of turnover. We try to keep a list of all the companies that have moved away from this: Accenture, Deloitte, Medtronic, Microsoft, Netflix. It's now estimated over 10% of Fortune 500 don’t do them or they've gotten rid of them. Do you see that trend in your work?

  • Ed likes to equate it to the self-criticism sessions that you had in the old Soviet Union and at present in North Korea. You probably saw it, but there's a wonderful episode of The Office, the British version, the actual funny one, not the one that we ripped off from you. It's called Appraisal Day. And every time we show that to HR people it just hysterical laughter. One girl actually said, “I peed my pants I laughed so hard.” Yes, we say that laughter is confession. We know this is a ridiculous process. And we still keep it around. It amazes me. So I just wanted to get your take on that.

  • And it wasn't a year after you did the deed. As we said before we went live, we did have Gary Hamel on two weeks ago [Episode #313]. And of course we did talk to him about Humanocracy, a book that Ed and I just both love. What your take on it?

  • I just the love the idea. It's even in the subtitle, “Creating Organizations as Amazing as the People Inside Them.” It's such a great insight.

  • He's right. When you look at bureaucracy in these organizations, it's just takes over, it is insidious. And like he says, it grows faster than the organization is growing. Well, Jules, this has been great. Ed is going to take you home, but I just wanted to say thank you so much for coming back on the show. We will definitely have you back on, if you're willing. We love talking with you. This has just been so enriching. So thank you.

Ed’s Questions: Fourth Segment

  • It is our joy to present to our listening audience our second conversation with Dr. Jules Goddard. We so enjoy our conversations and time with him is flying by, but I want to jump right back into it Jules. In the presentation I saw you give you reference a quote by Tim Ambler from 2003. This is his quote: “On average, boards devote nine times more attention to spending and counting cash flow, then to wondering where it comes from, and how it should be increased.” I can't get through the quote without laughing because of the absurdity of it. But yet that's the case, isn't it?

  • Yes, there was another moment in that presentation where you say zero out of 25,000 companies could point to cost cutting as the reason for driving profitability. Zero of 25,000!

  • At best, he said it was it was two of them. One of the things that Ron and I have been talking a lot about on our show the last couple of months, even over a year now, is subscription pricing. We think that is such a huge innovation because it does exactly what you just talked about. It forces the company to come up with new and better products every single year. Take Netflix, for example, they don't increase the price when the new season of Ozark drops. They constantly have to refresh their product in order to keep the keep the customer happy. So just some of your initial thoughts on that type of thinking.

  • I appreciate that. Because while certainly it's a noble thing to have a local source, the great thing is that the extra 20% can still be kiwi fruit from the global market. And it is amazing to me, and I try to point this out to my kids when we walk into a Target store, we should be amazed every single time. The fact that we were short on toilet paper when COVID first happened, alright, that's still a minor inconvenience compared to all of the things that we still have. And it's the marketplace that got us there.

  • With perhaps with different belief systems, different religions, all of these people somehow figured out a way to cooperate with one another.

  • Yes, well, let's hope that we can begin to get back to this kind of thinking and maybe COVID, as you said earlier, will spur us on to new and better things within our society. What are you working on? We have about a minute left? What are you working on?

  • I'm going to make a note of that and expect the email. Thank you so much, Jules. Ron, what do we have coming up next week?

  • Ron Baker : Ed, I'm so excited. We have one of my favorite writers from National Review, Jay Nordlinger who wrote a great book called Children of Monsters, which I can't wait to talk to him about so I'm really looking forward to it.


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