If we’re all oarsmen on a ship, who’s manning the sails?
The golden rule, both in economics and ethics, aims to find the balance with what we have today and we aim to have tomorrow. Knowing either can be very subjective; it’s defined relative to where you are in the world. It’s possible that boundaries exist for this very reason. To allow a society of individually capable members to construct a vision that balances the present and the future. To that effect, are boundaries actually working?
One of Drucker’s key qualitative metrics of success for an organization is each member having a general idea what the top three goals of the organization are. From the janitor to the middle manager to the CEO, being able to state 1, 2 and 3 without much effort. It could be the mission statement, but most often its much simpler; make money for stakeholders, increase speed of delivery, improve quality of care, educate X% of the population, and so on. That’s cohesiveness. The sails are set and the ship is moving.
The golden rule goes well beyond this in trying to optimize the decision making behind the three objectives. “Why?” do we set these goals in the first place and “How?” did we come to agree upon them. Put simply,
…if a society could choose a savings rate that maximized its own consumption, it would save nothing and consume everything. But that would leave future generations in a lurch as no capital would have been built to enhance future output and consumption. If, conversely, the current generation saved so much that future generations would in fact be better off than the current, then we are also violating “Golden Rule” as we are not doing unto ourselves what we have done for posterity. Thus, the “Golden Rule” condition is that the collectively-chosen or policy-imposed savings propensity is such that future generations can enjoy the same level of consumption per capita as the initial one.
When I studied economics, it was mathematically proven that in our current state, one generation (approx. a 25-year cohort) would have to maximize savings and reduce consumption to such an extreme point in order to create the foundation for an optimum savings rate for future generations. Implying our savings/consumption ratio in the past generations has been highly skewed to the lower end. Not much of a surprise.
I wonder now if we’re creating the psycho-social environment for that “sacrificial” generation to emerge. They certainly won’t view themselves this way and taking a step back and doing less will seem like the right thing to do. The trends towards reduced consumption didn’t just start with the recession. They’ve been building for a while, along with ethnic and gender equality, at least in some parts of the world. The global power struggle is still ongoing, but there’s definitely a trend towards the “do unto others as you would have them do unto you” philosophy. It’s certainly been repeated enough. Time to practice it. Daily.
