Franchise Bankers are on the Autobahn to Perdition

January 10, 2009


As I promised, more thought-provoking ideas from Saul‘s, The Doubter’s Companion.

BANKERS Pillars of society who are going to hell if there is a God and He has been accurately quoted.

All three Western religions have always forbidden the collection of interest on loans. When Samuel Johnson defined the banker in the eighteenth century his status was clear: “One that trafficks in money.” Their venal sin of usury [excessive interest] continues to sit high on lists of scriptural wrongdoing, which raise the question of why bankers – the money-market sort excluded – tend to be frequent church goers. The respect in which they have increasingly been held over the last two centuries has paralleled the growth of economics based on long-term debt, which spread into every corner of society, from governments and corporations to the poor. The more money owed, the more the lender is respected, so long as the borrower intends to pay it back.

But what effect does this have on the moral position of bank employees? Few modern bankers are owners. Except through their salaries they do not profit from interest payments. Are they or are they not among the damned? Perhaps they should themselves be seen as victims of usury, having little choice but to lend their lives to the usurious process in order to feed their families. Yet for the borrower, these employees are the human face of usury.

The clearest situation for bankers would be if God didn’t exist. They would then be morally home-free and could go to church in a more relaxed frame of mind. See: DEBT.

Margaret Atwood observes lately that Christianity is based primarily on debt: Jesus came and redeemed man, opened the gates of heaven and paid off all past and future debt. The Aramaic words for debt and sin are the same. In the Lord’s Prayer, believers are directed to forgive trespasses (debts, offences) and it appears She does only as much as you forgive others their debts.

  • One of my lawn sprinkler customers retired after 35 years with the Royal Bank of Canada in 2009. She looks 10 years younger in 4 months and attributes it not having to lie to her neighbours anymore about what the bank did to them.

A recurring theme is that debt is a form of death, is life-taking. You make your own hell by losing your soul now, let alone the everlasting damnation bit (perdition). autobahn

The Road to Perdition, 2002 movie with Tom Hanks, Paul Newman and Jude Law.


On Unsustainable levels of Debt: another perspective

January 7, 2009

johnralstonsaul6There are many, many types of debt.

  • Financial debt is really only a bit player in the rich theatre of human history. A necessary evil; a loutish relative sent to help us develop our patience and forbearance.

The recent obsession with financial debt overshadows and distorts culturally much more significant types of debt such as: ethical, debt to yourself, moral, educational, spiritual.

  • Financial debt is a simple matter that is simply a child of contract law.
  • This type carries NO moral or ethical weight, whatsoever.

Many franchise contracts carry into them a severe imbalance of economic and information power.

Some contracts are entered into with fraudulent intent.

Fusing imagination with a historical perspective may mean a different understanding of debt obligations. Some or all franchisee debt may prove to be:

  1. repaid $1.00 for $1.00,
  2. re-negotiated (certain % of claim),
  3. unenforceable (a Court will not oblige repayment),
  4. void (a conditions were not present for a valid contract to be formed), or
  5. commercially forgivable (0 to 100%, it makes economic and career sense for the creditor not to pursue the debt).

Dr. John Ralston Saul [Wikipedia, quotes] pursues a number of topics in an extremely lively and interesting way in his book, A Doubter’s Companion: A Dictionary of Aggressive Common Sense, One Review: B+.

  • Dr. Saul is a very accomplished and expansive Canadian author and philosopher. I had the great pleasure of meeting him in December 2008.
  • I told him his writings (along with Galbraith and McLuhan) had ruined my perfectly good Ivey MBA. He seemed pleased.

Unsustainable Levels of Debt is one of Saul’s more delightful entries. By substituting the words “groups of franchisees” for the word “nation, countries or civilization”, you may find it an apt franchising analogy.

I will be returning to The Doubter’s Companion and taking the liberty of free riding on Dr. Saul’s approach and insights.

Selected Excerpt

National debts are treated today as if they were unforgiving gods with the power to control, alter and if necessary destroy a country. This financial trap is usually presented as if it were peculiar to our time, as well as being a profound comment on the profligate [adj 1 shamelessly immoral 2 recklessly extravagant] habits of the population. The reality may be less disturbing.

1. The building up of unsustainable debt loads is a commonplace in history. There are several standard means of resolving he problem: execute the lenders, exile them, default outright or simply renegotiate to achieve partial default and low interest rates.

2. There is no example of  nation become rich by paying its debts.

3. There are dozens of examples of nations becoming rich by defaulting or renegotiating.

This begins formally in the sixth century BC with Solon taking power in debt-crippled Athens. His organization of general default – “the shaking off of the burdens” – set the city-state on its road to democracy and prosperity. The Athens which is still remembered as the central inspiration of WESTERN CIVILIZATION was the direct product of a national default. One way or another most Western countries, including the United States, have done the same thing at some point. Most national defaults lead to sustained periods of prosperity.

4. The non-payment of debts carried no moral weight. The only moral standards recognized in Western society as being relevant to lending are those which identify profit made from loans as a sin. Loans themselves are mere contracts and therefore cannot carry moral value.

5. As all businessman know, contracts are to be respected whenever possible. When not possible, regulations exist to aid default or renegotiation. Businessmen regularly do both and happily walk away…

8. Debts – both public and private – become unsustainable when the borrower’s cash flow no longer handily carries the interest payments. Once a national economy has lost that rate of cash flow, it is unlikely to get it back. The weight of the debt on the economy makes it impossible.

11. Civilizations which become obsessed by sustaining unsustainable debt-loads have forgotten the basic nature of money. Money is not real. It is a conscious agreement on measuring abstract value. Unhealthy societies often become mesmerized by money and treat it as if it were something concrete. The effect is to destroy the currency’s practical value.

13. Does all of this mean that governments should default on their national debt? Not exactly.

What it does mean is that we are imprisoned in a linear and managerial approach which denies reality, to say nothing of experience. Money is first a matter of imagination and second of fixed agreements on the willing suspension of disbelief.

In other words, it is possible to approach the debt problem in quite different ways.

14. There have been changes which limit our actions in comparison to those of Solon or Henry IV, who negotiated his way out of an impossible debt situation in the early seventeenth century and re-established prosperity..[discussion not relevant to franchising but he takes a shot at money market managers]

— [my definitions and emphasis]

A franchisee frequently owes the following entities:

  1. themselves,
  2. relatives (near and far),
  3. employees,
  4. government (federal, state, municipal),
  5. franchisor,
  6. financial institution,
  7. suppliers, and
  8. professionals and others (lawyers, accountants, consultants).

Both the lender and the creditor took a risk in advancing funds, or goods and services on credit. Most of the creditors have much more experience in business than the franchisee.

If, as Saul mentions, that loans are mere contracts and carry no moral weight, why should most franchisees pay themselves last?

Corporatism: Only real Threat to Democracy?

December 22, 2008

World War II was:

a battle between two concepts of civilization – the one based on individualism and democracy, the other on corporatist authoritarianism. Theoretically the democratic individualists won. Yet since 1945 corporatism has advanced with even greater strength and now has a real hold on day-to-day power. Somehow we seem to have lost World War II after all.


John Ralston Saul offers many original insights into what ails modern society.

In his 1994 book called The Doubter’s Companion: A Dictionary of Aggressive Common Sense, Saul defines terms in a way that brings out new ideas. One of those central words is an old but little used one: Corporatism.

Corporatism is the persistent rival school of representative government. In place of the democratic idea of individual citizens who vote, confer legitimacy and participate to the best of their ability, individuals in the corporatist state are reduced to the role of secondary participants. They belong to their professional or expert groups – their corporations – and the state is run by ongoing negotiations between those various interests.

Saul mentions that the origin of corporations are the medieval craft guild which imitated the organization and specialization of the Roman Catholic religious orders. These two experiences produced the original corporatist state, the Republic of Venice.

The ascendancy of the corporatist world view over the individual citizen perspective has be helped by characterizing democracy as inefficient, ineffective, corrupt and subject to whims and emotions. Corporatism, on the other hand, says that it is professional, responsible, delivers prosperity by ever-more specialization and reliance on experts.

Saul draws corporatism into the 20th century:

These claims resurfaced in the 1920s in Italy. And if Mussolini’s cumbersome corporatist structures didn’t function, corporatism itself did. In both Italy and Germany the relationships which were able to work quite happily under a dictatorship were those between expert groups. Even the academic community worked away happily on the theoretical structures of the new anti-parliamentary national contract.

Since 1945 we have downplayed the corporatist aspect of both the Nazis and Fascists. Instead we have demonized those two regimes into simple manifestations of evil.

Saul ends defining corporatism with his observation:

Corporatism has been for some time the only real threat to democracy. That explains why our corporatist elites never discuss it.

[above] 1939, Save 5 marks a week and you will drive your own car.

Franchisees: master storytellers caught in a literate machine

December 11, 2008

chaplinmodernFranchisees have primarily retained their geographically-specific, oral culture. As a species we have survived because of our ability to listen to and tell stories (a narrative), appropriate to a specific narrowly-defined physical landscape.

  • We’ve never needed to be that smart at rational decision making, especially if time and complexity are added.
  • We’ve evolved to look for dangers in certain places only.

The most vibrant research is coming out of the fields of behavioral finance, social psychology, law and economics, neuroeconomics, etc.

  • Basically, we walk around scratching ourselves with a belief that our rational brain (neocortex) is in charge, while in fact, 90% of what we do is caused or strongly influenced by our reptilian brain or the limbic system. [We think Spock is in control but we behave as if we’re Lucy Ball.]

Mankind has evolved primarily as a member of tribal structure within a hostile natural environment. Only since the industrial revolution,  has a phonetic alphabet gained its ascendancy in the West.

Our culture (Literate Man) views oral or tribal civilizations as more primitive, backward. Voltaire’s Bastards worked very hard to stuff the native genie in the bottle and they were extremely successful in doing so. There were some unintended consequences (externalities) though with this world view: slavery, theft, genocide, arms race, environmental collapse…

The printing press was the technology that revolutionized Western civilization. It brought with it many impressive and life-enhancing benefits. These, through a rational, Literate Man’s eyes, make them superior to the older, oral traditions.

The Gutenberg Galaxy (phonetic literacy) is an infinitely repeatable, homogenous and repetitive juggernaut. Franchise agreement is an example of an archetypal, industrial revolution machine. It is a colonial instrument intended to be used to control the savages (see indentured service).

A new technology (electronics) came along and now we in the West are in a postliterate age. And this scares the hell out of the self-identifying rational Supermen (ie. the franchise bar). They can hear the drum beats over at Blue MauMau.

  • All the franchisees have to do is to cast off their own blinders and assume their rightful leadership role via internet information sharing.

We know how to flip the switch, notwithstanding the huffing and puffing.

— Modern Times, Charlie Chaplin

Canada: A Fair Country

December 1, 2008

afaircountryI’ll be at Hart House, University of Toronto this Wednesday night, with any luck, with my son.

We’ll be listening to an essayist and philosopher called John Ralston Saul explain his newest book called A Fair Country: Telling Truth about Canada.

The latest from The Man with Big Ideas:

We [Canadians] are a Métis civilization.

What were are today has been inspired as much by four centuries of life with the indigenous civilizations as by four centuries of immigration. Perhaps more. Today we are the outcome of that experience. As have Métis people, Canadians in general have been heavily influenced and shaped by the First Nations. We still are. The influencing, this shaping is deep within us.

When I dig around in the roots of how we imagine ourselves, how we govern, how we live together in communities – how we treat one another when we are not being stupid – what I find is deeply Aboriginal. Whatever our family tree may look like, our intuitions and common sense as a civilization are more Aboriginal than European or African or Asian, even though we have created elaborate theatrical screens of language, referrence and mythology to misrepresent ourselves to ourselves.

I believe this is true in a very real sense.

One thing that I am constantly amazed at is the truly unique Canadian rock-solid belief in egalitarianism.

egalitarianism (derived from the French word égal, meaning equal) is a political doctrine that holds that all people should be treated as equals and have the same political, economic, social, and civil rights. Generally it applies to being held equal under the law and society at large. Wikipedia

I think Saul is on to something here. Something more than just simply stirring the pot or posing.

Canadians elected a bantam-sized former Baptist minister as the Greatest Canadian of all time in 2004. As a boy, Tommy Douglas needed surgery on his leg but his family could not afford it.

It was only the charity of a surgeon that prevented him from having it amputated. Douglas never forgot and as Saskatchewan premier was responsible for the Canada’s first free hospital care.

  • It doesn’t seem fair for people to have to chose between their health and their homes.

Note that the book’s cover art speaks to an Ojibway/Anishinabe creation myth called Turtle Island. The Parliament of Canada, Centre Block, Ottawa, Ontario is borne on the turtle’s back.

One common creation story:

Turtle Island is a traditional name for North America. The name comes from a common indigenous creation story: The first human, a woman, tumbled from the sky to the earth below. At the time the earth was completely water. Birds caught the woman in their wings, but they needed land for her to live on. Several animals tried to dive to the bottom of the ocean to retrieve some dirt with which to build land. Finally, the muskrat succeeded. Placing the dirt on the turtle’s back, the woman blew and sent the dirt expanding across the ocean, making land for her to live on and a place for her to give birth to the first humans.

Experts? We don’t need no stinkin’ professionals

November 27, 2008

VoltairesBastardsPeople sense that our society is backwards but they lack the understanding of why.

Saul suggests that it has to do with our fetish with the individual:

Just how confused we are over what we mean by individualism can most easily be seen by looking at the West from the outside. Buddhist societies are horrified by a great deal in the West, but the element which horrifies them most is our obsession with ourselves as a subject of unending interest. By their standards, nothing could be unhealthier than a guilt-ridden, self-obsessed, proselytizing white male or female, selling God or democracy or liberalism or capitalism with insistent superior modesty.

The individual is an old idea but “individualism” began to take form in the early 19th century. This is when the idea of “professionalism” came about:

The rise of the professional was therefore intimately linked – throughout the Industrial Revolution, the accompanying explosion of inventions and the growth of the middle classes – with Western man’s assertion that he was a responsible individual. He was responsible to the degree that he was competent. Thus the value of individualism was pegged to the soaring value of specialization.


By becoming better at what he did, each man believed that he was increasing his control over his own existence. He was building his personal empire of responsibility. This was both the measure of his worth and the sum of his contributions to society as a whole.

But, oddly, as the specialization and professionalism increased, the expert became much more isolated. In fact, we have pepper/fly poo time:

While our mythology suggests that society is like a tree with the ripening fruits of professional individualism growing thick upon it, a more accurate image would show a maze of corridors, blocked by endless locked doors, each one leading in or out of a small cell.

Voltaire’s Bastards: The Dictatorship of Reason in the West, John Ralston Saul, 1992.

  • Franchising is barren because certain members of the franchise bar feel personally insecure as men.

Maybe in the 2nd half of their life they can become less fearful of death (and life).

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