The Twin Virtues: Inequality of Outcomes and Equality of Opportunity
Book Proposal by Paul A. Summerville
What this book will be about
One very cold and snowy January day in Toronto during the 2006 Federal election I was knocking on doors with two loyal hard working volunteers. I was campaigning as a ‘star’ candidate for the quasi-socialist Canadian political party the New Democratic Party. There was nothing particularly unusual in this except that I had spent my professional life in investment banking for twenty years including stints as the chief economist of country’s largest investment bank and as head of Asian equity research for Lehman Brothers.
Accustomed to pigeon holes the media treated my candidacy as a `man bites dog` tale of brand confusion. They weren`t the only ones; on this particular day the two campaign workers trudging through the snow with me happened to be graduate students at the London School of Economics and were confirmed socialists. This was the first time I had campaigned with them and it wasn’t long before they told me that were both ‘fundamentally opposed’ to my candidacy. They instructed me in no uncertain terms that they were committed to social justice and since I had spent my career in finance -- where outcomes were always unequal, unjust, and served no purpose but to serve the rich -- they were convinced I could not simultaneously believe that the market and social justice were in any way compatible. My candidacy was therefore perverse but in Canada the NDP was the closest they could come to ideological purity and so they always campaigned for their local candidate.
This incidentally wasn`t much different than some of my investment banking friends but in reverse; since market outcomes were always fair the spoils going to the smartest and hardest working, arguments for social justice and equality of opportunity were simply a cover for the lazy and undisciplined. Some old colleagues were so offended by my choice of political parties that they didn’t return my phone calls then or now. My candidacy was a betrayal although happily there also were many who didn’t take such a strident point of view and while they didn’t vote for me still wrote my campaign a handsome cheque.
What struck me then was how utterly convinced both sides were that the unequal outcomes generated by the market and the equality of opportunity rooted in a country’s attempt at social justice were incompatible, chalk and cheese. My two socialist friends were not prepared to consider that the unequal outcomes that the market produces had any value to a sustainable social democracy and my investment banking friends were convinced that arguments for social justice were an excuse to tax and forgive the lazy and undisciplined. Both sides had a remarkable ability to talk past each other, both certain that the other had nothing to learn from the other.
However, far from being incompatible, the unequal outcomes created by a market economy and equality of opportunity founded on key instruments of social justice are in fact twin virtues to be embraced and celebrated. This book will demonstrate that both the socialists and the investment bankers are half right and make the case that unequal outcomes and equality of opportunity are twin virtues the twin pillars of sustainable and competitive countries to be embraced and celebrated. A key goal of the book is to change the language of the debate and create a bridge between the seemingly incompatible arguments for equality of opportunity and unequal outcomes.
'The Twin Virtues: Unequal Outcomes and Equality of Opportunity' will argue that a strong economy and social justice are two sides of the same coin and neither can survive for long without the other. The time for this message has never been riper. There is great global conversation going on right now about the importance of finding the balance between the economy and social justice that this book hopes to lead. Witness the conversation about the ‘crisis of capitalism’ led recently by the Financial Times and the Economist. Inequality is currently the rage.
With the fall of the Berlin Wall in 1989 the importance of unequal outcomes was affirmed as proof that societies without market determined economic winners and losers could not survive. Similarly, the financial crisis of 2007-2008, and the repudiation of the Washington Consensus (‘the market is always right’) demonstrated that societies that ignored the importance of equality of opportunity expressed in best in class justice, education, health and community outcomes were the least likely to be able to compete in the new hyper-competitive global economy created over the past quarter century. Communism failed because it was built on the flawed principle of equality of outcomes while the economic collapse centred on the high income countries in 2007-2008, and the painful recovery ever since, reminds us that capitalism built on false promise of equality of opportunity is equally flawed and will fail just the same.
The hand wringing about capitalism as being too hot where the market dominates or too cold where the state dominates misses the truth that ultimately the most sustainable communities find the balance between the twin virtues of inequality of outcomes and equality of opportunity. The challenge is how to tax and regulate the economy in such way as to ensure unequal economic outcomes provide the public revenue to invest in instruments of social justice, namely equality under the law, world class public education, the science of good health available to all citizens, and best in class public transportation. This incidentally is what Adam Smith was getting at in the Wealth of Nations.
Twinning unequal outcomes with equality of opportunity produces sustainable world class community and economic outcomes that are the foundation for the next generation of economic and social success. Successful societies ensure that peoples’ lives are not simply dictated by the circumstances of their birth because societies will fail where rich kids grow up to be rich adults and poor kids grow up to be poor adults. The tragedy is that a foul brew 30-years in the eating of tax and spending cuts were successfully peddled as income neutral and sold to gullible voters as a good thing for the ‘hard working individual’ no matter how incapable those people might be in participating in the wealth the economy created that has resulted in Great Gatsby like divisions in our society.
'The Twin Virtues' will argue that the compatibility of unequal outcomes and equality of opportunity is an important answer to many of the seemingly intractable economic, political and social questions facing the world right now.
The importance of unequal outcomes -- Unequal outcomes are a defining characteristic of the human condition and critical to successful societies
The importance of equality of opportunity -- Equality of opportunity is a defining characteristic of well-ordered communities
Why unequal outcomes and equality of opportunity are mutually dependent and reinforcing -- How unequal outcomes and equality of opportunity reinforce each other to create the next generation of economic and social success
Why the market is different from the economy -- The market is a place where people trade their labour and enterprise; the economy is what becomes of the market becomes when shaped by politics and culture
Why technology absorption is the lifeblood of a successful society -- Societies that allow technology to revitalise their economies, political institutions and culture are more likely to be wealthy and equal
Why countries differ: the winners and losers -- A review of key countries and where they fit on the scale of unequal outcomes and equality of opportunity, and how this will impact their future
'The Twin Virtues' will be a breezy, easy to read 180 pages for understanding the big debate about the role of the market and the state by making the case that unequal outcomes and equality of opportunity are vital to wealth creation, vibrant politics, and relevant cultures.
The book will break through tired clichés about role the market and the state in the current debate about the global economy stressing their compatibility. This approach will provide a simple way to frame the opportunities and challenges of globalisation. For example, countries that underinvest in justice, health and education outcomes across the whole population will not develop economies that are compatible with thriving in the 21st hyper-competitive global economy. The United States and Pakistan are similar in this regard. Similarly, countries that do invest in best in class justice, health and education outcomes and allow the market to weed out economic winners and losers are more likely to thrive. Brazil and Norway are similar in this regard.
The market for this book
The target market for this book are readers trying to cut through the noise about the global economy and the role of the state much like the audience that was drawn to books about religion by Christopher Hitchens and Richard Dawkins. Just like the latter provided a set of coherent questions and answers about a controversial subject so twinning unequal outcomes and equality of opportunity as twin virtues provides the same opportunity.
'The Twin Virtues' extends the conversation that includes best sellers The Commanding Heights: The Battle Between Government and the Marketplace (1999), Spirit Level: Why Equality is Better For Everyone (2009), and Why Nations Fail: The Origins of Power, Prosperity and Poverty (2012) that underline that there is a big appetite for this topic when presented free of jargon.
The target market includes investors, business people, media, and students who need a leading edge framework to make simple an increasingly integrated and complicated world. Globalisation has created a thirst for simple but effective approaches to understanding the global economy and the countries that make it up. The book will provide a new framework and different language for readers to better understand the key pillars to sustainable societies particularly as the differences seemingly narrow.
Why is China more likely to succeed than India? Why is the economic recovery in the United States likely to remain sluggish for a generation and Japan unlikely ever to recover? Why is Norway so successful and why are Italy and Spain doomed? Why has Canada weathered the recent global economic downturn better than most other high income countries? What does Mexico and India have in common that prevents them from becoming sustainable middle income countries? Why are female literacy, inter-generational mobility, and low teenage pregnancy levels leading long term indicators of economic success?
Positioned properly the book would be reviewed by the Economist and Financial Times, the writer would go on the major networks BBC, CNN, do a TED talk, and a seminar at Davos. 'The Twin Virtues' would be found in airport book stores as one of the ‘must read’ books for the international business set like Hot, Flat and Crowded. It is also a personal ambition to have the book reviewed on the Daily Show.
Proposed Table of Contents
Introduction: The Twin Virtues
Why socialists should embrace the importance of unequal outcomes
Why capitalists should embrace the importance of equality of opportunity
Why unequal outcomes and equality of opportunity are mutually dependent and reinforcing
Why the market is different from the economy
Why technology absorption is the lifeblood of a successful society
Why countries differ: the winners and losers
Conclusion: New Generation Economics
Why I am the right person to write this book
My personal and professional background gives me a unique insight into this topic. I am the book. Born into a lower, middle income Canadian family where neither parent graduated from high school, I was able to forge a debt free university career that lasted twelve years (1976-1988) by virtue of low tuition and scholarships that culminated with a PhD from the prestigious University of Tokyo in International Relations that included study in Toronto, Jerusalem, Edmonton, Geneva and Osaka.
Upon graduation from the University of Tokyo I was sucked up into the roaring profitability of investment banking and the emergence of global financial firms. At that time (1988) Japan was in the midst of one of the greatest equity and real estate bull markets in recorded economic history. Hired by Deutsche Bank as a staff economist -- even though I was not a trained economist -- to explain how Japan worked provided me with a platform forge my own method to analyse, explain, and present the economy.
I quickly discovered that this was my competitive advantage over traditionally trained economists. I developed a differentiated approach to thinking about how economies worked by analyzing countries in terms of the interconnection between the economy, politics, and culture from which I came to understand the importance of the reinforcing relationship between the market expressed in unequal outcomes and the state expressed in equality of opportunity.
I levered this position into a high profile and successful twenty year career in investment banking. I travelled hundreds of times to the world’s financial centres giving thousands of presentations and speeches in research and management roles at prominent global investment banks based in Tokyo (Deutsche Bank, Jardine Fleming, Lehman Brothers, Toronto Dominion Securities), Toronto (RBC Dominion Securities) and Boston (Wellington Management LPC).
My economic forecasts and political analysis led me to many appearances in the global television and radio media including the BBC, CNN, CBC, CTV, ABC, CBS, NBC, PBS, and NHK. I had a regular column in the Nikkei Weekly, and the Financial Post, and have published in the New York Times, International Herald Tribune, Asian Wall Street Journal, Globe and Mail, and National Post, and was often quoted in world’s leading financial newspapers and magazines.
As noted, in an against type ‘man bites dog’ political campaign, I ran for the quasi-socialist New Democratic Party in the 2006 Federal Election. My candidacy generated national interest although the ‘star’ status afforded me by the media did not prevent a third place and being trounced by the incumbent.
Currently, I am an Adjunct Professor at the Peter Gustavson School of Business at the University of Victoria in Victoria, British Columbia. I provide a daily subscriber service called 'Smart Picks' of comments on the international media off of the website www.excellentfuture.ca .
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