Burgess COMMENTARY
My goal is reform of the system of metrics being used to report on progress and performance in society, and the organizations that engage in all sorts of social and economic activity.

All the measures commonly used are antiquated, and though they may have served very well in the past, they are not up to the challenges of measurement in the 21st century.

Double entry accounting is a technique that was launched more than 400 years ago when investors needed to get an accounting from merchant venturers. What worked very well for investors in the days of sailing ships needs upgrading for the very much more complex society of the 21st century.

The idea of the market economy and the 'invisible hand' was described by Adam Smith in a book published in 1776. The 18th century was an era of tremendous shortage with not enough labor and time to produce what people needed, let alone what people wanted. In the shortage economy the market served to allocate resources well ... most of the time. The early economists wrote about the ways market efficiency was compromised, notably with wrong information and with monopoly control of either the supply or the demand. But they did not anticipate the huge concentration of economic power that has become the norm in the modern day, nor the ability for data ... right or wrong ... to pollute the information space at the speed of light.

Measuring progress and performance of society and the economy using Gross Domestic Product (GDP) was a short term measure introduced in the 1930s, recognized as being inadequate right from the start yet still in use more than 80 years later.

My research suggests that there are hundreds, if not thousands, of initiatives that are trying to improve the GDP measure and many others trying to improve business reporting of issues like the business impact on people and profit ... the so called triple bottom line. Up to now these initiatives have been unable to get the traction to be 'game changers' ... but change is coming.

What the TrueValueMetrics (TVM) initiative does is to incorporate many of these existing ideas into a coherent system that builds on existing money profit accounting concepts, and does for value what GAAP accounting is doing for money. TVM is one system that accounts for money and value and reports on profit and valuadd. TVM is one system that starts with 'economic activity' and rolls up the economic activity in one direction to the organization and in another direction to the place, society and community.

Somewhere there is the possibility of a play on words. According to MasterCard there are many things you can buy that are 'priceless'. According to TVM there are many banking transactions that are 'valueless'. With TVM it becomes possible to sort out which is which!

I like the following article. I studied economics at Cambridge where Keynes remains an iconic figure and in my view, Milton Friedman is not. I did not know the story told here, but it does not surprise me.
Peter Burgess

MILTON FRIEDMAN: FROM CORPORATE SHILL TO NOBEL LAUREATE

Last Friday, November 9, saw the big “Milton Friedman Centennial” celebration at the University of Chicago’s Becker Friedman Institute for Research in Economics. It was a big day for fans of one of the Founding Fathers of neoliberal/libertarian free-market ideology, and those fans are legion on both sides of the narrow Establishment divide —as Obama’s economy czar Larry Summers wrote in 2006, “Any honest Democrat will admit that we are all Friedmanites now.”

One episode in Milton Friedman’s career not celebrated (or even acknowledged) at last week’s centennial took place in 1946, the same year Friedman began peddling his pro-business “free market economics” ideology.

According to Congressional hearings on illegal lobbying activities '46 was the year that Milton Friedman and his U Chicago cohort George Stigler arranged an under-the-table deal with a Washington lobbying executive to pump out covert propaganda for the national real estate lobby in exchange for a hefty payout, the terms of which were never meant to be released to the public.

The arrangement between Friedman and Stigler with the Washington real estate lobbyist was finally revealed during the Buchanan Committee hearings on illegal lobbying activities in 1950. But then it was almost entirely forgotten, including apparently by those celebrating the “Milton Friedman Centennial” last week in Chicago.

I only came across the revelations about Friedman’s sordid beginnings in the footnotes of an old book on the history of lobbying by former Newsweek book editor Karl Schriftgiesser, published in 1951, shortly after the Buchanan Committee hearings ended. The actual details of Milton Friedman’s PR deal are sordid and familiar, with tentacles reaching into our ideologically rotted-out era.

It starts just after the end of World War Two, when America’s industrial and financial giants, fattened up from war profits, established a new lobbying front group called the Foundation for Economic Education (FEE) that focused on promoting a new pro-business ideology—which it called “libertarianism”— to supplement other business lobbying groups which focused on specific policies and legislation.

The FEE is generally regarded as “the first libertarian think-tank” as Reason’s Brian Doherty calls it in his book “Radicals For Capitalism: A Freewheeling History of the Modern Libertarian Movement” (2007). As the Buchanan Committee discovered, the Foundation for Economic Education was the best-funded conservative lobbying outfit ever known up to that time, sponsored by a Who’s Who of US industry in 1946.

A partial list of FEE’s original donors in its first four includes: The Big Three auto makers GM, Chrysler and Ford; top oil majors including Gulf Oil, Standard Oil, and Sun Oil; major steel producers US Steel, National Steel, Republic Steel; major retailers including Montgomery Ward, Marshall Field and Sears; chemicals majors Monsanto and DuPont; and other Fortune 500 corporations including General Electric, Merrill Lynch, Eli Lilly, BF Goodrich, ConEd, and more.

The FEE was set up by a longtime US Chamber of Commerce executive named Leonard Read, together with Donaldson Brown, a director in the National Association of Manufacturers lobby group and board member at DuPont and General Motors.

That is how libertarianism started: As an arm of big business lobbying.

Before bringing back Milton Friedman into the picture, this needs to be repeated again: “Libertarianism” was a project of the corporate lobby world, launched as a big business “ideology” in 1946 by The US Chamber of Commerce and the National Association of Manufacturers. The FEE’s board included the future founder of the John Birch Society, Robert Welch; the most powerful figure in the Mormon church at that time, J Reuben Clark, a frothing racist and anti-Semite after whom BYU named its law school; and United Fruit director Herb Cornuelle.

The purpose of the FEE — and libertarianism, as it was originally created — was to supplement big business lobbying with a pseudo-intellectual, pseudo-economics rationale to back up its policy and legislative attacks on labor and government regulations.

This background is important in the Milton Friedman story because Friedman is a founder of libertarianism, and because the corrupt lobbying deal he was busted playing a part in was arranged through the Foundation for Economic Education.

False, whitewashed history is as much a part of the Milton Friedman mythology as it is the libertarian movement’s own airbrushed history about its origins; the 1950 Buchanan Committee hearings expose both as creations of big business lobby groups whose purpose is to deceive and defraud the public and legislators in order to advance the cause of corporate America.

The story starts like this: In 1946, Herbert Nelson was the chief lobbyist and executive vice president for the National Association of Real Estate Boards, and one of the highest paid lobbyists in the nation. Mr. Nelson’s real estate constituency was unhappy with rent control laws that Truman kept in effect after the war ended. Nelson and his real estate lobby led what investigators discovered was the most formidable and best-funded opposition to President Truman in the post-war years, amassing some $5,000,000 for their lobby efforts—that’s $5mln in 1946 dollars, or roughly $60 million in 2012 dollars.

So Herbert Nelson contracted out the PR services of the Foundation for Economic Education to concoct propaganda designed to shore up the National Real Estate lobby’s legislative drive — and the propagandists who took on the job were Milton Friedman and his U Chicago cohort, George Stigler.

To understand the sort of person Herbert Nelson was, here is a letter he wrote in 1949 that Congressional investigators discovered and recorded:

'I do not believe in democracy. I think it stinks. I don’t think anybody except direct taxpayers should be allowed to vote. I don’t believe women should be allowed to vote at all. Ever since they started, our public affairs have been in a worse mess than ever.'

It’s an old libertarian mantra, libertarianism versus democracy, libertarianism versus women’s suffrage; a position most recently repeated by billionaire libertarian Peter Thiel —Ron Paul’s main campaign funder.

So in 1946, this same Herbert Nelson turned to the Foundation for Economic Education to manufacture some propaganda to help the National Association of Real Estate Boards fight rent control laws. Nelson knew that the founder of the first libertarian think-tank agreed with him on many key points. Such as their contempt and disdain for the American public.

Leonard Read, the legendary (among libertarians) founder/head of the FEE, argued that the public should not be allowed to know which corporations donated to his libertarian front-group because, he argued, the public could not be trusted to make “sound judgments” with disclosed information:

'The public reporting would present a single fact—the amount of a contributor’s donation—to casual readers, persons having only a cursory interest in the matter at issue, persons who would not and perhaps could not possess all the facts.

These folks of the so-called public thus receive only oversimplifications or half-truths from which only erroneous conclusions are almost certain to be drawn. If there is a public interest in the rightness or wrongness of corporate or personal donations to charitable, religious or education institutions, and I am not at all ready to concede that there is, then that interest should be guarded by some such agency as the Bureau of Internal Revenue, an agency that is in a position to obtain all the facts, not by Mr. John Public who lacks relevant information for the forming of sound judgments...Public reporting of a half-truth is indeed a significant provocation.'

What happened next, I’ll quote from Schriftgiesser:

'They were now busily co-operating on the new project which the foundation had engaged Milton Friedman and George J. Stigler to write. It was to be called Roofs and Ceilings and it was to be an outright attack on rent controls.

When Nelson received a copy of the manuscript he wrote Read to say, “The pamphlet...is a dandy. It is just what I wanted.'

In libertarianism’s own airbrushed history about itself, the Foundation for Economic Education was a brave, quixotic bastion of libertarian “true believers” doomed to defeat at the all-powerful hands of the liberal Keynsian Leviathan. Here is how Brian Doherty describes the FEE and its chief lobbyist Leonard Read:

'[Read] would never explicitly scrape for funds... He never directly asked anyone to give anything, he proudly insisted, and while FEE would sell literature to all comers, it was also free to anyone who asked. His attitude toward money was Zen, sometimes hilariously so. When asked how FEE was doing financially, his favorite reply was, “Just perfectly.”... Read wanted no endowments and frowned on any donation meant to be held in reserve for some future need.'

'It is difficult to avoid the conclusion that the Foundation for Economic Education exerts, or at least expects to exert, a considerable influence on national legislative policy....It is equally difficult to imagine that the nation’s largest corporations would subsidize the entire venture if they did not anticipate that it would pay solid, long-range legislative dividends.'

The manufactured history about libertarian’s origins, or its purpose, parallels the manufactured myths about one of big business’s key propaganda tools, Milton Friedman. As the author of The Lobbyists, not knowing who Milton Friedman was at the time, wrote of Friedman’s collaborative effort with Stigler:

'Certainly [the FEE’s] booklet, Roofs or Ceilings, was definitely propaganda and sought to influence legislation....This booklet was printed in bulk by the foundation and half a million copies were sold at cost to the National Association of Real Estate Boards, which had them widely distributed throughout the country by its far-flung network of local member boards.'

Like everything involving modern economics and libertarianism, it was a kind of giant meta-sham, shams celebrating a sham. Even the Nobel Prizes in economics awarded to people like Milton Friedman, George Stigler, or Friedman’s contemporary fans Heckman and Lucas, are fake Nobel Prizes — in fact, there is no such thing as a Nobel Prize in economics; its real name is the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” and it was first launched in 1969 by the Swedish Central Bank and has since been denounced by Alfred Nobel’s heirs.

And yet — in the words of Larry Summers, 'Any honest Democrat will admit we are all Friedmanites now.' Of course, there are no honest Democrats. And there are no honest economists. And these are the people who are framing our politics, the people who have told Greece and Spain they have no choice, and the people who today are making sure that the number one item on Obama’s and Congress’s agenda is cutting Social Security and cutting Medicare and cutting 'entitlements' — and the only thing that divides the elites in charge of this mess is 'how much of these moochers’ lifelines can we cut?'

Mark Ames is the founding editor of the eXile and author of Going Postal: Rage, Murder and Rebellion: From Reagan's Workplaces to Clinton's Columbine.