The document discusses various topics related to economics, culture, and human development. It covers spiral dynamics theory and how people adapt based on their environment. Complex problems require complex solutions. Financial crises are normal and result from factors like greed, fear, and government influence. Companies create value through relationships with stakeholders, though some prioritize shareholders over others or encourage unsustainable practices. Overall, the document emphasizes that everything is connected and economics involves human behavior.

2. Island Economics
Cultures and how to see the world
accurately
Envy and victims = economic and personal
vitality destroyers
Forecasting and scenario planning
 Experts & Dummies
Ethics, sustainability and virtue
 Business Values
Discussion Outline

4. Island Economics
Builder

5. Island Economics
Healer

6. Island Economics
Farmer

7. Island Economics
Philosopher, Poet, Artist Sage

8. Island Economics
Community

9. We all live in a Yellow Submarine
Spiral Dynamics

10. A theory of human development
Human nature is not fixed
People will adapt to their
environment when forced by life
conditions by constructing a new
model of the world.
Cultural DNA
Spiral Dynamics
Memes & DNA
• Systems of values
• Apply to individuals and cultures
• Negative and positive
• Each new system modifies or
builds on the previous

11. Stage/Wave Color Code Popular Name Thinking
Cultural manifestations
and personal displays
8 Turquoise Wholeview Holistic
collective individualism;
cosmic spirituality; earth
changes
7 Yellow FlexFlow Ecological
natural systems;
self-principle; multiple
realities; knowledge
6 Green Human Bond Consensus
egalitarian; feelings;
authentic; sharing; caring
;community
5 Orange StriveDrive Strategic
materialistic;
consumerism; success;
image; status; growth
4 Blue TruthForce Authority
meaning; discipline;
traditions morality; rules;
lives for later
3 Red PowerGods Egocentric
gratification; glitz;
conquest; action;
impulsive; lives for now
2 Purple KinSpirits Animistic
rites; rituals; taboos;
superstitions; tribes;
folk ways & lore
1 Beige Survival Sense Instinctive
food; water; procreation;
warmth; protection;
stays alive
Source: Don Beck Ph.D

12. Spiral Dynamics’ Takeaways
• We make mistakes as people, companies and groups
when we think people are like us.
• We need to meet people at their level – not ours.
• Zen training = we can see what is real when we quit
judging and saying “this is GOOD - this is Bad - this is
NEUTRAL & this is… fill in the blank.
• Most consensus, democratic or group systems are
reactive systems not proactive.
• Bottom line is everything connects & economics is
about people in action not money in action.

13. Forecasting and Scenarios
Stand in the Future
3 Same Subject Experts

14. Forecasting and Scenarios
Stand in the Future
3 Experts and a Dummy

15. Forecasting and Scenarios
Stand in the Future
3 Experts and an Artist

16. Simplicity & Complexity
• Complex problems require
complex solutions
• We make mistakes when we over-
simplify complex problems

17. Simplicity & Complexity
• Complex problems require
complex solutions
Problem; Need sustainable economy that provides Jobs
Problem; War
Problem; Starvation
Problem; Ignorance (root)
“Just be ethical” & “Just Love More”

18. What causes a Financial Crisis?
What Causes a Financial
Opportunity/Crisis?

19. People will rationally “binge”
“Men, it has been well said, think in herds; it will be
seen that they go mad in herds, while they only
recover their senses slowly, and one by one!”
– Charles Mackay
“Irrational Exuberance” –Alan Greenspan

20. Cycles Happen
• Financial meltdowns are a systematic and
normal dysfunction of government influence,
greed, fear, and are normal in our world.
Tulip mania – 1620
Mississippi Company France 1719/1720 & John Law
South Sea Company London 1711/1720
Wall Street 1929
Junk bonds 1980s
Dot.coms/telecom 1990s
Sub-prime mortgages/CDOs

21. People Make Mistakes
What Causes a Financial Crisis?
Mis-pricing of risk
MPT (Modern portfolio theory)
Increases in real risk are not captured in nominal
market prices
Asset prices become irrational

22. Finance 101
• Present value should reflect the risk of actually
receiving future income
• Capital value is a function of present and
future income!
• Misjudgments about future income distort
present capital values (Manias/Emotion,
squinter problem)

23. Finance 1001
We want to Believe!
• A person will not wish to know something, if
knowing that something will cost him or her.
Coal and Global Warming
Meat eating and Environmentalism/Global Warming
Driving “Hummers”
Not walking/riding bike
Eating Junk food – other stuff…

24. Free money=distortions
• In financial bubbles, mis-pricing is sustained by
infusions of debt
• Higher and higher asset values are supported by
borrowed funds
• Excess liquidity – based on future promises to pay –
transforms investment into speculation; prudence
loses out to greed; illusion trumps reality (beliefs VS
truth)– for a time

25. Systems are reactive
World Economic regulations, contracts, laws and “Order
enhancers” have inadequate pro-active mechanisms to
prevent financial crises
[bureaucratic /boards]
Bottom line is: Groups tend to be reactive
Someone fell off the Empire state building….

26. What is the fair value of an
investment in business?
Quality Income Stream
High future income
Priced right
Good Corporate Value
(Warren Buffet would buy it)

27. Today where does most corporate
value come from?
Intangible Assets!

28. Intangible value 3-4-14
Microsoft: Market value: $318 billion
Balance sheet assets: ~45%%
Goodwill/intangibles: 55%
Starbucks: Market value: $54 billion
Balance sheet assets: 20%
Goodwill/intangibles: 80%
Facebook Market value: $173 billion
Balance sheet assets: ~10%%
Goodwill/intangibles: 90%

29. Growing Importance of
Intangible Wealth
Change in U.S. Employment:
Tangible sector (manufacturing, construction, natural resources, real
estate, wholesale and retail, transportation and warehousing)
= job losses
Intangible sector (education, health care, computer system design,
finance and insurance, scientific research, etc.)
= job gains

30. Valuation & Sustainability
Intangible Assets = Stakeholder Relationships
(are the relationships sustainably nurtured and part of culture)
Create value thru growing relationships with…
Customers
Employees
Owners/Investors
Suppliers
Competition (Strategic relationship)
Community

31. How Do Companies Create
(Intangible) Value?
• The Good
• The Bad
• The Ugly

32. The Good
(Virtue Capitalism)
Manage Risk
Be Opportunity seeking
Constantly reassess business practices
Through 1)systems and culture
2)Best practice adoption
Optimize Stakeholder Benefits as goal
A culture where Virtue matters
Transparency (I am what I am-no hiding anymore)

33. The Bad
Brute Capitalism, Crony Capitalism
 Feed Shareholders,& Abuse Stakeholders
 Feed Mangers & Abuse shareholders and everyone else
 Hire slaves, compete only on pricing/low costs
 abusing market power
 Take the money and run: short term-ism
 Always with a smile of course 
Unsustainable values & practices= Eventual Failure

34. The Ugly
(Punting on the trading floor)
No net wealth creation
(Rob Peter to pay Paul)
Exploiting the emotion & Irrational Exuberance
(Market traders/short term-ism)
Exploiting emotions = False Valuations
(Enron: Ponzi Scheme; sub prime mortgages, CDOs, CDSs,
50,000 dogs)
Encourage unsustainable pricing of securities
(CDOs, CDSs, government bonds, currencies)
INEVITABLE FINANCIAL MELTDOWN

35. The Ugly

36. Reality=life goes on
Unsustainable trends are
unsustainable…
Herbert Stein

37. Reality=life goes on
Net wealth creation will happen
Wealth transfer will happen
Irrational Exuberance will happen
False Valuations will happen
So what do you do about it?
Use your head and heart & Think!
Has your brain ever hurt from thinking?

38. Summary
Island Economics= everything connects
Cultures = meet people at their culture
Scenarios =Experts, dummies and Artists
Ethics, sustainability and virtue matter

39. Summary
Complex problems require complex solutions
People won’t learn the truth if it could hurt them
(Duh!)
Beliefs are more powerful than truth. Emotions
Manias happen markets are cyclical. Emotions
Life goes on, Relax and enjoy!
Zen Master gets sick (story)

40. suffering exists
We suffer because we grasp and obsess;
We can do something about suffering;
We can live a spiritual life.
Neither shall they say, Lo here! or,
lo there! for, behold, the kingdom
of God is within you. Luke 17:21
“Peace comes from Within;
DO not seek it without.” Buddha

42. If you look at the Peacemakers
that we know from history and
today; Joan of Arc, David,
Gandhi, Dalai lama, Mother
Theresa, M. L. King Jr., Nelson
Mandela, Desmond Tutu,
St. Francis, Fethullah Gulen,
Malala Yousafzai, they were
willing to risk their lives, their
social comforts and acceptance to
pursuit virtue-infused ideals.

43. 7 Social Sins
Wealth without Work
Pleasure without Conscience
Knowledge without Character
Commerce without Morality
Science without Humanity
Worship without Sacrifice
Politics without Principle
– Mahatma Gandhi
8th sin added by
Arun Gandhi, his grandson:
Rights without Responsibilities

44. I grew up among the Sages.
All my life I listened to their words.
Yet I have found nothing better than silence.
Study is not the goal, doing is.
Do not mistake “talk” for “action.”
Pity fills no stomach.
Compassion builds no house.
Understanding is not yet justice.
Whoever multiplies words causes confusion.
The truth that can be spoken
Is not the Ultimate Truth.
Ultimate Truth is wordless,
the silence within the silence.
More than the absence of speech,
More than the absence of words,
Ultimate Truth is the seamless being-in-place
that comes with attending to Reality.
—Shimon ben Gamliel

45. Questions & Thank You