Then I realized that we have fundamentally distorted free enterprise in a way that makes markets and companies less efficient. But it was an “A-ha” moment initiated by one of Albert Einstein's insights that enabled me to isolate and identify the Defect. And, it was the quality process championed by W. Edwards Deming that led me to the solution.

Whether you are an employee working to create Shareowner value, an investor saving for your children's education, or a retiree living on investment returns, you have something in common with virtually every other American: to some degree you depend on stock for at least part of your income. But did you know that every single stock in America contains a common defect? And, that Defect is being legally used to cheat you out of your money and your economic choice.

This Defect in stocks has been known to a select group of people (“cognoscenti”) for over fifty years. It empowers these cognoscenti to shift wealth from Shareowners and employees to themselves without creating economic value for society. The impact on individuals, companies and society was hidden in a world protected by trade barriers. But globalization has pushed economies to the tipping point where the Defect has so distorted the practice of free enterprise that people are paid based on their ability to arbitrage the Defect rather than their economic contributions. As a result our economy is being driven by wealth shifting rather than wealth creation, resulting in proportionately fewer high paying jobs and therefore, less economic choice (freedom) for current and future generations.

The Defect produces many other fascinating effects, including: causing companies to harm the environment by over producing uneconomic products; deceiving employees and union leaders into thinking that a company can afford higher wages and employee benefits; and supporting the delusion that profitable companies are creating Shareowner value.

A most unexpected benefit of eliminating the Defect is that there would be more equitable distribution of income based on the creation of economic value, without increasing taxes or increasing dependence on government handouts.

The facts argue that the central leadership challenge for business, and perhaps society, in the 21 st century is to eliminate the Defect. But powerful political and business interests vested in the status quo will resist change. Only by acting together can we eliminate the Defect and increase our individual economic freedom. As Benjamin Franklin said when signing the Declaration of Independence, “We must all hang together, or most assuredly we shall all hang separately.”

To learn about the Defect, please join us on Thursday, May 10, for our next Leadership Breakfast “The Central Leadership Challenge in the 21 st Century” with Will Marshall, author of two of the Year's Top Investment Books, Money Ain't Free: The True Cause of the Crisis in Corporate Responsibility (2006) and Rich Shareowner, Poor Shareowner: Common Sense for Investors and Managers (2003) .