"The greatness and the genuine trait of your thought and writings lie on the fact that you positively and interestingly make use of philosophical thoughts and thoughtfulness in order to deeply and concretely cogitate about America's social issues. . . . This does not mean that your thought is reducible to your era: your thought, being inspired by issues characterizing your era . . . , overcomes your era and will still likely be up to date even after your era, for future generations." Bruno Valentin

Friday, November 21, 2014

Wall Street Banks in Commodities Businesses: An Inherently Unethical Conflict of Interest

Writing to the bank’s board of directors, an executive at Goldman Sachs wrote that the bank’s commodities division would achieve higher value “if the business was able to grow physical activities, unconstrained by regulation and integrated with the financial activities.”[1] According to Sen. Carl Levin, Goldman’s goal here is “to profit in its financial activities using the information it gains in the physical commodities business.”[2] The integration could be achieved in part by using the bank’s access to nonpublic information from the banking or trading operations to manipulate the price of a commodity by artificially restricting or adding to supplies through ownership at the production or storage stages. This structure contains a conflict of interest. Because resisting the temptation to exploit the conflict would put the Goldman bankers at odds with the bank’s financial interest, I contend that reliance by the public on intra-bank firewalls (i.e., policies) separating the commodity businesses from the bank’s trading operations is too weak to protect the public, including buyers of the commodity.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

Monday, November 17, 2014

Homelessness in the U.S.: A Reflection of American Values

According to a report by the National Center on Family Homelessness in 2014, nearly 2.5 million American children were homeless at some point in 2013.[1] The U.S. Department of Education had reported that 1.3 million homeless children were going to school. California, which accounted for one-eighth of the U.S. population at the time, had one-fifth of the 2.5 million, which comes out to nearly 527,000. The relatively high cost of living and shortage of low-income housing, along with a largely stagnant minimum wage, are the more visible factors behind the gap.

In addition, a subtler underlying contributor—more paradigmatic—renders sustainable shelter insecure and even elusive for many people who go from paycheck to paycheck. What I have in mind here is the assumption that housing is and should be a commodity. That is to say, we use the market mechanism to allocate houses, condos, and apartments. To be sure, matching supply to demand is in itself helpful to low-income people, the assumption that the prices they pay—for example, more money due to speculators—must vary accordingly is problematic, as well as unnecessary. The Section Eight housing program, for example, separates the amounts that low-income people pay for rent from the rents that property-owners accept.

We can go even further and question whether the rents (and housing prices) determined by the market should be acceptable to society. For example, speculators bought up foreclosed properties in the U.S. during the housing slump that began in 2007. The cost of houses (and thus rents) in such markets was higher than would otherwise have been the case. Low-income families that might otherwise have had shelter may have gone homeless as a result. In the tradeoff here between speculators and homelessness, societal values can be seen. Put another way, tolerating homelessness so economic liberty can encompass residential housing reflects a value judgment.

In summary, the relatively large number of homeless children reflects a tacit societal judgment of priorities premised on the assumption that housing should be a commodity fully subject to the market mechanism. That speculators can take advantage of it to profit at the expense of people going homeless suggests that the American collective judgment may be too extreme—meaning that it accepts a high marginal pain at one pole (i.e., homelessness) in order to be able to hug the other pole. This can explain why shelter as a basic human right is virtually absent from the public discourse in the United States.

[1] David Crary and Lisa Leff, “Number of Homeless Children in America Surges to All-Time High: Report,” The Associated Press, November 17, 2014.

Friday, October 3, 2014

Religion and Business Clash at a Church’s Food Pantry

The sacred and the profane are like oil and water—oil for anointing and water for cleaning. The viability or value of the sacred does not depend on denigrating that which is exogenous to it. In other words, praising the sacred does not require trashing the world. Being in the world but not of it does not imply that the world is necessarily bad. From this perspective, the sacred and profane can both be viewed as viable in their own rights, respectively. The inevitable distance that distinguishes them so starkly is breached only with great difficulty, even if pressed out of sheer practicality. For example, a theological interpretation undergirding a religious organization’s food pantry can clash with a business calculus such as would be held by an auditor pouring over the numbers and procedures. As theology and business enjoy their own, sui generis (i.e., of its own genus or type) bases of justifications or rationales, unraveling a clash can be notoriously difficult for want of a common denominator.

One pantry, which I will call here “Food Pantry of the Church of the Ossifier,” faced a challenge when the local food bank, which distributes meat to the local pantries, informed the pantry’s director, Sue, that the amount allotted would decrease on account of supplier issues. Specifically, as the price of meat increased, grocers had more of a financial incentive to more efficiently manage their respective inventories—with less left over nearing expiration dates. Translated into the Ossified Pantry’s terms, only 80 out of 430 families would get meat on the first and third Wednesdays of each month. In Sue’s words, “Meat is in short supply as donations to the food bank.  Walmart, . . . etc are not putting as much meat out in hopes to not have as much given away.  It cuts into their profit margins and everyone is being for frugile.”

The gap can be narrowed on both the demand and supply sides of the equation. On the supply side, one of the pantry’s volunteers, a former certified public accountant (CPA), contacted Sam’s Club for funding. The company had been instrumental in setting up an infrastructure locally for getting food from grocery stores to the food bank for further distribution to the pantries. Furthermore, each Sam’s Club store gave out gift cards to local charities, which could apply for the limited funds every other month. Charities could also apply to the corporation for grants ranging from $250 to $2,500 annually. The volunteer provided Sue with the information and she applied for both programs in the hope of being able to buy meat to supplement that which the food bank could supply. In addition, she asked the store manager about a possible discounted price. She could offer incentives such as free advertising in the church bulletin and at the pantry itself, as well as inclusion among the list of donors featured on a wall in the church lobby. From this side of the equation, business and religion look like country cousins—not marriage material but close enough to help each other out on a regular basis.

The intractable distance becomes apparent on the demand side. Sue allowed food recipients to pick up for other families too, under the assumption that some families cannot get to the pantry. Some recipients picked up for four or five families. From a CPA’s standpoint, the 430 families served figure—which the food bank uses as a basis for determining the pantry’s allocation (government funders would also use the figure)—would be a highlighted item for sampling and procedure-assessment. That is to say, the potential for cheating under such an arrangement was such that an auditor would want to test its validity rigorously. In fact, such a policy might have to go for the figure of families served to be said to be accurate enough for third-party reliance. Even with a record of the families in absentia, those families may not actually have received any of the food said to be picked up for them.

Sue’s theological basis for the policy is eons away from an auditor’s foundation. Compounding the difficulty in reconciling Sue’s perspective with that of an auditor, Sue held some non-theological assumptions regarding business that are vulnerable to criticism from a business standpoint. Even so, because her theological assumptions are beyond a business critique may have given her a misplaced confidence that her business assumptions too are beyond such a basis of critique. Her theological and business assumptions in her own words come in five points.

1.  People will scam us - that is a given and something that I can't control - if they really want to cheat they will.  Thieves are so smart and creative.

2 If they cheat they will have to explain it to God, I won't.  I hope that God is merciful.

3.  I do have a paper trail.  There have been a few times when I find out someone is cheating and when I confront them about it, I tell them they are not welcome to come back.  

4.  Occasionally I will make a phone call and spot check on the ones who pick up multiple families.  Most of them have asked me for permission to do so and I believe a lot of them do it to save on gas.  I have to trust that it is true or else God will take care of it.  God often tells me not to worry as He will take care of things and so I do just that.  

5.  Lastly this is God's work not mine.  It is never about the volume but about the one who needs us most.

Regarding Sue’s first point, just because theft cannot be completely eradicated does not mean that managers cannot do anything to reduce it. Sue’s assumption that a thief’s desire to steal necessarily means the thefts will occur is fallacious. Even if thieves are smart and creative, managers can be too. The passivity in Sue’s assumption likely comes from her theological tenets.

The theology surges in on the second point. Sue is saying that she is not obliged to provide a defense for the cheaters when God judges them.[1] Her assumption itself takes it as a given that the stealing will take place. Furthermore, her passivity or noninvolvement in the divine judgment may be a reflection (or projection) of her assumed passivity in her first point. Put another way, her assumption that the lying will take place may be based on her more foundational assumption that she has no involvement in God’s judging the cheaters.

A business practice may thus stem from a theological interpretation. Problematically, that the latter is beyond critique from a business standpoint may be used to assert that the resulting business practice is also beyond critique (and thus control) from a business basis. In cases in which the person has substantial power in the business, the business practice may go uncontrolled even though business principles have jurisdiction. Should the person’s boss have the wherewithal to stop the offending practice, the theological auspices could legitimately stand in the way if the business is part of or sponsored by a religious organization.

In her third point, Sue defends her practice of multiple-family pick-ups on the basis of business principles. She points to a paper trail, yet having the names and contact information of the families receiving the food at home is not sufficient to prevent fraud. A recipient could simply collude with a friend willing to act as a front. Asking for permission and using gas as a rationale, which Sue cites in her fourth point, can be part of the ruse even if the proactive gestures reduce the likelihood that cheating is going on in such cases.  

Sue assumes that because she has uncovered only a few cases of fraud by making a few spot calls, a small number of stealth instances remain among the 430 families being served. Of course, a colluding friend of an in-person recipient would naturally lie, though speaking with kids could uncover problems. Even so, a CPA would advise more than a few spot calls. Considering Sue’s passivity toward the matter of cheaters in general, the assumption that she has actively caught most if not all of the outstanding cases is vulnerable. In fact, the opposite assumption has more support. That her passivity is informed by her assumption of God’s agency makes her assumption of infrequent fraud particularly shaky.

In her fourth point, Sue bases her assumptions that a paper trail and a few spot calls are sufficient and that only a few cases are actually fraudulent anyway on her more fundamental (to her) theological assumption that God would take care of any problematic cases unknown to her. From a theological standpoint, this assumption is problematic, for if God would eradicate any cheating then wouldn’t God stop evil from happening? If not, then God is not omnipotent (i.e., all powerful). That injustices do in fact happen in the world is typically explained theological as an unavoidable consequence of God giving us free will.

Sue’s claim that God tells her not to worry (i.e., to passively accept that God will stop the cheating) opens the proverbial can of worms. In her fifth point, she concludes that taking care of any cheating is God’s work, presumably because God has told her this. From a religious standpoint, verifying Sue’s claim that God as “spoken” to her is fraught with intractable difficulties. However, that Sue does not question the “fact” that God has spoken to her may itself undermine her claim. Put another way, her unwillingness to question what she perceives to be the case flies in the face of the human experience, which is based in human nature itself. 

Given the conditionality inherent in Creation, Sue overplays the certainty card. Abraham struggles with God’s command that he sacrifice his only son even as God promises that his seed will populate the world. In Kierkegaard’s terminology, Abraham embraces the absurd in the realm of the finite.[2] Sue’s certainty belies her broader claim of being a person of faith. It is possible, even likely, that she had unconsciously chosen her theological assumptions to mollify her managerial challenges in formulating and implementing a system of accountability. 

Her compromised system can indeed be subjected to a business critique and correction, even if such oversight is hampered by the religious auspices of the pantry—being that it is part of a religious institution. To be sure, the business oversight can make use of the problematic elements in Sue’s theological basis, yet this presumes that managerial oversight is vigorous among religious functionaries.

Therefore, even though the gap in supply and demand occasioned by decreased supply at the local food bank could be narrowed by corporate giving and greatly reducing the instances of multiple-family pick-ups—such as by reducing the number of families a recipient can cover to one and asking volunteers to make the deliveries on their way home to cover as many cases as possible (especially the hitherto multiple-family pick-ups!)—the role of Sue’s theology on the demand side of the equation could keep the gap unnecessarily large. 

Moreover, both the pantry and the church’s administration could develop a reputation locally for ineptness in being disorganized. A boat with many leaks does not inspire much confidence. The rigidity alone with respect to plugging the leaks is easily offensive and naturally frustrating. Even though theology and business are worlds apart in their respective rationales, the flash-points need not be so intense and harmful. 

To the extent that some recipients get more meat than others, the shortfall hurts the people in need while enabling the gluttony of others; this is not exactly about the ones who need the pantry most. Hence Sue’s theological approach to caritas seu benevolentia universalis (i.e., higher-aimed human love, that is, universal benevolence) is vulnerable to her own criterion. Regarding the nexus of business and religion more generally, using the criteria of each on its own domain can work wonders in reducing otherwise inexorable difficulties from the interaction of the two domains.

[1] Notice that Sue assumes that God will judge them. This assumption has historically given confidence to people that unjust people leading a happy life would nonetheless “get theirs” eventually. Nietzsche interprets this desire of after-life retribution as being sourced on the urge of some of the weak to dominate even the strong out of resentment and for the pleasure that can be extracted even from such wan power.
[2] See Soren Kierkegaard, Fear and Trembling (London: Penguin, 1985), pp. 65, 75.

Wednesday, September 24, 2014

Societal Enabling of Economic Inequality

According to one study of people around the world, people of different cultures, incomes, religions, and other differences show “a universal desire for smaller gaps in pay between the rich and poor” than was the actual case at the time of the survey in 2014.[1] Interestingly, the respondents didn’t have a clue how much of a gap actually existed in their respective economies. The difficulty in estimation means that the public discourse on economic inequality has been rife with erroneous assumptions. Where the error lies in the direction of minimizing the gap, we can postulate that public policy allows for greater economic inequality than would otherwise be the case.

The full essay is at "CEO/worker Pay."

1. Gretchen Gavett, “CEOs Get Paid Too Much, According to Pretty Much Everyone in the World,” The Huffington Post, September 24, 2014.

Monday, September 1, 2014

Wage Theft: More Companies Flouting Trust

If you are playing by the rules, not trying to cut corners at others’ expense, you need not let the bastards get you down. Of course, if your detractors catch you with your hand in the cookie jar, then blaming them only confirms that a sordid character flaw undergirds the stealing. As a business strategy, accusing union officials of having an agenda simply because they have identified cases of wage theft by the company is not exactly good public relations; in fact, the ploy sends a message that the managers at the helm are more interested in shifting the spotlight onto distractions than “manning up” to take responsibility for the unethical and illegal conduct at the employees’ expense.

The full essay is in Cases of Unethical Business, which is available at Amazon.

Tuesday, July 29, 2014

Bad Boy Banks Enabling Inversion: Can a Firm Be Patriotic?

The “corporate citizenship” literature has it that companies in the private sector can indeed be “good citizens.” Even though a company cannot vote or be drafted, citizenship is said to fit as an apt description of what is organizationally speaking a profit-seeking machine. To say that a company is a good or bad citizen is, moreover, to anthropomorphise (i.e., apply human characteristics to a non-human). Furthermore, in their managerial capacities, the people who run companies are duty-bound to act in the financial interest of the stockholders, and only then in the broader societal interest. Even so, an ethical basis does exist on which some of the banks can be viewed as culpable.

Between 2011 and 2014 when Goldman Sachs made nearly $210 million in “inversion fees” for helping companies based in the U.S. shift their headquarters overseas to obviate a relatively high U.S. corporate tax, asking whether the executives at the bank were patriotic is tantamount to making a category mistake. A person can without contradiction be patriotic away from work while focusing on increasing inversion fees in his or her managerial role. Hence, Jamie Dimon could sincerely look at those fees earned by JPMorgan Chase and claim, “I’m just as patriotic as anyone.”[1] Were he to have put his personal patriotism into force at the bank at the expense of the stockholders’ financial interests and the chartered function of the bank, he would have been unethically disregarding his fiduciary duty. From a Kantian standpoint, we can ask what would happen if every manager at every bank had as his or her own “personal project” as a patriotic U.S. citizen trump the duty. Patriotism, after all, is hardly monolithic, but involves interpretation in discerning the applications and the proper choices therein. Banks could hardly function that way, so to say every manager should put patriotism first would not make sense (for the banks would fail under such a mandate). This, by the way, is the first formulation of Kant’s categorical imperative. If universalizing your maxim doesn’t work because of a contradiction in the reasoning or logic, the maxim is unethical.

The argument that banks that had been in trouble in 2008 and subsequently received loaned funds from the U.S. Government are obliged ethically not to turn around and profit by depriving that government of corporate tax revenue presents us with a stronger case, for it rests on an implicit contract, or quid pro quo, rather than patriotism. Social contract theory, of which Kant was an advocate, includes implicit contracts, rather than being limited to the ones where both parties sign on the dotted line. In fact, as regards any historical agreement establishing government and citizens, Kant idealizes the notion to say that such an agreement would be what people would agree to in a state of nature—not that such an agreement was literally made as man first stepped into complex living arrangements. From this interpretation of the theory, it makes sense to say that in return for being bailed out—even from the tailwind of irrational exuberance aided and abetted by a “big short”—a person naturally would expect an obligation not to double-cross the hand that had helped at the time of crisis.

This ethical argument applies to Goldman Sachs, Morgan Stanley, and Citigroup, each of which made sizeable profits from inversion fees and had needed the government bailout. JPMorgan Chase, on the other hand, avoided the greedy temptation to get into mortgage-based derivatives and insurance swaps based on the securities, and thus that bank did not face the implicit obligation. Jamie Dimon need not have jumped to defend his patriotism after all, or even an implicit obligation that his bank put the revenue of the U.S. Government before stockholder profits.

Regarding Goldman Sachs and Citigroup, dismissing the implicit obligation was, say we say, par for the course (i.e., in keeping with the banks’ respective cultures), for in both banks clients were lied to regarding what the traders knew were “crap.” I’m referring of course to the bonds based on sub-prime mortgages. Such fraud is also a disregard for an implicit social contract (as well as a very public legal one). Societally, people have a general expectation that people working at a bank will not exploit them through dishonest means. That’s not how business is done, the average Joe would rightly say. So perhaps the utility of this case of inversion fees lies in what it says about the intractability of a mentality in a corporate culture: the dysfunction is very difficult to remove, and thus it is likely to perpetuate itself in a pattern.

1. Mark Gongloff, “’Patriotic’ Big Banks Profit Helping U.S. Companies Dodge Taxes,” The Huffington Post, July 29, 2014.

Thursday, July 10, 2014

Labor and Stockholders: Applying Locke’s Notion of Property

John Locke’s view on how something becomes a person’s property could fundamentally alter labor-management negotiations in companies. Moreover, our assumption that management participates in the discussions may be upended. The key, I contend, lies in how we classify labor. I submit that the paradigm that has been handed down to us is deeply flawed in its fundamentals, and yet strangely we do not even question its contours.

In describing his notion of property, Locke begins with the state of nature, wherein “every Man has a Property in his own Person. This no Body has any Right to but himself.”[1] Unlike Thomas Hobbes, Locke did not think that rights depend on the existence of government. From a person’s body, Locke goes next to its labor, as properly one’s own. It follows, Locke contends, that “(w)hatsoever then [a person] removes out of the State that Nature hath provided, and left it in, he hath mixed his Labour with, and joyned to it something that is his own, and thereby makes it his Property. It being by him removed from the common state Nature placed it in, it hath by this labour something annexed to it, that excludes the common right of other Men. For this Labour being the unquestionable Property of the Labourer, no Man but he can have a right to what that is once joyned to, at least where there is enough, and as good left in common for others.”[2] The caveat at the end means that as parcels from the commons are belaboured, the resulting private property should not exhaust the commons itself, which nature provides to all. Yet even when all land, for example, has been claimed by individuals and government, surely Locke’s claim still holds that in mixing with an object, the labor of one’s person, being his or her property already, extend the property to the object too.

Yet what if another person already owns the object? Locke assumes the laboring person snatches it out of the state of nature, where anyone can appropriate the object with one’s own labor. If the basis of Locke’s theory of property is not the state of nature itself, but, rather, that a person’s own person and labor are one’s property—whether in the state of nature or in an arranged society—then a right of property is still in the mixing of a person’s labor in an object. In cases in which the object is already owned by another and he or she consents to the labor of another being mixed with said object, then either the laborer has an ownership share or he or she contracts with the pre-existing owner to sell the share.

Hence, companies, whether owned by private interests (capitalism) or a government (socialism), contract with employees essentially to purchase their property rights that naturally accrue as their respective laboring mixes in with the means of production. I distance the labor from the means of production because the latter do not gain a property right in working on an object, for it makes no sense to say that a machine has its machine and work as property. The implications of this distinction are nothing short of huge with respect to the assumptions we make about business and capital.

In financial reporting, labor is classified as an expense to be deducted from revenues to arrive at profit. The returns to a company’s owners (e.g., stockholders) come off after the profit, rather than being an expense of doing business. If Locke is correct that labor also gives rise to a property right, then the sale of the stake is also extra-business, rather than a mere means of production. That is, the cost of labor should rightfully be classified with dividends after profit.

By implication, rather than negotiating the sale of the labored property as if it were an expense, the talks would be between owners. For one group of owners, that of capital, to say, “We can pay more, but we’ll have to cut expenses” would be a category mistake. So too, would the common (and convenient) assumption, “If we pay you more, we’d have to raise prices and we’d lose business.” Within the property classification, buying up the labor-property shares would come out of dividends, rather than to be made up for by intra-business revenue or expenses. This “third rail” is never brought up as even an alternative—the capital-owners’ dividends presumably being off the table. Such a narrowing of a debate goes a long way in getting what you want in negotiations. John Locke might just say, not so fast!

1. John Locke, The Second Treatise of Government, section 27, in Locke, Two Treatises of Government (Cambridge University Press: Cambridge, 2003), p. 287.
2. Ibid., p. 288.

Tuesday, July 1, 2014

Hobby Lobby: On the Significance of the Case

For all the controversy stirred up by the case of Hobby Lobby v. Sibelius(2014) on whether an employer must comply with the mandate for contraceptives coverage in the Affordable Care Act, the significance of the decision handed down in a 5-4 majority opinion by the U.S. Supreme Court may be less than some commentators were predicting. 

The full essay is at "Hobby Lobby"

Friday, June 27, 2014

World Cup Soccer Frenzy in the U.S.: A Threat to the NFL?

First, 19 out of 20 brains of former NFL football-players showed lethal brain damage in autopsies. Then, it was 45 out of 46 brains.[1] Missed at first from the initial assumption that concussions from the occasional hard-hits—which make good television—have been the cause of the dementia-causing protein in the damaged brains, was the impact of the more subtle mini-concussions from regular play. A 21 year-old with dementia (CTE) had not had a concussion from a major hit.  Nor had a high-school senior football player with chronic (CTE) brain damage in the front lobe, and thus severe short-term memory loss, difficulty thinking, personality changes, and fits of rage. Suicides are not uncommon, not to mention an abbreviated life-span.[2] Meanwhile, the violence of the sport ironically continued to be the main draw to an American audience, with cheers at the most jarring clashes. What is going on here, and is there light at the end of this tunnel?

The NFL is a wealthy organization, shielded from tax by its non-profit status. From taking in $10 billion a year as of 2014, and that figure expected to go to $25 billion by 2027, a lot is on the line in maintaining the status quo in terms of American culture and sport.[3] The NFL continued for a long time to deny any link between the CTE dementia and football even though the wealthy non-profit organization’s own sponsored study had already admitted to a link—the league kept the result secret for years.

Blinded by the astonishingly high pay, the players too have been complicit, even self-destructive, as they have ignored the incoming scientific evidence culled from the dead brains of former colleagues. The illusion of immortality that typically runs out of steam by age 40 is alive and well in many young athletes. Together with the monetary high, the illusion can feed the denial.

Perhaps even more astonishing, given the huge amount of money on the line for the NFL as well as that league’s players (and the team owners) is the propensity of masses of people to continue right ahead as if nothing had changed, even with the new knowledge. During the 2013-2014 season, two years after PBS’s Frontline exposition of the scientific evidence of “brown matter” in the brains of ex-pro-football players not yet elderly and Frontline’s investigation of the NFL’s cover-up and subsequent damage-control, I discerned no shift away from the huge interest in NFL games among the American public. Sunday afternoons still turned residential neighborhoods into temporary ghost-towns.

Do we not understand the concept of a sport in which head-bashing is a staple as being inherently dangerous? I think we do. Cognitive dissidence, the holding of contradictory beliefs simultaneously, is in all likelihood enabling the denial. This lapse so happens to be in line with the moneyed status quo and popular culture writ large. Change in the sport’s popularity is likely to be long in coming, and so the dollars are likely to keep coming to the NFL, the team owners, and the players. Powerful interests being highly invested in perpetuating the status quo while seeming to adequately address destabilizing news is nothing new.

American fans at the World Cup 2014 in Brazil, cheering on their team. Could the leap in numbers and enthusiasm be a game changer in terms of American sports? If so, will the most dangerous game bear the brunt of the squeeze? (Image Source: Frederic Brown via Getty Images)

The axis of change can come from unexpected places, however, with an earthquake far away setting in motion a sea-change of change eventually from the subtle shifts of subterranean tectonic plates under the sea. The frenzy intensifying at huge viewing parties in major American cities as team USA made its way through the World Cup in 2014, and the increased American viewership up 44 percent over the previous Cup in 2010 may evince such an earthquake, with any subsequent gradual shift under American sports being much less visible.[4]
In the 2014 tournament, a record-breaking 18.2 million viewers in the U.S.—a record American viewership at that point for a soccer game—saw the U.S. game with the E.U. state of Portugal.[5] For the game between the U.S. and the E.U. state of Germany, 1.7 million concurrent viewers were logged on to ESPN—more than the number that had signed in to watch Super Bowl less than five months earlier.[6] For the final, the record broke again, with 26.5 million people in the U.S. watching, according to the Nielson company, with over 750,000 more people watching the game online at any given minute.[7] Generally speaking, the average viewership in the U.S. for all of the 2014 World Cup matches was up nearly 40 percent over the previous Cup in 2010.[8]

Such a leap in popularity raises the possibility that soccer, which is known more accurately to the rest of the world as football, could act as a sort of pressure-release value on the inherently dangerous sport of head-clashes and body collisions. Even though the two sports are played in different seasons, the people over at the danger-plagued NFL must have noticed the dramatically increased popularity of soccer in the summer of 2014.

To be sure, soccer still had a distance to go before triumphing over American football’s major feast-day. After all, American football is, well, American, while taking up soccer means getting in bed with the rest of the world--something anathema to American isolationists and the "City on a Hill" pilgrims. Additionally, as some pundits observed, a low-scoring soccer game can be pretty boring (like baseball?). That's actually a fair point, which is why I advocate the heresy of making the goals wider. Lest too much scoring occur, the economic law of declining marginal returns suggests that the width be brought in a bit, though still wider than was the case for all those low-scoring World Cup games in 2010. Lest the statistics-obsessed traditionalist lose it over this suggestion, those little factoids are merely means, rather then ends in themselves.

Whether or not soccer is spruced up, the huge bump in both fan enthusiasm and numbers of Americans watching the World Cup games may point to a opening void in American sports, festering just under the surface since the bad news for American football Fans from that sport may one day be up for grabs, with the healthier, more athletic sport hopefully scoring more and reaping the benefits.

[1] Frontline, “League of Denial,” PBS, 2012.
[2] Ibid.
[3] Brent Schotenboer, “NFL Takes Aim at $25 Billion, But at What Price?USA Today, February 5, 2014.
[4] Kim Bellware, “USA vs. Belgium World Cup Match Breaks Another Ratings Record,” The Huffington Post, July 2, 2014.
[5] Kim Bellware, “It’s Official: The United States As a Nation Has Gone World Cup Crazy,” The Huffington Post, June 27, 2014.
[6] Ibid.
[7]David Bauder, "The World Cup Final Was the Most Watched Soccer Game in U.S. History," Associated Press, July 14, 2014.
[8] Ibid.

Wednesday, June 25, 2014

On the Banality of Disruptive Innovation

When a herd grabs hold of something, odds are that its original meaning will not only get trampled over, but also in a way that turns it up-side down before spreading it all over as if it were sweet-smelling manure. Particularly striking is the ensuing willfulness that typically contravenes efforts to pen in the herd to the confines of the term’s definition. I have in mind the erroneous and even tautological self-aggrandizing trajectory of the term disruption in the business sector of society. Drawing on Nietzsche, I submit that the offending sickness is centered in an interlarding presumptuousness to define an existing word conveniently, even in ways that are antithetical to the received meaning. That is to say, this cultural problem involves more than garden-variety ignorance.

The full essay has been incorporated into (or swallowed up by) On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available in print and as an ebook at Amazon.

Saturday, June 21, 2014

Presbyterian Church (USA): Divestment from Companies Helping Israel

By a narrow vote of 310 to 303, the General Assembly of the Presbyterian Church (USA) voted in June 2014 to divest about $21 million in stock from Motorola, Caterpillar, and Hewlett Packard because their respective products were being used by the Israeli Government in violent occupation of the Palestinian territories. The Friends Fiduciary Corp, which manages investments for 250 Quaker groups, had divested from Catepillar, Motorola, and Veolia Environment two years earlier, and in 2013 the Mennonite Central Committee decided not to “knowingly invest in companies that benefit from products or services used to perpetrate acts of violence against Palestinians [and] Israelis.”[1] This point brings up the ethical point of what to do about companies that sell products used in violence by the Palestinians. To occupy is not like being occupied, though violence is violence. Moreover, using divestment from holding equity in a company may not be a very effective strategy, other than perhaps serving as a symbol, though even in this respect the effort can fad without having brought about the desired policy change.

The Caterpillar bulldozers used by the Israelis to topple Palestinian neighborhoods in shows of “collective justice” had actually been sold to the U.S. Government, which in turn either sold or gave the trucks to Israel. Even if Caterpillar’s management could possibly have predicted the eventual transfer from the buyer to a third party, holding the company ethically responsible for the actions of the U.S. Government would be unfair. To be sure, were the product inherently dangerous, such as a grenade, the eventual use could be anticipated even by the manufacturer, but a bulldozer truck’s use is not inherently violent. Nor would it be fair to draw attention to the company simply out of frustration with the U.S. Government, given the power of the main Israeli lobby, the American Israel Public Affairs Committee (AIPAC). If the U.S. Government is looking the other way as it hands over billions of dollars in aid to Israel even as it continues to occupy Palestinian territory and build still more settlements, taking frustration out on the companies that sell to Israel’s government violates the ethical principle of fairness. Even if divestment pressures the companies not to sell to Israel, the products can wind up there in ways that are beyond the ability of companies to control.

Furthermore, how much financial damage to the three companies is exacted from selling $21 million in stock? Presumably buyers exist—the Dow at the time heading close to 17,000 and the S&P above 1960. The principle impact, I submit, is symbolic; a religious group of 1.76 million members essentially says “No” to Israel’s violence-ridden occupation of a people. The ethical dimension is salient owing to the fact that the group is religious in nature. Yet even in this respect, like the years of divestment from South Africa to free Nelson Mandela and put an end to apartheid, the creation of a symbol does not portend quick results. Indeed, the condition of divestment can itself become part of the status quo, rather than an event.

Additionally, the symbol may backfire. At the Presbyterian assembly meeting, Rabbi Steve Gutow of the Jewish Council for Public Affairs, described the vote as coming out of a “deep animus” against “both the Jewish people and the State of Israel.”[2] To be sure, as depicted in the Oscar-winning 1947 film, Gentleman’s Agreement, anti-Semitism can be as subtle as simply saying nothing after a joke at a dinner table. Following the defeat of the Nazi Germany, many Americans were doubtless able to conclude that anti-Semitism and racism had been squashed “over there”—meaning there’s none of that here. The film demonstrates just how pervasive denial can be. Nevertheless, anti-Semitism (and racism) can also be used as a weapon that obfuscates the real point of a decision such as that of the Presbyterians. The violence of an occupier is sufficiently galvanizing for observers that the alternative charge of anti-Semitism has the air of phoniness. In other words, a person can be against such violence without hating Jews.

Therefore, both the divestment strategy and the charge of anti-Semitism can be viewed as weak responses. To the extent that political mobilization would be futile too, given the political power of the pro-Israel lobby in Washington, D.C., we might just be left with a “no good alternative” situation in which the quagmire goes on and on. With regard to the natural frustration at the status quo protected by long-entrenched, powerful interests, perhaps the sad reality is that most people simply tune out.

[1] Jaweed Kaleem, “Presbyterian Church (USA) Makes Controversial Divestment Move Against Israel,” The Huffington Post, June 20, 2014.
[2] Ibid.

Thursday, June 12, 2014

Trading Egalitarian Reputational Capital For First-Class Business: JetBlue Airline

It may sound trite, but managers really do compromise or expunge their company’s reputational capital altogether in order to chase down the additional revenue obtainable from a market segment that had been extraneous to the reputation. If the new advertisements have a Janus-like duplicitousness air, the source is not likely even to admit to the previously long-held principles. Indeed, the contrivance can be discerned from the way in which artful managers use words themselves—stretching them for an intended effect well past their respective meanings and customary usages. Unfortunately, the made-up diction can be contagious in a society that esteems organizational position.

I have in mind Jet Blue’s switch from its egalitarian single-class cabins to the first/coach bifurcated model. Left in the jet-wash is the company’s long-standing principle of egalitarianism, lost in the anticipation of more revenue from business travelers. Jami Counter at a website that includes reviews of airlines suggests that Jet Blue would no longer be “challenged winning their fair share of corporate and business contracts because they didn’t have a true premium experience.”[1] What, pray tell, is a premium experience? How does a true one differ from the mere garden-variety? In the case of JetBlue, the benefits to the business traveler include “the longest, widest flatbed seats” on any route within the U.S., and four “suites”—single-seat “pods” with their own doors.[2] The latter reminds me of the forts my elementary school friends and I used to make in the woods behind the school; each of us would pick a bush and use its base to build a tiny enclosed “fort.” It would seem that adult business travelers have the same instinct.

In any case, we don’t have to look far to see where verbal garbage like “a true premium experience” comes from. Perhaps the experience-warping complimentary “signature drink” before take-off and a “cocktail” before dinner might render experience itself transparent, such that the airline could indeed market “experience” itself. All the same, I would be more interested in the 100 channels on the seat’s 15-inch screen, and whether I could plug my laptop into it as I sit in my little fort as the elongated tin can careens forward at 30,000 feet at 500 miles an hour.

Jamie Perry, the airline’s director of product development, delivered a line as if on cue that the novelty would not be limited to the “Mint,” or first-class” experience; an “effort to reinvent the core cabin”[3]—where “core” is a cover for coach—boils down to bigger seats, power-outlets at each one, and up to 100 channels of television undoubtedly to placate perturbed pre-existing customers accustomed to flying egalitarian. Perry's linguistic over-reach—the larger seats and additional plugs hardly constituting an invention in any sense of the word (and reinvention being an oxymoron, like rebeginning)—points to a certain round-aboutness that is anything but up-front and transparent. 

Behind the "reinvented cabin" is a manufactured shift from the longstanding egalitarian premise to that of all boats rising—just not to the same level. The lack of equivalence is precisely what the fuzzy word-play is meant to blur. That is to say, the crafty wordplay—“core” for coach and “premium experience” for first-class service—dovetails with the wily switch from the long-held principle to one that allows for broader revenue streams. 

I disagree with Counter’s contention that JetBlue did not change its business model in the process; in fact, I would say that the first-class/coach standard fare deprives the airline of the more distinctive model, and thus of the associated reputational capital. To be sure, Counter does acknowledge that the change “could alienate the loyal JetBlue flier who now has to walk past (five) rows of a very premium experience.”[4] There we go again! How exactly does a person walk past an experience? Does a person say, “Hey, guess what—yesterday I was out doing errands and I drove right past an experience!” The response is likely to be, “Time for your medication again, dear.”

In actuality, the coach passengers are to walk past rows of more spacious seating arrangements and larger television screens. Putting the matter thusly, rather than artfully and without concrete substance, makes the cost to the airline’s reputational capital transparent—especially with respect to the loyal (i.e., long-standing) passengers who will of course instantly notice the unpalatable change. Such passengers need only look over at Southwest Airline, whose approach to attracting more business passengers was to expand to big-city airports and offer “business select” priority boarding, a free drink, and extra frequent-flier miles rather than introducing a separate class of seating.[5] That is to say, Jetblue managers could have went with alternatives to the old first-class/coach model. The principles that a company supposedly “stands for” are indeed expendable, particularly when they grind up against an untapped source of revenue.

1. Charisse Jones, “Egalitarian JetBlue Tries Out First Class,” USA Today, June 12, 2014.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ben Mutzabaugh, “Southwest Finds Itself at a Crossroads,” USA Today, June 30, 2014.

Monday, June 9, 2014

On the Toxicity of Ineptitude and Denial: The Case of Wal-mart's Pharmacy

On June 6, 2014, Walmart conducted its annual stockholder meeting under “scrutiny on all fronts.”[1] Revenue at the company’s stores in the U.S. had declined for five consecutive quarters. Walmart was also facing ethical questions over how the company’s executives handled bribery allegations at the Mexican division, as well as on the low wages going to non-supervisory workers (esp. part-timers). In short, the question facing the management was whether the company was being managed by cutting corners, as manifest both in terms on incompetence and unethical conduct. That the shareholder proposal to split off the chair of the board from the CEO did not meet even a preliminary tally of votes suggests that the company would sooner go under than that its management would be held to account.

On the day of the meeting, I happened to be at a Walmart store for what must have been two hours. I had stopped in to pick up medicine only to find that the pharmacy employees had lost my prescription. “You cancelled it and it was handed back to you,” an employee informed me. The system says you have it. Well, I didn’t, and after waiting over an hour for a manager to look at the camera footage, I was coming to the conclusion that someone had lied to cover up the mistake. For the prescription was cancelled and returned to me forty-five minutes after camera footage showed me leaving the store for the day. “You could have phoned in the cancellation,” the store manager suggested. Unfortunately for him, that would not explain how the paper prescription got into my hands.

Turning to his assistant, the shift manager, I asked if it is likely that the prescription had been inadvertently thrown way. “Oh, no, that doesn’t happen here,” she assured me. “Well,” I concluded, “then if no one handed it to me, and your employees don’t throw things out in there, then the prescription should still be in there, right?” Even as she nodded affirmatively—meaning the paper had been misplaced—the store manager interjected his view that the chances are minimal that it is still there. “The system indicates that it was given to you,” he said. I was stunned. Had he not been listening? I began to understand how it could be that the front managers and cashiers could have been getting away with treating customers so rudely right under the nose of the store’s manager. He went on to add that he and his assistant had done “excellent due diligence” and unfortunately the camera angle did not give him a clear view of me talking with the pharmacist after I had dropped off the prescription so he couldn’t be sure—in spite of having “an excellent camera system.” I was stunned at the sheer disjunction in what the guy was saying.

Clearly, someone had lied, as no one had handed back my prescription to me (and I had not cancelled the prescription). In this case, the lie had staying power, for the medical provider who had written the prescription refused to reissue or revalidate it even when the pharmacist called to explain the situation. Even though Walmart had erroneously cancelled and lost my prescription, it was “my responsibility.” I was between a rock and a hard place, neither one being willing or even perhaps even capable of deviating from a rigid script. Not having a primary-care physician locally, I would have to go without until the end of my visit.

Speaking the next day with a pharmacist at a Walgreens after I tried again in vain by stopping by the offending hospital’s emergency room, I learned that it was indeed unusual for a prescription provider to refuse to revalidate a prescription that had been erroneously cancelled. I also gathered from that pharmacist that I had erred in supposing that the pharmacy at a Walmart would somehow be immune from the sort of incompetence that plagues the company at the store level.

That very evening, a Walmart truck-driver killed one comic and seriously injured Tracy Morgan and two other passengers on the New Jersey Turnpike after going without sleep for than 24 hours.[2] In response, a Walmart statement claimed that the employee had not violated any federal regulations. Nevertheless, police charged him with manslaughter and assault. Interestingly, Congress was at the time bowing to industry pressure by backing off proposed regulations that would have required companies like Walmart to see to it that their truck drivers are getting enough sleep. One might say that Walmart’s management is asleep behind the wheel, even amid claims of being fully alert.

[1] Anne D’Innocenzio, “Walmart Faces Shareholder Scrutiny at Annual Meeting,” The Associated Press, June 6, 2014.
[2] David Jones, “Truck Driver in Tracy Morgan Crash Had Not Slept in 24 Hours: Complaint,” The Huffington Post, June 9, 2014.

Tuesday, June 3, 2014

Living the Urban Life: Increasing Economic Inequalities?

Richard Rinaldi, an innovative photographer in New York City, devised an interesting photo series, titled "Touching Strangers." It provides an answer to the following question: If brought together literally through touch, will two people who have never met begin, after some initial discomfort, to feel comfort, even a feeling of caring for the other person? Richard traversed the streets of Manhattan looking for pairs to put together. Seeing one person, and then another, who together would make an interesting picture, he would ask them simply to stand together. The  resulting picture would depict any initial reluctance. Then, he would arrange the two so they are touching each other in a friendly way.

A curious thing came out in the resulting pictures: a feeling of caring. Astonished, the subjects invariably reported that merely from the touching they actually had actually begun to care about a stranger! Reflecting on this feedback, Richard said in an interview that his “experiment” reveals humanity that lies within us, that we wish there were more of in the world, and that existed in the past. By “the past,” the photographer was referring to the photo shoots.

If we are willing to go a bit farther back in our reflection, say to the state of nature, whether mythic or historical, we can profit from the theory of Jean-Jacques Rousseau, which can explain why we do not feel more caring and compassion as we inhabit great edifices of modern business, government, and society. Indeed, it may be that those tremendous artifacts within which we work, argue, and live may have gradually changed human nature itself—and not for the better.

In his Discourse on Inequality,[1] Rousseau argues that humanity was in a much better condition in the state of nature, before all the artificialities of society changed us. Indeed, the question we might ask the eighteenth-century philosopher is whether forming commercial enterprises, governments and societies has modified human nature itself, or merely our proclivities. Rousseau’s view of “primitive” humanity is best grasped in a bundle.

With “savage man, wandering about in the forests, without industry, without speech, without any fixed residence, an equal stranger to war and every social connection, without standing in any shape in need of his fellows, as well as without any desire of hurting them, and perhaps even without ever distinguishing them individually one from the other, subject to few passions, and finding in himself all he wants, let us, I say, conclude that savage man thus circumstanced had no knowledge or sentiment but such as are proper to that condition, that he was alone sensible of his real necessities, took notice of nothing but what it was his interest to see, and that his understanding made as little progress as his vanity.”

We are naturally inclined to far less social interaction than is foisted on us by living in towns and cities. Less social intercourse meant less conflict and even fewer desires—hence my question of whether human nature was different. All that the savage man desired was limited to whatever nature could provide of its own making, rather than by means of man’s cultivation of forest and field. “The first sentiment of man was that of his existence, his first care that of preserving it. The productions of the earth yielded him all the assistance he required; instinct prompted him to make use of them.”

Like Hesiod’s and Ovid’s idyllic descriptions of a Golden Age, whose natural wealth literally grows on trees for the easy taking, Rousseau (unlike Aristotle, whose notion of natural wealth involves the labor of cultivating land) views labor for the savage’s subsistence as nugatory; real labor kicks in when people start to desire wealth. In the simple life enjoyed by primitive man, free time gave rise to more and more “conveniences.”  Through regular use (given declining marginal utility), they “lost almost all their aptness to please, and even degenerated into real wants, the privation of them became far more intolerable than the possession of them had been agreeable; to lose them was a misfortune, to possess them no happiness.

"There being no wealth or property and only limited contact with other humans at first, pride and jealousy from comparisons with others were either not yet in human nature or latent in its bowels. Hence, Rousseau rejects Hobbes’ theory that constant warfare exists in the state of nature and thus justifies the institution of government—even a tyrant. In fact, Rousseau refers directly to Hobbes’ theory in remarking, “so many authors have hastily concluded that man is naturally cruel, and requires a regular system of police to be reclaimed; whereas nothing can be more gentle than he in his primitive state.” To Hobbes life in the state of nature is short, cruel, and brutish. Rousseau totally rejects this view.

Rousseau argues that pity, or empathy for others who are suffering, is  a sentiment natural in human beings:

"(P)ity is a natural sentiment, which, by moderating in every individual the activity of self-love, contributes to the mutual preservation of the whole species. It is this pity which hurries us without reflection to the assistance of those we see in distress; it is this pity which, in a state of nature, stands for laws, for manners, for virtue, with this advantage, that no one is tempted to disobey her sweet and gentle voice: it is this pity which will always hinder a robust savage from plundering a feeble child, or infirm old man, of the subsistence they have acquired with pain and difficulty, if he has but the least prospect of providing for himself by any other means.”

In the state of nature, the compassion is not yet overwhelmed by the vices borne of the close proximity of other people in society. Empathy can check anger and fighting in the state of nature. Before the institution of property and law to protect it, “goodness of heart” was “suitable to the pure state of nature.” Furthermore, “nothing can be more gentle than he in his primitive state, when . . .  he is withheld by natural compassion from doing any injury to others. . . . For according to the axiom of the wise Locke, Where there is no property, there can be no injury.”

Rousseau embraces Locke’s theory that property arises from one’s labor. “(I)t is impossible to conceive how property can flow from any other source but industry; for what can a man add but his labour to things which he has not made, in order to acquire a property in them? . . . enjoyment forming a continued possession is easily transformed into a property.” To Rousseau, mine and yours came about in the process of societalization. “The first man, who, after enclosing a piece of ground, took it into his head to say, ‘This is mine,’ and found people simple enough to believe him, was the true founder of civil society.”

Furthermore, because man in the state of nature was oriented to “his real necessities,” no impetus kicked in to trigger industry. Hence, there was no economic inequality beyond that which nature grants. Referring to human beings in the state of nature, Rousseau maintains,

"(A)s long as they undertook such works only as a single person could finish, and stuck to such arts as did not require the joint endeavours of several hands, they lived free, healthy, honest and happy, as much as their nature would admit, and continued to enjoy with each other all the pleasures of an independent intercourse; but from the moment one man began to stand in need of another's assistance; from the moment it appeared an advantage for one man to possess the quantity of provisions requisite for two, all equality vanished; property started up; labour became necessary; and boundless forests became smiling fields, which it was found necessary to water with human sweat, and in which slavery and misery were soon seen to sprout out and grow with the fruits of the earth.”

The increased industry involved the development of reason and understanding, which have also led to problems. The savage man needed only to learn “to surmount the obstacles of nature, to contend in case of necessity with other animals, to dispute his subsistence even with other men, or indemnify himself for the loss of whatever he found himself obliged to part with to the strongest.” As the mind grew more enlightened, “property, and along with it perhaps a thousand quarrels and battles” more than countered the epistemological benefits. Whereas Hegel hails the progression of reason through human history, Rousseau sees a link between the expanding use of reason, increased wealth, and more wants and thus comparisons and conquest. In other words, modern man uses reason much more than is natural, and this had led to problems confined to society rather than based in the savage man.

In political terms, “Those who heretofore wandered through the woods, by taking to a more settled way of life, gradually flock together, coalesce into several separate bodies, and at length form in every country distinct nations.” From the increased interaction between people, jealousy and warfare take off. “Every one [sic] begins to survey the rest, and wishes to be surveyed himself; and public esteem acquires a value. . . . From these first preferences there proceeded on one side vanity and contempt, on the other envy and shame; and the fermentation raised by these new leavens at length produced combinations fatal to happiness and innocence. . . It was thus that every man, punishing the contempt expressed for him by others in proportion to the value he set upon himself, the effects of revenge became terrible, and men learned to be sanguinary and cruel.” Increased contact with others from that of our natural state leads to tremendous problems. Interestingly, the increased cruelty suggests that the human race has become weaker, as it is the weak person who seeks to dominate who is intentionally cruel.

According to Rousseau, our bad qualities have surged ahead of our pre-existing good ones. Society and the ensuing established relations among people draw on “qualities different from those . . . derived from their primitive constitution.” The question is perhaps whether the bad qualities had been merely latent, or altogether absent from human nature. Put another way, have the artificial aspects of society changed human nature or merely altered the balance between a number of instincts that we have come to see as good and bad?

In referring to different characteristics of man coming to dominate others, Rousseau implies that human nature has not changed. On the other hand, he also writes that “natural compassion” has “suffered some alteration” as human interaction has increased. Moreover, "the spirit of society" and "the inequality [that] society engenders" have changed and transformed "all our natural inclinations." This would seem to go beyond merely increasing some and decreasing others, suggesting instead that human nature itself has been altered, even transformed.

The implications from the change in context being able to transform human nature could only be highly significant. It would seem that societal artifacts, including systems of business and government, can render humans less humane in our very nature, which is perhaps to say human, all too human.

1. All quotes are from Jean-Jacques Rousseau, Discourse on the Origins of Inequality, Harvard Classics, Charles W. Eliot, ed., Vol. 34 (Cambridge: Harvard University Press, 1910).