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Wednesday, August 31, 2011

Nietzsche on Bank of America

The positive correlation between incompetence and unethical conduct at companies is striking, for, theoretically at least, a person can be talented or smart and of questionable character. Of course, it could be that cutting corners is a survival strategy of people who are not competent. However, shirking seems to reflect a sordid character, which, like personality, is relatively constant throughout one’s life—though character flaws could manifest more when times are tough (as in when incompetence has eventuated in a dire balance sheet). One might investigate, moreover, whether a firm’s culture can become more tolerant of unethical conduct when the finances are going south—or do unethical cultures tend to be like fixtures in organizations irrespective of financial condition?

The full essay has been incorporated into On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available at Amazon.

Tuesday, August 30, 2011

Angela Merkel: Leading Germany in the E.U.

In the E.U. state of Germany, Angela Merkel had her work cut out for her in getting her coalition to carry the German House, or Bundestag. In vesting the debt bailout fund with powers had been at the state level. The Wall Street Journal reported that conservatives feared the deal would “open to the door to relinquishing more sovereignty to the European Union.” Also, the legislators in her Free/Christian Democrat coalition were having trouble justifying the increased cost to their constituents of the expanded fund even though it is geared to keeping the E.U. debt-loads at the state level from spinning out of control—meaning at the expense of the German economy. Economically, it can be argued that expanding the E.U.’s bailout fun is in the economic interest of the state of Germany and its residents.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Monday, August 29, 2011

Eye of the 24/7 News-Cycle: Profits & Attention

For about a week toward the end of August 2011, the news networks in the U.S. seemed utterly captivated, or obsessed, with Hurricane “Irene,” which was running up the east coast from North Carolina to New England. The prognosis had been given as a fait accompli when the storm was just pulling out of the Bahamas. A rough convergence of the models was taken for certainty. If this obsessiveness sounds familiar, it may be because on virtually any major story, the 24-hour news networks have tended to crowd out other stories even when the marginal utility of the added coverage on the major story is very low. Editors go with filler on the major story rather than risk losing viewers by breaking away to cover the other news to a meaningful extent. Viewers who are not obsessed with the main story may view the networks as obsessed while the networks may view themselves as merely satisfying a growing obsession by viewers. In any case, the narrowness of coverage, as if a major story should crowd out other news, is problematic, for it ultimately leaves the American people less well informed than they would otherwise be of what is happening around them. 
The constant coverage and hyperbole that typically accompany a major news story can whip some viewers into a frenzy of binge-watching, which doesn't hurt ratings. To be sure, some stories, such as the 2020 U.S. presidential election, contain their own built-in excitement. 
When the hurricane named Irene failed to strengthen after the Bahamas, little was made of it; reporters did not point out that the storm’s eyewall, which had collapsed, did not re-form out of a contracting outer wall. Instead, the media obsessed on where the storm would make landfall. According to James Franklin of the National Hurricane Center, “There were a lot of rain bands competing for the same energy. So when the eyewall collapsed, there were winds over a large area.”[1] Spread over a larger area, the winds were less intense. So what was predicted to be a Category 2 or possibly Category 3 storm at landfall in North Carolina was in fact a Category 1 storm. After North Carolina, the storm weakened even more rather than strengthening over the water east of Maryland and Delaware. The water was slightly cooler and the winds and drier area of another weather system kept the storm from strengthening. 
Even so, the media was reporting that the hurricane would reach New York City as a hurricane. No mention was made of the fact that the storm was downgraded to a tropical storm prior to reaching New York City. Instead, the media kept up the storyline of lower Manhattan being set to go underwater. Eventualities based on an assumed worst-case-scenario were played out ad nausea even after the storm had been downgraded from hurricane status! Not surprisingly, New Yorkers were underwhelmed and most of the rest of us might have wondered whether the five or six day marathon had been worthwhile.
To be sure, damage was in the billions of dollars (especially from flooding far from the coast). The storm was a Category 1 hurricane when it arrived in North Carolina and a large and very wet tropical storm when it headed from New Jersey to New York and into interior New England. Also, the hurricane had the potential early-on to be devastating to the major cities on the eastern seaboard. So getting the warning out, particularly to folks on North Carolina’s outer banks, was important. However, the overkill had its own costs, including the opportunity cost of foregone, neglected news. Other things were happening during that week in August 2011. At the very least, the American broadcast media suffered from tunnel vision, was slow in reacting to the diminished destructiveness of the storm and was partial in reporting the updated storm information as it came in.  The partiality was in line with perpetuating the rather dramatic worst-case-scenario. I contend that this did not happen by accident.
As if to vindicate all the attention devoted to the story and the catastrophic portant, at least one network showed water going over a reporter’s feet when the tropical storm was at New York City. After the storm, as the nonstop coverage astonishingly continued, one reporter was interviewed because at one point on a boardwalk she could see foam below the boards. So much for catastrophic. Along with the omission of data indicating the storm was weakening, the refusal to budge from the storyline of utter destructiveness points to something being up (i.e., even beyond acting on behalf of public officials in sounding the alarm).

It is as though the media was bound and determined to run through the storyline come hell or high water—even if there was neither. Better to keep on message than change course because the latter would imply that the original storyline had been wrong. In obsessing on the projected path of the storm, the media ignored data on the diminished strength. “(I)t was not surprising that the strength forecasts were off,” according to the New York Times. “The accuracy of such forecasts has hardly improved over the past several decades.” In the wake of hurricane Irene, readers might have been thinking, now you tell us. However, it is not just overreliance on predictions; the media had an interest in ignoring the inherent inaccuracy.

The staff at the news networks might want to take the limits of human knowledge to heart the next time a storm pops up in the Caribbean, and the rest of us might want to remember that it is in the self-interest of the media companies and their personalities to exaggerate the dramatic scenario and then pretend that they have done no such thing when things turn out differently. In other words, there is not apt to be a learning curve on this circulation of profits and attention around an eye of ego—this is one spin that can be predicted. The game is up, journalists, but whether anything can be done about your little scam is another story—one that no doubt will also be preempted by some pressing disaster that demands a monopoly of attention across the continent of North America and beyond.

1. Henry Fountain, “Hurricane Lost Steam as Experts Misjudged Structure and Next Move,” New York Times, August 28, 2011. http://www.nytimes.com/2011/08/29/us/29forecast.html