The Mammoth Indoor Mall: A Dinosaur or a Reusable Shell?

One of the pitfalls in maintaining a general gaze at the long-term trend toward e-commerce at the expense of "brick-and-mortar" stores lies in missing or overlooking other changes in the business environment. The weight of such changes can fall largely within the "brick-and-mortar" world, impacting some of its neighborhoods more than others. Not all change impacting commerce in 2013 stemmed from the internet. The fate of the indoor mall is a case in point. Taking into account the obvious impact of online purchases does not explain why stand-alone stores and outlets were doing so much better than the noisy, sterile malls. 

Anticipating further detrimental impact on in-person transactions from increasing online purchases, Michael burden, a principal with Excess Space Retail Services, predicted after the Christmas season of 2013 that the retail sector would likely see an average decrease in overall retail square footage of between one-third and one-half within the next five to ten years. He cited fewer mall visits and less inventory needing to be stocked in the stores.[1] Less retail space not only includes smaller stores, but fewer as well. As regards store closings, the question of whether the indoor mall is to stand only as an artifact of an earlier society or a structure that can adapt to ever-changing societal mores begs for a definitive answer. 

One big shift in store closings underway already by 2014 stemmed from retailers shying away from indoor malls, favoring instead outlet centers, outdoor malls, and stand-alone stores. "There's no question that mall stores are closing quicker than the open air [variety],” David Birnbrey of The Shopping Center Group said.[2] Although new retail construction completions were at the time at an all-time low, the supply of new outlet centers had picked up in recent quarters according to Richard Ellis of CD.[3] Meanwhile, no new indoor malls were being constructed. Rick Caruso, founder and CEO of Caruso Affiliated, was unaware of any indoor mall being built in the U.S. since 2006. "Any time you stop building a product, that's usually the best indication that the customer doesn't want it anymore," he said.[4] Sometimes what is not done (or said) is more important than what the attention-getters are doing (or saying).

What exactly lies behind the impending demise of the shopping mall? E-commerce cannot be the whole story, for otherwise the outlets, outdoor malls, and stand-alone stores would face an equally dismal prospect. Rick Caruso declared at the 2014 National Retail Federation convention that at one point, the indoor mall “may have met the developer's needs—and even for [a while], the consumer's needs—but it has outlived its usefulness."[5] Without a major reinvention, traditional malls would soon go extinct as though a species unwilling or unable to adapt to rapidly accelerating climate change. 

Unlike the sort of experience that coffee shops off, the amusements here at Mall of America in 2005 are only indirectly linked to the products. (Image Source: Jeremy Noble)

Specifically, mall retailers must figure out how to get back in sync with people’s daily-life rhythms by creating a satisfying atmosphere for customers to experience. Many coffee shops had already achieved as much by offering wifi, good smells, particular styles of music (or none), and comfort (e.g., nice chairs, no fear of getting kicked out for hanging out too long, etc).[6] The comfort factor is subtle though significant nonetheless. Just weeks into 2014, news broke of yet another “mall shooting.” Malls and schools were already becoming associated with guns and death in the psyche of the general public. The managers of malls themselves and the particular stores therein faced the daunting task of finding and implementing novel experiences in line with a “modern-modern” society while facing a stiff headwind manifesting as an increasingly bad reputation in the broader society.

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1. Krystina Gustafson, “A ‘Tsunami’ of Store Closings Expected to Hit Retail,” CNBC.com, 22 January 2014.

2. Ibid.

3. Ibid.

4.  Ibid.

5. Krystina Gustafson, “Without Rebirth, Malls Face Extinction: Developer,” CNBC.com, 13 January 2014.

6. Interestingly, a Starbucks store manager approached me on one occasion as I was setting up my laptop just after sitting down to demand that I buy something or I’d have to leave. I pointed out that I had just arrived and was waiting for the line to shorten, and that Starbucks’ policy permits people in the stores without making a purchase, but he dismissed both points and continued to bark his order as though I were an alien insect. I left rather than made the purchase I had intended, and called Starbucks’ customer service to complain of the manager who could not be wrong. After a bit of fake sympathy and affirmation of the policy as I had understood it, the “customer service” employee impotently said, “Unfortunately I cannot call that store manager to correct him on the policy.” I mention this because I have not since felt as comfortable surfing the net while enjoying a coffee in a Starbucks store. In fact, I stopped going to Starbucks stores and not soon thereafter gave up coffee as a regular drink because of its negative effects on the body (such as hard stools, headaches, and a general sense of nervousness while on the drug). 

Online Sales: Breaking the Egg

Was the 2013 holiday season really a turning point in terms of online purchases? Can a business environment change so drastically from one Christmas to the next? If not, what can we say about a commercial system that buckles, at least at its weakest link, under the pressure of a moderate change in buying habits? Put another way, does such buckling necessarily indicate or point to the existence of a threshold point that has suddenly and unexpectedly been crossed? Alternatively, the system itself may be weak.

During the November-December holiday season of 2004, online sales revenue in the U.S. increased 25 percent from the year before.[1] CNN Money reported the increase as 29.5 percent—almost a third of total holiday sales.[2] This healthy numbers can be deceiving, however, if the base is low relative to the total. That is, if the online holiday sales figure as a percentage of total holiday sales is around 2 percent, an increase of 25 percent from the prior year’s online sales is immaterial in terms of the change in the percent of online sales to total from the prior to the current year. As shown below, fourth quarter percentages-of-total (rather than of increase) increased from roughly 1.7 in 2003 to 2 percent in 2004. This change is hardly earth-shattering.

Estimated Quarterly U.S. Retail E-commerce Sales as a Percent of Total Quarterly Retail Sales

4th Quarter 1999 to 4th Quarter 2004[3]

So let’s look at percentage-of-total figures specifically for the combined (November and December) season of Thanksgiving and Christmas, two of the major national holidays in the United States. In 2012, the season’s online sales revenue accounted for 19.3 percent of the total retail sales.[4] Keeping in mind the magnitude of the changes shown in the graph above (0.6% to 2.2% over five years), the change from roughly 20 to 25 percent in 2013—from just one Christmas to the next—seems relatively dramatic. Yet a shift from 20 to 25 does not in itself seem very significant. Even so, it was enough for journalists to label it a “sea-change,” “threshold,” “turning point, “and “major re-alignment, capable of unleashing a virtual tsunami.

One business practitioner interviewed on CNBC in mid-January, 2014 made the startling claim that the turning point had come quite unexpectedly in just one year. I contend that conclusion is overly dramatic, though I readily concede that the five-point difference was oddly too much for a part of the system. Specifically, “an unpredictably large number of packages overwhelmed UPS,” with thousands of Christmas presents left undelivered by Christmas Eve.[5] Natalie Godwin, a spokesperson at UPS, explained. “The volume of air packages in our system exceeded the capacity of our network, as demand was much greater than the forecast.”[6] The network’s capacity itself became transparent as a constraint, as a result of demand having been much greater than anticipated. The words “capacity” and “much” point to, or intimate, a systems-level problem not just for the package-delivery company, but also for the U.S. (and perhaps global) system of commerce.

Crucially, that a percentage change of just 5 percent of total sales revenue represented as increased demand can pierce the capacity of a major link in the commercial chain from manufacturers to customers suggests not a pivotal year, but, rather, a system too (i.e., artificially) inflexible or hard. Rather than being able to adapt to changes in the environment, as any fit species does through the evolutionary process of natural selection, the American system of commerce lacks the built-in ability to stretch (and contract). By implication, reaching a threshold point, such as in demand for products sold online, is in terms of the system and behaves as a wall rather than a semi-permeable membrane. It is worth pointing out that a threshold point concerning the system of commerce also no doubt exists in terms of society (i.e., changes in daily life) and even in terms of products (i.e., transformative products as mainstays as a result of ecommerce). Just as the loud kids tend to get disproportionate attention, a rigid and complacent system gets noticed (i.e., becomes transparent as a system) more than its share. Relying on such a system warrants the warning: Watch out for the “big one”—a major earthquake of sorts capable of a truly dramatic land-shift.

1. Jennifer LeClaire, “Online Holiday Shopping Soars 25 Percent to $23 Billion,” E-Commerce Times, 4 January 2014.

2. CNN Money, “Holiday Online Sales Surge,” 5 January 2004.

3. US Census Bureau, The Department of Commerce, “Quarterly Retail E-Commerce Sales 4^th Quarter 2004.”

4. The National Retail Federation.

5. Donna Leger, “UPS System Overload Delays Holiday Packages,” USA Today, 24 December 2013.

6. Ibid.

Incentives at EBay to Exploit Its Golden Goose

When is it ok not to worry about a corporate board or management exploiting an institutional conflict-of-interest? I contend in another essay that the very structure of an institutional (i.e., based on the relationships of positions and/or organizations) is inherently unethical, hence even if not actively exploited. Here, I delve into factors that may reduce the likelihood of such a conflict being exploited. I suspect that most folks assume that the presence of such mitigating factors means that a particular conflict-of-interest is not, therefore, inherently unethical. This convenient assumption may be all too easy to make, given that it removes any need ethically-speaking to reorganize positions and roles in an organization and the relationships between organizations.


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

The Japanese Dolphin Hunt: Fishing or Killing?

Is a dolphin like a cow? Both are mammals. Both breathe air. So did Japanese government officials have a point when they rebuffed Caroline Kennedy, the U.S. Ambassador, for tweeting the U.S. Government’s stinging response to the annual dolphin round-up and slaughter at a cove in Taiji during the third week of January in 2014? If so, can we extract a cultural difference?  In assessing this question, the roles of the two very different cultures come into play. Are we then to be left in the void of cultural relativism, barred from coming to a verdict?

Dolphins in a family group. (examiner.com)

In the hunt in question, the fishermen trapped 250 dolphins, killing about 40 for food, retaining 50 more to sell to aquariums, and letting the rest go.[1]  After confining the dolphins in a netted area for three days, the fishermen led the forty into the shallow water near the cove’s beach. As shown on CNN, the fishermen utilized a dining-type tent structure to hid the actual killing from external view. The fishermen stabbed the dolphins’ heads, which is said to cause great pain.[2]

After coordinating with other embassy officials, Kennedy tweeted that the hunt had been inhumane. Yoshihide Suga, Chief Cabinet Secretary, pointed out that dolphins are “very important water resources,” just as cows are very important land resources in North America.[3] In fact, the Japanese government explicitly labeled the American critics as hypocrites for not including the killing of cows and chickens in the West. Yet it is fair to ask whether cows and chickens come close to the dolphin in terms of social development (e.g., living in families), intelligence/language, and self-awareness. For this reason, cows and chickens are not said to be “killed” in the U.S., whereas Americans refer to the dolphins hunted in Japan as being killed.

To be sure, differences in words used can come out of cultural differences; after all, the Japanese government officials refer to cows used for food in the U.S. as being killed. The East Asian culture is doubtless very much present in the response made by Taiji Mayor Kazutaka Sangen. “We have fishermen in our community, and they are exercising their fishing rights. We feel that we need to protect our residents against the criticisms.[4] The notion that government officials have a responsibility to keep their constituents from being publicly criticized must strike Westerns as quite alien.

As difficult as it is to evaluate cultural differences by a presumed “universal standard,” the legalistic defense hinging on rights can indeed be called into question. In response to Kennedy tweeting that the Japanese should not kill dolphins, Yoshihide Suga stressed that dolphin “fishing” (i.e., not killing) is “carried out appropriately in accordance with the law. Dolphin is not covered by the International Whaling Commission control,” he explained, “and it’s controlled under the responsibility of each country.”[5] In responding to the legality of the practice, Suga unwittingly commits Hume’s naturalistic fallacy—the erroneous assumption that ought comes from is. That is, he assumes that the morality of dolphin “fishing” (dolphins are not fish) is a matter of what the law is. It is as though ethics reduces to law. Kennedy could simply have noted that Sangen and Suga were not answering her normative, or ethical. Indeed, she had not tweeted anything suggesting that the “fishing” was at the time illegal.

In conclusion, biological differences between cows and dolphins may come into play in allowing the world to come down one way or another on the Japanese cultural custom. It may not be inhumane solely from the standpoint of another culture. Furthermore, spotting logical errors can also contribute to moving beyond cultural relativism to an answer.

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[1] Kirk Spitzer, “Japan Criticizes Dolphin Tweet from Kennedy,” USA Today, January 22, 2014.

[2] Elizabeth Shogren, “Ambassador Kennedy Criticizes Japan’s Dolphin Hunt,” NPR.org, January 22, 2104.

[3] Spitzer, “Japan Criticizes.”

[4] Ibid., emphasis added to the culturally relevant sentence.

[5] Ibid.

European Parliament 2014 Election: A Gray Cloud with a Silver Lining

Whereas the European Parliament election in 2009 suffered from state-level issues and low voter-turnout, the legislative election in 2014 promises to be a super-charged one in the “super-nation.” Most notably, the electoral contests are “shaping up as no less than a referendum on the merits of continuing on with the European Union itself.”[2] With popular distrust of the E.U. at an all-time high, this bit of news seems rather bad for pro-E.U. Europeans. Any pessimism in anticipation of the election that exists is mitigated by “the bigger picture.”

From: "The 2014 E.U. Parliament Election"

Making Business More Interesting: Beyond the Jargon and Figures

From a historical perspective, I suspect that what “counts,” or is recognized, as discourse on business has consecutively narrowed. An enterprising scholar in the field of business and society, which itself has narrowed to managerial tools and ideological demands (under the subterfuge of knowledge), might compare the media’s coverage of business firms beginning to sell electricity, the telephone, and the auto-carriage (i.e., automobile) in the early decades of the twentieth century with reports a century later on firms bringing out life-changing products like smartphones and other applications of computer technology. Not having been around when electricity was making houses brighter and telephones as well as cars were fundamentally changing human interaction and mobility, people following the business news on Facebook, Twitter, Apple, Google, and Microsoft do not have the historical perspective necessary to assess how broad or narrow the coverage is. 

I contend that what is considered business news (and discourse) is artificially constrained, in that coverage is biased toward the companies themselves (most particularly in CEO antics and financial numbers) at the expense, or opportunity cost, of attention on exciting new products. Put another way, the public discourse on business need not be so reductionist. The trajectory is not good for business or society. I contend that broadening (i.e., rather than replacing one media obsession with another) the coverage in business news to include, and, indeed, emphasize, substantive information on, as well as discussion of, the exciting new uses and wider implications of the companies’ respective technologically advanced products would render business news as well as business itself much more interesting, especially to people in the wider society. In this essay, I sketch how a product-centric approach would look in the business media; hopefully, the sheer difference between this alternative and the status quo reporting will provide a sense of how much journalistic discretion is involved in what we watch and read in business news.

CNBC and Fox Business News provide much material for analyzing the business media, and can be taken as illustrative of the default that had taken hold by the 2010s. The devil is in the details, so I want to concentrate on a particular example and reason inductively to generalize to the business media overall.

An interview taking place on CNBC. The choice of questions may be more important than the answers. (Image Source: Inside Cable News)

On “Squawk on the Street,” a program on CNBC, the anchors interviewed Harvey Spevak, the CEO of Equinox (a company in the fitness industry), answered questions on January 17, 2014. I want to focus on the importance on the questions. One of the show’s anchors asked Spevak about his company’s plan to offer genome analysis as a service to customers who would like to know how they respond generally to exercise. Rather than follow up with a question to illicit what customers would learn about the way they react to exercise, the journalist asked if the service was “just a marketing gimmick.” I submit that probing the service if only to assess its staying power with consumers would have been more useful to not only investors and stock analysts, but also people who would not be interested in watching and hearing a cacophony of numbers presumptuously assuming the high ground as “king of the hill” of business news.

One implication from the interviewer’s choice of follow-up question is that investor interests, assumed to be exclusively bottom-line financial, trump consumer and entrepreneur (or even competitor) interests. Such reductionism is unnecessary, and the numbers orientation may not actually be in the interests of the investors and financial analysts, not to mention CNBC’s ratings.

The interview then turned to company’s foray into wearable fitness technology. Here, the interviewer had little interest in making the products concrete for prospective customers and the wider public; he was satisfied with the Spevak’s vague description, which ended with, “It’s science.” The journalist made the choice to follow-up instead by asking what profits the CEO expected the company would make on the wearables, and, moreover, whether an IPO might come anytime soon. Potential investors (and stock analysts) would be better equipped to evaluate a future IPO were the CEO to have discussed what how the wearables could benefit users (i.e., what the products can do) as well as how the products might change our daily lives and society itself. The anchor then turned his guest to the subject of online advertising, hence inadvertently feeding the obsessive mentality in the American media generally by treating advertising as an end in itself rather than a means of making potential and even existing customers aware of products and services.

All too often, information and public discourse on products a leap ahead technologically (and hence seemingly unfathomable) are relegated to “print” reports of product announcements, such as of Google’s new contact lens that measures glucose levels. People with diabetes would quite naturally be very interested in how the new product would likely impact their daily lives. A huge segment of potential viewers and readers could be drawn in by any media outlet willing to stay on the announcement rather than run to vague considerations of profitability and stock charts.

Does not the true value (and significance, not to mention the excitement) of products coming out of leaps in technology or hitherto unrealized applications of existing technology lie in the stuff we can do with the new toys? As a writer, I get excited when I come up with a novel point or perspective to share with others because I have experienced what it feels like to have my perspective “opened up” from reading a unique piece. I am not thrilled in reading about grammar or composition tips, on the other hand; I do such “mechanical” reading as a means of improving my ability to communicate to readers. 

Public discourse on business too often obsesses on the means—even taking them to be ends in themselves­. Consequently, interest is typically confined to a narrow segment (i.e., the financial wonks). Ironically, Wall Street would be better served with the media giving more attention to the new products and their societal implications, with the expected financial consequences being secondary rather than excluded in yet another manifestation of tunnel vision. Reports and commentary on novel products themselves (as well as innovative ways of business) do indeed fall within the domain of business discourse. In fact, I would say the reorientation is more in line with the true significance of business (i.e., making and providing products that consumers want to use). Tapping into this core of business, while still attending to the financials, would, I suspect, attract a broader array of viewers and readers in the wider society beyond the business world. As an added bonus, business practitioners, investors, and even stock analysts might find their own interest piqued. A stock analyst excited as much (or more) about a novel product as charts and figures may do a better job in assessing a company’s value, and thus likely stock trend.

Of course, in order for more of the general population to realize that the true significance of business is actually more interesting, the business journalists would have to wean themselves and their interviewees off the snazzy jargon, nearly devoid of any real meaning and yet ubiquitous in the business world. The artificial excitement over such words or phrases as “champion,” “coach,” “growing leaders,” “driving” (not as in driving a car), “drivers,” and “leveraging” (beyond its oversold application to debt) is misguided in that the obsession and related excitement (out of vacuous boredom?) distract everyone from the true font of excitement in business. Additionally, the weirdness in both the sheer obsessiveness on particular words—flavors of the month—and the misuses themselves, and the artificial narrowing of what counts as business that enables knowing and enjoying the “language” to function as the passkey keep people outside the business world from becoming excited about business rather than laughing at its inhabitants’ discourse. Perhaps the practitioners and journalists who play in the business world figure, quite unconsciously of course, that business as they understand it is not really very exciting, and, therefore, that few if any people in the wider society would be likely to get excited about business anyway.

Dissecting Best Buy’s Ethic: Where There's Smoke, There's Fire

In 2010, Best Buy’s management adopted executive compensation principles that included a provision that “pay is clearly tied to . . . performance.” Frank Trestman, then chairman of the company’s compensation and human resources committee, made this statement with rose-colored glasses. After just two years, Target's board and upper management abandoned the provision amid poor numbers. Even as the management laid off 2,400 employees (1.4% of the total), the board's compensation committee approved cash bonuses of $500,000 and $2 million in restricted stock for four executives. The interim CEO, Mike Mikan, was at the time hauling in $3.3 million in annual total compensation. In the analysis that follows, I subject this "dual strategy" to two criteria: institutional conflicts-of-interest and distributive justice.


The full essay is in The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.com.

The Processes of Innovation at Google and Apple: Clash of the Titans

How exactly innovation reaches the surface of human consciousness, and how widespread this process is or could be, elude our finite grasp even if particular managers assume the potion can be applied in our bewindowed linear towers. It is all too easy to willow the question down to a matter of which floor is best suited—the top or the lower ones. We can contrast the approaches at Google and Apple (under Steve Jobs) to understand just how little we know about innovation, which is ironic as we are living in an age in which change is the only constant.

The ways in which the folks at Google and Apple have sought to capture innovation can together be taken as illustrative of the “archetypical tension in the creative process.” So says John Kao, an innovation consultant to corporations as well as governments. Regarding Google, the company’s innovation method relies “on rapid experimentation and data. The company constantly refines its search, advertising marketplace, e-mail and other services, depending on how people use its online offerings. It takes a bottom-up approach: customers are participants, essentially becoming partners in product design.” To be sure, customers, or "users," are not “participants” in a company; neither, I suspect, are subordinates. As stakeholders to be appeased, neither customers (or "guests" at Target) nor employees (or "partners" at Starbucks) can be reckoned as "participants." 

The innovation method at Google is inductive, meaning that major product improvements come at least in part from going over the feedback of individual customers. According to the New York Times, “Google speaks to the power of data-driven decision-making, and of online experimentation and networked communication. The same Internet-era tools enable crowd-sourced collaboration as well as the rapid testing of product ideas — the essence of the lean start-up method so popular in Silicon Valley and elsewhere.” The emphasis here should be placed on a multitude of specific product ideas rather than on the collaboration, for “while networked communications and marketplace experiments add useful information, breakthrough ideas still come from individuals, not committees.” As Paul Saffo, a technology forecaster in Silicon Valley, observes, “There is nothing democratic about innovation. It is always an elite activity, whether by a recognized or unrecognized elite.” Therefore, we can dismiss the presumptuous use of "participant" to describe the inclusive involvement of customers. 

The Times goes on to describe the "Apple model" (under Jobs) as "more edited, intuitive and top-down. When asked what market research went into the company’s elegant product designs, Steve Jobs had a standard answer: none. ‘It’s not the consumers’ job to know what they want.'" Jobs strikes me here as an autocrat or aristocrat of sorts pointing out that the masses don’t really know what they want. The Dowager Countess of Grantham, a character in the PBS serial Downton Abbey, would doubtless readily agree. The assumption that transformative innovation can only come from an elite fits with Apple’s deductive approach wherein a few true visionaries, such as Jobs himself, at the top present the innovative product ideas (e.g., ipod, ipad, smartphone) to be implemented by subordinates. Clearly, neither employees nor customers are participants in this approach.

King Steve Jobs. Does transformative innovation depend on visionary leadership?  (Image Source: www.fakesteve.net)

The tension between the two approaches comes down to their respective assumptions concerning whether many people or just a few are innately creative in relating imagination back to "the real world" co-exist only in tension; each of the assumptions is antagonistic toward the other. In the political realm, the same tension manifests in terms of whether a democracy is likely to end in mob rule and aristocracy in plutocracy (the rule of wealth). 

As elitist as Job’s statement may be even with respect to employees, he may have had a point that virtually no customer could have anticipated the ipad even five years before it was designed inside Apple. Moreover, it is nearly impossible to project in the 2010s what daily life will be like for people living in 2050. Could anyone in 1914 have anticipated the movies and airplanes that were commonplace by 1950?  People alive just before World War I broke out on August 10, 2014 were still getting used to the electric light, the telephone, and the strange horseless, or auto, “carriage.” As the Dowager Countess remarks in an early episode of Downton Abbey, “First electricity, now telephones. Sometimes I feel as if I’m living in an H.G. Wells novel.” As for electricity in her house, she provides an explanation that might remind us a century later of the advent of cell phones amid concerns about brain cancer. “I couldn’t have electricity in the house,” the countess insists. “I couldn’t sleep a wink. All those vapours seeping about.”

A century later, only from retrospect can we say that the smart phone and ipad had been inevitable developments of computer technology. Anticipating innovation, let alone figuring out  how to institutionalize it, provides a glimpse of a wholesale deficiency in the human brain. The sheer distance between the respective assumptions at Apple (under Jobs) and Google demonstrates just how little we as a species know about the emergence of creativity. Should we concentrate on uncovering gems like Steve Jobs, or spread out our attention to a thousand points of light? Making matters worse, the human brain may be designed to be oriented predominantly backward (with the very significant exception of anticipating an upcoming danger, such as a predator), rather than to predicting even the next transformational innovation.  

Source:

Steve Lohr, “The Yin and the Yang of Corporate Innovation,” The New York Times, January 28, 2012. 

Irrational Exuberance in Taxing and Regulating Marijuana in Alaska

As the citizens as well as legislators of Colorado were no doubt marveling in astonishment at the seismic $5 million figure for just the first week of legalized marijuana sales, Alaska Lt. Governor Mead Treadwell received a petition to legalize recreational use. With over 45,000 signatures, of which only 30,169 are sufficient, the petition correlates with polls in early 2013 revealing that 54 percent of voters support the legalization.[1] As with many other governmental matters, the devil is in the details.

Already, the legislative proposal would levy a $50 tax on each ounce of pot sold. Just imagine if such a tax were levied on each ounce of alcohol sold! Alaska lawmakers may have insisted on the exorbitant tax as part of the proposal from a desire to bilk the consumers as if they were a golden egg (or bowl), or to discourage them on moral or public health grounds from ingesting the particular product. The “crowding out” effect on State taxing power due to more and more federal taxation was certainly a political force behind the support of legislatures in Colorado, Washington, and Alaska starved for revenue.

Yet the hypocrisy practically leaps off the page in Bill Parker’s statement that marijuana is “a substance objectively less harmful than alcohol.”[2] Parker had been a legislator and the Alaska Public Safety Commissioner. Similar hypocrisy infects the comparison with tobacco, in that at least one study in 2012 reports that moderate pot recreational use does not harm the lungs whereas cigarette use does.[3] So the proposal’s prohibition of pot-smoking in public (as already was the case in Colorado) is at the very least irrational, if not reefer madness unplugged. Even the restrictions on drinking alcohol in public may be excessively paranoid, given the passing of the religious taboo against alcohol.

Nevertheless, the proposed prohibition on public smoking of marijuana (without a corresponding ban on tobacco use in outdoor public places on account of the danger posed by second-hand smoke) did not stop Tim Hinterberger, one of the proposal's principal sponsors and a professor of developmental biology at the University of Alaska in Anchorage, from accepting the proposed system of “sensible regulation,” not to mention taxation.[4] “Replacing marijuana prohibition with a system of taxation and sensible regulation will bolster Alaska’s economy by creating jobs and generating revenue for the state." The professor cheers the end of the black market in pot without realizing that the proposed $50 tax per ounce would keep the underground alive. 

Generally speaking, the highest tax rate does not necessarily proffer the most tax revenue. One could even say that the more greedy and unreasonable a sales tax, the more the underground market can be expected to thrive. Once unleashed, freedom naturally finds its own way home.

In short, it would seem that irrational exuberance is not limited to Wall Street. Perhaps the real question is why human beings have so much trouble getting over not only prejudice and moralizing, but also overreacting to the unknown. It is as if legislators and regulators assume that regulations cannot be added if needed as unforeseen dangers are uncovered or encountered. The sheer rigidity and overreaction as evinced in the regulation of the recreational use of pot may even point to a subterranean fault in the American psyche. Perhaps at least some of the widespread pot use stems from the natural frustration in being repeatedly slapped in the face by a hypertrophic fear of change and the supporting pathological ignorance that can’t be wrong and presumes itself as fully justified in snatching whatever authority it has.

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[i] Hunter Stuart, “Marijuana in Alaska Gets One Step Closer to Full Legalization,” The Huffington Post, January 8, 2014.

[ii] Ibid.

[iii] Mikaela Conley, “Marijuana Smoke Not as Damaging as Tobacco, Says Study,” ABC News, January 19, 2012.

[iv] Stuart, “Marijuana.”

Should Britain Leave the E.U.?

The real purpose of the E.U. is not economic, but political. It began as the ECSC, which was geared to making sure that Germany would not re-militarize by extracting iron from the Rhine region. The purpose of the E.U. is to obviate the sort of bloodshed that Britain saw in WWI and WWII. If the British people don't want to be in the E.U., then you should leave. I don't believe that even your own government should keep you from deciding such a matter as a people, directly. That said, with great power comes great responsibility, and this applies to popular sovereignty. In other words, the people taking up the mantle of direct democracy in a constitutional referendum should make an informed decision, looking beyond even the people's own immediate interests. The stakes are much, much higher than whether being in the E.U. is an economic net loss or gain to Britain on a yearly basis, or even whether the City is crimped or inconvenienced. Much more is at stake.

From: "Should Britain Secede from the E.U.?"

Murdoch: Journalism as Vengence

According to Reuters, “News Corp, whose global media interests stretch from movies to newspapers that can make or break political careers, has endured an onslaught of negative press since a phone-hacking scandal at its News of the World tabloid” in 2011. One danger in this mix of private power even over government officials and being publicly criticized is that Rupert Murdoch could use his power in vengeance to retaliate. The public does not often suspect that such a high-profile and financially successful person could act so irresponsibility, but we ought not take what we are shown at face value. There is, after all, a public relations industry.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

Mammoth American Airlines Trades Passenger Privacy for Profit

“Personalizing the flying experience” Sounds pretty good, doesn’t it? Let’s add to it, “and better target promotions.” This addendum has doubtlessly been lauded in the corporate hallways at American Airlines, yet that airline’s completed phrase likely smacks of a marketing ploy to the general public. Specifically, the first part hinges on the second, which in turn is a function of profit-seeking and ultimately greed. As per the general relationship between increasing risk and reward, the airline’s strategy is not without risk.

The full essay is in the book, Cases of Unethical Business: A Malignant Mentality of Mendacity.

The Continual Campaign Eclipses Governance in Congress: Fixing Obamacare

The sordid, all-consuming encroachments of electoral politics into governance in the U.S. Congress could all-too-easily ride the entrails of Obamacare’s hemorrhaging web-site. Amid this undercurrent of political calculus under the subterfuge of governance and the public good, the public’s faith that the aggregation of the “producers’” self-interests will maximize or satisfice the general welfare remained invisible to the naked eye.

Let’s take the “fix it” vote that occurred in the U.S. House on November 15, 2013. Thirty-nine Democrats voted for the Republican-sponsored bill giving health insurers the option to continue selling plans not meeting the minimum standards in the Affordable Care Act (a.k.a. Obamacare). President Obama had said he would veto the bill because it “threatens the health security of hard working, middle class families.”[1] The sensationalistic conclusion reached by some journalists chastises the 39 Democrats for “breaking ranks” as if horses charging out of a barn billowing noxious smoke (fortunately those horses already had a solid health-insurance plan). Let’s not be so hasty in swallowing the media’s hay.

According to Rep. Jim Clyburn (D-SC), only nine or so of the thirty-nine Democrats voting for the Republican bill had “real serious concerns” with the Affordable Care Act itself; the rest of the thirty-nine were “insulating themselves against sound bites.”[2] Many of the insulators considered themselves vulnerable to a Republican challenger in the next election and thus sought to deprive “the enemy” of an easy talking-point. Political self-preservation is a creed that no politician would recognize as a betrayal. “I don’t blame anyone for insulating themselves from these sound bites because that’s the world we live in, unfortunately,” Clyburn lamented.[3] I want to unpack this statement because I think “there’s gold under them there hills!”

Ridding a potential electoral opponent of as many baleful talking points as possible falls under the rubric of a political campaign rather than governance. So the thirty “defectors” motivated by reelection rather than policy were in the campaign mode while governing as legislators. Ultimately, refusing to stop skating on the ice in keep waving at spectators defeats the person’s own supposed goal to ice-fish—skating being a necessary means of reaching the hole and hut. In other words, the means becomes the end, while the original goal is tacitly dismissed like an unwanted step-child.

Burrowing still farther down, as though with a powerful 9-inch analytical drill-bit, I find traces of an stygian flow of hot, silent molten lava hitherto undetected (the smaller drills don’t cut it at this depth). What Clyburn takes as “the world we live in” may actually be better characterized as a faith, and an economic one at that! Rather than implying that economics undergirds all politics, I submit that a default assumption in politics borrows from an economic faith. Specifically, the faith preached by Adam Smith in 1776.

Adam Smith and his classic text.  Wikimedia Commons.

 

Smith conjectured that each producer oriented to his or her own enrichment contributes nonetheless to the common good via a competitive market. In other words, the greed of individuals aggregates into what is best for the whole. The faith lies in not merely this assumption, but also that no one is needed to steer the whole. Rather than having someone steer the economic car, its route is a result of each car-part functioning as designed. Think of Google’s driverless car. No intention or consciousness drives. Rather, where the car goes is a product of an aggregate of parts—each doing its job (with design here being a part’s self-interest). To take another analogy, imagine a ship like the Titanic with only a massive group of formidable rowers in the belly of metal. The ship’s path is a result of external forces and the aggregation of the rowers’ individual striving to be stronger than the other rowers. No one is on deck looking for icebergs. No one is supervising the rowers, and the rowers themselves cannot see outside. In the back of each rower’s mind is an assumption, a faith really, that the sum total of bronze effort will result in the best course for the ship.

In American political theory, the notion of ambition as a check on ambition is a well-known staple. The ambition here is in terms of power. I suspect that the American electorate tends to assume that the tussle of self-interests is over policy and thus has the effect of shedding it of bad ideas. However, to the extent that members of Congress working on a bill are really thinking about how to get reelected, then the bill that emerges (i.e., where the ship goes) is a function of the aggregate of campaign strategies rather than governance. Faith is indeed needed here, for reason I fear cannot provide us with a viable link; what might be in a representative’s electoral self-interest is not necessarily conducive to public policy that optimizes the public good or welfare. Even aggregating all such self-interests does not, I strongly suspect, is not in the interest of the whole—the polity or society. Admittedly, I have not thought this last point out enough to safely rule out a rationale that links campaigning while governing to optimal legislation for the good of the whole. What do you think? Is it dangerous for the American people to be left in the dark regarding what really motivates Congressional lawmakers, or does legislation by sound-bites (or campaign strategy) not detract materially from “the sausage” that is produced?

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1. Seung M. Kim and Jennifer Haberkorn, “With 39 Dems Behind It, House Passes Obamacare Fix,” Politico, November 15, 2013.

2. Ashley Alman, “Jim Clyburn Accuses House Dems of ‘Insulating Themselves Against Sound Bites,’” The Huffington Post, November 18, 2013.

3. Ibid.