Tuesday, October 14, 2014

“Time is appropriate for reflection, action,” The Colorado Springs Business Journal, October 10-16, 2014, 23.



Time for Reflection and Action

Every businessperson knows that there isn’t enough time to think through decisions, that time for reflection isn’t usually scheduled during a hectic week.

The Jewish High Holidays are just that kind of time, asking us to stop and reflect, in a span of ten days, on what happened last year and what we hope to accomplish in the next year. 
The yellowing aspen leaves remind us of this time of the year as well; time for change.

Young residents cynically say that we should keep Colorado Springs “lame,” that in fact nothing has or will change in this sleepy village just south of the vibrant Denver metropolis. Should we?

As a challenge, I suggest four ways in which we can overcome our lameness and think of ourselves as potentially good enough, if not great. Yes, it’s about conceptualizing first and then doing, the way we offer a business plan to be executes later.

First, we should acknowledge past grievances in order to overcome them. Enough with the political bickering between the Mayor and City Council. Unless they want to compete with the low approval rate of Congress, they should change.

The Mayor should meet with each councilmember alone (with a therapist in tow?) to air old concerns in order to build a civil environment if not outright trust. If the Truth and Reconciliation Commission worked in South Africa after apartheid, it can work among our leaders.

Second, whatever has gone on in the past with city utilities, it’s time to think ahead to the future of our young entrepreneurs, those who care about the air they breathe and want to ensure a bright and healthy future for their children.

Why is CSU the “other” rather than “our” very own utility? Our best interests should be on their minds rather than threats of rate increases; as stakeholders and outright legal owners, we should determine the future of CSU.

Looking around the country at what is happening in every utility enterprise, we can quickly conclude: coal is out, renewal energy is in; old plants are out, efficient new ones are in. It’s not complicate to figure out how to be stewards of our environment—just some common sense and goodwill.

Third, let the City of Champions come forth and bring some fresh air to our stale old city. Despite the bickering and power moves, despite the concerns about wasting money and raising taxes, what else can transform the old warehouse district into a viable center?
Look northward to Denver and see what it did, with city leadership and financial support, to renew various areas that were moribund, that could be crime scenes rather than party spots. Has anyone been recently up there? It’s alive!

The four parts of this grandiose plan, the Air Force Academy—a federal entity that will take care of its allotted share, UCCS—a state entity that can be counted to take care of its future leaves the other two. Rumor has it that Dick Celeste said that he’ll lead the effort on behalf of the Olympic Museum; so what’s left? One fourth of the total, and we can’t find out how to handle it?

Fourth, I have proposed for years (to two different heads of the Convention and Visitors Bureau) to copy Colorado’s mountain towns. They somehow managed over the past decade to transform their heavy reliance on the ski season into a year-round programming that brings visitors every weekend for different festivals.

Breckenridge, with about 5,000 residents, hosts over 1.5 million guests annually. Can Colorado Springs, with 500,000, at least match that? I proposed to have something called “100 days of summer” (to Ms. Palus—Director of Parks, Recreation & Cultural Services—with no response). Here’s the plan.

Starting sometime in May or June, going all the way to late August or September, we should have an event every day in Acacia Park downtown: from farmers’ market to a local band, poetry reading and silent movie projection with a live piano player, all the way to street chalk paintings, mimes, and puppeteers. You name it, we can do it.

Who’ll fund this? I suggest we ask local individuals and business to contribute $500 for each day, thus completely underwriting the 100 days; some things will require less, some more, but $500 daily average should cover the costs. I volunteer to fund 2 days. Is anyone listening? Does anyone care?

These are just four ideas that I’m sure others can improve on. These are just some reflections that deserve to be heard and debated, just as I’m sure others, younger and smarter than I can offer theirs. What forum can they use? CSBJ? Social Media?

Raphael Sassower is professor of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com


Saturday, September 20, 2014

“The ‘other’ side of the NFL’s story,” The Colorado Springs Business Journal, September 19-25, 2014, 27



The NFL’s Other Story

While the airwaves and print media recycle their outrage over the revelations of domestic violence perpetrated by Ray Rice against his fiancĂ© at the time and Adrian Peterson against his 4-year old son, the focus has shifted from the alleged crimes themselves to the NFL’s cover-up.

Reminiscent of US Presidents’ own cover-up stories that ended in impeachments and the Catholic Church’s sordid history of protecting priests’ acts of pedophilia, the media reflects public outrage.

Will this storm be as quickly forgotten as the storm about the long-term debilitating effects of injuries suffered by NFL players? Will the concussion controversy be swept under million-dollar settlements with retired players or clever marketing campaigns?

As these scandals come to light, and regardless of how they’ll be eventually settled, they also shed light on the NFL itself as one of the most successful financial enterprises in the American entertainment industry.

To begin with, though race and class issues have been raised in media explanations of the behavior of NFL players, we are dealing here with millionaires, after all. The lowest NFL contractual salary per year is $375,000 (with an average of $1.9 million). Even if the average playing career of NFL players is short, this is a handsome compensation.

When we direct our ire at Commissioner Roger Goodell, we should remind ourselves that his annual compensation exceeds $44 million—not bad for the so-called sheriff of football. You’d think that for that salary he could have the courage to deal with criminals among his flock. Can we expect some moral courage as well, or is this too much to ask of a millionaire?

But with all of this money flowing, what we forget is that the NFL is a non-profit organization with strong players union. For devout fans—NFL games attract more viewers per game than any other sport—these facts might not be known. Non-profit? With an estimated $9 billion in annual revenue, how is it conceivable that the IRS would recognize such an organization as non-profit?

We know that the Church of Scientology has had its run-ins with the IRS, because of its dubious claims of religious practices. Is the NFL the new American religion? Does the worship of athletic celebrities warrant non-profit designation? I’m sure some clever lawyer made the argument that allowed for this ridiculous designation, but does that mean that game tickets are tax-deductible?

From a business perspective, this non-profit status is fascinating—who wouldn’t want to shelter profits in a similar fashion?—but not nearly as fascinating as the communal, even socialist, rules governing the league.

Last Sunday, there were three big upsets in the league: the Chicago Bears defeated the 49ers in their new stadium south of San-Francisco, San Diego defeated the 2013 Super-Bowl champions, the Seattle Seahawks, and Cleveland defeated the New Orleans Saints. How is that possible? Why is it that on any given Sunday, any team, even the statistically worst one, can beat the best?

The NFL is the model of real competition, the one Adam Smith already envisioned, and the one economists theorize about. If any participant team in the football market can beat anyone else, there must be some fairness in this game. How is fair play in the NFL guaranteed?

Though not government-imposed, there is league-imposed salary cap on all teams, so that the best and the worst cannot outspend each other. This way rich owners cannot skew the results of games by buying all the available talent in one year (the way it’s done in baseball, for example).

This imposed equality—socialist if I ever saw one—is an accepted, unquestioned feature of the game of billionaires (one of the worst teams in the league, the Buffalo Bills, was just sold for $1.4 billion). Would these same billionaires agree to such caps in other markets? Would they agree that fair competition requires strict regulations and enforcement, even unions?

Instead of reciting Adam Smith’s clichĂ© of Invisible Hand—unbridled competition despite monopolistic tendencies and barriers to market entry—we should recall his more nuanced and insightful Impartial Spectator. Focusing on morality, Smith insisted that our conscience be our guide, that our moral sentiments can ensure fair dealings with others.

As we delight in the socialist-framed competition of the NFL, we may also want to encourage owners, players, and fans alike to think in moral terms about their moral responsibility on and off the field. Celebrity status comes at a price, and so are the expectations of millionaire athletes: they are role models to young viewers and future players. As such, domestic violence, drug abuse, and DUIs should be fully excised from their daily diet.

Raphael Sassower is professor of philosophy at UCCS. He co-authored with Jeff Scholes Religion and Sports in American Culture (2014). He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com

       
 

Wednesday, August 6, 2014

“Who should be culpable for Citigroup’s bad dealings?,” The Colorado Springs Business Journal, July 25-31, 2014, 23.


Who should be culpable?

As we read about the latest bank settlement with the federal government, it may seem that $7 billion is a hefty fine to be paid by Citigroup. Apparently it’s not. Citigroup’s shares were up 3% on hearing of the settlement, so someone must be thinking it’s a good deal for the bank.

Some may argue that any settlement is better than ongoing investigations and the uncertainty that accompanies them, and therefore even $7 billion is a good deal, especially when no officer or director ended up in jail. These “decision-makers” or better yet “job-creators” are never touched by the long arm of the law. Are they above the law? Are they too rich to prosecute?

It’s a given that moral considerations aren’t part of the algorithm used by Wall Street mavens to make profits. It’s also a given that we shouldn’t judge banks’ performance by their moral aptitude or social contributions alone (even though some of them are proud of them). So, if we simply judge banks by the results of their financial performances, then Citigroup and its sister banks and hedge-funds are very clever indeed.

Knowingly commit a crime—fraudulently sell collateralized debt obligations (CDOs) tied to sub-par mortgages—make a huge profit for years, and then, years later, if and only if you are caught and convicted (which is possible but highly improbable), pay a fine. The billions you made along the way (whose value increases over time as you lend it again and again) remain yours minus the fines to eventually be paid.

Let’s translate this Wall-Street speech to a language the rest of us can understand. You and I steal money from unsuspecting people, make a profit off it, and pay a fine somewhere down the line if we get caught. If moral principles were invoked ahead of time, at the very beginning of the process, or better yet, before the crime is even conceived or committed, none of the awful things that follow would have ever happened.

The fact that the entire American economy (and large parts of the global economy) came to a halt because of such cavalier and criminal behavior may be worth recalling. It’s one thing to lie to secondary markets about the integrity of CODs, and quite another to create a financial bubble that is bound to burst. The “economy” isn’t hurt, it’s people who are hurt, flesh and blood.

The most successful program that the Bush/Obama Administrations undertook under the TARP initiative (close to $1 trillion in bailout funding) was in my mind “Cash for Clunkers” (Car Allowance Rebate System). The program lasted only a few short months in the summer of 2009, but the eventually allocated $3 billion provided for over 690,000 dealer transactions.

Whether the original intent was energy-savings, greater fuel-efficiency of trucks, or the stimulation of the car industry in the midst of the Great Recession remains unclear. But to actually put in the hands of individuals a credit towards buying a new car helped get reluctant consumers into car dealerships, 690,000 of them!, and helped car sales.

Just think what would have been the impact if the same voucher system of $2,500-$4,500 credit was given to homeowners. What would have happened if not $3 billion but $300 billion (much less than was given to large banks) was allocated to homeowners with vouchers worth $5,000-$9,000 each? Simple arithmetic would suggest that 34,500,000 transactions could have taken place, enough to avert the housing collapse, and the suffering of those facing foreclosures.

Instead of celebrating the triumph of the Attorney General, instead of feeling relief that justice is being exacted on corporate giants, we should pause and think again: is this the kind of country we want to live in? Is this the kind of capitalism we are willing to endure? Fines may assuage our outrage a bit, but justice requires more than a slap on the hand.

To put this $7 billion fine in perspective, Citigroup has a larger annual profit (on average) than the fine it just agreed to pay. Just like other costs associated with its operations, paying fines here and there is just the “cost of doing business.” Can you imagine that someone would routinely drive recklessly and threaten the lives of pedestrians and other drivers and agree to pay a fine here and there when caught without ever being threatened with a driver’s license revocation?

Would we feel sanguine to live in a community where known criminals like Citigroup’s officers and directors, executives and middle managers, get a pass no matter what they do? Citigroup’s crime was not victimless; its profits were at the expense of others; people’s lives were so affected that houses were lost, savings evaporated, and marriages dissolved. This was a crime, indeed, just as egregious and heartless as outright theft or burglary.

The idea that we can separate money from morals is false. The belief that my profits are never at your expense is also not true in all cases. So, before you decide what to make of Citigroup’s fine, just remember those you know who suffered in the Great Recession. Their sufferings were real; Citigroup’s weren’t (no matter what the Supreme Court says about corporations being citizens). And the culture of calculated fraud shouldn’t be ours.

 

Raphael Sassower is professor of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com

 

Tuesday, July 8, 2014

“Whose great ideas are those, after all?,” The Colorado Springs Business Journal, July 4-10, 2014, 23.


WHOSE IDEAS ARE THEY, AFTERALL?

The Constitution guarantees some protection for inventions as a way to provide incentives for geniuses of all stripes. By now the protection of patents and copyrights has become a legal industry under the catchall phrase Intellectual Property.

The question remains, should one’s ideas be legally protected against infringement by others? Is it fair, in other words, for me to use someone else’s ideas without paying any licensing fees? Regardless of how the law answers these questions, a generational divide spins its answers in different ways.

Young consumers, called by some millennials, deeply believe that they have an inalienable right to download whatever they find, no matter the source, for free. The very idea of paying for music or television shows seems absurd to them. They are also comfortable with “remixing” (Lessig 2008) based on the Supreme Court decision that allows “fair use” of materials—as long as enough of the original has been changed.

Older consumers have some respect for the sweat and toil that went into an invention of a song or an engine valve; they were socialized to pay for enjoying others’ inventions and products. In fact, they feel as if they are stealing from someone—individuals and corporations alike—when appropriating for profit that which isn’t theirs.

Of course, we can find among both groups thieves and saints whose age doesn’t express or betray their moral compass.

So, what should we make of the opposing strategies undertaken by Apple and Tesla, the former lionized as an American miracle with its late leader Jobs as its resident genius and the latter led by an iconoclastic billionaire named Musk?

The irony, if not outright hypocrisy, associated with Apple’s success should be laid bare before we switch to Tesla’s radical announcement.

According to pain-staking research by Marianna Mazzucato (2014), Apple’s entire collection of inventions has been graciously paid for by American citizens like you and I. The “entrepreneurial state,” as she calls it, researched and developed every facet of the iconic iPhone which enriched Apple. Government subsidies, loans, and outright underwriting of these technologies allowed Apple to scoop them all for the low price of some licensing fees. So, whose intellectual property was bought? Who owns it now?

We, taxpayers, already paid for the technologies and yet Apple makes us pay again when we buy the well-designed gadgets it sells to us. Not only are these gadgets made by Foxconn in China (outsourcing jobs), the profits made on them when sold in US are actually shifted to Ireland and other offshore places so that Apple can cut its taxes by an average of 25% and keep some 88% of its cash oversees (Financial Times).

Apple, the archetypal American corporate giant, has been enjoying the largess of government-generated, financed, and protected patents; it has also enjoyed access to the largest global market for its products. But when it comes to paying back anything to its benefactors—fairness—it shields itself from the IRS. Heads I win, tails you lose.

By contrast, Tesla’s CEO, Elon Musk, announced on 6/13/14 that all the patents his electric car company has developed and patented over the years will be open to its rivals. Has he lost his mind? What about the Constitution and Capitalism doesn’t he understand?

Quoted in the Financial Times, Musk said that “we believe that Tesla, other companies making electric cars and the world would all benefit from a common, rapidly evolving technology platform.” Is he all alone in this quixotic quest for an ecologically responsible future? Apparently not.

For those following the fashion industry, the practice of “knockoff” is as old as the trade itself. Instead of protecting one’s design, designers borrow from each other liberally and thereby increase competitiveness and the quest for new ideas. This is true for chefs and their recipes, standup-comedians and their routines, and football coaches and their tactics. (The Knockoff Economy 2012) Have these practices dulled our palates, closed restaurants, or stopped us from watching the Super Bowl? Imitation leads to innovation!

Likewise, Open-Source (Copyleft) isn’t news among code writers and users. In defiance of the restrictions posed by corporate lawyers and captains of industry, there has been an ongoing strong movement to keep codes as open sources for anyone to use freely. Your contribution is free of charge; so is your use. Sounds crazy? Only nerdy types will be so communal, ha?

Well, it’s been impossible to estimate how many millions of people around the world contributed millions of hours to write and edit Wikipedia. Not only aren’t they paid, they don’t even get credit for their work. Why do they do it? Do they believe in the greater good, like Musk? What a bizarre, anti-capitalist way of thinking? Have we lost our way?

No, we haven’t. Perhaps the good intentions of protecting one’s labor had the unintended consequences of allowing Big Pharma to patent our genes and DNA (Supreme Court decisions keep changing). At some point enough is enough, and our good sense overcomes the narrow interests of corporate America.

Will better automobile technologies necessarily evolve with open-sourced cooperation? Check your Apple iPhone to see if a new app can give you the answer. Then ask Apple to send $1 to the US government to ensure the future of American R&D!

Raphael Sassower is professor of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com