“Higher education is one of our precious resources,” The Colorado Springs Business Journal, July 22-28, 2011, 21.

PRECIOUS RESOURCE: HIGHER EDUCATION

There are two precious sets of resources that account for our national wealth: natural and human-made. The natural include precious metals, like gold and silver, energy, from gas and oil to sun, wind, and water, and rich soil for agricultural. The human-made set includes entertainment, communication, hardware/software, knowledge, ideas, and patents.

If we are so concerned to get “our money’s worth” out of most of these resources—fair  market prices—why are we willing to give away one resource way below its value? Gold mined in Cripple Creek is worth the same $1,500 per ounce as anywhere else in the world, while we export specialized knowledge for less than it’s worth foreigners.

There are about 18 million students in higher-education institutions (including 2-year community colleges and other degree granting for-profit universities); around 670,000 of those are foreign students (all numbers are website-related approximations). They pay “out of state” tuition in most cases, unless they arrange residency despite their special status with a student visa and pay “in state tuition” rates.

There are around 4,400 colleges and universities in the US, and 4 significant ones in Colorado Springs: Air Force Academy (est. 1955, enrollment 5,000), Colorado College (est. 1874, enrollment 1,900), Pikes Peak Community College (est. 1968, enrollment 12,000), and the University of Colorado at Colorado Springs (est. 1965, enrollment 9,000). The significance of each of these institutions for our local economy differs, but their overall impact rivals the defense contribution to our economy. Though the numbers generated by the Chamber of Commerce or city economists about jobs and consumer expenditures are relevant, they fail to address a qualitative question difficult to measure: do they attract businesses and produce knowledge?

Excluding the Air Force Academy (with a national mission to train cadets to become pilots and support staff), the other three are knowledge laboratories and training centers for those planning to relocate as well as those already here looking to either re-tool their skill sets or educate their dependents. When a military sub-contractor or sports organization decides to open an office here, the only consideration isn’t proximity to the Homeland Security base or the USOC—remote services work well in the digital age. Housing costs, open-space and outdoor activities, entertainment, clean air and water, and education all come into play.

The cost of living in Colorado Springs isn’t what it used to be when I moved into town 25 years ago and could buy a 4,200 sq. ft. house in the historic North End for the same cost as a one-bedroom condo in Boston. At the time UCCS had about 3,000 “commuters,” no athletic facilities or dorms. As costs go up, so must the quality of living. Though we are too dependent on clubs and bars for entertainment, in addition to extensive bike-trails we can boast local colleges/universities that compete nationally with their respective peer-institutions.

State support for the University of Colorado, for example, is around 5% of its budget. The rest of the budget comes from tuition, fees (faculty/staff pay $500 for parking), and indirect recovery costs of research funding. Tuition hikes have been substantial in the past few years to make up for decreases in state support. Out-of-state tuition is about three times higher than in-state tuition to help fund the university. Foreign students pay out-of-state tuition; why not pay “out-of-country” tuition?

Assume that foreign students with student visas come to study here and then return to their country of origin, a fair assumption during our Great Recession with high employment rate. They acquire general and expert knowledge here and in fact export it when they return to their home countries. Federal grants and state subsidies help finance institutions of higher education in multiple ways, presumably to benefit the future of our country, not to benefit foreign countries that will then compete with us. In fact, we are indirectly subsidizing our competitors!

However federal and state subsidies underwrite academic institutions, the justification has been that these are investments in our future: turning out informed citizens, creative artists, ingenious scientists, innovative engineers, and so on. Educated citizens in turn contribute to making our economy more advanced and competitive, productive and innovative, with Venture Capital funding most of the ideas and patents that they come up with. Should we give this away cheaply?

Just as out-of-state students pay three times what in-state students pay (with the rationale that the state subsidizes the university), foreign students should pay three times what out-of-state students pay (with the rationale that the federal government subsidizes the university).

Will this be a disincentive for foreign students? I doubt it’ll have any effect on enrollment—American universities are still the best in the world (especially at the graduate and professional level). Emerging markets will take another generation to catch up with our academic infrastructure (which includes democratic institutions).

Is this a xenophobic proposal? Not at all. Diversity will remain robust, since America itself is the most diverse society in the world. Foreign tuition will subsidize domestic recruitment of under-represented domestic populations.

Will it upset our foreign allies? American foreign aid overshadows that of any other country (close to $50 billion in 2011). Having designated ourselves the police force of the world (paid for exclusively by us), wouldn’t it be nice to designate ourselves instead as the knowledge resource of the world and get paid for it?

Raphael Sassower is professor of philosophy at UCCS, and the author of A Sanctuary of Their Own: Intellectual Refugees in the Academy (2000). He can be reached at rsassower@gmail.com.

 

“Weighing the importance of sales and ethics,” The Colorado Springs Business Journal, July 15-21, 2011, 21. Reprinted in Idaho Business Review.

The Ethics of Sales

When I first came to Colorado Springs in the summer of 1986, with a freshly minted doctorate from an university on the east coast, I thought I knew it all, especially when it got to ethics. I was teaching ethics seminars at Boston University’s medical school, drafted the Informed Consent form for one of the first hospital Institutional Review Boards in the country, and published on business ethics.

But when I volunteered to give a breakfast talk to a group of local real estate brokers, I realized how little I knew. As my presentation ended and some questions were posed by audience members, one guy at the very back—it’s always that one guy at the very back—who said: “nothing happens in America until a sale is made.” With this statement, he summarized American capitalism and the uselessness of my presentation of economic frameworks and ethical principles. It was friendlier than the request not to ever come back I got that same year from the dean of Beth-El School of Nursing for almost inciting a riot among the students after my presentation. I told them they were overworked and underpaid, and should stand up to doctors who treat them poorly.

So, sales determine the economy or at the very least make the wheels of commerce turn. Does that mean that a sale must be consummated no matter what? Does that mean that the completion of a sale trumps ethical considerations? According to Professor Shlomo Benartzi of UCLA, a specialist in behavioral finance (an offshoot field of Behavioral Economics), his stock-broker clients should come clean when the stock-portfolio of a client is down, tell them the truth about their own bad picks, and thereby gain the trust of their clients over time. In the long-run, it pays to be honest with your clients. Really? John Maynard Keynes, the famous British economist who inspired the New Deal and the current stimulus packages, is reputed as having said instead that in the long-run we are all dead. Ethical behavior is deemed economically prudent; that’s good news! Does that mean that sales at any cost, no matter what, will be curtailed?

In the popular Freakonomics (2005), Steven Levitt and Stephen Dunbar retell the case of Sonoma Williams being unable to sell a bread maker (it was too expensive at $199.99). The counter-intuitive solution was to introduce a more expensive bread maker, so that the current one would seem cheap enough. Sure enough, sales soured! Why? Because we are comparative shoppers who don’t have an absolute value attached to whatever we buy, bread-makers or houses.

Benartzi and his colleagues have done studies that prove that the framing of sales (just like comparing) is most important: labeled cold cuts “90% fat-free” sell more than “containing 10% fat,” even though they say the same. It’s not what you say, but how you say it. Happy hour at restaurants are popular because of this psychological effect: we are attracted to what we get for free (or discounted) than to what the actual cost is going to be at the end of the evening. Is this cheating? Is this ethical? Since nothing takes place in a restaurant, as the real-estate broker told me 25 years ago, until something is sold, what criteria of ethics should be adhered to?

 There are some simple ethical principles that relate to food purchase and liquor service. First, the balance between cost and quality must be renegotiated daily, especially as it relates to perishable products, from eggs and dairy products to fish and meats. Even if guests refuse to pay the extra cost for wild as opposed to farmed salmon, will the owner be willing to increase his food cost and reduce profits? This in itself is a moral dilemma; it balloons quickly if the wait-staff misinforms guests about what they are served. Second, free-pour may pose ethical quandaries to either the owner (if the pour is heavy), to the liquor board (if it’s really heavy) or to the customers (if it’s light). Should the bartender adhere to the letter or to the spirit of the law? Each drinker is unique, and no two drunks ever display identical behavior. What is the right thing to do? Can your training ever be full-proof?

Then there are broader ethical questions that come about from owning a restaurant: who should get credit for the success or failure of a restaurant—owner, chef, servers, bartenders, dish-washers? How much should be shared with guests—gossip about the internal workings of the restaurant, information about the food and liquor sources, whether or not the restaurant is profitable? Should the restaurant operate as a cooperative where decisions, policies, and profits are equally shared? Should it be competitive where servers who sell more get bonuses and those selling less are fired? Should owners cut corners to keep costs down? Should employees steal as much as possible without being caught? 

If nothing happens in America without a sale, then nothing good happens in America without an ethical sale, a sale where integrity is maintained every step of the way. But the sale is only a first step, not a final step in the relationship that develops among the parties. If a real-estate transaction, just like a meal at a restaurant, is treated as a cherished moment where something special is happening, then there is a greater chance for repeat performance: clients return, your customer base grows over time. When a restaurant does it right—as many in fact do!—the guests leave feeling great and happy to pay the bill and tip the staff well. If all they want is food, they should go to the grocery store; if they want alcohol, they should stop by a liquor store. Great meals or real-estate transactions provide experiences that you couldn’t have had on your own: you are establishing relationships with the hope that they will last for the rest of your life.

Raphael Sassower is professor of philosophy at the UCCS and has fourteen-year experience as a restaurateur.

“Memorial is our very own golden goose,” The Colorado Springs Business Journal, July 8-14, 2011, 18.

Our Very Own Golden Goose

If we allow common sense rather than rhetoric to govern our decisions, Memorial Hospital should stay a city entity, with the minimal governance it has endured for years. It’s not simply that “if it ain’t broke, don’t fix it,” or that conservatives like the status-quo, or that the older we get we fear change, but rather that its original charter has been faithfully and successfully fulfilled of late by its CEO, Dr. Larry McEvoy.

Let’s start with the facts: originally conceived in 1904, then constructed 1907-1911 on land donated by General Palmer and renamed Beth-El, what we know today as Memorial Hospital was a brainchild of community needs and local generosity. In 1943 the City Council of Colorado Springs purchased Beth-El Hospital for $76,500 and renamed it Memorial Hospital. Between 1946 and 1949 voters approved the operation of the hospital by the city with a citizens’ board of trustees. In 1956 the city approved $600,000 in revenue bonds for expansion and improvements; in 1973 the city approved $15,000,000 in bonds for expansions. Since then—38 years in all!—no additional bonds were issued.

Let’s continue with even more interesting facts (all in round numbers): in 2010 the net income of Memorial Hospital was $32 million (with around $642 million in total revenue); during that year it provided around $32 million for “charity care” and another $61 million for “provision for uncollectable accounts.”

The hospital’s mission was historically and remains today to serve the health needs of the local population. The numbers alone reflect a great success in doing so: if we include “uncollectable accounts” with the “charity” ones, we get about $93 million in services made available for our indigent population—patients with no insurance at all or those unable to pay their full medical bills. This is incredible; especially when you consider that the hospital was still profitable! It had $125 million surplus (profits plus uncollectable accounts) out of $642 million in total revenue (19.47%). I’m sure many of my business colleagues would love to own this hospital: be charitable and profitable. Oh, yes, it has some debts and liabilities, but they are all within reason and are serviceable with the current asset and revenue structure.

So, if a decision is made today what to do with the hospital, I’d say, keep going, Dr. McEvoy, you are performing a great service to our community! You and your staff are true custodians of the spirit that originally established this fine institution. You are all important and integral parts of what makes Colorado Springs so special, a model for the rest of the country: efficiently-run city hospital.

Yet, the successful Dr. McEvoy cries wolf to anyone who’d listen: it’s going to be horrible; we are at great peril from “Obamacare”; we are in danger of becoming a total failure; let’s change our status today. Not quite the message you’d expect from a successful CEO. This is odd behavior when compared to the rest of the corporate world, where CEOs of companies that are losing money still manage to trump their virtues and accomplishments. So, what’s going on here?

A charitable interpretation is that the successful doctor has not let his success get to his head and is trying to warn against the terrible onslaught of increased health-care costs. But he has had such success so far with increasing costs, why does he think he’ll fail in the future? Do doctors go into every surgery fearing disaster rather than build on their previous successful surgeries? Perhaps it’s because he knows something definite about the future the rest of us don’t, namely, that medical costs will rise indefinitely? Maybe they will, maybe they won’t. We really don’t know. What if the expenditure on two wars will cease and funds will be available for health care? What if employment increases and contributions to Medicare increase? What if the greed of pharmaceutical companies is curtailed and they will reduce the price of their drugs? What if government bureaucracies become more efficient? Let’s be honest, Democrats and Republicans alike don’t know what policies they themselves have enacted, and may one day focus on fixing this industry and the well-being of all citizens. Call me naïve, but I doubt any politician viewing the 2012 election will be as oblivious to health-care realities so as to ignore their rising costs and the need for reform.

A less charitable interpretation is that the successful CEO, like so many other CEOs, doesn’t like to be accountable to anyone. This is true for most corporate America that has basically installed boards of directors that rubber-stamp their decisions, renewing their contracts with amazing regularity and high pay-raises (23% average in 2010 for the top 200 publicly-held US companies). But this is a red-herring argument (there are no red herrings…): no one is really overseeing the CEO; he has a free hand to run the hospital as he wishes, with marginal blessing from the rest of us. Does he worry that a Strong Mayor and new City Council will pose an onerous oversight? I doubt it. Given that none of our elected officials are hospital experts, I doubt they’ll give any guidance at all. They probably will leave the esteemed CEO alone. In fact, from what I hear, it is he who is lobbying them to move the hospital into the new territory of a non-profit organization (as if being a city-owned institution isn’t non-profit).

Regardless of your ideological bent, what’s wrong with being accountable to someone? If you are doing something wrong, you should be stopped; if you are doing something right, you should be praised and get a raise. It looks straightforward to me: we have a great asset we should be proud to own, an asset that performs exceedingly well under perilous conditions. We haven’t been asked to contribute to the hospital in 38 years and we gave away $93 million in free health care in 2010 alone. Looks like a textbook win-win strategy!

Another interpretation of Dr. McEvoy’s concern may be personal: we have not praised him enough; we have failed to show gratitude to his incredible accomplishments at the helm of Memorial Hospital. May mine be a small contribution to an outpour of support and admiration for a job well done! Keep it up, Dr. McEvoy, doctor and businessman, humanitarian and visionary! Keep treating for free, while making millions. You are the man!

Raphael Sassower is professor of philosophy at UCCS and author (with Mary Ann Cutter) of Ethical Choices in Contemporary Medicine (2007). He can be reached at rsassower@gmail.com .    

“The Myth about what’s behind the numbers,” The Colorado Springs Business Journal, June 24-31, 2011, 19.

The Myth of Numbers

Economists and businesspeople alike claim that numbers tell all. You can hide a problem, you can rationalize around it, you can even pretend it isn’t there. By the end of the month or the quarter, the numbers will tell the truth, the whole, truth, and nothing but the truth—unless you cook the books…I recall years ago having a problem with my brewery (Palmer Lake Brewing Co.). The beer was good, but I was losing money. The assumption was that a pint cost about $1 to produce and it can be sold for $4—even with all associated costs for the pint, a profit should be at hand. My accountant called me in and plainly said: either someone is stealing from you or you are stealing from yourself!

This indictment was harsh, no matter how thick-skinned you are as a businessman. Theft in my midst? And how does an accountant, a nice one at that, figure out from a distance something I should know myself? How does he dare know more than I do about my own business? Incidentally, manufacturing accounting is quite complex because product-in-process must be valued differently at different times of the process. Instead of asking my brewmaster if he was a thief, and instead of bringing in lie-detectors for the entire staff, I decided to spend a day watching every aspect of the brewing process. In short time I realized that out every tome the 600 gallons travelled from one stage (and tank) to another some liquid was left behind or had spilled. When the brew was boiled, some of it evaporated. In short, the original 600 gallons lost as much as 5-10% in the process of one day (not to mention spillage when transferring to fermenting vats or when filling kegs).

Numbers don’t lie, people do. An accountant figured out how to calculate the brewing process more accurately than a brewmaster and an owner. He looked at the figures, not at the tasty pint of hand-crafted beer in front of him. He saw through the façade.

And indeed, we are faced with façades all day long, whether in business or in politics. We just went through a mayoral election that produced a new “strong” mayor, Steve Bach. On the face of it he won with 57% of the votes, a landslide by all standards of democracy. He therefore represents the majority of the population’s desire to have him lead the city rather than the other candidate who received only 43% of the votes. A comfortable margin indeed, and one that sanctions him to claim he has the mandate of the majority of the citizens. But just like my accountant said, let’s look at the numbers more carefully.

Colorado Springs is a city with around 500,000 citizens. Some say there are more, some less, depending if the county is counted. Apparently about 95,000 people voted in the second-round of the mayoral election, and 57% of this number is about 54,000 people. This number of people, though quite large, is in fact only about 10% of the population…I know we should subtract children from this fuzzy math (not in its technical meaning), and those ineligible to vote or simply those not registered to vote. But still, only 10% of the citizens of our great city endorse our newly elected mayor. What mandate is this, if at all?

Before we start feeling awkward about this straight-forward way of looking behind the façades of business and politics, as qualified economists will remind us, it should be noted that on the state or federal level the same is true. Our presidents never have more than about 20-30% endorsement (given actual votes) of the public when entering or returning to the White House. When we jump into the debates over our own democracy, as many political theorists and pundits do regularly, we should be careful about the preservation of the meaning of representative democracy and majority rule.

So before we jump into the debates over the Arab Spring in the Middle East and suggest all these post-dictatorship states emulate American democracy, we should just remember to match our rhetoric with actual numbers. How many people will vote in the elections? How many barriers will there be to eligibility? What mandate does a president really have when in fact a minority of the citizens voted for him or her? And though we must agree that a frail and tentative democracy is better than any dictatorship, we must acknowledge the need for greater participation of all citizens. Perhaps a few accountants or technical wizards can help along the way. How can that be accomplished?

Twenty years ago, when I went to academic conferences on the new media—personal computers and the Internet—the main questions were about the use of the new medium and the extent to which it would enhance democracy. Yes, academics worry about these esoteric things until they actually get tested on the streets of Cairo, for example. The worry has always been to get new technologies to the hands of everyone and thereby undermine the existing power-relations between the rich and poor. If Facebook can help disseminate revolutionary ideals by organizing people to demonstrate, why can we not use the Internet to vote for our mayor? Just as consumers have to go through a few steps to buy anything from a website, we can establish a city voting-website that would test eligibility and allow us to vote—without expensive mail-ballots. I’m confident the technology is at hand, and I’m confident that tech-smart people can put it together. We’d save money, get greater participation, and strengthen the ideals of democracy all at once.

Raphael Sassower is professor of philosophy at UCCS and a committed democrat in the philosophical and not partisan sense. 

“If pets can be put to sleep, why not people also?,” The Colorado Springs Business Journal, June 17-23, 2011, 19

OF PETS AND HUMANS

According to Packaged Facts, the pet industry was $55 billion strong in 2010. To put this amount in perspective, the Colorado state budget in 2009 was $18.9 billion. We spend a lot of money on our pets, whether it is food and food supplements, grooming, toys, and of course veterinary care. Dogs and cats are X-rayed and scanned, operated on for fractures, and treated for cancer, and when all else fails, they are put to sleep. Pet owners are vigilant, for the most part, about their pets’ health care, and there are some federal and state laws protecting animals (the latest case of horse neglect and abuse). So, how is it that animal-lovers who spend billions of dollars to care for them so lovingly, find it appropriate, under the right circumstances to “put them to sleep”? This euphemism is in fact an admission that the kind of pain and suffering afflicted on animals is in fact a cruel and unusual punishment that deserves to be averted with kind and painless death in the hands of a veterinarian. Much sadness ensues, grief, and mourning, but the active act of euthanasia is considered humane, and no veterinarian, or owner, would be accused of murder.

The fact that we treat animals well in their last days of their lives and are willing to be compassionate about their suffering came to mind when reading about the death of Dr. Jack Kevorkian of natural causes. The infamous “Dr. Death” was renown, spending 8 years in jail, for what is labeled assisted suicide. Some call it active euthanasia—where one actively ends one’s life, as opposed to passive euthanasia—where one stops eating, for example, or medical intervention. The question on which the Michigan authorities focused was the fact that the good doctor pressed the button that ended a patient’s life, rather than the patient herself doing so. It’s about who pushes the button! Now, we can all appreciate that this is a subtle distinction worthy of the best legal minds: we don’t want to condone pushing of buttons—or triggers—that hasten one’s death; it’s murder! But in the legal morass, some other issues were lost. Why not be allowed to end one’s terminal illness and great pain and suffering?

Our own former governor, Richard Lamm, was chided when in 1984 he made some comments in support of physician-assisted suicide. For him, this was primarily an economic argument. Given limited resources for health care, wouldn’t it be more prudent to spend money on the young than on the old? Some claim that Americans spend on average more money in the last year of their lives than they do on their entire life. Does it make sense to keep grandpa alive another month, deplete his life-long savings and saddle Medicare or Medicaid with bills that add up to hundreds of thousands of dollars? Physicians are likely to recommend surgery, as they did for my 94-year old mother two months before her death. Surgery could have extended her life by a couple of months, but the pain and the risk involving such a surgery on an old woman, a woman who had a full and exciting life, seemed out of place. My brother and I with consultation from our sister and other brother agreed not to pursue surgery. My mother asked if this surgery could cure her. I was candid in saying to her that it might, but that it might also kill her in the process. She agreed to pass, and died in her own bed, peacefully, two months later.

There is, of course, a difference between humans and their pets, and the main difference cited by experts is our self-consciousness, not simply our advanced brain-power. But, should animals enjoy a more humane end of life? Why can’t we be put to sleep? It’s exactly what my mother wanted, and she asked me on numerous occasions to help her die if she were to suffer with a terminal disease. She would have welcomed Dr. Kevorkian to her home, and thanked him for helping her avoid the pain associated with a protracted incurable disease. Instead, she was prescribed morphine, which, as the doses increased, eventually killed her. Are we really that callus that we treat dogs better than people? Have we no respect for fulfilling people’s wishes, even when they want to die? This is where paternalism—I know what’s good for you better than you know it yourself—meets free will and personal liberty.

Some states, like Oregon, are more hospitable to the notion of physician-assisted death; some are more concerned about the slippery slope of allowing others to participate in what may amount to killing. Perhaps our concern is more religious than legal, after all: God created humans in His image, and therefore only He can take life. The sacredness of human life is understandable, even socially necessary. The Jews claim that to save one life is equivalent to saving the entire universe. Christians extend the notion to a complete objection of abortion. But in the meantime, we have extended life expectancy from the biblical past to a level unimaginable only a couple of centuries ago. Is it our quest for immortality that keeps us going to have yet another procedure when we are in our eighties? Is it our sense that the world will stop without us?

We’d hate to make life and death decisions based on economic considerations alone, just as it may be odd to do a cost-benefit analysis when weighing on health treatment. But being reasonable about our health prospects, and allowing ourselves to die with dignity should be considered, too. Perhaps the quality of life rather than its quantity is what veterinarians think about, just like the late Dr. Death. It is just as compassionate to let a loved one die, whether human or a pet, as to allow medical intrusion to dictate what to do next.

Raphael Sassower is professor of philosophy at UCCS; he lost his father some 25 years ago and his mother five years ago. He has no pets.

“Is it worth going to college?,” The Colorado Springs Business Journal, June 3-9, 2011, 19.

Is It Worth Going to College?

As college graduation season is upon us, and we consider the cost of college education—from $60,000 to $250,000, depending on whether it’s private or public, with or without room and board, with or without travel expense for holidays, with or without books ($4,000 on the low side)—it may be worth listening to the so-called experts.
Some argue that college education is necessary because high-schools are failing their students—some 30% of graduating seniors cannot read or write at their expected level, not to mention having mathematical competency to give change without consulting the cash register. This, of course, is a sad commentary on the state of high-schools in America, and the No Child Left Behind legacy of the past. Current administrations are apparently not helping much. It’s also a sad statement about college-level education that remedial training is expected: incoming students fail calculus and cannot construct grammatically correct sentences (not to mention spelling which they expect their “spell-check” application to pick up—just like the cash-register that calculates the change from one dollar).
Then there are those who claim that college education is worthless, almost. There are two camps in this other extreme of the judgment spectrum. The first group, like researchers from New York University and the University of Virginia, claim that students cruise through college without learning enough; they read relatively little (32% read less than 40 pages per week per course), they write even less (50% write less than 20 pages in a course per semester), and they study less than 12 hours per week for all their semester courses. In short, college for a great percentage of students is a free-ride and a four-year-long vacation subsidized by willing and uninformed parents or by Pell Grants and loans that are somehow directly subsidized or indirectly guaranteed by the American taxpayer. If students don’t care to be educated, why should they go to college?
The second group claims that college is not simply a waste of time and money, but that in fact it’s a detriment to intellectual and innovative success. One recent representative of this group is not other than Peter Thiel, the co-founder of Pay-Pal, an early investor in Facebook, and a great entrepreneur/investor whose wealth continues to balloons. To put his claim to the test, he has launched his “20 under 20” fellowship which gives out $100,000 grants to young people over two years who are willing to drop out of college and have an idea or innovation they’d like to pursue. For him, college education is an excuse not to think about the future, and a loss of time. He also admits that there is the awful possibility that an ingenious student may invent something worthwhile and have to worry about intellectual property rights and potential loss of revenue.
Between these two extremes, some common sense must prevail. Yes, higher education may be expensive, but it’s an investment and not a paid vacation. Given that we don’t have a reasonable national transition between high-school and the “real world” of commerce—we don’t have mandatory national service, such as the military—2-4 years of higher education may provide the right transition. It’s a time when young adults may move out of their parents’ house or tutelage (in case they stay at home), and begin to fend for themselves. Their environment changes—they have to deal with food and travel, dorms and other students, their financial changes—Mom and/or Dad are not there all the time, their academic performance—professors don’t care about their athletic commitments or personal issues, and the like. These changes combine to a maturation process we hope leads to independence!
If we ask ourselves what higher education is really all about, let’s say for a minute just from the perspective of the business world, here are some interesting answers that neither extremes consider.
First, college educated students are more likely to be disciplined. No matter how many times they fudged a test or wrote their term-paper the night before it was due, they did complete four years of required courses and paper and tests: they got the credit for their work and therefore a degree.
Second, however poorly they may have done academically, they learned how to manage their time and effort: they learned to prioritize and to balance effort and result—this assignment is worth only 10% of the grade so let’s not kill ourselves for it as compared to the final paper that is worth 30% of the final grade.
Third, no matter what their major, they must have been able to communicate and interact with a variety of different people and egos, from fellow-students (working on team-projects) to professors.
Fourth, they inadvertently had some crisis or drama to deal with during their college years—death of a family member or parents’ divorce or financial hardship—and figured out how to cope with it without dropping out of college.
Fifth, as their academic career progressed, they have learned to choose and calculate what are the risks and benefits of taking this rather than that course so as to maximize the rewards of their work.
One can continue in this vein for a while, but the picture becomes quite clear: higher education inculcates certain life-long skills that may be learned elsewhere, of course, but that are also learned and reinforced during one’s college career. There if networking, too, which has its own economic and personal rewards, as well as just being a better informed citizen and community member. And those, too, have a financial element associated with them.
If I had my choice, I’d hire a college-educated young man or woman because they have already proven something: their own worth, their sense of self and self-confidence, perhaps even some skill-set I can use. Overall, they proved their commitment and resilience, their hard work and dedication to complete a task and a goal, and if I asked them to work late into the night, they’d know exactly what pizza can be delivered…
Raphael Sassower is professor of philosophy at UCCS and doesn’t only hire college graduates.

“Let’s close AFA golf course,” The Colorado Springs Business Journal, May 20-28, 2011, 19.

FREE GOLF ANYONE?

Though miles away from Washington, we, too, have something to contribute to the proposals for budget cuts. We are fortunate to host defense installations here—army, air force, and homeland security—and therefore how the national budget goes, so goes Colorado Springs. We are constantly reminded by city leaders and the Chamber of Commerce how more than one half of our economy depends on military spending, that it’s reasonable for us to make a contribution to the debate over cuts.

Here are some suggestions that will contribute the lowering of the national debt, and avoid raising the national debt ceiling (aka printing paper money whose value is in free-fall). The three suggestions may offend some readers, so unless you are truly a fiscal conservative or a businessperson who faced debts before, please read other columns.

First, let’s give up on the golf course at the Air Force Academy. Annual costs of such a facility range between $500,000 to $1.5M (especially in the arid climate of Colorado’s high desert). Playing golf at the wonderful municipal course, one of the oldest in the west, would be a great experience for retired Air Force personnel and current officers and cadets. Last I checked, the dexterity required of a pilot is better honed on a good video game than on the greens. And think about it: if the great Academy gives it up, perhaps all other military bases will see the light and give up on their tax-funded courses, and before you know it we would have saved $100M annually. One could argue about morale, but when a country is at war in three theaters, when young men and women in uniform are killed in the line of duty, the image of an officer playing golf seems a bit out of place.

Second, while we are tackling the leisure programs of the armed forces, we may want to visit their great athletic programs as well. Research on semi-professional sports in higher education have shown that they add little to academic excellence, even though they help increase donations from alumni. But, unlike the University of Colorado, for example, whose financial support from the state is less than 5% of its budget, military bases and academies are fully funded by our tax dollars under the label “defense.” Some would argue that sports build character and teach team work. Others would argue that they promote goodwill among the population in general. But when the country is broke and we are at war, are spectator-sports really needed? Don’t we teach military team-work elsewhere, too? Aren’t we proud of our men and women in uniform regardless of their scoring history? Without having data from the AFA on the cost of having a football team, but if we compared it to other universities, one could assume that more than $1M is spent annually just on this sport. And one shouldn’t forget the cost of intimidating visiting teams when fighter-jets come swooping down close to the field before a game—how much does that cost? Add up all the savings from all of these sports around all military installations, and some $100M annually can be saved.

Third, as we are debating cuts in so-called entitlement programs, such a Social Security and Medicare, have we visited the fascinating vortex of military retirees’ benefits? They have their own pension structure and health-care provision, some of which are much more favorable than those enjoyed by other “volunteers” in other careers—admittedly some more and some less dangerous. Should a supply officer who never saw combat have preferred treatment as compared to an engineer retiring from a utility company? Should the supply officer have discounts on car-insurance and grocery shopping and dining different from any other citizen? How long must the taxpayer foot the bill of extra privileges?  It sound heretic, but it’s only because we refuse to examine the largest parts of our budget, entitlements and defense. If we cut 10% from all of those programs, we wouldn’t have a budget deficit.

These three suggestions, and many more like them that many informed readers may suggest themselves, bring out other, more basic issues, such as, volunteer vs. mandatory conscription military, the military as part of the welfare system, and the global role of the military. How one approaches these issues will influence what cuts one favors. For example, if you favor a volunteer force, then any so-called incentives are unnecessary because those volunteering must have other motives (patriotism, unemployment, family tradition, love of uniforms) than pure financial security. Likewise, if the military serves as part of the safety net for the unemployed, then different attitudes towards recruitment must be adopted. And finally, if we believe that American soldiers should not be anywhere in the world where strife and civil war are at hand, then budget cuts would be politically palatable.

As Gordon Adam, who oversaw military budgets in the Clinton Administration, claims, cutting about a trillion dollars over the next ten years would not undercut our military preparedness. But are we ready to approach this sacred cow without the hypocrisy of protecting our own local pork?

Raphael Sassower is professor of philosophy at UCCS and an honorably discharged first lieutenant from the IDF (1973-1977).    

. “The Digital Age of Marketing,” The Colorado Springs Business Journal, April 28-May 5, 2011, 18.

THE DIGITAL AGE OF MARKETING

As our addiction to social media increases, and as we spend more and more time with our hand-held devices rather than in front of television sets, it was only a matter of time before the commercial potential for these technologies would become apparent. And, for small businesses and start-ups this seems like the best thing since sliced-bread! Easy and cheap access—extremely low barriers to entry, individual control of marketing strategies—easy and timely changes, and most importantly: it can go viral!

As Internet shopping is increasing annually (and states are worried about how to collect sales taxes), and as we are more likely to check the Internet for information about sales and movies, restaurants and cars, it seems that the Digital Age is here to stay. The good news: freedom of choice for the individual combined with a global competitive marketplace that dictates the best quality of goods and services for the lowest price.

What are the drawbacks? First, you are bound to be inundated with advertisement all the time, worse than classical telemarketing, when using your personal computer or cell phone. Second, unlike telemarketing that can be ignored, if you ever open a marketing message it may have lethal viruses. Third, will the success of Internet marketing kill print-media?

Newspapers used to be exclusively dependent on their survival and success on their advertisers: see how many pages of medical marijuana are printed in our own town! Now that papers have gone digital, would the change of venue eliminate print media and all the jobs and interesting analyses they have historically provided? The digital age of marketing not only changed what marketers do, it has changed the entire print media industry.

Fourth, unlike an ad in a newspaper, it seems that using Facebook, for example, to bring people to a restaurant would be cheaper than to print an ad in a newspaper or air a television ad. Think again. Groupon and LivingSocial are in the forefront of enticing local businesses to use their services. What’s the model? Groupon approaches a business and says that at “no cost” it can bring traffic to the store, offering potential new customers 50% discount. Internet users flock, volume increases a bit, but at what real cost? Assume you buy an apple for $1 and sell it for $2. When you give 50% discount you have at least covered the hard cost of the apple itself. You hope that this “lost-leader” will entice the new customer to buy something else and thereby you’ll eventually benefit from this “no cost” ad. But this is not the end of the story. What does Groupon charge? It gets 50% of your 50%, so now you are in real trouble, because your apple still costs $1, but you are collecting only $.50… No cost advertisement? If your margins are high enough ($1 apple sold for $3), maybe you can sustain deep discounts. But if not, your costs are so high that you are in fact losing money each time a new customer walks in your store.

In New York there is already a backlash and less and less small businesses use these marketing services. It’s one thing to help push a particular product you wouldn’t otherwise sell, and quite another if the discount is across the board. This marketing model is unsustainable and will surely be adjusted soon.

Fifth, individual complaints that may be erroneous at best or malicious at worst are unfiltered. You can become a target of a competitor or disgruntled former employee who writes something about you that then becomes an Internet “fact.” You are powerless. You don’t have Wikipedia’s army of editors who are ready to correct mistakes and liable statements, nor do you have an army of detectives who find those injurious statements on the Internet and address them. There are services that will monitor your reputation and clear up or bury unfortunate lies and accusations: can you afford them? Will they ensure your good name and reputation?

Like all great things—ice cream comes to mind—there are costs and disadvantages to them. As sophisticated as we think we have become in controlling the Internet for commercial purposes, we haven’t fully seen yet all its potential and actual harms. Remember Midas and turning anything he touched into gold? How about biting into a gold-plated apple…

Raphael Sassower is a professor at UCCS and a businessman who experienced first-hand the drawbacks of Internet advertising.    

“Are Pensions a Right or a Privilege This Day and Age?,” The Colorado Springs Business Journal, April 8-14, 2011, 17, 19.

Pension: Right or Privilege?

As we have observed the latest political fighting in Wisconsin, the labor movement and its unions has been forced to justify some of its sacred cows, such as collective bargaining. But this kind of labor struggle brings about more interesting and fundamental questions not only about unions and their membership, but about what we think about work itself.

In our city, two questions related to workers are marginally discussed: should government employees, like police officers and firefighters, be allowed to be members of unions, and if yes, should they, like the workers of Memorial Hospital and the Utilities, have pensions? Perhaps in the wake of empty big ideas propounded by the mayoral and council candidates in the past few weeks, such as “we should have a vision,” “we need to create more jobs,” and “I am committed to transparency and accountability,” some real issues can be addressed once the election is over.

For example, should budgetary cuts include the police and fire departments? If not, why not? Is it because they are a big voting-block no candidate dares alienate? Or, rather, is it because every candidate checks the details of their budgets and found no way to cut five or ten percent without affecting services? And if public safety is the issue, and we have broad support for public safety, would it be any less safe to ensure efficiency in these departments? Put differently, would it not be less safe for all of us if these departments displayed complete disregard for public accountability and operated as if it were above the laws of supply and demand?

The fact that we are too frightened to even raise these questions is a problem. The fact that these are sacred cows is an even greater problem. The fact that whenever budgetary cuts are proposed both departments threaten with slower response time and human-power shortages for criminal investigations—while having all the personnel needed for speed traps with two motorcyclists at each spot—is even more frightening. And the fact that it has recently been rumored that some “public servants” are using classic strong-arm tactics to discourage businessmen from supporting a candidate that they don’t like is morally and legally unacceptable! Last I checked, only dictatorial regimes retaliate against their own citizens, those who pay taxes that pay salaries and new cruisers. We are all on the same side, and as such are all trying to figure out how to reconcile a low tax-base with high expectations of government services.

Back to workers and unions. We all know the historical narrative of work exploitation and dangerous working conditions, from New York garment workers of the turn of the last century to miners up the Colorado hills. We also know that, depending who counts, less than ten percent of the American workforce is unionized. So, it seems that the problems of the past have been solved. Manufacturers who remain in the United States have learned their lessons: no more child labor, no more twelve-hour workdays, no more suffocating factories and dangerous fire hazards. Yet, as we solved one set of problems, we seem to inadvertently have created another.

To understand this problem we should pay closer attention where union growth has come from in the past few decades: government employees. Don’t get me wrong: I have nothing against government employees; without them, basic public goods wouldn’t be available. But should they be unionized? If yes, should they have pensions? If yes, what kind of pensions should they have—life-long percentage of their last paycheck or others, such as 401(k)? Why do our local K-12 teachers get full pensions while state university professors get only what they put into a TIAA/CREFT program that is similar to a 401 (k) plan? It’s one thing to support the education of our children (which account for the bulk of our real estate taxes) and quite another to subsidize the long retirement of teachers after twenty years of service; incidentally, that’s why some university professors never retire—they can’t afford to…

Work in the Soviet Union was a right, while in the United States it has been more of an obligation, and for some a personal choice. We laughed at the Soviets, and, indeed, their regime collapsed. In fact, they messed up their socialist ideals so much that they forgot about the capitalist stage of their development and turned themselves into a totalitarian regime. By contrast, we have fully developed our capitalist system and inculcated a regime of hard-working type-A individuals who are always so busy that they must continuously multitask. We work harder as a society than any other and our productivity, as measured nationally, keeps on rising year after year. Of course, technology helps us work harder and more efficiently, but we also have encouraged a culture of motivated workers who embody the Protestant Ethics that find laziness to be sinful. We don’t tolerate slackers and find their “free riding” or riding on the backs of others to be punishable by dismissal. So, in general our attitude towards work is pretty much set: we believe we should all work, and when we work we should work hard.

What are the rewards of hard work? Money is only one element in the reward system. Promotion is another. Praise and other forms of recognition are the third. Vacation and sick leave are the fourth. What about satisfaction? This could be a fifth. Health-insurance is definitely a sixth element that is becoming more contentious.  And somewhere at the bottom of the list is a retirement package. When car manufacturers in America couldn’t keep up with wage increases and health insurance benefits, they offered generous pensions. Why? Because it was a deferred cost that could wait for years before being paid out (and therefore could be only partially funded, unlike insurance premiums that are paid monthly). We are talking here about post-World War II.

Without being unkind, pensions make sense if people work for a very long time and die not too long after they retire. The longevity of a white male around 1900 was around 47 and by 2000 it was around 74, depending whose statistics you consult and what variables are included (gunshot wounds were more likely to kill you in 1900, just like birthing a child, than some one hundred years later). Assume you began working after high-school at 18 and worked till 68 (having contributed to your own pension fund for fifty years—being matched in whatever ratio by your employer—and having invested prudently for those fifty years), and then died in your early seventies, your pension would have been fully-funded even if it paid seventy percent of your last salary. Okay, let’s say you worked only till 58, and died at 78. You still have a ratio of forty working years to support twenty years of retirement. Any financial adviser would agree in general terms that even an annual increase of 5% of your fund would ensure pension payments. But as we all know, close to home, this is not the case anymore.

Colorado Springs is home to many retirees from the military and other government departments and agencies, and the retirement eligibility is now twenty years. Imagine, then, contributing for twenty years (18-38) and living another forty years to the ripe old age of 78. Can twenty years of pension funding support forty or more years of retirement payment? Of course, not? So, how do these pensions function? They expect new workers to support the retired ones, but as is the case with Social Security, there aren’t enough new workers in this recession to ensure payments to retirees.

If we are to maintain collective bargaining, as we probably should to ensure fair representation of workers’ needs and concerns, then such bargaining should be collaborative: wages may go down in recessions and up in boom times; more workers may be needed at some point and less at others, so that flexible staffing makes the operation efficient at all times. We can try the German model and have representatives of the unions as part of the management team to ensure an overall appreciation of budget constraints rather than an adversarial relationship that leads to resentment and strikes. This is not a philosophical ideal, it is already operational elsewhere.

If we are to maintain pensions, as we should as a token of appreciation for those working for many years in public service, then the ratio of work-years and retirement- years needs to be adjusted. I’m sure we’d feel morally and socially more inclined to support our retired neighbors after forty years of service more so than after twenty years. Especially if their own contributions are significant, then, like Social Security, it’s their money and they deserve to get a supplement from their employers. A hefty pension shouldn’t be the only motivating force to induce one to apply for a government job, a steady and secure one under most circumstances. Instead, from the President of the United States all the way to state and city employees, it should be serving one’s fellow citizens.

While we are still suffering from the worst unemployment rate in many decades, while millions are still out of work and eagerly looking for any job whatsoever, we have an opportunity to rethink workable solutions to labor concerns in a postcapitalist society.

Raphael Sassower is professor and chair of philosophy at UCCS and the author of Postcapitalism (2009). He has employed dozens of workers over the years and believes in their collaborative input to ensure financial sustainability if not profitability.  

. “Mayor’s Job Calls for Accountability and Leadership,” The Colorado Springs Business Journal, March 18-24, 2011, 19.

HAVING BOUGHT A STRONG MAYOR, WHAT NOW?

The mid-term elections last year brought some of the fringe radicals on all sides to illustrate how open a society we are, and how sometimes it is better to stay focused on local issues and worry about our own financial and social wellbeing. When the local Chamber of Commerce endorsed a democrat for the governorship, we know that the alternatives were off the charts. So, are we indeed less ideological and more pragmatic? Are we reasonable citizens working for what is best for all of us?

The Jenkins father-son duo were able to accomplish, with a hefty investment of their own money, what previous mayors, council-members, and commissions were unable to accomplish almost since I arrived in Colorado Springs in 1986. For this feat alone, they should be thanked by all of us, whether or not we are businesspeople or public servants. The question, though, remains: is having a strong mayor good for the city?

I recall many years ago, when I was facing unfriendly neighbors who called me a “foreigner” and expressed their dismay that someone like myself was developing what has become the Warehouse complex that I had to go before city council while Mayor Bob was in charge. He listened to their complaints, found them to be without merit (but with much malice), listened to my plan, and continued the hearing disregarding their threats to go after him personally. Yes, he was one of those “good old boys” in more than one sense, and I didn’t know if I’d get a fair chance. I prevailed and respected him for letting an upstart get a shot against the old establishment. He died poor, as my late friend Dr. Ted told me. As poorly as he was paid, and as powerful as he was, he never personally benefited from his position. Whether you agreed with his decisions or not, he was a leader!

The Daley mayoral dynasty in Chicago has just ended its reign, and the current New York City emperor is an outrageously wealthy strong mayor (he bought his way to a third-term and nullified term-limits, something we usually see in Latin America). Do we want to follow in their footsteps? Will it be good for us? I guess if Bloomberg moved here and began spending his billions, we’d be doing great… But I doubt we will ever be as large and as prosperous as these cities; yet we have a chance to make this city great by making good use of a strong mayor.

Having witnessed firsthand the mayoral forum at the Fine Arts Center, it seemed as if the gravity of the responsibility wasn’t fully acknowledged: nine candidates answered haltingly or dramatically (or, in some cases, not at all) fairly straight-forward questions. Are any of them ready to take on a deficit and a demoralized constituency? Are they up to the challenge? Is running a private corporation similar to running a city?

There are two dimensions associated with a strong mayor: accountability and leadership. I think that previous mayors have been accountable and have felt that they owed us an explanation if and when they acted in ways that were deemed questionable (the USOC is a case in point). What about leadership? Leaders are born not made, some scholars suggest. Our very own Center for Creative Leadership counters: we can train people in positions of power to become better, more effective leaders in their own organizations, public and private, regardless of their innate character. So, would a strong mayor necessarily be a leader in ways that the previous model didn’t allow for?

“You get what you pay for,” we are reminded by some business mavens. So, if we pay more for a mayor we are bound to get a better mayor. Is this a question of expectation? If we expect more of the mayor, now that the pay is much higher, will we indeed obtain a leader worthy of the title? Corporate America supports unequivocally the view that astronomical salaries and bonuses yield results. Yet, if you were to ask ten academic economists, you are bound to hear different appraisals of their empirical research on the correlation between CEOs’ pay and corporate profits. What about us, then?

Here is my wish list of a strong municipal leader, only some of its items were lightly addressed by the nine mayoral candidates at the FAC:

First, be a respectful leader: be the first among equals, and treat council with the respect all its members deserve. But be their leader nonetheless: come up with ideas and navigate through those of others. Compromise is not a bad word.

Second, be a promoter: tell the world how great we are and what a great place Colorado Springs is to live in: the healthiest city in the nation! The USOC is here!

Third, remember to boost local morale: taxpayers want to hear good news about their city and its daily accomplishments: find good news and make sure we all hear about them! Hiking and biking trails, for example, do much more than cater to a group of healthy residents; they increase the value of real estate as well.

Fourth: find a goal worth leading us towards and set your eyes and heart on it (your mind, too): we are blessed to have some worthy goals, such as national athletics and intelligence research that would put us on the national map. It may be more appealing to talk about defense contractors who are located here than about military bases.

Fifth: every city of any significance in the world has a vibrant downtown: make it the city’s mission to bolster the viability of our downtown and encourage all the residents to visit and support it (and have the meter-ticket-givers take a break). What about bringing the Sky Sox downtown? Remember what this kind of a move did for Denver.

I’m sure each resident has a wish-list of her/his own, and perhaps Santa Claus will be coming after all this spring… We owe it to ourselves to bring forth the best ideas we can come up with and expect the mayor to pick some and run with them! Even libertarians want leadership and not anarchy, last I checked their treatises; and liberals are no different: they expect wise government action. Conservatives and centrists alike also want their leaders to represent them well, to be “philosophers-kings” as Socrates suggested, and not simply be mediators and peace-makers (police officers do this job).

Raphael Sassower is professor of philosophy at UCCS.    

“Liquor-license law structure misguided,” The Colorado Springs Business Journal, December 24, 2010, 16

LIQUOR 101—THE LEGAL CONSTRAINTS TO FREE ENTERPRISE

Let’s be clear from the start: I’m a proud liquor license holder, a general manager to be precise, who enjoys all the benefits and duties associated with the license. I don’t have a grudge or an axe to grind. On the contrary, I find the local authorities to be appropriately concerned and vigilant about what matters most: upholding the letter of the law and ensuring safe drinking in this town. What prompted me to write about this is the fact that a very high city official invited me to join a wine club that receives monthly wines from around the country. He thought that I could then sell them in my restaurant, and was shocked to hear that it would e illegal for me to do so!

But, as a citizen of this state who has some knowledge of the liquor law, I have some concerns that I’d like to share with like-minded entrepreneurs who are unaware of how misguided our legal structure remains when it comes to liquor licenses. These laws can be changed by the public, they are not handed down from Mount Sinai (except for federal laws which are). My guess is that some of these laws carry with them the residual effects of the Prohibition (1920-1933; the 18^th Amendment to the US Constitution; repealed 12/5/33 with the 21^st Amendment to the Constitution). The level of control, scrutiny, and constraint (on who can manufacture spirits and what licenses one must have to distribute liquor, and the conditions under which consumption of alcoholic beverages is permitted) is beyond anything that free enterprise or American capitalism would ever suspect. Let me indulge you with what are outdated laws and regulations that are reminiscent of the former dictatorship of the Soviet Union.

First, you must buy all your liquor from approved distributors only. You cannot buy wine directly from vineyards or distilleries. This means that if a certain wine or liquor isn’t sold through the accredited distributors, you are not allowed to buy it. Example, when I had a previous license at a different location the father of a bride who owned a California vineyard couldn’t ship his wine directly to the facility for his daughter’s wedding!

Second, because of the constraints on who is allowed to sell what spirits in this state, if a bar owner wants to buy a particular vodka, for example, s/he must buy it from the one distributor who is licensed to sell this particular vodka. This, therefore, gives the distributor a monopoly power to command whatever price it deems right. No competition is allowed, since other distributors don’t have the license to sell that particular vodka. Given national branding and marketing, owners who respond to their clients’ requests are bound to deal with one lucky distributor and one only. The local bar cannot shop for the “best deal” because there is only one deal in the state! Moreover, it’s illegal to buy directly from out of state distributors or producers. In case you ever try to circumvent the system, you must keep your purchase records on file and available for inspection 24/7.

Third, the buying power of a single bar or restaurant or liquor-store owner is limited. In an open market, you can increase your bargaining power if you joined other buyers and created economies-of-scale to counterweight the selling power of distributors. In our state you cannot buy together or buy from a large store that can afford to buy hundreds of cases at a time. You stand alone and have no bargaining power. As a restaurant owner, you are limited to buying $1,000 per year in emergency situations.

Fourth, you are not allowed to let your customers bring their own wine or liquor into a restaurant. Whatever the reasons for this law (probably restaurant owners’ lobbying), it’s not up to the discretion of the restaurant owner to allow this. Regardless of the historical rationale of this law, just like the “Sunday blue law” that were repealed recently, perhaps it’s time to revisit it. Wine collectors and connoisseurs should be able to bring wine from their private collections while less-affluent diners should be able to buy inexpensive wines at the liquor store and bring them into restaurants if the owner permitted it. Freedom of choice can be respected.

Fifth, restaurants cannot sell liquor as retailers and retailers cannot sell liquor as restaurants; under some circumstances liquor stores can have “tastings” and under some circumstances restaurants can let their guests leave the restaurant with an open but corked bottle of wine. Really? What if I got a great deal on a case of wine and wanted to sell some bottles to my friends and clients? I can’t, plain and simple, it’s the law!

These are just a few examples of how state liquor laws are overly restrictive and outdated. I understand that there are many interests involved and lobbying groups who have pressured legislators to vote for these laws. But as some legal thinkers have argued for decades (Hart), not all human activities should be regulated by laws: they can be left open to social conventions, moral norms, and cultural habits. As such, they would change over time and be responsive to local interests and demands. Should there be state laws about alcohol? Of course, just as there should be laws about which side of the road to drive on. We all like some commonsense regulations that prevent disasters and minimize dangerous behavior, that protect us from others and at times from ourselves. But this alone doesn’t justify silliness and hypocrisy, and here I address issues that transcend state liquor laws: what about drinking age?

We have created an untenable situation when it comes to the legal classification of adulthood: fourteen-years-olds can choose where to live in a divorce case; sixteen-years-olds can drive; eighteen-years-old can vote, join the military, smoke cigarettes, marry and have sex; twenty-one-years-old can drink; and twenty-five-years-olds can rent cars. So, adulthood is between the ages of fourteen and twenty-five…you can die protecting your country but can’t have a beer at a bar when you return as a civilian…you are rational and mature enough to vote for the president and your local representatives but you aren’t mature enough to drink…and so the confusion ensues: am I too young or too old? Am I responsible enough yet?

This inconsistency is hypocritical (my partner, Perry Sanders has a lot more to say about these issues at StoptheH.com) and we all swallow it without protest, I can see our soldiers feeling a bit hurt; I can see our voters getting confused. But what we forget along the way is the fact that sixteen-years-old adults are in fact criminalized. And when they drink and drive we are all concerned about accidents and about the police catching them without realizing that what we should be concerned with is the fact that we have raised another generation of criminals—young adults who skirt the law, evade the authorities, and thinks that it’s totally okay to do so. Why wonder when they end up cheating on their taxes or their spouses? We have trained them to cheat and evade and skirt the law…we have told them that the law makes no sense and as such it should be disobeyed. If we decided that eighteen is the magic age of adulthood and that all rights and duties of adulthood revolve around this age of maturity, we would be consistent and rational, make sense to every generation of young adults: that’s the age when you can drive and vote and join the military and marry and rent a car and drink in public.

My plea, then, is about logical consistency as an antidote to hypocrisy: make sure liquor laws make sense to us who still believe in American freedom and individual rights, in the free marketplace and the possibility that we all deserve to be treated fairly and equally, that we can pursue our dreams (of selling liquor or serving drinks at bars and restaurants) without some Big Brother watching our every move. If we turn out to be criminals and tax-evaders or cheats, then by all means prosecute us; but other than that, let us be free to sell and buy what we want and however we want to do so!

 

Raphael Sassower is a professor of philosophy at UCCS and the proprietor and general manager of Il Postino which has a liquor license.  

“Front-line lessons in Entrepreneurship,” The Colorado Springs Business Journal, October 15, 2010, 16.

So, You Think You Know Something

Your hair turns gray, you have started some businesses over the years, and you feel you kind of know something. You know how to handle money; you know how to manage people; you even know how to sell an idea to a bank or a group of investors who will fund your next project, even a restaurant. You have done it before, so it shouldn’t be that difficult.

Think again! Every project is different, and whatever experience the previous ten may have taught you, they never teach you enough to really overcome all the potential obstacles you haven’t even realized are just around the corner. No matter how many mistakes you have made in the past, and no matter how much you have convinced yourself that you will never repeat them, you are bound to fall short of your own modest expectations.

Why? Because the future is not based on the past, and the present is a fleeting mirage that eludes the best of us. We have to make up things as we go along, improvising like never before. This is not to say that your past experiences are useless or should be forgotten; only to say that in the business world, the variables are so complex and varied that no road-map will ever chart a clear path to success.

No matter how many restaurants I have opened before, and no matter how many partners I have had in the past, the current experience—Il Postino in downtown Colorado Springs—is adding challenges to my little bag of tricks I never imagined I would need to use again. It couldn’t be more difficult than dealing with New York bureaucrats, could it?

Was I unprepared? On some level we are never fully prepared. All you can do as a businessperson is to be mentally agile to adapt to any new circumstance. Your business plans are a great starting point, but may never be executed as planned, if at all. I remember opening the third-largest brewery in the Colorado in 1997 (Palmer Lake Brewing Co.) out of 94 only to realize that I was selling more art than beer within a year and that my gallery would become an event center.

Did I not realize that renovating an existing space in the original 1879 Post Office may open a can of city-codes warms? Of course I did, but I was too arrogant to figure out that each historic property is so unique that it requires a whole new set of plans. I went into this project with a certain level of confidence that eroded quickly. Now I finally know what I should have known six months ago. We signed a five-year lease on a Brooklyn address that didn’t exist in the city tax-revenue role and therefore couldn’t be assigned building permits. Kafka comes to mind… Unlike K., we were lucky to find a 1924 document in the archives designating this spot as a tavern. What are the odds that an old warehouse was originally the kind of business we were planning to open?

Did I fully appreciate how much extra money and time would be required? Even in your worst dreams you don’t want to believe that a problem will require twice the budgeted expense because it hides behind it another, even deeper problem (rebuilding the floors that were damaged by a leaking walk-in cooler that was removed because it was dysfunctional). Instead of hidden gold I found coal in the basement. Instead of a beautiful façade I found broken windows. But I was better prepared than when I renovated an old warehouse in Brooklyn that had no gas-line to the building; here we need extra pressure from the city, a relative easy fix.

Were the architects and engineers and contractors fully aware of what they were undertaking in this project? Their best efforts were bound to fall short of what was really expected of them. They couldn’t imagine, for example, that behind a false wall was a hole in a three-foot brick wall leading to nowhere (another wall of an adjacent building) . Who took a short-cut fifty years ago and kept it a secret? Should we uncover past mistakes and correct them? Of course we should, and the building will be safer for all. Back to the architect for detail drawings, back to the RBD planner, back to the contractor, back to the inspector, and finally back to the sub-contractor who can finish this part.

I know it’s more fun to talk about the menu and the wine list, the cool light fixtures and the ambience. But what about the hours and days and weeks of hard work by the Regional Building Department and the architects and the contractors? Their contribution is usually invisible when the focus is on the great-looking plate of delicious food and the fun you are having with your friends. But without the cooperation of the Fire Chief and the City Manager and the planners and inspectors, the original tin-ceiling that survived 130 years would be gone. What stories can it tell, sitting pretty 16-feet above the ground? Were there bandits who held up the place and stole gold from the safe? Were love letters opened right then and there with tears in the recipient eyes? Were fortunes made and lost right on that spot?

You don’t have to be a history buff to appreciate preservation; you don’t need to be a philanthropist to enjoy the beauty of the past; all you need is the attitude of a citizen who thinks about the city core and the symbolic importance it gives to our daily life: we are living in the healthiest city in the country, after all! And by healthy I don’t mean only physically healthy, but also mentally and emotionally. What ensures all of this? Financial health! So, whether you are a Republican or Democrat, try and keep yourself and your city financially healthy by contributing to a budget that supports the renovation of historical buildings and keeps us all healthy!

Raphael Sassower is professor of philosophy at UCCS and an avid consumer of healthy food and liquor (yes, it’s healthy, too, in moderation) in historic buildings.