“Let’s look outside the military for brand,” The Colorado Springs Business Journal, August 5-11, 2011, 25.

WHAT’S OUR BRAND?

We all have strengths and weaknesses. Despite Ray Dalio’s special knack for humiliating his employees by pointing out their weakness and mistakes so they can improve next time around—perhaps because he’s the owner of Bridgewater, the wealthiest hedge fund in the world, we may want to consider working with our strengths.

City officials and economic development gurus in our town have for years clamored to attract and promote military installations and their subcontractors, after realizing that religious organizations, like Focus on the Family, spend their money outside the city.  They claim that twenty percent of the economy depends on defense-related expenditures at the Air Force Academy, Fort Carson, Peterson Air Force Base, Schriever Air Force Base, NORAD, and the Combined Services Space Center. It sounded like a good old-fashioned military town, but should it be?

Our very own Chamber of Commerce here renamed the Chamber of Defense doesn’t seem to have an education liaison. Does it have a sports liaison or a hospitality liaison? It has attracted less than fifteen percent of the businesses in town out of more than 10,000 businesses because it prices its membership rates beyond their means. Clue: give out free membership for the first year; after a year begin charging gradual dues; then assess your marketing strategy to attract more members and give a voice to a wider clientele.

According to the U.S. Dept. of Commerce, Bureau of the Census and International Trade Administration, small businesses “have generated 64 percent of net new jobs over the past 15 years.” So, if creating new jobs is our concern, as it should be, why not focus on niche and boutique small businesses, rather than focus on big military contractors?

Besides, what happens once we get out of Iraq and Afghanistan? What happens when budget concessions, as we see them unfold, reduce the defense budget? Our defense spending as a percentage of our federal budget is disproportionately larger than any other advanced economy in the world. Is defense spending sustainable?

If we plan for the future, let’s look into health, education, and new technologies. Having been a tourist and heath attraction from its very beginning, why doesn’t the city refocus its efforts in this direction?

Perhaps the focal point should be the Convention and Visitor Bureau that claims we had 5.5 million visitors in 2010 with an economic impact of $1.35 billion. Now this is a large number. I tried to compare this to local defense spending but websites weren’t helpful nor were city officials (including the Mayor’s office). Instead of the Chamber of Defense leading the economic charge, it will be left to the newly appointed CEO and President of the Bureau, Doug Price to create new jobs.

According to him, there are more than fifty local attractions with more than half being completely free of charge. There are more than thirteen thousand employees in the hospitality industry, as compared to about fifteen thousand in Fort Carson. So, if we add hospitality, high-tech (unrelated to defense), hospital, university, and athletic employees (including physical therapists and personal trainers), I bet the number overshadows that of the defense industry. And if our share of the state’s tourism industry is only ten percent—being the second largest city in the state—we have room to grow!

So, what’s the issue that keeps a military focus on the CS community? Is it our retired military personnel (who don’t like taxes because their kids are no longer of school age)? If it’s nostalgia, why not go back to attracting tourists and patients of tuberculosis? Forget tuberculosis patients, and instead focus on athletes who appreciate altitude training. Though no a ski resort, we are still closer than any other front-range city to the Rockies! The Hill Climb reminds us of Pikes Peak, just as all the other athletes coming to train at the USOC remind us of how special we are. Maybe we should start believing in ourselves again!

So-called liberal states like Massachusetts, New York, and California have many more military and air bases than we do; their economies rely on defense contractors even more than we do; but this is not what they are known for. This is not how they brand themselves. With new city leaders, let’s hope that after attracting defense contractors and religious organizations, they may pay attention to health, wellness, and tourism.

The city wisely chose to brand itself “Proud Home of the U. S. Olympic Committee” and not the “Proud Home of Military Bases.” Pikes Peak isn’t moving away; neither is it dependent on the largess of Washington. Let us make the most of it!

Raphael Sassower if professor of philosophy at UCCS and was formerly involved in the hospitality business in town. He can be reached at rsassower@gmail.com

      

“Running the city like a business is odd,” The Colorado Springs Business Journal, July 29-August 4, 2011, 24.

THE PRICE OF TRANSPARENCY

Not only did the citizens of Colorado Springs want a “strong mayor” with commensurate strong salary, they wanted the city to run like a business, which is code-word for efficiency. They found a perfect match in Steve Bach, a former commercial real-estate broker whose regal appearance bespeaks of a successful CEO and hopefully a Mayor. Beware of what you ask for!

So, Mayor Bach is running the city the way he ran his private business—all communication with the media, for example, is streamlined and must be approved by his office. It’s one thing to tell your secretary that all inquiries about a particular building should be answered only by agent X, and quite another to tell city officials/managers that they cannot answer directly questions by journalists (and a freelance ”rogue”—as I have been affectionately labeled). Really? Last I recall, he and his fellow-council members ran on platforms of transparency and accountability, so why tight controls?

As I was looking through the Police Department annual budget of around $92 million, I reached out to its Chief, the affable and eloquent Richard Myers, only to find out that only if city manager Steve Cox, also an affable and friendly former Fire Chief, is present, he could meet with me. Really? Let’s waste two officials’ time…Is this how efficient businesses are run? To save money and time, I rescinded my request to meet. The reports can speak for themselves.

So far two myths are being examined: first, public entities (like a city), if run like a business, will necessarily be more efficient, and second, that transparency can be simply declared to make it so.

When I reviewed Memorial’s budget for public benefit—limited, of course, to the public that reads the CSBJ—and suggested that there was no hurry to conclude an agreement in principle between the City and Memorial, a council member chided me for being “uninformed” because all the documentation is on the City’s website. Were salary increases for 25% of city employees during the official wage freeze (as discovered only recently by a new council member) also on the website? So, transparency can be accomplished by referencing a website! This is probably a third myth.

It is true that websites in general are open to the public in the sense that anyone with a personal computer or library card can have access to them. But is the mere fact that a website is part of the wide world of the Internet in itself a sufficient condition for public access? No, it is a necessary, but not sufficient condition. Without the website no public access is possible, but with it there is no guarantee that the public will know about it, find it, navigate the data in it that is in question, and be able to analyze its nuances.

For example, having poured over some 200 pages of Police Department reports (courtesy of Chief Myers who provided the links), I was thoroughly impressed by the detail of the reports and their commentaries, especially as the city has grown and the budget has shrunk. As in most budget reports, we get large numbers and not the details from which these numbers are composed. This makes sense, because otherwise I’d have to read probably more than two thousand pages, which is too much for an average citizen (or even for a rogue who is on summer break from university duties). Here and there one wonders if “each Emergency Technician answers nearly 5,700 9-1-1 calls a year” is impressive workload or not. Assuming that person works 250 days a year, this means 22.8 calls a day... Should I have wasted the Chief’s and City Manager’s time to find out if this is what their businessman-boss finds efficient use of resources?

In another report Chief Myers speaks my language: “Enforcement activity for the sole purpose of generating revenue is contrary to the social contract, and outside the ethics of modern policing.” Right on! Social Contract theory goes back to Socrates and his trial in Athens in 399 BCE, and espoused by most political philosophers who recognize that citizens have in fact an implicit “contract” with their representative government to ensure that they receive more benefits from the state while relinquishing some of their rights. Chief Myers knows this, acknowledging the consent of the citizens to be taxed and policed, get traffic tickets, be monitored by cameras. He wants to dispel the impression that ticketing motorists is the only way the department pays its officers (which is true in Colorado’s mountain towns where around 70% of the budget is generated this way). I wish he did more with the “three Es” of “enforcement, engineering, and education,” to emphasize education above all. Are all officers and civilians in the department proud to be “civil servants” constrained by a social contract or are any of them on a power trip? I hereby volunteer free lectures to the department on social contract or any other related topic.

As for enforcement, I have three suggestions: first, given that we are the healthiest city in the country, why not have officers ride bikes rather than cruise-cars or motorcycles? It’s cheaper, more flexible, ever-present (they go slower), and healthy for the officers. This would be like the British Bobby who walks around the pubs with only a club in hand.

Second, if there are dangerous intersections, cruisers should have their lights on (rather than hide behind bushes), so that motorists are warned; likewise on highways and around schools—let the public see where you are! Incidentally, this is true in Israel and France where cruisers have their lights on at all times for easy recognition, immediate warning, and a measure of safety. DC is considering adopting this method of patrolling.

And third, some ideas cost no money to implement: several years ago I suggested that cruisers leaving from or returning to the Nevada station should take different routes (rather than just use Cimarron and Nevada) and thereby cover more terrain—it has been done to the effect that the mixed-neighborhood around the station is safer than when I moved there in 1996.

Running a city like a business is an odd proposition: profit maximization isn’t the goal, but rather public service; tight communication controls don’t bespeak of public access. Transparency is a tough goal to achieve—open forums and websites help, but they must be critically navigated by experts or interested groups (and not the public at large). The media can help, as long as its work is done with grace and respect, humor and goodwill. And finally, officers, please don’t hunt me down and ticket me; despite the rogue label, I pay my taxes on time and stop at red lights!

Raphael Sassower is professor of philosophy at UCCS. He regularly teaches a course on “Politics and the Law.” He can be reached at rsassower@gmail.com

“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.