“Partnerships bring best of times, worst of times,” The Colorado Springs Business Journal, October 7-13, 2011, 19.

PARTNERSHIPS

As the Ten Days of Atonement are here, a time of reflection and stock-taking, a seasonal turning point that encourages revisiting ideas and habits alike, I want to share my sense of the value of business partnerships.

My late accountant, Sam Huff, who was generous with his time on many non-profit boards used to tell me: the problem with partnerships is that when they succeed, it’s because of me; when they fail, it’s because of you. Whichever way, responsibility is easily shifted around.

Yet, there are those who thrive in partnerships because the whole is stronger than its parts. Partners complement each other, and can trust that the benefits of each partner’s contribution outweigh any disadvantages associated with a difference in personality traits.  

Though partnerships are fundamentally social-contract associations, they need not be democratic (one person-one vote principle, majority rule). They can be hierarchical, where senior partners have more rights than junior ones who accept less responsibility with less rights. In some cases, senior partners may have veto-rights even when they don’t have a majority. There are partnerships that require unanimous consent for every decision, and as such may require certain finesse in how issues are presented to a vote.

So, if partnerships differ from other business arrangements where there are tensions, for example, between managers and workers, do partners really “feel” equal? In some partnerships, within a few years, it becomes apparent that some contribute more to the whole than others, tensions may rise, and they may fall apart.

What is the meaning of equality in partnerships? Regardless of unequal contributions to the partnership, are all partners equal in their voting rights, assuming majority rule? Should more senior partners have more rights or differentiated weight of their votes? Should there be a difference between partners, associate partners, and senior partners? Most Operating Agreements can take care of these questions, but in fact none of them spell out in enough detail how to ensure camaraderie.

Most professional partnerships (lawyers, accountants, doctors) account for different contributions (hours worked) by distributing funds at the end of the year proportionate to contributions (the more you work, the more you earn). Most distributions take into account shared overhead costs (equally or proportionately). Questions of fairness are always raised, since there is no “one-size fits all.” Founding partners may expect junior partners to buy their way into the partnership, while in other cases, they may be asked to pay senior partners an annuity when they choose to retire.

One problem with partnerships is the free rider syndrome, where some take advantage of the fruits of the partnership without contributing their fair share to the whole. Free rider issues are usually confronted through peer-pressure, penalties, or eventual dismissal from the group; they are tricky to “prove” and nasty to resolve.

Since partnerships are voluntary associations, everyone is free to leave, even when tenure is assumed to protect partners from being summarily eased out. Operating Agreements at times spell out the conditions under which any partner may leave (or be asked to leave) and what compensation is appropriate. Partnerships, like marriages, are complex relationships that require continued attention and fine-tuning.

As I look back at my own experiences, some have been exhilarating, some painful; some enlightening, some infuriating. The worst one was when a partner in one of my restaurants made demands that we stop serving gays because we were being known as a “gay bar.” Is a place a gay bar because it’s frequented by gays? How would you know, anyway? If Jews come in, is it a “Jewish bar,” if African-Americans, is it a “black bar”? I borrowed money from my mother and bought him out in three weeks.

But then I had partners who are smarter than I, who coached me and guided my decisions, who gave me realistic feedback, even when it was difficult to hear, who reminded me why I formed a partnership to begin with. Never be resentful towards your investors, a New York investment banker told me, they are indeed your partners; without them you would have nothing! So, remain grateful and repay with interest when they want out, or continue to pay dividends even when you are the only working partner.

I have met some fascinating people because of partnerships, people I wouldn’t have had the opportunity to meet otherwise. So, as I look backwards and forward, despite the heartaches that at time accompany partnerships, when the reasons are right, embrace and celebrate them; they add a dimension to your well-being you would otherwise be missing, including being accountable to someone other than yourself! Accountability is a good practice we are reminded to uphold at the dawn of yet another Jewish New Year. 

Raphael Sassower is professor of philosophy at UCCS and is still involved in eight partnerships. He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com

“A eulogy: Goodbye to Chinook and Borders,” The Colorado Springs Business Journal, September 30-October 6, 2011, 18.

A Eulogy

It was a sad day when Chinook closed its doors in 2004. Since 1959, it was a fixture on North Tejon Street, with Dick and Judy Noyes and their staff taking care of us. They knew the classics and the latest trends; they knew our family; they had a play area for kids and book signing parties (full disclosure: I had a book signing there). They were part of the landscape, and they added a cultural gravitas to our downtown.

When they closed it was assumed that the “chains” killed them, coming into town with discounted prices, national marketing budgets, and buying power an independent bookstore couldn’t match. It’s all economies of scale, not an emotional plea for the survival of the unfit. Unfit?

As national press releases tell us, “Borders, an Ann Arbor, Michigan-based chain that pioneered the big-box bookselling concept and grew to 1,249 stores at its peak in 2003, will cease to exist by the end of the day on Sunday, September 18^th, 2011.” Perhaps not that fit, after all. Even though it started in 1971 and diversified into other chains and Internet sales, it still filed for bankruptcy protection last February.

I used to go to the one at Broadmoor Towne Center, where the staff was cordial when I asked them to gift-wrap yet another book. What else can you get two-year old Sunny Lee or Liz who just graduated from Beth-El nursing school? There is nothing else that compares to a book you can inscribe or carry with you on a plane-ride. A certain intimacy, not a Luddite throwback, accompanies every book we read.

Yes, we have Kindle and downloadable books; yes, we have birthday cards we can digitally send; heck, they send themselves once you set the dates in the program. But does it have the same personal touch as a hand-written card? Have we digitalized our personality out of the message? Are we afraid to remain too human in a virtual world?

Even Borders, as a big-box chain, offered a public space for coffee drinkers and wireless consumers. It offered a place to meet and talk and read. Not quite a library, not really a living room or park, it still provided a space for the community, a place that felt safe and real, where people met to read and talk.

What will replace this big-box store? The biggest retail expansion in America is in the “dollar” stores category, such as Family Dollar and Dollar Tree, both of which can be found at Uintah Gardens. Is it because of The Great Recession? Perhaps we are just cheap; perhaps we stopped reading at middle-school. It might be that literacy is taken for granted, like breathing, and just as we need a Yogi to teach us to breathe properly, we may need someone to nurture the love of reading.

Postmodernism teaches about displacement as a substitute for replacement. When we replace, we erase what has come before and put in its place a new version, one that overshadows whatever the previous one offered. This is true about the car replacing the horse and buggy or gas furnaces replacing coal ones in private homes.

When we displace, by contrast, we leave in place whatever came before, because the old can coexist with the new. Though airplanes may be preferred, trains are still around. Though the Internet is commercially dominant, we still go to boutiques to shop. Such coexistence doesn’t take away from the intrinsic value of both commercial venues.

So, why think that independent bookstores must be replaced by big-box stores that will inevitably be replaced by Internet sites, like Amazon? Why can’t they all co-exist? Why can’t Chinook stay in place along Borders and Amazon? Is it really “market-forces” or our own short-sightedness?

Have we forgotten that sales taxes are paid for and spent locally, while Internet sales avoid charging them altogether? Local sales taxes fund basic public services, such as libraries and parks. As we mourn the loss of sales tax and jobs, we should think about reviving such public treasures, local bookstores with coffee shops.

President Obama wants to tax millionaires; his opponents dream of a market with no taxes; both in the name of jobs creation. The Bush and Obama administrations set up TARP to bail out Detroit car manufacturers to save jobs; would they have bailed out Chinook and Borders to save jobs? Perhaps steel and rubber are more macho than books; perhaps driving is more thrilling than reading. But when we look for the next Einstein, it would be wise to inspire her by a book, not a joy-ride…

Raphael Sassower is professor of philosophy at UCCS and writes books nobody reads. He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com

“Community and family at heart of civil society,” The Colorado Springs Business Journal, September 23-29, 2011, 23.

IT’S ALL IN THE FAMILY

            Having watched the first Republican panel of presidential contenders, it seemed that an evil villain is running this country. They might have been talking about Syria’s Assad who “must go,” as they chanted about our own President. What happened to civility in public discourse?

            Think about growing up in a so-called typical American family. As a baby, you contribute nothing to the household, while your parents work to feed you, invest in you because they chose to have you. Will they have a good return on their investment? Are they taking some risks? Will you repay them when they become old?

            The notion that a civil society is based on some basic principles of mutual support gets lost all too often in public debates about budgets or entitlements. Even religious advocates of family values forget their own rhetoric when thinking about financial matters. What causes such amnesia? Why has the financial been divorced from the moral?

            Adam Smith advocated a moral setting in our chosen communities, so that our commitment to our extended family would be practiced in our villages. As early as 1759 he posed the idea of Impartial Spectator that would observe our social and moral behavior, like a divine guide. Some think he talked about God. The Impartial Spectator ensured that our sentiments extended into the commons, the public sphere.

            It’s only much later in 1776 that the same Adam Smith focused on the marketplace and coined the term Invisible Hand to describe how markets could operate freely with equal access to anyone who wanted to engage with others. The Invisible Hand could be invisible because an Impartial Spectator was already in place. When you build trust, as should be the case in family settings, business exchanges can be honest.

            It’s with this in mind that Karl Marx a hundred years later proclaimed an old Christian principle found in Matthew 25: “From each according to his ability, to each according to his needs.” Whether under religious tutelage or that of political economists, it’s clear that to have a functioning marketplace we all need to be in it together, whether in Colorado Springs or the United States. A strong moral fabric is the foundation of business networks.

So, when our mayor (or any councilmember) wants to be “off the record” or not have public access to his Task Force meetings about Memorial hospital, he forgets that we care for and respect each other as if we are members of one extended family (without power-plays, guilt trips, or personal agendas). He may be the first among equals, but he still remains a citizen with one vote and one heart. The same goes for all politicians, Republican and Democrats alike.  

            Legitimate disagreements over ideas or policies do arise. In order to tease out the differences, we must ask for the principles that guided them, rather than the people who happen to advocate them. For example, when we discuss what part of the collective pie Defense budget or Social Security deserve to retain, we assume the pie is of a fixed size. If less revenue is collected through taxes and fees, the pie will shrink; if more, it’ll grow. As the Super Congressional Committee commences its deliberations, this issue should be addressed first, rather than some pledge about no tax increases.

            Similarly, the size of the economy isn’t fixed, because it’s subject to market fluctuations and business cycles; the economy expands and retrenches under market conditions. To speak, then, of job growth in a vacuum as if all other variables remain constant is foolish. Right now adding jobs is in fact making up for lost jobs; as new jobs are added, some companies, like Bank of America, are announcing massive layoffs. Is anyone doing the math in DC?

Can a President really promise to expand the job market? Or is he catching up to the realities of corporate layoffs and hiring? Perhaps he should follow Governor Perry of Texas who rightfully claims to have contributed about 40% of all the new jobs the country added since the official end of the Great Recession in 2009. But since about 47% of Texas’ new jobs were government jobs, is this a model we should follow? It’s difficult to remain principled in this economy…

            Perhaps we should lower the rhetorical volume and focus more on the changing realities of the marketplace, adapt as we go along, maintaining integrity and cordiality. Without the kindness of others, as consumers, employees, government clerks, police officers, bankers, and lawyers, no business could have ever succeeded. This lesson every helpless baby knows all too well.

Raphael Sassower is professor of philosophy at UCCS and is the author of Postcapitalism (2009). He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com

“Too big to manage?” The Colorado Springs Business Journal, September 16-22, 2011, 19.

TOO BIG TO MANAGE

We’ve heard enough of the slogan “Too Big To Fail.” For some it was an excuse for government handouts; for others, it was a symbol of the corrupt relationship between regulators and those they regulate, benefitting undeserving mega-banks whose leaders are compensated more that than their institutions pay in taxes.

Was it justified after the housing bubble to rescue the giants of finance? It did ensure some financial stability and may have averted further deterioration of the economy—a point difficult to prove retroactively because of the notorious “self-fulfilling prophesy” feature of any economic judgment—and therefore it was practically justified.

Yet, on principled and moral grounds, it was a travesty on a grand scale: what happened to capitalism? What happened to the belief in market forces determining who shall survive stiff competition and bad decisions? What happened to rescuing the weakest link in the chain we call society, rather than enabling greedy behemoths to thrive? Didn’t the dinosaurs become too big for their own good?

Learning from that experience, perhaps we should be more forceful in our assessment of the latest scandal plaguing the media empire owned by the Murdoch dynasty. There is ample evidence that there have been illegal and immoral electronically-eavesdropping on royalty, celebrities, and victims at the News of the World. It’s appalling to discover around the ten-year anniversary of 9/11 that last summer the FBI opened an inquiry into allegations that News of the World tried to intercept the phone records of victims of the 9/11terrorist attacks.
Murdoch famously testified before a House of Commons Culture, Media, and Sports Committee that since that operation accounts for less than 1% of his overall news-media conglomerate, he can’t be expected to be responsible for its management. Have we shifted from “Too Big To Fail” to “Too Big To Manage”?

Yes, it’s impossible for Murdoch to know all the details of phone-tapping and bribery in his $5 billion empire; it’s practically unwise for him to micromanage such a large workforce. One cannot expect him to know all his employees by name or remember their birthdays. Innocence by ignorance remains understandable but legally and morally unjustified.

More importantly, practical considerations raise moral issues. First, consolidation is the rule rather than the exception in capitalist market formation: economies of scale dictate mergers and acquisition. This entails a concentration of power that should lead to an increased sense of personal responsibility at the top. Second, if consolidation is inevitable, despite the Sherman Act of 1934 aka anti-trust law that warns against market collusion that undermines free competition (see the US Department of Justice lawsuit against the AT&T mobile merger with T-Mobile), then let’s make sure corporate leaders are trained to become role-models and mentors. Third, in addition to proper training for corporate leaders, there ought to be policies in place that ensure corporate compliance with basic moral principles, such as not lying or stealing or harming others. Simple principles are simple to follow even in large institutions. Without good role-models up and down the chain of command and ongoing mentoring, no policy is worth the paper on which it’s printed.

As any business owner knows, there is a big difference between running one store or restaurant or factory and running two or more. With one, you can manage every detail, answer every question, and make decisions in “real time.” Once you move to two locations, you must hire a manager for each location, delegate authority for decision-making, and train your managers to think like you. Since human cloning isn’t available yet, the prospect of delegating is difficult, especially for Type A control-freaks. But it’s exactly these individuals who get to the point of opening another location…

No business manual, textbook, or course can prepare you to transition from micromanaging to delegating, from knowing about every dollar that is spent or earned to seeing only at the end of the month a Profit/Loss statement about what happened weeks before. This requires different kinds of planning and controls, policy-setting and measuring tools, all contributing to the ability to manage from the sidelines, like a coach or guide.

Size matters, after all. The larger the entity, the more attention is required to preserve a corporate ethos of integrity and morality that can be expected at every level by every employee. Vigilant monitoring is part of responsible management. If we are serious about personal responsibility, then letting the likes of Murdoch get away with a mere mia calpa is an admission of a bankrupt capitalist system that has lost its original claim to moral superiority over feudalism.

Raphael Sassower is professor of philosophy at UCCS and has refrained from managing entities too large to micromanage. He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com

 

“Refinancing mortgages, solving foreclosures,” The Colorado Springs Business Journal, September 9-15, 2011, 23.

REFINANCING MORTGAGES, SOLVING FORECLOSURES

Perhaps soon enough we’d be in a position promised to Jeremiah (and repeated in Ezekiel) that the proverb “Parents have eaten sour grapes and children’s teeth are blunted” shall be replaced by an appreciation that everyone shall pay for his or her own sins. Unfortunately, we are not there yet.

The housing bubble with its attendant financial crisis is still with us. A combination of lax regulation and heavy subsidies to large financial institutions orchestrated in the Bush Administration under the leadership of Treasury Secretary Henry Paulson, Jr. is still plaguing the Obama Administration’s Treasury Secretary Timothy Geithner and its newly appointed Chair of the President’s Council of Economic Advisors, Alan Kreuger.

Business cycles are not bound by or timed according to the changing of the political guard; they have a rhythm of their own. Intervention in these cycles is at most precarious or counter-productive, at worst disastrous. With a $14 trillion economy, the original $700 billion TARP infusion (some claim $1.2 trillion) represents 5%, just enough to have an impact on the margins, but not the heart of the economy.

 Bloomberg LP News, under the Freedom of Information Act, discovered some pearls of folly. Here is the lineup: Bank of America and Citigroup received $45 billion each, JP Morgan Chase and Wells Fargo received $25 billion each, Goldman Sachs and Morgan Stanley received $10 billion each, as well as others, like AIG, US Bancorp, and GM. Even foreign banks who have a branch in NYC enjoyed the bounty: The Royal Bank of Scotland received $84.5 billion and, the Belgian Dexia $58.5 billion.

While most banks have returned the bailout handout and in some cases the Treasury profited from the transaction, foreclosure rates in the heartland have increased overall and sky-rocketed in select markets. Over 3 million foreclosure notices were served in 2010 alone. Why hasn’t the financial health of banks affected the housing industry? How is it that with 0% interest paid to the Federal Reserve banks can’t lend money with 1% interest—it is after all a 100% gross profit margin?

Local landlords know that tenants are their most precious commodity. If taken care of, tenants will pay rent on time and renew their leases even in bad times. Given the current situation, the rental market has adjusted, despite fixed-rate mortgages and escalating costs. This means, for example, that we’d rather give a tenant a break, reduce the rent by 10%, rather than lose the steady income that helps pay the mortgage or have a vacant space till a new tenant is found. Sounds reasonable, does it not?

Why can’t financial institutions lead the way out of the Great Recession? They can change their policies and shore up the housing industry. Let’s do the math. Assume you bought a $500,000 property. Assume you put 20% down, and took a mortgage of $400,000 with 6% for 30 years. Your monthly payment would be $2,398.

Given the housing bubble, the value of your property has been reduced in two years by 30%, from $500,000 to $350,000. Your down-payment of $100,000 is wiped out, and you owe more than your property is worth. Assume you want to retain your property and that you are still employed: can your bank help?

The bank can write off the $50,000 difference between your principal and the current value (you now owe $350,000), lower your interest rate to 2%, and have your monthly payment be $1,293, almost half of your original payment. You might feel more inclined to stay in your property, pay the mortgage, believing that an upturn in the economy will restore some of your original $100,000 equity. Default risk has decreased substantially.

In addition to profit optimization, banks are interested in risk mitigation and cash-flow. In the present case, the bank will be losing $50,000. Writing off this loss against profits from other operations, the nest loss may be cut in half. Comparing a loss of around $25,000 to the loss of the entire $400,000 is simple; even when comparing it to a loss from a short-sale of $250,000 it makes sense for the bank to refinance.

What about the loss of interest income, from 6% to 2%? Two mitigating factors come into play: first, the interest charged by the Fed has decreased to 0%, and second, wouldn’t the bank rather steady its income stream than lose all of it? It’s the same logic that motivates landlords to reduce rent rates.

If greed is squared off with common-sense maybe its devastating impact can be moderated; if sort-term considerations is compared with long-term prospects, maybe the effects of business cycles can be somewhat mitigated. When banks realize that their partners are indeed its customers rather than federal regulators, they can lower their risks, retain a steady cash-flow, and improve the health of the economy!

Raphael Sassower is professor of philosophy at UCCS, pays mortgages and is a landlord. He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com

“They just don’t make sense,” The Colorado Springs Business Journal, September 2-8, 2011, 19.

REALLY?

All too often we come across something that just doesn’t make sense. We look at something and wonder, really? Is it inconsistency, blindness, or hypocrisy? My observations are random

without any priority to one phenomenon over another.

We have compassion for homeless people, trying our best not to judge their choice to live under a bridge. But, what’s with the dogs? You hardly can take care of yourself, so how can you afford to care for a dog?

With a national commitment to health and wellness, numerous gyms and personal trainers are available at all hours. But have you noticed how close to the entrance clients must park? They plan to run on a treadmill, lift weights, or spin; are the extra few steps from across the street a physical hardship?

Hikers and bikers, runners and nature-loving casual walkers need to get to their destination by car. They don’t start from home because no good trail is nearby. But must they drive in the biggest SUV possible, the one that consumes the most gas?

What about so-called conservatives who want the government off their backs, but invite them to their bedrooms? If the point is less rules, regulations, and laws, why insist on having the government check what we do in the privacy of our homes? Why do we even have law about marriage, sex-workers, or marijuana dispensaries? Why not get the government out of the morality/sin business and leave it to religious organizations?

It’s odd to hear teachers or professors complain about the burden of grading students’ papers. After all, isn’t this part of the job description? Next thing they’ll complain about preparing lectures and having class discussion. Do teachers not like students? If not, why to they collect salaries from educational institutions?

When citizens make the decision to seek public office and become politicians, they are supposedly there to serve the public. The public puts its trust in them and the character they have portrayed in their campaigns. Is it unreasonable for them to be scrutinized by the press? Didn’t they volunteer to be in the public eye to begin with?

Restaurants offer customers a meeting place to eat and drink with their friends or colleagues. Though private by legal definition, restaurants are public spaces as well. Why do customers complain about the noise? Do they expect to dine all alone the way they do at home?

So-called liberals believe in the efficacy of taxation to provide public goods and services, like military defense and social welfare safety nets for the entire population. Progressive taxation as a means to redistribute wealth and income has been their motto. So, why do they hire expensive tax advisers and accountants to find loopholes and extra deductions?

Though we rarely find obese people in Colorado, the healthiest state in America, when they drink from large receptacles of Diet Coke or Pepsi they buy at Seven-Eleven at all hours of the day, we wonder: does the “Diet” designation make such a big difference? Are any sodas devoid of sugar or sugar-additives? It may seem a small amount, but what if they are drinking a gallon at a time?

Speaking of food, what about the black-tie events, where five courses are offered in opulent settings—hotel ballrooms, private country clubs—as fund-raisers for the homeless? The most hilarious breakfast I attended as a guest of cardiologists (for Peak Vista, if I recall correctly) served steak and eggs, ham and sausages, white rolls with butter, and basically everything one can think of as unhealthy nutrition. Wouldn’t granola and fresh fruit have been appropriate?

The right to own guns, as the Second Amendment to the Constitution is interpreted in terms of individual rights and not a group right (militias), is exercised in the West and South much more than in other parts of the country. With the proliferation of gun ownership and lax licensing regulation, is anyone surprised at crazy cases of random (or some claim deliberate) shooting of innocent people, as was seen in Rep. Giffords of Arizona?

Is it more cost-effective to build basketball or baseball fields, indoor sports arenas, music halls, and video-game arcades than prisons for juveniles? Have you ever seen a sweaty youngster after two hours running on a soccer field climb a fence to burglarize a home?

And finally, when you hear bad things about the “government,” how we should get rid of it, remember that they are talking about you! Our Constitution considers citizens as the sovereign—the ultimate seat of power and authority—while the government represents and serves, and is replaced at regular intervals. Congress as such isn’t the problem, it’s the millionaire, career politicians who are!  

Raphael Sassower is professor of philosophy at UCCS and likes reading students’ papers, paying taxes, and isn’t interested in his friends’ sexual habits. He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com

“It’s a global, but political, economy,” The Colorado Springs Business Journal, August 28-September 1, 2011, 19.

IT’S POLITICAL-ECONOMY, AFTER ALL

It made sense two centuries ago to describe the theories and practices of the world of finance political economy. Politics, as we have just seen in the past couple of months, play just as important a role in the economy as economic factors, such as employment and interest rates. When discord dominates the halls of Congress, the economy is bound to suffer; sound-bite declarations replace thoughtful solutions.

Whatever ails the world affects our country, and whatever ails our country affect every little village or city, since we rely on banks and mortgages that are internationally invested, federally controlled, even when locally serviced. As such, as disgusted as we are with our leaders, we needs to speak out and give them advice before electing others.

Though we teach in philosophy that every argument has a counter-argument, that every position can be opposed by an equally strong or valid one, there are times when this is not true. Some arguments are invalid, because their premises are false or their structure is fault. Some arguments are irrelevant when lives are at stake.

To say, then, that the Bush and Obama administrations’ TARP was a failure because it bailed out banks to stabilize and stimulate the economy in a way that didn’t filter downward is telling only part of the story. The other part was the “cash for clunkers” program that had an immediate ripple effect on the reduction of pollution, conservation of energy, and retaining manufacturing jobs. The smallest of investments produced the biggest bang for the bucks! Who knew?

Negotiation is commonly understood as a zero-sum game, where opponents find a middle-ground on which they agree. Of course there is posturing and grand-standing, bravado and chest-pounding, but at the end of the day, a compromise is achieved.

If the President intends to lead the country before the next election rather than become irrelevant, he must find ways to lead with informed compromises, to lead as if the fate of the country is at stake, not simply his own re-election.

Since the economy is influenced by politics (we didn’t need S &P’s downgrading to remind us of this fact), let’s be politically careful, ideologically honorable, and above all, prudent. Prudence, after all, ensures survival, not principled stubbornness, even when principles are compromised.

As some military historians remind us, if Hitler wasn’t as insistent on continuing his march eastward to beat the Soviet Union, he may not have lost World War II. Likewise, all the so-called socialist policies of the former Soviet Union or China have proven disastrous in their infatuation with heavy investments on armaments and heavy industries. Ideological narrow-mindedness leads to economic ruin.

Economic solutions to economic problems are not that complicated if there is political will to look at the big picture for long-term solutions. We know how to reduce burdensome regulations, close tax loopholes, increase exports, build infrastructure, create jobs. Legalizing immigration at $100,000 per entry, for example, would raise billions over time; likewise, legalizing marijuana would decrease legal costs and raise millions in tax revenue. How about combining most counties in the state and in some cases consolidating them within existing city governance? Any other ideas, anyone? Desperate times call for desperate measures. No idea is too silly to be aired.

Some theories are politically or ideologically informed, and as such are unscientific (untestable): they prove what they assume rather than find out the outcome after facts are examined. Let’s not repeat the folly of Arthur Laffer of the Reagan era who served an ideology, but come up instead with creative solutions, regardless of political affiliation.

Instead of asking: why can’t we all get along?, as some pundits seems to suggest, we should ask: what is the right course of action for the nation? If we don’t know the answer, let’s adopt a trial-and-error methodology, piecemeal engineering, as Karl Popper suggested. This would add humility to our public discourse and replace the arrogance of millionaire politicians. If President Obama or any other member of Congress ends up not being re-elected, it’s a cheap price to pay to improve our economy.

As the latest political squabbles illustrated, our democracy does work. It’s a messy process that brings out ugliness, discord, and deep seated emotions. There is nothing wrong with that as long as it’s constructive. Unless we want a dictatorship, this is the price we must pay: listening to extreme views we abhor. Who knows, perhaps among the cacophony of economic advice, a sweet note of brilliance will emerge to set us straight. Bill Cosby is reputed to have said: “I don’t know the key to success, but the key to failure is trying to please everybody”; he might be right!

 Raphael Sassower is professor of philosophy at UCCS and is the author of Postcapitalism (2009). He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com

“What is fair tax-burden?,” The Colorado Springs Business Journal, August 19-24, 2011, 23

TAX GRIEF

When I purchased in 1986 an old Victorian house in the historic North End, the county assessor—or his agent—showed up. He looked around and then announced that my annual real-estate taxes will be increased to around $700. That’s all?, I asked in amazement. Perhaps it should be more, I offered, having just moved from Boston. He chuckled and left, thinking I was deranged. I thought it was the bow tie I was flaunting as a freshly minted professor...

And then I learned a simple lesson: you get what you pay for: less taxes, less services. Garbage wasn’t collected by the city, and when we had a big snowfall, Tejon Street wasn’t plowed for days. So, why do taxpayers believe that they can demand city or federal services and pay no taxes?

Perhaps Elisabeth Kubler-Ross (On Death and Dying 1969) was right, after all. We first deny that any taxes are needed, comparing ourselves to the Founders. The more taxes, the more waste can be expected. There is nothing that government does right. Denying it taxes, it’ll learn to live within limited means. The road to small government is strewn with denial that government is needed at all. Can’t we just all get along? We all own guns anyway, so peace is bound to be maintained...

But when taxes keep being collected, when paystubs show that take-home pay is much less than expected, people begin to get angry. I don’t mean being frustrated or upset, I mean angry enough to demonstrate and march (The Tea Party). But anger is an exhausting emotion, especially when worrying about daycare and mortgages. It’s a lot of work, and for what?

Then bargaining sets in place: cut taxes for the rich, change the tax rate, retain the Bush’s Administration tax cuts, declare a tax holiday for the weekend. For bargaining to be effective at least two willing parties must engage in the process. Who are you bargaining with, the government, the IRS, your local mayor? And what is your trump card? Unless self-employed and willing to go underground, you can’t avoid paying taxes because they are deducted by your employer. So, you are in no position to bargain, after all, except when the city turns off street lights...

When there is no one to bargain with, when no one is listening or cares, we become depressed. Helplessness sets in. Why keep on fighting a losing battle? Alcohol or pot looks enticing, just like watching mindless TV. Should I even bother going to work? Once taxes are deducted and bills are paid, what is left? Our Great Recession is about to become the Sad Depression.

Just as we learn to accept the death of a loved one or a pet, we accept the reality of taxes. Only taxes and death are definite, it is said. We realize at some point that public goods must be paid for somehow. Unfortunately we cannot ask the Canadians to pay for our roads or the Mexicans for our bridges. The French will refuse to pay our defense bills, and the British won’t pay for our parks. Only New York is lucky enough to have Mayor Bloomberg pay for social programs from his own philanthropic foundation. CS must collect taxes to provide government services; Mayor Bach isn’t rich enough...

The question, then, isn’t whether we should or shouldn’t pay taxes, but what is a fair tax burden. Currently we have a progressive tax system—the rich pay incrementally more than the poor. Some think it’s a fair way to redistribute wealth and income. Some think that a flat tax, say 5% across the board, is fair. There are others who think that we can do away with taxes as we know them and have Value Added Tax (VAT) on consumption, like some European countries.  As for effective tax spending, there are enough MBAs on the government payroll and millionaire members of Congress to ensure that...

Since Washington seems like a rudderless ship adrift on an ocean of confusion, perhaps we should grant all Americans a federal tax holiday till the end of year. In an era where no economist has a handle on the future, why not experiment for a while. A complete personal tax relief is no crazier than what we see coming out of Washington.

And while we are at it, let’s ask the entire Congress to resign. Democrats and Republicans alike decry taxes, deficits, and spending while garnering pork for their districts. They display a level of hypocrisy unmatched by any other profession. Is being a politician a profession at all? Outside of money and an inflated ego, what qualifications are required?

 Raphael Sassower is professor of philosophy at UCCS and has low esteem for all politicians, especially those who vie for reelection. He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com

“Setbacks and strides in Springs’ diversity appreciation,” The Colorado Springs Business Journal, August 12-18, 2011, 20.

INTERFAITH INITIATIVES

Obviously our Representative, Doug Lamborn (R), missed the sensitivity class when he was in college, calling President Obama “tar baby.” Whether or not you should still like President Obama after the latest debacle remains open for discussion, but the office of the President should be respected. And the use of an inflammatory slur in 2011 is really out of line, no matter your party affiliation.

When I travel out of the city, strangers gasp at the mention of Colorado Springs. I’ve been asked about the intolerance of Focus on the Family in regards to gays and Jews, as well as about the tone of conservative evangelical zeal. I recall the outcry against the late Ted Eastburn when he dared suggest that city employees who are gay deserved to have their partners covered by health insurance. He lost the election when Focus mobilized against his heresy and chose a religiously-appropriate candidate.

But I thought we have left all of this behind us. Business-like thinking isn’t ideological, but economical: your dollar is just as good as anyone else’s, no matter who you privately worship (if at all). But for some, like Lamborn, the only way to define themselves and their ideas is through a negative portrayal of others. Like characters in western films, they need cowboys with white hats to win against those with black hats.

One way to overcome this kind of intolerance, especially when multiculturalism has given way to religious pluralism, is through education. And UCCS, now a towering force in the city’s economy with more than 9,000 students and a growing staff to meet their needs, has risen to the occasion.

A newcomer to UCCS, Dr. Jeffrey Scholes, a graduate of Princeton Theological Seminary and the University of Denver/Iliff School of Theology, has spearheaded an interfaith initiative on campus that has been awarded “The President’s Interfaith and Community Service Campus Challenge.” Yes, it’s an initiative undertaken by the same president Lamborn mocks. Yes, it’s the same president accused of not being Christian or American-born. And yes, it’s an initiative that is supposed to bring students together so as to overcome misguided conceptions of fear and hatred.   

The initiative includes this part:

Many municipalities are reducing services in a response to tighter city budgets.  In Colorado Springs this has had a huge impact on public parks with funding reduced from 20 million dollars to 3 million dollars since 2008.  As such, minimal park maintenance is being carried out and new park development (including enhanced planting) has almost ceased.  To help with this pressing environmental need, a key activity of the UCCS Interfaith Service Initiative is to establish the UCCS Park Corps of interested interfaith students. 

After an initial training period with the assistance of local landscaping experts, the UCCS Park Corps will be involved in organizing park care days consisting of trash removal, basic tree care (pruning and mulching), turf maintenance and bed care.  A tree will be planted at the end of each park care day as a further contributory gesture. 

The UCCS Park Corps will work in close collaboration with the City of Colorado Spring’s Parks, Recreation and Cultural Service to identify priority neighborhood and community parks requiring care.

Not only will interfaith activity be integrated into the city’s needs, performing tasks the city is unable to perform because of budgetary cuts, this public service will be undertaken by all the groups represented on campus: Hillel Student Group, Campus Crusade for Christ, Latter Day Saints Students Association, Secular Student Alliance, Habitat for Humanity, Navigators, Catholic Student Community, Students for Environmental Awareness and Sustainability, and Student Military Outreach.

Instead of fanning the fires of discontent and rivalry, we can bring together diverse groups. Under the auspices of educational or religious institutions, we can teach tolerance and acceptance, respect for others and ourselves. When an economic crisis strikes, it doesn’t discriminate according to religious affiliations, race, or gender. Nor does a natural disaster, like Katrina, make such discriminations. On some fundamental level, we are all in it together.

Interfaith efforts, more common in the late 1960s and early 1970s (Chicago’s Rainbow Coalition comes to mind), should be revived. UCCS’ recognition by the President of the United States is a clear indication that Colorado Springs is finally on board, changing its image of religious intolerance to a city where diversity is celebrated and harnessed for public good.

If politicians paid just a little attention to such efforts, they, too, could usher inter-political initiatives, where conservatives and liberals, anarchists and libertarians, socialists and capitalist could all join forces to benefit the job market and stimulate the economy. Just as interfaith students will take care of the parks, inter-political citizens can take care of Sharrows, libraries, and trails.    

Raphael Sassower is professor of philosophy at UCCS and breaks bread with people of all faiths, including atheists. He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com

“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