• Drunk walking: thinking about the consequences of alcohol

    Image from thesedonacitizen.com

    Marketplace, a business radio show, had a recent bit about "drunk walking"--a danger that may have dire consequences for an individual, much as drunk driving may have dire consequences for the individual and others. It made me think about alcohol use in business situations. 

    First, let's address the Marketplace piece.  [the link above has a transcript and a link to the podcast]

    According to Stephen Dubner's interview with Steve Levitt, it is eight times more dangerous to walk drunk than it is to drive drunk, on a per-mile basis.  This is partly because people don't realize the dangers of walking drunk.  They may end up falling, blacking out, or being hit by cars.  And they may not even be found until the next day. 

    People often do not realize how they are behaving when they are intoxicated.  Perceptions are altered.  It is a little ironic that the image of the very contained, in-charge businessperson is often coupled with an image of a business situation where alcohol is involved.  Teetotalers and those abstaining from alcohol for any number of reasons sometimes do not know how to handle business drinking situations.  Everyone is uncomfortable when there are signs that someone cannot "hold their liquor." 

    Mad Men image from atticusbooksonline.com

    Some businesses have clear rules about alcohol consumption during work hours, but the situation is different after-hours or at office parties. Jodi R. R. Smith of Mannersmith has these words of wisdom:

    "No matter how well you think you hold your liquor, limit yourself to one drink when in a business setting. Remember, you are a professional. Few people become more polished and more professional with the consumption of alcohol. Nothing dispels a professional image like slurring one's words, losing one's balance, or saying something inappropriate."

    Be careful out there--not only on New Year's Eve or at an office function, but on every occasion where alcohol is consumed.

    Follow up:

    1. Does your school or place of work have rules about alcohol use?  Do people break those rules? 

    2. What are your personal boundaries with respect to alcohol use?  Have you ever driven with a "buzz" (drunk driving)? Have you ever walked or ridden a bicycle while intoxicated with alcohol or other perception-altering substance?

    3. Have you ever been in a business situation where someone's judgment may have been clouded by alcohol? (An office party, for example...or an afternoon meeting where people had been drinking at lunch) Did anyone speak up about the situation or defer the final decision until everyone was clear-headed?  What would an observer's options be in a situation like this? [check out Jodi R. R. Smith's Huff Post piece for some suggestions]

  • Libraries vs. eBooks: info technology war

    image from money.cnn.com

    Randall Stross's NYT article makes it clear--information technology has brought new frontiers to the marketing wars.  But this is really a new one: LIBRARIES as a war zone!

    Here's the deal...

    Publishers didn't mind selling hardcover or paperback books to libraries, who would then lend them out for free, because it took time and energy for the consumer to go to the library. The reader had to physically go to the library BOTH to get the book AND to return it. It has been easier to BUY a book A book could be purchased online, or in one trip to the bookstore. In addition, popular books sold to libraries would wear out and have to be replaced. This didn't hurt sales. Some people may even have bought the book after reading a library edition.

    However, e-book sales to libraries, who then lend out copies electronically, result in lost book sales to publishers.  Of course, there are no "variable costs" of physically printing the book, but the revenue stream is lost.  The convenience factor of borrowing a library book is now EQUAL to the convenience factor of buying a book. When there is no marginal benefit to the consumer of book ownership, why should they pay?

    image from goodreader.com

    Publishers have protected themselves by limiting sales of e-books to libraries.  Simon and Schuster doesn't sell e-books to libraries at all.  Harper Collins has taken a different approach--they now require additional payments from libraries--a payment for every 26 book loans--so the e-book sale is more like a rental. Another strategy publishers might experiment with is to charge libraries more for e-books.  Publishers have to make their money somehow.

    Information technology has fundamentally changed the publishing industry, and publishers must constantly adapt.

    Follow up:

    1. Do you have an e-reader?  Have you borrowed library books using it? Have you ever been in the habit of going to the library instead of buying books?  

    2. How do you access your textbooks for school? In print? E-books? Online in a course management system?  Do you keep any of your school textbooks? What do you find most convenient?

    3. What other media industries have been substantially changed by the internet?  How have your own habits of accessing media changed over the last three years?

  • Paid to 'tweet' all day? How much?

    Image from www.socialtimes.com 

    What is the value of social media?  What is a Facebook friend worth? What is a Twitter follower worth? How do demographics enter into the equation? Is there a generation gap regarding the value of social media? 

    Data collection and analysis from websites, Facebook and Twitter is getting better all the time.  The immediacy of the feedback is something that marketing analysts have always wanted.  Still, there has been resistance to this frontier by senior management, who don't understand the full value of social media, according to Beverly Macy in her Huffington Post piece.

    One company has had a "wake-up call" that might have a ripple effect in the social media arena.  According to a NYT story, a lawsuit has been filed by the management of Phonedog Media, against a former employee, Noah Kravitz, who wrote a blog on Twitter for them.  Kravitz then left the company, taking his 17,000 Twitter followers with him.  He did this with Phonedog's knowledge, in exchange for occasional posts. Kravitz switched the list to his own name and thought they had parted on good terms. But after he left, Phonedog management became aware of the value of these Twitter relationships. Phonedog now claims that the followers constitute a "customer list" and are worth $2.50 per follower per month, for eight months. Hence, the lawsuit.

    Several issues are at stake:

    • What was the original contractual relationship between Phonedog and Kravitz?
    • Why was the original Twitter account opened?  To communicate with existing customers or build the customer base?
    • How is the value of a Twitter follower determined? What is it? How long does it hold value?

    Many stakeholders await the precedents this lawsuit may set, according to sources quoted in the article.

    Follow up:

    1. Do you have a Twitter account? How many companies do you follow? How many followers do you have?  Do you use the account for business or personal purposes?

    2. Do any of your professors use a Twitter account to remind you of assignments or deadlines? How does this work for you?

    3.  Have you ever had a job where you were paid to use Twitter or other social media?  Would you like one?  On the other hand, how much time do you spend on social media at your present job (or in class), when you "should be" doing something else?


  • The "Free Lunch" and Wikipedia's fundraiser

    image from tommclaughlin.blogspot.com  I trust that no mouse was really harmed in creating the image.

    "There is no such thing as a free lunch." This adage means that anything of value, passed from one entity to another, costs the receiver something, and/or creates some gain for the giver. 

    Not everyone agrees with this adage. I've heard friends of mine talking about doing acts of service or kindness "for fun and for free," with absolutely no expectation of getting anything in return. But when queried further, they do confess to getting a feeling of self-esteem for having done something nice. This won't pay the bills, but it does have some value, and it makes it more likely that they will continue to perform such acts, at least on an occasional basis. And it doesn't cost the receiver anything.  But many times, when someone offers another person a ride, or loans a tool, or pays for lunch, there is an "implied contract" that something is owed back sometime, however unstated the terms may be. 

    Everyone reading this blog is an internet user, and is accustomed to getting a variety of internet services "for free." But most of the free email accounts come with advertising.  Many of the "informational" websites are actually promoting a product.  We like getting things for free, but sometimes we just don't know how we are paying.

    In several of the blog posts I've written, I've referenced Wikipedia for definitions, history, or just further explanation.  There is no advertising on Wikipedia.  It is a site that is undergoing continual revision, and is open to everyone's editorial input. It is free. But the people who work on it every day need money to pay for the server space and the time the site takes to maintain with integrity.  Thus, the Wikimedia Foundation.  And a fundraiser.  

    My first response was "Yuck."  I hate being asked for money.  This request, however, made me get conscious about how much I used Wikipedia.  I kept track for a few days of the number of times I checked into the website..  Over the holidays, I also made note of the number of family disputes that were quickly resolved because "there was no sense in arguing over facts."  Hmmmm.  I've gotten a lot of value from Wikipedia without giving anything back. I want Wikipedia to be viable, and to be unaccountable to any big financial investor. I like the way it operates, and I have noticed that it has gotten to be a better resource over time. 

    Wikipedia has made a financing decision that is different from a for-profit corporation. I like what I'm getting and I've started to pay for it.


    1.  What is your reaction to this fundraising plea of Wikipedia's?

    2. What other media entities are non-profits that depend on fundraising? Do you access these media on a regular basis?  Do you support them?

  • Seasonal "CPI": Costs of the gifts in the "Twelve Days of Christmas"

    link to video: CBS NEWS 

    It's time to check out the "Christmas Price Index"--and determine the cost of the gifts in the song, "TheTwelve Days of Christmas."  This year, it is at an all time high--over $101,000, according to The Atlantic and The New York Times.  Their source is the PNC Financial Services Group.

    For those of you not familiar with the song, there are gifts associated with each of the 12 days of Christmas (a European tradition that begins on Christmas eve and ends on January 6th).  In addition, the gifts given on the previous days are RE-given on the each of the following days, so a summation must be used to account for all of the costs. This year, one set of gifts costs $24,263.18 and the gifts in total cost: $101,119.84.

    The increase from 2010 paralleled the regular Consumer Price Index.  Low labor costs kept the total costs down, as did a slight reduction in the price of gold, but other prices rose.

    Some of the cost of the twelve gifts are included below:

    1. Partridge in a pear tree: $15 + $169= $184
    2. Two turtle doves: $125
    3. Three french hens: $150
    4. Four calling birds: $520
    5. Five golden rings $645
    6. Six geese a-laying:  see "Follow up" below
    7. Seven swans a swimming: $6,300
    8. Eight maids a-milking: see "Follow up" below
    9. Nine ladies dancing: $6,294
    10. Ten lords a leaping: see "Follow up" below
    11. Eleven pipers piping: $2,427.60
    12. Twelve drummers drumming: $2,629.90

    According to the NYT article, it doesn't help to shop on the internet--in fact, that increases the costs. 

    Follow up:

    1.  Check out the websites to fill in the missing costs.

    2. Use the internet to research past years.  Either find or make a graph charting the "CPI" calculated by PNC from 1991 to the present.  What year took an unexpected dip? Can you speculate or research why that may have happened?

    3. What did you spend on gifts and entertainment this holiday?  Was it influenced by the current economic conditions?  Did you get any bargains?

  • It's a Wonderful Life's lessons about Banking

    George Bailey character deals with the run on the bank

    This holiday season many people watched the holiday classic, "It's A Wonderful Life," a film by Frank Capra.  It stars Jimmy Stewart and Donna Reed, and thematically is the inverse of "The Christmas Carol" story.  In both stories, the protagonist gets help seeing his life from a different perspective.  In this story, Clarence, an angel-in-training, is the guide, rather than a ghost. But the protagonists in the two films have opposing values with respect to greed. The Jimmy Stewart character, George Bailey, is in despair because there has been a theft at his family-owned Savings and Loan that threatens financial ruin for him and his family. Clarence helps him see how the lives of so many others in the town would have been worse--or even complete failures--if George Bailey had not made the self-sacrificing and altruistic life decisions he had made. Ironically, George Bailey's small sacrifices created increased sustainability for the entire community--and thwarted the financial domination of a single individual in the town--Henry Potter. 

    Image from the film of the George Bailey character in front of the town that
    would have existed--to the detriment of everyone but Henry Potter.

    In the movie, there is one particular instance of financial panic, when there is a "run on the bank."  But our protagonist saves the day. Because of the depositors' long-term personal relationship with George Bailey, and their trust in his judgment, almost all are convinced to just take the cash that they need. Since banks lend out the money that customers deposit, a bank cannot grant 100% of the cash on deposit to bank customers on any given day. The Baileys' Savings and Loan would have failed without George Bailey's personal banking relationship with his customers.

    "It's a Wonderful Life" is the story of one businessperson's values-centered decision-making process. It is a "must-see" for any business student. 


    Follow up:

    1. What is a "run on the bank"?  Check out the link above to see when some of these have occurred and why.  How would a banking consultant view George Bailey's response?

    2. How would George Bailey view the Occupy movement?  Cite parallels and differences with respect to George's situation. 

    3. See the movie! 

  • SELL NOW ! (If these reasons work for you)


    image from searchamelia.com

    If you are an entreprenuer, one of the "big picture" business decisions on your plate is: When is a good time to sell the business?  This question especially comes up for those who truly enjoy the excitement and risk of starting a business, but feel less fulfilled when running a mature business.  Aside from that, if maximizing profit is a prime motivation, the major stockholder is always looking for a "good" time to sell.  

    Katherine Reynolds Lewis, in "Why Some Business Owners Think Now Is the Time to Sell," poses possible reasons why selling your small business in early 2012 might be a good idea.  These reasons include:

    1. The "Bush-Era tax cuts" will expire at the end of 2012.

    In essence, the capital gains tax will return to 20%, up from its Bush-era level of 15%. Of course, Congress could extend the cuts, but by the time the national election occurs in 2012, it will be too late to plan a business sale, and Congress lately has been putting off all tax-related decisions to the last minute...or later. 

    2. Many small business owners who "missed the boat" before the economic turn-down are doing better this year.

    Katherine Reynolds Lewis interviewed business owners who regretted not selling in 2008 after showing 3-5 years of solid growth.  Several of these entrepreneurs reported that 2011 had shown sales growth, making it possible to consider a business sale--even if sales were not at the peaks experienced previously.  

    3. Businesses are being operated more efficiently.  

    Potential buyers will be looking at businesses that have "trimmed the fat" due to difficult economic times.  Businesses now have well-trained employees, less interest costs, and have opened up additional revenue streams. An efficiently run business is less of an investment risk that a less well-run entity that may have existed before the downturn. 

    4. Even though banks aren't lending, other entities have money.

    Let's face it, current interest rates are really in the basement.  Any entity with cash to invest is looking for an opportunity to make a "reasonable" return on investment--other businesses, venture capitalists, and even private investors willing to fund someone with entrepreneurial skill who wants to jump from the corporate rat-race to business ownership.

    5. Like the brokers in the fictional "Margin Call"...the small business owner may want to be the "first one off the boat."

    A large population of small business owners are nearing retirement age--we are at the beginning of a 19 year curve of retiring Baby Boomers.  A profit-minded owner would want to sell at one of the "high points" in this cycle, and there will be more buyers at the beginning of the cycle than there will be at the end of it.  The strategy used by the brokers in "Margin Call" (who were at the center of the economic downfall) was to be the first entity to sell securities--before others realized their value had fallen. The analogy falls apart because the financial instruments in the movie did not have underlying value, and all viable small business do have real assets, real net worth, and real revenue streams.  Nevertheless, the strategy to be among the first sellers is a good marketing strategy in many instances. [See my "Margin Call" blog from October 21, 2011]

    image from intersect.org

    Note: I also looked another blog referencing this article:  "Are You Thinking of Selling Your Business in 2012?"  

    Follow up:

    1. What is the name of a business owner interviewed by Katherine Reynolds Lewis who is thinking of selling this year?  What is his or her business story, and why might 2012 be a good time to sell in this particular case?

    2. What industries, in particular, have experienced sales growth that might cause them to think of selling in 2012?

    3. Does the data influencing small business owners have any application for a small investor? Please give your opinion, and back it up with reasons or parameters gleaned from the article or other sources that you find and cite.      

  • Dickens analogy: Scrooge as a job-creator?

    mage from Jim Carrey's performance of Ebenezer Scrooge

    From Jerome Brack's post on Facebook:  

    "It's too bad Dicken's "A Christmas Carol" has been ruined by our modern-day realization that the Cratchit family's problems were caused by Bob Cratchit's poor life decisions, lack of personal responsibility for his finances and a refusal to care for his family by purchasing health care insurance.

    And all the while Ebenezer Scrooge is demonized instead of being lauded as the Job Creator who employed the deeply flawed and undeserving Cratchit."

    I seem to sense a note of sarcasm in Mr. Brack's words.  What I find interesting is that this story, from more than 100 years ago, highlights destructive forces of economic inequities that are parallel to those we are experiencing today--the inequities protested by the "Occupy" movement. In Dickens' story, ("spoiler" alert!) it is private philanthropy on the part of Ebenezer Scrooge that saves the day. There is no government intervention.  But that was in England, and American government--by and for the people--tried for years to use government to benefit the populace rather than the monarchy.  

    The Dickens story turns on personal greed, business ethics and cultural values. The redeeming force for Scrooge is generosity--that same sort of generosity that has played out in the "lay-away angels" that have been paying off the lay-away balances over the past few weeks at Wal-marts and K-Marts:

    Businesses took the lead in re-establishing the option of a layaway...and, just like in the Scrooge story, it was the private sector's generosity that made the difference.  Still, after all these years, it doesn't speak well of our ability as humans to learn from our mistakes that such inequities still exist. 


    1. What is a "layaway"?  Why did they disappear as a retail marketing tool?  Why do you think they may have re-appeared this year?

    2. Think about the business set-up in A Christmas Carol .  Could Scrooge have afforded to pay Bob Cratchit more money?  What were the economic forces that "prevented" him from paying him more?  Where do those forces exist today?  


  • What punishments fit white collar mortgage fraud criminals?

    mage from rctcbcmalice.blogspot.com

    William K. ("Bill") Black, an associate professor of econ and law at the University of Missouri, thinks that those involved at all levels of the mortgage fraud debacle should be punished.  He delineated these punishments by writing an extended analogy to Dante's Circles of Hell (from The Divine Comedy).  It was forwarded from a blog called New Economic Perspectives, but I found it at Yves Smith's blog, Naked Capitalism.

    Black was prompted to write the article when he heard President Obama's comment on the December 11, 2011 60 minutes (CBS) that there were unethical behaviors perpetrated by mortgage businesspeople that were not "illegal."   Black disagrees on this point, and felt that the obvious follow-up questions had not been asked.  He urged reporters and private citizens to write to Obama and ask three basic questions (reposted here):


    1. Why are there no prosecutions of the felons that drove the crisis and occupy the nine worst rungs of unethical and destructive acts?
    2. Explain the five unethical acts by elite financial institutions that you consider the most destructive and least ethical – but which you believe to be legal. How do you rank the degree of unethical conduct and destruction in those acts?
    3. What specific statutory provisions did you propose to make those five unethical acts illegal? As enacted, which provisions of the Dodd-Frank Act made those five unethical acts illegal? Who has been prosecuted for those formerly legal but seriously unethical and destructive acts that were made illegal by the Dodd-Frank Act?

    Black summarized some of his previous publications with respect to the mortgage crisis as well.  He believes that there were several illegal activities committed, which were illegal under present laws.  (requoted here):


    • Only fraudulent home lenders made liar’s loans
    • Liar’s loans were endemically fraudulent
    • Lenders and their agents put the lies in liar’s loans
    • Appraisal fraud was endemic and led by lenders and their agents
    • Liar’s loans could only be sold through fraudulent reps and warranties
    • CDOs (collateralized debt obligations) “backed” by liar’s loans were inherently fraudulent
    • CDOs backed by liar’s loans could only be sold through fraudulent reps and warranties
    • Liar’s loans hyper-inflated the bubble
    • Liar’s loans became roughly one-third of mortgage originations by 2006


    In his article, Black delineates how each individual involved should be punished, based on how much they profited, and--more importantly--how many people were affected.

    This is a picture of Dante's Upper Hell...please read the article linked above to see how Black would populate a modern version of it--and Lower Hell as well--with mortgage criminals.



    Follow up:

    1. Who does Black place on Level Ten, the worst level, and why?

    2. What is the biggest difference between and Level 4 crook and a Level 10 crook?

    3. The 100,000 + folks that Bill Black places at Level 1 committed what crimes?  Can you imagine yourself being culpable at this level?  

    4. Do you agree with Black?  Should these folks be punished?

  • When is an airfare quote not an airfare quote?

    rom crankyflier.com 

    What happened to the idea that "bait and switch" was a bad business practice?  In the "Your Money" section of today's NYT, David Segal (a.k.a "The Haggler") writes about a very squirrelly contract for a plane flight from San Francisco to Palau, via Korean Air.

    Here is what happened:  A few months ago, a reader of the Haggler column bought a round-trip fare from San Francisco to Palau via  Korean Air, for himself and a friend., at $510 each.  But 2 months later, Korean Air e-mailed to say that the tickets had been canceled.

    “At the beginning of September, an erroneous fare was briefly published for travel on Korean Air from North America to Palau,” the e-mail from Korean Air read, per the Haggler's article. “We regret to inform you that Korean Air is unable to honor this erroneous fare for travel and has canceled all tickets, including yours.”

    The purchasers were offered a refund and $200 in a Korean air voucher...but: is that good business??  The travelers had incurred other costs, and had passed up other travel deals.  Korean Air also did offer to make good on the deal...for an extra $360.  Is that a "bait and switch" situation or what?

    "The Haggler" received more than one such emailed tale, and investigated it through another site--“Leighrowan’s Posterous” --that speculated that “300+” people had been affected, and that the deal had been intended only for travel agents, and/or was "totally bogus." 

    The Haggler contacted Korean Air, which acknowledged the mistake, and offered "regrets." Maybe a squeakier wheel will be able to tweak the deal a bit more...

    Follow up:

    1. What are the basic business ethics and business laws in making an offer for a contract?  What has to happen in order for the contract to be valid?  Did one party to the contract fulfill its obligation?

    2. Are business ethics different when travel companies are involved? Are there differences in business law? 

    3. What course of action would you take if you had been a customer who had taken advantage of the $510 flight offer?

    4. Research the term "bait and switch".  What are the laws surrounding such activities?

  • Some businesses--BANKS--are more equal than others

    "Technically, not an oligopoly" was Adam Davidson's take on the market rules applying to banks, in his article in this week's  NYT Sunday Magazine.  But, the types of trading he was describing seems so much more complicated than his headline implied.  An oligopoly is a small group of businesses that control a business segment--similar to a monopoly, but with a few more players.  Still--the center of Davidson's article was a trading vehicle called "FAZ" (formally named "Direxion Financial Bear 3X Shares").  This trading vehicle (described at the link) invests in several different types of futures contracts. The point of the entity is to allow "day traders" to make money even when the stock market is moving down, since this fund is balanced to hedge investments in a different direction. Davidson seems to think that this type of vehicle gives the "little guy" at least some way to be a player in the investments that the big banks control. Davidson's opinion is that a vehicle like FAZ  represents the "Wild West" of the financial investor segment, and provides healthy competition to the big banks.

    I am reminded of the adage, "having your cake and eating it, too." But Davidson's stated assumption is that this vehicle is being watched carefully by the SEC, and that--market forces being what they are--if the vehicle stops appealing to the less risk-averse investors, it will collapse and disappear--although, it is difficult for the small time investor or business student to follow that logic.  It seems more like wishful thinking. 

    There is not really a truly open market in banking transactions.  Davidson points out that--much like the 1% vs 99% playing-filed bias that is being exploited by the Occupy protestors, there is an uneven playing field for banks as well. Says Davidson:

    "being too big to fail generally makes the largest institutions fairly impervious to competition. There are nearly 8,000 banks in the United States, but the top 20 control more than 90 percent of the market. The top three alone control 44 percent. This is terrible for customers, who would be better served if banks competed entirely on the basis of serving us better."

     Raymond Lotta, at Occupy Wall Street, also has views that complement Davidson's position, but he doesn't blame the large banks.  He sees the inequities as a part of the rule system of capitalism.  He summarized those rules as:

    The Rules of Capitalism:


    Lotta sees individual countries as supporting their country's own corporate or capitalist interests as chips in gain international power--an economic war game. He sees the imperialistic expansionism as an axiom of the capitalist model, and he seeks to find a different model that would incorporate the benefits of competition and freedom in markets, but without the inequities that accumulated special privileges, which seem to be integral to the current system.

    Follow up:

    1.  If the headline of this post doesn't ring a bell for you, Google "All animals are equal, but some animals are more equal than others." From what piece of literature has that quote been lifted?  What is the meaning behind it? The general discussion in Wikipedia might help you with your answer.

    2.  Look up the Volcker Rule. How can this rule level the playing field for large and small banks, vis-a-vis other investors?


  • Business 101: Life is not fair

    OK...you are a business major, probably, if you are reading this blog.  Maybe this means you plan to be rich. Maybe this means you just plan to have a chance to make a decent living. Take a look at these " Inequality statistics " from Mother Jones if you want a little bit of a depressing reality check.  (the chart above is just one of the graphics displayed in the article).

    It is interesting to note that people generally want to see that the "playing field" is a lot more level than it is in reality. Maybe part of the reason is that the people making the laws are ensuring that the rules are stacked in their favor...take a look at this vote.

    Here are the 10 richest members of Congress--note that both Democrats and Republicans are included: 


    Rep. Darrell Issa (R-Calif.) $451.1 million
    Rep. Jane Harman (D-Calif.) $435.4 million
    Rep. Vern Buchanan (R-Fla.) $366.2 million
    Sen. John Kerry (D-Mass.) $294.9 million
    Rep. Jared Polis (D-Colo.) $285.1 million
    Sen. Mark Warner (D-Va.) $283.1 million
    Sen. Herb Kohl (D-Wisc.) $231.2 million
    Rep. Michael McCaul (R-Texas) $201.5 million
    Sen. Jay Rockefeller (D-W.Va.) $136.2 million
    Sen. Dianne Feinstein (D-Calif.) $108.1 million
    10 Richest Members of Congress 100% Voted to extend the cuts

    Congressional data from 2009. Family net worth data from 2007. Sources: Center for Responsive Politics; US Census; Edward Wolff, Bard College.

    Download: PDF (large) | JPG (smaller) 

    Is this what Americans expect of their representatives? Voting their personal pocketbooks instead of what might be best for their constituents?


    Follow up:

    1. One of my minority students who was fortunate enough to be chosen as an intern for a special program conducted by one of the "Big Four" accounting firms, reported back that it was a completely different universe--outside of his previous perceptions of a meritocracy--with respect to getting a top position n at a Big Four accounting firm.  What are your prospects? Do you have inside connections? Do you have aspirations to "make it big"? How will you achieve them?

    2. Contact you local representatives office to see if there are any possibilities for internships in Washington D.C, or in your state's capital.  Write about the the replies you received.  Make at least 5 follow up phone calls to try to achieve your objective of an internship or a future job.  See if you can beat the odds...

  • Running education like a business: one man's Lesson Plan

    Eii Broad (BTW...the pronunciation of his last name rhymes with "road" ) was a hugely successful real estate and insurance entrepreneur who also became a cultural and educational philanthropist. Kai Ryssdal interviewed him on Marketplace Dec 8, 2011 (your choice: you can listen to the radio broadcast or read the transcript at the link). 

    Broad has invested over $450 million in schools, via his foundation, over the past decade.  I have a particular interest in Eli Broad, because he hails from Michigan public schools, as I do...though he went to Michigan State University, while I went to U of M (go Blue).  He has also invested in a cultural center at the college at which I teach.

    Those connections are beside the point to this radio piece. One of Broad's priorities has been to get more managerial expertise into the decision-making process of public school administration.  Just as businesses must adapt to global pressures, he sees that the US educational system has to respond to and compete with the educational systems in Asia and elsewhere.  He thinks that accountability and merit pay can make a big difference in student achievement outcomes--which is the only thing that matters.

    Eli Broad would like to see the gap in achievement in income groups and ethnic groups grow smaller.  As a businessperson, he sees that spending in education has increased by 250% in real dollars (constant dollars), but that the outcomes have not improved.  He sees that the real gap between the 1% and the 99% is in education.  And that a business-minded approach to spending can make a difference.

    As an aside to this article, I want to voice my appreciation to Eli and Edie Broad, who funded a cultural center attached to Santa Monica Community College. This center has brought an incredible amount of cultural talent to the west side of Los Angeles.  The investment made by this philanthropy has made a huge difference to our students and to our community.

    Follow up:

    1.  What would you have changed about your K-12 education?  For example, my older daughter has made this suggestion: Why don't all the teachers make their basic lectures available by video, and require students to view the videos before class?  Then there can be groups of in-class problem or concept discussions, and the teacher's time in class could be spent clarifying and challenging students to optimize learning.  I'm sure that you might have a different idea about how to maximize the learning for time spent for both students and teachers...please brainstorm...

    2. Google Eli Broad and Edie Broad and write down the many philanthropic contributions that they have made to education and cultural endeavors.

  • Weeding Robots and other "Lean Start-Up" ventures

    detail of robot-training environment; image by Ramin Rahimian for the New York Times

    Sustainable agriculture meets venture capitalism!  Steve Lohr writes about how Silicon Valley technology-oriented investors are exploring new ventures in this week's NYT Science section.

    When a Stanford engineering student quits school to apply his skills in artificial intelligence and computer engineering to teaching robots to weed, it makes a person think there might be a major phase-shift in agribusiness going on. Blue River Technology is the name of Lee Redden's start-up. His company seeks to "replace hazardous chemicals with robotic technology."  He met business partner Jorge Heraud, a returning student who had worked for an agriculture company, at Stanford.  They discussed several products, but in talking to organic farmers they saw that a huge problem in all crop growing--weeds--could not be solved chemically on an organic farm. The clear solution to them was to solve it mechanically, with computer intelligence. The robot they are developing has to be able to distinguish weeds from crop plants, and must kill the weeds sustainably and economically.  Lasers were too expensive; they are now going with superheated oil.  The device also has to work fast--within 200 milliseconds, to keep up with the tractor that pulls the devices. Here is a picture of Redden and his colleagues working on one prototype:

    image by Ramin Rahimian for the New York Times

    According to Lohr's article, Silicon Valley is expanding its computer focus to every industry that might benefit from clean technology or bioengineering. Part of the venture capitalist energy has been focused on determining what products are most likely to succeed. Testing the marketplace now comes at the beginning of the business plan cycle--a process that has been termed the "Lean Start-Up" model.

    Eric Ries, an "entrepreneur in residence" at Harvard Business School, developed the model.  It starts with a "minimum viable product" which can be shown to potential customers, adapted, and then approved. The National Science Foundation is incorporating this model into the grant structure for its new "N.S.F. Innovation Corps."  Twenty one teams will be given $50,000 and six months to test new products. "It’s all about how to apply the scientific method to market-opportunity identification,” said Errol B. Arkilic, an NSF program manager.

    The model is also creeping into business school curriculums. This year 900 first-year Harvard Business school students will be given $3,000 per six-person team to develop a product that will produce a profit by the end of the Spring semester. How's that for pressure? 

    It is interesting that the science mind-set is being stretched to apply to business problems.  Science tends to view failures as opportunities for learning, and this attitude might produce better products as well as more profitable ones.  

    Here is an example of another weed-mitigating robot in development: 


    Methanol fuel cell powered Weedmaster; envirogadget.com


    Follow up:

    1. If you were a student at Harvard, what product might you try to develop? Try to brainstorm a new product idea with your friends...and also try to think beyond the "app" mentality.  Is there anything you can think of that would promote sustainability?

    2. Read the documentation at the link to the Lean Start Up model. How is this model different from a traditional business plan funded by a venture capitalist?

  • Walmart poised to ruin family businesses in India

    It looks as though Walmart is taking its business plan--annihilating small family businesses--to another corner of the global market place.  Vikas Bajaj in the NYT, "Wal-mart Debate Rages in India," reports that family businesses in India are the next target of the multinational mega-company. 

    The Prime minister, Manmohan Singh , thinks that bringing Wal-mart into India is a good idea, partly because of its expertise at creating logistical infrastructure that can help the movement of all kinds of goods to all parts of the country.  On November 24th, he announced a plan that would fast-track foreign companies to team up with local businesses to build megastores in cities of more than 1 million people. However, the deck is stacked: a multi-national behemoth like Wal-mart has a lot more financial clout than the small farmers and small shopkeepers in India.  Just like Wal-mart destroyed small businesses in American towns, it will destroy small businesses in India.  Wal-Mart has already been running a wholesale operation in northern India that has stolen sales from local businesspeople.  One business person, whose family has been running a store for 40 years, Ravi Mahajan, says that sales have been cut in half. “We’ll be destroyed,” Mr. Mahajan said. 

    It is the middlemen businesses--the wholesalers and retailers--who are frightened. But the farmers and local shoppers are benefitting...which is part of the "divide and conquer" business strategy. Wal-mart and other big multinationals are paying higher prices to farmers, to lure them away from the local traders.  But once the local traders have been driven out of business, won't the prices fall again--maybe even to lower levels because of the lack of competition? 

    Over the last few years, the government has allowed Wal-mart, in partnership with an Indian company called Bharti, to set up strictly wholesaling operations.  The stores are called "Best Price," and theoretically they are only allowed to sell to hotels, restaurants, and other businesses. But buyers are allowed to buy single items, as though it were a retail store, complains one local retailer, Rajat Agarwal.  Best Price has over 50,000 "members."  One advantage to consumers is that prices are more stable, rather than fluctuating with supply and demand, as an open capitalistic market would. This strategy is slowly luring customers to the big stores.

    Follow up

    1. What percentage of your shopping do you do at mega-stores like Wal-mart? Have your buying habits shifted over the years? Do you frequent any family owned businesses to buy staples such as food, cleaning supplies and everyday clothing?

    2. Is the source of the goods available in the stores a factor in your purchases?

    3. Are there any foreign-owned stores that have displaced local businesses in your town? Any large coffee chains that have displaced family owned businesses?  Bookstores? What about Newscorp?

    4. There is a lot of current debate about government support of businesses and taxes.  Do you think that small, family owned businesses and multi-national corporations have the same interests? Should they be lumped together in the debate?  If you know people who work for or own small and large businesses, talk to them about what the business concerns of different-sized businesses might be.  If this topic interests you, READ MORE.


  • Mushrooms: life-changing possibilities or way too risky for business?

    UCLA psychiatrist Charles Grob led psilocybin research team  (Mark Boster, Los Angeles Tim

    A Los Angeles Times article this week reported new and promising uses for currently illegal drugs. The featured drug was psilocybin, or "magic mushrooms." These were being studied for use in changing the treatment outlook for cancer patients and others with intractable medical issues:

    • leukemia patient Janeen Delany experienced a sense of "knowing" in her psilocybin trip (as part of a Johns Hopkins research study). The event has eliminated her fear of death, and has "allowed her to live"--for two years in remission so far.
    • Roland Griffiths, of Johns Hopkins University, sees the possibilities for curing addiction, and is "conducting a pilot study combining psilocybin with cognitive behavioral therapy to help smokers quit."
    • Griffiths also co-wrote a report in the Journal of Psychopharmacology exploring psilocybin's therapeutic value, involving patients with incurable diseases using the drug to induce "experiences having substantial and sustained personal meaning and spiritual significance." 
    • A team led by UCLA psychiatrist Charles Grob, UCLA psychiatrist, reported in Archives of General Psychiatry that psilocybin improved the mood of patients with "existential anxiety" related to advanced-stage cancer. The benefits lasted at least three months.
    • Scientists believe that agents such as psilocybin, LSD, MDMA (Ecstasy), and ketamine "have the potential to help patients with post-traumatic stress disorder, drug or alcohol addiction, unremitting pain or depression and the existential anxiety of terminal illness," says Melissa Healy.
    • Dr. Michael P. Bogenschutz, an addiction specialist at the University of New Mexico Health Sciences Center, has proposed an NIH clinical trial to test whether psilocybin can help ease alcohol dependence.

    The hope, according to article author Melissa Healy, is that "in their next incarnation, these drugs may help the psychologically wounded tune in to their darkest feelings and memories and turn therapy sessions into heightened opportunities to learn and heal."

    Certainly, there would be marketing problems if any of these drugs were to fully tested and offered for sale.  Rick Doblin, a public policy expert who founded the Multidisciplinary Assn. for Psychedelic Studies, states: "We're trying to break a social mind-set saying these are strictly drugs of abuse."  Prejudice because of prior use or abuse is a hurdle that must be surmounted.  But there is evidence that a drug's bad reputation can be overcome.

    For example, one drug with a horrible reputation because of the birth defects it caused, thalidomide, was approved a few years ago by the FDA for use in treating multiple myeloma and other cancers. It is marketed and sold now by the Celgene Corporation. Earnings per share for Celgene has increased by 98% since the introduction of Thalidomid in 2009; 2010 sales of the drug totaled $387 million. 

    What will be the future of currently illicit drugs being studied for therapeutic uses? Time will tell. The studies on these controversial drugs are currently being conducted in university settings with federal grants under very controlled circumstances.  Nevertheless, if the research continues to prove promising, new business ventures and improved patient outcomes could be the result. Certainly the potential market is large.

    Follow up

    1. Read about the history of the drug Thalidomide in Wikipedia. What is the protocol required for use that prevents potential damaging effects? Could a similar structure be employed for the drugs currently being studied?

    2.  Read about the drug history of MDMA.  What was its initial use?  Why was it taken off the market?  What are its potential uses now?

    3. What kinds of risks would a business have to face if marketing these drugs?  How could it mitigate these risks? 

  • Healthcare Myths: Insurance and Bankruptcy


    youTube link 

    Elizabeth Warren--Harvard professor, consumer advocate, and potential candidate for Senator from Massachusetts--has put out a short new video about health insurance myths. Her trademark seems to be plain-spoken, illuminating fact-bites about economic subjects that are often misunderstood. This piece, in fact, alludes to research she did about a decade ago, when she set out to document one thing, but found that the facts supported the opposite conclusion. It was not slovenly habits and bone-headed decision making that put middle class families in bankruptcy--it was, most of the time, the failure of medical insurance to adequately protect hard-working families from financial catastrophe when someone became seriously ill.  

    She and her colleagues discovered that 62.5% of middle class families filing for bankruptcy did so in the aftermath of a serious health crisis. [ Full text of article ] Even worse, they discovered that  75% of those whose medical crises had forced them into bankruptcy had been covered by health insurance. ["Medical Bankruptcy in the United States, 2007: Results of a National Study," American Journal of Medicine, August, 2009.

    What does it mean to have insurance? The business definition, from www.investorwords.com is:  

    "A promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Some forms of insurance are required by law, while others are optional. Agreeing to the terms of an insurance policy creates a contract between the insured and the insurer. In exchange for payments from the insured (called premiums), the insurer agrees to pay the policy holder a sum of money upon the occurrence of a specific event. In most cases, the policy holder pays part of the loss (called the deductible), and the insurer pays the rest. Examples include car insurance, health insurance, disability insurance, life insurance, and business insurance."

    This definition of insurance states that a contract exists when an insured pays a premium. Aside from the contractual deductible, the insured will be covered in the event of loss. Apparently, business practices in the insurance industry are based on deceptive loopholes in coverage, that only become apparent when claims are made. This can result in unanticipated financial losses.

    Health care coverage is a benefit that businesses, from the middle of the 20th century have offered as a perk to its employees. This used to be a predictable and affordable expense that was a win-win interchange between employer and employee. Both wanted to stay healthy (physically and fiscally), and the promise of insurance enhanced employee loyalty so that training costs invested by the business would not be lost. Ironically, highly paid executives and members of Congress still have top-notch health insurance plans, which cover them in retirement as well. Unfortunately, this benefit is eroding for those in the middle class and those employed part time.

    Primarily, this erosion is the result of the increasing risk associated with escalating health costs and deceptive insurance practices. It has changed the basic contract of reducing risk to persons who become ill, to the detriment of businesses and employees. As a nation, it is important for us to find a sustainable solution to this problem.  

    Follow up:

    1.Watch the video embedded and linked above.  What, according to Elizabeth Warren, is the "second biggest myth" of our healthcare system?

    2.Name three of the companies that do better than the USA in terms of delivering health care.

    3.The narrator/interviewer of the video quotes a statistic about how many  Americans have no health insurance. How many are uninsured?

    4. What is your opinion about what should be done about health insurance coverage in the US? How can we all be "safe"?