Points to Ponder

Points to Ponder December 11, 2011
© Mel Copen, December 2011

Every now and then, issues arise which I believe are important, but which can be dealt with in substantially less than a full column. When I accumulate a few, “points to ponder” is the result.

The First Amendment to the Constitution contains the wording: “Congress shall make no law … abridging the freedom of speech…” Never, in the history of human language, have so few words been stretched to cover so much ground. They seem to form their own expanding universe, covering more and more concepts with the passage of time. I’m particularly sensitive to some of the odd items that show up in the news. Let’s look at a few from recent times, and an interesting anomoly.

The Federal and State Courts (including various State Supreme courts and the Supreme Court of the United States) have handed down decisions, based upon these 10 words which justify: politicans knowingly lying about their opponents; politicians lying about military decorations they never received; tatoo parlors being able to locate where they wish, violent computer games being able to be sold to children, and to paraphrase former Supreme Court Justice Stevens, finding that when it comes to corporations engaging in campaign advertising, spending “money is the equivalent of protected speech.” Note the direction all of these go – “protecting” political and corporate interests.

Now the odd one A Federal judge ruled that graphic warnings that the FDA required to be placed on cigarette packs “constitutes advocacy” which violates rights of free speech. Figure that one out. Notice any sort of bias?

The Medium or the Message: I was recently intrigued by a home-imrovement product that I saw advertised on TV in a frequent infomercial. It looked great. Then next time I was in an hardware store I asked about it and, surprisingly, was told that they neither had the product (or anything similar) or knew about it, except that they had recently had a barrage of customers asking the same question I did. So I turned to the now-universal-source-of-information, the Internet. What I discovered also came as a bit of a surprise.

The Internet was choked with people complaining about the product and the company. Charges included false advertising, false billing, numerous cases of legal problems and problems with Better Business Bureaus, and even a video, done by a consumer rights organization, which showed that the product did not perform as claimed.

The infomercials are still running. Question. What is the responsibiltiy of the medium which conveys these messages to the public – particularly once the furor has reached the level where it is impossible to ignore the fact that it is possible that fraud is being committed? Does the medium have any responsibility? Clearly there is a broad spectrum of situations. At one end we have the product that does exactly what it claims. At the other, we have the total sham. Many promotional efforts fall in the middle. When is censorship justified and in what stage does it kick in? Whose responsibility is it to protect the public? Does the organization that is conveying the message (and making money from it) share in the responsibility – a form of aiding and abeting? Or do we want to establish “caveat emptor” as a firm rule of the society in which we live?

Rip-offs vs Reasonability and Responsibility. In August the FDA approved a new scorpion anti-venom for use in the United States. It actually wasn’t a new product as it had been used in Mexico for many years. Three to five doses are required in those cases, particularly for children and the elderly, where severe reactions to scorpion bites occur.

In Mexico, where the drug is produced, the cost is approximately $100 per vial (a single dose). The situation is somewhat different in the US – largely blamed on the cost of clinical trials and other high expenditures required by the FDA in introducing new drugs. The Arizona Republic checked hospitals administering the drug and found a price range of $7,900-$15,000 per vile. No! That is not a typo. Something seems a bit awry – with the approval processes, pricing or hospital overheads – or perhaps all of the above. Bottom line – stay away from scorpions.

Congressional Perks – should members of Congress receive pensions, in addition to their participation in the Social Security System. On the one hand, the founding fathers never envisioned professional politicians. Citizen legislators would derive their primary livelihood from their farms or businesses. The business of government was a part-time activity. But now we do have “professionals” who build their careers around Capitol Hill. Should they, like corporate employees, have access to separate pension plans? If so, why should their plans be better than that of other government employees? No one expects a member of Congress to starve, but shouldn’t serving be a priveledge, rather than a path to wealth?

The TV show, 60 minutes recently did a segment on another element of Congressional privilege – in partial explanation why many members of Congress retire with much greater wealth than their salaries would provide. Unlike corporate executives, who can go to prison for trading on insider information, there is no such restriction on members of Congress. So a member of a key committee who learns of a new development (e.g. in a defense contract or a pharmaceutical product) is free to buy or sell stocks – well before the information becomes public.

These are only two of the many areas where Congressional “perks” outpace those of the public. There is a growing movement to seek an amendment to the Constitution to limit such benefits. But unless a major grass-roots effort takes hold, it’s kinda like having the fox watch the chicken coop. It would be nice, for example, if the next elections to the House and Senate went to individuals who, among other things, vowed to restore some sense of equity.

The great FaceBook/Twitter Society: I’m obviously a Neanderthal. I neither use FaceBook nor do I Twitt. So perhaps you’ll write this off to my ignorance. So much of the time of our young people is spent in what I would consider non-productive time on these latest miracles of our modern civilization. I wonder, as we backslide on basic mathematic, scientific and reading skills, how many of them truly understand the technologies they are captured by – no, I am not talking about how to use them – I’m talking about underlying scientific and engineering principles that will lead to new and creative efforts in the future. And I wonder what our nation would look like if all that time spent on “linking up” was instead devoted to studying math and science (history, geography, art and philosophy too) and improving reading abilities. Can’t help but think it would lead to a better future. But again, I sometimes find myself looking backwards rather than forwards.
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Points to ponder
by Melvyn R. Copen May 21, 2011
© Mel Copen, May 2011

Every now and then, issues arise which I believe are important, but which can be dealt with in substantially less than a full column. When I accumulate a few, “points to ponder” is the result.

Gas Prices: My last article, entitled “Congress does it again,” dealt with the window dressing that has been applied to “address” the subject of Executive compensation – and the fact that the American Public lets it happen. Here’s another. Near-record breaking prices at the gas pumps and general consumer unhappiness has forced Congress to address this issue too. However, despite an indication that prices have little to do with supply and demand, and huge increases in oil company profits, the Senate rejected an attempt to repeal tax breaks and subsidies to oil companies (about $4 billion worth) – lots of rhetoric, no action. All this took place as 4 of the big five oil companies reported enormous increases in first quarter profits over last year (Exxon Mobile up 69% to $10.7 billion, Royal Dutch Shell up 30% to $6.3 billion, Conoco Phillips up 43% to $3.0 billion and Chevron up 36% to $6.2 billion). Only BP, suffering the after-affects of the Gulf of Mexico oil spill, showed a decline. Perhaps it is more than just tax breaks and subsidies that need to be addressed – none of the top 10 recipients of campaign funds in Congress received less than $200,000 from big oil interests. Is this what the voters (and gas purchasers) of the nation desire?

Health Insurance: In a similar vein, health insurers are reporting record profits, largely as they explain, because people are postponing medical treatment. Now the catch – since this is likely to build future demand for services, many are requesting an increase in premiums – despite record profits in the preceding two years. Very little of the focus on health care seems to be directed towards reducing costs. Most of it seems to be on finding ways to pay for ever-increasing costs of treatments – many of which are of questionable value. Clearly, the industry does not seem to be able to regulate itself. That raises the question: “How or when will Congress be able to focus on important issues in the interface between industry and the population without the potential influence of huge industry-dominated campaign contributions? Seems like a good argument for term limits.

Prescription Drugs: AARP reports a significant increase in the prices of some popular drugs that are close to the expiry of their patent protection. The report indicates that “the retail price of brand-name drugs that have faced generic competition in 2010 rose by 31% between the end of 2004 and…2009. This was supported by a study conducted by Thomson Reuters MarkeScan. Their conclusion: “The analysis indicates drug makers are scrambling to make as much money as possible from blockbuster drugs before their patents expire.” Again, this is an industry that has spent more than any other in “courting” members of Congress. According to OpenSecretes.org, it has lavished more than $2.1 billion for lobbying efforts since 1998, eclipsing insurance (in the #2 spot with only $1.5 billion) and Oil & Gas (#6 with $1.1 billion). But then there is the group in the #3 spot, business associations, adding another $1.2 billion to the effort. [Note: in all fairness, contributions by unions would be up there as well, except that they are reported in this data, as in the case of businesses, by the specific groups they represent.] Question: is all of this benign – or does it place the individual, unorganized consumer at a disadvantage?

Consumer Protection: A reader recently wrote a letter to the consumer protection advocate of a major newspaper. Her issue was that she had purchased a round-trip ticket for a vacation trip (cost $355) and then had to change the date of her departure. The airline informed her that seats were available on the earlier flight and they could make the adjustment, but it would cost her a change fee plus the difference related to the higher airfare that applied (vs. the air fare in place for her original booking). The additional amount that she would have to pay was just over $355. She checked and found a one-way fare for just over $100 and asked to be able to use the return trip portion of her original ticket. The airline declined and she wrote the consumer advocate to ask if there was “some regulator that would consider her complaint.” The response: “the airline did not break any rules…Basically they want to prevent the exactly the scenario you’re describing…Them’s the rules.” They told her next time to read the fine print. Yes, but the fine print is pretty much the same for all airlines and much of it is written and presented in such a way as to discourage reading and/or understanding. And who says that the “rules” are reasonable, sacred and appropriate? What has happened to our sense of reasonableness and fairness? Where can a single individual turn for help? Should there be some type of relieve, or should “caveat emptor” be the guiding principle for everything?

Airplane Seating: On a much lighter note, it would be interesting if someone could come up with a practical aircraft design that would permit more effective loading and unloading. Every time I travel by air, I am struck by the inefficiency in getting passengers onto and off the aircraft. In the United States, most trains are built the same way – with passengers entering from the front and rear, but other nations also use compartments, loading from the side, where everyone can board almost simultaneously. Be interesting if someone came up with modules which could be pre-loaded with passengers (and baggage) and then just slid into the plane body. I’m sure there are much more imaginative solutions – the trick, of course, being to make it cost effective, both with respect to aircraft design and airport facilities. Could be an interesting challenge for some of the engineering schools around the world!

The end of the world. I’m writing this at 3 p.m. on May 21 – with less than 3 hours to go before a significant number of people believe the world will end in a series of cataclysmic events. If it does, this column will never make it to print and no one will ever know what I wrote. Probably even better, we won’t have to worry about the daunting tasks of Congressional reform or consumer protection. If you are reading this, you might speculate on what it is in the human psyche that permits a significant number of people to accept a theory that has no basis in fact and has proved to be incorrect every time it has been expressed previously.

Hope a few of these items have given food for thought. Appreciate your reactions as you ponder the points above.
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Points to ponder – 3
by Melvyn R. Copen July 11, 2010
© Mel Copen, July 2010

Some time ago I started what is planned as an occasional change in format. There are always a number of issues floating around which raise important questions but which can be dealt with in less than a full column. So I thought I would try occasionally to capture a few of these “points to ponder” and explore the issues they raise to see if they strike a responsive chord. .

The postal service plans to raise the cost of a first class stamp by 2 cents. Many years ago I joined a major US corporation. One of my key responsibilities covered corporate-wide strategic planning. As timing would have it, the day I joined was the day that the first of the Group Vice Presidents was scheduled to present his plan to the board. His group had serious financial problems and had been losing increasing sums of money with each passing year. His job was on the line. I was enthralled and impressed by the data he had at his command and the coherence of his analysis as he made the convincing argument that his main challenge was due to cheap imports from abroad. Each time foreign competitors cut prices, his volume plummeted and his losses soared. I thought to myself, with people this rational, my new job would be both a pleasure and a cinch – until I heard the wrap-up. To make up for the losses, he proposed a price increase! As the Board nodded in assent, I started to get some inkling of the magnitude of the task I faced.

The concept of “price elasticity” is a measure of the percentage change in demand that occurs due to a percentage change in price. A product that is price in-elastic shows very little change in demand as the price goes up (usually within limits). One that is highly elastic shows big changes. It was clear in the above example (although not to many in the audience) that the products in question were highly elastic, and that any significant increase in price would make the problem worse. That’s exactly what happened.

Today, the postal service is under attack from several sources. The Internet has spawned a large number of inexpensive communications alternatives. Service levels have been cut or have deteriorated. (Recently, letters between Arizona and Georgia have taken more than 15 days in transit – substantially more than the 8-10 days it would have taken the Post Office to deliver mail an equivalent distance, from Saint Joseph, MO to Sacramento CA in 1860 via pony express). Private companies compete, often at higher prices, but normally offering better service. During the period from 2002-2007, the Post Office handled, annually, between 95 and 98 billion pieces of first class mail. In 2008 and 2009, the totals dropped to 92 and 84 billion respectively. Based upon the first half of the year, it looks like 2010 will be under 80 billion. Similarly, standard mail which had actually been growing during the 2002-2007 period, peaked at 103 billion pieces in 2007, dropped to 99 billion in 2008 and then to 83 billion in 2009. It too will likely fall below 80 billion based upon first half 2010 results. Interestingly, 2007 was the year that the 1st Class rates climbed above the 40 cent level.

Raising rates is the simple (perhaps “simple minded” is a better phrase) way to treat the problem. But it’s no solution. To the contrary, it is only likely to hasten the demise of this once-revered organization that played such a significant role in this nation’s growth. The solution has to rest with developing new and creative ways to facilitate communication. Perhaps a contest to stimulate new ideas from the public would help! But increasing prices and deteriorating service seems to be a formula for disaster. Any ideas for making it better?

Arizona’s new immigration law. Much has already been said about Arizona’s about-to-be—implemented new immigration law. But there are still some things that puzzle me.

First, there is genuine concern that some officials could misinterpret and misuse it with regard to racial profiling. But something needs to be recognized that seems to get lost in the political morass that always surrounds such issues. Current estimates indicate that more than 2/3 of illegals nationally, and more than 80% of illegals in Arizona come from Latin America. Absent any element of racial discrimination, it seems likely that the largest number of people who raise suspicion and are stopped for questioning will be Latinos. Would it not be unusual if it were otherwise?

Second, it would seem that efforts of the administration to thwart the law are based upon a careful political calculation. MSNBC, which is no supporter of the law, conducted a poll. It’s hard to get current data. “Conspiracy theorists” would say it is being withheld because the results do not support MSNBC’s position. However, earlier figures, with several million “votes” counted show a 95% support rate for the law. A recent national Pew study poll showed 59% supporting the law, with 32% opposed, and on specific questions relating to implementation (e.g. requiring people to show ID) as much as 73% were supportive. So it would seem that the general public is in support – but the general public consists of many polarized factions who will probably vote for their party no matter what. Is this, then, a play to court one specific group – a group whose votes may be desperately needed during the next election? How will we ever move what is for the good of the nation in front of political expediency?

Finally, the Federal Government has challenged the law’s constitutionality. The reasoning seems a bit fuzzy. There is a claim that a state cannot formulate its own immigration policy or enforce state laws that interfere with federal law enforcement (including requiring federal authorities to divert resources from other activities), or restrict interstate commerce (read that as the flow of illegal aliens). But when did the government become an entity solely of its own? In essence, it is (or should be) an instrument of the people. Just as a citizen can perform a citizen’s arrest, should not a state be entitled to help enforce (not create) existing federal law? And particularly if the non-enforcement of that law is creating severe local hardships? There is a principle which to me makes sense – if the law is just, enforce it; if not, get rid of it. But just like the “don’t ask, don’t tell” solutions that have been around for some time, many politicians lack the integrity to face difficult issues – another reason for Congressional reform (but that for another day).

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Points to ponder – 2
by Melvyn R. Copen January 10, 2010

© Mel Copen, January 2010

A few months ago I started what is intended to be an occasional change in format. There are always a number of issues floating around which seem, at least to me, important, but which can be dealt with in less than a full column. So I thought, from time to time I would try to capture a few of these “points to ponder” as they come to me – with no particular pattern – and see if they strike a responsive chord. .

The importance of reaching 60. Nope, not talking about age. The recent announcement by two Democratic Senators that they planned to retire has gotten the Democratic Party in an uproar. Media pundits and Democratic leaders lament the fact that they may lose the magic number of 60 which allows them a filibuster-proof Senate. But there is another side to this, which can be seen by the wheeling and dealing that has gone on around the health care bill, where a few Democratic Senators have held up the nation. In essence, to secure their support, (perhaps “purchase” would be a better word), the Senate leadership had no need to engage in debate, but had to enter into negotiations with them and, thus, undermine the integrity of the legislative process.

With less than 60 votes, the situation changes dramatically. It is no longer a question of pure power (I have the power to do what I wish regardless of your desires). Instead, it will require at least some degree of dialog across party lines, to attempt to convince (although the “purchase” option is still there) members of the opposition party to provide support and, perhaps even better, to work out meaningful compromises. Rather than look at this as a blow to party dominance, perhaps these two Senators should be applauded for taking an action that may, indirectly, ultimately benefit the nation.

The nature of government. I recently came across a quote by James Madison that I thought worth pondering. In the late 1780s, a series of more than 80 articles was published in New York newspapers (anonymously at the time), written by Alexander Hamilton (later first Secretary of the Treasury), James Madison (principle writer of the Constitution and later 4th President of the nation) and John Jay (first Supreme Court Chief Justice) in support of ratification of the US Constitution. These collected works became known as the “Federalist Papers” and represent one of our great treasures, as they outline the thoughts and issues of men who devoted their lives to giving birth to this nation.. Two themes that run through many of the articles are concerns about “majority rule” and the need for checks and balances on the power of government.

In “Federalist 51,” Madison wrote: “If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place, oblige it to control itself.” I wonder what Madison would think if he suddenly found himself in the Washington D.C. of today?

The meaning of Public Rage. A recent “BusinessWeek” article, entitled “Raging Against the Street” quoted a Bloomberg National Poll indicating that “the public rage directed at Wall Street banks and brokerages remains at high levels.” It indicated that two-thirds of Americans have an unfavorable view of financial executives. The same article estimated that, [despite recent history and the uproar – my words] the investment banking units of three of the top banking firms will hand out $29.7 billion in bonuses this year – a new record high “and up 60% from last year, when all three banks took billions in support from the Treasury to weather the financial crisis.”

Seems like “business as usual. I wonder how we now define “rage.” Perhaps raising one’s eyebrows is all that is necessary to qualify. People may be perturbed, but it’s clear that there is no concerted action to change the status quo, and without new energy directed toward changing the trajectory of things, inertia keeps things moving on the same course.

Rethinking Globalization. I believe globalization is a good thing – but then I tend to define globalization in terms of building international bridges and taking balanced approaches toward investment and international trade – a balance which considers both long-term as well as short-term consequences. To many people in the U.S., “globalization” simply means businesses shipping U.S. jobs abroad to take advantage of cheaper labor costs. I couldn’t agree more with those who oppose this practice. But the problem doesn’t rest solely with the business firms. Most of us are unable to visualize what happens on a macro level, and business organizations and government agencies have been wholly ineffective in presenting this picture.

The macro level is simple. A manufacturer sends its production capabilities overseas. On the plus side, its products become less expensive and, therefore more competitive. On the negative side, local jobs are lost. The argument is that we will ship only the manufacturing abroad and build, instead, on our intellectual capacities – retaining design, research and development and all of the creative portions of business. But the macro level is quite different. It doesn’t work that way. A recent Harvard Business Review Article by Professors Gary Pisano and Willy Shih entitled “Restoring American Competitiveness” focuses on the connection between manufacturing, R & D and innovation. Where the first one goes, the others eventually follow. In essence, we are impairing our future, as we lose the capability to produce and the engineering skills to innovate with both manufacturing processes and associated product improvement.

A key issue is that without an understanding of the long-term effects, the purchaser, or consumer, is likely to think solely in terms of lowest cost. Somehow, we need to convey the message that a longer view of national well-being may require more than comparing current price tags. Only in such an environment will businesses dare take more balanced approaches. We need national policies and communications programs that will encourage the rebirth of manufacturing in this country, and perhaps it should start in the elementary, high schools and universities of this nation.

Hope these encapsulated thoughts stimulate more thinking about the issues. Be delighted to receive your ideas.
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Points to ponder – 1
by Melvyn R. Copen October4, 2009
© Mel Copen, October, 2009

For some time now I have thought about trying something occasionally that deviates from the usual formats of my column. This just seemed like a good time to start. Whereas the typical column focused on a single subject, and my intent (not always achieved) was to address issues in either a positive or constructive mode, I find that life is full of conundrums. We all observe “mysteries” in the world around us – things that raise questions but often don’t come with ready answers. So I thought I’d try to capture a few of these, as they come to me – with no particular pattern – and see if they strike a responsive chord. So here goes.

When is a communication complete? In the days when the telephone was the major channel for personal communication, life seemed simple. You picked up the phone and called someone. If they answered, communication took place. If not, there was positive confirmation that the message had not been conveyed. The “control point” was at the receiver’s end. The arrival of voice-mail made things a bit fuzzier, since messages could be left, yet most people accepted the unreliability of such transmission since it was clear that the intended recipient was not available.

Today, email seems to have changed that equation. Many users assume that someone at the other end will receive their message – almost on a 24/7 basis. The communication is “complete” when it is sent, not received, and no confirmation is expected. Several email exchanges are often required where one short telephone call would suffice. The whole thing leaves me puzzled!

Email addresses When the telephone reigned supreme, it was interesting to see how possessive people were of their numbers. When a number changed, pains were taken to assure that everyone in the communications chain got the information. Today, email addresses are changed with impunity – and often with no notice. Maintaining email mailing lists has become a major headache. It’s interesting to note that, as communication over the Internet has become more important, the discipline of maintaining solid links has become more flakey. Spam and other socially repugnant practices have probably played a large role in undermining the validity of this most reliable of communications technology.

The connected world: I am intrigued by the number of people who carry their iPhones, BlackBerrys and other Internet devices with them continuously. One day, it would not be surprising if communications chips were implanted in new-born babies. It’s not only a need to have the capability to communicate, but also a desire for it to occur instantaneously. People feel lost without their umbilical cords to the rest of the world – (I see an inconsistency with the laxity concerning notice of changed email addresses). I can remember, years ago, living abroad, when it took a good part of a day to get a trunk line call to another part of the country, and perhaps a day or two to get an international call through. The world survived. Some of its “romance” seems to be gone – when you see people in the middle of the Sahara Desert with cell phones glued to their ears, or they are texting their stock brokers back home. Why must the pace of communications be so fast – even for much of the trivia that is handled by text messaging and services like Twitter? I don’t know the answer, but my guess is that finding it would provide interesting insights on future developments of civilization.

A change of subjects – an Afghan dilemma: Recently a friend sent me the text of comments General McChrystal made on “60 Minutes” about Afghanistan. Implied in much of the strategy that McChrystal’s plans to pursue is the recognition that Afghanistan has its own culture and a long history that has defied the change that the British, the Russians and now we are trying to impose. One of his comments related to corruption in the government with which we must work.

Years ago, before the Russian invasion, I did some work in Afghanistan and had a conversation with one of the cabinet ministers on corruption. I was amazed by the way he treated the subject so matter-of-factly. He first pointed to his wrist and said, “If your hand is not in this deep, you are suspect.” Then he pointed to his elbow – and said, “This is the area of comfort.” He then pointed to a spot between his elbow and his shoulder and said, “Here’s where people start getting nervous.” And then he pointed to his shoulder and said, “And this is where they lop it off.”

I’ve often thought about standards of morality and how they vary in different cultures. Again, many years ago, I was involved in a study relating to the average wages paid to a policeman in a developing nation vs. the income needed to live in very modest circumstances with a family of 4. The salaries were less than half the amount required. Where would the balance come from? Just as we don’t give another thought to tipping in restaurants, the system was designed to incorporate the “tips” policemen would receive for overlooking “petty” crimes – speeders, bootleggers, etc. What some communities would call “immoral” was clearly built into the institutions of this society and accepted by all.

In international business (and in a situation like Afghanistan), dealing the concept of “moral vs. corrupt” practices is critical. It’s difficult for organizations from different societies to compete (or interact) when one is permitted to do things that provide a competitive advantage but are prohibited to others. I’ve often felt that the best rule of thumb as to whether an action is moral or not in a society, is whether or not you can talk about it openly. However, this still begs the question as to whether one should adopt local behavior or even if it is possible, since, in the case of government officials and business people, the laws of their home countries often supersede those of the societies in which they are operating.

Does that mean that we have to live with corruption in Afghanistan? It probably depends on how effective one wants to be. I believe that education is the only way to change things – combined with resources that eliminate serious problems and inequities. But education takes time – often generations – and it is hard to germinate seeds in environments that are already hostile to them.

Hope these encapsulated thoughts stimulate more thinking about the issues. Be delighted to receive your ideas.
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