Monday, November 11, 2019

Perception-Based Healthy Reputational Capital as a Strategic Competitive Advantage: The Case of CVS Health

In 2014, CVS drug-stores stopped selling tobacco products. The strategic choice rendered CVS Health more internally consistent on wellness. To be sure, the company continued to sell alcohol products, such as wine and hard liquor, which are harmful to human health. Yet the incremental correction was significant both in regard to the short-term hits to the bottom-line and the salubrious contribution to the health of customers. If the share of revenue (and profit) from the sale of alcohol increased in the meantime to make up the difference, the net effect on the bottom-line could have been zero or even positive, and the net impact on the health of customers and the company’s healthy image could also have been nugatory or even negative. Writing in 2019, however, Larry Merlo, President and CEO of CVS Health, saw a perfect convergence of the long-term bottom-line and making a contribution to society even at the expense of short-term revenue.
In his editorial at CNN, Merlo claims that an increasing number of businesses were “incorporating purpose into the values and operating models of their organizations.”[1] The implication that purpose only pertains to social performance ignores the fact that boards and managers act with purpose in manufacturing and selling widgets that are of value to customers. Presumably products and services are purchased because they reduce the suffering of customers or increase their happiness. What Merlo means by purpose is to have a positive societal impact (albeit by considering the best interests of stakeholders rather than society as a whole) besides the impact of the products or services sold. Hence balancing purpose and profit “can lead to better companies that are motivated to do what is right for all stakeholders—customers, employees, suppliers, communities, and, yes, shareholders.”[2] The owners of the wealth known as CVS Health (i.e., the company’s owners) come last on this list, but not least. Even so, if a management hired by stockholders (via their board representatives) unilaterally decides to orient the company to other stakeholders, the property right is subordinated and thus violated. Hence, the shareholders should decide whether their company’s mission is to be extended beyond the stockholder-default. Merlo makes no mention of any such stockholder involvement in the decision.
To be sure, the CEO points to the positive impact on the company’s brand as being centered on health. In his words, the sale of tobacco was “a barrier to the future growth of the company as a trusted health care provider.”[3] No longer selling tobacco products “helped validate CVS’s evolving role in the health care marketplace.”[4] In other words, the “fact that companies and consumers now see us as a convenient and affordable point of access for quality health care creates longer-term growth opportunities for our business,” Merlo claims.[5] This led to the company’s acquisition of Aetna. The combined company could have a competitive advantage that (presumably) a cigarette-selling CVS could not have. I’m skeptical on this point because CVS Health still sold alcohol and yet could acquire Aetna and claim to have a health-centered brand-image.
Not having analyzed it, I have no reason to doubt a 2017 study published in the American Journal of Public Health, which claims that “smokers purchased nearly 100 million fewer packs of cigarettes in states where a CVS Pharmacy had a 15% or greater share of the retail pharmacy market.”[6] Merlo cites this study to make the point that CVS no longer selling tobacco likely has had positive health effects societally (taken here narrowly as customers).  It is the purity of the company’s reputation for furthering health, and thus the impact of the reputation on the company being able to make forays further into health-care that I question. As a regular CVS customer over the years, I have noticed increasing shelf-space being devoted to the sale of alcoholic beverages. As of 2019, a customer could walk down an aisle—typically a front aisle—with such wine and liquor stocked on both sides, and see still more bottles near the cashiers’ area. In his essay, Merlo only lightly touches on the short-term hit to the bottom line. Perhaps CVS merely substituted one ill for another—perhaps with alcohol selling at a higher premium than cigarettes—such that only a slight drop in revenue during the transition was all that the company had to sacrifice in increasing its reputational capital? If so, the company could play off the societal perception that alcohol is less toxic than cigarettes.
To be sure, CVS became a less hypocritical company in refusing to sell tobacco products, especially relative to Walgreens, whose slogan “Wellness at Walgreens” near the pharmacy area was at odds with the liquor and cigarettes highly visible at the front end of the stores. Admittedly, such egregious hypocrisy may bother only the ethically-sensitive customer while leaving little or no financial trace because the vast majority of customers do not notice the hypocrisy or simply don’t care. An interesting question, however, is whether CVS actually reduced its hypocrisy if alcohol got more shelf-space (and was more profitable!) to make up for the loss of revenue from tobacco. The enhanced reputational capital could be based on an illusion, yet interestingly even that may helped the company acquire Aetna.
Of course, the hypocrisy may be in us; it may even be a societal norm. We may compartmentalize our healthy and unhealthy practices just as Walgreens had “Wellness at Walgreens” painted in very large print above the pharmacy area in at least some stores in 2019, while alcohol and cigarettes were salient in the front half of the stores. If so, customers would not even notice the store-level hypocrisy, so little benefit could come to the company simply by reducing the hypocrisy within a store. Instead, a company’s brand-image could be solidified by advertising nonetheless, and the resulting reputational capital could aid in attracting potential acquisitions.

[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Ibid.

Wednesday, November 6, 2019

Democracy Held Captive by Claims of Racism: The Case of a Street Name in Kansas City, Missouri

Claims of systemic racism can also be attacks on democracy itself. In fact, if overdone, such claims may themselves be racist. The situation would then be that of racists holding democracy ransom in the mistaken belief that the whole must be consistent with the interests of one of its parts to be legitimate; otherwise, the democratic principle of majority rule is itself presumed to be invalid. The case of the change of a street's name in Kansas City, Missouri, can serve as a case study.
On November 5, 2019, voters in Kansas City voted overwhelmingly (nearly 70%) in favor of restoring the name of a street to The Paseo (inspired in 1899 by Mexico City’s mayor, Paseo de la Reforma). A mere two months before the vote, the City Council had changed the street name to honor Martin Luther King, Jr, an American civil-rights leader in the turbulent 1960s. Members of the Save the Paseo movement said that their motive was historical preservation rather than racism. According to one member, the Paseo was “historical I people’s memory” rather than just on paper.[1] The members “were upset that the council [had] made the change without input from those who [lived] along the street.”[2] A city statute required such input, according to the members. The mayor admitted that the city had not engaged with “enough different community members.”[3] The key word here is different, for the campaign to change the street’s name to that of the civil-rights leader had been led by black pastors. So the city council made the change based on the advocacy of a segment of the population with a vested interest in the change, rather than reaching out to first ascertain whether the sort of unity that Martin King had preached could be achieved on the measure. In short, the council had put a part ahead of the whole.
For its part, the part, represented by Rev. Vernon Howard, president of the Southern Christian Leadership Conference of Greater Kansas City, claimed that racism was the main motive of the opposition to retaining the King name. “This is a white-led movement that is trying to dictate to black people in the black community who our heroes should be; who we honor; where we honor them and how we honor them,” Howard said. “This is the pathology of white privilege and that is the epitome of systemic structural racism,” he added.[4] In other words, the pathology of white privilege is the epitome of systemic structural racism. Had the reverend sought to provide a religious rather than a psychological account, he might have claimed that certain social structures are evil whereas others are sacred. A Unitarian minister in my hometown had once insisted to me that certain social structures (i.e., egalitarian systems) are sacred. I countered that a human claiming that a human artifact is divine constitutes self-idolatry.[5] He dismissed my counter-claim instantly, as if he presumed that he could not be wrong whereas I must be so. Had he also insisted that societal structures that contain inequality are pathological, I would have pointed to the over-reach of his religious basis onto psychology.
I submit that in dismissing the meaningfulness of The Paseo to people generally in Kansas City, Howard’s reductionism to racism is erroneous. Essentially, he was claiming that cases in which majority rule does not dovetail with his interpretation of black interests, the democratic principle itself is culpable as part of systemic structural racism and thus is pathological in nature. In other words, the particular interests of one segment of the whole must be consistent with the majority for the democratic principle of majority rule to be devoid of the stain of racism and thus valid.
Furthermore, in so closely relating “white privilege” to systemic racism, the reverend overlooked or dismissed outright the racism in the black community. On the morning following the vote, for example, I endured fifteen minutes of racist insults from a black woman on a local bus in Phoenix, Arizona. Her voice could be heard throughout the bus as she claimed that “whites are ugly when they age, whereas black people age good.” Furthermore, whites are red-necks whose “dominance will end someday.” As she declared herself to be a racist, I noticed that the driver, also a black women, was refusing to stop the woman. Such passive aggression can be considered tacit racism. That was not the only instance in which I had observed black racism on a Phoenix bus. Once a driver had decided not to intervene as a black woman shouted insults at a Caucasian man until the woman called the driver a racist for not having kicked the man off the bus! The reputation of the local bus drivers in the phoenix metro, including Tempe, was sordid in terms of their attitudes and bad in terms of their driving, and accountability at least regarding the latter was deliberately obstructed by First Trans, a sub-contractor of Valley Metro. The subcontractor was in denial concerning the role of its pathetic hiring of people with bad attitudes to drive the buses. Such a flawed system enabled black racism (as well as reckless driving, such as in going from 40 or 50 mph to zero in a turn lane). Put another way, systemic structural racism can be due to black privilege (and facilitated or enabled by a corrupt, incompetent organization).
The reverend’s partial account can be taken as confirmation of being a part within a whole not reflecting the whole or its interests. Holding majority rule subject to such a partial perspective is not in itself in the interests of a whole. In Kansas City, the municipal government followed a flawed process (of input) in changing the street to Martin Luther King Jr Blvd. Such a flaw is not racist even if the segment that benefitted from the flaw no longer benefits once the flaw has been corrected by the voters. In fact, for an electorate to correct its delegated government is laudable from a democratic standpoint, as the People, as the popular sovereign, is the basis of a republic. For that basis to somehow be held ransom by a part thereof undermines the foundation of democracy, whether direct or representative.

[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] See the last chapter of my book, God’s Gold, for an elaboration on self-idolatry.

Monday, November 4, 2019

Goldman Sachs' Revolving Door: Regulatory Capture

In July 2012, Andrew Williams, a former spokesman for U.S. Treasury Secretary Timothy Geithner, announced plans to head over to Goldman Sachs at the end of that month.[1] Williams was the second of the Secretary’s spokesmen to head to theWall Street bank. Such moves may reflect a standing policy at the bank to have a revolving door. The previous U.S. Treasury Secretary, Henry Paulson, had been the CEO at Goldman. This suggests that the revolving door was to include populating high offices in government, presumably not out of a sense of civic duty, but, rather, to see that Goldman's interests would be protected and even promoted through public policy. Hence President Obama was said to have had a Wall Street government with respect to positions bearing on Wall Street. I submit that deconstructing such a revolving door would be very difficult. 
From the standpoint of a government official being hired by Goldman, the prospect of becoming wealthy is a large incentive to make the jump. Such an official would typically have scruples about using his contacts in government to pull strings for the bank. Mired in scandal following the financial crisis of 2008, Goldman’s leadership no doubt understood the value in hiring good PR men. Such hires could even put a good face on the cozy relationship between the bank and people still in government.
The “revolving door” dynamic is also difficult to break up because it contributes toward the capture of regulators by the regulated. This is known as regulatory capture. The regulated companies supply information that regulators need in order to devise regulations; the companies can use this reliance to their advantage even just in providing tainted, self-serving data. Moreover, the revolving door can make it easier for the managements of the regulated companies to get even high government officials to put political pressure on the regulatory agencies to go soft on regulating. In the case of Goldman Sachs, it is reasonable to expect that Henry Paulson would have bent to the bank's request for lax regulatory oversight from the SEC, which of course had no idea how many subprime-mortgage-derivative bonds Wall Street had been producing and selling up to the financial crisis of 2008.  
The SEC can be soft on Wall Street and point to insufficient staffing as the reason, while the reality is far more sordid in terms of the relationship between the regulators and the powerful regulated. 
Legislated restrictions on former government financial officials going to Wall Street banks could of course be circumvented, given the incentives described above, though prohibiting employment (or financial enrichment, such as by consulting) in the industries related to an official's area for many years seems possible. Even if Goldman Sachs could not hire away Treasury or SEC offiicals, the bank could still count on ex-Goldman folks who occupy key offices in the U.S. Government. 
Generally speaking, the financial and related political power of such huge aggregations of wealth such as a Wall Street bank has (and is) naturally overpower weak governments, by which I mean governments that depend on or do not have the will to resist the allure of money (or threats) from entities subject to the government. A government whose elected officials must rely on large sums of donated money just to get reelected is ripe for succumbing to corporate offers with strings attached. A strong government is insulated, whether by law, will, or power generally from such strings. A government that has many points of access (of influence) is likely to be weak in not only rebuffing pressure to reduce taxes and spend more, but also standing up to large corporations. A government in a pro-business society is likely to be weak with respect to the power of business, other things equal. Even more significant than these variables, however, is the tenuous basis of representative democracy amid Wall Street bewindowed towers. 

1. Bonnie Kavoussi, “Andrew Williams, Ex-Treasury Spokesman,Headed to Goldman Sachs,” The Huffington Post, July 12, 2012. 

Monday, October 21, 2019

Members of Congress Secretly Lobbied the Fed

As of late September 2012, more than one hundred members of Congress had lobbied the Federal Reserve and other regulatory agencies on the Volcker Rule, the part of the Dodd-Frank Financial Reform Act of 2010 that prohibits banks from operating like casinos (e.g., trading with proprietary funds, rather than those of customers).[1] The rule stems from the importance of banks in our financial system. In September 2008, the world nearly witnessed the collapse of that system when banks stopped trusting each other (e.g., via commercial paper market) because of the risks that some of the big ones had been taking with mortgage-backed derivative securities and the related insurance swap securities. Awash in healthy-seeming fees, the banks purchased risky subprime mortgages and bundled them into bond-like securities that could be sold to investors.
Congress passed the Dodd-Frank Act, so it makes sense, and indeed is positive from the standpoint of accountability, that lawmakers remain involve as the relevant regulators (who are not elected) translate the broad legislative language into specific rules for banks. However, the newspaper’s report points to a less-than-salubrious practice wherein members of Congress contact regulatory agencies in private and before even the period for public comment. This raises the possibility that Wall Street was using its connections in Congress to weaken the public safeguards in the bill—essentially putting a narrow private interest in front of the public interest that the bill was designed to protect.
The access purchased comes not only from having information that the regulatory agencies need; banks (and American corporations in general) could contribute unlimited amounts of money from the corporate treasury (rather than from contributions from executives and employees) to “social welfare” non-profit organizations that can spend money on political ads in support of friendly candidates (and against their opponents) without having to divulge the identities of the donors. So Wall Street banks can furtively promote U.S. Senate candidates who support the repeal of the Dodd-Frank Act without any of us knowing it. In fact, the “social welfare” (54c) groups can in turn contribute directly to a candidate’s campaign without divulging the names of the donors. Not even the IRS, which has been concerned about whether the donors pay the required gift tax, bothers the “social welfare” organizations for donor lists after complaints from several U.S. Senators. Nor has the SEC pushed corporations to divulge to their respective stockholders how the political donations have been spent. I suspect that senatorial influence lies behind this inaction too.
It is not as though there were some uncertainty regarding the need for disclosure in a democracy. Even though eight of the nine U.S. Supreme Court justices in Citizens United stress in their opinions the necessity of disclosure, corporations, no doubt well-connected in the halls of power in Washington from the donations already given, have a way to evade the transparency. Political and corporate democracy are both undercut as banks and business corporations can spend unlimited amounts (out of their respective profits) to help “pro-business” candidates for public office. Rather than being speech itself (and thus subject to free-speech constitutional protection), money is power that can be used to skew or otherwise limit the contours of public debate. After the election, the continued influence of the money is also stealth, such as when members of Congress lobby the Federal Reserve to weaken regulation meant to safeguard our financial system from a repeat of the near-collapse in 2008. For deregulation to be urged so soon after a near-depression gives us an indication of how dangerous “money as invisible speech” is to the public good, even if such influence is in the corporate interest.
As creatures of the state, corporations should not have a share in governance, for that function subverts the causal relationship between Creator and creature. That is to say, a corporate management (or board) presuming to influence members of Congress can be likened to the self-idolatry of a creature supposing itself to be God. Interestingly, as going concerns, corporations are immortal, legally speaking. As for us mere mortals, Rousseau reminds us that we are born free but live in chains—only we are under the delusion that we are still free because the confining elements are subterranean qua the furtive influence of great concentrations of private wealth. I suppose one question is whether finite bundles of subjectivity can somehow become aware of that which has been designed to be outside of our awareness, and, if so, whether a society can so move to protect its good in a viable republic.

1. Ben Protess, “Behind the Scenes, a Lawmaker Pushes to Curb the Volcker Rule,” The New York Times, September 21, 2012.

Tuesday, October 8, 2019

Is the U.S. Congress Too Beholden to the Financial Industry?

That financial deregulation had any traction at all following the financial crisis of 2008 in the U.S. is stunning, for the implication is that Wall Street money has tremendous influence in the U.S. Governent even after Wall Street banks have screwed up (even in triggering a financial crisis!). 
According to Gary Gensler, head of the Commodity Futures Trading Commission in 2012, Congress stood with the big banks in the struggle to shield Americans from the risks and excesses of Wall Street even after the financial crisis of 2008. He pointed in particular to a proposal from the U.S. House’s Appropriations Committee to cut his agency’s funding by 12 percent.[1] The CFTC had been given expanded powers by the Dodd-Frank Act in 2010. Doubtless the proposed budget-cut had something to do with that. It is astonishing that such a proposal would come in the wake of a financial crisis caused in large part by Wall Street bankers taking too many risks. That the agency was then tasked with regulating the problematic $700 trillion market on derivatives—a task that dwarfed the agency’s regulatory power over futures—suggests that the decision to cut the agency's budget after the financial crisis was especially agrevious, being based, I submit, in Wall Street's denial over its harmful role in triggering the financial crisis in which subprime-mortgage-based bond derivatives collapsed in value even as banks including Goldman Sachs were trying to unload the "crap" as good values. 

CFTC Chairman Gary Gensler staring down the big banks

That an industry with a vested interest in rolling back financial regulations could have any influence at all over elected representatives reflects the general ignorance or naivity concerning conflicts of interest. In a COI, a private interest predominates even if the good of the whole is being estolled. A bank-rolled member of Congress can used the espoused public-interest rationale advanced by the banking industry as cover to hide the cosy relationship. For example, a bank's public affairs department could put out the word that increased financial regulation, even after a financial crisis, is really socialism. The bank-rolled members of Congress could then use the socialism scare-tactic on their respective constituents while quietly accepting the large campaign-contributions from the banks. Meanwhile, the American people feel secure that such representatives are protecting them from a threat rather than enabling one.

For more on the conflicts of interest in the financial sector (and others), see: Skip Worden, Institutional Conflicts of Interest, available at Amazon.

1. Alexader Eichler, “CFTC Head Gary Gensler: Congress ‘Sides With Wall Street’,” The Huffington Post, June 8, 2012. 

On the Role of Socialism in American Political Polarization

In a stunning upset in the 2012 Republican U.S. Senate primary in Indiana, Indiana's Treasurer, Richard Mourdock, beat incumbant veteran Richard Lugar by 22 percent (61-39%). Even though Lugar's 36 years of experience in the Senate had seasoned him into a statesman in foreign policy, the Tea-Party-backed Mourdock was able to portray the aged senator as out of touch and too willing to compromise with Democrats. Mourdock had no intention of extending any hand across the aisle. Is such polarization worth the loss of experience in international relations? Moreover, what is the role of socialism in the political polarization? 
"While Lugar advised in his concession speech . . . that Mourdock would need to work together with lawmakers in the Senate, the new nominee stuck to the belligerent tone he [had] maintained in the campaign, warning that Democrats and socialists were destroying the nation."[1]  Even if Democrats were for government ownership of the means of production (i.e., companies), which is socialism, it does not follow that those Democrats were also attempting to sabatage the U.S. in its foreign relations. Especially given Lugar's expertise in that area, working across the iasle would only make sense. Nevertheless, Mourdock saw a link. 
"Today," he said, "we see the Obama White House and we see a Senate chaired by Harry Reid that's doing everything it can -- though perhaps not intentionally -- to turn our dreams, to turn our great national hope and our dream into the nightmare of ever-growing government, to make us that … western European-style nation,’ Mourdock said. ‘Just yesterday, France elected a socialist,’ he continued. ‘There are those I'm sure in the administration and in the left side of the Democratic Party that were cheering for that. But we're not going to stand for that in Indiana because the supporters of Barack Obama are not going to win!”[2] In other words, Mourdock expected the Democrats to cheer on and perhaps even aid "socialist" governments around the world, the spread of which could isolate the U.S. and the related interests of private property. In 2019, for example, the World Trade Court ruled against the E.U. for having unduly (i.e., unfairly, in terms of free trade) subsidized Airbus. The government ownership of a company goes beyond such subsidization of a corporation like Airbus, which, as of 2019, was owned by EADS, which in turn was owned by a mix of private companies and a few E.U. states. 
What about those supposed socialist countries? To be sure, Francois Hollande ran under the Socialist Party banner. However, the “socialist” policies that he had campaigned on were redistributionist. He did not advocate that the state own more of the means of production. Hollande was redistributionist in that he suggested that la dette (government debt) that Sarkozy had doubled should not be cut only by austerity (i.e., budget-cuts), which hurt the poor disproportionately; rather, the rich should be taxed what they had been taxed before the top tax rate was lowered. 
In fact, Hollande was in a position fresh from his victory to push for federal (i.e., E.U.) economic stimulus spending to complement the federal austerity programs in debt-ridden states, including Greece, Spain, Portugal and Ireland. Using tax increases and budget cuts to reduce government debt is hardly socialism. 
So, Mourdock's lack of knowledge on socialism as an economic system as well as on European governments, combined with his refusal to reach across the aisle, were misplaced, and thus not worth the loss of Lugar's expertise in foreign policy. 

1, Michael McAuliff, “Dick LugarLoses to Tea Party’s Richard Mourdock in Indiana Republican Senate Primary,” The Huffington Post, May 9, 2012. 
2. Ibid.

Tuesday, October 1, 2019

The European Commission as Political

The European Commission, the E.U.’s executive branch, has been known for being a technocratic institution. Yet in drafting regulations, imposing fines, and negotiating trade deals, the Commission is much like the U.S.’s executive branch. In fact, high-level appointments must secure the approval of the legislature through confirmation hearings. Yet the top of the U.S. executive branch, the White House, has been known for being ideological and definitely political. That that executive branch also promulgates and enforces regulations can be easily missed. That the E.U.’s executive branch is also political has definitely been missed or dismissed in the ideological illusion that the E.U. is merely a technocratic international organization rather than a federal system of governments. This illusion could finally be seen as such after the election of Ursula van der Leyen as President of the European Commission in 2019.

Her announcement of new titles for commissioners sparked ideological controversy because the titles themselves are inherently ideological. One commissioner would be “for Democracy and Demography,” while another would be “for Protecting our European Way of Life.”[1] Besides the inappropriateness of using office titles as ideological placards, the insertion of ideology at the top of the Commission must have surprised many Europeans who were under the ideological impression that the E.U. was merely an international technocratic organization rather than a federal system with a federal government.
The “once technocratic institution,” the Commission, was, according to van der Leyen a “geopolitical commission.”[2] Finally an explicit acknowledgement is made that the E.U. is geopolitical, and thus a federal government, rather than just a trading “bloc.” That The New York Times consistently applied this label to the E.U. in spite of the fact that it had not only an executive branch, but also a legislative one (The European Counsel and the European Parliament) and a judicial one (the European Court of Justice) boggles the mind. Unthinkingly swallowing the European illusion has effectively enabled it, and thus forestalled the day when Europeans would finally realize what they have created.

Recommended: Essays on the E.U. Political Economy: Federalism and the Debt Crisis. See also Essays on Two Federal Empires: Comparing the E.U. and U.S. Both are available at Amazon.

[1] Valentina Pop, “EU’s New Boss, Invoking ‘European Way of Life,” Sparks Partisan Brawl,” The Wall Street Journal, September 19, 2019.
[2] Ibid.

Saturday, September 28, 2019

E.U. and U.S. Counterparts Met: A Basis for Comparison

President Barak Obama of the U.S., and Herman Van Rompuy and José Barroso of the E.U. held a news conference following the EU-US Summit at Lisbon in 2010. Even though the E.U. and U.S. are both empire-scale federal unions of states, and thus are equivalent in terms of political type or genre, they differ in terms of how their respective federal offices are arranged and constituted. This does not, however, nullify the basis of comparison.

For example, the E.U. does not have one definitive president; rather, the Commission has a president, as does the European Council. Interestingly, the alternative of having more than one president (e.g., a presidential council) was debated in the U.S. Constitutional Convention in 1787. Yet this difference does not mean that the E.U. and U.S. are not comparable. In fact, I submit that each union can be strengthened by such a comparison. 
The picture below also shows the full presidential equivalence, while showing that the EU is not structured at the federal level as a replica of the US. 


The placement of the respective flags is interesting because the arrangement was, at least as of 2019, only done for countries. By implication, I submit, the EU flag, rather than the flag of an EU state (e.g., France) should be set with the US flag as a backdrop. At the very least, the EU flag and the flag of the state of France should both be present, for the sovereignty of the state of France is partial, just as is that of the state of Texas. Both states, in other words, are in federal systems in which governmental sovereignty is split between the federal and state polities.
Besides in how they are arranged, the flags themselves are also visually equivalent. Both contain stars, which represent semi-sovereign states, or polities, which are on the scale of the early-modern nation-state. The early US flag is even more equivalent, for the number of stars is roughly the same. 

The E.U. flag was designed by Arsène Heitz and Paul Lévy for the Council of Europe in 1955. The EC and the E.U. would subsequently adopt the flag as their own. The "Betsy Ross" U.S. flag was in use by 1777. Regarding the number of stars, whereas the 13 on the U.S. flag represent the original 13 states in the U.S. alliance, the 12 stars on the E.U. flag were chosen when the Council of Europe had 15 members (10 of which were founding members). Even so, the similarity between the two flags is striking, especially as both the U.S. and E.U. have added states since their respective foundings. It would seem, in other words, that both unions have followed the same evolution, which is another signifier that the unions may be in the same political genre. 
Lastly, the "EU and US" sign in the news-conference photo above implies that the two unions are equivalent. Lest it be objected, at least as of 2019, that the EU is not a political union, I submit that having a parliament, executive (the Commission), and supreme court (the ECJ) renders the federal level not only political, but also a government. The denial (in the E.U.) and ignorance (in the U.S.) on this point boggles the mind. Such is the force of ideology on cognition and perception.
The picture below also shows the full presidential equivalence, while showing that the EU is not structured at the federal level as a replica of the US. The placement of the respective flags is interesting because the arrangement was, at least as of 2019, only done for countries. By implication, I submit, the EU flag, rather than the flag of an EU state (e.g., France) should be set with the US flag as a backdrop. At the very least, the EU flag and the flag of the state of France should both be present, for the sovereignty of the state of France is partial, just as is that of the state of Texas. Both states, in other words, are in federal systems in which governmental sovereignty is split between the federal and state polities. 
Interestingly, the photo below attests that U.S. flag flew next to the E.U. flag in front of an E.U. building in Brussels in 2012. Perhaps knowledge of the proper equivalence existed within the E.U.'s federal government, while still noticeably absent at the state level, including the residents thereof. 


Even though the E.U.'s federal level has been criticized for being populated by technocratic officials, I submit that the nature of the E.U.'s laws (e.g., directives, regulations, etc) are such whereas the officials have tended to have a good understanding of the E.U. as a political system meant in part to act as an international counter to U.S. power. 

For more on this topic, please see: Essays on Two Federal Empires: Comparing the E.U. and U.S., available at Amazon.

Tuesday, September 24, 2019

Police/Security Over-Reaches: A Mentality Unfit for the Job

Absolute authority corrupts absolutely. On an organization or even a local scale, people with authority can play considerably on the ignorance of individuals to over-reach at their expense. As a consequence, surveillance and actions can be horribly excessive without there being recognition of it. Seeing an off-duty police employee wearing a bullet-proof vest and standing next to a store security guard in the entry-way of a grocery store in Phoenix, Arizona, for instance, can give at least new-comers an immediate sense of the excessive use of authority to intimidate even the innocent shoppers. As if seeing a policeman and security employee "greet" customers entering the store was not enough, I also saw a young mother with her young daughter in one of the aisles “freeze up” at the sight of the policeman (wearing a bullet-proof vest) staring at them in a confrontational posture from the end of the aisle. I could not believe my eyes. As the front doors opened as I left the store, I looked up only to see a security guard with his feet pointed right and left, respectively, in a confrontational posture. 

Could such practices ever be accepted as the default in the "land of the free"? It depends on the State. Furthermore, how does such ill-fitting excessiveness, which would only fit were someone reported to be shooting in the store, shift from inappropriateness to become the default—the status quo? Typically the underlying mentality is one of stubborn ignorance that cannot be wrong, backed up by an excessive and microscopic grip on real or invented authority. How is it that the more educated and broad-minded perspective in upper-echelon management comes to doubt even its common sense by being hoodwinked by the lower mentality? Excessive delegation to middle-and-lower levels of management, where the wider perspective can easily be lacking, may be part of the answer. Playing a supporting role, the value-system in the local culture may actually support the excess or look the other way in blind obedience to an ideology. Finally, if a practice beyond the pale gets its toehold in the status quo, then people can become blind to the excessiveness and treat it instead as normal. Excessiveness as the new normal. Dislodging an invasive or encroaching unquestioned trend can be very difficult given the nature of the status-quo default to act like cement. Two case studies demonstrate that an absurd over-reach by someone in the security field can occur. The first took place in Orlando, Florida. Accountability did occur, so the absurd was not allowed to become ensconced. The second was in Phoenix, Arizona. Such accountability is much more difficult there, so the aggressive over-reach of authority would likely become further ensconced in the conducive or enabling local culture. 
In September, 2019, an elementary school “resource officer” arrested two 6-year-olds at school in Orlando, Florida. At least one of the kids had committed the high crime of kicking another student. The “resource officer,” a misleading term for what was actually a policeman capable of making arrests (a resource for whom?), was subsequently fired for not having obtained permission from a “watch commander.” The militaristic term, commander, in having anything to do with first-graders, makes clear just how far the Orlando police department had overreached. Indeed, I submit that the cloak of being a resource is just as dishonest, and overreaching, as is the appropriation of military terms. A police employee is neither a security guard nor a military commando.
Of course, arresting a first-grader is such an obvious overreach that the judgment involved in the overreaching itself is arguably incompatible with the legal right to use lethal force. At least one of the first-graders was arrested for battery, fingerprinted, and had mugshots taken. That a police employee (or department) would even suppose that with a commander’s permission is appropriate or sufficient to arrest a first-grader for kicking another kid is so far-fetched that a lack of perspective, not to mention common sense, was also in the mix. Even Florida State Attorney Aramis Ayala chastised the Orlando police department when she said, “These very young children ought to be protected, nurtured, and disciplined in a manner that does not rely on the criminal justice system to do it.”[1] That a police employee (and department) would interlard that system indicates a basic lack of understanding regarding that system and the fact that it has boundaries. People who have problems with boundaries should not be wielding power, for such people love power too much to exercise it realistically. For a child to make being a child a crime suggests that that child should not be allowed to play with guns, much less to be lawfully entitled to use them. 
Such an obvious overreaching mentality can also exist “under” the police, such as in security guards. In Phoenix, Arizona, for instance, the security guards on the light-rail trains have regularly over-reached beyond their authority. This reflects the culture, as the same tendency can be observe in other domains there. 
For example, some of the employees of the security subcontractor have turned on passengers simply for taking pictures inside the train. Guards have aggressively threatened to kick such passengers off the trains, using the flimsy excuse that the guards had been photographed and the erroneous claim that picture-taking on the trains was illegal. Such ignorance that could not be wrong backed up by authority that simply did not exist is inherently toxic and utterly incompatible with (i.e., a danger to) wielding even the authority that has been authorized. Beyond even the ignorance is the sheer aggressive nature that looks for any opening in which to bully another person. In fact, the dismissiveness of other people’s natural boundaries may itself be sociopathic. The aggression unleashed by efforts to hold such people accountable points to a demented perspective in which the victim rather than the aggressor is actually the aggressive party. 
It is interesting, or telling, that security employees would be so preoccupied with passengers taking pictures and yet actually refuse to do anything, whether on a platform or on a train, about a passenger known to have walked across the tracks even in front of an oncoming train. 

This man rushed across the tracks so fast his baby's carriage back wheels caught on a rail.  

Once I witnessed a man run across a street (amid oncoming cars) and across the tracks before entering the train-car that I entered. The security employee told me that he too had seen this, but could do nothing. "The street is not our property," he explained. "Aren't the tracks your property?" I countered. He did not reply. Being so reluctant to even confront such a passenger (or people smoking on the platforms) is quite a contrast to the excessive presence of the employees on a train car. 

Three security employees are clustered together in one half of a rail car. Typically none of them would be checking tickets. Imagine being a passenger surrounded by security guards! 

Looking at me leaving the train and then at the three security employees, the man in the foreground asked me if he could enter the train! When I was on the train standing next to the door, the security employee shown on the right walked over and stood in the middle between the doors, blocking the entry-way to the rest of the car. He was too big to be standing in that space, but I suppose he felt that he could do whatever he wanted as he had a badge.

That the security company put as many as six guards at a time in a car (typically not during commuter times, as office workers could be expected to complain) suggests a proclivity toward and enabling blind-spot concerning excessiveness itself. At the very least, the employees don't care whether passengers feel uncomfortable as a result. Sometimes the excessiveness is so obvious on a rail platform that customers may stand at a distance until a train comes.

Four or five security employees were on this platform. 

Twice I witnessed around fourteen police and security employees enter a rail car to check tickets. In both instances, three or four passengers were taken to the platform to be surrounded by the police and security employees as the latter wrote municipal citations! Imagine if so much attention were directed to a motorist pulled over for speeding! In effect, the passengers were being treated as criminals likely to become violent. 
Tellingly, at least one supervisor of bus drivers at a bus-transfer hub in Tempe decided to have his new van's yellow lights flashing continuously, as if the default were to treat the routine as a constant state of emergency just because one might be possible. 

Even during daylight hours, on a Sunday when the hub was virtually empty, a supervisor still felt the need to have his flashers on!

The flashing yellow lights on top of the white van are barely visible, and yet presumably someone thought they were fitting. 

People who are not willing or able to perceive when they have gone too far should not be permitted to wield power over other people. 
The relationship between excessiveness and over-reaching is an interesting one. Perhaps the former connotes being oblivious while the latter stresses the underlying motive. In both of the cases of Orlando and Phoenix, the excessiveness in the over-reaching itself was of such an extent as to be utterly transparent to the naked eye. It is perhaps a easily overlooked truism that going beyond authorized authority is itself an over-reach.
Typically when an over-reach or excessiveness is treated as part of the legitimate status-quo, or societal default, the culprits eventually go so far that they come to be viewed as a problem. For example, the decision of Allied Security in Phoenix to have the ticket-checkers/security-guards wear police-color uniforms and even separate silver badges could eventually lead to the company being charged with intentionally impersonating police. 

One of six security employees (not the one who became aggressive concerning picture-taking of half of the car)  watching passengers (rather than checking tickets) on a routine basis rather than because of an incident suspected or in progress on one car of a light-rail train in Phoenix. The obvious police impersonation, with its (intended) implications of additional authority, is no accident. Even though the employee pictured here was not belligerent, she and another employee blocked the conduit between the two sides of the car (and thus were "front and center" for any general picture-shot).

I submit that the impersonation to look like police employees was geared to intimidating customers beyond that which a security guard as such could muster. On account of the low pay, minimal qualifications (a High School diploma), and the bad (hiring) management (as reported by former employees online), it should be no surprise that the attitude toward customers has been more like that of the local police to the citizens than customer service in a company. The allure of power taken can be too much, especially if that elixir is not ideally in a customer-service attitude.
In the Phoenix Public Library, the security employees also wore silver detachable badges, at least as of 2019.  

The security employees are so numerous that a patron could easily sense that the library's management had gone too far. That the security employees intermingle with the police stationed at the library renders the impersonation problem more of problem because patrons could more easily assume that the employees also have police powers. 

The policewoman is at the left-back, next to one of the security employees. 

That the police and security employees are constantly making the rounds passing by patrons who are reading or studying does not render the library a place conducive to studying. 

At the Tempe Public Library, armed security employees with badges stood at the entrance at least by 2019. A volunteer told me that a manager had insisted that the "Welcome" desk be relabeled "Security" just in case patrons miss the point even in seeing two armed guards in front. 

Those security guards, each having a gun and taser, also made rounds through areas where patrons were reading or studying, as the video below testifies. 

At one of the pot dispensaries in Phoenix, a security guard could be seen sitting at a close proximity to the customers on whom he was keeping a direct eye. I doubt it made any difference to him whether they felt uncomfortable with his excessiveness. To him, he may not even have been excessive. 

The security guard is seated on the right, positioned to face the three customers seated against the side wall. Was the guard worried that one of the customers would suddenly explode in reefer madness? Such over-blown assumptions, while ludicrous, have existed in Arizona even as marijuana was legal in some of the other States. 

In the television series, Downton Abbey, the Dowager Countess, played by Maggie Smith, remarks that power goes to the head of a common person like strong drink. She is referring to the village physician whom the British military put in charge of the military hospital during World War I at the Downton residence. If that could be said from her perspective of a physician, the hiring of (in many cases) inner-city youth to wear badges on trains can be expected to lead to a host of problems.  
The dynamic can be explained by appropriating Nietzsche’s philosophy in which some people are weak internally and so they cannot resist their instinctual urge to dominate even and especially the strong. The weak resent the strong for their self-confidence and surfeit of strength. Whereas the strong do not feel a need to use more power than necessary because they have more than enough strength anyway, the weak will stoop to even cruelty to exact even a bit of pleasure from the exercise of power externally; exerting power internally, as in mastering an intractable urge, requires more strength than the weak have.
If a hiring budget is inadequate to attract a certain maturity- and knowledge-level, then fine-tuning the hiring criteria will not be adequate. Unfortunately, if, as Nietzsche says, the weak cannot but be weak and the strong cannot but be strong, then training too can be expected to have limited usefulness. Organizational, governmental, and even societal accountability may have to be called on to supply the needed check on the power-overreaches. Unfortunately, in such a law-and-order culture as has existed in Arizona at least through the first two decades of the twenty-first century, security guards as well as the local police could be expected to get away with a lot. Even the state's major universities, including ASU and UA, were not immune from over-reaches by security guards given police status (a police department is reports to a city, rather than an organization), and yet students passively took it while the "academic" administrators compromised academic ways to make way for other values such as intimidation (i.e., of students). 

It was not uncommon, at least by 2019, for campus "police" to park their cars on a routine basis on sidewalks used by students to get from class to class. The assumption that they would not be concerned passing such a car belongs in a fantasy movie rather than on at an institution of higher learning (at least in principle). 

It was not uncommon for campus police to "patrol" in one place on an ongoing basis out in front where students walk. The obvious need to stick out carries with it a certain amount of ego and lack of concern for how the young students may be affected emotionally. Few, I submit, would feel that such a presence during a school day is necessary to feel safe. 

In fact, in addition to the campus police, ASU hires student security guards. The result is a sense of constantly being watched on that campus, which obviously must have had cameras too. 
Once while talking to two students representing a cause at a table, I noticed that a student security guard was taking his job too seriously, or was told to do so, by how he was so obviously watching us. I was reminded of the secret police of the Communist states in the last century. 

Notice how needlessly confrontational the security employee's posture is in this picture. 

To the extent that a local culture enables the over-reaches by casting a blind or even permissive eye, as in Arizona, the imposition of checks on authority are especially important. That Florida's authorities, in contrast, came out against the child-cop who tried to criminalize being a child suggests that not every state is as dire in this respect as is Arizona. 

1. A. Willingham, Artemis Moshtaghian, and Amir Vera, “A School Resource Officer Is Fired after Arresting Two 6-year-old Children,”, September 23, 2019 (accessed same day).

Friday, September 20, 2019

The U.S. Justice Department and Facebook: Secretly Mining Personal Information

Collusion between business and government has hardly been a rarity; the extent of secrecy regarding it , however, may be a surprise. Whereas business-government economic partnerships (as well as university-government partnerships) have typically been made public, the extent to which government uses businesses to get information on citizens has hardly been transparent. In spite of a U.S. federal law enacted in 2015, documents released in September of 2019 “show how far beyond Silicon Valley the practice extends—encompassing scores of banks, credit agencies, cellphone carriers and even universities.”[1] The documents, which cover 750 of the half-million subpoenas issued since 2001, reveal that more than 120 companies and other entities received subpoenas for information on customers, users, or students. F.B.I. could lawfully “scoop up a variety of information, including usernames, locations, IP addresses and records of purchases” without a judge’s approval.[2] A gag order keeps the businesses from divulging even the receipt of a subpoena. So much secrecy accompanying so much power is, I submit, dangerous to a republic. In fact, the subtle effects on citizens in the public square can easily be overlooked even if the negative impact on freedom is serious.
The documents reveal that the credit agencies received a large number of subpoenas, as did financial institutions like Bank of America. Universities including Kansas State University and cellular providers including AT&T and Verizon, as well as tech companies like Google and Facebook also received subpoenas. The public was kept in the dark, due to “several large loopholes” enabling the U.S. Justice Department to refuse even to review “a large swath” of gag orders.[3] Loopholes have been a common practice in legislation impacting business, given the power of large businesses or industries to influence lawmakers via large campaign contributions. I submit that the loopholes enabling secrecy on the subpoenas are even worse for a republic’s viability because of the extent of governmental power that is possible from mining private data on citizens. The potential uses—again in the dark—go well beyond reducing or preventing crime.
Political uses, for example, should not be discounted. Even as Facebook’s CEO, Mark Zuckerberg, was assuring users that they had control over what data is shared, the company’s COO had devised a business model that would substantially raise Facebook’s revenue by secretly allowing third-party “app” companies access to user data. The practice enabled Cambridge Analytic to influence users politically without the users’ knowledge. In the case of the F.B.I. subpoenas, partisans in governmental roles could conceivable gain access to the data through political pressure (e.g., from Congress or the White House).
Moreover, I submit that a government with a lot of information on citizens is totalitarian with respect to information, and such a near-totality can easily breed a totalitarian state in the sense of control over citizens. They in term could be expected to increasingly fear sharing personal data with businesses. In 2018, for instance, I tried out Facebook. After just weeks with an account, I was surprised when the company demanded that I send a photo in which my face is recognizable. I had read that the company had been working on facial recognition technology, and the explicit demand for a recognizable face seemed strange to me. I also knew that Facebook regularly shared user information with third-parties, whether business or governmental in nature. I had nothing to hide, but I did not like feeling invasiveness even in the demand itself. So I experimented by taking a picture on a public sidewalk of a poor person not likely to have an account. Facebook deleted my account without explanation. I would have deleted the account anyway rather than use a fake picture. I wanted to see whether Facebook would use its facial-recognition technology to assess the picture. Either the person whom I photographed had an account or Facebook already had access from an external entity (such as my web-site) of my face. Even just the use of secret software to assess the photo I had submitted struck me as excessive, and I would not have been surprised to discover that Facebook had access to more personal information that what I had shared on my account. Facebook itself could be said to be a private totalitarian state. Given the compromised ethics in the company’s brief history, I felt uncomfortable with Facebook having any of my personal information and, moreover, concluded that such a company with a totalitarian approach to information as a means at the very least of raising revenue is major problem. Sadly, given the susceptibility of the Congress and White House to political influence from large campaign-contributions,  the company’s wealth and thus political pull could keep a law from being enacted that would force Facebook to permanently remove all information pertaining to me at my written request. It would be interesting if any U.S. citizen could have access to any data collected by the F.B.I. from businesses and other external entities unless deemed classified by a judge in the Judiciary. The purpose would obviously not be to help criminals.
With personal data being provided on “social networks,” as well as to other companies, banks, phone companies, and internet providers (including universities), and with the U.S. Government having unlimited access to that information, a person could be expected to feel that he or she has a contracted personal space. Even in one’s home, if a cell phone or computer is on (and even if it is off, I have read), the government may have a way to look in. Not even a personal conversation on a cell phone can any longer be regarded as private. The sphere of a sense of freedom of expression has likely come to be feel very restricted. I suspect that Americans have resisted this encroaching de facto sense of limitation on their personal freedom by being in the illusion that an actual phone call is private and that neither a government agency nor Facebook is keeping tabs on which sites are being visited or what is being said or done on a phone. Yet the diminishment of the sense of freedom, especially when a person is in public but also on private property, is real, which a decrease in the quality of life going along with the masked fear. The People can regard this constriction of freedom as being subject to the Will of the People rather than merely something that can evolve by means of vested interests inside and out of government. In other words, an electorate need not be passive.
Moreover, a government’s totalitarian approach to gaining information on the citizenry is contrary to the notion of a limited government wherein the People are the popular sovereign. A limited government is a key part of a republic, whereas a totalitarian government is vital to a dictatorship wherein the People have no power. Adding to the concern is a private company’s totalitarian approach to information-gathering, especially if such a company has lied to its users about it. Interestingly, the third-party commercial app makers can be considered the company’s clients, whereas the users supplying the data are suppliers. In other words, the users are not the customers. The suppliers are not paid in monetary terms; rather, Facebook pays those bills by allowing the suppliers to use the company’s platform—activity that increases the supply of information!
In supplying something, a supplier transfers a commodity to a buyer; the supplier cannot claim ownership or control of the commodity once it has been supplied. Obviously if the buyer lies to the supplier regarding the contract, the supplier has grounds to take back the commodity supplied. The suppliers did not agree (and thus were not “paid”) to allow Facebook to contract with Cambridge Analytic, a client, to use the commodity to manipulate the suppliers themselves. To be sure, ordinarily a supplier would not expect to have any say as to what a buyer does with the commodity, but Mark Zuckerberg made oral promises that the company’s user-suppliers would continue to have a veto over how Facebook uses the commodity, including with whom the said commodity is shared. Because the CEO lied, it is important for the suppliers to realize that what had begun as a social network for college students became a business model. Unfortunately, the typical user is not even aware that he or she is actually a supplier. 
Government use is of course different; it can legally be done secretly, thus without the knowledge of Facebook’s suppliers. So it becomes a political question of whether the People should allow their government, assuming it is a republic, to have access. Citizens would be wise to remember that absolute power corrupts absolutely, and that with great power comes a huge responsibility even if the powerful may tend to shrug off the responsibility as they seize even more power.

1. Jennifer Valentino-DeVries, “Secret F.B.I. Subpoenas Scoop Up Personal Data From Scores of Companies,” The New York Times, September 20, 2019.
2. Ibid.
3. Ibid.