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Saturday, September 13, 2014

Startup Development Against All Odds

Here are some (but not an exhaustive list of) useful tips for startup entrepreneurs as well as wannabe political candidates:

1.   Spend your own money first before asking for anyone else for money. It is common advice to hear from commentators that you need to have "skin in the game." Less common is a coherent explanation of the various reasons (and yes, there are several) why this is important.  These reasons go beyond money. One reason is to establish credibility with others. The foundation of that is that you need, at a minimum, to avoid insulting anyone you approach for financing. The second reason is that anyone with merit, or at least relatively good credit, should be able to scrape up $10,000 from personal savings and/or credit or cash advance from a credit card account. These days, it is ridiculous to claim you cannot get to $10,000 from that combination of sources. If you don't have that much money of your own to bankroll seed capital, you are not enough of a success to be in a position to expect anyone else to give you money, in which case you are lying to people, don't have your priorities straight or you simply don't have any merit. Don't accept any excuses on this front. Excuses are for losers and liars. Avoid both categories as if your life depends on it. 

This is why I ask potential clients for a cash retainer, even if they offer equity. It's not the money that's the issue. It's the demonstration of credibility.  

And if you're thinking of running for office and won't pay a cash retainer, you simply are either going to be a bad client or have no business being a candidate. I don't waste my time with people in this category. I do not represent losers.

Period. 

2.  Get used to "no." Most people will say no to you. But you need to get over the fear of being told "no." You simply won't ever hear "yes" if you are afraid of hearing "no." This is true in all sorts of endeavors. You may have a bad product or service, but if you are introspective enough you will discover the difference between a product/service failure and the general naysayers who are skeptics or just can't bear to see someone else get ahead of them. Revise your product/service if need be, or scrap it and start fresh, but keep plugging.

3. Remember who told you "no." Remember the people with merit, who have accomplished far more than you, who tell you this. Learn from them and never take their feedback as a personal affront. Be thankful for the feedback. Also be thankful for the response of indifference. Every reaction is a "tell" and you learn about these people, their personality, their character, from their reactions. But be far more worried about the people who will pretend to give you positive feedback, pretend to want to learn more about your idea, and all the time are trying to steal your idea. 

4. Learn from the past.  Life is a collection of experiences and observations. Looking backwards is useful if used for introspection, reflection and contemplation of what to do in the future. It is part of planning. Just don't repeat what you've done in the past if you failed, and expect a different result. That is the sign of a sure loser, someone who will be a never-will-be. Don't do it. 

Monday, September 8, 2014

Atlanta Hawks Owner Tries To Cash In On Fear of Racism

Maybe the way to get the best deal for an asset you want to dump is to be caught in a politically incorrect remark or e-mail, so some rich idiot who craves the adulation of the politically correct opinion leaders can get his fifteen minutes of so-called popularity.

The Atlanta Hawks' owner has self-reported an arguably racist e-mail as a claimed pretext for selling the team.

This is pure hogwash. No one worth his salt sells a valuable multi-million dollar asset because of threats or because of a racist comment.

Do you really believe that the owner woke up one day and realized, by George, I am a racist, I am no longer fit to be a sports team owner where a majority of the players are African-American?

No, the owner might sell an asset sensing its value might fall. There are a variety of factors that could be at work. Some of those factors probably led to the study that gave rise to the e-mail being cited as the excuse to sell. 

On the surface, the Hawks franchise has historically performed well at the box office, especially when compared to its crowds 20-30 years ago. See these stats through 2010 (not official) showing Hawks' crowds being on average their historical best ever in the last decade, despite the team's won-loss record not being too impressive and only one 50-win season in the last 15 years. Since the 2009-10 season when the team averaged 16,545 per home game (and won 53 games), average crowds have dropped by nearly 15 percent, but the team has also been mired in mediocrity. Despite making seven straight playoff appearances, crowds have declined. For the last season (2013-14) the Hawks were third from the bottom in average per game home attendance at 14,339. The prior two seasons, average per game attendance was slightly above 15,000 per game.  But attendance ranking among teams should mean nothing, not when there are disparities in the size of buildings, and further when the majority of team revenues come from national television contracts and licensing and sponsorships, even sales of luxury box seats, but not from actual grandstand ticket sales.

Ever think the Atlanta market itself might be the problem? Atlanta recently lost its pro hockey team, the Thrashers, which shared Philips Arena with the Hawks.

Or maybe Occam's Razor should be the guide. That is the principle that holds that the simplest explanation is probably the most accurate.

Yes, let's look at recent history as a guide. What about that buffoon out in Los Angeles, who owned the other NBA team in that metropolitan area?

A while back I speculated that the Los Angeles Clippers owner Donald Sterling was just using racism as a cover to boost the sale price of his somewhat underperforming basketball team by inducing someone to overpay in the chase for the approval of the politically correct applause corner. I thought then -- and do so now -- that Sterling executed a brilliant strategy. The team was sold --- for $2 billion. (Think there won't be buyer's remorse once the PC crowd's amen corner quiets down and moves to its next victim?)

Compare with the New Jersey Nets -- an even worse comparable, since they were in a horrible arena and generated little support, true passengers on the NBA bus, or fleas on the league dog -- who were bought for $300 million just five years ago and moved out of the Meadowlands swamp to a brand new arena in downtown Brooklyn.

What would the Nets be worth today?

Heck, hockey's New York Islanders -- another team with arena and revenue issues -- just were sold for nearly $500 million.

In short, I think this was all a ploy.

After all, the goal is to get the highest price. This is not a realm for the politically correct. It is a realm of the bottom line.

From this angle, this looks like an owner who may suspect that he has maximized the team's value as a financial enterprise, and is looking to cash out. Using the politically correct hysteria to induce a sale is just really good business sense. Bruce Levenson is not a candidate for sainthood. He just wants the best deal to get out. It is that simple.

Friday, September 5, 2014

On Immigration: The Duties of the Federal Government

A different twist on this topic.

(Note: If you think this is about amnesty, you are missing the point. Here's your update: President Obama now states he will hold off on amnesty until after the November midterm. But this column is about the underlying psychological and behavioral aspects of policymaking.)

Start with the belief by a good number, maybe a plurality if not a majority, that the American people and their federal government should be "more welcoming" to immigrants, legal or not.

The first associated principle is that the American people and the federal government are extensions of each other.  The second associated principle is that the American people and its federal government owe a duty to the excluded masses to tear down their barriers to free and open immigration.

Whether you agree with these principles or not, do we not need to address the central but hidden question: To whom do the American people owe a duty? (Said differently, who is entitled to the benefit, the entitlement, from the American people?)

If you argue that we owe a duty to all peoples of the world, does this not mean that the entitlement of our own people and specifically our children comes, well, second?

If we do not put the interests of our own families first, are we not creating a preference for others over our own families? And when we put our families' interests second -- a distant second, some argue -- can you identify anyone who would put them first?

Does this not hurt our families? Are our families, our children, effectively subordinated in priority? Effectively punished for being our family members?

I would contend that the duties of any nation's government run first to its own people. Other governments may abdicate those duties, may commit horrible atrocities, but exactly what event warrants -- never mind, compels -- the government of another nation to sacrifice or subordinate the interests of its own people to the interests of a foreign people?

Some open-borders advocates get very emotional on this issue. Their emotion betrays their real purpose. You see, this debate has a visceral edge that is not at all about immigration. 

It is about how they feel, their feelings of being recognized for being compassionate, or fair. (Mind you, this is worlds different from actually being compassionate, or fair, or whatever.) You see, in this society, feelings are exalted and approval by The People Who Matter is treasured. 

It is about their need to receive the approval of others, that they are indeed good people. It is self-esteem-seeking gone wild. Outerdirectedness run amok.

Yet aren't these sentiments in line with, or even require, an absolute abdication of responsibility to those to whom we as a people, and our federal government, owe a unique duty, and to those who have no one else but us upon which to rely?  Don't these sentiments produce (or require) an abandonment of our families who would be left alone while we galavant to save the children in a faraway land?

Don't these sentiments boil down to this?: "Abandon your own children, there are others more deserving than your own." 

Doesn't this boil down to the concept, the argument of taking anything we can get, we come first no matter what?

In light of the foregoing, aren't these demands for your compassion really exhortations for you to toss your children, your families aside in favor of, well, anyone else?

And if the "anyone else" here cannot readily be ascertained or identified, it does seem as if their identity is as insignificant as their actual condition, so helping people with a dubious need would appear to be quite dubious, no? Then that leads to the inference that the value here is not helping others who are argued to be less fortunate.

The real value is far more ominous, evil even: The value is in hurting your families, your children, for no apparent reason that the fact that they are your descendants. 

The proper answer to the crowd seeking to induce and exploit guilt is to assert that insistence on enforcement is both rational and a recognition that we must discharge our responsibilities to those to whom we owe a duty and who are relying on us and who have no one else on whom to rely. 

Surrender to guilt is both cowardice and narcissistic. Assertion of responsibility, especially in the face of disapproval and reprisal, is both courageous and responsible. 

Surrender to guilt is an act of thinking about oneself, about one's benefits in receiving the approval of others.

Assertion of responsibility is far different. It is an act of thinking -- and then doing -- on behalf of others.

You tell me which makes you more of a responsible American citizen.

Eric Dixon is a New York attorney, entrepreneur and political strategist who uses behavioral analysis in his work. Comments may be addressed to him at edixon@NYBusinessCounsel.com.



Thursday, September 4, 2014

The Lesson of Joan Rivers' Death

Joan Rivers has died at age 81, according to multiple news sources out of New York, and the family has confirmed this.

There is a lesson in her death. It was not, by my account, a natural passing. She died as a likely result of her body's inability to withstand the strain of general anesthesia. There may be a valid question as to the quality of her underlying health. 

(In fairness, there has been no autopsy, no release of private records, so this is reasoned speculation.  It is now reported by the Wall Street Journal that the Manhattan clinic at which her vocal cord surgery was performed will be investigated by the New York State Department of Health. There is also the possibility of a medical malpractice lawsuit.) 

One should never confuse "thinness" with health, not at any age. In fact, in earlier times and really not until recently with the modern concept equating thinness and health, being thin was really a synonym for being frail, and that was certainly not considered a sign of good health.  Of course, morbid obesity is a serious health risk.

Nonetheless, I suspect Joan Rivers would still be with us had she elected not to have this elective surgery.

The lesson here: No surgery is simple. Not when general anesthesia is involved.

Eric Dixon is neither a doctor nor a medical malpractice lawyer. Nothing here is intended to be legal advice or to serve as a legal opinion. This is an opinion piece from which no inferences should be drawn. Inquiries should be directed to edixon@NYBusinessCounsel.com.



Saturday, August 30, 2014

The Country Farm Ripoff: Don't Believe It's Homemade

Buyer beware. That supposedly homemade, authentic jelly you bought off the shelf at Grandma's Organic Farm might be as fake as the 62nd flavor variation of Pop Tarts. 

September brings the cultural shift from the beaches or mountain lakes to the country farms, as thoughts turn to leaves turning and the harvest of crops.  So when you start thinking about apple picking or pear picking or digging through dirt for potatoes, you might be at risk.

Risk of being ripped off!


For the cosmopolitan readers out there whose idea of "the country" is the Sheep Meadow of Central Park, the closest you might come to sensing the seasonal shift is the replacement of lemonade offerings with "pumpkin spice"-infused beverages. (I am waiting to see the first "pumpkin wine" or even worse, the first pumpkin-flavored scotch. Blasphemy!)

Country farms in the Northeast and mid-Atlantic are not the huge behemoths you see in the Great Plains, the South or even California. These outfits depend on multiple revenue streams to survive. One of those revenue streams is the production and sale of canned goods like jellies, jams, sauces, pie fillings, pies and other baked goods, and other items.

Many of these goods sound like they're natural, authentic, homemade, any title that will get you thinking of warm apple pie, warm apple cider and slathering your toast with weird jams.

Most of it is pure hogwash.  Here are some tips.

One: Consider the crops the farm actually grows before buying any canned goods. Look at the ingredients on any can or package. The most common ingredient you will see is white grape juice. Pumpkin butter doesn't contain much pumpkin, but a whole lot of white grape concentrate. And sugar. Are you at a white grape farm? I doubt it. Any grape of merit is one you will find at a grape orchard run by a winery. It goes into wine and you'll be lucky to get a bottle for under $10 at a winery. (More on the perils of canned goods later.) That white grape juice is an imported ingredient and highlights just one of the many flaws in anything for sale off the shelf. And what is the second most common ingredient? 

Corn syrup.

That's right, the same artificial food you can get in any conventional supermarket. The farm may say all it wants that its crops are "GMO-free" (that is, they aren't 'genetically modified organisms') but those canned or baked goods are coming from a factory.  Even if the label says "Abe's Farms," look closely at the label to see where it was produced or packaged. Stop dead in your tracks if you see a disclaimed that says, "Packaged specifically for Abe's Farms." That is a surefire sign of a private-label food distributor. Private label, by the way, means food that is produced and distributed by a no-name company which will slap on any farm's label for a license fee. This means that the "Abe's Farms" boysenberry syrup is likely the exact same product, made in the same mixing vat, as the syrup from "Uncle Jeb's Farm" 500 miles away. This goes for canned goods as well as baked goods. Authentic pies are made on the premises; one place I recommend is the Masker Orchards near Warwick, NY. (These people treat apples like they are a separate food group.) 

Common sense should be the order of the day. If you are at an apple orchard and you're buying peanut butter, you're being conned. So check the labels -- and check out how the hired help will stare you down when you do this. They know what they're selling. They know that anyone smart enough to look at the label in a country farm is not taking their claims of down-home-country-goodness at face value. Now, you know the trick and hopefully you'll save your money. 

Two: The closest you will get to crops where point of sale is closest to point of harvest is literally at that country farm. Authentic means buy it out of the farm store basket. Even better, buy it off the tree at the "pick your own" or "PYO" farms. But be warned: A tremendous amount of crops rot on the tree, and you will be advised to wash and eat whatever you pick very quickly. Mold and bacteria may be rotting the fruit or vegetables you pick even if it's still on the plant (that happens in nature, folks) and even one overnight can be enough for a mold explosion. 

Three: Many farms will grow a variety of crops. All sorts of crops grow in a temperate climate and "crop rotation" actually keeps the soil fresh, because different crops extract different nutrients from the soil. This variety is not cause for suspicion. However, those crops are most likely put out for direct sale at the farm store (if not sold to a wholesaler). It is very unlikely the crops from Abe's Farm end up in the packaged goods labelled "Abe's Farm." (More on that in a moment.) That is because the profit margin for crops is highest for harvested fruits and veggies sold directly to a wholesaler. The leftovers are left on the trees. Those crops are loss leaders and result in virtually no profit to the farm. This explains why some farms allow you to come to the fields and pick anything you want -- for free. They've already made their money. Getting you on the farm in mid-October is a way for them to get rid of their remaining inventory in the fields or in the farm store before they shut for the season. Finally, this explains why it isn't very likely the peaches you see this weekend on the peach trees will end up in the peach pies sold in the store in the same farm. 

Pretty produce commands a high price and goes straight to market. Ugly produce gets mashed up and becomes jelly, juice, anything that needs filler or flavor. 

The reality is that American farms are an endangered species as agriculture becomes more and more the domain of large corporations which can pass on efficiencies of scale to the consumer. The small farm cannot compete because they cannot sell their crops or products at the same price point. The consumer benefits from this process, by the way. It just means that it becomes harder to preserve the mythology of yesteryear that the "family farm" was the bedrock of American culture and wealth. 



Saturday, August 23, 2014

Bitcoin Startup Incubator Info

As a service to the emerging information technology industry, I post the following for readers:


New York City's premier Bitcoin and digital currency center, located at 40 Broad Street in the heart of Manhattan's Financial District, 100 feet from the NYSE. Please direct media inquiries to Tanya Shimon using tanya@nycbitcoincenter.com.
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FOR IMMEDIATE RELEASE:
Thursday, August 21, 2014
Bitcoin Center NYC
to begin accepting applications for Startup Incubator


New York - Bitcoin Center NYC,  the city's only brick-and-mortar institution dedicated to the further adoption of Bitcoin, announced today that it has created a vehicle to help fund, manage, and cultivate momentum for Bitcoin related startups. This vehicle will supply a workspace, tech-support, and event coordination for startups to build a prominent industry profile.

Please inquire further at bitcoinstartups@gmail.com or call (631)-887-4322


Bitcoin Center NYC will ensure that your startup is equipped to intercept the digital currency sphere and encourage profitability accordingly. Inquire today and start building your startup at New York City's home base for all things digital currency. 

                                           

bitcoinstartups@gmail.com




Bitcoin Center NYC
40 Broad Street
New York, NY 10004
For a map of Bitcoin Center NYC, click here.

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Friday, August 22, 2014

New York Bitlicense: Official Comment on Bitcoin Regulation

The following was submitted to the New York Department of Financial Services regarding its proposed regulations on Bitcoin and virtual currencies:


* * * * 
August 22, 2014

Ladies and Gentlemen:

I am a New York lawyer and advisor and bitcoin industry developer who works with several startup companies and entrepreneurs.  I submit herewith my initial comments on the proposed virtual currency regulations first released by the Department on July 24, 2014. These comments are not exhaustive, and further comments may be forthcoming. 

It is feared that New York State's proposed regulations on virtual currency (most commonly referred to as Bitcoin) may drive new virtual currency founders out of the state and soon make it hard for any New Yorker to buy or sell Bitcoin. These consequences may not be the stated intent of the proposed regulations, but they may be their effect. While some commentators have tried to dismiss these concerns as exaggerated or hysterical, a careful evaluation of the proposed regulations reveals three legitimate "macro" concerns which support such strong concerns and justify the alarm with which many industry participants have reacted to the regulations as first proposed. 

The first concern arises from the burdens on industry participants which do not have the great financial resources of major international financial institutions. There is the fear that this regulatory scheme will lead to eventual domination of an emerging field by large multinationals (which as licensed banks are exempt from the regulations), who may eventually end up hiring the very same regulators in the symbiotic revolving door between big business and big government.  There are concerns within the industry that the regulations are either designed to or likely will force smaller players out of the industry or at least out of the New York market in favor of established financial institutions, which not coincidentally are the same institutions most likely to be potential future employers of today's regulators, legislators, lobbyists and other "players" in the government.


Some of the proposed virtual currency regulations mirror existing state requirements for regular banks. It must be noted that your agency's own guidance for those considering forming a bank in the New York metropolitan area suggests that prospective banks have minimum capital of $50 million net of startup costs. (See http://www.dfs.ny.gov/banking/iac2b.htm).  The proposed regulations also impose requirements for written anti-money laundering, know-your-customer and cybersecurity policies as well as the requirements to report "suspicious" transactions. Bitcoin and virtual currency bitcoin businesses are largely internet dependent and as such their operations involve concerns about cybersecurity, both for the companies' internal operations and as regards the safety of any customer information or transaction information.  However, the burden of these requirements is likely to be absolutely draconian in expense (both in time and money) in relation to the size of business conducted. This raises serious questions as to whether the proposed regulations are appropriate for the virtual currency industry in general, and also whether they support the inference that the Department believes that companies should have capital and compliance abilities on the level of banks in order to engage in this industry within the State of New York. 

I urge the Department to carefully consider whose interests are protected by any regulatory scheme which limits their choices of service providers or forms of payment to merchants, and encourages oligopolies in the name of "consumer protection."


The second concern arises from the broad definition of a "New York person." As currently drafted, the regulations will require anyone in the business of buying and selling virtual currency to a  "New York person" to get a state-issued "bitlicense." (Note: I use that term for the ease of third parties who may read this comment and who commonly refer to the proposed regulations as imposing a "bitlicense.") However, the initial draft of the regulation has broadly defined this term. The unavoidable result of such broad scope is that the definition can be interpreted to reach all sorts of people and companies with minimal contact with the state. Residing part-time in New York, even for one day, could make that person subject to the rule as a customer, meaning businesses might not accept that person as a customer. This is no different from the practice in the heavily-regulated securities brokerage industry, where broker-dealers will only handle customer accounts for people living in certain states where the broker-dealer is licensed).  And of course, any trust, corporation or other entity with any connection to New York, even a satellite office, becomes subject to the regulation whether it is engaged in the exchange business or other specified "virtual currency business activity."  


One is entitled to candidly wonder whether the burden of these regulations makes it worth it for a bitcoin industry business to either stay in New York or accept business from "New York persons" which makes that business, no matter where it is located, subject to the New York regulation.  Of course, it bears mentioning that the largest international financial institutions which already comply with equivalent requirements would gain a substantial competitive advantage if not a virtual government-sanctioned oligopoly. 

There is a third "macro" concern arising from the regulation as proposed. As a "coin" or unit of virtual currency is really only a unit of data, units or bits of data are the same objects whether they are used as currency or as part of a database. The regulation as drafted fails to distinguish between the various uses of the Bitcoin technology and instead targets the technology itself.  As currently written, the regulation threatens to govern Bitcoin in any use including uses or applications having nothing to do with use as a currency or medium of exchange.  That is because Section 200.2(m) of the regulation defines "virtual currency" as:
"...any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology."
It seems the Department may have intended to regulate and limit the use of Bitcoin as a form of currency, but the regulation as presently proposed has a broader scope that covers Bitcoin as an object. If the regulation intends only to cover and regulate its use as a currency or form of medium of exchange, the regulation needs to be more narrowly drafted to clarify its true scope. I urge the Department to revise the regulation to clarify that the regulation would only cover the use of Bitcoin-based technologies as a currency or medium of exchange, but would not seek to regulate its use for other information technology applications. 

This clarification is of crucial importance given that the modern post-industrial economy is information-centric. Any regulation imposing a regulatory cost on the transfer or maintenance of information is virtually guaranteed to impose a serious competitive disadvantage on New York State; in fact, such a regulation would threaten New York City's very stature as a world center of international finance and commerce. 


It has been my experience in talking with virtual currency industry participants that an inference as to an overall hostility towards small business and in particular towards an innovative technology has been drawn. If the Department did not intend such an inference, it is incumbent upon the Department to clarify the revised regulations and redraft them with an eye towards not making New York State prohibitively expensive for all but the largest financial institutions to participate in this emerging industry.  As it stands now, the foreseeable consequence of the proposed regulations is that Bitcoin industry participants will move their operations to friendlier jurisdictions where they are able to compete on a fairer and more level playing field. However, another possible result is that some companies will refuse to do business with anyone situated in the State of New York. (Indeed, some companies have already threatened to take this approach.)

The regulations do not only cover doing business in New York. They affect anyone in the world doing business with someone living in New York State.  They affect all New York residents and threaten to reduce New Yorkers' choices as consumers in virtually any field of product or service.  They make New York State a frying pan, and New Yorkers hot potatoes, in an increasingly competitive and global world economy. 



There is the danger that regulators and elected officials have simply overvalued and overrated the attractiveness of the New York market to entrepreneurs in an age where the flow of information, capital and people is increasingly unrestrained, and where neighboring jurisdictions are often able to offer friendlier climates in which to run businesses, own property and raise families. This is a reality which New York's government leaders should confront if they wish this State, and New York City in particular, to retain its current status as an international leader. 

Sincerely

Eric Dixon, Esq.
Eric Dixon LLC
116 West 23rd Street 5th Floor
New York NY 10011
Ph. 917-696-2442
Email: EDixon@NYBusinessCounsel.com

Thursday, August 21, 2014

How One Man's Death By Orange Could Lead To Absurdity

There is the very real and very tragic news of the death of a man in South Africa by pelting with oranges.

In a world both prone to violence and now revealed to be increasingly narcissistic (the hey-look-at-me syndrome), one has to be on the watch for exaggerated responses.  The actual death is a tragedy. But the follow-up could be absurd. Might we see the following acts of political correctness?

10. Holder Justice Department announces anyone possessing an orange toy gun may be charged with two felonies: one for weapons possession, the second for a hate crime.

9. Syracuse University announces its collegiate sports clubs will no longer be called the "Orangemen."

8. Arts departments across the nation are instructed to never, ever let red and yellow be next to each other. The combination could be deadly.

7. Tropicana has suspended sales of orange juice while they consider how to rebrand their tangerine-citrusy mix of high fructose corn syrup and water.

6. New Jersey Governor Chris Christie is cutting all state funding to the towns of Orange, East Orange, South Orange and West Orange NJ until they switch their town names. North Orange cannot be found and is considered a fugitive from justice.

5. Public works departments around America are furiously rushing to buy day-glo green and other fluorescent colors to cover over all objects colored with the hue previously known as "orange."

4. Prisons around America now hire Joe Arpaio as a fashion consultant, announce prisoners will now be fitted in pink prison jumpsuits to reduce violence among inmates.

3. Showtime cancels "Orange Is The New Black" after community groups threaten protest.

2. Seton Hall University announces it will move its campus from South Orange, NJ to protect its students and encourage their continued growth. The university will relocate...to Three Mile Island.  We look forward to students growing...new fingers, toes and feet...during the fall semester.

And the number 1 protest of Orange is:

1. Joan Rivers wears orange sundress to Late Show With David Letterman; entire audience walks out in protest.

Obama Not To Blame For America Becoming Aristocratic

I promise much more will be written on this theme...but is Obama the first ARISTOCRATIC president this country has had?

Follow my reasoning. Consider that his Administration is not really discouraging class conflict but is enhancing class consciousness.  This supports the inference that -- but is not the same as -- his Administration or its policies are designed to stoke resentment of the "rich" in order to make the "rich" want to self-isolate.  Then you have to think how the "rich" are defined. Suspend rationality. In a world sanctifying envy on every level, being "rich" simply means you have something which someone else wants and thinks they're entitled to take from you.

Consider that in most societies, the "achiever" class ends up being clostered behind high fences, in policed communities or otherwise segregated. (How the achievers got their wealth, and the merits and demerits of feudalism, are related topics and useful for discussion, but not in a short blog post.) Think back to the classic medieval protections of the high castle walls and moats.  The "haves" recognized that their possessions, their status, even their literal physical safety, were at risk from the "commoners."

What if current policies are either designed to enhance this new class consciousness, this new (or a return to the old) awareness that relative wealth carried with it the penalty of being at risk from the class envy or raw rapaciousness of the street mob?

Could the effect (if not the objective) be to make the self-isolating achievers more dependent on government for their protection?

Could the effect or objective be to induce the "haves" to seek government protection or interference?

Could the effect be to have the "haves" realize their common class interest with the government class?

Could this all be about a reordering of American society into a two-tiered structure, one much more in line with classic human societal boundaries in which you have the "owners of the means of production" (whether that means the literal owners or the managerial class), and then you have...well...everyone else.

Could America be turning into the classic aristocracies of Europe (see why they're imitating European government policies?), and in such a new social utopia the power and influence of the meritocracy and aristocracy is actually magnified?

What if America, and the concept of a democratic, pluralistic, relatively equal (if illusory) society, is really the outlier in human history -- many argue that this is what makes America unique -- and is merely regressing to the norm?

Incidentally, Obama is not the cause of this mentality. His presidency, at most, is only a symptom. Blaming Obama is the biggest waste of time in addition to being a huge strategic blunder. It would be hilarious, if it wasn't so boring.

What do you think?

Wednesday, August 20, 2014

The Tea Party Amateur Hour

The next time you hear network or major media pundits citing the "Tea Party" as the reason for political gridlock, or whatever, consider the proof of the pudding in the Northeast. Like in New York State.

The biggest winner in New York State politics today is the State Republican Party and, to a lesser extent, the State Conservative Party.

How can this be, you ask? (Keep reading.) And what does this have to do with the Tea Party movement? (Think analytically. I will connect the dots.)

That's because the StopCommonCore petition has over 100,000 signatures and will likely give Rob Astorino a third ballot line in November.  In New York, voters can cross-endorse, so a candidate can be on multiple party ballot lines. The Republicans and Conservatives already endorsed Astorino and the third line supposedly will attract voters who just absolutely cannot bear to vote for Astorino when he is under the "Republican" ticket or the "Conservative" ticket.

As for incumbent Andrew Cuomo -- aka "Son of Sfacim" to you old Bob Grant radio fans -- he is on the Democratic ticket, barring a huge surprise from some leftist law professor aptly named Zephyr Teachout who has survived a court challenge to her claim of having been "domiciled" in the state for the required five years, and he is on the Working Families Party ticket (barring another primary upset from the same Teachout), and he is also going to be on the ballot line of the "Women's Equality Party."

How are the Republican and Conservative Parties winners? When Astorino trails by nearly 30 points (according to this morning's new Quinnipiac Poll results)?  When incumbent Andrew Cuomo has a favorable rating of nearly 60%? When Astorino is most surely a lost cause?

It's because the SCC petition was not about helping Rob Astorino in any way.

It's because the object, the goal, is...not to win.

It was about diverting activist -- that is, tea party -- energies away from a protest third party, which could then run candidates in any election across the state for the next four years with just a handful of signatures.  The protest movement could have thrown up its own candidate and qualified as a defined political party if the candidate got at least 50,000 votes. Instead, the Astorino-led pseudo party will in absolutely all likelihood decline to engage in the legal formalities needed after the general election to form a party even if it qualifies with the votes. That is because the ballot line is owned lock, stock and barrel by the Republican party establishment.

The result for the grass roots? It means that across all of New York State, protest candidates will have to collect hundreds or thousands of signatures, and survive court challenges, just to run in GOP primaries.  Had there been an independent ballot line which turned into a political party through the process I just described, any protest candidates would get on the general election ballot, in all manner of county and state legislative races, in any election in the state, by just getting five percent of the voters enrolled in this new party. As a new party, that means five percent of an extremely low number!  So a congressional candidate who otherwise would need 3,500 signatures could instead qualify with just a handful, literally just a few signatures.

This would have been a brilliant strategy. But leave it to the rank amateurs of the Tea Party -- that supposedly fearsome political force, if you listen to the pundits on MSNBC -- to kick this opportunity away.

The proof in the pudding is the committee on vacancies for the SCC petition, which is a who's who of state GOP consultants who are very experienced in, well, coming in second and trailing by substantial margins. This and other facts were ignored by many state "tea party" groups, of whom many are indeed run or controlled by so-called "antis" who really, secretly wish they were in the club but couldn't get through Pledge Week.

Anyone with half a brain could see this coming a mile away. This is why the most credible and legitimate tea party organizations in New York State, particularly ones in New York City and Long Island, stayed far away from this political Trojan Horse.

Even New Jersey governor Chris Christie, running the well-financed Republican Governors' Association, weighed in and knew enough to steer clear of a hopeless race.

The rest of the New York tea parties have been shown to be easily playable, a bunch of dupes, rubes and abject amateurs. Just in time to wear the colonial hats and be caricatures in funny costumes at the country fairs and Oktoberfests.

Sunday, August 17, 2014

Rick Perry's Indictment and Protecting The Public

Usually a Friday afternoon news dump is a way of releasing bad news and hiding it in plain sight, usually to avoid or reduce scrutiny.

Consider that the news of Texas Governor Rick Perry's indictment in Texas came down Friday afternoon.

Perry faces two felony charges of "abuse of official capacity" and "coercion of a public servant" by threatening to exercise his veto power over a bill to authorize funding for the Public Integrity Unit operating out of the office of the Travis County District Attorney unless the head of that office, Rosemary Lehmberg, resigned. Lehmberg was targeted for removal by Perry after her arrest for driving under the influence. 

The legalities of the indictment are too wide for immediate discussion here (and more facts need to be revealed, frankly). But some initial observations give serious concern. I start with the least troubling, and work up the ladder.

This type of case threatens to make Texas government less efficient (although government efficiency is often at odds with liberty). It is not a good precedent to have political decisions become criminalized. This suggests that the criminal code is vague, perhaps unconstitutionally vague. More troubling: Do Texas elected officials need to seek pre-clearance from the local prosecutor? Is the county prosecutor the de facto final word in Texas government? 

If the district attorney can indict any elected or appointed official for a disfavored political action or policy decision, you know who's really in charge. Putting partisanship aside, this cannot be good. Period.

But more importantly, this type of case weakens the legitimacy of the criminal justice system and the rule of law. The primary role of the justice system is to see that "justice is served," and that objective depends upon the public's respect for the system. (A case in point is provided by the widespread public protests of the Civil Rights Era.) When overtly political prosecutions are brought, the public's skepticism in fundamental, impartial justice is warranted and encouraged. Unfortunately, such cases also give cover to those who are serious lawbreakers, who would use arguments as to the illegitimacy of "the system" to excuse their own misconduct, avoid detection or responsibility or retaliate against legitimate authority. In all cases, society at large and the rule of law are weakened.

Bonafide criminal activity needs to be deterred before it occurs. Illegitimate or highly questionable prosecutions weaken the reputational cost imposed on suspected wrongdoers (which is the classic and often the most powerful penalty), and in so doing, reduce the cost of criminality. The punishment for wrongdoing, the societal disapproval, is reduced; the flip side is that bad behavior becomes less disapproved and more tolerable, even in polite and so-called law-abiding circles.

When legitimate crimes become viewed as partisan or as a cost of doing business, the power of disapproval is diminished or destroyed. The effect is to make real crime socially acceptable.

And when you give a ready moral cover of "injustice" or "partisanship" to prosecutions, the result is that you get much more dangerous crime.


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Saturday, August 16, 2014

Christie's Political Operation Revealed in Town Dossiers

Select documents released by the New Jersey Governor's Office, Office of Intergovernmental Affairs contain election and political party affiliation data for individual towns in the state, suggesting that the Office of Governor Chris Christie was compiling data which has an unambiguously and principally political nature and purpose.  These documents, being compiled, maintained and possessed by the Office of the Governor, are clearly "public documents" and thus subject to review by the public.

Look at the page header in the pictures below. Then ask the simple questions:

Why is the Office of the Governor compiling these documents?

Why is the Office of the Governor -- on the taxpayer's dime -- tracking election results?

As for the third picture, what exactly is the public interest, the nonpartisan interest, in the Office of the Governor tracking vote totals for candidates divided by party?

Why is the Office of the Governor tracking voter turnout?





These documents were released pursuant to a preliminary agreement and a court order in ongoing litigation involving my client, who has sued the Governor's Office under the New Jersey Open Public Records Act to get these documents.  (See the press release I posted in March 2014.)  The documents were originally requested in January 2014. (For more of my other commentary on this story, see here and here.)

The vast majority of responsive documents are still not being released. The litigation is ongoing. The docket number for the case of Serringer v. Office of the Governor is MER-L-00563-14.

I argue that the release of even a tiny fraction of public documents acts as a State admission that the requested documents are disclosable under OPRA as public documents.  The question now remains as to why the remainder -- which can be substantial -- are being kept from public view.

The content of the pages pictured above may give a clue as to the answer.

More to come....





Friday, August 15, 2014

Bridgegate's MIllion-Dollar Legal Fee Bonanza

Fridays are always a good time for a news dump.

Particularly in the dog days of summer.  So an August Friday is actually time to get another pot of coffee.

The Record of Hackensack reported late Friday that the Gibson, Dunn law firm has now billed the State of New Jersey -- that means the taxpayers of New Jersey -- over $6.5 million for its work in connection with the investigation of the Bridgegate matter and ancillary matters affecting Gibson, Dunn's official client, which is the Office of the Governor of the State of New Jersey.

I have previously been very critical of Gibson, Dunn's work in connection with its initial investigative report (released in March 2014 and available here).  The outsized expense of the legal bills should only raise scrutiny as to the quality of the work.


Hello Israel

I must have a new fan club out there. Thanks for the 1,800 pageviews in the last hour. Amazing.


Monday, August 11, 2014

The Successful Get Targeted With Envy: Why Bieber Despises His Fans

The premise of this question is going to shock most people, not only followers and commentators on American popular culture (okay, so the young man is Canadian) but most certainly his fans.

But what if Bieber -- and other pop stars whose "misbehavior" gets chronicled by the paparazzi and tabloids, never mind on the "look at me now" social media -- has a point?

Is it impossible to be both successful...an "achiever" in life...and to keep your friends and stay popular?

And in the wake of the untimely death (reported by at least one news outlet to have been a suicide) of legendary actor-comedian Robin Williams, this quandary takes new life, new focus.

What am I getting at? Read more...follow the link to the Financial Policy Council think tank's website.

Sunday, July 27, 2014

Honduras President Blames U.S. For Honduras' Problems

The emerging Southwest border crisis is spawning some curious and ill-advised comments from foreign leaders who are blaming the United States for the stream of humanity going, well, towards the United States.

Perhaps the attitude of these foreign leaders, which is also surely on display in their home countries, is what is prompting people to flee.  And naturally, people seek entry to lands where conditions are more hospitable (they hope) than the land they have fled from.

But immigrants are not always poor. Throughout history, and particularly before technological advances in the 20th Century democratized transportation, overseas or continental travel was the domain, not of the poor, but of the wealthy.

The vast migrations of past centuries which populated the Western Hemisphere consisted mostly of people who could afford the trip. The poorest were left behind. Religious exile did not exempt you from this rule; you still had to be able to afford passage. Conditions being what they were, many immigrants sold all they had in order to make the trip -- contributing to the American lore of the impoverished immigrant coming through Ellis Island. They were poor after the trip, not before.

Nothing drives out the successful, ambitious and hardworking from countries -- and even from families -- than the envy, resentment and greed personified in the sentiment, "Your Problem Is Our Problem."  Consider the audacity of the President of Honduras, a nation unwilling to control itself yet declaring that the United States is not "doing its part" to combat the problems of, well, Honduras.

Never mind that the United States does more to combat the use, transport and production of illegal drugs than any other country on the planet.

Never mind that the United States sent billions to that nation after Hurricane Mitch struck Honduras in 1998.

Never mind...oh, never mind.

But consider who is expressing these sentiments.

Honduran-American entrepreneurs who immigrated to this country, that's who. 


Thursday, July 24, 2014

Playing To Win: Christie, RGA Money and the "Lost Cause" in New York?

THE RGA, CHRISTIE AND 2016. 

New York Republicans are (supposedly) up in arms over Republican Governors' Association head (and New Jersey Governor) Chris Christie all but declaring the gubernatorial campaign of New York Republican Rob Astorino a "lost cause." 

Careful: Read the quotes in press accounts carefully. Christie did not say Astorino's campaign was a lost cause. One can infer that was his intent. Christie is a shrewd man, much shrewder than most. But even the village idiot knows that a candidate trailing by 30 points in the polls in a deep blue state that historically has gone Democratic in presidential elections by at least double digits and sometimes as much as 20 points is unlikely to win. 

But the reality is this -- New York is a lost cause...for Christie...in the 2016 presidential election. That is the election that matters. This is all about 2016!

New York State will go for the Democratic candidate (and it might even be carpetbagger-turned-favorite-daughter Hillary Clinton) in 2016 by at least ten points, and possibly as much as 30 if it's Hillary versus any "red state" conservative (i.e., not a Northeastern moderate like Christie, or Mitt Romney). 

Why on earth would Christie waste one dime of other people's money on a state where he has nothing to gain? 

Why? Because that's what he's "supposed to do"?

That is the naive perspective. 

Frankly, that's the amateur perspective.

Candidates need to earn that support.  

The smart underdog asks for RGA support, not to help his own campaign, but as part of a larger, long-term strategy for making the party competitive in a deep blue state. 

In other words, the smart underdog appeals to the rational selfishness of the decisionmaker.

The smart underdog asks for support by saying, in essence, "It's not about me. It's about you. This is how I can help you." And that, by the way, might make perfect sense.

Chris Christie is doing the smart thing (for himself) by spending that capital in states where he can build himself up in the fight for the 2016 nomination which will be in full gear after the midterms. Give Christie full marks for having the foresight years ago to angle for the RGA chairmanship. History favors those with the most foresight.

Eric Dixon is a New York and New Jersey based lawyer and political strategist with no connection to any of the candidates or public officials mentioned here. 

Thursday, July 17, 2014

New York Attacks Bitcoin: Episode One

New York State's new proposed regulations on virtual currency (e.g., Bitcoin) may drive new virtual currency founders out of the state and soon make it hard for any New Yorker to buy or sell Bitcoin.  (Bitcoin accounts for approximately at least 90% of the trading volume of all virtual currencies worldwide.)

In the name of consumer protection, one wonders if this is just another regulation that will lead to eventual domination of an emerging field by large multinationals (which as licensed banks are exempt from the regulations), who may eventually end up hiring the very same regulators in the symbiotic revolving door between big business and big government.

The regulations are proposed and have not even been officially issued by the state's Department of Banking and Finance. Official date of issuance is July 24, 2014, and that starts an official 45-day comment period.

The major impact of the "bitlicense" regulations will require anyone in the business of buying and selling virtual currency to a  "New York person" to get a state-issued bitlicense. Some of the regulations largely mirror the state requirements for regular banks. However, as bitcoin businesses are on the internet, there is the concern about cybersecurity. The "bitlicense regulations" do not only cover cryptocurrency exchanges but also impose some requirements which for startups and small businesses are absolutely draconian in expense (both in time and money) in relation to the size of business conducted. These requirements include the institution of written anti-money laundering, know-your-customer and cybersecurity policies as well as the requirements to report "suspicious" transactions. These are serious undertakings.

For sake of comparison, these are the requirements otherwise imposed on commercial banks.  This isn't a problem for established banks, which as I mentioned before, will be exempt from the regulation. To put things in perspective, if you want to start a commercial bank in New York, the state actually advises that new banks doing business in Metropolitan New York City have at least $50 million in net capital.

As a lawyer who does regulatory interpretation, I have to candidly wonder whether the burden of these regulations makes it worth it for a bitcoin business to either stay in New York or accept business from "New York persons" which makes that business, no matter where it is located, subject to the New York regulation.

Perhaps most critical is the question: What is a "New York person" under the regulation?  It is any person or entity who "resides in" or "is located" or "has a place of business" or "conducting business" in New York State. 

Now, what does it mean to "reside in" the state?

The New York tax regulations specify that all your income is subject to state tax if you live in the state more than half the year. Hmmmm. Where is that definition here? (Answer: It's not here.)  What does that mean? I interpret it to mean -- and this deserves official clarification -- that residing at all in New York makes you a New York person.  Any part-time residence (even if lived in far less than 183 days) may make you subject to the regulation as a customer (and businesses not licensed can't touch you, as I explain below). I do not interpret this as the New York tax resident standard, whereby part-time residents are taxed full-time if they are in the state more than 182 days out of the year. This is the regulation forcing wealthy people to count their days, diary their entire calendar for the year and even assiduously flee the state before the stroke of midnight or arrange for flights arriving after the stroke of midnight to save a few days. I interpret this as the "tag" rule: any quasi-permanent contact with New York makes you subject to the new rules and you could feel the impacts I outline below.  Residing part-time in New York could make you subject to the rule as a customer, meaning businesses might not touch you (just as some stock brokerages will only handle customer accounts for people living in certain states where they are licensed).  And of course, any trust, corporation or other entity with any connection to New York, even a satellite office, becomes subject to the regulation whether it is engaged in the exchange business or other specified "virtual currency business activity."

The initial reaction to this regulation -- which has only been proposed and is likely to be sharply contested -- is that it may drive some bitcoin vendors out of the state, for the simple reason that the rest of the world and certainly neighboring states have no such requirement.  

There is another possibility: big institutions ("Big Finance") will either be exempt (which they would be if they already are licensed by the state ("chartered") to conduct exchange services, or they will get the licenses. Generally, larger institutions are able to absorb the formidable costs of regulation and applying for licenses. This may soon transform Bitcoin into the domain -- at least within New York -- of Big Finance, but smaller competitors will have the option of moving to competition-friendly or regulation-free states or countries.  (I expect to hear plenty of conspiracy theorists saying these regulations are designed to lock down the Bitcoin sector for Big Finance.)

Another danger: As a "coin" or unit of virtual currency is really just a bit, that is, a unit of data, and a bit used as a coin and a bit used for storing information is really just the same thing with the nature of the item being really no different, then this leads to draw one of two possible conclusions: One, the regulation means (but fails so far) to regulate Bitcoin on the basis of how it is used and not what it is, or two, the regulation really does mean to regulate Bitcoin in its form as units of data. (Admittedly, there is a third possibility: the regulation was just poorly drafted. I don't think that is likely.)

If the regulation is truly intended to reach the latter interpretation, then Bitcoin cannot be used or exchanged in New York except for consumer-to-business merchant commerce.  Any other uses of Bitcoin or other blockchain based technologies are subject to the act's requirements. This means that Bitcoin cannot be used as a database for any exchange or storage of information, because, well, information has value. Especially and particularly in our information society. That is because Section 200.2(m) of the regulation defines "virtual currency" as:
"...any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology."
What is the impact on regular New Yorkers? I think New Yorkers will eventually have no problem buying Bitcoin; they may have less competition and prices (spreads) may be cartel-like in their uniformity, they may not particularly like doing business with any big institution and the character of the still-early-stage Bitcoin community in New York may transform. (Or flee.)

Think of it as the mom-and-pop stand-alone coffee shop suddenly being surrounded and undercut on price, hours and ancillary services by a certain international coffee chain. 

That is the initial take on the impact on the still very small Bitcoin industry. But what about the impact on regular people who just want to buy and invest in Bitcoin?

That, my friends, is the major problem: The regulations do not only cover doing business in New York. They affect anyone in the world doing business with someone living in New York State.  They make New Yorkers a hot potato. The regulations don't just discourage Bitcoin startups and prompt them to leave for an unregulated (for now) climate. They essentially prevent those startups, no matter where located, from taking New Yorkers' bitcoin business (but the large institutions can come right in, and that may be exactly what is intended).

A different problem with the regulations is the requirement that anyone "controlling, administering or issuing" a virtual currency has to get a state license ("bitlicense").  This is sure to drive any virtual currency innovators out of New York. Want to develop an alternative virtual currency? Why bother with the New York regulations when most other states -- or countries -- are not even looking at regulating virtual currency?

The indirect but foreseeable consequence of the regulations is that restricting or discouraging Bitcoin through regulation will reduce the amount of any virtual currency floating around in commerce. This will affect (adversely, because the effect is never net positive!) any New York merchants whose business depends in any substantial part on Bitcoin.

As for myself -- Eric Dixon the lawyer, Eric Dixon LLC -- I am admitted to practice in New Jersey as well as New York, my 20 years of experience (I am a 1994 graduate of Yale Law School) mean I can waive into most states without taking their bar exams, and I would likely be welcomed to practice by most countries in the world. This may affect where I do business.  The impact on you -- if you need to move, I can move with you.  And if you want me to handle the regulations, we can certainly talk.  The regulations do not kill you if you are in New York, but you need to know what you are facing in order to have access to the New York market.  Email me at edixon@NYBusinessCounsel.com. 




Tuesday, July 8, 2014

Freudian Take On Americans' Reaction to the Immigration Crisis

The American people owe an apology to every legal immigrant and visa holder, and particularly to those who leave this country dutifully when their work authorizations or student or tourist visas expire. They see first hand that their obedience to the law is rewarded with an exit stamp, while others exploit the narcissism of the American people who are both obsessed with being recognized by others as compassionate and terrified of having anyone impute the vilest of motives to them for daring to object. This emotion is not compassion, for the root goal is not to help anyone. The true goal is to be acknowledged as being helpful. Actual humanitarian relief is but a collateral consequence. Th e "compassion" is a false flag, a fraud, and is nothing to commend. This is selfishness as well as an attack by one group of people who have not earned the right to judge, to audaciously assert their moral superiority over anyone who objects. This abdication of the core governmental function to secure the homeland border will only end, not with a border fence, but with the American people regaining their boldness.  Until then, we are a nation of spoiled children.