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Tuesday, September 30, 2014

Blame The Gatekeeper, Shoot the Messenger: Is SEC Wrong?

Recent developments out of the Securities and Exchange Commission indicate that agency is continuing its years-long trend of making selected corporate officers the intended scapegoats for management malfeasance, wrongdoing or just plain stock price underperformance.

In so doing, the SEC persists in its efforts to hold someone accountable. As in someone, anyone, anyone will do. The problem is that the SEC may not be holding the right people accountable. The bigger worry is that the SEC may not even care if it accuses or punishes the wrong people, if the goal is just to meet the low bar of holding someone accountable when it matters not whether you get the right person.

Years ago I spotted the apparent inequity in SEC enforcement policies which sought to hold two classes of corporate officers -- in-house counsel and auditors/accountants -- particularly liable for the misdeeds of others while simultaneously disqualifying these same "suspect classes" or "disfavored professions" from eligibility for the SEC's then-new whistleblower awards for detecting and reporting corporate misbehavior.

The smugly condescending (if not contemptuous) Commission attitude was that such professionals needed to "do their jobs."  Underlying that sentiment is the incorrect belief that lawyers and accountants are best positioned to uncover fraud.

Here is what is correct: Lawyers and accountants are best trained or most experienced to detect wrongdoing. But wait for the critical assumption: The assumption is that access to the needed information is equal.

This is where regulators, prosecutors and judges get it flat wrong. Lawyers and accountants are not privy to wrongdoing, not because they are "in on the secret." It's because they are both most able to detect wrongdoing and personally inclined to report it. And guess what? It's because of those factors that wrongdoers conceal their misdeeds from precisely these two categories of workers! Brilliant!

This approach is wrong on many levels and will prove to be counterproductive. The biggest problem is the encouragement of a highly risk-averse approach by lawyers and accountants who will rightfully fear how their work is judged in a de facto strict liability environment where they can fear being held liable, not only for the wrongdoing of others, but wrongdoing for which their liability will arise from their inability to detect precisely the misconduct which others conceal from them. This is a thankless and perhaps impossible job, and is also likely to be unrewarded and unrecognized. 

Another implicit message, surely not lost on lawyers and accountants, is that their non-professional colleagues have a green light to snoop around, free from the burdens of the actual responsibilities of detection, and blow the whistle. Perhaps it is even intended that other corporate workers will get to pursue the potential whistleblower rewards, because they are not doing their own jobs.

From the outside, it is crucial to see that regulators -- often overworked and inexperienced -- may be trying to show that they are "doing their own jobs" by being able to demonstrate that they are implementing and enforcing a system to hold people accountable.

It is also crucial for observers, lawyers and investors to see that the appearance of doing one's job is never the same as actual performance, nor it is the same as effectiveness in stopping fraud.

Maybe if the government really cared about stopping the next Enron or Madoff before investors lost their life savings, they would care about positively incentivizing lawyers and accountants instead of demonizing them solely on the basis of their professional achievement.

Thursday, September 25, 2014

Why Republicans Lose Latinos

There is more to getting the Latino vote than watching Sofia Vergara in an episode of "Modern Family." That's the lesson from a shockingly ignorant e-mail sent out by a Republican Senate candidate in an urbane blue state.

This latest Republican candidate to try to think like a Latino, and thereby successfully showing a profound ignorance of (and appalling condescension towards) all things "Latino," is the party's sacrificial lamb candidate for United States Senate in New Jersey, Jeff Bell. You may not have heard of Bell, but you've heard of his opponent, the formerly-all-over-the-Twitterverse, former Newark mayor Cory Booker.

The common Republican inside-the-Beltway establishment wisdom is that Republicans need to be sensitive on certain "Latino" issues, or else they will never get enough Latino votes to ever win nationally. Ever.

Democrats hear or read this, and start laughing, chortling, and falling off their chairs. 

Yesterday, Bell sent around a fundraising appeal centering on how Republicans need to stop being "unwelcoming" to Latinos in order to gain their votes. It is a hilarious piece that illustrates how an old white man who has spent too much time in the Beltway and probably absolutely no time with any conservative Latinos thinks he will appeal to Latinos who are legitimate voters. 

Democrats find this funny, because it gives them a living, breathing caricature of their ideal political foil: an old, rich, out-of-touch white guy as to whom they can imply the pejorative adjectives "racist" and "elitist" and "country club." 

Not so hilarious -- except for Democrats already nursing bruises and cramps from laughing too hard -- is Bell's attack on Republican President Ronald Reagan's 1986 immigration reform bill.  For many conservatives nationally, attacking Reagan is tantamount to heresy. For New Jersey Republicans, attacking Reagan, attacking your own party (e.g., the state party has not adopted the Republican Party's national platform) and having your state party leader (aka The Next President of the United States) holding hands with the House Majority Leader are all required actions to demonstrate the requisite Democratic voters.

But there's more. The ignorance is profound and not limited to Bell. As a Latino professional conservative myself, one with significant civil liberties and libertarian tendencies (that's the lawyer in me), I deconstruct the e-mail Bell's campaign sent out below.  The e-mail's verbiage is indented, with my commentary following.

Ronald Reagan once said, "Latinos are Republicans, they just don't know it yet." 

This ignores the huge cultural differences between peoples with different nations of origin, and by extension makes the unjustified assumption that Latin American colonization was the same as North American colonization. Mexicans are not the same as Cubans. Costa Ricans are not the same as, well, Puerto Ricans (who have absolutely no dog in the immigration issue yet are treated as if they should).  For most "Latinos" there is no pan-Latino identity whatsoever. That is a myth held by dumb gringos and gringas who succeed at showing off their ignorance every time they try to show off how smart they are.  

At most, there is a shared ancestral tongue stemming from the common nation, Spain, which colonized most of Latin America (the exceptions being the Portuguese whose influence in Brazil remains to this day, Haiti, a few Caribbean islands like Aruba, Belize, Suriname and Guyana) and a common predominant religious denomination in the Roman Catholic Church. But this ignores the formidable indigenous populations of Latin America which -- unlike the American Indian -- readily absorbed the colonials. Latin American colonization was not like that of the Thirteen Colonies. While Spanish architecture, language and civil and legal systems were established throughout Latin America, the population's large native component meant that some indigenous customs continued and became integrated into what developed into national cultures. Those cultures, however, should not be assumed to have been dominated by the Western (i.e., Western European / North American) cultural values, largely parallel with the Judeo-Christian religious culture which underpinned Western European societies of the colonial and industrial eras.  

In fact, in much of academia and increasingly among Latino activists, the Spanish/European/Western influences on culture, economics and values are rejected in an attempt to downplay -- if not erase altogether -- the influence of the European imperialist conquistadors. I theorize this rejection is demonstrated in nothing less than the evolving replacement of the adjective "Hispanic" originating from the name of the predominant nation of origin, Spain, with its European-rejecting replacement, "Latino." 

Although Western culture may dominate the establishment of the Latin American colonies and young nations of the 19th Century, it is a stretch to say this dominance extended to the general population still influenced by native tribal culture.  Hence, using the largely Catholic populations of Latin America as evidence suggesting that most Latin American immigrants have "traditional values" is only true if you recognize the true traditional values, which are not the same values we think of north of the Mexican border.

The Roman Catholic Church and other Christian denominations predominate in Latin America, and within those faiths a socialist theology has a heavy influence. The result is two-fold: the great majority of uneducated, unskilled migrants have become acclimated to a moral rationale for their dependence and sense of entitlement, while the relatively wealthy minority receives an often-explicit message that they must atone for their achievement. In addition, while obedience is the order of the day in many Latin American cultures and can be confused for the value of piety often sought by the more religious, in nearly all Latin American societies the governments have been viewed as autocratic, oligarchic, somewhat despotic and often corrupt. One consequence is that government authority can be seen as deriving from fear rather than from respect of the mutual consent of the governed. From this consequence it often follows that declining repression results not in the flourishing of liberty and individual rights, but in an emboldened disrespect for authority of all kinds. Newcomers bringing such attitudes to this country can hardly be expected to see the value in being good citizens instead of opportunistic scavengers.

The accepted wisdom that Latinos are more inclined to be "conservatives" and have "traditional values" is based on the fallacy that the exception proves the rule.  There are exceptions who possess traits and values demonstrated by the successful within each Latino national culture (such as it is), but within each such culture, the successful are distinct minorities! Those traits, those values, they are held by only a small portion of that subgroup. But in politics, it is not about the exceptions. Politics and warfare are the ultimate numbers games. Numbers win. And among the larger population the predominant values and practices are those of dependence, irresponsibility and entitlement-seeking. This is why many mainland-born Puerto Ricans, with all the advantages of United States birthright citizenship since World War I, remain mired in poverty and often lag newcomers on educational metrics, three generations after the 1950's "Operation Bootstrap" encouraged thousands of Puerto Rican islanders to migrate to the mainland.
More Jeff Bell: "Maybe that's politically incorrect to repeat in 2014. But I do agree with the premise behind [Reagan's] assertion: if the Republican Party makes the case to them, Hispanics will vote GOP." 
Here's the problem. Many Latin American countries are run by heavy welfare state, socialist governments which deliberately induce dependence to foster control.  There is no reason, none whatsoever, for naturalized Latin Americans accustomed to socialist government programs in their countries of origin to come here and seek to work for what they used to get for free over there.  Those countries produce migrants who overwhelmingly seek out government assistance, are uneducated and unskilled. There are exceptions in every migrant group, but remember: The exceptions never prove the rule. 
Bell: "But they do have a problem now. Our party has been unwelcoming. Republican members in Congress have refused to consider a path to legalization for those who came here illegally over the years or an expanded guest worker program that is open to low-skilled workers, not just Ph.D.'s. President Reagan tried to solve this problem in 1986, but the law he signed that year left out access for immigrants who want to come here and work temporarily without becoming citizens. It's led to the crisis we have today of millions of people who came from Mexico and elsewhere and simply stayed because neither the law -- which actually makes it a misdemeanor -- nor our border security encourage people to come here the right way."
The last sentence alone, read literally, declares that it is our border security which is the problem, not the preponderance nor encouragement of illegal immigration itself.  It logically follows that more border security equals more of a problem, so less border security is desired. Bell may not say it, but I will: Most Americans will read and hear this and think of the one dreaded word: Amnesty.

And most potential Republican voters in New Jersey may stay home on election day for that one reason. After all, concern about one issue, by so-called "single issue" voters, may be as likely to motivate people to vote as it is likely to induce them to stay home.
Bell: "I like Rush Limbaugh and have been interviewed by him on other topics, but I have to say that I fundamentally disagree with his assertion that those who immigrate here from Mexico are registered Democrats in waiting. Hispanics in the U.S. have the highest rate of business creation among all ethnic groups -- and more than double the national rate." 

This statement shows how statistics, even if true, can be deceptive. Let us just assume that this statement is literally true. Even so, it does not prove that Latinos are a fertile, undeveloped Republican voting bloc. It means only that there is a small segment of Latinos, the segment that achieves, that is entrepreneurial, to which Republicans may have added appeal.  

Again, politics is a numbers game. A candidate incompetent to realize that is, very simply, an incompetent candidate.

Entrepreneurs, no matter the culture, are the distinct minority. But it is important to understand why that is the case. Latino entrepreneurs migrating to America are not only seeking opportunity; in most cases they are fleeing oppressive cultures in which their achievement justifies their target status. Latino entrepreneurs, no matter their background, know instinctively that their success, as modest as it may be, is not because of their culture. Rather, it is often in spite of their culture. These are cultures in which the "wealthy" need bodyguards and often must bribe their way to security. This entrepreneur micro-segment of the Latino population should be Republican, but having Republicans apologize for the rich sends a signal that Republicans will not defend them here either. So they come here, become citizens, and don't vote because there is no candidate who looks to protect their real interests.

Virtually all of Latin America lacks any tradition of private property being thought of as safe and likely to be passed down over the generations. These are countries where the wealthy send their wealth -- and often, their children -- out of the country! (Disagree? Name one stable, economically developed free-market democracy in all of Latin America. Name one country thought of as a "safe haven." Go ahead. Yeah, I couldn't either.) 

There is a misguided notion, voiced often by people too smart to be that dumb, that voters will vote for Republicans because they are better, on average, than their Democratic opponents. This theory ignores the third choice, that voters will choose to stay home. As each election brings a fresh wave of commentary decrying ever-declining voter turnout figures, it is obvious more and more "potential Republican voters" are choosing none of the above.

Entrepreneurs are the minority, and Bell expresses the fallacy that the exception proves the rule. Entrepreneurs and achievers are never the rule; they are the exception. Entrepreneurs also illustrate few traits of any non-entrepreneurs who just happen to share their ancestral heritage and language.  It is intellectually dishonest to suggest that the traits demonstrated by entrepreneurs can be used as evidence of the presence of those same traits in the larger population segment which, almost as if by definition, rejects those traits. 
Bell: "Moreover, they tend to share conservatives' beliefs that life begins at conception and marriage is composed of a husband and a wife."
So they may be pro-life? That impulse may be successfully outweighed by the economic appeal of our cradle-to-grave socialism. This sounds like a weak argument to deny or delude oneself into ignoring the truth. Besides, a single-issue pro-life voter may be equally discouraged by some of the other positions I've deconstructed above.
Bell: "They are as good a prospect at voting Republican as any immigrants to America from anywhere in the world."
Even if that statement were literally true, that simply means that they might have a higher probability of voting Republican than other immigrants who choose to become citizens.  But when most immigrant groups yield very few Republicans, this statement becomes worthless. 
Bell: "If elected, I'm headed to the U.S. Senate to fight for a comprehensive immigration reform plan that includes a generous, market-based guest worker program so we don't repeat the crisis that stems from 1986. I'll fight against the special interests like Big Labor to get this done. As we achieve success, I believe Hispanic voters will move toward the GOP. Immigration may rank for many of them relatively low in a poll of issue priorities, but our party's stance on it has served as a barrier for them to consider the rest of our agenda that would appeal to Hispanics." 

The last sentence strongly implies that Hispanics will not vote Republican unless the party adopts an open-borders, amnesty-for-all policy. 

But the real problem in any general election is that America's long-term jobless, of all backgrounds, hear a common message: You're giving our jobs to foreigners. 

How this is a recipe for winning, even for candidates in a Democratic primary, is a mystery. How a Republican can voice this and try to win in a general election is not even a mystery. 

It is a fantasy. 

Judging The Right To A Lawyer

This morning's New York Times has a well-cited article on an upcoming trial seeking to reform New York State's county-run public defender system for poor criminal defendants. (In a curious allocation of attention and other resources, the United States Justice Department has weighed in, filing a statement of interest in this state class action.)

The problems listed in the article and also cited by the Justice Department happen to be true.

Innocent people -- not just the ones found "not guilty" (the two concepts are not the same) -- are wrongfully convicted, prosecuted, arrested and investigated every day. 

The criminal legal system is dangerously unbalanced in favor of the government. Prosecutors' offices have more resources than all but the wealthy defendants, so hiring a good criminal defense lawyer is beyond the reach of many lower-income defendants while middle-class defendants will often be wiped out financially in order to protect their freedom. Public defenders' offices are usually much less funded by comparison while their individual lawyers' caseloads can be larger.

But how to solve this problem?  Is the proposed solution of increasing the number of public defenders, the lawyers tasked with defending the really poor in criminal cases, going to work?

The organized criminal defense bar (a guild of sorts for lawyers who specialize in criminal defense) can be expected to be a little hesitant about any enhanced public defender programs. That is because reducing barriers to legal defense, subsidizing legal costs or outright providing many more public defenders, is likely to reduce the perceived value of all lawyers to all clients, no matter what speciality.  The value of any service is best supported when the person receiving the service and realizing its value is the same person who is paying for it.  Break those causal relationships down and you weaken any sense of value. Worse, you may create a greater sense of entitlement -- not just to a competent lawyer but to a "great" lawyer, and then to a "great" outcome, meaning, "I'm entitled to go free." (Just wait.)

The same value principle applies in the supermarket; if this week's can of corn is discounted to one dollar, the shopper may perceive its true value at that price, and refuse to buy it at next week's "regular" two dollar price.  So providing more "free" lawyers for whom clients do not have to pay threatens the value, and hence the livelihoods, of the lawyers who are able (whether by better reputational success or better client-building methods) to command higher fees.

Some will react by saying that lawyers are too expensive, so anything that drives down their rates is a good thing.  Funny thing is that most people who say that have no problem paying $1,000 for one ticket to sit in the rain to watch Derek Jeter's last home game (which I predict will be played, even if it takes until early Friday morning).

But look at what has happened when doctors' fees were cut, as their reimbursement levels from insurance companies have been falling for years, in a trend starting well before Obamacare took effect. If you are in a rural county in most of America, ask around to see how far you must travel to see an OB-GYN or oncologist. Expect your answer to be expressed in a number...not of miles...but of hours.

The lesson should be obvious: Cut the fees, and eventually you'll get a much narrower choice of service providers. You may also get much more assembly line service from lawyers, who increasingly outsource any "routine" task. These are the same criticisms leveled at doctors. 

One also has to wonder how one will judge the quality of the service. Will public defenders soon be subject to rating? Will a poor defendant get the best representation from a public defender who is under pressure to drive up his score? Could we have public defenders push defendants into going to trial, because the rating system requires some trial wins, so a convicted defendant never hears about a plea offer, and then does a much longer sentence because he gets convicted at trial?

I ask you to consider the myriad of problems that can still metastasize. 

Overall, it seems more funds should be allocated to all sides of the criminal legal system.

Prosecutors' offices should be better funded in order to retain the best, and often the most concerned, prosecutors. Don't forget the investigators who make those offices run. They also need better pay.

In a world where "you get what you pay for" remains as true as human nature, nothing threatens justice like incompetent, inexperienced or simply unsuited prosecutors who can wield extensive leverage in the form of government resources to threaten people -- often the wrong people. 

Public defenders' offices need equal funding simply to avoid basic clerical or managerial errors often arising from overburdened lawyers or their staffs.

And don't forget the judges. The judge is the last line of reason in a system which assumes but does not always produce the right "factfinding" coming out of the adversarial process. 

A reallocation of resources by governments should be sufficient to accomplish these objectives without raising taxes. Just think of the money wasted on transporting the hundreds of thousands of illegal immigrants who have been allowed to enter the country without inspection.

Now there's a civil rights twist: While legitimate American citizens languish in jails for months or years waiting for a trial that keeps getting delayed because of an overburdened judge, an overburdened public defender and an overburdened prosecutor, the federal government is spending money on illegal immigrants. Now let's have that discussion about "equal protection."

The reality is that our government spends money on noncitizens and plenty on foreign non-humanitarian foreign aid.

The starker reality is that to those of us on the ground here in America, where we see how mistakes can result in the horrible loss of years of freedom, the message to America's poor is that they are second-class and must wait their turn.

Wednesday, September 24, 2014

Huge Lawsuit Risk: Defining The Workplace Down With Bra Parties

Today's New York Post tries to report on a possible trend (aberration?) of the new ladies-only, private bra fitting party.

There's one twist: these parties are now occurring on the employer's premises. Yes, they are occurring in the workplace.

Laws against workplace harassment have accomplished a lot in changing the work culture as well as ending (or at least driving out of the office) egregious conduct. The horror stories of decades past, including the infamous Wall Street brokerage house which had a "Boom Boom Room," are clearly the exception now. (More likely, they've gone well outside the office.) But one need not survey the court docket to sense and realize that there have been plenty of companies, high-net-worth individuals and public officials who have been targeted and sued -- and been forced to pay settlements or judgments -- for far less overt exclusionary or discriminatory behavior. Some candidates for public office have been driven to suspend or end their campaigns because of the mere unproven allegations of inappropriate behavior, while other candidates get indicted for alleged crimes and remain in office and on the election day ballot.  And as this report indicates, making any class of employees feel left out is definitely not good for business. 

Whether it's the lawyer in me or the "prude", this bra party thing really does not belong at work. The basic existential reason lies in the purpose of the workplace.

The workplace is where people go to in order to support themselves and their families. The duty for one to support his family (sorry, ladies, most of the workers supporting families are men) is essential to the family and as such borders on the sacred.

The workplace is not -- or should not be, anyway -- the place for communal self-esteem building or personal bonding. It is not the place to seek unpaid therapy from co-workers. (I used to tell people I charged for listening to them and billed in minimum increments of one hour. In years past, I actually started moonlighting and tried mining some co-workers for direct business.)  The younger generations who think the workplace is a surrogate parent are setting themselves up to be fired or sued by a co-worker. (Warning: In New York State an employee may be sued by a fellow employee.)  Young, naive business owners who have acquired that notion are setting themselves up for a potentially business extinction level event, i.e., getting sued and facing a "bet the business" lawsuit where losing means everyone loses their job and the company closes, insurance be damned. 

The presence of activities which systematically exclude a class of employees is just astonishingly discriminatory for this day and age. I urge people not to follow the lead of the companies or people cited in this article, not unless you want to invite a lawsuit or threat of one. 

Don't Feel Sorry For Dinesh D'Souza

Somewhat tarnished conservative commentator Dinesh D'Souza was sentenced Tuesday to an eight-month custodial term in a glorified halfway house, and a five-year probationary term, for willfully violating federal campaign finance law by recruiting straw donors to give money to a United States Senate candidate who lost her 2012 general election by more than 30 points.

Before certain gullible right-wing useful idiots think D'Souza is some sort of ideological martyr who "fought the system" and then "beat the system," a careful reading of court documents shows D'Souza must serve eight months in a halfway house. This means he is likely free to work during the day but must return at night, with exact details to be determined according to the facility to which he is assigned. This is a custodial sentence, which the rest of the fawning news media is happy to ignore. There will be restrictions on D'Souza's freedom; it just is not "jail" per se but also not a "non-custodial" sentence like straight probation. While it won't be hard time, not in the hitting large rocks into small pebbles sense, it is no cake walk either. Some of the halfway houses in New Jersey are so bad that inmates cannot wait to escape even on the verge of completing their full custodial sentences (usually years of prison followed by a halfway-house stint meant to transition them to the outside world). D'Souza must also do one eight-hour day per week of community service each week for the five year probationary term. Yet for a non-violent first offender whose biggest offense may be hubris combined with a matching arrogance, the sentence does not seem out of line.

Since the charges were announced, D'Souza's public stance has raised my suspicions. First of all, he has shown little to no contrition. He made a huge mistake, but for this type of mistake it is hard if not impossible to claim it was an innocent misunderstanding. D'Souza appears to have reasoned that campaign finance laws are either unfair or even unconstitutional, and therefore that self-serving judgment gave him the moral authority to break the law.

Generally, people who decide on their own that certain laws should not apply to them often have serious and wide-ranging problems with respecting authority, and respecting their fellow man. Sometimes this mentality is a serious red flag as it can indicate a wide or all-encompassing narcissism manifesting itself in a blatant, chronic disregard for any and all rules, laws and conventions of behavior.

But in the case of D'Souza, I suspect this is all a form of Machiavellian calculation. It is, in my theory, all about the money.

D'Souza is trying to fashion himself as some sort of martyr, some sort of victim of the oppressive, dreaded left-wing progressives who unfairly target conservatives (see the Internal Revenue Service scrutiny of tea party groups trying to get tax-exempt status, often with laughable applications that evidenced their noncompliance!). Occupying this anti-hero space is good business; it helps someone sell books, get paid speaking gigs, that type of thing. (As another example, some people have gotten very rich hawking books about President Obama's alleged foreign birthplace.)

Maybe, just maybe, it is that pursuit of financial success which is driving D'Souza's apparent arrogance. But what does that say when a supposed veteran leader of the conservative journalistic corps is willing to publicly flaunt his crime -- yes, D'Souza has admitted to federal felonies -- in order to advance his career?

From this corner, it appears the movement for which D'Souza claims to speak is actually tarnished and degraded by his actions, statements and association.

Some genuine contrition would go a lot way and make D'Souza look much more credible and -- and this needs to be written -- would make him look more like a mature adult.

Whether that is as profitable as milking victim status -- like so many left-wingers D'Souza claims to oppose -- is a valid question.

Maybe D'Souza is just all about trying to play the rubes, the Tea Party folk, the unsophisticates who don't live within 50-100 miles of a major urban center, for fools and dupes who will dependably buy his books, pay to attend his speeches and treat him as some brave patriot.

Unfortunately, there are too many gullible, impressionable room-temperature IQ types who are prone to using someone like D'Souza as the moral authority with which to disregard (i.e., break) the laws just because they disagree with the current Administration.  Belief that one is allowed to nullify laws which one believes (often without any basis whatsoever, but why sweat the details?) to be unjust, unfair or inconsistently enforced is a sure recipe for someone to get in major legal trouble.

Then again, it was Karl Marx who wrote about the 'useful idiots.'

Let's hope this disgraced filmmaker-commentator isn't playing his customers for fools.

Thursday, September 18, 2014

RUN, FORREST, RUN! When Startup Owners Learn When And Who To Walk Away From

Success in life often involves choosing the right company to keep.

The right company can propel you.

The wrong company can undermine you, sometimes catastrophically.

When you are starting or building a young enterprise, even as a sole proprietor, even as a professional, the ability to successfully judge people is crucial. Admittedly this is difficult. Many people -- for financial and psychological reasons -- are out to deceive you, defraud you, kneecap you because they want to prove (to themselves at least) they are better, smarter, etc.  This is human nature; accept it.

But accepting that fact does not mean you have to keep their company.

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.


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

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