Focal Points V: Popular Culture

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Futurist and businessman Peter Schwartz in his book The Art of the Long View (1991,1996) suggests that firms should attempt to navigate uncertainty by constructing possible scenarios depicting the best- and worst-case scenarios for the business. Schwartz’s proactive and unorthodox approach to business suggests that we accumulate market information from an array of various sources to formulate a model that has the greatest degree of acuity possible.

One unlikely taproot for market information and patterns per Schwartz is popular culture. From Long View:

“… You may think popular music affects only kids. But those kids are all over the planet, and the effects last their entire lives. I once went to a Paul McCarthy concert that was, in effect, one big Beatles sing-along with people in their forties. The psychedelic mindset of “Lucy in the Sky with Diamonds”, and the delicious view of the world in “Here Comes the Sun” deeply affected the culture.

Today, I pay attention to rap music and world music –­ the fusion of ethnic threads from all over the equatorial world. I don’t think that business people will have to start putting “rap-speak” into their employment applications, but rap music will dramatically affect business nevertheless. These are not love songs; they are songs of anger. That rage begins to surface, with some still unknown racial event as the final trigger. ( This book was written several years before the Rodney King riots in L.A. that gave expression to that anger)….”

It seems as if Schwartz may have inadvertently stumbled upon a focal point or Schelling Point when he justifies utilizing contemporary culture as a potential bridge for the information asymmetries in consumer markets. Pop culture is a point of convergence for us all, whether for productive uses or purely entertainment. Being ignorant of pop culture can impact your social life; celebrity culture, sports, current music, and obscure references from popular movies; dominates topical conversations among Americans. It even has a hand in shaping circumstances in domestic politics. This statement is substantiated by the shrewd observation made by Andrew Breitbart: “Politics is downstream from culture”. It might be worthwhile to be aware of the newest pop culture trends.

Prisoner’s Dilemmas-Part III: Customer Service

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Social interactions generally constitute a series of various exchanges. Most instances of social exchange are typical non-economic. Whether it is two lovers on a stroll through the park exchanging affection through a kiss or a couple of friends trading pleasantries. Neither interaction involved an exchange of goods or money. Rather these individuals are trading intangible goods. Mutually shared friendships, trust, love, compassion, and even an intermingling of ideas cannot be easily quantified in the way products, services, and currency can be. Nevertheless, there is still value to these abstract fixtures in the realm of social engagement. A salient example of an attempt to categorize “social goods” is embodied in the term social currency.

Anytime there is something to gain, in the terminology of Game Theory a payoff, the potential for a Prisoner’s Dilemma exists. This is regardless of whether any tangible payoffs are possible. At the root of any exchange is trust. In the absence of trust, there is are no clear incentives for cooperation. This leads individuals to utilize uncooperative strategies.  Once again borrowing the nomenclature of Game Theory, results in defection. Hence why the sections of American antitrust law focusing on collusion are fruitless. Why? Cartel arguments are tantamount to a textbook example of a Prisoner’s Dilemma, one of the firms always ends up reneging. 

One common example of a Prisoner’s Dilemma experienced by most people is encountered in customer-facing interactions. Either as the client or as the vendor. This may sound like an unrelatable, highly sterile, and corporate description of this social dilemma. However, if you have ever been a customer you have experienced this predicament. Whether it was coping with a rude waiter, exhausting your patience with a clueless clerk, or getting hung up on by a call center rep, we have all endured this social dynamic. Naturally, we are right. After having the platitude “… the customer is always right…” seared into our subconscious, how could we ever be at fault?  This hubris makes us the perfect reciprocal agitator. 

The vendor has little incentive to be cordial and helpful when interacting with the client.  The Client has little incentive to be civil to the hourly customer service representative assisting them. The client questions their capabilities and possesses a sense of entitlement. There is a huge caveat to this contingency. Both parties are willing to tolerate a certain amount of aggressive interactions before arriving at the tipping point. Firms being constraint by profit-loss mechanisms, employees implicitly understand that there are certain lines that you do not cross. Once you start costing your employer money, you are as good as gone.  Vice versa, a customer service agent will only tolerate so much abuse before they quit. 

Despite the customer service representative lacking faith that the customer will be cordial. The customer not trusting the abilities and intentions of the customer service representative leads to suboptimal results. Adopting either strategy is a form of defection. Both parties doing so concurrently results in a Prisoner’s Dilemma. In the context of business dealings, more than money and goods are being exchanged. Trading partners are trading on faith and goodwill. This extends beyond the linear money for goods dynamic that most people superficially ascribe to commerce.  As the old saying goes business is a “… two-way street..”. Sure, the ludicrous demands of the customer can take primacy, however, if the interactions become too onerous the vendor may elect to drop the problematic client.  At the same time, if the vendor does not accommodate the customer and is providing an inferior product, then they have every right to be irate.  

Sarti V.. Salt Creek- The Death of the Minder Standard- Food Poisoning

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The legal precedence of Franke’s, Inc V. Bennett has not been completely resolute over the years.  Minder v. Cielito Lindo reinforced the standard of dismissing inferential evidence in food poisoning cases.  One case in California reviewed in the Late-2000’s Sarti V.. Salt Creek challenges this standard. In most instances, the burden of proof has been on the plaintiff. Evidence-based upon inferences and circumstantial evidence has generally failed to find foodservice providers liable for damages. We cannot attribute culpability for foodborne illness without causation. This is not to diminish the physical, psychological, and monetary costs that food-related infections impose on victims. Rather, nullifying evidence based on inferences makes the delivery of justice more balanced. Many could point to such jurisprudence and claim that it skewed towards shielding businesses. This is not the case. If the law is tilted towards victims there is no incentive to start a restaurant. Even based upon scant evidence you may be responsible for thousands, if not millions of dollars’ worth of damages. Most detrimental of all is the blighted reputation within the community. For a family-owned eatery is the kiss-of-death.

It is important to remember that most restaurants in America are small businesses. They cannot whether bad publicity or multi-million-dollar lawsuits. If an eatery was responsible for causing illness, it fair that they endure these costs. If not, it simply a miscarriage of justice. Especially when the illness could have been attributed to another source. Slanting the Scales-of-Justice is simply the opposite of a system that is biased towards business interest. Unfortunately, due to a significant amount of anti-market sentiment, many people would prefer a legal system that is stacked in favor of the victim. Justice requires balance. Molding the application of the law to the prejudices of the people is nothing more than judicial mob rule. Making the notion of justice something of a misnomer. Paralleling the flawed reasoning behind reverse-discrimination. It is still discrimination that is skewed towards the favor of a minority group.  Interpreting law in a manner that favors the victim over the business owner is injustice. Despite conventional wisdom.

The Sarti Case dates back to April 2005.  Alexis Sarti and a friend dined at the Salt Creek Grill. They split an appetizer that contained raw ahi tuna. Sarti developed nausea and chills the next day. Then for the next ten days suffered persistent chills, fever, and diarrhea. Twelve days later she could not move her legs and was taken into the intensive care unit. Where she was diagnosed with Guillain-Barre syndrome. After being tested it was confirmed that she was suffering from a Campylobacter infection. Campylobacter is a pathogen that is not associated with consuming raw tuna, making it likely that the appetizer Sarti ate was cross-contaminated with raw chicken. Sarti had a long recovery. Using a walker for eight-months after the incident. Only regaining forty percent of her previous stamina.

Sarti was awarded  $725,000 in economic damages and $2.5 million for her suffering by the jury’s verdict.  Less than a month after Sarti’s meal the Orange County Department of Health identified several practices by the eatery that could lead to cross-contamination. Despite the evidence implicating the restaurant, there was plenty of exculpatory factors that shed doubt upon Sarti’s illness originating from Salt Creek.

“…substantial evidence on which the jury could have found the restaurant not liable:  Sarti’s friend who split the appetizer did not get sick. The Salt Creek Grille takes great pains to separate its raw tuna from its raw chicken, including defrosting it in a different place in the walk-in freezer than where the chicken is stored, having the chef use a newly cleaned cutting board for the tuna, and preparing the tuna at the opposite end of the cook’s line from where the chicken is cooked.   Chicken is prepared in its separate room.   Different colored cutting boards are used for tuna and chicken, and the same chef does not prepare both items.   And Sarti herself worked as a supermarket checker the day she became ill, and could, at least in theory, have picked up campylobacter from a leaking bag of raw chicken she might have scanned.”

The judge found that there was enough evidence to avoid a JNOV. Meaning the judge found all of the evidence substantial enough to award damages. It’s important to note that this goes against past precedence. There is enough compelling evidence to doubt that source of the foodborne infection was not Salt Creek, but another possible source. Based upon the Minder ruling much of Satri’s case would be inadmissible. Yes, it is fair to award damages due to the severity of Satri’s illness. However, did the court direct liability to the correct party? If the depart of health did find Campylobacter bacterium on any of the surfaces of the Salt Creek kitchen, there wouldn’t be as much doubt. It’s the shadow of doubt cast on this case that makes it difficult to fully condone the court’s decision. It would be fair to argue that this a salient failure in Tort jurisprudence. The Minder/ Franke’s standard at least has a bulwark against the misapplication of liability. Stray from this variant of adjudication incentivizes the dishonest to engage in litigation for the intend of rent-extraction. For the honest, to attribute blame to the wrong culprit. This has the power to ruin lives. Something rarely considered in today’s litigious landscape.

Do We Need Laws to Force Us to Wear Masks?

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Ever since the number of COVID-19 cases began to grow in the United States the debate over whether to mandate wearing masks in public has raged on. Frequently devolving into a debate over political ideology rather than a discourse based on hard science. Naturally, those who believe mask-wearing to be an effective precaution against spreading the virus favor compulsory laws enforcing this practice in public. However, could it be possible that people still opt to take precautionary measures even in the absence of fine or other penalties? Better yet, couldn’t owners of private institutions such as stores, restaurants, and entertainment venues implement their preventive measures as conditions of patronizing their establishment? After all, the incentives are present to want to avoid any unnecessary risks and to keep their customers healthy to ensure a steady stream of business in these uncertain times.

In the state of Arizona, the issue of mask-wearing mandates has been left up to the local governments.  Most municipalities have opted to require masks while occupying indoor venues at the risk of facing a hefty fine. Back in June the city of Phoenix purposed a $250.00 for individuals repeatedly refusing to wear a mask. The suburb of Chandler, Arizona imposes a fine of $100.00 or 30 days in jail for mask-related infractions. Residents and visitors in the towns and cities located in Pinal County are not subject to mask requirements but are strongly encouraged to wear masks. One would assume that in these communities that are immune from such restrictions that the image of bare-faced shoppers must be a ubiquitous scene in the local grocery store. Such an assumption would be incorrect.

Even in the absence of formal constraints, most stores require that all customers wear masks. Generally, posting a sign on the front door forewarning prospective patrons of this precondition. Not only are the stores and eateries of the communities of towns such as Maricopa, Casa Grande, and so on filled with mask-wearing customers, but many establishments are taking measures not required by any municipality in the state. Employees are constantly cleaning. The local grocery store has never looked more pristine. Frankly, many of these changes in the cleaning and sanitizing schedules of the local business are long overdue. These shrewd business owners are proactively responding to the potential concerns of their clients. Anticipating that customers may avoid doing business if masks are at their brick-and-mortar location they have elected to require masks. In addition to urging patrons to wear masks, they also are making concentrated efforts to increase sanitation efforts. Even placing markers indicating the presence of six-foot gaps to maintain social distancing. The smell of bleach and other disinfectant products fill the entryway of the grocery stores. The local Walmart is even wiping down and sanitizing the carts! A sight that few would have ever predicted a year ago. All these preventive steps are taken without any laws, penalties, or ordinances. Completely implemented through apolitical channels.  

This micro-level self-governance on the part of local business propitiators and franchisees demonstrates the power of profit and loss mechanisms. Due to the business owners having a stake in the company they own and operate it is in their best interest to put the customers first. If the customers are comfortable, happy, and healthy it will be mutually beneficial for both parties. The customer will continue to obtain the goods and services they need and want. Simultaneously, the stores and restaurants will continue to receive business which will keep them afloat. Establishments that are insensitive to the needs of their customers will invariably see a dip in sales. This would hold even if we were not amid a pandemic. The entrepreneur must adapt to the present climate. That may mean investing in more cleaning supplies and sanctioning mask-wearing requirements for their establishment. Business proprietors who do not respond to customer concerns about the virus will be effectively punished by market forces. Through a sullied reputation, lackluster sales, and even insolvency. While constrained by federal, state, and local laws business owners by their possession of the enterprise still retain an immense amount of authority to create the rules governing their store. Having the ability to formulate the policies that govern the direction of the business enables them to better serve their customers. Displaying how to profit loss mechanisms can direct precautionary measures even in the absence of laws.

Business proprietors responding to these market pressures is an example of polycentric decision-making.  A system where multiple “decision-making units” with some degree of independent action subscribing to the same set of rules. Filtering the development of safety measures through the government attempts to use a one-size-fits-all approach to the pandemic. Whereas, individual shop owners can tailor their precautions to the specific concerns of their regular customers. Versus obtusely applying rules that may not even be effective or pertinent to how COVID-19 is impacting the region. Direct customer input about the absurdity of funneling customer traffic through two entries instead of three, can be an example of ground-level adjustments that can be made through business owner governed safety procedures when compared to those that are government-sanctioned. Avoiding the red tape and lethargic process of passing legislation or town ordinances provides fluidity that is necessary in dynamic times. A fluidity that is lost in the typical overarching and top-down approaches that are generally favored in regulations.  

Those cynical of the arguments that favor market pressure over formal regulation underestimates the power of the invisible hand. In jurisdictions where there are no regulations in forcing mask-wearing store owners not only require masks but are going the extra mile to ensure sanitary conditions for their customers. Most skeptical of the market being able to push such strives towards private solutions to the COVID-19 outbreak tend to cite avarice on the part of business owners. Without formal regulations, most will skimp on investing in extra precautionary measures due to the additional cost of enacting such changes. The willingness to make such changes is what separates a prudent businessperson from a fool.  The long-run profits from investing more in meeting alleviating the concerns of your customers will quickly outpace the minor cost.  Making a refusal to independently adjust to these changes shortsighted.

The Contribution of Beggars to Our Economy

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Panhandlers receive way too much derision and judgment from the general public. They have various stigma ladened insults hurled at them regularly. Constantly derided as “bums”, “beggars, and “mendicants. All terms lacking any sense of dignity. However, what true societal harm have panhandlers inflicted upon society through their attempts to cajoling passing motorists into parting with their spare change?  At worst panhandlers are a minor nuisance and their actions violate insignificant local ordinances. But I will have to draw the line at loitering on private property. From a property rights standpoint, that issue is much more problematic. Why as a society are we so repulsed by the notion of an individual asking for money? We as individual economic agents reserve the right to voluntarily decline to part with our spare change and continue on our merry way. Early this week I was grappling with this question and concluded that panhandlers aren’t a menace at all. That many of the local ordinance aiming to curtail the behavior is nothing more than an overaction to a victimless crime.

Upon stumbling across this idiosyncratic epiphany I naturally conducted a quick survey of the internet to see if any else shared my contrarian perspective on begging.  No other than the great Leonard Read wrote an article back in the 1950s arguing that panhandling was less harmful to the economy and society than taxpayer funding of government services. Read details how not only is the action of giving money to a panhandler voluntary but it does not damage the economy anymore so than an individual choosing to retire. It should be noted that again this article was written before the baby boomer generation retiring. The drastic increase in spending on Social Security and Medicare entitlements has made retirement much more detrimental to the U.S. economy. That point aside, Read mentions how government services assist in creating inflation while panhandling does no such harm. Anyone unacquainted with how inflation works may be confused by this statement. Essentially, he is implying that instead of raising funds through the politically inconvenient act of a tax hike, the government will merely print more money to fund whatever programs and services require allocations. Introducing more money into the economy naturally decreases the value of the currency causing inflation. Thus, making a strong case that panhandling is less harmful to society than government services.

However, I take one issue with this pithy and insightful essay penned by the founder of the Foundation for Economic Education. He describes panhandling in a quasi-neutral light. It doesn’t harm society, but also doesn’t benefit society. I would beg to differ on this point. I view panhandlers as being creative and enterprising individuals who have found a novel method of generating income despite their difficult circumstances. I would be so bold to assert that they resemble entrepreneurs. Perhaps and most likely the nature of panhandling has changed over the past sixty-plus years. To persuade to part with their money, beggars have over the years incorporated elements of entertainment in their persuasion techniques. I once saw a gentleman with a sign that read:

“ Too honest to steal, too ugly to strip”

Not only was this sign humourous but it also exhibits the wit of a talent marketing strategist. If wasn’t for his unfortunate shift in vicissitudes could have been quite the asset in the boardroom. Now he provides the service of entertainment to bored the bored motorists of Chandler, Arizona. Those who are amused by his witty sign, compensate him for his innovation. Another more risque example of panhandlers earning their money through entertainment was a witness at the very same traffic intersection. There was an attractive young lady who appeared to be well-washed and not homeless. Adorning a bikini top and short-shorts with her thong conspicuously exposed.  Needless to say, she was swiftly crossing backing forth between the median and the sidewalk of the intersection graciously accepting paper bills from male motorists. These fellows weren’t parting with mere pocket change! Another sign that I once saw that particularly struck me as clever read:

“ I bet you can’t hit me with a Nickle”

Before you are quick to pass judgment upon a panhandler remember this, it is a grind just like another vocation. It is merely an unorthodox means of earning an income. If anything, panhandlers contribute more to society than those on welfare who do not work. At the very least, beggars attempt to entertain, making them impromptu service providers. Good service demands just compensation.