From The Huffington Post comes word that the Honorable, the Justices of the Supreme Court of the United States, are wrestling with the potential ramifications of the decision that they will render in Sebelius v. Hobby Lobby. That case, in which the Court heard oral arguments earlier this week, raises the question of whether for-profit corporations may claim exemption from healthcare regulations that require the corporations to provide healthcare benefits that may conflict, not with the corporations's shareholders's religious scruples, but with the corporations's own religious scruples.
According to HuffPo's Ryan J. Reilly and Laura Bassett, the Supremes are up against the ramifications of their earlier decision in Citizens United, which granted to non-natural persons (that is, to legal fictions) free-speech rights cognizable under the Free Speech Clause of the First Amendment. As if that weren't bad enough, Citizens United also created at least a tacit equation between political donations and speech, thus cloaking corporate political donations with the "get-out-of-regulatory-jail-free card" of the First Amendment. From speech in Citizens United, the Court now finds itself having to deal with corporate behavior in Hobby Lobby.
It is an established principle that inaction is a form of action, and that, in certain circumstances and certain contexts, action can constitute speech. The question in Hobby Lobby is, can the government sanction inaction (the refusal actually to provide contraceptive services and products, or to pay for insurance to provide such services and products) when the law requires action? It is a principle that the government cannot compel speech; the most famous case in that line is Miranda v. Arizona, which established the "right to remain silent" under police interrogation - although, to be sure, the same Court that perpetrated Citizens United has also demonstrated its contempt for civil rights by ruling that one must assert, verbally, one's election to exercise one's rights under Miranda. That is, in order to remain silent, one must speak. That's how they do things in Cloud-Cuckoo Land.
If Hobby Lobby, Inc. is exercising its First Amendment rights (all of which were granted to it by the Citizens United decision) by "speaking" its refusal to act, can the Federal government compel, by criminal or civil sanction, or by any other mechanism, the corporation to act? The justification for Hobby Lobby, Inc.'s refusal to act has been based on "religious principles"; those principles have been enunciated by the human/natural person shareholders (or their reps; the corporation itself, like the Baals and the Ashtaroth of the Old Testament*, having no mouth, is unable, conveniently, to speak for itself).
It will be interesting to see whether the Court seizes the opportunity presented by Hobby Lobby to walk back deeply-reviled Citizens United decision, by placing limits on corporate "speech," or possibly even to reverse itself on the concept, generally - the latter not very likely. Even more interesting will be the knock-on effects of a decision by the Court that a corporation has a right of conscience - that is, that a legal fiction, a creature of the (secular, profane) law, can have moral scruples. It will be a "nice question" for the Justices to consider: just how human is a corporation, after all?
Qu'elle dommage! The Skeptical Entrepreneur respectfully declines to shed a tear for the Supremes's dilemma. For a dilemma it is. Observe:
If a corporation has a conscience, to assuage that conscience the corporation must avoid even the near occasion of sin: to-wit, it must decline to pay premiums to an insurance underwriter, to the extent that such premiums would be used to provide post-fertilization medico-therapeutic counseling services and products (that would cause the death of [or, at least, impede the continued survival of] a zygote). Pre-fertilization contraceptives - condoms, diaphragms, and other barrier methods; chemical (read: hormonal) contraceptives that disrupt the menstrual cycle; and surgical interventions, all are acceptable, insofar as they prevent fertilization. Hobby Lobby, Inc.'s objection is to being forced to commit the sin of murder, in that it doesn't want to have to pay for abortifacients.
Therein lies the dilemma.
If Hobby Lobby, Inc. argues that it should not be forced to commit sin, it admits, implicitly, that a corporation which is capable of speech is capable of sin. Leaving aside the question of how a (literally) soulless corporation can commit sin, we have to extend our reasoning to acknowledge that if a corporation is capable of sin, it is capable also of committing a tort, and/or committing a crime. By advocating for a right of conscience, Hobby Lobby, Inc. has thrown its corporate neighbors, collectively, under the bus, by eliminating the possibility that corporate officials can fall on their swords. If the Supreme Court rules, in Sebelius v. Hobby Lobby, that a corporation has conscience rights, from that point on, all misdeeds by corporate officers, agents, assigns, etc., can be - and they certainly will be - laid squarely at the corporation's door.
Does any corporation have pockets that deep?
* You know . . . false idols, etc.
Wednesday, March 26, 2014
Wednesday, December 18, 2013
[Smirk]
The Skeptical Entrepreneur lives for this - call it Executives Behaving Poorly.
Buon appetito. Don't say we never gave ya nothin'.
Buon appetito. Don't say we never gave ya nothin'.
Wednesday, December 11, 2013
Of Subsidies, Spending Priorities and Corporate Profits
From TIME magazine comes an analysis piece that says that fears of $8/gallon milk are overblown. The Skeptical Entrepreneur and family are the milk-drinkin'est bunch that you're ever likely to find this side of Pediatric Ward; even if milk had (more than) doubled in price, we would still be lined up in the dairy aisle to keep fresh moo-juice on hand.
The point that is being missed in all of the hoopla about a spike in dairy prices is that, in the end, the only people who would be hurt by the expiration of Federal dairy subsidies would be, not the dairy producers, not the consumers, but the other [non-supermarket] [retail] businesses whose potential revenues would have gone to the supermarket sector to pay for more-expensive dairy products.
TSE is left to marvel at the short-sightedness of the "starve-the-beast" mentality that animates so many fiscal conservatives. Their misguided, undisciplined zeal for cutting Federal spending and demonizing "takers" presents an unacceptable level of risk of damaging the economy, in the interest of "stabilizing" and "strengthening" the public purse. The only "beast" who would be harmed by allowing dairy subsidies to expire would be the retail sector's ox, gored by the free market's re-allocation of scarce consumer dollars toward more-expensive milk.
Does the "cut-the-budget" crowd simply not understand their own mantra of "socialize costs?" Do they imagine that costs should be socialized only among the "Other" (read: consumers), and not among entrepreneurs and enterprises?
Do they not understand that the cost of maintaining the inflow of consumer dollars into their tills is the outflow of their tax dollars into the Federal till, to fund dairy (and other agricultural) subsidies? Do they not understand that socializing the cost of subsidized milk is the price of admission to access to a stream of privatized profit?
The Skeptical Entrepreneur is forced, sadly and even a little bit reluctantly, to the conclusion that these shrill, fringe groups do not, in fact, understand the second- and third-order ramifications of their ideology. That's too bad - one would hope that people in charge of billions of dollars worth of assets would be a little more teleological - but at least there is job security in it.
The point that is being missed in all of the hoopla about a spike in dairy prices is that, in the end, the only people who would be hurt by the expiration of Federal dairy subsidies would be, not the dairy producers, not the consumers, but the other [non-supermarket] [retail] businesses whose potential revenues would have gone to the supermarket sector to pay for more-expensive dairy products.
TSE is left to marvel at the short-sightedness of the "starve-the-beast" mentality that animates so many fiscal conservatives. Their misguided, undisciplined zeal for cutting Federal spending and demonizing "takers" presents an unacceptable level of risk of damaging the economy, in the interest of "stabilizing" and "strengthening" the public purse. The only "beast" who would be harmed by allowing dairy subsidies to expire would be the retail sector's ox, gored by the free market's re-allocation of scarce consumer dollars toward more-expensive milk.
Does the "cut-the-budget" crowd simply not understand their own mantra of "socialize costs?" Do they imagine that costs should be socialized only among the "Other" (read: consumers), and not among entrepreneurs and enterprises?
Do they not understand that the cost of maintaining the inflow of consumer dollars into their tills is the outflow of their tax dollars into the Federal till, to fund dairy (and other agricultural) subsidies? Do they not understand that socializing the cost of subsidized milk is the price of admission to access to a stream of privatized profit?
The Skeptical Entrepreneur is forced, sadly and even a little bit reluctantly, to the conclusion that these shrill, fringe groups do not, in fact, understand the second- and third-order ramifications of their ideology. That's too bad - one would hope that people in charge of billions of dollars worth of assets would be a little more teleological - but at least there is job security in it.
Tuesday, September 24, 2013
Wow!
The Skeptical Entrepreneur seems to have touched a nerve along the southern Pacific Rim. FORTY-NINE visitors to the blog from Indonesia today!
To all of my new Indonesian friends, I say, "Selamat Datang! Terima kasih telah mengunjungi. Saya berharap bahwa Anda akan menikmati tulisan saya. Pengusaha Skeptis Anda menyambut Anda!"
To all of my established friends around the globe, I say, "Thanks for reading! You guys are the best!"
To all of my new Indonesian friends, I say, "Selamat Datang! Terima kasih telah mengunjungi. Saya berharap bahwa Anda akan menikmati tulisan saya. Pengusaha Skeptis Anda menyambut Anda!"
To all of my established friends around the globe, I say, "Thanks for reading! You guys are the best!"
On McDonald's and the $15/Hour Starting Wage
[Note: The Skeptical Entrepreneur should know better than to try to do math in his head. The initial version of this column incorrectly expressed the figures for increased consumer spending capacity in billions; it should have been millions. The corrected version is below. Sorry for the mix-up. - The Skeptical Entrepreneur]
The Motley Fool's Daily Finance column recently had an article on 3 Reasons why McDonald's would be Smart to Pay $15 an Hour as a starting wage. The arguments are good, especially the one that posits that McDonald's would be able to take its pick of the cream of foodservice workers if it became the first to offer a super-premium starting minimum wage.
What the article misses is the fact that bumping McDonald's 60,000-plus U.S.-based employees* to $15 an hour would provide a significant stimulus to the consumer economy. Assuming 60,000 employees, working an average 20 hours per week at an average $8 per hour, increasing the rate by $7 per hour leads to increased wages of $8.4 million per week, or $436.8 million per year. Given that American workers have the lowest marginal savings rate in the industrialized world, that translates to, at a conservative guess, something north of $400 million a year in increased consumer spending.
The benefit to other enterprises is two-fold. The Skeptical Entrepreneur has recently meditated on marginal consumer product demand, and the limitation thereof, as a hurdle to economic regrowth, despite the recovery of financial markets. The key to clearing that hurdle is to facilitate the expansion of consumer demand, thus increasing aggregate consumer product demand. Consumers cannot consume, if they lack the financial resources to purchase consumer products. Barter is not a viable option, since a fundamental principle of accounting demands that transactions be recorded in terms of a stable, unified, quantifiable system of valuation - no money, no documentable and recordable transaction.
Putting an extra $400 million-plus in purchasing power into the hands of consumers, who are bound by the same principle of limited marginal consumer product demand as regards food, will necessarily funnel a significant portion of that purchasing power into non-food consumer goods. All sectors of the consumer-retail economy will benefit, including the foodservice industry up and down the quality/service/efficiency scale.
How much of that extra wage money will find its way back into the hands of McDonald's Corp. and its franchisees is difficult to determine. Certainly, the increased demand for other consumer retailers's products will lead to increased hiring; the example of McDonald's and its premium wage will put pressure on other employers to increase their wages, thus initiating a further, two-pronged increase in consumer purchasing power. Goods and services flow circularly, so an increase in McDonald's wages should lead to an increase in other retailers's business volume, as well as payroll-based contributions to aggregate consumer purchasing power, which should feed back to increased demand for McDonald's products, both directly from its own employees buying more burgers and fries, but also from employees of other retailers (and wholesalers, and manufacturers, distributors, transporters, infrastructural-support firms, etc.).
The Skeptical Entrepreneur is at a loss to understand how anyone can consider that an increase of over $400 million per year in consumer purchasing power is a bad idea. Of course, there will be short-sighted managers who can only think of ways to increase their share of those consumer dollars without increasing their costs. There will be die-hard Hooverites who lament the weakening of the dollar. So what? Show me a businessperson who has a moral stake in maintaining the purchasing power of the dollar, and I'll show you a damned fool. It's not the entrepreneur's job to fret over whether the dollar buys as much today as it did yesterday. The entrepreneur's job is to grow sales and profits. Period.
McDonald's and its franchisees should raise their starting minimum wage to $15 per hour, and use the increase in customer-service value to justify increasing menu prices to cover the wage hike.
*A conservative guesstimate; The Skeptical Entrepreneur has been unable to locate hard data on employment numbers
The Motley Fool's Daily Finance column recently had an article on 3 Reasons why McDonald's would be Smart to Pay $15 an Hour as a starting wage. The arguments are good, especially the one that posits that McDonald's would be able to take its pick of the cream of foodservice workers if it became the first to offer a super-premium starting minimum wage.
What the article misses is the fact that bumping McDonald's 60,000-plus U.S.-based employees* to $15 an hour would provide a significant stimulus to the consumer economy. Assuming 60,000 employees, working an average 20 hours per week at an average $8 per hour, increasing the rate by $7 per hour leads to increased wages of $8.4 million per week, or $436.8 million per year. Given that American workers have the lowest marginal savings rate in the industrialized world, that translates to, at a conservative guess, something north of $400 million a year in increased consumer spending.
The benefit to other enterprises is two-fold. The Skeptical Entrepreneur has recently meditated on marginal consumer product demand, and the limitation thereof, as a hurdle to economic regrowth, despite the recovery of financial markets. The key to clearing that hurdle is to facilitate the expansion of consumer demand, thus increasing aggregate consumer product demand. Consumers cannot consume, if they lack the financial resources to purchase consumer products. Barter is not a viable option, since a fundamental principle of accounting demands that transactions be recorded in terms of a stable, unified, quantifiable system of valuation - no money, no documentable and recordable transaction.
Putting an extra $400 million-plus in purchasing power into the hands of consumers, who are bound by the same principle of limited marginal consumer product demand as regards food, will necessarily funnel a significant portion of that purchasing power into non-food consumer goods. All sectors of the consumer-retail economy will benefit, including the foodservice industry up and down the quality/service/efficiency scale.
How much of that extra wage money will find its way back into the hands of McDonald's Corp. and its franchisees is difficult to determine. Certainly, the increased demand for other consumer retailers's products will lead to increased hiring; the example of McDonald's and its premium wage will put pressure on other employers to increase their wages, thus initiating a further, two-pronged increase in consumer purchasing power. Goods and services flow circularly, so an increase in McDonald's wages should lead to an increase in other retailers's business volume, as well as payroll-based contributions to aggregate consumer purchasing power, which should feed back to increased demand for McDonald's products, both directly from its own employees buying more burgers and fries, but also from employees of other retailers (and wholesalers, and manufacturers, distributors, transporters, infrastructural-support firms, etc.).
The Skeptical Entrepreneur is at a loss to understand how anyone can consider that an increase of over $400 million per year in consumer purchasing power is a bad idea. Of course, there will be short-sighted managers who can only think of ways to increase their share of those consumer dollars without increasing their costs. There will be die-hard Hooverites who lament the weakening of the dollar. So what? Show me a businessperson who has a moral stake in maintaining the purchasing power of the dollar, and I'll show you a damned fool. It's not the entrepreneur's job to fret over whether the dollar buys as much today as it did yesterday. The entrepreneur's job is to grow sales and profits. Period.
McDonald's and its franchisees should raise their starting minimum wage to $15 per hour, and use the increase in customer-service value to justify increasing menu prices to cover the wage hike.
*A conservative guesstimate; The Skeptical Entrepreneur has been unable to locate hard data on employment numbers
Friday, September 20, 2013
Four Words
Marginal Consumer Product Demand.
Four words that constitute the brick wall against which the U.S. has run. Four words that explain why, even if the Dow Jones Industrial Average rises high enough to provide real, break-even returns on equity portfolios from, say, October 2008 to whenever the DJIA reaches that goal (talk about moving goal-posts!), then provides minimal, real growth over that break-even point, then provides compound profits for the same indefinable period, there will still be no need for the owning class to loosen the purse strings.
Even if the "miracle of equity financial markets" contrives to make this now-five-year-old economic nightmare disappear, there will never again be a sufficient flow of cash into the retail-consumption market to lift the former middle class's boats off the bottom, much less make them float. And the poor - well, they're hosed, but what else is new?
Four words: marginal consumer product demand. Even if the value of the 1%'s stock portfolios rebounds to real, compound growth, there are only so many consumer goods that the 1% can consume. The Skeptical Entrepreneur has been flogging what he calls the "Reeboks-Domino's-Blockbuster" test since . . . well, since Reebok and Blockbuster were players.
There are only so many pairs of Reebok sneakers that someone with disposable income can buy. There are only so many Domino's pizzas one can eat, and only so many videos from Blockbuster that one can rent. The 1% can only consume so much.
This is equally true of "luxury" goods, the sorts of things that only the (super-)rich can afford. After all, back in the day - when the middle class, attenuated as it was, still existed - even the hoi polloi could buy Reeboks, Domino's, and Blockbuster. Not everybody can buy multimillion-dollar jet aircraft, or yachts that sleep eight, or more.
But even the ones who can afford those expensive transportation toys can only buy so many of them. Shoot your wad on a late-model Gulfstream G-IV, or the latest offering from Cris-Craft, and you're done. There's no repeat business, except in a few extraordinary cases, until the previous model is disposed of. Note that the population of the super-duper-wealthy, who can afford multiple jets, boats, &c., is even smaller, thus reducing the aggregate marginal consumer product demand.
Four words. Has any harder wall ever been constructed from only four pieces?
Four words that constitute the brick wall against which the U.S. has run. Four words that explain why, even if the Dow Jones Industrial Average rises high enough to provide real, break-even returns on equity portfolios from, say, October 2008 to whenever the DJIA reaches that goal (talk about moving goal-posts!), then provides minimal, real growth over that break-even point, then provides compound profits for the same indefinable period, there will still be no need for the owning class to loosen the purse strings.
Even if the "miracle of equity financial markets" contrives to make this now-five-year-old economic nightmare disappear, there will never again be a sufficient flow of cash into the retail-consumption market to lift the former middle class's boats off the bottom, much less make them float. And the poor - well, they're hosed, but what else is new?
Four words: marginal consumer product demand. Even if the value of the 1%'s stock portfolios rebounds to real, compound growth, there are only so many consumer goods that the 1% can consume. The Skeptical Entrepreneur has been flogging what he calls the "Reeboks-Domino's-Blockbuster" test since . . . well, since Reebok and Blockbuster were players.
There are only so many pairs of Reebok sneakers that someone with disposable income can buy. There are only so many Domino's pizzas one can eat, and only so many videos from Blockbuster that one can rent. The 1% can only consume so much.
This is equally true of "luxury" goods, the sorts of things that only the (super-)rich can afford. After all, back in the day - when the middle class, attenuated as it was, still existed - even the hoi polloi could buy Reeboks, Domino's, and Blockbuster. Not everybody can buy multimillion-dollar jet aircraft, or yachts that sleep eight, or more.
But even the ones who can afford those expensive transportation toys can only buy so many of them. Shoot your wad on a late-model Gulfstream G-IV, or the latest offering from Cris-Craft, and you're done. There's no repeat business, except in a few extraordinary cases, until the previous model is disposed of. Note that the population of the super-duper-wealthy, who can afford multiple jets, boats, &c., is even smaller, thus reducing the aggregate marginal consumer product demand.
Four words. Has any harder wall ever been constructed from only four pieces?
Friday, September 13, 2013
Request for Assistance
The Skeptical Entrepreneur is an entrepreneur in need.
Due to having lost my job due to my big mouth, I am facing a serious fiscal crisis. Living expenses march on while I am between jobs; with no financial cushion available, I am looking at having serious difficulty with paying rent & utilities, and getting my cell phone turned back on.
I have posted a campaign on Indiegogo, soliciting contributions to help meet basic living expenses. The campaign goal is $2,200, which will leave me, if I meet the goal, with a net $2,046 after Indiegogo's fee. The campaign is here.
I made a video to support my campaign:
Thanks, and God Bless you!
Due to having lost my job due to my big mouth, I am facing a serious fiscal crisis. Living expenses march on while I am between jobs; with no financial cushion available, I am looking at having serious difficulty with paying rent & utilities, and getting my cell phone turned back on.
I have posted a campaign on Indiegogo, soliciting contributions to help meet basic living expenses. The campaign goal is $2,200, which will leave me, if I meet the goal, with a net $2,046 after Indiegogo's fee. The campaign is here.
I made a video to support my campaign:
Thanks, and God Bless you!
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