Friday, June 28, 2013

Post No. 186k: Understanding the Mindset of Paula Deen's Former Corporate Sponsors

For the past week or so, Paula Deen, celebrated author of numerous cookbooks, restaurateur, chef, and TV personality, has taken a beating because of a single word, which she uttered a number of years back (and which a lot of folks in modern day society are reluctant to admit they once used). The barbarians are at the gates of her culinary empire, and her mercenaries who made money off of her are abandoning the fight, left and right.

When the BP Deepwater Horizon oil spill took place in the Gulf a couple of years back, we examined how we as citizens have difficulty understanding the decisions of Corporate America. Our thoughts are equally applicable to Ms. Deen's corporate sponsors.

© 2010, 2012, and 2013, the Institute for Applied Common Sense

Yesterday, C-Span aired Tuesday’s Senate hearings in connection with the Gulf of Mexico oil “spill,” which is still spilling.

It was interesting to watch the corporate representatives, including the CEO of BP America, perform mental and legal gymnastics in responding to the questions. The world watched as Senators, on both sides of the aisle, posed questions reflecting their incredulousness that this “disaster” even occurred.

While we were impressed with the tap dancing on the part of the spokespeople, we were more impressed with the political savvy of the Senators. President Obama was justifiably incensed at the multi-lateral finger pointing going on, but, we submit, for all the wrong reasons.

We’re willing to bet, and even invest some money in the derivative ultimately crafted, that in the years to come (be it 10, 50, or 100), (1) “accidents” of this type will continue to occur, (2) the companies involved will be no more prepared to deal with them and their consequences, and (3) Senators investigating future accidents will continue to fake their incredulousness that such “accidents” still occur.

Many things in life have less to do with people or the humans who happen to exist at any given point in time, and more to do with the structure or organization within which they function.

We here in America, for a variety of psychological, historical, legal, and systemic reasons, have a “perverted” sense of “corporate responsibility.”

First of all there really is no such thing as “corporate responsibility.” In America, if a corporation screws up, it’s generally going to pay. Being a responsible corporation or a good corporate citizen is only pursued to enhance the bottom line. The consequences of the screw-up are generally based on the particular screw up, and even punitive damages can’t be avoided by a “good corporation.”

Second, those Senators asking questions are pretty savvy. They are well aware that a corporation is a legal fiction. They also know (although you might have difficulty believing it considering the way they run the government) that in conducting business, the goal of that entity is to generate profits in order to stay afloat.

Third, and most important, every corporate decision is made in an effort to maximize profits, and is theoretically an educated and calculated guess. However, the reality is that some of the guesses are going to be wrong. Corporate management knows, and the Senators should know, this dirty little secret.

The rest of society apparently does not.

And so we dump on corporations when there is a screw-up, accuse them of mismanagement and devious, under-handed activity, and then slap our jaws and drop our mouths with our eyes all bugged (like the kid on Home Alone), when the 27th screw-up occurs.

A corporate entity does not have a mind or a conscience similar to that of a human.

Repeat: A corporate entity does not have a mind or a conscience similar to that of a human.

Even though humans run corporations, corporations are separate and apart from humans, somewhere between a human and an inanimate object.

Whereas a human will occasionally make a judgment call against his or her personal interests in pursuit of other goals (like unprotected sex with a stranger), rarely will a corporate entity do so because it is not really its money. It's not even the money of the folks managing the company, at least in the case of a publicly traded corporation.

It is the money and interests of others, the shareholders, which are at risk, not that of the decision makers.

It makes for a unique dynamic.

As a result, fines, penalties, and lawsuits (which are quantifiable and really only about money, not lives) have to be figured into the economic mix as necessary evils.

An entity may try to minimize them, or even delay them if possible, but they know that they are always just around the corner. Corporate management recognizes this for what it is.

They keep this in mind when they're engaged, and then walk away from it and try to live a human life.

Speeches, press conferences, hearings, investigations, fines, and lawsuits, are all perversions designed to distract us from really getting to the root of the matter. Talk about irresponsibility.

If you really want to know what’s going on, talk to the bean counters. It’s all about probabilities and risk management. It’s not about humans, wild life, or the environment.

It’s about time that we recognize that, and then get on with the business of trying to reduce, not eliminate, such “accidents” from happening in the future.

Corporations are not human. They can't be. It's an inherent conflict of interest.

If they don’t make enough in the way of profits, they will not have any put away for a rainy day, or be able to respond to the fickle changes in consumer tastes.

And as they pass through St. Peter’s bankruptcy gates, we’ll accuse them of mismanagement and sleeping at the switch.

And that ain’t no BS.


  1. As I was watching reports about how Eric Holder (the Attorney General) and president Obama headed up organizations (the Justice Dept. and the executive branch, respectively) which were too big and too complex to control completely and, therefore, they cannot be blamed for some of the things that have come to light of late... I was also reminded of BP and that nasty platform explosion and oil spill. I don't recall anyone giving the CEO a break because his organization was too big and too complex for one man to know everything that was going on. In truth, it's a rare boss who knows everything that is going on under his alleged supervision. But government officials get a pass where their private sector counterparts do not? Strikes me as a double standard.

  2. Oh, one more thing: "Corporations are not human. They can't be. It's an inherent conflict of interest." I, as a human, look always to maximize my profit and make decisions that can come back to haunt me. I see no real difference there. The "core values" of a corporation may be different than the average person's but so can the core values of an individual differ from another individual's or even of his/her community.

  3. Thanks for the additional comment Douglas. Maybe our definitions of "maximization" are different; however, we know very few humans who strive, day in and day out to become billionaires, or even millionaires. Lot of humans take a vacation, or a day off, at every available opportunity. Lots of humans retire at the earlier possible point, and then do nothing for 30 years.

    A private, for profit business is a perpetual entity (unless it is perhaps a closely-held or family company) which goes on year after year, until it fails or it is no longer profitable to continue. Humans stop whenever they want to, for all sorts of emotional reasons, and frequently do not care about the repercussions.

  4. I could paraphrase you and say "a human is a perpetual entity (within his lifespan) which goes on year after year, until it fails or is no longer profitable to continue." We are born, we grow up, seek to become successful (or just get by, as in my case), We adopt a credo or philosophy which helps guide us through our existence. We marry and (possibly) divorce, have kids (expand our enterprise), create and (possibly) abuse budgets, make decisions for our enterprise (family) which has a profit/loss construct until we no longer can. Corporations are very similar in my view to any other human endeavor because they are constructs of humans.

  5. Let me take your last paragraph and work with it a little bit: "On the micro level, imagine a mother conducting a risk management analysis regarding her kids walking unsupervised to school. It's very different than the analysis of other managers of other sized entities."

    I think a mother (and any parent) does conduct risk management analyses regarding just about every situation concerning her children. I know I did when my son first started school and the issue was whether to let him walk there (a distance of 3 blocks) and getting him a bicycle and how far he could wander from home and choosing babysitters and all sorts of things. We just do not call them "risk management analyses." Possibly because they are more personal and we do not view our families as businesses. I think it might be better if we did. It might be better if we adopted that paradigm.

  6. One more thought on the Paula Deen situation:

    Alec Baldwin


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