Post No. 182b: Why Dumping on BP is a Bunch of BS

Earlier this morning, news media outlets reported that BP (aka British Petroleum) has agreed to massive fines in connection with its April 2010 Deepwater Horizon explosion. The resultant oil spill had a dramatic effect on those areas surrounding the Gulf of Mexico. We generated this article shortly after the accident. Criminal charges are still being pursued against various individuals associated with the human, economic, and environmental damages flowing from the incident.


© 2010 and 2012, 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.

Post No. 172a: Why Dumping on Royal Dutch Shell is a Bunch of B.S.

Royal Dutch Shell sprung a leak in the North Sea recently. Once again, a tsunami of criticism has evolved. While we did not come to the defense of British Petroleum (BP) and TransOcean last year in connection with their problems in the Gulf of Mexico, we noted that....

© 2010 and 2011, 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 and try 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 open 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 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.

Post No. 146: Why Dumping on BP is a Bunch of BS

© 2010, 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 and try 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 open 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 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.

Post 84a: Article of Interest re Surprising Auto Sales in a Distant Land

Despite the problems faced by automobile manufacturers world-wide, there's one location where cars are selling like hotcakes. Guess where:

By the way, if that surprises you, although clearlyunrelated, do you recall this article which we posted in August of last year?

Post 82: Some Thoughts on the State of Technology in America

© 2009, the Institute of Applied Common Sense

Previously, in Post No. 79a, we posted an article discussing where we really are at this point in time, in connection with electric car technology. The Free Press article, which we referenced, also mentioned that the auto industry will need the long term cooperation and assistance of government to pull this off.

While we focused, in that post, on the debate between the competing “private enterprise/let the free market determine,” and the “government intervention/ regulation” factions, we later realized that we had failed to focus on the technology factor.

That realization came about when one of our readers, Robert, perfectly framed the issue, and brought some common sense back into the discussion about the state of technology related to batteries used in electric vehicles. We decided to generate this post to highlight the importance of his comment.

Simply put, Robert indicated that the technology is simply not there. Yet. (We invite you to examine it in its entirety toward the end of the comments to Post No. 79a.)

(Tangentially, Robert’s comment (along with its tone) so impressed The Logistician, who has an engineering and science background, that he suggested that we extend an invitation to him to join us here at the Institute for Applied Common Sense.)

We've often wondered, why it is that some "elements" in our society are always complaining about the failure of our nation (whether it be an attack on our educational system or private industry) to come up with technological advances in various areas, when they feel that we need them, or that it suits their purposes?

By "elements," we mean the non-scientific, non-engineer, non-inventor, political science and English majors, and the lawyers who run for elected office. For the most part, the members of these elements have not invented one single thing in their lives (with the possible exception of babies), and yet they have the gumption to preach about technological failures or miscalculations on the part of others.

Michael Crichton, shortly before his death last year, spoke of how we had, in this country, come to politicize science, to such an extent that it hurts our ability to have a realistic conversation about our technological needs and goals.

In a discussion, with a very well-respected scientist and leader in his field of research late last year, we asked this question: Why are we, the “general public,” not privy to scientific views and conclusions viewed as “givens” by the academic, engineering, and scientific communities, which significantly affect our lives and the quality thereof?

The Professor suggested one basic reason: the fear of being “Saganized,” or not being taken seriously because of one’s popular appeal, once the discussion enters the popular arena. (The term was coined in connection with Carl Sagan, who popularized science.)

We submit that there is a second: the fear of attack, from those factions (usually religious, financial, or political in nature) outside of their respective scientific communities, who have agendas unrelated to the advancement of science.

The conversation, at the national level in particular, has become perverted, and, as with many things in life, perversion of the analysis on the front end leads to perversion of the purported solutions on the back end.

If you have 300 cats in your large home or building, and you let them essentially do what they want to do on a daily basis, you can't exactly complain when, at the end of the day, your structure is not in the “condition” in which you would like.

Similarly, when a nation of 300 million lets its adult citizens pursue whatever educational and vocational interests they desire, and industry to pursue whatever legal goals it desires, we can not later legitimately complain about the state of our nation.

We're not saying that we necessarily need to change our current governance model, if it's what the majority of the citizens want. We're just saying that a responsible nation recognizes the consequences of its freedoms (aka actions), acknowledges them, and then figures out how to minimize the negative costs associated with the exercise of those freedoms.

Disingenuously blaming others does not advance that goal, or the long term interests of the nation, in dealing with scientific and technological issues (or any other issues for that matter).

© 2009, the Institute of Applied Common Sense

Post No. 81: Rear View Mirror: Post - Super Bowl Edition (or How Quickly We Forget)

© 2009, the Institute for Applied Common Sense

We are once again delighted to have a contribution by The Laughingman.

In the summer of 1971, then President Richard M. Nixon introduced the American public to mandatory wage and price controls, pursuant to the Economic Stabilization Act of 1970, setting off a wave of unintended consequences.

(For those of you under the age of 45, we have provided you with some nifty links enabling you to further explore this seemingly ancient history.)

President Nixon's action was largely the result of the cost of America's longest war... and its first defeat.

Both Nixon and his predecessor, Lyndon Baines Johnson, had correctly assumed that support for the conflict would totally evaporate should the American people get any idea of what it was actually costing. Consequently, both men played their economic cost cards very close to their vests.

Wage and price controls had two immediate impacts on both corporations and labor.

For corporations, any reduction in the price of a product to address declining economic circumstances was viewed as suicidal because of the possibility of the corporation becoming locked into that lower price into perpetuity.

For labor, compensation negotiations shifted from current pay to future benefits, effectively moving what the workers earned from pay to future promises of health care and retirement income.

Both groups had one thing in common - neither trusted the federal government.

As both struggled with this new reality, the government went chasing niche interests in hopes of building support for an increasingly unpopular war. Detroit was given a couple of years to make mandatory seat belt/ignition interlocks standard equipment on every car sold in the United States by the 1974 model year.

Our news papers became awash in "coupons" to be submitted to the retailer, or sent directly to the factory to obtain a temporary price reduction on just about anything. As soon as P&G discovered that more than 40% of these coupons were never redeemed, it began to change its strategy, from strength of wholesale sales based on pricing and advertising superiority, to coupons, thus shifting pricing and advertising largely to retailers.

Welcome to the game, Wal-Mart.

Unions came up with ideas like "job banks" to insure that if their workers could not share in economic upturns, at least they would not lose their income when the market turned down.

President Nixon, with new problems of his own, finally pulled American combat troops out of Viet Nam on March 29, 1973, but the cost of the war remained a lingering problem, even as that only class of criminals native to the United States, Congress, debated how the "peace dividend" could best be spent to their individual benefit.

It was a short debate.

The Yom Kippur War only lasted from October 6 to October 26, 1973 (some have advanced it lasted until December 23, 1973), but the Arab Oil Embargo lasted from October, 1973 to March, 1974... temporarily quadrupling the cost of oil.

On January 2, 1974, President Nixon signed the "Emergency Highway Energy Conservation Act" into law, basically denying federal highway funds to any state not immediately enacting a 55 mph speed limit.

The United States became the laughing stock of the world-wide automotive community.

The idea was to cut U.S. oil consumption by at least 2.2%. Interestingly, U.S. oil conservation never exceeded 1%... and by most independent analysis never got above .5%... nevertheless, the law remained on the books until 1995.

The laughter only got louder as the American consumer simply refused to buy an automobile equipped with technology that made it impossible to start unless everybody (and every heavy package) in the car was wearing a properly connected seat belt.

Not only did American corporations and labor no longer trust the government, it appeared that the government no longer trusted them.

Not surprisingly, light vehicle sales tanked. 1975 looked as if it would be lucky to reach half of 1973's volume.

On August 8, 1974, during the acoustic segment of a Crosby, Stills, Nash, and Young concert in Newark, New Jersey, Richard Nixon resigned the presidency.

Six months later, during half-time at Super Bowl IX, Joe Garagiola suggested that the solution to all our economic ills could be solved fairly simply: "Get a car. Get a check."

Five years later, round about January, and on its way to 70 something consecutive monthly sales records, Tom Messner and Barry Vetere produced a $100,000 television commercial for Saab with a visual of empty car haulers driving down various roads.

The voice over ran something along the lines of, "Last year, Saab sold every single car they imported to America...even the 36 neon green ones with the orange interiors, and the rubber floor mats. So, if you want to buy a Saab this year, you might want to hurry."

This was clearly out of step with what had become standard automotive sales procedure, but according to Bob Sinclair...CEO of Saab NA at the time; "If you build cars that people want to buy, and price them accordingly, you don't have to bribe them to buy them."

Now that we’ve gotten beyond the hoopla of this year’s Super Bowl, and the depressing atmosphere at the recent North American International Auto Show, I would sure feel a whole lot better about the future or our automobile industry, if President Obama could find the time to have lunch with Bob, before we begin production of the new Pelosi.

© 2009, the Institute for Applied Common Sense

Post No. 79a: Article of Interest - Where are we in Terms of Electric Car Technology?

For the past couple of weeks, we have engaged in a conversation about whether the private sector or government should perform certain functions in society. We entertained all points of view, and even presented some arguments by Nobel Economics Laureate Milton Friedman, highlighting the different positions.

The following article appeared in the January 18, 2009 electronic edition of the Free Press. The article, entitled “Detroit 3 Say They’ll Need Help to Go Electric,” was written by Justin Hyde of the publication’s Washington staff. We’d like to hear from both free market advocates and government interventionists as to the factors which led to this situation, and what we might do going forward to accelerate the technological advance. Obviously just throwing money at the issue, no matter what the source, will not advance the technology overnight. Those of you with engineering or science backgrounds need not comment; this one is for the “policy” makers.

“When Tennessee Sen. Bob Corker strolled into the Ford Motor Co. display last week at the Detroit auto show, Mark Fields had his pitch for electric vehicles ready.

“The Ford vice president steered Corker toward a display showing the underside of a Focus converted to all-electric power, and pressed a case that Ford and other automakers couldn’t make such models happen alone.

“’We are really going to need to partner with the government and the electric companies,’ Fields said. ‘The infrastructure is key. If you’re going from one state to another, where are you going to plug in, what are you going to charge for it?’

“It’s the kind of conversation that Detroit’s executives will have plenty of practice with in the coming years…." [Read More.]