Who Gets the Blame for the BP Disaster?
a look at consumption, tacit encouragement, and acceptance of systemic risk
Posted May 20, 10:07 pm in business, culture, environment, ethics, human nature, sustainability
The BP oil disaster in the Gulf of Mexico is set to be one of, if not the biggest, environmental disasters in history. There’s been a lot of talk from the political left about about BP’s negligence and how their abject greed and lack of concern for safety precautions led to this problem. While I agree that BP probably did neglect their duties in some ways (evidence does seem to suggest this), and in a lot of ways should be held responsible for their failures, I also think that blaming BP is a very myopic way of looking at the problem and in preventing future disasters.
It’s a longstanding theme— a trope, if you will— within the progressive cultural narrative to blame corporations for all our global and national problems, or at least to finger them as the root cause of all unwanted consumption-related externalities. This view also conveniently avoids having to take serious looks at our own behaviors as individuals and as a society, and how these continually place our country and our environment at risk. When I say this, my point is not to absolve companies of responsibility and to place blame elsewhere. I advocate a holistic view of the entire system— being contemplative about our own roles in the functioning of our society and our complicity in creating it.
Fact: there are serious risks endemic to our energy policy. An error can definitely be blamed on an oil company’s negligence, but simply blaming them does little to stem the damage the disaster creates. As a country, we seem unable or unwilling to face this. Stated another way: there are systemic risks that are inherent in the way our society has chosen to build its infrastructure, and the energy chain we now rely on to achieve the basic functionality of our society.
Blaming BP is a little like going skydiving and having your parachute fail to deploy. Yes, maybe you are right to curse, during your last 30 seconds of life, the skydiving company for their failure to properly prepare the parachute. But as you can quickly see with this example, when you’re falling 120mph towards the hard, cold earth, it’s a bit too late for finger pointing to be productive. What would have been useful to know beforehand was that there is serious risk involved in skydiving to begin with. There will eventually be an accident. No matter what. The statistics might change, but there will at some point be an accident that someone will pay dearly for. And you might be the one affected by that accident. Maybe you should think about that before you go skydiving.
Inadvertent environmental damage. Inadvertent pollution. Inadvertent destruction of natural habitats. Inadvertent damage to ecosystems. Inadvertent killing of important portions of the food chain. These are but a few of the risks we assume with our energy policy. And I would describe this as systemic risk because damage to any one of these spheres could have serious ripple effects in other spheres. A failure of one off-shore oil drilling platform could potentially kill off a vast amount of ocean life. We do not know what degree of damage this might end up being once the effects of this echo throughout the chain. The interplay of factors is complex enough that it’s difficult to predict what kind of collapse we might trigger through one disaster stemming from energy procurement. Realistically, we must come to grips with the idea that things will go wrong from time to time. But to only criticize the companies behind such environmental disasters is to look askance at our own roles in creating the conditions for things like this to happen.
Like it or not, these companies sustain us and our way of life, which is why they are drilling out there in the first place. Unless we are willing to make compromises or wholesale shifts in our consumption as a society, then we’ll continue to have periodic disasters from things like off-shore drilling because things inevitably go wrong every now and then. There is no avoiding this; it’s the nature of a complex system for periodic failures to occur. It’s naive to think that companies simply don’t care about disasters like this; for BP, it’s not only bad PR, but they’re losing billions in profit from all this spilled oil.
Yet, regardless of what happens to the companies, we all suffer for these errors, and maybe in ways we haven’t even thought of yet. One error can be devastating to the entire human race and all life on earth. Yet, we allow companies to engage in activities that expose us to these risks. Why? Because it enables our lifestyle. We could easily prevent them from doing it if we as a society (through our elected officials) agreed that this was not something that was worth risking. But we don’t. We have comfortable lives that we receive as a benefit of allowing the behavior to continue (at least until the inevitable disaster); politicians feel pressure to support risky activities because as a society, we don’t appreciate the level of risk we’re investing ourselves in until it’s too late. Yet, it’s clear that the fewer risky behaviors we encourage or allow as a society, the less number of disasters we’ll have as a whole.
Currently the cap for all damages is $75 million, to be paid by BP. This, as you might imagine, is far lower than either the damage this has been valued at or the amount of money it will take to clean up the spill. Some outraged people think that we should raise that cap into the tens of billions. This sounds good, until you realize that some things are just unfixable. This oil spill (more like a geyser) is pretty much unfixable at any cost. It’s just too late.
Frankly, I think we shouldn’t increase the cap. If anything, I think we should lower it. Why? Having a huge cap will offer us psychological relief that we can keep allowing industries to do things that impose great risks to our society and planet. The larger this cap is, the more we feel like we will have someone to blame and someone who is “responsible” for fixing the problem. But like I said earlier, some things simply are not fixable. A money-back guarantee from a skydiving company isn’t going to do you much good when when you’re falling out of an airplane without a functioning parachute.
If we believe this disaster to be an exemplar of the kind of risk we are not willing to accept as a byproduct of off-shore oil drilling, then we should never have allowed this kind of drilling to be authorized in the first place. If we have low caps on similarly risky pursuits in the future, we’ll probably think a lot harder about what we allow to go on. Getting someone to fork over money for cleanup is the easy part. Actually undoing damage that a disaster on this scale causes is another, largely intractable problem that we’ll suffer the consequences for for a good long time. Lowering the cap forces us, from the very beginning, to think about what we’re doing when we authorize something. That’s what having no insurance policy forces you to do; you have to evaluate things based on an uncolored view of the risks because you are the one who is going to suffer the consequences. This is a realistic view because in the case of environmental disaster, we are all affected; a closed system like planet Earth is at jeopardy in its entirety when just one of the checks in a network of environmental checks and balances is threatened. It’s just easy to forget it when you can bill someone else for the problems.
If we think from the beginning about the costs we all have to deal with instead of the costs “some company” has to deal with, we’ll be a lot more careful in the future. If there is a future.
Comment [6]
Corporate Social Responsibility Can't Happen By Itself
emphasis on short-term profitability stunts CSR’s ability to thrive in the market
Posted Oct 1, 10:40 pm in business, business models, culture, economics, ethics, finance, improvements, marketing, sustainability, unfinished thoughts
Regulation is a pretty hot topic. And when I say “hot,” I mean that it has an uncanny ability to divide a crowd. Progressives seem to generally favor regulations as a means of limiting the damage caused by corporate recklessness, and they have been quite vocal in pushing for greater government oversight in what companies can do, and how much they can do it before incurring serious penalties. Meanwhile, proponents of the free market maintain that the only fair and effective way to handle regulation is to allow the market to do the work; they believe in an efficient economic system that automatically controls problems that really matter (i.e. the problems most people care about). I personally can sympathize to some degree with both sides of this debate, but am not convinced that either can be implemented as solutions to the problems we currently face. What follows is my logic.
Before we can go on though, we have to face facts: it’s been obvious to those paying attention that market forces have not been effective in curbing devastating environmental damage caused by companies who have ignored the social costs of their operations. It’s not limited to environmental damages, either. The recent financial meltdown almost certainly would have been prevented with more oversight.
The traditional progressive (read: “liberal”) line about all this is that these corporations are just greedy and soulless, and don’t care about anything but profit. But this views corporate activity within a vacuum, and denies the economic realities underlying their behavior. In the absence of proper incentives, no company will behave in a manner consistent with diffuse, idealized social goals. Companies by their very nature act in ways that are most beneficial to themselves in the marketplace; even companies that try to do social good still have financial and publicity incentives underlying their behavior. Why? Because if they don’t, they effectively get punished by Wall Street and the market; remember that when we’re talking about the stock market, the bottom line is that public companies (i.e. the biggest organizations on the planet, who control the most money) pretty much need to post higher-than-expected profits consistently— or else. On Wall Street, nobody gives a hoot about how socially responsible you are— unless you’re making money from it. And tragically, our system is structured in such a way that companies really cannot afford to piss off Wall Street, for a number of reasons that go beyond the scope of this commentary.
Nevertheless, that is an economic reality; to condemn a company for being socially irresponsible overlooks the conditions that encourage the sort of reckless behavior that we hear so much about. In my opinion, it’s more of an indictment of our social and financial structure than it is of a company to say that they act irresponsibly. Like I’ve said before, we should think of corporations like organisms. They do what it takes to survive now. They typically can’t afford to think too far in the future, because Wall Street does not reward thinking far into the future; Wall Street rewards thinking about next quarter. Whose fault is that? I’d argue that it’s all of our faults. In an environment of high competition and high risk of market punishment, it’s unfair to blame companies for playing the game by the rules we ourselves constructed. Of course, it doesn’t make what they do ethically right, but like in any evolutionary context, the concept of justice doesn’t play a large role in behavioral decision-making; surviving does.
So yes, public companies do operate by almost strictly by financial motives, just like many progressives indignantly charge. But I would argue that this financial motivation should not at all detract from the actions of, say, Wal-Mart, who has done more than almost any other company in the world to enact serious green initiatives. True, they’ve done it for themselves, their own bottom line, and Wall Street— but still, they’ve done it. And if that’s the motivation they need to do it, then perhaps we should encourage that. Besides, if they were supposed to adopt a sudden conscience about their activities and rectify them, whose social goals are they supposed to strive for, anyway? Lots of different social factions have lots of different goals, and many of them have incompatible or actively contradictory goals.
For this reason, it seems fair to place the decision-making process in the hands of the public, through market forces. That allows a sort of collective decision-making process that is free from being regulated by “some guys on a board,” and allows for us to ostensibly have a shared voice in determining the direction that we take as a planet. Unfortunately, however, there are some problems that such market forces don’t resolve. For example, the economically well-endowed have a disproportionately large voice and thus the ability to unilaterally have a strong negative impact with their choices. And there’s still no guarantee that the aforementioned group will pay attention to social well-being if they’re still being held hostage by Wall Street demands. Free market economics as a means of regulation is dependent on not only market efficiency, but ethical, rational, and well-informed decision-making on the part of consumers— many of which are corporate entities.
But as consumers we are neither rational nor omniscient. We are sometimes ethical. But we can’t know everything about all the downstream effects of all our purchases at the time of purchase. This makes it pretty hard to argue the point that the market will be able to curb environmentally damaging business practices through selective consumption.
That may seem like a slam dunk for regulation, and many on the political left would love to see this happen. But it’s not that easy. The problem of regulation is complex, and it is difficult to enact regulation in a way that appears fair to everyone. Here’s the main problem: if there are regulations, who gets to call the shots?
Some might argue that we should use science to guide our regulatory policy, at least with regards to environmental concerns. But what science? Even science can have an agenda. The more you look into scientific research, the more you see how there is a chain of funding. Funding is a political process. People conducting research are subject to biases. No matter what the science says, or the preponderance of evidence suggesting one thing or another, when it comes down to drafting law, there will almost always be some arbitrary component about implementation (e.g. exactly how many tons of CO2 a company can release per year; exactly what chemicals a company can and can’t produce). And those people whose economic interests are being impinged will no more welcome the validity of the science or the arbitrary lines being drawn than a liberal would welcome Sarah Palin’s views if she was placed in charge of preserving endangered wildlife. Ultimately, any laws will be seen as political tools with embedded agendas.
Though it is debatable how much this might change corporate attitudes towards CSR, I think part of the fix is to change the nature of Wall Street. It does not serve companies or society to have such a heavy focus on short-term profitability. This structure denies companies the opportunity to act in ways that favor their own long-term efficiency, the public’s best interest, and the well-being of the planet. If companies didn’t have to keep impressing Wall Street, they could better take actions that could, over the long term, make their operations more efficient, streamlined, and less wasteful. That would be good for their bottom line and for environmental concerns. But that takes time, and it might require a few consecutive quarters of what may appear to be subpar financial performance. Right now, this is a highly risky strategy that most companies wouldn’t consider because they will not be rewarded for it.
Weirdly, even amidst all the talk about reform in the financial industry, I have not heard any talk about this. Admittedly, I’m not sure if anyone has worked out the details about how a “new and improved” stock market system would work, or if anyone has suggested a better set of economic incentives for waste reduction, but perhaps it’s time we started a national dialogue about it. It seems rather important.
Comment [12]
The New Wave of Advocacy of Financial Recklessness in Advertising
in which desperation about the economy starts to set in
Posted Jun 24, 01:17 am in business, business models, consumerism, economics, ethics, human nature
The poor economy has hit a lot of people very hard. As such, there’s been a glut of commercials on daytime television extolling the virtues of various cost-saving products. But one in particular that I’ve seen lately has been striking in its unbridled pomposity. This commercial features a nicely-dressed, middle-aged, middle-class couple talking tough about their finances. The wife reveals, in a rather distressed manner, that their monthly paycheck is “spent before we even get it.” Her husband adds that they decided that they needed to make serious cuts to their monthly expenses. “That’s why,” the woman says shortly before her husband sits in a nice leather chair opposite a a rather large, late-model flat panel television, “we switched from [a certain brand of satellite television network] to [another brand of satellite television network].” Huh?
Commercials like this trouble me. Obviously, the goal of some marketers is to get people to fork over money for things they don’t necessarily need. However, the mechanism employed by this commercial is to encourage financial recklessness by actively reinforcing the idea that certain luxuries are actually necessities. This demarcation of necessity/luxury is being increasingly blurred by advertisers, many of whom are now attempting to leverage latent consumer concerns about financial security to get them to actually spend more! By buying this [unnecessary] product, you’re actually demonstrating good financial judgment. Objectively, this assertion is not true; yet commercials like this one create an illusory social consensus about the wisdom of certain ill-advised consumer behaviors. After all, why would that nice couple on TV lie to us?
This trend is not limited to premium television channels. Many cell phone commercials seem to suggest something similar about “saving” money through consumption, as do many home internet services. No doubt, these services are extremely convenient, but for most people they are far from necessary, particularly if you are concerned about losing your house or climbing out from under a mountain of debt, both of which are probably much bigger concerns. The auto company Hyundai began running ads encouraging consumers to buy their cars, stating that they would allow a consumer to return the vehicle if their income stream was interrupted in any way. Ford and other car companies soon followed suit with similar programs. The question remains as to whether it is a wise idea for anyone who is concerned about the future of their income stream to purchase a car in the first place; after all, shouldn’t such people be trying to save money for future financial straits for when they potentially lose their jobs?
This brings us to rather salient questions about marketing ethics. Marketers are already considered pretty low on the food chain in terms of ethics, but in the midst of a global financial crisis, advocacy by companies of personal financial indiscretion is still a very ugly sight to behold. We should recall that lifestyles of excess were at the root of the sub-prime crisis, and we might be concerned by the idea of consumers being egged on by industry to continue doing it. We can’t legislate morality, but as consumers we can certainly question the ethical standards of companies whose competitive business model rely heavily on their customers’ bad judgment. But to be fair, we also can’t discount the role of the consumer either; surely consumers must take some responsibility for their own financial well-being.*
Troubling as it may be, I see this as simply a continuation of what has always been going on in marketing communications: companies try to promote certain beliefs, consumers hear it and form a dialogue with it. The ideas that consumers find convenient and/or believable stick; those that do not, fall by the wayside. It’s not perfect, but at least it’s somewhat democratic. But like democracies, sometimes it’s the stupid ideas that win out in the end.
* We tend to think of the U.S. economic system as being largely modeled on free market economics, which is in many ways built on the idea of consumers making informed choices, companies responding to market needs, and companies competing with each other to provide needed goods and services. Shift all the responsibility on any one party, and the equation starts to break down.
Comment [1]
Marketing Privacy
amidst consumer fears and self-consciousness, retailers should offer something that’s hard to get
Posted Jun 15, 01:06 pm in business, consumerism, culture, human nature, improvements, marketing
It’s not infrequent that you hear people lamenting about the loss of privacy in modern society. Grocery stores want us to get loyalty cards so they can monitor what we’re buying and change their marketing mixes to capitalize on it. Facebook wants to sell our user information so marketers can post up banner ads about things they think we might buy. Data mining software on our computers watch what we’re doing and send that information to various companies that sign us up for junk mail and email spam lists.
Some of us actively combat this trend by being secretive when companies try to get information from us, while many of us are just resigned to it; but it remains true that privacy is a highly-valued commodity in our society. Some people value privacy because they don’t want to deal with the irritation and annoyance of people constantly trying to sell them things. But there are also real concerns about things like identity theft and corporations mining information for purposes that many people don’t feel comfortable about. Then there’s the fear of humiliation; sometimes people simply don’t want others— friends, acquaintances, and even strangers— to know certain things about them. There are, for example, fears of looking pathetic or comical in the eyes of others, or fears that potentially embarrassing information might circulate.
This morning, I happened to be in the pharmacy buying some calamine lotion for a poison ivy problem, but I noticed that in the same aisle there were numerous products for problems of a more embarrassing nature, like the slew of products for jock itch. Some people would rather live with the jock itch (or buy a $5 product online and have it shipped out for $7) rather than take that to the counter and face the cashier, knowing that they’re probably snickering under their stoic fascade and laughing about it with co-workers later.
Two aisles away were the condoms, prophylactics, and lubricants. I bet that only a quarter of people looking to buy “male enhancement drugs” in a pharmacy actually have the nerve to take the product to the counter.
In bookstores, I wonder how much potential revenue from the sales of self-help books, health and medical literature, and erotica (or pornography) is lost due to the inability of consumers to work up the gall to look another human in the eye while the price scanner brings up the book title on the computerized cash register.
I mention all these things not because they are humorous and we may see the universal human emotions involved in them, but because there’s a real marketing problem involved here. Consumers want to purchase things but are thwarted by their inhibitions, insecurities, and retailers’ apparent inability to acknowledge these feelings. Retailers are damaged not only because of the lost revenue from salable products that people are actually willing to fork over money for (but won’t), but because these products are taking up shelf and warehouse space and aren’t getting the turnaround that they could. There are high inventory costs to products that don’t shift units.
Some grocery stores, to save on labor costs, have implemented self-checkout lines in which customers ring up their own sales and pay for them through a machine. A system such as this would be incredibly valuable at stores like a bookstore or pharmacy. It offers customers an outlet to pay for an item and retain their privacy. They don’t need to talk to anyone, they don’t need to feel embarrassed, and they don’t need to feel like they are being judged. Retailers benefit because it keeps customers focused on getting the things they need, rather than feeling uneasy about making the transactions. These machines are a little clumsy in the grocery stores, but they would work much better in these venues than they do in grocery stores because you’d typically have a lot fewer items, and all the items have UPC codes (unlike vegetables in the grocery store, which are a pain to ring up).
There’s no doubt that persons in positions of power at retail organizations have recognized this issue. Yet, short of grocery stores (which have ostensibly implemented them for different reasons), I have yet to see one brick-and-mortar store do anything to remedy this misalignment. There may be a number of reasons for this, including concerns about theft, space, bucking convention, and good ol’ status quo; but in my view, the benefits outweigh the drawbacks by a significant margin— and for consumers, it would be a welcome change from feeling like their every move is being watched. For bookstores, it has the added bonus of keeping them as anonymous as Amazon.com, who they’ve been claiming has a competitive advantage over them.
Comment [2]
The Mystery of Coffee Refills
barriers to behavioral change are not always obvious
Posted Apr 21, 12:30 am in business, economics, environment, human nature, marketing, sustainability, unanswered questions
There is a Peet’s Coffee stand in the cafeteria of the building where I spend my days. They have a deal where you can bring in any size container and get a refill for $1.50. The cheapest size of coffee you can buy without getting a refill is $1.65, for a small size. I’m not a big coffee drinker, but as the semester rolls to a close, I find myself going there somewhat frequently. I always bring my old cup so I can get the refill. It saves me a few cents, and besides, I don’t like throwing away coffee cups. It’s not just the cup that bothers me, it’s the heat-insulating jacket and the plastic lid as well. It seems like a lot of stuff to be throwing out, especially if you buy coffee every day, or multiple times a day.
What I find very strange is that I’m surrounded by people who drink a lot of coffee— like 3-4 cups a day— and yet I feel like I’m the lone soul who brings in his used cup to refill. This seems particularly odd because a lot of the people around me are other students who, like me, are living their lives dangerously close to the poverty line and could probably use every cent that they might save.
Unsure about this incongruity, I asked the cashier one day if many people refill their cups. “Hardly anyone,” she replied, “but there are some people who refill huge containers.” She motioned with her hands to show how big the containers were. They were rather large.
Peet’s is apparently okay with this abuse of their refill policy, but the cashier seemed to think it was crazy. The reason Peet’s is okay with it probably has something to do with the facts that 1) they want to promote some kind of environmentalism, 2) refills save money on cups, lids, and insulators which are somewhat expensive, 3) it serves to reduce their waste disposal costs, and 4) hardly anyone gets refills.
But I find the fact that few people get refills curious. Of the people who frequent this coffee shop, many of them are graduate students, staff, and professors, who have offices within the building. Many of the undergraduates have storage lockers in the building as well. Yet the incentive structure is apparently not appealing enough for many of these people to get refills.
For a number of reasons, it is very interesting to observe the lack of consumer response to this initiative. First, it’s not very difficult for anyone to take advantage of it; that is, it doesn’t really create much inconvenience (especially for the customers who have offices or lockers within the building). Second, it demands very little change to habitualized behavior to get the refill (people just have to remember to take the cup with them to the coffee shop). Third, people— particularly those who drink a lot of coffee and multiple coffees per day— stand to save a good amount of money (if you buy a large coffee, you can save some 60 cents per drink, which can add up very quickly). Fourth, it demonstrates how inured we are to our disposable culture; the thought of refilling probably doesn’t occur to most people because they’ve simply never lived their lives in this manner.
As a person interested in understanding how to make behavioral change more appealing in social marketing contexts (this being of environmental concern to me), I note this: despite the bevy of benefits (reduced costs to the consumer, access to virtually infinite quantities of coffee, significant reduction of environmental waste) and the relatively minor drawbacks (you have to keep the cup and remember to bring it when you visit the store), this effort to promote refilling has generally failed. So I ask: what kinds of changes need to happen to make the reuse of coffee cups appealing for the customers of this particular store?
Post your thoughts or comments below, particularly if you are a regular customer of this or any coffee shop!
[Note: I realize that if you read the previous entry on this blog, it may seem to conflict with my attitude here. I should explain: this entry is about encouraging behavioral change that promotes certain ideals; the previous entry was expressing frustration with the repeated insinuations from industry that behavioral change is unnecessary if you just buy the right products. That said, I do not mean to discount the importance of careful and well-considered consumption, and its role in making social impacts; I simply reject it as a singular strategy.]
Comment [3]
Organizations as Evolutionary Entities
the simple yet complex task of curbing unwanted behavior
Posted Apr 4, 03:01 pm in business, business models, economics, human nature, marketing
In two separate incidents yesterday, I was conversing with friends who were lamenting about how awful the press is, with their sensationalist headlines, sordid gossip-mongering, and terrible invasions of privacy. “It’s awful,” my colleague remarked, “They are ruining the world. Why don’t they take it upon themselves to be more constructive and positive?”
I don’t disagree that the press is ridiculous sometimes. But at the same time, anyone who understands marketing has to understand that corporations, including the press, are mirrors of our society. They must be to survive. If sensationalism didn’t sell, no one would be publishing such stuff; it just wouldn’t make business sense.
I think of organizations as animals operating in an evolutionary context. Give a dog a treat when it acts in a certain way and it will instinctively continue to perform that action in the future in order to get more treats; it’s a simple matter of self-preservation. If you can secure your food source, you are less likely to die. Punish the dog for an action, and over time it will eventually stop; clearly, you don’t want to piss off the hand that feed you.
We like to complain about tabloid newspapers, environmental destroyers, and otherwise irresponsible companies, but when it comes time to punish them for what we claim to disdain, we do the exact opposite and throw them a treat— whether that is by buying their products, rewarding short-term profits on Wall Street, or by throwing up our hands and disavowing our own role in the process.
The concept is very simple. Money is the lifeblood of organizations. Withhold it from them and they’ll stop what they’re doing.* It just makes economic sense for them. And while that may be a hollow victory to some who want companies to acknowledge some moral responsibility for their reformations, this is probably the best they’re going to get on any global scale for now. And besides, even though it may only be for economic reasons, scientific inquiry has repeatedly shown: economics is one of the primary drivers of behavior in modern social settings— and it would be foolish indeed to ignore that.
* Take for example this article, which talks about how an angry internet mob banded together to stop buying Tropicana orange juice because they were angry about the redesigned package. In my opinion, a ridiculous, laughable reason to get outraged; but nevertheless, they got the company to revert to their old design by causing a 20% drop in sales! Now imagine if people were outraged about things that really mattered…
Comment [2]
Business, Social Justice, and the Problems of Fairness
Posted Mar 28, 11:03 am in biology, business, business models, economics, human nature, politics, sustainability
If you observe traffic in India long enough, you’ll arrive at the conclusion that there are no road rules in India. But this is not true. There is one rule that dictates driving behavior: Might is right. To Westerners, this is a discomforting thought, because it bypasses the systems of social justice that we are used to in the West. Shouldn’t you, as a small car, have the same rights on the road as a mammoth SUV? Shouldn’t you, as a pedestrian, be able to cross a crosswalk without fear of being flattened by a speeding vehicle?
Most Westerners probably think so. Fairness and equality is ingrained in our outlook on the world. We look for courts and governments to level playing fields for us. If someone smashes our car in an accident, we use the law to restore ourselves to the situation we were in before the accident. We call that justice.
The ideals of social justice, fairness, and equality are lofty; it’s hard not to get upset when you hear stories of unfairness (persons being wrongly convicted of crimes, people losing all their money in elaborate frauds, etc.), and it’s even harder not to demand justice when something like this happens to you. Yet, I have recently begun to understand the sorts of costs that this has had on our society, both in an economic sense, but also in a psychological sense. I fear that despite the high-minded ideals of social justice, it does not always serve us well as a society to rectify every injustice leveled against us.
I wonder about how the concept of justice fits into an evolutionary context. Does it fit in it at all? Evolution would suggest that some individuals (organizations) are better suited for prevailing conditions than others. The weak and frail will be consumed by the environment, and the strong will soldier on, and grow. Evolution is the law of nature for all beings, and it is a law that is the supposed lifeblood of capitalism. Despite this, our system (at least in the U.S.) continually ensures that those who cannot compete— fairly or not— can be sustained artificially by a system that will nurse them regardless of their strength or potential to compete effectively in the future. This is not true for all firms, but it’s true for many. Think of GM and Ford, think of AIG, think of the ridiculous amount of subsidies given to industrial farms.
You might be wondering where I am going with this. What does bailing out companies have to do with social justice? Remember why the government is currently bailing companies out; it has very little to do with the companies themselves. It has everything to do with the idea that some people unfairly lost their life savings in them, and hundreds of thousands of people will unfairly lose their jobs, and the resulting economic meltdown will unfairly ripple throughout society and affect people who had nothing to do with it. So what is the solution? A lot of people feel that ‘investing’ billions of dollars into these organizations will re-establish justice to not the auto company, but people who might have been impacted by their problems. All those hapless investors won’t lose their hard-earned money. All those dedicated auto-workers who labored at GM for 35 years won’t lose their jobs. And all those bystanders won’t be leveled in the narrowly-averted nuclear winter.
I can’t help but anthropomorphize this situation a bit by comparing it to the way a parent welcomes back the proverbial prodigal son with open arms despite the kid’s waywardness. At least to some degree, we expect this from good parents. Madonna’s song “Papa Don’t Preach” has the narrator begging her religious father for support instead of judgment despite what in his eyes is her grievous sin of becoming pregnant as an unwed teenager. But we’re talking about supporting wayward organizations here, which will have broad social impacts. Welcoming back companies that recklessly screwed over investors and their own employees should not necessarily be supported in return, though it’s tempting to do it because of the other parties that might be affected by a failure to do so. So let’s start with why it may not be a good idea to bail out these companies, and then move on to why it’s even bad for the related parties.
There’s a good chance that Madonna learned her lesson and won’t get pregnant again, but the guys at GM are more akin to heroin addicts than teenagers who made some bad decisions. They’ve been supported by government money so long, are so far from market-orientation, and so incapable of the sorts of organizational change that are necessary for detoxification that it seems impossible to give them any sort of support without tacitly feeding their addictions. Sure, you can give GM money to go rehab, but there’s absolutely no indication that they’re interested in rehab. They want to stave off the looming disaster on the horizon for one more day. If perhaps they showed the least bit of interest in market orientation and willingness to be innovative, it might be different. But that’s not the case at all. They simply expect to be saved because they always have been, and the government plays into their hands largely out of habit.
Despite this, no amount of money given to the company is going to restore the lives of the victims of corporate irresponsibility, and no amount of money alone will prevent the threats of insolvency from being constant and recurring events. Of course, we are often victims of the sunk-cost fallacy, which suggests that because we’ve already wasted so much money on these companies and they’ve already created so much chaos, that we should escalate our commitments to them to hoist them from the tarpit from which they’ve carelessly driven into (again)— which is precisely the wrong tack in this situation. The best thing to do is to walk away and never look back, despite their anguished screams.
I know that many people would be affected negatively by this course of action. I realize that many retirements will be ruined, many workers will hit the skids, and their kids may never be able to attend college. I understand and empathize with this hardship. But what worries me is that trying to correct these unfairnesses actually set us up to create exponentially more of them, and make us more susceptible to future crises of the same or greater magnitude— and it has nothing to do with the actual transfer of money, and everything to do with economic incentives.
Put bluntly, these organizations are drains on the system, and further feeding them and the people who they have hurt is an even bigger drain on the system. That said, I understand that we live in a society, and we can’t always think about things in these terms. I don’t advocate, for example, that we stop all social services, which many perceive as drains. But it’s damaging to the business environment and ultimately consumers to support businesses just because we always have. It not only encourages organizations to be reckless about their management habits, but it encourages those who work for them and invest in them to behave carelessly and greedily. Aggregated over a nation and over decades, it’s primes us perfectly for future disasters of equal or greater magnitude.
Put the right incentives in place, and you can avoid this sort of thing. If you knew that no one was going to bail you out, your company would probably act in a much more controlled manner. If you were investing your life or your live savings in that company, you might spend a bit more time scrutinizing the management practices of that company. Which is what these organizations and people are supposed to be doing in the first place.
Consider this: a herd of antelope will never try to nurse or save an injured antelope, regardless of whether it was maimed by a predator or by another antelope. To do so would jeopardize the future of the rest of the herd. Standing around and attending to the injured puts them all at risk. And indeed, some antelope will need to serve as fuel for the predators. These predators probably aren’t viewed positively by the antelope (if they have such a capacity), but in a way, they are actually protecting the antelope society as a whole because they enable a systematic checks-and-balances that promotes a balanced ecologic sphere that keeps the antelope’s environment stable. Without this, the antelope would overpopulate and eat themselves to famine. Then all of a sudden, the seeming prosperity would reveal itself to just be an elaborate illusion, and they’d see that actually there wouldn’t be enough food or resources to go around. Does this sound at all familiar?
Authenticity is Hard to Come By
but we like it when we see it
Posted Feb 25, 07:36 am in branding, business, human nature, marketing
A song like the Beach Boys’ “Barbara Ann” would never come out today. Well, at least not in the way we know it. It’s not the charming, perhaps quaintly theme of high schoolish-infatuation that makes it unusual so much as the production. Recorded for the Beach Boys’ Party! album, it features a lot of off-key singing, missed cues, laughter, and an all-round lazy production. Ordinarily, this would be considered a disastrous performance and the master tape for this recording would be locked away in some vault so no one could ever hear it. But instead, it reached #13 on the Billboard charts in 1965 and remains one of the Beach Boys’ most iconic and loved songs.
These days, it’s not uncommon to hear about artists and producers recording and re-recording hundreds upon hundreds of takes to get everything just perfect. But in my opinion, there’s something missing from recordings that are too clean and polished. They might be technically flawless, but they tend to miss something— the human element.
Some of the best drummers in the world don’t keep a perfectly steady beat. A perfectly steady beat can be made by a machine, and you can tell immediately when a machine is doing it— not necessarily by the sounds themselves, but by the mechanical playing style. The human mind can recognize that sort of level of sterility, and we intuitively understand that good drummers swing.
In art as well as business, I believe that people do not, as a whole, respond with giddy approval to perfection that doesn’t seem honest (that is, refined to hide flaws that should be there). And by that, I don’t mean that people want service providers to screw up, or they want their products to be defective. What I mean is that people don’t want things to pretend like they are something that they’re not. While the providers of these products and services often want perfection, and spend a lot of time and money on getting it, ultimately this process is useless if no one can relate to the finished product. Something gets lost in that process of refinement— uniqueness and authenticity.
Maybe people won’t hate you for your sterile product, service, or corporate image. But I think they’d love you more for your quirks. And I’m not talking about fake quirks designed to engender exclamations of how endearingly quirky you are (see: Juno, a movie littered with some of the most forced efforts in quirkiness I have ever seen).
It’s a question of authenticity. Can we believe you are who you are claiming to be? And moreover, is this image that you are projecting something that we actually want to see?
Further reading: All Marketers are Liars: The Power of Telling Authentic Stories in a Low-Trust World, by Seth Godin
Burger King's Confounding and Unconvincing Message
trust the guy who has no idea what he’s talking about
Posted Dec 21, 06:08 pm in branding, business, marketing
The geniuses at Burger King’s ad firm have been deeply committed to their long-standing tradition of churning out increasingly edgy and attention-grabbing (read: disturbing and borderline offensive) commercials. The latest in its decades-old string of abominations is the controversial series of commercials it is calling “Whopper Virgins.”
Here’s the basic idea: Let’s take a Big Mac and a Whopper around to isolated communities around the world— communities that are steeped in their local traditions and largely unaffected by trends in globalization— feed them these sandwiches, and see what they prefer.
Many observers were aghast by the company’s use of tribal peoples to hawk fast food; BK’s apparent lack of compunction in traveling to remote areas of places like Tibet, Thailand, and Romania to film natives eating greasy Western-style burgers apparently reeked of exploitation and cultural insensitivity. Gee, who would have thought?
But let’s leave ethics aside for a minute, and think hard about what this ad’s message is trying to tell us: It’s saying that people who have never had a burger before prefer the Whopper. This, apparently, is supposed to make you feel confident that the Whopper is the superior burger. I find this an odd conclusion to draw.
If the Miller Brewing Company told you that they’d served a 21 year old kid who’d never had a drink in his life a Miller High Life and a Sierra Nevada Pale Ale, and the kid chose the Miller, you’d probably wonder about their line of reasoning in stating that this shows Miller to be the better beer. In this case, the kid’s choice of Miller as the winner alone calls his judgment into question, but the fact that the kid has no experience in drinking beers should cause you to wonder about his qualifications in making a particularly informed judgment. In fact, you’d probably be a lot more convinced by the judgment of someone who had drunk thousands of beers over his life, including hundreds of different brands. A borderline alcoholic with a good job and a taste for la dolce vita might be a good choice. Why on earth would you trust someone who didn’t know what he was talking about? You’d be more inclined to trust a connoisseur, or at the very least, someone whose tastes resembled your own.
And speaking of people whose tastes are like yours, Burger King is soliciting the culinary opinions of people who whose cultural palates differ wildly from that of typical Westerners. Tibetans, for example relish Yak’s milk, whose smell alone would make most people in the U.S. nauseous. Do you trust their judgment in eating a broiled piece of meat smothered in western condiments like pickles, ketchup, and mayonnaise? Most of the aforementioned ingredients aren’t even available in Tibet. Why would anyone think they’d be good judges of what a Westerner might seek in a sandwich? Imagine if you were asked by a Chinese restaurant to compare the relative merits of their jellyfish entree with one made by the restaurant’s competitor. How confident would you be that you had any qualifications whatsoever to make an informed judgment? And how much credence should be given to your opinion, anyway?
The Pleasant Green Illusion of Trader Joe's
Why one of America’s fastest growing stores is not quite what it appears
Posted Sep 2, 10:44 am in branding, business, business models, consumerism, marketing, postmodernism, semiotics
I recently moved to Madison, WI, and found that my new apartment is just blocks away from the perennial grocery store of choice of the archetypal liberal, Trader Joe’s. Don’t get me wrong, I love Trader Joe’s. They have a somewhat interesting— if a bit odd— selection of food, low prices on alternative-lifestyle staples like Morningstar Farms Vegetarian Meats, Hummus, and Dr. Bronner’s Soap, and the staff usually seem engaged and friendly in a way that you rarely see in the bigger chains.
Yet despite these virtues, there’s always been something that I’ve found very curious and fascinating about the store given its primary clientele: they package the hell out of everything. I’m talking about putting often unnecessary plastic bags around nearly all their produce (which is, incidentally, prepackaged and shipped from afar), hard plastic shells around fruits and tomatoes, and things like individually wrapped biscottis inside paper bags of biscotti.
The produce sections of standard grocery stores like Kroger and Safeway aren’t much better, but you can tell that there’s a lot less waste going on, on the whole. You can buy fruits and vegetables without using a plastic bag at all, but if you choose to use one, very thin plastic bags on a roll are offered. You can stuff your plastic bag with as much salad mix as you want. The bags at Trader Joe’s are much thicker, presumably so that they can ship without incurring damage to the contents of the bag, but they are sealed so that if you want 10oz of salad mix, you’ll be forced to buy two packages of the stuff.
Now, the interesting thing that I’ve noticed is that if you talk to people about Trader Joe’s, you will see that many if not most of its clientele view the store as being ‘environmentally sound’, espousing the values prioritized by the politically and environmentally progressive consumer, words like: organic, sustainable, socially-conscious, green, fair-trade, healthy, whole-grain, eco-friendly, and so on.
Strangely, as the store is able to capitalize on those concepts, there is little in the direct customer experience that should really suggest any of those things any more than any other grocery store. Not all of Trader Joe’s produce is organic or whole-grain, not all of their coffee is fair-trade, and not all of their eggs and meat are cage-free or free-range. Few customers know anything about what Trader Joe’s has to say about labor rights, politics, or environmental issues, but if you asked, I would bet they’d place them in the top 20% of American companies in all these categories. And yeah, they sell canvas bags, but they still bag your groceries by default in paper bags.
Both Kroger and Safeway both have sections dedicated to organic and whole-grain foods. Both also sell fair-trade coffee and free-range eggs and meat.
So what exactly is going on here? Why does Trader Joe’s get a free pass on environmental concerns and get to capitalize on all the standard jargon of the socially-minded left while the other guys are left to be viewed as the mainstream guys who don’t really give a shit about anything but profits?
Part of it, I think, is that Trader Joe’s is a much smaller store than Kroger and Safeway. It’s a mere fraction of the size by volume, but they carry a similar variety of foods but certainly not the diversity of brands. And for that matter, many of the brands they do carry are not to be found in other grocery stores. They don’t, for example, carry Kraft Macaroni and Cheese or Tropicana Orange Juice. Sometimes such products are on their own private label brand (whose name changes depending on what product it is; their Mexican products are stamped with “Trader Jose” and Italian products have the ridiculous name “Trader Giotto’s” on them). They also carry an unusually large percentage of imported or apparently exotic goods. These don’t by themselves convey the aforementioned concepts, but these features do set them apart in the minds of the consumers, which is important.
Another part of it, while subtle, is the décor. Contrast the feeling you get while walking in the close, friendly quarters of the Trader Joe’s store with one you get when walking the cold, labyrinthine halls of Kroger. Contrast the warm wood paneling and comparatively low ceilings of Trader Joe’s with the stony white floors and high ceilings of Safeway. Notice the prevalence of baskets in the Trader Joe’s store, and the gargantuan supermarket carts elsewhere.
Also, and this is important, notice the clientele. There is a very obvious difference in who the typical shopper in each of these stores is. It’s impossible to tell without some form of surveying, but I would be extremely surprised if the average Trader Joe’s shopper wasn’t more educated, of a higher socio-economic status, with a higher disposable income, and a more liberal bent. But is it the store’s ostensibly progressive values that attracts this clientele, or does the store get its progressive image from the people who shop there? Certainly, there’s a feedback loop happening here, but it’s also true that there wouldn’t be such an attraction to these sorts of people without some compelling cause.
One possible cause could be that progressives are attracted to each other and teem into places where there are people like themselves, even in the absence of any gastronomical pretense. Possible, but I don’t find it very likely to be the root cause in the case of Trader Joe’s; after all, why would this trend begin in the first place? A more convincing reason for the progressive psychographic’s descent onto this store is its decidedly eclectic selection of food, where exotic foods like shitake mushrooms and shelled edamame are placed fashionably next to staples like baby carrots, and exotic Hollandic stroopwaffels oh-so-nonchalantly next to chocolate chip cookies. This post-modern melting pot of food is likely the central point of resonance at Trader Joe’s. After all, if we are to cull the messages from all the progressive radio stations, left-wing talking points, bumper stickers, and Bay Area street fairs, it is this very quality of “diversity” that presents itself as some kind guiding principle of progressive thought and which shapes the idealistic visions of progressive society. It is in this world that “diversity” in itself is considered a virtue, even in the absence of any dialectic.
Of course, diversity of foodstuffs is one thing, but where does the image of social consciousness come from? The household cleaners aisle, which is right next to where you’d buy “natural” toothpaste (do Poloxamer 335 and Propylene Glycol really count as natural?), doesn’t feature the usual allotment of chemicals like Ajax and Windex, but instead has products like all-purpose ‘natural’ orange cleaner made from degreasing compounds apparently found in citrus fruits, and mouthwashes with tell-tale signs of products that are trying to market themselves as ‘natural,’ muted brownish packages.
And speaking of muted packaging, it just might be that as a whole, Trader Joe’s packaging is of a more muted health-food store color than their mainstream rivals. With the notable exception of the produce section where colors like brown and white are not typically indicators of quality, the remainder of the store makes use of these earth tones in a manner not consistent of mainstream stores, where bright colors and fluorescence are used in packaging the same way that circus carnies shout and prod passers-by with their staccato brayings.
Trader Joe’s expertly weaves a tapestry that references all the signals that progressives look for and can relate to in their political identity, but much of the “follow-through” is only implied. But the store has called out so many of these reference points, that it creates the illusion that it’s all there—an illusion that many of the store’s patrons seem to appreciate as much as if it really were.
UPDATE (11/12/08):
I had an interesting encounter the other day as I was shopping in Trader Joe’s. In the seafood section, my girlfriend and I noticed that they were selling orange roughy. This particular fish is one that is listed as endangered, as it takes nearly 30 years for it to reach maturity— far longer than most commercial fish— and it has a long lifespan as well, often living up to 150 years. With the U.S. fishing industry hauling in about 19 million tons of the fish a year, and many of those fish being more than a hundred years old, it is not an exaggeration to say that this fish may be extinct within our lifetime.
Regardless, we were perturbed by the presence of this fish at this ostensibly progressive grocery store, and decided to talk to the management about why they are selling this endangered fish— at $6.99 a pound, no less. The manager was quite up front about it. “We don’t consider ourselves a ‘green’ company,” he said, obviously a little tired of once again having to answer to the legions of progressives that shop at Trader Joe’s, and explain why they stock items perceived as being unsustainable or hostile to liberal consumption ideologies. He continued: “We let our customers vote with their dollars about what we put on our shelves, and though I understand your concerns, we sell a LOT of orange roughy.” He tilted his head towards the sky when he said ‘lot.’
So there’s the confirmation. The idea that Trader Joe’s is a somehow progressive or green company is a total myth created by the brand’s phenomenal marketing— which is largely based on word-of-mouth.
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