Category Archives: Economics

The Law of Stupid Consequences


Unintended consequences: outcomes of a purposeful action that are not intended or foreseen.

~American Sociologist Robert K. Merton

To understand the law of unintended consequences, look no further than the Violent Crime Control and Law Enforcement Act of 1994 (obviously named by someone who did not appreciate the value of a catchy acronym like CARES) or “stop and frisk.”  Both had legitimate goals, bringing down the crime rate, especially in inner cities where Black Americans were more likely to be the victims of violent crimes.  However, these purported beneficiaries, in too many instances, instead became casualties of misguided or overzealous law enforcement, leading to the current push for criminal justice reform and the Black Lives Matter movement.

Then, what is the difference between unintended consequences and stupid consequences?  When it comes to stupid consequences, regardless of a law’s initial objective, proponents should have known there would be negative outcomes prior to passage or implementation.  How?  History!  The same adverse aftereffects were observed and documented in a similar situation once before.

Which brings me to the most recent example, Donald Trump’s rescinding of an Obama-era rule to combat housing discrimination.  Yesterday, during a speech in Midland, Texas, he laid it out in black and white (pun intended).

You know the suburbs, people fight all of their lives to get into the suburbs and have a beautiful home.  There will be no more low-income housing forced into the suburbs. … It’s been going on for years. I’ve seen conflict for years. It’s been hell for suburbia.

First, for any action to be subject to the law of stupid consequences, it need not be worthy to start with.  Definitely the case in this “bullhorn” to Trump’s base.  Of course, as with don't confuse the issue with facts - Willy Wonka | Meme Generatormost Trump claims, the facts undercut his argument.  First, the July 2015 rule said nothing about forced low-income housing.  It clarified data requirements to determine whether there was persistent housing segregation within a jurisdiction.   Any deficiencies in data collection needed to be addressed if the city or county sought additional federal housing assistance.  Second, and more damning, the median housing value since announcement of the rule has risen from $215,715 in July 2015 to $271,768 in July 2019.  (Can you say 25.9 percent?  I knew you could.) Does anyone want to guess where the price of housing has risen the most?  Ooo! Ooo! Call on me: I know, I know.  Suburban America.

Believe it or not, that isn’t what makes Trump’s war on low-income housing stupid.  The unintended victims of this policy are (drum roll) suburban households. How I do I know this?  In 1996, I was part of the team at the National Governors Association that worked with the Clinton Administration and Wisconsin Governor Tommy Thompson to identify potential barriers to implementation of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, more commonly known as welfare reform (because the vice-president for acronyms had that day off also).

At the time, my title was policy studies director for economic development and commerce.  Participation by someone with those substantive responsibilities made sense.  Without more jobs it would be difficult to justify terminating public assistance to current welfare recipients if there were no jobs for them to fill.  Some things are obvious.  What was less conspicuous were some of the added employee expenses if the available jobs were located some distance from their homes.  You know, like in the suburbs.  In particular, transportation and child care.

These facts of economic life have not changed in the 24 intervening years.  If there is not affordable suburban housing, inner-city residents working at suburban based businesses are still strapped with transportation costs and the additional child care expenses associated with the time it takes to commute from home to work and back.  Those costs are often subsidized by the employers and (you guessed it) passed on to the consumer.

Ask white suburban residents if they think it makes sense for them to pay higher prices to subsidize inner-city residents’ child care and transportation costs.  My guess is most would say, “Of course not; that would be stupid.  Why would I ever do that?”

Because Donald J. Trump doesn’t want minimum wage employees to live anywhere near their places of work.  Maybe there’s an acronym for that.  How about IDIOT (Intellectual Dereliction In Our Times)?

For what it’s worth.


With a Bullet


…refers to a hit record that has entered the charts in a high position, or has climbed rapidly in the charts, or is thought to have the potential for further rapid potential.

~”with a bullet”/Wiktionary

Casey Kasem case: Family feud erupts over legendary radio ...The origin of the phrase “with a bullet” goes back to Cashbox Magazine, which published weekly listings of record sales from 1942 until its demise in November 1996.  One feature of its registry was to highlight songs with high potential by placing red bullets next to their names.  The phrase was also popularized by Casey Kasem, host of a succession of radio programs during which he would count down the most popular songs on the Cashbox charts.

A series of headlines this morning suggest there is a new version of “America’s Top 10,” the televised spin-off of Kasem’s radio program.

  • “Coronavirus Forecast Researchers Say Florida Could Be Next Outbreak Epicenter” (U.S. News and World Report)
  • “Florida Hits the Gas” (Fernandina Beach News Leader)
  • “Top Trump Donors to Stay on Amelia Island during Republican Convention” (Jacksonvile Daily Record)

Congratulations to the Sunshine State!  One week ago it was #11 on the charts when it came to confirmed cases of the coronavirus.  This week, it broke into the Top 10 “with a bullet.”  Following three consecutive days of record new cases, Florida is now #7 having passed Pennsylvania within the past 24 hours.  And, based on the difference in new cases in higher-seeded jurisdictions, is likely to move into the #5 position by the end of June.

Yet, News-Leader op-ed columnist Steve Nicklas trumpets the decision by the Republican National Committee to hold its Donald J. Trump coronation in Jacksonville, describing it as follows. “A celebrated event in late-August with mega-wealthy participants is just what struggling hotels and restaurants and shops here could use.”  Do you want to guess what the greater Jacksonville area does not need?  One more catalyst to accelerate the already burgeoning number of confirmed COVID-19 cases in Duval County for which Jacksonville is the county seat.  According to News4Jax, 12 percent of all the cases reported in Duval County since the outbreak began have occurred in the past three days.

Mayor Curry names Brian Hughes chief of staff | Jax Daily Record ...Which brings me to the last headline.  Heaven forbid, wealthy donors should have to stay in  the same hotels as the MAGA-hatted masses that make up Donald Trump’s electoral base.  For a mere $1.16 million per couple (this is not a typo), those mega-wealthy participants to which Nicklas referred can be part of the “Trump Presidential Trust.” According to the Fernandina Beach Observer, the VIP package entitles the donor “to the guaranteed hotel berth comfortably outside Duval County.”  So, while Jacksonville mayor Lenny Curry touts the “$100 million economic impact” generated by this potential COVID19 super-spreader, the Observer reports, “…the biggest margins in terms of hotel spending will be outside his jurisdiction.”

Therefore, Deprogramming101 is initiating a new Top 10 list, suckers who have been scammed by Donald Trump, the Trump family and the Trump Organization.  This week Mayor Curry broke into the Top 10 with a giant red bullet.

For what it’s worth.


Racism & A Moment in Time


What better time to look in the rear view mirror than the year 2020.  And while some events, most notably the eight minute 46 second public execution of George Floyd was impossible to miss, others were less apparent.  But numbers do not lie.  During the past five months, four centuries of systemic racism have come together in a perfect storm of physical, economic and social destruction in minority communities across America.

While journalists and pundits have focused on the lasting symptoms of America’s racial history–a disproportionate share of COVID19 deaths among African-Americans, rising unemployment even as the economy shows some signs of recovery, excessive force by police or Donald Trump parroting 50 year-old racist memes–they target the WHATS without examining the WHYS.  Racial bias is a filter through which we all view our environment and which influences everyday decisions consciously or subconsciously.  Consider the following example, international travel policy in response to the coronavirus outbreak.

On January 31, 2020, Trump’s Secretary of Health and Human Services Alex Azar announced a travel ban on flights to the United States from China.  Despite the fact 400,000 people from China entered the country during the month of January and another 30,000 were exempted from the ban, on its surface, the policy made sense since the virus originated in Wuhan, China.  Forty-one days later (March 12), Trump announced a travel restriction on 26 European nations, but exempted the United Kingdom and Ireland.  Two days later, the ban was extended to Great Britain.

What was the impact of the time frame in which the administration rolled out the travel restrictions?  Consider the following table, current as of 6:00 a.m. on June 8, 2020. (Source: Johns Hopkins University Hospital)

What do you notice about the top five ranked states?  They have airports–JFK, Newark, Logan, Philadelphia International and O’Hare–which service the most overwhelming majority of flights from Europe.  In contrast, California and Washington have the three airports–L.A. International, S.F. International and SeaTac–which are the initial U.S. destination for most inbound flights from China.  Most striking is the fact the first case of coronavirus in the United States was identified in Washington State yet it now has a fraction of the deaths reported in the top five states and California.

What does racism have to do with this disparity?  First, if you always refer to the coronavirus as the “China virus,” your first instinct is to focus on China regardless of what the data implies.  And exactly what would the data have told you if you had not followed your racist instinct?  First, the number of confirmed cases in Europe had been on the rise since February 22.  By the time Trump announced the restrictions on the first 26 European countries (March 12), the number of confirmed new daily cases had risen to 5,523.  By the time he added Great Britain (March 14), that same statistic had increased to 7,318.  Keep in mind, those confirmed cases may have included individuals who had been coronavirus carriers for 7-10 days prior to the appearance of any symptoms and could have had contact with individuals already in the United States or headed that way.

Weeks prior to March 12, data affirmed the virus was no longer confined to Wuhan or China as a whole.  It had already become a global pandemic.  But the second data point may be more relevant.  And since Donald Trump prefers visual aids, I wonder if his national security team showed him the following snapshot of air traffic on a typical pre-pandemic day.

Compare the number of overseas flights approaching the west coast and those heading to the five major airports in the Northeast and Midwest.  Airports in cities with large minority populations who are now paying the price of Trump’s witting or unwitting racial preference for those who look more like he does.

Yes, the virus originated in China, but it’s gateway of choice to America was via Europe.  Like a broken clock, Trump gets it right once in a while.  During an April 10 press briefing, Trump said, “The virus is so brilliant, the antibiotics can’t keep up with it.”  That’s not  the only thing that couldn’t keep up with it.  It remembered Trump had once said he preferred immigrants from countries like Norway and used that bias to its advantage.  For an administration that has made a living misdirecting the American public to follow the shiny object, the virus knew Trump’s eye would be drawn to China, leaving the right flank wide open, open to those invaders from countries more like Norway.

For what it’s worth.


Sticks & Carrots


Creativity101:  A valuable tool when it comes to creative thinking is the “unrelated stimulus,” taking an image, experience or lesson from one discipline and applying to a totally difference situation.  The power of this technique grows exponentially when you draw on multiple analogies.  Today’s post is inspired by two totally unrelated experiences.

Changing the culture of any organization occurs only when the individuals who lead and work within that culture modify their personal behavior.  There are two ways to do this.  We can either punish those who violate standards and norms or we can reward those who contribute to the fulfillment of the highest values and expectations.

Meat Processing use of HOClAs demonstrated by the following example, shifting from a culture of punishment to one of reward can make a significant impact on outcomes.  For most of its history, promoting safety in the meat processing sanitation business, one that involves high-pressure, scalding hot water and chemicals, has been stick-oriented.  The overwhelming majority of injuries, and even fatalities, have resulted from “pilot” error, employees’ not observing safety procedures.  Violations resulted in suspensions without pay or, in the most grievous cases, termination.

Employee turnover is among the highest in any industry.  It is not the most desirable way to make a living. Crews arrive after the second plant shift (around midnight) and must complete their tasks before USDA inspectors arrive the next morning.  If the plant fails inspection, crews are called back to address regulatory violations.  In these cases, the contracts between the processing company and the cleaning business generally require the latter to reimburse the former for lost revenue if the morning shift cannot start work on schedule.  In this industry, time is money and the focus is on systems and procedures.

Until someone outside the industry took a different approach.  Lance White, a financial analyst at ChemEx, which owned DCS Sanitation Management, was asked to prepare a prospectus to sell the company.  While evaluating the venture’s worth, White determined the business had substantial growth potential and decided to make an offer himself.  Upon taking the reins at DCS, White chose to prioritize employee safety as workers compensation insurance and client reimbursements for lost revenues were a major drain on profitability.

White decided to take a different tack from the industry norm.  Instead of docking employees for safety violations, he created a bonus schedule based on the number of days each employee completed a shift without an incident.  The result?  Fewer injuries, less payout to clients and eventually lower insurance rates.

30 years of innovation continues to carry out Mr. K's promise ...The second unrelated stimulus was Project Choice, a program of the Ewing Marion Kauffman Foundation in Kansas City.  Mr. K, as he was affectionately known to friends and business associates, wanted to help the largely minority student body that now attended the high school where he had studied as a young boy.  He viewed education as the way to break the cycle of poverty and incarceration which were a part of so many of these students’ family histories,  But Mr. K also believed in personal responsibility.

Mr. K melded these two principles in the design of Project Choice.  He offered to sign a contract with each boy and girl who entered Westport High School, beginning in their freshman year.  If that student graduated with a B average or better and stayed out of trouble, he would fully fund their college education (tuition, fees, books, room and board).  In some cases, the payout included graduate school or professional training.  As Mr. K would say at each assembly when new Westport students were introduced to the offer, “When others did not give you a chance, we wanted to give you a choice.”

I have thought a lot about Lance (a Miami University graduate, who I invited to speak every semester in my Imagination and Entrepreneurship class) and Mr. K over the past 10 days.  In particular, I wondered if the lessons I learned from each provided guidance to help us move beyond the anger, frustration and division which have plagued the nation since the murder of George Floyd.

Of the two, Lance’s approach to worker safety is an obvious alternative to law enforcement officers being fired and charged with crimes for excessive force and endangerment.  Imagine a system where police are rewarded when they demonstrate compassion and understanding for the residents of the communities in which they serve.  Or receive bonuses in incidences where they deescalate tension in situations which might otherwise lead to unrest and violence.  Do not tell me law enforcement budgets cannot support such payments.  Compared to the settlements and legal fees associated with civil suits, an economic case can be made that rewarding good behavior would be much less expensive than cleaning up after bad actors.

The relevance of Project Choice to the current racial environment is much more complex.  Putting aside those who have resorted to violence to achieve political goals, I cannot help but think looting, for the sole purpose of obtaining something to which the looter thinks he/she is entitled, has been exacerbated since the onset of the coronavirus pandemic.  Economic analyses show the increase in black unemployment since the outbreak is two percent higher than the population as a whole.  And more than 50 percent of African-American men are currently out of work.  As strange as this may sound, watching celebrities on late night television  and journalists/pundits on cable news shows from their spacious and well-appointed homes is a reminder of the disparity in lifestyles between the rich and famous and the average black household.  It is just one more piece of evidence of the income and wealth gap which has existed since the first African slave arrived in the new world 401 years ago.

I have been warned by more than one person to be careful about using the term reparations; so, I will let readers decide what to call the following analysis and proposal.  Regardless of label, the goal is economic justice and racial reconciliation.

Here are the facts.

  • In 2019, there were just over 17 million household described as “black alone” meaning they were not inter-racial.  Those represented 13 percent of the total 128.6 million American households.
  • That same year, the median annual household income in “black alone” households was $41,361 compared to $63,179 for all households, a difference of $21,818/year.

Suppose, as recognition of  the “knee that has been on the neck of black America” for four centuries as Al Sharpton preached at Floyd’s memorial service, Congress passed legislation which would allocate the differential in median income to each black household for one year.  The total cost would be just under $375 billion.  I know, budget hawks will be screaming bloody murder (one more false equivalency).  But it is nothing compared to the bailouts to corporate America since 2008 when one totals the housing bailout, the Trump tax cuts and now the COVID19 CARE package.

There are two more points that need to be considered.  First, some opponents of this concept will argue, “Why include every black household? Not all African-Americans are descendants of slaves.”  That is the easiest objection to address and is the main reason the use of the word reparations can be misleading.  Did Fred Trump ask those he prohibited from renting Trump housing whether they were descendants of slaves?   Did the NFL owners ask Colin Kaepernik if there were slaves in his family history when they blackballed him from the league?  As he pressed his knee on George Floyd’s neck, did Derek Chauvin think it mattered if his detainee was the great-great-grandson of a slave?  Every African-American, regardless of when and how they came to this country, has been impacted not by direct lineage to pre-Emancipation status, but by the underlying rationale for slavery, that people of color were less human than those with pale complexions, and thus, less deserving of equal housing, equal pay, equal justice under the law and equal rights delineated in the Declaration of Independence and the Constitution.

The second and final point is a recognition by African-Americans that they can also use this opportunity to make a reciprocal gesture to those who over the years have been the victims of illegal behavior by members of the their own community.  What if public officials and clergy in the black community began a discussion about how best each family could use the federal payment to promote reconciliation.  For example, what if black leaders suggested that anyone who had looted during the Floyd protests make an anonymous payment to the store’s owner?  I am not idealistic or naive enough to believe this would happen on a grand scale, but no movement in history every started with an expectation everyone would jump on the bandwagon immediately.

Every entrepreneurship class I have taught or attended began with some variation of the model devised by Jeffrey Timmons which described the three elements essential to any successful venture:  opportunity, team and resources.  The size and makeup of the team and the amount of required resources depended on the magnitude of the opportunity.  If the demand for change precipitated by George Floyd’s murder is as big an opportunity as some believe, we should not be afraid to assemble the proportionate team and resources to respond in kind.

For what it’s worth.


Birx’ Law


If people can social distance and do those things, then they can do those things.  I don’t know how, but people are very creative.

~Dr. Deborah Birx

The above quote is Dr. Birx’ response to the following question by CBS White House Correspondent Steven Portnoy during Tuesday’s “press beefing”.  “How do you safely have hair salons and nail salons and tattoo parlors where people have to be inherently close together?”

For someone who has spent the last 20 years of his life researching and teaching the art and science of creativity, I welcome the challenge.  Below are just a few ideas to placate the “Liberate Coronavirus” protesters.

Barbershops with Roomba Shave™

Purell-Based Tattoos™

Paintball Nail Salons™

Drone Bowling™

And finally, for Mayor Carolyn Goodman of Las Vegas, Masked One-Armed Bandits™

I encourage readers to suggest other innovative ways to re-open the economy.  No suggestion is too outrageous as no Trumpster is too gullible.  Your time stamped comment on this site can serve as evidence of copyright in case Alex Jones, Sean Hannity or Laura Ingraham makes your concept the next hydroxychloroquine.

For what it’s worth.  Stay safe.