Can’t Win for Losing

It sounds like one of those riddles you hear from professors who aren’t quite as funny as they think they are: “When is a $700 million savings really a $2.3 billion loss?” Usually it’s the set-up for a problem in sunk costs, hidden costs, or multi-year depreciation that the accountants in your class love – and that remind the rest of us just how critical a good accountant is to any successful business venture. Yes, non-profits too. For a strategist, though, it’s usually an indication that there has been an unexpected consequence of what appeared to be a straightforward action. In the case of a publicly-traded company, it might not even have anything to do with the action itself, or even with anything your company did…

Consider, if you will, the case of Walgreens, CVS, Rite-Aid, Wal-Mart, Amazon, and an on-line pharmacy company called Pill Pack. If you’re not familiar with it, and I wasn’t until I read the CNBC story about this situation, Pill Pack is licensed to sell prescription drugs in 49 of the States, and booked about $100 million in sales last year. Wal-Mart has been in negotiations to buy Pill Pack for several months, but negotiations broke down when Wal-Mart balked at going over $700 million, at which point Amazon stepped in and offered $1 billion. Wal-Mart probably could have matched the offer, but they didn’t want to get into a bidding war with one of the only retailers their own size, and they didn’t believe Pill Pack was worth that much anyway…

This would probably be a non-story – Amazon has bought a lot of smaller companies, some of which panned out and some of which didn’t – if it hadn’t been for the stock market fallout. Within 24 hours after the transaction was announced Wal-Mart’s stock price dropped by $1.03, which doesn’t sound like much, until you realize that the company has almost 3 billion outstanding shares of stock, each of which is now worth a dollar less than the day before…

Not making the purchase saved Wal-Mart $700 million, but it ended up costing them $3.04 billion in market value, or a net loss of $2.3 billion. That might not seem fair, but consider what also happened to the three big drugstore chains mentioned above. According to a second CNBC story, Walgreens lost 9.9% of their stock price, Rite-Aid lost 11.1 % of theirs, and CVS lost 6.1%, for a combined loss of around $11 billion on the same day (June 28, 2018). Meanwhile, Amazon’s stock gained 2.5% on the same news, resulting in a gain of just under $20 billion…

Now, I’m not saying that we should blame the drugstore chains, or their leadership teams, for the losses in question – although I will be very surprised if at least some of their stockholders don’t start asking a few rather pointed questions at the company’s next General Meeting. I’ve got nothing to suggest that any of these companies, or even all three of them together, could expect to out-bid Amazon without bankrupting themselves, or that they would be able to recover the $1 billion if they did. I can’t even tell you for sure if Wal-Mart could do that and live. What I am saying is that the leadership of every company needs to be watching the competition, and potential competitors as well, exactly so they don’t get surprised by something like this…

Because, to paraphrase a very old joke, a few billion here, and a few hundred million there, and eventually it adds up to real money. And while I imagine Wal-Mart will survive this mistake without much difficulty, there is a limit to how many more times they can ignore the consequences of their actions…

The Worst That Could Happen?

From time to time I will call your attention to a story where a business disaster happened against all logic; when there really wasn’t anything the management team or anyone on the payroll could have done to prevent the problem, and even the other stakeholders were caught by surprise. There is no way you could have predicted that turkey vultures would take a shine to a hospital and start roosting on the windowsills of patient rooms, for example, or that a sudden (world-wide, web-based) interest in the output from your small soda bottling plant will draw so much attention that the franchisor will decide that you have violated your territorial limits and threaten to pull your franchise. The idea that people might use the Linked-In business networking site to advertise escort and prostitution services, however, shouldn’t have been all that hard to predict…

You can pick up the Business Insider story here if you want to, but the basic idea is simple: since personal “adult services” like prostitution are legal in many parts of the world, and since business people are the primary demographic targeted by such services in the first place, a number of individuals involved in that “business” sector have started listing their services on Linked-In. Of course, most of the listings on Linked-In that mention prostitution directly are from law enforcement, medical, criminal defense law or governmental personnel who deal with the criminal aspects of the business, but apparently enough escort services and massage therapists advertise on the site to push matters into the grey area. What makes this story remarkable is that Linked-In is trying to suppress such listings…

Craig’s List has been having problems, both customer relations and legal, with services of this type for years now, and has actually attempted to eliminate the “Adult Services” category on their site more than once. Unfortunately, none of their efforts at suppressing these ads has had any effect on either the popularity or the profitability of such services. As a result, those individuals (and organizations) selling sex on Craig’s List have just changed the euphemisms they were using for prostitution and continued on as escort services for lonely business people who are only in town for a few days, massage therapists who work in the nude, or dating services for people who don’t mind paying to get laid. There is no possible way for Craig’s List to eliminate all possible euphemisms for sex services from its site, and even if they did they would have no way to identify apparently legitimate businesses that are merely a front for these (or any other) criminal enterprises…

If anything, Linked-In has it worse, both because of the aforementioned legal sex services and also because their business model is predicated on retaining a professional, businesslike image. Crag’s List and the other Internet bulletin-board sites make no pretense of professionalism; you can sell a sack of fertilizer you made at home or offer your new fertilizer gift pack (“Smith’s Can ‘O Crap!”) without any pretense of reaching out to a community made up entirely of businesspeople in expensive suits. Adult escort services – or even genuine call-girls – would probably raise the tone of many transactions carried out on some of those sites. But there’s no way anyone is going to pay the (outrageously high) rates Linked-In demands in order to gain access to an online community frequented by “undesirable elements” – let alone try to put those charges onto their expense account…

But while the motivation for trying to keep such businesses – and professionals – off the Linked-In service is obvious, what the company intends to do about it is not. Criminals in general are not known for their willingness to adhere to company policy; companies that already operate in a legal grey area are unlikely to be impressed by a private company trying to tell them what to do. And anyone who runs a search on Linked-In using those particular key words probably already knows that such individuals and organizations are represented on the site. I’m not saying that Linked-In should just give up and let anyone who wants to do business over their service do so; I’m just suggesting that a strongly-worded policy is unlikely to have any effect on the outcome…

Amazon Invades

Previously in this space we have discussed the ethical issues associated with Amazon, and specifically in the harm they can do to local businesses and the stakeholders associated with those companies. No reasonable person is going to argue that a successful business model should be suppressed just because it gives its inventor a competitive advantage – that’s the whole point of having a business strategy in the first place – but any business that destroys other employers, bankrupts potential customers, and eventually eradicates entire population centers in which it has no operations of its own is not a sound business model. Even if there are no government sanctions or consumer boycotts taken against such a company, eventually it will eliminate enough potential customers to destroy itself, and who’s even mentioned monopoly effects yet?

Several factors have helped to prevent Amazon from reaching that critical mass, the most important one being the tendency of people to wait until the last moment to purchase things. Even with overnight shipping it is still faster to go to a real-world retail outlet to make a purchase, and you also avoid the issues of breakage during shipping and the shipping costs themselves. But what would happen if Amazon expanded its network of distribution centers, purchased its own fleet of trucks, and started offering delivery straight to your door on the same day – and at rates comparable to what you would spend at a brick-and-mortar retailer for the same product?

A number of online news sources have been reporting recently on Amazon’s plans to open new distribution centers and/or expand existing facilities in Texas, California, Virginia, and New Jersey, and increase the number of delivery vehicles available in each of these locations. With the right logistic arrangements and a modern mechanized warehouse system those four locations alone would given them the ability to deliver to anywhere in the Philadelphia – New York Corridor, anywhere from Baltimore through the Carolinas, any of the major Texas population centers, and anywhere from San Francisco to San Diego in the same business day. The only remaining questions would appear to be whether Amazon can operate such a system efficiently enough to remain competitive with existing real-world retailers, and whether we feel that this type of operation is any more ethical than their existing business model…

Employing their own distribution center workers, truck drivers, maintenance people (mechanized warehouses and fleets of trucks both require lots of maintenance) and support units will require Amazon to employ hundreds (or thousands; depends on who you ask) of local people, and purchasing electricity, diesel fuel, food and drink, and anything else they have to get locally will make Amazon part of your local economy, and those profit centers will contribute to the local tax base. Having an Amazon delivery center in your community shouldn’t be any different from having a Wal-Mart distribution center or any other kind of major warehouse operation there, and at least some of the benefit will remain there instead of going off to some corporate headquarters many hours away. But, as is the case with Wal-Mart, Target, or any other large retailer, we still have the issue of how this will affect local businesses…

Having your employer go under because Amazon built a real-world delivery center nearby isn’t functionally different from having it succumb to Wal-Mart or CostCo, or simply implode under the rotten economy; either way you’re still unemployed, angry, and unable to purchase anything even if you wanted to. Having local distribution centers will not change the fact that Amazon is still wiping out small businesses; if anything, being faster and more convenient will only make Amazon’s inherent menace that much more dangerous. All of which leads me to believe that we will be revisiting this issue again soon if Amazon goes through with these plans…

Whether we want to or not…

Mock the Infidel!

Last fall I read a short notice online about a Baptist university in Georgia that was adding a new requirement to all of its faculty contracts for the following academic year: a "Personal Lifestyle Statement" that requires all faculty to “reject homosexuality, premarital sex, adultery, drug use and public drinking near campus.” I recall saying at the time that this would almost certainly decimate the school’s faculty, alienate all of the students who aren’t themselves fanatic-level Baptists, and bring scorn and mockery onto the entire institution; I also recall saying that neither the Georgia Baptist Convention (which controls the university) nor the hardcore Baptists themselves would be likely to care…

You can pick up the story off the AOL News page if you want to, but it would appear that over 50 faculty at Shorter University have already quit, and a survey taken last month shows that only about 12% of the total faculty are planning to sign the statement and remain at the school for the next school year. It’s not clear from the AOL News story, or from any of my other online resources, how exactly the University’s leadership expects to replace approximately 88% of their instructors; it’s also not clear how they expect to retain their accreditation (Shorter is accredited by The Southern Association of Colleges and Schools, or SACS) without anything approaching an appropriate number of courses taught by ladder faculty. There is also no indication of their leadership backing off, however…

Now, we should acknowledge that as outrageous as this sounds, the University isn’t actually breaking any laws. Under Title VII of the 1964 Civil Rights Act, any religious institution is entitled to discriminate in favor of a specific religion (presumably their own) in their hiring practices, even in job positions that have nothing to do with instruction in or practice of religion. It’s one of those provisions in Federal laws that need to be there, otherwise you might have Christian churches being required to hire Buddhist priests or face discrimination lawsuits, and even stupider things. Unfortunately, some institutions will use Title VII to skirt any aspect of the labor laws they don’t like, such as the case from last year of a teacher at a religious school being fired for not being a member of the faith that controlled the school – after she filed for Worker’s Compensation and disability. Or, as in this case, to eliminate anyone who isn’t sufficiently Baptist to suit the Convention’s requirements…

It’s not a story that has much relevance in a business setting except as a cautionary tale – and yet, I think it’s still worth bothering my readers (assuming I have readers) about. Shorter didn’t start out to become a bastion of religious intolerance and job discrimination, and despite its traditional close ties to the Baptists it has been a mostly respectable institution of higher learning, academically sound enough to earn SACS accreditation and acceptance from the U.S. Department of Education. Now, even if they remain academically beyond reproach, they are going to be regarded by tens of millions of people around the world as a bunch of God-bothering homophobic Southern Redneck hicks who care more about their specific religious dogma than they do about education or the truth. And on top of all that, it’s also hard to imagine how this could possibly advance the religious agenda of any of the parties involved, considering that anyone who would consider this “Personal Lifestyle Statement” a good idea is already a Christian zealot – and probably a Southern Baptist as well…

It’s something to think about the next time you hear someone complaining about how the Civil Rights/Equal Opportunity laws are too intrusive…

Two Edges

There was a story online this week that really points out how suddenly going viral after spending years as a mundane and obscure company has become something of a two-edged sword. Having a product or company “go viral” – meaning that some online reference to the company spread suddenly across the Internet, as though it was a fast-breeding virus striking a community with no resistance to the strain – has become the new standard to which all online (and a remarkable amount of real-world) advertising aspires. To go viral – to have an ad or even a reference that cost you only pennies to make suddenly catch the attention of millions or tens of millions of potential customers sounds wonderful enough; as though a single mention on a popular web site could make you a billionaire overnight. But the truth is, it doesn’t always work out that way…

Consider, for example, the case of Dublin Dr. Pepper, from the Dr. Pepper Bottling Company of Dublin, Texas. Dublin Dr. Pepper is just like regular Dr. Pepper in most respects, but instead of being sweetened with high-fructose corn syrup and other chemically altered or processed sweeteners, the Dublin version uses Imperial cane sugar. This made it an extremely popular product during the high-fructose wars of the last few years, and motivated people thousands of miles from Dublin, Texas to sample the product. The company and product spread like wildfire across the Internet, and orders began pouring in for the special version of the popular soft drink. This should have been a happy problem – and it might have been, if all of the Internet publicity hadn’t caught the attention of the company that owns Dr. Pepper…

It turns out that, like most soda bottlers, Dr. Pepper/Snapple has strict territory rules for where its bottling companies (who are mostly franchises) can sell their product. In the case of Dublin Dr. Pepper, the company’s territory was limited to a six-county area in Texas, and by selling the product over the Internet (to thousands of customers outside of that area) the company had violated the terms of their franchise. To make matters worse, the bottler had never received permission to use the name “Dublin Dr. Pepper” in the first place, and doing so was a trademark violation as well as an additional breach of their contract. The Dr. Pepper Snapple group sued in federal court last year, and eventually forced the company to accept a settlement that involved discontinuing both the Dublin Dr. Pepper name and sales of the customized product…

Now, we’ve discussed the concept of depending trademarks and copyrights before in this space, and it’s clear that any company has to defend such properties or risk losing them outright. What makes this case special is that the Dublin Dr. Pepper company had been in operation for over a century, and had been more or less left alone to do as it liked, largely because no one had ever heard of it outside of the six-county area in which it operates. When the company was discovered by online customers and went viral over the Internet it suddenly found itself experiencing demand beyond anything it had ever imagined – which eventually attracted the corporate interest and legal action that destroyed the product after more than a century of continuous operation…

I’m not saying that companies (including yours) shouldn’t attempt to make use of viral advertising, or that marketing efforts of this type are likely to stop appearing any time soon. But just like any other new business development, viral advertising can have consequences you never anticipated, and once you let something loose in cyberspace there’s no telling where it will go, or what the long-term effects will be. As always, it’s a good idea to consider how a given tool works before you try using it and accidentally cut yourself on it…

What Would You Do?

Here’s another hypothetical for you: Suppose your employers announced that because of some really asinine choices made by their senior management team, some of which were so bad that they actually did bankrupt the company, you and your coworkers were going to be required to take a 50% cut in pay. That’s right; not a 10% reduction or even a 25% cut, but half of your current salary is going away. When you protest that this isn’t fair, and you can’t afford to live on such a salary, your managers tell you that the new, lower wage is about the industry standard these days (since your entire industry is in the tank); when you say you won’t accept the pay cut, they tell you that if everyone in the workforce does not accept it they’re going to close the factory and lay off everyone. Now, my question is, would you still refuse? Would your answer be different if you knew you could transfer to another facility owned by the same company and retain your current salary in the event of a plant closure?

Before you answer that, consider that your plant is one of the largest employers in the city you live in; even if all of the people who work there are able to transfer to other locations in other states there will be a domino effect as all of the businesses that provide you and your coworkers with food, shelter, clothing, transportation, entertainment and various services will lose thousands of customers, the city itself will lose tax revenue (from the plant being gone and from all of the former workers leaving, and from all of the collateral damage mentioned above) and have to restrict or eliminate even basic services, other manufacturing companies may flee the expanding urban blight, and your entire community could spiral into the sort of decay that causes everyone to move to less doomed places like Detroit. Are you still going to walk away?

Given where you’re reading this story, you already know that there’s a real case going on where this is actually happening; you can find the original story here if you want to. A union supporter would tell you that the union people had no choice but to reject the offer; making that sort of concession would have dramatically lowered the power and leverage of the union and placed all of its members in danger of further abuse by management. A management supporter, on the other hand, would point out that the union effectively demanded that the new owners continue paying their people double the industry standard for those jobs, that the rejection of this offer has a real chance of turning the workers’ community into a ghost town, and that any of them who can’t transfer will end up having to take the standard wages offered in the industry anyway – thus, effectively leaving them with the same situation they would have been in if they’d just accepted…

The people I feel sorry for in all of this aren’t the owners (as noted elsewhere in this space, the American auto industry dug its own pit and jumped into it willingly), nor even the union employees (the UAW leadership has been guilty of a few hair-brained moves of its own), but rather the people in the community who have been supplying goods and services to the company and to the people who worked there, many of whom are about to see their own businesses bankrupted and their own lives destroyed in the fallout. I’m not saying that I’d accept a 50% pay cut, or that I’d just go along with paying people double the industry standard for their positions; I’m just saying that there ought to be a better way. And I might add that unless we start looking for other possibilities, the decay of the American manufacturing sector is only going to get worse…

Beating the Toad

It’s hardly news that scientists in Australia are trying to find new ways to eradicate – or at least reduce the population of – the infamous cane toad, but a new report released this week indicates that there may be an organic solution that does NOT involve introducing any additional invasive species into delicate ecosystems. For those not familiar with the situation, the cane toad is a large amphibian that secretes a hallucinogenic toxin, does nothing whatsoever to control the cane beetle that is native to Australia, and has been blamed for massive declines in the population of several already endangered indigenous creatures. It’s one of the worst examples of an invasive species being introduced into an unprepared ecosystem you can find, even in Australia, which is unfortunately known for such things. But now it seems as though there may be an answer as nearby as the pet food section of the supermarket…

According to as story from Reuters Online, scientists working on the cane toad problem have discovered that a species of ant native to Australia is apparently immune to the toads’ toxin. All you have to do is arrange for a large population of these ants to move into an area where baby toads are hatching and developing – say, by leaving an open can of cat food near a pond where the toads reproduce – and the ants will do the rest. It’s a remarkably simple (and relatively inexpensive) answer to a problem that has been plaguing the continent since the toads were mistakenly introduced in 1935. Certainly much cheaper than using pesticides or trying to find some biological agent that is lethal to toads but harmless to humans, not to mention safer; it also avoids the problem with the creation of unintentional folk songs…

Most of us have encountered some variation of the song in which a cat is used to catch a rat, then a dog is used to catch the cat, and so on; “There Was an Old Woman Who Swallowed a Fly” is one of the common American versions. It’s an excellent example of an escalation effect, in that using the same method that has failed repeatedly in the past continues to fail until the entire system collapses (the Old Woman dies at the end of the song, for example). Plans for the elimination of invasive species often involve introducing some form of predator of the target species into the same environment, but these plans generally come to nothing either because there is no available predator for the target species, or more often, because the predators will cause even worse damage to the environment than the invasive species you’re targeting – necessitating the introduction of yet another species to control the controlling predators…

Obviously, I call this to your attention not because you or I have any interest in exotic invasive species control (this is a business blog), but rather because this same syndrome occurs all too often in business. It’s common to see people trying to undo damage caused by a measure that they introduced to avoid damage caused by another measure; it’s even more common to see people continuing to spend money on purchases that are a complete waste when they should just have written off the original purchase and started over. You can’t always count on repurposing the purchase or finding someone else to sell it to – which is to say, you can’t count on finding a native ant species handy that will eat your invasive toads – but continuing to throw good resources down the rat hole is bad strategy, bad planning, and ultimately bad business…

It’s probably also worth noting that the people who make cat food in Australia probably never considered the idea that it might one day be sold as a simple biological measure for combating the cane toad – but I would be very surprised if they don’t start marketing that application for their product very soon. Which means that this story can also serve as a lesson about finding new applications for your product – but that’s a post for another day…

Vulture Update

Back in July of 2008 I brought you the bizarre story of the Orthopedic Hospital of Wisconsin, and its unfortunate tenure as the roosting spot for a flock of turkey vultures. For those of you who missed it, you can find the story here if you want to. As I noted at the time, the birds didn’t really pose any threat to human life, let alone to patients at the hospital, since they won’t attack any living creature (vultures eat carrion almost exclusively) and they don’t carry anything that people can catch (vultures are surprisingly disease-free creatures, considering their diet). Nevertheless, patients were complaining because, in fairness, it can be rather disconcerting to wake up in the hospital and find a vulture perched on your windowsill. Now it turns out that the people at the Orthopedic Hospital of Wisconsin should have been counting their blessings…

According to a story being reported this week in USA Today by way of Delaware Online, a woman in Ridgeway, Virginia is under siege by a flock of 200 or so black vultures, which are eating the roof off of her house. It turns out that this species of vulture likes to chew on rubber, and the unfortunate in our story owns the only house with rubber shingles on the roof anywhere in the neighborhood. Each day 30 or 35 individual birds turn up to munch on the roof, which is now leaking and causing a great deal of distress to the owner, given the winter weather in Ridgeway. Even worse, the vultures are too smart and aggressive to scare away, and Federal law protecting migratory birds makes it illegal to kill them. You might be able to get a kill permit to take out a few individuals, but that will take at least 3 months, by which time the roof will be gone, the rest of the house will have been destroyed by water damage, and the owner will either be homeless or insane, or both. And moving isn’t really an option, because who’s going to buy a house that’s being eaten by vultures?

It’s an even better example of how unexpected conditions can impact your business than the original story was, not least of all because the vultures are impacting the local real estate market and the business opportunities for people who make rubber roofing materials almost as much as they are the homeowner in our story. It’s hard to imagine anyone in the Ridgeway area (or, in fact, anyone else who has read this story on the Internet) ever agreeing to purchase rubber roofing products after this, and anyone who was thinking of moving into the area is now going to be looking for houses with steel shingles (or some other substance that vultures don’t eat) and refusing to consider houses with rubber ones. Which should, in turn, make life difficult for realtors in the area; just as a guess, I don’t think the real estate agent’s license exam in Virginia includes Wildlife Management as one of its subject areas…

Now, I’m not suggesting that you compile a list of every species that could possibly impact your business though its daily behavior, because such a list would take longer than you are likely to have in your lifespan, let alone your strategic planning cycle. I am suggesting that having a contingency plan is a good thing, and that having one that is flexible enough to include what to do if a species you’d previously never even heard of (such as a highly aggressive, carnivorous cousin of the humble turkey vulture) starts to disrupt your business is probably a very good thing. I’m also thinking about investing in those steel roof shingles, as soon as the price comes down far enough that I can afford them – and assuming that nothing out there snacks on those…

“Clean Your Plate”

There was an article posted on CNN Money this week that raises a point that should surprise absolutely no one during the current oil crisis: according to both Democratic Party and Petroleum Industry sources, the nation’s oil companies are not currently working something on the order of 77% of the lands (and offshore sites) they already control. Although the productivity of these sites is disputed, some sources are claiming that if full exploited, these idle leased drilling sites could produce an additional 5 million barrels of oil each day. For purposes of comparison, consider that the U.S. currently produces about 8 million barrels a day, and consumes about 21 million…

Now, by itself this wouldn’t mean much; many of the sites in question are deep-water drilling locations and remote land locations, all of which would be expensive and difficult to operate. In fact, it has often been estimated that the world will never really run out of petroleum; it will eventually just become so difficult to obtain that no one will be able to afford to use it for power, and human civilization will either find alternative forms of energy or descend back into a pre-industrial state. What makes the current revelation so significant (and so politically polarizing) is that it comes at a time when the president and his cronies are putting pressure on Congress to allow vast increases in drilling on public lands and off of sensitive coastlines…

I try to stay off of political topics on this space, since my expertise does not lie in those areas and there are already enough ignorant pundits spewing meaningless opinions onto the Internet on those issues. My field is business, and specifically Strategic Management (and the failure thereof), and based purely on the standards of my discipline, this situation is completely asinine…

Leaving aside just for a moment the enormous costs of cleaning up costal oil spills themselves in the short term, the incredible costs in terms of health care, loss of property value, and decline of the tourism industry in the intermediate term, and the almost unbelievable environmental damage in the long term, increased drilling licenses will take years (more likely decades) to produce any significant increase in the supply of crude oil, and longer still to make any difference in the price paid by consumers. Even assuming no mishaps of any kind occur in any of the new drilling sites (a possibility so unlikely as to be completely fantastical), such measures would still be NO HELP in lowering the current consumer crisis…

From a business standpoint, there is no conceivable chance of the new drilling rights the current administration is requesting bringing more economic benefit to our economy than the costs that would be incurred by doing so – and worse yet, the benefits would be reaped by a handful of industrial companies already achieving record profits every quarter, while the costs would be paid by ordinary citizens in costal communities and future generations trying to live on a blighted world. It’s hard to believe that the party that once stood for financial responsibility and intelligent use of resources (consider that conservative and conservation have the same root) is pushing this sort of short-sighted, arrogant, runaway greed…

However, I do see a solution to this whole problem. Somewhere in this country there is undoubtedly a politically neutral think-tank that has already calculated the costs of developing a complete set of new, alternative sources of energy. Let’s offer the petroleum industry all of the drilling rights they want – in exchange for that amount of money plus 10% for over-runs. Chances are, it won’t be any more than the cost of those drilling permits they want, anyway. Then let’s see if the industry people are still so sure that increased drilling in environmentally sensitive areas is really what’s best for the nation…

Unintended Consequences

One of the most controversial legal decisions to hit California in the past four decades was handed down a week or so ago, when the State Supreme Court ruled that the law against same-sex marriages violated the California State Constitution and struck it down. As a result, same-sex marriages were suddenly legal in California and thousands of people began making plans to either get married or else stage an all-out effort to amend the Constitution to make such laws possible in the future. I’m going to leave the social, legal, political, religious, civil rights, equality and historical aspects of this situation to those better qualified to comment on them; I write about business issues. Fortunately, this leaves us with over $370 million dollars in new business to talk about…

Various stereotypical images aside, it’s hardly surprising that ANY group of people who have been denied the right to legal marriages for centuries might be excited by the idea of finally gaining that right, or that in their excitement they might begin planning some incredibly elaborate weddings (complete with massively expensive cakes, costumes, meals, settings, floral arrangements and accessories). The scope of the upsurge in this business sector appears to have taken everyone by surprise, however…

A story in today’s Los Angeles Times estimates that the uptick in wedding-related services resulting from the legalization of same-sex marriages in California could reach as much as $370 million. If couples from other states in the Western United States start coming to California to get married, this figure could rise even farther. And if conservatives in other Western states succeed in blocking such unions in their own jurisdictions, this sort of migration is in no way far-fetched. Nor does this figure even consider the corresponding uptick in business for the Legal industry, as scores of attorneys stand to be hired to fight for or against the legalization of same-sex marriages and recognition of those unions by other States…

It’s almost certainly not something that the people debating the issue on legal terms had given much consideration; those who are for same-sex marriages are working on the basis of equality and civil rights, and those who oppose it are mostly bringing up religious, social and political factors. Certainly the political liberals who favor these unions were not intending to create vast commercial opportunities, nor were the political conservatives who oppose them intending to find themselves working against hundreds of millions of dollars in business revenue for the State. As so often happens, the Law of Unexpected Consequences has introduced a completely new set of questions into what was already a complicated situation…

Politically, of course, no conservative can expect to oppose $370 million worth of new business and survive, any more than he or she can expect to support same-sex marriages and survive. But by the same token, any liberal who attempts to cloak him- or herself in a mantle of defending the civil rights of the people entering into same-sex marriages can reasonably expect to be questioned about whether they are really in favor of liberty or merely in favor of increased business and tax revenues…

Personally, I have always taken the position that anything that you benefit from that does not unnecessarily harm another person is not evil, and that anything which creates jobs, stimulates the economy, allows people to earn a good living and maintain a good lifestyle, and does not unnecessarily harm anyone (including members of future generations who have to live on this same planet) is generally a good thing. But under the circumstances, I have to say that it’s probably just as well that I’m not a politician…