Farewell, James Marion Sims … And Hello, Kim Jong-un

When is it appropriate for us to engage in a public commemoration? Most would consider doing so when the honoree is a person, an event, or an idea that makes a permanent impact on society.

For instance, the Lincoln Memorial in Washington DC memorializes a suitable person. Local towns’ fireworks displays on Independence Day are worthy events. And the Statue of Liberty, in New York Harbor, is an exemplar of an appropriate idea.

But there are times when the progression of history modifies our perceptions about people, places, and ideas. When that occurs, permanent commemorations may become socially awkward, and may even be removed from view.

Consider, for example, last month’s decision by the City of New York to remove a statue of Dr. James Marion Sims from Central Park. The physician had been memorialized as the father of modern gynecology.

But there was a dark side to his fame. Prior to the American Civil War, Dr. Sims perfected his surgical skills by experimenting on human slaves without using anesthesia. In response to public protests, government officials in New York City decided to move the statue to his gravesite, and to present it in historical context there.

When the statue was first erected in the 1890s, Dr. Sims’ honorees could not anticipate the day when public opinion turned against his legacy. In other situations, though, the obsolescence of a commemoration is relatively foreseeable.

For instance, consider the commemorative coin that the White House of the United States recently issued in advance of a scheduled meeting between the American President Donald Trump and the North Korean leader Kim Jong-un. It portrays the two men in a head-to-head pose, and even refers to the latter as Supreme Leader.

Some commemorations, like the Sims statue, survive for more than a century. But the memorial coin immediately became a relic as soon as President Trump cancelled the meeting.

From large statues to small coins, our memorials are designed to remain in place forever. Nevertheless, their continuing presence is subject to changes in public opinion and the tides of history.

How AT&T Turned Its “Big Mistake” Into An Example Of Ethical Behavior

When was the last time you heard a corporate officer unequivocally acknowledge a serious error?

Did it occur after United Airlines instructed police officers to assault a passenger who declined to surrender his oversold airplane seat? CEO Oscar Munoz eventually expressed regret, but only after his firm “seemed to go on the offensive when it circulated a letter in which (it) appeared to blame (the passenger), saying he “defied” the officers …

What about BP’s declaration of contrition regarding its massive Gulf oil spill? Indeed, its Chairman Carl-Henric Svanberg did express sympathy for residents of the region, but he was later compelled to apologize for his self-described “clumsy” choice of words when he referred to Gulf residents as “small people.”

So it is downright refreshing to hear a corporation clearly and unambiguously acknowledge a major blunder. When such an acknowledgment is honestly proffered, we may be able to encourage such behavior in the future by simply recognizing its ethical value.

Consider, for instance, AT&T CEO Randall Stephenson’s recent comment that its consulting contract with President Trump’s personal attorney Michael Cohen was a “big mistake.” Shortly after the election of 2016, AT&T agreed to pay Cohen’s firm $50,000 per month for advice regarding a “wide range of issues.” One such issue was its battle with the federal government to approve its merger with Time Warner, a battle that rages on today.

Special counsel Robert Mueller is now reportedly inquiring about the appropriateness of AT&T’s motivation for signing the contract. How has the corporate giant responded?

Stephenson could have simply stated that he would not comment about the matter. Or he could have noted that the contract concluded at the end of 2017, and thus is no longer a current concern of his firm. Instead, the CEO candidly confessed that “There is no other way to say it – AT&T hiring Michael Cohen as a political consultant was a big mistake.

Was Stephenson’s behavior impeccable? No, not perfectly so. Instead of issuing his statement to the public, he included it in an internal company memorandum that was shown to the Reuters news service.

Nevertheless, if blunt and unvarnished honesty is an indicator of ethical behavior, then AT&T should be recognized for this example of appropriate action. Honesty is not always practiced throughout the corporate realm; thus, whenever we manage to find it, we should be willing to commend it.

NAFTA’s World Cup

After Presidential candidate Donald Trump repeatedly told the American people that the North American Free Trade Agreement is “the single worst trade deal ever approved in this country,” we might have presumed that it would be well on its way to extinction by now.

But guess what? NAFTA is alive! And it appears to be overwhelming all global competitors in a particular international endeavor.

That endeavor is the World Cup of global football, known as soccer in the United States. Apparently, the sport’s international governing body has placed its 2026 quadrennial championship tournament up for bid. And earlier this month, NAFTA partners Canada, Mexico, and the United States instantly became the overwhelming favorites to win the bid when they revealed their plan to jointly host the games.

So why is the soccer championship series such a popular target for NAFTA cooperation, when other economic targets — such as the automobile industry, for instance — generate such hostility between nations? One possible reason is that sovereign countries like the United States can easily produce quality automobiles without help from others, but cannot easily host World Cup tournaments on their own.

Naturally, critics may note that the United States did indeed host its own World Cup tournament more than two decades ago. But with the field of participating teams soon to expand to 48 competitors, many more host cities will be needed in 2026. And relatively few cities in the United States can match metropolises like Toronto, Vancouver and Mexico City for cosmopolitan glamour and passion for The Beautiful Game.

Is North America the only region where such an approach is beneficial? Could the bitter debates that now divide the European Union, for instance, be calmed by a pan-European World Cup? Perhaps any sporting event that is too large to be hosted by a single nation could help promote a spirit of globalism by adopting a multinational hosting strategy.

Unfortunately, it may be a very long time before the European Union can even consider such a venture. And thus, at the moment, the three nations of NAFTA possess a golden opportunity to lead the way.

Trump’s Taxes

Four years ago, Republican Presidential candidate Mitt Romney severely criticized 47% of the American people. He said, “These are people who pay no income tax. 47% of Americans pay no income tax.” They are wholly “dependent on government,” and taxpayers will “never convince them they should take personal responsibility and care for their lives.”

So let’s fast-forward four years. Does Romney’s Republican Party still support the notion that people who pay no income taxes are failing to take personal responsibility and care for their own lives?

Apparently not. In response to the New York Times’ story that Donald Trump may not have paid income taxes for two decades, Republican Mayor Rudy Giuliani claimed that “The man’s a genius. He knows how to operate the tax code …” And Republican Governor Chris Christie concurred that “there’s no one who’s shown more genius …” than Trump.

So which position is correct? Is a person an irresponsible, uncaring free-loader when he doesn’t pay income taxes? Or is that person a genius? For some American politicians, the answers to those questions appear to depend on whether the person is an ally or a foe.

Nevertheless, it may be helpful to consider the facts that we actually know about the Trump tax situation. And, in turn, we may consider (or perhaps reconsider) a central presumption that serves as a foundation of our tax code.

Let’s begin with the fact that the Times revealed pages from Trump’s personal tax returns, and not from his business tax returns. That fact casts a harsh light on Mayor Giuliani’s assertion that Trump “had no choice but to utilize” the tax deductions.

Why does Giuliani believe this? Because, according to the Mayor, “If he didn’t take advantage of those tax deductions of tax advantages that he had, he could be sued, because his obligation as a businessman is to make money for his enterprise and to save money for his enterprise.” Furthermore, claimed Giuliani, these plaintiffs would be “investors in his business, people who loan money to his business, banks that loan money to his business.”

That argument would make perfect sense if Trump declined to claim deductions on his business tax returns. After all, his business stakeholders are impacted by the tax liabilities of his business. But his stakeholders are never affected by anything that Trump chooses to claim on his personal tax returns. That’s why the Mayor’s argument is simply not correct.

And yet Giuliani’s argument raises an interesting question. Why does the tax code allow a business loss in one year to eliminate tax payments in other years? Why should one year affect any other(s)?

The answer to that question reflects a fundamental assumption that underlies our tax code. Although we all file taxes on an annual basis, the code does not presume that a year necessarily reflects an appropriate period of time to determine the profitability of a business.

Here’s a simple example. Let’s assume that you open a business on December 30th, and that you spend your first dollar on December 31st. But you don’t earn your first dollar until January 1st.

Have you made a profit during those three days? Well, no; you haven’t done so. Simple arithmetic calculates that a dollar of expense and a dollar of revenue yield no net profit. And thus, based on common sense, you would pay no income tax.

Now let’s assume that your tax year ends on December 31st. For the period ending December 31st, you would file a tax return that shows no revenue and a dollar of expense. And for the subsequent period, you would file a return that shows a dollar of revenue and no expense.

Should you pay any income tax on the dollar of revenue that you earned during the second period? Again, based on common sense, you wouldn’t do so. After all, the December 31st filing cut-off date is an arbitrary one; you still haven’t earned any profit in total during those three days.

This illustrates a core premise of our income tax code. Namely, its tax period cut-offs are arbitrary dates that do not affect the overall profitability of an entity.

Therefore, if a businessman loses $1 billion in a single year but earns $50 million a year during the twenty year period surrounding or following it, he would earn no profit during the entire twenty year period. And he thus needn’t pay income tax on the $1 billion of revenue, given the aggregate $1 billion of expenses in other year(s).

To be sure, it is not correct for Trump’s Republican supporters to say that he could’ve been sued if he had declined to claim his business loss on his personal tax return. And yet it is also not correct for his Democratic opponents to claim that he is not “paying his fair share” of taxes.

So which side is correct? Well, neither side is correct. And in a political year when each side simply wants to win at any cost, it may not be surprising that no one is bothering to ask whether a central tenet of the tax code is itself correct.

Welcome, Englishmen

This is an essay about American history. It is not an essay about American presidential politics.

Or is it?

Unquestionably, though, it is a true story about the Pilgrims who sailed to the New World on the Mayflower, and who developed a tiny and struggling community within a hostile wilderness. Shortly after they landed, they began to confront the brutal realities of death, disease, starvation, frigid weather, and a hostile relationship with the surrounding Native American tribes.

One day, as several Pilgrims stood chatting on their village hill, they spotted an Indian warrior on the next hill. Immediately, they called their tiny community to arms and fell into a defensive position, braced for an attack.

So what did that Native American warrior do? He strode briskly down his hill. Then he crossed the small valley. Then he climbed the Pilgrim’s hill and walked right up to the little group of settlers, crouching behind their muskets.

They all paused for a moment and stared at each other. The Pilgrims were terrified that they had come face-to-face with a savage warrior, leading a catastrophic invasion. And then the Native American threw open his arms, smiled broadly, and clearly proclaimed:

Welcome, Englishmen!

The moment was captured in two different Pilgrim memoirs, and it changed the course of American history. The warrior, a man named Samoset, helped launch an era of friendly relations that extended through the First Thanksgiving and resulted in the birth of the American nation.

It was a beautiful moment, wasn’t it? Now imagine, if you will, that he hadn’t proclaimed Welcome, Englishmen. Imagine, instead, that he had gestured to the dark and threatening forest and snarled:

There you will find death, destruction and weakness. You will be helpless to die at the hands of savage killers. Your men, women and children will be viciously mowed down. And I alone can fix it for you. I am your voice.

Would the Pilgrims have listened to him? Perhaps briefly. After all, a message like that does tend to grab one’s attention, doesn’t it? But in the long run, it’s hard to believe that such a frightening message would have generated the goodwill that carried the Pilgrims through their catastrophic early years.

Ever since Samoset’s moment of first contact, Americans have learned that a bold, brash, outspoken, and aggressive attitude is a common trait of an effective leader. And yet, as the Indian warrior demonstrated to the Pilgrims, such audacity is only proven effective when paired with an attitude that exudes optimism, goodwill, cheerfulness, and generosity.

This was an essay about American history. It was not an essay about American presidential politics.

Or was it?

The Duality Of Donald Trump

As we move into 2016 and approach the U.S. Presidential election’s primary and caucus season, the indomitable Donald Trump remains the most surprising candidate of all.

Why is he so surprising? It’s not because he happens to be the most engaging and entertaining candidate in the race. And it’s not because he happens to be the most bellicose and confrontational candidate in the race. It’s because he is simultaneously engaging and yet bellicose, entertaining and yet confrontational.

How can any one, let alone a billionaire businessman and U.S. Presidential candidate, exude both types of personality qualities simultaneously? Is it possible that he is truly a sympathetic figure, but that he has adopted a merciless persona for political purposes? Or vice versa?

The truth is that Trump has always exhibited both types of qualities in his public behavior. In fact, one can look back over the decades of his public career and find numerous periods of time when Trump has behaved in an extremely admirable manner in certain respects, and in an extremely shocking manner in other respects.

Consider the Wollman Rink in New York City’s Central Park, for instance. From the late 1940s through the 1970s, it hosted numerous musical and theatrical events for the general public each summer, and ice skating activities each winter. The city’s administration shut it temporarily for repairs and renovations in 1980, but when it proved incapable of completing the restoration project after six years of effort, Trump stepped in and completed it in a mere three months.

Pretty impressive, eh? But now let’s consider the architectural loss of the Bonwit Teller edifice. In 1980, the same year that the Wollman Rink closed for repairs, Trump purchased the Art Deco flagship building of the Bonwit Teller department store chain and demolished it to clear room for his eponymous 5th Avenue tower. Although he initially promised to preserve the building’s classic exterior wall sculptures for donation to the Metropolitan Museum of Art, he then instructed his construction crew to jackhammer the art work to rubble.

How can someone work to preserve one Big Apple landmark while destroying another? Some critics claim that, in both cases, he was acting to further his own private interests. After all, Trump derives a financial benefit by splashing his name in bright red text in the upper left corner of the Wollman Rink’s web site. And the sudden destruction of the Bonwit Teller sculptures permitted him to construct his Tower more quickly and efficiently.

But it’s unfair to simply conclude that Trump’s Wollman and New York Tower projects were not motivated at all by the public interest. After all, Central Park in 1986 was a far more dangerous and uninviting place than it is today. Trump had no way of knowing that, in one generation, the Park itself (and its facilities, including the Wollman Rink) would evolve from a troubled public resource in a struggling city to a crown jewel in a wealthy global metropolis.

And likewise, from its initial opening during the 1980s, Trump Tower has always maintained its signature waterfall atrium plaza as a public meeting space. Its public use clearly prevents its rental to a private restaurant tenant that could easily pay significant rents for the location.

So now that we’re focused on the U.S. Presidential election campaigns, if you find yourself marveling at Trump’s dual personas and wondering whether one is genuine and the other is a mere act, you can put such suspicions aside. In reality, there has always been a duality to the man’s personality, and it is likely to influence his future behavior.

Retire The Teleprompter

The following posting first appeared on the nascent blog of the Strategic and Emerging Technologies (SET) Section of the American Accounting Association. I am the Chair of the Committee that is developing the social media platform of the Section, and I am posting these whimsical messages on the blog to enable us to test various technical features.

Although this posting contains humorous content, we plan to transition to more serious fare as we build out the infrastructure of the platform … without losing our sense of humor, of course!

If you have any interest in strategic and emerging technologies, you are most certainly welcome to sign up for email delivery of our SET blog postings. And soon, you’ll be able to receive notifications of all postings via LinkedIn and Twitter as well.

Whether or not we agree with the political opinions that Donald Trump is espousing to Republican voters in the American presidential campaign, we might concur that he is correct about the over-use of a ubiquitous communication technology.

Which technology is that? It’s the teleprompter. According to Trump, “I think about my speeches and I don’t believe in teleprompters, although it’s very easy. I would like to go up and stand and read a speech for an hour and just leave … I jokingly say if you’re running for president you shouldn’t be allowed to use teleprompters … you know what happens, you don’t have the same vibrance, you understand.”

The teleprompter is hardly a strategic and emerging technology. It has barely changed since the TelePrompTer Corporation first developed it over sixty years ago. It’s thus a bit surprising that its fundamental problem— that individuals who talk with their eyes glued to their screens cannot possibly speak with Trumpian vibrance to their audiences — still exists to this day.

So why haven’t our technology whizzes developed a new device to replace the teleprompter? Customized pairs of Google Glasses, for example, would permit politicians to read their lines from the tiny screens on their eyeglass frames.

Of course, as a fashion statement, eyeglasses have been known to backfire on candidates. Recently, former Texas Governor Rick Perry withdrew from the presidential campaign after Donald Trump ridiculed his eye wear, claiming that Perry “put on glasses so people (might) think he’s smart.”

If that is a concern, then perhaps Google can develop a pair of glasses with transparent or invisible frames. On April 1st of this year, for instance, the Smithsonian National Air and Space Museum published a blog posting about its display of the comic superhero Wonder Woman’s invisible jet airplane. According to the Smithsonian, she has been flying it since she first became a public figure during the 1940s.

So why not ask Google to build its smart glasses with Wonder Woman’s invisible technology? The product would easily replace the teleprompter, and would enable many Republican candidates to compete with The Donald.  🙂

Are Corporations People?

Corporations are people, my friend.

Four years ago, while campaigning in Iowa for President, Mitt Romney spoke those words to protestors who were angry about low income tax rates on corporations. Romney was saying that corporations are owned by people and employ people, and that their income is ultimately returned to people. Thus, for all intents and purposes, corporations are people.

The principle was later revived when the Supreme Court of the United States outlawed most regulations and restrictions on corporate contributions to political campaigns. They reasoned that corporations (as people) possessed the right to free speech, and thus also possessed the right to speak with their money by making (largely) unregulated and unrestricted donations to candidates.

But the principle that “corporations are people” appears to have its limits. Earlier this month, for instance, Brooklyn based Etsy — the online crafts platform that claims to be building a human, authentic, and community-centric global and local marketplace — initiated a complex tax avoidance strategy. The firm’s United States unit loaned funds to its Irish unit, which then utilized the funds to buy the American unit’s intellectual assets.

Why did Etsy engineer this strategy? Well, Irish corporate income tax rates are lower than American rates. So with Etsy’s intellectual assets now housed in Ireland, any income earned from the use of those assets can be taxed at Ireland’s lower rates.

It’s a nice way to reduce one’s tax bill, isn’t it? You’re probably tempted to replicate it, if possible. Perhaps you can simply tell your employer that you’ve transferred your personal knowledge, skills, and experience to a shadow version of yourself that is based in Ireland. Then your employer can pay your salary to your shadow self, who can (in turn) pay lower income tax rates.

Is this actually possible? Regrettably not. The tax strategy is only available for corporations. Human beings are not eligible to take advantage of it.

And there’s the rub of believing in the principle that corporations are people. On the one hand, it can be utilized by corporations to enable their own tax avoidance strategies and protect their own political lobbying and contribution activities. But on the other hand, people are not permitted to take advantage of many benefits that are routinely granted to corporations.

Today, four years after Mitt Romney spoke those famous words while campaigning in Iowa, many new candidates are seeking a Presidential nomination. Should we be surprised that, unlike Mitt Romney in 2011, today’s Republican Party front-runner is gaining support by charging that corporate interests buy people, instead of claiming that corporations are people?