Saturday, September 4, 2010

Human slavery to technology

In the conclusion of Consumption and New Technologies – In the Hyper World, I wrote:

«Technological tools can nonetheless be very useful to humanity, provided that we properly direct their development and use. Humans are too often made to serve machines, or at least forced to adjust their life or behaviour to them, whereas machines should adapt to humans and be useful to mankind. »

Here is an example of what can happen when humans become enslaved to technology.

On Monday, August 30, I made a purchase for which I had a $5 coupon, but did not have my coupon with me. I still bought the item because the dealer assured me I had to return to the store to get coupon refunded, without specifying a precise date to do so.

On Friday, September 3, I phoned the store to inquire about opening hours that evening, and specify the object of my visit (coupon refund). I was then told that it was impossible to refund the coupon, its expiration date being September 1st.

I then explained that the purchase having been made on August 30, the coupon’s validity date had been respected. The clerk answered that there was absolutely no recourse, because the coupon’s bar code having been disabled in the computer, the cash register’s scanner could no longer read it.

Well aware of the fact that manual procedures can often work around this kind of technical difficulty, I asked to speak to the store manager. On a rather arrogant tone, inappropriate with a client, he dryly replied that he couldn’t do anything because that’s the way the computer system had been programmed.

In the end, I mentioned the fact that I had been a loyal customer for many years and informed him that I would buy elsewhere from now on if I did not get satisfaction. He responded that I'd probably be better served in another store. This response is mind-boggling when you realize how difficult it is to acquire new customers.

You’ll notice that I deliberately omitted to mention the type of product and store name. This incident could likely have happened elsewhere, given retailers’ heavy reliance on technology. The crucial point here is that the inflexibility of a technology should never hinder a merchant from satisfying a customer, provided the latter has good reason to be dissatisfied, and manual procedures should always exist to circumvent technological flaws.

Sunday, June 27, 2010

Do you know your rights regarding price accuracy?

The following applies in the province of Quebec (Canada).

In principle, the Consumer Protection Act (CPA) requires merchants to label the price on each article, but allows for exceptions. For example, because of the increasingly popular use of optical scanners, retailers are no longer required to label each article; several avail themselves of this exemption, but are still subjected to a number of constraints that include, amongst others, mandatory display of each article’s price on the shelf and of a sign about the Price Accuracy Policy.

This policy includes measures to compensate the consumer in the event of any inconsistency between the price on the shelf, and that charged by the register.

If the product price is $10 or less, the merchant must give you the item for free.

If the product price is more than $10, the retailer must sell you product at the price displayed on the shelf and further give you a $10 discount.

Buyers beware!

Tuesday, June 8, 2010

Successes and pitfalls of technology

Technology has invaded workplaces, homes, vehicles, portable devices of all kinds, etc. Many will say it has freed man. This is true, from one point of view; appliances greatly facilitate household chores. It has also allowed man to express his creativity far more easily; inexpensive software now allows people with limited aptitude for drawing to create dazzling presentations and websites. The illustrations they create compete with those drawn by professional designers before the personal computer era. Cars have enabled the development of North America as we know it today, by giving greater freedom of movement to the middle class. Quick and relatively inexpensive air transport has brought continents closer and allowed people with average incomes to discover exotic and distant lands, a privilege once reserved to the elite.

But the effects of technology are not always positive. Increased individualism and selfishness often results from its use. It also induces a form of addiction, which sometimes almost amounts to slavery: millions of people, staring at a computer screen, line up thousands of lines of code to teach computers how to process vast amounts of information, day after day, in many cases night after night. More simply, remember your dismay when your computer crashes or a power outage occurs. Also think about the violations of privacy and all forms of viruses and other malware. Moreover, technology has contributed to widen the gap between rich and poor nations and even between well-off and underprivileged people in Western societies, in short, it has created a digital divide.

In conclusion, we must exercise discernment in the use of technology and keep in mind that they are not omnipotent; they will never confer eternal youth, let alone immortality, on humanity, and will not redefine our values for us. They are inanimate and as such without values; they simply fall within the system of values that we privilege. Technological tools can however be very useful to humanity, provided that we direct their development and use. Mankind is too often made to serve machines, or at least forced to adjust his life or his behaviour to them, whereas machines should be made to adapt to humans and be useful to mankind.

To learn more about these issues, see «Consommation et nouvelles technologies — Au monde de l’hyper» (Consumption and New Technologies — In the Hyper world), soon to be translated in English.

Saturday, May 15, 2010

Over-the-counter DNA tests

Here is a summary of my column of Thursday May 13 on Radio Ville-Marie (91.3 FM in Montreal) for those who have missed it.

Tuesday May 11, Pathway Genomics announced its intention of selling an over-the-counter DNA test in 6000 Walgreen stores in the United States. Two days later, Walgreen announced the cancellation of this agreement following an intervention by the Food and Drugs Administration (FDA), the US organization «responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation’s food supply, cosmetics, and products that emit radiation ».

I welcome the FDA’s and Walgreen’s decision, because immoderate use of such tests by an uninformed public could lead to serious abuses. First and foremost, we can think of the dangers associated with the interpretation of results, which can easily lead to anxiety or distress, or on the contrary falsely reassure a person while a severe illness is underlying. Also think about the dangers of discrimination against people identified as being at risk of contracting certain diseases (cancer, Alzheimer's ...) when they apply for a job or want to buy life insurance.

Finally, think about all the swindlers who inevitably arise to take advantage of people’s disarray when a test revealed the possibility of contracting a serious disease. «Your genes indicate that you are in danger of contracting breast, or prostate, cancer? Don’t worry, our researchers have discovered an elixir that will decrease your risk! Available in all good pharmacies and online ». It would be the resurgence of a form of advertising as rowdy as misleading intended to exploit people's worries. Many have without doubt already envisioned the possibility of making profits totalling billions.

Let professionals advise us about our health and keep in mind this reasoning: if a disease is incurable anyway, perhaps you are better off not knowing that you have a 54% probability of getting it.

Saturday, April 3, 2010

Quebec’s Budget and consumption: Minister Bachand’s miscalculation

Further to my radio column of Thursday, April 1 on the same subject, here are a few thoughts.

Minister Bachand deludes himself thinking that an increase of QST and the gas tax will bring more money into the coffers of the state; it’s a mistake governments often make.

In reality, many consumers already have a very tight budget; unable to pay the excess expenditure of hundreds of dollars per year incurred by these tax increases, they will adopt tactics to lower their expenses: 1. Reducing the purchase of certain goods and services; 2. Buying outside Quebec; 3. Purchasing goods and services on the black market to avoid paying taxes.

I do not advocate the use of these tactics, some of which are illegal; I only report what happens every time the government unduly increases the tax burden, especially in Quebec where the citizen is already the most taxed in North America. Ultimately, you can safely bet that Quebec will see its fiscal revenues decline.

Furthermore, the economic crisis has been severe and the recovery is still fragile; in fact, there is virtually no job creation. All these tax and tariffs increases will likely nip recovery in the bud.

The solution to Quebec’s deficit does not lie in increased state revenues but in a substantial reduction of the bill incurred for social programs, which amounts to 16 billion dollars more than the neighboring province, Ontario. We can no longer afford these privileges. For example, the $7 a day child care program alone, whose real cost is $45, represents an expenditure of over $2 billion for Quebec. Sheer nonsense!

For this program, I propose that access to child care be free for the poorest people, such as single mothers with incomes nearing poverty; others should pay the actual cost of the service. In any case, it really benefits only the richest.

Besides, if states want to increase their income, they can easily impose a surtax on speculative gains, but this requires concerted international action. Will our leaders have the political courage to confront the sometimes shady world of financiers and speculators?

Monday, March 15, 2010

Towards responsible capitalism

Confronted to the speculation we observe in financial markets, I began a series of columns on the ravages of financial capitalism. In the first, I demonstrated the harms of speculation, especially the relationship between it and the economic and financial crisis raging on the planet since summer 2007. In the second, I talked about the birth and evolution of capitalism and oft he stock market, and compared two forms of investment in a high tech company. In the third column, I presented the financing needs of companies involved in technology. In this fourth and last column, I will introduce a new mode of economic organization to focus on, responsible capitalism.

To be beneficial to all mankind, development, technological or otherwise, must be based on a new paradigm called responsible capitalism, a concept we have already discussed in 2007 in Consommation et luxe. We define responsible capitalism as a socio-economic system based on free circulation of trade, business, industry and finance, in a perspective of respect for the interests of all stakeholders: the ordinary citizen, the State, financial institutions, businesses themselves their customers, employees, suppliers and investors.

Derived from the very world that gave birth to it, that of business, responsible capitalism is part of an evolution of capitalism, from Venice’s merchant capitalism to industrial Revolution’s industrial capitalism in the XIXth century, the to modern day financial capitalism (For these three forms of capitalism, see K. Galbraith, The Economics of Innocent Fraud, Boston, Houghton Mifflin Company, 2004, p. 8.).

Aware of their responsibilities in society, more and more business men and women can only subscribe to a more humane vision of commercial, industrial and financial practices. To those who might think me naive, keep in mind that I have worked in the business world for over 25 years and still am very much involved in it; I can assure you that it is not populated solely by gangsters, swindlers, tyrants and speculators. As evidence of this, I present organizations such as BSR (Business for Social Responsibility), «A leader in corporate responsibility since 1992», whose mission is to «work with business to create a just and sustainable world».

Amongst the most fervent advocates of responsible capitalism, there are also influential politicians such as Nicolas Sarkozy and Barack Obama. Thus, during the campaign that led him to the presidency of France in 2007, Nicolas Sarkozy proposed a «family type» capitalism, based on more human values, which is within the context of social responsibility we have described: «I believe in the creative force of capitalism, but I am convinced that capitalism cannot survive without ethics, without respect for a number of spiritual values, moral values, without humanism, without culture. […] Capitalism must serve a certain idea of man. I believe in the ethics of capitalism. I do not accept, nor do thousands of entrepreneurs, for paid work and entrepreneurship to be violated by the excessive remuneration and privileges benefiting a small minority of CEOs. I do not accept that, around the world, for reasons of pure profit, some people toy with employees and plants as one moves pieces on a board game. […] I will reinforce «family type» capitalism. »

One must admit, even without outrageously speculative practices, the nature of the stock market is forcing companies to engage in a race for profitability, which often forces them to make decisions contrary to harmonious long term development and some contrary to the interests of their employees and customers. From its initial public offering of shares (IPO), a company loses some of its freedom of action and is from then on subject to the profit demands of mutual fund managers, large investors and speculators. This denatures the company, which explains why Guy Laliberté has always refused to list his company on the stock exchange. Cirque du Soleil would probably not be what it is today if the company was publicly traded, because Mr. Laliberté would not have had the flexibility to choose its partners, artists, shows, and more. I also believe that we must see in Toyota’s recent setbacks the effect of a race to profitability, which had a negative impact on the quality of its products.

Some CEOs of large companies refuse to follow the whims of investors. Thus, here's what Nick Hayek, CEO of Swatch, said on March 21, 2009 further to a decline in earnings of the company he heads: «For a company listed on the stock market, announcing a decline in profit, a10% reduction in the workforce can bring the share value back up. Such is not the case in our company. There will be no layoffs or reduced investment at Swatch. We accept having diminished earnings and not to be the darlings of the stock market. » Refusal to play the stock market game to appeal to investors is a good example of responsible capitalism.

On December 3, 2008, the United States, columnist Ray Williams published an article in which he argued that the current business paradigm was no longer viable, encouraging entrepreneurs to adopt responsible capitalism. Capitalist societies have initiated evolutionary transformation of who we are, what we value and how we behave. This requires social and environmental responsibility, to which CEOs must actively participate. This transformation requires a model that focuses on more than the sole profitability (bottom line) objective. It considers a creation of wealth that adds personal, social and ecological gains to the bottom line. (R. Williams, «CEOs need to adopt responsible capitalism», Financial Post, 3 décembre 2008)

US President Barack Obama’s position fits into this perspective. For instance, in a speech pronounced on February 24, 2009, he defended a vision of capitalism in which prosperity benefits to all. Although he did not himself named this new capitalism, others have done for him, Responsible Capitalism. Williams goes on saying that President Barack Obama’s speech was peppered with phrases and ideas outlining his vision of his government's responsibility to not only promote a strong economy, but also to ensure that ordinary people were taking advantage of this economy . He [Obama] has not yet fully articulated his economic philosophy, and has not given it a name either. But we can see in this speech outlines a new approach that could be called "responsible capitalism" in contrast with the "crony capitalism" of the Bush era. […] More accurately, he redefines the meaning of a "healthy business climate" — a widely shared prosperity for workers, an economy that creates good jobs, allows access to the middle class to the poorest, provides first rate schools, decent health care, and housing that families can afford, while protecting the environment.

President Obama also criticizes abuses, including those of the industry and the financial world; in his opinion, government must exert tighter control in these areas.

In short, the need for a reform of capitalism no longer need to be demonstrated; countless leading actors agree on the need for international collaboration to define actions to take, world economies being so interrelated that unilateral action by one country would have no effect. To put in place measures to curb speculation, on raw materials for instance, must necessarily involve all major states.

Monday, February 15, 2010

Link between stock market speculation and corporate bankruptcies

Confronted to the speculation we observe in financial markets, I began a series of columns on the ravages of financial capitalism. In the first, I demonstrated the harms of speculation, especially the relationship between it and the economic and financial crisis raging on the planet since summer 2007. In the second, I talked about the birth and evolution of capitalism and oft he stock market, and compared two forms of investment in a high tech company. In this third column, I present the financing needs of companies involved in technology. Of course, these findings also prove accurate in other sectors of economic activity.

I have already outlined the fact that today technological development requires massive injections of capital, available only to States and major financial players, such as banks, mutual funds and a few wealthy investors, amongst whom we find both entrepreneurs and speculators. Small technology companies are struggling to find capital for their development; they rely on state subsidies, bank loans, venture capital and a few private investors. When they reach a certain size, they seek to get listed on the stock market through an IPO; from then on, they are subjected to the dictates of investors demanding an increased profitability year after year. Failure to deliver will cause their shares to be dumped, their capitalization diminished and their development compromised.

Several flourishing companies have disappeared over the years. Even large companies, sometimes listed on the stock market for decades, are vulnerable; some have collapsed, their shares sometimes dropping from hundreds of dollars to a few cents. Consider Norton Telecom (Nortel) a jewel high-tech company in Canada. Market speculation is perhaps not the only culprit in Nortel’s bankruptcy, but it is a major factor. Without the excessive demands of some large investors with respect to a short-term excessive profitability, business decisions made by management would probably have been different; they would have been better suited to a more harmonious long term development of the company. Companies, technological or otherwise, should not have to finance through the stock markets and see their business decisions dictated by a handful of speculators who care only about their own short term profit, often at the expense of the company itself.

What other avenues might there be? I have already said that technological development can take place in a capitalist type economic organization, while remaining beneficial to society as a whole. However, to remain the privileged method of economic organization, capitalism must transform, be associated with State imposed social measures, and above all eliminate, or at the very least restrict, speculation. This new paradigm is already emerging in the form of responsible capitalism and new values; in my next column, I will present its broad outlines.

Sunday, February 7, 2010

Speculation: The origins of capitalism and the stock market

Confronted to the abuses that we witness daily in the world of finance, I began last week a series of columns on the ravages of financial capitalism. In the first, I demonstrated the harms of speculation, especially the relationship between it and the economic and financial crisis raging on the planet since summer 2007. In this column, I’ll talk about the birth and evolution of capitalism and oft he stock market, and compare two forms of investment in a high tech company.

Mumford situates «the birth of capitalism and the transition from a barter economy - facilitated by a local and variable currency – to a monetary system with an international credit structure (Mumford, 1950) », in the fourteenth century in Northern Italy. Regarding the stock market, he tells us that «two centuries later, existed in Antwerp, an international stock exchange intended for speculation on vessel armament in foreign ports and on currency. » Others trace the birth of this financial institution at an even earlier time. Some, for instance, report the existence of «courratiers» (ancient form of the French word courtiers), brokers, in Paris in the twelfth century, «concerned with managing and regulating the debts of agricultural communities on behalf of the banks» in France, then for the exchange of state debts by Lombard bankers in the thirteenth century. A first stock exchange is said to have existed in Bruges in the fourteenth century. According to many, According to many, the term «bourse» (stock exchange) origins from the name of the Van Der Beurze (De La Bourse in Walloon) family, the house in which Bruges commodity traders met. However interesting, all these socio-historical references are however little importance in light of speculation, inherent to the stock market.

On this subject, Mumford wrote «international stock exchange intended for speculation »; his use of «stock exchange» and «speculation» within a short sentence and of the adverb «intended» to link both terms and point out the purpose of this financial institution, demonstrates the indissolubility he sees between «stock exchange» and «speculation». Mumford goes on to say that with the advent of financial capitalism, «all business took an abstract form. They did not deal in goods, but in imaginary futures and hypothetical gains (Mumford, 1950). » He continues with the mining industry, stressing that the expansion of operations and use of machinery using the latest technologies of the time, required an injection of capital that the workers could not provide: «This led to the admission of associates who brought capital instead of work: they were silent partners [...] This capitalist development was further stimulated as early as the fifteenth century by the rampant speculation on shares. Landowners and merchants practiced this new game (Mumford, 1950). »

This said, to base human and technological development on a capitalist form of economic organization does not inevitably entail speculation. This practice is not inherent to capitalism, but to human greed; of all times, it has been the doing of a few. It has now reached dizzying heights; creating no real wealth, it only allows a handful of individuals to get revoltingly rich to the point of destroying the system that allowed them to accumulate their wealth. It could be otherwise.

Consider two $100,000 investments made in high technology, the first in a small startup company involved in software development for data security, and the second in a mutual fund speculating on the prices of metals, a critical resource in computer manufacturing. For purposes of this comparison, assume that two investments are worth $ 500,000 after 5 years and that both investors liquidate their respective investment, cashing in a profit of $400,000. Both these investments were equally profitable and will receive the same fiscal treatment, i.e. a tax on only 50% of the capital gain. However, which of these two investments has been most beneficial to society? Which has created real value?

In the first instance, programmers, salespeople and other employees were hired, thus creating collective wealth; furthermore, these people have paid taxes on their incomes to various government and their consumption has fuelled other economic sectors. The value of the small business has increased from $100,000 to 500,000, a value based on tangible assets, although some proportion may be intangible, such as the software developed. Said software has allowed other companies to protect their data and hence operate more efficiently and securely. We should also not forget the fact that the investor will probably not liquidate his investment after 5 years, especially if he owns the business. Even if he did so, the company would not liquidate its assets; under the direction of a new owner, it would continue to prosper, to hire staff and create collective wealth.

In the second case, we can see only a small positive impact on society; as in the first case, merely the imposition of a tax on 50% of the $400,000 capital gain. Quite the contrary, the impacts on society are rather negative. For instance, the rising price of metals affects the development of several companies, raising the prices of several products they need. If the value of investment increased from $100,000 to $500,000, this gain represents no real increase in value, only an increase in the perceived value of metals, the result of speculation on their price. Is the imposition of an identical fiscal treatment to these two investments fair if one considers the benefits to society? Let’s keep this question open for now ... but we will get back to it.

In my next column, I will discuss the financing needs of companies involved in technology.

Saturday, January 30, 2010

The ravages of financial capitalism

Consumption, technology and finance are intimately related; exceeded by the abuses that I witness daily in the world of finance, I begin today a series of columns on the ravages of financial capitalism.

Technological development, the driving force of consumption, is linked to available funding, especially since the 19th century’s industrial revolution; however, it was not always so. In «Consommation et nouvelles technologies — Au monde de l’hyper», a book I published in November 2009, I write: «Capitalism and technological development can exist without the other: "Capitalism has existed in other civilizations whose technical development was relatively low. Technique made steady progress from the tenth to the fifteenth century without needing the nudge of capitalism (Mumford, 1950)." But the nature of current technological development and the speed with which it takes place requires a concentration of capital available only to States and large investors (Ellul, 1990). » A source of funding is needed for technological progress; it can be public or private.

This said, State communism has shown its limits; capitalism has thus proved to be the least evil form of economic organization, despite the fact that it gave birth to the consumer society, then to hyperconsumption, and is undermined by speculation. This is why Robert Rochefort said: «The consumer society is the least evil form of society tested so far (Rochefort, 1995). »

Consequently, as I wrote in «Consommation et luxe – La voie de l’excès et de l’illusion» in 2007: «It is not my intention to criticize capitalism or the stock market as a whole. This mode of financing is necessary for the operation and growth of businesses. » I was then content to denounce the greed of a few large investors that feeds a speculation phenomenon. Two years have passed, and, if I still strongly believe in the merits of one form of capitalism, responsible, my opinion of the stock market has further deteriorated since then, because, more than ever, speculation is raging on Wall Street, Bay Street and all stock exchanges.

Speculation is a phenomenon which is inherent to stock market trading, because it is rooted in human desires for power, money being a form of power. Extremely harmful to our societies, it is responsible for the subprime mortgages crisis, which arose in summer 2007, then degenerated into an economic and financial crisis a year later; speculation is also responsible for most preceding crisis and for the bad reputation that many have made to capitalism: «Later, and more destructive to the reputation of capitalism in the United States, was the visibly insane Florida real estate speculation, the rising corporate and industrial voice and, most important, the stock market explosion of the late 1920s. Then came the world resonating crash of 1929 and, for ten long years, The Great Depression. (Galbraith, 2004). »

Closer to us, take for example high-frequency trading, a practice that is now spreading on Wall Street: « Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense. These systems are so fast they can outsmart or outrun other investors, humans and computers alike. And after growing in the shadows for years, they are generating lots of talk. Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer (Stock Traders Find Speed Pays, in Milliseconds). »

Thus, it is likely that much of the gains on the stock market in 2009 may be attributed to speculation and market manipulation. Such practices create no tangible value, only a hypothetical value based on an imaginary future, hence the creation of speculative bubbles, technological, real estate or other; those inevitably burst sooner or later, causing the usual parade of economic and social problems. Said practices will ultimately destroy our economies and our societies if we do not put an end to them.

Speculation and market manipulation, which have flared up after the stock market crisis of fall 2008, will inevitably lead to an even worse crisis, from which Western economies may not recover, if States do not exercise tighter control over these practices.

In my next column, I’ll talk about the birth and evolution of capitalism and oft he stock market, and compare two forms of investment in a high tech company.

Sunday, January 17, 2010

Response site to Haiti crisis

Here's a site developed by Google to find a person or supply information about a missing person.

Sunday, January 10, 2010

Poken, the latest way to network

Have you been pokened recently? Yes, not poked, pokened! It is far less painful and far more amusing. Pokening will shortly have to be added to our vocabulary. One may describe the practice as the mating of two palm-held digital devices the size of a USB key «to share your contact details and online social networks in the real world. ». Think of it as a Web 2.0 era business card and of a new way of shaking hands. Although there are more «serious» looking models, the poken you’ll want as an ice-breaker in a party is the pokenSPARK TM, a smiling figurine not unlike the famed smileys, offered in a variety of designs and colours.

Even if you don’t own a poken yet, you may still sign up and create an account in the pokenverse to explore some of the features of this latest social network.

You can order one from an authorized online reseller. More about this latest techno-gadget in coming columns, after I receive the ones I’ve ordered and had a chance to use it.

My initial reaction: a brilliant idea that will soon catch on.