Month: May 2013

Quotes of the Week: On This Memorial Day Let’s Remember the Freedom of Information


641250-julian-assange-on-time-coverI remember, back in 2004, looking at the abhorrent images from Abu Ghraib, reading about the Torture Memos, and saying to myself: "No matter the reasons, WE should not be doing this."  By that "WE" I meant the American Nation.  But, of course, WE wouldn't even know anything about it (as we don't most of the time), if the information about the habitual abuse, sanctioned by Top Brass, wasn't leaked to individuals with international media connections.

Nowadays, it seems like WE are drowning in secrets: major corporations, banks, technology developers, military, police, political parties, various government agencies (how about that IRS exposé!) – everyone is hiding something.  It's as if Lyndon Johnson has never signed the Freedom of Information Act.  I have to be honest, it makes me feel betrayed.  It hurts that this is what happens with an international symbol of Freedom and Democracy.

And, while Julian Assange, as a person, creeps me out and I'm highly suspicious of his motivations, I cannot help but appreciate his drive for dismantling  the spider web of cover-ups, finding and leaking every bit of information he can get his hands on.  He will be in the public eye again this summer and fall with the release of two movies about him: Alex Gibney's documentary We Steal Secrets, the Story of Wikileaks (reviewed by David Edelstein in 05/27/13 issue of New York Magazine) and Bill Condon's feature The Fifth Estate, based on Luke Harding book, starring Benedict Cumberbatch.  Hence the quotes:

"…There being so many hornets and soul-sucking ghouls and dark subterranean forces in this and the last presidential administration that we're practically living in Harry Potter world."

                                        David Edelstein

"We're going to fuck them all; fuck the world and let it flower into something new."

                                        Julian Assange

"No matter how you cut it, he's done us a massive service, to wake us up to the Zombielike way we absorb our news."

                                        Benedict Cumberbatch 

Marketplace Fairness (???) Act, or Lets Stomp on Small Businesses Again


ImagesCA3IO0HMBelieve it or not, but the Battle for (or against, if you will) the Internet Sales Tax has been going on for 20 years now. 

First, there were no online sales taxes at all.  Back in the early 90s, members of various legislative bodies thought that the World Wide Web was something that Al Gore invented and, therefore, didn't pay much attention to it, especially the Republicans.  Meanwhile, the online vendors (the term e-tailer didn't gain wide acceptance until 2000) and their customers justifiably acted like pioneers in the brave new world:  as far as they were concerned, they operated in the environment with no physical attributes, and no brick-and-mortar regulations were applicable to them. 

It didn't take too long, however, for the states to catch on and get all itchy on account of the missing revenues.  The first most obvious targets were those conventional retailers, who quickly added shopping carts to their websites: Godiva, Staples, Best Buy, Bloomingdale's, etc.  With them it was easy to enforce the guiding principle of sales taxation - the physical presence rule.  They have multiple locations practically in all states – collecting and remitting sales taxes are routine tasks for them.  A bit of code-writing and, voila, if your shipping address is in the state where the seller has a store, an office, or a warehouse, the tax will be applied.  

I was in the avant garde of the e-commerce consumers.  I bought my first book on Amazon in 1995.  I recall it was a new addition of Joy of Cooking: 1150 pages – too bulky to drag it with me from B&N.  A desire to own a one-of-a-kind Victorian coral bracelet sold by an antique dealer in Amsterdam trampled my inherent mistrust and led me to the conclusion of my first eBay purchase in 1996.  I had to fax my credit card info to the seller – we were still two years away from the inception of PayPal. And that same year I booked a room at Montreal's Ritz Carlton through Expedia.  I consider myself an Internet veteran.  Today, 90% of my consumer experience is managed online.  And I am not alone: in 2012 Internet sales amounted $226 billion.

And all these years, I've been kind of on the fence about this whole Internet taxation issue. On one hand, I LOVED not paying sales taxes for the items I bought from my home.  Plus, no state or city resources were utilized: I didn't use any public transportation, roads, or street parking; I didn't walk into any buildings; nor did I use any City utilities. The cost of my connectivity is taxed via my cable and power providers, while delivery services collect sales taxes from the shippers. I still remember how disappointed I was when Amazon opened a distribution center in NYC to facilitate same-day deliveries and started taxing my purchases.

On the other hand, the economist in me is fully aware of the importance of sales taxes for the state and municipal budgets. And, while I strongly believe that 70% of government employees are redundant and the rest are lazy, I do want all bridges to be repaired on time. Unlike other people, I understand that it's a capital-intensive process and money has to come from somewhere.  I knew only too well that Bluefly, with offices and employees in NYC, should've been taxing my purchases (they didn't) way before the CEO decided to launch a brick-and-mortar outlet.

I am a stickler for the rules that create common platforms for everyone involved: generally accepted accounting principles (GAAP), international financial reporting standards (IFRS), international commercial terms (Incoterms), etc. Speaking the same language prevents misunderstanding. If we cannot avoid paying, collecting, and remitting sales taxes, let's at least stick to the simple rules of physical presence already in place. Even though, the interpretation of what constitutes "physical presence" in the Internet environment could be debatable. I kept pondering, for example, whether, besides the conventional criteria like leased or owned commercial property, payroll, and inventory, the location of web servers and interface workstations should be considered as well.

Yet, one thing has always been clear to me: If you don't have any type of presence in a state and don't use any of the state's resources in order to generate income, you cannot be made responsible for collecting sales taxes in that state. This is not medieval Europe, I thought: just because the governments want additional revenues, they should not just impose new tax-collecting laws like some Sheriff of Nottingham. This would destroy a lot of small businesses that were able to break out of their local boundaries and find their way into the national and even international markets through the web.

What a fool I was! Who cares about small businesses? Members of the government act according to their allegiances to a few Big Players with their big gains and losses at stake.  On one side, there are Wal-Mart, Target, COSTCO, and Amazon (boy, this alliance alone was unimaginable only a few years ago), who are literally everywhere on the ground and on the web. These "poor" leviathans complain that they are at the "price disadvantage," losing customers to those e-tailers (read: smaller businesses), who don't charge sales taxes. "All" they want is to level the playing field, i.e. for everyone to collect taxes everywhere.

On the other side of the barricade is eBay providing thousands of online shops and craftsmen with the means of offering their products to the world.  It stands to lose tons of fees if the members' business volumes contract.  Nobody represents the unaffiliated e-tailers.

Guess who tips the scales? In the beginning of this month, the Senate approved an Internet tax proposal (perversely named Marketplace Fairness Act), which is not based on e-tailers' physical presence at all and will force shoppers to pay sales taxes on the majority of online purchases. In basic terms: all online sellers will have to collect sales taxes and file returns for all states to which they ship their merchandise. 

The plight of small businesses, including the additional workload related to the new responsibilities, is almost an afterthought in the proposed legislature: the ones with less than $1 million in out-of-state sales will be exempt from sales-tax obligations.  What is this stupidly irrelevant number? Are they low-balling like some cheap hagglers?  Again, common ground, people! According to the Small Business Administration's definition, a retailer is considered "small" if the sales do not exceed $5 million to $21 million, depending on the product!

Why our various government bodies always have to be such opportunists and never think about the future impact of their decisions, I have no fucking clue. The e-customers have only this much disposable income: if they have to spend a portion of it on the Internet sales taxes, they will buy less goods.  Consumer market contraction anyone?  And in the long-run every time a small business is hurt, it affects the entire economy.  But who cares about the long run? The governments are more interested in grabbing whatever they can right now, whether they entitled to it or not.       

Quote of the Week: Just Because We Deserve It, We Do Not Have to Like It


Henry-louis-menckenThe original authorship of the statement "Every nation has the government it deserves" has been disputed, like, forever.  Some attribute it to Joseph de Maistre, others to Alexis de Toqueville…  There are also various translations, interpretations, etc.  And why not?  It's logical and simple to blame everyone (and no one in particular). 

To take an individual stand, however – that's a different story:

"Every decent man is ashamed of the government he lives under."

                                                        H. L. Mencken (1880 – 1956)


Quote of the Week: The Negation of F. Scott Fitzgerald’s Misguided Morality


Gatsbymustknowclipimage_rx307_c540x304"Scott Fitzgerald was, in his own words, 'a moralist at heart.'  He wanted to 'preach at people,' and what he preached about most was the degeneracy of the wealthy.  His concern, however, did not lie with the antisocial behaviors to which the rich are prone: acquiring their wealth through immoral means…  Like many American moralists, Fitzgerald was more offended by pleasure than by vice, and he had a tendency to confound them.  In The Great Gatsby, polo and golf are more morally suspect than murder.  Fitzgerald despised the rich not for their iniquity per se but for the glamour of it…" 

                                                        Kathryn Schulz

                                                        Bad Egg (article for New York Magazine) 

The Frustrated CFO's comment:

A highly opinionated person has a difficult time restraining herself in the face of the inevitable hype evoked by the new adaptation of the "great American novel." And I'm not even talking about myself: Kathryn Schulz's strongly negative point of view resonated very positively with me. So, let me stick (or rather add) my two cents as well.

First of all, just like Ms. Schulz and a few other intelligent people, I always thought that, as a fictional novel, The Great Gatsby was a bad book. Moreover, the simplistic socio-economic generalizations of F. Scott Fitzgerald's writings, based on his own immediate upper-class surrounding, offend my intelligence. It's one thing when writers stick to what they know. Hey, if all of them were Philip K. Dicks, how would we know the difference? It's a completely different matter, however, when someone takes bits and pieces of his personal experience, severely impaired by alcohol and self-loathing, and tries to pass his cardboard characters and schematically constructed narrative as a "critical social history." That's a very dangerous, irresponsible, and self-serving undertaking. Was J.D. Rockefeller Jr., the conservationist, identical to Tom Buchanan?  I don't think so. Yet, they both belonged to the same class, the same age group, they both went to Ivy League Schools, etc.

There is a reason why the book's popularity rose sharply after WWII: the social changes were ripening and the white rich people were despised by most, including their own heirs (Patty Hearst was not the only one, you know). In the eyes of the readers who caused the Baby Boom, the Fates have punished poor, infatuated Jay Gatsby for trying to be where he didn't belong, for wanting to become rich and impress Daisy into loving him, for betraying "moral values" in order to accomplish this self-imposed task.

But times have changed. What the majority of critics don't realize is that by now the novel has lost all of its social-scorn charge. The baby-boomers and their children, corrupted by the celebrity-obsessed media, LOVE wealth above everything else and ENVY, but do not disapprove of, the rich. A "self-made man" Jay Gatsby is not pitied, but revered.  Who cares about shady deals, DUIs, and murders – it's all in the "job description" of climbing the ladder to the "top." 

Here is another quote to illustrate the depth of our contemporaries' perversion: 

"Every time I'm out, a drunken Wall Street guy comes up to me to say, 'You're the man.'  It's depressing.  Gordon Gekko was not a hero."

                                                                Michael Douglas 

Only in this environment the unrestrained lavishness of Baz Luhrmann's production could be acceptable, and preferable, to the hordes of day-dreamesrs wasting their lives on fantasizing about becoming rich and famous overnight. 

Now, go and Check out this entertaining post about what other directors might've done with this stale material.

Priorities and Attitudes


I’ve been predominantly focusing on specific issues and situations lately, thus ignoring the general topics of behavioral patterns in work environment.  So, today I would like to discuss how people’s priorities affect their attitudes and how important it is to recognize that connection not only in yourself, but in people around you as well.

Depending on circumstances, we switch from one mode of operation to another and focus on different priorities. This affects our behavioral patterns, our attitudes towards the tasks at hand and people around us.  For most of us, it is difficult to dissect and analyze our own motivations and actions.  However, to succeed in business and in life we need not only understand ourselves, but go further and develop an ability to recognize the behavioral patterns in others as well.

The good news is that we can apply a certain level of standardization to the seemingly limitless array of human demeanor.  Let’s look at some of the most common priority/attitude correlations.

Remember my post about Economic Triangles?  What happens if the highest priority is speed – to get a task accomplished in the shortest possible time?  Frequently that pushes the quality of the result to much lower level on the priority ladder.  At the same time, for someone like me, for example, it is highly important that no half-baked crap leaves my desk.  It is most likely that while trying to balance speed and quality I will display signs of agitation and frustration.  And so will anybody else in this position.

Here is another one.  Sometime ago you gave one of your employees a complicated assignment.  It’s not just complex, but it’s a crucial piece in your decision-making process concerning viability of a new line of business.  Now, he stands at your door shining like a well-kept copper kettle.  You are busy (when we are not busy?) – you raise your head and snap, “If you have something, send me an email.”  What was the guy’s priority?  Economy of time?  No, it was the desire to show you his accomplishment and be rewarded by your recognition of his success.  Next time you pass him you see him slacked back in his chair sourly moving his mouse.  Whose fault is that?     

So, next time a perfectionist under your supervision starts acting like an irritable child, ask yourself whether there is a conflict between the quality requirements and the deadline imposed on him.  And if an enthusiastic and talented person starts displaying passive-aggressive symptoms, see if you can give him a mid-term performance evaluation and express your appreciation.  

Over the years of self-training and experience, I have become an expert in prioritization and optimization of my personal standards against requirements of the moment.  It takes years of conscious efforts to develop these abilities.  People around us, including our subordinates, peers and bosses don’t necessarily possess them.  Understanding the conflict of priorities that dictates their attitudes gives us an undeniable professional edge.