January 5, 2006
From the desk of Jane Galt:The Road to Hell . . .
In the comments to my previous post, a commenter lambastes me for this:
So why did Public Citizen get Cylert banned, rather than Tylenol?Because if they tried to get Tylenol banned people would say, "What, are you nuts? I use that stuff!" while Cylert is used by a vanishingly small percentage of the population.
But if they weren't pushing to get anything banned at all, people would say, "Why are you guys still in business? Why are you still asking for donations?"
This is extraordinary logic. I mean, since my dentist has no financial interest to remind me to brush and floss (and show me how to do them correctly), and, in fact, as great financial interest for me to have awful teeth, I should believe that she's being disingenuous whenever she tells me to take care of my teeth? (My dentist does have personal and professional integrity, as do those who work for Public Citizen, but, reading the post & comments, that's easily dismissed.)
The assumption is that I believe Public Citizen is acting maliciously. I do not. People have an extraordinary ability to convince themselves that what is in their self interest is also Good for America. I've no doubt that farmers, steelworkers, and the owners of tAmerican textile factories all believe that the preservation of their industries is essential to prevent the further fraying of the fabric of American life.
Public Citizen is full of people looking for something to do. If no very good opportunities present themselves, they will seize on less-good opportunities. If you've ever been in a group of eager activists, or marketing executives, you'll know that it doesn't take long for the members of the group to talk themselves into believing that their new cause is very important indeed.
Like the most successful salesmen, the high-achieving activist believes his own BS. I speak here from experience: while I was canvassing for a Nader group, I was firmly convinced that the fate of the Western World was riding on the reauthorisation of the Clean Water act. It would have been unthinkable for me to conclude that the donations on which my weekly paycheck depended were almost worse than wasted. There are consciousless people who can sell things they know are worthless*, but most people need to believe in what they are saying. Fortunately for them, it doesn't take humans very much effort to develop a sort of false consciouness, in which any evidence that our product is inferior is shunted to the back of our mind, not allowed to connect with any other facts that might force us to consider finding another job.
Consider, for example, investment banking research. When I spent a summer at [cough] famous investment bank [/cough], one of the major selling points we included in our pitches was our fantastic research and our huge distribution network of brokers. Now, executives taking a company public generally already have their own stockbroker, and they can get access to investment banking research for considerably less than 7% of the total revenue from their IPO; a 10K account at each bank would do it.
What were we really selling, then? Well, this was a lightly coded promise to promiscuously abuse the trust of the investing public. What they were really saying was: "if you let us do your IPO, we'll say nice things about your company in our research, whether or not your financials deserve it, and our brokers will help keep the price high by jamming your stock into the portfolios of our unsuspecting clients." With brokerage profits declining due to competition from Ameritech and co., brokerage accounts and research departments had become a liability unless they could be used to secure lucrative IPO business.
Now, my colleagues and business school classmates knew this. We knew, too, that companies were massaging their earnings; indeed, we devoted a significant portion of our accounting classes to learning how to undo the deceptive accounting. It should have occurred to us that if companies were doing these things, there was probably a reason--and that that reason was that they wanted to take advantage of the naivete of average schmoes who didn't know how to properly account for stock options or recognize "big bath" tactics. Yet, somehow, we never thought of that stupid schmuck, out there in flyover country, letting his broker stick him into some dog so that the investment banking guys could bring in a little more business. It wasn't malicious; business school students are not the rapacious predators of stereotype. (Indeed, at least the half of my classmates who are Democrats consider me a heartless capitalist imperialist pig.) We just . . . never asked ourself why all this seemingly silly activity was happening.
Similarly, my idealistic colleagues at PennPIRG never troubled themselves to compare the mathematics of the canvassing organisation, which I'd estimate sucked up at least 75% of all the donations just putting the canvasser at your door to ask for money, with the spiel and the literature we delivered. These emphasized first and foremost our research, which it seems to me could not have absorbed much more than a couple percentage points worth of PIRG's total budget, and our legislative efforts. It was not because we were bad people; a solid majority of the people I worked with were idealists who really cared about the environment. It was just much more comfortable to concentrate on the mechanics of getting money out of people than to think about where that money was actually going.
Which brings me back to Public Citizen. I don't think that they are acting maliciously--as any dentist who told you not to brush your teeth would be. I just think that, like the rest of us, they find it surprisingly easy not to compare their results with their ideals.
Posted by Jane Galt at January 5, 2006 12:02 PM | TrackBack | Technorati inbound linksYou have a hanging asterisk without any accompanying footnote.
It was not because we were bad people; a solid majority of the people I worked with were idealists who really cared about the environment. It was just much more comfortable to concentrate on the mechanics of getting money out of people than to think about where that money was actually going.
This reads like the post-mortem of every debate I have attempted to have with a hard-line idealist arguing for Kyoto, nationalized healthcare, narrow causes and solutions to poverty, etc. Why, if you're not ready to jump wholesale into my proposed bath RIGHT NOW, it must be on account of how you DON'T CARE! Well, no, I do care about, e.g., the plight of the poor; but I don't believe a mindless dumping of money into social welfare programs solves anything.
As for Public Citizen...I wonder what the result would be if, say, a group of now-disenfranchized Cylert users filed a class-action against PC and did their best to ride the pain-and-suffering aspect throught the roof. It ought to be a reasonably funny comedy, anyway.
"Well, no, I do care about, e.g., the plight of the poor; but I don't believe a mindless dumping of money into social welfare programs solves anything."
anony-mouse,
I do agree with you (on both counts), and I think what you wrote raises a very interesting point thats worth talking about. I think one of the problems is that reactionaries, idealogues or any other way of labeling someone who enjoys the feeling of solidarity from identifying with a broadly labeled political cause but doesn't perform the intellectual legwork to question and reasses their position tend to engage in discussion with those that feel the same way as they do. It is very comforting to have your core beliefs continuously reinforced. So in the uncommon occasion when a redneck conservative hick meets a wimpy liberal hippie they tend to think of the other as alien and completely duped, misinformed, and stupid. When the conservative says that they don't like affirmative action, the liberal immediately thinks of them as a bigoted racist. When the liberal says that they should increase taxes on the rich to give to the poor, the conservative immediately thinks of them as a bloody communist. Think DailyKos and LittleGreenFootballs. And for those people, simply hearing their opponents positions on issues is enough reason to discredit any justifications they have for their positions.
You mean "Ameritrade," and not "Ameritech," yes?
You are young yet, madam. When you are older, you will realise, because you will then be in their age-group, that there are plenty of rapacious cynics who don't believe what they say to justify their activities. Come to think of it, what age is the average Congressman?
Dentists tell you to brush and floss your teeth without fear of revenue loss becuase they know you won't really do it.
Dentists tell you to brush and floss because they know they can convince you to come back in another 6 months whether you take their advice or not.
It was not because we were bad people; a solid majority of the people I worked with were idealists
Idealists aren't bad? Certainly idealists who think that idealism is all that matters are quite dangerous--and if they didn't think their ideals trumped all, then would they even be idealists?
"There are consciousless people who can sell things they know are worthless*..."
Nonsense. Unconscious people make terrible salesmen--they're always asleep on the job.
"...but most people need to believe in what they are saying. Fortunately for them, it doesn't take humans very much effort to develop a sort of false consciouness..."
Now you're just trying to confue me.
So, is there any data on the proportion of revenues that PennPIRG or Public Citizen spends on overhead? I know there are entities that compile this data; I'm just hoping there's someone less intellectually lazy than I to scope it out. :-)
I'm glad you left your PIRGer days behind you. Lovely that Sir Ralph has his organizations set up to get mandatory fees from students at many universities. If you look up the SCOTUS case Rounds v. OSPIRG, their entire funding model came out in discovery. And, despite the illegality of it all (compelled speech and all that), it's impossible to get them defunded on campuses.
In Oregon they're technically a contracted group, meaning that they get around funding rules to which other student groups are subject.
"As for Public Citizen...I wonder what the result would be if, say, a group of now-disenfranchized Cylert users filed a class-action against PC and did their best to ride the pain-and-suffering aspect throught the roof. It ought to be a reasonably funny comedy, anyway."
Aren't the people who would generally be opposed to organizations like PC also generally be opposed to class action lawsuits? So wouldn't it be funny if they weren't able to get a class action certified against PC?
While a lot of what I'm reading here makes sense, what struck me from the Jan. 4 post was the general outrage against Nader himself. Aren't there a gazillion organizations out there, on both the left and the right, that glaringly misuse their funds? And in any given year, aren't there a gazillion factors that will swing an election? And aren't there idealogues on every side of a spectrum? So why is Nader the devil? People just seem to hate him and I have yet to hear an adequately rational reason for why he is vilified above and beyond any number of equally despicable characters.
The canvas itself rarely makes money for anyone. Its the database of people who are willing to give to the cause that generates money for almost any canvassing organization you care to name.
Direct mail operates on the same principle.
So PIRG was probably spending 100%+ of the money Jane raised to put a canvasser at the doorstep. The third time that person gave to PIRG was almost pure profit, though.
So why is Nader the devil? People just seem to hate him and I have yet to hear an adequately rational reason for why he is vilified above and beyond any number of equally despicable characters.
With fame, comes notoriety.
A lot of people don't like, say, the neo-prohibitionist angle M.A.D.D. has taken, but that organization does not have a clearly-identifiable hood ornament riding out front of their activities, hence, no lightning rod. Also, M.A.D.D. has not as much time to develop a reputation, unlike Nader and P.C.
I think the first reason that attacks on Naderite policies are often phrased as attacks on Nader himself is that Nader's first priority is and always has been promoting himself. He wanted all the glory, he should take the blame. Second, he's a lawyer - don't they rate lower in polls than used car salesmen? And third, he just looks evil. It doesn't mean anything, but it does make it easier to convince the weakminded that he is evil...
I hate to think what % of the money I raised during MY pirg days went to pay overhead. I think I was only once able to raise more than I was paid in an evening.
What a humiliating week.
The first job I applied to out of high school (many years ago) was in response to an ad in the Village Voice for NYPIRG. If any for profit entity had engaged in the bait-and-switch practices they employed they would have been put out of business. The job, after several hours investment of time, turned out to be a no-draw commission fundraising scam like you've outlined above, nevermind the promise of a $250/wk salary in the ad. (Told you this was many years ago!)
Also, to complete the cynicism meme, have you ever noticed how dentists strategically space their procedures to make you come back for as many visits as possible?
I don't think the example of investment banks and IPOs fits in here. Business students may not spend much time thinking about 'why' in this case (or in most cases - they're bottom line types, not philosophers), but an issuer that is paying the high fees and taking a huge risk in its IPO presumably has put some thought into it.
Issuers around the world have been willing to pay higher fees for the book building method (the US approach) than for a fixed price public offer or an auction. If there's nothing to placing IPOs except favorable analysts' reports and a good brokerage network, then why do IPO auctions have such a horrible track record over the last three decades?
Dentists tell you to brush and floss because you're willing to pay them more for good advice than bad advice.
It's amazing how many comments on a blog with an economic emphasis ignore the fact that most transactions have at least two parties, each trying to achieve its goals. Parties that can go elsewhere have some likelyhood of achieving said goals.
No, it's not about malice. It's just good ol' cognitive dissonance.
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