Friday evening, in a last-ditch effort to save its Memorial Day weekend profits, Publix, “one of the 10 largest-volume supermarket chains in the country,”  announced it would no longer make contributions to the campaign of Republican gubernatorial candidate Adam Putnam.  The news came minutes before a scheduled “die-in” organized by David Hogg, a survivor of last February’s mass shooting at Marjory Stoneman Douglas High School.  Publix’s alliance with Putnam was targeted based on his bragging about being a proud “NRA sellout” (his words).  Congratulations to the Parkland students and their peers around the country who have kept their word they will not go away.

But that’s not what I came here to talk with you about.  The media coverage associated with the student protest uncovered just one more glaring example of a much larger issue in our body politic.  Publix is not supporting Adam Putnam for Florida governor because he is a Second Amendment zealot even though the chain allows employees and customers with concealed carry permits to bring firearms into their stores.  (That’s why one should never take the last artichoke in the produce section.) The real reason?  Since 2010, Putnam has been the state’s elected Agriculture Commissioner.  Among its constitutional duties, the office of the Agriculture Commission is in charge of (drum roll) regulating grocery outlets.

In a 2016 report by WFTS-TV in Tampa,  the station identified seven Publix facilities which had failed health inspections.   The day after Channel 28 aired the story, Putnam had the information deleted from the department’s website.  According to an article in yesterday’s Miami Herald, this was not the end of the Commission’s Publix-friendly actions.

Months later, a friendlier new system was put in action. Now, thanks to Putnam, if a storage room at a Publix is found freckled with rat droppings, the worst rating the store can receive is “re-inspection required.”   (Source:  “Putnam keeps his deep-pocketed friends happy,”  Miami Herald, May 25, 2018)

In the past three years, Publix has contributed in access of $670,000 directly to Putnam’s campaigns as well as an untold sum to business organizations which are Putnam’s financial backers.  I point this out as only one example to show why these unholy alliances should have been used as evidence to pinpoint the major flaw when the Supreme Court ruled in favor of Citizens United, the single most significant event which un-leveled the political playing field.   In the most “liberal” spin of Constitutional language by so-called conservative, strict constructionists, the 5-4 majority claimed corporations have the same rights as individuals when it comes to influencing political discourse.  To do otherwise, would be a violation of the First Amendment’s guarantee of freedom of expression.

But here’s the difference.  Suppose I, as an individual, donate not just thousands, but millions of dollars to every candidate who supports net neutrality because, as a blogger, I want to ensure readers have equal access to my “profound wisdom.”  And all the candidates I support win and, on day one of the next Congress, overturn the recent FCC regulations related to this issue.  Yes, I benefit.  But so does every other blogger and, more importantly, EVERY other company regardless of industry which is dependent of reaching its customers via the Internet.  In classic economics, this is what we used to call a public good.  Those who chose not to financially support the cause get the same benefit as those who did.

In contrast, a private, for-profit corporation making an equally large donation to candidates who promise to protect the FCC ruling do so in anticipation of a private benefit.  Internet service providers (ISP), such as Comcast and Verizon, if successful have surely calculated the return on investment if their campaign donations produce the desired outcome.

Furthermore, when I donate to a political campaign it comes out of my personal funds.  And the opportunity cost likewise is personal.  I may forego a vacation or a new smart phone.  Equally important, my choice is tempered by my ability to convince other stakeholders.  Imagine the following conversation.

ME: Honey, instead of that cruise we were going to take for our anniversary, what would you think if I gave the money to support candidates who favor reinstating net neutrality?

SPOUSE:  What would you think about sleeping on the living room couch?

In contrast, private corporations will argue they are making a similar choice.  Corporate donations are usually handled through a political action committee (PAC) which raises money from what is known as a “restricted class.”  For PACs associated with for-profit business, this designation is generally limited to mangers and stockholders.  The extent to which these individuals contribute to a given PAC often depends on the size of one’s salary or the share value of the company’s stock, both dependent on (drum roll) customers.  Customers who have no say or are unaware their purchases are supporting not only the business’ bottom line, but indirectly underwriting a political agenda which may be contrary to their self-interests (e.g. in the case of Publix and Adam Putnam, food safety).

But we are not helpless as proven again by the Parkland students.  If the Supreme Court, by its actions, is more interested in the Publix interest than the public’s interest, all it takes is an industrious high school student to remind us the preamble of the U.S. Constitution begins with the words, “WE THE PEOPLE.”  Now that’s something to “die-in” for.

For what it’s worth.
Dr. ESP

I have never spent a day in a classroom in the Wharton School of Business at the University of Pennsylvania, but based on the behavior of one of its undergraduates, there is only one of two possibilities.  The faculty of this prestigious institution does not understand the foundations of successful enterprises (which I doubt) or this alumnus did not pay attention to his professors or the course content.

During my nine years as a professor in the Richard T. Farmer School of Business at Miami University, I would continuously tell my students, “You can forget everything I have every said in class except this.  Business is about relationships, not transactions.”  And the example I would use was one not from my own experience, but one shared by a former associate of Ewing Kauffman when he worked for Mr. K at Marion Laboratories.

Upon returning from a sales trip to England, this Marion representative boasted how he had cut a more profitable deal with a new British customer than that available to other clientele.  Mr. K was outraged.  He asked the sales representative whether he thought the new customer would eventually find out they were treated differently than other retailers of Marion products.  And when that happened, would you expect them to place additional orders.  Mr. K told the associate to get back on the plane, meet with the client, apologize for trying to take advantage of them and renegotiate the deal.  Mr. K’s message?  You may have made a sale, but you did not make a customer.

Which brings me back to that Wharton graduate who promised us he would run government like a business.  This morning, Richard Haass, President of the Council on Foreign Relations, used similar language when asked about the cancelled June 12 summit between the the heads of state of the United States and North Korea.  Donald Trump’s off-the-cuff invitation to meet with Kim Jung Un was not about building a relationship with the North Korean leader.  It was a transaction designed to get an affair with a porn star off the front page.  But Haass went on to say, even if the original purpose, to change the media narrative, was questionable, it was an opportunity if done right.  And a real businessman would have seized the moment to lay the foundation for a win/win situation for both parties.

What we learned yesterday is Trump’s promise to run government like a business is one of his few honest statements uttered during the 2016 campaign.  With one very important exception.  His business model is not a traditional one which has served many entrepreneurs and corporate executives well, but his own unique brand of business where maximizing personal profits from each transaction takes precedence over the long-term benefits which might accrue when both sides agree it is in their mutual interests to continue working together.

Here are just two examples.  The Trump Organization is notorious for stiffing sub-contractors.  Which is more likely to increase the company’s bottom line over time?  The savings from non-payment of a single contract?  Or a relationship in which the subcontractor discounts EVERY contract because the Trump Organization is a reliable source of future revenues?

The second example, of course,  is Trump University.  Do you think anyone in the Trump Organization expected repeat customers or referrals from those who had laid out as much as $35,000 for a slipshod curriculum from unqualified instructors  and a photograph with a cardboard mannequin of Trump?  The entire scam was based on the premise, “Get their money and move on to the next sucker.”

In the case of North Korea, the now Public Trump Organization (which ironically appears to generate more profits than it private sector incarnation) made no pretense of repeating their pre-inaugural behavior.  It dispatched National Security Advisor John Bolton and Vice President Mike Pence to suggest a good outcome in North Korea would be based on “the Libyan model.”  If true, unlike Trump business transactions where subcontractors got stiffed by being shortchanged, Kim too would eventually be stiffed, as in rigor mortis.  In the spirit of recent analogies of the Trump Organization to a mafia family, this was an offer Kim COULD refuse.

We should not be surprised.  To paraphrase Ethel Merman, there’s no business like Trump business.  So, let’s go on with the show.

For what it’s worth.
Dr. ESP