This Week:

Quote of the Week

The Lawsuit That Never Was

Environment vs. Profits: A Report From the Front

From Smiling to Frowning

Greetings,

I will be synthesizing all of the writing on Social Security that I have been doing for other publications, and soon you will see it appear in these pages. Not this week, though.

This week - in “From Smiling to Frowning” - we take a light- hearted look at the subject of advertising, giving a glimpse into the thinking behind the commercials. And although the negative environmental effects of the trend toward the gas-guzzling Sport Utility Vehicle has not been news of late in the corporate media, the S.U.V.-stimulated P.R. effort by the Ford Motor Company was all over the front pages last month. That’s not crazy; it’s just a reflection of the values of the corporate media.

All of you Minnesotans already subscribe to the outstanding monthly Access Press, but be extra sure to check out the June edition, which comes out on June 10th, and in which will appear my analysis of George W. Bush’s ideas about Social Security. I considered reprinting that piece in this week’s issue of Nygaard Notes, but that seems a bit like cheating, doesn’t it? So you’ll have to read Access Press, which is a regional non-profit monthly paper by and for people with disabilities. To find out how to get your copy, call Access Press at 651-644-2133.

Welcome, new readers!

Nygaard

"Quote" of the Week:

On the subject of addressing funding shortfall projected for Social Security in the year 2037:

“Individual accounts can help put the Social Security system on a sounder footing only if they are linked in some way to benefit reductions within the traditional Social Security system.”

-- Center on Budget and Policy Priorities, May 15, 2000

The Lawsuit That Never Was

In Nygaard Notes #62 and #63 I talked about tort lawsuits, or lawsuits filed against corporations to recover damages for harm done. I pointed out that very few large awards are actually given out and, when they are, there is usually evidence of serious and intentional misconduct. (“What the Heck is “‘Tort Reform?’” and “I Stubbed My Toe - Call a Lawyer!”) While I am not a fan of big tort lawsuits, and certainly don’t want to be seen as promoting them, I think the common belief that such suits are entirely negative is too simple.

I thought of this while listening to National Public Radio this week as I was making dinner. The feature was about how large corporations deal with their aging workforces. Part of the story was a program instituted by some corporation or other (I forget which) to improve workplace relations between their younger workers and older workers. It painted a positive picture of the beneficial effects that this program was having not only on working conditions, but also on reducing turnover and increasing productivity. It sounded pretty good.

The problems that motivated the company to set up this program were said to stem from a sort of “generation gap” between the aging baby boomers and the young upstarts who have different sets of expectations, different values, and so forth. The company was said to fear such things as decreases in productivity, increased turnover, and “ultimately, the fear of a discrimination lawsuit that might be filed by one of their older workers.” (This quote may not be exact; it’s pretty close.)

It occurs to me that most of the items about lawsuits against corporations get “in the news” either when they are filed, or when they are settled, and focus on how costly and difficult they are. Rarely featured in the news are the beneficial effects - such as reported in this story - that the threat of a lawsuit can have. The fear of a costly lawsuit can, and apparently does, spur corporations to take action in order to prevent a bad situation from ever occurring. Would the corporation have “done the right thing” without the threat of a suit? We don’t know.

We hear endlessly in the media about all these ridiculous multi- million dollar lawsuits are driving up prices, putting companies out of business, stifling creativity, and so on and so forth. I hope I debunked that myth in my earlier articles. But here is a case where a lawsuit never was filed, and thus did not cost any company anything. But, because of the credible threat of a lawsuit, the corporation-the-name-of-which-I-forget decided to create a low- cost program that will make their work environment better for everyone.

It doesn’t make the news, but in an economy where money does the talking, the threat of a costly lawsuit may be the second-best hope (having a union is by far the best hope) that workers have to force improvements in their workplaces. Keep that in mind when you hear the candidates talk about “tort reform.”

Environment vs. Profits: A Report From the Front

A couple of interesting articles appeared in the media last month concerning the Ford Motor Company. Our local paper, the Star Tribune (Newspaper of the Twin Cities!), devoted a modest seven paragraphs on the back page of the business section to the news, while the New York Times plastered the news all over the front page. What was the news? “Ford Admits Sport Utilities Not Friendly to Environment,” was the headline in the Star Trib of May 12th. Why is this “news?” you may ask. Doesn’t everybody know that these huge gas-guzzlers are polluting the heck out of the atmosphere? Of course they do. But, as the headline makes pretty clear, the newsworthy thing is the fact that Ford is now admitting what everyone knows.

The front-page article in the New York Times (All the News That’s Fit to Print!) was headlined “Ford Is Conceding S.U.V. Drawbacks; But Environmental and Safety Concerns Won’t Stop Sales.” If you think the job of a headline is to summarize the main points of an article, that’s a pretty darned good headline, I’d say. What follows is a series of quotes from both the local paper and the Times with, as usual, my comments.

The lead paragraph in the Star Trib (ST) reads: “In a startling admission, Ford Motor Company says its high-profile business in sport utility vehicles doesn’t always jibe with its desire to be more environmentally responsible.” The New York Times (NYT) reports that “Ford Motor’s voluntary admission that it faces an odd situation because its most profitable products do not meet its goals for social responsibility has few parallels...” Apparently it is so unusual for a multinational corporation to tell the truth that it becomes front-page news. Hmm... I guess I can’t actually dispute that news judgement.

Ford Chairman William Clay Ford Jr. (henceforth referred to as “WC”) was quoted as saying, “We take our social responsibility seriously.” Indeed, the NYT reports that WC “has made environmental concerns one of his top priorities, promoting his views inside and outside the company.” Evidently one doesn’t need to do anything beyond uttering the words, since “Mr. Ford and Jacques Nasser, Ford’s chief executive, said that they had no plans to stop making sport utilities, including the immense Ford Excursion.” It may shed some light on this “odd situation” to know that Ford makes a profit of roughly $18,000 on each Excursion they sell.

“If we didn’t provide that vehicle [the Excursion, which weighs as much as two Jeep Grand Cherokees] someone else would, and they wouldn’t provide it as responsibly as we do, ” WC pointed out. To the Times, he “depicted the company’s statements as a combination of altruism and long-term business planning. He said that he worried that automakers could wind up with reputations like those of big tobacco companies if they ignored sport utilities’ problems.” Those “problems” include emitting more smog-causing pollution than cars and contributing more to global warming, plus the fact that sport utilities are designed in such a way that they are three times as likely as cars to kill the other driver in a crash.

WC (great-grandson of Henry Ford) continued, “The court of public opinion sometimes decides before you’re ready for them to decide...” Hmm, they’d better make some meaningless gestures in order to head off possible regulation, I’d say.

Three weeks ago, in “The Banality of Danger,” I said that “Most of the evil committed by the large institutions in our culture is committed not as a result of evil intentions on the part of the people in charge of them.” I think the case of Ford Motor Company is a perfect illustration of what I was talking about. Let’s take WC at his word, and say that “environmental concerns” are important to him. There’s not much he can do to act on these concerns, other than resign, and resigning wouldn’t change the behavior of the company in the least.

“Mr. Nasser cautioned that while customers consistently said in market surveys that they wanted more environmentally responsible products, they were unwilling to pay more for them or to sacrifice features on their SUVs.” And, finally, the real bottom line: “John Casesa, an analyst at Merrill Lynch, said that Wall Street would tolerate the company’s emphasis on social responsibility provided that it did not prove enormously expensive.”

What Wall Street will “tolerate” is crucial, of course, because Wall Street has effective veto power over the actions of Ford (and every other corporation). This is left unsaid in the article, probably because it is so obvious to any reader familiar with the workings of modern-day capitalism. And it shouldn’t surprise anyone that Ford’s customers might lie to them, since it is “politically correct” to say you care about the environment.

The Ford Motor Company, whose 1999 profit was a record $7.2 billion, is a part of the Free Market, and neither their customers (you and I) nor their owners (on Wall Street) are about to let them stop or even slow down their production of S.U.V.’s if WC went so far as to suggest it. To even admit that there is a problem is front- page news. To take steps to address the problem would be some sort of revolution.

From Smiling to Frowning

Ford Motor Company has figured out that their customers, shall we say, “exaggerate” their concern for the environment, but they aren’t the first company to discover that consumers (that is, you and I) are likely to lie to them. The advertising industry has long felt compelled to use such tools as psychological tests and hypnosis to try to discover what we “really” want. Or, rather, what we will really buy.

The New York Times (“All the News That’s Fit to Print!) runs a regular column called “Advertising.” It’s usually deadly dull, filled with news of Mr. X being hired at Company Z, and how he is going to reorganize the company, etc. But every once in a while the column offers a glimpse into how the industry thinks about people - oops, I mean “markets” - and how they plan to conquer us - oops, I mean get us to buy their stuff.

On April 13th the column ran a piece entitled “Research methods are being developed to help advertisers find out what you really think.” I will quote extensively from this column because it is so revealing and, well, funny.

“Last year, an estimated $87.5 billion was spent on advertising, but it turns out that no one can say with absolute certainty what actually works. Advertisers typically use long-established tools like focus groups and quantitative surveys to judge the effectiveness of advertising - and about $120 million is spent on advertising research - but the process is at best an inexact social science.” It turns out that, even though they are constantly asking us what we think, they don’t always believe what we tell them.

It’s not just that advertisers don’t believe us. The problem, focus group organizers noted when they looked more closely, is that people actually do often lie to them. “People in the focus groups weren’t necessarily saying what they felt or thought. They were saying what they thought we wanted to hear or what they wanted us to hear,” said David Reinbach, New York advertising exec.

Therefore, the column points out, “The main problem is that advertisers cannot read the consumer’s mind - yet.” But not to worry. We now have a wonderful new tool called “MindView” that is designed to track “basal skin response to a television commercial or other stimuli.” (I think it’s funny to hear a television commercial referred to as “stimuli.”) Similar to lie detectors, the machines are now being designed to somehow monitor, from a distance, the unconscious, reflex responses that we have to commercials. This is “less invasive for the consumers who participate in the tests,” the Times reassures us.

Another new technique mentioned in the same column is the use of pictures instead of words. Marketed by AdSAM Emotional Response Marketing, this technique “asks consumers to check off pictures representing their feelings after watching a commercial. For instance, the pleasure scale shows emotions ranging from smiling to frowning.” (I guess this is the sort of sophistication you have a right to expect for $120 million.)

“The advantage of using visual cues is that it measures emotion without the biases of language. It is also cross-cultural, which is increasingly important for companies trying to reach a broad market. And like the other methods, the research has applications far beyond measuring advertising impact. AdSAM was used recently to determine whether consumers wanted a cosmetics counter to become self-service.” We sure don’t want to give people a chance to lie about their cosmetics counter preferences, now, do we?

For evidence of the trend away from “the bias of language” (read: thinking) in advertising, notice the new campaign for Minnesota- based Target Stores. The ads, both print and television, use almost no words at all, but rely on endless images of the red-and-white Target logo plastered on every visible surface. I wonder if the workers in the sweatshops that produce so many of the products sold at Target are “smiling” or “frowning.” I guess it doesn’t matter; they can’t afford to shop at Target.