The Other Reason April 15th is Memorable

Most of us in the US know April 15^th as tax day, the day when federal and state personal income taxes are due.  But starting in 2004 major league baseball declared that on April 15 of each year, every player in every game wears number 42 in honor of Jackie Robinson, the Texas oil baron who sacrificed fame and fortune to be the first black professional baseball player. No, wait – he was a research chemist working on a vaccine for leukemia.  No, that’s not it either… perhaps he was a concert pianist and composer who gave up his career for the social advancement of his race? 

Well, actually none of those is accurate.  Jackie Robinson was just a good athlete who was the first black offered money to play baseball.  He wasn’t necessarily better than all other black players before him, it wasn’t that he sacrificed some greater calling to prove a point about race, it wasn’t that he organized a march on Washington, refused to give up his seat on the bus, or risked being thrown in jail to be a historic champion of civil rights.  He just agreed to live the dream of tens of thousands of other kids who wished they could get paid for playing a game they loved. 

So why do we need a Jackie Robinson day?  What was the selfless and heroic act he represented that blazed the way for all future black athletes?  Well, racism was definitely strong in major league baseball in the 1940s. No official rule existed that banned blacks from joining the league, but no team had been willing to sign black players despite their demonstrated success in the Negro league.   For sure, Mr. Robinson would face resistance from fans, players, media, and maybe even his own teammates for invading a ‘white sport’.   But let’s not forget, he wasn’t picking up garbage or shining shoes, he was playing baseball for money.  I have no quarrel with Jackie Robinson; by all accounts he was a great player, a great teammate, and never folded to the temptation of lashing out at his antagonists. 

Let’s be honest, who had the most to lose when Jackie Robinson joined the Brooklyn Dodgers?  A strong case could be made for Branch Ricky, a white business manager who took the risk to break ranks with the fellow owners and league officials by signing a black man. But you probably never heard of Branch Ricky¸ even though he is recognized as the innovator of the major league farm system, for signing the first Hispanic player, for encouraging the expansion of the league by adding new teams, and for instituting the use of baseball helmets.  Rickey was quoted as saying "I may not be able to do something about racism in every field, but I can sure do something about it in baseball."        

But Rickey’s ambitions put him at odds with many others in baseball management. Commissioner Kenesaw Mountain Landis, a judge, opposed Rickey’s proposal for a farm system, thinking it would ruin the existing minor leagues. But his perseverance ensured the survival of the farm system, along with many other beneficial changes to baseball including spring training facilities, batting cages, pitching machines and new statistical measurements for measuring effectiveness. Ricky’s gamble on Jackie Robinson paid off with Robinson wining Rookie of the Year honors and his Dodgers going to the World Series. 

Yet Rickey paid the price for making his enemies. He was forced out of the Dodgers organization and faced resentment from other team owners and management.  So if we define heroes as those who do something selfless on behalf of others, who is the real hero who broke the color barrier of major league baseball?   Shouldn’t we have a Branch Ricky day?  

But that’s not how racism works.  Black racists need to take every opportunity to remind America how underprivileged and oppressed blacks are, and how white people owe them for the crimes of the past. And white people, trying to assuage a conscience of guilt for not having their own history of oppression, jump on board to 'atone for the sins' of a generation they neither created or supported. Soon to be released is the movie "42", which will again enshrine Jackie Robinson as the champion of civil rights- the 'David' who slayed the white 'Goliaths' of race.  Expect Oscar nominations, no matter how bad the acting or directing actually is. 

   

Wouldn’t it be refreshing if next year on Jackie Robinson day, if one of the dozens of players interviewed would depart from the script of “Jackie breaking the color barrier” and give some credit to Branch Ricky for making it possible?  And even more refreshing will be the day when we stop treating black accomplishments like something unnatural and unexpected and instead treat them as ordinary members of the human race. 

Occupy Something (just not your mind)

The Occupy crowds have been in the news for a couple months now. What started at Occupy Wall Street has spread to cities across America, most notably Occupy Oakland. Having to drive through Oakland to get to work for the past 4+ years, I can attest that no part of the city is known for its ‘fat cats’, who live and work in luxury while the 99% of the population suffers. So why Oakland? Well, that’s where professional protestors are readily available. It’s next door to Berkeley, which is the birthplace of free speech marches and ant-government protests. Not much is required to gin up a reason to protest. A stroll down Telegraph Avenue on any given weekend will reveal numerous opportunities to buy buttons, T-shirts, bumper stickers and even tattoos to shout out the whole gamut of causes, from legalizing pot to promoting communism to freeing so-called political prisoners you’ve never heard of. Protesting is the only activity that gives these people meaning.

They’re like that thirty-something guy living at home in his parent’s basement. He can passionately rail against society and government for their unfairness but is content to abdicate his personal responsibilities for food and shelter to others. He wants to have the car available for his use, but doesn’t want to pay for the maintenance or registration. He wants the hospital, police and firemen to be there for him, but feels someone else should pay. He wants to excuse his personal situation by blaming it on the cruelty of our social structure, the greed of others, or more popularly – the failure of government to provide for him. We all realize that a society made of these people cannot succeed. But somehow they seem to the rest of us owe them something. Victims get passes, the rest of us have to make our own way. Maybe that’s why we have so many victims in our society, and why we have so many government programs that keep them that way.

Steve Jobs – Not Just a Visionary

By now, even people living in caves know that Steve Jobs, CEO of Apple, died of cancer. Few men in our time have left as large an impact on the commercial or technological world. The iPod forever changed the way we listen to music, the iPhone changed the way we communicate, and the iPad is yet another innovation in portable computing. All this is on top of the MacOS, which defined the way we interact with personal computers.

A few months back, some of my colleagues and I were sitting around waiting for a plane, and I posed the question: “Can you think of another single person who is so single-handedly responsible for their company’s success?” We were, of course, talking about major companies of $1B or more. A few names came up; Henry Ford, John Rockefeller, Bill Gates... but not a many. Larry Ellison is flamboyant and arrogant, but he’s not really an innovator. Richard Branson is adventuresome and eclectic, but also not an innovator.

Every eulogy we read about Jobs centers around the word ‘Innovation’, and nobody can deny this. But Jobs’ greatest skill was not his vision or creativity. Truth be told, the world - and especially the Silicon Valley – are full of good ideas. Billions of venture capitalists’ dollars go to entrepreneurs with great ideas. Few reach the kind of success Apple has, but not because their ideas are bad. The ability to turn a good idea into reality on a global scale is a far rarer gift than creativity. For many innovators, arrogance is their Achilles heel. Once they get a few million dollars, they morph from hungry innovators to the wealthy upper class they have idolized for so long. Maybe the most common flaw many founders face is the failure to recognize their own limitations. The skills needed to earn a company its first $10M are rarely the same as those needed to get to $200M, and those are different still from the skills required to manage $1B. Great ideas are nice. The ability to turn them into reality is a rare gift indeed.

Got Gas? Antacid Doesn't Help at the Pump.

Gas prices have gone up for 35 straight days or something like that. On a completely unrelated topic, profits at four of the largest oil companies are expected to rise by 22-56% for the first quarter. Conservative commentators scoff at the idea that there is something amiss; it’s just that we are all too simple-minded to understand the market forces at work. I did pretty well in graduate business school, but I can’t find this higher economic principle they are talking about. It’s pretty straightforward to find a correlation between gas prices and oil company profits. Something just doesn’t jive when we are told that it’s nobody’s fault that oil prices are high; oil companies are just passing along their costs. I would like one of these apologists to define for me what a genuine case of price gouging looks like, if it even exists. Obviously, oil companies are passing along more than their costs or they wouldn’t have record profits!

Liberals want to penalize the oil companies for being profitable. “Tax Those Bastards!” is the rally cry of congressmen pretending to be champions of the people. While this might make us feel some sense of temporary satisfaction, it does nothing to motivate oil companies to lower gas prices. If anything, it encourages them to find more ways to spend money like giving all their execs a 7 figure bonus, fund quarterly boondoggles to resorts around the world under the guise of environmental studies, dump millions into dead-end alternative energy projects that are never expected to succeed, etc. Oil companies have fleets of tax lawyers and accountants who are masters at minimizing their tax liability. Besides, penalizing success is generally a bad idea.

So who is responsible for raping us at the gas pumps every few days? In a truly free market, an industry will attract new entrants until it reaches equilibrium (Michael Porter, Harvard Business School). In simpler terms, this means that competition will prevent price gouging of consumers. If the average profits in an industry are higher than others, enterprising business people will set up shop in that industry and be willing to accept a slightly lower price in exchange for market share. So maybe they only earn $20Billion rather than $33Billion in a quarter. Still not bad if you can get it. Nobody can claim (with a straight face) that the oil industry is not profitable, so it should be attracting new entrants that want a piece of that pie. But when is the last time we heard of a new oil company being formed? When was the last refinery built in the US? I’d like to see Wal-Mart announce that they are building 3 new refineries in the Midwest. They would proudly explain that, using the 21^st century technology, they can refine oil to produce a gallon of gasoline at least 12 cents cheaper than current refineries which were built in the 1970s. In addition, they will have strategically planned their location and distribution network to lower those costs as well. How long do you think Shell, Exxon and Chevron would price their gas 30 cents a gallon more than Wal-Mart? This is exactly the kind of price war the gas industry needs, but it never happens. Why?

The only explanation is that the oil industry isn’t really a free market. There are too many government imposed safety and environmental hurdles for a new entrant to overcome. This is a result of knee-jerk legislation by lawmakers who want consumers to feel like they are being protected. “There will never be another BP oil spill in the US!” “We will not destroy our Alaskan wilderness in the name of oil!” We might die in a fiery car crash too, but that doesn’t mean we should outlaw cars and freeways. These bumper sticker policies have so handcuffed the industry that it can no longer function as a free market, which is bad for consumers. Same case can be made for nuclear power. It’s easy to scare people into thinking you are protecting them. It takes more integrity to be intellectually honest about the risks and costs of feel-good legislation.

The NFL Lockout

Sportscasters are trumpeting a judge’s decision to end the NFL training facilities lockout as ‘a huge win for the players’. The NFL owners had locked out the players from training facilities in relation to a contract dispute with players. This happens every few years, when the players realize that the owners are shrewd business people who find new ways to make money and they want a slice of the pie. Invariably, some barely literate running back makes an on-camera reference to modern day slavery then drives off in his $150,000 car. But back to the lockout: Owners must unlock the doors to the training facility, but they do not have to unlock the weight room, the players can’t interact with the coaches, and there is no supervision for practice facilities. This is ‘huge win for the players’? What would a meaningless win look like?

Sportscasters are so far in the tank for players that it’s getting hard to even pretend to be objective. After all, they make their living off of athletes. Nobody tunes in to SportsCenter to see highlights of an NFL owner's day, but everybody wants to follow around a star quarterback, find out what he eats for breakfast, what’s on his iPod, etc. Most of us in the non-sports world have the same opinion, that the players are a bunch of spoiled ingrates who should be thankful that they get to play a game and get paid for it. We all work for our money, even if nobody shows up to watch us.

I propose we scrap the NFL and start over with a Revised Football League, or RFL. In the RFL, all rookies make at most $250K for their first year. After all, they haven’t played a down in the pros, and we can point to lots of ‘really good college players’ like Ryan Leaf, Amerces Russell, Archie Griffin, Chris Weinke, Danny Wuerffel, who were busts in the pros. After the first year, players who played at least 10 downs in the pros are eligible for a new contract. If this is unfair, athletes are free to pursue a more lucrative job based on their fine college education. The highest salary for any player will be $2M, but they can earn incentives on top of this. For example, a defensive lineman might earn $100K for each sack. A running back might earn $100K for each 100 yard game. Kickers might earn $1K per yard on field goals. This makes the old association of pay and performance. Quaint, isn’t it?

I’m sure the current crop of NFL players would wail and cry about how unfair it is, but the public will survive for a season or two (or five or six) without pro football. And in about five years, all the best college athletes will be euphoric about the opportunity to make $250K playing a game they love. If they aren’t, they can always pursue a more lucrative job based on their fine college education.