Cognitive Dissidence

Impact Analysis is a by-monthly newsletter published by Manzella Trade Communications (www.ManzellaTrade.com). It is private labeled by a number of World Trade Centers and Chambers of Commerce in the United States. My ethical business model message was published in its November/December 2008 issue.

Guarding Our Most Valuable Asset

Nothing is as valuable as reputation. And yet we see corporate reputations squandered daily. In truth most companies and most people spend every day trying to do the right thing and protect their reputation. Very few set out to do anything less. So how does it happen?

In a variety of ways but mostly a little bit at a time. I call it the “Paper Clip Slip.” Anyone who hasn’t walked off with a company owned paper clip hasn’t ever worked with paper clips. The problem comes when it grows to a box of paper clips, or pencils, or something else.

The process we use to justify this petty larceny is called Cognitive Dissidence. It’s a very valuable human trait that we would be whimpering wrecks without. After we choose between the alternatives we need to move on. We all know people who agonize over every choice and are filled with doubts, sometimes for days. Cognitive Dissidence is the mental function that tells us we made the right choice and we become more convinced every hour that the other options would not have been as good.

The problem comes when we have too much of this trait. We begin to justify our actions no matter how outrageous. Actually, excessive Cognitive Dissidence is often admired in the C-Suite. A decisive executive can be a real asset to any organization. However, the same strong leader can steer the ship into treacherous waters sure that they are on course to success. And when things don’t look too good it is easy for them to justify actions that threaten the reputation of the company. When it goes sour they say, “I did what I had to do.”

Others come into corporate life with a distorted view of what you have to do. They believe that you have to do what it takes to win in a dog-eat-dog climate. Where do these people, some of them the best and brightest of our youngsters, get this idea? That’s easy! Good news is not news, so almost everything they see and hear in the media involves the baddies. And it’s not just the news media. Books, movies, TV shows, it’s all about the interesting nasty stuff, in business and in life.

Doing the right thing is not always easy. Sometimes it’s not even clear what the right thing is. We face hard choices everyday. What is clear is that an ethical business model is the best choice. The research shows that companies that put the best interest of their stakeholders first –their customers, their employees, their suppliers, their communities, the environment, and finally their shareholders and lenders– win in every way.

Why shareholders last? Because if you take care of the others, profits will take care of themselves. Do ethics driven businesses always win? Of course not. But if all things are equal these companies will do better every time, and they are a lot more fun to work for, and a lot more fun to run.

Original Thinking

My friend Brian Lee Crowley has one of the most brilliant minds on the planet. He consistently puts his finger on solutions, often those no one else even thinks of. Brian and Dori Segal have come up with and incredibly simple and powerful plan to help kick-start our economy.

This OPED has been sent to the 100 largest newspapers in the United States. Be sure the paper in your community has considered it. Send a copy to members of your Congressional Delegation.

These thoughts on solving the housing and other economic issues are as practical as they are original. That’s probably why no one will move on them, let’s hope I’m wrong.

Bill
---------------
Rebuild Housing
Through Immigration
By Dori Segal and Brian Lee Crowley
10/28/08

Desperate times call for innovative measures. Treasury Secretary Hank Paulson has already had to expand his focus from a flawed plan to buy toxic securities to one focused on taking equity stakes in financial institutions. Politicians in Washington would be well-advised to engage in a similar rethink about one of this election cycle’s whipping boys: immigration. Why? Because America’s attractiveness to the world’s best and brightest means we can put them to work solving the current crisis without vital companies falling into the hands of worrisome sovereign wealth funds or turning the US government into a major shareholder. All that is required in exchange is a chance to be part of the American dream.

America should immediately offer fast-track immigration to foreigners willing to do two things. First, they must buy a house in the United States worth a minimum of $200,000 or with a minimum area of 2000 square feet, paying cash up front. Second, they must place a further $250,000 in a government-insured account with a US financial institution or spend $250,000 to create a business in the US employing a minimum of three US citizens.

The need is immediate and urgent, so upfront entry requirements should be stripped to the bare minimum. In exchange for documented proof of health status, absence of a criminal record and the recommendation of a financial institution, major employer or government agency in their home country, they should automatically be granted a green card, good for three years, during which the US government would be able to do fuller due diligence on these prospective citizens and their documentation. Their green card should automatically become permanent if the authorities cannot prove terrorist connections or fraudulent claims in the entry documents.

During this time these newcomers would not be allowed to sell or mortgage their new home. The only grounds on which they would be allowed to withdraw money from their account would be if they failed to find a job, in which case they would be entitled to withdraw a maximum of $50,000 a year, ample to live comfortably when you don’t have a mortgage to pay. They would not be eligible for welfare and so could not fall on the public charge, guaranteeing that they are adding significant consumption to their local community at no cost to taxpayers.

Suppose that one million new immigrants (less than one third of one percent of the population) responded to this opportunity. Unlike most foreign investors, these are people who will be making the ultimate commitment to America, choosing to live there, bringing significant capital with them and ultimately becoming citizens. These one million new investors would put $200-billion into the housing market immediately, soaking up excess supply without drawing on the strained balance sheets of financial institutions.

The supply of unsold homes is now the equivalent of nearly a year’s demand, more than twice the normal level. Average prices are down around the $200,000 mark and still falling. A flood of people with ready money looking to buy at the $200,000 level would help the market to find its bottom and reverse the trend, while reducing the risk of defaults and non-performing assets on financial institution balance sheets. By allowing homes of 2000 square feet and more to qualify regardless of price, these immigrants would be especially attracted to areas where the housing collapse has been more severe, and where their investment would do the most to help the market turn the corner.

In the same vein, one million new immigrants placing $250,000 each into financial institutions would fill those institutions’ coffers to the tune of a further $250-billion — as much as the equity injection now being bruited in Washington, but without the risk associated with politicians’ being tempted to use their newfound ownership stake to mix politics with business. Those that chose instead to invest in their own business and employ Americans would both help to alleviate rising concern about unemployment and to improve the unfairly tarnished image of immigrants.

The target of one million such immigrants is not unreasonable. The draw of American opportunity is such that many families and communities would band together to amass the needed capital for one of their number as has so often happened in the past. Those who have the capital in hand would be a self-selecting group of high value immigrants bringing with them valuable skills and business acumen.

America’s strength has always been in its openness. That openness — to ideas, capital and above all people—has always been richly rewarded. Now the rest of the world offers America once again the opportunity to renew and refresh itself by drawing in a wave of dynamic and motivated new potential citizens who ask for nothing better than a chance to buy a share of the American dream.

Dori Segal, a dual Israeli-US citizen, is CEO of First Capital Realty in Toronto.
Brian Lee Crowley is President of AIMS, a public policy think tank.