Chapter 27: A New Approach to Life

September 25, 2002, Chicago, Illinois

"What's that?" Penny asked, looking over my shoulder when she came into the office on Wednesday morning.

"The new Phoenix web browser from Mozilla."

"Is that something we're going to support?"

"Eventually, because the last thing we want is Internet Destroyer to define the web the way Windows defined the desktop, or for Microsoft to fuck it up the way they have email."

Penny laughed, "Your dislike for Microsoft is legendary, almost as much as you dislike the Bush family!"

"Not even close!"

"Why eventually?"

"This is release 0.1," I replied. "It's bare-bones. Reading through their project documents, they'll release about once a week for a month, expanding features, then settle down to about every ninety days. From what I can tell, it will be serviceable in about six months, which is about the time it'll be available on the Mac. I figure it'll be in good enough shape for us to begin testing in a serious way in November."

"Is this your project?"

"That's up to Dave," I replied. "The Managed Services team will likely support it first for everything except NIKA Legal and NIKA Medical. That will help us work out some of the kinks and file bug reports as necessary with Mozilla."

"Why 'Phoenix'?"

"Because it's rising from the ashes of Netscape Navigator."

"What are we working on today?"

"The most exciting thing ever in the history of the world!" I declared. "A design review meeting."

"Ugh! I hate those as much as you do!"

"A necessary evil," I replied. "Fortunately, Julia keeps them as short as humanly possible, and Cindi is always reasonable."

My desk phone chirped, and I saw in the display it was Elyse.

"Hi," she said when I answered. "Would you come to my office?"

"Yes, but I have a design meeting in about fifteen minutes."

"It shouldn't take that long."

"Be right there."

I hung up, left my office, changed my shoes, and headed to Elyse's office. She indicated I should shut the door.

"What's up?" I asked after closing the door and sitting on her couch.

"I received two letter notices today. One from the IRS for an audit and one from the SEC inquiring about our ESOP plan and our issuance of preferred shares."

"Is the SEC alleging violations?"

"No. The letter is not really any different from an IRS audit. It's the same thing."

"Does it seem strange to you that you received both of those on the same day?"

"Yes, because the only way that happens except by some one-in-a-billion chance is a coördinated effort."

"My money is on either Jameson Miller or some friends of the Brauns," I replied. "I can't imagine anyone else who might be upset enough. Miller is a failed lawyer, but it wouldn't surprise me if he had friends in government, having been from the DC area. Do we have anything to worry about? I mean, besides the usual bullshit that comes with 'Imperial Entanglements'?"

"With regard to income and payroll taxes, you know we don't make use of any creative tax accounting or any loopholes. Yes, we engage in tax avoidance, but that's our patriotic duty! Will they find something? I'd bet on it, and it'll be something like last time, where we made a minor error, which is resolved by paying the additional tax due if any, as well as interest and a small penalty.

"The SEC inquiry is by far the riskier of the two. We, our accountants, and Samantha's team all believe we've complied with the law. NIKA's stock is designated as 'closely held', and we're not trading publicly. Even if we were, we'd be designated as a 'Closely Held Corporation' under SEC regulations because 50% of the shares are owned by five or fewer individuals. Your ownership of more than half the shares makes that automatic. Even if you dipped under fifty percent, then Cindi, Dave, Julia, and I would comprise enough shares to take us well over fifty percent.

"In any event, we follow all SEC regulations, and the vast majority of stock not held by the founders is held by the ESOP with option grants to NIKA employees. The only share sales which are made are when you sell to the ESOP or if someone exercises their options, which has only been done in an exercise/sell arrangement where shares never actually change hands. We've been over that with Bo, the tax and corporate law team at McCarthy/Jenkins, as well as Ben van Hoek's firm."

"What's the worst-case scenario?"

"A fine, and we're told to be good little boys and girls in the future. There's no real chance of claims of securities fraud because we're not marketing securities except to current employees who have detailed financials and complete disclosure, which you know is rare amongst corporations, whether privately held or publicly traded."

"So, in the end, it's going to cost us time and money and possibly some bad PR if the SEC or IRS decides to make a stink about some minor point."

"That's about it."

"OK. As Stephanie's away on her honeymoon, and I don't want to bother her with this, give Ned a call and let him know we'll use his firm, and then coördinate with Liz."

"That's why I brought it to you. I know Barbara is running things, but this is extraordinary."

"It is. Another thing, and I'm sure Stephanie will agree when the government does make their findings, we tell them that, so long as the fines are reasonable, we won't challenge them in court on the condition they keep the findings confidential."

"OK. I'll set aside the Orr room for the auditors' use once Liz and I reply to these letters."

"Sounds good. I doubt anything substantive will happen before Stephanie returns in about ten days, so just keep me posted on things, and she'll handle it when she's back."

"I'd have gone to her first if she wasn't on her honeymoon!"

"I'm going to our final design meeting for the next release of NIKA Legal."

"I'd rather stare at spreadsheets all day!"

"Me, too!" I chuckled.

[Oswego, Illinois]
🎤 Matthew

"Matt?" Mr. Camden said.

"It can never work," I replied.

"I think Sweden would disagree with you," Mr. Camden replied.

"If they were actually socialist, perhaps, but they aren't. Sweden has no minimum wage and guarantees the right to work without joining a union. In addition, nearly all businesses are privately held, though the government does hold some shares in certain companies."

"OK, so that was a bad example."

"You won't find a good one," I replied. "As I said, it can never work."

"Why?"

"Because, as F. A. Hayek said, we humans suffer from a 'fatal conceit'. Our society — locally, nationally, and globally — is infinitely more complex than any one person, or even a small group of people, could ever possibly understand. It is the 'fatal conceit' of central planners that they presuppose enough knowledge to control all aspects of human existence."

"Would you tell the class who you are quoting, please?"

"Friedrich Hayek, an Austrian economist who died about ten years ago, won the Nobel Prize for Economics for his work on how changing prices communicate information that helps individuals coördinate their plans. In a nutshell, it shows, among other things, that price controls conceal information, and lead consumers to make poor decisions, with overall negative impact on the economy. His work is seminal in defending classical liberalism, which we often refer to, somewhat inaccurately, as libertarianism, mostly to avoid the confusion in the US of 'liberal' and 'progressive'."

"Could you give us a concrete example?"

"Sure," I replied. "Anti-gouging laws. For example, when there is a gasoline shortage, the people who believe in central planning cap the price, which denies the price signal to consumers. In times of shortage, the price should go up, perhaps dramatically. As the price rises, individual consumers decide to buy or not buy gasoline. As supplies decrease, prices increase, such that fewer people buy gasoline, or only buy exactly as much as they need, rather than hoarding it or panic buying."

"Anyone care to comment?" Mr. Camden asked. "Miss Moore?"

"It's not fair to poor people because they can't afford to buy gasoline," she replied. "By capping the price, everyone can afford to buy it."

"Matt?"

"And the supply will run out, as we've seen happen in Florida during hurricanes and other places, and nobody can buy gas, no matter how much money they have. If you allow the price to float, each consumer decides if the value they receive from the gasoline is worth the price at the pump. If there are no price signals, everyone panic buys, and your hypothetical poor person, who is working all day and can't sit in a gasoline line for four hours, cannot get gas at any price, while the stay-at-home mom or people with the ability to take time off, can sit in those lines."

"But it's not fair if people can't afford it!" she protested.

I really wanted to smack my head on my desk because she'd used the 'F' word, and at that point, no amount of logic was going to convince her. But someone else in the class might learn something, so I had to try.

"And if there is no gas, they still can't buy it, so, in the end, the question is, should some gas be available to those who truly need it at $8 a gallon, or no gas be available at $1.45 a gallon?"

"It's just not fair!" she protested. "The oil companies get to make money from a shortage!"

"Actually, the oil companies own less than 1% of all US gas stations," I replied. "They're mostly owned by independent operators, like Chaz's dad."

"I think we'll move on," Mr. Camden said. "Let's return to our discussion of socialism."

When class ended, I had lunch and joined Matt W, Arby, and Nick at a table.

"Matt, can you explain how that works?" Arby asked.

"Sure," I replied. "Let's say a gas station has a thousand gallons of gas. That's enough for about eighty cars to fill up with twelve gallons. You know there's a gas shortage, and you have three-quarters of a tank, but see, the price is still $1.45, so you buy three gallons. If three other people do the same, now only seventy-nine cars can fill up. Got it so far?"

"Sure."

"When the station runs out of gas, there is no gas, so it doesn't matter what the price is, right?"

"Right."

"Using the previous example, say the nine gallons you have are enough for you to get to work and do your grocery shopping for a week. If the price were $5.00, would you top off your tank?"

"Maybe, but I'd sure think twice about it."

"Which is exactly the point," I replied. "If you and those other three people have enough gas for the near term, you might decide not to buy, leaving gas for other people. If the station comes closer to running out, they'll raise the price more to deter other casual fill-ups, reserving gas for others who actually need it. In the end, there are only two possibilities if you can't add supply — no gas at the regular price or gas at a much higher price. Yes, they may eventually run out as the need for gas becomes acute for some people, but the supply will last longer. You saw what happened in Florida with the last gas shortage."

"All the stations rationed, but even then, they ran out of gas because people were willing to line up to fill their tanks."

"Yes, and think THAT through."

"Oh, shit! They burned gas waiting in line because if they didn't move every time the car in front moved, someone would cut in."

"Thereby making the problem even worse!"

"Damn!"

"Yeah. It's not perfect by any means, but the alternative is worse. Think about toys that are in limited supply — what happens?"

"People buy them up, then resell them at higher prices."

"You can't repeal the law of supply and demand!" I declared. "Think about this, too. The perfect price for something is a price where the last item in stock sells out one second before the replacement supply arrives. Well, assuming the goal is to ensure availability for someone who needs the item. The price of a thing which is unavailable is irrelevant!

"The other thing to consider is that when prices are capped, it discourages production. In some cases, it might mean nobody produces the good because they can't make a sufficient return on their investment, but it also discourages investment by new entrants into the market who see a chance to make a profit by producing a scarce good. Price signals work for manufacturers just as they do for consumers."

"There has to be a flaw," Nick protested.

"Sure, because people are not always rational. All a price signal can do is provide information. How people process that information and what actions they take are up to them. But, as Hayek demonstrated, those price signals are extremely important, and we're worse off without them. He won the Nobel Prize for that work, as I said. Let me give you one more example. What does a store do if they are overstocked on something?"

"Put it on sale to encourage people to buy it," Nick replied.

"Yep. Here endeth the lesson!"

"You are NOT Sean Connery!" Matt W declared. "How did you learn that stuff?"

"From my dad," I replied.

"Changing subjects," Nick said, "are you still going to the US Grand Prix in Indianapolis this weekend?"

"Yes. We'll go down on Saturday morning. Hopefully, it'll be a good race. We have seats where we can see most of the course."

"They run the race partly in the infield, right?"

"Yes. It's the 'Grand Prix' track, which uses part of the oval but mostly uses the infield road course."

"You follow NASCAR, too, right?"

"Yes. I go to one or two races every year. One in North Carolina and the one in Joliet."

"I'm having a Halloween Party," Arby said. "Are you going to your Dad's house?"

"That was the plan, but I could ask Chelsea to come out to the burbs, and we could come to your party instead."

"Cool. Would you?"

"Sure. I'll discuss it with Chelsea this weekend and then let my dad know."

"Awesome!"

[Chicago, Illinois]
🎤 Birgit

"Do you think I could photograph you in your natural habitat?" Bob asked after Photography Club.

"You want candid shots of a 'wild Birgit?" I asked with a smirk.

"I was thinking of you at home doing your usual things. Even more casual than what we did for our photo shoot."

"Sounds like fun! When?"

"Saturday or Sunday, whichever works best for you."

"Why don't we do it on Saturday? I run with my dad around 6:00am, so be there before that, and you can shoot the entire day, including karate."

"6:00am?! On a Saturday?!"

"6:00am. On a Saturday."

"What kind of crazy person is willingly out of bed before 6:00am on Saturdays?"

"ME!" I declared. "I want to run with my dad and Suzanne, and I like the extra time I get with my dad after we run."

"Daddy's girl? I would never have guessed!"

I almost laughed because it was both true and not true.

"I am a strong, independent woman! But I also love my dad!"

"Which does not mean you aren't spoiled!"

I rolled my eyes, "There is more reality at my house than in ten episodes of Big Brother!"

"You watch Reality TV?"

"I've seen a few episodes. It's obviously not real, and I'm WAY more interesting than a bunch of self-absorbed Reality TV stars!"

"Speaking of self-absorbed..." Bob teased.

"Hey!" I protested.

"You do realize you can be spoiled, and your life can still be 'real', right?"

"Except I don't get everything I want," I replied.

"Name one thing!"

I nearly blurted out, 'An expert deflowering by my dad!' but there was no way I could say that to Bob or anyone else. But I also wasn't spoiled because Dad and my moms required us to be mature, responsible members of the family. Sure, we were really well off because of the amount of money they made, but I didn't think my parents 'overindulged' us; they simply treated us as if we were adults.

"That's not the point, really," I said. "Sure, we have lots of nice stuff and a nice house, but none of us thinks we deserve anything. We all contribute at home, my parents work hard for what we have, and they expect all of us to act like mature, responsible adults. The privileges we have are because we've shown we can handle the responsibility."

"It seems as if I touched a nerve," Bob said.

I shook my head, "Not at all. You made a statement, and I refuted it with facts and logic. And if my answers frighten you, that's on you, not me!"

"Touchy, touchy!" Bob teased.

"One thing," I said. "Before you come over on Saturday, I need to tell you more about my family."

"It's blended, right?" Bob asked.

I smiled, "Yes, but not the way most people mean when they say that. It's a bit of obfuscation."

"Now you have me super curious."

I explained about Dad, my moms, Suzanne, and my dad's girlfriends, as well as Jesse's moms and Matthew and Michael's situation with their mom and Eduardo.

"OK, I was mistaken!" Bob declared. "Your dad is the one who's spoiled! I think I need to talk to him!"

I laughed, "Meghan and Mariana?"

"I believe they would kill me for even suggesting anything even remotely like that!"

"Are they your girlfriends?"

"I guess it depends on what you mean. They're both friends who are girls, and I've messed around a bit with them, but nothing serious."

He wasn't quite sixteen, so that didn't really surprise me. I knew Jesse, Matthew, and I were outside the norm. That got me to wondering about Bob in a way I hadn't really considered. We were 'camera buddies', but I wondered if he was interested in more. Except for Peter, I was focused on trying to find an older guy, but something about Bob intrigued me.

"That's kind of like me," I replied. "No serious boyfriend, though I do hang out with my friend Peter."