20th century

1 Comment Posted on by noah_roberts1 20th century, business, state, and society, unacknowledged assumptions, Uncategorized

Plans To Lower CEO Pay Actually Increase CEO Pay…?

Noah Roberts

In movies and TV shows depicting corporate America, CEO’s and business executives are usually portrayed in the same way. What comes to mind for me is the show “Suits” where top executives in the law firm wear their expensive suits, drive their expensive cars, and have the nicest and largest office in a huge office building. But, why do we have these stereotypical depictions of business executives? Why were they ever paid so much and are their salaries still growing exponentially today?

In Planet Money’s podcast “When CEO Pay Exploded”, they review the events in the 1990’s that resulted in a boom in CEO pay. Before 1990 CEO pay was consistently increasing by a little each year. No matter the performance of the company, the CEO would continually have an increase in salary. During the 1990 recession, where executives were being paid more and more while employees were being laid off, the economist Kevin Murphy wrote a paper on changing the way CEO’s were paid. This launched campaigns for people like Bill Clinton who proposed a new Tax Code that would change the pay of CEO’s. This ultimately resulted in a use of Stock options as payment, which did not work out the way the government intended. However, in the early 2000’s, companies realized the effect on their companies by issuing stock options to executives and have changed pay scales.

The overarching idea throughout this podcast is Business, State, and Society. After Kevin Murphy’s paper on the principal that CEO’s should be based on company performance and not given a base salary, Bill Clinton proposed a new tax code. This tax code would prevent big companies from writing off more than a million dollars of their CEO’s salary. This was to discourage a high base pay. However, they did add in section 4C of the tax code saying that if companies paid based on company performance, they could write off all of the salary. This encouraged stock options to be offered to executives as a form of pay. Where if an executive performed well, they could possess a stock at a certain price and sell it for a gain if the company improved, or a loss if the company did not perform well. Ultimately, this did motivate CEO’s to try to advance their company.

However, this held both Unacknowledged Assumptions and Unintended Consequences. Economists like Kevin Murphy assumed that companies would lower base pay because they were offering stock options as a way for CEO’s to make more money. The reality, though, was quite different. If you were a CEO, you wouldn’t want to lower your own salary, and if you were on the board of executives and liked the CEO, you wouldn’t want to risk losing him or her to another company that would offer more money. This resulted in a same base pay with the addition of a 40% growth in stock options. Consequently, the average CEO salary for Fortune 500 companies dramatically increased from $4 million to $8 million between 1992 and 1996.

Image result for planet money ceo pay

Although, this increase in stock primarily happened due to another Unacknowledged Assumption made by corporations. Due to a weird accounting rule, stock options could be expensed at zero cost, and in result, businesses genuinely thought they were issuing stock to their workers with a zero cost. All they had to do when an employee cashed in was create a stock and give it to them to sell. This led to greater effects on everyone associated with the company. Employees that had their retirement based in stock, or citizens that had many shares of stock were being greatly affected. Their stocks were now worth significantly less because of how many shares the companies were creating out of thin air to pay salaries with.

Eventually, the companies did realize the affects of issuing a lot of stock and stopped giving it out so freely. This has actually resulted in a decrease in average CEO salary over the past few years, going against what most may think. Although one could make a fair argument that executives are still overpaid, we do know that the salaries aren’t going anywhere but down for now.

 

Picture from Planet Money

1 Comment Posted on by jacob_gochis1 20th century, business, state, and society

Ravings for Savings: The History and Evolution of Black Friday

JACOB GOCHIS

As November comes and goes, many Americans are preparing for a national holiday that gives us time to reflect on what we are truly thankful for what we have and celebrate good ol’ American values such as family, and generosity. The weekend following this holiday, 174 million Americans will participate in a shopping frenzy that marks the beginning of the holiday gift shopping season and emphasizes consumption.

(Image from Google)

I was interested in the history of this retail celebration that today gives us news stories and videos of people trampling each other for the newest Xbox. This article helped guide me through the history of the holiday and allowed me to see its development and adaptation to the times. Within this post I will explore the mingling of business, state, and society as retailers encouraged consumers to view the Friday after Thanksgiving as the time to start shopping.

The modern day Black Friday came about as a result of the Macy’s Thanksgiving Day Parade. While the parade was originally adapted from a Canadian retail shop’s idea of a parade, and was meant as a celebration of Macy’s success rather than an advertising opportunity, their first parade in 1924 gave Macy’s increased sales the next day and they chose to continue the tradition. This led to the recognition between stores that the Friday after Thanksgiving would mark the official beginning of the holiday season.This trend was only furthered as workers would take the Friday after Thanksgiving off in order to have a four day weekend and get a head start on holiday shopping. Employers embraced this rather than fighting the trend and Black Friday seemed to have its official recognition.

Then there’s Black Friday wasn’t always a sweet sound for capitalism, the earliest use of the name was in reference to a stock market crash caused by two speculators that wrecked havoc on the nation’s economy and prices. Later the name was re branded for the purpose of creating a better public image as another source I looked into describes:

No wonder retailers wanted to make the name “Black Friday” mean something positive. To them, the Friday after Thanksgiving was one of the most profitable days of the year. To compensate, they decided to follow the adage, “If you can’t beat ’em, join ’em.”

Retailers changed the name to reflect their success. Accountants use black to signify profit when recording each day’s book entries.

One more interesting fact, Thanksgiving’s location on our calendars might well be thanks to retail stores trying to get a head start on holiday sales. In 1939, Thanksgiving happened to fall on the fifth week of November which retail stores worried would lead to decreased sales. They petitioned President Roosevelt to change it to the fourth Thursday instead. The plan fell through in the end due to the late action by Roosevelt, however in 1941, Congress officially recognized the fourth Thursday of every November.

While these may all seem like trivia facts on Black Friday, I believe they show just how businesses have impacted society with their influence. We have studied in class how in the 20th century, businesses began pushing increased consumption on American society. This is reflected by the Macy’s Thanksgiving Parade showing off advertisements and essentially functioning as a billboard. The name re-branding reflected the idea that it was a consumers job to fuel the economy and help generate profit for retailers. These changes reflect the interaction between business and society, but I find the story of Thanksgiving’s official date most compelling. We see business asking the state to determine the day of a societal holiday in order to maximize revenue.

One would think that Thanksgiving and Black Friday would be separated on the calendar due to their differing values behind it, but business has created a tradition of consumption immediately following our day of thanks. This is a blatant example of businesses influence on our society and perhaps its worth looking into a few of our other traditions to see just how many of them are influenced by a corporate spirit.

1 Comment Posted on by trevor_rogers1 20th century, Uncategorized

Is The Government More Entrepreneurial Than You Think?

Image result for tesla government subsidies political cartoon

image from wattsupwiththat.com 

 

When most American’s picture the relationship between government and capitalism, they see a stark divide. On one side, there is the government, creating roads, funding the military, bettering education, in general putting money into sectors for basic needs. On the other, there is capitalism, Titans of Industry creating inventions like the iPhone, Facebook, or even the Tesla Model S. Mariana Mazzucato is a professor of Economics of Innovation and Public Value at University College London, and she seeks to show how government and capitalism are much more connected than we think.

The glaringly obvious Big Idea that Mazzucato uses is capitalism, and this is how she defines it;

[The] Defining feature of capitalism is how it “has really broken down all sorts of walls, that it’s constantly changing how industries operate; how production, distribution, and consumption work”

She begins her argument by pointing at her definition of capitalism. She argues that the government puts in significant resources into funding early-stage research, largely contributing to the success of technology, pharmaceuticals, and energy. By funding this research, Mazzucato believes that the government is changing how “production, distribution, and consumption work” and are therefore active participants in the capitalist system. Mazzucato points to several government agencies, specifically NASA, DARPA, and the National Institute of Health and how they contributed to inventions such as the internet, GPS, and HD displays. She believes that without these innovations, companies like Google would have no internet to run on and Tesla would have no GPS to lead its cars.

Mazzucato continues on by affirming that not only is government investing billions upon billions of dollars into research, but they aren’t getting credit for it, and they’re not getting much of a return. She illustrates this belief with two companies; Tesla and Solyndra. The government investing 1 billion combined in both companies. Solyndra failed and the government lost its investment and the American people were upset that the government was attempting to act as venture capitalists. Tesla on the other hand succeeded tremendously, and the government got no recognition for it, and no return on investment. Mazzucato suggested that the government should have required tesla to give them 3 million shares and after the significant boost in Tesla’s stock over the years, the government would have to been able to make its money back from the loss on Solyndra. She affirms that if the government is going to spend this money investing in companies, that it should also get a pay-out from them.

Mazzucato also delves into the market on pharmaceuticals. She states that most research during the beginning stages isn’t funded by private institutions, but by the government. She continues by saying that most large pharmaceutical companies don’t speed that much money on research and development, but instead on stock buy backs and dividends. Mazzucato believes that since the government funds so much of the development on these drugs they should be able to influence the price, specifically, by putting a price cap on drugs.

Overall, Mazzucato believes that the government is already an active participant in capitalism. She wants the government to be a co-shaper, and co-creator, not just a worried parent who sits on the sidelines waiting with band-aids for something to go wrong.

1 Comment Posted on by katie_shore1 20th century

Let There Be Light!

Katie Shore

Light bulb

(Image of a Light Bulb from BBC News)

Since the beginning of time, light has been a human necessity. While natural light is nice and all, it wasn’t always available when humans needed it. When the sun went down, the day was over, but new and efficient forms of light fixed this problem. Now, I can study in my well-lit room as late into the night as I want rather than sleeping as I should.

It took a long time to develop the accessible electricity that I use today for my late night studying. NPR’s “Planet Money” podcast titled “The History of Light” goes as far back as four thousand years ago to the time of the Babylonians to analyze the difficulties of creating and using light. Bill Nordhaus, an Economics professor at Yale, conducted his own experiments to emulate how the ancient Babylonians produced light. He determined that to generate a mere ten minutes of light during this time, a person would need to spend an entire day’s worth of wages.

One would expect that as the years went on, innovations would allow people to spend less money on light and get more of it. On the contrary, Nordhaus explains that improvements generally didn’t do much: “From Babylonian times to around 1800, there were – even though there were improvements as best we can tell, they were very modest.”

Creating light was a process involving a great deal of complexity. For example, some people made candles out of beef fat. This process involved raising, feeding, and then killing a cow to extract and melt its fat. Wicks then needed to be dipped in the fat and dried. Only after lots of work would you have some candles that would produce a minimal amount of light. One of the narrators of the podcast tried this technique and spent several hours making candles, which are pictured below.

(Images of Beef Fat Candles from Jacob Goldstein of NPR)

If you didn’t want to make candles out of beef fat, then you had a few other options. Some killed whales for their fat and burned whale oil to generate light. This tactic created about an hour of light for a day’s worth of wages. Likewise, the Native Americans in the Pacific Northwest would catch salmon and turn them into candles. The petrel, an oily seabird, was turned into a candle by putting a wick down its throat and lighting it. Still, there had to be an easier way to get light that didn’t involve killing animals…

Finally, in the 1800s, scientists began experimenting to try to produce better, more efficient forms of light. In 1850, a man named Abraham Gesner developed kerosene, which provided more light and was cheaper than other light sources at the time. It also didn’t require any animals to be killed and produced five hours of light for a day’s worth of wages.

The most significant breakthrough was Edison’s invention of the light bulb and cheaper electricity. Banker J.P. Morgan funded Edison, which allowed him to build a power plant that would illuminate his lightbulbs. In 1882, the plant was completed in Lower Manhattan, and it was able to power part of the area. Edison’s power plant involved a great deal of complexity as well. He had patents to protect his innovative ideas, and investors gave him a lot of money to support his efforts. Ultimately, Edison created a safe, inexpensive, and efficient source of light that was revolutionary at the time.

Now, one day’s worth of wages can purchase 20,000 hours of light. We have sure come a long way from the ten minutes of light a day’s wages could buy in the Babylonian times.

The creation of a new source of light created some unintended consequences. Edison’s power plant burnt a great deal of coal, which caused a lot of pollution. Additionally, this new technology provided humans with opportunities far beyond just light, as the podcast’s host notes: “This one little story, it explains why we are where we are today, why billions of people don’t have to worry about starving today, why we aren’t all subsistence farmers, why we can afford to have artists and massage therapists and plumbers and, yes, radio reporters doing stories about the history of light.” Who would have thought at the time that more accessible lighting solutions would have such a significant impact on humanity? Now, almost everything that we do somehow involves electricity or a source of light.

Today, we have lots and lots of light, and the quest for even better light sources continues. Companies such as John Edmond’s Cree continue to create better, more efficient lighting solutions such as LED light bulbs. From street lights to desk lamps to car headlights, we live in a well-lit world.

The future is bright for humanity, and it’s because of light.

 

 

2 Comments Posted on by haley_beard2 20th century

Big Government Cheese

When reading about President Trump’s promise to the farmers, the article kept mentioning how it will bring back the “government cheese” event from Jimmy Carter’s campaign. Prior to reading this article, I had not even heard of the term “government cheese”. To hear about more on the subject, I listened to the Planet Money podcast on Big Government Cheese.

Within this podcast, I was informed about how in 1976, Jimmy Carter was running for president and proposed to give farmers an equal break. He planned to do this by raising milk prices by 6 cents per gallon every 6 months. Carter followed through on his promise to the farmers and tried to figure out a way the government can step into the market to make it happen. They figured out they can either make demand greater or lower supply. USDA decided to go down supply the chain one step to find milk products that could store well. They came to the conclusion of cheese, specifically cheddar cheese. The government sent out sheet of paper to farmers that states they will buy as much butter, cheese or nonfat dry milk they are willing to sell at certain prices. By the government buying more cheese, cheesemakers buy more milk which in turn drives milk prices up.

Consequently, the government had an issue with storing cheese and had to store cheese in caves in Kansas because they had no other place to store the cheese. By early 1980s, the dairy support plan for cheese was costing tax payers around 2 billion and the government was buying 1 in every 4 pounds of the country’s cheddar cheese. This dilemma reached the point where the Agricultural Secretary held up hunk of cheese in a press conference and talked about the mold deteriorating cheese and how there wasn’t a market for it. A new program was created to give cheese away through food banks so that the market for cheese wouldn’t take a huge hit.

Government cheese became a symbol of crappy government handout as well as a parable in how government intervention in markets can have a butterfly effect, Jimmy Carter makes an innocuous announcement to help farmers and then the government ends up spending billions of dollars filling caves with cheese they couldn’t get rid of fast enough. The most prominent “Big Idea” for this course that is brought to our attention within this podcast is unintended consequences. Failing to acknowledge what might happen to the markets or the fact there will eventually be a large surplus for cheese came come back to bite the government. After finding the solution of food banks, the caves slowly emptied and the price for milk automatically froze every 6 months. The government did not foresee that price controls would be hard to unwind once they are started. Because of this, the government pondered how to get out of cheese business without harming the farmers too much. They ended up paying money to the farmers to encourage them to stop producing milk.

Due to the argument that our country has to be able to produce its own food because if our farmers go out of business, then we become reliant on other countries for food which is a security risk. It’s one thing for the government to provide stability and it is another to step into the market in a big way and possibly the wrong time because playing with price controls is like playing with fire.

 

(image on the left from twitter and image on the right from the podcast)

2 Comments Posted on by noah_roberts1 20th century, business, state, and society

Lobbyists: Their Opinion Means More Than Yours, Or At Least To Congress

Noah Roberts

Junior year, after we had completed the AP government and politics exam, my class watched the movie, “Thank You for Smoking” starring Aaron Eckhart and Cameron Bright. The movie focuses on a slick lobbyist, Nick Naylor, who works for the Big Tobacco Corporation. Throughout the movie, Naylor is often spinning the reported negative effects of smoking and trying to work out deals with the government on how to brand and warn society about the effects of smoking. The twisted agenda of Naylor and the Big Tobacco corporation was to market cigarettes in the most appealing way possible. They didn’t care that they were deceiving the public into buying goods that were damaging to their health; they were focused on maximizing their sales and profits. Although this movie satirized to show the extremes of lobbying, it holds some truth in the relationship between businesses and government.

To learn more about the state of lobbying within our government, I read,”How Corporate Lobbyists Conquered American Democracy” written by Lee Drutman from The Atlantic. Drutman brought to light the continual growth of lobbying in our government. Lobbyists reportedly spend $2.6 billion a year, which is more than the $2 billion that is provided to fund the House of Representatives and Senate combined. Compared to the 1950s and 60s, where special interest groups and labor unions had much more impact in the government, business lobbying has become the strongest force in government influence. The relationship between government and business has completely flipped in the last 50 years, from corporations shifting their focus from avoiding government involvement in their business, to focusing on how they can be business partners with the government. This has resulted in more lobbyists being more politically active and proposing and supporting more laws and legislation.

The most obvious “Big Idea” to me, is the relationship between business, state, and society. The actions of business and government are not so separate, and actually go hand in hand. The businesses and government are proposing new laws that can benefit both of them. For example, the article states how in 2000, the industry lobbyists were able to get Medicare Part D passed, which would benefit them by $205 billion in the span of a decade. The lobbyists were able to use the government as a vehicle to a major profit, while Congress was able to get legislation passed. So, if both sides are getting what they want, it makes sense the lobbying relationships have grown so rapidly. This relationship, however, ultimately effects the everyday people in society. For example, when a deal with Medicare Part D was made between the government and corporations, it resulted in different Medicare options offered to the people. Or when a cigarette company like the one portrayed in the movie actually does lobby for less regulation on their products, more people will be attracted to consuming more of their product.

Lobbying in the government doesn’t always result with a harmful outcome for the people in our society. What it does do, though, is take away the voice of the people. Everyday workers who are a part of labor unions or special interest groups now have less of an impact with what legislation is passed. Congress is listening to the people with the money, and not the people who have to deal with the outcome of whatever is passed. The article mentions that for every dollar spent by a special interest group, lobbyists are spending $34 and that each corporation has about 100 lobbyists. With no way to compare to these resources, the interests of the common man are being drowned out.

In his 1961 Inaugural Address, John F. Kennedy stated one of the most famous quotes, “Ask not what your country can do for you; ask what you can do for your country.” I think that corporate lobbyists should reflect on this quote, as it seems to me they are trying to see what our government can do for them.

1 Comment Posted on by trevor_rogers1 20th century, unacknowledged assumptions

The Transformation of Corporate Lobbying

Trevor Rogers

When one envisions corporate lobbyists one might picture a man in an expensive suit and a too white grin wining and dining a shady congressman. This is the image that comes to mind when we think of what a lobbyist truly does. However, lobbying is a relatively recent phenomenon, taking Washington by storm in only the last few decades. In the article, “How Corporate Lobbyists Conquered American Democracy” Lee Drutman details the history of lobbying and how the practice transformed over time into its current iteration.

The “Big Idea” that is most prevalent within lobbying is its complexity, especially its transformation over time. So let’s go through the history of lobbying and discover how it has transformed. Starting off in the Gilded Age we had a time of extreme influence by business in the government, pushing for certain legislation. This relationship was disrupted by a Great Depression and two World Wars. Now skipping ahead to the 1960’s we had a system where labor unions had significant influence in legislation, not the corporations. At this time it seemed futile for corporations to spend money lobbying for legislation, with one prominent corporate lawyer even commenting about how useless it was to try to influence legislation.

As every business executive knows, few elements of American society today have as little influence in government as the American businessman, the corporation, or even the millions of corporate stockholders. If one doubts this, let him undertake the role of ‘lobbyist’ for the business point of view before Congressional committees.”

     As we can see the attitude of businessmen towards influencing the government was essentially, “Well, we can’t get anything done, so why even try?” That was the case until 1972 when the Business Roundtable was founded by several prominent businessmen. John Harper, CEO of Alcoa, remarked ” I think we all recognize that the time has come when we must stop talking about it, and get busy and do something about it.” His comment reflects the frustration felt by businessmen at their inability to influence the legislation that so directly effected their lives. After a few corporations sent lobbyists to Washington and started actually influencing bills, such as a major labor law reform and lowering corporate taxes, they began seeing just how successful lobbying could be. There was a major shift that occurred during the late 80’s that is perfectly captured by this quotation by a lobbyist, “Twenty-five years ago…it was ‘just keep the government out of our business, we want to do what we want to do,’ and gradually that’s changed to ‘how can we make the government our partners?’ It’s gone from ‘leave us alone’ to ‘let’s work on this together.'”

  With the current state of lobbying we must now focus on another “Big Idea”, and that is the unintended consequences that came with allowing corporations and lawmakers to become such tight partners. We now are faced with a modern lobbying scene with more than the $2 billion spent to fund the House ($1.18 billion) and Senate ($860 million). For every dollar spent on lobbying for labor unions, large corporations spend 34, totally flipping the status quo from the 60’s and 70’s. Corporations are now able to play both offense and defense against government policies, getting some passed and others blocked, whichever ones they deem to have the most benefit to themselves. So how to we get back the balance? How can we reverse this pattern of corporate control? Well, Drutman has a few ideas. First, we must invest more into the Government, especially Congress. This would allow the leading policymakers to have the resources that are necessary so that they can hire and retain experienced staff, so they will not have to rely so much of lobbyists. Second, organizations that advocate for policies that are less well-funded need more financial support.

Overall, we are posed with this simple question. Who do we want creating legislation that affects this country and our own personal lives, our elected representatives or multi-billion dollar corporations?

 

 

1 Comment Posted on by katie_shore1 20th century, business, state, and society

It Ain’t Easy Being Cheesy

Katie Shore

(Image from NPR: “Uncle Cheese”)

Who would have thought that the government cared about cheese? Believe it or not, they did. The government and cheese have interacted in the past and affected our country’s economy and society.

Let’s go back to when it all started: Jimmy Carter’s campaign promise to give farmers what he called “an equal break.” It makes sense that Carter would want to help the farmers because he knew what it was like to be a struggling farmer: in 1954, his farm’s net profits were a mere $187. After winning the election, Carter went to work trying to fulfill his promise. First, he raised the price of a gallon of milk by six cents. The interaction here between business, state, and society is quite remarkable. The government came into the dairy industry and raised prices by using a price floor. I wonder how other businesses felt about this decision by the government. They must have been asking why the dairy industry was getting bailed out; surely, the dairy industry wasn’t the only struggling industry at the time. The state’s involvement in the pricing of dairy clearly shows Carter’s bias towards the farmers. While these dairy farmers and their businesses might have benefited from the government’s help, the rest of society was stuck paying more for their milk.

Let me pull out my notes from my Economics class (thank you, Dr. North). Because of the government-instituted price floor, dairy farmers were ramping up production; at a higher price, producers wanted to make and sell more goods to earn more money. Consumers, however, didn’t want to pay this higher price and demanded less than the producers were producing. This led to a surplus, which led to more government intervention.

The government started buying and trying to store lots of milk, but milk has a short shelf life. The solution then was to turn this milk into products that didn’t expire as quickly, such as powdered milk, butter, and cheese. Next, the government told dairy farmers that it would set a price and purchase as much as the farmers were willing to sell. Unfortunately, farmers took advantage of the situation and tried to sell the government their worst cheese. That’s where cheese graders – not graters – came into play. These people traveled the country evaluating cheese based on specific criteria including its flavor, acidity, fruitiness, and so on. The government bought cheese that met all of the grading requirements and then stored it in caves.

This whole cheese-buying extravaganza was costing billions of dollars, and the government needed to find a way to get rid of its cheese. Rather than flood the market with the cheese, destroy it, or send it overseas, the government decided that it would process the cheese, package it, and then give it away. These blocks of government cheese – pictured below – were given to schools and food banks to try to provide for the hungry.

(Image of a Block of Government Cheese from a magazine titled Rolling Out)

Government cheese often gets a bad rap, primarily because of its unintended consequences. First, the government’s efforts to help the farmers led to very expensive cheese for consumers. Second, the government’s supposedly beneficial price controls were actually harmful and very difficult to undo. Third, the government had to start paying farmers to stop producing milk while simultaneously instituting campaigns to convince people to buy milk. Got milk? Today, instead of directly buying farmers’ products, strategies such as direct subsidies work much better – and don’t require the government to store billions of dollars worth of cheese in caves.

You would think that we had learned our lesson from the past, but it appears the government is going back to its old ways. As of August 31, there are plans to purchase $85 million worth of dairy for schools and food banks. I’ll leave you with a quote by philosopher George Santayana: “Those who do not remember the past are condemned to repeat it.”

If you have time to listen to the NPR episode of “Planet Money” about the history of government cheese, I would recommend that you do so. Who knows? We might have another cheesy situation on our hands very soon…

1 Comment Posted on by elesha_coffman 20th century, business, state, and society, unacknowledged assumptions

Sample post: Shopping malls, past and future

Elesha Coffman

In a recent issue of the New York Times magazine, the “Letter of Recommendation” column touted “Dead Malls.” I was reminded of the malls I grew up with, in central Indiana in the 1980s. The best one was the Glenbrook Mall in Ft. Wayne, where my parents would do the Christmas shopping while my sister and I skated at the ice rink in the center:

(image from Pinterest; to my knowledge, I am not in the picture)

To think more about the history of shopping malls in the United States, I read Alexandra Lange’s article, “Malls and the future of American retail,” from Curbed. The article confirmed some details that I knew. Shopping malls largely date from the period after World War II, a time of increased consumer spending and suburbanization. Hundreds of malls were built in subsequent decades, but many of those are now closing or being dramatically repurposed, because people can buy things online instead and “hanging out at the mall” has lost much of the cachet it once (rather inexplicably) had. Large population shifts have also contributed to these trends. The postwar “white flight” from cities to suburbs has, in many places, reversed. The young, affluent (and still mostly white) Americans who are now gentrifying city centers do not want to drive all the way out to the suburbs, walk through an enormous parking lot, and shop in bland department stores with bad lighting. They want bold architecture, local flavor, landscaping, and spa services, and they want it all to be accessible via public transit.

The most obvious of the “Big Ideas” for this course that arises in the Lange article is unacknowledged assumptions. Shopping mall builders assumed that people would always do most of their shopping in person, back when nobody could imagine the Internet. Mall builders also assumed that suburban sprawl would just keep going and going, so a shopping center on an affordable, somewhat isolated lot would one day be surrounded by customers. This assumption about suburban sprawl was not entirely wrong, as many metro areas are still expanding in all directions, but the perception of urban centers as stylish and exciting, rather than decaying and dangerous, caught many planners by surprise.

The Lange article also highlights the interplay among business, state, and society. Malls might seem to be purely commercial spaces, but several public entities or concepts crop up in the article: the Department of Motor Vehicles (many DMV offices are located in malls), transit hubs, the Staten Island Ferry, state subsidies. Malls were always, in a sense, collaborative efforts of businesses and the state, because suburbanization would not have been possible without the G.I. Bill, which funded housing for WWII veterans, and the Eisenhower Highway System. Zoning policies, approaches to crime and education, “War on Poverty” programs, and other government interventions shaped cities and suburbs, too, as described in this paper from an undergraduate research journal at the University of Florida.

More significantly, the article speaks to Philip B. Scranton’s claim that “[i]nside a business there’s a minisociety” (MP, 9). A mall really is a minisociety, complete with food, employment, commerce, parks, social services, “mall cops,” etc. Lange argues, though, that it is a society with severe limitations:

However you remix the words “city” and “center”, however many public functions you invite in, however your sustainable landscape encourages walking (or hides the parking), it still isn’t the city. It’s a version of the city edited for the audience the owner and retailers want to attract.

All the mockery of the idea of Apple Stores as “town squares” multiplies tenfold—though malls, at least, must incorporate public bathrooms. No loitering policies, parental escort policies, and curfews explicitly exclude homeless people and teenagers from the mall. The economic mix of stores and the food options presents an implicit form of exclusion, as does the presence or absence of seating. The new urban malls must be responsible about the semi-public part of the equation.

A mall is perhaps the ideal place to examine questions of business and the meaning of society, all while sipping boba tea or looking for a good deal on shoes. Good luck finding a place to sit.