Schools and the poor are the real losers of the lottery

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By Roy Pankey

 

I don’t like to throw away my money. But in late October of this year, after the California Mega Millions jackpot topped $1 billion, I bought a handful of lottery tickets. I even waited in line with dozens of other hopefuls for half an hour at Bluebird Liquor in Hawthorn, where the lottery tickets are rumored to be extra lucky. Needless to say, I didn’t win.

Neither did California schools.

The state lottery is practically printing its own money. Though California Lottery hasn’t made public its total revenue for the 2017-18 fiscal year, the California Department of Education (CDE) projected total sales of $6.75 billion for this period, an historic high. That’s more than total revenue of Fortune 500 companies like Ralph Lauren, Ulta Beauty, Harley-Davidson, and Hasbro.

This sum comes after several years of increasing sales for the California Lottery, which sounds like a win for the state’s schools. Yet even as the lottery is selling more tickets than ever before, California schools aren’t receiving any additional funding. In fact, lottery payouts to education are essentially the same from a decade ago.

How can this be? Eight years ago, state legislators changed the requirements of the lottery system.

When 57.9% of voters passed the California State Lottery Act in 1984, they mandated that 34 percent of total lottery revenue be paid to public education. This law withheld until lawmakers abolished that requirement in 2010. The new law requires that the lottery “maximize revenues for public education by operating as efficiently as possible.”

Ticket sales dragged during the Great Recession, and legislators loosened reigns on the lottery to increase jackpots and sales overall. They knew the percentage of each dollar paid to education would fall but hoped the increase in revenue would lead to an increase in total payout to schools.

It’s not happening.

In its public education contribution report for the 2017-18 fiscal year, the California State Lottery indicated that it raised just under $1.7 billion for schools.

At first glance, that sounds like a huge, great number. (First graders shall never want for colored pencils again!) However, education payout represents just 25 percent of the $6.75 billion in projected sales for the year. In past years, the payout percentages were much higher. The lottery is making more money than ever, but schools aren’t seeing any of it.

Lottery revenue dramatically increased after 2010, but payout to schools did not. (Source: LAist)

Zahava Stadler of EdBuild, a non-profit that closely studies education funding, told The Press Democrat, “The fact that education dollars have remained pretty flat tells you that more and more what the state is doing here is running a casino, rather than funding public schools.”

Funds raised by lottery ticket sales account for less than 1.5 percent of all education funding in California. Money is distributed among K-12 schools, California State University, University of California, community colleges, and various other educational institutions. About 80 percent of payouts go to K-12 education.

In a statement on its website, the CDE says the money it receives from state lottery ticket sales “represents only a small part of the overall budget of California’s K-12 public education that alone cannot provide for major improvements in K-12 education.”

Since its inception in 1985, the California State Lottery has contributed more than $32.5 billion to education. Its all-time biggest expense—a whopping $53.8 billion—has been awarded to lucky prize winners.

Distribution of Revenues (in billions) October 3, 1985 – June 30, 2017 (Source: California State Lottery)

Distribution of Revenues (in billions) October 3, 1985 – June 30, 2017 (Source: California State Lottery)

In October 2017, officials who run the Mega Millions game were concerned that frequent, smaller jackpots—say, $100 million or less—would result in fewer ticket sales. They thought people would become too familiar with prizes like these and would be discouraged from buying any tickets at all. Gordon Medenica, head director of the Mega Millions Group referred to this phenomenon as “jackpot fatigue” in an interview with The Washington Post.

Now, the Mega Millions pools are paid out much more infrequently, allowing them to swell and swell to unprecedented amounts. Adding to the paucity of payouts was an increase of numbers to choose from on each ticket, as more numbers decreases a player’s odds. Another change that powered tickets sales was the increase in the price of the tickets themselves. They now cost $2, double the prior price.

The California Lottery estimates that more than 19 million people played last year. That’s more than half the state’s population old enough to gamble. In California—like in most states with a lottery system—vendors sell a majority of tickets to low-income individuals.

An analysis by LAist of two years of lottery ticket sales in California found that:

  • Most tickets are purchased by the poorest fourth of census tracts in virtually every county.
  • Most tickets are purchased in Southern California census tracts with high Latino and Asian-American populations.
  • Most tickets are purchased in Southern California’s Los Angeles, Riverside, San Bernardino, Orange, and Ventura Counties.

Dr. Timothy Fong, director of the gambling studies program at UCLA, told the publication, “The lottery does seem to be more harmful for, as you can imagine, lower economic communities, ethnic minorities.” Communities spending the most on lottery tickets are the same communities who are in most need of the system’s education funding.

That disparity hasn’t happened by chance. With the help of high-powered advertising agencies, the lottery markets to California’s diverse populations.

2018 Lunar New Year scratcher advertisement in Chinese.

To reach Asian-Americans, the lottery has developed products like its Lunar New Year ticket, whose jackpot is $888. The number eight is associated with wealth in Chinese culture.

In October, marketing agency David&Goliath placed the winning bid for California Lottery’s $295 million account as part of a five-year contract. Together, the two will continue marketing to California’s diverse communities and working toward the Lottery’s goal of becoming “the largest lottery in the U.S.” (It trails only New York.)

Of all California cities with populations over 50,000, Westminster, located in northern Orange County, sells the most lottery tickets per capita. The city sold $668 worth of tickets to each resident in 2016 and 2017. The median household income in Westminster is $55,287, while the median household income for the state is considerably higher at $67,739.

Some other California cities selling the most lottery tickets include Huntington Park, Inglewood, Hawthorne, and Compton at $392, $359, $330, and $323 per capita, respectively. All of the median household incomes in these cities are even lower than that of Westminster.

The Mega Millions used to work like this: Players chose five numbers from 1 to 75 and a Mega number from 1 to 15. Odds of winning the jackpot were 1 in 258,890,850.

Since officials altered the Mega Millions tickets, players now choose five numbers from 1 to 70. They still choose a Mega number, but the range increased to 1 to 25. Now, odds of winning the grand prize are 1 in 302,575,350, meaning my chances of getting rich decreased by more than 16 percent.

Odds that schools will win big? Still unclear.

How much money would the world save by going vegan?

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By Roy Pankey

When I find myself the subject of dinnertime interrogation after refusing my aunt’s meatloaf, I have an artillery of arguments ready to deploy. I talk about how I am decreasing animal suffering, fighting climate change, and setting myself up to live longer than everyone else at the table.

I also talk about how I’m being economically conscious. In a study published in the Proceedings of the National Academy of Sciences, University of Oxford researcher Marco Springmann estimates (conservatively) that if the U.S. continues its current meat-consumption trend, by 2050 it could cost our country between $197 billion and $289 billion annually. The costs for the world are significantly higher.

Springmann laid out numerous dietary scenarios in the year 2050. He considered costs related to healthcare and climate change that will be incurred if we maintain our diet saturated with meat instead of adopting one that follows global dietary standards. (This would mean a great reduction in meat consumption for many parts of the country.) He also totaled cost savings for vegetarian and vegan world populations.

Costs considered include those related to healthcare (for treatment of diseases like diabetes and heart disease related to a diet heavy in meat), unpaid care (by family or friends for those affected by such diseases), and lost work days. Savings of minimizing greenhouse gas emissions related to the production of meat and other animal products were measured using the “social cost of carbon.”

Source: The Atlantic

Source: The Atlantic

The U.S. would save more than any other country by giving up meat. We would save $180 billion if we ate in accordance to recommended guidelines, and $250 billion if we gave up animal products altogether, due to our high healthcare costs per-capita. That’s more savings than would see China or all the countries in the European Union combined. And that’s not speaking at all of the minimum 320,000 yearly deaths associated with chronic diseases and obesity.

Source: The Atlantic

Overall, the study shows that the savings in healthcare-related costs are greater than the savings in environmental costs achieved when adopting a meatless diet. However, Springmann admits that the study’s numbers are “subject to significant uncertainties.” To realize these levels of savings, the world would need to decrease the amount of red meat it consumes by 56 percent and increase vegetable and fruit intake by about 25 percent. Globally, we’d also need to reduce our calorie intake by 15 percent in general.

Associating these well-known effects of a meat-free diet with a dollar amount is powerful. The numbers determined by the study can drive policy and attitude changes. Governments can now weigh the expenses related to consuming meat and other animal products against their economic needs. They can also use these numbers to drive debate about new taxes, existing subsidies, and changes to food advertising.

#ByeMeatloaf

How hard will the iPhone fall?

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By Roy Pankey

 

Eyes widen. Mouths drool. Kids ask for a raise in allowance. People wait in line for days. Sometimes fights break out over it. Everyone always wants it. It’s the latest, greatest iPhone. This thin, handheld device only makes a tiny splash if you drop it in a toilet (I would know!) but it has caused economic waves worldwide.

It’s hard to believe Apple unveiled its first iPhone a little more than a decade ago. They seem to have been around for much longer, as they’ve become almost an icon of American culture. Like all icons, though, the iPhone will eventually fade away and will be replaced by something else. And that day might not be so far away.

The iPhone has been the most profitable product by far for Apple, the company that makes the smartphone. Consumer spending on new iPhone models is so reliable that economists are now surprised if Apple’s stock price doesn’t go up. As of 2015, the iPhone was responsible for between 60 and 70 percent of Apple’s yearly profits. (The new models that year were the 6 and 6 Plus, costing a mere $750 by today’s standards.)

When looking at the iPhone’s impact on the country’s economy, Michael Feroli, an economist for JPMorgan Chase, told the New York Times a few years ago there was a definite correlation between releases of new iPhones and jumps in overall sales at electronics stores.

On a global level, smartphones are making their name known. The business accounted for almost six percent of Chinese exports. In terms of value added, iPhone exports in Ireland, where Apple has its European headquarters, have made up 25 percent of the country’s economic growth.

 

Apple’s Irish Headquarters (Source: Irish Times)

 

But all of this could mean serious trouble if the smartphone industry continues to shrink.

According to the April World Economic Outlook published by the International Monetary Fund (IMF) earlier this year, shipments of smartphones worldwide fell during 2017 for the first time ever.

“By decomposing the cycle from trend for Chinese exports of smartphones, regression results show that the trend is nonlinear and may have reached its peak in September 2015, suggesting that future global demand for smartphones may grow more slowly,” it wrote.

 

(Source: Business Insider)

 

The iPhone industry is closely connected to several others associated with the making of the phone, including parts providers, factories where those parts are assembled, distributors who deliver the new phones, and the retailers who sell them. And that’s just to get the iPhones in the hands of consumers. App developers also depend on the smartphones for their business.

Earlier this fall, Apple released not two but three new iPhones. Best guesses say upwards of 90 million units have been made so far. Apple is expected to produce the same number during the first half of 2019. But what happens to 90 million iPhones if no one wants to buy them.

 

 

Sources:

Apple Insider  –  https://appleinsider.com/articles/18/04/19/apples-iphone-now-key-to-global-economy-growth-claims-imf

BGR  –  https://bgr.com/2018/07/10/iphone-9-iphone-11-vs-iphone-x-apple-discontinue-2017-model/

 

Bad for Business? The Effects of Legalization on Marijuana’s Black Market

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By Roy Pankey

Marijuana is everywhere. That has been true for a long time, but it has become vastly more visible in the last several years. For decades, marijuana users depended on the black market alone to get their hands on the drug. Things changed in 2012 when Colorado voters passed a ballot initiative to legalize cannabis. California is among the nine states (and the District of Columbia) that have followed the Centennial State’s move. More than 65 million Americans now live in states permitting adults to legally consume marijuana for any reason. Legalization advocates argue that regulating cannabis brings the industry into the light where governments can tax pot and effectively eradicate the black market.

A timeline of states’ marijuana legalization. (Third Way)

 

Governor Jerry Brown’s administration estimated $175 million in cannabis tax revenue for the first half of 2018, but the Legislative Analyst’s Office reported revenue of just $34 million in the first quarter, a figure about 80 percent below projections. Why was Brown’s estimate so far off? It isn’t because Californians don’t like weed; legalization doesn’t hinder the black market. In some ways, it aids illicit trade. Though the plant is legal in several states, the marijuana black market has not taken a hit. The legalization of cannabis acts as a shield against suspicions of impropriety, disguising illegal growers as legitimate, enticing sellers to avoid regulation, and dissuading buyers from making regulated purchases. Let’s look at how this works.

The majority of cannabis touches many hands before consumption. The grower plays the inaugural role in the distribution channel. As soon as marijuana is legalized in a jurisdiction, many farms appear after receiving a grower’s license. The sight of marijuana growing operations becomes commonplace, and no one questions the legitimacy of the cultivation. It is at this point, when everyone assumes all growers in the region are licensed, that unlicensed growers establish farms. They hide their illegal setup behind the public’s complacency and are not questioned about their work. NPR reported on an example of this kind of illegal pot farm in Okanogan County, Washington and how it was busted by local authorities. The growers of this farm went as far as trying to dupe their tax assessor. Owners filed to pay agricultural property taxes at the exact rate for licensed cannabis farmers. While unlicensed growers inherently supply the black market, even legal growers find opportunities to contribute to the trade.

 

              Authorities in California fight illegal cannabis. (BBC)

 

Regulation in this business depends on licensed farmers to be forthcoming with their production numbers. Without a way to ensure honesty, some legitimate pot producers take advantage of the system. Growers are required to tag their plants and disclose the number of buds harvested from each plant. Authorities have recognized that farmers often “set aside” buds without counting them. Fraudulent bud counts routinely go unnoticed, as the amount of product a given marijuana plant yields is contingent on several factors, including the amounts of water and sunlight the plant received, whether or not it was treated with fertilizer, the climate in which the plant grows, and more. This unaccounted cannabis automatically becomes part of the black market.

Sellers are the next hands in the supply chain and the next to subject themselves to the same kind of criminal activity in attempt to evade the obtrusive restrictions on marijuana vending and marketing. Before a seller can put their products up for sale, they need a license. Obtaining a license can be an arduous process. In the weeks leading up to California’s legalization of pot, Los Angeles only employed four full-time regulators to sift through licensed seller applications. The lack of staff caused a backlog in application reviews and left countless growers, businesses, and hopeful entrepreneurs in a state of uncertainty, according to Pot Network. Many of the candidates were bogged down by expensive leases and other costs without generating any income, making the prospect of selling marijuana illegally attractive. But people in other cities in California might have considered these fretting applicants lucky.

Sellers in some cities were especially prone to get involved in the black market, because individual California cities were allowed to prohibit any and all legal pot businesses if they want. Many had chosen to do just that. The LA Times reports that about half of Californians reside in cities that banned dispensaries and pot delivery services. There is no doubt that a ban of this magnitude played a role in the state’s sending of more than 2,500 cease-and-desist letters to unlawful marijuana shops as of August. In July, the state’s Bureau of Cannabis Control clarified the law, saying pot delivery companies could deliver to any private address in the state. Deliveries can now be made in any city, whether a city holds to its dispensary ban or not. The bureau hopes to made marijuana accessible to all adults in California regardless of where they live. Employees of delivery businesses still must verify the buyer’s identity and age, another potential deterrent for selling legally.

Weed’s wide fanbase tempts sellers to ignore current legal limitations on who they can take money from. All states that have legalized recreational marijuana mandate buyers be at least 21 years old. The Washington Post reported that 52 percent of users are millennials. While most millennials are now 21 and over, the study found that marijuana use is skewed significantly toward a younger demographic. The report also showed that nearly 55 million Americans currently consume cannabis, while 35 million consume it monthly.

Marijuana usage among Americans. (Washington Post)

 

Marijuana usage among millennials and older users. (Washington Post)

 

This means that a very large number of young people in this country are using the drug. As young Americans—potentially too young to be legal consumers—represent such a large chunk of the pot market, some sellers disregard the law and sell to those under age.

A buyer’s age isn’t the only thing some sellers overlook. In states that allow cannabis for medicinal purposes, some sellers aren’t concerned by whether or not their clients possess the proper licenses for consumption. Currently, it’s legal to smoke marijuana for medical use in 20 states. Medical marijuana refers to the use of cannabis as a doctor-recommended form of medicine or herbal healing. Most states that permit medical pot require patients to hold a medical marijuana card, a license that allows you to smoke pot.

California allowed medical cannabis before it legalized the drug for recreational use. The state’s Medical Marijuana Identification Card Program (MMICP) created a legal license for consuming marijuana and a database used to verify qualified patients and their primary physicians. Last year, getting your license from MMICP was rather easy; any doctor licensed in California could write a recommendation for medical cannabis, and the patient simply had to take the paper to a dispensary. You could even complete the process with an app without ever leaving your house. (Since January 2018, both MMICP and the app have become obsolete.) In states that still require a medical marijuana card, sellers avoid the hassle of asking to see a buyer’s card and verifying their enrollment in the state’s medical use database. All sales finalized without appropriate certification become sales in the marijuana black market. Similar to sellers, buyers participate in the black market to achieve less stressful transactions.

Many buyers turn to illegal pot for the same reasons sellers do, such as for being under age and not holding a valid consumption license (where applicable). Other reasons include lower prices, convenience of the sale, and the guarantee of anonymity. Prices are arguably the biggest reason some people choose to buy weed from the black market. “Sin taxes” on goods such as alcohol, tobacco, and cannabis are notoriously high.  These high rates steer buyers toward cheaper options. Washington state levies a whopping 37 percent sales tax on pot purchases, while Alaska’s government nets $50 for every ounce sold. Reuters reports that while daily users in Canada make up less than 15 percent of marijuana users, they account for nearly 60 percent of the country’s total cannabis consumption.

Distribution of cannabis user and total cannabis consumption in Canada.                                                                           (Reuters)

 

Convenience is another factor that plays into the business of the black market. Not all communities have dispensaries, and some people have to drive lengthy distances to purchase marijuana from the nearest retail store. Buying from unlicensed sellers in these communities is often much easier than the alternative. The avoidance of purchase limits also falls under the convenience umbrella. In some instances, dispensaries must limit your purchase to a particular amount of legal marijuana. With black market dealers, such restrictions don’t exist. Before finalizing a legal sale, the buyer must present a photo I.D. for age verification purposes. This requirement may disqualify those who don’t have a valid form of I.D. due to legal resident status or other reasons. The black market is also attractive to those who wish their favorite habit remain a secret. Sales of illegal pot are executed with far fewer eyes on the sale than regulated sales. If you’re buying illegal pot, you don’t have to worry about being seen in a dispensary by anyone you know or the knowledge of your sale being used in official sales numbers. Black market purchases can be made in cash without leaving a paper or legal trail.

Though recreational cannabis is legal is more states than ever before, the black market for the drug is showing no signs of stopping anytime soon. Illegal growers blend in with legal growers. Legal growers smuggle to states where it’s illegal to sell. Sellers don’t want to spend time trying to verify a buyer’s age and eligibility to consume. Buyers don’t want to pay high taxes on their weed. Roll and repeat.

 

 

 

Sources:

BBC, https://www.youtube.com/watch?v=59w-HQq2x0o

Bureau of Cannabis Control, https://cannabis.ca.gov/wp-content/uploads/sites/13/2018/07/Bureau-of-Cannabis-Control-Proposed-Text-of-Regulations.pdf

CBS Los Angeles, https://losangeles.cbslocal.com/2014/04/30/costa-mesa-man-gets-3-years-for-furnishing-pot-laced-brownies-to-minors/

EazeMD, https://www.eaze.md/

LA Times, http://www.latimes.com/opinion/editorials/la-ed-marijuana-delivery-20180814-story.html

Legislative Analyst’s Office, https://lao.ca.gov/LAOEconTax/Article/Detail/282

NPR, https://www.npr.org/2018/05/16/610579599/despite-legalization-marijuana-black-market-hides-in-plain-sight

Pot Network, https://www.potnetwork.com/news/why-marijuana-legalization-belongs-californias-black-market

Reuters, https://www.reuters.com/article/us-canada-cannabis-blackmarket-insight/why-canadas-pot-legalization-wont-stop-black-market-sales-idUSKCN1J40FS

Tax Foundation, https://taxfoundation.org/state-marijuana-taxes-2018/

Third Way, https://www.thirdway.org/infographic/timeline-of-state-marijuana-legalization-laws

Washington Post, https://www.washingtonpost.com/news/wonk/wp/2017/04/19/11-charts-that-show-marijuana-has-truly-gone-mainstream/?utm_term=.388a41fe4ac5

How Netflix Changed TV Forever

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The 70th Primetime Emmy Awards in downtown Los Angeles last night saw a few attention-catching and even historic moments. Black-ish star Jenifer Lewis donned a bedazzled Nike sweatshirt on the red carpet in support of NFL player Colin Kaepernick’s controversial Nike ad and subsequent backlash. Oscars producer Glenn Weiss proposed to his girlfriend live on stage during his acceptance speech, an Emmys first. (Also, unprecedented: Last night’s broadcast pulled in 10.2 million viewers, the lowest ever ratings for the awards show.)

Unsurprisingly, HBO took home the most awards at 23, including the prestigious award for best drama series, maintaining its years-long streak. However, the No. 1 spot was shared by rival Netflix. This year marks the first time Netflix has claimed the top spot for most Emmy wins. The streaming service took third place at the 2016 awards and rose to the No. 2 spot last year.

Source: Business Insider    

Netflix is a pioneer in the on-demand media industry. It is a digital warehouse of TV shows, movies, documentaries, and educational shows. Those who pay a modest monthly fee gain unlimited access to its haul with the freedom to consume the content on any platform, be it TV, computer, or mobile device. Netflix is TV’s first serious contender in its nearly-century-long existence.

The streaming service started humbly as a provider of DVD rentals via mail. With its initial business model, Netflix was much more a rival of brick-and-mortar stores. When it rolled out its on-demand capabilities, it immediately became superior to the likes of Blockbuster and Movie Gallery. It didn’t take long for its competitors to fall to the wayside.

Acting on its motto of user flexibility over corporate efficiency, Netflix launched its first original series, House of Cards, in 2013. Since the immense success of the show, Netflix has drastically increased the amount of original content it produces. By offering captivating, on-demand content, Netflix has forced cable companies to reconsider the way they do business.

While networks greenlight new shows based on metrics, Netflix has offered contracts to showrunners for an entire season or two upfront. It also started giving entire seasons to audiences at once. (Binge-watching, anyone?) Most TV networks can’t afford to give up the ad dollars earned from the one-time-weekly dissemination model.

Netflix has also given showrunners creative freedom without corporate restraints, which has led to some of the platform’s biggest hits like Orange Is the New Black. Netflix is making it much harder for network television to secure top-notch talent.

In perhaps its best move against traditional networks, Netflix got aggressive in collecting data from its users. First used to help suggest appealing content to users, Netflix shifted and began to use the information to define which kinds of content it should create. Using this model has led to sky high rates of success with new shows.

Sealing the deal, a Netflix subscription is much more affordable than cable service. Starting at just $7.99 per month, Netflix is just a fifth of the price of some cable packages. Furthermore, there are no ads. No one likes sitting through 15 minutes of ads per 45 minutes of content, and that’s exactly how TV makes the bulk of its revenue. Canceling cable is the top fear of TV networks. If unbundled, they would have only their own merits to contend with. Netflix’s continuing success puts constant pressure on television networks.

 

 

Sources:

https://qz.com/1295998/netflix-is-making-it-harder-for-tv-networks-to-make-tv/

https://www.telegraph.co.uk/on-demand/2016/11/21/how-netflix-changed-the-way-we-watch/

The Corruption Perceptions Index

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It seems as though daily someone gives another push to the revolving door that is scandal in the Trump administration. Last week, it got quite the shove, as Trump’s former personal attorney Michael Cohen said in court that the president had directed him during the 2016 campaign to pay off two women who claimed they had affairs with Trump. Cohen’s accusation implicates the president in a federal crime.

Many across the country—and across the world—see the Trump administration and the United States as heavily corrupt. The U.S. is, however, the 16th least corrupt country in the world, according to the Corruption Perceptions Index (CPI), that is.

The CPI is published yearly by Transparency International (TI), an NGO dedicated to fighting global corruption. It is perhaps the best-known measure of corruption worldwide. The CPI ranks 180 territories on a scale from 0 to 100. The closer the country’s score is to 100, the better that country prevents government corruption. A score below 50 implies the country has deeply-rooted issues with corruption, while a score below 30 suggests the country is capable of meddling in a U.S. presidential election wherein the winner of that election might go against all American intelligence officials and deny the country guilty of any wrongdoing. Just kidding. But it does suggest that corruption for the country is as basic as borscht.

The CPI takes into consideration the results of 10 surveys and studies conducted by a range of institutions. Sources include the World Bank, the African Development Bank, data from the Economist Intelligence Unit, and executives at the World Economic Forum. Transparency International evaluates the quality of studies gathered and employs a team of both in-house and independent researchers to assist in original data collection.

Participation in corruption can affect an organization in negative ways whose effects are felt long-term. In many cases, corruption causes inefficiency, especially when funds are wrongfully used. Bad press is sure to follow instances of realized corruption, likely causing customers to lose confidence in its business practices. An organization’s damaged reputation discourages possible business partners from becoming involved.

At this point, the company might need an entire public relations campaign to regain its footing, costing both time and money. This dedication of resources might rob another area of the company of the attention it needs, exposing inefficiencies and potential financial losses. This scenario can be applied to an entire country and its economy.

Corruption is discouraged when there are tools of accountability in place. They promote a culture that values stout ethical practices while maintaining a system of punishment for those who breach standards. Companies can minimize corruption by implementing easy ways to report offenses.

It’s still unclear whether or not Trump will ever be prosecuted for any instances of corruption, but it’s doubtful that he’ll retain the services of Michael Cohen if he is.