The Problem with Re-training


The Problem with Re-training

It is almost a drumbeat, what American workers need is more education, more technical and skill based education to fill the jobs coming open today. 

The Problem with Re-training
The Problem with Re-training

There is undoubtedly a certain amount of truth to this. But there are other factors in American jobs, in American hiring, to call much of this re-training into question. I have serious doubts that re-training can be successful without some necessary policy changes at the national level.  

The policies that made it easy and profitable to move American jobs overseas are still in place and, in fact, with the new TPP (Trans Pacific Partnership), it will be even easier to move jobs overseas. 

Picture yourself as a corporate executive. You’re a CEO and you have built a company with highly skilled workforce. You get a salary of about 250K a year and you have directly owned stock worth about a half million and an option to buy about two million more. Your company pays around fifteen million a year and has profits of around thirty five million. 

You have 120 workers who were trained to do these technical tasks at a local college under the auspice of a state mandate to train workers in direct response to local needs. You and your investors asked for the college to focus on the kind of training you needed and the college responded. You received grants from the state and the federal government to start and develop your business of around seven million dollars and they required you to operate in the state and in this country. However, this requirement was for five years and that time has expired. 

If you move the jobs overseas, you will be allowed to deduct all of the moving expenses. So, the actual move will cost you little or nothing.

The company’s stock may well double in value as the move will be fully publicized in the financial press. Speculators will buy up the stock and the value will probably rise as much at least as much as 50%. That means that your half million in stock will become worth three quarters of a million and do I need to talk about the stock options? – The potential profits are enormous. 

If that isn’t enough there are enormous tax advantages in moving your business outside the United States. Here’s a quote from the web site – Sovereign Man: 

However, the real tax advantage from running an offshore company as a US citizen doesn’t come from direct tax savings. It comes from tax deferment, meaning you postpone the payment of taxes into the future. If you run a business overseas and reinvest profits within the company you can defer taxes indefinitely. Let’s say you have a profitable company overseas. Now imagine that instead of paying taxes on your profits every year you can reinvest that capital in your offshore company every year for 30 years, and only pay taxes if you decide to sell the company after 30 years. Being able to reinvest your capital tax-free combined with the power of compound interest makes this a truly exceptional opportunity.

So the government subsidizes on an enormous scale the movement of businesses overseas and for those businesses to stay there. 

It is very difficult to move a business overseas and not make a profit. You can be fairly incompetent and still make a lot of money. In fact, financially the move may not make any financial sense at all. You may not be able to find the kind of skilled labor you need. You may not even be able to generate a profit with the limitations of the foreign supply chain. But for those quarters of the year that you were moving and during that period of stock speculation, a lot of money was made and business people in America are not trained to look at the long term but the next quarter. 

How will our re-training of American workers make a long term difference in their lives when the CEO, the Board of Directors and the Stockholder have a strong financial interest in moving the company once it is established? And there is the additional factor that any company remaining in the United States is in competition with American companies that have already moves overseas and are now largely relieved of their tax burden. How will they be able to compete without pushing down wages or, perhaps, even moving overseas themselves? 

And if those who have undertaken the arduous task of being trained and re-educated do find a company that offers them good jobs, what kind of salary and benefits can they expect when they are subject to the downward wage pressure that this international job movement creates? What kind of job security will that be? 

James Pilant

the Fighting T

For My Students, The Poisoner’s Handbook


The Poisoner’s Handbook – The Standards for The Rest of The America – YouTube
https://www.youtube.com/watch?v=gKhcb0-xeGo

I had the wonderful pleasure of seeing this film last night. It’s an amazing exploration of the history of poisons and poisoning in New York from the period of the 1920’s to the 1950’s.

p0075-imageAnyone, with any interest in Business Ethics or more simply, Business Law, will find this documentary utterly fascinating.

Watching this film will help you develop an understanding of how it came about that the federal government regulates food, cosmetics, industrial chemicals and medicine. Modern economic regulation was not inevitable. There were people and events that shaped the thinking of those generations. Understanding this and getting a grip on the history of those times enable one to understand what would happen with the abandonment of these regulations today.

For my students reading this post –

Now, you don’t have to watch it. There is no extra credit. Watching documentaries, reading and thinking are part of the pathway to becoming an educated and full human being. If your education only takes place in the classroom or when you are doing homework, then once you leave school, it stops. The quest to be a powerful and understanding individual should not stop with a diploma and the willingness to take time and effort to continue that quest is one of the ways, you can set yourself apart from those who look at the world of the philosophy, art, music, the sciences, etc. as just work, an unfortunate labor they must do to get a diploma and a job.

You are member of a new and vibrant generation upon whose shoulders the responsibility for future of this nation rests. Working to be exceptional, putting for the effort to be the best at what you do, will be good preparation for the challenges ahead of you.

James Pilant

The End of Subcontracting as We Know It?


The End of Subcontracting as We Know It?

This afternoon the National Labor Relations Board ruled that in many cases an employee of a sub-contractor is joint employee of both the sub-contractor and the contracting company.

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The End of Subcontracting as We Know It?

How do you determine who is joint employee? It would appear that the board is going to use some of the same standards used to determine whether someone is an employee or an independent contractor.

It’s about time.

The practice of sub-contracting janitorial services, etc. has long been a cover for labor abuses. Companies have been using sub-contracting to evade labor laws and avoid the consequences of poor working conditions and sub-standard pay.

Can I document this kind of abuse? How about hereherehere or here?

We’re talking about using sub-contractors to commit fraud in non-profits, government contracts and Medicare. We’re talking about using sub-contracting to create sweat shop conditions while providing deniability to the principal company.

This was long overdue and it is of critical important because this kind of subcontracting is almost an endemic practice by American businesses. It’s about time that an employee of a company employed through what is essentially a shell company is considered an employee of the main company.

James Pilant

From the NLRB web site:

In the decision, the Board applies long-established principles to find that two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law;  and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will – among other factors — consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so. 

From The Hill:

The National Labor Relations Board on Thursday handed down one of the biggest decisions of the Obama presidency, ruling that companies can be held equally responsible for labor violations committed by their contractors.

At issue is whether waste management firm Browning-Ferris is responsible for the treatment of its contractor’s employees. The Houston-based company hired Leadpoint Business Services to staff a recycling facility in California. 

The labor board determined Browning-Ferris should be considered a joint employer with the Phoenix-based staffing agency. As a result, the company could be pulled into collective bargaining negotiations with those employees and held liable for any labor violations committed against them.

This is a sharp departure from previous labor laws that hold companies responsible only for employees who are under their direct control by setting their hours, wages, or job responsibilities. Companies could avoid those requirements by hiring staffing agencies and subcontractors that deal more closely with the workers.

Work Hard or Go to the Right School?


Work Hard or Go to the Right School?

Many Americans, probably most, belief in merit. They believe that if you work hard, do the right thing and achieve that they will be rewarded and that reward will be in some relation to the effort put out.

But is merit actually rewarded?

29There is strong evidence that we live in a two tiered society. Two groups of people, one a group of the very well off are able to afford the finest private schools for their children as well as many other advantages. The other, those whose children are relegated to the public or charter school systems will almost never rival the success or income of the first group.

Currently there is a Ivy League Prep School under a moral cloud for the male student’s custom of scoring points by having sex with the a certain of co-eds. I am unhappy that this is apparently taking place. But there was more upsetting news in the article. What I then read is quoted at the bottom of the page but let me pull a section out.  –

Secretary of State John Kerry graduated from St Paul’s in 1962, alongside former FBI director Robert Mueller. Doonesbury creator Garry Trudeau is an alumnus as are 13 US ambassadors, three Pulitzer Prize winners, two World Series of Poker winners, actor Judd Nelson and sons of the Astor and Kennedy families, according to the school’s website.

This is where the one percent go. This is where the connections that lead to wealth, influence and power are made. This is the difference between struggling to make a living and a golden road of unending triumph.

Perhaps this doesn’t disturb you. Maybe you believe that you have earned your station in life?

But I am a teacher. I have college students who I am very proud of. And I have every reason to be proud of them. Every day I teach I see their obvious intelligence, their willingness to do more than necessary and an understanding that there are things that are very wrong in our society and that they will be called upon as a duty to remedy these failings.

And not for one moment at any time, do I consider my students to be less talented, less motivated and lesser people that the privileged few who have the opportunity to attend St. Pauls.

Nevertheless, I am aware of the tragedy clearly expressed here. Merit is not being rewarded. Parental income is being rewarded. Can there be anything clearer thatn that success in this society is only partially based on merit if it carries any weight at all?

Not one of my students, no matter how talented, no matter how kind, how genuine, how hardworking or intelligent is likely attain the success of the worst student at this prep school.

That’s wrong.

The very idea of business ethics implies merit. It implies that you hire based on capability. It implies fairness and square dealing, honesty in negotiation and a desire for mutual benefit.

I have met business people who roll their eyes when I say these things and look at me with the contempt one would have for a foolish child.

I welcome their contempt. I welcome their disdain. There is some justice in this world and a final justice in the next. I have faith in the necessity of the one and the inevitability of the other.

My students should have the same chance as those that go to elite prep schools. In fact, we should all be judged by our individual merits rather than who are parents are and what school we went to.

And when businesses hire on any other basis than merit, they have failed a fundamental test of business ethics.

James Pilant

 

Rape case puts focus on elite prep school’s alleged sexual tradition | US news | The Guardian

Founded in 1856, St Paul’s is an Episcopal school nestled on 2,000 pastoral acres (800 hectares) on the outskirts of downtown Concord, New Hampshire’s capital. It enrolls about 530 students and admitted girls for the first time in 1971. Tuition, room and board currently totals $53,810.

The school belongs to the Eight Schools Association, a sort of Ivy League for prep schools in the US north-east.

Secretary of State John Kerry graduated from St Paul’s in 1962, alongside former FBI director Robert Mueller. Doonesbury creator Garry Trudeau is an alumnus as are 13 US ambassadors, three Pulitzer Prize winners, two World Series of Poker winners, actor Judd Nelson and sons of the Astor and Kennedy families, according to the school’s website.

The school also has a robust international presence: 17% of the 2014-15 class came from 25 countries and notable alumni include Bernard Makihara, the former CEO of the Mitsubishi Corporation, and Edmund Maurice Burke Roche, a Conservative member of the British Parliament and the maternal grandfather of Diana, princess of Wales.

via Rape case puts focus on elite prep school’s alleged sexual tradition | US news | The Guardian.

Cooked Like a Tuna


Cooked Like a Tuna

i_236Three years ago, a worker at a tuna plant was slow cooked to death in a giant pressure cooker with six tons of tuna. (Please read the brief selection from the Guardian below my commentary.) The federal government has a surprising number of rules about the necessity of not killing your employees. In this case the rules being dealt with are the “lockout tagout” rules and cover employment situations where such precautions are necessary like the 12,000 lb. capacity ovens at Bumblebee.

Some writers on the web have pointed out the similarities of this incident to one of the stories from Upton Sinclair’s The Jungle. This is from the end of the book’s Chapter 9 –

... Worst of any, however, were the fertilizer men, and
those who served in the cooking rooms. These people could not be shown
to the visitor,--for the odor of a fertilizer man would scare any
ordinary visitor at a hundred yards, and as for the other men, who
worked in tank rooms full of steam, and in some of which there were open
vats near the level of the floor, their peculiar trouble was that they
fell into the vats; and when they were fished out, there was never
enough of them left to be worth exhibiting,--sometimes they would be
overlooked for days, till all but the bones of them had gone out to the
world as Durham's Pure Leaf Lard!

Of course, the feds took little interest in such things at the time, The Jungle, was published.

There are many today who sincerely believe that businesses will self-regulate if the feds would only step away and allow the invisible hand of the free market to rule. This is one of the beliefs held by Milton Friedman in what must be considered one of his more comedic moments. The idea that humans will become kind and good and willing to suffer monetary loss for worker safety if only the government would step away is more appropriate for small children than adults with experience of a capitalist society.

James Pilant

Bumble Bee Foods settles for $6m in death of worker cooked with tuna | US news | The Guardian

Jose Melena, 62, died three years ago in a 270F oven at the seafood company’s Santa Fe Springs plant after a co-worker mistakenly believed he was in the bathroom and filled a pressure cooker with six tons of canned tuna.

“This is the worst circumstances of death I have ever, ever witnessed,” said deputy district attorney Hoon Chun, who noted he had tried more than 40 murder cases over two decades. “I think any person would prefer to be – if they had to die some way – would prefer to be shot or stabbed than to be slowly cooked in an oven.”

Bumble Bee, its plant operations director Angel Rodriguez and former safety manager Saul Florez had each been charged with three counts of violating Occupational Safety & Health Administration rules that caused a death.

via Bumble Bee Foods settles for $6m in death of worker cooked with tuna | US news | The Guardian.

A German Fantasy


A German Fantasy

Reading as I do about the crimes and stupidities of humankind in the field of ethics, it is hard to surprise me, even harder to astonish me. And yet, today that happened. The German ambassador to the United States wrote an essay entitled, “Germany Wants a Strong Greece.” And that is easy to believe if I wipe away the memories of the last five years.

Greece wants a strong Greece. Yes, when the Russians bombed Helsinki in 1939, the Russian foreign minister, Molotov denied it and said they were dropping bread to the poor oppressed people of the city. Maybe the Germans will drop a similar brand of bread on Greece. After all the Greeks are poor and oppressed.

A German Fantasy
A German Fantasy

Forgive me if I sound angry but I seem to recall an IMF study that shows under the agreement imposed almost entirely by the German Minister of Finance, Greece will not be able to pay off its debt in fifteen years and quite possibly never. Call me a cynic but a fifteen year period of austerity (possibly for much longer, eternity?) doesn’t sound like a deal someone made with a great love for the Greeks.

The events of the last few weeks include a refusal to deal with Greece by the European Union until it agreed in advance to their demands. Once this had been done, the Greeks were made to sell off 50 billions Euros worth of government property which is to be placed safely outside Greek control. The agreement doubled the sales tax in Greece putting the hammer down on any hope of a healthy tourist industry, one of Greece’s vital sources of revenue. I could go on, but why bother? It’s item after item after item.

The only large group of people who believe that the Germans have been kind to the Greeks are other Germans.

The Germans have almost single handedly imposed an economic regime on Greece which is almost certain to fail. The hardship imposed on the Greeks in roughly equivalent to that endured in the United States during the Great Depression and if the International Monetary Fund is right, it could last for decades.

Does that sound like a strong Greece?

Maybe the German word for strong means servile, weak and helpless?

I’m use to corporate flacks saying anything they are told to. But this? Maybe when you have needlessly crippled a country so that it will never pay off its debts, maybe when your own enormous debts have been forgive twice in the last century, maybe when you appear to all the world as great cruel bully, you should just keep a low profile?

Or maybe your self-righteousness is so overpowering, you just can’t believe that everyone just needs a little push to understand how wonderful you are. This is a German fantasy. The real surprise is that they apparently believe they are kind and generous, acting out of a genuine concern for the Greek people. God save all of us from that kind of love.

James Pilant

Germany Wants a Strong Greece | Peter Wittig

Germany wants a strong Greece, because a thriving Greek economy benefits the eurozone as a whole. This is why Greece and the other 18 eurozone members agreed on a comprehensive reform package that will help Greece regain economic competitiveness. Some of these reforms were quickly approved by the Greek parliament — by an overwhelming majority. They will make Greece more competitive and economically sound.

via Germany Wants a Strong Greece | Peter Wittig.

Reason is Basic to Decision Making in Business Ethics


I was on Facebook the other day, and one of my relatives posted about Obama’s visit to Oklahoma. I spend the first 44 years of my life there and many of my relatives still live there. Some of the comments were, in my mind, bizarre. Obama was evil incarnate according to these individuals. One comment stood out. The writer claimed that anything whatsoever that Obama said was a lie. That is really over the top. It’s simply not possible to lie about every single thing. How would a person who believed such a thing have any opportunity, the smallest chance of analyzing a federal policy in terms of logic or benefit or usefulness with that kind of idea in mind?

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Reason is Basic to Decision Making in Business Ethics

I remember a few years ago, a famous cartoonist came out against Obama. He said it was because Obama was enforcing the federal marijuana laws against states where it had been legalized. I always thought that he had formulated a reason that made sense, not only that, he had taken a stance that the President or his administration could take notice of and change that decision if they so desired. You can change policy but if someone just hates you, there really isn’t anything you can do.

I have opposed Obama since the middle of the first term. I write about business ethics and his stance on that issue has been disastrous. Millions of Americans, who had been misled about the prospects of home ownership, often by deliberate fraud, had their homes taken from them. The government failed to act to save them or prosecute the venal thieves who took the most valuable thing that these people would ever own in the lives. And besides overlooking these crimes, the government under Obama’s leadership, failed to use the criminal law to prosecute the banks for their crime.

I taught business ethics against a backdrop of the federal government of the United States taking the law and making the biggest corporate crimes in the history of the world, a matter punishable by fines, a cost of doing business that has resulted in nothing but a wave, a moving wall of wrong doing that could right now take the world into a second financial catastrophe. It is a dereliction of duty that I cannot forgive or forget. Instead of taking the opportunity to make the international banking system a safe bulwark for the wealth of peoples and nations, it is now an international casino wreaking havoc upon weaker nations and constantly searching for the next shill, the next big score, knowing with absolute certainly that if they make a mistake they will be rescued with public money and at worst penalized with a fine. They have taken a nation of law that was often imperfect and created a two tier system where the wealthy and well connected walk free no matter what they have done.

But, once again, I, like the cartoonist I mentioned earlier, have an actual reason to oppose the President. I oppose him on a policy basis. This is principled upon the idea that in a democracy, we can stand for different things.

I’m a business ethics writer. So, it is entirely appropriate to ask, what about business ethics am I trying to say?

Very simple, for a few hundred years, Western Civilization, in particular, the United States, has been conducting an experiment in whether or not people can rule themselves. Democracy is a difficult process and the American example has features that made it even more difficult: for instance, a bifurcated legislature and three part government beset by “checks and balances.” This form of government requires opposing parties to cooperate in at least a minimal manner for government to function. Unreasoning hatred makes this impossible. 

And there is another factor, the Enlightenment. The founders believed that their dramatic compromises (they clearly understood the foolishness of the two house legislature) would be mitigated by the enlightenment values of knowledge and reason. This nation, its businesses, its corporations, its legal systems, ad infinitum is meant to operate in a thinking environment of reason and logic. 

How do you talk about ethics and good decision making in regard to the Presidency or any other issue, when human reason is removed from the equation? If instead of talking about the facts, we just emote?

Don’t for a minute doubt the temptation to hate in business ethics. When you review the millions of Americans who have and will have their property stolen by banking institutions most commonly investment banks, it is difficult to write without emotion. The knowledge that conscious evil wrong doing is not only tolerated but rewarded by billions of dollars in salaries, stock shares and other benefits is difficult to take.

This is what I want to say. Business ethics cannot function in an environment of unthinking emotion.  We can only find our way as a free people by thinking with reason and facts and only then acting.

I know that reason and logic are often slow and they are often tedious. They often lack the black and white certainty of 1940’s Western or the latest article in any of countless blogs but they are the means by which the best decisions can be made.

James Pilant

Why We Fight


Why We Fight

Or Why Business Ethics Matters

ill_p384bLast month, I had an unusual experience, a week with very few business ethic issues. For a brief few days, it was hard to find a topic to write about. But that brief interruption in a cascade of moral decrepitude is over.

This week we have ExxonMobil caught paying millions to climate deniers after promising to its shareholders not to. This week we had the publication on the Internet of the 542 page Hoffman Report. It would appear from the report that members, psychologists, cooperated with the government in the practice of torture and that senior members of the American Psychological Association crushed attempts at inquiry and accountability.

And then we have bird flu. For many years, it has been argued that factory farming is dangerous to food production in the United States because this grouping of enormous, unprecedented populations of animals in small spaces with little genetic diversity is a formula for disaster. Well, now we know for a fact that this is true. Forty-eight million birds are dead and many more are going to die. We are very lucky in that the outbreak has thus far been limited geographically but what would have happened if we had been less lucky? – A future without chickens?

This is a business ethics issue. If you are operating a business based on an unsustainable model, you are not being ethical. If you are operating a business that endangers a major portion of the food supply for nations or the planet as a whole, it would be ethical to not or to take steps to limit the damage.

Etc.

You get the idea. Throw in the Greek Crisis which I have written about here and here, and it has not been a good week for business ethics.

Sometimes, people infer that there is no such thing as business ethics and they point to the evidence of the daily headlines and published reports of business crime and stupidity.

But this isn’t true. Regularly there are stories of businesses sacrificing profit to do the right thing. There are stories of businesses that have held their employees even upper management liable for their crimes.

More importantly, there are tens of thousands of close or small corporate entities that have never and would never consider an illegal act and would shy away from the unethical. This includes most local banks and most professionals, doctors and lawyers.

We who struggle to encourage doing what is right by ethics and morality have not lost. If evil doings were pervasive in American markets, few would do business because without trust, capitalism does not function. For markets to work there must be a basic faith in fair and honest dealing.

Americans are a great and good people. It is just that the evil among us wield disproportionate influence in key industries. I realize that they have done catastrophic damage and these same people are protected from facing criminal and civil penalties by a government corruptly influenced by massive amounts of money. (Or should I say “corporate speech.”)

But they could not make enormous profits from a weak and villainous people. It is the very goodness, the basic humanity and hard work of the American people that gives the unethical and the immoral the opportunity to become rich.

We, the ethical and moral, are duty bound to struggle for what is right and true Victory is not inevitable. It never is. But that does not mean that the fight is pointless. Even in defeat, there is a glory in the fight well fought and a glory in having fought on the right side.

James Pilant

An Ambush by a Psychopath

An Ambush by a Psychopath


An Ambush by a Psychopath

David Dayen wrote the quote from which I take my title. Here’s the line –

As a side note, some in the Greek government did in fact see this coming, if you believe former Finance Minister Yanis Varoufakis. But to prepare for such sadistic behavior on the part of the central bank is akin to preparing for an ambush by a psychopath.

An Ambush by a Psychopath

An Ambush by a Psychopath
An Ambush by a Psychopath

I think my title is entirely appropriate. What we have here is an assault on a nation’s sovereignty and integrity on the same scale as on a nation that lost a war. This more resembles a dictated peace to a conquered people than an economic agreement.

Let’s be absolutely clear. By the International Monetary Fund’s own research, the Greeks cannot pay their debt under this kind of plan. It isn’t possible.

Let me quote from The Guardian: 

Putting into question its involvement in the bailout, the IMF report paints a far darker picture of Greece’s public finances than contained in the blueprint released at the end of the marathon eurozone leaders’ summit on Monday.

“The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date – and what has been proposed by the ESM,” the IMF said, referring to the European Stability Mechanism bailout fund which will be used to bankroll the Greek bailout plan.

Throughout the Greek crisis, the IMF has consistently urged deeper debt relief but has met resistance from European finance ministers, who have been unwilling to make their taxpayers pay the cost of a write-down.

Tsipras has also insisted that debt relief must form an important part of the package, but the Eurogroup statement on Monday said only that further measures might be taken provided Greece adhered in full to the reforms demanded by its creditors.

This isn’t about money. You would have thought with all this talk about the financial crisis and the amounts of money being thrown about on this and that, not to mention the incredible savagery and just plain nastiness of a horde of editorial writers condemnation of the Greeks and their government, that this was about financial responsibility and the payment of loans. It’s not.

I’ve already established above that the IMF says this deal can’t work. I read a good part of that leaked report. Basically it says that the Eurozone’s terms are impacting the economy so dramatically, the Greeks are not going to be able to generate enough growth for rising income to make possible debt repayments in the amounts now contemplated. More bluntly, the economy is so badly damaged by austerity, that they will never be able to pay back the debt.

So, if it isn’t about money, what is it about? David Dayen has his point of view as follows:

None of the satellite countries in the German empire missed the message. Step out of line, try to reverse an austerity agenda that has brought recession, if not outright depression, to the countries forced into its maw, and you will be pulverized, humiliated, forced to grovel and beg forgiveness.

Of course, that’s almost identical to what I said yesterday:

... Whole nations, states, counties and communities can get into financial trouble and if we do, who we will turn to for help? Banks, the IMF, or state imposed administrators, technocrats from business, banking and corporate law will be our only choices and what will they demand? You can see it right here, right now. This will be the prototype in the future for dealing with creditor governments, whatever their size. If we have a great a power differential like they have in Greece there will be no negotiations. You will accept what is offered to you and you will do it without question. And above all else, forget that democracy thing.

What is being implied her is that it is not the people that are sovereign; it is the international financial system of interlocking banks, finance ministers and multinational corporations.

David Dayen is angrier at Germany and with good reason. But I think the Germans are not so much imperialists in the traditional sense but modern neo-liberals who see reality in just one way, a world of “makers and takers.” 

Just like in the United States, we’re not talking so much about money as we are talking about virtue, and a lack of virtue must be punished.

The Germans view themselves as moral arbiters punishing the unworthy. They are cheerfully forgetful about their banks part in the debacle, suffer incredible amnesia over other nations’ forgiveness of its debts in the past and have forgotten all about the profits made from Greece on German weapons’ sales (Remember the 130 Leopard 2A4 type tanks?)

And who lacks moral virtue more than anyone else?  – The undisciplined mob, the people, the ones who keep the good honest virtuous bankers from their just deserts. You know, the people, the greedy ones that want retirement when they’re old and medicine when they’re sick and some form of government assistance when the “right” people tank the economy periodically.

The people of Greece got out of line. They weren’t virtuous. When they were told to go without jobs, without benefits, etc. etc., they got mad and their anger translated into votes. How dare they?

David Dayen says this is a warning to other members of the European Community. He is right and wrong on this point. He is right in that the Europeans are being sent a message but wrong about where the message is really intended.

It’s for all of us, certainly, the towns, counties, cities and states of this United States. We are all being warned. We are being told where real power lies and that obedience is expected.

James Pilant

An Ambush by a Psychopath

The rise and fall of the German Empire: What Greece’s crippling bailout deal reveals about the future of Europe – Salon.com

(As a side note, some in the Greek government did in fact see this coming, if you believe former Finance Minister Yanis Varoufakis. But to prepare for such sadistic behavior on the part of the central bank is akin to preparing for an ambush by a psychopath. There’s not much for one to do.)

None of the satellite countries in the German empire missed the message. Step out of line, try to reverse an austerity agenda that has brought recession, if not outright depression, to the countries forced into its maw, and you will be pulverized, humiliated, forced to grovel and beg forgiveness.

via The rise and fall of the German Empire: What Greece’s crippling bailout deal reveals about the future of Europe – Salon.com.

No One Here Is Elected


No One Here Is Elected

Below is a quote from an article from Huffington Post. It is reported in it that the Eurozone is not just demanding that Greece capitulate to its desires, they must do it before negotiations can even start. There is not even the semblance of respect for a nation state or its people.

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No One Here Is Elected

Picture yourself in negotiations. You’ve gotten behind in your mortgage and you want more time. The bank says that before they will even talk to you, negotiate with you in any way, you must sign over your income and submit to the banks’s recommendations of how and what kind of work you should do. That’s what the Greeks are being asked to do. Take all your bargaining chips off the table. Only when you are powerless and helpless, will we deign to speak to you. Give in now and we may show mercy.

There is really not much historical precedent for this. The only thing I can think of are the Austro-Hungarian demands on Serbia to yield up its sovereignty in the wake of the assassination of Archduke Ferdinand.

There are five things about these bailout talks that really bother me. First, the unfairness of it. To start with, the bulk of the bailout money has gone to foreign lenders and little has been used to bolster the economy. Second, we’re not dealing here with sovereign states or even groups of sovereign nations. We’re dealing with finance ministers and technocrats, essentially international bankers. They’re not elected. They can’t be voted out. Essentially, they can do pretty much what they want and the only people they are beholding to are other bankers. Democracy is irrelevant. Third, the Greek people are suffering terrible pain. The unemployment rate is more than 25% and the youth unemployment rate is more than 50%. And I can on and on about the other damaging effects of austerity. Fourth, the Greeks are being told with great specificity what they must do. The Eurozone is making a mockery of the power of national governments to conduct their own affairs. The Greeks want to impose a tax on businesses. The Eurozone says no. But the Eurozone doesn’t stop there. They tell the Greeks how they want the money raised and expect them to do it. They want a value added tax (VAT) and cuts in pensions. There’s more but you get the idea. The Greeks want to do a variety of things to raise revenue and the Eurozone and the IMF are staying on script: privatization, lower income taxes, cuts in social services and reduced regulation. And the last thing that bothers me and most important, it can happen to us. Whole nations, states, counties and communities can get into financial trouble and if we do, who we will turn to for help? Banks, the IMF, or state imposed administrators, technocrats from business, banking and corporate law will be our only choices and what will they demand? You can see it right here, right now. This will be the prototype in the future for dealing with creditor governments, whatever their size. If we have a great a power differential like they have in Greece there will be no negotiations. You will accept what is offered to you and you will do it without question. And above all else, forget that democracy things.

What is being implied her is that it is not the people that are sovereign, it is the international financial system of interlocking banks, finance ministers and multinational corporations.

I am sure that there are people reading this that believe that I am over reacting. Many hold the belief that if the Greeks overspent they should pay the money back. That does not sound unreasonable. But it is the highest level of hypocrisy imaginable to impose conditions that will make paying the debt impossible.

If you were one of my students, I would expect one of you to ask, “How do you know that the Greeks can’t pay under those conditions?” And I, of course, delighted by student intelligence and initiative will reply that the IMF has a paper out saying that they can’t pay under current conditions. Read below from The Guardian.

Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors.

The documents, drawn up by the so-called troika of lenders, support Greece’s argument that it needs substantial debt relief for a lasting economic recovery. They show that, even after 15 years of sustained strong growth, the country would face a level of debt that the International Monetary Fund deems unsustainable.

The documents show that the IMF’s baseline estimate – the most likely outcome – is that Greece’s debt would still be 118% of GDP in 2030, even if it signs up to the package of tax and spending reforms demanded. That is well above the 110% the IMF regards as sustainable given Greece’s debt profile, a level set in 2012. The country’s debt level is currently 175% and likely to go higher because of its recent slide back into recession.

So, the Eurozone already has evidence that they are essentially putting Greece into a state of permanent depression. Why would they want to that?

They aren’t saying. But I have a theory. All over Europe, there are people who are worried about what’s happening. Like me they wonder why nation states should bow before financial interests. They wonder why whether people should go without education, pensions and healthcare while the rich have a reduced tax burden and they pay higher taxes for less and less. They wonder much the same way we do in the United States, why their votes matter so little. Greece is an example of the power that can be brought on any show of defiance. Questioning the economic order has consequences, severe consequences. Don’t vote, comply. Economic value is the sole determinate in policy and practice. Humanity, compassion, honor, patriotism, and Christianity are all irrelevant concerns. The money must be paid, not to the people, not to the governments but to the banks. It is the money that votes.

James Pilant

Eurozone Leaders Meet, As Greece’s Debt Crisis Talks Continue

Euro zone leaders told near-bankrupt Greece at an emergency summit on Sunday it must enact key reforms this week to restore trust before they will open talks on a financial rescue to keep it in the European currency area.

Leftist Prime Minister Alexis Tsipras will be required to push legislation through parliament to convince his 18 partners in the euro zone to release immediate funds to avert a state bankruptcy and start negotiations on a third bailout program estimated at up to 86 billion euros ($95.5 billion).

Six sweeping measures including tax and pension reforms must be enacted by Wednesday night and the entire package endorsed by parliament before talks can start, a draft decision by Eurogroup finance ministers sent to the leaders showed.

via Eurozone Leaders Meet, As Greece’s Debt Crisis Talks Continue.