The Ethics Sage Talks About Price Gouging

The Ethics Sage Talks About Price Gouging

The Ethics Sage latest post deals with price gouging in prescription medicine. He discusses the social responsibility of business and goes into some detail about his preference for a free market solution.

i_454I am more and more convinced as time has gone by that the pharmaceutical companies have failed in serving the public and that some kind of government intervention to prevent price gouging and selling prescription medicines for other than their FDA approved uses is going to necessary.

However, the Ethics Sage is worthy of reading. You should put him in your favorites, visit often and perhaps, even sign up as a follower.

Below is a selection from his latest essay. I recommend you visit his web site and read it in full.

James Pilant

Recently a group of 118 oncologists came out in an editorial in the Mayo Clinic medical journal to support a grassroots patient effort to push for fairer prices from drug companies. According to the editorial, many cancer patients are bankrupted by the high cost of care even for insured patients for treatment that costs $120,000 a year. The proposal is to get it down to $30,000 in out-of-pocket expenses – more than half the average U.S. household income. According to the editorial, the drugs are so high that as many as 20% of oncology patients don’t take their medication as prescribed. I believe it may be better to mandate catastrophic insurance coverage. Under Obamacare, if you are under 30 or obtained a “hardship exemption” you qualify for a high deductible, low premium, catastrophic plan. What about those over 30 who are more in need?

Greed is good. Greed is right. Greed works. These are the words spoken by Gordon Gekko in Wall Street. We could say this is the mantra of greedy CEOs of pharmaceutical companies. In a 2014 survey by Fierce Pharma, a news outlet for the industry, the average pay of the 10 top CEOs of big Pharma was about $30 million. None of the companies were in the Fortune top 100. Celgene was number 369, the highest in the industry. The CEO of Celgene earned $36.61 million. This seems out of line given the relatively small size of most pharmaceutical manufacturing companies.

Teaching is a Calling

Teaching is a Calling

“If you don’t like the money, you can find another job,” A college administrator once told me.

lotr_09thThere was no concern about the process of de-professionalization of college teaching. There was no concern about an adjunct salary slightly above a fast food worker. There was no concern about the likelihood of having to rely on the charity of food banks and government services when you possess a terminal degree.

Do something that pays more. That’s the answer to any complaint, anywhere in the society, anytime. Such is the prevailing conventional wisdom.

If the free market produces just and perfect results and it must by the nature of its neo-religious believers, than the status and pay that you receive must by the very nature of a competitive society be just and honorable.

It isn’t. It is neither just nor honorable, and it is not based on any known concept of fairness. It is simply a matter of the strong taking from the weak in pursuit of a set of policy objectives.

This process takes its toll on those of who try to work in this profession. I tell my colleagues that just as soon as the students understand our actual salaries and our relative importance to administrators and legislators, they are going to treat us with the same contempt we receive from them. They’re going to wonder that since they paid good money to be taught, why a glorified fast food worker should have any authority to question them as to their understanding of the subject matter. For after all, if your salary is the primary indicator of your value, we’re only worth a fraction of the likely salary of our students while our lack of salary is a clear indicator that our work has little importance and that in a capitalist society, we are over-educated failures.

Why do we hold on in the face of the contempt of the politicians, the beltway media, the “very serious” people and every sort and breed of businessman? Because we care about our students. Because when we teach we feel important and empowered. And that feeling is legitimate because as teachers we are in a real way, the creators of our nation, the shapers of the next generation, and the architects of a democratic society.

It is highly likely that in the times to come, history books will discuss education in the United States in this period as the last candle light before the darkness, the last time in which significant academic freedom existed before college and universities became testing centers based on a purely standardized set of programs dictated by corporate needs.

Read below the thoughts of one teacher as she struggles to teach in a difficult environment. –

I’ve often said that the classroom is my “happy place.”  The one place where I can be present; where I can forget about Wisconsin politics, committee meetings, campus and departmental bureaucracy, and just do what I love.  It’s that time of year where most of us are exhausted.  Where we have students who may just now be realizing they’re failing a class and asking for extra credit.  Where we’re already burnt out and we’ve still got 7 weeks left in the semester.  Where we’re counting the days to finals week because we are all so tired.  I’m in that space, too.  I’ve been there before.  But I am grateful, and always will be, to the students now and in the past who remind me why I teach.  Who remind me how much I love doing my job.  And who have clutched me out of the depths of sadness, especially this semester.

Progression of Women by Casey Dye

(This is a guest column by Casey Dye, a colleague.)

i_005Women, since the 19th century, have seen a dramatic increase in the quality of life in most parts of the world. Oppression of women in the form of equality began to subside as women continued to prove they were not inferior to men on an intellectual standpoint. Women were once looked at as property, then as females who couldn’t own any property, to being able to own their own property and have the ability to have their voice heard. The culture of domesticity has faded from today’s society almost entirely, and leaving women to venture after their dreams. Many of these dreams included the furthering of the power of the women’s voice whether it be a movement to end the drunkenness of the American man (Prohibition), or the ability to vote. With the right to vote came the possibilities of a woman being able to divorce their drunk abusive husbands and save their children. From here women began to take control of their lives from who they married, to where they worked, to what they wore. Fashions began to change to create more sensible attire for women in the work force. More than fifty years after the American government freed the slaves they gave women the right to vote showing this was no easy task, but with this new freedom women are now able to enter the public sphere for the first time. This continued to chip away at the idea the women belonged in the home. Social reform through freedom of press and speech for women, along with the increase in capitalism, gave them the opportunity to prove their equality rather than just preach it. Now women hold leader positions in fortune five hundred companies and in those circumstances are getting paid better than most men.

To say women’s fight for equality is over is far from the truth, but for as far as they’ve come they have just steps to go in hopes for true equality. I for one believe in this movement whole heartedly. My mother is a strong independent woman who raised me with respect for women. With this message being passed along we might see true equality in our lifetime.

Economic Immigrants?

Economic Immigrants?

McGraw Hill has decided that slavery wasn’t all that bad. According to their new textbook, millions of “workers” were brought to the southern United States.

Here’s a passage from an article on this unfortunate choice in nouns:

Roni Dean-Burren was also disturbed by the language, and posted about the book online. Her comments went viral and the publisher swiftly decided to rewrite the section.

The offending passage was in pages titled Patterns of Immigration in McGraw-Hill Education’s World Geography book. A colorful map of the US was adorned with a speech bubble which said: “The Atlantic Slave Trade between the 1500s and 1800s brought millions of workers from Africa to the southern United States to work on agricultural plantations.”

From the 16th through the 19th centuries, more than 12 million blacks were brought to the United States in what is called by less neutral observers than McGraw Hill, the Holocaust of Enslavement.

Economic Immigrants?

Why not write American history so it’s easier on our feelings. Let’s feel good about ourselves! Why talk about slaves as if they were slaves? Let’s just bend a noun a little bit and they become workers. After all, they did work? Of course, millions were murdered, tortured and raped, and some may feel that calling them workers might imply that they weren’t murdered, tortured and raped. But weren’t slaves often treated kindly by their masters? Weren’t slaves valued members of their “families?”

I teach business ethics. Every day I read the words of people spouting incredible nonsense and lies. But the sentence, “Weren’t slaves often treated kindly by their masters?” occupies a special place in my heart. You see when you slap the words, slave, master and kindly into a single sentence, you are just talking nonsense. Slaves are not legally human beings. They are things like cattle or sticks. Masters are owners with the right of life and death over these possessions. That a throat isn’t cut on a particular day doesn’t mean it won’t be cut later. That a slave’s chastity is respected for a few hours or a few days does not indicate safety from rape.

Slavery is a crime.

The people who captured the slaves were criminals. The people that shipped the slaves were criminals. The people that bought the slaves were criminals.

What McGraw Hill should have said was this –

The African Holocaust between the 1500s and 1800s brought more than 11 million slaves from Africa to the southern United States to be used on agricultural plantations. Millions died on the journey and afterwards of mistreatment and disease. The Africa Holocaust in terms of numbers ranks as one of the greatest modern crimes against humanity, and is a stain on the history of the United States.

You don’t write textbooks to make people, even Southerners, feel good about themselves. You write the truth. People can’t make good decisions about the future if they don’t understand their past.

It is elementary business ethics that a historical work be accurate. If you are in the business of selling textbooks to build up national myths and legends and feed national self-esteem, you have embarked on a perhaps profitable but immoral pursuit.

And here we come to a basic issue in business ethics. Who deserves the loyalty of the company? If the shareholders and their profits are the only concern of a corporation, then the textbooks should read anyway the customer wants. Slaves were treated kindly, the Wild West was peaceful, the Great Depression not that big a deal, etc. etc. But if the company even a corporation has an ethical backbone, then the customer is not always right. Facts are facts and history is not just a matter of opinion.

James Pilant

The Minutia of Record Keeping?


This snippet below is from the Guardian –

In a conversation with NBC journalist Chuck Todd on a range of criminal justice issues, Lynch said on Thursday that she does not support a federal mandate to report people killed by police.

“One of the things we are focusing on at the Department of Justice is not trying to reach down from Washington and dictate to every local department how they should handle the minutia of record keeping, but we are stressing to them that these records must be kept,” she said at the Washington Ideas Forum, hosted by AtlanticLIVE and the Aspen Institute.


Here’s what I think.

Whether or not a police department kills someone is not a part of the “minutia of record keeping.” 

If we as a people acting through the federal government cannot demand that law enforcement agencies tell us when they kill people, what powers do we have? Are we somehow getting into their “business” when we ask law enforcement to tell us about the minutia of record keeping concerning police shootings?

The only good source for shootings by law enforcement in the United States is the Guardian. Look at it here.  I shouldn’t have to go to a private web site to find criminal justice statistics.

Okay, I’m not a neophyte. I understand the drill. If we actually collect the data, it isn’t going to look good. I already know part of the story from previous research. Some law enforcement agencies have a lot of shootings while many agencies never kill anyone at all. And if that isn’t bad enough, who gets shot and why also varies dramatically from place to place. If you’ve been following the news, once again, you know who I am talking about, the mentally ill. They get shot by law enforcement regularly and under widely varying circumstances.

If the feds require law enforcement agencies to disclose their killings, the world of policing will come under a lot of scrutiny. It is in the interest of many departments not to have their shootings publicized. Why?

In the United States, policing varies dramatically. Some police departments do it right. They don’t get much publicity because competent, professional police departments tend to have fewer PR disasters. But there are “rogue” police departments where there are a lot of shootings, a lot of excessive force and regular charges of corruption. I suspect that a culture that encourages shootings has a downside in other parts of policing.

If the numbers are publicized – if every police shooting is scrutinized, there are going to be changes. As long as police departments are measured only by local or state standards, change is slow and haphazard but if every department is held up to national standards, many people will be surprised at how poorly many of these agencies stack up.

And that is why the feds should require mandatory reporting of law enforcement shootings, to bring national scrutiny to a national problem. This isn’t some book keeping issue. It is a vital issue of what kind of justice we believe in. When law enforcement kills, there is no trial, no peaceful resolution. These kinds of shootings should always be matters of necessity.

James Pilant

The GM Settlement

The GM Settlement

This is what it comes down to. After 124 deaths, General Motors in a deferred prosecution agreement pays the government 900 million dollars. GM has also set aside 575 million to cover private complaints.

The GM Settlement

If GM complies with the agreement, all criminal charges will be dropped in three years. The government says that pursuing criminal charges would have been difficult –

Bharara hinted that criminal charges would be difficult to bring in the GM case. This rationale pervades the White House. President Barack Obama, who for years taught Constitutional law at the University of Chicago, made the same weak excuse, telling 60 Minutes in 2011 that “some of the most damaging behavior on Wall Street, in some cases some of the least ethical behavior on Wall Street, wasn’t illegal. That’s why we had to change the laws.”

Wrong. Fraud is always a crime. Filing false statements under oath, transferring money by wire and mailing documents signed under penalty of perjury constitutes fraud.

David Cay Johnston writing for Al Jazeera is exactly right. What GM did was a series of crimes and they could have been successfully prosecuted. President Obama’s claim that “some of the least ethical behavior … wasn’t illegal” is simple nonsense. I’m an attorney. I can see massive fraud from a considerable distance. The level of deception here is massive. GM sold a defective product that had an often lethal problem to millions of American without warning when it knew the scope of the problem. They did it for years, and the trail of memos and other communications would have added up to a staggering case in which I have no doubt the defendants would have been forced to plead because there was no hope of acquittal.

Justice is supposed to be served by a 900 million dollar fine. How much money did GM make off of concealing this defect? Is there any relationship between the money made and the penalty collected?

In the Old Testament, it is said that blood cries for justice from the ground.

Will that blood be silenced by 900 million dollars? Will the families be made whole by GM’s funds? And is justice served by a fine? Or is this more similar to a medieval knight cutting down a mere serf and paying a small fine for the inconvenience?

When did giant corporations gain immunity for their crimes? When did justice become a routine profit and loss calculation in the accounting departments of these great multinationals?

Today 124 people lay dead at the hands of a major company. Tomorrow, it could be you or your spouse or your child or a parent because why shouldn’t they do it again and again and again?

They made money. I have no reason to believe that GM lost a dime on this transaction. I’m sure they profited. So, why not kill again?

Haven’t you read Milton Friedman? A CEO’s duty is to maximize shareholder value? Here’s a quote –

In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business. He has direct re­sponsibility to his employers. That responsi­bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con­forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.

It can be said that Friedman called for ethical behavior. I’ve never thought so. The word, conforming, is not obedience and “basic rules” are subject to interpretation. It could be argued that GM violated the basic rules of society. You can claim they violated the law and “ethical custom.” But do you really believe that? The law, embodied by the Obama Administration, says that fines are adequate and GM will go on making cars and huge profits in spite of ethical custom.  The “basic rules of society” appear to be little more than tissue paper to be discarded when used.

Our current administration talks a good game –

In a recent speech about efforts to focus on individuals responsible for corporate misconduct, Sally Q. Yates, the deputy attorney general, said that “Americans should never believe, even incorrectly, that one’s criminal activity will go unpunished simply because it was committed on behalf of a corporation.”

But with this settlement, the administration has told the corporate world that this bold statement is nothing but PR, nothing but empty words.

We Americans, we who build and sustain this nation, we who follow the law deserve better.

James Pilant


Cool Ones and Lame Ones

Cool Ones and Lame Ones

There is a town where a boycott has been launched at a coffee shop. 

It’s not surprising that the West Asheville community is protesting and boycotting the coffee shop — especially the female members of it, who learned on Twitter that they’re not human beings so much as “an endless supply of hot young pussy,” or that “there are no ‘special’ girls,” merely “cool ones and lame ones.” The lames ones, according to the Holistic Game blog, “could help themselves immensely by reading a few classic novels and working out a little [but] they get attention regardless, so the motivation to better themselves isn’t present.”

Cool Ones and Lame Ones

So, let me get this straight. Two men create a successful business selling coffee but at the same time take to the internet to brag about how they use their business to pick up women for casual sex. 

This is a failure of business ethics. But bragging about picking up women wasn’t enough for these two entrepreneurs they also had to explain that what’s important about women are some of their component parts and whether or not the “experience” they provided was good enough to be chalked up as another story to be told online. 

Just wonderful. 

Maybe this is one of the grey areas I hear so much about? I am told that business ethics is full of morally ambiguous situations where educated minds can differ. That is just nonsense. Most business ethics problems are simple and straightforward tales of good vs. evil. 

Do you find much moral ambiguity in this one? Two entrepreneurs build a business, use business to get sex, post online about the women in a thoroughly disgusting and denigrating manner – business suffers. Where’s the moral complexity here? 

How about the other stories today? 

We’ve got a former hedge fund manager increasing the price of a lifesaving drug by a mind numbing amount, a food distributor sent to prison for 28 years for shipping contaminated food for years and we have an automobile manufacturer evading air pollution standards for millions of its cars by manipulating the software. Does any of that strike you as morally ambiguous? 

James Pilant

P.S. If you go to the Salon article in full, they have links to the web sites the men posted on. I don’t recommend it. The phrase, “degrading to women,” does not capture the full flavor of their writings. These are not gentlemen.

The Business Ethics Classic, Metropolis

The Business Ethics Classic, Metropolis

As an extra credit project my students can watch the silent film classic, Metropolis, and write a brief essay. They are to tell me in this writing whether or not the film would a useful teaching tool in my Business Ethics class.

There are never more than a few essays written. For this is not the hour and half American version. This is the two and half hour restored version. You might call it the director’s cut.

Here’s the link:

Metropolis (1927) Fritz Lang – Rescore by The New Pollutants – YouTube

An American film company paid for the film to be made but were deeply disconcerted by the powerful social message of the film and had it edited as a sort of halfway monster movie. Thus, the American public was denied the full impact, the power of this amazing motion picture.

This is not so much a motion picture as a prophecy. For today’s one percent closely mirror Fritz Lang’s pampered upper class besotted with their luxuries and unconcerned with the misery inflicted on their brothers buried deep in the earth sentenced by their birth in a lower social class to never ending toil for little benefit.

Not only does the film directly address the unfairness of economic exploitation, it is laden with Biblical symbolism from its references to Molag Bal to Maria’s transformation into the Whore of Babylon, one of the best segments in the film.

This is one of the greatest films of all time, well worth your while and a savage commentary on the perverse cruelty of an economic system where so many labor for so little.

Hidden Dangers!

Hidden Dangers

At the bottom of the page are four documentaries. They are listed not in the order in which they appeared on television (BBC) but chronologically by era – Tudor, Victorian and Edwardian. Please note there several hundred years between the Tudor and the Victorian but, you know, “television.”

006-1These documentaries are significant in terms of business law. For one thing, they demonstrate social change. If you watch the films you will note that while women were treated badly during the Victorian era, the sufferings of women in the Tudor period are appalling.

For another, these are largely pre-regulation societies, and I’m referring directly to business regulation. You’re going to see electric companies simply making up the rules as to proper voltage, insulation and wiring as they go along. You’re going to see food adulteration; sour milk made to taste okay but still sour and bread that appears nourishing but is actually full of inert filler. You’re going to see beauty products that kill, maim and disfigure women. It would not be incorrect to say that the idea of regulating business developed because of all these deaths over many years.

These documentaries are also windows into the past. If you have been in one of my classes, you know that I am a fierce critic of television portrayals of American history. Often overly dramatic, these television shows portray women very much as they live and act today, not to mention having an incredible focus on beautiful outfits. Women did not act in the past as they do now. They were very limited in how much participation in any form of social activity they were allowed and they were certainly almost always placed at a safe distance from power. That some women were able to be influential should not be considered as proof that women were influential but as amazing exceptions to the general rules. For almost all women through almost all of American history, they were relegated to the “women’s” sphere. And as to the glamorous clothing portrayed in these TV shows and movies, a lot of women’s clothing styles in the past were ugly and bizarre. It takes tremendous effort on the part of clothing designers to make this stuff look good. And this is because imposing ridiculous, nonsensical and cruel standards of beauty on women has never gone out of style.

I hate these portrayals because when there is a strong implication that women were always vital, respected members of society, this implies that no action was really necessary to give women a fuller role in society and belittles the terrible trials suffered by women who advocated for a more equal and better world. And I don’t like the emphasis on fashion and clothes because it implies a level of sophistication and beauty for past eras of crass stupidity, rampant disease, and moral degradation as well as high levels of illiteracy and superstition.

So, have a look at several bygone ages and see how other people have lived and suffered.

James Pilant


Hidden Killers of the Tudor Home BBC Documentary 2015 – YouTube

Hidden Killers of the Victorian Home – YouTube

New Hidden Killers of the Victorian Home – YouTube

Hidden Killers of the Edwardian Home – YouTube


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