Category: Business Ethics

The Irish Apple Edition

On By southwerkIn Business Ethics

The Irish Apple Edition

Where we discuss what should and should not be done in regard to national borders and taxes.

Apple, the company, exists and does not exist. It exists very firmly in reality if you wish to buy its products or contract for services. It has no legal geographical existence for tax purposes, that is, it cannot be taxed because it has no locality at which it can be taxed. 

Apple in this way is almost identical to the character in Hitchhiker’s Guide to the Galaxy, Hotblack Desiato, a rock singer, who is “dead for tax reasons.” Corporate amorality has reproduced Douglas Addams humor. 

It’s fascinating. Modern tax avoidance methods allow multi-nationals to suck up subsidies and the countless benefits of organized societies from education to roads without so much as paying a dime in support. If you were at a safe distance in a society where the tax burden hadn’t been shifted to middle class incomes, it would probably be funny. You’d think, “What kind of silly people would allow that nonsense?” But we are the people whose elected representatives allow and facilitate this kind of “globalism.” 

This is truly wretched business ethics. There is an implied social contract under which we cooperate for the common good and Apple chooses to abuse all of us by evading its responsibility. 

I never get to be consultant or even work very much in the field. And this is because I write these kinds of posts. What is wanted is a general denunciation of workers stealing from their employers or a long winded diatribe aimed a worker sloth. Writing that gets you jobs. Writing that international business acts in many ways as parasitical pirates makes businessmen uneasy about their own morality and beliefs and if there is anything they loath it is doubts about there own worthiness. In their own eyes, they are doing “God’s work” much like the Wehrmacht. 

But tax avoidance is a legitimate subject for business ethics and many, many companies are evading their most basic responsibilities. 

James Pilant

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From the Blog, Random Public Journal

!!!!!!i_00i_00i_152_tn
The Iris Apple Edition

Years of Irish wheeler-dealing directed towards attracting business from multinational corporations has produced an at least morally bankrupt near zero rate of corporate tax. While on the books Ireland has two rates for corporation tax – 12.5% for trading income and 25% for investment income, special deals negotiated by the government with the bigger fish in the Irish pond has resulted in companies like Apple paying no more than 0.005% on declared wealth generated in Ireland. In the last few days the European commission has called last orders on this shady dealing and has called in almost €13 billion in unpaid taxes from Apple.

Ireland – of all European member states – could do with this money. In over a decade of failed state “leprechaun” economics Ireland has found itself in a deep dark hole. Social welfare and spending cuts have ensured that more Irish people emigrate or die as a direct result of these decisions. Lower levels of real employment, zero hour contracts, a housing crisis, and levels of homelessness as high as the years of the Great Famine have brought Ireland to its knees, and yet the suits in government are “outraged” that Europe would dare to help them with their money problems. What they have done instead is take the side of the corporate giant and keep up the policy of screwing Irish people.

From the Guardian’s Matthew Gardner –

!!!i_00i_145_tnThe international tax system is only as strong as its weakest link. This is the clear message that the European Commission sent on Tuesday when it announced that Apple will have to repay as much as €13bn ($14.5bn) in back taxes due to illegal Irish tax breaks it has received.

Tax justice advocates across the globe lauded the decision as a big step toward tax fairness. Unfortunately, an immediate critical response from US lawmakers, coupled with a slick and disingenuous public relations play from Apple CEO Tim Cook, suggests that American taxpayers will probably continue to pay the price for Apple’s tax dodging for some time to come. This is a shame, because the commission’s goal of ending tax haven abuse is one in which the United States should, and ultimately must, be a full participant.

The facts of the Apple case are straightforward: with the blessing of the Irish government, Apple created a byzantine network of subsidiaries to shelter its profits in an entity that was a tax resident of no country. As a result, billions of dollars of Apple’s income have flowed almost tax free through Ireland’s tax system. The European Commission estimates that in 2014, one of Apple’s Irish affiliates paid a tax rate of just 0.005% on its Irish profits.

From Dear Kitty, Some Blog!

Andrew Walker at BBC News

05Was this week a turning point? It has certainly been expensive for the biggest stock-market listed company on the planet.

Of course, Apple can afford that €13bn (£11bn) tax bill that may be heading for the chief financial officer’s in-tray. And who knows whether it will actually have to pay up.

Perhaps the planned appeal will be successful. But it certainly feels like a very important moment in the battle to get multinational businesses to pay what many governments – as well as ordinary people – think would be their fair share of tax.

It is true that this episode has not brought unity among the governments concerned. The United States in particular is livid about the way the European Commission has gone about trying to get Apple to cough up.

But despite the spat, there’s still a degree of underlying common purpose. It is driven in part by a recognition that voters, many of them at least, detest what they see as the devious behaviour of many multinationals and some wealthy individuals.

From Real-World Economics Review (My favorite comment. jp)

!!!i_00i_207_tnIreland (the government plus the private sector) has by far the largest net international debt of all EU countries (measured as a % of GDP). To an extent this is caused because the Irish state was pressured, by its EU friends, to borrow money from other countries to bail out (the creditors of) Irish banks. The large and fast deterioration of the Irish position in 2014 and 2015 might be caused because large international companies finance their Irish headquarters with inter company international debt. But whatever the cause – it is ridiculous that a country like Greece, which is in a much better state when it comes to its net international investment position, is pressured (among others: by Ireland!) to cut pensions, sell government assets and raise taxes – while the Irish government even refuses to collect taxes due.

Apple taxed at 0.005% rate in 2014

013mEarlier the European Commission said Ireland had enabled Apple to pay substantially less than other businesses, in effect paying a corporate tax rate of no more than 1%.

Ireland and Apple both said they disagreed with the record penalty and would appeal against it.

“Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said Competition Commissioner Margrethe Vestager.

The standard rate of Irish corporate tax is 12.5%. The Commissions’s investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014.

Ms Vestager said that the tax agreement reached between Ireland and Apple meant that the company’s taxable profits “did not correspond to economic reality”.

Business Ethics Blogs 9-1-2016 The Disastrous Drugs Edition

On By southwerkIn Business Ethics

The Disastrous Drugs Edition

Here is some blogging I’ve been following. Some are more business ethics than others. We open with a contribution from the ever versatile, “Dear Kitty, Some Blog.” The blog, Kempton Ideas Revolutionary, talks the importance of original sources. We discover that research universities in the quest for money are fueling inequality. “Meet the billionaires” speaks for itself and a truly fascinating take on how immigrants become “white!”

I close with a blogger returning from life crisis to blog again.

Best wishes!

James Pilant

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This is from “Dear Kitty, Some Blog.”

Please share this important podcast as we hear from ex-Irish Defence Force members highlight the grave circumstances around the use of Lariam. Lariam is an extremely dangerous drug with damaging and long lasting side effects. This show must be heard and spread across Ireland.

Members of the Irish Defence Forces are not legally or constitutionally protected in this matter. They need the people to raise a voice and stand for them and with them in putting an end to this and protecting our fellow country men and women.

I’m seeing similar problems with American soldiers in a more general way. This is from author, Alan Zarembo, writing for the Los Angeles Times. 

20317mU.S. Army researchers have found that soldiers coming home from war suffer from chronic pain and use prescription opioids at far higher rates than civilians.

In a survey of an infantry brigade that had recently returned from Afghanistan, 44% of soldiers reported having been in pain for at least three months, and 15% had used opioids during the past month.

By comparison, researchers estimate than 26% of civilians live with chronic pain and 4% use opioids.

“We were surprised by the percentages,” said Robin Toblin, a psychologist at the Walter Reed Institute of Research and lead author of the study, published Monday in the journal JAMA Internal Medicine.

Experts said the study suggested that, despite the military’s efforts to improve pain management — a growing concern during the course of the recent wars — more needs to be done. It also raised but did not answer questions about whether opioids were being prescribed properly.

Dr. Mark Edlund, a psychiatrist and pain expert at RTI International, a North Carolina nonprofit research group, said the study gave no indication that painkillers are being used any differently in the military than they are in other health systems.

“American medicine in general is overprescribing,” said Edlund, who was not involved in the study.

Kempton Ideas Revolutionary

(He’s quite right – it is always most rewarding to read the originals rather than the current summarizers. Go to the original where possible! jp) 

One time I was looking at a beautiful picture book of fractals, my elderly and wise math professor ask why didn’t I go read the master Benoit Mandelbrot himself instead? Since then, I’ve made it a habit to read masters’ works by the masters themselves, often in their original papers.

!!!!!!i_00i_00i_136_tnResearch Universities encouraging inequality

We’ve been learning a great deal about the conditions and consequences of the obscene levels of inequality in the United States—now, in the past, and it seems for the foreseeable future.

Right now, inequality is escalating within public higher education, especially in research universities that are chasing both tuition revenues and rankings. Thus, the editorial board of the Badger Herald, the student newspaper at the University of Wisconsin, found it necessary to criticize the lifting of the out-of-state student enrollment cap because it betrays the Wisconsin Idea and is making the university both “richer and whiter.”

Meet the billionaires pushing charter schools

How Immigrants became white?!

!!!i_00i_035_tnHere it is important to understand how, exactly, Americans ‘become white’. The history of Polish-Americans is an illuminating example. Upon arriving in the U.S. en masse in the late 19th and early 20th century, Poles endured discrimination based on their appearance, religion and culture.In 1903, theNew England Magazine decried the Poles’ “expressionless Slavic faces” and “stunted figures” as well as their inherent “ignorance” and “propensity to violence”. Working for terrible wages, Polish workers were renamed things like “Thomas Jefferson” by their bigoted Anglo-Saxon bosses who refused to utter Polish names.

The Poles, in other words, were not considered white. Far from it: they were considered a mysterious menace that should be expelled. When Polish-American Leon Czolgosz killedPresident William McKinley in 1901, all Poles were deemedpotential violent anarchists. “All people are mourning, and it is caused by a maniac who is of our nationality,” a Polish-American newspaper wrote, pressured to apologize for their own people. The collective blame of Poles for terrorism bears great similarity to how Muslims (both in the U.S. and Europe) are collectively blamed today.

!!!!!i_00!i_00i_114_tnFrom the Blog – Rainbows and Road Rage – A blogger suffers the slings and arrows of outrageous fortune but returns to blog anew

Hi. Its been a while.

I wish I had some extremely life changing event that would explain why I took time off so early in my attempted blogging “career” (cuz I’m making ZERO dollars from this venture). I wish I had some amazing trip that explained my absence from the blogosphere and provided a wealth of writing material for those who haven’t unfollowed me at this point.

I don’t.

Instead, I have this explanation: Life got in the way and is basically being a bitch at this point.

The Linda Fisher Thornton Edition

On By southwerkIn Business Ethics

The Linda Fisher Thornton Edition

I was looking at the blogs I subscribe to, yesterday and came across “Leading in Context” which has a really sophisticated looking logo. (It made me wish I had one – it was that good.) Anyway, I was struck by the August 17th blog post entitled – Ready To Change the Ethics Quo (For Good)? In this post, Linda Fisher Thornton lists three recommended changes to “the Ethics Quo” and lists them as follows.

  1. EXPECT MORE FROM SENIOR LEADERS: Think of several examples of senior leaders who were coached, penalized or fired for ethical violations. If you can’t think of any, does that mean your organization prevents problems or lets senior leader infractions slide by? Always hold senior leaders to the highest standards since they model what others throughout the organization should do.
  2. HAVE ALL LEADERS MODEL AND REWARD ETHICAL ACTIONS: Keeping in mind corporate ethics policies and company values, examine what leaders are making important by their actions.  What are they doing? What are they holding people accountable for? Make sure that ethical decisions and actions are modeled and rewarded.
  3. SEE YOUR CEO AS THE “ULTIMATE ETHICS OFFICER”: Take a careful look at who is responsible for ethics in your organization. Is it just the compliance officer and HR Manager? It is the CEO and 1 or 2 other managers? Or is it every manager and every associate? Make sure that everyone is responsible, and be sure that the CEO is actively playing the role of the “Ultimate Ethics Officer.”
!!!i_00i_128_tn
The Lind Fisher Thornton Edition

She followed up on August the 31st with a Part 2, listing three more recommended changes.

  1. BE DEEPLY COMMITTED TO DOING GOOD: Take a hard look at the positive impact your organization is having in the communities you serve. Does the total impact say “deeply committed to doing good” or “trying to appear good?” Move toward “deeply committed to doing good” with intention.
  2. MAKE COMMUNITY SERVICE PART OF YOUR DAY TO DAY MISSION: Identify at least one important way that you are improving the communities you serve. If we stopped associates on the way in to work, would they all know what it is? If not, start the conversation and make the commitment today.
  3. COMMIT TO OFFERING SINCERE MUTUAL BENEFIT – FOR ASSOCIATES, COMMUNITIES & THE ORGANIZATION: Does the way you are improving communities also benefit your associates? Do they find meaning in volunteering their service and do you support them doing that during paid work hours? If not, make the financial commitment that backs the message and shows you care about associate AND communities.

She plans a third installment with some more rules. I’ll try to come back to this post and add those when she does.

I was impressed by the posts. Seldom do I attempt to create rules for businesses to use and not many of my colleagues try that either. But she jumps in and gives some structure to business decision making and I applaud her efforts.

Now, as usual, when I am quoting from another blog. I want you, my dear reader to visit the original blog, “Leading in Context,” and read the full article. In this case, don’t just read the article but look around the blog. The writing is in chunks, designed in the context of the overall design to give you a certain kind of business experience, very sophisticated.

As always, Share, Subscribe and Like!

James Pilant

Here is some more about Linda Fisher Thornton –

Linda Fisher Thornton – YouTube
https://www.youtube.com/user/LeadinginContext

And this is her video on ethical lenses as applied internationally.

We Need to Make Decisions Like Global Citizens – YouTube

The Gene Wilder Edition

On By southwerkIn Business Ethics3 Comments

The Gene Wilder Edition

!!!i_00i_193_tnAre actors a product or art?

Gene Wilder is dead. He died yesterday. I got up this morning and just couldn’t bring myself to write one more word about epi-pens or greedy hell-bound CEO’s. I want to talk about Gene Wilder.

If all movies were equal entertainment, each would be worth the same amount of money and each deserve the same amount of attention. They don’t. It is possible for large number of automobiles to be identical, and much simpler items are even easier to be simple duplicates. But movies resist being made standard products. They vary in countless ways.

I was teaching business ethics and I used a film called “Bringing Up Baby.” The film when originally released was a disaster but when re-released several years later was  a great success. So, I asked my students to write an essay and defend one point of view over another. The two points of view being art for art’s sake and movies are a commercial venture to make money.

So, which is it? Are movies an art form with intrinsic value beyond simple money making or are they justified only in term of monetary return?

!!!i_00i_097_tnEnter Gene Wilder.

When I said goodbye to classroom teaching at NWACC, I said it by playing as the last classroom assignment the film, “Young Frankenstein.” (My students had to write an essay.)

Young Frankenstein Greatest Moments – YouTube

Wilder isn’t just memorable in the film. He’s unforgettable. And that makes the value of the film highly debatable. I suppose from a neo-liberal point of view, one should demand a premium for a film with an unforgettable actor. Perhaps, some kind of interest paid for when humor last decades instead of minutes.

What Wilder is doing is beyond conventional acting. To quote my favorite, Twilight Zone episode. His performance is “one for the angels.”

He’s giving more than he could possibly get back.

!!!i_00i_054_tnValue for Value?

Sometimes, I think that we have forgotten any values except commercial ones. More and more I see people thinking of relationships as exchanges of value rather than, well, relationships.

Relationships involve love and love doesn’t work as a medium of exchange. Someone always gets less and someone always gets more. And sometimes, you just give it, just because you have to. Your heart doesn’t give you a choice.

We are at best temporary and we really don’t get to own or keep anything. We are visitors with an allotted time. Maybe what Wilder did in giving more than he got is an example of what we could be if we weren’t corrupted by greed or valuing every exchange looking to come out even?

James Pilant

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Here are some Gene Wilder Films –

Funny About Love – YouTube

World’s Greatest Lover 1977 – YouTube
https://www.youtube.com/watch?v=rsroZOa7z7c

The adventure of sherlock holmes smarter brother 1975 – YouTube

Some Gene Wilder Articles from the News

From Variety

He was born Jerome Silberman in Milwaukee and began studying acting at the age of 12. After getting his B.A. from the U. of Iowa in 1955, Wilder enrolled in the Old Vic Theater school in Bristol, where he learned acting technique and fencing. When he returned to the U.S. he taught fencing and did other odd jobs while studying with Herbert Berghof’s HB Studio and at the Actors Studio under Lee Strasberg.

Wilder’s memoir “Kiss Me Like a Stranger: My Search for Love and Art” was published in 2005. After that he wrote fiction: the 2007 novel “My French Whore”; 2008’s “The Woman Who Wouldn’t”; a collection of stories, “What Is This Thing Called Love?,” in 2010; and the novella “Something to Remember You By: A Perilous Romance” in 2013.

Dead at 83

Gene Wilder, who brought a wild-eyed desperation to a series of memorable and iconic comedy roles in the 1970s and 1980s, has died, his lawyer, Eric Weissmann, said.

He was 83.
Wilder is best known for his collaborations with director Mel Brooks, starring as the stressed-out Leo Bloom in Brooks’ breakout 1967 film “The Producers,” and later in the monster movie spoof “Young Frankenstein.” He also portrayed a boozing gunslinger in “Blazing Saddles.”
For many people, Wilder might be best remembered for “Willy Wonka and the Chocolate Factory,” playing the mysterious candy tycoon in the 1971 adaptation of Roald Dahl’s book.

The Robo-Baby Edition

On By southwerkIn Business Ethics

The Robo-Baby Edition

How do you sell a counter productive anti pregnancy tool to gullible high schools?

Robo-Babies – A Business Ethics Tragedy

The Robo-babies exist as part of anti-pregnancy programs in 89 countries.

What evidence do we have that they prevent teen pregnancy?

As far as I can tell, none.

Did this cause the schools not to buy them?

Nope.

And they aren’t cheap. According to the Australian study, about 1200 dollars (American) for each unit.

What kind of business ethics is this? After all, we’ve seen this before. Abstinence programs actually result in higher rates of teen pregnancy. And, of course, who can forget the disaster of “Scared Straight?”

Discouraging teen pregnancy means taking on a complicated problem with many cultural and historical variable. It requires careful study and planning and, almost certainly, huge resources to be successful.

But why do that when you can employ on the cheap, religious organizations selling watered down versions of their anti-sex and anti-contraception beliefs? Or when you can have a “purity” ball?

And finally, you can buy semi-electronic dolls to simulate the horrors of child rearing

Did anyone notice, anywhere at any time, that we as a people have children regularly in spite of the fact that they are often inconvenient? And did anyone notice that new mothers get a lot of attention, most of it positive? And how about the strange fact, that many people like children even when they are babies?

What kind of idea is this, anyway? This only works if children are a horrible burden that are so horrifyingly draining and disgusting that one weekend with a “simulator baby” will turn you away from all things sexual.

I’m sorry. For many people (including me), parenthood is the greatest experience of their life and we do get through tough weekends with babies without permanent harm.

Okay, let’s have some rules. It’s time. No one should get to sell their anti-pregnancy program to any school in America without at least some evidence of success. In a perfect world, a several year study with a control group would be preferred. But looking at the horrible landscape of our current efforts to reduce teen pregnancy, I’ll take pretty much anything.

Business ethics would suggest that people sell products that do what they say they will. This product does not appear to meet that test.

Let’s do something else.

James Pilant

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!!!i_00i_078_tnRobot Babies are Creepy

Caring for lifelike robot babies for a few days is supposed to discourage teen pregnancy, but a new study in The Lancet found that Australian teens were undeterred.

Students who participated in the virtual infant parenting (VIP) program with the computerized “infant simulators” were actually more likely to get pregnant by age 20 than girls in a standard sex-ed program. Pregnancy rates among robo-baby recipients were 17 percent, compared to 11 percent in the lower-tech intervention. The lead author categorized this difference as small but statistically significant.

!!!i_00i_085_tnCould we just do sex ed instead? 

The makers of the robo-baby aimed to teach teens about the hardship of having a baby at the early stage of life. It is programmed to cry, laugh, get hungry, and so forth just like any baby would, so as the teen being educated will somehow experience how it would be to have a baby. The goal is to make the young people discouraged to start a family or have a kid at their young age. Nonetheless, to the dismay of sex educators, the effect of the robo-baby is said to be the opposite, as a study says.

In Australia, researchers studied 57 schools in Perth by dividing them into two categories. Total of 28 schools were given robot babies and 29 schools were given normal health programs. These girls were carefully tracked and studied. From the records in 2003 up to 2006, it turned out that 8 percent of the girls with robot babies had at least one birth compared to the other group that had 6 percent. Much worse is that, 9 percent of the robot group had at least one abortion while the other group had 6 percent. It seemed that the kids who had robo-babies were amused and got encouraged to have babies.

A young woman who actually went through the program discusses her experience. (She’s brutally frank.)

Robot Baby Story – YouTube

!!!i_00i_055_tnActually increased rates of both pregnancy and abortion 

Brinkman said researchers at Western Australia’s Telethon Kids Institute were trying to determine whether the robot babies, which she said cost over US$1,000 each, were worth the money.

She said while some of those researching the life-like dolls thought they were perhaps ineffective, no one had expected them actually in increase the likelihood of an early pregnancy.

“We never went into the study thinking this would increase teen pregnancy,” she said.

!!!i_00i_045_tnApparently promotes pregnancy

What could have possibly gone wrong? According to Dr. Sally Brinkman, the study’s lead author, numerous teens became attached to the fake babies. She concluded that the program failed because a lot of girls enjoyed taking care of the robo-babies; therefore, they found motherhood easy. Moreover, they felt like they were ready to be mothers because they believed that the exercises reflect real-life motherhood experience.

As the abovementioned findings show, it might be safe to say that looking after robo-babies can indeed make teenagers think that they are preparing for actual parenthood; hence teenage pregnancy is promoted. It can also be safe to say that the difficulties and demands of being parents would not necessarily scare teenagers.

Meanwhile, adolescent sexuality expert Melissa Kang said there are other reasons why a person would opt for contraception. One great factor is the access to resources, something not covered by taking care of robo-babies. This fact makes other experts believe that taking care of fake babies cannot really mirror real-life parenthood experiences.

!!!i_00i_009_tnRobo baby moms

A weekend caring for a computerized baby doll — a popular sex ed technique — doesn’t discourage pregnancy, according to an Australian study published in Lancet. Girls who mothered Baby Think it Over dolls were more likely to become pregnant than sex-ed students who didn’t get the lifelike dolls.

Costing several hundred dollars, the “robo-babies” mimic “six-week-old infant behavior including crying when hungry or needing changing, or gurgling when rocked and burped,” reports the Wall Street Journal.

Robo babies increase teen pregnancy

Around the world, technology is being deployed as a tool to try to teach girls to use contraception. More specifically, a program using an “infant simulator” (or robotic baby) is used to teach teen girls about the harsh realities of motherhood. Over the last decade, the use of this program has exploded — it’s now in 89 countries. But a new study published today in The Lancet reveals that the robo-babies aren’t working as hoped.

A study that followed 2,834 girls from 57 randomly selected schools in the state of Western Australia found that girls who participated in this program had significantly higher rates of pregnancy.

The Philosopher’s Blog Edition

On By southwerkIn Business Ethics

The Philosopher’s Blog Edition

One of the delights of blogging is that sometimes you can take a day off from the horror of regular blogging and do something fun. Now, I’m sure that a lot of people have more fun than I do blogging. For instance, if you blog about dogs or cats, you can find many wonderful stories, films and pictures. But I blog about business ethics which by comparison makes economics sound like fun. In my subject, thousands die and millions are stolen from and otherwise mistreated. If that wasn’t bad enough, there are anti ethicists who exalt greed and evil and contend that if we just let the market run free, nirvana will ensue. So, I need the occasional break.

A Philosopher’s Blog can be found here. He sometimes blogs about business ethics but more often about general ethics and this makes him an ally in the cause, so to speak.

I going to list some of his blog posts with a paragraph or so from each. I want you, my kind readers to know that his paragraphs are nicely constructed and I think you can often make a good case that I should have chosen one or another over my selection. There is indeed a wealth here of writing, and I hope my critical judgement is up to the task.

Here are some selections from his work –

!!the sheriff on the trail from Zane Grey novelDo We Want Rapists, Robbers and Murderers Voting?

A reply to this is to inquire as to why such a moral standard should be used in regards to the right to vote. After all, the right to vote (as I have argued before) is not predicated on moral goodness or competence. It is based on being a citizen, good or bad. As such, any crime that does not justly remove a citizen’s status as a citizen would not warrant removing the right to vote. Yes, this does entail that rapists, murders and robbers should retain the right to vote. This might strike some as offensive or disgusting, but these people remain citizens. If this is too offensive, then such crimes would need to be recast as acts of treason that strip away citizenship. This seems excessive. And there is the fact that there are always awful people voting—they just have not been caught or got away with their awfulness or are clever and connected enough to ensure that the awful things they do are not considered felonies or even crimes. I am just as comfortable allowing a robber to vote as I am to allow Trump and Hillary to vote in their own election.

Felons & Voting

!!!50053mIn a state that professes to be a democracy, the right of citizens to vote is the bedrock right. As Locke and other philosophers have argued, the foundation of political legitimacy in a democracy is the consent of the governed. As such, to unjustly deny a citizen the right to vote is to attack the foundation of democracy and to erode the legitimacy of the state. Because of this, the only crimes that should disenfranchise are those that would warrant taking away the person’s citizenship. In general, the crime would need to be such that it constitutes a rejection of citizenship. The most obvious example would be treason against the country.

Simulated Living

!!!!40012mOne of the oldest problems in philosophy is that of the external world. It present an epistemic challenge forged by the skeptics: how do I know that what I seem to be experiencing as the external world is really real for real? Early skeptics often claimed that what seems real might be just a dream. Descartes upgraded the problem through his evil genius/demon which used either psionic or supernatural powers to befuddle its victim. As technology progressed, philosophers presented the brain-in-a-vat scenarios and then moved on to more impressive virtual reality scenarios. One recent variation on this problem has been made famous by Elon Musk: the idea that we are characters within a video game and merely think we are in a real world. This is, of course, a variation on the idea that this apparent reality is just a simulation. There is, interestingly enough, a logically strong inductive argument for the claim that this is a virtual world.

Now, these three selections are just his last three. He has a lot more. The gentleman has been blogging since 2007 (two years longer than me!).

I would like for you to click on at least one of the titles and read one of them in full to get more of the impact of his writing. Sometimes, he’s clever and funny but I sense a strong moral center in his work and that is the most important thing in my mind.

I strongly recommend the blog, A Philosopher’s Blog and I wish you, my kind readers and the blog author well.

James Pilant

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The EpiPen Edition

On By southwerkIn Business Ethics

The EpiPen Edition

Today, we run into the business ethics of pricing. What’s fair and what’s not? 

Robber Baron or Public Benefactor – You Decide.

We open with a discussion of what an EpiPen is and what it is for, along with a few facts about how Mylan, the owning company, wound up with a monopoly. We then talk about how much the price has increased, how “frustrated” the CEO is and how much money she makes and how much her decisions affected the price. We talk about who she is and how she took her American company, “Dutch,” to avoid taxes while using the power of the government on her behalf. We conclude with two articles about the lack of morality about all this and I have included a petition/letter drive site – if you want Congress to be upset about this little piece of business ethics. 

James Pilant

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Are Mylan Executives Vultures? 

Even Martin Shkreli, who became the poster boy for jacking up drug prices, called Mylan executives “vultures” for the price hike.

I have two daughters with nut allergies myself, and I can tell you that going without an EpiPen is simply not an option for them. But instead of asking the government to come in and provide more help, the solution to this problem is simply to demand that the government start doing a lot less.

It’s important to understand exactly what people are paying for when they buy the EpiPen. The cost of the life-saving epinephrine drug itself is minimal. Epinephrine has been around for more than 100 years and is easy to produce. The real costs come in connection to the EpiPen’s auto-injector which delivers the drug to people who need it in a much easier fashion than a traditional needle and syringe. Mylan’s patent on that auto-injector is the key to everything. And it’s the government’s protection of that patent that lies at the root of the price hikes that are leaving a lot of families struggling to meet the costs.

!!@@#dddddd444053m
The EpiPen Edition

Just a $100 in 2008

The EpiPen sold for $100 in 2008. In the eight years since, the price has more than quintupled, as this chart shows. About 43 million people are at risk from anaphylaxis, or the severe, life-threatening allergic reaction that EpiPen’s injection of epinephrine is designed to counteract.

“This outrageous increase in the price of EpiPens is occurring at the same time that Mylan … is exploiting a monopoly market advantage that has fallen into its lap,” Sen. Amy Klobuchar, D-Minn., said last weekend.

Klobuchar, whose own daughter uses an EpiPen, noted that Mylan has seen one competitor, Sanofi’s Auvi-Q, exit the market last year due to a recall, and Teva’s generic version failed to receive regulatory approval.

Is no one more frustrated than she? 

“No one’s more frustrated than me,” Bresch said. “My frustration is, the list price is $608. There is a system. I laid out that there are four or five hands that the product touches, and companies that it goes through before it ever gets to that patient at the counter. Everyone should be frustrated. I’m hoping that this is an inflection point for this country.”

A little under 19 million dollars in compensation makes frustration worthwhile? 

The executive of the pharmaceutical company that hiked the prices of two dozen drugs, including EpiPen, received a 671% pay increase over the past nine years.

Heather Bresch, chief executive officer of Mylan, came under public scrutiny this week after reports that since acquiring rights to EpiPen in 2007, the company had implemented a series of gradual price increases inflating the price of the drug from $56.64 to $317.82, a 461% increase in cost . During that same time, Bresch went from being Mylan’s chief operating officer to president to chief executive and saw her pay rise $2,453,456 to $18,931,068, a 671% increase.

When Mylan first acquired Merck KGaA in 2007, Bresch oversaw the integration of its 400 products. Among those products was EpiPen, which is used to quickly deliver a proper dose of epinephrine to those suffering from anaphylaxis. Anaphylaxis is when an allergic reaction causes one’s airways to swell and close. In a 2015 interview with Fortune, Bresch described EpiPen as “my baby”. Under her management, EpiPen went from bringing in $200m a year in sales to becoming Mylan’s first billion-dollar product.

Who is Heather Bresch? 

The CEO is the daughter of a U.S. senator. She reincorporated her U.S.-based drug company in the Netherlands, which cut its tax liability.

She also retroactively was awarded an MBA from West Virginia University while her dad was governor of that state despite not having enough academic credits. At the time, the university’s president was both a former lobbyist for her drug company and a high school classmate of hers.

And Bresch has also overseen her company’s increase in the price of EpiPens from $100 in 2008, to more than $600 for some customers today. During that time, her compensation has risen nearly 700 percent

When Bresch took over as CEO in 2012, Mylan’s stock was trading at almost $22 per share. The shares are up 101 percent under her leadership. Revenue has risen 38.5 percent since she took over, to $9.47 billion at the end of 2015.

A Dutch Company???

Bresch made a significant move a couple of years ago to help the company’s profits by guiding it through a corporate inversion. That meant the company withdrew its United States corporation and re-incorporated in the Netherlands, even while its physical plant, all its employees and executives, stayed in West Virginia. That saved the company paying its corporate tax rate of somewhere between 16 and 23 percent, even while it still takes full advantage of its location in the United States and all the infrastructure the country puts around it so it can flourish.

Mylan even sought the protection of the Federal Trade Commission when it was trying to fend off a hostile takeover from Teva, the same Israeli company that was trying to compete with it in the EpiPen market.

So to sum up, an American company has found a way to get out of paying taxes while tripling its stock price for shareholders, but still uses taxpayer-funded services and entities built and maintained by the state and federal governments of the U.S. to save its bacon from a foreign company and flourish in one of the poorest states in the country so Heather Bresch can cruise around Morgantown in what I’m sure is a very nice luxury car.

There is so much wrong with this that it’s hard to know where to begin. Mylan is certainly not the only company taking advantage of loopholes like tax inversions. But the fact that it is doing so at the crushing expense of people who need its lifesaving product to avoid easily preventable death is an outrage.

Robert Klitzman – What’s the ethics? 

Since Hippocrates in ancient Greece, health care has been seen as a noble art, in which physicians should treat patients — even those who are poor — and put the interests of the patient first. Physicians generally follow the principles of beneficence, of helping patients and not harming them.
It seems increasingly, though, as if many drug companies don’t follow such principles. Indeed, greed seems to be the prime motivating factor.
Some might argue that they are private entities, and therefore under no obligation to put the consumer first. The trouble with this argument is that vast amounts of taxpayer money has gone into research to help pharmaceutical companies develop drugs.

If you want to participate in the letter writing campaign to Congress on this issue, clink on this link!

The Athlete Rapist Edition

On By southwerkIn Business Ethics

The Athlete Rapist Edition

Business ethics does not exist in a vacuum. Ethical beliefs are shaped by the larger society. Business ethics are simply a sub-set of a society’s ethics. And this society’s ethics are often problematic at best. 

The worship of athletes and sporting events is part of American society. And worship is not too strong a word. Fans have actually rioted when their teams have lost. Many people seem to have lost all perspective when it comes to supporting their team and their athletes. 

This brings us to today’s subject, David Becker, a rapist. He raped two women and he was sentenced to two years probation which if he fulfills the terms of – will result in his record being clean. It will be as if he had never committed a crime. This is a sweet deal for him. 

For the rest of us, not so much. Creating a class of privileged athletes empowered to prey on women might not be a goal for the “good” society. It might be, in fact, be counterproductive and evil. 

When you hand a “get out of jail free card” to an athlete, you are conveying a powerful message to everyone that these people are special, their lives and careers must not be jeopardized by being penalized for their acts. 

i_466
The Athlete Rapist Edition

No, they are criminals. Whatever their pretences to special treatment, their actions have placed them in opposition to society’s rules. That women should able to sleep undisturbed by sexual assault is an important social value. That crimes should be punished is another one. 

And I’m sorry. I just don’t get it. There are a lot of athletes. If some go to prison for their crimes, how are we impoverished? What have we lost? 

If there is anything a society should want to be know for, want to be famous for and is vital to uphold, it is justice. 

Let us be known more for our justice and less for our sports. 

James Pilant

As usual, Subscribe, Share and Like!!

Mary Elizabeth Williams writing in Salon 

Upon sentencing, Becker’s attorney gloated in court that “he can now look forward to a productive life without being burdened with the stigma of having to register as a sex offender. The goal of this sentence was not to impede this individual from graduating high school and to go onto the next step of his life, which is a college experience.” (The University of Dayton, where Becker reportedly had planned on attending, says he will not be joining the freshman class.)

 Rooke believes that what occurred that April evening was “one mistake at one moment on one night which was clouded with alcohol,” and that “We all made mistakes when we were 17, 18, 19 years old, and we shouldn’t be branded for life with a felony offense and branded a sex offender. Putting this kid in jail for two years would have destroyed this kid’s life.”

Ah, yes, the old “What about the kid? What about his life?” argument. It should go without saying that headlines of the story do not fail to mention that Becker is a promising athlete who plays volleyball, basketball and soccer. Gotta think of that guy’s future! Hm, where have we heard this before? Oh that’s right, EVERYWHERE.

Pilant’s Business Ethics Links 8 23 2016 The Volkswagen Kills Edition

On By southwerkIn Business Ethics

The Volkswagen Kills Edition

Today, we open with a little (1:01 minutes) film about Volkswagens and death. Then there is a strong article about the national parks and the drive to steal those public resources. We have a little short story about a guy pulling off one of the oldest cons – “Producers” style. There are several business ethics stories but the most interesting of what follows is a public musing on what might happen if Donald Trump loses. I don’t think his supporters are going home quietly after the election, either. 

As always Share, Like and Subscribe!

James Pilant

From Reuters!

https://www.youtube.com/watch?v=fTcmJZtFB9M

Read more from one my favorite blogs – Dear Kitty, Some Blog. 

National Parks in danger of privatization and neglect

While the political landscape has tilted, public support for national parks remains rock solid. It’s almost impossible to find an issue that 95% Americans agree on, but polling suggests this is the level of support for federal government protection of national parks.

Separate polls show a hefty majority of voters would be unhappy if their representatives stripped protections from public land. A record number of visitors – almost 305 million – gazed at the vistas of Yosemite, Yellowstone, Gettysburg and other NPS properties last year.

While the NPS could be enjoying a triumphant centennial in 2016, it has to cajole funds from a recalcitrant Congress to deal with crumbling visitor centres, trails, campgrounds and education programs.

An overdue maintenance backlog has grown from a headache under George W Bush to a weeping sore under Obama. It will cost nearly $12bn to patch up all of the creaking infrastructure in national parks, at a time when a recent study found Congress has trimmed the budget of the NPS about 15% over the past 15 years.

A Producer’s Style Fraud? 

It sounds like the plot of Broadway hit “The Producers” come to life: A man conned seven investors into giving him $165,000 to produce a fake Broadway play, the Manhattan District Attorney’s Office said Friday.

003CEO Severance Raises Eyebrows

The corporate food system rigs the game

What do Trump supporters do if he loses? 

So I think the danger is . . . when they lose and I tend to agree with you, I think they’re gonna lose, although it’s not guaranteed. The question is, If the vote total is close — if it’s 10 points, it’s different — but if it’s 4 points or 5 points or less, where do they go? I wrote “Dear White America” in 2012. My argument at the time was, What do these white folks do who have been nurtured in this anxiety and resentment and this idea that they’ve ‘lost their country’?

At the time I was thinking about the Tea Party; I wasn’t even thinking about Trumpkins. My point at the time was, What do these people do? Are these the kind of people who gladly say, “Oh gosh, we lost, that sucks. But we’ll just work harder next time and gosh darn it, in four years we’ll come back and we’ll be ready to go.” My argument was then, and is now, I don’t think that that’s what Trump’s people are like. I don’t think Trump’s people are the kind of people who go, “Gosh darn it. How can we tweak our message to get moderate voters?” These are people who I think, to be perfectly honest, lose in November and then they look around and look at their wall and they say, “Well goddamn. We’ve got a lot of guns. We don’t have the vote, but we got the guns.”

Is Wal-Mart a magnet for criminals? 

Time reported last week that police in many communities get more calls to Walmart shopping centers than anywhere else. For some stores, police are called multiple times a day. The problem appears to be far larger for Walmart than for competing retailers like Target. And the crime ranges from mostly standard shoplifting and petty theft to the occasional rape, stabbing, shooting, murder, or meth lab hidden in a 6-foot drainage pipe under the store parking lot.

“I’ve got all my bad guys in one place,” Darrell Ross, a Tulsa police officer permanently stationed at the local Walmart, joked to Bloomberg.

Critics in both stories point to Walmart’s aggressive cost-cutting, beginning in 2000 with the tenure of former CEO Lee Scott, as a big part of the problem. Retail consultants told Time that Walmart likely has about 400,000 fewer workers in the U.S. today than a decade ago. In giant stores that can range up to five acres, that translates into one worker for every 524 square feet of retail space — a 19 percent decrease in workers per square foot from 10 years ago. The greeters at the entrances are gone, many cashiers have been replaced with automated checkout scanners, and there are simply fewer eyeballs monitoring everything than before.

A majority of men believe sexism is gone!!!

Is it Time to Prohibit All Non-Audit Services for Audit Clients? (Guest Post)

On By southwerkIn Business Ethics

Independence Impairments Threaten the Public Interest

(My friend, Steven Mintz, the Ethics Sage, has a new column that he has graciously allowed me to post. This is his blog – here.)

The Ethics Sage
The Ethics Sage

The accounting profession has lost its way and has reverted to old behaviors, including increased commercialism, and created a worrisome trend of deficient audits. It may be time to change the regulatory regime and completely prohibit the performance of all non-audit services for audit clients. Restrictions in place since the passage of the Sarbanes-Oxley Act (SOX) in 2002 seemed to work at first as audit firms were on their best behavior, but recently the profession has reverted to commercial behaviors that brings into question their commitment to serve the public interest, not the client’s interest or self-interest.

Most people do not realize that the accounting profession is the only profession where the public interest must be placed ahead of other interests. In law, the client’s interest is above all else. In medicine, with some exceptions, the patient’s interests are paramount. Indeed, the accounting profession is a profession because the SEC created its franchise right in that only CPAs can conduct audits of public companies.

The years and activities since the passage of SOX shows that the profession has reverted to its old ways. Firms like PricewaterhouseCoopers sold off its consulting business back in 2002 to IBM for $3.5 billion. It didn’t take long for PwC to back-track and in October 2013, the firm announced it was acquiring the consulting firm of Booz & Company thereby adding $9.2 billion in global consulting revenue to its total global firm revenue of $32.1 billion, or a 28.5% share for consulting services of the overall firm revenue.

Other firms have been sanctioned for providing prohibited non-audit services to audit clients. In January 2014, KPMG agreed to pay $8.2 million to settle charges by the SEC that the firm violated auditor independence rules by providing restructuring, corporate finance, and expert services as well as providing non-audit services such as bookkeeping and payroll services to an affiliate of an audit client. These activities create a self-review threat to independence because the audit firm winds up reviewing its own services.

Some of the independence impairments border on the bizarre, at least with respect to the broadening efforts of Big-4 firms to gain a competitive advantage and bring in lucrative consulting work. In July 2014, Ernst & Young agreed to pay more than $4 million to settle accusations by the SEC that the firm violated independence rules by lobbying on behalf of two of its audit clients, an advocacy threat to independence.

Greed has also infected the actions of some auditors. In May 2013, Scott London, the former partner in charge of KPMG’s Southern California regional practice, provided inside information to a close friend about audit clients. Once KPMG found out, the firm had to recall its audit reports on two clients, Herbalife and Skechers, because of the lack of independence. London sold his soul for $50,000 in cash and a Rolex watch.

A troubling trend is the high level of deficiencies cited in inspection reports by the Public Company Accounting Oversight Board (PCAOB). In 2014, the PCAOB identified deficiencies as high as 54% (KPMG) to a low of 21% (Deloitte). The deficiencies most often cited include a failure of internal controls over financial reporting, inadequate responses to risks of material misstatement, inadequate review and assessment of auditing estimates, and deficiencies in the audit of inventory, loan reserves, and revenue recognition.

The nature of the revenue stream for public accounting firms has changed since the passage of SOX. The audit function that had previously been treated as a loss-leader in many cases has now become a consistent source of firm revenue in part due to compliance requirements with SOX. New requirements, such as the rotation off the audit of the lead and reviewing partners every five years, has, presumably, created a check on auditors getting too cozy with their clients. Moreover, the PCAOB is considering whether to require audit firm rotation every 10-20 years, as has been done in the European Union (EU) for public interest entities.

Protecting the public interest starts with maintaining the foundation of independence and commitment to serve investors and creditors above all else. Given the ongoing challenges for the accounting profession and questionable results of prohibitions of certain non-audit services for audit clients in the post-SOX era, I believe it’s time to prohibit all such services for audit clients. Of course, firms would still be able to provide non-audit services, just not while they perform audit services for the same client.

Are there other options to protect the public interest? Yes. Similar to audits in the EU, the audit function might become a statutory one regulated through “audit directives”. In this case the annual and consolidated financial statements of public interest entities would be based on these prescribed regulations. The big firms would still be able to perform such audits but they would be answerable to the state as well as to investors and creditors. This exists in the U.S. right now through the PCAOB audit requirements, but a statutory regime implies determination by a governmental body that currently does not exist except for areas such as regulated industries (i.e., utilities).

The time has come for the audit profession to rethink the way in which it provides services, both audit and non-audit, to public clients. The recent trends cited above give me great pause about a diminished commitment to professionalism. I believe the reason is non-audit services are performed largely by non-CPAs that have a lesser commitment to the ethics of the profession and serving the public good rather than the commercial and financial reporting interests of their clients. The audit culture and non-audit culture can sometimes be diametrically opposed.

Blog posted by Steven Mintz, aka Ethics Sage, on August 18, 2016. Dr. Mintz is Professor Emeritus from Cal Poly San Luis Obispo. He also blogs at http://www.ethicssage.com.