This is the first blog entry which has a source discussing what might happen in terms of internet pricing in the absence of net neutrality. It appears that Net Flix is not just where I watch movies but where I look for an ally in the fight for the web.
I just discovered the blog, 112 West and I like his style.
Please Read.
James Pilant
via 112 West
If you have been reading my blog for more than a month or so, you know that my idea of the ideal American is Benjamin Franklin. I have posted about him several times and I have a number of his biographies. This is a review of another book about him which I recommend to your attention.
James Pilant
Innovation and Education Won’t Save Our EconomyThat’s the name of the article which appears in New America web site. It charges that American companies are often forced to move to China by bribes and threats. In the first part, the author challenges the idea that a lack of innovation is why jobs ae moving overseas.
U.S.-based multinationals are not transferring production to China and other countries because those nations surpass the U.S. in innovation. The U.S. remains the leader in global innovation, with a sophisticated system of creative interaction among universities, business, venture capitalists and government. Other countries are trying to catch up, but that is nothing new. China recently alarmed many Americans with its policy of “indigenizing” innovation. But ever since the 1970s East Asian and European countries have been trying to create their own artificial “Silicon Valleys,” usually with limited success despite huge investments.
Here is where, the author, Michael Lind, makes the shocking charge that China gets American companies to build factories there through bribes and intimidation.
American multinationals are not shutting factories in the U.S. and transferring production to China because of China’s superior innovation culture or superior educational achievements. Nor are low Chinese wages the major factor. For the most part, multinationals are pressured or bribed by the Chinese dictatorship into producing in China. In some cases, U.S. multinationals are told they must produce inside China in order to have access to China’s large and growing consumer market. In other cases, multinationals are bribed to relocate production to China by enormous subsidies from the Chinese government.
According to one trade expert in Washington, who spoke to me on condition of anonymity, Chinese government subsidies to individual American companies can amount to as much as 70 percent of the cost of a product. China’s artificially undervalued currency amounts to a government subsidy to Chinese-based manufacturers of around 30 percent. On top of the currency subsidy, the Chinese dictatorship often offers financial subsidies and gifts of free land and facilities that can amount to as much as 40 percent. China can afford to spend money on this lavish scale because it deliberately suppresses the consumption of its underpaid and unfree workers and controls investment decisions by its banking sector, while accumulating enormous surpluses from its artificially maintained trade deficit with the U.S. In other words, China recycles money spent on imports by American consumers to poach the factories of American producers.
I am familiar with the Chinese offering no taxation zones in coastal cities to attract American companies to move, but I have never heard these kind of charges before. Certainly many of the incentives offered to move plants to that country have the look and sound of bribery, nevertheless, the money advantages do not seem to rise to the definition of bribes. However, the Chinese government’s actions of international threats does give a certain credence to the charges.
I will see if I can find out more.
James Pilant
I’m surprised this hasn’t already happened. When you buy securities you expect that they be “secure.” These are not supposed to be the equivalent of penny stocks. Countrywide packaged securities that it knew were risky and packaged securities that it knew had serious ownership issues.
This is hard legal question. What is the first warranty guarantee that a seller gives automatically (implied)? Answer, that they own the product they are selling. That is the first thing you are supposed to do. And Countrywide sold a product that it knew it didn’t have a clear title to.
Is this going to be hard lawsuit to win? If it can be proved that Countrywide knew that its title to these properties was not secure, Bank of America which now owns Countrywide is going to be pay out more. I have heard estimates of up to 40 billion dollars in possible paybacks over these bad securities.
From CBS Money Watch –
A lawsuit alleges Countrywide Financial Corp. and two of its former executives misled institutional investors who were stuck with huge losses from mortgage-related investments that they say were portrayed as low-risk.
The lawsuit was filed Monday in New York State Supreme Court by investors who bought hundreds of millions of dollars in Countrywide’s mortgage-backed securities from 2005 to 2007, before the housing market went bust. The list of a dozen plaintiffs includes New York Life Insurance Co., TIAA-CREF Life Insurance Co. and Dexia Holdings Inc.
The complaint names Countrywide, various subsidiaries that issued the securities, two former company executives including ex-CEO Anthony Mozilo, and Bank of America, which bought Countrywide in 2008.
The big guns are out on this one. Read a little more –
The plaintiffs allege they wanted conservative investments that Countrywide portrayed as being backed by low-risk mortgages written according to strict underwriting criteria.
Materials that Countrywide subsidiaries circulated to potential investors indicated all the mortgage-backed securities had been assigned investment-grade ratings, and most had top-rung “AAA” ratings, according to the lawsuit.
But as of last month, more than 31 percent of the mortgage loans underlying those securities were over 30 days delinquent, in foreclosure, bankruptcy or repossession, the lawsuit says. The securities “are no longer marketable at or near the prices the plaintiffs paid for them,” leaving them with “significant losses,” the complaint says.
The lawsuit seeks unspecified damages for alleged securities fraud.
These investments were marketed as conservative (solidly secure), given a triple AAA rating (higher than any paper you ever wrote could get) and are now sinking in value daily.
The American mortgage crisis just keeps rockin’ on.
James Pilant
I wrote a three part series (part 1) (part 2) (part 3) on the latest study showing that college students are not learning critical thinking skills. I pointed out that the study was another in a series of little publicized media events. In truth, the public, the colleges and the business world have little desire for critical thinking.
But what do students learn in college?
A faculty member once had a class of students who were not wealthy, not even close. Not all of the students in his class were able to afford textbooks. So, given a choice of textbooks for the next year’s class, he chose one that cost about seventy dollars. The next year, all of his students had the textbook. The very next semester the price of the textbook rose to one hundred and ten dollars. And then two more years slid by and it went up to one hundred and fifty dollars.
This is not an unusual situation with textbook prices. It is, in fact, the common, everyday experience of teachers and students in colleges and universities all over the United States.
Students may not be learning as much critical thinking as some would like, they may not get that much cultural literacy, and they may have only the vaguest concept of the term “civic duty”, but they do know about pricing. I get it in class essays, “You charge as much as you can get.” To them, it is an ethical rule – You must pursue the highest return possible under any circumstance. The students don’t know any other rule. The deeper philosophical concepts of just price and two thousand years of contrary philosophy are not factors here.
I believe I am a good teacher but there is no amount of teaching skill that can equal the cutting edge of another textbook price increase every year. They may not grasp the “statute of frauds” in my business law class but they understand the phrase, “what the market will bear” with perfect clarity.
What are we teaching our students? Is there any lesson more naked about the nature of the American idea of free enterprise than what students endure each year at the bookstore?
James Pilant
From the Salisbury Post 
– (These events appear to have occurred in or around Salisbury, North Carolina.)
The Rowan County Sheriff’s Office responded to a 911 call from the Rev. Corey Barr at Mount Zion Baptist Church, Boyden Quarters, 1765 White Road, Sunday around 1 p.m.
Barr told dispatchers several people needed to be removed from a meeting/service in the sanctuary, and that “non-members (were) there disrupting a religious service,” the dispatcher’s report stated.
When two deputies arrived, they found about 100 people in the sanctuary divided into groups, shouting at each other, but no physical fighting.
Barr requested officers to remove about 20 people from the service who he said were not members of the church, the report said. The report said deputies were told the church was in a battle over by-laws and other issues.
The report said the associate pastor and two church elders told the officers not to remove anyone, and that Barr was wrong.
Barr has not returned calls from the Post.
According to the report, the meeting appeared to be out of hand, with no order or control by church administrators. Several people were videotaping the incident, it appeared.
A third deputy arrived, and the deputies “kindly advised” leaders of both parties it would be a good idea to dismiss the meeting before it became “more violent than it was,” the report said.
The meeting was dismissed and the last deputy left the scene at 2:12 p.m.
This was the second time the sheriff’s office has had to respond to the church following a 911 call from Barr. (Read More)
I want you to go read the article in full. If you read the rest you will find out what happened after the last 911 call, the story of who has been hiring deputies. And there are some other interesting details.
What are the business ethics here?
We could debate whether or not a church is a business. We could also argue over whether or not the Sheriff’s department could be considered a business. This is a grey area between the public and the private.
However, when you read the article you will discover that Pastor Barr has been hiring deputies at $20 an hour and deploying them in church. This moves at least part of the Sheriff’s department into the “for profit” zone.
Generally speaking, it is not common for churches to hire armed deputies but certainly there are circumstances that would merit such an action. However, church meetings have never to my knowledge required armed supervision.
Were you aware that the fictional town of Mayberry, the setting for the Andy Griffith Show, is south of this area. This would have made a good episode.
I hope everything works out for the church and parishoners.
James Pilant
“Thriven” (Adrian Bailey) takes a cynical look at newspapers and their purpose. While written from a Northern European point of view, I challenge you to find anything different here.
James Pilant
via Thriven’s Blog
I don’t understand why this was a problem? Religions using Saturday as their day of rest, etc. are relatively common. Did the company just decide to be stubborn?
Usually in these cases, there are other factors such as personalities, and company infighting that can range from the CEO’s office down to the mail room.
It’s hard to tell what the situation was in any detail. A quick internet search yieled little more than the press release below.
U.S. Equal Employment Opportunity Commission press release –
A Durham, N.C.-based educational testing company will pay $110,000 to settle a religious discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today.
The EEOC had charged that Measurement Incorporated discriminated against Jacqueline Dukes when it fired her for refusing to work on her Sabbath. Dukes is a member of a Christian denomination called Children of Yisrael which prohibits its members from working on the Sabbath, from sunset on Friday until sunset on Saturday.
Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against employees and applicants because of their religion and requires employers to reasonably accommodate an employee’s sincerely held religious beliefs unless doing so would impose an undue hardship on the employer.
In addition to the $110,000 in back pay and compensatory damages, the three-year consent decree resolving the case (EEOC v. Measurement, Inc., Civil Action No. 1:10-cv-00623 in U.S. District Court for the Middle District of North Carolina) includes injunctive relief enjoining Measurement Incorporated from engaging in further religious discrimination and requiring anti-discrimination training; the posting of a notice about the EEOC and its lawsuit against the company; and regular reporting by the company on its handling of religious accommodation requests .
“Some employers still need to be educated that they are required by law to explore reasonable accommodations to solve situations like this,” said Lynette A. Barnes, regional attorney for the EEOC’s Charlotte District, which includes the EEOC’s Raleigh Area Office, where the charge was filed. “No person should be forced to choose between her religion and her job when the company can provide an accommodation without suffering an undue hardship .”
This seems like a very simple case which makes me wonder about it. I can’t imagine letting it go to court. If you know something about this case that casts some kind of light on what happened, let me know.
James Pilant
This is from a Frank Rich column analyzing America in the light of the two True Grit films –
That kind of legal and moral cost-accounting seems as distant as a tintype now. The new “True Grit” lands in an America that’s still not recovered from a crash where many of the reckless perpetrators of economic mayhem deflected any accountability and merely moved on to the next bubble, gamble or ethically dubious backroom deal. When Americans think of the law these days, they often think of a system that can easily be gamed by the rich and the powerful, starting with those who pillaged Lehman Brothers, A.I.G. and Citigroup and left taxpayers, shareholders and pensioners in the dust. A virtuous soul like Mattie would be crushed in a contemporary gold rush even if (or especially if) she fought back with the kind of civil action so prized by the 19th-century Mattie.
Frontier justice. That would send the Wall Street gamblers packing, wouldn’t it? Of course, right now, I’d take just about any kind of justice. The current situation in the finance world if analogous to a movie would be Heaven’s Gate. In that film the villains after a murderous spree are tracked down by a posse from the local people and rescued by the cavalry on direct orders of the governor. That’s about the situations we have here.
James Pilant
Pilant's Business Ethics Blog 
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