Category: business ethics

Did The International Monetary Fund Push Tunisia Into Revolution? Yes.

On By southwerkIn business ethics

The IMF played  an important role in the Tunisian Revolution

This is from the International Monetary Funds Survey Magazine, an article entitled –

Tunisia Weathers Crisis Well, But Unemployment Persists.

(September 10th, 2010)

Maintaining a stable macroeconomic environment that promotes employment and growth also requires determined expenditure control, the IMF assessment said. Key for success in this area is the reform of the social security system. To this end, the authorities are in discussion with social partners on pension reforms to buttress the pension system’s financial sustainability. The government should also explore ways to contain subsidies of food and fuel products, the report noted.

The authorities are also undertaking reforms to make the tax regime more business friendly. International comparisons with other emerging market economies show that the tax burden on businesses is relatively high in Tunisia and that there is scope to increase the yield from consumption taxes. To promote private investment and employment, the authorities intend to reduce tax rates on businesses and to offset those reductions by increasing the standard VAT rate and expanding the tax base through the elimination of exemptions, the report noted.

Tunisia’s growth-enhancing strategy also includes a package of measures to strengthen the financial sector through consolidating the financial strength of banks, enhancing the role of banks in the economy, restructuring the public banking system, and bolstering the presence of Tunisian banks abroad. The aim, ultimately, is to transform Tunisia into a banking services hub and a regional financial market.

To strengthen the country’s ability to adapt to changes in the global economic environment, the authorities also intend to modernize the monetary policy framework by introducing inflation targeting and to implement convertibility of the dinar and capital account liberalization by 2014. The IMF assessment said that this strategy would require significant preparatory work, particularly further strengthening of the banking system and deepening of the foreign exchange, money, and capital markets. The report also noted that the authorities would need to take additional steps to ensure increased reliance on interest rates as the operational target of monetary policy.

The IMF had been recommending an austerity regime for Tunisia for many years. Being an exceptionally corrupt and kleptocratically ruled nation, the pain of these kinds of “austerity” measures fell on the poor. In Tunisia, the poor is virtually everybody.

The IMF was pushing for a decline in government spending particularly in the areas of food and fuel in a poor population that could rarely afford either. Per capita income is a little over $6,000 but the population is divided into a very small oligarchy of immense wealth and a very large population of the poor. So, I would suspect that income among the average Tunisian was probably far less than half. So, they were recommending cuts in food and fuel in a population just hanging on to the edge, hardly able to make it from day to day.

It could be said that the IMF at all times stands for cuts in social welfare spending, business tax cuts, consumption tax increases (a form of sales tax),  bank consolidation, and declines in government spending. But there is no issue upon which the IMF is more devoted than inflation control. It crops up again and again in report after report. Inflation damages capital because it makes debts less valuable to creditors. Since while inflation can exist by itself, it is also a characteristic of growing and prosperous economies, that kind of economic growth must be avoided. What is wanted instead is stable economic growth with little or no wage pressure. This removes inflationary pressure and assures those loaning money of a full return on their investment.

There is another thread you pick up when you read IMF reports, a fascination with data. They always want more data. Better reporting they call it.

The numbers are everything. People are not.

James Pilant

The costs of suffering in silence about bad work situations (via Minding the Workplace)

On By southwerkIn business ethics1 Comment

“Don’t cause any trouble.” “It won’t do any good.” “Nothing ever changes.” “You’ll just get fired.” “He’s the boss’ favorite, you’ll get canned.” The litany goes on.

It’s a cultural thing. We are supposed to be tough, supposed to be able to handle it, not be a sissy.

That is empowerment. Definite, hardcore, empowerment. It makes every bully, every wiseass put down artist – well nigh invincible.

If there is anything you should avoid, it’s making some two-bit bullies feel good about themselves.

The article below explains some of the downsides to not speaking out.

Yamada’s work is excellent. I recommend his work.

James Pilant

Let’s say you’re being bullied or harassed or otherwise mistreated at work. Or maybe you’ve just learned that you’re being horribly underpaid compared to the less-than-stellar fellow in the next office or cubicle. Anger and resentment are natural responses to these situations, but is there any outlet to express your emotions at work? Bottled up Many people — dare I say most people — will keep it bottled up inside them. After all, self-censorshi … Read More

via Minding the Workplace

“Attacking a brand is like attacking a person” (via The Business Ethics Blog)

On By southwerkIn business ethics

“Attacking a brand is like attacking a person.”

So, we can expect Taco Bell to become depressed, suffer anxiety, and need sleeping pills to get rest. Then it will sit up at night staring into the darkness, thinking, “Just a few more sleeping pills and all the pain will go away.” And now, now that it’s too late, we’ll regret the unkind things we said about Taco Bell’s meat content?

Not likely.

I find the idea of corporate personhood difficult to take seriously and then this thing comes along. We are supposed to attribute human like qualities to a brand? What’s the logical end of this? If I drop a bottle of Taco Bell sauce in the supermarket floor, can I be tried for assault? Will it need victim counseling?

Unfortunately and bizarrely, this is a serious matter. The company is staking out a claim that a brand can be defamed in the same sense as a human being. It may be attempting to set up this as a defense but more likely an opportunity for countersuite or future law suits.

Product defamation.

In a world in which the Supreme Court has just discovered that corporate personhood means unlimited political contributions, the idea of “brand” personhood be far behind?

Have you seen one of those web sites entitled (insert company name) sucks.com. How often do you imagine coporate executives and their attorneys are trying to figure out someway to shut them down and then shut down all criticism as illegal or at least something you can sue about?

This all sounds ridiculous, but this is an opening salvo in a new kind of law. It may work. It may not. But I do not think it’s going away.

Please read Chris MacDonald’s more academically nuanced piece on the same subject.

James Pilant

Last week on my Food Ethics Blog, I posed the following question: Fast Food Beef: What Matters? At the heart of that blog posting is a lawsuit that has been filed against Taco Bell, alleging that… …Taco Bell’s “meat mixture”, which it dubs “seasoned beef” contained less than 35 % beef. If these figures are correct, the product would fail to meet minimum requirements, set by the U.S. Department of Agriculture, to be labeled as “beef”. The othe … Read More

via The Business Ethics Blog

Andrew Comments On My Post, Gasland – The Documentary

On By southwerkIn business ethics

Andrew Gates once again provides his usual intelligent commentary to one of my postings, in this case, Gasland – The Documentary.

These companies will DEFINITELY take advantage of land owners in a second if they can.

My paternal ancestors were coal miners from Kentucky. My great grandfather worked for the mining company for a very long time. When he retired, the company gave him a piece of land on one of the mountains (that they thought was worthless, of course) that they owned. That was sort of a tradition back in that time.

Anyways, about 10 years after he retired, another company comes to him and says that they found more coal on that mountain and that they wanted his permission to mine the coal from under his property. They offered him a fixed amount per month for the rights to mine.

My great grandfather, being a veteran of the mining industry, knew that the company would mine the coal as quickly as possible without regard to his property, so that they would only have to pay him a few thousand dollars for hundreds of thousands of dollars worth of coal.

So my great grandfather told them that he would not give them rights to mine unless they paid him a fixed amount per ton of coal that was mined from his property. The company did NOT like those terms and tried everything in the book to get around it, but eventually they caved and accepted his terms. Because the company gave him so much grief about the terms of the mining deal, he also forced them to pay him a fee for every truck that went up and down HIS road to the mountain.

Its always a good story to tell to people who think that one man cant stand up to a large company.

I’m glad for the comment. There is no one in my family that has that kind of experience. (Pilants tend to be ministers, teachers and farmers although on rare occasions they may be found as Internet bloggers.)

Here’s another preview of Gasland:


Gasland – The Documentary

On By southwerkIn business ethics3 Comments

From the Huffington Post –

Josh Fox’s home sits in the woods of Milanville, Pennsylvania, near the rushing waters of the Delaware River. In May 2008, a strange letter appeared in his mailbox. A natural gas company was offering him $100,000 if he granted them permission to drill on his property.

Instead of signing, Fox decided to investigate. Armed with a video camera and a banjo, he set off on a journey up and down the Marcellus Shale, a massive reserve of natural gas that stretches 600 miles from Pennsylvania to Maryland, Virginia and into Tennessee. Known as the “Saudi Arabia of natural gas,” the shale contains billions of dollars in untapped fuel.

Fox wanted to know: What happened to other families who agreed to drilling on their property?

What he found was a heartbreaking collection of severely ill families whose aquifers had become so tainted by the gas, they could literally light their tap water on fire. He edited his footage into a modest documentary, Gasland, which was soon embraced by outraged viewers across the country. It won the Special Jury Prize at the Sundance Film Festival, the Lennon-Ono Peace Prize, and now has been nominated for an Academy Award for Best Documentary.

I was reading about the Academy Award nominations when I came across this film. I read up on it. I find it compelling, it’s a moving story about real people who lose the right to have clean water.

James Pilant

Netflix Fires a Neutrality Shot Across The Bow (via 112 West)

On By southwerkIn business ethics

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

Netflix Fires a Neutrality Shot Across The Bow Netflix posted better than expected growth Wednesday, adding 3 million users to top off at 20 million subscribers.  That’s good for them.  But what got the most attention was what the company had to say about that little inconsequential thing called “Net Neutrality” An independent negative issue for Netflix and other Internet video providers would be a move by wired ISPs to shift consumers to pay-per-gigabyte models instead of the curre … Read More

via 112 West

Benjamin Franklin: An American Life (via Nohandboblibrary’s Blog)

On By southwerkIn business ethics

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

Benjamin Franklin: An American Life Following closely on the heels of Edmund Morgan’s justly acclaimed Benjamin Franklin, Isaacson’s longer biography easily holds its own. How do the two books differ? Isaacson’s is more detailed; it lingers over such matters as the nature of Franklin’s complex family circumstances and his relations with others, and it pays closer attention to each of his extraordinary achievements. Morgan’s is more subtle and reflective. Each in its different way i … Read More

via Nohandboblibrary’s Blog

American Companies Forced To Move To China?

On By southwerkIn business ethics7 Comments

Innovation and Education Won’t Save Our Economy

That’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

Bank of America Sued Over Countrywide Mortgage Related Investments

On By southwerkIn business ethics2 Comments

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

Net-neutrality complaints pile up (via wan k choi)

On By southwerkIn business ethics

Amen.

Competition is very important in a free market system. But when companies like Comcast, Verizon, AT&T and other who want to keep regulators from regulating those companies keeping them from becoming gatekeepers of the internet whether it be mobile or cable, then I have to say let there be regulations. Comcast is already a large company in the area where I live. I don’t have the option of choosing another service provider since there is either … Read More

via wan k choi