James Pilant
An excellent video presentation by Harvard law professor Lawrence lessig, on the negative implications of this year’s Citizens United US Supreme Court Ruling. Lessig is also Director of the Edmond J. Safra Foundation Center for Ethics.
Category: business ethics
ADAM LEVITIN…21% HAMP First Year Redefault Rate (via Foreclosureblues)
Just when you thought the President’s HAMP program couldn’t be any worse, it is. I teach my classes that just when you think you’ve reached the bottom that there is always more down. Here is solid evidence from the gentlemen at Foreclosureblues.
James Pilant
via Foreclosureblues
Elderly Face Future Near Poverty Line
From MSNBC –
Nearly half of elderly Americans will face a future with at least one year below or close to the poverty line, according to a new study that showed a huge racial divide in prospects for the elderly.
Mark R. Rank, a professor at Washington University in St. Louis, said the results of his research contradict popular beliefs about the economic stability of America’s elderly population.
“We have an image of the elderly as doing pretty well,” he said, adding that data spanning 35 years does not support that assumption.
Nobody is safe. Nobody is secure. We face an economic future in which those that have created value, those that have worked for a living, are just pawns in a game of financial monopoly.
James Pilant
Nation On Wrong Track?
A majority of Americans feel that America has is “on the wrong track,” and that they are worse off than they were in 2008.
In a sweeping poll released by Bloomberg today, 66 percent of respondents said that they felt that “things in the nation…have… gotten off on the wrong track,” compared to just 27 percent who felt the country was heading in the right direction. 51 percent of respondents said they were worse off now than they were two years ago.
We need leadership and we need someone in power whose first concern is the welfare of the middle class. Period.
James Pilant
Opinion: Gilded Age America redux (via David Gushee, Associated Baptist Press)
From the Associated Baptist Press –
Since the origin of Christian social ethics in the late 19th century as an Anglo-American academic-ecclesial discipline, economic problems have been at the center of our profession’s concerns. Christian ethics was born during the days in which the contrast between the vast prosperity of the industrial barons and the vast suffering of those who worked for them became unbearable. The moral concerns that drove early Christian ethics helped contribute to the regulation of industrialization’s excesses during the Progressive Era. The same social compassion supported the creation of a modest social safety net during the Depression and New Deal era.
As a Christian ethicist, I stand in a tradition that both rejected communism as an alternative to laissez-faire capitalism and recognized very early that the only way capitalism would or should survive was through legal regulation of its worst excesses. I don’t say moral regulation because, as Reinhold Niebuhr taught us in his formative work Moral Man and Immoral Society, huge group entities and social structures do not respond to moral suasion. If you are asking a corporation — or a group of corporations, or an entire economic structure — voluntarily to act in such a way as to limit profit, you will fail. You will have to coerce it to do so under the power of law or some other countervailing power, such as the organization of labor.
First, you should go read the whole essay. Gushee posts only after much thought, and since a Christian perspective on business ethics is much rarer than I would have believed, this is important writing.
Second, he is right that large economic units only react to force. The idea of a self regulating marketplace is only partially a reality at the best of times.
James Pilant
Moody’s To Cut U.S. Rating?
Moody’s warned Monday that it could move a step closer to cutting the U.S. AAA rating if President Obama’s tax and unemployment benefit package becomes law.
The plan agreed to by President Obama and Republican leaders last week could push up debt levels, increasing the likelihood of a negative outlook on the United States rating in the coming two years, the ratings agency said.
A negative outlook, if adopted, would make a rating cut more likely over the following 12-to-18 months.
For the United States, a loss of the top Aaa rating, reduce the appeal of U.S. Treasuries, which currently rank as among the world’s safest investments.
We just spent several months with every commentator screaming out that we can’t afford to spend more money, that social security had to be cut, that things could not go on the way they had been and then –
President Obama made a deal with the Republicans to add trillions to the debt! (and social security will still get cut!)
The bizzarro world of Washington marches on. But there will be pain, there will be payback.
James Pilant
Why The Tax Cut Deal Isn’t Cutting It. (via Rortybomb)
Rortybomb is great. I wanted to take a paragraph out and quote him but I couldn’t pass up the graph, so, I reblogged.
Give him a read. It’s richly merited.
James Pilant
via Rortybomb
Kleptocrats
These days, we’re living in the world of the imperial, very self-interested individual; the man in the gray flannel suit has been replaced by the man in the very expensive Armani suit. Look at the protagonists in the global financial meltdown, and you won’t see faceless corporations subverting individual will; you’ll see avaricious individuals exploiting corporate forms to enrich themselves, often bringing the corporations down in the process. Lehman, AIG, Anglo-Irish, etc. were not cases of immortal hive-minds at work; they were cases of kleptocrats run wild.
I like the word, kleptocrat. It captures the sound of what it is, someone who can’t resist the lure of money, no matter what the cost.
The 21st Century might well be a hundred years devoted to kleptocracy in America. That’s pretty sad.
Do we have choices? Yes, but not the ones most people think of.
There is no return to a simpler moral age. There may be spots in American history where this virtue or another was more predominant than now but I promise you the trade offs are not anything you would want to play with.
What needs to be done is a combination of looking forward and looking backward, a fancy way of saying we should learn from experience but not react identically.
What am I talking about? Well, we’ve had kleptocracy before, roughly 1918 to 1929 maybe as late as 1931. We reacted by changing the balance of power between industry and government, imposing a large regulatory structure so as to never let the disaster happen again. Once that structure was abandoned, we fell into the trap once more. Except this time the force of the financial industry is such that no power moved to the government. We are at a stand still in the same spot where disaster struck in 2007.
There are three things that need to be done.
One – Corporations are creatures of the state, nothing more. They have the same living essence as a can opener if not less. The usurpation of human power by these moble documents is a pathetic farce a child can see through.
Return corporations to organizations under law, not as persons, as contracts. (which is what they are)
Two – Return morality to the law. First enlarge and enforce the duty of fair dealing, honesty and loyalty in business agreements. Those already exist in case law and often in statutory law. Let them be reborn as an integral part of contract law. But more than this, let us also revive the doctrine of unconscionability. The fees and contracts imposed on Americans regularly violate the basic standards of fairness. It is time to rein in those practices. If a practice “shocks the conscience,” a business, a corporation, shouldn’t be doing it.
Three – Give the owners of the corporations some say in what they do. Right now, a CEO and a board of directors are essentially unencumbered by oversight. The actual owners of the corporation have little say in the operation, major decisions and salaries of a company that are supposed to own. Isn’t a basic element of capitalism that the owner of property should be able to exercise rights in it?
That’s a start. Really, we’ve already been through these kinds of crisis before. Generally we know what to do. But there is no willpower, intelligence or wisdom to do it.
James Pilant
Rogue Columnist Recommended Reading!
The shelves groan under the number of books written about the financial crisis, its aftermath, causes and needed fixes. My favorites are Freefall: America, Free Markets and the Sinking of the World Economy, by nobel laureate Joseph Stiglitz; 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, by Simon Johnson and James Kwak; Crisis Economics: A Crash Course in the Future of Finance, by Nouriel Roubini and Stephen Mihm, and Aftershock: The Next Economy and America’s Future, by Robert Reich. It’s a soup-to-nuts telling of the bought-off politics, bad policy, deregulation and greed that brought on the crash, to the steps we must take in order to save ourselves. Not that we will.
I recommend these books a well. I particularly recommend Joseph Stiglitz.
Happy Holiday Reading!
James Pilant
Benjamin Franklin, Business Ethics and Bearing Grudges
An excerpt from Benjamin Franklin by John Torrey Morse, Jr.
In Philadelphia Franklin soon found opportunity to earn a living at his trade. There were then only two printers in that town, ignorant men both, with scant capacity in the technique of their calling. His greater acquirements and ability, and superior knowledge of the craft, soon attracted attention. One day Sir William Keith, governor of the province, appeared at the printing-office, inquired for Franklin, and carried him off “to taste some excellent Madeira” with himself and Colonel French, while employer Keimer, bewildered at the compliment to his journeyman, “star’d like a pig poison’d.” Over the genial glasses the governor proposed that Franklin should set up for himself, and promised his own influence to secure for him the public printing. Later he=7= wrote a letter, intended to induce Franklin’s father to advance the necessary funds. Equipped with this document, Franklin set out, in April, 1724, to seek his father’s coöperation, and surprised his family by appearing unannounced among them, not at all in the classic garb of the prodigal son, but “having a genteel new suit from head to foot, a watch, and my pockets lin’d with near five pounds sterling in silver.” But neither his prosperous appearance nor the flattering epistle of the great man could induce his hard-headed parent to favor a scheme “of setting a boy up in business, who wanted yet three years of being at man’s estate.” The independent old tallow-chandler only concluded that the distinguished baronet “must be of small discretion.” So Franklin returned with “some small gifts as tokens” of parental love, much good advice as to “steady industry and prudent parsimony,” but no cash in hand. The gallant governor, however, said: “Since he will not set you up, I will do it myself,” and a plan was soon concocted whereby Franklin was to go to England and purchase a press and types with funds to be advanced by Sir William. Everything was arranged, only from day to day there was delay in the actual delivery to Franklin of the letters of introduction and credit. The governor was a very busy man. The day of sailing came, but the documents had not come, only a message from the governor that Franklin might feel easy at embarking, for that the papers should be sent=8= on board at Newcastle, down the stream. Accordingly, at the last moment, a messenger came hurriedly on board and put the packet into the captain’s hands. Afterward, when during the leisure hours of the voyage the letters were sorted, none was found for Franklin. His patron had simply broken an inconvenient promise. It was indeed a “pitiful trick” to “impose so grossly on a poor innocent boy.” Yet Franklin, in his broad tolerance of all that is bad as well as good in human nature, spoke with good-tempered indifference, and with more of charity than of justice, concerning the deceiver. “It was a habit he had acquired. He wish’d to please everybody; and, having little to give, he gave expectations. He was otherwise an ingenious, sensible man, a pretty good writer, and a good governor for the people…. Several of our best laws were of his planning, and passed during his administration.”
Governor Keith lied repeatedly to Franklin, mislead him into the dangerous and unnecessary journey to England, and decieved a great many others as well. Yet, Franklin’s account of him is kind, balanced, and gives the man full credit for the good things he did. Would any of us have been so kind?
But don’t take this as a compliment on Franklin’s generous personality. It is far more serious matter.
Franklin can take a step back from a situation and view it unemotionally. For an ethical man, this is critical. There is a tendency to assign all evil to an opponent, to never think of him positively, to never consider the situation from that person’s point of view. That tendency throws off judgment and turns the mind away from justice and morality.
A generous view of humanity is often the more accurate one. Viewing one’s enemies as devoid of value puts one surely in the wrong. Viewing with accuracy and balance ennobles the mind and gives substance to decision making.
James Pilant
Pilant's Business Ethics Blog 
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