Category: business ethics
Wall Street’s Incredible Victory
It’s difficult to conceive that a nation driven to the brink of financial collapse by an irresponsible, greedy, incompetent industry that runs an operation more comparable to Monte Carlo gambling casino than banking could escape meaningful regulation and yet, they did. It is a catastrophic failure on the part of the Presidency and Congress to protect the American people from rapacious financial predators.
I exaggerate you say? From wikipedia –
In a dramatic meeting on September 18, 2008, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke met with key legislators to propose a $700 billion emergency bailout. Bernanke reportedly told them: “If we don’t do this, we may not have an economy on Monday.”
That sounds serious. A disinterested observer might conclude that an unregulated financial industry could be a problem. But remember we all know that the financial industry is self regulating. It’s watched over by a horde of business publications and reporters who would detect any problem long before it could happen. What’s more, the people, these amazing highly talented aces of industry who clearly merited the enormous sums they commanded were of such high intellectual capabilities and monumental experience that their unmatched stewardship would without any doubt guide their businesses and as a pleasant but wonderful and inevitable side effect, the United States of America to well deserved financial success.
Forgive me. I don’t want to spread the idea that the Chicago School of Economics might not understand economics.
The disaster that occurred in the financial industry in 2007 and 2008 and cost this nation more than ten million jobs should have been made impossible under a new set of rules. But the game is the same. The incentives are the same. The players are the same. The legislation changes none of that. An economic disaster resulting in millions of unemployed Americans is now avoidable through luck. Don’t you feel good?
There are plenty out there who say take what you get. We got more than could have been expected. No. Again no. This isn’t a matter where you can compromise. The survival of the United States as an economic power is an issue here. There are some who proclaim this an incredible victory over immense odds. You’d think they’d just blown up the Death Star, when they compromised with it and decided they could forgive that little Alderran incident as looking backward not forward.
There are some who say the banking industry got creamed. There is one guy who thinks this is a major success for Congress.
What does the banking industry think? Do they feel that it was a compromise in which they got some stuff and lost some stuff, a gain of one thing and the loss of another? No, that’s not how they feel about it. Let’s read the AP headline – Bank stocks soar on financial regulation agreement.
So, what do we do now? Nothing. The Congress and the President are not interested. They have created a piece of legislation with the correct sounding name. This will convince many that something has been done. But it’s just another joker, another game, another day in Washington where symbolism trumps reality.
I have read commentary that says that the government of the United States has been unable to deal with any major legislative crisis over the last thirty years, that the government is simply paralyzed only able to eek out temporary compromises, small bandages for large problems.
This is America. We can accomplish amazing things. We do not have to suffer the foolish and the greedy. We can do better than this.
(What do you think? If you disagree, don’t let me wonder about it. Tell me. I won’t learn if you don’t let me know. If you agree, I can be more confident that I speak for others as well as myself. Don’t be silent.)
James Pilant
Law schools and the legal job market (via Minding the Workplace)
In difficult economic times, the market for lawyers tends to crashed. Well, it has crashed and it’s crashed for the four or five years at minimum. Are law schools adjusting to the changing demand by raising entrance requirements, cutting class sizes, and lowering tuition?
What do you think? Of course not. The law school business is immensely profitable. After all, they sell dreams of monetary success for the avaricious, justice for the inspired and job security for the frightened.
When times are good, law school graduates, tend to get some of those things. But times are not good and many of those dreams are going to be nothing more than a lifetime of debt and second rate jobs.
It is ethical for law schools, especially second tier, to keep on doing what they have been doing without the slightest deviation?
No.
Are they going to change?
No.
But this is a good discussion of the situation and I recommend you read it. I’m very impressed with the web site. The guy is honest to God idealist. Treasure him, there are not a lot left.
James Pilant
World Cup Ethics And Flexible Ethics In The Wake Of The BP Disaster
Two extremes, right? The title represents Chris MacDonald’s last two blog entries. His June 15th entry discusses worker productivity and the World Cup. Here MacDonald asks the question, “How should an important-but-time-consuming cultural event like the World Cup be integrated into the workplace?” You should give it a read.
His other entry is for June 14th. Here he discusses whether or not ethical obligations appear differently under conditions of stress, in this case, in the aftermath of BP’s contribution to the environmental movement. He makes comparison between the Katrina aftermath and the current gulf situation. He concludes with a pretty paragraph. Let me quote it in full.
Now there are of course differences in the two cases. In the Katrina and Haiti cases, people were literally fighting for survival — it was literally life-or-death. Presumably no one in the Gulf Coast tourism industry is literally going to starve to death. But still, the general question remains interesting: to what extent can ethical rules legitimately be bent, when someone’s interests are seriously threatened?
Not a Churchillian statement by any measure but a good summing up.
You could probably avoid a number of my posts by simply putting MacDonald in your favorites and checking him every couple of days.
James Pilant
The Supreme Court Is Right.
I despise the Roberts court. After the Citizen’s United case in which the court addressed an issue that wasn’t even brought up in the case to give corporations the same rights as human beings meaning that they could spend unlimited amounts for advocacy. It seemed to me then and now that a paper entity and a citizen of the United States have striking differences.
Many, many people including me get upset when the obviously guilty walk free. I remember when Imelda Marcos evaded conviction with some anger and I could name some more. One of the most loathsome characters in the history of the United States and Canada is Lord Black also known as Conrad Black. This odious figure used a non-compete clause to enrich himself by many millions of dollars. Jeff Skilling, one of the architects of the Enron debacle, is also likely to walk free. It is difficult to contemplate any number of common criminal thefts and robberies that can close to Skillings incredible career of monetary destruction. Yet, it seems today that their convictions will be thrown out because of a Supreme Court decision.
Conrad Black should be in prison. He is a criminal.
Jeff Skilling is a criminal. He should be in prison.
But the Supreme court is right. The issue at question is the “honest services” law. Under the law if you fail to offer honest services you have committed a crime. The problem here is obvious – what are honest services? If you are late to work, are you late, stealing from your employer and thus liable under the law? The law gave enormous discretion to prosecutors, actually the word incredible come to mind. It was more a license to convict than a law. Alabama Gov. Don Siegelman was convicted under the law. His crime was to appoint a contributor to a position in exchange for his financial support for a campaign for a statewide lottery. It was a non-paying position that he had been appointed to several times under previous governors. That’s grounds for a federal prosecution?
What is worse about this whole stinking prosecutorial mess is that I believe that under the law, there were legitimate statutes under which to try most of these men, particularly simple fraud. The time is up for new criminal filings. Because the prosecutors opted for the easiest possible legal theory, there will be no convictions at all.
James Pilant
HOW TO BECOME A SYSTEMS ANALYST (via Lizette Grace Sabanilla’s Blog)
Ms. Grace explains with commendable clearness the business of being a Systems Analyst and what that entails. To my delight she mentions a knowledge of business ethics in a positive light, not just as a painful and annoying course that one must get through. She has my appreciation. If System Analyst is your thing, a better into would be hard to find.
James Pilant
Zachary Burt
Zachary has some distinctive ideas on business ethics. He also has some interesting comments on networking (I am in total agreement on the uselessness of business card swap meetings.).
His web site is called Zachary Burt’s Blog.
Derivative Napalm
Alain Sherter (BNET) is on the hunt today. The enemy is New York Democrats seeking to weaken financial regulations at the behest of the that very same financial industry.
In his article Sherter discusses those trying to weaken the bill and notes that –
In defense of preserving the current rules on derivatives Rep. Mike McMahon said:
Wall Street is to New York what cars are to Detroit and corn is to Iowa.
To which Sherter responds –
And derivatives are to the U.S. economy what napalm is to human flesh, but who’s quibbling.
If words were daggers, McMahon would look like a pin cushion.
Read the article. It’s rage, reason and satire, you don’t see that much. Not many people can write like that. It should be appreciated.
James Alan Pilant
David Lazarus: Retail Credit Card Fees, Who Should Pay?
David Lazarus writes for the Los Angeles Times. His column today deals with who should pay retail credit card fees.
Whenever you buy something from a retailer with a credit card, they pay an additional fee for processing, apparently about 1%. However, on a $300 dollar purchase that $3 and after a while it adds up. Congress has before it a new bill which will place supervision over these fees. The retailers want to be able to charge extra to consumers for using credit cards. The banks want things to stay the way they are. But what the banks are really frightened of is revealing how much it actually cost them to process these transactions.
These fees may have made sense in the early days of slow computers and inexperience, but your current computer be it a laptop or desktop could run thousands of transactions by itself. Does it cost a dollar to process a one hundred dollar credit card transaction? I don’t think so.
Lazarus has an elegant solution. Find out what the transactions cost and lower them to a more reasonable level. Banks are entitled to profit from their activities but without consumer and retailer knowledge of what actually takes place here, we have less of a service than a magical transference of your money by a priest of finance. That is not fair.
James Pilant
Ethics Columnists Round Up 6/14/2010
Mitchell Schnurman writing for the Fort Worth Star Telegram discusses Radio Shack continued push for more incentives to stay in the Fort Worth area. Schnurman is upset about the whole matter and after you read the article I bet you get upset too. It’s a good two pages and most of it is spent discusses the great deals Radio Shack is already getting. This guy is fighting the good fight. I wish there were more people like him. Give ’em hell, Mitchell!
Loren Steffy has a picture of a crab sporting a new camo paint job courtesy of its friends at British Petroleum.
Steffy’s June 10th essay asks that interesting question, “Do the Chinese want to organize a takeover of BP?”
Jon Talton talks about the poorly performing stock market and asks his readers to vote on what they expect it to do. (It’s going down.)
Jay Hancock asks, “Why is anyone surprised that Moody’s downgraded Greek debt to junk status?” He’s right. The most casual reading of the newspaper would tell someone the country was in trouble. A tiny, little reading of the material disclosed Goldman Sachs’ involvement in the debt crisis. Haven’t you seen enough of Goldman Sachs to realize that all their clients are expected to be “sophisticated investors?” Doesn’t always work out, does it?
Edward Lotterman says what I have already known for a long time: the internet can be a reliable source of information. He recommends using official government reports and cross checking them with other government agencies. I consider it to be a matter of experience and judgment tempered by a willingness to keep on hunting until you are sure you have the answer, and if you can’t find a definitive answer, the willingness to explain where you found the data and that it may not be accurate. (I firmly believe that humility is seriously lacking in this culture.)
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