Category: business ethics

Who Is Responsible For Our Financial Crisis?

On By southwerkIn business ethics

002-1Who Is Responsible For Our Financial Crisis?

Dylan Rattigan nails it (from the November 25, 2009 program, Morning Meeting):

Exactly and more importantly making sure that we identify who burned the house (the house being the American economy) down, who made themselves rich burning the house down, getting the money back from those who made themselves rich burning the house down, punishing those who burned the house down and then building a new house that doesn’t allow people who like to burn houses down to build them. And they’re acting like the house fire was an accident and I think that’s where you run into a lot of problems.

There has been a continuous failure of the Obama Administration to place blame or establish penalties for the long term financial wrong doing that created the greatest economic crisis since the Great Depression. Without accountability what reason do those who have profited so much from hurting so many to stop their actions?

James Pilant

Does The Bottom Line Always Trump Ethics?

On By southwerkIn business ethics

From Reuters, a comment from China Labor Watch:

“The case of Wal-Mart, the world’s largest retailer, shows that corporate codes of conduct and factory auditing are not enough by themselves to strengthen workers’ rights if corporations are unwilling to pay the real price it costs to produce a product according to the standards in their codes.”

Acting ethically costs real money. It limits the return on investment. It complicates dealings with suppliers, competitors and often the government.

Doing the right thing is never cheap. The wrong thing can make you enormous sums of money in a world where this kind of behavior has no down side.

jp

Pets to Benefit from Holiday Cheer

On By southwerkIn business ethics3 Comments

Generally speaking the occasional pet story doesn’t bother me. However this was the leading or top story on CBS News’ web site. The only other thing going on was the crisis in the treasury department and the Federal Reserve Board. And they have mentioned the largest economic crisis since the Great Depression. Now I freely admit that later in the business news they became more serious. But really, doesn’t this belong in the “popular” news or how about just moving it down a hair so it isn’t the number one story.

What Moral Stance?

On By southwerkIn business ethics

As I discuss the ethical implications of various business practices, I am troubled by the multiple possibilities of moral stances. Catholic Social Doctrine, Protestant Social Doctrine, the Southern Baptists’ total absence of any moral doctrine in regard to the business expressed as free market absolutism, Plato and Aristotles advocacy of the good life, the life examined and well lived, Kant’s categorical imperative, Friedman’s thinly veiled advocacy of Friedrich Nietzsche Superman, (the moral and ethical are weaklings who place limits on the “real” achievers because otherwise they couldn’t cut it); what do you advocate when examining the strange conduct of American business?

I will search for the best options, but it is not going to be easy. But doesn’t that fit with so much else?

The fight for justice, truth and honor is never won. The forces of evil rise again and again. There is no golden stake you can thrust into their heart to stop their depradations on the poor and helpless, their use of the levers of power to enrich themselves when they have contributed nothing and worst of all their continued recruitment of the young an a half wit philosophy of joining a group of “special” people, achievors, the real makers and shakers, an Ayn Rand doctrine that makes you special without any accomplishment or achievement save a twisted belief.

What is there but to fight, to struggle. Hear the words of Cyrano de Bergerac
in the last act of the play.

(He raises his sword):
What say you?  It is useless?  Ay, I know
But who fights ever hoping for success?
I fought for lost cause, and for fruitless quest!
You there, who are you!–You are thousands!
Ah!
I know you now, old enemies of mine!
Falsehood!
(He strikes in air with his sword):
Have at you!  Ha! and Compromise!
Prejudice, Treachery!. . .
(He strikes):
Surrender, I?
Parley?  No, never!  You too, Folly,–you?
I know that you will lay me low at last;
Let be!  Yet I fall fighting, fighting still!

Let us fall knowing that we acted with honor. Let us die with a curse on our lips for the sanctimonious, pompous evil doers among us. Let us die well.

Chamber of Commerce Stacks the Deck

On By southwerkIn business ethics2 Comments

Truth. We are taught to respect it. It might be said that truth is the basis of morality and ethics. Certainly the search for truth is the basis of modern science.

But the United States Chamber of Commerce already knows the truth. To paraphrase the movie, Treasure of Sierra Madre, “They don’t need no stinking research.”

In a series of memos, the Chamber explains that it has decided to pay $50,000 dollars to a “well-respected economist” to write a study explaining that the health care bill will cost jobs.

“The economist will then circulate a sign-on letter to hundreds of other economists saying that the bill will kill jobs and hurt the economy. We will then be able to use this open letter to produce advertisements, and as a powerful lobbying and grass-roots document.”

This the Chamber’s procedure. We decide on a result. We hire someone who “looks” respectable but has the morals of a syphilitic serial killer. He conducts a study predesigned to our conclusion. We get the research result we want and we can call it science.

Tell me, what does this say about the organization and its lobbying effort?

Does Cargill Use Derivatives To Help Small Business Or To Gamble On The Market?

On By southwerkIn business ethics

Does Cargill Use Derivatives To Help Small Business Or To Gamble On The Market?

 

In testimony before Congress, Jon Hixson of Cargill portrayed his company’s use of derivative as an aid to small business. (I provide a link to the full testimony below.)

Testimony Before the House Committee on Financial Services On Reform of the Over-the-Counter Derivative Market: Limiting Risk and Ensuring Fairness

“We offer customized hedges to help bakeries manage price volatility of their flour so that their retail prices for baked goods can be as stable as possible for consumers and grocery stores,” he told the committee’s wagging heads. “We offer customized hedges to help a restaurant chain maintain stable prices on their chicken so that the company can offer consistent prices and value for their retail customers when selling chicken sandwiches.”

Cargill earned 525 million dollars in the first quarter of this year. The total company is valued at 6 billion dollars according to its SEC filing.

Thus, we have clear evidence that derivatives are beneficial to Cargill. But when you read the testimony there is an absence of any numbers pointing to benefit for any of these small businesses. In fact, we are essentially asked to simply believe Cargill’s point of view.

I prefer numbers and verifiable evidence.

Derivatives are controversial because the use of derivatives during the 2007 economic crisis has been catastrophic destroying many financial institutions and were instrumental in creating the continuing economic difficulties.

It might be wiser to forego the use of derivatives for safer financial instruments. While derivatives may aid small business, they are also risky instruments. Do these different rationales conflict? Yes. Are there other choices? I am sure that in the multitude of financial instruments being sold today, there are other options.

I do have one question not addressed in the testimony, “In these transactions, who bears the risk of loss, Cargill or the small businesses?” I have seen that Goldman Sachs when using derivatives charged the investors with purchasing insurance to make sure the company suffered no loss. Is this the case here?

James Pilant