Category: business ethics

Business Ethics Blog Posts 7-18-2016 The Neoliberalism Slam Edition

On By southwerkIn business ethics

Will Neoliberalism in the end destroy democracy? 

Polanyi was far more broadly educated than most economists, perhaps an equal to Keynes. He was employed in Vienna in the 1920s as the “senior editor for the premier economic and financial weekly of Central Europe”– the Financial Times of its day and region. On the very first page of the opening chapter of The Great Transformation, Polanyi delivers his judgement on where the logic of mandating free markets as the dominant force in society would lead if not tempered with countervailing power:

Our thesis is that the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial life, and thus endangered society in yet another way. It was this dilemma which forced the development of the market system into a definite groove and finally disrupted the social organization based upon it.

Does general equilibrium theory have any actual proof that such equilibrium take place? 

Almost a century and a half after Léon Walras founded neoclassical general equilibrium theory, economists still have not been able to show that markets move economies to equilibria. What we do know is that — under very restrictive assumptions — unique Pareto-efficient equilibria do exist.

But what good does that do? As long as we cannot show, except under exceedingly unrealistic assumptions, that there are convincing reasons to suppose there are forces which lead economies to equilibria – the value of general equilibrium theory is nil. As long as we cannot really demonstrate that there are forces operating — under reasonable, relevant and at least mildly realistic conditions — at moving markets to equilibria, there cannot really be any sustainable reason for anyone to pay any interest or attention to this theory. A stability that can only be proved by assuming “Santa Claus” conditions is of no avail. Most people do not believe in Santa Claus anymore. And for good reasons. Santa Claus is for kids.

Restaurant Associations Don’t Speak for the Industry on Tip Credit Wages

Rapid charter expansion disaster for public schools in Detroit – 

Arnsen’s study documents what many have suspected: the rapid growth of charter schools is itself a factor destabilizing so-called “portfolio school districts” which are conceptualized as school marketplaces managed like a business portfolio in which new schools are opened and so-called “failing” schools are shut down in a constant cycle of churn.  Arnsen concludes his interview with Berkshire: “A place like Detroit is just chaotic. It’s the foremost example nationally of the adverse consequences of a poorly regulated education market… Our charter sector in Michigan is unusual nationally in the extent to which the schools are run by for-profit management companies… (W)e have a situation in Michigan where the charter interests are very influential in the state legislature.  It makes it much harder in this state to reach consensus not only on coherent choice and finance policies, but also on policy relating to all sorts of education issues….”

In other words, in a state where far-right Dick DeVos and his Great Lakes Education Project along with owners of the for-profit charters are actively buying political influence, it is very difficult to get the legislature to regulate what is an out of control charter school marketplace.

Student Loan Disaster

Making a long story short, the federal government enabled banks and private equity companies to monetize the federal student loan program, enabling them to make significant profits from the loans and fees. Because many state governments embraced an ideology of selfishness and opposition to public goods, these governments significant cut their support for state colleges and universities, thus increasing the cost of tuition. At the same time, university administrations were growing both in number of administrators and their salaries, thus increasing costs as well. There was also an increase in infrastructure costs due to new technology as well as a desire to market campuses as having amenities such as rock climbing gyms. The result is $1.3 trillion in debt for 42 million Americans. On the “positive” side, the government makes about 20% on its 2013 loans and the industry is humming along at $140 billion a year.

Malaga island and Eugenics

“Eugenics really took hold in both education reform and reform of social service practices in the state by the 1910s,” says Kate McMahon, a doctoral candidate at Howard University who has been researching Malaga Island, “Those who were poor were also institutionalized and many were forcibly sterilized.” With the growth of this social movement, an increase in sentiment of racism within the state, along with a fear that the black faces of Malaga would interfere with tourist’s vision of the picturesque Maine ideal, it was only a matter of time before the residents of Malaga Island became the center of these social policies and prejudicial fears.

Saving South Dakota from radiation

On July 22nd, an engineer is selling, er I mean, discussing, the underground nuclear waste dump…um, I mean, research laboratory.  It puts a nice spin on it, when you call it “research”, doesn’t it??  Clearly, this guy is going to market the idea to people–this is not about giving information to the public so that they can decide whether this is a wise decision or not.  The way that this project has been shoved through without much public input tells you that it is not what the public wants nor needs.

We have report after report on nuclear waste leaking at other sites:  New Mexico and Washington State.  Here’s another reporton it.

I don’t care about geology supporting it here in South Dakota.  It’s not natural and not supposed to be in the Earth.  It will come back to bite us in the arse…we have seen this over and over.  The arrogance is astounding.

Nine hundred million dollars in laundered drug money and they just paid a fine. 

What happens next at Fox News?

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The Neoliberalism Slam Edition

Back from the dead! (Go have a look! jp) 

Who is Fethullah Gulen and what is he doing in the charter school movement? 

Better Scientists through Philosophy.

 

The System Affects Morals

On By southwerkIn business ethics

The System Affects Morals

Circumstances have an effect on what we do. We can build systems that support and reinforce morality or we build systems that weaken and destroy morality.

Take this example from India. This is from an article entitled: – If no one helps you after a car crash in India, this is why.

Kanhaiya Lal desperately cries for help but motorists swerve straight past him. His young son and the splayed bodies of his wife and infant daughter lie next to the mangled motorbike on which they had all been travelling seconds earlier.

The widely broadcast CCTV footage of this scene – showing the suffering of a family of hit-and-run victims in northern India in 2013 and the apparent indifference of passers-by – troubled many Indians.

Some motorcyclists and police eventually came to the family’s aid but it was too late for Lal’s wife and daughter. Their deaths sparked a nationwide debate over the role of bystanders – the media hailed it as a “new low in public apathy” and worse, “the day humanity died”.

Why do people just walk away and do nothing in the face of such suffering? Are citizens of India evil and oblivious to suffering? Certainly not.

Then what’s going on?

In India if you assist a traffic victim the police assume you must be doing it out of guilt and they will likely arrest you and if they don’t you may wind up as a witness in a legal case. And in India, legal cases can drag for many years.

If that isn’t enough In India if you take someone to the hospital they are very likely to try to make you pay for their medical care.

There are efforts underway to change those rules and they are having an effect. India is re-writing its laws.

There are a lot of differences in our system compared to theirs. No one is likely to arrest you for calling an ambulance in an emergency or assume you caused the accident. If you take someone to the hospital they don’t try to bill you if you don’t know that person.

And the results are clear. When you encourage rescue, people get rescued. When you encourage people to not get involved, people die.

Are there examples where Americans are changing systems to encourage a lack of morality?

Absolutely, corporate and governmental decision making is increasingly divorced from any kind of moral code.

The sole concern of business is to make a profit for shareholders. It doesn’t matter whether or not you make a product, accomplish a goal, do good or even stay in compliance with the law. Money is all.

You can read articles where people discuss the idea that the only function of business is to make money. It’s an amazing experience. They hold the idea up of money (and sometimes greed) as the sole goal as if were a philosophical diamond, shining in the light. They talk about it as if they had found truth like King Arthur’s knights searching for the Holy Grail. As if it were obvious to any thinking human being that every other value was subordinate to money or to say it slightly differently, shareholder value.

What do we get when we train people to think only in terms of profit?

What’s happening now is what we get. Corporations that have no loyalty to anything that doesn’t make money. They evade taxes; refuse any responsibility for the communities and nations that have nurtured them. They have become moral free agents or more correctly amoral free agents. Like the superman of Friedrich Nietzsche, they are beyond the rules and expectations of lesser men.

I subscribe to another view. This is from Pope Francis’ Apostolic Exhortation, EVANGELII GAUDIUM, section 55:

One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

Corporations were created in nations like the United States to allow investors to come together to create great economic projects that could live beyond their creator lifetimes. They were not designed to be our masters or our destroyers.

Each system to encourage right actions and morality has to be based on an ethical system. If India can change its laws to encourage people to save the injured in car accidents, we can change our focus from simple profit to wider moral concerns that include a respect for law and an abiding loyalty to the United States.

James Pilant

Minimum Wage Dispute?

On By southwerkIn business ethics9 Comments

Minimum Wage Dispute?

Classic economics would suggest that raising the minimum wage will kill hiring. I had my basic economics class in 1974 and the book set up a graph showing virtual mathematical certainty that increased wages meant decreased hiring.

Classic economics deals with wages, prices and employment as if they are some kind of “natural forces” like wind and rain. When I was 18 and 19, that kind of thing was persuasive. The young like certainty. And today, many both young and old find the certainty of that kind of free market fundamentalism very attractive. The Utopian vision of the invisible hand dispensing economic justice to the deserving and undeserving is a kind of pre-final judgment. An invisible but very equitable economic deity is the kind of idea that only someone desperate for simple solutions to complex problems can find believable.

There is nothing natural about an economic system. It is made up of fallible human beings. Everything about it is artificial, human created.

Let’s examine the economics in regard to Seattle’s minimum wage increase. This is from Huffpost Business:

Basic economic theory suggests that when you increase the price of something, demand decreases. In minimum wage terms, that would mean when it’s more expensive to hire people, businesses won’t hire as many people. But in practice, the research doesn’t bear that out. Studies show that small minimum wage increases don’t affect employment that much. 

Adam Ozimek, an economist at Moody’s Analytics and a frequent economics blogger, wrote Monday about some of the initial results out of Seattle, which started phasing in a $15 minimum wage in 2015. Very early results seemed to indicate that the higher minimum wage, which is only $13 as of Jan. 1, 2016, led to people losing their jobs. But more recent revisions to the local data more or less erase that dip.

“So far there haven’t been any smoking guns” to prove that higher minimum wages kill jobs, Ozimek wrote. 

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Minimum Wage Dispute?

This should simply not be possible. Under classic economics, there is no dispute. Higher wages produce job loss and reduced hiring. Yet, here the numbers do not show that.

I want you to remember this very clearly. Classic economics does not in practice seem to work. And we have been using the rules of classic economics for decades. What price have we paid for this “science” and its predictions?

I think the price has been enormous. I believe that millions of Americans are paid less, our economy smaller and financialization adopted as a national policy based on the predictions of classic economics.

It’s time for second look. The data from the Seattle minimum wage demonstrate serious weaknesses in the theories of classical economics.

James Pilant

 

Self Regulation in 1819

On By southwerkIn business ethics2 Comments

Self Regulation in 1819

Labeling poison as, well, poison, might strike you as an obvious social good. That wasn’t always so obvious as the selection below indicates –

Stratmann’s portrait of the age of arsenic (by far the most frequently used poison) is more than a string of grisly tales, and more relevant to our age than you might think. Two hundred years ago, lethal substances were readily available in a way that now seems utterly perverse. Arsenic was used widely in medicine, agriculture, industry and the home. It was employed to dip sheep, kill rats, anoint fly papers, and could be purchased in powdered form from grocers, no questions asked. In 1819 a bill was introduced that would have made the labelling of deadly poisons compulsory, but it was opposed by the Society of Chemists and Druggists as potentially damaging to their business. It never passed.

From http://www.theguardian.com/commentisfree/2016/mar/18/poison-arsenic-gun-control-crime

Has it always been this way and will it always be this way? Every attempt to do the most obvious necessary thing that might conceivably cost a business man money will be opposed by trade organizations, corporations, chambers of commerce and laissez faire conservative of all stripes regardless?

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Self Regulation in 1819

Yes, the dollar always has a constituency and never lacks for friends. Even in the face of overwhelming evidence of wrong, the dollar will still scream out in pain and let us all know of its suffering.

But we have a responsibility too. The dollar has friends but so does humanity. Humankind is not always valued as much as money but should be and if money always has friends the some brave souls will have to volunteer to stand up for all of us and sometimes the least of us.

James Pilant

Pay to Pray Scam

On By southwerkIn business ethics4 Comments

Pay to Pray Scam

Suppose that you are in trouble. Your child is dying. You are told of a web site run by a Christian pastor with followers who can help. His site has testimonials to the healing power of prayer and how he has helped many before. All you have to do is make a thirty-five dollar contribution and thousands of Christians will pray for you. Your child may be saved.

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Pay to Pray Scam

Unfortunately some of this is true and some not. The true parts are about the dying child and the web site. But there was no pastor and no followers and no people praying and all the testimonials were lies. There were however fraudulent withdrawals from the credit card account once the site had the data. The money was very real.

From http://www.theguardian.com/us-news/2016/mar/20/pay-to-pray-scam-washington-christian-prayer-center-online.

As a result, the owner of christianprayercenter.com and its Spanish-language counterpart, oracioncristiana.org, have been ordered to pay up to $7m in restitution to an estimated 125,000 desperate consumers who reached out for prayers in their times of need.

Seattle businessman Benjamin Rogovy and the Christian Prayer Center “created fake religious leaders and posted false testimonials in order to attract consumers”, the attorney general’s office said in a statement announcing the settlement last week.

Christianity and other religions have always been magnets for hucksters and thieves. This is just the latest thing.

The appalling morality here is disgusting. The cynicism is breath taking. Many Americans are Christians or have some kind of religious belief. When people are in trouble they tend to appeal to a “higher power.” And the question asked by our intrepid enterprising young businessman is “How can I turn this into profit?”

He made a lot of money but that was not the only angle. He also helped with “consumer complaints” and provided ordination online.

But this whole matter I find very upsetting. I don’t see any criminal investigation. The last I heard make extra withdrawals on a credit card account is illegal. Further, is the financial penalty in any way commiserate with the profit made? The article is silent on this.

But what really gets me is this question: If he had gotten a real pastor to pray each week presumably with some members of the church participating, would he anything he did be illegal? Making false charges on the credit card would still be actionable but as long as someone prayed and people wrote testimonials about how in their experience these things were good, I don’t see anything actionable.

So, could you charge people for praying or for having someone else pray? I think you probably can. I am sure most denominations would back away from this but this is the United States and setting up a church here is quite simple.

So I don’t think we have seen the end of incentivized prayer, a kind of Neoliberal Christianity. Which, of course, makes the religion more marketable if that is desirable. I’m from a previous era where Christianity had something to do with service, believe and sacrifice. I admit to being both out of fashion and economically archaic in my beliefs.
James Pilant

NFL Admits Link between Football and Degenerative Brain Disease

On By southwerkIn business ethics

This is from the Guadian – http://www.theguardian.com/sport/2016/mar/14/cte-nfl-link-football-brain-disease-senior-official-acknowledges and is followed by my comments.

An NFL official has acknowledged a link between football and a degenerative brain disease for the first time.

Jeff Miller, the NFL’s senior vice president for health and safety, spoke about the connection during an appearance Monday at a congressional committee’s round table discussion about concussions.

Representative Jan Schakowsky (D-Illinois) asked Miller: “Do you think there is a link between football and degenerative brain disorders like CTE?”

Miller, who was referring to chronic traumatic encephalopathy (CTE), began by discussing the work of Boston University neuropathologist Dr Ann McKee, who has found CTE in the brains of 90 out of 94 former pro football players.

“Well, certainly, Dr McKee’s research shows that a number of retired NFL players were diagnosed with CTE, so the answer to that question is certainly ‘yes,’ but there are also a number of questions that come with that,” Miller said.

Schakowsky repeated the question: “Is there a link?”

“Yes. Sure,” Miller responded.

Will football as we now understand it continue?

hmlbr30I think that this kind of admission reflects a conclusion that the NFL has already reached, and that is, that the game cannot continue in its current form.

I believe right now they are busy looking at new ways the game can be played and at fairly immediate rule changes to limit the damage to players and the league’s bottom line.

They don’t have a choice. The evidence that repeated impacts are destroying the players brains is accumulating very quickly and looks very solid.

I am very impressed that they didn’t choose the tobacco defense of deny and stall or decide to fund some “climate denying” style web sites and organizations. Of course, that kind of thing would have only worked for a while and I suspect that stalling the inevitable when they have other and better choices such as re-designing the game struck them as painful and revenue threatening. They’d rather play ball and make money. That makes sense to me.

James Pilant

The Media Is Clueless

On By southwerkIn business ethics

The Media Is Clueless

Basic business ethics requires that you perform a business function with competence. Yet, our American media simply doesn’t understand the American people.

The success of Donald Trump and Bernie Sanders are in the minds of our media incredible beyond all bounds of rationality, and they continue to write long serious stories about how both of them will explode and crash any time now -basically the same articles they’ve been writing for months.

(Now understand clearly, it is not hard to see that Trump and Sanders are very different phenomenon. The only reason I’m talking about them both at the same time is that the media doesn’t get either one.)

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The Media Is Clueless

I’ve been reading much of the discourse about the two candidates since the beginning and the old fabled beltway, villager, very serious people analysis is failing and they are astonished; aghast that their establishment alternatives (always very limited in number) are not the public’s choice. And therefore, according to them, the American people are just stupid. 

Well, there is stupidity here and it’s a mile deep but it is not the American peoples’ problem. It is the gross incompetence of a complacent, servile media. It is the moral and intellectual bankruptcy of our ruling class whose servitude to the intellectually shallow concept (more of a puddle, actually) of Neoliberalism has wrought havoc on the lives of millions with little discernable gain unless you are a billionaire. 

Why are the media and the ruling class unaware of the anger of the American people? Because they live in an economic bubble. They literally don’t know anyone who makes less than $250,000 a year. And that means, they don’t know anyone who has to work three jobs. They don’t know anyone with a terminal degree doing adjunct work making an average of $22,500 a year. They have never met someone who works a job where their schedule is created by a computer for the company’s convenience so they can’t hold a second job, get an education or have any kind of home life. 

In short, they are ignorant of the lives of the great mass of the American people. They walk this land like tourists, living in nice hotels, eating in nice restaurants and keeping the locals at a safe distance. 

I don’t know how you can live in this country and not know that things have gone badly wrong. The economic statistics by themselves are staggering in their implications. The United States has a huge underclass, a seeming flood of the homeless and mentally ill and a real continuous problem with people not having enough to eat.

And if that isn’t enough to get your attention, we have a brand new study showing that white males with less than a college education have diminishing life spans due to suicide, drug and alcohol abuse. These people are dying but apparently unless they throw themselves under the wheels of a press bus, our media elites are not going to consider the implications.

It takes a lot of willful stupidity for the media act and treat us the way they do. I think they’re paid to be stupid. I think that our media outlets find the stories of the lives of real Americans and the real suffering that people have to be unpleasant and not worth covering. Furthermore and most importantly, the elected officials they idolize, the decisions they respect, are all corporate just like them. That’s why there was little coverage of the Flint, Michigan water crisis until the ugly facts became overwhelming and, dare I say it, that people began to die (legionnaire’s disease). 

I don’t expect them to get any better. But there are a few writers who seem to have some grip on the situation. 

Here’s Jeb Lund writing in the Guardian – 

Anger is pretty easy to miss when it’s something pretty difficult to feel. When you sit at the center of the world and are unlikely to ever lack for the basic materials of self-sufficiency, the idea of blind, gnawing resentment – let alone of feeding that resentment even with irrational aims – is ineluctably beyond your ken.

It’s harder still to understand that there are millions of people in America whose ambitions for a life of steadily improving conditions cratered sometime around nine years ago and have never recovered. If you can hardly imagine that you could follow the Horatio Alger script to the letter and still find yourself sinking in quicksand, you’re never going to understand why someone would be so contemptuous of the pieties of a system that only pays attention to you when doing soft-focus interviews in search of a journalism award or a campaign ad.

And anger isn’t something so easily ratiocinated. When your job is explaining world events, irrational phenomena lie fundamentally outside your brief. Explaining things with, “Well, people are angry!” is like surrender; it’s explaining badly resolved story lines in a TV show with, “A wizard did it.” Journalists learn to see the world in terms of the push/pull of conflicting ideologies and the necessary stratagems within a needlessly complicated governmental system; they’re necessarily going seek their explanations for seeming irrationality in the more elegant realms of philosophy and economics and political science.

He’s right. 

We are being ill served by our news media and the ruling elites that have created this giant economic nightmare.

Perhaps this election will not just change politics but upset the mindset of the blindingly stupid who write our news and create our policies.

James Pilant

Mozzarella without Mozzarella?

On By southwerkIn business ethics1 Comment

Mozzarella without Mozzarella?

Please read the following excerpt from a Salon article entitled: The only thing missing from McDonald’s new mozzarella sticks is mozzarella cheese.

One of the main ingredients in mozzarella sticks is, well, mozzarella. I mean, it’s right there in the name. Which explains why McDonald’s patrons who purchased the chain’s newest menu item have been extra disappointed to find their mozzarella cheese sticks sorely lacking in mozzarella cheese.

 Using the hashtag #Wheresthecheese, disappointed customers have been posting photos showing cheese sticks that look like hollow breaded encasings. The mozzarella cheese filling that comes to mind when you think of traditional mozzarella sticks is nowhere to be found. On its website, McDonald’s features pictures of mozzarella sticks filled with rich, gooey, “100 percent real and melty mozzarella cheese.” Contrast those with the sad, empty food sticks people report receiving in real life: …
Sometimes, you don’t realize that there is problem with a business or corporation for many months. The pollution, the deaths, the injuries, etc. don’t form a pattern and causation is often tricky. But when you come down to the simple and the mundane, you can see the business ethics problem before your eyes and in this case taste it.
Real cheese is expensive compared to milk by-products, etc. But we don’t have to worry about substitution in this case. According to the numerous pictures which can be found of which a single sample can be found here. there isn’t any cheese.
Should we let the market take care of this or should the government act? Well, it seems to me that McDonalds is likely to get clobbered on social media and there probably will be consequences in terms of their profits. On the other hand, the product is advertised as full of real cheese, and we have laws about false advertising.
Abraham LincolnThere is story that Abraham Lincoln used to tell about a settler who got in a fight with a bear. His wife didn’t want to be seen as taking sides because she didn’t know who was going to win, so she’d shout, “Go bear!, go husband!” I don’t have a dog in this fight, so “Go government!, go consumers!. Whoever gets them first is fine with me.
James Pilant

Patterns of Corruption

On By southwerkIn business ethics

Patterns of Corruption

This post is particularly aimed at other professors who teach business ethics. I was on YouTube and found a film by Adam Curtis called The Great British Housing Disaster and it is a business ethics masterpiece. Here’s a piece of if  –

The very banality and consistency in the greed and incompetence of the malefactors here is amazing and in my experience, I have found that attitude commonplace in this country as well.

The film tells the story of how Britain decided to build a great deal of housing in a very short period of time and how that gave opportunity for unscrupulous contractors to build sub-standard housing. It takes you through the whole process from politics at the national level to the local and then, architects, contractors,workers and regulators. We are shown the building process and we see, in this case literally, the “concrete” results of the corruption.

I like the film because it’s well done and because it’s historical. I don’t want to be too topical,  too current, when teaching. When all the students have decided already what they think, it makes teaching more difficult. If you give them history and ethics, you have the opportunity of showing how corruption and incompetence follow particular patterns, and you see these patterns over and over again. If you watch the patterns, you can see the corruption as it develops in many other situations.

Now obviously I do teach on some current events but I prefer to use a film and a subject original to the students so they all begin at the same place.

For those of you who don’t teach, it’s a very fine piece of documentary film making and it is the first work listed in Wikipedia for Adam Curtis. So, it is kind of a preview of his later career.

James Pilant

Did TransCanada Just Kill the Trans Pacific Partnership?

On By southwerkIn business ethics

Did TransCanada Just Kill the Trans Pacific Partnership?

Democracy is a precious thing. It is easy to see that throughout history, autocrats of all types have attempted to end or limit government by the people whenever possible. Corporations are not different in this respect. They often and quite publicly prefer the autocratic and the certain over the will of the people and its variability.

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Did TransCanada Just Kill the Trans Pacific Partnership?

As time has gone by the United States has entered into treaties like NAFTA, the North American Free Trade Agreement. This agreement like many other trade agreements limits the sovereignty of participating nation states and gives power to international tribunals that are not answerable to the people.

These tribunals have not gained a great deal of public attention. That’s probably wise. The idea that a band of unknown bureaucrats can contradict the will of the people as a community, a county, a state or even a nation is a wonderful selling point if you’re a corporation but probably less than persuasive for the citizens who don’t realize that a big chunk of democracy (control over their lives) just went away.

One of the big chunks of democratic power that was given away was the right of governments to be not be sued by foreign corporations.

And while this has not been well known, it is about to be. You see, TransCanada had a stake in the building of the Keystone Pipeline and since the United States government said no, they are suing for more than fifteen billion dollars.

That will put the rest of us on notice that we can be sued if we obstruct international corporate profit making.

This is unlikely to make passage of the Trans Pacific Partnership easier for once people realize that even mundane decisions in the public interest can be reversed and penalized with money damages, they may decide that free trade agreements carry too high a price.

You may think at this point that I’m being an alarmist. TransCanada has yet to win any money and perhaps you don’t even believe that these international tribunals every really sue anybody. Well, what about Australia?

Let’s say you are a tobacco company and you don’t want people to regulate your product. You can use “free trade agreements” on your behalf. (This is from the Huffington Post –

Absent state intervention on their behalf, tobacco companies found a new way to fight efforts to regulate tobacco marketing. They take advantage of an “investor-state” dispute options being built into more free trade agreements between countries, which allows companies to directly challenge regulations they believe discriminate against foreign products. Unlike fighting laws in domestic legislatures or through WTO disputes, which are more formal and predictable, investor-state conflicts are decided by a panel of international arbitrators with no appeal, making them more attractive to multinational corporations.

So when Australia tried to put limits on how cigarettes were sold, the tobacco companies used the free trade agreements and used them well. –

(Further down in the same article -)

PMI has used that tactic to challenge Australia’s proposed “plain” packaging rules, which would eliminate bright colors and branding on packs and cartons, and Uruguay’s plan to require 80% of cigarette packs be covered in warning labels. The company argues that these restrictions on its trademarks and branding are akin to expropriation (which would require the country to pay the restricted company for selling its product unbranded) and violate trade deals between Australia and Hong Kong, where PMI has a subsidiary, and Switzerland and Uruguay.

What kind of democratic decisions could be challenged in the United States under these agreements and who could bring these law suits? Any decision that could affect profitability could be challenged. That would include things as mundane as zoning laws all the way up to federal legislation. Any corporation or citizen of a nation participating in the TPP could sue should they believe their operations are being damaged.

For example, Fayetteville, Arkansas could re-zone an area residential. If property there was owned by a foreign corporation say, one from Vietnam, an international tribunal might very well find that this act amounts to an expropriation of the company’s property and force the community to re-zone and pay damages for its “illegal” act.

Over time as the number and complexities of these “free trade agreements” grows, the city will have to become increasingly lawyered up to stay aware of the effect of city decisions on possible litigants all over the world.

Sound good? If you don’t like what you’re hearing, maybe you should do something to let your representatives from the President down to local government know that maybe we shouldn’t be weakening democracy to protect the profitability of foreign corporations.

James Pilant

Here is an excerpt from an article from the Guardian –

For many, the Keystone XL pipeline was a catalyst for environmental action, and when the State Department denied developer TransCanada’s permit application in November, it was a signal that the environmental movement had triumphed over corporate and fossil fuel interests. So when the tar sands company announced this week that it was filing a claim against the United States for $15 billion, under provisions in the North American Free Trade Agreement (NAFTA), many were outraged.

But TransCanada’s heavy-handed use of the Clinton-era agreement might be the rallying point activists need to stop another, perhaps even more far-reaching, federal action: the pending Trans-Pacific Partnership. The TPP is a massive, Pacific Rim trade agreement that would apply NAFTA-like provisions — including prohibitions on interfering with private investment — to the relationships between the United States and 11 other countries, including Japan, Malaysia, and Vietnam.

It might be the rallying point activists need to stop another, perhaps even more far-reaching, federal action: the pending Trans-Pacific Partnership. The TPP is a massive, Pacific Rim trade agreement that would apply NAFTA-like provisions — including prohibitions on interfering with private investment — to the relationships between the United States and 11 other countries, including Japan, Malaysia, and Vietnam.