The connection between psychopathology and the Financial Meltdown needs further research.
This article first appeared as a guest blog on Dr Alf’s Blog.
Moral Defects in the Financial Machine
The movement against war is sound. I pray for its success. But I cannot help the gnawing fear that the movement will fail if it does not touch the root of all evil – human greed.
Gandhi
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Homophilosophicus and his associates are some of my favorite people. If you want something new and different about that mysterious land of Ireland, this is a good place to go.
Ireland, or at least the cultural talking-heads of Ireland, has or have declared the coming ten years a Decade of Centenaries. Depending on where each participant stands this might refer to either the centenaries of 1911 – 1921 (from the 1911 census of Ireland), or of 1913 – 1923 (from the Dublin Lockout). Whichever way we look at this, it is absurd; for no matter where we stand in the stream of human history, unless one happens to be a Young-Earth Creationist, it will always be one hundred years since something happened. Regardless, the upcoming centenaries are important for the national nation-creation myths or history of Ireland. We have the sinking of RMS Titanic, the colossal industrial agitation around the city of Dublin in the Lockout, the Great War, the Easter Rising, the War of Independence, and the Civil War. All of these things are important, but one hundred…
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The Ethics Sage Talks Medical Conflicts of Interest
Steven Mintz has a new post. It concerns conflicts of interests, in particular those involving academics sitting on the boards of drug companies. It’s a critical problem and he paints the issue in the bright colors of ethical perception that such an issue deserves.
I recommend this essay and suggest you visit the web site and read more of The Ethic Sage’s posting.
James Pilant
The danger of the practice of allowing leaders of academic medical centers to sit on the boards of drug companies is more than just the perception that independent judgment may be tainted by these relationships. Academic medical centers should serve the public good. How can they be expected to do so if a situation arises, for example, where the pharmaceutical product is of questionable value and the center is dependent on funding from the company? After all, the deans and directors who sit on boards are only human and just as board members of corporate entities might be biased toward the interest of the company and not the public interest, these academic leaders might overlook a problem with a drug that could threaten the public health.
From the web site, UCDenver.edu.
A headline in The Denver Post was a reminder that health care providers, and the schools that teach or employ them, need to remain vigilant about conflict-of-interest issues.
The Post declared: “Docs limit drug-firm ties.” The ties refer to payments to doctors from pharmaceutical companies and medical-device manufacturers.”
The smaller headline tells another important part of the news: “Payments must pass ethics muster ….”
The story underscores changes that have occurred recently at the University of Colorado School of Medicine. The school has had conflict-of-interest (COI) rules on the books for years.
But in 2011 those rules were both tightened and clarified—the “ethics muster.” The guiding principle is this: faculty cannot accept money to help a company market or promote a product.
The main target of the change was what are called “speakers bureaus.” Companies set these up to pay for speeches by physicians and others. CU now bans such participation.
“We’ve made explicit what always was our intention,” says Steven Lowenstein, MD, an emergency department doctor and associate dean who helped shape the new policy. “Our doctors can’t promote products. Drug companies can’t tell our doctors what to say or require them to use the companies’ slides or other instructional materials. And speaking requests will be reviewed by a new committee.
“The committee review is designed to separate truly educational talks and research-related talks, which are permitted, from talks that are about marketing and promotion.”
Lowenstein notes that research collaboration and research-related talks are allowed because they advance the science and practice of health care and benefit patients. For example, a doctor might have a contract with a pharmaceutical company to assist in developing, testing or assuring the safety of a new drug or device.
The issue of payments to physicians has gained prominence because of reporting by the organization ProPublica. In October 2010, they published a report called “Dollars for Docs,” based on pharmaceutical company payment disclosures that recently had become available.
Chris MacDonald Discusses Loophole Flouting
Chris MacDonald writing from The Business Ethics Blog is discussing Japanese whaling practices as these actions connect to the larger moral and ethical framework of the nation at large. It’s a good read. I recommend it. If you have time, go to his web site and read the full post (and then sign yourself up as a follower!).
James Pilant
Japan’s loophole flouting is bad for business | The Business Ethics BlogJapan has flouted the 1986 moratorium on whaling, making use of a loophole that allows whaling for scientific purposes. In effect, the country’s fleet kills whales for what it claims are “scientific” purposes, and sells the meat for human consumption. You don’t have to be an ardent defender of the world’s whales to see the problems inherent in an having a key player in the world’s economy flouting an international standard.
And just think for a minute about that approach to compliance. It effectively means adopting the credo, do what you want, spirit of the law be damned, as long as you can find even the narrowest of loopholes. What example does has the country’s leadership been setting for the business community? How can government ministers look business leaders in the eye and encourage them to cleave to the meaning and intent of regulations? How can the government ask business, without risking hypocrisy, not to make cynical, self-serving use of loopholes?
Naturally, the government of Japan is not alone in this dilemma. The demands of political expediency often mean that political leaders get caught in a do-as-I say, not-as-I-do self-contradiction. But Japan’s stance on whaling seems a particularly blatant example. And the future of the issue still remains unclear. Japan has only committed to cancelling its whale hunt for this year. Time will tell whether the Japanese government, on this issue at least, demonstrates character worthy of emulation, or instead goes back to an approach aimed merely at securing short-term gains.
via Japan’s loophole flouting is bad for business | The Business Ethics Blog.
From the web site, Ethics and the Environment.
http://ethicsandtheenvironment.wordpress.com/2013/06/25/the-purpose-of-this-blog/
The Australian government has taken legal action against Japan over concerns Japanese whaling in the Southern Ocean was not done for scientific purposes.
According to BBC news, the case is been held in the International Court of Justice in The Hague, with Australia arguing that Japan’s scientific whaling program (under which it kills whales) is commercial whaling in disguise. A moratorium which bans commercial whaling was put in place in 1986 by the International whaling commission.
According to The Age, a Melbourne based newspaper, Australia Government counsel Bill Campbell told the court, “Japan seeks to cloak its ongoing commercial whaling in the lab coat of science.”
Mike Double from the Australia Antarctic division told AlJazeera Japan’s scientific whaling was not scientific because whales do not have to be killed to be study.
“We simply do not need to kill whales for the science,” he said. “We can collect all the information we need to conserve and manage these whales through non-lethal methods.”
Attorney-General Mark Dreyfus, who is representing Australia in court, said that more than 10,000 whales had been killed by Japanese whalers since the moratorium was introduced.
He said Australia wanted to see whaling practices halted “once and for all.”
SEC Member Doesn’t Like Shareholder DemocracySome things are the way they are supposed to be. Some things are not. An excellent example is shareholders and corporations. The perspective that most people have in a capitalist, private property system is that if you own a company, your decisions should determine what the company does. And this does happen when the stockholders control very large amounts of stock, for instance, in close corporations. But the influential and powerful corporations often have thousands of stockholders. When the stockholder base is diffused among so many players, it is very difficult for the stockholders to exert effective control.
As a result of this very large corporations tend to operate under CEO leadership with little input from shareholders.
In very large corporations, control by management (a combination of the directors and officers) is maintained with a very small percentage of stock ownership through the use of corporate records and funds to solicit proxies. (Reed, 2010)
Now let’s take a look at the Reuters article.
Any investor who owns at least $2,000 or 1 percent of a company’s stock for a year or more can bring a shareholder proposal, so long as it meets certain requirements. The U.S. Securities and Exchange Commission approved Fredrich’s pitch because it was designed to financially benefit all GE owners and not just him.
That, at least, distinguishes it from resolutions involving environmental, political or social issues that may not serve the interests of shareholders generally. SEC Commissioner Daniel Gallagher, speaking to the annual confab of M&A practitioners last week at Tulane University in New Orleans, argues that “it’s time we asked whether the shareholder proposal system as currently designed is a net negative for the average investor.”
Gallagher, one of two Republicans on the five-member SEC, claims it’s too easy for investors to get resolutions on company ballots. As a result, activists and corporate gadflies “hijack” elections, he says. The commissioner cited statistics showing that a third of proposals come from organized labor and a quarter from social or policy investors and religious institutions.
The upshot is a system that encourages “taking money out of the pocket of someone investing for retirement or their child’s education and using it instead to subsidize activist agendas,” according to Gallagher. The SEC’s rules, he says, should ensure that these activists do not “crowd out every-day and long-term investors” or advance causes “inconsistent with the promotion of shareholder value.”
http://blogs.reuters.com/breakingviews/2014/04/01/rob-cox-ge-should-put-itself-up-for-sale/
Cox, R. (2014, April 1). Rob cox: Ge should put itself up for sale. Reuters, U.S. Edition, Retrieved from http://blogs.reuters.com/breakingviews/2014/04/01/rob-cox-ge-should-put-itself-up-for-sale/
Daniel Gallagher doesn’t like the current system because it’s too easy to get resolutions on company ballots. That is a fascinating conclusion to reach considering the facts. There 10,033,130,000 shares of GE stock and this year there will be six resolutions for the stockholders to vote on. That number (6) would seem to imply that it is not that easy to get a resolution approved for a shareholder vote. Now, it is not publicly disclosed by the company how many actual shareholders exist but since the number of the shares exceeds the population of this planet by a comfortable margin, there are probably a lot of them. So, a disinterested observer might well think the system wasn’t broke at least in the direction of too many resolutions.
But the best part is the quote from above: “taking money out of the pocket of someone investing for retirement or their child’s education and using it instead to subsidize activist agendas.” So, when shareholders vote to use their control of their investment, their money, to do something they want rather than maximize profit they’re stealing from children and retirees. It makes one weep that people should vote to decide what to do with their investments.
Gallagher understands that the only reason a corporation exists is to enhance shareholder value, and when some vile activist or corporate gadfly persuades gullible shareholders to do things like invest in America, the natural order of things has been violated and shareholder control must be reined in.
But shareholders have rights in the control of the company because they own it. And democracy is messy. Some people will make illogical or unrealistic proposals. Some will and have made proposals that Gallagher will not approve of. But investors should be able to make decisions about their company and voting – democracy is the best way to do that. There is no rule from on-high or anywhere else that shareholder value is the only or even the most important goal of a corporation. Stockholders can decide to do something else.
We have reached a point at which stockholders appear to gaining a little more control over the companies they own. There are people, as there always are, who think they know best what should be done with these companies even though they don’t own so much as a single share, because, well, they like Mr. Gallagher, just know.
James Pilant
*Reed, O. (2010). The legal and regulatory environment of business. (15th Edition ed., p. 420). Boston: McGraw Hill Book Company.
Analysis & Opinion | Reuters (There is some content also used above but if that content was removed, the section below wouldn’t make sense. jp)
Gallagher, one of two Republicans on the five-member SEC, claims it’s too easy for investors to get resolutions on company ballots. As a result, activists and corporate gadflies “hijack” elections, he says. The commissioner cited statistics showing that a third of proposals come from organized labor and a quarter from social or policy investors and religious institutions.
The upshot is a system that encourages “taking money out of the pocket of someone investing for retirement or their child’s education and using it instead to subsidize activist agendas,” according to Gallagher. The SEC’s rules, he says, should ensure that these activists do not “crowd out every-day and long-term investors” or advance causes “inconsistent with the promotion of shareholder value.”
He’s right, to a point. It is a waste of time for investors to vet proposals that have nothing to do with the stewardship of their capital. But stifling shareholder speech has consequences. Stricter limits may allow, say, GE to keep a silly measure calling for its sale off the ballot, but they could also prevent owners from voting on more intelligent notions, like splitting the chairman and chief executive roles.
The Supreme Court ruled four years ago that free speech rights apply to corporations under the Constitution, including the right to make campaign contributions to politicians that favor profit-making causes. Shareholders also deserve protection under the First Amendment – no matter how wacky they may sometimes sound.
via Analysis & Opinion | Reuters.
From the web site, Global Corporate Law.
http://globalcorporatelaw.wordpress.com/2012/09/25/shareholder-democracy-and-future-reform/
Writing on the corporate governance blog earlier this month, Bob Tricker observed that “serious” interest in corporate governance is a recent phenomenon which only came to the fore following Sir Alan Cadbury’s 1992 Report. The dichotomy is that despite the existence of regulatory bodies such as the US Securities and Exchange Commission since the mid-1930s, it was not until problems such as the Enron scandal, the sub-prime crisis and more recent Libor scandal – that “corporate governance” became a buzzword in the business sphere, company law and regulation.
For Tricker, corporate governance – to which constructs such as marketing, production, finance, operations research, and management information systems have only recently ceded ground – is quickly becoming the focus of a company’s organisational chart. Themes such as the board of directors, executive directors’ remuneration and their relationship with management are all now very much at the apex of the debate about issues such as shareholder democracy, accountability and transparency in the corporate sphere. It is often said that good corporate governance is about promises kept: Macey, Corporate Governance: Promises Kept, Promises Broken (2010). Conversely, bad corporate governance is considered “promise breaking behaviour”.
The UK – which is seen as a “laboratory” for shareholder activism – has high rates of executive remuneration and on average bosses earn seventy five times more than workers.
I enjoyed this writing and can’t help but believe that there business ethics implications here as well.
Experimental philosophers and sociologists have become interested in the way in which people attempt to reason about ethical choices. Some of their studies have found that people, and especially Americans, think about ethical choices from a relativistic framework. Such people are called ethical relativists. In short, ethical relativists believe that ethical standards are a matter of personal opinion or taste. So, for example, when one says that it is wrong to cheat or lie, one is simply expressing their opinion with respect to cheating or lying in a particular context.
But ethical relativism is a problematic position. For one, if ethical relativism is true, we are in no position to say that an action performed by others is wrong; after all, if ethical standards are a matter of personal opinion, then it is only one’s opinion that some action is wrong. This has far reaching consequences. It follows that…
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Steven Mintz Has Written a Textbook
My friend, Steven Mintz, has a new textbook. Below is a segment of the review. Please share my pleasure at the accomplishments of a colleague.
James Pilant
From a review by W. Steve Albrecht in the Journal of Business Ethics, March 2014
One of the book’s great strengths is its excellent cases. The first seven chapters include 10 cases each, many of them famous ethical cases where accountants, executives, and corporate directors have been sued or held liable for their decisions and actions. I have personally been an expert witness in several of the cases covered in the book and so I studied the authors’ treatment of these cases in detail. Their write-ups were always accurate, presented in an interesting manner and provided great references for further study by students. The accuracy of the cases led me to follow up on several of the references cited in the chapters which I also found helpful. My conclusion after reading the book, examining in detail some of the cases and reading the 20 discussion questions per chapter was that this book would work equally well as a stand-alone ethics text or as an excellent supplement in auditing, corporate governance, financial reporting, or other business and accounting classes.
via Steve Mintz Accounting Ethics Textbook Reviewed – Ethics Sage.
From the web site, Cal Poly.
http://www.cob.calpoly.edu/faculty/steven-mintz/
Dr. Mintz enjoys an international reputation for research and teaching ethics in business and accounting. He has published two textbooks the most recent publication is Ethical Obligations and Decision Making in Accounting: Text and Cases. Dr. Mintz has published dozens of research papers in the areas of business ethics, accounting ethics, corporate governance and international accounting. Dr. Mintz teaches courses on accounting ethics and international accounting.
Dr. Mintz develops ethics training programs for organizations. He also develops and teaches continuing education courses in ethics for CPAs. His courses are used in twenty-states to meet their continuing education requirements for re-licensing.
Dr. Mintz is a widely sought out speaker at ethics and academic conferences. He has presented at: The Board of Director and Corporate Governance Research Conference in Henley, England; Global Finance & Research Conference in London; The Institute of Chartered Accountants in Trinidad & Tobago; Association of Asian-Pacific Accountants in Bangkok, Thailand; and the Asian International Business Association in Shanghai, China.
Dr. Mintz writes two popular blogs on ethics issues in business and society (ethicssage.com) and workplace ethics (workplaceethicsadvice). He has been interviewed by the NY Times for his expertise on workplace ethics.
The Gilded Age in Higher Education
David Yamada is here discussing an important topic, that is, the “McDonaldization” of American businesses and institutions, in this case, colleges and universities. I share his concerns. Please visit his site and read not just this article but appreciate the depth of his knowledge in workplace issues.
James Pilant
Of course, the fate of the public intellectual in higher education has been a subject of debate for some time now, especially since the 1987 appearance of Russell Jacoby’s important book, The Last Intellectuals: American Culture in the Age of Academe. Among other things, Jacoby posited that sharp trends toward narrow specialization in academic scholarship were creating a professoriate that is less relevant to the major public issues of the day.
Yup, one could argue that part-time college teaching jobs, unpaid internships, “non-stipendiary” fellowships, and assorted volunteer gigs offer outlets for expression and creativity. And between individual blogs, sites like The Huffington Post, and free websites, there’s no shortage of online venues for publishing or sharing one’s work.
The problem is that most people have this weird need for food, shelter, and clothing. “Exposure” and “contacts” don’t pay for those basic necessities. A little bit of job security wouldn’t hurt either.
During the coming months, I will devote some space to exploring this and related questions, incorporating a variety of new and emerging voices on public intellectual life in this plutocratic, New Gilded Age. In doing so, I’ll be talking about educators, researchers, activists, practitioners, writers, artists, and others who share a common, understandable concern that our society has no place for them.
As a central part of this inquiry, we need to consider strategies for change. Is it possible to reverse the bad course taken by so many standard-brand universities? Or do we have to think about creating new, sustainable entities that embrace a different, better set of values? If so, how do we go about this?
From the web site, The Homeless Adjunct.
http://junctrebellion.wordpress.com/2013/06/06/inequality-moocs-and-the-predator-elite/
It’s been too long since I’ve written here on The Homeless Adjunct blog, but I am back and ready to move forward. The silence was caused by a particularly hard year of never-ending job searching. Two of my three adjunct teaching jobs disappeared, leaving me with barely 30% of what was already a poverty level income. I suspect that this has had something to do with my outspokenness on the issue of adjunct labor abuse, but as those of you working on contingency contracts all know far too well — there is simply no way to definitively prove such retaliation. And after a year of falling victim to the severe trauma that we adjuncts are always facing, I have gotten myself back up, and have determined that I won’t let myself be silenced by poverty, or fear. While it has certainly proven to be an effective tactic, it can only be effective if we allow it to take our spirit along with our income. It’s pretty clear that this is a Braveheart moment, where I either continue to fight against tyranny — and the corporatized university is a tyrannical institution — or I let them win.
And thanks to the Scottish warrior blood in my veins, I choose to fight.
I’ve been saying these same things for some time now.
Listen and watch as these parents in New York City tell you why your children should opt out of the state tests.
The high-stakes standardized testing is a massive waste of time. The results come in long after your child has changed teachers.
The teachers learns nothing of value from the tests: just the scores.
The tests have no diagnostic value.
It is a horse race with no point other than to steal instructional time, to rob your child of the joy of learning.
The only way to stop it is to say NO.
Don’t feed the machine.
Remember that your child’s data is being mined even as he or she takes the test.
Say NO.
Chris MacDonald Discusses Business Ethics and Bribery
A long term blogger on business ethics matters, Chris MacDonald here speaks of the need for international business standard. Please read his post and go to his web site and sign up as a follower.
James Pilant
Bribery and other forms of corruption continue to pose a challenge to international business. Bribery is a problem because it distorts markets, saps economies, and hurts local communities. For all these reasons, bribery is illegal just about everywhere that has a functioning legal system. And as reported recently in the Wall Street Journal, many countries are stepping up efforts at enforcing anti-bribery laws. Both because of the possibility of prosecution, and because of the slippery slope between bribery and other forms of criminality, bribery poses significant business risks.
Clearly, improved enforcement is an important part of combatting bribery, and combatting corruption more generally. The temptation to win ‘by any means’ will always be there, and so tough rules need to be in place.
But another element is the promulgation and adoption of good, clear, international business standards. As it happens, I’m currently in Madrid as part of the Canadian delegation to an International Standards Organization working committee that is drafting a new “Anti-Bribery Management Systems” standard (ISO 37001).
via Bribery is Still a Challenge for International Business | The Business Ethics Blog.
MacDonald, C. (2014, March 26). Bribery is still a challenge for international business. Retrieved from http://businessethicsblog.com/2014/03/26/bribery-is-still-a-challenge-for-international-business/
From the web site, The Bung Blog.
http://thebungblog.wordpress.com/2012/04/28/time-to-stand-up-for-the-little-guys-girls/
Avid readers of this Blog, (aka gluttons for punishment) will remember my outburst last year. “Government Declares Bribery Not an Offence!”
The tenor of that little tome was to the effect that however sexy the Bribery Act 2010 might have been, it was not perceived as having much relevance, or bite, to the average Jo.
A well respected criminal QC, and good friend of mine, has described it in an article last year as a “Toothless Wonder.”
Much of the cynicism has arisen as a result of the common perception that the SFO being the principal prosecuting authority under the act, has a) no interest in, and b) no budget for, prosecuting anything but the most headline grabbing, stone cold bonkers cases that they can’t possibly lose.
There were dark mutterings from the departing Director that they were hot on the tails of a number of cases, but for now, Mum’s the word. We all await developments on that, especially in the light of the new Director’s protestations that the future of the SFO is secure, and, by implication perhaps, prosecutions are just around the corner. (So’s my Taxi apparently)
To be fair to David Green QC, as a lot of people have been pointing out, it takes time for any substantial case to be detected and investigated to the point of charge, and not being retrospective, the Bribery Act 2010 cannot apply to any act of Bribery committed before July 1st 2011.
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