This a news analysis of the July 20th, drop in Goldman Sachs’ shares. Forgive the commercial that opens it. I can’t get around it.
This is a PBS two part series on how Goldman Sachs’ profit. If you want to understand our economy’s problems and what is likely to continue to go wrong, this is a good place to start.
This is the second part.
David Gebler writing on the blog, Business Ethics, discusses safety violations, codes of silence and what not to do when advancing safety practices.
Shel Horowitz begins his latest blog post (Principled Profit) with these words: As my Boomer generation ages, and as our parents move well into the elder category, I reflect often on something I learned as a young organizer with the Gray Panthers (1979-80): the idea that society had best learn how to incorporate people with disabilities into active daily life, because most of us were going to grow into that category sooner or later.
Horowitz writes that today, his entry is part of an event, Worldwide BloggersUnite, Empowering People with Disabilities. I’d give it a read and take a look at the idea behind the event.
I would like to call attention to two Chris MacDonald postings. A few days ago, Professor MacDonald posted an interview with the author of the “The Authenticity Hoax.” Since then the posting has had some comments (skip past mine) and they have been interesting. Chris gets pretty tough there in that last one. So, I recommend a read of the comments section.
The second MacDonald posting concerns British Petroleum’s faked photographs. MacDonald implies that he has been willing to give BP the benefit of the doubt in the past (I firmly believe this is true. I thought he was too fair) but he is increasingly doubtful of their motives and honesty.
A new business ethics blog has appeared. I give it a warm welcome and a hope of many postings!
“Stop me before I overpay again,”might be scratched on the wall of Goldman Sachs’, if the firm had any insight or shame. But they don’t. Reuters News Agency reports that Goldman Sachs, J.P. Morgan and Citibank are among the firms who will be cited by the Obama administration pay czar Kenneth Feinberg for having made “ill-advised” payments. (For ill-advised read unearned) The payments in the 17 institutions cited total over one billion dollars. This was in 2008 when the firms were awash with taxpayer money from the bailout.
You see it doesn’t matter what scrutiny they are under, whether or not the public is angry, whether an action is right or wrong as long as the money flows. Money, Money, Money, the arbiter of all decision making on Wall Street, the great green god that supplants the real God and any of sense of responsibility. They know that the only important thing in the world is money. It buys happiness, sex, influence and immunity from the duties that the rest of us take for granted as part of our lives. They live in separate communities with separate education systems and when our children serve in the military, become teachers, policeman or firemen, they snicker at our stupidity.
Or they decide we are unworthy, take a look at this excerpt from Ben Stein’s article in the American Spectator:
The people who have been laid off and cannot find work are generally people with poor work habits and poor personalities. I say “generally” because there are exceptions. But in general, as I survey the ranks of those who are unemployed, I see people who have overbearing and unpleasant personalities and/or who do not know how to do a day’s work.
That’s right, the millions of unemployed their lives in tatters because of casino capitalism, aren’t there because of a savage recession (depression). No, they’re just lazy.
By the way, the article just oozes with Ben Stein’s concern for his poor friends who made bad investments. I can’t help but be curious where he would meet the unemployed. Maybe he’s just confused. Maybe he’s really thinking about his upper crust friends who don’t know how to do an honest day’s work or exercise a workable personality.
I shouldn’t be so angry. Right? Why should the fact that there is one job for every five applicants bother me? Why should an economic elite that moves every job humanly possible to some distant shore where they can ignore those annoying work place laws like child labor, wage and hour, and most annoyingly of all, worker safety, bother me? Why should I be upset? After all, there are a lot of workers, a lot of surplus population that needs culling.
I want justice. I want hard working American to reap the benefits of their hard work, their devotion to this country and their willingness to go the extra mile to do what’s right.
James Pilant
This quote is going to delight me for days. Ladies and Gentlemen, a business student talks about business school in his own words honestly (the world may end!).
“Finally, there’s the small matter of the treatment of ethics and CSR in MBA courses. The prominent role played by some former Ivy League geniuses in perpetrating the greatest financial meltdown of the past million years or so has painted the lot of management practitioners as a bunch of soulless, blood-thirsty and greedy Shylocks constantly devising new and exotic ways of separating honest folk from their hard-earned money. And in the light of what has transpired over the past decade or so, I must admit a manager’s standing is somewhere between that of a vulture and a sewer rat.”
Go read the whole thing! This guy has things to say!
Michael Barker is not afraid of having his own opinion or afraid of writing in depth on a subject about which he feels passionately. The article is about corporate giving in the environmental movement and its corrosive effect. I do not always agree with the author. But it is inescapable that the article is well written and well researched. I wish Mr. Barker well.
James Pilant
An article in the Business Insider explains that at least one investment firm believes that it’s time to invest in the discounted property along the Gulf. The investment group, Broyhill Asset Management, is pushing an investment in the St. Joe Company. Broyhill has a 31 page presentation extolling the virtues of this company and its current holdings along the gulf coast.
But this will just be the first of a flood of companies that will move in on the real estate bonanza that the gulf coast will become.
Naomi Klein explained in The Shock Doctrine how disasters can be made to profit economic elites. Here is a developing project. First, there will be requests for “tax free development zones.” Then there will be actual grants of federal, state, county and city money to encourage development. The properties along hundreds of miles of coastline devastated and devalued by the oil spill can be bought up for a song. And a happy tune it will be, as thousands of businesses escape paying taxes to support roads, schools, etc. and roam to the gulf where cheap land, no taxes and a subservient government desperate for jobs will do virtually anything to make them happy.
But think about the other possibilities. You can get the government to guarantee loans, waive wage and hour laws, postpone or do without environmental impact studies, and the list of goodies a company can get goes on and on.
And during all this, the people whose livelihoods and homes were destroyed or devalued will simply be setup for the chopping block. The government that should have protected them and aided them will be a conscious, skillful, relentless aid to the companies buying them out and replacing them.
Well, the vultures are circling. They are expecting meat on the table and plenty of it.
James Pilant
P.S. I want to thank Sue White who brought this to my attention. jp
Fair work Australia is a web site set up by the Australian government. It enforces a law that makes it illegal to fire an employee except for cause. The web site lists 8 elements which can be considered under the Unfair Dismissal Law. There is a wiki article on the whole act.
This law is in stark contrast to the American practice of “employment at will.” Under this doctrine, an employee can be fired for any reason or no reason. There have been occasional moves toward the doctrine of “firing for cause,” but these have come to nothing. The Australian act was adopted in 2009, and went into effect in January. It will be interesting to see how and if the law shapes opinion in the United States.
Here’s some video describing the process that resulted in the legislation –
In my mind this is food for thought. Let’s see how the act works out. Maybe we can learn from their example.
James Pilant
I guess like most things it depends on the situation. Well, let’s take a look at an unusual situation. Let us wander around the state of California until we arrive at the small town of Bell. No, it is not small by the standards of some western states but a population of 36,000 does put it in the average category. And this place is tough. I mean almost impossible to run. Because they have such difficulties getting skilled politicians that they pay the mayor about $800,000. This is not quite twice as much as the President of the United States, but the mayor of Bell must have tougher problems. Obviously.
However, the mayor is not the only one who makes a good salary. Let me quote from the article:
Residents, however, have no problem expressing what they think about their city’s budget, which pays the police chief — who oversees a 46-person department — $457,000 a year. By contrast, Los Angeles’ police chief oversees 12,899 people and earns $307,000.
My favorite part is the city council. To be a city councilman required a person to work part time and it’s must be really tough part time work because these guys get a $100,000 for their efforts.
Chief Administrative Officer Robert Rizzo (I refer to him as the mayor.) is not upset or sorry. He says he can make the same in the private sector. Of course, some wiseacre might point that he isn’t in the private sector and that since the private sector seldom owns and operates small cities, it might be hard to get a comparative number.
Now as always when people with real ability are rewarded for their skills and effort, there will be people who squawk and complain. Let me quote from another article on the same subject:
Bell resident Douglas Waugh said he was infuriated when he learned that city officials in his small city had some of the highest salaries in the nation. “They think we’re stupid,” Waugh said standing outside of his home. “They get into power and talk to us like little kids and they think we’re ignorant, but we’re not.”
The top officials in Bell receive a 12% pay hike every July. The mayor has been working in that position since 1993. At that rate he will be earning $2,446,680 in the year 2020. Did you know that the city has been cutting back on services and laying off employees? But these guys have their priorities straight. Right?
James Pilant
Keith Chrostowski at the Kansas City Star provides a good summary of the arguments for fiscal restraint during this economic disaster while calling for extension of unemployment benefits. I find the arguments for such restraint to be ridiculous. Chrostowski only summarizes these arguments and I have no problem with his views but the arguments for fiscal restraint during this crisis border on the bizarre.
Where were all those people when the Bush tax cuts were put in place? Where were all these people when during a period of massive public approval and unity, George Bush asked for no tax to finance the war? Where were all these people when Congress approved an enormous expansion in Medicaid? Is it only when the crisis concerns the basic middle class American that we discover we are in a crisis?
Where were all these economists when the estate tax (fortunately only for a while) was repealed? Where were all these formerly employed politicians (Alan Simpson, are you reading this?) now shouting “fiscal restraint?”
It is hard to describe my anger at these “born again” budgeteers. My students suffer. The people I know suffer. This economy is damaging lives and destroying the hopes and dreams of tens of millions of Americans. And now, only now, do these cowardly wretches find the fortitude to challenge spending. It seems you can make wars, cut taxes and do every kind of strange appropriation until the American people are hurting and then and only then, must we become “tough minded” and fiscally concerned.
We exercise fiscal restraint according to Keynes when the economy is healthy. This one isn’t. We labor under intense levels of unemployment, a little under 10%. If we count those who have simply given up looking for work, the number climbs toward 16% which is roughly the same as in the great depression. I tell you with conviction that this recession is becoming and may already be a depression and our leaders are unable and unwilling to meet that challenge.
We are rapidly moving toward desperate times. Each day I drive to work and see businesses closing. Each day I see nothing to give me hope for my students and confidence in the economy. Each day I wait and hope and pray that the leadership of this country will do the simple and basic things necessary to employ the great and good American people. This people who have astonished the world with their achievements and can do so once again if only given the opportunity.
But I know this is not going to happen. This people do not appear to be worth a second glance. When fiscal pain must in the eyes of these unsought comedians, these fact distant fools, be felt, it is only when the great mass of Americans are enduring the pain and suffering of evil economic times brought on by the rapacious stupidity of the financial elite.
James Pilant
Timothy Platt is writing about starting and keeping a new store in operation. This is chapter 14. Unfortunately for me, I have only read this one chapter. However, I was impressed by the intelligence and judgment displayed by the author and intend to read the rest of his posts. If you intend to become an entrepreneur, you should keep up with the series.
James Pilant
Pilant's Business Ethics Blog 
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