Definitely a case where some businessmen have decided to use political muscle to deal with a competition. Crony Capitalism.
Category: Capitalism
Capitalism is a social system based on the recognition of individual (human) rights, including property rights, in which all property is privately owned.
Closing Generating Plants to Manipulate the Market
Closing Generating Plants to Manipulate the Market
I remember when Enron closed generating plants for “maintenance” back in the good old days of extorting money from the citizens. These maintenance periods coincided with peak demand in California and helped Enron generate billions in profits. And I remember that many public officials were shocked that anyone would think something suspicious was going on.*(see below)
An ethical businessman makes money by selling a service or a product. An unethical businessman manipulates the market to make money. Making money the ethical way is too slow when you can lobby regulators to look the other way while you cut the supplies of electricity to raise the price. It is fast profits, a high return on an investment, good results for the next quarter, and it leaves in the dust the ethical businessman.
If this process is not regulated, then the unethical manipulators will drive the ethical producers out of the electrical business. This is a kind of Social Darwinism in which the unprincipled and immoral displace their competitors producing a mediocracy of the ethicless. A society that values simply making money by whatever means necessary will embrace such mediocracy since only a fool would act ethically when money can be made. So in time, all producers will act to manipulate and cheat as opposed to making an honest dollar.
The dishonest profit destroys the moral fabric of a society?
Probably not the best place to raise children?
James Pilant
Enron-style price gouging is making a comeback | Al Jazeera America
The price of electricity would soar under the latest scheme by Wall Street financial engineers to game the electricity markets.
If regulators side with Wall Street — and indications are that they will — expect the cost of electricity to rise from Maine to California as others duplicate this scheme to manipulate the markets, as Enron did on the West Coast 14 years ago, before the electricity-trading company collapsed under allegations of accounting fraud and corruption.
The test case is playing out in New England. Energy Capital Partners, an investment group that uses tax-avoiding offshore investing techniques and has deep ties to Goldman Sachs, paid $650 million last year to acquire three generating plant complexes, including the second largest electric power plant in New England, Brayton Point in Massachusetts.
Five weeks after the deal closed, Energy partners moved to shutter Brayton Point. Why would anyone spend hundreds of millions of dollars to buy the second largest electric power plant in New England and then quickly take steps to shut it down?
Energy partners says in regulatory filings that the plant is so old and prone to breakdowns that it is not worth operating, raising the question of why such sophisticated energy-industry investors bought it.
The real answer is simple: Under the rules of the electricity markets, the best way to earn huge profits is by reducing the supply of power. That creates a shortage during peak demand periods, such as hot summer evenings and cold winter days, causing prices to rise. Under the rules of the electricity markets, even a tiny shortfall between the available supply of electricity and the demand from customers results in enormous price spikes.
With Brayton Point closed, New England consumers and businesses will spend as much as $2.6 billion more per year for electricity, critics of the deal suggest in documents filed with the Federal Energy Regulatory Commission.
That estimate will turn out to be conservative, I expect, based on what Enron traders did to California, Oregon and Washington electricity customers starting in 2000. In California alone the short-term market manipulations cost each resident more than $1,300, a total burden of about $45 billion.
via Enron-style price gouging is making a comeback | Al Jazeera America.
From Around the Web.
From the web site, CBS News.
http://www.cbsnews.com/news/us-jpmorgan-owes-410m-for-energy-price-manipulation/
JPMorgan Chase & Co. (JPM) agreed to pay $410 million in penalties on Tuesday to settle accusations by U.S. energy regulators that it manipulated electricity prices.
The Federal Energy Regulatory Commission said the bank used improper bidding strategies to squeeze excessive payments from the agencies that run the power grids in California and the Midwest in 2010 and 2011.
The penalty includes $285 million for the federal government, and $125 million for ratepayers.
FERC’s enforcement staff said its investigation had found improper trading practices were used at Houston-based JPMorgan Ventures Energy Corp.
JPMorgan said in a written statement that it’s “pleased to have reached an agreement with FERC to put this matter behind it.” JPMorgan didn’t admit or deny any violations.
FERC recently levied a $453 million penalty on Barclays, Britain’s second-largest bank, for manipulating electricity prices in California and other Western states. Barclays is disputing the allegations.
FERC claimed JPMorgan’s energy unit used five “manipulative bidding strategies” in California between September 2010 and June 2011, and three in the Midwest from October 2010 to May 2011.
The language of political denigration: Kevin Andrews and disability pensioners.
We see the same games played in the United States.
Social Services Minister Kevin Andrews’ recent announcement that eligibility for the disability pension was to be tightened was a masterful demonstration of political weasel words.
Full marks to the speechwriter, it was a textbook example.
The first thing that Andrews did was to reclassify those on disability pensions. He did this by saying young people on the disability pension sat on couch all the watching television. The reclassification or label that comes with this description is “lazy” and this combines very nicely with “young”. So the new label is now “young and lazy.” It’s very easy for the idea of “young and lazy” to morph into the idea of “dole-bludger.” It’s also interesting to understand that and that the new labelling stresses the young and lazy idea and de-emphasises the idea of disability.
Once the re-labelling has been done it is necessary to construct a narrative to support it. This…
View original post 299 more words
One of the Tragedies of Our Time
One of the Tragedies of Our Time
David Yamada touches upon one of the great tragedies of our time. The new generation is facing a wold in which doing vital, meaningful, satisfying work is not possible. We live in a time where any employment is difficult to find, where job security is a joke and where casual cruelty often substitutes for leadership.
I often wonder how people can seriously talk about an entitlement generation when we live in such times. The new generation faces a future beset by underemployment, high student debt and economic stagnation. Is that what they are entitled to?
Please read Yamada’s work and sign up as a follower on his excellent blog.
James Pilant
For many, the economic meltdown means shelving the idea of a true vocation « Minding the Workplace
In The Four Purposes of Life (2011), Dan Millman identifies a cluster of key criteria for developing a career:
“Do I find the work satisfying?”
“Can I make good money?”
“Does it provide a useful service?”
Some might add factors such as work-life balance, geographic location, and the like, but overall, I’d say that Millman’s three criteria are useful guideposts for most people. And during much of the last half of the 20th century, as America’s post-WWII economy went into high gear and fueled the nation’s growing middle class, having some choice over one’s vocation became a realistic option. Against the backdrop of a robust economy and labor market, people could start thinking about work as being more than a source of income.
Today, however, the scarcity of good jobs is limiting our vistas considerably. Especially for those who have struggled with layoffs and unemployment, finding work that “merely” pays the bills understandably outpaces job satisfaction and notions of service as individual priorities. Millions are just trying to get by.
via For many, the economic meltdown means shelving the idea of a true vocation « Minding the Workplace.
From Around the Web.
From the web site, Word Journey.
Is the cliché that all good things, or bad things, come in threes? Never mind, I can’t dictate it for you and you’re likely to take my question as rhetorical. Beginning a blog post with a cliché aside, I figured it was time to update my journey through joblessness. This will be my third and hopefully final post on the subject, unless you count my Gold Coast amendment post made after some criticism I received in relation to comments I made about my dear city in The Year of Living Idly – The Negatives. It will also, which I thought was appropriate, be my third and final, for a while at least, phone blog (or “phlog”). And I’ll presume any criticism of those previous two to be either withheld or still pending.
I have actually worked since initially becoming unemployed in July 2012, but have remained on the dole ever since early in 2013 – after I returned from three months’ glorious yet aimless travelling. Technically, I am now working but I don’t count it because it is only for two days per week, and it is work for the dole. I spend my Wednesdays and Thursdays or Thursdays and Fridays helping cook crisis meals for the disadvantaged and maintaining an about an acre property run by a Christian church. With other unemployed people. Depending on my mood, I either think it’s great or loathe it – just like real work. And my best prospect for some paid employment at the moment is blueberry picking, which was mentioned as an opportunity by my work for the dole supervisor. The system works. Or at least, it might. Such is life.
They Trample the Head of the Poor
A Post from my Friend, Homophilosophicus
My friend discusses moving into the inner city of Dublin. He says, “Over a year ago I decided to move into Dublin’s inner city, to the Liberties; an area of town which has historically suffered the worst from the conditions of poverty and social exclusion. What I had thought to do was to test my own prejudices and those of ‘better-off’ Dublin concerning the lifestyle choices and attitudes of the people who live in those run-down houses between Cork Street and Thomas Street. Was it really the case that the houses were so decrepit because their inhabitants lacked any real care for their environment or any sense of social responsibility?”
Why don’t you read all of it and see what he discovered?
James Pilant
They Trample the Head of the Poor
(a one paragraph excerpt below)
On viewing the house all of the windows were open; airing the house, the beds were covered in new linens and a leather sofa was taking up most of the living room. Now that I had the keys, and could battle my way through the front door – which had evidently been ‘kicked in’ and repaired a number of times before my arrival – it was a completely different story. Nothing could have prepared me for the state of the house once the smoke and mirrors had been removed. With the windows closed over the lack of ventilation created a stench of mould and urine which was suffocating, the kitchen produced a wholly indescribable stench and the general condition of the air caught like a powder in the back of ones’ throat. Upstairs was where the real shock was waiting. The mattresses in both of the bedrooms were bare and both were sodden with human filth; the true extent of which would only transpire later in conversation with neighbours. It took one whole month before the house was fit for human habitation, and it was only then that I would allow Ambrose (the dog who lives with me) to move his things in. Everything in the house had to be thoroughly cleaned and disinfected. With the help of my longsuffering and dearly beloved friend the mattresses and the bed frames were removed from the house and destroyed. The insect infested wallpaper was removed and a fresh coat of paint was put on every wall. …
http://homophilosophicus.wordpress.com/2012/06/24/they-trample-the-head-of-the-poor/
From Around the Web.
From the web site, landlordrocknyc.
From an earlier Wall Street Journal, 2010….”. Jetsetter and social activist Bianca Jagger has lost her legal bid to keep her knock-down-price rental at 530 Park Avenue.
A New York state judge last week ordered Mick’s ex to pay $708,600 in back rent and other fines to her landlords. Ms. Jagger spent nearly 20 years in the two bedroom apartment—rent-stabilized at $4,600 a month. But then she complained about poor upkeep, The landlords in turn noted that Ms. Jagger, in the U.S. on a tourist visa, shouldn’t pay the lower rent since New York isn’t her “primary residence,” one of the criteria under rent control laws.
Fracking Causes Earthquakes?
Fracking Causes Earthquakes?
It is truly interesting to discover an industrial process that literally undermines the earth upon which we stand but combine American know-how, de-regulation and greed, and the sky is just the limit.
James Pilant
Ohio earthquakes linked to fracking | Al Jazeera America
Ohio authorities shut down a hydraulic fracturing (“fracking”) natural gas operation in Mahoning County on Monday after two earthquakes were felt in the area, which is near the Pennsylvania border, local newspapers and broadcasters reported.
The quakes registered magnitudes of 3 and 2.6, the U.S. Geological Survey’s National Earthquake Information Center said on its website.
The Ohio Department of Natural Resources (ODNR) halted operations of Texas-based Hilcorp Energy — which conducts fracking in the area — while experts from the department analyze data from the earthquakes, the Columbus Dispatch newspaper said, citing a statement it received from the ONDR.
“Out of an abundance of caution we notified the only oil and gas operator in the area, and ordered them to halt all operations until further assessment can take place,” the department was quoted as saying.
There were no immediate reports of injury or damage.
The magnitude 3 quake at about 2:26 a.m. was strong enough to wake up some residents in Poland Township, according to local NBC affiliate WFMJ. Reports said the smaller quake followed at 11:44 a.m.
via Ohio earthquakes linked to fracking | Al Jazeera America.
From around the web.
From the web site, Akron Dave.
http://akrondave.wordpress.com/2014/01/21/fracking-suspected-as-cause-of-texas-earthquakes/
A group of residents of a small Texas community traveled to the state capital to protest hydraulic fracturing, “fracking,” in their community that is being blamed for about 30 earthquakes since November.
This follows reports of earthquakes near Youngstown, Ohio, last year that were linked to fracking wells, which led the usually business-friendly Gov. John Kasich to order the operation to shut down.
If Texas quakes are like the Ohio seismic activity, the problem could be the injection of fracking wastewater into the ground near a fault line. Geologists say the liquid can create “slippage” in faults, which triggers the quakes.
The fact that fracking has helped dramatically reduce U.S. dependence on imported oil and natural gas makes shutting down fracking operations highly unpopular in some circles. But when the earth is shaking under your feet, you gotta take it seriously.
I’m sure we’ll be hearing more about this.
Inequality in America
Inequality in America
Read the numbers below and see just how staggering inequality has become over the past few years. It’s a rigged game and it didn’t have to be this way. Globalization is a force but these changes are the result of tax policies and trade deals not to mention government guarantees for banks and other financial institutions. Manufacturing has become a cheap bargaining chip to open foreign markets to American drug patents and copyright protections for the motion picture industry.
Basic business ethics would suggest that destroying your customer base is both unethical and foolish.
James Pilant
Inequality | Real-World Economics Review Blog
I am preparing a talk on inequality here in America, and so have been re-reading the Piketty and Saez work. Amongst the more eye-opening facts I have come across is the assertion, by Saez, that the surge in the top 1% incomes is so large that the growth of the bottom 99% amounts to only half the average [mean].
Think about that for a moment.
It would be like walking into a room full of people two feet tall with one thirty footer in the corner. The mean average is meaningless in such circumstances. We are all taught that in statistics class, but to come across such an egregious example in a dataset as large as all US tax returns is astonishing.
Not only is this an alarming fact, but to portray it adequately on a chart is difficult to do. The line representing that 1% doesn’t fit well with the 99% because any scale you use cannot easily accommodate such extremes.
When I chat with people about the topic I realize that most have no clue as to how skewed and screwed up the economy now is. Even when they start to comprehend they retreat into a kind of ‘it doesn’t affect me’ denial. The fact seems to be that most people want to cling onto the mythological image of America they carry with them, perhaps because confronting the reality we have made for ourselves means accepting unpleasant and disturbing facts.
Yet they’ve all been hurt by what happened.
via Inequality | Real-World Economics Review Blog.
From around the web.
From the web site, Rethinking Inequality.
http://rethinkinginequality.wordpress.com/
Rising economic inequality in Canada and other advanced industrialized states is a phenomenon much discussed by the media in recent years: indeed, income and wealth inequality have reached historic highs in the U.S. — where the top 1% owns nearly 50% of the wealth — as well as Canada, where the top quintile now controls 70% of the wealth and earns 44% of all employment income. The precise impact of this rising inequality has become an important subject of study and intense debate among economists, sociologists, social epidemiologists, and urban studies scholars; chief among the possible consequences of inequality they explore are those on public health, economic growth, mobility, levels of social trust, educational opportunity, and crime rates.
Normative reflection on rising economic inequality by moral and political philosophers and theorists has, by contrast, focused on broader, more foundational questions: Which aspects or forms of equality are most important for a just, decent society, and which are comparatively insignificant? Are equal respect and political equality compatible with a high degree of social and economic inequality? And on what grounds might a society strive to reduce inequality, and at what costs to citizens’ social, economic, and political freedoms?
Neo-Liberalism Defined
From around the web.
From the web site, Political Snapshots.
http://politicalsnapshots.wordpress.com/2010/05/23/neo-liberalism-and-the-role-of-government/
Neo-Liberalism and the role of Government.
When a government abdicates its responsibility in regulating the economy (as did the U.S. government), capitalist greed accompanied by all sorts of illegal amassing of wealth by the few, at the expense of the majority in society takes place. In other words, policies of neo-liberalism compel governments to abandon regulation of the economy, so that only profit- making becomes the law of the land. Society be damned. The citizen is only a consumer. The government is only a facilitator of business exploitation.
A government as a body that has the power to enforce environmental, labor and consumer laws was required by neo-liberal philosophy to abandon its most critical responsibility of social policy to “market forces”. While it is true that Democracy gives ordinary people a significant voice in government, at the end of the day, who makes the policies that the U.S. government pursues, is what matters. When that question is properly answered, then, we will find out who has power in America.
Let’s Have Post Office Banking!
Let’s Have Post Office Banking!
The present system has failed the poor and those living paycheck to paycheck (often the same group). Millions of people pay exorbitant fees for cashing checks and short term loans for family emergencies. We can end that right now by using the Post Office as a bank.
Why is this an issue for me, business ethics writer? It’s very simple. The conflict here is between human intelligence and neo-liberalism. For the neo-liberal, it is obvious that the free market is always better than anything else. For me, evidence should be used to decided what works and what options society should choose to solve its problems. The current banking system and payday loan industry have failed and failed spectacularly in taking care of the needs of a great part of our people.
If there is anything I write about consistently, it is the need to use intelligent, reasoned decision making. Doctrinal rules like the idea that the free market is always best are better used in the world of religion.
I’ll go with the facts.
James Pilant
Return to Lender: Postal Banking Can Bring Equity to Communities | Michelle Chen
Your friendly local post office may have an honorable history, but it’s facing tough times, including a fiscal crisis and, more generally, a struggle to keep pace with growing digital communication technologies. Conservatives have increasingly dismissed the United States Postal Service as a clunky relic of old-fashioned America, with right-wing lawmakers seeking to phase it out through service cuts and privatization. Now, some progressives are trying to save the USPS by rebranding it as a financial vehicle: a place for you to pick up your mail and deposit a paycheck in one stop.
Some officials have pitched the idea of the postal service expanding into “non-bank” financial services, carefully designed to complement rather than directly compete with Wall Street. In a recent white paper, the USPS Inspector General’s office suggested that local post offices could offer products such as international money transfers, small short-term loans, and prepaid debit cards for bills or everyday purchases. To fulfill needs unmet by big banks, these financial services would ideally be targeted toward “low-income areas like rural communities and inner cities.”
Ultimately, though, many advocates want to see the postal service be bolder and actually delve into full-scale banking services. Labor and consumer advocacy groups like AppleSeed say the USPS is excellently positioned as a government-supported, publicly accountable institution to fill a longstanding gap in the financial system by offering interest-bearing accounts and other basic banking services. In addition, branching into the affordable finance business would offer the USPS a steady revenue stream.
For free-marketers who fear the USPS would steal big banks’ customers, advocates point out that low-income groups that stand to gain the most from postal banking have already been marginalized as a bad business prospect. Some 68 million Americans are considered “underbanked”: In other words, they lack access to mainstream banks and essential services like savings accounts. “Banking desert” neighborhoods are typically full of people of color, immigrants and unemployed workers — and there may be no full-service bank in sight for them, because massive firms like Merrill Lynch do not see those areas as “profitable.”
via Return to Lender: Postal Banking Can Bring Equity to Communities | Michelle Chen.
From around the web.
From the web site, Your Postal Blog.
http://yourpostalblog.wordpress.com/2013/12/30/banking-with-usps/
USPS is one of the most trusted organizations in the United States. Its reputation and world-class services are well known, and its customers know that there is no better value for their shipping solutions than their local Post Office. Reintegrating banking services into the Postal Service could have the effect of increasing its revenue base from financial services while simultaneously expanding its mailing business from increased foot traffic in its local branches.
The endeavor wouldn’t be a quick solution to increasing postal revenue as there are many infrastructure enhancements and procedures to establish to ensure necessary financial rules and regulations are followed. Still, the long-term prospects of a renewed Postal Savings System could be lucrative enough to reestablish the once thriving service.
Twenty Years of Lower Pay?
Twenty Years of Lower Pay?
Read below and see what you think? Should unemployment have these kinds of long term effects? Can we do something about it?
Is it a usual part of unemployment or is it a result of corporate and government policies against the unemployed?
I want to hear more. If anyone has some links to throw at me, this is a good time.
James Pilant
The Unemployed Make Lower Wages For Two Decades After They Get A Job | ThinkProgress
Unemployed workers’ wages take an immediate 31 percent hit compared to those who stay in their jobs. The effect dissipates over time, and these workers’ wages see a 2 percent recovery every year after the first drop. But even so, 10 years later, their incomes are nearly 14 percent lower than they would have been in the absence of unemployment, and they only fully recover 19 years later.
Perhaps unsurprisingly, given the discrimination the long-term unemployed face in the labor market, those who are out of work for 26 weeks or more see an immediate 67 percent drop in wages, compared to 24 percent for short-term unemployed workers. While the long-term unemployed recover at a rate double that of the short-term unemployed, 10 years later their incomes will still be 32 percent less than those who didn’t lose their jobs, while wages for the short-term unemployed will be just 9 percent lower. “The earnings gap also closes about three or four years sooner for short-term unemployed workers than for long-term unemployed workers,” the author notes, adding, “for a given number of years since an unemployment spell, someone unemployed for 40 weeks had nearly 1.5 lower earnings than someone unemployed for only 10 weeks.”
via The Unemployed Make Lower Wages For Two Decades After They Get A Job | ThinkProgress.
Pilant's Business Ethics Blog 
You must be logged in to post a comment.