Category: Government Failure

Treasury Makes A Mistake – Claiming They Are Not Blocking Elizabeth Warren (via The Baseline Scenario)

On By southwerkIn business ethics, Capitalism, Government Failure

President Obama faces a choice and this choice will tell us a lot about the administration. Does this administration intend serious oversight of the finance industry. The choices are simple, Elizabeth Warren, a long time defender of the public interest or someone acceptable to Geithner and the Department of the Treasury. Who counts in this country, the millions of individuals who suffer from the fees and often the cruelty of these institutions or the institutions and their political muscle? We’ll know soon. In the meantime, read this fine analysis from Simon Johnson!

By Simon Johnson It’s one thing to block Elizabeth Warren from heading the new Consumer Financial Protection Bureau. It’s quite another thing to deny in public, for the record, that any such blocking is going on (e.g., see this report; Michael Barr apparently said something quite similar today). There is a strong groundswell of opinion on this issue from the left – see the BoldProgressives petition.  But the center also feels strongly that, given … Read More

via The Baseline Scenario

This is one of Elizabeth Warren’s appearances before Congress:

Goldman Sachs’ Value Drop – July 20th, 2010

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure

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.

Wall Street Overpays!

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure

“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

British Petroleum Discards Justice And Patriotism.

On By southwerkIn ethics, Government Failure

The Lockerbie bombing was a traumatic event in Western history. A plane called the Clipper Maid of the Sea was destroyed by a bomb. The deaths included 243 passengers, 16 crew and 11 on the ground for a total of 270. One man was convicted for the bombing. His name is Abdelbaset Ali Mohmed Al Megrahi. He was sentenced to life in prison with a recommendation that he serve at least twenty years. He was released by the Scottish government after serving less than ten years on the grounds that he had terminal prostate cancer with less than three months to live. Only the one unnamed doctor supported this diagnosis. It is alleged that there were four specialists on cancer who did not agree and whose advice was ignored. Nevertheless, he was released on compassionate ground to “die” in homeland of Libya.

Let me quote wikipedia concerning his triumphal return to Libya: Megrahi landed in Libya to national celebrations and acclaim.[71] As he left the plane, a crowd of several hundred young people were gathered at Tripoli Airport to welcome him, some waving Libyan or Scottish flags, others throwing flower petals. Many had been ushered away by Libyan officials in an attempt to play down the arrival in accordance with British and US wishes.[72] Megrahi was accompanied by Saif al-Islam al-Gaddafi, son of Libyan leader Muammar al-Gaddafi, who was dressed in a traditional white robe and golden embroidered vest. It was he who had pledged in 2008 to bring al-Megrahi home, and so he raised his arm in victorious salute to the crowd.[73] Megrahi was then joined on the aircraft steps by Al-Amin Khalifa Fhimah, dressed smartly in a white boubou with a tan waistcoat and waving a small Libyan flag at the gathered crowd. This was the first time the pair had met since they had stood side by side during their eight-month trial at Camp Zeist, in the Netherlands 8½ years earlier.[74]

Thus, one of the greatest mass murderers of history was returned to his country. Of course, he did not die. Reports indicate that he could live another ten years.

Why was this man released? There is an allegation that British Petroleum wished a lucrative deal with Libya and the imprisonment of their “national hero,” was a roadblock in the negotiation. The negotiations occurred at the same time and were concluded at roughly the same time. The Libyan government has denied any connection between the two sets of negotiations.

Let us assume for the sake of argument that the allegations are true. The convicted killer of 270 people is released so that British Petroleum and the British government can reap enormous profits.

Let’s do an ethical analysis. We are not confronted here with an iffy, unclear, difficult analysis. Releasing convicted murderers on compassionate grounds when the evidence appears to have been flimsy at best is not ethical. Releasing him for money is not ethical to put it kindly.

What conclusions can we draw from this? First, both BP and the British government’s concept of justice is that it is a matter of convenience. Second, money outweighs all other interests.

I call into question the patriotism of British Petroleum in that providing release of a convicted international criminal who performed essentially an act of war is not the action of a group devoted to the interests of any country or any civilized society but motivated only by a concern for profit.

Now, the big question, can we count on international corporations in a time of war? If the United States were to go to war with a large and powerful enemy with considerable economic resources, would international corporations (even nominally based in the United States) offered enormous profits to remain neutral side with this country and decline to sell trade, patent and other secrets to our enemies? Would these corporations refuse to support the United States if such support cost profits particularly in the areas of trade disruption or mineral rights?

Does the regularly delivered evidence of corporate malfeasance indicate a willingness to abandon national interests in time of war if such would cost profits? Could an enemy of the United States purchase military secrets held by corporations if they name the right price?

I believe that currently with the enormous financial resources of the United States that we can outbid other countries for the continued favor of international corporations. Since this country is squandering its manufacturing base and descending into an ear of corporate ethical darkness, it is doubtful that such a financial advantage can long continue.

James Pilant

Saving Trees and Capitalism Too (via Canadians for Climate Change Action)

On By southwerkIn business ethics, Capitalism, ethics, Government Failure

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

Saving Trees and Capitalism Too By Michael Barker "Describing a group funded by the world's leading capitalist elites as grassroots demonstrates how desperately well-meaning environmentalists cling to the illusion that by working with capitalists (not the grassroots) they will be able to counter the destruction wrought on the planet by capitalists (evidently for the benefit of the grassroots)." Capitalism requires trees, but trees do not need cap … Read More

via Canadians for Climate Change Action

Vultures Circle Oil Spill!

On By southwerkIn business ethics, Capitalism, Government Failure

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

Are High Salaries Unethical?

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure2 Comments

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

Screwing The Public With “Financial Restraint”

On By southwerkIn business ethics, Capitalism, Economic measurement, Government Failure1 Comment

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

Business Ethics Newspaper Column Roundup 7/7/10

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure

Edward Lotterman of the Pioneer Press discusses the economic fallacy of mercantilism.

Loren Steffy has a poll up – How long will Hayward remain as head of British Petroleum? I’d get on his site and vote if I were you. Stffey’s previous column speculates on whether or not Libya will acquire British Petroleum.

Jon Talton picks out the best of the writing on our current economic collapse.

Alain Sherter at BNET writes about the likelihood of a Chinese real estate crash. My Chinese students have been saying things to me along the same lines.

David Moon has some interesting thoughts on solving the debt crisis

Educating My Students – To What End?

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Teaching2 Comments

I have students. I am college professor. Generally speaking in these very tough economic times, they come to school not for an education but to get that piece of paper they have been grandly told over and over again will get them a job. Oh, yeah, I guess that is confusing, going to school but not for an education. Let me explain.

We have a thing in America called No Child Left Behind, which makes the mammoth and bizarre claim that we can measure progress based on tests. That’s right, bizarre. I might agree with you if had some numbers correlating success with grades (and you don’t). Oh, there are some university studies, which since they develop their very own concept of what we might call success, don’t amount to anything useful. (If you get to decide what determines success for your own programs, you have a tendency to win.)

No Child Left Behind means that for a school to be determined to be successful (worthy of money from the State and the Feds), it has to have good test scores generated by its students. So, in pursuit of this, students are drilled relentlessly in the subjects to be tested. The school that drills its students longer and harder than the others is supposed to be improving. Since the primary indicator of grades is social and economic class, the scores fall into utterly predictable categories. Obviously there are variations. An inspired group of teachers can pump up test scores with skill and effort. But inspired teachers are just like inspired politicians, inspired architects, inspired pediatricians, etc. There are only so many per profession.

Now, you will find that there are people who say we can train teacher to be inspired in large numbers. That enthusiasm and a willingness to go beyond requirements should be the standard. This is nonsense. There are only so many inspired, truly dedicated individuals on earth and that’s it.

The effect over time of teaching to large scale tests is devastating. Students are conditioned not to think but to remember. The advent of the internet solves many problems of remembering and great deal of remembering is useless trivia. America needs thinkers and it’s as if we wish to exterminate them that we do this crazy testing. We have perverted the idea of education from developing human beings to the production of standard products as if on an assembly line. My students aren’t products, they are people. Human achievement is not measured by tests. No test will ever be a substitute for the real life measurements of success these people will produce.

It fills me with rage to look at what has been done to my students. I want thinkers, doers and patriots. What I get are rote learners, good passive students and bumper sticker patriots whose knowledge of the greatness of this nation is limited to the most trivial.

You see, there is a funny thing about these people, these students; they’re magnificent. When I look over my classes I don’t see A and B and C students. I see these people waiting to be told of the enormous power, potential and talent they each carry within them.

My students are the heart and soul of America. They are leaders of the next generation. They work hard. I don’t see the government of the United States lavishing care on these most vital people for the future of this country. There is more an attitude of how much we can make them financially obligated for the rest of their lives and make sure that they don’t escape paying a dime of it.

We need to figure out our priorities. If you truly desire a second rate society of “information” workers, if you truly believe that this country is merely a corporate resource to be disdained if the money is too dear and that only the “right” people should have a say in what happens, this educational system is perfect for you.

This is the United States of American. We can do better.

James Alan Pilant