Category: Philosophy of Business

Goldman Sachs Fined £20m

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Philosophy of Business

Britain’s Financial Service Authority has fined Goldman twenty million pounds.

Goldman kept vital information from the government regulatory agencies in Great Britain, and most certainly from the investing public as well. Goldman Sachs has been involved in the melt down of the Greek economy, unfair home loans in the United States (paying a 60 million dollar penalty), and a wide variety of violation of American financial regulations.

Perhaps someone should catalog the company’s activities around the world. It would seem from many, many news reports that pushing the boundaries of the law and direct law breaking are habits of the company. Considering the firm’s immense financial holdings, these practices could post serious dangers to the American economy.

Sheila Smith Comments On “Is Corporate Crime Simply The Way Things Are?”

On By southwerkIn business ethics, ethics, Philosophy of Business

“Is Corporate Crime Simply The Way Things Are” reads my blog post.

Sheila Smith is a colleague at work, most intelligent and she puts up with me and is kind enough to read my blog. She has some thoughts on my afore mentioned blog post.

and here they are. (These are very good, so please read!)

I was actually told this by a dean of business in college. I had my first internship job as a bookkeeper for a home health agency, and found out that they were fraudulantly reporting home visits to medicare and medicaid and receiving millions from those programs, as well as some other things going on. I went to my dean to ask to be reassigned and ask his advice as to what to do in regards to reporting, etc. He shrugged and said, it’s just the way the corporate world works these days. We just have to accept it and work with it. You’ve gotta learn to be tough out there. I couldn’t accept that; so I quit the job, dropped my remaining accounting classes, and switched my major to education the next semester. I felt like at least teachers could still be ethical and not looked down upon for it. I later found that ethics even falters in education when I was asked to change a grade for a local “known” person’s child so that she could pass and graduate, event though she had not completed even half the work required. I refused to do that, and the administration went behind my back and changed the grade anyway. Needless to say, I had a new job for the next school year. It seems lack of ethics is everywhere, and many just accept it for the norm. How sad!! Maybe it explains alot of the trouble we face in our economy and society?

I hope she writes some more, so I can put it up. This blog is successful because there is more than one cook!

James Pilant

A Word of Caution To The Corporate Drive For Cash

On By southwerkIn ethics, Philosophy of Business1 Comment

I read this in the National Catholic Register today. As an academic, I must temper my religious remarks at school, and that is right and just. Those students do not pay to be converted to my idea of religion.

However, this is my blog, and I can say what I believe. All will be held to account in the day of judgment. The corporate followers of Friedman and the moral minimum will have their reward.

There will be a reckoning.

“Therefore, those whom fortune favors are warned that riches do not bring freedom from sorrow and are of no avail for eternal happiness, but rather are obstacles; that the rich should tremble at the threatenings of Jesus Christ —threatenings so unwonted in the mouth of Our Lord (Luke 6:24-25) — and that a most strict account must be given to the Supreme Judge for all we possess.”
—Leo XIII, Rerum Novarum, 21-22

Fox Parent Company News Corp Off Sources Software Development To North Korea!?

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Government Failure, Philosophy of Business

Fox Mobile owned by News Corp. owned by Rupert Murdock off sources software development to North Korea? Isn’t North Korea socialist? Wait a minute … they might be communist, oh …, they are communists. Wow, Do you think that someone should tell them that providing aid to the North Korean Communists might be a bad idea?

I just don’t get it. The parent company of Fox News cutting deals with a communist nation (and since they can’t do business directly using front companies to exchange the goodies.)

Apparently outsourcing is so important to profit we can overlook a few little problems.

This kind of support is one of the few ways that North Korea can raise money since it is under sanctions by the U.N. and specifically, the United States for its development of nuclear weapons. The North Koreans stand accused of several of the most successful cyber attacks in history and this kind of support bolsters their capability at cyber warfare.

Hey, don’t believe me. Listen to this guy.

“Any sort of transaction that gives cash to the North Korean government works against U.S. policy,” said James Lewis, a senior fellow at the Center for Strategic and International Studies, a Washington-based policy group. “The coding skills people would acquire in outsourcing activities could easily strengthen cyberwar cyber-espionage capabilities. Mobile devices are the new frontier of hacking.”

Well, on the other hand, we’re at peace with the North Koreans. Oh, wait a minute!  …  You tell me we don’t have a peace treaty with the North Koreans and are technically still at war. That can’t be good.

Does that mean that News Corp. is providing aid and support to a direct enemy of the United States?

Well, they’re not really a threat right now, I mean, aside from that nuclear weapon thing, right?

Will North Korea’s saber rattling lead to war? Thus reads the headline for May 25th of this year from McClatchy News Service. So, it would appear that they are actively considering direct war with the United States.

North Korea? Huh, I’ve heard something about them. Would that be the guys with the fourth largest standing army in the world? Would that be the ones we don’t have diplomatic relations with? Would that be the one led by a repressive dictator who has been described as being sadistic, paranoid, antisocial, narcissistic, schizoid, and schizotypal. Would that be a country led by the afore mentioned modest, retiring gentleman whose simple titles include
* Party Center of the WPK (1970’s)
* Vice-Chairman, WPK Central Committee (1972–80)
* Dear Leader (Chinaehan Jidoja) (Late 1970s-1994)
* Intelligent Leader (1973–84)
* Member, Presidum of the Supreme People’s Assembly of the DPRK
* Secretary of the Worker’s Party of Korea (1980–94)
* Supreme Commander of the Korean People’s Army (December 25, 1991-)
* Marshal of the DPRK (1993-)
* Chairman, National Defense Commission of North Korea (1993-)
* Great Leader (Widehan Yongdoja) (July 1994-)
* General Secretary, Workers Party of Korea (1997-)
* Supreme Leader of the Republic (2009-)

It’s possible that they are willing to tell us exactly what they think of this nation. Well, they are willing to. Their attitude toward the United States might be summed up nicely by this statement released by the North Korean Government –

Pyongyang — Of late the U.S. Department of Defense formally announced that the U.S.-south Korea joint military maneuvers would be kicked off soon. These maneuvers are, to all intents and purposes, dangerous saber-rattling aimed at rounding off their preparations for joint military actions, pursuant to their scenario for a war of aggression against the DPRK and mounting a surprise preemptive attack on it.

The U.S. is contemplating staging a joint anti-submarine drill under the pretext of coping with the “intrusion” of DPRK’s submarines into the waters of the east and west seas of Korea. But lurking behind these moves are a design to invade the DPRK to put the whole of Korea under its control and a more important aim to establish military hegemony in Northeast Asia and pressurize and contain other big powers by force of arms in this region.

As Northeast Asia including the Korean Peninsula is of great military and strategic importance, the U.S. considers the peninsula, a gateway to the region, as its vantage point for carrying out its strategy of Asian aggression.

Cold War came to an end but the U.S. ambition to dominate the world remains unchanged. Its moves for a war of aggression have become evermore pronounced to carry out the strategy to put Asia and the Pacific under its control.

Asian countries will never remain an onlooker to the U.S. moves to hold military hegemony.

If enemies dare provoke a war, the army and people of the DPRK who have bolstered up the war deterrent in every way will wage an all-out struggle and demonstrate the mettle of Songun Korea.

The U.S. would be well advised to give up its foolish dream to control other countries and dominate the world by dint of its strong-arm military policy.

Let’s sum up. News Corp. owned by Rupert Murdoch, the company that runs Fox News sends money to North Korea to pay their software developers to make games for mobile phones. This is done through a number of intermediate companies so very, very technically, News Corp. can deny involvement. This money provides aid and support to a nation which has nuclear weapons for which is under sanction by the United Nations and United States. The nation of North Korea has been actively threatening war with this country and can be described with no exaggeration as an enemy of the United States.

This is the logical result of a corporate ethos devoted only to money. It doesn’t matter who you trade with as long as you make money. It does not matter if it can cost lives or threaten the strategic interests of the United States. It does not matter that the company expresses continued, constant support for capitalism and continuous contempt for policies to the left of that. As long as the question is one of money, there are no borders, there are no beliefs, there are no other considerations.

Do you like that? Is Milton Friedman laughing from his grave? After all, didn’t say that a corporation’s responsibility was solely to make the maximum profit for the shareholder within the rules of the game? This is all technically legal. Isn’t this exactly where that belief system leads?

So, the United States of America is a secondary consideration in the quest for profit. Maybe that should alarm you?

James Pilant

Andrew Comments On “Suggested-Rules-For-Corporate-Moral-Decision-Making.”

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, Economic measurement, ethics, Philosophy of Business, shareholder

Andrew has once again offered his insights and, as usual, I am more than pleased to post them. I want you, gentle reader, to understand that if I get a post of more than two or three paragraphs (and it is thoughtful and on point), it is going to appear as a blog post. This blog isn’t just about me. If I didn’t think you were intelligent and perceptive, I wouldn’t write this thing.

Andrew is commenting on my blog entry, Suggested Rules for Corporate “Moral” decision making.

(I don’t post Andrew’s last name, his e-mail, etc. He has not directly given me permission and I am loath to volunteer such data.)

Here’s what he has to say –

Mr. Badaracco seems to put much stock into the idea that what is popular is best. 2 of the 3 steps in his quick process revolves around how others will perceive the decision. I think this is a shallow and intellectually hollow way of developing a system of ethics.

The “Golden Rule Test”, I think, warrants some merit, but it also has a flaw. Sometimes the best decision for a company will involve a negative impact to one or more individuals. If one utilizes this rule and thinks “what if I were the one being laid off or fired?”, then it could lead the CEO to make a decision that, while compassionate, is detrimental to the company as a whole.

I find the long method to be more intellectually and morally stable. Of course, its not perfect either. I agree that #1 is a good place to start, and that it alone is not sufficient. #2 is a fairly simple question in my mind. The rights of the people involved are usually determined by the overall society that the corporation resides in. This can, of course, vary from society to society. The value and character of the organization should be paramount. To preserve that, the leader must act in accordance with the organizations set of values. If he does this, then he needs not worry about how his character is perceived. The character of the organization is inevitably linked to the character of its leader.

Suggested Rules For Corporate “Moral” Decision Making

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Philosophy of Business3 Comments

Badaracco is presenting a theory of ethics that I have seen in textbooks before. I’m not impressed. The first has got to be the shallowest possible interpretation of Utilitarianism as well as an equally inadequate exposition of the principle of rights. Then there is “what will people think.” My reputation is all. And we can’t live in a fantasyland. Wow, I betcha that Bible and the Western Civilization stuff got nailed there.

Of course, I guess you have to make it simple for the masses of the corporate relativists in the crowd.

Oh, well, read it for what’s it is worth –

The conference’s concluding keynote speaker, Joseph Badaracco, Professor of Business Ethics at Harvard Business School, presented the assembled CIOs a practical guide to making ethical decisions—not in case of right versus wrong, because that’s easy—but in right versus right, because that’s hard.

Badaracco suggested four ways to think about each decision:

1. Will it produce the greatest good for the greatest number of people? That’s a good place to start, Badaracco said, but it’s not sufficient.
2. What are the rights of the people involved? For example, if a Nobel Prize winner, on the verge of discovering a cure for cancer, needs your heart, having it cut out of your chest against your will would, ultimately, produce a great deal of good for a great number of people, but it would certainly violate your rights. Not to mention establishing a grisly precedent.
3. What will the decision say about your values, your character, and the values and character of your organization? Leaders need to represent the values they hold dear. However, simply focusing on how the decision reflects upon you can be short-sighted at best, priggish at worst. Finally,
4. What will work in the real world? Leaders cannot afford to live in fantasyland.

All these questions eventually need to be answered, and one can spend a long time thinking about them. But say you don’t have a lot of time? Badaracco offered a quick three-step process:

1. The newspaper test. How will you feel if your decision hit the front page of tomorrow’s newspaper?
2. The Golden Rule. How would you feel if someone else made the decision about you?
3. The obituary test. How would you like the people you respect to look back at your decision?

Shareholder Power?

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business, shareholder

One again, I’m going to lament that the people who own the corporations don’t seem to have any actual control over them. Let me quote Nouriel Roubini from his excellent essay, Gordon Gecko Reborn.

There are also massive agency problems in the financial system, because principals (such as shareholders) cannot properly monitor the actions of agents (CEOs, managers, traders, bankers) that pursue their own interest. Moreover, the problem is not just that long-term shareholders are shafted by greedy short-term agents; even the shareholders have agency problems. If financial institutions do not have enough capital, and shareholders don’t have enough of their own skin in the game, they will push CEOs and bankers to take on too much leverage and risks, because their own net worth is not at stake.

At the same time, there is a double agency problem, as the ultimate shareholders – individual shareholders – don’t directly control boards and CEOs. These shareholders are represented by institutional investors (pension funds, etc.) whose interests, agendas, and cozy relationships often align them more closely with firms’ CEOs and managers. Thus, repeated financial crises are also the result of a failed system of corporate governance.

That’s what I think too.

Simple statement – We hear over and over again about property rights but start talking about actual shareholder control, power held by the actual property owners, howls of outrage cloud the horizon.

The people that own the corporations should have say about what they do.

James Pilant