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
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.
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
Shel Horowitz is back from vacation with a posting on confronting racism, a topic much in the news.
The Engineering Ethics Blog discusses education and the importance of experience, ability and education in different ways in different times. He is particularly upset with President Obama for his over emphasis on college as opposed to other kinds of learning. There is a lot of societal comment here. I quote:
The natural tendency of our society, unfortunately, is to look up to people who (1) have lots of money, (2) have lots of people working for them, or (3) manipulate symbols instead of real things.
I agree with him pretty much across the board but I am an advocate for education other than just credential education, that is, an education that enriches the many aspects of a person’s life as opposed to simply a note on the wall, a permission slip for employment often with no more intellectual importance than a postage stamp.
Gael O’Brien takes on the ethics of brand identity in the aftermath of so much corporate wrong doing. She points out much more kindly than me that their brand identities of quality and concern for clients were less than real. The article asks more questions than it answers but we as a people and a society will have to answer those questions. As corporations dominate every aspect of our lives, whether or not we have made a deal with concerned people or the devils’s acolytes is one that has to be dealt with.
Chris MacDonald is cruising into philosophical territory with an interview with Andrew Potter about his new book, The Authenticity Hoax. The book’s thesis is that authenticity, the seeking of an identity through consumer purchasing, is based on dubious claims and is inherently self defeating for too often the goal of the authentic is a societal story with little relation to the self but everything to do with the preoccupations of the society around us. The book sounds fascinating.
The Leading In Context Blog discusses green office supplies (something I didn’t know existed).
These gentlemen discuss green office supplies:
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
Pilant's Business Ethics Blog 
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