Crisis Mode 2016

On By southwerkIn Business Ethics

Crisis Mode 2016

The New Year comes with the threat of a serious economic crisis. The plunge in oil prices is causing market instability all over the world with the China’s strange excuse for a stock market on the front line. But we are also in a continuing economic crisis as the middle class shrinks and its finances worsen. 

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Crisis Mode 2016

But I’m not the only one that believes this. Here’s Will Hutton writing in the Guardian: 

There has always been a tension at the heart of capitalism. Although it is the best wealth-creating mechanism we’ve made, it can’t be left to its own devices. Its self-regulating properties, contrary to the efforts of generations of economists trying to prove otherwise, are weak.

It needs embedded countervailing power – effective trade unions, law and public action – to keep it honest and sustain the demand off which it feeds. Above all, it needs an ordered international framework of law, finance and trade in which it can do deals and business. It certainly can’t invent one itself. The mayhem in the financial markets over the last fortnight is the result of confronting this tension. The oil price collapse should be good news. It makes everything cheaper. It puts purchasing power in the hands of business and consumers elsewhere in the world who have a greater propensity to spend than most oil-producing countries. A low oil price historically presages economic good times. Instead, the markets are panicking.

They are panicking because what is driving the lower oil price is global disorder, which capitalism is powerless to correct. Indeed, it is capitalism running amok that is one of the reasons for the disorder. Profits as a share of national income in Britain and the US touch all-time highs; wages touch an all-time low as the power of organised labour diminishes and the gig economy of short-term contracts takes hold. The excesses of the rich, digging underground basements to house swimming pools, cinemas and lavish gyms, sit alongside the travails of the new middle-class poor. These are no longer able to secure themselves decent pensions and their gig-economy children defer starting families because of the financial pressures.

Capitalism has grown inside the protective cover of the modern nation state and the international accords sought by those states to protect themselves from war and instability. It would seem that Neoliberals are contemplating a world in which the nation state is reduced to the same level of just another corporation, in which national laws including those specifying what are acts of criminality are just matters to be negotiated.

I have been sensing unease in the literature over the last few weeks. It is making me uncomfortable. The financial press seems bewildered by economic events that appear without precedent. (The financial press’ view of history never seems to run more than a couple of decades.) Could we be running into another economic crisis? Well, yes, there is almost certainly going to be some kind of downturn in the next twelve months but at what level? The Fed’s silly decision to raise interest rates is going to cause an economic slowdown. But even more troubling is the Royal Bank of Scotland’s predictions for the year. They compare the current situation to 2008. That is very bad indeed. 

Andrew Roberts, Bank of Scotland’s “head of European economics, rates & CEEMEA research,” stated that progress in automation and technology are set to “wipe out” up to half of employment in developed countries, and that the global economy has “far too much” debt, to the point where it may hinder global economic output. Roberts sees the majority of 2016 being used to sell profitable positions entered after the 2008 subprime mortgage collapse and the resulting quantitative easing-driven boom that has seen equities, as measured by the Dow Jones, gain about 90 percent since January 1, 2009.

In economics and banking “speak” this is roughly equivalent to screaming out obscure Bible verses while clutching a “The End is Near” sign. 

It seems to me that capitalism can be a positive force in society but that kind of capitalism is not one based on pure financial exploitation or an absence of patriotism or on the opportunity to evade taxes. A positive capitalism is one that creates value not in derivatives but in actual goods and services. A positive capitalism is one in which companies will not seek out their nation’s enemies as profit making opportunities. And finally, a positive capitalism recognizes the contributions of the community in its success and pays its share of taxes to maintain the common welfare. 

James Pilant

Patterns of Corruption

On By southwerkIn business ethics

Patterns of Corruption

This post is particularly aimed at other professors who teach business ethics. I was on YouTube and found a film by Adam Curtis called The Great British Housing Disaster and it is a business ethics masterpiece. Here’s a piece of if  –

The very banality and consistency in the greed and incompetence of the malefactors here is amazing and in my experience, I have found that attitude commonplace in this country as well.

The film tells the story of how Britain decided to build a great deal of housing in a very short period of time and how that gave opportunity for unscrupulous contractors to build sub-standard housing. It takes you through the whole process from politics at the national level to the local and then, architects, contractors,workers and regulators. We are shown the building process and we see, in this case literally, the “concrete” results of the corruption.

I like the film because it’s well done and because it’s historical. I don’t want to be too topical,  too current, when teaching. When all the students have decided already what they think, it makes teaching more difficult. If you give them history and ethics, you have the opportunity of showing how corruption and incompetence follow particular patterns, and you see these patterns over and over again. If you watch the patterns, you can see the corruption as it develops in many other situations.

Now obviously I do teach on some current events but I prefer to use a film and a subject original to the students so they all begin at the same place.

For those of you who don’t teach, it’s a very fine piece of documentary film making and it is the first work listed in Wikipedia for Adam Curtis. So, it is kind of a preview of his later career.

James Pilant

Fracking Lawsuit

On By southwerkIn Business Ethics2 Comments

Fracking Lawsuit

Can the lawsuit be an effective tool against corporate misconduct? It has been, continues to be and will be again. But what about fracking? Can lawsuits affect the practice? And I want to focus here on one aspect of fracking, and that is the disposal of waste water by injecting it deep into the earth apparently near fault lines.

Here is a brief quote from an article in Think Progress – found here: Oklahoma Residents Sue Energy Companies Over Earthquake Damage | ThinkProgress
http://thinkprogress.org/climate/2016/01/12/3738417/oklahoma-earthquake-residents-lawsuit/

This week, a group of 14 homeowners in Edmond, Oklahoma filed a lawsuit against 12 energy companies, claiming that the companies’ fracking operations have contributed to this uptick in earthquakes. Specifically, the lawsuit targets the companies’ wastewater disposal wells, claiming that the injection of fracking wastewater into these wells “caused or contributed” to earthquakes and constituted an “ultrahazardous activity.”

In the lawsuit, filed in Oklahoma County court, the residents focus on two earthquakes — of 4.3and 4.2 magnitude — that struck Edmond on December 29 and January 1. The plaintiffs say they suffered damage from the earthquakes, and that the energy companies were “negligent, careless, and reckless” in their treatment of the earthquake risks surrounding wastewater injection.

i010We have questionable behavior on the part of the energy companies and a lawsuit alleging that behavior has caused harm. This works for society with most industries. Ford and General Motors have to build their cars with the knowledge that they can be sued for misconduct. Obviously, this threat hanging over their heads doesn’t always stop them from making foolish and lethal decisions but my experience is that we live in a much, much safer world because companies have to worry about being sued.

So, why do I have doubts that this will work? These aren’t “regular” companies. These are energy companies. They are the primary political powers in a number of states and the reach of their think tanks, political action committee, etc. is very difficult to measure, so enormous is the money and influence being deployed. No, these aren’t regular corporations.

I think they’ll follow the path blazed by the firearms industry and create restrictive law protecting them from lawsuits. The first legislative acts I expect to see will force those that sue and lose in court to one of these companies to pay all court costs. It may be more difficult and take more time, but in the long term they will simply seek and almost certainly get a blanket restriction on lawsuits in the “national” interest. Expect to see a giant legislative preamble talking about energy independence and the need to protect “innovation.”

James Pilant

Oklahoma Adapts!

On By southwerkIn Business Ethics2 Comments

Oklahoma Adapts!

If you live in Oklahoma you may have already seen this document. It’s entitled Fast Facts on Earthquake Insurance. It is provided for free by the Office of Oklahoma Insurance Commissioner John D. Doak. I was unaware of Mr. Doak and his work (I don’t live in Oklahoma.), but after reading his press releases recommending that residents of the state buy earthquake insurance and how to get the best deal while avoiding being scammed – I am impressed with the man. He makes good sense.

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Oklahoma Adapts!

But I write about Business Ethics and while insurance sometimes has business ethics elements, my focus here is on fracking.

Last spring, the US Geological Survey (USGS) issued a report declaring that a spate of earthquakes over seven years were man-made, triggered by drilling for oil and gas. Dumping toxic wastewater from the drilling process destabilized faults in the bedrock, according to the report, causing more problems than the high-pressure injection of water, sand and chemicals, or hydraulic fracturing, that is known colloquially as fracking.

The necessity of the citizens of the State of Oklahoma to buy earthquake insurance is almost totally man-made. These are induced earthquakes.

There is an injustice here that bothers me. You see part of the cost of hydraulic fracking is the necessity of disposing of the waste water, and the industry has solved this by injecting it deep into the earth. And this causes earthquakes, lots of earthquakes. (Here’s another little quote:)

According to the National Earthquake Information Center (NEIC), which is based in Colorado, in 2014 Oklahoma experienced 585 such quakes. In 2015 there were 842.

“That’s almost a millennium’s worth of earthquakes in two years,” George Choy, a seismologist at the center, told the Guardian on Friday. “When you see that you suspect something is going on.”

Before fracking Oklahomans experienced a couple of earthquakes a year on average and last year they had 842.

So, the industry saves itself a great deal of money by disposing of the waste water in an earthquake producing fashion while citizens of the state bear the brunt of the damage. That strikes me as unfair. The industry makes billions while the citizens of the State live on ground that is becoming more and more unsteady and dangerous.

In other words, the industry shifted the cost of their operation from themselves to the citizens in the form of earthquake damage and such necessary changes as the having to buy earthquake insurance.

And there is one further thing that bothers me.

Someone is going to die. It is inevitable. You shake the ground and buildings collapse and burn. Someone is going to die.

That’s not fair either.

In the past industries saved money by polluting the air and water instead of safely disposing of their waste products. Isn’t this just the same thing in a different format? Instead of talking about air, instead of talking about the water, we’re talking about the integrity of the earth itself.

James Pilant

The Future of the Corporation

On By southwerkIn Business Ethics2 Comments

The Future of the Corporation

A Guest Post by Jason Michael McCann

(It is a great privilege to have my friend, Jason Michael McCann, post an article on my blog! I hope you all appreciate his thoughts as much as I do. Jason’s original post on his blog can be found here – The Future of the Corporation | Random Public Journal
http://randompublicjournal.com/2016/01/03/the-future-of-the-corporation/)

Already we stand on the precipice of a post-nation state future. Globalisation of private corporate interests has successfully unshackled the international market from the controls of individual governments and so has positioned the legal entity of the Corporation above the law. In the twenty-first century the transnational corporation has become a law unto itself, governed only by the imperative to increase the value of its shares for its wealthy private stakeholders. So successful has been this corporatist revolution against the bourgeois state that is has now arrogated to itself the right to sue the state when the actions of the latter undermine the corporation’s interests – a move which has cemented the subjugation of democracy to the whims of global corporations.

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Jason Michael McCann

Above we have used the word Revolution, because a revolution is precisely what we have witnessed. It is no longer in the realms of conspiracy theory that the Corporation has become the new order of the world, but conspiracy fact. Years of secretive negotiations, across the developed world, between corporately sponsored governments and the corporations themselves have borne fruit in the creation of globalised treaties granting effective domination of the world’s economy to unelected and legally unaccountable super-boards-of-management. Now these new Lords of the Philistines play the tune to which elected governments must dance, regardless of the thoughts and better interests of the people who have elected them. Democracy has lost its teeth.

We the people, the newly dehorned electorate workers of the world, must think carefully about this new direction of global social evolution. Until recently we have each been, within the social contract, an asset of the state in which we have had a meaningful vote. Today the very governments we elect have become the clients of a new superstructure of suzerains over which no one has control save for the profit principal. Our multinational corporate overlords, with an overwhelming share of the world’s wealth, can now buy and sell the resources and assets of any nation – and this includes us for we too are state assets.

One does not need a crystal ball to see that this trajectory is leading to somewhere very dark. Whether it is the economy, the environment, or human rights, individual states and international bodies of states the likes of the United Nations have been rendered powerless in a post-nation state reality. Of course there is the chance that we are worrying over nothing. Corporations may discover that what’s best for people and the environment is best for business, but we have seen precious little evidence of this in the past. Our most likely path into the future is one of a dystopian hell where human and workers’ rights exist only on the statute books of pacified nations, and where the wonders of nature are broken down in ledger books to crude cash value.

Did TransCanada Just Kill the Trans Pacific Partnership?

On By southwerkIn business ethics

Did TransCanada Just Kill the Trans Pacific Partnership?

Democracy is a precious thing. It is easy to see that throughout history, autocrats of all types have attempted to end or limit government by the people whenever possible. Corporations are not different in this respect. They often and quite publicly prefer the autocratic and the certain over the will of the people and its variability.

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Did TransCanada Just Kill the Trans Pacific Partnership?

As time has gone by the United States has entered into treaties like NAFTA, the North American Free Trade Agreement. This agreement like many other trade agreements limits the sovereignty of participating nation states and gives power to international tribunals that are not answerable to the people.

These tribunals have not gained a great deal of public attention. That’s probably wise. The idea that a band of unknown bureaucrats can contradict the will of the people as a community, a county, a state or even a nation is a wonderful selling point if you’re a corporation but probably less than persuasive for the citizens who don’t realize that a big chunk of democracy (control over their lives) just went away.

One of the big chunks of democratic power that was given away was the right of governments to be not be sued by foreign corporations.

And while this has not been well known, it is about to be. You see, TransCanada had a stake in the building of the Keystone Pipeline and since the United States government said no, they are suing for more than fifteen billion dollars.

That will put the rest of us on notice that we can be sued if we obstruct international corporate profit making.

This is unlikely to make passage of the Trans Pacific Partnership easier for once people realize that even mundane decisions in the public interest can be reversed and penalized with money damages, they may decide that free trade agreements carry too high a price.

You may think at this point that I’m being an alarmist. TransCanada has yet to win any money and perhaps you don’t even believe that these international tribunals every really sue anybody. Well, what about Australia?

Let’s say you are a tobacco company and you don’t want people to regulate your product. You can use “free trade agreements” on your behalf. (This is from the Huffington Post –

Absent state intervention on their behalf, tobacco companies found a new way to fight efforts to regulate tobacco marketing. They take advantage of an “investor-state” dispute options being built into more free trade agreements between countries, which allows companies to directly challenge regulations they believe discriminate against foreign products. Unlike fighting laws in domestic legislatures or through WTO disputes, which are more formal and predictable, investor-state conflicts are decided by a panel of international arbitrators with no appeal, making them more attractive to multinational corporations.

So when Australia tried to put limits on how cigarettes were sold, the tobacco companies used the free trade agreements and used them well. –

(Further down in the same article -)

PMI has used that tactic to challenge Australia’s proposed “plain” packaging rules, which would eliminate bright colors and branding on packs and cartons, and Uruguay’s plan to require 80% of cigarette packs be covered in warning labels. The company argues that these restrictions on its trademarks and branding are akin to expropriation (which would require the country to pay the restricted company for selling its product unbranded) and violate trade deals between Australia and Hong Kong, where PMI has a subsidiary, and Switzerland and Uruguay.

What kind of democratic decisions could be challenged in the United States under these agreements and who could bring these law suits? Any decision that could affect profitability could be challenged. That would include things as mundane as zoning laws all the way up to federal legislation. Any corporation or citizen of a nation participating in the TPP could sue should they believe their operations are being damaged.

For example, Fayetteville, Arkansas could re-zone an area residential. If property there was owned by a foreign corporation say, one from Vietnam, an international tribunal might very well find that this act amounts to an expropriation of the company’s property and force the community to re-zone and pay damages for its “illegal” act.

Over time as the number and complexities of these “free trade agreements” grows, the city will have to become increasingly lawyered up to stay aware of the effect of city decisions on possible litigants all over the world.

Sound good? If you don’t like what you’re hearing, maybe you should do something to let your representatives from the President down to local government know that maybe we shouldn’t be weakening democracy to protect the profitability of foreign corporations.

James Pilant

Here is an excerpt from an article from the Guardian –

For many, the Keystone XL pipeline was a catalyst for environmental action, and when the State Department denied developer TransCanada’s permit application in November, it was a signal that the environmental movement had triumphed over corporate and fossil fuel interests. So when the tar sands company announced this week that it was filing a claim against the United States for $15 billion, under provisions in the North American Free Trade Agreement (NAFTA), many were outraged.

But TransCanada’s heavy-handed use of the Clinton-era agreement might be the rallying point activists need to stop another, perhaps even more far-reaching, federal action: the pending Trans-Pacific Partnership. The TPP is a massive, Pacific Rim trade agreement that would apply NAFTA-like provisions — including prohibitions on interfering with private investment — to the relationships between the United States and 11 other countries, including Japan, Malaysia, and Vietnam.

It might be the rallying point activists need to stop another, perhaps even more far-reaching, federal action: the pending Trans-Pacific Partnership. The TPP is a massive, Pacific Rim trade agreement that would apply NAFTA-like provisions — including prohibitions on interfering with private investment — to the relationships between the United States and 11 other countries, including Japan, Malaysia, and Vietnam.

High Noon

On By southwerkIn Editorial

High Noon

The Sheriff walked tall into the town meeting, a gun strapped to his hip. He tells the meeting that strangers have come into our town and our county. They’ve threatened my life. My wife has had to leave town because of the threats and now they’re threatening my elderly parents.

Was this some old Western flick I watched?

!!the sheriff on the trail from Zane Grey novel
From the novel, The Mysterious Rider by Zane Grey

No, this is Harney County in Oregon – Last Night.

Yesterday, a county sheriff asked his fellow citizens for help. Sheriff David Ward asked for help because of these strangers that have come to town.

Now, I ask you – Is he just talking to his citizens or all of us? Because we can listen right now or we can wait till later when a whole bunch of heavily armed hooligans march into your town and demand you cooperate in whatever “protest” or “seizure,” they’ve got on their very small minds.

And if you don’t cooperate, they and their friends on the Internet are going to make you. And right smack in the middle of everyone of these tragicomedies is law enforcement – men and women tasked with defending your life and liberty confronted with heavily armed strangers.

What are you going to do?

I’ll tell you what you should do. First, protect and back your law enforcement. Because it is right and because they back you and they’re part of your community. Second, you have a responsibility as a citizen to make sure that justice is served, that people even heavily armed people have to obey the law.

Someday, every one of you may find yourselves in a community where thirty or forty armed men come in and demand you cooperate. And then you get to choose whether you have the guts to back your law enforcement or you’re gonna hide. What’s it going to be?

James Pilant

Thirty-Two Million Dollars and Justice

On By southwerkIn Editorial

Thirty-Two Million Dollars and Justice

We spend a lot of money on a lot of things in this country, but how much are we willing to pay for justice?

Is it not written in Amos 5:24 that – But let judgment run down as waters, and righteousness as a mighty stream?

064-1Evil men have committed evil acts. Are we willing to seek justice, even if it costs thirty-two million dollars?

There are 13,000 untested rape kits in the State of Florida. It is estimated by the Florida Department of Law Enforcement that it could cost anywhere between nine and thirty-two million dollars to test all the kits some of which have been stored in police departments for years.

Every rape kit needs to be checked and checked as quickly as possible. Why? Here’s an excerpt from the article found in the Guardian –

(From the story, More than 13,000 rape kits remain untested in Florida, officials say – -)

Testing old rape kits usually leads to a torrent of new prosecutions. Several law enforcement agencies have found that the rape kits point to serial rapists.

After Detroit processed a backlog of 11,000 rape kits, police identified more than 100 serial rape suspects.

And here is a quote from the report itself –

In 2000, the City of New York initiated the process of inventorying and testing all previously unsubmitted SAKs without regard to the status or facts of the case (forklift approach). Testing of 17,000 SAKs resulted in over 2,000 DNA matches and 200 cold case prosecutions across New York City. Those offenders are now serving more than 900 years in prison. Similar results have been reported in Michigan where the Wayne County Prosecutor’s Office identified 188 potential serial rapists and obtained 15 convictions. In Houston, Texas, testing of 6,663 untested SAKs resulted in 850 matches in the federal DNA database and the prosecution of 29.

Many rapists are serial rapists. Testing a large number of rape kits from a single geographical area often pulls up the same name many times. A serial rapist can rape hundreds of women during their criminal career. Testing rape kits connects the dots in eminently prosecutorial format.

As a criminal justice professional, these kits are a tool to rid society of many of these repeat offenders.

This is a worthy goal and it is worth thirty two million dollars.

James Pilant

The Fabric of the World

On By southwerkIn Business Ethics

The Fabric of the World

“Greed, fraud, dishonesty and arrogance, these are the words that best describe the reality of Wall Street today,” Sanders told supporters in midtown Manhattan. “To those on Wall Street who may be listening today, let me be very clear. Greed is not good. In fact, the greed of Wall Street and corporate America is destroying the fabric of our nation.”

Provided by the Sanders Campaign web site. jp
Provided by the Sanders Campaign web site. jp

These are the words of Bernie Sanders. You can find the full news article here at the guardian.

Sanders says that greed is “destroying the fabric of our nation.” But as a business ethics professional, I can tell you, greed in the form of unregulated capitalism is destroying the fabric of the world.

Over the past decade, the world has been subject to commercial attacks, an oil spill in the gulf that devastated an area larger than many states, fires related to palm oil production in Indonesia and other countries as large as dozens of American counties, dam failures in Brazil that released 60 million cubic meters of iron ore tailings into the water system, in Japan – radioactive contamination made several once thriving communities uninhabitable(1) and I can go on and on.

But let me close this litany of disaster with Volkswagen, the poster child for necessity of regulation with criminal penalties. Volkswagen inserted software in 11,000,000 cars designed to evade pollution controls by running one way under tests conditions and another on the road. There is no way that Volkswagen could have believed that they would never be caught. The pollution produced by an automobile is not always measured under test conditions. There had to be an underlying belief that the company is so well placed, so influential, employs so many people – that it will not be prosecuted and will get to keep most or all of the money.

As we have seen with the virtual non prosecution of General Motors in the United States, they may have good reason for that belief. Assessed a 900 million dollar fine after 124 deaths were traced to a below specs ignition switch, General Motors escaped criminal penalties in spite of having continued their wrong doing for 10 years after first detecting the problem.

Pure capitalism, unregulated greed, whether referred to as Neo-liberalism or free market fundamentalism is dissolving the fabric that binds us together as human beings.  It is not just an economic malady but a moral evil which must be addressed.

James Pilant

(1) In case, you wish to challenge me on the corporate responsibility for Fukushima and say it was a “natural” disaster – I would respond that building a nuclear reactor to an American design on low land near the coast on an earthquake fault in Japan is malfeasance.

Teaching – A Good Discussion Question?

On By southwerkIn Teaching

A Good Discussion Question?

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A Good Discussion Question?

I was on the web doing my morning read of business ethics topics when I came across this –

Should a Greek Island Reconstruct One of the Seven Wonders of the Ancient World?

http://www.slate.com/blogs/the_eye/2016/01/04/colossus_of_rhodes_project_wants_to_reconstruct_one_of_the_seven_wonders.html

If I had a class this morning (the semester doesn’t start for a couple of weeks) I’d be prepping this for use sending out an e-mail with links and practicing a few opening lines. This is a perfect ice breaker for any business ethics class. –

What are the business ethics of building one of the great wonders of the ancient world? 

The follow up questions virtually write themselves:

Should a virtually bankrupt nation devote enormous resources to a tourist attraction?

Is the Colussus a part of the Greek national heritage and if so, does that justify the projected expenditure of 283 million dollars?

Is this commercially viable?

Is the channel navigable for the big cruise ships?

What kind of power would the thing need and how much would it cost to maintain it?

The last one was destroyed by an earthquake. Does the present of a fault line call into question the whole idea?

If your students are like mine, there is always going to be a division between those who want to discuss the morality of the idea as opposed to those who want to discuss profitability followed by a smaller group who want to talk about history, beauty and whether or not the people proposing this are just crazy. My heart is with the last group. They are the most fun.

One of my teaching methods is to keep the class lively by providing new, interesting and often amusing topics sometimes illustrated with pictures and video. Often, I’ll just cruise the web for a few minutes in the morning before going to school looking for something to get them motivated and in the mood to learn.

Well, I thought I’d just float the idea past some of you who teach like me.

James Pilant