I’m sorry. I won’t be posting for a few or posting just a little. I’m sure I’ll get well soon and get back to the word processor.
James Pilant
Jayaraman Rajah Iyer Discusses His Latest Project
Jayaraman Rajah Iyer Discusses His Latest Project
My friend, Jayaraman Iyer, made this comment on one of my posts and I want to share it with all my readers.
James Pilant
“Yes, children do learn ethics in schools and No, they don’t learn to practice greed in the universities. You have to continue teach them business ethics. But they should learn how to measure ethics, subtler than the subtle.
First in the series of CREAM™ Report on Corporate Rating I have created a rating system on Hindustan Unilever that leads towards self-governance. JP Morgans, or Lehman Bros cannot be controlled but we can measure them with the published materials as to the extent of ethical values practiced within. We let them commit attrocities and try catch them. No, we have to have rating system on real-time.
CREAM™ Report on Corporate Rating on Hindustan Unilever is about 350 pages [A4] of 189 issue areas with no single issue analysed beyond a single page.The data is shrunk to arrive at their rating of 1,1,1,2,1, for the years 2008-09 onwards till date. With the optimum level of 5 the study suggests areas how they should work towards reaching self-governance.
The measurement methodology adopted is unique. I want universities and corporate to learn the technique of evaluating by ethical responsibility. It fetches more $ and better stability. Companies with better rating will attract the public to invest, as Paul Polman CEO of Unilever says: Increasingly
consumers will vote with their wallets for companies that are just and equitable. More importantly the Society is benefited. We don’t need JP Morgans but we should learn how to create companies practicing self-governance as corporate culture.
I have just published the report through Amazon http://www.amazon.com/dp/B00GR6K9UM#reader_B00GR6K9UM
I welcome your comments. I had been very busy on this work that I could not visit your site and respond. Thanks. Jayaraman”
From around the web.
From the web site, Amazon.com.
Here you will find Iyer’s book, Corporate Critical Density. It is sold as an e-book for 7.99.
http://www.amazon.com/Corporate-Critical-Density-Jayaraman-Iyer-ebook/dp/B006OUSIMC
From the web site, Smash Words. There is a biographical account of Jayaraman Iyer.
http://www.smashwords.com/profile/view/jayar
Jayaraman Rajah Iyer is a Chartered Accountant from ICAI, New Delhi (1966) who has a
unique insight into major changes in accounting in India’s history culled from experience with
major firms across the globe. He interned at Hindustan Lever, worked his way up holding key
positions at API and Mafatlals. He introduced the principle of Likely Ultimate Cost
while appointed as Forestry Operations Accountant at Wimco. Leaving India in 1977 was
appointed as General manager of ITI Nigeria, Lagos. Selected by Sir William Castell who is
now the Chairman of the Wellcome trust, joined the Wellcome Foundation, UK to set right the
accounting functions of Wellcome Nigeria. He had also been visiting faculty at SPJIMR, SIES
School of Management, and Vivekananda School of Management where he taught Balanced
Scorecard and Strategic Cost Management based on the Proprietary IBCM (Jayaraman owns
the copyright to Inactivity Based Cost Management, 2006).
He is the son of the renowned educationalist late Rajah Iyer, Headmaster, policy maker
and Member of the Legislative Council of Tamil Nadu till his death in 1974. Jayaraman’s
Rajah Iyer Foundation provides a support system for teachers.
Beccaria and Punishment
Beccaria and Punishment
Beccaria says that punishment should be based on the harm done to society not the actor.
Which does more harm to society: 1) manipulating the companys books to reflect profits when in fact the company was losing money or 2) robbing a grocery store and taking $180 from the register while threatening a crowd of people with a firearm?
The collapse of the company caused the loss of all the employees pensions and benefits. The company had more than twenty thousand employees, many close to retirement. The profit and loss manipulations of the companys books made the officers of the companies, millionaires many times over.
Who does more harm to society? Why?
What punishment would be appropriate?
My Answer –
Manipulating the company’s books does more harm to society.
Retirees are probably between 50 and 70 at most companies. For many the loss of pensions will mean delayed retirement and years of more labor. For those unable to continue working, this means living off social security which average 1, 250 dollars a month. Generally speaking the elderly are sicker than the general populations and living on a tiny budget often means going without food, medicine or adequate housing. In these situations, the elderly may have to choose which prescriptions medicines to buy and which ones to try to live without.
But even more, these individuals thought that they would have a surplus of money beyond their basic needs. After all, they worked for it and sacrificed for it.
For these people, there will be no vacations, there will be no helping hand extended to children and grandchildren in need, there will be no retirement in Florida, or on the beach or the waterfront or in the mountains – just wherever it’s cheapest to live.
These retirees might live another ten or twenty years, every single night staring at the ceiling wondering whether there will be enough money for groceries or medicine. – ten or twenty years going without a car, not going anywhere, not ever eating out or going to a movie. Their pain is almost endless.
Yet, the person who cooked the books, who stole tens of millions of dollars, in some cases, hundreds of millions of dollars, will appear in court in a fine suit with fine recommendations from his wealthy and well placed friends. He is unlikely to spend much time in jail, and when in society, his friends and family will not ostracize him but welcome him back.
This second insult to society does far more harm than either crime in itself because this reprobate getting away with little or no penalty does serious harm to the moral fabric of society. This kind of “justice” harms us all.
James Pilant
From around the web.
From the web site, Kate Prudchenko.
http://kprudchenko.wordpress.com/2012/10/27/beccaria/
Beccaria is very deliberate in his approach to analysis. He views the law as a tool for preventing violence and suffering, rather than a tool for punishment. He defines laws as “the terms under which independent and isolated men come together in society” (Williams 442). Rather than advocating for extreme individualism, he argues for some restrictions on freedom for the good of society as a whole. Beccaria views individuals outside of society as men who are “wearied by living in an unending state of war” whose freedom is made useless because there is “uncertainty of retaining it” (Williams 442). According to him, men sacrifice a certain degree of freedom in order to live in the sovereign of the nation and “the sovereign is the legitimate repository and administrator of these freedoms” (Williams 442).
Middle Class Political Economist: A Great Site!
Middle Class Political Economist: A Great Site!
I was cruising the Internet when I came across this site. I immediately liked it and I recommend it to you. He prefaces his posts with this –
I grew up in a middle-class family, the first to go to college full-time and the first to earn a Ph.D. The economic policies of the last 35 years have reduced the middle class’s security, and this blog is a small contribution to reversing that.
I, James Pilant, grew up in a middle class family, was the first to go to college, and the first to earn a J.D. So, I feel a certain affinity. I wish my fellow economic blogger luck and continued success. As for you, my kind readers, please go to the site and become a follower. You won’t be sorry.
James Pilant
Middle Class Political Economist: Subsidy Insanity in Western Missouri
I have written before about the gross waste of taxpayer monies on retail in the St. Louis region. According to the East-West Gateway Council of Governments (p. 18), governments in the bi-state metropolitan area pumped about $2 billion worth of subsidies into retail projects from 1990 to 2007, but only saw a net increase of 5400 jobs, meaning that each low-wage, low-benefit retail job cost the cities of the region $370,000 apiece. The price is only this low on the generous assumption that the subsidies were solely responsible for this job creation. However, given the growth of incomes in the metro area during that time period, it is likely that most if not all the jobs would have been created without the incentives provided.
via Middle Class Political Economist: Subsidy Insanity in Western Missouri.
From around the web.
From the web site, The Net Economy.
http://theneteconomy.wordpress.com/2012/01/04/what-does-it-mean-to-be-middle-class/
By David Rohde – For decades, praising the middle class has been a staple of American politics. Candidates vow to defend the middle class and accuse their opponents of betraying it. But what, exactly, is the “middle class”?
Despite the incessant political lip service paid to the middle class, there is no official American government definition of the group. The middle class has been intensively studied but no political consensus exists over how it was created or how to strengthen it.
The closest the task force came to defining the middle class was a January 2010 report “Middle Class in America (pdf).” The study never gives an exact income level that is “middle class.” Instead, echoing academic studies on the subject, the document concludes that “middle class families are defined more by their aspirations than their income.”
Beware of Greeks Bearing Standardized Tests!
Beware of Greeks Bearing Standardized Tests
Foundations, charities but mainly for-profit groups claim to have all the answers to “fix” education in the United States. Their principal tool is the standardized test, and not just any standardized tests, the ones they have created. It’s funny they always talk about accountability but what harm does it do to millions of students to be rated by tests that make little sense and measure only a small part of the results we expect our schools to produce?
As as society, it should be a matter of some concern that tax free foundations are the weapons of choice in the battle to replace public education with a neo-liberal set up where you get what you pay for. Essentially, the taxpayers are substituting anti-democratic initiatives across the country.
It’s bizarre that the United States is one of the pioneers in creating public schools is the nation where it seems most under attack.
James Pilant
Privatization is undoing Brown v. Board of Education – Salon.com
Untaxed and Unqualified Foundations Want To “Save Our Schools”
The “starve the beast” mentality allows the privatizers to claim that our “Soviet-style” schools don’t work, and that a business approach must be used instead. Philanthropists like Bill Gates and Eli Broad and Michael Bloomberg and Rupert Murdoch and the Walton family, who have little educational experience among them, and who have little accountability to the public, are promoting “education reform” with lots of standardized testing.
But according to the National Research Council, “The tests that are typically used to measure performance in education fall short of providing a complete measure of desired educational outcomes in many ways.” Diane Ravitch notes that the test-based Common Core standards were developed by a Gates-funded organization with almost no public input. Desperate states had to adopt the standards to get funding.
Bill Gates may be well-intentioned, but he’s a tech guy, and his programming of children into educational objects is disturbing. One of his ideas is to videotape teachers and then analyze their performances. The means of choosing ‘analysts’ is unclear. Another Gates idea is the Galvanic Skin Response bracelet, which would be attached to a child to measure classroom engagement, and ultimately gauge teacher performance. It all sounds like a drug company’s test lab.
As noted by Ravitch and others, philanthropic organizations tend to contribute to “like-minded entities,” which are likely to exclude representatives of the neediest community organizations. They are also tax-exempt. And when educational experiments go wrong, they can just leave their mess behind and move on to their next project.
via Privatization is undoing Brown v. Board of Education – Salon.com.
From around the web.
From the web site, Cleo’s Blog.
http://cbwhite33.wordpress.com/standardized-testing/
I completely agree with the Education Bug. Standardized testing has its place in schools, but it is extremely flawed. In today’s society standardized testing greatly impacts the lives of every student and teacher in the public school system. We have created these tests to measure students intelligence, as well as the performance of teachers in the classroom. One problem with this (which must not have stood out when we decided to implement these in our schools) is that just like every student learns differently, they test differently as well.
Another problem with standardized test is that it takes away from a teacher’s freedom in the classroom to teach what they think the students should know.When a teacher steps into a classroom each morning they focus on only the things that may be on the big test at the end of the year, leaving out crucial information that may not necessarily be on the test. The curriculum of our schools are now being based around the content of the standardized tests. This not only limits teachers’ creativity and ability to share knowledge with their students, but also caps students’ learning and retention of information. Students take in the information in a way only to regurgitate it for the test and then they soon forget what they have learned. Among the many flaws of standardized testing, curriculum is only one. Governmental spending on test preparations and how great the impact these tests have on students’ educational careers are also pitfalls of the standardized tests.
Prosecute JPMorgan!!
Prosecute JPMorgan!!
I am tired of these settlements. How can business ethics be taken seriously when massive illegality produces meager fines. Yes, 4.5 billions is chicken feed compared to what was made. If getting caught is just a cost of doing business, why not commit any illegality you can afford?
Is this is how it is going to be, why don’t we just take business ethics as a course offering and throw it out the window, then replace it with a new course. We’ll call the new course, “Rule Breaking Costs.” Instead of looking at ethical systems, we’ll apply the lessons of JPMorgan to business ethics: We obey the rules only when it is profitable to do so and we break the rules when the risk is justified by a cost-benefit analysis. See, no more nasty talk about good or bad, we just use a calculator. Of course, we have to worry that someday, somehow, against all current business free market analysis, will prosecute these criminals but what are the chances of that?
My students can go to jail for failing to pay parking tickets or using marijuana. JPMorgan can ruin tens of thousands of lives through their vicious and unprincipled manipulation of the mortgage markets, and not even be prosecuted once for a criminal offense.
Is that justice?
Is that a lesson I want my business ethics students to learn?
James Pilant
JPMorgan reaches tentative $4.5 billion deal with investors | Al Jazeera America
The bad news continued to pile up for JPMorgan Chase & Co. with Friday’s announcement of a $4.5 billion settlement reached with investors who said the bank deceived them about bad mortgage investments, part of a string of recent legal deals that contributed to the nation’s largest bank rare third quarter loss this year.
The newest settlement covers 21 major institutional investors, including JPMorgan competitor Goldman Sachs, BlackRock Financial Management and Metropolitan Life Insurance Co. The mortgage-backed securities were sold by JPMorgan and Bear Stearns between 2005 and 2008.
As the housing market collapsed between 2006 and 2008, millions of homeowners defaulted on high-risk mortgages. That led to billions of dollars in losses for investors who bought securities created from bundles of mortgages. Those securities were sold by JPMorgan and other big Wall Street banks.
Separately, JPMorgan has been negotiating with the U.S. Justice Department to settle a civil inquiry into its sales of mortgage-backed securities. While that case has yet to be full resolved, the bank reached a tentative deal last month to pay $13 billion.
As part of the $13 billion settlement, $4 billion will resolve U.S. government claims that JPMorgan misled mortgage finance giants Fannie Mae and Freddie Mac about risky mortgage-backed securitie
via JPMorgan reaches tentative $4.5 billion deal with investors | Al Jazeera America.
From around the web.
From the web site, Living Lies (Good Site! – jp).
The banks have paid tens of billions of dollars in settlements with Federal and State agencies and law enforcement. Where did the money go? But more importantly the real question arises out of the investigation and the question Elizabeth Warren keeps asking — which homes were found to have defective notes and mortgages as alleged by investors in their lawsuits against the investment banks? Which homes did the agency investigation find were foreclosed by parties who were strangers to the transaction. I agree with Sen. Warren who thinks that nothing could be more important to answer as required public informations hand the finding already made by investigators and admitted by the banks to be illegal Foreclosures on defective mortgage liens based on enforceable notes.
Do Businessmen Lie?
Do Businessmen Lie?
A poll of businessmen says they are hiring more part timers to avoid buy their workers health insurance. The data points in the opposite direction of what the businessmen’s poll says. Do businessmen let their politics get in way of the facts? Well, I think that’s likely but it’s obvious that something’s wrong. Either someone is lying or they are polling the wrong businessmen.
James Pilant
When It Comes to Obamacare, Businesses Don’t Do What They Say | Beat the Press
That would have been an appropriate headline for a Christian Science Monitor article on a poll of businesses sponsored by the Chamber of Commerce. The poll found:
\”Some 31 percent of franchise businesses and 12 percent of non-franchise businesses say they have already reduced worker hours because of the law.
\”About 27 percent of franchise businesses and 12 percent of non-franchise businesses have already replaced full-time workers with part-time employees because of the law.\”
Of course this is what the businesses say they are doing. However the data say the opposite. The data say that businesses have actually reduced somewhat the share of their workforce employed for less than 30 hours a week.
This is not the only case where the businesses answering this survey seem to be contradicting the data. The survey finds:
\”Some 41 percent of the non-franchise firms say they already see health-care costs rising because of the law.\”
By contrast, the Kaiser Family Foundation found that the rate of increase in employer health insurance costs has slowed in recent years.
via When It Comes to Obamacare, Businesses Don’t Do What They Say | Beat the Press.
Mark Megalli Charged
Mark Megalli Charged
SEC.gov | SEC Charges Hedge Fund Trader With Insider Trading in Carter’s Stock
The Securities and Exchange Commission today announced insider trading charges against a New York-based investment professional who used nonpublic information about youth clothing company Carter’s Inc. to give the hedge fund where he worked a $3.2 million trading edge.
The SEC alleges that Mark Megalli obtained the inside information through a consulting agreement he had with the former vice president of investor relations at Carter’s, Eric Martin, who the SEC has previously charged among several others in its investigation into insider trading of Carter’s stock. Martin, who had left Carter’s and started his own consulting firm, maintained contact with at least one company insider and obtained confidential information in advance of market-moving events that he supplied to Megalli so he could trade on it. Megalli enabled hedge fund Level Global Investors L.P. to avoid approximately $2.4 million in losses and make $853,655 in illicit profits by trading shares ahead of positive or negative news.
“The information was hot enough that Megalli sometimes conducted the trades while he was still on the phone with his source,” said William Hicks, associate regional director of the SEC’s Atlanta Regional Office. “After one profitable trade, Megalli bragged to his colleagues about being ‘max short’ in advance of negative news without mentioning his inside source.”
via SEC.gov | SEC Charges Hedge Fund Trader With Insider Trading in Carter’s Stock.
As always, I’m surprised at how little coverage these kinds of crime get. Often, I will find no stories at all on SEC charges. In this case, four news outlets covered the story, Reuters, hedgco.net, FINalternatives and OPALesque. I will be watching to see if there is coverage by more of the media but I do not have high expectations.
James Pilant
From around the web.
From the web site, Relative Money.
http://relativemoney.wordpress.com/2013/11/05/what-is-reallyi-insider-trading/
Insider trading is the trading of a public company‘s stock or other securities (such as bonds or stock options) by individuals with access to non-public information about the company. In various countries insider trading based on inside information is illegal. This is because it is seen as being unfair to other investors who do not have access to the information.
I think that the scope of insider trading will be extended to other activities like HFT, Politiciens, Lobbyist, Dark Pools operators and owners and also the TBTF banskters institutions which have been, are… able to socialize losses versus reaping fat profits and bonuses.
No Tip, No Class
No Tip, No Class
“No class” had been defined as being loud and ignorant. This is a violation of the bounds of behavior expected of ladies and gentlemen. This particular act definitely qualifies as “no class” act.
James Pilant
Another homophobic jerk leaves waiter hateful note in place of tip – Salon.com
A few weeks after two homophobic jerks in Kansas refused to tip their server because he was gay, another homophobic jerk in New Jersey has done the same thing, leaving her waiter a hateful little note in place of gratuity.
On a bill of almost $100, the woman wrote, “I’m sorry but I cannot tip because I do not agree with your lifestyle and the way you live your life.”
Former Marine and waiter Dayna Morales sent an image of the note to Have a Gay Day, where she wrote she was “thoroughly offended made pissed off and hurt that this is what her kids will grow up learning.”
“Sorry lady but I don’t agree with your lifestyle and the way you’re raising your kids but you didn’t see me throwing that in your face and giving you shitty service,” she added.
via Another homophobic jerk leaves waiter hateful note in place of tip – Salon.com.
From around the web.
From the web site, Advocate.com.
After providing excellent service to a couple who dined in his section, a 20-year-old gay waiter at Carrabba’s Italian Grill in Overland Park, Kan., found a hateful message left for him in lieu of a tip, reports The New Civil Rights Movement.
The note read: “Thank you for your service, it was excellent. That being said, we cannot in good conscience tip you, for your homosexual lifestyle is an affront to God. Queers do not share in the wealth of God, and you will not share in ours. We hope you will see the tip your fag choices made you lose out on, and plan accordingly. It is never too late for God’s love, but none shall be spared for fags. May God have mercy on you.”
But the couple’s cruel intentions appear to have backfired, as their hateful message has caused several locals to rally around the young waiter. A string of supporters have shown up at the restaurant since hearing the news and specifically request to be seated in the mistreated waiter’s section.
Ethics of Advertising Wine and Utilitarianism
Ethics of Advertising Wine and Utilitarianism
The “ethics of advertising wine” is not actually the subject of this post. The web site, Ethics of Advertising Wine, is. I enjoyed the site, an interesting foray into ethics and advertising, and below is the author’s take on utilitarianism.
Please enjoy!
James Pilant
Ethical Theory-Utilitarianism
http://advertisingtowardsgenerationy.wordpress.com/2013/10/09/ethical-theory-utilitarianism/
Utilitarianism is split between the works of two famous philosophers: Bentham and Mill. What you have just seen is a very shallow version of Bentham’s philosophy. What Bentham did was provide a moral theory that was supposed to allow people to calculate whether something is morally good dependent on if it brought more overall pleasure than pain. The tricky part of his theory comes when you have to place a numeric value on seemingly immeasurable things. I mean, how exactly do you put a number on how much pleasure eating an entire pizza pie will bring? (one million pleasures, that is how much.) And how many pleasure points are subtracted from how fat and unhealthy you will feel? (seven…the answer is seven. so I’m heading off to Little Caesars.) Not only is it difficult to put a number on your own personal pleasure an pains, but utilitarianism includes the pleasure and pain of anyone that will be affected by your decision, even those that will be effected in the future. Bentham also was a follower of act utilitarianism. This means that he believed that you should deem the moral value of each individual act and follow those calculations.
Mill, who studied Bentham, was a rule utilitarian. He believed that moral citizens should calculate the ethical value of a set of “rules.” They should then never stray from following those rules. For example, he would calculate the pleasures and pains of every person ever in the case of lying. He would possibly find out that lying causes more pain than pleasure, and would deem that, as a rule, lying is immoral. No longer do you have to do individual calculations on each special scenario to see whether lying is okay in this case and bad in another.
From around the web.
From the web site, European Business Ethics Ireland.
http://ebeni.wordpress.com/decisions/theories/consequences/utiliarianism/
Utilitarianism
Probably the most widely understood and commonly applied ethical theory is utilitarianism. In an organisational context, utilitarianism basically states that a decision concerning business conduct is proper if and only if that decision produces the greatest good for the greatest number of individuals.
“Good” is usually defined as the net benefits that accrue to those parties affected by the choice. Thus, most utilitarians hold the position that moral choices must be evaluated by calculating the net benefits of each available alternative action.
Importantly, all the stakeholders affected by the decision should be given their just consideration.
As mentioned previously, teleological theories deal with outcomes or end goals. The often-stated declaration that “the end justifies the means” is one classic expression of utilitarian thinking. Several formulations of utilitarianism exist. Their differences harken back to the original writers on the topic, the nineteenth-century philosophers Jeremy Bentham and John Stuart Mill.
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