Tag: Capitalism

Why unethical conduct in business is so common at this time in our history? Why is business ethics almost irrelevant?

On By southwerkIn Business Ethics1 Comment

Why unethical conduct in business is so common at this time in our history? Why is business ethics almost irrelevant?

It is now about four years since the catastrophe on Wall Street wrought destruction on this country’s economy. In those three years, the lives of much of the population have become much more difficult while the lives of those who created the disaster seem to have changed but little.

How did we get here? How did doing financial speculation amounting to little more than gambling become respectable? How did the idea of a responsibility to the other citizens of a nation become amusing to the elites?

There are several factors. The first was the advent of the baby boomers to power and authority replacing the Depression and the World War Two Generations. Probably the best date for this transfer would be 1976 when Jimmy Carter became President. He was the first President to not have served in the Second World War since Truman. The significance of this was huge. The previous generation had solid memories of the failures of financial sector and the long hard times that resulted. The difference between study and experience are dramatic. It’s even worse when it’s collective experience. The new generation had stories, movies and television to remind them of the pain of those years, but it didn’t carry the power of the emotions involved, the collective helplessness of more than fifteen years when everything that generation knew was in peril.

The second factor I point to is the advent of the Chicago School of Economics and the doctrines of Milton Friedman. I point in particular to Friedman’s 1970 article in the New York Times Magazine, The Social Responsibility of Business is to Increase its Profits. This is my favorite quote.

But the doctrine of “social responsibility” taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book Capitalism and Freedom, I have called it a “fundamentally subversive doctrine” in a free society, and have said that in such a society, “there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

I want you to understand that it appears to me that included in “the doctrine of social responsibility” is duty, honor, religion and patriotism, to name a few. (I like to tell my ethics class that the no religion agrees with this doctrine that doesn’t practice human sacrifice.) Here we have a rejection of those values that constitute Western Civilization. From Wikipedia:

The concept of western culture is generally linked to the classical definition of the Western world. In this definition, Western culture is the set of literary, scientific, political, artistic and philosophical principles which set it apart from other civilizations. Much of this set of traditions and knowledge is collected in the Western canon.

These things that make us human, these things that convey the values – the principles, that are the result of thousands of years of human experience are swept away in a simple doctrine that justifies any action within “the rules of the game.”

I want to point out one more thing: notice that the principles of “within the rules of the game” and “open and free competition without deception or fraud” are in many ways contradictory. If you can make or influence the rules why should you compete? Now get a load of this: Friedman tells businessmen that they are free of any restraint, every limitation of conduct, but they are supposed to hold to the duty of engaging in open and free competition without deception or fraud: Do whatever is necessary to make a profit but be good boys and compete.

The third element is the gradually increasing wave of deregulation which begins in a small way in 1971 when the Nixon Administration recommends the rail and trucking industries be deregulated. By the time, Jimmy Carter is elected the doctrine has gained enormous strength and much wider application. The basic implication that government regulation damages business success hampered any attempt at new regulation no matter what happened. This attitude is critical to what happens next.

The fourth element can be dated roughly as beginning 1981. Hostile takeovers and corporate raiding become regular parts of the business news. The basic significance of this is that it is a war. A war fought between manufacturing and finance, with manufacturing losing at every turn. The secondary effects were only a little less worse. You could make money at it. Not little money like people made from developing new products and making things, big money. T. Boone Pickens, one of the major corporate raiders of the period is worth three billion dollars and is rated currently as the 117th richest man in the world. Now let us add in a related development, the financing of these takeovers. Drexel Burnham Lambert paid Michael Milken 550 million dollars a year during its heyday. What did Michael Milken do to merit this: he created high yield bonds, junk bonds. The era of “financial innovation” begins here. Continuing to the present day, more and more bizarre mathematical creations will be used for investment, financing and speculation.

Now, let’s combine them. Those Americans familiar with the pain of the results pass on the reins of power to a new generation. The Chicago School of Economics will provide the philosophical basis for discarding societal responsibility. The government reacts with deregulation which makes it exceptionally difficult to re-regulate industries. The financial industry begins destroying manufacturing in its search for profits.

All the elements are now in place for what has happened and continues to happen. The American population without previous experience of the fruits of financial speculation have no common idea of what should be done. The ethic of the business world is converted from a complex set of factors motivated by religion, philosophy, the myriad other factors that tie us to one another as a people to one of profit as the only value. The government accepts this philosophy and applies it, making deregulation and not regulating pretty much the official doctrine of the government. The financial industry begins destroying healthy companies making hundreds of millions of dollars for what might kindly be described as little effort. The government does not intervene to stop this, which is a clear demarcation line in history that the power of that part of American that makes things is eclipsed by the power of the deal makers, the part of American society that moves money.

Out of this history we grew a generation of Americans who knew with certainty (and unfortunately with accuracy) that going into the financial industry, taking risks, and pushing the boundaries of the rules could make one a multi-millionaire in short order. The most capable of the students at the great universities many of them Ivy League schools went into finance. Those individuals were supposed to be a wide variety of things especially the keepers of the flame, the torch that is passed from one generation to another, the moral standards, the courage, the willingness to sacrifice for their country and their fellow man so that all can prosper. It is difficult to maintain a system of morals when the rewards are so extreme. My understanding is that ivy leaguers can start at a Wall Street firm for as much as $350,000 in salary. And after that if you are willing to do “what it takes,” the path to being a mere millionaire is quick and easy. These people were supposed to be crusading attorneys, publishers, politicians, administrators – all those things that make societies function. There is an ancient precept that nations succeed based on the wisdom of the learned, the courage of their soldiers and the efforts of the workers. Our best and brightest don’t go there. They go to make money in a moral vacuum.

We are going to pay for this for a long time. When the basic doctrine, the ethos of a country becomes devoted to the acquisition of wealth with not even a tiny lip service to virtue you get unethical conduct on a broad front across the business world. Everything that has happened since then, has grown out of these events that I described. The Savings and Loan Etc. (I was going to list them but you know as well as I do what they are and I find it too depressing to make such a list just at the moment) are all explainable out of these elements.

Now we have the demonstrations on Wall Street that are rapidly forming a counterpoint to the story,  I told above.

Is this the beginning of a brand new story or a small and insignificant chapter in the global rise of financialization?

I am hoping for a new story.

James Pilant

From around the web.

From the web site, 3M Health Information Systems.

http://3mhealthinformation.wordpress.com/2013/07/24/why-unethical-behavior-goes-unchecked/

I’m interested in why people don’t report to their companies if they observe unethical, illegal, or just wrong behavior. Most large companies provide training on their Code of Conduct, ethics, legal issues, and harassment. Is it that it takes effort and a bit of risk in order to report someone else’s wrongdoing? That appears to be case. In the same survey mentioned above, they found that 69 percent of respondents thought the company would not investigate the issue properly if it was reported and 23 percent feared a negative consequence, including retaliation. It appears that more training on the topic of reporting suspected wrongdoing is needed as well as efforts within companies to honor their commitments to address any report of suspected wrongdoing and keep the employee safe from harm.

Who is in a position to help companies promote more reporting of misconduct? Once again, I think the middle manager is the key to the solution. Middle managers are well positioned to see what happens with those who report to them as well as what happens with their own senior managers. Their perspective within the organization cannot be matched. Additionally, the middle manager often has sufficient information about the company and its policies to know when the issue is bad behavior or an honest mistake versus unethical or illegal actions. Encouraging employees to report directly to their manager (when the issue does not include their manager) may help to weed out the misunderstandings from the misconduct and do so at a level that feels safer to the employee.

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Doug Guthrie addresses Business Ethics

On By southwerkIn Business Ethics

Doug Guthrie addresses Business Ethics

Business Ethics and Social Responsibility – YouTube

I listened to this video and enjoyed it, particularly the discussion of Adam Smith and Milton Friedman early in the lecture.

Dean Guthrie’s background in Chinese studies is particularly interesting to me, since I also have a great interest in the nation’s culture. I am less sanguine about that nation’s prospects than he is. China’s long term geographical and political ambitions are not compatible with continued economic cooperation with the United States.

James Pilant

The glacier like movement of business ethics
The glacier like movement of business ethics

From around the web –

From the web site, Capitalism and Friedman:

There’s no way to appreciate fully the contributions of Nobel Prize-winning economist Milton Friedman (1912-2006), who would have turned 99 years old this weekend, to the growth of libertarian ideas and a free society.

This is the man, after all, who introduced the concept of school vouchers, documented the role of government monopolies on money in creating inflation, provided the intellectual arguments that ended the military draft in America, co-founded the Mont Pelerin Society, and so much more. In popular books such as Capitalism and Freedom and Free to Choose, written with his wife and longtime collaborator Rose, he masterfully drew a through-line between economic freedom and political and cultural freedom.

From the web site, Lisa Richards, Rock and Roll Politics:

The federal government appears to be under the impression Wall Street CEO’s are better at managing the United States Treasury than trained economists.[26] [27] [28]  America has over two centuries of proof that bankers and legislators cannot be trusted with the people’s money,[29] yet, despite forewarnings from Adam Smith to Milton Friedman, Washington ignores the experts and continues helping itself to the Treasury. 

     America has gained and lost many times,[30] learning repeated lessons the central government continues committing: monetary stupidity.  In truth it is useless to wonder why Washington continues creating and wreaking economic havoc when it is obvious that human nature has proven those with power will continue doing harm[31] as long as mankind exists.  It is for this reason economics was invented, is practiced and taught: too often, lack of common sense has been in charge of money and the need for fiscally wise minds analyzing trade and industry is cost effective to society overall.  That being said, financiers tend not to listen to the money-wise discussed here: men who forewarned disaster if certain fiscal policies were not implemented, and devised solutions to resolve and repair monetary failure.  

And finally, from the web site, UNLADTAU:

To all fellow men and women out there who may have deep fondness for the liberal capitalist model of economic adaptation, I hope that you can make some adjustments in your cognitive banks. Capitalism is not a permanent facet of human life, but merely one among various epochs that will come to pass. Only impermanence is sacrosanct in the cosmos, so please refrain from singing hallelujah to a world system that is on its death knell as I articulated in a previous article.

And please refrain from swallowing hook-line-&-sinker the contentious propaganda of Francis Fukuyama about the ‘end of history’, that accordingly history had concluded with the galvanization of liberal capitalism, that history makes no more sense. Fukuyama’s theory is a slapstick narrative of hyper-valuation of the ‘mad economics’ of late capitalism and hypo-statization of reality that has no relation at all to the real in the world out there. Fukuyama had taken as ‘real’ what is actually ‘virtual’, and froze time much like unto a fairy tale of timelessness, of history-less Nietzschean moment that is fit more for infants than for adult humans. 

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Make as Much Money as Possible–Typical Business Rule?

On By southwerkIn Capitalism1 Comment

029-1Do businesses have ethical obligations beyond what the law and shareholders require? | The CQ Researcher Blog

“In a free-enterprise, private-property system,” Friedman wrote, “a corporate executive is an employee of the owners of a business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom.”
In this view, going beyond those basic requirements — for instance, as Friedman wrote, spending more to reduce pollution than “the amount that is in the best interests of the corporation or that is required by law” — amounts to improperly spending money that belongs to the shareholders.
The U.S. concept of free-market capitalism is not, of course, universally accepted. Karl Marx, the intellectual father of communism, saw profit as the result of capitalist exploitation of workers. Socialist and communist systems assert that some or all of business profits rightfully belong to society.
But among those who embrace capitalism, many say ethical obligations go well beyond simply making a profit.
A survey of business executives from around the world by consulting firm McKinsey & Co. found that only a minority wholeheartedly embraced Friedman’s view. Sixteen percent of respondents agreed that business should “focus solely on providing the highest possible returns to investors while obeying all laws and regulations.” But 84 percent said the role of large corporations should be to “generate high returns to investors but balance [that] with contributions to the broader public good.” [Footnote 14]

Do businesses have ethical obligations beyond what the law and shareholders require? | The CQ Researcher Blog

Does business believe in the absolute pursuit of profit to the exclusion of all other goals? A study by McKinsey and Co. indicates otherwise. This is an unexpected result based on my perceptions but, of course, I live in the Southern United States where free market worship is one very short step below the more traditional forms of worship.

I hope the study is correct. We need business leaders willing to be valuable members of our communities. Without their participation, the ties that bind us together as a people, a civilization, weaken.

James Pilant

From around the web.

From the web site, Business Talk.

http://businessadministrationblog.wordpress.com/2012/01/29/goal-of-the-firm-maximize-profit-maximize-shareholder-wealth-stakeholder-wealth/

Wealth maximization is long term process. It refers the value of the company generally expressed in the value of the stock.

Value maximization says that managers should make all decisions so as to increase the total long run market value of the firm. Total value is the sum of the value of all financial claims on the firm- including equity, debt, preferred stock and warrants.

Here, the executives undertake investing in new projects, maximizing profits from existing products and services, controlling cost, and adding value to the company through process, which reflects in the price of the stock, but always in the increase in Net Asset Value and Equity Per Share.

The wealth of corporate owners is measured by the share price of the stock, which in turn is based on the timing of returns (cash flows), their magnitude and their risk. Maximizing share price will maximize owner wealth.

Cash flow and risk are the key decision variables in maximizing owner wealth.

When investors look at a company they not only look at dollar profit but also profit margins, return on capital, and other indicators of efficiency. Profit maximization does not achieve the objectives of the firm’s owners; therefore wealth maximization is better option than profit maximization.

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Listen to the “Morality” of Laissez-faire.

On By southwerkIn Economic Justice

The English government during the Irish Famine of 1845 – 1852 adhered strictly to a doctrine of Laissez-faire. I want you to listen to the cold blooded ramblings of a government in thrall to a cruel, vicious and irrational policy concept. This is where economic philosophy confronted tragedy and compounded it.

Watch the clip and see if you can avoid recoiling in horror at the voices of the decision makers mindlessly repeating the necessity of letting the market have its way.

James Pilant

Laissez-faire

When Ireland Starved Episode 3 Managing The Famine (Part 1 of 3) – YouTube

When Ireland Starved Episode 3 Managing The Famine (Part 1 of 3) – YouTube

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Why unethical conduct in business is so common at this time in our history? Why is business ethics almost irrelevant?

On By southwerkIn Business Ethics

It is now about three years since the catastrophe on Wall Street wrought destruction on this country’s economy. In those three years, the lives of much of the population have become much more difficult while the lives of those who created the disaster seem to have changed but little.

How did we get here? How did doing financial speculation amounting to little more than gambling become respectable? How did the idea of a responsibility to the other citizens of a nation become amusing to the elites?

There are several factors. The first was the advent of the baby boomers to power and authority replacing the Depression and the World War Two Generations. Probably the best date for this transfer would be 1976 when Jimmy Carter became President. He was the first President to not have served in the Second World War since Truman. The significance of this was huge. The previous generation had solid memories of the failures of financial sector and the long hard times that resulted. The difference between study and experience are dramatic. It’s even worse when it’s collective experience. The new generation had stories, movies and television to remind them of the pain of those years, but it didn’t carry the power of the emotions involved, the collective helplessness of more than fifteen years when everything that generation knew was in peril.

The second factor I point to is the advent of the Chicago School of Economics and the doctrines of Milton Friedman. I point in particular to Friedman’s 1970 article in the New York Times Magazine, The Social Responsibility of Business is to Increase its Profits. This is my favorite quote.

But the doctrine of “social responsibility” taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book Capitalism and Freedom, I have called it a “fundamentally subversive doctrine” in a free society, and have said that in such a society, “there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

I want you to understand that it appears to me that included in “the doctrine of social responsibility” is duty, honor, religion and patriotism, to name a few. (I like to tell my ethics class that the no religion agrees with this doctrine that doesn’t practice human sacrifice.) Here we have a rejection of those values that constitute Western Civilization. From Wikipedia:

The concept of western culture is generally linked to the classical definition of the Western world. In this definition, Western culture is the set of literary, scientific, political, artistic and philosophical principles which set it apart from other civilizations. Much of this set of traditions and knowledge is collected in the Western canon.

These things that make us human, these things that convey the values – the principles, that are the result of thousands of years of human experience are swept away in a simple doctrine that justifies any action within “the rules of the game.”

I want to point out one more thing: notice that the principles of “within the rules of the game” and “open and free competition without deception or fraud” are in many ways contradictory. If you can make or influence the rules why should you compete? Now get a load of this: Friedman tells businessmen that they are free of any restraint, every limitation of conduct, but they are supposed to hold to the duty of engaging in open and free competition without deception or fraud: Do whatever is necessary to make a profit but be good boys and compete.

The third element is the gradually increasing wave of deregulation which begins in a small way in 1971 when the Nixon Administration recommends the rail and trucking industries be deregulated. By the time, Jimmy Carter is elected the doctrine has gained enormous strength and much wider application. The basic implication that government regulation damages business success hampered any attempt at new regulation no matter what happened. This attitude is critical to what happens next.

The fourth element can be dated roughly as beginning 1981. Hostile takeovers and corporate raiding become regular parts of the business news. The basic significance of this is that it is a war. A war fought between manufacturing and finance, with manufacturing losing at every turn. The secondary effects were only a little less worse. You could make money at it. Not little money like people made from developing new products and making things, big money. T. Boone Pickens, one of the major corporate raiders of the period is worth three billion dollars and is rated currently as the 117th richest man in the world. Now let us add in a related development, the financing of these takeovers. Drexel Burnham Lambert paid Michael Milken 550 million dollars a year during its heyday. What did Michael Milken do to merit this: he created high yield bonds, junk bonds. The era of “financial innovation” begins here. Continuing to the present day, more and more bizarre mathematical creations will be used for investment, financing and speculation.

Now, let’s combine them. Those Americans familiar with the pain of the results pass on the reins of power to a new generation. The Chicago School of Economics will provide the philosophical basis for discarding societal responsibility. The government reacts with deregulation which makes it exceptionally difficult to re-regulate industries. The financial industry begins destroying manufacturing in its search for profits.

All the elements are now in place for what has happened and continues to happen. The American population without previous experience of the fruits of financial speculation have no common idea of what should be done. The ethic of the business world is converted from a complex set of factors motivated by religion, philosophy, the myriad other factors that tie us to one another as a people to one of profit as the only value. The government accepts this philosophy and applies it, making deregulation and not regulating pretty much the official doctrine of the government. The financial industry begins destroying healthy companies making hundreds of millions of dollars for what might kindly be described as little effort. The government does not intervene to stop this, which is a clear demarcation line in history that the power of that part of American that makes things is eclipsed by the power of the deal makers, the part of American society that moves money.

Out of this history we grew a generation of Americans who knew with certainty (and unfortunately with accuracy) that going into the financial industry, taking risks, and pushing the boundaries of the rules could make one a multi-millionaire in short order. The most capable of the students at the great universities many of them Ivy League schools went into finance. Those individuals were supposed to be a wide variety of things especially the keepers of the flame, the torch that is passed from one generation to another, the moral standards, the courage, the willingness to sacrifice for their country and their fellow man so that all can prosper. It is difficult to maintain a system of morals when the rewards are so extreme. My understanding is that ivy leaguers can start at a Wall Street firm for as much as $350,000 in salary. And after that if you are willing to do “what it takes,” the path to being a mere millionaire is quick and easy. These people were supposed to be crusading attorneys, publishers, politicians, administrators – all those things that make societies function. There is an ancient precept that nations succeed based on the wisdom of the learned, the courage of their soldiers and the efforts of the workers. Our best and brightest don’t go there. They go to make money in a moral vacuum.

We are going to pay for this for a long time. When the basic doctrine, the ethos of a country becomes devoted to the acquisition of wealth with not even a tiny lip service to virtue you get unethical conduct on a broad front across the business world. Everything that has happened since then, has grown out of these events that I described. The Savings and Loan Etc. (I was going to list them but you know as well as I do what they are and I find it too depressing to make such a list just at the moment) are all explainable out of these elements.

Now we have the demonstrations on Wall Street that are rapidly forming a counterpoint to the story,  I told above.

Is this the beginning of a brand new story or a small and insignificant chapter in the global rise of financialization?

I am hoping for a new story.

James Pilant

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Кто враги народа Ирландии?: Who are Ireland’s Enemies? (via homophilosophicus) [1]

On By southwerkIn business ethics

Homophilosophicus has given me permission to blog all of his posts during the crisis. He lives in Ireland and is taking part in the demonstrations against the government austerity measures and loan guarantees to the European Union. I’ve gone back to the beginning of the crisis which by his blog would be the 30th. So, I’ll reblog all of them in order. For convenience sake, I’m going to number them. This is more for me than you. I want to get these up in the exact order.

James Pilant

Кто враги народа Ирландии?: Who are Ireland's Enemies? Certain schools of Iranian Islamic political discourse have labelled the United States of America as the ‘Great Satan;’ speaking more of the taut political relationship between the Islamic World and the United States than any spiritual reality. Europeans have their own mistrust of matters transatlantic; betraying Europe’s deep-seated jealously of the prosperity of the America’s republican project, which is often manifested in either yankenfreude, … Read More

via homophilosophicus

What The Market Will Bear?

On By southwerkIn business ethics1 Comment

I reported a few days ago that David Lazarus of the Los Angeles Times had written a good article explaining the dispute between banks and retailers over the higher costs of credit cards as opposed to cash. He has a new column today explaining the strange phenomena of a poll backing the bank’s side of the argument happily presented to all and sundry as consumer opposition to any change in the current system. Strangely enough I worked on a doctorate for a while and I remember a few scant traces of my survey research teaching. The methods used in the Visa card survey are completely useless for getting statistically accurate data. They essentially did push polling where you ask loaded questions to get the answers you want. A properly phrased set of questions can get you positive numbers for the proposition that there are too many mothers and we should thin the herd.

Lazarus reports that credit card fees on a retail transaction might be as little as a few pennies per purchase. Lazarus also points out that retailers wonder why larger transactions cost more than smaller ones. Its a computer process, just numbers. Does a computer seemed more fatigued after a seven digit transaction than a three digit transaction? Does it demand overtime or organize a protest or form a union? Does it take longer breaks? Where’s the pain justifying higher fees for a hundred as opposed to ten dollar transaction? But there’s more.

Let me quote from the article –

Ken Clayton, senior vice president of the American Bankers Assn., said the cost of processing credit card transactions should be whatever the market will bear.

“Who puts the value on the price of a ticket Jack Nicholson pays to watch the Lakers?” he asked. “It’s however much Jack Nicholson wants to pay to sit in the front row.”

Whatever the market will bear! Wow! You know if I can recall my Adam Smith (and I can), the free market is based on a free exchange of information about such things as pricing and he had a strong preference for small economic units that would actually compete. Strangely enough we have no idea what it costs banks to do these transactions. So, they deliberately withhold the knowledge of their costs and charge us whatever they want. Then, they pronounce with the certainty of a prophet from a vindictive and very strict religion that they can charge as much as the market will bear. Wow, doesn’t that strike you as a little unethical? I mean doesn’t it seem to you that if businesses can band together and claim that every transaction they process costs them up to 3% regardless of the advances in the speed and computing power of their operation, that they might be deceiving you and acting unfairly. Shouldn’t they be competing with each other? You know, that weird funny thing called the free market? What they are doing here sounds a lot like a monopoly. But it couldn’t be because that would be domination by a singly entity or cooperation by a number to control pricing and eliminate competition. Surely we don’t see any large economic units all practicing the same policies and withholding the same information. Right?

From wiki:

In economics, a monopoly …  exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.

Goodness? That must be one of those inaccuracies I hear when people criticize wikipedia. I better go to a better source.

From Black’s Law Dictionary –

“A privilege or peculiar advantage vested in one or more persons or companies consisting in the exclusive right (or power) to carry on a particular business or trade, manufacture a particular article or control the whole supply of a particular commodity. A form of market structure in which one or only a few firms dominate the total sales of a product or service.”
Black’s Law Dictionary, 5th edition, page 908.

You can’t trust anybody. That one must be wrong too.

Well, I wouldn’t worry the fees on retail transaction because our interests are being watched over the men running the banks. Who, you all know are honorable men. I will not wrong such honorable men.

I will not suggest that their business practices place a cruel burden on retailers. I will not argue that their interpretation of the free market is simplified child like understanding that wouldn’t get the a B in the fifth grade. I would never intimate that creating a push poll justifying their position suggests that they are in weak or vulnerable position with their argument.

Well, best wishes. I’ll try and make more concrete arguments the next time.

James Pilant

Gary Bender Adds His Thoughts On This Post: Business ‘Ethics’ Wrong Focus – Really?

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

Gary Bender is a friend of mine and more than that, he is well read and thinks. So I enjoyed his comment and share it with you.

Gary Bender writes –

Mr. DiLorenzo writes “Dishonest business people will be punished financially as customers cater to their competitors while suppliers refuse to do business with them. In cases of negligence, such as the BP oil spill, chief executives often lose their jobs, the company is sued, and the firm’s stock price plummets, as was in fact the case with BP. Such market feedback mechanisms do not guarantee ethical behavior, but they do reward it with customer loyalty – and profits. No such feedback mechanism exists in government, which is where much larger ethical problems exist.”

This is the usual nonsense we hear from the teabaggers and other blame-the-Democrats-I-mean-government right-wingers.

No, customers are not watchdogs. They buy for complex reasons that have little to do with the ethics of merchants. Likewise, suppliers sell to anyone.

As far as malfeasance, BP will continue to make huge profits long after the gulf spill is forgotten. Sure, a few people will lose their jobs, probably fewer than lost their lives in the explosion, and stock prices will rebound. Those who are intelligent enough to invest for the longterm will barely notice the stock dip.

It is in government where the people do have a feedback mechanism – their votes. Unfortunately, in the American two-party system, greedy capitalist are able to have more influence on government than the voters. Mr. DiLorenzo is one of those who would like to see more corporate influence on government. I believe that Benito Mussolini called the marriage of government and corporations fascism.

To suggest that capitalism and government are disjoint in America is disingenuous. To suggest that greed in capitalism is of no concern is downright evil.

What Do I Stand For?

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

First and foremost, I believe that a human being can be a businessman and still maintain that precious humanity. That would be my first principle.

I hope it is obvious that flowing from this basic belief is the second, that is, there are many, many reasons to do things and money is not the only one or the most important one.

Third, I am a firm advocate of leadership. Change does not happen naturally or inevitably, and many, many times in history, we have gone backwards. A successful effort toward human values is often destroyed or turned back by the forces of greed and evil. When someone plays that song from Les Misérable, “Do you hear the people sing?,” I always disgusted. No, they’re not. They aren’t reaching for anything. It’s like one of those empty disney films where one more time they tell us to be all we can be but not really. The people like everybody throughout history get tied up and focused on the mundane, the useless, the copying and pretending that passes for life. If people change, for there to be social change, someone has to lead; someone has to point out that change is possible.

We do not live in an era of leadership.

Fourth, I believe in capitalism. I like the idea of people developing and selling goods. I like the idea of competition. But history is clear, it is a lot easier, extremely easier to make money by theft, by lies, by monopoly, by adulterating goods and by bribing or gaining favors from the government. This is so obvious to me, so clear a lesson of history repeated over and over again ad nauseum, that when someone says all we have to do is unleash the power of the market place by getting rid of law and regulation I still find myself shocked.

I have lived during the age of Milton Friedman. I believe that the free market and capitalism are tools to be used in building a healthy society not ends in themselves and certainly not a principle to held with religious fervor. I do not believe in the utopia of communism. I do not believe in a utopia based on race, or education, or religion. And I absolutely reject the idea that all decisions will be made in the best way possible economically if we only let it function without interference. The idea that you can build an ideal society on the basis of greed because it will channel decision making into the best choices to make the most capital or money or value which will produce the best outcomes is no more practical than pure libertarianism where if we have no laws everyone will behave.

I am told that what I believe is called limited capitalism. That’s probably about right. I want to buy eggs at a reasonable or good price but I don’t want to risk death for the low price. I am willing to suffer an additional cost for the government to regulate eggs. (I know I went a little long on number four but it’s important to explain that particular issue.)

Fifth, I believe in personal freedom and privacy. I think those two items are linked. I am very opposed to the surveillance society, and the lack of secrecy and security for our internet communications. I believe an e-mail should be just as legally protected as a letter sent in the mail.

Sixth, I am a patriot. I believe America is a special place because of its people and its history. Because of that, I believe this vibrant, energetic and amazing people deserve government policies to protect jobs and insure economic security. I reject, fundamentally and utterly, the charge that Americans are lazy, over paid and unwilling to accept responsibility. There is constant refrain in the media about lazy, overweight, non-saving, etc. etc, Americans. Any examination of these issues will lead to the discovery that they are far more complex than any simple moral failing.

Those are the ideas I want to put in my columns. If you think I do please tell me and if you think I don’t I need to know that even more.

James Pilant

Wall Street Overpays!

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

“Stop me before I overpay again,”might be scratched on the wall of Goldman Sachs’, if the firm had any insight or shame. But they don’t. Reuters News Agency reports that Goldman Sachs, J.P. Morgan and Citibank are among the firms who will be cited by the Obama administration pay czar Kenneth Feinberg for having made “ill-advised” payments. (For ill-advised read unearned) The payments in the 17 institutions cited total over one billion dollars. This was in 2008 when the firms were awash with taxpayer money from the bailout.

You see it doesn’t matter what scrutiny they are under, whether or not the public is angry, whether an action is right or wrong as long as the money flows. Money, Money, Money, the arbiter of all decision making on Wall Street, the great green god that supplants the real God and any of sense of responsibility. They know that the only important thing in the world is money. It buys happiness, sex, influence and immunity from the duties that the rest of us take for granted as part of our lives. They live in separate communities with separate education systems and when our children serve in the military, become teachers, policeman or firemen, they snicker at our stupidity.

Or they decide we are unworthy, take a look at this excerpt from Ben Stein’s article in the American Spectator:

The people who have been laid off and cannot find work are generally people with poor work habits and poor personalities. I say “generally” because there are exceptions. But in general, as I survey the ranks of those who are unemployed, I see people who have overbearing and unpleasant personalities and/or who do not know how to do a day’s work.

That’s right, the millions of unemployed their lives in tatters because of casino capitalism, aren’t there because of a savage recession (depression). No, they’re just lazy.

By the way, the article just oozes with Ben Stein’s concern for his poor friends who made bad investments. I can’t help but be curious where he would meet the unemployed. Maybe he’s just confused. Maybe he’s really thinking about his upper crust friends who don’t know how to do an honest day’s work or exercise a workable personality.

I shouldn’t be so angry. Right? Why should the fact that there is one job for every five applicants bother me? Why should an economic elite that moves every job humanly possible to some distant shore where they can ignore those annoying work place laws like child labor, wage and hour, and most annoyingly of all, worker safety, bother me? Why should I be upset? After all, there are a lot of workers, a lot of surplus population that needs culling.

I want justice. I want hard working American to reap the benefits of their hard work, their devotion to this country and their willingness to go the extra mile to do what’s right.

James Pilant