There has been much anger in the financial press about JPMorgan having to pay a multi-billion dollar fine. It has been strangely charged that this is a government attack on capitalism. No, actually the bank broke the law and failed over and over again to act in an intelligent manner about its investments or its clients. But Gretchen Morgenson is absolutely right. This kind of fine isn’t really getting tough with the banks. It’s merely carrying on the long tradition of banks paying some proportion of the losses they caused while criminal prosecution as individuals is off the table.
There is no real penalty here. The billions are just the cost of doing business. The bank has paid out fines before. The bank will pay out fines again. The fun and enormous profits of reckless speculation will remain.
There will only be an effective deterrent when wrongdoers are punished personally by fine and imprisonment.
You can’t attack prevent crime by attacking organizations with minor financial penalties. You could effectively if you were willing to pull the corporate charter from the bank and destroy it, or seize all of its assets. But I see no willingness to do that. The only effective tool present is the power to prosecute individuals.
It is bizarre to tell students to act with business ethics when they can read everyday in the news of the incredible money being made by individuals under the cover of banks deliberately, knowingly breaking the law. But even that is eclipsed by the simple and horrible fact that we do not impose penalties on individuals.
Without justice, how we expect people less favored than bank executives to believe in the law?
Why JPMorgan May be Getting off Easy
In a criminal investigation, JPMorgan Chase is facing action from federal authorities who suspect that the bank turned a blind eye to Madoff’s Ponzi scheme. That’s yet another headache in a week of migraines for America’s largest bank; last Friday JPMorgan Chase reached a tentative $13 billion settlement with federal prosecutors for its alleged manipulation of mortgage securities, which helped trigger the Great Recession. There may be more pain to come as the megabank faces litigation on a number of fronts.
And JPMorgan Chase is not alone – it is one of several banks being investigated by the government for mortgage fraud. While many headlines in the financial press accuse the government of conducting a witch hunt, Pulitzer Prize-winning New York Times columnist Gretchen Morgenson offers a different perspective: “If the Justice Department were being tough on Wall Street they would be talking about bringing criminal cases against individuals who helped to perpetrate this immense crisis.” she said. Morgenson adds that the investigations into JPMorgan Chase show that it and many other financial institutions are still ‘too big to fail,’ which means taxpayers could once again be forced to bail them out.
The reason Ferguson wants to talk about civility is that he can\’t talk about not being full of crap. Ferguson trades on his academic credentials to write popular articles that contain misleading and false claims. His writing causes readers to come away with a worse understanding of the economy than they entered with. He is changing the world for the worse.
My contention is not that we haven\’t been uncivil to Ferguson. We definitely have. My contention is that he deserves it.
Too much to do today to go all John Foster Dulles on Harvard’s Folly, but I can’t leave this without noting that if Niall’s honestly not scared of Krugman (he is), he should be.
Cases in point here and here and here and here. This isn’t a fair fight. Ferguson has the debate chops and the accent, but nothing else. Krugman has both technical skill and the willingness to engage actual data to gut the Harvard Bully Boy on the actual merits of the argument. That Ferguson plays better on TV is his reason for being, but not a recommendation. (BTW — for a devastating synoptic view of Ferguson’s style and (lack of) substance — and his pure nastiness in the service of the 1%, check out this overview.)
I am appalled by what’s happening. I freely confess I don’t know what will happen if this last beyond the 17th and we go into default. It could be anything from very little happening to a worldwide economic catastrophe culminating in a decade long Depression. If I were a legislator, I like to think I would want to avoid going into default where the unknowns are so perilous. But I do not believe I can count on the intelligence or judgment of those willing to shut down the government as a form of blackmail. It was irresponsible to begin with, and it has only become less moral, less ethical and less intelligent as the days have gone by.
Trudy Rubin: Shutdown repercussions | Opinion | McClatchy DC
How far we have come since the heady days of the 1990s, when eager civic activists from ex-communist and third-world countries looked to U.S. experts to show them how a multiparty system worked.Indeed, America\’s longtime allies are bewildered by a system where a small minority of legislators can hijack Congress. They also can\’t understand why Congress has to vote separately to authorize the borrowing of funds to pay for expenses it has already approved. Perhaps because no other modern democracy except Denmark has such a system.The commentary in friendly countries has been scathing.\”For a country that fancies itself the greatest democracy on Earth, the fact that a small band of outliers in one party can essentially shut down the federal government over a petty political brawl seems woefully undemocratic,\” Lee-Anne Goodman of Canadian Press told the Talking Points Memo blog. Le Monde columnist Alain Frachon told the New York Times that \”Washington is looking more like the Italian political system, with its permanent crises.\”David Usborne wrote in the British newspaper The Independent: \”America is indeed exceptional, at least in terms of its place in the global financial system,\” but \”in almost every other respect right now it is starting to look exceptionally silly.\” Even if a budget and debt-ceiling deal is completed in the next two weeks, he add …
“That leaders of one of the most powerful nations on earth willingly
provoked a crisis that suspends public services and decreases economic
growth is astonishing….Even in the middle of its ongoing civil war,
the Syrian government has continued to pay its bills and workers’
wages.” In western Europe, a think-tank scholar tweeted, “Next time you
blame the woes of developing nations on ‘poor governance,’ think about
how the U.S. government arrived at today.”
In France, the newspaper Le Monde assailed the “grotesque” shutdown, and aimed its editorial message at one of America’s founding fathers: “Jefferson, wake up! They’ve gone crazy!” In Germany, Der Spiegel Onlinedeclared, “A superpower has paralyzed itself,” and the business daily Handelsbatt depicted the Statue of Liberty in chains, capped by the headline, “The Blocked World Power.” In Spain, the El Pais newspaper marveled at America’s “suicidal madness.”
Granted, some of these reactions have a touch of schadenfreude,
taking pleasure in our misfortune. That’s especially true with the
French, who always love to tweak us, even while forgetting that if not
for America 69 years ago, they would’ve stayed under the Nazi heel. But
why give them an excuse to treat us as a laughingstock?
And the current scoffing spans the continents. In China, an
entertainer tweeted, “Chinese must be wondering – When will America
embrace real reform? How long can this system survive? Where is
America’s Gorbachev?” In China, a government-run news website said
the nation should be “on guard against spillover of irresponsible U.S.
politics.” In India, business executives told the Voice of America that
they couldn’t fathom how an advanced nation like America could allow its
government to close, and a college student in New Dehli said it was
“sad and shocking.” In the Philippines, an editorial writer asked, “How
did the world’s lone superpower come to such a sorry pass?” In Malaysia,
a news website ran the headline, “U.S. shutdown leaves the world
scratching its head,” and the story said that some Malaysians “had
trouble suppressing smirks.” And The Australian newspaper said that the shutdown “doesn’t say much for the budgetary process in the world’s largest economy.” And so on.
Milton Friedman’s Dumbest Idea (The article actually says “the world’s dumbest idea,” but it is longer than the recommended length for titles if you are doing “search engine optimization and I had to cut it. jp)
I wish I had written the article below. I love every word of it, and the most astonishing thing about this writing is where it appears, in Forbes. That takes by breath away. How did he get past the editor?
Well, enough of that –
The article is very much what I have been saying in previous articles on this web site and in public, that is, the idea that a corporation’s sole purpose is to make money for the shareholder is ridiculous. I’d start my analysis with “non-profits,” and get more legally critical as I went through the various kinds of corporations and what they were used for.
Generally speaking, articles dealing with the crisis focus on derivatives, Sallie Mae, the business press, rating agencies, etc. They all share blame and a lot of it. I have always been convinced that the underlying problem was greed, self interest, the corrosive effects of Milton Friedman’s bizarre doctrine of economic utopia, and the replacement of critical scrutiny by frantic cheerleading in the financial press, and I have some more villains to name.
Bogle doesn’t dodge the ethical question. He wonders how we got here and how we can get out. He longs for the day when businessmen understood the value of trust and fair dealing. I’m not surprised to find that Mr. Bogle has no simple solution. It took four decades of worship of the financial means of production of little more than electronic impulses to triumph over the creation of actual goods. This isn’t going to be easy, and it it likely to fail subjecting this country to a chain of financial meltdowns each one of which will severely damage the lives of millions of Americans who will bear the chief cost not only of their way of life but paying for the meltdown themselves out of their “widow’s mite.”
This is capitalism run off the tracks. Greed out weighed simple good judgment. Obvious signs of trouble, not just obvious but certain evidence of approaching disaster, were ignored as money piled up.
The market was supposed to be self regulating. Read a little Milton Friedman. This economic freedom to innovate was supposed to lead to better lives for all Americans, perhaps the whole world. This utopia, this nirvana, has thus far failed to appear. But incomes in a handful of the well placed are measured in the billions.
Now, you could make a good argument that this kind of business thought (Milton Friedman, etc) actually falls into the second level where self interest and avoidance of punishment become primary concerns. However, making moral decisions at the second level of Kohlberg’s six stages is just about as insulting as reasoning at the first.
My second point is when business is considered only as a money making endeavor, all the other levels of moral development don’t just become irrelevant, they become a block and a hazard to making maximum profit.
If you are short on time, please read the brief excerpt below, but if you have time click on the link and read the whole article. It merits it.
As the leader of the Chicago school of economics, and the winner of Nobel Prize in Economics in 1976, Friedman has been described by The Economist as “the most influential economist of the second half of the 20th century…possibly of all of it”. The impact of the NYT article contributed to George Will calling him “the most consequential public intellectual of the 20th century.”
Friedman’s article was ferocious. Any business executives who pursued a goal other than making money were, he said, “unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.” They were guilty of “analytical looseness and lack of rigor.” They had even turned themselves into “unelected government officials” who were illegally taxing employers and customers.
How did the Nobel-prize winner arrive at these conclusions? It’s curious that a paper which accuses others of “analytical looseness and lack of rigor” assumes its conclusion before it begins. “In a free-enterprise, private-property system,” the article states flatly at the outset as an obvious truth requiring no justification or proof, “a corporate executive is an employee of the owners of the business,” namely the shareholders.
If anyone familiar with even the rudiments of the law were to be asked whether a corporate executive is an employee of the shareholders, the answer would be: clearly not. The executive is an employee of the corporation.
But Friedman also produced a less felicitous legacy. In his zeal to promote the power of markets, he drew too sharp a distinction between the market and the state. In effect, he presented government as the enemy of the market. He therefore blinded us to the evident reality that all successful economies are, in fact, mixed. Unfortunately, the world economy is still contending with that blindness in the aftermath of a financial crisis that resulted, in no small part, from letting financial markets run too free.
The Friedmanite perspective greatly underestimates the institutional prerequisites of markets. Let the government simply enforce property rights and contracts, and – presto! – markets can work their magic. In fact, the kind of markets that modern economies need are not self-creating, self-regulating, self-stabilizing, or self-legitimizing. Governments must invest in transport and communication networks; counteract asymmetric information, externalities, and unequal bargaining power; moderate financial panics and recessions; and respond to popular demands for safety nets and social insurance.
The birth of the shareholder value movement is commonly traced to a speech Jack Welch gave at New York’s Pierre hotel in 1981, shortly after taking the helm at GE. In that famous speech, entitled “Growing Fast in a Slow-Growth Economy,” Jack Welch outlined his beliefs in selling underperforming businesses and aggressively cutting costs in order to deliver consistent profit rises that would outstrip global economic growth. He told analysts then, “GE will be the locomotive pulling the GNP, not the caboose following it…,” according to reports of the speech.
Jack Welch said in the interview given on 11-March-2009 that he never meant to suggest that setting, and meeting, profit expectations quarter after quarter in an effort to boost a company’s share price should be the main goal of corporate executives.
“It is a dumb idea,” he said. “The idea that shareholder value is a strategy is insane. It is the product of your combined efforts – from the management to the employees”.
What he was talking about is the commonly held belief that the purpose of business is to increase shareholder value. That belief is variously attributed to Milton Friedman, Adam Smith, and perhaps common sense. BUT, it was the operating principle that resulted in two market busts and innumerous scandals in the past decade. The fact that Welch was one of the main proponents certainly adds a fair amount of gravitas to his comments.
Profitability, shareholder value, and measures like economic value added (EVA) completely miss a point that Welch articulated so well. Namely, increased “shareholder value” is a result, not a strategy.
Eric Holder Admits Some Banks Are Just Too Big To Prosecute
When the Attorney General of the United States admits some banks are simply too big to prosecute, it might be time to admit we have a problem — and that goes for both the financial and justice systems.
Eric Holder made this rather startling confession in testimony before the Senate Judiciary Committee on Wednesday, The Hill reports. It could be a key moment in the debate over whether to do something about the size and complexity of our biggest banks, which have only gotten bigger and more systemically important since the financial crisis.
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy,” Holder said, according to The Hill. “And I think that is a function of the fact that some of these institutions have become too large.”
Holder’s comments don’t come as a total surprise. His underlings had already made similar confessions to The New York Times last year, after they declined to prosecute HSBC for flagrant, years-long violations of money-laundering laws, out of fear that doing so would hurt the global economy. Lanny Breuer, formerly in charge of doling out the Justice Department’s wrist slaps to banks, told Frontline as much in the documentary “The Untouchables,” which aired in January.
One day, I discussed with the class my idea for teaching upper class communication skills to the business students. They asked me to go further with it, so here is the first video in what will be a series discussing the social class skills necessary for business success.
Realize that online networking is similar to real life networking. In real life networking, you make connections one person at a time. The same is true for online networking. Don’t be seduced into thinking that you can create meaningful relationships with a lot of people at once, simply by posting updates about what you do.
A better approach would be to consider the online social networks as tools to provide you more access to more people, from the comfort of your home or office, while realizing that the basic relational skills when making a connection remains comparable to both online and offline. In other words, meet a lot of people, but meet them one by one.
I think the best way to start a business is to look at what you love and think about how you can formulate that into a plan. It’s important to ask questions, always take calculated risks, and develop the ability to recognize an opportunity when it presents itself.There are no failures if you learn from the mistakes you made along the way. I think a bit of self-reflection always helps to build the foundation of a company and let it take shape. Passion, Hard Work, Kindness, Generosity and patience are definitely some of the key factors in making something successful.
It is always important to remember that a business is built in a series of blocks or stages. Slowly but surely it all comes together over time.
Insight: How Colombian drug traffickers used HSBC to launder money | Reuters
In a typical transaction, a middleman in a drug cartel would offer to deliver consumer goods, such as computers or washing machines, to Colombian businesses on favorable terms. Another person in the United States would buy the goods from firms using funds from drug trafficking, and fulfill those orders.
Money launderers exploited the laxness of HSBC in policing shadowy money flows, the Department of Justice said earlier this month. Failures included not conducting due diligence on customers, not adequately monitoring wire transfers or cash shipments and not having enough employees to run anti-money laundering systems. U.S. Assistant Attorney General Lanny Breuer called the lapses “stunning failures of oversight.”
The situation was so bad, according to the Department of Justice, that in 2008, the head of HSBC’s Mexican operations was told by Mexican regulators that a local drug lord described the bank as “the place to launder money.”
The Chaparro probe, led by ICE and the Justice Department, converged over the past two years with two other investigations – led by federal prosecutors and investigators in West Virginia and by the Manhattan district attorney – resulting in this month’s settlement with HSBC.
HSBC and its employees avoided criminal indictments, as the bank agreed instead to a deferred-prosecution deal that forces it to strengthen controls and accept a compliance monitor.
Where to start? This bank has committed crimes on a scale almost beyond comprehension.
Our first question; is this good business ethics? Under Friedman analysis that a corporation’s sole purpose is to serve the shareholders, the HSBC’s actions were a marvelous success. The bank paid a fraction of its profits on its wrongdoing. Further it evaded any prosecution and the resulting loss in prestige and publicity damage that would have resulting from actual criminal punishments. But even more important when looking at the profit side of the ledger, a precedent has been set that if a bank has reached a certain size, it is beyond prosecution. This insures that banks of this size can in the future launder money with confidence that it will both be profitable and free from criminal charges.
Is this bad business ethics? The bank laundered about nine billion dollars in drug money from the Mexican cartels. These financed the drug trade smoothing the shipment of drugs into the United States and other countries. It paid for assassinations and kidnappings, bribery of public officials, and the creation of large heavily armed criminal mafias capable of exerting control over large geographical areas. The was at the very least a subversion of the government and economy of Mexico. Similar but smaller effects were felt in the United States.
However, this is not the whole story, the banks also laundered money for Saudi and Bangladeshi clients who were highly likely involved in terrorists activities and in some cases known have links to terrorists. I don’t think I need remind you that the United States has embarked and continues a “war” against terrorism. The bank actively subverted that war. In addition, the money helped finance rogue regimes like Iran in defiance of American sanctions, strengthening the nation’s enemies, and making those regimes more able to resist reform and democracy.
There can be no doubt that the religions of Christianity, Islam, and Judaism and a giant list of smaller religions would find these acts in violation of their rules of ethical conduct.
Philosophically, unless you consider Friedmanism, a legitimate source of wisdom, almost all philosophical schools with the probable exception of Nietzsche, would condemn the bank’s actions.
Capitalism is in a crisis. This is not an isolated example of few individuals’ greed. This is a giant financial institution deliberately acting against the interests of its host countries and financing murder and mayhem around the world. But further, have we not seen banking incompetence and law breaking on a massive scale on a regular basis since the 2008 financial crisis. This hardly seems to be passing phase.
This particular bank makes more money than most of the nations on earth. Its power to cause harm is enormous and it deliberately, over a long period of time, with direct knowledge of its leadership, caused that kind of harm.
This is a moral and ethical bankruptcy that is not just wrong but endangers the long term welfare of citizens in the United States and the rest of the world.
It’s hard to think of any phrase more sad when have knowledge of these crimes than, HSBC Avoids Criminal Charges.
From Matt Taibbi, Rolling Stone
Though this was not stated explicitly, the government’s rationale in not pursuing criminal prosecutions against the bank was apparently rooted in concerns that putting executives from a “systemically important institution” in jail for drug laundering would threaten the stability of the financial system. The New York Times put it this way:
Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.
It doesn’t take a genius to see that the reasoning here is beyond flawed. When you decide not to prosecute bankers for billion-dollar crimes connected to drug-dealing and terrorism (some of HSBC’s Saudi and Bangladeshi clients had terrorist ties, according to a Senate investigation), it doesn’t protect the banking system, it does exactly the opposite. It terrifies investors and depositors everywhere, leaving them with the clear impression that even the most “reputable” banks may in fact be captured institutions whose senior executives are in the employ of (this can’t be repeated often enough) murderers and terrorists. Even more shocking, the Justice Department’s response to learning about all of this was to do exactly the same thing that the HSBC executives did in the first place to get themselves in trouble – they took money to look the other way.
From further down in the article:
On the other hand, if you are an important person, and you work for a big international bank, you won’t be prosecuted even if you launder nine billion dollars. Even if you actively collude with the people at the very top of the international narcotics trade, your punishment will be far smaller than that of the person at the very bottom of the world drug pyramid. You will be treated with more deference and sympathy than a junkie passing out on a subway car in Manhattan (using two seats of a subway car is a common prosecutable offense in this city). An international drug trafficker is a criminal and usually a murderer; the drug addict walking the street is one of his victims. But thanks to Breuer, we’re now in the business, officially, of jailing the victims and enabling the criminals.
This is the disgrace to end all disgraces. It doesn’t even make any sense. There is no reason why the Justice Department couldn’t have snatched up everybody at HSBC involved with the trafficking, prosecuted them criminally, and worked with banking regulators to make sure that the bank survived the transition to new management. As it is, HSBC has had to replace virtually all of its senior management. The guilty parties were apparently not so important to the stability of the world economy that they all had to be left at their desks.
The following are findings from the Senate report:
HSBC Bank USA, N.A., known as HBUS [pronounced H-Bus] functions as the U.S. nexus for HSBC’s worldwide network. HSBC has 7,200 offices in more than 80 countries and 2011 profits of $22 billion; HBUS has 470 branches across the United States with 4 million customers. HBUS provides accounts to 1,200 other banks including more than 80 HSBC affiliates.
In 2010, HSBC was cited by its federal regulator, the Office of the Comptroller of the Currency (OCC), for multiple severe anti-money laundering deficiencies, including a failure to monitor $60 trillion in wire transfer and account activity; a backlog of 17,000 unreviewed account alerts regarding potentially suspicious activity.
HBUS offered correspondent banking services to HSBC Bank Mexico, and treated it as a low risk client, despite its location in a country facing money laundering and drug trafficking challenges. The Mexican affiliate transported $7 billion in physical U.S. dollars to HBUS from 2007 to 2008, outstripping other Mexican banks, even one twice its size, raising red flags that the volume of dollars included proceeds from illegal drug sales in the United States.
Foreign HSBC banks actively circumvented U.S. safeguards at HUBS designed to block transactions involving terrorists, drug lords, and rogue regimes. In one case examined by the Subcommittee, two HSBC affiliates sent nearly 25,000 transactions involving $19.4 billion through their HBUS accounts over seven years without disclosing the transactions’ links to Iran.
HBUS provided U.S. dollars and banking services to some banks in Saudi Arabia and Bangladesh despite links to terrorist financing.
The HSBC deal includes a deferred prosecution agreement with the Manhattan district attorney’s office and the Justice Department. The deferred prosecution agreement, a notch below a criminal indictment, requires the bank to forfeit more than $1.2 billion and pay about $700 million in fines, according to the officials briefed on the matter. The case, officials say, will claim violations of the Bank Secrecy Act and Trading with the Enemy Act.
Prosecutors found that HSBC had facilitated money laundering by Mexican drug cartels and had moved tainted money for Saudi banks tied to terrorist groups.
On November 11 HSBC said it had “reached agreement with United States authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanctions laws.” The bank is also expected to reach a settlement over the matter with Britain’s Financial Services Authority, according to a person with direct knowledge of the matter.
November 10, federal and state authorities also won a $327 million settlement from Standard Chartered, a British bank. The bank, which in September agreed to a larger settlement with New York’s top banking regulator, admitted processing thousands of transactions for Iranian and Sudanese clients through its American subsidiaries. To avoid having Iranian transactions detected by Treasury Department computer filters, Standard Chartered deliberately removed names and other identifying information, according to the authorities.
But HSBC is not being indicted and nobody will be criminally prosecuted because of the perceived or projected threat to the financial system if such a large bank and its officers were penalized criminally for commission of crimes that everyone agrees did take place. Why? Because HSBC is too big to indict.
The obvious answer here is to dismantle the mega banks that are so big that their every move produces swings in the financial markets. Instead DOJ and other law enforcement agencies have given a green light to anyone who can build a bank that big. They can now commit crimes with impunity, which is to say that we are guaranteed to see repeat behavior. Now when a smaller bank engages in the same illicit schemes, it too can point to the fact that law enforcement decriminalized what is clearly a crime under all applicable statutes.
“The Tinkerers”: How corporations kill creativity by Alex Foege – Salon.com
In August 2010, Paul Krugman published a piece in the New York Times titled “America Goes Dark.” He described how the United States, “a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System” was now dismantling its infrastructure.
Krugman’s main point was that the U.S. government was not investing stimulus funds in the tools needed for our own economic growth. Three decades of antigovernment rhetoric had convinced many Americans that spending taxpayer funds on anything was a waste of taxpayer funds. But government—the US government, specifically—had built this country into an innovative economic powerhouse by investing in “lighted streets, drivable roads and decent schooling for the public as a whole.”
I would take Krugman’s point one step further and argue that the American government and people helped the country grow both by investing in innovation and by committing themselves to the traditional tinkerer spirit. A sophisticated, cutting-edge infrastructure was the perfect crucible for the kind of innovation the United States embodied.
The point about the devolution of tinkering in American life is not that we have lost a physical connection to the work that we do. It’s that the notion that we can fix any problem or achieve any goal that we set for ourselves has deteriorated into a sanitized, corporatized version of what constitutes achievement.
Corporate America has grown rigid as it has grown larger. Despite the dot-com era’s many images of creative whizzes reweaving the very fabric of innovation, it remains extremely difficult for the freethinking alchemists of today to perform their peculiar strain of magic and thrive while doing it.
Yet, these pressing needs seem to register very little as a governmental concern. We’ve already had collapsing dikes and bridges. What kind of crisis will it take to make this a critical issue that gets addressed?
Maybe the flesh is willing but the spirit is weak? Where’s that “can do” spirit that built buildings, monuments and wonders of technology? Where has that gone?
I like to read yearbooks from the 1960’s, Britannica, World Book, etc. and in them I find a spirit of optimism and a certainty of success that no longer is predominant in our culture. Much of our current angst can be traced to the thought that things are only going to get worse.
I agree with Mr. Foege, we need change.
We need to act and we can’t wait for the “road fairy” to repair out problems.
P.S. You could argue that there is no business ethics here. After all we aren’t speaking of deliberate sabotage of America’s infrastructure. Certainly I hope not. But business ethics is also a positive force. Good business ethics would embrace creativity and long term growth as manifested in infrastructure development and preservation.
In mid-January, the American Society of Civil Engineers (asce) convened a series of five roundtables in Washington, D.C., that were conceived as in-depth discussions of how best to address the nation’s significant infrastructure deficiencies, which threaten not only the safety and welfare of the public but also the nation’s economic growth and competitiveness. Each roundtable had its own moderator and slate of participants, and the participants included well-respected political leaders, policy leaders, and members of asce who are well versed on the subject of critical infrastructure. The starting points for these discussions were the five key solutions outlined in asce’s 2009 Report Card for America’s Infrastructure, which was released in March 2009. In essence what these roundtables were striving to achieve was to develop a framework for giving full dimension to these solutions and securing for them positions of high visibility and high priority on the national agenda. which was released in 2003. The 2001 report card conferred an overall grade of D+; the 2005 report card, a D; and the 2009 report card, a D. The 2003 progress report also conferred a grade of D. These assessments have trained a spotlight on the fact that America’s critical infrastructure—principally its roads, bridges, drinking water systems, mass transit systems, schools, and systems for delivering energy—may soon fail to meet society’s needs. The underlying threats—and these threats are quite significant—are those of deteriorating economic strength within the global marketplace and a diminished quality of life across the spectrum of American society.
Now is the time to act to bring up the level of repair of our infrastructure. The reasons?
• the cost of borrowing the money to do this is approximately 0%. We will never get a better deal.
• the number of out-of-work construction workers is huge which has depressed the cost of labor.
• the money paid to the architects and engineers and laborers and suppliers of raw materials and truck drivers will be spent almost immediately by those folks which will stimulate the economy. Plus there is time for the money those folks spend to be spent again (by the subsequent recipients) before the next year is out, amplifying the effect. (Economists call this the multiplier effect. In this case $1 spend on construction creates well over $1 of economic activity.)
• the problems with our infrastructure will only get worse and will cost even more as time goes on. It is not like they will “heal themselves” like a cold will if you just wait.
• all of the expenditures will go to Americans and American companies. The jobs cannot be “outsourced.”
If China is willing to lend us the money to make this nation stronger, creating jobs that generate more than enough tax revenue to pay off those loans, we will be fools if we don’t act. The more we wait the more it costs us in the long run.
“Over the next several decades, Illinois’ infrastructure needs will likely exceed $300 billion, yet the state does not have a comprehensive plan to address this critical need. There are real costs associated with underfunding of infrastructure: shipping and travel delays, congestion, pollution, and diminished economic growth.” State Budget Crisis Task Force Illinois Report.
For the U.S. economy to be the most competitive country in the world we need a first class infrastructure system—transport systems that move people and goods efficiently and at reasonable cost by land, water and air; transmission systems that deliver reliable, low-cost power from a wide range of energy sources, and water systems that drive industrial processes as well as the daily functions in our homes. Infrastructure is the foundation that connects the nation’s businesses, communities and people, driving our economy and improving our quality of life.
ASCE urges the administration and Congress to focus on policies that will create jobs and continue to grow the economy. ASCE will work with the new Congress and the President to rebuild and revitalize the very foundation of our national economy. Roads, bridges, levees, and dams not only provide security, but also allow businesses to move goods, reach global markets, grow their market share and create new jobs.
The amount of money available today for studying the impact of firearms is a fraction of what it was in the mid-1990s, and the number of scientists toiling in the field has dwindled to just a handful as a result, researchers say.
The dearth of money can be traced in large measure to a clash between public health scientists and the N.R.A. in the mid-1990s. At the time, Dr. Rosenberg and others at the C.D.C. were becoming increasingly assertive about the importance of studying gun-related injuries and deaths as a public health phenomenon, financing studies that found, for example, having a gun in the house, rather than conferring protection, significantly increased the risk of homicide by a family member or intimate acquaintance.
Alarmed, the N.R.A. and its allies on Capitol Hill fought back. The injury center was guilty of “putting out papers that were really political opinion masquerading as medical science,” said Mr. Cox, who also worked on this issue for the N.R.A. more than a decade ago.
Initially, pro-gun lawmakers sought to eliminate the injury center completely, arguing that its work was “redundant” and reflected a political agenda. When that failed, they turned to the appropriations process. In 1996, Representative Jay Dickey, Republican of Arkansas, succeeded in pushing through an amendment that stripped $2.6 million from the disease control centers’ budget, the very amount it had spent on firearms-related research the year before.
One of the ways industry protects itself is by destroying or limiting research. The gun industry uses its political clout to make sure that evidence that it might find offensive is never done. This is very similar to using the government to eliminate competition or gain subsidies. Are any of these ethical? It depends on the circumstances. All over the world, trains (public transportation) are subsidized because of the many benefits they provide to society. And I could go on. But it seems unlikely that the kind of research that this legislation killed was inaccurate or unfair.
At a time when we need accurate information about the effects of guns in our society, one of the chief players in the controversy has worked hard to take facts off of the table. Gun research is a legitimate field of inquiry by the CDC. It is a public health crisis. It will continue to be.
Some fascinating quotes from around the web –
This is from the web site, Fundamentally Connie! (This is a very fine article and I strongly recommend it.)
Only modestly mentioned in weekend media coverage is attention to the effect of a tragedy such as this upon emergency responders. This is PTSD at its worst. I am a teacher; a researcher by choice; a parent, grandparent, a spouse, and with enough experience to clearly envision the horror they came upon; the classroom scene, the aftermath of devastation suffered by those whose call was answered. Few have mentioned the unimaginable job of the veteran Medical Examiner, working through the long and difficult night to categorize, identify, and document the extent of catastrophic bullet wounds suffered by tiny, innocent sons and daughters, grandchildren, parents, brothers and sisters; playmates silenced forever and removed quietly; …”attired in cute children’s clothing”, he noted, when asked.
My Facebook feed is full of people offering prayers, voicing anger and frustration, and, happily sharing pictures of their own children. One of my friends announced the birth of his first child. Amidst grieving, new life and joy.
As the reality of this tragedy settles in, this moment may still be too raw to decide exactly what the way forward should be. In the wake of dozens of mass shootings in the past several years, there’s more interest in doing something to prevent them.
Adam Levin: The Alarming Ties Between Debt Collectors and District Attorneys
Consider what’s happening here. The debt collection companies are using the letterhead of the prosecutor’s office to threaten consumers with criminal prosecution and possible jail time. In reality, they’re in no position to back that threat up — but from reading the letter, the consumer has no way to know that. The truth is that in the vast majority of cases, the prosecutor’s office has no idea when these letters are mailed or who is receiving them, and has conducted no investigation to determine whether the claim of unpaid debt is actually true. Thus, the debt collectors are apparently mailing official letters without effective oversight — and often without even having the evidence they would need to prove that the recipients actually owe the alleged debts. In short, no case.
“I would say that roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt,” Noach Dear, a civil court judge in Brooklyn who sees up to 100 such cases a day, told the New York Times.
This is, indeed, outrageous. To have prosecuting attorneys renting out their letterhead to private companies at all diminishes their office and, at the end of the day, betrays the public trust. To do this without weighing the merits of each individual case betrays the fundamental American ideal of due process and turns the phrase “innocent until proven guilty” on its head. Finally, to allow private companies to use the power and prestige of public office to coerce consumers, using the fear of criminal charges and imprisonment to bully them into compliance — well, that is so clearly abusive that it’s hard to imagine how anyone could defend it (not that they haven’t tried).
Debt collectors have a terrible reputation in this country for misconduct and often direct law breaking. For prosecutors to form an alliance with them, loaning them some of the powers of the state, is simply unconscionable.
I’m not the only one that thinks so – here’s J.F. Quackenbush from the web site, Disinformation:
So here’s the deal, it’s a crime to write a bad check if you know that the bank isn’t going to honor the instrument. But in most states, in order to be convicted the State has to prove that you knew the check was going to bounce when you wrote it. That’s hard which is as it should be, because the crime here is not owing a debt, it’s fraud. We don’t do debtors prisons anymore, and for good reason. Bankruptcy law is explicitly mandated by the Constitution because it has long been understood that not all debts are equal, and sometimes it’s for the best in our society if we just let people off the hook and give them a clean financial slate to start over.
This, of course, drives the vampires of the collection industry, who make money by buying debts for pennies on the dollar and then brutalizing the people who owe those debts who can’t afford to pay them, and in the meantime making all manner of threats and coercive promises to keep those debtors out of bankruptcy so that the vampires can continue to feed.
Prosecutors’ job is to enforce the law. One important part of that job is exercising some discretion over who to prosecute. That’s especially important in bad check cases. People bounce checks all the time, usually unintentionally. That doesn’t make them crimes. So a prosecutor’s job is to sort out the crimes from the accidents. Under the new arrangement, everybody gets contacted by a debt collector, which then demands even more money for a budgeting class — the profit from which goes into the collector’s pocket.
The excuse for this program is that district attorneys’ offices were overwhelmed with merchant requests to go after bounced checks where they were unable to collect the debt and alleged fraud. Um, what about saying “no” unless the amount at issue was significant, say at least a few hundred dollars, or having the merchant provide evidence of intent? Instead, this scheme allows the debt collectors to get a windfall from people who’ve stuffed up on relatively small checks (the two examples in the article were each under $100) as well as contributing to erosion of public faith in the legal system.
Consumer attorneys did succeed in getting one debt collector that engaged in this practice, American Corrective Counseling Services, to file for Chapter 11 in the face of class action suits. But its successor CorrectiveSolutions carries on with the same dubious practices and has “partnerships” with more than 140 district attorneys’ offices.
The DAs office, it appears, is literally selling the use of their stationary. In exchange for letting debt collectors appear both a lot more official and for falsely suggesting that law enforcement is pursuing criminal action, the debt collectors “sell” a “financial accountability” class, from which some of the proceeds get kicked back to the DAs’ offices.