Pilant's Business Ethics

Business Ethics Blog

Tag: Capitalism

Doug Guthrie addresses 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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Listen to the “Morality” of Laissez-faire.

Listen to the “Morality” of Laissez-faire.

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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Capitalism Bitch

I was watching the Korean Spy Drama, Athena, Goddess of War. One of the characters referred to a relative of his disparagingly. He said the guy would do anything for money, he was a real “capitalism bitch.” I assume a more direct translation would be a capitalist bitch but I loved the phrase. Here’s a trailer for the show -(It’s available on Hulu for free, if you count having to listen to commercials as free – I don’t. Nevertheless, it’s worth watching.) Just click on the link to see the trailer.

Athena: Goddess of War

It’s wonderful to listen to how other cultures think about the issues we are dealing with in the United States.

James Pilant

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

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?

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?

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?

What do I stand for?

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

 

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Wall Street Overpays!

“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

Should Shareholders Vote With Their Feet?

Loren Steffy says that has no effect. And as usual, he’s right. The current system of corporate governance effectively cuts the actual owners of a corporation out of any influence over who runs their corporation as well as all other decision.

Corporations are creatures of the law. They are statutory creations. If we as citizens of  the United States as well as being citizens of individual states (that do the chartering of corporations) want to change the rules, we can. But there has to be some political will.

Let me lay out for you this utterly radical thought. I believe that –

THE PEOPLE WHO OWN THE CORPORATIONS SHOULD HAVE SAY IN HOW THEY ARE MANAGED.

What do you think? Does that make me a communist? I think I am a purer capitalist than many in the business world because I actually believe in private property in a way they can’t wrap their minds around. If you own part of a company, why should your wishes be ignored because of the way the law and the organization are structured?

Shareholders should be primary factors in determining who runs the company and how the company is managed.

Selections of the CEO and the Board of Directors should require shareholder ratification. Executive compensation packages should require ratification by the shareholders. Shareholder meetings should be conducted electronically on a regular basis far more often than the once a year mandated now.

It’s one thing to talk about free market capitalism and then not do it. That’s wretched hypocrisy. Let’s talk about it capitalism sincerely and act on our beliefs. To make capitalism a reality in the corporate board rooms of the United States we would have to make a connection between ownership and power. Why should CEO’s appointed without shareholder input and acting in opposition to shareholder wishes, be able to make their own policy, and choose their own boards. They are essentially acting as if the corporation was their personal plaything and not a duty to the real owners.

We can do better.

James Pilant

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