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Newspaper Columnists – Business Ethics Roundup 8/24/2010

David Moon at Knoxvillebiz decries reliance on the federal government. He is particularly incensed by the money provided to Fannie Mae and Freddie Mac, (Mortgage giants). I disagree with his position but I agree this whole bailout business has been a boon to the banks and little has been asked in return. I worry about the mortgage holders, not the villains who preyed on them like deranged vultures.

Edward Lotterman at TwinCities.com explains the difference between cyclical and structural problems in the economy. He explains that the problems besetting us are structural and take a long time to sort out. Lotterman is excellent teacher of economics. If you follow his columns you will pick up the jargon and understand the key terms.

Tell me I’m awesome every day — I’ll pay you. is the intriguing name of Jay Hancock’s current column. It seems there is a company that will call you up once a day for a month for $10 and tell you how awesome you are. I will now quote the quote Mr. Hancock uses from the company’s advertisement (Do you suppose I will ever get the opportunity to quote the quote from another quote?) –

With AwesomenessReminders, a real person will call you every day to tell you how much you rock. If you’re not around, we will leave you a voicemail. Our founder, Zack Burt, has studied psychology in-depth at the university level and found that social reinforcement is critical to maintaining our “frames”, also known as our “point of view”. Getting positive social feedback, via a daily reminder call, is instrumental to progress. Experts agree. This study from Wake Forest University also shows that social feedback has clear effects on self-esteem, even if individuals claim that they are unaffected by social feedback.

Keith Chrostowski from the Kansas City Star quotes Milton Friedman, “The social responsibility of business is to increase profits.” (This, of course, is a magnificent philosophy if the destruction of your nation is your intent.) Chrostowski is urging the formation of “B” corporations. This kind of corporation is designed to make a profit and do good, socially useful good. This turns Mr. Friedman’s insane prediliction for Utopian abstractions on its head. There is a web site where the “B” corporation idea is being pushed. You might give it a look.

Jon Talton in his column, Sound Economy, writes about the demise of “Shareholder Nation.” This was the idea that the great majority of Americans would realize the sound investment qualities of the stock market and invest their money. These Americans were taken to the cleaners in the last two years and are fleeing the stock market and its pseudo security. The idea of shareholder nation has fallen victim to the cold, naked greed and incompetence of our banking class.

Loren Steffy, writing for the Houston Chronicle, explains the game that British Petroleum is playing with those injured by its gross incompetence. It seems that if you accept payment now before you have any real concept of the continuing damage you sign away your right to sue. If you refrain from accepting the settlement offer, you face years of litigation. It is difficult to find any column by Steffy to be anything but a good read, very consistent high quality.

It is difficult decision for me to make, but I have decided to talk about the government response to the spill and here is my opinion.

The federal government’s response to the catastrophe in the gulf was ill conceived, strongly favorable to BP, a failure of leadership and grossly incompetent. The government failed in its most basic responsibility to protect its citizens and threw its lot in with the perpetrators of a vast economic disaster. It is difficult to conceive of any possible decision making worse than what the government has done. It calls into question the basic competence of the current administration.

BP Gets Ten Billion Dollars From You!

That’s right! British Petroleum has found a new way to make money. They have taken a perfectly legal tax deduction for their losses caused by the oil spill enabling them to evade $10,000,000,000 of taxes.

That’s ten billion dollars the federal government has to get somewhere else. Goodness Gracious, who might the burden of taxes fall on without BP paying its share? I wonder.

Loren Steffy writing for the Houston Chronicle is all over this. Steffy points out that considering these kinds of tax benefits, claiming that corporations pay too much taxes is disingenuous, since very often they pay none at all.

The feds could have figured this into their 20 billion dollar escrow fund but didn’t, so essentially BP is only on the hook for ten billion of it. The rest we pay for.

James Pilant

What’s The Verdict – Financial Reform?

Loren Steffy of the Houston Chronicle writes, “Most of the provisions that would have forced Wall Street to change its ways were compromised out of this law weeks ago.”

John Talton of the Seattle Times chooses this title: Financial ‘reform’: Big bankers cry all the way to the…

David Moon writing from the Knoxville Biz entitled his blog entryFinancial reform is a political charade. The rest of the article is even tougher.

I was looking at this newspaper’s web site and discovered they had no new column on the financial reform disaster but they did make an excellent prediction and for that I must honor them. Read below.

In its June 23rd editorial, the St. Petersburg Times said, “Congressional negotiators have a choice as they hammer out the final details on much-needed financial reform. They can stand for financial reform with real teeth and stand up to the pressure of the banking lobbyists. Or they can bow to those deep-pocket financial interests that have sponsored more than 800 fundraisers over the past year for members of the congressional banking committees. A weak reform bill that offers too little oversight and too many loopholes would not be in the nation’s best interest.”

I will follow up with more newspaper comments. I have looked at a dozen newspaper business pages after checking the ones above. It appears that the editorial pages have not caught up with the news. So, I will return to the subject probably on Monday.

James Pilant

Financial Reform Watered Down?

Loren Steffy thinks so. In his June 25th blog post, he leads with this –

Congress finally passed the most sweeping financial reform measures since the 1930s, but what we have here is a bill that’s been so watered down that it doesn’t do many of the things it was supposed to.

Steffy is one of those writers that when he thinks something is so and puts it on paper, it is. Read him all the time. I do.

Ethics Columnists Round Up 6/14/2010

Mitchell Schnurman writing for the Fort Worth Star Telegram discusses Radio Shack continued push for more incentives to stay in the Fort Worth area. Schnurman is upset about the whole matter and after you read the article I bet you get upset too. It’s a good two pages and most of it is spent discusses the great deals Radio Shack is already getting. This guy is fighting the good fight. I wish there were more people like him. Give ’em hell, Mitchell!

Loren Steffy has a picture of a crab sporting a new camo paint job courtesy of its friends at British Petroleum.

Steffy’s June 10th essay asks that interesting question, “Do the Chinese want to organize a takeover of BP?”

Jon Talton talks about the poorly performing stock market and asks his readers to vote on what they expect it to do. (It’s going down.)

Jay Hancock asks, “Why is anyone surprised that Moody’s downgraded Greek debt to junk status?” He’s right. The most casual reading of the newspaper would tell someone the country was in trouble. A tiny, little reading of the material disclosed Goldman Sachs’ involvement in the debt crisis. Haven’t you seen enough of Goldman Sachs to realize that all their clients are expected to be “sophisticated investors?” Doesn’t always work out, does it?

Edward Lotterman says what I have already known for a long time: the internet can be a reliable source of information. He recommends using official government reports and cross checking them with other government agencies. I consider it to be a matter of experience and judgment tempered by a willingness to keep on hunting until you are sure you have the answer, and if you can’t find a definitive answer, the willingness to explain where you found the data and that it may not be accurate. (I firmly believe that humility is seriously lacking in this culture.)

Newspaper Columnists – Ethics Roundup 6-9-10

Loren Steffy (Houston Chronicle) asks the rhetorical question: “Should BP be paying its shareholders a dividend?”

Ben Bernanke predict a sort of, kind of, maybe, might be, probable recovery. (I’m overjoyed.) Jon Talton feels the same way. Discussing Bernanke’s testimony before Congress, Talton writing for the Seattle Times laments the paralysis and stupidity of our political class. He points out the easily discernable budget busters and then points out there is no one willing to deal with them.

Jay Hancock of the Baltimore Sun argues that increasing taxes on manufacturing makes no sense in the light of the enormous losses of those jobs in the Baltimore area over the last years.

Edward Lotterman writing for Pioneer Press argues that even with a good number of bank closings, there are many choices left for those seeking banking services. I’m a little surprised he didn’t discuss the ramifications of his state of Minnesota losing six banks this year.

Ethics Round Up – Newspapers – 6/8/10 Tuesday

Tony Pugh in a new article he wrote for McClatchy cites a new report that calls for reorganization at the Food and Drug Administration, a new emphasis on enforcement and a focus on detecting food problems before they get into distribution.

McClatchy was kind enough to include links to two other reports, The Long-Term Health Outcomes of Selected Foodborne Pathogens and Enhancing Food Safety: The Role of the Food and Drug Administration.

Don Blankenship of Massey Energy goes on the offensive stopping just short of claiming that the federally mandated fan system for clearing methane gas caused the accident in the coal mine where 29 miners died. (The comments to this article are not friendly and as of this time, he has not a single supporter.) This is a pdf file of the letter Blankenship sent to four governors.

Mitchell Schnurman writing on McClatchy’s home page section commentary suggests that since this country is in budgetary trouble that we stop giving money to private corporations. (Sounds good to me.)

Loren Steffy writing in the Houston Chronicle discusses the probably bankruptcy and end game for British Petroleum.

Jon Talton discusses the effect a massive increase in city fees for a skyway might have on a department store. It’s business ethics at its most basic level. Who should pay taxes? How much? How should the amount be calculated?

Keith Crowstowski writing for the Kansas City Star explains the corrosive effect of crony capitalism. This is some fine writing. I strongly recommend it.

Ethics Round Up – June 4th 2010

Karl Stephan writing on his blog, Engineering Ethics Blog, discusses the flap over facebook and privacy. The article is far more philosophical than you world expect from an engineering blog. He refers to the phrase, digital suicide, which is so mind grabbing and delicious I can barely wait until Monday to try it out on the poor college freshman in Business Law I.

One of the editor’s picks on the web site, Ethical Corporation, is an opinion piece by Mallen Baker discussing BP recent shift to corporate villain.

Timothy Egan writing an opinion piece in the New York Times say that the “millennials” should save us. He might be right. As a 53 year old, I find my generation disappointing.
(I was going to link to an article by The Ethicist, Randy Cohen, but he chose to write about a woman who was 36 but wondered if maybe she should falsify her age on her online dating profile as 34, so you’re getting Timothy Egan.)

I just found a web site called Principled Profit, created by Shel Horowitz. His latest blog entry recommends the Department of Justice get ready for criminal investigation into the British Petroleum catastrophe. One of his subtitles is “award winning blogger.” I can’t claim that one. Maybe someday. (One of the guys who does good work in the Business Ethics field linked to me on his blog just a couple of days ago, so I am moving up in the world!)

Jonathon Tasini writing in his blog, Working Life, has some unkind things to say about Wal-Mart. (He is referring to a New York Times article.)

Loren Steffy of the Houston Chronicle discovers that the federal government’s Minerals Management Service sometimes means no when they say yes.

Chris MacDonald writing on his site, The Business Ethics Blog, has a new post up before I got finished with the last one. (I still have to read the attached paper, An Adversarial Ethic for Business or When Sun-Tzu met the Stakeholder, which he tells me is amazing so you better click on the link.) MacDonald’s new post deals with the issue of alternative medicine and is a “meta blog,” a compendium of the current blog and all previous related blogs. (You watch, one day I will have a meta-blog of my own!)

Jon Talton of the Seattle Times discusses a jobless recovery.

Jay Hancock of the Baltimore Sun discusses underfunded pensions in a video.

Rod Dreher of BeliefNet offers a simple but moving take on the crisis in the gulf.

The Milwaukee Wisconsin Journal Sentinel reports that state BP filling stations are starting to feel the discontent.

Sri Sri calls for spiritual values in corporate culture –

Ethics Round Up – June 3rd 2010

Loren Steffy at the Houston Chronicle tells how to get your ideas to fix the spill to British Petroleum. (No, I’m not kidding.)

Jim Denison writing for the Associated Baptist Press reviews To Change the World: The Irony, Tragedy, and Possibility of Christianity in the Late Modern World.

Jon Talton in the Seattle Times explains why the recovery doesn’t feel better Here’s a quote from the article: “Many of the economic imbalances that led up to the crash were also pretty much frozen in place, instead of the painful but ultimately healthy cleansing that recessions usually bring. More dolorous trends were accelerated, such as offshoring of jobs, increased used of temporary and contract labor, stagnant or falling wages, and rising income inequality.” If you get the idea he is not optimistic, you’re on point.

Asher Meir writing in the Jerusalem Post concludes a three part discussion on the morality of bankruptcy in the light of Jewish law.

Jay Hancock of the Baltimore Sun writes that if you stop paying your mortgage it takes about a year to get kicked out of your home so he asks if you’re in financial trouble why not default and essentially get a years free rent. (I do not approve, but I want to include it because if some clever business or ethics student sees it, they will have a dynamite article to take to class.)

Edward Lotterman writing for Twin Cities press does a good analysis of the question of what duty does an investment broker have to his client. He discusses this in the light of a case that on Wednesday reached a verdict and awarded 30 million dollars to several non-profits from Wells-Fargo.

From Business Ethics, the Magazine of Corporate Responsibility, we have a piece by Jake Bernstein analyzing the likelihood of a wider circle of fraud in the Madoff fraud case. Even if you only do a casual reading of the story, you get an immediate impression of how much research went into it. I was impressed.

Here’s Elizabeth Warren (who should have been appointed to the Supreme Court by Obama) discussing small business in the light of the COP report.

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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