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Friday, August 18, 2017

The U.S. House of Representatives: An Aristocratic Democracy-Deficit?

The abrupt resignation of Jesse Jackson, Jr., from the U.S. House of Representatives in 2012 only weeks after being re-elected gave Democratic politicians in Chicago a rare opportunity to get their hands on a Congressional seat. The New York Times observed at the time that such seats “in Democratic strongholds” of Chicago “do not come open very often, and when they do, a line forms fast.” According to Debbie Halvorson, who ran against Jackson, “If someone is thinking of becoming a congresswoman or congressman, this might be their only chance. Whoever gets this will have it forever, they say. That’s why everyone wants to take a chance.” In other words, the office is a sort of personal entitlement. From a democratic standpoint, this represents “slippage.”


Even though the U.S. House Chamber looks large, it represents 310 million people.   Source: Britannica


The full essay is at "An Aristocratic Democracy-Deficit."


Source:
Steven Yaccino and Monica Davey, “Illinois Sets Election Dates to Replace Jackson in House,” The New York Times, November 27, 2012.

Pressuring Employees to Act as Lobbyists on the U.S. Debt: Ethical?

How far a boss can ethically become involved in an employee’s political role as a citizen is a question perhaps more important than whether a business should make demands regarding what an employee does in the privacy of his or her own home (e.g., smoking or drinking products that are legal). It would obviously be objected, for example, were a supervisor to insist on accompanying a subordinate into the voting booth to verify the vote. What about pressuring an employee to lobby as a private citizen in the company’s interest without being paid for that work? Is it even work when it is “voluntarily” done on “off-time”? Finally, would it make a difference if the issue held systemic importance—meaning if it were vital to the country itself or at least the economic system—and the particular stance being advocated by the boss had value in solving the systemic problem (i.e., not just in the company’s interest)?
                 Federal U.S. deficits as a percentage of GDP from 1792 (2012-2016 projected). Notice that the projections take the deficits down from 2008-2010 levels. Notice also 1960-2010 as differing significantly from the "episodic" pattern in the 1792-1930 period. Why?
The full essay is at "Pressuring Employees."


Sources:
Damian Paletta and Kristina Peterson, “CEOs Flock to Capital to Avert ‘Cliff,” The Wall Street Journal, November 28, 2012.
Christina Wilkie, “’Fix The Debt’ CEOs Underfund Employee Retirement, Demand Cuts For Elderly,” The Huffington Post, November 27, 2012.

Ethan Rome, “Goldman Sachs CEO Lloyd Blankfein Wants Seniors to Get Less,” The Huffington Post, November 27, 2012.

Massey Mining: Beyond Regulations

Massey Energy Co. owned the mine in West Virginia where 29 minors were killed in an explosion in 2010. Faulty water nozzles failed to stop a spark from setting a pocket of methane gas on fire, which in turn led to an explosion of coal dust. Other safety violations, such as not cleaning up extra coal dust, contributed to the accident too. While it is unfortunately not unusual for managers to cut corners on regulations, the attitude evinced at Massey may point to a deeper problem in how some companies view law itself--as an obstacle to be overcome rather than constrained by. 

Emergency vehicles head to the Massey explosion in which 29 miners were killed.   AP

The full essay is at "Massey Mining."

Wednesday, August 16, 2017

From Visionary Leadership to Management: Taking a Bite Out of Apple

Founders and otherwise visionary leaders in business can be distinguished from managers, even though a manager may be running a company. For one thing, managers may resent leaders for being able to take in a larger view while relegating—even dismissing the petty, which can be so alluring to the managerial mentality. Leaders in turn may view the implementation of a vision as nugatory at best. More abstractly, change as paradigmatic (i.e., shifting from one broad framework to another) has its fans (i.e., visionary leaders), while the status quo has its own defenders (i.e., managers). Vision and big ideas are typically associated with a company’s founder or visionary leader, whereas bureaucracy tends to go with the implementation-focus of managers (including executives). In short, to suppose that leadership and management are the same is to ignore a lot that separates them. In the case of Apple, the shift from leadership to management that occurred with the passing of Steve Jobs may be at least partially responsible for the subsequent decline in the company’s stock price. In this essay, I explore the change at Apple to demonstrate why management should not be conflated with leadership.

Tim Cook testifying at the U.S. Senate. Is he innately a visionary or is his leadership managerial in nature?    Getty Images

Material from this essay has been incorporated in The Essence of Leadership, which is available at Amazon in print and as an ebook.

The Essence of Leadership

In The Essence of Leadership, leadership itself is reformulated in such a way that what emerges—the essence of leadership—is distinct from related phenomena, including management, presiding, and mentoring. This is not to say, however, that leadership bears no relation to strategy—hence the complex concept of strategic leadership, which is not without risks. Leadership itself contains risks, which a focus on the essence of leadership, rather than, for instance, taking leadership as simply about having influence, can arguably minimize. Such risks include the cult of the leader, to which charisma and attributions of heroism are especially susceptible, and the distorting impact of ideology, such as in Burns’ version of transformational leadership. Shaking out the risks and distinguishing leadership as a unique phenomenon are ways of pointing back to the essence of leadership, which applies in virtually any culture. That is, the essence is cross-cultural. Taking comparative religion as a stand-in for cultures, I demonstrate that the essence of leadership can be informed by Taoist, Buddhist, and Judeo-Christian principles.


Material from this essay has been incorporated in The Essence of Leadership, which is available at Amazon in print and as an ebook.

Tuesday, August 15, 2017

U.S. Government Debt: A Constitutional Moment?

The Congressional Budget Office (CBO) issued a report in June 2011 indicating that the debt of the U.S. Government had reached a dangerous level—that is, one likely to trigger a financial crisis. This characterization ought to have garnished close attention by the American people, for the viability of the Union itself may have been at stake. I submit that such a condition, moreover, warrants a constitutional moment—that is, a time when the citizenry focus on solving a basic governmental problem. In other words, the matter of the publicly-held U.S. Government debt may have justified popular sovereignty stepping in. Of course, how this would have been done is itself a problem, particularly because government officials had no interest at the time in relinquishing their power as our agents. This might explain in part why the debt would go on to reach $20 trillion by 2017. 

The full essay is at: A Constitutional Moment.


Nature's Racial Melting-Pot: The American Empire

The 2010 U.S. census reignited the question of racial identity among multi-racial residents.  “I can’t fit in a single box on the census form” was the typical refrain among the fastest growing segment of the US population.  According to The New York Times in February, 2011, "when it comes to keeping racial statistics, the nation is in transition, moving, often without uniformity, from the old “mark one box” limit to allowing citizens to check as many boxes as their backgrounds demand." The number of mixed-race Americans was at the time rising rapidly, largely on account of increases in immigration and intermarriage. In 2010, for example, one in seven new marriages was interracial. Politically, some racial interest groups believed that the use of a catch-all category marginalized minority races in particular. As a result, the Census Bureau created 63 categories of possible racial combinations (a typical bureaucratic solution to a political problem).

The full essay is at "Nature's Racial Melting-Pot."

Susan Saulny, “Counting by Race Can Throw Off Some Numbers,” The New York Times, February 9, 2011.

Tuesday, August 8, 2017

Drug Companies as Feeding Machines: Don't Feed the Sharks

In 2008, drug companies raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That added more than $10 billion to the nation’s drug bill, which was on track to exceed $300 billion in 2009. By at least one analysis, this was the highest annual rate of inflation for drug prices since 1992. “When we have major legislation anticipated, we see a run-up in price increases,” says Stephen W. Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota.  A Harvard health economist, Joseph P. Newhouse, said he found a similar pattern of unusual price increases after Congress added drug benefits to Medicare a few years ago, giving tens of millions of older Americans federally subsidized drug insurance. Just as the program was taking effect in 2006, the drug industry raised prices by the widest margin in a half-dozen years.  “They try to maximize their profits,” Mr. Newhouse said. However, the drug companies claimed they were having to raise prices to maintain the profits necessary to invest in research and development of new drugs as the patents on many of their most popular drugs were set to expire in a few years. The drug makers were proudly citing the agreement they had reached with the White House and the Senate Finance Committee chairman to trim $8 billion a year — $80 billion over 10 years — from the nation’s drug bill by giving rebates to older Americans and the government. However, if realized, the price increases in 2009 would effectively cancel out the savings from at least the first year of the Senate Finance agreement. Moreover, some of the critics claimed that the surge in drug prices could change the dynamics of the entire 10-year deal. “It makes it much easier for the drug companies to pony up the $80 billion because they’ll be making more money,” said Steven D. Findlay, senior health care analyst with the advocacy group Consumers Union.

The full essay is at "Drug Companies as Feeding Machines."

Source:

Duff Wilson, "Drug Makers Raise Prices in Face of Health Care Reform," The New York Times, November 15, 2009.


Van Rompuy as the European Council's First Extended-Term President

“In a sense, Europe seemed to be living down to expectations. Earlier, the foreign minister of Sweden, Carl Bildt, warned against a 'minimalist solution' that would reduce the European Union’s 'opportunity to have a clear voice in the world.'"  Olivier Ferrand, president of Terra Nova, a center-left research institute in France, said, “It is quite astounding. . . . It is jaw-dropping. It is the end of ambition for the E.U. — really disappointing.”



The full essay is at "Van Rompuy as the First President."

Source:

Stephen Castle and Steven Erlanger, "Low-Profile Leaders Chosen for Top European Posts," The New York Times, November 19, 2009.

Goldman Sachs: Working It

Goldman Sachs’ (GS) board considered buying AIG in late June, 2008, so GS could use AIG’s premium float for capital (rather than becoming a bank holding company and using deposits to fund trades or as collatoral for leveraged trading).  Strangely, GS’s board didn’t realize that another part of GS was questioning the “mark to market” valuations that AIG was making on its swaps.  Also, AIG had revised its November and December 2007 losses from $1 billion to $5 billion.  GS and AIG had the same public accountant (Price), which GS was using to get AIG to down-value the value of its assets. On that week in September, 2008, when Lehman went under, JP Morgan and GS were working to put together a loan of $50 billion to cover AIG’s deepening hole  At the same time, the two banks were demanding new collateral payments from AIG, pushing the insurance giant deeper into its hole.  The Fed and AIG wondered if the fees and interest rate being set by the two banks for themselves and other contributing banks wasn’t essentially stealing the company.

The full essay is at "Goldman Sachs."


Problems in American Executive Compensation: The Ethical Dimension

According to The New York Post, 66% of the income growth in the United States between 2001 and 2007 went to the top 1% of all Americans. In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. By the year 2000, that ratio had exploded to between 300 to 500 to one. Because American executives tend to be paid more in total compensation than do their European colleagues, the ratios are lower in in the E.U. Hence one might ask what is behind the trajectory in the United States. 

Democratic Protests in the Middle East: A Conflagration of Historic Proportions amid a Constancy in Human Nature?

Perhaps by looking back on one's own time as though it were already historical, it is possible to assess whether what one is witnessing on the global stage is truly significant from the standpoint of human history or merely of that which history is replete. In the context of the popular protests in the Middle East in early 2011, the question is perhaps whether the world was witnessing a Hegelian burst of freedom or merely more of the same in terms of political revolutions.

The full essay is at "Democratic Protests in the Middle East."

Does Opportunity Justify Economic Inequality?

From 1993 to 2010, the incomes of the richest 1 percent of Americans grew 58 percent while the rest had a 6.4 percent increase.  In 2010, the first year of an economic recovery, the top 1 percent of Americans captured 93% of the income gains. Beyond the danger to the American republics in there being an economic elite so far removed from the vast majority of the population is the question of whether the trend is baleful, economically speaking. It is not clear that even such an income gain being snagged by so few registered in the minds of the general populous as a problem. The key to any concern would seem to be whether opportunity for the many is compromised as a result of extreme economic inequality.

The full essay is at "Economic Inequality."

Source:
Eduardo Porter, “Inequality Undermines Democracy,” The New York Times, March 21, 2012. 

Christianity and “Social Capitalism”

The SEC charged Ephren Taylor with a fraudulent $11 million Ponzi scheme in April 2012. According to Reuters, “Taylor fraudulently sold $7 million of notes said to bear 12 percent to 20 percent annual interest rates, to fund small businesses such as laundries, juice bars and gas stations.” He “had conducted a multi-city ‘Building Wealth Tour’ in which he spoke to congregations” on the importance of “giving back.” He called himself a “social capitalist.” In actuality, he used the money on himself and his wife’s attempt to become a singer.

The full essay is at "Christianity and 'Social Capitalism'."


Source:
Jonathan Stempel, “SEC Charges Ephren Taylor II ForAllegedly Bilking Churchgoers In $11 Million Ponzi Scheme,” The Huffington Post, April 12, 2012.

Partisan Bishops Castigated Poverty Nuns

In April 2012, the Vatican’s Congregation for the Doctrine of the Faith accused the Leadership Conference of Women Religious, an umbrella organization of women’s religious communities, of having members with “serious doctrinal problems.” Specifically, the Congregation alleged that members of the group had challenged church teaching on homosexuality and the male-only priesthood, and promoted “radical feminist themes incompatible with the Catholic faith.” The Vatican’s use of “radical” to describe the “feminist themes” belies the neutrality of the Holy See on the matter (for the adjective is both unnecessary and pejorative). In other words, if you want to discredit someone’s point of view with which you disagree, simply label it as radical. The labeling says more about the labeler than the actual target. Specifically, the labeling indicates anger and resentment as well as prejudice. The white supremacists in Alabama in the 1960s, for example, labeled the Freedom Riders as radicals. In going after the group of nuns, the Vatican too was being partisan.


Source:

Laurie Goodstein, “Vatican Reprimands a Group of U.S. Nuns and Plans Changes,” The New York Times, April 19, 2012.