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Friday, November 1, 2013

A Diet Dug Out of Anthropology

The Big Bang took place 13.7 billion years ago. Earth formed about 4.54 billion years ago out of “stardust.” So our planet is not nearly as old as our universe (which consists of clusters of galaxies). It was not until 1.8 million years ago that our species, homo sapiens, took shape, formed by the forces of natural selection. We are relative newcomers to our planet’s existence, yet much of what we encounter, make, or use in the modern world has existed as only a mere flicker in our species’s 1.8 million year life as a species.  
For example, it was not until about 70,000 years ago that our ancestors’ brains developed to the extent that a fictive imagination was possible. That is, the homo sapiens brain was no longer dependent on the senses (e.g., touch, sight, smell) and thus empirical observation of one’s environment (e.g., appearances). The brain could imagine a unicorn, justice as an ideal (even as a Platonic form!), and a utopian vision having little if anything to do with how the world is at the time.  
It was not until 9,500 BCE that homo sapiens settled into permanent settlements to farm. Only a relatively few types of plants were grown and animals were domesticated as a result of the agricultural revolution. For example, wheat originally grew only in a small area in the Middle East; by the end of the twentieth century, the crop’s area had reached 200 million hectares.[1] From roughly 6,000 BCE, wheat has been a basic staple food of Europe, West Asia, and North Africa.
It was not until the eighteenth century that the scientific revolution found some traction. At that time, the gravitational pull of the past, through tradition and custom, began to lose out to an orientation to the future, and thus to discovery and innovation. This was a major shift in the history of our species. As a result, the modern world as it exists would look like another world to a person living in the sixteenth century, whereas the same person would find the life of people living in the eleventh century to be familiar.
As a result of the agricultural and scientific revolutions, we moderns have a myriad of processed foods (e.g., hormones, preservatives). Paradoxically, even though agriculture has essentially mass-produced only a relative few of the foods that our ancestors ate from one day to another in the eons of time in the Stone Age, the advent of long-distance transportation has extended the reach of otherwise geographically limited foods (e.g., pineapples) as well as the agricultural staples (e.g., wheat). This all sounds well and good, but a subtle problem festers that can only be discovered by taking a very long historical perspective grounded in anthropology—the study of the homo sapiens species.
I have been applying my own study of what almost two million years of natural selection has etched in our biology to this day to dieting. The forces of natural selection have not had nearly enough time to tweak our bodies (including our brains) to the modern world in which we live. For example, we eat much more in complex carbohydrates (e.g., wheat, so breads, pasta, etc.) than our stomachs are designed to digest. In other words, it is difficult for our species to digest wheat because that food was not factored into the equation by the forces of natural selection in adapting the stomach of a homo sapiens over almost two million years. How long out of the 1.8 million years has wheat been a staple food for us? Almost a blink of an eye.
Additionally, sugar is difficult for our livers to process because that organ was formed when sugar was only consumed when fruits were in season. Accordingly, besides being overworked, the human liver produces cholesterol particles in the process. Coca-Cola is like a frontal assault on the liver, with the heart being hit as collateral damage through a lifetime. It is no wonder that heart disease is the leading killer of modern man.
Combining these snippets of anthropological food science with the fact that few of us get anywhere near the amount of exercise of the prehistoric hunter-gatherers, we cannot count on the burning of calories nearly as much. By the way, the hunting made our ancestors more muscular and fit (and without the pathogens that have plagued our species ever since we created large societies and domesticated animals).  Even with regular visits to a fitness center, we moderns really must attend to the intake side of the energy budget wherein a surplus of retained calories is bad. To reduce current and accumulated surpluses, we can apply a bit of anthropology with beneficial results.
Because complex carbs can turn into fat while a person sleeps and most exercise typically occurs during the day rather than at night (except, perhaps, in the bedroom), I have shifted my intake of “heavy foods” like bread, pasta, meat, and potatoes to breakfast and lunch. In this mix I have drastically reduced my intake of wheat foods (even whole wheat bread!) because I know my stomach is not well-suited to digesting them. Because fruits and vegetables are of relatively few calories and natural selection has taken them into account in adapting the human stomach, I emphasize them for dinner. I make sure the proportion of fruits and vegetables is than that of wheat foods.
In short, both timing and proportions are in the mix along with food servings when anthropology—taking the millions of years of natural selection as the default—is itself added into the equation in formulating a diet to lose weight. As Plato wrote, much of being virtuous is changing habits. I would add self-discipline in countering the lure of instant gratification as a vital ingredient. In terms of dieting, a changed habit that a person sustains can actually result is a smaller, shrunken stomach. This physiological change can in turn take away some of the pain in applying the self-discipline. Although I do not read published diets, I suspect that this anthropological approach is quite novel.

[1] 2 million square kilometers or 77,204 square miles.

Wednesday, October 30, 2013

McDonald’s Strategic Use of Its Charity: Clowning around with Ethics?

Corporations have undoubtedly oriented their philanthropy to take advantage of the potential synergy with marketing their products and services. This “revelation” should not surprise anyone in modernity. Even so, overdoing any convergence to maximize profits is certainly open to ethical critique, even if leaning excessively on strategic interest at the expense of reputational capital is perfectly legal. This point ought to impress itself on the frontal lobe of any dean who hires lawyers to teach business ethics. In this essay, I focus on McDonald’s funding of its own charitable organization, McDonald House Charities. Has the corporation’s financial contribution been sufficient, ethically speaking, to justify the resulting reputational capital, marketing synergies, and long-term profitability?
In late October 2013, Corporate Accountability International and The Small Planet Fund came out with a 30-page report accusing McDonald’s of using its own charity as a branding device for the food products. Specifically, the report claims that McDonald’s reaps all of the “branded benefit” from the charity while contributing only about 20% of the money. At the time, the corporation was contributing only $5.3 million to $10 million to its namesake global charity. Meanwhile, the “reputational cost” to the company does not seem to have registered with the management.
From an ethical perspective, to link charity, the root word caritas meaning higher human love, with such an encroachment by self-interest is bound to stir a general recognition of hypocrisy. “McDonald’s giving does not match its rhetoric,” Michele Simon, a public health lawyer and author of the report, said. The hitherto accrued reputational capital associated with “McDonald’s” was suddenly on the chopping block. By linking the ubiquitous symbol of McDonald’s, the clown Ronald McDonald, to the charity, “McDonald’s gains an emotionally loaded marketing vehicle while shielding itself from critics,” the report concludes. Who would criticize the company for having established an organization that provides temporary housing for family members of hospitalized children? Yet anyone who has seen Cameron’s film, Titanic, grimaced as the rich son of a Steel magnate grabs a small girl (as though his own) in order to gain access to a life boat. McDonald’s has been grabbing not just children, but sick ones!
Abstractly, caritas, used by Leibniz in caritas naturalis seu benevolentia universalis (natural love, that is, universal benevolence), allows for some self-love as the love is natural rather than divine. Even so, an influx of excessive self-interest premised on narcissism can easily pierce and deflate the entire phrase as a viable theory of justice. A sordid sense of the underlying greedy mentality naturally results. Hence, reputational capital is “withdrawn.” Over-reaching is itself “emotionally loaded,” such that a virtue ethics is part of the ethical judgment.
Lest it not be forgotten, however, corporations are organizational abstractions designed like sharks to be feeding machines. Furthermore, to ask a board of directors or management to disregard their fiduciary duty to the property-owners, the stock holders, in favor of giving cash away with only a hazy long-term financial impact by means of some reputational capital accrued is unethical in deontological terms (i.e., in terms of duty). Even so, a company’s stockholders realizing their property rights can legitimately (and ethically) order the board to direct management to give money to a cause even though it bears little or no relation to the company’s strategic interest.
Even so, over-reaching in a duplicitous and mendacious way, such as by McDonald’s board and management, is never pretty. Hence the noxious odor of a squalid character-type is bound to rise to the discomfort of the gods on Mount Olympus. They are not depicted as always ethical, however, so here the indictment must surely come from ethics itself. Yet as Nietzsche points out, it can hardly be immoral for the weak to act contrary to weakness, for that is how they are constituted. To be other than what one is can hardly be an obligation. Perhaps our normative expectations regarding corporations need to be scaled back to account what they are in themselves. This is not to say that McDonald’s has not surpassed the nature, design, and purpose of a corporation, just as a mortal sin is not dismissed simply because human nature is what it is. The reference point here is the abstract nature of what a corporation is, to which corporate conduct can either surpass or fall short.


Bruce Horovitz, “McDonald’s Grilled Over its Charity,” USA Today, October 30, 2013.

Monday, October 28, 2013

JPMorgan: Fault and Criminal Fraud under the Settlements' Radar?

Resolving just a part of the $13 billion being demanded by the U.S. Government in court, JPMorgan capitulated in October of 2013 to a $5.1 billion settlement to resolve claims by the U.S. Federal Housing Finance Agency that the largest American bank had sold Fannie Mae and Freddie Mac mortgages and mortgage-based (i.e., derivative) securities by knowingly misrepresenting the quality of the loans and the loan-based bonds.[1]  At the time of the $5.1 billion settlement, JPMorgan’s executives were trying to settle “state and federal probes into whether the company misrepresented the quality of mortgage bonds packaged and sold at the height of the U.S. housing boom.”[2] It would seem that the bank was in a vulnerable position in the settlement negotiations, having “capitulated.” I’m not so sure.
Firstly, “JPMorgan preserved its right to seek reimbursement from the Federal Deposit Insurance Corp. for FHFA claims stemming from Washington Mutual Bank’s estate,” which at the time was managed by the FDIC.[3] The reimbursement would come out of the estate rather than the FDIC.
Secondly, it was not as though the claims against JPMorgan were only for the misdeeds of people at Bear Stearns and Washington Mutual before JPMorgan acquired them (and their problems!). Indeed, an ethical argument based on the principles of fairness and desert (as in deserving, not sugar) could be brought forward in defense of JPMorgan were the bank being asked to settle claims from the misconduct of the other two banks before being bought out. To be sure, the “fire sale” price of $2 per share (a mere 7 per cent of the market value) in acquiring Bear Stearns could justify ethically the assertion that JPMorgan ought to then cover the misconduct, even fraud, at Bear even before the bank became part of JPMorgan. In other words, the very low price per share—being so low relative to Bear’s market value—factored in the probably settlement costs. Getting a good deal and shirking the related implicit or explicit obligations is not fair—nor is it responsible, societally speaking.
To be sure, the “separate misconduct” represents only a part of the governmental claims—exactly how much of the total I do not know.  The FHFA “accused JPMorgan and its affiliates of making false statements and omitting material facts in selling about $33 billion in mortgage bonds to [Fannie and Freddie] from Sept. 7, 2005, through Sept. 19, 2007.”[4] JPMorgan had acquired Bear Stearns and Washington Mutual in 2008, so the fraud at Bear Stearns and Washington Mutual must be pre-acquisition. According to the regulator’s affidavit submitted to the federal court in Manhattan, executives at JPMorgan, Washington Mutual, and Bear Sterns “knowingly misrepresented the quality of the loans underlying the bonds.”[5] The fraud allegedly touched inside JPMorgan itself.
In 2006, for example, JPMorgan purchased 4,209 mortgages from New Century into a mortgaged-backed (i.e., derivative) security, which the bank then sold to investors including Freddie Mac (which bought about a third of the $910 million bond deal). Within a year, fifteen percent of the mortgage holders were delinquent on a payment or in bankruptcy, according to BlackBox.[6] By 2010, the 15% had turned into 50 percent. “The truth was that New Century had completely abandoned its stated underwriting guidelines,” the investors allege in a court document as support for their claim that JPMorgan bankers made false and misleading statements in testifying to New Century’s underwriting standards.[7] Given that JPMorgan had “dealt with some of the biggest subprime lenders . . . , including Countrywide, Fremont, and WMC Mortgage,” the false and misleading statements were likely not just about New Century.[8] JPMorgan was most vulnerable in this respect; the bank stood on semi-solid ground (e.g., melting permafrost) concerning the pre-acquisition, fraudulent managerial behavior at the Bear and Washington. Even so, as of October 2013, neither JPMorgan nor its bankers whom investors claim made the false and misleading statements had been charged with criminal fraud.
Thirdly, JPMorgan did not have to admit to any wrongdoing as part of the $5.1 billion settlement. This “lack of guilt” achievement points to a real or imagined vulnerability in the regulatory agencies bringing suits against Wall Street powerhouses. From this standpoint, the government capitulated. This is particularly so in this case because of the extent of lying at several banks regarding the risk of their respective mortgages produced and/or securitized into bonds.
Therefore, I would not exactly say that JPMorgan capitulated. The amount of the settlement is indeed significant, though $5.1 billion is hardly catastrophic for the largest American bank. In the judgment of William Frey, the chief executive of Greenwich Financial Services, “(w)hile these settlements seem huge, given the nature of the offenses, they are trivially small.”[9] How is it that the Wall Street giant got a mere slap on the wrist?
I propose for your consideration the hypothesis that JPMorgan did not get hit with worse in part due to the financial muscle that the bank, as well as Wall Street more generally, has in the corridors of power in Washington, D.C. More particularly, the “capture” or at least bias of regulators, who depend on the regulated for market information and regulatory feedback and who face political pressure from elected officials and their appointees, may explain more closely why JPMorgan’s potential legal liabilities have been less than typically supposed.

[1] Clea Benson and Dawn Kopecki, “JPMorgan to Pay $5.1 Billion to Settle Mortgage Claims,” Bloomberg, October 25, 2013.
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Al Yoon, “J.P. Morgan Talks Show Tangled Web,” The Wall Street Journal, October 28, 2013.
[7] Ibid.
[8] Ibid.
[9] Ibid.