A Night of Knowing Nothing

Diwali, or Deepavali, is one of the biggest festivals in India. More than a billion Hindus, Sikhs, Jains, and Buddhists in the world celebrate the festival of lights in which good triumphs over evil. “Despite its deep religious significance, Diwali today is also a cultural festival observed by people regardless of faith.”[1] In this regard, Diwali is like Christmas, which plenty of non-Christians celebrate as a day of giving complete with the secularized myth of Santa Claus, Rudolf the Red-nosed Reindeer, and Frosty the Snowman. To claim that Diwali is exclusively Hindu or Christmas is only a Christian holiday—and thus in resentment to ignore either holiday—violates the spirit that both share. The “Happy holidays” greeting is an oxymoron, given its underlying motive of resentment. Yet if this were the extent of human aggression, the world would be a much better place. The Indian documentary film, A Night of Knowing Nothing (2021), reveals much worse than the passive aggression of dismissing a national holiday as if it did not exist. The violence unjustifiably and wantonly inflicted by university police on students at several universities who are protesting caste discrimination and the politically partisan coup at the Film and Television Institute of India, goes beyond even the harm exacted by the discrimination by caste. A Diwali celebration is shown in the film, and this raises the question of whether we can of yet even assuming our species' “progress,” celebrate the victory of good over evil as long as human beings in power abuse their discretion with impunity.

The full essay is at "A Night of Knowing Nothing."

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1. Harmeet Kaur, “What to Know about Diwali, the Festival of Lights,” CNN.com, November 11, 2023.

Income Inequality: Natural or Artificial?

In the United States, the disposable income of families in the middle of the income distribution shrank by 4 percent between 2000 and 2010, according to the OECD.[1] Over roughly the same period, the income of the top 1 percent increased by 11 percent. In 2012, the average CEO of one of the 350 largest U.S. companies made about $14.07 million, while the average pay for a non-supervisory worker was $51,200.[2] In other words, the average CEO made 273 times more than the average worker. In 1965, CEOs were paid just 20 times more; by 2000, the figure peaked at 383 times. The ratio fell in the wake of the dot-com bubble and then in the financial crisis and its recession, but in 2010 the ratio began to rebound. According to an OECD report, rising incomes of the top 1 percent in the E.U. accounted for the rising income inequality in Europe in 2012, though that level of inequality was “notably less” than the one in the U.S.”[3]  Nevertheless, in both cases the increasing economic gap between the very rich and everyone else was not limited to the E.U. and U.S.; a rather pronounced global phenomenon of increasing economic inequality was clearly in the works by 2013.

The full essay is at "Natural vs. Artificial Income Inequality."

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1.Eduardo Porter, “Inequality in America: The Data is Sobering,” The New York Times, July 30, 2013.

2. Mark Gongloff, “CEOs Paid 273 Times More Than Workers in 2012: Study,” The Huffington Post, June 26, 2013.

3. Kaja B. Fredricksen, “Income Inequality in the European Union,” OECD, Economics Department Working Paper No. 952, 2012.

Losing the Middle Class: An Educational-Industrial Policy

Beneath the headlines showing new figures on unemployment (which do not include the unemployed who are no longer looking for work or applying for unemployment compensation) is the story of the changing distribution of jobs in the American economy. That distribution in turn can give rise to cultural or societal changes. When the jobs in the economic middle are disproportionately lost, American society increasingly resembles a tale of two cities—and by this I do not mean Augustine’s heavenly and earthly cities though the realms of the “haves” and “have nots” could admittedly be called as such by materialists.

The full essay is at "An Educational Industrial Policy."

The French Socialist Party’s Proposal of a Universal Income Amended: An Economic Floor Providing Economic Security to the Poor

Benoit Hamon, “riding to victory” from political obscurity on a proposal to “pay all adults a monthly basic income,” defeated the recent Prime Minister, Manuel Valls, in a presidential primary runoff election of the Socialist Party in the E.U. state of France.[1] Although “Hamon wasn’t as tainted as Valls by Hollande’s unpopularity” because Hamon had “rebelled and quit the government in 2014,” whereas Valls served more than two years as Hollande’s prime minister in the state legislature, Hamon’s “proposal for a 750 euros ($800) ‘universal income’ that would be gradually granted to all adults also proved a campaign masterstroke. It grabbed headlines and underpinned his surprise success in the primary’s two rounds of voting.”[2] I submit that the proposal, although flawed from the standpoint of economic security, fits well with the industrial world of global capitalism.

The full essay is at "Universal Income Pegged to Economic Security."

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1. Associated Press, “Hard-left Candidate wins French Socialists’ Presidential primary,” Foxnews.com. January 29, 2017.

2. Ibid.

The Wealth of 8 People and 3.6 Billion People: Utilitarianism Applied

As of the end of 2016, eight people held as much wealth as the 3.6 billion people who make up the world’s poorest half. Just a year earlier, a similar study had “found that the world’s richest 62 people had as much wealth as the bottom half of the population.”[1] Part of the difference in these findings is due to new data gathered by Credit Suisse. Put another way, the richest of the rich were richer than had been thought. In this essay, I want to call attention to the sheer magnitude of the wealth involved, as it pertains to the richest.

The full essay is at "Wealth of 8 People and 3.6 Billion People."

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[1] Gerry Mullany, “World’s 8 Richest Have as Much Wealth as Bottom Half of Global Population,” The New York Times, January 16, 2017.

A Business Surtax on Income Inequality: Target the Proceeds

The medium compensation in 2015 for the 200 highest-paid executives at publicly-held companies in the U.S. was $19.3 million; five years earlier, the figure was $9.6 million.[1] CEO pay compared with the earnings of average workers surged from a multiple of 20 in 1965 to almost 300 in 2013.[2] “Income inequality is real, it is a national problem and the federal government isn’t doing anything about it,” said Charlie Hales, the mayor of Portland, Oregon in 2016 when that city passed a surtax on companies whose CEO’s earn more than 100 times the medium pay of their rank-and-file workers.[3] According to the law, set to take effect in 2017, companies whose ratios are between 100 and 249 would pay an additional 10 percent in taxes; companies with higher ratios would face a 25 percent surtax on the city’s business-license tax. Whether the new law would make a dent in reversing the increasing income-inequality was less than clear.

The full essay is at "A Business Surtax on Income Inequality."

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1. Gretchen Morgenson, “Portland Adopts Surcharge on C.E.O. Pay in Move vs. Income Inequality,” The New York Times, December 7, 2016.

2. Ibid.

3. Ibid.

Analysis of Italy’s 2016 Referendum: Beyond the Euro and the E.U.

The predominate axis of analysis in the wake of the Italian referendum in early December, 2016 centered on the euro, the federal currency of the European Union. For example, an article in The Wall Street Journal begins with the following: “Sunday’s referendum vote in Italy reinforced a widening split between the economics needed to sustain Europe’s common currency and the continent’s rising tide of populism.”

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

The Age of Adaline: Death as No Longer Inevitable

In The Age of Adaline (2015), the age-old “fountain of youth” leitmotif springs forth yet again. In this incarnation, Adaline is forced to come to grips with the fact that everyone around her, including her daughter, is aging even as Adaline herself does not. A strong electromagnetic has altered her genes such that her cells do not divide at slower rates as they age. As she becomes aware of the repercussions, we in turn can marvel at what may be just decades away scientifically concerning the expected human life-span. In short, when the film came out, scientists were already openly discussing whether death itself may no longer be inevitable for human beings.

The full essay is at “The Age of Adaline.”

Bank Profits Hit Record as Wages Stagnate in the U.S.: A Tale of Two Cities

In the United States, executives have been compensated much more than their own non-supervisory workers. This has been so in not only absolute terms, but also relative to other countries. As a first step to getting to an explanation, the sheer magnitude of the gap in the U.S. must be digested.

          The magnitude of the difference between the U.S. and all the other countries listed here suggests that the ratio of 475 to 1 is artificial rather than natural.  Moreover, the different ratios point to differences in underlying cultural values. Image Source: www.politifact.com

According to the Associated Press, American “banks earned more from April through June [2013] than during any quarter on record, aided by a steep drop in losses from bad loans.”[1] The Federal Deposit Insurance Corp. reported that the banking industry earned $42.2 billion in that quarter, up 23 percent from the second quarter of 2012. Banks' losses on loans decreased 30.7% from a year earlier to $14.2 billion, the lowest in six years, and lending increased 1 percent from the first quarter. Losses on loans fell to the lowest level since the third quarter of 2007. Home equity loans showed the greatest declines in losses.[2]

CNNMoney reported that the nation’s biggest banks were expected to hand out more in compensation (including $23 billion in bonuses) in 2013 than they had done in 2009. The total compensation of CEOs had increased by 876 percent between 1978 and 2012.[3] The FDIC report shows that the largest banks continued to drive the industry's profits while smaller institutions have struggled. Banks with assets exceeding $10 billion, including Bank of AmericaCorp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo, accounted for about 82 percent of the industry's earnings in the second quarter of 2013. Most of them had recovered in part from federal bailout money and record-low borrowing rates—neither one warranting higher compensation. For instance, the Fed’s bond purchases had been keeping long-term interest rates low.

On the very same day the FDIC announced the record profits, fast food workers across the U.S. walked off the job to protest low wages and poor treatment. Roughly “200 protesters including employees from McDonald's and Wal-Mart and members of the Chicago Teachers Union and the Service Employees International Union gathered outside the Rock N' Roll in downtown Chicago. Sixty cities joined in with their own protests. "It's not livable," Tyree Johnson, who said he's been a McDonald's employee for 21 years, charged. "I've been dedicated to McDonald's for the past 21 years. I still make $8 an hour. "I'm tired of choosing between paying rent and eating," said worker Tamara Best-Watkins to the crowd. "I'm tired of choosing between taking my daughter out and paying rent." Speaking at the protest, U.S. House representative Jan Schakowsky (D-Ill.) noted that McDonald’s CEO “makes in two or three hours at work what his employees make in a year.”[4]

With the federal minimum wage of $7.25 per hour having remained unchanged since 2009,  the demonstrators demanded a $15-per-hour minimum wage and protections against retaliation for joining a union.[6]  Hourly wages for nonfarm workers had fallen 3.8 percent in the first quarter of 2013; that drop surpassed any other since the Bureau of Labor Statistics began keeping track of wages in 1947.[7] Hourly worker pay had risen just 1.9 percent in 2012, even as the consumer price index increased 1.8 percent. That was the third-weakest annual increase in hourly pay since 1947, topping only the 1.4 percent gain in 2009 and a 1.8 percent gain in 1994.[8]

Jean-Jacques Rousseau, an eighteenth-century European philosopher, would label such fiscal inequality as artificial, rather than natural. Even though artificial inequalities are not hard-wired into human nature, we may have made them virtually impossible to expunge from the American political economy. Perhaps just viewing the widening gap as artificial could be a first step back from the brink of social instability and maybe even revolution, in spite of the odds established and enforced by the military-industrial complex.

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1. The Associated Press, “Bank Profits Hit Record $42.2 Billion in Second Quarter,” The Huffington Post, August 29, 2013.

2. Ibid.

3. Ibid.
4. Kim Bellware, “Fast Food Workers Protest in Chicago for Living Wages, Better Treatment Amid Nationwide Strikes,” The Huffington Post, August 29, 2013.

5. The Associated Press, “Bank Profits Hit Record $42.2 Billion in Second Quarter,” The Huffington Post, August 29, 2013.

6. Mark Gongloff, “U.S. Suffers Biggest Pay Drop on Record, as Workers Squeezed Tighter,” The Huffington Post, June 5, 2013.

7. The Associated Press, “Bank Profits Hit Record $42.2 Billion in Second Quarter,” The Huffington Post, August 29, 2013.

8. Mark Gongloff, “U.S. Suffers Biggest Pay Drop on Record, as Workers Squeezed Tighter,” The Huffington Post, June 5, 2013.

The Financial Crisis: A Systemic and Ethical Analysis

According to a study by the Dallas Federal Reserve, the financial crisis of 2007-2009 “was associated with a huge loss of economic output and financial wealth, psychological consequences and skill atrophy from extended unemployment, an increase in government intervention, and other significant costs.”[1] The study’s abstract goes on to “conservatively estimate that 40 to 90 percent of one year’s output ($6 trillion to $14 trillion, the equivalent of $50,000 to $120,000 for every U.S. household) was foregone due to the 2007-09 [sic] recession.”[2]

 

Interestingly, the Huffington Post “reports” the study’s finding in the following terms:  “a ‘conservative’ estimate of the damage is $14 trillion, or roughly one year’s U.S. gross domestic product. This is based on how much output was lost during the crisis and Great Recession, along with all the damage done to potential future economic growth.”[3] In fact, the article’s title claims that the crisis cost more than $14 trillion! Lest it be thought that the reporter and editor suffer from a learning or reading disability, the gilding here is notably in the direction of “selling more papers.”

 

Ironically, the Huffington Post also published an article pointing to the lack of accountability in that “the executives that [sic] were in charge of Bear’s headlong dive into the cesspool of subprime mortgage lending hold similar jobs at the most powerful banks on Wall Street: JPMorgan, Goldman Sachs, Bank of America and Deutsche Bank."[4]

 

The upshot is that those stakeholders who played a role in the crisis, most significantly the people running the government, the media, and the banks, have gone on, relatively unscathed, while the systemic risk remained or has actually become even greater.  As a first step toward recovery, a systemic map depicting the interrelated parts in the systemic failure and a related ethical analysis can provide a basis for reforms sufficient to thwart another major financial crisis.

 

 The systemic and ethical analysis

 

                                                         

1. Tyler Atkinson, David Luttrell, and Harvey Rosenblum, “How Bad Was It? The Costs and Consequences of the 2007-09 Financial Crisis,” Staff Paper No. 20, Federal Reserve Bank of Dallas, July 2013.

2. Ibid.
3. Mark Gongloff, “The Financial Crisis Cost More Than $14 Trillion: Dallas Fed Study,” The Huffington Post, July 30, 2013.

4. Lauren Kyger and Alison Fitzgerald, “Former Bear Stearns Executives Seemingly Unscathed by Financial Crisis They Helped Trigger,” The Huffington Post, July 31, 2013. The article was originally published by the Center for Public Integrity.

 

Facebook Holds Employees to Declining Stock

With Facebook’s stock trading at $17.73 a share just after Labor Day 2012, down more than half from the IPO issue-price of $38, further downward pressure was anticipated due to the upcoming expirations of the lock-up. Employees would be able to cash in approximately 220 million shares at the end of October, 780 million shares in mid-November, and still more in December and then in the following May 2013. Experts were not putting much stock in Mark Zuckerberg’s decision to hold onto his options for at least a year. Rather than trying to assess the impact of the downward pressure on where the price might go, a business ethicist would be apt to notice a subtle point of fairness by class pertaining to when the options can be sold.

                                                                                     
The full essay is at Taking the Face Off Facebook, available at Amazon.