On the Aristocracy of Wealth

The rule of a few—aristocracy. The rule of the wealthy—plutocracy. Where the few, being valued above the many, are determined principally on account of wealth, the two forms of government fuse into the aristocracy of the moneyed interest. The cardinal virtue is the fundamental desire for more—otherwise known as greed. Justice is limited to peerage, or amicitia (friendship) based on having wealth. This sort of justice, which can be derived from Cicero, is antithetical to justice as caritas seu benevolentia universalis (love, that is, universal benevolence), which comes from Plato, Augustine, and Leibniz.

The full essay is at "On the Aristocracy of Wealth."

A Professional Misnomer: Self-Proclaimed Professionals

By the turn of the twenty-first century, the term, "professional" had become such a cherished word in the American lexicon that every American had decided that he or she is one. Evincing the Lake Wobegon effect—the tendency of most people to describe themselves or their abilities as above average—nearly everyone is wont to say, “I am a professional.” On housing listings on Craigslist, for example, people routinely use the word to signify that they are not students. In fact, even some students characterize themselves as professionals (though not as professional students!). Such common usage belies the term's claim to having a specific meaning. Moreover, the tendency of non-professions to deem themselves as professions nonetheless may evince one of the downsides of democracy—namely, its proclivity to excess in terms of self-entitlement. This is particularly likely to ensue from a citizenry that is lacking in self-discipline, virtue and knowledge. 

The full essay is at "A Professional Misnomer."

The Ministerial Exception: A Religious Right to Discriminate

In early 2012, the U.S. Supreme Court recognized, for the first time ever, a “ministerial exception” to employment discrimination laws, saying that churches and other religious groups must be free to choose and dismiss their leaders without government interference. In his written opinion, Chief Justice Roberts wrote, “The Establishment Clause [of the First Amendment to the U.S. Constitution] prevents the government from appointing ministers, and the Free Exercise Clause prevents it from interfering with the freedom of religious groups to select their own.” The wrench in the works here concerns the matter of delimiting the exception, given the inflation in what constitutes “ministerial” in terms of tasks.

The full essay is at "The Ministerial Exception."

Public Accountants Betraying Clients: Insider-Trading on Client Information

There are two basic types of conflicts of interest: personal and institutional. In any conflict of interest, two roles conflict in such a way that one role can compromise the other. The role compromised is the more legitimate of the two. In this essay, I distinguish the two types and situate the public accountants involved in insider trading in the personal rather than institutional type. I discuss two specific cases, both of which resulted in the auditors being prosecuted, in order to distinguish that outcome from the failure of society to come to grips with some of the most important ongoing institutional conflicts of interest.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

Frank Lloyd Wright: A Modern Renaissance Man

Perhaps no greater Renaissance man has been cited in American history than Thomas Jefferson. He wrote on the native plants of his country, Virginia, ran a plantation, designed buildings, founded a university, surveyed land,  was the head of state in Virginia, wrote a declaration of independence, and was the third president of the new American Union. More than two centuries after Mr. Jefferson, however, a cleft had become well-ensconced in American society between being an intellectual and a practitioner. The typical lawyer or physician, who holds two undergraduate degrees due in part to the political sense that a well-rounded citizenry makes a good electorate, has scant interest in intellectual endeavor. Indeed, one might even say that the “professions” place scant value on such activity; it is not “real work” or of the “real world.” The disdain is palpable, particularly in among the self-righteous in America. Yet Mr. Jefferson was able to bridge this gulf; so too can we. More contemporary examples can be cited to illustrate the mere possibility. The requisite delimiting "pruning" self-discipline might come as a surprise to people who presume that Renaissance breadth is borne of a wayward inability to "stay put."

The full essay is at "Frank Lloyd Wright.

Capitalism & Caste: Melting Untouchability in India

In what has become known as India, the caste system of Hinduism has for millennia served as the template for the socio-economic ordering of people into family-based groups. By the end of the first decade of the twenty-first century, the economic liberalization policy put in place in 1991 to replace the stagnant “import-substitution” domestic-favoring model of economic development had enabled some people in the lower castes to vault into social acceptability by virtue of what The New York Times calls “the newest god in the Indian pantheon: money.” Given the advent of the prosperity gospel in Christianity and the associated eclipse of the “camel getting through the eye of a needle” much-earlier-hegemonic association of wealth with greed, a similar statement could be made with regard to the Trinity (see “Godliness and Greed” and "God's Gold," both available at Amazon).

The full essay is at "Capitalism and Caste." . 

Leadership Funds: A Congressional Conflict of Interest

Congressional leadership funds constitute a loop-hole by which members of Congress can more easily use donations for personal expenses including vacations. To count on those very same members to turn off the sugar-water that they themselves enjoy is perhaps the epitome of naivety. A solution to a systemic conflict of interest cannot come out of the parties themselves, but must be from an exogenous or outside force. In this essay, I depict the conflict of interest and suggest places we might look to eliminate the conflict of interest.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

Americans on the Impact of a Government Default: Everyone Is an Expert

Would default of the U.S. Government be catastrophic to the world economy? In searching for an answer, the discerning inquirer knows to avoid the incredulous reports. One problem is that the American media treats even such sources as just as valid as those that are backed up by expertise. It may even be that enough Americans presumptuously dismiss or discredit expertise out of sheer jealousy and resentment that the media have become accustomed to treating public surveys as equivalent to experts on matters requiring expertise. In Madison’s Notes on the Constitutional Convention, a fear of excess democracy can be found among some of the delegates who feared that expanding popular election in the U.S. Government beyond the U.S. House of Representatives would unbalance that government (i.e., in terms of “the one, the few, and the many” in favor of the many). The fear has been realized as the U.S. Senate turned to popular election and the Electoral College has been captured by the political parties (i.e., electors are forced or pressured to vote in line with the election results). I contend that excess democratization of presumed expertise is related to the expansion and the values (e.g., anti-elitism) behind it.

 

Regarding anticipations of the impact of a government default, the U.S. Treasury released a report in October 2013 with the following results: "A default would be unprecedented and has the potential to be catastrophic. . . . Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse." This forecast came from experts on the topic at Treasury, whom I suspect made use of the expertise of economists. Hence, the report has high credibility.

 

At the same time, however, American news networks were reporting that, according to public-survey polls, a default would not be catastrophic. The media was also reporting poll results indicating that a quarter of the Americans believe that Obama was secretly working to on a third term. Doubtless the journalists give no credibility to such claims. In fact, the tone of the reporting suggests that the sheer madness of such a belief is what is really being reported. “Just where is such paranoia coming from?” one journalist asked after reporting the poll. Yet the tone used by journalists reporting that a default would not be catastrophic according to a significant percentage of Americans suggests that opinions—even those biased by political ideological agendas—can be treated as fact or at least as of equal value to the Treasury report or those of economists. The underlying assumption is deeply problematic, yet it has become a staple of the public discourse via the media.

 

Of the 21% who claim the U.S. dollar would no longer be a reserve currency around the world, how many people are just guessing? How is it that non-finance/economists know the market would not tank?  For my part, I don't know. I'm not an economist. Source: CFA Institute                                      

 

As an experiment of sorts, try paying extra attention to the claims that people make generally and you will soon come to the realization that many people go beyond their justifiable basis of knowledge or expertise in making clreaims with absolutely no caution that such would even be possible. The proclivity may be inversely related to the level of education, though the know-it-all graduate students and even professors is hardly a rarity. Even just after a few sentences from one, the arrogance-fueled over-reach is easily detected.

 

Try listening for the media basing findings requiring expertise as valid simply because a majority of Americans polled say so. Even though expertise renders a conclusion more credible (and accurate!), even experts can over-reach on their own territory. For example, an airline pilot who announces from the cockpit just after take-off, “We will arrive in Paris at 7:34am is overshooting. What if touch-down is at 7:35am due to a bit stronger headwind than anticipated? Would the passengers bail or storm the cockpit were the pilot to have said “around 7:30” instead?

 

Many Americans will leap to sue a professional (e.g. pharmacist, physician, surgeon, lawyer, CPA) who goes beyond his or her expertise such that people are harmed. So it is telling that we take at face value the economic conclusions of a political pundit whose expertise is in journalism or politics. The presumption that a majority of Americans saying X is not a problem can be taken as reason to conclude X really won’t be a problem makes it easy for the self-proclaimed “experts on the content” in the media to beguile an incredulous viewership.

Conflicts of Interest: Relying on a Wall Street Bank’s Safeguards

In October 2012 the Wall Street Journal reported, “the Financial Industry Regulatory Authority is examining how major investment banks and brokerage firms define and manage conflicts of interest between themselves and their clients.” Prime facie, defining and managing such conflicts between oneself and others can be regarded as itself a conflict of interest. It is perhaps a bit like the wolf negotiating with itself on its new job guarding the hen-house. I suspect that the regulators were going too far in attempting to translate “regulating” into managerial terms. The Journal goes on to ponder, “Will the first systematic look at conflicts on Wall Street in years make a difference for investors?” In my view, investors have good reason to be skeptical of the FIRA’s “manageralizing” approach.

The full essay is at Institutional Conflicts of Interest, available at Amazon.

Experts on the Supreme Court: Lawyers Who Teach

For all the American lawyers and law “professors” who had been predicting on the basis of their "expertise" that the three days of oral arguments before the U.S. Supreme Court meant that the Affordable Healthcare Act would go down, the Court's decision must have been a rude awakening. Immediately after the ruling, the decision came "as something of a surprise after the generally hostile reception the law received during the six hours of oral arguments."[1] This is an understatement at the very least.

The full essay is at "Experts on the Supreme Court."

 1. Mike Sacks, "Supreme Court Health Care Decision: Individual Mandate Survives," The Huffington Post, June 28, 2012.

Cardiologists as Ethicists: On Cheney’s Heart Transplant

Former U.S. Vice President Dick Cheney had a heart transplant on March 24, 2012, "after five heart attacks over the past 25 years and countless medical procedures to keep him going. Cheney, 71, waited nearly two years for his new heart, the gift of an unknown donor.”[1] At the time, more than 3,100 Americans were on the states’ waiting list for a heart. Of the roughly 2,300 heart transplants performed in 2011, 332 were over sixty-five. On average, heart failure was killing 57,000 Americans a year at the time, so just a fraction of those who could use a heart get one. One might question, therefore, whether the 332 recipients who were over 65, and Cheney, who was 71, should have been allowed to avail themselves of the relatively short supply of available hearts.

The full essay is at "Cardiologists as Ethicists."

                                  

1. Kasie Hunt, “Dick Cheney Heart Transplant: Former VicePresident Recovering After Undergoing Surgery,” The Huffington Post, March 24, 2012.

Limited Tenure For CPA Firms?

Arthur Levitt, who headed the Securities and Exchange Commission from 1993 to 2001, “sought to root out conflicts of interest at audit firms in 2000, and urged Congress to adopt auditor term limits in 2002 after the Enron and WorldCom scandals.”[1]  Levitt did not buy the argument made by companies that it would cost them a lot of money to change audit firms. To be sure, he acknowledged that some added cost would be entailed in a system of mandatory auditor “term limits,” but a long auditor relationship “raises the perception,” he maintained, “that the auditor is very much beholden to the company and not totally independent. An environment of skepticism should trump the fraternal environment that tends to occur after a relationship has developed over a period of years.”[2] Indeed, Arthur Andersen’s people were well ensconced at Enron by the time the energy giant went bust. In fact, the auditors even approved the questionable “partnership” accounting (used to hide debt).  Nor did the auditors communicate any misgivings to the audit committee of the company’s board of directors. The auditors were “in” with a rancid management. 


The full essay has been incorporated into "A Proposal: Limited Tenures for CPA Firms"  at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.  

1. Emily Chasan, “Keeping Auditors on Their Toes,” The Wall Street Journal, October 19, 2011.

2. Ibid.

On the Entitlement to Exceptionalism

John Blake of CNN asks, “Have you ‘walked the aisle’ to ‘pray the prayer?’ Did you ever ‘name and claim’ something and, after getting it, announce, ‘I’m highly blessed and favored?’ . . . If this is you, some Christian pastors and scholars have some bad news: You may not know what you’re talking about. They say that many contemporary Christians have become pious parrots onstantly repeating Christian phrases that they don’t understand or distort.”[1] Unfortunately, the epistemological brain-freeze extends beyond religion onto business, thanks to marketers. 

The full essay is at "Entitlement to Exceptionalism."

1. John Blake, “Do You Speak Christian?” CNN, July 31, 2011.