Nietzsche on Bank of America

The positive correlation between incompetence and unethical conduct at companies is striking, for, theoretically at least, a person can be talented or smart and of questionable character. Of course, it could be that cutting corners is a survival strategy of people who are not competent. However, shirking seems to reflect a sordid character, which, like personality, is relatively constant throughout one’s life—though character flaws could manifest more when times are tough (as in when incompetence has eventuated in a dire balance sheet). One might investigate, moreover, whether a firm’s culture can become more tolerant of unethical conduct when the finances are going south—or do unethical cultures tend to be like fixtures in organizations irrespective of financial condition?

The full essay has been incorporated into On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available at Amazon.

Angela Merkel: Leading Germany in the E.U.

In the E.U. state of Germany, Angela Merkel had her work cut out for her in getting her coalition to carry the German House, or Bundestag. In vesting the debt bailout fund with powers had been at the state level. Conservatives feared the deal would “open to the door to relinquishing more sovereignty to the European Union.”[1] Also, the legislators in her Free/Christian Democrat coalition were having trouble justifying the increased cost to their constituents of the expanded fund even though it is geared to keeping the E.U. debt-loads at the state level from spinning out of control—meaning at the expense of the German economy. Economically, it can be argued that expanding the E.U.’s bailout fun is in the economic interest of the state of Germany and its residents.

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

1. Vanessa Fuhrmans, “Merkel Faces Test OverBailout Fund,” The Wall Street Journal, August 30, 2011.

In the Eye of the 24/7 News-Cycle: Profits & Attention-Seeking

For about a week toward the end of August 2011, the news networks in the U.S. seemed utterly captivated, or obsessed, with Hurricane “Irene,” which was running up the east coast from North Carolina to New England. The prognosis had been given as a fait accompli when the storm was just pulling out of the Bahamas. A rough convergence of the models was taken for certainty. If this obsessiveness sounds familiar, it may be because on virtually any major story, the 24-hour news networks have tended to crowd out other stories even when the marginal utility of the added coverage on the major story is very low. Editors go with filler on the major story rather than risk losing viewers by breaking away to cover the other news to a meaningful extent. Viewers who are not obsessed with the main story may view the networks as obsessed while the networks may view themselves as merely satisfying a growing obsession by viewers. In any case, the narrowness of coverage, as if a major story should crowd out other news, is problematic, for it ultimately leaves the American people less well informed than they would otherwise be of what is happening around them.

 

The full essay is at "The 24/7 News-Cycle."

The Payroll Tax Cut: A Luxury?

As U.S. deficits and thus the federal government's debt had been increasing since the Clinton Administration in the late 1990s, proposals for a payroll tax-cut entailed risking the financial condition of the U.S. Government. To be sure, increasing government spending above inflation was risky too. Here, though, tax policy as it relates to deficits, and thus debt, is analyzed. 

The full essay is at "The Payroll Tax Cut."

Social Media in the UK: Protests and Criminal Activity

Officials from the E.U. state of Britain met with representatives of Twitter, Facebook and Blackberry on August 26, 2011 “to discuss voluntary ways to limit or restrict the use of social media to combat crime and periods of civil unrest.”[1] Theresa May, the state’s Home Minister, said the aim of the meeting was to “crack down on the networks being used for criminal behavior.”[2] However, reducing the protests, rioting, and looting to such behavior ignores the point that civil unrest can include political protest. So it may be disturbing to some that the discussion, according to some who were present, “was still aimed at reeling in social media and strengthening the hand of law enforcement in gathering information.”[3] What would stop the police from gathering information on people taking part in a political protest against police brutality, for example? It would be convenient for a police department to classify a march as “criminial behavior” in breaching the peace, or simply collect information without any subterfuge.

The full essay is at "Social Media in the UK." 

1. Ravi Somaiya, “In Britain, A Meeting on Limiting Social Media,” The New York Times, August 26, 2011. 

2. Ibid.

3. Ibid.

Refinancing Mortgages: Only for the Rich?

According to the U.S. Government, prices of homes with government-backed mortgages fell 5.9% in the second quarter of 2011 from a year earlier. This was the biggest decline since 2009, which was on the heels of the credit crisis of late 2008. In 2011, more than one in five homeowners with mortgages owed more than their homes are worth. That translates to at least 10.9 million families, almost none of whom could refinance. While the Treasury Department and Federal Reserve were able to pump hundreds of billions of dollars into American banks, federal programs to assist homeowners had been regarded as ineffective.. [1] Out of the $45.6 billion in TARP funds (the total being $800 billion) set aside to help struggling homeowners, only $22.9 billion had been spent by August 2011. Fewer than 1.7 million loans had been modified under federal programs as of 2011. Just over 760,000 permanent mortgage modifications had been initiated under the government programs while at least 5.5 million mortgages were in delinquency or foreclosure. Andrea Risotto, a spokesperson at Treasury, said that the unused portion of the TARP funds for homeowners would be used to reduce the deficit.[2]

The full essay is at "Refinancing Mortgages."

1. Shaila Dewan and Louise Story, “U.S. May Back Refinance Plan for Mortgages,” the New York Times, August 25, 2011. 

2. Ibid.

States Bypassing the E.U.: A Problem for Federalism?

In August 2011, opposition was mounting among state governments to the Finnish-Greek bilateral deal wherein Greece would pay Finland 500 million euros in cash (in an escrow account) as collateral against Finnish loans. Angela Merkel of the state of Germany objected to one state getting extra collateral. Indeed, other state governments are seeking similar deals as Finland, which could undermine Greece’s ability to repay (and the “preferred creditor” status of the IMF). Furthermore, much of what the state of Greece owned at the time had already been earmarked to be sold for privatization proceeds.

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

Eurobonds: The Solution to the E.U.’s Debt Crisis?

One possible solution to the E.U.’s debt crisis may be debt issued by an E.U. government agency and vouched for by all 17 state governments that use the euro currency. According to the Wall Street Journal, “Such euro bonds would dispel concerns Italy or Spain might not be able to get the financing they need, as it would be provided centrally.”[1] Of course there is the downside of moral hazard: states facing crushing debt-loads could rely on the wealthier states to guarantee additional debt. Because the “fiscally imprudent” state governments “could borrow freely at low cost, there would be little incentive to stop.”[2] The wealthier states in turn would be in the position of guaranteeing debt that they do not control.

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

1. Charles Forelle, “A Shaken Europe Looks for Bolder Fixes,” The Wall Street Journal, August 19, 2011. 

2. Ibid.

Two Tiers Fiscally in the E.U.: Too Simplistic

The main question regarding E.U. reforms oriented to preventing state governments from being overburdened with debt has been stated by Stephen Castle of The New York Times as follows: “Is the euro more in need of Germanic fiscal stability or the growth and stimulus policies that France traditionally champions?”[1] I contend that there are bigger fish to fry that unfortunately have gone largely unnoticed.

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

1.  Stephen Castle, “In Debt Crisis,Reminders of Disputes in Euro’s Founding,” New York Times, August 18, 2011. See also Nathalie Boschat and Gabriele Parussini, “France, Germany Push for Sanctions,” Wall Street Journal, August 18, 2011.

Fraud at S&P: A Conflict of Interest

By the summer of 2011, the U.S. Government had brought relatively few cases against large financial institutions for their roles in the financial crisis of 2008. For instance, the government investigated Washington Mutual and Countrywide without taking any further action in spite of reports of “liars’ loans.” In the case of the three major ratings agencies, the business model “is riddled with conflicts of interest, since rating agencies might make their grades more positive to please their customers. Before the financial crisis,“banks shopped around to make sure rating agencies would award favorable ratings before agreeing to work with [one of the agencies].”[1] In spite of accounts of the agencies’ mixing of business and ratings, the Dodd-Frank law of 2010 retained the issuer-pays business model while putting the agencies on the same legal liability level as accounting firms. 


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

1.  Louise Story, “Justice Inquiry Is Said to Focus on S&P Ratings,” The New York Times, August 18, 2011. 

Congressional Earmarks: A Personal Conflict of Interest

Congressman Darrell Issa (R-Calif.) runs his local district office down the hall from where he runs his businesses worth hundreds of millions of dollars. According to the New York Times, his “dual careers” evince a “meshing of public and private interests rarely seen in government.”[1] While advocating for business in Congress, he split his holding company into separate multibillion-dollar businesses, started an insurance company, and retained a financial interest in his automobile-alarm business. At least some of his actions in government have made him richer.[2] Most notably, he secured Congressional earmarks for road widening and other public works projects that runs his local district office down the hall from where he runs  that he owns in his district. For example, earmarks that he arranged made possible the widening of a busy road in front of a medical plaza that he bought for $10.3 million. To be sure, his constituents applaud the easing of traffic, but what if the money would otherwise have been spent to relieve more severe congestion elsewhere? Even if no worse instances existed, that the congressman’s constituents benefitted from the street-widening does not mean that his action was ethical.

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

1. Eric Lichtblau, “Helping His District, andHimself,” New York Times, August 15, 2011.

2. Ibid.

Diplomatic Pressure and Human Rights: The Case of Assad in Syria

It is perhaps telling that the world was more or less content, as of 2011, to rely on diplomatic pressure in the idyllic hope that it is sufficient to remove a tyrant from power, even if a tyrant were unleasing the weapons of war, including chemical weapons, on his own people I have Bashar Assad of Syria.

LA Times (2011)

The full essay is at "Diplomatic Pressure and Human Rights."

The London Riots of 2011: Protesting Police Power

Over three nights of rioting in London after the police shooting of a 29-year-old father of four, over 450 people had been arrested and 44 police officers injured. The rioting began on August 6, 2011 when a peaceful march in protest of the police use of lethal force turned violent. According to the Huffington Post, “Hooded and masked youths threw bottles and petrol bombs at police and buildings and vehicles, setting a building, a bus and cars alight.” The source of the violence seems clear, at least with respect to its beginning. Rather than being fueled by greed at that point, anger at a possible abuse of power by the local police seems to have been the motive. To be sure, rioting spread to include the looting of stores by kids and opportunistic adult thieves, but to claim that greed itself was the driving force instigating the riots is to miss the purpose of the initial march and give the London police a pass.

The full essay is at "The London Riots of 2011."

What Is a Member-State?

It is easy to get locked into a certain way of viewing something, even if the perspective, it turns out, has more to do with one’s epoch than the thing itself, including how it came about and was designed. I contend that one of the main category mistakes is that wherein one Union is treated as equivalent to a state in another Union. It is astounding when citizens of the former acquiesce in the likening of “apples and oranges” at their own expense—in this case, citizens of the United States unwittingly treating their Union as though it were simply France with a very big backyard rather than a Union commensurate with the European Union (in which France is a state). The affable “going along” is caused in part by a willful indifference that relegates any study of the origins and history of the United States. I submit that a proper comparison between the U.S. and E.U. takes both after their respective first fifty years—hence most Americans are ill-equipped to refute the asseverations of European friends that the U.S. itself is somehow equivalent to a state in their own Union.

The complete essay is at Essays on Two Federal Empires.

Charismatic Leadership: A Reply

I am particularly taken by the following passage from Edith Luc’s essay on charismatic leadership: “(I)t is risky, almost utopist to wait on manifestations of a charismatic leader believed to be of unique and exceptional nature, and able to mobilize everybody at the same time.”[1] I am reminded of the emphasis that American corporations place on the CEO position and the U.S. Government places on the U.S. President. The focus on one person, rather than a council, presumes that certain individuals are so unique and exceptional that perhaps even human nature itself is surmounted. In other words, the theory behind charismatic leadership may imply such extraordinary differences within human nature that some people are essentially super-human, and thus subject to hero-worship.

The full essay is at "Charismatic Leadership: A Reply."

1. Edith Luc, “Charismatic Leadership: Between Fact and Fiction”