Holding the Unfit Accountable vs. Murdoch’s Entitlement to Power

“A damning report [in late April 2012] on the hacking scandal at Rupert Murdoch’s British newspapers concluding that Mr. Murdoch is “not a fit person” to run a huge international company has convulsed Britain’s political and media worlds and threatened a core asset of Mr. Murdoch’s American-based News Corporation.”[1] The report also “found that three senior Murdoch executives misled Parliament in testimony” and “alleges that the company sought to cover up widespread phone hacking.”[2]

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. John F. Burns and Ravi Somaiya, “Panel in Hacking Case Finds Murdoch Unfit as News Titan,” The New York Times, May 1, 2012

2. Ibid.

Subsidiarity: Federalism Over Catholic Social Ethics?

In the E.U., the principle of subsidiarity functions in theory like the Tenth Amendment does in the U.S.—again in theory. In both cases, public authority on a given domain or policy-area is preferentially to be exercised at the state rather than federal level. The principle, while not federalism per se, can be an element of it. Taking subsidiarity to be “really federalism” turns the latter into an alliance—giving the states potentially so much power that the government of the federation or union itself cannot act as a check on the state governments.

The complete essay is at Essays on Two Federal Empires.

Wealth: Benefitting and Distorting Society

“One of the great political and economic challenges of our time is figuring out the balance between wealth that benefits society and wealth that distorts.”[1] In terms of benefitting society, invested (as distinct from donated) wealth can benefit consumers by enabling better and cheaper products. Economists estimate that for every dollar invested in productive enterprise, there is $5 of benefit to consumers.  Interestingly, this does not apply to money that is donated (rather than invested) to feed the poor (i.e., consumption rather than production).

1.Adam Davidson, “The Purpose ofSpectacular Wealth, According to a Spectacularly Wealthy Guy,” The New York Times, May 1, 2012. 

Quitting Money: Crazy in Christian Terms?

In 12 years, Daniel Suelo has not made a penny; neither has he spent one. In 2000, he left his remaining $30 in a phone booth (remember those?) and never looked back. He went on to live on public lands, foraging for food and accepting alms from others.  Mark Sundeen, who wrote The Man Who Quit Money about his friend, told an interviewer, “I assumed he had gone crazy or had some kind of mental breakdown. But that is not the case.”[1] The key to unpacking Suelo’s life-choice is to view it as a spiritual journey.

The full essay is at "Quitting Money."

1. “He ‘Quit Money’ and Is Still Living a Happy Life,” MSNBC, May 2, 2012. 

Wal-Mart: Political Contributions as Bribery

In September 2005, “a senior Wal-Mart lawyer received an alarming e-mail from a former executive at the company’s largest foreign subsidiary, Wal-Mart de Mexico. In the e-mail and follow-up conversations, the former executive described how Wal-Mart de Mexico had orchestrated a campaign of bribery to win market dominance. In its rush to build stores, he said, the company had paid bribes to obtain permits in virtually every corner of the country. . . . Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville, Ark. In a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: ‘There is reasonable suspicion to believe that Mexican and USA laws have been violated.’”[1]

The full essay is in The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.com.

1. David Barstow, “Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle,” The New York Times, April 21, 2012.

The Internet Escapes China's Grasp

The “surprising escape” of Chen Guangcheng, a blind legal activist, from house arrest to the presumed custody of U.S. diplomats was “buoying China's embattled dissident community” even as the government lashed out, “detaining those who helped him and squelching mention of his name on the Internet.”[1] Two points bear further scrutiny.

The full essay is at "The Internet Escapes China's Grasp."

1. Alexa Olesen, “Chen Guangcheng Escape: China Activists Inspired by Blind Dissident Lawyer,” The Huffington Post, April 29, 2012. 

Obama Caved to the Agribusiness Lobby

Faced with political pressure from Republicans and farming groups, the White House decided in April 2012 not to go ahead with rules that would have prevented children from “operating heavy machinery, handling tobacco crops, working in grain silos or performing other jobs considered potentially dangerous.”[1] The Labor Department issued a statement indicating it was withdrawing the rules due to concern from the public over how they could affect family farms. “The Obama administration is firmly committed to promoting family farmers and respecting the rural way of life, especially the role that parents and other family members play in passing those traditions down through the generations,” the department announced.[2] I contend that this rationale was a ruse intended to cover up the true source of the political pressure. Family farms were actually exempted from the proposed rules.

The full essay is at "Obama Caved to the Agribusiness Lobby."

1. Dave Jamieson, “Child Labor Farm Rules Scrapped by White House under Political Pressure,” The Huffington Post, April 27, 2012.

2. Ibid.

The E.U.: The Growth Union

In relying only on austerity and cheap bailout loans, the German-led strategy has proffered a false sense of European integration in the E.U. Even as expanding the bailout funds to roughly 800 billion euros and strengthening the E.U.’s means of enforcing limits on state deficits and debt are along the line of continued incremental shifts of governmental sovereignty from the state governments to that of the E.U., the related austerity (and recession) sparked a populist backlash in several states. At the state level (and this level has a major role at the E.U. level—unlike in the U.S.), the state-rights (i.e., anti-E.U.) parties have been the beneficiaries even if they could not gain outright majorities. The National Front in the state of France is an obvious example, as it captured 18% of the vote in the run up to the general election in 2012.  Other things equal, such a spike translates into brakes on further European integration in the medium term.

The full essay is in Essays on the E.U. Political Economy, available in print and as an ebook at Amazon.

Hollywood Bribes China

The Foreign Corrupt Practices Act, known as F.C.P.A., “forbids American companies from making illegal payments to government officials or others to ease the way for operations in foreign countries.”[1] The practical difficulty facing American companies doing business around the world is that in some cultures bribes are so ubiquitous they are simply a part of doing business.  For American companies to refuse to participate in what is generally expected can be a competitive disadvantage, particularly if substitutes exist and the practice is widespread.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. Edward Wyatt, Michael Cieply, and Brooks Barnes, “S.E.C. Asks if Hollywood Paid Bribes in China,” The New York Times, April 25, 2012.

Oil and Gas Companies: Citizens Buying Government

“Corporate campaign contributions have historically been split among incumbents of both political parties, with a decided advantage for whichever controls Congress and the White House.”[1] From 2008 to 2012, however, “companies in some major industries that [saw] a threat from federal regulations—most notably the energy sector—[appeared] to have deepened bonds with the Republican Party, with which they share increasingly indistinguishable goals.”[2] One implication is that the party would block regulations to protect the regulated even at the expense of the public safety.

The full essay is at "Oil and Gas Companies."

1. Dan Froomkin, “Corporate Campaign Contributions Show Some Industries Giving Up Appearance of Bipartisanship,” The Huffington Post, April 26, 2012. 

2. Ibid.

Spanked by Stockholders: Citigroup

In April 2012, Citigroup’s shareholders voted against the bank’s proposed $15 million compensation for the CEO, Vikram Pandit. This was the first time a majority on a stockholder vote—in this case, 55 percent—united in opposition to what was considered “outsized compensation at a financial giant.”[1] Shortly thereafter, a major stockholder sued Citigroup for breach of fiduciary duty (owed to the stockholders) for excessive executive compensation. Nevertheless, the prognosis is not so bad for the “top brass” on Wall Street; they need not worry unless the votes were to become binding and managements were barred from voting proxies.

The full essay is at "Spanked by Stockholders."

1. Jessica Greenberg and Nelson Schwartz, “Shareholders in Citigroup Reject Executive Pay Plan,” The New York Times, April 18, 2012.

U.S. President Obama on Executive Power

In February 2011, U.S. President Barak Obama directed the U.S. Justice Department to stop defending the Defense of Marriage Act, which bars federal recognition of gay marriages, against constitutional challenges. “Previously, the administration had urged lawmakers to repeal it, but had defended their right to enact it. In the following months, the administration increased efforts to curb greenhouse gas emissions through environmental regulations, gave states waivers from federal mandates if they agreed to education overhauls, and refocused deportation policy in a way that in effect granted relief to some illegal immigrants brought to the country as children. Each step substituted for a faltered legislative proposal.”[1] While not defying Congressional statutes, the use of executive power to thwart defending a statute violates the enforcement function of the executive branch. The other matters—enacting environmental regulations, granting relief to some illegal immigrants, and issuing state waivers presumably were under broader statutes that permit administrative action by the executive branch. The danger, however, is that the enforcement branch or arm could become a legislative branch or arm of the U.S. Government.

The full essay is at "Obama on Executive Power."

1. Charlie Savage, “Shift on Executive Power Lets Obama Bypass Rivals,” The New York Times, April 22, 2012. 

Credit-Card Companies in a Conflict of Interest

On April 12, 2012, Hawaii sued Bank of America, Chase, Citi, Barclays, Capital One, Discover, HSBC, and their subsidiaries, “claiming that the banks ‘slammed’ Hawaii credit card customers, charging them for products customers didn't need and that the companies never provided.”[1] The Hawaiian government alleges that the banks used “‘predatory tactics to sign up customers for services they either don’t want or don't qualify for,’ and the companies charged their customers ‘without their knowledge or consent,’ according to a press release issued by the Hawaii attorney general's office.”[2] According to the Attorney General, David Louie, “You don't know that you're enrolling, but they say, 'Oh you just enrolled,' okay, and now they've put a charge on your credit card.”[3]  The banks’ telemarketing departments may have charged customers an average of $150 in the form of small charges.

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

1. Bonnie Kavoussi, “Hawaii Sues Bank of America, Chase, Citi, Others For DeceptiveCredit Card Marketing,” The Huffington Post, April 13, 2012.

2. Ibid.

3. Ibid.

Banks Coopting the Consumer Protection Agency

According to the Credit Card Act, which took effect in February 2010, credit-card issuers cannot charge fees equal to more than 25% of the borrower’s credit limit in the first year after the account is opened. A question confronting the Consumer Financial Protection Bureau was whether up-front fees charged before the account is open count toward the limit. The new agency decided against subjecting such fees to the limit. The question is why.

The full essay is at "Banks Coopting the Consumer Protection Agency."

Using Corporate Position to Torture Whistle-Blowers

Jack B. Palmer made a quiet complaint through internal channels at Infosys, an outsourcing company based in India. He suspected some managers were committing visa fraud. His complaint leaked. As a result, investigators from the U.S. Government looked into “whether the company used workers from India for certain kinds of jobs here that were not allowed under their temporary visas, known as B-1.”[1]

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. Julia Preston, “Whistle-BlowerClaiming Visa Fraud Keeps His Job, but Not His Work,” The New York Times, April 13, 2012.