Amid Record Bonuses Goldman Sachs Enabled Greek Debt

The person who has the gold makes the rules.  I suspect this is the operating mantra at Goldman Sachs even after the bank’s near-death experience (when Solomon Bros stock was taking a hit, Blankfein knew his bank could be next).  As it turns out, the bank was involved in enabling Greece to stealthily spend beyond its means. Just after Greece had been admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means. Additionally, in late November, 2009— three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in Athens with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting. The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.[1]

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

1. Louise Story, Landon Thomas, Jr., and Nelson D. Schartz, “Wall St. Helped to Mask Debt Fueling Europe’s Crisis,” The New York Times, February 13, 2010.

The European Union: Dissolution or Consolidation?

In its 1993 Maastricht decision, the German Constitutional Court ruled that national authorities are not bound to respect and apply Community law to the extent that it exceeds the outer boundaries of Germany’s transfer of sovereignty to the E.U.  The Court also ruled that no transfer of sovereignty is valid to the extent that it results in a violation of the fundamental individual rights guaranteed in the German Constitution.  Nevertheless, a subsequent ruling on this subject indicated a willingness to rely on the European Court of Justice (ECJ) for the vindication of those fundamental rights.

The complete essay is at Essays on Two Federal Empires.

On the Merger of Comcast and NBC: A Structural Conflict of Interest

On January 18, 2011, Comcast received government approval to acquire NBC Universal. This followed a lengthy review, which mandated a list of conditions. The most important of them is aimed at preventing the new media conglomerate from thwarting competition in online video. However, even though regulators described their review as the most intense scrutiny ever for a planned media merger, Comcast managers said they believed their company faced few onerous restrictions from the review. “I don’t think any of the conditions are particularly restrictive,” said David L. Cohen, executive vice president of Comcast.[1] This statement ought to give readers some pause.

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

1. Tim Arango and Brian Stelter, "Comcast Receives Approval for NBC Universal Merger," The New York Times, January 19, 2011.

The Revolving Door: A Public-Private Sector Conflict of Interest

In Illinois, at least as late as 2011, state and local legislators could use their position to benefit paying clients. According to The New York Times, fourteen elected officials in Cook County, where Chicago is located, were registered as lobbyists in the 2009-2011 period and had clients who did received government contracts in Illinois. Rep. Fred Crespo observes, “When I see them [the law makers] at a hearing in the Capitol, I often can’t tell of they’re here for their constituents or for their paying clients.” Legislators in Illinois “can legally vote and otherwise act on matters that directly benefit their lobbying clients.”[1] As this involves a conflict of interest, which is inherently unethical, this case demonstrates for us the contention of ethicists that ethics as a field is distinct from law.

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

1. Mike McIntire and Michael Luo, “When Santorum Left Senate, Some He Aided Found Him Work,” The New York Times, January 6, 2011; John Sullivan and Fredric Tulsky, “When Office Holders Also Represent Clients, Collisions Are Likely,” The New York Times, January 6, 2011; and Fredric Tulsky and John Sullivan, “Is It a Conflict? Yes, But It’s Legal,” The New York Times, January 6, 2011. 

The E.U.'s Dire Political Problem Obscured by the Banking Crisis

In December, 2010, E.U. leaders agreed to propose an amendment wherein the financial emergency rescue fund would be replaced with a permanent crisis-finance program. The amendment would permit the States having the euro as currency to establish a "mechanism" if it is "indispensible" for the health of the euro.  Interestingly, all of the 27 State legislatures would have to ratify the amendment, though no referenda would be required on account of the amendment being of insufficient scope to trigger them.

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

The Republican Congress and Health Insurance Companies: The Real Agenda

According to Wendell Potter, a former health-insurance company lobbyist, “the new law props up the employer-based system that insurers and large corporations benefit from so greatly. It also guarantees that private insurers will get billions of dollars in new revenue.”[1]  It is no accident that Obama’s health-insurance law works out this way. Potter points out that Republicans will back off from repealing the mandate, but will push for other changes. The reason is that the mandate is in the health-insurers’ interest whereas some other features of the law are not. Private insurance companies would like to keep the mandate that will guarantee them more customers.  At the same time, the insurers would like to go back to refusing to cover kids with preexisting conditions, canceling policyholders’ coverage when they get sick, and setting annual and lifetime limits on how much the insurers have to pay for medical care. Also, the insurance companies do not like having to spend eighty percent of their revenue from premiums on medical care, and the insurers would like to get more from the US government for private medicare plans.

The full essay is at "Congress and Health Insurance Companies."

1. Wendell Potter, “Repeal and Replace?” Newsweek, November 15, 2010, pp. 42-43; see also Jay Newton-Small, “What Does She Want?” Newsweek, December 20, 2010, pp. 38-47

The Affordable Care Act Running Up Against Federalism

According to Newsweek, "Conservatives have been quick to declare that "ObamaCare is on life support" in the wake of federal district court Judge Henry E. Hudson's ruling in Virginia that the Affordable Care Act’s (ACA) requirement to buy health insurance is unconstitutional. But in truth Virginia’s attorney general, Ken Cuccinelli, won only a partial victory. He sought to have the entire law overturned, but instead only the section creating an individual mandate was." This is perplexing to me, as the law contains a clause indicating that if any part is deemed to be unconstitutional, the entire act would fall. Clearly, the health insurance industry didn't want to be forced to pay out without being guaranteed the expanded customer base by the U.S. Government.  

The full essay is at "Obamacare and Federalism."

Military Sacred Cows: A Matter of Contrived Camulflage

"The most significant threat to our national security is our debt."

Micheal Mullen, Jount Chiefs of Staff Chairman, August, 2010.

The defense budget in 2010--$664 billion (not counting the Iraq and Afghanistan wars)--equalled that of the rest of the world combined.  One dollar of every five spent by the U.S. Government was for defense. The amount spent represents 80% growth since 2000. Why?  One reason: the big weapon systems oriented to fighting other empires (e.g., Russia and China). For example, $600 million for the littoral combat ship and $13 billion for amphibious landing vehicles (whose purpose has even been questioned by Sec. of Defense William Gates).  It would seem that the military contractors--the military industrial complex, moreover--are firmly entrenched and in control. That is to say, the defense spending is indicative of the influence of big business over government in the United States.  That this influence goes unhampered may tell us something about the leanings of our societal norms.

The full essay is at "Military Sacred Cows."

Obama Caving to Plutocracy

I contend that Obama caved on his campaign pledge (or promise) not to extend the bush tax cuts for the rich.  The added growth expected in 2011 from ALL of the cuts is just a half of a percent of GNP growth.  I have read that the rich save their tax cuts rather than use them in ways that stimuate the economy.  As for savings, banks have enough capital to lend (this isn't why they are still skittish in 2010).  That the vacuous argument that tax cuts for the rich will somehow create lots of jobs and save the economy from another recession has had any weight or credance really discourages me about American political discourse.  That Obama didn't "just say no" is also discouraging. 

The full essay is at "Obama Caving to Plutocracy."

The American Republican Party: For More Federalism or Less Government?

The stance of Sen. Jim DeMint (SC-R) in 2010 is emblematic of the ambiguity in the hierarchy of goals in the Republican party. DeMint can be taken as being primarily oriented to restoring the balance of federalism by having the federal government do less and the State governments more, at least in terms of domestic policy. This could bring the General Government back to its enumerated powers. Accordingly, Time magazine maintains that DeMint’s real target in 2010 was “a radical downsizing of the federal government.”[1] This downsizing includes “turning education policy over to the states and gradually dismantling safety-net programs like Social Security and Medicare.”[2]

The full essay is at "The American Republican Party."

1. Michael Crowley and Jay Newton-Small, “Leading the Rebel Brigade,” Time, November 29, 2010, pp. 34-37.

2. Ibid.

The Corporate Apology

In classical literature, an apology can mean a defense, such as Plato’s Apology. In modern parlance, an apology is known as an expression of genuine sorrow and an acceptance of responsibility for having caused harm to another person. Consumers should be on guard lest a company use the semblance of an apology for marketing purposes. Robert Bacal advises that an apology be used as a strategy to use “along with other techniques."[1] According to Bacal, “perfunctory or insincere apologies are worse than saying nothing at all.”[2] Accordingly, he advises that a “sincere apology can help calm a customer, particularly when you or your company has made an error. You can apologize on behalf of your company.”[3] However, how can an apology be both sincere and geared to manipulating a customer? I contend that giving a "perfunctory or insincere" apology is unethical because it is essentially a lie spun under the subterfuge of compassion. 

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

1. Robert Bacal, Perfect Phrases for Customer Service, 2nd Ed. (New York: McGraw Hill, 2010), p. 19. Italics added.

2. Ibid.

3. Ibid.

An Industry Undoing European Federalism: The Case of Cookies

In 2010, the EU Parliament passed a law to protect internet users from invasive “cookies,” which track computer usage at the expense of privacy. The 27 E.U. states had to implement the directive, but as this involved discretion, the business sector feared at the time that the states “might interpret the law differently, creating a nightmare of conflicting standards.” In other words, business can be intolerant toward federalism.

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

1. Paul Sonne and John W. Miller, “EU Chews onWeb Cookies,” The Wall Street Journal, November 22, 2010, pp. B1-2.

President Obama Absent at the EU-US Summit of 2010

I submit that most Americans are unaware that the EU has a Supreme Court, a Parliament and a Council/Senate.   Few Europeans are wont to admit that these institutions constitute a government, so perhaps we can’t be blamed here in America for not taking greater notice of the relatively new government across the pond.  So it is no surprise to read that President Obama decided to skip the 2010 EU-US summit in Europe.  The American president missed an opportunity to educate the American people not only on contemporary political Europe, but also on a potentially fecund new basis of comparison, from which both the U.S. and E.U. could benefit. 


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

Midterm Elections, 2010: Lessons Unlearned

The Republican surge that gave that party control of the US House of Representatives reflected a shift of some moderate independents, even as Republican leaders portrayed the election as “the American people” having repudiated the policies of the sitting U.S. President, Barak Obama. In other words, that 54% vote for a given Republican and 46% vote for the Democratic opponent does not mean that the 54% constitute “the American People.”

The full essay is at "U.S. Midterm Election."

Democracy and Capitalism: On Managing Equality and Inequality

Both capitalism and democracy claim to maximize individuals’ freedom—capitalism in the economy and democracy in politics.  In spite of this superficial commonality, Henry Brands points out that democracy “depends on equality, capitalism on inequality. Citizens in a democracy come to the public square with one vote each; participants in a capitalist economy arrive at the marketplace with unequal talents and resources and leave the marketplace with unequal rewards.” [1] In fact, a capitalist economy cannot operate without inequality. According to Brands, “The differing talents and resources of individuals are recruited and sorted by the differential rewards, which reinforce the original differences.”[2]

The full essay is at "Democracy and Capitalism."