Stakeholder Management: Property Rights

Stakeholder theory can be interpreted as containing a series of prescriptive leaps in the direction of giving stakeholders a greater and greater share in the property rights of stockholders. The final leap issues in what can be called radical stakeholder theory, for it represents a fundamental challenge (or usurpation) of property rights. Perhaps the most astonishing thing about how stakeholder theory unfolds is its presumptuous claim that its prescriptiveness is merely description (i.e., pertaining to what is the case, rather than what is ideologically desired).

The full essay is at "The Stakeholder Subterfuge."

Stakeholder Management: Property Rights

Stakeholder theory can be interpreted as containing a series of prescriptive leaps in the direction of giving stakeholders a greater and greater share in the property rights of stockholders. The final leap issues in what can be called radical stakeholder theory, for it represents a fundamental challenge (or usurpation) of property rights. Perhaps the most astonishing thing about how stakeholder theory unfolds is its presumptuous claim that its prescriptiveness is merely description (i.e., pertaining to what is the case, rather than what is ideologically desired).

The full essay is at "The Stakeholder Subterfuge."

The Bicycle Principle of Business Ethics: Walmart as Mediocre

I once bought a bike at Walmart.  To my chagrin, the bike had very little coasting ability. After riding down into a valley, I looked forward to some momentum on the up side. However, there was very little upside. Shortly after passing the lowest point, I would have to begin pedaling again.  In fact, if the down-hill was not steep, I had to pedal so as not to de-accelerate while going down hill.  In regard to Walmart, it could be concluded that not every product fits into a low-cost strategy (to say “cost-leadership” would gild the lily, besides engage in fad-jargon). While pedaling from the bottom of a hill just after having come down another, I constructed a young theory of business ethics.  Namely, that it was unethical for Walmart to sell the bicycle-brand (which I do not recall) because I deserved some coasting credit. You might say that if I didn’t have to pedal going down hill, I don’t deserve any “credit” in going up hill; the ease going down is paid for by the effort going up. However, even if I had not had to pedal while going downhill, I still would have believed that I deserved some “credit” on the up side. Why should I be exempted from benefiting from the laws of nature?  It is not fair if I am excluded from the phenomenon of mometentum through no fault of my own. Walmart had unwittingly put a wrench between me and momentum by essentially “spending” it by releasing it. So I was left with the impression of an asymetry that was unnatural. Of course, gravity and friction take their toll, so one can not expect to go without any effort on the up side.  But where a product eviscerates the benefits ensuing from a natural law, the product can be reckoned as inferior from the standpoint not only of quality, but as undeserved by any buyer.  There is thus a bicycle principle of ethics, which is a sort of naturalistic ethical theory based on the principles of fairness and desert–namely, that it is unfair to deprive certain people of public goods such as momentum while others indulge. An inferior product can be reckoned in such terms.

The full essay is at Walmart: Bad Management as Unethical, available at Amazon.

BP's CEO Tony Hayward: A Golden Parachute Despite Having Failed on Safety

In terms of corporate governance setting executive compensation to align the employee's incentives to the financial interests of the company even beyond his or her term of employment, it is apparently quite easy to go overboard. This can include severance packages for top managers--packages that may not reflect the performance of the executive. At the very least, it would appear that corporate lawyers are not writing very good contracts. Worst yet, insider board-management friendships may mean that the gap between achievement and severance pay may be intentionally wide. Sadly, the innocent non-management investors whose interests are not adequately represented in the board room pay the price, even if they don't perceive it on an individual level.  Even so, the lack of fairness alone calls for an end to the insider luxuriating.  The case of BP, whose rig exploded in the Gulf of Mexico in 2010, provides a good case study.

The full essay is in Cases of Unethical Business, which is available at Amazon.

The ECJ Decision on Gender-Based Insurance: Political, Philosophical and Business Implications

On March 1, 2011, the European Court of Justice, the EU's Supreme Court, declared illegal the widespread practice of charging men and women different rates for insurance, setting in motion an overhaul of how life, auto and health policies are written across Europe. Although tied to commerce, the ruling involves non-economic elements as per the high court's citation of the EU's Charter of Fundamental Rights, which enumerates 14 categories on which discrimination is prohibited; sex is the first. A separate provision states that "equality between men and women must be ensured in all areas." Because fundamental rights go to the core of what a political domain stands for, at least in the case of a republic, an implication is that the EU is indeed a political federal state, rather than simply a WTO for Europe. The fact that the states of the EU must abide by the ECJ's ruling on the fundamental rights means that some governmental sovereignty has indeed shifted from the state governments (and their respective constitutions) to the EU.  Like the US, the EU is a federal system of governance characterized at its core by dual governmental sovereignty, which in turn is sourced in popular sovereignty.  Other, less fundamental, implications can also be drawn from an analysis of the ruling.

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

Online Privacy and Advertising Databanks: Kant, Societal Norms, and Regulation

$26 billion-a-year by 2011, the internet advertising market is lucrative to venture capitalists who want to invest into companies that help target online advertising. Between 2007 and 2010, venture firms invested $4.7 billion in 356 online-ad firms. "Its a huge market and it's growing," Chris Fralic at First Round Capital says. Fralic's company has backed 33Across, which analyzes users' social networks, and Demdex, which has a "behavioral bank" of user profiles. Ethically, user on-line privacy is at issue. I contend that user privacy can be protected from dangers of concern to users while willing users can benefit as consumers from information regarding products that they want and would not otherwise know of.

The full essay is in Cases of Unethical Business, which is available at Amazon.

A Society Based on Corporate Culture: A Case of Sickness behind Fakeness?

Scripted "conversations" for employees.   Some customers as "members," and the others "not."   A larger cup of coffee being an "upgrade."   It occurs to me that a blue collar worker would simply laugh in the face of a chain retail store employee using any of these misappropriations as if they were natural and fitting.  That the rest of us don't laugh and the employees are not even likely to be aware of their own fakeness, much less stop it, tells me that modern society has to some extent adopted the corporate practice, even if tacitly.  That is to say, many of us have been mindwashed into accepting fakeness as authentic in the public square.

The full essay has been incorporated into (or swallowed up by) On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available in print and as an ebook at Amazon.

Executive Stature: Glimpses of the Man Behind the Curtain

One of the perks of corporate office is the presumption of stature and legitimacy.  In other words, the general public typically brings all sorts of assumptions along when reading about the behavior of a CEO.  I contend that the reality of the person behind the curtain is far different from what is portrayed.  That is to say, at least with respect to how CEO's typically want to be viewed in terms of corporate responsibility, I suspect that the reality in the executive suites is far different.  In fact, the reality can be downright childish.  Richard Fuld, who was the CEO at Lehman Brothers, may well have behaved like a six year old when upset. Had the general public been given a view of Fuld's antics, we would have shaken our heads not simply out of utter disbelief that such immaturity could be in such a position, but also in recognition of the gap between public and private persona.  Such a gap is dangerous in a republic wherein the electorate is to hold the government in check (and the government in turn is charged with protecting the public and the market system itself from being compromised from firms too big to fail). 

The full essay is at "Executive Stature."

Libya and the World in 2011: A Higher Calling

On February 21, 2011, Libyan military aircraft fired live ammunition at crowds of anti-government protesters in Tripoli. "What we are witnessing today is unimaginable," said Adel Mohamed Saleh, an activist in the capital. "Warplanes and helicopters are indiscriminately bombing one area after another. There are many, many dead." Arabiya television put the number killed on that day alone at 160. Gadhafi's son had vowed on television the day before that his father and security forces would fight "until the last bullet." I suspect that few people were surprised to find that Gadhafi would mount a sustained vituperative effort against the pro-democracy movement that was sweeping through the Middle East. "These really seem to be last, desperate acts. If you're bombing your own capital, it's really hard to see how you can survive, " said Julien Barnes-Dacey, Control Risks' Middle East analyst. "But I think Gaddafi is going to put up a fight ... in Libya more than any other country in the region, there is the prospect of serious violence and outright conflict," he said. As the world received reports of the massacre, a latent question not being asked was whether the world (or even a coalition therein in case of a holdout like China) has the right or an obligation to intervene militarily to stop the offending regime against its own defenseless people. I contend that there is such a right and moral obligation--meaning that national sovereignty does not extend to crimes against humanity. Sadly, at the time of the Libyan protests and Gaddafi's retaliation, the world's government offiicals were still largely impotent and disorganized.

The full essay is at "Libya and the World in 2011."

Source:

"Gadhafi: 'I'm in Tripoli, not Venezuela," February 22, 2011. NBCNews.com.

Prohibiting Interracial Marriage: Testing the Limits of Tolerance in a Federal Empire

In October, 2009, it was widely publicized in the press that a justice of the peace in Louisiana had been refusing to marry interracial couples (what if both people are multiracial?). He was subsequently fired. Keith Bardwell, justice of the peace in Tangipahoa Parish, said it is his experience that most interracial marriages do not last long. "I do ceremonies for black couples right here in my house," Bardwell said. "My main concern is for the children." As astounding as this sounds in the twenty-first century in a modern society, the case demonstrates the thesis that an empire, or Union of many States, is inherently diverse--incredibly diverse in fact. Europeans tend to view the United States as though it were itself akin to a state (i.e., homogeneous). In truth, the United States are indeed as diverse as is the European Union (language is not the only basis of diversity).  A person in Boston reading a newspaper about the justice in the peace in Louisiana could be excused for thinking for a moment that Louisiana is another country. To be sure, the large states in the U.S. are equivalent in size to the large member-states in the E.U. Territory does matter in terms of cultural diversity.

The full essay is at Essays on Two Federal Empires.

Employing Smokers: Economic, Political and Social Aspects

Hospitals in Florida, Georgia, Massachusetts, Missouri, Ohio, Pennsylvania, Tennessee and Texas (among others), stopped hiring smokers in 2010 and more countries were openly considering doing so. Paul Terpeluk, a director at the Cleveland Clinic in Ohio, said, “The trend line is getting pretty steep, and I’d guess that in the next few years you’d see a lot of major hospitals go this way.”[1] Indeed, this could come to be the case around the world. Various factors impact any comprehensive evaluation of a hospitals' policy against hiring smokers. The matter is therefore more complex than one might assume at first glance.
 

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

1. A. G. Sulzberger, “Hospitals Shift Smoking Bans to Smoker Ban,” The New York Times, February 10, 2011.

South Sudan as a Sovereign State: Governmental Change in Slow Motion

Announced in Sudan’s capital, Khartoum, on February 7, 2011, voters in the oil-producing south overwhelming chose to secede from the Arab north. According to the New York Times, 98.83 percent of the more than 3.8 million registered voters in the south chose to separate from the north. The referendum had been agreed to as part of the peace agreement in 2005, after two long and brutal civil wars between the Arab Muslim north and the mostly animist and Christian south. “Today we received these results and we accept and welcome these results because they represent the will of the southern people,” President Bashir said in a statement on state television, according to Reuters. In Washington, the White House released a statement by President Obama congratulating the people of south Sudan and announcing “the intention of the United States to formally recognize southern Sudan as a sovereign, independent state in July 2011.” The New York Times reported that actual independence would be declared on July 9, when the peace agreement that set the stage for the vote expired. In the meantime, issues regarding citizenship, oil-revenue rights and the contested and volatile region of Abyei would be settled.

The full essay is at "South Sudan."

Efficiency, Corporate Social Responsibility and Full Employment: Squaring a Circle

The New York Times reported that President Obama urged American businesses on February 7, 2011 to “'get in the game' by letting loose trillions of dollars being held in reserves, saying that they can help create a 'virtuous cycle' of more sales, higher demand and greater profits that will put people back to work and turn around the sluggish economy.” Obama continued, “If there is a reason you don’t believe that this is the time to get off the sidelines — to hire and invest — I want to know about it. I want to fix it.” In the speech at the U.S. Chamber of Commerce, Mr. Obama said that companies have a responsibility to help the economy recover. The trouble is that responsibility is a rather vague term that can be variously applied. This is one reason why the corporate social responsibility concept could mean providing society with the products and services that are sought via the marketplace (e.g. Milton Friedman of the Chicago school) while meaning for others increasing corporate philanthropy to alleviate a society problem such as poverty. In other words, responsibility can be made concrete in various ways that can accommodate and indeed reflect the ideologies of those applying the term.

The full essay is at "Efficiency and CSR."

Coordinating Fiscal and Monetary Policy in the E.U.: Is Ever Closer Political and Economic Union Advisable?

Initiating a bold effort on February 4, 2011 at a summit of the European Council (composed of heads of the state governments) to strengthen the euro by coordinating fiscal policies among the 17 states that use the currency, the German Chancellor and French President laid down far-reaching plans to deepen economic and political integration for the group of states within the EU. From the standpoint of the US, a subset of states relatively integrated federally seems strange, though perhaps such flexibility will obviate a war between EU states in the future. In other words, Americans ought not dismiss the arrangement out of hat. This is not to say that bringing fiscal policy up to the EU level to join monetary policy will be easy, even for just seventeen states.  The particular interests of the latter must be balanced against the interest of the ECB (the EU's central bank) for some degree of fiscal coordination and accountability.

The complete essay is at Essays on Two Federal Empires.

The U.S. Senate on Health Insurance Reform: On the Applicability of the Bundesrat and the E.U.'s Council of Ministers

A second federal judge ruled at the end of January, 2011 that it is unconstitutional for Congress under the interstate commerce clause of the U.S. Constitution to enact a health care law requiring Americans to purchase health insurance. Unlike the Federal judge in Virginia who had ruled against the law the month before, Judge Roger Vinson of Federal District Court in Pensacola, Fla., concluded that the insurance requirement was so “inextricably bound” to other provisions of the Affordable Care Act that its unconstitutionality required the invalidation of the entire law.  Such an invalidation would of course be in the interest of the health-insurance industry lobby; the managers of health insurance companies are opposed to providing expanded coverage to the uninsured without the mandated expanded pool that would spread out the risk. One might wonder whether the lobby has any muscle with the Federal courts.  Nonetheless, I want to raise another point that may have been missed from all the tussle over the jurisprudence. Specifically, 26 states were parties to the legal challenge in Pensacola. That is to say, more than half of the state governments were opposed to the Affordable Care Act.  It is notable, therefore, that the U.S. Senate, which represents the States and was intended to give them a direct agency in the general (or federal) government, passed the Act by 60 votes in favor.  

The full essay is at Essays on Two Federal Empires.