A Structural Conflict of Interest in Feinberg's BP-Claims Disbursement Office

A year after the BP oil rig explosion in the Gulf of Mexico, only $4 billion of the $20 billion fund alloted by BP had been paid to claimants. Out of 800,000 claims submitted, two-thirds had been processed.  That is to say, two-thirds of the claims translates into 20% of the available funds. It appears that Ken Feinberg, the lawyer tasked with administering the funds, was being too stingy.

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

Business Ethics in the Business World: A Glimpse from Goldman Sachs

Goldman Sachs’ ethics code reads in part, “[We] expect our people to maintain high ethical standards in everything they do. . . . From time to time, the firm may waive certain provisions of this Code.”[1] The explicit conditionality is notable and significant. I contend that among other reasons, a negative impact on the bank’s financial position and/or profits is apt to trigger such a waiver not only at Goldman Sachs, but from the business standpoint more generally.


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

1. William D. Cohan, Money and Power: How Goldman Sachs Came toRule the World (NY: Doubleday, 2011).

Conflicts of Interest for Public Officials: How Broad?

Michael Carrigan, a member of the City Council in Sparks, Nevada, “says he was trying to make sure his vote on a proposed casino, one that his campaign manager helped develop, did not pose an ethics problem.”[1] Carrigan backed the Lazy 8 casino project proposed by Red Hawk Land Co. Carrigan’s friend and campaign manager, Carlos Vasquez, worked as a consultant on the project. The question is whether the elected official’s relationship to his campaign manager who was a consultant on a project to be voted on constitutes a conflict of interest sufficient for the official to have not voted. The Sparks city attorney told Carrigan that he could vote on the project as long as he publicly disclosed his relationship with the project consultant. The attorney was obviously thinking in terms of transparency. Carrigan made the recommended disclosure. The Nevada Ethics Commission, however, claimed after the vote that Carrigan had a conflict of interest and should have abstained even with the transparency. In its reprimand, the commission cited ethics law that says public officials must not vote when their judgment could be affected by a commitment or relationship to someone in their household, a relative, business partner, or a person “substantially similar” to those specified. The commission classifies the campaign manager in the “substantially similar” category because Carrigan’s loyalties to his campaign manager would have affected his judgment. Caren Jenkins, executive director of the Nevada Ethics Commission, explains, “Here was a friend, a buddy, a close confidant. If Mr. Carrigan ever thought it was in his best interest to vote against the project, would he have?”[2] Carrigan sued the commission for its reprimand, claiming it violated his free speech rights. The Nevada Supreme Court sided with Carrigan, who pointed to the fact that he was not in business with his campaign manager. The Nevada Supreme Court said the catch-all category the commission cited failed to “limit the statute’s potential reach (or) guide public officers as to what relationships require recusal.”[3] The state court said the law “thus chilled speech.” In its appeal to the U.S. Supreme Court, the lawyer representing the commission argues, “State and local legislators have no personal ‘free speech’ right to cast votes on particular matters, much less ones in which they have a personal interest.”[4] The Reporters Committee for Freedom of the Press similarly claims that rules such as Nevada’s are important to ensure politicians don’t vote based on personal interests.

The full essay is at "Conflicts of Interest for Public Officials."

---

1 Joan Biskupic, “Nev. Official’s Vote Turns Free-Speech Case,” USA Today, April 18, 2011, p. 6A.
2. Ibid.
3. Ibid.
4. Ibid.

 

Contending Healthcare Social Contracts: A False Choice?

On March 21, 2010, the U.S. House of Representatives approved “a far-reaching overhaul of the nation’s health system . . . , voting over unanimous Republican opposition to provide medical coverage to tens of millions of uninsured Americans after an epic political battle that,” according to The New York Times, “could define the differences between the parties for years.”[1] The vote was 219 to 212. “This isn’t radical reform,” the U.S. president said, “but it is major reform.”[2] Whether that was real change is an open question. House Speaker Pelosi said, “Today we have the opportunity to complete the great unfinished business of our society and pass health insurance reform for all Americans that is a right and not a privilege.”[3] While Obama was referring to the bill’s reliance on extant private insurance companies, absent even a public option, Pelosi made explicit the change to the American social contract—access to health-care would henceforth be a right for all citizens rather than a benefit to be conferred to those able to pay from their own wherewithal and insurance. The basis of this new right was undoubtedly the human right to life, as in the right to life, liberty and the pursuit of happiness. The closeness of the House vote suggests that the people were divided on whether the new right ought to be conferred (and/or whether it should be conferred by the U.S. Government rather than decided on a State by Stat basis). Sure enough, the pendulum did indeed shift.  

The full essay is at "Contending Healthcare Social Contracts."

1. Robert Pear and David M. Herszenhorn, “Obama Hails Vote on Health Care as Answering ‘the Call of History,” The New York Times, March 22, 2010, p. A1.

2. Ibid.

3. Ibid.

Achieving Balance in American Federalism: On the Crusade of Texas’ Rick Perry

As the governor, or head of state, of Texas, Rick Perry has been on a crusade to reinvigorate American federalism. Referring to the efforts of officials in the U.S. Government to secure the Mexican border, Perry said, “It is part of that frustrating paradox where Washington neglects their responsibility for areas clearly within their purview, while interfering in other areas in which they’re neither welcome nor authorized.”  The chief executive was pointing to a little-noticed point concerning the expansion of the domains in which the federal government is active.

The complete essay is at Essays on Two Federal Empires.

See Rick Perry, Fed Up! and the critique of Perry's book, Skip Worden, American and European Federalism: A Critique of Rick Perry's 'Fed Up!

On the Cruelty of Gadhafi's Libyan Troops from a Nietzschean Perspective

Gadhafi, or any tyrant who violates the human rights of citizens, can be reckoned as weak rather than strong from a Nietzschean standpoint. Such an analysis could embolden (i.e. awaken) protesters around the world who remain under the subterfuge of a ruler's enforcement of his or her assumed dominance.

The full essay is at "On the Cruelty of Gadhafi's Libyan Troops."

On Nietzsche applied to business, see: On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available at Amazon. 

Labor-Management Relations: Starving Workers as a Childish Tactic

Before the industrialization in the nineteenth century, nothing "intrinsic or permanent separated those who hired from those who hired out" because "many laborers could hope to ear and saven enough to become their own employers." (1) That is to say, the employee/employer distinction was not overlaid with connotations of disparate distinctions, such as child/parent and subject/ruler. Relatedly, the two parties to the economic agreements bearing on labor in exchange for money had roughly equal bargaining power. As the United States industrialized, however, a distinct working class developed as industrial workers found their upward mobility cut off by rising start-up costs and other barriers to entry. Additionally, the advent of the monopolies (and oligopolies) swung the balance of power in contract negotiations strongly in favor of the corporations. With the added leverage came pretensions going far beyond what could be justified by the relation of labor and capital in a commercial contract. The case of the first transcontinental railroad, which was completed in 1869, demonstrates just how distended, or bloated, the pretensions on the corporate side had become.

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

Tax Avoidance at GE: On Corporate Income Taxation

In spite of $14.2 billion in global operating profit ($5.1 billion on U.S. operations) in 2010, GE paid no corporate income tax to the U.S. Treasury that year thanks to offsetting prior losses by GE Capital (i.e., bad loans).  In spite of that unit having received TARP funds from U.S. taxpayers, the corporation was able to avoid paying any income tax. This seems like Rousseau's social contract run amuck: corporate welfere in exchange for nada.  Such a modus operendi is in line with the corporate mission: to economize in the sense of maximizing (or satisficing) what is taken in while minimizing what must go out.  In other words, a corporation aims to turn itself from a productive, lean throughput to a concentration of capital in its own right.

The full essay is at "Tax Avoidance at GE."

President Obama's Role in Budget Negotiations: Undercutting His Role in Presiding

On April 5, 2011, President Obama observed, “We’re going to have some very tough negotiations. And there are going to be, I think, very sharply contrasting visions in terms of where we should move the country. That’s a legitimate debate to have.” (1) He sounded very presidential in making the statement because he was taking the perspective of the nation as a whole. Furthermore, he used that vantage-point to try to keep negotiations from falling off the track. “If they can’t sort it out,” he said, “then I want them back here tomorrow.” (2) In short, he was presiding, rather than being partisan in taking a side, as he framed the situation facing the union. 

                                             Doug Mills, The New York Times                 

However, even as the president was referring to the two sides sorting the budget out as “they,” he himself was on one of the sides. That is, even though he “sought to position himself above the nitty-gritty haggling going on in Congress, which . . . limited his influence on the process” yet distanced him from any blame, his taking a side in the dispute subtly worked against his attempt to preside to hold the process as a whole together. (3) 

The full essay is at The Essence of Leadership, which is available at Amazon in print and as an ebook.

1.   Gregory Korte, “Meeting Fails to End Impasse on Federal Budget,” USA Today, April 6, 2011, 2A.

2.  Naftali Bendavid, Jonathan Weisman, and Carol E. Lee, "Budget Talks Head to Brink,” Wall Street Journal, April 6, 2011, pp. A6.

3. Ibid.

Political Ideology in a U.S. Federal Healthcare Budget: Disentangling Redistribution, Government and Federalism

A shift in power from the U.S. Governments to those of the states is distinct from a redution in the size of government. These are distinct, albeit not disparate, unrelated, goals. Shifting power does not in itself imply or mandate a reduction in the size of government. For example, in shifting public health-care policy, an expansion of government could result if enough states develop programs further-reaching than what Congress had enacted.  Of course, as per the nature of federalism, particularly in an empire-scale instance, the resulting health-care programs would differ from republic to republic, given the innate heterogeneity that exists at such a scale.

The full essay is at "Political Ideology in a U.S. Government Budget."

Transocean Executive Compensation Bonuses Ignored the Rig Explosion of 2010

Transocean, the world’s largest off-shore oil rig company, owned the Deep Water Horizon rig that exploded in the Gulf of Mexico in April of 2010. Astonishingly, the company awarded its managers healthy bonuses. Even more astonishing, safety was a major component in the calculation of the bonuses. Even without intending to, the compensation sets up managers in a conflict of interest—their compensation motivating them to keep up the good work rather than to correct for what went wrong in the management of the Horizon rig. In other words, the bonuses give all the wrong incentives, and there has been no principled leadership to point in the other direction.

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

Government Employees and Manufacturing Jobs: Takers and Makers?

I contend that we need to expand our notion of “making” in the twenty-first century global economy. We also need to reduce our conception of “taking” when it comes to what government employees do and even in what the government does. Otherwise, even Steven Moore might be left with the unavoidable conclusion that the American corporations, even more so than the “welfare mothers,” are the “takers.”

The full essay is at "Takers and Makers."

Social Media Companies: Is Blocking Political-Protester Content a Political or Business Decision?

The question of the role of social media internet companies as protesters have used social-media platforms to communicate before and during protests exploded on the world stage in "Arab Spring" going in the Middle East in early 2011. Lest it be presumed that the companies' respective policies were relevant only in terms of what content (or users) was allowed and how that content could impact events on the ground, the policies themselves reflect the claim made by the West of what liberty means. In other words, if social media companies were (allowed to be) oppressive or otherwise not respectful of their customers, the overall message to the oppressed in the Middle East could not have been that greater freedom is indeed possible because it exists in the West. Lest our own private sector unwittingly undercut the words and efforts of the protesters, we might want to use this case to ask if we couldn’t be freer too.

The full essay is at "Social Media Companies and Political Content."

Flickering Ethics at Flickr: On the Ethics of Enforcement

The New York Times has an interesting piece on the ethics involved in providing a social media service for the public.  The article describes how “(t)wo days after using Flickr to display photos of police officers from Egypt’s feared state security force, Hossam el-Hamalawy watched in disbelief as they vanished, one by one, from the popular social networking site, which he had been using since 2008. ‘I thought I was being hacked,’ said Mr. el-Hamalawy, a prominent Egyptian blogger and human rights activist who had uploaded the headshots of the police from CDs found by activists early this month at the State Security Police headquarters in Nasr City. He later learned . . .  that the photos had been removed because he did not take the images himself, a violation of the site’s . . . rules. ‘That is totally ludicrous,’ he said. ‘Flickr is full of accounts with photos that people did not take themselves.’”

 

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