Finance

Ethics Hero: Journalist Harris Meyer

/ Jack Marshall / 18 Comments

Harris Meyer is an Ethics Hero because he won’t let a bad lesson go unchallenged.

Meyer is an award-winning  freelance journalist and a former editor at the Yakima (Wash.) Herald Republic. That was the paper that first broke the story of Gaby Rodriguez last year, which I wrote about here. With the encouragement of her high school principal, Rodriguez, a senior, embarked on some amateur social science research that involved deceiving everyone in her life except her mother, one (of seven) siblings, her boyfriend, and the principal. She pretended that she was pregnant, suing padding. She faked the pregnancy for months, finally announcing the sham in a student assembly. This extended hoax was supposedly designed to expose how pregnant teenagers are treated by their peers and others. It was, by any rational standard, a despicable thing to do—a betrayal and exploitation of her friends,  her boyfriend’s family, her siblings and teachers. Deception on such a scale must be justified, if at all, by both need and necessity. Were there other, less destructive ways to investigate the treatment of pregnant teens? Sure there were; interviews come to mind. Collecting published journals and other accounts. But Gaby’s unethical stunt was in spiritual synchronicity with a reality show-obsessed culture, where fake is entertaining and collateral damage is of no concern.  I wrote: Continue reading →

Our Incompetent Broadcast News Media: A Frustrating Morning With Soledad O’Brien

/ Jack Marshall / 11 Comments

Soledad O’Brien, paving the road to Athens

This morning, on CNN, I managed not to change the channel as I usually do when Soledad O’Brien is on the screen. It was a mistake. The long-time CNN anchor is as low as newscasting can sink short of MSNBC when it comes to smugly-biased commentary, and unlike some of MSNBC’s lefty warriors, O’Brien is just not very bright. This doesn’t keep her from visibly wincing, rolling her eyes or winking at the supposedly simpatico viewer when she thinks her opinion is superior to someone she is interviewing, as unprofessional a habit as I have ever seen. She has a job because, I suppose, she is pleasant to look at and exudes confidence, though it is confidence unsupported by any actual skill, insight or knowledge. Continue reading →

Don Cornelius, Suicide…and Ethics Hero?

/ Jack Marshall / 13 Comments

“Soul Train” creator and pop culture icon Don Cornelius took his own life at 75 yesterday, using a gunshot to the head to do it. Suicide always conjures up feelings of special sadness for the deceased, sometimes mixed with anger. The act can be cruel and devastating to family members and friends; often it leaves behind crushing problems, financial and otherwise, that the living have to deal with. Suicide is stigmatized in our culture as a coward’s way out of earthly problems; many religions consider it a sin, and many legal systems consider suicide a crime. Yet it may be that American culture will have to undergo a major cultural transformation in the matter of taking one’s own life. While morality tends to ossify, ethics is fluid and adaptable. Changing conditions and new realities can, in rare circumstances, cause societies to conclude that what was once considered right is really wrong, and what was once condemned as wrong is in society’s best interests. I think we may reach that point with suicide. Continue reading →

Freddie Mac’s Conflict of Interest and the Betrayal Of The American Homeowner

/ Jack Marshall / 7 Comments

Possible, but expensive.

Though the political implications of this disturbing story, which broke today on NPR, are wide-ranging, this isn’t a political blog.  I will avoid the temptation  to wade into them. That’s fine: the ethical implications are bad enough.

Freddie Mac, the taxpayer-owned mortgage giant, has been doing a Goldman Sachs, betting against the very homeowners it is pledged to serve by making multi-billion-dollar investments that will profit Freddie Mac only if homeowners can’t get out of  expensive mortgages with interest rates well above current rates. Of course, Freddie Mac’s job is supposedly to do the opposite…to help homeowners find cheaper, fairer mortgages. And we were told, by the Obama Administration, that this what it was working to do.

This is called a conflict of interest. And since Freddie Mac, along with its cousin Fannie Mae, is owned by U.S. taxpayers, this is also a massive breach of trust by the Federal government. Freddie and Fannie were bailed out in 2008. The companies insure most home loans in the United States, making banks able to lend at lower risk, and the companies’ rules determine whether homeowners can get refinanced and on what terms. Now we know that Freddie Mac, at least, profits when they fail.  Continue reading →

The Corruption Problem

/ Jack Marshall / 9 Comments

“Maybe, just maybe, the legislative and judicial systems have been corrupted, by, dare I say it, corporations?”

—Ethics Alarms commenter and OWS warrior Jeff Field, in his comment regarding the weekend post, The Marianne Gingrich Ethics Train Wreck

I don’t know how Jeff reaches the conclusion that the judicial system has been corrupted by corporations. Judges, unlike legislators, do not grow rich as a result of their inside knowledge and corporate connections. Judges, unlike revolving-door Congressional staffers and lawyers, do not generally come from corporate backgrounds. The fact that a judicial decision benefits the interests of some corporations, and many do not, does not mean that the decision was not just or was influenced by more than persuasive legal arguments. Those who believe that begin with the biased and untenable position that any decision that benefits a corporation must be, by definition, wrong.

So let me put that dubious assertion aside as the result of excessive reformer’s zeal and crusader’s license, and deal with the general proposition that corporations corrupt the legislative system, and society generally. Well, sure they do, but the statement is misleading, and, I would argue, meaningless because it places disproportional importance on the corrupting influence of this one, admittedly important, societal force.

Yes, corporations can be corrupting influences. So can government, and the lure of public office. The news media is a corrupting influence on the legislature, and upon society generally. Religion corrupts; as does popular culture, with its celebration of empty celebrity, glamor and wealth. Non-profits and charities are corrupted by their tunnel vision of specific worthy objectives to the neglect of others; the civil rights movement corrupts, as does feminism and all other advocacy efforts, which often, if not usually, succumb to an “ends justify the means” ethic, which is unethical. Indeed, freedom corrupts, as does dependence. Cynicism corrupts, and corrupts with a vengeance. Ignorance corrupts; so does the belief, however well-supported, that one knows it all. Ideological certitude and inflexibility corrupts.

Education, and the cost of it, corrupts. Sports, both professional and collegiate, corrupt people, students, and institutions. Science corrupts; technology corrupts. Heaven knows, the internet corrupts. Leisure and success; triumph and defeat; wealth and poverty, love and hate, desperation, patriotism; kindness, loyalty, sex, lust; intellectual superiority, beauty, physical prowess, passion. Talent corrupts. Kindness and sympathy too.

Self-righteousness. Fear. Worry. Envy. Stupidity. Zealotry.

And, as we all know, power and the love of money.

All of these and more corrupt human beings and the institutions, organizations and governments that they make up. If individuals are corruptible, something will corrupt them, as sure as the sun rises and the quinces ripen. To focus upon any one of the limitless and abundant sources of corruption and to say, “This, above all, is the cause of our problems” is naive and unfair. By all means, we must seek ways to limit the opportunities for corruption and the damage it can do, but we must also recognize that the ability to corrupt does not mean that something or someone does not or cannot contribute much good to society as well. Heroes can corrupt, as we saw in the tragedy of Joe Paterno, but we need heroes. Leaders can corrupt, and often do, but we still need leaders.

Ultimately,  the best way to stop people and things from corrupting us is to understand what corruption is and how easy it is to be corrupted. Our inoculation is ethics, understanding right and wrong and how to recognize both, and learning to recognize when we are biased, conflicted, or being guided by non-ethical or unethical motivations. Shifting the blame for corruption away from ourselves is comforting, but intimately counter-productive. We have the power to resist corruption, just as it is within out power to select public servants who are not likely to be corrupted. It is our responsibility to do so.

 

Dear Banks: This Is Why Nobody Trusts You

/ Jack Marshall / 35 Comments

I know I’ve been hard on the Occupy movement, but I don’t want to let the protesters think that I’m pals with all of their targets. Take the banks, for example.

The “waiting for the check to clear” scam engaged in by banks has always been annoying, but I now realize, thanks to bitter personal experience, that we have been fools to tolerate it. Once upon a time, before electronic transfers and computers, it really did take a check at least “five business days” to go from one bank to another, but the banks have held on to the fiction that nothing has changed, presumably to give them free use of our money while we patiently wait for the completion of transactions that have already been completed. Running a small business with perpetual cash-flow problems, the Marshalls constantly hectored our bank (then Wachovia, which bought it from American Security Trust, and there may have been another one in there somewhere) about speeding up the process, and in fact they did: our checks from clients often had money available to us within a day or two. That’s right—the bank let us use our own money while telling less long-standing, savvy, or persistent customers that the checks they deposited were taking almost a week to clear. Continue reading →

Comment of the Day: “The Priorities of U.S. Higher Education Defy Understanding”

/ Jack Marshall / 23 Comments

When the topic on Ethics Alarms is education, Michael frequently scores a Comment of the Day, and he did it again following the post on the University of Maryland spending a fortune on its president’s residence. Here is his effort to help us understand the conduct discussed in The Priorities of U.S. Higher Education Defy Understanding. And I’ll have a closing comment at the end.

“I have asked these questions about what is driving up college costs. Here is what I have found: Continue reading →

Economists Start Getting Serious About Ethics

/ Jack Marshall / 1 Comment

Charles Fergusen’s documentary about the 2008 financial collapse, “Inside Job”, chronicled the maze of deceit, conflicts of interest, greed, recklessness and self-serving maneuvers across multiple professions and sectors of the economy that led to the meltdown. Among the professions that were implicated in the account was that of economists, who in many cases advised Congress and others regarding economic policies without disclosing their own ties to special interests and various players in the drama. The debacle was a severe blow to the credibility of economists as a group and economics as a discipline. Many have since called for the profession to put in place conflicts of interest rules to guide practitioners and to build public trust.

For my part, I was surprised to learn that there was not such a code already in place. As a lawyer, I am  spoiled—the legal profession, as with judges, doctors, researchers, psychiatrists, accountants, legislators and government workers, has recognized the need for formal ethics guidelines for a very long time. The number of fields without ethics codes continues to amaze me, although one of those professions is…ethics.

Economics, however, is making strides. At its annual meeting in Chicago last week, the American Economic Association  issued  principles for disclosure of potential conflicts of interest and conflicts related to published academic papers. Here they are: Continue reading →

A Frightening Figure, Setting Off Ethics Alarms

/ Jack Marshall / 10 Comments

We don't even know how to play Russian Roulette responsibly.

On Friday, the day before Christmas Eve when much of America was thinking about sugar plums,  lay-away plans, and protesting Christmas pageants, the Federal Accounting Office released its analysis of  the net present value of the nation’s Social Security and Medicare obligations, “net present value” being  the total funds that would have to be set aside today to pay the costs of these programs in the future. Seldom do figures so clearly indict the unethical practices and statements of so many.

In fiscal 2011, the cost of the catching up on the required funding of Medicare and Social Security rose from $30.9 trillion to $33.8 trillion. That $2.9 trillion increase should be regarded as adding to the $1.3 trillion cash deficit for fiscal 2011, making a $4.2 trillion deficit—and this coming in a year in which the rising national debt was supposedly recognized, at last, as a threat to America’s stability, prosperity, and welfare. The costs of Social Security and Medicare are rising at a frightening rate, nearly doubling in the last decade, with little or nothing being done to address the problem. And there is good reason to believe that the Medicare estimates are based on unrealistic assumptions. The GAO report also includes an alternate, less rosy scenario (or perhaps “more putrid” is a better phrase) in which the projected Social Security-Medicare debt is more than $46 trillion. How serious is that? Well, the combined value of the equity in U.S. homes and the value of all publicly-traded companies is less than 20 trillion dollars.

What do these figures tell us about the ethics of the various players on the national scene? Continue reading →

Punishing Corrupt Companies Without Punishing the People Who Make Them Corrupt

/ Jack Marshall / 4 Comments

By all means, fine corrupt companies, but we need a new dress code for their management.

From The National Law Journal, December 8:

“The Justice Department has announced that Wachovia Bank N.A., now known as Wells Fargo Bank N.A., will pay $148 million to federal and state agencies after admitting to anti-competitive activity in the municipal bond investments market.”

I understand why the Justice Department, the SEC and other federal agencies fine companies huge amounts for what is essentially criminal conduct, choosing negotiated settlements rather than engaging in time-consuming trials that would cost taxpayers money and risk failing for reasons ranging from investigator error to skillful defense strategy. Nevertheless, the policy encourages rather than discourages unethical conduct by corporate decision-makers. It  does nothing to improve a culture that tends to define a bad business practice as a gamble that doesn’t work, or a scheme that gets discovered. Continue reading →