I agree with Professor Silver’s view that Microsoft should not be involved in social issues unless the benefit is for the company. There were two interesting points that Professor Sliver made in this case:
1. It is the duty of citizens to organize themselves to protect values.
2. The interests of those shareholders and other stakeholders who disagree with Microsoft’s position must be considered.
To elaborate on the first point, I agree that the citizens of Washington State should rally behind legislation they believe in to ensure that it is passed. We cannot always rely on the corporation to do everything for us. There are many times when the corporations’ interests are held above our own. Why would we want to give them more power? I commend Microsoft for making a stand on an important topic like gay rights but I do not believe it is their place to get involved in the legislative process.
The second point regarding the shareholders is something to be considered. Maybe the stockholders do not agree with this policy and would prefer money not spent towards this legislation. This case is against Friedman’s view of stockholder theory. He would not approve of this measure because it does not provide a financial benefit for the company.
Thursday, May 15, 2008
Microsoft's Wavering Stance
Regarding the article mentioning Microsoft’s corporate and social responsibilities, I believe their first mistake was not remaining neutral on the idea of publicly announcing their support of gay civil rights. Whatever Microsoft’s stance on this issue may be, it did not need to be made public and in the manner that transgressed. It is one thing to support a policy but it is very different to openly publicize a company’s stance. Additionally, the company should not only remain neutral on this subject, they need to maintain a consistent stance. Its apparent that Microsoft first supported the bill, then stepped back, and then was all for it again – all this flip flopping does is frustrate employees, civilians, shareholders, etc. and provide an unstable picture of what Microsoft is all about.
Microsoft addressed the concern about not receiving the best recruits if the company did not support this legislation. That may be true, however; there is also the possibility of Microsoft not receiving the best recruits if they do support this law. While I agree with non-discrimination acts, I believe Microsoft’s reasoning is faulty and insubstantial.
I also think the author makes a very important point about how individual citizens should have the responsibility to decide the social policies, not corporations. While I realize businesses have a lot of influence in this country, there needs to be boundaries drawn as to how much power corporations have. Democracy involves social issues and individuals should have the right to vote on this type of legislation, not corporations on their behalf.
Unfortunately, this social issue is a topic that is extremely controversial and regardless of the action that companies take, people will be against the overall decision – it cannot please everyone.
Microsoft addressed the concern about not receiving the best recruits if the company did not support this legislation. That may be true, however; there is also the possibility of Microsoft not receiving the best recruits if they do support this law. While I agree with non-discrimination acts, I believe Microsoft’s reasoning is faulty and insubstantial.
I also think the author makes a very important point about how individual citizens should have the responsibility to decide the social policies, not corporations. While I realize businesses have a lot of influence in this country, there needs to be boundaries drawn as to how much power corporations have. Democracy involves social issues and individuals should have the right to vote on this type of legislation, not corporations on their behalf.
Unfortunately, this social issue is a topic that is extremely controversial and regardless of the action that companies take, people will be against the overall decision – it cannot please everyone.
Tuesday, May 13, 2008
House Bill 1515
Microsoft's stand in this case seems unclear to me. Well it is clear that they are pro-gay it is not clear what the business angle to it is. Assuming that there was no business oriented motive to it it is even more vague as to why they backed out of the legislation.
The threat of a Pastor of a church could not have been the only reason for their withdrawal. Cause it is hard to imagine that a company whose software literally rides every PC save the niche market PC's like MAC and the occasional Linux would back down because it felt threatened!
Although i see value in the point that the write up raises about companies not getting involved in common legislation that we as a community should unite to make real, it contradicts with some other systems that we practice as a society. In the days of CSR, corporate governance is a major proponent of several social policies like the movement against apartheid. It was the involvement of corporations that help end the practice. That being the case, why can't corporations take the natural step ahead and voice their stand in the issue legally? How different is that from discrimination on the basis of sexuality?
The threat of a Pastor of a church could not have been the only reason for their withdrawal. Cause it is hard to imagine that a company whose software literally rides every PC save the niche market PC's like MAC and the occasional Linux would back down because it felt threatened!
Although i see value in the point that the write up raises about companies not getting involved in common legislation that we as a community should unite to make real, it contradicts with some other systems that we practice as a society. In the days of CSR, corporate governance is a major proponent of several social policies like the movement against apartheid. It was the involvement of corporations that help end the practice. That being the case, why can't corporations take the natural step ahead and voice their stand in the issue legally? How different is that from discrimination on the basis of sexuality?
Microsoft Errs
The error was done before the minister's threat. This is a public legislative bill that has nothing to do with employment, work practices, or MS profits. They were right to pull out their support but unfortunately it came as a consequence of having crossed over their responsibility. This will set up most companies to back out too if the legislative bill is unrelated to the workforce, performance and profitability. If this were something that is a threat to its workforce, then there is reason for involvement.
Research does not support that gays and lesbians have a choice. This is who they are. To live otherwise is to live a life masqueraded. I have known plenty of folks within the gay community, some of them close friends, and know through them that, if it weren’t for their hormones or other chemical attractors, they would gladly be heterosexual. It just is. I think the data on gays is more like 6-9% of the population.
MS's benefit policy for partners is a loud enough statement as is other corporations who provide partnership benefits. So is their company policy that discourages discrimination or prejudice. This is the area where they are most responsible.
Another tactic that MS can take and other companies who seek to impact public perception is to use their CSR grants to provide funding to groups that protect civil rights or to help provide education and information that wards against unfair stereotyping or other forms of discrimination.
Research does not support that gays and lesbians have a choice. This is who they are. To live otherwise is to live a life masqueraded. I have known plenty of folks within the gay community, some of them close friends, and know through them that, if it weren’t for their hormones or other chemical attractors, they would gladly be heterosexual. It just is. I think the data on gays is more like 6-9% of the population.
MS's benefit policy for partners is a loud enough statement as is other corporations who provide partnership benefits. So is their company policy that discourages discrimination or prejudice. This is the area where they are most responsible.
Another tactic that MS can take and other companies who seek to impact public perception is to use their CSR grants to provide funding to groups that protect civil rights or to help provide education and information that wards against unfair stereotyping or other forms of discrimination.
Should Corporations be involved in social issues & policies?
I really think Microsoft and all corporations should stay away from all social issues unless there are no other options. I think Microsoft will be better off not taking a stand on this issue from the start and maintain a neutral position on the bill. Furthermore, I do not think that recruiting will be affected by not taking a side against or in favor of Gay rights.
I do believe everyone should have equal rights, especially when it comes to issues related to essential rights such as housing and education. But, corporation should not make decisions people make decisions. Corporations are generally more powerful than individuals when it comes to politics and policy-making and by interfering; they are only taking power from the people and the democratic process. The people with equal votes should make these moral and social decisions.
Microsoft’s shifting stand on this issue has only created controversy and distrust. Now, Microsoft’s employees will never know if their employer is supporting or is against the issue. More importantly, by shifting sides, customers that support or do not support gay right will be aggravated by the fact that Microsoft once was against their beliefs.
I do believe everyone should have equal rights, especially when it comes to issues related to essential rights such as housing and education. But, corporation should not make decisions people make decisions. Corporations are generally more powerful than individuals when it comes to politics and policy-making and by interfering; they are only taking power from the people and the democratic process. The people with equal votes should make these moral and social decisions.
Microsoft’s shifting stand on this issue has only created controversy and distrust. Now, Microsoft’s employees will never know if their employer is supporting or is against the issue. More importantly, by shifting sides, customers that support or do not support gay right will be aggravated by the fact that Microsoft once was against their beliefs.
Microsoft
My view of the Microsoft article is that the company handled the situation in the best way possible given the circumstances. Had the Microsoft representatives who attended the church not been threatened by the pastor, I believe they would have stood their ground, as did the many other prestigious companies listed in this article and who supported this legislation on a national level.
I think there is something wrong (I'm not certain if I would say ethically, but certainly morally) when a pastor threatens a major corporation into changing its views on a political subject, simply because his or her views of gay people are different than for heterosexuals. Many of us believe in freedom of religion, but does it give us the right to condemn other people because they do not believe in or practice their faith in the same way as I do?
From a moral perspective, I have never fully understood gay or lesbianism, therefore I do not have the power nor desire to condone or condemn it. Whether or not individuals believe it to be a form of discrimination, I would have to challenge that.
People who are regularly discriminated against, on the basis of age, race, gender, physical or mental condition, etc, normally don't have a choice in who they are and how they became who they are. However, I would argue that gay and lesbian individuals have a choice. So I have never considered the behavior of individuals who fit into this category as people who should be considered under the laws of discrimination.
I believe that if I were the head of a company like Microsoft, I would also be somewhat apprehensive and not fully embracing this legislation as quickly as I would on the national level , after all, it is much easier to embrace something when you are not a member of every community (nationally), it's a different story when the place is your headquarters. I think Microsoft demonstrated excellent judgement when it sided more for the care and concern of its employees. Milton Friedman would be so proud.
After all, Microsoft has demonstrated that it is fully aware of the role of one of its major stakeholders. For without the employees, Microsoft would not be Microsoft and other stakeholders and shareholders wouldn't exist.
However, the members of Microsoft are always free to choose a new church.
I think there is something wrong (I'm not certain if I would say ethically, but certainly morally) when a pastor threatens a major corporation into changing its views on a political subject, simply because his or her views of gay people are different than for heterosexuals. Many of us believe in freedom of religion, but does it give us the right to condemn other people because they do not believe in or practice their faith in the same way as I do?
From a moral perspective, I have never fully understood gay or lesbianism, therefore I do not have the power nor desire to condone or condemn it. Whether or not individuals believe it to be a form of discrimination, I would have to challenge that.
People who are regularly discriminated against, on the basis of age, race, gender, physical or mental condition, etc, normally don't have a choice in who they are and how they became who they are. However, I would argue that gay and lesbian individuals have a choice. So I have never considered the behavior of individuals who fit into this category as people who should be considered under the laws of discrimination.
I believe that if I were the head of a company like Microsoft, I would also be somewhat apprehensive and not fully embracing this legislation as quickly as I would on the national level , after all, it is much easier to embrace something when you are not a member of every community (nationally), it's a different story when the place is your headquarters. I think Microsoft demonstrated excellent judgement when it sided more for the care and concern of its employees. Milton Friedman would be so proud.
After all, Microsoft has demonstrated that it is fully aware of the role of one of its major stakeholders. For without the employees, Microsoft would not be Microsoft and other stakeholders and shareholders wouldn't exist.
However, the members of Microsoft are always free to choose a new church.
Stupid Microsoft
My stance is that Microsoft should never have been involved in this type of politics to begin with– if they stayed out of it, no one on either side of the issue would have complained.
But they got involved, and some claim that they took the wrong side by staying neutral??? If staying neutral isn’t safe…look out Switzerland!
Why did Microsoft let one lone pastor at a church threaten them and bully them into changing from their Pro stance? Maybe they saw it like this:
1.51% of the population is gay, lesbian, bi, or transgender. 76.5% of the population is Christian. The math seems pretty clear to me. If there were a group to appeal to, it would be the Christians. This vote took place right after President Bush was re-elected in 2004 where it was understood that the Right Religious Groups voted heavily and unified together. If they were to stage a national boycott against Microsoft it would definitely hurt the company and as we know, their obligation is to make money for their stakeholders.
Let’s look at another case: Boy Scouts of America (BSOA). In 2004, the Boy Scouts made a policy (upheld by the Supreme Court) that Gays were not allowed to be troop leaders. There was an intense outcry charging that the decision was an example of bigotry and protests all over the country ensued. Again, this is during the same time period as the Microsoft case. The total membership for BSOA in 2003 (before the new policy) was 997,398. In 2006 (after the new policy) the membership had quadrupled to 3,998,914. Clearly being labeled as “anti-gay” may not be that bad for business.
But they got involved, and some claim that they took the wrong side by staying neutral??? If staying neutral isn’t safe…look out Switzerland!
Why did Microsoft let one lone pastor at a church threaten them and bully them into changing from their Pro stance? Maybe they saw it like this:
1.51% of the population is gay, lesbian, bi, or transgender. 76.5% of the population is Christian. The math seems pretty clear to me. If there were a group to appeal to, it would be the Christians. This vote took place right after President Bush was re-elected in 2004 where it was understood that the Right Religious Groups voted heavily and unified together. If they were to stage a national boycott against Microsoft it would definitely hurt the company and as we know, their obligation is to make money for their stakeholders.
Let’s look at another case: Boy Scouts of America (BSOA). In 2004, the Boy Scouts made a policy (upheld by the Supreme Court) that Gays were not allowed to be troop leaders. There was an intense outcry charging that the decision was an example of bigotry and protests all over the country ensued. Again, this is during the same time period as the Microsoft case. The total membership for BSOA in 2003 (before the new policy) was 997,398. In 2006 (after the new policy) the membership had quadrupled to 3,998,914. Clearly being labeled as “anti-gay” may not be that bad for business.
Microsoft and gay civil rights
The issue that happened in Microsoft makes me think about how to apply the stakeholder theory and how to reconsider Milton Friedman’s argument about business.
In this case, Microsoft tried to consider the effects of its employee policy at different levels, from different people’s angles. This is a good application of stakeholder theory. However, when satisfying every stakeholder is not possible, (like in this case), Microsoft has to draw a bottom line about priority of stakeholder and not to harm anyone. Microsoft’s stand about gay’s right is a great support and respect for employee diversity, in my understanding. It prioritized what should be considered first (the diversity respect)), and I don’t think their policy would harm anyone.
In Milton Friedman’s view, the social responsibility of business is to increase its profits, which seems to catch the situation here. Some people would argue, why Microsoft bothers to announce the policy about gay rights? Is it their business at all? At first glance, it does seem quite “obvious” that there is no need of Microsoft to get involved in this hot-debated social issue. However, I think the point that Microsoft makes and the attitude it holds from the policy suggests its moral standards, makes it distinguished from other companies. I think it sets a good example for others about respect people as means but not as ends.
Monday, May 12, 2008
Microsoft and CSR
Microsoft was rather indecisive in their stand on “outlawing many forms of discrimination against gays.” Initially, Microsoft was supportive of the legislation in the State of Washington. Then, based upon a local pastor’s influence and threats of boycotting, Microsoft was swayed to relinquish support of the gay rights legislation. Finally, Microsoft decided that supporting “diversity in the workplace” would include backing legislation that would “take a stand on social issues.” If I were employed by Microsoft in Washington, I would be utterly confused and concerned by the company’s wishy-washy attitude. For a company that prided itself on being “gay-friendly” and was not tolerant of employment discrimination, how could a few people derail the company’s legislative agenda? Who was Microsoft acting on behalf of the shareholders, the community, the local pastor, the consumers or the Board of Directors?
If Microsoft wants to be known in the business world for it’s corporate social responsibility, then it should have stood by the initial decision to endorse the legislation. This would have demonstrated that the company’s interest in advocating for the social interest of company employees. Understanding that many other technology and financial corporations supported the stakeholder’s social expectations, it may have negatively affected how consumers and other businesses viewed Microsoft by changing their stand.
If Microsoft wants to be known in the business world for it’s corporate social responsibility, then it should have stood by the initial decision to endorse the legislation. This would have demonstrated that the company’s interest in advocating for the social interest of company employees. Understanding that many other technology and financial corporations supported the stakeholder’s social expectations, it may have negatively affected how consumers and other businesses viewed Microsoft by changing their stand.
Blood Bananas
Sunday evening’s 60 Minutes provided an interesting example of business ethics. It seems that Chiquita has banana growing operations in Columbia. Columbia has struggled with civil war and terrorism in the last couple of decades. Chiquita responded by paying protection money to whomever was in power in the region they had their operations (first the leftists then the rightists). Apparently these terrorists were quite brutal; several incidents were described including the murder of children in plain sight during the daytime as intimidation.
Chiquita defended its decision to pay the protection. Not only was their operation profitable, but they felt like they were making the payments for their employee’s protection. They employed upwards of 3,500 people in the region in question. Without Chiquita’s support, they felt like the employees would be at risk for exploitation. A counter view of the situation might accuse Chiquita of actually financing the terrorists. Chiquita responds by saying they were the victim, not the perpetrator of the violence.
In 2001 the US gov’t labeled the rightist groups as terrorists. This meant that any payments made to them were illegal under US law. Chiquita continued to make the payments for another 2 years because they said they didn’t know the terrorists had been labeled as such.
Ultimately Chiquita had a management change, sold their Columbian operations, and self reported their transgressions to the gov’t. The company pled guilty to a felony and paid a $20MM fine. (I wonder if they still buy Columbian bananas under contract). Many of the rebel terrorists have now disbanded and the central government has reestablished control in the region where Chiquita had its operations.
I acknowledge Chiquita’s coming clean of their crimes, but what took so long? What is a company’s responsibility when its main raw material is tainted (blood bananas like blood diamonds)? I think Chiquita could have done more and they seem to agree (somewhat) which I acknowledge. It seems like Chiquita is using a Utilitarian argument to defend their actions. We've seen the problems with Utilitarianism (although it can work for some things) and in this case a more Kantian approach is needed.
Chiquita defended its decision to pay the protection. Not only was their operation profitable, but they felt like they were making the payments for their employee’s protection. They employed upwards of 3,500 people in the region in question. Without Chiquita’s support, they felt like the employees would be at risk for exploitation. A counter view of the situation might accuse Chiquita of actually financing the terrorists. Chiquita responds by saying they were the victim, not the perpetrator of the violence.
In 2001 the US gov’t labeled the rightist groups as terrorists. This meant that any payments made to them were illegal under US law. Chiquita continued to make the payments for another 2 years because they said they didn’t know the terrorists had been labeled as such.
Ultimately Chiquita had a management change, sold their Columbian operations, and self reported their transgressions to the gov’t. The company pled guilty to a felony and paid a $20MM fine. (I wonder if they still buy Columbian bananas under contract). Many of the rebel terrorists have now disbanded and the central government has reestablished control in the region where Chiquita had its operations.
I acknowledge Chiquita’s coming clean of their crimes, but what took so long? What is a company’s responsibility when its main raw material is tainted (blood bananas like blood diamonds)? I think Chiquita could have done more and they seem to agree (somewhat) which I acknowledge. It seems like Chiquita is using a Utilitarian argument to defend their actions. We've seen the problems with Utilitarianism (although it can work for some things) and in this case a more Kantian approach is needed.
Sunday, May 11, 2008
Pharmaceutical sales ethics
When it comes to pharmaceutical sales ethics, the pendulum has swung between very lax and very strict over the years. For many years, the pharmaceutical companies have been accused of using its sales force to ‘bribe’the doctors to prescribe their drugs. Its been said that with the latest ethics and compliance programs, pharmaceutical sales reps are once again working in a stricter ethical environment. Or are they? There's been plenty of publicity about how sales reps are toeing the ethical line with respect to accessing physicians and promoting pharmaceuticals, but still there are claims that some companies are evading the guidelines with an eye to securing profits.
In recent years, it isn’t uncommon to see doctors being treated to many sorts of royal treatment. The belief among the sales force reps being that without being able to offer prime seats to a baseball game or some other gift or perk, getting a physician's ear can be difficult. Many of the tactics used to lure physicians into prescribing medications are coming under fire. Incentives ranging from pricey vacations, front row ballpark tickets to outright financial rewards are increasingly viewed as unethical.
I have been interning with a pharmaceutical company and the message our company is sending to its reps can be viewed as very ethical. The sales reps are asked to put new emphasis on relationship building. One way in which some sales reps are working to create and strengthen ties with doctors is by positioning themselves as educational resources. The pharmaceutical companies used to invite physicians to attend lectures, which were followed by some special event such as a ball game or golf outing. But now, these dinner meetings feature a modest meal and a lecture by a guest speaker. While many pharmaceutical companies appear to be making adjustments to follow the new ethics, it is still believed that some are skirting the issue with secret strategies such as off-label marketing, the marketing of drugs for purposes other than those approved by the FDA.
The rep is not supposed to go out there and tell a doctor to use a drug for off-label purposes. The doctor is supposed to make the initial inquiry, but it doesn't always happen that way. Drug companies may be cutting back on the actual overt payments and golf trips, but reps are paying doctors to prescribe drugs for off-label purposes just to boost sales and with no proof of the drug's efficacy for that off-label purpose. Big names such as Pfizer, Merck and Astra Zeneca have recently been warned by FDA for off-label usage on their blockbuster drugs.
But with FDA approval process taking longer and getting tougher, companies are trying to find ways for doctors to prescribe more. In this situation, is it really possible to follow the ethical routes or will pharma companies continues to bribe doctors and use avenues of off-label usage to meet its bottom line?
In recent years, it isn’t uncommon to see doctors being treated to many sorts of royal treatment. The belief among the sales force reps being that without being able to offer prime seats to a baseball game or some other gift or perk, getting a physician's ear can be difficult. Many of the tactics used to lure physicians into prescribing medications are coming under fire. Incentives ranging from pricey vacations, front row ballpark tickets to outright financial rewards are increasingly viewed as unethical.
I have been interning with a pharmaceutical company and the message our company is sending to its reps can be viewed as very ethical. The sales reps are asked to put new emphasis on relationship building. One way in which some sales reps are working to create and strengthen ties with doctors is by positioning themselves as educational resources. The pharmaceutical companies used to invite physicians to attend lectures, which were followed by some special event such as a ball game or golf outing. But now, these dinner meetings feature a modest meal and a lecture by a guest speaker. While many pharmaceutical companies appear to be making adjustments to follow the new ethics, it is still believed that some are skirting the issue with secret strategies such as off-label marketing, the marketing of drugs for purposes other than those approved by the FDA.
The rep is not supposed to go out there and tell a doctor to use a drug for off-label purposes. The doctor is supposed to make the initial inquiry, but it doesn't always happen that way. Drug companies may be cutting back on the actual overt payments and golf trips, but reps are paying doctors to prescribe drugs for off-label purposes just to boost sales and with no proof of the drug's efficacy for that off-label purpose. Big names such as Pfizer, Merck and Astra Zeneca have recently been warned by FDA for off-label usage on their blockbuster drugs.
But with FDA approval process taking longer and getting tougher, companies are trying to find ways for doctors to prescribe more. In this situation, is it really possible to follow the ethical routes or will pharma companies continues to bribe doctors and use avenues of off-label usage to meet its bottom line?
Saturday, May 10, 2008
Is Your Kid Covered?
http://www.businessweek.com/magazine/content/08_20/b4084041498815.htm?chan=top+news_top+news+index_top+story
In fall 2006, Ralph Giunta Sr. decided to buy his son Ralph Jr. a practical birthday gift: health insurance. The Lake Worth (Fla.) school recommended a policy provided by MEGA Life and Health Insurance, whose student business was acquired in late 2006 by giant UnitedHealthcare. Giunta wrote a check for $1,044 for one year. "They assured me he was well covered," he says.
Ralph Giunta Jr. knew something was wrong in March, 2007, when the photography major and avid skateboarder felt pain in his legs and feet. Then 19, he lost all feeling in his lower extremities and was rushed to the hospital. The diagnosis: Guillain-Barré's syndrome, a rare disease of the nervous system that typically causes temporary paralysis. His father's anxiety was compounded upon learning more about the insurance he had purchased. Even with "major medical" coverage, the plan reimbursed only $22,800 of the $206,325 bill for 19 days of intensive care.
Six out of 10 colleges and universities now recommend specific health insurance plans for their students, and three of 10 require them. But as the Giuntas discovered, many of the policies turn out to be scanty at best, and inferior to comparably priced alternatives.
Schools often arrange for a standard student plan, and some even bill for it automatically unless students or their families opt out. But the administrators negotiating multimillion-dollar insurance packages frequently aren't sophisticated or diligent enough to obtain the best deals in the marketplace, says Mark Rukavina, executive director of the Access Project.
IN WHOSE INTEREST?
In some cases, universities have comfortable relationships with carriers that reimburse the schools a small percentage of student premiums to cover administrative expenses. This raises questions about whether schools ought to serve as what amounts to a broker. I think it is OK for university to take small percentage of student premiums. The point is if the university really try their best to get the best deal for its students? If university gives up students’ interest to get the reimbursement, the university’s action is unethical.
In fall 2006, Ralph Giunta Sr. decided to buy his son Ralph Jr. a practical birthday gift: health insurance. The Lake Worth (Fla.) school recommended a policy provided by MEGA Life and Health Insurance, whose student business was acquired in late 2006 by giant UnitedHealthcare. Giunta wrote a check for $1,044 for one year. "They assured me he was well covered," he says.
Ralph Giunta Jr. knew something was wrong in March, 2007, when the photography major and avid skateboarder felt pain in his legs and feet. Then 19, he lost all feeling in his lower extremities and was rushed to the hospital. The diagnosis: Guillain-Barré's syndrome, a rare disease of the nervous system that typically causes temporary paralysis. His father's anxiety was compounded upon learning more about the insurance he had purchased. Even with "major medical" coverage, the plan reimbursed only $22,800 of the $206,325 bill for 19 days of intensive care.
Six out of 10 colleges and universities now recommend specific health insurance plans for their students, and three of 10 require them. But as the Giuntas discovered, many of the policies turn out to be scanty at best, and inferior to comparably priced alternatives.
Schools often arrange for a standard student plan, and some even bill for it automatically unless students or their families opt out. But the administrators negotiating multimillion-dollar insurance packages frequently aren't sophisticated or diligent enough to obtain the best deals in the marketplace, says Mark Rukavina, executive director of the Access Project.
IN WHOSE INTEREST?
In some cases, universities have comfortable relationships with carriers that reimburse the schools a small percentage of student premiums to cover administrative expenses. This raises questions about whether schools ought to serve as what amounts to a broker. I think it is OK for university to take small percentage of student premiums. The point is if the university really try their best to get the best deal for its students? If university gives up students’ interest to get the reimbursement, the university’s action is unethical.
An Ethical Drug Plan?
Medicare Part D brought about numerous changes within the pharmaceutical industry. The members of the previous Medicare plans were told to choose from literally thousands of Part D plans in a short period of time in order to have any sort of drug coverage. It resulted in a lot of members enrolling in plans which may not have been best suited to their needs and basically created total chaos. Even after few years in running, the members are still trying to understand the plan details and its so-called advantages over the previous Medicare plan.
I would agree with the professor that advantages clearly lie with the pharmaceutical companies rather than the enrollees of the Part D plans. These companies clearly gain from not having to offer best/lowest government prices to Part D plans anymore. Historically, the pharmaceutical industry has always been one of the top performing sectors and this only adds to the higher profit margins. These companies also gain as they no longer have to reserve for additional rebates, charge backs that used to be generated from charges submitted by older Medicare plans (decrease in % reserve would add to the bottom line). One could argue that these profit margins are needed to invest more in R&D to create better drugs. Additionally, with many of the blockbusters drugs recently or ready to go generic, the companies need these advantages to offset the losses. But with the pharmaceutical companies already charging premium pricing for their drugs, is this necessary? Aren’t the annual price (and sometimes two or three) increases of 5-10% enough?
It also seems unjustified that the members of these plans are banned from buying cheaper drugs from foreign countries even when they are in the ‘donut hole.’ These members, mostly retired Americans, depend on their retired income and social security to survive and these bans put further financial pressure on them in midst of rising cost of living. But then again, in support of the pharmaceuticals, one could argue that American pharmaceutical companies guarantee top level products as they have passed tough FDA standards where as the imports don’t carry any known standards; you could simply be buying a placebo.
It seems like the Part D plan is here to stay although there may be changes made after the presidential election later this year. In the mean time, it is only fair that the members are clearly explained the pros and cons of each plan so that they are better able to choose a plan which may cover specific drugs that they are prescribed to. Till this is done, it is hard not to classify these plans as unethical?
I would agree with the professor that advantages clearly lie with the pharmaceutical companies rather than the enrollees of the Part D plans. These companies clearly gain from not having to offer best/lowest government prices to Part D plans anymore. Historically, the pharmaceutical industry has always been one of the top performing sectors and this only adds to the higher profit margins. These companies also gain as they no longer have to reserve for additional rebates, charge backs that used to be generated from charges submitted by older Medicare plans (decrease in % reserve would add to the bottom line). One could argue that these profit margins are needed to invest more in R&D to create better drugs. Additionally, with many of the blockbusters drugs recently or ready to go generic, the companies need these advantages to offset the losses. But with the pharmaceutical companies already charging premium pricing for their drugs, is this necessary? Aren’t the annual price (and sometimes two or three) increases of 5-10% enough?
It also seems unjustified that the members of these plans are banned from buying cheaper drugs from foreign countries even when they are in the ‘donut hole.’ These members, mostly retired Americans, depend on their retired income and social security to survive and these bans put further financial pressure on them in midst of rising cost of living. But then again, in support of the pharmaceuticals, one could argue that American pharmaceutical companies guarantee top level products as they have passed tough FDA standards where as the imports don’t carry any known standards; you could simply be buying a placebo.
It seems like the Part D plan is here to stay although there may be changes made after the presidential election later this year. In the mean time, it is only fair that the members are clearly explained the pros and cons of each plan so that they are better able to choose a plan which may cover specific drugs that they are prescribed to. Till this is done, it is hard not to classify these plans as unethical?
Wednesday, May 7, 2008
Due Diligence of U.S Based Companies
Author T.A. Frank’s, Confession’s of a Sweatshop Inspector, sheds light on a subject thus far I have been relatively unfamiliar with. The idea that United States based corporations, which outsource international suppliers, should be more accountable and involved with the problems that sweatshops face, I believe is vital to creating awareness and promoting positive ethical business relationships. Of course I have an aversion to the very concept and reality of sweatshops, but like most consumers, I do not research company’s suppliers when I go to make a purchase at Wal-mart or buy a pair of Nike running shoes. American’s just do not have time; I believe American based businesses need to make conscious efforts to act on behalf of their customers and manage their companies in a way which takes into account what is best for society. For example, I agree with Frank’s statement of the importance of researching ethically operating suppliers and publicly recognizing them on their websites.
The U.S. based corporations cannot directly control sweatshops but they can set a good example by not engaging in business with suppliers that act unethically with regard to their employees and their well-being. Companies should only be contracting with suppliers that provide adequate working conditions and proper labor standards. This in turn will force suppliers to adhere to specific standards if they want a share of the business.
Companies have numerous options for outsourcing, including cheap labor. There is not a need to go after the cheapest labor possible – those sweatshops that provide horrific and almost unbearable working conditions. The United States needs to set standards and do due diligence when selecting suppliers. It is obvious that we cannot control globalization, but companies can make genuine efforts to promote the importance of ethical business practices by not engaging with sweatshops.
The U.S. based corporations cannot directly control sweatshops but they can set a good example by not engaging in business with suppliers that act unethically with regard to their employees and their well-being. Companies should only be contracting with suppliers that provide adequate working conditions and proper labor standards. This in turn will force suppliers to adhere to specific standards if they want a share of the business.
Companies have numerous options for outsourcing, including cheap labor. There is not a need to go after the cheapest labor possible – those sweatshops that provide horrific and almost unbearable working conditions. The United States needs to set standards and do due diligence when selecting suppliers. It is obvious that we cannot control globalization, but companies can make genuine efforts to promote the importance of ethical business practices by not engaging with sweatshops.
Tuesday, May 6, 2008
Governor’s Daughter Awarded MBA Degree Without Actually Having Done the Work
//Please see link to article below//
The Governor of West Virginia’s daughter has been awarded an Executive MBA from the University of West Virginia without having actually completing the course work. A university panel met in October where it was decided to add courses and grades to Heather Bresch's transcript, then retroactively award her a 1998 executive MBA degree.
In the wake of the scandal, the West Virginia Faculty Senate has called for the University’s President (Mike Garrison) to resign so that the University could move on to the healing process by putting the problems that the scandal has caused behind them. President Garrison refuses to resign saying that he played no role in awarding the MBA.
Whether the President played a role in the degree being awarded or not isn’t the issue to me. To me the issue is that anybody be awarded a degree without it being properly earned. It makes me wonder just how many academic degree’s are out there that have been given as gifts of favor due to elitist relationships. It illustrates concerns relating to Rawls regarding everybody getting a fair opportunity.
This situation is not unique. This value-chain of elitism helps to perpetuate many of the scandals that we have been dealing with all semester. Part of the value-chain are the relationships of influence in which these individuals – and groups – leverage their relationships toward favorable business and financial outcomes. This also includes the political outcomes that lead to huge long-term financial opportunities for all parties involved. It is the revolving door that has these individuals in influential positions giving favors that are repaid in kind.
As for me, I’m too busy trying to earn my MBA the old-fashioned way to really ponder this much more.
http://ap.google.com/article/ALeqM5jwqss6WG9C4W0n957xhvFsvDqGKwD90G85MG0
The Governor of West Virginia’s daughter has been awarded an Executive MBA from the University of West Virginia without having actually completing the course work. A university panel met in October where it was decided to add courses and grades to Heather Bresch's transcript, then retroactively award her a 1998 executive MBA degree.
In the wake of the scandal, the West Virginia Faculty Senate has called for the University’s President (Mike Garrison) to resign so that the University could move on to the healing process by putting the problems that the scandal has caused behind them. President Garrison refuses to resign saying that he played no role in awarding the MBA.
Whether the President played a role in the degree being awarded or not isn’t the issue to me. To me the issue is that anybody be awarded a degree without it being properly earned. It makes me wonder just how many academic degree’s are out there that have been given as gifts of favor due to elitist relationships. It illustrates concerns relating to Rawls regarding everybody getting a fair opportunity.
This situation is not unique. This value-chain of elitism helps to perpetuate many of the scandals that we have been dealing with all semester. Part of the value-chain are the relationships of influence in which these individuals – and groups – leverage their relationships toward favorable business and financial outcomes. This also includes the political outcomes that lead to huge long-term financial opportunities for all parties involved. It is the revolving door that has these individuals in influential positions giving favors that are repaid in kind.
As for me, I’m too busy trying to earn my MBA the old-fashioned way to really ponder this much more.
http://ap.google.com/article/ALeqM5jwqss6WG9C4W0n957xhvFsvDqGKwD90G85MG0
Beware of The Nursing Home Scandals
I thought I would blog this because, though personal, it might serve as an informative experience that perhaps maybe helpful to you should you ever have to endure a similar situation.
The question is: When does CYA (Covering Your backside) become more important than protecting a life?
Background:
My family and I are currently dealing with a long-term medical care situation involving a nursing home facility located in Delaware.
My younger sister is very ill and confined to a nursing home in Delaware. I will not mention the name of the nursing home but suffice it to say, it is one of the worst I have seen in a long time. Anyway, as a result of the lack of care they were giving my sister, I called a meeting back on March 6, 2008 of all of the top administrative and nursing staff. This included the head of the facility, the director of nursing, the head nurse, the primary care physician for my sister and the administrator of social services for the facility. We all gathered around the table, along with other members of my family to discuss my sister's care.
What transpired at the meeting isn't important, except that it was pointed out to the administrators that we (my family and I) are very disappointed and very much aware of the negligent practices of the facility and that we believed that the facility was not a good place for our loved one's continued care. That same evening, my sister was rushed to the emergency room of Christiana Hospital where she subsequently underwent three surgical procedures to correct the actual problem.
The problem, by the way, is one that was persistent and that should have been identified by the nursing home medical staff, where she lived. It gets even better.
After my sister's condition stabilized and she began to get better, I receive word from the hospital that the nursing home had been contacting the hospital on a daily basis, expressing that they were holding a bed for my sister's return, against our wishes. More importantly, the hospital is obligated to release her back to this facility because the facility has volunteered to keep a bed open for her. Whereas, due to the extensiveness of her care, and the new medical challenges she faces, other nursing home facilities are not equipped to or unable to take her.
My problem with all of this is that out of all of the facilities that were identified as having the ability to take her, they are all listed on a Medical Watch List for facilities having failed repeatedly to pass survey tests in key areas of care. Surprisingly enough, the facility that has given my sister the very worst care -- ISN'T EVEN LISTED AS HAVING ANY ISSUES!
There is an answer to this however. When my sister was admitted to the hospital, the very thing that is causing her the worst medical problems, was conveniently omitted from her medical report. In other words, the nursing home failed to indicate that she had a problem. They NEVER documented that she had the problem. By doing so, they do not claim any responsibility for the problem and the hospital nor any of us, can do anything about it.
Now, they are coming back to us as the glorious savior for my sister by being the only facility that will take her with the conditions she now exhibits. Of course, you may offer to say: "Why don't you hire a lawyer?" or "Why aren't you looking to place her in other facilities?" And the answer to this would be: "We are."
However, there are only a half dozen facilities available in Delaware that support extensive long-term care - and all of them are on this list of DANGEROUS FACILITIES for care except the one she is currently assigned to.
So now what do I do?
The question is: When does CYA (Covering Your backside) become more important than protecting a life?
Background:
My family and I are currently dealing with a long-term medical care situation involving a nursing home facility located in Delaware.
My younger sister is very ill and confined to a nursing home in Delaware. I will not mention the name of the nursing home but suffice it to say, it is one of the worst I have seen in a long time. Anyway, as a result of the lack of care they were giving my sister, I called a meeting back on March 6, 2008 of all of the top administrative and nursing staff. This included the head of the facility, the director of nursing, the head nurse, the primary care physician for my sister and the administrator of social services for the facility. We all gathered around the table, along with other members of my family to discuss my sister's care.
What transpired at the meeting isn't important, except that it was pointed out to the administrators that we (my family and I) are very disappointed and very much aware of the negligent practices of the facility and that we believed that the facility was not a good place for our loved one's continued care. That same evening, my sister was rushed to the emergency room of Christiana Hospital where she subsequently underwent three surgical procedures to correct the actual problem.
The problem, by the way, is one that was persistent and that should have been identified by the nursing home medical staff, where she lived. It gets even better.
After my sister's condition stabilized and she began to get better, I receive word from the hospital that the nursing home had been contacting the hospital on a daily basis, expressing that they were holding a bed for my sister's return, against our wishes. More importantly, the hospital is obligated to release her back to this facility because the facility has volunteered to keep a bed open for her. Whereas, due to the extensiveness of her care, and the new medical challenges she faces, other nursing home facilities are not equipped to or unable to take her.
My problem with all of this is that out of all of the facilities that were identified as having the ability to take her, they are all listed on a Medical Watch List for facilities having failed repeatedly to pass survey tests in key areas of care. Surprisingly enough, the facility that has given my sister the very worst care -- ISN'T EVEN LISTED AS HAVING ANY ISSUES!
There is an answer to this however. When my sister was admitted to the hospital, the very thing that is causing her the worst medical problems, was conveniently omitted from her medical report. In other words, the nursing home failed to indicate that she had a problem. They NEVER documented that she had the problem. By doing so, they do not claim any responsibility for the problem and the hospital nor any of us, can do anything about it.
Now, they are coming back to us as the glorious savior for my sister by being the only facility that will take her with the conditions she now exhibits. Of course, you may offer to say: "Why don't you hire a lawyer?" or "Why aren't you looking to place her in other facilities?" And the answer to this would be: "We are."
However, there are only a half dozen facilities available in Delaware that support extensive long-term care - and all of them are on this list of DANGEROUS FACILITIES for care except the one she is currently assigned to.
So now what do I do?
The Supreme Court - What's the Problem?
In the article, "Supreme Court Inc.", I did not see an ethical issue. I may be naive to the point of the article but what I got from the article is that the Supreme Court is hearing more and more business related cases; "up from around 30 percent in recent years." However, I do not see the ethical issue with the Supreme Court hearing these cases. The author assumes that because the court is hearing more corporate cases that the Supreme Court is helping out corporations with their decisions. I think that is ludicrous.
The Supreme Court is made up of great people who are the final say in our legal system. They always try to make the right decision. Maybe, the legal system in corporate America is so screwed up these days because the Supreme Court failed to get involved in years past. I think it is a great thing for them to get involved more and more with corporate cases.
The Supreme Court is made up of great people who are the final say in our legal system. They always try to make the right decision. Maybe, the legal system in corporate America is so screwed up these days because the Supreme Court failed to get involved in years past. I think it is a great thing for them to get involved more and more with corporate cases.
Stella Liebeck versus McDonalds
Not that well known, is the infamous case of an 81 year old woman named Stella Liebeck who successfully sued McDonalds, when she spilt hot coffee on herself. The reason behind the judge favoring her claim is 'the vendor did not particularly notify/warn the customer about the hottness of the beverage'. This was seen as an unethical call by many critics because the lady had ordered hot coffee and should expect a hot coffee, just because the vendor did not specify that when he handed the drink to her, it doesn't mean that the fault is on the vendor's side.
Inspired by this case, there were similar such lawsuits filed by individuals against big companies concluding in an unethical judgement favoring the plaintiff. Few of which are :
Kathleen Robertson of Austin, Texas, was awarded $780,000 by a jury of her peers after breaking her ankle tripping over a toddler who was running inside a furniture store. The owners of the store were understandably surprised at the verdict, considering the misbehaving little toddler was Ms. Robertson's son.
A Philadelphia restaurant was ordered to pay Amber Carson of Lancaster, Pennsylvania, $113,500 after she slipped on a soft drink and broke her coccyx (tailbone). The beverage was on the floor because Ms.Carson had thrown it at her boyfriend 30 seconds earlier during an argument.
Kara Walton of Claymont, Delaware, successfully sued the owner of a nightclub in a neighbouring city when she fell from the bathroom window to the floor and knocked out her two front teeth. This occurred while Ms.Walton was trying to sneak through the window in the ladies room to avoid paying the $3.50 cover charge. She was awarded $12,000 and dental expenses.
Mrs. Marv Grazinski of Oklahoma City, Oklahoma. Mrs. Grazinski purchased a brand new 32-foot Winnebago motor home. On her first trip home, having driven onto the freeway, she set the cruisecontrol at 70 mph and calmly left the drivers seat to go into the back and make herself a sandwich. Not surprisingly, the RV left the freeway, crashed,
and overturned. Mrs.Grazinski sued Winnebago for not advising her in the owner's manual
that she couldn't actually do this. The jury awarded her $1,750,000 plus a new motor home. The company actually changed their manuals on the basis of this suit, just in case there were any other such foolish complaints.
These cases bring out the fragility and the vulnerability of the law system in the US and the lack of concern it has for following common business ethics.
Inspired by this case, there were similar such lawsuits filed by individuals against big companies concluding in an unethical judgement favoring the plaintiff. Few of which are :
Kathleen Robertson of Austin, Texas, was awarded $780,000 by a jury of her peers after breaking her ankle tripping over a toddler who was running inside a furniture store. The owners of the store were understandably surprised at the verdict, considering the misbehaving little toddler was Ms. Robertson's son.
A Philadelphia restaurant was ordered to pay Amber Carson of Lancaster, Pennsylvania, $113,500 after she slipped on a soft drink and broke her coccyx (tailbone). The beverage was on the floor because Ms.Carson had thrown it at her boyfriend 30 seconds earlier during an argument.
Kara Walton of Claymont, Delaware, successfully sued the owner of a nightclub in a neighbouring city when she fell from the bathroom window to the floor and knocked out her two front teeth. This occurred while Ms.Walton was trying to sneak through the window in the ladies room to avoid paying the $3.50 cover charge. She was awarded $12,000 and dental expenses.
Mrs. Marv Grazinski of Oklahoma City, Oklahoma. Mrs. Grazinski purchased a brand new 32-foot Winnebago motor home. On her first trip home, having driven onto the freeway, she set the cruisecontrol at 70 mph and calmly left the drivers seat to go into the back and make herself a sandwich. Not surprisingly, the RV left the freeway, crashed,
and overturned. Mrs.Grazinski sued Winnebago for not advising her in the owner's manual
that she couldn't actually do this. The jury awarded her $1,750,000 plus a new motor home. The company actually changed their manuals on the basis of this suit, just in case there were any other such foolish complaints.
These cases bring out the fragility and the vulnerability of the law system in the US and the lack of concern it has for following common business ethics.
From Confessions of a Sweatshop Inspector
From the article entitled Confessions of a Sweatshop Inspector, I stopped on the following line: “ I suspect, however, that the fault lay with Wal-Mart as much as with the inspectors. I say this because there's a broader point here: Monitoring by itself is meaningless. It only works when the company that's commissioning it has a sincere interest in improving the situation.” It almost seems to have brought the semester back full circle to the Kantian argument that noble intentions are not enough if they are not performed for the right reason. If Wal-Mart is hiring compliance regulators to find labor violations, it must be with the intent of doing real human rights work. If it is simply due diligence to keep the press unaware of such activities, then it is no longer a moral action. This will tie in to my discussion of Title IX enforcement and how it must be followed in spirit and with truly universal good intentions, not just to make a gesture of compliance for the community.
I further the support that the author makes about the flagrant immorality that stems for the bad behavior of a supplier sullying the good name of an otherwise compliant company with regards to working standards. This is the new challenge of globalization and as the
Free Trade
Is It Time for a Free Trade Agreement with Columbia? Only if we want a strong economy.
The key to an individual’s economic success is being able to sell what you have to others, whether it’s products or your time. And being able to buy what you need at the best available price. That’s also the key to a country’s economic success. So why do so many Democrats oppose what’s known as free trade agreements with other countries, especially Columbia? Columbians pay tariffs, or taxes, on about 8 percent of what they sell to the United States. Americans, by contrast, pay tariffs of up to 37 percent on nearly all of the products we sell to Columbia. Those tariffs make U.S. products more expensive and harder to sell. A free trade agreement would end that disparity. Taxing U.S. products doesn’t punish other countries; we’re only punishing ourselves.
The key to an individual’s economic success is being able to sell what you have to others, whether it’s products or your time. And being able to buy what you need at the best available price. That’s also the key to a country’s economic success. So why do so many Democrats oppose what’s known as free trade agreements with other countries, especially Columbia? Columbians pay tariffs, or taxes, on about 8 percent of what they sell to the United States. Americans, by contrast, pay tariffs of up to 37 percent on nearly all of the products we sell to Columbia. Those tariffs make U.S. products more expensive and harder to sell. A free trade agreement would end that disparity. Taxing U.S. products doesn’t punish other countries; we’re only punishing ourselves.
Monday, May 5, 2008
Sweatshop
After reading the article “Confessions of a Sweatshop Inspector”, I have several thoughts as follows:
1) In
2) How sweatshop develops? I think, to certain extent, sweatshop is the direct product of pursuing profit by companies in developed countries and companies and/or government in developing countries. Nike or Walmart, they didn’t open the sweatshop, but the way they run the business lead the emergence and popularity of sweatshops around the world. Why factories in
3) As the article states in the end, everyone should be concerned about and pay attention to these people. It’s not one or two people or organizations’ duties or issues in the global village.
ref:http://en.ec.com.cn/article/entrade/eclaw/enlrothers/200801/536674_1.html
Patenting a Thousand year old product
As globalization continues to bring all the remote corners of this world closer together, there will be more “new” discoveries of ancient products. This was the case with the article in the textbook titled “W.R. Grace & Co. and the Neemix Patent”. At the core of this article, a product that has been used for centuries, neem, by Indians, Africans and Middle Eastern cultures was patented by a U.S. company in 1992. Without getting too much into the specifics, neem is used for various purposes; ranging from preventing tooth and gum disease to a potential contraceptive as a spermicide. However, it is predominately used as a natural, effective pesticide by Indian farmers for generations. Unfortunately, the problem was that the active ingredient was not stable enough to use in a product formulation. This was not a concern for Indian farmers as they prepared the pesticide as needed to treat their crops.
What W.R.Grace was able to do was to stabilize neem so it could be sold as a commercial product. According to the US Patent laws, an invention must meet 3 conditions in order to receive protection: 1) it has to be novel to a “prior art” (something different as defined by someone possessing ordinary skills in the art at time of invention), 2) invention cannot have been known or used in the US, or patented or described in a printed publication in the US or elsewhere prior to its invention; nor can the invention have been descried in print in the US or elsewhere more than a year prior to the application, 3) cannot patent a naturally occurring substance unless it has been modified in some way.
In 1995, the Foundation on Economic Trends (FET) claimed that the patent should not have been granted for many reasons; primarily, it was not novel, numerous articles were written about neem’s pesticide benefits in India (as early as 1928) and that any “modification” made by Grace was trivial. Furthermore, the reason why Indian farmers or entrepreneurs could not file patents in India was because of the “pragmatic and legal constraints against it”. Additionally, under the agreements of the World Trade Organization, India, as a member nation, would have to move to align its patent requirements with the West. Therefore, these farmers would now have to pay Grace for using something they’ve been using for generations.
Grace responded back by stating that FET’s accusations were incorrect and without merit. They acknowledged that their neem stabilization modification was “nothing Buck Rogers”, but it spent $10 MM on R&D and came up with a solution. Also, they said the patent would not prevent or limit Indian farmers from using it and that Grace did business with many Indian firms (harvesting, processing, shipping, etc) to produce this product.
What I found really interesting about this case is that this occurs often; especially when you think about all the “new” discoveries that are made from the Amazon Rain Forrest or from ancient Chinese remedies. How can companies that invest time and money in bringing these “hidden” treasures to the masses be compensated for their efforts? How do you give credit (specifically, royalties) to a Nation or a group of indigenous, remote people? How can two countries with different patent laws co-exist in ethical business transactions without claims of “copy-right violation (i.e.- Ironman on DVD)” or “piracy of their heritage”?
What W.R.Grace was able to do was to stabilize neem so it could be sold as a commercial product. According to the US Patent laws, an invention must meet 3 conditions in order to receive protection: 1) it has to be novel to a “prior art” (something different as defined by someone possessing ordinary skills in the art at time of invention), 2) invention cannot have been known or used in the US, or patented or described in a printed publication in the US or elsewhere prior to its invention; nor can the invention have been descried in print in the US or elsewhere more than a year prior to the application, 3) cannot patent a naturally occurring substance unless it has been modified in some way.
In 1995, the Foundation on Economic Trends (FET) claimed that the patent should not have been granted for many reasons; primarily, it was not novel, numerous articles were written about neem’s pesticide benefits in India (as early as 1928) and that any “modification” made by Grace was trivial. Furthermore, the reason why Indian farmers or entrepreneurs could not file patents in India was because of the “pragmatic and legal constraints against it”. Additionally, under the agreements of the World Trade Organization, India, as a member nation, would have to move to align its patent requirements with the West. Therefore, these farmers would now have to pay Grace for using something they’ve been using for generations.
Grace responded back by stating that FET’s accusations were incorrect and without merit. They acknowledged that their neem stabilization modification was “nothing Buck Rogers”, but it spent $10 MM on R&D and came up with a solution. Also, they said the patent would not prevent or limit Indian farmers from using it and that Grace did business with many Indian firms (harvesting, processing, shipping, etc) to produce this product.
What I found really interesting about this case is that this occurs often; especially when you think about all the “new” discoveries that are made from the Amazon Rain Forrest or from ancient Chinese remedies. How can companies that invest time and money in bringing these “hidden” treasures to the masses be compensated for their efforts? How do you give credit (specifically, royalties) to a Nation or a group of indigenous, remote people? How can two countries with different patent laws co-exist in ethical business transactions without claims of “copy-right violation (i.e.- Ironman on DVD)” or “piracy of their heritage”?
My reflection on Sweatshop Article.
I found the article “Confessions of a sweatshop inspector” really interesting and I could relate to it through different topics we discussed in the course so far : K-Pan, Labor standards in the era of globalization, Wal-mart case from the book. I absolutely agree with Frank when he concludes saying that being accountable to something that happens within your own regime is not the correct way to operate in a global economy. One has to use the best judgment to identify if the standards used in other nations for manufacturing its own products are ethical enough or not! Definitely, what occurs on papers or is inspected in a two-day’s period often represents a partial real picture. It is more of a responsibility of the customer (individual or firm) to make sure that the contract goes into ethical hands and people are not exploited for the same.
I also mentioned in my mid-term exam, sweatshop is bad due to the kind of working conditions, poor pay that prevails there. But are they not the feasible means of employment for those who do not have enough skills to get employed in a better firm? The benefit here is that the sweatshop is able to provide employment to a large number of people and so leave them in a better situation than having no job at all. While the problem here is that the workers do not have options, but to continue to work in poor conditions, knowing that they are being exploited. I think that Ian Maitland might suggest that more than one sweatshop should exist so that people are not exploited by a monopolized company and can move to a different employment at their own will if the conditions are not supportive. I also appreciate the information that Frank had mentioned in his article about Nike’s and Mattel’s approach towards selecting their suppliers. Pre-screening the firms that might work with them and making the information public is definitely a means to let others judge how ethical they are and their intentions about not hiding anything suggests that they are trying their best to keep up the standards even across the national boundaries.
I also mentioned in my mid-term exam, sweatshop is bad due to the kind of working conditions, poor pay that prevails there. But are they not the feasible means of employment for those who do not have enough skills to get employed in a better firm? The benefit here is that the sweatshop is able to provide employment to a large number of people and so leave them in a better situation than having no job at all. While the problem here is that the workers do not have options, but to continue to work in poor conditions, knowing that they are being exploited. I think that Ian Maitland might suggest that more than one sweatshop should exist so that people are not exploited by a monopolized company and can move to a different employment at their own will if the conditions are not supportive. I also appreciate the information that Frank had mentioned in his article about Nike’s and Mattel’s approach towards selecting their suppliers. Pre-screening the firms that might work with them and making the information public is definitely a means to let others judge how ethical they are and their intentions about not hiding anything suggests that they are trying their best to keep up the standards even across the national boundaries.
CEO's Compensation Requires Accountability
To piggyback on Roxy’s topic for her presentation last week on the absorbent compensations of CEO’s, I found an interesting article that did focus on the immense salaries, but more on those CEO’s that were not deserving of multi-million dollar contracts. While I do agree that for the most part, CEO pay is somewhat unjustifiable, I do think a large salary for a person in such a visible role who carries huge responsibilities does deserve to be compensated greatly. However, my issue with the salary’s of CEO’s has more to do with those CEO’s that perform poorly and as a result the company and shareholders falter.
In an article posted today on Forbes.com, several CEO’s are highlighted as the top paid CEO’s that perform the worst. Among them, Gary Forsee the CEO of Sprint, basically negotiated a fail proof compensation package that would leave him with millions whether he helped or hurt the company. The only notable action he did with Sprint was led the catastrophic merge of Nextel which dropped the stock price from $25.00 to $7.40. When he was finally asked to leave, he left well taken care of; Sprint gave him $40 million over the course of 2 years which included his salary, bonuses, stock options, and a pension for life. How is it possible for a person to get paid more than the average person when not only are they not even working, but their performance was horrific?
I’m going to have to push some blame on the hiring practices of these huge corporations that allow for this type of thing to happen. First off, for the most part, I can’t imagine this highest paid “worst CEO’s” have a background of extraordinary performance that validates them being capable to run these massive organizations let alone justifies them having this much negotiation power. Just like the average employee, CEO’s need to be held accountability for goals and the growth of the business – after all, that’s why they get paid the big bucks, right?
In an article posted today on Forbes.com, several CEO’s are highlighted as the top paid CEO’s that perform the worst. Among them, Gary Forsee the CEO of Sprint, basically negotiated a fail proof compensation package that would leave him with millions whether he helped or hurt the company. The only notable action he did with Sprint was led the catastrophic merge of Nextel which dropped the stock price from $25.00 to $7.40. When he was finally asked to leave, he left well taken care of; Sprint gave him $40 million over the course of 2 years which included his salary, bonuses, stock options, and a pension for life. How is it possible for a person to get paid more than the average person when not only are they not even working, but their performance was horrific?
I’m going to have to push some blame on the hiring practices of these huge corporations that allow for this type of thing to happen. First off, for the most part, I can’t imagine this highest paid “worst CEO’s” have a background of extraordinary performance that validates them being capable to run these massive organizations let alone justifies them having this much negotiation power. Just like the average employee, CEO’s need to be held accountability for goals and the growth of the business – after all, that’s why they get paid the big bucks, right?
Sunday, May 4, 2008
Chapter 7: Corporate Ethics and Politics
In this a presidential and gubernatorial election year (for Delaware residents), I believe corporate ethics plays a critical role in the upcoming elections and the political system as a whole. Some people question whether corporations should have a role in politics and the extent of the role. I agree with Professor Silver’s viewpoint that “if they (corporations) respect some critical moral boundaries” and they follow the letter of the law, then political participation should be granted. Corporations add value to the political process and have a vested interest in the outcome of elections. The means and the extent of political participation by corporations should be controlled, to ensure the spirit of the law is followed. Corporations influence the political system by utilizing lobbyists, regulatory capture and campaign contributions. Corporations have skirted the spirit of the law by influencing board members and company employees to contribute to and vote for specific political candidates. Once candidates are in office, corporations expect additional access that average citizens would not be granted. I believe that Freidman’s stockholder theory would support political involvement by corporations, if it positively impacted the bottom-line of a corporation. There are limitations on this theory, such as the corporation abiding by CSR rules and following the political involvement rules to ensure the corporation stays above the law.
Is Ethanol Getting a Bum Rap?
http://www.businessweek.com/magazine/content/08_19/b4083060454256.htm?chan=top+news_top+news+index_news+%2B+analysis
Ethanol is taking a tumble. Once hyped as a magic brew for reducing both oil addiction and global warming, alcohol made from corn kernels is now being accused both of triggering a global food crisis and doing more ecological harm than good.
Ethanol critics, ranging from environmental groups to pig farmers facing high feed prices say “What started as an energy policy is leading to spreading hunger and political instability around the world.”
The global food crisis has brought on riots in about a dozen countries and left many panicked world leaders scrambling for answers. food prices globally have climbed 83% in the past 36 months and are expected to stay high through 2015, according to the World Bank. "This is hitting everyone, but it's hitting hardest people who live on less than $1 a day,"
Is it an unthical thing to produce oil from corn while so many hungers and malnutritions in the world?
some arguments which mention that the global food shortage could lead to lower trade barriers and innovation that may raise farm productivity. Also they say that high prices will lead these countries to produce more of their own food. So the food shortage is a good thing.
Thinking of those poor Moms who have hungry babies to feed or those children who are eager to food, I really can’t agree with above arguments. I think it is the entire people’s resposiblity to get rid of food shortage.
As for the Ethanol ,if we can shift to other crops, there would be not conflict between Ethanol and food shortage.
Ethanol is taking a tumble. Once hyped as a magic brew for reducing both oil addiction and global warming, alcohol made from corn kernels is now being accused both of triggering a global food crisis and doing more ecological harm than good.
Ethanol critics, ranging from environmental groups to pig farmers facing high feed prices say “What started as an energy policy is leading to spreading hunger and political instability around the world.”
The global food crisis has brought on riots in about a dozen countries and left many panicked world leaders scrambling for answers. food prices globally have climbed 83% in the past 36 months and are expected to stay high through 2015, according to the World Bank. "This is hitting everyone, but it's hitting hardest people who live on less than $1 a day,"
Is it an unthical thing to produce oil from corn while so many hungers and malnutritions in the world?
some arguments which mention that the global food shortage could lead to lower trade barriers and innovation that may raise farm productivity. Also they say that high prices will lead these countries to produce more of their own food. So the food shortage is a good thing.
Thinking of those poor Moms who have hungry babies to feed or those children who are eager to food, I really can’t agree with above arguments. I think it is the entire people’s resposiblity to get rid of food shortage.
As for the Ethanol ,if we can shift to other crops, there would be not conflict between Ethanol and food shortage.
I read the second article Dr. Silver sent, called "Confessions of a Sweatshop Inspector". I thought the insight provided by the author was very interesting and brought a different perspective to the sweatshop discussion. As the author explained the details of his job and how he would have to deal with interviewing employees of sweatshops who would just provide streams of lies regarding working conditions, and how he would find numerous labor violations, I tried to put myself in his shoes. After seeing so many instances of terrible worker treatment and conditions over and over again, I feel like I would lose faith in corporations, altogether, and believe that “ethical sourcing” is just a myth and a fancy tagline.
Saturday, May 3, 2008
Ethics of awards
Many a times, even popular and well-respected awards like Oscars and Pulitzers have to go through the criticism grind for their choice of winners. And many a times, awards which are meant to recognize people in the corporate sector by a magazine which lives on advertisements from this sector just gets away with it. Tacky but true!
Back in my home country, there is a magazine that awards prominent people of the corporate sector. By corporate sector prominence, I mean CEOs, Managing Directors, Finance Heads, Marketing Heads, Human Resource Heads and so on of comparatively large companies. The same magazine also awards young achievers from various sectors- art, business, music, politics, education and so on. The way they recognize these young achievers, though not justified, is less controversial due to the fact that most seem to be rising in their fields. However, the choice of the corporate winner should raise an eyebrow or two!
First, this magazine purely survives in the advertisements from these companies. Since it is primarily a business journal, it is supposed to write about corporate sector. Most corporate entities agree that its competitor does a much better job at delivering key issues of the corporate sector and provides a deeper knowledge-base. However, the glamour part of the magazine is what keeps it alive and ahead.
Is it ethical that a magazine concentrates more on these cheap gimmicks to increase circulation and advertisements rather than concentrate on a better content? Is it ethical on the part of the magazine which literally runs on the advertisements placed by these corporations to award people of the same corporations? I believe that the award itself loses its prestige when being given away by anyone who has an ulterior motive in giving away that award.
Back in my home country, there is a magazine that awards prominent people of the corporate sector. By corporate sector prominence, I mean CEOs, Managing Directors, Finance Heads, Marketing Heads, Human Resource Heads and so on of comparatively large companies. The same magazine also awards young achievers from various sectors- art, business, music, politics, education and so on. The way they recognize these young achievers, though not justified, is less controversial due to the fact that most seem to be rising in their fields. However, the choice of the corporate winner should raise an eyebrow or two!
First, this magazine purely survives in the advertisements from these companies. Since it is primarily a business journal, it is supposed to write about corporate sector. Most corporate entities agree that its competitor does a much better job at delivering key issues of the corporate sector and provides a deeper knowledge-base. However, the glamour part of the magazine is what keeps it alive and ahead.
Is it ethical that a magazine concentrates more on these cheap gimmicks to increase circulation and advertisements rather than concentrate on a better content? Is it ethical on the part of the magazine which literally runs on the advertisements placed by these corporations to award people of the same corporations? I believe that the award itself loses its prestige when being given away by anyone who has an ulterior motive in giving away that award.
Thursday, May 1, 2008
Ethics of Withholding Medical Records
USA Today published an article mentioning the ethics of medical records being wrongfully withheld from patient’s family in emergency and fatal situations. There were several hospitals mentioned in the article who faced these accusations that respectively denied they had been involved in any misconduct. The general complaint from patient’s families is that in terminal situations, these families struggle with finding the truth when something goes wrong with their loved ones. Federal law recognizes that these representatives have the authority to see the patient’s records; however, the pressing issue in this situation is not only the timing of providing the records, but also a reoccurrence of missing or false records. The article mentions several specific cases where medical professionals have easy access to these records but when the patient’s families request them to make their own diagnoses or assumptions, the process seems to take substantially longer or certain bits of information are somehow missing.
The Health Information Portability and Accountability Act allows health care providers to withhold records in certain situations; however, in this case the hospital would not provide the reasoning. In a specific case, the records were withheld for too long of a period of time and the “victim” passed her statute of limitations timeframe to file a civil lawsuit.
It seems highly unethical, and oftentimes emotionally corrupt to not provide the patient’s family’s and representatives the proper medical documentation in a timely matter, especially when urgent decisions need to be made. I believe many medical professionals and institutions are concerned with malpractice suits and in some situations I do not think it is far fetched to believe that there is intent involved from delaying the release of information. I think this is also a case of accountability – if there are problems or complications with patient, a family has the right to know the truth and that everything possible was done to save their loved ones.
The Health Information Portability and Accountability Act allows health care providers to withhold records in certain situations; however, in this case the hospital would not provide the reasoning. In a specific case, the records were withheld for too long of a period of time and the “victim” passed her statute of limitations timeframe to file a civil lawsuit.
It seems highly unethical, and oftentimes emotionally corrupt to not provide the patient’s family’s and representatives the proper medical documentation in a timely matter, especially when urgent decisions need to be made. I believe many medical professionals and institutions are concerned with malpractice suits and in some situations I do not think it is far fetched to believe that there is intent involved from delaying the release of information. I think this is also a case of accountability – if there are problems or complications with patient, a family has the right to know the truth and that everything possible was done to save their loved ones.
Wednesday, April 30, 2008
Steriods and the Spirit of the Law
Professor’s Silver evaluation of the steroid scandal in sports in Chapter Five, highlighted some recent cases. Steroids are harmful and the results they produce can be quite addictive. His conclusion that these athletes were not following the spirit of the law is a true depiction of the situation. You can not tell me that these athletes were unaware that what they were doing what skirting the system. Sport leagues have created these rules in order to create a fair playing field and to protect their assets. The athletes should take this more seriously.
I agree with the creation of stricter and more clearly defined rules to prevent these situations. With this said, I have never understood why Congress felt it was necessary to get involved in this scandal. I believe that this is something that should have been handled by the league. Perhaps the government should focus on preventing the corporate scandals that actually impact our financial lives.
Corporations have and will continue to bend the rules as long as our government allows it. Especially when the government allows deferred prosecution agreements in the place of a conviction. This creates a culture that is almost encouraged to bend to rules and test the limits.
I agree with the creation of stricter and more clearly defined rules to prevent these situations. With this said, I have never understood why Congress felt it was necessary to get involved in this scandal. I believe that this is something that should have been handled by the league. Perhaps the government should focus on preventing the corporate scandals that actually impact our financial lives.
Corporations have and will continue to bend the rules as long as our government allows it. Especially when the government allows deferred prosecution agreements in the place of a conviction. This creates a culture that is almost encouraged to bend to rules and test the limits.
Tuesday, April 29, 2008
The Parable of the Sadhu
This was an interesting article (page 287 in the textbook) that discussed how a group trekking up the Himalayan Mountains encountered an “ethical dilemma” and how their decisions are similar to corporate ethics. Briefly, a group of multi-national individuals embarked on a trip of a life-time up the mountain (presumably Mt. Everest). Along their journey up, another group’s member comes down the mountain and “dumps” a partially naked and hurt Sadhu (Holy man) at their feet. This individual angrily states “I’ve done what I can and you care for him” as he heads back up the mountain to continue his journey. Now this group is faced with an ethical dilemma. Provide minimal support (clothes, food and water) and continue up the mountain or turn around and return back to base camp and provide the sadhu with the proper care. One individual decides that this journey (an experience to achieve personal satisfaction) was more important that the well-being of the stranger. Another individual (who was suffering from the elements himself) attempted to help the Sadhu as best as he could. When these two individuals meet up, he asks his companion “how do you feel about contributing to the death of a fellow man?” Nobody knows for sure if the Sadhu is dead or alive. No one was willing to accept the total responsibility for the Sadhu, but did what they could as long as it was convenient and “passed the buck”.
This story illustrated to me what I believe is so pervasive in our corporate culture; that many individuals, when in a stressful environment, often make decisions that will damage (affect) them the least, regardless if it was the ethical decision to make. This is especially true in a group dynamic. If the group needs to make a difficult choice, it is hard to find that individual who is willing to risk everything (career, goals, bonus, etc.) to do the right thing. What usually happens is that each individual does their share to “get by” and hope that some else will make the ethical decision for them. In light of all the corporate scandals, it seems that many people turn a blind eye or believe that someone else will do the right thing, but in the mean-time, many people’s lives will be impacted.
What would you do if you were in this group? Would you go to the “top of the world” or help a stranger in need?
This story illustrated to me what I believe is so pervasive in our corporate culture; that many individuals, when in a stressful environment, often make decisions that will damage (affect) them the least, regardless if it was the ethical decision to make. This is especially true in a group dynamic. If the group needs to make a difficult choice, it is hard to find that individual who is willing to risk everything (career, goals, bonus, etc.) to do the right thing. What usually happens is that each individual does their share to “get by” and hope that some else will make the ethical decision for them. In light of all the corporate scandals, it seems that many people turn a blind eye or believe that someone else will do the right thing, but in the mean-time, many people’s lives will be impacted.
What would you do if you were in this group? Would you go to the “top of the world” or help a stranger in need?
Hoop Dreams...
In a recent discussion that I had with a University President, we talked sportsmanship. He said that in a basketball game, if a ball is clearly out of bounds by your own team, but the players on your team are pointing to the other team in hopes of influencing the referee’s perception, there is a problem. Is this view of ethics too stringent?
If you think that this is not too stringent a view, what does it then say about politician’s level of accountability for the unfounded finger pointing that they engage in during election campaigns? We’ve been talking about the ethical behavior of for profit firms in this class. What about the ethical accountability of each of us in our daily lives…in our daily interactions with all those around us? Isn’t looking at the ethical behavior of companies like KBR or Enron like looking at the symptoms’ instead of the cause.
We’ve talked about the revolving door of government and corporate America in the context of public officials selling out the interests of Americans for their personal interests. But what are we doing about it at the individual level? It may be appropriate to talk about Machiavelli and his work suggesting that what is right is dictated by who is in the position of power (idea that might makes right). The idea of a tyranny of the majority (JSM) would seem to be all but impossible in a society in which big money, special interests, and politicians seem to control the playing field? It seems to be lies upon lies told by these groups in their efforts to control the game? Is it really possible that they really believe that what they’re doing is truthful? Has truth lost relevance?
What would you do if a player from your favorite team walked over to the ref on the deciding point of the game and argued that the ball was actually out on him and that the other team should get the ball? How would you honestly react? Does it even matter?
If you think that this is not too stringent a view, what does it then say about politician’s level of accountability for the unfounded finger pointing that they engage in during election campaigns? We’ve been talking about the ethical behavior of for profit firms in this class. What about the ethical accountability of each of us in our daily lives…in our daily interactions with all those around us? Isn’t looking at the ethical behavior of companies like KBR or Enron like looking at the symptoms’ instead of the cause.
We’ve talked about the revolving door of government and corporate America in the context of public officials selling out the interests of Americans for their personal interests. But what are we doing about it at the individual level? It may be appropriate to talk about Machiavelli and his work suggesting that what is right is dictated by who is in the position of power (idea that might makes right). The idea of a tyranny of the majority (JSM) would seem to be all but impossible in a society in which big money, special interests, and politicians seem to control the playing field? It seems to be lies upon lies told by these groups in their efforts to control the game? Is it really possible that they really believe that what they’re doing is truthful? Has truth lost relevance?
What would you do if a player from your favorite team walked over to the ref on the deciding point of the game and argued that the ball was actually out on him and that the other team should get the ball? How would you honestly react? Does it even matter?
Agents- The face of an Airline?
I came across an article in CNN.com titled “Confessions of an airline agent” in which a anonymous former airline agent relates some of his/her experiences as an agent and traveler and some of the things the airlines allow to happen in order to cut costs. For example, they are limiting training to new agents, “leaving inexperienced agents on the front line to deal with passenger complaints”. Now, I understand why is it so hard to reason with agents in case of delays. Usually, the agent is the last person informed of what is going on, which is the reason most travelers are left in the dark when there are schedule changes.
The airlines need to refocus their strategies to make room for customer satisfaction. Some of the things they need to work on are updating their systems, improving their luggage handling methods, and adding Internet connectivity at the gate to have the agents better informed. I think it is unfair that the airlines are leaving the agent helpless to face screaming disgruntled travelers. The number one responsibility of the airline is service, which includes customer service and that can only be achieved by training their employees & by giving them the necessary tools to assure the customers expectation are met. Also, travelers need to learn that the agents are also human beings that are not entirely responsible of malfunction of the airline.
Source: http://www.cnn.com/2008/TRAVEL/04/28/airline.agent.confessions/index.html
The airlines need to refocus their strategies to make room for customer satisfaction. Some of the things they need to work on are updating their systems, improving their luggage handling methods, and adding Internet connectivity at the gate to have the agents better informed. I think it is unfair that the airlines are leaving the agent helpless to face screaming disgruntled travelers. The number one responsibility of the airline is service, which includes customer service and that can only be achieved by training their employees & by giving them the necessary tools to assure the customers expectation are met. Also, travelers need to learn that the agents are also human beings that are not entirely responsible of malfunction of the airline.
Source: http://www.cnn.com/2008/TRAVEL/04/28/airline.agent.confessions/index.html
Is the earth getting warmer?
Apparently not last winter.
Americans living in the Midwest who had seen several waves of ice and snow last winter could be forgiven for wondering whether global warming is real.
And they might be right. University of Oklahoma geophysicist David Deming points out that in 2007:
Snow fell in Buenos Aries for the first time since 1918;
Snow fell in Baghdad, Iraq for the first time since 1908;
Johannesburg, South Africa, had its first significant snowfall in 26 years;
Closer to home, an April freeze killed 95 percent of South Carolina’s peach crop;
Denver, Charlotte, North Carolina, Meacham, Oregon, and St. Cloud, Minnesota, all set record lows last winter;
And the Canadian government claims it had the coldest winter in 15 years.
Maybe that’s why Al Gore released his global warming film “An Inconvenient Truth” . . . in the summer.
Americans living in the Midwest who had seen several waves of ice and snow last winter could be forgiven for wondering whether global warming is real.
And they might be right. University of Oklahoma geophysicist David Deming points out that in 2007:
Snow fell in Buenos Aries for the first time since 1918;
Snow fell in Baghdad, Iraq for the first time since 1908;
Johannesburg, South Africa, had its first significant snowfall in 26 years;
Closer to home, an April freeze killed 95 percent of South Carolina’s peach crop;
Denver, Charlotte, North Carolina, Meacham, Oregon, and St. Cloud, Minnesota, all set record lows last winter;
And the Canadian government claims it had the coldest winter in 15 years.
Maybe that’s why Al Gore released his global warming film “An Inconvenient Truth” . . . in the summer.
Chapters 5 & 6
This weeks reading was based on corporations not following the ‘spirit of the law’ when it comes to taxes. Just a couple quick points I thought I would share.
First of all, I agree with the overall problem of corporations “cheating” when it comes to taxes. I would accept this practice if they were public about it and brought to the attention of Congress how our tax laws are flawed. Also, If we expect companies to adhere to the ‘spirit of the law’ then we must also adhere to it, or at most, make our politicians do it. Especially the ones making the laws. An example is Ted Kennedy and the Kennedy family.
Ted Kennedy is one of the strongest promoters of the estate tax law. He says, “The estate tax is the most progressive of all federal taxes” and “It would be terribly unfair to tax work while giving inherited wealth a free ride” -- June 8, 2006. The Kennedy family has long been part of American politics yet they “avoid the heavy burden of estate taxes by creating numerous trust funds” – New York Times. The facts are through a web of trust funds, the Kennedy family paid only $135K of estate taxes on a $300 million estate which is only 0.04 of the nearly 50% average estate tax rate. So how could we expect corporations to lead by example when our lawmakers don’t?
Another point of the book is how companies should pay their fair share of taxes. But what is this fair share? The Government has certain fiscal policies and responsibilities for which they need to tax people to cover the budget – granted. What if the government is corrupt and has no sense of duty in regards to NOT spending? Why should we pay for this irresponsible spending? This year, July 23 (according to the Adam Smith Institute) is ‘Tax Freedom Day’ for the US. This is the day at which point all Americans and corporations on average have earned enough money to pay their share of taxes. That means for the first 204 days of work this year, all the income has gone to the government. I think corporations and we have a duty to bring to the attention of our government the unfair tax laws. The only way to do it is by circumventing the existing laws so the government sees that the public does not accept the current ones. A bill was introduced in Congress back in 2003 called the “Fair Tax Bill”. It’s been 5 years and it hasn’t even been voted on yet. This is a democracy but if nobody listens to the people, how can we change the unfair laws?
First of all, I agree with the overall problem of corporations “cheating” when it comes to taxes. I would accept this practice if they were public about it and brought to the attention of Congress how our tax laws are flawed. Also, If we expect companies to adhere to the ‘spirit of the law’ then we must also adhere to it, or at most, make our politicians do it. Especially the ones making the laws. An example is Ted Kennedy and the Kennedy family.
Ted Kennedy is one of the strongest promoters of the estate tax law. He says, “The estate tax is the most progressive of all federal taxes” and “It would be terribly unfair to tax work while giving inherited wealth a free ride” -- June 8, 2006. The Kennedy family has long been part of American politics yet they “avoid the heavy burden of estate taxes by creating numerous trust funds” – New York Times. The facts are through a web of trust funds, the Kennedy family paid only $135K of estate taxes on a $300 million estate which is only 0.04 of the nearly 50% average estate tax rate. So how could we expect corporations to lead by example when our lawmakers don’t?
Another point of the book is how companies should pay their fair share of taxes. But what is this fair share? The Government has certain fiscal policies and responsibilities for which they need to tax people to cover the budget – granted. What if the government is corrupt and has no sense of duty in regards to NOT spending? Why should we pay for this irresponsible spending? This year, July 23 (according to the Adam Smith Institute) is ‘Tax Freedom Day’ for the US. This is the day at which point all Americans and corporations on average have earned enough money to pay their share of taxes. That means for the first 204 days of work this year, all the income has gone to the government. I think corporations and we have a duty to bring to the attention of our government the unfair tax laws. The only way to do it is by circumventing the existing laws so the government sees that the public does not accept the current ones. A bill was introduced in Congress back in 2003 called the “Fair Tax Bill”. It’s been 5 years and it hasn’t even been voted on yet. This is a democracy but if nobody listens to the people, how can we change the unfair laws?
Hospitals Turning Patients Away
Yesterday, The Wall Street Journal contained an article entitled, “Cash Before Chemo: Hospitals Get Tough.” The genesis of the article is that non-profit hospitals are requiring patients to pay up front before services are rendered, from chemotherapy to surgeries, due to the large amount of outstanding debt from patients. The patients impacted are primarily those currently uninsured and underinsured. The prepayment amounts per patient were staggering, ranging from $75,000 to $300,000. Most non-profit hospitals have missions that center around serving the indigent population, thereby making this new business practice a complete contradiction to their guiding principles. In addition, this practice aids is the hospitals bottom lines, by ensuring a positive cash flow. According to the article, “Federal law requires hospitals to treat emergencies, such as heart attacks or injuries from accidents. But the law doesn’t cover conditions that aren’t immediately life-threatening.” This gives hospitals a loop-hole to deny services to people fighting cancer and needing other non-emergency surgeries.
While I understand that hospitals, even non-profit hospitals, need to be compensated for the services provided, there needs to be a compromise between paying $100,000 up front for services to not receiving the services at all. I should add that my father has spent the past two weeks in the hospital; therefore my opinion may be jaded. He was admitted by the paramedics and in my mother’s attempt to hurry; she left her health insurance card at home. My father received services under the Federal requirement and later it was determined that the hospital had his insurance card on file. I am appalled that hospitals have adopted this practice. I find it completely unethical and bad business.
http://online.wsj.com/public/article/SB120934207044648511.html?mod=2_1566_topbox
While I understand that hospitals, even non-profit hospitals, need to be compensated for the services provided, there needs to be a compromise between paying $100,000 up front for services to not receiving the services at all. I should add that my father has spent the past two weeks in the hospital; therefore my opinion may be jaded. He was admitted by the paramedics and in my mother’s attempt to hurry; she left her health insurance card at home. My father received services under the Federal requirement and later it was determined that the hospital had his insurance card on file. I am appalled that hospitals have adopted this practice. I find it completely unethical and bad business.
http://online.wsj.com/public/article/SB120934207044648511.html?mod=2_1566_topbox
Despite record level gas prices, Shell and BP post big profits
I was quite annoyed when I saw the article titled “BP and Shell post big profits in era of record oil prices” on the usatoday.com website.
I reside in Newark and work in Philadelphia and am sometimes required to make the commute by car. A round trip is approximately 100 miles, potentially resulting in a gas bill of over $350 per month. Judging from the amount of traffic I see on the roads each day, I am only one of many hundreds of thousands (or rather millions) of commuters that are subjected to these high prices.
While it is perfectly understandable that the additional cost associated with the high oil prices should be passed on to the consumer, it does seem as though companies like BP and Shell have increased their profit margins on their products. This seem very unethical given the current economic conditions.
The current high gas prices have been blamed for slowing the economy. In order to counter the slowing economy, the federal government has gone as far as to issue a $168 billion stimulus plan in the form of tax rebates. People like senators McCain and Clinton have gone as far as to call for a tax break on gasoline for the summer.
Never the less, the 'economy' is pretty good at BP and Shell. In spite of millions of Americans feeling the pinch of the increased gas prices and the slowing economy, companies like BP and Shell are free to exploit the situation and record huge profits.
I cannot help but wonder if the driving force behind the anti bio-fuel movement aren't the big oil companies. The ability to make huge profits even in a bearish economy is not something that any company would want to relinquish.
http://www.usatoday.com/money/companies/earnings/2008-04-29-oil-earnings_N.htm?loc=interstitialskip
I reside in Newark and work in Philadelphia and am sometimes required to make the commute by car. A round trip is approximately 100 miles, potentially resulting in a gas bill of over $350 per month. Judging from the amount of traffic I see on the roads each day, I am only one of many hundreds of thousands (or rather millions) of commuters that are subjected to these high prices.
While it is perfectly understandable that the additional cost associated with the high oil prices should be passed on to the consumer, it does seem as though companies like BP and Shell have increased their profit margins on their products. This seem very unethical given the current economic conditions.
The current high gas prices have been blamed for slowing the economy. In order to counter the slowing economy, the federal government has gone as far as to issue a $168 billion stimulus plan in the form of tax rebates. People like senators McCain and Clinton have gone as far as to call for a tax break on gasoline for the summer.
Never the less, the 'economy' is pretty good at BP and Shell. In spite of millions of Americans feeling the pinch of the increased gas prices and the slowing economy, companies like BP and Shell are free to exploit the situation and record huge profits.
I cannot help but wonder if the driving force behind the anti bio-fuel movement aren't the big oil companies. The ability to make huge profits even in a bearish economy is not something that any company would want to relinquish.
http://www.usatoday.com/money/companies/earnings/2008-04-29-oil-earnings_N.htm?loc=interstitialskip
Penalties of the Moral Rationales for Following the Law
Dr. Silver,
In your book, the first sentence of chapter 5 states:
“Corporations are not required to follow the law when it requires them to do deeply immoral things, such as to participate in genocide.”
I want to raise the question of the penalty a company must pay if they do not follow the immoral laws. I will argue that the more immoral the law, the higher the penalty.
For example, if you run a cruise ship company and the law states that you are not permitted to feed your guests dinner on Tuesday’s, this is a minor immoral law that a government would probably just slap a small fine on you.
But what if the law was more severe, the penalty would be more severe.
For example, in 1939, the St. Louis cruise ship was faced with a morale and ethical dilemma. This ship housed about 1000 Jews who were escaping Germany to go to Cuba. Cuba officials and law makers decided not to allow the entrants of the Jews even though all of the Jews had the proper papers and a ticket which they paid for. After being rejected in Cuba, the captain sailed for Miami where the US Coast Guard also said no to the entrants. The captain, faced with the dilemma of should he break the US law and enter the territory or just sail back to Germany. If the captain broke the US law and entered the US territory, he would probably have had his boat sunk and all killed or a German Nazi official on the boat would have had him killed. The penalty for not following this immoral law was death.
So in the end, the St. Louis sailed back to Germany where about half of the Jews were killed during the Holocaust. Everyone should watch the movie Voyage of the Damned.
So my question is, at what price does human thought become simply a matter of survival during immoral law times? My answer would be that sometimes it is not realistic for companies or business people to act ethically when the immoral law is so extreme that it interferes with your survival.
In your book, the first sentence of chapter 5 states:
“Corporations are not required to follow the law when it requires them to do deeply immoral things, such as to participate in genocide.”
I want to raise the question of the penalty a company must pay if they do not follow the immoral laws. I will argue that the more immoral the law, the higher the penalty.
For example, if you run a cruise ship company and the law states that you are not permitted to feed your guests dinner on Tuesday’s, this is a minor immoral law that a government would probably just slap a small fine on you.
But what if the law was more severe, the penalty would be more severe.
For example, in 1939, the St. Louis cruise ship was faced with a morale and ethical dilemma. This ship housed about 1000 Jews who were escaping Germany to go to Cuba. Cuba officials and law makers decided not to allow the entrants of the Jews even though all of the Jews had the proper papers and a ticket which they paid for. After being rejected in Cuba, the captain sailed for Miami where the US Coast Guard also said no to the entrants. The captain, faced with the dilemma of should he break the US law and enter the territory or just sail back to Germany. If the captain broke the US law and entered the US territory, he would probably have had his boat sunk and all killed or a German Nazi official on the boat would have had him killed. The penalty for not following this immoral law was death.
So in the end, the St. Louis sailed back to Germany where about half of the Jews were killed during the Holocaust. Everyone should watch the movie Voyage of the Damned.
So my question is, at what price does human thought become simply a matter of survival during immoral law times? My answer would be that sometimes it is not realistic for companies or business people to act ethically when the immoral law is so extreme that it interferes with your survival.
EPB vs Comcast
It was in the news last week that there is a court suit being filed in
Local concerns focus on the possibility that a failed project on the part of EPB could cause rates to rise in the future to cover possible losses. Comcast is already well established and provides decent service to its customers, but many feel that arbitrary rate hikes make a new provider with faster service desirable.
Monday, April 28, 2008
The story of Lamborghini
In the year of 1963, Ferruccio Lamborghini was earning big bucks from selling his tractors that he decided to pep up his garage with a Ferrari 250 GT, so he went and purchased this superior sports car. While maxing out its performance on the lush Italian roads he noticed a problem with the clutch system. Being the gentleman that he is, he personally confronted Enzo Ferrari with the issue, Enzo ignored his request and sent him away telling him to rather drive his own tractors. Infuriated, Ferruccio went back and tried to fix the problem himself. He then discovered that the clutch system was manufactured by the same company who provides the clutches for his tractors. So, he installed a more efficient clutch from his tractor warehouse and fixed the problem.
After this incident, Ferruccio lost respect for the Ferrari brand and decided that he could build more powerful and effective sports cars with his skills and expertise. With the help of an ex-Ferrari engineer he designed a sports car with a V12 engine and sleek design now popularly known as the Lamborghini.
This example shows the amount of inspiration and self motivation a particular unethical behavior can influence a person's perceptions and actions.
After this incident, Ferruccio lost respect for the Ferrari brand and decided that he could build more powerful and effective sports cars with his skills and expertise. With the help of an ex-Ferrari engineer he designed a sports car with a V12 engine and sleek design now popularly known as the Lamborghini.
This example shows the amount of inspiration and self motivation a particular unethical behavior can influence a person's perceptions and actions.
Textualism and the Supreme Court
Dr. Silver’s discussion of the spirit of the law in Chapter 5 reminded me of a case decision that was announced today (Monday) by the US Supreme Court. Although it is not really business related, the topic of the spirit of the law seems very evident. In the case Democrats and related groups argued that a new Indiana law was unconstitutional because it denied suffrage to people who are poor, old, or members of minority groups. It did this by requiring that any potential voter provide explicit photo identification prior to voting. Since members of these groups may find it harder to obtain the ID, it effectively denies them the right to vote. The Democratic Party argued that the very intent of the law (i.e. the “spirit”) was to reduce the number of potential voters of these groups, who typically vote democratic.
The Supreme Court voted to uphold the law. Justice Stevens (who frequently votes on the liberal side of the court) was in the majority and noted that the justifications for the law “should not be disregarded simply because partisan interests may have provided one motivation for the votes of individual legislators.” Assume for a moment that the motivation (spirit) of the law was in fact to simply remove potential democratic voters. I would argue that this is morally unacceptable because it denies the nature of our liberal democracy (universal suffrage). However, what Justice Stevens is saying is that even if this were true, the law is still acceptable even if it’s original spirit is corrupt because it serves another useful purpose, which is to prevent voter fraud. Steven’s interpretation would seem to be an example of the textualism that Dr. Silver describes in the book. (This also seems to be an example of utilitarianism.)
This case would seem to have implications for business lobbyists and the laws they promote. Say a pharmaceutical company has a domestic factory for producing an expensive drug. A competing drug is introduced by a second company where a portion of it is manufactured it in a poor country that lacks a strong regulatory structure. It passes all the FDA tests, and is even perhaps formulated and quality tested domestically, but the first pharam company influences a law to be passed that restricts the sale of drugs with components that originate in countries with poor regulatory structures. Even if it were proven that that the first company only acted to protect its business interest, and was not even concerned with protecting the consumer, the basis for this case might allow this law to be considered acceptable. The spirit and motivation for the law is immaterial; the fact that it plausibly protects consumers from substandard drugs is what makes it acceptable.
I’m usually a conservative person who would not have a big problem with presenting an ID when I vote. I do express some unease, however, if the INTENT of a law in immoral even if it serves a useful purpose. I believe in justice and I think that there is some room for understanding intent as well as outcome.
The Supreme Court voted to uphold the law. Justice Stevens (who frequently votes on the liberal side of the court) was in the majority and noted that the justifications for the law “should not be disregarded simply because partisan interests may have provided one motivation for the votes of individual legislators.” Assume for a moment that the motivation (spirit) of the law was in fact to simply remove potential democratic voters. I would argue that this is morally unacceptable because it denies the nature of our liberal democracy (universal suffrage). However, what Justice Stevens is saying is that even if this were true, the law is still acceptable even if it’s original spirit is corrupt because it serves another useful purpose, which is to prevent voter fraud. Steven’s interpretation would seem to be an example of the textualism that Dr. Silver describes in the book. (This also seems to be an example of utilitarianism.)
This case would seem to have implications for business lobbyists and the laws they promote. Say a pharmaceutical company has a domestic factory for producing an expensive drug. A competing drug is introduced by a second company where a portion of it is manufactured it in a poor country that lacks a strong regulatory structure. It passes all the FDA tests, and is even perhaps formulated and quality tested domestically, but the first pharam company influences a law to be passed that restricts the sale of drugs with components that originate in countries with poor regulatory structures. Even if it were proven that that the first company only acted to protect its business interest, and was not even concerned with protecting the consumer, the basis for this case might allow this law to be considered acceptable. The spirit and motivation for the law is immaterial; the fact that it plausibly protects consumers from substandard drugs is what makes it acceptable.
I’m usually a conservative person who would not have a big problem with presenting an ID when I vote. I do express some unease, however, if the INTENT of a law in immoral even if it serves a useful purpose. I believe in justice and I think that there is some room for understanding intent as well as outcome.
Global Equilibrium Out of Balance
A recent study of ice cores over a hundred thousand years old has negative indications about our atmosphere. According to scientists, a natural balance exists between carbon dioxide emissions and the planet’s ability to absorb them. Earth is no longer capable of maintaining this balance. The imbalance is caused by excess carbon emission into the atmosphere. This may be considered as a cause of the climate change in recent years. This study of ice cores has attracted much attention to criticism based around global warming.
The natural balance is a finely tuned process that has evolved over thousands of years. Human activities now produce carbon dioxide somewhere around 14,000 times faster than nature. This pace began during the industrial revolution and has increased ever since. Leading causes of carbon dioxide emission include the burning of gas, fuel and coal. The planet and atmosphere will naturally absorb all of the excess carbon dioxide produced, but it may take hundreds of thousands of years to do so.
The natural balance is a finely tuned process that has evolved over thousands of years. Human activities now produce carbon dioxide somewhere around 14,000 times faster than nature. This pace began during the industrial revolution and has increased ever since. Leading causes of carbon dioxide emission include the burning of gas, fuel and coal. The planet and atmosphere will naturally absorb all of the excess carbon dioxide produced, but it may take hundreds of thousands of years to do so.
Unethical Office Pools
Every year lots of men and women across the country find out if they won money in their office Super Bowl pool. Those who lose have a chance to recoup their cash in pools for the NCAA March Madness, Academy Awards, the World Series, and perhaps even the Presidential election. For every season, there is a chance to bet and win at the office, and the winnings can be as high as five figures. Office pools involving cash are common, exciting, and potentially lucrative. But they can violate corporate policies and the law. So the question arises, are these office pools ethical?
It has often been debated that office pools do encourage office morale resulting in greater productivity. The supporters of these office pools feel it’s all just harmless fun. Office pools build morale and camaraderie. For example, at the beginning of football season, we kick in a few dollars, then follow our team over the coming weeks and months. Most of us lose. A few of us win. What's the harm in that? Even if there happens to be no legal or policy issues at stake, the harm has to do with how stakeholders would view the business if on-the-job gambling activities were revealed. For example, if the stakes are high, the result of the pool could create disharmony in the workplace, and the problems could escalate.
But the fact is that is unethical to be part of any betting pools at the work place. The office simply isn't an appropriate place for gambling. It's called a workplace for a reason: It's the place where we're supposed to work. Things that interfere with doing our job should be done before or after work. If even a small percentage of fellow employees, board members, and shareholders is likely to be troubled by the practice of on-site betting, that alone is sufficient cause for concern. Some stakeholders may have religious objections to it. Others might be concerned that employees will not give their full attention to their work. A third group may simply view gambling on the job as unseemly. Whatever the objections are, they deserve to be taken seriously.
Office pools are also unethical due to the lost productivity at the work place. As a result, during the time of March Madness, some companies block ability to stream videos. Companies don’t want its employees sitting at their desk watching games. Moreover, streaming videos uses up a lot of computer network resources and eats up bandwidth, hurting business operations. It is estimated that $1.7 billion is lost in wasted work time over the 16 business days of the tournament if workers spend just 10 minutes a day on March Madness activity. Also, up to 37.3 million workers participate in office betting pools. This year, for the first time, every single game of the NCAA March Madness was streamed online. Additionally, the little red "boss button" on the NCAA Sports.com streaming video site came in handy to many. Many NCAA basketball fans were toggling between the game and the fake business charts that the site kindly provided, just a click away in case the boss walked by.Another argument that office pools are unethical has to do around the taxes involved with the cash winnings. For example, we are legally required to file a federal tax return each year where all your income needs to be reported. A very small percentage of the employees involved in these pools report their winnings as part of the taxes. The FBI estimated that $2 billion (mostly not reported in taxes) changes hands in just office-run March Madness pools each year.
The workplace has no room for March Madness or any other betting pools. But the reason has nothing to do with productivity or computer use. All these are considered office pools. And office pools are, by definition, gambling.
It has often been debated that office pools do encourage office morale resulting in greater productivity. The supporters of these office pools feel it’s all just harmless fun. Office pools build morale and camaraderie. For example, at the beginning of football season, we kick in a few dollars, then follow our team over the coming weeks and months. Most of us lose. A few of us win. What's the harm in that? Even if there happens to be no legal or policy issues at stake, the harm has to do with how stakeholders would view the business if on-the-job gambling activities were revealed. For example, if the stakes are high, the result of the pool could create disharmony in the workplace, and the problems could escalate.
But the fact is that is unethical to be part of any betting pools at the work place. The office simply isn't an appropriate place for gambling. It's called a workplace for a reason: It's the place where we're supposed to work. Things that interfere with doing our job should be done before or after work. If even a small percentage of fellow employees, board members, and shareholders is likely to be troubled by the practice of on-site betting, that alone is sufficient cause for concern. Some stakeholders may have religious objections to it. Others might be concerned that employees will not give their full attention to their work. A third group may simply view gambling on the job as unseemly. Whatever the objections are, they deserve to be taken seriously.
Office pools are also unethical due to the lost productivity at the work place. As a result, during the time of March Madness, some companies block ability to stream videos. Companies don’t want its employees sitting at their desk watching games. Moreover, streaming videos uses up a lot of computer network resources and eats up bandwidth, hurting business operations. It is estimated that $1.7 billion is lost in wasted work time over the 16 business days of the tournament if workers spend just 10 minutes a day on March Madness activity. Also, up to 37.3 million workers participate in office betting pools. This year, for the first time, every single game of the NCAA March Madness was streamed online. Additionally, the little red "boss button" on the NCAA Sports.com streaming video site came in handy to many. Many NCAA basketball fans were toggling between the game and the fake business charts that the site kindly provided, just a click away in case the boss walked by.Another argument that office pools are unethical has to do around the taxes involved with the cash winnings. For example, we are legally required to file a federal tax return each year where all your income needs to be reported. A very small percentage of the employees involved in these pools report their winnings as part of the taxes. The FBI estimated that $2 billion (mostly not reported in taxes) changes hands in just office-run March Madness pools each year.
The workplace has no room for March Madness or any other betting pools. But the reason has nothing to do with productivity or computer use. All these are considered office pools. And office pools are, by definition, gambling.
Saturday, April 26, 2008
Who and How to Survive?
After reading, I was reminded of Charles Darwin’s words, “It is not the strongest of the species that survives nor the most intelligent, but those most adaptive to change”. In addition, I think the survivors should follow the spirit of the games. Several thoughts came up to my mind.
1) As we discussed in the last class, people see the problems and realize both government and corporation need to work on them. However, questions such as who/how/when should initiate the change still puzzle me. I assume the peak and bottom points in the chart over the blackboard were very critical in the history where changes were the must. Should we always wait to that point? How patient we are supposed to be?
2) After reading Chapter 5, I was asking if it is possible when every company follow the spirit of law, people need not change the laws, increase the cost for implementing and management. Is that Utopia? In another word, does that really exist?
3) To some extent, I could understand the profit-motivated company’s dilemma. On one hand, they should put profit first, earning hard for their shareholders. On the other hand, they should be able to see long-term picture, respond to the whole society where they are rooted. Sometimes, following the spirit of the law would bring lower profit. It seems to me that if all people, not just the corporation, can see the situation well and appreciate more, the problem could be easier.
4) Is there any example companies that put profits second came in first? Is that true behind every successful company, there is a dark story?
Thursday, April 24, 2008
Wal-Mart
The case of Wal-Mart was interesting given that they went over the ruling of the council and requested a citizen’s opinion. I am not sure that I agree with Professor Silver’s evaluation that this was wrong. Obviously, Wal-Mart felt this ruling was unjust and wanted the citizens to decide. As discussed in class many times, not all laws are right and there needs to be a significant change in order to improve the laws. Generally, this comes given a crisis but this was enough of a crisis for Wal-Mart to initiate the vote.
In my opinion, there cannot be a better way to fairly decide an issue than letting the citizens decide. Often times our representatives can be easily influenced and lose sight of what their citizens want. I understand that Wal-Mart’s PR power far out-weighed that of the private citizen groups; but if there is an issue that people do not want then it does not matter how much money Wal-Mart has the measure will not pass.
I agree with Professor Silver that it is impossible for citizens to be aware of all policy matters. But I do, however, feel that it is the responsibility of every citizen to be aware of the issues for which they vote. If your vote is not based on information, then in my opinion there is no point in voting. The severity of this issue should be understood by all citizens.
In my opinion, there cannot be a better way to fairly decide an issue than letting the citizens decide. Often times our representatives can be easily influenced and lose sight of what their citizens want. I understand that Wal-Mart’s PR power far out-weighed that of the private citizen groups; but if there is an issue that people do not want then it does not matter how much money Wal-Mart has the measure will not pass.
I agree with Professor Silver that it is impossible for citizens to be aware of all policy matters. But I do, however, feel that it is the responsibility of every citizen to be aware of the issues for which they vote. If your vote is not based on information, then in my opinion there is no point in voting. The severity of this issue should be understood by all citizens.
Housing Bailouts and Taxpayers Obligations
An article in Fortune presented a relevant and very concerning proposal that Congress is currently reviewing. Based on our discussions in class this week and also in coordination with Professor Silver’s literature, I thought the topic of housing bailouts and taxpayers obligations would be appropriate for a Blog. In this article dated April 23rd, a growing concern of many American’s is whether Congress will pass legislation requiring taxpayers to bailout suffering mortgage borrowers. This angers me for numerous reasons, most importantly, the fact that I have the credit and funds to effectively pay my mortgage knowing full well from the beginning that buying a house is a big commitment and that I would be solely responsible for paying back my debt. Why should homeowners, such as myself, be penalized and made to support those borrowers who should not have been able to purchase in the first place?
Sure, I realize that banks are also tangled in the root of the overall problem and should have more strict standards on who to lend money too, but I do not think they should be entirely held accountable for individual decisions.
I think this type of intervention will only encourage people, who may have less than average credit and funds capable to handle a mortgage, to take unwarranted risks in the belief that the government will bail them out or rescue them if they end up getting in way over their heads.
Additionally, the article mentions the importance of a free market and letting the economy run its course without interference of the government. Although the economy is struggling, I think minimal obstruction of the government is key – constant government meddling only sets a precedence that rewards bad behavior. I would agree that the market needs to sort these issues out gradually and that the less government interaction, the better.
Sure, I realize that banks are also tangled in the root of the overall problem and should have more strict standards on who to lend money too, but I do not think they should be entirely held accountable for individual decisions.
I think this type of intervention will only encourage people, who may have less than average credit and funds capable to handle a mortgage, to take unwarranted risks in the belief that the government will bail them out or rescue them if they end up getting in way over their heads.
Additionally, the article mentions the importance of a free market and letting the economy run its course without interference of the government. Although the economy is struggling, I think minimal obstruction of the government is key – constant government meddling only sets a precedence that rewards bad behavior. I would agree that the market needs to sort these issues out gradually and that the less government interaction, the better.
Tuesday, April 22, 2008
To stand for what you are
I intend to make my presentation on a few organizations in my country which are doing a good job at value creation for their shareholders, customers, employees and overall society but are not doing what they are expected to do. The very nature of these organizations called “co-operatives” is to serve a particular sector.
A co-operative is defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. A cooperative is a legal entity owned and democratically controlled equally by its members. The defining point in a cooperative is that the members have a close association with the cooperative as producers or consumers of its products or services, or as its employees. Cooperatives are based on the values of self-help, self-responsibility, democracy and equality. Membership is open, meaning that anyone who satisfies certain non-discriminatory conditions may join.
In Nepal, many co-operatives are behaving more and more like any other financial institution (banks and finance companies). Loans are decided before memberships and there is no feeling of community for which co-operatives stand. Although some co-operative may claim to be established to develop a particular sector, say agriculture, less than 1% of their customers might be from this sector. There is a concern about their sustainability if they act as they are typically expected to by the governing body- the Central Bank.
Are these co-operatives doing a greater good to their stakeholders by behaving more like a financial institution and less like a co-operative? May be a Utilitarian would agree, but what about standing for what you are? That, we will discuss during the presentation, I hope!
A co-operative is defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. A cooperative is a legal entity owned and democratically controlled equally by its members. The defining point in a cooperative is that the members have a close association with the cooperative as producers or consumers of its products or services, or as its employees. Cooperatives are based on the values of self-help, self-responsibility, democracy and equality. Membership is open, meaning that anyone who satisfies certain non-discriminatory conditions may join.
In Nepal, many co-operatives are behaving more and more like any other financial institution (banks and finance companies). Loans are decided before memberships and there is no feeling of community for which co-operatives stand. Although some co-operative may claim to be established to develop a particular sector, say agriculture, less than 1% of their customers might be from this sector. There is a concern about their sustainability if they act as they are typically expected to by the governing body- the Central Bank.
Are these co-operatives doing a greater good to their stakeholders by behaving more like a financial institution and less like a co-operative? May be a Utilitarian would agree, but what about standing for what you are? That, we will discuss during the presentation, I hope!
Reference:
Tax Shelters, Free Riders, and Treason?
The readings from the manuscript leave me contemplating the American preoccupation with finding a good “tax shelter” in a new light. It also invites me to look at companies like Halliburton and KBR, as well as Tyco - and many others using off-shoring - from a critical perspective in which we must consider their actions in relation to the purpose of our country's tax laws. Why do we pay taxes?
Some of the basic examples of the purpose of taxes include the security and defense of the nation, the enforcement of law and public order, protection of property, economic infrastructure, public works, and the operation of government itself. Taxes are also used toward funding of public services which include education, health care systems, social security benefits, unemployment benefits, and public transportation. Other public infrastructure needs funded by taxes include energy, water and waste management systems.
It is an easy argument to claim that the elimination of just a few of these basic government functions would leave the people of the U.S., and all those firms for which the U.S. is home, in a situation of vulnerability.
While the cases presented in the manuscript, and those we discuss in the class, are the more extreme examples of egregious profit mongering, I think it would be fair to look at even less egregious “tax sheltering” behavior - those in which corporation’s (and their agents) behavior are for the purpose of sheltering profits to enhance their bottom line – as examples of free-rider practices in which these firms gain all the benefits of a stable liberal economy, while clearly acting directly to avoid paying their fair share. One may even go so far as saying that these behaviors – in that they damage the ability of the U.S. government over the long-term to provide and create the very conditions that the nation requires to remain safe both in terms of its economy and its national security – are acts of treason.
The “agents” of these companies include all those (individuals, groups, and corporations) who willingly aid in a corporation’s purpose to avoid paying their fair share. These entities take advantage of their unequal access to decision-makers to bias the laws - of the very national economy which allowed their prosperity – in a manor that not only inflicts damage on their nation, but cheats the nation and its people from payment for the privilege of these benefits.
Some of the basic examples of the purpose of taxes include the security and defense of the nation, the enforcement of law and public order, protection of property, economic infrastructure, public works, and the operation of government itself. Taxes are also used toward funding of public services which include education, health care systems, social security benefits, unemployment benefits, and public transportation. Other public infrastructure needs funded by taxes include energy, water and waste management systems.
It is an easy argument to claim that the elimination of just a few of these basic government functions would leave the people of the U.S., and all those firms for which the U.S. is home, in a situation of vulnerability.
While the cases presented in the manuscript, and those we discuss in the class, are the more extreme examples of egregious profit mongering, I think it would be fair to look at even less egregious “tax sheltering” behavior - those in which corporation’s (and their agents) behavior are for the purpose of sheltering profits to enhance their bottom line – as examples of free-rider practices in which these firms gain all the benefits of a stable liberal economy, while clearly acting directly to avoid paying their fair share. One may even go so far as saying that these behaviors – in that they damage the ability of the U.S. government over the long-term to provide and create the very conditions that the nation requires to remain safe both in terms of its economy and its national security – are acts of treason.
The “agents” of these companies include all those (individuals, groups, and corporations) who willingly aid in a corporation’s purpose to avoid paying their fair share. These entities take advantage of their unequal access to decision-makers to bias the laws - of the very national economy which allowed their prosperity – in a manor that not only inflicts damage on their nation, but cheats the nation and its people from payment for the privilege of these benefits.
French Vacation Leaseback
I found the ethics discussion on the leaseback schemes to be interesting. I had read an article recently on a related topic. In the UK it is common for people to have self-invested personal pensions (similar to the proposal put forth by George Bush a couple of years ago during the social security “crises”). These Sipps as they are called allow individuals to make personal investments that provide tax rebates in return for limited ability to access the money until an age limit is met. Very similar to a 401k.
It is not permissible to make investments in personal property with the Sipp. Only commercial property is allowed. However a loophole has been found around this restriction. In France and Spain there is a government supported method for a legal leaseback. This method encourages people to purchase property that is intended to be used as a hotel or rental unit in order to increase tourism. Besides the rental income the buy makes, he also does not have to pay the French VAT tax, with is currently 20%.
So a buyer in the UK purchases the French vacation villa with his SIPP, receives the UK SIPP contribution tax benefit, receives the UK rental income SIPP tax exemption, receives the UK capital gains SIPP tax exemption (if the property is sold), receives the French VAT relief, and in 20 years has a nice vacation home. Considering that he only has to make a down payment to make the purchase and can finance the rest, this provides a really nice way to make a good investment.
Ethically speaking I am not sure the leaseback is really a problem here since the French law is specifically intended to increase investments in vacation properties. The buyer is using it for its intended purpose. From the SIPP standpoint, the article I read implied that the SIPP is not intended to allow investments in personal property, but in effect this is what is being allowed though the loophole. The property is commercial for a while but is really personal property which can be enjoyed as such after it is paid off.
It is not permissible to make investments in personal property with the Sipp. Only commercial property is allowed. However a loophole has been found around this restriction. In France and Spain there is a government supported method for a legal leaseback. This method encourages people to purchase property that is intended to be used as a hotel or rental unit in order to increase tourism. Besides the rental income the buy makes, he also does not have to pay the French VAT tax, with is currently 20%.
So a buyer in the UK purchases the French vacation villa with his SIPP, receives the UK SIPP contribution tax benefit, receives the UK rental income SIPP tax exemption, receives the UK capital gains SIPP tax exemption (if the property is sold), receives the French VAT relief, and in 20 years has a nice vacation home. Considering that he only has to make a down payment to make the purchase and can finance the rest, this provides a really nice way to make a good investment.
Ethically speaking I am not sure the leaseback is really a problem here since the French law is specifically intended to increase investments in vacation properties. The buyer is using it for its intended purpose. From the SIPP standpoint, the article I read implied that the SIPP is not intended to allow investments in personal property, but in effect this is what is being allowed though the loophole. The property is commercial for a while but is really personal property which can be enjoyed as such after it is paid off.
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