Ethics Sage

Politicians have fallen off the Civility Cliff and need to be Sequestered

The Lost Art of Civility

Civility: It seems to be discussed everywhere today. It seems to be misunderstood in most of those discussions. I have written about the loss of civility in society many times, but it always is worth a return visit since I believe it is the number one issue preventing our government from functioning in a way that serves the public good. Whether we are taking about “the fiscal cliff” or “sequestration,” the common theme is incivility in politics is driving most Americans, especially the middle-class that politicians purport to care about, to lose all hope that they ever will be able to achieve the American Dream.

The word ‘civility’ shares an etymological root with the idea of ‘citizenship’ on the one hand, and of ‘civilization’ on the other. The first sense of civility, reflecting the link to the concept of citizenship, is found in the idea of ‘civic behavior.’ Political theorist John Rawls argues that political legitimacy must be based on public reason. As such, ‘the ideal of citizenship imposes a moral, not a legal, duty—the duty of civility—to be able to explain to one another . . . the principles and policies they advocate and vote for’.

For those directly engaged in politics, this means listening to others, being tolerant of views other than one’s own, and recognizing that the principle of ‘shared governance’ must be put ahead of one’s own ideological claim. In other words, a civil society depends on the ability of its leaders to look beyond self-interest and make decisions based on what is best for the country. Given that Democrats and Republicans typically have different views on this matter, the fact is compromise is the basis for having a civil society because it involves listening to others and recognizing one side or the other cannot always get what it wants but, in the interests of the country, a middle ground must be found.

I have previously blogged about an interesting poll that was taken in 2010 by Weber Shandwick and Powell Tate, in partnership with KRC Research: Civility in America: A Nationwide Survey. The survey asked 1,000 American adults to express their views about the tone and level of civility in government and traditional and social media. Here are some of the results: (1) two in three respondents believe civility is a major problem while three in four believe the problem has gotten worse; (2) three in four said the financial crisis and recession made the level of civility in America worse; (3) just one in four expect civility to improve while one in three think it will get worse; (4) not surprisingly, the government and politics were identified as having the least civil discourse and a majority characterized America’s high schools, talk radio, and Hollywood celebrities as uncivil. No argument there from me.

The 2012 survey was recently released and the overall results are about the same. In other words, we’ve made no progress in becoming more civil during the past two years. You might say we are falling off the cliff of a civilized society.

Americans of all political persuasions agree that civility is a major problem today (65% of Republicans, 63% of Democrats and 62% of Independents). However, Democrats are somewhat more likely to believe civility has improved over the past few years and will continue to get better. Republicans and Independents expect civility to get worse. No surprise here because everything done by our Congressional “representatives” is driven by party affiliation and a desire to make the other party look stupid while avoiding looking stupid while doing so. Both parties have failed on this account. They all look stupid and are getting stupider by the day.

Compared to the blame pointed at politicians, government officials and the economic downturn, corporate America (42%) is less often faulted for making civility worse. Notably, the Internet and social media are also less likely to be mentioned as causing our current uncivil state of affairs. It is surprising even to me that politicians and government officials are less civil than what is said and done on the Internet and in the social media.

A civil society cannot avoid tough but important issues, simply because they are unpleasant to address. There must also be more to civility than a scrupulous adherence to the laws governing public-policy decision making. Clearly, there are numerous instances in which the parties to public-policy conflicts act in ways which are destructive and inappropriate, even though they are (and should continue to be) legal.

In short, any reasonable definition of civility must recognize that the many differing interests which divide our increasingly diverse society will produce an endless series of confrontations over difficult moral and distributional issues. Often these issues will have an irreducible win-lose character and, hence, not be amenable to consensus resolution. While continuing confrontation is inevitable, the enormous destructiveness which commonly accompanies these confrontations is not.

Our nation cannot survive as beacon of light if we cannot make the tough decisions in the name of the public good. We have been witness to the political theater of the absurd for all too many years with our politicians playing the role of blocking what the other party wants to do out of some sense of serving their constituency rather than what the American people really want – just get it done!

Our elected politicians have to stop playing games and become dispassionate advocates for the public good during a time when you can’t satisfy all of the people all, or even most, of the time. Not while we fall deeper into the black hole of over spending and less revenue coming into the government coffers; not because the rich are not taxed enough but because there aren’t enough working Americans to contribute to the revenue system, and all too many depend on government support for their livelihood.

Unfortunately, today our politicians mirror the egoistical society we have become. It manifests itself in selfishness, an unwillingness to compromise for the public good, and level of immaturity and civility as low as I can ever remember. I suppose to expect our politicians to deal intelligently with our problems – as statesmen and stateswomen – is pie in sky thinking today.

Blog posted by Steven Mintz, aka Ethics Sage, on March 4, 2013

 

U.S. in 19th Place in Corruption Perceptions Index

Transparency International Results Troubling for the U.S., China and India

The well-respected international ratings service, Transparency International (TI), just came out with its annual rankings of its Corruption Perceptions Index (CPI).

The CPI ranks 176 countries based on how people in those countries perceive the severity of corruption at all levels of government. It is a composite index, a combination of polls, drawing on corruption-related data collected by a variety of institutions. The CPI reflects the views of observers from around the world, including experts living and working in the countries/territories evaluated.

Corruption is the abuse of entrusted power for private gain. This is the working definition used by TI, applying to both the public and private sectors. The CPI focuses on corruption in the public sector, or corruption which involves public officials, civil servants or politicians. The data sources used to compile the index include questions relating to the abuse of public power and focus on: bribery of public officials, kickbacks in public procurement, embezzlement of public funds, and on questions that probe the strength and effectiveness of anti-corruption efforts in the public sector. As such, it covers both the administrative and political aspects of corruption. In producing the index, the scores of countries/territories for the specific corruption-related questions in the data sources are combined to calculate a single score for each country.

According to Transparency International, corruption generally comprises illegal activities, which mainly come to light only through scandals, investigations or prosecutions. It is thus difficult to assess absolute levels of corruption in countries or territories on the basis of hard empirical data. Possible attempts to do so such as by comparing bribes reported, the number of prosecutions brought or court cases directly linked to corruption cannot be taken as definitive indicators of corruption levels. Rather they show how effective prosecutors, the courts or the media are in investigating and exposing corruption. One reliable method of compiling comparable country data is to capture perceptions of those in a position to offer assessments of public sector corruption in a given country.

The 2011 CPI draws on 17 data sources from 13 institutions. The information used for the 2011 CPI is survey data from these sources gathered between December 2009 and September 2011. The CPI includes only sources that provide a score for a set of countries/territories and which measure perceptions of corruption in the public sector. TI ensures that the sources used are of the highest quality. To qualify, the data collection method must be well-documented and the methodology published to enable an assessment of its reliability.

Here is a listing of the top 25 countries and their scores.

Worldwide Corruption Perceptions ranking of countries published by Transparency International

Rank Country Index 2012 2012 [20] 2011 [21] 2010 [22] 2009 [23] 2008 [24] 2007 [25] 2006 [26] 2005 [27] 2004 [28] 2003 2002 1  Denmark 90 9.4 9.3 9.3 9.3 9.4 9.5 9.5 9.5 9.5 9.5 1  Finland 90 9.4 9.2 8.9 9.0 9.4 9.6 9.6 9.7 9.7 9.9 1  New Zealand 90 9.5 9.3 9.4 9.3 9.4 9.6 9.6 9.5 9.5 9.4 4  Sweden 88 9.3 9.2 9.2 9.3 9.3 9.2 9.2 9.3 9.3 9.0 5  Singapore 87 9.2 9.3 9.2 9.2 9.3 9.2 9.3 9.4 9.4 9.4 6  Switzerland 86 8.8 8.7 9.0 9.0 9.0 9.1 9.1 8.8 8.5 8.4 7  Australia 85 8.8 8.7 8.7 8.7 8.6 8.7 8.8 8.8 8.6 8.5 7  Norway 85 9.0 8.6 8.6 7.9 8.7 8.8 8.9 8.8 8.5 8.6 9  Canada 84 8.7 8.9 8.7 8.7 8.7 8.5 8.4 8.7 9.0 8.9 9  Netherlands 84 8.9 8.8 8.9 8.9 9.0 8.7 8.6 8.9 9.0 8.8 11  Iceland 82 8.3 8.5 8.7 8.9 9.2 9.6 9.7 9.6 9.4 9.2 12  Luxembourg 80 8.5 8.5 8.2 8.3 8.4 8.6 8.5 8.7 9.0 8.7 13  Germany 79 8.0 7.9 8.0 7.9 7.8 8.0 8.2 7.7 7.3 7.4 14   Hong Kong 77 8.4 8.4 8.2 8.1 8.3 8.3 8.3 8.0 8.2 7.9 15  Barbados 76 7.8 7.8 7.4 7.0 6.9 6.7 6.9       16  Belgium 75 7.5 7.1 7.1 7.3 7.1 7.3 7.4 7.6 7.1 6.6 17  Japan 74 8.0 7.8 7.7 7.3 7.5 7.6 7.3 7.0 7.1 7.1 17  United Kingdom 74 7.8 7.6 7.7 7.7 8.4 8.6 8.6 8.6 8.7 8.3 19  United States 73 7.1 7.1 7.5 7.3 7.2 7.3 7.6 7.5 7.7 7.6 20  Chile 72 7.2 7.2 6.7 6.9 7.0 7.3 7.3 7.4 7.5 7.5 20  Uruguay 72 7.0 6.9 6.7 6.9 6.7 6.4 5.9 5.5 5.1 5.1 22  Bahamas 71 7.3                   22  France 71 7.0 6.8 6.9 6.9 7.3 7.4 7.5 6.9 6.3 6.7 22  Saint Lucia 71 7.0   7.0 7.1 6.8           25  Austria 69 7.8 7.9 7.9 8.1 8.1 8.6 8.7 8.0 7.8 7.8

 

Greece, which is the recipient of aid and loans from Europe and the International Monetary Fund totaling nearly €250 billion ($327 billion), dropped to 94 from 80, and replaced ex-communist Bulgaria at the bottom of the list of 27 EU members. Bulgaria now ranks 75th.

The ranking also shows that Italy, which hasn't received a bailout but has been struggling with high interest rates on its government debt, slipped to 72nd, below Romania, at 66.

Portugal and Ireland, which along with Greece have received euro-zone bailouts, were placed 33rd and 25th, respectively. It is not surprising that many countries in the euro zone are struggling from a corruption point of view given the internal financial pressures that exist.

Denmark, Finland and New Zealand tied for first place, helped by strong access to information about government activity and rules governing the behavior of public officials. Sweden, Singapore and Switzerland ranked fourth, fifth and sixth, respectively. Somalia once again ranked last, behind North Korea, Afghanistan and Sudan.

The report also notes that Egypt, where frustrated citizens overthrew the authoritarian government in last year's Arab Spring, is now perceived as more corrupt than before the revolution. Egypt slipped to 118 from 112.

The United States ranked 19^th, just behind Japan and the United Kingdom. I do not view these results as positive for the U.S. given countries like Chile and Uruguay were almost tied with the U.S. There is no glory in saying we are only four rankings ahead of France, a country known for corruption in government.

China ranked 80th and that should be of concern to a government, already perceived as corrupt, with respect to global economic development and growth. I believe the point will be reached in the future where foreign businesses become more reluctant to do business in China if it doesn’t conform to international norms with respect to anti-corruption and transparency, especially in the financial results of state-owned enterprises.

The news is not much better for India, the other rapidly developing economy, that is ranked 94^th. Corruption is endemic in virtually all aspects of government in India. A culture of bribery has existed for a long time. I wonder whether India will ever achieve all of its promise as an economic powerhouse given the culture of corruption.

On a broader level, I believe the TI CPI results are important because they measure countries against a common standard and provide benchmarks for comparison. They highlight the importance of transparency and echo the concerns expressed by President Obama in his 2009 inaugural address that emphasized the importance of transparency in government practice and its value in holding government accountable for its actions “… And those of us who manage the public's dollars will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government.”

I hope the President revisits the issue in his second inauguration on January 21, 2013. He needs to acknowledge that the trust between the public and our government has worsened during the past four years. I do not blame him. I blame mainly Congress – on both sides of the isle – as its members sought out their own narrowly-perceived self-interests to the detriment of what is in the best interests of society and the public good.

Blog posted by Steven Mintz, aka Ethics Sage, on December 28, 2012

 

E-Mails from Biographer to a Third Party Led to Petraeus’ Resignation

How should we Evaluate Patraeus’ accomplishments in light of his Affair?

What is it about middle age men and their libidos? First it was Bill Clinton. Then, John Edwards followed by Eliot Spitzer. Fit Tiger Woods in there. I could go on but you get the picture. The latest to fall from grace is General David Petraeus, the American former military officer and public official.

Patraeus served as Director of the CIA from September 6, 2011, until his resignation on November 9, 2012. Petraeus acknowledged in his announcement that he had shown "extremely poor judgment by engaging in an extramarital affair." You think?

The woman at the center of the extramarital affair that led to the resignation of Petraeus is a highly-accomplished, West Point graduate like Patraeus, author and anti-terrorist specialist who got to know the high-profile general, in part, by going running with him in Afghanistan.

Paula Broadwell met Gen. David Petraeus in 2006, when she introduced herself after he gave a speech at Harvard's Kennedy School, where Broadwell was working on a master's degree. She got to know the General thereafter and wrote a book about him: All In: The Education of General David Petraeus. The glowing biography was taken offline shortly after her name was linked to the scandal.

The sordid affair was uncovered by an FBI investigation of “harassing” e-mails sent by Broadwell to another woman reported to be Jill Kelley who was a "social liaison" to military bases in Tampa, Florida. That probe led agents to Broadwell's email account, which uncovered the relationship with the retired four-star general, who earned acclaim for his leadership of the wars in Iraq and Afghanistan.

When F.B.I. agents followed up on the complaint and began to examine Broadwells’ e-mails, they discovered exchanges between her and Petraeus that revealed that they were having an affair, according to several officials who described the investigation on the condition of anonymity. They also discovered that Broadwell apparently had acquired some classified documents, and considered whether Petraeus might be the source, one official said.

The F.B.I. investigators were not pursuing evidence of Petraeus’s marital infidelity, which would not be a criminal matter. But their examination of his e-mails, most or all of them sent from a personal account and not from his C.I.A. account, raised the possibility of security breaches that needed to be addressed directly with him.

The agents apparently concluded, however, that it was probably not Petraeus who had given them to her, and that there had been no major breach of security. No leak charges are expected to be filed as a result of the investigation.

President Obama praised the General in his announcement of the resignation on November 9. "David Petraeus has provided extraordinary service to the United States for decades. By any measure, he was one of the outstanding General officers of his generation, helping our military adapt to new challenges, and leading our men and women in uniform through a remarkable period of service in Iraq and Afghanistan, where he helped our nation put those wars on a path to a responsible end," Obama said. "As Director of the Central Intelligence Agency, he has continued to serve with characteristic intellectual rigor, dedication, and patriotism. By any measure, through his lifetime of service David Petraeus has made our country safer and stronger.”

The Patraeus-Broadwell matter raises the question whether his life’s-work should be judged by his military accomplishments, which are significant, or the fall from grace because of his extramarital affair. Normally, I am willing to forgive someone for such discretion. To do so I look for signs of true regret for one’s actions: (1) admit to the mistake willingly; (2) show true remorse for what you have done; (3) apologize to those you have harmed; and (4) promise to never do it again.

Patraeus may have met these requirements. Still, he was in a sensitive national security position that, in my mind, overrides these prerequisites of true forgiveness. Who knows what he told Broadwell? Who know what she might now try to pass on to others, most of who have no right to know about the inner workings of the CIA or its field operations?

Patraeus exhibited a severe lack of judgment, lack of common sense, contempt for the uniform, and disrespect for his family. I cannot forgive his actions under any circumstances. Putting aside the issue of remorsefulness, it’s important to remember that ethics is not judged by situational behavior or relative to one’s beliefs. Ethics rely on established standards of moral behavior in society, not to mention the military code of conduct. Patraeus violated these norms and as a leader in the military he dishonored the uniform and put into question his service to the country.

Patraeus should be held to a higher standard because of his position. My goodness, he presided over much of "the surge" period in the war in Afghanistan. Under other circumstances I might have forgiven him, but not when he potentially compromised sensitive military information by passing it along to Broadwell. It doesn’t matter whether he did or did not do so. He shouldn’t put himself in such a compromising position by having an affair with his biographer, writer, and someone who had the potential to taint his entire life’s work.

To quote the incomparable Forrest Gump: “Stupid is what stupid does.”

Blog posted by Steven Mintz, aka Ethics Sage, on November 12, 2012

The Ethics of Awarding Military Uniform Contracts to Prison Inmates

Is Federal Prison Industries Stealing Jobs?

It's hard to compete with workers willing to take pay as low as 23 cents an hour. Do I mean workers in Guatemala or Vietnam? No. I mean Americans in federal prisons.

Two American companies which make military uniforms are laying off hundreds of workers as the federal government decides to use prison inmates to make soldier fatigues. American Apparel currently charges $29.44 per uniform. The cost will increase by 15 percent when Federal Prison Industries (FPI) convicts begin sewing the clothing at a cost of $34.18 each. FPI also functions under the name UNICOR. The convicts are reported to receive between 23 cents and $1.15 per hour. That’s quite a markup for FPI. The ethical question is whether it is right to take work away from private industry to support a prison-based program with the government’s blessing?

Under the law, FPI receives preference for contracts up to a certain percentage, about 7%, before they have to compete against private industry. My concern is an item such as the army combat uniform is earmarked directly for FPI without competitive bidding. American taxpayers pay more for it, but the bottom line is each soldier is paying more for their uniform.

FPI currently operates approximately 80 factories with more than 13,000 convict workers. The correctional institute factories are not permitted to sell goods to the private sector. The law mandates that federal agencies buy the products, even when they are not the least expensive available option.

Critics accuse UNICOR which last year pulled in $900 million in revenue, of shifting its focus from the betterment of inmates to profits. Those profits, they allege, have largely come at the expense of small business which are already struggling to secure government work. A bipartisan group of lawmakers has proposed new rules that would change the way prison manufacturing companies do business, subjecting them to stricter standards that would lead to higher prices.

In my mind it is difficult to ethically justify the program when so many US businesses are suffering from the great recession. I recently read that Alabama-based American Apparel was forced to close one plant and downsize at others due to the loss of contracts to prison inmates, according to company spokesman and retired Air Force Colonel Kurt Wilson. A total of 190 employees had their hours cut, and 255 others were laid off this year.

Also, I can’t think of any other situation where the government awards a contract to a private company without competitive bidding. I don’t like the government picking winners and losers with respect to government contract work when the playing field is not level.

One way to justify the FPI program is that it teaches inmates a skill and aids in their adjustment back to society. Some claim it also can decrease crime because that skill will enable them to become productive members of society. I’ll withhold judgment on that claim until the program has had several years or so to follow inmates in the program who have subsequently been released back to society. However, I can’t help but wonder whether the adjustment “reason” is a rationalization for an unfair action that knowingly harms private companies making military uniforms.

It seems to me if we want to teach inmates a marketable skill it should start with computer skills. These are in great demand and are transferable to any numbers of jobs and occupations.

I can’t imagine what would be the uproar from the public if we were importing goods manufactured by prison labor in someplace like China? That leads me to my final point. How can we argue against outsourcing manufacturing overseas to countries like India and the Philippines when we insource manufacturing in the US to companies chosen by the US government and not by free-market principles? It seems to run counter to our capitalistic system that relies on non-interference by the government. You know the “laissez-faire” concept!

Blog posted by Steven Mintz, aka Ethics Sage, on October 9, 2012

Voter Fraud: Real or Imagined?

Challenges to Voter ID laws Raise Questions about Voter Suppression

Claims of voter fraud by state attorney generals are on the rise. On August 1, 2012 the American Civil Liberties Union (ACLU) challenged Pennsylvania's new voter ID legislation alleging that "large numbers of registered voters in Pennsylvania will not have their votes counted on Nov. 6, 2012 because they will be unable to present an acceptable photo ID" and that the new photo ID law "will lead to elections that are no longer free and equal."

At the moment, the U.S. Justice Department is looking into the law, but Pennsylvania doesn't go through pre-clearance under the Voting Right Act like Texas and South Carolina are going through, two states where voter ID laws are being challenged.

The voter fraud issue in recent times goes back to 2008 when the U.S. Supreme Court recognized the threat posed by voter fraud and ruled that Indiana's photo ID requirement was a legitimate, non-discriminatory means of protecting the integrity of elections. The Supreme Court upheld Indiana's law despite no concrete evidence of fraud in Indiana's elections.

In South Carolina, the state claims that dead voters have been casting ballots in past elections and a voter ID law is necessary to prevent fraud.  Last year, South Carolina passed a voter ID law to require all voters to present a certain form of photo identification or be turned away from the polls. The Justice Department blocked that law a year ago for violating the Voting Rights Act’s prohibition on election laws that discriminate against minorities. An examination of the voting rolls by the State Election Commission appears to have turned up no evidence of fraud.  

In Texas, evidence of voter fraud abounds. In recent years, the Attorney General’s office has secured more than 50 voter fraud convictions. Those include a woman who voted in place of her dead mother, a political operative who cast ballots for two people, and a city councilmember who registered foreign nationals to vote in an election decided by 19 votes. Voter fraud is hard to detect, so the AG alleges cases like these are just the tip of the iceberg.

In 2011, Texas enacted a photo-identification requirement modeled after Indiana's. The Department of Justice rejected the Texas voter ID law on March 12, 2012, preventing it from taking effect.

A spokesman for the Texas Attorney General’s office claims that three-quarters of the cases involved election code violations classified as "illegal voting" – which includes acts such as voting more than once, impersonating a voter or voting despite ineligibility -- and "method of returning marked ballot," often meaning the defendant was accused of having someone else’s ballot.

In April 2012, Florida election officials were denied help by the federal government to confirm citizenship status (and voter fraud) for an estimated 180,000 illegal immigrants already registered to vote in Florida. The explanation seems to be that Florida’s Motor Voter Act of 1993 (which most states have in some form) prohibited even asking immigration status when an individual filled out their voter registration form while failing to require proof of citizenship.

Investigators are now looking into possible vote fraud in Hialeah, Fla., where at least 31 absentee ballots were collected by a suspected ballot broker in two separate instances in July 2012. Miami-Dade detectives questioned a Hialeah woman named Daisy Cabrera, who was found in possession of at least a dozen absentee ballots belonging to other voters. Some voters have told El Nuevo Herald that Cabrera filled out ballots for them in local elections - and offered to help the voter move up a public housing waiting list.

In the most bizarre case, in eastern Kentucky a major cocaine and marijuana dealer admitted to buying votes to steal elections. Kerry B. Harvey, U.S. attorney for the Eastern District of Kentucky, described a stunning vote-buying scheme that includes "very extensive, organized criminal activity, involving hundreds of thousands of dollars, and in many cases that involves drug money." Prosecutors say more than $400,000, part of it drug proceeds, was pooled by Democratic and Republican politicians over several elections, and spent to buy the votes of more than 8,000 voters, usually at $50 apiece.

There are reported cases of voter fraud but they appear to be isolated incidents. Still, if we can’t trust our election process 100% then how can we claim to be “The Shining City upon a Hill?” We are supposed to set an example for the rest of the world. We monitor elections in other countries to prevent election fraud. Our country cannot afford to have its election process tainted even by questionable allegations.

Voter fraud should become a major election issue because it goes to the very core of who we are as a people. Election fraud begets other kinds of fraud including kickbacks to government officials, financial fraud, credit card fraud, and so on. As a nation we need to “wake up and smell the coffee.” We have become a nation that places greed above all else; we’ve lost our moral compass. The sooner we admit to the problem, the sooner we can begin to heal the cancer that grows within us.

Blog posted by Steven Mintz, aka Ethics Sage, on August 8, 2012

Ethics of using Eminent Domain to Seize, Restructure Underwater Mortgages

What is 'Public Use' in the Context of Seizing Private Property?

Last Friday an opinion editorial I wrote was published in the Pacific Coast Business Times. Given the interest in the topic, at least out here in California, I decided to post it on my blog.

Eminent domain refers to the power possessed by the state over all property within the state, specifically its power to appropriate property for a public use.

Generally, when a unit of government wants to acquire privately held land the government attempts to negotiate the purchase of the property for fair value. If the owner does not want to sell, the government files a court action to exercise eminent domain, and serves or publishes notice of the hearing as required by law. In the state of California, the eminent domain process can only be stopped if the proposed taking does not meet the requirements for public purpose or public necessity.  

On July 5 it was reported that officials in San Bernardino County, and in the cities of Fontana and Ontario, are considering using eminent domain to seize and restructure underwater mortgages and help struggling homeowners. The idea is to acquire the mortgages of distressed homeowners and restructure them in a way that allows the borrowers to stay in their homes.

As might be expected, banking and housing groups are not on board. They are concerned that forced restructuring through eminent domain could lead to big losses for the investors in these home loans and a loss of confidence in the ability of the cities to repay debt in the future. Seizing mortgages in this way would result in losses for public pension plans, 401(k) plans and individual investors who bought the individual loans as part of a packaged group of securities known as collateralized debt obligations. You remember these securitized assets that were at the forefront of the 2008 financial meltdown.

Two important ethical issues exist in using the eminent domain process to help one group of homeowners and not others. The first is the problem of moral hazard whereby the costs of risk-taking are passed along to other parties. The second is basic fairness. Is it fair to help out a group of people who got in over their heads or who no longer have the ability (or desire) to meet their obligations? What about homeowners who did the right thing? There are many homeowners who are living up to their obligations and making mortgage payments even though their mortgages far exceed the fair market value of their property.

The use of eminent domain rewards irresponsible behavior, even if caused by events out of the control of the benefited party. It sets a bad precedent that the government will be there to help you if economic conditions create challenges that otherwise would be met. It is unfair to others who play by the rules.

The use of eminent domain to refinance underwater mortgages is an ethical slippery slope. Where does it stop? Why not use it to pay off automobile loans and prevent repossession? Why not restructure student debt to relieve the burden of years of loan repayment?

There is a reason we live in a free market economy. We believe in letting the marketplace resolve issues of supply and demand for housing. We should also learn from the past and acknowledge that various affordable housing programs have not worked to stem the tide of foreclosures and underwater mortgages. The real problem is stagnant economic growth.

The U.S. Constitution states that “No person shall be… deprived of… property, without due process of law; nor shall private property be taken for public use, without just compensation.” The key is to define ‘for public use’. Public use is generally thought of as having a public benefit such as seizure to develop infrastructure. The eminent domain action being contemplated by San Bernardino county officials benefits one group of people and might lead to the loss in value of homes for those who have played by the rules.

The free-market solution to the housing dilemma is for banks to work with their customers to restructure debt. We should not expect the banks and investors to sit idly by and watch the government intervene in the process. The eminent domain solution is more akin to socialism than capitalism.

Blog posted by Steven Mintz, aka Ethics Sage, on July 26, 2012

Moral Blindness

Why Good People Sometimes Do Bad Things

The noted moral psychologist James Rest developed a Four-Component Model of Moral Development that identifies four essential characteristics of moral behavior. If we examine the model, we can see why good people sometimes do bad things. I'm talking about people who would otherwise act ethically but for pressures either self-imposed (i.e., desire to be a "team player" even though you are asked to do something you know is wrong) or imposed by an outsider (i.e., a superior who threatens your job if you don't go along with something you know is wrong).

In order to make an ethical decision and act ethically, the first step is to identify that an ethical issue exists for you, or what Rest called ethical sensitivity. This is not so easy since many people who want to do the right thing -- try to do the right thing -- do not realize they are involved in an ethical situation. I tell my students a good perspective is that you are faced with an ethical issue whenever your actions affect others. These are the stakeholders potentially affected by what you do or do not do. It is a matter of ethics how you treat them (remember "The Golden Rule"). If you treat others with respect, caring and empathy, fairness, and with honesty and trustworthiness, then you are sensitive to the ethical issues. Since Accounting is my field a good analogy is to recognize that the financial statements must be accurate and reliable to protect the position of shareholders and creditors.

Once the ethical issues have been identified, the next step is to apply moral judgment to reason out what is the most ethical action to take. We should consider how our actions affect others using ethical reasoning methods such as harms and benefits (Utilitarianism) and not violate the rights (Rights Theory) of others. It would be wrong for an accountant or auditor to go along with materially misleading financial statements because it violates the rights of shareholders and creditors to receive accurate and reliable financial information. These stakeholders make decisions based on the information so it must be in accordance with generally accepted accounting principles and be transparent.

It is not enough to have the skills to reason out what is the most ethical action. Rest points out that ethical intention must follow ethical reasoning to turn decisions into action. In other words, do you want to be an ethical person? Do you want to do the right thing? Let's be honest, not everyone is concerned about whether they make an ethical choice/decision. Some people don't care -- John Edwards is a good example. Others believe they won't get caught so they ignore ethics. I believe Tiger Woods works well here.  Also, you can pick any one of a number of corporate executives involved in financial fraud at Enron, WorldCom, and so on.

Even the desire to do the right thing and act ethically is not enough because of the pressures previously mentioned. Young people get caught up in giving in to peer pressure and they go along with something they know is wrong. In accounting, a supervisor (i.e., Chief Financial Officer) might pressure an accountant (i.e., Controller) to go along with materially misstated financial statements. The accountant knows his or her job may be on the line. An expected promotion may be withdrawn or a demotion forthcoming unless that person agrees to manipulate the statements or at least be silent about it.

So how can an otherwise ethical person combat these pressures and follow through with ethical judgment and action? The key is integrity. Integrity is an ethical value that summons up the courage to take an ethical action despite pressures to do otherwise. It means we have the courage to act in accordance with our principles which should be to:

Treat Others the Way We Want to Be Treated.

Respect the Rights of Others.

Never take an Action that Does More Harm than Good.

I could go on but you get the point. Ethics is not easy. Being committed to your values takes moral strength. The key is not to take the first step down the proverbial ethical slippery slope. Once we agree to be silent; to go along with wrongdoing; and go along to get along; then we have begun the slide and it becomes very difficult, should we gain a conscience, to turn around to reclaim the high road.

I leave you with something said by W. Clement Stone, a businessman, philanthropist, and self-help book author: "Have the courage to say no. Have the courage to face the truth. Do the right thing because it is right. These are the magic keys to living your life with integrity."

Blog posted by Steven Mintz, aka Ethics Sage, on May 3, 2012

Abramoff, PACs, and Campaign Financing

Abramoff is Out of Prison Just in Time to Witness the Buying of the Presidency

Last week it was reported that Jack Abramoff, the former lobbyist, businessman and movie producer who was indicted on charges of fraud, conspiracy and tax evasion after an extensive corruption investigation, will give a talk on ethics at The University of Texas at Austin on May 2. "You Don't Know Jack! A Conversation with Jack Abramoff” will be held at the AT&T Executive Education & Conference Center on the UT campus.

Abramoff, who served four years in federal prison after pleading guilty, will discuss the importance of ethics in government, as well as personal ethics as they relate to his own experiences. He will describe the pitfalls he didn’t see, what he didn’t do, how he came to the point of making only bad choices and how he came to realize his mistakes and work through them.

I don’t know about you but I have a problem with a convicted fraudster going on the speaker’s circuit and making money by telling listeners why and how s/he did what they were convicted of doing. It’s worse when that person gives advice on how to spot fellow-fraudsters. Perhaps it’s just me but the only way in my mind of justifying a speaking engagement for a fraudster is to donate the speaker’s fee to a worthy cause. On that comes to mind is The Association of Certified Fraud Examiners.  This is a group of well-trained accountants, auditors, lawyers and investigators who examine incidents of fraud and provide expert information on the causes and results of such actions, and how to prevent and detect fraud in an organization.

Abramoff has the dubious “distinction” of having been involved in the most widespread influence-peddling scandal to date. On September 4, 2008, he was sentenced to a four-year term in federal prison for mail fraud, conspiracy, and tax-evasion charges stemming from an influence-peddling scandal in Washington, D.C. Lawmakers, lobbyists, Bush administration officials, congressional staffers, and businessmen got caught up in the Abramoff public corruption probe including former Ohio Representative Bob Ney (R-GA) who was sentenced to a 2 1/2 year prison term for taking bribes from Abramoff.

Abramoff was released from prison in June 2010 having been confined since November 2006. I guess he received four months off his sentence for good behavior. Perhaps he gave seminars in prison and counseled prisoners on the errors of their ways.

Abramoff has been trying to regain the notoriety he once had by establishing a promotional website and he began to charge for giving talks about corruption in Washington with titles like "How Lobbyists Shape Your Industry" and "Can Congress be Fixed?" Abramoff also made the rounds on talk shows like "Hannity," "60 Minutes," "The Early Show" and "Piers Morgan Tonight" in an attempt to rebrand himself as a whistleblower against corruption. He has a Facebook page and game app called "Congressional Jack," and a feature film called “Casino Jack.” The movie tells the story about how a band of amoral lobbyists and ideologues bought and sold favors from a slew of influential Republicans.

How timely it is that Jack’s lobbying entanglements seem to have ushered in an era of sanctioned influence peddling in Washington, D.C. During the past several months we watched as Political Action Committees (PAC) were used to influence the outcome of primary elections. Critics of Mitt Romney claim he paid for and bought the Republican nomination for President through the operations of his PAC.

We can thank a 2010 Supreme Court decision, Citizens United v. Federal Election Commission. In the case, a bitterly divided court ruled 5 to 4 that the government may not ban independent political spending by corporations, as well as labor unions and other organizations, in candidate elections. The decision and subsequent court rulings led to tens of millions of dollars in donations -- often by wealthy individuals, of as much as $5 million at a time -- to super PACs supporting candidates in the Republican primaries.

We now live in a political campaign environment where there are no limits on how much cash can be raised and spent by anonymous donors seeking to influence elections and legislation. It is a world that would suit the old Jack Abramoff quite well. The 2012 presidential election is almost certain to be the most expensive in history, as the two main candidates set lofty fundraising goals and money floods in to “super PACs,’' independent political committees that have been supercharged by a series of court decisions.

The sad fact is that millions of Americans go hungry every night while politicians and their PACs and Super PAC’s spend outrageous amounts of money to influence a contest that is supposed to pick the next President of the US, a person who should represent all the people.

Blog posted by Steven Mintz, aka Ethics Sage, on April 16, 2012

GSA Misuses Funds and Improperly Awards Contracts

Wasteful GSA Spending and Contract Procurement Policies to be investigated by Congress

What in the world is the General Services Administration thinking? After all the fraud, misuse of funds and downright unethical actions that caused the financial meltdown in 2008, along comes the GSA with its own brand of greed and stupidity. GSA Administrator Martha N. Johnson resigned last Monday and two of her senior deputies have been fired in the wake of the agency’s recent spending scandal.

The GSA inspector general’s report, which strongly criticizes the agency for excessive spending on clowns, mind readers and lavish parties during a training conference just outside Las Vegas, claims that officials awarded a $58,808 contract to a large audio and visual services firm, Royal Productions, when federal regulations require contracts of such size be reserved for small businesses.

The inspector general also said the agency violated federal rules by neglecting to publish a solicitation for the contract on the government’s list of Federal Business Opportunities and by providing Royal Productions with a competing bidder’s quote — thus allowing the company to present a winning offer. This is ethics 101. The bidding process must be above board and confidential. It didn’t help matters from an ethical perspective that the agency paid roughly double what the contract outlined for the company’s employees’ hotel rooms, according to the report.

The contracting accusations focus on a problem that some say has been crippling the nation’s small businesses for more than a decade. “The diversion of small-business contracts to large corporations has gone on for a dozen years, and the only thing the government has done in response is remove the transparency,” Lloyd Chapman, president of the American Small Business League, said in an interview, later adding that the procurement review system available to the public has become increasingly difficult to use in recent years.

The federal government has a stated goal of awarding 23 percent of contract dollars every year to small businesses. However, Chapman pointed to his group’s recent analysis of government data that showed that 72 of the 100 companies receiving the highest amount of federal small-business contracts in 2011 were firms that exceeded the Small Business Administration’s size standards for small companies.

“Anytime you take a sample of what the federal government is doing and anytime you take a look at small-business contracting in almost any federal agency, what you find is money going to the biggest companies in the world,” he said.

In October, the SBA’s inspector general published a report acknowledging that small-business contracting was the agency’s most serious management and performance challenge. Specifically, the report stated that “procurement flaws allow large firms to obtain small business awards and agencies to count contracts performed by large firms towards their small business goals.”

Congress plans to hold hearings on the claims of wasteful spending against the GSA. No doubt it will be a waste of time without significant consequences for the perpetrators of the bad judgment and fraudulent activities of the GSA. I have seen this movie before and know how it will end.

Blog posted by Steven Mintz, aka Ethics Sage, on April 9, 2012

What is Civility?

Lack of Respect is the Root of Cause of Incivility in Society

The word ‘civility’ shares an etymological root with the idea of ‘citizenship’ on the one hand, and of ‘civilization’ on the other. The first sense of civility, reflecting the link to the concept of citizenship, is found in the idea of ‘civic behavior’. Political theorist John Rawls argues that political legitimacy must be based on public reason. As such, ‘the ideal of citizenship imposes a moral, not a legal, duty—the duty of civility—to be able to explain to one another . . . the principles and policies they advocate and vote for’.

If we look at the Republican nominating process of choosing a candidate to run against President Obama, it is difficult to see any evidence of civil discourse. Civility in this sense requires that we listen to others with fair-mindedness and accord them the respect they deserve. Ah, but there is the rub.

I have blogged before about the issue of civility and pointed out that by age sixteen, George Washington had copied out by hand, 110 Rules of Civility & Decent Behavior in Company and Conversation. They are based on a set or rules composed by French Jesuits in 1595. The first rule is:  'Every Action done in Company, ought to be with Some Sign of Respect, to those that are Present.'

For those directly engaged in politics, this means listening to others, being tolerant of views other than one’s own, and recognizing that the principle of ‘shared governance’ must be put ahead of one’s own ideological claim. In other words, a civil society depends on the ability of its leaders to look beyond self-interest and make decisions based on what is best for the country. Given that Democrats and Republicans typically have different views on this matter, the fact is compromise is the basis for having a civil society because it involves listening to others and recognizing one side or the other cannot always get what it wants but, in the interests of the country, a middle ground must be found.

One June 22, 2010, Weber Shandwick, Powell Tate and KRC Research released new research that explores the state of civility in America. The survey asked 1,000 American adults to express their views about the tone and level of civility in government and traditional and social media. Here are some of the results: (1) two in three respondents believe civility is a major problem while three in four believe the problem has gotten worse; (2) three in four said the financial crisis and recession made the level of civility in America worse; (3) just one in four expect civility to improve while one in three think it will get worse; (4) not surprisingly, the government and politics were identified as having the least civil discourse and a majority characterized America’s high schools, talk radio, and Hollywood celebrities as uncivil.

Have you checked out You Tube lately? More and more we see video clips of teenagers attacking one another and there seems to be a marked increase in girls getting involved in the mayhem. I suppose such actions were the motivation for the Oxygen network developing a television program called Bad Girls Club that is in its sixth season.

The big question is why does society reward bad behavior? Does each of us secretly wish we could do the same thing and have such public exposure? Of course, it’s hard these days to do the right thing and wind up with your own television show. The public doesn’t want to see it and network executives give the public what they want. Or, is it the other way around? People who act responsibly and accept the consequences of their actions typically are not the kind of people who seek out notoriety for their good acts. They do it because of an inner voice or conscience that tells them it is the right way to behave.

I see no hope for civility becoming the norm in American life so long as our leaders act uncivil. Incivility in public discourse seems to create a divide in how talk radio deals with important issues facing the nation. One side or the other makes fun of their opponents; dissects every last word to find a gaffe; and even exaggerates the opposing views to the point of distortion if not outright lying. Incivility then creeps into every day life such as cutting people off on a roadway, shoving others to get to the head of a line, cursing in public and other forms of uncivil behavior.

Civil discourse was an important value to our founding fathers. Perhaps Ralph Waldo Emerson said it best: "There can be no high civility without a deep morality."  

Blog posted by Steven Mintz, aka Ethics Sage, on April 2, 2012

KONY 2012: Doing the Right Thing

Is there Hope for Victims of Joseph Kony and Other Victims of Unspeakable Crimes in Africa?

We can question the motives of filmmaker Jason Russell in making the film KONY 2012 and how donated funds have been used by the non-profit organization, Invisible Children. We can question his use of mostly white people to tell the uniquely African story of child kidnappings, abuse, forced sexual slavery, coerced mutilations of children’s faces, and forced killings even of one’s parents. We can question the relative simplification of a complicated story that extends beyond Ugandan borders. However, what we cannot dispute is the emotional effect of the twenty-seven minute film that went viral since it first hit You Tube on March 6, 2012, with more than 84 million viewers to date. We cannot dispute it is the right thing to do to bring the matter to the collective consciousness of the entire world.

If you haven’t heard of it, you haven’t been on Facebook or Twitter within the last two weeks. The social media attention that this issue has gotten since its release has shocked everyone, including the producer himself. Perhaps that explains Russell’s recent mental breakdown ("reactive psychosis") following scores of interviews and international attention never before seen.

The twenty-seven minute video can be viewed on You Tube. It is well worth your time given the educational and (anti-) humanitarian story of a man and has actions that led to his being named the world’s worst criminal by the International Criminal Court.

Joseph Kony is the head of the Lord’s Resistance Army, a Ugandan rebel group that has abducted an estimated 66,000 children since 1986 to become soldiers in his army. Kony kidnaps the children and enlists them into the LRA. He forces them to commit atrocities not in the name of a cause but to retain and gain more and more power by driving the population to fear him even more than death itself.

KONY 2012 was released by The Invisible Children group to raise awareness of the criminal acts of Joseph Kony. As stated on their webpage, Invisible Children’s mission is to use “film, creativity and social action to end the use of child soldiers in Joseph Kony’s rebel war and restore LRA-affected communities in Central Africa to peace and prosperity”. Three young filmmakers had traveled to Africa in search of a story, and came back with a documentary that aired in 2005 on the invisible children of the Lord’s Resistance Army. However, very little attention was paid to the story until the video.

U.S. involvement was minimal until Invisible Children urged the government to take action. In May 2010, President Obama signed the Lord’s Resistance Army Disarmament and Northern Uganda Recovery Act. Not much happened until November 24, 2010 when Obama sent a document to Congress to acquire more money for the cause. As of October 14, 2011, Obama deployed 100 U.S. military advisors to assist, train, and offer intelligence to the Ugandan forces to help combat the LRA. This is not a military action by the U.S. but one of technical assistance in part to find Kony in the jungle so he can be brought to justice. It is the right thing to do – the humane thing to do.

Current efforts are to publicize the story and plight of Ugandan children including making the Invisible Children visible for the whole world to see the atrocities committed in the name of Joseph Kony. Invisible Children are targeting 20 culture-makers (Hollywood types) and 12 power-makers (with influence on governmental affairs) to lend their name and help spread the word.

Invisible Children wants to make Kony even more famous in the U.S. by having young people plaster their neighborhoods with posters featuring Kony’s picture. At sundown on Friday, April 20, the organization is urging young people to gather together and work all night putting up posters. They have printed hundreds of thousands of posters in preparation for the event. The organization believes once people find out more about what Kony has done then justice will prevail.

The story of Joseph Kony and the Invisible Children is played out endlessly in other African countries. While attention should be focused on the plight of Ugandan children forced into unspeakable acts we must not forget other struggles and atrocities. Most recent are the ethnic clashes between the Murle and Lou Nuer tribes in the world’s newest nation, South Sudan. Fighting continues in the Jonglei region of South Sudan, where battles have claimed thousands of lives since the country gained independence from Sudan in July 2011. According to the United Nations, more than 300,000 South Sudanese were displaced due to internal violence last year.

Then there is Joshua Milton Blahyi, once dubbed to be one of Liberia’s most feared warlords, who was responsible for the killing of nearly 20,000 people during Liberia’s 14-year civil war. Recently he converted to Christianity and proclaimed to be an evangelist, traveling the nation as a preacher and asking for forgiveness from those whom he had hurt in the past. A film documentary was made of his past, “The Redemption of General Butt Naked,” and asks the question whether a transformation so great can ever occur and how will we know it is real.

Africa has been a troubled region of the world for many years. Millions have died in the Democratic Republic of the Congo (formerly Zaire) during the conflict between warring rebel militias and the national army as they vie for control over the country’s vast mineral wealth and control of slaves, many of whom are women and who are forced to work in the mines and into a life of sexual slavery.

Who can forget the Rwandan Genocide and the 1994 mass murder of an estimated 800,000 due to ethnic strife between the minority Tutsi, who had controlled power for centuries, and the majority Hutu peoples, who had come to power in the rebellion of 1959–62 and overthrown the Tutsi monarchy.

Is there hope for Africa to become more peaceful and end the bloodshed formed by many years of ethnic and tribal conflict? One place to look for a useful perspective on the issue is the Prime Minister of Malaysia, Datuk Seri Dr Mahathir Mohamad, who made an impassioned plea for an end to inter-religious strife in his country. Speaking at the official opening of the 11th General Assembly of the World Evangelical Fellowship in Kuala Lumpur on May 4, 2011, Dr Mahathir said that once started, religious disputes often lead to violence over several generations.

"Intolerance breeds injustice. Injustice invariably leads to rebellion and retaliation, and these will lead to escalation on the part of both making reconciliation almost impossible. It would appear that during times of stress, despair and frustration, people become increasingly irrational, and they do things, which they never think they are capable of. And so we see hideous brutality perpetrated by the most gentle people.”

Blog posted by Steven Mintz, aka Ethics Sage, on March 19, 2012

The Ethics of Using Dolphins to Detect Underwater Mines

U.S. Navy May Use Mine-Detecting Dolphins to Keep Open the Strait of Hormuz

The threat of Iran closing the Strait of Hormuz has reached a fever pitch with U.S. officials warning Iran's supreme leader that such moves would cross a “red line” provoking a U.S. response. Iran could block the strait with any assortment of mines, armed speed boats or anti-ship cruise missiles but according to Michael Connell at the Center for Naval Analysis, “The immediate issue [for the U.S. military] is to get the mines.” To solve that problem, the Navy has a solution that isn't heavily-advertised but has a time-tested success rate: mine-detecting dolphins.

"We've got [MK 6] dolphins," said retired Adm. Tim Keating in an interview with NPR. Navy-trained dolphins would come in handy. They are astounding in their ability to detect underwater objects. Their skills are so precise that it takes six years to fully train the mammals. This three-minute video demonstrates just how the mine-detection process works. There is a 10-second promo so be patient.

The invasion of Iraq was the last time the minesweeping capability of dolphins was widely-touted. "Dolphins - - which possess sonar so keen they can discern a quarter from a dime when blindfolded and spot a 3-inch metal sphere from 370 feet away -- are invaluable minesweepers."

When this was an issue in 2003, lobbying for the rights of dolphins was much more politically sensitive given that scores of U.S. men and women were being sent into battle. "We're not going to second-guess the Navy at a time of war," said Naomi Rose, a marine mammal scientist with the Humane Society. "But we don't support the use of marine mammals for military use." Critics emphasize that it is not a matter of placing the lives of animals above those of troops. But they question the ethics and wisdom of using wild animals to ensure safe passage through hostile waters. Back when the dolphins were first used, petitions were sent to the U.S. Defense Department protesting the use of dolphins. Still, the practice continues ten years later and has become a staple of the Navy.  

In 2010, the Seattle Times reported that the Navy has 80 bottlenose  in the San Diego Bay alone. They are taught to hunt for mines and drop acoustic transponders nearby. According to a report in 2003, the dolphins only detect the mines. Destroying them is left up to the Navy's human divers. Still, the mammals are large enough to detonate a live mine, a prospect that doesn't delight animal rights groups. 

Tom LaPuzza, a spokesman for the San Diego-based Space and Naval Warfare Systems Center, cast aside the skepticism about how the dolphins were treated: “By nature, dolphins are naturally reliable and trustworthy animals that seem to enjoy pleasing their human handlers.” Following their release into the ocean for missions, "they come back to the handler, the trainer ashore or on a ship.” LaPuzza’s insensitivity to the ethics of using the dolphins in this way is quite alarming. 

The ethical issues are clear: Is it “right” to use animals that are not able to consent to their use for such a dangerous purpose? Dolphins do have rights under The Marine Mammal Protection Act of 1972. The Act prohibits the capture of wild animals from U.S. waters and it regulates standards of fair treatment. However, the Navy is exempt from the Act. One has to wonder whether this is the case because of the perceived strategic need for the dolphins in times of conflict.

An ethical reasoning approach that was used in a classroom analysis by my ethics students* in a case presentation is to weigh the harms and benefits of using dolphins to detect underwater mines. A utilitarian approach might identify the following benefits:

• Dolphins cost less to train and deploy than human divers
• Dolphins are better at detecting mines than human counterparts
• The use of dolphins can save millions of dollars because it limits damages to Navy ships
• Dolphins can help save thousands of lives
• The deployment of dolphins in strategic areas can serve the public good such as keeping the Strait of Hormuz open

The costs of using the dolphins are more difficult to assess. For example, what is the cost of taking dolphins out of their natural habitat and using them for a dangerous, self-serving purpose? Also, the dolphins can be injured or killed while “carrying out their duties.” Beyond that the costs to society include:

• Mines can be accidentally bumped by the dolphins causing harm to the mammals
• There is a lack of transparency about the Navy’s use of dolphins to detect mines; full disclosure is a basic ethical principle as the public has a right to know
• Little data exists on dolphin casualties

Not surprisingly, animal rights groups such as People for the Ethical Treatment of Animals (PETA) object to the use of dolphins for mine-sweeping purposes. In 2003 when dolphins were dispatched to the Persian Gulf to locate underwater mines, PETA activists were outraged, claiming that the animals had not volunteered their services and were unwittingly placed in grave danger. PETA claimed the dolphins don't realize the tasks they are being taught to perform are life and death. True enough and it may seem like a game to the dolphins as they are rewarded with lots of fish to eat after performing well during drills.

The bottom line issue here is why can’t Navy divers be equipped with the same underwater sonar capabilities as the dolphins? After all, if we are going to fight a war shouldn’t we be willing to use our troops in the battle? Some might say it is no different than using drones to hunt out and kill the enemy. However, drones are not living, breathing beings.

Blog posted by Steven Mintz, aka Ethics Sage, on March 5, 2012

*Thanks to those students for their contribution: Evan Kilbourne, Taryn Kirkwood, Katie Kobayasi, Ben Lis, Melissa Mallett, and Aida Mustacich

Gap Between Rich and Poor Widens

Will the Younger Generation Survive the Economic Downturn?

I have previously blogged about the wealth gap in the U.S. in the conext of the "occupy" movement. A recent study by the Pew Institute provides evidence of this disturbing trend.

The wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt.

The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data recently released. The 47-to-1 gap in net worth between old and young is believed by demographers to be the highest ever, even predating government records.

While people typically accumulate assets as they age, this gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation.

The analysis by the Pew Research Center reflects the impact of the economic downturn, which has hit young adults particularly hard. More are pursuing college or advanced degrees, taking on debt as they wait for the job market to recover. Others are struggling to pay mortgage costs on homes now worth less than when they were bought in the housing boom.

The report casts a spotlight on a government safety net that has buoyed older Americans on Social Security and Medicare. "It makes us wonder whether the extraordinary amount of resources we spend on retirees and their health care should be at least partially reallocated to those who are hurting worse than them," said Harry Holzer, a labor economist and public policy professor at Georgetown University who called the magnitude of the gap "striking."

The median net worth of households headed by someone 65 or older was $170,494. That is 42 percent more than in 1984, when the Census Bureau first began measuring such data broken down by age. The median net worth for the younger-age households was $3,662, down by 68 percent from a quarter-century ago, according to the Pew analysis.

Because the Pew report examines households at the midpoint of the economic scale, it does not delve deeply into changes occurring at the top and bottom of the distribution. A new census measure shows the poverty rate to be higher than previously known — about 15.9 percent for Americans 65 or older, compared to the official 9 percent rate reported last September. Working-age adults ages 18-64 also saw increases in poverty — from 13.7 percent to 15.2 percent.

Nancy LeaMond, an executive vice president of AARP, noted that older Americans spend a disproportionate share of their income on out-of-pocket medical care, compared to other groups. "Millions of older Americans today continue to struggle to make ends meet," she said. "Many older Americans do own their homes, but plummeting housing values — along with dwindling savings, stagnant pensions and prolonged periods of unemployment — have taken their toll."

In all, 37 percent of younger-age households have a net worth of zero or less, nearly double the share in 1984. But among households headed by a person 65 or older, the percentage in that category has been largely unchanged at 8 percent.

While the gap in net worth has been widening gradually due to delayed marriage and increases in single parenting among young adults, the housing bust and recession have made it significantly worse.

For young adults, the main asset is their home. Their housing net worth dropped 31 percent from 1984, the result of increased debt and falling home values. In contrast, Americans 65 or older were more likely to have bought homes long before the housing boom and thus saw a 57 percent gain in housing net worth even after the bust.

Older Americans are staying in jobs longer, while young adults now face the highest unemployment since World War II. As a result, the median income of older-age households since 1967 has grown at four times the rate of those headed by the under-35 age group.

Social security benefits account for 55 percent of the annual income for older-age households, unchanged since 1984. The retirement benefits, which are indexed for inflation, have been a consistent source of income even as safety-net benefits for other groups such as low-income students have failed to keep up with rising costs.

Paul Taylor, director of Pew Social & Demographic Trends and co-author of the analysis, said the report shows that today's young adults are starting out in life in a very tough economic position. "If this pattern continues, it will call into question one of the most basic tenets of the American Dream — the idea that each generation does better than the one that came before," he said.

Other findings:

— Households headed by someone under age 35 had their median net worth reduced by 27 percent in 2009 as a result of unsecured liabilities, mostly a combination of credit card debt and student loans. No other age group had anywhere near that level of unsecured liability acting as a drag on net worth; the next closest was the 35-44 age group, at 10 percent.

— Wealth inequality is increasing within all age groups. Among the younger-age households, those living in debt have grown the fastest while the share of households with net worth of at least $250,000 edged up slightly to 2 percent. Among the older-age households, the share of households worth at least $250,000 rose to 20 percent from 8 percent in 1984; those living in debt were largely unchanged at 8 percent.

The Pew survey is a wake-up call for our elected officials that social security and Medicare must be fixed, and sooner rather than later. We are not likely to emerge from the recent economic downturn anytime soon. I believe it will take at least another five years to be anywhere close to where we were before the 2008 meltdown. That would mean a ten-year period of slow or no growth accompanied by a continued loss of jobs overseas, dependence on unreliable foreign sources of oil, and an appetite for war that seems to send our brave soldiers to the most troubled areas of the world with little chance to make a sustainable difference in how those countries are run or the quality of life for the population.

If the U.S. continues down the same path we’ve been on since Bush invaded Afghanistan and Iraq and corporate American and Wall Street took greed to an unfathomable level, then I fear this country may become susceptible to an infiltration by groups that want to destroy the American dream. Where are our politicians on these important issues? Where is the discussion and debate in the current election cycle? I’m still waiting.

Blog posted by Steven Mintz, aka Ethics Sage, on February 23, 2012

“Big Brother” Google to Impinge on Personal Privacy

Google Policy on Sharing Information is Unethical

By now you have heard that Google has developed a plan to link user data across its email, video, social-networking and other services as it consolidates more than 60 privacy guidelines it had for products into one master privacy policy. In a move criticized by some as a massive invasion of privacy, the changes will piece together information from Gmail to YouTube to the Google Plus social network.

Gizmodo, the technology website, called the new policy the end of Google’s ‘don’t be evil’ motto because it reversed the company’s previous promise to give customers “meaningful and fine-grained choices” over how their personal information was used. I call it eerily Orwellian-like circa 2012, some 28 years after George Orwell’s Big Brother fictional character in his novel 1984 that has entered our collective psyches.

The new policy means that things you could do in relative anonymity today will be explicitly associated with your name, your face, your phone number come March 1. Google might share this information with online service providers. The company has written to users to describe the new policy as creating a “beautifully simple and intuitive” experience on its sites.  You be the judge.

Imagine if you spend an hour signed in to a Google account searching the Web for skateboards and the next time you log into YouTube, you might get recommendations for videos featuring Shaun White, along with ads for his merchandise and the nearest place to buy them. Now imagine this happening with every choice you make.

I believe Google’s announced policy is unethical practice because allowing consumers to opt-out should be a basic tenet of ethical business practices for internet provider with respect to sharing information. Moreover, the company must ensure that the ways it uses data help users without revealing sensitive information.

Lawmakers seem to agree as evidenced by the response to Google’s new policy: "We believe that consumers should have the ability to opt-out of data collection when they are not comfortable with a company's terms of service and that the ability to exercise that choice should be simple and straightforward.” The lawmakers asked Google for details about how the privacy settings could affect people with Android phones, which require users to sign into their Google account.

Lawmakers have previously considered the idea of new privacy legislation to set restrictions on Internet companies to protect consumer information, although no legislation is expected to pass until Google responds to questions raised by members of the House of Representatives by mid-February.

The motivation for Google to establish its sharing policy now is, at least in part, in response to a Federal Trade Commission report Protecting Consumer Privacy in an Era of Rapid Change that was issued in December 2010. The FTC studied privacy issues and concluded sharing policies should not be prohibited. Having blessed such practices, the FTC has given the green light to companies like Google to establish such data gathering policies.

In its report the FTC points out the two sides of the issue. On the one hand consumers want greater transparency, a simplified process to exercise choice over how their information is collected and used, and to ensure that business take privacy-protective measures as they develop and implement systems.

At the other end are those who believe the government should not restrict the exchange and use of consumer data in order to preserve the substantial consumer benefits made possible through the flow of information. They claim the use of consumer data not only helps to fund a variety of personalized content and services, but also allows businesses to innovate and develop new products and services that offer consumers convenience and cost savings.

To me this is an example of a powerful lobbying group getting its way because its influence vastly exceeds that of those who would protect the public interest.

By now you may be wondering how Google gathers information about you and your habits. Of course there is the personal information you provide. Then there is the information it derives from your use of device-specific use such as search queries. So far, so good but Google also will collect and store information on your daily calendar, telephone numbers you have called, GPS signals sent by a mobile device, and, most troubling, device event information such as crashes, system activity, hardware settings, browser type, browser language, the date and time of your request and referral URL. If you are interested, Google provides a more thorough explanation on its website.

Even scarier to me is how Google might use the information collected. Here are some examples:

• To offer you tailored content – like giving you more relevant search results and ads.
• If other users already have your email, or other information that identifies you, Google may show them your publicly visible Google Profile information, such as your name and photo.
• Google may combine personal information from one service with information, including personal information, from other Google services – for example to make it easier to share things with people you know.
• Google may process your personal information on a server located outside the country where you live.
• Google may collect and process information gathered from GPS signals sent by a mobile device.
• Google may also use various technologies to determine location, such as sensor data from your device that may, for example, provide information on nearby Wi-Fi access points and cell towers.

I do not think it is a coincidence that Google announced its new policy shortly after reporting its 2011 fourth-quarter earnings results that showed the company’s average revenue per click fell 8 percent from the previous year. Google shares have fallen about 10 percent since the report. What better way to improve these numbers then by establishing a new policy that impinges on personal liberties and choices we might make in order to enhance advertising revenues.

Blog posted by Steven Mintz, aka Ethics Sage, on February 2, 2012

What is meant by Life, Liberty, and the Pursuit of Happiness

Virtue is the Key to True Happiness

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are life, liberty, and the pursuit of happiness. These three aspects are listed among the "unalienable rights" or sovereign rights of man.

This, the second sentence in the Preamble of the Declaration of Independence, has been called one of the best-known sentences in the English language. It remains to this day the most profound, self-evident, and—to sovereigns everywhere, the most gut-wrenching—sentence ever penned and declared by the citizenry of any country.

Most people agree about the meaning of life and liberty. In one sense life gives us the freedom to pursue happiness. However, disagreement exists over what is meant by the phrase “pursuit of happiness.” I address this issue because of the increased attention placed on the question of how should one go about pursuing happiness in the current Republican primary cycle.

When the Founders spoke of the right to pursue happiness, what they meant, according to Newt Gingrich, was the right to pursue "wisdom and virtue, not hedonism." Rick Santorum's interpretation is that, “Happiness is not enjoyment or pleasure. Happiness means to do the right thing — to do not what we want to do, but what we ought to do.” Putting these two explanations together one might say that in pursuing happiness we should do so in a reasoned way; in a manner motivated by an inner sense that it is the right thing to do -- the right way to behave -- and not solely for our own self-gratification. 

Contrast this explanation with Ayn Rand’s Objectivism that holds the right to pursue happiness protects the individual’s ability to live for her own sake, rather than for the sake of society. It is based on the idea that the pursuit of one's self-interest is one's highest moral purpose.  This belief has been identified with the capitalist ethic that by pursuing one’s own interests the result will be benefits for all in society.

I believe that the pursuit of self-interests notion embedded in modern capitalism is largely responsible for the 2008 financial meltdown whereby financial institutions made home mortgage loans to unsuspecting buyers not qualified for such loans and then sold off a basket of loans as a collateralized debt obligation thereby transferring risk to another party. Why should have commercial and investment banks care about the qualifications of a home buyer when they knew at the end of the day risk would be transferred to some other party?

The ancient Greeks had a very different perspective on happiness. Aristotle spoke about achieving eudaimonia, which is roughly translated into happiness.

Eudaimonia is not an emotional state; it is more about being all that you can, fulfilling your potential. The idea is that by living in a way that reaches your full potential you bloom or flourish and so display the best version of you that you can be. This meant striving for "arete," which loosely translated means excellence or virtue. So, for the ancient Greeks, leading a virtuous life would lead to happiness.

For Aristotle the act of living in balance and moderation brought the highest pleasure. Not in the action itself, but in the way of life. It is this way of life that would lead to the greatest long-term value rather than just a passing amusement. A modern illustration would be the difference between earning a high income, but spending it all and living in more moderation and having great wealth that will last you and provide security.

By virtues, Plato meant developing positive traits of character that would enable one to achieve true happiness. Wisdom, courage, temperance, and justice were the cardinal virtues according to Plato.

I teach ethics and emphasize to my students the explanation of classical Greek virtue espoused by the philosopher Alasdair MacIntyre. He believed that the exercise of virtue requires “a capacity to do the right thing in the right place at the right time in the right way.” One’s judgment in making these decisions comes from those dispositions (tendencies) that enable choices to be made about what is good for people and by holding in check desires for something other than what will help achieve this goal. For MacIntyre, virtues such as truthfulness and trust, justice, courage, and honesty would direct one’s actions in the betterment of society.

Given the challenges facing our society, each of us must remember that it is one’s actions that lead to true happiness. We gain the ability to act morally through knowledge and reason. We make deliberate choices that move us toward achieving happiness but should do so through virtuous behavior that advances society, not self-indulgent behavior.

As we watch the race for the Republican nomination unfold let us not forget that we have responsibilities to others in a civil society. Our actions affect others and it is through virtuous behavior that we achieve the end goal of happiness.

Let me conclude with a quote from Thomas Jefferson:

"Self-love . . . is the sole antagonist of virtue, leading us constantly by our propensities to self-gratification in violation of our moral duties to others."

Blog posted by Steven Mintz, aka Ethics Sage, on January 30, 2012

Johnson & Johnson Records a $3.3 Billion Charge for Product Liability

Lawsuits over Risperdal Marketing at Johnson & Johnson Continue to Raise Questions about Ethics at the Company

Johnson & Johnson announced this week that it has recorded pretax charges and special items totaling $3.3 billion for the fourth quarter of 2011 in order to provide a reserve for probable losses from product liability lawsuits. The pending lawsuits are attributable to misleading marketing practices and manufacturing-quality lapses.

I have previously blogged about product deficiency and ethics questions at Johnson & Johnson with respect to issues such as: quality control-failures at manufacturing plants of subsidiary McNeil Consumer Healthcare that led to recalls of the popular over-the counter drug Motrin; baby shampoo that allegedly includes the potentially cancer-causing chemical methylene chloride; lawsuits concerning its subsidiary DePuy Orthopaedics and the metal-on-metal hip implants that were found to shed minute metal particles into a patient’s bloodstream over time; and suits by women who have suffered serious injury and disfiguration claiming that vaginal mesh manufactured by J&J subsidiary Ethicon caused them life-altering complications. In today’s blog I deal with what may be the worst ethical lapse at J&J -- its marketing of the antipsychotic medication Risperdal.  

Risperdal is an "atypical antipsychotic". It works by changing the effects of chemicals in the brain. Risperdal is used to treat schizophrenia and symptoms of bipolar disorder (manic depression). It is also used in autistic children to treat symptoms of irritability. In the latter case questions have been raised whether the company received approval from the federal Drug Administration (FDA) to market the drug for use by children. Other states have brought lawsuits against J&J for marketing agreements to promote the drug.

On January 9, J&J, which has already lost judgments of almost $660 million over the marketing of its Risperdal, went to trial facing a demand by Texas for damages of more than $1 billion. State Attorney General Greg Abbott said J&J’s Janssen unit paid state officials to get Risperdal on approved drug lists, marketed it for unapproved uses to children and the elderly, and lied about its safety and effectiveness. The case in state court in Austin was filed by a whistle-blower, Allen Jones, an ex-investigator for the Pennsylvania Office of Inspector General.

A jury weighing only the claim that the company downplayed the drug’s risks awarded Louisiana $257.7 million in 2010. A judge in South Carolina last year ordered J&J to pay $327 million over Risperdal sold in the state. The Texas suit may result in the largest-ever false-claims verdict, said Patrick Burns of the advocacy organization Taxpayers Against Fraud in Washington. J&J and its Janssen unit, which sold Risperdal, deny any wrongdoing.

Jones probed allegations that the chief pharmacist for the state’s mental health office had received payments from pharmaceutical companies. He sued Texas in 2004, his last year in the Pennsylvania job. Jones determined in his probe that Janssen had “engaged in a fraudulent scheme that included payments to at least one Texas state official” to ensure that Risperdal was included as a preferred drug in the state’s Texas Medication Algorithm Project, known as TMAP, he said in court papers.

“Janssen had made payments to Texas and other state officials to facilitate the exportation of TMAP to other states, including Pennsylvania,” Jones said. He sued under a Medicaid-fraud law similar to the federal False Claims Act. It allows a whistle-blower to share in any settlement money or damages.

Texas claims that Janssen and J&J paid four state health officials $340,000 to promote Risperdal, inducing them to breach their duties to the state. “J&J sent the four leaders of TMAP around the country to promote TMAP, and, in the process, Risperdal,” David Rothman, a state expert, said in a pretrial report.

With respect to off-label uses, allegations include that J&J marketed Risperdal for the treatment of medical conditions for which it hadn’t received regulatory approval after clinical trials. It was allegedly sold for use by children and the elderly, according to Texas officials. Texas alleged that Janssen began promoting prescriptions for children as soon as the drug was being sold without any approvals by the FDA for such use.

“They had their sales people out calling upon doctors as early as 1994 who saw no adult patients, who saw only children”. One psychiatrist in north Texas who treated only children was called by Janssen sales people 96 times. There was no FDA-approved indication for any use in the child and adolescent population from December 1993 to October 2006, Texas said in its complaint.

Johnson & Johnson needs a change in leadership and the board of directors must play a more active role in overseeing the company’s product quality processes and the marketing of pharmaceutical products. It is sad to see how low the company has fallen on the ethics scale. The reputation it built in handling the Tylenol poisoning incident in 1982 has been all but forgotten. What’s worse is the company seems to have forgotten the values in its own Credo that made it a model for business ethics. They include the statement:

“We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality”.

Blog posted by Steven Mintz, aka Ethics Sage, on January 27, 2012

Who is Killing the Homeless?

Homelessness Problem is a National Disgrace

Three weeks; four homeless dead; and the police have no idea why. Apparently, not any more. According to Orange County DA Tony Rackauckas, the 23-year-old suspect and Iraq war veteran Itzcoatl Ocampo was a thrill seeker who took pleasure in killing his victims. "He gets a thrill out of it," Rackauckas said. "This is a serious, vicious killer who went out there intentionally going about killing people and terrorizing a whole area."

Ocampo, a 23-year-old former Marine, allegedly killed four homeless men in the Orange County, California area in a two-week period of time. The first of the four victims, James McGillivray, 53, was found on Dec. 20 outside a shopping center in Placentia. The second, Lloyd Middaugh, 42, was found eight days later on the Santa Ana River Trail in Anaheim, and the third, Paulus Cornelius Smit, 57, was found behind the Yorba Linda library on Dec. 30.

The fourth victim was John Berry, a Vietnam War veteran who had stayed in the area for years, sometimes sleeping on a bench beside a river bed or, on rainy nights, in the shopping center where he was killed.

Why target the homeless? This is a question I ask myself all the time. What kind of morally-challenged individual picks on the most vulnerable in our society for their own gratification? The fact that Ocampo apparently dealt with homelessness himself suggests to me that he may have been lashing out at his own predicament by killing others with the same afflictions.

Homelessness is at a critical stage in this country especially with respect to homeless veterans. In a previous blog I pointed out that according to the National Coalition for the Homeless there are between 130,000 and 200,000 homeless people living on the streets of the wealthiest country in the world on any given night, and between one fourth and one-fifth of all homeless are veterans.

The news gets worse for the homeless. According to The National Center on Family Homelessness one in every 45 American children are homeless. That totals roughly 1.6 million kids. Children experiencing homelessness:

• Are sick four times more often than other children.

• Homeless kids have four times as many respiratory infections; twice as many ear infections; five times more gastrointestinal problems; and four times more asthma.

• They go hungry at twice the rate of other children yet have high rates of obesity due to nutritional deficiencies.

• Homeless kids have three times the rate of emotional and behavioral problems compared to non-homeless children.

Out here in LaLa land, some of us still don’t believe what happened in October 2005. Police officers from outside L.A. were observed “dumping” their unwanted mentally ill homeless on the city streets. Apparently, this inhumane “dumping” at the doors of social service organizations already short on staff and funds has been going for years. The reason given is that the cities outside L.A. don’t have the services to serve the homeless, so they travel miles outside their municipal jurisdictions and ‘dump’ them in the downtown area.

According to recent reports, the number of homeless on any given night in Los Angeles County has reached 100,000. The County of Los Angeles is now the homeless capital of the U.S., surpassing the total homeless in New York City, Chicago, and San Francisco. The homeless population of L.A. County is larger than the entire population of the city of Santa Monica.

Housing to provide the homeless with a warm place to sleep and food to eat exists in most communities. They may be homeless shelters, halfway housing, day shelters, and other forms of supportive housing. The problem is all too many homeless can’t find their way to such assistance and many feel ashamed having to use it.

One successful program that has been operating since 1988 in Fairfax, Virginia, is FACETS. FACETS seeks out and identifies people who are living on the streets or in the woods with the goal of helping them stabilize and ultimately move into housing. They also connect the homeless with medical and dental resources. Not surprisingly there is two-month waitlist for families to enter a Fairfax County homeless shelter so groups such as FACETS are critical to help treat the problem.

About three months ago I started to become involved in the homeless issue after reading a disturbing story in the Detroit Free Press that a homeless vet named Charles Duncan, 42, was beaten with a baseball bat and dragged behind a pickup truck on in Corktown, Detroit's oldest neighborhood. Steve J. Diponio allegedly told police he was tired of homeless people sleeping near his house. He pleaded not guilty on December 3 to the attack on Duncan.

I think it’s unfortunate that so little time has been devoted to the homeless problem in the current election cycle. Perhaps it has become that “dirty little secret” that Republicans won’t address. Let’s hope President Obama raises the issue because it is affecting more and more of our citizens every day. How many of us have seen people begging for money, sleeping in the streets, or wheeling a shopping cart with their worldly possessions?  

As a society, what are our ethical obligations to take care of the homeless and, especially, homeless veterans who made the ultimate sacrifice for our country? Let me put it this way: A wise man once said every society is judged by how it treats it's least fortunate amongst them.

Blog posted by Steven Mintz, aka Ethics Sage, on January 24, 2012

Message to Newt: Character Counts

Newt was the First Speaker to be disciplined for Ethical Wrongdoing

It’s not about his affairs or alleged request for an open marriage. It’s not even about his book deal in 1983 when he established a limited partnership to pull together about two dozen of his biggest campaign contributors to finance his book. Nor is it about other charges of alleged misuse of official resources including using staff and office equipment to develop the manuscript. Don’t get me wrong. These are moral and ethical lapses.

For me, questions about Newt Gingrich’s character center on the improper use of official resources in preparation of a college course. This lapse in judgment deals with the ethical responsibilities of a college professor. It is near and dear to my heart as a professor who teaches ethics. Moreover, it is the only one of eighty-four ethics charges filed against former Speaker Gingrich that he admitted to and for which he was sanctioned. Gingrich is the only House Speaker to resign as a result of an ethics investigation by the House.

Gingrich's rollercoaster ride as a Presidential candidate and remarkable comeback win last night in South Carolina can be attributed to his in-your-face style of debating that includes attacking the elite media. This is exactly what many Republican voters want. The reason is we have become a divided country. We live in a time with an "us against them" mentality; the 1%ers versus the 99%ers.

Given that Gingrich may be the winner of the Republican nomination in 2012, I must raise the question whether such a person should become President of the U.S. Have we slid so far down the ethical slippery slope that one’s character no longer counts in picking a leader of the free world?

Last Friday, Politico posted the several-hundred-pages-long, four-part House Ethics Committee report on the charges against Newt Gingrich from his days in Congress. The report details numerous alleged ethical violations including the misuse of official resources in preparation of a college course "Renewing American Civilization" during 1994-1995. The report is good reading if you are an insomniac.

There were eighty-four ethics charges filed against former Speaker Gingrich during his term. I focused on Part 3 of the report that dealt with the college course. Following an investigation by the House Ethics Committee, Gingrich was reprimanded and required to reimburse the House $300,000 for its investigation expenses. Gingrich acknowledged in January 1997 that "In my name and over my signature, inaccurate, incomplete and unreliable statements were given to the committee".

The House Ethics Committee concluded that inaccurate information supplied to investigators represented "intentional or ... reckless" disregard of House rules. Special Counsel James M. Cole concluded that Gingrich violated federal tax law and had lied to the ethics panel in an effort to force the committee to dismiss the complaint against him. The full committee panel did not agree whether tax law had been violated and left that issue up to the IRS.

Gingrich’s ethical lapses exemplify the persistent problem in politics of using one’s position of power to gain favored treatment with an individual or organization. In this case Gingrich sought to personally benefit from an improper relationship with the Progress and Freedom Foundation that provided financial support related to the course.

In ethics we call this egoistic behavior because the offending party (Gingrich) failed to consider how his actions might affect other stakeholders including Congress as an institution and the American people. An egoistic like Gingrich acts purely out of self-interest. Perhaps this isn’t surprising in Gingrich’s case because he appears to have a “grandiose” ego as evidenced during the Presidential debates.

Gingrich’s major ethical failing is that he had a conflict of interests in using a tax-exempt entity in support of his college course; he also used official government resources for the same purpose. He violated the public trust in using the people’s money for his own selfish interests. The fact that he tried to cover up his actions is nothing new in politics.

Newt is a hypocrite. Going back in time to 1987, and somewhat ironically, Gingrich led the charge against Representative Jim Wright, when he accused the Speaker of ethics violations. Gingrich claimed that Wright had violated House rules in his dealings with a Texas developer and in the manner by which he had profited from sales of a book. Gingrich won a major coup in 1989 when the House Ethics Committee formally charged Wright with sixty-nine ethics violations and Wright resigned from the House. Guess who succeeded Wright?

Should character play a role in choosing a Presidential nominee? I don’t think personal issues should make the difference between supporting and not supporting a candidate. As many have pointed out, Gingrich asked for forgiveness for his extra-marital affairs and he claims to have seen the light. Even hardened criminals are given a second chance after serving time for their crime.

However, character should be an important consideration when a politician abuses his office for personal gain; when a politician lies in an ethics committee investigation; and when a politician hypocritically goes after other politicians when he, himself, is similarly flawed. It’s not only the Jim Wright situation that concerns me but let's not forget that Gingrich led the charge in the House during the 1998 impeachment hearings of President Clinton, all the while he was having his second extramarital affair with his to-be-third wife, Calista.

People who criticize others for the same behavior that they engage in are, in my opinion, not worthy of the public trust because they act as though there are two sets of rules – one for themselves and one for everyone else.

Blog posted by Steven Mintz, aka Ethics Sage, on January 22, 2012

US Supreme Court Declines to Hear Cyber-bullying Case

What is the Solution to Regulating Student Cyber-bullying Attacks?

The US Supreme Court on Tuesday declined to take two cases involving three separate incidents involving free speech protection for public school students on the Internet.  In all three cases students were punished for posting obscene and derogatory information on students or school officials by using their home computers.

In one "cyber-bullying" case, a female high school student in West Virginia was punished for posting crude and insulting information in 2005 about another female student on a fake page on the MySpace social media site.

A US Circuit Court of Appeals ruled in July 2011 that officials at Musselman High School could punish the perpetrator without violating her free speech rights because they could reasonably believe that those comments would create a disruption at school.

In a separate case, Blue Mountain School District v. Snyder, two students from Pennsylvania -- one a high-school senior, the other an eighth grader -- were punished for opening parody MySpace profiles of their principals in 2005 and 2007 respectively.

In one fake profile the principal was depicted as a sex-crazed pedophile, while the other that the principal was gay and used drugs.

A federal appeals court in Pennsylvania ruled in June 2011 that the students not be punished because that interfered with their rights to free speech, because the posted information did not disrupt school activities.

The justices give no reasons when they decline to consider a case. However, the denial of certiorari in the two student internet speech case seems to muddy the waters in that the US Circuit Court of Appeals held that schools could punish students for offensive Internet postings while the federal appeals court sided with the free speech rights of such students.  It is indeed unfortunate the Supreme Court chose not to hear the case because cyber-bulling is the most serious problem today in our schools.

On May 7, 2010, the Pew Institute reported the results of its Research Center Internet & American Life Project. Pew found that 32% of online teens have experienced one of the following forms of online harassment: private material such as text or email forwarded without permission; receiving threatening messages; someone spreading a rumor about them online; and someone posting an embarassing picture of them online without permission.

Four cases of cyber-bullying that led to suicides stand out in my mind. On October 7, 2003, 13-year-old Ryan Patrick Halligan of Vermont hung himself in his bathroom after he had been bullied online. Ryan had been taunted and insulted about his allegedly being gay.

In July 2008, Sycamore, Ohio, high-school graduate Jessica Logan hung herself in her bedroom after nude photos sent to her boyfriend were sent to other high school girls after they broke up. The girls were harassing her, calling her a slut and a whore. Her death illustrates the dangers of sending sexually explicit messages or photographs, primarily between mobile phones (sexting).

On March 21, 2010, popular 17-year-old soccer star Alexis Pilkington of New York took her life following vicious taunts on Facebook. Pilkington’s popularity and success in soccer seems to have created a level of jealousy that prompted the cyber-bullying comments.

On September 19, 2010, 13-year-old Seth Walsh of Tehachapi, California hung himself from a tree in his backyard. Tehachapi Police Chief Jeff Kermode said investigators interviewed some of the teenagers who allegedly taunted Seth for being gay and concluded no crime was committed. The chief told radio station KGET several of the taunters broke down in tears while being questioned and said they wished they had tried to stop the bullying.

Like most states, California has been adding laws to the books to protect the bullied. An existing law that gives school officials the right to suspend or expel a student for bullying another student over the Internet or by other electronic means has been updated to include bullying others through social networking websites. The bill, AB 746, sponsored by Assemblywoman Nora Campos (D-San Jose) and signed into law by Governor Brown, goes into effect on January 1, 2012.

Perhaps this is the answer to the problem, that is, to let each state decide how to regulate cyber-bullying activity. However, when it comes to vulnerable school children, I just can’t help but feel that a national standard is necessary to avoid a situation where a student in one state can post anything and everything about another on the Internet whereas it is a crime to do so in another state. When the health and safety of young people are at stake there needs to be a national standard that creates a national value system and societal ethic.

Blog posted by Steven Mintz, aka Ethics Sage, on January 19, 2012

 

Who is telling the Truth in the Republican Debates?

Is Civility in Society a Lost Art?

From time to time I post the same blog on both of my websites for maximum exposure and, hopefully, comments on my blogs. Today’s blog is one of those occasions.

Civility. We hear so much about it today. But what is it? Some would say it is showing good manners. Others might add it is being respectful of others. I like to go back to The Golden Rule for guidance on how to define civility. If each of us simply asked our inner voice whether we would like to be treated the way we were about to treat someone else, we could have a more civil society.

I find more and more that civility in the workplace is no longer a given. Some of the emails I get are downright offensive. Some of those who send me emails just want to vent about a particular issue.  I have no problem with that but the language used to express one’s opinion should conform to societal norms.

Maybe that is the problem. We no longer act in accordance with these norms. I find many people don’t even know what they are. I find more and more people seem to believe that ethics is whatever they want it to be, a method of reasoning known as ethical relativism. If that were true then each of us could define what it means to be honest, trustworthy, have integrity, be a responsible person, and how to treat others fairly.

In my classes I go back to George Washington in teaching civility. Washington, by age sixteen, had copied out by hand, 110 Rules of Civility & Decent Behavior In Company and Conversation.  They are based on a set of rules composed by French Jesuits in 1595.  The first rule is: “Every Action done in Company, ought to be with Some Sign of Respect, to those that are Present.” The underlying ethical value of respect is to treat others fairly.

I was watching the interviews with Republican candidates and the debate Monday night from South Carolina with an eye toward assessing the fairness of the statements made by the candidates. There were way too many to mention in this blog but one stands out in my mind. It was a comment made by Newt Gingrich when asked about the truthfulness of an advertisement made by the PAC (supposedly not associated with him). I heard the same comment verbatim made by the person who created the PAC.

The comment was in response to a question about the truthfulness of parts of the PAC advertisement that were highly critical of Governor Romney during his time at Bain Capital. Gingrich and the PAC-man (sorry) said the PAC was going to submit a series of questions to Governor Romney to assess whether the statements the PAC made about Romney’s experiences at Bain Capital are accurate. What? The PAC thinks it is proper to say something critical about another candidate’s record and then check their facts with that candidate after the veracity of the pro-Gingrich advertisement has been challenged? Think about it. This is reverse ethics at its worst.

I don’t know about you but I am tired of the debates, and another one is scheduled for tomorrow night. Yet, I seem to be drawn toward watching the debates. Perhaps it is because it is the ultimate in reality TV. Perhaps it is because I keep waiting for one of the candidates to talk about the decline in civility and ethics in our society. Perhaps tomorrow night will be the night. Then again, I said the same thing on Monday night.

Blog posted by Steven Mintz, aka Ethics Sage, on January 18, 2012

Building an Ethical Corporate Culture

Ethics Compliance Program and Whistle-blowing Provisions

I have previously blogged about the corporate ethics and the increase in regulations and new laws imposed on businesses in recent years including the Sarbanes-Oxley Act and Dodd-Frank Financial Reform Act. In an ideal world we would not need such stifling regulations and corporate America would be free to pursue their own self-interests while improving the income levels and job opportunities for our citizens. Undoubtedly, the capitalist ethic works in the vast majority of cases. As in so many situations in life, however, it is the few fraudsters who can spoil it for the vast majority who attempt to play by the rules of the game and try to do the right thing.

In this blog I examine what makes for an ethical corporate culture. It starts with the “tone at the top”. Top management (i.e., CEO, CFO) must set an ethical tone that makes it clear to those in the organization that the rules must be followed, regulations adhered to, and identified best practices should have an ethical component. It’s not enough for top management to set an ethical tone, they must be supported by a diligent board of directors and audit committee that oversees corporate operations and financial reporting to ensure everyone plays by the rules and ethical standards are being followed.

Congress passed legislation known as the Federal Sentencing Guidelines in 1984 that sets rules for uniform sentencing policies for individuals and organizations convicted of felonies and serious (Class A) misdemeanors. According to the guidelines, an ethics and compliance program can help to mitigate the penalties imposed under the Law. Here are some key elements that can help to create the kind of ethical culture to protect a company from the actions of a “rogue” employee.

• Willingness to seek ethics advice
• Receipt of positive feedback for ethical conduct
• Employee preparedness to handle instances of misconduct
• Management can be questioned without fear
• Incentives, support, and encouragement to follow ethical standards
• Questionable means of conduct are not rewarded
• The organization encourages ethical conduct
• Employees believe organization is ethical

As pointed out in a study by the Ethics Resource Center, a strong ethical culture develops when the following elements are present.  

• Ethical Leadership: “tone at the top” of an organization and belief that leaders can be trusted to do the right thing
• Supervisor Reinforcement: individuals directly above the employee in the company hierarchy set a good example and encourage ethical behavior
• Peer Commitment to Ethics: ethical actions of peers support employees who “do the right thing”
• Embedded ethical values: values promoted through informal communication channels are complementary and consistent with a company’s official values

Today, it is not unusual to find a top-level management official with the title of Ethics Compliance Officer who oversees compliance and enforcement of the code of ethics. Many believe that an ethics hot line and encouraging a whistle-blower protection program is an essential part of building an ethical culture. In fact, both the Sarbanes-Oxley Act and Dodd-Frank include protections for whistle-blowers and Dodd-Frank even includes what has been called a whistle-blower’s “bounty” provision.

I have mixed feelings about paying whistle-blowers to come forth with information about their company that might lead to a monetary reward. At a minimum, whistle-blowers should take their concerns up the chain of command and try to resolve their concerns internally. With respect to external whistle-blowing, there is a confidentiality obligation that employees have to employers, and non-disclosure agreements may exist that tie the hands of employees who contemplate contacting external parties.

Nevertheless, I believe the test should be whether more good than harm would come from blowing the whistle on corporate wrongdoing. After all, investors may be harmed by fraudulent financial statements; the public may be harmed by environmentally unsafe practices; and the company may be following discriminatory practices. Utilitarianism (weighing harms versus benefits) is an accepted approach to corporate decision-making as long as the rights of stakeholders are not violated in the process of calculating the effects of proposed actions.

Above all else, whistle-blowers must be motivated by righting a wrong and doing the ethically appropriate thing, and not by greed, revenge, or other selfish motive.

Blog posted by Steven Mintz, aka Ethics Sage, on January 13, 2012

Is Ethical Capitalism an Oxymoron?

Is Capitalism a Moral Economic System?

I write an opinion editorial for the Pacific Coast Business Times, a business publication covering the three-county area of Los Angeles, Ventura, and San Luis Obispo. Today's blog appeared in the Pacific Coast Business Times on December 2.

It is quite popular these days to reflect on whether capitalism as an economic system does more harm than good. Critics of capitalism, such as those in the “Occupy Wall Street” movement, claim that the actions of corporate America and Wall Street investment firms contributed to the financial meltdown in 2008 that still affects our ability to recover economically. I have previously written about corporate greed when I supported the OWS movement in an opinion editorial in the Business Times on October 21.

Can capitalism be an ethical system that promotes economic growth and improves the economic standing of all in society? In other words, can the actions of the managers of a corporation (e.g. the CEO and CFO) still lead to the maximization of shareholder wealth and “trickle down” to benefit all of society?

It is important to remember that Adam Smith connected ethics to economics. Smith came to his philosophy of economic behavior described in The Wealth of Nations through his view of moral behavior espoused in his first book, The Theory of Moral Sentiments. Smith, who is generally regarded to be the founder of free market economics, posited that rational self-interest informed by moral judgments based on fairness and justice would lead to promoting the best interests of society guided by the invisible hand of the marketplace.

I believe that what is missing from business today is ethical decision making. We must ask: What are the rights of shareholders and other stakeholders, including employees, customers, suppliers and the general public, and what are the obligations of CEOs and boards of directors to these parties?

The nature of the present economic crisis illustrates the need for departures from uncontrolled self-dealing for the good of society. Smith had a diagnosis for this: he called such promoters of excessive risk in search of profits "prodigals and projectors,” an appropriate description of many of the promoters of credit default swaps and sub-prime mortgages in the recent past. Yet, more government regulation is not the answer. The fact is we cannot regulate ethical behavior. It comes from within each one of us as individuals and corporate managers who are supposed to act as agents for shareholders.

The Josephson Institute of Ethics identifies six pillars of character. I believe there are Six Pillars of Ethical Capitalism: honesty, trustworthiness, fairness, integrity, responsibility (and accountability), and civic virtue.

Honesty

• Do not lie or deceive stakeholders in conducting business operations
• Fully disclose all the information that stakeholders have a right to know

Trustworthiness

• Act in a reliable manner by exercising diligence in business decision making
• Be consistent and dependable in word and deed

Fairness

• Judge performance in the workplace in an unbiased manner
• Act in accordance with established standards of behavior (i.e. code of conduct)

Integrity

• Keep promises and carry through decisions with ethical action
• Act to prevent improper behavior or to stop it once it has been detected

Responsibility

• Meet obligations to stakeholders
• Accept the consequences of decisions and act to improve corporate behavior

Civic virtue

• Follow the laws and customs of society
• Act in a socially responsible manner

It has been more than forty years since Milton Friedman proclaimed in his in seminal piece, “The Social Responsibility of Business is to Increase Profits,” that any businessman who thinks a corporation should take “seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else” was “preaching pure an unadulterated  socialism.” I suppose this is the basis for criticisms by Republicans of the OWS movement.

Friedman later wrote in his book Capitalism and Freedom that in society, "there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

This is precisely the problem – fraud has been rampant in corporate America for years going back, at least in recent history, to the late 1980s and the failure of 1,043 savings and loan institutions that cost the public about $150 billion. Fast forward to the late 1990s and early 2000s when massive accounting frauds at companies such as Enron, WorldCom and dozens more wiped out hundreds of billions of dollars in corporate assets, shareholder and personal wealth. Just a few years later the financial system collapsed under the weight of self-serving, manipulative actions that were designed to enrich the few at the cost of the many (99%ers)?

The problem today is that we have lost our moral compass. Nowhere is this more apparent than in corporate America.  Ethical standards of behavior are set aside for the pursuit of self-interest. Reliable financial reporting is lost in the fog of misinformation and the ambiguous reporting of facts. The traditional notion of corporate social responsibility has morphed into a belief that if the rich simply get richer, all of society will benefit because the movers and shakers in the corporate world will then invest their “hard earned” money in creating jobs and advancing economic development. Anyone who believes this is quite naïve.

The answer to our national dilemma is to first agree on what are the standards of behavior for corporations – the engines of economic development in America and across the world? I don’t mean corporations as entities; instead, my standards apply to the managers of such businesses. It is with this goal in mind that I submit my “Six Pillars of Corporate Character.”

Blog posted by Steven Mintz, aka Ethics Sage, on December 8, 2011

 

The G(ing)RI[N]CH who stole Christmas

Newt Says: Poor kids don't work "unless it's illegal"

“I think I’m going to be the nominee, proclaimed Newt Gingrich.” All I can say is “OMG.” Has the Republican Party totally lost its collective minds? Do they WANT to lose to President Obama?

With the holiday season upon us, the G(ing)RI[N]CH who stole Christmas boasted to ABC news "It's very hard not to look at the recent polls and think that the odds are very high I'm going to be the nominee." Thanks, Newt, for spoiling all my post-holiday primaries fun.

Newt Gringrich is the G(ing)RI[N]CH who stole Christmas for a number of reasons but the one that irks me most are the comments he made at a pit stop in Iowa last week that: "really poor children have bad work habits and no knowledge of how to make an income unless it’s illegal." In case you missed it, here is the "best" of Newt. I’d say his comments are akin to an outtake in the screening of a movie but, I’m afraid, for Newt it’s truly an in-take.

Newt proclaimed that children in poor neighborhoods should be employed as janitors in schools and argued that "the best way to teach children in poor neighborhoods good working habits is to put them to work as soon as possible. Start with the following two facts, really poor children in really poor neighborhoods have no habits of working and have nobody around them who works, so they literally have no habit of showing up on Monday. They have no habit of staying all day. They have no habit of ‘I do this and you give me cash’ unless it’s illegal."

Gingrich said every successful person he knows started working at an early age in explaining his position that schools should hire poor children in their neighborhoods for part-time jobs as assistant librarians or assistant janitors. Seriously?

Newt, have you ever heard of Oprah Winfrey? She grew up in poverty. I don’t think she was a janitor growing up. Instead, she grew up in an abusive household and ran away at home at the age of 13. She worked hard in school aided by the Upward Bound program. Her story is one of going from rags to riches formed by hard work in school and a determination to succeed.  Born into abject poverty in rural Mississippi, Winfrey went from being a young girl clothed in potato sacks to the richest and most powerful female media mogul in the world.  She has been ranked the richest African American of the 20th century and the greatest black philanthropist in American history. YOU SEE, NEWT, POOR KIDS CAN RAISE THEMSELVES BY THEIR BOOTSTRAPS IF GIVEN THE CHANCE AND SUPPORTED BY WELL-THOUGHT-OUT  SOCIETAL PROGRAMS AND THE AMERICAN PEOPLE!

Here’s a bit about Gingrich’s early years. He was raised in Hummelstown near Harrisburg, Pennsylvania, and on military bases. Today, the median family income in Hummelstown is about $53,000 while the national poverty level is $22,000. I don’t think Newt was a janitor growing up. In fact, at the age of 18 he graduated from high school and became interested in politics during his teen years while living in Orléans, France. That’s right – Orléans, France, not New Orleans.

He was disciplined in January 1997 by the House of Representatives for ethics accusations, although a full hearing was avoided. He resigned from the House on November 5, 1998, three days after being elected to his 11th term. Newt acknowledged that "In my name and over my signature, inaccurate, incomplete and unreliable statements were given to the committee." The House Ethics Committee concluded that inaccurate information supplied to investigators represented "intentional or ... reckless" disregard of House rules.

Now, I ask you: Who had a more privileged up-bringing? Who worked harder under more arduous circumstances? Who is a person of greater character – Oprah Winfrey the world- renowned-philanthropist or Newt Gingich, the greedy who was paid $1.5 million as a consultant for Freddie Mac, a government-sponsored entity that has drawn $72.2 billion from government funds for its bailout and has just asked for $6 billion more?

Newt has no right to criticize "really poor children." For the record, based on poverty statistics, children represent a disproportionate share of the poor in the US; they are 24 percent of the total population, but 36 percent of the poor population. In 2010, 16.4 million children, or 22.0 percent, were poor.

In his last speech, the late Hubert H. Humphrey said "...the moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; those who are in the shadows of life; the sick, the needy and the handicapped." This was Humphrey’s version of a statement made earlier by Mahatma Ghandi: "A nation's greatness is measured by how it treats its weakest members."

Sorry, Newt, you’re not quite in the category of Oprah Winfrey, Hubert Humphrey, or Mahatma Gandhi. The fact that the Republican Party is seriously considering nominating you to be its “standard-bearer” says more about the Party’s view about character and ethics than anything else.

Let me close with the famous quote by Martin Luther King in his “I have a Dream” speech. “I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin, but by the content of their character.”

Newt, if you are reading this piece, have you gotten the message yet?

Blog posted by Steven Mintz, aka Ethics Sage, on December 5, 2011

 

Should Insider Trading by Congress be Banned?

Congressional Ethics and Insider Trading

I’ve dealt with all kinds of issues in my blogs but none as unexpected as insider trading in Congress. I don’t mean to be overly-facetious but don’t they already use their influence in enough marginally appropriate ways and sufficiently trade-off on their political positions to adequately line their pockets? I mean, when is enough, enough? Here is a list of the ten wealthiest members of Congress as developed by the Capitol Hill newsletter, Roll Call.

1. Sen. John Kerry (D-Mass.) --- $188.37 million      

2. Rep. Darrell Issa (R-Calif.) --- $160.05 million

3. Rep. Jane Harman (D-Calif.) --- $152.62 million

4. Sen. Jay Rockefeller (D-W.Va.) --- $81.50 million

5. Rep. Michael McCaul (R-Texas) --- $73.75 million

6. Sen. Mark Warner (D-Va.) --- $70.19 million

7. Rep. Jared Polis (D-Colo.) --- $56.49 million

8. Rep. Vern Buchanan (R-Fla.) --- $55.47 million

9. Sen. Frank Lautenberg (D-N.J.) --- $49.70 million

10. Sen. Dianne Feinstein (D-Calif.) --- $46.07 million

Let’s get back to the point at hand. It took a recent report on “60 Minutes” to galvanize Congress into action after the program criticized members who made profitable securities trades based on information they had learned on Capitol Hill. In a recently published book, “Throw Them All Out,” (a sentiment I wholeheartedly supported in a previous blog), Peter Schweizer asserted that members of Congress may be exempt from some insider trading laws. House and Senate committees plan to hold hearings soon on bills that would prohibit trading on information “relating to any pending or prospective legislative action” to address this perceived gap in the law. The House bill, titled the Stop Trading on Congressional Knowledge (STOCK) Act, was first introduced in 2006, but it went nowhere. Not to be too pessimistic but I wonder how such a law would be enforced? As the saying goes, “the devil is in the details” and that is why Congress is likely to build in loopholes that enable most of them to escape punishment. They don’t have a 9% approval rating by the public for nothing.

Before the “60 Minutes” report, the House bill that would outlaw the practice of insider trading only had nine co-sponsors. In the week following the “60 Minutes segment,” that number jumped to 92. Of the 83 additions, 19 are facing competitive reelection races as defined by the Cook Political Report. That’s not surprising. Those in Congress routinely fail the integrity test: not supporting a worthy bill up front because of the lack of public awareness of the problem but jumping on the bandwagon once the practice becomes public knowledge.

In playing down the substantive importance of the STOCK Act, Andrew Eggers, a lecturer in government at the London School of Economics, and Jens Hainmueller, assistant professor of political science at MIT, point to the fact that congressional ethics rules already prohibit the practice. The House Ethics Manual states that "all government employees, including officeholders" should "never use information received confidentially in the performance of governmental duties for making private profit." The authors believe the purpose of the new law probably will be to help salvage whatever credibility Congress has left. I guess their approval rating could even go from 9% to 9.5%.

This whole issue got me thinking. What is the point of banning any illegal or immoral practice by those in Congress? We know they will find a way around any restrictions and those who do get caught will receive a pat on the wrist – at worst a reprimand, the same sanction imposed on Representative Barney Frank for fixing parking tickets for his boyfriend.

The moral of this story is that we, the public, should exercise our fundamental right to vote next November and “throw all the bums” out of office. The Super Committee was a super failure; unemployment is stuck at historically high levels; the government has done nothing to ameliorate the housing crisis; the middle class continues to get pinched; and not one program passed by Congress since the crisis began in 2008 has made any meaningful difference.

Blog posted by Steven Mintz, aka Ethics Sage, on November 28, 2011

Should lobbyists be Banned from Giving Gifts to Federal Employees?

Banning Gifts to Lobbyists: Who Represents the Public Interest?

Here are some numbers for you to think about – 65%, 36%, 16%, 15%, and 9%.

According to CBS News, ten years ago, as many as 65% of Americans actually liked their elected officials. But as Congress has gotten more and more dysfunctional, its popularity has fallen dramatically to today's all-time low - a 9%  approval rating.

Even the hated IRS has an approval rating four times that (36%)!

At the height of the oil spill, the BP oil company - at 16% - had a higher approval rating than Congress.

So does Paris Hilton, who scores 15%.

These findings came before "60 Minutes" aired the story a couple of weeks ago revealing that Congress has given its members the right to use inside information not available to the public to buy and sell stocks and bonds. Moreover, it follows the colossal failure of the Super Committee, and Congress failed the test of representing the people's interests. Is it possible that the next survey might show Congresses approval rating at or near 0%? I still think that would be too high.

Business groups are attacking the Obama administration over a plan that would bar lobbyists and their employers from giving gifts to federal employees — including picking up the tab for government workers to attend conferences and trade shows. The proposal is aimed at preventing lobbyists from exerting undue influence over executive branch employees charged with regulating everything from automobile safety to air quality, but trade groups have launched an all-out offensive to kill the proposal.

"It's a slap in the face of business from an administration that says it wants to work with industry to create more jobs," said John Graham, president and CEO of the American Society of Association Executives, which represents about 23,000 trade-group executives. Graham's organization has launched a website, along with Twitter and Facebook campaigns, to fight the measure. More than 450 groups have signed onto the organization's letter of protest, including the U.S. Chamber of Commerce and National Association of Realtors.  

The ethical question is why not let businesses pick up the tab for federal government employees to attend conferences and trade shows? It’s simply this. Any federal government employee who might become involved in decision-making that affects specific businesses or business groups must be beyond reproach with respect to making unbiased, independent decisions. A conflict of interest exists when a member of Congress hears testimony and votes on an issue that affects organizations that used lobbyists to influence the way the member votes.

In a 1992 decision, Quill v. North Dakota, the U.S. Supreme Court ruled that retailers are exempt from collecting sales taxes in states where they have no physical presence, such as a store, office, or warehouse. Let’s assume Congress is debating whether to require all states to impose sales taxes on e-commerce (e.g. Amazon) to level the playing field with brick and mortar businesses. Right now it’s up to each state government to make that decision. If one state imposes such a tax while another does not, Amazon simply threatens to move its distribution center to a tax-free friendly state.

Let’s further assume that a lobbyist representing Amazon’s interests -- and we can include other e-commerce vendors such as overstock.com – decides to pay the expenses of key Congressional decision-makers to attend a trade show that features purveyors of on-line merchandise. The expenses include coverage of airfare, the best hotel in town, and a $1,000 per day food and sundry items allowance. Can the member of Congress (let’s call him Sneaky Pete) make an objective decision on the taxing issue? In my mind it doesn’t matter. Independent decision-making is based as much on the appearance whether Sneaky will, in fact, make an objective decision. We won’t know if the decision made was based on objective decision-making until after the decision is made. The point is to avoid the possibility that a biased decision will be made by banning gifts to lobbyists up front.

According to a report by the Government Accountability Office (GAO), $3.51 billion was spent on lobbying in 2010. This money does not improve our economy in any meaningful way especially at a time when we are swimming in a sea of debt. Who represents the public interest in these matters – you and me?  Who are our lobbyists? Certainly not those we vote into office as our Senators and Representatives. If that were the case, Congress would not have a 9% approval rating.

Blog posted by Steven Mintz, aka Ethics Sage, on November 28, 2011

What should be the Next Step for the OWS Movement?

Citizen Watchdog Groups Have an Important Role to Play in the OWS Movement

It’s been one month since the Occupy Wall Street (OWS) movement set off a chain of events that have literally spread throughout the world. I believe the motivation for the movement comes from two sources: (1) the efforts of those involved in the “Arab Spring” to bring about meaningful and lasting change in the way their government operates and how they treat citizenry and (2) the ongoing economic crisis in the U.S. that has affected many in the ‘99%’. Just consider the effects of the financial crisis that ushered in a recession in 2008 and motivated the ‘99%’ to protest nationwide.

• Millions have lost their jobs or been forced to work beneath their skill level, accept less hours on the job, no pay raises, and increases in their share of health plan costs
• Millions have been unable to prevent their houses from going into foreclosure because of the downward spiral of home prices, underwater mortgages, and stagnant or a decline in in their personal wealth over a number of years
• Millions have seen their retirement accounts (i.e. IRAs, 401-Ks) go down in value or increase only marginally due to declines in stock prices over a number of years

I haved previously blogged about the growing gap in income in America. Studies show that the 400 richest families in America, who saw their wealth increase by some $400 billion during the Bush years, have now accumulated $1.27 trillion in wealth. At the same time, working families have watched as median family incomes dropped nearly $2,200, the third year in a row we have witnessed such a decline. In a recent report issued by the U.S. Census Bureau on poverty in America, 46.2 million Americans are now living in poverty.  The number of those living in poverty in America has grown by 2.6 million in just the last 12 months, and that is thelargest increase that we have ever seen since the U.S. government began calculating poverty figures back in 1959. Back in the year 2000, 11.3% of all Americans were living in poverty.  Today, 15.1%  of all Americans are living in poverty.  The last time the poverty level was this high was back in 1993.

Participants in the OWS movement point to the gap between rich and poor, use of public funds to bail out failing companies (i.e., the GM, Chrysler, and AIG), and greed on Wall Street and in corporate America as evidenced by a survey by salary.com that shows the average salary and benefits paid to the CEOs of the Standard & Poor’s top 500 companies in 2010 was $11.4 million. We are rapidly becoming a country of haves and have-nots and that is a recipe for civil disobedience, or worse. Add to the mix the public distrust of government and politicians who place partisan interests ahead of acting for the public good, and you can understand why our individual angst has now spread throughout the country.

Critics of the OWS movement believe it has been hijacked by groups that have self-serving interests such as the Services Employees International Union (SEIU), labor unions, and those just looking for a warm place to sleep. No doubt, there is some truth in these charges and other (fringe) groups and individuals have given the movement a bad name. But this is to be expected in a Vietnam-type environment where disenchantment among the populace has motivated a movement for change in the way “the powers that be” drive the political and economic agenda in America.

The OWS movement needs to identify where they want to go with their legitimate complaints. The Tea Party organized into a powerful representative group with a common point of view – no new taxes, reductions in entitlement payments, and cleaning up America’s economic mess that, as of November 18, created an outstanding public debt of more than $15 trillion and climbing --  which is over $48,000 for each citizen of the U.S. based on a population of about 312 million.  

I recommend that government watchdog groups take the lead in identifying a unifying message for the OWS movement. Most of these groups have missions that are complimentary to that of OWS. Here are some groups I think could lead the way:

Citizens for Responsibility and Ethics in Washington: an organization dedicated to promoting ethics and accountability in government and public life by targeting government officials who sacrifice the common good to special interests.

Common Cause: an advocacy organization that serves as a vehicle for citizens to make their voices heard in the political process and to hold their elected leaders accountable to the public interest. 

Corporate Accountability International: a group that challenges corporate abuse and demands direct corporate accountability to public interests.

The Project On Government Oversight: a watchdog group that champions good government reforms and  investigates corruption, misconduct, and conflicts of interest to achieve a more effective, accountable, open, and ethical federal government.

These are four groups that can best lead the charge to promote ethics in government, accountability from our elected officials, public interest decision-making, and corporate responsibility. Many other groups are equally worthy to lead the way, but the effort must be limited and focused on common goals to have a meaningful impact on the OWS movement, create true and lasting change, and to advance the endeavor to the next level of true reform in government and corporate America.

Blog posted by Steven Mintz, aka Ethics Sage, on November 19, 2011

DNA Evidence, the Innocence Project, and the Release of Innocent People from Jail

Courts Increasingly Stay Executions and Release ‘Criminals’

You may have heard that on Monday a Texas court granted a stay of execution for convicted murderer Henry "Hank" Skinner, giving Skinner time to pursue DNA testing his lawyers say could prove his innocence. Skinner had been scheduled to die by lethal injection Wednesday evening for the New Year's Eve 1993 killings of his live-in girlfriend, Twila Busby, and her two adult sons in the Texas Panhandle town of Pampa. But the state Court of Criminal Appeals halted the proceeding Monday afternoon, ruling that it needed time to review the state's revised law on DNA testing. In a written statement, Skinner's lawyer, Rob Owen, said the decision "has ensured that Mr. Skinner's request for DNA testing will receive the thorough and serious consideration it deserves."

Skinner, now 49, has strongly denied any involvement in the crime and claims that the DNA analysis of untested evidence will not only show him innocent but help determine the real killer. He came within 45 minutes of execution in March 2010 before the U.S. Supreme Court stepped in and handed him a legal reprieve.

One day later in a separate case, a Cook County Circuit Court judge set aside the convictions of three men who were convicted of a rape and murder in 1991. Robert Taylor, James Harden and Jonathan Barr, all of whom were teenagers when arrested, were represented by the University of Chicago’s Exoneration Project, the Center on Wrongful Convictions of Youth with private attorney Jennifer Blagg and the Innocence Project.

In June 1994, before any of the teenagers were tried, the Illinois State Police crime lab identified a lone male DNA profile from sperm recovered from the victim’s body. Even though all 5 defendants were excluded as the source of the semen, the prosecution pushed forward rather than seeking the source of the semen recovered from this young victim.

In August 2009, James Harden, through the Chicago Exoneration Project, again sought DNA testing. For more than a year, the Dixmoor Police Department claimed that it was unable to locate the DNA and was threatened with contempt of court for failing to respond to a subpoena. Eventually Judge Michele Simmons ordered the Dixmoor police to allow counsel to view the evidence storage areas and log books for themselves. In short order, the Department informed the lawyers that they had finally located the evidence. DNA testing uncovered a full male profile that was entered into the national DNA database of criminal offenders, matching serial violent offender Willie Randolph.

“It is abundantly clear that overly aggressive police interrogation techniques can cause adults to falsely confess to serious crimes – and when it comes to juveniles, it can happen at a truly alarming rate,” said Joshua Tepfer with the Center on Wrongful Convictions of Youth. “These techniques don’t only hurt those wrongfully convicted, but as we saw in this case, they allow the real perpetrators to go free and commit other crimes. Hopefully this case will lead the way for much-needed reforms like requiring that all police interviews and interrogations be videotaped in full.”

The number of cases of innocent people released from years after being found guilty of a crime has skyrocketed since the establishment of the Innocence Project. You may have heard about a Texas man imprisoned 30 years ago on aggravated robbery charges that had his conviction overturned in January after DNA evidence exonerated him. Dallas County Judge Don Adams overturned Cornelius Dupree Jr.’s conviction clearing his name officially. Dupree had served more years in a Texas prison for a crime he did not commit than anyone else in the state who was later exonerated by DNA evidence. Only two other people exonerated by DNA have spent more time in prison in the entire country, the Innocence Project said. Texas has freed 41 wrongly convicted prisoners because of DNA testing since 2001, more than any other state.

I have to wonder about the increasingly frequent discovery that DNA evidence was not properly screened during legal proceedings. Is it incompetence? Do those who fail to properly examine DNA evidence have an ulterior motive for not doing so? What that might be? I believe it is a combination of all these factors including the emphasis by some police departments to close cases as soon as possible and the desire by some investigators to maintain a high conviction rate. However, this is doing real harm to our society. Freedom is the number virtue for all Americans and the basis for our Constitution. I can’t imagine anything worse than losing 30 years of your life for a crime you did not commit.

Blog posted by Steven Mintz, aka Ethics Sage, on November 11, 2011

AMERICA, CHANGE IT OR LOSE IT

Government Ineptness Underlies Occupy Movement

This is the second in a series of blogs I’ll post on Fridays from now until election day to address critical issues facing our country. My blog last week dealt with the issue of who is to blame for class warfare (Blame Corporate America and Wall Street for “Class Warfare.”). This week I look at the role of our political system and how it creates distrust of our government.

Critics of the “Occupy Wall Street (OWS)” movement rail against what they perceive to be obnoxious protesters looking for a place to vent, and even sleep and eat. Critics charge there is a segment of the protesters who want to tear down capitalism and our government. They miss the point that the underlying goal is to reform capitalism so that it works for all in society and not a chosen few who tend to act in their selfish interests without regard to the consequences of their actions on the public.

There is a meaningful analogy to be made between the protesters in the Vietnam War and those in OWS. Many in the public criticized Vietnam protesters as unkempt, loud, a nuisance, and generally wanting nothing more than to tear down our government. Sound familiar?  Today we look at those protesters in a much different light as ushering in a period of peace and ending an unjustified and, perhaps, unwinnable war. I’ve taken the title of this blog from one of the slogans chanted during the Vietnam War protests – “America, change it or lose it.” The chant was in reaction to anti-protesters whose slogan, “America, love it or leave it,” articulated the view that those who don’t like what America is doing should leave the country.

Much of the criticisms lodged against OWS protesters have the same underlying theme. The anti-protesters are trying to minimize the valid and well-meaning message that corporate greed and government ineptness is to blame for the harm that has befallen so many in society. Millions have lost their jobs not because they no longer can do the job or don’t want to work, as the OWS opposition would have us believe. Let’s not forget that it was financial institutions and investment banks that brought down our financial system thereby leading to massive layoffs. The government through Fannie Mae and Freddie MAC, both of which engaged in accounting fraud, created a bubble in the housing industry that burst and caused the loss of millions in home value. The combined efforts of the perpetrators of the financial disaster that began in 2008 led to the destruction of a massive amount of stock market wealth for the average citizen whose IRAs and 401Ks plummeted in value.

In a poll taken between October 19 and 24 by Real Clear Politics, only nine percent of the public approves of the job Congress is doing, a 75 percent drop in support since the last poll. How could Congress not expect the public to protest with these numbers? I’d be surprised if there were no protests as it would indicate a complacency in society that is not healthy to our tradition of speaking out about wrongdoing. Moreover, compare these results to an Association Press-Gallup Poll that 37 percent support the Wall Street protesters and 58% say they are furious about America’s politics.

Protesters against the Vietnam War changed the public’s opinion about it just as the protesters in New York City and other places will change the public’s position on the rightness of their cause. However, it behooves the protesters to get better organized; keep in check those who are there for their own agenda; and control troublemakers that always latch on to any protest movement.

The legitimacy of the Vietnam protesters who were branded hippies was enhanced when the group Students for a Democratic Society came along and organized into a political force. SDS developed a political manifesto that suggested a series of reforms, some of which are relevant to today’s protesters: it proclaimed a need to reshape the political parties to attain greater representation, for stronger power for individuals through citizen's lobbies, for more substantial involvement by workers in business management, and nonviolent civil disobedience as the means by which student youth could bring forth a "participatory democracy." This was a unifying message. OWS protesters also must develop a unifying message to be successful in the long run.

The support for the anti-war movement was low at first but grew as the war wore on and more and more Americans questioned the values of their government, much as do OWS protesters. Support for the war went from a high of 52 percent in August 1965 to a low of 28 percent in May 1971.

A Fox-News poll taken the week of October 24 indicates that 76 percent of Americans are not satisfied with the direction our country is headed. This is a serious matter. How can Republicans and other critics dismiss the protest movement in light of the lack of support in the public for the political process and results? The unemployment rate has been over nine percent for about thirty months with no decrease in sight. Programs to alleviate the pain have not worked. None of the Wall Street fat cats were charged with any crimes for their role in the financial meltdown. The government is stalemated and we can’t move forward. Some say it will change after the election. I doubt it as our recent past indicates that political posturing by the party not in power will begin the day after we elect a new President. Politicians are more concerned with the ends – get re-elected; get control of Congress; and change the party of the President – than the means used to achieve those ends. This is an unethical approach to decision-making because it ignores how the public may be harmed by the political games played to achieve a goal.

Blog posted by Steven Mintz, aka Ethics Sage, on October 28, 2011

Blame Corporate America and Wall Street for “Class Warfare”

Occupy Wall Street Protesters Motivated by Corporate Greed and Fraud

This blog first appeared as an opinion editorial in the online version of the Pacific Coast Business Times on October 21, 2011.

At the Value Voters Summit on Friday, October 7, Rep. Eric Cantor (R-Va.) said he is "increasingly concerned" by "Occupy Wall Street" demonstrations which began in New York and spread to other major cities. Cantor used part of his address to attack the Occupy Wall Street protests, and he condemned political leaders who are supporting them.

"This administration's failed policies have resulted in an assault on many of our nation's bedrock principles," he said. "If you read the newspapers today, I, for one, am increasingly concerned about the growing mobs occupying Wall Street and the other cities across the country. And believe it or not, some in this town have actually condoned the pitting of Americans against Americans. But you sent us here to fight for you and all Americans."

Unfortunately, some have joined the protesters for their own reasons and to vent their individual anger. Others have used the park near Wall Street at which they are protesting as a place to eat, sleep and generally make a mess of the area. This is wrong and disrupts innocent people going about their daily work. Still, we should not lose sight of what the protests are really about. Cantor, like so many Republicans, has misread the true message of the protesters. I add my voice to the protestors and believe the underlying motivation is to speak out about what is the true cause of the economic decline in the U.S., the financial difficulties facing our nation, high unemployment, and the general malaise that exists on Main Street about the future of our country. It is the greed that infected corporate America in the 1990s and early 2000s by the Enron’s and WorldCom’s. It is the fraud and corrupt policies of these companies and institutions such as Fannie Mae and Freddie Mac. It is the hyped securitized mortgages that were sold off by financial institutions to unsuspecting investors. It is the ill-advised mortgages made by commercial banks that ignored home buyer ability to repay the mortgage because the banks sold off these mortgages along with the related risk of default. Wall Street investment firms that held these securities hedged their bets by purchasing credit default swaps from AGI thereby betting on both sides of the coin. It is the Ponzi-schemers such as Bernie Madoff. I could go one but you get the point.

If there is a class warfare that has developed in the U.S. it is because the selfish policies of these institutions caused the financial meltdown, economic recession, and massive loss of jobs – all through no fault of us who play by the rules. The unemployed didn’t cause the crisis. Sure, some people overspent and got too deeply in debt, but that was due in part to the belief fostered by the actions of these institutions that the good times would keep rolling along. Instead, the bubble burst and it was the average American that was left holding the bag.

The Republicans attack over-regulation in the form of Dodd-Frank and Sarbanes-Oxley that, they claim, has created an uncertainty and unwillingness to expand economically by the very companies being regulated. That may be so and there is no denying it is a problem. However, the Republicans need to look in the mirror of those being regulated to see the face of who created the need for more regulation.

Our free market capitalistic system is based on the notion that by acting out of self-interest, business will create a better economic climate for all Americans. Well, it is just not working out as intended by Adam Smith. According to a survey by salary.com, the average salary and benefits paid to the CEOs of the Standard & Poor’s top 500 companies in 2010 was $11.4 million. The average CEO earned 343 times more than typical workers.

Very little has been said this election year cycle about how much the financial crisis has cost the average American in lost wealth. Well, hold on to your chairs as you look at the data provided by The Pew Charitable Trust that covers the period between 2008 and 2009:

• $100,000: Cost to the typical American family in combined losses from declining stock and home prices
• $5,800: Average household income loss resulting from declining economic growth
• $14,200: Average household loss in wealth caused by plunging real estate prices
• $66,200: Average stock market losses for households from July 2008 to March 2009
• $2,050: Average household cost to pay for TARP, the main government program to shore up the economy

Oh, and Representative Cantor, his net worth went from $2.2 to $7.6 million during 2008 to 2009, and he ranks 60^th in the House with respect to personal wealth.

Blog posted by Steven Mintz, aka Ethics Sage, on October 24, 2011

ETHICS at the SEC: An Oxymoron

SEC Has Lost its Moral Authority to Regulate Securities Markets

Perhaps you heard that a not-for-profit group co-founded by a Securities and Exchange Commission lawyer used his name to raise thousands of dollars from law firms that represent clients before the agency. According to an article by Jessica Holzer posted online at the Wall Street Journal, four law firms, including Winston & Strawn LLP and WilmerHale LLP, paid the Electronic Discovery Institute $4,500 each to sponsor a conference the group hosted last week at the Ritz Carlton resort in Amelia Island, Florida. The conference was attended by officials from dozens of large corporations.

Patrick Oot, the SEC's special counsel for electronic discovery, co-founded the Electronic Discovery Institute in 2006 before coming to the SEC in the fall of 2010 to develop the agency's procedures for handling outside requests for its emails and other electronic documents in lawsuits and investigations. Oot, who also is a top official at EDI, is quoted promoting the Amelia Island event in a document that details what law firms get in return for the $4,500 sponsorship fee, including having their logo placed on all event marketing materials and the chance to speak on a panel or moderate a lunchtime discussion. EDI said the firms could count $3,700 of their $4,500 sponsorship payment as a charitable contribution to EDI.

Federal regulations bar government employees from knowingly soliciting funds from certain "prohibited sources," which include "someone who conducts activities regulated by the employee's agency." For the SEC, such sources would include securities firms or publicly traded companies, the very entities they are sworn to regulate. Asked whether a law firm representing clients before the SEC is a prohibited source, a spokesman for the Office of Government Ethics, an agency charged with writing federal ethics regulations, said, "A company that does business with an agency is a prohibited source for the employee of that agency."

This isn’t the first time the SEC got caught with its (ethical) pants down. Last March SEC chair, Mary Schapiro, came under Congressional fire for hiring as the SEC’s general counsel someone with a Madoff financial interest — David M. Becker, who participated in matters involving how the scheme’s victims would be compensated.

The revelations about Mr. Becker’s role have raised fresh questions about ethical standards and practices at the agency, where Schapiro was brought in with a mandate to strengthen its enforcement unit. Louise Story and Gretchen Morgenson point out in a NY Times story that questions about Becker arose after Irving H. Picard, the trustee overseeing the Madoff case, sued him and two of his brothers to recover $1.5 million of the $2 million they had inherited in 2004 from a Madoff investment by their late mother. Becker’s financial ties to Madoff had not been publicly disclosed until that suit.

 “One of the things the S.E.C. does is hold companies to a very high standard with regards to transparency and disclosure,” said Representative Randy Neugebauer, Republican of Texas. “We think it’s important that the same integrity exists within the SEC, ensuring that people working there do not have conflicts of interest and that here is a process to vet those issues and make sure they are taken care of in a way that gives confidence.”

Perhaps the most significant Madoff matter involving Becker is a proposed reversal of the agency’s recommendation on how to compensate victims of the scheme. While the SEC had agreed on a deal that would return to investors only the money they had put into their Madoff accounts, Becker argued that the commission should change its stance to allow victims to keep some of the gains their investments had generated, since the investment would have grown somewhat over time even in a low-interest account. The Becker family would benefit from this approach.

In correspondence with lawmakers late last month, Becker said that he alerted the ethics office about his family’s Madoff investment again that May after he received a letter from a number of law firms representing Madoff victims asking that the commission change its proposed compensation formula. Among the issues are whether Madoff investors who withdrew money before the fraud was exposed must return some of their proceeds — and if so, how much — to other investors. “I recognized that it was conceivable that this issue could affect my financial interests because the issue could affect the trustee’s decision to bring clawback actions against persons like me,” Becker wrote in response to lawmakers. The ethics officer approved his participation, he said.

The mission of the SEC Securities is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. It’s difficult to do that when questions arise about the credibility of the SEC’s own actions. The Commission has compromised its integrity and has a black eye from the Madoff affair. It has lost its moral authority to ensure that public companies act in accordance with ethical standards. Congressional investigations will do no good other than to impose an additional layer of requirements on the SEC. Like most regulatory efforts where ethics is the underlying issue, the effort is doomed to fail because you can’t legislate ethics.

Blog posted by Steven Mintz, aka Ethics Sage, on September 16, 2011   

Internet Ethics

Ethical Behavior and Technology

The Internet allows consumers, businesses, and industry to do many new things in unique and efficient ways. The technology around which it is built is also changing and advancing rapidly. A source of concern is that the legal and ethical developments regarding the Internet are not able to keep up with the fast pace of technological change. Questions about appropriate use, ethical and legal responsibilities can be grouped as follows:

• protection of intellectual property
• prevention of fraud
• protection of freedom of expression versus problems of defamation
• protection of privacy
• control of Internet indecency versus free speech

Ethics deals with standards of human conduct that direct the behavior of individuals and groups. These standards, in turn, are developed by the society within which the individual or group exists. Since the Internet allows access to individuals and groups from a wide and complex range of societies and backgrounds, the ethical standards of the participants can vary widely. However, in order for the users of the Internet community to be able to interact productively through communications and commercial transactions, it is necessary for the community to develop a common set of ethics or standards of human conduct that governs their behavior. This is especially necessary since those who are interacting are doing so in a virtual community where they cannot see or meet each other physically. Without a common ethical framework, no trust can develop between those interacting, and the Internet will then fail as a medium for interaction.

Several groups are trying to develop guidelines for a common ethical framework for the Internet. ReelSEO is an online video and Internet marketing group that provides helpful advice about the ethical, professional, and legal obligations of those who use online videos as a tool for Internet marketing. In an attempt to counter the troubling proliferation of socially irresponsible video online, a  “Pledge for Online Video Responsibility,” was developed to help both online video professionals and enthusiasts be more mindful and considerate of others. I had an opportunity to work with Grant Crowell, a professional consultant and developer in the online marketing space, on the Pledge. My contribution was to identify ethical obligations to guide actions by online video professionals. These include a pledge to build trust in those who rely on one’s independence and objectivity in making and evaluating online videos. The standards to carry out the Pledge include:

• Acting in a responsible manner and always considering the consequences of one’s actions before making decisions
• Being able to defend one’s actions if questioned by others, or if they were to appear in any public media or venue.
• To encourage others to join the community in using online video responsibly, thoughtfully, and respectfully – both towards others and ourselves

Another groups trying to develop guidelines for a common ethical framework for the Internet is taken from the Internet Advertising Bureau website. The IAB strongly endorses the view of the Division Advisory Panel of the National Science Foundation Division of Network, Communications Research and Infrastructure which, in paraphrase, characterized as unethical and unacceptable any activity which purposely:

(a) seeks to gain unauthorized access to the resources of the Internet,

(b) disrupts the intended use of the Internet,

(c) wastes resources (people, capacity, computer) through such actions,

(d) destroys the integrity of computer-based information,

and/or

(e) compromises the privacy of users.

An examination of these guidelines for ethics on the Internet indicates that they address many of the areas that involve legal implications as well as ethical ones. It is often true that what is illegal is also unethical. However, the opposite is not always true: what is unethical may not always be illegal. For example, it may be considered unethical to sell information regarding your customers to another agency but it may not necessarily be illegal.

Ethical behavior seeks to go beyond legal requirements to ask questions such as: Is it what is best for all concerned and not just for myself? Would I want someone else to do the same thing to me?

It can be seen that ethics is much more difficult to pin down than legality, and is much more a personal decision. This is all the more reason for technology professionals in the computer industry to set high ethical standards and to act in a way that its actions and the basis for them are clear to all concerned. One approach to accomplishing this is to have a clearly stated set of guidelines for the organization that addresses general issues, as well as specific issues prone to ethical problems, and make sure that both employees and customers are familiar with.

Blog posted by Steven Mintz, aka Ethics Sage, on September 2, 2011

 

Google: All that is wrong about American Business

Google pays out $500 Million to Settle Criminal Investigation

Google draws over 1 billion visits to its websites each month, making it the world's largest Web property. You may have heard that search giant Google Inc. has agreed to pay $500 million to settle a Justice Department investigation into allegations that it improperly accepted ads from online Canadian pharmacies that import prescription drugs into the US.  Google agreed to forfeit $500 million, which represents revenue it earned in ads from Canadian pharmacies plus revenue earned by the pharmacies, the Justice Department announced in a statement, calling it one of the largest ever forfeitures. The DOJ said that it is almost always illegal to import prescription drugs into the U.S., because the FDA cannot ensure the safety and effectiveness of the foreign drugs.

Google can now be added to the long and ever-growing list of unethical companies that put profits and self-interests ahead of doing the right thing. I’ve previously blogged about the lack of corporate social responsibility. Corporations lack a collective conscience because they fail to reflect on their actions prior to taking them; cover-up when caught; and repeat the offensive behavior. They seem to act as if they are above the law. Their ethical blindness has cost society trillions in lost wealth and the cost to government to create regulations they themselves criticize, but fail to realize it’s because of their bad behavior. If only corporation would self-regulate, then perhaps those moneys could be used to truly stimulate the economy and help fund start-ups.

Here are a group of standards I suggest corporations follow to be ethical:

Honesty and Transparency

• Be honest and open about transactions and activities. Don’t withhold relevant information. Be transparent.

Trustworthiness

• Act in a trustworthy manner. The public must rely on the diligence and good faith of companies in carrying out company operations.

Integrity

• Be principled and consistent in action and deed. Avoid giving in to pressures within the organization to engage in or condone improper behavior.

Responsibility and Accountability

• Be responsible and accountable for actions and decisions. Admit mistakes right away; be contrite about the mistake; promise to never do it again…and DON’T!

Reasoned Judgment

• When faced with a conflict consider the consequences of proposed actions on affected parties. Strive to follow the basic principle: “First, do no Harm.”

Reflection

• Reflect on proposed actions before making a final decision. Ask: Would I want my actions to be examined on the front pages of the newspaper.

Google admitted that the company had banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago. Google acted with reckless disregard (my characterization) by putting profits over the possible effects of their actions on the consuming public.

That’s not all. Recently the FTC concluded an antitrust investigation into whether Google had been profiting from illegal activity. In 2007 the three largest Internet companies, Google, Microsoft, and Yahoo agreed to pay a combined $31.5 million fine to settle civil allegations by DOJ that they had accepted ads from illegal gambling sites.

The FTC is also investigating whether Google is taking information like local business reviews that is collected by competitive sites for use on its own sites. The agency also wants to know if Google is giving its own sites, such as Places pages and Google Finance, higher placement in search results than competitive sites.

Google is also facing a separate antitrust investigation launched last year by the European Commission. That investigation is focused on a similar issue -- whether Google abused its dominant position in search to promote its own services.

It will be a difficult case to make: Google says the site is free to users, and “if you don't like its results, you can go elsewhere for information.” And despite its dominant market share, Google argues it doesn't have a monopoly, pointing out there are other search engines like Bing. But more important, it says the FTC's notion of search is antiquated.

What an unethical, irresponsible, insensitive approach to business that is especially offensive given the size and scope of Google’s actions. It’s clueless when it comes to acting with integrity and as a good corporate citizen. Perhaps it’s time for the FTC to open up a separate division just to investigate Google. The company acts like a bully. Perhaps the company motto should be the spins starts here. Google has created a culture of wrongdoing and rationalization for unethical actions that infect other areas of its operations.

The NY Times recently reported that some of the largest US corporations are pressing the Obama administration for tax breaks to encourage the repatriation of profits and use to stimulate the US economy. Google has $17 billion offshore. Under the proposal, known as a repatriation holiday, the federal income tax owed on such profits returned to the United States would fall to 5.25 percent for one year, from 35 percent. In the short term, the measure could generate tens of billions in tax revenues as companies transfer money that would otherwise remain abroad, and it could help ease the huge budget deficit.

Corporations and their lobbyists say the tax break could resuscitate the gasping recovery by inducing multinational corporations to inject $1 trillion or more into the economy, and they promoted the proposal as “the next stimulus.” For every billion dollars that we invest, that creates 15,000 to 20,000 jobs either directly or indirectly,” Jim Rogers, the chief of Duke Energy, said at the conference. Duke has $1.3 billion in profits overseas.

But that’s not how it worked last time. Congress and the Bush administration offered companies a similar tax incentive, in 2005, in hopes of spurring domestic hiring and investment; 800 companies took advantage. Though the tax break lured them into bringing $312 billion back to the US, 92 percent of that money was returned to shareholders in the form of dividends and stock buybacks, according to a study by the nopartisan National Bureau of Economic Research.

This money comes from overseas operations and in some cases accounting maneuvers that shift domestic profits to low-tax countries. The study concluded that the program “did not increase domestic investment, employment or research and development.” Indeed, 60 percent of the benefits went to just 15 of the largest US  multinational companies — many of which laid off domestic workers, closed plants and shifted even more of their profits and resources abroad in hopes of cashing in on the next repatriation holiday.

That’s the moral rub. A “one-time” reduction of the repatriation rate creates a moral hazard. Other companies may come to believe if they just park their profits overseas sooner or later the government will institute a partial tax holiday. Moreover, it is highly unfair to US companies that have been paying their fair share all along. What message does it send to society: Do the wrong thing and you eventually you will be rewarded!

Blog posted by Steven Mintz, aka Ethics Sage, on August 31, 2011

L.A. Mayor Villaraigosa Touches the Third Rail of California Politics – Prop. 13

Can California Afford Proposition 13 Tax Constraints?

Los Angeles Mayor Antonio Villaraigosa is treading where others have feared to go – Proposition 13. Some call it the third rail of California politics. Prop. 13 was introduced in 1978, with the original intention to serve as tax protection for homeowners. However, due to loopholes and exceptions, commercial property owners ended up benefitting most from the legislation. Villaraigosa said, “Prop. 13 was never intended to be a corporate tax give-away, but that is what it has become.” The Mayor states that increasing taxes on commercial properties could bring in up to $8 billion, and that such capital should be split evenly to fund public schools and decrease property taxes for homeowners.

I have previously blogged about the need to consider dialing back or even repealing Prop. 13. Somehow California must come to grips with year-after-year budget shortfalls and gimmicks used to close the deficit. We have a structural problem with our budget in part due to the “lost” property tax revenue since 1978. Moreover, the education system is broke—literally – although money is not the only answer to the problem. A declining work ethic and lack of parental involvement plays an important role.

Here are some statistics on how Prop 13 has negatively affected education spending in K-12 through the 2009-10 school year. It comes from a recent study by the California Budget Project.   

• California’s schools ranked 44th among the 50 states in K-12 spending per student, spending $2,546 less per student than the rest of the US for the 2009-10 school year
• California ranked 46th in education spending as a percentage of personal income
• California ranked 50th in the nation with respect to the number of students per teacher.
• California averaged 21.3 students for each teacher in 2009-10, more than 50% larger than the rest of the US, which averaged 13.8 students per teacher.
• More students attend school in California than in any other state. In 2009-10, 6.0 million attended school in the state compared to 4.5 million in Texas.

The 2009 Nation's Report Card, a national assessment of education achievement, shows a decline in both reading and writing from 1992 to 2009. The lack of an adequate education is not just a California problem, but it is most pronounced in our state.

So, would repeal of Proposition 13, the Holy Grail of property tax policy created by Howard Jarvis, help to stem the declining tide of educational achievement in California? Obviously, there is no way to know that in advance. However, the State has tried to fund education for more than 30 years with constraints on the most important source of education funding for most localities -- property tax revenue. Right now, real property is reassessed only when sold or transferred. Between sales the assessed value can be raised no more than 2 percent a year plus the value of improvements. Excluded from reassessment are transfers between spouses. A number of possible amendments to Prop 13 have been floating around for years. One possible amendment is to tax commercial property periodically on its resale value, not when there is a change of ownership. That's a good idea because creative accountants can obscure real ownership changes.  

The bottom line is more revenue must be raised through a Prop 13 repeal or, at least, an amendment that provides substantially larger resources for local governments so they don't have to go hat in hand to Sacramento each year to fund public services. Even if the additional revenues do not contribute to higher achievement by California kids, we owe it to them to try -- to better fund K-12 education. We must do everything in our power to reverse the decline in educational achievement in California. Even those without school-age children must realize that without a proper education young people may very well wind up on the public dole and then we all pay the price. The purpose of education is to make young people contributing members of society. We all have a stake in making sure it gets done.

Blog posted by Steven Mintz, aka Ethics Sage, August 18, 2011

 

Should President Obama Go to Martha’s Vineyard?

Obama Family Vacation Sets a Proper Tone for All Families

President Obama has been a frequent target of critics since he took office almost three years ago for his “frequent” vacations. Now, with the President and his family set to depart for Martha’s Vineyard, the outcries are beginning. How can he go on vacation at a time like this with a debt crisis at home, political upheaval in the Arab world, and the meltdown of European economies on the horizon? How can he go to Martha’s Vineyard, a playground for the rich and famous, while so many Americans are out of work, trying to deal with underwater mortgages, and struggling to make ends meet?

These are good questions – ones the President should consider whether he is on Martha’s Vineyard or not. I believe he does take these matters seriously. By now he is used to criticisms for taking vacations. It happened last summer as well. At that time I blogged about the attacks on the President’s character and offered my opinion that he deserves to take a vacation and the timing is dictated by the fact that his children will be returning for the new school year very shortly.

Americans are suffering real economic pain. We all need to be sensitive to their situation. But, does that mean we all should skip our vacations? No, and we should not begrudge the Obama’s their vacation time. The way I look at it, President Obama is acting as a responsible father to his children and husband to his wife by taking these trips especially during the summer when his children are out of school. Compared to previous presidents, the Obama children are young and at an impressionable stage in their lives. Just like other children of their age, they need quality time with both parents and Michelle Obama needs to be able to spend quality time with her husband. It must be next to impossible to do this while carrying out the business of the Presidency. President Obama is serving as a good role model for other parents and husbands in that regard.

Blog posted by Steven Mintz, aka Ethics Sage, on August 18, 2011

Whistle-blowing and Accountants' Obligations

Accountants as Whistle-Blowers: Confidentiality Issues

Accountants are increasingly being asked to blow the whistle on corporate wrongdoing to help stem the tide of recent massive financial frauds such as Bernie Madoff’s Ponzi scheme. I have blogged about whistle-blowing considerations before, but not on specific expectations in the law for accountants to blow the whistle. The laws that encourage whistle-blowing by accountants may be well-meaning but they fail to consider the fact that professional accountants and auditors who are Certified Public Accountants or who hold a Certificate in Management Accounting and Certificate in Internal Auditing, all have to abide by a strict code of conduct that generally precludes whistle-blowing. Corporate accountants might be seen as disloyal if they blew the whistle on wrongdoing by their employer. However, this is where ethics and the law part ways. Ethical people use the law as a minimum standard of behavior. They always try to adhere to the law and, in this case, rules of professional accounting and auditing. Under the profession’s rules of conduct, if you know your employer is committing fraud the first step is to take your concerns up the chain of command all the way to the audit committee of the board of directors, if necessary. If you are shut out at every step then, based on your conscience and ethical beliefs about right and wrong, it may be that you choose to take your concerns outside the organization even though it violates your confidentiality obligation and the rules of professional conduct. This is whistle-blowing.   

Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. One of the goals of Dodd-Frank was to extend whistleblower protection beyond the Sarbanes-Oxley Act of 2002 to further incentivize whistleblowers to expose securities fraud. On May 25, 2011, the U.S. Securities and Exchange Commission (SEC) approved final rules to implement a program to pay individual whistleblowers that provide information relating to possible securities law violations that lead to successful SEC enforcement actions.

While CPAs are not permitted to receive a reward under Dodd-Frank by reporting possible violations of a client, they are permitted to receive a reward by reporting possible violations of their accounting firms in the performance of audit services for a client. In a sense Dodd-Frank contains what some have called a “bounty hunter” provision. To be eligible for a reward under the whistleblower provisions, a whistleblower must voluntarily provide the SEC with original information that leads to a successful enforcement action by the SEC and that results in monetary sanctions of more than $1 million.

Where the SEC recovers at least $1 million, the whistleblower must be awarded anywhere from 10 percent to 30 percent of amounts recovered, although the SEC has broad discretion in determining the exact amount of the award. If the SEC does not ultimately recover at least $1 million, the whistleblower receives nothing.

To receive the award, the whistleblower must agree to provide sworn testimony if needed and other assistance and cooperation with the SEC’s investigation. As a result, whistleblowers may be faced with years of ongoing cooperative obligations before receiving any payment. Although initial whistleblower reports can be made anonymously via an attorney, a whistleblower must identify himself or herself to the SEC before collecting any reward.

The whistleblower provisions exclude two categories of accountants from award eligibility because of their pre-existing legal duty to report securities violations:

1. Individuals with internal compliance or audit responsibilities at an entity, including CPAs, who receive information about potential violations, cannot receive whistleblower awards since it is part of their job responsibilities to report suspicion of illegal acts to management. However, these individuals will not be excluded from receiving a whistleblower award where:
   1. Disclosure to the SEC is needed to prevent “substantial injury” to the financial interest of an entity or its investors,
   2. The whistleblower reasonably believes the entity is impeding investigation of the misconduct or
   3. The whistleblower has first reported the violation internally and at least 120 days have passed.
2. CPAs who receive information about potential violations of a client or its directors or officers through an audit or other engagement required under the federal securities laws are not eligible to receive whistleblower awards. The SEC included this exclusion so as not to undermine the legal duty that auditors have under Section 10A of the Securities and Exchange Act of 1934 to report illegal acts by officers, directors, and other client personnel up the chain of command. If the issues are not addressed adequately by management, the auditor must then resign from the engagement and file a report with the SEC.

Notably, the whistleblower exclusions do not apply to CPAs who report information about potential violations regarding their own firms’ performance of audit services for a client. This is true even where the CPA’s information about his or her firm leads to a successful enforcement action against one of the firm’s clients.

Several members of the public accounting industry, including KPMG, Ernst & Young, PricewaterhouseCoopers and the Center for Audit Quality, have expressed concerns to the SEC that the accountant exclusion in the whistleblower provisions is too narrow. Those entities believe that permitting CPAs to obtain monetary rewards by blowing the whistle on their own firms’ performance of services for clients could create several significant problems with respect to maintaining the confidentiality of client information.

Blog posted by Steven Mintz, aka Ethics Sage, on August 10, 2011

The Ethics Party -- A New Direction in American Politics

 Republican, Democrat, and Tea Parties Lack the Foundation of Ethics to Lead the U.S.

I believe we need a revolution in this country. Not a military or citizens' revolt. Not a violent revolution. Instead, a revolution of thought. It is in this vein that I offer up the Credo of a new political party -- The Ethics Party. Let me know what you think...

"We, the American people, in expressing our free speech rights and holding our representatives in Congress responsible for their actions, form a new political party -- The Ethics Party. We do so because none of the current parties represent the values we aspire to and insist they be applied to rebuilding the foundation of our great nation. We are deeply disappointed in our "leaders" in Washington. We abhor the arrogance displayed every time a party leader lays blame for our economic problems, including excessive spending and the accumulated budget deficit, on the other party. These leaders are so disconnected from the American people that we believe nothing short of a new political party can begin to address the economic decline, loss of respect in the world, and the abandoning of the foundational values that built our great nation. The battle cry of  The Ethics Party is: If you believe in these values -- honesty, integrity, personal responsibility, fairness, caring, respect, civic virtue and the work ethic -- we want you on our side as we try to change the direction of this country we love so much.”

Blog posted by Steven Mintz, aka Ethics Sage, on August 8, 2011

Washington, D.C. Now Called “Washywood”

Boehner, McConnell, Pelosi and Reid Lead the Way to Financial Disaster

I have renamed Washington, D.C. “Washywood.” It’s ‘washy’ because leaders such as John Boehner, Mitch McConnell, Nancy Pelosi and Harry Reid seemed to have changed their positions during the recent debate on raising the debt ceiling about as often as I change my underwear. (Yes, I do change every day). The wind blows one way and one of them adopts that position. None of them exhibited even an ounce of integrity as they did not stand by their principles. Of course, you would have to have principles in the first place to stand by. D.C. is ‘wood’ because it reminds me of Hollywood. It’s a place where reality has been suspended and the pursuit of self-interest rules the day. Meanwhile, like Nero who fiddled while Rome burned, the Congress “whiled away the time” right up to August 2, the doomsday date that could have led to a change in the debt rating on U.S. securities.

President Obama is not blameless. During an interview with NPR President Obama said that the Congressional negotiations on raising the debt ceiling made him understand that what may work well in theory often fails in application. In theory the president assumed that representatives in the senate and the congress would put aside bi-partisan bickering in an effort to ensure that the U.S government would maintain its AAA credit rating, amongst other important issues. Unfortunately, this was clearly easier said than done as the members in both houses proved that compromise is as elusive as capturing a bowl of J-E-L-L-O. Has Obama’s head been stuck in the sand about our political system?

President Obama has jumped back onto the fundraising circuit after a month-long hiatus, by appearing at two high-profile events in Chicago this past weekend. First on the list was a semi-intimate dinner where individuals and couples paid $35,800 for their chance to rub elbows with the president and wish him “Happy Birthday”. The first $5,000 of each ticket sold will go to the Obama campaign while the remainder is allotted to the DNC‘s coffers. Reportedly, that figure is the average yearly combat pay for our troops.

Congress’ disdain for the working man and it’s insensitivity towards FAA workers and the traveling public could not be clearer then by its failing to pass a temporary funding measure for the Federal Aviation Administration to put nearly 4,000 federal employees back to work and restart more than 200 airport construction projects. The Democratic-led Senate went on its summer recess last Tuesday without approving what would have been the 21st short-term funding extension for the FAA. The Republican-led House previously passed a short-term extension, but included some changes opposed by Democrats. In addition to workers being forced on temporary furlough, failure to extend funding for the FAA prevents collection of federal taxes on airline tickets that total $30 million a day. If the dispute continues until Congress returns in September, the federal government will be out more than $1 billion in revenue.

Where have all the leaders gone? Where have all the Statesmen gone? What ever happened to serving the public interest? Quite frankly Congress has lived under the delusion that they know what is in the best interests of America while they live a life and lifestyle few of us will ever know. I like to point to Benjamin Franklin who was one of the Founding Fathers of the U.S. He embodies the practical values of ethical behavior, a work ethic and respect for others. He was the image of what America was to become. He is the one who best illustrates “American exceptionalism,” a phrase often used by politicians these days to harken back to what built our great nation.  

So, what can be done about the morass we find ourselves in? I hate to be a pessimist but I think it’s too late to reverse the course of economic decline and infection that surrounds our morality as a nation. We are in a disastrous situation. It is not something that can be solved overnight or in two months, two years, or longer. It doesn’t matter which political party is in power. It doesn’t matter who we send to Congress. I believe our system does not work anymore. The rich get richer while the poor get poorer and the middle class is squeezed like a lemon. The politicians live in their own world where they are oblivious to what is going on with the average American; instead they gravitate to Wall Street bankers. We need just look at the backgrounds of many in the cabinet and economic advisers to the President, some of whom where complicit in the actions that caused the financial meltdown of 2008. These bankers continue to make obscene amounts of money. Corporate profits are up while the unemployment rate hovers around 9.1%, a meager change of 1/10^th of 1% from June. There is no end in sight for our economic free-fall.. Capitalism has lost its moral dimension that calls for taking actions that benefit others, not just a few fat cat millionaires and billionaires. Throwing more money at the problem is not the answer. As the song goes, money can’t buy you love or, in this case, the determined spirit to accomplish a goal and get ahead -- the work ethic that has long since been abandoned in our society.

 Blog posted by Steven Mintz, aka Ethics Sage, on August 5, 2011

 

Throw the Republicans and Democrats Out of Office

Politicians Have Violated the Public Trust

Politicians have lost sight of their main responsibilities -- to serve the public interest, honor the public trust, and be faithful to their constituency. It's the latter that can get them into trouble as is the case with the current budget deliberations. The republicans are driven by conservative views and the Tea Party principles based on balancing the budget, cuts in spending especially from entitlement programs and no new revenues. If this is the Tea Party manifesto then it should start to drink caffeinated coffee. This is not the time to pursue a balanced budget amendment given the government has failed to deliver one for at least the last 14 years and we are still fighting two unwinnable wars. 

The Democrats want no balanced budget amendment, limited cuts in spending programs and new revenues by raising the tax on taxpayers making over $250,000 in income. There needs to be changes in social security such as expanding the retirement date to a minimum of 65 years and a maximum 70 years. I would also recommend a slight increase in the 2.5% tax on Medicare which is low in comparison to the 6.25% rate for social security. We have an aging population that now lives longer than in the past and a slight increase in the Medicare rate is justified given the higher Medicare costs to the government.

'Cut, cap and balance' is predicated on the balanced budget amendment. These are laudable principles and ones that should be included in a national debate during the next 15 month election cycle. However, Rome was not built in a day. Let the voters decide in the ballot box. Politicians should make decisions based on principled behavior and serving the public trust and not motivated by satisfying lobbyist groups.

There should be a comprehensive audit of government programs to eliminate the fraud and abuse. For years we have heard about $500 million in Medicare fraud yet no one seems to have the political will to eliminate it. The Government Accountability Office seems unwilling or incapable of identifying abuse areas and eliminating it. I suggest calling in one of the Big-Four CPA firms to conduct an independent audit. They know how to examine documentation and ask the right questions. CPA firms must abide by strict ethical standards including serving the public interest.

There undoubtedly are other areas of fraud and abuse including in the procurement program, community-based funding, and the misuse of government resources by some in Congress including unsupportable reimbursement of trip expenses and payoffs to lobbyists. 

Our country is at a crossroads. We are headed down a path that will make us the second largest economy after China. Our work ethic is declining perhaps due to not having the skills necessary to compete in the global environment and/or pure laziness. A malaise has taken over our society. If we put the same time and effort into our schoolwork and job performance that we do to social networking time, then much of the declining work ethic would vanish. Americans have gotten lazy and believe they are entitled to a certain standard of living provided by the government. I call it the "Greece-ization oif America."

Congress should be given sufficient time to get the job done right and not based on some arbitrarily imposed deadline. Going forward, we all must make a shared sacrifice and Congress should lead the way by setting a good example and insist on reductions in fraud and waste and reduce their own profligate spending to regain the public trust.

Blog posted by Steven Mintz aka Ethics Sage on July 30, 2001

 

 

 

What Is Civic Virtue?

Barriers to Being A Good Citizen

Machiavelli called virtu civile ("civic virtue")--an ingrained tendency to form small-scale associations that create a fertile ground for political and economic development, even if  the associations are not themselves political or economic. Civic virtue both expresses and builds trust and cooperation in the citizenry, and it is these qualities-"social capital,"-that make everything else go well. I question whether government and other institutions are doing what it takes to create an environment where trust thrives, or are they creating cynicism on thae part of the  American public. What follows are a few examples to make my point.

The other day I found out that the Los Angeles Police no longer will prosecute photo-enforced red light tickets. You know, you get a photo in the mail that shows your car went through a red light. I got such a ticket a few years ago and was $400 poorer for the experience. I went to traffic school to avoid having the ticket appear on my driving record. That cost another $100. My beef is that I was being a good citizen, or so I thought, only to find out others in a similar situation have not been paying their tickets and, in many cases, the courts have sided with the drivers. Apparently, there are some due-process issues. Was I a fool? What motivated me to do what I thought was “the right thing?” For me it wasn’t even a question. I got the ticket, knew I had gone through the red light, took responsibility for my actions, and ‘promised never to do it again’ by suffering through traffic school. Now, I feel like a jerk and it makes me question whether it may be better to take advantage of the lowering of moral standards in our society and no longer pay those tickets especially when they are given by out-of-town police. Also, why not consider defaulting on my under-water mortgage and go through a mortgage forgiveness program sponsored by the government and by banks such as Bank of America, or seek “strategic default." Maybe I should stop paying income taxes because the government might adopt a tax amnesty program or I can always go through an ‘offer-in-comprise.’  Why should I bother to vote in elections because neither political party acts with integrity and ultimately does what is in their narrow self-interests?  And, maybe I'll do whatever it takes to get off jury duty in the future. I mean, who wants to go through what faces the Casey Anthony jurors?

Of course, I will do none of the above. I realize a person who is aware of his or her duties and rights in society is a good citizen. However, now I wonder whether the expansion of one’s right to avoid meeting one’s obligations has caught up with or surpassed civic duty. I always thought we have to accept the standards of behavior expected in society for the common good. But now I see fraud at all levels of government, business, and society. I observe bad people acting badly on television and on the Internet, some of whom get their own reality TV program. I see murderers getting away with it (i.e., OJ and Casey Anthony) because the jury does not want to take the time to methodologically go through all the evidence and conduct a reasoned deliberation to assess reasonable doubt. Students act out in class and teachers are afraid to discipline them for fear of harming their self-esteem or inviting administrative scolding or lawsuits. In other words we have morphed into a no consequences society and a dumbing down of our ethical standards.

One of my first blogs was to explore the concept of moral hazard. Moral hazard occurs when a party protected from risk behaves differently than it would if it were fully exposed to the risk. It arises because an individual or organization does not take full responsibility for its actions so that the consequences of bad behavior do not befall on that party. Instead, responsibility passes to another party that covers the cost of the risky behavior. Banks absorb the cost of defaults on mortgages because some people choose to walk away from their obligations with the result being our home values decline. We, the people, pay for IRS tax forgiveness for others with the resulting increase in the revenue shortfall to the government. And, scofflaws know that the likelihood of getting caught these days is much less than in the past and penalties for any offense more lenient. One reason people get away with wrongful acts today, or aren't caught until massive harm has occurred to others, can be attributed to the growing incompetence on the part of law enforcement and those who should be able to spot red flags before they turn green. Just think about the Jaycee Dugard case or Major Nidal Malik Hasan.

I fear that if we continue down this path we may be headed for violence in the streets if economic conditions don’t improve; the middle class may continue to get squeezed and wonder whether their personal sacrifice is worth it; and the rich will get richer while the poor, poorer. The "do-badders" in our society know they can get away with it and, even if they are caught, rarely are there any consequences for their actions. We all should remember that in history the greatest societies have fallen because of moral decay from within. Who can question that this is precisely what has been occurring during the past forty years or so in America ever since the mantra of the 1960s was to “do your own thing.”

Blog posted by Steven Mintz, aka Ethics Sage, July 16, 2011

Cartoon reproduced with permission

Societal Effects of Cyberbullying, Immoral Behavior, and the Cult of Celebrity

Ethics Being Ignored in 2012 Election

It's all around us yet no one talks about. Why is that? I explore the possible reasons that politicians ignore the lack of ethics in society in this blog.

Examples of immoral behavior pertain more to personal choices and include recent failings by politicians such as Anthony Weiner, Arnold Schwarzenegger, John Ensign and the creepy John Edwards. Morality and ethics are often thought of as one and the same. I prefer to think the latter as the process of reasoning and deliberation one should follow in making personal and professional decisions. Morality and ethics often are intertwined in decision making. Tiger Woods broke his vows to his wife and violated a Commandment so he acted immorally, and he also failed to consider the consequences of his actions on others as expected in ethical decision-making.

Much has been said since the debate on health-care reform about the estimated $500 billion in Medicare fraud. Fraud is certainly an unethical act. Fraudsters like Bernie Madoff made decisions based on lies to investors and then covered-up their theft through deception. The financial meltdown of 2008 was predicated on taking advantage of unsuspecting borrowers who had a right to know about the risks inherent in their mortgage loans. The accounting frauds at companies such as Enron, WorldCom, Tyco and Global Crossing were motivated by greed on the part of CEOs and CFOs. Employees and investors lost millions of personal wealth while the perpetrators of the fraud benefited from lucrative compensation packages.

We are fast becoming a nation without a moral conscience. Violent attacks no longer shock us and anyone can be a target: Gabrielle Giffords; Fort Hood Soldiers; the Virginia Tech massacre; the Beltway sniper attacks; and the slaughter of innocents at Columbine.

Cyberbullying illustrates how far we have fallen on the ethics meter. It has been blamed for the death of 13-year old Ryan Patrick Halligan in October 2003 who committed suicide after online bullying from middle school classmates accusing him of being gay, and he was threatened, taunted and insulted incessantly. A 17-year-old girl, Alexis Pinkington, took her own life following vicious taunts on social networking sites - which persisted postmortem on Internet tribute pages, worsening the grief of her family and friends. Sick hackers maliciously exploited interest in Alexis by automatically using blackhat SEO techniques to stuff webpages with content which claimed to be related to the news.

In Massachusetts, 15-year-old Phoebe Prince and 11-year-old Carl Joseph Walker-Hoover took their own lives after unrelenting bullying pushed them over the edge. Hoover's mother was interviewed by 20/20 last October and told of continuous teasing by her son's peers despite his mother confronting school officials and her efforts to help him cope. Students called him gay, and would provoke Carl, getting him to react, and his reaction, though a victim, was what teachers were seeing, said his mother.

ABC's 20/20 featured a special report on bullying amongst students, subtly suggesting school officials and adults could take a greater role in working with students to prevent bullying. The episode, called "Bullied to Death" featured students who ended their lives due to bullying, some currently bullied students, and some former bullies.

From my perspective the lack of attention to these problems that have persisted for many years and are getting worse is due to the desensitization of society to unethical behavior. At its worse, most in society do not know what are ethics and what it means to have an ethical character. Traits such as honesty, trustworthiness, respect, and responsibility are no longer valued by society. We hear that everyone lies; we should act in our own best interests; respect must be earned and never given; and we blame others for our mistakes and failings.

You would think politicians would jump at that chance to discuss such issues. But very few, if any, see it as the underlying cause of the economic decline in America. Virtually no one seems to understand that the declining work ethic has led to the failure of our education system as students prefer to text and tweet rather than read works of literature, discuss philosophy, and learn how to develop critical thinking skills. The latter takes practice and it is "way more fun" to surf the Internet. Parents don't seem to care because all too many have become infected by the same malaise.

As a nation, we have become addicted to the culture of celebrity. We follow every tweet by our favorite stars and ignore the hard work it took to get to that point; we come to believe we deserve our fifteen minutes of fame and engage in immature behavior to get it; and we obsess over the lives of others such as the Casey Anthony trial. A survey by the Association of Teachers and Lecturers in the U.K. found that the cult of celebrity is producing a generation that believes education is not important in achieving success. More than 70 per cent of teachers in primary and secondary schools said the cult of celebrity was perverting children's aspirations and expectations. About 37 per cent of teachers believe their pupils want to be famous for being famous.

These are the issues that should be addressed by political candidates because no amount of stimulus money or combination of fiscal and tax policy can cure the ills that have befallen our country until we recognize and deal with the fact that our moral underpinnings are crumbling.

Blog by Steven Mintz, aka Ethics Sage, July 6, 2011

Homeless Veterans Basic Rights Ignored in L.A.

On July 4th We Reflect on Our Moral Obligation to Veterans

On this July 4th it's important to reflect on our nation's disgraceful treatment of veterans in general and homeless veterans in particular. I have previously blogged about the fact that there are between 130,000 and 200,000 vets on the streets on any given night representing between one fourth and one-fifth of all homeless people. The Veterans Administration estimates there are about 1.5 million other veterans at risk of homelessness due to poverty, lack of support networks, and dismal conditions in overcrowded or substandard housing. Advocates for the homeless have initiated a class-action lawsuit, filed on behalf of four mentally distressed homeless veterans, contending that the US Department of Veteran Affairs has violated the terms of an agreement in which property in Los Angeles was deeded to the government in 1888. The suit is based on the claim that the department is required — under a federal statute barring discrimination against the mentally disabled — to provide housing to help mentally ill veterans. The scope of the lawsuit is, to a certain extent, limited and, if successful, it would apply only to those homeless veterans deemed mentally disabled. Yet, L.A. has the largest population of homeless veterans in the nation — 8,200 of the city’s estimated 49,000 homeless people, by one count — and the number is expected to swell as soldiers return from Afghanistan and Iraq.

CBS recently made the issue front and center in the American psyche with a shocking report and video. In its report, CBS points out there is a large VA hospital in L.A. and an old-age home for veterans. However, most of the land and buildings that once housed homeless vets have been vacant and dilapidated for decades. With the VA and city of L.A. looking for resources from any source to reduce operating deficits, the VA has been leasing about one-third of the property for private use: to a bus company, to Enterprise Rent-A-Car, for UCLA's baseball stadium and a private school's athletic field. There's even a golf course and a dog park. There's no public record of where the money goes. Bobby Shriver, the former mayor of nearby Santa Monica, has been pressing the VA to spend the money to provide housing for homeless, traumatized vets. "To let them live on the street and die when we have this sort of facility is un-American," Shriver says. So he joined veterans and the American Civil Liberties Union (ACLU) in a lawsuit to force the VA to rehab this facility to house two to three hundred veterans with Post-Traumatic Stress Disorder (PTSD).

Josh Taylor, a Veterans Affairs spokesman, released a statement reiterating a pledge from Eric K. Shinseki, the Veterans Affairs secretary, “to end veteran homelessness by 2015. “We have a moral obligation to ensure that veterans and their families have access to affordable housing and medical services that will get them back on their feet,” Mr. Taylor said. “Though much work remains, V.A. is beginning to make good on that promise.” Taylor's statement is disingenuous. This is not a new problem. U.S. military involvement in Vietnam ended on August 15, 1973 as a result of the Case-Church Amendment passed by the U.S. Congress. Vietnam Vets came home thereafter to a hostile America, with serious PTSD problems, and lacking the basic needs they were entitled to after putting their lives on the line for our country. Even if you did not support the Vietnam War, our soldiers merited supported for making the ultimate sacrifice.

Finally, some action has been taken. The Senate Veterans Affairs Committee approved a bill last month that would authorize the Department of Veterans Affairs to spend up to $35.5 million to house homeless vets at the VA Medical Center in West Los Angeles. That money would be used for seismic retrofitting and renovations at Building 209, converting it into a therapeutic housing facility. The Senate Appropriations Committee followed suit adopting an amendment by Sen. Dianne Feinstein (D-CA) to the 2012 VA spending bill that endorses the project. Both bills now move to the full Senate.

According to a L.A. Times story, the renovated Building 209 -- the first of three slated for conversion into housing units -- would have room for only a fraction of the thousands of chronically homeless vets in Los Angeles County. That's why some local advocates are pushing for the VA to move faster. Among other steps, that faction is supporting by the ACLU lawsuit that would force the VA to provide more permanent, supportive housing at the West L.A. campus. The lawsuit reflects a split among local leaders over how best to solve the problem of homelessness among local veterans. On one side are such governmental insiders as L.A. County Supervisor Zev Yaroslavsky, Rep. Henry A. Waxman (D-Beverly Hills) and Sen. Dianne Feinstein (D-CA.), who see the VA making progress toward a solution, albeit slowly. On the other are cage-rattlers like Santa Monica Councilman Bobby Shriver, who argue that "tectonic plates move faster than the VA."

We need a sea change in public policy on many levels to support those who have sacrificed for this nation, the impoverished, unemployed people who are casualties of the greed-driven 2008 financial meltdown and who are seriously seeking work and trying to gain new workplace skills, and our senior citizens who have been promised social security and Medicare benefits under a social contract. The fact is our national debt is not due solely to socially-targeted entitlement programs that, admittedly, may have to be scaled back, but equally to the fighting of ill-conceived wars, the cost of serving as the world's national policemen and financially supporting unfriendly regimes such as in Pakistan, and costly fraud and corruption in government programs and by politicians.

On this July 4th let me leave you with two quotes that sum it up perfectly. The first was the last speech of Hubert H. Humphrey: "...the moral test of government is how that government treats those who are in the dawn of life, children; those who are in the twilight of life, the elderly; those who are in the shadows of life; the sick, the needy and the handicapped.” Mahatma Ghandi said: "A nation's greatness is measured by how it treats its weakest members."

Blog by Steven Mintz, aka Ethics Sage, July 4, 2011

 

US Interest in Africa Motivated by Chinese and Indian Successes

Forgotten Continent Now Remembered

All of a sudden the U.S. is interested in African economic development. During her recent tour of Africa to address security interests in light of the "Arab Spring" and promote economic development, U.S. Secretary of State Hillary Rodham Clinton said the following: "We want a relationship of partnership not patronage, of sustainability, not quick fixes. We want to establish a strong foundation to attract new investment, open new businesses ... create more paychecks, and do so within the context of a positive ethic of corporate responsibility." My goodness, where has the U.S. been for the past fifty years! The U.S. is not turning its attention to Africa out of altruism. The U.S. has largely remained on the sidelines for the past ten years or so and watched the recent successes of India and, especially, China in partnering with African aid organizations and government to support economic development in Africa while gaining access to strategic, abundant mineral resources. The U.S. wants its piece of the African pie and is not beyond criticizing Chinese interests as based on patronage not partnership to promote U.S. investment in Africa.

China has long targeted Africa under its "Going Out" strategy launched in 1998. I have previously blogged about my concerns with respect to China's true motive for its extensive involvement with African countries and whether it is motivated by the desire to  help develop the infrastructure essential to accommodate economic advances and enlarge Africa's role as a contributing member of the the global society. The African Growth and Opportunity Act (AGOA) has been the cornerstone of U.S. investment on the continent for more than ten years. But the vast majority of goods imported duty free are textile and oil products. African producers want to diversify those exports and say the U.S. government can do more to help.

In a meeting in Zambia, Chungu Mwila, the director for private sector development at the Common Market for Eastern and Southern Africa, says the trade preferences known as AGOA would be more valuable with more direct U.S. investment. “If American companies were to invest in Africa and boost our production capacities, then, in our view, AGOA would become more meaningful,” said Mwila. The Obama administration agrees and is asking Congress to extend AGOA trade preferences for another ten years. U.S. Assistant Secretary of State for African Affairs Johnnie Carson says there should be greater tax incentives for U.S. earnings from AGOA investments. "We recommend that the U.S. government support an effort to eliminate the U.S. tax on repatriated revenues from American companies that invest in factories in Africa that produce AGOA-eligible products.”

This is quite a request. Corporate America has recently criticized the repatriation tax on foreign profits as stifling U.S. business investment in the United States. Their attitude and request to Congress can be summed up as saying "Let us repatriate tax-free and you'll see greater investment in the U.S." From an ethical perspective we must look at the fairness issue.  If such a request is approved for American companies that invest in factories in Africa that produce AGOA-eligible products shouldn't it be allowed for at least some "strategic" investments if not all foreign investments of U.S. businesses?

Secretary Clinton was the first secretary of state to visit Zambia since Henry Kissinger came in 1976 as part of her recent "magical mystery tour" of Africa. Perhaps not coincidentally, for the first time since 1989 Zambia's economic growth reached the 6%-7% mark (in 2007) needed to reduce poverty significantly. Copper output has increased steadily since 2004, due to higher copper prices and the opening of new mines. GDP is up helped by a strong maize harvest and agricultural exports. Cooperation continues with international bodies on programs to reduce poverty, including new lending arrangements with the International Monetary Fund.

The African Development Bank Group Annual Report for 2010 points to the recent economic growth in Africa. "Real GDP growth rose from 3.1 percent in 2009 at the height of the financial crisis, to a level of 4.9 percent in 2010. It is projected to fall to 3.7 percent in 2011 as a result of the emerging sociopolitical unrest in some North African countries, before recovering to 5.8 percent in 2012. The observed GDP growth in 2010 has been driven by higher domestic demand, stronger export revenues, and increased inflows of foreign direct investment, remittances, and aid. The growth performance is most pronounced in resource rich countries that can benefit from the revival in commodity demand, oil and non-oil commodity prices, and trade.

The U.S. investment and economic role in Africa should emphasize African leadership and ownership of the development process while, at the same time, calling for a new partnership based on shared responsibility and mutual interest.  

Blog by Steven Mintz, aka Ethics Sage, June 24, 2011

Cartoon reproduced with permission

Outsourcing California Prisons

How to Deal With Overcrowded California Prisons

I was motivated to write this blog by an accounting ethics student of mine, Andrew Kolchak, who wrote his own blog on overcrowded California prisons as part of an assignment. Andrew pointed out that "Cornell Law School’s Legal Information Institute states that, under the United States Constitution, '…protection requires that prisoners be afforded a minimum standard of living… [and] some other Constitutional rights, including due process in their right to administrative appeals and a right of access to the parole process.'  The most controversial part of the prisoners’ rights argument to date is whether California prisons meet the requirements for a minimum standard of living."

Perhaps you have heard that the California prison system is crumbling. I don't know why it should be any different than the rest of the state. California has now become a failed experiment in being a trailblazer in so many areas including providing for public education, health care, and now housing prisoners in a humane way. As might be expected there is a link between overcrowding in prisons, the number of prisoners and declining educational achievement by high school graduates. A review of recent research shows that California grapples with a multifaceted set of issues in its K-12 and higher education system including:
• A persistent achievement gap, with low-income students performing far worse than their more affluent peers
• An estimated 31% of 9th graders dropping out of high school between 9th and 12th grade
• Lack of preparation, in college preparatory or career technical coursework, for education after high school
• A college-going rate in decline over the last decade, which now puts California 40th in the nation on this important measure, and
• Substantially lower college participation rates in inland and rural California and for black and Latino students statewide.

It is estimated that the state houses 140,000 inmates. The rest are in the Legislature (Sorry, I couldn't resist!). Jam-packed into 33 prisons only built to hold 80,000 individuals, these men and women commit suicide at double the national inmate average, experience unprecedented rates of lock-downs, receive inadequate medical treatment and sometimes live in continuous fear of violence. The U.S. Supreme Court looked at the overcrowding in response to a lawsuit brought that it violates the Eighth Amendment, which protects against cruel and unusual punishment, and ordered California to cut 30,000 inmates over the next two years. The Supremes' ruled in a 5-4 vote that "Overcrowding has overtaken the limited resources of prison staff; imposed demands well beyond the capacity of medical and mental health facilities; and created unsanitary and unsafe conditions that make progress in the provision of care difficult or impossible to achieve," wrote Justice Anthony M. Kennedy for the majority. 

Given the close vote and the extreme decision to drastically reduce the prison population—a task that the state will likely accomplish through sentencing reforms rather than a mass exodus of inmates—critics wonder how bad the situation inside the California prisons could actually be. According to those close the system, it’s been dysfunctional for more than two decades, with the specific problems changing but the quality of life for most inmates remaining unconstitutionally bad. The current inmate population compared to normal capacity is 179 percent. According to last year's Supreme Court’s decision that became effective on May 24, 2011, the inmate population statewide in California’s 33 adult prisons must be no more than: 167 percent of design capacity by November 28, 2011 and 137.5 by May 24, 2013.

The California Department of Corrections and Rehabilitation (CDCR) recently submitted a report to the federal Three-Judge Court updating it on prison crowding reduction measures that the state has taken, or plans to take, in response to the Supremes' decision. “Our current reduction plan does not include the early release of inmates. But it is absolutely critical that the Legislature understand the seriousness of the Supreme Court’s decision and support a variety of measures that will allow us to lower our inmate population in the safest possible way. AB 109 is the cornerstone of the solution, and the Legislature must act to protect public safety by funding Realignment.”

On April 4, 2011, Governor Edmund G. Brown Jr. signed Assembly Bill 109, historic legislation that will enable California to close the revolving door of low-level inmates cycling in and out of prison. Under Realignment, the state will continue to incarcerate offenders who commit serious, violent, or sexual crimes and counties will supervise, rehabilitate and manage low-level offenders using a variety of tools. It is anticipated that realignment will reduce the prison population by tens of thousands of low-level offenders over the next three years.

Legislative reforms already implemented established the California Community Corrections Performance Incentives Act, created credit-earning enhancements for inmates who complete certain rehabilitation programs, and reformed parole supervision by creating a Non-Revocable Parole category for low-level, lower-risk offenders. CDCR also transferred about 10,000 inmates to out-of-state facilities. In other words, these prisoners were outsourced. This program would continue as operationally needed. Since 2009, the department has also discharged more than 27,000 parolees who were deported to foreign countries by the federal government.

California prisoner numbers are projected to decline by adding “no-prison” felonies that would result in prison terms of less than 366 days, alternatives to custody, a more generous credits system and far fewer parolees re-entering. Shorter sentences would allow people convicted of seven felony counts to be transferred to less reliable and more prisoner-friendly county jails, rather than state prisons.

The crimes of the chosen few to be relocated include: (1) possession of a controlled substance, including cocaine and methamphetamine; (2) check fraud; (3) miscellaneous grand theft; (4) receiving stolen property; and (5) petty theft with a prior conviction of a certain offense.

I don't know, why don't we just outsource ALL prisoners? I suggest Texas as the destination of choice. In fact, two of Texas' prisons were recently rated by ex-cons as the best place to serve time including one in Bastrop that has easy airport access (huh?) and in Texarkana that boasts a track, booce pit, and basketball court.

 Blog by Steven Mintz, aka Ethics Sage, June 20, 2011

The Ethics of the Tea Party Movement

Tea Party Fails to Create Ethical Standards

The Tea Party Mission Statement includes the following: "The impetus for the Tea Party movement is excessive government spending and taxation. Our mission is to attract, educate, organize, and mobilize our fellow citizens to secure public policy consistent with our three core values of Fiscal Responsibility, Constitutionally Limited Government and Free Markets." I am particularly interested in its core values because those underlie ethical behavior. Just as a person of integrity acts based on principle and the belief in honesty, trustworthiness, fair treatment of others, personal responsibility and other admirable traits of character, the core values of those who are supported by the Tea Party movement, either expressly or implicitly, should be consistent with THESE core beliefs. Otherwise, I'm not sure the Tea Party is any different from the Republican Party. At least it may have missed a golden opportunity to distinguish itself as truly a party of the people.

The Tea Party core values are important ones but they do not address personal responsibility, an important aspect of conduct as we have seen in the Anthony Weiner case. His future was doomed because he took no responsibility for his actions until it was too late. He had lost the trust of the media that turned against him and the general public that no longer believed him when it became clear he didn't even fully disclose all of his sordid behavior at his mea culpa.

I searched the Internet to find statements attributed to the Tea Party that address the kinds of core values I am interested in and are lacking in "official" Tea Party statements. The closest I could come was attributed to a group called "Gather Your Armies" out of Montgomery, Alabama. GYA claims as its core values "Fiscal, Moral and Legal Accountability of ALL government officials - Support and Promote our Free Enterprise Market - Protecting the Sanctity of Life, Marriage and our Judeo-Christian Values."

The problem with the Tea Party is there are dozens of on-line groups that purport to espouse Tea Party values. The only one that seems to be officially sanctioned by the Tea Party is Tea Party Patriots, a national group that provides support for community-based tea party groups around the country.

The Tea Party Patriots link to "Tea Party Questions for Political Candidates" posted by Paul Beaird, author of The Freedom Philosophy. The questions are part of Beaird's book, Tea Party Questions. Baird raises 26 questions that appear to be designed for prospective candidates who seek out Tea Party support. They are what you would expect: questions to gauge one's commitment to the Tea Party mission and core values; address restrictive government; and promote free enterprise and social policy issues. None deal directly with questions such as: Are you committed to personal responsibility and ethical conduct in your political and personal behavior to regain the trust of the American people?

One of the most thought-provoking ideas about the Tea Party movement comes from the Georgetown Tea Group that is linked to the Tea Party via the Facebook page of "Robert Wagner for Vermont Senate 2012." One statement by the Georgetown Tea Group ironically questions the relevance of the Tea Party itself, at a time when political parties have been co-opted by special interest groups. Wagner's statement suggests that the public should "petition for a Nonpartisan County Political Public Service that does for ourselves what political parties do for us. We would introduce our own candidate’s strai[gh]t to their job. We don’t want the candidates making a pit stop at the political party filling station. This public version would have its own by-laws that are voted on by the public along with a leader. We the public would set our own preconditions to those who we elect. It is a new train of thought that we are in charge and we can find an individual to vote for instead of a political label."

George Washington's Farewell Address that was published in 1796 to explain to the American public why his service was no longer necessary addresses nine areas of concern to the American people going forward. One fear he expressed was about "The Dangers of Political Parties." I couldn't help but relate it to politics in the U.S. today, some 215 years later. While Washington accepted the fact that it is natural for people to organize and operate within groups like political parties, he also argued that "every government has recognized political parties as an enemy and has sought to repress them because of their tendency to seek more power than other groups and take revenge on political opponents." Sound familiar you Watergate generation?

Washington recognized the dangers of a fractured system. That is exactly what we have today in U.S. politics. The Republicans look to take revenge against Obamacare in the name of the people and promote "fiscal responsibility" as defined by the GOP. The Democrats still seem to blame the Republicans, and George Bush in particular, for the economic muck that threatens to engulf the nation. Republicans are viewed as heartless and would cut or eliminate all social programs. Democrats are profligate spenders determined to ruin the country.

The bottom line is political parties no longer work for America and that includes the Tea Party. Sooner or later they represent self-identified ideas that purport to represent what is in the best interests of the public but never speak to the public's clamoring for honesty,  integrity, and personal responsibility in government. These are values that hold out hope of reducing or eliminating fraud, waste and abuse in government, and the narcissistic behaviors that have a stranglehold on our moral compass. These are the values that are  missing from the national discussion; they are not addressed in candidate forums or in the debates. My fear is we have lost our sense of purpose as a nation and until we regain it we cannot begin to turn the nation around -- back to the core values envisioned by our Founding Fathers.

 Blog by Steven Mintz, aka Ethics Sage, June 17, 2011

Green Lantern and Philosophy

The Plato-Aristotle Debate in Green Lantern Philosophy

"Green Lantern and Philosophy," released May 3 and just in time for the new movie's June 17 release, proves to any fan of the comic book series that there are people out there thinking more critically about it. So says the "esteemed" publication The UTDaily Beacon. The Daily Beacon is the editorially independent student newspaper of the University of Tennessee. Now, I've quoted more prominent sources than this before but I feel it is quite appropriate to quote a student newspaper on an issue related to the philosophy of a comic book character.

In case you are not an aficionado of the comic book, let me clue you in on some important details. The Green Lantern is the shared primary alias of several fictional characters, superheroes appearing in comic books published by DC Comics. The first Green Lantern appeared in July 1940. Each Green Lantern possesses a power ring and power lantern that gives the user great control over the physical world as long as the wielder has sufficient willpower and strength to wield it. The ring is one of the most powerful weapons in the universe, and can be very dangerous. While the ring of the Golden Age was magically powered, the rings worn by all subsequent Lanterns were technological creations of the Guardians of the Universe, who granted such rings to worthy candidates. These individuals made up the intergalactic police force known as the Green Lantern.    

You may be wondering why I am exploring a fictional comic book character in an Ethics Sage blog. It's summer time. The students are on break. It's timely and appropriate. The movie based on the book comes out on Friday. In "fact," according to the Daily Beacon, the "book is packed with intimate articles, authored by professors, Ph.D candidates and graduate students. [Most] articles involve some long-winded philosophical definitions and breezy introductions to the thoughts of Immanuel Kant, Plato, Aristotle and the like." I teach this stuff in my accounting ethics class although I use an accounting ethics textbook -- my own titled Ethical Obligations and Decision Making in Accounting: Text and Cases with co-author Roselyn Morris and published by McGraw-Hill Irwin. College professors can obtain an examination copy by contacting their college McGraw-Hill Irwin representative. I guarantee it is a better source material for a course in ethics than "Green Lantern and Philosophy." Enough of the blatant commercialism!

I was mesmerized by the chapter entitled "Another Boxing Glove?: Green Lantern and the Limits of Imagination." It looks at why the character Hal Jordan constantly creates, with his ring, ordinary boxing gloves and giant fists, when he has seen so much of the universe and could come up with anything his mind could imagine. I believe  fictional worlds in art create magical visual environments that are believable and real in their own right such as the Harry Potter stories that can carry our imaginations beyond the limit of the text.

This got me thinking about our situation in the U.S. today. If we could make the written word come to life in real world circumstances then perhaps we can apply the right of revolution in political philosophy, variously stated throughout history, of the people of a nation to overthrow a government that acts against their common interests. Do we really believe our government has been representing our best interests for oh, let's say, the last eleven years? Don't get me wrong. I am not advocating treason or sedition. That is illegal. But, I do try and inform through my blogs so I want to let you know that rebellion against wrongful acts by a government is a right that extends back to ancient China, and it has been used throughout history to justify various uprisings, including the American and French Revolutions.   

The right of revolution is often first associated as part of an official state philosophy by the Zhou Dynasty (1122-256BC) of China. To justify their overthrowing of the earlier Shang Dynasty, the Zhou kings promulgated the concept known as the Mandate of Heaven, that Heaven would bless the authority of a just ruler, but would be displeased and withdraw its mandate from a despotic ruler. The Mandate of Heaven would then transfer to those who would rule best. Chinese historians interpreted a successful revolt as evidence that the Mandate of Heaven had passed on. Throughout Chinese history, rebels who opposed the ruling dynasty made the claim that the Mandate of Heaven had passed, giving them the right to revolt. Now that I think about it, the mythical Green Lantern sounds a lot like the Mandate of Heaven.

Ruling dynasties were often uncomfortable with the idea of a Mandate of Heaven, and the writings of the Confucian philosopher Mencius (372-289BC) were often suppressed for declaring that the people have the right to overthrow a ruler that did not provide for their needs. This almost sounds like what may be going on in China today with the suppression of opposing political beliefs and the fear that the Arab spring might influence Chinese people to rise up against violations by the Chinese government of privacy and free-speech rights. 

The Green Lantern book may spawn a whole new fictional genre I'd like to call Comicosophy. In fact, on June 28 the publishing house of Rowman & Littlefield will release Dr. Seuss and Philosophy: Oh, the Thinks You Can Think! I bet my accounting ethics students would prefer this book to my own.

Well, you've been quite patient so here is your reward. The official trailer for The Green Lantern. It's 2 minutes and 33 seconds. Enjoy!

 

   

Blog by Steven Mintz, aka Ethics Sage, June 15, 2011

Video from YouTube

Cal Poly Ethics Blogs: Carleigh Lake on Osama's Death

Cal Poly Student Carleigh Lake Ethically Analyzes the Killing of Osama

I am so pleased to use two of my accounting ethics students' ethics blogs on my own blog site because they illustrate the quality of writing and thoughtfulness of students in the Orfalea College of Business at the California Polytechnic State University in San Luis Obispo. Today's blog is by Carleigh Lake on the killing of Osama bin Laden. Tomorrow, Lindsey Franz will blog about the sexualization of women in the media.

As the news of Osama bin Laden’s death ran viral around the world on May 1, 2011, some people rejoiced while others

were disheartened; still others were deeply saddened by the act. My question is: In a world where ethical values have been diminishing for years, how do we respond to the death of Osama?

Dr. Martin Luther King Jr. once said, “Through violence you may murder the liar, but you cannot murder the lie, nor establish the truth. Through violence you can murder the hater, but you do not murder hate. In fact, violence merely increases hate.” Through our violence have we increased hatred of the U.S? Is it right to condone the murder of a person because he was a mass murderer himself? Is it right to question such a murder from an ethical perspective?

We live in a society with the basic values of life, liberty and the pursuit of happiness. Under our laws, Osama Bin Laden should have received a fair trial with a jury present. Some believe that it was unethical to kill him since he was unarmed at the time of his death. Others believe the killing was justified since it was in the best interest of the world and qualifies as retributive justice – “An eye for an eye, and a tooth for a tooth."

Osama used his followers as a means to an end by having them kill themselves at the same time they were killing others. This is an ethical issue in itself since he was sacrificing his own people in his pursuit of slaughtering his opposition including fellow Muslims. Many have justified Osama’s death as self-defense of not only the American people but the greater, peace-loving world. This is a debatable proposition but we should realize the normal “standards” of warfare that say we should try and take prisoners and not kill them hardly applies in the case of a mass murder of innocent people, all in the name of a cause – or because of hatred of others.

Another ethical aspect to consider is the method in which Osama was buried. John Brennan, chief counterterrorism advisor to President Obama, informed the American people in a statement shortly after the death, that Osama was buried in accordance with “strict conformance with Islamic precepts and practices.” This included burying the body at sea, performing a ritual prayer, washing and shrouding the body and then burial 24-hours after death. This shows respect for a culture and the person himself. However, a contrarian might question whether Muslims should have been allowed to decide what a proper burial in this situation is. Obama’s failure to follow this path can be criticized from the perspective of the virtues of caring and empathy for another. In other words, how would we like it if one of our perceived heroes was given a burial by our very own enemies who killed that person?

Finally, to me the most interesting ethical issue is whether people, the American public, should have been out in the streets celebrating the murder of Osama as if our team had just won the Superbowl? Does that make us any better than those who celebrate in the streets after the capture of an American soldier? Shouldn’t we hold ourselves to a higher standard? President Obama attempted to set the proper somber, not celebratory tone, in his speech informing the nation of Osama’s death. His position that we shouldn’t release photos of Osama's body and circulate them or treat the death and body as some trophy is ethically proper. To do otherwise would have shown disrespect for the Muslim religion and may have stoked the flames that burn inside radical Islam.

We devoted nine years, lost thousands of lives and spent trillions of dollars in the pursuit of one man. True, he is a symbol, perhaps the most glaring symbol, of hatred for America. True, he committed an unspeakable crime on 9-11. However, we must be realistic about what this one killing may do in the war on terrorism. Dr. King said by killing the terrorist you do not kill terrorism. I suppose the message our leaders want is for the world to learn that America will stop at nothing to hunt down a terrorist and bring him to justice, even if the decision is made to kill the individual rather than capture him to avoid dealing with the consequences of a trial and prolonged ridicule. It’s been almost six weeks since Osama’s death and it has all but been forgotten – at least by the media. But let’s not forget that this shouldn’t become part of our national strategy in fighting an enemy that hates us or we risk being labeled the haters ourselves. 

 Blog by Carleigh Lake posted on Ethics Sage, June 9, 2011

Weinergate: Show Compassion or Kick the Bum Out?

The Psychology of Forgiveness Applied to Rep. Anthony Weiner

A great deal has been said and written about Anthony Weiner's (D-NY) "mea culpa" on June 6. As an academic and one who believes deeply in forgiveness, I want to use a different tactic in this blog to analyze Weiner's action -- one based on the psychology of forgiveness. Now, don't shut down this blog because you think it will be just another academic exercise. Read through it; think about it; talk amongst your friends; and I hope you'll see what happened to Weiner and how he dealt with it in a different light.

First, let me dispense with the necessities. Weiner is a jerk! He's an immature jerk! He deserves to be roasted (sorry) by his constituency, but that is up to the good people of New York's 9th District. What he did is shameful, stupid, borderline narcissistic, and he hurt the ones he purports to love the most. It's up to his wife to decide if she rides out the storm with her husband given his expressions of remorse. It's up to the people of the 9th District to determine his fate in the 2012 election.

As a society, should we forgive Weiner? What framework can we use to make that determination? Here is a definition of forgiveness from Dr. Robert D. Enright, a Professor of Educational Psychology at the University of Wisconsin-Madison, and the unquestioned pioneer in the scientific study of forgiveness. Enright is the co-founder of the International Forgiveness Institute, a non-profit organization dedicated to the dissemination of knowledge about forgiveness and community renewal through forgiveness. Enright and a Human Development Study Group define forgiveness as follows:

Forgiveness is the overcoming of negative affect and judgment toward the offender, not by denying ourselves the right to such affect and judgment, but by endeavoring to view the offender with benevolence, compassion, and even love, while recognizing that he or she has abandoned the right to them.

The question then becomes on what basis should we consider forgiving another person for a transgression? I don't mean from a religious context. I want to explore forgiveness granted by one human being towards another human being. Here are my thoughts on the matter and one's I share with my accounting ethics students. To forgive the offender that party must take four steps: (1) take responsibility for one's actions; (2) show remorse for what you have done; (3) be contrite in making an apology for one's inappropriate behavior; and (4) promise to never do it again.

I believe one's interpretation of these four standards in Weiner's case rests largely on whether you attribute his statement of regret this past Monday to getting caught or, on the other hand, to reflecting about what was the worst of his offenses, that is, after the story broke he blamed others, in particular blogger and investigative reporter Andrew Breitbart, for hacking into his Twitter account. My opinion is that Weiner's handlers -- spin doctors if you will -- came out right away and pulled the old "plausible deniability" game plan from the book of cheaters and liars. We've seen it used before by the likes of Richard Nixon in Watergate. Now, I don't know if Weiner sincerely thought it through over the weekend and came to the independent conclusion that it was a mistake to blame the generic hacker. I'd like to give him the benefit of that doubt. Why? Even if he was motivated to confess because he knew more pictures would come out and that the damage control had to begin as soon as possible, he did expose himself to the American public and the world as a cheat, liar, and one who deflects blame onto others for his wrongdoing. These are not admirable traits even by today's low societal standards of right and wrong. He stood up to the ridicule and incessant questioning for over thirty minutes all the time repeating it was a mistake and apologizing to his wife, constituents, and even Breitbart. If you have followed Congressman Weiner's career and the man, then you know how difficult this must have been for an individual like Weiner who typically is very combatant and does not shy away from the likes of Bill O'Reilly and others who may go after his liberal viewpoints tenaciously.

While I am willing to give Weiner the benefit of the doubt and let those who matter most decide his fate including his wife and constituents, I withhold final judgment until enough time has passed to see if his apology covered all transgressions and not just those he sensed would become public. I've become too cynical over time to naively think this definitely is the end of the story.

I leave you with this quote from Paul Boese, a Dutch botanist, known more for his quotes than for his research in science: “Forgiveness does not change the past, but it does enlarge the future."

Blog by Steven Mintz, aka Ethics Sage, June 8, 2011

Cartoon reproduced with permission

India, China and African Economic Development

What Should Be the U.S. Role in African Economic Development?

It's been referred to as Dark Africa and The Lost Continent. These are descriptors used to capsulize the world's standoffish viewpoint of African economic development for all too many years. In the 1990s we heard of “Africa fatigue” in response to incidents of rebellion and reported atrocities during wartime. So, what has changed? Why the new-found interest in Africa by China and India? Is it simply to exploit Africa's vast natural resources at a time of great economic development in China and India, two countries  with a seemingly unquenchable thirst for oil and mineral resources? Are China and India truly interested in facilitating economic advancement in African nations or is that just the rationalization given for the rapid joint venture and other business arrangements being developed by the Chinese and Indians businesses with African partners?

I have previously blogged about the emerging economic development in Africa and China's role in securing needed resources of the African continent for its own economic expansion. China has long targeted Africa under its "Going Out" strategy launched in 1998. My concerns about China's true motive for its extensive involvement with African countries emanates from the question whether China truly has, as part of its economic outreach in Africa, the desire to  help develop the infrastructure essential to accommodate economic advances and enlarge Africa's role as a contributing member of the the global society.

Now, along comes India. It's late to the party but is making up for it with enthusiastic proposals that mirror those of the Chinese. Indian Prime Minister Manmohan Singh ended a six-day Africa trip last week and participated in a summit in Tanzania designed to underscore India's  growing stature on the global stage. Of course, India's motivation is not purely an altruistic one. It is part of a broader effort to lobby for a permanent seat on the U.N. Security Council and signal to China that the South Asian giant is also a player on the resource-rich continent. New Delhi said it would extend a $5-billion line of credit, fund 22,000 scholarships, set up a "virtual university" and support infrastructure and training

Where is the U.S. presence in the economic development of Africa? We've ignored the continent for far too along and, as I have previously blogged, we have a moral imperative in Africa to do what we can to invest in Africa's economic future. This is an opportunity to right past wrongs and the systematic neglect of the interests of the African people. Let's not forget that an estimated 12 million Africans arrived in the Americas from the 16th to the 19th centuries, about 645,000 of whom landed in the U.S. 

Establishment attitudes toward Africa have evolved quickly since 2000, when George W. Bush announced in his first presidential campaign that the continent didn't “fit into the national strategic interests” of the United States. However, things changed after the 9-11 attacks with the establishment of a unified Africa Command (AFRICOM) that became fully operational in October 2008, and the Combined Joint Task Force-Horn of Africa, stationed at the U.S. military base in Djibouti since 2002. Both efforts point to a major shift  in America’s recognition of Africa’s growing geopolitical significance.

Still, I am concerned that the renewed emphasis on U.S. military and security interest in Africa doesn't address the scale of commercial opportunities or the need for active competition between the U.S., China and India. If the U.S. is to play a role in the continent’s burgeoning growth, there is a need for U.S. policymakers to deepen economic engagement with the region through investments in commercial agriculture, infrastructure, and technology development alongside established strategic alliances.

 Blog by Steven Mintz, aka Ethics Sage, June 3, 2011

Software Piracy in China

Cultural Considerations and Software Privacy in China

Some say it's just part of the collectivist culture in China that emphasaizes sharing within groups and society while others point to the high cost of buying American software. Why not copy it and install it into computers so everyone benefits and costs are kept in check? Yesterday I blogged about corporate fraud in Chinese companies. Today I address the equally troubling fact that elements of Chinese culture in the form of software piracy may be infecting an otherwise successful movement away from traditional state-owned enterprises to corporatized Chinese entities.

From an economic perspective, software piracy cheats the U.S. economy and companies like Microsoft out of hundreds of millions of dollars of revenue, and that in turn cheats the U.S. government out of needed tax revenue. Already the biggest market for cars, cell phones, and commodities like iron ore, China is on track to surpass the U.S. as the world's largest PC market in 2012, according to International Data Corporation, the   premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. This year, the market research firm projects PC unit shipments in China are likely to increase 12 percent to 71 million units, just shy of the 75 million units in the U.S.

Microsoft is one company deeply concerned about its lost PC sales in China due to software piracy. In an address to employees at the company's new Beijing offices, CEO Steve Ballmer said Microsoft's per PC sold in China is only about a sixth of the amount it gets in India. He noted that Microsoft's total revenue in China, population 1.3 billion, is less than what it gets in the Netherlands, a country of fewer than 17 million.

On a global basis, Microsoft's revenue in China is close to $2 billion. For the fiscal year ended June 30, 2010, Microsoft reported U.S. revenue of $36.2 billion out of a world-wide total of $62.5 billion. The company has historically tried a collaborative approach with Chinese officials, developing an agreement to require Chinese PC makers to ship their products with legitimate copies from factories. For its part, the Chinese government acknowledges the problem but says it is taking steps to improve the situation. Among other measures, the government has ordered all state institutions to buy licensed software.

The Business Software Alliance, an industry advocacy group, estimates 78 percent of the PC software installed in China in 2010 was pirated, down from 86 percent in 2005. That's progress, albeit grudging progress. At this pace it will take about five years to get the rate down to 50 percent and at least another ten to come close to eradicating the problem.

If China wants to be seen as an equal partner in the international marketplace it must come to grips with its unethical software piracy practices. These practices cheat U.S. companies like Microsoft out of revenue it deserves and the U.S. government out of tax revenue. It instills a culture that cheating is OK, at least when it is others' products that are being pirated. The tradition of software piracy that adds to a corrupt business environment may be showing up in other areas such as the increasing number of cases of fraud committed by Chinese companies and questions about the reliability of financial statements produced by corporate China.

The software privacy problem may solve itself over time as China becomes a leader in software development. However, we must realize that the country's ability to assume a global economic leadership role in the future may occur on the backs of U.S. software developers that see its products pirated and intellectual property rights stolen. The Chinese government must realize that software piracy is not a very responsible way to act for a country that aspires to be the world's largest global economy. It's time for the Chinese government to recognize its global social responsibilities and play by the same rules as all industrialized nations.

  Blog by Steven Mintz, aka Ethics Sage, June 2, 2011

Whistle-Blower Rewards Under Dodd-Frank Under Attack

Corporate America and Whistle-Blowing

A new bill in the House of Representatives proposed by freshman congressman Michael Grimm (R-N.Y.), would make "any whistleblower who has legal, compliance, or similar responsibilities for . . . an entity and has a fiduciary or contractual obligation to investigate or respond to internal reports of misconduct" ineligible for the whistleblower awards incorporated into the Dodd-Frank Financial Reform Act. This  would include chief financial officers. The Dodd-Frank law passed last year aims to give witnesses to securities fraud a monetary incentive -- starting at $100,000 -- to report wrongdoing to the Securities and Exchange Commission. Under an SEC proposal made in December, informants would collect 10% to 30% of wrongdoers' payout to the commission for enforcement cases that involve penalties worth more than $1 million.

National Association of Corporate Directors (NACD) President and CEO Ken Daly testified before the House Financial Services' Capital Markets and Government Sponsored Enterprises Subcommittee on the impact of whistleblower reward provisions in the Dodd-Frank Act and supported the proposed Grimm bill. He enumerated the unintended consequences that may result from the proposed SEC whistleblower regulations to implement Dodd-Frank. Under previous rules, the SEC could choose to reward whistleblowers, but was not required to provide monetary compensation. The main focus of  Daly's testimony was to recommend deferral of the proposed regulations until further study can determine the effectiveness of the provisions that already exist in the Sarbanes-Oxley Act.    

The first person to win protection under the Sarbanes-Oxley Act's whistle-blower provision was a CFO, David Welch, a former finance chief of Cardinal Bancshares. Welch had claimed he was fired after raising questions about the bank's accounting policies and internal controls. A government review board later rejected the Department of Labor's initial decision that Welch should get his job reinstated and collect back pay. Dodd-Frank's whistle-blower rules were designed to make the process more favorable to informants.

 This is not an easy issue from an ethical perspective. On the one hand I believe whistle-blowing should be encouraged if it helps to uncover corporate fraud and save the investing public from untoled losses. On the other hand, a top company official like a CFO should go through the chain of command including reporting to the CEO and board of directors when he or she suspects corporate wrongdoing. I think it's reasonable to amend Dodd-Frank to require those steps be taken first before blowing the whistle externally. One would hope the proper corrective action would be taken internally before it comes to that point --  assuming the allegations are correct.

I have previously blogged about what it takes to have an ethical corporate culture -- one that promotes financial responsibility and fosters ethical behavior. However, I do take exception to Ken Daly's cynical characterization of Dodd-Frank that, he claims, " has created 'a perverse incentive' for whistle-blowers to let a problem fester in order to collect a higher reward." Daly is guilty of the same kind of rhetoric we hear all too often from corporate America today that they are over-regulated. Well, look in the mirror! Who do you think is to blame? Might it be these very same corporations that gave us Fannie Mae and Freddie Mac, Countrywide and all the risky derivatives trading, the Enrons and WorldComs of our world -- OR, should we blame Congress that, for all its other faults, is trying to protect the very public it was sworn to serve?

  Blog by Steven Mintz, aka Ethics Sage, May 27, 2011