Problems in American Executive Compensation: The Ethical Dimension

According to The New York Post, 66% of the income growth in the United States between 2001 and 2007 went to the top 1% of all Americans. In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. By the year 2000, that ratio had exploded to between 300 to 500 to one. Because American executives tend to be paid more in total compensation than do their European colleagues, the ratios are lower in in the E.U. Hence one might ask what is behind the trajectory in the United States. 

Does a shift from manufacturing to knowledge-based industries occasion a widening economic gulf? Even as late as 2010, the United States still had the largest manufacturing sector in the world. I suspect that the change is not so much tied to the number or even proportion of factory workers as it is to changes in executive compensation. Specifically, in the 1990s stock options took off as a part of such compensation because boards wanted to tie executives' compensation to long term firm performance. Even if the alignment of incentives was strengthened, a side effect was an explosion in the overall level of a given executive's compensation. In other words, if an executive's company did well, so too did his or her total compensation package. This byproduct in turn raised the ethical issue of fairness.  Specifically, is a CEO's work really worth tens of millions in a given year to a firm or to society at large?  Is a CEO's effort really so much more than that of a mid-level manager or an employee in operations?  

To obviate any ethical violations of fairness, which human beings seem able to detect innately, boards could reduce the overall compensation packages of executive managers even as the proportion in stock options is increased.  Lest it be argued that the market demands the higher amounts, it could be argued that that market is an oligarchy rather than being competitive. If so, there might be a legitimate role for the U.S. Government as an umpire establishing and protecting competitive markets. Otherwise, an oligarchy can become a self-perpetuating club that functions primarily in the interest of its members, which occasions the ethical objection of fairness.

Source:

"So Long, Middle Class," New York Post, August 1, 2010.

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

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

It could be predicted, therefore, that the President's application of responsibility might have differed from some of the business managers in the audience. Indeed, Obama’s suggestion that businesses could help the economy recover by spending their reserves was met, according to The New York Times, “with skepticism by some in the audience.” For example, Harold Jackson, a executive at Buffalo Supply Incorporated (a medical supply company), called the President's suggestion naive. “Any business person has to look at the demand to their company for their product and services, and make hiring decisions,” Jackson said. “I think it’s a little outside the bounds to suggest that if we hire people we don’t need, there will be more demand.” In effect, Jackson was defending Friedman's application of corporate social responsibility from that of the President's.

To President Obama's assumption that American businesses were still sitting on the sidelines, it can be asked, in what sense? The President was pointing to what he viewed as excessive retained earnings. Yet John Schoen of MSNBC reported the same day that the American manufacturing sector was “roaring back” after the recession. Schoen reports a sustained rise in factory orders in five of the last six months, which prompted manufacturers to boost hiring. The Commerce Department had reported a few days before Schoen's report on February 7, 2011 that the manufacturing sector had added 49,000 new jobs in January. Yet this is hardly a roaring comeback in terms of new jobs. Schoen reports that businesses have figured out how to make more widgets with the same number of workers, resulting in higher productivity and profits. Investing reserves in automation, for example, raises productivity by making products faster and better. According to Schoen, “Productivity is a pretty simple concept: It’s a measure of how much stuff a worker makes in a given number of hours. . . . Productivity has also risen as American manufacturers have moved to specialize in more valuable products, sending manufacturing of cheaper goods overseas where wages are lower. As the value of American-made products has risen, so too has the average level of output per worker when measured in dollar terms.” Schoen reports that according to the U.S. Labor Department, the level of output per hour worked rose by 2.6 percent in the last three months of 2010. Even if it is not in the interest of labor, such improvement is in line with the logic of business, given how business is designed and how a competitive marketplace works. Spending retained earnings beyond that which can be expected to raise productivity simply does not make sense to a business practitioner.

In general terms, the (nearly) “jobless recovery” can be seen as pointing to a major difference between the interests of business and society—the latter being represented by the President at the Chamber of Commerce. Given the nature of business enterprise in a competitive market, it is only natural for managers (and boards) to work toward (and reward) greater efficiency (i.e. productivity). Business managers thus understand or apply responsibility in this way. As per Harold Jackson's point, to hire labor beyond the optimal efficiency point in order to solve the wider societal problem of unemployment would run against a firm's telos, or goal. Ultimately, such over-hiring would compromise a company's continued viability (which could result in the loss of even more jobs).

One cannot blame a manager for thinking in line with his or her company's logic, or raison d'etre, any more than one can blame a shark for hunting for food and eating like a shark. A shark is a shark, and a business can also be viewed as a feeding machine. To posit or impose responsibilities onto a machine does not make sense either to the machine or to those who operate it (in their functioning as operators). To an operator, responsibility means operating well—which, by the way, is virtue in the ancient Greek sense. The President's use of responsibility extrinsic to a business calculus simply would not register. It would be like trying to get ought out of is. Even within business functionality, responsibility even as in fiduciary duty to the stockholders is simply translated into “try to get as much profit as possible, now or later.” In other words, ought does not compute in a business technical vocabulary. The term is extrinsic, like societal problems and goals. To come from a societal standpoint and impose “be responsible” to a business practitioner is like shouting at a deaf person. The business person is apt to simply look curiously at the person as if wondering why he is speaking in a foreign language while assuming he is being understood nevertheless. “How odd,” is perhaps the most honest response that one could give to such a display.

The difference between the President's application of responsibility and that of Jackson can also be understood as the difference between the interest of a subunit and the system as a whole. It is only natural for a part of a whole to operate in the interest of the part itself rather than necessarily the whole. The interests of the latter can thus fall through the cracks. Government regulation is an attempt to plug such cracks, but regulations, like firms, are particular. On the issue of unemployment, the societal question is whether even a fully-operational economic system can supply full employment. If not, it may be the government's responsibility to supply the surplus employment, directly or indirectly via subcontracting. Crucially, this supply must be designed such that it does not reduce the employment provided by the private sector. The surplus jobs must be functions that the private sector does not and would not address. The President's error in his speech to the Chamber of Commerce could be that he was assuming this surplus is the responsibilities of “parts” of the system (i.e. individual companies) rather than of the system itself (i.e. the government).

In sum, responsibility is a dubious concept to apply to business; the term is too vague to have much traction in discussing such vital matters as affect our economic livelihoods and the related viability of our economy. It seems to me that the priority ought to be that every able-bodied and minded adult has a job (or, otherwise, a means by which he or she can have sufficient economic wherewithal to survive in this interdependent society), whether through business, non-profits or government. Ideologies, including responsibility itself, ought to be relegated as luxuries with which we can play on the margins once full employment has become a fait accompli. That is to say, ideologies might contribute to improving full employment, rather than being depended on to reach it or allowed to keep us from it. Of course, it could be countered that ideologies are part and parcel of this entire discussion and thus cannot be dissected from it. That may well be. Even so, I submit that ideologies such as laissez faire and corporate social responsibility ought not be allowed to thwart us in how we constitute full employment as a societal fact. That is to say, we ought to direct full employment by whatever means necessary then work from there (once attained) to improve it. Simply put, for some reason, we don't treat full employment as necessary.; rather, we treat it as a goal.  "How odd," an alien from another galaxy might say (in its own language, of course), should one visit us and want to study us.

Sources:

Michael D. Shear, “In Speech to Chamber of Commerce, Obama Urges Businesses to ‘Get in the Game,’” The New York Times, February 7, 2011.

John W. Schoen, “Factories Boom, but with Few New Workers,” February 7, 2011, NBCNews.com.

Does Opportunity Justify Economic Inequality?

From 1993 to 2010, the incomes of the richest 1 percent of Americans grew 58 percent while the rest had a 6.4 percent increase.  In 2010, the first year of an economic recovery, the top 1 percent of Americans captured 93% of the income gains. Beyond the danger to the American republics in there being an economic elite so far removed from the vast majority of the population is the question of whether the trend is baleful, economically speaking. It is not clear that even such an income gain being snagged by so few registered in the minds of the general populous as a problem. The key to any concern would seem to be whether opportunity for the many is compromised as a result of extreme economic inequality.

In 2011, inequality was not exactly the top priority of American voters: only 17 percent thought it is extremely important for the government to try to reduce income and wealth inequality, according to a Gallup survey. That is about half the percent who said reigniting economic growth was crucial. However, 29 percent said it was extremely important for the government to increase equality of opportunity. More significant, 41 percent said that there was not much opportunity in America, up from 17 percent in 1998. The question is whether the concurrent increase in economic inequality was viewed as causing the decrease in opportunity. According to David Hume’s naturalist fallacy, a correlation does not itself mean a causal relationship exists. The fact that economic inequality was increasing as opportunity was decreasing does not in itself mean that the increasing inequality was reducing opportunity. There might be a causal relationship, but more is needed to support it than a correlation.

According to the New York Times, comparisons across countries “suggest a fairly strong, negative link between the level of inequality and the odds of advancement across the generations. The link makes sense: a big income gap is likely to open up other social breaches that make it tougher for those lower down the rungs to get ahead. And that is exactly what appears to be happening in the United States, where a narrow elite is peeling off from the rest of society by a chasm of wealth, power and experience.” Additionally, that elite can use its wealth as power to reserve the opportunities itself. For instance, donations to universities (and lobbying government officials) could be used to keep financial-aid-based admissions down to a certain level such that there are plenty of spots available for children of the well-off. Appeals seemingly in the interest of the masses can even be utilized, as in wanting to reduce subsidized student loan programs because students are suffering from too much debt.

In my view, the business-government dynamic is crucial to why increasing economic inequality is harmful both politically and economically. Minimizing the harm to reduced opportunity ignores the injustice that comes with the inequality itself. Wealth can easily be made into power, which in turn can be used in political, economic and societal realms in self-serving ways. The primacy of opportunity assumes that anyone can be rich if he or she just works hard enough. Both on account of the way the system is designed and the differences between people, not everyone will succeed even if given the opportunity.

Furthermore, conditioning one’s objection to economic inequality in society on whether one’s opportunity is affected can be viewed as self-centered as well as rather narrow because one is indifferent to the negative effects of the inequality on others apart from any decreased opportunity as long as one believes that one’s own opportunity is not adversely affected. Put another way, too many Americans are willing to look the other way on how the elite can unfairly use their advantage aside from restricting opportunity. The right of the elite to so much wealth is tacitly acknowledged as long as opportunity is still thought to exist.  As long as it does, society has no right to take from the rich even if they compromise the republics themselves. This is a very minimalist notion of social contract—one that the 1% benefit from. This is hardly an accident—political ideology established in society being in the interest of the relatively few beneficiaries of the vast majority of income gain.

Therefore, whether increasing economic inequality causes less opportunity for the masses is a question that can be relegated to the more important question of whether the inequality itself is inherently unfair and/or a threat to the republics, the economy, and even society. How the wealth has been and is gained as well as used are relevant to the ethical question of fairness, and thus to whether the concentration of wealth is legitimate. Crucially, a focus on opportunity misses this point. Besides its ethical dimension, absolute or relative economic inequality could be harmful in building up pressure of resentment and even revolution, as evinced in the Occupy Wall Street Movement (which has been safely marginalized—with its own complicity). As the interests of the elite and the masses diverge and the elite (e.g., Goldman Sachs) gains more and more power, the strangling of the lower and lower-middle classes may ensue—a development that could not be good for a society’s stability. A focus on opportunity recalibrated in terms of being promoted to manage a McDonalds’ restaurant misses this point. In short, we are missing the iceberg coming up in front of our ship because we are satisfied if we can still get a deck chair.

Source:

Eduardo Porter, “Inequality Undermines Democracy,” The New York Times, March 21, 2012. 

Christianity and “Social Capitalism”

The SEC charged Ephren Taylor with a fraudulent $11 million Ponzi scheme in April 2012. According to Reuters, “Taylor fraudulently sold $7 million of notes said to bear 12 percent to 20 percent annual interest rates, to fund small businesses such as laundries, juice bars and gas stations.” He “had conducted a multi-city ‘Building Wealth Tour’ in which he spoke to congregations” on the importance of “giving back.” He called himself a “social capitalist.” In actuality, he used the money on himself and his wife’s attempt to become a singer.

The congregants’ susceptibility to Taylor can be understand from grasping the larger historical trend within Christianity wherein the prosperity gospel—in which it is believed that God rewards “true believers” with material wealth—had replaced the anti-wealth view wherein being rich and saved is like a camel getting through the eye of a needle. In other words, the shift in historical Christian thought from a close coupling of wealth and greed to an outright rejection of such a linkage made it more likely that the lay Christians would view investing in “social capitalism” as sufficient to justify having wealth beyond subsistence living.

Secondly, Taylor’s assumed conflation or mixing of Christianity and social performance in business enabled the congregants to open their wallets presumably for religious purposes in line with a social conscience. It is worth pointing out that camel is not given a pass for using wealth in a socially responsible manner. In other words, if simply having wealth is indicative of underlying greed, how one uses the wealth is not sufficient to undo the linkage and justify having the wealth in the first place.

Moreover, fidelity to a social norm such as corporate social responsibility is not religious. Even though Unitarians maintain that certain social structures are the object of their faith, the religious domain contains a transcendent referent.  That is, faith in a religious sense is oriented to an object that lies beyond the limits of human cognition and perception.  Specific social structures do not qualify because they are in our human domain.

In fact, to advocate a particular social norm is not to justify ethically with ethical reasons.  That is to say, corporate social responsibility is not business ethics.  The difference can be explained by referring to David Hume’s naturalist fallacy, which holds that what “is” the case cannot justify what “should” be. In other words, you can’t get ought out of a melon. You need ethical reasons, such as “it is fair because x,” to justify what one should do. To advocate a social norm is not to provide an ethical reason; more would be needed to provide support for why a certain norm that can exist should exist.

Therefore, I question Taylor’s linking “social capitalism” to religion (and Christianity in particular). The application cannot even be justified under the rubric of religious ethics. In addition, the congregants were too gullible because they had applied or bent Christianity too far from its native turf.

See: God's Gold, available in print and as an ebook at Amazon.

Source:

Jonathan Stempel, “SEC Charges Ephren Taylor II ForAllegedly Bilking Churchgoers In $11 Million Ponzi Scheme,” The Huffington Post, April 12, 2012.

A Managerial Society of Carrots and Sticks

In a society of managerialism, a particular value-set is salient; it can be characterized overtly or tacitly by technique as a functional means of manipulating resources (human or material). This orientation issues in an instrumentalism wherein even other human beings are viewed as means rather than as ends in themselves. Furthermore, an assumption of incrementalism rather than real change tends to accompany the orientation because the status quo is the default where the focus is on instruments. The managerial orientation can be so ingrained in generally accepted “organization speak” that the modern herd hardly recognizes the penetration in modern society itself.

In the film, The Matrix, Neo is eventually able to see the matrix for what it is: series of green ones and zeros scrolling up or down.  It is only then that he has power to punch through it with complete impunity.  Likewise, it is only when a person sees the allurements and arrows in a company’s customer service that a customer can transcend the vacuous business-speak and thus be able to resist the attempted manipulation.  Rational nature, according to Kant, views itself as an end in itself. Therefore, a natural tension exists between a manipulator and the object, which views itself as an end rather than a means to another’s end. Coming to perceive the attempted manipulation naturally triggers resentment, for it is presumptuous to use another person without any recognition of the other’s inherent nature that intrinsically resists being used. 

For example, an employee representing an organization typically presumes that the potential customer is already under the organization’s policies and procedures.  It is hardly imaginable that a potential customer would use phrases such as “you have to” before any transaction has been agreed to. Furthermore, employees who refuse to deign themselves to negotiate with potential customers presume that the default lies on their side; organizational “policy” or rigidity is merely back up to the operative point that negotiating would be humiliating in that the being of the potential customer would have to be recognized at least in part as an end in itself of equal value to the employee’s company of rational natures.

In other words, modern society, at least in the West, has come to accept the presumptuousness that has come to characterize the attitude of employees who view their role as holding policy up to customers who must either accept it or go away. Policy serves here as a technique by which to dominate. It is used because the organizational herd animal wants to dominate but knows that it is too weak to do so without the aid of policy taken as law. Rather than negotiating with customers, they are told “you must” or “you can’t” even before they agree to a transaction.

Policy is used as a stick instrument. Managerialism also makes use of carrots, or inducements. “You don’t like the product you have purchased?  You can’t return it (policy as domination) but here is a coupon for 10% off your next purchase.” For the other end of a conversation to consist of only carrots and sticks is naturally to be disconcerting, even maddening because the subtext is a refusal to recognize the other as an end in itself. In fact, there is evidence that the carrots and sticks of managerialism have a rather narrow application with human beings. Therefore, much of the effort by people in organizations to induce or threaten may be in vain. 

According to CNN, “In laboratory experiments and field studies, a band of psychologists, sociologists and economists have found that many carrot-and-stick motivators — the elements around which we build most of our businesses and many of our schools — can be effective, but that they work in only a surprisingly narrow band of circumstances. For enduring motivation, the science shows, a different approach is more effective. This approach draws not on our biological drive or our reward-and-punishment drive, but on what we might think of as our third drive: Our innate need to direct our own lives, to learn and create new things, and to do better by ourselves and our world. In particular, high performance — especially for the complex, conceptual tasks we’re increasingly doing on the job— depends far more on intrinsic motivators than on extrinsic ones.” This third drive is that which stems from our rational nature viewing itself as an end in itself (i.e., having absolute value, because rational nature assigns value to things).

So organizational employees and their task-masters may well be selling their fellow human beings short in presuming that they must be buffeted with inducements and threats from the get-go.  Perhaps these organizational creatures are of the lower sort that function only by being manipulated and threatened.  Perhaps they project their own self-centeredness out onto ordinary, free, human beings.

The third drive can lead a potential or actual customer to say, “I am not in your organization so I am not subject to it as you are,” or even more directly, “I do not appreciate being manipulated” or “I feel insulted by being pressured to buy something else as I’m leaving your store after buying one of your products.”  Typically, the employee will feign ignorance of what he or she has been doing, or simply ignore the demurs of the dissatisfied customer. We moderns are bombarded every day with organizational passive-aggression via “organization-speak” consisting of carrots and sticks. We are so used to it in our organizational society that we absorb it without realizing what it is and how it affects us as human beings.

Source:

Daniel H. Pink, “Big Bonuses Don’t Mean Big Results,” CNN, March 2, 2010.

See a related book, available at Amazon: On the Arrogance of False Entitlement

The Basis of American Aristocracy: Wealth & Property

In the constitutional convention of the United States in 1787, the property-interests were well-represented. Even so, a fear of a plutocracy was voiced by those property-protectors as well. While one might conclude at first glance that the wealthy delegates were duplicitous, their position is not self-contradictory, even if the bias toward wealth is discomforting for those of us who value representative democracy.

Governeur Morris, on July 5, asserted that property is “the main object of Society.” (1) Rutlidge, on July 5, concurred, maintaining, “Property was certainly the principal object of Society.” (2) Hamilton, on June 26, argued that the “inequality of property constituted the great & fundamental distinction in Society.” (3) King, on July 6 averred that “property was the primary object of Society.” (4) In Morris’ view, property is thus “the main object of [Government].” (5) Hamilton articulated this view in the Federalist by writing that the adoption of the Constitution will afford additional security “to the preservation of [republican] government, to liberty and to property.” (6) “I am convinced,” he writes, “that this is the safest course for your liberty, your dignity and your happiness.” (7) So his statement that “the vigour of government is essential to the security of liberty” can be read as a plea for a General Government primarily to protect property interests. (8) Butler, on July 11, claimed likewise that government is “instituted principally for the protection of property.” (9) At the very least, these remarks evince a reductionism wherein society and government were viewed in terms of wealth. Shouldering a minority view on this point, Wilson, on July 13 in the convention, “could not agree that property was the sole or the primary object of [Government] & society. The cultivation & improvement of the human mind was the most noble object.” (10) This object, he suggested, is a personal right. (11) As much as this object is laudatory, it is not the object of government, which I contend is to provide and ensure order, which goes beyond the protection of property. If there is a higher purpose, government can express and operationalize societal ideals, which can thus orient whatever order government provides.

The primary result of the delegates’ property-centric view was the formation of a General Government of the U. States to counter the risk that State legislatures would act democractically at odds with the interests of the wealthy. Just a year before the convention, the Massachusetts legislature had attempted to act in the interest of debtors (i.e., unpaid soldiers who were still expected to pay on their farm debts; the representatives sought to stop this injustice at the expense of the creditors). Shays’ Rebellion was the unhappy result. Govereur Morris, on July 2, alluded to this affront on property interests in stating, “Every man of observation had seen in the democratic branches of the State Legislatures, precipitation—in Congress changeableness, in every department excesses [against] personal liberty [,] private property & personal safety.” (12) However, what if private property is acquired unjustly at the expense of another’s liberty? In other words, liberty may run counter to the interests of the rich.

Madison, on June 26 in the convention, remarked that “we had not among us those hereditary distinctions, … nor those extremes of wealth or poverty which characterize [the modern States in Europe]… . An increase of population will of necessity increase the proportion of those who will labour under all the hardships of life, & secretly sigh for a more equal distribution of its blessings… . a leveling spirit… the future danger.” (13) Leveling would actually be in line with liberty if wealth has been acquired unjustly, as for example, under duress. Moreover, too great an inequality of wealth can threaten the viability of a republic. For example, in 1985, the top five percent in the U.S. held $8 trillion in wealth. By 2007, they had $40 trillion. Besides being in part from the dot.com and housing bubbles wherein asset values were overvalued, the concentration of wealth cannot but undermine representative democracy wherein each person has one vote. Interestingly, even as they sought to protect their wealth from being leveled via representative democracy, the delegates also feared that the U. States would end up as a plutocracy (i.e., ruled by the wealthy who would be our aristocracy). Governeur Morris, on July 2, expressed the following. “Let the rich mix with the poor and in a Commercial Country, they will establish an oligarchy. Take away commerce, and the democracy will triumph. Thus it has been all the world over. So it will be among us.” (14) Madison reports that Morris feared “the influence of the rich.” (15) That the U.S. was even then an extended republic on the scale of an empire was thought, at least by Morris, to strength the ability of the rich to rule.  “The schemes of the Rich,” he maintained, “will be favored by the extent of the Country. The people in such distant parts can not communicate & act in concert. They will be the dupes of those who have more knowledge & intercourse.” (16) Govereur Morris, on July 2, maintained that “The Rich will take advantage of their passions & make these the instruments for oppressing them. The Result of the Contest will be a violent aristocracy, or a more violent despotism.” (17)

Madison reports that Morris’ “creed was that there never was, nor ever will be a civilized Society without an aristocracy. His endeavor was to keep it as much as possible from doing mischief.” (18) To contain such mischief (and to protect property-rights), the delegates wanted the proposed U.S. Senate to represent the interests of the wealthy (as well as wisdom and the state governments—a combination they problematically assumed would play well together in the Senate). Govereur Morris, on July 2, claimed that “The Rich will strive to establish their dominion & enslave the rest. They always did. They always will. The proper security [against] them is to form them into a separate interest.” (19) Accordingly, Davy, on July 6, urged that “wealth or property ought to be represented in the [second] branch.” (20)

The Senate was to be a conservative institution, wherein the vested property interests must sign off on any reform.  This could partially explain why passing health-insurance reform in 2010 was so arduous (and why extant health-insurance companies were able to kill off a competing public option). It could also explain why the wealthy could insist that their tax cuts be extended even as the U.S. Government was facing another deficit over $1 trillion also in 2010.

In short, the delegates to the constitutional convention were concerned that a “leveling danger” not be allowed to redistribute wealth even as they feared the advent of a plutocracy as essentially aristocratic governance. Government should protect wealth but not be run by it. In modern terms, this position might seem familiar as: CEO’s like Lloyd Blankfein of Goldman Sachs should not run the government, but the latter should not be used by those without to take from the wealthy. Yet as the CEOs’ agents in government essentially operate in the interest of the corporations and the wealthy, does not the government’s orientation to property already evince a plutocracy by a moneyed aristocracy? If so, Jefferson and Adams, who were for a natural aristocracy of talent and virtue rather than money (the latter being an “artificial aristocracy,” which the two founders believed was taking hold in the U. States even in the early 1800's), would doubtless demur. It is telling for us that government protecting wealth is virtually taken for granted among the American people even as the fear of an impending plutocracy and moneyed aristocracy is nearly absent. Any balance from the delegates’ two fears has dissolved in favor of property. The bias is so ingrained in American society and government that it has become invisible.

1. James Madison, Notes in the Federal Convention of 1787. New York: Norton, 1987, p. 244

2. Ibid., pp. 245

3. Ibid., p. 196

4. Ibid., pp. 247

5. Ibid., p. 244

6. Alexander Hamilton, Federalist #1, in Jacob E. Cooke, The Federalist, Hanover, N.H.: Wesleyan University Press, 1961, p. 7

7. Ibid., p. 6

8. Ibid., p. 5

9. James Madison, Notes, p. 268

10. Ibid., p. 287

11. Ibid., p. 287
12. Ibid., pp. 233

13. Ibid., p. 194

14. Ibid., pp. 233-34

15. Ibid., pp. 235

16. Ibid., pp. 235

17. Ibid., p. 235

18. Ibid., p. 251

19. Ibid., p. 233

20. Ibid., pp. 248

Carbon-Dioxide Emissions: A Species’ Death-Wish?

Global emissions of carbon dioxide from fossil-fuel burning rose 5.9 percent in 2010, the largest amount on record, according to an analysis released in early December, 2011 by the Global Carbon Project. According to the analysis as reported by the New York Times, “the increase, a half-billion extra tons of carbon pumped into the air, was almost certainly the largest absolute jump in any year since the Industrial Revolution, and the largest percentage increase since 2003.” 

The researchers did not expect the extraordinary growth to persist, but did "expect emissions to return to something closer to the 3 percent yearly growth of the [2000-2009] decade, still a worrisome figure that signifies little progress in limiting greenhouse gases. The growth rate in the 1990s was closer to 1 percent yearly.” In other words, the trend has been the opposite of that which one might have expected years after Al Gore’s documentary on global warmth. Increasing knowledge of global warming did not result in a reduction in contributing to global warming; rather, more carbon dioxide has ensued. To be sure, the negative correlation is not causal in nature; knowing more about global warming has not caused people to decide to pollute more. That would really be bizarre. Even so, it does appear that mankind is not sufficiently interested in protecting the specie’s own long-term viability at the expense of more immediate interests. Put another way, governments have enabled their respective businesses to produce more (or cheaper) even while knowing that the earth is warming.

According to the New York Times, “Scientists say the rapid growth of emissions is warming the Earth, threatening the ecology and putting human welfare at long-term risk. But their increasingly urgent pleas that society find a way to limit emissions have met sharp political resistance in many countries, including the United States, because doing so would entail higher energy costs.” Short-term costs are more important than long-term survival. This, in short, is why our species does not deserve to survive. We have produced this sad verdict ourselves. “Each year that emissions go up, there’s another year of negotiations, another year of indecision,” said Glen P. Peters, a researcher at the Center for International Climate and Environmental Research in Oslo and a leader of the group that produced the new analysis. “There’s no evidence that this trajectory we’ve been following the last 10 years is going to change.” This was borne out in the “deal” reached for a “New Emissions Treaty” at the U.N. climate talks ending in December 2011.

According to the New York Times, “The European Union had pushed hard for what it called a ‘road map’ to a new, legally binding treaty against fierce resistance from China and India, whose delegates argued passionately against it.” Developing countries, including China and India, had surpassed the developed countries in their overall greenhouse emissions. In 2010, for example, the combustion of fossil fuels and the production of cement sent more than nine billion tons of carbon into the atmosphere, the new analysis found, with 57 percent of that coming from developing countries. Even so, emissions per person were still sharply higher in the wealthy countries, which had been emitting greenhouse gases far longer and thus they account for the bulk of the excess gases in the atmosphere. The level of carbon dioxide, the main such gas, had increased 40 percent since the Industrial Revolution. A long-term cost was being incurred simply in debating year after year without actionable results in lower emissions. For developing countries, it would seem that having an equal opportunity to pollute was worth risking the planet, at least as far as human habitation is concerned. “Am I to write a blank check and sign away the livelihoods and sustainability of 1.2 billion Indians, without even knowing what the E.U. ‘road map’ contains?” asked India’s environment minister, Jayanthi Natarajan. “Please do not hold us hostage.” This way of thinking—or decision to use hyperbole—also qualifies mankind as not deserving to survive.

Even as carbon-dioxide emissions were “alive and well,” the “deal” reached in December 2011 would continue the Kyoto agreement, to which neither the United States nor developing countries such as China and India are parties, until  2017 or 2020. The terms of any agreement that replaces it would be negotiated at future sessions of the governing body, the United Nations Framework Convention on Climate Change. The basic mentality behind such a wan or pallid “deal” amid knowledge that global warming is indeed proceeding is transparent in this passage from the New York Times: “Scientists say the rapid growth of emissions is warming the Earth, threatening the ecology and putting human welfare at long-term risk. But their increasingly urgent pleas that society find a way to limit emissions have met sharp political resistance in many countries, including the United States, because doing so would entail higher energy costs.” That “increasingly urgent pleas” are being essentially ignored may itself point to a “hard-wired” weakness in the species that can be characterized as “self-defeating.”

Behind the increased emissions alone, moreover, is the failure of the species to self-regulate its own size. On October 31, 2011, the global population (of human beings) was estimated to have hit 7 billion. It had passed the 6 billion mark in 1999. The 10 billion mark is expected by the end of the twenty-first century. At a basic, biological level, organisms must consume resources and expel waste products: the more people, the more consumed and expelled. It is ironic that humanity places so much reliance on its technological abilities to mitigate this basic fact even as the species seems incapable of simply acting on the basis of the extant knowledge on climate change to make emissions reduction “actionable.”

In An Essay on the Principle of Population, Malthus pointed to disease, famine and conflict (war) as nature’s trove of solutions to arrest a maximizing species from piercing a broader ecosystem, which is inherently at an equilibrium (i.e., homeostatic). Perhaps we could add a fourth solution—namely, a shift to a climatic equilibrium inconsistent with human habitation. Perhaps this is nature’s way of handling the arrogance of man, or perhaps it is our way of judging ourselves as a species. Perhaps unconsciously, the sordid species, which presumes itself to be “made in God’s image,” has a death wish—a humble sensibility underneath “just saying no” to the overweening superciliousness of the arrogance that seems almost hard-wired in the species. That is to say, the “result” of the global climate talks “attained” in December 2011 can perhaps be read as the expression of an unconscious collective will—a tacit verdict of a species on itself by procrastinating in the context of “urgent pleas.” In the context of a maximizing trajectory in terms of population, which seems to suggest dominance or victory on this planet, the species’ own verdict is certainty ironic. From the 2010 figures alone, my initial gut reaction was that the species had failed the “test” in a way that shows human nature to us as it is. Accordingly, I have no doubt that the verdict will be fully implemented in a few generations—our days being limited as a species.  

Sources:

John M. Broder, “U.N. Climate Talks End With Deal for New Emissions Treaty,” The New York Times, December 11, 2011. 

Justin Gillis, “Carbon Emissions Show Biggest Jump Ever Recorded,” The New York Times, December 4, 2011. 

A Nietzschean Critique of Customer Service (Oh, Yeah!)

In classical literature, an apology can mean a defense, such as Plato’s Apology. In modern parlance, an apology is known as an expression of genuine sorrow and an acceptance of responsibility for having caused harm to another person. According to Business Ethics for Dummies, corporate apologies should be sincere, as soon as possible, and be coupled with a correction to the problem.[1] Consumers should be on guard lest a company use the semblance of an apology for marketing purposes, and, more generally, to manipulate, which in itself belies the “apology.” Robert Bacal advises that an apology be used as a strategy to use “along with other techniques.”[2] An apology as a technique in a strategy is a means, and thus as such it harbors ulterior motives. This invites “perfunctory or insincere apologies,” which are “worse than saying nothing at all.”[3] Even a sincere apology as a means to get something suffers from ulterior motives. For example, Bacal advises that a “sincere apology can help calm a customer, particularly when you or your company has made an error. You can apologize on behalf of your company.”[4]  A sincere apology is mutually exclusive with an ulterior motive, especially one that is self-beneficial in some way; the orientation must be to the error.  The manager who wants to give the impression of an apology in order to disarm the aggrieved customer therefore falls short, for such manipulation eclipses genuine sorrow.

Likewise, a willingness to take responsibility in terms of making things right is associated with a sincere apology. In fact, a refusal to “make things right,” such as by compensating an aggrieved customer, eviscerates the sincerity itself and thus rides the apology of its content. Nevertheless, Bacal advises, “Keep in mind that tendering an apology doesn’t necessarily mean that you’re admitting responsibility.”[5] Responsibility, however, goes with the recognition of having committed an error. Bacal seems to want to have his cake and eat it too!

As profit-seeking machines, corporations are inherently oriented to their own interests (as are most people); hence getting something out of apologizing while obviating any cost—strangely even in admitting responsibility as if the emotions involved constitute a business cost—fits with the corporate apology. In keeping with a business’ nature, it can also be argued that because companies are economic entities, a corporate apology must involve compensation having a monetary value to be valid. In other words, unless a business gives something to the wronged consumer to make up for the error or mistake, no apology has taken place.

Bacal refers to a “bonus buy off” as “offering something of value to the customer as reimbursement for inconvenience or other problems.”[6] However, Bacal adds that the monetary value need not be significant, “since the point is to be perceived as making an effort.”[7] Here again, he equivocates, for being motivated to appear apologetic takes the focus off the original error. Also, the monetary value must at the very least equal the cumulative loss to the customer from the error to “make things right” again. Therefore, customers should insist on the corporate apology entailing adequate compensation in goods, services, or money; otherwise—especially if nothing is offered even when asked!—the customers should reject the apparent apology.

The vacuous statement, "We apologize for any inconvenience," can be taken as an example of utter fakeness designed to manipulate under a subterfuge that is in actuality nothing more than a script. A customer turning down a company’s easy apology can use the passive-aggressive corporate lingo too, saying something like, “Unfortunately (i.e., appearance of sorrow) I am unable (i.e., false rigidity) to accept the apology as it does not come an offer of adequate compensation.” If the customer “service” employee or even manager replies that the company “cannot” compensate for its own mistakes, defects, or lapses—not the least of which are rigidity and rudeness—the customer has the answer: no apology had been made after all. The customer should reply, “Unfortunately, your company’s apology cannot accepted” and cease doing business with the company. In short, such a customer will have tested the “company’s sincerity” and found the people wanting rather than genuine. Such pretense in place of sincerity is odious, ethically speaking.

Unfortunately, the massive herd of customer herd-animals in commercial society are too easily mollified by the easy corporate-speak.  To be sure, some company managements have grasped the apology-responsibility-compensation connection. As of this writing, Starbucks still sends free-drink coupons to customers who have registered a credible complaint against a store. “We’re sorry,” a customer service employee says, “I’m going to send you some coupons for drinks on us because of your bad experience in one of our stores.” Such a response is exceedingly more credible, and genuine, because there is financial cost in the mix, than a mere, “We apologize for any inconvenience.”

Starbucks is rather generous in giving four free drinks for one bad experience, though more than one drink is necessary to compensate for the bad drink and or experience plus the effort to make things right. In Business Ethics, it is noted that if the compensation is too low—such as McDonald’s offer of $800 to compensate a hospitalized customer scalded by the hot coffee—the offer can even be taken as an insult; the passive-aggression therein is real. Insult that is added to injury is really another injury. Such an “apology” extends the error and this of course adds to the compensation needed to make things right again. The point is to see through the efforts to present the appearance of sincerity and speak to employees in economic terms in order to separate “the men” from “the boys” on their own turf.

In Nietzschean terms, the skimpiness in the refusal to compensate an aggrieved customer points to underlying weakness, for the strong are by nature generous for their strength overflows. The strong say lightheartedly, what are these parasites to me. Giving up some money is not painful, for the strong are self-confidently oriented to their surfeit of strength. In contrast, the weak give up little, and at great pain, because they feel a lack (of strength) within. They are, in other words, over defensive. Some of the weak have an overwhelming instinctual urge to dominate nonetheless, as evinced in the pleasure in saying NO to even wronged customers. Even the passive aggression latent in, “We apologize for any inconvenience,” with a clear omission or refusal of compensation is of use to those “new birds of prey.”  Imagine how business would change if only this underbelly—this plethora of weakness instead of strength—were made transparent in society. Weakness evades the translucent light so as to dominate even the strong even though such a condition is “upside-down” and thus in some sense against the laws of nature. The question from a Nietzschean perspective is how strength can take hold in even a weak sector in society.

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1. Norman Bowie and Meg Schneider, Business Ethics for Dummies (Hoboken, NJ: Wiley, 2011), 239.

2. Robert Bacal, Perfect Phrases for Customer Service, 2^nd Edition (New York: McGraw Hill, 2011), 19. Italics added.

3. Robert Bacal, Perfect Phrases for Customer Service, 2^nd Edition (New York: McGraw Hill, 2011), 19.

4. Robert Bacal, Perfect Phrases for Customer Service, 2^nd Edition (New York: McGraw Hill, 2011), 19.

5. Robert Bacal, Perfect Phrases for Customer Service, 2^nd Edition (New York: McGraw Hill, 2011), 19.

6. Robert Bacal, Perfect Phrases for Customer Service, 2^nd Edition (New York: McGraw Hill, 2011), 22.

7. Robert Bacal, Perfect Phrases for Customer Service, 2^nd Edition (New York: McGraw Hill, 2011), 22. Italics added.