The E.U. on Chinese Online Marketplaces: Different Business Cultures

It is perhaps just human nature to assume that the attitude towards ethical (and unethical) business is uniform from culture to culture around the world, with one's own culture being definitive and thus the default as a standard. But just as far-away cultures can be very different than one's own, so too can far-off business practitioners and even regulators have different beliefs, values and thus expectations concerning how ethical business norms should be than do such people in one's own culture. The E.U./China trade interface provides a case in point. 

In Wealth of Nations, Adam Smith does not exclude a role for government in regulating markets and addressing the externalities of market competition. The emphasis lies in maintaining competitive markets and making up for any societal costs, such as unemployment and even homelessness. What about “mopping up” unethical business practices to protect consumers? Is there a role for government here or is “buyer beware” sufficient because competition in a market will put unethical suppliers out of business? A business strategy of stealth and denial can delay the accrual of negative reputational capital, especially if the pool of potential and likely buyers is not stagnant. The management of a coffee house or lunch place near a large university, for instance, can get away with a lot of unsavory practices without the annual incoming crowd having any knowledge of the sordid mentality of the management or its rogue retail employees. Similarly, nonsupervisory, uneducated employees working at a major retail company’s customer-service telephone room can get away with lying even in telling aggrieved customers, “The managers here don’t talk with customers” and even “We don’t have supervisors in this department.” This assumes that an automated answering “menu” even has an option to speak with a live person rather than with AI, which may not grasp the concept, complaint. Nietzsche’s claim that the will to power is the primary motive even for weak people who are like herd animals and so cannot master their own instinctual urge to dominate applies in spades to retail phone-banks, even at least in appearances to AI answering-machines. The unilateral, even rogue “power trips,” or power-aggrandizement, whether by an actual, small employee or a human-programmed AI phone-system (i.e., machine learning applied to a switch-board), give rise to emotional harm and thus are unethical because such treatment is not justified, especially to paying customers. Paying to be dominated is perhaps another line of business beyond the reach of the present topic. In a competitive market, presumably companies with rude, even hostile customer-service employees get enough of a negative reputation that even repeat customers eventually go elsewhere, but what if rude customer service is the norm in a given industry? A new potential supplier may not be motivated financially to enter the market based on customer-service as the primary basis of competitive advantage. Of course, the intentional (or, looking the other way) sale of illegal, unsafe, and counterfeit products can benefit from the deceit, especially on e-commerce platforms. Furthermore, if unethical business practices are the norm in the host country of such a seller but not where the customers are located, the reputation may be too light for sufficient notice to be taken by potential (and repeat) customers for them to buy from other sellers. This differential, and the typical erroneous assumption that the business ethics in one’s own culture is universal around the world and therefore one is not vulnerable to extremely unscrupulous sellers elsewhere, may be behind the €550 million fine that the E.U. slapped on AliExpress, an online marketplace based in China, on 20 July, 2026.

Even though I have no data to suggest that business practitioners in China were generally less ethical than their counterparts in the E.U., both the magnitude of the fine and the broadness and substance of the Commission’s accusation that AliExpress managers had failed “to adequately assess and mitigate risks linked to the sale of illegal, unsafe and counterfeit products” may be indicative of a very unethical business culture, not only in the company, but also in the general business culture in China.[1]  It may have been that at least as of 2026, even blatant unethical conduct was considered as a regular part of doing business in China, as in the statement, everyone here sells counterfeit. Two years prior, the E.U. Commission had “found that AliExpress failed to establish an effective system to detect and remove illegal products, while underestimating the gap between the number of human moderators available and the scale of the workload.”[2] Failure to establish a system that worked can be interpreted as an active decision to allow, or tolerate, illegal products on the “selves.” So too can the intentional understaffing of monitors in the company. The management need not have admitted to the mentality, for it is possible that its fingerprints were all over the choices actually taken by the managers. The “platform’s product compliance checks were also found to be vulnerable to abuse, with malicious traders allegedly misclassifying products to exploit less stringent requirements.”[3] Establishing an insufficient number of checks can itself be interpreted as being too comfortable with product-negligence and even the existence of malicious sellers. That “large volumes of illegal products—including unsafe toys and dangerous cosmetics—continued to circulate on AliExpress despite moderation efforts, in some cases remaining online for weeks after being flagged” may point to a managerial acceptance of squalid sellers on the marketplace platform.[4] In fact, the E.U. found “that AliExpress failed to properly enforce its penalty policy, allowing stores selling illegal products to remain active on the platform even after receiving sanctions” as if they would suddenly reverse an unethical mentality and organizational culture.[5] Sellers were even “able to bypass safeguards and list fake products” because the company’s brand authorization system “was deemed ineffective and insufficiently robust to stop abuse.”[6] Even the company’s public statement that the company had invested a lot in risk assessment and mitigation, product safety and consumer protection does not touch on how those investments were used, or even whether they were in fact used sufficiently. In fact, spending a lot of money can act as a smoke screen. The failure to acknowledge lapses can itself be viewed as unethical, or at least as not serious. In other words, mendacity can be like smoke indicative of a hidden fire if unethical people are habitually so, especially in covering up their own unethical decisions. Confessions are not necessary.

A company’s foreign direct-investment renders a foreign country’s beliefs and values concerning business ethics (and integrity in general) relevant. Even international trade—even at arm’s length—can cause two different ethics cultures to clash. The people in the more ethical business culture may be vulnerable to worse, and thus unforeseen or unanticipated, unethical practices such as selling illegal or counterfeit products under false pretenses (i.e., lying) rather than merely charging too much or having rude, power-hungry, or product/policy-incompetent customer-service employees.  To be sure, the latter two unethical practices are worthy of disrepute, but then how much more severe, and thus indicative, are the former two. As an admittedly rouge gauge, the difference between the ethical norms in the E.U.’s business sector and those in China’s can be grasped. Cultures around the world can be said to differ even substantially in terms of tolerance for unethical volition, mentality, and conduct and thus societal expectations for ethical conduct. A very large fine may be a quantifiable indication that two cultures differ substantially.

To go beyond compensation, the matter of whether as a penalty such a fine can actually change, or uplift, the relatively sordid business culture by somehow incentivizing practitioners in it to behave honorably rather than continuing with corner-cutting expediency seems too idealistic, and thus unrealistic because humans tend to be habitual creatures in conduct and mentalities are not likely to change, given their sheer gravitas, especially if they are oriented to sneaking around a new barrier. A river’s dam that has many holes is not likely to fix itself. Accordingly, the Commission would be wise to set fines as compensation for all of the harm to European consumers, rather than to teach the Chinese a lesson in order to mold Chinese business after European business. To be sure, the temptation to penalize and manipulate towards one’s own culture can be very strong, but being realistic can work wonders in satiating the desire to mold others who are different in one’s own image. Knowing the otherness of the other, for example, and publicizing this domestically in the E.U., could potentially do a lot to facilitate the mechanism of market competition in the weeding out of the squalid sellers in China by informed European consumers. The Commission has a loud-speaker with which to more closely link a company’s reputational capital to the actual business practices that may even be hidden from view.

---

1. Vincenzo Genovese, “EU Slaps €550 Million Fine on AliExpress over Illegal and Counterfeit Goods,” Euronews.com, 20 July, 2026.
2. Ibid.
3. Ibid.
4. Ibid.

5. Ibid.
6. Ibid.

COP30: Is Symbolism Enough Amid Climate-Change?

With the U.S. fed up and only 100 governments left willing to attend COP30 in Brazil on combatting carbon-emissions and the related global warming, the question of whether the basis of the annual conference, voluntary compliance, is sufficient and thus should be enabled by the staged meetings. Even to continue to have the conferences annually can be viewed as part of a broader state of denial, given that the 1.5C degree maximum for the planet’s warming set at the Paris conference a decade earlier was by 2025 universally acknowledged by scientists to no longer be realistic; the target would almost certainly be surpassed. It is in this context that any progress from COP30 should be placed.

At the end of the pre-COP30 meetings, the “European Union and Brazil launched an appeal calling on other nations to recognize carbon pricing as a pragmatic way to cut emissions and fun the green transition.”[1] Crucially, the “declaration . . . is a symbolic way to encourage world nations to develop strategies and establish markets akin to the EU’s emissions trading scheme, ETS, in place since 2005. Under the ETS, the EU makes companies pay for the emissions they produce.”[2] Below the nice headline of the declaration and assurances of “partnerships” lies the key word, symbolic. To characterize countries as partners is already a red flag, for that is weaker than even alliances, which can be broken at a moment’s notice with impunity.

Immediately after the “declaration” was made public, critics were saying “that putting the spotlight on carbon pricing could divert attention from real emissions-cutting, like investing in restoring natural carbon sinks, like forests and oceans.”[3] Even in putting “real emissions-cutting” in terms of restoring forests and oceans—COP30 ironically being held near the increasingly deforested Amazon rain-forest—minimizes the urgency in staving off warming from greatly exceeding 1.5C degrees. Real decreases in carbon-emissions were needed, and yet only 100 national governments were meeting in Brazil to consider voluntary action at the country-level.

The elephant in the living room, invisible to almost everyone, is the assumption that voluntary decisions by national governments in the face of economic and political immediate costs can be relied upon to solve the problem, even when it was clear in 2025 that the 1.5C degree maximum “decided” at the COP15 in Paris would be surpassed. Like the tremendous risk of destruction to the species from nuclear war, which the belligerence of the Russian and Israeli governments for two years as of 2025 means that the irrational decision to unleash nuclear weapons is not at all unrealistic, the risk to the species’ very survival from climate change justifies the establishment of a world federation with just enough governmental sovereignty, backed up militarily, to push back against wayward national governments in order to keep the worst of human nature from being unleashed with hitherto unimaginable ferocity and mass destructiveness. Anyone with the irrational fear that such a world federation, which Kant recommends in his writings, would produce the Anti-Christ might want to look at the Russians in Ukraine and the Israelis in Gaza as of 2025 for a clue as to where in the tiered system evil has already been manifest. Stalin and Hitler provide easy examples from the twentieth century.

In short, symbolic international conferences and absolute national-sovereignty should no longer be relied on so much by our species if it hopes not to go extinct. If that does happen, the wound would almost certainly be self-inflicted. Yet even then, with blood dripping from the knife being held by our species, still word of the deed will not have reached us. As Nietzsche writes of the unconscious discrediting of God (which Nietzsche opposed, for he was not an atheist), word of the deed did not reach the culprits, as in light from a far star not having reached Earth yet and yet the explosion has already happened. So too, our species has been oblivious concerning what is sufficient to stave off the destruction even of the species itself. The human mind discounts even mass-destructive possibilities that are thought to be low-probability and far off in the future, and thus flinches from agreeing to set up adequate safeguards.

In issuing the warning here with an acknowledgement of utter futility, I may be writing only to future descendants who are already dead. I am time, the destroyer of worlds, Lord Krishna tells Arjuna in the Hinduism’s Bhagavad-Gita. Left to its own devices by a feckless, stubborn, and greedy species, time may indeed see the extinction of homo sapiens, the “wise” species of Man, while the gods laugh at our primped-up seriousness as if we had been children pretending to be adults. Pathetically, we even take ourselves to be adults as we marvel at our own symbolic feats.

---

1. Marta Pacheco, “COP30: EU Back Global Carbon Market Alliance to Crack Down on CO2 Emissions,” Euronews.com, 10 November, 2025.
2. Ibid., italics added for emphasis.
3. Ibid.

Climate Change in Europe: On the Culpability of the Media

A report by the E.U. Copernicus Climate-Change Service in 2024 contains the finding that “Europe is the continent with the fastest-rising temperatures on Earth, having warmed twice as fast as the global average since the 1980s.”[1] In spite of “fastest-rising” and “twice as fast” are alarming expressions, no such corresponding sense of urgency had translated into a political will capable of pushing through game-changing legislation and regulations in the European Union. The short-term financial interests of industry, cost-conscious consumers, workers not wanting to be laid off, and taxpayers would pale in comparison were a sense of emergency to take hold the domain of politics. “Weak” states (i.e., governments) that are not willing or even able to resist short-term political pressures from an electorate exacerbate the problem even in the midst of climate change, which scientists decades earlier had predicted would really begin to move the needle on air-temperatures globally in the 2020s (and just wait until the oceans become saturated with CO₂!). You ain’t seen nothin yet may be the mantra for the 2030s.

It seems to be a case of the proverbial oblivious frog in gradually yet steadily warming water in a cooking pan on a stove, as the editors at journalistic media companies have been orienting their news to reporting on specific climate-related events that are disasters only in particular locales and thus do not point explicitly to global warming. For instance, on 4 July, 2025, a wildfire in the E.U. state of Greece “prompted evacuations in coastal areas south of Athens” and mobilized “75 firefighters, including five elite ground teams . . . alongside fire engines, volunteers, four helicopters, and two aircraft” as well as municipal water trucks.[2] “(O)ngoing heatwaves, drought and strong winds” kept the fire-risk high in the area.[3] Only at the end of Euronews’ article on the fire is climate change mentioned, and then only as an attenuating factor: “While fires are common in the area, experts say climate change is exacerbating them.”[4] That is to say: Oh, by the way, the warming of the planet’s atmosphere and oceans is in play here. Even as climate change is relegated thusly, that it is only exacerbating wildfires in the southern states such as Greece is a way of deflating claims that climate change ought to be handled as an emergency in terms of public policy. The media has thus been culpable.  

1. David O’Sullivan, “Firefighters Battle Wildfires in Greece and Turkey, Prompting Evacuations and Emergency Response,” Euronews.com, July 4, 2025.
2. Ibid.
3. Ibid.
4. Ibid.

Wealth as a Societal Value in the E.U. and U.S.: The Case of Financial Reform

The E.U. and U.S differ markedly in the degree to which the interests of big business are etched in the respective societies and polities. That is to say, the difference goes beyond the question of the relative influences of the lobbyists. I contend that the relative proclivity societally in favor of business in the U.S. tilts the political playing-field excessively in the direction of the financial interests at the expense of the public good, which I take to be well represented generally by a full, equally-weighted spectrum of views. I further contend that influence is easier for financial-sector lobbyists in the United States than in the European  Union because the societal values in the former lean more in their favor. By analogy,  it is easier to run downhill than even on a flat surface.
These points can be discerned from the respective financial reforms in the E.U. and U.S. in the wake of the financial crisis of 2008. Because the financial sector was viewed as culpable in both societies, the ensuing respective financial reforms would be expected to be at the expense of the banks rather than conducive to their interests.

On March 10, 2010, the E.U. Parliament adopted a Resolution (536 votes in favour to 80 against) calling for the financial sector to contribute fairly towards economic recovery since the costs of the crisis are being borne by taxpayers. On 25 March, Members of Parliament’s special “Financial, Economic and Social Crisis Committee” debated the rationale behind a possible financial transaction tax. Stephan Schulmeister of the Austrian Institute for Economic Research in Vienna said short-term financial transactions can make short-term prices of currencies and other financial products such as derivatives and shares vary wildly. Schulmeister claimed that a tax on financial transactions of just 0.05% would eliminate these short-term transactions, bring greater stability and bring €300 billion of additional revenues to the E.U. While the tax would undoubtedly bring in revenue, it is not clear to me that short-term transactions would be eliminated, as they can be worthwhile even with such a tax. Moreover, the financial crisis of 2008 shows us that the volitility can come from the market mechanism itself (in so far as it magnifies irrational exuberance). At any rate, even as there was division on the matter of such a tax in the parliament, that the proposal had been made distiguishes the legislative body of the E.U. from the Congress in the U.S., where such a proposal would undoubted have been blocked. Indeed, the E.U. Parliament went ever further.

On July 7, 2010, the EU Parliament approved some of the strictest rules in the world on bankers’ bonuses. In the legislation, caps were imposed on upfront cash bonuses and at least half of any bonus had  to be paid in contingent capital and shares. The legislative chamber also toughened rules on the capital reserves that banks had to hold to guard against any risks from their trading activities and from their exposure to highly complex securities. “Two years on from the global financial crisis, these tough new rules on bonuses will transform the bonus culture and end incentives for excessive risk-taking. A high-risk and short-term bonus culture wrought havoc with the global economy and taxpayers paid the price. Since banks have failed to reform we are now doing the job for them,” said MEP Arlene McCarthy. Upfront cash bonuses were capped at 30% of the total bonus and to 20% for particularly large bonuses. Between 40% and 60% of any bonus had to be deferred for at least three years and could be recovered if investments did not perform as expected. Moreover at least 50% of the total bonus had to be paid as “contingent capital” (funds to be called upon first in case of bank difficulties) and shares. Bonuses also had to be capped as a proportion of salary. Each bank had to establish limits on bonuses related to salaries, on the basis of E.U.-wide guidelines, to help bring down the overall, disproportionate, role played by bonuses in the financial sector. Finally, bonus-like pensions were also covered. Exceptional pension payments had to be held back in instruments such as contingent capital that link their final value to the overall strength of the bank. This was to avoid situations similar to those experienced in the wake of the financial crisis of 2008 in which some bankers retired with substantial pensions unaffected by the crisis their bank was facing. The rules applied to foreign banks operating in the E.U.and to subsidiaries of E.U. banks operating abroad. The law gave state regulators binding powers to take action against banks that failed to comply with the new rules. In contrast, the U.S. went after Arizona for trying to enforce US immigration law.

Clearly, the U.S. financial reform did not go nearly as far; it did not put nearly as much crimp in the American banks. This is no accident. The feeling among big bankers in the US was that they dodged a bullet concerning what could have been in the American bill. No “too big to fail” limit was put on a bank’s capital or size , or on the bankers’ compensation. The American media and President Obama were strangely silent on why. In the case of the health reform, the President silently removed his objection to an insurance mandate and dropped his desire for a public option after the lobbyist for the American health insurance companies told him that her support was contingent on these changes. 
My point is simply this: Were not American society leaning in a pro-business direction (e.g., economic liberty being salient in how liberty itself is viewed), the President might not have felt the need, or pressure without a sufficient countervailing wind, to bend in the banking lobbyists' direction. That is to say, the lobbyist would not have had so much leverage. Wall Street no doubt had massive influence in the crafting of the financial reform as it was making its way through Congress (even though the banks were culpable in the financial crisis—which is itself telling). I submit that the reasons go beyond the sheer power of money to unquestioned societal values.

Sources:
http://www.europarl.europa.eu/news/public/story_page/044-71441-088-03-14-907-20100329STO71433-2010-29-03-2010/default_en.htm

http://www.europarl.europa.eu/news/public/focus_page/008-76988-176-06-26-901-20100625FCS76850-25-06-2010-2010/default_p001c011_en.

Google in the E.U. and U.S: Privacy Rights and Obligations

The European Court of Justice, the E.U. Supreme Court, ruled on May 13, 2014 that Google must defer to the right of users to have links about themselves deleted. Google’s management had sought to obviate any obligation to act on such requests. The New York Times points out that the decision indicates “that such companies must operate in a fundamentally different way than they do in the United States.”[1] The ring of fundamentality has implications for the international strategies of internet companies and affords us a better look at how business plays out in society differently in different societies.

Depending on the impact of cultural differences between a given company’s home and host markets impact the management of the company as a whole, either a global (i.e., one-size-fits-all) or multidomestic (culture-specific managements) international-business strategy is optimal. Although it might seem that a “market-making” function like providing a search engine or social-media medium would naturally fit the global approach to international strategy, the impact of differing societal values bearing on relevant rights and obligations can render the multi-domestic approach superior. The ECJ’s decision may push Google’s management further in this direction—the root cause being the differing power and attitude toward business in the E.U. and U.S.

Mina Andreeva, a spokesperson for the E.U. Government’s executive branch, noted that the court’s decision switches the obligation from users to the internet companies like Google and Facebook to prove that user-data is still needed to be kept online. “Today, it’s up to consumers to prove this, but this is not very easy or effective,” she said. “We have reversed the burden of proof.”[2] Put another way, consumers face the uphill battle in the U.S. whereas managers do in the E.U. This difference reflects a basic, or fundamental, difference societally in terms of how much business is valued in society.

Put in terms of a theorem, the more societal values reflect or value the values that are held in the business sector, the more likely it is that societal institutions place obligations on customers (or the general public) and rights on companies. The case of Google suggests that the E.U. and U.S. societies differ fundamentally in the extent to which business values have stature as societal values.

1. James Kanter and Mark Scott, “Google Must Honor Requests to Delete Some Links, E.U. Court Says,” The New York Times, May 13, 2014.

2. Ibid.

Justice as Fairness: Greece’s Bond-Holder Holdouts

In the wake of the agreement whereby private holders of Greek debt would swap the bonds and take a 75% loss, two or three percent of the private holders—namely, well-financed hedge funds including Aurelius Capital and Elliott Associates—were thought to be mulling over holding out for full pay-outs instead of agreeing to take the loss. Greece’s dilemma would have been to pay them in full in order to avoid a default and face the ire of the holders who took the losses, or risk default by invoking a collective bargaining law to force the holdouts to swap their bonds.

The full essay is in Essays on the E.U. Political Economy, available in print and as an ebook at Amazon.

Justice as Fairness: Writing Down Greek Debt

In 2012, 80% of Greece’s private creditors agreed to “voluntarily” convert their Greek debt into debt of a bit less than half the face-value (plus a lower interest rate). With such a proportion having agreed to the swap without triggering credit default swap insurance payouts, Greece could get the E.U. to agree to force the remaining 20% to involuntary write-downs. That would trigger the credit default swaps, at least in theory.

Because any write down of Greek debt by other E.U. states or the E.U.’s central bank (equivalent to the Federal Reserve) would be tantamount to additional aid to Greece, the E.U.’s basic law would again need to be amended (which must be unanimous). So the E.U. (and the international IMF) exempted themselves even as they pushed for “voluntary” write downs by private debt-holders. This hardly seems fair. Moreover, any pressure from the E.U. could have been sufficient for the credit default swaps to be triggered. To be truly voluntary, the write downs would have to have come from the private bondholders themselves rather than from governmental pressure. Even so, that 80% agreed, it is only fair that the remaining 20% be forced to capitulate. Otherwise, holding out could be a strategic competitive advantage financially. Refusing to compromise while other similar parties do is unfair whether between private creditors or governments.

In my view, Greece should have secured the E.U.’s approval on instituting the collective bargaining statute in order to get all of the state’s private holders of Greek bonds to take a write down. It would have triggered the credit default swap insurance claims, so the bondholders might actually have preferred being forced even if more of their Greek debt was written off. Furthermore, E.U. officials should have subjected the E.U. states to join the private bondholders. At the time of the 80% voluntary agreement in 2012, Greek debt in 2020 was forecasted to be at 120% of Greece’s total economic activity.[1] This is still quite high, particularly given the recessionary impact of the continued Greek austerity. Unfortunately, the (excessive) power of state officials at the E.U. level meant that a conflict of interest interfered with amending the E.U.’s basic law to permit the state governments and the ECB to take write downs.

In terms of ethical theory, one could apply John Rawls’ Theory of Justice here. In this theory, there is a veil of ignorance concerning where one will be in the system for which one is making rules. Not knowing whether one would represent a government or private bondholder, for example, one would not be likely to add the rule in which only the private bondholders write off their Greek bonds. Not knowing which E.U. state one would represent, one would not add a rule favoring Germany and France over Greece. Not knowing whether one is an official of the E.U. Commission or a member of a state legislature such as the Bundestag, one would not make a rule allowing the states to protect their interests at the expense of the E.U. Rawls adds that because of the veil, any rule would see to it that the position of the least well situated is improved. So it would not be the case that Germany could dictate to the E.U. or so successfully protect German interests at the expense of Greece. Indeed, the bias would be in seeing that the people least well off in the least well off state are not further downtrodden as a result of any proposed rule. This might be part of Rawls penchant for redistribution, however. At the very least, we could say that the rules enacted under justice as fairness would be in the interest of the system itself rather than any particular part thereof. In terms of the writing down of Greek debt, the E.U. could have been fairer in how it went about designing its rules. There was not exactly a veil of ignorance on the vested interests that were in a position to protect themselves at Greece’s expense.

1. Charles Forelle, Stelios Bouras, and Alkman Granitsas, “Greece Passes Key Debt Test,” The Wall Street Journal, March 9, 2012.

E.U. Presses Italy to Tax Church Businesses

One of the chief benefits of federalism is the ability of one system of government to check another within the overall federal system. In the European Union, the state governments have so much power at the federal level—in the E.U. institutions—that it is difficult for the E.U. Government to check excesses and abuses in the state governments. E.U. law, regulation and directives rely on the state governments, albeit to varying extents. In the United States, the case is the reverse. The U.S. Government holds so many of the cards that the state governments cannot act to check abuses in the federal government. Actually, for all of the power that the U.S. Government has amassed, it does a horrible job in aiding citizens against abuses in their own state governments. Fortunately, we can look to Europe for a bright spot: the E.U. Commission and Italy, á grace de Mario Monti who is both governor of the state of Italy and a former commissioner in the E.U. Commission (the E.U.’s executive branch).

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

The Profitable Aristocracy: On the Conditionality of the Managerial Elite

Downton Abbey, a television series that began in 2011 on PBS’s Masterpiece Classics, depicts through narrative life in a British manor beginning with the sinking of the Titanic in 1912. For European viewers and more generally for the rest of us, the program proffers a glimpse of the world a century back. The advent of the telephone and phonograph seem to pierce through the manor’s socio-economic hierarchy that had undoubtedly been in place for centuries. It is the sheer social distance between the servants, almost regardless of their particular rank within their hierarchy, and the nobility in the house that is so striking to me. Moreover, the “Your Lordship” and “Your Ladyship” are not contingent on the manor’s owner employing or even paying the servants.

Lady Mary between the man she was to marry and the man she loves. (Carnival/Masterpiece)

In other words, nobility is by birth and is therefore not contingent on any financial arrangement. Indeed, after being fired, servants at Downton continue to address their former employers by their respective noble titles. This can easily be distinguished from the business or commercial culture wherein respectful demeanor is typically contingent on being paid. A worker who is fired is apt to quickly drop the former air of respect—even turning downright disrespectful. Even a longstanding regular customer can find the respectful demeanor of a waiter or front desk clerk quickly turned into something else entirely if a tip is not judged to be sufficient or there is a dispute on a reservation or room charge.

An acquaintance of mine who is from India was staying at a Staybridge for a number of months on business. As per the hotel’s policy, any of the long-term “guests” could invite friends or co-workers to the weekday late-afternoon receptions at the hotel. He invited me to a few of the receptions. Arriving before him on one occasion, I was stunned at the rude conduct directed at me by the front desk employee and another employee who was helping with the reception. It was ironic that they referred to their paying customers as “guests” yet could not have been of lower class in how they treated a real guest. The man helping at the reception ignored me and the front desk employee stood behind me bragging about how she had just thrown out a “non-guest.” When my friend arrived, I had to inform him that I would not be able to join him at the reception. He too was shocked at the employees’ behavior. “I live here!” he said still astonished.

From my own experience, Days Inn is far worse with respect to a low-class approach to management.  In reading reviews by customers, the lack of accountability at Days Inn is truly astounding. In Downton Abbey, Granny remarks that once the little people get a taste of power, it goes to their heads like strong drink. Hearing this line, I was reminded of when I made a noise complaint while at a Days Inn. Actually I made one early one morning, then another a night later because the noise above had gotten worse. The front desk employee refused to act on both occasions, so I phoned the police the second time. Even that did not end the noise, which lasted until 6am. From what the Days Inn centralized customer service dept representative later told me, the manager had retaliated against me by reporting to that dept "several altercations with front desk staff including profanity." Days Inn itself refused to come down on the local manager as the hotel was a franchise (they could have demanded a video recording as proof of the alleged altercations). As it was, I was left with the impression that the corporate office was impotent while the manager was utterly corrupt and beyond virtually any accountability. I was stunned that insult could be so easily added to injury as a manager was allowed to turn on a customer in the wake of his own failure. In the context of Downton Abbey, the manager  had completely lost touch with the fact that even as a manager he was a servant, rather than nobility. Management, in other words, is not of nobility. We allow managers to presume far too much, and all too often they get away with it because of their power in their respective organizations.

My point is that the “nobility” in a commercial society is utterly fake, as shown through the extent of conditionality. Customers and employers doubtless regard the perfunctory manners of managers as fake—i.e., as something we are expected to pretend is authentic rather than contrived simply to get something. Social respect in a non-noble, commercial society is simply a means of manipulation fueled by greed.

In watching Downton Abbey, I had the sense that “Your Lordship” and “Lady Mary” are expressions from a felt obligation that does not depend on getting anything in return because the nobility are due it regardless of any monetary transaction. In America at least, where such a thing does not exist, viewing nobility in another time and place makes the contrived nature of social respect in the American commercial society all the more apparent. Far too much in terms of behavior is assumed to legitimately be conditioned on money.

In fact, the American aristocracy could be said to be Wall Street, with lower “counts” being the professional caste (lawyers, CPAs, physicians), while the aristocracies of clerics and scholars operate without the requisite currency and thus must appeal to another place and time. The clerics and scholars have more in common with the nobility than with rich CEOs and professionals, whose basis is utterly contingent (i.e., being wealthy). In other words, the motives in how the respective aristocracies are addressed differ. Respect for a cleric or scholar is rooted in obligation, whereas respect for a business executive or a profession is based on the commercial element (i.e., wealth being valued, as well as self-interest).

It is no accident that clerics and scholars are not highly valued in American society—its values being so commercial in nature. Typically an executive or lawyer will dismiss a cleric or scholar for not being “in the real world.” Indeed, some “professionals” even presume that their undergraduate degree in a professional school makes them scholars, or able to evaluate scholars. Barak Obama, for example, has been characterized as a “legal scholar” simply because he taught in a law school as an instructor with one degree in law. I have read plenty of law journal essays written by people having earned a degree in law. Let’s just say the writing reflects the undergraduate degree. In Europe, by the way, a law professor must have the doctorate in law (JSD).

In some ways, having a doctorate (i.e., nobility in academia) is like being an earl or count because the title does not depend on the size of a bank account or any commercial transaction. After having been hooded, a doctor (this is not properly a medical designation) is forever designated as such, meaning unconditionally. The same applies to a member of the European aristocracy. Also, that aristocracy prides itself on its good manners, while I have wondered if a lot of education renders one more refined as well. Perhaps it is simply a function of being socialized for so long at university. Particular at good or excellent seats of learning, the context does not exactly reflect society as a whole.

I contend that an educated refined demeanor is superior to the conditionality of commercial relationships. It is no surprise, therefore, that the educated aristocracy is so slighted by the American society at large—including the moneyed “aristocracy,” which after all has a vested interest in doing so. As if to circumvent the true scholars, the “aristocracy” of professionals even sought to portray its undergraduate degrees as if they were doctorates, and thus among the scholarly nobility too. Nice try. Such games put the nobility as depicted at Downton Abbey at quite a distance.

The over-reaching and conditionality—both of which are indicative of low class—may have been made possible because hereditary nobility had been eliminated long ago in the U.S. In other words, American society is reductionist in terms of its notions of aristocracy—reducing it to being a function of money. How could anything truly noble be so conditional? Moreover, how could it be so low class and still be aristocratic? Our nobles must be pretenders. Might our forefathers have left us vulnerable to such hypertrophy (i.e., the over-extension of one part) by extirpating nobility? Is there nothing whatsoever to distinguish “well, he wasn’t raised right” from “he came from a good family”? A person of the latter rightfully recoils at the presence of a person of the former who is being rude “without a clue.” What of this natural hierarchy, or aristocracy? Surely it is not conditioned on a monetary transaction. A suddenly rude front desk employee “was not raised right,” I would wager. An innate sense of “with power comes responsibility” over “it’s the customer’s responsibility” is missing from America’s commercial aristocracy and its epigones (i.e., formerly servants now as managers).

In other words, Americans allow servants to over-reach in claiming authority on the basis of running something. The managers of Downton Abbey were classified as among the servants, rather than as among the nobility of the house. Yet the modern manager is seldom viewed as a servant—especially by the employees. “Labor/Management” is itself within the servant hierarchy. As much as I disapprove of a hereditary basis for any social privilege because it is unearned (although acting on a noble obligation of service over years could make it so, as illustrated by Queen Elizabeth II), I find the commercial variety even more distasteful and certainly not noble. In fact, I look at the conditionality based on commerce as rather low class. Its own lack of respect for clerical or scholarly nobility simply confirms my judgment. Conditioning one’s attitude on money is unquestionably banal. Even so, because we have nothing to compare our “aristocracy” too, it is virtually unquestioned in American society. We view the CEO as a noble rather than as being at the top of the servants’ hierarchy simply because the CEO is wealthy.

In fact, basing so much social value on money can even been seen in how the American “safety net” for the poorest of the poor is nevertheless all too contingent on job history. From the American sense of nobility, survival itself is presumed rightly conditioned on having participated in the commercial life of the society. The human rights to food, shelter, medical care, medicine, and even survival itself have been inherently conditional throughout American history. Perhaps having a non-conditional aristocracy would ironically have implied a non-conditional basic human right.

Amid Record Bonuses Goldman Sachs Enabled Greek Debt

The person who has the gold makes the rules.  I suspect this is the operating mantra at Goldman Sachs even after the bank’s near-death experience (when Solomon Bros stock was taking a hit, Blankfein knew his bank could be next).  As it turns out, the bank was involved in enabling Greece to stealthily spend beyond its means. Just after Greece had been admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means. Additionally, in late November, 2009— three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in Athens with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting. The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.[1]

The full essay is in Cases of Unethical Business, available in print and as an ebook at Amazon.com.  

1. Louise Story, Landon Thomas, Jr., and Nelson D. Schartz, “Wall St. Helped to Mask Debt Fueling Europe’s Crisis,” The New York Times, February 13, 2010.