Bad Management as Unethical: On Reckless Bus Drivers in Boston

The corruption of an individual manager or non-supervisory employee, or even a government official can be distinguished between the collusion of multiple levels, as I contend has been the case at least as of 2023 in Boston, Massachusetts in regard to the government and the Commonwealth’s most populous region’s mass transit system—in particular, its bus service. I contend that the government has been looking the other way as the management of the local bus transit has held off from firing reckless bus drivers, who thus sordidly feel entitled to ignore the training—assuming it is not deficient—by driving recklessly by riding the accelerator pedal before stomping down on the brake pedal at the last minute, literally, in stopping. With positions to fill, the company’s management treats such driving at best with a slap on the wrist, with the government looking on rather than divesting the management of its disincentive to fire even dangerous drivers. Such corruption is systemic in nature, and thus is much worse than the corruption of an individual. Ultimately, it is the public—which includes the electorate—which goes unprotected while bus riders have to put up with jolting rides.

With a pay rate of $30 per hour, a signing bonus of $7,500, paid commercial-driver’s license training, health benefits, and $10,000 for tuition reimbursement for college being the new labor contract for Boston’s bus drivers in 2023, better bus driving would theoretically follow as better candidates apply. In her State of the Commonwealth speech in early2024, Governor Healey announced that 2023 had been “the best year of hiring the T has ever had.” But the T includes subway and light-rail operators too, and as of the end of 2023, 415 bus-driver positions were still unfilled, and that is relative to the 1,452 bus drivers currently working—a net increase of only 2 since that August. 

The tan areas indicate the number of bus drivers working

 and the red areas indicate the number of unfilled positions.

The better compensation package seems not to have made a dent, and I suspect that the company's mechanics would probably admit in private that too many buses continued to make dents (as well as wear out brake pads, from braking hard, and even shocks, from driving too fast on roads in need of repavement). In general, aggressive driving means higher maintenance costs than need be the case. 

In other words, the “in theory” consequence of better driving failed to materialize. This in spite of Governor Healey having told bus drivers in a press conference announcing the labor contract, “We’ll be looking to improve working conditions as you improve the safe and effective operation of our public transportation system,”[1] the drivers were able to take the raise without improving the safe operation of the buses. Perhaps this was due to not only incompetent supervision by the management of the mass-transit of its bus drivers, but also enabling by the government. “Today you see a demonstration that we have your back,” the head of state of Massachusetts said during her press conference.[2] To be sure, the incentive that the management of the “T” has serially had not to increase the number of unfilled positions by firing even reckless drivers is likely the real driver here, with the government looking the other way rather than looking out for the public’s interests by providing a countervailing force to the bus company’s disincentive in getting rid of bad drivers, who in turn doubtlessly have felt both entitled to drive however they want with the air of impunity. This is literally dangerous.

On the evening of November 29, 2024, I was riding on a route 71 bus, having boarded the beginning of that route, at the bus/subway station underneath Harvard Square. In spite of the fact that I had submitted a complaint concerning the driver’s aggressive driving, which was uncomfortable to passengers and a risk to pedestrians and people driving near the bus, he still felt entitled to floor the bus’s accelerator, even in the tunnel out of the terminal at Harvard Square, where the speed limit was 6 mph, and to slam the brake pedal despite the harsh jolt felt by passengers. After speeding through the tunnel out from the underground station, he proceeded to ride the accelerator pedal on the street that winds through the crowded square so excessively that he had to stomp hard on the brake pedal to avoid back-ending the car that was stopped in front of the bus at the red light. Then the driver honked the bus’s horn at the car’s driver, who did not react to the now-green light fast enough for the harried bus driver working to extend his break at the end of the route. He proceeded to accelerate so excessively that had braked hard not to hit the three pedestrians who were in the middle of a designated cross-walk. Because they looked like they could have been three undergraduate Harvard students, I wondered whether the university administration might have some words for the mass-transit’s management. I immediately called the transit’s customer service line while the driver was once again riding the accelerator pedal only to brake hard at the first bus stop in spite of the fact that he could see several people well ahead waiting at the stop. At the very least, his judgment concerning how much to accelerate in a given distance and how to stop a bus (including some coasting seemed beyond him) was warped.

On the phone with a customer-service employee, I hurriedly exclaimed, “The driver almost hit three pedestrians who were in a crosswalk! And now he is quickly accelerating again! I have called in a complaint on that driver’s driving before, and yet he is still driving recklessly. I’m getting off and will wait for the next bus; he is too reckless.” So, I got off at the first bus-stop and will wait for the next bus.” In spite of the customer-service employee telling me that she would notify operations at “the garage” as well as her immediate supervisor, I had the sinking feeling that, like my prior complaints, that one would fall on conveniently deaf managerial ears.  

The bus driver continued fast as the bus approached a red light even though an ambulance was making its way through the intersection and thus caution was just common sense. 

Sure enough, the driver was driving the same route on the next night. He tailgated another bus part way through the tunnel out of the station, and then was able to easily surpass the speed limit by accelerating until just before he had to stop before turning onto a road. Then he accelerated on that road, and braked hard at the first bus stop. Somewhere in the middle of the route, he accelerated until a minute or so before braking behind a stationary car at a red light intersection even though an ambulance with lights flashing was trying to make its way through the intersection. Passing through the intersection, the bus driver applied a series of “fits and hard stops,” and this pattern continued when he approached two or three bus-stops ahead. 

The bus driver pushed his foot down on the brake pedal too hard just before stopping, without having coasted so the sudden braking would not have to stop so much motion. This can be seen by the standing passenger's loss of balance. Were he to have fallen and broken a bone, he could have sued the company.

The customer-service employee on the night before had said that the procedure when that department is closed and safety is at risk from a driver’s reckless, aggressive driving, is that I should call the company’s transit “police.” When I called that department just after I got off the bus, a stern woman stated, as if she could not be wrong, “No, you need to call customer service.” I told her that customer service was closed on Saturdays and that that department had informed me that transit police should handle cases of safety issues when customer service is closed.” “No!,” she exclaimed, “you have to call customer service when they are open.” I was stunned because I had told her that the driver had almost hit three pedestrians in a crosswalk the night before, and he slammed on the brake pedal just fifteen minutes ago behind a car at a light that had been red for some time. “We have to witness the incidents to do anything about them,” the corrupt woman said. Knowing this was incorrect (I had already stated that I was a witness) and thus that the "police" employee was corrupt. The pathetic excuses she used clearly indicated that she was willing to dismiss a report even of pedestrians almost being hit. Her crime was more than being inept and corrupt; she didn't care whether the aggressive driver might kill a pedestrian between that Saturday night and Monday, when customer service would reopen. So, I ended the call as she was obstantly denying that she was refusing to take and act on my reports. I called 911 emergency to speak with the local police department not only to report the driver, but the transit "police" employee too! Even though I told the employee of the local police department of the driver’s reckless driving both that night and the night before, and that he was still driving even though I had notified the transit company’s customer service department the night before that the driver had almost hit three pedestrians—likely Harvard students—he told me I had to contact the transit “police,” which prompted me to relay the last conversation with the control-freak who presumed that she could not be wrong and utterly dismissed my claims gained from the transit company. “The transit police would rather risk pedestrians being killed than follow the transit company’s policy that the transit “police” handles such reports when customer service is closed. It’s really just common sense not to wait two days before reporting (and the company therefore acting on) a report of reckless driving where safety is being compromised. He said he would call the transit police, but I did not believe him. I gave up. A report against a bus driver was being blown off yet again, and the driver doubtless was breaking traffic laws with a sense of impunity, which made him especially dangerous.

This is the bus driver who had almost killed three Harvard students in a cross-walk and, on the following night, braked hard behind a car at a red light. On both nights, he had enough time at the end of the route for a personal break, as shown here.  I contend that this is why he was speeding and waited to the last minute, literally, to apply the brake pedal before stopping so as to shorten the time of the route. 

Not a full week before that weekend, I had called in a complaint on a driver, also a Black male, who had been riding the accelerator and hitting the brake pedal hard when stopping, rather than coasting to a stop—as that would mean less break-time at the end of the route for him. “He almost hit a car standing in front of the bus; that car had its left-turn signal on, and that could be seen at a distance as it was dark outside. But the driver kept acccelerating until he got very close to the car. What if he had misjudged on where to come to a quick stop by slamming on the brakes? He is a reckless driver!” That driver might have been the same one. I had also called customer service to report a young black woman whose stomping on the brake pedal had rendered rides very uncomfortable. Yet she was able to continue driving without any concern for the comfort of the paid customers on the bus.  

I had never ridden on a transit bus in which the driver slamed on the brake pedal so hard (and even after I had asked him not to do so). Again, the pattern is the same: customers, and even company policies on driving don't matter. After I had called customer service to report him, I rode again on a bus he was driving, and his driving was just as hard and reckless. A bus is not a toy, and we are ALL subject to the law--even those people who disrespect rules and laws, yet while demanding respect from everyone else in spite of having a selfish and inconsiderate attitude.

It bears repeating that after I had called customer service a few weeks before and said, “One of your coworkers told me to call the transit ‘police’ to report reckless driving when your department is closed, but your company’s transit “police” have insisted to me that I call customer service. Apparently, they are just fine with letting a reckless bus driver continue to drive through a weekend and have riders wait until your department is open, which could be a day or two away.” Although the customer-service employee told me that I had followed procedures correctly, and thus that the transit “police” dispatcher had been wrong, and I asked the customer-service employee to have her supervisor contact the transit “police” supervisor, but, as I have already stated, there was no change in the script of the transit “police” when I called the transit police to report the driver who had almost hit three Harvard students the night before and could easily have misjudged when to stomp on the brake pedal behind a stopped car at a red light. 

In addition to the bus company having a disincentive to terminate even bus drivers whose driving could terminate people in cars and in cross-walks, the refusal of the company’s transit “police” to contact “the garage” to intercede on behalf of the public (and bus riders) to get a reckless bus driver off the streets until the driving could be investigated by an operations supervisor points to bad management not only in the transit “police” department, but also higher up, to the manager who is over both that department and customer service and was thus responsible for making sure that reports of dangerous driving do not fall between the two departments, as when customer service is closed and yet the transit “police” insist that customer service be contacted when it opens.

Whether because my paternal grandfather rose from being a trolley driver to being the president of the Milwaukee, Wisconsin (then Des Moines, Iowa) mass transit company, or because I have worked in public accounting and have a B.S. and M.B.A. in business (with an emphasis on organizational studies because systems theory intrigued me), I have called the customer service (and transit “police” departments) to report uncomfortable and even reckless bus driving even though most riders would not bother, or even suspect that the problem is systemic both among the bus drivers and even including their supervisors. So, in response to one customer-service employee, who had told me that the company looks for reports from many riders before taking action, I said, “It is a fallacy to assume that there is not a problem unless many people report it, because, frankly, most people figure, why bother, nothing will happen, and some people may even expect bad driving because it happens so much.” Yet how many companies stick to this fallacy! The macro-culture of democracy may be erroneously projected on business management in assuming that a majority is needed for a complaint to be valid. The assumption ignores the fact that few riders may actually be able to “connect the dots” and be willing to call in a complaint. The assumption of political equality of voters—one person, one vote—does not hold in complaints to a manager about an employee. Even in terms of political democracy, Donald Trump only received the votes of 34% of the eligible voters (and Harris received 32%) in 2024, so it is not really true that majority rules. I for one am more interested to know why eligible voters did not vote (or voted for other candidates, who could not be expected to win) than in why voters voted for Trump or Harris.

Individuals have insights, and, for any given subject-matter or domain, some people have more insight than do others. I might even venture to claim that some people are, whether genetically or by effort in formal education, more intelligent than are other people. Herds, however, walk only when a general shift is occurring. Waiting for a herd to complain for the substance of the complaint to have merit and thus value and credibility, can be reckoned as foolish management. Nietzsche contrasted herd-animals, who are weak, from the strong, who act out of self-confident strength if they are not beguiled by the weak to be ashamed of being strong, as if it were unethical. In actuality, weakness even in not standing up to corruption is unethical even in feckless non-action, and the corrupt are themselves obviously unethical in being so.

I contend that the transit “T” company and the Massachusetts government with respect to that company comprise layers of negligence, beginning with the dangerous drivers themselves and going through the customer service department and the transit “police” department to upper management, and finally to the Massachusetts government: none of which are looking out for the public and the bus riders (as even accelerating even just until the point of stop by braking hard is very uncomfortable).

Once I conducted a small experiment to find out if the bad bus drivers had been trained badly or have been knowingly driving badly. I asked one bus driver to stop slamming on the brakes, and he complied, which told me that at least some of the reckless drivers know that they are driving badly and yet are doing it anyway. I believe they do so in order to rack up minutes at the end of a route to take a personal break, or else because they are late due to traffic and the company pressures its drivers to reach the end of a route on time. But this does not explain why many drivers depart the beginning point of a route early. A longer break at the end or insuring an on-time arrival is likely the motive. Creating a longer break could be called gaming the system. I know that the driver supervisors know this is happening, yet they conveniently allow it.

Finally, notice that I have not had to resort to claiming that the drivers’ union is protecting even reckless drivers. I suspect that is also in play, but the sad point is that I have enough without even bringing up the pressure from the union on the management. I would not be surprised to learn that the upper management has told the union’s head, We’ve got your back. After all, it is what the governor told the drivers when she announced the sweet labor contract in 2023 that was, according to that governor, supposed to make the operation of the buses safer.

Collusion upon collusion upon collusion can make for collision, collision, and collision when aggressive bus-driving is involved, and this is obviously at the expense of customers and even the public, not to mention the innocent pedestrians and car-drivers who are injured or even killed as a result. The banality of narrow, bureaucratic managerialism and oblivious, duty-free politics is none other than corruption writ large. This means that that the system itself, which spans the domains of business and government, is corrupt and thus is in need of reform. Generally speaking, furtive though obvious unaccountability can become so banal as it becomes so common that it renders bad management itself as unethical. 

In the present case before us, the expectation of harm to innocents may be eclipsed by a narrow, self-centered fixation on enuerated departmental tasks (e.g. by the transit “police” department), and willful gross negligence (e.g., many of the bus drivers). The harm may be an implicit byproduct of the incentives and disincentives that are operative in the system, including the bus company and the government that is supposed to oversee the company. Aside from the refusal or sheer inability of elected government officials and regulators to adequately oversee the Boston metro area's mass-transit, known as the "T," the aggressive bus-driving and the transit company's management can be so bad that both can be said to be inherently unethical. 

Even the ongoing momentum of the inertia of such a dysfunctional system can be said to be unethical, such that inaction is culpable. In such a case, the status quo does not warrant pride of place; rather, warrants should be issued for the drivers who believe that the traffic laws do not apply to themselves. 

Indeed, an attitude can be determined to be unethical, as can the consequences when innocent people are injured or even killed and human customers are driven like cattle. Ironically, the toxic "herd animals" depicted by Nietzsche that are too weak to master their instinctual urge to dominate are at the wheel, as they are too weak to experience the richer pleasure that comes from power derived from mastering one's own most intractible urges. If this verdict seems overly harsh, you might imagine the jolt from a foot stomping down on a brake pedal immediately after having ridden the acelerator without allowing the bus to coast at all, all this without any concern for the paid passengers or for pedestrians and people driving nearby.

In the seventeenth century, a European Jansenist priest, Pierre Nicole, wrote that even though self-love (over loving God) can have unintended beneficial consequences and thus be reckoned as enlightened self-interest, self-love is still a sin. Although Augustine wrote that sin can have unintended beneficial consequences, it is important to remember that self-love is still a sin. In moral terms, which has been my vantage-point here, it can be said that selfishness negligent of any possible resulting harm to other people, is unethical. Selfishness can be extended to an organization's managers as well as to government officials who look the other way. Unfortunately, the human nose can become accustomed to a bad odor if it hangs around long enough to become the atmospheric norm. 

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1. Christian MilNeil, “MBTA Adopts ‘Historic’ New Labor Deal with Carmen’s Union,” StreetsBlogMass, August 2, 2023.
2. Ibid.

Should Philosophers Sell Out to Business?

Should philosophers at universities, by which I mean scholars who hold a Ph.D. in philosophy, try to be relevant?  Nietzsche wrote that no philosopher is a person of one’s own day, but Adam Smith saw in philosophers the potential as observers rather than doers to observe occupations rather than Plato’s eternal moral verities or Aristotle’s prime mover way up high. Opinions on this question can reasonably differ, but under no circumstance should someone holding a MBA and DBA or Ph.D. in business claim to be a philosopher. This is especially true in North America, where doctoral students in business have not typically even taken ethics courses in philosophy. Indeed, I turned down a doctorate in business in part because my area would have been business ethics sans any coursework in philosophy, including ethics. I attempted to take the core graduate course in ethics, but the professor, Kurt Baier, announced at the end of the first class session that only philosophy students could enroll. Baier had the countenance of Schopenhauer, and both, ironically, focused on ethics academically. To be sure, doctoral students in business who already have a Ph.D. in philosophy may be counted as philosophers, and the dual degrees fit an orientation to observing and thinking about occupations rather than just on metaphysics or ontology.

The full essay is at "Should Philosophers Sell Out to Business?"

On the Aristocracy of Wealth

The rule of a few—aristocracy. The rule of the wealthy—plutocracy. Where the few, being valued above the many, are determined principally on account of wealth, the two forms of government fuse into the aristocracy of the moneyed interest. The cardinal virtue is the fundamental desire for more—otherwise known as greed. Justice is limited to peerage, or amicitia (friendship) based on having wealth. This sort of justice, which can be derived from Cicero, is antithetical to justice as caritas seu benevolentia universalis (love, that is, universal benevolence), which comes from Plato, Augustine, and Leibniz.

The "ardent glow of freedom gradually evaporates;—the charms of popular equality . . . insensibly decline; —the pleasures, the advantages derived from the new kind of government grow stale through use. Such declension in all these vigorous springs of actions necessarily produces a supineness. The altar of liberty is no longer watched with such attentive assiduity; —a new train of passions succeeds to the empire of the mind; —different objects of desire take place: —and, if the nation happens to enjoy a series of prosperity, voluptuousness, excessive fondness for riches, and luxury gain admission and establish themselves—these produce venality and corruption of every kind, which open a fatal avenue to bribery. Hence it follows, that in the midst of this general contagion a few men—or one—more powerful than all others, industriously endeavor to obtain all authority; and by means of great wealth—or embezzling the public money, —perhaps totally subvert the government, and erect a system of aristocratical or monarchic tyranny in its room. What ready means for this work of evil are numerous standing armies, and the disposition of the great revenue of the United States! . . . All nations pass this parokism of vice at some period or other; —and if at that dangerous juncture your government is not secure upon a solid foundation, and well guarded against the machinations of evil men, the liberties of this country will be lost—perhaps forever!"[1]

 A society wherein aristocracy is defined in terms of money can be likened to an old industrial city wherein the masses are boorish and the few are refined. The latter spend their spare time at the two or three country clubs in town. On July 4^th, the masses have a motorcycle parade and fireworks downtown while the wealth-aristocrats enjoy golf and swimming followed by dinner in the dining room and then a separate fireworks show on the golf course. It is literally the tale of two cities—only one of which is gated, though some of the many can watch the clubs’ fireworks from outside.

 In an aristocratic plutocracy, business executives and the moneyed of the professional class (e.g., CPAs, physicians and lawyers, but not clerics and professors—the Brahmans who have been uneasily professionalized but not as well compensated) are valued and thus they rule. In other words, the country clubs rule the strip malls. It is not only that money is allowed to buy political power; wealth is valued so much that is presumed to have the right to govern.

 Although wealth is the defining difference in a society wherein aristocracy is a function of money, refinement itself tend to go with the upper classes; and yet for all the lubricating manners, the country club set is limited by its value on wealth. In other words, corruption can coexist with the superficial manners typically found on the putting green. True refinement, it turns out, comes not from wealth, but, rather, from being educated. Hence, the greatest difference in a society, it turns out, exists between the pedestrian mall and the scholar rather than between the poor and the rich. Even so, in a society wherein aristocracy is defined in terms of wealth, the distance between the rich and poor is exaggerated, which in turn is seen as justifying plutocracy. Once a society can be characterized as an aristocratic plutocracy, it may be that only a mass rebellion can bring back the demos in governance; for the propertied will only consolidate their rule, and their property, unless or until they are forced to relent.

1. The Impartial Examiner, Essay (March 5, 1788), 5.14.15, in Herbert J. Storing, ed., The Anti-Federalist (Chicago: University of Chicago Press, 1985), pp. 290-91.

Executive Compensation (Part I): Systemic Risk

In the wake of the financial crisis, according to the Huffington Post, “a number of the nation's largest banks were excused from the government's rescue program before they had returned to a position of complete financial security -- in part because they wanted to avoid restrictions on how much their executives would get paid, according to a new report from the program's government overseer. Citigroup, Wells Fargo, PNC and Bank of America successfully lobbied to leave the federal bailout program early in 2009, even though the Federal Reserve Board and the Federal Deposit Insurance Corporation had recommended they take additional steps to shore up their assets, according to a new report from the Special Inspector General for the Troubled Relief Asset Program, a government watchdog office. Regulators, including the Treasury and the Federal Reserve Board, eventually ‘relaxed’ their criteria for letting the banks out of the program, the report says, leaving questions about whether the banks had strengthened their holdings enough to be able to withstand another systemic crisis.”[1]

The Huffington Post reports that according to SIGTARP, in 2009, the “four banks repeatedly tried to leave the bailout program, also known as TARP, ahead of schedule, claiming that the stigma attached to the bailout would damage investor confidence in their stability. Bank of America was especially persistent, submitting 11 separate exit proposals to the Federal Reserve Board in less than a month. The banks, particularly Citigroup and Bank of America, also expressed concern that if they stayed in TARP, they would be subject to the program's restrictions on executive compensation.

"Ultimately, the federal banking regulators ended up bowing to pressure" to let the banks leave early, said Christy Romero, Acting Special Inspector General for TARP and the author of the report. Romero added that in the event of another shock, many banks could be left with too little capital to endure, raising the possibility that "it could potentially trigger an avalanche of severe consequences to the broader economy." As a result of the regulators’ lenience, Romero told The Huffington Post, the financial system is still carrying considerable systemic risk from huge, interconnected banks, well after the meltdown of 2008. "The institutions that were 'too big to fail' ... are bigger than they were before," said Romero. "It's very critical that regulators remain vigilant to banks' demands to relax capital requirements."[2]

In short, the U.S. Government and its central bank, the Federal Reserve, acquiesced on bank executive’s desire for more (i.e., greed) at the expense of reducing systemic risk. That the bankers presumed themselves as being in a position to lobby—especially to obviate compensation restrictions —given the roles played by the banks in the mortgage securities crisis, is astounding, as is the obsequious reaction of the regulators. The dynamic itself evinces the U.S. as a plutocracy rather than as representative democracies. Furthermore, the motive of the bankers demonstrates a continued fixation on gain at the expense not only of the system (i.e., systemic risk), but also of stockholders. 

See Essays on the Financial Crisis.

1. Alexander Eichler, “BofA, Wells Fargo, Citigroup Left TARP Early to Avoid Restrictions on Executive Pay,” The Huffington Post, September 30, 2011.

2, Ibid.

India’s Business Environment: Beyond Corruption

In spite of expected growth of 6 or 7 percent for 2012, the economy of India was facing a pessimistic outlook at the time. The underlying cause seems to have been mismanagement by the federal government—in particular, by the ruling Congress Party. In actuality, the problem lies in the Indian business culture, and the society itself. As such, the problem is not so easily fixed as a change of government or policy.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

Holding the Unfit Accountable vs. Murdoch’s Entitlement to Power

“A damning report [in late April 2012] on the hacking scandal at Rupert Murdoch’s British newspapers concluding that Mr. Murdoch is “not a fit person” to run a huge international company has convulsed Britain’s political and media worlds and threatened a core asset of Mr. Murdoch’s American-based News Corporation.”[1] The report also “found that three senior Murdoch executives misled Parliament in testimony” and “alleges that the company sought to cover up widespread phone hacking.”[2]

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. John F. Burns and Ravi Somaiya, “Panel in Hacking Case Finds Murdoch Unfit as News Titan,” The New York Times, May 1, 2012

2. Ibid.

Hollywood Bribes China

The Foreign Corrupt Practices Act, known as F.C.P.A., “forbids American companies from making illegal payments to government officials or others to ease the way for operations in foreign countries.”[1] The practical difficulty facing American companies doing business around the world is that in some cultures bribes are so ubiquitous they are simply a part of doing business.  For American companies to refuse to participate in what is generally expected can be a competitive disadvantage, particularly if substitutes exist and the practice is widespread.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. Edward Wyatt, Michael Cieply, and Brooks Barnes, “S.E.C. Asks if Hollywood Paid Bribes in China,” The New York Times, April 25, 2012.

Hedge Fund Lobby: Breaching Ethics

In a rule adopted by the SEC on October 26, 2011, hedge funds over a certain size must report information—the amounts required depending on the fund’s size. The devil, as it were, is in the details. In this case, they reflect the intense lobbying of hedge funds and their advocates. As a result of the lobbying, according to The New York Times, the “changes call for only the largest funds to report the most detailed information, eliminate any penalty of perjury for misleading reports and delay for six months the initial reports for all but the largest funds.”[1] Whereas the matter of the amount (and type) of information required involves or potentially puts at risk the funds’ secret strategic competitive advantages and the matter of a start date involves technical points such as how much effort is needed to cull the required information, the elimination of any penalty for perjury does not correspond to any legitimate business concern. Indeed, it makes on sense to require information if it can be misleading with impunity. It is as if the SEC regulators had told the hedge funds, You will have to submit information to us but it can be misleading. The fund managers would be apt to reply, Oh, ok.


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

1. Edward Wyatt, “Rule Allows Regulators a Look at Hedge Funds,” The New York Times, October 27, 2011.

Deloitte: A Culture of Least Resistance

On October 17, 2011, the Public Company Accounting Oversight Board issued a statement saying audits should protect investors. “The board therefore takes very seriously the importance of firms making sufficient progress on quality control issues identified in an inspection report in the 12 months following the report,” the statement said. Not having seen such progress at Deloitte, the board made its 2008 report on the firm public. The report “cited problems in 27 of the 61 Deloitte audits it reviewed, including three where the issuing company was forced to restate its financial statements.” This was “an unprecedented rebuke to a major accounting firm. In too many instances,” the report stated, inspectors from the board “observed that the engagements team’s support for significant areas of the audit consisted of management’s views or the results of inquiries of management.” In some cases, “Deloitte auditors did not bother to even consider whether accounting decisions made by companies were consistent with accounting rules. Instead, auditors accepted management assertions that the accounting was proper, the board’s report said.”[1] As a very young auditor at that firm, I was told to do just that.  

The full essay is at "Deloitte: A Culture of Least Resistance" in Institutional Conflicts of Interest, which is available at Amazon.

1. I took the quotes for this paragraph from: Floyd Norris, “Accounting Board Criticizes Deloitte’s AuditingSystem,” The New York Times, October 17, 2011;  and Floyd Norris, “Audit Flaws Revealed, AtLong Last,” The New York Times, October 21, 2011

FIFA: Weaving an Unethical Web in a Sport

Soccer is the world’s most popular sport. Unfortunately, the Federation Internationale de Football Association (FIFA), the international association of soccer, has “repeatedly faced charges of corruption while operating with a lack of transparency and little oversight.”[1] Even though corruption comes naturally to individuals, institutional processes and structure too can be unethical in themselves. In such cases, it is not sufficient to isolate and remove the sordid persons; structural reform is needed too.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available at Amazon.

1. Jeré Longman, “Accusations Are Replaced by Anger at FIFA,” The New York Times, May 30, 2011.

Conflicts of Interest for Public Officials: How Broad?

Michael Carrigan, a member of the City Council in Sparks, Nevada, “says he was trying to make sure his vote on a proposed casino, one that his campaign manager helped develop, did not pose an ethics problem.”[1] Carrigan backed the Lazy 8 casino project proposed by Red Hawk Land Co. Carrigan’s friend and campaign manager, Carlos Vasquez, worked as a consultant on the project. The question is whether the elected official’s relationship to his campaign manager who was a consultant on a project to be voted on constitutes a conflict of interest sufficient for the official to have not voted. The Sparks city attorney told Carrigan that he could vote on the project as long as he publicly disclosed his relationship with the project consultant. The attorney was obviously thinking in terms of transparency. Carrigan made the recommended disclosure. The Nevada Ethics Commission, however, claimed after the vote that Carrigan had a conflict of interest and should have abstained even with the transparency. In its reprimand, the commission cited ethics law that says public officials must not vote when their judgment could be affected by a commitment or relationship to someone in their household, a relative, business partner, or a person “substantially similar” to those specified. The commission classifies the campaign manager in the “substantially similar” category because Carrigan’s loyalties to his campaign manager would have affected his judgment. Caren Jenkins, executive director of the Nevada Ethics Commission, explains, “Here was a friend, a buddy, a close confidant. If Mr. Carrigan ever thought it was in his best interest to vote against the project, would he have?”[2] Carrigan sued the commission for its reprimand, claiming it violated his free speech rights. The Nevada Supreme Court sided with Carrigan, who pointed to the fact that he was not in business with his campaign manager. The Nevada Supreme Court said the catch-all category the commission cited failed to “limit the statute’s potential reach (or) guide public officers as to what relationships require recusal.”[3] The state court said the law “thus chilled speech.” In its appeal to the U.S. Supreme Court, the lawyer representing the commission argues, “State and local legislators have no personal ‘free speech’ right to cast votes on particular matters, much less ones in which they have a personal interest.”[4] The Reporters Committee for Freedom of the Press similarly claims that rules such as Nevada’s are important to ensure politicians don’t vote based on personal interests.

In 2009, the U.S. Supreme Court ruled by 5-4 that a West Virginia judge should have withdrawn from case because of a risk of bias. The court majority said judges must sit out a case when a risk of bias arises because a person with a significant stake in the case “had a significant and disproportionate influence” in getting the judge on the bench. In the present case, Carrigan’s campaign manager had a significant influence in getting Carrigan elected, but did his consulting role at the casino constitute a significant stake, and, if so, was it only in the past, or did the consultant/campaign manager stand to benefit financially after the vote? 
Regarding the Nevada ethics law, a campaign manager can be regarded as similar to a business partner. The vagueness of last category in the law is poor legislation, but it does not nullify the similarity in the present case. In fact, I contend that the law does not go far enough, for it excludes friendship. Presumably a public official would want to see one of his friends benefit even if there is no financial relationship between the official and the friend. Suddenly the vagueness in the law does not seem to be a formidable problem, but, rather, a virtue. 

In general, a conflict of interest in politics or business need not involve a financial relationship between the decision-maker and the other person.  The problem with sidestepping votes to avoid any conflict of interest is that too many votes may be missed. Moreover, evading votes when an official might be tempted to vote in line with his or her more particular interest can be interpreted as giving up on the civic duty to vote in line with the public good; it is assumed that if there is a personal interest involved, the official will act on it rather than the good of the city. In other words, the Nevada law essentially punts by separating a voting official from conditions in which voting in the public interest would be felt as a duty (there being an opposing motive in line with the official’s own interest extended out to business associates, relatives and friends.

As for the Nevada ethics law, that its vagueness somehow “chills speech” is perplexing. The same kind of conflation seems to take place when spending money is reckoned as political speech. The court seems to have been assuming that the vagueness would mean that officials would be skipping many votes, and therefore “silenced” by the law.  Even if the law is too broad in its coverage, to consider voting as “speech” is patently absurd.  To vote is not to speak.  To claim that one is proffering his opinion by voting magnifies a side-effect out of what it means to vote. A vote takes place after the give and take of opinions in order to settle the question.  Hence, “the vote is on the question” rather than being an elaboration of the question.  A vote is a collective decision rather than a dialogue.  We are therefore back to the problem of whether too many votes would be skipped.

At some point, if the duty of civic virtue is trampled upon, no law can bracket the corruption.  In the end, it is up to the popular sovereign, the people, to evaluate their elected officials with respect to the voting records. As for the officials, skipping a vote to avoid a conflict of interest must be weighed against the duty to vote.  From the standpoint of the latter, a skipped vote is a failure, even if it is to obviate a hard choice. Ideally, public officials would stand up to their particular relations and explain to them that the public trust is bigger than them and the relations. Yet if the official foresees himself succumbing to the temptation of expediency, skipping a vote would be worth evading the duty.

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1. Joan Biskupic, “Nev. Official’s Vote Turns Free-Speech Case,” USA Today, April 18, 2011, p. 6A.
2. Ibid.
3. Ibid.
4. Ibid.

The Revolving Door: A Public-Private Sector Conflict of Interest

In Illinois, at least as late as 2011, state and local legislators could use their position to benefit paying clients. According to The New York Times, fourteen elected officials in Cook County, where Chicago is located, were registered as lobbyists in the 2009-2011 period and had clients who did received government contracts in Illinois. Rep. Fred Crespo observes, “When I see them [the law makers] at a hearing in the Capitol, I often can’t tell of they’re here for their constituents or for their paying clients.” Legislators in Illinois “can legally vote and otherwise act on matters that directly benefit their lobbying clients.”[1] As this involves a conflict of interest, which is inherently unethical, this case demonstrates for us the contention of ethicists that ethics as a field is distinct from law.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

1. Mike McIntire and Michael Luo, “When Santorum Left Senate, Some He Aided Found Him Work,” The New York Times, January 6, 2011; John Sullivan and Fredric Tulsky, “When Office Holders Also Represent Clients, Collisions Are Likely,” The New York Times, January 6, 2011; and Fredric Tulsky and John Sullivan, “Is It a Conflict? Yes, But It’s Legal,” The New York Times, January 6, 2011.