"(T)o say that the individual is culturally constituted has become a truism. . . . We assume, almost without question, that a self belongs to a specific cultural world much as it speaks a native language." James Clifford

Monday, March 19, 2018

Facebook: A Distrustful Company Projecting Distrust

Cambridge Analytica, political data firm founded by Stephen Bannon and Robert Mercer, and with ties to U.S. President Trump’s 2016 campaign, “was able to harvest private information from more than 50 million Facebook profiles without the social network’s alerting users.”[1] The firm had purchased the data from a developer (a psychology professor at Cambridge University in the E.U.) who had developed a personality test that Facebook users could take, and whose purpose was supposedly academic. The developer violated Facebook’s policy on how user data could be used by third parties. The data firm “used the Facebook data to develop methods that [the firm] claimed could identify the personalities of individual American voters and influence their behavior.”[2] In other words, Cambridge Analytica used the purchased data to manipulate users to vote for Donald Trump for U.S. president in 2016 by sending pro-Trump messages. Although Facebook had not known of the sale of the data to Cambridge Analytica at the time, the social network, upon learning Cambridge Analytica’s political use of the data in 2015, failed to notify its users whose data had been compromised. Although 270,000 Facebook users took the developer’s personality test, “the data of some 50 million  users . . . was harvested without their explicit consent via their friend networks.”[3] It bears noting here that those of the 50 million users who had not taken the personality test should definitely have been informed. At the very least, Facebook’s management could not be trusted to not only  keep users informed, but also protect users in the first place by adequately enforcing the third-party-use policy. So it is ironic that Facebook’s untrustworthy management could be unduly distrustful of ordinary users.
The psychological-political mixture in Cambridge Analytica’s use of the data is downright creepy. Tapping into a psychology professor’s methodology for inferring personality from data on a social network platform so to be able to send politically manipulative advertising to certain Facebook users  is highly invasive, even for the users who voluntarily took the professor’s personality test online. Regardless of party affiliation, a reaction of disapprobation to such an over-reach could be expected; hence the operation was stealth—which is why Facebook’s management erred so in failing to inform the 50 million users. Facebook’s stock deserved to fall when the story finally did break in March, 2018.
It is odd that Facebook’s management even permitted the developer, the psychology professor who went on to sell the data to Cambridge Analytica, to obtain the data in the first place to develop personality constructs for academic purposes. It is also odd that Facebook’s management had been so naïve concerning a political data firm, and yet so demanding of individual users who displayed no cause for suspicion. Facebook suspended an account I set up because I had sent a link to one of my academic articles to some scholars I knew. I deleted the account. A few years later, I tried again. That time, Facebook demanded that I upload a clear facial picture of myself so I could be identified. Apparently my phone number and email address were not sufficient, even though I had not yet even used the account and thus could not have violated any of the company’s use-policies. I deleted that account rather than supply a picture of myself because I was concerned how the facial recognition software would be used, especially when combined with other basic information I had included in the profile. It turns out I had reason to be concerned, for even if my personality had not been construed and I had not been subject to political manipulation psychologically, the fact that Facebook let a political firm in the door means that other harvesting could have been going on. Furthermore, even if Facebook discovered other extractions, I could not trust that the company would have informed me.
It is telling, in short, that a company so distrustful demanded that I upload a picture of my face so I could be identified—as if I were distrustful. I suspect that the managers and their employees were projecting their own distrustfulness onto innocent users, while giving firms like Cambridge Analytica a free hand. In other words, the folks at Facebook were very bad at determining who is trustworthy. The lesson here is that Facebook was not worthy of its users’ trust, and yet strangely the users did not bolt en mass. It could be that people in modern society had become so used to being distrusted by people working in organizations and to interacting with distrustful companies that the Facebook revelation was a mere blimp on the radar screen.
The philosopher Kant reasoned that promise-making is only valid in a context in which promises tend to be kept; otherwise, promises would simply be dismissed as worthless dribble. If large companies only keep their promises when doing so is convenient to them, such a context could recalibrate just how much worth promise-making justifiably deserves. If so, the business world itself could contribute to a society in which distrust rather than trust is the norm. When I lived in Tucson, Arizona, I experienced such a society. I could feel not only the angst in the air, but also the passive aggression in the distrust itself. Besides the police-state being “beyond the pale” even on the local university’s campus, the guarded watchfulness that was (and surely is still) practiced between strangers on the city streets (as well as between bus drivers and riders) included an inherent aggressiveness. Likewise, Facebook’s refusal to notify users of the “harvesting” and Facebook’s demand that I furnish a photo of my face involved passive aggression—which is inherent in unjustified disrespect. Are companies like Facebook unwittingly turning modern society into Tucsons? If so, the link between distrust and aggression should be made transparent so people can at least be aware of the change.

For a business ethics critique of Facebook, see Taking the Face off Facebook



1. Matthew Rosenberg and Sheera Frenkel, “Facebook Role In Data Misuse Sets Off Storm,” The New York Times, March 19, 2018.
2. Ibid.
3.Cambridge Analytica: Facebook ‘being investigated by FTC,’” BBC News ( accessed March 20, 2018).


Saturday, February 24, 2018

Novartis Invested for Bribery in the E.U.: On the Ethics of Suffering

Two former prime ministers, the central bank governor, and the federal commissioner for migration stood accused by prosecutors in the E.U. state of Greece of receiving bribes from Novatis “in exchange for fixing the price of its medicines at artificially high levels and increasing” the company’s access in the state.[1] The state legislature voted in February, 2018 to investigate the accusations and to vote by secret ballot at the conclusion of the investigation on whether to revoke immunity, which would be necessary for any of the accused to be indicted. The prime minister at the time, Alexis Tsipras, said, “Those who enriched themselves from human pain must suffer the consequences.”[2] This statement reveals an ethical truism of sorts—namely, that people who knowingly cause others pain should suffer.  It is right, in other words, that they suffer.
A gay man, for instance, who knowingly risks infecting sex partners with HIV by lying to them may receive less sympathy if he becomes ill. Mortgage producers who knowingly subject borrowers the likely risk of losing their respective homes deserve to suffer punishment. Suffering should be in balance. Yet the infliction of retributive suffering does not undo the original suffering. Whether or not the 10 politicians would suffer by being imprisoned would not bring back any patients who died because medications were too expensive. A corresponding suffering does not make the world fair; it merely makes the victims or their allies feel better by relieving their anger. But does this render the corresponding suffering ethical?
It is better, ethically speaking, to prevent the original suffering, for even adding a corresponding suffering does not undo the original for the victims. Novartis had been investigated for bribery in China, South Korea, Turkey, and the U.S. Why had the European Commission not held the company to close scrutiny? To look the other way concerning such a company is itself unethical because the original suffering could have been prevented.

For more on unethical business, see Cases of Unethical Business



[1] Nici Kitsantonis, “Did Novartis Bribe 10 Politicians? Greece Approves an Investigation,” The New York Times, February 23, 2018.
[2] Ibid.

The Commercial Media as Gate-Keepers Looking Down on Bloggers as "Non-Journalists"

In a few days during July in 2010, the American media was obsessed with Shirley Sherrod, who in a tightly edited video clip had made apparently-racist statements about not helping a caucasion farmer because he was caucasion. She was quickly fired by Tom Vilsak, the US Secretary of Agriculture, who, like the journalists and the NAACP, had failed to look at the full video.  The day after Sherrod was fired, the NAACP looked at the full video and realized that she was actually a racial healer rather than racist.  In the fuller video, she said, “I have come to realize that we have to work together … we have to overcome the divisions we have.”  Even as she used questionable language, such as “his own kind,” it should not be forgotten that the clan killed her father.  In other words, she deserves some slack.  At any rate, it was not long after the NAACP’s about-face that the agriculture department and the media were doing also doing an about-face. According to the NYT, “the White House and Mr. Vilsack offered their profuse apologies to her for the way she had been humiliated and forced to resign after a conservative blogger put out a misleading video clip that seemed to show her admitting antipathy toward a white farmer.”

Bill O’Reilly of Fox apologized—though while suggesting that Sherrod “very well could have seen things through a racial prism” and had been “blatantly partisan” on the job possibly in violation of the Hatch Act so she should not work in government.  O’Reilly was apologizing for not having done due diligence in “reporting” the story by watching the entire video before making a judgement. Like so many other journalists, he lept at the story without adequately checking the source—the video or Sherrod herself.  Even as the journalists were apologizing for their bad work, they wanted to distinguish themselves as journalists from the “blogger” or “activist” who had posted the edited video clip in the first place. O’Reilly promised his viewers that they could still come to him for good journalism even as he had gotten the story wrong.

Beyond the momentary obsession that the media enjoyed at Sherrod’s expense—the obsession itself being a problem missed by the journalists themselves—this case allows us to glimpse how journalism changed so much in the first decade of the twenty-first century. The case put journalists in the position of distinguishing themselves from bloggers when both had engaged in bad judgment. Hence Bill O’Reilly’s statement that his viewers could come to him for good reporting (rather than have to rely on bloggers) in spite of the fact that he had just engaged in bad journalism and may have done Sherrod another injustice even in his apology. To be sure, the blogger had erred in posting such an edited video clip without providing the context.  However, given the opining of many mainstream journalists who work for media companies and the actual news provided on blogs, the line between “journalist” and blogger are blurred.  Hence the journalists working for media companies were sure to distance themselves from the blogger, who they said was not a real journalist, even though they had all made the same mistake. Were there a clear distinction to be made between the journalists and the bloggers, the former would have done better work—but they didn’t.

Back in 1984 when Daniel Schorr was working at CNN, he objected to the network’s plan to couple him with John Connally, who had been the Governor of Texas and a Secretary of the Treasury, to cover the Republican Convention. It was improper, Mr. Schorr said, to mix a politician with a journalist. In 2010, journalists were saying that it was improper to mix a journalist with a blogger. By then, many television journalists were giving opinions, and were thus closer being politicians, while many bloggers were providing news even before the networks. Lest the journalists point to their educational credentials from schools of journalism, how many American journalists in the nineteenth or even the twentieth century majored in journalism?  Is learning on the job at a newspaper so much different than the entrepreneurs who free lance at their own blogs to provide news?  If these are so different, why didn’t the “journalists” in the Sherrod case catch rather than perpetuate the blogger’s mistake? The proof is in the pudding.

The fact is that many bloggers are able to provide news because a person does not have to study journalism to have access to some information that is new. As a blogger myself, I have not found myself in this position—hence I confine myself to providing analysis based on my years of formal education and on the news provided by others—bloggers or “journalists.”  I must admit that I am more apt to trust the news from a company simply because there are institutional requirements for verifying stories, though as the Sherrod case shows, a media company’s procedures are not always sufficient. The difference between a news company and a blogger is perhaps in the checking or verification function, rather than so much in the getting of news (though the companies have more resources).  Even so, news can come from a variety of sources—not just from people who have a BA in journalism.  As a consequence, there is more of a need for verification—precisely because there are so many blogger/entrepreneurs operating. To dismiss them by saying they are not really journalists is an over-reaction and ill-founded. However, to insist on due diligence and verification on any report is even more pressing. Perhaps rather than have their journalists invoke artificial diremptions, news organizations could hire or contract per piece with many of the bloggers who are providing news so the latter could have access to the organizational wherewithal to verify stories.  These bloggers would then have the advantages of being entrepreneurs and of having the wherewithal to do due diligence.

Daniel Schorr, a protégé of Edward R. Murrow at CBS News and an aggressive reporter who got into conflict with censors, the Nixon administration and network superiors would likely see the advantages that bloggers have in terms of freedom, while being worried (as I am as well) concerning the due diligence limitations faced by the entrepreneurs. He got his first scoop, which earned him $5, when he was 12. A woman fell or jumped from the roof of the apartment house where he lived, and he called the police, interviewed them about the victim and then called The Bronx Home News, which paid for news tips.  Had there been an internet, he likely would have been a blogger. Would that have made a difference?

While good to a point, a profession’s gate-keeping can be readily subverted into simply keeping people out who are otherwise doing good work. In spite of the Sherrod blogger, other bloggers have been providing news—otherwise, the media companies would not be citing them as sources. Rather than fighting the bloggers, the “journalists” who got the Sherrod story wrong might offer a hand; they might just find that they will be helped in return. News is like water in a stream—there are many feeder streams.  Moreover, the nature of news is freedom,which is inherently broad rather than circumscribed.  This is particularly so in a high-tech world where the internet has had a democratizing effect in expanding the sources of news and analysis.  In this context, we might be wise to remember Ben Franklin and Thomas Jefferson concerning the need for an educated electorate rather than try to monopolize information-getting to those in the club.

Source on Schoor: http://www.nytimes.com/2010/07/24/business/media/24schorr.html?_r=1&hp
Source on Sherrod: http://www.nytimes.com/2010/07/22/us/politics/22sherrod.html?scp=1&sq=sherrod&st=cse

Monday, February 19, 2018

How Much Economic Distance Is Justified?


The median household income in the U.S. in 2016 was about $60,000. The following year, Citibank’s CEO, Mike Corbat, received a 48% increase in compensation--$23 million. Goldman Sachs’ Lloyd Blankfein enjoyed a 9% rise, to $24 million. JP Morgan Chase’s Jamie Dimon received $29.5 million.[1] The sheer distance between the median and bank CEOs’ incomes not only begs the question—were the executive compensations justified?—but also raises the question—is such distance itself justified?

Saturday, February 17, 2018

God's Gold on Wall St.: A Vaunted Self-Assessment of God's Work

A year after the financial crisis of 2008, Lloyd Blankfein, the CEO of Goldman Sachs,  found himself vilified for his firm’s quick return to risky trading in spite of its new bank holding company status. Populist resentment at the time was especially pitted against the hefty bonuses from the trades. Also, people were upset about the benefits that the bank had obtained from the decisions of its alums in the U.S. Government—specifically, in the U.S. Department of the Treatury. For instance, Goldman Sachs and other AIG counterparties got a the dollar-for-dollar payout from AIG thanks to an infusion of funds for that specific purpose by Treasury. Regardless, in an interview with the London Times, the highest-paid CEO (at least in the financial sector) dismissed such talk and defended his money-making machine and its compensation.  In addition to being the engine of economic recovery, according to Blankfein, Goldman Sachs provides a social function in making capital available to companies so they can expand. Stunningly, he adds, “I’m doing God’s work.”[1]  Such a claim is a far cry indeed from Thomas Jefferson’s warning that banking institutions are more dangerous to our liberties than standing armies.[2]  Perhaps God intends to undo our liberties by bailing out the banks.

Besides these rather obvious problems with Blankfein's religious claim is his presumption to know what God's work is, and, furthermore, that he is doing it.   Even though a feckless system of corporate governance can enable a CEO to essentially function as his or her own boss, including doing the board's job of evaluating his or her own performance, it is a tall order for a human being to be able to evaluate his performance as God's work.   To be sure, it is possible that God is an intelligent being that bestows favor on his golden stewards for doing His work.

Lloyd Blankfein may have been involved in two conflicts of interest: 1) that of having excessive power over the board whose principal task it is to oversee him, 2) having communicated with GS alums in high posts in the U.S. Government (e.g., Hank Paulson) and perhaps having them enact policies on GS's behalf.   It may be that institutional and personal conflicts of interests can become so ubiquitous that they are simply not seen by the culprits. Furthermore, it could be that the denial enabled by a tacit presumptuousness is like a white movie screen on which even doing God's work can be projected. How ironic it is, that sordid proprietary interest could operate not merely under the subterfuge of being a neutral "market-maker," but also as God's work. Such work is two degrees of freedom away from squalid greed. So it is remarkable that the two could become conflated in a mind.

[1] John Arlidge, I’m doing ‘God’s work. Meet Mr. Goldman Sachs, The Sunday Times, 11/9/09.
[2] Thomas Jefferson to John Taylor, Monticello, May 28, 1816, in Paul L. Ford, ed., The Writings of Thomas Jefferson (New York: G.P. Putnam’s Sons, 1892-99),  XI, 533.

See related book: God's Gold and Essays on the Financial Crisis

Off Target: Corporate Spending as "Speech" against Gay Rights

In a 5-4 decision on January 21, 2010, the US Supreme Court ruled in Citizens United that federal restrictions on corporate spending in elections constituted a violation of free speech. Critics called it wrong to equate corporate “speech” with individual speech and said the ruling would allow special-interest money to flood election campaigns. The bipartisan nature of the opposition to this ruling is striking in these largely partisan times. The court’s ruling is opposed, respectively, by 76, 81 and 85 percent of Republicans, independents and Democrats; and by 73, 85 and 86 percent of conservatives, moderates and liberals. Majorities in all these groups, ranging from 58 to 73 percent, not only oppose the ruling but feel strongly about it. Even among people who agree at least somewhat with the Tea Party movement, which advocates less government regulation, 73 percent oppose the high court’s rejection of this particular law. In addition to overwhelming opposition to the decision, there’s also bipartisan support for Congress to try to reinstate restrictions on campaign spending by corporations and unions.

So when Target sent a check for $150,000 to MN Forward, a Minnesota-based political group backing a gubernatorial candidate with penchant for opposing gay rights, people wondered what business Target has in taking sides on that issue, even if the group was also pro-business. MN Forward endorsed and was paying for ads for the Republican gubernatorial candidate Tom Emmer. On Emmer’s website he defines marriage as a “union between one man and one woman” and he has come under fire for his $250 contribution to a Christian rockband that has been known to speak harshly of gays. Emmer told the Minnesota Star Tribune that the controversial rock band “You Can Run But You Cannot Hide,” were “nice people,” following band member Bradlee Dean’s reported comments that Muslim countries that support execution of gays are “more moral than even the American Christians.” To be sure, the managers of Target were not spending their companies’ “free speech” in defense of such a view, but that the wealth qua free speech was nonetheless being spent on a candidate who had made such a comment makes the Target CEO an unwitting accomplice.
Rather than viewing Target managers distancing themselves from Emmer’s view of gays as corporate social responsibility, I contend that the problem lies in taking spending as speech. Put another way, Target would have better stores if it sticked to its knitting, as it were.

Diverting money even to political campaign groups that further a pro-business agenda is off from the business’s main business, which in the case of Target is to sell retail. Besides the collateral damage from unwittingly helping campaigns on issues that are not even pro-business, diverting cash reserves to political campaigns puts corporations in the business of electoral politics, which is another sort of retail. In the case of Target, it is not as though the stores could not be improved from a business standpoint.  Once I accompanied a foreign friend of mine to a Target to return the coat he had given his wife for Christmas. Because he had paid by check, he had only the option, according to the “customer service” employee, of exchanging it. He could not get his money back—though he could have had he paid cash or by credit card. The “reasoning” of Target’s managers was that a check is “like kind” to an exchange voucher.  My friend and I left the store committed not to return, and I have not. Even in terms of influencing electoral politics in a pro-business general direction, Target’s management has plenty else to do closer to home—if indeed it is a home.  Rather than being socially responsible, a company ought to focus on its knitting.  That—doing business well—is the responsible thing to do because it is what a business’s owners expect from the managers of their property. Rather than being able to influence electoral politics beyond their expertise, managers ought to be restrained more by stronger corporate governance. To be sure, managers have a tendency to over-reach. Treating their spending decisions as “speech” only enbles them.

Sources:

http://blogs.abcnews.com/thenumbers/2010/02/in-supreme-court-ruling-on-campaign-finance-the-public-dissents.html

http://abcnews.go.com/Business/target-best-buy-fire-campaign-contributions-minnesota-candidate/story?id=11270194

Sunday, January 28, 2018

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.