Tag Archives: ethics

Nigerian Scam Moved North?

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Has our Nigerian friend moved north?  You recall the gentleman: he’s the one who obtained millions of dollars from the Nigerian government, dollars of questionable source, and now he’s willing to share his windfall with you—if only you’ll pass to him your bank account access information, so he can deposit the funds.

Now The Daily Caller reports that one of their staff members has received an email from none other than the late Muammar Gaddafi’s widow.  It seems the poor woman is in fear for her own life and desperately needs TheDC staffer’s help, and of course she has access to ” billions of pounds and dollars” with which to reward him for his kind assistance.

From: Mariam Gaddafi ‪<mariam_gaddafi@yahoo.com>

Date: Thu, Oct 27, 2011 at 2:33 AM

Subject: Hassana

To:

Greetings in the name of Allah, am the  wife of the late Libyan president Gadafi who was killed by rebels on Thursday 20th  oct 2011, please my life is in big danger and I would like to use you as my contact to move a huge some of money and start living a free life in your country for I have been covering my self as a Muslim since he married me, which is our religious rights nobody has seen my face or known me except my children and himself and I thank Allah for this.

I cannot be identified by anybody in the world now that things has gone bad.

Please let me know your mind for I will reward you greatly cos we are talking of billions of pounds and dollars.

Waiting to hear from you.

Hassana

Heads up….

Socially Redeeming Value

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Nicholas Brady writes in today’s The Washington Post about “Wall Street’s wealth.”  Among other things, he wondered about “…Wall Street…activities that had no redeeming social value, and…disoriented executive pay scales.”

I have to ask: whose socially redeeming value definition?  Whose standard of “disoriented” pay scales?  Based on what primacy of social standing do those who disparage stand in judgment of their peers?  What arrogance.

One man offered to sell something, and another agreed to buy it.  One man wanted something, and another man offered to supply it.  All four men became better off than they were before; each man gained something of value to him that he hadn’t had before.  The things gained had value to these men, specifically, not to some self-appointed arbiter of propriety.  How much more socially valuable can such activities get?

Are there activities that have no socially redeeming value?  Probably.  But is being valueless, whether socially or economically, necessarily harmful?  Of course not.  They simply are irrelevant, and those who wish to transact with these are fully within their rights as free Americans to do so; such transactions have no impact on their neighbors.  Let’s look at some other transactions that have caught some fame in recent years, things like transactions in mortgage-backed securities and their derivatives.  These and similar instruments like credit default swaps, and the institutions who traded in them, are blamed for starting the current economic malaise.  However, mortgage-backed securities are instruments of Fannie Mae and Freddy Mac.  Indeed, these two institutions were created explicitly to buy up lending institutions’ mortgages, package and securitize them, and then resell these new instruments on the open market.  The purpose of these and of the two FMs was to make it easier for lending institutions to lend mortgages, to make mortgages more readily available, to ease Americans’ purchase of their homes.  Government said transactions with these instruments was socially redeeming.  Hmm….

Along the way, derivatives of these securities were developed, credit default swaps were developed as “insurance” policies on these derivatives, and so on.  Were transactions in these derivatives and new securities and their derivatives at fault for the current economic straits?  Or was it regulations that hid the nature of these instruments and their derivatives so that buyers and sellers of them didn’t fully understand what they were transacting?  Or was it financial institutions that concentrated too much of their asset base in these instruments?  Or was it those buyers and sellers entering in that market that they didn’t understand?  Clearly, transacting in willful ignorance, and over concentrating assets were economically unsound, and in their impact, they were, in the context of social redemption, also unsound, not merely valueless.  I’ll come back to this in a bit.

On what basis are the pay scales deemed disoriented?  Are all skills of equal value?  One measure of the value of skills is easily assessed by anyone who cares to look.  One man offers to sell something, and another agrees to buy it.  Here that thing is the one man’s skill.  Does the employer get what it pays for?  Does the employer get sufficient value in labor output from the man possessing the skill to produce that output?  Does an athlete with a multi-million dollar contract, based on his skill at (throwing|hitting|catching a moving|stationary ball (of some shape)), bring in multi-millions of dollars in ticket sales and/or related marketing revenue?  Does the business executive with a multi-million dollar contract bring in multi-millions of dollars in revenue for the company that employs him?

In a free market, i.e., one that is not regulated into politically correctness or centrally directed because Progressives in government Know Better, the answers to those questions provide their own definition of “disorientation.”  If the employed are not bringing in multi-millions of dollars in revenue, they are not earning their multi-millions of dollars of pay, and they are terminated.  The same is true for the $10 dollar an hour laborer.  If his work isn’t worth those $10 dollars, he too, is terminated.  If the value received for the work is worth the cost of the work, neither the wage nor the salary is “disoriented.”  What is disoriented, to take this to its logical extreme, is to claim that washing dishes in the corner diner has the same value as the ability to put together deals that lead to the financing of an entrepreneur’s diner, or a chain of them.

Of course there are those who abuse the system, there are those who outright steal, there are those who hide behind the rules and/or obfuscation to obtain compensation out of proportion to the revenue their work produces.  However, these are corner cases or completely out of the envelope cases; they are not justification to claim that all high cost activities are socially valueless or that salaries are too high and unearned—or to claim that low wages are in some way too low.  They are justification only to let a free market correct the corner cases—the free market is a quite effective self-correcting system; they are justification only to let the legal system handle the out of the envelope cases—American jurisprudence, for all its presently Byzantine nature, remains both the best in the world, and on an absolute scale a quite effective system.

Thoughts on Privacy

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An individual’s right to privacy, that is to be confident that the things he wishes not to be exposed to the public will be kept to himself, is an inherent right of his existence, which acknowledgement is well rooted in our Constitution via the Bill of Rights’ 3rd Amendment barring the use of our homes by the government’s soldiers without our permission, the 4th Amendment’s more explicit acknowledgment of our right to “be secure in [our] persons, houses, papers, and effects” against the government’s prying eyes, the 5th Amendment’s self-incrimination bar, and the 9th Amendment’s acknowledgment that any right not explicitly assigned to the government remains in our hands.  Those roots are well fertilized by various Supreme Court decisions, including Griswold, Eisenstadt, Loving, and Roe.

Yet there is a growing move to reduce or eliminate that expectation, based on the increasing capability of technology to penetrate that privacy and on our increasing use of social media, and those technologies, to abrogate that expectation.  Indeed, questions are asked whether our individual privacy comes at too great a cost, or whether we have too much privacy.

People who want to meet us are only a click away via this or that social media.  It’s easy to join this or that group—even a useful group, such as a breast cancer survivor group—and that group wants us to join.  Therefore we’re obligated to do so?  Suppose we don’t want to meet that person?  Suppose we only want to interact with the group through private means and not publicly?  Or not at all?

I cannot think how the cost of privacy is too great given the costs from losing that privacy.  The question of too much privacy often is grounded in the premise that technology makes it easy to “share” our information, and that today such information has great value.  But the question elides certain critical additional questions that must not be ignored.

The ease of sharing as justification for forcing that sharing is on its face disingenuous.  As well insist that, since I can pick a locked file cabinet’s lock with a paperclip, I’m entitled (entitled!) to know the contents of the files in that cabinet.  Since I can open a door to my neighbor’s house, I’m entitled to enter it without that neighbor’s permission.

As to that value, the questions offered don’t address to whom that value applies.  That someone wants very badly, and so that information has great value to him, in no way justifies a requirement on my part to give him that information.  My information has value to me, also, and a lot of that value is bound up in the private nature of that information.  But I’ll pay a pretty penny, he says.  No, say I.  I decline to share my information.  Why not, he presses.  But this question is a non sequitur.  Indeed, to paraphrase Sir Thomas More, I will not say, and I will not say why I will not say.

I have no obligation to justify why I wish to maintain my privacy.  Indeed, that justification is part of my privacy.  But what am I hiding, some might ask.  My privacy, I answer.  And nothing more.

Why is privacy so important?  Honoring another’s privacy is to respect that other.  We don’t need to know every inner datum about another just to satisfy our own curiosity.  Further, privacy is critical to our liberties.  If we cannot be private in our affairs we cannot protect ourselves from an overreaching government.  We cannot prepare ourselves to respond to a government that goes too far, even with the best of intentions.  We cannot be free in our speech, for instance, if we cannot be private in our preparation of it, if we cannot make our decisions concerning what we will say publicly.  Aside from that, we have a property right in our privacy.  Any decision concerning the disposition of our privacy, or any part of it, is ours and ours alone.

If we cannot control our own privacy, we have no privacy.

We have transferred to government all the rights concerning our privacy it needs via those 3rd, 4th, and 5th Amendments, wherein we allow the government to penetrate our privacy under certain narrowly circumscribed conditions, with suitable government certifications to a court that the penetration is necessary.  No more control need be transferred to government or to our fellows.  No more private information need be transferred to government or to our fellows.

The technologies for penetrating our privacy can be valuable tools—get the appropriate court order or warrant and use the very latest technology to pierce the veil of privacy of a suspected terrorist.  The social media’s ability to make sharing our information with our friends and acquaintances, and potentially interesting strangers, is enormously valuable in its ability to facilitate the spread of useful information.  But that information must be voluntarily given.  It belongs to an individual until that individual decides for himself to publicize it.

Bank Bailouts

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There are weighty discussions going in in Europe over the need to prop up/bail out the Greek economy by guaranteeing Greek sovereign debt.  The argument goes this way: Greek banks, which have a vast portion of their assets in the form of Greek sovereign debt instruments, need that debt made good, or the banks will fail.  If the banks fail, the Greek economy fails.  Further, major banks central to the economies of other nations of Europe, both private financial institutions and national central banks, are major holders of Greek sovereign debt; if that debt is defaulted, those banks will fail.  Other economies of the EU—Portugal, Italy, and Spain (the remaining PIGS)—will fail if their banks, holding all that Greek debt, fail.  The financial institutions of sounder economies are also major holders of those remaining PIGS’ debt; if those economies fail, so do these additional banks, and the cascade continues.  So it’s necessary to prop up the Greeks, to prevent bankruptcy and default there, in order to prevent the cascade from getting started.

The argument in Europe currently is from the perspective that since this cascade must be so widespread in its final outcome, it is legitimate for taxpayers to be forced to bail out the failing banks (the current mechanism for this is for the taxpayers’ money to be used to increase the capitalization—the cash on hand—of the exposed banks, so they’re better able to handle the losses in the even of a Greek default; however, the specific pathway of committing taxpayer funds is irrelevant to this discussion), even of other countries: the taxpayers are only protecting themselves by doing this.

Let’s look at this from another perspective, though.  Is a mandated bailout truly necessary, or appropriate?

To answer this, we must first understand whose money will be used to recapitalize (let us say) those banks.  If governments, individually or behind the veneer of an EU demand, mandate the recapitalization, it will be the taxpayers of the constituent nations whose money will be used, including taxpayers of nations different from the nationality of the banks being recapitalized.

If, on the other hand, the market is left to recapitalize the banks, it will be the market participants, the citizens* of the constituent nations whose money will be used, including the participants/citizens of nations different from the nationality of the banks being recapitalized.

We see, though, that these are the same people in both cases; it is the same money being used in both cases.  We also readily see that a critical difference between the government and the market solutions is that with the market solution, the decisions will be made by the people whose money is being committed—or withheld—but with the government solution, those decisions to commit (and not withhold) are made by government, committing other people’s money by diktat.  We also see the nature of that diktat in this paraphrase by Spiegel International Online of Luxembourg Prime Minister Jean-Claude Juncker’s remarks, revealing EU leadership disparaging attitude toward democracy and the crass citizenry having any input:

The German parliament’s right to co-decision on important matters pertaining to the euro bailout is one of the reasons that the summit has been stretched out over a period of several days.  And while some have demonstrated sympathy for Merkel’s problems, others have been irritated by the extra burden the co-decision has created.  Berlin isn’t the only place with a parliament….

In the nature of free markets, though, the decisions will be made far more quickly and far more transparently if they’re made by those citizens themselves.  Any damage done by a Greek default (for instance) will be far more limited in its cascade effects and far more quickly repaired.

On the other hand, government cannot keep up with the changing market conditions or with the rapidity of failure when failure is in the offing.  We’ve seen how the governments of the EU have been unable to understand the European economic problem, for instance.  The European nations have vastly and repeatedly underestimated of the amount of money needed to bail out Greece: an original estimate of some €120 billion was discovered to be insufficient last summer, and it ballooned to an additional €110, or so, billion; now those governments are finding that to be insufficient, and estimating another—in addition to that summer estimate—€252 billion.

Finally, for all those efforts these last 2 years, a Greek default now is being arranged anyway: the latest attempt is for a write-down of Greek debt of 60%.  In addition to this is the conversion of the European Financial Stability Facility (EFSF), the original pool of funds for the bailout, into an insurance scheme wherein the existing €440 billion of the EFSF will be leveraged, via insurance bets, into a €1 trillion backstop.  Both by government mandate.

But these decisions are properly those of the investors whose money it is in a free society, not a decision handed down from on high by government(s).  Let the taxpayers, in their free markets, make these decisions.  Greek default may well have the cascade of failing banks described above, especially if taxpayers decline to keep feeding the bad decision-makers, decline to continue funding bad debt issuers, against the wishes of their governments (though I doubt it’ll be so bad as the doomsayers wail).  However, without government’s involvement, the decisions and the outcomes, via the pricing mechanisms of a free market, or even a centrally-guided (if not so much, anymore, centrally managed in the EU) market, will move much faster.  Results will be known much more quickly without governments in the way as middlemen.

Thus, those taxpayers—citizens—will, as is entirely appropriate, decide for themselves, via their Invisible Hand, who the winners and losers will be; who will, or will not, receive bailouts; they need no assistance from governments.  The pace of the free market may deepen the downturn from a Greek default and any potential cascade, but with taxpayers in a free market making the decisions, the recovery will be much faster, too, and it will rise far beyond the condition preceding the onset of the Greek problem.  Indeed, had Greece been allowed to default two years ago when the problem became apparent, both the Greeks and the EU would be on the path to recovery, growth, and prosperity today.

Out of the creative destruction of a bankruptcy in a free market grows a refreshed, stronger, more vibrant economic entity than before the bankruptcy—even at the national economy level.  And the lessons learned from the bankruptcy and recovery are enormously valuable.  Out of the destruction of a propped up entity that is not allowed to go through bankruptcy grows more widespread bankruptcy and destruction and a far broader, longer lasting economic dislocation—especially at the national, and continental, levels.  And the lessons missed by that intervention and impeded recovery would have been enormously valuable.

 

*For exposition purposes, I hold that private enterprise, including private/commercial financial institutions, are agents of their individual, citizen, owners, and so in the context of this discussion, I make no distinction between citizens and the businesses they operate.

Update: Clarified Juncker’s paraphrase by indenting it.

Holidays and Insensitivity, Follow-up

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A bit ago, I wrote about the apparent holiday insensitivity of a politically correct treatment of the fall holidays in a Massachusetts school.  In that post, I posed some questions to Dr Foley and Dr Pierantozzi concerning certain remarks they were quoted as having been made, in particular concerning Christopher Columbus, Thanksgiving, and Hallowe’en.  Dr Foley’s remarks were contained in an internal email to her school staff which had been obtained by Boston Herald columnist Jessica Heslam; Dr Pierantozzi’s remarks were made publicly in support of Dr Foley.   Separately, I emailed Ms Heslam, requesting access to that internal email from which she quotes.

Dr Foley’s original email is available here, courtesy of the SomervillePatch, and I’m providing it below.

From: Foley, Anne
Sent: Wednesday, October 05, 2011 7:44 AM
To: Kennedy School
Subject: our next holiday

When we were young we might have been able to claim ignorance of the atrocities that Christopher Columbus committed against the indigenous peoples of the “new” world.  We can no longer do so.  For many of us and our students celebrating this particular person is an insult and a slight to the people he annihilated.

On the same lines – we need to be careful around the Thanksgiving Day time as well.  For many people this was just one big happy meal.  We can talk about this more during grade level meetings today if you choose.

Anne

From this email, it’s plain that there was no ban on holidays at the school; there was only an intent to “spark discussion.”

Since then (the following Monday, in fact) Dr Foley has delivered an explanation via email and autocalling an explanation of her remarks in that internal email.  That message is provided below, also courtesy of the SomervillePatch.

This message is to address the Herald article and its aftermath that occurred this past Friday. As we all know anything posted on the internet has the potential to become public. The email I sent was addressed to Kennedy School staff with the intent of sparking an educational discussion on how we can address the multi-cultural perspectives on our upcoming holidays. If this message had been intended for a broader audience, I would have chosen less inflammatory words and provided more of a context for the message. I apologize if my words offended anyone – that was not my intent.

Please know that nothing has changed regarding the instruction and events planned at the Kennedy School this year. As always, teachers and classrooms address holidays as part of their curriculum. I support the outstanding staff at the Kennedy School who will continue to provide the best education for our students. I want to thank all of those who have offered me kind words.

Thank you.

It’s plain that errors occurred in this affair.  Dr Foley has already addressed hers.  Ms Heslam, however, seems to have taken remarks out of context and created a story where none, in fact, existed.  The rest of us, yours truly included, were too quick to jump on the anti-PC bandwagon and start screaming bloody murder.