The Ethical Barometer

Not so fast, Mr. Bremmer.  In comparing China and the United States, your categories on statist vs. rule of law are correct.  However, the United States’ political philosophy has shifted.  The facts and logic point to the U.S. as the statist nation. China renders the death penalty for bribery.  Thankfully, the United States does not go that far or we might lose a good portion of Congress and most municipalities. But China makes no bones about (more…)

In celebration of the release of the 234 episodes of “Leave It to Beaver,” the New York Times highlighted one of the show’s strengths:  lessons in ethics.  The show, which ran from 1957 through 1963, was a charmer. Beaver Cleaver showed us the challenges of doing the right thing.  In the first episode Beaver and his older brother Wally are shown leaning over a bathtub, dressed in their pajamas, swirling their hands in the water as the tub is filling. Beaver is worried because he has a note from his teacher and has not yet worked up the “guts” (more…)

The American Board of Internal Medicine (ABIM) has taken some sort of disciplinary action against 140 docs who cheated on their ABIM certification exams. In a lawsuit that the ABIM had filed previously against Arora Board Review, a company that does exam review courses for certification, the discovery process yielded information that proved to be more damaging for the docs than for Arora.[1]  The documents in the now-settled case included e-mails and other correspondence from the docs to Arora.[2]  The e-mails and correspondence revealed that the docs knew many of the questions (more…)

By now all that can be said about umpire Jim Joyce and his bad call that cost Detroit Tigers’ pitcher Armando Galarraga his perfect game has been said.  The Barometer knows little about baseball and even less about what constitutes a perfect game.  But, there was graciousness to Mr. Joyce’s admission that he blew the first-base call and a magnanimity to Mr. Galarraga’s acceptance that rules are rules and the ump’s decision stands.  GM gave Mr. Galarraga a Chevrolet Corvette for his grace.  The Barometer gives both Joyce and Galarraga a shout-out for demonstrating that contention, disputes, and litigation are but temporary fixes (more…)

The folks who post pictures of themselves hugging and chugging were outraged.  Why the things they were posting on their Facebook pages were showing up elsewhere on the web and were being used to generate advertising dollars.  Oh, what times are these when we realize there is no privacy on the web.  Hackers have been able to obtain the credit card numbers of millions and proceed to charge yachts (more…)

Just as Joseph Jett of Kidder Peabody followed Nick Leeson of Barings Banks, another trader will follow Jérôme Kerviel of Société Générale.  There will always be rogue traders in banks that turn a blind eye to under-achievers who defy all odds to produce gains that are inexplicable but always welcomed. The under-achievers are always thrown under the bus as diabolical thieves but as long as there is complicity in everything from lax internal controls to a blind eye, banks will foot the eventual losses that travel on the same side of the street as these too-good-to-be-true traders, aka (more…)

Enron managed to fool most of the people for a long time with its SPEs.  If you thought we were done with these beasts following changes in the accounting rules, well, think again.  The report on Lehman tells us the company was using SPEs that it controlled in order to shift bad investments off its books.  Oh, Lehman disclosed the shifts.  What it did not disclose was that it controlled the firms to whom it was doing the shifting.  There is always a loophole.  But, honor should keep us from using them.  The ethical issue here is leaving a false impression.  And Lehman, using SPEs, did so — indeed, all the way to bankruptcy.  Just like Enron.  Enough!

The Barometer feels like a Top-40 DJ.  By popular request, thoughts on the whirling, swirling, and twirling in Washington, DC.  First, the obvious.  Reasonable minds can differ on what to do about health care.  Second, don’t fret about the level of disagreement, citizen involvement, or desperate moves.  Know thy history. Realize representative democracy has always had its moments of passionate disagreement.  However, citizens will respect the winner of a tough battle only if the process is clean.  But, if the process is tainted . . . (more…)

He gets there on time. He plays. He hits. Derek Jeter broke Lou Gehrig’s record for hits in October 2009. The Barometer was reminded of this little-noted event because in the year of the Tiger and McGwire admissions there was some missed magic (more…)

Two days after B. Ramalinga Raju, co-founder and now former chairman of Satyam Computer Services, Ltd, admitted that he had cooked the books for years, Indian authorities arrested him and his brother and fired the company’s board.  On the same day, Robert Rubin finally managed to quit Citigroup after overseeing 18 months of turmoil at that company whilst shrugging his shoulders and muttering, “Who knew?”  Well, Rubin told a Fortune reporter that he tried to help people through the complexities of the mortgage markets but cautioned, “Myself, at that point, I had no familiarity with CDO’s.”  The then-Chairman of the Board and former Secretary of the Treasury admitted that he didn’t understand one of the basic instruments fueling his company’s earnings and growth.  Did it ever occur to him that it might be part of a job that has earned him $115 million since 1999 to find out?  (more…)

The Wall Street Journal ran a story that finds even the jaded Barometer shaking its head.  Many employers, lured in by consultants, have their job applicants take personality tests.  The tough questions on this test?  “You have to give up on some things that you start.” “You would like a job that is quiet and predictable.” and “Any trouble you have is your own fault.” The answers?  “Strongly agree,” “Agree,”  “Disagree,” and “Strongly Disagree.”  The test and the retailers’ preferred answers made their way onto the internet where job applicants studied them so that they could perform well on the “test.”

The companies should be ashamed for using such a silly screen.  And when you impose silly rules and requirements on employees (or potential employees), they cheat.  The applicants should be ashamed for not knowing enough to understand that the stores were looking for shopping channel personnel:  go, go, go, sell, sell, sell, up with America etc. Did the retailers ever think that perhaps those who tend to be thoughtful and would fail the silly test might just be what they need in an employee?  The Barometer has an idea for a screening test. (more…)

Illinois Governor Rod Blagojevich and his coiffure appointed former Illinois attorney general, Roland Burris, to fill the Illinois Senate seat vacated by president-elect Barack Obama.  Illinois’s Secretary of State said he would not certify the appointment.  Harry Reid et al. threatened (for a few days anyway) to not seat Mr. Burris.  Oh, the weeping, wailing, and gnashing of teeth, along with the legal challenges.  Dear friends, this series of events and bottomless Bermuda Triangle are what we get when there are loopholes.  The governor, under cloud though he may be, is still the governor.  He has the authority to appoint a replacement.  If that replacement is qualified, the Secretary of State must certify.  The U.S. Senate must then seat those who are certified by their states for Senate seats. 

You have here your basic series of events born of loopholes that no one could anticipate and which are not closed easily.  When there are such loopholes, we depend on moral restraint, sweet ethics, (more…)

On November 17, 2008, when the CEOs of Chrysler, Ford, and GM scurried from their private jets to ask Congress for a bail-out, they were asked if they would be willing to follow the Lee Iacocca model and take $1 in salary whilst their companies struggled for air.  Bob Nardelli of Chrysler said he’d take the pledge.  Neither Alan Mulally nor Rick Wagoner would join in for the salary cut.  The Barometer reminds readers that Mr. Nardelli was the fellow hooted out of Home Depot by shareholders who lambasted him at the May 2006 annual meeting for his excessive pay. The Home Depot board didn’t even show up for the contentious annual meeting.  Mr. Nardelli took no questions that day, listened for 30 minutes, and then shut the meeting down.  He offered no explanation for the lack of correlation between Home Depot’s poor performance and his stellar pay (a skill set he obviously brought along with him to Chrysler, i.e., the old low-earnings, stock-in-the-tank, but high-pay model of management). The board, however, found its backbone following the annual meeting and sent Mr. Nardelli packing, with a $210-million-pay-package.  And to really show him, the board added in another $20 million.  Oh, what times are these when boards can lop on extra pay to punish executives who send a company’s stock diving. They fixed his wagon. Small wonder Mr. Nardelli can take a buck in pay for a year or two.  ’Tis a sad day in Congress and in business when Mr. Nardelli proves to be the most sensitive guy in the room.    

The late scholar, Robert Solomon, had a list of 33 admirable characteristics of those who are really trying to live the ethical way, or as it was known in days of yore, the examined life.  The list was published in his book, A Better Way To Think About Business.  Two of the qualities were “caring” and “graciousness.”  President-elect Obama, in his first news conference, was asked if he had spoken to the living presidents.  Mr. Obama laughed and joked with the press, “I didn’t want to get into a Nancy Reagan thing about, you know, doing seances.”  The press was giddy with a glee the Barometer heard even over the AM car radio.  (more…)