tag:blogger.com,1999:blog-43975519232818369872024-03-13T00:32:12.199-04:00ETHICS@FORDHAMThe Unofficial Blog of "Ethics in Business" (class sections taught by Miguel Alzola)Unknownnoreply@blogger.comBlogger74125tag:blogger.com,1999:blog-4397551923281836987.post-73296319698358661412014-01-02T09:36:00.002-05:002014-01-02T09:39:10.773-05:00New Year, New Market<embed allowfullscreen="true" allowscriptaccess="always" background="#000000" flashvars="pType=embed&si=254&pid=Yz1VBNY02z1M&url=0" height="279" salign="lt" scale="noscale" src="http://www.cbsnews.com/common/video/cbsnews_player.swf" type="application/x-shockwave-flash" width="425"></embed><br />
For more than 70 years, the sale of marijuana for recreational use has
been criminally prohibited in the United States. But the ban, as it has
existed for decades, ended the first day of 2014 in Colorado.<br />
Voters in Washington state also approved recreational marijuana but the state's recreational marijuana shops are expected to open later in the year.<br />
Uruguay also became the first country in the world to create a legal, regulated marijuana market for adults in 2013.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-84472467526208099562013-12-29T18:23:00.001-05:002013-12-29T18:23:16.817-05:00Price discrimination<iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/f4TVRPvFGt0?rel=0" width="560"></iframe><br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-21666744814792566952013-12-19T21:52:00.000-05:002013-12-19T21:52:05.405-05:00The virtues of disclosure<iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/yjeZcQEOEdo" width="560"></iframe> For years, pharma firms have paid doctors to speak on behalf of their products at professional conferences and meetings, in the understanding that it is potent tool to persuade doctors. For years, this practice has been criticized on the grounds that it unduly influences the information doctors give each other and the possibility of prescribing drugs inappropriately (or for the wrong reasons). But the practice was and is legal. Now, with the Obama administration’s health care law, such practices and payments by pharmaceutical companies must be made public next year. And apparently that has made Glaxo announce, this week, that by 2016, they will no longer pay health care professionals to speak on its behalf “to audiences who can prescribe or influence prescribing.” Glaxo will no longer provide direct financial support to doctors to attend medical conferences, a practice that is prohibited in the United States (through an industry-based ethics code) but still allowed in other countries. According to the NYT's report (<a href="http://www.nytimes.com/2013/12/17/business/glaxo-says-it-will-stop-paying-doctors-to-promote-drugs.html?pagewanted=1&_r=2&nl=todaysheadlines&emc=edit_th_20131217&adxnnlx=1387476378-TzC2j8I0PAoB0Atvo49qeA">here</a>), a handful of drug makers are adopting similar actions for several reasons, "including concerns about the reaction to the required disclosure of such payments that will begin next fall under a provision of the health care law."<br />
Glaxo also announced it will extend its new integrity initiatives to its global business: for example, beginning in 2015, it will no longer compensate sales representatives based on the number of prescriptions doctors write. Instead, its sales representatives worldwide would be paid based on their technical knowledge, the quality of service they provided to clients, and the company’s business performance.<br />
These initiatives may help improving the relationships between pharma firms as physicians. Dr. Raed Dweik, the new chairman of the conflict of interest committee at the Cleveland Clinic is quoted saying that he, as a physician, often meet with the pharma firm's sales reps and that they come in armed with information about he that he does not even know, like the number of prescriptions he has written for the drug company’s product: “I feel that’s not really a comfortable interaction to have.”<br />
My colleagues, however, are not so confident about the potential of disclosure requirements. You can check the work by Daylian Cain about how disclosure helps conflicted advisors and harms their advisees. For example, he found that advisors feel comfortable giving more biased advice, but advisees do
not properly adjust for this and so fail to discount
biased advice (<a href="http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.423">here</a>).<br />
<iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/n8Y8FK8gonc?rel=0" width="560"></iframe> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-45516616978554616742013-12-13T10:02:00.000-05:002013-12-13T10:02:50.021-05:00Moral virtues make the difference<iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/Wg8ZyaN7msw?rel=0" width="560"></iframe> Many things have been said about Mandela during the last week. One of the pieces I really liked was the one written by journalist John Carlin (<a href="http://www.parade.com/25678/johncarlin/a-journalists-tribute-to-nelson-mandela-the-reason-why-he-will-live-forever/">here</a>). His central thesis is that defining characteristic of Nelson Mandela, about and beyond his actions, was a crucial feature of his personality. As Carlin puts it, “The thing about Mandela,” he said, “is that you can’t see the cracks.”<br />
Technically, we call that moral integrity. And the whole article is providing evidence in support of the claim that Mandela was a man of integrity. Those who believe that virtues do not exist, that situations rule our behavior, should read this piece and try to find a compelling explanation for why Mandela did what he did without appealing to his personality. They will have a hard time. <br />
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-46396705779130886412013-11-27T11:21:00.000-05:002013-11-27T11:21:00.962-05:00Pope Francis teaches business ethics<div class="separator" style="clear: both; text-align: center;">
<a href="http://i.dailymail.co.uk/i/pix/2013/11/07/article-0-1939ED2E00000578-412_634x399.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="251" src="http://i.dailymail.co.uk/i/pix/2013/11/07/article-0-1939ED2E00000578-412_634x399.jpg" width="400" /></a></div>
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Yesterday, Pope Francis released his “Evangelii Gaudium” (the Joy of the Gospel), an
apostolic exhortation (which is less authoritative than an encyclical, but an
important statement). The document is, above all, an ethics piece. And it has a lot of overlap with our course contents, especially with the justification of capitalism, the purpose of business firms, and the dangers of moral relativism. Here are some of key quotes from “Evangelii Gaudium”:<br />
<br />
On moral relativism:<br />
"As the bishops of the United States of America have rightly pointed out,
while the Church insists on the existence of objective moral norms
which are valid for everyone, ‘there are those in our culture who
portray this teaching as unjust, that is, as opposed to basic human
rights. Such claims usually follow from a form of moral relativism that
is joined, not without inconsistency, to a belief in the absolute rights
of individuals. In this view, the Church is perceived as promoting a
particular prejudice and as interfering with individual freedom’. We are
living in an information-driven society which bombards us
indiscriminately with data – all treated as being of equal importance –
and which leads to remarkable superficiality in the area of moral
discernment. In response, we need to provide an education which teaches
critical thinking and encourages the development of mature moral values."<br />
<br />
On inequality:<br />
"How can it be that it is not a news item when an elderly
homeless person dies of exposure, but it is news when the stock market
loses two points? This is a case of exclusion. Can we continue to stand
by when food is thrown away while people are starving? This is a case of
inequality. Today everything comes under the laws of competition and
the survival of the fittest, where the powerful feed upon the powerless.
As a consequence, masses of people find themselves excluded and
marginalized: without work, without possibilities, without any means of
escape."<br />
<br />
On libertarianism: <br />
"In this context, some people continue to defend trickle-down
theories which assume that economic growth, encouraged by a free
market, will inevitably succeed in bringing about greater justice and
inclusiveness in the world. This opinion, which has never been confirmed
by the facts, expresses a crude and naïve trust in the goodness of
those wielding economic power and in the sacralized workings of the
prevailing economic system." <br />
<br />
On financial markets: <br />
"While the earnings of a minority are growing exponentially,
so too is the gap separating the majority from the prosperity enjoyed by
those happy few. This imbalance is the result of ideologies which
defend the absolute autonomy of the marketplace and financial
speculation. Consequently, they reject the right of states, charged with
vigilance for the common good, to exercise any form of control. A new
tyranny is thus born, invisible and often virtual, which unilaterally
and relentlessly imposes its own laws and rules.<br />
<br />
On the rule of market: <br />
"In this system, which tends to devour everything which
stands in the way of increased profits, whatever is fragile, like the
environment, is defenseless before the interests of a deified market,
which become the only rule."<br />
<br />
On state regulation: <br />
"A financial reform open to such ethical considerations would
require a vigorous change of approach on the part of political leaders.
I urge them to face this challenge with determination and an eye to the
future, while not ignoring, of course, the specifics of each case.
Money must serve, not rule! The Pope loves everyone, rich and poor
alike, but he is obliged in the name of Christ to remind all that the
rich must help, respect and promote the poor."Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-4397551923281836987.post-81033875353916955812013-11-07T10:47:00.000-05:002013-11-07T10:47:44.849-05:00Halloween and Insider Trading<div class="separator" style="clear: both; text-align: center;">
<a href="http://freefever.com/stock/free-halloween-desktop-background-into-painting.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="250" src="http://freefever.com/stock/free-halloween-desktop-background-into-painting.jpg" width="400" /></a></div>
It does not fail. Each time I teach insider trading there is a piece by a libertarian intended to show why it is harmless and hence should not be made illegal. This op-ed by Tim Harford (The Undercover Economist) appeared in the Financial Times last week: <a href="http://www.ft.com/intl/cms/s/2/6a23c7e2-40e3-11e3-ae19-00144feabdc0.html#axzz2jsITamO0">What’s so scary about insider trading?</a><br />
<br />
"It was Halloween on Thursday, so let’s meet a frightening ghoul who haunts our financial markets: the insider trader. The Halloween metaphor is not mine but that of economist Donald Boudreaux, who asks if the insider trader is a genuinely dangerous monster or a comical apparition in a fright mask, fit only for the scaring of children."<br />
<br />
This is a summary of the reasons why insider trading should not be illegal according to Prof. Boudreaux:<br />
<ol>
<li>despite intensive monitoring, it’s hard to detect and even harder to prove. People with inside information can profit by not taking action and that is undetectable.</li>
<li>market prices are supposed to reflect all available information, the better to allocate capital and insider trades simply accelerate the process. </li>
<li>insider trading is a crime without a victim</li>
</ol>
Some arguments in favor of banning insider trading are more compelling, though. Take a look at Prof. Strudler's piece on the law of insider trading (click <a href="http://journals.gmu.edu/PPPQ/article/view/105">here</a>). Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-4397551923281836987.post-8757597369387250712013-11-06T09:33:00.003-05:002013-11-06T09:33:39.619-05:00Honesty and honest behavior<div class="separator" style="clear: both; text-align: center;">
<a href="https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTdQBr_K9KZ2IAcHQdC8zcS5Isrww8aNyqXWfCE12Yn-EKQdI5VCw" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="122" src="https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTdQBr_K9KZ2IAcHQdC8zcS5Isrww8aNyqXWfCE12Yn-EKQdI5VCw" width="400" /></a></div>
The Financial Times is inadvertently endorsing virtue ethics in business (at least today). The "excuse" is <a href="http://www.ft.com/intl/cms/s/0/101e6226-4524-11e3-997c-00144feabdc0.html?siteedition=uk#axzz2jsITamO0">the failure of the Co-operative Group in the UK</a>. The bank is announcing a restructuring. The restructured company’s articles of association will include a commitment to moral behavior. The justification, in the end, is that honesty is the best policy. But the FT reporter (<a href="http://www.ft.com/intl/cms/s/0/6ff46438-42eb-11e3-8350-00144feabdc0.html?siteedition=intl#axzz2jsITamO0">here</a>) is skeptical about it. He writes:<br />
"The slogan that good business is profitable business is superficial – an attempt to make moral dilemmas dissolve in a warm bath of goodwill. When the right thing to do is also in your own self interest, you do not need advice from philosophers and theologians. Ethics are about what to do when good behaviour and profitable business are not necessarily the same thing."<br />And then he goes to make a difference between honesty and honest behavior:<br />
"the difference between the honest man and the man for whom honesty is the best policy. When you deal with the man for whom honesty is the best policy, you never know when it might be the occasion on which honesty is no longer the best policy. Bankers, not bishops, deliver lectures extolling their own personal integrity; the man who repeatedly reminds us how honest he is rarely acquires, or deserves, our trust. The integrity we value is a personal or organisational characteristic, not a business strategy."<br />
So, he concludes, "if honesty is the best policy then the best policy is to be honest from conviction."Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-4397551923281836987.post-27638489991234703212013-11-05T19:24:00.000-05:002013-11-05T19:24:02.408-05:00Courage<div class="separator" style="clear: both; text-align: center;">
<a href="http://news.bbcimg.co.uk/media/images/70763000/jpg/_70763341_kt_624_624.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="http://news.bbcimg.co.uk/media/images/70763000/jpg/_70763341_kt_624_624.jpg" width="320" /></a></div>
A moving story about courage and kindness at the BBC website (<a href="http://www.bbc.co.uk/news/magazine-24653643">here</a>).<br />
Back in 1996, Keshia Thomas, then a teenager saved the life of a man believed to be a white supremacist affiliated with the KKK from an angry mob (see the pic above). Her explanation is revealing: "When people are in a crowd they are more likely to do things they would
never do as an individual. Someone had to step out of the pack and say,
'This isn't right.'"<br />
Today, Keshia keeps committed to make a difference:<br />
"The biggest thing you can do is just be kind to another human being.
It can come down to eye contact, or a smile. It doesn't have to be a
huge monumental act."<br />
<br />Unknownnoreply@blogger.com5tag:blogger.com,1999:blog-4397551923281836987.post-56422033319433053912013-11-04T21:59:00.003-05:002013-11-04T21:59:34.944-05:00Investing in or giving back?<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="http://graphics8.nytimes.com/images/2013/10/27/business/dealbook/27goldman-chart/27goldman-chart-articleInline.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="http://graphics8.nytimes.com/images/2013/10/27/business/dealbook/27goldman-chart/27goldman-chart-articleInline.jpg" width="195" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br /></td></tr>
</tbody></table>
According to <a href="http://dealbook.nytimes.com/2013/10/26/goldman-sachs-buying-redemption/">this NYT report</a>, Goldman Sachs gave $241.3 million to charity, making the firm the fourth-largest corporate giver
in America. Goldman Sachs has been one of the leading corporate philanthropists in the last five years. Since 2008, the firm has given away more than $1.6 billion, in a remarkable effort to change its tarnished reputation. Whether that works or not is something to be decided but, apparently, it is creating bad feelings between the bank - which has been cutting back sharply on expenses - and the Goldman Sachs Foundation- which is giving the money away. Communication is also an issue: an employee is quoted saying that the philanthropy program is “run as if it’s a Broadway show,” against Goldman Sachs' culture of discretion.
<br />
Another, major, concern is voiced by Warren Buffett,
whose holding company is one of Goldman’s largest
shareholders. He is troubled by the principle of large-scale corporate philanthropy because, as Milton Friedman used to say, this money comes out of shareholders’ pockets. Buffett reportedly added that "he didn’t look up how much Goldman gave
to charity when he bought a giant stake in the firm during the depths of
the financial crisis, and that Goldman’s generosity — or lack of it —
has never factored into any investment decision he has made." The firm is giving to charity much more than before the real
estate collapse now that corporate charitable donations are going down in the USA.<br />
Motivations? This is what the reporter tells us:<br />
"At the time Goldman started the program it made no public connection
between the largest single charitable contribution in its history and
public anger over its role in the financial crisis, but it was clear the
money was part of the price of reputation reclamation."<br />
Results? We need to wait a bit more but apparently it does help bolstering the firm's reputation. Malene Barnett, who graduated from one of the prograns funded by Goldman Sachs, has changed her opinion about Goldman: “All I knew before was a lot of people there made a lot of money... Now I see they are trying to give back. Before I didn’t have
that impression but I believe now they are really trying.” Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-4397551923281836987.post-45259384848369910302013-10-24T22:49:00.001-04:002013-10-24T22:49:06.464-04:00The ethics of employment termination<div class="separator" style="clear: both; text-align: center;">
<iframe allowfullscreen='allowfullscreen' webkitallowfullscreen='webkitallowfullscreen' mozallowfullscreen='mozallowfullscreen' width='320' height='266' src='https://www.youtube.com/embed/l1xS14yLVG0?feature=player_embedded' frameborder='0'></iframe></div>
Legally OK. Morally OK? Why?Unknownnoreply@blogger.com5tag:blogger.com,1999:blog-4397551923281836987.post-12498200528011547722013-10-23T16:02:00.000-04:002013-10-23T16:02:05.457-04:00Do bankers need biz ethics training?<div class="separator" style="clear: both; text-align: center;">
<a href="http://i.telegraph.co.uk/multimedia/archive/02597/Ethical-bank-carto_2597056b.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="226" src="http://i.telegraph.co.uk/multimedia/archive/02597/Ethical-bank-carto_2597056b.jpg" width="400" /></a></div>
According to a recent post at the WSJ (click <a href="http://www.ft.com/intl/cms/s/2/57debbc2-302c-11e3-9eec-00144feab7de.html#axzz2i1nKjSFb">here</a>) 98,000 employees of Deutsche Bank, 13,000 senior bankers at Goldman Sachs and 140,000 staff members at Barclays are being taken through ethics programs, which are aimed at
reinforcing codes, values, and behavior. This is in response to the scandals and reputational blows at the three banks. The debate is centrally connected to our discussion on corporate governance and accountability. And it is also about the effectiveness of ethics training in the workplace and in the financial industry.<br />
The report states that if team members at
Deutsche Bank score less than 80% in a
mandatory online test on compliance, they are red-flagged to their
team leader and their career could be affected. And at
Goldman Sachs, senior bankers have to spend hours
debating a fictional case study about a big player on the brink of collapse.<br />
At Barclays, CEO Antony Jenkins set out the bank’s “Transform” program after the Libor scandal. Sessions for senior leaders "take place in a room at
headquarters styled like a Roma agora to encourage open discussion". Staff members start watching <a href="http://group.barclays.com/about-barclays/about-us#barclays-history">this clip</a> (take a look at it). Then, they engage in case studies sessions which
echoes the sort of dilemmas they face daily. They are also asked to vote on the best action after
watching video scenarios like the ones we examine in class. Barclays’ workshops are reportedly led by 1,500
“values leaders” trained by a faculty of
outside experts. Besides training, they need to change the structure of incentives and the organizational culture. They should measure "good conduct" and they should give
it weight in bonus decisions, for example.<br />
Mr. Jenkins argues that “I’ve been clear that
[this] is a five to 10-year journey, so this isn’t sprinkling a bit of
PR magic and life suddenly gets better.” Humm...
Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-4397551923281836987.post-77294242265520110662013-09-26T10:46:00.000-04:002013-09-26T10:46:38.627-04:00Larry Summers, again and again<div class="separator" style="clear: both; text-align: center;">
<a href="http://www.examiner.com/images/blog/EXID15870/images/Rubin,_Greenspan,_Summers,_Time.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="400" src="http://www.examiner.com/images/blog/EXID15870/images/Rubin,_Greenspan,_Summers,_Time.jpg" width="302" /></a></div>
Here is Larry, again. Before his appointment as Harvard President, when he was chief economist at the World Bank (yes, he never served as a trainee... after all he was the nephew of Paul Samuelson and Kenneth Arrow!) - he wrote the following memo:<br />
<br />
“Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the less developed countries? I can think of three reasons:<br />
1. The measurement of the costs of health-impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health-impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.<br />
2. The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost ... Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world-welfare enhancing trade in air pollution and waste.<br />
3. The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity ... Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing.<br />
The problem with the arguments against all of these proposals for more pollution in least developed countries (intrinsic rights to certain goods, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.”<br />
<br />
(quoted from "Economic Analysis, Moral Philosophy and Public Policy" by Daniel Hausman and Michael McPherson).<br />
<br />
The memo was intended for internal World Bank use only. It caused a public commotion when The Economist leaked it to the
public. And, BTW, no professional economists has seriously questioned the "impeccable" economic logic of this argument. When asked about the memo, Summers responded to the reporter: "I think the best that can be said is to quote La Guardia and say, "When I make a mistake, it’s a whopper.’" Yes. Believe or not, that is what he said.<br />
I will not use adjectives to describe Larry Summers (I may succumb to FAE). I will simply ask you to remember what we learned about the stages of the decision-making process. Remember the first step: moral awareness. Unknownnoreply@blogger.com6tag:blogger.com,1999:blog-4397551923281836987.post-8851339773837538342013-09-19T09:46:00.000-04:002013-09-19T09:46:04.672-04:00Larry's explanation of gender inequality<iframe allowfullscreen="" frameborder="0" height="281" src="//www.youtube.com/embed/ElwZkaymX5I?rel=0" width="500"></iframe><br />
The race is over. Last Sunday, Larry Summers sent President Obama a letter withdrawing his name from consideration to be the next chairman of the Federal Reserve. Summers, a former Harvard President who served in the Obama White House as director of the National Economic Council until 2010, was the front-runner to succeed Ben Bernanke at the Federal Reserve Board. Until Sunday. <br />One of the critical factors that explain his withdrawal was an old speech he made at the 2005 National Bureau of Economic Research conference. Summers provided there an explanation for the underrepresentation of
female scientists at top universities, namely, the natural
differences between men and women. Here is a small fragment of his controversial comments (clicking <a href="http://www.harvard.edu/president/speeches/summers_2005/nber.php">here</a> you access the full version)<br />
<i>"(...) It does appear that on many, many different human attributes—height, weight, propensity for criminality, overall IQ, mathematical ability, scientific ability—there is relatively clear evidence that whatever the difference in means—which can be debated—there is a difference in the standard deviation, and variability of a male and a female population."</i><br />
The storm surrounding Summers' hypothesis lead to his resignation from Harvard in 2006. And now that he was running for the Federal Reserve, these words made at least five Democrats on the Senate Banking Committee say they would vote against even bringing Summers's nomination to the floor. A coalition of progressive groups spearheaded by the National Organization for Women and Ultraviolent pushed hard against his nomination, and more than 450 economists signed onto a letter to support his rival, Janet Yellen, currently vice-chair of the Fed.<br />
Other economists do not disagree with Summers's assertion, though. Watch the clip above. Featuring Steve Levitt, Distinguished Professor of Economics at the University of Chicago.<br />
<br />
Anyway, we will keep talking about Summers this semester. Here we have a kick-off piece to begin the conversation on inequalities, their explanations, and (possible) moral justifications. Enjoy it! <br />
<br />Unknownnoreply@blogger.com9tag:blogger.com,1999:blog-4397551923281836987.post-44458914293324176472013-09-11T08:24:00.001-04:002013-09-11T11:35:48.503-04:00September 11, Business, and Politics <iframe allowfullscreen="" frameborder="0" height="281" src="//www.youtube.com/embed/aeO_lsYldU4?rel=0" width="500"></iframe> <br />
Today is September 11. Chile commemorates the most tragic day of its modern history,
culminating a week of remembrances dedicated to the 40th anniversary of
the most brutal military coup. Forty years ago, democratically elected President Salvador Allende was toppled by general Augusto Pinochet, earlier chosen by Allende to lead the Chilean army.<br />
The videos and pictures of that September 11 are startling. The whole Chilean army, with the support of the CIA and DIA, against a defenseless old man and 22 followers. Declassified documents related to the military coup (they were declassified during the Clinton administration) have shown the involvement of the CIA and the USA Defense Intelligence Agency. Allegedly, the CIA and DIA secured the missiles used to bombard the La Moneda Palace (the Chilean White House). Yes, the Chilean Air Force bombarded the La Moneda palace with Allende and his 20 supporters inside! <br />
The declassified documents also show that powerful American business
leaders like David Rockefeller were active supporters of the military
coup. Indeed, according to Edward Korry, former U.S.A. ambassador to
Chile in 1973, <a href="http://www.theguardian.com/business/1998/nov/08/observerbusiness.theobserver">Rockefeller and other prominent business leaders from the copper industry, played a key role in the military plot</a> with the collaboration of the USA President Richard Nixon and his Secretary of State Henry
Kissinger. More than 3,200 people - not only political dissidents and Allende's supporters - were killed or disappeared between 1973 and
1990. 40,000 Chileans survived
political
imprisonment and torture. At least 262 people have been sentenced for
human rights violations in Chile, according to figures from Amnesty
International. <br />
Americans have other, strong reasons, to commemorate September 11. But we should not forget <a href="http://www.forbes.com/sites/jameshenry/2011/09/10/the-other-september-11/">the other, the first, September 11</a>. And <a href="http://www.thenation.com/article/176035/chileans-confront-their-own-911#axzz2ea5WOeZ0">the role of business in it</a>. The "Chilean economic miracle", announced and praised by the Wall Street Journal at the time, was only possible through brutal political repression and massive human right violations. <br />
Just prior to the capture of the presidential palace, President Allende made his famous farewell speech to Chileans on live radio (Radio Magallanes). The president spoke of his love for Chile and that he would not take an easy way out or be used as a propaganda tool by the traitors. That he would pay with his life the loyalty of the Chilean people. The radio address was made while gunfire and explosions were clearly audible in the background. Right after, reportedly, he shot himself. But he did not surrender the government elected by the Chilean people.<br />
His last words:<br />
<iframe allowfullscreen="" frameborder="0" height="375" src="//www.youtube.com/embed/xZeEfXjTNu4?rel=0" width="500"></iframe> <br />
<i>"Workers of my country, I have faith in Chile and its destiny. Other men
will overcome this dark and bitter moment when treason seeks to
prevail. Keep in mind that, much sooner than later, the great avenues
will again be opened through which will pass free men to construct a
better society. Long live Chile! Long live the people! Long live the
workers!"</i>Unknownnoreply@blogger.com6tag:blogger.com,1999:blog-4397551923281836987.post-54316849973265725992013-09-04T08:10:00.000-04:002013-09-04T08:10:45.002-04:00Lost wallets and character evaluationsThis is the story we discussed in class yesterday (from Huffington Post):<br />
KINGSTON, N.Y. -- Hassel Junior Barber lives on the streets of Kingston by choice. He sleeps in doorways and on stoops. And, police say, he's an honest man.<br />
Barber found a wallet plopped down on a sidewalk Sunday in the Hudson
Valley city. Inside: $485. Money, Detective Lt. Thierry Croizer said,
that Barber certainly could have used for food, shelter, clothes. Instead, the 50-year-old homeless man marched the wallet to the police station and turned it in. No reward needed. "He told us that he did not want anything in return," Croizer said
Wednesday. "That he did it because it was the right thing to do, and
those are his words, the right thing to do."<br />
In a tough town sometimes scarred by serious crime, Croizer said he
wanted to publicize a "feel good" story, and hopes people learn the same
lesson he did when he dealt with Barber on a new level.<br />
"It made me reevaluate my perception of people, my first instinct, when I first observe someone," Croizer said.<br />
<br />
<iframe frameborder="0" height="330" scrolling="no" src="http://eplayer.clipsyndicate.com/embed/iframe?aspect_ratio=3x2&auto_next=0&auto_start=0&page_count=10&pf_id=9606&pl_id=21399&rel=3&show_title=0&va_id=4163796&volume=8&windows=1" width="425"></iframe><br />
<br />
This coming Friday, we will discuss why Detective Croizer is not entitled to say that.Unknownnoreply@blogger.com8tag:blogger.com,1999:blog-4397551923281836987.post-15991694577039981912013-07-15T11:10:00.001-04:002013-07-15T11:10:18.857-04:00The market for government espionage<div class="separator" style="clear: both; text-align: center;">
<a href="http://media.winnipegfreepress.com/images/648*436/snowdenHONG.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="268" src="http://media.winnipegfreepress.com/images/648*436/snowdenHONG.jpg" width="400" /></a></div>
For years we have criticized Chinese information policies and praised Google and other IT firms for leaving China in defense of the right to privacy and information. But then Edward Snowden came to the scene. And a noxious multimillion-dollar market has emerged, as Anne Flaherty shows in a recent piece for AP (see <a href="http://bigstory.ap.org/article/price-surveillance-govt-pays-snoop">here</a>). AT&T charges a $325 activation fee for each wiretap (plus $10 a day to maintain it). Verizon records are more expensive: $775. Numbers climb quickly. One narcotics case in New York in 2011 cost the government $2.9 million alone. Is this the best way to spend tax-payers money? Is it true that Google and other firms are indeed serving intelligence purposes like any of its Chinese competitors?<br />
In any case, be careful! Your email records may be only $25 worth!Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-56737576439913951662012-10-25T14:03:00.000-04:002012-10-25T14:03:00.775-04:00What is wrong with Armstrong?<div class="separator" style="clear: both; text-align: center;">
<a href="http://estaticos.elmundo.es/elmundodeporte/imagenes/2012/08/24/ciclismo/1345777121_2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="265" src="http://estaticos.elmundo.es/elmundodeporte/imagenes/2012/08/24/ciclismo/1345777121_2.jpg" width="400" /></a></div>
Lance Armstrong is (was?) the most successful cyclist in modern sporting history. But soon after the US Anti-Doping Agency showed how he and his team "ran the most sophisticated,
professionalized and successful doping program that sport has ever seen" (<a href="http://cyclinginvestigation.usada.org/">here</a>), Nike terminated his contract (<a href="http://nikeinc.com/news/nike-statement-on-lance-armstrong">here</a>), he was forced to step down as chairman of his Livestrong charity (<a href="http://www.slate.com/blogs/trending/2012/10/17/lance_armstrong_nike_livestrong_doping_cyclist_forced_out_of_his_own_charity.html">here</a>), and he is said to "a cheating bastard..." among other epithets (<a href="http://www.dailymail.co.uk/sport/othersports/article-2220775/Daley-Thompson-calls-cycling-banned-Olympics-Lance-Armstrong-scandal.html">here</a>). <br />
Now, we are talking about cycling and doping. Of 21 podium finishers in the Tour de France between 1999 and 2005, 20 were directly linked to doping (<a href="http://blog.practicalethics.ox.ac.uk/2012/10/the-ban-on-doping-not-armstrong-is-the-problem-with-cycling-armstrong-is-a-scapegoat-for-cyclings-hypocrisy/#more-4750">here</a>). We are talking about competitive team sports, where it is acceptable to do things you are not supposed to do when you play alone or with your friends. There is room for both a defense of doping and a defense of cheating in professional team sports. There is no room, though, for lying. And that should be the main charge to Mr. Armstrong.<br />
<br /><br />Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-4397551923281836987.post-61079806762701848352012-04-20T09:31:00.000-04:002012-04-20T09:31:15.012-04:00Good pay and obscene pay<div class="separator" style="clear: both; text-align: center;">
<a href="http://media.salon.com/2011/10/ows-protest-460x307.jpg" imageanchor="1" style="margin-left:1em; margin-right:1em"><img border="0" height="307" width="460" src="http://media.salon.com/2011/10/ows-protest-460x307.jpg" /></a></div>
Citigroup shareholders rebuffed this week Citi’s $15 million pay package for its chief executive, Vikram S. Pandit. This is the first time that shareholders have united in opposition to outsized compensation at a financial giant. That is why this news deserves attention. According to the <a href="http://dealbook.nytimes.com/2012/04/17/citigroup-shareholders-reject-executive-pay-plan/?nl=todaysheadlines&emc=edit_th_20120418">NYT</a>, about 55 percent of the shareholders voting were against the plan, which laid out compensation for the bank’s five top executives. Disapproval is not common. In 2011, shareholders at only 42/3000 companies voted against pay plans. So, this looks like the beginning of emancipation. David Dreman, whose money management firm owns about $400,000 worth of Citigroup shares, is quoted arguing that “Shareholders have finally done something constructive on the whole C.E.O. pay problem.” And Brian Wenzinger, a Philadelphia money management company that voted against the pay package said: "C.E.O.’s deserve good pay but there’s good pay and there’s obscene pay." A few more quotes from the same piece:
Mike Mayo (Credit Agricole Securities): “This is a milestone for corporate America. When shareholders speak up about issues on which they’ve been complacent, it’s definitely a wake-up call. The only question is what took so long?”
But you should not be misled... this is not part of the initiative to reduce executive compensation. The same piece makes clear that shareholders voted against the pay proposal because it "lacked rigorous goals to incentivize improvement in shareholder value," according to ISS Proxy Advisory Services. Apparently, "Citigroup has had the worst stock price performance among large banks over the last decade but ranked among the highest in terms of compensation for top executives."
Mr. McCauley, a senior officer at the Florida State Board of Administration, which voted against the plan, argues that “the plan put forth reveals a disconnect between pay and performance.” Calpers, the California state pension fund, also voted against because pay was not linked to performance. And even those who were in favor were on the same page: Mr. Ackman, head of Pershing Square Capital Management, argues that the CEO Vikram Pandit "is doing an excellent job and the bank has made tremendous progress during his tenure.”
So, even if framed this way, this "rebuke" is not part of the <a href="http://occupywallst.org/">OWS</a> thing. It is, I believe, just another chapter of the old motto, "the corporation and its executives ought to maximize shareholder value."Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-50314553973324530742012-01-11T08:29:00.002-05:002012-01-11T08:33:42.241-05:00The Ethics of PokerIs there an ethics of poker? Apparently it is, according to Matt Glantz, a professional poker player who sees poker both as a professional sport and a respectable profession... See <a href="http://">here</a>. The original post in Glantz' weblog is <a href="http://www.mattglantzpoker.com/blog/">here</a>.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-24456446721253105582011-10-12T10:37:00.002-04:002011-10-12T10:42:19.393-04:00A code of ethics for professional economists<iframe width="500" height="284" src="http://www.youtube.com/embed/t0kIRqSvUzY?rel=0" frameborder="0" allowfullscreen></iframe><br />As a reaction to the documentary Inside Job - which won an Academy Award last February - the AEA (American Economic Association is rafting a set of professional standards for economists). Apparently, the main concern is the existence and appearance of conflicts of interests. Hope it is not too late... The article in the WSJ <a href="http://online.wsj.com/article/SB10001424052970204294504576613032849864232.html?mod=djkeyword">here</a>.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-37804417165870501132011-08-16T08:36:00.001-04:002011-08-23T10:48:36.935-04:00Buffett calls for higher taxes on the Super-rich<object id="flashObj" width="480" height="270" classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=9,0,47,0"><param name="movie" value="http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1" /><param name="bgcolor" value="#FFFFFF" /><param name="flashVars" value="videoId=1111589028001&playerID=58264559001&playerKey=AQ~~,AAAAAASoY90~,_gW1ZHvKG_0UvBsh7aZU7MXZe77OcsGq&domain=embed&dynamicStreaming=true" /><param name="base" value="http://admin.brightcove.com" /><param name="seamlesstabbing" value="false" /><param name="allowFullScreen" value="true" /><param name="swLiveConnect" value="true" /><param name="allowScriptAccess" value="always" /><embed src="http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1" bgcolor="#FFFFFF" flashVars="videoId=1111589028001&playerID=58264559001&playerKey=AQ~~,AAAAAASoY90~,_gW1ZHvKG_0UvBsh7aZU7MXZe77OcsGq&domain=embed&dynamicStreaming=true" base="http://admin.brightcove.com" name="flashObj" width="480" height="270" seamlesstabbing="false" type="application/x-shockwave-flash" allowFullScreen="true" allowScriptAccess="always" swLiveConnect="true" pluginspage="http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash"></embed></object>
<br />
<br />And 16 French millionaires are making a similar call... (<a href="http://economicsnewspaper.com/policy/spain/sixteen-french-millionaires-are-calling-for-taxes-to-rise-out-of-the-crisis-60085.html">link</a>)Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-82064003851919304192011-07-28T21:44:00.000-04:002011-07-28T21:45:28.154-04:00Josh Cohen on Citizens United<iframe width="500" height="405" src="http://www.youtube.com/embed/fiWJAdFTIxQ?rel=0" frameborder="0" allowfullscreen></iframe>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-7250837781027979542011-04-28T01:18:00.001-04:002011-04-28T01:21:21.695-04:00Sokol: Guilty<object id="wsj_fp" width="512" height="288"><param name="movie" value="http://s.wsj.net/media/swf/VideoMicroPlayer.swf"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><param name="flashvars" value="videoGUID={C4DD05EE-9CD1-4A1D-87E2-69A9A0613F02}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false" base="http://s.wsj.net/media/swf/"name="anonymous_element_1"></param><embed src="http://s.wsj.net/media/swf/VideoMicroPlayer.swf" bgcolor="#FFFFFF"flashVars="videoGUID={C4DD05EE-9CD1-4A1D-87E2-69A9A0613F02}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false" base="http://s.wsj.net/media/swf/" name="anonymous_element_1" width="512" height="288" seamlesstabbing="false" type="application/x-shockwave-flash" swLiveConnect="true" pluginspage="http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash"></embed></object><br />This is the answer to the assignment you wrote on David Sokol's behavior according to Berkshire Hathaway. The statement said Berkshire Hathaway's investigation of stock purchases by David Sokol showed the former executive violated company policies and concluded he misled senior management. Link <a href="http://online.wsj.com/article/SB10001424052748704187604576289413064912104.html?mod=djkeyword">here</a>.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-4397551923281836987.post-28601610403026293792011-04-17T11:20:00.004-04:002011-04-17T11:49:05.684-04:00Why business majors need ethics classes<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://graphics8.nytimes.com/images/2011/04/17/education/edlife/17business-gr/17business-gr-popup.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 500px; height: 450px;" src="http://graphics8.nytimes.com/images/2011/04/17/education/edlife/17business-gr/17business-gr-popup.jpg" border="0" alt="" /></a><br />Great piece in the NYT today (<a href="http://www.nytimes.com/2011/04/17/education/edlife/edl-17business-t.html?_r=1&scp=1&sq=default%20major&st=cse">here</a>). Summary here:<br /><br />* Business majors spend less time preparing for class than do students in any other broad field, according to the most recent National Survey of Student Engagement: nearly half of seniors majoring in business say they spend fewer than 11 hours a week studying outside class. In their new book “Academically Adrift: Limited Learning on College Campuses,” the sociologists Richard Arum and Josipa Roksa report that business majors had the weakest gains during the first two years of college on a national test of writing and reasoning skills. And when business students take the GMAT, the entry examination for M.B.A. programs, they score lower than students in every other major (...) What accounts for those gaps? Dr. Arum and Dr. Roksa point to sheer time on task. Gains on the C.L.A. closely parallel the amount of time students reported spending on homework. Another explanation is the heavy prevalence of group assignments in business courses: the more time students spent studying in groups, the weaker their gains in the kinds of skills the C.L.A. measures.<br /><br />* Scholars in the field point to three sources of trouble. First, as long ago as 1959, a Ford Foundation report warned that too many undergraduate business students chose their majors “by default.” Business programs also attract more than their share of students who approach college in purely instrumental terms, as a plausible path to a job, not out of curiosity about, say, Ronald Coase’s theory of the firm. “Business education has come to be defined in the minds of students as a place for developing elite social networks and getting access to corporate recruiters,” says Rakesh Khurana, a professor at Harvard Business School. It’s an attitude that Dr. Khurana first saw in M.B.A. programs but has migrated, he says, to the undergraduate level.<br /><br />* Donald R. Bacon, a business professor at the University of Denver, studied group projects at his institution and found a perverse dynamic: the groups that functioned most smoothly were often the ones where the least learning occurred. That’s because students divided up the tasks in ways they felt comfortable with. The math whiz would do the statistical work, the English minor drafted the analysis. And then there’s the most common complaint about groups: some shoulder all the work, the rest do nothing.<br /><br />* “We’ve got students who don’t read, and grow up not reading,” he says. “There are too many other things competing for their time. The frequency and quantity of drinking keeps getting higher. We have issues with depression. Getting students alert and motivated — even getting them to class, to be honest with you — it’s a challenge.” One senior accounting major at Radford, who asked not to be named so as not to damage his job prospects, says he goes to class only to take tests or give presentations. “A lot of classes I’ve been exposed to, you just go to class and they do the PowerPoint from the book,” he says. “It just seems kind of pointless to go when (a) you’re probably not going to be paying much attention anyway and (b) it would probably be worth more of your time just to sit with your book and read it.” How much time does he spend reading textbooks? “Well, this week I don’t have any tests, so probably zero,” he says. “Next week I’ll have a test, so maybe 10 hours then.” He adds: “It seems like now, every take-home test you get, you can just go and Google. If the question is from a test bank, you can just type the text in, and somebody out there will have it and you can just use that.”<br /><br />* IN a dimly lighted classroom at Ohio University, 20 students are spending a long evening preparing for final exams. (...) Tomorrow’s final is in finance, and the students, mostly sophomores, are sweating over practice questions. (“If you invested some money in a fund seven years ago that offered a fixed 5.99 percent nominal interest rate with quarterly compounding . . .”) “I know this is going to be tricky, but I think I’ve learned from the mistakes I made on the last finance test,” says Adrianna Berry, a junior who started out in marketing but added a second, more challenging major — management information systems — after an injury forced her from the swim team. In contrast to finance, she says, the marketing final she took earlier in the week consisted mostly of multiple-choice questions that had already appeared on previous tests this quarter. For the management final, students could bring a cheat sheet. Ms. Berry’s sheet, in tiny multicolored script, is a thing of beauty: the five-factor model of personality. Bounded rationality. Anchoring bias. Distributive versus procedural theories of fairness.<br /><br />* Concrete business skills tend to expire in five years or so as technology and organizations change. History and philosophy, on the other hand, provide the kind of contextual knowledge and reasoning skills that are indispensable for business students. “If we didn’t provide that kind of timeless knowledge to our students, we would be providing a seriously inadequate education,” Dr. Schlesinger says.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4397551923281836987.post-38897008035294522152011-04-13T09:55:00.002-04:002011-04-13T10:32:21.963-04:00<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://politicalgraffiti.files.wordpress.com/2009/03/madoff.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 500px; height: 350px;" src="http://politicalgraffiti.files.wordpress.com/2009/03/madoff.jpg" border="0" alt="" /></a><br /><br />Bernie Madoff accepted to receive a reporter from the Financial Times in prison. Besides his accusations (e.g. he says that JPMorgan, the primary bank for Bernard L. Madoff Investment Securities, should have known of his illegal activity before his arrest), it is interesting to see what he has to say about his Ponzi scheme. The interview is available <a href="http://www.ft.com/cms/s/2/a29d2b4a-60b7-11e0-a182-00144feab49a.html?ftcamp=traffic/email/regsnl//memmkt/#axzz1JPUSDcVL">here</a>. <br /><br />Some fragments here:<br /><br /><span style="font-style:italic;">So in 1992, he says, his slide into the Ponzi scheme began, using money from new deposits to pay some returns. “I thought I could do it. I did! I took the money – let’s say I had $1bn, by then – and I was convinced that when the market straightened out I would be able to cover things.” But it never happened. “The turning point was really about 1992 onwards. From then on, it started getting worse and worse. I spend a lot of time thinking about it – it is almost like a blank to me now. I try to piece it together; why didn’t I say, ‘I cannot do it?’ Why didn’t I return the money to those four or five clients – and the others – and say, ‘I can’t do it.’ Why?”<br /><br />We ask why he didn’t just hand the money back to investors. After all, he says that in 1992 he was already a fairly wealthy man, since the market-making operation was performing well. “Ego,” he explains. “Put yourself in my place. Your whole career you are outside the ‘club’ but then suddenly you have all the big banks – Deutsche Bank, Credit Suisse – all their chairmen, knocking on your door and asking, ‘Can you do this for me?’<br /><br />“[I was] under a lot of pressure – a lot,” he mutters. “And I was embarrassed. It was the first time in my life that something hadn’t worked. I was just dumb. Dumb! Starting in the early 1990s there were no trades. It was just paper. But let me tell you,” he adds forcefully. “It looked real.”<br /><br />Once the Ponzi scheme was under way, it required a constant influx of new cash. Madoff began taking on clients referred to him by existing ones, who were inclined to keep their money parked with him because of the steady returns. At some point – Madoff never makes it clear exactly when – the real trading ceased altogether, and he began forging trade records for clients. And he says Picower, Chais, Levy and Shapiro – his big four clients – knew something was amiss. “They were complicit, all of them,” he says.<br /><br />Madoff’s accusations cannot be corroborated. None of the four families has been charged with criminal wrongdoing. Picower is dead, and his estate settled for $7.2bn; his lawyers maintain he was not aware of the fraud. Levy is dead and his family settled for $220m. Chais is dead; his family denies any wrongdoing and has not settled. And Shapiro, the only one still alive, settled for $625m but denies any wrongdoing and has not been accused by authorities of being complicit. In the words of his lawyer, “Mr Madoff is a liar. These latest statements are no more believable than all the other lies that Madoff told his investors and the authorities for decades.”<br /><br />But the regulators did not crack down. “The regulators get calls all the time,” Madoff says. They didn’t investigate “because I had the reputation at the time for being the gold standard. I had all the credibility. Nobody could believe at that time that I would do something like that. Why would I? Stupidity – that is why. But remember that when people asked me about the strategy, it made sense. I was big, credible.”<br /><br />But how does he feel about ruining all those ordinary people’s lives; all those innocent “Mrs Greens”? Did he feel pleasure – or revenge – in this? He shakes his head. “I was scared to death,” he says. “I took no satisfaction in this. There was no malicious action on my part.” (...) I have spent a lot of time with a psychologist [in prison], which I had never done before in my life, in order to try to figure out how I could have done it,” he says. “There are these mafia people who can kill people all day long, do terrible things, and then go home to their families. I used to wonder how it was that people in wars could shoot people. But the thing is that you can compartmentalise things in your life.”<br /><br />“My complaint about regulators and the SEC, which dates back as long as I’ve been involved, is I feel they spend too much time going after minor infractions and no time going after the major firms and investment banks,” he says. “Very little, if anything, has been done with this new regulatory reform that is going to correct this.”<br /><br />By early December 2008 Madoff faced $7bn in redemptions – and he did not have the money. On December 10, the night of the BLMIS office Christmas party, his sons could tell something was wrong. “I was comatose,” he says. “They had never seen me like that.” So Madoff, his sons, his brother and Ruth retired to their plush Upper East Side home, where he told them the family fortune was built on a fraud. “I was crying,” he says. “They were crying.” His sons, on the advice of their lawyer, turned their father in to the police. He was arrested the next morning. Madoff says he never considered fleeing. “In the end I was almost relieved,” he says. “The pressure I was under in the last 16 years was almost unbearable. I wish they caught me sooner.” However, his moment of relief unleashed hell on his family. They were hounded by lawyers and journalists. On the second anniversary of Madoff’s arrest, Mark, his eldest son, committed suicide by hanging himself while his own two-year-old son slept in the next room. His other son, Andrew, has broken off contact. “They don’t speak to me,” he says in a flat voice. “It’s horrible. They feel like I betrayed them. And I did. But I had no choice. By the time I realised, I couldn’t get out.<br /><br />The distribution of funds to Madoff victims is a complex ordeal that is taking years, and many of the settlements, including the $7.2bn from the Picower estate, are tied up in appeals. Madoff is of the opinion that individuals should not be pursued by the trustee. “I do not think that Picard will be successful in clawing back money from individuals, including the Mets family,” he tells us. “He shouldn’t. If they can claw money back from the average person who was involved, then who will ever invest in a hedge fund ever again? But the banks are different.<br /><br />Several business schools have approached him, he adds, and asked him to work on ethics courses. He likes that idea; Harvard and Northwestern are in his sights. But from 10am to 7pm, four days a week, he mans the commissary, or prison store. Fittingly, Madoff tells us, it is called the “money management department”.</span><br /><br />The last paragraph is eloquent: "<span style="font-style:italic;">As we leave the prison, we are still not sure where the truth ends and his lies begin. What we know is that this is a man who mercilessly ran a Ponzi scheme for at least 16 years, corrupted the financial system, destroyed lives and bankrupted families and charities. Yet, in the flesh, Madoff spins a credible tale of how a renegade entrepreneur conquered Wall Street and was drawn into crime by personalities and forces he could not control. It sounds almost convincing; or at least no more absurd than many of the other stories we hear every day in western finance.</span>"Unknownnoreply@blogger.com1