September 11, Business, and Politics

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.
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!
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, Rockefeller and other prominent business leaders from the copper industry, played a key role in the military plot 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.
Americans have other, strong reasons, to commemorate September 11. But we should not forget the other, the first, September 11. And the role of business in it. 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. 
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.
His last words:

"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!"

Lost wallets and character evaluations

This is the story we discussed in class yesterday (from Huffington Post):
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.
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."
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.
"It made me reevaluate my perception of people, my first instinct, when I first observe someone," Croizer said.



This coming Friday, we will discuss why Detective Croizer is not entitled to say that.

The market for government espionage

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 here). 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?
In any case, be careful! Your email records may be only $25 worth!

What is wrong with Armstrong?

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" (here), Nike terminated his contract (here), he was forced to step down as chairman of his Livestrong charity (here), and he is said to "a cheating bastard..." among other epithets (here).
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 (here). 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.

Good pay and obscene pay

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 NYT, 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 OWS thing. It is, I believe, just another chapter of the old motto, "the corporation and its executives ought to maximize shareholder value."

The Ethics of Poker

Is 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 here. The original post in Glantz' weblog is here.

A code of ethics for professional economists

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 here.