Wednesday, August 6, 2014

“Who should be culpable for Citigroup’s bad dealings?,” The Colorado Springs Business Journal, July 25-31, 2014, 23.

Who should be culpable?

As we read about the latest bank settlement with the federal government, it may seem that $7 billion is a hefty fine to be paid by Citigroup. Apparently it’s not. Citigroup’s shares were up 3% on hearing of the settlement, so someone must be thinking it’s a good deal for the bank.

Some may argue that any settlement is better than ongoing investigations and the uncertainty that accompanies them, and therefore even $7 billion is a good deal, especially when no officer or director ended up in jail. These “decision-makers” or better yet “job-creators” are never touched by the long arm of the law. Are they above the law? Are they too rich to prosecute?

It’s a given that moral considerations aren’t part of the algorithm used by Wall Street mavens to make profits. It’s also a given that we shouldn’t judge banks’ performance by their moral aptitude or social contributions alone (even though some of them are proud of them). So, if we simply judge banks by the results of their financial performances, then Citigroup and its sister banks and hedge-funds are very clever indeed.

Knowingly commit a crime—fraudulently sell collateralized debt obligations (CDOs) tied to sub-par mortgages—make a huge profit for years, and then, years later, if and only if you are caught and convicted (which is possible but highly improbable), pay a fine. The billions you made along the way (whose value increases over time as you lend it again and again) remain yours minus the fines to eventually be paid.

Let’s translate this Wall-Street speech to a language the rest of us can understand. You and I steal money from unsuspecting people, make a profit off it, and pay a fine somewhere down the line if we get caught. If moral principles were invoked ahead of time, at the very beginning of the process, or better yet, before the crime is even conceived or committed, none of the awful things that follow would have ever happened.

The fact that the entire American economy (and large parts of the global economy) came to a halt because of such cavalier and criminal behavior may be worth recalling. It’s one thing to lie to secondary markets about the integrity of CODs, and quite another to create a financial bubble that is bound to burst. The “economy” isn’t hurt, it’s people who are hurt, flesh and blood.

The most successful program that the Bush/Obama Administrations undertook under the TARP initiative (close to $1 trillion in bailout funding) was in my mind “Cash for Clunkers” (Car Allowance Rebate System). The program lasted only a few short months in the summer of 2009, but the eventually allocated $3 billion provided for over 690,000 dealer transactions.

Whether the original intent was energy-savings, greater fuel-efficiency of trucks, or the stimulation of the car industry in the midst of the Great Recession remains unclear. But to actually put in the hands of individuals a credit towards buying a new car helped get reluctant consumers into car dealerships, 690,000 of them!, and helped car sales.

Just think what would have been the impact if the same voucher system of $2,500-$4,500 credit was given to homeowners. What would have happened if not $3 billion but $300 billion (much less than was given to large banks) was allocated to homeowners with vouchers worth $5,000-$9,000 each? Simple arithmetic would suggest that 34,500,000 transactions could have taken place, enough to avert the housing collapse, and the suffering of those facing foreclosures.

Instead of celebrating the triumph of the Attorney General, instead of feeling relief that justice is being exacted on corporate giants, we should pause and think again: is this the kind of country we want to live in? Is this the kind of capitalism we are willing to endure? Fines may assuage our outrage a bit, but justice requires more than a slap on the hand.

To put this $7 billion fine in perspective, Citigroup has a larger annual profit (on average) than the fine it just agreed to pay. Just like other costs associated with its operations, paying fines here and there is just the “cost of doing business.” Can you imagine that someone would routinely drive recklessly and threaten the lives of pedestrians and other drivers and agree to pay a fine here and there when caught without ever being threatened with a driver’s license revocation?

Would we feel sanguine to live in a community where known criminals like Citigroup’s officers and directors, executives and middle managers, get a pass no matter what they do? Citigroup’s crime was not victimless; its profits were at the expense of others; people’s lives were so affected that houses were lost, savings evaporated, and marriages dissolved. This was a crime, indeed, just as egregious and heartless as outright theft or burglary.

The idea that we can separate money from morals is false. The belief that my profits are never at your expense is also not true in all cases. So, before you decide what to make of Citigroup’s fine, just remember those you know who suffered in the Great Recession. Their sufferings were real; Citigroup’s weren’t (no matter what the Supreme Court says about corporations being citizens). And the culture of calculated fraud shouldn’t be ours.


Raphael Sassower is professor of philosophy at UCCS. He can be reached at See previous articles at


Tuesday, July 8, 2014

“Whose great ideas are those, after all?,” The Colorado Springs Business Journal, July 4-10, 2014, 23.


The Constitution guarantees some protection for inventions as a way to provide incentives for geniuses of all stripes. By now the protection of patents and copyrights has become a legal industry under the catchall phrase Intellectual Property.

The question remains, should one’s ideas be legally protected against infringement by others? Is it fair, in other words, for me to use someone else’s ideas without paying any licensing fees? Regardless of how the law answers these questions, a generational divide spins its answers in different ways.

Young consumers, called by some millennials, deeply believe that they have an inalienable right to download whatever they find, no matter the source, for free. The very idea of paying for music or television shows seems absurd to them. They are also comfortable with “remixing” (Lessig 2008) based on the Supreme Court decision that allows “fair use” of materials—as long as enough of the original has been changed.

Older consumers have some respect for the sweat and toil that went into an invention of a song or an engine valve; they were socialized to pay for enjoying others’ inventions and products. In fact, they feel as if they are stealing from someone—individuals and corporations alike—when appropriating for profit that which isn’t theirs.

Of course, we can find among both groups thieves and saints whose age doesn’t express or betray their moral compass.

So, what should we make of the opposing strategies undertaken by Apple and Tesla, the former lionized as an American miracle with its late leader Jobs as its resident genius and the latter led by an iconoclastic billionaire named Musk?

The irony, if not outright hypocrisy, associated with Apple’s success should be laid bare before we switch to Tesla’s radical announcement.

According to pain-staking research by Marianna Mazzucato (2014), Apple’s entire collection of inventions has been graciously paid for by American citizens like you and I. The “entrepreneurial state,” as she calls it, researched and developed every facet of the iconic iPhone which enriched Apple. Government subsidies, loans, and outright underwriting of these technologies allowed Apple to scoop them all for the low price of some licensing fees. So, whose intellectual property was bought? Who owns it now?

We, taxpayers, already paid for the technologies and yet Apple makes us pay again when we buy the well-designed gadgets it sells to us. Not only are these gadgets made by Foxconn in China (outsourcing jobs), the profits made on them when sold in US are actually shifted to Ireland and other offshore places so that Apple can cut its taxes by an average of 25% and keep some 88% of its cash oversees (Financial Times).

Apple, the archetypal American corporate giant, has been enjoying the largess of government-generated, financed, and protected patents; it has also enjoyed access to the largest global market for its products. But when it comes to paying back anything to its benefactors—fairness—it shields itself from the IRS. Heads I win, tails you lose.

By contrast, Tesla’s CEO, Elon Musk, announced on 6/13/14 that all the patents his electric car company has developed and patented over the years will be open to its rivals. Has he lost his mind? What about the Constitution and Capitalism doesn’t he understand?

Quoted in the Financial Times, Musk said that “we believe that Tesla, other companies making electric cars and the world would all benefit from a common, rapidly evolving technology platform.” Is he all alone in this quixotic quest for an ecologically responsible future? Apparently not.

For those following the fashion industry, the practice of “knockoff” is as old as the trade itself. Instead of protecting one’s design, designers borrow from each other liberally and thereby increase competitiveness and the quest for new ideas. This is true for chefs and their recipes, standup-comedians and their routines, and football coaches and their tactics. (The Knockoff Economy 2012) Have these practices dulled our palates, closed restaurants, or stopped us from watching the Super Bowl? Imitation leads to innovation!

Likewise, Open-Source (Copyleft) isn’t news among code writers and users. In defiance of the restrictions posed by corporate lawyers and captains of industry, there has been an ongoing strong movement to keep codes as open sources for anyone to use freely. Your contribution is free of charge; so is your use. Sounds crazy? Only nerdy types will be so communal, ha?

Well, it’s been impossible to estimate how many millions of people around the world contributed millions of hours to write and edit Wikipedia. Not only aren’t they paid, they don’t even get credit for their work. Why do they do it? Do they believe in the greater good, like Musk? What a bizarre, anti-capitalist way of thinking? Have we lost our way?

No, we haven’t. Perhaps the good intentions of protecting one’s labor had the unintended consequences of allowing Big Pharma to patent our genes and DNA (Supreme Court decisions keep changing). At some point enough is enough, and our good sense overcomes the narrow interests of corporate America.

Will better automobile technologies necessarily evolve with open-sourced cooperation? Check your Apple iPhone to see if a new app can give you the answer. Then ask Apple to send $1 to the US government to ensure the future of American R&D!

Raphael Sassower is professor of philosophy at UCCS. He can be reached at See previous articles at

Monday, May 19, 2014

“Convenient capitalism deviates from ideals,” The Colorado Springs Business Journal, May 16-22, 2014, 25.


Academic circles and news media are abuzz with the latest French critique of capitalism by Thomas Picketty. In his historically-informed tome (685 pages), Picketty illustrates how capitalism over the last three centuries retains its tendency to concentrate wealth in the hands of the few, so that overall inequality increases (except for three decades in 20th century America).

Just like all other major academic accomplishments, what’s missing is as important as what is emphasized. Though critics and pundits are fixating on the difference between wealth and income inequality (especially in light of gigantic Wall Street salaries), there is something important that is glossed over.

Are we indeed practicing capitalism in America? Are we true to the principles advocated by Adam Smith and his fellow classical political-economists? Their principles were modeled on Enlightenment ideals, such as freedom and equality, moral respect and public education. They also believed that the capitalist marketplace could cure all the ills of the feudal and mercantile systems.

Have these ideals been accomplished? Outside of the complaint about the unintended consequences of capitalism (wealth inequality), are the actual legal and political guards supportive of these classical ideals?

Instead of surveying the national or international landscape, let’s focus on our immediate surroundings to see how capitalism is conveniently (or lazily) applied. What’s at stake is consistency of thought and practice—practice what you preach!

First and foremost, if the marketplace is supposed to be in private hands, if the government is supposed to get out of the way and let private industry determine the direction of our city, why are we so dependent on the Department of Defense? Why does our Chamber of Commerce look like the Chamber of Defense? Is it just all too convenient to have the federal government subsidize our local economy?

Second, if we believe in markets being more efficient mechanisms to decide how to allocate resources (capital and labor), and if we believe that the role of government is simply to accommodate the needs of the private sector, why has our City Council become such an obstacle to anything that happens locally? Is it simply that nine power players have forgotten how little we should be hearing from them?

Third, if the Austrian economists and their Chicago-University descendants got it right about minimal government intervention (except to enforce voluntary contracts among individuals), why has City Council regulated away recreational marijuana sales? The paradox must be obvious: the benefits of sales taxes will stay out of the city but the costs of policing problems will remain ours. Shouldn’t we let the marketplace decide what should be bought and sold?

Fourth, classical political economists worried about monopoly powers—the tendency for companies to buy each other and become dominant in a market—and oligarchical behavior—the tendency for collusion on prices and product quality. The marketplace is envisioned as a meeting place for “little” buyers and sellers none of whom can dictate prices when supplying or demanding goods and services. How come, then, that we have a utilities monopoly in our midst? With no competition or oversight, CSU can raise rates at will any time. Is this the most efficient way to handle a needed commodity—energy—for our city?

Fifth, from developmental economists to finance gurus there is a basic agreement on the need for the exchange of information as it is the most valuable commodity in the marketplace. The free-flow of information allows for minimal government coordination of long-term plans, such as our very own City of Champions. This is part of the capitalist framework as long as government agencies aren’t themselves involved in competing for resources and customers. Why not let a thousand lights shine on this city plan? Why hinder the private forces waiting to engage this four-pronged effort to revitalize the city?

Overall, we should be hearing about what companies and educational institutions, like UCCS, are doing in town as economic “engines” rather than what’s the latest scrimmage between the Mayor and City Council or between CSU and the rest of the politicians it is promoting and electing. Let’s stay focused on what could be an emerging and successful model that is based on the beauty of the city and its healthy environment.

Unlike the (federally funded) military bases we are so fond of, let’s focus on being the headquarters of the Olympic Committee and some of its affiliates (privately sponsored). If some of our wealthy leaders are proud to call themselves capitalists, let’s remind them not to be convenient capitalists but consistent ones! If these exhortations fall on deaf ears and anyone remains confused, look northward to Denver and see what is being done right…    

Raphael Sassower is professor of philosophy at UCCS. He can be reached at See previous articles at


Friday, April 11, 2014

“Looking for the right standard to implement wage fairness,” The Colorado Springs Business Journal, April 11 -17, 2014, 23.

As tax time comes around again, and as the president keeps bringing up minimum wage, it’s time to consider our attitudes towards income, wealth, and inequality.

One of the basic tenets of the capitalist marketplace (Adam Smith) was that a moral code binds the community within which markets operate. Our moral sentiments provide the framework for fairness and help us recognize that we are all in this together. The baker and her vendors and customers will likely trade with each other more than once, so in the long run they must maintain fairness.
Perhaps there is an obvious fairness in selling bread, but as an employee of the baker, is fairness involved in how much you are paid? The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA) which in 1947 enacted 40cent/hr. standard, increasing it to $7.25 in 2009.

Many states also have minimum wage laws. Some state laws provide greater employee protections and/or higher minimum hourly wage (Oregon’s is $9.10); employers must comply with both. What standard should be used to implement fairness?
One standard is annual earning. With $8/hr., 40 hrs./week, and 50 weeks annually, we are looking at $16,000 (before any deductions) which is where the poverty level is for a household of two (single mother, for example) according to the 2014 guidelines for Medicaid eligibility. For a single person the poverty line is $11,670.

On the other extreme of the income spectrum we have entertainers, like Madonna who topped the Forbes 2013 list of the “Top-Earning Celebrities,” and who made around $125 million in one year (7,812 times the minimum wage). Is “income inequality” even relevant here?
Among athletes, the golfer Tiger Woods remains a steady top-earner with estimates of $80-$100 million annually (tournaments plus endorsements). Though Alex Rodriguez’s (NY Yankees) 10-year contract of $275 million has just been surpassed by Miguel Cabrera’s (Detroit Tigers) contract of $292 million, they pale by comparison to Woods’ annual earnings. Can we compare their incomes to minimum-wage earners?

Hitting closer to home, what about the CU-Buffaloes’ Mike MacIntyre who earns $2.4 million plus additional allowances to coach a notoriously losing team (USA Today). Is he “worth” his salary? If not comparing him to a minimum wage-earner, how about comparing his compensation to that of an instructor?
At UCCS full-time instructors (with PhD) are paid annually about $32,000 to teach 8 courses with an average size of 40 students who pay about $1,000 per course. Generating $320,000 in revenue for the university, they receive about 10% of what they “produce.” Will MacIntyre ever “produce” ten times his compensation? Should instructors’ pay be related to minimum wage earners?

Perhaps those who are endowed with super-human talents deserve to be outside the orbit of the discussion over income inequality, but what about those involved in the marketplace?
So let’s move to the business world, where Henry Ford famously (voluntarily) doubled the daily wages of workers in 1914 to $5. It reduced attrition on his assembly lines and lifted most workers into the middle class. What informed this move was neither generosity nor altruism; instead, it was a simple principle that his workers should be able to afford to buy the cars they produced.

While the president is pleading for a $10/hr. minimum wage, the CEOs of the largest 500 corporations in the US got a pay raise of about 16% in 2013 for an average of $10.5 million annually. About 60% of the total came in the form of stocks or stock options. According to the AFL-CIO, the top CEOs’ income was about 354 times that of their average rank and file workers. Is the president wasting his minimal political capital?
Isn’t the marketplace a place where the “fittest” rise to the top and command their fair “share”? Why would anyone want to put the government in a position to regulate how much money one makes? Will this intervention undermine job creation?

Companies whose stock is traded on the exchanges or public universities with state constituencies deserve public scrutiny and government regulation. They embody American values. Is fairness an American value?
The debate over income inequality and minimum wage can be framed as a debate about fairness or about job creation and the growth of the economy; it can be framed in terms of unregulated capitalism or in terms of government protection of basic human dignity and wellbeing. How should we frame the debate?

Thomas Piketty historically illustrates that except for a few decades in the 20th century, capitalism tends to increase wealth inequality (2014). Would Adam Smith worry about this? Would he appeal to moral sentiments to battle inequality? Would he invite instead government intervention?

Raphael Sassower is professor of philosophy at UCCS. He can be reached at See previous articles at

Friday, February 28, 2014

“Colorado Springs—a city in search of leadership,” The Colorado Springs Business Journal, February 28 – March 6, 2014, 21.

In Search of Leadership

From the Austrian School of Economics to its Chicago School descendent, it has been an article of faith that if left to its own devices the marketplace will perform more efficiently than if the government had anything to do with it. The rule of law, of course, should be upheld and deviant behavior—cheating, stealing, and misrepresentation—would be handled by courts of law.
Businesses could rely on the government to step in when needed, not too often but forcefully enough to punish and deter potential abusers. According to this model, political (and legal) authorities play a reactive (rather than proactive) role. So who leads the marketplace? Is it Adam Smith’s “invisible hand” or “impartial spectator”? Are the likes of Bill Gates and Mark Zuckerman needed?

Leadership is defined in most cases in terms of the social influence a leader exerts over others so as to move them towards the accomplishment of a common goal, whether it be military or moral. In some cases, we have tried to transform battlefield leadership into politics, assuming that the one is a proving ground for the other (from Washington to Eisenhower). What about market leaders?
Some argue that leadership grows organically when one company increases in size and importance and eventually sets the trends of the marketplace. Others suggest that trade organizations, such as the Chamber of Commerce, provide cooperative objectives that benefit all participants as a way of leading. And yet others are appalled by any claim for market leadership because it reeks of socialist-like planning that constricts the untethered competitive and entrepreneurial spirit.

When we think about our own microcosm, General Palmer and Spencer Penrose come to mind. In their respective ways, they have demonstrated how leadership in one field could be translated into founding a city and turning it into a mecca for prospectors as well as a health retreat for tuberculosis. Who are their successors today?
We have plenty of former military leaders in our midst, some retired generals and colonels; we also have some entrepreneurs for whom the city has been a source of wealth. Are they stepping up? Have they done more than field surrogates whose own statures aren’t up to par? Perhaps the conditions of a century ago don’t fit the present.

To begin with, the city’s reliance on government largesse flies in the face of its claims for conservative ideals of small or no government. Between military bases and a growing population of retirees (with “entitlement” benefits, Social Security and Medicare), it seems that the city’s marketplace is relatively small.
Second, if the city’s political leaders are indeed representing the sentiments of their conservative constituents, why aren’t they allowing a more laissez-faire economic climate in the city? Why outlaw recreational marijuana retail shops?

Third, given a utilities monopoly and a choice to retain it as a municipal entity, there is no political oversight. Instead of the CSU serving its ratepayers and minimizing waste, it has become its own political power-house insulated from transparency and accountability. Would Palmer or Penrose tolerate this situation?
Fourth, to promote economic growth, some forward-thinking and vision are required. Who, outside the embattled Mayor and the distant State authority, is leading the local charge for the City of Champions? If our local millionaires were more vocal in support, would the dysfunctional Council or Chamber of Commerce step in line?

Are the conditions nowadays so different from a century ago that no leadership can be expected? All we need to do is look at UCCS’ Chancellor as a leader. Perhaps her academic specialty gives her an edge; perhaps it’s the mountains where the university is perched that allows her to see farther; perhaps it’s just her DNA that makes her an effective leader. Whatever the reason, she leads.
Is UCCS all alone in this visionary quest for greatness? Is the city happy to slumber in its complacent hibernation since the days of Palmer and Penrose? With a contracting federal budget, perhaps it’s time to focus on the athletic and health advantage of our altitude. And while the winter Olympics is fresh on our minds, it’s time to focus on doing more for the USOC’s headquarters here than anything else.  

Wake up Colorado Springs! Every century we get an opportunity to remake ourselves. The City of Champions and the legalization of marijuana provide such opportunities. Since the “next Penrose” seems reluctant so far to do more than buy local gems (Broadmoor) or duds (Gazette), we have two choices: either implore someone to lead us to greatness or use what is within our reach to become a vital city that attracts young professionals to invest their energy here and now.

Raphael Sassower is professor of philosophy at UCCS. He can be reached at See previous articles at


Wednesday, February 5, 2014

“What the Super Bowl tells us about our culture,” The Colorado Springs Business Journal, January 31 – February 6, 2014, 19.


When I ask what game is played by a bunch on millionaires on lush green grass, most people respond with “polo.” They forget that in fact there are twenty-two millionaires on the field at any given time during a professional football game—America’s most popular spectator sport.

The analogy to gladiators, which was common among sports sociologists in the 1970s, has been replaced more recently with the “Forty Million Dollar Slaves” as a narrative about the “The Rise, Fall, and Redemption of the Black Athlete” (Rhoden 2007). Instead of Roman emperors orchestrating a diversion for starving masses, American billionaires are ensconced in guarded balconies as their players slug it out till concussions force them out of the arena.

No different from their predecessors, team owners buy and trade players as if slavery hasn’t been abolished yet; despite the appearance of a trade organization that is quasi non-profit, and despite a players union (currently negotiating a landmark settlement to compensate retired players for their debilitating injuries), the NFL has a salary cap (socialist marketplace?) where over-all team expenditure on those million-dollar slaves is set by the league (and enforced by a $30 million/year commissioner).

As we prepare to watch the Super Bowl on Sunday, and are entertained by million dollar (30-second) commercials (ensured to air no matter what pace the game should have), let’s check to see if billionaire owners are getting their money’s worth from their “millionaire slaves.”

Peyton Manning of the Broncos is the 4th highest-paid quarterback who earns an average of $17.5 million/year (in a multi-year contract), while Russell Wilson of the Seahawks is earning a puny $1.2 million/year 9under his rookie contract). Can we therefore expect—to use marketplace value comparison—a seventeen to one ratio between their abilities or performances?

According to, the Seahawk’s 2013-1014 payroll is the highest in the league with $124.9 million, while the Broncos’ is 5th with a total of $119.2 million. Is it because Paul Allen (co-founder of Microsoft) is wealthier than Pat Bowlen (oil drilling wildcatter)? But what is an extra $5 million among billionaires?

The other two championship finalists were the 49ers (9th in the league with $116.2 million) and the Patriots (19th in the league with $106.3 million); were they a better bargain for their achievements as compared to the two finalists?

But perhaps we shouldn’t fixate on money and think more broadly about the cultural significance of football in America. Public Religion Research Institute CEO Robert Jones reports that 26 percent of those surveyed “pray for God to help their team,” while 25 percent “think their team has been cursed,” and 19 percent “believe God is involved in determining who wins on the court or in the field.” Overall, “half of Americans fall into one of these groups.”

“As Americans tune in to the Super Bowl this year, fully half of fans — as many as 70 million Americans — believe there may be a twelfth man on the field influencing the outcome,” Jones confirmed. What does this say about the intermingling of religion and sports? It’s not only that fans pray to God for intervention or players thank God when scoring (“Tebowing” has become a cultural signature behavior of players on the field), but the very terminology used in sports is reminiscent of that classically invoked in religious ceremonies and practices.

Whether the topic is belief, sacrifice, work, competition, relics, pilgrimages, or redemption, similar vocabularies are used with the assumption that one discourse is translatable to the other with the same psychological and social impact.

We “believe” in our team (Broncos) and our “hero” (Manning) using reverential words that we typically reserve for our faith in Jesus Christ as our savior. We pray for victory against the heathens of the northwest, and hope that the legalization of marijuana in both states (Colorado and Washington) will not raise the anger of God. Did smoking pot have something to do with our teams’ ability to chill and focus?

So, it’s not simply that billionaires provide expensive entertainment for the masses; they demand (with threats of moving their teams elsewhere) that the public pay for the arenas. The Roman emperors built arenas and supplied slaves (admittedly in a slave economy); our billionaires, working under capitalist pressures, ensure that fans (indirectly) pay for their own entertainment (taxes and product placements).

Since sports is considered by some to be our American religion, and since we pray for victories the way we pray for our souls, perhaps we should consider nationalizing football teams (Packers?) and turning them to religious institutions where all are welcome to seek communal comfort or salvation.

Raphael Sassower is professor of philosophy at UCCS. His latest co-authored book (with Jeff Scholes) is titled Religion and Sports in American Culture. He can be reached at See previous articles at


Monday, January 6, 2014

“Pope’s views against idolatry…and more,” The Colorado Springs Business Journal, January 3 – 9, 2014, 17.

Against Idolatry

 We recall the image of Jesus entering the temple in Jerusalem, driving out the merchants and overturning the tables of the money changers. This was a stern reminder to separate the holy from the mundane.

Likewise, we recall the image of a golden calf molten in the absence of Moses on Mount Sinai. Were precious metals more seductive to the impatient Israelites than an invisible power?

But we probably have forgotten the work of Liberation Theology in Latin America (1950s-1960s), where Catholic teachings were used to fight economic, political, and social inequalities. This movement wasn’t condoned by Rome, but had widespread support from local Bishops who tended to their oppressed flocks.

We also haven’t made much of the US Bishops’ Pastoral Letter(s) on the Economy (1970s and 1986) that railed against economic inequalities and the departure from Christian principles of brotherly love and helping the poor.

Economic reality, we have been led to believe, isn’t dictated from above—God or the Treasury Secretary—but moves naturally in the cycles of the “invisible hand”. So invisible, in fact, that any crisis is explicable after the fact in terms of “market forces” or the “laws of supply and demand.” Human agency is absent.

The recent “Apostolic Exhortation” by Pope Francis focuses on human agency in our economic system. Perhaps it’s because of his experiences in Argentina, perhaps it’s because his theological interpretation of a moral life here and now is intertwined with the economy.

To be sure, this is a Catholic view steeped in two-thousand years of tradition; it is also one that saw the fortunes of the Mother Church depend on wars and wealth accumulation. Being the single largest denomination of any religion on earth, the significance of the “exhortation” is global. The action, though, should be local.

Mindful that he speaks as the Vicar of Christ, Pope Francis deliberately fuses theological concerns of evangelism with economic reality: “The great danger in today’s world, pervaded as it is by consumerism, is the desolation and anguish born of a complacent yet covetous heart, the feverish pursuit of frivolous pleasures, and a blunted conscience.” This situation, for him, means that “there is no longer room for others, no place for the poor.”

The Pope describes our economy as one of “exclusion and inequality.” But his description becomes more critical when he says: “Such an economy kills.” It’s not an economy that hurts or overlooks, benefits some at the expense of others; it kills. Referring to news-media, he asks: “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?”

When the stock-market index hovers around 16,000, why do commentators even bother to claim the Dow is “up” or “down” when it moves a few points in either direction? The percentage change is so negligible that the very reporting seems hubris. Do greed and fear consume our daily lives? Do these numbers help to reassure us?

Reminding us that the poor are excluded from our midst, he continues: “Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless.” Have you heard this assessment lately at your church? Are there more important theological issues?

For the Pope, as for some critics of hyper-capitalism, the economy is part of his theological message: its principles either follow or undermine moral principles. If market exchange of goods and services is exclusively defined in monetary terms, moral hazards are bound to appear. If economic transactions are justified by their potential benefits—the end justifies the means—what happens in the meantime? Will “trickle-down economics” indeed reach the poor?

The Pope answers: "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 naive trust in the goodness of those wielding economic power." In fact, “the excluded are still waiting.”

The “tyranny” of the current system and the “culture of prosperity” are harmful, according to the Pope. We have created new idols,” he continues, and we continue to worship them. There is “idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose.” Should we continue to live like this?

Whether one is Catholic or not, as Christmas is celebrated and New Year resolutions are being made, it behooves us to think of Pope Francis’ words: “I exhort you to generous solidarity and to the return of economics and finance to an ethical approach which favors human beings.”

Raphael Sassower is professor of philosophy at UCCS. He can be reached at See previous articles at







Monday, December 2, 2013

“Altcoin mania makes it onto stage, but for how long?” The Colorado Springs Business Journal, November 29-December 5, 2013, 17.


The recent Senate Homeland Security and Governmental Affairs Committee’s hearings on the potential of digital currencies to be used as donations for PACs may be of interest.
We have known virtual currencies that don’t involve banks: from Monopoly or poker, to more sophisticated video games where “money” is earned at various stages; likewise, they are used in closed-communities and resorts.

Detractors believe this to be a short-lived digital craze, while promoters believe this will become a game-changer. Whether called “digital currency,” “e-Money,” “electronic cash system,” or “altcoins,” these innovations push the conceptual and practical limits of what we mean by “money.”
Money has both value and function, being exchanged for actual commodities or services according to a certain cultural logic that legitimates it. Georg Simmel suggested over a century ago that it is “the most ephemeral thing in the external-practical world; yet in its content it is the most stable, since it stands as the point of indifference and balance between all other phenomena in the world.”

Are we all meeting at the public square and expect the backing of government agencies and banks or rather in virtual space that allows for anonymity and complete disregard of state institutions. How long did it take us to trust paying bills virtually?
A group of cyberpunks was intent on challenging government authority. In 1998, Wei Dai proposed “b-money” as an untraceable digital currency. Ten years later, Satoshi Nakamoto (a pseudo-name) released his version of bitcoin. In his manifesto, he says that “what is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”

A coin is defined by Nakamoto as “a chain of digital signatures” or “hash.” A cryptographic hash function is an algorithm that configures an arbitrary block of data and affixes to it a hash value. With a “timestamp” one knows the time-line of each movement from one user to another, cannot be reversed, thus avoiding double-counting. Though users remain anonymous during the exchange, the exchange itself is public. Bitcoin owners are required to “mine” them: finding a solution to a difficult problem with high-powered computers and sophisticated programs.
More recent developments include “PeerCoin,” “Litecoin,” and “anoncoin.” Unlike the recluse originators of bitcoin, Charles Lee is open about his creation of Litecoin. As a former programmer at Google, he believes in advancing the future of cyber transactions—why not have more choices?

The value of one bitcoin has ranged from as little as $2 a couple of years ago, spiked at $2,000, to over $900 now; total value in circulation is billions of dollars. Surely this cyber-“ecosystem” is comprised of earnest cryptographers showing off their expertise, but it also invites criminals who are looking for ways to hide from scrutiny.
Promoters praise “peer-to-peer electronic cash system” because it eschews “third party” reliance on governmental central banks or commercial banks and replaces “trust” with cryptography; this presumably avoids the collapse of money value because of inflation (without the gold standard since 1971), and eliminates transaction costs levied by credit card services or banks.

The issues spawning this movement can be rewritten as individual freedom, distrust of government, trust in technology as a neutral and fair method, and distaste for waste. A strong libertarian streak is evident here!
Altcoins aim to appeal to merchants who trade through the Internet. What happens once these altcoins are exchanged for dollars? Will they then become traceable and regulated?

Will altcoins undermine the authority of the federal mint to print money? With claims to safety and reliability, trustworthiness and increased use, the bitcoin experiment is limited to about $20-40 million and will never threaten the status-quo of trillions of dollars in annual transactions. Are altcoins counterfeit money? Are they new ways to launder money? What about taxes? Hence the Senate hearings.
Do you recall the so-called Swiss Dinar in Iraq? Though backed by the Iraqi government before the 1990 Gulf War, it was “disendorsed” after the war and a “Saddam Dinar” was introduced in its place. The fascinating fact is that in northern Iraq the Swiss Dinar retained its trading value while the Saddam Dinar was affected by hyperinflation after the 2003 invasion of Iraq. No gold reserves and no real value; was it the faith individuals put in the Swiss vs. Saddam) name of the currency?

Unlike Monopoly money or the coins you get at all-inclusive resorts, altcoins need to have a moral gravitas that anchors them in something other than the encryption world of programmers. They need the sanction of transparency and good faith, and more universal acceptance than by speculators alone. Till then, let me stay with dollar bills.

Raphael Sassower is professor of philosophy at UCCS. He can be reached at See previous articles at


Friday, September 6, 2013

“Detroit’s lessons might affect answers on retirement,” The Colorado Springs Business Journal, September 6 - 12, 2013, 21.

Labor, Anyone?

I grew up in Haifa (the Red City of Israel), a place where there were annual May Day parades--with red flags and street dancing, speeches and a day off for all. I loved this carnival, though my parents hated the unions and all they represented, especially their political power that could, at a drop of a hat, call for strikes in any sector of the economy. A mixed upbringing, to be sure.

As much as my parents despised those unions and their leaders, and as much as they strove to succeed as capitalists in a hybrid economy, they treated their company as a large dysfunctional family, with my Mom serving as the matron saint. She stood five feet tall with little formal education. She helped the pregnant unmarried secretary and scolded wayward men who cheated on their wives. Yes, these were her employees, but she felt responsible for their well-being.

As the Labor Day sales were announced across America last week, most of us think less of unions than about the picnic we attended. Perhaps we take for granted the benefits from the hard-won battles of yesteryear between labor and capital that the former was able to win—elimination of child labor, workplace safety, and paid vacations. Perhaps we simply ignore unions because of their anemic political power (less than 9% of the private workforce) or caricature them as represented by Jimmy Hoffa.

Every politician in every election, local to national, promotes job creation, though none has asked if work is a right or privilege. None has referred to microeconomics textbooks where “full employment” is defined in terms of 7% unemployment. And while we’re at it, how are we measuring unemployment? What about those who have drifted off the unemployment benefits lines? What about part-time employees?

Perhaps we are too busy to think through our views about labor: should there be unions, altogether? Our K-12 teachers are unionized, yet most don’t look at them the way we do at the Teamsters. Do police officers and fire fighters use collective bargaining, or as my dear friend calls it collective begging? What about our men and women in uniform?

Some (teachers, fire-fighters, police officers) enjoy pensions under various conditions. UCCS professors don’t have pensions, classified staff do. Why? Should they all have pensions, or should none? What about health insurance?

Recently I was in Detroit with a friend to see what a “bankrupt” municipality looks like. As Mark Twain quipped, the news of its demise has been greatly exaggerated. The downtown looks thriving, with some major corporate headquarters intact. Yes, there are some outlying neighborhoods that are boarded up or that are being razed with plans for rebuilding, no different from what is seen outside any metropolitan area where urban renewal is an ongoing process.

The city’s bankruptcy, just like that of GM and Chrysler a few years ago, is partially about underfunded pensions. Should the courts eventually allow the city to shirk its pension liabilities? Do we fundamentally deserve to have pensions, or is this idea outdated? Now that workplaces are for the most part safe (some refineries in Louisiana still emit dangerous chemicals), now that minimum wage is a federal law, is it time to revisit pensions?

If it’s time, let’s separate the practical from the theoretical. In theory we should ask ourselves if, after years of hard labor, one deserves to retire with benefits. When it comes to the military, our national answer is a resounding yes! Depending on many variables, pensions are granted to military retirees (over 100,000 are residents of our fair city). For the sake of consistency, should this answer apply to everyone?

It is argued that our men and women in uniform have risked their lives for our nation, and therefore deserve a pension. True, but since 1973 military service is voluntary, and is no different, in this sense, from those serving as teachers, police officers, fire fighters, and utilities employees. Should a pension be owed to them all?

Even when we agree to offer pensions to all employees, can we, practically, afford to do so? The answer is simpler than it sounds. All we need to do is adjust our outdated spreadsheets and the formula used to determine retirement benefits. As we live longer and are healthier later into our lives, we should work longer for our benefits; we should also contribute a greater percentage of our current wages (matched by employees) for future benefits.

Otherwise, the system isn’t sustainable, as is also the case with Social Security. Change the formula, and you can save the system. Keep it, and it’ll be in a crisis, the kind that becomes an excuse for bankruptcy. If we plan better, we can provide all working citizens an “honorable discharge” from their place of work with benefits commensurate with their contributions to them.


Raphael Sassower is professor of philosophy at UCCS; See also

Thursday, August 22, 2013

“Financial inequities persist under Obama”

You don’t have to be a Republican to sling some mud at our lame duck president. Senator Kirsten Gillibrand (D-NY), dared suggest that student loan rates should equal those charged to large banks, 0.75%; she’s appalled by the “business-as-usual” mindset found in Washington.

After much haggling, Congress has passed a bipartisan legislation that pegs student loan rates to the economy, hardly a comforting compromise for the largest debt in the economy (around $1trillion in 2012). Amidst the euphoria associated with a rare legislative agreement, the silly idea proposed by the junior senator has been quietly laid to rest: how dare she compare the mighty commercial banks to students?

Regardless of an estimated 8.7% drop in student enrollment in 2013 (compared to 2012), and regardless of graduates’ economic prospects in the new digital economy, let’s follow the mega commercial banks. If you recall, the Emergency Economic Stabilization Act of 2008 gave roughly $700 billion to banks to avert an impending economic catastrophe. Economic historians will debate for years the effects of this Act.
Fast forward to 2013, and these same banks have done tremendously well. Just look at their reports for the 2nd quarter of 2013: Bank of America’s revenue $22.9 billion, $4 billion net income ($97 billion bailout); Goldman Sachs’s revenue $8.6, $1.93 billion net income ($10 billion bailout); Citigroup’s revenue $20.5 billion, $4.2 billion net income ($220.4 billion bailout); JPMorgan Chase revenue $26 billion, $6.5 billion net income ($94.7 billion bailout). You see the picture—the banks are doing extremely well after a well-intentioned (but misplaced) taxpayers’ assistance. Couldn’t this money have been given directly to homeowners to avoid foreclosures? Should their “prime discount rate” be fixed at 0.75%, while ours is so much higher?

Given this collaborative relationship between banks and government agencies that regulate them—bailouts when needed—you’d hope that banks would behave like good citizens. Instead, these commercial banks have been disregarding federal laws with a level of impunity not seen since the Gilded Age.
The latest headlines are quite telling: “Lawyers Present Closing Arguments in Former Goldman Trader’s Fraud Case,” “Ex-Stock Analyst Charged With Insider Trading in Case Tied to SAC Indictment,” and “Morgan Stanley Fined for Selling Exotic Funds to Unwary Elderly.” At least these cases ended up in court. Many, though, have been settled out of court.

According to the New York Times, the Federal Energy Regulatory Commission agreed to settle with JPMorgan to the tune of $410 million. The regulator accused the bank, and more specifically its senior executive, Ms. Blythe Masters, of “manipulative schemes” that resulted in charging more for energy than was warranted at the time (2010-2011). We should leave the details of the facts in this case and its eventual settlement to lawyers. But should we ignore the moral hazards associated with ongoing abuses by bank executives, the beneficiaries of low borrowing costs and a federal safety net if they fail?
The argument about a rogue trader here and there that takes unduly advantage of unsuspecting investors or the public trust is one thing; when it’s a systematic behavior that is condoned (because not stopped) by CEOs and Board members, then American capitalism isn’t living up to the promises its founders made for its integrity.

Large commercial banks, like JPMorgan Chase, are public entities at least inasmuch as they collect individual deposits that are insured by the FDIC, they are publicly traded (hence publicly owned), they enjoy the largess of taxpayers (even though never consulted) when they are about to fail, and they are regulated by the US government. They are private insofar as their profits remain under the control of the management team whose compensation packages don’t require public (or government) consent. The choice of playing the public or private card is always at the discretion of these banks.
What should we make, then, of the $410 million settlement? Defrauding customers apparently is the new normal. Getting caught rarely happens. If it happens, fines are paid, and no one goes to jail. Powerful Wall Street lawyers cut a deal that doesn’t ruffle any feathers: it’s a win-win settlement (favorite cliché in Business Schools). Neither Ms. Masters nor Jamie Dimon (the CEO) went to jail, and the fines JPMorgan paid will be forgotten in the annual financial statement (which will amount, at this rate of profitability, to 1.6% of $25 billion). Likewise, the Federal Energy Regulatory Commission scored big in levying $410 million in fines in comparison to its latest settlement with a bank of $1.6 million (NYT).

Have we lost our moral outrage? Have we accepted financial scandals. We continue to deposit our paychecks in mega-banks for 0.1% interest and pay 6.99% interest for small business loans. No wonder banks’ facades are made of marble.

Raphael Sassower is professor of philosophy at UCCS; See also