“Deciding between legality and morality,” The Colorado Springs Business Journal, June 3-9, 2016, p. 22.

It’s Legal, but is it Moral?

The Panama Papers, which disclosed numerous off-shore bank accounts of the rich a famous, haven’t made much of a splash here compared to the ongoing media adulation or disgust with Donald Trump.

In addition to an amazing feat of secrecy held together across national boundaries, these papers revealed a systematic sheltering of capital in a country that offers tax haven for those refusing to pay taxes on the interest generated by their fortunes. 

The names of Russia’s President, Iceland’s Prime Minister, and the British Prime Minister were exposed; some demurred, some resigned because of public outcry. Not much public respond in the US.

Why is there no outrage in the US? Why has there been no pressure on the likes of Apple who have been stashing the profits they have made in the US in countries like Ireland? Is American tolerance of corporate maleficence entrenched?

Perhaps the answer is in the complicated relations between moral norms, social conventions, and the legal systems they engender.

Academics have portrayed this complex relationship in a linear model: first come moral norms, the ones found in religious texts like the Bible with its Ten Commandments, next come social conventions based on them, whether tribal or eventually within civil society, and finally there are rules and laws that make up the legal system of nation-states.

The trajectory from moral norms to the legal system is reassuring so that we can always trace our laws—however confusing—to some moral foundation, some deep principles, like equality (all humans ought to be treated equally as ends and never as means) or liberty (humans should be able to do anything they want so long as they don’t hurt others’ ability to do the same).

This trajectory doesn’t always obey a linear progression. For example, by the time women’s liberation took hold in the case of Roe v Wade in 1973 and was nationally implemented, the 1980s came along and a whole new conservative sensibility emerged.

Examples like this don’t simply challenge the linear trajectory assumed by academics, but also explains the incessant debates about abortion and other hot-button social issues we hear about in the media: the law follows too slowly social changes.

There is also another critique of the linear model (morality-->social conventions-->law): not all moral principles or social norms ought to be part of the legal system altogether.

For example, we may find prostitution immoral or anti-social behavior, but should we attempt to legislate its demise? Can we? The same goes for modesty and marriage: should there be laws about them? Why not leave such matters to one’s conscience or religious commitments?

What becomes obvious is that some relations shouldn’t be a matter of law, but a matter of civic decency. Being courteous to your clients and vendors should be obvious to you, if you want to develop lasting relations with them.

Likewise, business cheating or even theft should be self-policed out of existence rather than because you worry about being caught. Besides, there aren’t enough laws on the books to account for all potential business mischief. Would anyone want more laws?

Domino’s Pizza was recently sued by the New York Attorney General (USA Today 5/24/16) because of exploitation; workers cleaned and prepped their stations without clocking their time-cards. This violation of common decency and fairness should never have happened. Will only a lawsuit stop such practice?

Is the business world only focused on profits at all costs? Recent economic models, such as the Knockoff Economy or the Sharing Economy, suggest that hybrid market models are much more effective in the long-run. There is a limit to how much profits can be squeezed out of any business model and there is much to gain from peer-to-peer exchanges, even remixing others’ ideas.

It is a sad state-of-affairs if the only moral boundaries we recognize are those of the law. Our daily behavior should be centered on our moral and social convictions, on the religious ideals of charity and generosity, caring for the community as a whole. As members of our own community, its overall well-being is our business, too.

Especially for those who want limited government or no government regulation at all, the Panama Papers and Domino’s Pizza remind us that it’s not about the law but about greed. When greed is packaged as freedom, when selfishness is couched in a principled manner, one wonders what moral principles one knows; they are definitely not those found in the Bible or Secular Humanism.

As the sociologist C. Wright Mills intoned, “Laws without supporting moral conventions invite crime, but much more importantly, they spur the growth of an expedient, amoral attitude.” (1956)

Raphael Sassower is professor and chair of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com

“Apple’s poisonous business practices,” The Colorado Springs Business Journal, March 18-24, 2016, p. 27.

Beware of the Apple, It’s Poisonous

As the latest debate over Apple’s stance on privacy and its refusal to help federal investigators access the iPhone of the San Bernardino attackers, we should recall an earlier stance that seemed principled at the time, but was not.

For those who may have forgotten, Apple appealed a 2014 settlement that found it guilty of antitrust violation in relation to e-books. The settlement amount was $450 million. Its appeal to the Supreme Court was just denied, so the original settlement is binding.

In that case, Apple’s CEO, Tim Cook, made a passionate argument on behalf of “free enterprise” and the right of Apple to conspire with publishers to artificially inflate the price of e-books. At the time, Amazon.com, which had its own disputes with publishers, was setting the benchmark price for e-books.

Apple may argue about its monopoly-like right to set prices in the marketplace as much as it wants; it even can try to present itself as a martyr for free enterprise; but the truth is that it was hurting consumers to enrich itself, called profiteering.

One wonders if today’s debate about privacy isn’t a similar case where the veneer of an ideal ends up being just that, a veneer. The real point is a marketing ploy to convince present and future customers of its protective corporate culture. Fighting “the government,” as many presidential candidates are finding out, is quite popular!

Apple’s hypocrisy need not be measured exclusively by the yardstick of its entanglements with the government, as these two cases illustrate. Instead, it seems that Apple is unabashedly pursuing maximal profits, pure and simple.

To begin with, let’s examine what has set Apple on its path to American iconography. It is outrageously successful, valued at more than $750 billion (biggest in the world), profits of over $53 billion (October 2015), and over $180 billion in cash. Its legendary leader, Steve Jobs, has been lionized as a design guru and creative genius (despite some less than flattering books and documentaries).

Apple came out of IBM’s and Microsoft’s shadows to capture our imagination and pocketbooks; we are so enamored by its products that we stand in line for hours to pay premium prices for the latest revision of its latest gadgets. But there is something dark about Apple, so dark that good publicity, as the one now enjoyed by Apple, is needed to distract our attention from its fundamentals.

First, Apple produces its gadgets overseas, primarily by Foxconn in China. This outsourcing has become ubiquitous, but it sheds light on the awful working conditions of Apple’s sub-contractors’ employees (nets have been set in workers’ dorms so they won’t jump to their death). As president Obama beseeched Steve Jobs to bring jobs back to America during the Great Recession, Jobs scoffed at him and said it’ll never happen.

Second, as Mariana Mazzucato argues in her The Entrepreneurial State (2011), Apple has licensed most if not all of its patents and intellectual property from government sources. Apple doesn’t “invent” as many new technologies or processes as one might believe, but uses others’ inventions for its own designs. It’s R&D budget in 2015 came close to $8 billion, pittance as percentage of its sales of $234 billion (just over 3%). By comparison, Microsoft spent over $12 billion on R&D out of $93 billion in sales (close to 13%).

Third, there are some who are wondering about Apple’s legal behavior both domestically and globally, as it continues to be embroiled in patent disputes with its rivals (Samsung), overseas antitrust allegations, and class-action suits at home. Some have speculated that Apple spends more money on legal fees and fines annually than on R&D. If true, how “entrepreneurial” is it?

Fourth, if you have missed it, Apple has been under scrutiny for its tax-evasion tactics, most of which are perfectly legal, yet fly in the face of it being a good corporate citizen. It’s not that Apple doesn’t pay taxes at all, as it does ($8 billion as Cook told Charlie Rose on “60 Minutes”). Yet, between channeling some sales through offshore distribution networks and keeping over $180 billion in offshore accounts it avoids paying much more. Shouldn’t it contribute to the infrastructure that guarantees its sales?

As we piece the narrative about Apple’s corporate behavior, what may seem a principled stand against government intrusion into citizens’ privacy turns out to be a smokescreen. Is there really no technological way to accommodate federal investigators? We see instead a legal machine with exuberant profits enjoying the American framework of markets without contributing its fare share to ensure its operation. Just like those who came for dinner and never quite contributed their fair share. Perhaps legal, but is it right?

Raphael Sassower is professor and chair of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com

“The Lost Opportunity of the Sanders Candidacy to Teach America about Social Democracy,” LeadStories.com, March 13, 2016.

The Lost Opportunity of the Sanders Candidacy

It was our 26^th president, Teddy Roosevelt, who recognized his position and the White House as a “bully pulpit,” defined as “a public office or position of authority that provides its occupant with an outstanding opportunity to speak out on any issue.” Perhaps it’s unfair, but it seems that Bernie Sanders, the Democratic presidential candidate for 2016 is missing a golden opportunity to follow the spirit, if not the letter of Teddy’s insight.

The media is apt to remind us that Bernie Sanders is “unelectable” because he is a “socialist” even as he corrects everyone that he is a “social democrat.” He is saddled with the old Cold War mentality that understood “socialism” as the marker of the Soviet Union, a militaristic dictatorship with central planning and lack of freedom for its citizens. The Cold War is over, the Soviet Union (and its form of State Socialism) collapsed, and social democracy is the rage in most Eurozone countries.

Bernie Sanders has the golden opportunity not only to make sure Americans are aware of these simple facts—and thereby change the tenor of the discourse over his policies—but also to offer a brief explanation of what social democracy is about, and how it has been practiced not only in Europe but also in the USA. In short, Bernie’s candidacy is missing an opportunity that any leftist academic would “kill” for: teaching the American public what is actually going on in our midst.

Social democracy is primarily understood as a political system that is democratic with market economy that favors public ownership of the means of production and has a great concern for public goods and services—from roads and bridges to the Internet—with a modicum of humanity in the form of safety nets for the poor, needy, and underprivileged. This means, in short, less concern with who “owns” a factory or a business, but more with how private ownership enhances public welfare rather than exploits it.

This kind of 21^st socialism is not our grandparents’ one; it cares more about using market efficiencies and less about central planning by some faraway bureaucrats; and it demands that when private ownership controls this or that industry, it should be proven that it’s superior to the state owning natural resources, for example, or that “economies of scale” are in fact operating in a way to cheapen resources and products for all of us. In short, it’s a sophisticated system that appreciates the ultimate goal of ensuring the best, most productive use of natural and human resources.

So, to begin with, Bernie can explain what was just said. He can distinguish the crude and abusive state-planning system from the more nuanced and efficient system so many modern European and Asian economies use today. But, secondly, Bernie can also point out that in fact we are already living in a quasi-socialist system that has been endorsed by the entire political spectrum.

How are we already social-democrats? We have numerous safety nets that have become part of American culture and that will not be scrapped anytime soon. For example, there is no presidential candidate that wants to abolish Social Security, probably the most “socialist” of our practices. Nor is any candidate proposing to do away with Medicare; likewise, no one has suggested doing away with Medicaid which is an even more committed socialist ideal of providing health care to indigent people who cannot afford even base health insurance. Despite the rhetoric about the Affordable Care Act, all candidates know not to threaten some of the “sacred cows” the elderly have come to depend on so deeply—and they vote!

But then, again, there are numerous other forms of so-called socialism we readily practice, even find attractive to fight for. Among them we must mention the military-industrial-academic complex that captures some $600 billion annually, and that among other things, offers opportunities to the least advantaged in ways the rest of the economy does not. Yes, the military, too, is part of the enormous welfare system we have in place, even though we prefer to speak of it in terms of “national security.”

When all the candidates talk enthusiastically about their commitments to education, they forget to admit that these programs, from Pell Grants to Student Aid and Loans are government-sponsored programs that are funded (or guaranteed) by taxing the public (progressively, mind you, which means that the richer pay (theoretically) a higher percentage of their income than poorer citizens).

And lest we forget the most socialist activity since the New Deal (1933-1938), the banking bailout in 2008 was endorsed and implemented (legally and practically) by both the Bush and the Obama administrations. Good capitalists would have let weak banks collapse if they overreached or managed their finances poorly. No? Who’d think that conservative administrators would recommend government intervention?

Bernie Sanders, as he excites the young and less privileged, should keep reminding the public how socialist we already are, how fortunate we are that we are socialist to some extent, and that the debate is about keeping an intelligent and sensitive balance between being too socialist and not socialist enough. Would you want to live in a country where the poor die in the streets because of no access to health, shelter, and jobs? Are you willing to pay the price unfettered capitalism would exact on those not at the very 1% top? Of course not.

Having the voice of Biblical prophets who spoke truth to power and who reminded the political establishment of their day of moral justice and their responsibilities as kings, Bernie should go even further in tutoring his audiences. Since we are already quasi-socialist, he can ask now how far—morally, socially, and economically—we should go to ensure the prosperity of all. We should be grateful to Bernie’s voice, loud and angry as it is, and the fact that he still rails against the big banks and the “billionaire class.”

Yet, we can also entreat him to give a lesson, the kind of lesson given by those ancient prophets, and remind the American public that to be a socialist in the 21^st century is to be both sensible and humane, or what we’re to believe makes us so great.

“Could our city become the next Flint?”, The Colorado Springs Business Journal, February 12-18, 2016, p. 19.

Are we the next Flint?

What happened in Flint, Michigan was bound to happen somewhere, sometime. The origins of this disaster can be traced to the Reagan revolution that brought about the mantra that the government isn’t the solution, but the problem. This mantra embodies three important principles.

The first is that there is a direct correlation between how much services we receive and how much taxes we pay. The less taxes, the less services (small government).

The second is that government bureaucracies are less efficient than private ones, and therefore we should outsource to the private sector whatever we can.

The third is that all public goods—from roads to natural resources and defense—should be privatized in one way or another: either sold off or users should pay fees (Milton Friedman and the Chicago School).

The first principle is indisputable: CS comes in seventh among the 15 lowest-taxed cities in the US (Nick Wallace, SmartAsset). You might have noticed the unplowed streets with any snowfall, and the need for a tax increase to fix potholes.

The second principle is more problematic since it’s unclear if the issue is the inefficiency of bureaucracies, private of public, or that public are worse than private ones. But we should notice that at times inefficiencies relate to redundancies that save lives than to simple laziness.

The third one is the most interesting, as we have seen it play out in Flint. Should all decisions about and public goods themselves be privatized? We agreed during the Iraq War to hire Blackwater “mercenaries” to help fight the war; we also procured the private services of Cheney’s Halliburton (that eventually moved its headquarters to Dubai).

Were these moves the most “efficient” or merely the most expedient?

The lead-poisoning in Flint reminds us that the only way privatization works is if it’s accompanied by strict regulation—to ensure the health and safety of those affected.

But the age of deregulation that began with the Clinton Administration and has continued into the Bush and Obama Administrations has brought about not only the banking bubble and the Great Recession, but now the cruel effects of water poisoning in Flint.

What the headlines make clear is that perhaps the water problems in Flint were ignored because its population is poor and made up of minorities. Here is an example of how the outrage over income and wealth inequalities isn’t simply a philosophical query but instead relates to conditions that lead to health hazards.

As the facts are still being uncovered, it becomes clear that first, we cannot trust outsourced government performance—when cutting costs is achieved at the cost of people’s health—and second, that we shouldn’t wait till it’s a catastrophe to pay attention. Regulators and journalists, politicians and activists should heed complaints and investigate before it’s too late.

What about the health hazards perpetrated by our own Utilities? We finally got City Council (its board) to agree to close the Martin Drake power plant within 20 years. In the meantime, is our health at risk? Are we listening to Leslie Weise, an attorney with special expertise in environmental issues? Will she become a sainted crusader when the health issues associated with Drake become national news?

The community within a mile or two of Drake is more than 30% minority, more than 29% below the poverty level, and of such overall low income that one wonders if their health means less to CSU and its Board than the health of those living in more affluent sections of the city. Air quality around Drake doesn’t meet EPA standards; but CSU is reluctant to act.

Colorado Open Records Act has been used on numerous occasions by attorney Weise and others, but CSU’s attorneys redact most documents and refuse to share their findings about the level of toxins that plague the Drake area. Isn’t it their civil duty to be as transparent as possible? As we saw in Flint, time is not a luxury sick kids and their parents can afford.

Likewise, the Colorado Department of Public Health and Environment seems to be uninterested in shutting down the plant or holding CSU to the standards enjoyed by the rest of the state, granting extensions and more studies. The EPA is also slow to respond to mandates than one would expect of a regulatory body.

Is this similar to what happened at Flint? What will it take for more vigorous and timely regulation of our city-owned CSU? Councilman Leigh, if you recall, was politically blackballed and threatened with lawsuits.

Would CSU behave this way if Drake were in close proximity to the Broadmoor? We can avoid following in the footsteps of Flint.

  

Raphael Sassower is professor and chair of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com

 

outsourcing, health hazards