Category: Business

Big Toyota Settlement Misses the Point Again

toyota_logoU.S. Attorney General Eric Holder today announced that the government had settled a criminal complaint against Toyota by accepting a $1.2 billion fine. That’s a hefty sum and I don’t want to diminish its stinging value on the $234 billion company. The fine represents more than 8% of the company’s operating profit of $14 billion.

But not one individual went to jail in the case. And therein lies the problem.

The “corporation” didn’t make the decisions that led up to the accidents, injuries and five deaths caused by the design defect. Individual employees and executives did. Fining the company doesn’t discourage any individual from behaving in ways that result in similar issues arising in the future.

The auto industry, not uniquely but famously, will generally put profits ahead of consumer safety. GM just proved that by waiting a full 10 years after discovering a serious flaw in the ignition switches on millions of its vehicles before finally issuing a recall under government pressure. You can bet that if some vice-president or the CEO of Toyota or GM was facing jail time for their malfeasance, issues would get resolved much more quickly. But as long as the company can do a cost-benefits analysis and conclude it’s cheaper to pay the fines and lawsuit verdicts than to fix the problem, public safety will continue to take a back seat.

Corporations are not people, not so long as they can avoid jail hen they break the law as Toyota here admitted. Criminal prosecution for misconduct must reach to the individual decision-makers responsible for the conduct. It’s long past time for that shift in American judicial philosophy.

 

 

So We Boycott Wal-Mart But Not Amazon?

This piece on Salon.com by Simon Head was an eye-opener for me. As a heavy user of Amazon.com, I’m being forced to reassess whether I want to continue to support these horrific labor practices merely for my own convenience.

amazon_logoHonestly, my jaw dropped. Repeatedly. And it wasn’t just over the unhealthy labor conditions reported in some of the Amazon’s plants. It was the general tenor of constantly accelerating performance requirements and expectations that pushed employees — particularly those over 50 — beyond their ability to perform and then simply tossed them aside like so much human garbage.

It feels to me like it is at least as immoral for me as a pro-labor Lefty to patronize Amazon as it is or would be for me to shop at Wal-Mart. This is really unconscionable behavior, even assuming a certain amount of exaggeration on the part of the reporters cited by Salon.

Has anyone else encountered this? How are you doing with it? I can’t allow this to become part of the new reality in which I participate.

 

Here’s Something to Get REALLY Agitated About With China

From time to time, American politicians, primarily of the conservative stripe, fret publicly about the amount of U.S. debt that is owed to China and Chinese nationals. I’ve never been convinced this was a major threat; in fact, their position as a primary creditor nation makes them, in my view, less likely to become a belligerent. It also reduces our leverage over how they run their country, but I’m not sure we should have such leverage.

But I just read a lengthy piece that was primarily about the recent surge in concerns with Indian pharmaceutical companies’ performance as suppliers of generic drugs to the U.S. market. It’s a very scary situation and one which is making me re-think whether I should insist on generics.

But the scary part of the article came in the very last sentence. It was almost a throw-away line:

The crucial ingredients for nearly all antibiotics, steroids and many other lifesaving drugs are now made exclusively in China. (emphases added)

Say what!!??  China has been resisting allowing U.S. Food and Drug Administration officials to inspect plants despite an agreement with VP Joe Biden last December. There is widespread concern that this resistance is due to China’s concerns many of its plants would not pass such inspections.

But how did we let ourselves get into a position where so much of our critical, day-to-day medicines depend on a single nation’s unregulated pharmaceutical industry? This feels to me like another side effect of rampant corporate greed among U.S. corporations in general and Big Pharma specifically, no doubt aided and abetted by the health care industry.

How can we know, if we allow or require a generic substitute for a prescribed drug, that it is safe and pure and does what it says it will do? The FDA stepping up foreign inspections and blocking imports from companies that fail to meet our exacting standards is one part of the solution. But maybe we need to cultivate a U.S.-based solution set to the need for generics, particularly in those areas where China now appears to hold a near global monopoly.

 

Big Banks Stockpiling…Uranium!!??

Goldman Sachs and Deutsche Bank Stockpile 5,000 tons of Uranium

Goldman Sachs and Deutsche Bank Stockpile 5,500 tons of Uranium

MY FRIEND TONY SETON, an old news-hound if there ever was one, sent me an email today with the understated subject line, “this does not seem like a good thing.”

No shit.

According to reporting by Wall Street Journal columnist Shah Gilani, Goldman Sachs and Deutsche Bank combined own 5,511 tons of yellowcake Uranium. What could one do with that much Uranium? Gilani ticks off some possibilities:

  • power all of China’s nuclear power plants for a year
  • power 20 conventional nuclear power plants anywhere in the world
  • build 200 nuclear bombs

Since they own these stockpiles, they can presumably sell them to anyone they want. And while it may be inconceivable that they would sell them to a rogue or terrorist state or organization, there’s nothing to prevent that (other than a few pesky laws they can undoubtedly buy exceptions to from a Congress they own) or for that matter blocking them from selling to another party who would resell to the highest bidder.

The idea that they might sell off some of their holdings isn’t just idle speculation In August 2010, a report on HuffPo was headlined, “Goldman Sachs Goes Nuclear, May Sell Uranium: Report”. That story was prompted by the financial giant’s first known foray into the world of uranium stockpiling.

This, my dear readers, is scary stuff.

Private ownership of Uranium stockpiles is a horrific idea on the face of it. When the owners and controllers of that stuff are huge financial conglomerates with proven track records of manipulation and market destruction, it becomes a freaking nightmare.

 

Wal-Mart is First Major Retailer to Get Bit by Food Stamp Cuts

I found this story too deliciously ironic not to share.

Wal-Mart announced a slightly less profitable picture for Q4 due primarily, its spokesman said, to “a greater-than-expected negative impact from reductions in … food stamps.”

What poetic justice!

Or as Daily Kos commenter Siri offered:

They put their political muscle behind the party that celebrates undercutting the economic stability of their largest base of consumers. Beyond the simple humanity of making sure families can afford to buy food, I’d think their own economic interests rely on those in need receiving the benefits they need to survive.

As I’ve said for years — and as many economists and other real experts have warned — you can’t cannibalize your market by denying them access to the wages to buy your products. I mean, wake up you morons! Henry Ford taught that lesson early last century! If you have no other morality than your bottom line, it still makes sense to make sure the lower classes don’t get too low.

Thanks for Your Many Years of Service. Now Please Die Quietly.

pensionsI suppose these comments are attributable, at least in part, to my advanced age. Although I am not a potential beneficiary of any retirement programs, I have many friends and acquaintances who are.

So when, as just happened with the sale of the Boston Globe, pensions are unceremoniously dumped as part of cost-cutting methods, my blood boils just a bit. Detroit and other cities who are experiencing difficult financial times are begging to be released from long-time pension obligations. Never mind that the law and agreements required that these funds were to be set aside and protected from the vagaries of day-to-day business. Never mind that in many cases part of the funds were contributed by retirees who are counting on them. As in so many other things, corporate greed knows no bounds.

By all accounts, sports magnate John Henry got a major steal when he bought the Globe and associated properties for a miserly $70 million. One financial analyst pegged the value of the properties, on a strictly cash flow basis, at $140-150 million. But Henry managed also to dump the pension obligations of the Globe as part of the acquisition. This factor alone should make the sale the subject of litigation by screwed retirees and their survivors and families.

I can hear the bleeding-heart capitalists now. The newspaper business is a shambles. The Globe is lucky to find a buyer at all. (Actually it was the New York Times that made the sale.) But newspapers are in trouble because their owners were too blind or stupid to see the impact of the Internet on their business. This despite literally hundreds of warnings from technology observers going back 20+ years. 90% of the retirees had nothing to say about the newspapers’ refusal to read the signs and make appropriate adjustments. But they’ll pay the price now unless someone puts a halt to this unconscionable practice.

 

I Wonder if These Anti-Freedom Companies Have Thought This Through?

A story that moved across the AP wire this morning reports that a company in Oklahoma City has appealed a lower-court federal ruling that it could not be exempted from a national mandate that all companies except religious organizations must provide health insurance that includes coverage for contraception. The company is Hobby Lobby and it is apparently owned by a family of Evangelical Christians who find abortion and some kinds of conception immoral.

The company is a privately held corporation but corporations are not eligible to allege that they hold any beliefs. Their owners and founders, of course, may do so.  But the corporation? Nope.

But here comes the Green family trying to convince a federal court that these behaviors that it finds immoral should not be mandatorily covered by insurance plans offered to employees. They are, in effect, asking the court to determine that the company can be thought of as having the beliefs of its owners.

But I don’t think they’ve thought this through very well. If they succeed, it seems to me they will have run a huge risk of “piercing the corporate veil.” This principle says that the owners and managers of a corporation cannot generally be held individually liable for acts of the company, its employees or contractors. The existence of this shield is one of the primary reasons people form corporations.

But if the corporation’s veil of protection can be pierced to avoid insurance coverage, then it seems to me that the owners have thereby admitted that the corporation is nothing more than a proxy for them as individuals and, therefore, they are individually liable for its acts.

I’m no lawyer, but that seems to be a reasonable understanding of the law as I do understand it.

(I’m refraining from commenting on the case itself beyond saying that I think the original court ruled correctly.)

 

Apple Does Evil, Tax-Wise

The New York Times today broke a story that is not itself a surprise but which clearly paints Apple with a pretty dark, sticky brush as a gigantic tax avoider. I find myself unsurprisedly disgusted.

rottenappleAccording to the story, “Even as Apple became the nation’s most profitable technology company, it avoided billions in taxes in the United States and around the world through a web of subsidiaries so complex it spanned continents and surprised experts, a Congressional investigation has found.” It cites one subsidiary in Ireland that paid .05% tax on $22 billion in pre-tax earnings and another that didn’t even file a return anywhere on $30 billion in profits.

It’s not clear yet whether Apple broke any laws — whether it evaded taxes or simply found legal ways to avoid paying them — but even if they didn’t, they are best an example of a terrible kind of corporate greed. By failing to support the cities, states and countries from which it and its employees derive enormous benefit, they drive up the cost of those services to ll of us. And that, in my book, is a bad actor.

 

Facebook Home Likely to Flop

Facebook LogoLeave it to Facebook to come up with yet another intrusive way to be in your face. This time, they want to own your entire smartphone experience without giving you one bit of added value.

The company’s new Home “app” (we’re going to have to find a new word for it but nothing I’ve heard so far resonates) essentially becomes your opening screentop and home base for your entire phone experience. Every time you start your phone or go back to its main screen (previously called “Home” but now we’ll have to find a better word for it, too, to avoid more confusion), you’ll be smack in the middle of your Facebook feeds.

I imagine there will be lots of people who are Facebook addicts who will find this a marvelous idea. But the vast majority of folks, I suspect, want to control their own experience, not have to jump through Facebook hoops just to launch the app they wanted to run.

This is a poorly thought-out idea that may in fact drive some users who perceive this as what one outlet called a “land grab” and sever ties with a company that is showing increasing signs of being willing to throw around its considerable weight without regard for what its users actually want.

I hope at least it turns out to be easy to deinstall or disable.

 

Ricochet Ads Are an Intriguing Idea

The New York Times (which I just blasted in my previous post for elitist language use) is pioneering a new kind of online advertising I find intriguing. It’s called “ricochet” advertising and here’s how it works:

  1. Advertiser chooses an article that has appeared in an online publication.
  2. Publisher creates a custom URL link to that article, to which it affixes an ad from the advertiser.
  3. Advertiser pays a fee (or share of proceeds) for a specific time period of association with the article.
  4. Advertiser promotes the article custom link to its social network.

As a rule, and as an old-fashioned news guy, I look askance at tight linkages between editorial and advertising. But this one seems, at first blush at least, to be innocuous and perhaps even mutually beneficial. It may point the way to a whole new approach to content-driven Internet marketing.

Advertisers who choose this approach will have to be very careful in choosing articles to attach to, though, because inevitably this will come to be seen as something of an endorsement.

What do you think?