Warning: Parameter 2 to SyndicationDataQueries::posts_search() expected to be a reference, value given in /home4/sattek/roguepolitics.com/wp-includes/class-wp-hook.php on line 298

Warning: Parameter 2 to SyndicationDataQueries::posts_where() expected to be a reference, value given in /home4/sattek/roguepolitics.com/wp-includes/class-wp-hook.php on line 298

Warning: Parameter 2 to SyndicationDataQueries::posts_fields() expected to be a reference, value given in /home4/sattek/roguepolitics.com/wp-includes/class-wp-hook.php on line 298

Warning: Parameter 2 to SyndicationDataQueries::posts_request() expected to be a reference, value given in /home4/sattek/roguepolitics.com/wp-includes/class-wp-hook.php on line 298
conflicts of interest « Rogue Politics

Categories

A sample text widget

Etiam pulvinar consectetur dolor sed malesuada. Ut convallis euismod dolor nec pretium. Nunc ut tristique massa.

Nam sodales mi vitae dolor ullamcorper et vulputate enim accumsan. Morbi orci magna, tincidunt vitae molestie nec, molestie at mi. Nulla nulla lorem, suscipit in posuere in, interdum non magna.

The Courts Go After Gerrymandering: Deconstructing a Conflict-of-Interest

In the U.S., the boundaries of both federal (e.g., U.S. House of Representatives) and state legislative districts are redrawn every ten years after the census to “ensure that each district contains roughly the same number of people.”[1] Both major political parties in state legislatures “often remap districts to favor themselves, either by cramming opposition voters into a single district or by dividing them so they are the majority in fewer districts.”[2] I contend that a simple majority vote is problematic, given the irresistible temptation to redraw the districts for partisan advantage rather than merely to take account of changes in population.



The full essay is at “Gerrymandering.”


1. Michael Wines, “Judges Find Wisconsin Redistricting Unfairly Favored Republicans,” The New York Times, November 21, 2016.
2. Ibid.

Continue reading The Courts Go After Gerrymandering: Deconstructing a Conflict-of-Interest

. . . → Read More: The Courts Go After Gerrymandering: Deconstructing a Conflict-of-Interest

Donald Trump as Businessman and U.S. President: How to Manage High-Stakes Conflicts of Interest

In a matter of days after his being elected as President of the United States, Donald Trump decided to put his business empire in the hands of his children. As laudable as it is for a father to have such pride in his offspring, the conflicts of interest cannot be ignored. It cannot be pretended that the Trump Organization would be in a blind trust; nor, given the element of temptation that is “huge” in a conflict of interest, would it be wise to simply trust the new president to do the right thing. While a president’s business should not have to take a major hit, the notion that assuming public office is a duty should be sufficient to justify costs—even in terms of opportunities lost (i.e., opportunity cost)—arising as a result of the business being put in a blind trust. In the case of a business empire, whose properties are of course known to the future president, expunging any chance of conflicts of interest is prohibitive, if not unrealistic. So the task, I submit, is to do what can realistically be done while recognizing that conflicts of interest are inherently unethical—meaning that human nature should not be expected to stand up to the inherent temptation.

The full essay is at “Donald Trump: Conflicts of Interest.”

Continue reading Donald Trump as Businessman and U.S. President: How to Manage High-Stakes Conflicts of Interest

. . . → Read More: Donald Trump as Businessman and U.S. President: How to Manage High-Stakes Conflicts of Interest

Organizational Conflicts of Interest and National Interest: The Case of Hillary Clinton and the Clinton Foundation

Organizational lapses, such as in non-profits or companies, regarding institutional conflicts of interest can extend in impact as far as distorting or impairing government policy and national interest if a principal of the organization also holds a hig… . . . → Read More: Organizational Conflicts of Interest and National Interest: The Case of Hillary Clinton and the Clinton Foundation

Organizational Conflicts of Interest and National Interest: The Case of Hillary Clinton and the Clinton Foundation

Organizational lapses, such as in non-profits or companies, regarding institutional conflicts of interest can extend in impact as far as distorting or impairing government policy and national interest if a principal of the organization also holds a hig… . . . → Read More: Organizational Conflicts of Interest and National Interest: The Case of Hillary Clinton and the Clinton Foundation

Corporate Money in Politics: Undue Influence and Conflicts of Interest

Indications of “the pervasive influence of corporate cash in the democratic process, and the extraordinary lengths to which politicians, lobbyists and even judges go to solicit money” can be seen in sealed but leaked court documents in Wisconsin.[1]This glimpse in to the real money-game in business and government shows just how much corporate money is in play. “The files open a window on a world that is very rarely glimpsed by the public, in which millions of dollars are secretly donated by major corporations and super-wealthy individuals to third-party groups in an attempt to sway elections.”[2] In addition, the files show just how easy it is for public officials to deny having been subject to conflicts of interest. The combination of a lot of money and the ability to get away with exploiting a conflict of interest is toxic to a viable representative democracy (i.e., a republic).


The full essay is at “Corporate Money in Politics.”



[1] Ed Pilkington, “Leaded Documents Reveal Secretive Influence of Corporate Cash on Politics,” The Guardian, September 14, 2016.

[2]Ibid.

Continue reading Corporate Money in Politics: Undue Influence and Conflicts of Interest

. . . → Read More: Corporate Money in Politics: Undue Influence and Conflicts of Interest

Apollo Global Flew Too Close to the Sun: Personal and Institutional Conflicts of Interest

I submit that people tend to get more upset over the exploitation of personal conflicts of interest than the institutional sort. That is to say, our blood boils when we learn of another person contravening a duty in order to gain financially, yet we don’t mind when a CPA firm falsely gives a qualified opinion on an audit so the company being audited will continue with that audit firm the following year. Logically, as the money involved is more in the case of the CPA firm and individuals within the firm stand to benefit personally as the firm is enriched by the continued business, yet even so, we cannot stand direct personal enrichment resulting from a conflict of interest. In August, 2016, Apollo Global, a large private equity firm, settled with the SEC. Both personal and institutional conflicts of interest brought on the $53 million fine. Hence, this case is useful in comparing the two sorts of conflicts of interest.

The full essay is at “Apollo Global Too Close to the Sun

Continue reading Apollo Global Flew Too Close to the Sun: Personal and Institutional Conflicts of Interest

. . . → Read More: Apollo Global Flew Too Close to the Sun: Personal and Institutional Conflicts of Interest

A Subtle Conflict of Interest in Obama’s Nominee for FDA Commissioner

Robert Califf, U.S. President Barak Obama’s nominee in 2015 to head the federal Food and Drug Administration (FDA), had received consulting fees of roughly $205,000 between 2009 and early 2015 from drug companies and a medical-device maker.[1]He donated the money he had made since around 2005 to nonprofit groups, and he had ceased all such work before he became the FDA deputy commissioner for medical products and tobacco. The question is whether he would have a conflict of interest in taking the helm at the regulatory agency that puts the public’s interest above those of the regulated companies. I contend that such a conflict is indeed entailed, though not on account of the money he received or any relationships he had developed with people at the companies.


 The complete essay is at “FDA Nominee Conflict-of-Interest.”



[1]Drug companies spent an additional $21,000 reimbursing the cardiologist for travel, meals, and other expenses. Joseph Walker, “FDA Nominee Received Industry Fees,” The Wall Street Journal, September 19-20, 2015.

Continue reading A Subtle Conflict of Interest in Obama’s Nominee for FDA Commissioner

. . . → Read More: A Subtle Conflict of Interest in Obama’s Nominee for FDA Commissioner

Bank of America Board Ignores a Binding Resolution: Fiduciaries Seizing Power from Shareholders

Corporate board directors have a fiduciary duty to act in the shareholders’ financial interest. What if a board’s directors think they know better that the stockholders as to their interest? In such a case, the directors would be acting like elected representatives who vote contrary to the wishes of their constituents for their own good. While valid from the standpoint of representative democracy, I’m not sure the principle has legitimacy in the corporate context, wherein property-rights are being represented. Simply put, an owner gets to decide how his or her wealth is used, within legal parameters of course. The case of Bank of America’s board may suggest that directors essentially work for their managements while being shamelessly dismissive of even binding directives from the stockholders as a group.


The complete essay is at “Corporate Governance at Bank of America.” 



The man of the hour. Brian Moynihan, Chair and CEO of Bank of America as of 2015. His power exceeded even that of the stockholders, whose concentrated wealth he managed. Lest it be maintained that a CEO with such power optimizes corporate earnings, consider that his predecessor, Ken Lewis, had the bank purchase Countrywide, whose fraudulent mortgages played a vital role in bringing about the financial crisis of 2008. Perhaps CEO/chair duality is of value simply in reducing a corporation’s systemic risk. Hence, Congress may legitimately intervene.(Simon Dawson/Getty Images)

Continue reading Bank of America Board Ignores a Binding Resolution: Fiduciaries Seizing Power from Shareholders

. . . → Read More: Bank of America Board Ignores a Binding Resolution: Fiduciaries Seizing Power from Shareholders

A Greek Referendum on a Proposed Bailout: Impediments to Reaching the People

Greek Prime Minister Alexis Tsipras announced a referendum on austerity demands from foreign creditors on June 27, 2015, “rejecting an ‘ultimatum’ from lenders and putting a deal that could determine Greece’s future in Europe to a popular vote. ‘Our responsibility is for the future of our country. This responsibility obliges us to respond to the ultimatum through the sovereign will of the Greek people,’ Tsipras said in a televised address.”[1]Prime Minister George Papandreou had been ousted in 2011 because he had announced a referendum on budget cuts that lenders were demanding. Essentially, the sovereign will of the people was eclipsed by an incoming government by technocrats. Four years later, Tsipras was on much firmer ground, democratically speaking, even as his state was facing a financial crisis manifesting in a slow bank-run. 

Nevertheless, reaching the popular sovereign (the Greek people in this case) involves obviating some serious distortions and roadblocks.

Greece’s PM Tsipras looking rather fatigued after meetings on the bailout. (John Thys AFP/Getty)

 The full essay is at “A Greek Referendum.”


[1] Lefteris Papadimas and Renee Maltezou, “Greece’s PM Tsipras Calls Referendum on Bailout Deal,” The Huffington Post, June 26, 2015.

Continue reading A Greek Referendum on a Proposed Bailout: Impediments to Reaching the People

. . . → Read More: A Greek Referendum on a Proposed Bailout: Impediments to Reaching the People

A Conflict of Interest at the U.S. Department of Education Keeps Students on the Hook

A conflict of interest can be viewed as two conflicting roles, wherein the one entailing more public responsibility is compromised or eclipsed by the other. The ongoing temptation itself may be sufficient grounds ethically to end or transfer the potentially exploitive role. In other words, sometimes the solution is as simple as ending the potentially encroaching task or role. When the institution is a governmental agency, selecting or creating another agency to perform the task is one alternative; privatizing it is another. Either way, deconstructing an institutional conflict of interest by separating problematic role-combinations is advisable even in cases in which the more private-benefits role has not corrupted the more public-benefits role. The U.S. Department of Education provides a useful case in point.


The complete essay is at “U.S. Department of Education.”

Continue reading A Conflict of Interest at the U.S. Department of Education Keeps Students on the Hook

. . . → Read More: A Conflict of Interest at the U.S. Department of Education Keeps Students on the Hook

Stockholder Activism at DuPont: A Conflict of Interest for Management

In American corporate governance law, the business judgment rule gives management expertise the benefit of the doubt over stockholder proposals. Compared with executive skill, they look rather populist and thus potentially irrational in nature. Nevertheless, with the rule chaffing up against the property-rights foundation of corporate capitalism, the managerial prerogative can be said to be dubious. Indeed, a strict private-property basis justifies displacing the default profit-maximization mission for a given corporation. Alternatively, stockholders may want to use their concentrated, collective wealth for other purposes, such as to alleviate hunger. Once enough profit has been made for the business to be sustained for another year or two, any additional surplus would be spent on food pantries, for example, rather than going out as dividends or being retained by the corporation. Because managerial skill is premised on the profit-maximization goal and its associated strategies, corporate executives intrinsically resist alternatives proposed by stockholders. The managers face a conflict of interest in providing their recommendation for stockholders. Even when the proposal assumes profit-maximization but differs from a current strategy (i.e., adopted by management), a conflict of interest exists should the management seek to provide a recommendation for the stockholders. In this essay, I use the activism of Trian Fund Management at DuPont to illustrate this point.


The full essay is at “Stockholder Activism at DuPont.”

Continue reading Stockholder Activism at DuPont: A Conflict of Interest for Management

. . . → Read More: Stockholder Activism at DuPont: A Conflict of Interest for Management

Police Power Exceeding the Capacity of the Human Brain: Some Countervailing Measures

“Power tends to corrupt and absolute power corrupts absolutely.” Lord Acton’s timeless statement is applicable to legal and illegal power alike, for each is subject to abuse. The victims are those whose wills are bent through either harm or the threat of injury. Put another way, the human brain may lack sufficient cognitive, emotional, and perceptual machinery to check the instinctual plus socialized power-aggrandizing urge. This vulnerability is particularly apparent in viewing video showing a police employee violently over-react in a situation that quite obviously should not have involved violence. Although anger doubtlessly plays a crucial role in the trigger that unleashes the police violence, the more subtle suspension of cognition and warping of perception is also in the mix.



The full essay is atPolice Power.” 

Continue reading Police Power Exceeding the Capacity of the Human Brain: Some Countervailing Measures

. . . → Read More: Police Power Exceeding the Capacity of the Human Brain: Some Countervailing Measures

Wall Street Writing Its Own Laws on Risky Derivative Trading

In just four years, Wall Street got away with weakening a part of the Dodd-Frank financial reform law, which became law in 2010 to protect the financial system from the excesses that led to the financial crisis in 2008. Wall Street bankers and their lo… . . . → Read More: Wall Street Writing Its Own Laws on Risky Derivative Trading

Private Interests Over the Public Good: Energy Companies Capture an Attorney General

In Wealth of Nations, Adam Smith argues that the aggregation of the preferences of consumers and producers for a given good is in the public interest for the product or service. Often overlooked is Smith’s Theory of Moral Sentiments, in which the famous economist wraps a moral sentiment around the individual preferences, hence hopefully constraining them, albeit voluntarily. Herein lies the rub, for it is shaky to assume that a preference that seeks to maximize itself will voluntarily restrain itself when it rubs up against an ethical limit that is felt. Such a moral constraint is like a semi-permeable membrane in that the sentiment naturally triggered when a person comes on an unethical situation or person can be ignored or acted on.


The full essay is at “Private Interests Over the Public Good.” 

Continue reading Private Interests Over the Public Good: Energy Companies Capture an Attorney General

. . . → Read More: Private Interests Over the Public Good: Energy Companies Capture an Attorney General

On the Federal Reserve’s Quantitative Easing: Impacts on the U.S. Debt and Inflation

With government-bond purchases of $3.9 trillion (including mortgage-backed bonds) from November 25, 2008 to October 30, 2014, the U.S. Federal Reserve Bank stimulated the American economy by keeping interest rates low. This in turn kept the U.S. Treasury department’s interest payments on the gargantuan federal debt lower than would have otherwise been the case. Put another way, the Federal Reserve Bank’s massive foray into stimulating the economy made holding debt and borrowing still more money less costly than it would otherwise have been, and thus enabled the government’s penchant for debt-financing over raising taxes and/or reducing spending. “Enabling an addict” would be a less charitable way of putting the Fed’s role vis-à-vis the U.S. Government. In this essay, I explore problems resulting from the Fed’s stimulus on the government’s debt-financing.
 
The full essay is at “The Federal Reserve’s QE

Continue reading On the Federal Reserve’s Quantitative Easing: Impacts on the U.S. Debt and Inflation

. . . → Read More: On the Federal Reserve’s Quantitative Easing: Impacts on the U.S. Debt and Inflation

Beyond Breaking California Up into Six States: A Federalist Alternative

In any epoch and in any culture, the human mind displays a marked tendency to accept the status quo as the default—being so ensconced in fact that efforts at real change almost inevitably face formidable road-blocks. In this essay, I analyze the 2014 failed ballot-petition that would have put the proposal of breaking California into six separate states to Californians. I contend that the proponents could alternatively have taken up a more optimal alternative—one much easier to put into effect. Interestingly, that idea comes from the E.U. rather than the U.S.

The entire essay is at “Beyond Breaking California Up

Continue reading Beyond Breaking California Up into Six States: A Federalist Alternative

. . . → Read More: Beyond Breaking California Up into Six States: A Federalist Alternative

Putin’s Russia Invades Ukrainian Territory: National Sovereignty Turned Against Itself at the UN

On February 28, 2014, Ukraine’s UN Ambassador Yurly Sergeyev informed the Security Council that Russia had invaded the Crimean Peninsula, a semi-autonomous region of the sovereign state of Ukraine, by means of military transport planes, 11 helicopters, and trucks. In exchange for Ukraine having given up its nuclear weapons, Russia was treaty-bound to respect the sovereignty of the Soviet Union’s former republic. After briefly discussing whether Putin’s plan should have come as a surprise around the world, I want to take a critical look at the Russian president’s rationale for invasion in order to argue that political realism (i.e., the priority being on strategic interests at the expense of the world) and the related doctrine of absolute sovereignty are faulty maxims even as they are dominant still in the twenty-first century due to the staying power of pre-genetic-engineered human nature (e.g., “might makes right”).


Russian transport trucks inside Crimea in Ukraine. (Image Source: CNN)

Coming on the heels of the Olympics that showcased Russia to the world, the show of force must have come as a complete surprise to many people around the world. After all, on the day before the well-planned invasion, Russia’s ambassador to the United Nations had dismissed with laughter a journalist’s question on whether Russia was suddenly conducting its “military exercises” near Crimea as a precursor to an invasion. Indeed, Vitally Churkin even conveyed a sense of having been insulted by the very question! To be sure, any surprise may have been muted for those people who had watched the tape of two or three Russian policemen whipping the three young women of the musical group, Pussy Riot, for singing an anti-Putin song while jumping around on a sidewalk (as per youth’s natural vigor) in Sochi, Russia as the Olympic games were in progress. Indeed, some people may have felt an intuitive sense of that Olympics just not feeling right for some reason and so could in some measure feel vindicated in not having been manipulated by Putin (or the NBC television network in the US).[1]


As though by script known to only a few while the viewers are fed lies at the surface, well-armed men presumably Ukrainians but actually brought in by bus from Russia (among them being members of Vladimir Putin’s favorite biker group) took over the provincial legislature of the semi-autonomous region a day or two before the invasion. Once the Russian thugs were in control, the pro-Russian Crimean leader, Sergey Aksyonov, somehow found himself installed as the region’s boss. He “returned the favor” by “asking” Putin for help in maintaining peace.[2] The two-step dance by the emperor and his potential governor of Ukraine or at least Chrimea can be understood as an exercise in “mutual back-scratching” (or something far less fit for public viewing).


Meanwhile, the two men dancing where dancing was illegal at the time kept their mutually-satisfying engagement to the basement as they acted out a script upstairs to edify and assuage a global audience well-ensconced in slothful inertia (and its cousin, the “meeting”). Speaking with U.S. President Barak Obama on the first day of the invasion, “Putin stressed ‘the presence of real dangers to the lives and health of Russians who are currently present in the Ukrainian territory.’ Putin said that Russia reserves the right to defend its interests and the Russian-speaking people who live there,” according to the Kremlin.[3]Meanwhile, Ukraine’s acting President Oleksadr Turchynov insisted that any reports of Russians and Russian-speaking Ukrainian citizens in the Crimean region being at all threatened were pure fiction.  US President Johnson’s fictional “Gulf of Tonkin attack” rationale for sending troops to Vietnam in 1964 may come to mind as a similar fabricated incident serving as a façade for a pre-existing plan to escalate a war by adding force.


With Sergey Aksyonov essentially installed by Putin’s regime, the Russian president could not viably claim to have been invited into the territory. What about Putin’s claim of reserving his government’s right to protect Russian citizens in other countries? Would the United States be justified in invading the sovereign state of Mexico because Americans there are at risk due to the prevalence of powerful drug-cartels or because Americans are violating US laws by facilitating the drugs reaching American soil by aiding smugglers on the other side? No Americans had been at risk in Iraq when US President Bush manipulated Congress (and the UN) with faulty (or outright dishonest) “intelligence” reports of weapons of mass destruction in Iraq. Must the citizens at risk even be inside the malevolent country for an invasion to be valid? Surely international law does not confer Russia or any other sovereign country (including Ukraine) with the right to invade another sovereign nation simply because citizens or ex-compatriots there may be threatened. Notice that Putin’s claim of “real dangers” could only mean potential threat as of the day of the invasion. Surely a slippery slope comes into play if invasions can be justified on the basis of potential energy.


Having exculpated Putin’s façade, we are left with the naked aggression of an empire going after a former (member) state as per the empire’s own geopolitical and military strategic interests. The theory of political realism applied to international relations asserts that polities act only or primarily on the basis of their “self-interests.” Like a car ignoring the law in cutting in front of a cyclist or pedestrian, greater force can dismiss the constraint of parchment and impose its will without fear of being stopped by a lesser force.


In his seventeenth-century masterpiece, Leviathan, Thomas Hobbes warned  the world that a sovereign ruler can do whatever he wants, as he is constrained only by divine judgment in the afterlife (when it is too late for the king’s victims in this world). A century earlier, Jean Bodin, who also held an absolutist view of sovereignty, had that sovereigns are also bounded by divine law while still ruling. The absolutist notion of a ruler’s or nation’s sovereignty is not as absolute as modern-day defenders at the UN, such as Russia and China, conveniently. At least in Russia’s case, the doctrine is only to be selectively defended when violating it is not in Russia’s strategic interest. Fortunately for Russia, its veto-power in the UN’s Security Council is pliable enough to be used for both purposes—the inherent conflict of interest of a member of the council being allowed to veto resolutions to reign in the member’s own violations being somehow acceptable enough for the systemic or institutional design-flaw to be expunged from the land of the living.


[1]See “The 2014 Winter Olympics in Russia: ‘Where There’s Smoke, There’s Fire.”

[2]Chelsea Carter, Diana Magnay, and Ingrid Formanek, “Obama, Putin Discuss Growing Ukraine Crisis,” CNN, March 1, 2014.

[3]Ibid.

Continue reading Putin’s Russia Invades Ukrainian Territory: National Sovereignty Turned Against Itself at the UN

. . . → Read More: Putin’s Russia Invades Ukrainian Territory: National Sovereignty Turned Against Itself at the UN

Google Jettisons Motorola: A Jack of All Trades Is Master of None

Managers tasked with the overall management of a company may thirst for additional lines of business, particularly those that are related to any of the company’s existing lines. Lest it be concluded that an expansive tendency flows straight out of a business calculus, the infamous “empire-building” urge, which is premised on the assumption of being capable of managing or doing anything, is often also in play. Interestingly, this instinct can operate even at the expense of profit satisficing or maximizing. In this essay, I assess Google’s sale of its Motorola (cellular phone manufacturing) unit.


Having acquired Motorola for $12 million, Google’s selling price of $3 million may seem to reflect negatively on the management at Google. However, Google arranged to keep some of the valuable patents, and license a few of those to Motorola. “Google got what they wanted and needed from Motorola—they got patents, engineering talent and mobile market insight,” Jack Gold, principal analyst at J. Gold Associates, explains.[1]His mention of insight is particularly noteworthy, as it pertains to the importance of innovation at Google.


Larry Page, Google’s CEO, provides us with the official rationale. “The smartphone market is super-competitive, and to thrive, it helps to be all-in when it comes to making mobile devices.”[2]Not being “all-in” implies that Google’s management would be too distracted by its main preoccupation (i.e., coming up with new software and related hardware) to concentrate on making phones better than those proffered by competitors in that manufacturing sector. Interestingly, Page omits at least two alternative rationales.

First, the quote says nothing about the institutional conflict-of-interest that is inherent in Google competing in the phone market against smartphone makers such as Samsung and HTC, which use Google’s Android operating system. Jack Gold points out that selling Motorola eases this tension.[3] 

That a conflict-of-interest is more serious than mere tension seems to have alluded the financial analyst; competitors are in tension, but this is generally accepted because the benefits to society dwarf the rather limited costs (e.g., by means of government regulation). An institutional conflict-of-interest, on the other hand, brings with it only a private benefit while the costs can be widespread. From a societal standpoint at least, we do not assess conflicts-of-interest based on a cost-benefit analysis. In fact, we tend to treat the sheer existence of the exploitable arrangement to be unethical. We need only look at the societal reaction in the U.S. to CPA firms pronouncing unqualified opinions so the clients would renew the firms for the next year, and the rating agencies rating tranches of sub-prime mortgage-based bonds as AAA because the agencies earn more if the bond issue does well. Yet, strangely, Larry Page made no mention of having expunged this problem.


Secondly, Page’s statement makes the point that the company’s main pursuits would be too distracting. Alternatively, he could have pointed out that manufacturing phones would likely become a distraction from Google’s main work. This rationale makes more sense, as distractions from an adjunct operation are less costly than those impinging on what the people at a company do best.


I submit that the assumption that a heavily ideational, future-oriented company can also be good at manufacturing is more costly than any prohibitive short-term financials. The search-engine-based internet giant strikes me as being oceans of time away from the banal world of manufacturing, even concerning those products such as cell phones and internet glasses that are related to the software advances.


Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, trying out a pair of Google “glasses” during a meeting at Google’s headquarters. How might the innovation change war? If only it could be relegated to virtual reality .

Similar to leadership being forward-oriented whereas management encompasses implementation of existing strategies derived from innovations already part of history, Google’s forté in looking out on a horizon pregnant with practical possibilities not just to ride, but also to create the next wave in computer technology does not necessarily transfer into being good at managing a manufacturing process. Furthermore, any resources, whether financial or managerial, poured into the latter must come with an opportunity cost at the expense of the former. That is to say, opportunities would be lost in what the supervisory and non-supervisory employees at Google do best. Even hiring additional managers and labor with expertise in manufacturing would require time and money that could otherwise be devoted to inventing and mining practical ideas on the open horizon. At the very least, the “room addition” of operations could distract Google’s futurists from delivering yet another leap in technology that transforms the world in which we live.


Generally speaking, intensification can bring with it more fecundity than can expansion. The diseconomies of scale that come as costs rise disproportionately as a company’s administration and operations expand only worsen the plight of the Jack of all trades who is master of none by virtue of having a finger in many pies. What might a business calculus look like that is based on intensification? Amassing more and more charge in a well-fitting battery is doubtless very different than being oriented to spreading out across new lands while trying to conquer and hold them while protecting the home front and seeing that it continues to be productive. I suspect that the intensification instinct is more in line with profitability over all than is the power-aggrandizing urge of empire-building.


1.Alistair Barr, “Google Sells Off Motorola,” USA Today, January 30, 2014.

2. Ibid.

3.Ibid.

Continue reading Google Jettisons Motorola: A Jack of All Trades Is Master of None

. . . → Read More: Google Jettisons Motorola: A Jack of All Trades Is Master of None

Incentives at EBay to Exploit Its Golden Goose

When is it ok not to worry about a corporate board or management exploiting an institutional conflict-of-interest? I contend in another essay that the very structure of an institutional (i.e., based on the relationships of positions and/or organizations) is inherently unethical, hence even if not actively exploited. Here, I delve into factors that may reduce the likelihood of such a conflict being exploited. I suspect that most folks assume that the presence of such mitigating factors means that a particular conflict-of-interest is not, therefore, inherently unethical. This convenient assumption may be all too easy to make, given that it removes any need ethically-speaking to reorganize positions and roles in an organization and the relationships between organizations.


To uncover at least a few factors, I take an inductive approach here in using the particular case of EBay, which owns PayPal. That is to say, the online marketplace has its own online payments company. PayPal began operations in the late 1990s and went public in 2002. EBay then acquired the company for $1.5 billion.[1]PayPal expanded to handle the payments of other online ecommerce sites even as it thrived as the principal means of payment on EBay. By 2014, with EBay still arduously competing with Amazon, PayPal had come to account “for a substantial portion of the total market value” of EBay’s stock.[2]In 2013, for example, PayPal’s revenue growth was at 19 percent, compared to just 12 percent for EBay.[3]This contrast and the related portion of PayPal value in the corporation’s total market value are crucial points for my larger point.


The corporate headquarters of EBay and PayPal. Which one dominates internally? (Wikimedia Commons: Leon7)

With PayPal having added a substantial number of online sellers—some of which may be competing with EBay—and looking to become a payment method in “brick and mortar” stores in 2014, EBay’s corporate management may be tempted to “tweak” PayPal behind the scenes to make the payment method easier for EBay customers. The institutional, or structural conflict-of-interest here lies in the dual roles of EBay’s corporate management oriented to 1) improving the financial performance of the online marketplace at EBay by more vigorously competing against other online marketplaces as well as sellers, and 2) getting more “golden eggs” from PayPal by expanding its reach even further beyond EBay.

Inserting a bias in PayPal toward EBay at the expense of outside vendors would tend to shrink the “golden eggs” gradually over time even as EBay’s online marketplace would benefit against its competitors. In exploiting the intra- and inter-institutional relations in this way, however, the corporation’s group of top managers (and/or board) would risk “killing the golden goose” for a very uncertain increase in revenue-growth from EBay’s struggling online marketplace. Put another way, the interest that would motivate exploiting the conflict-of-interest is so much weaker than the corporate management’s (or board’s) conflicting interest that the decision to exploit PayPal’s situs in the larger corporation (i.e., PayPal’s dual roles) is unlikely to be made unless the relevant variables change. From this caveat, you may have an intangible sense of the contingency, and thus precariousness, of an institutional conflict-of-interest not being triggered (i.e., exploited). Indeed, the subtle nervousness you may feel may be a psychological indication or sign of the inherently unethical nature of an institutional (or any other type of) conflict-of-interest. Such a nature, or essence, is exists whether or not such a conflict is exploited.


1. Alistair Barr, “Icahn Wants EBay to Spin Off PayPal,” USA Today, January 23, 2014.

2. Ibid.

3. Ibid.

Continue reading Incentives at EBay to Exploit Its Golden Goose

. . . → Read More: Incentives at EBay to Exploit Its Golden Goose

Probing the Annals of CBS in 60 Minutes or Less: Benghazi as a Profit Center

The American CBS television network’s main news magazine, 60 Minutes, breached the network’s own journalistic standards in 2013 by not sufficiently verifying the veracity of Dylan Davies’s “eyewitness” account of the night of the attack on the U.S. embassy in Benghazi, Libya. Every human being makes mistakes; we cannot, therefore, expect the editors at 60 Minutes to be any different. Jeff Fager, chairman of CBS’s board of directors and executive producer of 60 Minutes, told the New York Times that the fiasco was “as big a mistake as there has been” at the program.[1]However, what if the lapse was intentional? What if the departure from the network’s standards was part of a determined effort at the network level to exploit a structural conflict of interest existing within the company?
Dylan Davies had been a security guard at the embassy. He described for correspondent Lora Logan the events he had witnessed on the night of the attack. Never mind that prior to the interview he had told both his employer and the FBI that he had not been at the mission on the fateful night. The easy explanation is that Davies lied and Logan failed to do an adequate fact-check on her interviewee. The media itself tends to go for such easily-packaged explanations.

Nevertheless, Davies was also the author of The Embassy House: The Explosive Eyewitness Account of the Libyan Embassy Siege by the Soldier Who Was There. No, I am not making this up; the man who had been nowhere near the embassy urged or went along with the emphasis on his status as an eyewitness to sell his book. That the publishing house, Threshold Schuster (a subsidiary of Simon & Schuster), was owned at the time by CBS, gave Fager the perfect opportunity to exploit an institutional conflict of interest under the more salubrious-sounding notion of “corporate synergy.”

As chair, Fager could help the subsidiary of a subsidiary while, as executive producer, also helping the network’s flagship news-magazine program. To the extent that he would make out financially, the conflict of interest is of the personal type; the “corporate synergy” gained by compromising journalistic standards (as well as any ethical mission statement) falls under the institutional type. I suspect the latter is the most operative here. Fager, or perhaps a manager at the corporate level, may have pressured the staff at 60 Minutes to not look very closely in checking up on Davies’s eyewitness testimony. Besides making good copy, the material would “cross-fertilize” another unit of CBS—the book publishing subsidiary—by selling more of Davies’s book.

Unfortunately, the exploitation of conflicts of interest typically go under the radar screen; the pubic typically has only a whiff of the proverbial smoking gun to go on. Moreover, Americans tend to ignore or minimize the need to deconstruct institutional conflicts of interest, preferring to go after personal conflicts of interest by making sure the self-enriched culprits feel some pain. In the case at hand, that Logan did not mention on camera that Davies is the author of a book being sold by a CBS subsidiary raises the possibility that she and her bosses had in mind something (i.e., the conflict of interest) in order for her to avoid giving any hint of it publically. In other words, the omission would be rather odd if the relationship were no big deal. Even so, with such conjectures to go on, the public is at a notable disadvantage even just in knowing that CBS exploited an organizational conflict of interest. As a result, managers know that going subterranean on such a matter is a workable course of action. To wit, Kevin Tedesco, the spokesman for 60 Minutes, replied to the enquiry of a journalist with a solid, “We decline to comment.”[2]When darkness prevails outside, it can pay to slam the door firmly shut. So much for the public interest; the private prevails in any plutocracy.


1. Rem Rieder, “Clock is Ticking for CBS to Probe Benghazi Report,” USA Today, November 15, 2013.

2. Ibid.

. . . → Read More: Probing the Annals of CBS in 60 Minutes or Less: Benghazi as a Profit Center . . . → Read More: Probing the Annals of CBS in 60 Minutes or Less: Benghazi as a Profit Center