If you only read U.S. news sources you may have most likely missed the hard to find blurb on two executions that took place today. That is because they took place in China, and they were not child killers, serial killers or mass murderers of any kind; sort of. I do; however, want to make an example of these two gentlemen.

Their names are Zhang Yujun and Geng Jinping. No doubt you cannot pronounce the names, but I ask you to remember them. Now, before you get ready to stand on your moral high ground let’s take a look at what they did.

They were businessmen, and by fortune found themselves in the middle of China’s economic revolution running full steam ahead to a  mixed economy (market economy for those of you that only read western news sources). They each were involved in the milk trade; Jinping managed a milk production center while Yujun was a manufacturer. A lucrative business for an economically thriving society. So what went wrong?

These two businessmen, in a heightened sense of greed amidst a burgeoning “market”* economy, found a way to make their product appear more desirable to a consumer hungry nation. They manufactured, marketed, and sold what they called a protein powder, and they put this powder into the milk supply. This protein powder was actually made from melamine and maltodextrin. Melamine gives a false reading of high protein, but it is a toxic chemical that in higher doses can cause renal failure, and so it did. Six children died and almost 300,000 other people fell ill in varying degrees.

Wow, a bad business decision; an error in judgement; a greed driven parable that finds otherwise good people trying to keep up with the Jones’ or in this case the Li’s perhaps. It is nothing more than the antics U.S. business people find themselves doing, and we don’t execute people for that. Heck, if we did we would have to put half of Wall Street in front of a firing squad. Not to mention the leaders of places like Boeing, PG&E and hundreds of others. Medical insurance company heads alone would be quaking in their boots. Pharmaceutical CEOs would be heading for the border. Isn’t it great that we are so civilized?

Now let me knock you off your principled pedestal. The Chinese defense lawyers blamed the government for not paying attention. To quote one, “it’s the food supervision and inspection authorities that are responsible for this.” It was inferred that the greedy client was not to be blamed, despite knowing the harm it would cause, because it is someone else’s responsibility to catch them. This sounds a little familiar to me. Our own banking industry championed the same exact reasoning!! That’s strange.

Now, our Wall Street and former White House cronies didn’t kill six children, at least not directly. But, can we not indirectly blame them for hundreds of people that have taken their lives, thousands that are on the streets, and millions out of work? China makes an example of this type of crime.  An eye for an eye. Sure we could do this too, but don’t worry guys because we don’t execute our white collar criminals even if their actions are a catalyst. We are better than that. We reward them with bailouts and bonuses.

Don’t you just love capitalism?

*Although the west claims China is becoming a market economy, the most they can hope to achieve is a mixed economy. While maintaining a Communist government, a free market economy is not possible. China themselves only state their desire to be a mixed and not a market economy.

It is fairly plain to see that the $700 billion stimulus has not worked. At least not so far, and in light of the planned executive bonuses there is a fair chance we can take that statement to the bank. This is good in that at least we have something to take to the bank considering all they are taking from us, but I digress.

As an economist, I take this seriously. I realize the government is trying anything to get the economy back on track, but seriously folks in D.C. Did you really think that money would find its way down from Wall Street to Main street? A trickle down theory of economics is good, and has at times been successful; however, not when greed and corruption are rampant. This is where my common sense becomes inflamed. The government knew very well that corruption had caused the banks to crumble. Why then would they pour $700 BILLION into a corrupt institution?

Did we need a stimulus? Yes. Do we still need a stimulus? Yes, because main street is still suffering. Unemployment is quickly approaching 16% in places like Michigan, but even in California it is continuously creeping up. According to the Bureau of Labor Statistics it rose again to over 12% in September. In fact, that is only “registered” unemployment and not actual figures. It does not account for those that are underemployed or are not eligible for unemployment compensation such as the formerly self employed. If we counted those workers the numbers would more than likely approach  at least the 20% – 25% level. As of the latest September statistics, long term unemployment (those unemployed more than 27 weeks) rose to 5.4 million people. Does this sound like a recovery? Does this resemble a successful stimulus?

Although I was not a fan of the previous administration, I am also one to give credit where credit is due. The decision to give a stimulus to the people, in the form  of a $600.00 check, was a step in the right direction. It was designed to “stimulate” consumer spending, but it did not do the trick and was therefore deemed a failure. That was also part of the design. The administration needed to be able to point to a failure of the trickle up theory of economics. The failure was in the fact that the amount was ridiculous. If anyone thought that $600 in a person’s hand was going to do anything but pay a bill or two they were sadly mistaken. Very few people ran out and went on a shopping spree with a paltry $600, and thus consumer spending continued to drop. See, trickle up doesn’t work so let’s try trickle down and give big business billions said the guys in charge. Whew, aren’t we glad they tried? Don’t we feel better now?

Why not try this President Obama? How about taking the beginning amount of $700 billion and divide it by the 250 million adults in the U.S.? MAYBE, even add another $700 billion to the mix, which is probably closer to the amount that will actually end up being poured into our failing economy. Divide all of that by 250 million adults and watch how they spend their $5,600 windfall. Yes, people will pay down a bit of their debt like they did with the $600, but they will definitely go out and spend some of that much larger check. How do I know this? Because it is human nature. Sociology 101 for a consumer nation, and especially with the holidays right around the corner.

Trickle down did not work. What do you say we give trickle up a “real” try, and watch our economy start to right itself with a genuine stimulus?!

BLS (Oct. 21, 2009), Regional and State Employment and Unemployment Summary. Retrieved Oct. 23 from

http://www.bls.gov/news.release/laus.nr0.htm

The new film by Michael Moore, Capitalism, A Love Story, did not really say anything different from what I  have been talking about for many years now. While I am not necessarily always a fan of his tactics, he does have some very insightful things to say. Capitalism is failing.

For almost a year now we have been hearing Wall Street wail as loud as they can for help so we bailed them out despite the knowledge that they created the disaster themselves by virtue of unethical business practices and greed. The idea was such that pouring taxpayer money into badly managed, unethical, parasitic banking institutions would save the economy, our beloved free market system, and give them more money to loan. The trickle down theory of economics in practice, but it is not trickling down and never will. Therein lies obvious as well as less apparent problems.

By the very definition of capitalism and free market economy it is survival of the fittest. This is what Wall Street has been espousing far longer than I am alive.  But wait! Apparently that does not apply to Wall Street itself, and the rest of us never got the memo. If it did apply they would have insisted that inferior institutions be allowed to fall in order to make way for the stronger ones, but they didn’t. All of a sudden they had their hands out with fear mongering speeches decrying the end of America. The best part is that we the American public, and our government, all drank the Kool-Aid. We buy into fear. It unites us. It gets us to agree to things that we later scratch our collective heads in wonderment over. If the previous eight years can be pointed to as an example it is not surprising we find ourselves in a similar position today, and those that reap the rewards stand laughing.

Just a few days ago I ended up in a conversation with an otherwise intelligent man that begged me to understand that the United States financial system was hours away from “Armageddon.” Armageddon?! Does this not wreak of familiar pulpit driven tactics to control the masses from thoughts of upheaval? Of course, the moment he began spouting his vitriol I correctly guessed that he was an investment banker by trade.What was there to understand? Where is their free market, capitalist model now? I do not see small business being bailed out, and small business employs the bulk of Americans. Small businesses are failing at record rates because of the mess that Wall Street created.

I am not saying I disagree with a free market system, but left unchecked as it has been since WWII it is doomed to self destruct. The fact that our economy has been in free fall has not been remotely solved by the big bailout, but why? That is what they promised after all. The answer is simple. Our form of capitalism breeds greed. We can look back to Lord Acton’s famous quote; “power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.” This is why my recent debate opponent sees nothing wrong with the bailout or the huge sums being given out as bonuses to the very people that did a poor job to begin with. It is not that he is a “bad man” as Lord Acton would suggest, but he is employed by some. If the rest of us had driven our companies into the ground we would surely not be given bonuses.

This folks is capitalism, but it is not democracy. They are mutually exclusive from one another despite what we are too often told. It is not democracy it is plutocracy, which is the form of government rampant, unchecked capitalism is best suited for. By definition plutocracy is “government by the wealthy.” Sound familiar?

Some residents of Big Tujunga in the Los Angeles area are making claims today that their homes were lost when firefighters were diverted to the Palos Verdes fire. Now, for those of you not located in Los Angeles I will give you a little geography and fiscal education. Big Tujunga is fairly well populated with older smaller homes dotted throughout the canyon while Palos Verdes is populated with larger, many newer, more opulent homes. Now let’s do the math:

According to several real estate websites the mean home price in Palos Verdes, CA is just under $1 million. The mean home price in Big Tujunga, CA is between $400,000 – $500,000.  If property taxes are assessed at around 1% we can easily see that between the two areas Palos Verdes is the big ticket item for the state.  A state in dire financial crisis I might add.

Right now you are saying “that can’t be!” How can a professor of business ethics jump on the accusatory bandwagon of alleging financial favoritism? Has the latest news story gotten to her head without doing the research? Have conspiracy theorists invaded her cerebellum? No. Quite the contrary. I am not jumping on a bandwagon, not a conspiracy theorist, but most importantly am speaking from personal observation.

What the residents of Big Tujunga are claiming rings true. Almost every other year now I have been evacuated from my own canyon home above Chatsworth, CA due to raging, out of control fires. I am not complaining about this fact because I accept the pitfalls of living in paradise. Four years ago we were evacuated and I attended an NBC news conference being held by Mayor Villaraigosa and the fire chief just below the canyon. They proudly announced to the crowd and the cameras how the water drops were taking place at that very moment in Bell canyon. Now, this would have been good, but the homes most in danger were in Box and Woolsey Canyons. The fire had not even reached Bell canyon at that point, but rest assured those homes were protected while not one water drop had occurred in Box or Woolsey. When I confronted the mayor about this he hemmed and hawed so I pressed the point and inquired as to whether the higher property taxes in Bell canyon had anything to do with why we were not receiving the needed water drops. While watching the television camera go from my face to his repeatedly he appeared to be a deer caught in the headlights then sputtered out that he would personally go check on our homes. To his credit he did just that, but I wanted water drops like Bell Canyon was getting not a mayoral visit. We did begin to get water drops just minutes after his trip up our canyon, and I am not saying definitively it was because of my confrontation, but I also don’t believe in coincidences.

So, when I saw Bert Voorhees, resident of a burnt out home in Big Tujunga Canyon, make his claims on the news today I gave a silent cheer and ran to my blog. After all, I have a blog on ethics and what could be more unethical than greed on the part of our government? Some may argue that it makes financial sense. I say garbage! It is not okay, nor is it ethical to decide whose home gets saved by the value of their property tax! Next thing you know the government will decide whose life is worth saving by how much money they have. Uh oh, they already do that. It’s called health care and war.

I was just thinking back to my youth today, and while it sometimes seems a long time ago I can’t help but thinking of how things have changed in such a short time. Growing up in Southern California was not unlike “anytown” U.S.A. We worked hard, played hard, and when it was time to go on vacation we packed up the family GM for the customary two weeks and hit the road for parts unknown. My mother and father insisted we buy American, and it was an easy thing to do because you were buying a solidly made beast of the highway. We were a GM family, but some of you out there could have been Ford or Chrysler families. It matters not because that was just an issue of taste and family upbringing. Kind of like being a Pepsi or Coke house. The products were good quality, the price was right, and the corporations cared about what the customer wanted and what would make them happy. I am not saying it was a scene out of Leave it to Beaver or Father Knows Best, but it certainly was simpler. Things today are no longer simple by any stretch of the imagination, but I am also not saying this is a bad thing in most cases. After all, I wouldn’t be able to “blog” here without the complicated life we live today, but not everything had to change. The lost art of customer appreciation and satisfaction seems to have been crossed off of the curriculum of most business schools in favor of “Bottom Line 101″, “Shareholders 250″, and “Upper Management Bonuses 550.” The last one is taught in both the BA and MBA program.

I guess I was busy this morning lamenting the America we see today, and sad at the thought that I don’t think our parents and grandparents would be proud of us. Those that lived through the depression and fought in WWII gave their lives so that we could enjoy the life that we have today, but somehow, somewhere along the way much of it was squandered. GM, for all intents and purposes, no longer exists as an American company. Chrysler is in the process of being sold to Fiat, and who knows how long Ford will hold on. These were powerhouses of American industry, and now what? Hummers made in China, Chryslers made by a company that hasn’t been able to sell a car in the U.S. for more than twenty years and is not considered to be top notch. What is next?

If we want to ask ourselves why we have to do a combination of things. Yes, we need to look in the mirror, but it is far more than just a turn away from “buying American.” It has been a long time since these companies have given us something worthy of buying. While foreign car companies were being innovative American car makers were giving us more of the same and losing focus on the customer. They were late to the game of hybrids, still producing oversized monsters designed to make soccer moms and underachievers feel powerful, and providing such low quality in order to get the customer buying more frequently. This was not and is not the American way, and yet somehow it became the American business model in a relatively short time for Detroit and others.

Two years ago I finally shook the invisible cultural shackles I had been raised with and purchased my first foreign vehicle, and I have never been happier. The first thing I noticed is that I am treated like a valuable customer; something that had been lost along the way in my years of dealing with GM and Chrysler. Simply said, they stand by their product. The last American car I had happened to be a convertible and when the rag top blew off after only a year and a half they told me it was my problem because it was “not a covered item.” In my foreign car I have been to the dealer twice in two years. Both times were for a “yearly” oil change. That’s right; YEARLY.

My father is still alive at the ripe old age of 78 and will probably live to well over a hundred at the rate he is going. He spent many years in the auto industry and helped to frame my “All American” girl persona. Is he proud of what has happened? No, and the sad part….he also drives a foreign car.

The California courts have recently determined that the right to privacy does not extend beyond death in the case of Nikki Catsourus. While this gets escalated to the appeals level, and then most likely on to the Supreme court, we have to wonder why. Perhaps more importantly, we should ponder as to why we feel the need to be so voyeuristic. This is a tragedy beyond compare, and the family must be suffering in unimaginable ways. This young lady was not famous and should therefore not be subject to the same rules of privacy.

What is our obsession with the gruesome details? Why is human nature such that we just cannot look away? And why in the world would a California Highway patrolman find it necessary to send these pictures to friends and then have them end up all over the internet? Can we say common decency?

As this story unfolds, and the case winds its way through the court system let us accept that this behavior, while not currently illegal, is unethical to say the least. Surely there must be something else for people to obsess about that is not quite so vile. It is bad enough that people read the rag magazines about the famous and infamous, but leave this poor child and her family alone. Haven’t they suffered enough?

Okay, so I am going to go out on another limb with something controversial here, but I just feel that it is time to chime in as it is becoming an ethical issue. For years now I have been hearing, and understanding, how everyone has a right to their “opinion.” This is true, and freedom of speech and expression are two of the factors that make this country great. Now, let’s go a little deeper into the idea of “opinion.”

Once “opinion” crosses over into “action” it is no longer a “point of view.” I always see both sides to an argument and value people’s differing opinions, and this subject has been no different until now. With states like Maine legalizing gay marriage day by day and public figures such as Miss California joining organizations to prevent the legalization of gay marriage the debate is heating up, but it is now more than a debate. I understand that there are many people in this country that oppose gay marriage primarily on the foundation of religious reasons, and that is to be respected to a degree, but we also have laws in this country that protect a person’s civil liberties. In this case we are left arguing based on the Principle of Rights, i.e. one person’s rights versus another’s. Allowing a gay couple to marry is not infringing on the rights of those with strong religious beliefs, however, the campaign to prevent them from marrying does infringe on another group’s rights.

Our civil judicial system operates under this very principle of rights and so it is doing in this case. The courts are deciding whether or not gay couples should be allowed to marry. The courts are where cases of rights are adjudicated not by public vote. If this were not the case then there would be many things in this country that would never have changed. It is not, in any situation, appropriate or ethical for the majority to dictate to a minority on basic human rights.

It wasn’t that far back in recent history that African Americans and Caucasians were not allowed to marry. The “majority” felt it should be prevented based on religious moral convictions. Sound familiar? We look back on this today as ridiculous, but the fight for this right was long and arduous. The majority’s moral, religious conviction against the allowing of multiracial marriage was deemed unethical and a violation of rights of another.

Our system is designed to protect the rights of the minority against the whims of the majority. It is our ethical duty as Americans to address this. Not to pick on this one person, but if Miss California had stood on the Miss USA stage and ranted about taking away the rights of multicultural partners to marry we would be outraged. We would be quick to call her and others like her racists and un American. Why then is it “okay” to do the same to another group of tax paying Americans?

Okay, so credit card companies have always raised their fees on a whim, but this just seems to take the cake. I can understand that the fees need to be raised when someone misses a payment date, and I am well aware that banks make the lion’s share of their money on these fees. What I cannot understand is the audacity of banks to be doing this after accepting millions of dollars in bailout money.

Traditionally, this is one step a business can take that will help to build its capitol, but to continue to do this at this particular stage of the game is unconscionable. The mere definition of that word says it all. According to Encarta it is defined as “shocking and morally unacceptable.” The Oxford English Dictionary describes the expression as “not right or reasonable,” and Webster’s defines the term as “not guided or controlled by conscience: unscrupulous.”

So WHY is it unconscionable? Because these same lending institutions have just begged for and accepted $700 billion in bailout money, and that is billion with a capital B. While we may or may not have had to do it the fact remains that it is a done deal for better or worse, and the American taxpayer is getting the shaft.

WE, you and I, have loaned the banks our hard earned money to straighten out their self created mess through our tax dollars, and now they are asking us to further fit the bill by raising interest rates on the credit cards of people that have always payed their bills on time. Is this not double dipping in its ugliest form?

Let’s name names; Bank of America, American Express, Citigroup, and the list goes on and on and on. When is the assault on the American public going to stop? Come on Washington. You promised us “change”. We cheered for “change”. Now let’s get it done!

I am reprinting this blog of mine I did on another website Nov. 30, 2008, and I thought it was appropriate to share here with a bit of an update.

People are often confused by me; just when you think you know me, I can surprise you. The fact that I am a liberal while being more fiscally conservative may surprise many. I also like to see things from both sides of the equation, which is handy considering I teach global economics. So, let me start by telling you that I no longer watch the news on television. I do, however, read newspapers from all over the world every day, and there is a very good reason – television is for drama.

Television news is overly dramatic for a reason. Now, I am not saying there is no economic difficulty before us, but I am saying that broadcast news has a singular responsibility to get ratings and not to inform you. That, my friends, is lesson number one.
Lesson number two? Be wary of what those around you say. Remember the old adage about screaming fire in a theater? There is a good reason it is illegal to do so, and it should similarly be illegal for network news to overly dramatize the world economic situation. Again, I am not saying we don’t have a situation, because we do, but I remind everyone that this is a cycle. It is only a little scarier because we are being told to be scared.

Economics, as a whole, is a confidence game. If Warren Buffet told us things would be all better in six months, everyone would start down that road the minute he stopped talking. When the pundits, news stations and even friends cry disaster, guess what – disaster looms.

Yes, Mervyn’s (is going) went out of business. They couldn’t compete anymore. Yes, Circuit City (is going) went under. Best Buy out-advertised, out-marketed and just simply outdid them. Yes, GM, Ford and Chrysler are headed down the drain (update – Chrysler just claimed bankruptcy), but perhaps they shouldn’t have been making Hummers when Toyota was selling the Prius like hotcakes. Not that I am a fan of the Prius as I think it is more hype than reality. It truly does not give us anything better for the environment than a BMW. And, yes, many banks have gone under. We all know the golden rule of not buying what you can’t afford and, similarly, not loaning what you are pretty sure will never be paid back.

There are many businesses starting up now than there have been in many years. People are no longer complacent with bad business. They are starting to think for themselves, which is one of the principles this country was founded upon.

So, I conclude with a few important questions. When do bad management and bad business decisions become the responsibility of a nation of taxpayers? When does it become crucial to put common sense first in lieu of high television ratings? And, perhaps more importantly, when do we stop blaming the other guy for our failures, suck it up and start over, just like our forefathers?

Reprinted from my blog at a national travel magazine