Daniel Lubetzky

Ben Stein has a good article pointing out the dangers of following Treasury Secretary Paulson’s unfettered lead in bailing out his former employees and peers.

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Brad Stone wrote an interesting article that speaks to societal differentiation between success from building something and risking your own skin to achieve it, vs. enrichment from financial engineering risking other peoples’ money.

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For a newspaper with editorials as sophisticated and generally on target at least as free markets economics is concerned, it was surprising to read an editorial about "speculators" with such fallacies in logic as the one here. 

Amidst all the finger pointing against speculators, the Wall Street Journal regularly asserts that speculators do not have an impact on the rise in oil prices because they do not hold on to the physical goods and do not play any significant role in setting pricing.

But in an example of an over-reaching argument that undermines its core argument, now they cite evidence that speculators actually did have an impact in reducing prices in the latest period under study. 

Lo and behold, the CFTC found that index traders and swap dealers actually reduced their stake in crude oil futures as prices spiked. The number of contracts held by these investors betting that prices would increase — the net long position — fell by 11%, and more were shorting oil than going long over the six-month period. In other words, index traders and swap dealers were driving the future price of oil down.

But if this is indeed the case, then the possibility that speculators can have the opposite impact is alive and well – and it just so happens that the study and data they analyzed covered a period where speculators started laying off the market!  This coincides with what has actually been happening of late – with prices coming down, and it may buttress the argument that speculators did have a role in the initial astronomical rise of oil prices.

I don’t know if speculators are indeed behind the roller coaster ride of commodity pricing.  And prior posts in this blog have pointed to arguments against blaming them.  I just found it entertaining that the very Wall Street Journal would have such fallacy of logic.

Another argument they make in the same editorial is that because futures contracts are matched – buyer with seller – and one loses if another wins -these contracts have no impact on price. But the fundamental laws of demand & supply remind us that the aggregate of these matches is indeed what creates the balance that sets prices. 

Who is writing these editorials?!

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Nice example of grassroots social entrepreneurship to help the poor – follows the biblical tradition of sharing some crops with the poor, with a twist.

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Here is a really interesting article on how people view their wealth in relative terms, and the exponential financial success of peers may make rich people most discontent!

Like the story of the 49 coins, those who allow external measures – money accumulation, fame/celebrity, power/influence – to determine their self-worth and joy will suffer from eternal inadequacy/inequality.

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Mike Edwards questions whether the trendy concept of philantrocapitalism exemplified by Bill Gates is as effective as the uncritical buzz it is generating.  And he raises questions worthy of consideration, including this one in his q&a:

…what are the actual effects of business involvement in activities that are intended to promote social change? Where is business involvement useful, where might it be damaging, and do we have the evidence to separate one from the other? Here’s a list of things that business could usefully do:

• pay your taxes
• don’t produce goods that harm people
• pay decent wages and benefits
• stop subverting politics
• obey regulations in the public interest

The problem is, philanthrocapitalism does none of these things.

Well, business actually has a pivotal role to play beyond the basic code of decency Mike Edwards lists above.  As the primary force in the 21st century, the private sector can make enormous positive contributions into our lives. 

I am a strong advocate of engineering market forces to achieve positive change, marrying the business model to the social mission, as we’ve endeavored to do for the last fifteen years at PeaceWorks. 

And I am similarly an advocate of using entrepreneurial and creative practices commonly found in the private sector to maximize impact in civil society, as we try to do at OneVoice.

But beyond critical appraisal of "philantrocapitalism’s" effectiveness advocated in Mike’s article, what most resonates and troubles me about the unexamined noise with this and the broader concept of "corporate social responsibility" is that often it is used to mask dishonest or noxious behavior from corporations, to create bland appearances about business contributions to society while hiding under the carpet abhorrent behaviors that may be the primary driver of a business. 

Certainly, a company cannot justify or sugarcoat ruthless practices, or an underlying business model that harms people just by affixing the "csr" motto to its ads.  Unlike when people purchased indulgences from the medieval Church to swiftly absolve them for abominable sins, you cannot (or should not be able to) donate your way into brand heaven in the 21st century.

In sharp contrast to Mike’s provocative article, take a look at this piece in TIME Magazine where Bill Gates discovers the field of social entrepreneurship for humanity, dubbing it "creative capitalism."  Gates first announced this discovery in Davos back in January, where he was given 45 minutes to share how he conceived a utilitarian servile version of social responsibility.  It struck me he had just discovered and repackaged a field long in existence, just as he appropriated the netscape browser and apple’s operating system.

Social contributions should have a soul, a sentiment, and a sincerity of purpose.  Corporations are driven by human beings, so hopefully they will be driven to make our world better because this too is their world.  I have yet to meet a business person (or a human being) that does not care about the world.  But the trouble is that sometimes some corporate business models or junctures present people with concentrated profit-maximizing opportunities that cause harm to society overall.  And no amount of "CSR" should exculpate taking the wrong path – whether by lobbying the government to help a specific industry at the expense of the community or the environment, or by undermining competition, or any of the items in Mike’s list.

In the end, consumers will see through corporate efforts to manipulate causes just to make them look hip and responsible.  Alas, along with the unscrupulous corporation so too will fall the credibility of this important space – the sincere intersection between doing well and doing good.

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Thomas Friedman contrasts US energy policy and US behavior to the way Danes live and have structured their lives to be energy-efficient, and almost energy-independent.

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Thanks to Stacy Perman for a profile about PeaceWorks, KIND, and OneVoice in BusinessWeek yesterday.

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A study from Cornell University demonstrates a correlation between junk/unhealthful food and energy costs.  Artificial stuff, junk food and red meat all require more energy and natural resources to produce than fruits, nuts, veggies, etc.  So by eating real foods, you are not just helping your health – you are also helping reduce greenhouse emissions.

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China seems intent on using its veto at the UN to minimize any interference with national sovereignty, even at the expense of basic human rights and values, to the point of again vetoing a UN resolution against Robert Mugabe, Zimbabwe’s atrocious dictator, and seeking to fight an ICC warrant against Sudan’s genocidal President.  Howard French just wrote an excellent article on this issue.

But what seems to also be missing from most analyses on this topic, is that China is not just trying to limit ‘foreign interference’ in national affairs but also just plainly trying to avoid having to pay any commercial price for being a global citizen.  The United States and other Western countries incur a tangible cost for taking certain moral stances.  Sometimes these principles are worth more than trade.  It is truly immoral to pursue trading interests at all costs. The policy-making community, and CONSUMERS, have not weighed in enough on this issue.

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