Wednesday, August 21, 2013

Legal or Ethical

A story in the New York Times this morning, the headline in the digest we get is Many Wall Street Banks Woo Children of Chinese Elites, reminds me of the hard-to-describe difference between legal action and ethical behavior.

What is happening here is that firms like Goldman Sachs, Merrill Lynch, and JPMorgan Chase hire the sons and daughters of politically high-placed Chinese leaders in the expectation that they will gain major favors in consequence, not least insider knowledge of how things are arranged in governing circles. Such actions are neither illegal nor yet hidden. (Doing it in the open would seem, indeed, quite beneficial—signaling that your company is well-connected.) At the same time, this sort of thing causes hair to rise up on my arm. It has ethical implication.

Once in my career I walked from the biggest contract one of the companies I was running could have snagged when a lawyer from Louisiana, who had arranged to meet me at O’Hare, where we would both be passing, suggested to me that our company should place some advertisement in a particular magazine. The job was worth half a million, the advertisement about five thousand. But that modest expenditure would have ensured approval of our contract by a Louisiana state agency. A relative of the head of that agency worked at the magazine. We needed that contract—like badly. And nothing would have been traceable. Nor was it illegal to advertise in that or any other magazine. Choking down my disappointment, I walked—and no, I did not first check with the layer above mine.

My own action, even then, would have been viewed as na├»ve. But, there you are. It all depends on where you live. Is it in the universe of the pragmatic or the universe of the ethical? These days, much the same. And, needless to say, the NYT article does carry the almost obligatory quote usually found in articles such as this one. “But everyone does it…”

Now an even more difficult-to-judge situation. Merrill Lynch manages our various holdings of what is usually referred to as our “wealth.” And Merrill Lynch is one of the Wall Street banks said to participate in Hire the Big Chief’s Child. So how much of that perfectly legal stain will stick to our skin?

Friday, August 2, 2013

Employment Update: July 2013

The new employment data published by the Bureau of Labor Statistics today (link), are certain to produce frowns. Expectations had been for a gain of minimally 185,000 new jobs—and those with their eyes on the stock market hoped for something like 225,000. The actual results were otherwise.

The economy gained 162,000 jobs in July. However, June results were revised downward by 26,000 jobs, and if we factor that change in, the net gain was an anemic 136,000 in new employment. There is definitely a difference between watching jobs and watching the Dow. The Dow is more exciting, no doubt about it. The monthly chart follows:


The annualized projection for the year 2013 has also suffered a small decline. Last month it looked like we would end the year with a gain of 2.422 million jobs added. This month’s result is 2.309 million. It is still better that the gains of 2010 through 2012, but, on the jobs front, anyway, we’re still just threading water. That chart is next.


The positive note, this month, is that all but one of the sectors of the economy posited gains in employment. The only sector falling short, posting a loss, was the somewhat obscure Other Services category; it posted a loss of 2,000 jobs.