daltonpearman-blog

[daltonpearman-blog]

How to fix the problem

              Through this portfolio, I hope that I have made it evident that the ethical concerns of the finance industry are a real threat. As Bernard Williams once said, “There was never a night or a problem that could defeat sunrise or hope” and for this problem it will take many nights and a lot of hope. There is no easy way to fix these ethical problems and it will take years if not decades to begin to fix them. Just because this problem is not a simple fix and must be seen as a long-term investment, does not mean it should not be done. I believe that a three-step process is need to fix this problem people, government, and a company change.

             Fixing people is never an easy task and requires persistence. This problem will require us to teach children at a young age in school that the most important thing is not success but instead doing things the right way. This should continue through college where students should face more difficult decisions and gather valuable learning experiences. This will not just benefit the ethical decision making of the finance industry but also help all industry grow in a positive direction. Currently in school students are taught to find a way to win and being successful but not that the decisions made to get to the top should be ethical, this must change.

             The government may be the most difficult beast to accomplish on this list simply because it is in the financial interest of some many to limit regulation. If America wants to see real change in how the decisions these companies make we must elect officials that will hold these companies accountable. We can look at the current situation in South Korea where government officials are trying to loosen the control of large companies on the people. The other negative aspect of imposing government regulation on the financial sector is that it will limit growth of the market. This will result in the slowing down of the overall economy and could lead to a recession. These may sound like extreme negative impacts but I feel that the end result, if executed correctly, will be worth these impacts.

             Finally, a company change. This change ties into people but needs to go a step further. The current culture of financial institutions is to do whatever it takes to make profit. This does not help the consumer and in most cases, leads to ethical dilemmas. This will need to be done with the help of the people so that there are large negative incentives to not following ethical guidelines. This should be brought even further to helping companies increase profits by giving them tax breaks if they correspond with ethical laws. This will be the easiest and last step of my plan because it relies on the current two changes to happen first to be effective.

             If this plan was to be implemented I believe that it will solve the ethical problems currently faced in the financial industry and in many other industries. Though it will take sacrifice from a large number of people and for people to start choosing the right thing. I don’t believe it will happen because of the immense obstacles. There are just too many economic incentives to limit regulation and allow the finance industry free roam.

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source comparison

Blundell-Wignall, Adrian, et al. “The Current Financial Crisis: Causes and Policy Issues.” Financial Market Trend, 26 May 2015, Accessed 14 Feb. 2017.

The Current Financial Crisis: Causes and Policy Issues, is a peer reviewed article that has been published in a journal with over 110 volumes. This alone should speak on the ethos of this article. Adrian Blundell-Wignall, Paul Atkinson and Se Hoon Lee, the articles writers, all have extensive experience in their fields.  Dr. Blundell-Wignall received his PhD in economics from the University of Cambridge and has held leadership positions in different financial market advising positions. Paul Atkinson is a distinguished research professor in field of sociology who has held positions such as head of department and pro vice-chancellor at Cardiff University. Dr. Se Hoon Lee is a prestigious graduate of Wharton business school. Beyond his academic achievement Se Hoon Lee was a successful CEO for multi-billion-dollar company and was awarded the Distinguished Service by Wharton University which has only been awarded 36 times in the school history. This shows that beyond being published in a major journal with a strong history all of these authors are extremely experienced and highly respected.

           If you believe that the author doesn’t create the ethos for the paper than this article still has the credibility to stand on its own. The paper is supported by over a dozen scholarly sources that range from other articles to non-bias government committees. The information presented in the article is also supported by a common consensus among scholars throughout the field. Every claim made in this article is supported by extensive research, solid facts, and logic that is easy to follow.

           In summary, this article is the perfect scholarly source because it is peer reviewed, published in a major finance journal, created by extremely respected and accomplished writers, and is supported by factual evidence throughout. There is no reason to not say this is a strong and reliable source because of all of these reasons.

The Big Short. Dir. Adam McKay. Perf. Christian Bale, Steve Carell, Ryan Gosling. Paramount Pictures, 2015. DVD.

           The Big Short is the perfect example of a bad source to use in a research paper. Even though it is the winner of the Oscar for Best writing for an adapted screenplay there are several reasons why this is not a reliable source. The movie does a good job of explaining a very complex problem for most people to understand but as the issue gets simplified important details are lost.

           The first reason is that it is a fiction movie. Even though it is based on a true story there are still different aspects that where changed to be adapted to the big screen. The characters are also based on real investors who saw the crisis coming but they were brightened up for the audience with actors like Steve Carrell and Ryan Gosling. The movie does better job than others to acknowledge where it has stretched the truth. An example of this would be that during the movie a character stops and breaks the fourth wall (talks to the audience) to explain that they actually didn’t discover this great secret in a bank lobby but instead a friend told them to look into it.

           Another reason why this movie isn’t a reliable source is that it isn’t peer reviewed or held up to any factual standard.  There are some critics who objected to the facts presented during the movie but honestly who really listens to critics. In today’s day and age most people rely on word of mouth and mass media to determine what movies to watch. Since this movie did so well in the box office it is obvious to me that most people did not care about fact checking the movie.

           The Big Short is a critically acclaimed movie that grossed more $133 million dollars internationally and honestly a great movie but not a great source. This movie does a great job of showing a very complex issue and showing it to the entire world so that the general public can understand it. This makes it a great starting point for someone to gain interested in the topic but not enough to be used as a source for legitimate paper.

[daltonpearman-blog]

Research Paper

How do you judge if someone is successful? Most people will look at their income and net worth to judge their success. But for most people around the world their very existences and survival depends on generating some type of monetary value to secure fundamental resources like food, water, and shelter. What if I told you that the people who have the most money or control the most money have no responsibility to rest of the world? The people who can create great cities and discover exciting new technology didn’t have to do so. This paper discusses the ethical and social responsibility that financial services industry has to the rest of world. The choices they make impact every single person on this world from interest rates to price of goods sold. When we look at the responsibility this industry has it goes beyond just some dollar signs and effects the dreams of everybody.

             So, what is the financial sector? “The financial sector is a category of stocks containing firms that provide financial services to commercial and retail customers; this sector includes banks, investment funds, insurance companies and real estate” (Staff, Investopedia). This is a pretty broad term but it basically means if a company works around providing services for getting money they are most likely in the financial sector. When I speak about unethical financial activities, this can include giving a loan to somebody who can’t afford it or an example with Wells Fargo creating fake accounts to increase profits at the expense of its customers.

             One aspect of this paper will look at the different ways unethical business practices can have a negative effect on the market. This will include a look at the housing crash of 2008 which was powered by poor business decisions and even worst ethical decisions. This paper will also begin to look at why an individual will choose to break these ethical standards. This ranges from simply worrying about increasing profits to believing that if it isn’t illegal it can’t be unethical.

             There isn’t only a negative side to following or not following ethical guidelines and this paper will explore the different ways that companies are choosing the right thing and increasing profits. This will bring up the topic of corporate social responsibility which is the idea that a positive corporate culture doesn’t just benefit the community but helps with employee morale and increasing profits (McNamara). As a new generation of companies are beginning to grow and take over it shows that work life and social life no longer have to be separated and making money doesn’t mean hurting other people.

             From my research, I have concluded that choosing ethical and morally correct decisions are not just better for the people but also for organization. It creates a positive work place culture, increases profits, and litigates the risk of lawsuits. For this reason, I believe that companies must hold themselves to higher ethical standards while at the same time public organizations should be created to keep them in check.

             When discussing the impact of choosing ethically poor decisions it is best to evaluate different examples of a complete lack of ethics at a micro and macro level. The first example will be of the recent Wells Fargo scandal of creating fake consumer accounts and charging account fees. In this situation, employees were incentivized to create as many accounts as possible. Though this may seem like a logical way to get employees to generate more revenue, poor execution led to managers pushing employees to the point to where they had to create fake accounts to meet their quota. Also, employees who tried to stand up to their managers often were fired or forced to leave the company. “You can talk yourself blue in the face about ethics, as many Wells Fargo managers did, but you cannot send employees a clearer signal than their paycheck” (Pastin). This quote shows that talking about ethics isn’t as important as acting on ethical decisions. The negative impacts of this was almost immediate as 5,300 employees were fired for their involvement, the CEO left his position, and the brand name of the company is almost completely ruined (Cowley and Corkery). If the correct decisions would have been made, many people would still have their jobs but, more importantly, more consumers would not feel violated for putting their faith in what they thought was an ethical company.

             In rare cases society has seen an ethical collapse on a macro level. This requires people from many different backgrounds to choose unethical decisions. One of the most famous examples of this would be the housing crash of 2008 where bankers, consumers, and even regulators chose unethical decisions that resulted in one the worst recessions the world has ever seen. One of the most important failures was in the poor regulatory framework (Blundell-Wignall). To give a quick summary of the issue, banks were giving high risk mortgages out to an individual then packaging these mortgages together and selling them to investors. These investments were not vetted properly.  They were given higher security ratings because if they didn’t rate them high enough, the rating companies would lose business. The consumer makes a poor ethical decision by getting a mortgage they know they cannot afford and living far above their means. If at any one of these points someone would have asked themselves “Am I doing the right thing?” the housing crash of 2008 could have been prevented. This means that almost 10 million families would not have lost their home (The 2008 Housing Crisis Displaced More Americans than the 1930s Dust Bowl).

             Now that we have discussed some examples of poor ethical decisions made by people we can begin to discuss why they made these decisions. The reasons can be broken down into five points; the first is greed. This can be easily explained as once people and companies start making money their goal is to get more thus do anything to obtain it. The second aspect is that many people are not fully developed morally. This can be seen in business school where in some circumstances the focus is strictly taught on how to become profitable but not how to become reasonable. The third, if it isn’t illegal it must be ethical. This is a common excuse found in many organizations that if is clearly not stated to be illegal then it cannot be wrong.  An example of this would be a company giving loans to people that shouldn’t have loans because it is above their means. Though this isn’t illegal it creates a system of failure that eventually comes crashing down. The fourth is that poorly designed incentive programs reward the wrong behavior. This can be simply put as rewarding the wrong behaviors will result in poor decisions. This can also be a grey area because it is not always obvious to see when the wrong things are being rewarded as seen before with the Wells Fargo example. The final reasons are the desire to please the client at any cost. Many times, employees and companies must make unethical decisions to satisfy the needs of their clients. This creates conflicting loyalty that forces the company to pick a side. In many of these situations it is better for the company to pick the customers side because of the financial gain and the extreme negative impact of not fulling client needs (Federwish).

             As shown in this paper, there are many incentives to not following ethical standards so why should a company? This creates the idea of corporate social responsibility.  This can be simply defined as the responsibility a company has to society to produce, source, and manage its products. Having strong corporate social responsibility can benefit the company in several ways and lead to increased profits. These benefits can be acquiring more customers, having happy and more productive employees, and attracting investors. This can result in attracting customers by building a sense of trust and respect. This creates a competitive advantage that can be used to leverage the market. When it comes to hiring employees, it is easier and cheaper for companies if the employee wants to work there. An example of this is that a highly skilled employee may choose a lowering paying job to work at a company that he or she feels is making a difference in the world. For employees that already work at a company with strong corporate responsibility, it creates more productive employees because a since of pride is being developed for their product. Finally, investors are drawn to these companies, which drives up the value of the company, because historically they are more dependable and are less likely to be harmed by scandal (Ethical business practices-A Cadbury Schweppes case study).

             Society has seen a new outlook on social corporate responsibility that has been driven by gigantic tech companies. One example of this is off the Bill Gates. The charity he has started, from the money he has received my Microsoft, has donated 36.7 billion dollars (Foundation Fact Sheet). This is a sign of growing change among high wealth induvial to do more with their money and companies than just make profits. A manufacturing company that has gone above and beyond its competitors to be responsible is Patagonia. The company has taken extra steps to ensure that the people making their clothes are treated correctly, the resources they are using are sourced correctly, and that they leave a positive environmental impact (Environmental & Social Responsibility). This has been achieved based on the company values even though it could become more profitable by not doing so.

             The responsibility a company has, especially a financial company, can alter the direction of countries and the lives of people. If people within these large organizations do not hold each other accountable for choosing correct ethical decisions a create number of misjustices can occur. It also the job of society to positively enforce strong ethical habits and hold companies accountable. The social and economic decisions made by large financial intuitions should be held at the highest standard not just because of the large impact that they possess but also because it can create more economic growth and a more productive work force. If employees and employers where to take pride in what they did and how they did it, this will create a stronger nation but also lead to strong moral development of the generations to follow.

             Work Cited

"Environmental & Social Responsibility." Environmentalism: Enviro & Social Responsibility - Patagonia. N.p., n.d. Web. 04 May 2017.

"Foundation Fact Sheet." Bill & Melinda Gates Foundation. N.p., n.d. Web. 03 May 2017.

"The 2008 Housing Crisis Displaced More Americans than the 1930s Dust Bowl." National Center for Policy Analysis. N.p., n.d. Web. 04 May 2017.

“Ethical business practices-A Cadbury Schweppes case study.” Cadbury Schweppes, businesscasestudies.co.uk/cadbury-schweppes/ethical-business-practices/the-importance-of-ethics-in-business.html#axzz4YnnIwh6e. Accessed 14 Feb. 2017.

“Office of the Ethics Counsel.” SEC.gov | Office of the Ethics Counsel, Securities and Exchange Commission, www.sec.gov/ethics. Accessed 14 Feb. 2017.

Blundell-Wignall, Adrian, et al. “The Current Financial Crisis: Causes and Policy Issues.” Financial Market Trend, 26 May 2015, Accessed 14 Feb. 2017.

Cowley, Stacy, and Michael Corkery. "A Showdown Over Wells Fargo’s Board of Directors Looms." The New York Times. The New York Times, 24 Apr. 2017. Web. 30 Apr. 2017.

Federwish, Anne. “Ethical Issues in the Financial Services Industry” Markkula Center For Applied Ethics, 6 Oct 2015, https://www.scu.edu/ethics/focus-areas/business-ethics/resources/ethical-issues-in-the-financial-services-industry/, Accessed 14 Feb 2017

McNamara, Carter. “Business Ethics and Social Responsibility.” Udemy, 10 Dec 2013, http://managementhelp.org/businessethics/. Accessed 14 Feb 2017

Pastin, Mark. "The Suprise Ethics Lesson of Wells Fargo." The Huffington Post. TheHuffingtonPost.com, 20 Jan. 2017. Web. 25 Apr. 2017.

Staff, Investopedia. "Financial Sector." Investopedia. N.p., 05 Mar. 2016. Web. 04 May 2017. http://www.investopedia.com/terms/f/financial_sector.asp

[daltonpearman-blog]

Introduction

How do you judge if someone is successful? Most people will look at their income and net worth to judge their success. But for most people around the world their very existences and survival depends on generating some type of monetary value to secure fundamental resources like food, water, and shelter. What if I told you that the people who have the most money or control the most money have no responsibility to rest of the world? The people who can create great cities and discover exciting new technology didn’t have to do so. This paper discusses the ethical and social responsibility that financial services industry has to the rest of world. The choices they make impact every single person on this world from interest rates to price of goods sold. When we look at the responsibility this industry has it goes beyond just some dollar signs and effects the dreams of everybody.

             So, what is the financial sector? “The financial sector is a category of stocks containing firms that provide financial services to commercial and retail customers; this sector includes banks, investment funds, insurance companies and real estate” (Staff, Investopedia). This is a pretty broad term but it basically means if a company works around providing services for getting money they are most likely in the financial sector. When I speak about unethical financial activities, this can include giving a loan to somebody who can’t afford it or an example with Wells Fargo creating fake accounts to increase profits at the expense of its customers.

             One aspect of this paper will look at the different ways unethical business practices can have a negative effect on the market. This will include a look at the housing crash of 2008 which was powered by poor business decisions and even worst ethical decisions. This paper will also begin to look at why an individual will choose to break these ethical standards. This ranges from simply worrying about increasing profits to believing that if it isn’t illegal it can’t be unethical.

             There isn’t only a negative side to following or not following ethical guidelines and this paper will explore the different ways that companies are choosing the right thing and increasing profits. This will bring up the topic of corporate social responsibility which is the idea that a positive corporate culture doesn’t just benefit the community but helps with employee morale and increasing profits (McNamara). As a new generation of companies are beginning to grow and take over it shows that work life and social life no longer have to be separated and making money doesn’t mean hurting other people.

             From my research, I have concluded that choosing ethical and morally correct decisions are not just better for the people but also for organization. It creates a positive work place culture, increases profits, and litigates the risk of lawsuits. For this reason, I believe that companies must hold themselves to higher ethical standards while at the same time public organizations should be created to keep them in check.