If You Really Believe You're Right, You Shouldn't Have to Lie

If that's the case, then what does it say about what the health insurance companies are doing?

A friend of mine brought my attention to this post at Business Insider. Basically, health insurance companies are using Facebook virtual currency to get game players to email Congress about their supposed opposition to the health-care reform bill.

As article author Nicholas Carlson points out, the companies are exploiting Facebook gamers' desire to obtain more virtual currency (to help them move up the ranks in games like Farmville), by offering currency in exchange for "trying" a new product or service.

But in this case, "Instead of asking the gamers to try a [specific] product..., "Get Health Reform Right" requires gamers to take a survey, which, upon completion, automatically sends the following email to their Congressional Rep: 'I am concerned a new government plan could cause me to lose the employer coverage I have today. More government bureaucracy will only create more problems, not solve the ones we have.'"

"Astroturfing" like this (i.e. fake grass-roots movements) isn't new, and it's not illegal. But it is completely unethical.

This particular instance is the product of an innocuous-sounding (ain't it always the way?!) organization: "Get Health Reform Right", which describes itself as a "project of organizations whose shared mission is to ensure consumers continue to have access to employer-sponsored healthcare plans." (Full disclosure here: My personal definition of "Getting Health Reform Right" would be 100% single-payer.)

Who is/are "Get Health Reform Right"? Carlson did a little research, and came up with the following organizations:

• Association of Health Insurance Advisors
• America’s Health Insurance Plans
• American Benefits Council
• BlueCross BlueShield Association
• Council of Insurance Agents & Brokers
• Healthcare Leadership Council
• Independent Insurance Agents & Brokers
• National Association of Health Underwriters
• National Association of Insurance and Financial Advisors
• National Retail Association

Completely disinterested parties, wouldn't you say?

My own skeptical inclination is to think that if the established health-care players are so concerned by even the not-even-close-to-what-I-would-have-hoped-for legislation working its way through Congress, it must be pretty damn good.

Or they wouldn't have to lie like this to get their messages sent.

Cellphone Ethics, not Etiquette

I could write a very long rant about cellphone etiquette, as I'm sure you could too. Who hasn't be subjected to VERY LOUD "conversations" along the lines of "so, he's like, I totally didn't mean that, and I'm like, You are so busted, and she goes (yadda yadda yadda)"? Not to mention the phones that ring (and are answered) during theater performances, concerts, and movies. Not to mention... But you get the idea.

Instead, I'd like to think about this quote, which I found in Matt Richtel's article in today's New York Times on "Promoting the Car Phone, Despite Risks":

"If you’re an engineer, you don’t want to outlaw the great technology you’ve been working on... If you’re a marketing person, you don’t want to outlaw the thing you’ve been trying to sell. If you’re a C.E.O., you don’t want to outlaw the thing that’s been making a lot of money."

Richtel identifies the speaker as Bob Lucky, a now-retired former director at Bell Labs.

It's a great insight into a key problem in corporate ethics: When you have a great new product, how carefully do you want to look at its potential problems?

Lucky and other early developers were aware of the potential for "distracted driving". A former Motorola engineer admits that "I’d pass by the exit I was supposed to take because I was talking on the phone."

"Thinking back, he said he was 'absolutely' aware of potential dangers but did not think roads would become filled with distracted drivers."

One distracted driver, of course, is all it really takes, especially at high speeds and on a congested roadway.

The tough question is how to encourage corporations to build in a "devil's advocate" position into their operations: someone whose job it is to think about potential negative ramifications of a new product or technology and not just its upside marketing potential. Where such a role is played, it's usually taken on by legal (which is why we have all those great little warnings on not misusing the products we buy).

In this case, I'd like to see one cellphone manufacturer or service provider take the high road and stake out a safety zone -- be the Volvo of cellphones if you like -- perhaps by engineering a phone that won't work if it passes through x number of cell transmitters in y minutes (although this would prevent passengers from using their phones too).

Sins of Omission Are Still Sins

I really hadn't wanted to write anything about the Salahis, the couple who apparently gate-crashed last week's White House dinner, because who would want to give such camera hogs even more attention? But alas here I am, writing about them.

Or more precisely, about NBC "News".

Michaele Salahi apparently harbors aspirations of "starring" on the Bravo cable channel's reality show, Real Housewives of D.C., and while she and her husband were entering the White House, they were followed by a Bravo camera crew.

Monday morning, the Today show, which, while generally fluffy infotainment, is a part of the news division, had the Salahis as guests. At no point in the interview -- or in the next day's followup -- did Matt Lauer mention that Bravo and NBC are corporate siblings, both part of NBC Universal. In fact, both are based in New York's Rockefeller Center.

As reported by Brian Stelter in today's New York Times, "Both NBC and the couple say that they received no money for appearing on the 'Today Show.' An NBC staff member suggested Wednesday that the couple selected Mr. Lauer in a good-will gesture to NBC and, by extension, Bravo."

According to Stelter, NBC's Nightly News, when reporting on the issue Tuesday, "did note the corporate connection".

Did the corporate connection affect the questions that Mr. Lauer posed? Probably not. But wouldn't you feel more confident about it if you had known the connection ahead of time rather than after the fact?

MBA Oath Now Has More Than 1700 Signatories

Back in May, I commented on the new MBA Oath, started by some second-year Harvard Business School students, in which they promised to "create value responsibly and ethically." I hoped it would take effect, but was a little skeptical -- after all, 50% of marriages end up in divorce despite that "'til death do us part" line.

Now, reports Business Week, more than 1700 students and recent graduates have signed, not just from Harvard, but also from Northwestern's Kellogg School of Management, Yale School of Management, Foster School of Business (at U. of Washington), Fuqua School of Business at Duke, and many others.

The oath begins, "As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can create alone." (click here for the oath's website)

The Harvard ethics oath is not the first (both INSEAD and Thunderbird claim that honor), but it appears to be the first to have gone viral in a fairly impressive way.

While the oath is "just words", its intent is greater than that. As an earlier Business Week article pointed out, "the oath's creators have big plans for the future of the project. In addition to eventually having hundreds of thousands of MBAs sign the pledge, they want it to be part of a much more ambitious agenda to professionalize the occupation of management, transforming it into a vocation much like medicine or law."

Both medicine and law require more than oaths; they require licensure, and that license carries teeth. A doctor can lose her license to practice, and a lawyer can be disbarred. Will managers willingly put themselves under such rigorous oversight?

Now It's Not Just the Little Guys Yelling

Now it's the shareholders -- the owners, you should say -- who are yelling, too.

For weeks now, Main Streeters have been complaining about the huge bonuses Goldman Sachs is preparing to pay its top employees. For example, the Financial Times's Kevin Sieff reported on Monday about demonstrators from SEIU (Service Employees International Union) protesting outside Goldman's Washington offices. And I have written with considerable skepticism about Goldman CEO Lloyd Blankfein's claim to be doing "God's work" (which, to be fair, he came close to recanting Monday; as reported by Graham Bowley in the New York Times on Wednesday, Blankfein said, "We participated in things that were clearly wrong and have reason to regret. We apologize.")

Goldman received a $10 billion bailout from the taxpayer-funded Troubled Asset Relief Program in October 2008, but has already repaid that. As far back as June of this year, the firm reported that it had already earmarked more than $11 billion for employee bonuses.

As a result, most Wall Streeters have ignored the complaints from the little people. After all, making money, and lots of it, is what Wall Street is all about, isn't it?

Today's Wall Street Journal reports, in an article by Susanne Craig, that Goldman shareholders are starting to complain, too. As Craig notes, "Despite record net income and compensation at Goldman as markets rebound and the firm outmuscles weakened rivals for business, analysts expect its 2009 earnings per share to be 22% lower than in 2007 and roughly equal to 2006 earning." (italics mine)

Reducing the bonus pool could substantially boost per-share earning and the share price. Shares traded yesterday at more than $170, up nicely for the year, but still well below the $250 per share peak in 2007. Last time I checked, corporations were supposed to maximize shareholder value (or stakeholder value -- but that's a rant for another day). Considering that Goldman employees own between 10 and 15% of the company's stock, they might even appreciate the move. Or not.

Goldman's employees are on course to earn about $717,00 on average in 2009. This is far beyond Wall Street's previous high-water mark, set by Goldman in 2007, of $661,490 per employee (The per-employee figure, of course, a ruse in itself; the Goldman administrative assistants and janitors earn, um, somewhat less; as the Times noted back in July, three years ago, Goldman paid more than 50 employees more than $20 million each. Moreover, Goldman artificially reduced the bonus number by including temporary employees and consultants in its "employee count".).

I find it hard to believe that even the gifted Mr. Blankfein really warrants a one-year paycheck of this size, but that's just me.

The much more serious complaint is that Goldman is still using taxpayer money, so why is the taxpayer getting cut out of the Goldman payday? After all, Goldman has been borrowing Treasury (our) money at essentially 0%. Where does Treasury get the money? By borrowing it, at Treasury bond rates. Don't you wish your bank would let you do the same thing? Goldman has made great returns on its investments, but it wasn't playing with its own money, it was playing with ours, and I want some of mine back now, thank you.

Sometimes, The Good Guys Win

Let's celebrate the victory of what was once a ragtag group of student activists against the large and profitable Russell Athletic (owned by Fruit of the Loom).

As reported by Steven Greenhouse in today's New York Times, pressure on Russell picked up dramatically last January when the company closed one of its Honduran factories, Jerzees de Honduras, shortly after the 1200 workers there had voted to unionize.

The company agreed Tuesday (1) to open a new factory, Jerzees Nuevo Dia (New Day), which will hire the laid-off workers, (2) to recognize the workers' union and proceed with good-faith collective bargaining, (3) to place laid-off workers who cannot be placed at the new factory at other Russell facilities in Honduras, and (4) to pursue a policy of non-interference in regards to unionization efforts at all Honduran Russell and Fruit of the Loom facilities (click here to read the Russell public announcement).

The student lobbying effort was led by United Students Against Sweatshops (USAS), which over the course of a year orchestrated a nationwide campaign, convincing the administrations of universities from Boston College to the University of Michigan to suspend their licensing agreements with Russell. According to the Times, some of those agreements yielded more than $1 million in sales.

In addition, "student activists picked the NBA finals in Orlando and Los Angeles ... to protest the league's licensing agreement with Russell. They distributed fliers inside Sports Authority sporting goods stores and sent Twitter messages to customers of Dick's Sporting Goods to urge them to boycott Russell products."

USAS has been resisting Russell for years, slowly building the coalition that persuaded universities to adopt codes of conduct for licensees' factories that could then be used to convince those same universities to suspend Russell's licenses when the coalition produced evidence of worker harassment and intimidation.

USAS also persuaded more than sixty US members of Congress to sign a letter to Russell, expressing "grave concern" about the reports of violations of worker rights, and noting that if the reports were true, "the factory has violated internationally recognized labor standards, Russell's own code of conduct, and Honduran law...."

Ever wonder what just one person can do? Here's your answer: Organize.

Pharma Companies Take Page From Bankers' Playbooks

Sigh.

Duff Wilson, in today's New York Times, reports that major drug companies are aggressively raising prices in advance of health-care legislation (complete article, here). This sounds suspiciously like the ploy of credit-card companies, raising interest rates in advance of the approved-but-not-yet-in-force Credit CARD legislation (click here for an earlier blog post on that subject).

Note that the drug companies' moves are coming, as Wilson reports, at the same time that they have promised "to support Washington’s health care overhaul by shaving $8 billion a year off the nation’s drug costs after the legislation takes effect".

When is a sale not a sale? When the seller hikes prices beforehand to create an artificial "discount" price.

Moreover, these increases come at a time when, thanks to the deep recession, overall consumer prices have been falling: according to the Bureau of Labor Statistics, prices have fallen 1.3% over the last 12 months.

Prescription drug prices, in contrast, are up about nine percent.

But perhaps I'm being unfair to suggest that the pharmaceutical companies have learned from the credit-card companies. After all, Wilson notes that the same thing happened three years ago, just before the Medicare drug coverage program went into effect (click here for Times article from 2006). At that time, according to AARP (the American Association of Retired Persons), which conducted the pricing research, "prices charged by drug makers for brand-name pharmaceuticals jumped 3.9 percent, four times the general inflation rate during the first three months of this year and the largest quarterly price increase in six years."

So maybe it's the credit-card companies who learned from pharma. Either way, we need to send them the "don't be evil" memo.