Unprofitable Drugs…

The Star Ledger Sunday Business Section recently printed a front page article called, “Shortage puts lives in Jeopardy: Cancer drugs’ scarcity a persistent problem” by Susan Todd. Todd highlights that in New Jersey there is a notable shortage of some cancer treatment drugs. These shortages began to show up about four years ago. The cause seems to be manufacturing problem, supplies of ingredients, or ceasing to make unprofitable drugs.  Profitability is argued as the key reason.

What is notable is that New Jersey is the drug company state.  Most major drug companies are headquartered in New Jersey.  So the shortage here is very notable.

What is the take away relative to ethics? Regulation and other factors that increase costs may limit supplies.  Yes, this is basic economics, but it is also the law of business.  Business has to make a profit to remain in business.  Governments and NGOs do not.  When the government intrudes it brings in the profit not essential orientation.

That the U.S. has drug shortages should be a wake-up call on the environment for business and the resulting quality of life. It must be pointed out that the wonderful progress in living standards over the past 200 years is mostly due to innovative businesses.  We should understand that even as a community can go forward, it can also go backward.  A great example is the City of Detroit and the decay of the past 50 years.

Please Share Your Thoughts!

From Sunday’s Star Ledger April 29, 2012, on front page of “Perspective” section 2, there are two articles that show the lack of reasoning and understanding of the problem in developing an answer to the ethical issues in business.  In the first article, the lead on the page is, “Big Business Behaving Badly: Have America’s Commercial Giants Lost their Ethical Compass?” by John Farmer, Jr. It articulates a series of settlements made by major corporations such as Bank of America, Goldman Sachs, and Intel.  Then it raises the question of the ethical lapses that lead corporations to do the things needing settlement.

The second article is just below it. “Welcome to the United States of Puritanism”, by Paul Mulshine, reviews the unreasonable standards being applied to the security details that had some recreation while preparing for the president’s visits.  Mulshine argues that after hours recreation is none of our business, when it is legal in the host country.

It is fair to say that each article has more points than the brief summaries above.  But they suffice for clarity of the analysis problem.  The first talks about the moral compass and the second says it can only be judged based on office hours not personal time.  But we know that the answer to both is the full person.  A business is not an entity, rather it is a collection of individuals.  The individuals create the culture of the company.  The whole individual comes to work. Therefore, the behavior of the individual in his or her off hours is telling as to the values the individual is bringing to work.  It is a warning of how that individual will do the job and how that individual will act when pressures on the job arise.

So the answers to both situations is indeed the Puritan approach to rules, values and life. Indeed it is the Mulshines of the world that encourage the loss of compass we are seeing. The business schools teach and the media reinforce the Mulshine way.

Your Thoughts?

This blog is based upon an editorial written in the March 20, edition of USA Today. The editorial is entitled “States Battle Voting Fraud with Epidemic of New Limits” and it’s opposing view: “In Texas, Evidence of Voter Fraud Abounds“

Two articles debate election laws and question whether we should allow a state to put ID requirements in place at the voting stations.

The USA Today editorial is in support of NOT requiring ID as a means to protect against voter fraud.  Greg Abbott, Texas attorney General, opposes this and defends why Texas has put in a voter ID requirement to minimize voter fraud. It is interesting that both sides recognize the prevalence of fraud, and acknowledge fraud to be a problem in the voting system.

The question is: How do we balance the actions needed to prevent fraud?

The USA Today Editor says “individual rights transcend the protection of fraud”. In other words, if a person might be prevented from voting due to the inconvenience of getting an ID, then we should allow everybody to vote without ID’s.

Philosophically, this is the “one versus many.” So the many can vote but the one might suffer because they couldn’t get around to getting an ID.  The Texas Attorney General feels if a person wants to vote, they can get an ID. This doesn’t cost them money, it’s not inconvenient, we make it possible. He believes this is a matter of individual responsibility embedded in the right to vote.

As a matter of business, fraud is real and must be prevented. Collective individual responsibility goes out the window because the full responsibility for protecting against fraud is put solely on the particular business in question.  See the difference?

It is modern social thinking that has allowed us to come up with this notion that people are not necessarily responsible and therefore can’t burdened with individual responsibility. In business you don’t have that option. The reality of the marketplace is that if you don’t stay focused on the disciplines of the individual responsibility and doing everything that it takes to protect against fraud, the marketplace will crush you. It’s an important business ethics discussion because we have to recognize that the standards in community have more bandwidth than the market allows us to have in business.

What are your thoughts?

Over the weekend the Star Ledger reported that the new Jersey legislature is looking to pass a law making it easier for banks to foreclose. It seems that while the $25 billion settlement suggests over reaching by banks, in NJ foreclosures are so slow that it will take 49 years to clear out the current backlog. Click Here to read the Star Ledger article.

The NJ problem seems to be that homes are being abandoned as well, creating urban blight.
Let us add to the questions from last week – Do we see the outcome of errors?

Big news! Largest banks in the US have agreed to a $25billion settlement of mortgage related concerns.

The WSJ article, found HERE, raises some basic ethical questions, on which we would ask your comments.

1. Ethics is about what should be done, not what can be done.  The article suggests that the U.S. government extracted the settlement because they could, not because there was any wrong.  Do you agree?

2. The rule of law is a concept that allows people and businesses to engage in activity based upon predictable treatment as found in the law at the time.  Does this settlement encourage you to see that the U.S. is about the rule of law?

3. Might makes right is another law, which is the opposite of the rule of law.  Is this action more consistent with might makes right?

“An update on the Sacramento Kings story…”

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Part 3 of 3…

We are pleased to post this update on the Sacramento Kings story.  WSJ reported yesterday that the Kings are staying in Sacramento!  The mayor announce he had cut a deal with the owners for the Kings to stay, with Sacramento building a new $400 million facility.  The owners will contribute $70 million to the costs of the facility.

The article highlights the issue for smaller communities of keeping sports teams. You can find the article HERE

We would reaffirm our questions of whether a community’s investment in sports teams is a wise use of funds?

We would love to hear your thoughts!

Read Part 1 of this blog HERE

Read Part 2 of this blog HERE

“The Sacramentos feel attacked as the Kings consider relocating…”

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Part 2 of 3…

The Sacramentos feel attacked as the Kings consider relocating. Last week, we gave a brief history of the team and its owners. This week we explore the issues surrounding the City of Sacramento as it faces this challenge. Relevant WSJ article can be found HERE.

We like the U.S. because of its freedom of movement. We can relocate from state to state, from city to city, even from church to church. The factors underlying a relocation decision are many, but economics and finances are one of them. Even in the Bible, such relocations occur. For example the Book of Ruth records both a movement out of Judah, during a famine, and a coming back to Judah after personal crisis. Of note is that if the relocation had not happened, Ruth would not have married Boaz and become a lineal parent of Jesus.

Sacramento has only one of the four top professional teams. Should it try to save the Kings? If so, what can be done? How much can it spend, given that finances are part of the equation? Are there contract considerations that are appropriate? Does the 8th Commandment or other Commandments give biblical insight?

“The Sacramento Kings are up for grabs. Let’s look at the owner’s issues, the Sacramento issues and the new city’s issues….”

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Part 1 of 3…

The Sacramento Kings are up for grabs. Let’s look at the owner’s issues, the Sacramento issues and the new city’s issues. We need to remember that ethics is not about what is legal, but about what is right. What is right is the fuzzy part of ethics, because who defines “right.”? The Center endeavors to look to Scripture for the definition of “right.” Does Scripture have a contribution here?

“Lin-mania” leads us to “March Madness”, meaning that it is basketball time. The Center would like blog a bit on the business of sports teams. The Center’s theme of “Stealing” or the 8th Commandment makes a nice court to bounce around some issues.

The Sacramento Kings will be our team of choice for this discussion. There are three parties of interest: (1) The owner of the Kings, (2) the City of Sacramento, and (3) Seattle and other cities interested in the Kings. While the fans, the league and others are of interest, let us focus on these three. Each week we will consider the business decisions and ethical issues of these three parties.

What is the problem? Wall Street Journal Weekend edition for February 18, 2012 has an article on Sacramento endeavoring to keep the Kings. View the article HERE! The article reports that the owner is looking to move the team to Seattle and Seattle is cutting a package to make it worth the owner’s while. The article also notes there are other cities that would be interested in hosting the team.

Before jumping in to the fray, a bit of history would be helpful. The Kings moved to Sacramento in 1985-6 season, after starting in Rochester (Rochester Royals, 1920’s) and having stops in Cincinnati (Cincinnati Royals,1957) and Kansas City (Kansas City Kings, 1972). As a smaller city team, it has always struggled to make profits. The Maloof family acquired the team in 1999. A brief description of the Maloof’s and their business activities can be found HERE. In 2011, the Maloof’s filed to relocate the team to Anaheim, CA. But Sacramento intervened and the team stayed put.

But now it looks like a new owner may be in the picture, Christopher R. Hansen. The WSJ article reports that Hansen wants to take the team out of Sacramento and may have a deal with Seattle to settle the Kings there.

Questions:

1. Do the Maloofs have any responsibility to Sacramento in their evaluation of the options of keeping, relocating or selling the team?

2. What biblical base counsel would you give to the Maloofs?

Next week we will consider Sacramento’s issues in Part 2 of 3…

“this article affirms the key role Christianity plays in commerce as we know it today…..”

I thought you would be interested in the following Wall Street Journal Article by Aryeh Spero: What the Bible Teaches about Capitalism

Without addressing the salvation aspect of faith, this article affirms the key role Christianity plays in commerce as we know it today. The last sentence is notable in that the author makes proper commerce thinking a moral issue. The Center affirms that this discussion of foundational principles is a moral issue for our country, because these principles go to the ability of all people in the US to be able to pursue life, liberty, and happiness.

What are your thoughts?