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Honoring Those Who Serve

Published November 9, 2015 by Mayrbear's Lair

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This week, as proud citizens of the United States, we will once again take the time to celebrate and reflect on the many services provided by our veterans as we honor all the great she-roes and heroes that have served this beautiful country. In honor of these heroic leaders, we decided to re-post our favorite blogs on the topic of leadership for the Veterans Day Holiday this week. In the meantime, we will continue the discussion we began on strategies for effective decision making next week.

Until then … we hope you enjoy this week’s blogs!

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Styles of Leadership
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(Original post, December 2012)

The nature of today’s business world produces constant change. Strong leadership expertise is required to handle potential problems with intelligence, diplomacy, and efficiency. Every leader exhibits talent in a different way and no one way of leading is better than another.  In fact, everyone can lead to a certain degree but not all leaders are effective (Glanz, 2002). Generally, visionary leaders that demonstrate a charismatic style tend to experience higher levels of success. This class of strong leader copes with change, delivers guidance, and institutes direction by communicating a vision that generates enthusiasm. These transformational leaders propagate trust, encourage development leadership skills in others, exhibit self-sacrifice and serve as moral representatives. They focus on objectives that transcend their own immediate needs (Baack, 2012).  In addition, they increase levels of fulfillment and performance in their organization by formulating and communicating a vision while building a bond with their staff. They are able to combine personal capability, group skills, managerial aptitudes and motivational proficiency with individual humility and professional determination.

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Many studies have been conducted to determine the best style of leadership. Most conclude that effective leaders exhibit varying degrees of the following virtues: (a) courage, (b) impartiality, (c) empathy, (d) judgment, (e) enthusiasm, (f) humility, and (g) imagination (Glanz, 2002).  The best leaders continue to re-examine outdated business paradigms to maintain smooth operations, high production rates, while diligently working to keep morale up. In his book, Leadership Aikido, John O’Neil (1999) introduced six concepts inspired by the martial arts tradition that stresses victory without harm. The six master practices he outlines that enable leaders to assess and develop their potential are:

  1.  Cultivating self-knowledge;
  2.  Practicing the paradoxical art of planning;
  3.  Speaking the language of mastery;
  4.  Letting values drive our decisions;
  5.  Turning failure into success; and
  6.  Heeding the law of unintended consequences (O’Neil, 1999).

He believes through the elements of aikido, leaders are able to identify and overcome five inner enemies that impede progress: (a) failure to grow emotionally; (b) failure to make creative decisions; (c) failure to empathize; (d) failure to manage ego; and (e) failure to overcome alienation and boredom (O’Neil, 1999).  This perspective embraces personal power and energy as vital traits to effective leadership.

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The bottom line is, individuals are not required to be well liked to become effective leaders. What is important, however, in an effective leader is their ability to garner high levels of trust and respect. The truth is, leaders are not always in a position to produce satisfaction in the workplace because not all policies and regulations enforced are popular. It is imperative, nonetheless, that leaders are accepted and command respect in their leadership role. To sum up, if a leader is not acknowledged or venerated on some level, it will be difficult to achieve objective goals and high levels of success in their position.

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“What each of us believes in is up to us, but life is impossible without believing in something.” ― Kentetsu Takamori

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References:

Baack, D. (2012). Organizational behaviorSan Diego: Bridgepoint Education, Inc.

Glanz, J. (2002). Finding your leadership styleAlexandria, VA: Association for Supervision and Curriculum Development (ASCD).

O’Neil, J. (1999). Leadership AikidoNew York, NY: Three Rivers Press.

Discrimination

Published September 11, 2013 by Mayrbear's Lair

Discrimination

Laws and doctrines help establish the choices that determine the rights of citizens in society regardless of gender, race, or age. Palumbo and Wolfson (2011) explain that many social systems emerged from ancient roots that were cultivated to treat people differently based on the race or sex. In addition, although evidence suggests early matriarchal traditions existed, patriarchal models have dominated Western civilization for millennia (Palumbo & Wolfson, 2011). In fact, the rise of patriarchy produced the manifestation and institutionalization of male dominance over family and society as a whole. Furthermore, men held power in all important facets of society. In short, a patriarchal system has been enforced, cultivated, legitimated, and perpetuated in a variety of manners throughout the ages and supported by religion and laws. In modern society, however, these practices are now viewed as a form of discrimination that federal government agencies like the EEOC, oversee based on Title VII of the Civil Rights Act of 1964.

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Discrimination in the workplace is an ongoing issue in the evolution of humanity. According to Seaquist (2012) discrimination in a business environment affects not only the individual, but the climate of the company as a whole (Seaquist, 2012). A leader’s best defense, as in any legal issue, is to keep meticulous records, develop effective strategies and policies to discourage discrimination and incorporate systems to monitor behavior that include checks and balances. The challenge, however, that most leaders face, is that there are many forms of discrimination; it is not isolated to race, age, or sex only. In fact, discrimination can appear in the form of class, level of academics, religious preferences, and even based on the kind of pet an individual has. Discrimination in short is a concept that creates separation and distrust in people because it focuses on their “inequalities.”

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Many of the founding fathers of this country believed that equality is the ideal that is at the core and fiber of every human being. Fredman (2011) in the meantime, asked us to contemplate the following concept: “When one person is like another, does that entitle them to be treated alike?” For example, for centuries it was commonly accepted that women were not like men and therefore deserved fewer rights. This concept still exists today in many countries. The same premise is used to deny rights to people of color, ethnic groups, sexual orientation, disability or age. Although one can agree or argue whether individuals are different or alike, many still contemplate as to whether they should or are entitled to be treated equally. This would suggest that the treatment of equality is predicated on the principle that justice is inconsistent. This paradox is evident when we accept that equality is formulated in different ways contingent upon the specific concept that is applied. This explains how the consistencies or inconsistencies of two individuals that appear to be alike, are in fact different in terms of things like: (a) access to power, (b) opportunities, and (c) material benefits that manifest in unequal outcomes. Therefore, an alternative view of inequality emerges that is based on perception of justice that is concentrated on balancing maldistribution (Fredman, 2011). This is one way to explain how discrimination continues to thrive and exist.

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Some employers, however, engage in certain kinds of discrimination to justify their business practices. For example, many of the employees hired as cocktail waitresses in certain environments are employed based on a certain attractive look, age, gender and physical features. The reasoning behind this is that it is part of their marketing strategy which is aimed at a dominant male clientele. Although this can be construed as discrimination, EEOC mandates also protect an employer’s right to choose how to run their business and the marketing strategies they deem effective for their industry. As long as a company can produce evidence to support their business is based on profiting by hiring a certain group, whether based on attractive looks, religion, age, gender, or other criteria, the business can engage in this practice legally and within the framework of employment laws. In other words, a business owner can operate an establishment, hire a specific type of employee for specific duties, and the EEOC will not consider it discrimination as long as the employer can provide substantial reason and evidence to support their justification in doing so, that is consistent in their industry. Ultimately, it is the job of each and every business leader to make sure they are familiar with the business laws that govern their industry to ensure that they are not violating any statutes with respect to employment and discrimination laws.

References:

Fredman, S. (2011). Discrimination law. New York, NY: Oxford University Press.

Palumbo, C., & Wolfson, B. (2011). The law of sex discrimination (Fourth ed.). Boston, MA: Cengage Learning.

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Employer Liability for Negligent Hiring

Published September 9, 2013 by Mayrbear's Lair

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Smart business leaders have a firm grasp of comprehending the law and recognizing its limitations when it comes to operating a business. Walsh (2013) explains that, “No single set of employment law covers all workers” (Walsh, 2013). In fact, employment laws consists of a variety of federal, state, and local laws that are contingent upon such things like: (a) whether the individual is a government employee, (b) whether the individual works in the private sector, (c) the size of their company or (d) whether they have any union affiliation. In addition, employment laws are ever changing, as new employment laws are created and old ones are reinterpreted.

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To better understand these laws, we will examine a case study of a scenario involving  a 17 year old plaintiff that seeks damages as a result of being violently assaulted by an employee of the defendant, XYZ Motor Freight Inc. When XYZ hired the employee that committed the assault, they questioned the individual with respect to prior vehicular offenses and criminal convictions. However, due to their position on EEOC discrimination statutes, XYZ only chose to verify his vehicular offenses and ignored his negative response to the criminal convictions inquiry. Rassas (2011) suggests that employers who have a working knowledge of labor law and the obligations of employers can help them avoid litigious events such as this. A lack of knowledge can unintentionally result in a failure to abide by a law and impact the operation of an organization significantly (Rassas, 2011). For example, employment laws have been established to protect both employees and employers by imposing certain responsibilities. For employees, employment at will is a default rule that permit employers to terminate employees without having a good reason. This means the employee has the freedom to engage in collective bargaining with their employers. In addition, according to employment laws, each relationship is subject to the terms and conditions of employment that meet minimum required standards. However, in today’s society the most effective and successful people, whether employer or employee, should also take responsibility and accountability to ensure their own safety as well as those of others.

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XYZ’s position is that it did not seek to verify the criminal background check citing they had no duty to do so because of a lack of foreseeability. They further defended their position stating that to impose such a duty would be against public policy and place too great a burden on them. However, in this case, failing to do so created another burden for them. Seaquist (2012) purports that when an employee is working within the scope of their employment, the employer will be liable to third parties for the torts of their workers under the doctrine of respondent superior (Seaquist, 2012). The plaintiff in this case seeks justice arguing that the employer should have been cognizant that the employee they hired was dangerous because he had a history and a record of violent sex related crimes when they hired him. In other words, by not checking his criminal background they created a dangerous condition by putting him in a situation in which he was able to bring harm to others because they failed to verify his criminal record.

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Both sides have very effective defenses to support their position. XYZ claims they did not verify the criminal background check because they were acting in accordance with EEOC discrimination law issues. However, because the employee was hired to participate in interstate commerce, it is their responsibility to make sure the individual performs their duties to best of their ability and trust they will not engage in misconduct or inappropriate behavior. In my view, if I were a business leader for XYZ, I would be concerned about the damages from the negative publicity alone that a case like this attracts. That is reason enough to engage in thorough employee investigations scrutinizing criminal backgrounds a little closer because of the nature of the trucking industry. As a part of the legal counsel for XYZ, I would suggest a settlement to keep the matter private to preserve the organization’s reputation, and take responsibility for their employee’s ethical misconduct by paying any and all damages to the plaintiff as an act of good faith that supports an ethical corporate climate.

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The plaintiff is in her right to seek damages for being so horrifically violated. However, the jury must decide on whether or not XYZ was responsible for negligence because they were acting in accordance with EEOC mandates with respect to the background check issue. Unfortunately, in a life changing situation as this, hopefully both parties learned some valuable life lessons from this experience. The defendant can begin to take more effective methods to insure the competence of their employees, and the plaintiff came to understand, that although an individual may represent an organization, that does not mean the individual is free of behavior from criminal or ethical misconduct. The moral of the story: never, ever, accept a ride from a stranger. The movie Hitchhiker was a good reminder as to why.

References:

Rassas, L. (2011). Employment law: a guide to hiring, managing, and firing employers and employees. New York, NY: Aspen Publishers.

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Walsh, D. (2013). Employment law for human resource practice. Mason, OH: Cengage Learning.

Antitrust Laws

Published September 6, 2013 by Mayrbear's Lair

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Fair trade and competition is a significant component in how business leaders conduct commerce. Gellhorn and Kovacic (2004) assert that societies have adopted legal systems to control and regulate anti-competitive conduct for several millennia where an antitrust incident documented in Ancient Greece describes a case brought against the grain dealers cartel in Athens in 386 BC (Gellhorn & Kovacic, 2004). By understanding the origins of antitrust statutes authorities are better able to comprehend how to decode them. For this discussion post, we will examine the recent attempted merger of AT&T with the T-Mobile Corporation that was dropped after the Justice Department took an aggressive stance and sued to block the deal contending the merger would constitute a violation of antitrust laws.

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Antitrust laws are regulated by the federal government to manage anticompetitive practices. Hovenkamp (2011) contends that in order to comprehend antitrust policies, knowledge is required in two rudimentary regions of economics: price theory and industrial organization.  Price theory consists of the decision-making process that determines the quantity and the cost of goods. Industrial organization on the other hand, is the theory of how the framework of the organization and the market are established. In a perfectly competitive market, for instance, all participants have knowledge of price, output and other information. In other words, competitive equilibrium means that all sellers make a standardized product that consumers can purchase at the same price from any outlet. However there are other elements that can affect the market. For instance, supply and demand for products play a role as well. In addition, there are consumers that are willing to pay different amounts. Monopolies, however, create opportunities to increase output and raise profit margins. When profits in a market are high two things happen: (a) companies will produce more, and (b) new companies are formed. This momentum continues until it reaches a point where supply and demand intersect (Hovenkamp, 2011). From that point on, continuation to produce the product increases cost, resulting in too much supply. In addition, revenues decline because of the decrease in demand. Based on this model, the government was justified in believing that the AT&T/T-Mobile merger was a threat to fair competition in the cellular communication market.

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The US government has the authority to exercise its power to protect citizen rights. Merced (2011) reported that if the merger between communication giant AT&T and T-Mobile would have been allowed to occur, it would have created a duopoly between AT&T and Verizon Wireless leaving the two giants to control three-quarters of the cellular communications market (Merced, 2011). This would have ripened the field for the two giants to engage in anticompetitive practices that could have a profound affect on: (a) price manipulation; (b) restriction on the availability of products; and (c) agreements to fix prices that undermine the market. Seaquist (2012) purported that the Sherman Antitrust Act of 1890 which is based on common-law practices integrated with standards of conduct, regulates and punish businesses that engage in anticompetitive practices and was established to prevent mergers like these from occurring (Seaquist, 2012). In fact, just recently, the news reported that the government intervened yet again to stop another merger. This time between American Airlines and US Air, contending that the union would affect higher prices in airfare that would be unfair to citizens. In conclusion, consumers win when Antitrust Laws prevent mergers of large conglomerates because of: (a) higher prices to consumers, (b) they reduce innovative opportunities, and (c) they leave little room for competition. Without antitrust policies, the world would indeed be a very different place today.

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References:

Gellhorn, E., & Kovacic, W. (2004). Antitrust law and economics in a nutshell. St. Paul, MN: West Publishing Co.

Hovenkamp, H. (2011). Black letter outline on antitrust (Fifth ed.). St. Paul, MN: West Publishing.

Merced, M. D. (2011, December 19). AT&T ends $39 billion bid for T-Mobile. Retrieved August 19, 2013, from http://www.dealbook.nytimes.com: http://dealbook.nytimes.com/2011/12/19/att-withdraws-39-bid-for-t-mobile/?_r=0

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Securities Law

Published September 4, 2013 by Mayrbear's Lair

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The most common securities many individuals are familiar with are stocks and bonds. According to Gabaldon and Soderquist (2011) the courts, however, have acknowledged all types of investment schemes, including some that relate to earthworms, chinchillas, and warehouse receipts for Scotch whiskey, which can also involve a security. People that invest in securities learn to become familiar with security laws to avoid violating them. It can also help them determine whether a transaction is a legitimate security based on concepts that are completely foreign like those mentioned here (Gabaldon & Soderquist, 2011). In other words, understanding security laws may help them learn how to profit from them, plus, it can also serve to protect their investments. In addition, regulation allows for fair competition in the marketplace. For example, consider a private California university that wants to issue “shares in learning” certificates; are they required to register the stock they offer with the Securities and Exchange Commission (SEC)?

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Federal laws mandate that securities are registered before they go up for sale. Companies are expected to file the paperwork with the SEC and the Supreme Court determines what securities constitute an investment contract. In order to be considered an investment contract: (a) it must provide an investment opportunity, (b) establish a common enterprise, (c) provide an opportunity to make a profit, and (d) the returns are derived from the management of others. In addition, the registration process must include detailed information on the provisions of the security offered, including the corporation’s properties and business, the company’s management team and their compensation, security holdings and benefits, a certified financial statement by an independent accounting firm, and any pending lawsuits the company may be engaged in. There are, however, exceptions to registering securities before they go up for sale. For instance, the SEC exempts securities that are issued by banks prior to July 27, 1933 or any securities issued by the government. In addition, securities are exempt if they have been issued by nonprofit organizations including religious, charitable, educational, benevolent or fraternal organizations (Seaquist, 2012). Based on this information, the private university in California, therefore, would be considered exempt, and not required to register with the SEC because it falls under the category of a nonprofit educational organization.

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Regulating securities is an extremely complicated matter. Hazen (2009) contends that it is particularly perplexing because of the degree of detail and difficulty in elaborating both federal and state laws. Although originating is a matter of state law, the majority of regulation for securities falls under the jurisdiction of the federal law (Hazen, 2009). In other words, dealing with federal securities regulations is usually a difficult task that requires the consultation of several sources for efficient management because of the complexities involved. With respect to the stocks issued in from the private California university, according to Seaquist (2012) the Securities act of 1933, Rule 504 of Regulation D states that non-public issuers are permitted to sell up to one million dollars of securities in a twelve month period to any buyer. Under Rule 147, regulations also state that securities offered for sale by an organization that conducts 80% of their business in one state, are also exempt from filing (Seaquist, 2012). Given this information, one can conclude that the private university in California would be exempt from filing with proof the institution meets the following criteria: (a) it is a nonprofit educational organization; (b) the amount offered does not exceed the maximum value mandated in Rule 504 of Regulations A and D, and (c) they conduct most of their business in California where their facilities are located and students attend classes. In conclusion, because of the complexities involved with security laws, it is best to check with a legal consultant to determine exemption status.

References:

Gabaldon, T., & Soderquist, L. (2011). Securities Law (4th ed.). New York, NY: Thomson Reuters/Foundation Press.

Hazen, T. (2009). The Law of Securities Regulation (6th ed.). St. Paul, MN: West Publishing.

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Administrative Law and Business

Published August 28, 2013 by Mayrbear's Lair

Administrative-Law

There are those that favor an increase of government regulation in the business arena in light of events like Enron and the credit crisis of 2008, while others believe that self-regulation is more effective without the intervention of government agencies and their administrative laws. Funk and Seamon (2009) suggest that administrative laws are like the air we ingest: invisible and ubiquitous.  Administrative agencies effect many areas of our lives that most people take for granted. In other words, they are part of the atmosphere that comprise modern society and like our physical environment, a necessary component (in some form) to help sustain civility (Funk & Seamon, 2009).  However many company leaders believe that government intervention is not effective and regard it as an unfair practice that forces financial burden on businesses, particularly small ones. Seaquist (2012) contends that the purpose of government agencies and their administrative laws is to help oversee and carry out specific government functions that help maintain a civil society (Seaquist, 2012). However, the effectiveness of these regulations are altered and evolve as society does and as administrations change and incorporate their political views.

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In order to better comprehend what role government regulation should play to ensure ethical corporate conduct, we must first understand what role administrative agencies and their laws are meant to play and why they were established in the first place. Funk and Seamon (2009) purport that historically, the most significant agencies (or departments), consisted of the President’s Cabinet or close advisory members.  There are fifteen areas these departments oversee: Agriculture, commerce, defense, education, energy, health and human services, homeland security, housing and urban development, interior, justice, labor, state, transportation, treasury, and veterans’ affairs. The formation of these agencies and the demands placed on the leaders altered the historic importance of the cabinet members (Funk & Seamon, 2009). Subsequently, as these agencies evolved, they slowly began to take on a life of their own. For example, the agencies focus on implementing and managing their administrative laws, which are primarily about procedure and the systems they maintain, in order to take action that affect citizens. The administrative laws in turn, are determined from judicial opinions, driven by judicial decisions – as opposed to statutory or regulatory content.  In the meantime, growing concerns over costs and the efficiency of these government regulations, continue to lead to the creation of many new laws and executive orders designed to reform them. In theory, as society evolves and new technology expands, these regulations and agencies continue to make adjustments and the cycle continues.

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One thing is for certain, administrative regulation agencies have been granted considerable power. Gellhorn and Levin (2006) purport that some of these powers are assigned on an industry wide basis like the FBI and IRS whereas other agencies enforce norms of conduct within the economy like the Federal Trade Commission (FTC) that enforces the ban on unfair methods of commerce and competition (Gellhorn & Levin, 2006). What makes these agencies dramatically unique is that each operates wielding the power of all three principal branches of government. In other words, they have legislative power to issue rules that control behavior, including the enforcement of heavy civil or criminal penalties for violations. They also have executive power to investigate possible violations and prosecute offenders. In addition, they have judicial power to adjudicate disputes that fail to comply with mandates. For example, the Securities Exchange Commission (SEC) created regulations that outline specific disclosures that must be taken into consideration in a stock prospectus. This later becomes a law that is passed by the legislature that the SEC uses to enforce and prosecute violators. Then, the SEC acts as the judge and jury by conducting adjudicatory hearings.  What makes this a unique situation is that these administrative agencies are typically unattached to any of the three branches of government (executive, legislative, or judicial). This then, raises questions of concern with respect to the constitutional distribution of authority in our government which is based on the principle of the separation of powers. We must remember that the division of these branches serves to provide a check and balance system of the power exercised by the other two branches. This means that the combined powers of the administrative agencies are not in alignment with the three part paradigm of the democratic government system the founding fathers designed. Institutions granted that kind of power can become dangerous because they have no one but themselves to answer to. In light of this significant information, it seems the real question is not whether government should increase or decrease their regulatory measures, the real question is how to make them effective at what they were designed to do, with checks and balances in place to ensure that these agencies and the government leaders that run them, manage society in a fair and ethical manner and that the distribution of power is more evenly divided to detect ethical misconduct before another crisis threatens the global economy.

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References:

Funk, W., & Seamon, R. (2009). Examples and explanations: Administrative law (Fourth ed.). New York, NY: Aspen Publishers.

Gellhorn, E., & Levin, R. (2006). Administrative law and process: In a nutshell (Fifty ed.). St. Paul, MN: West Publishing Co.

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Regulation and the Greater Good

Published August 26, 2013 by Mayrbear's Lair

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Innovations in technology and politics have been significant factors for the expansion of government agencies and the administrative laws that govern citizens. Seaquist (2012) suggests these government agencies are also considered the fourth branch of government. Since the 1930s, the federal government has been expanding its regulatory authority on most areas that affect commerce. Congress created these administrative agencies to oversee and manage specific functions. In addition, they are empowered to create agency rules set forth by guidelines provided from the Administrative Procedure Act (APA). Furthermore, these agencies have the force of the law to support them (Seaquist, 2012). For example, Federal agencies consist of two separate branches: (a) independent and (b) executive. These agencies manage regulatory control and are powerful entities. Independent agencies (some of which include the EPA, EEOC, FCC, ICC and FTC) are granted the power to create their own rules, enforce them, conduct investigations and arbitrate disputes. In other words, they have been granted the power to act as legislator, law-enforcement, judge and jury. Executive agencies, on the other hand, serve to assist carrying out the responsibilities of the executive branch of the government. These agencies include the Justice Department’s FBI, the Treasury Department’s US Customs Service, the FDA is part of the Health and Human Services Department, and the FAA is an offshoot of the Transportation Department. These agencies, unlike independent agencies, are under the direction and control of the US President, who is also responsible for appointing and removing staff members. These agencies serve to regulate and control laws that govern society.

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With all these agencies and the government regulations established, how was an event like the credit crisis of 2008 even possible? Blinder (2013) reminds us that as many witnessed the financial crisis unfold, one of the most perplexing issues Americans faced was how very little explanation was offered as to why and how it occurred. During the crisis, President Bush, on his way out of office, was elusive, and although President Obama was more visible, his explanation fell short of what the citizens deserved (Blinder, 2013). For example, the US economy, leading up to the crisis was that of growth and job creation. According to Jarvis (2012) Alan Greenspan, the head of the Federal Reserve governmental agency lowered interest rates which made investors eager to take advantage of (Jarvis, 2013). In other words he created cheap credit and made borrowing money easy which motivated bankers and lenders. The investment bankers in turn used their leverage to control outcomes to make more money by joining banks together with homeowners offering high risk sub-prime loans.

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So the million dollar question is, if these government agencies were established to oversee and regulate laws, how were Wall Street investors and bankers able to create the credit crisis in the first place? And even more important, why was no one held accountable for their conduct or their part in creating the crisis? Soros (2008) contends that the crisis was slow in coming and that authorities could have anticipated it several years in advance when the “dot com” industry of the internet exploded in 2000.  The Federal Government responded by cutting interest rates. This cheap money helped create a housing explosion because of leveraged buyouts and other excesses. The mind set was that because money was practically free, lenders kept lending until there was no one left to lend to (Soros, 2008). What could have prevented this? Many agree there is no one easy answer. Government agencies are there to help prevent situations like this, but when government officials are also being compensated by big business and are favored by Wall Street, they are more inclined to look the other way and go with the flow, until the situation reaches a tipping point. In other words, until those in places of authority are caught in ethical misconduct, these situations will occur because of issues like greed and power. Until serious reforms are implemented from trusted institutions these events will continue to surface. The first order of business in my view, is to identify the agencies and authorities that have a proven record of trust and ethical behavior including spotless track records. Use those as models to build others. Unfortunately, however, it has been difficult to discern who is trustworthy and truly have the citizen’s best interests at heart.

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The US economy has endured financial crises in the past, but the credit crisis was a new beast that spread like wildfire from one market across many others. One thing is certain, that the financial markets and authorities were very slow to recognize that the global economy would be affected. Perhaps there were those that did not care about the consequences because they were too consumed by the wealth and affluence they enjoyed. What this crisis did reveal however, was that greed and excesses were at the root of the credit crisis. The good news is that the value of the American dollar will continue to grow because of the ongoing expansion of raw materials and energy. For example, biofuel legislation is generating a boom in agricultural products. Economic growth and falling interest rates in countries like China that turn negative, are positive signs that is normally associated with economic growth. This gives hope that the winds of change are making progress.

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References:

Blinder, A. (2013). After the music stopped: The financial crisis, the response, and the work ahead. New York, NY: The Penguin Press.

Jarvis, J. (2013). The crisis of credit visualized. Pasadena, CA, USA. Retrieved August 11, 2013, from http://vimeo.com/3261363

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Soros, G. (2008). The new paradigm for financial markets: The credit crisis of 2008 and what it means. New York, NY: PublicAffairs.