ENRON, The Smartest Guys In The Room. is documentary that focuses on the rise of the energy company, along with the rise of the idea that created the company in the first place.
Enron was a corporation that bought and sold stocks in energy as the core of their company, as well as electricity, natural gas, communications, pulp and paper.
Enron made their money using a strategy called mark to market accounting, allowing companies to change values on their balance sheet as market conditions change. Mark to market accounting only shows past transactions, leaving out current ones. Through this they were able to add transactions to their books, from deals that were intended to occur, but were never carried out. This lead to an increase in stock prices, leading to an increase in investments and consumer confidence, allowing them to continue this lie as long as the stock profits could cover the false transactions.
This does not mean that Enron was not making any real profits, because even though they did really sell energy and ect. they were simply manipulating the numbers to make it look like they were much more profitable than in reality.
When company debts started surfacing, Enron hired an economist to manipulate the debt. They did so by creating new companies, which included different branches to "buy the debt". Through this they in turn did not have to book any debts, since the transaction appeared real, and resulted in a "profit" for Enron. Along with this, Enron got real corporations on board to buy off their debts. companies such as JP Morgan, Citi Bank, Deutsche Bank, and many many others.
The downfall of Enron occurred when CEO Ken Lay retired in February, turning the position over to Jeff Skilling, who then resigned as CEO in August of that year- for "personal reasons". That October, Enron reported their first quarterly loss, and closed Raptor so that it would not have to distribute 50 million shares of stock, which would drive profits further down. Next, Enron changed their pension plan, forbidding employees from selling their shares for 30 days, meanwhile the CEO's were able to easily sell theirs. Shortly after, the SEC started investigating and uncovered the many accounting scams.
Enron's collapse had devestating effects for the nation. 4,500 Enron employees lost their jobs, in addition to jobs lost at firms which invested in Enron and lost roughly 60 billion dollars in the span of days. Pensions were also eliminated, as well as many American's trust in the market and firms obliterated.
The Enron scandal serves as a prime example of the dangers of unregulated capitalism. As in government, if there are no checks and balances power will go to the heads of those in charge and they will abuse their privilege. With no agency or government checking up on Enron and keeping their business practices honest and fair, it wasn't hard for Enron's CEOs to use the company to take advantage of millions of Americans. In order to ensure that this type of corporate fraud doesn't continue in the future, we must keep a careful eye on large, monopoly-like firms.
Monday, May 2, 2016
Friday, April 15, 2016
Worker Exploitation Under Capitalism
“If capitalism is fair, then Unionism must be. If men have a right to capitalize their ideas and the resources of their country, then that implies the right of men to capitalize their labor.” Frank Lloyd Wright
"It is to the real advantage of every producer, every manufacturer and every merchant to cooperate in the improvement of working conditions, because the best customer of American industry is the well-paid worker.”
-FDR
Labor unions are a dying breed. According to the Pew Research Center, union membership in America “is at its lowest level since the Great Depression.”
Karl Marx had a broader and more scientific definition of exploitation: the forced appropriation of the unpaid labor of workers. Under this definition, all working-class people are exploited.
Exploitation is not unique to capitalism. It has been a feature of all class societies, which are divided into two main classes, an exploited class that produces the wealth and an exploiter class that expropriates it.
Economic theory stipulates that all transactions in a free market economy are voluntary, and therefore by definition must be beneficial to both parties. The problem here is that, in reality, not all exchanges in the free market are truly voluntary. To give an extreme example, if someone demands your wallet at gunpoint, and you “voluntarily” give him your wallet it can be said that this was a mutually beneficial voluntary exchange – the other person got your money, and you didn’t get shot. Therefore, the dynamic of the situation dictates whether the exchange is truly voluntary or not. Generally speaking, the fewer alternatives one party in a transaction has (or the more desperate it is) relative to the other the less voluntary is the exchange, and the more exploitative is the relationship.
To summarize what we researched this week, we believe that unregulated capitalism is inherently exploitative of the individual. Without regulation or unions, CEOs and other individuals in power positions will easily be able to abuse their power to exploit the individual.
We noticed a striking parallel between exploitation and options. The less options an individual has, specifically if they are in a poor financial condition, the more easily exploited they become. If there is only one option, it becomes inevitable that individuals will be exploited, so with extreme poverty comes greater abuse.
Sources:
http://www.geopolitics.us/capitalism-is-exploitation/
http://socialistworker.org/2011/09/28/what-do-we-mean-exploitation
Tuesday, March 22, 2016
The Cost of Higher Education
My whole life I have been taught that through hard work, I am capable of anything and everything. My whole life I have drilled this concept into my school work and choice in classes, I cannot tell you how many all nighters I have pulled and events I have missed out on for the sole purpose of finishing a project or studying for a test. I am writing this letter thoroughly concerned about this country and its future. I am part of a generation that needs to be acknowledged and pushed towards greatness. The U.S. is a country founded off of equal opportunity for everyone, and to this day consistently pushes the idea of "the american dream" into the minds of our youth, but for all I have seen, the American dream is dead and we as a society, through the ever growing cost of tuition and burden of student loans have killed it. In our economy, it is not the fact that there are not jobs out there that is a problem, it is the fact that the jobs that are available cannot be held because we, the society, have not provided the education to fill them. The fact that a college diploma today is equivalent to a high school diploma even 20 years ago, is indication that we as a country, as a first world country, should be striving towards free or low-cost higher education. College is no longer an option to thrive in our society today, and to burden students with hundreds of thousands of dollars in student loans simply because they wanted a higher education is a backwards, unethical and corrupt system. And the fact that the government is making money through interest rates off of students trying to receive a higher education instead of finding other ways to fund our large military spending budget, is something I must say makes me ashamed to be American. Often I hear the phrase "well what if that aborted baby were to cure cancer?" And I cannot help but think to myself, well, what if I could afford college? Could I cure cancer?
Friday, March 18, 2016
Living on One Dollar
Living on One Dollar is an insightful documentary created to transport viewers into the world of impoverished Guatemalans who survive on only one dollar a day, on average. The film follows two college students studying Economics and two filmmakers through their journey in Peña Blanca, an indigent area in Guatemala. In order to simulate a realistic lifestyle, the American students wrote numbers zero through nine on slips of paper, placed them in a hat, and drew one number each day to represent their daily income. Some days were zero, and some were nine, which replicates the unpredictability of the incomes of the people of Peña Blanca. The consistent majority of these individuals work on a day-to-day basis, meaning they do not know when they will work, how much they will be paid, or how often they will be paid. Budgeting and planning is nearly impossible with an inconsistent income, which perpetuates the cycle of poverty. Stemming from this poverty, individuals are negatively effected in countless ways. There is no money for nutritious food, no money to pay for an education, no money for adequate shelter, and no money for medicine or healthcare. Many of the small things we take for granted, these people lack, which is one of the main things these students portrayed in their film.
One thing that stuck out to us while watching was the incredible generosity that underprivileged Guatemalans showed. In one story shared firsthand by a man in Peña Blanca, was about a young boy with a sick mother. Carlos, who was just nine years old, had a violently ill mother who needed emergency medical care. Carlos and his father tried to scrape up every penny they could to take her to the hospital, but with such a small budget and an inconsistent income, they did not have enough. Desperate and afraid, they turned to a neighbor and asked him for assistance. Without blinking an eye, the neighbor, who was in a very desolate situation himself, paid for the mother's medical care. When the American students asked him why he was so willing to help, he said "I just pictured Carlos as myself as a boy, and I knew I had to help." This jaw-dropping display of empathy shows the values of the community. In a place where everyone has so little, they are willing to give so much.
Another noteworthy part of the film is the description of micro-loans and other economic tools introduced to help lift up the people of Peña Blanca. Micro-loans are small loans given out to allow men and women in bad situations to start their own business or fund their education. The movie showed many examples of people who were able to thrive on these loans, paying them back in small increments as they are able. Many came up with innovative ideas to make money, which is an idea central to capitalism. This is an example of a way that capitalism has benefited society. Taking out loans and starting a business allowed these individuals to considerably improve their lifestyles. While capitalism creates a great wealth disparity, there are certain situations where it can be benevolent.
Savings accounts and savings clubs are other economic tools that improve the lives of those in poverty. Savings accounts encourage teaching individuals to save small portions of their inform in case of emergency. This is especially important in cases where there is not a consistent, steady income, and can save lives in situations of medical emergency or natural disaster. Savings clubs consist of twelve of so contributing individuals who all agree to put a small amount of their income each month into a mutual pool of money. This collective sum of money is randomly distributed to each individual contributor until they have all benefited from an unexpected, large amount of money at once.
Although all of these instances provide great ways to help, they can often be ineffective because commercial banks create strict criteria that individuals must attain in order to obtain a loan or create a bank account, and this criteria is almost always impossible for impoverished individuals to meet. These tools cannot effect change if they are not readily available. The documentary touched on a few institutions who have fair criteria and give out many loans, but highlighted the fact they are few and far between. If there are no accessible tools to lift people out of poverty, the cycle will perpetuate.
One student on his sixty day journey in Peña Blanca mentioned that there are more people living above the poverty line than below. If each person above assisted one person below, we could achieve a society without poverty. Now, this is very impractical, but very thought provoking. What can we do on an individual level to fix this dire situation? It's mind blowing to consider that people actually live this way since it is so different than many of us are accustomed to. As it is a difficult subject, many find themselves ignoring this issue instead of taking action, but this is a toxic mindset to have. It may seem impossible to make a tangible difference, but raising awareness and donating to organizations and non-profits that assist those like the people living in Peña Blanca is a perfect place to start.
One thing that stuck out to us while watching was the incredible generosity that underprivileged Guatemalans showed. In one story shared firsthand by a man in Peña Blanca, was about a young boy with a sick mother. Carlos, who was just nine years old, had a violently ill mother who needed emergency medical care. Carlos and his father tried to scrape up every penny they could to take her to the hospital, but with such a small budget and an inconsistent income, they did not have enough. Desperate and afraid, they turned to a neighbor and asked him for assistance. Without blinking an eye, the neighbor, who was in a very desolate situation himself, paid for the mother's medical care. When the American students asked him why he was so willing to help, he said "I just pictured Carlos as myself as a boy, and I knew I had to help." This jaw-dropping display of empathy shows the values of the community. In a place where everyone has so little, they are willing to give so much.
Another noteworthy part of the film is the description of micro-loans and other economic tools introduced to help lift up the people of Peña Blanca. Micro-loans are small loans given out to allow men and women in bad situations to start their own business or fund their education. The movie showed many examples of people who were able to thrive on these loans, paying them back in small increments as they are able. Many came up with innovative ideas to make money, which is an idea central to capitalism. This is an example of a way that capitalism has benefited society. Taking out loans and starting a business allowed these individuals to considerably improve their lifestyles. While capitalism creates a great wealth disparity, there are certain situations where it can be benevolent.
Savings accounts and savings clubs are other economic tools that improve the lives of those in poverty. Savings accounts encourage teaching individuals to save small portions of their inform in case of emergency. This is especially important in cases where there is not a consistent, steady income, and can save lives in situations of medical emergency or natural disaster. Savings clubs consist of twelve of so contributing individuals who all agree to put a small amount of their income each month into a mutual pool of money. This collective sum of money is randomly distributed to each individual contributor until they have all benefited from an unexpected, large amount of money at once.
Although all of these instances provide great ways to help, they can often be ineffective because commercial banks create strict criteria that individuals must attain in order to obtain a loan or create a bank account, and this criteria is almost always impossible for impoverished individuals to meet. These tools cannot effect change if they are not readily available. The documentary touched on a few institutions who have fair criteria and give out many loans, but highlighted the fact they are few and far between. If there are no accessible tools to lift people out of poverty, the cycle will perpetuate.
One student on his sixty day journey in Peña Blanca mentioned that there are more people living above the poverty line than below. If each person above assisted one person below, we could achieve a society without poverty. Now, this is very impractical, but very thought provoking. What can we do on an individual level to fix this dire situation? It's mind blowing to consider that people actually live this way since it is so different than many of us are accustomed to. As it is a difficult subject, many find themselves ignoring this issue instead of taking action, but this is a toxic mindset to have. It may seem impossible to make a tangible difference, but raising awareness and donating to organizations and non-profits that assist those like the people living in Peña Blanca is a perfect place to start.
Monday, March 14, 2016
The Propaganda Game, a documentary filmed, directed and produced by Spanish Filmmaker Alvaro Longoria, examines North Korea's 'propaganda war', along side western propaganda against the isolated country. The documentary takes a different approach to North Korea than what we are so used too, instead of solely examining the government, we see life from a citizens prospective.
We often forget that real people, just like any citizen of the US, live and love in North Korea as well. When western countries carry out propaganda against communist countries such as North Korea, they take, understandably, a dehumanizing approach, for if a war were ever to surface, we cannot sympathize with the people of these countries if we are not really conditioned to believe they exist. TPG follows around a former Spanish citizen who moved to North Korea, trained with the military and now works in the foreign affairs department, close to Kim Jong-un. Along the way, interviewing regular people of the country, both children and adults. We strongly noticed the unity the people of North Korea deeply tried to portray, the unconditional love for their leader and the utter and complete trust they seemed to have for Kim Jong-un was surprising from a western perspective. When Longoria interviewed multiple college age men and women about what they wanted to major in, all answers related to them wanting to do something for their leader. The documentary also covered the moments when Kim Jong-il died, showing millions of people, no matter the age or gender, sobbing. These moments honestly made us think, how would we react if someone we believed was God or God-like died? North Koreans are so conditioned to believe that their leaders are God, or ever so close to a God. Through songs, pledges, pins, controlled media and religions, Kim Jong-un is portrayed as the all supreme, therefore we do believe that the emotion shown and felt in these clips as well as real life when Kim Jong-il died was genuine to an extent.
The documentary further explored the communist approach in their economy and society; everyone has free health care, free education, veterans are very very looked after and respected, the government owned everything- from large department stores to street vendors. The only question- although a pressing question- one also presented in the documentary by Longaria was; where is the money coming from? The large, new buildings, the amusement parks, the schools the public parks, libraries, and everything else, continuously kept us wondering where was the money coming from?
The end of the documentary posed a good question; why hasn't the west taken down North Korea? We definitely have the military power, we have the allies and the economic resources too, if we are so dead set on expanding democracy to every corner of the world, as we were extensively during The Cold War, why haven't we acted on the totalitarian regime of North Korea?
The Propaganda Game ends by pointing out that no one actually wants to see North Korea's current regime fall. Not South Korea, for they would have to pick up the economic damages and pay for the merging of both countries. Not China because North Korea gives them a strong communist ally that they can use as control and power in negotiations with other countries. Lastly, the United States does not really want to see North Korea fall because if it did, we would no longer have a reason to keep military forces and bases in that region of the world, in turn largely endangering our imperialistic policies and our policing and concern of Russian, Chinese, or other Asian countries actions.
The only people that want to see North Korea fall, are, as the documentary pointed out, the North Koreans themselves, the ones truly hurt by the totalitarian regime. But when we are barely taught that they exist, how are we supposed to advocate or fight for them? We are taught to see the regime instead of the people in times of war, or else we would all go insane, but when these teachings are inevitable applied elsewhere, we fail to see the repercussions of them unless we open our eyes from a different perspective.
We often forget that real people, just like any citizen of the US, live and love in North Korea as well. When western countries carry out propaganda against communist countries such as North Korea, they take, understandably, a dehumanizing approach, for if a war were ever to surface, we cannot sympathize with the people of these countries if we are not really conditioned to believe they exist. TPG follows around a former Spanish citizen who moved to North Korea, trained with the military and now works in the foreign affairs department, close to Kim Jong-un. Along the way, interviewing regular people of the country, both children and adults. We strongly noticed the unity the people of North Korea deeply tried to portray, the unconditional love for their leader and the utter and complete trust they seemed to have for Kim Jong-un was surprising from a western perspective. When Longoria interviewed multiple college age men and women about what they wanted to major in, all answers related to them wanting to do something for their leader. The documentary also covered the moments when Kim Jong-il died, showing millions of people, no matter the age or gender, sobbing. These moments honestly made us think, how would we react if someone we believed was God or God-like died? North Koreans are so conditioned to believe that their leaders are God, or ever so close to a God. Through songs, pledges, pins, controlled media and religions, Kim Jong-un is portrayed as the all supreme, therefore we do believe that the emotion shown and felt in these clips as well as real life when Kim Jong-il died was genuine to an extent.
The documentary further explored the communist approach in their economy and society; everyone has free health care, free education, veterans are very very looked after and respected, the government owned everything- from large department stores to street vendors. The only question- although a pressing question- one also presented in the documentary by Longaria was; where is the money coming from? The large, new buildings, the amusement parks, the schools the public parks, libraries, and everything else, continuously kept us wondering where was the money coming from?
The end of the documentary posed a good question; why hasn't the west taken down North Korea? We definitely have the military power, we have the allies and the economic resources too, if we are so dead set on expanding democracy to every corner of the world, as we were extensively during The Cold War, why haven't we acted on the totalitarian regime of North Korea?
The Propaganda Game ends by pointing out that no one actually wants to see North Korea's current regime fall. Not South Korea, for they would have to pick up the economic damages and pay for the merging of both countries. Not China because North Korea gives them a strong communist ally that they can use as control and power in negotiations with other countries. Lastly, the United States does not really want to see North Korea fall because if it did, we would no longer have a reason to keep military forces and bases in that region of the world, in turn largely endangering our imperialistic policies and our policing and concern of Russian, Chinese, or other Asian countries actions.
The only people that want to see North Korea fall, are, as the documentary pointed out, the North Koreans themselves, the ones truly hurt by the totalitarian regime. But when we are barely taught that they exist, how are we supposed to advocate or fight for them? We are taught to see the regime instead of the people in times of war, or else we would all go insane, but when these teachings are inevitable applied elsewhere, we fail to see the repercussions of them unless we open our eyes from a different perspective.
Income Inequality
https://www.washingtonpost.com/news/wonk/wp/2015/05/21/the-top-10-of-americans-own-76-of-the-stuff-and-its-dragging-our-economy-down/
http://inequality.org/wealth-inequality/
http://youtu.be/QPKKQnijnsM
http://apps.urban.org/features/wealth-inequality-charts/
http://www.scientificamerican.com/article/economic-inequality-it-s-far-worse-than-you-think/
http://inequality.org/wealth-inequality/
http://youtu.be/QPKKQnijnsM
http://apps.urban.org/features/wealth-inequality-charts/
http://www.scientificamerican.com/article/economic-inequality-it-s-far-worse-than-you-think/
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