This week I am proud to be a Googlican.

GoodB is happy to report that Google continues to be one of the best models for Good Business around. No, we are not sipping Kool-Aid! As most of you know, Google, the internet search giant, has challenged one of its biggest clients, the money machine of the 21^st century Communist China, on the subject of free speech and ethics.

In all the hullabaloo this past year as the financial crisis enfolded and China stepped in to lend America piles of cash against a future of debt, little was mentioned about the communist government of China. People like brilliant policy shaper Tom Friedman waxed rhapsodic at the wonders of China with green-eyed envy. China had become the flat world’s wunderkind.

I marveled at the hypnotic affects of China’s “capitalism” in the past decade over respected and innovative thinkers. Friedman in “The World is Flat” listed China as a welcome addition to the global economy, a great commercial giant leveling the playing field.

In the U.S. love affair with China, as the Big O (and George Dubbya before him) shake their hands and money tree, otherwise smart people seemed to forget who our benefactor really is. It’s the Big Bad Wolf, folks and we are on our way to Grandma’s house.

For all the Red Scare of the 50’s through 80’s, the Soviet Union was the wolf. Russia continues to be vilified in the press and Public Square. The message is repeatedly clear. They are a communist dictatorship and do not value American-style freedom. They can’t be trusted.  Okay…so how did China slip through the cracks to become one of the most admired economies by the western world?

The affair with Big Red began with the smell of money. Back in the mid 1990s, top execs at Goldman Sachs were scouting the world for new opportunities. The economic neutron bomb, hedge fund Long Term Capital, had exploded and with it the Russian market.

All eyes turned to the East. CEO Hank Paulson turned for help to Goldman pal, Robert Rubin, who sat comfortably in the U.S. Treasury seat. President Clinton signed on and the stars aligned. China was open for business.

The belief in the early 21^st century among many of the “best” economic minds of the day (including Alan Greenspan) was that communism through capitalism would slowly transform into democracy.  Ahh, we were so young and foolish back then. We believed so many fanciful things, like capitalism actually has anything to do with democracy!

In the lust for profits in the developing nation of China, American businessmen and policy makers seemed to forget – they kill people there! They round up “dissidents” (anyone who does not agree with The Party), force them into kangaroo courts, torture them behind closed doors, break their spirits, and whisk them away forever. And we think Iran’s government is ”bad?” I guess they are not our trading partner, so we can afford to be preachy. As soon as China became a primary source of revenue we were up the creek without a paddle….

(Just a quick note, if the financial crisis had occurred in China, what do you think would have happened to the subprime mortgage industry titans who took the money and ran? It is doubtful a Chinese Wall Street could have run too far. Guess there are perks to living with the Green-Reds after all.)

I have not understood for the past decade how the U.S. government can crow loudly about the violations of individual freedom in parts of the Middle East and somehow remain non-committal on the ongoing human cruelty in China.

Last month, outspoken Chinese dissident and well-known member of the American civil rights group PEN, Liu Xiaobo, was convicted of “inciting subversion” for calling forth “greater human rights” in China and the end of one-party rule. He was sentenced to 11 years in a maximum security prison. His wife was held in house arrest by the Chinese police during the trial. So much for democracy, even worse, forget about basic human rights.

These are the people with whom we willingly do business. These are the folks whose fortunes are made by Walmart shoppers. These are the folks who now own the future of America. Isn’t business supposed to be based on trust?

Google’s recent challenge to the Chinese government’s hacking of private email accounts reveals the struggle between Chinese and American style commerce. When it comes to “free enterprise” in a non-free society, the limitations of capitalism are plain to see. In America, capitalism trumped democracy once again this year. In China, communism will always have the upper hand. 

China and Google have butted heads over user privacy and censorship before. In my book, Spiritual Capitalism, I detailed the complex ethical issues between Yahoo, Microsoft, Google, and Chinese authorities. In 2006, all three tech companies succumbed to pressure to remove any blog or website critical of the Chinese government. Yahoo shockingly turned a political activist’s email identity over to officials. He was never seen nor heard from again.

Google and Microsoft chose to allow censorship, yet refused to reveal private identities and moved all email accounts offshore. All three U.S. companies were summoned before a Congressional panel and summarily chastised for their actions. More than one congressman compared their actions to Nazi complicity.

Time Magazine ran a cover story in February 2006, “Can you trust Google with your secrets?” as the commitment of the tech giant to its mantra, Don’t Be Evil, was called into question. A Google spokesman stated the company was not “ashamed” of its action, but “not proud.”  Better to have limited Internet rather than none, he explained. The response never sat quite right with the rest of Free Speech America.

The current situation involves more than suppression of First Amendment values. The Chinese government stands accused of “hacking” into private email accounts of political dissidents. Hacking is the digital equivalent of breaking and entering. The issue at stake is the very essence of Google core values. It’s good to know that when Big Brother is watching you, your other Big Brother has got your back.

Google is considering pulling their search engine out of China – a country of 1.3 billion people, four times the population in the United States. An amazing action for any hugely profitable publicly traded company. The threat alone would make shareholders shudder and competitors gloat. It also can make their largest client, the People’s Republic of China, mad as a hatter.

Yet they are willing to put their money where their ethics are, potentially risking enormous profits, and raising the bar of corporate social responsibility to a new level most of us will have to leap to follow.

This week Google profits are down 13%. The toll of the recession and the threat of Chinese action are already weighing heavily on the tech giant. Yet Google stated in their 2004 IPO that they wanted to be a different kind of company, one that did not sacrifice their core values for short-term profits.

That is a tough call for any for-profit company. Business leaders meet ethical challenges daily. Little in the world of money is black and white. There is always a grey area where profits must be considered against human needs. This is what doing good business demands of us. Asking questions like, “How do you stay in business, answer to the bottom line, and still maintain the soul of who you are?”

These are the dilemmas faced by modern business -big, small, and everything in between. Wall Street has been called on the carpet in recent months. So far they have failed miserably to balance two essential values: profits and the human bottom line.

The key for managers and companies faced with difficult decisions is to have a clear foundation of principles from which to act. Like valuing quality of life and placing the welfare of people and planet before profits. That is a hard lesson for business. Yet it remains the fundamental test of good business for 21^st century enterprise.

However this issue rolls out, Google has made a profound statement with its current stance. Sergey, Brin, and all the Googlicans are saying simply, some things are more important than money- principles and people. In the process, they have renewed our faith in ethically responsible capitalism.

This year, we watched incredulously as one profitable firm after another justified reprehensible breeches of ethics as the cost of doing business.  Google’s actions set them apart from the pack by drawing a distinct line in the sand. They are in business to profit, but they refuse to sell their soul to do it. The search king reveals once again that trust in business is not a PR slogan, but an absolutely essential component in any contemporary business model. 

Just goes to show, there are some things in life you can still count on. It is good to know that Google is one of them.

Christmas might be over, but the Spirit of Giving seems alive and well – at least on Wall Street. Investment banking firms like Goldman Sachs are considering whether to require employees to “give back” to society with a mandatory charity clause. The purpose of the action would be to:  a) Do the “right” thing. b) Appease the common folk. c) A & B 

Really what difference does it make why? The real questions are, is it the right thing and will it diminish public criticism? After all, according to one CEO, these firms are doing “God’s Work.” 

Employees at the big bailout firms stand to make even bigger gains for last year’s debacle than previously imagined. With the help of friends in high places, the “too-big-to-fail” banks have roared back to the top of the charts and execs expect to be paid for it. Bonuses are to be announced in late January and early February and are guaranteed to stir up ire among the long-suffering public. Some of Goldman’s efforts to soothe public resentments have included earmarking $500m for “small business education in community colleges” and $61m more to build urban affordable housing. Global investment banks are considering making employee tithing an official part of their business model.

Wall Street firms, including the greed-is-good 1980s Solomon Brothers, have long given back to the community. Junk Bond King Michael Milken has been one of the financial industries largest philanthropists since his release from prison in 1993. George Soros who “broke the Bank of England” has been an unceasing benefactor for many of the world’s neediest for decades.

Financial firms have built schools, underwritten libraries, created poverty programs, fought deadly diseases, and supported environmental sustainability and social entrepreneurship – all in an effort to balance the scales of prosperity.

Three of the biggest contributors to the fallen firefighters’ widows and children funds after the September 11 attacks were Merrill Lynch, Lehman Brothers, and Goldman Sachs. All the big Street firms gave hundreds of millions of dollars to rebuild the city and honor its fallen heroes. No one in New York ever forgot that.

So what is different now? Isn’t this what capitalism is all about? Making a profit and circulating it back to the people? Of course. Yet any firm that used bailout funds to get back on its feet is no longer viewed as a pure capitalistic venture. With the official label of “too-big-to-fail,” the public sees these firms as government-backed. Therefore the old rules of capitalism no longer apply. Giving a portion of profits to personal charities does little for those losing their homes or the millions of middle-class jobless who took the fall for others.

Since the days of Andrew Carnegie, people have confused good business with philanthropy. The titans of yesteryear, like Carnegie and Rockefeller, established the big business standard of supporting the arts and other non-profits. These men forced people to work at subsistence level wages in subhuman conditions, and then built libraries and schools for the same folks. In the 19^th century selective philanthropy balanced the scales, in the 21^st century it does not.

Business has an obligation to give back to the community that supports it. Therefore, charitable giving is a basic reality for any profitable company. However, in the past year it has become unmistakably clear that business also has an obligation not to profit by exploiting that community.

A great example of this model is the former investment bank Bear Stearns. The Bear was one of the most reckless subprime mortgage securities houses leading to the financial crisis. In the 2000’s, Bear Stearns also set the trend for “giving” by requiring top executives to contribute 4% of their income to charity. Levered at over 40 to one, Bear’s flimsy underwriting standards and outsized trading risk brought the behemoth firm down. Following in its footsteps were Merrill Lynch and Lehman Brothers, both high flying mortgage market makers and generous patrons. The loss of Lehman and Bear to the greater New York not-for-profit community has been heart-breaking.

Yet charitable giving by these firms has not made up for the financial devastation left behind in their wake. Donating 4% to a favorite charity while crushing the working and middle classes has not satisfied stressed taxpayers. The same people who lost their incomes and perhaps their homes directly due to market mayhem are asked to accept charitable donations to quell their rage. Hardly a reasonable offering.      

While firms cannot earmark 10% of profits for philanthropy without enraging shareholders, they can invoke the “charity clause.” Setting aside 5-10% of earnings for top producers to support a special community fund might establish better relations with the public after all – if that fund is funneled into a program that supports those affected directly.

For example, Goldman has set aside $16bn in a 2009 bonus pool. What if $1.6bn of this executive fund was used to finance small business loans at zero percent, refinance at-risk homeowners, pay a portion of monthly mortgage payments for unemployed homeowners, or seed money to social entrepreneurship start-ups who guarantee they will hire U.S. workers? These may be highly unusual solutions for profit-seeking Wall Street, but these extraordinary times require extraordinary measures.

This week, the top banking chiefs expressed mia culpa for the industry’s part in the economic crisis. Apologies are due, but actions are imperative. Earmarking a portion of bonus checks to plaster your name above the public library door isn’t going to relieve suffering or reduce anger. Real and effective solutions to current economic dilemmas are expected from both the government and financial industry.

To calm the ire of the seething public, firms do need to acknowledge their part in the nation’s misery, but not by following the path of Gilded Age robber barons. The way to rectify ongoing economic fallout is not through subjective “charitable giving,” but through genuine proactive restitution and reform.

contact@good-b.com  © 2010

What is the point of all your great efforts these past few years you may be asking? In 2009, it was enough to just hold on, keep your business or income afloat, and try to make it through each month. There wasn’t a whole lot of growing to do unless you were one of the firms that grabbed onto the government’s life line to be pulled out of the hole you put yourself in. For the rest of us, we are left to our own devices to pull ourselves out of the hole others left behind.

All the progress made in 2008 by motivated entrepreneurs and optimistic working folk was flushed down the old porcelain convenience after Lehman Brothers’ collapse. 2009 was the year to hang on for dear life and hope you made it through. It was like standing on the Titanic watching all the Big Banks jump into the lifeboats leaving you two choices: sink or swim.  If you managed to swim in 2009 and not get pulled down with the ship, you might be asking, what do I do now?

The New Year 2010 has begun and with it green shoots of Hope have sprung in the hearts of the resilient. Larry Summers, President O’s Chief Economic Advisor, swears that “everyone agrees that the recession is over.” Those words ring false for the millions upon millions whose incomes have been cut in half or completely wiped out, or for the tens of millions more whose net worth is a fraction of its former value.  For the millions of jobless or financially devastated who feel abandoned or forgotten, these words inspire rage and despair. Those left to their own resources without lifeboats for the past 16 months do not agree, Mr. Summers – the recession is not over, not for ordinary folks, not by a long shot.

So what is it all about, Alfie? What was the point of all that? Where do we go from here?

We muddle through the day to day financial stress trying to make sense of the senseless and nothing rings true.  The need for financial regulation, the methods for resurrecting incomes, the possibilities of official support - all of it really means nothing in the face of bigger truths. For all the menial, trivial, and hard reality of paying the bills, and generating income to stay alive, it all comes back to one thing. What is the deeper meaning of all of this financial upheaval in your life?

Why are you or any of us here on this earth at this moment in time? Is it Chance or Coincidence to find ourselves in the middle of this economic drama? Is there a greater plan behind it all? These are the questions for millennia; these are the questions for the moment at hand.

I don’t know a deeper meaning to life if it is not to help others as we try to help ourselves – to serve a higher purpose by making the world a better place. While that may be an ultimate truth, it will not necessarily pay the bills.

The questions for 2010 then are how to do we make the world a better place, a world where human beings care for each other more than their wallets, where common folk are not left on the curb as “fat cats” step over their writhing bodies, where ordinary heroes rise up to take back the world they create every day in every way. When will the values of ordinary people who do the “right” thing consistently  without prompting reap earthly rewards for their humanity? Must we always be trumped by the overwhelming self-serving indifferent powers that be?

I ask all these questions of you, because I have been asking these myself.

It can get pretty hopeless out here in the wasteland of the devastated American economy. I look around and see misery and suffering, some of which the rest of the world has always known, but for my generation is new. What do I tell them, how do I bring them hope for a better future?

First of all, I remind everyone, even those facing homelessness and bankruptcy, it is never just about money. There is always a bigger picture.

Money makes the world go around only to a degree. It buys us food, shelter, clothing, perhaps medical care and education. Things we need to survive and thrive. But we already know it does not buy us love, nor does it buy us compassion, or sensitivity to the pain of others, nor relief from apathy. That comes from the heart. That comes from a greater place than can be explained easily in words.

So while you are going through your great financial challenges and hoping to pull yourself up from the boot straps for 2010, remember that there is always a greater plan. These difficulties shall inevitably pass and you will be once again back on your feet having learned important lessons along the way.

After all, it is only money. Money dictates your lifestyle, keeps you in your home and in the mainstream of the living. But it does not say who you are, no matter how much you have or don’t. More importantly it does not reveal how you are inside, your heart, your mind, your soul. No matter what, you always have that.

Sometimes we think, why is this happening to me? Haven’t I done so much for so many, shouldn’t I be rewarded for that?  Yes, absolutely. And so we are rewarded every day for our good deeds in the warmth and support we give and receive from others. Not necessarily in monetary terms.

What does all of this have to do with Good Business and earning a living? Everything. That is what we cannot lose sight of. We are not our bank books, portfolios, or careers. We are living breathing souls with Goodness on our side and a greater purpose guiding us through it all. The good don’t always die young; sometimes they live to be very old like Desmond Tutu or Mother Teresa. Financial reward is not necessarily in the picture.

So make your money and make your living, but don’t let it define you. Don’t let it determine your mood or self esteem. Don’t fall into the trap that got our society into the current bind of blind materialism it finds itself in, the trap that says money determines any part of your value other than numbers on a computer screen. Our deepest most valuable assets are our hearts and minds. We still have those. These are the assets we are remembered for; these will be the things that we remember ourselves for. How do we treat others in our climb to the top or in our quest for more? How do create our living in relationship to others? How do we view ourselves – as numbers or as souls?

Don’t forget to ask what your greater purpose in life might be. It isn’t money. It is never money. In the end, it is always how you make your money that counts the most, not whether you do. That is what we are really measured by.

As you navigate through the maze of making ends meet this year and work towards growing your business or income back to prosperous levels, you may have to lay people off; you may have to look for a job, you may not be able to pay all your bills.

Put these circumstances in perspective by remembering that these are inevitable realities of the human condition. There is no need to confuse them with greater meaning in your life or to let economic difficulties obscure the core of who you are.

Wishing you the Best in the New Year.

©2010   editor@goodb.net

A January 2010 Op-Ed in the Wall Street Journal accused a moderately progressive U.S. Congress of inadvertently creating a loan-sharking credit card interest rate. Congress enacted credit card reform to stop lender usurious abuses. In retaliation, credit companies are finding ways to get around the new law. WSJ Opinion claimed that Congress’ attempt to rein in excessive credit card fees led the First Premier Bank of South Dakota to raise its rates from 9% to 79%.

“The whopping rate increase is First Premier’s way of complying with the Credit Card Accountability, Responsibility and Disclosure Act of 2009. Among other provisions, that law prohibits fees of more than 25% above a card’s credit limit. First Premier has been offering an account with a $250 limit and annual fees of $256. By law the latter figure must come down to $75. To compensate for the lost $181 in fees, the bank is raising the rate by 70% of $250, or $175, a year.”

As the anonymous WSJ author points out,

“Banks can’t be expected to give money away, even if Congress is in the habit of doing just that. Unlike lawmakers, banks and other businesses can collect revenues only by offering something of value in return.”    

Hmmm…. To whom does Congress habitually give money away? Certainly not ordinary citizens. Why, banks of course – banks like First Premier. Deposit-taking interest charging banks want their cake and to eat it too. And they won’t stop there – they also want yours.

Money can’t buy you love, but it can buy you food, shelter, clothing, education, and healthcare – all the basics of living a good life that free market capitalism can offer. So what is the price of freedom? 79%.

First Premier, aka “America’s vulture creditor,” is there to help anyone desperate enough for credit to put the final nail in their financial coffin.  One consumer states, “The only difference between First Premier Bank and Jesse James was he did it with a gun. They advertise as trying to help people with bad credit, but really they are just taking advantage of the poor people and lining their pockets.”

To be truly free in America, you need access to credit for almost everything. The ordinary citizen-borrower is caught in a trap.  How free are you when you can’t have your phone turned on, apply for a job, or buy a car without “good” credit?

Freedom in America’s credit-trapped economy comes at a very high price. Thus some folks go for 79% as a last resort. Hungry banks sit in wait, ready to pick at the bones of the economically wounded. For a price, credit card companies will happily devour you alive – legally and with impunity. Like WSJ reports, they can’t be expected to do it for nothing - that is strictly the job of the Federal Reserve.

The discount window at the Federal Reserve is “giving money away for nothing” – not to you or me, but to banks.  The current rate for loans from the Fed is 0%, ZERO, nada, nichts, njet!  The same banks that get their money for free lend it to you for 24-79%.

(Riddle #1: What is the difference between banking in 2010 United States and loan sharking?  Answer: One is legal and the other is not.)

The Fed lending rate gives you a clue on how Bank of America, Citibank, and Wells Fargo managed to “repay” the government while continuing to swim in billions of dollars of unpaid debt.

In addition to borrowing at zero percent, banks are legally allowed to move “toxic assets” (money-losing debts) “off  balance sheet.” This would be akin to calculating your net worth by ignoring your entire loan, credit, and mortgage debt and counting only assets. In the dualistic system created since TARP, somehow you are in the red and your bank is in the black. 

Oddly enough this arrangement is loosely called the “free market.”  Although there is nothing free about being forced to pay unlimited interest rates-especially if the scales are tilted unfairly in one direction. Banks don’t have to pay their debts, but they sure as hell expect you to pay yours.

The Ancient World

Credit in ancient times, according to historian Paul Millet, began as “a process of neighborly reciprocity in rural societies.” Long before consumer societies or money itself was invented, there was credit.  Citizens traded their own labor (as well as that of their children and spouses) and their land to have access to credit, becoming enslaved and impoverished in the desperate effort to survive. Sound familiar?

Even Ancient Babylon had more credit laws than we do. The first recorded laws in human history, Hammurabi’s code, stipulated interest rate limits of 20% on silver-based loans and 33% on grain loans.

In 1763 B.C. in the Ancient Mesopotamian city of Ur, only a few years and few miles away from King Hammurabi, Dumuzi-gamil “the grain supplier to the King” acted as an ancient banker. 

The Temple under the King Rim-Sin collected rents (modern equivalent of taxes) from all citizens. Clay tablets written in cuneiform reveal that Dumuzi-gamil borrowed 250 grams of silver minas from the Temple and promised to repay 297.3 grams in five years – an annual interest rate of 3.78%.  Over the five year period, Dumuzi made a personal fortune by lending at rates as much as 20% per month to distressed farmers and fisherman unable to pay Temple rents or to feed their families.

Very quickly, the situation for ordinary citizens became unbearable and a severe credit crisis ensued as more citizens were shackled under the burden of debt.  The King felt there was no way to relieve the crisis other than cancel all debts. Thus King Rim-Sin created the first official act of “debt forgiveness” on record, nearly 1200 years before the Athenian Solon did the same.

The system of gouging blood money out of distressed borrowers is primitive and stealthy, worthy only of those without the moral or creative resources to generate profit in a non-predatory way. There is no honor in the exploitation of the desperate. It is not good business – no matter what the powers that be might claim. Perhaps it was in the second millennium B.C. however, not in the third millennium A.D. 

In theory, people are free to choose to borrow or not. However, in practice there is really no choice. We are enslaved in a system of credit and debt that has terrorized humanity for 4,000 years.

In this new year of 2010, as the banks that created the credit crisis for ordinary folks continue to rape and pillage the society they feed on, something must be done to turn the tide of vulture credit.

Senator Dick Durbin of Illinois introduced a bill in 2009 to limit interest rates to 36% (3% more than Ancient Babylon). It was shot down. Democrat and Republican Senators, in the pockets of powerful credit card lobbyists like the “Financial Services Roundtable,” do not want any limits at all on interest rates – even though until 1978 every state in the union had these.

Vermont Senator Bernie Sanders introduced another bill to limit credit card interest to 15%. It was defeated in a landslide of 33 votes for and 60 against.  Senator Sanders said, “When banks are charging 30 percent interest rates, they are not making credit available. They are engaged in loan-sharking.”

(Riddle # 2: What is the difference between mafia loan sharks, ancient lenders, and the present state of U.S. banking credit? Answer: The mafia takes your life; the ancients owned your life; modern banks destroy your life.)

The same distorted system of predatory lending that ended in the 2008 financial collapse and echoed in the Ancient world, continues with unlimited interest rates that prey on the poor and desperate. Perhaps 2010 will bring a more enlightened system of credit to modern finance - one that allows debtors the same protections and opportunities given to vulture creditors – true freedom of choice.

Haven’t we waited long enough?

editor@goodb.net  GoodB Blogger Monika Mitchell