original link: https://hbr.org/2014/11/board-members-should-be-psychologically-profiled-before-being-hired

This post from Michael Schrage from the Harvard Business Review brings up an interesting point: if employers are making more and more of their potential employees take some form of psychometric testing in order to help predict future performance, shouldn’t shareholders hold directors and board members to the same standard?

While I find psychometric testing to be intrusive, if employees are going to be tested in order to give their bosses a small sample of what their personality is like, I believe that it is only fair that board members should be held to the same standard. Which begs the question, what tests should be used? The options go on and on, from standard IQ to Myers-Briggs and so on. However, an interesting test that isn’t currently used by most corporations to assess any of their members is called the Hare Checklist. What does it test for? Psychopathy.

In his book “The Psychopath Test: A Journey Through the Madness Industry”, author Jon Ronson comes across the fascinating (and somewhat frightening) conclusion that 4% of CEOs are psychopaths, as opposed to 1% of the general population. The main characteristic of psychopathy is lack of empathy, which could potentially be viewed as a favourable trait for CEOs that need to make tough business decisions that can negatively affect other peoples’ lives. However, does this mean that psychopathy should be encouraged in top executives? I believe that the obvious answer is no. Disregarding the fact that there are known correlations between psychopathy and violence, working for a psychopath, who has little to no empathy for others, would create an incredibly hostile work environment and could lead to problems with employee retention and productivity, not to mention possible lawsuits due to workplace abuse. Additionally, due to the anti-social and narcissistic characteristics of psychopaths, they are more likely to be concerned about personal success than that of a collective, be it their co-workers or the company as a whole.

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link to original post : https://blogs.ubc.ca/katieapplebaum/2014/11/06/show-me-the-money/

As a music lover (and severe music pirate) myself, I was instantly drawn to this blog post as soon as I could gleam that it focused on the decline of record sales in the past few years. However, I had barely finished the first paragraph when I realized that I fundamentally disagree with Katie’s opinion that declining record sales are driven by a lack of effort on part of the musicians.

On my laptop alone, I have over 15,000 songs. To put into context how much money that would imply I spent on music over my lifetime had I purchased all this music legally, I will use the standard iTunes price for one song ($0.99) multiplied by my total library (15,297 songs), because really, who buys CDs anymore. This formula tells me that the iTunes dollar value of my music library is $15,144.03. How much money have I actually spent on music in my life? I’m sure there are a few Backstreet Boys CDs in my room at home gathering dust that were purchased using real money, but the truth is, my entire music library that I own today was amassed for free (technically illegally, but free nonetheless). And this has absolutely nothing to do with the value I place on today’s music vs. the music of old.

In her post, Katie uses examples of The Beatles/Nirvana/Madonna as artists “powerful enough to unite billions of people (and) cause societal trends”, and contrasts these groups with those of today who she does not see as capable or talented enough to evoke the same emotion from their audience. Besides the fact that this is a purely subjective argument (no offence Katie! I really did enjoy reading your post), I can use a personal example to display how I see things differently.

I am an enormous Nirvana fan. I completely agree with all of the things Katie wrote about Nirvana; I believe they changed music forever. In my room back in Toronto, hanging from my wall is a copy of the a Nevermind vinyl signed by Kurt Cobain himself, which certainly cost a lot more than the band’s music catalogue (which I conveniently got for free with the click of a button). Did I pay a cent for their music? No. Does that mean that I do not value the art this band produced? Certainly not. Had I been born 10 years earlier and had the luxury of listening to the band while they were still together, before Napster or downloadable music was even conceived, I would have gone to my local HMV and bought every Nirvana recording I could find. Given the ease of access nowadays to free music online, that is now an unnecessary expenditure, but this doesn’t make me any less of a fan. Similarly, I downloaded all of Kanye West’s music for free, but spent the majority of my summer job salary to see him in concert last year. Do I value the art that he produces? You be the judge. The music industry has changed for good, but that has no bearing on the quality of music being produced. Please excuse the verbosity, this is just a topic that I feel strongly about.

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Link to original post: https://blogs.ubc.ca/lawsonp/2014/11/09/norways-solution/

Lawson’s post focuses on Canada’s lack of significant carbon taxation in spite of the fact that the Alberta oil sands contribute significantly to North American oil production and therefore, carbon emissions. Well Canada is certainly not on the right track in terms of hitting emissions targets for sustainable development, exemplified by Stephen Harper’s opposition to the Kyoto Accord. However, it is also important to consider that the Canadian oil industry contributes to a large part of the country’s GDP, as well as the potential harms of implementing a significant carbon tax. One major problem is that carbon taxation doesn’t just hurt the big polluters, such as the oil industry and large, high emission corporations: it hurts everyday Canadians as well. Carbon taxation is effectively an increase in cost of production for mass-polluting firms, and any significant tax would cause the operating costs of many of these firms, which employ millions of Canadians, to skyrocket. What is one of the most common methods of reducing cost? Laying off labourers. It is of necessity to note that while Norway and Canada, the two countries compared in Lawson’s post, are similar in that they are both major oil producers and different in that Norway imposes high carbon taxation and Canada does not, that Norway has an unemployment rate less than half of that of Canada’s, and that is including the fact that Norway has already implemented significant carbon taxation while Canada has not. Regardless of all the good that reinvesting carbon taxes can do in terms of social services, improving education, etc, it is important to consider the cons as well, and increased unemployment is definitely one worth noting.

” If the United Nations was fully funded why would we need the Arc or social enterprise”?

A common topic in conversation as well as among scholars is the supposed ineffectiveness of the UN, particularly with regard to their inability to properly address systematic issues plaguing certain regions of the world: one must look no further than the lacklustre response to the recent ebola outbreak in West Africa to see why. It is true that some of these problems could be resolved with better funding, but given the all encompassing nature of the UN with regard to global issues, “full funding” is pragmatically impossible, and certain areas in need for intervention are bound to be overlooked. This is where social entrepreneurship comes in. Social enterprises such as the Grameen Bank, which provides microcredit loans to the poorest of the poor based on trust, and without the usurious interest rates that their borrowers would face from loan sharks, rely on the brilliant ideas of their founders to create meaningful change in the world, and do so independently without any bias/funding constraints that might arise from the UN, a politically charged organization. Moving forward, cooperation between the UN and social enterprises will be the key to making our world an ideal place to live for all.

http://www.vancouversun.com/news/There+will+pipeline/10122968/story.html

The Nak’azdli are fiercely opposed to a proposed oil/natural gas pipeline through their territory commissioned by Canadian energy giant Enbridge. This is no novel headline: native groups often align strongly against industrial development within their own lands, and with good reason. Living in a culture deeply connected to the land that they and their ancestors have lived on for centuries, it goes without saying that environmental degradation in the name of progress upon First Nations sovereign land is always going to be an area of conflict. However, there is a point where compromise is necessary, especially within some of the more marginalized reserve communities. In the case of Embridge, the company is offering a significant equity stake in the profits from the pipeline for the community, which could seriously benefit from these profits and reinvest them in the community to the benefit of all members. The issue I have with the Nak’azdli opposition to the project is not one of disrespect to the tribe’s sovereignty: these lands have been their ancestral territory for centuries and I believe that Embridge, as well as the Canadian government that approved the Northern Gateway pipeline should respect that. However, this article makes clear that the Nak’azdli’s opposition is not rooted in maintaining their sovereignty, nor really an overarching environmental argument; it is because they wish to preserve a specific part of their territory, the waterways which they fish, and a part of their territory that the Embridge pipelines should pose no significant threat to. Again, wishing to preserve their fishing territories is a noble cause for the Nak’azdli, however given the data on how unlikely an oil spill is (0.06% chance per year for a major rupture), and the fact that nowhere does the article mention that the mere development of the pipeline poses a risk to their food supply, the Nak’azdli are choosing the wrong reason to oppose a pipeline that, while contributing to overall environmental degradation, could provide serious economic benefits to their community.

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http://www.vancouversun.com/news/There+will+pipeline/10122968/story.html

This article from The Economist examines the darker side of the technological revolution: the stagnation of wages for less skilled workers and increased threat of rising unemployment as improving technology allows for employers to lower their labour force in favour of computers and machinery. Unlike the industrial revolution of the 19th century, where firms required massive work forces to operate new technologies and fill assembly lines, the digital revolution is allowing companies to conduct business with significantly smaller work forces than ever before, and is making entrepreneurship easier than ever; one example given is Facebook’s recent 2 billion USD acquisition of Oculus VR, makers of the Oculus Rift virtual reality headset, which employs only 75 people. Technological advancements are allowing firms to significantly decrease their costs by operating with a smaller workforce than ever before, creating huge profits for well educated CEOs and executives, while resulting in unemployment and stagnant wages for the less skilled members of the labour force. This begs the classic economic question of where and how the government should intervene to ensure that unemployment does not rise beyond acceptable levels and workers are still able to make a living. Interestingly, this article advocates for not increasing minimum wage or taxes on the upper class. I agree specifically with the idea of not increasing the minimum wage as the biggest problem bound to arise out of the tech revolution is unemployment as low-medium skilled workers are swapped out for machines, and increasing the minimum wage and therefore costs to employers is only going to accelerate this process and cause unemployment to rise. However, I disagree with the idea of not increasing taxes on the upper class because if this revolution plays out as expected (stagnant wages for the middle/lower class, increased unemployment), then increased government support for those left behind by the tech revolution will be necessary, and who better to get funding for this than those reaping all the benefits?

http://www.economist.com/news/leaders/21621800-digital-revolution-bringing-sweeping-change-labour-markets-both-rich-and-poor

Article on effect of minimum wage on unemployment

:http://www.cato.org/blog/minimum-wage-unemployment-0

Earlier in September, Air France pilots went on strike for two weeks due to a contract dispute, leading to the cancellation of about half of Air France flights and hundreds of millions of Euros in losses for the carrier, the biggest in France and 3rd largest in Europe. Despite the loss in productivity and economic surplus resulting from said strike, Air France’s loss in profits have translated into a huge gain for British discount carrier EasyJet, which reported that the Air France strike has led to a 5 million pound (approx. 9 million CAD) increase in revenue, as well as a higher percentage of seats sold on each flight, which should drive down the price per seat as the marginal cost of fuel declines. The restricted supply of flights caused by Air France cancellations can be seen as a temporary partial exit of the European flight market by the carrier, which as stated above is one of the “Big Three” in European air travel along with German carrier Lufthansa and Irish Carrier Ryanair. Given that consumer demand for air travel would remain constant in spite of this decreased supply, it follows logically that EasyJet would enjoy a surge in demand for their lower-priced flights as competition declines between the big three carriers in Air France’s absence. The question now is whether or not EasyJet can sustain its gain in market share after the Air France return, and how much of an effect the strike will have on Air France’s annual profits.

http://www.cbc.ca/news/business/air-france-strike-wipes-out-more-than-half-its-global-flights-today-1.2766241

http://en.wikipedia.org/wiki/List_of_largest_airlines_in_Europe

I’ve been having technical difficulties accessing Connect on my computer, but now that that has been sorted here is my Business Ethics Article post.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/gulf-oil-spill-due-to-bps-gross-neglience-says-judge/article20344882/

In April of 2010, British energy giant BP were involved in the biggest oil spill disaster ever in American waters. Caused by an explosion on the Deepwater Horizon oil rig owned and operated by BP, the explosion and aftermath caused the death of 11 oil workers and untold environmental degradation, despite joint efforts by the US and BP to limit the damage. To date, BP has already spent upwards of $42 billion in clean up efforts and fines, but now may be liable to pay almost $18 billion in additional compensation after U.S. District Judge Carl Barbier of New Orleans ruled that BP was guilty of gross negligence in the events leading up to the oil spill. Since the ruling, shares in BP have dropped 5%. 

This article is a clear example of the dangers firms face when engaged in unethical business practices. Freeman’s Stakeholder theory explains how for a business to thrive in the long term they must consider the impact their decisions have on all stakeholders including so called “externalities” such as the environment, their workers, local wildlife, etc. In this case, while BP certainly did not intend to cause the death of 11 workers and an oil spill that may end up costing them upwards of $60 billion in addition to the damage done to their reputation and the environment, the fact that they were not properly inspecting their equiptment still puts them liable for all the destruction this spill has caused. Hopefully they have learned their lesson and new measures will be put forward to avoid such disasters in the future.