Decency

Decency, a down-to-earth, yet vague concept; a dimension of human morality, a backbone of civilised society. So understandable, yet enough intricate to give you a hard time in coming up with a comprehensive (decent) definition of it. Oddly enough, on the blog before today I posted seven other posts tagged decency; their content could help bring us closer to what the concept of decency may revolve around:

- watching one’s tongue,

- not shunning responsibility for one’s missteps,

- not duping fellow men,

- paying somebody for work they do for you,

- laying off staff “gently”,

­- workings of rotten financial sector,

- giving back money you have been lent.

The list above contains some odd criteria scattered and picked out from the universe of standards of decency.

So what makes you a decent man?

- They way you treat other people?

- Whether you follow ethical principles, either those universal, or those set by the religious beliefs, e.g. ten commandments?

- Whether you obey the law?

- Whether you sympathise with other people and ask yourself how would you feel, if you were in that skin?

- Whether you simply can look yourself in the eyes in the mirror and admit you have not hurt anyone?

What instils decency in you?

- Parents and immediate relatives over the course of upbringing? Definitely in the formative years a human can be shaped, the older one grows, the harder to eradicate bad habits and seed good ones.

- Or maybe it runs in the genes? Examples of children of evil people adopted by decent families and whose new parents’ effort to bring them up failed bear this out?

- Is it inculcated by other institutions that shape humans, with primary credit here to schooling and the Church?

- Or maybe the so-called “moral spine”, for some less, for some more supple, has some other origins?

Decency is indispensably linked and interlaced with other concepts, such as…

- Conscience, something I would define has a black box which stores a memory of all misdeeds of a human. The misdeeds are to be a burden for a human, one is meant to feel bad after a wrong-doing; conscience’s role is to ensure it?

- Embarrassment, a state of feeling uncomfortably with a situation or one’s own or someone else’s behaviour. Embarrassment reminds us falling out of generally accepted norms in several cases should cause us discomfort and would not help us win respect from other people. Fear of embarrassment might preclude humans from doing things they would be ashamed of.

- So also the shame, a strong feeling, causing not just discomfort, but a strong desire to curl up and die, to erase a situation from one’s own and other people’s memory. Shame works after the fact, is an unpleasant feeling, yet it proves if after with hindsight a human realises they had done something bad, shame might work as a stabiliser of a human psyche.

- Remorse, having it means feeling guilty for one’s misdeeds, wanting to make up for the wrong, atone for it, apologise to those hurt by one’s behaviour.

Virtually all humans are familiar with the concepts attempted to be described above, even if they would struggle to verbalise them. Yet not all humans are equally bestowed with decency, sensitivity of human consciences varies from person to person, different situations evoke feelings of embarrassment or shame, some people don’t even have remorse, no matter what evil they do. The most extreme examples are psychopathic murderers who can be involved in manslaughter without being conscience-stricken, nor feeling remorse and a straightforward child who sincerely shows their emotions. All of us are somewhere in between and as long as we fit into “norm”, whenever we behave indecently, we should feel shame and have remorse, yet intensity of those feelings varies. For some people the burden might be quite heave, for some easily bearable…

Incidentally, a quite peculiar distinctive way of dealing with murky affairs by indecent people is pretending nothing has happened, in situations when in my opinion they should react to a situation which has taken place (e.g. apologise for their misbehaviour, etc.)

End justifies the means. This memorable adage raises the question how far a human can go, how many rules and limits can break to achieve what they want.

A penny drops. While I write a (decent) definition comes to my mind. A decent man never pursues their goals at the expense of other people. Nail hit in the head?

Now I have forgotten what I had intended to cover in the previous paragraph, yet I carry on!

I somehow envy people who don’t care, who see fewer problems, who are more bold, have no inhibitions. But is it true indecent people, on account of not being held back by conscience, etc., have easier lives? Aren’t the indecent disposed to be privileged, i.e. if they do not have to overcome inhibitions and deal with potential remorse, their pursuit of goals is less uphill? If they don’t care whether they hurt (in any facet) other people, if they don’t feel guilty of living off other people’s back, does it make such persons more likely to climb ladders of career faster? If it a coincidence most executives in the corporate world are ruthless beasts?

Finally, is it possible to switch between levels of decency when you switch between social roles you perform. I have asked myself this questions repeatedly when I looked at and listed to my workmates. I suppose they are caring and loving husbands and fathers, so why the hell at the doorstep of the office they turn into callous sons of the bitches? I fully appreciate the principle of separating family and professional lives but does it mean behind the gates to the corporate shitty world different ethical principles apply and you have green light to turn into a swine? Do your colleagues deserve less decency than your family? Your family should be given love and care, while the people you work with should be given decency, a bare minimum that in the workplace is much enough! From birth until death we are humans, all social roles only come and go.

I stare at my face in the mirror. After twenty seven years in this lousy planet I cannot pledge not regret any of my deeds, I cannot pledge I have not hurt anyone, I cannot pledge no one has ever suffered on account of my behaviour, yet as long as my offences are not serious, I hope as long as I recognise my wrongdoing, regret it, strive to make up for it and have remorse, people can tell I’m a decent man.

Watching one's tongue

If there is an area in which I could mend my ways, I would surely point at being less impulsive. I tend to quickly say or write some thoughts that come to my mind, without second thoughts. The outcomes of acting too spontaneously at times happened to be slightly embarrassing (I was too sincere and straightforward like an innocent child), but never offensive for anyone. Additionally and fortunately it has never occurred to me that I acted hastily in official situations, when weighing carefully one’s words is of paramount importance. But slip-ups with which a young corpo-rat can get away with, do not befit public officials. In Poland one such scandal follows another and the spate of such anything, but well-thought-out public statements is probably bound to never come to an end.

Last week agriculture minister, Mr Sawicki, during a press conference called farmers“suckers”. The government, to tackle the problem over-supply of domestic apples in the wake of ban on imports of Polish fruits to Russia, has put into operation an EU-co-funded apple buy-up scheme, paying growers PLN 0.27 per kilogram of apples (up to a certain quantity). Some growers instead of letting their apples being dumped, sold their fruits off for processing for less than half of the buy-up price… Their economic decisions (analysed up to that point only, since there might be other factors which have not been assessed in this short analysis) did not appear economically rational…

Not seldom does it happen that economic actors behave irrationally. Yesterday the price of one litre of 95 unleaded petrol at Orlen station in Piaseczno was PLN 4.95. At the same time, identical fuel at Orlen station in Konstancin Jeziorna was PLN 5.32. This means the same petrol was 7.5% more expensive on a station of the same distributor (for simplification I do not try to find out whether franchise could be in place) If you buy a full tank of petrol, i.e. 50 litres, you need to fork out PLN 18.50 more and even the cost of driving to Piaseczno and back to fill up a car, which is no more than PLN 8.50, leaves a tenner in your pocket. In simple words such price discrepancy is a simple rip-off. But because free market rules are in place, decision whether to fill up cars at Orlen station in Konstancin rests with drivers. Rational drivers would boycott the station, but yesterday (and on any other day_ the station in Konstancin was chock full of cars. In private, I deem the drivers who came there to buy fuel, suckers. If I were to explain to a wider audience (I do not consider this blog as a way of reaching wider audience) why the station has not gone bankrupt nor has had to decrease prices to stay competitive, as it should if the market was efficient, I would not dare to call those hapless drivers suckers. Mr Sawicki dared…

The next day former foreign minister and current speaker of parliament, Mr Sikorski, in a hurriedly given press interview, mentioned in 2008 Mr Putin in a conversation with Mr Tusk had put forward to divide up Ukraine between Russia and Poland. Several hours later he took back his words, citing lapse of memory as an excuse. Mr Sikorski’s misdemeanour is much serious than the blunder of Mr Sawicki. The latter only offended a group of his party’s potential voters, while the former (according to the version everyone officially sticks to) misrepresented the course of official meeting of prime ministers, compromised his own credibility and held himself up to ridicule. To boot, this clanger was dropped by a seasoned journalist who spent over a decade in the Anglo-Saxon world. I have never thought highly of Mr Sikorski, but the most recent confabulation puts him in even worse light…

Then things went as usual. Contrite Mr Sikorski staged a press conference and apologised, citing ample reasons for why he had made up a story of Putin’s proposal and had given a false testimony. Politicians from the opposition held out for dismissal of Mr Sikorski, politicians of the coalition, with the customary exception of deputy Kłopotek, in unison moderately defended him and tried to sweep the scandal under the carpet.

Poland has really peculiar standards in terms of dealing with reputational scandals. I do not posit one misstep should drag a person down for the rest of their career and do not view the other extreme as appropriate. Standards vary from country to country. In April 2014 South Korean prime minister resigned from his office after a ferry sunk near Korean shore. Five months earlier the Latvian prime minister also submitted a resignation after a roof collapse. I have to admit until today I do not construe motives for both personal moves. The reasoning implies a prime minister can be indirectly responsible for every tragedy in a country they run, regardless of total lack of their involvement in the disaster. This brings us towards a foregone concept of wina Tuska, which is ludicrously absurd. How can you hold a prime minister responsible for a disaster caused by a few construction workers failing to obey safety rules. If there is any explanation, I must be a matter of honour, a concept with which Polish politicians are totally unfamiliar with.

Whatever shameful deed they make, whatever subsequent scandal breaks out, for a few days they are under fire and then the dust falls and they carry on as if nothing has happened. Sometimes there are profound reasons to pretend everything is alright. Such was the case when members of Monetary Policy Council, offended by Mr Belka in wiretapped and then publicised conversation with minister Sienkiewicz, officially claimed nothing happened. Had they taken umbrage in public, they would have jeopardised the stability of the Polish currency, so the price of keeping up appearances was high enough.

I personally view a long-term track record and competencies as crucial in assessing one’s capacity to hold a specific office. For such reason I was not distasted by over-sincere “apologies” of Mrs Bienkowska “sorry, taki mamy klimat”. But if slip-ups tend to recur, it would be better to reconsider whether it would not benefit society if a person prone to get involved in repeatable embarrassing situations stepped down. Being unforgiving rarely pays off, but being too forgetting does not teach to think twice before going one step too far.

Nie robię za darmo

Back as a fourth-year student I brought to your attention the topic of unpaid internships and expressed my displeasure with HR policies allowing to hire young people without paying them at all. As a student, I never condescended to take an unpaid internship, despite understanding employers’ rationale (or excuses) behind such despicable practices. Time has gone by, my career has moved on, I am no longer eligible for an internship, but keep in mind days when I was on a lookout for gaining first job experience and hence sympathise with current students, often coerced to work for a mere “thank you”.

I was more than pleased to find out somebody has finally decided to draw a line at offering students and graduates unpaid internships. Nie robię tego za darmo (I don’t do it for free) is a project launched by one of Poznan-based NGOs, Wspieramy Wielkich Jutra (Supporting the Future Leaders, to convey the meaning) foundation that has gained extensive media coverage in week following the campaign commencement on 20 September. Originators of the venture have broached an important social problem that affects each year thousands of young people in Poland.

For some of you this may sound like a leftist twaddle, but unpaid internships are a nefarious form of labour exploitation (campaigners call it slavery), taking advantage of natural weakness of inexperienced youngsters (no one has been born with a CV full of previous positions) in corporations’ pursuit of higher profits. I do not advocate going to another extreme and meeting excessive pay requirements some graduates have, as it is obvious a freshman will not add huge value to a company, but it is a matter of straightforward decency to pay an intern at least token “peanuts” allowing them to subsist in a city they work (during my last internship, 3 years ago, I earned 2,200 PLN before tax monthly and such salary seems reasonable). If you argue an intern does not add value to your business, what is the point in hiring them at all? If you argue an intern requires attention and teaching such person utilizes the company’s resources, I remind you in free-market economy in order to reap profits you need to invest and every kind of business expansion carrier a risk – the same applies to money spent on human capital. Not every such investment will pay you back.

If the points above do not seem convincing, let’s refer to the economic concept of negative selection. In simple words it implies better candidates for interns will choose paid internships, while those too poor to be offered paid internships will come to you and you will get leftovers.

OK, so they will come anyway, better or worse, yet suitable to do some simple tasks. You might point out the market functions in such way, so if there is a demand even for unpaid internships, why not coming up with supply? The reasoning is akin to noticing a loophole in law – if you can circumvent a regulation and go unpunished, why not benefiting from it? It all boils down to ethics, the moral spine you have or only claim to have. Any company that takes on interns for free and claims its commitment to CSR lies through its teeth! Get it? If not, use the last resort analogy. If someone pays you a visit, do you offer them something to drink or eat, or not, because they do not ask you? Just as offering a beverage or snack to a guest is a matter of good manners, paying an intern is a matter of decency.

Tens of companies, including the biggest Polish firms and multinational corporations have swiftly supported the initiative. The circle of commendable employers covers, according to press reports, inter alia: Orange, Danone, ArcelorMittal, Deloitte, General Electric, Leroy Merlin, PKN Orlen, Bank Pekao, PwC, PGNiG, PZU, Toyota and Whirlpool. The code of ethics has been written in one-page long “Polish Internship Quality Framework”, a document which sets out requirements an internship with a civilised employer has to meet. The key assumptions are:

1) each internship lasting at least 1 month MUST be paid and governed by a written contract,

2) each internship should have an agenda / plan setting forth duties of an intern and skills they are to acquire or develop

3) each intern should have a supervisor who will be responsible for overseeing and lending a helping help to an intern,

4) each intern should receive feedback at the end of their stint and written confirmation of completing the internship.

I must say my last internship fulfilled all the criteria above, thanks to this both my employer and I benefited from it.

Points above address other pathologies affecting how internships are organised. We must not confine the problem to the mere aspect of remuneration, since what an intern does at work is of paramount importance as well. The initiative is also intended to crack down on internships consisting in brewing coffee, copying documents, or sorting pieces of paper in files. But these pathologies in turn stem from another ludicrous arrangement, which fortunately was not in force at my university when I was a student, i.e. that internship is obligatory for every student and every student needs to get a credit for it in order to get a degree. I hold the view students are adults, aware of how the labour market functions, who realise what factors are appreciated by employers and who know the value of experience when looking for the first serious job. If somebody wants to gain experience, they will take matters into their hands anyway. If somebody is reluctant to have an internship, their choice – what is the point in two parties to internship agreement having to put up with each other?

Noteworthy is also the story of intern working in the City who participated in summer programme run by Bank of America Merill Lynch. The 21-year-old student was paid 2,700 pounds a month for his job, but did not endure 70 hours of continuous working without a break… So while in Poland the case is whether interns are paid at all, in the UK problems youngsters overreaching themselves in the chase of jobs in the never-sleeping financial industry, have become an issue.

Indecency stretched to the limit

Some of the readers of this blog know my name and surname; some of the readers know where I work and what position I hold. For the rest of the world, I try to appear as an anonymous ex-student of economics, employed by one of “Polish” banks. Rationale for concealing my identity? A down-to-earth reason is that I need publicity like a hole in the head and generally tend to avoid situations when the world revolves around me. The other motive cropped up out of the blue in 2010, when I had to familiarise with some of the internal policies (containing several dos and don’ts) set out by the corporation I work for, including the blogging policy.

At first glance it seems absurdly silly that a company may require its employees to stick to regulations concerning limitations in blogging, but if a company wants to avoid adverse publicity from its employees, maybe this is the case. I plead I haven’t learnt by heart all the drivel written there, but I keep in mind that: 1) as an employee I can’t write anything about my company nor my job (event if doesn’t involve letting in on any secrets) and sign it with my name, even if I don’t mention the name of my employer, 2) as an anonymous Internet user I don’t have to refrain from mentioning my employer’s name but I’m not advised to spread negative opinions about its business. So to comply with all the regulations there’s no author’s name, nor a company name.

If someone wishes bad on me, feel free to send link to this post to the HR department of my company. This would surely help bring forward the inevitable bitter end of the shattered relationship between by employer and me. Anyway I would appreciate if you let me put myself out of this misery on my own and only after I find a better place, which is not that easy, hence I soldier on…

This might be a matter of corporate culture. They vary across the world and companies and models of socio-economic order. In American companies direct relationships, hire-and-fire approach, flexibility and opportunities to climb the ladder of career quickly are quite typical. You can like it, or detest it, fit in, or struggle to find your way inside a specific business. But is decency, a backbone of moral fibre, a part of corporate culture? Back in 2008 when several banks at the verge of bankruptcy had to be bailed out from taxpayers’ purses, executives’ bonuses and salaries outraged everyone. Do you remember where cries of anger were the loudest? These were the United Kingdom and the United States, not only because deregulated banking industries have grown too big too fail there, but also because (Bank executive’s salary / average salary in the national economy) multipliers in Anglo-Saxon countries were incomparably higher the in more civilised countries.

Many times I’ve asserted on this blog I’m glad I live in Poland, not in the United States. I also stressed the soundness of Polish banking system, prudently managed, wisely regulated and lacking depravities typical for developed investment banks. My general take on the Polish commercial banking has not changed. I still hold it as a whole in high esteem, there are just some exceptions that prove the rule…

One of the differences between Polish and American banking is a position of banks and its employees in the national economy. Financial sector in Poland is not a significant contributor to wealth creation as in Anglo-Saxon countries. Moreover, Polish commercial bankers, unlike their colleagues from investment banks, are ordinary people who don’t earn zillions and whose conduct is usually governed by moral principles, not only by pursuit of profits.

In Anglo-saxon investment banking, weaselling into the industry was (is?) one of few ways to grow rich quickly and legally (this doesn’t imply ‘in morally acceptable way). In Poland, if your expertise is above-average, you can count on above-average earnings, but don’t expect appallingly high salary. In investment banking, profits are distributed between: executives, employees and owners, the rest of the society and the state do not benefit from their activity. In Poland these are only executives and (foreign) owners that reap profits from banks’ activity.

To cut this long considerations short, I’m getting at the question whether a company can prosper at the expense of its employees? How long can you exploit workforce before they show you their middle fingers and quit? How big gaps between executives’ and rank-and-files’ remunerations are acceptable? Bigger responsibilities and higher qualifications must mean the higher your position, they higher your earnings must be, this is natural. Only the size of disproportion in earnings can be a matter of a dispute. How should employees’ contribution to a company’s prosperity be rewarded?

The other story is how executives participate in an austerity programmes they pursue in their companies. I know one company which has been more or less successfully turning around for a while. It has changed its strategy, pulled out from unprofitable business lines, laid off over 10% of its staff and continues to terminate contracts with employees. This year to show financial standing of the company is improving and to appreciate the contribution of employees to this success, most of the staff were granted a 10 PLN before tax pay rise. Getting it? Ten zlotys minus income tax, even too little to get hammered in despair! Some people who heard about it told it was a joke, I call it a slap in the face, especially if from the annual report of that company (quoted on the stock exchange) you can learn that its executives remunerations have increased by 30 – 50%. Pay rise of 10 PLN vs. pay rise of 1,000,000 PLN – just fair? This remuneration model is a sort of ‘privatising profits and socialising losses’.

The answer to the question I asked in a civilised world must be ‘no’. On a properly functioning market best employees would refuse to put up with such uncivilised treatment and would flee to work for competitors. Things aren’t so simple when labour market in a specific industry is characterised by over-supply of workforce – this is visible in Polish banking. A good banker will find a job, but room for salary negotiations has shrunk…

Not long ago my opinion on activity of trade unions was similar to this espoused by Mrs Thatcher. I thought trade unionists were spongers with endless unfounded pay rise demands, paralysing growth of businesses. I still see many times they act with detriment to their companies, but where I work things look much different. In pathological situations, such as described above, trade unions are the only organisation capable of standing up for indecently treated employees. Oddly enough, trade unions’ bargaining power is bigger in companies where employees are treated well…

Much has changed since I wrote my summary some three months ago (not only the temperature which is now some 50 degrees higher than then). I have been assigned more duties and given more responsibilities. This has upsides – new challenges, learning & development opportunities and downsides – no measurable reward in return. With each next week I feel more encumbered and less motivated. With a bold face I face new challenges take up more tasks, try to complete them all, but seeing to appreciation of my efforts I can’t see my future where I work. I’ll grind my teeth and wait until I hit two-years’ experience as an analyst, after which I’ll be fulfilling all the criteria in most job openings. Best people I work with are on the lookout for better places to work. If they quit, there’ll be no reason to stay in, and without them this ill-run boat will sink. I’m worried about the number of fatalities, but given the way it is managed, it will meet a well-deserved fate.

So bitter… Am I getting acrimonious?

The Inside Job - film review

It starts with shots of intact Icelandic landscapes. In early 2000s the country finalised reform of its financial sector, which consisted mainly in deregulation. Until mid-2008 Iceland received glowing praises for the reform, which, as said by economists, strengthened the country’s financial stability and accelerated its economic growth. In fact deregulation of financial institution in Iceland gave rise above all to excessive credit expansion and, eventually, to an ultimate collapse of the country’s banking system.

This is just the prelude to another story told about the recent economic crisis. Clever, bright, yet not leftist and not politically involved. Some claim it does espouse leftists views on economy, but I did not discern it. If the film calls for something, it is surely not a revolution that would overturn the current unbridled capitalism, but for reverting to traditional capitalism, based on freedom, responsibility, playing by the rules and straightforward decency.

The main thesis the film sets out is that the financial industry in most developed countries has been allowed, by politicians and economists, to spiral out of control, then, by means of privatising gains and socialising losses, led to the recent crisis and went unpunished. The work, divided into five parts, explicates mechanics of events and decisions in the run-up to the crisis. I do not know if the way facts are presented is clear enough for a layman, but for me it seems the job has been done well.

Part 1: How we got there.

Filmmakers have come up with a theory that since the end of the Great Depression, until early 1980s when Ronald Reagan was sworn in as US president, the United States did not see any major economic crisis. This success, in fact untrue, since early 1970s saw oil crises, bringing about periods of stagflation, that put the era of Keynesianism to the end, is put down to the strict regulation of banking industry that prevented financial institutions from growing big. It was after Ronald Reagan took over and pressed ahead with his doctrine of Reaganomics when deregulated financial industry began to distend.

Two last decades of the 20^th century saw two financial crises triggered by deregulation – S&L crisis and the dot-com bubble. The former is thought to have been caused by excessive law liberalisation, the latter by simple lack of integrity. The film brings back commonly known, exposed by the press, examples of stock market analysts saying privately the dot-com stocks they had valuated at sky-high prices were just junk.

The end of the previous century brought also much more tie-ups between business and politics. Transfers from positions of CEOs of big investment banks to positions in state administration and the other way round became the order of the day. Number of lobbyists hired by financial industry to protect its interests soared. Belief in self-regulation of the financial industry became an officially recognised doctrine.

Part 2: The Bubble

Around 2000, deregulation was full-blown and any attempts to bring some markets under supervision met stiff resistance from financial industry, backed by officials from FED, at that time chaired by Alan Greenspan, an remorseless advocate of deregulation. One of the proposals eventually rejected around 10 years ago was the one to oversee derivatives market. Personally I’m in two minds about this. Derivatives are like axe, itself good, good when you use to it to chop wood, but evil when you use it to kill your mother-in-law. Derivatives can be used for transfer of risk, hedging and speculation. Two first purposes seem safe, but usually derivatives were used for speculation and this sparked the whole turmoil in the recent crisis.

Those who have never dwelled on the mechanism of mortgage lending in the US in early 2000s are recommended to see the part clarifying how this all happened. The same part brings up the ever-lasting issue of risk vs. return trade-off. So either you grant loans to creditworthy borrower and make safely small profits, or give risky loans and cash in more, as long as they perform. You just cannot circumvent this!

The film reminds that one of the causes of the crisis were flawed remuneration schemes that put emphasis only on performance, regardless of risks taken. Risk-adjusted salaries and loss-sharing together with profit-sharing before the crisis could have mitigated the aftermaths of the financial meltdown.

Very remarkable is the last episode of this part in which a psychologist tries to examine the specific features of a typical banker’s personality. As you would have thought this an alpha male, compulsive risk-taker, inconsiderate, acting on the spur of the moment. Such types were much desired by banks and still are, since only thanks to their bravado profits of banks in good times could be that high and banks did not spare money to finance entertainment for them…

Part 3: The Crisis

Begins with the face of Ben Bernanke and his utterance from mid-2005 in which, when interviewed by a journalist of one of US TV stations, he claimed there was very tiny risk that there was a tremendous housing bubble and found it improbable that bursting of it would plunge the whole country into a recession. Several economist claim to have warned Bernanke of the impending disaster but he would always shrug off those warnings. Deliberately?

His pronouncement coincided with the peak of the housing bubble. The film indicates a direct cause why it burst and it is strikingly simple – the housing market run out of suckers who wanted to buy houses at exorbitant prices and financial markets run out of suckers who wanted to buy securities backed by lousy mortgages.

Then comes another commendably clear explanation of how financial crisis spilled over into real economy. Finally, the makers conclude that, as always, those who suffer the most are not those guilty, but the poorest. The bailout programmes rescued big financial institutions (as an economist I realise it was cheaper to help them out than to let them go bust and the whole plan was purely pragmatic) and left millions of ordinary people unaided. This is again symbolised by empty houses, may this bleak sight serve as a symbol of human folly and may it caution others not to repeat the same mistakes.

Part 4: Accountability

What accountability? Current “crony capitalism” is based on lack of responsibility. Either I win or you lose. What a game! Fortunes of banks CEOs who brought institutions the had run on a brink of collapse are intact. Bankers got away with punishment. If someone went to jail, it was only for fraudulent activities. In 2008 and 2009 correlation between remunerations and performance and financial standing of managed institution was totally disrupted.

The film also lays bare the hypocritical take of financial industry on deregulation. Prior to the crisis they were against, in autumn of 2008 when financial tsunami was about to wipe out the whole industry they called for tighter regulation, and when in 2009 the worst was over again they returned to their previous stances.

The crisis has changed nothing. Financial institutions are bigger and more powerful than ever before.

At the end, the film outlines several tie-ups between renowned academics from best business schools in the US and the financial industry. The study of economics, as carried out by people financed by the industry and who get well-paid jobs there, is described as “corrupt” and indeed conflicts of interests are visible… Should we believe scholars then?

Part 5: Where we are now

I am thankful, again, I do not live in the United States. Level of inequality in the US society is continually increasing, while social mobility is decreasing. In Poland, by sheer hard work, it is still possible to rise from rags to riches. Many poor people in Poland still can afford to get in to university and break away from poverty. In the US it is out of reach. The US economy has made a huge shift towards innovativeness and high-tech. Jobs in new industries require good education which, due to its costs, is out of reach for more and more Americans. In Poland financial institutions are not powerful, their power is as big as it should be, maybe except for Pension Fund Managing Companies, which showed how to defend their interests during the debate on pension system earlier this year.

Filmmakers also blame the “culture of going into debts” for the crisis. Media and financial institutions, as they claim, have incited people on consumption spree, brought them into troubles and profited from their misery. Also limited access to higher education is said to be one of the reasons why people run up huge debts.

Barack Obama’s presidency turned out to be a big letdown for all those who had hoped for the CHANGE. He went back on the promises to curb excesses of the financial industry. European government somehow managed to tackle the issue, Mr Obama failed.

The film ends with a lovely conclusion: Real engineers build bridges, financial engineers build dreams. Many people dreamt of their own houses. Their dreams have turned into nightmares.

Personally I have two main reflections after watching the film.

Firstly, if so many people “declined to be interviewed for this film”, are their consciences not clear?

Secondly, I could not resist the impression that many people who agreed to be interviewed mastered lying through their teeth to perfection. This is an immensely useful ability in the contemporary world. Sadly…

Benevolence

This year, the time has come. In the past years, before Christmas I promised myself to share some of my wealth with the ones in need. I know, it is a but hypocritical, it is done only around Christmas, because everyone else does it and later people forget for the rest of the year. In the past years my low income was a lame excuse to confine to a few zlotys, this year I decided it was high time to endow some foundations and charities. I began to earn some “real” money, next year my earnings will be really decent, so apart from paying taxes which are aimed at redistributing wealth, I should help my fellow men off my own bat.

In the past days, when I had some free time (scarce commodity) I have pondered upon this issue. The topic triggers a lot of questions, concerning legitimacy, percentage of income that should be shared with others, discretion, moral duty and many more.

Virtually everyone agrees the disadvantaged should be given aid. Opinions how to do it wisely vary. In socialists’ view, the state should be solely responsible for redistributing wealth. The richer should under constraint pay not only higher taxes, but should also give to the state apparatus a higher percent of their income. Liberals, in turn, claim it should be the civil society that takes over function of helping the poor. People, as they say, can set up foundations and charity organisations and endowing them should be a moral duty.

Both approaches have substantial downsides. The statist one assumes the state is omnipotent and will allocate the collected resources effectively. This is impossible – the whole bureaucratic apparatus costs too much and will never be effective – once we had such system in which the state oversaw everything and it failed. The liberal one carries a naïve assumption people will be ready to share their wealth with the worse-off, which is overtly false. Most people are greedy and even if they do it, they will give out only a tiny percent of their earnings. Here there is a fix for it. In many Anglo-Saxon societies donating large sum to charities is a benchmark of one’s social status. There is some bit of pressure from society. But if it was not about boasting about the endowment on a party, would they be ready to give their money away that eagerly? I realise it is better that giving no money at all; no matter if the well-off outbid one another who donates more, the disadvantaged benefit from this. My take on the issue is similar to my view of CSR – most companies do it to maintain a good image, not because they care about those parentless children. Mechanics of the endowment is identical – people do it because they care about their prestige, benevolence is just a side effect.

And I have also realised that even if I was most open-handed I could afford, my contributions would still be hypocritical. I could not sympathise with beneficiaries of my help, just because I have never experienced homelessness, famine, shortage of money, severe illness or any other kind of misery. No big tragedy has affected me yet, my family have, thank God, never been destitute. But on the other hand, as I have also never experienced luxuries, I feel I am in between. Much above me are those whose opulence would dazzle me, much below are those whose poverty is beyond my comprehension. Probably the bigger the gap is, the harder it is to take in a fellow man’s woe.

In addition, giving money is taking the path of least resistance. I may have fewer banknotes in my wallet, by bank account may be credited and the strain is over. Good deed is done, conscience is clear. It is not that simple, as long as I still avert experiencing misery.

Also a man’s wealth determines his problems. For people who struggle to make ends meet, the problem might be if they will not run out of cash to buy bread for children. For those a bit better off, who surely can afford to stock up on bread and smoked hams, the problem might be paying for a child’s school trip abroad. The richer you are, the further from scraping along your problems are. A reason to complain for my colleagues might be that they can afford only a suit for 1,000 PLN rather than five times more expensive one. Or, as this year, that the Christmas bonus was not an equivalent of new compact car’s value, as it was in the years of prosperity (2006 or 2007).

Yesterday I had a Christmas party in my office. It was thrown in an empty unfinished sizeable room in our office building in the very centre of Warsaw. Looking outside the windows could you see Palace of Culture, hotels, busy streets full of well-off people running pre-Christmas errands in haste. Food and drink was in abundance, everyone was pleased to get together… I wonder if I was the only one who thought about families who cannot make ends meet during the party. Once again the Band Aid’s song reverberated in my head…

It's Christmas time

There's no need to be afraid

At Christmas time, we let in light and we banish shade

And in our world of plenty we can spread a smile of joy

Throw your arms around the world at Christmas time

But say a prayer

Pray for the other ones

At Christmas time it's hard, but when you're having fun

There's a world outside your window

And it's a world of dread and fear

Where the only water flowing is the bitter sting of tears

And the Christmas bells that ring there

Are the clanging chimes of doom

Well tonight thank God it's them instead of you

And there won't be snow in Africa this Christmas time

The greatest gift they'll get this year is life

Where nothing ever grows

No rain nor rivers flow

Do they know it's Christmas time at all

Here's to you raise a glass for everyone

Spare a thought this Yuletide for the deprived

If the table was turned would you survive

Here's to them underneath that burning sun

You ain't gotta feel guilt, just selfless

Give a little help to the helpless

Do they know it's Christmas time at all

Feed the world, feed the world, feed the world

Feed the world, feed the world

Let them know it's Christmas time again

Does anyone hear “the clanging chimes of doom”?
Is anyone thankful “tonight thank God it's them instead of you”?

But Polish bankers are not as spoilt as their counterparts from the City or Wall Street. Here the banking system is totally different (in Poland investment banking is just fledging and will never develop for good after Mr Crisis spelled the death of it) – there is no such depravity, earnings and bonuses are not sky-high and expectations are different. More about one depiction of London’s bankers circle in the New Year’s Day post!

Was it really about trust?

A follow-up to the story from late August. Not a breakthrough hitherto, although things have moved on a bit. I still haven’t got back a single zloty out of one thousand I had lent my ex-classmate over six months ago.

I tried to get in touch with Karol a few times, he wrote back to some text messages, but never picked up a phone. Once, in mid-October he claimed he had made a transfer to me a month earlier. When I told him I hadn’t received any money he couldn’t believe it, but also couldn’t submit any receipt of bank transfer executed. Funnily enough, not only didn’t he have any confirmation slip, but also he didn’t know to which bank account he had transferred the money. The next day he dropped me another text in which he asserted he had just transferred money and asked for a reply when I got the money. Needless to say I once again I didn’t see a single zloty.

On 19 November Karol’s mother called me. To my surprise it turned out he had told his family about much more transfers sent to me. She also added he wouldn’t return any money to me because he was “undergoing a therapy” and pledged to take over his debts. We also arranged a meeting next day, in the evening. I met up with her in her house in Piaseczno. Once well-furnished and well-maintained flat has lost its finery. Karol’s mother was quite jittery (they still have some other problems in the family) and explained she was desperately trying to borrow some money to straighten things out. I think I managed to talk her out of turning to a loan shark (who the f*ck invented the name of the company which surely doesn’t cater for provident people?) and suggested she should apply for a regular cash loan in a bank. She also asked me not to call Adam (Karol’s brother) because his nerves were frayed after months of sorting out his brother’s problems and having two full-time jobs for a few months to earn more money.

The sentence about the therapy was the most puzzling. The first supposition that occurred to me was that he had got addicted to gambling and lost all his money as a compulsive casino-visitor. Then I began putting the pieces of jigsaw puzzle together, all goings-on from the day I had lent him the money and the possible sequence of events began to unfold it was even more frightful than gambling.

Schizophrenia is a quite possible explanation. Did he lie he was a chairman of a student organisation or did he think he was? Did he have a job or did he think he had a job? Did he think he had had ordered those transfers and was he really baffled because he couldn’t find any documents to prove it? Was his strange behaviour at home, before he moved out, about which his brother told me, a sign of developing mental illness? Probably I’ll never find out the truth about what has happened, but if it’s really schizophrenia, it’s a tragic story. Karol and his family might have met a tragic fate. He was an up-and-coming lawyer, now, regardless of what he’s being cured from, he’s not going to finish his studies. His family, once well-off are now almost destitute. Will they manage to give him a helping hand after they lost all their ample savings getting him out of troubles? A fellow blogger’s wife, who is a psychiatrist, told me care from family and friends is essential to return to a rather normal life after symptoms of schizophrenia recede. Or will he be left to his own devices on account of his misdeeds?

For two weeks they Karol’s mother didn’t call me. If she fails to do it for a while, I’ll get in touch with her in January. Her assurances to pay me off sounded credible, so I’ll give them at least a bit more peaceful period before Christmas. I told her the repayment wasn’t urgent for me and I could wait for some time, but in the long run I wished to get the money back. I hope we’ll agree on a repayment schedule and I mull over what then. Given their situation and mine, I think it would be wise to write down a part of the debt, but only when they repay more than a half of it in time.

Another question is if I’ll every lend any money (except small change everyone can afford to lose) to anyone. I think lending some money (no more than a few hundred PLN) to friends I keep in with regularly doesn’t have to be ruled out. The other thing is securing the loan by signing a loan agreement, which enables me to claim my money in a court. But if I had signed a valid loan agreement with Karol on that hapless day, would I be better off now? I could sue him, I would have to lose time for wrangling with Polish judiciary system and quite probably the court would hand down a ruling favourable for me, but what would the ruling mean in a situation when my debtor is out of cash and, moreover, insane? Maybe his family would go to a great extent to repay the debt? Who would cover the litigation costs? Finally, I’d have to listen the whole sanctimony…

Hmm… I know by dint of age I’m wet behind ears and maybe I don’t handle the matter properly… So what do you make of it?

A short story about the price of trust

Till some time ago I thought the price of mistrust was much higher, but the moment I had to pay the price of trust I changed my mind.

Karol (name deliberately changed) joined my class almost exactly ten years ago, when we were beginning our first year at middle school (gimnazjum). I don’t even remember if he sat behind the same desk I sat, or was it me who joined him in. As a rather sociable person he quite easily found his way around us (we’d been together as a class for six years on then), though I can’t say he would get along with everyone for the next three years of middle school. Soon by dint of sitting next to each other we became good mates, though I could never say we had ever been friends. We were just good classmates, spent some time after school together, but surely weren’t friends for good and bad times.

Karol soon became the best student in our class and later even in the whole school. Teachers deemed him to be impeccably well-mannered and he soon also became an exemplary pupil. In fact as we all knew he was not just extraordinarily clever. He was a typical “smarty pants” – no one else would get away with getting a bad grade when being unprepared for a lesson, no one else would wriggle out of being punished for cheating during a class test. For some reason he had a charm which worked on all teachers, but my classmates and I weren’t impressed with his continuous wheeling and dealing.

Karol somehow also had an inclination for trying to outfox everyone around, but not everyone could discern it. Many people, including my parents warned me against him, I treated those advice seriously, but they didn’t dissuade me from helping him putting into practice some of his stillborn ideas. Fortunately, it never ended up badly for me, so actually I could have gone unharmed out of this friendship… Within those three years there were many conflicts within our class, but even despite falling in love with the same girl (who eventually chose him) somehow we didn’t fall out, all tribulations didn’t tear us apart.

As I dropped in on his house quite often, I met his parents and older brother, Adam (name also changed), who incidentally attended the same high school as I did, so we had an opportunity to get to know each other better. Although born to the same parents they were totally different – Adam was a paragon of virtues, Karol kept trying to outwit the whole world around.

With time we my friends from middle school fell in with new companies from high schools, old friendships began to break off. Karol and I met usually met in a bus, since we both commuted to high schools to Warsaw. From time to time we called each other, sent text messages, wished happy birthday or merry Christmas. We hadn’t been keeping in with each other since the beginning of our studies in 2006. Occasionally I met his brother in a bus and when I asked him about Karol, I’d usually hear his inclination for wheeling and dealing had only intensified (to Adam’s discontent).

Karol turned to me a few times in 2008 and 2009. Every time he had a great deal to strike but he was hard up for cash and asked me to lend him some few hundred and later even few thousand zlotys. Every time he claimed he had an opportunity to earn thirty to fifty per cent or so and promised to share profits with me, but never revealed what the gooses that laid golden eggs were. As an economist I know such opportunities generally don’t happen in the real world and each time his loan requests were rejected by me.

On 31 May 2010 a text message from him hit me out of the blue. That time he didn’t write about any profitable (read: shady) business to be done, he said we was in an urgent need of money (2,500 PLN) because he had to pay a bill (lie( of a student organisation he was in charge of (lie). The organisation was about to have its expenses reimbursed within a week plus he was about to get his salary within a few days as well. What he described were just some liquidity problems he temporarily had. He managed to earn my trust by offering to meet quickly and sign a loan agreement that would secure the repayment. On that day I was in the middle of exam period and didn’t wish to bother to meet him to sign a stupid piece of paper.

At the beginning I lied to him I had all my money in stocks and investment funds and it would take me three days to turn the assets to cash, but later on I gave in. I transferred to him 1,000 PLN since I realised this was a quite risky move and of course we didn’t meet up to put any signatures. I know very well why I did it, actually despite myself. Just before it all happened I had painfully experienced a blatant example of mistrust and I told myself the relationships between people could not be founded on mistrust, hence my half-baked decision.

Karol offered to return all money four days later in cash. He offered to come to my house, but as it was the day after Corpus Christi downpour I was busy tidying up my garden I asked him to transfer the money to me next Monday. The other reason was that my parents still don’t know about the sunk money – I somehow don’t fancy hearing the “Haven’t I told you” phrase…

On Sunday he asked me to lend him another 500 PLN, I refused. The money I had lent him didn’t appear next Monday, moreover, Karol stopped answering his phone and writing back to my text messages. Soon his voice mailbox got jammed and I realised things must have gone pretty nasty. I got in touch with his brother who promised to tell him to call me, his mother couldn’t tell me where I could find him. Karol’s behaviour became more and more mysterious.

I had a few phone calls with Adam in June, which consisted in reading between the lines. In early July we finally talked openly. Adam politely asked if I had given his brother any money and if Karol hadn’t given it back to me, I politely confirmed to find out I was a bit out of luck. Karol would behave strangely for the last four years, he moved out from home in 2009. For the last two years his family had been paying his debts until they ran out of cash. They decided not to run up their own debts to repay Karol’s obligations, so all debtors who turned to them were simply rebuffed. Karol managed to ruin financially his quite well-off family. From what I could infer from what Adam had told me, I estimate his all debts could total to around 100,000 PLN. Staggering? During the open conversation in early July Adam told me Karol had assured them he had found a job and promised to give his family a half of his salary. Till now (I called Adam yesterday) they haven’t received a single zloty from Karol. He tritely explained it away by telling his employer hadn’t paid him yet. Adam and his parents still remember about my ten stoovers and still openly declare they will transfer it back to me as soon as Karol gives them the money. I don’t hold out much hopes for getting the money back, but given the very good stance of Karol’s family, there’s still a glimmer of hope. I’ll treat this thousand as a windfall if it ever comes back to me.

Never mind the money now. One thousand more won’t make me much happier, one thousand less won’t make me much sadder (but wiser?).

How come? He used to be the best student in the whole school, everyone spoke highly about him, he was held in high esteem by everyone. Everyone said he would be really successful in the future. My teachers from middle school would never believe in the story above.

And the roles reversed. Seven years ago his family was much better-off than mine. Karol had brand-name clothes and footwear, would go on holiday abroad two years in a year, had all electronic gadgets. At the same time I had clothes from normal shops or from a supermarket, I within those three years I was abroad once for a week and spent two third of my holidays at home and didn’t have all newest consumer electronics devices – my parents were scrimping and saving to buy their dreamt-up house. Today my family’s and mine financial standing is satisfying, his family is flat broke and he ended up as a downright cheater.

I wonder what Karol feels now. I’d be surely conscience-stricken having done something so awful. I wonder how it feels to borrow money with an intention not to give it back. When I talked about it with Scatts two months ago he said in the UK he would never make a down payment for a house without securing it properly, which is normal in Poland. In the UK, in turn, he would lend someone a few hundred pound right away, in Poland he wouldn’t hope to get the money back. Cross-cultural differences?

And how did Karol manage to get into such debts? Stock market? Not that easy. Gambling? Possible. Leveraged risky deals is for me the most probable explanation. If you borrow a lot to increase your profits and it doesn’t work out you’re left with huge debts. That probably dragged Karol (and his family I feel sorry for) down.