Choice reading from the blogosphere

Is it important to you to lead a good life?  What does “a good life” mean to you?  Integrity?   Wealth?  Power?  The esteem of others?  A life which harms others as little as possible?  A life that does as much good as possible?

What do you do about reaching YOUR goal of “a good life”?

Two of the blogs I regularly read have good articles on goal setting and personal discipline.

On One Organized Life Blog, Alaia Williams writes about the need to align priorities and resources:  Are the things that are taking up your time really what you want? Are you spending time on things that matter to you, or frittering it away on things that don’t matter?  She then lists five steps to bring one’s life into step with personal goals.

On Get Rich Slowly, Flexo of Consumerism Commentary offers a guest post, “Financial Success Comes from Within,” on the need to take responsibility for our choices.

Time and money are two scarce resources, and I agree with Williams and Flexo, it is important to set priorities and take responsibility for our choices.  Conscious, responsible choices are the only way to reach our goals.

What in your personal discipline and your financial plan, reflects your deepest belief about what’s really important?

The Tipping Game, Part 2

There was a  discussion of my last post on 43Things.com, and I’ve had some additional thoughts since yesterday.  Seems that tipping is a hot topic:  some people resent it, and others have very strong feelings about tipping well.

First, silly me:  I forgot that the Internet is an international phenomenon, and not all readers are eating and tipping in the States.  My discussion of tipping had to do with tipping practices in the U.S.  Travelers would do well to learn about local tipping practice, because attitudes and customs about tipping are quite different from one place to another!  The practice of paying a lower wage and allowing tips to bring it up to minimum wage seems to be a U.S. phenomenon, however.

I found it interesting that in on- and offline conversations on the subject, people who cited experience in the restaurant industry in the U.S. were unanimously in favor of methodical tipping, and usually generous methodical tipping.

Some people suggested that it was odd to have tip jars in places like Starbucks.  If there are any Starbucks employees (present or past) in the readership, I’d love to hear from you.   Do Starbucks employees make minimum wage, or the truncated wage that assumes the tip jar will overflow?   How is Starbucks different from other places in which consumers order and pay at the counter?

I have now had two individuals tell me that while the rule is in place that the employer must make up the difference between the hourly wage (in the U.S.) and the minimum wage if the tips are insufficient, they have worked in places where the rule was flaunted.

CMStone64’s thoughtful comment to the previous post suggests to me that one way to frame the whole issue is to talk about it in terms of relationships.  As a consumer, I am in a relationship with the server.  The server is also in relationship with her or his employer.  The second relationship may be of indirect concern to me (I may choose to go elsewhere for dinner if I learn that labor practice at that restaurant is poor).    But that primary relationship, the relationship between consumer and server, is one that it seems to me should be conducted with dignity and responsibilities on both sides.   I am within my rights to protest if the service is poor, but the server is within his rights to expect to be paid for his work.  Since the law is set up in such a way that he will not be paid for that work unless I tip, then I’m at fault if I tip insufficiently.

Or so it seems to me.  Your thoughts?

The Tipping Game

When and how much do you tip?  Do you ever NOT tip?

Let’s say that Mr. A takes a lady friend to lunch.  The lunch is a disappointment:  there is a mixup about his reservation, they are given a table by the bathroom, the restaurant is loud, the gazpacho is tepid and the roast chicken is cold.   Miss B is a good sport about it all, but she clearly does not relish warm gazpacho.  Her opinion is very important to Mr. A.  He feels foolish, and Mr. A hates feeling foolish.

Mr. A stews, his frustration with the restaurant building, until the check arrives.  $50.00!  Ridiculous!  He slaps his Amex into the folder and glares as the waiter carries it away.  When the waiter returns with the charge slip, Mr. A hesitates over the tip.  He is angry about his experience in the restaurant.  Miss B is looking at her watch.  He is aware that the customary tip is 15-20%, which would dictate a minimum of an $8.50 tip, but my gosh, why reward a bad experience?

Mr. A has a number of choices, some of which he has already made:

1. He might have moved the lunch elsewhere.
2. He might have asked about the wait for a better table.
3. He might have sent the food back when it arrived at the wrong temperature.
4. He could, at any point, have asked to speak to the manager about the reservation, the poor table, the food.
5. He could choose to leave a smaller tip.
6. He could choose to leave no tip at all.
7. He could tip according to custom, and then never return again to that restaurant.

However, if Mr. A is a typical U.S. customer, he regards the tip as a reward for good service, with the corollary that withholding it is a punishment for bad service.  Therefore he concentrates on #5 and #6 as his prime options for conveying his disappointment:  How much, if anything, will he tip?

Some things for Mr. A to consider in making his decision:

Tips are given at the discretion of the consumer, but they are part of most restaurant employees regular compensation.    According to the U.S. Department of Labor:

The Fair Labor Standards Act (FLSA) requires payment of at least the federal minimum wage to covered, nonexempt employees.  An employer of a tipped employee is only required to pay $2.13 an hour in direct wages if that amount plus the tips received equals at least the federal minimum wage, the employee retains all tips and the employee customarily and regularly receives more than $30 a month in tips. If an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.

Some states have minimum wage laws specific to tipped employees. When an employee is subject to both the federal and state wage laws, the employee is entitled to the provisions which provides the greater benefits.

That means that the tip you leave for a server is part of their wage, not on top of the wage, which may be the minimum wage.  The employee in theory is guaranteed the minimum wage, but it’s going to come out of someone’s pocket:  Mr. A’s or the restaurant owner’s.

Mr. A says that’s just fine with him, the restaurant owner should be punished for such bad service.

In reality, while it ought to work that way, there is sufficient abuse of that particular requirement that it has become the subject of much litigation.   Also, servers are often required to share tips with busboys and other restaurant employees (another topic of litigation.)   Were dirty dishes left on the table to be cleared?  The busboy is also being paid with the assumption that he’ll get his share of the tips.

Mr. A might also want to consider the precise items of discontent.  The waiter is responsible for delivering the food at the appropriate temperature, true.  Could it have been sent back?  Was it sent back?  Or did Mr. A suffer in silence?  Is it fair to punish the waiter if nothing was said about the temperature of the food?

The waiter and the busboy are not responsible for the reservation snafu.  They did not place him and his guest at the table by the bathroom.  All of this suggests to me that unless Mr. A protested the temperature of the food, and was met with Major Attitude, a low or missing tip is a poor choice for expressing his displeasure.

What do you think?  When do you not tip?  Do you think that the law should be changed so as to eliminate the tipping game entirely?  What values inform your tipping calculations?

Keep your beta off my body

Drudge picked this up from Financial Times a couple days ago. He called it “The Jobs Question” but the title of the article is Do investors have the right to know about a CEO’s illness? It presents three ethical questions: “To what extent should any chief executive feel obliged to divulge health details to investors? Is it simply a private matter? And what is the best response when such questions are raised?”

The rest of the article is short responses to these questions from experts of different stripes. The consensus was that it is appropriate to waive privacy rights, in many circumstances. Though it may be legal to follow a policy that requires or encourages disclosure, is it really justifiable?

If a CEO cannot perform job functions for whatever reason, of course he or she should step down. Of course stakeholders should be informed of changes in management. However, privacy with regard to medical history/status for civilians would seem to be well worn territory. The opinions expressed in the article are all over the place as to what should be taken into account when considering whether to disclose CEO health issues, the most frightening one being the link between CEO health and share price. My own answers to the questions in the quote:

To what extent should any chief executive feel obliged to divulge health details to investors?

“feel obliged” ? Not at all.

Is it simply a private matter?

Yes.

What is the best response when such questions are raised?

If a public company’s share value were known to be so dependent on the health of the CEO, that in itself should demonstrate fragility severe enough to negatively impact share price.

Tough times, tough choices

Today’s news of two more Western regional bank failures (1st National Bank of Nevada and First Heritage) is a harsh reminder that we are in peculiar economic times. As Flexo over at Consumerism Commentary explains, there is no need for most of us to be worried about our own money in an FDIC insured bank. During the savings and loan crisis in the other Bush administration, I had a CD in an S&L that failed, and the only impact on me was that I got a letter explaining that my principal was safe, but that the outlandish interest promised by the failed institution was merely a fantasy.

All this reassurance presupposes that one has money in the bank. However, with the price of food and fuel rising, with many people deep in debt, with homes falling in value, the most pressing choices facing most people are not “Where shall I invest my money?” ethically or otherwise. The questions have more to do with “which bill do I pay first?” or “how much can I afford to help family or friends in financial straits?”

I learned one very important aspect of ethical decision making in a lecture by Dr. Arthur Gross-Schaefer of Loyola Marymount University. He said to us (a class of rabbinical students) that there are almost always more than two alternatives for solving any dilemma. It is human nature to frame choices as having only two possible solutions (“I must choose between this and that“) but with a little thought, there are often other options we can choose.

It is frustrating and frightening to see bank failures in the news and to hear words like “stagflation.” The challenge for individuals is to maintain the imagination and the courage to see and to act upon our best options, whatever they may be.

Ethics 101

How do YOU make decisions?

Right now, the United States economy is moving in directions that force people to make unpleasant choices about money, many of them choices with ethical implications.  We at Ethical Finance are going to look at the choices many people are facing, and at methods for coming to ethically-grounded decisions.

“Ethics” is the study of standards of behavior for making choices.  What your ethics are will depend on two things:  (1) where you ground your standards and (2) how you choose to apply those standards.  Ethics is not “your guts,” it isn’t the law (a law can be unethical – for example, apartheid was enshrined in law), and it isn’t simply provided by cultural norms (in Nazi Germany, dispossessing and killing Jews was deemed a cultural value.)  Ethics can be informed by religion, but two adherents of the same religion can have very different ethical standards, depending on their interpretation of the religion.

There are several different approaches for ethics, but all of them boil down to “what’s important?” and they divide into three basic groups:

*** The most important thing is the OUTCOME:

– What will do the greatest good or the least harm to the greatest number of people?   [Utilitarianism]

– What will do the greatest good and/or the least harm to me?  [Egoism]

– The only ultimate law is Love.  What is “right” and “wrong” depends on the situation. [Situation Ethics]

*** The most important things are the RIGHTS of beings and our DUTIES towards them:

– Some rules are constants:  it is always right to take certain actions, and always wrong to take other actions.  This includes the idea of natural law. [Deontological ethics, or Kantian ethics]

–  Every individual has certain basic rights that must be honored [Natural Rights]

*** The most important thing is CHARACTER:

– Certain qualities (Kindness, Justice) are recognized as representing the best of humanity.  What choice will I make as my “best self”?  [Virtue Ethics]

If you are reading this, and feeling confused, that’s a normal response.  Outcomes, rights, duties, and character are all important.  How we balance them, and which one is paramount to us is a highly personal matter.  Our goal here at Ethical Finance is not to tell you what to think, or how to decide, but to offer some tools and information for decision making.

More to come!

Same as it ever was

Is it ironic to start a personal finance blog as the US tips into recession?

An appropriate time to think about our finances and financial ethics is now, as one or both may face serious tests in the near future. As we muse on the subject, it’s always helpful to keep context in mind. For those who want to know a little more about the broad US financial predicament and its causes, PBS has come through:

This is the PBS page with the Bill Moyers special on the mortgage meltdown. Author William Greider is featured; the video of his part of the segment is here. Also here is a link to a TERRIFIC Economist article on Fannie and Freddie (actually quoted in the Bill Moyers piece) for people who want to know more about the mechanics of the situation.

That the intricacies of the credit crisis are enough to cross any layperson’s eyes may be the most important lesson this recession has to offer. It is the very complexity of the financial industry and its instruments that caused the crisis, and the cozy relationship between Washington and Wall Street paved the way. What better time to examine Ethics and Finance?

Living Values

Philip Brewer of Wise Bread posted an essay earlier this month about making deliberate choices in life, called “What I’ve been trying to say.” He discusses five tactics for living his version of the good life:

1. Live intentionally

2. Raise some capital

3. Find your true calling

4. Do for yourself and

5. Value Community and Experiences over Stuff.

His essay is a vivid example of an individual taking stock of his values, and then making the appropriate choices to live them out his financial life. Worth reading!

Ask yourself, as you read the article: are his values your values? If your values are different, then how would the “tactics” change, if at all?

Guilty as Charged

The New York Times today has an article on the causes and effects of the growth in American consumer debt.

It’s a long, juicy piece with many points to make, but one quotation in particular snagged my attention: “One of the tricks in the credit card business is that people have an inherent guilt with spending,” Jonathan B. Cranin, executive vice president and deputy creative director at the agency, said when the commercials began. “What you want is to have people feel good about their purchases.” [emphasis mine]

There’s appropriate guilt, and inappropriate guilt. Inappropriate guilt causes needless ulcers and ruins lives. Appropriate guilt is another thing entirely: it lets us know when we are doing something wrong.

What’s wrong with spending money? Nothing at all. What’s wrong is spending money we don’t have on things we don’t need.

What’s shocking is that Mr. Cranin doesn’t seem to feel more guilt about what he’s been doing.

My budget, myself

With all the talk about “family values” and “Judeo-Christian values” it might be worth while to take a moment to ask: what are my values?

How can we get a picture of our values? Try taking a look at your checkbook and your credit card statement. “Values” are principles for which we are willing to forego something else. Your checkbook will tell you what you value so much that you will exchange money for it. Granted, this will not tell you everything, but it can be surprisingly revealing.

What percentage of your income goes for housing? For cable TV? For clothing? For gambling? For exercise? For medical treatments? For eating out? For parking tickets? For the freedom of a personal car, instead of public transportation? For food? For charitable giving?

And if your records are such that you have no idea about any of the above, ask yourself: what is it that you value more than knowing where your money goes?

If you had to cut your budget, what would you cut first, second, and third?
If you had to cut your budget, which figures would you cut last?

What are your values? What does your budget tell you about you?