In the modern world, more and more often, all financial transactions are carried out using e-commerce, reducing cash turnover. However, the development of technology invariably leads to the development of fraud in new areas that are not yet thoroughly familiar to ordinary people. As a consequence, this process can lead to theft of money from a credit or debit card. Therefore, the issue of card safety both on the part of banks and consumers is now the most acute. A variety of strategies are used to prevent and prevent these occurrences. However, the best result can be achieved only through the efforts of two parties – cardholders and banks.
However, preventive measures require prior analysis. Unfortunately, a relatively large number of fraudsters operate in different countries and go unpunished. Just as a bank is developing a security system, fraudsters are also developing their schemes to deceive cardholders. This paper reviews the literature on this topic, which is an introduction to further research. Since it is the ratio and agreement of the actions of bank employees and cardholders that is a critical element in the money security chain, so as a result, the method of interviews with the heads of organizations issuing credit cards was chosen. As an analysis of this study, the theory of diamond fraud is used to define the phenomenology and ethnography of the topic. Twenty academic sources were analyzed for a thorough and deep understanding of the issue.
Accordingly, the literature review includes a review of critical strategies to combat identity and money theft, such as improved security technologies, customer education, and a heightened vigilance strategy. This review then examines specific interventions to prevent such incidents. Finally, the diamond fraud theory method and its application to related topics are explained.
Protection of Personal Data and Credit Cards
Stealing money from credit and debit cards is almost impossible without first stealing the holder’s identity. Consequently, the root of the problem lies precisely in the security of each person’s data, which fraudsters can collect bit by bit on the Internet and elsewhere in different ways (Berghel, 2017). Today’s extremely high rate of cybercrimes is dictated not only by the overall development of technologies, including fraud schemes, but also by the extremely low literacy in protecting people’s data (Goel, 2019). The methods of education developed by experts do not give the desired results for several reasons. First, users prefer automated security systems that do not require interaction with them. However, at the moment, it is the constant inclusion of a person in the protection of their security that is a crucial element in the preservation of personal data (Zou et al., 2020). Secondly, the determinants of the positive dynamics of users’ attention to this side of the issue are the presence of technical education and previous negative experience (Li et al., 2019). Consequently, people lack personal and financial cybersecurity knowledge due to the rapid development of technological progress and an insufficiently strong education campaign.
Several aspects further complicate this problem. First, victims do not always report such cases to the police or other relevant authorities (van de Weijer et al., 2019). In addition, there is a correlation between the types of cybercrimes and the percentage of police reports. Some victims experience psychological distress and depression after such cases, which require lengthy litigation, wasted time, and the possible loss of livelihoods (Golladay & Holtfreter, 2017). As a cause and as a consequence of such emotional and physical disorders, it also leads to the victim’s isolation, and many criminals who steal funds from credit cards go unpunished.
Control methods include many different strategies. Modeling and analyzing the text of identity theft stories helps to classify the constant flow of information about identity theft unstructured on the vast Internet (Zaeem, 2017). Such an analysis helps determine the average statistical portrait of the victim and the methods of actions of fraudsters and form a particular warning complex of actions that reliably protect people from theft.
Strategies for using new technologies and education are also highlighted. Both strategies imply actions on the part of banks and organizations that issue cards since the safety of personal data directly depends on their security system and organized available instructions for users. Therefore, in this work, a decision was made to use a targeted sampling approach. In other words, a person from such organizations is specially selected for the interview, passing according to strict selection criteria and holding a leadership position. The statistical aspect of this sample is achieved by inviting five such specialists. This approach is explained by the fact that it is necessary to understand the work of such organizations and how they answer urgent questions and problems in this area.
Consequently, the above measures leading to the theft of personal data entail other fraudsters who bypass the security system of banks and credit card organizations in pretty straightforward ways. Even everyday online purchases, which have increased in connection with the global pandemic, can lead to data loss (Burnes et al., 2020). This problem affects directly not only the cardholders and banks but also the entire health care system and the state (Al-Nemrat, 2018). The regulation of e-commerce, one of the newest areas in financial technology, requires regulation at the level of the law, with requirements for security systems, proper instructions for users, and appropriate penalties for offenders.
The Fraud Diamond Theory
The Fraud Diamond Theory looks at fraud by an attacker, which is also necessary for analyzing this problem. The theory includes four main elements regulating the commission of fraud: pressure, opportunity, rationalization, and capability (Rustiarini et al., 2019). The pressure can be dictated by social, government, and less often personal factors. Criminals most often commit these atrocities without being wealthy or successful people in life. The problem of poverty, structural inequality, and other social ills of society always lead to increased crime (Manhica et al., 2020). The high availability of knowledge in programming by sufficiently educated people with abilities can be used not only for good purposes. Security flaw-finding programs are encouraged by the companies themselves. However, the professional question that finding a bug can lead to much more enrichment for their purposes than reward for helping the company is most pressing (Maillart et al., 2017). These two factors reveal the main elements of the theory: pressure and opportunity.
Other elements depend directly on the psychological motives of the fraudsters and directly follow from the first two factors. Rationalization is always moral, namely the violation of the potential victim’s legal and moral rights (Peprah, 2018). Finally, the ability depends on the confidence of the fraudster in the performed action since most of them are always aware of the possible consequences and penalties. These factors are exacerbated by the victims’ frequent silence and non-reporting to the relevant authorities, and ignorance of their security capabilities (Sujana et al., 2019). In addition, the favorable economic situation in the country, which is the goal of any state, only creates a fertile ground for such fraudulent activities (Rengganis et al., 2019 and Christian, 2020). Finally, the imperfect study of some aspects of security systems by banks and the imperfection of laws regulating such offenses leads to a carte blanche situation for attackers (Azmi et al., 2017). As a result, it turns out that there are more than two interested parties in security – financial organizations, cardholders, a society that regulates the social situation, and the state, which needs to find a balance of security for its citizens.
A triangulation strategy is used to determine the validity of the results obtained in this study. The capabilities of this method suggest a more reliable assessment of the results and limitations of empirical social research (Christian et al., 2019). This model leads to the need to improve audit activities and classify companies that issue credit cards for performing a set of actions that support security (Zaki, 2017). Nevertheless, the application of this method must be combined with quantitative indicators for a more accurate assessment (Utami et al., 2019). The integration of such a method will help reveal the theoretical potential of the interpretation of the results and reveal paradoxes and questions that require other, atypical solutions.
Conclusion
Identity theft and subsequent theft of funds from potential victims are urgent and require an integrated approach. An ideal analysis picture involves using both quantitative and qualitative methods to determine the validity of the results. Ultimately, efforts are required not only for the security systems of the relevant organizations but also for educating consumers of these services and government decisions that keep pace with technology development.
References
Al-Nemrat, A. (2018, April). Identity theft on e-government/e-governance & digital forensics. In 2018 International Symposium on Programming and Systems (ISPS) (pp. 1-1). IEEE.
Azmi, L. M., Herwanti, T., & Asmony, T. (2017). E-Procurement fraud in government sector: In the perspective of fraud diamond theory. E-Proceeding Stie Mandala.
Berghel, H. (2017). Equifax and the latest round of identity theft roulette. Computer, 50(12), 72-76.
Burnes, D., DeLiema, M., & Langton, L. (2020). Risk and protective factors of identity theft victimization in the United States. Preventive medicine reports, 17, 101058.
Christian, N. (2020). Behavioral strategy analysis using the Fraud Diamond theory approach to detecting corporate fraud in Indonesia. International Journal of Business and Management Invention (IJBMI), 9(4), 66-74.
Christian, N., Basri, Y. Z., & Arafah, W. (2019). Analysis of fraud triangle, fraud diamond and fraud pentagon theory to detecting corporate fraud in Indonesia. The International Journal of Business Management and Technology, 3(4), 1-6.
Goel, R. K. (2019). Identity theft in the internet age: Evidence from the US states. Managerial and Decision Economics, 40(2), 169-175.
Golladay, K., & Holtfreter, K. (2017). The consequences of identity theft victimization: An examination of emotional and physical health outcomes. Victims & Offenders, 12(5), 741-760.
Li, Y., Yazdanmehr, A., Wang, J., & Rao, H. R. (2019). Responding to identity theft: A victimization perspective. Decision Support Systems, 121, 13-24.
Maillart, T., Zhao, M., Grossklags, J., & Chuang, J. (2017). Given enough eyeballs, all bugs are shallow? Revisiting Eric Raymond with bug bounty programs. Journal of Cybersecurity, 3(2), 81-90.
Manhica, H., Straatmann, V. S., Lundin, A., Agardh, E., & Danielsson, A. K. (2020). Association between poverty exposure during childhood and adolescence, and drug use disorders and drug‐related crimes later in life. Addiction.
Peprah, W. K. (2018). Predictive relationships among the elements of the fraud diamond theory: The perspective of accountants. Management, 8(3), 141-148.
Rengganis, R. M. Y. D., Sari, M. M. R., Budiasih, I. G. A. N., Wirajaya, I. G. A., & Suprasto, H. B. (2019). The fraud diamond: Element in detecting financial statement of fraud. International research journal of management, IT and social sciences, 6(3), 1-10.
Rustiarini, N. W., Sutrisno, T., Nurkholis, N., & Andayani, W. (2019). Why people commit public procurement fraud? The fraud diamond view. Journal of Public Procurement.
Sujana, E., Yasa, I. N. P., & Wahyuni, M. A. (2019, January). Testing of Fraud Diamond theory based on local wisdom on fraud behavior. In International Conference on Tourism, Economics, Accounting, Management, and Social Science (TEAMS 2018) (pp. 12-15). Atlantis Press.
Utami, I., Wijono, S., Noviyanti, S., & Mohamed, N. (2019). Fraud diamond, Machiavellianism and fraud intention. International Journal of Ethics and Systems, 35(4), 531-544.
van de Weijer, S. G., Leukfeldt, R., & Bernasco, W. (2019). Determinants of reporting cybercrime: A comparison between identity theft, consumer fraud, and hacking. European Journal of Criminology, 16(4), 486-508.
Zaeem, R. N., Manoharan, M., Yang, Y., & Barber, K. S. (2017). Modeling and analysis of identity threat behaviors through text mining of identity theft stories. Computers & Security, 65, 50-63.
Zaki, N. M. (2017). The appropriateness of fraud triangle and diamond models in assesing the likelihood of fraudulent financial statements-An empirical study on firms listed in the Egyptian Stock Exchange. International Journal of Social Science and Economic Research, 2(0), 2403-2433.
Zou, Y., Roundy, K., Tamersoy, A., Shintre, S., Roturier, J., & Schaub, F. (2020, April). Examining the adoption and abandonment of security, privacy, and identity theft protection practices. In Proceedings of the 2020 CHI Conference on Human Factors in Computing Systems (pp. 1-15).
It is vital for a writer to comprehend and appreciate the use of rhetorical strategies when compiling any rhetoric piece of work. Hence, the ideas and perspectives of the author can only be expressed when rhetoric strategies are applied in a given piece of work.
As such, an author might employ various rhetorical tools depending on the purpose of writing the given piece of information. For instance, some authors may employ logos when they need to represent some statistics, solid evidence or facts. In some instances, ethos may be employed in a piece of writing to demonstrate various levels of credibility.
The paper that I will analyze in this case was written way back in 2008. The paper is entitled A Summary of the Primary Causes of the Housing Bubble and the Resulting Credit Crisis: A Non-Technical Paper and written by Jeff. Holt. The author has worked as the Director for Undergraduate Programs, Department of Statistics at the University of Virginia. This paper aimed at demonstrating how the housing bubble led to credit crisis of 2007.
The author was very formal throughout the article. He employed the third person point of view and presented facts and ideas in their empirical forms. In this paper, I will be exploring the rhetoric appeals and strategies that were used by the author when writing the journal article.
Audience
The intended audiences for this article are the financial business scholars and especially students who are undertaking business related courses at higher levels of learning. This can be judged from the content and arguments presented in the article. However, this paper was written with the instructor in mind.
Even though my fellow classmates would benefit from the rhetorical analysis portrayed in the paper, the author was very keen in meeting the needs of the audience. The author intended to address the paper to all those interested in business concept. From the title of the journal, it is evident that it is a “non-technical paper”. Therefore, quite a wide array of readers can understand the content of the paper.
Purpose
The main purpose for writing this piece of assignment was to demonstrate to my instructor that I was indeed in a position to read, understand and rhetorically analyze a formal article using persuasive arguments. In addition, the assignment was also meant to test my critical thinking and analytical skills through a piece of writing. The author analyses the key reasons why the housing bubble occurred. From his analysis, I was able to write a clear yet detailed rhetorical analysis based on the journal article.
Context
This is a class that we are usually tested on the ability to read, understand and analyze literary content. We were supposed to write a rhetoric analysis paper as part of class assignment given by our professor. We were also required to choose an appropriate article to analyze with the assistance of our instructors. In my case, I chose an online journal article entitled A Summary of the Primary Causes of the Housing Bubble and the Resulting Credit Crisis: A Non-Technical Paper and written by Jeff. Holt.
The instructor also gave out the direction for constructing a rhetorical analysis paper using the triangle technique. The thesis of the paper was to investigate and demonstrate how the housing bubble led to the credit crisis of 2007 by exploring the rhetoric appeals and strategies that were used by the author when writing the journal article.
Style
The journal article was written using a formal style throughout the pages. The arguments and facts presented are also formal in nature. For instance, the author cites other accredited authors throughput the text. The author also used APA style for his references. Based on the content and purpose of the paper, I was supposed to write it using a formal style. In fact, I used formal citations in MLA style. This was necessary because the task was meant to test my ability to communicate, analyze and articulate ideas obtained from a formal document.
Organization
The paper was organized into three main parts with sub-sections as well. These were the introduction, six body paragraphs and a conclusion. Besides, a works cited list was included at the end of the paper. In the introductory part, sub-sections and sub-headings were used in order to make it easy for the reader to follow. The body had two major sections with each section sub-divided into three sections each containing a subheading.
Rhetorical appeals
Logos
This can be defined as the use of logical appeals when presenting reasons, ideas, reasons, and facts and so on. Logos play the role of persuading the targeted audience to agree with the perspectives of the author. One of the Logos used by Holt is statistics. For instance, what caused the housing bubble? Housing prices were rather stable during the entire decade of the 1990s.
For a period of about 8 years (1990-1997), homes prices recorded a marginal rise of 0.8%. The audience can logically understand the reason why the Federal Reserve funds rate had been lowered to about 1.25% before the start of 2003 and up to one percent by June 2003. In addition, it is also evident that the housing bubble caused a major instability in the mortgage market since the interest rates were grossly affected.
Pathos
Pathos tends to address emotional appeals presented in any piece of writing. Holt observes that “even though the U.S. savings rate was low during the housing bubble, an influx of saving entering the U.S. economy from countries such as Japan and China helped to keep mortgage interest rates low” (121). This implies that the credit crisis was occasioned by the immense housing bubble.
The audience is in a position to acknowledge why the low mortgage rates of interest affected the short-term interest rates. During the entire period associated with housing bubble, the loans were advanced to borrowers in the most favorable manner since the terms and conditions were not very strict. Moreover, the author asserts that “mortgage interest rates were falling despite the low savings rate in the U.S. because of an influx of saving entering the U.S. from other countries” (Holt 121).
In this case, he has used irrational exuberance to appeal to the emotional need of the audience when expounding the main pathos in the article. For example, irrational exuberance played a major part in housing bubble and consequent credit crisis since it entailed a lot of speculation in the mortgage industry.
The author has managed to appeal to the audience by asserting that all the players who took part in the mortgage borrowing and lending assumed or speculated that home prices were bound to rise in the near future. In any case, home prices had never went down since the Great Depression era and therefore, all the major parties believed that such prices would never go down.
Even the government regulators never made any attempt to control the rising prices for homes. The author has made it clear by asserting that investment bankers were also very keen in issuing mortgaged backed securities that were highly leveraged. Therefore, it may not be easy to recognize or even control irrational exuberance that accompanies price bubbles bearing in mind that housing was a pretty investment before the crisis began.
Ethos
The persona of the author usually reveals the ethos appeals portrayed in a piece of writing. This information is also contained in the course reader. It is the targeted audience that is supposed to depict the persona of the author. In other words, ethos can only appeal if the writer demonstrates adequate know-how of the information presented in an article, book or any other form of literature. Although the author has not put down his academic credentials, it is evident that he has vast knowledge in this subject area.
For example, he demonstrates that the “standards for mortgage loans were relaxed as a result of the following factors: new governmental policies aimed at fostering an increase in home-ownership rates among lower-income households…” (Holt 124). When the terms and conditions of borrowing from the mortgage market were made more lenient, it became extremely easy for predict the condition of the market.
Holt (120) also reiterates that “much of the financing that fed the housing bubble came from the unregulated “shadow banking system”. The targeted audience can clearly relate the housing bubble and the role of banks in the whole mess. The unregulated system was highly leveraged.
However, a deleveraging cycle was later subsequently created by the banking system which was unregulated. Eventually, this scenario triggered and worsened the credit crisis. Hence, there was panic within the banking system. Hence, lenders were greatly hampered in terms of screening borrowers.
Most of the lending was advanced to individuals without verifying their credit worthy levels. Nonetheless, research studies are yet to be undertaken to determine the actual cause and effect of the housing bubble in relation to credit crisis These are fine details that cannot be given by an individual who is not a specialist in that area. Since he has worked at the department of statistics, he must be knowledgeable enough.
Rhetorical analysis
Comparison and contrast
The author has managed to develop similarities and difference between the housing bubble and credit crisis. According to Holt, “even though the U.S. savings rate was low during the housing bubble, an influx of saving…helped to keep mortgage interest rates low” (121). In terms of reduced interest rates that were being advanced for buying houses, the author notes that huge savings from foreign investors managed to keep the interest rates as low as possible.
The audience is in a position to understand that savings obtained from worldwide sources provided minimal risk environment for investors. Borrowers ended up with huge borrowed amounts from various financiers in the mortgage market. By 2006, the influx of foreign savings in the US market had peaked to about six percent of the Gross Domestic product (GDP) compared to 1.5 percent way back in mid 1990s.
Another comparison and contrast is evident where the Holt affirms that “investors in these countries sought investments providing low risk and good returns” (122). The author also observes that “home prices were still 57 percent higher than they had been in the 1 quarter of 1997” (Holt 121).
Exemplification
The author has used several examples to illustrate various assertions and points in the article. He observes that “For example, the monthly principal and interest payment on a $200,000 30-year fixed rate mortgage with an interest rate of 6 percent would be about $1,200” (Holt 123).
Moreover, the author notes “for example, suppose XYZ Company invests $10 million in mortgage-backed securities (Holt 123). There are several illustrations with examples in the article. In case of any eventualities, these enterprises would be bailed out by the federal government.
Cause and effect
When the cause and effect tool is used well, it can significantly assist a writer to organize ideas in a holistic manner. For instance, there are several causes and effects for reduced interest rates on short term loans. Due to the 2001 recession, the Federal Reserve was compelled to lower the federal funds rate. This action aimed at strengthening the US economy which was already ailing (the cause part). Although this rate was marginally increased in 2004, it remained stable for about three consecutive years (the effect part)
The reduced short-term rates of interest are believed to have contributed towards the hosing bubble in two main perspectives. Hence, several home buyers did not prefer fixed rate mortgages since they were not favorable.
Conclusion
From this rhetoric analysis paper, I have acquired a lot of knowledge on how various tools work for writers when presenting ideas on paper. Before the housing bubble could fully develop, the rates for mortgage loans were rather stable. In addition, the main purpose of writing this article was to demonstrate my ability to read, understand and write a rhetorical paper based on the analysis of a given text.
From the journal article on housing bubble, the author offered a detailed description of why the housing bubble in the United States contributed to the 2007 credit crisis. Finally, the author suggested that the housing bubble was caused by various factors such as fair interest rates and irrational exuberance.
Works Cited
Holt, Jeff. A Summary of the Primary Causes of the Housing Bubble and the Resulting Credit Crisis: A Non-Technical Paper. The Journal of Business Inquiry 8(2009): 120-129. Print.
In analyzing the excel data provided from the bank for customers who have previously been granted bank loans the following are the factors that should be considered when determining whether a prospective customer is suitable to be granted a loan. The data analyzed was for 100 customers who defaulted on their loan payment by missing one or more repayments and 100 customers who did not default on their loan by making every payment.
Years spent with the current employer
One of the factors that should be considered in awarding the bank customers loans is the years they have been with the current employer. The data shows that those who have been with their current employers for a few years have not defaulted on their loan repayments as compared to those who have been with their current employers for a long period. For example, those who have been with their employers for 19 years and above have not been repaying their loans with the statistics showing nearly 98% of them have defaulted (Spiegel, Schiller, Srinivasan, 2009, pp.1-20).
The age factor
Age should also be considered in awarding loans by the bank. It is very interesting to find many of those who have defaulted on their loan repayment are between the ages of 21-33 with those beyond that age doing well in their payment. Only 63 customers between the age of 21 and 33 have been repaying their loans as compared to 100 who are between the ages of 33 and 55. Therefore, it’s important to consider the age of the customers as the decision to award a bank loan is considered.
Sex as a factor
Sex is also a critical factor in awarding bank loans. Upon analysis, it is revealed that the ratio of male to female defaulting in loan repayment is 1: 5 respectively. This gives an implication that for every one male who defaults 5 females default on loan repayment. So it becomes critical for the bank to consider male customers for awarding loans as compared to the female customers of the bank. The management has to be more cautious as it awards loans to the females since their repayment turnover wanting as revealed by the statistics available.
Income levels
The middle-income earners and fewer income earners repay their loans more than is the case with those who are earning more as revealed by the analyzed information. The ratio is 3: 4, giving the implication that, for every 3 people who are middle-income earners who default, 4 people earning high-income default and so the bank ought to be cautious on the high-income earners and prioritize those who are middle-income earners (DeGroot, Schervish, 2002, Pg.133).
Education level
Those with a high level of education are defaulting on loan repayment more than those with a lower level of education. This means that contrary to the expectations that those with a high level of education are earning more and may not default on loan repayment is a wrong assertion. The ratio of loan default for the customers with A level to postgraduate and those who lack formal education to GCSE is 3: 4. Therefore, education becomes a critical factor in deciding on those the bank should go ahead and award loans with those who have less education qualifying more than those who have high levels of education.
Credit card debt
The customers with less credit card debt default on loans more than those who have large credit card debt. This is a factor to be considered by the bank since relying on such information can make the management decide appropriately on those to an award bank loans. The ratio is 4: 5 with 5 customers with less credit card debt having previously defaulted as compared to 4 with more credit card debt.
Other debts
It is also evident that those with more other debts are repaying their loans than those with fewer other debts. This also becomes critical for the management to consider as it decides on those to consider for awarding of loans in the future.
The years with the current address factor
Lastly, it is revealed that those who have maintained their addresses for long have a strong affinity to default on loans repayment than those with fewer years on their current address or no address at all. So the issue of customers maintaining their address to get the trust of the bank should be reviewed as loans are awarded since the probability of them not repaying is very high(Biswal, 2000, pg. 90)
References
Biswal, R. (2000). Probability and Statistics: Mathematics and business statistics. NewDehli, PHI Learning Pvt Ltd.
DeGroot, M & Schervish, J. (2002). Probability and Statistics: Business and Economic statistics: Pittsburgh, Addison-Wesley.
Spiegel, M, Schiller,J & Srinivasan, R. (2009). Probability and Statistics: Schaum’s outline. New Jersey, McGraw-Hill Professional.
A credit card, normally plastic, is a symbol of credit worthiness implied on the authorized card holder by a financial institution. The card is issued by the institution upon verification of a person’s credit worthiness. The holder is then assigned an account upon which his or her transactions are charged.
The card holder is then allowed to make credit purchases with the card issuer’s guaranty that payment will be made to the seller. At the end of a specified period, normally a month, the card holder is the supposed to remit to the card issuer the sum amount of purchase equivalence made on the card. Failure to this periodic term results in charges by the issuing institution.
One of the disadvantages of using the credit card is the interest rate charged on the outstanding amount after the end of a specified period. The rate is deemed to be high and many people have been asking the question, “should the government be allowed to regulate the interest rate charged by the credit companies on the defaulters?”
This paper seeks to justify the statement that even though credit cards are a result of voluntary contract between the card holder and the issuing company, the government should limit interest rates that the credit card companies are allowed to charge their customers. The paper will look at the current regulations on the credit card companies including regulations on the interest rates in relation to the government’s capacity to regulate them.
Limiting the Rates
Discriminatory Rates
One of the reasons why the government should limit interest rates on credit card users is the variance in the charged rates. There is at a particular time a wide gap between the lowest rate and the highest rates charged on the credit card customers. The determination of the rate has been left at the discretion of the credit card companies.
Cases are witnessed where a given credit card company will impose a rate on one user and a much lower rate on another user. A case observation was noted by Simon that in a given week, there was a record of 9.99% rate and another record of 18.24 %. The problem is that this freedom to charge any interest rate can be personalized beyond economic and market forces.
Areas with few credit card providers can see the companies colluding to jointly raise the rates in order to increase their incomes. A manager can as well apply the freedom on a discriminatory way based on the customer’s race or any other factor. A strict regulation on the limit of the rates can reduce the variance witnessed some of which are just but because of greed and personal attitude of the company officer (Simon 1).
Avoiding Unnecessary Exploitation
Another reason for call of the government’s ability to regulate the rates is that the freedom gives the companies an exploitative opportunity. Having the power to set the rates can see a company impose an exorbitant rate on a particular consumer merely on the basis that it has the right to do so. An extremely high rate could be imposed on an individual on a revenge basis and no legal contest can be mounted as the company shall have breached no law, may be unless an ill motive can be proved.
A case like a 79.9% charge as reported by Prater is charged on a person and the credit card company had a ground to defend its legality. Ignorance is no legal defense but not all citizens are lawyers. Government’s move to limit this rates will induce measures on the credit card issuers to take fairer steps of controlling defaulters rather than extracting extra money from them (Prater 1).
Protecting Citizens
Rockoff noted that one of the reasons for interest rates regulation by governments is to protect the citizens who are forced by circumstances to borrow. The concept of rates on loans is similarly applicable to rates on credit cards. There are individuals who actually lack basic human needs and do not have the capacity at the moment.
Their income could as well be low leading to their current inability to purchase. Under this condition, a credit company will likely charge a higher rate which the individual might not be able to afford. It should therefore be seen as the government’s effort to help its citizens meet their basic needs.
Controlling the credit card interest rate limit will make more affordable to the considered poor who can the use it to meet their needs on a credit basis (Rockoff 1). In addition, Smith attributes the high interest rate to the issuing company’s greed for money. The companies in their quest to make more profit induce selfish regulation that will favor their profit objectivity at the expense of the credit card users. The users remain voiceless victims on the ground that the contract is voluntary (Smith 1).
Opposing Views
The main opposing view to the government limiting the credit card interest rate is that it will interfere with the free market system. Those with the view claim that a low limit interest rate will see many people living beyond their means and in the long run failing to pay the credit card companies the dues.
The argument may be true that at low interest rates, many people will be enticed into the credit card system and the number of defaulters will be higher. This view that at a lower cost (the interest rates), consumers are attracted to to the product which in this case is the credit card. Morton on her explanation on price regulations explains that when prices are taken down, below the optimum, consumers will go for more of the product. Their argument is valid but with a reservation (Morton 1).
Conclusion
In view of the above discussion, it is evident that the government’s move to control the credit card interest rates is more a benefit to the consumer than the current situation where by it is at the discretion of the companies to dictate the rates. In controlling the rates, the government will be moving to protect its citizens from exploitation by the credit card companies as well as reducing discrimination due to people’s financial levels.
The move will also help the less fortunate citizens in terms of financial status to acquire goods and services and make payments at a later time when they get money. Of course this time refers to a period agreeable to the credit companies. It is therefore more beneficial for the government to obtain the powers to limit the interest rates charged by credit card companies.
References
Morton, Fiona. The problem of price controls. Cato Institute, 2001. Web.
Prater, Connie. Issuer of 79.9% interest rate credit card defends its product. Credit Cards, 2011. Web.
Countries faced a major stumbling block occasioned by conflict of different laws due to the intensive growth of international trade in the early 20th century. It was at this period that letters of credit were adopted as a main mode of steering a uniform way of carrying out international trade in different countries. The 1933 International Chamber of Commerce conference was held to give the letter a valid legal position.
The member state meeting had various objectives (Hinkelman and Karla 26). The main aim of their meeting was to come up with a ‘Uniform Customs and Practice for Documentary Credits’ (Dabydeen 41). These rules were later narrowed down to rules that are used to govern letters of credit. The rules have been revised to capture the new developments due to growth in international trade and the banking sector.
Letters of credit have had effective application due to the existence of uniform regulations among major countries. The set framework has made international trade easy. Banks and traders have conducted business without fear of being defrauded. Assurance of security has been the main impetus towards a better playing ground for all concerned parties. The popularity of credit letters has been growing throughout the years and more people are picking consistent interest in their use.
The operation of letters of credit is not basically based on one type of a document. The letters are in numerous occasions in two types (Dabydeen 41). This paper will critically analyze the effectiveness of letters of credit in facilitating international trade.
A letter of credit is a document that shows an importer’s commitment to make payment to an exporter once goods are received. The precondition of payment is that the exporter must present all the necessary documents and conditions set out in the letter of credit. The conditions of payment stipulated in the document must be strictly followed.
It is possible to have a letter of credit that can be repealed and one that cannot be revoked. The distinction is based on the fact that the revocable letter may be revoked without first seeking the consent of the exporter (Bertrams 46). The foregoing literary means that the documents may be cancelled or challenged before the other documents are presented to the exporter.
The letter is rarely used, considering its limited protection to the exporter. On the contrary, an irrevocable letter of credit is not revocable without issuance of consent by all parties in the transaction. The general rule on the letters of credit is to the effect that all letters are irrevocable, unless there is a document stating otherwise within the knowledge of the parties.
The rationale behind making letters of credit to be irrevocable is to guarantee protection to all parties in the transaction. W distinction that is based on the payment terms is made on understanding their operation.
A ‘sight letter of credit’ is evident when the importer is allowed to see the documents before effecting payment. On the hand, if the payment is to be completed at a later fixed date it follows that the document will be known as deferred payment letter of credit (Bertrams 46).
To maintain gradual uniform, the International Chamber of Commerce reviews and subsequently publishes the agreed rules that are geared towards governing letters of credit in several banks in the world. The standardization of letters of credit has played a critical role in ensuring that banks subscribe to uniform standards. The International Chamber of Commerce continuously revises the rules from time to time.
From the making of the letters of credit rules, there are certain steps that are essentially followed by the persons and institutions in transactions involving letters of credit. To start with, the importer and exporter reach an agreement that their purchase and sale respectively will be through a letter of credit.
Secondly, the importer is required to fill in an application form asking his bank to issue a letter of credit in favour of the exporter. At this point, the importer must be in possession of a line of credit with the issuing bank. Thirdly, the issuing bank is duty bound to transmit the letter of credit through the convenient means possible. In many occasions, this is done through telecommunication or registered mail.
Fourthly, the authenticating bank must receive the letter in due time to authenticate it and communicate to both the importer and exporter. Fifth, the exporter goes through the letter diligently upon receipt of the letters of credit. This is done to establish whether there is compliance to the terms as they are stated in the initial contract.
On the same vein, the exporter checks the document to ascertain whether the documents can be produced and whether the terms and conditions in the letter of credit can be fulfilled. Sixth, the exporter is expected to act expeditiously when he notes that some of the conditions or terms may not be fulfilled (Hinkelman and Karla 26).
This affords the exporter an opportunity to request the importer to amend the conditions or terms in the letter of credit. Seven, the new conditions are incorporated in the letter of credit when all parties are in agreement on the amendments. At this point, the exporter is advised against any goods shipment until the amendments are received and accepted.
Eighth, the exporter makes physical arrangements on how the goods will be shipped. At the same time, the exporter prepares letters of credit. Upon completion, the letters are forwarded to the confirming bank. The drawing in the issuing bank is paid or accepted depending on the circumstances (Dabydeen 46).
Ninth, the issuing bank has an obligation of examining the letter of credit before hand. This is mainly done to safeguard the interest of the importer. Finally, the documents are forwarded to the importer for permitting possession of goods. There is a shift of possession of merchandise from the exporter to the logistics company.
The transaction is deemed fit when the importer receives goods and the exporter has received payment. Banks deal with documents and not goods as it has been noted from the afore-discussed steps. The precondition pegged on payment is based on the fact that the documents presented appear to be in compliance with the terms and conditions of the letter of credit.
Possession in these circumstances is the possession of documents (Winston and Winston 47). It is highly impractical to talk about dealing with goods since the seller and the buyer are far from each other. The letter of credit depends on the integrity of the seller and the buyer. Documents related to the transactions must be inspected with due diligence.
There are numerous merits and demerits for the exporter and importer in the use of the letter of credit. First, the importer is guaranteed that the exporter will be paid upon adhering to all terms and conditions in the letter of credit. In addition, this moment presents a viable chance for the importer to review his negotiation for better terms at a stage when the credit has not been offered.
The letter of credit may be to the disadvantage of the importer in that there is no protection against the exporter shipping goods of low quality (Winston and Winston 48).
The letters of credit if not carefully followed with supporting documents seem to be offering more protection to the importer at the expense of the exporter. The importer is required to do a thorough research on the nature and reputation of the exporter. It is imperative to note that some of the details may not be discovered during the research, thus putting the exporter at a greater risk.
Further, it is a requirement that the importer ought to have a line of credit before the issuing bank can commit to issue letters of credit. The final payment is grossly affected by the line of credit a party has applied for. There are several advantages to the exporter. First, the risk payment may be interfered with by the political risk where the issuing bank domiciles. The letter of credit presupposes an agrement.
The exporter may be required to execute his obligation. In addition, the exporter may reduce credit risk at any given time he deems fit. On the disadvantageous side, the exporter has the obligation of preparing all the necessary documents. The documents must be in strict compliance with the letter of credit. Due to lack of credit facilities, some exporters may lack credit facilities, thus preventing export.
There are broad categories of impacts presented by the use of a letter of credit. Substantial discrepancies in the negotiating bank may not be detected. It is recommended that once the discrepancy is detected, there is room for correction before the other documents are returned. It is possible to have the documents sent back to the bank if there are errors.
The only disadvantage is that there could be no time for such documents to be returned, which is disadvantageous to one party in the transaction (Bertrams 61). Waiver in cases of discrepancies in the contract is allowed.
This can be done whereby the parties agree that the payment and transportation of goods to the buyer will take place even after the discrepancies have been discovered. The parties to the agreement or their agents must reach a consensus about the waiver.
There are numerous characteristics that make a letter of credit favourable. Its negotiability makes it convenient and practical to the exporter and the importer. It is mandatory for the issuing bank to pay the beneficiary any arrears. The payment is made through the bank where the beneficiary holds an account. It is the negotiable character that makes the transaction flow in a similar was as if money was used.
The promise to pay in the letter of credit makes the document a negotiable document. This can be on demand or at any other time as stipulated by the agreement. The nominated bank in this case becomes the holder in due course, waiting for the remaining requisites to be fulfilled.
The holder of letters of credit is supposed to take the face value. Any party with a claim on it is defeated. Straight point negotiations may arise bearing in mind that the beneficiary of the credit is covered. Under the foregoing condition, the promise does not pass to the purchaser in due course (Grath and Anders 50).
The instrument is negotiated on the basis that it can be revoked. A revocable letter of credit is not subject to confirmation. The advising bank in such cases engages in correspondence transaction for the parties in the contract. All requirements must be met as demanded by the transacting parties.
Revocability is a salient element of credit letters. However, documents of such a nature are mostly used when providing crucial guidelines as to shipment (Grath and Anders 51). Worth noting is the fact that an irrevocable letter of credit may not be amended without consent from the issuing bank. Equally, the beneficiary and the confirming bank must provide their consent.
It is possible to transfer ‘letters of credit’, just the same way they can be assigned. Upon reaching the negotiations the beneficiaries are free to deal with the property in the desired way, including assigning. There is a limitation imposed under the international control. The transfer is only possible at once.
In instances whereby the instrument is not transferable, parties to the transaction may transfer their rights before the performance of conditions commences. It should be noted that letters of credit are applicable where there is a contract of sale of goods. In addition to the requisite documents, the transaction must be evidenced by a written contract. There are two types of drafts in regard to the letter of credit.
A draft created by the beneficiary may also be termed as a bill of exchange. The drafts are based on time and sight. They are distinguishable depending on the time they are presented for payment. In some instances, the time draft may rely on a condition of payment after the lapse of some time. The credit terms will predict the use of the documents depending on the terms earlier agreed on.
It is clear that the most fundamental steps concerning the transaction between the exporter and the importer are handled by banks (Bertrams 63). This is because the transactions are international in nature and the two parties may meet. The banks in this case act to the best interest of the parties.
The fact that the documents are not a substitute to the goods is worth critical examination. The buyer of the goods in one country is sure that the documents will arrive in the bank before the money is paid. The buyer is, however, not certain on the condition of goods.
Actual possession of the goods comes earlier when the payment has been effected. The issuing bank acting in the best interest of the buyer and the seller should make sure that the documents are examined. The appropriate bank is advised to pay against the documents once they are authenticated and said to be mature. The ‘standby letter of credit’ can be used in places that the ‘commercial letter of credit’ is no applicable.
The ‘standby letter of credit’ is the second preferred payment method. This type of letter has greatly fostered international trade by ensuring that the customer is able to fulfil his or her obligations. This provides security to the beneficiary. When the parties enter into such arrangements, there are no guarantees that drawing of the letter of credit will be done.
The standby letter is the only document that is designed to provide assurance to parties in the agreement of sale. Standby letters, as the name suggests, are used to stand behind monetary obligations by providing assurances to other people. The letter is used as a guarantee since it acts to inform either party in the transaction on the nature of credit they have.
The holder of the letter in this case is the supplier, while the bank is the issuing authority. The seller pursues the seller directly, but if the customer is unable to pay the seller presents copies of the draft to the bank which should be paid immediately (Schaffer et al. 75).
In international trade, the most essential step to follow is assuring security to both the buyer and the seller. The distance between the two makes them unable to carry out the transaction differently. Both the issuing and confirming banks ensure that the buyer and the seller are compliant. The banks steer the contract of sale of goods. There are other obligations that rest on the exporter and the importer.
For instance, there is the risk of damage since the goods are mostly shipped. Any damages occurring in the course of transporting the merchandise are not borne by the exporter. The liability shifts when the exporter prepares all the necessary documents and forwards them to the bank. The exporter’s obligations are extinguished upon payment.
The transport company that is in contract with the importer is expected to safely transport the goods to the importer (Grath and Anders 55). The buyer is encouraged to enter into a contract of insurance to safeguard the safety of the goods in transit.
The contract is at some instances entered into by the importer and the exporter for the benefit of the exporter. The cost of insurance is paid by the exporter. The documents indicating that the goods on transit have been insured should be given to the confirming bank.
The documents in international trade are the crux of the transaction. The transaction cannot be effectively achieved without the document. It would be cumbersome to transport the document from one country to another without consideration. The letter of credit comes in to strengthen the security of the contract.
The payment is only secure in an event that documents are presented to the bank, which has the sole duty of confirming compliance. Handling of the letter of credit backs up the reputation and creditworthiness of the bank. The bank will assume the responsibility of paying the exporter within the prescribed period.
In essence, the contract is between the bank and the importer, but the exporter is paid upon meeting given conditions as per the contract of sale. The documentary collection method lacks the required degree of security to facilitate smooth running of international trade. The letter of credit fills that loophole by detailing the conditions (Grath and Anders 56).
As mentioned before, the banks in such transactions heavily rely on the exporter reputation in issuing the credit. Arguably, this is a major disadvantage to new exporters who have not built any reputation. However, the bank’s preconditions before payment may be used to cure that.
The bank may impose conditions stating the nature of the goods to be received before payment is effected and the time when the documents will be received. The bank is under obligation to pay the exporter, despite the importer’s breach.
The letters of credit have gained their popularity for their ability to offer unique and a universally accepted mode of payment that satisfies the exporter and the importer. They make international trade transactions smooth in that the documents have to be received and not the merchandise. In order to protect the importer, shipment of goods may be postponed up to a time when payment is done.
This means that the importer is protected against being provided with goods of poor quality. The exporter remains with a draft in the bank that has been requested to effect payment. The letter is the most efficient mode of payment today due to its universal acceptance. Banks all over the world find it safe to associate themselves with letters of credit.
The International Chamber of Commerce has strengthened the acceptability of the letters of credit. The industrial utilization and strict conformity with the ‘International Chamber of Commerce Customs and Practice Publication No.
600’ has made letters of credit a preferable mode of payment as opposed to other means. Although there are many safeguards to protect transactions through a letter of credit, it is clear that neither the exporter no the importer is protected from fraud. The risk of fraud still remains unchecked (Grath and Anders 54).
In the transactions that the mode of payment is by letters of credit, banks confine themselves to the face value of the document. The practice in international trade is that documents of international trade are acceptance without actual verification of the merchandise. The duty of safeguarding the transaction from fraud rests on the exporter and the importer to act on the reputation of the each other.
The parties to the transaction take over the responsibility of exercising diligence, a rule that would have been executed by the bank. This is one of the main draw backs of the letters of credit. It should be noted that the security of payment does not depend upon the importers financial status. The exporter is allowed to continue controlling the title until the payment for the goods has been effected or documents are accepted.
On the other hand, the importer gains several advantages. The importer will only be required to pay when the documents providing shipment are presented. The letter of credit being a document of payment should specify the type of payment and the mode. This means the timing of payment as well as the timing of the payment. There should a clear specification on the manner in which the payment is to be made.
The face of the letter specifies the availability of payment. In circumstances whereby the payment is on the tenor, it means that the payment will be effected at the sight of the document. Payment at sight greatly favours the exporter since the payment is received immediately (Schaffer et al. 74).
The importer must evaluate his or her ability to pay for the merchandise. This should be done before remitting the payment. The letter of credit has a time frame in which acceptance is deemed to be effective. It requires the exporter to be paid after a given period of time. The wording of the letter of credit ought to be understood in the context of the contract terms. The word acceptance is very common in the letter.
It means that payment will be effected at a future date. The date in the ordinary contract of sale is specified. If the letter of credit is indicated on its tenure at sight, this means that payment has to be made six months after sight. The letters of credit have made transactions in the international trade become more flexible (Hinkelman and Karla 26).
A basic letter of credit may address special considerations, which create a flexible way of effecting transactions. The bank may settle on a special letter of credit to enhance flexibility. A revolving letter of credit allows reinstatement of credit without amending the letter of credit every time. This is used to maintain constant control on the shipment schedule.
The letters of credit may adopt the cumulative or non cumulative mode. This means that goods that would have been shipped in the previous periods are carried forward to future shipping periods. This also includes carrying forward the value of the delayed goods to be considered for shipment at a future date. On the contrary, a non-cumulative revolving credit prohibits shipment of merchandise to a future date (Winston and Winston 42).
The letter of credit may also take the red clause credit. This allows the exporter to receive the payment in advance. This happens prior to the presentation of the necessary documents. The transferable credit enables the exporter to act as an agent or in some instances as the middle man. The proceeds may subsequently be transferred in another payment option.
The option given by the importer in relation to the goods is optional to the exporter as far as there is prove showing that all other terms have been met. The role of the bank at this point is to engage in a serious undertaking. A letter of credit once issued becomes a pending liability to the bank. The state of the importer or goods is not a factor to consider when there is a clear indication that the documents are in good order.
An advising bank in such a case is not required to effect any payment, but to forward the letter of the credit to the exporter without any responsibility. The overall effectiveness is enhanced when the confirming bank forwards the document to the other bank in a move to accept payment. The letter of credit in simple words is treated by a bank just the same way a loan is treated.
The bank introduces a clause for its protection once the owner of the goods refuses or is unable to pay. This clause expressly stipulates that the documents that are to take part in the negotiations are to be issued under the banks orders. There is a massive evaluation by the bank to ascertain the capacity to pay by the parties in the contract.
The financial stability of the importer and the proof of his capacity to pay are of grave importance to the bank. The issuance of letters of credit should not be understood to mean that the bank is ready to pay.
The financial history of the importer is very essential as a condition before issuing the letter of credit. In addition, the importer is required to accept certain conditions before the bank permits the issuance of letters of credit. The proof agreement is reached by signing the letter of credit agreement (Bertrams 64).
The agreement with the bank by the importer is to the effect that the importer should reimburse the bank all the payments under the letter of credit. This condition is dependent on the fact that the bank will pay the exporter. The bank also acknowledges the fact that it has the sole right to deal with the title of the goods.
The responsibility of the validity of the documents is covered in the agreement between the importer and the bank (Grath and Anders 56). The dealings between the importer and the bank are that the information presented in the credit application acts as the instructions to the bank at a later date. The importer should be having sufficient knowledge of the requirements of the contractual agreement with the bank.
The applications for letters of credit have various conditions to facilitate secure transactions. First, the amount of credit for the importer is a requirement that banks consider before they agree to transact with the exporter. The total amount of credit and the mode of payment should be indicated.
In some instances, the mode of currency is required. It has been observed that trading overseas is based on various factors, the major issue to deal with being that the exporter and the importer should have confidence in the transaction.
Letters of credit are legally binding, thus the importer is assured of payment. Secondly, the importer only pays for the goods agreed; hence the exporter makes sure that the goods conform to the conditions. This reduces the risk of not being paid (Mugasha 34).
Conclusion
International trade has many challenges that emanate from the nature of the transactions that constitute it. There are documents that are used in securing safe transfer of title in goods from the exporter to the importer. The complexity of cross-border trade is compounded by the fact that the importer does not get the chance to check the goods. The transactions rely on documents.
One of the main documents that have gained popularity throughout time is the letter of credit. Its credibility is derived from the fact it has the recognition of the International Chamber of Commerce. The document has gained universal applicability due to its advantages. Letters of credit are reliable since they are issued to a person with the credit line.
It is not possible to get letters of credit void of credit. Letters of credit are issued by the bank upon confirmation of certain conditions. The legal binding of the letters makes them essential when engaging in business. International transactions largely depend on the reputation of the exporter and the importer.
A bank will be very reluctant to issue letters of credit when the importer has a history of defaulting payment. A clause in the contract of sale may be invoked in instances whereby the bank is not sure about the payment by the importer, thus postponing payment. Payment of goods in the international sphere would be very hard without letters of credit.
Works Cited
Bertrams, Roeland I. V. F. Bank Guarantees in International Trade: The Law and Practice of Independent (first Demand) Guarantees and Standby Letters of Credit in Civil Law and Common Law Jurisdictions. Paris: ICC Publ., 2004. Print.
Dabydeen, Sally R. UK Steel Industry & International Trade. New York, NY: iUniverse, Inc, 2004. Print.
Grath, Anders. The Handbook of International Trade and Finance. London: Kogan Page, 2012. Print.
Hinkelman, Edward G, and Karla C. Shippey. Dictionary of International Trade: Handbook of the Global Trade Community Includes 19 Key Appendices. Novato, CA: World Trade Press, 2004. Print.
Schaffer, Richard, Filiberto Agusti, and Beverley Earle. International Business Law and Its Environment. Mason, OH: South-Western Cengage Learning, 2009. Print
Mugasha, Agasha. The Law of Letters of Credit and Bank Guarantees. Sydney: Federation Press, 2003. Print.
Winston, Jay, and Winston, Arthur. Complete Guide to Credit and Collection Law: 2010-2011. Aspen Pub., 2010. Print.
The Secret Agent is one of the most famous novels by Joseph Conrad. It addresses such disputable issues as anarchism and terrorism. Admittedly, these topics have acquired special attention after the tragedy in New York in 2001. It is possible to focus on various aspects of the issues mentioned above. For instance, some may claim that Mr. Verloc is an exemplary anarchist. Others may argue that he is more like a terrorist. So, is Mr. Verloc a terrorist or an anarchist?
In the first place, it is necessary to define the notions. This will help to understand whether the protagonist of the novel is an anarchist or a terrorist. Thus, anarchists ignore rules and conventions. They believe that absence of rules can lead societies to the true development. Of course, capitalistic societies are believed to be weak, unjust and wrongful.
Mr. Verloc is a member of an anarchist group. The members of the group believe that “only preparing, organizing, enriching, making ready the lawful inheritance of the suffering proletariat” people can establish a new and rightful order (Conrad 37).
However, Mr. Verloc is unlikely to be an anarchist. He may articulate some anarchist ideas and he can even seem to be an anarchist. Nonetheless, he is not an anarchist proper. Conrad depicts him as a “thoroughly domesticated” man (4). Mr. Verloc runs a shop which means he is a part of the capitalistic system. He is married and he has quite ordinary social life. He is not an outlaw. He is a part of the system; he is one of those who follow rules and conventions.
As far as terrorists are concerned, these people seek for the opportunity to promote their ideas in a very cruel manner. Terrorists tend to attract people’s attention via such acts as damaging some property (e.g. exploding something) or killing innocent people. The major principle is: the more people are killed or the more damage is caused the better for terrorists.
However, Mr. Verloc can hardly be called a terrorist. He makes the bomb explode, but he wants no victims. In fact, Mr. Verloc can be called a terrorist who never “in his life raised personally as much as hiss little finger against the social edifice” (Conrad 36). Therefore, it is possible to conclude that Mr. Verloc is not much of a terrorist.
Thus, Mr. Verloc is not an anarchist, but he is not a terrorist either. This man simply tries to seem what he is not. In fact, he can be regarded as one of those who find themselves in conditions which force them to act in a specific way. Conrad manages to depict those people who are simply exposed to different dangerous ideas. The talented writer warns that such dangerous ideas can lead to terrible consequences.
Thus, the protagonist of the novel is killed because of his playing dangerous games. The protagonist’s life and especially his death is a great illustration of Conrad’s views on terrorism and anarchism. Mr. Verloc’s dearth can be deciphered in the following way: terroristic methods and anarchist values are doomed to fail as they are wrongful.
Anarchist values are delusive as anarchy can lead to destruction. Terroristic ways are also doomed as they do not draw people’s attention to some agendas, they provoke reactions which also lead to destruction (terrorist are generally found and punished).
Works Cited
Conrad, Joseph. The Secret Agent. New York, NY: Oxford University Press, 2004. Print.
Essence of Decision: Explaining the Cuban Missile Crisis
The major argument of the book created by Graham Allison and his colleague Philip Zelikow is the possibility of several variants, or scenarios, according to which the political events are being developed in the world. The focus of the book is the so called Cuba Missiles Crisis used by Allison and Zelikow (1999) as the case study to test their three fold model of policy analysis. The three aspects that the authors consider are the so called “Rational Actor”, the “Organizational Behavior”, and the “Governmental Politics” models. According to the first model, the governmental decisions made by the USSR and the USA were conditioned by rational thinking and the pursuit of utility. The second model suggests that the imperfection of the state run construction process results in the inability of the government to act freely and makes the government commit political mistakes. The final model, concerned mainly with “court politics”, states that the personal benefit pursued by each of the situation players conditioned their actions during this crisis.
As for the evidence presented in the book, and its credibility, the work considered can be called a well-documented and reliable source of the political, historical, and social information. To support this statement, the history of the publishing of Essence of Decision: Explaining the Cuban Missile Crisis can be considered. The first edition of the book was carried out in 1971, but in 1999 the authors saw the necessity of the revised edition as far as the new information about the governmental negotiations and other proceedings was revealed in the late 1990s. Therefore, the argument of the book and its major ideas are supported by the specific governmental materials, including the tapes of the governmental hearings of the issue, the correspondence of certain politicians including Kennedy, Khrushchev, etc. What also adds credibility to the evidence presented by Allison and Zelikow (1999) is that their own hypotheses about the reasons and the outcomes of the political proceedings are supported by specific research data.
Drawing from these facts, the book under consideration teaches a lot about the general principles according to which the public policy making is carried out. Although these principles are not made public, as a rule, it is evident for a number of scholars including Allison and Zelikow (1999) that intriguing and personal benefit are the driving forces of the political changes in the local and the global scope. Accordingly, the major revelation this book presents is that the political events are not planned and carried out for the sake of nations, whose leaders conduct them. Vice versa, the statesmen are involved in their special game in which the political parties and personalities, usually funded by certain mighty corporations like EXCOMM, pursue the interests of these companies and of their own. Moreover, if the personal interests are under a certain threat, as the Soviet ones in case if the USA undertook the air attack on Cuba, the decisions claimed to be for the universal good are easy to change for the opposite.
Finally, the book under consideration has taught me a lot in respect of policy analysis process. First of all, the ideas presented by Allison and Zelikow (1999) demonstrate that no political event can be analyzed in a single way, mostly because any approach is biased to some extent and to see the objective picture of a situation the comprehensive analysis is needed. For example, the analysis of the Cuba Missiles Crisis would be incomplete if carried out through only one of the models offered by Allison and Zelikow (1999). The “Rational Actor” model would examine all the occurrences from the rational point of view, regardless of any underlying reasons that might condition the launching of the Soviet missile base in Cuba or the US decision to implement a blockade. On the other hand, the “Organizational Behavior” and the “Governmental Politics” models would also provide the reader with an incomplete analysis by applying to hidden messages and leaving the rational thought behind. Thus, the book by Allison and Zelikow (1999) teaches that policy analysis process is multifaceted and applies to a lot of approaches to obtain the objective picture of a political event or a decision.
Policy Design for Democracy
Policy Design for Democracy is a perfect book for those busy with the study of the policy making procedures and the basic political systems that can be implemented in the modern society. The authors of this book, Schneider and Ingram (1997) offer the comprehensive overview of the main principles of democracy as well as the four basic theories of the political study used by scholars nowadays. These theories include pluralism, public choice, critical theory, and the policy sciences. In more detail, pluralism presupposes both the variety of political views and movements and the variety of the opportunities to study and examine them. Although the main democratic values are pluralism and the personal freedom, such an approach leads to anarchy rather than a structured society using its freedom properly. Public choice theory is close to the pluralist one as it states the innate right of any person to choose his or her political preferences, but this theory is undermined by the fact that choice is traditionally presented to those having power while those powerless have to accept decisions of the latter. The other two theories does not allow the comprehensive overview of democracy as such either, and in their book Schneider and Ingram (1997) stress the need of the combined study of politics.
Therefore, the credibility of the evidence presented in the book under consideration cannot be doubted. The ideas expressed by the authors are supported by the complexity of theoretical considerations related to the study of politics and major political systems of the past and present. Moreover, the positions that the authors take in the scholarly world also do not allow us doubt the reliability of the ideas they offer. Thus, Anne Larson Schneider occupies the position of the dean of the College of Public Programs which is the part of the Arizona State University. It is evident that the person holding such a position is a well-educated and proficient specialist in the area of public policy making, and the ideas expressed by such a person can be relied upon. The same can be said about Helen Ingram whose position of the Warmington Endowed Chair taken in the School of Social Ecology and the degree of professor obtained in the University of California, Irvine allow her to currently work for the Department of Society and Politics in the same University. Therefore, the credibility of the source considered is undoubted.
So are the ideas presented in this book by Schneider and Ingram (1997) who manage to teach the readers the basics of the democratic society. In its relation to the political system implemented, democracy can often be misunderstood and misinterpreted by politicians and other statesmen. The result of this misinterpretation is the distorted essence of democracy as applied to a particular society. On one hand, democracy allowing too much freedom can evolve to anarchy on a certain stage of its development, especially in the societies of a transitional period. The examples of such societies include the countries of the former USSR, which could not control their political forces on the initial stages of their formation. On the other hand, democracy can be a mere cover to the totalitarian regime under which the democratic freedoms are enjoyed by a selected group of powerful people, while others are deprived of freedoms.
In accordance with this, the means of the political analysis, as Schneider and Ingram (1997) argue, should also be a combination of different approach allowing the examination of various aspects of democracy. For example, pluralism is the means of studying the variety of public minds as for this or that political phenomenon, while public choice theory provides the opportunity to monitor the social opinions with the highest degree of objectivity. Critical theory strives at finding out the disadvantageous of the political system which is currently in force in a country, while political sciences theory ensures the comprehensive overview of the possible political systems and social structures. Thus, none of the above mentioned theories presents a comprehensive means of the policy studies, and to ensure the latter an analyst of policy process should apply all four approaches.
In Retrospect: The Tragedy and Lessons of Vietnam
The main argument of the book by Brian Van Demark and Robert S. McNamara is the acknowledgement of the mistakes that the American government headed by Presidents Kennedy and Johnson failed to recognize at once when they had been made. Vietnam War is viewed as the major failure of the US Government and Robert S. McNamara as the Secretary of Defense in the years 1961 – 1967. In In Retrospect: The Tragedy and Lessons of Vietnam Robert S. McNamara tries to present his views on the issue driven by the best reasons including the wish to help the American nation with the understanding of the fact that their 1960s leaders committed their mistakes not intentionally but only in trying to benefit the USA. Moreover, the author of the book explains his quite delayed reaction to the Vietnam War events by the reluctance to present his book as trying to publicly apologize. Having published his book over three decades, Robert S. McNamara has managed to make the hindsight to the past events, while Brian Van Demark has served as a critical assessor of the argument from the viewpoint of the younger generation.
Accordingly, the question about the credibility of the facts and evidence presented in the book under analysis comes next. But this question is of little value in relation to this book as the facts presented in it are taken by the very participants of the events depicted from the original sources, from talks with the highest ranking politicians of the time and from the personal judgements of the former Secretary of Defense of the United States. Therefore, the account on the Vietnam War and on the political events that surrounded it is rather full and credible. Moreover, the help of the second author, Brian Van Demark, is hard to underestimate in adding credibility to this book’s evidence. Being a critic of the arguments presented, Brian Van Demark assures the absence of biases or subjectivity in the book, as well as interprets the facts presented in it from the modern point of view, i. e. three decades after the horrors of the war are in the past.
As a result, In Retrospect: The Tragedy and Lessons of Vietnam presents a specific and credible data on the Vietnam War but also provides a huge amount of information about public policy making and its basic principles. Considered as the historical document, the book under analysis displays a wide range of data beginning from the exact timeline of the key events in the 1960s American politics and Vietnam War as one of its major failures. The accounts of the author about his communication with the American presidents and their reaction to his arguments against the War are also presented in the book. But the major value of this source for the public policy study is that it reveals the principles according to which the American policies were developed at that period. The idea of stopping Communism expansion to Asia made all other considerations minor and led to 58, 000 of killed American soldiers in Vietnam, thus demonstrating that the public policy is mainly concerned with the global goals but not with the lives of ordinary people as such.
Therefore, this book has changed considerably my view on the traditional procedure of policy analysis. The facts revealed by the authors, especially by Robert S. McNamara, show that the traditional approaches used by scholars are not always effective or applicable at all. For example, using one of the traditional methods of policy analysis one might consider the decision to start the war in Vietnam as a politically conditioned one, as the US Government wanted to stop the Communist expansion to other countries. However, the person who is well informed about the underlying facts of the policy making in Washington, like Robert S. McNamara, is able to present another view of the problem. This fact shows that apart from using the purely scholarly methods of analysis, to understand politics it is necessary to be ready to assume and try to prove everything, even the most incredible scenario. For example, in Vietnam War such a scenario could be the interest of corporations that funded the Government in the Asian markets and their desire to keep the Soviet interests out of that area. Thus, policy analysis should be a combination of science and creative thought able to predict any possible scenarios.
Bureaucracy: What Government Agencies Do and Why they Do It
The main argument of Bureaucracy: What Government Agencies Do and Why they Do It by James Wilson is that the publicly understood goals of bureaucracies at different levels usually do not match with the actual, legislatively dictated, duties that these agencies are to fulfill. The analysis of the bureaucratic apparatus of every country is started at the lowest level, i. e. private organizations and businesses, and is developed up to the highest levels of the state authority including the Government, the Congress, and the very office of President. This is achieved by dividing the book into six major sections that include Organizations, Operators, Managers, Executives, Context, and Change. The latter are in their turn subdivided further into chapters dealing with such aspects as people, their beliefs, and needs of people in bureaucracies, etc. Finally, the difference between the private, i. e. profit-oriented, and the governmental, i. e. non-profit, bureaucracies is clarified in the fact that the former pursue their goals while the latter act according to the governmental and legislative restrictions.
Accordingly, the evidence presented in Bureaucracy: What Government Agencies Do and Why they Do It is rather credible because the author does both – he manages to provide a substantial body of theoretical information on bureaucracies, their types and development principles; at the same time, this argument is supported by a number of specific examples. For instance, Wilson (2000) considers the institution of the US Army Procurement and the duties of the main official of the latter as an example of the non-correspondence of the officially presented duties with those assumed for this institution by the public. Thus, the US Army Procurement official is supposed to be in charge of purchasing the weapons for the military, but the government imposes other functions on this person, including support to the American business and the native producers of goods and services, providing the employment opportunities for mentally disabled people, monitoring and regulating the wage rates in the countries, and many other minor functions.
As a result, Wilson (2000) presents a lot of information about the public policy making of today. Using bureaucracy as the specific, and at the same time generic, example, the author manages to depict the very structure of the political system of the United States of America. For example, the author refers to the multiple nature of subordination of the local bureaucracies to the central authorities saying that the Congress might decide a matter in one way, the President might keep to another point of view, while the Supreme Court might rule the matter in a third way. This ambiguity of bureaucratic subordination makes its work difficult and, rather often, inefficient. However, positive examples are also present, including the US Army Corps of Engineers, the FBI, etc. The success of this bureaucracies is, according to Wilson (2000), is conditioned by their proper organizational structure and management.
Finally, this book contributes greatly to my understanding of the basics of the policy analysis process. Bureaucracies, as a substantial part of the political system of every country, should be considered for their efficiency and possible improvements, and the book under analysis classifies them for the easier study. Moreover, the specific examples presented for any type of bureaucracy help in understanding the essence of their operation. Thus, the complex of data that Wilson (2000) presents in his book constitutes the valuable tool for any person dealing with the public policy analysis. The ability to distinguish between the types of bureaucracies and see their specific reflections in the real world politics is difficult to overestimate for the purposes of the public policy analysis.
Works Cited
Allison, Graham T. and Philip Zelikow. Essence of Decision: Explaining the Cuban Missile Crisis (2nd Edition). New York: Longman, 1999.
Schneider, Anne L. and Helen M. Ingram. Policy Design for Democracy. Lawrence, KS: University Press of Kansas, 1997.
Van Demark, Brian and Robert S. McNamara. In Retrospect: The Tragedy and Lessons of Vietnam. New York, NY: Vintage Books, 1996.
Wilson, James. Bureaucracy: What Government Agencies Do and Why they Do It (Second edition). New York: Basic Books, 2000.
Credit reports have been applied in many organizations across the US to make hiring decisions. However, it creates a barrier to accessing jobs and limits organizations’ ability to recruit the most talented and experienced employees. This paper discusses the reasons as to why credit reports should be considered irrelevant in making hiring decision.
Introduction
There are various opinions coming from different stakeholders on how to get people back to work given the high levels of unemployment and job cutbacks. There is a general consensus that more jobs should be created and barriers to accessing these jobs need to be done away with. As a result, the selection process applied by the employers and organizations to determine the suitability of potential employees for various positions, have come under scrutiny. Stakeholders are debating on how to provide solutions to restrictions that limit individual’s ability to obtain jobs by defining what should and what should not be considered when it comes to recruiting employees. The use of credit reports is one issue that needs to be reviewed considering the current economic environment. The use of credit reports involves reviewing credit files of potential employees during recruitment; however, there are many issues on compliance, appropriateness and legal perspectives of their use. Consequently, the question that is still debated remains whether having bad credit makes an individual a bad worker or whether having a good credit report guarantees best performance? I would say no. Having more than ten years or over with good credit in any industry does not guarantee an individual’s proficiency or excellent performance of tasks. There are several reasons as to why credit reports should be irrelevant to hiring decisions.
Credit reports cause discrimination
Credit reports are founded on the premise that there are normally bad credits whenever employers or selection panels are evaluating employment credit reports. In reality, employment credit reports unlike other credit reports used for other purposes such as for loans and mortgages have no score associated with them. An employment credit report only provides history of the individual’s payments as well as debt levels plus a list of public records which include bankruptcies, liens as well as judgments. When an employer or selection team reviews an individual’s credit report, the aim should be to conduct a background check of the individual concerning the job and not separate good workers from presumed bad workers in terms of their credit reports. Employers and selection teams normally conduct screening of potential workers to manage risks associated with the organization’s performance so as to make informed decisions during the selection process. However, most of the information contained in credit reports are not related to the applicant’s job or expected performance, meaning that in most cases, credit reports do not help selection panels and employers in making hiring decisions (Rebecca & Smith 30). Instead, when used, they can result to discriminations against individuals with bad credit reports regardless of their abilities and performance credentials even in positions which do not require the person to deal directly or indirectly with finances of the organization.
Credit reports could have errors
Credit reports are also subject to potential errors since they are based on numerous pieces of data which are collected by human beings and computers from various sources across the United States, thus, mistakes can always occur (Rosen 6). Negative information on the credit reports may also result from disputed bills, dissolution of marriage as well as other problems which are out of the individual’s control. These errors can adversely affect an individual’s ability to obtain employment when a credit report is used. Rosen (8) explains that when such errors occur on a credit report and the job applicant is not able to resolve the issue with the creditor, the applicant can write a letter to credit bureaus explaining the case. However, due to the processes involved in investigation of such issues, the applicant has to wait for as long as 30 days to allow the credit bureau to complete their investigation and resolve the dispute. This could cause the job applicant to miss an employment opportunity especially if the vacancy had to be filled urgently or where many of the applicants to the position were qualified and therefore the wrongly reflected credit report is used to eliminate the applicant.
Violation of privacy rights
The use of credit report is in itself an invasion to an individual’s privacy, hence, a violation of job applicant’s civil rights. A credit report is analysed by a whole selection panel and passes through several hands before it finally reaches the selection panel. As a result, many people including those the applicant may not want to share their financial details with get to know the financial details of the person. This could be worse in organizations which have weak security controls for their information systems. Malicious individuals or hackers can use an individual’s private information/financial details to blackmail the person or for their own selfish gains.
Limit organizations effectiveness
Use of credit reports in the recruitment could also affect an organization negatively. Unnecessary credit reports may discourage potential employees from applying for the vacant positions or participating in the recruitment process (Fray 234). In some cases employers use credit reports as tool for evaluating candidates during the hiring process without determining whether there is a sound business need to obtain applicants’ credit reports. Potential employees may consider credit report discriminatory and therefore may fail to apply for the job. This means that organizations which adopt the use credit reports in hiring processes may limit their ability to employ talented and more experienced employees who can help the organizations better achieve their objectives. Thus, such organizations may not have the capacity to improve their competitiveness in the market.
Impact on minorities
Applying mass credit reports on all individuals who apply for any position in the organization regardless of the requirements and responsibilities of the job may discriminate against some protected classes (Steingold 128). The US constitution protects minority groups including those above forty years and minority tribes. In most cases those aged above forty yeas have several years of experience which come with diverse employment history regarding financial details. Some of the negative information contained in their credit report may have occurred in circumstances out of their control. However, these details form part of what the applicant is judged upon, meaning that protected minority groups could be discriminated against unfairly.
Conclusion
Credit reports are often used as tool for evaluating job applicants in most organizations; however, their use should be reviewed as they could discrimination against job applicants. Again, organizations also limit their chances of employing talented and experienced employees who can drive the company to greater heights.
Works Cited
Fray, John. Encyclopedia of security management. New York: John Wiley & Sons, 2009. Print.
Rebecca, Mazin and Shawn, Smith. The Human Resource Book: An indispensible Guide for Managers and Human Resource. New York: AMACOM, 2011. Print.
Rosen, Lester. Credit Reports and Job Hunting. Employers can request credit reports before making a hiring decision, but applicants should be aware of their rights in this regard. Employment Screening Resources, 2011. Web.
Steingold, Fred. The Employer’s Legal Handbook: Manage Your Employees & Workplace Effectively, 10th Ed. Berkeley, California: Nolo Press, 2011.
The three credit agencies constitute TransUnion, Experian, and Equifax, and each has the mandate of gathering information on people and how they use their credit. Further, the agencies are responsible for collecting information on whether any business has turned a person’s debt over to collection agencies or whether an individual filed for bankruptcy. With the involvement in people’s credit activity, it becomes significant that people report instances of identity theft to agencies since identity theft often results in credit abuse (Johansen, 2018). In their mandate, it becomes the responsibility of the credit agencies to prevent identity theft from happening. However, if identity theft occurs, credit agencies have to ensure credit abuse is reduced.
One of the challenges identity theft victims faces in the reporting process is slowing down the credit recovery process once the theft has been reported. Credit reporting bureaus and creditors often decline to consumer efforts resulting in credit disputes. Reporters of identity theft are often victims of unclean credit reports when dealing with credit agencies, making it challenging or time-consuming to recover their credit (Johansen, 2018). The other challenge with the reporting process is that hackers may sell clients’ social security numbers to criminals and use sensitive information once their identity is stolen. With the falsified information on the loop, identity theft victims may be arrested for evading authorities. Another familiar challenge associated with identity theft and the reporting process is that victims are sadly victimized and are forced to face unpaid medical bills in their collection of debts (Johansen, 2018). Last but not least, the challenge with identity theft in the reporting process is that victims are made to encounter damaged credit reports since fraudsters run up charges on their accounts and leave them unpaid.
With a clear analysis of the court system and the civil rights act, it is evident that the Court has left many natives employees with no redress for any case of harassment that occurs in their employments. For instance, there are many prevailing cases of discrimination in the employment sector that the Court has not fully or rightly addressed. However, with the political and public response of the civil rights in 1991, the decision by the Court was reversed, and foreign employees in the United States have something to smile about. After the Civil War, Congress passed many laws that aimed to guarantee the newly-freed slaves the same rights as white Americans (Ressein, 2017). During this period, discrimination by the states was vividly presented by the Thirteenth, Fourteenth and Fifteenth amendments. However, there was still a huge spread of discrimination cases against the African Americans by the White Americans.
Among the key laws that Congress passed was the Civil Rights Act of 1981, which claimed that “provided that all citizens, regardless of race, shall have the same right… to make and enforce contracts… as is enjoyed by white citizens (Refsin, 2019).” Despite Congress passing laws that prohibited all acts of discrimination within the employment sector of the United States, the Supreme Court later in 1981 explicitly held the section that covered discrimination acts by private persons. According to the case filed by Runyon versus McCrary, the Supreme court claimed that section 1981 prohibited pure private discrimination.
Presentation of the Problem
Brenda Peterson case versus McLean Credit Union was spurred up amid a suit for typical fair rights for Peterson. However, the case became one of the critical cases that aimed at rallying for the civil rights of advocates. According to the case, Peterson, who served as an African American bank teller, filed a case to suit the McLean Credit Union for what she termed as discrimination against being promoted in her professional ladder despite the promotion of her white American colleagues. She also claimed that she was subjected to patterns of harassment by her supervisor for ten years that she was working in the bank (Refsin, 2019). However, the trial court ruled in favour of McLean Credit Union, claiming that the job contract did not cater to harassment and could not be enforced in the contract. Despite efforts by Peterson to appeal in the Court of appeals, the decision by the district court was upheld. She then sought to appeal in the Supreme court using a procedure termed a writ of certiorari, a case that saw both parties arguing on 29th February 1988.
The research questions that this case study aims at discussing entail: How do you think this case squares with the Court’s statement “Neither party would be likely to conciliate if there is the possibility of the employee recovering the greater damages permitted by section 1981?” and Why did the Congress want to overrule the Supreme Court’s decision by enacting the 1991 legislation? In this paper, the key emphasis will be on analyzing the section 1981 civil rights act and evaluate the Supreme court decision on Peterson’s case against McLean Credit Union.
Literature Review
According to section 1981, “[a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts… as is enjoyed by white citizens (Refsin, 2019).” However, according to the article that was composed by Fagel (2018), there have been many plaintiffs who have successfully relied on the statute in the suit for racial discrimination in their areas of work, with most of them claiming that they have been facing harassment and racially denied promotion benefits despite having the required merits. Similarly, according to Ressein (2017), the Supreme Court rejected the section 1981 expansive reading by a vote of 5-4 in a poll conducted in 1989. After the Civil War, Congress passed many laws that aimed to guarantee the newly-freed slaves the same rights as white Americans. During this period, discrimination by the states was vividly presented by the Thirteenth, Fourteenth and Fifteenth amendments.
In an article titled Washington and Lee Law Review, the authors present a discourse that the scope of the section 1981 first appeared in the Civil Rights act of 1844 within section one. The authors also claim that Congress believed that the thirteenth amendment had accrued the Congress with powers to pass the act that defines the employees’ civil rights (Refsin, 2019). Plaintiffs, in most cases, take advantage of section 1981 by failing to comply with the administrative requirements of title VII (Fagel, 2018). According to the administrative requirements of Title VII, a plaintiff is required to file a charge with the Equal Employment Opportunity Commission (EEOC) within a period of one hundred and eighty days amid the execution of the discriminatory offence, of which most of the time it does not happen.
Methodology
This case study incorporated various qualitative methodology paradigm that entailed critical concepts to address the Peterson versus McLean case. The study involved collecting various sources of evidence through evident quantitative means such as key research methods; among them were interviews, observations, use of surveys, and analysis of secondary and primary sources such as newspaper articles and journals.
Findings and Discussions
Section 1981 of the US constitution claims that “[a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts… as is enjoyed by white citizens (Ressein, 2017).” However, with a clear analysis of the court system and the civil rights act, it is evident that the Court has left many natives employees with no redress for any case of harassment that occurs in their work environs. Neither the Fourteenth Amendment nor section 1983 may be used for discrimination by private employers (Fagel, 2018). They both redress actions by government personnel. The government may not be sued without its permission because of the Eleventh Amendment to the Constitution, so it is brought against the government official in its individual and official capacity.
Compensatory and Punitive Damages
The Civil Rights Act of 1991 permits recovery of compensatory and punitive damages squares with the Court’s statement on conciliation upon employee recovering of the greater damages permitted by section 1981. The fact is evident as the Civil Rights Act of 1991 provides the jury trial on all claims concerning discrimination that would help eliminate possibilities of limited amount that the jury can award and emotional distress (Refsin, 2019). According to the act, women have been given the right to sue and collect their punitive and compensatory damages in harassment or sexual discrimination in their places of work (Ressein, 2017). These aspects are also following the Supreme Court statement on the fact that “Neither party would be likely to conciliate if there is the possibility of the employee recovering the greater damages permitted by section 1981 (Fagel, 2018).
Congress would want to overrule the Supreme Court’s decision by enacting the 1991 legislation to uphold all the tainted policy considerations. Usually, this arises due to innocent miscommunication or temporal coincidence between the two branches (Refsin, 2019). In addition, with how the 1991 legislation rule was reached, the miscommunication between the two critical branches may have been fuelled by critical philosophical differences on the scope of roles of the federal government on policy matters.
Conclusion
In summary, the paper has demonstrated that section 1991 claims that all people within the jurisdiction of the United States have equal rights against discrimination and harassment. Still, the Court system in the US has not often upheld this. The Court has left many natives employees with no redress for any case of harassment that occurs in their employments. Despite Congress passing laws that prohibited all acts of discrimination within the employment sector of the United States, the Supreme Court later in 1981 explicitly held the section that covered discrimination acts by private persons. There is a need for future research to determine ways that can be used to solve the misunderstanding and miscommunication within Congress and the Supreme Court.
Refsin, B. (2019). The Lost Clauses of Section 1981: A Source of Greater Protection after Patterson v. McLean Credit Union. University of Pennsylvania Law Review, 138(4), 1209-1246. Web.