Last week, the US Supreme Court heard oral arguments in an important pair of cases, namely Sebelius v. Hobby Lobby and Conestoga Wood v. Sebelius. Hobby Lobby and Conestoga are companies that want to be allowed to opt out, on religious grounds, of the U.S. Affordable Care Act’s requirement that employer health plans pay for contraception. The First Amendment to the U.S. Constitution, after all, forbids the government from passing laws that restrict the free exercise of religion, and the practice of some religions includes refusal to engage in (or, apparently, to promote) the use of certain forms of birth control.
(Set aside for now the apparent hypocrisy implied by the fact that Hobby Lobby apparently invests some of its 401(k) employee retirement plan’s money in the pharmaceutical companies that produce the very contraceptives that Hobby Lobby is so hell-bent on avoiding paying for.)
The cases before the Court seem to hinge on the question of whether corporations can have religious beliefs. For some, the answer is obvious. The corporation, they say, is “merely an inanimate vessel,” and as such it cannot have beliefs or exercise a religion. But as Kiel Brennan-Marquez rightly points out, it is of course possible for corporations to be religious, because we have an entire category of religious corporations called churches, whose entire raison d’être is religious and who are given special treatment on that basis. The question, then, is really whether for-profit corporations like Hobby Lobby should enjoy the same protections that non-profit corporations like the Catholic Church enjoy. The key difference, for Brennan-Marquez, is that a church — as a non-profit — cannot be owned. Because a corporation can be owned, and because its assets are therefore transferrable, attributing a religion to a corporation would raise thorny questions in cases of corporate acquisitions, mergers, and so on.
More to the point, perhaps, is the question of instrumentality. As I argue in a forthcoming paper in the Georgetown Law Journal, there are cases in which we should think not in terms of the rights the corporation should enjoy, but in terms of the appropriate limits to be placed on the corporation, understood as a tool for achieving human objectives.
Now, there are cases in which it may be genuinely useful to think in terms of the corporation itself as having rights. The interests of corporations are not always directly reducible to the sum of the interests of its various stakeholders. But in other cases, it is more illuminating to think of which legal protections are necessary to protect the rights of persons who make use of the corporation as a way to carry out their own objectives. In such cases, the legal protections that the corporation should have are just those necessary to protect the human beings involved.
So, consider the difference here between a church and a for-profit corporation. A church just is an instrument for engaging in the exercise of religion. People form churches in order to express their religious beliefs and carry out their religious commitments; failure to allow religious freedom to a church is a failure to allow religious freedom to the people who make it up. A corporation, on the other hand, is many things to many people &mash; an investment, an employer, a supplier, and so on. And it will only be in rare cases that the exercise of a single religion is a fundamental goal of a sufficiently broad range stakeholders to justify attributing freedom of religion to the corporation as a whole.
Thinking of the question this way lets us avoid thorny metaphysical questions about what sorts of things can “have” religion. If we think of the corporation (for-profit or otherwise) as an instrument or technology by means of which people seek to achieve their goals, then it becomes clear that the rights (or “rights”) of different kinds of corporate persons depend not on what kind of entity they are, but on the the demonstrable goals of the human beings involved.
In government, as in business, it’s important to think not just about the direct effects of your actions, but also about the indirect effect your actions have in terms of the example they set for others, and the way your actions shape who you are.
Bearing that in mind: what message do you think the cynical letter-of-the-law approach that the government of Japan has heretofore taken to the question of whaling has on business culture in Japan?
As you may have heard, U.N. Court recently ordered Japan to stop whaling in the southern ocean. And it seems like Japan has decided to honour the order, announcing plans to cancel its whale hunt off Antarctica, at least for this year.
Japan has flouted the 1986 moratorium on whaling, making use of a loophole that allows whaling for scientific purposes. In effect, the country’s fleet kills whales for what it claims are “scientific” purposes, and sells the meat for human consumption. You don’t have to be an ardent defender of the world’s whales to see the problems inherent in an having a key player in the world’s economy flouting an international standard.
And just think for a minute about that approach to compliance. It effectively means adopting the credo, do what you want, spirit of the law be damned, as long as you can find even the narrowest of loopholes. What example does has the country’s leadership been setting for the business community? How can government ministers look business leaders in the eye and encourage them to cleave to the meaning and intent of regulations? How can the government ask business, without risking hypocrisy, not to make cynical, self-serving use of loopholes?
Naturally, the government of Japan is not alone in this dilemma. The demands of political expediency often mean that political leaders get caught in a do-as-I say, not-as-I-do self-contradiction. But Japan’s stance on whaling seems a particularly blatant example. And the future of the issue still remains unclear. Japan has only committed to cancelling its whale hunt for this year. Time will tell whether the Japanese government, on this issue at least, demonstrates character worthy of emulation, or instead goes back to an approach aimed merely at securing short-term gains.
Bribery and other forms of corruption continue to pose a challenge to international business. Bribery is a problem because it distorts markets, saps economies, and hurts local communities. For all these reasons, bribery is illegal just about everywhere that has a functioning legal system. And as reported recently in the Wall Street Journal, many countries are stepping up efforts at enforcing anti-bribery laws. Both because of the possibility of prosecution, and because of the slippery slope between bribery and other forms of criminality, bribery poses significant business risks.
Clearly, improved enforcement is an important part of combatting bribery, and combatting corruption more generally. The temptation to win ‘by any means’ will always be there, and so tough rules need to be in place.
But another element is the promulgation and adoption of good, clear, international business standards. As it happens, I’m currently in Madrid as part of the Canadian delegation to an International Standards Organization working committee that is drafting a new “Anti-Bribery Management Systems” standard (ISO 37001).
Christian Levesque, Chair of the Canadian ‘mirror committee’ and head of the Canadian delegation here in Madrid, had the following to say about the project:
“It is important that we, as Canadians, be part of this discussion and this drafting process. We are pleased to see that the matter of Anti-bribery is seen by ISO, and by many countries, as an important matter that needs to be addressed at an international level. We need to be vigilant about bribery as a global community, and ISO is the international platform to offer solutions to deal with that challenge.”
The ISO’s working committee is still in early days of its 3-year process. When completed, the standard will describe a set of best practices for companies that want or need to establish management systems that will help them avoid, detect, and deal appropriately with bribery wherever it is encountered — either in their own operations or potentially in the operations of business partners. And, to the extent that their business partners are compliant with the standard, businesses will have some assurance that those partners have processes in place to ensure the integrity of their own operations, thereby reducing risk. The standard will constitute the core of an eventual ISO certification regime, alongside certification regimes for Quality Management (ISO 9000), Environmental Management (ISO 14000), Social Responsibility (ISO 26000) and many others.
Establishing an ISO standard, of course, doesn’t mean the problem of bribery is going to go away. But it does give global businesses a target to aim at, and it gives companies of all sizes access to a set of best practices, such that if they really want to be diligent about avoiding bribery, they’ve got the tools to put that ambition into practice.
Accusations recently arose that Lady Gaga’s charitable foundation, the Born This Way Foundation (BTWF), was spending its money in what looked like an irresponsible way. For example: according to 2012 tax filings, BTWF spent almost $60,000 on publicity fees, $50,000 on social media, and nearly $80,000 on travel, but spent “only” $5000 in the form of “grants to organizations or individuals.”
BTWF was founded in 2011 to “foster a more accepting society, where differences are embraced and individuality is celebrated.” But how, commenters wondered, could the foundation accomplish that mission when the vast majority of its spending is goes to what many organizations would consider mere overhead?
Gaga’s mom (who is also co-founder and president of BTWF), Cynthia Germanotta, responded recently, saying that the nature of BTWF had been misunderstood:
“First and foremost, we are an organization that conducts our charitable activity directly, and we fund our own work. We are not a grant-maker that funds the work of other charities, and were never intended to be.
Our activity has included The Born Brave Bus Tour, which has travelled to 23 communities, interacting with more than 19,000 young people and raising awareness to the tune of more than 300 million media impressions. The foundation’s messages of kindness and bravery have touched more than half a million online users via our website, which includes the Bravest Map Ever and the Play Brave Game, as well as social media channels such as Twitter and Facebook — which on a peak week can hit 50 million individual users.”
In other words, the ShowBiz411 story betrayed a lack of understanding of what BTWF is for, and what it takes to run a foundation of that kind. It doesn’t make sense to insist that a charity give away more money to charity — when it is itself dedicated to doing what most charities do, namely spending donated money in ways that aim to help people directly.
Of course, the fact that BTWF (or any other foundation) is dedicated to doing good does nothing at all to put them beyond critique. Indeed, a do-good mission is itself a good reason to insist on accountability, since a do-good mission is liable, in at least some cases, to make those who run a foundation feel a sense of entitlement. And the need for accountability is all the more relevant with regard to charities that accept donations from the general public: when people are trusting you with their money and when all they get in return is your promise to use it well, well, you’ve got an obligation to live up to that trust.
So yes, accountability at charitable foundations is an important topic. Too many (that is, more than zero) foundations spend too much on overhead and too little on doing good. Were I a donor to BTWF, I would like to know a little more about just how the foundation spends its money, why it had to spend so much in 2012 on lawyers ($150,000).
The lesson here is one that should be heard not just by charitable foundations, but by organizations of all kinds. It’s not enough to be doing good. You have to communicate that to key stakeholders. And that means telling them not just that you are doing good, but letting them know how you’re doing it.
Manufacturing technology is evolving rapidly. Technologies like 3D printing and production concepts such as mass customization are allowing the kinds of changes in manufacturing not seen since the industrial revolution. And those changes are ethically important. These modern technologies promise significant increases in the speed and efficiency of many kinds of manufacturing, and are already allowing increasingly tailored products to heighten consumer satisfaction. There are of course worries about the uses to which some of these technologies will be put. Much has been made of the possibility of 3D printed guns, for example, and of the fact that many people will soon have the ability to 3D print consumer products at home has intellectual property lawyers watching very carefully.
But there’s another ethically-important aspect of this revolution in manufacturing, and that’s the promise it holds to bring to a broader population the ability to make stuff. The desktop PC and computer-aided design software has for years now put the basic tools of design into the hands of millions. But actually making stuff — creating prototypes, holding your invention in your hand — has until recently been a privilege reserved to relatively few. Today, 3D printing and on-demand computer-guided fabrication mean that just about anyone with a computer and an idea can see their idea take form, quickly cheaply. This is a radical change.
What these technologies promise is nothing less than the diffusion and decentralization of the fundamental tools of design and production. While the 20th century saw massive corporations build vast factories to churn out the products of an elite class of industrial geniuses like Edison and Ford and Jobs, the 21st century is more likely to see what we might loosely call the democratization of design, production, and ultimately innovation, as the means of technologically-sophisticated design and manufacturing become widely available.
This is a point that Chris Anderson emphasizes in his 2012 book, Makers: the New Industrial Revolution. Anderson points to the example of his own grandfather, an inventor who struggled through the long process of tinkering, building a prototype, acquiring a patent, and eventually — necessarily — licensing his idea for a new, smarter lawn sprinkler to a big company with the manufacturing capacity to turn his invention into a consumer product. Those days, Anderson argues, are gone. Today, someone with a good idea can relatively easily acquire the tools for rapid prototyping and, ultimately, for consumer-grade production. No factory is required. The bottleneck is gone. And while Anderson clearly sees this democratization as a good thing, he doesn’t focus explicitly on its ethical significance. That ethical significance is two-fold.
First, the democratization of innovation is good for those who make use of these new technologies. As a matter of economic and creative freedom, it is good to know that large numbers of people are being empowered to create and to build. No longer do creative types need to be beholden to those with the vast quantities of capital required to build factories and to hire armies of workers. The means of production, if you will, can be in the hands of hands of the workers. If you can dream it, you can build it.
Second, the democratization of innovation promises to be good for society as a whole. It promises to unleash the creative power of an an entirely new generation of would-be inventors and entrepreneurs, and eliminate the cost barrier that has heretofore existed between good ideas with production capacity. Society will benefit from seeing the tools that truly enable productive creativity put into the hands of many, many more bright individuals.
So we should continue to watch carefully the increasing quality and diminishing cost of these new manufacturing technologies. There will of course be risks, but there will also be benefits. And enabling a new generation of creative geniuses and would-be entrepreneurs is far from the least important.
Chris MacDonald is Director of the Jim Pattison Ethical Leadership Education & Research Program at the Ted Rogers School of Management.
Sometimes regulations aimed at helping the poor end up hurting them. That doesn’t mean we should eschew regulation, but it does imply reason for caution.
Housing provides one example. The Portland Tribune recently carried an interesting piece on the way that building codes and other regulations keep the price of housing high, and reduce the availability of truly affordable housing for the working poor. Requirements that all bedrooms have a certain number of electrical outlets, for example, or that all bathrooms be disabled-accessible, raise costs not just for builders but for tenants. And in some places, builders who receive public subsidies to build low-cost housing are forced to pay union wages — even when paying slightly lower wages would let them build housing that is more affordable to those in need.
Another long-discussed example is automobile safety. Every advance in automobile safety has reduced fatalities and improved crash survivability, but has also raised the price of automobiles. I’m glad to drive a car that has seatbelts and anti-lock brakes and plenty of airbags. But then, I have a good job and can afford those things. Of course, I can’t afford the level of safety provided by, say, a full-sized Mercedes sedan. But there are plenty of people who can’t even afford a reasonably-safe compact car like mine, and for some of them the difference between affordable and unaffordable lies in a litany of safety features. The problem is even more pronounced in developing countries. A recent story out of India offered speculation that in that country, those who can’t afford cars with government-mandated safety features will have to opt for even less safe, 2-wheeled forms of transportation.
A final example comes from the realm of labour regulations. Here in North America, we have the luxury of a wide range of on-the-job health and safety protections. Other places — including for example Bangladesh — are not so lucky. There, the problem is not that the regulations don’t exist. There are in fact plenty of regulations in Bangladesh. The problem is that Bangladeshis literally cannot afford higher standards. Higher standards would price much of that country out of a job. And so, for that matter, would voluntary efforts by employers to improve safety conditions at their factories.
None of this means that we shouldn’t worry about safety standards when employing or making products for the poor. But every safety feature has a cost, and every cost represents money that could have been spent on something else, some alternative way in which we could have made the world a better place including by making the world’s poor better off.
A colleague of mine, a fellow philosopher from the US, once suggested the following thought experiment: Imagine you owned a garment factory in Bangladesh, a factory that pays 1,000 Bangladeshi women the lowest wage allowable by law to make clothes for Canadians and Americans. Imagine you ended up with a million dollars in profits, and needed to figure out how to spend it. And imagine that you really, really wanted to use the money to do some good for the community in which your factory is located, to make it a better place. What should you do? Spend it on higher wagers? On improving workplace health and safety? “You know what I would do?” asked my colleague. “I would use that million dollars to build another factory, to give another thousand people jobs.”
(Or: “It’s still capitalism, dummy!”)
A fascinating piece appeared recently in the New York Times, about efforts in Greece to (re)vitalize the so-called ‘social’ economy. The main feature of the movement, as described in the Times piece, is an attempt to eliminate or at least minimize the role of middlemen by reconnecting producers and consumers. “The movement seeks to cut out wholesalers, shop managers, state bureaucrats or anyone else between producers and consumers who once took a share of profits and added to the costs of goods.” Oddly, the piece characterizes this movement as an “attack” on “modern profit-driven capitalism.” Odd, because as far as I can tell the Greek movement still involves private ownership of the means of production, freedom of contract, and the determination of economic activity by the forces of supply and demand. It is innovation within a capitalist system, something that strikes me as not just capitalist, but an example of capitalism at its vibrant and innovative best.
The notion of casting this Greek movement as “anti-capitalist” is reminiscent of a big theme in the 2006 documentary, The Take, which was directed by Avi Lewis & written by Naomi Klein. The Take is about a group of workers at an Argentinian auto-parts factory who, rather than accept unemployment when the factory’s owner shuts it down, instead decide to occupy the factory, re-start the machines, and run it themselves. Lewis and Klein — no frends of global capitalism — portray the workers as revolutionaries, sticking it to the man by doing an end-run around the evils of modern business. But of course, when the machines are restarted by the workers’ cooperative, the inputs are still being bought on the open market, and the products that result are still being sold to the highest bidder, and so on. All that’s really different after the workers’ little coup is the management structure. But even that is not all that innovative. Plenty of solid members of the modern business community are already worker cooperatives.
The problem in both cases lies in seeing capitalism as embodied in a particular, narrow set of practices, or in the behaviour of a handful of monolithic multinational corporations. So thinking of a particular shift within the system as “anti-capitalist” makes about as much sense as thinking that the discrediting of a particular scientist or the fall of a particular scientific theory amounts to the downfall of Science, as a whole.
Both the Greek anti-middleman movement and the Argentinian factory workers provide interesting examples of the ingenuity and passion with which people respond to hardship and injustice. But they are are off-target as examples of critiques of capitalism. To think that these are somehow examples of alternatives to capitalism just demonstrates a misunderstanding of what capitalism is. It’s like arguing against ‘corporate personhood’ or claiming that Barack Obama is a ‘socialist:’ all you’re doing is demonstrating to the world that you don’t know what the words you’re using really mean.
Chris MacDonald is Director of the Jim Pattison Ethical Leadership Education & Research Program at the Ted Rogers School of Management.
The business community can, and should, follow AT&T’s lead in speaking out in solidarity with the LGBT community. On February 4th, the company’s Consumer Blog featured an entry entitled, A Time for Pride and Equality. “We support LGBT equality globally and we condemn violence, discrimination and harassment targeted against LGBT individuals everywhere. Russia’s law is harmful to LGBT individuals and families, and it’s harmful to a diverse society.”
Russia’s anti-gay laws and attitudes are repugnant. Russian President Vladimiar Putin clearly wants hosting the Olympics to signal that Russia is a proud and globally-significant nation once again. But what it’s really doing is making the country look like an oversized banana republic, with values that don’t befit a serious world power. Putin is a man of the times alright — as long as the times you’re thinking of are the 19th century.
We’ve long known that discrimination is bad business. Discriminating against talented employees or paying customers just because of their sexual orientation is plain stupidity. And every decent person knows in their heart of hearts that such discrimination is immoral. This is not something where reasonable people can agree to disagree. There simply is no argument in favour of holding someone’s sexual orientation against them, let alone subjecting them to violence.
I wrote previously that I think the International Olympic Committee and corporate sponsors are in a no-win situation. These organizations clearly can’t condone Russia’s brutish stance on homosexuality. But a boycott isn’t necessarily in anyone’s interests either: it is arguably better to allow Russia a moment in the limelight, precisely because some of that light will shine into the dark corner that is Russia’s treatment of its gay citizens.
But every corporation has a voice. Olympic sponsors and non-sponsors alike have enormous capacity to get its message out. Some of them might lose business over taking a stand on what is for some, regrettably, a hot-button issue. But the obligation to pursue profits has limits. And I detect one of them here. Some have speculated that AT&T’s decision to take a stand is, whatever motivated it, a smart marketing. And that may be. If a company happens to benefit from doing the right thing, we should note the benefit, but admire the good deed.
An awful lot is being said these days about the difference between the top 1% and the rest of us. But if we really care about social justice, we should probably focus more of our attention on the difference between those of us fortunate enough to be in the top 99%, and the 1% at the bottom of the socio-economic ladder.
Consider the homeless, a significant group of individuals and families without even the resources to meet what most of us consider the absolute basics of human existence. About 30,000 Canadians are homeless at any given time, and upwards of 600,000 Americans.
In terms of social justice, helping the homeless could pretty easily be thought of as low-hanging fruit. Debates rage over whether (or why, precisely, it should be thought unfair for CEO incomes to keep rising while the middle class stagnates. At least one move in that debate goes like this: capitalism helps everyone (though not equally) and so those who benefit from the system (i.e., just about everyone) have little legitimate grounds for complaint, and certainly little grounds to wish for a different system. To the extent that that point holds, it implies then that we should focus our energies on the needs of the very worst off — those who are truly left behind by the capitalist system. Professors and journalists and unionized blue-collar workers have comparatively little grounds for complaint. So if we want to make the world a fairer place, let’s focus on those who need it most.
And besides, given what economists refer to as the diminishing marginal utility of money, a dollar given to a poor person does a lot more good than a dollar given to a middle-class person.
Assisting the homeless, in other words, is where the ethical action is, whether you are concerned about good outcomes or about the distribution of those outcomes — that is, justice.
In Canada, governments at the provincial and municipal level have taken up the cause, with varying degrees of zeal and varying degrees of success. But business can play a role too, and any company that considers itself ‘socially responsible’ should consider helping the homeless as a key pillar of that stance.
Donating money to charities that help the homeless is one obvious avenue. But there are also businesses — for-profit businesses — that have made helping the homeless part of their business. One company, for example, has devised a backpack that converts into a tent.
Other companies have found ways to make it easier for other people to help the homeless. Handup, for example, is a text-messaging service that makes it easier to donate money to a given homeless person, while at the same time raising the odds that the donation will go to real essentials. Or consider Suspended Coffees, a way for coffee buyers to donate coffee to those who need one: at participating coffee shops, customers can simply order an additional, “suspended,” coffee, which the barista will note and give to the next needy person who comes in to ask for one.
Companies also have an opportunity to help simply by letting the homeless do things like use the bathroom. Or by giving away food that is unsold, at the end of the day. (Got other suggestions? Post them in the Comments section below!)
What counts as justice, and whether capitalism ought to be thought of as fair in the most important senses of that word, are philosophically complex questions. But given how much each of us — and each business — could do for the homeless without even breaking a sweat, it is clear that that’s where some of our clearest obligations lie. That goes for most of us as individuals, just as well as it does for companies that aspire to earn the label, “socially responsible.”
Controversy continues to bubble over the SodaStream countertop carbonator. The popular home gadget — used to turn regular tap water into a variety of fizzy drinks — has generated controversy due to the fact that SodaStream operates a manufacturing plant in the occupied West Bank. For some, raging against the SodaStream is just part of a larger effort to boycott Israeli products, or at least products made in the occupied territories. They point out that Israeli settlement in those territories is illegal under Article 49 of the Fourth Geneva Convention, and has been declared illegal by the International Court of Justice.
None the less, it is probably tempting for many to shrug their shoulders at the whole thing. Many North Americans without a partisan tie to the issue may just think of the conflict between Israel and Palestine as one of “those” conflicts, “over there.” Consider: for the average middle-aged North American, it’s a conflict that has been making headlines for literally our entire lives, with both sides apparently taking turns at acting badly and no end in sight. It’s understandable if a few of us consider it a wash, declining to take sides and staring blankly when the topic comes up.
SodaStream’s spokesperson, incidentally, is none other than Scarlett Johansson. The Jewish Daily Forward referred to Johansson’s affiliation with the company as an unhelpful ‘normalizing’ of the Israeli occupation. After all, what could be more normal and peaceful than opening up a factory and offering people employment? There’s a sense in which that might be an understatement: building factories on occupied land — any occupied land — could easily be thought of as an act of war.
On the other hand, as defenders of the company point out, the factory is giving jobs to a few hundred Palestinians, and giving someone a job is hardly an act of aggression. For that matter, in most parts of the world it is acknowledged that commerce is generally conducive to peace. The more prosperous people are — roughly, the more they have to lose — the less likely they are to engage in warfare.
Does it matter, either way? From the point of view of outcomes, it’s hard to see much value in avoiding buying a SodaStream, even given a principled objection to operating factories in occupied territory. Your purchase (roughly $80 – $120) isn’t buying guns, or barbed wire. And the fraction-of-a-fraction of the purchase price that ends up contributing to the company’s bottom line isn’t going to either keep SodaStream in business or put them out of it. Your purchase, in other words, is trivial.
But isn’t refusal to buy a SodaStream another example of the growing, and generally positive, trend toward conscious consumerism? It arguably is, but in fact the benefits of conscious consumerism are not as obvious as many would have you think. As my friend, Professor Alexei Marcoux, argues, refusing to do business with someone because you disagree with their values is a dangerous road to go down. Given the huge number of moral disagreements in the world, we should think twice about becoming the sort of people who let such disagreements get in the way of engaging in mutually beneficial trade. That’s not a knock-down argument against any and all principled refusals to do business, but it’s a point worth making.
Now, the conflict between Israel and Palestine is no garden-variety disagreement. But that might just be the point. It’s not at all clear that we should want a controversy so bitter, and so protracted, to occupy our purchasing decisions.