What’s Legal Isn’t Always Ethical

The fact that something is legal doesn’t make it ethical. You might think it’s obvious, but it’s not, as evidenced by the fact that a former student recently told me that his Finance professor explicitly told him that if something is legal, it’s ethical…full stop. Of course, the student — my student — knew better, and related the story to me while rolling his eyes.

So let’s make the case explicitly, and explain why legality doesn’t determine ethics.

First, we can proceed by enumerating a few counter-examples:

  1. Most kinds of lying are perfectly legal, but lying is generally recognized as being unethical;
  2. Breaking promises is generally legal, but is widely thought of as unethical;
  3. Cheating on your husband or wife or boyfriend or girlfriend is legal, but unethical, though the rule against it is perhaps more honoured in the breach;
  4. …and so on.

So, if you want to hold that what is legal is also ethical, you’ve got to bite an awful lot of bullets, and accept as ethical a lot of behaviours that you very likely don’t want to accept.

Of course, it could be that the aforementioned Finance professor wasn’t making a general claim about the relationship between ethics and law at all, but was instead making a more subtle point about ethical standards in competitive domains. After all, ethical rules are different in adversarial situations, and it might well be argued that in the highly-regulated world of commerce, businesses should feel justified in helping themselves to whatever strategies aren’t specifically outlawed.

But that rationale is, at best, incomplete, and leaves open a different line of argumentation, one that applies even within competitive domains, and one that should truly drive a stake through the heart of the “legal=ethical” nonsense.

The ultimate disproof lies in the hidden circularity of the Finance professor’s argument, which we can illuminate by contemplating the process by which something is made illegal.

Consider: on what general basis is something made illegal? Let’s set aside cases of unscrupulous legislators passing laws simply to benefit themselves or their friends. In all legitimate cases of lawmaking, the law always has a moral purpose — generally, either to make people’s lives better and safer (e.g., seatbelt laws) or to protect some important right (e.g., food-labelling laws).

But if the aforementioned Finance professor were right, there would be no possibility of finding a moral rationale for any new law. After all, according to him, if a behaviour is legal (right now) then it is ethically OK (right now). On what basis could new laws ever be passed? Certainly not on ethical grounds, because per hypothesis if something is currently legal is must be ethically OK. What if some horrible new toxin is discovered, the use of which by industry would pose significant risks to workers or consumers? Should it be banned? According to the Finance professor, it cannot be. After all, using it is legal, so it must be ethical; and if it’s ethical, it cannot be made illegal.

Anyone who tells you, or simply implies, that whatever is legal is also ethical is most likely indulging in self-serving rationalizations. When that idea comes up in the private sector, it’s likely that someone is trying to justify some profitable behaviour that is unethical but not-yet illegal. When that same idea comes up in academic circles, it’s more likely the self-interest they are trying to preserve is their own interest in avoiding the hard work of figuring out which business behaviours are unethical, and why.

10 comments so far

  1. Norman Steinberg on

    Remeber not too long ago the law in the south was that Black people had too sit at the back of the bus.Legal but not ethical!!!

    • Harry Adr on

      Norman, in a way, you are bringing up an argument which is even stronger. If I understood correctly, Chris has made the point that as we learn new things about toxins, medicines, and such we should also apply the new knowledge to legislation. And by being thick headed, and saying that if it’s legal it is ethical then no new information can be considered in legislation. Your point, Norman, seems more in the direction of saying that laws can be downright wrong.
      The difference is that the people who made laws allowing for segregation had made those based on an ethical error, whereas the people making the laws allowing an unknown toxins use simply lacked information at the time. Either way the point is the same, but I think that Normans point really gives the final blow to any argument about legal being automatically ethical.

  2. Urs on

    I rather believe that ethics and law can be pictured as a two-by-two matrix – there is even the interesting are of practices that are ethical but illegal!

    How about the case of Christoph Meili – a security guard ad UBS who discovered (while on duty) that the company was shredding evidence of owning property that was stolen from Jews during the Nazi period? He simply took some of the paper – which could be considered as illegal (theft). How about the guys stealing data from banks located in the tax harbor of Liechtenstein who sold the CDs to tax authorities of multiple European countries to discover tax evasion?

    Or just take an everydas example: When you are transporting a seriously injured person in a car at night and arrive at a red traffic light and there is clearly no traffic: Would you really stop or cross carefully? This would clearly be illegal – would it also be unethical? I guess not.

  3. Peter Jones on

    Great article, it amazes me how some people believe that if it’s legal it means it’s ethical… The cheating on your partner comment put it across perfectly, you wouldn’t be breaking the law if you cheated, but it’s not exactly an ethical action to carry out.

    Peter

  4. Pete Bresnahan on

    It would be interesting to hear Prof. Finance’s opinion of the various issues stemming from the SEC’s dealings with investment banks since the debacle of 2008-2009.
    At this point it seems that the law itself is quite ‘fickle’ in determining when an act is illegal. The Abacus case exemplifies that what is considered legal is ‘transactional’ while at the same time demonstrating that what is ethical is not even worthy of consideration by the perpetrators of the multi-faceted malfeasance.

  5. Yvonne Box on

    What a great article. I’m currently preparing an academic essay about ethical practice in real estate (in New Zealand). In that industry there are a number of issues which are legal but certainly far from ethical. On the contrary, there are sometimes actions that I would consider to be preferable from an ethical sense, but not actually legal.

    For the record, these issues don’t just apply to agents/brokers – buyers and sellers seem to blur the line as well!

    I really enjoy reading your work, Chris, and the insightful comments from other readers. Best wishes for 2012 to all of you.

  6. darrenlobo on

    While bringing up a great point I think the flip side is more important these days, not everything that is illegal is unethical. There are so many laws regulating our behavior that one author states that on average, in the US, we commit 3 felonies a day (http://online.wsj.com/article/SB10001424052748704471504574438900830760842.html). We definitely don’t all commit 3 unethical acts a day that rise to the level of crimes. Something is very wrong here.

    Another point I would bring up is the article’s focus on the citizen’s behavior. At this point I would suggest that it is more important to turn a critical eye on the government’s behavior. Chris, with all due respect, I think you underestimate the cases “…of unscrupulous legislators passing laws simply to benefit themselves or their friends.” This is the norm not the exception. The huge lobbying industry attests to this. Here we are talking about influence peddling which is legal but unethical.

    The next logical step is to question the morality of the laws themselves & the morality of the govt’s actions to enforce them. When a law unjustly deprives a person of property or liberty it is wrong. When the govt enforces these laws it is engaging in unethical aggression against the people.

    Lastly, we should look at the fact that the govt’s enforcers routinely engage in behavior that would land the rest of us in jail. No need for a rehash of stories of police brutality gone unpunished. These are legion. Less discussed are the abuses by tax collectors & regulators. This is another area where govt ethics need to be cleaned up, though given the nature of govt I’m not sure it is possible to do so.

  7. [...] our exploration of the relation between ethics and the law. (Two weeks ago we discussed why what’s legal isn’t always ethical; last week we explored why following the law can be hard and hence breaking the law sometimes [...]

  8. [...] even if the suit against Shoppers fails, it’s worth remembering that what’s legal isn’t always ethical. It’s wrong to mislead consumers, even where doing so is legal. And the Rexall flyer is [...]

  9. [...] Rexall’s dubious homeopathic offerings. From Canadian Business and MSN. Because legal isn’t necessarily ethical. [...]


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