Archive for the ‘ethics’ Category
The Social Responsibilities of Truckers
If you want to learn about the social responsibilities of business, don’t start by looking at Walmart and Apple and GM. Companies with hundreds of thousands of employees and millions of customers make an enormous number of decisions every day. Their impacts are many and varied. Their relationships are complex. They’re worth considering, but they are a lousy place to start.
Much better to start small, with a more tractable set of problems. We should look, for example, at the world of small, independent businesses. For example, a recent story from the Detroit Free Press raises interesting questions about safety and ethics in trucking. But the fundamental questions of social responsibility that story raised go far beyond the trucking industry itself.
Last week I wrote about the social responsibilities of lawyers. Today I’ll move the discussion of social responsibility in a decidedly blue-collar direction. Let’s look at the social responsibilities of truckers, the men and women who drive the Big Rigs on which a majority of North American goods get transported.
Like lawyers, truckers, too, are all either independent business-people or employed by businesses. So the relevance of trucker ethics to business ethics is clear. But unlike lawyers, truckers are not commonly spoken of as having specifically social obligations. But of course, that doesn’t mean they don’t have any.
Before asking about specifically social obligations, let’s look at a trucker’s obligations more generally.
A trucker’s most obvious obligations as a trucker are to her employer (if she has one) or to her customers. She’s got a job to do, and she ought to do it diligently, doing her best to deliver the shipment on time and in intact. She also has obligations to suppliers, including an obligation to pay invoices on time, and so on. If she happens to have employees (e.g., an assistant who helps load & unload) then there are clear obligations there, too.
The other obvious obligation is to drive carefully — an obligation owed to others with whom the trucker shares the road. 18-wheelers are pretty much the biggest thing on the road. That implies a significant responsibility not to drive recklessly and impose risks on others, including an obligation to be sober and alert while at the wheel. Are those social obligations? I don’t know. I tend to take words seriously. “Social,” to me, implies an obligation to society as a whole, to society at large, rather than just to people who happen to be directly in harm’s way.
So let’s put it this way: does a trucker — by dint of being a trucker — have obligations to make society, as a whole, better-off? But wait, we can’t really mean society “as a whole.” No one can do that. It’s too big a project. Social responsibilities must be responsibilities to do what one can to help some relevant bit of society, to contribute in some meaningful way to the overall project of making society better-off.
But if we’re thinking specifically about truckers, we should of course also exclude obligations that you might think all of us have: obligations to donate to good causes if we are financially able, and to help lost children find their way home. And so on.
So, then: does the trucker have trucker-specific social obligations, obligations that she should carry out in the course of driving her truck?
I have to admit, I’m having trouble thinking of very many. But the story cited above suggests one good example, since it is in part about efforts by the trucking industry to lobby government regarding the legal weight limits imposed on trucks. So one key social responsibility of truckers, we might say, is to lobby government in ways that is in the public interest, rather than just in their own interest. Of course, just what is in the public interest, here, is open to debate. But the notion of social responsibility at least sets the terms for that debate. So there’s one clearly social responsibility.
Now, with regard to lawyers, I argued that social responsibility has to do with the force of, and limits on, the individual’s role in a larger, socially-important system. If that is true beyond the special case of the legal profession, then role-related social obligations have something to do with the obligations involved in being part of a team effort. All that remains, then, is to figure out what socially-valuable team effort the trucker is part of, and what obligations are necessary to the achievement of that team’s goals.
At this point, I’ll open up for discussion.
Did GE Really Pay No Taxes in 2010?
A few months back, the NY Times shocked a lot of people by reporting that General Electric — an enormous, multi-billion-dollar company — had paid zero taxes to the US government in 2010, despite the fact that more than a third of the $14.1 billion that company earned that year had come from its US operations. The reason? GE has a truly enormous tax department that works non-stop to look for deductions and loopholes.
Scandalous, right?
Not so quick. As I’ve argued before, what we commonly call “loopholes” are in most cases the result of some decision by government to encourage or discourage a particular behaviour. That is, most of the things GE (or any other company) does in order to avoid taxes are thing the government is trying, however ham-fistedly, to encourage companies to do. Still, we might reasonably look askance at a company that works so assiduously to squeeze every last dollar out of the tax system. The millions spent to save millions in taxes could in principle be spent to develop products that would boost the overal value proposition of the company.
But the situation with regard to GE is even more complex than that. To get a taste, check out the comments section under the discussion of this story on the always-useful economics blog, Marginal Revolution. There, it is pointed out that the $14.1 billion in profits attributed to GE by the NYT was calculated according to GAAP, which is entirely different from how the IRS calculates taxable income. In other words, we’re looking at apples and oranges here. The entire discussion thread at MR is worth reading. But if you’re not well-versed in the niceties of tax rules, or corporate finance more generally, you’ll quickly find yourself in over your head.
But that in itself raises an important issue. As the sophistication of the debate in the MR comments section demonstrates, the fairness of GE’s tax burden (or lack thereof!) is something that most of us simply are not qualified to comment upon. And that’s a worry. It’s hard for companies to be held accountable if the general public doesn’t understand the factual basis for evaluating them. It seems to me that this is an additional reason for tax reform: the subtlety of the various policy objectives being sought through taxation of corporations needs to be balanced against the need for the concerned public to be able understand it.
Eggs, Ethics, and Supply-Chain Accountability
Filed under: accountability, corporations, ethics, food, supply chain |
Comments (2) Canadian Business recently reported that two major companies — McDonald’s and Target — have dropped egg supplier, Sparboe Farms, after concerns arose regarding animal welfare at the company’s egg-production facilities. It’s a small PR hassle for titans like McDonald’s and Target. But it’s clearly a huge hit for a company like Sparboe.
This case raises two important points, ones that go far beyond the relationships between mega-chains and their suppliers:
The first has to do with supply-chain responsibility. Notice that McDonald’s, for its part, doesn’t deal directly with Sparboe: it gets Sparboe eggs via Cargill Inc., the agricultural giant that supplies all of McDonalds’ eggs. This raises an interesting question about supply-chain ethics. Any company is clearly responsible for, and should be accountable for, its own behaviour. And a company is pretty clearly also partly responsible for, and should be accountable for, the behaviour of its suppliers, at least to the extent that it knows, or should have known, about those suppliers’ behaviour. But what about the behaviour of their suppliers’ suppliers? The modern trend is toward nearly infinite responsibility, up and down the supply chain. That much is clear. But the moral principle behind such responsibility is less clear.
Sensible thinking about supply-chain accountability has to differentiate, I think, between retrospective culpability, on one hand, and responsibility to make changes going forward, on the other. Is McDonald’s responsible for brutal behaviour by employees of a supplier’s supplier? No. But do they have a responsibility to take action, now that they know about it? Yes.
The other point has to do with the blurry boundary between practices that are unethical, on one hand, and practices that are in some more vague way unacceptable to the public, on the other. Animal welfare issues are a great example of this. Philosophers continue to debate the moral significance of animals and their suffering. Some will tell you that all suffering, human or not, is of moral significance. Others will tell you that ethics is a human device for making social living more congenial and sustainable. On the latter point of view, animal suffering might be ugly, but it’s not unethical, except to the extent that we have an obligation not to tread upon other people’s sensibilities. But this distinction matters little, in many cases: a company’s suffering can result from either — either from behaviour that is actually unethical, or from behaviour that is simply seen as being so.
Business Ethics Blog’s 6th Blogaversary
Today is the 6-year anniversary of the day back in 2005 when I posted my first entry on the Business Ethics Blog. This is my 885th posting since then.
A lot has changed since 2005. For one, the ethics blogosphere is more crowded — or should I say, more fruitful — than it was 6 years ago. The business-ethics blogosphere now includes blogs by ethics/CSR professors like my pals Dirk Matten and Andy Crane, as well as blogs by profs from neighbouring fields, like the corporate governance blog written by my friend Richard Leblanc. It also includes journalists like Marc Gunther as well as consultants like David Connor and Elaine Cohen. And, significantly, the ethics/CSR blogosphere is now knitted together, you might say, by a vigorous multidimensional Twitter conversation.
It’s also worth noting that a number of major business publications have also joined the fray, including Forbes and Fast Company.
The other big change is that my blog is now syndicated exclusively on Canadian Business magazine (most of my blog entries can be read both here and there). Besides inspiring me to blog more consistently, being featured on CB has enlarged my audience. That’s a very good thing, I think — not just for my own sake, but for the sake of having the broadest, most inclusive conversation possible.
So, dear readers, thanks for your support over the last 6 years, and here’s to continuing the conversation for another 6!
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Moneyball and Business Ethics
Filed under: books, complexity, critical thinking, decision-making, ethics, management, reporting, strategy |
Comments (1) 
I’m finally getting around to reading Moneyball, Michael Lewis’s best-selling ode to the study of baseball statistics (and the source material for the new Brad Pitt movie of the same name). It’s one of the most engaging books I’ve read in a long time — something that won’t surprise those of you who happen to have read The Big Short, Lewis’s lively account of the 2008-2009 financial collapse.
What did surprise me as that Moneyball isn’t really a book about baseball. It’s fundamentally about epistemology. Epistemology is the critical study of knowledge itself — how we get it and how we use it. And though Lewis doesn’t (as far as I can recall) use that word, Moneyball is all about epistemology: the epistemology of baseball, yes, but much more than that. It’s fundamentally about how managers should use information to achieve better outcomes.
Moneyball holds important lessons for business managers generally, but in particular it holds lessons about business ethics. But the messages aren’t the obvious ones you’d expect from a book on baseball — they aren’t about the ethics of labour negotiations, for example, or the incomplete alignment of the twin goals of satisfying your fans and making money.
Three key lessons of the book, as far as I can see, are as follows:
1) The numbers matter. So, don’t guess — measure. In baseball, this means scouts need to look closely at a player’s stats, rather than relying on the fact that he’s got a “nice swing” or a “body made for baseball.” In business, it means measuring actual performance — not just bottom-line financial performance, but social and environmental performance, too, rather than just relying on the vague feeling that your company is “doing OK.”
2) The numbers don’t come out of thin air. The numbers you have available to you aren’t just a feature of the universe around you. The numbers represent what happens to have been measured. The “bottom line” (net income) is no more a natural feature of business than “Earned Run Average” is a natural feature of baseball. Both are artefacts of a particular system, one with a particular history and its own set of biases.
3) Numbers can lead you astray. Managing based on the numbers someone else more-or-less arbitrarily decided to keep track of can result in disaster. This is especially the case when those decisions are rooted in idiosyncratic interests or biases. Lewis points out, for instance, that early baseball stats didn’t bother to record the number of walks a batter earned — mostly because one of the early promoters of baseball stats, a journalist named Henry Chadwick, happened to be a fan of cricket, a sport where there’s just no such thing as a ‘walk.’ Chadwick decided not to keep track of how many walks a batter achieved. The result was that there was no way to track which batters had the good judgment to watch a high-and-inside fastball sail past instead of swinging at it. It matters to their performance, but for a time there was no way for coaches to include it in their management strategies. The exact same point can be made about various elements of social and environmental reporting.
The overarching lesson, here, is about the need for (pardon the pun) a measured approach to the use of numbers in business. Numbers matter, and they matter a lot. The old saw that “you can’t manage what you can’t measure” is surely a vast overgeneralization, but one that contains a kernel of truth. But what matters even more than the numbers is knowing what the numbers mean, and what they can and cannot tell you.
Greed, Capitalism, and the Occupy Movement
What’s wrong with greed, anyway? No, don’t worry, this isn’t going to be one of those ill-conceived “greed is what makes capitalism work” diatribes. After all — with apologies to Gordon Gekko — that’s nonsense. Greed isn’t what makes capitalism work. Self-interest and ambition, maybe. But not greed.
Greed, after all, is the unseemly and excessive love of money, a desire for more than your share. And that is neither necessary nor sufficient for the operation of our economic system. None the less, there are many who believe that greed is not just an enemy, but the enemy.
Canadian pundit Rex Murphy recently argued that if greed is the enemy, then the Occupy movement should forget Wall Street, and instead Occupy Hollywood. After all, he argued, if you’re looking for greed, the best examples aren’t bankers, but rather the actors and producers and miscellaneous talentless celebrities who gleefully rake in millions in La La Land for doing next to nothing.
It’s hard to know what to make of Murphy’s argument. The simplest interpretation is that it’s a grenade lobbed over the wall of the culture war. Stop bothering the hard-working bankers, you Occupiers! Go pester the makers of low-brow entertainment.
More likely is that Murphy is doing something one step cleverer than that. By taking aim at celebrities, he’s telling “the 99%” to rue the wealth of the monsters they themselves have created. Kim Kardashian, after all, is astonishingly wealthy only because an astonishing number of people have paid to see her hijinks. But — and this, I think, must be Murphy’s unstated punchline — the same generally goes for the wealthy on Wall Street. They got wealthy because a whole lot of people each found a little bit of use for their services. And a whole lot, multiplied by a little bit, can be billions of dollars. True, some on Wall Street have multiplied their earnings through corrupt means. But the basic mechanism of wealth aggregation is the same, whether on Wall Street or in the Hollywood Hills.
OK, back to greed. Where Murphy goes astray is in his focus on that particular vice. Vast wealth is a feature of the stories of both Hollywood and Wall Street, but the role of greed in generating such wealth is very much in question. After all, being handed a million dollars doesn’t make you greedy. Even asking for a million dollars doesn’t make you greedy, when the pile on the table is much larger than that and when everyone in a similar situation is asking for a similar amount.
No, greed isn’t the problem. Greed isn’t what makes capitalism work, but nor is it typically the culprit when capitalism goes astray. The real problem isn’t greed, but rather institutional structures that reward antisocial behaviour. Which structures? Well, that depends on which particular antisocial behaviour you’re talking about. And that’s precisely where the Occupy movement faces its greatest challenge. You can’t plausibly take aim at a hundred different social ills and presume to find the cause of them all in the single word “greed.”
Ice Cream, OxyContin, and the 3 Big Questions of Business Ethics
Filed under: crime, ethics, markets, philanthropy, pricing, regulations, values |
Comments (1) 
Sometimes it takes a really minor story to illuminate the basic issues at stake in business ethics. Like, for instance, a recent story about a guy selling both ice cream and serious street drugs out of his New York city ice cream truck. Here’s the story, by Jonathan Allen for Reuters: Ice cream vendor gets prison for selling drugs with treats.
That story highlights nicely one of three really fundamental questions that must be asked by anyone seriously interested in business ethics.
The three big questions of business ethics are as follows:
- 1) What may I do, and what may I not do, in attempting to make a living?
- 2) In what ways do my obligations change when I act on behalf of others, including employers, shareholders, etc.?
- 3) What should I do when I see inappropriate business practices that don’t directly affect me?
Each of these “big” questions can of course be subdivided into an entire category of questions. Question 1, for instance, implies a whole range of more specific questions — not just questions about the basic ethics of commerce (Can I lie, cheat or steal? No. Can I exaggerate, or put important details in fine print? Not so clear!) but also questions about Corporate Social Responsibility and corporate philanthropy. The second question covers all the issues that crop up once businesses are staffed by more than a single individual. And the third concerns third-party critique, the work of consumer advocates, and government regulation.
The news story cited above illustrates beautifully Question 1, the question of what you can and cannot do to make a dollar. Louis Scala was, after all, just trying to make a living. There’s nothing wrong with that, of course. The catch was the method he chose.
Scala chose to sell two products. One was soft-serve ice cream, a dessert treat sold primarily to kids, who just can’t get enough of the stuff. The other was OxyContin, a highly-addictive narcotic, sold primarily to adults who just can’t get enough of the stuff. Selling the former is considered a reputable way to make a living. Selling the latter (out of the back of a truck!) is what earned Mr. Scala three and a half years in jail. But then, neither of those products is uncontroversial. Ice cream isn’t exactly healthfood, and child obesity rates are on the rise. But on the other hand, it’s a harmless treat, when consumed in moderation. But on the other hand, it’s not always consumed in moderation. But on the other hand…you get the point.
Figuring out what constitutes a legitimate way to make a living — taking into consideration all reasonable details — is far from straightforward. But realizing that the questions we want to ask about business ethics all fall under one or another of the fundamental headings listed above is, I think, a useful bit of mental bookkeeping, which is increasingly important in a world where criticisms, and defences, of business practices are becoming more and more diverse.
Which Oil is the More Ethical Oil?
Filed under: boycott, energy, environment, ethics, greenwashing, human rights, marketing, values |
Comments (13) It’s a clever marketing strategy. But is there really such a thing as ethical oil?
In today’s National Post, the Fraser Institute‘s Mark Milke argues that there is, and that “the ethical oil tag is useful shorthand for why Canada’s oil is preferable to that extracted elsewhere.” But “preferable” is a pretty grand, global conclusion. It implies that, all told, Canada’s oil is better, ethically. And that may well be, but it’s certainly not obvious. Don’t get me wrong — I’m a patriotic Canadian, proud of my country and its accomplishments. But I’m also a critical thinker, and a critical thinker can’t accept unreflectively a conclusion that happens to coincide with his own biases. Indeed, the fact that Milke’s conclusion conforms so neatly to my own biases is a strong reason for me to look at his argument more closely.
His argument is basically that Canada’s oil is ethically preferable to the oil produced in other places, considering especially places with serious histories of violating human rights.
OK, so let’s try it out. Let’s look at a rough sketch of the perceived negative ethical implications of oil from the top 10 countries listed by oil production….
Russia — widespread political & economic corruption;
Saudi Arabia — oppressive regime; human rights abuses;
United States — capital punishment; crazy war on drugs; irresponsible financial institutions;
Iran — human rights violations; insane political leaders;
China — human rights violations;
Canada — environmental degradation; poor treatment of indigenous peoples;
Mexico — widespread corruption; ongoing drug war;
United Arab Emirates — undemocratic;
Brazil — crushing poverty; immense social inequality;
Kuwait — undemocratic; human trafficking and abuse of migrant workers.
Feel free to add your own potential points of criticism to the list. And, of course, you can add significant environmental concerns to the worries for all oil-producing nations. That goes with the turf.
Now we absolutely must not make the mistake of treating this like a checklist, or treating all of the ethical “bads” listed above as equally bad. They’re not. And the other problem with this list is that it presumes that the only alternatives are various countries’ oil. Presumably much of the criticism of tar-sand oil isn’t that it’s so environmentally-evil that it’s ethically worse than, say, Saudi oil. Rather, the criticism has to be that tar-sand oil is worse than renewable energy sources that we ought to be developing, like solar and wind and geothermal.
So while I think the “ethical oil” label is rather, well, crude, I think the people promoting that label are at least doing us the unintentional service of reminding us that it’s far from clear what counts as an ethical source of energy. (If you use slave labour to build a wind turbine, is that an ethical source of energy?) As my friend Andrew Crane points out there are many dimensions along which to evaluate the ethics of any product — including not just the intrinsic properties of the product but also things like the process of production and nation of origin. That certainly applies to oil. I just wish I could believe that the people pushing the “ethical oil” label for my country’s oil were doing it to advance the debate, rather than to score points in it.
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Update: Take a hew poll on this topic, here: Oil Poll: Human Rights or Environment?
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Ethics, Ethics Everywhere: A Day in the Life of a Business Magazine
As a professor, I always make a point of emphasizing to my students that ethics, far from being a niche topic, is actually pervasive in business. Ethics is what differentiates commerce from crime, but commerce also raises lots of interesting and complex ethical controversies. Really, most of the interesting stuff about business has an ethical element.
One way to illustrate that point is to look at the contents of business magazines. More specifically, let’s look at a recent issue of Canadian Business. As I’ve noted before, Canadian Business does more than most biz magazines to feature ethical issues on its website. But what I’m interested in today is the stories covered in the print version of the magazine. So here’s a quick look at the ethical issues — not necessarily labelled as such — in a single issue (the September 26, 2011 issue) of Canadian Business.
In the magazine’s 78 pages, you’ll find the following ethics-related stories:
On p.4, interim Editor-in-Chief, James Cowan, has an editorial responding to criticism of the cover of the magazine’s Sept. 12 issue, which featured an attractive woman in a tight red dress. Was this particular way of portraying a successful business woman exploitative, as one letter-writer suggested?
On pp. 12-13, there’s a piece by my colleague Richard Leblanc on governance standards and the recent scandal at Canadian company Sino-Forest. (And as I’ve argued before, corporate governance just is about ethics.)
On p. 14, there’s a short piece by Marina Adshade on adultery among executives. (For why that’s a business-ethics issue, see what I wrote about Eliot Spitzer three years ago.)
Then on pp. 14-15, there’s a piece by yours truly on a South African winery’s attempt to come to grips with its slave-holding past. The key question I contemplate is whether owning up to that past is a matter of basic ethics, or a more complex issue of social responsibility.
On pp. 19-21, Michael McCullough has an article on Warren Buffett’s argument for why wealthy Americans like him should pay more taxes — which raises fundamental questions about not distributive justice, freedom, and property rights.
On pp. 22-26, there’s a lengthy article by Robert Thompson on a Canadian drug company’s attempt to develop a sexual-dysfunction drug for women. The obvious comparison is with Viagra, a drug nominally intended to treat real dysfunction, but widely recognized, and criticized, as being more commonly used as a so-called “lifestyle drug.”
On pp. 28-31, you’ll find an article, by Jasmine Budak, on how companies deal with — and why some of the resent having to deal with — maternity leave. That topic raises all sorts of questions about fair treatment of employees, and about what sorts of employee benefits are just too burdensome to be fair to businesses and co-workers.
Finally, Angelina Chapin’s article (pp.50-52) about lingerie sales in conservative Islamic countries isn’t exactly about ethics, but it certainly raises questions about conflicts, and perceived conflicts, between various value sets.
All in all, I have to conclude, with some modesty, that if you’re a magazine reader interested in ethical issues in business, you certainly don’t have to head straight to the article by the ethics professor to scratch that itch.
And there really is a deep point about business, here. Ethical standards are inherent to the very idea of doing business. Those standards apply, contextually, to a thousand tiny details about how business gets done, to a thousand questions that need to be answered in the course of doing business. Different people will have different ideas about what those standards should be, not least because different people will have different stakes in the outcome. One result is that “ethics stories” are actually all over the place, in the business press, and they’re relatively seldom labeled that way.
Philip Morris: Endangering Kids and Academic Ethics
Filed under: accountability, children, ethics, health, law, marketing, product safety, rights |
Comments (4) Tobacco giant Philip Morris is doing its best to get its hands on research about teen smoking, and encouraging some UK academics to violate ethical standards along the way.
Here’s the story, by Andrew Hough for the Telegraph: Philip Morris: tobacco firm using FOI laws to access secret academic data
Philip Morris International has tried to force the University of Stirling to hand over secret data into teenage smoking and cigarette packaging gathered over more than a decade.
The manufacturers behind the popular Marlboro brand, have used Freedom of Information laws to [attempt to] gain access [to] about 6000 confidential interviews undertaken with teenagers as young as 13, which discuss their views on smoking and tobacco….
The researchers are rightly fighting the request.
It’s a shocking move on Philip Morris’s part, even just from a PR point of view. To be seen seeking information that the company clearly hopes to use in marketing to children will do nothing to improve anyone’s opinion of the firm or the industry.
But there’s a second wrong, here, and that lies in the attempt to get the researchers in question to violate their obligations to the research subjects — the children and their parents — who participated in the research in question.
When university-based researchers conduct any kind of research on human beings, they are required to adhere to pretty strict standards for research ethics. The most fundamental of those standards has to do with obtaining informed consent from research subjects. Such consent may be obtained only after research subjects are fully informed about the goals of the research, as well as about what sorts of privacy protections they can expect. In the case described here, it is almost certainly the case that the children interviewed, and their parents, would have been assured that while the researchers would of course eventually make public the aggregate results of their research, the raw data — the interview transcripts that Philip Morris seems to be seeking — would of course be kept confidential.
So Philip Morris is asking these researchers to break their promise and to breach the trust placed in them by research subjects. The company is attempting to get the researchers to violate their duty. This puts the company’s behaviour into the same moral category as suborning perjury or intentionally putting another party into a conflict of interest. It’s a bad thing when a company violates its own duties; but it is especially corrosive to work so hard at encouraging other people to violate theirs.
