Archive for the ‘trust’ Category
Petraeus, Moralizing, & Leadership Obligations
This past Friday, David Petraeus, a retired 4-star general in the US Army resigned from his position as Director of the Central Intelligence Agency. He resigned because evidence had surfaced that he had had an extramarital affair.
On the surface, of course, this is just another example of a powerful man succumbing, as all too many seem to do, to the all too common temptation to betray his marital commitments. And, again on the surface, it raises questions about whether private foibles are sufficient reason to think a man unfit for public office. Petraeus himself, in his letter of resignation to President Obama, said he had shown “extremely poor judgment.” The question that always arises — remember Clinton/Lewinski? — is whether poor judgment in personal matters necessarily implied poor judgment in public matters, or whether instead the scandal really just amounts to a puerile bit of titillation.
But the fact is that Petraeus is not just another man, and not even just another man in a leadership position. He was, until November 9th, Director of the CIA, the most important intelligence organization on the planet. He was, in other words, one of the world’s most desirable candidates for blackmail. And so any transgression that could serve as fodder for blackmail is immediately amplified in magnitude. Clearly, marital infidelity is pretty high on that list. Someone in a position like the one Petraeus had has to stay squeaky clean, not for moralistic reasons, but for national security reasons.
And the seedier details that have been emerging seem to bear this worry out, at least to some extent. The woman with whom Petraeus is said to have had the affair, Paula Broadwell, is now said to have sent threatening letters to another woman who she saw as a rival for the general’s affections. That’s not to say that anything like blackmail was in the offing. But it suggests that the Petraeus/Broadwell affair had dark edges to it beyond your standard tale of marital infidelity.
There will surely be, in the coming weeks and months of analysis of this matter, plenty of talk about the demands of leadership and the character and integrity it requires. But what leadership at the highest level really requires is not just character, but an acute awareness of your own weaknesses — including weaknesses you share with the rest of the human population — and the ability to foresee and forestall the risks the flow from those.
The Hidden Ethical Value of Social Networking
Filed under: accountability, capitalism, complexity, consumers, economics, information, internet, markets, trust |
Leave a Comment 
Like it or not, we are in the middle of a social networking revolution. And of course, that’s hardly news. Endless ink, digital and otherwise, has been spent on worrying over whether Facebook, Twitter, and their rapidly-multiplying ilk are the best or the worst thing that has ever happened to humankind.
A recent story about car-pooling apps highlights the fact modern technology, including social media, has a role to play in making markets more efficient. And since efficient markets are generally a good thing, this counts as a big checkmark in the “plus” column of our calculations concerning the net benefit of social media.
Carpooling is a great example, because the relative lack of carpooling today is a clear instance of what economists call “market failure” — a situation in which markets fail efficiently to provide a mutually-beneficial outcome. Think of it this way. There are lots of people in need of a ride. And there are lots of people with rides to offer. The problem is a lack of information (who is going my way, at what time?) and lack of trust (is that guy a potential serial killer?) Social networking promises to resolve both of those problems, first by helping people coordinate and second by using various mechanisms to make sure that everyone participating is more or less trustworthy.
With regard to car-pooling, the obvious benefits are environmental. But the positive effect here is quite general: just about any time we find a way to foster mutually-advantageous market exchanges, we’ve done something unambiguously good. This is one example of the ethical power of social media.
Another big enemy of efficient markets is monopoly power, or more generally any situation in which a buyer or seller is able to exert “market power,” essentially a situation in which some market actor enjoys a relative lack of competition and hence has the ability to throw its weight around. Social media promises improvements here, too. Sites like Groupon.com allow individuals to aggregate in ways that give them substantial bargaining power.
The general lesson here is that markets thrive on information. Indeed, economists’ formal models for efficient markets assume that all participants have full knowledge — that is, they assume that lack of information will never be an issue. Social networks are providing increasingly sophisticated mechanisms for aggregating, sharing, and filtering information, including important information about what consumers want, about what companies have to offer, and so on. So while a lot of attention has been paid to the sense in which social media are “bringing us together,” the real payoff may lie in the way social media render markets more efficient.
Capitalism and Bad Behaviour
Filed under: adversarial ethics, capitalism, character, competition, trust |
Comments (2) Contrary to what you have heard, there is nothing immoral about capitalism.
A couple of weeks back, the New York Times published a truly scandalous opinion piece by essayist William Deresiewicz with the provocative title, Capitalists and Other Psychopaths. The views expressed in the piece are not just false, but dangerous.
The central claim of Deresiewicz’s essay is that “capitalism is predicated on bad behavior.” This claim is entirely untrue. Capitalism in no way requires bad behaviour. Indeed, to function even moderately well, capitalist markets rely on a general pattern of basic goodwill and honesty of its participants. Commerce of any kind requires trust, and trust is predicated on the expectation that the other person is going to follow some basic rules of decent behaviour. The niceties of the rules that ought to govern business are up for debate, the basic need for some sort of rules is not. Capitalism, in other words, presumes ethics.
Deresiewicz is right of course that bad behaviour does go on within capitalist systems. That’s not exactly a news flash. Nor is it unique to capitalism. There’s no evidence that either feudalism or communism magically turns humans into selfless and cooperative purveyors of peace, love and understanding.
The beauty of a free market, as Adam Smith taught us, is that it can generate benefits even even among mean-spirited. The taxi driver who took me to the airport this morning doesn’t have to like me, and he doesn’t have to be a particularly lovely human being. All that’s necessary, in order for me to get to the airport, is that he wants to make a living. But in no way does capitalism require that people be vicious or even indifferent to each other’s fates. As Nobel laureate Ronald Coase put it, “The great advantage of the market is that it is able to use the strength of self-interest to offset the weakness and partiality of benevolence.” We are limited in our sympathies for others. The good news is that, in the marketplace, our commitment to our own welfare, and the welfare of those we hold dear, inspires a great deal of creative and industrious activity that has as its very useful side-effect the provision of benefits to others.
Deresiewicz’s essay also takes a particularly gratuitous pot-shot at business school education. “I always found the notion of a business school amusing,” he writes. “What kinds of courses do they offer? Robbing Widows and Orphans? Grinding the Faces of the Poor?” This may be a joke, but it’s a baffling one. Is business management really so trivial a task that it couldn’t possibly require any advanced training? (The old-guard communists thought so, and look where it got them.) Say what you will about business schools, there’s little doubt that the better ones, at least, teach a serious and difficult curriculum. Deresiewicz’s slam here is also terribly and unnecessarily insulting to millions of business school graduates who work diligently and honestly to produce a bewildering array of goods and services. Yes yes, we all know about Ken Lay and Bernie Madoff. Those men deserve, and have already received, ample criticism. But why impugn the honesty and integrity of every single executive, mid-level manager and accountant along the way?
The key to understanding Deresiewicz’s error is to see that he thinks ethics should be exactly the same in all situations. Not just present, but the same. The virtues of the marketplace, he suggests, should be the same as those of the Christian bible. The norms we apply to commercial exchange, he suggests, should also be (or include?) those of civic life. But does anyone really believe that? If a company rips you off should you really “turn the other cheek,” in good Christian fashion? Should Apple and Dell really debate the qualities of their competing products and then have us all vote for the one winning product that we will then all buy? To expect the same behaviour in the market as in a townhall meeting makes about as much sense as to expect people to behave on a football field the same way they do in a church pew.
It goes without saying that Deresiewicz is not alone in his misunderstanding of the fundamentals of capitalism. But his misunderstanding is especially fundamental, and especially corrosive. The really troubling thing about Deresiewicz critique is that it suggests that there’s nothing about capitalism worth saving. If capitalism is intrinsically unethical — if it has the immorality baked right in — then why try to fix it? Why try to make things work better? We all might as well just settle in and enjoy our smug cynicism. Because like a lot of really trenchant critics, Deresiewicz offers us no alternative.
Financial Advice, Competency, and Consent
Filed under: consumers, decision-making, ethics, finance, investing, professionalism, trust |
Leave a Comment I blogged recently on a California case about an insurance agent who was sentenced to jail for selling an Indexed Annuity — a complex investment instrument — to an elderly woman who may have been showing signs of dementia. I argued that giving investment advice is just the sort of situation in which we should expect professionals to live up the standard of ‘fiduciary’, or trust-based duty. An investment advisor is not — cannot be — just a salesperson.
But asserting that investment advisors have fiduciary duties doesn’t settle all relevant ethical questions. It settles how strong or how extensive the advisor’s obligation is; but it doesn’t settle just how the financial advisor should go about living up to it.
The story alluded to above again serves as a good example of that complexity. How should a financial advisor, in his or her role as fiduciary, handle a situation in which the client shows signs of a lack of decision-making competency? Sure, the advisor needs to give good advice, but in the end the decision is still the client’s. How can an advisor know whether a client is competent to make such a decision?
In the field of healthcare ethics, there is an enormous literature on the question of ‘informed consent,’ including the conditions under which consent may not be fully valid, and the steps health professionals should take to safeguard the interests of patients in such cases.
The way the concept is explained in the world of healthcare ethics, informed consent has three components, namely disclosure, capacity and voluntariness. Before a health professional can treat you, he or she needs to disclose the relevant facts to you, make sure you have the mental and emotional capacity to make a decision, and then make sure your decision is voluntary and uncoerced. And the onus is on the professional to ensure that those three conditions are met. But there’s really nothing very special about healthcare in this regard. Selling someone an Indexed Annuity isn’t as invasive, perhaps, as sticking a needle in them, but it often has much more serious implications.
Of the three conditions cited above — disclosure, capacity and voluntariness — disclosure is of course the easiest for those in the investment professions to agree to. Of course you need to tell your client the risks and benefits of the product you’re suggesting to them. But of course, many financial products have an enormous range of obscure and relatively small risks — must the client be told about those, too? There’s only so much time in a day, and most clients won’t care about — or be able to evaluate — those tiny details.
Voluntariness might also be thought of as pretty straightforward. A client who shows up alone and who doesn’t seem distressed is probably acting voluntarily, and it’s unlikely that we want investment professionals poking around our personal lives to find out if there’s a greedy nephew lurking in the background and badgering Aunt Florence to invest in penny stocks.
What about capacity? That’s the tough one, the one implicated in the court decision alluded to above. Notice that in most areas of the market, no one tries to assess your capacity before selling to you. I bought a car recently, and all the salesperson cared about was a driver’s licence and my ability to pay. No one tried very hard to figure out if I was of sound mind — beyond immediate appearances — and hence able to make a rational purchase.
Investment professionals do typically recognize a duty to ensure the “suitability” of an investment, and presumably whether an investment is suitable depends on more than just the client’s financial status. It also depends in part upon whether the client is capable of understanding the relevant risks. Being a true professional and earning the social respect that goes with that designation is going to require that financial advisors of all sorts adopt a fiduciary view of their role. That means learning at least a bit about the signs of dementia and other forms of diminished capacity. It also means knowing how and when to refer a client to a relevant health professional. Finally and most crucially, it means putting the client first — solidly and entirely first — and hence being willing to forego a sale when that is clearly the right thing to do.
Investment Advice and Fiduciary Duties
Filed under: complexity, consumers, ethics, finance, honesty, investing, law, professionalism, trust |
Comments (6) Most of us rely on accredited professionals for a range of services. Doctors, lawyers, accountants and so on play a huge role in our lives, giving us advice and rendering services that we would be foolish to provide for ourselves. Some topics, in other words, are beyond the ken of even the dedicated do-it-yourselfer. Financial planning is in that category. If you plan to do anything much beyond storing your money in a mattress, you probably want help from a professional. And you hope — really, really hope — that that professional is on the ball and has your best interests at heart.
A recent story highlights some of the difficulties in this regard. The story is about an independent insurance agent facing jail time for selling a particular kind of investment — an indexed annuity — to an 83-year-old woman. The catch: prosecutors say the woman showed signs of dementia, and the implication is that the agent took advantage of the fact that the buyer may not have understood the limits and disadvantages of the investment instrument she was buying.
Even minus the question of the buyer’s competency, there are worries here. For perspective on this story, I talked to Prof. John Boatright, who literally wrote the book on ethics in finance. He pointed out to me that Equity-Indexed Annuities are so complex that they’re a dubious product quite generally. He also pointed out that such annuities are investment instruments sold by people in the insurance industry who are not truly investment specialists. Most investment instruments are regulated such that they can only be sold by investment professionals with suitable training and credentials.
But regardless of the kind of professional you go to for investment advice, the underlying ethical question is whether that professional is going to have your best interests at heart. When the thing you’re buying is too complex to understand, you have to put your trust in the seller. Such trust is best underpinned by what are called fiduciary duties. A fiduciary, roughly speaking, is someone to whom something of value is entrusted. And a professional who bears a fiduciary duty has a stronger obligation than a mere salesman. Someone out to sell you something — a car, a stereo, whatever — has a plain obligation not to deceive you, but generally isn’t obligated to make sure that the product is right for you. Whether the product is right for you is up to you to decide. But a fiduciary is held to a higher standard. As Alexei Marcoux points out, we are vulnerable in various ways to professionals of various kinds, and that vulnerability generates duties on the part of those professionals, not just to be honest to us but to put our interests first. The transaction between a professional and a client is not a regular market transaction; rather, it is (or ought to be) governed by the higher standard implied by a fiduciary relationship.
Whether financial advisors and financial planners proclaim and live up to such a high standard is another matter. It certainly seems they should. In some places, financial professionals are explicitly expected to live up to the standard applied by a fiduciary duty, and other jurisdictions are moving in that direction. If ever there were a circumstance in which we were vulnerable, a situation in which we are trusting a stranger to tell us what to do with our life’s savings seems to fit the bill.
The True Cost of Conflict of Interest
Filed under: accountability, conflict of interest, education, employees, lobbying, marketing, scandal, taxpayers, trust |
Comments (3) What does conflict of interest cost?
It was recently reported that certain employees of the Chicago Public Schools food services department were going to be required to undergo ethics training, after it was revealed that they had accepted improper gifts from contractors.
The worry, naturally, is that accepting gifts put those CPS employees into a conflict of interest, a situation in which they were trusted to make good decisions on behalf of CPS, but in which they had an ‘outside’ interest — in this case, gratitude to the gift-givers — that might reasonably be thought likely to warp their judgment. The behaviour here was more specifically a violation of the section of the CPS Code of Ethics that specifically forbids accepting gifts, but the moral root of the problem is conflict of interest.
Now, in addition to the trouble the employees are in, it’s been reported that Chicago Mayor Rahm Emanuel wants to go after two food services companies that had given improper gifts.
Just what have those companies done wrong? What’s wrong with putting someone else in a conflict of interest? I’ve argued before that we might think of this as analogous to suborning perjury. When you intentionally put someone else in a conflict of interest, it means that even if you’re not violating any duties yourself, you’re encouraging other people to violate their duties.
And the companies’ bad behaviour, here, is going to cost them. It may well cost them future contracts, but it may cost them (and other companies that want to compete for CPS contracts) more than that. It’s been reported that they may be required to provide ethics training for their employees, and hire an independent auditor to make sure they’re complying with CPS ethics standards. Neither of those things is likely to be cheap. In an industry with narrow profit margins, such additional costs could well mean the difference between black ink and red.
But the most important “cost” in this case is, of course, the loss of confidence in the CPS and its purchasing procedures. That is always the risk with conflict of interest, namely that when conflicts are accepted and fostered, rather avoided or remedied, they erode confidence in the judgment not just of individuals, but of entire institutions.
Greg Smith, Goldman Sachs, and Corporate Culture
Filed under: banking, corporations, culture, employees, ethics, governance, trust |
Comments (6) By now everyone has heard that a guy named Greg Smith wrote a letter this week. Who is Greg Smith and why does anyone care? Why is Greg Smith’s letter getting attention from anyone who isn’t a Goldman Sachs employee, customer, or shareholder? Sure, he’s a mid-level executive at one of the world’s most powerful financial institutions. So he’s certainly not a nobody. And sure, Goldman, like other big financial institutions today, is seen by many as the corporate embodiment of evil, and so people are bound to be fascinated by an insider’s repudiation of the firm — especially accompanied, as it was, by a good dollop of juicy details. But there’s more to it than that, and the “more” here is instructive.
I think the key to understanding why Smith’s letter caused such an uproar is the fact that Greg Smith’s letter taps into the deep, dark fear that every consumer has, namely the fear that, somewhere out there, someone who is supposed to be looking out for us is instead trying to screw us. Smith’s letter basically said that that is exactly what is going on at Goldman, these days: the employees charged with advising clients about an array of complex financial decisions are, according to Smith, generally more focused on making money than they are on serving clients.
Now, first a couple of words about the letter. It goes without saying that we should take such a letter with a grain of salt. It’s just one man’s word, after all. Now that doesn’t make Smith’s account of the tone at Goldman implausible. He’s not the first to suggest that there’s something wonky at Goldman. It just means that we should balance his testimony against other evidence, including for example the kinds of large-scale surveys of Goldman employees that the company’s own response to Smith’s letter cites. Then again, such surveys are themselves highly imperfect devices. Either way: buyer beware.
(Note: one group that must take this stuff seriously is Goldman’s Board of Directors. A loyal employee taking a risk like Smith has is not a good sign, and his story deserves to be investigated thoroughly by the Board.)
OK, so let’s bracket the reliability of Smith’s account, and ask — if it accurately reflects the tone at Goldman — why that matters.
It matters because of this awkward fact: in many cases, in business, all that stands between you the customer and getting ripped off is that amorphous something called “corporate culture.” Most of us are susceptible to being ripped off in all kinds of ways by the businesses we interact with. That’s true whether the business in question is my local coffee shop (is that coffee really Fair Trade?) or a financial institution trying to get me to invest in some new-fangled asset-backed security. My best hope in such cases is that the business in question fosters a culture within which employees are expected to tell me the truth and help me get the products I really want.
Now culture is a notoriously hard thing to define, and harder still to manage. Culture is sometimes explained as “a shared set of practices” or “the way things are done” or “the glue that holds a company together.”
Why does culture matter? It matters because, other things being equal, the people who work for a company won’t automatically feel inspired to spend their day doing things that benefit either the company or the company’s clients. People need to be convinced to provide loyal service. In part, such loyalty can be had through a combination of rewards and penalties and surveillance. Work hard, and you’ll earn a bonus. And, Treat our customers well, or your fired. And so on.
But sticks and carrots will only get you so far. Far better if you can get employees to adopt the right behaviours voluntarily, to internalize a set of rules about loyal service and fair treatment. An employee who thinks that diligence and fair treatment just go with the turf is a lot more valuable than one who needs constantly to be cajoled. And, humans being the social animals that we are, getting employees to adopt and internalize a set of rules is a lot easier if you make it part of the ethos of a group of comrades. Once you’ve got the group ethos right, employees don’t act badly because, well, that’s just not the sort of thing we do around here! In the terminology used by economists and management theorists, culture helps solve ‘agency problems.’ Whatever it is that you want employees to be focusing their energies on, corporate culture is the key.
Of course, there’s still the problem of what exactly employees should be focusing their energies on. Should they be taking direct aim at maximizing profit? Or should they be serving customers well, on the assumption that good service will result in profits in the long run? In any reasonably sane market — one without ‘TBTF‘ financial institutions — the latter strategy would be the way to go, practically every time. And that fact is precisely what makes large-scale commerce practical. Consumers enjoy an enormous amount of protection from everyday wrongdoing due to the simple fact that most businesses promote basic honesty and decency on the part of their employees.
Unfortunately, it’s far from clear that Goldman operates in a sane market. So it is entirely plausible that the company could have allowed its corporate culture to drift away from seeing customers as partners in long-term value creation, toward seeing them as sources of short-term revenue. I don’t know whether Greg Smith’s tale is true, and representative of the culture at Goldman Sachs. But if it is, that means not just that Goldman isn’t serving its clients well. It means that Goldman embodies a set of values with the potential to undermine the market itself.
Should Penn State’s Board Resign?
Filed under: accountability, boards, education, ethics, excuses, governance, public relations, sports, stakeholders, transparency, trust |
Comments (4) In the wake of the Sandusky sex-abuse scandal the question has arisen whether Penn State University’s Board of Trustees should tender its collective resignation. And now, following the death of Coach Joe Paterno on Sunday, the question has taken on additional emotional resonance. The university’s Faculty Senate is scheduled to discuss a motion to strike an independent committee to investigate the Board’s role in the whole affair, and indeed has seen at least one motion calling for the entire Board’s resignation.
So, should the members of the Board be asked to resign? And if not, should they do so of their own volition?
To answer these questions, here are some questions that need to be considered:
Fist, did indeed the Board fail in its fiduciary (‘trust-based’) duties? It’s worth noting that the Board has been under fire from two different directions, here. Some think the Board failed in not staying sufficiently ‘on top of’ the Sandusky situation, and in resting satisfied with whatever dribbles of information the university administration saw fit to feed them. (The only detailed account I’ve read so far paints the Board in a rather sympathetic light, in this regard.)
Others think the Board failed in firing — in their eyes, scapegoating — the beloved Paterno. Both sides think the Board screwed up, but for very different reasons. Of course, both can be right at the same time. Perhaps the Board has just generally done a bad job, first by letting the situation get out of hand and then second by botching the task of responding to it. Rather than cancelling each other out, maybe these two sets of complaints just compound each other.
Next, we need to ask, if the Board failed, was it a failure of people or a failure of structure? A board, after all, is both an institutional structure and a set of people occupying that structure.
If it was a failure of structure (and, as governance expert Richard Leblanc wrote back in November, there are serious problems with how Penn State’s board is configured) then there’s little reason to think that a change of personnel on the Board is either necessary or sufficient to fix the problem. And if instead it was a failure of people, then getting rid of them all is a blunt, but perhaps effective, way to solve the problem — providing, of course, that the new people brought in to replace them are better.
Of course, the problem is that it’s difficult to distinguish between a failure of people and a failure of structure, in a case like this. Perhaps people better-suited to the job would have risen above the confines of a poorly-structured board, or lobbied to have its structure revised. Human behaviour and institutional structure shape each other.
And finally, regardless of the above questions about the sources of failure, it might be the case that the removal or resignation of the Board is necessary in order to restore public confidence. That is, even if the individuals currently on the Board are not in any way to blame, the fact that key stakeholders have lost faith in the Board might be sufficient grounds for calling for the entire Board to go. Without the confidence of key stakeholders, any Board is going to find it hard to do its job.
But then, while the current Board certainly faces challenges, so would an entirely new Board. The loss of continuity that would result from a 100% change in membership could seriously impair the Board’s functioning, and make it even more reliant on — and susceptible to control by — university administrators. There’s a good reason why well-governed boards have careful plans in place to make sure that new blood is brought in regularly, rather than en masse. In the end, it seems to me that the best prescription is this. The Board of Trustess at Penn State needs to see substantial structural change. It also needs enough new blood to restore confidence, while retaining enough of the old guard to ensure continuity. Beyond that, the Board is just going to have to do its best to muddle through whatever challenges lie ahead, with whatever strengths and limits it possesses, just like any other board.
The Social Responsibilities of Lawyers
Filed under: adversarial ethics, conflict of interest, law, professionalism, rights, trust |
Leave a Comment If there’s serious academic topic and social issue that might generate more stupid jokes than Business Ethics, it’s Legal Ethics. Which is too bad, since it’s an important topic. And that’s the topic raised by a recent story in the Boston Globe about lawyers who specialize in defending drivers accused of drunk driving.
Anyone with a broad interest in business ethics is almost inevitably going to run into questions of legal ethics, for a couple of reasons. One reason is that many corporations employ lawyers, and so businesses have to know about the ethical constraints on these very special employees. The other reason is that lawyers who don’t work for big companies are, themselves, either partners in law firms or owners of their own small businesses. And whether you work for a business or run one, questions arise regarding the intersection of, and perhaps conflict between, legal ethics on one hand and business ethics on the other.
One of the crucial ethical question that must inevitably arise for lawyers is this: what are a lawyer’s social responsibilities? In other words, what are a lawyer’s obligations to the society she lives in, while she goes about trying to ply her trade and make a living?
There’s a very strong argument to be made to the effect that the key way in which lawyers serve society — their key social responsibility — is by serving their clients well. Ours is an adversarial legal system, under which all parties to a dispute are entitled to legal representation. A key presumption of the system is that we are most likely to arrive at a just outcome if all parties to the dispute are represented by lawyers who vigourously pursue their clients’ interest. So the morality of whole system effectively stands or falls with the practice of zealous advocacy. We can never be 100% confident in the outcome of a trial, perhaps, but at least we know each side had its bulldog.
Now, it’s widely recognized among legal scholars that there are limits to zealous advocacy. Lawyers are forbidden from directly breaking the law in attempting to help their clients, and from derailing the court’s processes by, for example, suborning perjury or destroying evidence. But beyond that, lawyers are entitled — indeed, required — to do their damnedest.
Yale legal scholar Robert W Gordon wrote a nice piece a few years back called “Why Lawyers Can’t Just Be Hired Guns.” Gordon’s basic argument is essentially that lawyers play too important a role in modern society for them to think of themselves as solely beholden to their clients. In particular, Gordon argues that a lawyer’s right to engage in zealous advocacy only makes sense to the extent that lawyers also help support the system within which such advocacy ends up being constructive:
…lawyers’ work on behalf of clients positively requires—both for its justification and its successful functioning for the benefit of those same clients in the long run—that lawyers also help maintain and refresh the public sphere, the infrastructure of law and cultural convention that constitutes the cement of society.
(You’ll find Goron’s piece in a very good book called Ethics in Practice: Lawyers’ Roles, Responsibilities, and Regulation, edited by Deborah L. Rhode.)
It’s worth noting that Gordon’s argument about social responsibility is essentially an argument about the limits that apply to the fundamental moral obligation that lawyers have to faithfully play their role in the larger legal system. And it’s equally worth noting that that obligation cannot be described without reference to that system, and to the role we want lawyers to play within it.
There’s a general lesson, here. We shouldn’t think of ethics strictly in terms of the human micro-implications of a particular situation. We need also to look carefully at the roles individuals play in important social structures, and the roles those structures play in society as a whole.
Stem Cell Fraud
Filed under: consumers, critical thinking, fraud, health, marketing, product safety, science, technology, trust |
Leave a Comment Stem cell science is pretty sexy. And as the saying goes, “sex sells.” And if something sells, someone is liable to make a buck off it, whether it’s right to do so or not.
See this opinion piece (in The Scientist) by Zubin Master and David B. Resnik: Reforming Stem Cell Tourism.
As with many new areas of technological advancements, stem cell research has received its fair share of hype. Though much of the excitement is warranted, and the potential of stem cells promising, many have used that hype for their own monetary gain. … Young and elderly patients have died from receiving illegitimate stem cell treatments; others have developed tumors following stem cell transplantations….
Master and Resnik point to the need for patient education, and to the limits of international guidelines, but their main focus is on the ethical responsibilities of scientists — including the responsibility not to cooperate in various indirect ways with unscrupulous colleagues. (It is very, very hard to do clinical science in a vacuum, and so isolating unscrupulous scientists may be one way to put them out of business.)
But it’s important to point out that this is as much a story of business ethics as it is of scientific ethics. The unscrupulous individuals preying upon the sick aren’t doing it for free. What these clinics are doing is committing fraud, and endangering their customers in the process.
Now there’s nothing ethically subtle about that. You don’t need a Ph.D. in philosophy to know that fraud is bad. But there’s another, subtler, issue here, namely an underlying theme about the general lack of scientific literacy on the part of consumers and the ability of business to use it to their advantage. Companies of all kinds can do a lot of good in the world by promoting scientific literacy, and by being scrupulously careful about having the facts straight when they present their products to consumers and tell them, “this works.”
Now of course, we’re never going to prevent such behaviour entirely. As long as there are desperate people in the world, there will be snake-oil salesmen eager to make a buck from their misery. But as Master and Resnik suggest, that doesn’t mean we shouldn’t try.
