Archive for the ‘virtue’ 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.
Healthcare, Unions, and Selling Donuts to Canadians
Filed under: compensation, employees, health, pay, unions, virtue, wages |
Leave a Comment Selling donuts to Canadians sounds so easy that it seems like the punch-line to a not-very-funny joke.
Apparently, however, it isn’t always such and easy thing to do. Or at least, not easy enough to support paying double the minimum wage to the people who serve the donuts. Witness the case of the three Tim Hortons kiosks at Windsor Regional Hospital (in Windsor, Ontario, just across the border from Detroit, MI). At Windsor Regional, the donut-and-coffee kiosks are a big drain (to the tune of a quarter-million dollars a year) rather than a source of revenue. Part of the reason, apparently, is that the servers who work there are paid over $20/hour — far above Ontario’s minimum wage of $10.25. The kiosks are in effect being driven under by their own employees.
Part of the complexity of this story lies in the fact that the donut kiosks in question are at a hospital. So this isn’t just a question of a profit-hungry capitalist at odds with unionized employees. The cost overrun in this case is borne by the hospital, a not-for-profit organization that must recoup the cost in other ways.
The donut kiosks, along with other food service outlets at the hospital, are part of the organization’s overall operating budget, part of the overall cost of providing healthcare to the people in the hospital’s catchment area. As Canadian health economist Robert Evans has often pointed out, every dollar spent on healthcare is a dollar of income for someone. The result is that there are plenty of people — some wealthy, and some not so wealthy — with a vested interest in not reducing the cost of healthcare. That’s not a matter of malice; it’s just a matter of math.
But of course, the salaries of unionized employees can only be part of the tale, here. If the three kiosks have, say, two employees on duty at a time, then paying each of them only minimum wage would still only save about $120,000 — which accounts for less than half of the shortfall. So it doesn’t make sense to point to the workers’ wages as “the” cause of the problem. The supply of donuts and coffee at Windsor Regional simply seems to be out of line with demand.
Of course, one way out would be for the coffee kiosks to raise their prices. That may or may not be permitted by Tim Hortons’ franchise agreement. But anyway, raising prices would mean pushing the burden onto patients and their families along with hospital staff. And at most hospitals, the on-site food outlets have a virtual monopoly, which puts customers at a serious disadvantage. It also means that demand at a hospital is less elastic, which means the hospital kiosks have more power to raise prices than a non-hospital donut seller would. And if you believe that the wage currently being paid is a fair one (by some measure), then that’s what should be done. They should raise prices to benefit employees at the expense of patients, families, and staff.
All if this just illustrates that idealism about fair wages has its limits. In a world of limited resources — i.e., the world we live in — giving more to one person often means taking more from someone else. The result is that you can’t argue for higher (or lower) wages without talking about prices. Wages are part of an economic system, and discussions of justice in one part of that system can’t ignore justice in the others.
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(Thanks to Prof. Alexei Marcoux for pointing out this story to me.)
Social Class and Unethical Behaviour
Hating the rich comes pretty naturally to a lot of people. And so it’s not surprising that a widely-reported study apparently demonstrating that the rich are less ethical resulted in a combination of glee and eye-rolling proclamations that “we already knew that.”
There’s plenty to say about the study — lots of people (mostly in the comments accompanying various reports on the study) have pointed to what they say are methodological weaknesses related to sample size, how participants were chosen, what kinds of tests are taken as proxies for a lack of ethics, etc.
But if we take as given the conclusion that the rich do behave less ethically (by certain measures) this raises the question of what causes such behaviour on the part of the rich. To their credit, the study’s authors at least gesture at subtlety: “This finding is likely to be a multiply determined effect involving both structural and psychological factors.” But the authors do spend an awful lot of time discussing what they clearly take to be the key causal factor, namely greed. “Greed,” the authors write, “is a robust determinant of unethical behaviour.”
But the role that greed plays is in fact very far from obvious. The citations given by the authors are not entirely compelling, and as I’ve pointed out before, there’s considerable evidence (found primarily in the literature on criminology) that greed is not a key explanatory factor in much wrongdoing. Wrongdoing is more generally explained by the capacity for rationalization, for telling oneself compelling stories about why one’s own behaviour isn’t wrong after all.
It’s also worth pointing out the more general problem with establishing causal relationships. Note that the title of the study says only that “Higher social class predicts increased unethical behaviour” [emphasis added]. But the headline writers for various news outlets are not so careful: Wired, for example, tells us that “Wealth Could Make People Unethical” [emphasis added]. And the distinction is important. Owning an ashtray may predict increased tendency toward lung cancer, but we’re pretty sure that ashtrays don’t cause lung cancer. So is being rich making people unethical, or is being unethical a route to getting rich, or are both the result of some third factor, like ambition?
What’s the practical upshot of all this? That, too, depends on the direction of causation. If being rich makes less ethical, then you have a reason — perhaps not a compelling one — to worry about the effect that your own increasing wealth might have on your morals. And, given what I said above about the role of rationalization, you ought to watch yourself for signs that you’re telling yourself those comforting little stories that make you feel better about behaviour that you know, deep down, is unethical.
If, on the other hand, being less ethical is a route to riches — well, that points in a couple of different directions. For individuals, the dangerous and cynical conclusion is that you need to learn to bend the rules to get ahead. But from a systems point of view, the implication is quite different: how do we design institutions so that ethical, socially-constructive behaviour is rewarded, and that socially-destructive but individually-profitable behaviour is not?
The third possibility — that some third factor, like ambition is the crucial causal factor — has implications also. This possibility raises the question of social tradeoffs. What if a certain amount of anti-social behaviour is the quid pro quo of entrepreneurship and creativity? Is the amount of social good done by ambitious people sufficient to make us tolerate a certain amount of unethical behaviour? History is full of accounts of crummy human beings with the vaulting ambition to produce great works of art, literature, and science. Steve Jobs was, by all accounts, a difficult guy to say the least, and had a habit of treating people very, very badly throughout his career. But then, he also gave the world a lot of ‘insanely great,’ innovative products.
Of course, whether such trade-offs are worthwhile is a world-class philosophical problem, the answer to which is far from clear. But what’s much more clear is that individuals can’t rightly help themselves to the relevant justifications. We can’t excuse our own bad behaviour by pointing to our productivity. We are all far, far too likely to overestimate our own social contributions, and to underestimate our own foibles and peccadilloes. And that, it seems to me, is the root of a much more likely explanation of patterns of unethical behaviour than is the simplistic assumption — an assumption that all too often simply reaffirms a cynical worldview — that it all really boils down to greed.
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.”
Buffett, Sokol, and Virtue Ethics
Filed under: character, conflict of interest, employees, ethics, finance, honesty, trust, values, virtue, white collar crime |
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Warren Buffett (photo by Mark Hirschey)
The world’s most successful investor, Warren Buffett, was recently caught up in a scandal. He himself is not accused of any wrongdoing, though some have accused him of responding to the scandal — one involving a senior employee of his, one David Sokol — in a lackadaisical manner.
For the basics of the story, see here:
Berkshire doesn’t plan big changes after scandal (by Josh Funk, for the AP)
Berkshire Hathaway CEO Warren Buffett says he doesn’t think his reputation has been hurt much by a former top executive’s questionable investment in Lubrizol shortly before Berkshire announced plans to buy the chemical company….
Sokol is accused of a form of insider trading, essentially a kind of betrayal that is unethical at best, and illegal at worst. Now, Sokol himself is, not surprisingly, keeping pretty quiet, and speaking only through his lawyer. I’m more interested, at this point, in Buffett’s response, and what it says about his character. I’m not the first person to suggest that you can learn a lot about a person by the way he or she responds to a crisis. But when the man in the spotlight happens to be one of the world’s most successful businessmen, there’s some reason to think that the lessons learned might just be more interesting than most.
For more about Buffett’s response, see here: Buffett Takes Sharper Tone in Sokol Affair (by Michael J. De La Merced, for the NYT.)
Despite the critics, I think Buffett comes out of this looking pretty good. To begin, Buffett gets points for demonstrating his loyalty to a long-serving employee:
[Buffett] was harsh in his assessment of Mr. Sokol’s trading actions, he pointedly declined to personally attack Mr. Sokol, instead highlighting the executive’s years of service and good performance.
Buffett also has a sense of context and proportion. Not that the wrong of which Sokol is accused is small. But it is wise, and ethically correct I think, for Buffett to resist the urge to pounce on an employee who has, in Buffett’s own experience (up until the present crisis), been a diligent and morally-upstanding employee:
“What I think bothers some people is that there wasn’t some big sense of outrage” in the news release, Mr. Buffett said. “I plead guilty to that. But this fellow had done a lot of good.”
Buffett’s business partner, Charles Munger, likewise gets points for showing restraint:
“I feel like you don’t want to make important decisions in anger,” Mr. Munger said, defending Berkshire’s press release. “You can always tell a man to go to hell tomorrow.”
All of this is set against a background of Buffett insisting on the importance of having a reputation for integrity in business. Buffett is no slacker when it comes to ethical standards. The NYT piece quotes Buffett from 20 years ago, on the topic of the significance of reputation in business:
“Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”
Finally, it’s worth pointing out that this focus on Buffett’s character, and on the example he sets, represents an importantly different approach to business ethics. The approach here is akin to what philosophers call “virtue ethics,” a stream of thought that goes back to Aristotle. The idea here is that, rather than focusing on principles (or, more cautiously, in addition to focusing on principles), what we really ought to do when thinking about ethics is to focus on character. Rather than asking, “what rules apply to this situation?” this way of thinking asks, “what would a good person do in a situation like this?” And in between crisis points, we should be asking, “when a crisis comes, what kind of person do I want to pattern my behaviour after?” I don’t know nearly enough about Mr Buffett to hold him up as a moral exemplar, but I think that the kind of character he has displayed in the Sokol affair is worthy of emulation.
Certifying Virtue
Filed under: accountability, brands, certification, consumers, labelling, standards, virtue |
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Two weeks ago I was at Duke University’s Kenan Institute for Ethics, in part to participate in a panel discussion called “Certifying Virtue.” The panel was basically about the challenges faced by various attempts to certify particular consumer goods as having been ethically produced.
My excellent co-panelists were Greg Dees (director of Duke’s Center for the Advancement of Social Entrepreneurship) and Tim Büthe (Assistant Professor in Duke’s Political Science department). The panel was organized and moderated by Kenan’s Lou Brown.
My own comments focused on:
- The large number of value-dimensions along which different consumers might want assurances about the things they buy.
- The epistemic problems involved in figuring out how to measure the things you might want to certify (e.g., measuring “environmental impact”).
- The moral problem that arises when 2 or more desirable characteristics conflict (e.g., “wild” vs “organic” salmon — you might want both, but no one fish can be both wild and organic.)
- The role of brands and certification schemes as “value-alignment” mechanisms, helping consumers find producers with whom they want to do business.
The panel was videorecorded, and the resulting 90-minute video is here, on YouTube: Certifying Virtue
Groupon Super Bowl Ad: Unethical
Filed under: advertising, brands, character, consumers, ethics, food, international, marketing, virtue |
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A collective gasp could be heard at one particular moment last night during the Super Bowl. No, I’m not talking about the gasp following Nick Collins’ 37 yard touchdown run in the first quarter. I’m talking about the gasp that issued at the punchline of the now-infamous Groupon.com commercial featuring Timothy Hutton.
You can see the 30-second spot here, on YouTube: Groupon – Tibet
And here’s the entire transcript:
“Mountainous Tibet — one of the most beautiful places in the world. This is Timothy Hutton. The people of Tibet are in trouble, their very culture is in jeopardy. But they still whip up an amazing fish curry. And since 200 of us bought at Groupon.com we’re getting $30 worth of Tibetan food for just $15 at Himalayan Restaurant in Chicago.”
Immediately following the commercial’s appearance, Twitter lit up with comments about how “offensive” and “tasteless” the Groupon.com commercial was. Media outlets today have been abuzz with criticism and commentary. The headlines tell the tale. According to NBC Chicago: “Groupon Super Bowl Ad Not a Good Deal”. CNN Money.com‘s headline was “Groupon spends big on controversial (tasteless?) Super Bowl spots”. Time asks: “And the Most Offensive Super Bowl Ad Goes To: Groupon?”
But the ad was more than just tasteless. It was unethical. To recruit — and then trivialize — the plight of the people of Tibet to sell Groupon’s services shows a jaw-dropping level of disrespect. And while we often think of disrespect as a matter of bad manners, showing suitable respect for other humans’ basic needs and interets is a core moral principle.
It’s also worth pointing out that the commercial played, perhaps unintentionally, on the unfortunate fact that, for many westerners, complex Asian societies are often most closely associated with exotic dinner fare. Yes, yes, Tibet is exotic and troubled. But hey, they make a yummy curry!
Who knows just what the fallout will be? There have been predictions that Groupon will lose business over this — it’s been suggested that the company may have found the limit of the notion that “there’s no such thing as bad PR.” And, predictably, there have already been calls for a boycott of Groupon.com. Timothy Hutton (once an Academy Award winner) will likely have to go into the spokesperson’s equivalent of rehab, perhaps by working with a pro-Tibet charity of some sort.
Of course, some will cling to the notion that Groupon.com intended all this — that they knew the ad would be controversial, and were aiming directly at the enormous amount of free media coverage they’re now getting. Maybe that’s true. But it was a helluva gamble to take. And, if it was a gamble, it was a gamble that treated the people of Tibet as just another Asian trinket to be tossed in among the poker chips.
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Addition:
It’s been pointed out to me (by @Changents on Twitter) that Groupon is apparently donating money to the causes featured in its commercials. See: http://savethemoney.groupon.com/. I’m not at all sure that that’s sufficient to overcome the worries discussed above, especially given that the disrespectful commercials is all that most people will see or know about. What do you think?
Authentically Unethical
Filed under: character, ethics, excuses, leadership, values, virtue |
Comments (1) Authenticity is the among the favourite buzzwords of the day. (My pal Andrew Potter’s recent book, The Authenticity Hoax, is a wonderful take-down of the concept.)
There are lots of ways the feel-good word, “authenticity”, can fail us. See, for a start, this blog entry by Deborah Gruenfeld and Lauren Zander, for the Harvard Business Review: Authentic Leadership Can Be Bad Leadership.
…being who you are and saying what you think can be highly problematic if the real you is a jerk. In practice, we’ve observed that placing value on being authentic has become an excuse for bad behavior among executives….
Gruenfeld and Zander’s basic point is that while authenticity (being who you really are) is great in principle, is authenticity the right goal if “who you really are” is a jerk? And in fact, there’s a fine line between being a jerk and being unethical. For starters, although most of us have our moments of rudeness, it is unethical — a serious character flaw — to consistently act like a jerk. Consistently acting rudely demonstrates a lack of respect for other people, and that’s unethical. So aiming for authenticity might not be all it’s cracked up to be, especially when compared to the more obvious aim of being a decent human being.
(See also Andrew’s Authenticity Hoax Blog.)
Most Hated American Companies Of 2010
Filed under: consumers, corporations, employees, rankings, virtue |
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The corporate world is certainly subject to plenty of criticism, and even hatred. But which companies are hated most?
Here’s one look at that question, from 24/7 Wall St.: The Fifteen Most Hated American Companies Of 2010
Customers, employees, shareholders and taxpayers hate large corporations for many reasons. 24/7 Wall St. reviewed many of these to choose the 15 most hated companies in America.
We examined each company based on six criteria….
(Note that the title “Most Hated” actually understates the sophistication of the ranking method used here, which includes measures of employee satisfaction, media coverage, total return to shareholders, and more.)
Interestingly, several of the companies on this “most hated” list have appeared on the Business Ethics Blog before.
- Dell (#9 on the un-ordered list) appeared here several times in 2006 and 2007, in blog entries about the ethics of poor customer service.
- Nokia (#2 on the list) appeared here as the subject of a movie I reviewed, called A Decent Factory. The movie was about Nokia’s attempt to manage things like labour standards in its supply chain.
- Toyota (#3) appeared in a blog entry on whether a company’s shareholders really “own” the company, as well as in an older blog entry about “Patriotism vs. Globalization in the Auto Industry”.
- Citigroup (#6) appeared in a blog entry called “Ethics in Banking: Best Practices”, as well as in a more recent one called “The Pay Czar’s Ethical Dilemma”.
- McDonald’s (#12), not surprisingly, has made a couple of appearances. It appeared in a blog entry on “Trans-fats vs. Genetically Modified Foods”, as well as “Saving the Earth, One Big Mac at a Time”.
- Last, but not least, British Petroleum (BP) is #14 on the list (and labelled “the most obvious choice to be on a list of hated companies”) has of course appeared here several times this year, including in “BP and Corporate Social Responsibility”, and “Boycotting BP is Futile and Unethical”, and “Ethics, BP, & Decision-Making Under Pressure”.
As you read through the whole list, it’s worth noting more generally the role that unethical (or at least ethically controversial) behaviour plays in generating hatred.
Ethics and Stupidity
Filed under: complexity, corporations, decision-making, employees, ethics, excuses, values, virtue |
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Why do people do bad things? It’s an ancient question. Certainly, some people do bad things simply because they are bad people. Psychopaths and sociopaths exist, though thankfully they are very few. Whether those few should be classified as “evil,” or as “mentally ill,” or both, is not clear to me. Either way, they certainly have the capacity to do evil. But sometimes, surely — maybe quite often — people do bad things stupidly, rather than out of evil intent. Sometimes, as I’ve blogged before, people do bad things because they allow themselves to use invalid excuses. It’s likely that some people know (in their heart of hearts) that they’re using lame excuses. But probably some people sincerely believe those excuses, and simply don’t understand that their reasoning is flawed.
“Hanlon’s Razor” is the name for an adage attributed to one Robert J. Hanlon. It says the following:
Never attribute to malice that which is adequately explained by stupidity.
It’s a good rule of thumb, not least because it is so often true that bad outcomes owe more to poor decision-making than they do to evil intent.
Of course, if what we’re really interested in is why bad things happen, attributing it to stupidity rather than malice just pushes the question down one level. If so many people act stupidly, why?
There are at least 3 kinds of situations in which dumb things happen:
- Some dumb moves are made by people who, well, are not that bright. The truth is that people have different levels of ability. We don’t all have equally-good judgment, and we’re not all equally good at foreseeing the consequences of our actions. In a corporate context, good hiring practices are supposed to weed out the untalented. But talent pools are always limited. And remember: screwups can in principle occur anywhere within a corporate hierarchy, so there’s no position so unimportant that a company can simply afford to fill it poorly.
- Some dumb moves are made by people — maybe even smart people — who lack the relevant skills. In some cases, that may mean they lack the relevant technical skills. If you’re not an accountant, for example, you simply may not understand the consequences of certain kinds of bookkeeping decisions. But people can also lack the skills to assess, for example, the quality of their own arguments and thought processes. I teach a course on Critical Thinking, and believe me, people are not all equally good at spotting fallacious arguments or flawed patterns of thought. But it’s a skill-set that can be taught, and learned.
- Some “dumb” decisions get made as a result of one or another of a bunch of well-studied cognitive biases. Those biases — the subject of an enormous body of psychological literature — go by names like “anchoring,” and “confirmation bias” and “the framing effect,”. (Confirmation bias, for example, essentially means that we have a tendency to accept new evidence when it confirms what we already believe, and to reject new data that challenges our beliefs. It’s dangerous, and we all do it.) Basically, cognitive biases are a bunch of persistent, and generally faulty, trends in the way humans think. They are ways in which we are pretty consistently subject to patterns of error in our thinking. Alarmingly, these cognitive biases tend to apply to smart people, too, as well as to people with the kind of technical training that you might hope would help them avoid such biases.
(For a bit more on why individuals do dumb things, see this Wired piece on Why Do Smart People Do Stupid Things?)
So, there are lots of reasons why people — even smart people — end up doing dumb things. And sometimes those dumb things will have evil (or just bad) consequences. It’s worth understanding the difference between bad things that happen because someone did something bad, and bad things that happen because someone did something dumb, though in some cases the line will be pretty fuzzy.
And I suspect Hanlon’s Razor holds true of organizations just as it does for individuals, and maybe more so. So really, we need to distinguish between why individuals act stupidly, and why organizations do. That’s a topic for another day.
