Is it fair to charge airline passengers based in part on weight? That’s the plan recently announced by Samoa Air, and it’s a plan that is raising a few eyebrows.
Yes, it’s an ethical issue. But no, there’s no clear answer.
Interestingly, the mainstream media stories I’ve read about this thus far have made little mention of the obvious moral worry, namely discrimination. On the face of it, this looks like systemic discrimination against overweight and obese flyers. You and I could be in adjacent seats, booked seconds apart, but if you happen to be 20 pounds chubbier than me, you’ll pay more.
Whether being fat is sufficiently under personal control to make it a permissible basis for discrimination is hotly debated. But it’s worth noting that a weight-based policy also discriminates against those whose extra pounds are pure muscle. A heavyweight boxing champ would be about fifty pounds heavier than me, and would therefore pay more. The same goes for someone with the same build as me, who happens to be 4 inches taller. So if this is discrimination, it’s discrimination against those who are heavy, not those who are fat.
The other factor not mentioned in the few stories I’ve read about this is the environment. In aviation terms, weight translates into fuel, and more fuel burned means more environmental impact. So in charging by weight, an airline is basically levying a kind of carbon tax. And while how much you weigh isn’t fully within your control, the amount of luggage you bring with you is, and Samoa Air charges based on the total weight of you plus your luggage. Charging more on that total encourages people to carry less, and in principle might nudge frequent flyers, at least, to lose a few pounds. Such reductions eventually mean reductions in carbon emissions, and that’s a good thing. So even if there is a problematic form of discrimination going on here, there’s at least one factor on the other side of the moral equation.
Finally, it’s worth noting that to the extent that we’re worried about discrimination against bigger people (regardless of why they are big), being charged extra for their weight is far from the only price bigger people pay. Sufficiently large people also “pay,” for example, in the form of pain suffered by squeezing into airline seats not designed for people their size. That’s one of innumerable ways in which people who are outside the norm suffer in a world of products and services that are mass produced. But then, if the unusually large person pays a price for being squeezed into a seat designed for smaller folk, the person next to them pays a part of that price, too.
Of course, Samoa Air is a tiny airline, based in a tiny country. And commentators suggest that the company’s example is unlikely to be copied by major airlines. Indeed, it’s probably next to impossible: Samoa Air not only charges more to heavier passengers, it gives them more space — something likely impossible on standardly-configured passenger jets. But it is precisely for this reason that Samoa Air makes for a good case to use in ethics training and education. Before coming down on one side or the other, it’s important to tease out not just that there’s an ethical issue at all, but that there are in fact a range of ethical questions here.
The drugstore chain, Rexall, has been shaking things up a bit lately. Chain Drug Review recently posted a lengthy piece on how Rexall “aims to reinvent the drug store”. And a recent piece in the Ottawa Citizen says that the chain’s new products aim to make life better.
But not all of the attention lavished on Rexall has been so positive. Dr Terry Polevoy, an MD who runs the website Canadian Quackery Watch, recently showed me a highly problematic ad from a Rexall flyer inserted two weeks ago into his local newspaper, the Waterloo Record:
Trusted homeopathic remedies offer an alternative way to naturally treat symptoms. Speak to your local Rexall Pharmacist for more information or visit rexall.ca.
The problem, of course, is that homeopathy doesn’t work. Or, to be more precise, there’s no reliable evidence that it works, nor any plausible reason to think that it even could work. In commercial contexts, that’s pretty bad. And it’s worse still when the company selling the stuff is a company people rely on for competent health advice, and when that company leverages the credibility of a licensed health profession to promote bogus wares.
Rexall isn’t the only drugstore chain selling homeopathy and other ‘alternative’ healthcare products. A pharmacist friend who keeps his eyes open for such things tells me he’s seeing more and more of it. And last year, a class action lawsuit was filed against Shoppers Drug Mart and a company called Boiron, maker of a homeopathic preparation called “Oscillococcinum.” The suit alleges that Boiron breached several consumer protection statues in marketing Oscillicoccinum without evidence that it works.
But even if the suit against Shoppers fails, it’s worth remembering that what’s legal isn’t always ethical. It’s wrong to mislead consumers, even where doing so is legal. And the Rexall flyer is clearly misleading. Homeopathic remedies are incapable of treating symptoms — at least, unless the companies that make them have learned to violate the laws of physics and basic biochemistry. A homeopathic ointment may soothe skin because of the soothing properties of the non-medicinal cream on which it is based — if you take standard hand cream and add pixie dust it will now be “pixie dust cream,” but the fact that it makes your skin feel better won’t have anything to do with the power of pixies.
And then there’s the placebo effect, rooted in the well-documented fact that the power of suggestion can in some cases have real physical effects: if you believe a pill will cure your headache, then it just might. But such effects are quite hit-and-miss, and hard to predict, and in any case are predicated on a lie. Lying isn’t always illegal, or even always wrong, but when you lie in commercial contexts, both the law and society more generally takes a pretty dim view of it.
Now to be fair, I know that there are other products on drugstore shelves that raise questions about efficacy. Some studies have suggested that prescription antidepressants, for example, are no more effective than placebos. But the key is that there’s a rigorous (if imperfect) procedure for debating the effectiveness of prescription drugs. Yes, the makers of prescription drugs sometimes exaggerate the effectiveness of their products, playing fast-and-loose with the evidence. But the purveyors of ‘alternative’ therapies like homeopathy do that literally all the time.
When I asked him what he thought about this kind of marketing, Dr Polevoy said the following:
Rexall, like Shoppers Drug Mart, has one thing in mind when it comes to the marketing of homeopathic products. In my opinion, the bottom line — profits — is much more important to them than their customers, and whether or not these products work. Their customers are the ones who will ultimately pay the price, and the pharmacists have no power to warn their customers that homeopathy is bogus, and that they are wasting their money.
The commercial world is full of scams, and all too often people with something to sell have unwarranted faith in their products. Greed and ignorance are nothing new, but that that doesn’t mean they are excusable. Companies that claim not just to provide a product, but to educate and take care of consumers, ought to do better. They should do their best to sell only those products that they, and their customers, are justified in believing in.
I recently spent a day acting as a Faculty Advisor at an event held by the Canadian Business Ethics Research Network (CBERN). The day involved listening to presentations by young PhD students in the field of Business Ethics and offering constructive comments on their research projects. The students presented on very different scholarly questions within Business Ethics, each drawing on his Doctoral research. It was interesting enough that a summary bears repeating.
The first presentation was by Sean Geobey from the Waterloo Institute for Social Innovation and Resilience. Geobey’s presentation was about a broad cluster of financial mechanisms known as “social finance” (which includes, for example, microfinance, social banking, and crowd-funding). The focus was on the degree, if at all, to which such innovations can serve as remedies to failures on the part of more traditional market- and government-based mechanisms.
When, for example, can microfinance remedy failures of traditional banking, and to what kinds of failure is microfinance in turn subject? The significance of this work is plain: it is increasingly clear that there is value to be found in open-minded innovation about the institutional mechanisms we use to supply goods and services, including finance. If social finance is to make good on its promise, we need sophisticated understandings of just what it can and cannot do.
Second up was Abraham Singer from the University of Toronto. His presentation was an exploration of the relevance of the political philosophy of John Rawls — the most important in his field of the 20th Century — to corporate governance. Singer’s conclusion was to cautiously assert that Rawls probably has relatively little to tell us about corporate governance. Rawls was primarily concerned with justice in what he called the “basic structure” of society, the key institutional mechanisms that make society what it is. That basic structure, according to Rawls, must be subject to principles of justice that would be acceptable to essentially everyone, regardless of their own particular vision of ‘the good life.’ And Rawls was clear in stating that beyond that basic structure, all of us must be permitted the freedom to live our lives as we see fit.
Singer argued convincingly that where the Rawlsian framework is concerned corporate governance is essentially a private matter, and so the specific principles of justice that Rawls advocated just aren’t relevant within corporations. That’s not to say that justice within corporations isn’t a concern; it’s just to say that the principles that apply there will be specific to the kind of institutions that corporations are, rather than being the principles that apply to how we organize society more generally.
And finally was a presentation by Hamish van der Ven, also from the University of Toronto. His work is on the factors that affect companies’ decision to “go green.” The standard assumption is that companies that take an environmentally-sensitive turn are likely to do so because they’ve become convinced of the business case for doing so. They may, for example, have realized that there are significant bottom-line benefits to energy conservation, and positive reputational benefits to being seen as sensitive to environmental concerns.
Van der Ven’s hypothesis—supported by limited but provocative data—suggests that what is much more important is whether a company’s senior executives have or have not had opportunities to associate with, and absorb values from, environmentalists and environmental organizations. What matters, in other words, is the processes of socialization that senior executives have been through.
Van der Ven argued that you can understand a lot more, for example, about Walmart’s relatively strong environmental performance (compared, say, to Costco’s) by looking at the experiences of certain key decision-makers, and by looking at the number of points of interaction (or lack thereof) between the companies and various environmental groups.
Interestingly, none of these three young scholars is from my own home discipline, namely philosophy, which is the traditional ‘home’ of academic business ethics. Singer and van der Ven are political scientists, and Geobey’s background is in economics and environmental studies. Small sample, to be sure, but this kind of diversity is as it should be. Business ethics is and must be a broad discipline. It needs to draw upon both theoretical and practical insights, and on scholarly methods from a whole range of humanist and social-scientific disciplines. Business ethics, in other words, is everybody’s business.
The issue of ethics in the food industry never really goes away, but there are times when it garners more than its usual share of headlines. About a month ago, the New York Times published a lengthy piece called “The Extraordinary Science of Addictive Junk Food,” by Michael Moss, author of “Salt Sugar Fat.” The piece is a riveting look at the often-cynical moves made within the food industry within recent decades to use our tastebuds against us, to use our love of salt and sugar and fat to persuade us to buy products that are making us more overweight and less healthy.
The next headline had to do with NYC Mayor Michael Bloomberg’s attempt to push back by banning supersized sugary drinks. The move had many fans. Not among those fans: Starbucks, which said it simply would not comply, the American Beverage Association, and New York State Court Judge Milton Tingling, who accepted the ABA’s request to block Bloomberg’s plan.
Most recently, and related to all of the above, the New York Times recently ran an opinion piece on the need to impose stricter regulations on food companies in order to slow the industry’s otherwise seemingly inexorable march toward ever more addictive, and less healthy, prepared foods. The piece was written by a guy named Michael Mudd, a former executive VP at Kraft, no less.
Mudd’s key point is essentially that if the food industry is going to be reined in, government is going to have to do it, since the industry shows little interest in restraining itself. In other words, to borrow Mudd’s words, government is going to have to “force ethics” on the industry.
There are at least two significant problems with framing the issue this way.
The first problem has to do with chalking it all up to a lack of ethics. This is entirely the wrong diagnosis. Or, to be precise, even if the food industry suffers from an ethics deficit, that deficit is not necessarily the root cause of the problem. The unfortunate truth is that there are some problems for which “more ethics” simply is not a viable solution. Ethics is about finding rules that make social living better, but it assumes some overlap of interests. In particular, ethics only works where we have a shared sense that our lives—or our businesses—would go better if we followed a few rules. Ethics isn’t fundamentally about self-sacrifice; it’s about mutual restraint for mutual benefit. That’s why ethics is generally important in business: harmony is good for business. But it’s still a competitive game, and at the end of the day all the competitors want to win. Unless you can show the food industry that its interests will somehow be promoted by playing by a different set of rules, then an ethical solution just isn’t in the cards.
There’s a second reason why ethics isn’t enough. Ethics involves restraint on self-interested (or profit-seeking) behaviour. But the notion of restraint presumes some understanding of where to draw lines. But consider the dilemma faced by any company that sells a fundamentally sugary or fatty food, like Coke or Twinkies or Doritos. These products are delicious, and harmless if consumed as most of us consume them, namely in moderation. When the Coca Cola Company sells me a can of coke, it does absolutely nothing remotely unethical. I’m a grownup, well-informed about the nutritional characteristics of Coke, and besides this one coke is meaningless, health-wise.
But, yes yes, we all know that anyone drinking too much Coke is going to suffer ill effects, and a society that drinks too much Coke is going to suffer too. But how much is too much? No one can say. And simply imploring the Coca Cola Company to “be more ethical” is useless, here. True, we can implore them not to advertise in a way that targets kids, or not to promote ridiculously huge servings, but that leaves the fundamental paradox of their product untouched. Even a scrupulously ethical — indeed, saintly — Coca Cola Company would still find itself uncertain as to how to market its product. How would you sell a product that many people enjoy harmlessly, but that in the aggregate causes trouble?
Finally, the plea for “more ethics” in the food industry misses entirely the fact that that the food industry’s pattern of supplying us with excessive quantities of fat and sugar and salt constitutes a classic social dilemma, a situation in which each person’s (or company’s) behaviour is individually reasonable, but collectively disastrous. We’re poisoning ourselves with junk food for the same reason we’re burdening our atmosphere with giant quantities of carbon dioxide. Not because we’re stupid or unethical, but because my own efforts to reduce carbon emissions (or yours, or yours, or yours) are neither necessary nor sufficient to make a difference. Coke can’t solve the obesity problem. Nor can McDonalds. Nor Kraft. Nor… you get the picture.
So, yes, feel free to call for greater regulation of the food industry. But recognize that in doing so you’re not calling for more ethics. You’re admitting that even ethical companies can produce unwanted outcomes. A good understanding of the role of ethics in business must include some appreciation of the range of problems at hand, including the ones for which ethics is unnecessary, as well as the ones for which ethics simply is not enough.
Canadian engineering giant SNC-Lavalin continues to provide plenty of fodder for ethics classroom discussion, and making news in all the wrong ways. Over just the last three days, the company has made headlines for making over $1 million in illegal political donations in Quebec, for disguising dodgy payments to an agent in Angola, and for police searching the home of a former executive as part of a prosecution involving more than a dozen criminal charges.
Against this backdrop, slightly less attention has been paid to an announcement last week that the company had hired a former Siemens executive to take over the role of Chief Compliance Officer, a portfolio that ostensibly puts him in charge of ethics, too.
I was interviewed about this recently on BNN, (see video here) and the key question not surprisingly was whether having hired a new Compliance Officer is going to be enough to turn the company around, either in terms of ethics or in terms of reputation. In this regard, I think three key points need to be made.
First, a word about the relationship between ethics and compliance. The new guy SNC has hired (Andreas Pohlmann) is first and foremost in charge of compliance. Compliance with the law will of course be a very good start for SNC, but it’s just a start. Ethics has to be part of the picture. For that matter, even if Pohlmann’s only goal is to get the company consistently onto the right side of the law, there’s good reason he should pay attention to ethics, so that employees at SCN understand the ethical underpinnings of the laws the company has been breaking.
Second, the company needs to see that its reputation has to be built on more than its ability to pull off big engineering projects. SNC needs to be a company all stakeholders – including investors – can trust, because trust is the foundation of business. Given its track record so far, if I were looking for a big engineering contractor I wouldn’t put much trust in SNC at all. If they play fast-and-loose with the rules as much as they seem to, what’s to say they aren’t going to play fast-and-loose with their obligations to me, too?
Finally, the company needs to get past its apparent belief that bribery is just part of doing business. Bribery isn’t just illegal — illegal pretty much everywhere, even in places where it’s tragically common — it’s also bad business. And by “bad business,” I mean it is bad capitalism. It’s the opposite of free and open competition.
If SNC is going to regain its place as a rockstar Canadian company, it needs to show that it can go out there and compete and win on quality, rather than on its ability to bend and break rules.
A month ago, we launched the Business Ethics Journal Review (ISSN: 2326-7526), a venture in 21st century academic publishing, which I co-edit along with Alexei Marcoux (Loyola University Chicago).
The goal of BEJR is to publish short, peer-reviewed commentaries on recent business ethics articles published in the standard scholarly journals.
Since our launch, we’ve published the following six peer-reviewed Commentaries:
“Moving Beyond Market Failure: When the Failure is Government’s” by Peter Jaworski Bus Ethics J Rev 1(1) (2013): 1–6
“Corporate Human Rights Obligations: Moral or Political?” by Jeffery Smith Bus Ethics J Rev 1(2) (2013): 7–13
“Toward a Political Theory of the Business Firm? A Comment on ‘Political CSR’” by Pierre-Yves Néron Bus Ethics J Rev 1(3) (2013): 14–21
“Are Usurious? Another New Argument For the Prohibition of High Interest Loans?” by Matt Zwolinski Bus Ethics J Rev 1(4) (2013): 22–27
“The Unification Challenge” by Dominic Martin Bus Ethics J Rev 1(5) (2013): 28–35
“Proposition: Shared Value as an Incomplete Mental Model” by Laura P Hartman and Patricia H Werhane Bus Ethics J Rev 1(6) (2013): 36–43
We’ve also published the following three Responses, from the authors of the works at which some of the above Commentaries were aimed:
“The Cost of Usury” by Robert Mayer (a response to Zwolinski) Bus Ethics J Rev 1(7) (2013): 44–49
“Market Failure or Government Failure? A Response to Jaworski” by Joseph Heath Bus Ethics J Rev 1(8) (2013): 50–56
“Morality Meet Politics, Politics Meet Morality: Exploring the Political in Political Responsibility” by Florian Wettstein (a response to Smith) Bus Ethics J Rev 1(9) (2013): 57–62
You can see abstracts, and get free access to the full PDFs for each piece, by clicking on the links above.
For more information about BEJR, please see our instructions for authors.
Update: You can also follow the BEJR’s Facebook page, here: http://www.facebook.com/BusinessEthicsJournalReview
CEO pay — in Canada, at least — is apparently more closely aligned with corporate performance than most people have suspected.
Last week I had the pleasure of hosting Matt Fullbrook, Manager of the Clarkson Centre for Business Ethics and Board Effectiveness, as part of my Business Ethics Speakers Series. Fullbrook’s presentation focused on an interesting study recently completed by the Clarkson Centre.
Much of the discussion focused on this provocative graph:
The graph plots change in CEO pay against total shareholder return (TRS). Each dot represents a company listed on the TSX 60. The red dot shows the average for all companies studied. The blue shaded areas indicate companies at which CEO pay and shareholder value have been headed in the same direction (up or down) over the 8 years under study (2004-2011). The other areas show misalignment. The vast majority of companies are in the blue regions. Only at one company did pay rise substantially without a commensurate rise in shareholder value, and several companies showed phenomenal growth in value with no change in CEO compensation.
After his presentation, Fullbrook summarized the study’s findings for me this way: “Our research shows that CEO pay and performance are largely in sync at Canada’s largest corporations, contrary to conventional wisdom. Despite the Financial Crisis, and a significant amount of CEO turnover, most issuers have successfully aligned executive compensation with shareholder returns, which is great news for investors.”
I’ll leave you with just a couple of comments on this.
First, it’s worth noting that the x-axis on the graph above shows change in CEO pay, rather than absolute level of CEO pay. So while we can see that not many Canadian companies provided their CEOs with big raises, that doesn’t mean that they weren’t overpaid to start with. They may or may not have been; that’s a different study. But the fact that pay and performance are heading in the same direction is still pretty significant, given that lots of criticism has been rooted in the perception that CEO pay was climbing while investors get shafted. This study shows that, in general, that’s not true in Canada.
Second, just what counts as “alignment” is itself a difficult question, and during his presentation Fullbrook was thoughtful in this regard. What we see in the red dot in the graph above is a kind of correlation. It suggests that the pattern in Canada is that a slight upward trend in CEO pay is accompanied by a bigger upward trend in shareholder value. But this leaves open questions such as whether TRS is the right measure of “performance” (even if we focus exclusively on the interests of shareholders).
And if we try looking at individual companies, at a particular moment in time, the question of alignment becomes even more difficult. The word “alignment” itself arguably suggests parallel trajectories. But where a CEO is overpaid, it makes sense for pay to go down even while (hopefully) value is going up. The attempt there is to make pay commensurate with value, not to push them in the same direction.
Executive compensation continues to be one of the hardest problems faced by corporate boards, as well as an absolutely key ethical obligation. Doing it well is difficult when we’re not even sure what doing it well looks like.
Product labels are important, both practically and ethically. Reading the label is a key way to make sure the thing you’re buying meets your needs. Labels on products can help inform consumers about what they’re buying, reducing what economists call information asymmetries between buyer and seller. Where substantial information asymmetries exist, voluntary exchanges can fail to live up to the promise of mutual benefit, and society as a whole suffers from the resulting reduction in market efficiency.
Of course, not everything that could be said about a product could possibly be crammed onto a product’s label, so generally the information provided consists of what the maker of the product really wants to brag about, what consumers insist on knowing, and anything beyond that that regulators have seen fit to insist upon.
So precisely what gets labeled, and what form the labelling takes, matters a lot. Now while the moral significance of labels in general is not disputed, just what should be included on labels is hotly debated.
Take, for instance, the question of whether a food product has been genetically modified (GM). Or, more precisely, whether the ancestor of the organism from which a food product was derived was genetically modified by means of a particular set of laboratory procedures. It’s important to be precise, here, because there is virtually nothing that we eat today that hasn’t been ‘genetically modified’ by humans in some loose sense.
If you thought the question of GM labelling had gone away with the demise of California’s Proposition 37 this past November, think again. Washington State is apparently about to hold a vote on the issue, and there are reports that the anti-GM faction has been energized by the battle in California, and perhaps even galvanized by the massive sums of money that ‘big food’ and ‘big ag’ apparently spent to help defeat Prop 37. But as I’ve argued before, the demand for mandatory labelling of GM foods is misguided: the broad scientific consensus is that there’s no reason to worry about GM foods. Making such labelling mandatory, just because some people want to know if their food’s genes have been tweaked in certain ways, would be unjust.
Contrast this with the stunning report recently released by the ocean conservation group, Oceana. Nevermind subtle genetic modifications. Oceana found that a very high proportion of the fish sold in American retail outlets isn’t even from the species indicated on the label. So consumers are buying “snapper” that isn’t really snapper, and “tuna” that isn’t really tuna. Here, consumers are being lied to. Information isn’t just being omitted; the information being given is actually a lie, and so consumers are being cheated.
If the food companies of the world are going to expend money and effort to provide consumers with information, it’s pretty clear which kind of issue they should expend it on.
As of a couple of weeks ago, I’m now co-editor and co-publisher of an innovative new publication that aims to shake up the somewhat stodgy world of academic business-ethics publishing. The Business Ethics Journal Review (BEJR) is a cutting-edge online publication: it’s a free, open-access journal that publishes peer-reviewed commentaries on scholarly articles published in mainstream academic journals.
That may not sound all that exciting to those not firmly ensconced in the ivory tower, so let me explain why it’s worthy of note.
The business model of standard academic journals hasn’t changed in decades, perhaps centuries. The process goes like this. Scholars submit their research; editors vet it for basic adequacy, and then anonymize it and send it to other scholars for “blind review.” If the work passes muster (often after a round or two of revisions) it eventually gets published. If another scholar spots errors or confusions, he or she repeats the process, submitting a rebuttal that goes to an editor, then through the process of peer review, revision, and so on. It’s hardly a process that fosters discussion. A single back-and-forth can literally take years.
BEJR aims to change that formula radically, by leveraging the power of the internet and social media. We’re publishing online, and we’ve streamlined the review process so that we promise authors submission to publication in under 30 days. We also provide a “Comments” function on our website, so that literally anyone with an internet connection can participate in the discussion.
(An interesting aside: my co-Editor Alexei Marcoux and I have started BEJR using two laptops, some off-the-shelf software, and a consumer-grade web-hosting service. It’s taken plenty of work, but we’ve hardly broken the bank. A couple of decades ago, starting your own scholarly journal would have required taking out a second mortgage on your house.)
Broadening discussion in the realm of business ethics is no small feat. A lot of different people have an interest in business ethics, including business executives and other corporate employees, as well as consultants, activists, and academics. The problem is that although there is plenty of conversation about the topic, the conversation tends to be fragmented. Executives talk to executives and to their own employees. Activists chat amongst themselves and try to get the public interested. And academics most typically carry on isolated debates about esoteric considerations in scholarly journals that the uninitiated never dare to read. Bringing business ethics scholarship into a much more public forum holds the potential to foster real dialogue.
Of course, like anything really innovative, there’s a chance that the Business Ethics Journal Review will fall flat on its face. We’ve published half a dozen peer-reviewed commentaries so far, and our website has already seen some lively discussion, but it’s entirely possible that our initial momentum will wither, that the novelty will wear off, and that those who have expressed enthusiasm for this new format will go back to old, familiar ways.
And you know what? That’s OK. That’s what entrepreneurship is about: trying something cool, and living with the chance of failure. But for now, it’s great to be part of something that has other people saying, “Wow, what a great idea!” That’s something everyone should get the chance to experience, at least once in their lives.