What’s Legal Isn’t Always Ethical

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

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

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

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

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

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

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

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

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

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

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

(See also the entry on Law, from the Concise Encyclopedia of Business Ethics.)

31 comments so far

  1. Norman Steinberg on

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

    • Harry Adr on

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

    • sarah on

      hi professor i study in the UAE UNIVERSITY and we take business ethic the teacher told us bring examples for ethical but illegal issues and unethical but legal can u give me some

      • Chris MacDonald on

        I’ll give you one example and leave the rest to you: breaking the speed limit to get an injured child to the hospital. That would in many cases be ethically fine, but technically illegal.

      • Maddie on

        Chris, I believe that is unethical as you are putting everyone else in danger with your reckless driving in order to take your child to the hospital for an injury? I don’t think a broken arm makes an unethical issue become ethically fine.

  2. Urs on

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

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

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

  3. Peter Jones on

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


  4. Pete Bresnahan on

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

  5. Yvonne Box on

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

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

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

  6. darrenlobo on

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

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

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

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

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

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

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

  10. […] ethics and the law. As should be obvious, ethics and the law are not identical. What’s legal isn’t always ethical, and vice versa. An ethics code typically tries to bridge the gap: they tell employees what’s […]

    • ShriGopal Soni on

      A culture of impunity is created when people in power break the law,
      escape social or legal punishment, and then continue breaking the law.
      Impunity allows the powerful to get away with it – to break existing
      laws but also to exploit legal loopholes…
      During 2010-2013 those in the Public Sector Undertaking (PSU) New
      india Assurance company head office mumbai deliberately misread the
      notice(s) of the Central Information Commission (with copy to
      appellants ,e.g. the complainant) to attend video conference.
      The complainant witnessed systematic loss of public money of approx.
      Rs. 10000/- to 25000/- per person to claim habitual ,uncalled for
      Delhi tour to embezzle public money ..


  11. […] See also: What’s Legal Isn’t Always Ethical […]

  12. […] legal and what’s ethical. Palmer believed he was conducting a legal hunt. But what’s legal isn’t always ethical, especially in countries with underdeveloped regulatory systems. The fact that a practice is legal […]

  13. Greg on

    A good example of this is oil and gas waste water injection and earthquakes. Waste water injection is legal, but if it has a correlation to earthquakes, which is yet to be determined; is it ethical? Some things to consider, is the methodology in correlating waste water injection or disposal to earthquakes is building a model and methodology to understand the why, how and to what extent waste water injection has on induced seismicity or earthquakes. To start this model one should collect the data for the number of barrels injected waste water at disposal wells across the US or even by region and compare that against the seismic activity through time. This would make a great visual. Some additional considerations for the model methodology are to take volume of fluid injected in disposal wells and try to correlate the proximity of these disposal wells to the epicenter of the seismic event or earthquake. The next step would be to overlay geologic fracture and fault maps. This would provide data relating epicenter proximity to known fracture or faults, provide a possible correlation between volume injected in disposal wells and epicenters, potentially begin to define a radius of induced seismicity, and place parameters around areas of interest that may be highly sensitive to disposal well injection as opposed to areas that are less sensitive or even beneficial to receive such injection. Building a model based on data rather than seeing a trend and making assumptions seems to be the better approach. I can assure you that oil and gas operators are as interested in this data as the general public and academics, if not more interested. Rest assured state regulators are keeping a close watch on the correlation and data coming out of the academic community. In fact, the Oklahoma Corporation Commission has already implemented regulation on injection wells. If it is determined that oil and gas waste water disposal is directly correlated to earthquakes, the oil and gas industry and this nation will be faced with some very difficult decisions. Without getting into the renewal energy debate, this country is still highly dependent on hydrocarbons for energy sources. Operationally, oil and gas operators would be forced to shut down almost overnight unless they find a way to recycle produced water, which has been proven to work. This overnight shutdown would cause massive unemployment, blackouts, outrageous fuel prices, and general chaos a multitude greater than the oil embargo of the 70’s. The ethical decisions would be centered on future oil and gas demand, environmental responsibility, corporate citizenship and reliance on foreign oil. The Utilitarian ethical dilemma becomes one of what is best for the U.S.; shutting down all oil and gas development to reduce the risk of a major earthquake, loss of life, and suffer through the shockwaves of no longer having domestic oil and gas production or trying to mitigate and promote responsible domestic oil and gas development while trying to understand and reduce the risk of earthquakes in “flyover states?” So given what we know today, oil and gas waste water disposal is still legal, but is it ethical? Is it ethical to shut down the main industry driving the economy in say Oklahoma based on assumption rather than verifiable data?

  14. […] isn’t an acceptable stand-in for ethical behavior. Just as legality doesn’t equal morality (seriously, it doesn't, spread the word), so too does profit fail to imply ethical superiority. Great, we’re all making […]

  15. Tim B on

    I first want to say I enjoyed the article and agree with you. The part that I would like to add and point out is that the accounting teacher was not necessarily wrong as they were teaching about accounting and in that world ethics determines most of the laws as the reason for accounting laws and regulations is to present a clear and truthful representation of the company’s financial standings for the purpose of investors. So in that world yes legality does determine ethics and ethics determines legality. I know this is not what you were speaking to but was something I feel you should keep in mind and might help explain to the students like the one you mentioned in the article as I also see that as ethical respect for fellow teaching professionals. I enjoyed reading this though thank you for sharing.

  16. Adrian on

    You’re right about some things and wrong about others. Why pick what’s thought of as wrong instead of what’s legal? There’s not enough logic in either. Morals are about desirability, not what’s thought of as wrong. You can’t just pick the majority because there are too many different ideas about ethics. If people thought it was fine to kill or steal, would it be right? Say, if the majority voted on people to murder or something because they were bored because it was a psychopathic society? No, that would still be wrong, because it’s worse for that person. It’s worse to die than be bored, so the psychopath can go without. They are just selfish, even if they are the majority. The majority can be selfish. Because everyone is important and everyone matters. Interracial marriage used to be thought of as wrong, and that’s not immoral. Would you consider that immoral?
    What’s your reasoning? Why do you think it’s about the majority? Do you just not think about it?

    • Chris MacDonald on

      No, ethics isn’t just about the majority. The point of this blog entry isn’t to provide a full explanation of where ethics comes from; it’s just to point out that ethics and the law are not the same.

  17. Florent on

    Why cant ethics become the law ?

    • Chris MacDonald on

      Think about this for a moment: would you really want all ethical obligations turned into laws? That would mean a huge number of new laws, a huge enforcement problem, and a hugely intrusive legal system. (example: Imagine your friend asks “What do you think of my new boyfriend.” Imagine you lie, and say “He’s great!” That lie is probably unethical. But do you think it should be against the law? Should you be thrown in jail over this?)

  18. […] in my opinion, it is ethically wrong and illegal to use a fake doctor’s notes also known as a doctors excuse. If the selling and buying of this […]

  19. John Arnold on

    We need you now as Trump is using it is legal as his rational for not separating himself as President from himself as businessman. That is extremely dangerous then he can bargain with US support, treaties, military, commerce for the purpose of his business. He can take this further by using his deals to buy or buy into office Senators and Congressmen. He can build his dictatorship.

    John K Arnold

  20. […] tests upon them, then perhaps they could, legally, but it would still be a PR disaster.  “Legal” does not mean “ethical“.  There’s more to running a business then simply doing what the lawyers say is […]

  21. Adam on

    The examples you list are morally wrong not ethically wrong.

    • Chris MacDonald on

      Please explain what you think the difference is. Those words are used differently by different people, and in different literatures. In at least one traditional usage, they are interchangeable. And regardless, I don’t know of any usage of “ethical” according to which I would be wrong to say that lying is unethical.

  22. Joel Isaac Kakembo on

    Engaging in Price fixing to force smaller competitors out of Business. …….

    • Chris MacDonald on

      Is that supposed to be an example of my point, or a counter-example?

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