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Should Celebrities Regret Singing for Gadhafi’s Family?
Filed under: accountability, boycott, brands, charity, entertainment, ethics, excuses, international, profits |
Leave a comment I blogged nearly two weeks ago about the Ethics of Doing Business in Libya. The concern there was about the ethics of involvement in Libya by, well, “businesses” in the traditional, i.e., corporate, sense of that word. But the controversy that emerged short after that, and that continues still, concerns high-profile members of the entertainment business — celebrities like Usher, 50 Cent, and Mariah Carey. Basically, it has come to light that a whole fistful of such stars have, at various times, done private concerts for members of the Gadhafi family. And now, in light of the continuing violence in Libya, most of those stars are expressing regret and doing things like donating the money to charity. (For details, see Public consequences of pop stars’ private gigs, by By Reed Johnson and Rick Rojas for the Los Angeles Times.)
A few people have pointed out that the timing of the celebs’ crisis of conscience is just a little bit off. Libya has been a dictatorship for decades, and its leader has been a vicious madman just as long. As Tim Cavanaugh wrote on his blog at Reason, “Even assuming Qaddafi is so toxic you can’t with sound conscience take his dinars, that didn’t just become the case a few weeks ago.” If it’s right to give the money back now, it was likely wrong to take it in the first place.
But we can also question whether anyone does, or should, give much of a hoot over where these celebs sing, or for whom. The LA Times quotes Sting — a star with a reputation for charity work and activism — as defending having sung for the daughter of Uzbekistan dictator Islam Karimov:
Sting addressed criticism saying he was “well aware of the Uzbek president’s appalling reputation in the field of human rights as well as the environment. I made the decision to play there in spite of that.” He added, “I have come to believe that cultural boycotts are not only pointless gestures, they are counterproductive, where proscribed states are further robbed of the open commerce of ideas and art and as a result become even more closed, paranoid and insular.”
The man has a point. Though it may sound like a self-interested argument, that doesn’t mean it’s a bad one.
(Cavanaugh’s blog entry has a wonderful quote from, of all people, Adolf Hitler, who shrugged off artists behaving in ways that might have taken by him to be treasonous: “I don’t take any of that seriously. We should never judge artists by their political views. The imagination they need for their work deprives them of the ability to think in realistic terms.”)
But this leads me wonder: just what is the objection to singers singing for dictators? Is the money the problem, or is it having sung for (or more generally having done business with, or having provided a service for) an evil man’s family? Consider: if the money really is the problem — i.e., if this really is a case of filthy lucre — then donating the money to charity really does utterly absolve the stars in question of any blame. Or at least it would if the timing weren’t so questionable. Singing for free would also be OK. Indeed, if the money is all that matters, then stars might have a positive obligation to sing for wealthy tyrants and give the money to charity. After all, what could be better than squeezing a few million out of a mad dictator’s family in order to do something good with it? And if singing for free (or singing for money and donating it to charity) isn’t OK, then that seems to imply that the money isn’t the problem either.
Critical Thinking in Business Ethics, Part 3: Fallacies
Filed under: complexity, critical thinking, decision-making, definitions, ethics, excuses |
Comments (2) 
This is the 3rd in a series of occasional postings on the role of critical thinking in business ethics.Critical thinking is about a) how to construct good arguments, and b) how to spot and avoid bad ones. The focus of this posting will be on the latter. Bad arguments come in many forms, in many shapes and sizes. But some faulty arguments follow patterns of reasoning that are so common that they’ve acquired names. The general term for such named patterns of faulty argumentation is “fallacy”. There are many known fallacies, and textbooks on critical thinking typically devote a chapter to discussing a dozen or more of the most common ones.
Here are just a few examples of fallacies that could hinder good reasoning about Business Ethics.
One common fallacy is known as “the fallacy of composition.” We commit the fallacy of composition any time we assume, without justification, that the characteristics of the parts of a thing are automatically shared by the thing as a whole. A silly example: the fact that each piece of a motorcycle is light enough to lift doesn’t mean that the motorcycle as a whole is light enough to lift. Likewise, the fact that each member of a committee is talented and effective does not mean that the committee as a whole will be talented and effective — group dynamics matter. A business-ethics example follows pretty quickly from that one: from the fact that each member of your organization is ethical and well-intentioned, it does not follow that your organization, as a whole, will always act ethically. Team dynamics and institutional structure matter. That’s not to say that having ethical employees isn’t important. It obviously is. The point is just that you can’t automatically assume that, because you’ve got good employees, the net result of their behaviour will always be ethical. Another important example: from the fact that individual ethical acts don’t always pay, it doesn’t follow that an ethical pattern of behaviour won’t pay off in the long run.
Here are some other standard fallacies with clear relevance to business ethics. I’ll leave it to the reader to think up examples.
- “Appeal to the Person” (a.k.a. ad hominem attack), which generally involves attacking the person putting forward a point of view, rather than examining the strengths and weaknesses of that person’s argument. It’s important to keep in mind that a well-reasoned argument from someone you don’t like is still a well-reasoned argument.
- “Appeal to Tradition“, which typically means using the fact that “we’ve always done things this way” as a reason for continuing to do things that way. Clearly a recipe for disaster.
- “Appeal to Popularity“, which involves appealing to the fact that a particular point of view or practice is popular as a reason in favour of that view or practice. But being widely-believed is of course a very poor indicator of whether or not a claim is actually true.
- “Straw man” argument, which involves setting up, and then knocking down, a weak or foolish-looking “dummy” version of your opponent’s argument. This is a common rhetorical device. Whenever someone criticizes a particular bit of regulation, for example, it’s easy (but wrong) to paint them as a “rabid free-market neoliberal,” and then to attack that ideology, rather than looking at the substance of their argument.
One of the reasons such fallacies are so dangerous is that they tend to be psychologically appealing. Sometimes they’re appealing because they play to our biases. And sometimes they’re appealing just because they act as short-cuts, letting us take the easy (i.e., lazy) route straight to a simple conclusion, without doing the hard work of actually looking critically at the case at hand. But in business ethics, what we really need are the best answers, not the easiest ones.
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See also Part 1 and Part 2 in this series.
Regulating Wall Street Bonuses
Filed under: accountability, competition, decision-making, employees, finance, government, pay, regulations, wages, white collar crime |
Comments (5) The U.S. Securities and Exchange Commission has just announced its intention to exercise oversight over levels of pay on Wall Street. Is this an example of overreaching regulation, or of justified intervention in the public interest?
Here are the details, from Ben Protess and Susanne Craig, on the NYT‘s DealBook blog: S.E.C. Proposes Crackdown on Wall Street Bonuses:
Lavish Wall Street bonuses, long the scorn of lawmakers and shareholders, have met a new foe: the Securities and Exchange Commission.
The agency on Wednesday proposed a crackdown on hefty compensation awarded at big banks, brokerage firms and hedge funds — a move intended to rein in pay packages that encouraged excessive risk-taking before the financial crisis.
The proposal would for the first time require Wall Street firms to file detailed accounts of their bonuses with the S.E.C., which could then ban any awards it deemed excessive. The rules would be aimed at top executives and hundreds of rank-and-file employees who receive incentive-based pay….
In general, we should probably have as our starting point a healthy skepticism about government attempts to regulate pay in particular industries. Remuneration for high-level jobs is typically based on some combination of rewarding past performance and incentivizing future performance, in addition to sensitivity to things like skill, experience, and the scarcity of the particular talents the job requires. And it’s highly unlikely, again speaking in generalities, that government agencies are going to have the right information and motives to allow them to determine with any degree of precision and efficiency just what a private company’s pay structure should be. Now of course governments aren’t the only ones who could err in setting up compensation schemes; private companies are perfectly capable of screwing that up pretty badly themselves. But for the most part, if private companies screw up in that regard, it’s their shareholders that should hold them accountable, just as it is shareholders who ought to hold them accountable for any other foolish spending.
But there are likely to be justified exceptions to the general presumption in favour of the government taking hands-off approach to compensation. If it is the case — and this seems to be the S.E.C.’s conclusion, here — that compensation schemes in a particular industry are seriously and chronically causing harm beyond the walls of the organization, that seems to be a pretty good argument in favour of government action. This is especially true when the damage being done is not “merely” damage to particular individuals or groups, but to the stability of the economy as a whole. And as Protess and Craig point out, “The move by regulators to have more say on Wall Street pay highlights the huge role financial institutions play in the economy.” That is what arguably makes the harm done by Wall Street compensation not just a matter of private wrongs, but of public ones.
But of course, this argument doesn’t mean the S.E.C. should rush in like a bull in a china shop. All of the concerns mentioned above still apply — there are reasons why Wall Street firms have the compensation policies they have, and it’s pretty likely that at least some of those reasons are pretty good ones related to the necessities of the industry. Indeed, the S.E.C.’s chairwoman, Mary L. Schapiro, says that “This is an area where we want to be very attuned to unintended consequences.” The S.E.C.’s objectives here, seem to be good ones; the question will be whether the quality of the agency’s methods live up to the nobility of its goals.
Ethics of Doing Business in Libya
Filed under: corporate citizenship, ethics, government, international, risk, trade, workplace safety |
Comments (1) 
Amidst the upheaval in Libya, questions arise about foreign companies doing business there. Many firms, of course, are pulling out and evacuating any employees currently on the ground, for obvious reasons related to safety. But there are apparently still a few reasonably safe places in Libya, places far from the major cities that are the focus on the current fighting. And certainly business done from afar is still an option. So, that leaves companies with choices. Should Libya be considered entirely off-limits? At this point in the conflict, various governments have issued orders that put restrictions in place. But that doesn’t mean that Libya is, from a legal point of view at least, a no-go zone. (Canada’s government, for example, has clarified that Canadian firms are still allowed to do business in Libya, generally, but not with the Libyan government or with the Libyan Central Bank.)
I’m sure many will be tempted to say that foreign companies should pull out entirely. But then, it’s not clear that such a blanket prohibition does much good for the people of Libya as a whole. Note, for example, that Libya currently imports about 75% of its food. Stopping doing business with Libya would mean starving its population.
Of course, even before the current crisis, Libya was a dubious place to do business — at least some kinds of business. Note, for example, that a Canadian company has faced questions about its role in building a fancy new prison for the Gadhafi government. (From the Globe & Mail, see: SNC-Lavalin defends Libyan prison project.)
(An interesting side-note: SNC-Lavalin was recently ranked as one of the best-governed corporations in Canada. Note also that the companies shares are down, apparently because of worries not just about Libya, but about the entire region. About a quarter of the country’s income comes from the Middle East and Africa.)
Building a prison for use by a dictatorship is exactly the kind of project that is likely to draw fire. But that’s not entirely fair, either. As the G&M notes, Libya has been under international pressure to modernize its prisons. And if it is a legitimately good thing for a dictator to upgrade his prisons, then it’s hard to claim that it’s unethical for a company to make a profit by helping him do so.
Charlie Sheen as Toxic Asset
Filed under: employees, entertainment, media, professionalism, risk, values |
Leave a comment 
While actor Charlie Sheen may not be a ‘toxic asset’ in the technical sense, he’s clearly become too much of a liability for the companies who have thus far been profiting richly from his services.
In case you don’t already know all the gory details, here’s one version of the story, by Bill Carter, writing in the Business section the NY Times: Sheen Tantrum Likely to Cost in the Millions
Charlie Sheen’s latest antics may leave CBS and Warner Brothers with a quarter-billion-dollar headache.
The two companies decided on Thursday to halt production of the hit CBS comedy “Two and a Half Men” after Mr. Sheen, the star of the show, unleashed a barrage of vituperative comments about the sitcom’s creator, Chuck Lorre.
The loss of next season’s episodes would mean forgoing about $250 million in revenue between Warner Brothers, which produces the show, and CBS….
Sheen, of course, was already a famously problematic ‘talent’ long before his decision to publicly and viciously bite the hand that feeds him. Sheen has a long history of handing the tabloids easy headlines through his penchant for drugs and booze and prostitutes and property damage and domestic violence.
Several writers have already suggested that all of that should have been enough to make Sheen persona non grata, but it wasn’t. As the LA Times’ Mary McNamara put it,
If you are the star of a hit comedy on CBS, you can keep your job in spite of accusations of: threatening your pregnant second wife; holding a knife to your third wife’s throat on Christmas Day; and indulging in cocaine-fueled weekends during which your bizarre behavior causes your female companion to fear for her life.
I think from a Business Ethics point of view, we can look at this in two ways.
1) Employment. From an employment point of view, this is a question of CBS and Warner Brothers having an employee with serious behavioural problems, most of which have been after-hours problems rather than on-the-job problems. As McNamara reports, Sheen’s bosses referred to his domestic abuse troubles as “very personal and very private.” Of course, any employer needs to recognize that it will always be the case that at least some of their employees will have personal troubles, and it’s not entirely clear that such problems are grounds for dismissal. But what employers cannot ignore is insubordination, and that’s basically what Sheen’s recent outburst amounts to.
2) Production methods. In an age of conscious consumerism, people are paying a lot more attention to the way in which the products they enjoy are produced. The average consumer is more likely than ever to want to know whether their clothes were made in third-world sweatshops or whether coffee was made with beans that were traded fairly. For the bizarrely popular product that is “Two and a Half Men”, Charlie Sheen is a major part of the means of production. And all available evidence suggests that consumers of that product just don’t care that, in order to produce it, CBS and Warner Brothers had to turn a blind eye to behaviour that was by turns childish, unethical, and criminal.
Utility Monopolies: Who Pays for Mistakes?
Filed under: consumers, corporations, energy, ethics, excuses, government, pricing, profits, shareholders, stakeholders |
Comments (3) Naturally, when any organization suffers unanticipated expenses, it’s going to have to find ways to make up the shortfall in its budget. That’s exactly what happened to Ontario Power Generation (OPG), the provincially-owned power company responsible for generating about 70% of all the power consumed in the Canadian province of Ontario. A legal battle with customers ended up costing the company nearly $20 million. So, where did the company turn to recoup that amount? Well, to its customers, of course.
Here’s the story, via the CBC: Ont. electricity rates expected to rise next week
Electricity ratepayers in Ontario, already reeling from soaring prices, should brace for more increases.
The Ontario Energy Board agreed Tuesday to let utilities raise rates to recover $18 million they paid in fines and legal costs after charging consumers excessive interest on late payments….
Now most companies could only dream of passing along such costs to their customers. Some might even succeed. But most wouldn’t. Most would be hindered by the fact that, if they raise the prices they charge to customers, customers would simply buy from someone else. But electricity in Ontario (as in most places) is a monopoly: an organization called Hydro One has a monopoly on distribution of electricity throughout Ontario, and the power it distributes is produced by a small handful of organizations, the most significant of which by far is OPG. So, with the consent of the Ontario Energy Board (the relevant regulatory agency) all OPG has to do is raise its prices, and the company’s customers end up paying for the consequences of its legal tussle with…the company’s customers.
I don’t know much about the original lawsuit, but I do know that this was a predictable result of it. And that puts customers of utilities in a strange position. Sure, customers can sue the a utility when they screw up, but all the utility is going to do is turn around and raise your rates to get the money back out of you.
Now, just to be clear, I generally have nothing against this sort of monopoly. Electricity distribution is what economists call a “natural monopoly.” It’s crazy to have multiple competing sets of power lines running down to street. And, for that matter, it might well be crazy to let many multiple competing companies all run nuclear power plants (OPG runs several of those). But at any rate, it’s worth recognizing the effect that this monopoly (or quasi-monopoly) situation has in the event that the company screws up (say, by overcharging customers). The expenses incurred are entirely likely simply to be passed along to their captive customers.
By the way, Ontario Power Generation (whose only shareholder is the government of Ontario) had a profit of $333 million for the 4th quarter of 2010.
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Thanks to NW for the story.
Russian Business Ethics
Filed under: accountability, corporations, economics, ethics, international, transparency, trust |
Comments (3) 
We can learn a lot about the fundamental nature of business ethics by looking at its operation in various countries at different levels of economic development and with very different histories. Former members of the USSR are a good place to start. Russia, for example, was once at the heart of the Soviet empire, yet today — 20 years after the fall of that empire — Russia continues to struggle. The country’s per capita GDP is middling (i.e., about 1/3 of American GDP), and the economy has been growing steadily for years, but it’s far from free of problems. Law and order (including the functioning of its basic democratic institutions) continues to be a challenge there. Note also that Russia fares very badly on Transparency International’s Corruption Index.
So what about the role of business ethics in civilizing (and hopefully growing) the Russian economy?
See this story by Khristina Narizhnaya, for the Moscow Times: Business Ethics Get Codified
Business ethics are improving in Russia, on paper at least.
More local companies are emulating Western standards and adopting ethics codes to help them operate in a corrupt environment and create the appearance of trustworthiness.
Such codes regulate everything a company’s employees do, from how they dress to how they act in case a bribe is offered….
In the last three years, state companies, including Sberbank and Rosneft, have established codes for their workers as part of President Dmitry Medvedev’s initiative to increase transparency. Gazprom has begun putting together its ethics guidelines, which could take more than a year to deploy. Private companies have followed suit….
The entire piece is interesting and well worth reading, but I think couple of issues in particular are worth thinking about. First, what is the point of all this explicit attention to ethics? Interestingly, at least some Russian business people seem to be aware that ethics is a fundamental building block for real success in business:
“It is good for the image — and clients, investors and partners respond with trust,” said Econika chief executive Andrei Iliopulo.
(The reference to “image” is a distraction, there. Iliopulo’s main point is about trust.)
Others see ethics as an absolute necessity on a macro scale, for the Russian economy as a whole:
Some experts see the ethics code trend as an example of transforming the economic model from wild capitalism to socially responsible business.
“Business feels this need and tries to fulfill it,” said Alexander Sergeyev, a professor at the School of Higher Economics. “It might seem strange, but people like to live by the rules….”
And then there’s the question of scope, and focus. What are the key issues to focus on? As the story notes, ethics codes can cover everything from conflict of interest to social responsibility:
[British-Russian conglomerate] TNK-BP’s code outlines a set of principles covering ethical conduct, employee behavior, external relationships, health, safety, security and environmental performance, control and finance.
That’s quite a range of issues. And when thinking about a country still struggling to “find its feet” in terms of business ethics, we might well want to ask about priority-setting. So, question for discussion: of the various issues mentioned above, which one should Russian businesses be focusing on? I’m not suggesting single-mindedness. But for the good of the Russian population as a whole, which business ethics issues is likely to be the most important?
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(For more on the importance of business ethics for economic development, see Nobel Prize-winning economist Amartya Sen’s “Does Business Ethics Make Economic Sense?”)
Ethical Constraints on a Corporation Without Humans
Filed under: accountability, decision-making, personhood, technology |
Comments (11) 
The buzz over the appearance by IBM’s computer, Watson, on Jeopardy last week has me thinking about the capacities of computers.
Could a computer run a company, and if so what would we want to say about the ethical constraints on such a company? Well, one obvious worry is that ethics requires exercising judgment. Stanley Fish, in an editorial in the NY Times a couple of days ago (“What Did Watson the Computer Do?“) argues that while computers (from laptops on up through to Watson) are very good at is following rules. What they’re bad at, Fish points out, is adapting to new situations and figuring out whether the current situation is a valid exception to the rule.
So, let’s imagine a corporation without humans. It’s not science fiction, and it’s not far-fetched. I don’t know of any in operation today, but they’re certainly possible. There are some corporations today that, while they currently do have significant human personnel, could likely survive and continue to generate revenue for at least several days without human intervention. For example, basically any company that sells a product that can be bought and shipped via the Internet, such as ebooks or music files, can operate for at least a while without humans. (If you’re skeptical about that, please accept it for now, for the sake of argument.)
So imagine a guy named Dave sets up a company selling audio books. He builds a website, which allows customers to search, find the books they want, pay online, and receive the audio book as a download. Maybe he has a web-roaming software ‘bot looking around the web to find out which print books are popular enough for his online store to feature, and maybe even a decent piece of text-to-voice software to generate the voice files, without the need for human input.
Now, as long as Dave is around, monitoring the system, we’re likely to say that Daves “is” the company, and the computer is a tool he uses. And any ethical questions about the company’s conduct should be addressed to Dave. But what if Dave dies? The computer system would keep on chugging along, making money (barring failures of hardware or software). What ethical questions does such an autonomous electronic corporation pose? If the computer harms no one, and violates no rights, is it acting “ethically”, or does that notion require the kind of judgment that Fish says is impossible for computers? Would this robo-corporation have ethical obligations, or is the very idea of a non-human construct having ethical obligations nonsense? And if it’s nonsense, then does it make sense for corporations to have obligations, or are a corporation’s obligations merely the obligations of the persons that make it work?
Credit Card Laws & Ethics
Filed under: banking, complexity, consumers, ethics, honesty, regulations, transparency |
Comments (4) Credit cards: we love them, and we hate them. We love the convenience, but we hate the high interest rates. But really, based on our patterns of usage, it seems like the love/hate relationship is tilted in favour of love; it looks like our fondness for those super-convenient pieces of plastic is getting the better of us. The result: many North Americans are utterly buried under credit card debt. The natural temptation is to blame the banks, and certainly many financial institutions have preyed upon both our fondness of convenient purchasing, and our lack of attention to fine print, to turn credit cards into a cash cow.
But see this story, by Jennifer Liberto, for CNN Money: Credit card laws working, says bank critic
A year after new credit card laws curbed interest rate hikes and forced new disclosures, consumers are paying fewer late fees and have a better understanding of what their cards cost, according to a federal study released Tuesday.
White House official Elizabeth Warren, best known for her outspoken criticism of the banking industry, is expected to praise that same group during a Tuesday conference on the one-year anniversary of the credit card laws….
Now unless I’m mistaken, what banks are being force to disclose is stuff that would previously likely have been buried in the notorious ‘fine print’ of credit card agreements. And fine print is a hard problem, ethically. We all know that consumers should read the fine print; there can be important information there. But we also all know that almost nobody does read the fine print. Fairness requires at least some attention to what we can reasonably expect consumers to do. But on the other hand, is it really a bank’s fault if they disclose something important and you simply don’t bother to read it? While you could argue the fairness point back and forth, it’s also worth pointing out that there’s an economic efficiency argument here, too. Information asymmetries are the enemy of economic efficiency. (An “information situation” is any situations in which one party to a transaction understands that transaction much better than the other.) So we have here the foundation for an argument that says that, even if it is fair to expect consumers to read all the fine print, the fact that they do not do so is resulting in socially sub-optimal patterns of purchasing. This means a social reason, not just a paternalistic reason, to want to help consumers by forcing banks to change how it is that they disclose information.
The other interesting aspect of this story has to do with the persuasive force of law. According to Warren, “much of the industry has gone further than the law requires in curbing repricing and overlimit fees.” In other words, this may be a case in which the law not only prescribed a certain set of behaviours, but also set the tone for the industry. I think this aspect of law is too often overlooked. This suggests that even when we are skeptical about a new law because, for instance, we are skeptical about the potential for strict enforcement, we ought to consider the possibility that an industry will take the passage of a law as sending a signal about the overall tenor of society’s perspective on their business. We also ought to consider also the possibility that the law will give those subject to it an excuse to do what they thought they ought to be doing in the first place.
Certifying Virtue
Filed under: accountability, brands, certification, consumers, labelling, standards, virtue |
Comments (2) 
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
The Business Ethics Blog 