Author Archive
Corporations & the Right to Sue for Libel
Back in February, just after the US Supreme Court issued its Citizens United decision that essentially asserted that corporations have a right to mostly-free speech in the political realm, there was a lot of speculation about what other rights would be asserted next on behalf of corporations.
In that regard, here’s an interesting story from the UK about the legal right of corporations to sue for libel. Writing in The Guardian, lawyer David Allen Green asks, Why should companies be allowed to sue for libel? The whole piece is very much worth reading, but here’s Green’s conclusion:
Given the range of other legal means open to companies to protect their commercial reputations, I think the right of companies to sue for libel should be severely limited, if not abolished altogether. The public interest requires nothing less.
Green suggests that those who assert the cogency of such a right likely do so on the basis of the idea that corporations are, after all, persons:
But to the conventionally minded English lawyer there is no question that companies should be able to sue for libel. After all, companies are “legal persons” – and in English law, personality goes a very long way. The view is that if “natural persons” can sue for libel then so can companies.
But it doesn’t seem to me at all obvious that personhood is the foundational notion, at least not ethically. What about something simpler, like the idea that the corporation is a valued instrument (of its owners, members, shareholders, whatever). If you libel a company (by publishing something false that damages its reputation) you do economic damage to its shareholders. But rather than having each shareholder launch a lawsuit against whomever wrote or broadcast the libelous words, it makes more sense to let the company itself sue.
Now, Green argues that companies have other effective mechanisms at their disposal, beyond libel law. And that may well be. My only point here is to argue that we don’t absolutely need to begin with the notion that a corporation is a person, in order to attribute to it certain legal rights. All we need to do is recognize that protection of the corporation is important to protecting the interests of those flesh-and-blood persons whose economic interests depend upon it.
(p.s., in the wake of Citizens United, I did a trio of blog entries on the topic. See my 1st, 2nd, and 3rd entries. A few months earlier, I had written about Why Corporations Must Be Legal Persons.)
Venture Capital: Lessons for Business Ethics (part 2)
Filed under: finance, governance, management, profits, shareholders, SME |
Comments (2) Yesterday I posted the first of two blog entries on Ethics in Venture Capital. This is the second.
I noted yesterday that the relationship between venture capital (VC) firms and entrepreneurs is fraught with ethical challenges related to bargaining, information, control, and short term-ism. Those worries tell us something about the world of venture capital; but what do they tell us about business ethics more generally?
The key lesson, I think, is one I learned from Gary Pisano’s book, Science Business, though it isn’t a major theme of that book. The lesson is this: a funding model is also typically a governance model. This insight is at a very coarse level summed up by the old aphorism that “he who pays the piper calls the tune.” In business terms, providing financing means paying the piper. Governance is about getting to call the tune.
This is closely linked to the core lesson from another favourite book of mine, Henry Hansmann’s The Ownership of Enterprise. Hansmann’s book is an attempt to explain the patterns of ownership and control we observe when we look at the range of business firms that populate a market economy. When you look around at complex organizations like modern corporations, most of them tend to be owned by shareholders but managed by professional managers. What is it that explains how pervasive that particular setup is? Lots of other models are possible — partnerships, employee co-operatives, consumer co-ops, and so on. Law and even tax policy in most modern economies both permit and sometimes even encourage these other models, yet the shareholder-driven corporation dominates in most industries. Why? To make a long story short, Hansmann’s thesis is basically that the patterns of ownership we see can best be explained in terms of different stakeholders a) interest in, and b) ability efficiently to accomplish, effective oversight of managers.
So, back to VC. When VCs invest in firms, they often essentially assume ownership: they buy an equity stake in the firm and exercise control (via Board membership, among other mechanisms). But why are VCs involved at all, rather than other sources of funding, like employees or banks or non-expert shareholders? Basically, in Hansmannian terms, because VCs are better able to a) bear the risk involved in ownership of a startup company, and b) exercise the kind of knowledgeable control over the company (via supervision & sometimes appointment of managers) to make the risky investment worthwhile. But as I noted yesterday, the specific kind of (short-term) interest that VCs have in the firms they invest in raises a special set of ethical issues that look somewhat different from the issues faced in firms funded in other ways.
The lesson: if we want to understand the ethical challenges firms face, and why they do the things they do, we need to think in a detailed way about who owns them, the goals those owners have, and the extent to which the owners are exercising effective control.
Ethics in Venture Capital
Filed under: conflict of interest, finance, management, profits, SME, technology |
Comments (3) 
This is the first of two blog entries on ethical issues in venture capital.
Venture capitalists are investment companies that specialize in careful investment in high-risk ventures that provide the possibility of exceptionally high returns, typically in specialized technology-driven industries like biotech and information technology. Venture capitalists (VCs) are a source of funding for small companies that need a serious infusion of cash (typically from a few hundred thousand dollars to a few million dollars) but that are too small (and with too little short-term promise of profit) to raise money via the stock market. In addition to providing funding, VCs typically provide startup companies with mentoring, providing advice, business connections and management expertise that might otherwise be lacking.
The relationship between VCs and the entrepreneurs they provide funding to raises some special ethical challenges. Here are just a few:
1) Bargaining power. VCs typically provide funding to companies that are fairly desperate for money. Add to that the fact that VCs are typically seasoned industry insiders, whereas the entrepreneurs seeking funding may never have been in business before at all. He or she might, for example, be a university scientist who knows a lot about cancer drugs, but nothing at all about the world of business and finance. As a result, there’s a worry that VCs will often be able to impose conditions that are highly advantageous to themselves, and much less good for the entrepreneur. Whether that imbalance ends up being unfair is a matter for debate.
2) Information. The companies VCs invest in are typically recent start-ups; often all they’ve got going for them are a few smart people and what they take to be a great idea. In order to justify investing, VCs engage in an intensive process of due diligence, essentially insisting on a level of access to information otherwise reserved for insiders. Sometimes they sign non-disclosure agreements, but sometimes they don’t. The result is that VCs end up with inside information not just about the companies they actually invest in, but also about the companies they consider investing in — and some VCs will look at proposals from several hundred companies per year. This raises obvious risks related to confidentiality, insider trading, and the protection of intellectual property.
3. Control. Because their investments are so risky, they typically insist on being given considerable control in exchange for their investment. For example, VCs may insist on being given seats on the company’s Board of Directors. This raises questions of loyalty and conflict of interest. VCs seek Board seats in order to protect their interests; but Board members have fiduciary obligations to promote the interests of the company as a whole, which may at times be different from the interests of the VCs.
4. Short Term-ism. The time-horizon for VCs is relatively short. Their investments typically take the form of cash in exchange for shares (often preferred shares) in the company. The idea is generally to nurture the company through early-stage growing pains, help it grow into a company that can either go public (via IPO) or be bought out by a bigger, wealthier company. Typically VCs cash out in 3-5 years; if things have gone well, they reap a very significant profit. The result is that VCs have a pretty short-term interest in the companies they invest in. They care about growing the company, making a profit, and getting out. They are typically seen as having very little interest in the long-term interests of employees or other stakeholders. This is the source of the common joke that “VC” actually stands for “vulture capital.”
In my next blog entry, I’ll consider what we can learn about business ethics more generally by thinking about ethical issues that arise in the world of venture capital.
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Links:
Here’s the Wikipedia page on venture capital.
One of the few scholarly works on VC ethics: Yves Fassin, “Risks in Business Ethics and Venture Capital,” in Business Ethics: A European Review, Volume 2, Issue 3, pages 124–131, July 1993
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Addendum (Aug. 12, 2010)
A friend of mine who is a venture capitalist suggested the following excellent clarifications regarding timelines. First, the 3-year time horizon mentioned above is mostly for later stage deals. VCs that invest at earlier stages usually have 5+ year time frames. VCs that invest in start-ups have 7-9 year time frames. Second, even the 3-year time horizon for later-stage deals is not all that short — not compared to the even shorter time horizons of stockholders in publicly-traded companies, which are typically under pressure from Wall Street to produce quarterly results.
Do All ‘For-Profit’ Companies Seek Profits?
There’s a common assumption that all companies seek profits. But is that assumption true? Never mind things like not-for-profit organizations. Let’s also set aside so-called “social enterprises,” companies that have an explicit social mission. I have in mind here genuine commercial entities. Do they always seek profits?
I can think of a few kinds exceptions, types of firms that don’t, as a rule, seek profits — or that at least don’t take profit-making to be their primary mission. I think you could also argue that Google is an example. It surely is profitable, but its behaviour suggests that that’s not its main goal. A fan would say that what Google wants to do is to organize the world’s information. A cynic would say Google’s goal is to dominate or control all that information. Profit is the tool that lets Google expand its sphere of control. Note that Google has apparently never paid a dividend — a share in profits — to its shareholders, though it certainly has had the profits to do so.
But the main example I’d like to put on the table today is this: most firms in the biotechnology industry.
Most biotechnology firms never make a profit. Indeed, for many of them it’s not even a reasonable goal, given that many of them never even put a product on the market. So most of them lose money on a yearly basis. Biotech companies are basically R&D companies. They often begin life as university spinoff companies, work for a few years turning a scientific idea into a plausible bit of technology, and end up being bought out by a large pharmaceutical company. And sometimes that’s the explicit goal. So in a very plain sense, they’re not “profit-seeking.” Their goal is to build their portfolio of intellectual property to the point where they become attractive to Big Pharma. So, question: does it make sense to call these firms “profit-seeking”? It’s not as if they’re charities. They’re aiming at commercial success, and would surely love to see a profit if that were possible. But for them commercial success doesn’t mean generating profits, in the usual sense. Whether that’s an important difference or not depends on whether profit-seeking per se has an ethically worse (or better!) influence on management behaviour than the zealous pursuit of other objectives.
Wind Turbine Hush Money
Filed under: energy, environment, health, protest, regulations |
Comments (14) 
In Oregon, the “whoosh, whoosh, whoosh” of wind turbines is being partly drowned out by another sound: “Hush, hush, hush….”
What are we to think when a company starts paying people substantial sums of money not to complain about the effects of their projects? Is that illicit hush money, or is it a company facing up to its impact and paying due compensation?
Here’s the story, by William Yardley, for the New York Times: Turbines Too Loud? Here, Take $5,000.
IONE, Ore. — Residents of the remote high-desert hills near here have had an unusual visitor recently, a fixer working out the kinks in clean energy.
Patricia Pilz of Caithness Energy, a big company from New York that is helping make this part of Eastern Oregon one of the fastest-growing wind power regions in the country, is making a tempting offer: sign a waiver saying you will not complain about excessive noise from the turning turbines — the whoosh, whoosh, whoosh of the future, advocates say — and she will cut you a check for $5,000.
“Shall we call it hush money?” said one longtime farmer, George Griffith, 84. “It was about as easy as easy money can get….”
The effects that a production process (such as a wind farm) has on people other than its paying customers are what are called “externalities” — effects that are external to some voluntary transaction. And in principle, compensating those who suffer externalities is the right thing to do — it means that a company (and its customers) are paying something closer to the full cost of production. Otherwise, externalities amount to a cost foisted on someone else involuntarily.
OK: so far, so good. The company involved here is attempting to (as an economist would put it) internalize its externalities, by compensating those affected by noise from its windmills. But what about the price set? Note that the price was an apparently invariable $5,000. Why? After all, different people are likely to be affected differently, and some will be more noise-tolerant than others.
So, why one price? According to the company, the reason is fairness:
“What we don’t do in general is change the market price for a waiver,” [Caithness Energy’s] Ms. Pilz said. “That’s not fair.”
Of course, equal payment for all is one version of fairness, but it’s not the only one.
One last theme to pick up on is the tension between what’s good for the individual and what’s good for society. The company involved, here, attempted to play the “social good” card:
Some people who did not sign said that Ms. Pilz made them feel uncomfortable, that she talked about how much Shepherd’s Flat would benefit the struggling local economy and the nation’s energy goals, and that she suggested they were not thinking of the greater good if they refused.
It’s a good rhetorical move on the company’s part, not least because there’s more than a grain of truth to it. A project of this size is bound to benefit the local economy (though perhaps not as much as locals might hope). Add to that the fact that this is, after all, clean energy that’s being produced, the kind of energy that most people now figure is essential to weaning us off our collective addiction to petroleum products.
So, let’s put this on the table as a fundamental truth: there are no centralized forms of energy production, clean or otherwise, that will not have a negative impact on anyone, and that hence won’t be subject to someone’s objections. So the question is not whether anyone will be negatively affected (or even merely inconvenienced), but rather who will be negatively affected, and how much, and what to do about it.
Unwritten Rules
People generally underestimate the important role played by unwritten rules in just about every facet of our lives. From family, to church to work to play, all sorts of unwritten rules (philosophers may refer to them as “norms” or “conventions”) give structure to, and generally civilize, our world. Some unspoken rules are pernicious, of course. In some places still today, there is an unspoken understanding that one part of the beach is for whites and the other part of the beach is for blacks. And in some institutions, there’s an unspoken rule that women don’t get equal consideration for promotion. But in general, unspoken rules make our world safer and more enjoyable, and they reduce the need for explicit rules of the kinds promulgated and enforced by government and other institutions.
In that regard, here’s a very interesting short piece rom The Guardian’s Bike blog: Winning the Tour de France means learning its unwritten rules.
Written ethical codes don’t count for much in cycling. There have been a couple of attempts to make professional cyclists sign charters stating they won’t take drugs, but they have been quietly abandoned, because they didn’t stem the tide of positive tests, and they were viewed solely as window-dressing. The unwritten rules are another matter. They are everywhere, although the Contador-Schleck episode shows that as in Pirates of the Caribbean, the “code” is sometimes merely viewed as a guideline….
So, food for thought: what unwritten rules civilize the world of commerce? What unspoken standards civilize the following:
- Interactions with your co-workers, or with your boss?
- Interactions with the businesses you interact with daily, both big and small?
- Interactions between businesses?
BP’s Faked Photos
Often when a person or company does something bad, it’s most reasonable to assume that stupidity is the cause, rather than malicious intent. Some behaviour of course is both stupid and unethical. At BP, it’s getting harder and harder to tell the difference.
Everyone’s least-favourite oil company has now been found to have been posting faked photos on its website. (A small excerpt of one photo is above. Lots of others can be found online, including in various news reports on the story. Even at low resolution, you can see tell-tale signs of photo-alteration. The bits of brightness around both men’s heads is evidence of a sloppy cut-and-paste job. Also, the image on the screen shown at bottom-centre of the photo is slightly crooked.)
MSNBC tech blogger Wilson Rothman provides this good, brief summary:
A site called Americablog spotted a press photo of BP’s Houston command center, ostensibly taken on July 16. The image had quite visibly been Photoshopped — badly — to include more on-screen camera action.
Once word got out — the story was picked up by the Washington Post, where it was then spotted by the tech blog Gizmodo and others — BP ‘fessed up. A spokesman admitted that the image was altered, said that a photographer had inserted shots where the TV screens were blank, and provided the original image….
(Here’s the Washington Post version, by Steven Mufson: More doctored BP photos come to light)
Now, it’s worth noting that the changes to the photos are not actually misleading in any material way. Nothing important is hidden, and the faked photos don’t really tell any lies. The changes are basically cosmetic. (In a sense, the photos were merely enhanced to make them more authentic.) But as MSNBC’s Rothman points out, “Though the command center alteration doesn’t seem to be an attempt to hide facts or confuse the public, it heightens skepticism for the company at a time when it should be trying to build trust.” And as WP’s Mufson points out, “While the changes were minor, the embarrassment was major, coming at a time when the oil giant is trying to convince the American public that it is being open and transparent about the oil spill.”
Both Rothman and Mufson are correct as far as P.R. goes. Being caught in even a trivial fib is pretty bad for BP at this point. But what about ethics? Are the faked photos a sign that we generally can’t trust BP? Or rather, since there’s pretty little trust for BP in the first place at this point, does the revelation that they faked these pics give us new, ethically-relevant information about the company? Probably not.
Perhaps most disturbing about this whole fiasco is BP’s attempt to blame the (unnamed) photographer involved. As some have already pointed out, the photoshopping is so clumsy that it’s hard even to believe that it was done by a professional photographer. But at any rate, passing the buck and blaming the photographer is the wrong way to go. If there’s anything the public wants from BP now even more than honesty, it is evidence of willingness to take responsibility.
Interview: Andrew Potter and The Authenticity Hoax
Filed under: advertising, books, environment, food, greenwashing, health, honesty, labelling, natural |
Comments (38) 
My pal Andrew Potter is a public affairs columnist with Maclean’s magazine (Canada’s premier newsweekly) and a features editor with Canadian Business magazine. He also has a Ph.D. in Philosophy.
Andrew’s new book, The Authenticity Hoax, is excellent. I interviewed Andrew recently, about the implications the issues discussed in his book have for a range of topics in Business Ethics.
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Chris MacDonald: Your new book, The Authenticity Hoax, is about the way our pursuit of authenticity is in many ways the pursuit of a mirage, and you argue that the pursuit of it is ultimately not just futile, but destructive. You say that one element of that — or is it a result? — is a lack of faith in the market. Presumably that plays out, in part, in a perception that business quite generally is unethical, on some level. Is that one of the deleterious effects of the pursuit of authenticity?
Andrew Potter: According to the theory I offer in the book, the quest for the authentic is largely a reaction to four aspects of the modern world: secularism, liberalism, technology, and the market economy. And I think you’re right, that hostility towards the market is probably the most significant of these. Why is that? That’s a whole other book! Though I think something like the following is at work:
First, markets are inherently alienating, to the extent to which they replace more gregarious and social forms of interaction and mutual benefit (e.g. sharing or gift economies, barter, and so on) with a very impersonal form of exchange. The second point is that the market economy is profit driven. This bothers people for a number of reasons, the most salient of which is that it seems to place greed at the forefront of human relations. Additionally, the quest for “profit” is seen as fundamentally amoral, which is why — as you point out — the mere fact of running a business or working in the private sector is considered unethical. Finally, you can add all the concerns about sustainability and the environment that the market is believed to exacerbate.
The upshot is that we have a deep cultural aversion to buying things on the open market. We think we live in a consumer society, but we don’t. We live in an anti-consumer society, which is why we feel the need to “launder” our consumption through a moral filter. That, I think, is why so much authenticity-seeking takes the form of green- or socially conscious consumerism.
CM: Claims to authenticity are a standard marketing gimmick at this point. In The Authenticity Hoax, you argue that authenticity isn’t the same as truth. Authenticity has more to do with being true to some essence, some deeper self. It strikes me that that makes for some very slippery advertising, including lots of claims that can’t be backed up, but can’t be disproven either. Is authenticity the ultimate marketing gimmick that way?
AP: Absolutely. What advertising and politics have in common is that they are both “bullshit” in the philosophical sense of term (made popular by Harry Frankfurt). What characterizes bullshit is that it isn’t “false”, it is that it isn’t even in the truth-telling game. That is why I think Stephen Colbert was dead on when he coined the term “truthiness” to refer to political discourse — he essentially means that it is bullshit.
What is interesting is that authenticity has the same structure as bullshit, in the following way: from Rousseau to Oprah, the mark of the authentic is not that it reflects from objective truth in the world or fact of the matter. Rather, the authentic is that which is true to how I feel at a given moment, or how things seem to me. As long as the story I tell rings true, that’s authentic.
And that fits in well with advertising, since advertising is all about telling a story. Everyone knows that most advertising is bullshit — for example, that drinking Gatorade won’t make you play like Jordan, or that buying a fancy car won’t make you suddenly appealing to hot women. But what a good brand does is deliver a consistent set of values, a promise or story of some sort, which fits with the idealized narrative of our lives, the story that seems true to us. That is why branding is the quintessential art form in the age of authenticity. Bullshit in, authenticity out!
CM: There’s an irony, of course, in the fact that so many companies are making claims to authenticity in their advertising and PR, since for most people the very term “PR” implies a kind of spin that is the exact opposite of authenticity. But that apparent irony echoes a theme from your previous book, The Rebel Sell (a.k.a. Nation of Rebels), doesn’t it? In that book, you (and co-author Joe Heath) argued that all supposedly counter-cultural movements and themes — things like skateboarding, hip-hop, environmentalism, and now add authenticity — are bound to be co-opted by marketers as soon as those ideas have gathered enough cultural salience. Is that part of what dooms the individual consumer’s pursuit of authenticity?
AP: Yes, that’s exactly right. Chapter four of my book (“Conspicuous Authenticity”) is a deliberate attempt to push the argument from the Rebel Sell ahead a bit, to treat “authenticity” as the successor value (and status good) to “cool”.
We have to be a bit careful though about using the term “co-optation”, because it isn’t clear who is co-opting whom. Both cool-hunting and authenticity-seeking are driven not by marketers but by consumer demand, in particular by the desire for status or distinction. And in both cases, the very act of marketing something as “cool” or as “authentic” undermines its credibility. Authenticity is like charisma — if you have to say you have it, you don’t.
That doesn’t mean marketers can’t exploit the public’s desire for the authentic, but it does mean they have to be careful about the pitch they employ; it can’t be too self-conscious. We all know that “authentic Chinese food” just means chicken balls and chow mein, which is why I actually think that things that are explicitly marketed as “authentic” are mostly harmless. It’s when you when you come across words like “sustainable”, or “organic,” or “local” or “artisanal”, you know you’re in the realm of the truly status-conscious authentic.
CM: I’ve got a special interest in ‘greenwashing.’ It occurs to me now that accusations of greenwashing have something to do with authenticity. When a company engages in greenwashing, they’re typically not lying — they’re not claiming to have done something they haven’t done. They’re telling the truth about something ‘green’ they’ve done, but they’re using that truth to hide some larger truth about dismal environmental performance. When companies greenwash, they’re using the truth to cover up their authentic selves, if you will. Do you think the public is particularly disposed to punish what we might think of as ‘crimes against authenticity?’
AP: I’m not sure. It is certainly true that in extreme cases of corporate bad faith the public reacts badly. The case of BP is a good example; as many people have pointed out, its “Beyond Petroleum” mantra is a very tarnished brand right now, and it is doubtful they’ll be able to renew its polish.
But at the same time, I don’t see any great evidence that the public as a whole is disposed to punish companies for greenwashing. Actually, I think the exact opposite is the case: I think the public is very much disposed towards buying into the weakest of greenwash campaigns. The reason, I think, goes back to the point I made earlier about most of us being fairly ashamed of living in a consumer society. Yet at the same time we like buying stuff, especially stuff that makes us feel good about ourselves and morally virtuous. Even the most half-witted greenwashing campaign is often enough for consumers to give themselves “permission” to buy something they really want.
CM: Let’s talk about a couple of product categories for which claims to authenticity are frequently made.
First, food. You argue that much of the current fascination with organic food, locally-grown food, etc., is best understood as the result of status-seeking. So the idea is basically that food elites start out looking down on everyone who doesn’t eat organic. But then as soon as organic becomes relatively wide-spread, suddenly eating organic doesn’t make you special, and so the food elite has to switch to eating local, or eating raw, or whatever else to separate themselves from the masses. And I find that analysis pretty compelling, myself. But a lot of devotees of organic and local foods are going to reject that analysis, and object that they, at least, are eating organic or local or whatever for the right reasons, not for the kind of status-seeking reasons you suggest. And surely some of them are sincere and are introspecting accurately. Does your analysis allow for that possibility?
AP: Sure. The key point is that these aren’t exclusive motivations. In fact, they can often work in lockstep: You feel virtuous eating organic, but you also want to feel more virtuous than your neighbour (moral one-upmanship is still one-upmanship, after all). And so you try to out-do her by switching to a local diet. And when she matches you and goes local too, you ratchet up the stakes by moving more of your consumption to artisanal goods (e.g. small-batch olive oil, handmade axes, self-butchered swine, and so-on).
And this would be a good thing if there were any evidence that these moves actually had the social and environmental benefits that their proponents claim for them. But unfortunately, the evidence is – at best – mixed; the more likely truth is that the one-upmanship angle has completely crowded out the moral calculations.
The more general point is that we need to stop assuming that something that gives us pleasure, or feeds our spiritual needs, will also be morally praiseworthy and environmentally beneficial. That assumption is one of the most tenacious aspects of the authenticity hoax, and it is one that we have no reason to make. There are good and bad practices at the local level, and artisanal consumption has its costs and benefits. Same thing for conventional food production — there are good things and bad things about it. It would be nice if the categories of good versus bad mapped cleanly on to the categories of local versus industrial, but they simply don’t. The belief that they do is nothing more than wishful thinking.
CM: What about alternative therapies? Much of the draw of those products — and at least some of their marketing — seems to revolve around authenticity. People who are attracted to alternative products seem to want to reject modern medicine, which they find alienating, in favour of what they perceive as something more authentic. Now most critics of alternative therapies such as homeopathy primarily object that there just isn’t good evidence that those therapies actually work. But your own analysis provides a further kind of criticism, rooted in the way that those who seek ‘authenticity’ via alternative medicine are engaged in what is more generally an unhealthy rejection of modernity. Is that right?
AP: There is a lot to dislike about modernity, and my argument is not that we should just suck it all up and live with it. My point is rather that modernity is about tradeoffs, and that we need to accept that for the most part, the tradeoffs have been worth making. Yes, some things of value have been lost, but on the whole I think it’s been worth it.
But if there is one part of the pre-modern world that is well lost, it’s the absence of evidence-based medicine. Yet for some bizarre reason, the longer we live and the healthier we get, the more people become convinced that we are poisoning ourselves, and that modern medicine is not the solution to our woes, but part of the cause.
The turn away from the benefits of modern medicine is one of the most disturbing and pernicious aspects of the authenticity hoax. My book has been interpreted by many as an attack on “the left”, but it perplexes me that things like naturopathy, anti-vaccination campaigns, and belief in the health benefits of raw milk are considered “left wing” or “progressive” ideals. As far as I’m concerned, this is part of a highly reactionary political agenda that rejects many of the most unimpeachable benefits of the modern world. We know that naturopathy and homeopathy is a fraud; we know that vaccines don’t cause autism and that public vaccination is the one of the greatest public health initiatives ever; we know that pasteurization has saved countless lives over the years.
But for reasons I cannot fathom, these and many other related benefits are ignored or shunned in favour of an “authentic” lifestyle that is an absolute and utter hoax.
Progressive Garment Factory, or Charity?
Filed under: aid, charity, employees, international, labelling, profits |
Comments (23) What’s the difference between a progressive factory and a charity?
Here’s the story, by Steven Greenhouse, for the NYT: A Factory Defies Stereotypes, but Can It Thrive?
…Ms. Castillo had long dreamed of a bigger, sturdier house, but three months ago something happened that finally made it possible: she landed a job at one of the world’s most unusual garment factories. Industry experts say it is a pioneer in the developing world because it pays a “living wage” — in this case, three times the average pay of the country’s apparel workers — and allows workers to join a union without a fight.
“We never had the opportunity to make wages like this before,” says Ms. Castillo, a soft-spoken woman who earns $500 a month. “I feel blessed…”
There’s lots that’s interesting, here, but what most struck me was the similarity between the factory described (which produces apparel under the label “Alta Gracia”) and the controversial (Product) RED campaign. As you may already know, (Product) RED is a project that attempts to leverage consumerism into charity, by donating a small portion of profits from certain consumer goods — RED-branded iPods, for example — to the Global Fund (to fight AIDS, tuberculosis, and malaria in needy countries). I wrote about RED here and here.
See the similarity? Red asked consumers to pay a premium so that money could be donated to the Global Fund. Alta Gracia asks consumers to pay a premium so that the money can be donated to the company’s workers. In both cases, there’s an attempt to advance a worthy cause (disease prevention on one hand, poverty alleviation on the other) by appealing to affluent consumers via value-laden branding.
Two questions occur to me.
1) Will Alta Gracia be subject to the same kinds of criticisms that (Product) Red has been subjet to? If not, why not?
2) It seems to me that the choice of workers as beneficiaries of the Alta Gracia scheme is but one option. Who are other potential beneficiaries of schemes like this? If RED helps out by donating profits directly to third parties (i.e., via the Global Fund) and if Alta Gracia helps out by donating higher wages to its workers, are there other parallel mechanisms that would work? Here’s an example. What if the company that owns Alta Gracia (Knights Apparel) were publicly-traded (instead of privately-held). And what if it gave shares to poor families, so that they could receive dividends when the company makes a profit? Would that be ethically the same thing? Would people who generally think profit-seeking is evil suddenly think profits are a good thing?
Chiropractic Referral Fees & Conflict of Interest
Filed under: conflict of interest, health, honesty, professionalism, regulations |
Comments (4) Sometimes, when consumers need two different, but related, goods or services, they rely on the advice of the provider of one product to select a provider of the second. That often makes sense, because providers in related businesses often have specialized knowledge that lets them give good advice (e.g., the guy who sells you your carpet likely knows who would be good at cleaning that carpet.) In such a case, people in related businesses can be a good source of expert, independent advice.
That is, if the advice is truly independent. And the most obvious way to eliminate independence is to inject a financial interest into the scenario. If the person you’re relying on for advice is financially beholden to the person he or she is recommending, you have every reason to doubt that advice.
And if that advice you’re after isn’t about something mundane, like carpets (something about which a great many non-experts know quite a lot) but is instead about your health, you have every reason to worry — especially when one of the service providers involved is taking active steps to put the person you’re relying on for advice into a Conflict of Interest.
Here’s an article (in which I’m quoted) about just such a situation. It’s by Yoni Freedhoff, MD, writing for the Canadian Medical Association Journal, Chiropractic clinic offered referral kickbacks
A chiropractic clinic with locations in Ontario, Nova Scotia and Manitoba offered lucrative kickbacks to physicians for referring clients to its five outlets until the College of Physicians and Surgeons of Ontario (CPSO) apparently stepped in to scuttle the payments as a result of CMAJ inquiries.
The offer of kickbacks, which were in the form of financial compensation, arising out of referrals from doctors, came to light as a result of a CMAJ request for a “doctor’s information kit” in accordance with instructions from an advertisement placed in the journal by the Low Back Clinic.
The kit included a document detailing appropriate patient referral criteria, which was followed by the proclamation: “In compliance with the C.P.S.O. standards, a $300 documentations fee will be provided once the patient completes care….”
Summary of problems:
- The payments put referring physicians into a conflict of interest;
- The payments, which are based on completion of a course of care, induce physicians to encourage patients to complete a course of care independent of whether that’s in the patient’s best interests;
- The payments risk jeopardizing patients’ trust in their physicians;
- The payments risk the professional reputation of the medical profession quite generally;
- Referring to the payments as being “In compliance with the C.P.S.O. standards” falsely implies that the payments are required by the C.P.S.O.
All in all, this scheme was a pretty bad idea. Perhaps the clinic offering the fee could be excused for not knowing that doing so was contrary to regulation. But health professionals certainly ought to know enough about conflict of interest to recognize that such a scheme is seriously ethically problematic.
The Business Ethics Blog 