The Business Ethics Blog

Hope is a wonderful thing. Sharing stories of hope might be inspiring, even therapeutic. At worst, it certainly seems harmless enough. But does it matter who’s paying for the story telling?

Check out the Sharing Miracles website, “a blog of personal stories of miracles and hope.”

People confronting serious illness or disease need to know — perhaps more than anything else — that they are not alone. Help comes in many ways: through the counsel and care of a doctor, access to innovative new medicines and procedures, the support of loved ones, and the inspiration provided by others who have faced or are facing similar challenges.

Sharing Miracles is a forum for people to relate their own personal stories of hope and survival….

Most of the stories “shared” on the website are stories from celebrities and athletes: football legend Mike Ditka talks about surviving a heart attack and changing how he lived as a result; actress Meredith Baxter talks about her battle with breast cancer; and so on. Are these celebs making paid appearances on the site, or telling their stories out of the goodness of their hearts? The website gives no indication.

Further, as far as I can see, nothing on the website indicates who’s running it or funding it. But GlaxoSmithKline’s More Than Medicine blog suggests that PhRMA (the pharmaceutical industry association) is behind the site. The PhRMA website makes the sponsorship clear.

So, PhRMA isn’t exactly hiding the fact that they’re sponsoring the site. But the site itself certainly doesn’t advertise the fact.

And (as far as I can see) the site isn’t promoting any particular pharmaceutical (or even pharmaceuticals in general, really). But then again, who knows what messages are buried in there? And why would anyone spend money to produce a site like this if they didn’t think it promoted their interests? You would think that, in 2009, the pharmaceutical industry would be smart enough to know that it needs to be a little more transparent in its activities.

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Thanks to John at the very useful Pharma Marketing Blog for pointing me to this story.

Let’s be clear: I am in favour of free or cheap access to life-saving pharmaceuticals for all. Ensuring universal access is both compassionate and pragmatically wise. Finding the right mechanism — one that’s both effective and fair — is the hard part.

From Reuters: Novartis says won’t give poor free H1N1 vaccines

Swiss drugs company Novartis (NOVN.VX) will not give free vaccines against H1N1 flu to poor countries, though it will consider discounts….

The director-general of the World Health Organisation, Margaret Chan, has called for drugs companies to show solidarity with poor countries….

Why appeal to Novartis (and other drug companies) to subsidize vaccines? Recall that, in reality, appealing to publicly-traded drug companies means appealing to their shareholders. Why not appeal to the shareholders of Exxon, or Microsoft, or Walmart? Those companies don’t make drugs, but they do make profits, profits that could be handed over to Novartis to pay for vaccines. Or why not appeal to the citizens of developed nations, more generally? Why ask some citizens — namely shareholders, not necessarily wealthy, of one or a few companies — to give more than the rest of us seem willing to?

Solidarity and charity are lovely, and easy to support when they’re going to cost someone else money.

This past Friday evening, I did a longish live interview on Skeptically Speaking, (“the world’s only skeptical talk show”) on CJSR FM88.5 in Edmonton, Alberta. The topic was ethical issues in biotechnology. The conversation ranged across personal genomics, gene patenting, and whether biotechnology is pushing us toward the realization of the dystopia envisioned in the movie Gattaca.

Here’s the webpage with the podcast of the interview: Biotechnology Ethics. Thanks again to my wonderful hosts, Desiree and Sean.

This is shocking.

A chiropractic association in the UK has taken the very unusual step of contacting all of its members and recommending they take down their websites, apparently because of the risk that those websites contain unsubstantiated claims about chiropractic’s ability to treat certain conditions.

This blog entry on DC’s Improbable Science blog — The McTimoney Chiropractic Association would seem to believe that chiropractic is “bogus” — has a copy of the letter. It reads, in part:

The target of the campaigners is now any claims for treatment that cannot be substantiated with chiropractic research. The safest thing for everyone to do is as follows.

1. If you have a website, take it down NOW.

When you have done that, please let us know preferably by email or by phone. This will save our valuable time chasing you to see whether it has been done.

1. REMOVE all the blue MCA patient information leaflets, or any patient information leaflets of your own that state you treat whiplash, colic or other childhood problems in your clinic or at any other site where they might be displayed with your contact details on them. DO NOT USE them until further notice. The MCA are working on an interim replacement leaflet which will be sent to you shortly.

The “campaigners” referred to in the website are individuals — mostly skeptical bloggers, from what I understand — who’ve taken on the task of emailing chiropractors and saying, basically, “your website says you can treat X…can you provide any credible evidence for that claim?”

Many commentators think this letter is a smoking gun, proving that chiropractors themselves know how little evidence there is that their practices are effective. (My non-expert understanding from what I’ve read is that there is some evidence for the effectiveness of chiropractic treatments for certain kinds of back pain, but little beyond that.) In fairness, it’s worth pointing out that MCA explicitly denies that its letter is an admission of anything. Their letter says: “This advice is given to you solely to protect you from what we believe is a concerted campaign, and does not imply any wrongdoing on your part or the part of the Association. “

Now, I want to set aside entirely the debate over chiropractic in general. What interests me, here, is the move by this professional association — a kind of business association, in effect — to tell its members not to publicize the details of the services they offer. This means that all communications is now going on behind closed doors. This is clearly a dangerous move. It means that consumers now can’t see in advance what ailments a various chiropractor offers to help with. It also means that (some) chiropractors are now going to be doing business in a way that’s insulated from public scrutiny. That sort of behaviour is surely beneath what we expect of people who claim the title of ‘health professional.’

(FYI…Here’s the strikingly brief website for the McTimoney Chiropractic Association itself. Essentially, they’ve deleted all content. But here, thanks to the Internet Archive (which archives websites) is what the McTimoney Chiropractic Association website looked like on February 2008.)

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Please note: I will not be approving comments that try to engage the general question of evidence for/against the effectiveness of chiropractic. Please limit comments to the specific issue at hand. Thanks.

I study, teach, and write about Business Ethics — roughly the study of ethical issues that arise in commerce. It includes questions of good and bad outcomes, right and wrong behaviours, as well as questions of character.

I think “business ethics” is the best term for the topic. The way I use that term is consistent with expert usage of it, and consistent with the way we’ve used the term “ethics” for as long as it’s been a subject of study.

For whatever reasons, other people prefer other terms. But none of the others is adequate as an umbrella term to encompass all of the most important normative issues that arise in business. Some people, for example, like the term “Corporate Social Responsibility.” I think that term is problematic: rather than a topic or set of questions up for debate, CSR tends to be treated as presuming a set of answers. And besides, the notion of “responsibility” implicitly sets aside all kinds of interesting and important questions about things like rights, prohibitions, entitlements, and virtue.

Some are attracted instead by the language of “Corporate Citizenship,” though that language is rooted in political notions, some of which don’t readily apply to corporations, especially multinational ones. And don’t even get me started on the mess that is the so-called “Triple Bottom Line” — a term made up of 3 words, each of which is either false or misleading. There are other terms, all of which are either wrong-headed or at least incomplete.

So why do people rebel against simply using the good old-fashioned term “business ethics?” Partly, I think, it’s a matter of just not knowing what that term means, and the range of issues it encompasses. I speculate that there are 2 factors contributing to the confusion. One is the existence of so-called “ethics laws” and “ethics regulations”, which tend to be codified rules governing things like conflict of interest, gift-giving to public servants, political contributions, and so on. I worry that the term “ethics laws” implies (wrongly!) that ethics consists of only those sorts of issues.

The other possible factor is the fact that when the idea of ethics comes up in the media, it’s often associated with some scandal or another. This gives the impression that ethics is just the avoidance of certain kinds of wrongdoing — and to be sure, avoidance of wrongdoing is part of ethics, but it’s just a part.

I don’t know whether there’s hope for the term “business ethics”. I sometimes try to avoid using the term, in favour of just talking about specific issues. If the issue at hand is conflict of interest, let’s focus on that, and on why COI is ethically problematic, and what to do about it. It matters less whether we say that avoiding and managing COI is part of “business ethics” or “CSR” or whatever. But on those occasions where we do genuinely need a blanket term, my vote is to go for the one with sufficient breadth actually to encompass the full range of issues at hand. I’d rather work towards correcting misunderstandings of the term “business ethics,” instead of just capitulating to them.

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Thanks to Andrew Newton for the email conversation that sparked this blog entry — but he’s not to blame for any faults in the paragraphs above.

From the NY Times: A Promise to Be Ethical in an Era of Immorality

When a new crop of future business leaders graduates from the Harvard Business School next week, many of them will be taking a new oath that says, in effect, greed is not good.

Nearly 20 percent of the graduating class have signed “The M.B.A. Oath,” a voluntary student-led pledge that the goal of a business manager is to “serve the greater good.” It promises that Harvard M.B.A.’s will act responsibly, ethically and refrain from advancing their “own narrow ambitions” at the expense of others.

(The link to the Oath itself is here: The MBA Oath. Take a minute to read it.)

Overall, this strikes me as a good project. If nothing else, it serves as a focal point for discussion, both for the students involved and for others interested in ethical behaviour in business. So my critical comments below are not intended to denigrate the overall usefulness of the code in any way.

First, a note about the title of the NYT story: I know of no credible evidence that we live in an “era of immorality.” Or at least, I know of no credible evidence that the present era is any more immoral than previous eras. If anyone knows of any evidence to the effect that this is an “era of [business] immorality” please let me know. And “I saw it on CNN” doesn’t count. Nor does “everyone knows it’s true!” We no more live in an era of (business) immorality than we live in an era of plane crashes. The fact that something makes the news often doesn’t imply that it’s happening often. But ok, on to the topic at hand; regardless of whether the current era is more or less immoral than previous ones, it’s certainly clear that business could be doing better. Will the MBA Code help?

My first point about the MBA Code is really a question: why have so few Harvard MBA students signed on? The article says about 20% have signed on. What’s up with the other 80%? Why not sign on to a code of ethics that (as far as I can tell) has no teeth? It’s got no enforcement mechanism, and it’s pretty vague. All of which is fine: the code is aspirational, not regulatory. But it does make me wonder why so few MBA’s have the relevant aspirations, or are at least willing to claim to have them. This is not unrelated to my next point…

It’s kind of unclear just what the Code demands. But the demands will have to be clearer if — and it’s a big “if” — this code is supposed to lead to concrete changes in behaviour. Note, for example, the Code’s second point: “I will safeguard the interests of my shareholders, co-workers, customers and the society in which we operate.” What does that mean? Does “safeguard” mean “safeguard at all costs?” It can’t. And the promise to safeguard all of these interests leaves open the question of what to do when the interests of “shareholders, co-workers, customers and … society” conflict.

Finally, a word about professionalization. The NYT notes that “student advocates contend [the Code] is the first step in trying to develop a professional code not unlike the Hippocratic Oath for physicians or the pledge taken by lawyers to uphold the law and Constitution.” The analogy with physicians and lawyers is instructive. The codes of ethics of most — probably all — true professions include a promise of some sort to promote the public good. But the means by which professionals such as physicians and lawyers aspire to promote the public good is indirect. When lawyers know their clients are guilty, they don’t promote the public good by telling the cops. Their code of ethics forbids that. They play a role in a system of justice, and that role involves defending vigorously even guilty clients. Likewise, physicians are expected to contribute to the public good by advocating for their patients. They’re not supposed to abandon their patients, even if they think it would be socially best to do so. In such cases, there are of course limits on what professionals may do to help their clients or patients. Lawyers can’t suborn perjury, and physicians can’t steal drugs for their patients. But those are side-constraints on what is unquestionably their primary obligation. So if managers aspire to professionalism, that doesn’t, on its own, imply that they should adopt the public good as their first-order goal. What they need to do is to figure out how best to play a role in the larger institution that promotes the public good.

Here’s a smart & balanced piece on executive compensation by Ray Fisman, writing for Slate: Comparison Shopping: The real reason CEO compensation got out of hand.

The popular (and populist) perception is that of America’s CEOs greedily rubbing their hands together as they approve their own paychecks, and there certainly has been some of that. Others argue that in most cases CEOs are richly compensated because they’re so good at what they do.

Several recent studies stake out a middle ground, assuming that CEOs are neither villains nor business masterminds. These studies argue that the seemingly innocuous practice of benchmarking pay against other companies’ CEOs may be to blame…

I heartily recommend reading that entire article. It’s enlightening. And it’s enlightening on an issue about which many of us have strong opinions. And opinions without understanding are useless, perhaps dangerous.

I think there are 4 factors that go into explaining public outrage at executive compensation.

1) Corporations sometimes screw up, in which case any executive compensation, never mind 6-figure compensation, seems outrageous. (If you think “sometimes” is an understatement, you’re falling prey to the same fallacy that leads people to believe, falsely, that plane crashes are common.)

2) Executives sometimes are paid too much — too much, that is, by any standard other than cronyism. That is, sometimes Executive Compensation Committees make bad decisions, in some cases because they’re insufficiently independent of the CEO.

3) Many people hate the rich. And many (not all) corporate CEOs are rich. Hating them leads naturally enough to believing they don’t deserve what they have. (This typically involves a philosophically controversial assumption that justice in the distribution of wealth is a matter of how much we each end up with, rather than how we each got what we have.)

4) Most of us don’t understand enough basic economics. I include myself in that category. (So read this book.) One consequence of this is that many people don’t know that there just is no other, well-worked out theory of the value of labour beyond “What The Market Will Bear.” (The notion of benchmarking CEO salary based on what other relevantly-similar companies are paying is part of figuring out just how much the market will bear.) Even the notion of tying salary to performance leaves open the question of how much reward for how much performance of what kind. Also, this helps explain why reason #1 above can be a mistake: base salary is related to expected performance: it’s a gamble, based on what the company expects the CEO to be able to do. Failure on the part of the CEO doesn’t necessarily mean the salary was unjustified in the first place.

All that being said, the salary-ratcheting phenomenon discussed in Fisman’s article strikes me as a genuine problem, because the feedback loop implies a kind of self-fulfilling prophesy regarding what, in fact, the market will bear. And if CEO compensation looks, to corporations, like it’s rooted in a reliable methodology, it will tend to trump, and hence squeeze, other, less-readily quantifiable, corporate objectives.

What do Starbucks and Walmart have in common? I mean, beyond being wildly successful chains. And beyond being corporations with a tendency to polarize commentators into Lovers and Haters. What, for example, do the two have in common in terms of labour relations?

The stopstarbucks.com website features an open letter to Starbucks CEO, Howard Schultz. It begins like this:

Dear Mr. Schultz (Starbucks CEO),

You have repeatedly intimidated and terminated your employees for seeking to unionize, taking a page from Wal-Mart’s unethical playbook. That does not foster trust among workers.

We insist you allow your workers to organize and stop opposing the Employee Free Choice Act.

Instead of allowing your workers to unionize and negotiate fairer wages, health benefits, and hours, Starbucks spends millions in legal fees settling labor complaints that would expose your atrocious labor practices. That does not foster trust among workers….

Here’s an example, from the NYT, of the kind of behaviour they’re talking about: Starbucks Loses Round in Battle Over Union. According to the story, Starbucks was found to have “illegally fired three baristas and otherwise violated federal labor laws.”

Now, union-busting is illegal, or at least certain union-busting activities are. But being anti-union in a more general sense is not. But is being anti-union unethical?

As a starting point, notice the comparison: the stopstarbucks.com website compares Starbucks to Walmart, a company widely criticized for its tough anti-union stance.

Now here’s the difference between Starbucks and Walmart: the customers. Walmart customers are, well, not wealthy. They’re primarily the working poor, the underemployed, and those on a fixed income. (In the US, Walmart customers have annual household incomes well below the national median.) Unionization at Walmart would mean higher wages, which would translate into higher prices, which would hurt Walmart’s not-very-wealthy customers. Resisting unionization is one of the ways Walmart keeps their prices low, to the benefit of many poor families. That doesn’t mean its OK to violate workers’ rights. But it explains why it’s not wrong for Walmart to resist unionization in general.

Now, consider Starbucks. Starbucks customers are, well, not poor. Not typically, anyway. Starbucks caters to those willing to pay $5 for a fancy cup of coffee. So Starbucks can’t exactly claim to be protecting its impoverished customers from greedy unions. But then, that doesn’t make it a slam-dunk, ethically, for the union side either. It’s still a zero-sum game, and a raise for employees means the price of a cup of coffee goes up. Well, prices don’t necessarily go up. Starbucks could, instead, cut how much it pays farmers for coffee beans and for milk. Or stop donating to charities. Again, the point here is not to justify union-busting: workers’ rights are important, and Starbucks has done some bad things in this regard. I’m just using this example to point out what ought to be obvious: that higher wages are not always, on balance, an obviously good thing, ethically speaking.

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HT to the Organic Consumers Association.

I’ve realized I need the help of a homeopath or a naturopath.

Not help with anything related to my own health, of course. There’s no good evidence that homeopathic or naturopathic treatments work, so relying on them for that would be foolish.

Here’s why I think I need their help.

I’m willing to assume that most homeopaths and naturopaths (and other practitioners of new-age medicine, like crystal therapists, and those who practice “therapeutic touch”) are honest and sincere. I’ll willing to assume that they’re not intentionally defrauding anyone. They’re mistaken, perhaps, about their work having anything beyond placebo value, but I’ll assume they’re not con artists.

So, here’s my question: how can I tell the difference? Surely such practitioners have to acknowledge that there are charlatans out there. Con artists do exist, right? Surely no one thinks that everything offered as health-promoting actually works. So, my question for practitioners of new-age medicine: how do I tell the difference between their services, and the services of a true snake-oil salesman?

Seriously, if any of you homeopaths or naturopaths (etc.) out there can answer this question, you will be doing a very significant service to consumers.