Archive for the ‘government’ Category
Should Companies Judge the Ethics of Those With Whom they Do Business?
Filed under: accountability, corporate citizenship, decision-making, government, NGO, protest, stakeholders |
Comments (10) 
The Wikleaks backlash continues. I suggested here two days ago that Mastercard was probably justified in ceasing to act as a conduit for donations to Wikileaks. I said that, at very least, it’s not surprising that a company whose business depends on its reputation as a trustworthy keeper of secrets would find it hard to endorse the behaviour of an organization that exists entirely for the purpose of exposing secrets.
But quite a few people have suggested that Mastercard (and Visa and PayPal and perhaps others) have been inconsistent, and perhaps even hypocritical, in deciding to cut off Wikileaks. As an editorialist for the Guardian pointed out…
while MasterCard and Visa have cut WikiLeaks off you can still use those cards to donate to overtly racist organisations such as the Knights Party, which is supported by the Ku Klux Klan.
For that matter, you can use Mastercard or Visa to donate to any number of controversial charities and political causes, from PETA to the NRA to Planned Parenthood — all of which are organizations about which at least some people have serious moral reservations. Similarly, you can use either card to buy cigarettes, to buy guns, to buy drug paraphernalia, to reserve the services of a call girl, or to pay for hardcore pornography online. So, really, just how careful are Visa and Mastercard with regard to the companies they deal with?
And if Visa & Mastercard are on thin ice with regard to judging Wikileaks morally, that reduces the force of their ostensible reason for cutting off the organization, and lends credibility to the claim that all they’re doing is caving to government pressure.
Trying to divine the actual motives of the credit card companies here is probably nearly impossible. But this also raises the very general question of whether companies should pass moral judgment on their customers and business associates. Is it OK for a company to refuse to do business with someone — whether that someone is an individual or another company — because they have ethical objections to their behaviour?
(I touched on this topic a couple of years ago, in discussing the right of a bakery not to decorate a cake with the name “Adolf Hitler” on it. And more recently I blogged about corporate participation in the death penalty.)
Now in some cases, of course, moralistic discrimination is simply impossible, because the grounds upon which a company might choose to discriminate are invisible to them. In many markets, companies simply don’t know enough about their customers to pass judgment. The store I buy my groceries from has no idea how I live my life, what my values are, etc. Maybe if they knew more about me they would refuse to sell to me. But they don’t, so they can’t, and they aren’t likely to start going to the trouble of finding out more.
And in many (most?) cases, discrimination on moral grounds is off the agenda simply because it reduces profits. Maybe you have moral qualms with the behaviour or character of 25% of the population (or maybe even with the 50% who don’t vote the way you do), but are you really going to refuse to do business with them, and accept the resulting huge reduction in income?
And clearly, generally, this paucity of moralistic discrimination is a good thing. A lack of discrimination likely leads to greater economic efficiency (good for the community as a whole). And the fact that businesses are generally (though unfortunately not always) unable to discriminate based on, e.g., what they see as moral objections to someone’s sexual orientation, is a good thing for gays, lesbians, the transgendered, etc.
On the other hand, there are some clear cases in which it is widely accepted that companies will and should discriminate based on the character and behaviour of their customers. Think of banks, which are obligated (often legally required) to “discriminate” against criminal organizations by, for example, reporting large financial transactions to the government.
Note also that many people believe that companies should judge other companies they do business with, for example with regard to their environmental record and labour standards. In fact, lots of companies have faced serious criticism for failing to do so. Companies today are supposed to care about the ethical standards of their suppliers.
So, is it OK (or even good) for companies like Visa and Mastercard and PayPal to judge the morality of Wikileaks? Your initial answer to that is likely to depend on your opinion of Wikileaks more generally. I’d be curious to know if there’s anyone out there who says either:
- “Wikileaks is evil, but Mastercard, Visa, and PayPal should stay neutral and continue funneling funds to them,” or
- “Wikileaks is great, but Mastercard, Visa, and PayPal are fully justified in cutting them off.”
Wikileaks, Credit-Card Companies, and Complicity
Filed under: activism, banking, corporate citizenship, ethics, finance, government, NGO, transparency |
Comments (6) 
I was interviewed last night on CBC TV’s “The Lang & O’Leary Exchange” about Mastercard and Visa’s decision to stop acting as a conduit for donations to the controversial secret-busting website Wikileaks. [Here’s the show. I’m at about 15:45.] (For those of you who don’t already know the story, here’s The Guardian‘s version, which focuses on retaliation against Mastercard by some of Wikileaks’ fans: Operation Payback cripples MasterCard site in revenge for WikiLeaks ban. )
Basically, the show’s hosts wanted to talk about whether a company like Mastercard or Visa is justified in cutting off Wikileaks, and essentially taking a stand on an ethical issue like this.
Here’s my take on the issue, parts of which I tried to express on L&O. Now just to be clear, what follows is not intended to convince you whether you should be pro- or anti-Wikileaks. The question is specifically whether Mastercard and Visa, knowing what they know and valuing what they value, should support Wikileaks’s activities.
I think that, yes, Mastercard & Visa are justified in cutting off Wikileaks. And I don’t think that conclusion depends on arriving at a final conclusion about the ethics of Wikileaks itself. The jury is still out on whether the net effect of Wikileaks’ leaks will be positive or negative. Likewise it is still unclear whether Wikileaks’ activities are legal or not. And who knows? History may be kind to Wikileaks and its front-man, Julian Assange. The question is whether, knowing what we know now, it is reasonable for Mastercard & Visa to choose to dissociate themselves. I think the answer is clearly “yes.” The key here is entitlement: the secrets that Wikileaks is disclosing are not theirs to disclose. They don’t have any clear legal or moral authority to do so, and so Mastercard & Visa are very well-justified in declaring themselves unwilling to aid in the endeavour.
One question that came up in last night’s interview had to do with complicity. Is a company like Mastercard or Visa complicit in the activities of Wikileaks? The answer to that question is essential to answering the question of whether the credit card companies might have been justified in simply claiming to be neutral, neither endorsing nor condemning Wikileaks but merely acting as a financial conduit. I think the answer to that question depends on at least 3 factors.
- 1. To what extent does Mastercard or Visa actually endorse Wikileaks’ activities?
- 2. To what extent does Mastercard or Visa know about those activities? and
- 3. To what extent does Mastercard or Visa actually make Wikileaks’ activities possible? That is, what is the extent of their causal contribution? Do they play an essential role, or are they a bit player?
In terms of question #1, it’s worth noting the significance of the particular values at stake, here. Wikileaks stands for transparency and for publicizing confidential information. Visa and Mastercard stand for pretty much the exact opposite. Visa and Mastercard, like other financial institutions, are able to do business because so many people trust them with their financial and other personal information. And so the credit card companies are, of all the companies you can think of, pretty clearly among the least likely to be able to endorse Wikileaks’ tactics, whatever they think of the organization’s objectives.
It’s also worth noting the significance of the notion of “corporate citizenship,” here. That term is widely abused — sometimes it’s used to refer to any and all social responsibilities, broadly understood. But if we take the “citizenship” part of “corporate citizenship” seriously, then companies need to think seriously about what obligations they have as corporate citizens, which has to have something to do with their obligations vis-a-vis government. Regardless of how this mess all turns out, the charges currently being bandied about include things like “treason” and “espionage” and “threat to national security.” These are things that no good corporate citizen can take lightly.
Four Myths About Business Ethics
Filed under: decision-making, definitions, economics, ethics, government |
Comments (2) Here are four important myths about business ethics. There are surely many myths about business ethics, but these 4 in particular cause trouble, and pose significant challenges for anyone trying to have a productive discussion about right and wrong in the world of business.
Myth #1. “Business ethics” is an oxymoron.
The idea that “business ethics” is somehow a contradiction in terms is based on a serious misunderstanding of what ethics is and what the world of commerce is like. Indeed, it’s much closer to the truth to say that the term “business ethics” expresses a redundancy, since commerce is quite literally impossible without ethics. Every single commercial transaction requires some level of trust, and without a shared commitment to some level ethical behaviour, you simply do not get trust. Indeed, economists are more than ready to point out the huge range of ethical norms that underpin the modern economy and make it run more efficiently.
Myth #2. Ethics is just a matter of opinion.
Again, false. While ethics does of course have something to do with having an opinion, it’s also about having opinions that you can defend to other people. While there certainly are a few really tough moral questions about which we might agree to disagree, we should also recognize that on many ethical issues there are better and worse answers. Poor answers to ethical dilemmas are typically rooted in factual mistakes and logical inconsistencies. We shouldn’t settle for those. We should talk them through. (And, as a I blogged recently, having an opinion doesn’t come to much if you can’t sell that opinion to others.)
Myth #3. There’s no such thing as “business ethics,” because ethics should be the same everywhere.
There are two main reasons why ethics, while essential to business, isn’t just exactly the same in business as it is in other domains of life.
First, business poses special challenges. The enormous productive capacity of corporations and other large organizations also brings the potential to do substantial harm, both to the lives of stakeholders and to the natural environment. So we face questions in the world of commerce that we just don’t face in other parts of our lives. Second, the special social role of business implies a tailor-made set of ethical principles. One of the defining characteristics of business is that it is competitive: companies are naturally driven to do better than others in their field. This kind of behaviour is socially beneficial — consumers benefit when companies compete vigorously to produce a better product, at a better price, than the other guy. In practice, we can really look at business ethics as having two importantly different components. One component consists of the rules needed to civilize a tough, competitive game. This part of business ethics essentially has to do with the norms-and-principles that ought to govern business’s behaviour with regard to outsiders. The other component of business ethics is about the ethical rules that ought to be embodied in relationships within the organization. Here, we do value cooperative behaviour; so managers work hard to shape corporate culture to enable employees to trust each other and to work together toward shared goals. Business is morally complex that way.
Myth #4. Business ethics is just a matter of laws and regulation.
This is not just false, but dangerous. The tendency to confuse ethics and law is tempting, especially in an age in which the business section of the newspaper increasingly refers to “ethics laws” and “ethics regulations.” But we shouldn’t be misled by that short-hand way of speaking. If you think about it for just a minute or two, there are in fact lots of ways in which law and ethics come apart. There are plenty of things that are legal but unethical; and there are also behaviours that are illegal, but arguably ethically OK. The short explanation for the fact that law & ethics don’t overlap perfectly is this: laws are made & enforced by government. But governments can’t be everywhere, and if they could, we wouldn’t want them to be!
These surely aren’t all the myths there are about business ethics. But these strike me as four that are particularly common, particularly troublesome, and particularly clearly wrong.
Conflict of Interest at the Business/Politics Interface
Filed under: accountability, conflict of interest, ethics, government, politics, taxpayers |
Leave a comment People tend not to trust big business. And they tend not to trust the world of politics. But when those two worlds intersect, people really get nervous.
Witness, for example, this story by Eric Lipton, for yesterday’s New York Times: A Journey From Lawmaker to Lobbyist and Back Again
The story is about Dan Coats, a former corporate lobbyist recently elected to the US Senate.
Dan Coats, then a former senator and ambassador to Germany, served as co-chairman of a team of lobbyists in 2007 who worked behind the scenes to successfully block Senate legislation that would have terminated a tax loophole worth hundreds of millions of dollars in additional cash flow to Cooper Industries.
…
As part of the Republican wave in this year’s midterm elections, Mr. Coats will join the Senate again and is seeking a coveted spot on the Finance Committee, the same panel that tried to shut the tax loophole and that the Obama administration has pushed to again consider such a move.
The worry alluded to in the NYT piece, but not explored in any depth, is that of conflict of interest. The vague worry is roughly that there is — well, some sort of conflict between Mr. Coats’ old allegiances and his new position.
Coincidentally, here’s a piece (just published today) that I wrote about conflict of interest in the Canadians Prime Minister’s Office: Conflict of Interest in the PMO: Just What is the Worry?
The main point of my article is neither to accuse nor to absolve. It’s to point out that we need to get clear on just what the worry is, in any particular situation. A vague worry that “something ain’t right, here” is fine as a starting point, but if we want to go beyond that, and if we want to prescribe smart solutions, we need to get clearer about what the problem is.
Some scholarly definitions cast the matter as a question of judgment. Under such definitions, conflict of interest is said to occur if there is good reason to think that the judgment of the individual in question will be impaired. In other words, will she be able to exercise judgment impartially, or will her judgment be clouded by other factors that ought to, for ethical reasons, be excluded?
Other definitions frame the issue as one about the interests of those being served: a conflict is said to occur if there is reason to doubt the individual’s ability to faithfully serve the interests of those they are sworn to serve.
Whatever their differences, both definitions focus on service. We worry about conflict of interest when the incentives present in a given situation give us reason to doubt the quality of an individual’s service as a trusted advisor or decision-maker. This analysis suggests that, whatever the Conflict of Interest Act may say, the real question in the case of Wright is whether the judgment that he exercises in his capacity as the chief of staff can reasonably be expected to be skewed (consciously or subconsciously) by the interests of his former, corporate, employers.
The same could, and presumably should, be asked about Mr. Coats. But, as always, I am at pains to point out that a conflict of interest is a situation, not an accusation. If there is reason to worry about Mr. Coats’ judgment, that is not a matter of impugning Mr. Coats’ integrity. Rather, it is a matter of considering what measures (if any) are sufficient to make sure that the value of his service to the public outweighs the risks.
Governance, Both Political and Corporate
Filed under: boards, conflict of interest, corporations, governance, government, politics |
Comments (4) The word “governance” (as in, “corporate governance”) is obviously quite similar to the word “government.” And just as obviously, that’s no coincidence. The two words share the same roots. In the abstract, the word “governance” just refers to the act of governing something. But it’s not just the meaning of the words that overlaps — it’s the people doing the work. At the highest levels, people often move from the world of business into the world of politics, and vice versa.
A few quick points about this.
1) The fact that there’s some flow back-and-forth between government and the corporate world is not at all surprising. After all, there’s considerable overlap in the skill-sets required in leadership positions in both domains. For example, I recently heard a top expert on corporate governance say that ex-politicians actually make very good corporate directors (and that was said based entirely on their skill-set — not, as you might guess, based on their political connections).
2) Some people do question the extent to which one world is good training for the other. See, for example, this recent story about former EBay CEO, Meg Whitman, who is currently in the running to become governor of California: Is EBay a proper primer for a governor? (by Stuart Pfeifer for the LA Times). Here’s one relevant bit:
Some former employees and Silicon Valley observers question whether a forceful corporate executive used to getting her way would be capable of the compromise needed in government.
“You certainly have many more freedoms as a CEO than you do as an elected official,” said Larry Gerston, a political science professor at San Jose State. “We don’t elect kings.”
3) It’s also noteworthy when a major politician acts in a way more common in the corporate world. In this regard, see the review (by Jordan Timm) in this week’s Canadian Business magazine (unfortunately not online yet) of Lawrence Martin’s Harperland, a book about Canadian Prime Minister, Stephen Harper. According to the review,
…this Prime Minister’s office has enjoyed privilege and authority more in the style of the corporate C-suite than the executive branch of a traditional Westminster government. That approach has been responsible for many of the Harper government’s successes, but it has also been at fault for many of its blunders and setbacks. And though the business and political worlds feature very different rules and accountabilities, executives can learn many lessons, both constructive and cautionary from Stephen Harper’s Ottawa.
4) In both kinds of governance (political and corporate) the main challenge lies in turning the will (and values) of the many (votes in one case, shareholders in the other) into decisions by a few (politicians in one case, executives and directors in the other) to be implemented by an in-between number (of civil servants in one case, and of corporate employees in the other). And in both cases, effective leadership seems to require that the leader engage in a combination of a) listening to their constituents, and b) exercising independent judgment.
I don’t have a grand point to make on this topic. But can anyone recommend essential reading on the intersection between corporate and political governance and/or leadership?
Chilean Miners: What is Rescue Worth?
Filed under: aid, CSR, disaster, employees, government, pricing, risk, workplace safety |
Comments (8) 
Happily, rescue crews seem to have made better progress than anticipated toward rescuing 33 Chilean miners trapped deep underground since August.
Here’s a recent story giving details, by Alexei Barrionuevo and Christine Hauser writing for the NYT: Drill Reaches Miners in Chile, but Risks Remain
As the rescue proceeds, most of us will (rightly) be focused on the human side of this story, the ordeal those 33 men have gone through. But this story also has an important business- and economic component. Last month, I blogged about whether the trapped miners ought to be paid, and by whom. But another issue is that the rescue effort itself is likely to be exceptionally expensive. What should the companies doing the drilling be paid? Back in April, after a mine collapse in West Virginia, I blogged about the Ethical Obligation to Save Trapped Miners, and pondered the extent of the financial obligations of the mining company and the government in the face of such a disaster. Today, I’d like to look at the question from a different angle. How much should drilling companies involved in such a rescue be charging for their work?
Now, just to be clear, I’m not talking about the actual companies involved.
Brandon Fisher, founder & president of US-based Center Rock Inc., the company that made the drill used, is reported to have nobler motives:
He says the Chilean government is paying for his time and equipment — “that’s the plan anyway.” But he is not at the Mina San Jose for the money. He is there for the miners.
“I don’t know that there’s 10 minutes that you’re out here that you don’t look down there and think, ‘There’s 33 guys 600 feet below our feet,’ ” he said. “Whenever you’re tired, it’s real easy to think, ‘Hey, I’m out here seeing sunlight and breathing fresh air. It’s time to suck it up and get these guys out of here.’ ”
It’s also worth noting that, in fact, this is a competitive arena — there are apparently quite a few companies with relevant capacities, and they’re likely competing with each other to bid for the work. Perhaps they’re even charging less for this high-profile job than they normally would, because it’s good advertising. But let’s set that complication aside for the moment.
So, a thought experiment: what if there were only one company qualified to do the rescue work, or only one company available locally? What should that company charge?
A few quick options:
1. They should charge whatever the market will bear, which would essentially amount to charging the most the Chilean government and/or the mining company involved are willing to pay.
2. They should charge nothing. They should be happy to be involved, and to charge anything would be to put a price on human lives, which is unacceptably exploitative.
3. They should charge just enough to cover their own costs — machinery, fuel, and maybe their own workers’ wages.
4. They should charge exactly the same to drill this hole as they would to drill any other hole of similar size, depth, and complexity. No more (that would be exploitative), and no less (that would be foolish).
Do you favour one of those four? On what grounds? Or can you suggest another principled answer?
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Addendum: I found a story that offers the following relevant detail: “Local newspaper La Tercera reported that the rescue efforts, expected to last three to four months, will cost anywhere from $10 million to $20 million.”
Ethics & Foreclosures
Filed under: banking, consumers, finance, government, politics, risk |
Comments (7) 
The number one business story of the week is surely the foreclosure story. A number of U.S. banks, including most notably Bank of America, have suspended mortgage foreclosures for the time being due to worries over flawed paperwork.
Here’s just one of many news items on the topic, by David Streitfeld and Nelson D. Schwartz writing for the NYT: Largest U.S. Bank Halts Foreclosures in All States
…Bank of America instituted a partial freeze last week in those 23 states, and three other major mortgage lenders have done the same. The bank’s decision on Friday increased pressure on other lenders to extend their moratoriums nationwide as well.
An immediate effect of the action will be a temporary stay of execution for hundreds of thousands of borrowers in default. The bank said it would be brief, a mere pause while it made sure its methods were in order….
As the NYT story points out, there is considerable pressure on lenders to put the brakes on. Members of Congress and various attorneys general are suggesting that it would be wise to do so.
A few quick points about ethics:
1) In case it’s not obvious, the freeze on foreclosures is an ethical issue, in addition to being a legal one. It involves shifting benefits, burdens, and risks among groups, including homeowners, banks’ shareholders, and taxpayers. (In this regard, it’s worth remembering that the banks are middlemen, essentially mediating a transaction between their shareholders, who have money to lend, and homeowners, who need to borrow. If there has indeed been any fraud or even lack of diligence on the part of the banks, it is an offence not just against homeowners, but against shareholders.)
2) Mortgages are not just like any other product. For starters, a home is by far the biggest purchase most of us will make in our lifetimes. Scale alone makes this an important issue. Further, home ownership is for most people laden with emotion. When foreclosures happen, people aren’t just losing a product; in most cases they lose a home. This is both morally significant, and accounts for at least some of the political attention being paid to the issue.
3) It’s not at all clear that a freeze on foreclosures is good for home-owners (or rather would-be home owners) over all. The ability to foreclose in the event of default is part of what makes it worthwhile for lenders to take a risk in lending money to buy a home in the first place. Also, foreclosures put houses on the market, helping to keep prices down. Fewer foreclosures may mean a rise in prices. (See CNN-Money: Foreclosure freeze shakes battered home market). Since ethics is, in part, about evaluating outcomes, recognizing the effects of the freeze on the full range of stakeholders is ethically important.
Corporate Participation in the Death Penalty
Drug companies are often accused of engaging in, or of complicity in, all manner of wrongdoing.
It’s less often (though certainly not unheard of) that they’re accused of participation in actual killings, or offered the opportunity to save a life. This is one of those cases.
The story begins here, with a heinous crime not committed by any corporation: Jury Finds Steven Hayes Guilty In Connecticut Triple Murder
Steven Hayes was found guilty today in the deadly home invasion that left a woman and her two daughters brutalized and murdered, making him eligible for the death penalty….
Hayes may well be executed, but only if a subsequent legal proceeding results in that decision, and only if the state of Connecticut has the help of a particular corporation, namely the one that supplies the drug necessary for lethal injection. And that help can’t be assumed. To begin, there are reports that one of the suppliers is having trouble supplying a key drug used in lethal injection.
Not everyone thinks that shortage is a bad thing. See this piece, by Jim Edwards, writing for Bnet: Why Hospira Should Stop Supplying Prisons With Lethal Injection Drugs
Hospira (HSP), the company that makes the lethal injection Pentothal used in death row executions, says the restricted supply of the drug that has halted executions across the country is caused by supplier issues and has nothing to do with the company’s distaste for the death penalty. But why shouldn’t Hospira cut off prisons from their supply of Pentothal?
Now, I don’t know whether Hospira is the company that Connecticut relies on to facilitate its executions (Ewards’ article lists only Oklahoma, Kentucky, Virginia, Arizona and California). But the drugs they use come from somewhere, either Hospira or another drug company.
So, I’m going to ask you to engage in an exercise in imagination. Forget, for a moment, what your own view on the death penalty really is. Ask yourself these two questions:
- IF the death penalty is morally justified, is Hospira (or another company) required to sell the requisite drug to the state in question? May they opt out? Must they remain in some sense “neutral” on this hot-button issue?
- IF the death penalty is morally unjustified, is Hospira (or another company) required not to participate? Or is the company blameless for its participation? If the company is blameworthy for participating, are we likewise to blame the company that makes the gurney that Hayes will lie in as the drug is injected? The company that makes the needle? Why or why not?
Again, even if you have strong views on the death penalty itself, please do your best to set that aside and consider more specifically the ethics of business participation in the practice.
Should Trapped Miners Be Paid?
Filed under: disaster, employees, government, risk, taxpayers, wages, workplace safety |
Comments (20) 
Most people don’t expect to be paid when they’re not doing work. Sure, most people get paid during coffee breaks, and lucky folks get paid vacations. And some people get paid sick days. But what about when you’re not working for months on end? Does any employer have an obligation to pay you under those conditions? What about when you’re not working, but physically at work, for months on end?
That’s the issue faced by 33 miners trapped 2,300 feet below ground, in a collapsed Chilean mine.
Here’s the story, written by Nick Allen for the Daily Telegraph, but featured in the Ottawa Citizen: Trapped miners may not be paid
The 33 Chilean miners trapped underground may not be paid for months while rescuers try to reach them, leaving their families with no income.
The San Esteban company, which operates the mine, has said it has no money to pay wages and is not even taking part in the rescue.
It has suggested that it may go bankrupt and its licence has been suspended.
Evelyn Olmos, the leader of the miners’ union, called on Chile’s government to pay the workers’ wages from next month….
My initial impulse: yes, of course the miners deserve to get paid. Granted, they’re not exactly doing productive work, but that’s not their fault. Even though they’re not working, they are in fact still on the job. The problem, of course, is that the company seems financially incapable of paying them, not just unwilling. Legal means can be attempted, but if it’s really true that the company is bankrupt — well, you can’t get blood from a stone. (Note also that, for what it’s worth, the mine’s owners have asked the miners for forgiveness.)
So that leaves the government (i.e., the citizens) of Chile. Should they pay? Now, to be clear — and this is a crucial distinction — I’m not just asking whether it would be a good thing if the miners end up getting paid. I’m asking whether Chilean taxpayers have an obligation to pay them. I think the answer to that is less clear than the question of whether a financially-capable company would have an obligation to pay them. Now, this isn’t a public policy blog, it’s a business ethics blog, so I don’t often delve into what constitutes the morally-best decision for government. But it’s worth thinking about what principles might apply to this case not just from the point of view of government’s obligations to citizens in need, but from the point of view of government’s obligations to take up the slack when industry undertakes dangerous operations that can end up requiring considerable financial resources when things go wrong. Is government’s willingness to clean up the mess part of what lets mining companies put miners at unreasonable risk in the first place? Or should we think instead that the government’s willingness to help out is just part of the insurer-of-last-resort role that we want government to take on, and that allows all sorts of companies (responsible or otherwise) to be in business in the first place?
As a post-script, I should point out that the moral parallels between the Chilean mine rescue and the BP oil spill cleanup, in this regard, are striking.
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Also of interest, on the Research Ethics Blog:
Could Research be Done on the Trapped Miners?
Galarraga’s Corvette
Filed under: advertising, governance, government, management, shareholders |
Comments (2) 
By now everyone probably knows the background story: Detroit Tigers pitcher Armando Galarraga didn’t get credited with the perfect game he pitched last Wednesday, due to a bad call made by the umpire. Fast-forward a day to General Motors tapping into international sympathy felt for Galarraga by giving the ballplayer a red Corvette convertible. A public-relations coup…pure genius, right?
Well, unless you’re given to armchair micromanagement, in which case you slam GM for wasteful spending.
Here’s the story, by the New York Times’ Nick Bunkley: G.M.’s Gift of a Luxury Car Stuns a Few.
A free sports car for a Detroit Tigers baseball player was not among the reasons the government saved General Motors from financial collapse. Nor was a year’s supply of diapers and other gifts for a Minnesota woman who gave birth behind the wheel of a Chevrolet Cobalt.
General Motors has given away both in recent weeks — marketing ploys that would have barely raised an eyebrow in the past. But now that American taxpayers collectively own a majority of the carmaker, executives are learning that there are more than 300 million potential second-guessers out there.
The complaint, of course, is ridiculous. Never mind the fact that it’s so patently obvious, even to those of us who are not experts, that this was a brilliant move by GM. The bigger point here is that most of us (including the critics mentioned in the NYT story) are not experts, either in public relations or in corporate management more generally.
Now, that’s not to say that non-experts can’t express an opinion. (The fact that I have a “Comments” section on my blog essentially constitutes an invitation to experts & non-experts alike to comment.) The point is that shareholders in GM (including, now, indirectly, all U.S. citizens) have little business feeling aggrieved over each and every minor managerial decision, even ones they suspect are misguided. Shareholders hire managers to manage — to make decisions. Courts have long recognized that, once you empower someone to run a business, you basically need to back off and let them do their job. There are exceptions, of course. The American people now hold a major stake in GM, and they should be worried if they see GM managers heading in any truly disastrous directions. But being a shareholder neither qualifies you, nor entitles you, to have a say in day-to-day decision making. So critics of GM’s gift should feel free to play armchair umpire; but they shouldn’t expect anyone to take them seriously.
The Business Ethics Blog 