Archive for the ‘Uncategorized’ Category
Toronto Mayor in Non-Financial Conflict of Interest
Back in October, I wrote about the small conflict of interest case revolving around Toronto mayor Rob Ford’s purchase of new business cards. The reason why non-Torontonians ought to be interested in that story — a local story about a very small COI — is that it illustrated important points about the principles that ought to guide decision-makers through the treacherous waters of conflict of interest. The point wasn’t about Ford himself, certainly.
But the conflict of interest problems at Ford’s office continue.
Today’s controversy involves the fact that Ford has decided that one , the Toronto Star, is effectively black-listed as far as communications from his office goes.
The back story is that The Star ran an unflattering series of articles on Ford, back before he was Mayor. According to CTV News,
Ford has refused to talk to Star reporters since a 2010 article in the paper concerning his conduct as a football coach.
The Star says that’s the mayor’s prerogative, but adds the paper is also being denied notification of public events, briefings or announcements from Ford’s office.
Ford says he’ll continue to snub The Star until the paper apologizes. The paper says that’s an abuse of power. That sounds right, but even prior to the actual abuse, there’s a conflict of interest implicit in the idea that the Mayor would exercise discretion in this way over which papers to communicate with.
It’s important to see that a conflict of interest doesn’t have to involve money, though it often will. All that is required is for someone in a position of trust be required to make some decision in a situation in which he or she has some personal interest that could reasonably be seen as influencing his or her judgment.
Ford clearly has demonstrated that he has a personal interest here, specifically an animosity towards a particular newspaper that he feels has besmirched his reputation. And it’s pretty hard for a reasonable observer to think that that interest isn’t affecting his judgment.
Of course, this is surely not the first time that a politician’s (or business leader’s!) communication strategy has been swayed by his personal agenda. But that doesn’t make it ok, and it doesn’t mean we can’t learn from the example. People in positions of power are trusted to make decisions on behalf of others, and that affect other people’s interests. That implies an obligation to make those decisions for the right reasons, not personal reasons.
Eat More Kale, Launch Fewer Lawsuits
A recent AP story reported on the David-and-Goliath battle between a Vermont folk artist and the Chick-fil-A restaurant chain. The dispute is over Bo Muller-Moore’s use of the slogan “Eat More Kale,” which the Chick-fil-A says is just too darned close to their trademark “eat mor chikin” [sic]. The company’s lawyer has told Muller-Moore that his kale slogan “is likely to cause confusion of the public and dilutes the distinctiveness of Chick-fil-A’s intellectual property and diminishes its value.” The company apparently failed to comment as to what sorts of idiots they think are likely to confuse kale with chicken.
OK, so let’s get the obvious out of the way: yes, intellectual property is important and firms have every right zealously to protect their brand and its accompanying slogans.
But that’s quite different from bullying an entrepreneur who poses no imaginable threat.
This kind of behaviour is more than a simple wrong being committed against a single entrepreneur, a mere victimization of David by Goliath’s over-zealous lawyers. This is a matter of socially irresponsible behaviour.
As I’ve argued frequently on this blog, we ought to reserve the term “corporate social responsibility” to refer to obligations that a company owes to society at large, in some sense, rather than responsibilities it owes to particular individuals. And social responsibilities are precisely what Chick-fil-A is violating here.
In particular, Chick-fil-A is violating two different social responsibilities, here.
The first is the responsibility not to waste the legal system’s time. If Muller-Moore fights this in court, as he says he will, Chick-fil-A will be needlessly clogging up an already-overburdened legal system.
The second is the responsibility, albeit a weaker one, not to contribute to a pattern of overzealous — some would say frivolous — use of lawyers to scare smaller businesses. In acting this way, Chick-fil-A is setting an example for other companies, and contributing to an overall pattern that is liable to have a chilling effect on free speech and entrepreneurship.
Such legal actions, in other words, constitute a kind of pollution, a negative externality imposed on people not directly involved. Now of course in legal actions as in pollution, some effect on third parties is unavoidable and ethically permissible. But a socially responsible company at very least takes note of such externalities, makes sure that they are kept to a minimum, and makes sure that they are proportionate to the permissible goals they are trying to achieve.
Business Ethics Lessons from G20 Cop’s Arrest
Filed under: crime, government, protest, trust, Uncategorized |
Leave a comment What lessons can we take from a story about police brutality and apply to the world of business?
As many readers will know, the meeting of the G20 here in Toronto last summer was not, on the whole, a happy experience. Protestors, both peaceful and otherwise, were plentiful, and there were serious questions about the way the Government, and in particular the Toronto Police Service, conducted themselves. No one came out looking very good. Protestors torched cop cars and broke shop windows. Some of the tactics used to quell the riot resulted in accusations of police brutality.
Nearly a year later, after a fraught investigation by Toronto Police’s Special Investigations Unit, one police officer has been charged with assault. See this story by Jennifer Yang, for the Toronto Star: Toronto police officer charged in G20 assault:
After nearly one year, two closed investigations, and a public squabbling match between Toronto police and the agency tasked with investigating them, criminal charges have finally been laid in the case of Dorian Barton.
On Friday, the Special Investigations Unit charged Toronto police Const. Glenn Weddell with assault causing bodily harm in connection with Barton’s arrest during the G20 summit last June. The charge came on the same day the Toronto Star publicly revealed Weddell was the previous unnamed officer photographed during Barton’s violent arrest….
Strictly speaking, this isn’t a story about business ethics, but still it provides plenty of fodder for discussion of issues that are centrally important to business ethics. Issues such as:
- Who watches the watchers? Any regulatory system — whether a system of policing criminality or a system of vetting new pharmaceuticals — requires safeguards to make sure that those who wield regulatory power wield it wisely. That’s why police forces have systems for hearing complaints from citizens and for investigating wrongdoing by their own officers. And it’s also why regulatory decisions are typically subject to parliamentary oversight and judicial review.
- With great power comes great responsibility. Self-regulation is crucial for those given the power to enforce rules. Such self-regulation can take many forms. First and foremost, it needs to include individual self-regulation and the adoption of principles of integrity and good conduct. But individual ethics needs to be bolstered by an informal system of peers reminding each other of their obligations. When one regulatory bureaucrat or police officer edges too close to crossing a line, it is essential that colleagues be ready to point out that “That’s not how we do things around here.”
- What are the limits of team loyalty? It is no exaggeration to say that modern civilization is built on something akin to teamwork. And the number one challenge in literally every organization involves getting a number of people with different personalities, talents, and points of view, to work together effectively. Fostering loyalty is a key part of that. But loyalty must have limits. Lawyers are supposed to act as zealous advocates, but are not allowed to suborn perjury. Police and soldiers and firefighters often depend on teamwork for their very lives, but they jeopardize their social value if they put fraternal loyalty above the public good. And corporate employees are expected to help build shareholder value, but not to break the law in doing so.
One of the worst mental habits that can be adopted by people who proclaim an interest in business ethics is that of thinking that the ethical issues found in business are categorically different from those found in other walks of life. Commercial contexts do raise a number of special issues, but we can learn a lot about those issues by thinking about the ethical issues that arise in seemingly quite different domains.
McJobs, and Height as Bona Fide Employment Qualification
Filed under: discrimination, employees, Uncategorized, workplace safety |
Comments (15) 
Questions of employment discrimination and of what counts as a “bona fide occupational qualification,” are always challenging.
See, for example, this story published yesterday in the Globe & Mail: Starbucks sued for firing dwarf from barista job
The U.S. government is suing Starbucks Corp. … saying the coffee company fired a barista in El Paso, Tex., because she is a dwarf.
When the employee asked for a stool or small stepladder to perform her job, Starbucks denied the request and fired her that same day, claiming that she could be a danger to customers and workers, according to the U.S. Equal Employment Opportunity Commission….
As several commenters on the Globe story point out, the space behind a Starbucks counter is not a great place for an employee to stand stationary on a stool. It’s a fast-paced workplace in which people work with hot coffee and scalding jets of steam. So, Starbucks is at least not being entirely unreasonable in suggesting that allowing their would-be employee to stand there on a stool. That, I take it, is the key legal question.
But it seems to me that there’s another issue here, which has to do with just how critical this particular job is to this particular person. How critical the job is reveals the extent to which the company’s refusal to accommodate counts as an impediment to the would-be employee’s interests. Consider a different kind of example. Consider a situation in which the job in question is a high-paid unionized job, in a town with few employers. In such a situation, having that job might be really, really important. Or consider an employee who is moving up a corporate ladder. Imagine that the job at the third rung of the ladder (but only that one) requires that the employee receive some form of accommodation. Here, accommodation is crucial not just for the job, but for the employee’s entire career trajectory.
So there are, arguably, jobs for which accommodation is exceptionally important. But (with all due respect to the nice people who make my grande no-whip mocha) most of us don’t think of a job at Starbucks that way. We think of a job as a barrista as basically just another McJob, one which pays maybe a little over minimum wage and which is interchangeable with lots of other kinds of jobs in similar industries.
On the other hand, Starbucks likely doesn’t see its jobs that way, and doesn’t want to. At least, that’s the impression one gets from visiting the company’s Career Centre. So even if it turns out that Starbucks isn’t legally required to accommodate this person, doing so might be consistent with the values they claim to embrace, and the kind of workplace image they want to project.
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Thanks to Dominic Martin for showing me this story.
Unethical Innovation
Filed under: advertising, banking, complexity, consumers, finance, investing, regulations, risk, technology, Uncategorized |
Comments (8) 
Innovation is a hot topic these days, and has been an important buzzword in business for some time. As Simon Johnson and James Kwak point out in their book, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, innovation is almost by definition taken to be a good thing. But, they also point out, it’s far from obvious that innovation is in fact always good. They focus especially on financial innovation, which they say has in at least some instances led to financial instruments that are too complex for purchasers to really understand. Innovation in the area of finance — often lionized as crucial to rendering markets more efficient and hence as a key driver of social wealth — is actually subject to ethical criticism, or at least caution. And the worry is not just that particular innovations in this area have been problematic. The worry is that the pace of innovation has made it hard for regulators, investors, and ratings agencies to keep up.
In what other cases is “innovation” bad, or at least suspect? One other example of an area in which innovation might be worrisome is in advertising. Consider the changes in advertising over the last 100 years. Not only have new media emerged, but so have new methods, new ways of grabbing consumers’ attention. Not all of those innovations have been benign. When innovative methods have been manipulative — subliminal advertising is a key example — they’ve been subject to ethical critique.
Some people would also add the design and manufacture of weaponry to the list. But then, almost all innovations by arms manufacturers have some legitimate use. Landmines and cluster bombs are controversial, largely because of their tendency to do too much “collateral dammage” (i.e., to kill civilians). But they do both have legitimate military uses. So it’s debatable whether the innovation, itself, is bad, instead of just the particular use of the innovation.
Are there other realms in which innovation, generally taken to be a good thing, is actually worrisome? One caveat: the challenge, here, is to point out problematic fields of innovation without merely sounding like a luddite.
God-Washing Davos
Filed under: ethics, finance, greenwashing, international, sports, Uncategorized, values, workplace safety |
Comments (19) 
Can religion save the soul of the world’s economic system? What does religion have to do with ethics? In particular, what does religion have to do with business ethics? There’s certainly no necessary connection. You’ll notice an utter lack of theological arguments in this blog, for instance. But many people see a connection, and perhaps a necessary one.
For example, see this piece by Dan Gilgoff, for CNN’s “Belief” Blog: How Davos found God
…Since the banking crisis shook global markets more than two years ago and contributed to a worldwide economic slump, the annual Davos summit has invited dozens of religious and spiritual leaders to hash out issues like business ethics and the morality of markets in the company of presidents and corporate titans….
This worries me for two reasons.
First is that religious leaders have no particular expertise in the questions at hand. One clergyman quoted in the story says the key question is “how do you embed values in the culture of companies in a way that would change behaviors?” Good question, but it’s not one about which most religious leaders are likely to have any real insight. Most, for example, won’t know much about the workings of corporations, or about corporate culture, or about (for example) what the criminological literature says about the real causes of wrongdoing. Sure, talking about values can be a good thing. But there’s no good evidence that religious values, or organized religion as a way of inculcating values, does anything in particular to make people more ethical. And certainly there’s no reason to believe that “40 minutes of guided meditation” is going to play any role at all in fixing the problems faced by the world’s economy.
My second worry is that the inclusion of religious leaders is a distraction, a way of deflecting criticism by including a few dozen people who a large portion of the public are likely to associate with the idea of being a good person. It’s symbolic. It’s a way of signalling to the public that the business world really is concerned about doing the right thing — without engaging anyone who actually has the relevant expertise. It’s a feel-good move. It’s like greenwashing, but with religion rather than environmentalism as the focal distraction.
Ethics of Insider Trading
Filed under: conflict of interest, decision-making, ethics, finance, governance, honesty, profits, shareholders, Uncategorized |
Comments (13) “Insider trading” is one of those phrases that most adults have heard (at least on the nightly news), but that relatively few understand. (Perhaps the most famous case: Martha Stewart was originally charged with insider trading in the ImClone case.) I imagine few people even know what it really refers to. Well, it refers to situations in which corporate “insiders” (executives, directors, etc.) buy or sell their company’s stock on the basis of significant corporate information that is not available to the investing public more generally. (For more details, see the Wikipedia page on insider trading.)
But even if we don’t all know just what insider trading is, we all know insider trading is bad, and must be stopped. Right? But it’s hard to stop something that’s hard to define. In that regard, see this nice piece by Steve Maich, Editor of Canadian Business: “Chasing our tails while we chase insider trading.”
In case you hadn’t noticed, we are in the midst of a crackdown. Or rather, another crackdown. The crime du jour is an old favourite: insider trading….
There are obvious benefits to these shows of regulatory force. Seeing hedge fund managers and lawyers in handcuffs not only produces a nice dopamine rush, it’s also meant to demonstrate the integrity of the capital markets. But the costs are frequently overlooked. Like most crackdowns, this one seems likely to deepen cynicism, erode confidence and lob more grenades at shell-shocked markets….
Maich is undertandably cynical about these enforcement efforts:
Despite the periodic efforts of regulators to stamp it out, insider trading runs as rampant as ever, and that isn’t going to change. This is in part because it’s notoriously difficult to prove, but also because we have never definitely solved the fundamental puzzles at the heart of this supposed crime….
It’s worth adding that there is genuine disagreement over just why insider trading is unethical. (Some people even think it’s not unethical at all, because the executive who trades on “inside” information ends up indirectly bringing that information to the market, rendering the latter more efficient.) And if we’re not entirely sure why it’s unethical, it makes it that much harder to figure out in which cases it’s unethical.
The only scholarly article I’ve read on the ethics of insider trading is by Jennifer Moore, and is called “What Is Really Unethical About Insider Trading?”* Moore looks at a number of arguments against insider trading — arguments rooted in fairness, in property rights, and in the risk of harm to investors — and finds most of them lacking. Moore ends up arguing — plausibly, in my view — that the real reason insider trading is unethical is that it jeopardizes the fiduciary relationships that are central to business. If insider trading were permitted, that would put corporate insiders in a conflict of interest. Basically, the interests of corporate insiders would stop being well-aligned with the interests of the shareholders they are supposed to serve. And if the interests of corporate insiders aren’t aligned with the interests of shareholders, then people are much less likely to be willing to buy shares (i.e., to invest) in companies. And that wouldn’t be good for the firm, for its shareholders, or for society in general.
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*Jennifer Moore, “What Is Really Unethical About Insider Trading?” Journal of Business Ethics, Volume 9, Number 3, 171-182.
Conflict Kitchen: Business as Activism
“What do we want? Sandwiches! When do we want them? Now!”
Businesses are not infrequently the targets of protests, boycotts, and other forms of activism. But what about business as a form of activism?
I’m not just talking about using a market-based approach to achieve certain kinds of social goals, as in various kinds of social enterprise. What about a business whose very purpose is to raise consciousness on a particular ethico-political issue?
Witness Conflict Kitchen, a Pittsburgh take-out restaurant “that only serves cuisine from countries that the United States is in conflict with.” But it’s more than just food: the business is “augmented by events, performances, and discussion about the the culture, politics, and issues at stake with each country we focus on.”
Cool idea. Here are just a few thoughts:
1) Inevitably, there are people who find the idea of highlighting the food & culture of America’s enemies objectionable. See, for example, in the comment section of this page, the claim that those operating the restaurants are “traitors.” I’m guessing that debate over what counts as loyalty, in contexts involving political and military conflict, is just the sort of thing the people behind Conflict Kitchen were hoping for. So, as they say, mission accomplished.
2) Some people may find the mission of Conflict Kitchen offputting in a different way. Maybe they just want lunch, minus the sermon (or even just minus having their consciousness raised). Is there a bait-and-switch, here? Get them in the door by promising yummy treats, and then bring on the politics…
3) Conflict Kitchen also represents an interesting (novel?) way of funding activism. Most kinds of activism rely on donations, and some on tax dollars. Conflict Kitchen says it receives no tax dollars, though it does have a number of non-profit supporters. But its activities are funded at least in part by selling food. I’d be curious to see to what extent the food is subsidizing, rather than being subsidized by, the activism. Other kinds of activism are, of course, funded by selling things. All kinds of groups sell t-shirts, videos, etc., to support their work. But this strikes me as different.
4) I suspect this approach is bang-on correct, psychologically. I suspect sitting down over food is a great way to foster mutual understanding. Unfortunately, I suspect the people who most need it are the least likely to partake.
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Thanks to NW for alerting me to this story.
Success at Selling Less
A few months ago, I posted about Pepsi promising to stop selling its sugary drinks to kids at school (see The Ethics of Selling Less.) I pointed out that there’s a significant problem for a company that sells a product that, when consumed in moderation, is totally harmless, but which when over-consumed is dangerous. It’s hard to know what counts as success. Moderation is a nice word, but it’s a hard corporate goal.
I’m interested in the general idea, so I’m curious to find examples from other industries. So, my questions:
1) What other products or services are there that we want or need in some quantity, but that, socially, we want to use less of?
Some obvious examples:
- sugary beverages;
- legal advice;
- healthcare;
- electricity;
- gasoline.
In each case, we need (or want) to have access; but we wish that overal usage were lower. We’re glad the companies supplying these things exist, but we don’t necessarily want maximum consumption of their products. Of course, the reasons are different in different cases. We need gas, but we want reduced consumption because burning gas causes pollution. For healthcare, on the other hand, we want the right amount (rather than the maximum) because we don’t want people to need much healthcare, and we don’t want to provide unnecessary care (and face unnecessary side effects).
Now, the 2nd question:
2) Are there cases in which the providers of those products or services have been successful at acting socially responsible, by finding ways to remain in business while also actively finding ways to reduce sales? Small examples are relatively easy. Good and ethical lawyers, for example, will help their clients find ways to stay out of court (even though going to court is lucrative for lawyers). And there have been programmes launched by various electrical and water utilities to reduce consumption (e.g., by promoting use of energy-efficient appliances or water-efficient shower heads).
Can you think of other cases in which:
a) we’re glad the company exists (or at least neutral about it);
b) it’s bad (socially or individually) if too much of their product is consumed; and
c) the company has made non-trivial efforts to limit sales in some way.
Business Ethics in Film
As September approaches, many of us are thinking about the start of school. Those of us who teach Business Ethics are thinking about how to ease our students into the topic without throwing them into deep philosophical waters right off the bat.
One way to do that is through film. Regular readers will know that I occasionally review movies here (both documentaries and fiction). Now I’ve set up a special page, on my EthicsWeb Bookstore, with links some of my reviews, along with Amazon links to let you buy the DVDs. Here it is: Ethics on Film.
My list is far from complete — I’ve kept the list minimal, sticking to movies I’ve reviewed on this blog or used in the classroom. So I’ve left out classics like Wall Street, for example). But if you have suggestions (especially for films that you’ve used successfully to foster discussion of business ethics) let me know.
The Business Ethics Blog 