The Business Ethics Blog

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.

Should restaurants serve foods that a subset of the population finds distasteful? Animal rights activists think not, especially with regard to foie gras, that supposed delicacy made from the fattened livers of geese and ducks. To be fair, activists don’t just find foie gras distasteful, they think it’s unethical — though the ethical framework from which they draw that conclusion is far from uncontroversial itself. So, are they justified in pressuring restaurants to stop serving it? And more importantly, what methods are they justified in using to do so?

From the Ottawa Citizen: Out of the frying pan: Beckta bows to foie gras protest

One of Ottawa’s most celebrated restaurateurs swore off serving foie gras Wednesday following a targeted campaign by animal rights activists who aim to erase the controversial delicacy from menus across the city.

After months of finding himself on the receiving end of protests, dozens of abusive phone calls and hundreds of e-mails — many of them aggressive and even threatening — Stephen Beckta told the Ottawa Animal Defense League he would no longer serve foie gras once his supply runs out.

“It was a personal rather than a business decision because it didn’t really hurt our business,” said the owner of Beckta Dining & Wine and of the three-month-old Play Food & Wine. “In my mind, this is as much a story about intimidation and harassment as it is about animal cruelty….”

Though Beckta was the immediate target, the activists hope other restaurants will get the message. As one of them put it, apparently without irony, “I hope that the compassionate vibe will just catch fire and they’ll take it off voluntarily.” Of course, there’s no evidence that compassion has anything to do with this (or any other) restaurant’s decision, in the face of bullying.

(Here’s the Wikipedia article on Foie Gras, which includes a section on the controversy.)

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(p.s. for the record, though this is technically irrelevant, I personally don’t eat foie gras, or meat in general, but that’s mostly because I think the farming practices involved are ugly, not unethical.)

Business is a rough game. Competitors are in it to win, and a certain amount of pushing and shoving is to be expected. But sometimes the ref just has to blow the whistle.

From CNN: European Commission fines computer chipmaker Intel $1.45B

(CNN) — The European Commission found leading computer chipmaker Intel guilty Wednesday of violating European anti-trust rules and ordered that it pay a fine of 1.06 billion euros ($1.45 billion).
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The commission found Intel abused its dominant market position in the market for computer chips known as the x86 computer processing unit (CPU), Kroes said. The abuse lasted more than five years, she said.
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“That Intel had such a large market share is not a problem in itself,” Kroes said. “What is a problem is that Intel abused its dominant position. Specifically, Intel used illegal anti-competitive practices to exclude essentially its only competitor, and that reduced consumer choice — and the whole story is about consumers.”

But just what’s wrong with that, ethically speaking? In this regard, the analogy with sports is instructive. (In fact, on CNN this morning I heard one reporter refer to the charge against Intel as one of “unsportsmanlike conduct.”) For a more scholarly take on that analogy, see philosopher Joseph Heath’s An Adversarial Ethic for Business or When Sun-Tzu met the Stakeholder. Heath’s argument is that in business, as in sports, we allow some aggressive behaviour that wouldn’t be allowed in polite company. And we do so because the net effect is socially positive: we get joy out of watching tough, competitive hockey, and we get lower prices out of the scrapping between Honda and Mazda. The limit of that aggressive behaviour, however, is reached roughly when it begins to undermine, rather than to promote, those positive externalities. And that is what Intel did wrong.

File this one under “giving credit where credit is due.”

From Natural Products Insider:
Coalition Says Supplements Not Swine Flu Remedy

WASHINGTON—A Dietary supplement industry coalition advises against using dietary supplements to treat or cure H1N1 flu virus (“swine flu”). A group of trade associations released a statement saying they are unaware of any scientific data supporting the use of dietary supplements to treat swine flu. Furthermore, they said state federal law does not allow dietary supplements to claim to treat any diseases, including swine flu.

The American Herbal Products Association (AHPA), the Consumer Healthcare Products Association (CHPA), the Council for Responsible Nutrition (CRN), the Natural Products Association (NPA) and the United Natural Products Alliance (UNPA) are endorsing the following unified advisory for marketers and retailers of dietary supplements:

• Marketers and retailers of dietary supplements are urged to refuse to stock or sell any supplements that are presented as treating or curing swine flu, and
• Marketers and retailers should refrain from promoting any dietary supplement as a cure or treatment for swine flu.
• Anyone who believes they may have swine flu or may have come in contact with the virus should contact a healthcare professional. More information on swine flu and the proper actions to take if you suspect you are ill is available on the Centers for Disease Control Web site.

“There are dietary supplements that have much to offer in terms of enhancing general immune function,” the released statement said. “However, therapies for the treatment of swine flu should only be recommended by qualified healthcare professionals or public health authorities.”

You could also file this under “stating the obvious,” but that would be uncharitable. True, anyone who thinks that herbs and vitamins are going to cure a sometimes-lethal viral infection is sadly uninformed, but the world is (apparently) full of sadly uninformed people. And given that the natural-remedies-and-dietary-supplements industry tends too often to exaggerate the benefits of its wares, it’s refreshing to see them issuing a statement recommending that people not use their products, even if it’s just for this one illness.
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HT to Dr* T at the Thinking is Dangerous blog.