The Business Ethics Blog

Criticism is easy when you’re vague and unclear about who you’re criticizing. I mean, that makes it impossible to be wrong, right?

Witness this odd little rant in the Boston Globe, (by a philosophy professor named Gordon Marino) apparently aimed at someone vaguely labeled as “business ethicists,” and the role they (failed to) play. The business of business ethics.

Here are a few key paragraphs:

In a recent New York Times column, Nicholas Kristoff observed that of the great multitude of economic talking heads, next to none of them recognized the pavement that we were rushing toward. Finally, there is some public scrutiny of our overreliance on expert opinion.

However, there is one cadre of experts that has not been asked to approach the bench: namely, that brigade of briefcase-toting philosophers known as “business ethicists.”

Back in the ’80s, just after the Michael Milken scandals, the business of business ethics took root on Wall Street and in MBA programs around the nation. Within a few years, philosophers began setting up shop in the financial districts. Every corporation worth its exec bonuses had ethics codes and workshops run by some Socrates in a suit. Many companies put ethicists on retainer and insisted that their employees sit through seminars for continuing-education credit in ethics. By the ’90s, MBA programs began requiring courses in business ethics. Soon the business of business ethics was a booming multi-billion-dollar business. To what avail…?

I’m probably inflating the significance of this editorial, just by commenting on it. But the piece is so misleading that it’s hard not to comment.

The first error worth noting lies in the author’s understanding of the field of business ethics — or rather, the fields of business ethics. Is his target philosophers, or the people performing business-ethics roles in corporations, who in fact are overwhelmingly not philosophers? Though there is some overlap, the academic study of business ethics (within which philosophy professors like me play a significant role) is quite distinct from the business ethics function carried out within corporations (often by “Ethics & Compliance” departments). To the best of my knowledge, those departments are staffed by lawyers and accountants and so on. That’s not an attempt on my part to shift blame from philosophers onto others: it’s just pointing out that the author of the editorial is a bit confused.

Fast forward to the current economic crisis, and the unethical behaviour that facilitated it:

Did we hear a peep from the experts on ethics while these shenanigans were in play? Hardly. The silence is understandable.

Again, to evaluate this we need to know who the author is talking about. But regardless, it’s an odd charge. If he’s talking about corporations’ internal ethics advisors, why on earth expect that “we” would hear a peep from them? If he’s talking about academics, he’s just uninformed. Business ethics scholars spend pretty much all their time promoting ethical behaviour on the part of corporations. As for commenting, after the fact, on the financial crisis and its sources, I’m guessing the author just hasn’t noticed the conferences, the special issues of scholarly journals, and the blog entries.

Finally, the author ends off with a totally wrong-headed prescription:

…if business ethicists cannot do anything to diminish the tendency toward greed, they ought to close up shop.

To say that business ethics, or any other field, ought to “close up shop” if it cannot change fundamental facts about human nature demonstrates a deep and dangerous misunderstanding of what we can, and should, expect of that field. Does advising an organization on what policies to implement in order to deal with conflict-of-interest require changing human nature? No. Does helping managers balance their obligations to shareholders against their obligations to other stakeholders require changing human nature? Thankfully no. Does reminding corporate leaders about the importance of visibly modelling the virtues they wish employees to imitate (advice they certainly don’t always follow) require changing human nature? No.

I think reflection on the role(s) of business ethics is an excellent thing, overall. But it’s rather unseemly to tell business ethicists that their job is to tilt at windmills, and then criticize them for not hitting their targets.

Discrimination based on sexual orientation is illegitimate in the world of commerce — when talking about humans, at least. What about when talking about animals? To discriminate based upon human sexual orientation is an affront to human dignity, and to ideals of human moral equality. But our views about animals are different. Even though many of us love animals, and think they warrant good treatment, we generally don’t object to discriminating among animals the same way we object to discriminating among humans.

So, check out this story, from Reuters, via Yahoo! News: Polish politician fumes over “gay” elephant in zoo

WARSAW (Reuters) – A Polish politician has criticised his local zoo for acquiring a “gay” elephant named Ninio who prefers male companions and will probably not procreate, local media reported on Friday.
“We didn’t pay 37 million zlotys (7.6 million pounds) for the largest elephant house in Europe to have a gay elephant live there,” Michal Grzes, a conservative councillor in the city of Poznan in western Poland, was quoted as saying.
“We were supposed to have a herd, but as Ninio prefers male friends over females how will he produce offspring?” said Grzes, who is from the right-wing opposition Law and Justice party.
The head of the Poznan zoo said 10-year-old Ninio may be too young to decide whether he prefers males or females as elephants only reach sexual maturity at 14.

OK, odd story, liable to produce a few giggles here & there. I mean, the notion of elephant sex is funny enough, without the notion that elephant sexuality might be subject to the same wonderful diversity as human sexuality. But then, this is also a story about a commercial transaction — a very expensive one — which brings it into the realm of business ethics. So, a couple of points:

Commodification of animal sexuality is widely regarded as ethically permissible. Paying for the services of a ‘stud,’ for example, is common among horse-owners, as well as in the breeding of dogs, cattle, and other domesticated animals. And if it’s legitimately commodifiable, it seems we’re in the realm where sexuality is subject to ethical & legal questions about product quality. So, does the zoo in question have a legitimate beef over the quality of the product it bought? Well, in a commercial transaction (especially ones with large price-tags), many of the relevant obligations are built in, written into the sales contract. And we don’t know much about the terms of contract for this reluctant elephant stud. We don’t know if guarantees were given, for example. If not, well, given the (apparent) variability of elephant sexuality, it seems this is a case of ‘buyer beware.’ And the buyer in this case is a zoo — a buyer with some relevant expertise, presumably including some knowledge about animal sexuality.

On the other hand, some might choose to look at the elephant as deserving of respect in its own right, rather than as a commodifiable ‘product.’ Looked at that way, is this a case of workplace discrimination, based on sexual orientation? Well, workplace discrimination is generally bad if the basis for discrimination is something irrelevant to the job. It’s not generally considered wrong to discriminate based on a characteristic that is a bona fide job requirement. When hiring airline pilots, it’s not wrong to discriminate against the visually impaired. And presumably if the ‘job’ being done is the job of serving as a stud, having the right sexual orientation (or at least a willingness to play the role!) is a bona fide job requirement. That would mean the zoo in question has the right to discriminate; but acting upon that right really should have meant asking the right questions, or bargaining for the right assurances, up front.
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Business ethics aside, for more on animal homosexuality, see this Wikipedia entry, which includes a paragraph on elephants: Homosexual behavior in animals.
And see also this book: Biological Exuberance: Animal Homosexuality and Natural Diversity by Bruce Bagemihl, Ph.D.

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Update:
Sadly, I’m receiving too many hateful, poorly-reasoned, off-topic comments on this posting. I have neither the time nor the energy. I’m cutting off comments.

Ahh, the good old days. The golden era of goodness & truthfulness in business. Back before business turned Evil and Greedy. Back when a man’s word meant something. When business was guided by men who understood what it meant to pay a fair wage. When the wealthy eschewed opulence and instead lived simple, humble lives. Yes, those were the days…

Surely, no one believes that, right? Well, oddly enough, some people think something close to that. Their message is that things are bad, and getting worse. We’ve lost our way. Etc etc. For example….

Jonathan Sacks (Chief Rabbi of the United Hebrew Congregations of the Commonwealth), writing for The Times: Morals: the one thing markets don’t make

The continuing disclosures about excessive pensions and payoffs, salaries and bonuses for people at the top stir in us feelings for the oldest of human bloodsports: the search for a scapegoat. But they ought to lead us to think more deeply about the values of our culture as a whole.

Often, these past months, I have found myself going back to one of the most painful conversations I have had. It was with one of Britain’s leading industrialists. He had led his company to consistent success for decades. When I met him he had retired and was near the end of his life.

He was not a religious man but he was a deeply moral one. He spoke of the principles that had guided him in business and of the salary he had drawn. It was not negligible, but it was modest. What pained him was that his successor had awarded himself a salary ten times that amount, while systematically destroying the company he had so carefully built.

I recall another conversation with a successful investment banker. He told me that the first thing he had to establish was his character, his reputation for trustworthiness and honesty. Without that, he would have been unable to trade. Nowadays, he said, deals no longer depend on character but on lawyers.

Ah, the power of anecdotes! And what, pray tell, do these anecdotes teach us? This:

Common to these stories is the gradual disappearance of the cluster of principles that went by the name of morality. Whatever its source — religion, conscience, custom or code — it meant that there are certain things you don’t do because they are not done….

Now, admittedly, it’s been a bad year. Things look grim. But the idea that this is part of some decades-long trend, some inexorable march from virtue to villainy, is simply unsupported. Don’t get me wrong: encouraging people to think about the values that often do, and always should, underpin business is a very good thing. But I’m not sure it helps to suggest that the current crisis is the fault of a long-term historical trend, rather than the result of a particular set of circumstances resulting from a combination of bad decisions on Wall Street and weak government oversight.

Drug company reps giving physicians goodies to try to convince them to prescribe — oops, I mean, educate them about — their branded drugs is hardly a new story. But it’s one that bears repeating. No one buys the companies’ rhetoric about education; and physicians who categorically deny that they’re not influenced are delusional. Whatever else they may be, drug companies aren’t stupid. And there’s empirical evidence that marketing does work on physicians — if not on every physician, every time, then at least on average.

Here’s a particularly good, detailed account, from the St. Petersburg Times: To move more prescription drugs, sales reps sling swag

The transformation of a Jacksonville psychiatrist from a skeptic on Seroquel into a super-prescriber was marked by months of gentle pestering, generous $1,500 speaking engagements and giveaways of everything from a plastic brain to gourmet chocolates.

A neurologist in Tampa joked with Seroquel sales reps that she doled out so much of the powerful antipsychotic drug for migraines that they probably thought she was psychiatrist. She was rewarded with free trips to Scotland and Spain. “I want to go too ! =)” her Seroquel rep wrote.

Wooo hoooo!

*sigh*

I must say I find these stories depressing, though I can’t say I find them surprising. Companies want to sell drugs. So they reward sales reps for convincing docs to prescribe more. And the reps stroke and coddle the docs into prescribing. And the patient? Well, in most cases the patient is just happy someone is taking care of them, and they haven’t got a clue whether the doc is prescribing what’s very best for them or not. (That’s because many pharmaceuticals are what economists call “credence goods,” goods that the consumer can’t effectively evaluate even after consuming them.)

Now, one thing the Times mostly leaves out is that a few things have changed, at least on paper, since the events recounted in the story. Most significantly, the Pharmaceutical Research and Manufacturers of America (PhRMA) has revised its code of conduct to forbid its members from buying physicians meals at restaurants and giving out non-educational gifts bearing their logos. Here’s the story as reported by USA Today: New pharma ethics rules eliminate gifts and meals. And here’s PhRMA’s press release: PhRMA Revised Marketing Code Reinforces Commitment To Responsible Interactions With Healthcare Professionals.

The change in policy was effective in January (2009). I have no idea whether it’s been effective. But there are two things I’m pretty sure of.

First: as one insider quoted in the Times story points out, the problem isn’t about the value of the gifts. The problem is the personal relationship forged between the drug rep and the physician. When physicians get defensive and object, “Hey, I can’t be bought for the price of a free lunch and a coffee cup bearing a corporate logo!” they are absolutely right. It’s not the freebies, per se. It’s the pat on the back, the chumminess, the “hey, how did your daughter’s violin recital go?” (See also this blog entry by Nancy Walton: Personal relationships, conflict of interest and ethics.)

Second: Like most people, I find it easy to be skeptical about the kind of self-regulation represented by PhRMA’s changes in its code. There is, after all, still one helluva lot of money to be made here, and that means lots of incentive for gaming the rules. But on the upside, notice that the industry, collectively, really does have reason to want this to work. After all, lavishing goodies on doctors to get them to prescribe your drug is a game the companies can’t all win. It’s like athletes taking steroids. If everyone does it, no one has any advantage, but all pay the costs. So they’d be better off as a group if they could stop. (In more technical terms, it’s a zero-sum game.) That doesn’t make playing by the rules easy, because each company may be tempted to bend the rules, just in case the competition is doing so. And then there’s still the issue of convincing docs not just to prescribe your company’s drug, but to prescribe more of it — and that, unfortunately, is a game that all the companies can win at. So, the situation is strategically comlex. But it’s worth noting that there’s at least some reason for drug companies genuinely to support and end to the gifts and free lunches.

It happens all the time, in business and in the professions. A senior member of the team instructs a junior member to do something that the junior member thinks is plainly unethical. And sometimes, maybe often, the junior person will comply. After all, being the junior person typically means being vulnerable to losing your job, and it also means being liable to question your own judgment when faced with a competing opinion from someone older & more experienced. So, the order gets obeyed.

The best explanation I know of for how wrongful obedience happens is the one given by law prof David Luban, of Georgetown University, in his paper “The Ethics of Wrongful Obedience.” Basically, Luban’s idea is that once the junior person agrees to do some very minor questionable thing, the next slightly-more-questionable thing becomes easier to do, and then the next, and the next, and so on. He calls this the “corruption of judgment” theory. But that’s an explanation of how wrongful obedience happens, not a defence of it.

So, what about the rationalization, the claim that the junior person really has to just toe the company line? The first thing to notice about the rationalization is that it is a rationalization — something to make you feel better — rather than an full-fledged justification (i.e., something that would fully justify your behaviour).

As a justification, it doesn’t really work very well. Doing the wrong thing is still wrong (and in some cases, illegal!) even when you’re pressured to do it.

That being said, junior people really can find themselves in very difficult positions. They may tend to question their own judgment when faced by odd orders from superiors. And sometimes their jobs really are at stake. So it’s very hard for me, looking in from the outside, to say “always do the right thing, regardless of the cost to yourself.”

When I talk about this problem, the advice I usually give to students, in all professions, is this:

1) Do your best. Recognize the problem and be honest with yourself about it.
2) Pick your battles. Sometimes you’ll have to give a little. Only be rigid on matters that are really worthwhile. But be careful: as Luban points out, sometimes small transgressions lead to bigger ones.
3) Ask questions. One of the benefits of being junior is that you can get away with asking “naive” questions, even ones that embarrass your superiors sometimes. For example: “I know I’m new here, but why are we doing it this way…?” If you diplomatically question what’s going on, you might embarrass someone into a change of plans.
4) You won’t be the junior person in the group forever. Start thinking now about what kind of boss you are going to be, when you finally get there, and what kind of pressure you’re going to put on the young people who you see below you on the corporate ladder.

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This blog entry began as an email discussion with Blake Sunshine.

The word “greenwashing” is getting a lot of play these days. For those of you who haven’t come across it, “greenwash” is a play on “whitewash”. Whitewash is cheap white paint used to cover dirty walls in industrial and agricultural settings. Metaphorically, to whitewash something is to cover something up, to make it look pretty when there’s actually dirt underneath. Greenwash is the environmental version. These days, lots of companies want to pretty up their images when it comes to being environmentally responsible (i.e., green). That leads to a lot of claims to being green, some of which are entirely unwarranted, and that’s maddening both to those who care a lot about the environment, and those who merely care about truth in advertising. What can be done?

From the Sydney Morning Herald: No greenwash, please – industry introduces its own code

Advertisers will no longer be able to use images of nature and call themselves “environmentally friendly” unless they can back up any green claims under new proposals put forward by the advertising industry.

The new self-regulatory green marketing code – thought to be the first of its kind in the world – will also prevent companies from passing off a mandated environmental initiative as something it has voluntarily adopted.

Advertisers will have to prove that the benefits to the environment are “significant” too….

This seems like a good move.

It’s not clear, though, that what they’re talking about is really greenwashing. In some cases it may be. Not all dishonest or overreaching environmental advertising should be counted as greenwashing. Remember, greenwash, like whitewash, attempts to cover up dirt. True greenwashing is when a company with a bad environmental track record points to some meagre environmental achievement as a way of distracting consumers from the truth.

False or misleading environmental advertising of any kind ought to be stamped out (and if self-regulation works, that’s great). But our harshest moral condemnation ought to be reserved for the true greenwashers, the companies that have the gall to brag about what is, in fact, a lousy track record.

(More food for thought: The “Green” Hypocrisy: America’s Corporate Environment Champions Pollute The World. They’re a bit off-target on the definition of “greenwashing” but it’s a useful article nonetheless.)
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Thanks to Development Crossing for pointing this story out, on Twitter.

Wall Street Journal’s health blog: Merck CEO Calls On Pharma to Repair its ‘Trust Deficit’

To the applause of fellow drug-company officials today, Merck CEO Dick Clark told executives that the industry needs to fix its “trust deficit” with the public.

Industry leaders have complained privately about the public shellacking of drug makers, which have been criticized for the safety of drugs like Merck’s Vioxx that eventually were withdrawn, as well as for undisclosed payments to doctors and misleading advertising directly to consumers. The corporate leaders say the industry’s good works developing life-saving medicines have been unfairly overlooked in all the criticism.

Prescription for Pharma

No, you don’t need to remind us how much good you’re doing. We know, & we appreciate. Thanks.

Stop promoting off-label use.
Stop paying excessive “consulting” fees
stop paying excessive “speaking” fees
Stop getting slammed by FDA for advertising w/o sufficient attention to side-effects

Admittedly: regulatory compliance is hard in a highly-regulated industry

Patents, Trademarks, and other forms of intellectual property play an important role in the world of commerce. Like legal protections on real, physical property, protections on intellectual property reward hard work and promote innovation. But they are also subject to abuse.

From The Wall Street Journal: The Scariest Monster of All Sues for Trademark Infringement

When Christina and Patrick Vitagliano dreamed up their Monster Mini Golf franchises — 18-hole, indoor putting greens straddled by glow-in-the-dark statues of ghouls and gargoyles — they never imagined that a California maker of high-end audio cables would object.

But Monster Cable Products Inc., which holds more than 70 trademarks on the word monster, challenged the Vitaglianos’ trademark applications. It filed a federal lawsuit against their company in California and demanded the Rhode Island couple surrender the name and pay at least $80,000 for the right to use it.

“It really seemed absurd,” says Ms. Vitagliano.

The legal actions were nothing new for Monster Cable, which was granted its first “Monster” trademark in 1980. Since then, the company has fought more monsters than Godzilla did….

As I understand it, normally trademark protection only protects the use of a particular name in a particular industry. So, for instance, I’m free to set up a company called “MacDonald’s Pool Cleaning Service,” but if I tried to set up “MacDonald’s Hamburgers and French Fries,” the lawyers for McDonalds Corporation would very soon come knocking (minor variations in spelling notwithstanding).

So Monster Cable’s strategy is clear enough: build brand value by seeking a very broad recognition of the word “monster” as belonging to Monster Cable. The WSJ article points out that some very famous brands — Visa, for example — are legally considered “famous marks” and have been granted very broad protection by the courts. So don’t try to open up your own Visa Hotdog Stand. That is the kind of brand protection Monster Cable is trying to achieve. But the company’s methods are, needless to say, highly suspect. Never mind the fact that they’re making a practice of dragging small businesses into court, putting hard-working entrepreneurs at risk and wasting valuable court time. At least as unseemly as that is the sheer gall of the company thinking its name already has the kind of widespread prominence and salience that would give it a plausible claim to being a ‘famous mark.’ I bet most people have never even heard of the company.

It’s hard to see how gaining a reputation for being litigious and self-important constitutes a good way of building brand

Ironically enough, the t-shirt pictured above is an actual Monster Cable T-shirt, for sale on the company’s website. Monster attitude indeed!
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Thanks to Michael Parekh for pointing out this story.

Here’s a cool story about unanticipated consequences (at least I think they’re unanticipated). From the Washington Post: Public Interest Groups Decry Obama’s Strict Lobbying Rules.

President Obama’s war with K Street is escalating, this time over stringent new rules on lobbyists attempting to land federal stimulus money for their clients.

An unlikely alliance of groups — including one co-founded by Obama’s chief ethics adviser — argue that the restrictions will penalize those who play by the rules while doing nothing to curb the influence of large corporations and campaign donors.

Leaders of the groups, which include Citizens for Responsibility and Ethics in Washington and the American League of Lobbyists, also said yesterday that they are preparing to challenge the guidelines on First Amendment grounds if the administration does not agree to revise them.

“President Obama has managed to unconstitutionally ban American citizens from one of our most sacred rights, and it’s flat-out wrong,” said Dave Wenhold, president of the lobbying league, which has joined CREW and the American Civil Liberties Union in demanding a repeal of the gag rules. “This is not how a democracy works; this is how a totalitarian regime works….”

The basic problem is how to limit excess influence without limiting free speech. Everyone decries the influence of lobbyists in Washington, but most of us can probably think of some group or cause we’d like to see promoted in Washington, and we probably think it’s a bad thing for those lobbyists to go unheard. But in effect, Obama’s well-intentioned restrictions on lobbying mean not just restrictions on lobbyists for Walmart, Exxon, McDonalds, etc., but also restrictions on lobbyists for Ducks Unlimited, the Boyscouts, and Anytown USA.

(By the way, I posted about lobbying last month — Lobbyists, Ethics, Earmarks — and Dave Wenhold posted a long & interesting comment on it.)

Last week I blogged about a probably-spoof website for something called Cyclone Dairy, a dairy supposedly guaranteeing that 100% of their milk is from cloned cattle.

Well, appropriately enough icecream makers Ben & Jerry have chosen today (April first) to reveal that they’re behind the shenanigans.

Here’s their press release: Ben & Jerry’s Lifts the Lid on April Fool’s Day Cloning Stunt.

Today, Ben & Jerry’s lifted the lid on an April Fool’s Day event aimed at raising consumer awareness of the government’s recent approval of cloned milk and meat within the human food supply chain. In late-March Ben & Jerry’s went undercover through the launch of Cyclone Dairy, a fictitious dairy company marketing milk made from 100% cloned cows, to gauge consumer reaction surrounding this issue. The make-believe company was launched via the Web site CycloneDairy.com and street sampling initiatives in Manhattan, with support from the Center for Food Safety, a nonprofit public interest organization based in Washington, D.C….

The press release goes on to advocate the creation of a “national clone tracking system” for the benefit of consumers who want to be able to choose whether or not to consume products from cloned animals.

It’s a bad idea. A national system would be costly, and those costs would be borne either by taxpayers or by consumers (perhaps via fees charged to food companies, which they would inevitably pass along to consumers.) All that to track a product already believed to be safe. Why make all consumers (or taxpayers) pay more for something that only some are concerned about?

The reason, according the Ben & Jerry’s press release: “Americans should have the basic right to choose the foods they want to eat.” Is there such a right? Well, yes and no. You have the right to decide what you put in your mouth; but that doesn’t imply a right to be provided all the information you could ever want about that food. (See my blog entry here for the basics of my argument against there being a right to know if your food is genetically modified. I think the same argument applies to cloned food.)