The Business Ethics Blog

Rebecca Skloot at Culture Dish has been following hearings held by the U.S. Senate regarding at-home genetic testing kits. The conclusions of these hearings (based on a study conducted by the U.S. Government Accountability Office) are pretty alarming regarding the reliability of these products.

Here are Skloot’s two recent blog entries on the topic:
Aug. 2: Totally Nailed: Home DNA Tests Ruled a Scam
July 25: At Home DNA Tests: Marketing Scam or Medical Breakthrough?

In her August 2 posting, Skloot writes:

Since this investigation was done by a committee with no actual enforcement power, the end result of all this is a recommendation to the federal government that they require oversight of DNA testing, and a warning to consumers saying “a healthy dose of skepticism may be the best prescription,” when dealing with these test results. May be? They’ve essentially been caught falsifying DNA results — I’d say that warrants more than potential skepticism. I’m thinking that’s grounds for full-fledged rejection. Good to keep in mind, since the companies are still operating in full force.

Here’s the Washington Times article Skloot cites:
‘Beware’ online DNA testing
According to the article:

DNA tests that consumers buy online to find out whether they carry genes for certain diseases are misleading, lack predictive value and can exploit the public by recommending pricey dietary supplements based on the test results, an official for the Government Accountability Office (GAO) told lawmakers….

For more resources on at-home genetic testing, see also Genethics.ca (Look under Topics >> Genetic Testing.)

Relevant Books:
Guiding Icarus: Merging Bioethics With Corporate Interests
Quality of Life and Human Difference: Genetic Testing, Health Care, and Disability
Genetic Testing: Care, Consent and Liability
Genetic Testing For Cancer: Psychological Approaches for Helping Patients and Families
More generally, see the books listed here: EthicsWeb Bookstore: Biotech Ethics

I asked for & received a review copy of the 2004 documentary, The Take (directed by Avi Lewis & written by Naomi Klein)

The Take tells the story of the growing number of factory workers in Argentina who, instead of acquiescing in unemployment when their factories are shut down, take matters into their own hands by occupying the factories and starting them up again, without the oversight, or permission, of their former bosses. The workers’ motto: “Occupy, Resist, Produce.” In particular, the film focuses on the efforts of 30 workers to re-start the bankrupt Buenos Aires auto-parts factory (“Forja San Martin”) that once employed them.

Film-makers Lewis & Klein begin the movie by telling us that their visit to Argentina was driven by the desire to demonstrate something their political leanings demand they believe, namely that there are alternatives to global capitalism. Klein narrates: “There’s only so much protesting can accomplish…at a certain point, you have to talk about what you’re fighting for.” To which Lewis adds, “So we decided to shut up for a while. Our opponents wanted alternatives…so did we.” And where better to look than a place where workers are casting off their chains, running their factories by direct democracy and (according to the workers) doing a better job of it than their former bosses?

As for various kinds of “bosses,” well, any good drama needs a bad guy, and The Take features 2 of them. One is former Argentinian President Carlos Menem, whose policies (implemented at the urging of the International Monetary Fund) are blamed for the countries serious economic woes. The other villain is Luis Zanon, owner of another factory — the Zanon Ceramics Factory — now also under worker control. If this weren’t a documentary — if you didn’t see Zanon with your own eyes — he wouldn’t be a plausible villain. He’s too perfect for the role…like a smoother, better-groomed version of Mr. Burns from The Simpsons. He smiles into the camera and smugly states that, yes, of course, he will get his factory back. The government will give it back to him, he claims. The subtext: that’s how things work for rich Argentinians with connections in high places.

But the segments about political corruption and corporate greed are really just backdrops. The real story of The Take is the story of the 30 workers trying to restart the Forja San Martin. These are good men, hard-working men, who just want to be earn a living to support their families. Hence their motto: “Occupy, Resist, Produce.” In the end, it’s a heart-warming story. We want the factory to work the way the workers say it will: managed through democratic decision-making, equal pay for all, etc. We want to believe that, under the workers’ cooperative, Forja San Martin will be run ethically and efficiently. We want to believe the optimistic words of the cooperative’s charismatic leader, Freddy, whose movie-star looks and strong, honest face make him both an obvious leader and an obvious focal point for the movie:

In the cooperative, we’ll all be administrators. I’ll check on what he does, and he’ll check on me. Of course, we’re going to have to be more conscientious, and not be too bourgeois, like before under the boss…when you would duck around the corner for a break whenever you could. Now, no. If a light is on, turn it off if it’s not necessary. There won’t be exaggerated salaries like there were before, which is one of the things that caused all thiss…the salaries will be equal.

Of course, it’s not so clear that what Freddy envisions is really the “alternative” to global capitalism that Lewis and Klein are seeking. It’s just a different management structure. Under control of the Cooperative, Forja San Martin will still buy raw materials and sell finished products, while consuming energy and producing pollution and waste along the way. The decision-making process will be different, but the fundamentals of commerce will not.

One final note: the context — one that includes financial desperation and political upheaval — makes it hard to evaluate, ethically, what goes on in this movie. Everyone seems wrong, in some way or another. The Argentinian government is portrayed as corrupt, and corporate bosses as evil. On the other hand, what the members of the cooperative have done is illegal. They’ve stolen control of the factory. And in any sane world, no amount of corporate malfeasance could justify unilateral appropriation of a multi-million dollar piece of property. But if the story told by the film-makers is even close to accurate, the world the workers live in is anything but sane, and they’re struggling, after all, to feed their families without the help of the power-brokers who see them as mere pawns in a very high-stakes game.

The cynic in me, of course, doesn’t believe Freddy’s claim that under the Cooperative, everything will be better. Why would anyone shirk their responsibilities, when they’re part-owners of the factory? See the enormous literature on collective action problems. How could things not go well, given that all workers have equal input through a democratic decision process? See the literature, and history more generally, on the limits of direct democracy. And so on. But despite these academic worries, the film is well worth watching, as is the experiment — however naive — in alternatives forms of commerce currently under way in Argentina’s worker-managed factories.

Relevant Links:
IMDB’s page for The Take
The Take (official website)
Watch the trailer
Review of the move, by Roger Ebert (thumbs up!)

Relevant Books:
No Logo: No Space, No Choice, No Jobs, by Naomi Klein
Globalization: Capitalism and Its Alternatives, by Leslie Sklair
Here’s a link to buy the DVD from Amazon: The Take (DVD)

See more movie reviews from this Blog.

From the Washington Post: Warner Bros. To Cut Link With Adware Firm Zango: ‘Inappropriate Material’ Could Reach Children

Warner Bros. Studios, home to Bugs Bunny, Scooby Doo and Harry Potter, said yesterday that it plans to terminate a business relationship with Zango Inc., an adware company that has been offering free games on the Warner Bros. Web site in exchange for permission to install a computer program that could push advertisements and pornography.

Zango is offering free downloads of games on a Warner Bros. Web page called “Fun Stuff” that appears to be for children. But when users click on the game, they’re directed to a page that asks for permission to install on the computer a program called Zango Search Assistant. Hidden in the terms of agreement is the disclosure that users may receive adult-oriented ads through it.

Basically, Zango is in the “Adware” business, which means that they’re in the business of installing — or rather, trying to get YOU to let them install — software that brings ads (pop-ups) to your computer desktop. Adware companies probably ought not be lumped together in one seedy pile. Some of them quite literally deceive computer users into installing their software, software which can then spawn dozens of pop-up ads, whereas others merely offer users the option of accepting ads as the quid pro quo for some legitimate service. The problem, here, is that Zango was giving visitors to the Warner Bros website the “option” of installing their software. In particular, the problem was that lots of visitors to Warner Bros’ website are kids, and at least some of the ads served up by Zango’s adware are ads for adult services & websites.

Now, under U.S. law…

The Children’s Online Privacy Protection Act bars Web site operators from collecting personal information about children under age 14 without parental consent. Zango notes that the person who agrees to install the software must be over 18. But the box that confirms the user’s age on the Warner Bros. site is already checked, by default.

Here’s a screen-cap of one of Zango’s “agreements”:

So it certainly looks like Warner Bros did the wise (i.e., both prudent and ethical) thing by breaking its deal with Zango. But it’s also important to see just how easily this sort of thing can happen. In the rush to flood corporate websites with the all-important content that all the web-gurus say websites need, companies liker Warner Bros can end up in situations like this all too easily. Caveat emptor.

Relevant Links:
Wikipedia entry on Adware[Wiki-warning]
Warner Bros.
Zango
Zango, per Wikipedia [Wiki-warning]

Relevant Books:
Malware: Fighting Malicious Code, by Ed Skoudis and Lenny Zeltser
Computer Viruses and Malware (Advances in Information Security), by John Aycock

The latest in the NY Times series on conflict of interest in the world of pharma: Drug Makers Pay for Lunch as They Pitch, by Stephanie Saul.

A snippet:

Anyone who thinks there is no such thing as a free lunch has never visited 3003 New Hyde Park Road, a four-story medical building on Long Island, where they are delivered almost every day.

On a recent Tuesday, they began arriving around noon. Steaming containers of Chinese food were destined for the 20 or so doctors and employees of Nassau Queens Pulmonary Associates. The drug maker Merck paid the $258 bill.

Free lunches like those at the medical building in New Hyde Park, N.Y., occur regularly at doctors’ offices nationwide, where delivery people arrive with lunch for the whole office, ordered and paid for by drug makers to the tune of hundreds of millions of dollars a year.

Like the “free” vacation that comes with a time-share pitch attached, the lunches go down along with a pitch from pharmaceutical representatives hoping to bolster prescription sales. The cost of the lunches is ultimately factored in to drug company marketing expenses, working its way into the price of prescription drugs.

OK, so drug companies are buying doctors lunch, and taking the opportunity to inform doctors about their wares. But that can’t possibly actually affect doctor’s prescribing behaviour, can it?

A former pharmaceutical representative, Kathleen Slattery-Moschkau, called lunch “incredibly effective” in lifting pharmaceutical sales for the companies where she worked, Bristol-Myers Squibb and Johnson & Johnson.

“We got the numbers of what the physicians were prescribing. If I brought in lunch one week, I could see the following week if that lunch had an impact,” Ms. Slattery-Moschkau said.

Is this lunch stuff as bad as the old trip-to-Tahoe or courtside-tickets schtick? Certainly not. But ask yourselves these 2 questions:
1) Do drug companies expect lunches to affect prescribing behaviour? (Answer: Of course, else they’d be stupid to spend so much money on lunches.)
2) What factor(s) ought to influence physicians’ prescribing behaviour? (I’ll leave that one to readers…)

(p.s. It’s interesting to note that there’s no need to ascribe any serious moral culpability to physicians in such cases. They may actually believe that these lunches don’t affect their decision-making. But people in general are very bad at understanding what factors do and do not influence their decisions. Physicians are no different than anyone else in this regard.)
(p.p.s. Neither do we need to ascribe any malevolent intentions to pharmaceutical companies. From their point of view, these lunches are “just part of doing business.” And in a competitive environment, it’s likely the case that if one company does it, the others have to, too. But that doesn’t mean that the practice is OK.)

Relevant Links:
No Free Lunch
Relevant articles: here and here.
Money Talks – Profits Before Patient Safety (documentary) [note: I’m trying to get a copy so that I can review this]

Here’s an interesting story from the L.A. Times: Christian Retailers Put Their Print on Products

More than 400 vendors packed the Colorado Convention Center last week to showcase the latest accessories for the Christian lifestyle. There were acres of the predictable: books, CDs, greeting cards, inspirational artwork, stuffed animals wearing “Jesus Loves You” T-shirts. Many of the newest items, however, put a religious twist on unexpected products — marketed as a means to reach the unsuspecting and unsaved.

Christian Outdoorsman was taking orders for a camouflage baseball cap with a red cross. In Booth 235, Revelation Products of St. Louis was pitching golf balls and flip-flops. Follow the Son flip-flops have patterned soles that leave the message “Follow Jesus” in the sand.

What interested me about this story was the particular spin on Christianity — and Christian values — implied by the list of Christian products described in the story. The products described seem to equate Christianity with evangelism. It was curious to see that none of the products described were portrayed as Christian because of, say, the Christian values according to which the factories that made them were run.

There are, of course, a whole slew of “Christian” values that can be — and are — valued by non-Christians (whether they be Muslims, Jews, Hindus, Secular Humanists, agnostics or atheists). Those values include compassion, respect, humility, forgiveness, etc. So in the description of “Christian” products, where were those values represented? Where was the electric car, perhaps inspired by the What Would Jesus Drive? slogan? Where was the Christian equivalent (pretty easy to imagine) of Fair Trade Coffee? Where were the products of the socially-responsible Christian business that — for Christian reasons — donates a portion of profits to the needy?

I’m not saying that those kinds of “Christian” businesses aren’t out there. Maybe it’s just a quirk of the particular trade show that the L.A. Times reporter visited. Interesting, though.

Relevant Books:
The Christian Entrepreneur: How to Profit from Your God-Given Ideas
Business By The Book Complete Guide Of Biblical Principles For The Workplace
Christian Family Guide to Starting Your Own Business
The Big Book of Bible Crafts

Here’s a corporate ethics story with a (mildly) misleading headline: “Boeing CEO raises ethics bar”

The story is about Boeing’s CEO, Jim McNerney, who’s been on the job just over a year now, and has, to his credit, steered the scandal-prone company along the straight-and-narrow.

[McNerney] has done something his two predecessors couldn’t manage: steer the company clear of ethics controversy and lessen the whiff of scandal that has surrounded it for several years.

“At the one-year point, Jim McNerney’s contribution has mainly been in returning credibility to the corporate office,” said Peter Jacobs, an analyst for Ragen MacKenzie in Seattle. “He has raised the ethical bar and put into place things to prevent some of the misdeeds of the past.”

It’s pretty telling when managing to do things like avoid defrauding the US government and avoiding involvement in sex scandals garners a CEO credit for “raising the bar.” I’m not trying to downplay Mr. McNerney’s achievements, but I think a more modest metaphor would be more appropriate, like “Keeping Your Nose Clean” or “Colouring Inside the Lines” or maybe “Keeping Your Hands Out of the Cookie Jar.”

Relevant Books:
The Story of the Boeing Company
Inside Boeing: Building the 777
Boeing Boeing (the 1965 movie, starring Tony Curtis and Jerry Lewis)

Healthcare is a big business. There’s lots of money being spent, and hence (analytically) lots of money being made. That makes financial conflicts of interest pretty likely to occur.
The latest group to come under fire in this regard is hospital executives. See, for example, this NY Times story: Hospital Chiefs Get Paid for Advice on Selling (by Walt Bogdanich)

Here are the opening paragraphs of the story:

One recent sun-splashed afternoon, executives who run some of America’s leading nonprofit hospitals met at a stately Colorado resort for an unusual mission: to advise companies confidentially on how best to sell their drugs, medical devices and financial services to hospitals.
The hospital executives were rewarded with more than a chance to indulge in a “harmonic” hot stone massage or mountainside golf.
They were also paid thousands of dollars for the advice they offered to dozens of companies, like Eli Lilly, Johnson & Johnson, Morgan Stanley and Citigroup.

Just to put the issue into stark, black-and-white terms, here are two spins on this activity:
Positive: Companies need information on hospitals’ needs. No one understands a hospital’s needs better than hospital executives. So, companies turn to hospital execs for advice. Providing such advice is not a usual part of a hospital exec’s job, so it has to be done after hours, on weekends, etc. If the execs’ advice is worth something, so is their time: if they’re spending time advising companies, they ought to be compensated for it.
Negative: Hospital execs work for hospitals, and have fiduciary (i.e., trust-based) duties to the hospital’s patients and to the foundations that fund the hospitals (remember we’re talking about nonprofit hospitals, here). Hospital execs (depending on their precise job title) are typically going to have some influence on purchasing decisions; patients and foundations need to be able to trust that those decisions will be made so as to best use foundation money to serve patients. If executives are personally receiving non-trivial compensation from suppliers, then there’s grounds to think that they’re facing a conflict of interest.

Instead of comments, how about some questions:

• Just how much is each executive being paid by the various corporations (the second half of the story gives some indication of that), and is that amount sufficient to make us worry about its influence on decision-making? (Most large companies have rules about accepting gifts or other benefits from suppliers; typically such rules stipulate that “token” gifts — such as pens, calendars, etc. — are fine, but larger gifts are not.)
• Has each executive disclosed that he or she is in a fiancial relationship with the various corporations (i.e., disclosed it to his or her boss, the hospital’s Board of Directors, etc.)?
• When Executive A is faced with making an on-the-job decision about the products of Corporation X (a corporation to which Executive A has provided consulting services as described in the NY Times Story), is Executive A consistently disclosing the conflict of interest, and recusing him- or herself from the decision-making?
• Is the information supposedly being gleaned by companies at these events information that could not be provided by various hospitals’ Purchasing Departments, in their official capacity and in a professional manner? (That is, is there some other way that companies could acquire information that they legitimately need, without risking putting hospital executives into a conflict of interests?)

Relevant Books:
Conflict of Interest in the Professions
Ethics in Health Administration: A Practical Approach for Decision Makers
An Ethics Casebook for Hospitals: Practical Approaches to Everyday Cases

Here’s an interesting example of how differently ethical issues can be spun in the press…

First, some background on the central concept at issue in the news story at hand: Nepotism involves giving preferential treatment to relatives, typically in things like hiring or giving out contracts. It’s typically not a big problem for small, privately-held companies, where if the owner/manager hires a close relative (rather than hiring the most talented candidate) no one else is going to be affected much. It’s a much bigger worry in publicly-traded companies, where managers have a fiduciary obligation to shareholders to see that the most talented — rather than the most closely related — candidates get hired.

Writer Hanah Cho has a nice little article on the ethics & optics of the practice, published in at least a couple of different newspapers this weekend. What’s interesting is how different editors (or headline-writers) chose to spin the story. Check out these two very different headlines, for the same story:
“Nepotism occurs despite negative perceptions” (The Miami Herald)
“Nepotism can be a benefit to corporations” (The Albany Times Union)

As far as I can tell, the rosy headline used by the Times Union is entirely unjustified by anything in the text of the story itself.

The only other differences in the two versions of the story (as far as I can tell) are these:

1) The Times Union version has slightly different paragraph breaks, so that the following sentence, rather than being stuck at the end of a larger paragraph, sits by itself (and is therefore — intentionally or not — highlighted):

“The troubles faced by WorldCom Inc., Tyco International Ltd. and Enron Corp. arose from other problems.” [i.e., problems other than nepotism]

2) The Times Union version omits the following paragraph, included near the end of the The Miami Herald version:

“I would advise a client that if you have two equally qualified candidates, it’s safer not to hire the family member,” said Ross A. Albert, a partner at Morris, Manning & Martin in Atlanta, and a former senior special counsel for the Securities and Exchange Commission. “There will be some who will perceive that a [family member] hiring resulted from nepotism, not merit.”

Hmm…almost makes you wonder whether nepotism is a touchy issue, over at the Times Union. (For the record, no, I know nothing at all about the Times Union, its management or its staffing.)

Relevant Books:
The Ethics of Human Resources and Industrial Relations
In Praise of Nepotism: A History of Family Enterprise from King David to George W. Bush
High Impact Hiring: How to Interview and Select Outstanding Employees

I never thought I’d see an ethically-interesting story about shoplifting. For those of us who study ethics, stealing stuff is not exactly a subtle moral issue.

A story in today’s NY Times, “Some Leeway for the Small Shoplifter”, changes that.

Wal-Mart refuses to carry smutty magazines. It will not sell compact discs with obscene lyrics. And when it catches customers shoplifting — even a pair of socks or a pack of cigarettes — it prosecutes them.
But now, in a rare display of limited permissiveness, Wal-Mart is letting thieves off the hook — at least in cases involving $25 or less.
According to internal documents, the company, the nation’s largest retailer and leading destination for shoplifting, will no longer prosecute first-time thieves unless they are between 18 and 65 and steal merchandise worth at least $25, putting the chain in line with the policies of many other retailers.

The reason for Wal-Mart’s change of policy? The article cites two:
1) It’s not economically feasible to enforce zero-tolerance. According to one Wal-Mart exec quoted in the story: “If I have somebody being paid $12 an hour processing a $5 theft, I have just lost money….I have also lost the time to catch somebody stealing $100 or an organized group stealing $3,000.”
2) The zero-tolerance policy was putting a strain on some police departments, whose officers would need to be called in everytime some kid got caught swiping a pack of gum. “At some of the chain’s giant 24-hour stores, the police make up to six arrests a day…”

A few thoughts about the ethical dimensions of this story, in no particular order:

• Both of the reasons offered above serve to remind us that, from an economic point of view, there is pretty much always going to be some non-zero efficient level of crime, whether in a given store or in society more generally. That is, from a financial point of view, it’s almost never worth it to put in place sufficient enforcement mechanisms to drive the crime rate to zero.
• The change in policy is apparently based purely on localized economic factors. So it leaves aside questions like whether theft is a moral wrong that ought, morally, to be punished. Some would argue that retailers have an obligation to do their part in punishing wrong-doing, independent of whether doing so is strictly efficient.
• Some will see the amount of law-enforcement effort expended on arresting shoplifters at Wal-Mart as a “further” way in which Wal-Mart is subsidized by public coffers. In a sense, that’s true. But it’s only true in the same sense that your own security costs (and mine) are subsidized by public coffers. The fact that the city I live in has an effective police force is part of the reason I don’t need a full-time security guard at my home. The more interesting question, regarding Wal-Mart, is whether there’s something about Wal-Mart that makes it a disproportionate drain on law-enforcement budgets. That is, does your average Wal-Mart use up more law-enforcement resources than other stores its size, or than however many smaller stores you’d have to add up to equal its size? Is anything about Wal-Mart especially criminogenic?

(Note: See also the interesting blog entry on this over at the Freakonomics blog.)

Relevant Books:
Shoplifting: A Social History, by Kerry Segrave
The Sociology of Shoplifting: Boosters and Snitches Today, by Lloyd Klemke
Retail Security: 150 Things You Should Know, by Louis A. Tyska, Lawrence J. Fennelly

Law prof and blogger Stephen Bainbridge has some interesting, brief comments on Google’s plans to build an office and research centre in Ann Arbor, Michigan. Google co-founder Larry Page apparently has close ties to the town, having gone to university there, etc. The new project is also anticipated to give a political boost to Michigan’s Democratic governor.

Writes Bainbridge:

So Google’s bosses are spending the shareholders’ money to boost (a) one of the bosses’ hometown and (b) one of the many liberal politicalians the bosses espouse.

Of course, it’s not like Google is building a new opera house, or even endowing a hospital foundation or something…they’re building an office, and a research centre…both projects that you’d think would have a legitimate business purpose.

Here’s the NY Times story on Google’s new centre.