World Standards Day: Celebrate or Mourn?
Filed under: experts, governance, international, regulations, standards, trade |
Comments (2) Today happens to be World Standards Day, a day that honours the work of the thousands of experts involved in setting the huge range of voluntary international standards that regulate production and trade in a globalized economy. Depending on your view of globalization, it’s a day either to be celebrated or mourned.
The standards in question include various standards established by groups like the International Electrotechnical Commission (IEC), the International Organization for Standardization (ISO), and the International Accounting Standards Board (IASB).
I’m currently reading a very good book on just this topic, namely The New Global Rulers: The Privatization of Regulation in the World Economy, by Tim Büthe and Walter Mattli. The book examines the wide and growing range of international, private (i.e., non-governmental) standards being set by groups like the IEC, ISO, and IASB. As Büthe and Mattli point out, such standards are a double-edged sword.
On one hand, they facilitate the international flow of goods and services, making it easier for companies to ship products overseas or set up branch offices in foreign countries without learning entirely new, idiosyncratic local standards. And (being established by international groups of experts) they do this without the direct participation of governments that may not have the financial or technical capacity to set such standards. On the other hand private, international standards don’t bring benefits equally to all: not all companies are equally-well equipped to switch from older national standards to newer international ones, and some countries’ internal regulatory regimes make the switch even harder. And regardless, as Büthe and Mattli point out, adopting new standards always brings costs, including things like the costs of training, the cost of redesigning products, and even paying licensing fees for proprietary technologies.
It seems appropriate, at this juncture — while the Occupy Wall Street movement is a) lamenting the nature of government-industry interaction, and b) deciding whether it is or is not part of the anti-globalization movement — to give some serious and well-informed thought to the desirability of regulatory regimes that are both non-governmental and international.
A High-Tech Replacement for Sweatshop Labour! Um…yay?
Filed under: activism, employees, human rights, international, technology, values, workplace safety |
Comments (17) When new technology puts sweatshop labourers out of work, is that a good thing or a bad thing? It’s not an entirely hypothetical question.
Here’s the story, from Fast Company: Nike’s New Thermo-Molded Sneakers Are Like Sculptures For Your Feet
The classic Air Force 1, Dunk, and Air Max 90 Nike shoes get the Vac Tech treatment–a thermo-molding technique that produces one-piece, stitch-free sneakers.
…
As a centerpiece for the holiday season, Nike Sportswear has released three of its most venerable brands–the Air Force 1, Dunk, and Air Max 90–constructed using a thermo-molding technique, a kind of vacuum compression method that allows the shoe to be held together without any noticeable seams or stitching. The Nike Dunk VT, above, basically recreates the familiar silhouette of the original design as sculpture around your feet.
Now presumably — though details are sketchy — the lack of stitching will mean these babies will be cranked out by machines, rather than assembled by hand by underpaid people in underdeveloped nations. Critics who think there’s no such thing as a good sweatshop should rejoice. But will sweatshop workers be so happy?
I hasten to add that the word “sweatshop” in its most pejorative sense doesn’t really apply to Nike. Nike, once villainized for having its shoes made by poorly-paid workers working under appalling conditions, is now widely recognized as a garment-industry leader in terms of labour standards. But that’s not to say that a job in a factory that makes Nike shoes is peachy. It’s still a hard life, by western standards. So is it good, or bad, for such labourers if a machine is developed that makes their services redundant?
As I’ve pointed out before, the workers vs machines conflict is, in the grand scheme of things, a false one. Machines can make workers more efficient (and hence valuable), can save humans from dangerous tasks, and can improve net social productivity in a way that stands to benefit literally everyone, in the long run.
But such generalizations don’t obviate the fact that there are some cases in which a new technology comes along and puts you out of work.
Unemployment is bad. Sweatshop jobs are bad. So do we celebrate or mourn when someone with a sweatshop job is put out of work? And is this a matter of choosing the lesser of two evils? Or the greater of two goods? And what does our answer to that question imply about the ethics of buying products made in the sweatshop jobs that remain?
Bullying in Pursuit of the Public Good
Filed under: accountability, activism, corporations, government, international, NGO |
Comments (5) Should we celebrate when a powerful NGO convinces a powerful corporation to change its mind on something?
Here’s an example. Greenpeace recently… um, persuaded Mattel to stop using packaging sourced from companies that contribute to deforestation in Indonesia. (See the story by Angelina Chapin: Greenpeace wins battle with Mattel.) Mattel is a major toymaker, selling millions of products wrapped in cardboard, so the company’s decisions on where to get that cardboard stand to have a significant environmental impact. And Greenpeace managed to get the company to change its ways.
I suspect — but only suspect — that this is a good thing. I don’t know much about the facts of this particular case, but I think generally it’s good that there are well-intentioned nongovernmental organizations (NGOs) like Greenpeace working hard to get companies to think twice about the environmental impact of their business practices.
But it’s not always a good thing when NGOs badger and cajole a big company. Consider, for example, another case involving Greenpeace, namely the battle over the dismantling and disposal of the massive Brent Spar oil-storage buoy in the mid-90s. In that case, Greepeace launched a global campaign to pressure Shell, owner of the Brent Spar, to dispose of the floating oil-storage facility in a way that contradicted the company’s own environmental impact assessment. Greenpeace later changed its mind and apologized, but it was too late: Shell’s original disposal plan had already been scrapped, and the company’s share price damaged. In other words, Greenpeace had bullied Shell into doing the wrong thing.
Now most people are generally not very worried about major corporations, or large institutions of any kind, being bullied. And it’s easy enough to understand why. We’re usually more worried about corporations having too much power, rather than too little. But to uniformly celebrate victories of NGOs over corporations is to assume that NGOs are always right. And that’s a mistake. It’s also a mistake to assume that NGOs are in any important sense democratic, or automatically representative of the public interest.
Now this point must not be mistaken for a general critique of NGOs. There are many good NGOs out there, doing invaluable work. It’s just a reminder that the leaders of NGOs are not elected representatives, but rather self-appointed defenders of what they see as the public good. (I’ve written about how to assess NGO legitimacy before.)
Think of it this way. Companies sometimes do dumb things, and sometimes they do unethical things. There are lots of ways that can happen. Sometimes it’s due to flawed internal decision-making processes. Sometimes it’s a blind focus on profits or on expanding market share. Sometimes they do bad things in response to poorly-constructed regulations, or pressure from governments. And sometimes they’re bullied by other organizations, including NGOs.
And when a major corporation is bullied into making a bad decision, that bad decision can have enormous implications. So we should all watch with a careful eye when lobby groups, whether corporate or populist, attempt to use powerful non-democratic means to get their way.
Ethical Investing and Values-Based Investing
Filed under: accountability, certification, experts, film, investing, values |
Comments (9) If you’re an investor, and if you want your money invested in companies that will not just bring you a return on investment, but will also some good in the world, that means you’re interested in what is variously called “responsible investing” or “ethical investing” or “values-based investing.”
I was recently interviewed for a documentary on the topic. Here it is: “Responsible Investing: An Evolving Story.” The 20-minute video was produced by the Ontario Teachers’ Pension Plan (OTPP). OTPP (colloquially known as “Teachers”) is one of the biggest institutional investors in Canada, managing a fund of just over a hundred billion dollars.
One of the main points I tried to make in the segments I’m in is that the key to thinking about values-based investing is to think of it as a mechanism for value-alignment. That is, it’s a way for investors to invest in companies whose values are like their own. It allows pacifists to avoid investing in arms manufacturers, and allows anyone who is stridently anti-tobacco to avoid investing in that industry. It’s not about all of us investing in products or industries that are “more ethical”, overall. Such global judgments are difficult to arrive at, and even harder to find consensus on.
That is, it’s best not to think of values-based investing as “ethical” investing, as if in contrast to all that other, unethical, investing. Indeed, referring to it as “ethical” investing probably makes the same mistake as references to “ethical oil” or “ethical food” does: it confuses the fact that there is ethical reasoning involved in such investing with a much grander claim that your investments are the only (or most) ethical ones.
Wall Street Needs to be Fixed, Not Occupied
Filed under: accountability, activism, corporations, corruption, finance, government, protest |
Comments (16) Issues of corporate ethics are too important to leave to the Occupy Wall Street gang. The principles the group is fighting for are noble ones, but the tools they employ leave much to be desired. It’s up to the rest of us to use better tools.
Those currently camped out in New York, and other cities across the US, are right to want better corporate ethics, including a big dose of accountability and transparency. And they’re right to want to live in a just and equitable society. And they’re right to want certain kinds of electoral reform: finding ways to limit the influence of corporations (without stomping on free speech) would be a very good thing. But occupying Wall St. isn’t going to do it.
Don’t get me wrong: I’m there, in spirit. Well, not there there. I’m not likely to join the sit-in anytime soon; those methods aren’t my methods. But I sympathize with the frustration manifested by the passionate, non-partisan cabal of well-intentioned folks who make up the Occupy Wall Street movement. Indeed, though our methods are radically different, I’ve dedicated my career to some of the same ideals. I’m committed to the project of figuring out the best possible standards for corporate structures and behaviours, and I hope that better understanding will lead, indirectly, to better outcomes. The folks of the “Occupy Wall Street” movement likely think my way won’t won’t have much impact. Don’t worry, I’m not taking it personally.
The Occupy Wall Street movement has substantial symbolic significance, but we all know, I think, that nothing concrete is going to come of it. To start with, the mechanism is all wrong — it’s not like corporate and political elites are going to see a sit-in, and suddenly going to smack their foreheads and say, “Oh, ok! Let’s make changes!” And then there’s the movement itself. It’s pretty clear by now that the loosely-organized movement doesn’t have much in the way of concrete goals. And its spokespeople can barely open their mouths on topics related to business and economics without saying things that are grossly mistaken. Their values are right, but the mechanisms they envision to implement those values — things like repealing corporate personhood — are deeply misguided. But then, to look for direct impact is, as others have observed, likely a mistake, and misses the real significance of the movement.
So it would be easy — too easy ‐ to dismiss Occupy Wall Street as a bunch of well-intentioned young people tilting at windmills. But that would be a mistake. The windmills they’re tilting at are important ones.
The real value of the Occupy Wall Street movement is that it ought to serve as a kick in the pants to the rest of us, an inspiration to make use of tools that will do some real good. Let’s leverage their energy into effective methods. So think. Learn about the issues. Learn about corporate governance. Advocate reform. Organize. Get out the vote. If Occupying Wall Street is to have any real impact, it won’t be by motivating a few hundred more people to camp out in the street.
Corporations as “People” vs Corporations as “Persons”
Filed under: corporations, critical thinking, definitions, personhood, stakeholders |
Comments (11) There are two ways to think about corporations. One is as a mechanism for letting a bunch of individual people interact. Seen this way, General Motors is just a mechanism for letting employees, customers, shareholders, suppliers, and managers interact in mutually-beneficial ways. The other way is to think of the corporation as an entity in its own right. Seen this way, GM is an entity that owns property, hires employees, is a party to contracts, and has obligations (e.g., via warrantees) to millions of customers. The people involved come and go, but the 103-year-old institution remains. These two views aren’t incompatible. Each illuminates one important characteristic while obscuring another. We need to be able to see corporations both ways, depending on the circumstance.
But it is important not to confuse the two. One is about people. The other is about legal personhood.
Here’s an important case of that confusion. As was widely reported at the time, US presidential hopeful Mitt Romney said, in a speaking engagement, that “corporations are people.” (You can see it for yourself on YouTube: Mitt Romney- Corporations Are People!) This happened over six weeks ago, but it is still causing confusion, and muddying the waters of the debate over the role of corporations in modern society.
What did Romney mean by what he said? I think the point Romney was clearly making is very different from the one he is often thought to have been making. In fact, he was making the exact opposite point. In clarifying what he meant, Romney said, in reference to corporate profits:
“Everything corporations earn ultimately goes to people. Where do you think it goes?”
In other words, he’s pointing to the first of the two viewpoints mentioned above, the one according to which what really matters is the people, the individual stakeholders, behind the corporation. And yet I keep seeing Romney’s “Corporations are people” claim bandied about sarcastically as if it’s yet another example of the much-hated (and much-understood) notion that corporations are legal persons.
(Greg Sargent at the Washington Post did try to explain this, but the point has generally been missed.)
If you don’t like Romney, fine. And if you don’t agree with the point he was making — that corporate profits end up in the pockets of human beings — that’s fine too. But please don’t confuse his point with the exact opposite point, namely the fact that corporations are (and need to be) legally regarded as persons.
Oil Poll: Human Rights or Environment?
Filed under: consumers, decision-making, environment, excuses, human rights, international, pollution, values |
Leave a Comment A few days ago, I blogged about the notion of “ethical oil”. That’s the label one advocacy group is applying to oil from Canada’s oilsands, to distinguish it from oil from Saudi Arabia, a country with a less-than-admirable human rights record. That, of course, is a gross oversimplification.
But it’s still an interesting ethical issue. I said,
In principle, we could look at this as a matter of “choose your poison.” Do you want the oil that’s associated with human rights violations, or the oil that’s associated with environmental destruction?
It’s important to point out that there are two reasons this is a false dilemma. One is that consumers don’t actually get to choose: oil isn’t labeled by country of origin. The other reason is that neither of the nations named above is perfect, from a social and human rights point of view; nor is either country perfect from the point of view of environmental protection.
But it’s a philosophical thought-experiment worth conducting. So, let’s imagine: you’re driving your car, and your tank is near empty. You’re at an intersection with two gas stations. One is the Saudi brand and the other is the oilsands brand. Which one would you choose?
(Again, I do realize this is a gross oversimplification. It’s not a real choice. It’s a thought-experiment to get you to think about the relative value of the environment and human rights. Let’s all be thankful it’s not a choice we actually have to make.)
Which Oil is the More Ethical Oil?
Filed under: boycott, energy, environment, ethics, greenwashing, human rights, marketing, values |
Comments (15) It’s a clever marketing strategy. But is there really such a thing as ethical oil?
In today’s National Post, the Fraser Institute‘s Mark Milke argues that there is, and that “the ethical oil tag is useful shorthand for why Canada’s oil is preferable to that extracted elsewhere.” But “preferable” is a pretty grand, global conclusion. It implies that, all told, Canada’s oil is better, ethically. And that may well be, but it’s certainly not obvious. Don’t get me wrong — I’m a patriotic Canadian, proud of my country and its accomplishments. But I’m also a critical thinker, and a critical thinker can’t accept unreflectively a conclusion that happens to coincide with his own biases. Indeed, the fact that Milke’s conclusion conforms so neatly to my own biases is a strong reason for me to look at his argument more closely.
His argument is basically that Canada’s oil is ethically preferable to the oil produced in other places, considering especially places with serious histories of violating human rights.
OK, so let’s try it out. Let’s look at a rough sketch of the perceived negative ethical implications of oil from the top 10 countries listed by oil production….
Russia — widespread political & economic corruption;
Saudi Arabia — oppressive regime; human rights abuses;
United States — capital punishment; crazy war on drugs; irresponsible financial institutions;
Iran — human rights violations; insane political leaders;
China — human rights violations;
Canada — environmental degradation; poor treatment of indigenous peoples;
Mexico — widespread corruption; ongoing drug war;
United Arab Emirates — undemocratic;
Brazil — crushing poverty; immense social inequality;
Kuwait — undemocratic; human trafficking and abuse of migrant workers.
Feel free to add your own potential points of criticism to the list. And, of course, you can add significant environmental concerns to the worries for all oil-producing nations. That goes with the turf.
Now we absolutely must not make the mistake of treating this like a checklist, or treating all of the ethical “bads” listed above as equally bad. They’re not. And the other problem with this list is that it presumes that the only alternatives are various countries’ oil. Presumably much of the criticism of tar-sand oil isn’t that it’s so environmentally-evil that it’s ethically worse than, say, Saudi oil. Rather, the criticism has to be that tar-sand oil is worse than renewable energy sources that we ought to be developing, like solar and wind and geothermal.
So while I think the “ethical oil” label is rather, well, crude, I think the people promoting that label are at least doing us the unintentional service of reminding us that it’s far from clear what counts as an ethical source of energy. (If you use slave labour to build a wind turbine, is that an ethical source of energy?) As my friend Andrew Crane points out there are many dimensions along which to evaluate the ethics of any product — including not just the intrinsic properties of the product but also things like the process of production and nation of origin. That certainly applies to oil. I just wish I could believe that the people pushing the “ethical oil” label for my country’s oil were doing it to advance the debate, rather than to score points in it.
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Update: Take a hew poll on this topic, here: Oil Poll: Human Rights or Environment?
Facebook, It’s Not OK to Suck
Filed under: advertising, consumers, entertainment, internet, pricing, privacy, quality, technology |
Comments (12) Facebook users should keep complaining, complaining bitterly, complaining in every possible forum.
Oddly, for all the controversy over Facebook implementing yet another round of changes to its layout and user experience, that controversy has almost been drowned out by arguments over whether it’s appropriate for users to complain about Facebook. Yes, the burning debate among users is over whether there should be a burning debate among users.
Much of the force of the “stop complaining!” camp is rooted in the claim that, hey, after all, it’s a free service and no one’s forcing you to use it anyway. But contrary to what you might have heard, Facebook isn’t optional, and it isn’t free. Let me explain.
First, let’s talk price. Lots of people have already pointed out that while Facebook doesn’t charge users for an account, that doesn’t mean it’s free. The service is supported by advertising, just like TV shows have been since the days of early soap operas. So you are “paying” to use Facebook — you’re paying with your eyeballs. You’re paying with attention, however fleeting, to those ads along the side of the page. And — the more worrying fact — you’re paying with your privacy, as Facebook uses what seems to be increasingly-ornate ways to gather information about you, your preferences, and your web-surfing habits. As the saying goes, there’s no such thing as a free lunch. Facebook isn’t an exception.
Think of it this way: Facebook is like a gas-station bathroom. It might be “free”, but that doesn’t mean that quality doesn’t matter. In both cases, the “free” service being offered is there as an inducement. In the gas station’s case, it’s an inducement to stop there for gas (and increasingly for snacks, magazines, etc.). In Facebook’s case, being able to post stuff for “free” for your friends to see is an inducement to look at those ads, and to share your web-surfing habits with that advertising agency. So they have reason to want you to be satisfied, and you have every right to demand excellence in return for your attention.
Second, is Facebook optional? Whether a product is optional or not matters, ethically, because when a product is truly optional, customers can simply exit the relationship, either buying the product from someone else or not buying it at all. Given the option to exit, the dispute between producer and consumer evaporates as the two simply agree to disagree and go their separate ways. (The classic source on this is Albert O. Hirschman’s book, Exit, Voice, and Loyalty.) But Facebook isn’t optional. Ok, I know. Strictly speaking yes it’s optional. But then, so is email, or having a telephone, or having a car. Optional but, for many of us, functionally essential. In this regard, Facebook is a victim of its own success. It has no real competition, and the service is one that many of us cannot simply walk away from. In essence, Facebook has gained a virtual monopoly on what has become part of our social infrastructure. Complaining about Facebook is no sillier than complaining about the state of your local roads or the consistency of your supply of electricity.
So if you don’t like Facebook’s new layout, or if you don’t like Facebook’s approach to privacy, do not hesitate to complain. You’re well within your rights. And if Facebook listens, you might just help make the on-line world a better place.
Conflict of Interest: the SEC Doesn’t Get It
Filed under: accountability, character, codes of ethics, conflict of interest, government, regulations |
Comments (1) There are a few ways to interpret how the Securities and Exchange Commission handled a blatant conflict of interest on the part of one of its own lawyers, and none of them is particularly flattering.
If you don’t already know the story, see this Wall St. Journal editorial: The SEC’s Ethics: Washington’s double standard on conflicts of interest
…this week’s remarkable report from SEC Inspector General David Kotz disclosing how the SEC’s former top lawyer, David Becker, directly handled matters relating to the Madoff fraud case despite his mother’s $2 million investment with the firm, to which he and his brothers were heirs….
Despite a clear conflict, Mr. Becker didn’t recuse himself. He did (properly) report the conflict to his superior, Mary Schapiro, but she didn’t take the appropriate action in response.
How do we explain this failure? One possibility is that leadership of the Commission is clueless about what conflict of interest is. That seems unlikely; watching for conflict of interest at regulated companies is an important part of the Commission’s mandate.
Alternatively, it could be that this is a case of actual corruption (something not intrinsic to the notion of conflict of interest). That is, it’s possible that Becker was intentionally acting in a genuinely self-serving way, and that Schapiro was facilitating his attempt to do so. But there’s no evidence of that as far as I can see, and making that assumption is neither charitable nor consistent with our best understanding of what motivates wrongdoing. Self-serving rationalizations are much more commonly the mechanism behind wrongdoing than is actual pursuit of personal gain. So I’m willing to assume that Becker and Schapiro genuinely thought there was no real problem, that Becker was technically in a conflict, but that that conflict wouldn’t actually affect his ability to make the right decisions.
More likely, it seems to me, is that Becker and Schapiro, while understanding what conflict of interest is, how it is defined, etc., don’t really get the moral significance of the concept. They don’t see that conflict of interest isn’t about some personal interest actually having an influence on the integrity of the decision-maker. They don’t see that avoiding conflict of interest is about avoiding the shadow of doubt, a shadow that reduces people’s trust in the organization as a whole.
This sort of misunderstanding is alarmingly common in institutions that treat ethics as an administrative function. They focus on the rules, and on the processes and procedures that need to be built in order to enforce the rules. But too often, then forget why the rules are there in the first place.
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Notice / Correction: The first version of this blog entry had a serious, repeat typo, wrongly implying that Mr Kotz, rather than Mr. Becker, was the one in the conflict. I’ve fixed that sloppy error above. My apologies for any confusion.
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