The Business Ethics Blog

Which Alternative Therapies is it Ethical To Sell?

chris@businessethicsblog.com (Chris MacDonald) — Mon, 08 Mar 2010 05:25:00 +0000

Homeopathy has been getting a bit of a rough ride in the UK lately, as the 10:23 campaign has been doing its best to shame UK pharmacy chains for selling unproven remedies.

Then just this week, a committee of the House of Commons concluded that the government should no longer pay for homeopathic treatments. Here's a bit more detail, from The Guardian: MPs criticised homeopathy this week. What's their evidence?

This week, the House of Commons Science and Technology Committee published a report criticising government policy on homeopathy, saying that homeopathic remedies should no longer be funded by the NHS or licensed by the drug safety watchdog.
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The committee discussed evidence from all kinds of sources, including the Department of Health, the British Homeopathic Association, the British Medical Association, Boots, doctors and scientists, NHS trusts, the UK's drug safety watchdog, NICE, campaigning groups, and the Advertising Standards Authority.
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The committee's report is highly critical of homeopathy. It recommends that placebos should not be routinely prescribed by the NHS, that the NHS shouldn't fund homeopathic hospitals, and that doctors shouldn't refer patients to homeopaths. According to the Society of Homeopaths, current NHS funding for homeopathy runs to £4 million each year....

Homeopaths and their customers, not surprisingly, have been up in arms, shocked that very idea that the government might end funding for the form of treatment the believe in so fervently. The fact that the Committee pointed to an absence of Randomized Controlled Trials (RCTs) showing that homeopathy works is taken by defenders of homeopathy as evidence of a too-narrow view of what counts as evidence.

But let's set homeopathy aside. (Please, seriously!)

Let's ask the question more generally: what evidence should be required in order for a government insurance scheme (or any other insurance scheme I guess) to pay for a particular treatment modality? Should RCTs be required? Or is some lesser form of evidence sufficient? How much evidence is enough? How little evidence is too little?

Or, since this is The Business Ethics Blog, let's ask it this way: which products is it ethical for a pharmacy to sell? Should pharmacies only sell remedies supported by RCTs? Or is consumer demand the only standard that matters?

Presumably defenders of homeopathy don't think that the government should fund literally every therapy that someone claims is useful. There have to be some standards. Likewise, surely defenders of homeopathy don't think that pharmacies should sell literally every product claimed (by someone) to have some therapeutic value. If I were to think up a "cure for cancer" while in a drunken stupor, surely my new "discovery" shouldn't be sold in pharmacies just because I think it's a cool idea. So, what generalizable principle do fans of homeopathy recommend for sorting this out?

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A note about posting comments:
Sorry, but I will not approve comments that don't at least try to answer the question above. If you love homeopathy or hate it, that's fine, but save it for another blog entry. Sorry, skeptics, that means there's likely little for you to contribute here. My question is aimed at the believers. Likewise, comments about how "homeopathy worked for me!" are off-topic, here.

Blagojevich Speaks on Ethics (And I Would Listen)

chris@businessethicsblog.com (Chris MacDonald) — Sun, 07 Mar 2010 14:52:00 +0000

Who on earth would want to hear a politician indicted on a whole range of corruption charges talk about ethics?

Well, I would.

But I wasn't among the lucky students at Northwestern University who heard Rod Blagojevich speak on ethics recently. Here's the story, by Natasha Korecki, for the Chicago Sun-Times: Laughs, boos for Blago at NU

To some, the irony was as thick as the shock of hair on his head: indicted ex-Gov. Rod Blagojevich addressed Northwestern University students Tuesday night about ethics and morals in government.

One student said the event was akin to inviting Tiger Woods to speak about fidelity....

Why would anyone want to hear this guy speak on ethics? Well, let's set aside the fact that he's innocent-until-proven-guilty, and so he's not yet certifiably unethical. I think that, even if he's guilty of everything he's charged with, there are still reasons to want to hear a guy like Blago talk about ethics:

One: "What's this Ethics Stuff?" First, I'd be truly curious to hear just how someone like Blagojevich defines the word "ethics," or more generally what he takes the scope of that topic to be. If the speaker thinks that ethics covers not cheating on schoolwork, but doesn't think it covers not selling public offices, that's an interesting substantive confusion.

Two: "Excuses, excuses." I'm intrigued to hear anyone accused of serious wrongdoing explain themselves. It's interesting (and likely useful) to hear the excuses & rationalizations. The explanations offered might be intended as explanations of why they didn't actually do the things they're accused of, in spite of the evidence. Or what's offered might be rationalizations: "I did it, but it's not as bad as it looks" or "I did it, but I did it for good reasons." Either way, psychologically interesting.

Three: "Been There, Done That." I'm also interested to hear apologetic wrongdoers. The ones who have come to terms with their wrongdoing can provide insight into the causes of wrongdoing more generally, and the processes by which otherwise "normal" folks can come to participate in schemes that they, by their own lights, would otherwise have seen as unethical. It's also useful to see what someone convicted of serious wrongdoing looks like, if you've never met one. I once met Walt Pavlo, who did federal time for embezzling a few million dollars from MCI. When I heard Pavlo speak, I recall that the most alarming thing about the experience was just how normal the guy is, and what a nice guy he seemed to be. It was truly unnerving. I'm not sure what I was expecting a white-collar criminal to be like, but Pavlo wasn't it! (See my blog entry about Pavlo here: White Collar Crime Up Close & Personal. See also my interview with Walt Pavlo about the sentencing of Enron's Jeff Skilling, back in 2006).

Of course, when you're listening to someone who is accused of, or who has admitted to, significant wrongdoing, there's no guarantee you're hearing the truth. Some of them may be inveterate liars; others may be lying to polish their own image. So, naturally, you should take what they say with a grain of salt. But to think that there's nothing to learn from them is a mistake.

Enron's Skilling Appeals Conviction: Was the Law Too Vague?

chris@businessethicsblog.com (Chris MacDonald) — Tue, 02 Mar 2010 15:26:00 +0000

Jeff Skilling may not be guilty.

Seriously.

Not to say that he didn't do anything bad. Skilling is no angel.

But to be truly, criminally guilty, you need to a) be convicted at a fair trial, and b) be convicted of a law that is sufficiently precise to meet the standards of fairness.

It's looking like it's at least possible that in Skilling's case, those two criteria weren't met.

Here's the story, by Adam Liptak, writing for the New York Times: Justices Hear Appeal of Ex-Chief of Enron

Both the law under which Jeffrey K. Skilling was convicted and the way his jury was selected were the subject of skeptical questioning at the Supreme Court on Monday. The law was too vague, several justices suggested, and the jury selection too cursory....

The bit about the law being vague warrants some explanation.

The basic idea is that in order for a law to be considered just, it has to have certain qualities. For example, there can be no secret laws. Laws also normally have to be general in their formulation (so, you can have a law that says "It's illegal to do X" but not a law that says "It's illegal for Dave to do X.") And laws also have to be sufficiently clear and specific that citizens can know, in advance of acting, whether they're about to break a law or not. This is so that the law can actually guide citizens' behaviour. So, for example, you can't have a law that says "It's against the law to do things that displease the King."

The worry, in Skilling's case, is that the federal law under which he was convicted (title 18 of the United States Code, section 1346) is too vague. Title 18 is where anti-fraud laws are found, and section 1346 specifies that the term "fraud" also "includes a scheme or artifice to deprive another of the intangible right of honest services." Now, if you're wondering what the heck that means — well, that's precisely the problem. Basically the idea is supposed to be that it's illegal to defraud your employer. But as was pointed out in Skillings' appeal, section 1346 may be so broad that it effectively criminalizes all kinds of workplace dishonesty — including many things that no one would think of as illegal. And it's impossible to follow a law the scope of which you cannot predict.

So, while no one is saying Skilling is innocent, he may not be guilty of the crime of which he was convicted.

Greenwashing & Corporate Motives

chris@businessethicsblog.com (Chris MacDonald) — Sun, 28 Feb 2010 14:52:00 +0000

This past Friday I delivered The 2010 Edwards Family Lecture in Business Ethics at the University of Saskatchewan, on the topic "Greenwashing and Corporate Moral Motivation."

The talk was basically whether corporate motives matter in making an accusation of greenwashing. Though the term is sometimes used more loosely, I think greenwashing is best understood as an attempt (usually in advertising) for a company to highlight a relatively minor environmental accomplishment as a way of distracting viewers from a poor environmental track record. Greenwashing is a problem, because it can to a certain extent mislead or manipulate viewers. But certainly there's nothing unique about greenwashing in that regard; other forms of "puffery" in advertising is more-or-less taken for granted. I think that a big part of what actually explains people's strong negative reaction to greenwashing is lies in the hypocritical element of greenwashing: how could a company like that dare to brag about this puny environmental accomplishment?

There's a problem, though, if a charge of greenwashing imputes a particular motive to the company involved (typically, I think, the accusation is that the motive for greenwashing is an interest in distracting from something or covering something up.) This is a potential problem because accurate attributions of corporate motives is difficult. Some people are entirely skeptical about the very existence of corporate motives: some people think corporations are merely legal fictions, and legal fictions don't have minds, let alone motives. I'm not quite so skeptical about the existence of motives: I think it's at least possible that corporations, as complex entities in their own right, can have motives (and intentions and interests and desires). But there remain two problems. Even if corporate motives can exist, it's still possible that in particular situations there actually was no corporate motive per se: it might just be that a corporate decision was arrived at, but that it was supported by dozens of important internal stakeholders for dozens of different reasons. The other problem is a problem of knowledge: even if a corporate motive exists, it may be terribly difficult for outsiders (and sometimes even insiders) to figure out what it is.

Where does that leave us? My skepticism about divining corporate motives is not intended as a way to let greenwashers off the hook. The fact that corporate motives can be hard to discern doesn't at all mean that we shouldn't be on guard against companies trying to pull the wool over our eyes. But it might well mean that it's smarter just to focus on present behaviour, good or bad, and do our best to call attention to environmental claims that are either false, or far less impressive than the companies making them want them to seem.

(Thanks to both the Edwards Family and the Department of Philosophy at USask for the invitation & the hospitality.)

Are Hotdogs Unreasonably Dangerous?

chris@businessethicsblog.com (Chris MacDonald) — Tue, 23 Feb 2010 17:48:00 +0000

It's a perennial favourite with adults and kids alike. And it's potentially deadly. Should manufacturers act?

The villain: the good ol' hotdog.

Here's the story, by Dakshana Bascaramurty writing for the Globe and Mail's health & fitness blog: Wanted: a redesigned hot dog

The hot dog may be a saviour for time-pressed parents and a favourite among picky eaters, but a respected health body says it can also be a serious danger to children.

The American Academy of Pediatrics identified the hot dog as the greatest food-related choking hazard to children in a policy statement released yesterday.

“If you were to design the perfect plug for a child's airway, you couldn't do much better than a hot dog,” Gary Smith, lead author of the statement and professor of pediatrics at the Ohio State University College of Medicine, said in a release. “It will wedge itself in tightly and completely block the airway, causing the child to die within minutes because of lack of oxygen....”

So, should hotdog manufacturers act, to reduce the risk to kids?

I'm sure for many people, the immediate response will be a skeptical one. There are lots of ways to die, and indeed lots of things that kids can choke on. You can't prevent all accidents, and you can't make products 100% safe. Leave the hotdog-makers alone!

I've got a lot of sympathy for such views. But there are at least a few factors that make me think it's at least plausible that hotdog manufacturers have an obligation, here.

1) Hotdogs aren't just a choking hazard. They're choking hazard #1. Sure, every product brings dangers. You can choke on literally anything you can fit into your mouth, whether solid or mush or liquid. But when one product dominates the top of the choking-hazard list, it's hard not to think that manufacturers of that product should pay attention.

2) The risk is there regardless of how vigilant a parent is. There's no parental negligence required for a 10-year-old to choke on a piece of hotdog. So you can't plausibly just say "It's up to parents. Parents should be more careful."

3) This is an area where no company could reasonably rely on government regulation, because specifying a regulation for non-choke foods is essentially impossible. First, it's hard to imagine what the regulation would look like...a ban on food products of a particular diameter? That seems unlikely. Second, the worry here is about kids, but most food isn't sold as "food for kids" — it's just sold as "food." And it seems a bit intrusive for government to ban a certain kind of food altogether, including for consumption by fully aware and rational adults.

Yeah, yeah, I know. It's just a hotdog. What could be more common and more innocent than the beloved hotdog? But we shouldn't let the cultural centrality of a food (or other product) seduce us into exceptionalism. So, if you think the manufacturers of the highest-choking-risk food have no responsibility to improve their product, do you also think that goes for other products that are most-dangerous in their respective categories?

Was Polluting Factory a "Gap Factory" and Does it Matter?

chris@businessethicsblog.com (Chris MacDonald) — Mon, 22 Feb 2010 15:17:00 +0000

From the Times Online: Gap factory danger to African children

A factory that makes jeans for Gap and Levi Strauss is illegally dumping chemical waste in a river and two unsecured tips where it poses a hazard to children.

The scandal was uncovered by a Sunday Times investigation into pollution caused by a plant in Lesotho, southern Africa, which supplies denim to the two companies. Dark blue effluent from the factory of Nien Hsing, a Taiwanese firm, was pouring into a river from which people draw water for cooking and bathing....

We should being by saying, yes, this is a bad thing. Polluting water that people need to survive is generally wrong. In some cases, it seems justifiable for developing nations to choose lower environmental standards in exchange for economic development, but I doubt that argument applies very well to this particular case.

But it's worth noting that the headline for this story is misleading. The factory in question isn't a "Gap factory". It's the factory of a company that supplies denim to the Gap. That might not seem like a huge distinction in an era in which large companies are regularly held responsible (and increasingly accept responsibility) for the actions of their suppliers. But it does matter. The headline is importantly misleading, for two reasons.

First, there's a moral difference between me doing X, and someone who sells me things doing X. To begin, I can normally only bear any responsibility if I know (or should know) what the person selling things to me has done. It's good that, in 2010, it's harder for big companies to turn a blind eye to wrongs done solely in order to meet their demands. But that's different from saying that we ought to lob an accusation — an accusation of hurting children, in this case — as soon as there's any slippage in a company's supply chain.

Second, if consumers see this headline and think they can save children in Africa by avoiding Gap jeans, they're wrong. For starters, the story (for those who get that far) actually supplies 2 companies: The Gap and Levi Strauss. But beyond that, if you actually were going to make a decision about what jeans to wear based on the environmental and labour conditions under which they were made, you need to know about the product as a whole, and the company's production processes over all. Indeed, what you really need is comparative information, not just information about one company.

I can understand why activists like to single out big companies for special attention. Yelling "Gap hurts children!" gets more attention than "wholesaler you've never heard of hurts children." But those of us focused on understanding problems (including newspapers like The Times) should hold themselves to a different standard.

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(Thanks to LK for this story.)

Tiger's Apology

chris@businessethicsblog.com (Chris MacDonald) — Fri, 19 Feb 2010 16:19:00 +0000

Tiger Woods just held a press conference, making a 14-minute apology for his transgressions.

The apology itself was point-by-point perfect, so perfect that it's hard not to imagine that it was the product of professional PR advice (not that there's anything wrong with that — if I had his profile and were in his situation, I'd seek expert advice at this juncture, too.)

He offered two very different explanations for his wrongdoing, explanations that are not necessarily mutually exclusive, but just very different.

Woods' first explanation was that he had succumbed to temptation. The particular explanation he offered was that he had allowed himself to believe that the rules didn't apply to him, and that he had allowed himself to think that he had earned the right to enjoy the temptations around him. (As I've discussed here before, there's reason to think that excuse-making, and in particular the process of making exceptions for oneself, is a key component in various kinds of wrongdoing.)

The second, very different, explanation, was a medical one. Though he was vague about this, Woods said he had spent most of the last 2 months in treatment, receiving counselling and therapy. (Roughly, it seems the implication is that he suffers from addiction — namely, that he's a sex addict.)

I don't know (and the talking heads on TV don't know either, regardless of what they say) which of those explanations is correct, or whether there's some truth in both of them.) But it's crucial to see how different those 2 explanations are. The first is basically cognitive: the implication is that Wood had formulated a certain kind of argument in his head, namely an argument that said that he was subject to an exception to the rules he said he himself believed in. The second explanation is, roughly, biomedical — roughly that there is something, presumably something subconscious, in Tiger's head that makes him behave wrongly.

Now, Tiger Woods' wrongdoing was primarily not a question of business ethics. His wrongs were largely personal wrongs. But the question of what makes people do bad things is an important one in business ethics (and in other fields). So it's worth considering: is the cognitive (excuse-giving) part of his explanation plausible? Is it sufficient? And to the extent that it resonates with what we know about other cases of wrongdoing, does it point to a strategy for reducing the frequency of wrongdoing in particular contexts?

Expense Claim Ethics

chris@businessethicsblog.com (Chris MacDonald) — Thu, 18 Feb 2010 12:00:00 +0000

Padding expense claims or otherwise abusing expense accounts may well be the most common form of petty wrongdoing in the workplace, perhaps second only to stealing office supplies. Such behaviour is likely to be common because it is so often necessary for employees to pay for certain kinds of expenses up front (travel, for instance) and get compensated for it later. Typically, such expanse claims are subject to some form of oversight by the Accounting Department. But it's probably worthwhile, from the point of view of administrative efficiency, to structure an expense-claims system such that they basically trust employees to report their expenses honestly. And with that trust comes the opportunity for malfeasance — an opportunity some people find too good to pass up.

So, what ethical standards apply to filling out and filing an expense claim?

First, it should go without saying that expense reports should be honest and accurate. There's no justification for 'padding' an expense claim. Some may say that the organization they work for is cheap, and that by padding expense claims they're simply taking what they're really owed. That, of course, is simply a self-serving rationalization — akin to the shoplifter claiming that she's not doing anything wrong because she's merely exacting restitution for having been cheated by the store in the past.

So, basic honesty is a given. But what sorts of things is it OK honestly to claim? Well, most obviously, you can claim things that your organization's expense claims policy permits you to claim.

Now, some expense claim policies are vague, stating only that "reasonable" expenses will be covered. That leaves lots of room to manoeuvre. Some people will use such vagueness to their own benefit, trying to argue that if there's no specific rule against claiming a certain kind of expense, then it must be OK to do so. Of course, that doesn't follow.

Why don't organizations just make the rules clearer? Well, fair question. And maybe they should. Some policies probably are too vague. But a certain amount of slack and vagueness is inevitable. No policy, no system of rules can ever be so complete as to describe in full detail exactly what is and is not permitted. For one thing, policy-makers sometimes just can't foresee every eventuality that could arise. Further, ask yourself this: would your world (your organization) really be better if policies were as detailed as possible, and left no room for individuals to use their judgment?

So, when rules are vague, what should you do? How should you decide whether a particular expense is or is not fair to claim?

The most obvious rule of thumb, here, is that in order to be 'expensable,' an expenditure should be one that you had to undertake only because of your job. Here's an obvious example. The airfare to meet a client in another city is very likely alright to claim: you wouldn't have had to expend that money in the first place if not for your job. But your pyjamas probably are not a reasonable expense to claim, since you were going to wear those wherever you slept that night.

One last piece of common-sense advice: if all else fails, consider the 'publicity test.' When contemplating submitting your receipt for that espresso maker for your 'home office,' ask yourself whether that is an expense you would be happy to see honestly reported in your local paper, or that you would be happy to explain to the person or persons to whom you are ultimately accountable: shareholders, in the case of corporate employees, or taxpayers in the case of public employees. Now of course, explaining yourself can be a pain, especially when it's hard for outsiders to understand the requirements of your job. (For example, I blogged last year about the use of corporate jets and pointed out that most people don't know that some big companies require their CEOs to use a corporate jet, for security reasons.) When people don't understand your job, things that you know are essential expenditures can look frivolous. But still, being accountable — being willing to answer for your actions — is central to the kind of agency role undertaken by employees in organizations of all kinds. Your organization entrusts you with an expense account; the quid pro quo is a willingness, on your part, to be accountable for how you use it.

Is Ethics Profitable?

chris@businessethicsblog.com (Chris MacDonald) — Wed, 17 Feb 2010 04:37:00 +0000

Many people interested in business ethics are fascinated by the idea that ethics is good business, or that you can "do well by doing good." Others think that idea is obvious hogwash.

So, are ethical behaviours profitable? Well, are swans white? The answer is yes, mostly, except when they're not.

The obsession some people have with the obviously-partly-true and obviously-partly-false claim that "ethics brings profits" is regrettable. It seems to me a truism of commerce that, in the long run, you'll tend to do well if you deal honestly with customers, treat your employees well, deal honourably with suppliers, etc. But everyone in their right mind knows that that basic truism doesn't mean you can't ever make a little more (sometimes a lot more) by doing something bad. And so, "ethics is good business" is a lame sales pitch, at least when the person trying to sell it implies that it applies to every single decision, at all levels, and that it implies the very highest level of virtue.

Now, of course, there's of room for some interesting empirical work, here. Somewhere between "ethics never brings profits" and "ethics always brings profits" lies the truth, and it would useful to know just where the truth lies, and what the relevant variables are. Even though doing the right thing is (by definition) the right thing to do, even when it's not profitable, it would be nice to know under what circumstances those two things are liable to go hand-in-hand.

The key philosophical error people make here is in thinking that the "ethics is profitable" idea applies on a decision-by-decision basis. It doesn't, and it can't, any more than it's true that "honesty always pays" in our personal lives. Now, it's clearly true that having a set of ethical rules that we (mostly) all (mostly) abide by is "profitable", socially. (See, e.g., Nobel-prize-winning economist Ronald Coase on how moral rules make commerce more efficient.) And it's clearly true that generally acting ethically is a pretty decent route to success for any given individual or firm. (Though it's important to note, here, that I think the list of ethical "oughts" for business is much smaller than some people, particularly people in the world of CSR, seem to think.) But is ethics profitable all the time? Obviously not.

So, if people try to sell you or teach you the dumb version of the profit-ethics connection, they're selling & teaching an obvious falsehood. But that doesn't mean there's no connection at all, and it certainly doesn't mean that being profitable should be seen as somehow being definitionally opposed to acting ethically.

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This blog entry began life as a comment on this useful blog entry by Charles Green: Financially Justifying Ethics: A Faustian Bargain?

Banana Packaging: The Saga Continues

chris@businessethicsblog.com (Chris MacDonald) — Mon, 08 Feb 2010 17:22:00 +0000

This is just an update. Not sure if there's anything ethically interesting here at all.

Three weeks ago I blogged about bananas being packaged (in South Korea) in plastic wrappers. Extra packaging for a banana seemed odd. A week later I posted an update with an explanation from Starbucks: the plastic wrappers, they had told me, reflected Korean 'cultural norms' dictating that premium produce be individually wrapped.

OK, interesting answer.

But now, in a recent issue of MacLean's magazine, there's a story (by Kate Lunau) that gives a much more plausible explanation — and it's about bananas being sold right here in Canada. According to Lunau's story, retailers package banana's for individual sale to help extend the very small window of time during which bananas are the pristine yellow colour that consumers demand, rather than either too green or too brown. Here's the story: An inconvenient fruit.

Now I'm not sure what to think about the two different explanations. Maybe there really are 2 separate reasons, I guess. Or maybe there's a failure of communications within Starbucks.

Some might say (re the Maclean's story) that if it's that much trouble to get pristine bananas to consumers, we shouldn't bother. Some might say the same about the "cultural norms" explanation. But then, potato chips come in a plastic bag too. Either way, garbage is generated. Presumably the healthfulness of the banana makes the garbage generated worthwhile, socially. Yeah?

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Thanks to Michael B for pointing me to the Maclean's story.

The Superbowl, Abortion, and Corporate Responsibility

chris@businessethicsblog.com (Chris MacDonald) — Sun, 07 Feb 2010 14:52:00 +0000

This story brings together Americans' two 'favourite' battles. One, an annual epic battle between opposing sports teams, carried out on the gridiron, namely The Superbowl. The other, a never-ending battle between opposing moral points of view, carried out in seemingly every nook and cranny of American life, namely the abortion debate. Add to that a debate over corporate responsibility and a debate over free speech, and it's not hard to see why sparks are flying.

(That much is cultural anthropology for me. I'm a Canadian. Our "Superbowl" is called the "Stanley Cup," and it's a hockey game not a football game. And abortion has not been the subject of significant debate in Canada since 1988.)

So, here are the basics of the current story: CBS, the tv network airing the Superbowl today, has agreed to air an ad by conservative Christian group, Focus on the Family. It's a pro-life/anti-abortion ad featuring Florida Gators quarterback Tim Tebow and his mom. Though the full ad has not been seen publicly yet, the gist of it apparently is a claim that Tebow's mom, Pam, had, while pregnant with Tim, refused medical advice that she have an abortion. The result of her refusal is the man we know today as Tebow, a Heisman Trophy-winning quarterback. That would be just another little human-interest story, if it weren't for the way Americans are deeply, bitterly, divided over abortion.

(You can get more details here, from The 5th Down, the NY Times' NFL Blog.)

The question being debated: should CBS be airing such a controversial ad during the Superbowl? Within broad limits, networks can pretty much air whatever they want: if CBS wants to air controversial ads, it's within its rights to do so. Heck, if it wants to adopt a pro-life/anti-abortion editorial view, it can do that two.

But two issues complicate the matter:

1) In recent years (?) CBS has had a policy of not airing controversial ads during the Superbowl. Why the exception? Now, CBS is of course free to change its policy. There's been a suggestion that the economic downturn has prompted the network to be a little more daring. But that argument will only work if other, equally controversial ads are allowed in the future, from a range of moral-and-political points of view. Failing that, CBS would become the network that allows controversial ads only representing certain points of view. It's hard to judge which way CBS is going, based on a single ad. In other words, based just on the Superbowl, CBS's new strategy might be "allow controversial ads" or it might be "allow conservative Christian ads." Time will tell.

2) Questions have arisen about the accuracy of the claims being made in the ad. Tebow was born in the Philippines. Abortion was entirely illegal in the Philippines then, as it is now. So, the claim that Tebow's mom was advised to have an abortion is a claim that her physicians counselled her to break the law (and offered to break it themselves, too). The illegality angle means that a) the story is less likely to be true (though not obviously false) and that b) the story effectively accuses physicians of criminal behaviour. The question then becomes: should CBS care? It's probably not plausible to say that a broadcaster is morally responsible for the veracity of every claim made in any commercial it airs. But then again, this isn't just "any commercial."

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(Note: if you want to post comments, please stay on-topic. The topic is corporate responsibility. If you want to debate abortion itself, there are lots of other places to do that. Exceedingly inflammatory comments will not be approved. Thanks.)

Corporate Personhood and Citizens United

chris@businessethicsblog.com (Chris MacDonald) — Wed, 03 Feb 2010 12:17:00 +0000

This is the third of 3 blog entries on the U.S. Supreme Court's Citizens United decision. Yesterday I argued that the Court's decision was fundamentally the right one, because the decision struck down a law that sought to use clumsy and intrusive means to achieve dubious ends. (And I pointed out that it's possible to think the decision is the right one even if you worry about the possible consequences of that decision.)

Today I want to talk about the role of corporate personhood in the Court's decision and in the underlying issues. Much of the furor over the Citizens United decision seems to be rooted in a reaction against the notion of corporations being (or merely receiving protections normally reserved for) persons. I think much of that reaction is misguided: not because I'm in favour of an expansive understanding of corporate rights, but because I think many people are misunderstanding what "personhood" means in this context, and the history of that notion.

A few points about the notion of corporate personhood, and the Court's view on it:

1. The U.S. Supreme Court did not, in the Citizens United decision, suddenly declare corporations to be persons, contrary to what you might have heard. All they did was declare that one of the limitations on corporate speech could not be justified in light of the U.S. Constitution (in particular, the First Amendment). The Court left in place the legal restrictions on corporate donations to political candidates, and it left in place requirements about the obligations of corporations to disclose their political expenditures. Corporations were, prior to this decision, and they remain, after this decision, a kind of person before the law, with a limited range of rights and responsibilities.

2. It's worth noting that the Court's decision (in PDF, here) does not focus on, or argue in favour of, corporate personhood. Indeed, it mentions the concept just once in 57 pages of argument. The view of the Dissenting judges was that the decision by the Majority of the Court must have assumed that corporations are in some strong sense "real persons." How else could corporations be thought worthy of constitutional protections? As a matter of Constitutional law, though, the majority's argument was simply that the First Amendment applies to speech per se, not to the speech of men or humans or persons or anything else. Just speech. Ethically, I think the key is really that you can't limit the speech of corporations without thereby limiting the speech of the persons (executives, employees, and shareholders) who make it up. Corporations are instruments: legal "persons", yes, but also instruments or mechanisms by means of which real, flesh-and-blood humans achieve their ends. The Court's decision is worthy of support not because it helps make sure that corporations per se are able to express themselves, but rather because it helps make sure that human beings are not denied a mechanism through which they sometimes choose to express themselves.

3. Legal personhood for corporations is not new. It goes back at least hundreds of years. At heart, all it means is that the corporation exists as an entity separable (ethically and legally) from the human beings that work within it. GM exists today despite the fact that none of its founders or original employees is alive today. You can sign a contract with Apple, and Apple (as a legal person) is required to honour its warrantees, without you having to interact with every shareholder in the company. Governments and courts have, for centuries, seen the wisdom of allowing (and sometimes insisting) that corporations be treated as collective entities (in legal parlance, as "persons.") As I've argued before, there are good reasons Why Corporations Must be Legal Persons. Assigning some form of personhood to corporations (and churches and universities and unions and so on) is how we assign both rights and responsibilities to them. If corporations were not in some sense persons, they could not sign contracts and own property or do any of the other things that makes them useful to us. If corporations were not in some sense persons, you could not sue them when they do wrong. The piece of legislation that the U.S. Supreme Court declared, in part, unconstitutional — the Bipartisan Campaign Reform Act of 2002 — itself treats corporations as persons, since it imposes criminal sanctions on certain kinds of corporate behaviour.

4. Personhood is not a monolithic concept. The fact that the Court rejected some restrictions on corporations does not imply that corporations are now full-fledged persons in the same sense that competent adult human beings are. We have always recognized many different "kinds" of persons, with different sets of rights and responsibilities. Note that the rights and responsibilities of a child, for example, differ from those of an adult (even though both are persons). And the rights and responsibilities of a foreign tourist, for example, differ from those of a citizen (even though both are persons). The fact that corporations are regarded as a type of person does not mean that they're going to be accorded the right to vote next. And the fact that they don't have certain rights (e.g., the right to vote, or to adopt children, or to marry) does not mean they aren't (in some sense) persons.

In summary, I think the corporate-personhood issue is a huge red herring, here. It's a distraction. If you think (as I do) that there are specific rights that corporations shouldn't have, argue against those. Treating corporations as in some sense persons should be the beginning of a conversation about which rights and responsibilities we think they should have.

Free Speech: Means, Ends, and Citizens United

chris@businessethicsblog.com (Chris MacDonald) — Tue, 02 Feb 2010 13:37:00 +0000

(This is the second of 3 blog entries on the U.S. Supreme Court's Citizens United decision. Yesterday's was about what corporate citizenship requires in light of the decision. Tomorrow's entry will look at the decision from the point of view of the vexed notion of corporate personhood).

The U.S. Supreme Court's Citizens United decision was fundamentally right, it seems to me. I'm not a lawyer, nor a scholar of the U.S. Constitution, but from what I can see the decision was a sound one constitutionally. More importantly, for my purposes, the decision was the right one ethically. And as Glenn Greenwald at Salon rightly pointed out, you don't have to like all of the possible consequences of this decision in order to believe that it was the right decision. (See Greenwald's blog entry, What the Supreme Court got right.)

The law the Court struck down (the Bipartisan Campaign Reform Act or BCRA, and really the Court only struck down part of it) was problematic both in terms of ends and in terms of means. Ends vary in their moral worth, as do means; so, the ends don't always justify the means. Some ends of course are particularly worthy, and may justify just about any means. And some means are so clearly harmless that their use is ok regardless of what your goals are. Though most of us think that consequences matter, few of us think that absolutely any means is justified in pursuit of good consequences.

So, first, what were the law's ends, its objectives? The BCRA sought to limit corporate political speech, in order to limit the influence of powerful corporate interests in the political sphere. That first, immediate goal of limiting speech is of course worrisome in its own right, in any society that values freedom. The ultimate goal (limiting corporate influence) is problematic too. First, it's problematic because it's not really clear that corporate money actually exercises a catastrophic amount of influence. Indeed, some scholars have wondered Why Is There So Little Money in U.S. Politics? [pdf] (ht to Marginal Revolution). But more fundamentally, the goal of reducing corporate influence is only a good one for those who think corporate influence is (mostly? always?) a pernicious thing. That is, it requires that the corporate point of view is generally a bad one. And you're perfectly free to think that's the case. Certainly that's a conclusion reached by lots of people. But it's not a view shared by all. And ultimately the question is whether governments ought to be playing favourites, whether they should be deciding that certain points of view ought not be heard. I for one think there are individuals out there whose views are pernicious, and I would rather they not be heard. But that doesn't mean I want the government passing laws to prevent them from speaking.

What about means? What means did the law employ? In seeking to limit the influence of powerful corporate interests in the political sphere, the law basically made it a criminal offence for corporations and unions to spend money on independent political communications in the weeks leading up to an election. In this regard, the law was both overinclusive and underinclusive. It was overinclusive in that it applied equally to very small (even single-shareholder!) corporations and nonprofits. And it was underinclusive in that it limited the political speech of wealthy corporations but not of wealthy individuals: there are no limits on how much, say, Bill Gates or Warren Buffet is allowed to spend on promoting a political candidate. The relevant section of the BCRA was a bad means to achieve its supposed ends.

So, the law sought to use clumsy and intrusive means to achieve dubious ends. So the ends pretty clearly don't justify the means, here. When you're messing with fundamental rights — even when you're doing so in the pursuit of noble ends — the means you employ need to be pretty carefully targeted. From what understand, that is an acknowledged principle of constitutional law; it's also a pretty good ethical rule of thumb. That's why the Court's decision was right.

The US Supreme Court, Free Speech, and Corporate Citizenship

chris@businessethicsblog.com (Chris MacDonald) — Mon, 01 Feb 2010 17:20:00 +0000

Many of you are already aware of last week's controversial decision by the U.S. Supreme Court in the Citizens United case. Basically, the decision struck down a part of the U.S. government's law that limited the freedom of corporations (and unions) to engage in political speech.

But saying that you are free to do something is not the same as saying that you should do it or that there are no limits on the way you should do it. Ethics is, in part, about figuring out what limits we ought to accept on our own behaviour, beyond the limits imposed by law.

Here's a very useful piece that looks at the Citizens United case from that point of view, by Wayne Norman (of Duke University's Kenan Institute for Ethics), writing in The News & Observer: With 'citizenship' comes great responsibility:

For the foreseeable future, "corporate citizens" have a right to speak their minds and to spend as much as it takes to get you to hear their message.

But should they? Is it ethical to actually exercise these rights - for example, to spend money to try to defeat a candidate who would tighten regulations on the firm or its industry?

It is time to shine more light on a realm of corporate responsibility that tends to get overlooked when we are focusing on more obvious irresponsible behaviors like pollution, sweatshops or excessive risk taking....

Wayne goes on to suggest a couple of likely obligations, including an obligation on the part of corporate citizens to use their free speech rights in ways conducive to the public good, and an obligation to be transparent about their lobbying.

But I think the key contribution, here, is the idea that the Court's decision is not just a conclusion — it's the starting point for a (renewed) conversation about what a corporation's responsibilities are in how it exercises free speech in the realm of politics.

Should Consumers Take Sides in Labour Disputes?

chris@businessethicsblog.com (Chris MacDonald) — Sat, 30 Jan 2010 14:57:00 +0000

Should individuals or groups stay away from hotels (or other businesses) in the midst of labour disputes?

The Pacific Division of the American Philosophical Association is currently struggling with that issue — not as an abstract ethical question, but as a practical one. Basically, the hotel at which they were planning to hold their annual meeting this year (the Westin St. Francis, in San Francisco) is currently subject to a boycott being promoted by Local 2 of the union Unite Here. The union is not on strike, though they're in the middle of negotiations that apparently are not going well. (See details, including the Association's compromise decision, here: Statement on the Labor Dispute at the 2010 Conference Hotel.)

The situation faced by the APA raises the more general question: should associations like the APA, or consumers more generally, comply with this kind of union-organized boycott, either of a hotel or of another kind of business? Here are a few points to consider:

1. The first thing to note is that, in going along with the boycott, the APA would effectively be choosing sides in this labour dispute. And to take a side means determining (or assuming) that one side is in the right, and the other is in the wrong. But in a labour dispute, the most natural assumption for an outsider is to assume that the two sides simply want different things, and are engaged in what is (roughly) a zero-sum game: the union wants more (more money, better benefits, and/or more job security) while management wants either the status quo or to provide less of one or more of those things.

2. It's worth being clear about what the role of unions is. Unions are a mechanism of collective action. They are a way for labour to band together for more efficient and effective bargaining in the sale of their labour; this is in parallel to the way that equity investors (i.e., shareholders) band together to hire managers to (among other things) buy labour on their behalf. So a union is a way to further the interests of its members. (I've benefited substantially, for instance, from my membership in my university's Faculty Association.)

3. The APA faces this issue because at least some of its members take it as obvious that the Association should respect the boycott. The impulse to side with the union, here, might be grounded in a presumption that the union is in the right — perhaps that unions always or typically are in the right. Part of that might be rooted in particular philosophical points of view about economic justice. But certainly it's a point of view that accords nicely with a significant theme in popular culture. The general impression given in popular culture is that workers are powerless and corporations are powerful. They make movies about workers bravely uniting against a common, heartless enemy. They don't make movies about shareholders banding together to fight Big Labour.

4. It matters that the decision maker in this case, the APA, is an association, rather than an individual. Being an association complicates things in two ways. First, associations often have rules and policies, including sometimes foundational documents (a constitution or a set of by-laws), that to a certain extent guide (and sometimes determine) their behaviour. (The APA, for example, has a policy of only meeting at unionized hotels, though whether that policy applies to the current situation is a matter of interpretation.) Secondly, an association has members, who in many cases need to be consulted and asked for input. Ethical decision making for associations, then, takes on some of the trappings of political decision making (broadly understood).

5. For some people, the decision to support a union in its boycott will be easy, because their own preferences make it so. If you are an ardent supporter of labour movements, generally — if you take the successes of a union as your own successes, the way you might the successes of a friend or family member — then supporting such a boycott might seem a no-brainer. It doesn't necessarily require any restraint on your part. If, on the other hand, you are neutral or even antagonistic to unions generally, then the boycott presents you with an ethical dilemma. Assuming (as is the case for the APA) that you already have plans in place that involve using the hotel in question, then changing those plans means accepting some inconvenience, and maybe even significant expense. Normally, in the marketplace, we look to buy those things (and only those things) that meet our needs, and satisfy our preferences. Complying with a boycott may imply accepting a limitation on the pursuit of what's in your best interest. That, in a sense, is the hallmark of ethically-significant issues: they put constraints on the pursuit of what is most obviously in our best interest (narrowly construed).

6. Assuming that you neither a) assume that unions are always right, nor b) have a natural passion for unions and their causes (either of which might make the decision trivial for you) you need to make a decision about whether the union's case is morally compelling. The problem, of course, is that the relevant information is going to be hard to acquire. Accurate information is particularly hard to come by in the context of labour conflicts, which are characterized by dissimulation, exaggeration, and bluffing. Individual consumers, limited as they inevitably are in their information-gathering capacities, are going to find it incredibly difficult to sort through the labour equivalent of a "he said, she said" dispute. It may well be that this is among the more difficult domains in which consumers can attempt to engage in ethical consumerism.

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Thanks to Matt for alerting me to this story.

Haitian Tourism: The Role of the Profit Motive in Development

chris@businessethicsblog.com (Chris MacDonald) — Fri, 29 Jan 2010 16:09:00 +0000

I was on CBC Radio's "The Current," this morning, talking (still!) about the issue of cruise ships visiting Haiti. Here's the link to today's show (scroll down to the third segment, called "Haiti Cruises") or you can find the podcast here: Haiti Cruises.

The show included some useful comments from two other professors, (Rebecca Tiessen from Royal Military College who specializes in global development, and Brian White who is Director of the School of Tourism and Hospitality Management at Royal Roads University), both of whom had interesting perspectives on tourism and its contribution (or lack thereof) to developing nations in general.

Host Brent Bambury was full of great questions for me. My favourite was about the motives of companies doing business with Haiti. It's at the very end of the interview. Here's how the conversation went:

BB: Are you comfortable when you hear the CEO of Royal Caribbean, Mr. Goldstein, talking about his economic rationalizations for continuing to do business there — or do you hear, there, self-interest or a self-serving economic argument, at a time when really there's this whole other moral question?"

CM: I hope I hear his self-interested argument coming through. Because, you know, there are organizations in the world that do things because they have, you know, good intentions towards others. But an awful lot of productive work in the world goes on because people find a way to make a living for themselves, right? So I think what Haiti desperately needs, you know, is a bunch of companies that find ways to make money in Haiti, in ways that are going to also be beneficial to Haitians. That kind of profit-making opportunities are what's going to bring in companies that are going to provide jobs, provide export opportunities, things like that and I think that's what Haiti's going to need.

BB: It's the second part of the argument, though, 'In a way that will make benefits for Haitians,' that's the tricky part of the argument, because historically that hasn't been there.

CM: Yeah, historically that hasn't been there. There's been — I'm not an expert on the history — but from what, you know, most people know, it's a place that has had trouble in the past with achieving something like stable government and responsible government and those kinds of decisions haven't always been good. So what we need to be looking for then, is transactions that Haitians see as being in their own best interests, to the best we can tell that, right? So I'm at least somewhat comforted with regard to the cruise ships when I hear reported by reputable...you know, by objective third parties, journalists and so on, that by and large Haitians are saying, 'Yes, please, keep bringing the cruise ships — we see that as beneficial to us.'

Cruise Ships & Haiti (Follow Up)

chris@businessethicsblog.com (Chris MacDonald) — Tue, 26 Jan 2010 17:32:00 +0000

The issue of cruise ships visiting Haiti really struck a nerve last week...even made it to CNN. They interviewed me & quoted me in this story: Haiti cruise stops draw ire, support.

Those of you who recall my blog entry know that I think there was (and is) nothing unethical about cruise ships bringing tourists to the northern, non-disaster-stricken, parts of Haiti. The editors of the Globe & Mail agreed with me: Let the Cruise Ships Dock.

(And here's another good story on the issue, from New York Times: Haiti Cruise Stops: 'Without This, We Don't Eat'.)

Finally, here's an expanded version of my argument, published in The Mark: Disaster Tourism. (In this article, I also include some thoughts about the role of moral intuitions, and argue that some critics, at least, may in part be 'projecting' their own feelings of guilt onto the cruise-goers and cruise lines.)

Packaging and Cultural Norms

chris@businessethicsblog.com (Chris MacDonald) — Mon, 25 Jan 2010 14:06:00 +0000

A couple of weeks ago, I posted this picture, taken by a friend of mine at a Starbucks in Busan, South Korea.

The picture struck me as odd: why does a banana need a plastic wrapper? Seems unnecessary. But, as I pointed out at the time, Starbucks is a pretty smart company — they don't do much that isn't well thought out.

So I contacted Jim Hanna, Director of Environmental Affairs at Starbucks. He offered to find out the answer for me. And the answer: cultural norms. Apparently, according to Starbucks Korea (via Hanna) cultural norms in Korea dictate that "premium" produce be individually packaged.

Now, it's easy enough to understand a company wanting — both for ethical and for sheer marketing reasons — wanting to be sensitive to local norms. We don't want multinationals barging into countries and simply assuming that everything will be the same as "back home."

But surely "cultural norms" aren't always going to trump. After all, for years it was a cultural norm in North America to drive a big, big car and not to care about gas mileage. For years, it was a cultural norm to toss tin cans into the garbage, rather than recycling them. Those aren't the kind of norms that deserve respect; there are good arguments against those norms, arguments that have by and large been persuasive.

Norms can and do change. Sometimes what it takes is a company that's big enough to nudge cultural practices in a better direction, and to lead by example.

Business As Usual (plus Price Gouging) in Parts of Haiti

chris@businessethicsblog.com (Chris MacDonald) — Sun, 24 Jan 2010 13:42:00 +0000

Business ethics is mostly about the extra-legal rules that apply in the world of business. Though the study of business ethics often involves thinking also about what sorts of laws and regulations ought to apply to commerce, for the most part business ethics takes for granted a more-or-less-stable set of laws, a background against we ask questions like, "Yes, that's legal...but is it ethical?"

Business owners in Haiti, right now, don't get to think about things that way. From what I understand, for all intents and purposes, there is no stable, generally-enforced body of law in Haiti right now. There may be a nominal government, but the importance of that is more symbolic than practical. And Haitian law-enforcement agencies leave much to be desired on a good day; post-disaster, they've got their hands much more than full maintaining even small pockets of law and order. The enforcement of laws governing commerce is presumably not a terribly high priority.

This opens up a whole range of interesting questions about what ethical rules apply to business in the absence of law and order.

For an interesting glimpse at the world of retail as found in Haiti this week, see this story from The Ottawa Citizen: Decadence amid devastation. One interesting bit of the story raises a clear business ethics issue, namely price gouging:

About 30 per cent of gas stations in Port-au-Prince have opened, and officials say there is no longer a fuel shortage. But prices have tripled from pre-earthquake levels.

Now, huge increases in the prices you charge to desperate people during an emergency may seem like an ethical no-brainer (and in most places in North America, for example, it's against the law). But ethically it's actually not so straightforward. My friend Matt Zwolinski has argued, for example, (in "The Ethics of Price Gouging" Business Ethics Quarterly, Volume 18, Issue 3) that many instances of price gouging should not, in fact, be thought of as unethical. I won't rehearse Matt's entire, carefully-laid-out argument here. But basically he argues that price gouging isn't always coercive or exploitative (though it sometimes is) and that to forbid price gouging may a) be unfair and b) have very bad consequences. It may be unfair in that it puts a heavy burden on merchants, who in time of crisis may face exceptional challenges and additional expense in obtaining anything to sell in the first place. (And note that many merchants, especially in a place like Haiti, may be far from wealthy themselves). And forbidding price gouging may have bad consequences for all concerned if it leaves merchants with little choice but to close their doors and stop providing goods to consumers in a time of need. Now, that's an abstract argument about price gouging in general, not a defence of any particular instance of price gouging. But it's thought-provoking, and serves to remind us that many ethical issues — particularly ones related to people's behaviour in an emergency — are more complex than they appear at first glance.

One last thought about perceptions and appearances and moral judgment.

Take a look at the opening paragraphs of the story quoted above:

While tens of thousands of Haitians struggle in horrific conditions, it's business-almost-as-usual at one store in the Port-au-Prince suburb of Petionville, where fresh vegetables, meat, cheese and wine are available to those with money to spend....

At the Big Star Market in Petionville, a relatively affluent Port-au-Prince suburb, Jean Robert Lebrun emerges from his first grocery trip in 11 days with half a dozen baguettes under one arm and bags of rice and cooking oil under the other....

That bit alone makes Mr. Lebrun sound downright spoiled. Baguettes? Bags of rice? Wine and cheese? This is Haiti we're talking about, right? The place where people are bleeding and starving? How (one might jump to ask) can anyone eat so lavishly while their neighbours are starving?

The answer: that's not what's going on here. But you have to read to the end of the story to find that out:

Lebrun's home was "completely destroyed" by the earthquake, and his street was so choked with rubble that he could not drive out until Friday. There are 25 neighbours living in his tree-covered garden. They have no shelter. But they have a charcoal stove and, now, a few items of relative luxury.

"So far, no one has come to help. We need tents, and so far we can't find them," says Lebrun, who had planned to return to Big Star later Friday with more cash. "Before the tremors, my wife had made provisions for a month. So that is why we have been able to help the people."

This is not a story of greed or insensitivity. It's a story of generosity and compassion. The lesson: it's dangerous to reach conclusions based on incomplete understanding of the facts. Sometimes, we need to reach conclusions quickly because the need to act is pressing. But when it comes to judging the actions of people in the middle of a crisis, from the comfort of our armchairs, we are obligated, I think, to exercise caution.

Cruise Ships and the Crisis in Haiti

chris@businessethicsblog.com (Chris MacDonald) — Mon, 18 Jan 2010 18:44:00 +0000

Cruiselines have been taking heat for continuing to bring tourists to Haiti. Critics have thought it unseemly for wealthy vacationers to be enjoying sun and sand on an island currently in a state of deep crisis.

See this article by Robert Booth, writing for The Guardian: Cruise ships still find a Haitian berth

Sixty miles from Haiti's devastated earthquake zone, luxury liners dock at private beaches where passengers enjoy jetski rides, parasailing and rum cocktails delivered to their hammocks.

The 4,370-berth Independence of the Seas, owned by Royal Caribbean International, disembarked at the heavily guarded resort of Labadee on the north coast on Friday; a second cruise ship, the 3,100-passenger Navigator of the Seas is due to dock.

The Florida cruise company leases a picturesque wooded peninsula and its five pristine beaches from the government for passengers to "cut loose" with watersports, barbecues, and shopping for trinkets at a craft market before returning on board before dusk. Safety is guaranteed by armed guards at the gate.

The decision to go ahead with the visit has divided passengers. The ships carry some food aid, and the cruise line has pledged to donate all proceeds from the visit to help stricken Haitians. But many passengers will stay aboard when they dock; one said he was "sickened"....

Is there anything wrong with cruise lines continuing to do business with Haiti? I have to admit that, at a visceral level, I have some of the same reaction critics have had. There's something a bit 'off' about having fun in the sun while others are suffering so near-by. It's a bit like having a picnic adjacent to a funeral. It seems tacky. But is there anything wrong with it?

First, it's important to note that Royal Caribbean is donating $1 million to the relief effort. When its ship docked in Haiti for passengers to enjoy the beach, it also dropped off "Forty pallets of rice, beans, powdered milk, water, and canned foods ... and a further 80 are due and 16 on two subsequent ships." So, the cruise company is doing a lot of good, both by contributing to the Haitian economy (by bringing tourists who spend money, for example) and by making philanthropic contributions. Now, that in itself doesn't automatically make it OK to continue bringing tourists to Haiti during the crisis. Maybe the contrast between wealthy vacationers and desperate Haitians is just too repugnant to be overcome by mere money. Maybe it's too much like waving a hundred-dollar bill in a poor man's face and then giving him a dollar. Maybe.

But is it really plausible to say it's wrong to have fun (or make money by taking people to have fun) "too close" to poverty and desperation? It's hard to imagine making that a general rule. Should poor countries be scratched off our list of places to spend our vacation dollars? That's hard to imagine, and it's hard to imagine a principle that would let you distinguish between Haiti this week and, say, Brazil or Mexico or Trinidad & Tobago. And it's worth keeping in mind that Haiti itself is a terribly poor and deeply troubled place at the best of times. It's the poorest country in the Western hemisphere. It's per-person GDP is about 1/36th that of the U.S. It's #14 on the Fund for Peace's 2009 Failed States Index. So, if it's unethical for cruise ships to patronize Haiti's ports this week, what about next week? Next month? Next year? When will Haiti be sufficiently stable that wealthy vacationers can feel OK about visiting (and about thereby contributing to the Haitian economy)?

I think it's important for the world to know that Haiti is, in at least some small way, still open for business. And I think it's worth a bit of awkwardness to send that signal.

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Once again: here are a couple of great links for helping the situation in Haiti right now (without having to book a cruise)...
World Food Programme and
Médecins Sans Frontières (Doctors Without Borders)
(If you choose to give to another organization, make sure you find a reputable one. But please do give.)

Haiti, Credit Cards, and Charitable Donations

chris@businessethicsblog.com (Chris MacDonald) — Sun, 17 Jan 2010 21:25:00 +0000

Are credit card companies morally obligated to waive their fees when people use their credit cards to donate to disaster relief, or is doing so itself a charitable act, something above and beyond the call of duty?

I think it's great that the major credit card companies have all decided to waive their fees — but I think it's important to acknowledge that as an act of charity. It's an act of corporate philanthropy, not something they're obligated to do. (The move to waive their fees came, unfortunately, after the firms were criticized for making money off the current crisis.)

Here are a couple of quick points to consider, if you're tempted to think that these companies are ethically obligated to waive their fees, rather than profiting from this terrible situation.

1. Shouldn't companies that find excellent ways to help in disasters be rewarded, at least by being allowed to charge their normal fees for their services? The credit card companies are of enormous importance to the people of Haiti at this point: the very existence of these companies means that millions of people like you and me can help financially with a few clicks of a mouse. Indeed, the services these companies provide (even were they to charge their standard fees) are probably more important to Haitians at this point than any single charitable organizations is. And as far as profiting from a bad situation goes, well, that's not exactly uncommon. Lots of companies profit from human misery, and I'm glad they do. They profit because (with some notable exceptions) they're providing a genuine service. Drug companies make lots of money because people get sick. Insurance companies make money because people fear fire and theft and disability. And so on. Credit card companies are far from unique in this regard. They provide a huge service in times of hardship, and deserve to profit from doing so. So, forgoing such profits is an act of charity, not an obligation.

2. What makes this event unique? Don't get me wrong: it's a horrific crisis, and anyone who can help should do so. But if credit card companies are obligated to waive fees for charitable donations to Haiti right now...what about donations to Haiti last year, or next year? It is, after all, the poorest country in the Western hemisphere, in constant need of help. Should facilitating donations (without charging fees) always be considered the minimally decent thing for credit card companies to do, instead of generous and morally praiseworthy? Should all charitable donations (to all charities? in support of all causes?) be underwritten that way? Some people do apparently think that companies should never profit from charitable donations. But again, that seems to undercut the huge amount of good that credit card companies do by facilitating charitable donations. (I for one know that I donate more often, to more charities, than I otherwise would, just because Visa lets me do it so easily online.)

So: a big "yay!" for Visa, Mastercard, American Express, and Discover for waiving their fees and thereby helping the people of Haiti. But that's "Yay, good corporate philanthropy," not "Yay, they're foregoing evil profits."

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While I've got your attention: here are a couple of great links for helping the situation in Haiti right now...
World Food Programme and
Médecins Sans Frontières (Doctors Without Borders)
(But of course the most important thing really is not that you choose one of those, but that you find a reputable organization and give.)

Packaging Gone Bananas?

chris@businessethicsblog.com (Chris MacDonald) — Fri, 15 Jan 2010 16:08:00 +0000

A friend of mine took this picture recently at a Starbucks in Busan, South Korea.

My first reaction when I saw it was, "What the....?!" Why does a banana need a plastic package? Isn't the banana already our most perfectly-packaged fruit? After all, a banana peel is relatively tough (certainly tougher than thin plastic wrap) and easy to open. It's water-proof, and easily keeps dirt of the delicate fruit inside. What's with the wrapper? Wouldn't a Starbucks-logo sticker and a best-before date sticker be enough?

On the other hand, Starbucks isn't stupid. Packaging costs money, and if there weren't a good reason (at least from their point of view) to stuff a banana into a plastic wrapper, they wouldn't do it. And they're a relatively environmentally-conscious company: they are at least alive to environmental issues, and they know that big companies like themselves are liable to be prime targets when they make poorly-thought-through decisions.

Does anyone know the actual reason for this packaging? Is the reason, whatever it is, a good justification, in an environmentally-conscious age?

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(Thanks, Zack!)

Employee Wrongdoing: Drawing the Line

chris@businessethicsblog.com (Chris MacDonald) — Wed, 13 Jan 2010 18:45:00 +0000

Should companies ever tolerate unethical behaviour in the workplace? Never? What about really small stuff? What about really important employees? How strictly should they monitor employees? Won't intense scrutiny hurt morale?

Here's an excellent piece on just those questions, by Vadim Liberman, in the Conference Board Review: Workers Behaving Badly

This article is written for workplace miscreants who steal from, lie to, bribe on behalf of, and deceive their bosses and businesses. Not you, of course. Not only is the angel on your left shoulder restraining Satan on the other side—page thirty-four in the company manual forbids such hijinks.

But ask yourself: Have you ever slipped a pencil from your desk into your purse? Ever surfed the Internet in the office to check the score of this afternoon’s game? Dropped a holiday package in the mailroom outbox? If you answered no to all the above, congratulations! You’d be the ideal ethically pure executive—that is, if your no weren’t an outright lie.

Oh, come on, you might be thinking—it’s just a pencil....

The article cites a number of relevant considerations (including a few in quotations from me). The one I think particularly worth highlighting is the distinction between ethical infractions that only affect the company (e.g., petty pilfering from the supply cabinet) and those that affect outsiders (e.g., exaggerating expenses that are then billed to clients). It seems to me that companies (and hence managers) are within their rights to be more or less as strict or as lax as they want, when only the interests of the company are affected. That's not to say they couldn't make more- or less-wise ethical decisions in that regard; it's just to say that, well, it's their business, and that gives them the right to some latitude. But when employees do unethical (or illegal) things that affect those outside the company, if the company allows the behaviour (explicitly or implicitly condoning it) then it essentially becomes an action of or by the company. And in that case, the company itself is acting unethically.

(By the way, this is one of the finest piece of ethics journalism I've seen in a long time, and not just because it quotes me. It's thoughtful and well-researched. The whole thing is well worth reading.)

Jeffrey "The Insider" Wigand: Inner Journey of a Whistleblower

chris@businessethicsblog.com (Chris MacDonald) — Sun, 10 Jan 2010 15:01:00 +0000

Most of you will have heard of Dr. Jeffrey Wigand, or will at least have heard of the movie, The Insider, that chronicled Wigand's harrowing experiences as a tobacco-industry whistleblower.

Most of you will not know, that Wigand is still involved in the fight against Big Tobacco. More specifically, he's the head of a nonprofit foundation called Smoke-Free Kids.

You also may want to know that Wigand will be appearing this Tuesday (January 12th) on the internet radio show Ethics Talk. The title for that show will be: From Knowledge to Action: An Interview With Jeffrey Wigand.

It's good to know that one of the few true celebrities of business ethics is still involved in trying to make the world a better place.
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(You can follow Wigand on Twitter, here: @jeffrey_Wigand.)
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Measuring the Value of Executive Pay

chris@businessethicsblog.com (Chris MacDonald) — Sat, 09 Jan 2010 16:31:00 +0000

Here's a very useful piece by economics prof Thomas F. Cooley, writing in Forbes: The Real Bank Pay Scandal.

Cooley notes (and sympathizes with) the pattern of outrage over executive compensation. But he also reminds us that, when designed properly (which it isn't always) compensation packages are designed to give executives incentive to build long-term shareholder value. That's why, for example, the modern trend is towards paying CEO's predominantly in stock options: it aligns the interests of CEOs with the interests of shareholders.

Of course, CEOs are humans, and humans are complicated. Motivating them is not straightforward. So different companies use different combinations of salary, stocks, stock options, and other perks. Well-organized Boards of Directors have "compensation committees" set up to figure out how best to incentivize senior execs, and there are consulting firms available to offer advice.

Well, how well do firms generally do? Cooley's research (with his colleague, Gian Luca Clementi) suggests that, over all, CEO compensation is in fact pretty strongly correlated with gains for shareholders.

The first figure shown below is a plot of net shareholder gain in billions of 2005 dollars (the horizontal axis) against total compensation in millions of 2005 dollars (the vertical axis) for CEOs of all publicly traded companies...
What one would hope to see in such a plot is that the observations would lie in the lower left and upper right quadrants, which by and large they do. ...There are some [exceptions] and one can identify them by name, date and company. The important point is that there are very few.

So, with a few exceptions, it looks like firms are doing pretty well at aligning executive compensation with the interests of shareholders. But in an age characterized by massive government bailouts, that's not the whole story. Cooley's concluding paragraph:

At the heart of the anger about bankers pay is the very legitimate concern that the bankers and their shareholders and debt holders benefit from a subsidy paid for by taxpayers--the subsidy that is implied by the notion that they are too big to fail. That subsidy empowers them to take bigger risks and earn bigger returns for themselves and their shareholders with all of the down side risk born by Main Street. That is the real outrage.