Contributing Author – Monday Morning Business Ethicist

Can Dom Cobb (Leonardo DiCaprio) find honor and redemption as an industrial infiltrator? In the 11th chapter of a newly published book, Inception and Philosophy, I argue that he can . . . though only in his dreams.

Perhaps Dom has no choice in being a corporate spy and is not responsible for his actions. He may be considered honorable because of his professional expertise, or admirable devotion to family. I root for the “hero” too, but find Dom both unethically and recklessly irresponsible for violating principles of freedom.

Are we not all morally flawed and in need of redemption?

If you enjoy thinking about Inception, you’ll like this collection of 22 edited essays covering the various ethical, metaphysical, and religious themes of the film.  You can find Inception and Philosophy at Barnes and Noble, and sneak a peak at Amazon.com.

Monday Morning Business Ethicist [MMBE]: You operate Mexican maquiladora(s) for major U.S. sporting good brands. What are maquiladoras? Can you compare and contrast these factories with their Asian and South American counterparts.

Ms. Jennifer Walton [JW]: Mexican Maquiladoras are factories exclusively owned by foreign companies. Mexico does not own any part of these ‘shells’ or possess any fixed assets. While products technically could be sold in the host nation, everything produced at the plant naturally returns to the original country; otherwise duties and taxes are assessed. These arrangements are distinct from the partnerships and subcontractors one finds in the East and other manufacturing countries.

MMBE: How has the North American Free Trade Agreement [NAFTA] affected your business?

JW: NAFTA is beneficial for employees and our suppliers. Those against NAFTA do not (or refuse to) understand that many American companies compete in a low-margin market. Not only would we need to move our operations from Mexico to Asia, we would no longer be able to buy our American materials and pay the high union wages in the United States without NAFTA.

MMBE: How is international business done in Mexico?

JW: Foreign firms are highly regulated, constantly audited and fined, and are seen as cash cows for the government. Although Mexican companies are subject to the same laws, they emphasize ‘loyalty’ relationships and are less regulated with the Peso.

MMBE: Is the actual threat of drug cartel violence analogous to the stereotypical image of Californians always experiencing earthquakes and Midwesterners constantly dealing with tornadoes?

JW: The threat is definitely real. The violence heard on the news is usually a battle over territory between cartels. Kidnapping Mexican executives (as a business) is a billion dollar industry. Two years ago, I hired Israeli guards due to the cartel’s infiltration of the security industry. I still keep them currently on the payroll; the workers expect them around—whether in the Mexican factory or Maquiladora.

MMBE: Why choose Mexico (with the significant higher costs) over other places in the world?

JW: Maquiladora workers are backed by the Mexican government and embrace a family-oriented working environment. This stability brings efficiency and lower costs in the long run. Also, if something goes wrong, Mexico is a short drive and the country poses less of a communication barrier. You have more control.

MMBE: Is the disparity between laborer wages and the price of an NFL jersey justified?

JW: Everyone in the supply chain wants their piece of the profit pie. The negotiation process with big companies is brutal, and sometimes we sacrifice a run as a loss leader. Honestly, I would not tell the workers the price of an NFL jersey. Americans are willing to pay that price; it’s simple supply and demand.

MMBE: Any final reflections on business ethics?

JW: Reality doesn’t tend to be ethical and you need to hold your ground. If you belong to an unethical company, that black mark will follow you.

Prospective institutional cover-up for act(s) of sexual abuse allegedly committed by head football coach Joe Paterno’s former defensive coordinator and charges of multiple subsequent infractions have already brought down Penn’s State organizational leadership and storied football program. Will the Nittany Lion’s devotion to a winning culture and Paterno’s subscription to resilience and ‘enduring adversity’ eventually parallel Enron’s obsession with profit at any cost and adherence to their former CEO’s ’survival of the fittest’ principles?

The developing scandal emits conflicting emotions: I am torn by the outpouring of support for an 84-year-old legend who has earnestly dedicated himself to building a long tradition of winning with integrity without the infamous scandals often associated with a major college program. I am sad for these young, innocent boys who would not have experienced further horrors if someone in power had pushed the issue. Properly evaluating a rapidly developing news story is difficult; determining the relevant ethical considerations may represent the best next step i.e., the distinction between law and ethics, and the connection of responsibility to leadership.

Corporations like Enron were familiar with the law; they knew how to exploit and profit from it. University President Graham Spanier and Head Football Coach Joe Paterno met all legal requirements and will not be tried in a criminal court. The ethical question is whether they failed to meet their moral duties and obligations as human persons. Even more so—in their de facto roles as leaders, figureheads, and guardians in their community—greater responsibility is often associated with greater privilege. What personal responsibilities do individuals have beyond their specific job descriptions? Is an act of omission as heinous as the sin of commission?

The university has decided in the best interest of ‘business’ to relieve Spanier and Paterno of their responsibilities. Further clarity is needed before passing judgment on whether Penn State shares a similar aura of hubris with Enron. Even without the pride, their indecision produces greater consequences than even the dissolution of a major corporation.

In the business of uncovering the truth in the digital age, this game will have no winners. Prayers, comfort, and support to the victims and their families.

A repeated criticism of Steve Jobs focused on Apple’s lack of philanthropy in relation to his contemporaries. While the question of whether corporations must give away part of their profits follows naturally from a stakeholder view, let us set aside the larger business ethics concern for a more personal question.

Jobs’ lack of what Aristotle called liberality (generosity) provoked the continued accusation that he was less moral or ethical than his peers. Public generosity is praiseworthy but, as a sole moral criterion, represents a limited view of morality. By broadening the Greek notion of ethics [from ethikos toward ethos], we find character, moral structure, a harmonious relationship between parts, and an accustomed place. Jobs was a private individual and we may never know the amount or lack of financial giving behind the scenes. However, we do know the public impact he made on our collective ethos:

He structured the way we relate to music and each other, helped organize the relationship between information and the disparate parts of our lives, and offered us a shared, accustomed place to express ourselves within the confines of his technology.

Those who have followed Jobs over the years will make no claims of sainthood; in fact, his leadership style was often reported as ruthless and borderline abusive. This “artist” certainly is not an ethical archetype in the traditional sense. But one thing he has done is help modify the ethos for how we live life (whether we own an iProduct, an Android OS device, or “refuse to participate”) in this revolution of time and space. The way our world is structured is no longer the same, and for this grand contribution to ethics, Jobs may be considered (per Aristotle) a magnanimous albeit morally-complicated man.

During a lecture hosted by our university’s engineering department, I was introduced to the Paradox of Design:

The lessons learned—from historically massive engineering failures such as steamships (Titanic) and suspensions bridges (Tacoma Narrows Bridge)—lead to success in future innovations; however, successful designs can evolve into eventual failures.

Dr. Henry Petroski, Professor of Civil Engineering and History at Duke University

If the Titanic had not struck an iceberg, bigger ships with fewer lifeboats would have been built. If the Narrows Bridge’s retrofitted cables had not snapped, thinner and lighter bridges without trusses and stays would have spanned the world’s waters. According to Petroski, “When something just works, we may not know how close we stand next to failure.”

I see clear parallels between these engineering disasters and the collapse of the financial sector. Economic institutions incrementally moved from investing in sound traditional strategies toward speculations in creative derivatives; initial success invited additional risk exposure. Philosopher Bernard Williams coined a notion of ‘Moral Luck,’ where the same act can produce wildly different outcomes, and praise and blame are assigned for partially uncontrolled circumstances. In this lucky or unlucky world, the Titanic does not hit the iceberg; Tacoma still has their bridge; the housing bubble has not burst . . . disaster is momentarily delayed for a much larger breakdown.

Yet while continued success can pave the way for larger failures, I’m not a Luddite who opposes progress. Engineers and economists need to take creative and innovative steps in design and application. Of course, ethical foundations are often found lacking. Increased regulation always follows tragedy and failure, resulting in a better artifact, community, or corporate structure for the short term. Ultimately, a well-established prior corporate ethos (structure/character) frames the proper boundaries and appropriate risks in future decision making—especially in times of success.

Thanks to Professor Petroski for connecting the history of suspension arches to design theory; and to my father for showing his son the buildings and bridge(s) he helped design as a structural engineer.

Is business ethics about etiquette or keeping a strict moral code? As a business ethicist, am I simply a good behavior appraiser? The answer is yes . . . but not just that. While the field of business ethics includes the creation and enforcement of regulations, morality judgments tend to be considered at minimum legal and ethical levels.

The mere identification of immoral behavior is often unproductive and ineffective. A Ph.D. in business ethics is not required to decide that Bernie Madoff’s multi-billion dollar Ponzi scheme is wrong. Professional business ethicists are not needed to confirm that the reward from Munich Re, the world’s biggest insurer, of prostitutes to top sales representatives is unethical. What’s interesting and useful is exploring the respective issues affecting companies on a daily basis−such as moral hazard (risking someone else’s property without taking on the associated responsibility) and how incentives affect corporate morale and production−in order to offer concrete reflection and practical solutions.

Our field excels in looking at acceptable business practices and economic systems requiring further analysis, including marketplace dilemmas which don’t have obvious answers. What are the benefits and drawbacks of capitalism and conservationism? Are sweatshop labor and outsourcing obvious evils? Should transcendent principles or “When in Rome . . .” govern international trade?

Many people believe that business ethics is a contradiction in terms at worst and an unenforceable set of real-world rules to live by at best. While improved individual behavior is a worthy goal of business ethics, a broad business ethical vision incorporates critical marketplace reflection at the systemic, corporate, and personal levels with realistic moral and economic change.

The debate centers around the intrinsic right to own non-tangible, creative ideas. According to traditional patent, trademark, and copyright laws, intellectual property represents real ownership of intangible assets. Dissidents like Richard Stallman−a software freedom activist−argue that intellectual property creates a ‘bias’ toward property rights by confusing non-physical monopolies with ownership of physical things.

Regarding the creation of Facebook, courtroom and journalistic evidence shows no formal contract between Zuckerberg and the Winklevosses . . . only interesting and entertaining “dorm-room chit-chat.” A mere week after beginning what Zuckerberg referred to as ‘the dating site,’ he started working on a separate ‘Facebook’ project. Zuckerberg appears to have considered the two as competing for the same users’ attention, but also seems to have regarded them as different in key ways. While Zuckerberg does appear to have intentionally strung along the twins with the goal of making his own project the more successful launch, the Winklevosses $65 million lawsuit settlement seems more than fair−especially considering that the entire dispute took place over two months in 2004 and that in the years since, Zuckerberg has built Facebook into a massive global enterprise.

The Winklevoss twins are demanding that the case be reopened not for money but for honor. If there is no such thing as intellectual property rights, then there was nothing to steal and additional demands represent mere ego and greed. If intellectual property represents real ownership of intangible assets, then the battle between information highway robbery and issues of gentlemanly agreement should return to the top of Facebook’s News Feed.

Update: the Winklevoss suit against Facebook was thrown out by a federal judge in Boston as reported on July 22, 2011.

The philosopher Immanuel Kant reminds us to ask whether we are treating persons (customers) as a means to some end (profits) or as ends themselves (patients). When push comes to shove at medicine’s financial margins, decisions tend to lean toward monetary gain. Efficiency and profits are needed components of every venture (even Kant says not to use people as a means only but as a means as well as an end). Yet this move from taking care of patients to customers—while promoting friendlier hospital environments—may be damaging to the health care system in the long run.

The Hippocratic Oath has been condemned for promoting a ‘guild-like’ environment and its ancient author set aside in the hope of adopting the examples of other tightly managed industries (ironically, some business academics call for managers to take on the guild-like professionalism of the medical field). While some combination of treating patients as a means and as an end is probably acceptable, it seems that the customer/consumer metaphor is being adopted wholesale.

To Hippocrates, a physician’s first consideration was to use his/her art for the patient’s well-being—a re-emphasis that can benefit all stakeholders. Otherwise, this move to make the medical environment more patient-friendly has the potential to make it ultimately more vulnerable.

Written in conversation with Cory Wilson, M.D.

Statistics

A Boeing 747-400 passenger jet can hold 416 passengers. Readers viewed this blog 3,000 times from its launch date in May 2010. That’s about 7 full 747s.

From May, there were 12 new posts. The busiest day of the year was June 3rd with 72 views. The most popular post that day was Should Shopping Carts Stay or Should They Go?.

Referrals, Searches, and Attractions

The top referring sites in 2010 were facebook.com and moodle.csun.edu.

Visitors came searching for Miranda Priestly, stakeholder theory, Karate Kid, corporate espionage, and Avatar.

These are the posts that got the most views in 2010.

1.Should Shopping Carts Stay or Should They Go? May 2010

2.“Show Me the Marijuana!” November 2010

3. Human Sex Trafficking is Wrong July 2010

Thanks for reading the Blog!

It was interesting to note how various constituencies lined up on California’s largest cash crop. The teacher’s union supported the recreational use of marijuana anticipating the ensuing taxes pouring into public schools. Beer distillers and small pot growers were worrisome over the ‘Wal-Marting of weed,’ and sought to wipe out the prospective competition. Law enforcement was mixed: some officers backed the initiative as they desired to diminish the cartel influence and decrease the prison population to focus on more violent offenders. Some were primarily opposed to the recreational use of marijuana on moral grounds. Still other departments were against the proposition because of the prospective loss of a profitable source of income (sales from the seized pot derived from their raids represent a substantial source of the budget particularly in difficult economic times).

The limits of government constraint on individual autonomy (cf. John Stuart Mill) may actually comprise the core issue in Proposition 19. However, there was relatively little evidence of this concern in current political discourse while following the greenbacks. Yet the business ethics question does not rest in simply dividing self-interest from ethics (pace Adam Smith) but in considering the economic benefits as part of a nuanced, principled plan to control a trade in need of regulation. One thing is for certain in that like war and politics−especially in this economic climate−weed makes for strange bedfellows.