Business Ethics (honest work texkbook)

Schimmel (greed)

Avoid greed or the inordinate pursuit of money. It will set you at odds with others or make you a slave to money. Greed. Greed can make you a slave instead of setting you free. Ex. Steve Jobs. (now, his window is trying to donate to charities to make up for his lack of interest in others. Scrouge. CHAPTER 15 THE GOOD LIFE

Walzer (tyranny and complex equality)

CH. 4 JUSTIC AND CORP. ETHICS

McFall (Integrity)

Integrity is essential to a good life. The Olaf Principle: see p. 592. Have to have some principles that are identity-conferring commitments. These can't be compromised or you lose your sense of self. Betrayal of friends Integrity. The Olaf principle: (there is a limit/line you won't cross) "There is some shit that I will not eat." Having integrity means that there are limits to what you will do. If you go past those limits, you have lost yourself. Identity-conferring principles: Ex: defense contractors, scam call center, attorneys for known criminals (the mob) CHAPTER 15 THE GOOD LIFE

Machiavelli (the prince)

Leaders have to lie and be deceptive in order to succeed. You should appear to have all virtues (honesty, mercy, faith, etc.) while actually doing whatever you have to to maintain power. "The Prince" The Prince has to lie and be deceptive if he wants to be successful. Fox and lion Fox: sneaky, sets traps Lion: terrifying, scare Others will not be honest/fair with you, so you have no choice But, the smart prince will hide what he is doing. Appear loyal but stab people in the back when needed to. Do unto others because they will do unto you. CH. 2 THE GOOD LIFE

Nozick (anarchy, state, and utopia)

Libertarian. Should state interference be allowed for the sake of distributive justice (making sure goods are divided up justly in society)? He thinks it's misleading to talk that way because there aren't goods just lying around waiting to be divided. We have to make the pie and our choices effect that all the way through. Instead, he talks about Justice in Holding, which has 3 parts. (1) Justice in acquisition (2) Justice in transfer (3) Rectification of injustice. Know what those are. Shouldn't reallocate what people have earned unless there was a problem with how they got it (1 and 2). Anarchy, state, and utopia. Libertarian, only a minimal state is going to be just. You need to justify state interference, especially when it comes to distributive justice. So often, when people are asking about distributive justice they are assuming that there is a pool of G&S's and resources just laying around waiting to be divided. Justice in holdings and justice in transfer. Holding has to do with the original acquisition or development of a good. Justice here has to do with how the "pie" (product) was actually first created. Justice in acquisition. Transfer: has to do with how the holdings (stuff) get transferred to another. Justice in transfer. The rectification of injustice. How do you fix it if someone got or transferred goods unjustly? Must make a lot of assumptions about what would have happened if the injustice had not occurred. CH. 4 JUSTIC AND CORP. ETHICS

Ekman and Frank (lies that fail)

Lies fail because of the liar's behavior. There are thinking problems (forgetting what you said or contradicting yourself) and emotional problems (hard to control your reactions when you lie). Being in a situation where lying is expected makes it easier. Lies often fail because of the liar's behavior Two main causes: 1. Not developing a good enough lie. Becomes contradictory, you forget what you said, can be obviously false, hard to stand up to questioning. 2. Not controlling one's emotions well enough Subtle physiological changes, emotions happen in a split second, guilt is a strong response. The reaction varies from person to person. Also, there are cases where bluffing is expected, so the guilt may not arise -- authorized lies. Having an anonymous victim makes it easier to lie. (spam callers, eBay sellers) CH. 2 THE GOOD LIFE

Frankfurt (on bullshit)

Lying is different from bullshitting. BS is faking it and generally involves a whole storyline. BS isn't necessarily lying. It is more like bluffing in a game. Bullshit. Lies are simply false, but BS is basically faking it by appearing to be true but not necessarily being entirely true BS: usually a whole storyline. "Creative" meant to be persuasive. CH. 2 THE GOOD LIFE

Tragic Optimism

Make the best of any given situation, even if you can't achieve Success. Faced with pain, guilt, and death: the tragic triad Turn suffering into achievement Turn guilt into the opportunity for improvement Turn death into a call to responsible action Turn the possibilities in even the worst situation into something you can be proud of. Ex: miracle league CH. 15 THE GOOD LIFE

Carr (is business bluffing ethical)

Makes an analogy to poker. Business is like a game in that bluffing is perfectly within the rules, and everyone knows going in. You must follow the rules, but you do not have to tell everyone. It's not like your personal life. Bluffing. Lying in business is different from lying in your personal life. View business as a game like poker. Nobody expects full truthfulness, so it's not immoral if you bluff. It is an impersonal game, do, and But: there are still rules to the game. The business game presupposes distrust and ignores friendships. Follow the laws and respect public opinion IF it is strong enough to affect your business. It is all about winning in a harsh, competitive world CH. 2 THE GOOD LIFE

Breining (the 1%: how lucky they are)

Makes an argument to show that the free market does not in fact give An opportunity to all. He talks about how the rich get richer and that capitalism always leads to oligarchy. He thinks this concentration of wealth is unfair and leads to instability, is a danger to democracy, and provides less long-term growth. He thinks the wealthy got that way by chance and should give a lot of their wealth back. Rich get richer, poor get poorer The top 1% own 40% of total wealth He considers that to be excessive He claims there have been studies that show that the people who make it in our society are really just lucky. He thinks this luck is unjust and will lead to instability in society. He thinks the differences in POWER that great wealth leads to are dangerous to democracy. CONCLUSION: it is not fair for people to benefit so much from what is mere chance. So we should take a lot of the money back. CH. 4 JUSTICE AND CORP. ETHICS

Epicurus (on pleasure)

Aim for pleasure and being free from disturbance. Avoid pain and fear. Can be hard to do both. "wealth consists not in having great possessions but in having few wants" Pleasure: a life aimed at satisfaction but not just about immediate pleasure (food, sex, sleep) P. 587: health of body and the soul's freedom from disturbance. Think long-term. "Pick your pleasures well, or you will live to regret it." CHAPTER 15 THE GOOD LIFE

McEntee (comparable worth: a matter of simple justice)

Concerned about wage discrimination against women and argues for the need for comparable work laws. He gives a good example of overcoming counterarguments to make his point. He obviously is an example of someone advocating social justice ideas: the government needs to step in and make sure that outcomes (wages) are equal. He thinks it's just simple justice. Women are paid less than men. Government should intervene to fix this problem: comparable work laws Objection 1: the problem isn't discrimination, it is that women have less seniority, experience, less training. So they should not get paid the same McEntee claims that even when you remove those factors, there's still a significant pay gap Objection 2: if we have comparable work laws, the free market will be upset and we'll have a whole new government bureaucracy in place. But: we already have a bunch of regulations, labor laws, and such. The free market hasn't exactly withered away. We just need to enforce the laws. Objection 3: you can't compare apples and oranges. Different jobs really can't be compared. But: we compare apples and oranges all the time. (Cals, nutrition, flavor, weights, color, etc.) Factors: training, experience, working consciousness, responsibility, etc. Objection 4: it will cost too much. But: evidence supports the claim that it will only raise labor costs by about 4% (not that bad). Besides, fairness is what is important. Objection 5: having comparable work laws enforced will lead to women remaining in female-dominated fields instead of moving into male-dominated ones in order to get ahead. It will perpetuate segregation. But: segregation is already there and the issue is fair compensation and when comparable work laws have been instituted the facts suggest that women actually do move into male-dominated fields anyway CH. 4 JUSTICE AND CORP. ETHICS

CASE 12.2 Ruth Capriles (Rags to riches to rags)

Discusses the Pemon people in Venezuela and their leader, the captain. Shows his rise and ultimate fall as he tries to support his community. CH. 12 THE GOOD LIFE

Bok (defining secrecy- some crucial distinctions)

Distinguishes between lies and secrets. There are always degrees of openness and concealment in human interactions. Secrecy allows you to control information and allows for human autonomy (what we are, what we intend, what we do, what we own). It can be misused, so think about equality (everyone lives by the same standards) and privacy. Defining secrecy. distinguish between lying and keeping secrets Secrets: any kind of information that is deliberately concealed or hidden from others. Privacy, economic advantage, politics... Some seem good, others not so much. Privacy: implies some sort of personal space that needs to be respected and/or applied to groups or whole nations In interpersonal relations, there are always degrees of openness. The issue is CONTROL over information. There are consequences when information is shared—no capacity for secrecy. You are controlled by others. Secrecy and privacy are essential to human autonomy. There are 4 aspects to this autonomy: 1. Identity: what we are 2. Plans: what we intend to do 3. Actions: what we end up doing 4. Property: what we own But, secrecy can also be misused. It can allow for cheating, harming others, concealing wrong-doing, shielding you from useful criticism. Suggests two ways to separate the good from the bad: 1. Equality: everyone should live by the same rules 2.Privacy: when it concerns matters ,central to our private, personal lives the presumption should be for secrecy. CH. 2 THE GOOD LIFE

Greenleaf (servant leader: a journey into the nature of legitimate power and greatness)

Distinguishes those who want to lead to serve others and those who just want to lead. Servant leadership... 2 different approaches to leadership. Why someone becomes a leader Servant leader: want to be a leader so that they can help others Serve others first and use leadership as a way to do that. Other-oriented. Leader - leader: wants to lead and helping others comes later as an afterthought. Want the power. self-oriented Servant - leadership style is better because followers will grow as people: healthier, wiser, more autonomous, more moral and the least in the community will be less likely to be harmed It's hard to know ahead of time how your actions will affect others for sure, but the servant leader is more likely to make better decisions. Machiavelli contradicts Greenleaf (2 different points of view) CH. 12 THE GOOD LIFE

Dunfee (corporate governance in the market with morality)

He contrasts the monotonic and pluralistic views of corporate purpose (shareholder vs stakeholder theories). He looks at the cases of Merck and Shell Oil. Current law won't solve the debate between these two worldviews. Instead, he wants to look at Marketplace Morality, the basic moral norm in current society. He gives us 4 principles: (1) corporations should make money (2) managers must recognize how marketplace morality can affect profits (3) rule 1 can be overridden if marketplace morality justifies it (4) managers must respect hyper-norms regardless of the cost as long as they can defend their decision. Looks at the debate between shareholder and stakeholder theories Conflicting political and moral views or corporations and their legitimate goals Monotonic view: Smith, Friedmann: maximization of shareholder wealth, usually immediately But: always with the assumption that laws will be followed and basic morality upheld Pluralistic view: Nader and many others: there are a large number of other interests that are legitimately appropriate for a corporation to consider maximizing Employees, consumers, environment, local communities, bondholders, suppliers. CSR Merck: Mectizan: Developed it and then had it to give it away since the people couldn't pay for it Shell Oil: decided to sink an old rig in the North Sea Led to major protests. Lost money Wanted to do this because it was less damaging to the environment Did they do anything against the law? The actual costs and benefits of any corporate action can be very difficult to foresee The law by itself is NOT going to tell us what is right or wrong in these cases Market morality: the prevailing moral views of the society Does market morality determine whether we should focus on shareholders or stakeholders? Market morality right now does seem to be in favor of stakeholder theory Hence, a company needs to pay attention to it in order to maximize profits There are also major theories that can come into play 4 principles: Prima facie duty is to maximize shareholder wealth Unless 2,3, or 4 apply This duty can be overridden Managers must respond to, anticipate and understand how to market morality will affect the bottom line Managers should get to know the moral landscape around them Figure out who is relevant Figure out what they believe Make changes to accommodate that If there is clear evidence that market morality justifies a change, it is okay If the manager is acting in step with market morality, he or she can take actions that don't necessarily maximize profits Managers must respect relevant hyper-norms You should follow these even if doing so prevents you from maximizing profits Managers can act on their moral standards without feeling that they are violating their duty to shareholders CH. 13 JUSTICE AND CORP. ETHICS

Aristotle (on the good life)

How to define happiness (living well and doing well): Not just pleasure, not just social success, but an activity of the soul in accordance with virtue in a complete life. Plan your life and choose wisely. Humans are rational and self-directed and should act that way. Q: "What is happiness (eudaimonia)?" A: "Happiness is a life of virtue as well as pleasure, friendship as well as excellence in whatever it is you do. But it is not as if one simply achieves this through luck or good fortune or good upbringing (although all these may be a big advantage). Happiness is the result of practical wisdom and understanding. It is the result of planning." Insists that a little money is essential to living a good life Happiness is the greatest goal we can aim for. It generally means living well and doing well. How to define that --- (1) Pleasure. Do what feels good and avoid pain. ("that's how my cat lives") (2) Political success, really social success. Being well thought of. The problem is that it isn't in your control. (3) An activity of the soul in accordance with virtue in a complete life. Making a plan, choosing wisely, aiming to be the best person we can be over a complete lifetime. CHAPTER 15 THE GOOD LIFE

Ciulla (meaning work and lives)

Humans are seekers and makers of meaning. Meaning comes in our relationship to what we do and how we do it. Thinks employers are obligated to provide employees with the means (energy, autonomy, income, will) to find meaning at work or home. Meaningful work. People seek meaning, look for it and assign it. Job: in and of itself, a job isn't significant. It depends on the relationships it involves and creates. Employers are obligated to provide at least some of the requirements for finding meaning in work. Pre-conditions. Provide work and compensation that enables employees to have the energy, income, and will to create meaning in their lives and work. CHAPTER 15 THE GOOD LIFE

Arrow (social responsibility and economic efficiency)

One of the things people assume about the free market is that businesses always pay fair market value for their goods/services. He questions whether that is so: (1) assumes that there are no limits on competition, (2) assumes that large inequalities of wealth don't matter. In addition, (1) firms don't always pay the full cost of their operations (eg. Pollution), and (2) companies have information not available to others that would affect what they would pay for a product. Need social institutions to deal with this sub-optimization: legal regulations, taxes, legal liability, professional ethical codes. In a free market, businesses will always pay the full/ fair cost of doing business and will always get a fair market value for their G&S. this claim has some assumptions: 1. It assumes there are no limits on competition (monopolies) 2. It leads to large inequalities of income which will have effects on the social structure. Two additional cases where organizations in the market breakdown: 1. There are cases where the firm does not in fact pay the full costs of its business. Pollution, infrastructure 2. The consumer often does not have full knowledge about the product and therefore can not make a rational decision about whether it is the best/most preferable thing to have. Because of these organizations, we need social structures in place 4 institutions needed: 1. Legal regulations (laws: emission control, a counting rules, disclosure rules, safety standards OHSA) 2. Taxes (force companies to pay the full costs of doing business) 3. Legal liability (allow folks to sue) 4. Professional ethical code (AMA, professional engineering, bar associations, etc.) A Lot of economic activity relies on trust. CH. 5 JUSTICE AND CORP. ETHICS

Ciulla (exploitation of need)

People can still be exploited even if they freely choose to take a job if they have no other option. Talks about traditions of self-enslavement. John Locke: claims others have a right to someone's excess property if it keeps them from having to give up their freedom in order to survive. Consider how much freedom and human dignity an employer can morally justify paying for just because someone is willing to sell it. Monkey labor case. Employers are paying for the use of our freedom, not some product, actually. Exploitation of need. America is the land of opportunity and options. But... History of self-enslavement. Is it really a free choice if you have no option to survive otherwise? She says the same thing happens even today as folks are forced to take dangerous jobs in order to feed their families. Are there limits to what an employer can reasonably and justly ask of an employee regardless of whether the employee would have to agree to it? Monkey Labor example: the monkey loses its freedom, but is given food, shelter, and basically a higher standard of labor. Does that justify taking away the monkey's freedom? This colonialist view assumes that managers know what is best for everyone. P. 144 summary of her view RR3: freedom of opportunity, wage determine by law CH. 4 JUSTIC AND CORP. ETHICS

Smith (on human exchanges and human differences)

People exchange things with each other because it serves their self-interest. They specialize in order to do that more efficiently and get more for everyone. People can't be expected to cooperate in exchange unless it benefits them. Father of capitalism. The individual is primarily moral. The community comes after, as a result of the free choices of individuals to join together. We join together to get the benefit of sharing the load. If it weren't in our self-interest we wouldn't work with others at all. Division of labor: it is more efficient to divide up the work and specialize. Natural differences between people (talents, intelligence, strength) are very small and the differences we see today are simply the results of the division of labor. Everyone ends up better off through this division of labor. RR3: what the market will bear CH. 4 JUSTICE AND CORP. ETHICS

Ciulla (work and values)

Personality traits: ants, bees, and grasshoppers. 4 main values to consider: (1) meaningful work, (2) leisure, (3) money, and (4)security. "Success in business, by contrast, is usually the dessert of people who know who they are, what they are doing, and why." Referring to Aesop's story (ant and grasshopper), "it does not say that a life of work is better than a life of singing, but rather that if you want to sing, you have to be willing to pay the price." "The issue here is self-sufficiency and fairness-- if you don't work, you don't eat, and you shouldn't expect others to feed you." " You can lead a brief happy life of the grasshopper or the long prudent life of the ant. Yet it is not wholly clear what the wise person should choose." " Life would be empty if we could not engage in activities that were good in themselves and not driven by necessity." "To seek meaning, one has to feel like a human being." "The most distinctive thing about having meaningful work is that it energizes one's life as a whole." Contrasts Ants, Bees, and Grasshoppers. Figure out who you are and what you believe because that will determine how you act. Ants: hardworking, plan for retirement, cautious, seeking security, mostly looking out for self and family Bees: work for others and self, doesn't hurt flowers, communal attitude. Grasshopper: leisure and uncertainty, live for the season/moment. 4 MAIN VALUES: need to balance (1) work that is meaningful/useful (2) leisure, being able to do what you want to do (3) money --- security for now (4) security for later CHAPTER 15 THE GOOD LIFE

Ciulla (the moral pitfalls of being a leader)

She identifies 2 major pitfalls of being a leader: getting a swelled head (believing you are special) and the dirty hand's problem (needing to do things that are immoral, particularly when none of your choices is good). Leadership is a relationship between leader and followers Not a job title. Power, mutual agreement, moral obligations Leaders should have the same moral standards as their followers, however, leaders can cause more damage if they do the wrong things. (1) Leaders often feel like they can do anything because they've been given more money, power, and respect. BEWARE OF EGO (2) Leaders really should not want to be leaders: have to put others' interests first. We distrust leaders who want to be leaders because we suspect they want to take care of their own self-interest. Dirty hands problem: you may have to sacrifice your own ethical beliefs in order to get the job done. Guilt: the leader will have to live with the guilt CH. 12 THE GOOD LIFE

Parker (corporate social responsibility and crisis)

Talks about Adolf Berle and the rise of the New Deal. Argues that corporations are the result of government action and that therefore the government needs to regulate them to protect all the stakeholders. Adolf Berle and the new deal Saw financial power had become connected in the hands of a few hundred companies. Managers were no longer constrained by the stockholders and the system failed dramatically He claimed that these large corporations were never created by the free market in the first place. In Adam Smith's ideal model, they would never have come about. The government has allowed these unnatural entities to arise and hence needs to control them. These companies create imbalances in the moral process of supply and demand and hence need to be regulated. The free market itself would be protected by government intervention. Enlightened administration. CH. 5 JUSTICE AND CORP. ETHICS

Reisner (when does the CEO just quit)

Talks about how CEOs may become less motivated as their pay is cut. Recommends ways to watch out for that and compensate for it. She's worried about them feeling threatened or not appreciated or not trusted Point: it may depend on HOW they are reined in. Need to improve the morale of these high ranking leaders: Improve relations with the little people Visit them, accept blame, get feedback, etc Having BOD praise him Hiring a motivational coach CH. 13 JUSTICE AND CORP. ETHICS

Marcoux ( business ethics gone wrong)

Talks about shareholder theory vs. stakeholder theory. See his definitions. 3 objections to stakeholder theory. (1) It will discourage equity capital. (2) It will decrease managerial accountability. (3) It will cause inefficiency due to special interest groups wrangling. Argues against the stakeholder theory Stakeholder theory comes out of the corporate social responsibility theory. CSR: corporations are free-riders who benefit selfishly from communities they work in without giving anything back, hence, they need to redeem themselves by doing good and not caring only for profits. 3 objections to this theory: 1. Equity capital. Investors will not want to invest in companies anymore if they don't make the most profit possible. Driveaway investors. Companies will then need to borrow money instead, which is an inefficient way to do business. End up with a poor, static, risk-averse economy 2. Managerial accountability. Managers will be even harder to control and keep from being self-serving because they will be able to hide their true motivations by claiming to support some stakeholder or other. Easy to hide when you have many masters. 3. Interest group politics. Corporate boardrooms are going to become political arenas. With so many interest groups all vying for a bigger piece of the pie, nothing will get done efficiently. Net result, a lower standard of living for all. CH. 5 JUSTICE AND CORP. ETHICS

Friedrick von Hayek (justice ruins the market)

Talks about social justice and other concepts of justice. Older ideas of Justice views it as a set of general rules, but with individual freedom to decide on particular goals. Social justice has a set of general rules, but also a set of specific goals, determined by an authority, that we all must meet. Hayek thinks that social justice will limit not only our freedom but also our ability to think creatively and progress. He is concerned with the rise of special interest group lobbying. Concerned about the rise of social justice as a competing view of justice from capitalism Social justice = totalitarianism Distinction between 1. Justice is a general set of rules people must follow but with lots of individual choices about how to set goals 2. Social justice seen as not just a set of rules but as a set of specific outcomes The first kind allows for greater freedom and creativity. It will lead to innovations. The great society Specials interest groups or identity politics People always want more for themselves. If they can't get it from a free market because that has been taken over and controlled by the government, then they will lobby the government to get more for themselves Allowing these special interest groups to gain so much power will be detrimental to anyone who doesn't fit into one of them This will limit innovation CH. 4 JUSTICE AND CORP. ETHICS

Argenti (corporate ethics in the era of millennials)

Talks about the era of the millennials and how their ethical sensibilities will affect corporate actions. Friedman would be wrong to say that following the needs of CSR will lead to lower profits. Because millennials want this kind of corporate action, it will make good business sense to do it. Millennials. Argues against Friedman, who said that being concerned about and spending money on social justice will lead to lower profits. Millennials expect a company to pay attention to social justice ( environmental concerns, employment practices). Since millennials make up the biggest chunk of consumers, a company can only make maximum profit by catering to them. The fair market is not an objective matter. If you give the people what they want, when they want, you make money. CH. 5 JUSTICE AND CORP. ETHICS

Machiavelli (is it better to be loved or feared?)

The leader must be effective and get things done. Because people aren't very trustworthy, you must be prepared to break faith with them and lead by fear in order to be successful. The prince: the biggest issue is always being effective How to be effective is primarily understanding the people you are leading. People: are dishonest, greedy, should never turn your back on Trust is always misplaced. You never try yo be loved, but rather be feared Harsh consequences for not doing what you want Avoid being hated! Be a fox couching your demands in ways that avoid making it obvious what you are doing The best way to avoid hatred is to not mess with people's women or property Break promises if you have to but make it seem like it's all in their best interest CH. 12 THE GOOD LIFE

Friedman ( the social responsibility of business is to increase its profits)

The people who own businesses and hire the managers basically want to make money. The business leader is responsible to them and for using corporate resources to make money. Spending corporate money for anything else is like imposing a tax on the employees and customers who have to bear those costs. Managers who act on these demands of social responsibility assume that the socialist idea that political goals and not market forces should determine how resources are spent. But they have no legitimate authority or special knowledge to make that reasonable. It also comes down to a difference between freedom in a capitalist society or conformity in a socialist (social justice) world. companies aren't moral agents to start with. The people in business are responsible only to the people who hire them. Managers must see for the good of their employers. Corporate leaders are paid to see to the benefit of the company, not any other issues. Using corporate funds and resources to further other goals besides profit is a kind of theft. His analogy is to a tax No taxation without representation (un-American) Managers should not act like public employees. They don't have the knowledge to make such decisions wisely. They have the moral authority to make such decisions anyway--- a matter of force. If the owner of a company wants to spend money on social goods, that's fine. Most of the time, when corporations do good --- they are just looking to make a good name for themselves and thus make more money. Hypocrisy anyway. This hiding of self-interest behind social responsibility is actually very damaging. It gives the impression that making a profit is somehow bad and not honorable. Distinguishes between capitalist justice and social justice. Capitalist: free choices, market forces, minimal government. Social: equality, government intervention, conformity. CH. 5 JUSTICE AND CORP. ETHICS

Kristol (capitalist conception of justice)

There are different definitions of justice and some of them have presuppositions inherent in them that are at odds with capitalism. Social justice is like that, with a fundamental presumption that egalitarianism and government intervention are essential to justice. Capitalism does not share those assumptions. Equality for capitalists is equality of rights and before the law. Equality for social justice means equal economic outcomes. Capitalism will never guarantee an equal outcome, but Kristol believes all will be better off. For Kristol, everyone's economic success depends on how much they contribute to society as determined by the free market. That is justice as defined by capitalism. If someone can't compete, there is room for charity to help them. Having Government step in and redistribute money never works, he thinks, because you always run out of money. The authoritarianism in social justice assumes that the government can know what everyone deserves. Kristol thinks that is unlikely. There just isn't the sort of perfect authority or perfect society that social justice assumes is possible. The capitalist system provides a better chance at a good life. A capitalist conception of justice Justice can only be defined by reference to what a person views as a good society. Capitalist vs social justice Social justice: egalitarianism and authoritarianism Capitalism: equal opportunity and individual free choices Egalitarianism Everyone should end up with the same income, standard of living, etc. Equal outcome. - Capitalism - Everyone should have opportunities that are equal w/out any institutional restrictions. No governmental limitations on who can get what. Kristol thinks that the capitalist view is more likely to make everyone better off, although not equally so. In a capitalist society, people will earn and have a standard of living based on their contributions to society, as determined by the free market Justice means letting the market decide who gets what based on all the different choices people make. Unfortunately, some don't have much to contribute Charity takes over where capitalism leaves off. Business leaders aren't just business leaders, they are also part of the community and part of humanity The reason people don't agree with this is that in the 19th century there were some harsh thinkers who basically told the lower classes to stop having children because they were a burden to society. In reaction, Kristol says they wanted a redistribution of wealth to fix the apparent injustice. You always run out of other people's money when you set about redistributing wealth. Authoritarianism There should be no significant distinction between the public and the private. The government ought to be heavily involved in all aspects of society Assume govt. Can have the sort of knowledge and judgment to decide what everyone merits. Kristol thinks that is highly unlikely, so leave it to the market to decide Capitalism Need both public and private sectors The private sector is needed to allow for all those free choices that drive the economy and create wealth in the 1st place CH. 4 JUSTICE AND CORP. ETHICS

Stone (why shouldn't corporations be socially responsible)

Thinks corporations should be socially responsible. He goes through 4 reasons why the anti-responsibility position (Friedman) is wrong. (1) It isn't really a promise to the stockholders to aim only for profit, (2) managers aren't really the agents of the stockholders, (3) managers are restricted by their role to only pursue profits, (4) while acting to maximize profits may maximize well-being for the society, there are cases when managers must act in order to make sure the corporation does the right thing. People in ordinary life are often asked to give up some of their freedom for the greater good. Why not business people? Friedman's position is wrong: 1. The promissory argument: supposedly, the corporate executives have made a promise to the stockholders to pursue profit. Generally speaking, you make a promise you should keep it. BUT: stockholders really don't have a very strong relationship to corporate leadership. Even if it were a promise: it does not mean doing absolutely everything possible to make a profit. Promises can be broken if there is a higher good at stake 2. Agency argument: corporate leaders are merely agents of the shareholders and thus must act as faithful agents. BUT: stockholders don't in any real sense select or control the managers. You would expect the shareholders to be telling their agents what to do on a regular basis. Also, why are corporate leaders only agents to the stockholders, why not also constituencies? 3. Role argument: because of the role corporate leaders have in the corporation, they have a specific obligation to pursue profits alone. Fiduciaries: As such, they can't line their own nests or waste the company's money. This is true up to a point. BUT: (a) managers won't ever be spending so much on community projects that will affect the bottom line much --- so it will never rise to the level of constituting a legal issue for the manager. (b) there can be higher moral claims than fiduciary ones. (c) the fiduciary responsibility of the manager to the shareholder is actually less than their fiduciary responsibility to other stakeholders. The shareholder can easily remove themselves from connection to the company. Employees of the local community can't just up and move so easily. 4. Polestar argument: when managers act solely to maximize profits, they are also most likely to maximize the well-being of all of us. Mill's utilitarianism. Profits make an objective measure of well-being. Ok, that has merit. BUT: there are instances where the law and its limitations on the free market are simply not going to be competent to prevent corporate mismanagement. The manager must step in these cases to prevent harm to others. Professor example: technology and how fast it changes. Tobacco industry with special knowledge of the damage and not doing anything about it. CH. 5 JUSTICE AND CORP. ETHICS

Solomon and Flores( building trust)

Trust is essential to business and involves a lack of control over the other person. It is a social practice that creates & depends upon bonds between people. Lying destroys trust and in a competitive business world, customers and employees will just go elsewhere. Building trust. Trust is essential to business, but it is poorly understood. Even feared. Trust involves a lack of control over other people -- letting them make choices and have autonomy. Risk. Trust isn't just something it arises as people work with each other, a social thing. A WAY OF LIVING. Social practice. P.56 thesis quote The point of wanting trust in business is not merely efficiency (which would be a phony, manipulative way of doing it), but because of the bonds between the people, it engenders. Authentic trust. Contrast that with several other kinds that are different from authentic trust. Authentic trust has been thought about where the risks are considered and yet trust is chosen. Trust of a child: blind, not really chosen or thought about. Trust of a stubborn person: not really thought about, just held onto out of habit or stubbornness. Trust of someone who lives in a very secure society: not thought out, just assumed. Very low level. A whole range of human interactions is involved in authentic trust. It is not limited to contacts. Because authentic trust is at the heart of all human relationships, it is essential to long-term business success. CH. 2 THE GOOD LIFE

Nadar, Green, Seligman (who rules the corporation)

Wants a complete restructuring of the corporate system based upon the idea of having checks and balances as we do in government. Board has the power to establish procedures to make sure law is followed, approve/veto major actions, hire/fire officers, and report to stakeholders. They will hire compliance officers, review decisions, determine compensation, etc. They will be full-time, with a complete staff. Board will be elected in such a way that it is beholden to no one, but represents the interests of many different stakeholders. 9 board members suggested. Ultimately, there should be public elections for actions that affect the stakeholders. The myth of corporate officers being controlled by the board of directors and shareholders Step 1: return power to the board of directors. As if they are a separate branch of government Powers: Establish and monitor procedures that assure the operating exec are informed of and obey applicable federal, state, and local laws. Approve or veto all-important exec management business proposals such as corporate by-laws, mergers Hire and dismiss the CEO and be able to disapprove the hiring and firing of the principal exec of the corporations Report to the public and shareholders how well the corp has obeyed the law and protected the shareholder's investments Review important decisions Determine compensation Require community impact statements before changes are made BOD: a whole new class of directors: professional experts with high salaries who will hire their own staff at company expenses Corporate counsel, auditors, compel record-keeping,: point is to keep the corporate leadership honest and doing the right thing What about the cost of all this? The BOD system will pay for itself in terms of avoiding conflicts of interests and waste. In any case, it's worth it to prevent lawbreaking, conflicts of interest, inefficiency, harm to workers/consumer/public Election of BOD: Recommend that there be about 9 directors each withs pacific tasks Employee welfare Consumer protection Environmental protection/ community service Shareholder rights Compliance with law Finances purchasing/ marketing Management efficiency planning/ research These 9 experts will have to vote on every decision and will be required to act for the benefit of the company as a whole. None of these directors may work for the company as an officer. They cannot work for any other company at the same time How will we make sure the directors are competent? Well, make it a rule that qualifications are the main determinant in the election. surely shareholders will want to vote for competent people How will we find enough qualified directors? If we just look outside of the usual pool we will find plenty How do we prevent boards from becoming stale? Term limits How are these people nominated and voted on? The company pays all election costs. Any person with 1% or greater voting stock or 100 people in their interest group can nominate up to 3 directors Any group with about 10% of voting shares should be able to nominate their own director. New role for shareholders: Shareholders will have to be more involved with the company bc of this new system of electing board members If 3% of shareholders or 3 of the directors think there is a big problem, they can call a public referendum. The citizens will then decide what to do. CH. 13 JUSTICE AND CORP. ETHICS

Shapiro ( power and accountability: the changing role of the corporate board of directors)

Wants a more measured response to corporate wrongdoing than Nader. Corporations are larger than ever; they aren't owned by the same people that run them, and society expects them to do more for the community. But, they aren't really like governments, and regulations & market forces can constrain them to a large extent. He gives his own view of how a stronger board of directors could help prevent corporate mischief. Mostly, he wants more oversight, but without all the strict rules of a Nader. There have been cases of corporate wrong-doing, but those are better handled in a less draconian way. People want more control over corporations: where really large corporations make mistakes, the people notice and feel affected. They feel that the private corporation isn't really just private anymore; There are so many large corporations: admire and fear them Corporations are not run by specific owners anymore but by diffuse shareholders and managers Society simply expects more corporations BUT: businesses aren't like governments. A govt. Answers only to itself. Corporations answer to the government. , the consumer, social pressure, competitors, employees, and stockholders ALSO: government regulations have worked to a large extent ALSO: corporations do have to answer to the public already. Forces of competition Shapiro wants corporate leaders to pay attention to all the things the CSR folks want, but voluntarily. Corporations should not be forced to comply with a specific set of social goods. How should corporations divide up the responsibilities of decision-making? Managers get to make all decisions except: BOD: determining broad policies, performance standards, selecting company officers, reviewing management's performance, and communicating to stakeholders. BOD: must be active and present. Full time. Professionals. Skilled. Must not be represented by only one interest group. If you hire reputable people, you'll get a reasonable result. If you hire immoral people, no rules are going to keep you safe. CH. 13 JUSTICE AND CORP. ETHICS

Rawls (Justice as Fairness)

What rules would free and rational people in an ideal state of equality choose to set up? 2 principles follow: equality in basic rights/duties, inequalities in social/economic standing must benefit all including those at the bottom. Rationality requires these rules. So society should follow them now. Justice as fairness. An ideal state of equality between people. What would people who are free and rational actually agree to in such a perfect state of nature? What rules of society would they agree to? Veil of ignorance. You don't know where you will be in this society or what talents you will have or what opportunities. 2 principles will be chosen under these conditions: 1. There must be equality in basic rights and duties. (freedom of speech, religion, etc. duty to protect country) 2. Inequalities of social standing or economic standing are only acceptable IF AND ONLY IF they lead to benefits for everyone, especially at the lowest levels - rationality requires these rules. You would be irrational to agree to anything else. - RR3: law set wages, equal, fair CH. 4 JUSTIC AND CORP. ETHICS

Solomon (strategic planning)

You have to plan for living a good life. Can't do that unless you determine what your needs, your ideals, and your dreams are. He gives you a list of questions to ask yourself. - " but the essentials of the good life remain remarkably constant: friendship, family life, and time to enjoy it, a sense of fulfillment, the respect of one's neighbors and self-respect besides, the basic comforts of life, good health and the "good things that money will buy." Need to know yourself. "A Plan for the good life means, first of all-knowing your needs, your ideals and aspirations as a human being." CHAPTER 15 THE GOOD LIFE

Russel (Impersonal Interests)

You need to have some impersonal interests in your life, or you can become Fanatical. Fanatics focus on one or two things and can commit all sorts of injustices because they forget all the other values in life. "one of the sources of unhappiness. Fatigue and nervous strain is an inability to be interested in anything that is not of practical importance in one's own life." "However important a worry may be, it should not be thought-about throughout the whole of the waking hours.." " A little work directed to a good end is better than a great deal of work directed to a bad end...." Impersonal interests. Essential to a meaningful life. Only being concerned with self leads to exhaustion. Fanaticism. (being concerned with only one or two things to the exclusion of all else) Life isn't just you, and you can be unjust to others if you forget that. BALANCE CHAPTER 15 THE GOOD LIFE

Ludwig and Longnecker (The Bathsheba syndrome: the ethical failure of successful leader)

discusses the story of David and Bathsheba as a cautionary tale for leaders. David loses strategic focus, has privileged access, has control of resources, and believes he can control outcomes. They use a matrix to show what went wrong (the Bathsheba Syndrome) and develop lessons for leaders and boards of directors. The Bathsheba syndrome David and Bathsheba story from the bible. David's success actually leads to gis downfall. A warning to us all Loses strategic focus. He rested on his laurels. He just enjoys his leisure time as a reward. He's not where he should be. Has the time to get in trouble Has privileged access. Easy to be tempted and so now he's got the time and the inclination to get into trouble Has control of resources: servants, others he can order about also has money, etc. power seduces Bathsheba, who was married to Uriah. Pregnancy: cover-up Belief in control of outcomes: thinks he can control what will happen because he's been successful and has all these resources. Over-confident. He's sure he can control the situation to get away with his adultery. Controls Uriah and the other generals Refer to p.454: a leader needs 2 and 3, but not if you add 1 and 4 Success can come at the cost of an unbalanced life and loss of touch with reality. Dark side: loss of contact with family, adrenaline junky, swelled head, meaninglessness Lessons learned: Leaders need to be doing what they are supposed to do You will be tempted. Look out for it Unethical actions are choices that put personal gain above institutional need Unethical actions generally implicate others Cover-ups make it worse \getting away with it for a while will only make it more likely you will do it again Getting caught has huge implications for everyone, even the innocent Recommendation for leaders: Remember it could happen to you Live a balanced life. Reduces the likelihood of being tempted by the dark side Your job is to provide strategic vision and leadership, which is never done. Your power is given so you can do that, not as a reward Surround yourself with other ethical people Remember that once lost, good leadership is difficult to regain Recommendations for the board of directors: Make sure the leader is finding balance in their life Watch the leader. Audits, ombudsmen. Check for bad behavior Establish clear codes of conduct and enforce them Be proactive. Think ahead. Try to understand what causes unethical behavior and cut it off at the pass CH. 12 THE GOOD LIFE