Business Ethic 1-11

Whistle Blowing

"An employee' *informing the public* about the *illegal or immoral behavior* of an employer or an *organization*."

Tragedy of the commons

"the commons"- that is, to the public or communal goods like air, water, and wilderness- *problems arise as the result of individuals and companies following their own self-interest.* --> In the tragedy of the commons we have the reverse of Adam Smith's invisible hand: *Each person's pursuit of self-interest makes everyone worse-off.*

Ethics

*"Moral principles that governs a person or group's behavior"* (Moral Philosophy) Deals with individual character and the moral rules that govern and limit our conduct. It investigates questions of right and wrong, duty and obligation, and moral responsibility.

Distributed Justice Principle

*EIPSM* - To each an *equal* share - To each according to *individual* need - To each according to *personal* effort - To each according to *social contribution* - To each according to *merit*

Externality/Spillover

*It is the difference between private industrial cost and public social costs * --> Proponents of the broad view having problems with spillovers because it requires society to absorb these costs --> In viewing things strictly in terms of private industrial costs, business overlooks spillover

Puffery

*Supposedly harmless use of superlatives and subjective praise in advertising* Example: "Worlds best..." "Best.. Ever!" "The most effective" Usually a statement not visual "Hyperbolic language" → shows excitement but is very vague (best pen.. what does that really mean?)

Problem with Egoism

- Not really a moral principle at all - condones blatant wrongs

Distributive Justice Favors...

..whichever economic system will bring the most good for society as a whole

Arguments against affirmative action:

1. *White men* feel that their *rights are being infringed* upon 2. Some say you *can't achieve equality by treating people unequally* 3. some say all we need to do is not discriminate not go the opposite

Utilitarians View on Product Liability

1. Advocates contend that only such a policy will *induce firms to bend overboard to guarantee product safety* 2. Contends that the manufacturer is *best able to bear the cost of injuries due to defects* instead of the consumers

6 Type of Deception in Advertisements:

1. Ambiguity 2. Weasel Words 3. Concealment of Facts 4. Exaggeration 5. Puffery 6. Psychological Appeals 7. Subliminal Advertising

Relationship with Law and Ethics

1. An action can be illegal but morally right 2. An action that is legal can be morally wrong

Two arguments for capitalism

1. Capitalism reflects people's natural right to property 2. Capitalism is the most efficient and productive economic system because things take care of themselves. You end up producing what you need → supply and demand/Invisible hand

4 Features of Capitalism

1. Existence of Company's 2. Profit Motive 3. Competition 4. Private Property

3 Arguments of Narrow View

1. Invisible Hand 2. "Let government do it" 3. Businesses can't handle it

Whistleblowing can be justified when:

1. It is done from an *appropriate moral motive.* 2. The whistleblower,except in special circumstances, has *exhausted all internal channels* for dissent before going public. 3. Whistleblower has *compelling evidence that wrongful actions* have been ordered or have occurred. 4. The whistleblower has acted after *careful analysis of the danger*: How serious is the moral violation? How immediate is the problem? Can the whistleblower point to specific misconduct? 5. The whistleblower has some *likelihood of success*.

Arguments against capitalism

1. Poverty and inequality challenges the fairness of capitalism and its claim to advance the interest of all. 2. Capitalism reinforce materialism and offer no higher sense of human purpose 3. Capitalism operates on the debatable assumption that human beings find increased well-being through ever greater material consumption 4. Critics of capitalism also charge that competition is not what it's cracked up to be because (1) Capitalism breeds oligopolies (few businesses hold all the power ex. cell phone providers) (2) Corporate welfare (3) Competition is not a good thing.

Two Types of Sexual Harassments

1. Quid Pro Quo 2. Hostile Work Environment

Civil Rights Act of 1964 What are the protected classes? (EARNS)

1. Race 2. Sex 3. Nationality 4. Age 5. Ethnicity

Three Approaches to Environment Protection RIP

1. Regulatory Approach 2. Incentive Approach 3. Pricing mechanisms and pollution permits

Arguments in favor of affirmative action:

1. They are designed to *compensate past wrongs* 2. some feels that they make *job competition more fair* because they remove unfair advantages of white men 3. some feel they are necessary to *break the cycle of minority workers being trapped in minority positions*

Companies can escape liability under hostile work environment IF:

1. They took *reasonable steps* to prevent and promptly correct sexually harassing behavior 2. the *employee unreasonably failed to take advantage* of the preventive or corrective procedures established by the company

Reasons we want to protect trade secrets

1. Trade secrets are the *intellectual property* of the company 2. The theft of trade secrets is *unfair competition* 3. Employees who disclose trade secrets *violate the confidentiality owed to their employers.*

To decide what economic arrangements that best promote human happiness, the utilitarian must consider many things including:

1. Type of *economic ownership* (private, public, mixed), 2. the way of *organizing production and distribution* in general (pure laissez faire, market with government planning and regulation, fully centralized planning), 3. the type of *authority arrangements* within the units of production (worker control versus managerial prerogative), 4. the range and *character of material incentives*, and 5. the nature and* extent of social security *and welfare provisions.

Unsatisfactory Implications of Ethical Relativism

1. Undermines any moral criticism of the practices of other societies as long as their actions conform to their own standards 2. we cannot say that moral standards today are more enlightened than were moral standards in the middle ages ( past moral are right for then, slaves) 3. The moral code itself cannot be criticized because whatever a society takes to be right really is right for it

Gift Giving Factors:

1. What is the *value* of the gift? 2. What is the *purpose* of the gift? 3. What are the *circumstances* under which the gift was given or received? 4. What is the* position* or decision-making authority of the person receiving the gift? 5. What is the *accepted business practice* in the industry? 6. What is the *company's policy*? 7. What is the *law*?

Privacy in the workplace

A firm has legitimate interest in employee's conduct off the job *only if it affects work performances. * But organization may be invading privacy when they interfere with... 1. Employee's *off-the-job conduct* 2. Pressure employees to* contribute to charities/volunteer work * 3. Participate in *wellness programs*

Concealment of Facts:

Ad that suppress information that is unflattering to their products. they neglect to mention or they distract consumers' attention away from information, knowledge that will make their product less desirable.

Ambiguity:

Ads that can be understood in two or more ways

Egoism

An act is morally right if and only if it best promotes the agent's own interest. - if an action can produce more good for the agent than any alternative than it is morally right to perform.

Hostile work environment:

Any *behavior of the sexual nature* that *interferes with a women's peace of mind* and *undermines her work performance* even if it is not asking for sexual favors Companies CAN escape liability

Trade Secrets

Any formula, pattern, device, or compilation of *information* which is used in one's business and which gives him an *opportunity to obtain an advantage over competitors *who do not know or use it.

Conflict of Interest

Arises when employees at any level *have special or private interests that are substantial enough to interfere with their job duties*-- that is when their personal interests lead them, or might be anticipated to lead them, to make decisions or to act in ways that are detrimental to their employer's interest.

Alienation

As the *separation of individuals from the objects they create*, which in turn *results in one's separation from other people, from oneself, and ultimately from one's human nature* "the worker puts his life into the object and his life then no longer becomes to himself but to the object" - their work becomes meaningless - they are not invested in the company

Exploitation Theory

As the means of production become concentrated in the hands of a few, the balance of power between capitalists and laborers tip further in favor of the capitalists because of this, the laborers become exploited. Because of the exploitation, capitalists are able to make a profit and increase their capital

Alienation

As the separation of individuals from the objects they create, which in turn results in one's separation from other people, from oneself, and ultimately from one's human nature "the worker puts his life into the object and his life then no longer becomes to himself but to the object" their work becomes meaningless and they are not invested in the company

Kantian Ethics

Believed that moral reasoning is not based on factual knowledge and that the result of our actions do not determine whether they are right or wrong. Good Will: "good samaritan law" nothing, said Kant, is good in itself except goodwill. Will: unique human capacity to act from principle.

Narrow View

Corporations should focus on maximizing profits. It is inappropriate to spend shareholders money on general social issues.

Broader View

Don't think there is anything wrong with the profit motive but businesses are powerful in the society and must take on some responsibility. (owe a duty to stakeholders (not just shareholders) Responsibilities to: - Consumers - Employees -Suppliers and contractors Surrounding community - Society at large

Socialism

Economic system characterized by public ownership of property and a planned economic - productive equipment owned by public bodies - crucial economic decision are made not by individual but by government. - No competition

Capitalism

Economic system that operates on the basis of profit and market exchange in which the major means of production and distribution are in private hands. - small, medium, and large companies are all privately owned - they set their own production goals - competition

Job skills testing

Even tests that are valid and reliable can be *unfair if culturally biased* or *irrelevant to job performance*.

Price Fixing

ILLEGAL Horizontal: among competitors. Vertical: Manufactureer and retailers

Libertarian Approach

Identifying justice with the idea of "liberty" (freedom). -Libertarians *refuse to restrict individual liberty* even if doing so would increase overall happiness (noninterference) - For them the prime value, and just consists in permitting each person to live as he or she pleases free from the interference of others.

Disparate Impact

If employers have a* rule or practice* that, although not intentional discriminatory, excludes or adversely *affects too many people of a protected class. * Example: making people take a test and it happens that african americans have lower passage rates

Informed consent (privacy chapter)

Implies deliberation and free choice. Worker must understand what they are agreeing to, including its full ramifications, and must voluntarily choose it. - *Deliberation*: requires that employee be provided all significant facts concerning the information-gathering procedure and understand its consequences. - *Free Choice:* entails that the decision to participate must be voluntary and uncoerced (not forced).

Relationship between law and corporate responsibility

LAW IS NOT SUFFICIENT!!! - System is too slow and expensive to enforce - Laws are often only passed after disaster has struck (not proactive only reactive) - Lobbyists favor the rich when passing these laws - Laws are not always fair

Relationship of Law to Corporate Responsibility

Law is NOT SUFFICIENT! 1. System is too slow 2. Reactive not Proactive: law are often passed once disaster has struck 3. Lobbyist favors the rich when passing laws 4. Laws are not always fair -- Not specific/To broad

Regulatory Approach

Makes use of direct public regulations and control in determining how the pollution bill is paid. "when public regulations are put into place to *monitor and enforce* environmental standards"

Exaggeration

Making claims unsupported by evidence.

Hypothetical Contract

Meeting taking place to determine the rule of society. People in the meeting are under the veil of ignorance and do not know where they stand in society.

Incentive Approach

Minimizes government interference and *encourages voluntary action* rather than coercing compliance, as in the case of regulation.

Misappropriation theory:

Misappropriation theory is based on the doctrine that a *person who uses confidential information in a wrongful manner to buy or sell securities is guilty of securities fraud*. Such a misappropriation is in violation of a duty owed to the person who provided the information or who is the information source.

Categorial Imperative

Moral law must hold in ALL CIRCUMSTANCES, free from any internal contradiction (unconditional) everyone should follow it WITHOUT EXCEPTION. *Under Kant

Hypothetical Imperative

Must do on the assumption that we have a particular goal. Example: want to be a doctor have to take bio.

Prima Facie Obligation

Obligation that can be overridden by a more important obligation If there's no conflicting obligation, we must keep the orginal one.

Veil of Ignorance

People in this meeting *people are ignorant*. They *can't be bias* when deciding the rules. They can't choose based on their *position in society* because they don't know what that is yet. He believes that each person will have equal rights to extensive system of equal basic liberties

Pink collar occupations

Poor paying jobs that women are clustered in such as: librarians, nurses, elementary school teachers, sales clerks, secretaries, bank tellers, and waitresses - "In the service industry" - Top paying occupations have been almost exclusively male preserves

Pros and Cons of Incentive Approach

Pro: -- Not required, but encourages voluntary responsible behavior since they are getting money for it. -- Allows companies to move at their own pace. -- Provides economics incentives for companies to go above and beyond Con: -- The programs tend to move very slowly, so the results aren't seen quickly. -- It is also hard to see how much these programs are cost effective?! -- Can amount to "Paying polluters" (you're polluting and then improving and getting paid)

Pro and Cons of Pricing Mechanisms and pollution permits

Pro: -- places the cost on the polluters... it actually *charges companies for certain types of pollutions*..the prices are tied to the damages costs by the pollutions -- Pollution permits - allow companies to pollute Con: -- How do you *account for the spillover*? do we like the idea of giving companies the license to pollute?!

Arguments surrounding insider trading

Pro: some writers defend insider trading as *performing a necessary and desirable economic function.* Con: 1. insider trading seems *unfair* 2. it can *injure other investors* 3. undermine *public confidence in the stock market.*

Affirmative action

Programs designed to *correct imbalances in employment* that exists directly as a result of past discrimination. Have to be: - moderate and flexible - cannot have any rigid quotas

Gullible consumer standard:

Prohibits an ad that might mislead someone who is ill informed and naive

Pro and Cons of Regulatory Approach

Pros: legally enforceable, equally applied to all industries Cons: - require aggressive protection and pollution control. - Can put companies who can't comply out of business. - can be diluted (not specific enough) - Don't give incentive to do more than normal. People will do the bare minimum

Federal Trade Commission (FTC) 1914

Protecting consumers against *DECEPTIVE ADVERTISING* and *FRAUDULENT commercial practices* They follow the "Modified" guildable-consumer standards

"Modified" guildable-consumer standards

Protects consumers from ads that mislead significant number of people, whether those people acts reasonable or not.

Rawl's Theory of Justice

Rawl's strategy is to ask what principles people would choose to govern their society if they were in the "original position".

Price Gouging

Sellers exploiting a short-term situation in which buyer have few purchase option for a much needed product by raising price substantially

Pricing mechanisms and pollution permits

Spell out the cost for a specific kind of pollution in a specific area at a specific time. *Pricing Mechanism*: charge you for the amount of pollution you contribute *Pollution Permit:* you pay for a pollution permit.

Maxim

Subjective principle (the rule) that people in effect formulate in determining their conduct. (personal rule for yourself) Example: "i'll make a promise that i'll break whenever keeping them no longer suits my purpose"

Insider Trading

The *buying or selling of stocks* (or other financial securities) by business "insiders" on the basis of *information that has not yet been made public and is likely to affect the price of the stock*

Maximin rule (Rawls)

The least advantaged people in this society will be better off than the least advantaged people in other societies He believes broader concept about society as a whole rather than individual transaction

Strict Product Liability

The manufacturer of a product has LEGAL RESPONSIBILITY to COMPENSATE the user of that product for INJURIES suffered because the product's DEFECTIVE CONDITIONS made it unreasonably dangerous regardless of whether the manufacturer was negligent in permitting that defect to occur. NEGLIGENCE NOT REQUIRED.

Ethical Relativism

The theory that what is right is determined by what a *culture or society* says is right.

Utilitarian View of Distributed Justice

The utilitarianism holds that the maximization of happiness ultimately determines what is just and unjust.

Gift giving and the ethics surrounding gift giving

There are host of factors that you must consider "Not cut and dried, and some of them manage to ignore altogether the conflict of interest issues that gifts create"

Distributive Justice

To the proper distribution of social benefits and burdens (economic)

Sexual Harassment

Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of sexual nature

Weasel Words

Using "loose" language to avoid responsibilities. -"Be up to" - "help"

Ross Pluralism

We have various moral duties that cannot be reduced to one single obligation to maximize happiness.

Invisible Hand (Narrow View)

We shouldn't intervene with business functions. By allowing them to pursue their interests financially, they will produce good as a byproduct.

Employee Satisfaction

What are the factors that lead to satisfaction and dissatisfaction? Dissatisfied - usually caused by external factors - low pay - bad benefits Satisfied - usually caused by internal factors

Disparate Treatment

When employers *intentionally* treat a *protected class* differently of their sex, race, religion, color, or national origin *through out the employment process. * - Always intentional - Always illegal "I won't hire black people"

Reasonable - consumer standard:

Would prohibit only advertisement claims that would deceive reasonable people

Subliminal Advertising

ads that communicates at a level beneath conscious awareness

Karl Marx on Capitalism

he was very opposed of it! he thought it: 1. Alienated workers 2. Exploited them

Act Utilitarian

look at specific acts (each and every act) The theory that we should always act to produce the GREATEST possible balance of good over bad FOR EVERYONE affected by OUR actions.

Psychological Appeals

persuasive efforts aimed primarily at emotions, not reason

Rule Utilitarianism

specific rule or code of behavior. That rule is developed according to the Utilitarian standard. Ask "what moral code a society should adopt to maximize happiness"

Utilitarianism and Economic Distribution:

utilitarianism doesn't tell us which economic system will produce the most happiness. That question hangs on the social, economic, and political facts.

Quid pro quo:

when a supervisor makes an employee's employment opportunities conditional on the employees' entering a sexual relation with, or granting sexual favors to, the supervisor. *Companies are always held liable even if they did not know about it*