Business Ethics Exam 1
the mere-means principle (and duties of justice)
All human being must be treated as the end-in-itself DUTIES: Duty of non-deception Duty of non-coercion Duty of non-destruction
why Boeing hid the true nature of the MCAS system from pilots and airlines
Boeing may have hidden the true nature of the MCAS system from pilots and airlines to expedite the approval process for the 737 MAX aircraft and to avoid additional pilot training requirements, which would have increased the cost and complexity of the aircraft.
the charitable reconstruction of Friedman's argument
Corporate social responsibility involves managers using a company's resources in a way that shareholders have not consented to (private taxation) Shareholders are the owners of corporations; thus they are all of a company's resources It's wrong to use resources in a way its owner has not consented to Thus, CSR is wrong
the economic argument in favor of removing restrictions on immigration
Immigration will cause great economic gains
Instramental vs Final value
Instrumental/extrinsic goods: only valuable to obtain something else, outside value (ex: money) Final/intrinsic goods: inside value, valuable in and of itself (ex: happiness for the hedonist= the one thing we care about)
argument for a presumptive right to freedom of movement
It's human rights to obtain freedom of movement and sell goods wherever one wants
for-profit vs. non-profit vs. public benefit corporations
Overall, the main difference between these types of corporations is their primary focus: for-profit corporations prioritize profits, non-profit corporations prioritize social or charitable goals, and public benefit corporations seek to balance both profits and social impact.
Strategies for Fruitless debate
Talk loud, exaggerate what you disagree about, exploit all weaknesses, go for the quick kill
the "sunk cost" fallacy
The "sunk cost" fallacy is a cognitive bias that occurs when people continue to invest resources (such as time, money, or effort) in a project or decision, even when it no longer makes rational sense to do so, simply because they have already invested a lot of resources into it.
the "triple bottom line"
The "triple bottom line" (TBL) is a business concept that takes into account three dimensions of sustainability: economic, social, and environmental. It is a framework for evaluating an organization's performance and impact beyond just the traditional financial bottom line.
Formula of humanity
act in such a way that you always treat humanity (yourself or someone else) always as an end-in-itself and never as a mere means
Argument as WAR
aim is to win, enemies try to defeat each other, learning = losing
advantages of self-management
greater autonomy, faster descision making, better communication, improved accountability
the stakeholder theory of corporate purpose ("stakeholderism")
if helping others will maximize profit, do that; but if hurting others will maximize profits do that.
Scientifc expirement
physicall tests as hypothesis, looks for a concrete answer
evidential/economic myths about shareholder value
A corporation is its own residual claimant; the shareholder gets nothing by dividends, which is decided by the board of directors - they decide what to do with funds
abstract harms vs. concrete benefits
Abstract harms are intangible, indirect, or long-term negative effects that may be difficult to quantify or measure. concrete benefits are tangible, direct, or short-term positive effects that are easily observable and quantifiable.
why authoritarianism vs. libertarianism is distinct from socialism vs. capitalism
Authoritarianism and libertarianism are distinct from socialism and capitalism because they refer to different aspects of political philosophy. Authoritarianism and libertarianism refer to the degree of government control over individual freedom, while socialism and capitalism refer to the degree of government control over the economy.
autocratic vs. democratic workplace structures
Autocratic workplace structures are characterized by a hierarchical management structure where power is centralized with a single person or a small group of people at the top. In an autocratic workplace, decisions are made by the leaders without much input or participation from employees. democratic workplace structures are characterized by a more egalitarian management style where power is shared among all employees. In a democratic workplace, employees are encouraged to participate in decision-making, and communication is open and two-way.
autonomy (what it is and how it fits into Kant's theory of value)
Autonomy is the concept of self-rule or self-determination. It refers to an individual's ability to make decisions and take actions based on their own values. Overall, autonomy is a crucial concept in Kant's moral philosophy because it is what gives humans their inherent dignity and moral worth, and it forms the basis of his ethical principles.
why diminishing marginal utility matters for utilitarian evaluations
Because diminishing marginal utility states that with time one's utility decreases; thus, ones maximum pleasure and pain changes with time
Boeing's corporate culture before and after the McDonnell Douglas merger
Boieng used to be the gold standard for aviation and plane construction. However, when they merged with McDonnel Douglas, they started priortizing quantity over quality leading to a significant decrease in the quality of their planes and thus the reputation of Boeing.
the shareholder theory of corporate purpose ("shareholderism")
Businesses ought to be run exclusively for the benefit of shareholders
Herman Simon's concept of "satisficing" (and how it applies to corporate decisions)
Combines satisfying and sufficing (theoretically) Managers can meet the needs of many shareholders instead of targeting one small subset (ie long term shareholders, short term, deerfield, prosocial) Once satisfy = can retain earning to invest and satisfy procedures, marketing, research and development for future growth
constituency ("stakeholder") statutes
Constituency or stakeholder statutes are laws that require corporations to take into account the interests of various stakeholders, such as employees, customers, suppliers, and the local community, in addition to the interests of shareholders.
democratic capitalism
Democratic capitalism is a term used to describe an economic system that combines the principles of democracy and capitalism. In this system, the government is responsible for ensuring that markets remain competitive and that all individuals have an equal opportunity to participate in the economy.
Descriptive vs prescriptive statements
Descriptive: the way the world is (ex: squid games is a show on Netflix) Prescriptive: what ought to be the case; you prescribe how the world should be (ex: stranger things is the best show on Netflix)
fragmentation of information and responsibility
Fragmentation of information and responsibility refers to a situation where information relevant to making a decision is scattered across multiple individuals or groups, and no single entity has complete responsibility for making the decision or ensuring its consequences
Friedman's (apparent) argument against corporate social responsibility
His argument was that businesses have no social responsibility beyond maximizing profits for their shareholders. In his view, the only responsibility of a corporation is to its owners and investors, and any actions that do not contribute to this goal are wasteful and potentially harmful.
objections to immigration and caplans replies
Immigrants will steal work from native workers: although immigrants who sell what you sell will increase supply, immigrants who buy what you sell will increase demand - it will even out All of the low-skilled workers will depress our country's standard of living: arithmetic fallacy Open borders will lead to swamping: they can't all flood in at once, it will gradually happen (diaspora dynamics) The immigrant's home countries will suffer: globally migrant workers send home billions each year
the Business Roundtable's 2019 "Statement on the Purpose of a Corporation"
In August 2019, the Business Roundtable issued a statement titled "Statement on the Purpose of a Corporation", which signaled a significant shift in the organization's stance on the role of corporations in society. Traditionally, the Business Roundtable had maintained that the primary responsibility of corporations was to maximize shareholder value. However, the 2019 statement acknowledged that corporations have broader responsibilities to stakeholders, including employees, customers, suppliers, and communities. The statement argues that corporations should be committed to "delivering value to all of our stakeholders", rather than solely focusing on shareholder value.
explanatory vs. justificatory reasons
In general, explanatory reasons are focused on providing a causal explanation for an action or event, while justificatory reasons are focused on providing moral or ethical justification for an action or decision.
the B.F. Goodrich case (what went wrong and why)
In the early 1980s, the US Air Force awarded a contract for the development of a new air-to-air missile to two competing companies: B.F. Goodrich and Hughes Aircraft. B.F. Goodrich was awarded the contract based on its lower bid, but it soon became clear that the company had submitted a fraudulent proposal. B.F. Goodrich had included the cost of research and development for a similar missile program that it had previously worked on, which inflated its bid and gave it an unfair advantage over Hughes Aircraft. The company had also falsified test results to make its missile appear more effective than it actually was. The B.F. Goodrich case highlights the importance of ethical behavior and fair competition in the aerospace industry. The company's fraudulent practices not only resulted in financial losses for the US government but also undermined public trust in the industry and raised concerns about the safety and effectiveness of the missile program. The case also demonstrates the need for effective regulation and oversight to prevent fraud and unethical behavior in the defense industry.
Categorical imperative
Kant defines categorical imperatives as commands or moral laws all persons must follow, regardless of their desires or extenuating circumstances.
Kantian and utilitarian evaluations of Ford's actions
Kantian: immoral. stole customer's autonomy through deception; used humans as mere means; duty of non-deception and non-destruction Utilitarian: consequentialism and cost-benefit analysis validated Ford's actions
Louis Kelso's invention of employee stock ownership programs (ESOPs)
Kelso proposed the creation of ESOPs, which are retirement plans that allow employees to own shares in the company they work for. Under an ESOP, the company sets up a trust fund to hold shares of the company's stock, which are then allocated to the employees as part of their retirement benefits. As the company's stock value increases, so does the value of the employees' retirement benefits.
What typical cost-benefit analysis leaves out (according to Singer)
Leaves out the costs and benefits of nonhumans, only indirectly includes the consequences on nonhumans
Different normative/prescriptive statements
Legal standards: ought to uphold the law Moral: what ought to be moral Prudential: something out to be because it promotes your self interest Institutional: perspective of Job Rules. (can opt out)
the history of car scandals in the US
Manufacturers do not spend the money on safety hazards because it minimizes profits
Open book management
Open-book management is a management approach that involves sharing financial and other performance-related information with employees to increase their understanding of the business and their engagement in its success. The goal of open-book management is to create a culture of transparency, trust, and ownership among employees, which can lead to improved financial performance and overall success of the organization.
Salazar's analysis of Kant's "shopkeeper" thought experiment
Overall, Salazar's analysis of Kant's "shopkeeper" thought experiment highlights the importance of a more nuanced and complex approach to moral decision-making, one that takes into account both the abstract principles and the specific context of each situation.
historical myths about shareholder value
Ownership: shareholders "own corps" -> (no one actually does) → it actually is the board of directors that is elected by shareholders residual claimancy: shareholders are RC in corp. -> (only occurs in bankruptcy) Agency: execs/directors
examples of Certified B Corporations
Patagonia, Ben and Jerry's, Allbirds, Warby Parker, Dr. Bronner's
the basic facts of the Ford Pinto case acc. to Dowie (esp. Ford's cost-benefit analysis)
Pinto fuel system caught fire extremely easily; Ford knew this - rushed it into production. Ford did cost-benefit-analysis to human life and decided that it wasn't profitable to make changes sooner; placed a value of $200,725 on a human life - argued that Ford should not make an $11-per-car improvement that would prevent 180 fire deaths a year ($11 x every car produces is much more expensive than 180 burned cars x $200725)
probationary hiring periods (and the reason for them)
Probationary hiring periods are a common practice in many organizations, during which new employees are employed on a trial basis for a set period of time before being granted full-time employment status. The duration of the probationary period can vary, but it is typically between 30 and 90 days. The primary reason for probationary periods is to allow employers to assess the performance and suitability of new employees before committing to long-term employment.
the moral argument for shareholder theory (and counterexamples)
Pursuing shareholder value alone is good in the short term but not long term; consequences for society as a whole are not maximized Counterexamples: public goods and market failures; chocolate industry; recycling; advertising
self-interest and job survival
Self-interest and job survival are often related concepts in the context of business and employment. In many cases, individuals are motivated by self-interest to preserve their own job security and financial well-being, even if it may conflict with the interests of others or the organization as a whole.
Self management (and examples)
Self-management is a management style in which employees have more autonomy and decision-making power in their work, and are responsible for their own actions and outcomes. worker cooperatives, agile development, holacracy, results only work environment.
self-management vs. employee ownership (and how they don't necessarily overlap)
Self-management refers to a workplace structure in which employees have a greater degree of control over their work and decision-making processes. This can include things like decentralized decision-making, participatory management, and worker cooperatives. Employee ownership, on the other hand, refers to a situation in which employees own a stake in the company or have a share of its profits. This can take many forms, including employee stock ownership plans (ESOPs), worker cooperatives, and profit-sharing arrangements.
the diversity of shareholder identities
Shareholders are human beings - they are NOT all the same; they all have individual incentives and interests, thus what maximizes value for one shareholder may not do the same for another (ex: short-term vs long-term investors)
the Dalkon Shield case (what went wrong and why)
The Dalkon Shield was a contraceptive intrauterine device (IUD) marketed by the A.H. Robins Company in the 1970s. The device was initially successful and widely used, but it was soon discovered that the Dalkon Shield had serious design flaws that caused a range of medical complications for users. The main issue with the Dalkon Shield was that its string design allowed bacteria to travel up into the uterus, causing serious infections, infertility, and in some cases, even death. The device was also difficult to remove, which further increased the risk of complications. Despite reports of problems with the device, A.H. Robins continued to market and sell the Dalkon Shield for several years,
how the MCAS system worked in Boeing's initial 737 MAX design
The MCAS system was designed to automatically push the plane's nose down when the aircraft's angle of attack (AOA) was too high, in order to prevent a potential stall. The system received input from sensors on the aircraft that measured the AOA and adjusted the plane's horizontal stabilizer accordingly. However, the MCAS system had a critical flaw in its design. It relied on a single angle-of-attack sensor, and if this sensor provided erroneous data, it could cause the MCAS system to malfunction and force the plane into a dive. This is what is believed to have happened in two fatal crashes of 737 MAX aircraft in 2018 and 2019.
the economic argument for employee ownership
The economic argument for employee ownership is based on the idea that it can lead to improved performance and productivity for companies. Proponents of this argument believe that when employees have a stake in the success of the company, they are more likely to be invested in its success and work harder to achieve it.
Stout's "fishing with dynamite" analogy
The fisherman who switches from using baited line to dynamite sees an increase in size of his catch. But, when many fishermen in the village switch to this approach, after the initial increase, the collective catch decreases gradually. Shareholders will see the same result when they push managers to "maximize shareholder value" Diminishes future value Ex: not funding proper employee training
the moral argument for employee ownership
The moral argument for employee ownership is based on the idea that employees have a right to a greater degree of control and ownership over the fruits of their labor. Proponents of this argument argue that employees are the ones who create value within an organization, and therefore, they should have a say in how that value is distributed and used.
the principal-agent model (and how it does and does not apply to corporations)
The principal-agent model is a framework used to understand the relationship between two parties: a principal, who delegates decision-making authority to an agent, who is expected to act on behalf of the principal's interests. In this model, the principal may be a shareholder or group of shareholders, and the agent may be a corporate executive or board of directors. The principal-agent model assumes that the agent may have interests that differ from those of the principal, and that the principal must devise mechanisms to align the agent's interests with their own. When applied to corporations, the principal-agent model can help to explain why corporate executives may not always act in the best interests of shareholders.
the private taxation analogy
The private taxation analogy is a metaphor often used by critics of corporate social responsibility to argue that businesses should not be expected to take on social or environmental responsibilities beyond their primary objective of maximizing profits for shareholders. The analogy suggests that any actions taken by businesses to pursue social or environmental goals are essentially a form of taxation on shareholders, who may not support or benefit from these initiatives.
The right to consent
The right to consent refers to the right of individuals or groups to give or withhold their consent to decisions or actions that affect them.
the right to consultation
The right to consultation refers to the right of individuals or groups to participate in decision-making processes that affect them.
the right to information
The right to information refers to the right of individuals or groups to access information that is relevant to their lives or interests.
Volkswagen's "Dieselgate"
The scandal involved the discovery that VW had installed software in its diesel cars that could detect when they were being tested for emissions and reduce their emissions output to meet legal standards. However, when the cars were driven on the road, they emitted up to 40 times the legal limit of nitrogen oxides.
the underlying principle of democracy
The underlying principle of democracy is the idea that people have the right to participate in the decision-making process of their government.
Hedonism
The view that good and bad are directly related to pleasure and pain
what Boeing knew internally vs. what Boeing said publicly
There is evidence to suggest that Boeing knew internally about the potential dangers of the MCAS system on the 737 MAX aircraft, but downplayed these risks in public communications and in interactions with regulatory agencies.
the "paperclip maximizer" thought experiment
Thought experiment: if we design a machine that ONLY tries to make the most paper clips as possible; if it were to reproduce itself, it could use all raw materials on earth to make paper clips If we make a machine to only maximize one single value with no other values informing its actions, it could lay waste to the earth for a single trivial value (this is why shareholders is not good)
examples of how motives and consequences can come apart
Two people can have the same motives with completely different consequences.
the moral argument for stakeholder theory
Valuing each other and interests, ones who aren't valuing each other won't get very far Working towards shared interest will maximize success in evolutionary sense as well a competitive environment (ie wrong idea of Darwinism and the idea of the survival of the fittest)
non-consequentialism (and what Kant thinks makes actions right/wrong instead)
We are not in control of the consequences of our actions. Good intentions do not equal good ends. your intentions behind your actions is what determines right and wrong
using someone as a means vs. as a mere means
We do use people as a means for something (ex: we use our teachers as a means of learning) that is okay; however using people as a mere means to accomplish your goals with no thought to their goals/interests is not okay
Principle of Utility
We should act always so as to produce the greatest good for the greatest number of people
what a utilitarian would say about restrictions on immigration
When it comes to restrictions on immigration, a utilitarian would consider the benefits and drawbacks of allowing or restricting immigration.
Consequentialism
Whether an action is morally right or wrong has to do only with whether its consequences are intrinsically better than other actions one can perform under the circumstance
public benefit corporations vs. Certified B Corporations
While both PBCs and B Corps are committed to balancing profits and social impact, PBCs are a legal entity that are required by law to consider the interests of stakeholders, while B Corps are a certification that businesses can voluntarily pursue to demonstrate their commitment to social and environmental responsibility.
Cicero's food shortage thought expirement
You are the first person in a town and know that many trucks behind you carry food with them. Is it morally wrong to price gouge?
structural incentives and corporate psychopathy
You could have the most moral people, who given the goals of shareholders make decisions like a psychopath (ex: pinto case) Often look at it like good guy vs bad guy, but on the corporate level, increasing profits can cause a "good" guy to make morally wrong decisions
Immanuel Kant's control theory of moral responsibility
You're responsible for your actions only to the degree that they are under your control (whereas utilitarianism holds people responsible for all consequences)
Salazar's "selling supplements" thought experiment
a hypothetical scenario designed to illustrate a potential problem with the principle of informed consent in medical ethics. highlights the importance of informed consent in medical ethics and the potential for power imbalances between doctors and patients to influence the decision-making process.
Thought Expirement
a hypothetical situation, gives conclusions based on inductive or deductive reasoning
Formula of universal law
act in such a way that your action would become a law for everyone; tests whether it is possible for everyone to will the maxim and still achieve its purpose; can't make an exception of yourself
argument as Collaboration
aimed at learning and arriving at a mutual understanding of something. Partners, listen, ask questions
Strategies for Fruitful debate
connect, welcom openings and opportunities, stay engaged
Deontology
ethical theory evaluates the morality of an action or decision based on whether it follows certain rules or duties. In evaluating workplace structures, deontology would consider the extent to which a particular structure respects the rights and dignity of all individuals involved.
Feminist ethics
evaluates the morality of an action or decision based on its effects on gender equality and social justice. In evaluating workplace structures, feminist ethics would consider the extent to which a particular structure promotes gender equity, diversity, and inclusivity.
Virtue ethics
evaluates the morality of an action or decision based on whether it reflects certain virtues or character traits. In evaluating workplace structures, virtue ethics would consider the extent to which a particular structure fosters virtues such as honesty, integrity, and compassion.
Consequentialism
evalutes the morality of actions based on their consequences. Consequentialists believe that the rightness or wrongness of an action depends solely on the goodness or badness of its outcome. Utilitarianism is a type of consequentialism.
The principal of equal consideration
fundamental principle that requires us to give equal moral consideration to the interests of all beingns who are capable of experiencing pleasure or pain, regardless of anything.
advantages of employee ownership
improved performance, increased employee engagement and job satisfaction, reduced turnover, improved decision making, enhanced sense of community
disadvantages of employee ownership
initial costs, potential for conflicts, limited liquidity, risk of employee buyouts, potential for decreased flexibility
disadvantages of self-management
lack of structure, resistance to change, increased work load, risk. of desicion making errors
Utlitarianism
moral theory that focuses on the results, or consequences, of our actions, and treats intentions as irrelevant
Argument as Performance
not invested in a debate
direct vs indirect obligations
o Direct obligations - arise from immediate interaction with others, such as obligations to refrain from harming others or providing assistance when needed. If you see someone drowning in a river, you have a direct obligation to help them o Indirect obligation - obligations that arise from our actions or inactions that mmay have consequences on others. Less clear cut
Normative Perspectives
o Moral perspective - concerned with right and wrong and good or bad Often based on religious or cultural values o Legal Perspective - concerned with what is legal or illegal, and what is punishiable by law. Often determined by a country's legal system o Prudential Perspective - concerned with one's own self interest or the interest of a certain group. Often based on practical considerations suc has maximizing one's benefits and minimizing one's risks o Institutional perspective - concerned with the norms and rules that govern certain institutions. Often based on specific codes of conduct or professional stnadards, and may very by industry or sector.
Bentham
o argued that moral actions should be evaluated based on a calculation of pleasure and pain. Somebody can sum up the units of pleasure and pain and can use this to judge the overall good or evil of an action. Hedonic Calculus
the political-economic consistency argument for workplace democracy
political-economic consistency argument for workplace democracy argues that if we believe in democracy and equality, then we should support extending those principles to the workplace. Workplace democracy can lead to increased productivity, creativity, and employee satisfaction, as well as contribute to a more stable and equitable society.
diaspora dynamics
refer to the social, cultural, and political processes that shape the experiences and identities of diaspora communities. A diaspora refers to a dispersed group of people who share a common heritage, identity, or culture, but are living in different parts of the world due to migration or displacement
The arithematic fallacy
the fallacy of assuming that the average value of a group can be applied to every member of that group, without taking into account individual differences.
Impartiality
the principle of treating all individuals or groups equally, without any favoritisim or bias. Key compmonent of moral reasoning and decision-making
Kant's shopkeeper thought expirement
used to explore the nature of moral duty and the concept of the moral law. In the thought experiment, Kant asks us to consider a shopkeeper who always gives his customers the correct change, not out of a sense of moral duty, but out of a desire to maintain a good reputation and attract more business. It highlights the idea that moral duty is based on universal principles of respect and dignity, and that our actions must be guided by these principles, even if our motives are not entirely pure.
Jonn Stuart Mills
views that higher pleasures, such as intellectual and artistic pleasures, are more valuable than lower pleasures, such as physical pleasures. The goal is to achieve the highest quality pleasure, not the most pleasure.
maxims-for-action
A principle for whether and when an action should be done; asserting what you will do and for what purpose you will do it
the "business judgment" rule
Any decision is allowed if there is no conflict of interest and a reasonable effort to be informed
legal myths about shareholder value (esp. ownership)
Corporations are legal entities that own themselves; thus, shareholders do not own them, they only own shares Managers are shareholders "agents" but shareholders do not have the No laws require board of directors to maximize shareholder value
the economic argument for stakeholder theory
Customer loyalty, reputation (benefiting all stakeholders), future generations, employee loyalty. All of these tie together; (ie if employees feel burned out they will not treat customers as well
the end-in-itself principle (and duties of beneficence)
Humans are end results