Business Ethics (Midterm)

Bilateral Treaties

treaties made between two nations

Virtue Ethics

(Aristotle) - Argues that ethical behavior involves not only adhering to conventional moral standards but also considers what a mature person with a "good" moral character would deem appropriate. Be honest, just, kind, honorable, etc. It differs in that it is not rule centered.

Deontology (Kantian Ethics)

(Immanuel Kant)- focuses on the rights of individuals and on the intentions associated with a particular behavior, rather than its consequences.

Rights-Based Ethics

(John Rawls) - We should act within our rights and accord other people their rights. On this view, right action is simply action within one's rights, whereas wrong action violates rights.

Utilitarianism

(John Stuart Mill) - evaluates the morality of an action on the basis of its consequences for everyone affected. (The greatest good for the greatest number). Choose to act from among your options which is best from the twin points of view of increasing human happiness and reducing human suffering.

Three Questions for Thinking about Ethics

- Am I doing the right thing? - Am I doing it the right way? - Am I doing it for the right reasons?

Key elements of sexual harassment

1. Harassment was unwelcome 2. Harassment was based on gender 3. Harassment was sufficiently severe or pervasive 4. Hostile environment affects a person's ability to perform at work and/or causes psychological harm.

W.D. Ross' Prima Facie Duties

1. Justice: Be just, prevent injustice & future injustice, & rectify existing injustices. 2. Non-injury: Avoid harming people. 3. Fidelity: Keep promises. 4. Veracity: Tell the truth. 5. Reparation: Apologize or make amends when you do something wrong. 6. Beneficence: Do good deeds for others and contribute to the development of their virtue, knowledge, or happiness. 7. Self-improvement: Better yourself. 8. Gratitude: Express appreciation for good deeds.

Most common types of unethical behavior at work

1. Misusing company time. 2. Abusive behavior. 3. Employee theft. 4. Lying to employees. 5. Violating company internet policies.

Six Principles of Ethical Accounting

1. Responsibility- in carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities. 2. The public interest- members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism. 3. Integrity- To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity. 4. Objectivity and independence- a member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services. 5. Due care- A member should observe the profession's technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member's ability. 6. Scope and nature of services- a member in public should observe the principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.

Basic Objectives of Restorative Justice

1. Restoring values. 2. Reintegrating offenders back into the community. 3. Facilitating community healing.

Equal Pay Act

1963 law that required both men and women to receive equal pay for equal work

Social Responsibility Concept

A business organization's obligation should be to maximize its positive effects and minimize its negative effects on "stakeholders". "Stakeholders may include owners, employees, customers, the community, the environment, suppliers, etc. Businesses have a societal obligation beyond profitability.

Securities Exchange Act of 1934

A federal law dealing with securities regulation that established the Securities and Exchange Commission to regulate and oversee the securities industry.

Title V11 of the Civil Rights Act of 1964

A federal law that prohibits employment discrimination based on a person's sex, race, religion, and national origin. It prohibits discrimination in decisions involving compensation, terms, conditions, or privileges of employment.

Sarbanes-Oxley Act

A law passed by Congress that requires the CEO and CFO to certify that their firm's financial statements are accurate.

Facial Discrimination

A law that, by its very language, creates distinctions between classes of persons is discriminatory on its face. Example: An ordinance states that only males will be considered for a city's training academy for firefighters.

NASDAQ

A nationwide electronic system that links dealers across the nation so that they can buy and sell securities electronically.

New York Exchange

A physical market is located in New York City.

Restorative Justice

A process whereby all the parties with a stake in a particular offense come together to resolve collectively how to deal with the aftermath of the offense and its implications for the future. It is both instrumental in nature, focused on deterring wrong doing, repairing harm, and improving relationships.

Social Conscious Audits

A social audit is a formal review of a company's endeavors, procedures, and code of conduct regarding social responsibility and the company's impact on society. A social audit is an assessment of how well the company is achieving its goals or benchmarks for social responsibility.

Bait and Switch

A store advertises bargains that do not really exist to lure customers in, in hopes that they will buy more expensive merchandise.

Relativism

Action is ethical because others within your company or industry regularly engage in the activity.

Management as fiduciaries and agents theory v. theory that they have social responsibility duties

Agency theory describes the problems that occur when one party represents another in business but holds different views on key business issues or different interests from the principal. The agent, acting on behalf of another party, may disagree about the best course of action and allow personal beliefs to influence the outcome of a transaction. The agent may also choose to act in self-interest instead of the principal's interests. This may result in conflict between the two parties and might be an agency problem. Agency theory tends to focus mainly on the interest of shareholders. Stakeholder theory describes the composition of organizations as a collection of various individual groups with different interests. These interests, taken together, represent the will of the organization. As much as possible, business decisions should consider the interests of this collective group and advance overall cooperation. Conflict represents an erosion of these interests. Bringing these distinct groups together to reach an agreement may not always be possible, so business decisions must consider each point of view and optimize the decision-making to include all voices. With agency theory, there are differences in what the principal and the agent think is the best course of action, also known as the principal-agent problem. The agent theory can arise in such cases as portfolio managers—the agents—managing assets on behalf of an individual or company—the principal. Agency loss comes about when the principal suggests a loss happened due to an agent's actions that were not in the best interest of the principal. With stakeholder theory, there's a difference in the priorities for stakeholders, either internal or external. Internal stakeholders can include employees, investors or owners. External stakeholders include those that are affected by a company's decisions, such as suppliers or creditors. An example would include a conflict between company management and shareholders. The management may make decisions that do not necessarily enhance shareholder value, which is in conflict with shareholder interests. Performance-based compensation, which ties management incentives to shareholder value, is one way that companies look to address the stakeholder theory. However, this does come without its own issues, which includes trying to boost short-term performance at the sacrifice of long-term growth.

Kant's Categorical Imperative

An act is only ethical if it would be acceptable for everyone to do the same thing. Treat people as an ends instead of a means to something.

Pyramid Schemes

An illicit business model where profits are based on the investor's ability to recruit other individuals who are enrolled to make payments to their recruiters. Generally, neither a product or service is delivered.

Sophisticated Investor Concept

An investor who either alone or together with his, her or its purchaser representative, has sufficient knowledge and experience with financial and business matters that the investor can evaluate the risks and merits of a contemplated investment.

Commodities Exchange

An open and organized marketplace where ownership titles or standard units of commodities are traded by its members.

Contingent work

Arrangements that are temporary and can lack the basic protections that workplace and civil rights laws typically afford only people employed in traditional, direct employer/employee work arrangements. It includes women and men in temporary work relationships.

Division of labor (evolved from agricultural society to interdependent society)(p. 141)

As it is by treaty, by barter, and by purchase that we obtain from one another the greater part of those mutual good offices which we stand in need of, so it is this same trucking disposition which originally gives occasion to the division of labor. In a tribe of hunters or shepherds a particular person makes bows and arrows, for example, with more readiness and dexterity than any other. He frequently exchanges them for cattle or for venison with his companions; and he finds at last that he can in this manner get more cattle and venison than if he went to the field to catch them. From a regard to his own interest, therefore, the making of bows and arrows grows to be his chief business, and he becomes a sort of armorer. The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause as the effects of the division of labor. The different between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature as from habit, custom, and education. The division of labor sprung from the loins of reality. Meaning, it is by treaty, by barter or purchase that we obtain goods and services from one another. By specializing, one positions themselves to obtain more. He concludes that the highest good for all will result if each individual member of society is allowed to pursue her or his own idea of the good (and not interfering with others), so that everyone may cultivate the talents particular to him or her.

Why Shouldn't Corporations Be Socially Responsible(Christopher Stone)(p. 179-182)

As the title indicates, below is a summary of the four prominent arguments used to support the assertion that corporations have no social responsibility Christopher Stone starts off by noting that in "ordinary morals" people are expected to act in ways that benefit others as well and that such acts are usually held in high esteem by society. With this essay he sought to critically appraise the four positions which deny social responsibility for corporations. According to these positions corporations should be "steered almost wholly by profit" instead of focusing on the general well being of society and/or the environments in which they operate. Corporations should focus only on those acts which benefit themselves directly. 1. The Promissory Argument This argument states that corporations have an implied 'promise' to their stock-/shareholders to maximise profits. Accordingly management has the sole responsibility of keeping that promise - acting in ways that seek to maximise stockholders' profits. Christopher Stone is of the opinion that this view is mistaken. He argues that very few stockholders invest their money in a corporation and receive a promise from management that profits will be maximised. He argues also that even such a promise were made it wouldn't have been made directly to the stockholder since very few stockholders invest their money directly into a corporation. Consider that the shares anyone owns have probably been around for many many years and have been passed on to many hands/owners. Who then does the corporation owe the keeping of the promise to? Not only that but since a corporation's management changes ever now and then, the 'new' managers may simply not hold the view that a corporation's sole purpose is to maximise profits. Stone further makes another point against this view. The first being that even if we inferred that a promise has been made and needs to be kept, there is no reason why we can't accept that "sometimes it is ... morally justified to break promises in the furtherance of other social interests of higher concern. ... My promise to appear in class on time would not ordinarily justify me from refusing to give aid to a drowning man." Stone makes this point to drive another home: the fact that a promise has been made to maximise profits does not mean in each and every act and each and every possible way one must seek to maximise profits even if its means poisoning consumers and polluting the environment; again, even if that was the express promise made by management to stockholders, who of us would consider it a respectable and/or morally justifiable promise? 2. The Agency Argument This is an argument which has among its proponents Milton Friedman. It states that stockholders appoint management as their agents. Milton Friedman expressed this position, in his 1970 New York Times article, as follows: "The key point is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation or establish the ... institution, and his primary responsibility is to them." Stone considers Friedman's view wrong "both as to the state of the law (the directors are not mere agents of the shareholders) and on his assumption as to the facts of corporate life (... management is more often using its control over the proxy machinery to designate who the directors shall be, rather than the other way around)." He says Friedman's argument is basically that management "ought to morally to consider themselves more the agents for the shareholders than for the customers, creditors, the state, or the corporation." Stone then asks why this should be the case? - and to what extent ought this to be the case? According to Stone the agency argument is not only undermined by its inconclusiveness but also by corporate practice. He points out that oftentimes shareholders find themselves at odds with the company's management and having to take each other to court or forcing votes at annual general meetings because they have differing opinions as to which direction the corporation must follow. "If the managers truly considered themselves the agents of the shareholders, as agents they would be expected to show an interest in determining how their principals [that is, the shareholders] wanted them to act - and acted accordingly" stone points out. 3. The Role Argument This argument is based on roles - the roles that people play and the obligations that attach themselves to the roles in question. In moral reasoning people are expected to fulfil certain obligations/duties, even without expressly assuming them, just based on the roles or status they occupy. Stone thinks this is a somewhat stronger argument provided by the proponents of "anti-social responsibility" because this argument closely resembles the facts. According to this reasoning since management, as has been shown above, never made a promise to the shareholders to maximise profits, "nor did the shareholders designate the directors their agents for this express purpose", management then acts only as fiduciaries. As fiduciaries management then has a legal responsibility not to engage in "self-dealing" and not to "waste" the assets of the corporation. Stone then points out those who are for social responsibility do not, as is implied by this argument, expect management to assume expenditures that would "expose the officers to legal liability; what we are talking about are expenditures on ... pollution control, above the amount the company is required to pay by law" but not in excess of what is considered reasonable and may lead to a violation of management's fiduciary duties ('amount required by law' < 'expenditure incurred' < 'expenditure that would violate fiduciary duties'). To problematise the role argument Stone asks this question: "What is there about assuming the role of corporate officer that makes it immoral for a manager to involve a corporation in these expenditures [that is, expenditures for social responsibility]?" A man who has the role of fatherhood and therefore responsibilities towards his children cannot use that as a "moral argument ... to leave unsightly refuse piled on his lawn, spilling over into the street, on the plea that he had obligations to give every moment of his attention to his children, and was thus too busy to cart his refuse away." Why then do those who make this argument expect it to carry moral weight on the basis that managers are busy discharging their obligations to shareholders to undo the damage caused to the environment by their activities? Stone considers the agency argument to suffer "from the problem that the strongest moral obligations one can discover" for it "have at most only prima facie force, and it is not apparent why those obligations should predominate over some contrary social obligations that could be advanced." 4. The Polestar Argument Stone considers this to be the strongest moral argument that can be advanced by those who are against corporations assuming social responsibilities. This argument says "if the managers act in such a fashion as to maximise profits - if they act as though they had promised the shareholders they would do so - then it will be best for all of us." Note: a pole star is a directing principle. This argument then is called a pole star argument because, it is claimed, advancing the interests of shareholders will be a "means of charting a course toward what is best for the society as a whole." Increased profits mean increased tax revenue due to governments which can in turn be used by the state to pursue social ends (to benefit the poor, for example). Stone points out that there are many assumptions that need to be made for this argument to hold water, and that it has an implicit positivism - "a feeling ... that moral judgments are peculiar, arbitrary, or vague - perhaps even 'meaningless' in the philosophic sense of not being amenable to rational discussion." For those who make this argument "profits (or sales, or price-earnings ratios [in a nutshell quantifiable data]) at least provide some solid, tangible standard by which participants in the organisation can measure their successes and failures" rather than relying on arbitrary moral claims. Another variant of this argument says managers and directors, even if they did possess the skills and expertise, do not have the authority to decide for society as a whole. Stone points out that Friedman makes this point when he says "if a corporate director took 'social purposes' into account, he would become 'in effect a public employee, a civil servant.'" Stone excuses himself from "getting deeply involved in each of these arguments" and points out that indeed policy choices (decisions made for society as a whole) are vague. However, he notes that there a number of cases/decisions taken by directors in pursuit of profit which have implications for society as a whole and as a result could be construed to be for "social purposes." He says though those who advance these arguments have ground to stand, "their essential failure is in not pursuing the alternatives." Following Friedman, Stone agrees that "to the extent" that the markets and the law can be relied upon to manage corporations to be "within desirable bounds" it is preferable to let corporations service the needs of society than to give that responsibility to unelected "public officials" [that is, managers who pursue social ends without a mandate from society]. Stone includes the to "the extent" to point out that there are indeed situations where both the law and markets fail dismally to "keep corporations within desirable bounds." According to him those who are against social responsibility fail to note that the existence of such points to the need to consider "alternative measures of corporate control."

Occupy Wall Street (p. 156)

Average Americans "are getting nothing while the other 1 percent is getting everything". One thing is inarguably true: The 99% don't have 99% of anything, money wise in the United States. The 99% account for 79% of income in 2008, with the top 1% taking the other 21%. Back in the 1970s, the 99% were earning about 90% of income. The top 1% of households took a bigger share of overall income in 2007 than they did at any time since 1928. Inequality has increased in the past decade, leaving the 99% with smaller and smaller proportions of income and wealth. And it has many economists, public policy wonks, and, well, protestors very, very worried.

Hostile Work Environment

Behavior that does not affect an employee's economic benefits. It consists of unwelcome advances or sexual, verbal, and/or physical conduct of a sexual nature. This conduct has the purpose or effect of interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment.

Milton Friedman

Believed that the sole mission of businesses should be to produce goods and services at a profit for its shareholders or owners, thus maximizing its contribution to society in that way. Beyond that, there is no societal obligation.

AN Essential Ambition

Benefits to individuals or to a few corporations do not necessarily constitute benefits to larger groups of individuals and the country. What is good for General Motors is not necessarily good for America. There is a balance between individual and societal benefits. The balance cannot always be achieved by self-interest and conflict but most often, by a commitment to the other party's benefits. This commitment is expressed by honesty and trustworthiness. This is where the culture must lead if we are able to restore trust in the financial system and the economy. So here I make a leap to aspirations. We may have to compromise on the details. But the one thing on which we may not compromise is the ambition to become an honest society. This ambition is an idea, yet it can shape and become a building block of our culture. Being an idea, it is fully within our control- powerful and empowering. It may be a Utopia, which we cannot reach. But it can guide our daily life. Let the social pressures shame and prevent people from bragging about their gains at the expense of others. Let people who have abused trust be shunned. Do not let them be our leaders. Follow those who are not afraid to say: "I try my best to be honest. I want to live in a society of honest persons. I will not take advantage of others even when I can, and even when it is perhaps permissible under the law, and even if I give more than I can take." This would enable our society and economy to become far more prosperous and secure than they are today.

Introduction (p. 137-139)

Businesses and corporations are not just legal entities. They are communities. As a member of a family or a community you will be sensitive to considerations that pertain not just to yourself, but also to you as a member of a group, the sort of motivation that is summarized in most corporations as team spirit. But being a member of a group in not just becoming submerged in the group. One retains one's identity and interests as an individual. And that means that among the most important factors in a good job and the satisfaction that goes along with it is fairness, a comparative measure of how people are treated. Aristotle insisted that justice requires a principle of equality, by which he meant not that everyone should get the same but, rather, that justice requires that everyone should get the proportion he or she deserves, depending on his or her position in the society. It is equal in the sense that it is neither too much nor too little. Aristotle suggests that the best way to test a person's sense of fairness is to watch the person when he or she is in charge.

Protecting the Investor

For the past 15 years, after the financial scandals of the late 1980s, it has been evident that the financial markets can be as corrupted by unfair dealings (like insider trading and ignoring conflicts of interest) as by outright theft and fraud. Behind all of this concern is a new awareness that is not enough to say "investor beware!" It is the responsibility of the financial community- in other words, all of us- to have some concern for what we might call the innocent investor, not just the proverbial feeble old lady on a pension, but most likely all of us. The forces of the market are brutal enough and sufficiently beyond our control that we all need and have a right to expect some protection, which means, minimally, ethical behavior on the part of those who are centrally responsible for making markets run in the first place.

Meaning of the Article Titled "We Don't Make the Laws"

In the article, it lists several instances where companies did some questionable behavior. However, despite their actions being unethical, they continued to perform them as there wasn't technically a law in place preventing them from stopping. The meaning of this article is that even if something is morally wrong, many won't stop until they're forced to stop. You can't trust people to automatically have their best interest at heart.

Common-Sense Ethical Pluralism

Combines aspects of of virtue ethics, Kantianism, and Utilitarianism.

Marketing to Customers

Customer marketing refers to any marketing activity or campaign directed at existing customers, specifically designed to drive retention, customer loyalty, advocacy, growth and community participation.

Retributive and distributive justice

Distributive justice is concerned with the distribution of goods, in the context of a job, salaries, bonuses, and promotions, but also opportunities and responsibilities. Retributive justice is essentially concerned with penalties and punishments, with assigning blame and, when necessary, reprimanding or punishing people in proportion to their mistakes or misdeeds.

The Golden Rule

Do unto others as you would have them do unto you.

Transparency International --USA Program

Securing Transparency in Trade: TI-USA is working with the U.S. administration , the private sector, and TI chapters to promote transparency in procurement, investment, services, and customs. It has promoted a World Trade Organization Agreement on Transparency in Government Procurement and agreements with similar requirements in the FTAA and APEC. It advocates strong transparency requirements in U.S. bilateral trade agreements and requiring bidders on projects financed by the World Bank and multilateral development banks to have anti bribery programs.

The Individual Investor in Securities Markets: An Ethical Analysis (pg. 91) (informed consent)

Informed consent refers to a case where an investment client makes a decision on a recommended investment program. This process actually involves the investment client having vivid and unobstructed understanding of the implications, details and the consequences of undertaking a recommended investment decision. Whereas normally an investment client may be not be aware of the implications of their investing decision, informed consent suggests they know the implications and are knowledgable before making that investment.

Finance Ethics

Financial Markets: Are vulnerable to unfair trading practices (fraud and manipulation), unfair conditions (an unlevel playing field), and contractual difficulties (forming, interpreting, and enforcing contracts). Financial Intermediaries: Commonly make decisions as agents for principals in an agency relation, and they often become fiduciaries with fiduciary duties. Agents and fiduciaries have an obligation to act solely in the interests of other parties and especially, to avoid conflicts of interest. Financial Management: Business firms are legally structured as the financial instruments of shareholders, and officers and directors are agents of firms, and have a fiduciary duty to manage the firms with the objective of maximizing shareholder wealth.

Contrast the Views of Aristotle, Kant, and Mill on truthfulness and lying

For Aristotle, truthfulness was a virtue. The lack of truthfulness was a vice. Lying was not so much a breach of rules as it was a betrayal of bad character. Kant, in contrast, was a rule man. Lying was wrong because it violated what he called the Moral Law (or what he characterized as the Categorical Imperative). Yet he, too, saw lying as a mark of a bad person, worthy of contempt, and independent of the consequences. In other words, lying is wrong even if the consequences are goof, and truth telling is right even if the results are disastrous. John Stuart Mill, by contrast, insisted that consequences are all-important. Lying is wrong, accordingly, because it usually-- perhaps almost always-- has long-term bad consequences.

Impact of "Holder in Due Course" concept- Swift v. Tyson Decision

From the 1842 case of Swift v. Tyson through the mid-1970s, this doctrine shielded innocent third-party holders of debts created by the sale of consumer goods. If the original creditor committed fraud in enticing a consumer to sign a contingent sales contract or a promissory note, and then sold that financial instrument another person or firm who remained unaware of the original deceit, then the consumer could not avoid payment to the new creditor on the grounds that the original transaction was tainted by fraud. Sale or transfer wiped clean any legal stain left by sales misrepresentations. The holder in due course doctrine encouraged aggressive misrepresentation by sellers of consumer goods on credit. Salesperson and agents could shade the truth or lie outright in order to wheedle contractual signatures out of consumers, knowing that the contract imposed different terms and conditions. Perhaps the fine print incorporated feed or expensive insurance coverage, or specified a different base price, order quantity, or interest rate. Alternatively, customers who might think that they had taken merchandise on a trial basis left stores, according to the documents they had signed, as contingent owners who had just agreed to sales on installment plans. Once customers signed their name to a sales contact, firms could then transfer the resulting financial obligations to a loan broker or finance company at a heavy discount, leaving consumers to fend off uncompromising debt collection from these financial intermediaries.

Quid Pro Quo

Harassment that pressures an employee for sexual favors as a conditions of employment or for benefits, such as promotions, job assignments, etc. Manipulation based on one thing for another.

Nietzsche on Honesty

He had an interesting take on truth telling and lying. He famously argued that a certain amount of deception (and self-deception) was necessary for life. (Art, after all, is essentially the telling of half-truths, embellished truths, and untruths.) But he nevertheless saw in lying a special problem, one that had less to do with breaking any rule than it did with the breach of personal trust.

Ethics of Hostile Takeovers

Hostile takeovers are often epic battles with winners and losers. For this reason, the rules for acquiring controlling interest should be fair to all parties involved. Managers of target companies feel entitled to a fair chance to defend their jobs; shareholders who sell their shares, and those who do not, have a right to make a decision in a fair and orderly manner; bondholders often lose in takeovers because of the increased debt; and employees and residents of local communities, who usually have no say in the decision, are generally the groups most harmed.

What is alienated labor? Karl Marx

In alienated labour, Marx claims, humans are reduced to the level of an animal, working only for the purpose of filling a physical gap, producing under the compulsion of direct physical need. Alienation from my life-activity also means that my life-activity is directed by another. The process whereby the worker is made to feel foreign to the products of his/her own labor.

The Poker Analogy

In poker it is right and proper to to bluff a friend out of the rewards of being dealt a good hand. A player feels no more than a slight twinge of sympathy, if that, when- with nothing better than a single in his hand- he strips a heavy loser, who holds a pair, of the rest of his chips. It was up to the other fellow to protect himself. In the words of an excellent poker player, former President Harry Truman, "If you can't stand the heat, stay out of the kitchen." If one shows mercy to a loser in poker, it is a personal gesture, divorced from the rules of the game. Poker has its own special ethics, and here I am not referring to rules against cheating. The man who keeps an ace up his sleeve or who marks the cards is more than unethical; he is a crook, and can be punished as such- kicked out of the game or, in the Old West, shot. In contrast to the cheat, the unethical poker player is one who, while abiding by the letter of the rules, finds ways to put the other players at an unfair disadvantage. Perhaps he unnerves them with loud talk. Or he tries to get them drunk. Or he plays in cahoots with someone else at the table. Ethical poker players frown on such tactics. Poker's own brand of ethics is different from the ethical ideals of civilized human relationships. The game calls for distrust of the other fellow. It ignores the claim of friendship. Cunning deception and concealment of one's strength and intentions, not kindness and open-heartless, are vital in poker. No one thinks any the worse of the game of the business because its standards of right and wrong differ from the prevailing traditions of morality in our society.

A Capitalist Concept of Justice (p. 152-155)

Irving Kristol argues (against Rawls and others) that capitalism does not require the creation of a common authority charged with redistributing wealth. Although we might have an obligation to help those less fortunate than ourselves, that does not mean we should have a centralized power (like a government and a tax structure) to tell us who, when, and how to help those persons. "Social justice" adds the idea of economic equality. A free market will raise the tide and thus float more boats, NOT make all boats equal However, the resulting unequal distribution of wealth will be whatever it turns out to be -- and by definition it will be as "just" as the free market can make it. Authoritarian manipulation of the free market is not the answer. Overall production of wealth will be decreased. No clear standard for the fairest redistribution of wealth. Voluntary redistribution of wealth is, however, consistent with free market economics. What answer does Kristol give for "is capitalism compatible with social justice?" "No". He believes this because since capitalism as a socioeconomic or political system is neither egalitarian nor authoritarian, it is in truth incompatible with social justice. Kristol argues that capitalism allows equal opportunity. Kristol argues that capitalism got a "bad name" because the focus shifted from production to distribution. What makes Smith's understanding of capitalism more humane than some other versions of capitalism? Adam Smith never believed for a moment that human beings were strictly economic men and women. He understood that people live in a society, not just in an economy, and that they feel a sense of social obligation to one another, as well as a sense of engaging in mutually satisfactory economic transactions.

Moral Repair

It emphasizes the importance of restoring or stabilizing and in some cases creating the basic elements that sustain human beings in a recognizably moral relationship. It is a responsibility that involves multiple parties affected by wrongdoing including offenders, victims, and communities. For offenders, it is forgiveness, and for community moral repair, it is achieved through supporting the victim while providing the opportunity to integrate the offender back into the community.

Ethics

It is essential to the functioning of the business world and the market. It is the opposite of corruption. It is a fundamental part of business education, not an embellishment.

Employment- At- Will Doctrine

It means that an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any reason with no adverse legal consequences.

Unsophisticated Investor Concept

It simply means you are part of a class of investor that can be sold stuff without liability and without the usual disclosures that would be required in a prospectus. Qualifying as a sophisticated investor says you do not need regulatory protection.

Instrument of labor

It's a concept in Marxist political economy that refers to all those things with the aid of which man acts upon the subject of his labor and transforms it. You're an instrument of labor if you give up your own time to work and produce labor.

Why is ethical employment termination important?

It's important that a termination process is ethical because that will help outgoing employees cope, it will protect your company's reputation, and it will reduce your risk of lawsuits.

Exploitation of Need (p. 142): John Locke, our labor and time are property rights.

Joanne Ciulla discusses the problem of exploitation in the workplace. Locke argues that labor is an extension of one's body. How does Ciullla further develop the notion that the free market may result in the weak being exploited by the powerful? By showing when, how, and why the weak may even choose to be exploited by the mighty. What does Ciulla mean by "self-enslavement"? A person in need of support and/or protection would sell himself to another. This choice, thought more or less freely made, was grounded in the same fears of starvation and violence found in other forms of slavery. The case of Monkey Labor illustrates how the logic of exploitation justifies taking advantage of those in need by arguing that one is taking care of people's needs. Exploitation is also about using one's power over others to determine what people need and what they should be willing to trade to have their needs filled. Similarly, the farmer decides that the monkey needs three meals a day and assumes that the monkey is willing to give up its freedom for them. Sometimes employers fill "needs" that employees do not have or want. Locke raises one of the biggest tensions of the employer-employee relationship. He writes that "the subjugation of the needy does not begin with the consent of the Lord, but with the consent of the poor man, who preferred being his subject to starving." So, it's wrong to force a needy person to choose to be your slave, but it's not wrong for the needy person to choose to be your slave or indentured servant. Are the two really that different? This is like the employer who says to a single mother of four, "If you don't like working here you are free to leave" or "if you didn't like the working conditions here, then you shouldn't have taken the job in the first place." A single mother who lives in a small town and has four children to support has the freedom to choose where to work, but little to choose from. When it comes to work, everyone has freedom of choice, but not everyone has viable options.

The Respect for Persons Principle

Kant's second formulation of the categorical imperative says, "Act so that you treat humanity, whether, in your own person or in that of another, always as an end and never as a means only." Kant did not simply assert that human beings are entitled to respect; he had an elaborate argument for it. Human beings ought to be respected because human beings have dignity. For Kant, an object that has dignity is beyond price. It is the fact that human beings are moral agents that makes them subjects worthy of respect.

Contrast the ethics of lying, puffing, and bluffing in business settings

Lying is making a false statement of fact. Spin is taking the same facts and viewing it differently. Puffing is inflating an making something seem better than it is. Bluffing is a lot like poker.

What were Machiavelli's thoughts offered about lying, etc.in "The Prince"?

Machiavelli's thoughts about lying are that you cannot rely on one person to keep everything good. Each person must be accountable for their own responsibilities, and often times the only way for people to be accountable is through force. This being because people in nature are not good, they are bad. People often have bad intentions and can't be trusted to be good 100% of the time. He also says that it's important for princes to appear to be honest and keep promises. He says that in dealing with people, a prince must break his promises when they put him at a disadvantage and when the reasons for which he made the promises no longer exist. In. any case, promises are never something on which a prince can rely, since men are by nature wretched and deceitful.

Concept of "managed earnings" and related ethical challenges (see p. 85-86)(Enron Scandal)

Managed earnings occur when the managers of a business falsely manipulate reported profit levels. The manipulation is usually designed to increase profits, perhaps to improve the stock price of the business or to qualify it for a loan. The Enron corporation was regarded as a corporate giant. The corporation had massive debts in its name. It tried to conceal these with the help of special economic entities and special purpose vehicles. But after a good run, it failed miserably and ended up as a bankrupt business. The failure and bankruptcy of the Enron Corporation jolted Wall Street and put several employees on the verge of a financial crisis . Enron traded at the highest market price of $90.75 on December 2, 2001. And when the accounting scandal emerged, stock prices went down to a record low of $0.26 per share. The Enron corporation and its management resorted to an evil scheme and malpractice of the off-balance-sheet mechanism. It created a special economic vehicle to hide the massive debt from its external stakeholders, namely creditors and investors. The special purpose vehicle was utilized to conceal the realities of accounting rather than focus on the operating results. The corporation transferred some portion of assets that had rising marketable value to the special economic vehicle, and in return, it took cash or notes. The special purpose vehicle then utilized such stock to hedge an asset present on its balance sheet of Enron. It ensured that a special purpose vehicle reduced the counterparty risk . The formation of the special purpose vehicles can not be termed illegal, but compared with the securitization techniques relating to debt, it could be termed as bad. Enron disclosed the existence of special purpose vehicles to the investors and the public, but few people understood the complexity of transactions done using the special purpose vehicles. Enron assumed that the stock prices would continue to appreciate and that they would not deteriorate or fail as hedge funds. The primary threat was that the special economic entities were capitalized with only the corporation's stock. If the corporation is compromised, then the special economic entities won't be able to hedge the deteriorating market price of such stocks. Additionally, the Enron corporation had held significant conflicts of interest concerning the special purpose vehicles. The Enron corporation was formed to merge Houston's natural gas company and inter-north incorporation. After the merger, it grew rapidly and was regarded as the most innovative company. However, it resorted to bad accounting practices. It was involved in the creation of special purpose vehicles, utilized to hide the rising debt of the Enron incorporation, which led to the business's failure and downfall.

Fiduciaries

Persons placed in positions of trust who use due care and loyalty in acting on behalf of the best interests of the organization.

Securities and Exchange Commission (SEC)

Monitors the stock market and enforces laws regulating the sale of stocks and bonds

Comparable Worth Article (p. 161-163)

On December 31, 1985, the American Federation of State, County, and Municipal Employees (AFSCME) and the state of Washington reached a historic comparable worth agreement. They negotiated a settlement of the AFSCME v. Washington State pay equity lawsuit. The 106.5 million payout is historic because it is the largest comparable worth settlement in history, and it ended over a decade of resistance by the state to rectify sex-based wage discrimination in its wage scales, as documented by Washington's own studies. In spite of this historic ruling, however, there is evidence that public sector employers still practice intentional wage discrimination and job segregation policies that funnel women into lower-paying, female-dominated jobs. Is this segregation intentional? And are the pay scales for these particular jobs based on sex-based wage discrimination? A means of closing the gap between men's salaries and women's salaries that can be attributed only to sex descrimination. a means to bring the wages of working women into the main stream The main arguments of comparable worth opponents are the following: -The gap between men's earnings and women's earnings is due to women's more recent entry into the workforce and their lesser education, training, and experience. -Instituting comparable worth will upset the free market economy and require new laws and government wage-setting boards. -Dissimilar jobs-like apples and oranges-cannot be compared. -comparable worth costs too much. -Unions promote pay equity because they want to keep women segregated in traditionally female dominated jobs.

On Demand Work and Ethical Issues Associated with It

On demand work refers to the recent rise of startups that provide services like chauffeuring and cleaning in immediate or near-immediate response to consumer demand. Ethical issues associated with this type of work is the lack of responsibility from the corporation for its employees. With Uber, the company claims their drivers are independent contractors so that they don't take any heat if anything bad happens. However, that exposes the company to more liabilities under employment and tax laws.

What is unethical about insider trading?

One argument against insider trading is that if a select few people trade on material nonpublic information, then the public might perceive markets as unfair. That could undermine confidence in the financial system and retail investors will not want to participate in rigged markets. Insiders with nonpublic information would be able to avoid losses and benefit from gains. That effectively eliminates the inherent risk that investors without the undisclosed information take on by investing. As the public gives up on markets, firms would have more difficulty raising funds. Eventually, there might be few outsiders left. At that point, insider trading could eliminate itself. Another argument against insider trading is that it robs the investors without nonpublic information of receiving the full value for their securities. If nonpublic information became widely known before insider trading occurred, the markets would integrate that information, resulting in accurately priced securities. Suppose a pharmaceutical company has success in Phase 3 trials for a new vaccine and will make that information public in a week. Then, there is an opportunity for an investor with that nonpublic information to exploit it. Such an investor could purchase the pharmaceutical company's stock before the public release of the information. The investor could significantly benefit from a rise in the price after the news is made public by buying call options. The investor who sold the options without knowledge of the success of the Phase 3 trials probably would not have done so with full information. One argument in favor of insider trading is that it allows nonpublic information to be reflected in a security's price and not just public information. Critics of insider trading claim that would make the markets more efficient. As insiders and others with nonpublic information buy or sell the shares of a company, for example, the direction in price conveys information to other investors. Current investors can buy or sell on the price movements, and prospective investors can do the same. Prospective investors could buy at better prices, while current ones could sell at better prices. Yet another argument for allowing insider trading is that it is not serious enough to be worth prosecuting. The government must spend its limited resources on catching nonviolent traders to enforce laws against insider trading. There is an opportunity cost to going after insider trading because the government must divert those resources from cases of outright theft, violent assaults, and even murder.

Should the SEC restrict access to certain markets tosome individual investors?

One kind of justification that might be proposed is paternalistic. By paternalism we roughly mean interfering with a person's actions or preferences by restricting their freedom of action or the range of choices normally available to them for the reason that such a restriction promotes or preserves their good, welfare, happiness, or interests. A paternalistic justification for restricting at risk investors would be that exposure to risk for many investors is too great to permit them to continue without some sort of protection that reduces the risk to an acceptable degree. For certain investors an acceptable degree may be no risk at all. For others it some risk may be permissible. In either case, the argument goes, as long as the intent of interventions to protect or promote the good of at-risk investors, and as long as it does not wrong other persons, then intervention is at least permissible and may be obligatory. It is only in this way that harm to many investors may be prevented.

Historical - aluminum siding scams in the 1950s and some time share schemes as examples

Originally the term referred primarily to siding salesmen and to tactics that were deceptive as well as pushy. Several local Better Business Bureau Web sites feature tin men as the 1950s' contribution to the top scams of the past century. At dinner downtown with a group of friends, the conversation turned to one couple's day of car shopping. They didn't have nearly as much to say about the cars as they did about the salespeople. Tom mocked the one who jumped to speak with them before they entered the showroom. Carolyn couldn't stand the one who refused to accept that a $200 "discount" would not make a $25,000 decision go any faster. Whether pushy sales tactics ever were appealing is something I can't answer. But they were widespread, in contracting as well as in cars. And in contracting, at least, those who employed this approach were, and are, called tin men. Originally the term referred primarily to siding salesmen and to tactics that were deceptive as well as pushy. Several local Better Business Bureau Web sites feature tin men as the 1950s' contribution to the top scams of the past century. Aluminum siding salesmen would promise homeowners a commission or referral fee for any neighbors who purchased the siding. They also might tell the homeowners the product would be free and they'd have to pay only for labor. Either way, consumers ended up paying quite a bit of money for work they'd been led to believe would cost much less. Watch the 1987 film Tin Men, starring Richard Dreyfuss and Danny DeVito, to get the Hollywood version. These days, tin men is a term remodelers use to deride contractors who use high-pressure sales tactics, make promises they can't fulfill (whether they realize it or not) and are better at marketing than they are at delivering what customers need. It is my great pleasure to report I've yet to meet one. Despite the fact that remodelers in many parts of the country are struggling mightily to hit revenue targets, no one recommends a return to hard-sell strategies. Instead, companies that are holding strong or even growing suggest shutting up. This might seem counterintuitive and strangely passive, but it works. Once a salesperson gets in front of a prospect, the best thing to do is listen. Find out what prospects' needs, wants, desires and problems are. Take the time to understand them. Explore all possible solutions and then offer the best one. And if your company cannot offer a solution, don't try for the sale anyway. The revenue from that job will not outweigh the bad word-of-mouth from an unhappy customer. One bit of advice suggested by Dave Mattson of the Sandler Sales Institute - owner of a system popular with many remodelers - is to remember that the entire staff, not just the sales team, is responsible for sales. One example he cites is how a lead carpenter, speaking with great passion, conviction and knowledge about his work, can do more to build repeat and referral business than any phone call or visit on the part of the salesperson. I saw this happen in January at the International Builders' Show in Las Vegas. For the second year in a row, the Reed Residential Group partnered with readers, sponsors and charitable organizations to build homes and shelters for deserving people. While working on the remodelers' Habitat for Humanity house this year, I had a chance to observe the interactions among volunteers who'd never met before. Again and again, work colleagues pulled me aside to remark on the ingenuity, patience, intelligence, skill and kindness of one remodeler or another. While seeing my friends get along always gives me the warm fuzzies, my business self thought: sold. If anyone at Reed Residential needs a remodeler, I know who will be called. Time-sharing is a form of fractional ownership, where buyers purchase the right to occupy a unit of real estate over specified periods. For example, purchasing one week of a timeshare means the buyer owns one-fifty-second of the unit. Buying one month equates to one-twelfth ownership.

First Amendment's Application

The First Amendment prohibits any laws that establish a national religion, impede the free exercise of religion, abridge the freedom of speech, infringe upon the freedom of the press, interfere with the right to peaceably assemble, or prohibit citizens from petitioning for a governmental redress of grievances. In September 2004, Lynne Gobble was fired from her job as a factory machine operator in Decatur Alabama because her automobile in the company's parking lot displayed a bumper sticker supporting John Kerry as President.

The Social Responsibility of Business is to Increase its Profits for the Shareholders (Milton Friedman)(p, 174-178)

The Friedman doctrine, also called shareholder theory is a normative theory of business ethics advanced by economist Milton Friedman which holds that the social responsibility of business is to increase its profits.[1] This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. As such, the goal of the firm is to increase its profits and maximize returns to shareholders.[1] Friedman argues that the shareholders can then decide for themselves what social initiatives to take part in, rather than have an executive whom the shareholders appointed explicitly for business purposes decide such matters for them.

Adam Smith's Influence in Business Ethics

The Wealth of Nations and the Theory of Moral Sentiments. The invisible hand theory of capitalism. Viewed as the founder of free market capitalism; believed that business was and should be guided by the morals of good people.

Lies, Damned Lies, and Managed Earnings article (p. 83)

The article talks about how in a high up company an employee is committing an accounting fraud. It says that typically, the employee never set out to be dishonest, but rather just dodge a few rules. However, over time that fraud will build up, class action lawsuits will happen, stocks will go down, fines will happen, and someone will go to jail. Basically this article talks about how CEOs never imagine themselves going to jail, but that the pressure to "manage their earnings" can lead them to do dumb things.

Plural Universalism

The broadest moral principle that would require standards of conduct that optimize happiness as far as possible without producing injustice or curtailing freedom. It balances broad concepts of happiness, justice, and freedom.

Business Ethics

The concept of this is best described as compromising the principles, values, and standards that guide behavior in the world of business.

Fissured work

Work arrangements that may have a traditional employee/employer structure, but exhibit much of the insecurity associated with contingent work. Women and men in fissured work arrangements may not be counted as part of the contingent work force despite having similar characteristics, including greater job insecurity, lower pay, and less access to benefits. Example is a company like Walmart. They set rules and regulations. It also includes situations like franchising.

Emotional Labor

This labor requires one to induce or suppress feeling in order to sustain the outward countenance that produces the proper state of mind in others. This kind of labor calls for a coordination of mind and feeling, and it sometimes draws on a source of self that we honor as deep and integral to our individuality.

Ring of Gyges

This story is about a man who finds a ring that turns him invisible. He ends up doing unjust things due to him being invisible. This story emphasizes the point that when no one can see you, you're invisible, you'll tend to do unjust things rather than just things. In the business world this can apply to many things. Businesses, if they can get away with it, will find loopholes and will be unethical.

Sustainability Reports

To evaluate an enterprise's responsiveness to economic, environmental, and social sustainability challenges

The Foreign Corrupt Practices Act

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.

Employee Bill of Rights concept

The employee bill of rights concept is a proposition that people at work deserved greater rights to expression than the law, management practice, or conventional wisdom. It's merely an assertion that a market economy can still flourish when adults sell their time and their labor but not all of their liberties. It's an idea that there should be an employee bill of rights.

Securities Act of 1933

The first major federal law regulating the securities industry. It requires firms issuing new stock in a public offering to file a registration statement with the SEC.

Are information requirements enough?

The only plausible course of action is to make sure that at-risk investors have all the information they need to make investment decisions. This provides three advantages. 1. Providing information does not infringe any rights. 2. providing information is already one function of the securities and exchange commission. 3. providing information would be the most direct way to discover whether investors would consent to restrictions.

Introduction - Shareholder v. Stakeholder concepts (knowMilton Friedman's philosophy and some of the rebuttals)(p. 172-174)

The shareholder approach believes that those in management have a singular duty to please shareholder. The stakeholder approach believes that management should consider everyone who is affected.

Anchoring

The tendency, in making judgments, to rely on the first piece of information encountered or information that comes most quickly to mind.

Ponzi Scheme

Using cash from newer investors to pay off older ones.

Introduction- History of Money

We started off with bartering, then we moved to precious metals. After that we moved to paper money, and then online forms of currency. Paper money is a promissory note, and behind the promise is an enormous network of trust. Money is worth something only because people believe and trust that it is worth something. This mystery of money, as opposed to the illusion that money itself is what is ultimately desired and desirable, pervades the financial world and its ethics. Money depends entirely on trust, and trust is the stuff of ethics. The story of money and business, like the story of business ethics, is the story of trust and how it is gained and lost, how it is betrayed and, if lost, again regained. And the more abstract money becomes, the more it depends on trust. Money doesn't just sit there. Money gets invested. Money is always at work. Money that is just sitting there still plays its passive role in the flow of markets and financial exchange, and people who owe billions to local and foreign banks are very much players in the system.