Ethics and Business Final
Justification for Employment at Will
*Argument from Property Rights: (Rights) employers have right because it is their property, their money, and their employees *Argument from voluntary contracting (fairness): employees voluntarily accept at will status, both parties enter freely, employee has accepted terms and conditions *Argument from Efficiency: (Welfare) aggregate outcomes are biggest because employers have flexibility, much more active, moving economy, more bang for the buck so they can hire more without worrying about keeping them, produces better welfare and economy thrives.
Heath Principles for Business/Corporations in the Market
*CSR: corporations have a responsibility to promote public good above and beyond merely making profits; should serve society *Sports vs. Business *Competition allows for individuals to act in a self- interested way, yet action must be healthy and must uphold 4 principles 1. constrained competitiveness (do not exploit market failures) 2. No cheating 3. No Gaming 4. Taking the High Road
OSHA
*Occupational Safety and Health Administration *government regulatory agency, executive department of labor *primary responsibility for regulation of working conditions *"general duty clause"-requires employers to furnish to each of his employees employment and provide a place of employment which is free from recognized hazards that are causing or are likely to cause death or serious injury. *Protect health and safety by providing information about hazards that employees must face and with due care it eliminates lead poisoning in general instead of determining who can work there (Johnson Control Case)
Occupational Safety and Health: Risk and Coercion in the Workplace
*employee who depends on job for living have diminished claim to say no to dangerous work Health/Safety: Information 1. reveal info 2. duty to clearly communicate info 3. duty to speak of info from science 4. duty to produce new info Due Care: right to have employer minimize health/safety risk with technologically/ financially feasible (Owen Take initiative)
Employment at Will
*legal doctrine that maintains that employees serve at the discretion of their employer *employers have right to hire, fire, promote, demote, or lay off employees whenever they please so long as such actions do not violate a labor union agreement, legal statute, mandate of public policy, or special employment contract **Montana is the only state with the "just cause" statute
Arguments for Affirmative Action
*preferential treatment programs are necessary to eradicate lingering racial and sexual discrimination and to accelerate the pace of integrating certain groups into the mainstream of american society *combat effects of discrimination *provides direct economic benefit by increasing the pool of job applicants and by improving community relations 3 conditions for permissible affermative action (1) plan does not create an absolute bar to the advancement of any group (2) plan does not unnecessarily limit the rights of others (3) plan to be temporary
Ethical Relativism
*relates to international business Actions are ethically right (wrong) when they conform (don't conform) to the conventions/practices of a particular society or culture, defines what you ought to do to conform to conventions PROBLEMS 1. same action can be right and wrong simultaneously 2. some universally unacceptable conventions (Slavery) 3. lack of cross-cultural evaluation 4. no progress possible (can't say one change is better than another)
Psychology of Ethical Decision Making (Adler)
*scientists believe that most people have an innate moral sense *moral judgement is often an intuitive, emotional matter *moral feelings of doing the right thing or doing the wrong thing were generated by nature as a part of human evolution *ethics can't be absolute because of our psychology *moral judgements are often cause not outcome of moral reasoning *CPSC draws line that can't be crossed on products Haidt's 5 Innate Moral System
The Right to due process in employment
*the idea that individuals have the right against the interference or use of power by employer that intends to unduly harm their interest or deprive them of their legitimate rights. *Due process requires good evidence and good procedures: *good evidence to justify employment decision *good procedures to consider and present evidence (Ex. HR) *Human Resources 1. performance stands 2. performance evaluations 3. review of management 4. appeal process
Case 4.3: A Whistle-Blower's Quandary
-Genetropin (growth hormone) was marketed by Pharmacia -off label marketing became a problem (strictly not allowed in pharmaceutical industry) -Dr. Rost noticed what was happening and alerted his superiors (nothing was done) -company then sold to Pfizer and Pfizer reported it without telling Rost -Rost filed a complaint under the False Claim act (compensation) -they couldnt prove that he was the original source and he turned in the company and off labeling was ceased -he eventually lost his job
Case 14.4: Google in China
-Google in trouble for violating human rights in China -they agreed to obey the Chinese government and block certain terms from search -made it clear that they were not collecting information -They said they were doing more good by obeying the government ETHICAL RELATIVISM
Ford Firestone Documentary
-Rollovers -firestone tires failed but cars also flipped (Ford vs Firestone) -sport utility cars were rolling over with good tires -light trucks to avoid fuel issues -rollovers at very low speeds -high center of gravity -management could have widened and lowered car but chose not to -NHTSA showed the public tests proving that the cars flipped over -Marketed big cars directly to families even though the car was unsafe -lawyers saw an opportunity to blame Firestone for the rollovers saying it was due to blown tires -Firestone was slammed and had to recall tires -ford finally widened their car by 2 inches and lowered it for "passenger comfort"
Problems with Advertising
-deception -tactics to create a false belief in another -manipulation - using information to shape perception of alternatives -Persuasion -creation or shaping desires through claims, arguments, images, etc
10.3: The Ford-Firestone Brawl
-disagreement on what was causing car wrecks -firestone tires would blow out because they were low pressure tires but the ford explorers also flipped often and were not constructed well -ford put all the blame on firestone and their tires were recalled -ended a business relationship that had been striving for over 100 years
Case 14.3: Bribery at Siemens
-first investigated because the company was bribing individuals so they wouldn't be able to get out of contracts -it was discovered that they had made billions of bribes -hired consultants who funneled money for bribes -"for good of company" -federal authorities impressed with how open Siemen was with investigation -brought in new ceo to reform company BRIBERY
5.2: The Conflict of an Insurance Broker
-insurance broker trying to find good insurance for cheap for a major museum -the museum would most likely take cheapest insurance and one insurance company offered a $60,000 payment but the insurance agent didn't want to report it to the museum because he wouldn't make much commission -deception (with holding info)
Case 1.1: Merck and the Marketing of Vioxx
-merck withdraws arthritis pain reliever Vioxx that was researched and proved to cause an increase in heart attacks -damaging documents emerged casting doubt on Merck's claim that they had taken precautions with the development of the drug -challenge of adhering to high standards while staying competitive -push for profits and deception
6.1: Psychological Testing at Dayton Hudson
-owner of Target store chain -Soroka charged him with invasion of privacy -Hudson defended the use of psychological testing -intrusion was minor and for the good of the company -they don't see answers to the questions -was justified
13.3: Sears Auto Centers
-performed unnecessary repairs and services to increase profits -systematic consumer fraud -filling the oil in each car only halfway, slow workers fired, fast workers would would purposely perform a poor job so customers would come back more often FRAUD
10.1: Selling Hope
-the nature of advertising lotteries -they are a monopoly without competitors so they only have 2 strategies (1) recruit new players and (2) make existing players spend more -they chose second option to play into peoples gambling addictions -targeted lower income groups and were deceiving with their message by presenting only winning awards and not how much people lose -target poor because they have the most to gain and restrictions would deprive them of life changing opportunities DECEPTION
Marketing: Labeling Problems
-unclear terms and incomplete information ■ Fair Packaging and Labeling Act (1966): requires that the each package list the identity of the product; the name and location of the manufacturer, packer, or distributor; the net quantity; and as appropriate, the number of servings, applications, and so on ■ Nutrition Labeling and Education Act (1990): requires that the labels on packed food products contain information about certain ingredients, expressed by weight and as a percentage of the recommended daily diet in a standardized serving size
Case 2.1:HP and the Smart Chip
-users of HP ink-jet printers complained that the smart chip was programmed to send a premature low-on-ink message, while substantial ink remained in the cartridge -failed to provide information -information asymmetry (market failure)
Components of Whistle-Blowing Policy
1. An effectively communicated statement of responsibility (responsibility to report all concerns) 2. A clearly defined procedure for reporting (allows employees to report concerns in confidential manner) 3. Well-trained personnel to receive and investigate reports (skills) 4. A commitment to take appropriate action (employers must be assured that their reports of suspected wrongdoing will not be ignored or misused) 5. A guarantee against retaliation (most critical component** in any whistle-blowing policy is the assurance that employees will not suffer retaliation for making reports in good faith)
Objections/Responses to Friedman's Agency and Taxation Arguments
1. Consumer Demand/Preference (Whole Foods) 2. Reputation (Starbucks) 3. Labor Resources (Potential Employees) 4. Investors with social concerns (SRI)
Haidt's 5 Innate Moral Systems:
1. Don't physically harm other people 2. Golden Rule 3. Be loyal and show tolerance (group) 4. Be pure and demonstrate sanctity 5. Show respect for authority
Justifications for Whistle-Blowing
1. Is the situation of sufficient moral importance to justify whistle-blowing? 2.Do you have the facts and do you understand the significance? (motivated by the prevention of wrong doing) 3. Have all internal channels and steps short of whistle-blowing been exhausted? 4. What is the best way to blow the whistle? (Reasonable evidence of wrong doing) 5. What is my responsibility in view of my role in the organization? (a careful analysis of above, and what is the particular role in the organization) 6. What are your chances of success? (reasonable success at preventing wrongdoing)
How to Avoid Conflicts of Interest
1. Objectivity, avoid being biased on an interest 2. Avoidance, avoid acquiring any interests that would bias one's judgement (some corporations practice alignment to avoid conflict of interest) 3. Disclosure, three conditions: (1) lawyer discloses conflict to client (2) lawyer is confident that he/she can provide wholly adequate representation so that the client will be unaffected by the conflict (3) the client accepts the lawyers service under those conditions 4. Competition, powerful incentive to avoid conflicts of interest 5. Rules and Policies, most companies have policies 6. Independent Judgement, results from biased judgement 7. Structural Changes, compartmentalizing services and strengthening independent boards
Limitations to Employment at Will
1. Union contracts: if you are part of a collective bargaining unit (labor union) you can be protected by their contracts, collective group that tries to give employees more freedom 2. State or federal Statutes: specific laws that limit employment at will (specifically Civil Rights Act of 1964)- makes it illegal to hire/fire based on race, religion, etc. 3. Public Policy: Cannot take away job because employee won't do something harmful to self or to public that would be fraudulent or illegal 4. Special Employment Contract: Special 1 on 1 contract entered into through negotiation
Arguments Against Affirmative Action
1. affirmative action involves hiring and promoting less qualified people and lowering quality in the workplace 2. It is damaging to the self-esteem of employees who are favored because of race or sex (creates impression that they could not succeed on their own, reduces respect of society) 3. it produces race consciousness, which promotes rather than fights discrimination (heightens our consciousness of differences)
Four Kinds of Conflicts of Interest
1. exercising biased judgement 2. engaging in direct competition 3. misusing a position 4. violating confidentiality
Pharmaceutical Ads for Celebrex and Lipitor
Ad #1: Was the information about Celebrex presented in a clear, transparent and useful manner? Explain Distracted you doing to side effects, but slowed down and focused on the positive effects Manipulative because it shaped the perception of all of the information presented by presenting it in a way that plays to the psychological reactions emotionally of the viewers visually and graphically The communication of information is not a strait forward thing it can be selectively shaped to the way in which it is presented What they leave you with at the end is what is remembered Ad #2: In what way, if at all, did the Lipitor ad engage in any manipulation? How did it attempt to persuade us? It has the effect of creating the perception in the mind of viewers that it is the drug that is the direct solution to solving the problem
"Black Money"
BAE System *flyer deal with the UK and Saudi Arabia (lavish gifts to Prince Bandar and $2 million sent to the Prince in DC) *investigation started but Tony Blair was threatened of terrorism by Prince Bandar's father *investigation stopped and there is no account of the black money
Conflict of Interest
Boatright: -a conflict of interest exists when a personal interest interferes with a person's ability to fulfill his/her obligation to act on behalf of another person's interest Smith: - a conflict of interest exists when: 1. there is an individual, A, who has obligations to another party, B, in virtue of holding an office or position 2. A is compromised or potentially compromised in fulfilling his obligations to B 3. The reason for A's being compromised in fulfilling his obligations to B is that A has interests that are incompatible or potentially incompatible with fulfilling his obligations to B.
Property Theory of a Corporation
Bundle of Rights that defines what an owner is entitles to do with a thing, involves control over the thing owned and an assumption of responsibility (ex: car, house, etc) Right to exclude Right to dispose/use BUT owning a car is different from owning a corporation investors dont own anything tangible possession can not be exclusive shareholders are removed from day to day decision making
Human Rights
Certain, basic rights that no person or institution (including a corporation) is morally permitted to violate. ○UN Declaration of Human Rights - Lists of rights sent out by UN that gives basic rights to people regardless of nationality/race, provides benchmark for world ○International Covenant on Civil & Political Rights ■ like bill of rights ○UN Global Compact-brought together corporate leaders to recognize human rights ○Rights Argument - A has a right to B (All of these must be true to establish right) ■ B is an entitlement (legal or moral) ■ Others have an obligation to respect A's entitlement to B ■ B represents some fundamental human need or interest of A ○People Argue that people have the basic right to... ■ Free Movement, Free speech, free association, security, poltical participation, non-discrimination, fair trade/due process, property ownership ● Known as Negative, "Non-interference rights", leave people alone, intangible ■ Education, subsistence, health care, housing ● Known as Positive "welfare" rights ● depend on other people to provide
Special Roles and Relationships
Fiduciary: an individual who is entrusted to oversee and care for another's assets, large amount of discretionary judgement (all agents are fiduciaries but not all fiduciaries are agents) (must act with candor, care, and loyalty) ex: CEO, trustee Agent: act on behalf of another, employee of a company. normally follows orders of the principal, has expertise/skill and acts on behalf of principle, not self-interest. (*avoids conflict of interest-principle of duty) Professional: legally recognized special employees who have highly developed or technological skills (*thought to benefit or serve public) ex: medical doctor, lawyer Agency Relationship: engaging other peoples skills and knowledge and allowing them to exercise judgement on our behalf. ex: agent (employee) relationship to employer
Market Failures
Heath: businesses take advantage of the market by exploiting the market failures created when businesses do unethical things like pollution (Race to bottom). Do not exploit monopolies, externalities, and information gaps, and uphold all rules to avoid market failures Boatright: 4 main reasons: 1. imperfect competition 2. information asymmetries 3. externalities 4. collective action problems Arguments: 1. Imperfect Competition: argument that free markets are efficient presupposes perfect competition. (perfect competition is highly unlikely because of lack of information) 2. Information Asymmetries: argument that free market is efficient makes certain assumptions about human behavior (people lack ability to gather all info, human motivation is more complex than econ theory) 3. Externalities: efficiency argument that assumes that there are no spillover effects or externalities which is to say that all costs of production are reflected in the prices of goods and services and are not passed onto others 4. Collective Action Problems: false belief that if every person makes decisions on what is rational then collective choice will be rational (things like transit are decided by a few people, and not all people will decide on the same thing)
Taxation Argument By Friedman
Managers are not public servants; they do not have the right to interfere with people or peoples liberty and freedom. It is morally wrong for a manager to use corporate money on a social endeavor because taxation would be a result. The money the company makes belongs to the shareholders. (*problem is the trade off between profit and social responsibility)
NHTSA
National Highway Traffic and Safety Administration -did studies on cars to show rollovers and warn people -Static stability Factor was released to public to show link between car and stability
Contract Theory of a Corporation
Nexus of Contracts the structure and relationships within a corporation which are individuals coming together through various contracts and agreements that constitute why and how the corporation exists and how it is managed. (work for one goal) corporation holds contracts together like fabric that holds thread together explicit contracts: employees and management implicit contracts: what investors operate under
Privacy
The right to be left alone, the right to have personal information kept from possession of others, protect an individuals autonomy
Equality Affirmative Action
Two arguments: 1. equality of opportunity addresses not only the harm done to individuals from past discrimination but also the barriers posed by discrimination in present-day society (chance to compete under fair conditions) 2. Equality of treatment right to receive an equal share applies only to a few things (provides a more solid basis for affirmative action)
Theory of Social Institution for a Corporation
a corporation is not merely a private association created for the purpose of personal enrichment but also a public enterprise that is intended to serve some larger social goal. "quasi public institutions"- must serve interests of everyone, promote wellbeing of every contracting party of a corporation serve all stakeholders (including employees)
Bribery
a special payment or service to another individual, organization, or government agency in order to influence the latter'w behavior or judgement, to obtain or retain a business arrangement (*personal interest) (*illegal) Wrong because: 1. distorts equal competition -non market ways to beat competition, lack in price quality and efficiency 2. conflict of interest - company v personal 3. substandard products (inefficiency) -prevents products from improving because of lack of competition 4. Leads to poor economic development -contributing patterns of underdevelopment
Deception
act of intentionally or unintentionally creating a false belief in someone else, or exploiting a false belief already held by someone else, that influences their choices • Ethically problematic because it undermines someone's ability to make fully informed, rational choices, thereby diminishing their freedom • Occurs through telling lies/presentation of false information or leaving clues that lead to a result that is false and deceptive • Marketers place claims on products that may create some false belief on the claims made on products
Persuasion
act of shaping or creating someone's desires (or wants) through the presentation of arguments, information, images or messages • Not necessarily unethical; however if the act of persuasion produces irrational desires, may undermine the individual's ability to make rational choices, thereby undermining their freedom • Trying to create a desire/interest in a product that a customer might not have previously had • How was this desire created? Are they using tactics or techniques that are rational or irrational? • 2 Ways o Rational Means- argumentation state your case to persuade o Irrational Means- ways to attempt to persuade in active manipulation, plays to our emotions, weaknesses, and desires that our rational selves might not act upon but give in due to being played emotionally
Manipulation
act of using information or the psychological profile of another person in order to limit or shape their perception of information or alternatives • Ethically problematic because it undermines someone's ability to make fully informed, rational choices, thereby diminishing their freedom • May have the same potential impact of deception, yet it is slightly more crafty, because you are trying to shape their perception or use of information that is being conveyed are use of advertisement • Marketers=Psychology (Playing to certain psychological qualities EMOTIONS) • Examples: Fear you need this product to protect you child
Ethical Absolutism
actions are right (wrong) when they conform (fail to conform) to universal standards, independent of the conventions/ practices of a particular society or culture
Discrimination
describes a large number of wrongful acts in employment, housing, education, medical care, and other important areas of public life. It is a form of unequal treatment and it involves decisions that directly affect the employment status of individuals or in the terms and conditions of their employment 2 necessary elements for discrimination: (1) involves decisions that directly affect the employment status of individuals or the terms of conditions of their employment (2) results from prejudice or some other morally unjustified attitude against members of the group to which the individual belongs
1964 Civil Rights Act
employers cannot take race, color, religion, sex, and national origin into account (protected class)
Coercion in Workplace
exercising force to compel another individual to accept a decision or state of affairs that he or she would not otherwise accept. typically the individual being coerced is made worse off compared to his or her current situation because they are forced into a situation where the alternatives are comparatively worse.
Employers and Coercion
if injury or death, two defenses for the employer 1. Direct Cause: industrial accidents are from numerous effects and it is not practical to reduce harm any further 2. Assumption of Risk: employees voluntarily assume the risk inherent in work (need to be aware and choice must be free) (*common law defense)
Affirmative Action
initiatives undertaken by an organization to expand representation to statistically underrepresented groups of individuals, able to address discrimination types: preferential hiring, special recruitment, hiring quotas
Sub-Prime Mortgages
loans given to people who are at a higher risk to have difficulty maintaining their repayment schedule due to a variety of factors
Agency Argument by Friedman
managers are agents, working for principals, they are profit seeking. Since they are in an agency relationship, their main goal is to fulfill the needs of the principals, not greater society.
CPSC (Adler)
o Work with industry to develop industry standards o Educate consumers on the safety/use of products o Educate industry on our rules/regulations o Issue mandatory safety standards o Ban products where standard is not feasible o Recall dangerous products and seek civil and criminal penalties
Compensation Affirmative Action
one argument for giving preferential treatment to members of certain groups is that it is owed to them as compensation for the injustice directed at them distributive justice and corrective justice (Aristotle)
Foreign Corrupt Practices Act (FCPA)
prohibits the payment of domestic and international bribe payments by individuals and also provides criminal penalties for corporations that create organizational environments where bribe payments are permitted, encouraged, or insufficiently prevented. *If you have assets in the US, you are subject to investigation under the FCPA
Whistle-Blowing
the release of information by a member or former member of an organization that is evidence of illegal and/or immoral conduct in the organization or conduct in the organization that is not in the public interest
Value of Privacy
two arguments: Utilitarian Concept -some info gathered causes needless harm, many times info will be inaccurate or incomplete, the employee is not able to challenge or explain the information gathered, privacy gives a healthy sense of personal identity and freedom Kantian Concept - privacy is being a person and respecting other people, people have no control on how they are being perceived by others, cannot establish intimate relationships without privacy, can destroy integrity, trust doesn't exist if there is no privacy.
Sexual Harassment
unwelcomed sexual advances, requests for sexual favors, and other verbal or physical conduct of sexual nature 2 main types: 1. "quid pro quo"-when a superior (usually a man) uses his power to grant or deny employment benefits to exact sexual favors from a subordinate (usuallu a woman) 2. "hostile working environment"-the sexual nature of the conduct of coworkers and others that causes a woman (or man) to be very uncomfortable
Basic Ethical Principles
welfare, duty, honesty, dignity, fairness, rights, integrity
Ethical Issues in Financial Services
■ Deception: When a person is unable to make a rational choice as a result of holding a false belief that is created by some claim made by another. That claim may be either a false or misleading statement or a statement incomplete in some crucial way. ● Ethically problematic because it undermines someone's ability to make fully informed, rational choices, thereby diminishing their freedom. ■ Churning: Defined as excessive or inappropriate trading for a client's account by a broker who has control over the account with the intent to generate commissions rather than to benefit the client. ● Legal Definition Includes 3 parts ○ (1) The broker controls the account ○ (2) The trading is excessive for the character of the account ○ (3) The broker acted with intent ● Ethical Problem - Breach of a fiduciary duty to trade in ways that are not in a client's best interests **Important to note that broker must have been given control of account, because then they assume responsibility. ● Can be very hard to prove, "excessive" part is hard to prove. Investor could just like high-volume trading, and high-volume trading that loses money might still be defended as an intelligent but unsuccessful investment strategy. ■ Suitability: The degree to which a certain product meets the needs, expectations and long term interests of customer; in the financial services industry suitability is particularly important because individuals who sell financial products and services are also perceived to be in a position of authority or special knowledge. ● Most common causes of unsuitability: ○ (1) Unsuitable types of securities - (Exp) Recommending stocks when bonds would be better ○ (2) Unsuitable grades of securities - (Exp) Selecting low-rated bonds when higher-rated ones better ○ (3) Unsuitable Diversification - (Exp) Leaves portfolio vulnerable to changes in markets if everything in one type of investment ○ (4) Unsuitable Trading Techniques - (Exp) Use of margin or options, which can leverage an acct. & create greater volatility and risk ○ (5) Unsuitable Liquidity - (Exp) Limited partnerships are not very marketable and are thus unsuitable for custumers who need to liquidate investment
Basic Concepts from Krinsman Article on the Sub-Prime Mortgage Crisis
■ Early 2000's Housing Market was booming, interest rates were at an all time low, and delinquency on subprime mortgages was at an all time low ■ This made everyone happy, tons of refinancing happening, everyone getting equity in their house, whole market on rise, people took notice ■ As people took notice of prosperity, Krinsman says more seccuritization of subprime loans began, meaning big investment banks began bundling them and taking more interest, dealing with them. ■ Problems began in 2006 when housing prices began to decline and interest rates began to increase, however demand for the securities with the subprime mortgages did not. ■ In order to meet this demand, originators began to lax their standards even more for these subprime mortgages than they already were in order to keep up with how much big companies wanted them ● Krinsman says they loosened their standards to meet demand through devices such as not requiring a 20% downpayment anymore, they would simply let them take out another loan on top of their 80% one to cover it. They also required less stringent documentation to prove sources of income and credit scores, would simply give them to people without really checking. ■ Beginning in 2006 delinquency rates for paying back these subprime mortgages began to rise, aka people can't pay back loans they shouldn't have even gotten, essentially shit hits the fan at this point. BOOM!!!
Strict Products Liability Theory
■ Strict Liability Theory ■ manufacturers are responsible for all harm resulting from a dangerously defective product even when due care has been exercised all contracts observed ■ Ethical arguments ■ purely utilitarian and justifies strict liability for securing the greatest amount of protection for consumers at the lowest cost ■ strict liability is the fairest way of disturbing the costs involved in the manufacture and use of products ■ theory ignores element of fault ■ objections to strict liability ■ product liability covers many different kinds of accidents, and the most efficient or equitable system for one kind may not be efficient or equitable for another ■ the view that corporations are able to distribute the burden of strict liability to consumers effortlessly is not always true. Multi-million dollar awards in product liability suits and the high cost of insurance premiums place a heavy burden on manufacturers, driving some out of business and hindering the ability of others to compete ■ other complaints of critics are that the threat of liability suits stifles innovation because new and untested products are more likely to be defective and that a patchwork of state laws with differing theories and standards creates uncertainty for manufacturing
Due Care Theory (Product Safety)
■ manufacturers should take all reasonable precautions to ensure that products they put on the market are free of defects likely to cause harm ■ Due Care Standard: a legal standard used to determine if a company is negligent in the design or manufacture of a product that has caused harm through its use. It states that a company fails to protect against harm when it did not take steps to prevent some harm that a reasonable person could have foreseen. ■ 1. Design ■ 2. Materials ■ 3. Production ■ 4. Quality Control ■ 5. Packaging, Labeling, and warnings ■ 6. Notification
Contract Due Care Theory Manufacture
■ responsibility of manufacturers for harm resulting from defective products is that specified in a sales contract ■ ethical basis for the contractual theory is fairness in commercial dealings ■ consumers know that the use of many products involves some danger, and they voluntarily assume the risk when the nature and extent of the hazards are revealed to them ■ Objections to the contractual theory ■ whether a product is of an acceptable level of quality or is fit for the purpose for which it is ordinarily used is an extremely vague standard ■ a sales agreement may consist of a written contract with language that sharply limits the right of an injured consumer to be compensated
Dependence effect
■ term coined by economist John Kenneth Galbraith ■ present-day industrial production is concerned not merely with turning out goods to satisfy the wants of consumers but also with creating the wants themselves ■ involves a distinction between wants that originate in a person and those that are created by outside forces ■ advertising can still be criticized for creating desires by making irrational appeals
Ethical issues in financial market
○ Playing the stock market is like playing a sport, the aim is to keep the game fair like Heath stated. ○ Financial markets ensure efficiency(maximize output, minimize input), but only when the market is fair and of equal opportunity. This isn't always the case. Investors are particularly vulnerable to fraud because the value of financial instruments depends almost entirely on information that is difficult to verify. so the following ethical issues result: ○ Fraud: the willful misrepresentation or falsification of information that either results in harm to the person who uses or relies on the information, or otherwise leads the person to enter into a market transaction that they wouldn't have otherwise pursued ■ Fraud = deceive by misleading representations of information ○ Manipulation: the act of using information or the psychological profile of another person in order to limit or shape their perception of information or alternatives. Like deception, manipulation is problematic because it undermines someone's ability to make informed, rational choices, therby diminishing their freedom. ■ Manipulation = deceive by creation of false or misleading appearances ○ These two ethical issues can be avoided if reliable information is easily accessible by the investors. Equal information requires a "level playing field" where not only does everybody play by the same rules, but everyone is equally equipped to compete. People also have different bargaining power. Some individuals have easier access to resources(rich vs poor), better processing ability (smart vs dumb) and vulnerabilities(humans are human and have weaknesses that can be exploited). ○ Insider trading-trading in the stock of publicly held corporations on the basis of material and nonpublic information
Facebook Case (Beacon)
○Beacon - Data Collecting Software Facebook developed that collects data from your electronic device, works with other websites, such as retail websites, and collects your information such as purchases on these websites, etc, and gives shares that. ○Ethical Dilemma/Stuff - The people who were using the apps/facebook had no idea that their information was being used by the App. The agreement was set up in such a way that you had to opt out from having your information sent. For most apps this period was very short and the notification to not send the information was hard to find/locate. This information was then published on the person's behalf without them knowing or actively choosing to do so. Eventually through pressure from individuals the system was changed from an opt out systems to an opt in system.
