I guess like most things it depends on the situation. Well, let’s take a look at an unusual situation. Let us wander around the state of California until we arrive at the small town of Bell. No, it is not small by the standards of some western states but a population of 36,000 does put it in the average category. And this place is tough. I mean almost impossible to run. Because they have such difficulties getting skilled politicians that they pay the mayor about $800,000. This is not quite twice as much as the President of the United States, but the mayor of Bell must have tougher problems. Obviously.
However, the mayor is not the only one who makes a good salary. Let me quote from the article:
Residents, however, have no problem expressing what they think about their city’s budget, which pays the police chief — who oversees a 46-person department — $457,000 a year. By contrast, Los Angeles’ police chief oversees 12,899 people and earns $307,000.
My favorite part is the city council. To be a city councilman required a person to work part time and it’s must be really tough part time work because these guys get a $100,000 for their efforts.
Chief Administrative Officer Robert Rizzo (I refer to him as the mayor.) is not upset or sorry. He says he can make the same in the private sector. Of course, some wiseacre might point that he isn’t in the private sector and that since the private sector seldom owns and operates small cities, it might be hard to get a comparative number.
Now as always when people with real ability are rewarded for their skills and effort, there will be people who squawk and complain. Let me quote from another article on the same subject:
Bell resident Douglas Waugh said he was infuriated when he learned that city officials in his small city had some of the highest salaries in the nation. “They think we’re stupid,” Waugh said standing outside of his home. “They get into power and talk to us like little kids and they think we’re ignorant, but we’re not.”
The top officials in Bell receive a 12% pay hike every July. The mayor has been working in that position since 1993. At that rate he will be earning $2,446,680 in the year 2020. Did you know that the city has been cutting back on services and laying off employees? But these guys have their priorities straight. Right?
Parents Shocked By Swimming Instruction Techniques reads the article title. The technique involved tying a child’s shoes and throwing him into the pool. This was to teach him how to float even in “dangerous conditions.”
Ethically, just where do you start? If the purpose of swimming instruction techniques is to teach the child to swim, an overwhelming fear of the water caused by your own actions might be a detriment. Secondly, it does not appear from the article that parents were aware of this aspect of training.
As a parent I think I would like to be aware if the class had taken a turn toward training my child what to do if a comic book villain ties his shoes together and throws him into water.
I ran an internet search to see if this practice was common but had no luck. It’s possible it happens elsewhere. But search terms like “tie shoes together” and “swimming instruction” just don’t seem to get any hits.
When I was in law school we were taught that when a business had to decide whether or not to break the law, if the penalty was a simple fine, you would just decide which was least expensive and pay that cost. So, if the fine were cheaper than your profits, break the law and pay the fine. I was always troubled by that, the assumption that a fine was just a part of doing business.
My perception is that this is major current of thought in modern business. Profit makes right, not as catchy as might makes right, but still probably what a great many businessmen have been taught, believe and put into action.
What does this have to do with my title? Excellent question. According to the research of Lawrence Kohlberg, children at around the age of ten progress to a higher level of moral understanding moving from consequence thinking to considering the intent behind the action. I quote: At approximately the same time–10 or 11 years–children’s moral thinking undergoes other shifts. In particular, younger children base their moral judgments more on consequences, whereas older children base their judgments on intentions. When, for example, the young child hears about one boy who broke 15 cups trying to help his mother and another boy who broke only one cup trying to steal cookies, the young child thinks that the first boy did worse. The child primarily considers the amount of damage–the consequences–whereas the older child is more likely to judge wrongness in terms of the motives underlying the act (Piaget, 1932, p. 137).
So, catch my thought? When a businessman considers the costs of performing illegal or unethical acts only in the sense of money, he is reverting to the very first stage of moral development, that of less than a 10 year old child.
Now, there are six stages in Kohlberg’s theory:
1) Obedience and Punishment Orientation
2) Individualism and Exchange
3) Good Interpersonal Relationships
4) Maintaining the Social Order
5) Social Contract and Individual Rights
6) Universal Principles Now, you could make a good argument that this kind of business thought (Milton Friedman, etc) actually falls into the second level where self interest and avoidance of punishment become primary concerns. However, making moral decisions at the second level of Kohlberg’s six stages is just about as insulting as reasoning at the first.
My second point is when business is considered only as a money making endeavor, all the other levels of moral development don’t just become irrelevant, they become a block and a hazard to making maximum profit.
People who hold values from the other four stages might very well have difficulty succeeding in a corporation.
Let’s look at level 3, Good Interpersonal Relationships.
They believe that people should live up to the expectations of the family and community and behave in “good” ways. Good behavior means having good motives and interpersonal feelings such as love, empathy, trust, and concern for others.
It might be difficult to evade taxes, shift jobs overseas, to fire employees who are too old, if you try to live up to these expectations. Now, that generally that is not much of a problem, because if you want to do these things, you can get people (once again, Milton Friedman) to tell you that what you are doing is right and true. Not only is doing these things not wrong, they are in the long term good for everybody and in the long term will contribute to a more successful and happier society.
Now, as someone who professes and teaches ethics, I might point out that using wrong doing and “ends justify the means” thinking is more likely to produce more wrong doing and “ends justify the means thinking” than it is to produce a “good” or “successful” society.
Level 4 thinking means a person begins to consider “society as whole” as a factor in moral decision making. Breaking the law, damaging the environment, treating people badly, acting in the interest of a foreign government or corporation or trading partner to the detriment of your own country, etc. are acts that damage society as a whole. A businessman willing to maximize profit at all costs with this level of moral development has to believe that the long term benefits of illegal and unethical actions will produce in the long term a better society or embrace simple villainy as a way of life.
At level 5, you are essentially talking a language modern business on the Friedman model may have serious difficulty understanding. A “good society” might very well be one where real people with real influence might seriously believe that it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of heaven. What makes for a good society might in some people’s minds to be things other than money. If the “free market” solves all societal problems in the long term, other thought is just childish rubbish that must be tossed aside as part of the debris of history.
One of the reasons for the absence and continuing decline of moral values in American business is the lack in this society of individuals at the 6th level of moral development. Nothing could be more detrimental to the profit model of societal success than the proposition that there are universal principles by which a society should function. I read a lot and I promise you that the great thinkers, leaders and holy men of history have not been friendly to profit as a primary goal of the good society.
Kohlberg’s six levels of moral development give us insight into how we might consider thinking about ethical problems. Presumably it is better to think at a higher level than a lower one. If you accept that thought than an alarm bell should go off anytime a belief system calls for ignoring higher values and using the earlier ones.
(The quotes for this article are from W.C. Crain. (1985). Theories of Development. Prentice-Hall. pp. 118-136.) With my grateful thanks!
Loren Steffy has a poll up – How long will Hayward remain as head of British Petroleum? I’d get on his site and vote if I were you. Stffey’s previous column speculates on whether or not Libya will acquire British Petroleum.
Alain Sherter at BNET writes about the likelihood of a Chinese real estate crash. My Chinese students have been saying things to me along the same lines.
Loren Steffy wonders if British Petroleum naming a drilling rig, Crazy Horse (not the smartest move), decided to misrepresent to the tribes in Colorado the amount of oil it was getting out of the ground.
Jon Talton explains how the loss of manufacturing jobs makes the recovery more difficult and may cause long term damage as our position as a manufacturer deteriorates as opposed to other powers such as China.
Keith Chrostowski writes about creative capitalism.
Jay Hancock discusses the importance in the electronics field of an excellent knowledgeable sales force (particularly if you fired the ones you had).
Edward Lotterman discusses “external costs” and “imperfect information.” These are important and basic economic concepts. He discusses them accurately, simply and in a straightforward manner. If you read any of these pieces, read this one.
David Moon explains scientific research into where in the brain investment decisions are made and why we like to agree with others.
In the fourth quarter, Merrill lost 14 billion dollars.
What do you get bonuses for? I was under the mistaken impression that these were rewards for performance. Apparently they have other uses.
However, there is a counter argument, Thomas F. Cooley, writing in an opinion piece for Forbes magazine writes that bonuses and other benefits are closely tied to shareholder interests and demonstrates this by using graphs. He graphs shareholder interests against executive benefits. I quote: The observations cover the years 1992 to 2006. Our sample consists of information on 31,587 executives, employed by 2,872 companies, for a total of 33,896 company-executive matches and 167,822 executive-year observations.
His graphs indicate correlation between stockholder interests and compensation. I am not convincedin this instance. I am not opposed to high executive compensation provided it is approved by the shareholders and rewarded for successful performance. I am very opposed to executive compensation paid for out of public funds for a disastrous performance.
My problem with Mr. Cooley’s graph isn’t in its accuracy but in my perception that it does not analyze the problem at hand – the correlation between investment banks success and their executive bonuses with an appropriate analysis of how government funds played out in that success.
High executive compensation might work well in dozens of industries. Does it work well in these? And if it does not, what should we be doing instead?
Is it ethical to consider a business successsful if it can get government rescue money totalling billions of dollars to put it in the black? If so, is it then ethical to pay bonuses based on a success purchased with public money?
I had the misfortune and the opportunity to think over the long break. The misfortune was due to my trip to Tulsa. I have a dramatic allergy response to the city either the phosphorous laden Arkansas River or the emissions of the oil refineries or both. I was down and in a lot of pain for several days. But on a larger note, I thought. I am 53 years old and I am not sure what happens next. Gail Sheehy called my age, the age of mastery. I don’t feel like a master of my career or much of anything else.
So, I thought. I apologize for the lack of posts. I wanted to clarify what it was I was trying to do. I wanted to clarify to myself my purpose and to set some goals for this savage year. Yes, savage year. I predict a rough year for me and, more particularly my students. They have come seeking new lives and all this economy has to offer them is pain. They seek an American dream that barely exists.
Why should I write this when so few read it? I wrote my previous blog for more than a year and never gained an audience. I finally deleted it feeling it was of no significance. This one is different. It is different because I am using it as a tool to seek kindred souls and develop my thought.
I want to talk about ethics seriously and without backing away in educational jargon from confronting the evils of our time. Of particular concern are two issues. One is the total lack of protections for our internet communications. We as a people are entitled to some kind of protection for our e-mail and other posts. The second is privatization in the state of Arkansas, my home. I sense something in motion. I worry about the assets of the people of this state being turned over to private interests for their unjust and cruel enrichment.
Sometimes, I would fold my tent and walk away. I could read, listen to music, play my games and let the sweet things of life escape me away from the tedium of the continuing struggle for significance, for the struggle against evil, for that action that says I stand and while I live I will try to do what’s right. Let me quote Tennyson:
Tho’ much is taken, much abides; and tho’
We are not now that strength which in old days
Moved earth and heaven; that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
Not a great post, but my post. A new year. Continued struggle. 2o10
When I was in law school we were taught that when a business had to decide whether or not to break the law, if the penalty was a simple fine, you would just decide which was least expensive and pay that cost. So, if the fine were cheaper than your profits, break the law and pay the fine. I was always troubled by that, the assumption that a fine was just a part of doing business.
My perception is that this is major current of thought in modern business. Profit makes right, not as catchy as might makes right, but still probably what a great many businessmen have been taught, believe and put into action.
What does this have to do with my title? Excellent question. According to the research of Lawrence Kohlberg, children at around the age of ten progress to a higher level of moral understanding moving from consequence thinking to considering the intent behind the action. I quote:
So, catch my thought? When a businessman considers the costs of performing illegal or unethical acts only in the sense of money, he is reverting to the very first stage of moral development, that of less than a 10 year old child.
Now, there are six stages in Kohlberg’s theory:
1) Obedience and Punishment Orientation
2) Individualism and Exchange
3) Good Interpersonal Relationships
4) Maintaining the Social Order
5) Social Contract and Individual Rights
6) Universal Principles
Now, you could make a good argument that this kind of business thought (Milton Friedman, etc) actually falls into the second level where self interest and avoidance of punishment become primary concerns. However, making moral decisions at the second level of Kohlberg’s six stages is just about as insulting as reasoning at the first.
My second point is when business is considered only as a money making endeavor, all the other levels of moral development don’t just become irrelevant, they become a block and a hazard to making maximum profit.
People who hold values from the other four stages might very well have difficulty succeeding in a corporation.
Let’s look at level 3, Good Interpersonal Relationships.
It might be difficult to evade taxes, shift jobs overseas, to fire employees who are too old, if you try to live up to these expectations. Now, that generally that is not much of a problem, because if you want to do these things, you can get people (once again, Milton Friedman) to tell you that what you are doing is right and true. Not only is doing these things not wrong, they are in the long term good for everybody and in the long term will contribute to a more successful and happier society.
Now, as someone who professes and teaches ethics, I might point out that using wrong doing and “ends justify the means” thinking is more likely to produce more wrong doing and “ends justify the means thinking” than it is to produce a “good” or “successful” society.
Level 4 thinking means a person begins to consider “society as whole” as a factor in moral decision making. Breaking the law, damaging the environment, treating people badly, acting in the interest of a foreign government or corporation or trading partner to the detriment of your own country, etc. are acts that damage society as a whole. A businessman willing to maximize profit at all costs with this level of moral development has to believe that the long term benefits of illegal and unethical actions will produce in the long term a better society or embrace simple villainy as a way of life.
At level 5, you are essentially talking a language modern business on the Friedman model may have serious difficulty understanding. A “good society” might very well be one where real people with real influence might seriously believe that it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of heaven. What makes for a good society might in some people’s minds to be things other than money. If the “free market” solves all societal problems in the long term, other thought is just childish rubbish that must be tossed aside as part of the debris of history.
One of the reasons for the absence and continuing decline of moral values in American business is the lack in this society of individuals at the 6th level of moral development. Nothing could be more detrimental to the profit model of societal success than the proposition that there are universal principles by which a society should function. I read a lot and I promise you that the great thinkers, leaders and holy men of history have not been friendly to profit as a primary goal of the good society.
Kohlberg’s six levels of moral development give us insight into how we might consider thinking about ethical problems. Presumably it is better to think at a higher level than a lower one. If you accept that thought than an alarm bell should go off anytime a belief system calls for ignoring higher values and using the earlier ones.
(The quotes for this article are from W.C. Crain. (1985). Theories of Development. Prentice-Hall. pp. 118-136.) With my grateful thanks!
I teach Business Ethics. What happened in the health care debate in the last few days is to ethics what a fire hydrant is to a dog. I am enraged. Does anybody at any time, talk ethics about this issue? And I am definitely absolutely not talking about joe lieberman’s, “I am standing for God and country based on how pettily I can act at the moment.” Revenge is not ethics.
How do I explain any of this to students? Health care reform makes them buy private insurance? Whose idea of reform is this? What do I tell them? Their government’s cure for rising health care costs is to make them buy insurance from private companies? How do I explain the importance of ethics, honor and duty, when it is not rewarded? What kindness, consideration and care have the insurance companies done to merit this? Have they been free of fraud and wrong doing?
Should I just re entitle the class Anti-Ethics: how to get ahead and don’t worry, God won’t get you later?
I can’t explain this to ME. There is no way anyone could have told me this debate would work out this way.
I believe in democracy, that people should have some kind of say in how the government functions. I believe that we are in a serious crisis in the field of health care and that it is severely damaging the country not to mention causing death and suffering for many people.
For decades, in poll after poll, the American people have said over and over again that this system is not working. In Congress over the last few days a consensus has been reached to strengthen the current system, essentially rewarding the same actors and fools who have created this crisis in the first place.
We as a free people will be forced to buy private insurance. Let me explain private to you. If the government does it, I can vote, I can complain and the government can make changes. Elected people like staying elected and even fairly small threats to their electability will motivate them. Private industry has a different motive, profits. I have no way of influencing their decisions. None. Zip. Zero.
You might say: Well James, you can buy another insurance policy, get something cheaper. Really? The insurance companies have an exemption from the anti-trust laws. They do not have to compete. With the government mandate that I have to buy insurance, I am being tied and fettered, thrown helpless into the profit making hands of an insurance company. I will be fined, possibly imprisoned if I do not. I can be relatively confident that the government and private industry will make sure I either pay or suffer.
I could go on for page after page, but what’s the point? I’m not a lobbyist. I don’t make campaign contributions in the thousands of dollars. I have e-mailed my representatives with no response at any time on these issues.
As far as I can tell in the minds of those people I had the misfortune to vote for, I don’t exist. My life has no relevance to the people in Washington.
I have strongly professed such beliefs in my teachings on ethics. I strongly believe that the moral stance we have in place is the main factor in what we decided when the ethical dilemma arrives. It is obvious to me, that we create our ethics continuously, and the destruction of our ethical framework takes place in small daily increments. This is why traditional business ethics teaching has little effect. What the more foolish call the “real world” eats it up. The real world is the kind of person you are as opposed to the crawling maggot the world would prefer you become.
I guess like most things it depends on the situation. Well, let’s take a look at an unusual situation. Let us wander around the state of California until we arrive at the small town of Bell. No, it is not small by the standards of some western states but a population of 36,000 does put it in the average category. And this place is tough. I mean almost impossible to run. Because they have such difficulties getting skilled politicians that they pay the mayor about $800,000. This is not quite twice as much as the President of the United States, but the mayor of Bell must have tougher problems. Obviously. 
Pilant's Business Ethics Blog 
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