Business and Money
Tibor R. Machan
On a recent trip to a college in Louisiana I was in a discussion with some academic philosophers one of whom advanced the idea that business isn’t guided by ethical principles since its purpose is to make money. A 1961 essay by the late Milton Friedman, a Nobel Laureate in economics, from The New York Times Magazine and reprinted in many business ethics readers, seems to give support to this idea. Friedman argued that the social responsibility of corporate managers is to earn a profit. And this does appear to mean that nothing other than making money hands over fist should motivate those in the profession of business.
Actually, Friedman made clear that while people in business ought to strive to make money, they need to do so while adhering to "the rules of the game," as it were. And these rules include the criminal law as well as basic ethical principles such as truthfulness, keeping promises, etc. Still, Friedman’s essay left the impression that all business is about is making money. And if this is so, one might ask—as the professor I spoke with did—why bother with any standards other than whether one’s professional decisions lead to making money.
But, of course, business isn’t just about making money, anymore than medicine is just about advancing health. A doctor who would attempt to advance the health of a patient by deceit—say, by failing to fully disclose what’s amiss to the patient—or by theft—say, of someone else’s vital organs—and so forth would not be carrying on professionally. Such a doctor would engage in malpractice. A manager of a firm who would produce shoddy goods so as to make a quick buck would be no different.
Indeed, properly understood, businesses are highly varied, some involved in producing products, some services, some investing in other firms—all aiming for prosperity, yes, but not at any price. Any profession could be corrupted by failing to heed the standards of producing what it is about. So an educator, for example, who seeks to impart knowledge by means of deception or taking advantage of the naiveté of students would be engaged in misconduct. It is not only when the teacher becomes a preacher that he or she misbehaves. And it is not only when someone in business fails to heed the bottom line that there’s malpractice.
Indeed, business is never just about making money—even when it seems to be so. For making money even while managing money requires adherence to certain standards of conduct based on the simple fact that one is a human being making money by dealing with other human beings. In the employment relationship, for instance, it is wrong to hire and promote on the basis of factors irrelevant to the business at hand. This is why racial or sexual discrimination, nepotism and such, are deemed violations of business ethics even though they do not directly involve neglecting the bottom line.
In any profession one can carry on badly while seeming to pursue the ends that define the profession. A journalist could obtain an interview on false pretenses, gain information dishonestly and even steal it, in which case the job of producing information for his or her clients would be mishandled.
One reason that my academic pal may have maintained the perverse thesis that nothing else matters in business but making a buck is that some economists actually advocate this idea, just as the late Milton Friedman appeared to (although, once fully understood, didn’t, in fact). Economists have for centuries argued that the best explanation of how people act in the market place is that they are driven by the profit motive. This wasn’t actually an idea that came from economists, originally, but from a 16th century philosopher, namely, Thomas Hobbes. Hobbes held that we are all driven to behave as we do because we seek power, because we are afraid of death. For Hobbes right versus wrong conduct amounted to no more than doing what felt right versus what didn’t. And that itself could be explained by how we are made to feel good by improving our changes of survival.
This idea was derived form the more basic notion of Galilean physics that everything moves ineluctably until it is stopped by some force. It introduced mechanistic determinism as a way to understand human behavior. Economists tended to adept this to their efforts to make sense of how markets work. Morality was excluded from the picture, especially since so many moral theorists believe that self-interested conduct is unethical. Going the mechanical route avoided having to contend with these moralists. And it still does, to a large extent.
In fact, however, market conduct, as any other conduct, is governed by ethical principles. That includes, of course, the vigilant pursuit of profit—but not at any cost.
Saturday, February 03, 2007
BBC Biased Environmental Correspondent
Tibor R. Machan
Reporting on a meeting at which various organizations came together to address the issue of global warming, climate change, and the possibility of having to cut greenhouse gas emissions, the BBC’s environmental correspondent, Richard Black, wrote how US Energy Secretary Samuel Bodman declared that energy companies will reduce greenhouse gas emissions because, well, they cared about the environment. As Bodman reportedly put the point, "I believe that the people who run the private sector, who run these companies: they too have children, they too have grandchildren, they too live and breathe in the world. And they would like things dealt with effectively."
In response to this the reporter for the BBC offered this: “Call me cynical if you will, but my first thought was, so you mean, what, corporations like Enron? Or Arthur Andersen? Or WorldCom? And I was not alone. Mr Bodman had momentarily silenced an entire press corps.”
Now just consider the companies Mr. Black mentioned as he considered Mr. Bodman’s comment—Enron, Arthur Andersen, WorldCom. All of these have recently committed some kind of corporate crime, or have been charged with criminal conduct, although one of them has recently been nearly completely exonerated from all criminal culpability. Now imagine another scenario. A representative of the Roman Catholic Church offers a declaration that the church cares about young people, their education, their upbringing, their future. Mr. Black, who is in the audience when this declaration is made, writes about this as follows: “Call me cynical if you will, but my first thought was, so you mean, what, the Roman Catholic clergy, like those in Boston and San Francisco and Los Angeles, care about children? And I was not alone. The Roman Catholic spokesman had momentarily silenced an entire press corps.” Or consider the following: At a conference of university medical systems a representative of university hospitals declares that these institutions are concerned about the health of the citizenry in their neighborhoods, whereupon Mr. Black reports, “Call me cynical if you will, but my first thought was, so you mean, what, hospitals like the one at UCLA or UC Irvine care about patients? And I was not alone. The university hospital spokesman had momentarily silenced an entire press corps.”
Now perhaps my own response to Mr. Black’s report will not be fully appreciated by most people, probably because they have not followed the scandals involving Roman Catholic priests who have molested children entrusted into their care or the scandals at university hospitals where body parts have been selling on the black market and other gross malpractice has occurred, for instance, involving obtaining livers to be used in transplants. This would be understandable. The mainstream media is far more eager to report malfeasance in the business community than in the Roman Catholic clergy or at university medical schools. Yes, at first the news did make headlines but it never became the grounds for widespread condemnation of either the clergy or university medical care as such. The scandals were treated, rightly, as exceptions to the rule.
If Mr. Black and his colleagues took a count, they would learn that among all the major corporations doing business throughout the globe, only a very, very small minority is involved in malfeasance. Therefore to indict the integrity of all of them, to be cynical as Mr. Black and his fellow journalists reportedly were, is irresponsible and unprofessional. Might it be something of an indictment of professional journalism, perhaps? But it is best to recall that those who go into environmental journalism are a minority and tend to be ideologically motivated and, frankly, largely anti-business, not fully representative of journalists.
As to whether Mr. Bodman and others in the business community are justified in being concerned over greenhouse gas emissions, that’s a different topic. Perhaps they, like millions of other people, are victims of a hoax or the exaggerations of environmentalist doom-sayers. Whatever the case, the idea, conveyed by BBC reporter Richard Black, that people in corporate commerce must all be like a certain few corporate villains is disgraceful. It is completely unbecoming of someone in his own profession!
Tibor R. Machan
Reporting on a meeting at which various organizations came together to address the issue of global warming, climate change, and the possibility of having to cut greenhouse gas emissions, the BBC’s environmental correspondent, Richard Black, wrote how US Energy Secretary Samuel Bodman declared that energy companies will reduce greenhouse gas emissions because, well, they cared about the environment. As Bodman reportedly put the point, "I believe that the people who run the private sector, who run these companies: they too have children, they too have grandchildren, they too live and breathe in the world. And they would like things dealt with effectively."
In response to this the reporter for the BBC offered this: “Call me cynical if you will, but my first thought was, so you mean, what, corporations like Enron? Or Arthur Andersen? Or WorldCom? And I was not alone. Mr Bodman had momentarily silenced an entire press corps.”
Now just consider the companies Mr. Black mentioned as he considered Mr. Bodman’s comment—Enron, Arthur Andersen, WorldCom. All of these have recently committed some kind of corporate crime, or have been charged with criminal conduct, although one of them has recently been nearly completely exonerated from all criminal culpability. Now imagine another scenario. A representative of the Roman Catholic Church offers a declaration that the church cares about young people, their education, their upbringing, their future. Mr. Black, who is in the audience when this declaration is made, writes about this as follows: “Call me cynical if you will, but my first thought was, so you mean, what, the Roman Catholic clergy, like those in Boston and San Francisco and Los Angeles, care about children? And I was not alone. The Roman Catholic spokesman had momentarily silenced an entire press corps.” Or consider the following: At a conference of university medical systems a representative of university hospitals declares that these institutions are concerned about the health of the citizenry in their neighborhoods, whereupon Mr. Black reports, “Call me cynical if you will, but my first thought was, so you mean, what, hospitals like the one at UCLA or UC Irvine care about patients? And I was not alone. The university hospital spokesman had momentarily silenced an entire press corps.”
Now perhaps my own response to Mr. Black’s report will not be fully appreciated by most people, probably because they have not followed the scandals involving Roman Catholic priests who have molested children entrusted into their care or the scandals at university hospitals where body parts have been selling on the black market and other gross malpractice has occurred, for instance, involving obtaining livers to be used in transplants. This would be understandable. The mainstream media is far more eager to report malfeasance in the business community than in the Roman Catholic clergy or at university medical schools. Yes, at first the news did make headlines but it never became the grounds for widespread condemnation of either the clergy or university medical care as such. The scandals were treated, rightly, as exceptions to the rule.
If Mr. Black and his colleagues took a count, they would learn that among all the major corporations doing business throughout the globe, only a very, very small minority is involved in malfeasance. Therefore to indict the integrity of all of them, to be cynical as Mr. Black and his fellow journalists reportedly were, is irresponsible and unprofessional. Might it be something of an indictment of professional journalism, perhaps? But it is best to recall that those who go into environmental journalism are a minority and tend to be ideologically motivated and, frankly, largely anti-business, not fully representative of journalists.
As to whether Mr. Bodman and others in the business community are justified in being concerned over greenhouse gas emissions, that’s a different topic. Perhaps they, like millions of other people, are victims of a hoax or the exaggerations of environmentalist doom-sayers. Whatever the case, the idea, conveyed by BBC reporter Richard Black, that people in corporate commerce must all be like a certain few corporate villains is disgraceful. It is completely unbecoming of someone in his own profession!
Why Skepticism is Sound
Tibor R. Machan
In the global warming debate the big issues is whether what human beings do contributes significantly to global warming. That global warming is occurring is not much in dispute, although some scientists do make a good deal of the point that there have been warming periods in the past, some of them far greater than those being recorded in our time. There has of course been steady global warming, on average, since as the earth evolved it was at certain early times covered with ice and quite uninhabitable by anything alive. Warming was a precondition to the emergence of life. But the warming never increased steadily and there have been periods of both, warming and cooling all along. Even after serious warming had commenced, there were long periods during which cold spells reemerged.
At this time, however, there is discernible warming, although the actual records—as distinct from computer projections—show only very small increases in the temperature of the earth. And in some places no warming is occurring at all. However, the history of temperature rise is not what concerns many of the skeptics about climate change. Nearly everyone agrees that there has been a rise recently. What is in dispute is (a) how much of an increase is likely to occur in the future and (b) whether human activities have had, are having, and will have a significant impact on global warming.
As to (a), the evidence is mixed and the more dire predictions are all based on several computer models combined with other computer models. And as the saying goes, "garbage in, garbage out." Here is the first place where skepticism occurs. Are those doing the modeling doing it right and can they actually be trusted to do it right? Is the science and technology on which modeling is based itself—and the scientists themselves—reliable?
Given that global warming research now consists of a mostly government subsidized industry across the globe, including the United Nations, with millions of dollars in grants going to those doing work in the field, there is understandable concern about whether those involved are stacking the deck in favor of a Doomsday scenario. It is often noted by private industry research critics that profit can corrupt research but the same is hardly ever noted in mainstream circles about government subsidized research. Furthermore, skeptics well understand that without a scare, there are fewer funds forthcoming. Government funding requires, ultimately, political support and such support relies heavily on a concerned, even frightened constituency. No Doomsday scenario, no concerned citizenry, and no allocation of funds obtained via taxation.
But there is more. In my own community the rangers put warnings out each day about fire hazards, ranging from "moderate" to "extremely high." Interestingly, the "moderate" sign is displayed even if it is pouring rain. In the ten years I have lived here, there hasn’t been a fire. Yet the "extremely high" has been displayed (by my assessment) routinely roughly 70% of the year. It is a tendency of those assigned to be on the lookout to exaggerate hazards. Vigilance calls for it, as they see their jobs.
As to the human factor, here the skeptics are often concerned about what may be dubbed (following a book by that title by Jonathan R. T. Hughes) the governmental habit—if global warming were unrelated to human activity, there isn’t a lot that politicians and bureaucrats could promise to do about it. Or, alternatively, if the best approach to encouraging responsible human conduct would be to leave politicians out of the picture and simply deploy various measures banning or containing what economists call negative externalities—bad side effects from normal productive processes—that, too, would leave the politicians out of the picture. And then what would they do, how would they gain the power most of them hunger for? There is, then, a strong probability that Doomsday scenarios will be projected by government officials and all those who work for them—get financial support, appointments to prestigious committees, invited to plush conferences, etc., etc.
So when one puts together the lack of solid science and technology behind the claim that global warming is imminent and that human conduct significantly contributes to the probable global warming, the attitude of skepticism is most reasonable. Or, to put it differently, how reasonable is it to trust politicians about their need for increased powers over the rest of us?
Tibor R. Machan
In the global warming debate the big issues is whether what human beings do contributes significantly to global warming. That global warming is occurring is not much in dispute, although some scientists do make a good deal of the point that there have been warming periods in the past, some of them far greater than those being recorded in our time. There has of course been steady global warming, on average, since as the earth evolved it was at certain early times covered with ice and quite uninhabitable by anything alive. Warming was a precondition to the emergence of life. But the warming never increased steadily and there have been periods of both, warming and cooling all along. Even after serious warming had commenced, there were long periods during which cold spells reemerged.
At this time, however, there is discernible warming, although the actual records—as distinct from computer projections—show only very small increases in the temperature of the earth. And in some places no warming is occurring at all. However, the history of temperature rise is not what concerns many of the skeptics about climate change. Nearly everyone agrees that there has been a rise recently. What is in dispute is (a) how much of an increase is likely to occur in the future and (b) whether human activities have had, are having, and will have a significant impact on global warming.
As to (a), the evidence is mixed and the more dire predictions are all based on several computer models combined with other computer models. And as the saying goes, "garbage in, garbage out." Here is the first place where skepticism occurs. Are those doing the modeling doing it right and can they actually be trusted to do it right? Is the science and technology on which modeling is based itself—and the scientists themselves—reliable?
Given that global warming research now consists of a mostly government subsidized industry across the globe, including the United Nations, with millions of dollars in grants going to those doing work in the field, there is understandable concern about whether those involved are stacking the deck in favor of a Doomsday scenario. It is often noted by private industry research critics that profit can corrupt research but the same is hardly ever noted in mainstream circles about government subsidized research. Furthermore, skeptics well understand that without a scare, there are fewer funds forthcoming. Government funding requires, ultimately, political support and such support relies heavily on a concerned, even frightened constituency. No Doomsday scenario, no concerned citizenry, and no allocation of funds obtained via taxation.
But there is more. In my own community the rangers put warnings out each day about fire hazards, ranging from "moderate" to "extremely high." Interestingly, the "moderate" sign is displayed even if it is pouring rain. In the ten years I have lived here, there hasn’t been a fire. Yet the "extremely high" has been displayed (by my assessment) routinely roughly 70% of the year. It is a tendency of those assigned to be on the lookout to exaggerate hazards. Vigilance calls for it, as they see their jobs.
As to the human factor, here the skeptics are often concerned about what may be dubbed (following a book by that title by Jonathan R. T. Hughes) the governmental habit—if global warming were unrelated to human activity, there isn’t a lot that politicians and bureaucrats could promise to do about it. Or, alternatively, if the best approach to encouraging responsible human conduct would be to leave politicians out of the picture and simply deploy various measures banning or containing what economists call negative externalities—bad side effects from normal productive processes—that, too, would leave the politicians out of the picture. And then what would they do, how would they gain the power most of them hunger for? There is, then, a strong probability that Doomsday scenarios will be projected by government officials and all those who work for them—get financial support, appointments to prestigious committees, invited to plush conferences, etc., etc.
So when one puts together the lack of solid science and technology behind the claim that global warming is imminent and that human conduct significantly contributes to the probable global warming, the attitude of skepticism is most reasonable. Or, to put it differently, how reasonable is it to trust politicians about their need for increased powers over the rest of us?
Wednesday, January 31, 2007
Lexus Parallel Parking not For All
Tibor R. Machan
One of the annoying elements of advertising is that it often treats us all as if we were just one person. So, for example, because some people may befit from a product--say Lexus's new automatic parallel parking device—it appears to be suggested in the ad that this is something for us all. Of course, very few products or services being promoted to us are really for all of us. But back when advertising used to come mainly from the radio and TV industry, and both of these were oligopolies, ads were indeed usually addressed to millions of people all at once, with no differentiation among them possible. With diversified commercials now possible, targeting people in markets whose interests it is possible to anticipate, this apparent one-size-fits-all assumption in ads has subsided.
Nonetheless, the habit is still pervasive, so this Lexus ad makes it appear that we all require help with parallel parking. It is exactly this that the Op Ed piece By Calvin Trilling in The New York Times, Friday, January 26th, brought to my mind. I thought about how the Lexus ad, which I have seen several times, "suggests" that we all need the help that the new model provides.
But that would to be to misunderstand the function of advertising, which is not to make suggestions, not to give advice, not to inform us of anything but simply to effectively promote products and services. And in promotions one uses hype or other attention-getting means because all one aims for is to alert people to the availability of a produce or service. Once they are aware, they then can reject or accept—it's up to them.
The late Harvard celebrity economist, John Kenneth Galbraith argued against this because he believed that advertising destroys our ability to choose, to be sovereign consumers. He believed corporations produce ads so as to create desires in us which we will have to fulfill by purchasing what they are marketing. This demeaning view is not totally unreasonable—indeed many ordinary folks outside of Harvard University tend to think of others as very vulnerable to the lures of commercials. Many of us think other people are uncritical when they view or hear or read ads and therefore we are being lead unwillingly to go out and buy stuff. But being uncritical is a matter of choice!
F. A. Hayek, another economist and Nobel Laureate, penned a rebuttal to Galbraith in which he pointed out that while becoming aware of new products and services does indeed create desires—as do all innovations in art, science, entertainment, technology, etc.—human beings have the capacity to select which of their desires they will try to fulfill. Depending on their budgets and other constraints, as well as their priorities apart from commerce, they may or may not act so as to fulfill a desire that may have been prompted by means of advertising. Men and women in the market place are free agents and as such are also free to do dumb things, so they can and often do respond to advertising mindlessly, hastily, imprudently. But this doesn't mean they have to. Yet that’s is just what Galbraith thesis suggests—that we lack sovereignty means we cannot govern ourselves, be in charge of our own actions.
Now such thinking is quite rampant because many educated and well placed scholars, natural and socieal scientists and researchers—not to mention philosophers—hold that whatever we do, we must do. We have no choice. So when people go out to buy something after having encountered an ad for it, they had to do this and the immediate cause to explain their conduct seems to be, well, the ad itself. Not their considered judgment as to what to do, which may have involved weighing alternatives against this option, even if ever so rapidly and even un-self-consciously. So the Galbraithian thesis gains support form the widespread deterministic understanding of human behavior.
As with all such determinist notions, this, too, runs up against the fallacy of self-exclusion. If we are all just doing what we have to, then what the proponent of this idea is doing he or she must be doing, like rain that must fall or earthquakes that must erupt. In which case the issue of whether it is true is moot—the utterings of a parrot cannot qualify as a theory of anything.
Tibor R. Machan
One of the annoying elements of advertising is that it often treats us all as if we were just one person. So, for example, because some people may befit from a product--say Lexus's new automatic parallel parking device—it appears to be suggested in the ad that this is something for us all. Of course, very few products or services being promoted to us are really for all of us. But back when advertising used to come mainly from the radio and TV industry, and both of these were oligopolies, ads were indeed usually addressed to millions of people all at once, with no differentiation among them possible. With diversified commercials now possible, targeting people in markets whose interests it is possible to anticipate, this apparent one-size-fits-all assumption in ads has subsided.
Nonetheless, the habit is still pervasive, so this Lexus ad makes it appear that we all require help with parallel parking. It is exactly this that the Op Ed piece By Calvin Trilling in The New York Times, Friday, January 26th, brought to my mind. I thought about how the Lexus ad, which I have seen several times, "suggests" that we all need the help that the new model provides.
But that would to be to misunderstand the function of advertising, which is not to make suggestions, not to give advice, not to inform us of anything but simply to effectively promote products and services. And in promotions one uses hype or other attention-getting means because all one aims for is to alert people to the availability of a produce or service. Once they are aware, they then can reject or accept—it's up to them.
The late Harvard celebrity economist, John Kenneth Galbraith argued against this because he believed that advertising destroys our ability to choose, to be sovereign consumers. He believed corporations produce ads so as to create desires in us which we will have to fulfill by purchasing what they are marketing. This demeaning view is not totally unreasonable—indeed many ordinary folks outside of Harvard University tend to think of others as very vulnerable to the lures of commercials. Many of us think other people are uncritical when they view or hear or read ads and therefore we are being lead unwillingly to go out and buy stuff. But being uncritical is a matter of choice!
F. A. Hayek, another economist and Nobel Laureate, penned a rebuttal to Galbraith in which he pointed out that while becoming aware of new products and services does indeed create desires—as do all innovations in art, science, entertainment, technology, etc.—human beings have the capacity to select which of their desires they will try to fulfill. Depending on their budgets and other constraints, as well as their priorities apart from commerce, they may or may not act so as to fulfill a desire that may have been prompted by means of advertising. Men and women in the market place are free agents and as such are also free to do dumb things, so they can and often do respond to advertising mindlessly, hastily, imprudently. But this doesn't mean they have to. Yet that’s is just what Galbraith thesis suggests—that we lack sovereignty means we cannot govern ourselves, be in charge of our own actions.
Now such thinking is quite rampant because many educated and well placed scholars, natural and socieal scientists and researchers—not to mention philosophers—hold that whatever we do, we must do. We have no choice. So when people go out to buy something after having encountered an ad for it, they had to do this and the immediate cause to explain their conduct seems to be, well, the ad itself. Not their considered judgment as to what to do, which may have involved weighing alternatives against this option, even if ever so rapidly and even un-self-consciously. So the Galbraithian thesis gains support form the widespread deterministic understanding of human behavior.
As with all such determinist notions, this, too, runs up against the fallacy of self-exclusion. If we are all just doing what we have to, then what the proponent of this idea is doing he or she must be doing, like rain that must fall or earthquakes that must erupt. In which case the issue of whether it is true is moot—the utterings of a parrot cannot qualify as a theory of anything.
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