Business Ethics: Concepts & Cases: Chapter 1 Outline Ethics and Business Introduction Velasquez's Thesis: Ethical behavior

the best long term business strategy

Merck & Co. a case in point Ethical behavior is the best long-term business strategy means o in the long run o & for the most part o ethical companies enjoy significant competitive advantages over unethical ones Why ethical behavior pays off in the long run & for the most part o customers more likely to buy from a business known to be honest & trustworthy o employees are more likely to loyally join & faithfully serve a company that treats its workers with loyalty and respect Assuming that it pays to do the right thing . . . still it's not easy to know what that is: e.g., how to balance o duties to shareholders o rights of employees o needs of customers o obligations to society

1.1 The Nature of Business Ethics

What does ethical mean: Study of businessmen o "What my feelings tell me is right" (50%): Doing what your conscience tells you. o "What is in accord with my religious beliefs" (25%): Doing what the church or bible says. o What "conforms to the golden rule" (18%) Inadequacy of all these answers in theory & practice o "conscience" sometimes commands wrongly or not at all o religion: sometimes commands wrongly especially others' religions, we're inclined to think Salmon Rushdie fatwah example "You shall not suffer a witch to live"? o the golden rule: perhaps commands wrongly: different strokes for different folks hard to interpret it

Morality

Definition: "the standards an individual or group has about what is right and wrong, or good and evil"

Contrast: standards we hold about things that are not moral o legal standards o etiquette: rules of politeness o aesthetics: good & bad art; what's beautiful, ugly, etc. Five Characteristics of moral standards 1. deal with matters we think can seriously injure or benefit human (& other sentient?) beings 2. not established or changed by the decisions of authoritative individuals or bodies 3. are overriding: take precedence over other standards & considerations (especially of self-interest) 4. are based on impartial considerations: like my momma said "what if you were them?"; " "how'd you like someone to do that to you?" 5. associated with special emotions and vocabulary emotions like guilt, shame, & remorse vocabulary like "wrong", "right", "ought", "good", "bad", "immoral"

We absorb these standards as children from a variety of influences and revise them as we mature

Ethics

Definition: the activity of examining one's moral standards or societies' and asking o how these standards apply to our lives o whether they are reasonable or unreasonable Ethical v. Social Scientific Study of morality o Social scientific study is descriptive: what there standards are & how they came by them (not, e.g., whether they're reasonable): Is anthropologists: taboos of the Trobriand Islanders social scientific: the value system of neo-nazi groups in the U.S. psychological: the moral development of the child o Ethics is a normative (i.e., evaluative study of morality): Ought questions about consistency & rationality completeness & adequacy

Business Ethics

Definition: o V: normative study of moral standards as they apply to business policies, institutions, and behavior

LH: the ethical analysis of business practices Business defined o preliminary definitions a society = people who have common ends and whose activities are organized by a system of institutions designed to achieve those ends institutions = relatively fixed patterns of activity economic = pertaining to the production & distribution of goods and services o businesses = the primary economic institutions through which people in modern societies carry on the tasks of producing and distributing goods and services Corporations: the most significant kinds of modern business enterprises o "dominant life form on our planet in the 20th century" (Wm. Gibson) top 500 U.S. companies: account of 80% of all industrial profits & hold 80% of all industrial assets o corporations = immortal "fictitious persons" with rights, in their own name, to sue & be sued hold & sell property enter into contracts o Organizational structure stockholders contribute capital own the corporations liability limited to capital contributed directors or officers administer the corporation's assets run the corporation, typically through various levels of middle managers employees: do the basic work related to the production of goods & services Three kinds of Issues for Business Ethics (arising from the purposes & structure of Corporations) 1. systemic: concerning the economic, political, and other social systems within which businesses operate. 2. corporate: concerning issues & practices of a particular company 3. individual: concerning particular individuals within companies
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Applying Ethics to Corporate Organizations

Problem: are corporations moral agents capable of acting morally & immorally just as people are o are corporations as a whole morally responsible for their acts? o or does moral judgment & responsibility apply only to the individuals who make up the corporations? Corporate responsibility theory: Corporations have moral responsibilities as such.

Pro: the rules that tie corporations together allow us to say they "act" as individuals and have "intended objectives" hence, they are "morally responsible" for these acts & objectives o Con: Organizations don't really "act" or "intend" as persons do Corporate nonresponsibility theory: o Pro: Corporations are morally nonresponsible. o Con: Moral responsibility percolates up. The humans that comprise the corporation can make responsible moral decisions. so can the corporation. Velasquez's "Intermediate" View o When an organization's members collectively, but freely and knowingly pursue some objective it makes perfect sense to say the acts they perform for the organization are "moral" or "immoral" and that the organization [n.b.] is "morally responsible" for these acts. o Nevertheless individuals are the primary bearers of moral responsibility since "corporate acts originate in the choices and actions of human individuals" o Organizations have moral duties, etc. in a secondary sense: A corporation has a moral duty to do something only if its members have a moral duty to make sure its done. Velasquez's Concession: corporate policies, culture, norms, and designs can & do "have an enormous influence on the choices, beliefs, and behaviors of corporate employees" [& officers?!] o Not so concessive But these corporate policies, etc., do not make the individuals' choices for them. So the policies or the corporation are not responsible for these individuals' actions. o How to square with this: "corporate actions flow wholly out of [human] choices and behaviors."
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Globalization, Multinationals, and Business Ethics

Most large companies today are multinationals: firms that maintain operations in many different countries. The fact that multinationals operate in more than one country produces ethical dilemmas o Able to shift operations out of one country & into another that offers more favorable conditions, e.g., cheaper labor less stringent laws: e.g., environmental regulations lower rates of taxation o Enabling them to playing off one government against another (as happens even between U.S. states)

to escape social controls (e.g., minimum wage laws, safe working condition laws & environmental laws) even taxes Moral Dilemmas Posed by these Abilities: requires choosing between the needs & interests of the business & those of their host countries. Their ability to relocate v. the expense of relocation, threat of confiscation, etc. by host countries means they can face hard choices: 1. To go along with ethically questionable local practices (e.g., apartheid as previously practiced in South Africa) v. risk their operations & market in the host country 2. To practice tax avoidance to the maximum of their abilities v. paying what might be viewed as their fair share 3. Benefits of technology transfer v. risks

Business Ethics and Cultural Differences

Ethical Relativism (ER) holds o Negative thesis: there are no ethical standards that are absolutely true for all societies o Positive thesis: something is right within a given society if it accords with that societies moral standards. "When in Rome do as the Romans." But what if what the "Romans" practice is routine bribery of government officials, gender discrimination, or the like? Counters to ER o Fact of cultural disagreement over the likes of polygamy & homosexuality infanticide & abortion slavery and racial & sexual discrimination genocide & the torture of animals o Doesn't necessarily mean there are no objective standards that are universally true there is disagreement over whether the human species evolved from apes still there's plain truth about the matter (regardless of whether we could find it out) not true for creationists that we did and true for evolutionists that we didn't either we did or that we didn't is just plain true, for everyone & either the evolutionists or the creationists are just plain mistaken similarly there's plain truth about the matter of genocide not right for nazis but wrong for us just plain wrong: nazis are just plain mistaken

Some norms or standards are universal in the sense that every society must have them norms forbidding indiscriminate injuring and killing of other members of society norms forbidding theft norms enjoining truth telling & censuring lying Seeming different practices may express shared underlying values Inuit abandonment of the aged v. our nurture of the aged might reflect similar value on community survival Cannibals who eat their dead and we who bury or cremate our dead may share an underlying value of honoring the dead (just have different opinions in how to go about it). Most telling criticism: Absurd Consequence If ER were correct then the moral standards of a society are above criticism either internal criticism by members of that society or external criticism by those outside of that society But the moral standards of societies are not above criticism in this way So ER is not correct

Technology and Business Ethics

"Technology consists of all those methods, processes, and tools that humans invent to manipulate their environment." Radical technological transformation poses special ethical challenges o being disruptive of former economic & social structures o such transformations engender challenges & conflict Ethical issues therein raised concern (LH) o Utility: risk vs. promise: costs v. benefits of the transformations o Justice: fairness of the distribution of resulting costs or risks & benefits o Culture & Character: human habitability of the world as transformed ... do we really want to go there (1984? BNW?)? Notable Technological Revolutions o Agricultural revolution: "humans developed the farming technologies that enabled them to stop relyuing on foraging and on the luck of the hunt": growth of affiliated technologies (e.g., irrigation, tool-developments, etc.) and social stability "eventually allowed humans to accumulate more goods than they could consume, and out of this surplus grew trade, commerce, and the first businesses." o Industrial revolution: "transformed Western society and business, primarily through the introduction of electro-mechanical machines powered by fossil fuels such as the steam engine, automobile, railroad, and cotton gin." subsequent nationalization and now globalization of markets and trade mass production and giant enterprises

the rise of "the large corporation that came to dominate our economies and that brought with it a host of ethical issues for business including" exploitation of the workers who labored under these new conditions manipulation of financial markets producing massive damage to the environment New Technologies Now Transforming Society o Information technology including the internet and cyberspace. issues of privacy issues of property: copyrights v. "fair use" o Nanotechnology poses unknown risks o Biotechnology and especially genetic engineering poses dimly understood ecosystemic risks

1.2 Moral Development and Moral Reasoning Moral Development (skip) Moral Reasoning

Reasoning by which actions or policies are judged to accord with or be in violation of moral standards Has two essential components o Evaluative component: beliefs concerning what the relevant moral standards are o A factual component: evidence or information about which courses of action meet or fail to meet the standards o Example Racial & sexual discrimination is wrong. (Evaluative premise.) Affirmative action is (reverse) racial & sexual discrimination. (Factual premise) Affirmative action policies are wrong. Not always easy to separate the two o Different opinions concerning the facts o May mask different understandings of the standards faux factual question?: whether reverse preferences are discriminatory. masked evaluative question: whether discrimination against dominant or historically advantaged classes is wrong.

Analyzing Moral Reasoning 1. Logical validity o does the conclusion really follow from the premises? o given some hidden assumptions? 2. Concerning the factual evidence

Is it accurate? Is it relevant? Is it complete? 3. Concerning the moral standards o Are they consistent with other acknowledged moral standards o Are they being consistently applied Consistency requirement: If I judge that a certain person is morally justified (or unjustified) in doing A in circumstances C, then I must accept that it is morally justified (or unjustified) for any other person to perform any act relevantly similar to A in any circumstances relevantly similar to C. Method of Hypothetical Counterexamples How would you like it if your brother did that to you? Ought to be willing to receive what you dish out: compare the Golden Rule. Moral standards should be such that you would be willing to accept regardless of whether you were on the giving or the receiving end.
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1.3 Arguments for and Against Business Ethics Three Arguments Against Bringing Ethics into Business (skim)

Perfectly free markets insure maximum social benefits better than anything else o Pro leads most efficiently to the production of goods & services that the buying public needs and wants. attempts by managers to impose their moral convictions only gets in the way of the workings of the marketplace so managers should single-mindedly pursue profit to the exclusion of all else (including what they take to be morality) o Con Questionable assumptions: in fact industrial markets are not perfectly free not all profit increasing practices are socially beneficial unconstrained pollution deceptive advertising price fixing the buying public <> the public: distribution of goods & services also an essential purpose of economic institutions Inconsistency: the conclusion that managers should single-mindedly pursue profit to the exclusion of all else (morality included) is itself a normative ethical judgment Loyal Agent's Argument o The Argument

1. A loyal agent's duty is to serve his/her employer as the employer wants to be served. 2. An employer wants to be served in whatever ways will advance his/her self-interest. 3. Therefore, as loyal agents of their employers (stockholders) managers have a duty to serve their employers in whatever ways advance their employers self-interest. o Objections Inconsistency the argument rests on an normative/ethical assumption (an agent's moral duty being asserted) to argue that ethical considerations don't apply in business Assumes there are no limits to an agent's duty to serve his employer, but the managers duty to serve his employer are limited by duties as citizen, etc. by morality & even law law of agency "when considering whether or not orders . . . to the agent are reasonable . . . business or professional ethics are to be considered" "in no event would it be implied that and agent has a duty to perform acts which are illegal or unethical" Nuremberg Principle: "Following orders" does not excuse immoral actions. Business ethics is essentially just obeying the law o Pro: 0. Wrongful business practices are those forbidden by law. 1. Therefore following the law is sufficient to prevent wrongful conduct in & by businesses o Con: legality <> morality some correspondence: laws prohibit rape, murder, & fraud (which are also immoral) but some illegal acts are not immoral due to insignificance of what's regulated: e.g., parking laws because the laws are unjust laws enforcing slavery & later racial segregation in the U. S. South Nazi laws against harboring Jews some immoral acts are not illegal e.g. killing & raping slaves was not illegal in the U. S. South lying to your spouse deceptive promotions, e.g., Publishers Clearinghouse style "you have already won" promotions

Telemarketing aimed at bilking the elderly morality couldn't shape our laws if morality equaled legality if legal equaled moral then whatever the law enjoins is moral by definition and whatever it forbids would be immoral by definition Examples Abortion is not illegal. Therefore, it's not wrong, so it shouldn't be made illegal. Marijuana possession is illegal. Therefore it is wrong; so it should be against the law. Compare the objection to Ethical Relativism: Law would be beyond criticism. Nevertheless, most hold there is a prima facie moral obligation to obey the law exception to be made only in cases where what the law enjoins is seriously wrong or unjust distinction to be made between: between civil disobedience: Rosa Parks not going to the rear of the bus (but note -- a "piddling matter" this seems too: "My feet are tired" was Rosa Parks' reason for not giving up her seat) draft resistance during the Vietnam War Harboring Jews in Nazi Germany mere scofflawism shoplifting underage drinking most illegal drug use

The Case For Ethics in Business

Simple Argument o Ethics should govern all human activities. o Business is a human activity. o Therefore, ethics should govern business too. Argument from Businesses Need for Ethics o Businesses can't survive without ethics business requires at least a minimal adherence to ethics on the part of those involved in the business: e.g., the honoring of contracts by customers, managers, & employees business requires a stable society in which to carry on its dealings: morality is a stabilizing force in society. o Therefore it is in the best interests of businesses to promote ethical behavior (and practicing it is the best way to promote it). Argument from the Consistency of Ethical Considerations with Business Pursuits (of profit)

Observed evidence example of Merck, Inc. and others shows business can have exemplary ethics & still be very profitable no studies have found a negative correlation between socially responsible behavior and profits. o Reasons behind the profitability of ethical behavior (cited earlier in connection with the Merck example): ethical behavior cultivates good will & loyalty among customers among employees Game theoretic considerations: "the prisoner's dilemma" lesson: "when people deal with each other repeatedly, so that each can later retaliate against or reward the other party, cooperation is more advantageous than continually trying to take advantage of the other party." Unethical businesses become targets of moral outrage which works to their detriment.
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1.4 Moral Responsibility and Blame

Two sorts of moral questions o about the rightness or wrongness of actions o about who to blame for wrongdoing: especially sticky in cases of corporate wrongdoing: questions about responsibility & blame People are not blamed for every unfortunate consequence of their actions o some bad consequences are accidental o unforeseen or even unforeseeable consequences Conditions of Moral Responsibility: A person is morally responsible only for those acts and their foreseen injurious effects of deliberate acts or ommissions o commission knowingly and freely performing or bringing about what it was morally wrong for the person to perform or bring about o omission knowingly and freely failing to perform or to prevent which it was morally wrong for the person to fail to perform or prevent Excusing Conditions & Mitigating Conditions o Excusing Conditions: Total absolve the agent of blame: Eliminate responsibility ignorance: didn't know asbestos exposure was carcinogenic inability: workers refused to wear protective masks & company was unable to force them o Exceptions to Excusing Conditions Willful ignorance: carefully avoided studying up on the effects of asbestos exposure because they didn't want to know. Ignorance of Principle vs. Ignorance of Fact Example Principle: bribery is wrong

Fact: by tipping a customs official I was actually bribing him into canceling certain import fees Both exculpatory to they extent that they are not willful o Mitigating Conditions: partially absolve the agent of blame: diminish responsibility 1. Circumstances which leave a person uncertain but not altogether unsure about what they're doing person may have doubts about the facts and the seriousness of the standards involved examples: wrongdoing -- e.g., what gets "winked at" in a certain corporate culture -- so it doesn't seem so bad (everyone's doing it) your not from around here 2. circumstances making it difficult but not impossible to avoid doing it decisions taken under threats or other kinds of duress e.g., middle managers getting pressured from above to disregard safety standards or impose unrealistic production goals (less culpable than a middle manager who did this on their own initiative) 3. circumstances that minimize but do not completely remove a person's direct involvement in the act: diminished instrumentality Commission vs. omission: generally people are held to be more responsible for things brought about by their action than by their inaction: e.g., drowning someone vs. failing to rescue them (at no risk to oneself). "Not my department": omission or acts that are not your specified responsibility judged less serious: if an accountant specifically hired to audit a companies books chooses not to report discrepancies they're more seriously to blame that a bookkeeper who suspects irregularities but says nothing 4. Factoring in the seriousness of the wrong if the wrong is very serious, then uncertainty, duress, and lessened involvement are less mitigating: with so much at stake the agent ought to have found out the score ought to have done the right thing regardless of duress should have made it their business to do something Example: my employer says sell this lemon or you're fired I know the car's cd-player is about to go. I know the car's brakes are about to go out. Critical Contentions about mitigating factors

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duress is no excuse (some say) there's no real difference between omission and commission: letting die is as bad as killing (some say)

Corporate Responsibility

Corporate acts: acts brought about by several actions or omissions of many different people all cooperating together so that their linked actions and omissions jointly produce the corporate act. Question: Who is morally responsible? o "Traditional" Individual Responsibility View: those who knowingly & freely did their parts are each morally responsible for the act. o Alternative Corporate Responsibility View: the corporate group and not the individuals who make up the group must be held responsible. Pro Corporate Responsibility o We (and the law) say EXXON was responsible for the Valdez oil spill: not just the Captain (though he was drinking) + the person who hired this captain + . . . o More often than not . . . employees of large corporations cannot be said to have "knowingly and freely joined their actions together" to bring about a corporate act or pursue a corporate objective. Employees of large-scale organizations follow bureaucratic rules that link their activities together to achieve corporate outcomes of which the employee may not even be aware. engineers may design a product with certain weaknesses not knowing that marketing dreamt up an application for which the product is unfit and plans to sell the product for that application (without knowing its unfit for that application) Traditionalist rejoinder: in such cases ordinary mitigating factors suffice to mitigate the employees responsibility without appeal to any such notion as "corporate responsibility" o Example: e.g., the engineers didn't know it would be used that way e.g., the marketing dept. didn't know it couldn't safely be used that way o Amply mitigates the individuals: but isn't there some responsibility left over that belongs to no particular individual but rather the Corporation: say due to its corporate culture engineers don't talk to marketing

Subordinates' Responsibility

Corporations generally have hierarchical authority structures in which o those above issue orders & directives o which those below them are expected -- on pain of dismissal -- to follow & carry out One view: those who are "only following orders" are not responsible for the acts that result (only those who gave the orders): the Nuremberg defense.

When a subordinate acts on the orders of a legitimate superior this absolves the subordinate of all responsibility for the act. o They were only "following orders" The Post Nuremburg Principle o A subordinate has no obligation to obey an immoral order -- quite the contrary o The subordinate's responsibility may be mitigated by the duress: "Do it or I'll find some one who will," the Boss says. but they are not excused. o The superior bears unmitigated responsibility the fact that the superior used a "human instrument" (the subordinate) to do the act does not diminish the superior's own "instrumentality" in bringing it about.
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Cases for Discussion Slavery in the Chocolate Industry 1. What are the systemic, corporate, and individual ethical issues raised by this case? 2. Is child slavery absolutely wrong (no matter what) or only relatively so (depending on whether your culture disapproves of slavery)? 3. Who shares the moral responsibility for the slavery occuring in the chocolate industry? Enron (ABC News Video) 1. What are the systemic, corporate, and individual ethical issues raised by this case? 2. Who was morally responsible for the collapse of Enron? 3. If Enron had not collapsed and Enron's accounting practices had adhered to the letter if not the spirit of the Generally Accepted Accounting Principles would there have been anything wrong with what Enron did?

Business Ethics: Concepts & Cases: Chapter 2 Outline Ethical Principles in Business Introduction

Background o Apartheid system of racial segregation & oppression designed to maintain the total subjugation of the black majority (80%) and the supremacy of the white minority (20%) o Caltex, a jointly owned subsidiary of Texaco & Standard Oil maintained extensive & growing refinery operations in South Africa which greatly benefited the South African economy: which relied on oil for 25% of its energy needs & government S.A. law required refineries to set aside some of their oil for the government and profited from stiff corporate taxes on Caltex (& other corporations) The Issue Raised: Should Caltex break off relations with the S.A. Government & even leave S.A. altogether? o PRO: By continuing & even expanding operations in S.A. Caltex gives aid & support to the government and its oppressive system of apartheid. Caltex has a moral duty to discontinue its S.A. operations to cease activities that helped the regime with its unjust & repressive policy of apartheid to bring pressure on the government to eliminate apartheid o CON: The continued operation of Caltex brings income to both blacks and whites If the company ceased operations the hardship & economic losses would be borne mainly by the companies black employees who would lose their jobs The company has a responsibility for the well being of its black workers. As an example of a moral debate: Considerations appealed to o considerations of justice: apartheid unfairly apportions burdens to blacks & benefits to whites o considerations of rights: black South African's rights to freedom & well-being were not being respected. o considerations of benefit or utility: Caltex's operation confers economic & other social benefits

considerations of character: the admirable characters of Desmond Tutu with his passion for justice and the courage and thoughtfulness of Nelson Mandela invested their opposition to apartheid with moral authority.

2.1 Utilitarianism: Weighing Social Costs

The Ford Pinto "TNT" o rushed onto the market after only 2 yrs. in development (rather than the usual 4) o when struck from the rear at >20 mph the gas tank sometimes ruptured tests show Question: whether to modify the design or go ahead with production The social cost-benefit analysis o Costs: $11 x 12.5 million autos = -$137 million o Benefits: less 180 deaths x $200,000 less 180 injuries x $67,000 less 2100 burned vehicles x $700 TOTAL BENEFITS: $49.15 million Cost-benefit analysis typical of utilitarianism Utilitarianism o consequentialist: actions derive their moral value (or disvalue) from their consequences o altruistic: for all who are affected o whatever course of action maximizes benefits over costs for all concerned is right o Compare Egoism: whatever course of action maximizes benefits over costs for me (the agent) is right. o Many hold that "the best way of evaluating the ethical propriety of a business decision -- or any decision -- is by relying on utilitarian cost-benefit analysis."

Traditional Utilitarianism

Jeremy Bentham (1748-1832) generally considered the founder The utilitarian principle: An action is right from an ethical point of view if and only if the sum total of utilities produced by that act is greater than the sum total of utilities produced by any other act the agent could have performed in its place. Utilitarian Moral Reasoning vs. Rule-based moral reasoning o Rule-based approaches view morality as a kind of "higher law" & moral reasoning on the model of legal reasoning. question what are the statutes (moral principles) and which apply to the action in question o Consequentialist approaches view morality as a kind of "higher economics" & moral reasoning on the model of economic calculation. (Marx derided Utilitarianism as "the ethics of English shopkeepers")

Assumptions & Clarifications o assumes the commensurability of various benefits & costs o cost-benefits compared for different possible courses of action does not say that any action whose benefits outweigh its costs is right says that the action that produces the greatest benefit (or least cost) in comparison with any alternative course of action is right o impartially considers cost-benefits for all concerned not just for the individual or company considering the action (that's egoism) egoism, due to its partiality, is not a moral theory or policy at all o includes long term not just immediate benefits & losses: calculation of long-term benefits & costs needs to be adjusted for probability of the outcome Intuitive appeal o fits nicely with intuitive criteria invoked in discussions of public policy & personal conduct we do consider the benefits & costs we frequently do judge policies & actions that cause avoidable harm or loss of benefits to be morally questionable. o plausibly explains why certain types of activities we regard as generally immoral generally are so, but are not so without exception lying & theft are generally wrong because they diminish trust and impede cooperation & so are socially costly However, in certain situations -- when more harm would result from telling the truth than from lying or theft -- lying or theft could be morally justified. o promotes efficiency, i.e., doing what produces the most benefits at the least cost: effort is a cost. Example application: Clinton's Choice Technical applications (skip) o Economist's calculations & economic theories assume idealized individuals & corporations always acting so as to maximize utility objection . . . their own utility! Doubtful that this explanatory application of utilitarian-style calculation supports the normative claims of the theory -- is v. ought This application is supportive of egoism, not utilitarianism . . . it's their own utility that economic theory assumes individuals & corporations seek to maximize. o Use of economic cost-benefit projections to determine the advisability of projects, e.g. whether to build a dam. assign cost values to the estimated long-term costs: environmental destruction, population displacement, etc. assign cost values to the estimated long-term benefits

"If the monetary benefits of the a . . . project exceed the monetary costs and . . . the excess is greater than that produced by any other feasible project, then the project should be undertaken."

Measurement Problems

Comparative measures of the values things have for different individuals cannot be made, e.g., o the benefits I would derive from getting the job -- what it's worth to me. o the benefits you would derive from getting it -- what it's worth to you. o so the method couldn't be applied to determining who to hire (all else being equal) Some benefits and costs seem immeasurable, e.g., life & health o won't any price you assign be arbitrary? o isn't putting a price on life morally inappropriate in its own right Many of the benefits & costs of an action are unpredictable: e.g., benefits from basic research. Unclear what's a "benefit" and what's a "cost" o is the suffering of prisoners a cost (as Bentham thought)? o or a benefit (as Kant thought)? Critics contend these measurement problems undermine the would-be objectivity of utilitarian calculation o morally crucial benefits like beauty & happiness not quantifiable like economic benefits and costs o example: corporate "social audits" stymied by inability to place monetary values on intangible outcomes: e.g., loss of scenic beauty due to new construction differences over opinion over what should be counted as a benefit -- not another golf course!?

Utilitarian Replies to Measurement Objections

Accurate measurement not essential o it's still desirable to lay out the consequences of an contemplated course of action as clearly as possible o one may usefully rely on shared common-sense judgments of comparative value & disvalue: e.g., death a more serious cost than a hangnail Common sense criteria o Intrinsic goods trump instrumental goods all else being equal intrinsic: desired for their own sake, e.g., happiness, wisdom, beauty, pleasure, health instrumental goods: desired for the sake of other things: e.g., money, medical treatment o Needs -- especially basic needs -- trump mere wants:

needs are things without which one will suffer harm basic needs are things without which one will suffer fundamental harm such as injury, illness, or death wants are things one desires needs can also be wants: I need to eat & want to too though they needn't be wants: the alcoholic needs to quit but doesn't want to mere wants: are things one desires but does not need: I don't need to eat steak. Quantitative measurement is more feasible than the critics think o the price someone would be willing to pay for them on the open market is a measure of things' values o values like health and life are not immeasurable we regularly do put a price on them any time people place a limit on the amount they are willing to pay to reduce the risk that something poses to life they set an implicit price on that life such pricing is inevitable so long as we live in a world where risks can be eliminated only by trading off other things we may want o nonmonetary measures may also be used: e.g., opinion surveys

Problems with Rights & Justice

Objection: in a wide variety of circumstances applying the Utilitarian Principle would dictate actions that are unjust and violate peoples rights. o Framing an innocent man to prevent rioting that would cost many lives. o The pornographic police photos scenario o The Pinto case: What went wrong? not that they made mistaken utilitarian calculations but something intrinsic to all utilitarian calculation: it ignores considerations of justice or fairness: better that everyone should bear the additional $11 cost & fix it rather than make the 180 who were projected to die (& to a lesser degree the 180 burn victims who wouldn't die & the 2100 whose vehicles would be destroyed) bear THE WHOLE COST even though that whole cost was less than the cost of fixing the Pinto considerations of rights people were buying a car that was less safe than they might have expected without their informed consent

if they'd known about the problem they could have decided for themselves whether to take this added risk by not telling them Ford deprived them of their right to decide Conclusion: Utilitarianism seems to ignore certain important aspects of ethics. o Considerations of justice: which look at how burdens and benefits are distributed o Considerations of rights: which look at individual entitlements to freedom of choice and well-being

Utilitarian Replies to Objections on Rights & Justice

Bite the bullet (if needs be) or spit it out o Framing an innocent man Bite: it really would be right to frame an innocent man if the situation were as described Spit: there can't be a situation like the one described: always a high probability that such a conspiracy would be found out -- which would have very grave costs (loss of respect for law & authority). o Taking & distributing nude photos of someone without their consent it really would be right to take & distribute nude photos without the woman's consent if there were no chance of her finding out but there always will be considerable likelihood that it will be found out; that these guys will be encouraged to do the same in the future (which again may be found out); etc. -- which would have very grave costs (individual's mortification, mistrust of police, etc.) Rule Utilitarianism: take the principle of utility to define a procedure for evaluating rules not particular acts. (skip) o Stated An action is right from an ethical point of view if and only if the action would be required by those moral rules that are correct. A moral rule is correct if and only if the sum total of utilities produced if everyone were to follow that rule is greater than the sum total utilities produced if everyone were to follow some alternative rule. o Counterargument: Why not rules with built in exceptions. Don't bear false witness against your neighbor (as in the framing case) except when that would produce the most utility. So rule utilitarianism boils down to act utilitarianism & the problems with rights & justice (shown by the counterexamples remain). o Rule Utilitarian Response since human nature is weak & selfish allowing exceptions would leave everyone worse off in effect: change "if everyone were to follow that rule" to "if society were to adopt that rule" for a realistic assessment of what rule is best

2.2 Rights & Duties

The concept of a right and the correlative notion of duty . . . lie at the heart of much of our moral discourse. o In practice employees often assert that they have a right to a fair wage business owners complain that plant takeovers -- as in sit-down strikes -violate their property rights consumers claim they have a right to know o In Law and Tradition & Theory 1st 10 amendments to the U. S. Constitution are a Bill of Rights The U. S. Declaration of Independence declares that "all men . . . are endowed by their creator with certain inalienable rights" including life liberty the pursuit of happiness U. N. Universal Declaration of Human Rights asserts that all human beings are entitled, among other things, to the right to own property alone as well as in association with others the right to free choice of employment, to just and favorable conditions of work, and to protection against unemployment the right to just and favorable remuneration ensuring for [the worker] and his family an existence worthy of human dignity the right to form and join trade unions the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance.

The Concept of a Right

Rights are entitlements o to act in certain ways (without blame or punishment) o to be treated in certain ways (with mistreatment being subject to blame & punishment) Legal vs. Moral rights o Legal rights are entitlements under law e.g. the rights specified in the Bill of Rights to freely speak & assemble to keep & bear arms

legal rights, or course, are limited to the particular jurisdictions in which the laws are in force o Moral rights or human rights are universal rights -- of all people based on moral norms, ideals, and values In the most important sense rights involve o prohibitions or requirements on others (duties) to allow the individual to pursue certain interests or activities: "protective function" or even enable the individual to pursue certain interests or activities: "enabling function" Three features of the protecting and enabling functions of rights 1. Rights impose correlative duties on others of noninterference correlated with protective rights: if I have the right to do something other people have a duty not to interfere with my doing it of enablement: if I have a right to have someone do something for me then someone has a duty to do it for me 2. Rights provide individuals with autonomy and equality in the free pursuit of their interests rights identity activities or interests people must be left free to pursue or not as they choose and whose pursuit must not be subordinated to the interests of others except for extraordinary & very weighty reasons 3. Rights provide a basis for justifying one's actions and invoking the aid or protection of others If I have a moral (or legal) right to do something then I have a moral (or legal) justification for doing it: "I'm within my rights.". And others have no justification for interfering with me and justification for assisting me, i.e., defending my rights. Contrast with Utilitarian Considerations o express the requirements of morality from the standpoint of the individual rather than society as a whole o rights limit the validity of appeals to social benefits and numbers the perceived benefit to society is generally not enough to override my rights o but it's a limited limitation: great enough social benefits can sometimes justify violations of rights e.g., declaration of martial law in times of national emergency imposition of quarantines (during disease epidemics) & curfews (during time of civil unrest)

Negative and Positive Rights

Defined o Negative rights can be distinguished as those which impose only the negative duty of noninterference on others. the right to privacy: means no one has the right to interfere in my personal affairs the right to property: means no one has the right to interfere with my using & disposing of it as I choose o Positive rights impose positive duties on others -- not just to refrain from interfering with me -- but to do something to assist me in the exercise of that right if needs be right to health care right to employment o Controversy Conservatives often loath to recognize positive rights: would like to limit the role of government to preventing violation of negative rights: maintaining law & order protecting property Liberals eager to assert positive rights which are apt to impose duties (on consequently expenses) on governments since the onus of assisting often falls there guaranteeing rights to health care impose a duty of providing medical assistance to the poor rights to housing impose a duty of providing housing assistance rights to jobs impose a duty offer training and placement

Contractual Rights and Duties

Aka special right and duties o i.e. limited rights and correlative duties that arise from agreements between parties o Distinguishing marks (in contrast to the unlimited or universal & nonvoluntary character of legal & moral duties) speciality: they attach to specific individuals and are imposed by specific individuals: the parties to the agreement arise out of specific transactions between individuals depend on a publicly accepted system of rules that define the transactions that give rise to those rights and duties clear in the legal case but perhaps even in the moral case: promising depends on the social institution of making promises the joke: a verbal agreement isn't worth the paper it's written on. Such agreements crucial to the practice of business, obviously.

Special duties arising from acceptance of a position or role in an organization or social institution o e.g., parents have special duties toward their children o spouses have special duties toward each other o Doctors have special duties to care their patients and keep their patients' confidences. o etc. "Ethical rules" underlying & legally limiting contractual obligation o Both parties must have full knowledge of the nature of the agreement o Neither party must intentionally misrepresent the facts of the contractual situation. o Neither party must be forced to enter the contract under duress or coercion. o The contract must not bind the parties to an illegal act.

ON THE EDGE: Working for Eli Lily & Co (p.73)

Drug testing is necessary & required by the FDA, but o Hard to get healthy volunteers: "Test subjects can die, suffer paralysis, organ damage, and other chronically debilitating injuries" o So, Eli Lily recruited homeless alcoholics from soup kitchens, shelters, and jails Particulars o Free room & board & medical care o $85/day o tests run for months so the men can make up to $4500 o they leave drug and alcohol free with money in their pockets o "When asked, one homeless drinker hired to participate in a test said he had no idea what kind of drug was being tested on him.

A Basis for Moral Rights: Kant

Doubtful that Utilitarianism can provide a satisfactory basis for moral rights o Weak: "People have moral rights because conferring moral rights on them maximizes utility." o Because: a right entitles you to do something regardless of the benefits it provides or costs it imposes on others. Immanuel Kant (1724-1804) and his theory. o Moral rights and duties all human beings possess regardless of any utilitarian benefits or costs o Based on the categorical imperative: a philosophical adaptation of the Golden Rule: "Do unto others as you would have them do unto you." First Formulation of the Categorical Imperative o Act only on that maxim through which you can at the same time will that it should be a universal law.

a maxim is the policy -- or expression of the policy -- governing your act: your reason for doing it to will it to be universal law is to will that everyone should follow the same policy. o Two criteria for determining the moral rightness or wrongness of a maxims and acts done on them. UNIVERALIZABILITY Must be willing that everyone should act on that maxim. My mama used to say to me, "What if everyone did that?" REVERSIBILITY Crucial case where "the shoe would be on the other foot": whether you would be willing to be done unto by others as propose to do unto them. My mama used to say, "How would you like it if your brother did that to you?" o Discussion: Kantianism focuses on the person's interior motivations for their actions not expected consequences (like Utilitarianism). maxims express those motivations "nothing is absolutely good except a good will" says Kant Central concept is not "goodness" (as of results) but "duty" our moral duty is to act as the Categorical Imperative says our actions have moral value -- are good deeds -- only insofar as they are motivated by duty not from inclination (because you want to or find it pleasant) even if you have good inclinations: you're kind & generous, say your acts are morally creditable only insofar as your motive was a belief that what you're doing is the right way for all people to behave, as the categorical imperative would have you. Second Version of the Categorical Imperative o Act in such a way that you treat humanity, whether in your own person or in the person of any other, never simply as a means, but always at the same time as an end. Never treat people solely as means. Don't use people. o Kant thought the two versions of the CI were equivalent: just said the same thing in other words. 1st version says that what's morally right for me is morally right for others: everyone is of equal value. "If this is so," Velasquez suggests, "then no person's interests should be subordinated to the interests of others so that the person is used merely to advance interests of others.

What the second version emphasizes is respecting other peoples autonomy: their right to choose for themselves not doing things to or for them without their consent

Kantian Rights

Based on the fundamental right of each rational agent or person to set and pursue their own aims (as expressed by the second version of the CI): to be (allowed to be) free autonomous agents. The different kinds of rights previously identified flow from this fundamental moral right of freedom: o positive rights to food, clothing, housing, & medical care exist as preconditions of the exercise of freedom if you're sick or starving you can't very well pursue your aims if you're dead or deranged you can't even set them o rights flowing from right to be informed pursuant to self determination negative rights (both choice and pursuit of ends requires information) freedom of speech freedom of association positive right to education o contractual rights flowing most forcefully from the CI's first formulation Kant's favorite example of a nonuniversalizable maxim: Break your promises when it suits you. If universally adopted promises wouldn't be credited. Not just -- you wouldn't like it if others did that to you. Universalizable in an even stronger sense self-contradictory in a way: it cuts off the branch it sits on. the possibility of breaking promises depends on the existence of the institution or custom making promises but this would be destroyed by the universal adoption of the maxim.

Problems with Kant

Imprecise & Impractical o Not so easy to figure out what maxims I'm acting on not clear we generally do or should act on maxims or set policies Can imagine someone saying, "my life is jazz man, . . . not classical improvisation is where it's happenin' man not your fusty old playin' from a score

or which you'd be willing to universalize especially on the fly. o Nor so easy to know when you're using someone merely as a means is the used car salesman who sells me a lemon using me only as a means to line his pockets "Let the buyer beware," he contends. He didn't make me not take it to a mechanic to get checked out. he was just respecting my freedom to be a chump who didn't beware. Heteronymy (Different Strokes) Counterexamples & Rejoinder o The racist employer who discriminates against blacks: he seldom hires & never promotes them. Such a fanatical racist he's willing to accept the proposition that if he were black he should be discriminated against (Maybe he's a fanatic fundamentalist Mormon: the "Book of Mormon" commands it, he thinks.) So CI licenses a maxim of racial discrimination, which is immoral. o Kill the weak, is my maxim, says Nazi Ned. "But if you were weak you wouldn't want others to kill you," says Kant, blanching in horror. "Better to die than live as a sniveling weakling," says Ned eyes ablaze with sincere fervor, "I would want someone to kill me." "Do the right thing and put me out of my shame" (weakling I'd be I probably wouldn't have guts to do it myself). So CI in this case licenses a Nazi Ned's maxim: and that's immoral. o Rejoinder: biting the bullet if Nazi Ned genuinely and conscientiously would be willing to universalize his principle then his acting on the maxim is morally right insofar as he is striving to be true to his sincerely universally willed principles he is acting conscientiously & in a moral manner. justifies R. E. Lee (perhaps) but Hitler? Surely not! would-be rejoinder itself encapsulates what's most wrong with Kantianism IMHO conscientious & sincere villainy possible: it's the worst kind as Nazism showed nothing inherently redeeming about a moralizing & maxim-izing style as opposed to Jazzman's style (for instance) shown by Ken Starr: He probably wouldn't mind having his sex life similarly scrutinized "If you've nothing to hide you've nothing to fear"

morality v. moralism

The Libertarian Objection: Nozick (skip) 2.3 Justice & Fairness

Justice and fairness are essentially comparative: concerned with the comparative treatment given to members of a group when o benefits and burdens are distributed o rules and laws are administered o individuals cooperate and compete with one another o individuals are punished for misbehavior Considerations of justice generally taken to trump utilitarian considerations of benefit & cost o greater benefits (or lesser costs) cannot justify injustices o unless the benefits (or savings) are very great, e.g., we seem to feel that some degree of inequality may be traded off for major economic gains that leave everyone better off. Considerations of justice doesn't ordinarily trump individual rights since, to some extent, justice is based on rights o violations of rights are thought to be themselves unjust o however, extreme injustice may justify restricting some individuals' rights Three categories o distributive justice: concerned with the fair distribution of society's benefits and burdens o retributive justice: concerned with the fair imposition of punishments on those who do wrong. o compensatory justice: concerned with fair recompense of individuals for losses suffered due to others misconduct or mistakes.

Distributive Justice

Issues typically arise o when individuals put forth conflicting claims on societies benefits & burdens and all cannot be satisfied o two cases scarcity of benefits (e.g., jobs, food, housing, medical care, wealth) compared to individuals desires for these benefits superfluity of burdens (e.g., unpleasant work, military service, risks) compared to individuals willing to take them on. The fundamental principle -- equals should be treated equally & unequals unequally -requires o Individuals who are similar in all relevant respects should be given similar benefits and burdens

Individuals who are dissimilar in relevant respects should be treated dissimilarly in proportion to their dissimilarity. Purely formal nature of the fundamental principle (which is why it's acceptable to all) o based on the purely logical idea of consistency: identical cases should be treated identically o but doesn't specify what respects are relevant or material to determinations of similarity application of the fundamental principle requires adoption of some material principle differing theories of Distributive Justice differ with regard, precisely, to this
o

Justice as Equality: Egalitarianism

Overview o There are no relevant differences among people that justify unequal treatment. o Therefore: Every person should be given exactly equal shares of society's benefits and burdens. PRO o Workers who receive equal treatment compensation cooperate better and feel greater solidarity with each other o A traditional American ideal that "All men are created equal" as the Declaration of Independence says o A good ideal leading to good results emancipation of slaves prohibition of indentured servitude elimination of racial, sexual, & class discrimination e.g., in voting requirements institution of system of free universal public education CRITICISMS o Simply not true that all are equal no two individuals are really equal in every respect, much less all individuals humans differ in many relevant respects: e.g., in abilities, intelligence, virtues, needs, and desires more like they're unequal in all respects than equal o Ignores relevant differences of need, ability, and effort Examples of injustices egalitarianism would lead to handicapped individuals would be expected to bear burdens equal to nonhandicapped lazy slackers would be compensated just as much as hard workers Productivity argument: since individuals would have no incentive to work so economic productivity and efficiency would decline. REPLIES

Distinguish between political and economic equality Political equality refers to equal control of, participation in, and treatment by governmental and other public agencies. Economic equality refers to equality of income, wealth, and opportunity. The Reply: Egalitarianism is the right principle for distribution only of political benefits and burdens. the criticisms leveled against equality apply only to economic equality the benefits cited in defense of equality are mainly improvements in political equality Limited economic egalitarianism proposes everyone to be compensated equally up to some set minimum standard of living beyond that unequal pay for unequal work should be practiced for productivity's sake.

Justice Based on Contribution: Capitalist Justice

Overview o Benefits should be proportional to what the individual contributes to society or the group. o In theory, the principle used to establish salaries and wages in most American companies o Pure expression of the principle: piecework style compensation. o Drawback: tends to promote an uncooperative and even competitive workplace atmosphere resources and information less willingly shared status differences arise & solidarity falls Main question: How is contribution to be measured? Proposed measures of contribution o work effort The greater the quantity of the individuals effort the greater their compensation should be: the harder you work the more you should paid. problems: ignores how effectively you work the incompetent drudge would be rewarded more than someone who produced more by working less. would remove incentive for individuals to acquire skills & education that would make them more productive workers. o productivity The better the quality of the individual's contributed product the more compensation they should receive. problem: ignores peoples' needs the needs of handicapped & other disadvantaged people will not be met problem: hard to place an objective value on contributed products

especially in certain fields such as artistic production science -- especially basic research education religion health care would-be fix: appeal to market forces: the value of a person's contributed product is whatever it would sell for on the open market. criticism: still ignores needs markets ignore the intrinsic values of things, e.g., athletes & entertainers vs. firemen, nurses and health-care workers etc. when products are made through the joint efforts of many workers the usual case how do we determine how much of the products value is due to whose efforts?

Justice Based on Needs and Abilities: Socialism

Overview: o "From each according to his ability, to each according to his need." o Burdens should be distributed according individuals' abilities to bear them and benefits according to individuals' need for them. o The distributive principle that tends to be least acknowledged in business. PROS o From each clause encourages productivity: the best person for the job gets it individuals would be encouraged to develop and exercise their particular talents to realize their potentials through their work o To each clause: social benefits go to those who will benefit most -- those with the greatest need best promotes human health, welfare, & happiness basic needs should be me first (vs. jewel encrusted Faberge eggs) what's left over should go to meet nonbasic needs o Same principle as in the family CRITICISMS o Productivity argument: remuneration would not depend on effort or productivity so economic productivity of would fall: workers receive the same no matter how hard or how productively they work o Unrealistic to think that whole societies can employ the distributive principles appropriate to the family: the "All for one and one for all" spirit only goes so far. The claim

human nature is essentially self interested and competitive outside the family people can't be sufficiently motivated by brotherly/sisterly willingness to pitch in (with the burdens) share (in the benefits) Socialist rebuttal competition and selfishness are learned not unchangeable features of human nature they're undesirable character traits instilled & encouraged by the capitalist system itself the "all for one and one for all" spirit would be nurtured and instilled under a socialist system: a "new socialist man" would arise under socialism. Oppressive collectivism would obliterate individual freedom: for instance a person's occupation would be determined by his (socially recognized) abilities not by his free choice. a person's compensation would be determined by their (socially recognized) needs not their free choice. substitutes paternalism for freedom in the best case scenario results in centralization of power & authority that invites abuse

Justice as Freedom: Libertarianism (skip) Justice as Fairness: Rawls (skip) Retributive Justice

Concerns blaming or punishing individuals for wrongdoing (particularly violation of group norms) Conditions of Responsibility or Desert o the individual knowingly did wrong o and freely chose to do so Due Process o aims to guarantee a high probability that the punishment is going to the real offender Proportionality & consistency of punishment. o consistency: everyone is given the same penalty for the same infraction o proportional: the penalty inflicts a harm no greater in magnitude than the harmfulness of the infraction

Compensatory Justice

Concerns restoring to individuals what they have lost due to being wronged by another Insofar as possible the wrongdoer should restore the loss Relevant conditions on compensatory responsibility

the action was wrong or negligent the action was the real cause of the injury the infliction of the injury was voluntary foreseen desired Controversial case: preferential treatment to remedy past mistreatment of groups, e.g. affirmative action
o o o

2.4 The Ethics of Care Partiality and Care

Impartiality & Traditional Ethics Utilitarianism & Kantianism agree: moral behavior is impartial behavior o Utilitarians: each counts one, none counts more than one o Kantians: universalizability accords no special concern for me & mine Doubts concerning impartiality o Freud: to love everyone equally is not to give a damn about anyone o "I love humankind. It's people I can't stand!" o Counterexample save your father from drowning vs. some stranger (a heart surgeon) Utilitarianism says you have a moral duty to rescue the stranger! In Defense of Partiality or Care o View intimacy & relationships as values in their own rights emphasizes these over abstract principles & societal benefits the web of relationships each individual has a moral obligation to perceive & nurture the web of relationships within which they exist and to give special consideration to and exercise special care for those with whom they are so linked o argument from identity of the self: "no man is an island" a good life is a connected life to love and work we need others to love and work with o Communitarian ethics: endorses person-to-group as well as person-to-person partiality

Objections to Care Ethics

can degenerate into unjust favoritism (e.g., nepotism) or factionalism in the Communitarian case: R. E. Lee excess of care can result in self-neglect or "burnout" case for care more compelling at the level of individual than of institutional morality possible conflicts with other values o with justice: the South Africa case of Caltex

possible conflicts with utility hire the most qualified applicant hire your useless brother-in-law

2.5 Integrating Utility, Rights, Justice, and Caring

Conflicts cut both ways o if it's an objection to care based ethics that care can conflict with justice & rights it's an objection to justice & rights based ethics that these considerations can conflict with care o likewise utility v. care o likewise utility v. justice & rights Conflicts ye have always with ye: for that matter, o rights can conflict with rights o & caring for one with caring for another Points up the need to weigh the relative importance of different types of considerations in specific situations. o no hard & fast general rule for doing so seems available o only rough criteria & subjective judgments of comparative value rights generally trump utility but sometimes utilitarian costs & benefits become sufficiently large trump rights: When? right to privacy (not to have one's phone tapped, etc.) vs. social utility of surveillance groups & persons who are terrorist threats

2.6 An Alternative to Moral Principles: Virtue Ethics

Virtue ethics focuses on character as opposed to conduct. o not the person one ought to be o not the kind of actions one ought to perform Conduct will take care of itself: o Good (kind, loving, generous, brave) people do good deeds regardless of their moral convictions: Huck Finn example "Love and do as you will." o Bad (cruel, hateful, stingy cowardly) people do bad things in spite of the lofty moral principles they espouse witch hunters "The mercy of the wicked is cruel."

The Nature of Virtue (skim)

Acquired dispositions

valued as part of the character of a morally good human being (seen as desirable) o exhibited in a persons habitual behavior o to do as good (admirable) persons do for right reasons E.g., truthfulness o disposed to tell the truth o feels wrong about lying o etc. Acquired: virtues are regarded as praiseworthy, in part, because their acquisition requires effort
o

The Moral Virtues (skim)

Aristotle: a mean between two extremes (or vices) of excess & defect o generosity defect: stinginess excess: wastefulness o courage defect: cowardice excess: rashness o pride defect: false humility excess: boastfulness Aquinas o pride a vice: humility a virtue o theological virtues faith hope charity

Virtues Actions and Institutions

Knock on virtue ethics is that it is an insufficient guide to action Key action guiding implications: o do what exercises or develops morally virtuous traits of character: the morally right actions are those o avoid doing what exercises or develops vicious traits of character: the morally wrong actions are these. Also applicable to the evaluation of institutional arrangement o ask what kind of character traits do the institutional arrangements foster if virtuous, the organization is good if vicious, the (form of) organization is bad: e.g., corporate cultures that encourage back-stabbing as the path to advancement.

capitalism encourages greed communism encourages laziness & incompetence

Virtues & Principles (skim)

No fundamental conflict in the conduct judged to be right & wrong. o e.g., utilitarianism would commend acts of the sort associated with generosity & industry o Kantianism would commend acts of the sort associated with integrity & consistency o Care would comment acts of the sort associated with loyalty & friendliness Main difference: focus on issues related to motivation & feeling that are largely ignored by an ethic of principles

2.7 Morality in International Contexts (skip) CASES FOR DISCUSSION Publius

Analyze the ethics of marketing Publius using utilitarianism, rights, justice, and caring. In your judgment, is it ethical to market Publius? Are the creators of Publius in any way morally responsible for the criminal acts that criminals are able to carry out and keep secret by relying on Publius? Is AT&T in any way morally responsible for these? In your judgment, should the U.S. government allow the implementation of Publius? Why or why not?

Unocal in Burma (ABC News)

Assess whether from a utilitarian, rights, justice, and caring perspective, Unocal did the right thing in deciding to invest in the pipeline and then in conducting the project as it did. According to your assessments, did Unocal do the right thing? Is Unocal morally responsible for the injuries inflicted on some of the Karen people? Why or why not? Do you agree with Unocal's view that "engagement" rather than "isolation" is "the proper course to achieve social and political change in developing countries with repressive governments"?

Business Ethics: Concepts & Cases: Chapter 3 The Business System Introduction

Globalization (Marx & Engels 1848): http://www.marxists.org/archive/marx/works/1848/communistmanifesto/ch01.htm o The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere. o The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature. o The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians intensely obstinate hatred of foreigners to capitulate. It compe ls all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image. Controversy: Free Markets v. Government Regulation o Regulators argue unregulated markets are defective with regard to problems of recession, depression, & inflation ensuring open and fair trade and competition protecting the environment providing equal opportunities to the disadvantaged helping the poor

providing just compensation & safe working conditions to workers fostering long-range basic research and innovation Laissez-faire advocates: antiregulators argue that regulation is bad because it violates rights restricts freedom leads to inefficient allocation of resources

Economic Systems

Definitions o economic system: the system a society uses to provide goods and services o tradition-based societies: societies that rely on traditional communal roles and customs to carry out basic economic tasks o command economy: an economic system based primarily on government authorities making the economic decisions about what is to be produced, who will produce it, and who will get it. o market economy: an economic system based primarily on private individuals [and corporations] making the main decisions about what they will produce and who will get it. o free markets: markets in which each individual is able to voluntarily exchange goods with others and to decide what will be done with what he or she owns without interference from the government. o ideology: a system or normative (or evaluative) beliefs shared by members of a social group concerning human nature and motivation, the purpose of social institutions, how societies actually function, the values societies should try to protect A business ideology is such a system of normative beliefs shared by members of a business group such as managers. A person's ideology is the system of normative beliefs they believe to be shared -- or think ought to be shared -- by the group Every economic system today is "mixed": mixed economies contain both command & free-market elements in addition to tradition-based elements present in every economy. Command System (idealized) o A single authority (a person or committee) decides what will be produced who will produce it how the product will be distributed o Decisions are communicated to those responsible for carrying it out as enforceable commands o Production and transfers take place in accordance with those commands o Nearest Examples integrated corporations U.S. & British economies during World War II

Soviet Economy: particularly between 1928 & 1953. Free Market System (idealized) o Overview Individuals and privately owned & controlled corporations make their own decisions about what to produce and how. Each firm exchanges its goods with other firms and consumers at the most advantageous prices it can get. Price levels serve to coordinate production by encouraging investment in profitable enterprises auto tires circa 1910 microchips circa 1990 discouraging investment in unprofitable ones buggy whips circa 1910 typewriter ribbons circa 1990 o Two main components system of private property embodied property laws assigning to individuals the rights to make decisions about the goods or property they own reassigning these rights when individuals exchange property or goods a market system enabling individuals & corporations to freely contract to exchange goods or property: e.g., the system of monetary exchange o Pure market system no restraints on rights of ownership & exchange whatsoever unsavory consequences people could be owned: slavery & indentured servitude would be legal prostitution & all drugs, including hard drugs, would be legal o Constraints typical of all real economic systems: impositions due to government concern for the public welfare things that may be owned: e.g., slaves things that may not be be sold: e.g., organs for transplantation, heroin illegal exchanges: e.g., child labor imposed exchanges: e.g., taxation Debate over whether governments should intervene -- & to what extent -- in the workings of the market system o Pro free-market arguments John Locke: a free market best insures & protects individual rights & freedom. Adam Smith: free markets are the best way to provide utilitarian benefits to society o Anti free-market arguments Karl Marx: capitalist systems promote injustice.

"Liberals": capitalist systems fail in various ways to promote the general welfare & needs to be supplemented by governmental (hence commandbased) programs.

3.1 Free Markets and Rights: John Locke

Overview: Locke's Case for Free Markets o Humans have certain "natural rights" including the right to freedom the right to private property o A free market system best serves to protect and guarantee those rights to freedom: insofar as they allow individuals to freely exchange goods with others without government interference to property: insofar as each individual is allowed to dispose of what they own however they see fit, without government interference o Therefore a free market system is, morally, the best kind of system (i.e., better than command systems) John Locke (1632-1704) o Imagine a state of nature with no government, no legal rights o In such a state human beings, we can see, would still have certain natural rights -- things which individuals in such a state would naturally take themselves to be entitled to life liberty property o But in such a state of nature, these rights would be extremely insecure without the restraints of law (in the natural state) there's no protection of these rights: in pursuing their lives, exercising their liberty, and acquiring and defending property individuals are apt to interfere with the life, liberty, and property of others. o therefore "governments are instituted among men" by the consent of the governed in order to secure these natural rights o limits on government flowing from the consensual nature of the compact or covenant cannot interfere with the life, liberty, or property of the individual except to prevent their infringing on the life, liberty, or property of another. Application in defense of free markets o government interference in the marketplace infringes on peoples life, liberty, and especially their property o therefore, government interference in the marketplace is wrongful violation of natural human rights o and should not be tolerated.

Criticisms of Lockean Defense of Free Markets 1. Locke's assertion of natural rights is unjustifiable: it's just an unproven assertion that people have rights to life, liberty and property that take precedence over all else o "reason . . . teaches all . . . who will but consult it" that these rights exist, Locke says o "We hold these truths to be self evident" says the Declaration of Independence o We're supposed to intuitively see this "self-evident" truth: but many rational human beings do not have these intuitions 2. Locke's assertion of the priority of negative (life, liberty, and property) rights over positive (happiness & welfare) rights is also just an unproven assertion o even if humans do have natural (life, liberty, and property rights) o does not follow that these negative rights override positive rights to, e.g., to food housing medical care clean air 3. Lockean (life, liberty, and property) rights conflict with -- and may sometimes be overridden by -- demands of distributive justice o free market economies by their very natures create distributive injustices o the rich get comparatively richer due to their access to educational opportunities business opportunities interest on their investments: sort of like being paid a stipend for having money o the poor -- lacking all of the above -- grow comparatively poorer o case in point: the U.S.A. circa 2001 32.9 million living in poverty: 11.7% of the population 33 million suffer from hunger 83 million people under age 65 had no health insurance 2.3 to 3.5 million homeless top 1% of the population held nearly half of all personal wealth owned more than a third of the nation's net worth and the gap has been steadily widening as show by the Table on p. 133-5 Figure 3.1 shows increasing inequality as measured by the Gini index increasing steadily since 1968 Figure 3.2 shows increasing family inequality between Figure 3.3 shows the steady decrease of the share of total U.S. income earned by the poorer 80% of households 4. Individualistic assumptions are false and in conflict with the demands of caring
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Locke's individualistic assumptions

life, liberty, and property rights flow from an individual's personal nature, independently of their relations to the community because these rights exist prior to and independently of the community, the community is not entitled to interfere with these rights except pursuant to its mutual protective function implied in the original covenant voluntarily entered into On the contrary: humans are by nature social animals not atomistic individuals with rights prior to and independent of their membership in communities persons naturally belong to communities which make those (life, liberty, and property) rights possible make the person who and what they are persons, consequently, are morally obliged to sustain communal relations to care for others as others have cared for them Conclusion: the community can legitimately restrict the liberty and make claims on the property and even the lives of its members because the community and the care it provides are the ultimate source of individuals' liberty, property, and lives.

3.2 The Utility of Free Markets: Adam Smith

Smith's Thesis: economic utility is maximized by the private property and free market system Defense: this system o ensures that the the economy produces what consumers want since producers produce to meet consumer demand o produce it at the lowest possible prices since buyers cause sellers to bid the prices down o and with the greatest efficiency since competition drives out the inefficient Conclusion o The economic utility of society is well served by free markets o where agents are motivated only by self interest. o Thus, private businesses are led to serve society "as if by an invisible hand" Corollaries o interventions into the market by government are undesirable interrupt the self regulating effect of competition thus reducing its many beneficial consequences. Human planners cannot allocate resources as efficiently as the "invisible hand" of the market can never have enough information or calculate what to do fast enough

The market allocates resources efficiently demand high supply low consumers bid prices up causing increased profits leading to increased production causing supply to increase to meet demand supply high demand low sellers bid each other down causing decreased profits leading to decreased production causing supply to decrease to the level of demand tending toward a natural equilibrium where supply = demand: consumers get what they want and goods find their "natural price" = cost of production + going rate of profit available in other markets

Criticisms of Adam Smith

The argument rests on false and unrealistic assumptions about competition 1. unrealistically assumes there are many producers freely competing to provide various products to consumers but monopolies develop without competition, they are immune to the market forces they are able to set prices artificially high: Microsoft Access, e.g. and are apt to be unresponsive to consumers "We don't have to care, we're the phone company" Microsoft's move to integrate Explorer into Windows against fundamental principle of sound software design: strive for modularity for reasons having to do with their "marketing" strategy against Netscape 2. falsely assumes firms pay for all the resources they use in production & consequently: to keep down costs they conserve resources this overlooks resources for which producers use but do not pay for the market then doesn't encourage conservation rather it leads to careless exploitation of resources like these left unchecked, freely competing businesses would use up clear air & water by polluting More general point: external effects that businesses have on surrounding natural and social environments is ignored in Smith's cost-benefit analysis psychological effects of mechanization on workers

health effects of products & production depletion of natural resources 3. falsely assumes profit is the only human motivation: that each "intends only his own gain" by following the rule of "economic rationality" construes people & corporations just as consumers & producers as purely rational with economy -- buy low & sell high -- as their only motive but people & corporations are not purely rational purely economic agents actuated by other motives besides economic ones people don't just seek their own gain there's kindness, & generosity in us and goods you can't buy friendship love creativity tradition & religion and they don't always act according to economic rationality tend to show brand loyalty tend to buy local sometimes weigh things money can't buy above profit socialist criticism: assuming that people are "self seeking" and merely consumers becomes self fulfilling the requisite selfishness is inculcated by the system virtues of kindness & generosity & cooperation are discouraged vices of mercilessness & greed & ruthless competition are encouraged rampant materialistic-consumerism is likewise encouraged idea that you can buy happiness is promoted (e.g., by advertising) goods money can't buy get downgraded & neglected status depends on what you have not on who you are (on character) the car you drive, your income, etc. become more honored than good character "He who dies with the most toys wins." Economic Planning is possible o Examples Positive: French, Dutch, and Swedish economic planning Negative: the Soviet Union o Velasquez conclusion from these examples

planning is possible: by measuring supply (in the form of inventories), demand (in the form of back orders), etc. but only so long as it remains one component within an economy in which exchanges are for the most part based on market forces.

The Keynesian Criticism (skim)

Keynes analysis: supply outruns demand o total (aggregate) demand is the sum of the demand from three economic sectors households businesses government o aggregate supply tends to outrun aggregate demand because households prefer to save some of their income in liquid securities (e.g., stocks & bonds) instead of spending it o oversupply leads to layoffs as producers cut production o resulting in a vicious cycle overproduction recession & depression until eventually supply decreases to level of demand: less supply due to diminished production savings will fall faster than incomes folks sell off their stocks to pay the rent value of stocks still held will decrease due to supply & demand in a bear market Keynesian Remedy: Government Intervention o Gov't can influence the propensity to save by regulating interests rates directly or indirectly via control of the money supply. o Gov't can affect the amount of money households have available by taxation. o Gov't spending can close the gap between aggregate supply and demand. by taking up the slack in demand from households and businesses which, alas, creates inflation Contra Smith: government intervention in the economy is needed to maximize social utility o by moderating the ups and downs of the business cycle o by pursuing spending & other fiscal policies that serve to enlarge effective demand decrease unemployment Post Keynesian's o Stagflation -- inflation in conjunction with unemployment -- inexplicable on Keynesian assumptions unemployment means less money chasing available goods should result in deflation

Post Keynesian explanation of stagflation it's due to nonmarket forces determining prices e.g., labor costs set by conventional agreements between producers and unions, not market forces of supply & demand prices set by oligopolies agreement or monopolistic fiat oligopoly: a few groups control the markets & production in the economy of some sector monopoly: a condition in which one group controls markets and production in some sector Post Keynesian solution: even larger role for government besides boosting aggregate consumption & demand (a la Keynes) curbing the power of large oligopolistic groups

The Utility of Survival of the Fittest: Social Darwinism

Claim: non-economic benefit -- the human good in a larger sense -- results from capitalistic competition Classic Social Darwinism o Supporting Argument Capitalism is an extension into the economic realm of the Darwinian mechanism of "survival of the fittest" in nature survival of the fittest results in the continuing progress and improvement of animal species in a capitalist society only the ablest individuals survive & prosper in the competitive world of business the fittest survive & prosper the unfit get left behind and die out the government should not intervene, e.g., with health benefits for the poor this only interfere with the mechanism: "if these economic misfits survive, they will pass on their inferior qualities to their offspring" Upshot of capitalist competition, therefore, is improvement of the human species. o Objections mean-spirited, even facistic, in its disdain for "useless mouths" (as the Nazi's called the unproductive). Traits that are useful in business not necessarily those that help humanity survive on the planet advancement in business might depend on ruthless disregard for others human survival might depend on cooperation and mutual helpfulness it can be doubted that capitalistic fitness = human fitness

in a physical genetic sense in any sort of spiritual sense: Jesus scores low on the capitalistic fitness measure "Take all your money and give it to the poor," Jesus says. What kind of investment advice is that!? Velasquez: Naturalistic fallacy: fiscal fitness =/=> physical or moral fitness but the economically fittest individuals -- those who do survive and prosper in business not necessarily the best individuals -- those whose survival truly betters humanity Kinder Gentler Social Darwinism o The selection mechanism applies to firms not individuals o Economic competition insures that the best business firms survive o Leading to improvement of the economic system (rather than the human species)

3.3 Free Trade and Utility: David Ricardo {skim}

Smith: "If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage." Ricardo's discovery: "that both countries could benefit from specialization and trade even though one can make everything more cheaply than the other" (143) Point those favoring globalization take from Ricardo: Globalization is good because specialization and free trade boost total economic output and everyone can share in this increased output.

Criticisms of Ricardo

Against the economic utility of free trade o Ricardo falsely assumes that resources used to produce goods do not move o Ricardo ignores economies of scale. o Ricardo falsely assumes that workers can easily and costlessly move from one industry to another. o Ricardo falsely assumes an absence of international rule setters such as the WTO, World Bank, and IMF Economic utility <> Utility: offsetting noneconomic costs of globalization o stability & relative self-sufficiency of local communities undermined o traditional life-styles, customs, and cultures are swept aside o like Marx and Engels said

Marxist Criticisms

Karl Marx ( 1818-1883) o the harshest critic of capitalist system of private ownership & free markets o chief theorist of Communism in collaboration with Friedrich Engels with addenda by Vladimir Ilyich Lenin Motivated in part by exploitative excesses of early capitalism which Marx witnessed o forced displacement of peasants from countryside to the city caused by industrial & consequent agricultural revolutions o exploitation of the new class of industrial workers long hours unsafe working conditions subsistence pay child labor Marx's diagnosis: such exploitation no passing accident but symptomatic of the underlying -- inequality creating -- dynamics of the capitalist system o Capitalist system offers only two basic sources of income wages got from sale of one's labor profits got from ownership of the means of production: interest on capital o Owners do not pay workers full value for their labor but only subsistence wages workers must like it or lump it owners have the leverage o value = labor only part of the value added to the raw materials by the production process returned to the workers as wages the rest -- what Marx called "surplus value" -- kept by the owners as profits o Resulting economic & distributive injustice the rich get richer the poor get poorer the gap between rich & poor continually increases o Indictment of Capitalism Capitalism promotes injustice undermines communal relations causes alienation

Alienation

Human fulfillment (self-actualization) v. Alienation o People are naturally social and productive o A good life involves creative & productive self expression satisfaction of genuine human needs for sustenance & shelter

for fellowship & community for fulfilling labor o Capitalism offers monotonous, oppressive unfulfilling drudgery, not creative self expressive work stifles satisfaction low wages breakdown of family & community has led, historically, to the breakdown of extended & lately, more & more, the nuclear family close-knit communities of yore have give way to bedroom communities of commuter/cucooners mind numbing, stifling work sows confusion -- especially about the causes of the aforesaid dissatisfaction promotes the idea that you can buy happiness: "He who dies with the most toys wins." encouraged by advertising also by the way that other avenues of fulfillment -through work & community -- are closed off human value defined in terms of income & economic standing it's not who you are but how much you make Four forms of alienation 1. expropriation of the products of our labor surplus value created by labor of workers is pocketed by Capitalist bosses products are designed & used for purposes antagonistic to the worker's own interests Marx's day nightsticks for strike-breakers guns for the colonizers Today prison-industrial complex mind-numbing infotainment 2. alienation from our own productive activities: from our work jobs that are repetitive, uncreative, & unfulfilling and controlled by others: the owner & his representatives (the bosses) 3. alienation from self: reduced to worker/consumers pursuit of wealth preoccupies us leaving us little time or inclination genuinely rewarding pursuits & activities leisure pursuits have a desperate quality generally unedifying & "escapist" -- TV & sports, for example they merely distract us from the basic emptiness & purposelessness of our lives

4. alienation from others class conflict between bourgeois: the owners of the means of production proletariat: the workers (wage laborers) between workers in the workplace: workplace arrangements undermine community & solidarity (even effort) if you produce more than you fellows more will be demanded of them advancement is from the ranks not with the ranks: requires going over to the bosses side against your former coworkers more widely in society (as already mentioned) breakdown of extended & nuclear families already noted above bedroom communities of commuter/consumers/ cocoon class & race conflicts incited justified resentment against the bosses gets displaced onto others who are perceived, e.g., as taking our jobs immigrants beneficiaries of social benefits beneficiaries of hiring preferences (affirmative action) The Real Purpose of Government

The real purpose of government is to serve the interests of the ruling class o to organize & run society in the way that's most beneficial to the Capitalists o this requires controlling the workers by police and military force by control of culture: high: e.g., religion, art, literature, philosophy low: popular news and entertainment media o "The executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie." (Marx & Engels) Marx's analysis of Society o Rests on a material basis: economic substructure Means & Forces of Production: raw materials, land, factories, machinery, etc. Relations of Production ownership relation between Capitalists & the means of production command relation between Capitalists & their workers established by the wage contract which the worker must accept in order to make a living Relations of production define the main classes in any society feudal society (agricultural basis)

lords: own the land vassals: work the land capitalist society (industrial basis) bourgeois (capitalists): own the factories proletarians (workers): work in the factories Dialectical Materialism: the available means & forces of production determine the social relations development of new forces of production -- e.g., steam power & mechanization force development of new social relations the old arrangements get outgrown: e.g., feudal sharecrop & ancestral loyalty system replaced by new arrangement: labor hired for wages Ideology: social superstructure relations of production determine the culture produced culture as ideology: serving the interest of the ruling class most important cultural products the state: "a committee for managing the common affairs of the whole bourgeoisie." protects the property and prerogatives of the ruling class maintains order favorable to continuation & consolidation of ruling class control religion: pronounces its blessing on existing social distribution of wealth & power medieval church blessed the feudal order & preached the divine right of kings Protestantism along with the rise of capitalism: removed condemnation of "usury" preached prosperity doctrine: the good prosper: wealth proves virtue political philosophy: rationalizes existing forms of government Locke: provides a would-be rationalization of Capitalism held government exists to protect life, liberty & property of all & rules by mutual consent of all Marx: the truth is government exists to protect property & prerogatives of the ruling class & rules by mutual consent of the ruling class over the working class

when necessary by naked exercise of force when possible by persuasion & thought control control of cultural expressions engineering consent under the guise of democracy other manifestations of culture also tailored to the purposes of the ruling class it's mainly the ruling class that has the leisure to create culture and the wealth to fund it

Immiseration of Workers

Capitalist exploitation of the working class contains internal contradictions: the system contains the seeds of its own destruction Three contradictions: 1. Large firms will swallow up the small & drive them out of business fewer & fewer corporations & individuals come to control increasingly large share of the economic assets and markets "the rich get richer" & the ranks of the proletariat swell 2. The business cycle & periodic economic crises surplus value siphoned off by the capitalists causes overproduction: workers can't afford to consume all they produce capitalists can only consume so much caviar & so many jewel encrusted eggs investment in modernization & expansion also fuels consumption some goes into stocks & other liquid securities which do not fuel consumption so periodic episodes of oversupply occur leading to layoffs & unemployment taking even more purchasing power out of the hands of worker/consumers in a vicious cycle leading to repression & depression in which the surplus is gradually used up workers get rehired at less than the value of the products of their labor (of course) reinitiating the cycle 3. Gradual worsening of the lot of the workers owners seek a bigger & bigger share of the pie leading to labor-saving tactics e.g., automation & downsizing

leading to increased unemployment & underemployment Marx's proposed solution: Communism 1. Collective ownership of the means of production: "Expropriate the expropriators" -- take their property by violent revolution 2. institute a centrally planned economy to replace unregulated markets 3. stages socialism: the dictatorship of the proletariat communism: the withering away of the state in a classless society

Replies

Factual Replies 1. the predicted immiseration of the workers has not occurred Lenin's rejoinder: Theory of Imperialism immiseration gets exported to the undeveloped world workers at home get bought off out of the profits from exploitation of third-world workers 2. the business cycle has proven not to be inevitable can be managed in ways such as Keynes suggested: Ben Bernicke's job the extremes can be avoided thereby no depressions since 1929 -- knock on wood 3. capitalism not.the cause of breakdown of community other factors are responsible ("secular humanism") at any rate, communism causes worse breakdown by restricting peoples rights of association of religious association of economic association Normative replies o Capitalist distribution is not unjust only appears so on egalitarian & needs-based principles of distributive justice on other principles the distribution arguably is just contribution-based distribution wherein invested capital counts as a (very great) contribution if none of these principles is provably correct the Marxist "solution" involves violation of (property) rights & freedom with no provable gain in justice o Utilitarian benefits sufficient to outweigh distributive injustice the distribution of wealth under capitalism is unjust but the productivity & efficiency of the system produces benefits outweighing these distributive injustices sure the workers deserve a bigger cut: it's not fair

but 10% of $100 is better than 50% of $10

3.4 Conclusion: The Mixed Economy, The New Property, and the End of Marxism

Mixed Economy: o partially free markets o subject to some government intervention to insure competition: prevent monopolies moderate the effects of the business cycle prevent the most egregious kinds of exploitation of workers, e.g., unsafe conditions & child labor guard the environment against destructive effects of pollution, stripmining, etc. soften possible injustices of distribution through redistributive mechanisms such as welfare benefits guarantees of health-care free universal public education o limited property rights Debate today -- even in remaining nominally "communist" countries like China -- mainly about what's the best mix of o property rights & free markets o governmental regulation

Property Systems and New Technologies

Intellectual Property consists in ownership rights over abstract and nonphysical objects such as o software programs o a song o a recipe o a digital image or sound o a genetic code?! Nonexclusive nature of intellectual property: "one person's use of intellectual property does not exclude other people's simultaneous use of that property," unlike physical objects. Competing Ideas o Lockean: a software program or song I create, since it is the product of my mental labor, is my private property. o Utilitarian: private ownership of intellectual property provides incentives that increase intellectual productivity. o Marxist/socialist: intellectual property belongs to the community contra Locke: intellectual labor is inherently communal: "while people may have a right to the fruit of their labor, they have a duty to reward

society which made the very fruitfulness of labor possible" (Paul Steidlmeir) contra Utilitarianism: private ownership of intellectual property in not needed to inspire intellectual creativity and is an impediment to the dissemination of ideas & understanding & innovation (e.g. it prevents others from developing improved versions of protected software or from taking advantage of key new drug discoveries). U.S. Policy: A Mixed Solution o Article I, Section 8, Clause 8 of the United States Constitution, known as the Copyright Clause (or the intellectual property clause) empowers the United States Congress:To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries o Ideas vs. Expressions Ideas cannot be owned: e.g., blues in a minor key stories about space travel soap operas about gangsters number systems: Microsoft Patents Ones Zeros (satire from The Onion) graphical interface operating systems Expressions of ideas can be granted a copyright making it the private property of an individual or corporation St. James Infirmary Blues (thankfully this is "traditional" and in the public domain): still a particular performance of the St. James Infirmary Blues may be protected Star Trek: The Next Generation The Sopranos binary computer code Windows XP o Copyrights & Patents & the Public Domain: Copyrights: grants that indicate that a particular expression of an idea is the private property of an individual or a company. crucially imposes restrictions on the right to duplicate the expressions exceptions for "fair use" to promote public discourse and criticism granted for "a limited term": 95 years (currently) it keeps getting extended "Mickey Mouse will never go out of copyright" some predict. Works of art, literature, etc. are protected by copyright Patents apply to machines, drugs, chemicals, or other "compositions of matter"

also included: software programs, nonsexually reproduced plants, genetically modified organisms, product designs granted for periods of 14 or 24 years Public Domain: after their terms expire the expressions become "the common property of everyone"

The End of Marxism?

Fall of the Soviet Union o Sept. 24, 1990: Soviet legislature votes to switch to a free market economy o Summer 1991: Communist party outlawed in Russia after an attempted coup The giddy Capitalist interpretation voiced by Francis Fukuyama o the fall of Soviet-style communism marks "The End of History" o "there will be no more 'progress' toward a better or more perfect economic system" o "The whole world now agrees that the best system is capitalism." (Velasquez: 156) Velasquez's more sober assessment o the fall of Soviet-style communism only shows the bankruptcy of extreme command-based economics o what almost the whole world agrees on is mixed economics: combining both command & free-market elements . o remaining debate concerns the best mixture for combining the economic-utilitarian benefits of free markets the social justice & care benefits of planned economies The Political Compass (Online Self-Test) o authoritarian/communitarian: Stalinism o authoritarian/individualistic: Fascism o anarchist/communitarian: Anarcho-syndicalism (Chomsky) o anarchist/individualistic: Libertarianism

Case for Discussion GlaxoSmithKline, Bristol-Myers Squibb, and AIDS in Africa (ABC News CD-ROM) Case Outline

HIV/AIDS: a deadly communicable disease mainly transmitted o by sexual contact o by IV drug use o in childbirth 2005 World Estimates: WHO: 2006 Report on the Global AIDS epidemic o 38.6 million infected: o 4.1 million newly infected

2.8 million died World's poorest countries in sub-Saharan Africa hardest hit o 70% of those infected as of 2004 (about 28 million) o Average adult infection rate 8.8% across the region Anti-retro viral treatment o 4 different classes of retro-viral drugs developed (1991-1996) most importantly by GSK and B-MS o Standard "cocktail" treatment combining 3 different classes of these drugs developed in 1996 o Unavailable to sub-Saharan African HIV/AIDS victims due to prohibitive costs Avg. income in the region: $500/yr. Avg. cost /year of drugs (circa 2001): $10,000 Moral-Legal Dilemma for GSK & BMS o GSK & BMS hold 15-20 yr. patents on these drugs o $10,000 far above the cost of production due to high drug industry profits funding R&D for tomorrow's drugs from today's income o CHALLENGE: Given the deadliness of this disease and the extent of the epidemic, GSK & BMS should (be compelled to) sell their drugs much more cheaply to make them more affordable to poor HIV/AIDS sufferers. GSK&BMS argued they should not 1. because prevention programs were more cost effective public health measures than drug therapy 2. because uneducated & impoverished people would be unable to follow the complicated regimen (involving precisely timed doses of the different drugs) that the "cocktail" therapies required, which could lead to the development of drug-resistant strains of HIV 3. R&D and testing needed to bring future drugs on the market is very expensive & the drugs would be resold & reimported to the developed world, undercutting. Doctors Without Borders and other critics replied 1. prevention isn't 100% effective and those already infected still need treatment 2. public health workers & low-skilled paramedics effectively oversee the administration of the drugs in poor communities 3. drug companies exaggerate the expense of R&D and make huge profits Laws & Developments: WTO, TRIPS, & Cipla o The 1997 Trade-Related aspects of Intellectual Property rights agreement requires all signatory countries to give patent holders 20 yr. exclusive rights to make and market their inventions. o Developing countries, including India, Brazil, & China, were given until 2006 before they had to implement the agreement
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2001: Cipla, an Indian drug company, begins manufacturing generic versions of GSK & BSM patented drugs to include in its own "cocktail": cost per 1 yr. supply = $350. Other Indian companies followed suit By 2003 another Indian company was selling a similar cocktail: cost per 1 yr. supply = $201 Dispute & Resolution o GSK's CEO "branded the Indian companies as 'pirates' and asserted that what they were doing was theft, even if they broke no laws" due to the "developing nations" loophole o Cipla also cites the "national emergency" provision of TRIPS allowing 'compulsory licensing' and the import of unlicensed drugs from foreign countries in the event of a national emergency and the HIV/AIDS epidemic being a national emergency. o By 2003, pressured by "the discounted prices of the Indian companies and world opinion," GSK & BMS were offering "discounts" to poor countries bringing the price of their products down to $727 "still to high for most sub-Saharan AIDS victims and their governments" (Velasquez, p.161) o The AIDS epidemic continues: estimated there will be 5 million new cases in 2006 WHO "3x5" initiative to bring anti-retro viral treatment to 3 million people by the end of 2005: o table: Number of people receiving anti-retro viral treatment triples in low and middle income countries: 2002-2005
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Questions for Discussion 1. What would Locke, Smith, Ricardo, or Marx probably say about the events in this case? 2. Explain what view of property -- Locke's or Marx's -- lies behind the positions of the drug companies GlaxoSmithKline, Britol-Myers Squibb and of the Indian companies such as Cipla. Which of the two groups do you think holds the correct view of property in this case? 3. Evaluate the position of Cipla or of GlaxoSmithKline in terms of utilitarianism, rights, justice, and caring? Which of these two positions do you think is right from an ethical point of view? 4. What other issues do you believe this case raises or what else to you think it shows? Accolade versus Sega Questions for Discussion 1. Analyze this case from the perspective of any of the theories of private property described in this chapter (Lockean, utilitarian, or Marxist). Which of these theories do you most agree with you and which do you think is most appropriate in this case? 2. Do you agree that Accolade had "really stolen" Sega's property? Why or why not?

3. Did Accolade go too far in trying to discover the underlying source code of Sega's programs? Does a company have a right to reverse engineer any product it wants? 4. What other issues do you believe this case raises or what else to you think it shows?

Business Ethics: Concepts & Cases (6th edition) : Chapter 4 Ethics in the Marketplace Introduction

If free markets are moral it's because they allocate resources & distribute commodities 1. in ways that are just 2. that maximize economic utility 3. that respect the liberty of both buyers and sellers These three benefits depend crucially on competition .Consequently, anticompetitive practices are morally dubious Two kinds of anticompetitive conditions and practices o monopoly conditions: a market segment controlled by one seller o oligopoly conditions: a market segment controlled by a few sellers

4.1 Perfect Competition

Under perfect competition, "no buyer or seller has the power to significantly affect the prices at which goods are exchanged." Seven features of perfectly competitive markets: 1. distributed: numerous buyers & sellers, none of whom has a substantial market share 2. open: buyers and sellers are free to enter or leave the market 3. full and perfect knowledge: each buyer & seller has full and perfect knowledge of each others' doings 4. equivalent goods: goods being sold are similar enough that buyers don't care whose they buy. 5. unsubsidized: costs of producing or using goods is borne entirely by the buyers & sellers 6. rational economic agency: all buyers and sellers act as egoistic utility maximizers try to buy (or produce) as low as possible sell as high as possible 7. unregulated: no external parties such as governments regulate the price, quantity, or quality of goods Breakdown of the seven features o 1-2 -- openness and distribution -- the "basic conditions" o 3-6 are "idealizing conditions" o 7 -- nonregulation -- a measure of how free the market all real economies are mixed, mixing free market elements command elements regulative admixtures justified by appeal to social utility distributive justice

rights -- especially positive or welfare rights Essential presuppositions o an enforceable private property system so buyers and sellers have ownership rights to exchange o a system of contracts to facilitate & control transfers of ownership o an underlying system of production so there's goods to be exchanged Self-regulation: the basis for the alleged moral benefits of competitive markets o supply > demand sellers bid prices down: assumes distribution among sellers falling profits lead to decreased production: assumes openness profits in one market sector falling below those in others causes sellers to move into the other, more profitable, sector o demand > supply buyers bid prices up: assumes distribution among buyers rising profits lead to increased production: assumes openness profits in one market sector rising above those in others causes sellers to move out of the others and into the more profitable sector

Equilibrium in Perfectly Competitive Markets

Principle of Diminishing Marginal Utility o affecting demand o states that each additional item consumed is less useful or satisfying than each of the earlier items consequently is less valuable than each of the earlier items o consequence: "the price consumers are willing to pay for goods diminishes as the quantity of goods they buy increases" Principle of Increasing Marginal Costs o affecting supply o states that each additional item produced after a certain point costs more to produce than earlier items point determined by countervailing economies of scale & scarcity or plenitude of resources costs breakdown = ordinary costs + normal profits "ordinary" costs of production & distribution costs of labor materials marketing distribution etc. "normal" profit: "the average profit the producers could make in other markets that carry similar risks" (p. 213) Equilibrium price: the price at which supply = demand, i.e.,

the amount buyers will pay for a quantity of goods the production costs (including normal profits) of that quantity for the sellers Discussion: Perfect Competition as useful idealization o only a few markets -- mainly agricultural commodities markets -- come close to the ideal o perfect competition and explanatory construct or idealization enables economists to make predictions as with other useful idealizations use of equations governing "frictionless planes" to estimate behavior of real inclined planes use of equations governing "free fall in a vacuum" to estimate the behavior of bodies falling in the atmosphere etc. ethically illuminating provides us with a clear understanding of the advantages of competition and understanding of why it may be desirable to keep markets as competitive as possible
o o

Ethics and Perfectly Competitive Markets (PCMs)

Capitalist distributive justice is well served by perfectly competitive markets o contributive justice: to each according to their contribution counting capital or ownership of the means of production as a contribution counting the value of workers contribution as = the price their services command on the job market accords with the practice of counting "normal" profit as a cost of production Economic utility or efficiency is best served o demand is served: sellers sell and producers produce what consumers want o efficiency is forced on producers & distributors by competition o consumers individual preferences are served each gets what they in particular most want from among the goods available Negative rights are well respected, especially rights of economic liberty o to buy and sell whatever you choose o whenever you choose o to and from whomever you choose Limitations on Perfectly Competitive Markets' Claims to Moral Superiority o Justice under competing conceptions not so well served egalitarian justice violated by income & wealth disparities arising under PCMs distribution according to ability to pay vs. need is contrary to needsbased conceptions

counting the value of labor as the price it commands on the job market contrary to Marxian contribution-based justice value of labor = fair-market value of product minus the ordinary costs of production "normal" profit not counted as a cost of production Justice and benefits alleged accrue only to market participants or those with money to buy it's only their demand that are served it's only their individual preferences that are served Positive rights of the poor may be violated: e.g., rights to food & shelter education health-care Conditions for perfect competition may conflict with care rational egoistic utility maximization neglects caring -- it's selfish efficiency demands of competition may conflict with caring if I'm too caring pay my help substantially more than my competitors if I spend substantially more on pollution controls than my competitors if I spend spend substantially more on safe working conditions than my competitors then I may lose out in the competition my production costs will be higher my competitors will undersell me putting me out of business Certain bad character traits may be encouraged and certain good traits discouraged by competitive markets discouraged good traits kindness caring generosity negative traits encourages greed & self-seeking materialism Imperfections of real markets insofar as they fall short of perfect competitiveness they may fail to deliver even the promised benefits of serving capitalistic justice maximizing utility securing negative rights of economic liberty

4.2 Monopoly Competition

In monopoly conditions the first two of the seven conditions defining perfect competition are violated o not distributed but concentrated instead of "numerous sellers, none of whom has a substantial share of the market" one seller has a 100% share of the market o not open but closed instead of other sellers being able to "freely and immediately enter" other sellers are prevented from entering due to various factors patent laws high capitalization costs anticompetitive machinations of the monopoly holder etc. o Monopoly markets Definition: "markets . . . in which a single firm is the only seller in the market and which new sellers are barred from entering." (p. 221) Principal Market-Distorting Effect inability of other competitors to enter the market thereby increasing supplies thereby bidding prices down results in artificially high prices above the "natural price" or equilibrium point natural price = cost of production + going-rate-of-profit (CP + GRP)

Monopoly Competition: Justice, Utility, and Rights

Monopoly Markets & Capitalist Justice o Capitalist justice says: "to each according to their contribution of labor or investment. o Equilibrium point is where Capitalist justice is served. o Under monopoly conditions prices kept above equilibrium so the seller charges more than the goods are worth (i.e., their natural price) so the prices the buyer is forced to pay are unjust (i.e. > CP +GRP) Monopoly Markets & Economic Utility 1. Monopolies foster distributive inefficiency: demand is not served monopolies create (virtual?) shortages (indicated by high profits) other firms unable to enter the market to make up these shortages excess profits absorbed by the seller are resources not needed to supply the amounts of goods the consumers are getting: if others were free to enter the market the same goods would be supplied for less. 2. Monopolies remove competitive pressures making for productive efficiency

3. Discretionary preferences of consumers not as well-served: consumers forced cut back more than they would have had to (under "normal" conditions) to buy the monopolized goods Monopoly Markets and Negative Rights of Economic Freedom o Sellers not free to enter. o Buyers buy under duress: monopoly sellers can dictate terms to buyers goods they may not want: "You have to buy the Service Agreement with that." Example: Microsoft marketing of Explorer quantities they may not desire: "sorry it only comes by the dozen." o GM's reply to Bill Gates (humor)

4.3 Oligopolistic Competition

True monopolies are rare: but a second type of "imperfectly competitive market" is common. Oligopoly conditions: a few firms control most of the market o relatively common ("business as usual") o have similar dynamics and anticompetitive effects In oligopoly conditions the first two of the seven conditions defining perfect competition are violated o not distributed but concentrated instead of "numerous sellers, none of whom has a substantial share of the market" a few sellers have a near 100% share of the market o not open but closed instead of others sellers being able to "freely and immediately enter" other sellers are prevented from entering due to high start-up costs anticompetitive machinations of the oligopoly firms long-term contracts with buyers etc. Concentration o the fewer the firms controlling the market the more "highly concentrated" the market o the more firms controlling the market the less "highly concentrated" Horizontal mergers: the chief cause of oligopolistic conditions o horizontal merger = "unification of two or more companies that were formerly competing in the same line of business" e.g., Daimler, Disney-Times-Warner anticompetitive Dynamic: Creation of Virtual Monopoly Conditions via Collusion

with only a few firms in the market it is relatively easy for them to join forces and act as a unit "much like a single giant firm" by agreeing to set prices at the same (excessively high) level tacitly: a "gentlemen's agreement" explicitly: price fixing by agreeing to restrict output & control supply (OPEC) with similar anti-competitive & consequently dubious ethical consequences violations of capitalist justice negative impacts on economic utility distributive inefficiencies productive inefficiencies diminished discretionary preference satisfaction with similar negative (economic freedom) rights violations others are prevented from entering the market sellers dictate terms buyers have no recourse since the "competition" has agreed to dictate the same terms

Explicit Agreements

Price fixing: managers meet (secretly) & agree to set prices at a artificially high levels. Manipulation of Supply: firms agree to limit their production o result in artificially induced shortages o hence in artificially high prices Exclusive Dealing Arrangements: firms sell to retailers on condition o that retailers will not buy from certain other companies (contra openness) o or will not sell outside of a certain geographical area (contra distribution) Tying Arrangements: the seller agrees to sell to buyer only on condition that the buyer agrees to buy other products from the firm. Retail Price Maintenance Agreements: manufacturer sells to retailer only on the condition o that they agree to charge the same set retail price for the goods. o effects diminishes competition between retailers removes competitive pressure on the manufacturer to lower prices decrease production costs Price Discrimination: charging different prices to different buyers for identical goods. o Examples Continental Pie Co. underselling Utah Pie Co. in Salt Lake City Most famous case: Standard Oil cornering of the oil market at the end of the 19th century used regional price discrimination region by region

to undersell the locally based oil companies & drive them out of business. The airlines? Price differences are legitimate only when based on volume differences other differences related to true costs of manufacturing transporting packaging marketing servicing

Tacit Agreements

Explicit agreements to undertake many of the anti-competitive practices just named are illegal Most collusion between oligopolies, consequently is based on unspoken or "tacit" forms of cooperation Genesis of unspoken cooperation o firms each come to recognize that competition is not in their best interest o that cooperation would be in the best interests of all o so without any explicit agreement to cooperate they undertake to act as if there were such an agreement you might say there is such an agreement de facto or in practice Price-setting: when one major player raises prices, all the would-be competitors follow suit o each realizes all will benefit as long as they continue to act in this concerted fashion o "price leader" version the oligopolies recognize one (dominant) player as the industry's price leader and tacitly agree to follow suit in setting prices at whatever level this firm sets

Bribery

Bribes can be used to secure the sale of products o serve to shut out other sellers o hence, are anticompetitive Not all bribes are of this sort: e.g. "tips" customarily given to customs agents in some countries to "expedite the process" Ethical rules for bribery: potentially excusatory & mitigating questions o Is the offer of payment initiated by the payer? if so, this is a morally culpable act of bribery

if not -- if the payee initiates the transaction by demanding payment (usually accompanied by an explicit or implicit threat: e.g., the processing won't be "expedited") it's more like extortion by the payee than bribery by the payer the payer is absolved of moral responsibility or their responsibility is at least diminished Is the payment made to induce the payee to act in a manner contrary to the duties or responsibilities of their office if so: it's a morally culpable bribe: the payer is inducing the payee to act immorally if not -- as in the case of the customs official -- it may not be. Are the nature and purpose of the payment considered ethically unobjectionable by the local culture if so (again as in the case of the customs agent) then it may be morally excusable if not done for anticompetitive purposes if not done for the purpose of inducing the payee to do something immoral may be ethically permissible on utilitarian grounds: otherwise the process won't be "expedited" might, however, still be a legal violation of the Foreign Corrupt Practices Act of 1977 agreement with local practices won't be a mitigating or excusing factor if it is done for anticompetitive purposes or if it is done for the purpose of inducing the payee to do something immoral

Oligopolies and Public Policy

The problem o Competition within industries has declined & is declining. o What to do in light of this fact?

The Do-Nothing View

No Problem: Competition between industries with substitutable products takes the place of competition within o example: steel industry, though highly concentrated, faces competition from plastics, aluminum, etc. o question: what to do when Alcoa & U. S. Steel & 3M merge? "Countervailing power" of other large corporate groups blunts the effects of concentration o unions & government

large corporate buyers not so easy to dictate terms to Chicago School: markets are economically efficient with as few as three significant rivals Big is good o economies of scale reductions in unit costs of production using the same fixed resources o offsets drawbacks: excessive profits offset by incredible cost savings o necessary to meet foreign competition from subsidized industries o Velasquez is dubious: "research suggests that in most industries expansion beyond a certain point will not lower costs but will instead increase them."
o

The Antitrust View

Reinstitution of competitive pressures o is necessary in order to rein in excessive oligopoly profits o requires breaking up large firms into smaller units (each controlling not more than 3-5% of the market) Expected results o higher levels of competition will emerge o along with a decrease in explicit and tacit collusion o bringing about the beneficial consequences lower prices for consumers greater innovation increased development of cost cutting technologies

The Regulation View

Oligopoly corporations should not be broken up o economies of scale would be lost if they were forced to decentralize mass production mass distribution etc. o these economies should be passed on to consumers in the form of cheaper products more plentiful products To pass savings due to economies of scale along to consumers requires proper regulation of large corporations o nationalization -- government take-over of operations the regulative extreme controversial sometimes necessary & beneficial, some argue

never necessary or beneficial others argue leads to unresponsive bureaucracy removes competitive pressure from these firms or industries which negatively effects productivity efficiency innovation proponent of regulation usually have in mind measures less extreme than regulation to ensure that markets continue to be structured competitively: to ensure that firms maintain competitive market relations between themselves i.e., to prevent collusion may be voluntarily followed or legally enforced justified insofar as competition is necessary to best secure utilitarian benefits distributive justice rights to negative freedom

Case for Discussions Playing Monopoly: Microsoft (ABC News CD-ROM) Case History

1977: Bill Gates & Paul Allen begin writing programs for the Apple II PC, rename their company Microsoft, and move to Seattle "where, with 13 employees, it ended the year with revenues of 1.4 million." 1980: IBM belatedly decides to enter the PC market & finds itself in need of an operating system fast o CP/M (a multiplatform OS) turns down IBMs offer to license its OS for IBM o Approach Bill Gates who says he can provide them with an OS o "Gates went to a friend who he knew had written a ... 'knock-off of CP/M' and paid him $60,000 for the rights to this 'knock off': Gates did not tell his "friend" about the IBM offer o IBM's share of the market grew to 40% by 1987. "MS-DOS became the standard operating system for computers built to IBM standards," roughly 90% of all PCs o thousands of applications including Microsoft's own MS Word and Mulitplan developed for this OS 1984: Apple Computer develops operating system with graphical interface 1987: Microsoft releases its Windows OS also featuring graphical interface o Apple sued Microsoft for infringement: claiming that because Windows copied the "look and feel" of the their copyrighted MacIntosh OS

Apple lost the case and with it the competitive advantage it had briefly enjoyed" Microsoft continues to control some 90 percent of the personal computer market Netscape o Netscape Navigator after its release in December of 1994 Navigator quickly captured 70% of the internet browser market o browsers do not only display text and graphics but can execute instructions (software programs) much like an OS, making them a potential competitors to Windows. o Bill Gates' 1995 memo: "A new competitor "born" on the internet is Netscape. Their browser is dominant, with a 70% usage share. They are pursuing a multi-platform strategy where they move the key API [applications programming interface] into the client to commoditize the underlying operating system." Java o a programming language developed by Sun Microsystems in 1995 o can operate on any computer equipped with Java software regardless of the OS, again threatening to make Windows obsolete o "This scares the hell out of me," Bill Gates wrote in an internal e-mail. Navigator + Java! Oh no! o Netscape agreed with Sun to incorporate Java into Navigator o So Java programs didn't need Windows: they could run on any Navigator equipped computer o Furthermore, this made Navigator a "major distribution vehicle" for Java Microsoft kills Navigator o Microsoft's "offer you can't refuse" Offer: Microsoft would supply the browser for the Windows operating system and Netscape would provide browsers only for other operating systems. Since this would be to exchange 70% market share for a 10% market share, Netscape naturally refused Microsoft punished Netscape for this by refusing to share the codes for Windows 95 to impede Netscape from developing a new version of their browser to take advantage of the Windows 95 API o Microsoft's Internet Explorer competing browser released in 1995 failed to make the major inroads in Netscape's market share that Microsoft wanted Microsoft executive Christian Wildfeuer wrote in a 1997 memo that it would be "very hard to increase browser share on the merits of Internet Explorer 4 alone" and proposed that Microsoft "leverage our Operating System asset to make people use Internet Explorer instead of Netscape Navigator." o Implementation of the bundling strategy
o o

Window 95: incorporated a copy of Internet Explorer that automatically installed with the OS Windows 98: fully integrated Internet Explorer with the OS so that IE couldn't really be removed: Windows 98 called on IE to perform crucial operations despite the fact that this slowed its operations made it more crash prone made it difficult and risky for PC owners to try to replace IE with Navigator as their default browsers undercut Netscape on pricing by giving away IE "for free," as Microsoft put it Microsoft further required computer manufacturers to agree not to promote Netscape's browser [by making it the default browser] and offered incentives to manufacturers not to install Navigator at all. Success! Navigator's market share plummeted and Explorer's soared. Microsoft "pollutes" Java o Microsoft negotiates a license to distribute Java with Windows from Sun Sun "not knowing that Microsoft was planning to change Java" (Velasquez) [Or were threats employed, as with Netscape. Perhaps MS made Sun "an offer they couldn't refuse".] o Microsoft distributes an altered version incorporating changes that prevent regular (Sun) Java programs from running on computers using MS-Java. o Since 90% of machines are now MS, applications programs began to be written for MS Java & not Sun. o The "strategic objective" to "kill cross-platform Java" by expanding the "polluted Java market" (as and internal MS document puts it), had been achieved: "Microsoft had turned Java into a part of Windows" (Velasquez) U.S. DOJ (under Janet Reno in 1998) accuses Microsoft of "a pattern of anticompetitive practices designed to thwart browser competition on the merits, to deprive customers of choice between alternative browsers, and to exclude Microsoft's Internet browser competitors" that was in violation of the Sherman Antitrust Act, the DOJ charged, on four counts. o Judge Jackson finds Microsoft guilty on three of the counts o Ordered MS to be broken up into two separate companies MS OS marketing & development MS applications program marketing & development o Furthermore ordered MS could not punish or threaten computer manufacturers for installing and promoting competitors' products MS had to allow computer manufacturers to remove any MS applications from the Windows OS [i.e., unbundle the aps.]

that MS would not have to implement his orders until it had time to appeal Ruling on Appeal o Jackson's findings of fact were accepted o Jackson's breakup penalty was reversed: MS argued his bias against Microsoft affected the severity of the remedy he imposed o A new penalty would have to be devised. New Penalty: Negotiated in 2001 between MS and "the new Republican-appointed head of the DOJ" John Ashcroft o MS would share its API with rival applications software companies o MS would give computer makers and users the ability to hide icons for Windows applications o MS could not prevent competing programs from being installed on Windows computers o MS could not retaliate against computer makers that used competing software. o however, MS could continue to bundle applications into the OS Ongoing Pattern o MS tried to corner the server market to share APIs with competing server software programmers o MS bundled its Windows Media Player together with Windows 2000 o 2004 European Commission fined MS $613 million ordered MS to disclose the APIs to competing server software programmers ordered MS to offer a version of Windows without Windows Media Player o On appeal: MS doesn't have to offer that version until appeals are exhausted: that will take several years Linux -- a free open source OS -- is an emerging alternative to windows

Questions for Discussion 1. Identify the behaviors that you think are ethically questionable in the history of Microsoft. Evaluate the ethics of these behaviors. 2. What characteristics of the market for operating systems do you think created the monopoly market for Microsoft? Evaluate this market in terms of utility, rights, and justice. 3. In your view, should the government have sued Microsoft for violation of the antitrust laws? Was Judge Jackson's order that Microsoft be broken into two companies fair to Microsoft? Was Judge Kollar-Kotelly's November 1, 2003 decision fair? Was the April 2004 decision of the European Commission fair to Microsoft? 4. Who, if anyone, is harmed by the sort of market that Microsoft's operating system has enjoyed? What kind of public policies, if any, should we have to deal with industries like the operating system industry?

5. What other issues do you believe this case raises or what else to you think it shows? Archer Daniels Midland and the Friendly Competitors Questions for Discussion 1. Evaluate Terry Wilson's assertion that the difference between the $1.20/lb. price of Lysine when ADM entered the market and the $.60/lb. the price fell to due to the oversupply that resulted from ADM's entry was money that the five companies were "giving away to their customers" (p.201). What, if anything, is wrong with the principle that "the competitor is our friend and the customer is our enemy"? 2. Your text cites a number of factors that cause companies to engage in pricefixing. Identify the factors that you think were present in the ADM case & explain. 3. Was Mark Whitacre to blame for what he did? For which of the things that he did? Do you feel that in the end he was treated fairly? Why or why not? 4. What other issues do you believe this case raises or what else to you think it shows? http://www.wutsamada.com/alma/bizeth/velasq4.htm

Business Ethics: Concepts & Cases: Chapter 5 Outline Ethics and the Environment Introduction

Modern industry has been a two edged sword o producing unparalleled prosperity for "us" o but also creates strains on & threats to the environment pollution depletion of resources Trends o Accelerating industrialization of the world the global economy has quintupled in size since 1950. In the ten years from 1985-1995 the world economy grew by more than from the beginning of civilization to 1950. o Population Explosion: Population has doubled since 1950. o Result: spiraling human demands for resources beginning to outgrow the capacity of the earth's natural systems evidence collapsing fisheries falling water tables shrinking forests soil erosion dying lakes disappearing species global warming Gloomy forecast o [A]s human societies are confronted with dwindling resources in the midst of mounting accumulations of wastes, and a steadily deteriorating environment, we can only foresee social paroxysms of an intensity greater than any we have so far known. The problems are so varied and so vast and the means for their solution so far beyond the resources of the scientific and technological know how on which we have relied that there simply is not time to avoid the impending catastrophe. We stand, therefore, on the threshold of a time of judgment more severe, undoubtedly, than any mankind has ever faced before in history. (William Pollard: Velasquez, p. 252) o Above all -- more than the resources, I should say -- we lack the will Questions raised o Factual: is this gloomy assessment correct? o Normative if disaster is impending for civilization for human individuals for other sentient beings: animals

for the earth itself: the ecosystem shouldn't we be doing everything in our power to stave it off for the sake of future generations and the earth itself?

5.1 The Dimensions of Pollution and Resource Depletion

Resource depletion involves the consumption of finite or scarce resources. Pollution involves the undesirable contamination of the environment by the manufacture or use of commodities. o since "contamination of air, water, or land diminishes their beneficial qualities" o pollution can be viewed as "a type of resource depletion" itself

Air Pollution

A result of industrial production & certain industrial products. Especially, o industrial smokestacks o utilities o and automobiles Global warming: Rising carbon dioxide & other "greenhouse gas" levels create a "greenhouse effect" o explained: the atmosphere becomes like a blanket keeping more heat in high wavelength light radiation comes in & warms things up lower wavelength heat radiation can't get out o trends 25% increase in CO2 levels since the dawn of the industrial revolution CO2 levels currently increasing at 1.4% per year rising average global temperatures measured: now .1 C warmer than 1900 forecast: to rise 1.5 to 4.5 C during this century o ongoing & expected consequences expansion of the world's deserts melting of the polar ice caps causing rising sea levels flooding of coastal lands assorted ill effects extinction of species disruption of farming increase in the severity of respiratory diseases Ozone depletion o explained the ozone layer, high in the stratosphere, screens the earth from harmful UV radiation

chlorofluorocarbons (CFCs) destroy ozone & their release into the air causes deterioration of the ozone layer o CFC facts CFCs take 7-10 years from release to rise to the level o the ozone layer remain there destroying ozone for 75-130 years due to international agreements to phase out CFCs their emissions have dropped by 87% since their 1988 maximum, however gasses already released will continue to rise upwards for many years o ill effects & threats skin cancer destruction of plankton: small ocean plants on which the entire ocean food chain ultimately depends crop destruction: 75% of the world's major food crops are UV sensitive unexplained decrease in frog & other amphibian populations: "canaries in the mine" hypothesis Airborne toxins: associated with increased cancer rates. o 2.4 billion pounds of airborne toxins released annually in the U.S. alone o EPA estimate: just 20 of the more than 320 toxics released cause more than 2000 cases of cancer per year Acid rain o explained nitrogen oxide & sulfur oxide emissions react with water in the atmosphere to form nitric and sulfuric acid o ill effects kills fish & vegetation in lakes deforestation: "many researchers feel that future emissions will devastate the world's forests." Air quality: Other "pollutants": assorted gasses and particulates o explained: contribute to photochemical smog S and N oxides also contribute here along with hydrocarbons particulate matter: memories of Ecorse & Trenton o Ill effects interferes with respiratory function contributes to respiratory disease o progress (in the U. S.) total emissions of all major air pollutants fell in the decade from 19952005 reduction in air pollution since 1970, it is believed, now saves about 14,000 lives/year U.S. Office of Management and Budget cost benefit analysis for effects of emissions regulations from1992-2002 costs: $18-$21 billion

benefits: $117-$177 billion

Water Pollution

Notable Pollutants & their effects o organic wastes & phosphorus compounds most important sources organic wastes sewerage runoff from animal feedlots wastes from the pulp and paper industries phosphorus compounds detergents fertilizers: agricultural runoff ill effects bacterial contamination (organic wastes) direct human health risks hepatitis, cholera (especially from sewerage) E Coli (from feedlot runoff) oxygen depletion in lakes & streams: kills fish explosive algae growth: phosphates are fertilizers organic wastes are nutrient rich o inorganic pollutants heavy metals: e.g., chromium (Erin Brockovich) effects: find their way into the food chain consumed by fish which are consumed by us & other animals resulting in various afflictions & toxic effects: especially endangering unborn children o heat due to use of water as a coolant disturbs aquatic ecosystems & kills fish o oil spills causes: offshore drilling, tanker discharges & accidents effects directly lethal to wildlife losses to tourism & fisheries expensive cleanup Ocean & underground water pollution o oceans sources what goes into the lakes & rivers finds its way eventually to the sea

oceans have been used as disposal sites for low-level radioactive & other wastes effects: materials work their way up the food chain & into the fish we eat heavy metals other toxins (e.g. PCBs) underground water supplies: "ground water contamination" sources landfills, waste piles, and legal & illegal dumps surface reservoirs (Erin Brockovich) risks associated with various afflictions (Erin Brockovich) groundwater is the source for more than 50% of U.S. drinking water

Land Pollution

Toxic substances: substances that can cause an increase in mortality rates, or an increase in irreversible or incapacitating illness, or that have other seriously adverse health effects. o Examples acidic chemicals pesticides herbicides inorganic metals flammable solvents radioactive waste (treated separately below) o Trends: 10 times more chemicals were being used in the mid-80s than in 1970. many of them toxic. o Uncertainty health effects of many substances is hard to determine carcinogens (cancer causing substances) for instance generally only result in cancers 15 to 30 years after exposure making it hard to identify the cause of the cancer when it develops Solid Waste o Residential Garbage Facts & Figures (residential garbage = 369 million tons/yr) {up from 160 million: previous edition!} Each U.S. adult produces, on average, almost 7 lbs. per day {up from 4 lbs.: pervious edition!} only 25% of residential wastes are recovered through recycling due to {up from 10%} lack of financial backing for recycling operations the small size of markets for recycled products

toxic chemicals present in recyclable garbage Effects: city garbage dumps are significant sources of ground water pollution only 25% even test for groundwater contamination less than 16% have insulating liners less than 5% separate out & collect polluting liquid wastes less than 50% put restrictions on types of liquid wastes they'll accept o Industrial garbage dwarfs the residential Facts & Figures: industrial = 7.6 billion tons per year oil & gas production: 2-3 billion mining operations: 1.4 billion there are more than 220,000 industrial waste heaps about 80% of such waste is estimated to be deposited in ponds, lagoons, and unlined landfills 1980-86: 24,000 uncontrolled hazardous sites identified: estimated clean up cost: $28.4 to $55 billion Effects harm due to direct human exposure groundwater contamination Nuclear Wastes o Three types 1. high-level: emit gamma rays which can penetrate all but the thickest shielding significant types cesium 137 & strontium 90: become harmless after 1000 years plutonium: 250,000 to 1,000,000 years disposal must be isolated from the environment until no longer hazardous at present, no safe and permanent long-term method of disposal is known 2. transuranic: contain same chemicals as above at lower levels disposal until recently by burial in shallow trenches seepage from such trenches has recently become a worry may be necessary to exhume & predispose of them at enormous expense 3. low-level contaminated clothing from nuclear plants uranium mine tailings

nuclear plants themselves after decommissioning remain dangerously radioactive for 1000s of years sites must continue to be quarantined for centuries

Effects & Risks Health risks fatal in small doses: inhalation of as little as a millionth of a gram of plutonium can cause death within a week carcinogenic even in small doses reproductive effects in humans & animals sterility birth defect causing mutations Security risks plutonium the stuff atom bombs are made of so there's risk of power plants' supplies falling into the wrong hands criminals terrorists Current situation & trends U. S. phase out no new plant construction has been begun since the 1970s phase-out due to political pressure many still in operation still producing wastes we still don't know how to safely & permanently dispose of research has continued renewed interest due to global warming coal and gas burning power plants are big greenhouse gas emitters nuclear plants don't produce greenhouse gasses Worldwide: mixed trends Japan, China, & India have remained active in developing nuclear power France and Finland are actively pursuing nuclear power programs Other parts of Europe and Asia, meanwhile have been phasing it out.

Depletion of Species and Habitats

Chief business related causes of extinction of species o pollution o deforestation Facts & Forecasts

o o

deforestation: rainforests being destroyed at a rapid rate estimated at 1% per year estimated that between 15 to 20% of earth's species are at risk of extinction in the near future: between a half million & two million species

Depletion of Fossil Fuels

Most important fossil fuels o petroleum: oil & natural gas o coal Trend until the 1980s o these were being depleted at an exponentially increasing rate o would have led to complete depletion in a relatively short time 100 years coal 40 years oil The "good" news: o exponential rate could not continue as resources get depleted they become increasingly difficult & costly to extract so rates of extraction & depletion peak and eventually go down. o peaked rate: point of complete depletion never reached small consolation: depletion continues until it's too expensive to extract anymore o adjusted forecast coal extraction will peak in 150 years then decline to nil over the next 150 oil extraction U.S. rates peaked around 1970 world rates will peak around 2010 according to some predictions though others say not until around 2040 U.S. natural gas extraction has already peaked & is expected to decline over the next 30-40 years Catastrophic consequences threatening o widespread use of fossil fuels in industry power generation & automobiles o Possible substitutes & their drawbacks nuclear: dangers associated therewith hydroelectric dams cause environmental damage water power is also a limited resource

other alternatives: renewable fuels: mainly still in or barely off the drawing boards alcohol & renewable fuels solar & geothermal electro-chemical: e.g., battery powered cars

Depletion of Minerals

By the year 2000 the U. S. had exhausted o 90% of domestic aluminum reserves o 80% of our iron 0 70% of our lead o 90% of our manganese o 80% of our mercury o 90% of our tungsten o 70% of our zinc Difficulties in predicting the future course & impact of world resource depletion o mining technologies may continue to develop enabling cheaper extraction from poorer grade ores o recycling may reduce the need to mine o substitutes may be found for depleted minerals World Reserves: the case of copper o rate of extraction expected to continue to rise rapidly over the next hundred years o peak about 2100 o then slowly decline rich copper ores expected to be exhausted circa 2070 mining copper from poor sources will be drastically more expensive o Possible expedients & remedies recycling: can't supply increasing demands of future industry & population substitute manufacturable materials, e.g., plastics manufacture contributes to pollution most commonly used plastics at present are petroleum based: increased use of these will contribute to petroleum depletion o Gloomy conclusion all such resources are finite & hence ultimately subject to depletion day of reckoning can only be delayed, not avoided

5.2 The Ethics of Pollution Control

The Innocent Past o Industry was small o the waters and skies immense o firms could view the environment as a unlimited good

virtually unlimited: the minuscule discharges of olden-days industry we're as nothing compared to the immense "carrying capacities" of the air and the waters effects so slight could be treated as negligible o and therefore -- since there's unlimited supply there for the taking -- a free good there for anyone to use without reimbursing anyone for the use Lost Innocence o Larger scale of industry o Many "negligible" effects can add up some very non-negligable ones hundreds of small polluters can add up to one big pollution problem o Upshot: the "unlimited" carrying capacity is exceeded and the "free" goods start to deteriorate o Other contributors: besides industrial production consumer use of certain industrial products . . . especially automobiles residential & other human waste Aggravating factors o world population explosion o explosive worldwide urbanization industrialization

Ecological Ethics

Ecological ethics holds we have a duty to recognize and protect ecosystems o ecosystem: a system of interrelated and mutually dependent set of organisms and environments Example: a lake: fish eat small aquatic organisms & plants plants & organisms fed & fertilized by decaying plant and fish waste products Prime example: "spaceship earth" the planet's ecosystem is our life-support system Gaia hypothesis the global ecosystem is bigger than any of us bigger than all of us put together the ecosystem -- life on this planet -- has an intrinsic value over and above the values of its human inhabitants a value all its own, independently of us o we have a a direct duty to protect the ecosystem not just indirect: e.g., in order to insure our own survival we need to protect the environment

in order to insure the survival off future generations we need to preserve the ecosystem direct: "nonhuman parts of the environment" -- and the nonhuman whole of it -- "deserve to be preserved for their own sake" biodiversity is a good thing in and of itself humans have no right to reduce the richness and diversity of the ecosystem except to satisfy vital needs. o Fact: the current population/industrialization/urbanization explosion is reducing biodiversity o program flowing from recognition of that direct duty & that fact decrease of human population: the flourishing of nonhuman life requires such a decrease ideological change: appreciating the quality of life rather than frenzied pursuit of higher material standards of living economic changes: produce & consume less, not more altogether and per capita Variety of Environmental Ethical Claims o Some utilitarians: Jeremy Bentham (the first utilitarian) Peter Singer (most famously, at present) pain is an evil whether is is inflicted on humans or animals: "they suffer" Bentham says the pains of animals must be considered equal to comparable human pains to do otherwise is speciesism (Singer) comparable to racism & sexism so we have a direct duty to animals to avoid causing them pain & suffering o Rights argument every animal life has intrinsic value so animals have rights to be treated with respect to have their interests considered in decisions affecting them interests in surviving, flourishing, & not suffering o More extreme arguments extend rights and an interest in living & flourishing beyond animals to plants natural things such as wild rivers, mountains, etc. have rights to have their "integrity, stability, and beauty preserved" rights extend beyond individual living things to whole `systems locally: biotic communities (e.g., the lake) globally: the earth: Gaia

Environmental Rights and Absolute Bans

William T. Blackstone's proposed human right to a livable environment o as essential to permitting each to live a human life rational free & self determining o imposes a duty on others not to interfere with this right o this right overrides property rights o and should be recognized under law Actual enactments embodying something like Blackstone's Principle o National Environmental Policy Act of 1969: asserts a right of all Americans to "surroundings" that are "safe, healthful, productive, and aesthetically and culturally pleasing" o Water Pollution Control Act of 1972: asserts a duty to firms to "use the best practicable technology" to get rid of pollution implies a correlative right to a pollution free environment. Drawback of this approach: its inflexibility o characteristic of all absolute rule or absolute rights based approaches (compare Kant) o absolute rights give rise to absolute duties not to pollute regardless of cost o unable to give "nuanced guidance" involving "trade offs" with other human rights property rights positive rights to economic welfare (which loss of jobs may violate) with utility: pollution control in some cases might have high costs in terms of decreased productivity increased prices The more nuanced approach would have to enable us to assess the "trade offs" o more utilitarian in spirit: balance the benefits against the costs o current approaches -- since the early 80s -- based on this: Executive Order No. 12291 require all new environmental regulations to undergo a cost-benefit analysis

Markets and Partial Controls

View environmental problems as "market defects" o when a firm pollutes the market price of its commodities no longer reflects their true price

fails to incorporate hidden environmental costs, e.g., depletion of air & water resources o undesirable consequences of this market defect misallocation of resources waste inefficient distribution o in sum: "society as a whole is harmed and its overall economic welfare declines" Utilitarian Conclusion: pollution should be avoided o it's a kind of inefficiency in the working of markets o detrimental to the general welfare. Private Costs and Social Costs o Sometimes part of the cost of producing a product does not fall on the producer suppose I'm burning coal to make steel Private costs: I'm paying for the coal the pig iron & other ingredients the labor external costs (I'm not paying) depletion of public resources: water & air I pollute my neighbors bear the health costs of breathing my factory's fumes also bear the cleanup costs to to the particulates in my emissions settling on their windowsills, etc. Total social cost of production (what production costs society as a whole) =s private costs: borne by the producer + external costs: not borne by the producer o Whenever a firm pollutes its private costs are always less then than the total social cost o Fundamental problem with pollution, as utilitarians view it, is this divergence between private and true total social cost. since external costs are not reflected in the price of the goods this results in the commodities being under priced overproduced that's bad because society as a whole consumes more of that product than it would if it knew the full price but it's paying the full price the outstanding costs ultimately get paid in the form of environmental degradation depletion of resources society "gets taken"

"free" use of air and water resources is a disincentive to efficient use since the producer doesn't bear the external costs the producer has no incentive to minimize them result: unjust pricing and distribution of costs external costs not equally distributed to all of society those who disproportionately bear the external costs are "paying more" for the same product those who live near the power plant not only pay for the electricity on their bill like everyone else they also pay for cleanup, emission related healthcare, etc. Remedies: The Duties of the Firm o The solution for pollution: internalize the external costs. if costs are all absorbed by the producer this will be reflected in the price of the goods goods will be accurately priced at a rate = true social costs (including the customary rate of profit) producers will be encouraged to minimize "external costs" -- not to pollute and some consumers will no longer end up, in effect, paying more than others for the same goods o How to bring this about is controversial Polluters pay plan: The plan: the polluting agent pays all those being harmed an amount equal to the costs imposed on them by the pollution. Example case: Union Oil's drilling in the Santa Barbara Channel caused an oil spill damages to local residents and to state & federal agencies estimated at $16,400,000 cleanup and containment loss of tourism, fishing, and recreational opportunities property damage, etc. Union Oil paid 10,400,000 voluntarily: by paying full cost of cleanup & containment 6,300,000 in damages as the result of litigation Drawback: often there are several polluters not clear who is being damaged by whom administrative and legal costs of assessing damages for each distinct polluter can be very substantial Prevention plan (preferable)

polluters bear cost of preventing pollution by installing pollution control devices additional benefit: avoids the pollution, which is more efficient "an ounce of prevention is worth a pound of cure" locks the barn door before the horses get out

Justice
o

Internalizing costs seems consistent with demands of distributive justice the external costs of pollution are borne unequally without justification How pollution adversely effects equality: "shit runs downhill" stockholders and customers -- mainly the affluent -- get unfair gains stockholders: excessive profits due to not having to bear the external cost of pollution customers pay less due to lower external costs others -- mainly the poor -- suffer corresponding losses: they bear the costs property values go down in polluted neighborhoods increased health costs & other pollution related costs borne by the poor who end up living there Complications to this picture if the polluting firm produces basic goods & essential services for which the poor spend proportionately more than the rich then internalization of pollution costs can actually be disproportionately burdensome for the poor if the costs of pollution control lead to unemployment the poor will be disproportionately burdened by this also though studies show that the effects of pollution control on employment are limited and transitory Internalizing costs of pollution also seems consistent with the demands of retributive and compensatory justice principles involved: retributive: those who are responsible for and benefit from an injury should bear the burdens of rectifying the injury. compensatory: those who have been injured should be compensated by those responsible for the injury. implications re: pollution retribution: the costs of pollution control should be paid by those who cause it and benefit from it compensation: the benefits of pollution control should go to those injured by it how internalizing external costs meets these demands the costs are borne by shareholders & customers who benefited from the pollution

the benefits go to those who have borne -- or would be bearing -the costs of the pollution if it remained external

Costs and Benefits o How much pollution control to implement diminishing returns 99% of some pollution might be removable from discharges relatively cheaply: here you get big bang for you pollution control buck while the last 1% might be extremely expensive to remove trouble with absolute bans: mandate resource uses that might be socially disadvantageous all things considered absolute bans don't allow for any tradeoffs so if auto exhausts can't be made completely pollution free absolutist approach would seem to mandate a complete ban on autos or at least on internal combustion engines regardless of other social costs. a more flexible approach -- weighing costs v. benefits -- seems needed right amount of pollution control vs. pollution = point at which the total social costs of pollution control = the total social benefits to be gained up to that point pollution control is a winning proposition in terms of the general welfare beyond that point it's a losing proposition. o Drawbacks to the cost-benefit approach: compare general criticisms of Utilitarianism Technical difficulties: costs of pollution and benefits of its elimination are difficult to measure even at a rough estimate due to things which aren't easy to put a price on, e.g., lives & health uncertain & unknown effects of various pollutants: problem of estimating risks "perhaps the major problem involved in obtaining the measurements needed to apply cost-benefit analysis to pollution problems" problems for risk estimation unknown long-term effects the human factor: e.g., the risks of nuclear terrorism unforeseeable advances -- or lack of advances -- in technology: e.g., high-level radioactive waste disposal: Some say "science will find a way" Will it? e.g., depletion of nonrenewable resources (e.g. fossil fuels)

Some say "science will just find alternative energy sources" Will it? uncertain issue: how much risk is acceptable if we're 90% certain a safe way to dispose of nuclear waste can be found is that enough to warrant building more nuclear power plants?

Moral objections: justice: cost-benefit analysis may indicate the least costly & most beneficial course of action would be to to store all U. S. high-level nuclear wastes underground in Michigan this has actually been proposed the salt deposits under our state have the geological properties that make them prime candidates we're relatively non earthquake prone hereabouts but it seems unfair that this entire risk fall on the residents of Michigan violations of right to informed consent right of consent implies that decisions on pollution control should rest with the people who will be affected people have a right not to be forced to undertake risks without their informed consent but costs & benefits might be impossible for lay people to assess often, even the experts disagree as regarding the prospects for nuclear waste disposal (above) so ordinary citizens aren't capable of giving informed consent to risks that cost-benefit analyses might justify exposing them to

Social Ecology, Ecofeminism, and the Demands of Caring

Shortcomings of utilitarian and rights based approaches o rights based: inflexible absolute rules allowing no tradeoffs o utilitarian technical difficulties moral objections neglect of justice violations of rights to informed consent o Prompts a call for alternatives Ecofeminism

ideological essence view nature as an other to be cared for not an object to be dominated practical upshot oppose hierarchical structures as part of the problem: democratize & decentralize dominators objectify the dominated: use them as means to their ends this fosters a similar attitude toward nature back to nature practice conservation deindustrialize control population criticisms: utopian & impractical

5.3 The Ethics of Conserving Depletable Resources

Conservation refers to the saving or rationing of resources for future use A basic difference between pollution and resource depletion o pollution for the most part pollution affects present generations (with the notable exception of nuclear waste) polluted resources are for the most part renewable air and water can be renewed by ceasing to pollute them and allowing them time to recover o depletion for the most part affects future generations concerned with finite nonrenewable resources since they cannot be renewed what will be around for future generations is just what's left over from the present

Rights of Future Generations

Would-be argument for conservation o future generations have an equal right to the planet's limited resources o by depleting these resources we are depriving them of what is rightfully theirs o so we ought to do our utmost to practice conservation to minimize depletion to avoid violating the rights of future generations Objection 1: future generations do not have rights o future generations do not -- and may never -- exist o only existing individuals have rights o future generations do not have rights

Objection 2: according equal rights to future generations would result in the absurd consequence the present generation has almost no rights to use depletable resources o main argument: 1. Granting future generations rights would mean we that we have no right to use up any of the world's depletable resources 2. So, we would have to sacrifice our civilization. 3. but that's absurd (or unacceptable) 4. therefore, we should not acknowledge any rights of future generations o argument for premise 1 suppose each fixture generation, stretching (virtually) infinitely into the future, has an equal right to the world's resources so whatever the amount of a resource there is we are entitled to (virtually) none of it any amount you choose divided by (virtually) infinity = (virtually) zero example of the absurdity we would have to limit our per capita consumption to almost nothing -- say thimbleful of petroleum per lifetime so that each member of every future generation can have their thimbleful but a thimbleful of oil does no good to anyone Objection 3: we are unable to say what rights fixture generations will have o the purpose of rights is to protect interests o we can't know what interests future generations will have the human beings of the future may be a lot different than we are with bio-technology & genetic engineering coming into play with advances in transplantation and other areas of medicine etc. the technology of the future may differ vastly from what there is today new energy sources & substitute materials may be discovered so they'll have no need & no interest in crude oil, coal, etc. who would have guessed 100 years ago that our generation would have an interest in uranium ore? maybe power from nuclear fusion will replace present sources therefore, no one can say what the rights of future generations are Velasquez replies o even if all the above objections were granted o it does not follow that we have no obligations to future generations o these obligations may be based on other grounds than rights

Justice to Future Generations

John Rawls o two unjust extremes to impose disproportionately heavy conservation burdens on the present generation (unfair to us) to leave virtually nothing for future generations (unfair to them) o need to determine the middle point: that's where justice lies imagine you didn't know which generation you belong to: this or some future one the distribution of resources you would accept as fair & reasonable from behind that "veil of ignorance" is the just distribution o the middle point = the point at which we hand over to the next generation a situation no worse than the one we received Seconded by considerations of care o we have a fairly direct relationship of care and concern towards the immediately following generation & less & less towards more and more distant future generations o seems to imply that we should attempt to see matters from the perspective of the immediately succeeding generations o which suggests we should "at least leave the succeeding generation a world that is not worse than the one we received" Seconded by the following Utilitarian Analysis: each generation has a duty to maximize benefits and minimize costs for succeeding generations as well as themselves o a corollary of the utilitarian principle of impartiality: "each counts one, none counts more than one" morally speaking, our generations interests don't count more simply because they're ours o Nevertheless consequences need to be discounted (given less weight) in proportion to their uncertainty the further into the future consequences are projected the less certain the projection our responsibility to fixture generations, consequently, diminishes the further into the future we project, due to the increasing uncertainty of the projections o Still that leaves us with an powerful duty to the next succeeding generation to avoid those practices whose harmful consequences to the next generation are likely to outweigh the benefits to be derived by the present generation Inadequacy of market mechanisms for ensuring adequate conservation o the market a "live for today" kind of mechanism responding to the effective demands of present participants actual supplies currently made available o future demands and supplies

so heavily discounted they hardly effect prices at all six reasons for the heavy discounting or "live for today" character of markets (William Shepherd and Clair Wilcox) 1. Multiple access: if a resource can be used by several different extractors, then the shared access will inevitably lead the resource to be depleted too fast for example: several people with straws in the same milkshake it will be in the private interest of each to suck faster to get the most for themselves 2. Time preferences and myopia: firms generally have short time horizons under the stresses of competition apt to give insufficient weight to the demands of future generations 3. Inadequate forecasting: present users may simply fail to foresee future consequences example: DDT spraying in the 5Os no one foresaw that it would build up in the environment with harmful effects 4. Special influences: short run tax breaks and other incentives encourage overly rapid use of resources 5. External effects: resource depletion like pollution an external cost not borne directly by the firm so it's in the economic self interest of the firm to ignore this cost 6. Distribution: private market decisions are based on existing patterns of wealth and income distribution resource users, in effect, vote with their dollars about what to produce in what amounts so the richer the individual the more say they have in what the market produces future generations -- having as yet no wealth or income -- have as yet no "vote" consequence of the inadequacy of market mechanisms for encouraging conservation voluntary or politically enforced policies of conservation need to be undertaken Practical upshots of Rawls' imperative to leave the world no worse than you found it should not sacrifice cultural advances we have made should adopt voluntary or legally enforced conservation measures to conserve the resources the immediately succeeding generation will need

to live lives with a variety of available choices comparable to ours in particular we should preserve wildlife and endangered species ensure that rates of consumption of fossil fuels & minerals does not continue to rise recycle nonrenewable resources search for substitutes for materials we are too rapidly depleting

Economic Growth?

The anti-growth argument: continued economic growth threatens to degrade the quality of life of future generations o to preserve enough scarce resources for future generations to maintain their quality of life we must scale down our pursuit of economic growth o this requires radical changes in our present economies and population control policies zero population growth (ZPG): maintenance of population at a steady state certainly no greater than at present or better, at some level below the present first decrease population then maintain at some sustainable lower level maintenance of resource use at a steady state certainly no greater than at present or better, at some level below the present first decrease use then maintain that sustainable lower rate The Doomsday Scenario o the present situation continues explosive population growth declining death rates relatively stable birth rates world's economies continue to expand o causing depletable resources to run out: deplete to point they're insufficient to sustain further growth o world's growth-based economies (virtually all of them) collapse collapse of major economic institutions financial manufacturing communication service collapse of political and social institutions

governments educational institutions health-care systems scientific & cultural institutions & pursuits precipitous decline in living standards anarchy & political disorder Somalia-ization of the world o something like the end the anti-growth argument urges us to pursue will be achieved the hard way population levels will be drastically & rapidly reduced by skyrocketing death rates Already life-expectancies in Africa have precipitously declined due to AIDs Just a bump in the road of progress or a sign of things to come? resource use drastically & rapidly reduced by economic collapse if not the end of civilization forever at least the dawn of another dark age like the 1000 or so year long dark age 500-1500 brought on by the collapse of classical civilization (fall of Rome) Criticism of the Doomsday Scenario: based on wrong assumptions o about future population growth o about productivity rates o about our inability to find substitutes for depleted resource o about the ineffectiveness of recycling Velasquez's estimation: given the uncertainties of the situation conservation seems imperative o Suppose the optimists -- critics of the doomsday scenario -- are right if the following occurs population stabilizes productivity increases we find substitutes for depleted resources we effectively recycle doomsday will be avoided and continued economic growth & development may even be sustained o Even so "a commitment to conservation" seems necessary if those things are to occur: they won't just happen by themselves the optimist side virtually concedes that were doomed if we don't halt explosive population growth increase productivity find substitutes & recycle o Whether wholesale transformation of our economy is necessary if civilization is to survive

is a question that remains open that we may soon not be able to avoid facing. Discussion: This is a great country ain't it? o Everyone wants to be like us. o But is that possible: is Americanization of the world a sustainable vision for the future? o Example of energy use U.S.A. has 6% of the world's population {up from 5%} currently account for 25% of world's energy resource consumption {down from 35%} Least developed nations 50% of the world's population currently account for 8% of the world's energy resource consumption Per-capita comparisons: each U.S. resident consumes 15 times more energy than each South American 24 times more energy than each Asian 31 times more energy than each African Exploitation issue: are we using up their resources U. S. produces only a portion of the energy it consumes Net flow of energy out of these low-consuming populations' regions for the sake of our high-consuming lifestyle Americans use much of this energy for inessential products & services Low-consuming populations: most consumption goes for essential products & services o Concluding question: "[W]hether a a high-consumption nation is morally justified in continuing to appropriate for its own use the nonrenewable energy resources of other [low-consumption] nations that are too weak economically to use these resources or too weak militarily to protect them." (297

Cases for Discussion The Ok Tedi Copper Mine 1. What are the systemic, corporate, and individual issues raised by this case? 2. Discuss the actions of the principal agents in this case from the standpoints of virtue and care. 3. Assess the final resolution of the case from the standpoints or utility, rights, and justice. Gas or Grouse (ABC News CD-ROM)

Pine Mesa in Southern Wyoming has rich natural gas deposits trapped in sandstone

in the 1990s industry developed techniques to get at such deposits by fracturing the sandstone to free the gas o Questar drilled a successful test well there in 1998 o after an environmental impact statement was completed the Bureau of Land Management (BLM) approved drilling of up to 900 wells on federal lands on Pinedale Mesa. By 2004 Questar had drilled 76 wells on the mesa with plans for at least 400 more Benefits o Natural gas is clean source of energy: much cleaner than fossil fuels o Exploiting this resource helps reduce U.S. dependence on foreign energy supplies o Businesses and people in the Pinedale area benefit from the jobs, benefits, and tax revenues o The state of Wyoming benefits: 60% of the state revenues come from royalties received from coal, gas, and oil operations" Costs o the mesa is prime old growth sagebrush habitat for sage grouse, pronghorn sheep, and other species o sage grouse: a species at risk 200 year ago: estimated population 2 million and "were common throughout the west 1970s: estimated population of 400,000 "in scattered pockets in 11 states" If sagebrush habitats are not protected, biologists believe, "the bird will be so reduced in number by 2050 that it will never recover" o pronghorn antelope herds at risk the mesa is an important migration route and wintering ground "Environmentalists feared that if the animals were prevented from reaching their winter ranges, or if the winter ranges became inhospitable, the large herds would wither and die off." to a lesser extent the same applied to the herds of moose Fish & Wildlife Service determination on the sage grouse o May 2004: The U.S. Fish and Wildlife Service undertook a review of the sage grouse's status to determine whether the grouse should be listed as endangered o Questar & other mining companies opposed this it would put large areas of federal land off-limits for drilling, mining, & development 80% of Wyoming is considered prime grouse habitat o Questar & other energy companies formed a coalition to oppose such listing by lobbying "key administration plays Washington" encouraging "grass-roots opposition" to "provide political cover" suggesting "funding scientific studies" to show the bird was not endangered o Jan 2005: "The U. S. Fish and Wildlife Service has completed its status review of the greater sage-grouse throughout its range and determined that the species
o

does not warrant protection under the Endangered Species Act at this time" (http://www.fws.gov/news/NewsReleases/R9/4D0B98E6-DE22-18A85FBC25A1E928B298.html) Bureau of Land Management imposed restrictions o to protect grouse Questar's roads, wells, and other structures had to be located at least 1/4 mile from grouse breeding grounds & at least 2 miles from nesting areas Some studies showed these protections were insufficient and recommended increasing the 1/4 mile set back to at least 2 miles also o to protect migration routes and wintering grounds of pronghorn and other species disallowed winter drilling (11/15 thru 5/1) prohibited vehicular and foot traffic in the area during winter with the exception of trucks and personnel needed to haul off liquid wastes from existing wells which were allowed to continue pumping in the winter Questar's directional drilling proposal o This would minimize the land occupied by the wells: instead of separate 2-4 acre "pads" for each well, directional drilling would allow 16 wells per pad. o Since directional drilling is more expensive, Questar's agreed to this only on the condition that it be allowed to drill in the winter. o BLM authorized Questar to drill wells at a single pad from 2002-2007 as part of a study of its effects on wintering & migrating herds" o BLM preliminary report found "no conclusive data to indicate quantifiable adverse effects" o The Upper Green River Valley Coalition "sued the bureau for failing to adhere to its own rules when it allowed Questar ... to drill ... on the mesa during winter and for failing to conduct and analysis of the potential impacts before granting the permits, as required by the Environmental Policy Act." 2006: "The Bureau of Land Management continues to expand on a dangerous experiment to erode seasonal drilling stipulations that protect wildlife. Increasingly, the agency is allowing Pinedale Anticline operators to drill year-round in crucial winter range for mule deer, even as biologists have documented a 46 percent decline in the number of wintering mule deer in recent years. Now industry is demanding the removal of all wildlife stipulations, prompting resistance from Gov. Dave Freudenthal, Wyoming Game and Fish, sportsmen groups and conservationists." (http://www.uppergreen.org/new/new.php) Links o Upper Green River Valley Coalition o Questar: environmental policy o National Geographic Article

Questions for Discussion 1. What are the systemic, corporate, and individual issues raised by this case?

2. How should wildlife species like grouse or deer be valued, and how should that value be balanced against economic interests of a company like Questar? 3. In the light of the U.S. economy's dependence on oil, and in light of the environmental impact of Questar's drilling operations, is Questar morally obliged to cease its drilling operations on the Pinedale Mesa? Explain. 4. What, if anything, should Questar be doing differently? 5. In your view, have the environmental interest groups identified in the case behaved ethically?