MANAGERIAL ETHICS - 1

-Applying Systems Thinking to analyze Brexit

Submitted by:

HRM B Group 10

Ankur Desai (H16067)

Debadrita Mukherjee (H16076)

Rajesh Ranjan Mahapatra (H16096)

Snehi Pathak (H16108)

Subhanshi Agarwal (H16113)

XLRI, JAMSHEDPUR

Managerial Ethics Take Home Exam - 1

Q1. Define also your unit of analysis of the market phenomenon: for instance, in respect to the
GST Bill, is it the whole GST Bill, or any specific component (e.g., Central versus State, the
legislative process versus its planned enforcement, specific action or actor, and so on) that you
choose to investigate and analyze under the following questions. Why did you choose this unit of
analysis? Justify your choice. [10 marks].
(Assigned to Debadrita)
Brexit is something which will affect the global economy and so we took up this topic to study the
moral and ethical implications of such a global issue.
Our unit of analysis is the decision of Brexit by referendum.
In 2012, Prime Minister David Cameron rejected calls for a referendum on the UK's EU membership,
but suggested the possibility of a future referendum to ascertain if the people of UK really wanted to
remain a part of the EU. Under pressure from many of his MPs and from the rise of UKIP, in January
2013, Cameron announced that a Conservative government would hold an inout referendum on EU
membership before the end of 2017, if elected in the next term. The Conservative Party won the 2015
general election with a majority. Soon afterwards the European Union Referendum Act 2015 was
introduced into Parliament to enable the referendum. Cameron favoured remaining in a reformed
European Union and sought to renegotiate on four key points: protection of the single market for noneuro zone countries, reduction of "red tape", exempting Britain from "ever-closer union", and restricting
EU immigration.
The outcome of the renegotiations was announced in February 2016. Some limits to in-work benefits
for new EU immigrants were agreed, but before they could be applied, a country such as the UK would
have to get permission from the European Commission and then from the European Council. In a speech
to the House of Commons on 22 February 2016, Cameron announced a referendum date of 23 June
2016 and commented on the renegotiation settlement. Cameron spoke of an intention to trigger the
Article 50 process immediately following a leave vote and of the "two-year time period to negotiate the
arrangements for exit."
The result was announced on 24 June. 51.9% (17,410,742) of the valid votes were casted in favour of
leaving the European Union and 48.1% (16,141,241) in favour of remaining a part of the European
Union. A petition calling for a second referendum attracted more than four million signatures, but was
rejected by the government on 9 July.
Prior to the referendum, the UK treasury estimated that being in the EU has a strong positive effect on
trade and as a result the UK's trade would be worse off if it left the EU.
Supporters of withdrawal from the EU have argued that the cessation of net contributions to the EU
would allow for some cuts to taxes and/or increases in government spending. However, Britain would
still be required to make contributions to the EU budget if it opted to remain in the European Free Trade
Area.
Unity-UK was a part of the EU and just to walk out when problems start showing is morally a wrong
thing to do. The decision to leave the European Union negates multiple agreements and contracts. Even
if some member of the group does something wrong in a way that affects the group as in case of Greece
or even due not being able to come together to some practical decisions like in case of immigrants,
parting ways because of such reasons does not show solidarity is unethical.
The UK lobbied very hard to get the Eastern Countries into the EU, against the wishes of several other
member states. UK wanted to expand EU, the others however wanted to have stronger bonds within
themselves. But now UK seems to be unhappy about those very same countries and their immigration
into her territory. The fact was very clear when UK had supported these countries to join and it was the
government's prerogative not to use the transition arrangements. By turning against them, UK has
broken their trust.
The UK got into the EU on petitioning for the third time. But now it seems as if it regrets its decision
of joining the EU. UK did not join the Euro club and did so reasonably. But the decision to move away
from EU shows a lack of commitment on part of the UK.
Another ethical issue with Brexit is how will the decision affect others that did not participate in the
vote. Voting is a morally charged act because it impacts everyone. Jason Brennan in
1|P age

Managerial Ethics Take Home Exam - 1

his Quartz article An Ethicist explains what Brexit voters forgot on their way to the polls says
,When a majority makes a bad choice, everyone suffers, including dissenting voters, foreign residents,
foreigners living abroad and children who are ineligible to vote. The ethics of voting are an ethics of
care. The day after the referendum, in the UK, there was a sharp spike in Google searches asking
exactly what the EU is and what leaving it will do. This suggests many Britons voted first and did their
homework second. Already, many UK voters express regret.
Q2.Apply the Eleven Laws of Systems Thinking (see Chapter 2) as Assurance of Learning (AOL8)
that studies any market phenomenon. Explain each Law and its potential for explaining and
predicting behavior of the phenomena you have chosen for investigation. Illustrate the application
of each Law by past, current or projected examples. [20 marks]
(Assigned to Ankur)
Brexit as a market phenomenon can be analysed through the aid of the eleven laws of system
thinking.
1) Todays problems come from yesterdays solutions:

All British Prime Ministers have played to the galley during campaigning season, blaming the
policy limitations of their government on the E.U. Gordon Brown said, in an election speech,
When I first expressed my doubts about Britain's entry, I stood virtually alone in the Cabinet. Indeed, I
was ready to resign as Chancellor if I was unable to persuade my colleagues of the grave risks of taking
us immediately into euro membership. He also said, The City of London is consumed by an alien
culture of excess to a roaring crowd. As we know, he was elected. Later, he vociferously supported the
Remain camp. Margaret Thatcher, Tony Blair and David Cameron had also stoked the fires of
Euroscepticism as a corner-stone to a successful election as PM. In fact, Thatchers speech opposing
compliances laid down by Brussels is regarded as a seminal work by the Leave camp.
Hence, expedient solutions leading to votes in the general election, served to inflame the antiimmigration and freedom from European interference rhetoric peddled by the Leave camp. Hence,
yesterdays expedient solution led to todays Brexit.
2) The harder you push; harder the system pushes back:
In 2004, Tony Blair effectively scuttled negotiations for a European Constitution by asking for
excessive concessions. In 2007, Gordon Brown missed the Lisbon treaty declaration ceremony, which
the British had long opposed. In 2011, David Cameron opposed E.U financial reforms and announced
that he would bring power back from Brussels. There are many other representative incidents including
a back bencher rebellion in Parliament over the 1992 E.U concessions. In other words, the U.K has
always attempted to dominate the E.U in order to assert its independence while retaining the privileges
of membership. Needless to say, it had several run-ins with Germany, France, Belgium etc.
After the Brexit vote, the U.K desperately needs to negotiate a favourable trade treaty with the E.U.
Inevitably, there are voices rising from the member states that want to make the British pay ball.
Wharton Finance Professor Joao Gomes expects the E.U to take a tough stance on Brexit ahead of the
French and German elections next year.
Id recommend the E.U, the EC and member states to play hardball, says Michelle Egan, a professor
at American Universitys School of International Service and a fellow at the Wilson Centers Global
Europe Program. She notes that Article 50 of the Treaty on European Union, the legal mechanism for
an E.U member state to break away, has never been used before. If they make it easy and give too many
concessions to Britain, then the risk is other states will want an a la carte Europe as well, adds Egan.
3) Behaviour grows better before it grows worse:
The 2014 referendum for Scot independence was settled in the U. Ks favour after a promise by the
Conservative Government to devolve further powers to the Scottish Parliament. The Conservatives
delivered their promise after sweeping Scotland at the expense of the pro-independence SNP in the
2016 general elections. Relations between Glasgow and London were extremely amicable. However,
the hawks for independence have risen again after the overwhelming Scottish vote for Remain. The
demand for a 2nd referendum is catching steam, citing a dissonance between the U. Ks Euro-scepticism
and Scotlands Euro-centricity.
2|P age

Managerial Ethics Take Home Exam - 1

4) The Easy way out usually leads back in:
The Leader of Opposition, Jeremy Corbyn tried to hedge his bets by taking a Remain stand with
Leave overtones. He probably expected to appease both sides in the event of any outcome, but ended
up displeasing all. The Labour Party Remain faction criticized his stance as lukewarm and his
leadership as uninspiring. The Leave faction called him a traitor for deserting his vociferous Out
of Europe stance, for which he campaigned as a councillor in the 1975 referendum called by Edward
Heath.
5) The cure can be worse than the disease:
The Leave vote was primarily decided on the emotive issues of freedom from European interference,
British supremacy and anti-immigration. The economic impact was side-lined under the garb of British
tenacity and the supposed advantages of international trade free from the E.U radar. However, the GBP
3 trillion wipe-out of the stock market was not foreseen. According to Wharton Finance Professor
Jeremy Siegel, The big uncertainty is how much will investment go down? [This is about] people
putting off decisions to put real capital expenditures into the U.K. until the situation gets clarified very
much. Believe it or not, I think they might just avoid a recession. But certainly theyre going to take a
growth hit as a result.
6) Faster is Slower:
In the immediate aftermath of the Brexit vote, there were cries on the British as well as European sides
of expediting the process of Brexit. David Cameron and Theresa May also spoke of respecting the
mandate and hastening the impending divorce. However, the British Parliament has censured the
leadership for not taking it into confidence and wants that each negotiation stance with the E.U be
ratified by it. Since, the Article 50 invoking separation from E.U has never been used before, there are
apprehensions about its impact. These concerns are forcing the parties to actually go slow on the
separation negotiations and keep their haste aside.
7) Cause and Effect are not closely related in time and space:
Brexit offers freedom from E.U trade regulations. Hence, U.K can now potentially ramp up ties with
India and China. This remains a futuristic dream at present because the economic instability at present
is a strong deterrent for foreign investment. The U.K Govt. had an extremely difficult time in convincing
Tata Steel to continue with its U.K operations.
8) Small changes produce big results but the areas of leverage are often the less obvious:
The Remain campaign flooded the electorate with scientific and economic data proclaiming Brexit
as doomsday. However, the leaders remained smug about victory and did not recognize the
disgruntlement among the lower to middle class White electorate which was convinced about the
subjugation of its once-glorious nation to Europe by the Leave campaign. Some inter-personal
connect by the Remain portraying the human strengths of its stand might have swayed the day,
however, the areas of leverage are often the less obvious.
9) You can have your cake and eat it too but not at once:
A long-awaited U.K trade policy independent of the E.U regulations, emphasizing bilateral relations
with India and China can now be deployed. However, it will not be successful until the divorce from
E.U is final and British investments finally start picking up, aided by the fall in the Pound.
10) Dividing an elephant into half does not produce two elephants:
One of the points made repeatedly by the Leave campaign for Brexit was that E.U bureaucracy was
hampering economic relations with emerging economies such as India and China. On the other hand, it
opposed immigration. Respecting this mandate, the Theresa May Govt. has announced restrictions on
the student visas issued which will have a large impact on Indian youth. Theresa May has sent feelers
towards India to scale up their relationship. This represents a dichotomy in the Leave philosophy
rather a self-defeating prophecy. Narendra Modi said on his 2015 U.K visit that India regards U.K as
its gateway to the E.U. This objective cannot be fulfilled now. U.K by dividing an elephant into half
might end up with a carcass to boot.
11) There is no blame:
Brexit offered the politicos, intelligentsia and the citizens of U.K and E.U the ideal opportunity for a
blame-game and a mud-slinging match. Remain was blamed for insipid leadership. Leave for
beguiling voters on a fraudulent emotive appeal etc. etc. The way out is to respect the mandate and
3|P age

Managerial Ethics Take Home Exam - 1

ensure an amicable divorce between E.U and U.K. Care must be taken that the Leave vote does not
lead to Britain being classified as a closed and insular society. The parting of ways cannot be undone.
However, skilful economic negotiation would ensure a fair deal with excellent opportunities for
recovery on which both parties can rebuild. How Brexit can be achieved with minimum damage to
either side depends on how exactly it is negotiated and how the transition is managed, says Mauro
Guillen, Wharton professor of management and director of The Lauder Institute. The U.K. is a large
economy and to take it out of the EU of course disrupts years of assumptions that investors, companies
and consumers have been making.
Q3. As Assurance of Learning (AOL9) that studies any market phenomenon, create at least two
Laws of your own similar to the Eleven System Laws for explaining and predicting market
behavior that is not covered by the Eleven Laws. Explain each new Law and its potential for
explaining and predicting behavior of the phenomena you have chosen for investigation. Illustrate
the application of each Law by past, current or projected examples. [10 marks]
(Assigned to Subhanshi)
While taking a decision, expect the worst

According to this law, when we make a decision about anything, we should be equipped to handle the
worst scenario that may arise in the future.
The decision to form the European Union was for the ease of doing business across Europe. While this
was a good move on part of the nations to move towards a unified and friendly world, it may not have
been thought through. The idea of creating a unified zone in which the respective nations enjoyed their
own governance system but a common monetary system was novel but difficult to gel. At the same
time, the union mandated the nations to follow certain rules which may have been counterproductive
for the respective economies. There are two ideas in discussion with respect to this law
i.
ii.

The decision to form the European union

Britains decision to join the union

In retrospective, the union may never have predicted the crisis in middle-east having such tremendous
impact on their economy. At the same time, their immigration law was the reason for the exit of Britain.
Observing this phenomenon shows that the purpose of forming the union in the first place is being
defeated. Could Britain have negotiated on immigration laws at the time of joining as it did to maintain
the pound? This is a question we can ponder over.
In the current scenario, we will discuss Britains decision to exit the European Union. Post this decision,
Britain needs to be ready with the worst possible scenario that may occur. Until now, the growth of
Britain has not been up to the mark post its exit, in fact its budget deficit was much lower than last
years, at around 4% of the GDP. Having taken this decision, Britain would have thought of the possible
outcomes - good or bad that may arise.
In the perspective of the future, Britain and the European union need to work out all their decisions
keeping in mind the most challenging scenario that may come their way.
Minus X Minus Plus
According to this law, committing two mistakes does not make the outcome correct. This means that
when we make two consecutive incorrect decisions, the outcome will not turn out to be positive. It is
like saying that killing a person and hiding the murder does not make you innocent or free from stress.
In the context of the market phenomenon under purview, there have been many decisions that the
European union and Britain have taken for example the initial consensus of the rule of the union such
as the immigration laws which are doing more harm than good and correspondingly the exit of Britain
4|P age

Managerial Ethics Take Home Exam - 1

may not necessarily improve the situation, rather it may deteriorate it further for both the parties in the
future.
Every indecision is also a decision

It is a common belief that the only way to move forward is by making decisions. These decisions being
correct or incorrect is another matter into consideration. But in perspective, choosing not to act on
something is a decision in itself and every moment of indecision is a decision altogether. It may
conclude to an opportunity lost or an opportunity gained depending on the final outcome.
Taking the case of the market phenomenon in discussion, at the time during the referendum for Brexit
was taking place, many investors were in a state of indecision regarding investments. Few decided to
invest, few decided not to invest and a few were indecisive till the end. This indecision in a way is a
decision to not invest. By not making investments, the investors will eventually invest in another place
which will amount to an opportunity gained but at the same time, they would have lost the opportunity
to invest at the time of Brexit. If we look at the phenomenon of Britains exit itself, the debate had been
going on for long and no decision was being reached before they decided to go by the method of
referendum. In those indecisive moments Britain ended up deciding to be a part of the European Union.
Know your rivals, but know your friends better
This law goes opposite to the saying keep your friends close, but your enemies closer. There is no
point in having a friend who at the time of crisis is not there for your rescue. He/she will always be
present when times are good but disappear the moment things start going wrong. In addition, a friend
will not take a decision which will create an adverse impact on you.
Taking into consideration the market phenomenon under investigation it may be interesting to know
who is a friend and who is an enemy. There were many nations involved that lead to the culmination of
Brexit - the US, Syria and the nations of the EU including Greece, Germany. Observing from a macro
level we see that none of the countries are friends of each other. It is a known fact that the problem in
Syria today is attributed to the US. The Syrian crisis had led to mass immigration of refugees into
Europe which in turn caused the slowdown in economy of the European Union.
In the present and future context, the nations need to figure out who will support them at the time of
crisis and who will leave.
Q4.Apply now the Ten Archetypes of Systems Thinking (see Chapter 2A) as Assurance of
Learning (AOL10) that studies any market phenomenon. Explain each Archetype and its
potential for explaining and predicting, past or expected structures of market behavior in the
Case you have for investigation. Illustrate the application of each Archetype by past, current or
projected examples. [20 marks]
(Assigned to Snehi)
1) Limits to Growth
Management Principle: Do not push growth; remove the factors limiting growth
The steady growth before Britain left EU: There were many benefits that Britain enjoyed while it was
a part of EU. The most important was that EU provided millions of jobs to Britain. According to the
report published by Centre for Economics and Business Research, EU provided 3.1 million jobs for
Britain. If Britain were to remain the member of EU, the increase in the number of jobs by 2030 would
5|P age

Managerial Ethics Take Home Exam - 1

have been 790,000. In addition to this EU also provided subsidies to 476,000 farmers who worked
primarily in farming sector. As per the report published in a leading newspaper, according to 71% of
the total members of Confederation of British Influence and 67% of Small and Medium sized
enterprises, EU bolstered the business of Britain. As per the report published by the Centre for
Economics and Business research, The overall contribution to our economy from exports to the EU
was 187 billion pounds last year and it could rise by almost half again to 277 billion pounds by 2030.
The mentioned facts and details clearly shows the steady growth before Britain left EU.
However, after a while Britain was not satisfied with the decision-making approach of EU which was
dominated by Brussels elite. It was a top down approach which hampered the collaborative approach
that should have ideally been applied while making decisions. Britain wanted to change this, however,
in spite of several unsuccessful attempts, it decided to quit EU. Thus, this turned out to be the limiting
factor to the steady growth enjoyed by Britain till then. Thus, this clearly identifies with the application
of the management principle of the archetype Limits to Growth.
2) Shifting the Burden
Management Principle: Beware the symptomatic solution
The various issues that plagued Britain while it was a part of EU were dominance of Brussels elite,
grave problem of immigration, huge membership costs, no sovereign power to name a few. However,
instead of analyzing the problems at root cause, Britain came to a consensus of withdrawing from EU.
As per U.K. shadow foreign secretary, I would suggest that this is a really big deal geopolitically not
just for Britain but also for Europe and indeed for the West, for Americas relationship with Europe.
Britain as a part of EU can better meet the big challenges we face, such as climate change and threat
of terrorism. Thus this clearly shows that Britain was resorting to symptomatic solution of exiting from
EU, instead of solving the root cause problems. As a result, after the exit of Britain from EU, it is in
tatters. Pound has stumbled to a 30-year low and Moodys credit rating agency has downgraded UK
governments bonds to a negative rating.
Hence, in order to solve any grave issue, try eradicating the root causes for long term benefits.
3) Fixes that Backfire
Management Principle: A continuing series of fixes to a stubborn problem improves only
momentarily
The various business symptoms that were plaguing Britain were many EU citizens coming to work in
Britain while UK citizens struggle to obtain visas to go and work in EU, Undemocratic nature of the
membership of the EU so it has the monopoly of issuing regulations which are legally binding all
member states. The quick fix for the symptoms is for Britain to exit the EU. However, this fix can
backfire Britain in the longer run as this could result in EU prohibiting Britain to maintain access to its
single market and hence, resulting in constraints in the free movement of people. According to leading
economist Paul Krugman, Yes, Brexit will make Britain poorer and it will become less productive.
Thus, emphasizing the management principle.
4) Tragedy of the Commons
Management Principle: A continuing increase of use of a common resource will eventually
overstrain the resource until it crashes
In the context of Brexit, the common resource is Britain. The excess control exerted on Britain by
Brussels was one the primary reasons for Brexit. Boris Johnson, a Conservative who was a mayor of
London mentioned in an interview, The more the EU does, the less room there is for national decisionmaking. Sometimes these EU rules sound simply ludicrous, like the rule that you cant recycle a teabag,
or that children under eight cannot blow up balloons, or the limits on the power of vacuum cleaners.
Sometimes they can be truly infuriating like the time I discovered, in 2013, that there was nothing we
could do to bring in better-designed cab windows for trucks, to stop cyclists being crushed..
Hence, the power concentration in the hands of unelected Brussels elite led to overstraining the
relationship of Britain with EU. As sovereignty is the most important aspect of any country to prosper
in trade and business. Brexit case truly reflects the Tragedy of Commons.
6|P age

Managerial Ethics Take Home Exam - 1

5) Accidental Adversaries
Management Principle: Understand your partners needs, see if you are unintentionally
undermining them, and look for ways that support each other
Brexit is a classic illustration of this archetype. The relationship between Britain and EU had been
beneficial for both the partners till unfettered dominance of Brussels and financial slowdown of Euro
since 2008 crisis has strained the partnership. EU failed to collaborate Britain in its decision making
which led to Brexit. The consequences of this would be huge for both British as well as EU. It would
be calamitous for other member states as well as it will weaken their trust on EU leading to more exits.
So failure of EU to understand the extent of control it should impose on British institutions led to this
crisis. Thus, if EU could have acted wisely and supported Britain, this situation would not have arisen.
6) Success to the Successful
Management Principle: Should the success of the successful spell failure of the failed? Break
this vicious zero-sum game cycle

Initially, EU and Britain enjoyed economic benefits like worlds largest free-trade zones, single largest
market to name a few. Gradually EUs way of doing business started affecting Britains trade
negatively. For instance, Britains fishing policy is political imperatives of Europe which is in turn
controlled by Brussels, huge membership cost of 17.4 billion pounds levied by Europe and disparities
in immigration system led to Europes success while hampering Britains trade and eventually its
failure.
The virtuous and vicious cycle was formed which ultimately led to Brexit. So, in order to curb the
failures of trade relationships the entire economic curriculum should be redesigned so that benefits of
both the partners are taken into account.
7) Balancing Process with Delay
Management Principle: In a sluggish system, aggressiveness produces instability. Either be
patient or make the system more responsive
When the relationship of Britain with EU was getting strained (which refers to the sluggish system as
mentioned in the archetype), the then PM of Britain Mr. David Cameron embarked on a tour of EU
states to renegotiate the membership of Britain. He promised to put the best if his efforts in keeping
Britain as a part of EU. However, with a majority of 52% Leave campaign was declared leading to
Brexit. Thus, giving rise to instability and uncertainty.
The system has since seen a slowdown of growth. According to John Van Reenen, director of Centre
for Economic Performance at the London school of Economics, You get a rabbit-in-the-headlights
phenomenon where businesses don't want to make new decisions, or new investments, because they are
uncertain about the future. The immediate effect will be a lowering of investment activity, a lowering of
hiring. There will an immediate slowdown of growth."
If Britain could have negotiated properly with EU and given it a chance, maybe Brexit would not have
happened, given the various benefits Britain had enjoyed.
8) Growth and Underinvestment
Management Principle: If there is a genuine potential for growth, build capacity in advance
of demand, as a strategy for creating demand
Since more than 50% of Britains exports go to EU countries and it had access to the single market,
there was a potential for growth. However, according to the Brexiters the benefits of leaving EU
outweighed that of being a member of EU.
7|P age

Managerial Ethics Take Home Exam - 1

A study by the think tank Open Europe found that UK economy would lose 2.2% of its total GDP by
2030 if it left EU. However, as there exists a potential for growth, Britain can try to negotiate a free
trade deal with Europe in order to increase its GDP by 1.6%. This maybe a strategy of Britain to create
demand. However, this seems quite murky considering the extent to which Brexit has affected EU.
9) Escalation
Management Principle: Look for a way for both sides to win, or to achieve their objectives
Brexit could have been stopped if both Europe and Britain would have negotiated on the terms and
regulations that would have benefitted the trade relationship for both the partners. One way is to have a
EU wide agreement on grave issues like control over immigration and sovereignty. A public opinion
can be garnered so that objectives of both sides are met. Inter-governmental bargaining can defuse
Brexit crisis and preserve the access to single market and free trade. Thus, the archetype of Escalation
can be applied to this market phenomenon.
10) Eroding goals
Management Principle: Hold the vision; do not compromise established standards for shortterm gains
This is similar to that of archetype 2 which explains the condition of Shifting the burden. Hence, the
same application would suit the application for this archetype as well. The symptomatic solution of
Brexit in order to escape from the issues of dominance of Brussels elite, grave problem of immigration,
huge membership costs will offer only short-term gains, ultimately resulting in slowdown of Britain as
well as crisis for EU.
Q5) Synthesize all the Laws under questions 2 and 3, compare and contrast them, and judge
which Law has the best explanatory and predicting power of the phenomenon under
investigation, and why? Illustrate by market examples.
(Assigned to Rajesh)
While all laws of system thinking can be applied to this scenario, the laws which seem to be
particularly valid for this case are as follows:
Law 1 i.e. Todays Problems come from Yesterdays Solutions seems to be a good example of
the situation which Britain is facing today. After World War II, which shattered the European
Economy, the idea of a common European Forum was first pitched as a solution to any future political
conflicts. In 1975, the British public voted for being a part of the European Economic Community
hoping that a common European market would boost the economy of all member states involved,
however this solution led to problems which would cause resentment among the British public in the
decades to follow. Successive treaties since 1975 have seen the European Union transform from a
trading arrangement to a fully-fledged political union giving the EU unprecedented political power
over policy making decisions, this caused a resentment among the British Population who began to
doubt that whether it was actually worth it to stay in the union. However, an unprecedented economic
growth in the 90s under the Labor Government, this issue was put on the backburner for nearly 20
years. After the global recession and stagnant economic growth since 2008 the question of leaving the
EU again took precedence and led to Brexit as we know it now. Law 3 which states that Behavior
grows better before it grows worse. can be verified from the facts given above. In the 90s and for
the first 5 years of the 21st century, unprecedented economic growth made people think that EU is a
boon for the UK and the government made policies allowing mass immigration from eastern Europe
possible. This behavior however took a turn for the worse when the same immigrants who had
migrated were blamed for the poor economic scenario after the global recession in 2008.
However, the law that fits perfectly with the market phenomenon under our purview is Law 5: The
Cure Can Be Worse Than the Disease. In todays complex markets, there are no systems which
8|P age

Managerial Ethics Take Home Exam - 1

can exist in complete isolation. Every subsystem in the market interacts and affects the others around
it. Hence there doesnt exist any final solution to any particular problem which impacts a market,
since once a solution is drawn up to fix a particular problem, the other subsystems will ultimately fire
back new problems which were previously unanticipated. Thus, the cure to a particular problem can
cause scenarios which might be worse than the disease itself.
Considering the case of exit of the United Kingdom from the European Union, it can be observed that
the problems it aimed to solve might ultimately lead to more problems in the future as described
briefly below:
Immigration from the European Union countries in general and Eastern Europe in particular
accounted for nearly half of the net migration in the UK. This issue was widely touted by the British
politicians as being the reason behind the growing unemployment scenario in the country and as a
result of this the British voters ultimately voted in favor of exiting from the EU assuming that the
reduction in migration would ultimately resolve the unemployment scenario. However, in the
foresight, it is not difficult to observe that a ban on immigration will ultimately lead to new financial
problems for the British citizens. With a net decrease in migration from the EU countries there would
be a substantial reduction in the growth rate of the available labor force. This will lead to an upward
pressure on the salaries and wages of the workers in the medium term, but in the long term it will
cause the inflation to sky rocket and the interest rates to increase, and thus there will be a squeeze in
the living standards. London, which was earlier seen as the financial capital of Europe will see this
status being eroded away. Investors will move out capital from Britain and scale back plans for
expansion which would ultimately lead to more employment problems instead of solving it.
Official Trade Statistics show that the European Union accounts for nearly 50% of Britains total
exports. The cost of losing preferential access to this huge market will bring up unanticipated issues in
the future. Although it is of little doubt, that there will be a favorable trade agreement of some kind
between the UK and the EU, it will however not mitigate the problems the future problems which the
British exporters will face. Loss of preferential access implies that British exporters will face
additional costs in selling into the European Union due to the extra costs of custom duties and the
costs of compliance with the EU rules which will bring the British goods under pricing pressure from
competition with products from other non-member countries.
Q6. Synthesize all the Archetypes under questions 4, compare and contrast them, and judge which
Archetype has the best explanatory and predicting power of the phenomenon under investigation,
and why? Illustrate by market examples. [10 marks].
(Assigned to Subhanshi)
There is an interesting relation between Archetype V which is Accidental Adversaries: Understand your
partners needs, see if you are unintentionally undermining them, and look for ways that support each
other and Archetype IX which is Escalation: Look for a way for both sides to win, or to achieve their
objectives. They both complement each other. In a way if Archetype IX is satisfied, Archetype VI will
occur automatically.
Another relation which we can compare between the archetypes is between Archetype IV which is
Tragedy of the commons: A continuing increase of use of a common resource will eventually overstrain
the resource until it crashes and Archetype X according to which hold the vision; do not compromise
established standards for short-term gains. Many industries now a days are overexploiting the natural
resources for quick and short term gains. Even in the aspect of our economy there are elements in our
society who use the one-rupee coin to make blades. One coin generates twenty blades are sold for twenty
rupees. Thus in this way our economy is being hurt.
The archetype that fits perfectly with the market phenomenon under our purview is Accidental
Adversaries.
Management Principle: Understand your partners needs, see if you are unintentionally
undermining them, and look for ways that support each other
9|P age

Managerial Ethics Take Home Exam - 1

Brexit is a classic illustration of this archetype. The relationship between Britain and EU had been
beneficial for both the partners till unfettered dominance of Brussels and financial slowdown of Euro
since 2008 crisis has strained the partnership. The main arguments put forward by advocates of the
Brexit were European Unions liberal rules for internal migration along with the Unions burdensome
economic regulations.
Initially, EU and Britain enjoyed economic benefits like worlds largest free-trade zones, single largest
market to name a few. Gradually EUs way of doing business started affecting Britains trade
negatively. For instance, Britains fishing policy is political imperatives of Europe which is in turn
controlled by Brussels, huge membership cost of 17.4 billion pounds levied by Europe and disparities
in immigration system led to Europes success while hampering Britains trade and eventually its
failure.
Britain refused to dismantle border controls and be a part of the Schengen agreement. But the European
Union law does not limit the number of migrants from other European Union countries. Because the
Eurozone was suffering from dismal economic performance, many workers from less affluent European
states such as Poland and Portugal have moved to UK in search of work. This is not in the hands of
Britains elected leaders and influences the voters in the wrong way.
The European Union failed to collaborate with Britain in its decision making which led to Brexit. The
consequences of this would be huge for both British as well as EU. It would be calamitous for other
member states as well as it will weaken their trust on EU leading to more exits.
Q7. Synthesize all the Laws and Archetypes under questions 2-4, compare and contrast them,
and judge which Law or Archetype or a combination of the two has the best explanatory and
predicting power of the phenomenon under investigation, and why? Illustrate by market
examples. [10 marks].
(Assigned to Debadrita)
All the laws and archetypes help us to observe and analyse the different facets of the issue at hand.
However, some laws can help us look into the root causes of the current issue as an issue/dispute or
conflict does not spring up suddenly, its seeds are usually sown long back. So some among these 11
laws and 10 archetypes, we feel that the second law combined with the fifth archetype could have
predicted the occurrence of BREXIT.
As we saw the second law states that The harder you push; harder the system pushes back. This law
is true in every situation. It can be referenced from the Newtons third law in physics which is that every
action has an equal and opposite react. We see whenever is history we have tried to forcibly put down
or dominate something it comes back with an equal force or sometimes with more intensity. Revolts
often happen due to this. When a section is dominated and exploited, a time comes when they unite and
revolt against the dominating group. Here too in case of Brexit, Britain was pushed with a heavy
pressure on economic resources in terms of the heavy membership fee as well as non-monetary
resources as in the case of immigration and over-dominance by Brussels. And as a result UK too pushed
back by invoking section 50 and taking the decision to leave the European Union. Had there not been
the continuous strain, the United Kingdom would not have decided to with draw its membership from
the umbrella of EU as being a member of EU, United Kingdom enjoyed quite a lot of benefits like all
Europe free trade which helped it boost its economy. But in this case the advantages it was deriving
were getting balanced out by the disadvantages it was facing being a part of the EU. So it is not to see
Brexit happen if we look through the lens of the second law.
Also we can understand the occurrence through the 5th archetype i.e. Accidental Advisories having a
Management Principle that states, Understand your partners needs, see if you are unintentionally
undermining them, and look for ways that support each other. In every relationship, be it personal or
commercial, there is a basic requirement- you should understand the other entity involved. The
archetype 5 also explains that if we dont understand our partners needs or are unintentionally ignoring
10 | P a g e

Managerial Ethics Take Home Exam - 1

them this might result in friction and to avoid such a scenario we should look for ways to understand
and be aware of the others needs. We see this very commonly in business scenarios where people most
of the disputes occur die to this lack of understanding. Let us take an example of the disputes we see
between the management and workers which stem from this basic concept. Both try to hold their ground
because of which the relationship suffers. Here in case of Brexit the inability to understand and cooperate with each other was a weakness seen in both the parties. EU did not understand that putting
undue pressure on the economy of the United Kingdom would lead to dissatisfaction in the minds of
the citizens of UK and would finally culminate with UK lashing out and in EU losing its member. UK
too did not want to mind itself with the necessary evils of being a part of EU and did not want to share
the burden when things were going bad. This lack of consideration on part of both EU and UK led to
BREXIT. Had they tried to be tolerant of each others issues and somehow tried to work things out
together, Brexit would have probably never happened.
So, we see that it is possible to predict such big issues through these laws and archetypes if we have a
far sight. Most of the times we are aware of such laws but we seldom use them to practically interpret
situations. So, we need to apply these practically to situations to derive the benefits out of it.
Q8) Given you approach in questions 2-7, and using Laws and Archetypes, determine how you
can predict if the market phenomenon under investigation is heading to be ethically and morally
good or bad for the country and its people, and why.
(Assigned to Rajesh)
The Brexit vote is the most significant socio-cultural event which has hit Europe ever since the Berlin
Wall came down in 1989. This event has inspired several scholars to examine the economic, social and
cultural impact on the British society in particular and Europe in general. Although the financial markets
showed their disapproval for this decision by drastically tumbling down, and credit rating agencies
predicted a dim future by downgrading Britains Government bonds, it remains to be seen how this
event would play out in the future.
Referendums do not necessarily mean the correct decision since after all it bypasses the normal
legislative processes of governments and the thin margin in which this decision came through represents
in a way the tyranny of the majority. Hitler and Mussolini were elected after referendums, and as
history witnessed, these decisions turned out to be disastrous.
This vote has major moral and ethical value attached to it, since it would be impacting the future of
millions of people working now and the generations to come. The major ethical concerns of this vote
are how this will impact the voters who voted against this decision and those who didnt bother to
participate in the polling process. Over the years with an increase in access to media, the number of low
information voters has largely multiplied. This has led to a scenario in which people who are
fundamentally ignorant of social sciences and politics making decisions on the basis of hearsay and
without any rationality. Thus, without any moral and ethical obligations many voters voted for a YES
without thinking about the disastrous consequences in the future and the price of such a decision will
be paid by both pro and anti-Brexit camps alike.
Europe is an excellent example of a society which has struggled through innumerable wars and
persecution to progress from a medieval feudal mindset to a progressive society which values scientific
thought and enquiry, multiculturism and diversity. As a matter of fact, Britain served as a beacon of
multiculturism when it elected the first Muslim mayor of London, a first in any European country. Now
this decision of exiting the EU due to a fear of immigrants shows the British nation in bad light as they
are now being branded as xenophobic and racist.
This rise of the xenophobic tendency due to lack of active initiatives to spread awareness on
immigration can be best proven by the rise of far-right groups like the UK Independence Party, i.e.
UKIP which has slowly but steadily increased its political base by receiving the greatest number of
votes of any British party and winning 24 Member of European Parliament seats in the 2014 elections.
This success of far-right groups in UK has prompted other far-right political parties in countries like
France and Germany to demand a ban on immigration by adopting direct action methods like street
protests and spreading misinformation about the evils of immigration.
European society through an amalgamation and experimentation of Roman, Greek and Biblical Thought
over centuries has promoted institutions which strive for human rights, emancipation and a universal
11 | P a g e

Managerial Ethics Take Home Exam - 1

moral outlook. However, the rise of far-right politics which has gain popularity in recent years seems
to reverse this progress of humanistic thinking which had slowly imbibed in the European culture. If
rapid action is not taken against the spread of such groups and misinformation in the society following
Brexit, it would be highly disastrous for the future generations to come and the way in which far-right
groups are now gaining popularity, it makes one shudder to think what type of a society one is creating
for his future progeny.

12 | P a g e