14 May 2008

Does Being Ethical Pay?

In The Journal Report section of Monday’s Wall Street Journal, the main headline asks the question, “Does Being Ethical Pay?”  This caught my attention because if treated properly, the correct message delivered by such a widely read publication could have a tremendous impact.  What the article is essentially asking is, “Is the moral also the practical?”  A rational ethics should answer with a resounding, “Yes!”

Unfortunately, the article is a dreadful disappointment.  It reduces a potentially eureka-laden topic into an uninspiring call to follow the dull duties of the anti-corporate political left.  At best, the article is a mess of floating abstractions and parroted premises.  At worst, the piece obliterates ethics outright by appropriating the term to refer to actions that are either not ethical or even unethical.

The key to the article’s problems may be found in the paragraph that describes the criteria used to determine if corporate behavior is ethical.  The investigators defined the conditions to be met:

For our purposes, “ethically produced” goods are those manufactured under three conditions.  First, the company is considered to have progressive stakeholder relations, such as a commitment to diversity in hiring and consumer safety.  Second, it must follow progressive environmental practices, such as using eco-friendly technology.  Finally, it must be seen to demonstrate respect for human rights – no child labor or forced labor in overseas factories, for instance.(1)

I would guess that the average businessman who reads this article is not particularly well armed with a rational view of ethics, but holds a haphazard collection of ideas that he has collected over his life from parents, Sunday school teachers, books, movies, college professors,... and perhaps Wall Street Journal writers.  Think about what such a businessman would conclude from this article.  In an effort to be considered ethical by his peers - after all, who wouldn’t want to be ethical? - he would accept the list uncritically as a program of action.  

Let me take each of the article’s criteria in turn to see how well the activities correspond to truly ethical behavior.

1.  “First, the company is considered to have progressive stakeholder relations, such as a commitment to diversity in hiring and consumer safety.” 

A “commitment to diversity in hiring” means that factors such as race, gender, and age ought to be considered as a qualification of employment.  That is, a company must adjust its workforce according to these factors.  

This is outrageous.  To say that the “diversity” of an unchosen human characteristic - diversity of race, for example - is of value to a company is to say that the quality of a workforce depends upon its racial makeup.  This is bald racism, and to smuggle this activity under the category of “ethical behavior” is obscene.  An employer who holds his own long-term self-interest as his ethical standard will judge potential employees on merit alone.  Skin color, heritage, gender, and age are utterly irrelevant.  

To desire the diversity of race, gender, age, etc. is irrational to the same degree - and for the same reason - as desiring the uniformity of these characteristics.  If a workforce happens to be “diverse” - composed of people from every corner of the globe - that’s great.  If a workforce happens to be composed entirely of near-sighted, elderly Jewish women with curly red hair, that’s great, too.  The only thing that matters is that the people are good at what they do.

The other item, a “commitment to consumer safety,” might indicate a proper ethics, but expressed this way it obscures the only valid reason: rational self-interest.  Again, it is in the long-range interest of any company to ensure the quality of its products, and consumer safety is certainly one of the important aspects of product quality.  This is never a problem in a free market because the law holds a company liable for any legitimate harm that it causes consumers, and companies that make unsafe products (or are even merely rumored to make unsafe products) will be driven out by competitors.


2.  “Second, it must follow progressive environmental practices, such as using eco-friendly technology.”

To “follow progressive environmental practices” does not mean to respect the property rights of one’s neighbors, which does in fact constitute ethical behavior.  It actually means to subjugate one’s own interests - and indeed, the interests of all human beings - to the alleged “interests” of the planet.


It is beyond the scope of this post to elaborate upon the deep irrationality of environmentalism.  I am simply pointing out that it is by no means moral to participate in the surrender of liberty, along with the prosperity, happiness, and achievement that it makes possible, in order to placate policy makers that use apocalyptic visions to advance their own agendas. 

3.  “Finally, it must be seen to demonstrate respect for human rights – no child labor or forced labor in overseas factories, for instance.”

If a “respect for human rights” means a respect for individual rights, then naturally this constitutes ethical behavior.  And “forced labor” is slavery, which is evil by any rational standard.  The problem is that I do not trust that the authors of the article are referring to individual rights, meaning: the right to one’s life, liberty, earned property, and pursuit of happiness.  

One clue to the authors’ meaning is the example of “no child labor.”  What is meant by this?  In some Third World countries, families send their children work to avoid starvation.  To use force to prohibit children from working in these circumstances would be extremely immoral.  The presence of these “sweat shops” is obviously a great benefit to the people, including the children, who work there; if there were a better deal somewhere else, they would leave.  (I am assuming here that they are not literally forced to work, for that would be immoral, as I’ve already stated.  And of course, by “force” I mean forced by people, not “forced by poverty” or “forced by conditions,” which is not force at all in the sense of rights violations.)  

It is tempting for us in western nations that are advanced and relatively free, to observe the squalid conditions and low-paying work in some overseas factories and conclude that this constitutes “exploitation,” since we cannot imagine ourselves actually choosing that kind of work.  But this is a misunderstanding of the context.  The progress of a civilization is made slowly, and Third World nations are in some respects literally centuries behind.  When corporations set up shop overseas, it is a supreme opportunity for the poorer nation to advance.  Everyone benefits. 

(As an interesting aside, a strict interpretation of “no forced labor” would mean that one should never do business with communist countries, since citizens of communist countries are, in every important respect, slaves.  However, I’m not sure that this strict interpretation should be applied in every case.  For instance, China is still technically a communist country, but I think a flourishing trade of non-military or non-“dual-use” goods with them is very beneficially and may by degrees cause the communist aspects to simply wither away.)

P.S.  I sent a greatly abbreviated version of this post as a letter-to-the-editor to the Wall Street Journal.

(1)  Wall Street Journal, Does Being Ethical Pay?, 12 May 2008, p. R-4.


C. August said...

Very thought-provoking article. I liked the analysis, and I agree with your evaluation of the WSJ piece as a "dreadful disappointment."

There's one question I have that doesn't relate directly to the topic, but more to the way in which one should evaluate others' ethical arguments. Namely:

What is the proper way to philosophically evaluate a claim of a particular action being "ethical"?

You stated that while the WSJ's three criteria purported to be a guide to ethical behavior, it in fact was the opposite. But what I keep coming back to is that by the authors' implicit ethical code, they are actually promoting ethical behavior. It's their system itself that is flawed.

You said: "At worst, the piece obliterates ethics outright by appropriating the term to refer to actions that are either not ethical or even unethical." But this presupposes a specific code of ethics, one of rational self-interest. By their own code, they were being consistent.

Their code, altruism, is objectively wrong, and anti-life. But their specific applications of that code to particular situations are logically consistent within that system. Their claim that being committed to diversity is ethical, is in fact true to the altruist code.

What I'm trying to figure out is whether in a case like this, where one identifies that the fundamental code of ethics that a person is basing their judgments on is wrong, is it best to state that, contrary to their assertions, they are actually promoting unethical behavior (i.e. racism, as you noted)? Or is the best way to attack the bad ideas to identify that by their own code, they are being ethical, but that the code itself, altruism, is wrong?

I don't know the answer to that. I realize that it sounds like I have made up my mind about the question based on my overall comment, and I certainly am leaning towards the "attack altruism, not the judgment based on it" way of thinking, but I'm not certain that my argument is fully consistent or that I have all the facts.

Stephen Bourque said...

Oh, yes – I see what you mean. By their own ethical standards, the list of actions they suggest conforms to ethical behavior.

However, I simply do not accept their standard of ethics as a starting point. Frankly, it didn’t even occur to me to think of it from that point of view, but even now that you point it out, I don’t think I would change much in the text. I am indeed “presupposing a specific code of ethics,” as you said. I indicated a few times that rational self-interest was the standard that I was using, but I admit that I was treating it as if it were understood and did not elaborate upon it.

I suppose different approaches would be required for different audiences. My blog posts are probably being read mostly by Objectivists, so a thorough defense of one’s own life being the standard of morality is not required. Furthermore, I’m not even sure it’s possible to do that; every post or letter-to-the-editor would require volumes and take weeks or months to complete!

For what it’s worth, I’ve copied below the actual text that I sent to the WSJ editorial board. I curious to know what you think about it – specifically, do you think it is a little better at addressing a general audience than is my blog post? I still matter-of-factly rejected their standard of ethics, but the big difference is that at the end I managed to insert a reference to Ayn Rand, so any reader who is curious could explore further. (Of course, it’s a little silly to say “any reader” because the letter was not published. There are no readers!)


The special report in Monday’s issue asks the all-important question, “Does Being Ethical Pay?” Unfortunately, the survey condenses what is meant by “ethically produced goods” to those made by businesses satisfying three concrete conditions, some of which are either not ethical or outright unethical: (1) “progressive stakeholder relations, such as a commitment to diversity in hiring,” (2) “progressive environmental practices,” and (3) “no child labor or forced labor.”

A “commitment to diversity” is actually immoral – it means that attributes such as race, gender, and age ought to be considered as a factor when hiring, which is an outrageous injustice to employers and employees alike. Far from preventing prejudices, this actually institutionalizes them. “Progressive environmental practices” does not mean a respect for private property, which is in fact a pillar of ethics – it means a capitulation to the policy makers who tout the pseudo-science of “global warming.” And “forced labor” is slavery, which is so obviously immoral, I suspect the term is used here ambiguously to mean something else. For instance, if injunctions against “child labor” mean that children ought to be prohibited from work that they would otherwise choose over starvation, then I would regard the prohibition as immoral as well.

The tragedy is that the question, “Does being ethical pay?” is vitally important, and as Ayn Rand has identified, the rational answer is a resounding, “Yes!” I am disappointed that in this article, the authors have reduced ethics to a few left-leaning bromides that do not constitute moral behavior.