PHIL 1317 business ethics final

amoral

conditions or activities in which morality does not apply (distinct from 'immoral', which involves offenses against morality or ethics.)

narrow view of corporate responsibility

Corporations are only obligated to serve the interests of the owner, partners, or shareholders of a company by trying to maximize their profits within the "rules of the game".

broad view of corporate responsibility?

Corporations are obligated to give "due consideration" to the interests of all stakeholders.

Shareholder

someone who invests in a company by buying its stock, hence also called 'stockholder'

stakeholder

anyone who has a significant material interest (a stake) in the activities of a company

Like shareholders, employees, retirees, customers, suppliers, and vendor

Solomon’s 3 C’s

compliance

contribution

consequence

Compliance

not just with the law, but with principles of morality, community customs or expectations, and general concerns like fairness.

Contribution

to society, in the form of the value and quality of the goods and services produced, the jobs provided, and furthering the prosperity of the surrounding community.

Consequences

to all affected by the firm's activities, not just the consequences to the firm if it gets caught doing something underhanded. Attention must be paid, in other words, to how business policies affect the well-being of all stakeholders.

a. The point of social cooperation among human beings is to provide for a better life, which is best achieved by dividing up society's various jobs in an efficient way.

e. The principles people ought to be guided by "in the village" are to do no harm and to treat others appropriately.

Which of the following are views that the CEO ends up endorsing as her dialogue with Socrates proceeds? Select all that apply.

TRUE

T OR F - Socrates tries to get the CEO to see that the point of business is not just to make profits for the owners of the business, though he is willing to grant that the CEO has not lied, cheated, or stolen anything.

TRUE

T OR F - Socrates suggests that the CEO's objectivity will be enhanced if she adopts the perspective of one behind Rawl's "veil of ignorance."

FALSE

T OR F - Socrates agrees with Wendy's claim that the interests of shareholders take priority over the interests of employees, because the shareholders have risked more to keep the firm in business.

Corporate Culture

every organization has a culture fashioned by a shared pattern of beliefs, expectations, and meanings that influence and guide the thinking and behaviors of its members.

Ethical culture

one in which employees are empowered and expected to act in responsible ways, even when the law does not require it.

receptivity, listening, openness and humility, integrity, honesty, empathy, and trustworthiness

Traits thought to be characteristic of good leaders:

Humility

_______ prevents excessive self-focus it also allows leaders to develop deeper perspectives in their relationships, which makes them more perceptive and capable of anticipating the future.

Psychological Egoism

the theory that claims that the only thing that ever motivates anyone to act is their own self-interest.

Altruism

we certainly seem to be motivated, sometimes, by a concern for the well-being of others.

Acting on principle

we seem sometimes to act in a certain way because it is the ethically/morally right thing to do.

Ethical Egoism

the theory that says we should always act only in our own self-interest.

Normative egoism

The interests of others are always relevant to the evaluation of behavior

False

T OR F - As Socrates sees it, the CEO's prepared remarks to the Congressional INvestigative Committee aptly conveyed her firm's ethical commitments, and she appropriately took personal responsibility for some poor decisions she's made; but her arrogance resurfaced as she snidely lectured those with farther greater expertise than hers, making irresponsible comments about the economy and climate change.

True

T OR F - An ethical culture is one in which employees are not only expected to act in responsible ways, even when the law does not require it but one in which they are empowered to do so.

False

T OR F - Socrates agrees with Wendy that having a clearly articulated and communicated mission statement and code of conduct overseen by an ethics officer is sufficient to sustain an ethical corporate culture.

True

T OR F - Socrates claims that Wendy lacks the expertise or sophisticated ethical vision to be able to even see ethical problems, let alone deal with the complexities involved in a satisfactory way.

True

T OR F - the Corporate Culture file stated that in addition to ethical leadership, ethical values must be integrated into day-to-day proceedings, suggesting that one of the ways to do that would be to have ethics evaluation be part of annual employee reviews.

False

T OR F - Neither Socrates nor the literature on corporate responsibility generally puts much stock in executive humility, holding that it is likely to weaken employees' commitment to the management's vision for the company.

True

T OR F - In SCTWS, Socrates claims that individual conscience, personal emotions, and social or cultural traditions or laws cannot provide an objective standard for ethical permissibility, since they are subjective, or at least arbitrary enough to preclude a universal consensus.

False

T OR F - Wendy feels unable to respond to Socrates' feigned claim that ethics is rubbish.

TRUE

T OR F - Wendy ends up agreeing with the historical Socrates's idea that happiness is obtainable by living a virtuous life, but not with his idea that vice ends up harming those who engage in it.

Moral Hazard

a situation wherein a party will have a tendency to take risks because the costs that could be incurred will not be felt by the party taking the risk.

Securities

financial instruments; stocks, bonds, derivatives, etc.

Derivatives

financial instrument whose value derives from and is dependent on the value of an underlying asset.

Collateralized debt obligation (CDO)

a derivative backed by a pool of various bonds or loans

Leverage

the ratio of the banks borrowed money to their own assets. The higher the ratio the greater risk of insolvency as a result of default on the debts the CDOs were based on.

Credit default swap (CDS)

Financial derivative designed to offset the possibility of loss connected with some other asset

Securitization food chain

Complex financial arrangement in which lending institutions sell the mortgages they provided to homeowners to investment banks. Investment banks then package these and other debts into CDOs. then sell them to investors who receive the payments on the original mortgages/debts.

Regulatory capture

Lobbying or other actions on the part of special interest groups which succeed in influencing the staff or commission members of regulatory agencies or policy-making organizations. Then resulting in the harnessing of state power to private interests often in conflict with the public interest.

True

T OR F - According to the narrow view of corporate responsibility, the sole responsibility of corporations or their officers is to serve the interests of those who own the firm— the partners in privately owned companies, the shareholders in publicly traded ones — within the limits of the law.

False

T/F - The gist of the Hand-of-Government argument is that legislation must be passed requiring the managers of corporations to adopt the broad view of corporate responsibility, since that's the only way stakeholders and society generally can be protected against the side-effects of laissez-faire capitalism.

True

T/F - Inside Job takes the position that the financial collapse of 2007 was made possible in part by deregulation of the finance industry.

False

T/F - The executives leading the Wall Street companies depicted in Inside Job managed to wreak havoc on both their own companies and the economy in general, despite the fact that they operated with a broad view of corporate social responsibility.

True

T/F - The purpose of credit-rating agencies — educating outside stakeholders about the creditworthiness of financial products — has been compromised because of incentives to give inaccurate high ratings to the securities issued by their clients, who are the parties paying for those ratings.

True

T/F - Inside Job was critical of Economics professors making hundreds of thousands of dollars as consultants for financial services companies and being commissioned to write papers in service of the interests of such clients, without disclosing these potential inhibitors of objectivity in their analyses.

Wendy's tangible list ("the stuff of life")

life,

physical health and safety,

emotional health and safety,

absence of pain and suffering,

being cared for when we need help,

the skill and knowledge necessary to operate successfully in society,

Social interaction and access to meaningful relationships,

rest

Wendy's intangible list (how we are treated)

Freedom in action and thought,

fairness,

equality,

honesty,

privacy, and

respect for our dignity as persons

A, C, D

Which of the following would Solomon, in "It's good business" agree with? (Select all that apply)

A. In the long run, unethical business practices are likely to damage the interests of the companies or corporate officers who engage in them.

B. While business is an essentially amoral component of society, there is no reason why businesses should not strive make a positive contribution to society.

C. It is the ethical duty of managers to comply, not just with the law, but with basic moral rules as well.

D. There is no intrinsic conflict between ethics and the successful conduct of business.

E. Business is a professional practice set apart from the rest of society, and those participating in it should limit themselves to considering their proper roles as employees.

False

T/F - According to the narrow view of corporate responsibility, corporate officers are free to maximize profits for the shareholders as long as they stay within the limits of the law and refrain from damaging the interests of the other stakeholders.

False

T/F - The broad view of corporate responsibility holds that the primary ethical responsibility of corporate officers is to serve the interests of society at large, risking the profitability of the company if necessary.

True

T/F - Partisans of the hand of government argument think that the narrow view of corporate responsibility typically leads to harmful consequences for stakeholders and the society at large. But rather than shouldering executives with responsibilities that are extraneous to their essential profit-oriented concerns, they hold that stakeholders should be protected against those harms by using the hand of government to impose regulations that would change the "rules of the game", which the narrow view says corporations must follow.

False

T/F - John Mackey boasts that whole foods has been able to engage in philanthropy and promote the interests of its stakeholders while staying committed to the idea that making profits is the primary goal of business.

True

T/F - In SCTWS, Socrates, the venture capitalist, challenges the CEO's claim that whole point of business is to make profits for the owners of the business, as well as her claim that she has not done anything wrong.

True

T/F - Socrates rejects the CEO's claim, that a hospital that is extremely profitable because it skimps on patient care is bad as a hospital but good as a business.

False

T/F - The CEO states that the point of social cooperation is to provide for a better way of life, holding that this includes material comforts, but she denies that fairness, respect, and treating others the way you'd want to be treated are included among the aims of social cooperation.

True

T/F - Socrates suggests that the inordinately high compensation paid to executives is incompatible with Wendy's implicit promise to the shareholders to cut the company's costs whenever possible.

True

T/F - Socrates suggests that Wendy has not fully lived up to the "do no harm" principle she accepts, because of the loss of earnings, unemployment, foreclosures, and economic recession that the risky decisions of her wall street firm had a part in causing.

False

T/F - Wendy is inclined to agree with the claims of cynics like Callicles, that ethics is rubbish.

False

T/F - Psychological egoism claims that human actions should motivated solely by self-interest, while ethical egoism says that human actions should not be motivated solely by self-interest.

True

T/F - Socrates and Wendy end up agreeing with the real Socrates's idea that that vice ends up harming those who engage in it.

True

T/F - The CEO's criterion for something counting as a basic human need is that it be a necessary condition for healthy growth and development and a basic sense of satisfaction or well-being.

False

T/F - Wendy's list of tangible needs includes emotional health and safety, the absence of pain and suffering, and the rest, but not skills, knowledge, social interactions, or access to meaningful relationships.

True

T/F - Moral hazard arises because an individual or institution does not take the full consequences and responsibilities of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to suffer the consequences of the risky actions.

True

T/F - according to the Corporate Culture post on Canvas, good leaders must be perceived as openly engaging in ethical behavior; also important are traits like receptivity, being a good listener, humility, and trustworthiness.

ethical culture

one in which employees are empowered and expected to act in responsible ways, even when the law does not require it.

wendy define's right

actions that respect, promote or defend the satisfaction of basic needs

wendy defines wrong

actions that prevent, interfere with, or make difficult the satisfaction of basic needs

Veil of Ignorance (Rawls)

we are fully knowledgeable about the relevant ways of the world, and allowed to negotiate freely, equally, and rationally in order to find the deal that best serves our interests, but we are guaranteed to be impartial because we do not know any facts about ourselves that could bias our understanding and our decisions.

Utilitarianism

form of Consequentialism, which determines the permissibility or impermissibility of actions based on the good or bad consequences of the actions.

For egoism, only your own happiness matters; for Utilitarianism, everyone's happiness matters.

Difference between utilitarianism and egoism:

Utilitarian Calculus

If we just had enough of the right sort of information — who, exactly, would be benefitted or be harmed by a given action, and how much, exactly — we could make morality into science. We could literally calculate right and wrong.

Utiles

imaginary unites of benefit/harm, pleasure/pain.

hedons

Positive utiles

sadons

negative utiles

Greatest Happiness Principle

Actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness.

Act Utilitarianism

applies the Principle of Utility and its choice procedure to each option in choice situations — as such choice situations come up — in order to determine which act to perform in that given situation.

Rule Utilitarianism

applies the Principle of Utility ahead to time to various types of choice situations and imagined general courses of conduct in them — asking what the consequences would be if everyone adopted a given option whenever that type of choice situation arose — in order to formulate and justify rules that we can use to guide our day-to-day choices as such situations come up.

“vertical dimension”

refers to the total sum of happiness produced by an action or practice: how much happiness comes into the world, irrespective of who gets it

“horizontal dimension”

refers to how widely the happiness is spread around (or how narrowly the harm is confine: how many people are made happier (or less happy)

Justice Objection

Utilitarianism sometimes recommends actions that are intuitively seriously immoral, inasmuch as they involve unfairness, injustice, or violation of rights.

principle of utility

states that an action is good to the extent that it produces beneficial (pleasurable) consequences, bad to the extent that it produces harmful (painful) consequences.

application of the principle of utility

1. All the different choices

2. Weigh the benefits and harm of each choice

3. Choose the one that maximizes the benefits and minimizes the harms.

True

T/F - To apply the principle of utility, one must consider all feasible options in the choice situation, and estimate the harms and benefits that are likely to accrue to all those affected by each option.

False

T/F - While utilitarians place a high value on happiness, they maintain that the morality of an action is more important than its effect on happiness.

False

T/F - For a utilitarian, it can never be morally permissible to cause harm to any of the individuals who are affected by our action.

True

T/F - John stuart mill holds that the value of the general happiness cannot be proven by deriving it from some more basic value, but he holds that it can be shown to be valuable by the fact that people do, in fact, value it.

False

T/F - The value of the general happiness warrants giving everyone equal consideration, which also entails that efforts should be made to make everyone equally happy.

False

T/F - Act utilitarianism is primarily focused on formulating and justifying rules that would maximize social utility if adhered to, so that we would not need to apply the Principle of Utility to each particular choice situation as we encounter it.

True

T/F - Mill emphasizes that deviation from the truth weakens the trustworthiness of human assertions, and thus seriously detracts from civilization, virtue and happiness.

True

T/F - The justice objection claims that utilitarianism is fundamentally flawed, since its choice procedure will sometimes condone injustice, unfairness or the violation of rights.

Optimum profits

the maximum profits that can be made compatible with long-term viability, ethical strictures, and business doing its part in providing the kind of life we want.

Kant's Categorical Imperative

one command that Reason issues categorically or unconditionally. (= moral law)

Universalizability principle

act only on those policies that you can coherently and consistently will to become universal laws -- policies to be followed by everyone

Respect Principle

Treat personhood, whether in yourself or in another, always as an end in itself, never solely as a means.

“dignity”

Treating an individual's personhood "as an end in itself" means treating it as having the highest-priority, intrinsic value that Kant calls _______

- Cannot be lost

- humans have it

“price”

To treat an individual's personhood "solely as a means" would be to treat the individual as having only instrumental value, which Kant eccentrically calls _____

- Can be lost

- humans can't have IT

Moral law

to be understood by analogy with both civic law and natural law, a universal code of conduct binding on all persons

Autonomous being

a self-directed being, one who is capable of being the author or endorser of the rules or guidelines that govern their behavior.

Good will

A will in which the motive of duty predominates over the motives of interest or inclination

Inclination

refers to our spontaneous impulses or whims, where our motivation is not the result of any conscious thought process.