Teaching Business Ethics

Why Warren Buffett is Wrong: False Generalization

2011-12-13T15:40:00.000-05:00

A false generalization occurs when a small sample or an individual sample is thought to represent all examples of the same type. If one energy company (Enron) is found to be corrupt, it is a false to conclude that all energy companies are corrupt. False generalizations are primary mistakes in critical thinking. All students in Business Ethics should be taught to avoid them.

Warren Buffett has complained on numerous occasions that the tax rates for the wealthy are not fair. Here is an account of one such incident, as reported by The Times, on June 28, 2007:

Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent.

This may be an accurate account of his individual circumstances, but it is a gross misrepresentation of reality. Buffett’s salary is $100,000 per year. It is reasonable to assume that his effective tax rate on this part of his income is near the median, approximately 25%. The rest of his income is from the sale of stocks, much of which may be taxed at a rate as low as 15%. The weighted average to salary tax and tax on other income makes his personal effective tax rate between and 17% and 18%.

As for his secretary’s rate, it is impossible under current law that anyone earning $60,000 per year is taxed at an effective rate of 30 per cent. If she is taxed near the average rates for similar incomes the effective rate of her taxes is 17-18%, essentially the same rate as her employer.

Buffett’s case does not demonstrate anything about the overall effective rates of top income earners in the United States. In fact, the top 1% have always been taxed at the highest effective rates. Since 1980, there has never been a year when the top 1% paid lower rates than any other group. Students can check this by researching CBO data.

Buffett’s kind of disinformation based on false generalization inclines us to make judgments and form opinions that have no basis in reality. These are the kinds of errors Business Ethics students should be on the look out for as they develop a critical stance toward the media.

Assignment: Find Examples of Kantian Thinking

2011-12-10T09:06:00.001-05:00

Students should be encouraged to find examples of how Kantian principles are interwoven into news stories and current problems in business and international affairs.

Two recent examples:

1. Corzine's denials before congress in the MF Global case.
By stating that he did not "intend" to use customer funds, Corzine tries to appeal to our Christian/Kantian sensibilities that one's intent -- rather than what one actually actually does -- is the measure of morality. It sounds like he is admitting the he did it, but did not "intend" it.

2. The current negotiations in Europe regarding sovereign debt issues.
In Perpetual Peace, Kant warns against nations incurring debts: "Thus, forbidding foreign debt must be a preliminary article for perpetual peace, for eventual yet unavoidable national bankruptcy must entangle many innocent nations, and that would clearly injure them. Consequently, other nations are justified in allying themselves against such a nation and its pretensions." Currently, nations are forming a pact to follow the spirit of Kant's suggestion. This is also a good example of how Kant's Categorical Imperative, "willing that your maxim should be a universal law," has political implications. One country cannot will that it's monetary and fiscal policies should be an exception to sound policies that should be adopted universally.

Too often, students are given examples or case studies in textbooks and told to analyze them from a Kantian perspective. I have been guilty of this practice. Although this practice has some merit, in that some cases clearly work better for analysis along certain lines, students should be given the opportunity to find their own examples and cases.

The Importance of Confidence and Certainty

2011-08-22T13:50:00.005-04:00

"Why has this [failure to recover economically] happened? Simply because of the fear of American enterprise and the rules upon which it is to be conducted. ...Confidence must be reestablished on a firm foundation by demonstrated fact and understanding as to the objectives and methods before American business can go forward with confidence."

"At present, Mr. Dupont notes, there is uncertainty about the future burden of taxation, the cost of labor, the spending policies of the Government, the legal restrictions applicable to industry -- all matters affecting computations of profit and loss. It is this uncertainty rather than any deep-seated antagonism to government policies that explains the momentary paralysis of industry."

When were the above quotes written? Yesterday, perhaps? No. 1938. The first is by Alfred P. Sloan, Jr., then Chairman of GM. The second from an article in the Washington Post by Anna P. Youngmanis based on remarks by Lamont DuPont, then president of DuPont Chemicals.

Akerlof and Shiller reproduce both quotes on pages 71-72 of their excellent book Animal Sprits (Princeton UP, 2009).

These two quotes call for clarity in "the rules of the game." They do not call for fixing the outcome of the game. There is a big difference. Government's job is to establish the rules, not pick the winners.

For student discussion: Are confidence and certainty important in your own lives? Think about the course syllabus, for example! Is the syllabus clear? Are you confident that you can achieve your objectives in the course? How does the simple case of taking a course compare to the way businesses should deal with government regulations?

As game theory is becoming more important in business ethics, I suspect that getting students to appreciate the importance of questions such as "what game are we playing and why?" will be helpful in teaching business ethics.

Student Life Objectives

2011-08-06T22:07:00.000-04:00

If students were primarily motivated to attain a meaningful philosophy of life, both within the business world and outside of it, teaching business ethics would not be much of a challenge. Nor would "business ethics" be mocked as an oxymoron. As things stand, we must meet students "where they are." It is a mistake to try to move students to your point of view. As William James argued in defense of American pragmatism, the principles of philosophy must have practical application if they are to have any meaning at all.

(Chart: Santrock, John W. (2008) A Topical Approach to Life Span Development (4th Ed.) Boston: McGraw Hill.)

The practical value of moral principles is the same today as it was in Plato's time: although one cannot prove that the cynic is wrong in thinking that the best of all possible worlds is to fool all the people all the time, there are good arguments for believing that adhering to moral principles is much more likely to produce a successful life. Such principles correspond -- in Plato's view and in many contemporary views -- to the natural order of the world and the human soul. Just as in ancient times, the challenge for life is to serve human needs well. It is reasonable to expect to be well-off financially when meeting this challenge. Pointing this out without contentious fanfare might be an easy introduction to the principles of Business Ethics.

Conceptual Space of Financial Crises

2011-07-31T12:09:00.000-04:00

Economic Motives - Rational Responses	Non-Economic Motives - Rational Responses
Economic Motives - Irrational Responses	Non-Economic Motives - Irrational Responses

Using business writers as sources, I have shown previously how mapping the conceptual space in Business Ethics can be a useful exercise. See http://teachingbe.blogspot.com/2008/08/gleanings-1.html

The above chart is based on an idea used in Akerlof and Shiller’s book Animal Spirits (Princeton UP, 2009). Their argument is that conventional economic theory concentrates on the assumptions indicated in the upper left box. Conventional economic theory assumes that people have only economic motives and only make rational choices based on these motives.

Akerlof and Shiller suggest that we ignore the other three logical possibilities in this conceptual space at our peril. We cannot explain economic boom-bust cycles by rational responses to economic motives alone.

For example, one can argue that the housing crisis of 2008 was caused by irrational responses (paying far too much for housing, under the irrational belief that housing prices would continue to increase dramatically) to the economic motive of obtaining shelter.

For teaching Business Ethics, it may be helpful to remind students that the economic models we use as explanations of current social, political, and moral dilemmas are important factors in making moral assessments. If entire systems of thought fall into the irrational response categories, how are we to assess blame? Do we blame irrational home-buyers, irrational mortgage bankers, or irrational buyers of mortgage-backed securities?

What moral and practical principles can we suggest to help avoid personal or corporate “boom-bust” cycles? These might be good topics of discussion in class, once students have been exposed to Kant and Aristotle.

Sampe Business Ethics Essay Question

2011-06-25T00:02:00.003-04:00

This question is designed for my book Introduction to Philosophy, published by Florida State College at Jacksonville. Since the theme of the book is to show how philosophy applies to real-world problems, I thought it appropriate to include a business ethics question. The question is based on the Levi's plant closings that occurred throughout the U.S. and Canada during the 1990s, with the last plant closing in North America in 2003, as described in Shaw and Barry's book Moral Issues in Business. Also see http://stosselintheclassroom.org/video_activityJune08.html.

This would be a good discussion question or essay question for any Business Ethics course.

The Essay Question:

You are new Senior Manager at the Bakersfield plant owned by MM Brands, a major multi-national manufacturer of clothing. Bakersfield is a small city of 40,000 people. The factory employs 400 people most of whom earn low wages because of the low-skill work. At your initial meeting with the plant workers you promise that you will do everything possible to protect jobs at the plant, since everyone knows that there is pressure to outsource low-skill production work. Eight months later, you are told by upper management that the plant must be closed because MM Brands cannot stay in business unless it outsources production work. Competitors have been able to cut their prices by using outsourcing and are gaining against MM Brands. You will be offered a new job at the main MM Brands offices, but everyone else will lose their jobs. Due to your family responsibilities, you decide to accept the new job and you close the plant without fighting for the additional severance pay packages that the workers want. At the new factory in China, workers have 12-hour days and no health care benefits, but most are better off than they were as subsistence farmers. One year after the plant closing one-third of the previous employees report that they were challenged to improve themselves for the first time in lives and have found better, higher paying work. Another third are employed in similar low-skill, low-pay jobs, and the last third remain unemployed.

Evaluate whether or not your own actions and the actions of MM Brands were morally justified according to the theoretical provisions of the following moral perspectives: utilitarian, Kantian, Nietzschean, and Pragmatic. State the main theoretical provisions of each system, how these apply to the specific actions, and the reasoning used to decide whether or not these actions were morally correct according to each system. Next, using the theory of moral pluralism (the theory that each of the main moral systems may be partially true), reach a considered, rational, conclusion about the overall moral correctness of these actions. Finally, suggest ways that the actions might have been altered to ensure a better moral outcome. Based on reasoning derived from a pluralistic approach, suggest several moral rules that should guide the practice of outsourcing in general.

You may find it helpful to research the moral theories in conjunction with the key words "business ethics."

Comments on the question: Obviously, I have stacked the deck toward some very specific kinds of approaches that I would like to see in the answers. I want students to be "forced" to view problems from several perspectives, using the information in the textbook, as well as external sources. For a helpful article on Nietzsche, see http://findarticles.com/p/articles/mi_m1038/is_n3_v40/ai_20141971/?tag=mantle_skin;content

Truthfulness and Traditional Virtues Rank High

2011-02-04T16:01:00.008-05:00

I have posted a number of survey results in this blog. Here is another, done for an Intro Phil course at Florida State College at Jacksonville. Students were asked to select up to four virtues from a list of about 15 virtues. They also rated their agreement or disagreement with a number of other statements. Below are some of the results and my comments, as posted in an announcement to the class. (SA = strongly agree, A = agree)

Values chosen by this class:

Truthfulness  81%
Humility      52%
Wisdom        48%
Courage       48%
Justice       33%
Care          29%

The following statements showed clear favorites for answers:

You should not criticize the values of another culture. 67% SA or A
Certain acts are intrinsically morally wrong.           95% SA or A
It is wrong to treat a  person like a thing.             96% SA or A

The answers to the remaining questions presented to the class, such as those about homosexuality or morality being based on God showed a broad spread of views, reflecting uncertainty about the issue.

Comments: The philosopher Huston Smith has written a number of books about universally-shared values. He came to the conclusion that truthfulness, humility, and charity are the three most common values supported by the world's major religions. Charity got 19% in our survey. The virtues at the top of our list show a strong preference for the traditional Seven Virtues.

Most of you fully agree with Kant that it is "wrong to treat a person like a thing."

On the other hand, if you agreed that "you should not criticize the values of another culture," you are disagreeing with many, if not most, philosophers. Western philosophy started as a criticism of culture! Socrates and Plato sought to question the values of all cultures, their own included.

Student Research - Types of Capitalism

2010-02-03T08:13:00.006-05:00

I have occasion to revisit my initial post on 5 types of capitalism (http://teachingbe.blogspot.com/2008/07/5-types-of-capitalism.html).

I received two responses to this post:

1. "In describing China's up-and-coming form of Capitalism and the several unjust practices it brings with it, the writer described so much of the "American Stile".

My Response: This is a kind of "moral equivalency" argument that the Left has been using for decades. On the other hand, I deserve some criticism for pouncing on China, simply describing what I think are its faults and not rounding out my concept. Essentially, I was pointing to two kinds of "fifth" forms of capitalism.

First, the current "organizational narcissism" Zuboff mentions that may give rise to a "fifth" form, the details of which are unclear (to me at least).

Second, something akin to National Socialism (Nazism, in the strict economic sense) but fueled with political and military power (Nazism in the cultural/political sense) may end up being the "fifth" form of "capitalism." (Although in my view such a state of affairs hardly deserves to be called "capitalism.")

To some limited extent, we see this developing in the U.S. in the form of hyper-welfare state capitalism combined with moves to nationalize the insurance industry. We do not see, as my critic would have it, any lack of individual liberties or new waves of racism, or any kind of imperialism developing in the U.S.. Citizens in the U.S. are clearly opposed to severe abridgements of liberty, racism, and imperialism. No amount of invective from the Left will change this basic fact of American life.

In China, on the other hand, we see forced labor camps, population control, conscription of under-age athletes, limits on free speech, and a host of other violations of human rights, not to mention one-party rule.

My main point was that IMHO democracy and capitalism need to inextricably linked, just as Kant's notion of humanity needs to be linked to practical utilities and human creativity. I don't look forward to a day when non-democratic nations are hailed as models of capitalism.

2. "Thanks. this would be very helpful in my report tomorrow about capitalism and its type. Could you give me links that would could help me in my topic tomorrow?..thanks!"

My Response: Sorry, I don't have anything specific to recommend aside from Shaw and Barry's treatment of the four forms of capitalism in their book Moral Issues in Business. In any case, doing your own research first is always best! Never accept the what you see on this blog or any other Internet resource at face value!

That said, I see that the wikipedia entry on "mercantilism" appears to be quite good and includes the reasons for Smith's repudiation of it. People who argue for protectionism (tariffs on foreign goods) today usually show no understanding of this historical dialogue.

The wikipedia entry under "welfare capitalism" shows the effect of transfer payments, but one has to be careful with such "data." What is the effect morally and psychologically of transfer payments? This moral/psychological effect is one of the concerns of a global business ethics -- an ethics yet to be developed.

Copyright Infingement: Deep Framing

2010-01-31T12:42:00.003-05:00

Below is a copy of an email I recently sent to a new course creator for Mindtools.net. It is a useful reminder and a good discussion starter for students. Most instructors will easily be able to find examples of infringement in courses at their schools, since disregard for deep framing is common.

Just a reminder to course builders.

The word is "deep framing". It means that when you construct an online course, you put in a page from ANY OTHER WEBSITE MATERIAL ON THE INTERNET OF ANY KIND into your own course by copying it or by causing the Learning Management System to display it as if the page were part of the course itself.

DEEP FRAMING is copyright infringement. By default, ALL materials on the Internet are copyrighted. Very few items are not under copyright, including emails.

Instead of DEEP FRAMING, simply write something like "read paragraphs 2 and 3 on the following web page: http://xyzqrs.com".

You may forward this message to anyone! (It IS copyrighted by me, Anthony Birch (tbirch@gis.net), but with this message you are free to use it, copy it, and forward it.)

Reputed Values vs. Real Values

2010-01-24T13:23:00.003-05:00

I have been very remiss in posting to this blog due to my involvement with the Introduction to Philosophy book for Florida Community College at Jacksonville, due to be published in the Spring of 2010.

A topic came up two days ago: what are the real vs. the reputed values of the majority of people? I suggested that the three values I identified in my WizIQ presentation (truthfulness, humility, and charity, based on Huston Smith's appraisal of world religions) reside at the core of human aspirations and probably practice. My interlocutor suggested otherwise. People may want to live according to such virtues, but ever since Reagan (approximately), our culture has shifted to the Ayn Rand individualist/egoist type. As a result, people in the real world of business people rarely act according to religiously-inspired values. Laissez-faire values rule.

I thought of my Global Business Ethics Quiz (http://www.mindtools.net/cgi-bin/quiztest.cgi?globalethicsquiz). I wondered how it was doing, since it had been at least one year since I looked at its data. I imagined all sorts of inspiring input!

Much to my chagrin, I found the database corrupted with links to ads!

Well, the quiz was quite biased in that it makes very leading suggestions as to virtues in any case. Also, my friend has a point: it is the way in which people actually act that matters. What can we discern from the behavior of businesses?

Nevertheless, I reviewed what data there were regarding my quiz. Utilitarians are in the distinct minority! Most people adhere to Kantian/Christian values in the scenario provided (which is not much of a business scenario). I note that integrity, faith, and truthfulness lead the list of characteristics needed in business, with only one entry for self-interest out of some 50 responses.

For those of you teaching business ethics, I suggest you ask (again, as I have urged many times in this blog) for your students to do self-appraisals, but to also couple this with appraisals of ACTUAL business practices. Ask them what suggestions they have for bringing any disparities in these realms together.

Anyone who wants a copy of the data, just contact me.

Deconstructionism

2009-11-24T10:31:00.003-05:00

Chris Hedges, in Empire of Illusion, writes about philosophical forces at work in higher education which undermine the Good: “English professors, who see novels divorced from society, speak in the obscure vocabulary of deconstructionism, disempowering and emasculating the very works they study. Writers from Euripides to Russell Banks have used literature as both a mirror and a lens, to reflect back to us, and focus on, our hypocrisy, moral corruption, and injustice. Literature is a tool to enlighten societies about its ills. It was Charles Dickens who directed the attention of the middle-class readers to slums and workhouses of London. It was Honoré de Balzac who through the volumes of his Human Comedy, ripped open the callous heart of France. It was Sinclair Lewis who took us into the stockyards and shantytowns of Chicago in The Jungle. In the hands of academics, however, who rarely understand or concern themselves with the reality of the world, works of literature are eviscerated and destroyed. They are mined for obscure trivia and irrelevant data. This disconnect between literature and philosophy on the one hand and the real on the other is replicated in most academic disciplines. Economists build elaborate theoretical models yet know little of John Law, have never closely examined the tulip crisis, and do not study the railroad bubbles or the deregulation that led to the Great Depression.” (From Page 97, Empire of Illusion, Chris Hedges.) As students, we have to be on guard that the very essence of what higher education brings to advance the Good (the liberal arts) is deconstructed and rendered inert, at the very least.

Principles as Heuristics

2009-08-14T07:23:00.003-04:00

"The more complicated the situation, and the less we really know about it, the more insistent is the orthodox type of moral theory upon the prior existence of some fixed and universal principle or law which is to be directly applied and followed. Ready-made rules available at a moment's notice for settling any kind of moral difficulty and resolving every species of moral doubt have been the chief object of the ambition of moralist."* -- John Dewey

This admonition from John Dewey is something to take to heart in the study of Business Ethics. Dewey recommends that traditional theories be treated as heuristic devices that will stimulate the production of new heuristics for new situations. Inflexible principles are to be avoided. At the same time, there is no reason to suppose that this will mean a decent into chaos. A universal, impersonal, outlook will always be a part of rational solutions.

In our time, as we attempt to develop global perspectives, Dewey's advice could not be more appropriate.

Reference:
Dewey, John (1929). Human Nature and Conduct. Page 220.
*The last 5 words involve some sort of error. Perhaps a missing word? "...of the ambition of THE moralist."

The Problem of Business Ethics -- again

2009-08-08T09:19:00.011-04:00

At the beginning of the course it's always a good idea to discuss the limitations of subject matter.

The Acton Institute has an interesting website and an associated blog, which recently posted some insightful comments on business ethics, pointing out the limitations of such courses. I responded to some of the issues raised by that post.

While I think it important to make students aware of ethical objectivism (ethical realism) as a way of understanding the scope of ethical theories, one must also be realistic. Without descending into absolute relativism, it is possible to acknowledge the limitations of theory while defending against overt violations of the principal -- flawed -- theories that have guided the West (utilitarianism, Kant, Rawls, virtue ethics, prima facie duties). The theories we have appear to be, as Hinman has observed, partially true. I think more business ethics courses need to acknowledge this kind of limitation.

What then will be the point of Business Ethics courses? Many may cringe at the thought that one of the main points -- as I believe -- is exposure to theory. It is to show students how to start thinking about problems. Not about solving them permanently -- nor about falling back into relativism.

In addition to this, business ethics should also address the problem I have mentioned at the outset of this blog: the integration of moral values (the work/home "gap" in value systems). To a certain extent, this can be presented objectively, as D'Souza has discussed and I commented upon (the presentation does not start until slide 7).

More Exercises: Student Surveys

2009-08-06T22:07:00.006-04:00

Surveys should test fundamental moral intuitions about problems that can be elucidated through further study.

Hinman's surveys meet this criterion. Students should be able to see the results for their group (class/university), as well as for a larger pool (the U.S.) after completing the poll. (Hinman's surveys currently seem to have a problem, since the "results" just show an error page.)

Here are some survey questions I proposed for the surveys to be incorporated in the book I am helping with for FCCJ:
1. What is "true" is just a matter of personal opinion
2. The only real source of knowledge we have is science
3. Faith and the Bible provide the most important knowledge
Students answer on a 5-point scale (strongly disagree to strongly agree). The questions are for a unit on epistemology.

Students should be encouraged to re-take the survey after the unit or near the close of the course. They should comment on which views have changed and why.

I have found that views do not seem to change much, particularly among adults who have mature ethical-intellectual outlooks. However, this does not count against the utility of surveys. Their value is in bringing central questions to light and ultimately -- after reading texts and discussing their views -- in causing students to be aware of the theoretical underpinnings of their pre-reflective views.

Beginning Exercises

2009-08-06T19:14:00.004-04:00

There is always a question about how to spend the first few hours of any class. I have mentioned surveys several times in the past. These reflect personal views -- but what about publicly expressed moral views? There are some: church bulletins, cartoons, editorials, newscasts, as well as public iconography that embodies or expresses moral sentiments. After visiting the Georgia Guidestones recently, it occurred to me that it would be an interesting exercise to have students find and comment on public expressions of moral sentiments or moral thought. I have been told that Yoko Ono likes these stones...any higher possible accolade?

Health Care Debate as Example

2009-08-03T09:14:00.009-04:00

Sometimes Business Ethics and Public Policy Ethics are taught as a single course. Since the two areas are hopelessly intertwined at this point, it is almost makes no sense to treat one without the other.

In any case, I have been thinking lately that the easiest way to introduce how NOT to think through ethical problems is most easily demonstrated by observing public policy debates.

Any highschooler ought to be able to see that a rational approach involves steps like the following. The failure of our media and political pundits to make it through step one explains the why nothing is being accomplished except demonization of the other side.

1. Gather the facts and have everyone agree on the pertinent facts.
See wikipedia listing on numbers for starters.

2. Agree on the nature of the problem.
In this case, one central issue is "what to do about providing health insurance assistance for American citizens (not any illegal aliens) who, by some reasonable standard, really both want and need such insurance"? The preferred procedure would be to assign in advance "reasonable standard" (e.g., 0 to $20,000 real income). This is part of the "original position" technique recommended by Rawls. Once that is done, look at the data, including current costs and healthcare options available. The standard can be adjusted based on, but not necessarily restricted by, current evidence. (It looks to me that about 10.6 million Americans may need some form of assistance. See Hennessey link).

See Keith Hennessey's excellent analysis of the is problem. This demonstrates how a problem is to be broken down into components. His analysis shows that the problem resolves into separate ethical questions for each group affected by a proposed public policy.

3. Order the values.
Which value is higher: liberty or the prima facie duties we have to protect and nurture others (beneficence), esp. with regard to health? Both Ross and Kant, not to mention Christianity, support such prima facie duties.

One problem is that this question is not put forward in such stark fashion in the health care debate. (It helps to put it into stark fashion even if it is unanswerable in abstract terms.)

It seems to me that proponents on each side of the healthcare debate simultaneously a) utilize our inherent tendency to support one of the these values and b) demonize the other side for apparently rejecting it.

For my part, liberty has the edge. Even if it results in inferior overall healthcare, liberty (i.e., choice, competition) must be maintained. By "inferior," I do not mean drastically or terminally inferior, but "somewhat" inferior in certain respects, such as higher costs or a failure to address certain, limited, kinds of healthcare issues.

Conservatives are apparently unwilling to make this pronouncement, but they do appeal to liberty without stating that it is the "trump" value.

Liberals appeal to the beneficence value, without acknowledging that it is already being met through emergency room care and that conservatives do not reject it, but merely seek to balance it with liberty.

4. Check for egregious violations of core pluralistic principles (utility, Kant, Ross, Libertarian, modified Rawls).

5. Make proposals.
For a sketch of ideas see http://keithhennessey.com/2009/07/17/hennessey-health-plan/

Charles Landesman (my dissertation advisor) suggested that we adopt something like what was suggested by Milton Friedman: ensure that everyone has the ability to buy a very high deductible plan (say, $4000). So, I say let's just abolish employer-provided health care and make it a law that all major health insurance companies must provide a $4000 deductible plan to individuals. Let the insurers decide what to cover. Let individuals buy insurance across state lines and put limits on malpractice suits. I would think that "the public option" is just a non-starter for any serious American solution that has any regard for liberty -- but this should not limit classroom discussion about the merits of other systems. A good friend of mine pointed out that Denmark has a healthcare system that consumes a mere 6% of GDP. This is worth investigating. But conversion to socialism requires a plebiscite and a series of constitutional amendments, not a bill.

Quiz Results

2009-08-03T08:10:00.002-04:00

Time to report on the online quizzes I have had running for some time:

Globalization I.Q. Quiz
Average continues at about 58%, up from 56% since Sept. 2008.

Global Ethics Survey

1. Single most important character traits suggested by respondents shown below. Number of duplicates are shown after responses. Program counts Capitalization or alternate spellings as a separate response. Integrity (5 total leads the list), with truthfulness also often chosen.

enthusiasm
Integrity 2
truthfulness
temperance
courage
determination 2
fairness
faith 2
flexibility
hope 2
humility
integrity 3
leadership
optimism
patience
perseverance
profit
prudence
responsible
self-interest
thoughtfulness
truthfulness 3
wisdom 2

2. Tally of answers to row boat problem. Answers indicate the strict utilitarians ("the genius" response) are relatively few.
coin flip 20
share 21
genius 13

3. Suggestions and comments on quiz left users:

a. Questions users would like to see:
questions on reasoning ability
question about "why are you in business"
questions about poverty

b. Critical Comments:
"I am looking for more questions in the survey as it is very difficult to judge anybody just by his approach to these questions. "
"What do the results of this quiz mean?"
"In a global business environment consisting of many cultures, can there be such a thing as "ethics"?

Repost: Credit Crisis - worksheet and video link

2009-07-15T20:53:00.004-04:00

I am reposting some information here because I just reviewed my video "answer" to this problem or exercise. As I suggested in the original post the worksheet is just a starter and any classroom discussion would likely come up with much more than I included on the video.

I must say, I appear to be rather calm in this video...and now as our nation crumbles before our eyes, I wonder how I did it.

The worksheet:
http://www.teachingbe.blogspot.com/2008/11/exercise-looking-at-credit-crisis.html

The video:
http://www.youtube.com/watch?v=aYodJmaT8Do

Pre and Post Inventory - Apart from Theory

2009-05-16T10:15:00.004-04:00

I have mentioned before the value of pre-module and post-module value inventories. One way is to do inventories is to use survey questions on a contemporary issue prior to the module. Another is to ask students to order values or principles prior to readings.

Here is an example exercise I am working on now:
Of the following values or characteristics, which four would you select as the best to have for leading a good life?
Truthfulness Courage Justice Wisdom Hope Faith Moderation
Charity Industry Humility Self-Reliance Sympathy Friendliness
I have included the 7 classical virtues plus some of the business values that have been volunteered in my business values survey. (Take the 3-Question, 1-minute Ethics Survey by clicking HERE.)

Recently, it's been recommended to me that in approaching real world problems it is best to set "philosophical ethics aside," thinking of theories only as useful guidelines rather than inflexible rules. This corresponds, in some measure, to the pluralist approach I have been recommending via my WizIQ presentations, but goes beyond it in its pragmatism. Naturally, in a course one must teach theory -- and this is about all one can test students on -- so this view creates a bit of a dilemma as far as teaching goes.

Combining these ideas: let students develop and express their initial, pre-theoretical, pre-reading reflections so that they can incorporate these into their final reflections on theory and their ultimate approach to problems. Remind students that although we need to have theoretical knowledge, theories will fall short in many cases. As Aristotle reminds us: practical wisdom is something that is not a matter of content or theory, but a matter of deliberation in context.

Reasonable Expectations: Modest Gains and Transparency

2009-05-06T22:32:00.005-04:00

The above shows the S&P 500 for the last 14 years. The first vertical on the left is 9/01/1996. The lowest point between the two peaks occurs at 9/01/2002. The extreme right terminates at 5/01/2009.

When Charles Schwab appeared recently on CNBC he began the interview by acknowledging that investors have experienced a lost decade. His solution for restoring faith in the market? Ethics. Transparency. And customers first.

No need to elaborate on Charles Schwab's advice. But there is need to elaborate on reasonable expectations. A look at the chart tells why. In about 6 years, from the lows of late 2002 to early 2003, the market valuation of the S&P almost doubled. That's about 12% per year. Clearly unsustainable for an extended period. About 2006, some market watchers began warning that 3 years without a major correction was extremely rare. Well, we got the correction -- and then some. A reasonable positive expectation (I think) would be to return about half of the last precipitous drop within the next couple of years, to about the 1100-1200 level on the index.

Unlikely Sources

2009-02-05T07:53:00.008-05:00

1. I have mentioned before that students (and profs.) might seek inspiration, solace, and even fundamental ideas about economics in music.

Last nite I saw Gluck's marvelous one-act opera Orfeo ed Euridice though Fathom Events (a great invention of capitalism!). The final chorus, in the surprise ending to this story of Orpheus (who must retrieve his wife from Hades) is:

"Let Love triumph throughout the world, creating a realm of beauty."

See libreto here. (The Met's translation differs from this source, and was something like what I have quoted above.)

I suspect that not a few in business and commerce want to see a higher level of integration in values among the various roles that contemporary life seems to force on us. Such powerful sentiments (need I say valid Ideals?) want an outlet.

2. Aquinas addresses some of the fundamental issues of capitalism -- or at least ownership and the disposition of goods -- in ST II-II, Question 66, Second Article.

While many seem to think the even the idea of private property is contrary to the intent of Christianity and natural law, Aquinas disagrees. He sates:

"Hence, ownership of possessions is not contrary to the natural law but an addition thereto devised by human reason."

Aquinas distinguishes between "procuring and dispensing" goods and their proper "use" or final ends. Fair procurement may be gained through individual labor and for one's own benefit, but fair use should be for the benefit of all. Aquinas even warns of the problem of communism: people shirk their work if they think it is "for the community." May be a good resource for students wishing to pursue how religious, practical, and economic values could be integrated.

A Problem with the Prisoner's Dilemma

2009-01-16T18:56:00.004-05:00

Met Michael Borsodi at the Brenau conference. He quickly pointed out a problem with the prisoner's dilemma: the problem assumes a single agent (conscious person) is engaged in the game from beginning to end.

As previously posted, rational arguments, game theory, and studies show that a strategy of short term gains is self-defeating and does not lead to market efficiency and the best outcome for all.

In a corporate environment, however, someone who is looking for short term gains may not be the same person who has to play the game "to the end." Lapses in corporate oversight, or spontaneous outbreaks of greed, make make it possible for managers or corporate leaders to pursue a strategy of short-term gains for a limited time. Eventually, the corporation and other players will pay for it, but the deviators from an optimal strategy may remain unscathed.

A corporation is a legal fiction, a pseudo-person with no continuous conscious knowledge of motives and underlying goals. This makes the application of the prisoner's dilemma questionable in business contexts where corporations are the "agents." This type of critique fits in well with similar critiques, for example, those that point out that Kantian ethics also assumes a kind of conscious agent that does not match corporate structures.

Online Instruction: Random Tips

2009-01-16T18:20:00.004-05:00

Attending the annual Brenau University conference on online education has yielded a wealth of useful tips and ideas. Among them, in no particular order:

1. Use dimdim.com to share a white board. If voice and video is too much for your set of Internet connections to handle simultaneously (very likely if many nodes and international in scope), use a regular conference call for the audio portion while dimdim handles the visuals.

2. To avoid all of YOUR time being consumed by answering emails and posts day and night, set up a schedule for yourself (say, 9-5) and stick to it. Let students know that this is your schedule and that you will answer emails, grade, and administer the course normally during those times only. Naturally, phone calls are accepted outside of those hours for emergencies, etc. I have heard that students will be respectful of your time and adjust their expectations for course interaction accordingly.

3. Make sure the technologies you are using (wikis, videos) in assignments actually match your learning objectives. No sense in requiring technology that has no educational purpose. Example: wikis are ideal for group projects, less useful for individual reports.

4. Don't write quizzes using BlackBoard's interface. Use respondus.com.

5. Online tests and quizzes that fail to respond to student inputs are a common problem. To avoid the problem of essay questions timing out online due to ISP protocols, use a timed assignment (drop box) instead. For a two hour exam, cause the assignment to appear at the exam time, and to be due 2 hours later.

6. Let students learn on their own and then teach each other what they have learned as part of an assignment. Example: one student learns how to make and post a video, another learns how construct a wiki. Together, they create a wiki with videos.

Looking Forward to 2009

2009-01-04T10:17:00.006-05:00

Predictions for 2009 and beyond from today's McLaughlin Group show include:

1. The end of Globalism and the beginning of nationalist protectionism. McLaughlin argues (much as Ambassador Mousnier) that the U.S. will come to realize that you cannot continue to export manufacturing jobs overseas without impoverishing the very middle class that makes it possible for the U.S. to buy the exports from other countries, which make a global economy possible.

2. Monica Crowley suggests simultaneous increases in spirituality and terrorism. Parallels idea (mentioned in this blog? -- if not, should be) that globalization creates existential fear, existential fear leads to existential flight, and flight leads to false identity (Sartre's basic argument). False identity surely takes its most destructive form in terrorism.

3. Death of Capitalism and beginning of Managed Capitalism. So says John McLaughlin. Is this different than what we already have? We shall see. Obama's early autobiography indicates he does not understand "solutions" in terms of enabling ideas that will help people transform their own lives, but rather in terms of "programs."

While most see 2008 as a financial disaster, I see it as a return to more realistic expectations. Not that I wasn't deceived and over-optimistic about continued increases in stock market values! But the RESET button has been pushed. Essentially, inflation-adjusted incomes for all income groups are flat to down since 2000 (see http://www.census.gov/hhes/www/income/histinc/h03AR.html). Need to check this, but surely there have been other periods besides the Great Depression where total wealth and incomes have remained static in the U.S. But this is hardly the point from a global perspective. Look at the huge increases in wealth and well-being during the last 8-10 years in India, China, and many other places in the world!

Learning the Language of Moral Arguments

2008-12-18T13:48:00.004-05:00

For the most part, my students have been excellent in terms of presenting clear and logical views. Usually, after a number of weeks of practice, they express moderate views, supported by one or more moral principles or theories.

This stands in stark contrast to most public debate. A useful exercise for students might be to find position statements that are examples of either good or bad practice. Students would post their findings and provide critical comments.

Good
"Global warming may or may not be a problem. Man may or may not be driving it. Given the uncertainties, a significant amount of global regret may apply if we divert too much of our global wealth to solving what may be a non-existent or trivial problem, especially if that diversion mires billions in poverty. On the other hand, we may also regret not doing anything if man-made global warming does turn out to be a problem. It is therefore prudent to examine what steps we can take that would prove beneficial whether or not anthropogenic global warming turns out to be a problem. These steps can be termed "no regrets" policies.
What makes a No Regrets Global Warming Policy? A global warming policy can be termed "no regrets" as long as it

Reduces the amount of greenhouse gases emitted into the atmosphere, or

Mitigates, prevents or reduces a harm associated with global warming, or

Provides greater capacity for dealing with problems associated with global warming

Without imposing significant cost or diverting economic activity. "

Source: http://www.globalwarming.org/solutions

Poor
"With less than two years remaining in the President's term, the Bush Administration is escalating an all-out effort to cripple our environmental laws and plunder our natural heritage. ...The Administration is putting radical new policies in place that will let its corporate cronies poison our air, foul our water and devastate our wildlands for decades to come."
Source: Letter from National Resources Defense Council (mass mailing piece)