Business Ethics Study Guide
Definitions/Distinctions| Philosophy (Rand)| The study of the existence, of man, and of man’s relationship to existence. | Justice (Rawls)| Justice is the principle that free and rational persons concerned to further their own interests would accept in an initial position of equality as defining the fundamental terms of their association. Greatest benefit to the least advantaged. | Moral philosophy vs. Moral Psychology| Moral philosophy: How people SHOULD behave in moral situationsMoral psychology: How people DO behave in moral situations| Consequentialism vs.
Non-Consequentialism| Consequentialism: Decides what’s moral based only on the consequencesNon-consequentialism: Considers both the means and the consequences in order to make moral decisions| Negative Rights vs. Positive Rights| Negative: The right to pursue somethingPositive: The right to something| Employee Rights vs. Employee Benefits| Rights: Compensation or conditions that would be unethical for any employer to withhold from employeesBenefits: Compensation of conditions that an employer offers to employees voluntarily| Utilitarian vs.
Rights Justifications of Capitalism| Utilitarian: Capitalism is the economic system that best maximizes the common goodRights: Capitalism is the only economic system that respects fundamental human rights, such as property rights and freedom of association| Value (Rand)| Reason, purpose, self-esteem| Virtue (Rand)| Rationality, productiveness, pride| Rights (Rand)| A moral principle defining and sanctioning a man’s freedom of action in a social context| Subjective Egoism vs.
Objective Egoism| Subjective Egoism: Decide what’s moral based on what’s good for you in the short run, and states that humans are fundamentally different, therefore you CANNOT judge each other. Some choices don’t require reason and may be fueled my powers the mind might not know of. Objective Egoism: Decide what’s moral based on what’s good for you in the long run, and states that humans are fundamentally the same, therefore you CAN judge each other. ALL choices are guided by reason alone.
Allowing the heart or any other power to fuel decisions can lead to disaster. | Absolutism vs. Relativism| Absolutism: Some moral rules stay the same through time and space. There are absolute moral rules to which we must adhere to and particular situations, people, or places do not affect moral truths. Relativism: Morality itself changes through time and space. Morality is relative to particular cultures, groups, or even individuals. Everyone must decide their own values and ethics. | Collectivism vs.
Individualism| Collectivism: Humans are fundamentally members of groups; emphasize collective purposes over personal goals and group harmony over individual achievementIndividualism: Humans are fundamentally individuals who can join groups; responsible primarily to themselves and their immediate families| Price Gouging (Zwolinski)| A practice in which prices on certain kinds of necessary items are raised in the wake of an emergency to what appears to be unfair or exploitative| Hypernorms (Donaldson and Dunfee)| Principles so fundamental to human existence that they serve as a guide in evaluating lower level moral normsReflected in a convergence of religious, philosophical, and cultural beliefs| Authentic Norms(3 conditions)| 1. Compliance is approved2. Deviance is disapproved by most3. Almost everybody does it (well over 50%)| Methods of Paying Sweatshop Workers(3 positions)| 1. Home country standard2.
Living wage standard3. Classical liberal standard| Corporate Social Responsibility)| The actions of an organization that are targeted towards achieving a social benefit over and above maximizing profits. It is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large. | Ethical Theory QuestionsBe able to write a cohesive essay about any of the six ethical theories covered in class, including answers to the following questions. | How does Rawls define justice? What is the veil of ignorance?
What are the characteristics of people in the original position? What method does he think people in the original position will use and why? State and explain Rawls’ two principles of justice. What is the difference principle? What are the two key problems with Rawls’ theory? | Justice is defined by that which provides the greatest good for the greatest number of people. A characteristic set of principles for assigning basic rights and duties for determining what they take to be the proper distribution of the benefits and burdens of social cooperation. Something that benefits many people while sacrificing some is NOT just. The veil of ignorance is an imaginary mechanism that strips you of your biases.
The characteristics of people in the original position are: Instrumentally rational and mutually disinterestedDo not know:· Their place in society· Natural assets and abilities· Conceptions of the good, psychological propensities, and generationDO know:· Principles of economic theory and politics· Basics of social organization· Laws of human psychologyThe method people in the original position will use is the two principles of justice. The first principle guarantees the equal basic rights and liberties needed to secure the fundamental interests of free and equal citizens and to pursue a wide range of conceptions of the good.
The second principle provides fair equality of educational and employment opportunities enabling all to fairly compete for powers and prerogatives of office and secures for all a guaranteed minimum of the all-purpose means (like wealth) that individuals need to pursue their interests and to maintain their self-respect as free and equal persons. Rawls’ Two Principles of Justice: 1. Each person is to have an equal right to the most extensive basic liberty compatible with a similar liberty for others 2. Social and economic inequalities are to be arranged so that they are both to the greatest benefit of the least advantaged and attached to offices and positions that are open to all under conditions of fair equality of opportunityThe difference principle is the greatest benefit to the least advantaged.
The two key problems with Rawls’ Theory are the Process (morality by agreement) and the Normative Aspects (unrealistic) of the 2 Principles themselves a use of social contract and content of the original position| Name and explain the three main principles of Nozick’s Entitlement Theory. Which of the three is most important in business today and why? What does Nozick believe is humans’ fundamental right? Explain 1) a historical vs. an end-result principle of distribution, and 2) a patterned vs. an un-patterned principle of property rights, and how they fit together; state which he supports. Explain negative and positive rights. Which does Nozick promote and why? | Force: the use or threat of physical forceFraud: getting someone to do what they otherwise wouldn’t do by misinformation or by withholding informationNozick’s Entitlement Theory: 1.
Justice in Acquisition: the process of getting something previously unowned or out of nature 2. Justice in Transfer: The process of getting something previously owned or making something out of other things 3. Rectification of Injustice in Holdings: Righting a wrong that, in history, was caused by force or fraudJustice in Transfer is the most important in business today because the means of transition from one situation to another specified by the principle of justice in transfer are justice-preserving, and any situation actually arising from repeated transitions in accordance with the principle from a just situation is itself just. Nozick believes that freedom from force and fraud is a human’s fundamental right. 1.
Historical Principle of Distribution: whether a distribution is just depends on how it came about VS End-Result Principle of Distribution: Whether a distribution is just depends on whether it fits some structural principle (Utilitarianism judges the justice of a distribution according to the total amount of happiness that results) 2. Patterned Principle of Property Rights: natural or moral distribution (distribution of goods is only just if it meets a particular pattern) VS Un-Patterned Principle of Property Rights: constantly changing Nozick supports historical and un-patterned * Negative Rights: the right to pursue something * Positive Rights: the right to something Nozick supports negative rights because positive rights infringe on negative rightsProblems: Not a complete system, supporting arguments for property rights aren’t fully developed, and what date does entitlement start? | What is the goal of utilitarianism?
Generally, how does a utilitarian make decisions? What factors are included in the utilitarian equation and why? Explain in detail some of the benefits, and some of the problems with the theory. | “What’s good for everyone, including me? ”The goal of utilitarianism is to maximize the common good. Maximize happiness, not distribute it. Contrasts to Rawls – sometimes redistribution maximizes the general happiness, but the least advantaged are worse off. One measures the consequences of each individual action according to whether it maximizes the good. A utilitarian makes decisions by having at least two alternatives and figuring out which option achieves the best consequences.
It is important that the means to happiness should be distributed in some ways and not others (choose to give $500 to two men rather than $1000 to one and $0 to the other because it maximizes happiness). Utilitarians act in a sentiment of generalized benevolence. They will contemplate some sacrifice to certain individuals for the sake of the greater good of all and may allow certain limitations to personal freedom. Self + Close relationships + Everyone else affected by the decision are included in the utilitarian equation because everyone else including oneself are at stake when decisions affect us. By maximizing the common good, the self can be worse off. The benefits of utilitarianism are… Egalitarian consequences * In most cases, equal distribution of the means to happiness will be the right utilitarian action * Different from Rawls – it’s okay to reduce liberty to save most of society (nuclear war: reduce liberty of 1% to reduce danger)The problems with utilitarianism are: * The least advantaged could be worse off * Measurement problem: some things can’t be measured and some are more conducive to the general good than others * It does not matter in what way happiness is distributed, provided that the total amount of happiness/goodness is maximized * The Reference Problem: unnatural/immoral * The Rights Problem: doesn’t recognize human rights * Cardinal vs. Ordinal numbers * · Data gathering would be unlimited| Explain the difference between subjective egoism and objective egoism and state which Rand supports.
Outline briefly Rand’s metaphysics, ethics, and politics. How does Rand define “value” and “virtue”? What does she consider to be humans’ three cardinal values and virtues? What does she say about happiness and justice? How does she define rights? What is the key difference between Rand’s Objectivist approach and a rights-based approach to ethics? | * Subjective Egoism: Decide what’s moral based on what’s good for you in the short run, and states that humans are fundamentally different, therefore you cannot judge each other. * Objective Egoism: Decide what’s moral based on what’s good for you in the long run, and states that humans are fundamentally the same, therefore you can judge each other.
Rand supports Objective Egoism because man has the liberty to live their life in any way they choose and that nobody should interfere and tell them what they can and cannot do. However, there are consequences and people should be held accountable for them. Subjective is rejected because, although individuals are free to do as they please, they don’t think they should be held accountable for their actions. They believe some choices do not require reason. * Metaphysics: What is the nature of reality? supremacy of actual living over all other considerations * Ethics: How should I conduct myself? code of values to guide man’s choices and actions that determine the course of life * Politics: How should we conduct ourselves in society? aissez-faire capitalism with a separation of state and economics * Value: That which one acts to gain and/or keep reason, purpose, self-esteem * Virtue: The act by which one gains and/or keeps values rationality, productiveness, prideThree Cardinal— * Values: reason, purpose, self-esteem * Virtues: rationality, productiveness, prideHappiness is the greatest moral goal and is the successful state of life. Justice is the recognition of the fact that you cannot fake the character of men as you cannot fake the character of nature. Every man must be judged for what he is and treated according, rationally, and with respect for truth. Rights are a moral principle defining and sanctioning a man’s freedom of action in a social context.
The only ONE fundamental right is a man’s right to his own life. Life is a process of self-sustaining and self-generated action. The concept of “right” pertains only to action—specifically, the freedom of action freedom from physical compulsion, coercion or interference by other men. The key difference between the Objectivist approach and a rights-based approach is Rand focuses on self-sustaining, self-generated, and freedom from the claims of others. A rights-based approach is claims against others to be treated in certain ways and generate correlative duties on the part of others. Objectivism is consequentialist while Rights is Deontological (duty).
Problems: benevolence and charity are less important virtues, and the “is-ought” problem| Why is Donaldson and Dunfee’s theory called 1) “integrative” 2) “social contract” theory? Explain the three factors that contribute to bounded moral rationality and the reason that Donaldson and Dunfee discuss it. Generally, what is a “macro social contract”? Briefly describe the four sets of conditions it requires. Define “hypernorms” and explain how they are determined. What conditions must a norm meet to be considered “authentic”? Explain the procedure that a social-contract theorist would go through to make moral decisions. What are the three problems with the theory? Emphasis on the role of communities in generating moral norms characterize this approach as communitarianDonaldson and Dunfee’s theory is called “integrative” “social contract” theory because it integrates two distinct kinds of contracts: * First, the normative and hypothetical contract among economic participants * Second, implicit contract among members of communities including firms, departments within firms, informal subgroups within departments, national or international economic organizations, professional associations, etcThe three factors that contribute to bounded moral rationality are: 1. A finite human capacity to assess facts 2. A limited capacity of ethical theory to capture moral truth 3.
The plastic or artificial nature of economic systems and practices * Socioeconomic interactions vary widely from system to system and they shift significantly over time. A “macro social contract” is a set of principles regarding economic morality to which contractors would agree on and the conditions it requires are: * Local communities must be allowed ‘moral free space’ to spell out obligatory ethical norms for their members * The macro social contract must be based on the free consent of the parties involved, all of whom have the right to exit when they please. * All macro social contract must be compatible with hyper norms * If conflict arises among various micro social contracts, these must be resolved through priority rules that are compatible with the three principles listed above.
Hypernorms are principles so fundamental to human existence that they serve as a guide in evaluating lower level moral norms and they are determined by a convergence of religious, philosophical, and cultural beliefs (human and drug trafficking, piracy, slavery, counterfeiting currency). * Core human rights * Obligation to respect personal dignityThe conditions a norm must meet in order to be considered “authentic” are: 1. Compliance is approved 2. Deviance is disapproved by most 3. Almost everybody does it (well over 50%)The procedure a social-contract theorist would go through to make moral decisions is: 1. Identify all communities that will be impacted by the decision. 2. Identify the norms by which those communities freely conform. Those norms must not conflict with larger moral standards which are taken as universally applicable to everyone, such as hypernorms. 3.
If conflicts remain, give priority to norms that are more pervasive, consistent and coherent within the framework of the macrosocial contract. This method would theoretically allow decision-makers to act in accordance with regard to an acceptable set of values, practices and norms. Problems: * You can know all of the moral theories and still not be able to specify in advance the moral norms of business or the norms for specific situations, like the gift giving or negotiation example * Concept of hypernorm includes many unresolved issues| Application Questions| Ian Maitland in “Priceless Goods: How Should Life-Saving Drugs be Priced? ” makes numerous arguments against market pricing for crucial pharmaceuticals.
Name and explain the three of his arguments that you believe are the strongest, and why – tying in your use of one or more of the six ethical theories covered in this course. Then state whether or not you believe that some pharmaceutical prices should be controlled, and back up your position drawing upon the ethical theories and concepts covered in this course (not solely based on your own personal viewpoint). | Fears in allowing drug makers to control the price: 1. Health care is a right and access to that care should depend on a person’s need, not on their ability to pay. We may be prepared to tolerate wide inequalities in access to luxury or discretionary goods, but not when it comes to the basic necessities of life—or even life itself. 2.
There is the sense that something precious is lost when the profit motive drives out the traditional ethic of care (the market for blood in the US has eliminated the altruism involved in giving blood). 3. If we ration access to life-saving treatment, or to treatment that controls health conditions that blight people’s lives, according to ability to pay, then we are in effect permitting life itself to be bought and sold like a commodity. Certain things should not be bought and sold because it diminishes their value. Human life is above all price. 4. It is seen as indecent to profit from the misfortune of others. Health care providers are making a lot of money from desperately ill people. 5. A voluntary exchange in the market presupposes some rough equality of bargaining power or “desperate exchanges. Because of their acute vulnerability, any transaction between such unequal parties appears to be inherently exploitative. Three arguments: 1. Patents for Medication * The government allows companies to monopolize the industry for a period of time with the patent for their new medication * This is an acceptable practice because it encourages investors to fund drugs that are high risk but may also have a high potential to save lives from diseases, like AIDS * This is one of the strongest because it protects research and innovation * It follows Objectivism where the drug companies are able to “be all they can be” in helping others and creating value through productive work 2.
Do drug profits finance more promotion than research? * Funding for promotion and research are related in the same way many think * It is important to promote drugs because then it sells more and that in turn allows more capital to fund research * This is one of his strongest arguments because it upholds Nozick’s Rights Theory there is no force or fraud in what the pharmaceutical companies are doing; although sometimes they promote their products in ways that may seem unfair or unjust to those buying the drugs, they are not forcing their products upon doctors and there in no fraud in actively showing the world what is available 3. Is the public paying twice for drugs? This may seem like the case when the government provides aid in R;D for the pharmaceutical companies and then provides aid to consumers who cannot afford the drugs * However, ultimately, the public benefits the most from the government’s support of R&D * Research from the companies will most likely go into public domain where others can use the information and the money put into developing the drugs will eventually benefit and increase social welfare * From this point of view, it seems Utilitarian, where the government funding eventually benefits “the greater good”—Ultimately, funds will offer consumers treatment for the ailments and the number of consumers greatly outweighs those in pharmaceutical companiesExamines the ethics of allowing drug manufacturers to fix their own price for what is regarded as a ‘priceless good’ – that is, a good that has a special, non-market value which makes it, so the argument goes, unsuitable for trading in the market – and argues that it is neither ‘degrading’ nor ‘profane’ to put a price on a priceless good (since prices do not reflect society’s estimation of the value of the good) and that the true moral challenge is to get medicines to the people who need them. Suggests that the ‘mixed economy’ approach to developing drugs in the USA, in which basic research is performed with the support of public funds but applied R;D is predominantly conducted by the private sector, shows the greatest ability to develop key medicines (the USA’s profit-driven industry leads the world in this area) and submits that this success may depend in part on the freedom of US drug companies to make their own pricing decisions. Sets out the basic moral case against imposing price restraints on drug companies and answers some common rguments put in favor of price restraints, for example, the right of sick people to have medicines at affordable prices. Drugs save lives, relieve suffering, and enhance the quality of life. That fact simplifies and clarifies the moral issue at stake here. It gives us an overriding criterion for evaluating different drug pricing regimes (i. e., whether we leave companies free to charge what the market will bear or whether we demand that they exercise restraint in pricing drugs). Other things equal, whatever regime saves the most lives, relieves the most suffering, and brings the greatest improvement in the quality of our lives, is the morally superior one.
Some fear that the profit motive is driving out the traditional ethic of care and is creating inequities in access. This criterion is plainly consistent with Rawls’s Difference Principle, which requires maximizing the advantage of the worst-off (in this case the dying or suffering or those whose quality of life is seriously impaired by health conditions). The criterion is probably also broadly consistent with utilitarianism, requires maximizing the sum of total utilities as well (It is not clear how non-consequentialist moral theories would view this criterion, but it is not obviously offensive to them). Thus, it may be held that medications should be available on the basis of need rather than ability to pay (already the case in the US).
Author argues that the economically disadvantaged are better off when drug prices are set by the market because within a relatively short time, they become available in perpetuity to the rest of the world at little more than the cost of manufacture. In the US, drug makers are granted 20 years during which they are free to charge whatever the market will bear. After that, their drugs are in the public domain. If the goal is (maximizing the number of lives saved or reducing suffering) then the regime of price constraints fits better. Requiring drug makers to set their prices at zero would presumably minimize the chance that anyone might die or suffer. The goal of achieving the greatest benefit for the greatest number would be achieved – as long as stocks last and the company doesn’t go bankrupt!
Price controls create shortages because they take away incentives to invest in producing more of an existing product and/or developing new products and thus slow the development of new drugs. If price restraints reduce investors’ expected returns, that will reduce the supply of investors’ dollars to drug makers. At that in turn is likely to mean fewer drugs in the future. Today’s drug profits are tomorrow’s drugs. Because the benefits of price restraints are felt immediately but the consequences aren’t, politicians are tempted to support them. The goal isn’t limited to providing maximum benefit in the here and now, but the ethical dilemma on pricing drugs is a tradeoff between current needs and future ones.
Allowing the market to set prices may work when it comes to satisfying wants, but drugs are necessities, and it is therefore intolerable to let producers charge what the market will bear. Many arguments against market pricing… It may put medicines out of reach of people who desperately need them. People who need expensive medicines have to degrade themselves by selling personal assets to qualify for Medicaid. Because the sick may not be able to live without particular medicine, there is no limit to what they are willing to pay. Drug makers take advantage of this desperation to charge huge prices. Furthermore, drug prices are hugely inflated than what is needed to fund R;D.
They spend more money on advertising/promotion, and some/most of it is unnecessary and potentially corrupt. Then, they sell their medicines abroad at regulated prices that are considerably lower than in the US. Drug makers benefit from public subsidies, which further help swell their profits, which makes society feel entitled to some reciprocity, like lower drug prices or a share in the profits. Opposing side: Rights theory! Drug makers have a moral claim to the fruits of their labor, inspiration, or investment. Just because a person/company discovered/created a drug, does not mean the company has a special responsibility to make the drug affordable, even at the expense of their own profits.
To demand that companies shoulder some of that responsibility if compassion on the cheap and encourages moral free-riders. If drug makers are assigned the responsibility to help the sick (by receiving no profit), then they will stay away from the sick and find another line of work. “Robin Hood” policies are often self-defeating. Malaria example: because malaria is a 3rd world disease, it does not benefit companies to spend the hundreds of millions or billions to do the R;D for the vaccine because there is no market. If a vaccine were created, it is assumed it would be grabbed up by international agencies or private sector copycats and they will argue that the poor “deserve” to have the vaccine at low prices/free.
Nozick does acknowledge that, in the event of a catastrophe, owners’ property rights may have to be overridden “a person may not appropriate the only water hole in a desert and charge what he will. Nor may he charge what he will if he possesses one, and unfortunately it happens that all the water holes in the desert dry up, except for his. ” This is an important qualification to the firm’s moral entitlement to exclusive rights to the discovery BUT it doesn’t apply in the case of life-saving or life-enhancing drugs (says the article). Without the unregulated American market, the flow of drugs to the rest of the world (and US consumers) would be much smaller.
Americans fund the bulk of research so the rest of the world can mooch. If companies engaged in the behavior that foreign governments do, we would call it intellectual piracy. Countries that enjoy lower prices are not immune to the consequences of price controls. Americans enjoy quicker access to drugs than Europeans, for example (99% of patients with advanced breast cancer received treatment with a taxane compared to only 48% in the Netherlands, and 25% in Britain). The case that I have made for leaving drug makers free to set prices rests (almost) entirely on judgments about the efficacy of the market at discovering and delivering medicines to more people who need them.
Given the moral urgency of that task, the sole or overriding test is results. If a better way is found (say, one that dispensed with drug companies), then that would become morally mandatory, because in the case of saving lives, relieving suffering, and restoring people’s ability to lead normal lives, results are trumps. This conclusion goes against the grain of our intuition that healthcare should be driven by an ethic of care rather than the profit motive. I don’t see the two as mutually exclusive. There is still room for the occasional magnificent gesture like that of Jonas Salk who refused to take any royalties from his polio vaccine. And there may be a growing role for publicly funded basic research.
But it is inconceivable that we can rely on random acts of altruism to match the productivity of our for-profit drug industry. So long as we rely primarily on private enterprise to provide us with medicines, which means that (some) firms will be making profits, occasionally big ones, from the sick. It is precisely because life-saving and life-enhancing medicines are priceless that it is especially urgent that we leave companies free to charge market prices for them. | From the Newton and Schmidt article “How Shall we Know if Our Products are Safe? ” briefly explain Ford’s general behavior concerning the Pinto crisis. Name and give details of the procedure Ford executives used to determine what they should do.
State whether you believe their behavior was moral or immoral. Argue logically and thoroughly for your position using one or more of the six ethical theories covered in this course. | Ford was being charged with Reckless Homicide due to the death of three women in Indiana who died in an automobile accident involving a Pinto. However, they would have to prove that Ford involved substantial deviation from acceptable standards of conduct. The pinto was hit from behind and exploded – looking like a napalm bomb going off. Prosecution claimed executives knew that the gas tank tended to explode when struck from behind and they did nothing to correct it. This was not an isolated incident.
Ford had unusual urgency to get the car on the market, and did so on time— making it the bestselling car. Defense stated Ford used acceptable standards and was comparatively safe when viewed against the safety features and performance of other subcompacts. Engineers: “Pinto Madness! ” Ford was too eager to get the Pinto to the market that it affected the critical design and production tests. * Engineers discovered in crash tests the fuel system would rupture easily * Top Ford officials decided to manufacture the car anyways (exploding tanks and all even though they had a patent on safer tanks)Pinto was completed in only 25 months VS a normal 43 months. Design and production was rushed and cost of the vehicle kept down to sell it at $2000.
It sold well, until 1972 when four people died, the first of many incidents stemming from the Pinto’s flaws, and many more followed, costing Ford millions in compensation. The cost-benefit analysis demonstrated an abuse of utilitarian principles, and the engineers were fully aware of the flaws, yet the company continued to sell the car as it was, without safety modifications. They “weighed the risk of harm and the overall cost of avoiding it. ” The government figure, mentioned earlier, was made up of 12 ‘social components’ that included $10,000 for ‘victim’s pain and suffering’ and was meant to determine the cost to society for each estimated death. Ford decided to estimate 180 deaths, 180 serious burn injuries, 2100 vehicles lost, and calculated $49. million overall, a figure that would be a benefit to the company, if they put things right with the car. The estimated cost of doing so came to $137 million, for 11 million vehicles at $11 dollars per tank and $11 per unit for other modifications. So costs outweighed benefits by $87m and the value of human life was quantified as an economic commodity. It also emerged that some evidence suggested the actual costs to correct matters were over-estimated and would have been nearer to $63. 5 million. Though these did not equate to the benefits, there would seem to be a moral duty somewhere for a huge corporation like Ford, to bear the cost of $15 million.
That way, utilitarian ethics, normative principles and the most good and positive consequences for most people overall would have resulted. There seems to be some form of justice in the way the benefits dwindled and the costs grew over the years, as lawsuits and penalties took millions of dollars from Ford. The company did nothing illegal in terms of design at that time; they took advantage of the cost-benefit analysis, ignored ethical principles and abused the moral aspects in utilitarianism. Studies showed the tank would be safer if moved to be placed above the rear axle, however the engineers didn’t have enough time because of the deadline.
Tank could have been fixed with a rubber bladder, but Ford was too concerned with the cost of doing so. Company run by salesmen, not engineers, so the priority is styling, not safety. The decision not to rectify faults represented a denial of doing no harm, not deceiving others, justice and the rights to life and safety. Nor can the theory measure human suffering or loss, as Ford found, to its cost; it cannot predict consequences accurately or quantify benefits and harms, simply by applying a cost-benefit measure. In considering that the ends justify the means, another aspect of utilitarianism, and determining the pain of actions, volume and not ‘who’ suffers, has significance.
In principle, the evaluation of good and bad consequences provides one way of ensuring that companies consider the morality of their actions, which may suggest that utilitarianism can be a positive influence for ethical business practice as long as the true costs can be accurately determined and the right value placed on human life. WHICH THEORIES RELATE: * Utilitarian: The argument here is that Ford abandoned these principles, abused the utilitarian theory to suit their needs, stayed within the laws of the time, but behaved unethically. The ‘utilities’ as a consequence, appeared to be money, and they used that to define the value of their needs against the value of human life * Objectivism: They didn’t care that the tanks could explode, they just focused on the deadline and getting the car to market| Discuss the different positions covered in Matt Zwolinski’s article “The Ethics of Price Gouging” – including the arguments on both sides of the debate.
Then state clearly which side of the price-gouging- permissibility argument you believe to be morally correct, and argue persuasively for your position using one or more of our six ethical theories for support. | Price gouging > A practice in which prices on certain kinds of necessary items are raised in the wake of an emergency to what appear to be unfair or exploitatively high levels. Hurricane example: market is driven by things being sold for high prices. Things are priced differently because you know what you are getting when you pay a higher price. Selling something that normally costs $800 for $1300 in times of emergency. Doing so would be illegal in most US states, about 34 of which have statutes that prohibit price gouging.
The practice is usually defined as raising prices on certain kinds of goods to an unfair or excessively high level during an emergency. So there is no question about what the law would do during a price gouging situation. But even if the law is clear, the moral status of price gouging is not. Morality: 3 reasons why price gouging isn’t necessarily morally wrong 1. You don’t HAVE to buy it for the higher price. If that’s more than you think the good is worth, you are free to walk away. If you do decide to pay, it’s because you believe you’re getting more value out buying the good than the higher price you paid > coming away from the deal with MORE than you gave up 2.
What would happen if the “normal” (non-gouged) price was charged? There are many people who need what is being sold. If the price was lower, would the good still have been there when another tried to buy it (who would have paid a higher price)? 3. High prices do more than just line seller’s pockets. They also affect how buyers and sellers behave. For buyers, high prices reduce demand and encourage conservation. Do they really need it or do without it? By doing so, they allow at least some of those resources to be conserved for other people who might need them more and therefore are willing to pay more. For sellers, high prices encourage people to bring more goods to where they’re needed.
If they take items from where they are less needed to where they are MORE needed, this creates a profit incentive. This brings items to where they’ll do more good for people who need them most. Even someone who cannot afford to pay a higher price benefits from a system in which sellers are allowed to charge that price. The profit motive the debt system creates encourages competition which increases supply and ultimately drives down prices to a more affordable level for everyone. It’s true that not everyone will be able to afford the higher prices. But what alternative institutions would do better? When price gouging is prohibited, goods usually go to whoever shows up first.
If you care about distributive justice (Rawls), is that really a better system? Even if we assume that price gouging is immoral, it should certainly not be illegal (according to Zwolinski). If price gouging is wrong, it’s because it hurts people in vulnerable situations. But then, the last thing you want to do is hurt those vulnerable people even more. Remember, the only reason price gouging occurs is because a disaster causes demand for certain goods to go up or supply to go down. There isn’t enough stuff to go around. Anti-gouging laws don’t do anything to address the underlying shortage. In fact, they make it worse by destroying incentives for conservation and increased supply.
So even if you think price gouging is morally wrong, making it illegal doesn’t make sense. It hurts the very people who need our help most. For: Nozick’s Rights Theory (Duty to avoid force; fraud)Against: Rawls (Benefit the least advantaged)| In his article “The Great Non-Debate Over International Sweatshops,” Ian Maitland explains three methods for approaching payment of workers in other locations. Name and explain each. Then state clearly which of the three you believe to be the most moral, and argue persuasively for your position using one of our six ethical theories for support. | Are the conditions of sweatshops unethical in all situations?
How coveted are these jobs in some countries? safety, better than being homeless, what seems like a small wage to us actually has a lot of purchasing power, etcMaitland supports companies’ sweatshops in response to critics. He discusses the acceptable ethical standards for the wages and conditions in sweatshops. Payment of workers in other locations 1. Home Country Standard: Pay the same wages in a foreign country as you do back home – it was said corporations have an ethical duty to pay the same labor standards regardless where they operate. However establishing US wage levels would eliminate international markets. No need – just do it at home. Eliminates function of the market in setting wages * Eliminates incentive to hire foreign workers * Disruption of local labor markets * Little incentive to move their manufacturing abroad when the cost of production is the same as in the home country 2. Living Wage Standard: Paying workers enough to allow them to live with dignity. Corporations should at least subsistence wages in order to live with dignity in the general state of development in the society. * Hard to operationalize * No employment if not at a “living wage”? * What about market forces? * At least subsistence wages and as much above that as workers and their dependents need to live with reasonable dignity, given the general state of development of the society * It is preferable for a corporation to provide no job at all than to offer one that pays less than a living wage 3.
Classical Liberal Standard: An appropriate wage is based on supply and demand, and is considered ethical if freely chosen by informed workers * Critics complain of a market failure that prevents this approach from working * Conditions in countries are so poor that free choice is meaningless * With full employment, and all other things being equal, market forces will encourage workers to make trade-offs between job opportunities using safety as a variable * But with massive unemployment, market forces in developing countries drive the unemployed to the jobs they are lucky enough to land, regardless of safety * Example was Nike and its’ sweatshops located throughout IndonesiaIn response to the argument that companies are paying “slave wages” which accounts for the increasing separation between the rich and the poor, he points out the fact that developing countries have experienced an increased living standard and more opportunities for employment as a result of economic development. Nike and other companies are also facing accusations that their high profiles are yielding from political repression. Maitland diffuses the allegations with the fact that despite workers’ having little to none alternatives, sweatshops pay employees the same, if not more, than the local companies.
His final cause introduces the belief that in some situations, it is possible that paying works above market wage is unethical. * Unconscionable wages * Widening gap between rich and poor * Collusion with repressive regimes * Apparel companies are chasing cheap labor * By US standards, wages are shockingly low * Some countries repress unions * Minimum wage levels are sometimes below poverty level * Host governments do not enforce their own safety and minimum wage laws * Some apparel companies employ contractors using child labor * Some host countries deny their citizens basic rights * Wages are amazingly low * Still, wages aid in sweatshops are often much higher than alternative employment * No problem in finding employees * Critics say worker choices are irrelevant * Real issue according to critics is basic human rights and needs * Workers are so beaten down that they don’t realize their own exploitation * Workers face such miserable alternative employment they accept a horrible choice * Raising cost of labor means that less will be employed * Sweatshop workers already receive a high rate of local pay, so paying more increases local pay inequality * Higher sweatshop wages would slow growth and hurt those at the bottom most * Sweatshop jobs are often coveted by the rural poor * Higher wages may help those who receive them, but will reduce jobs available to aspirantsMaitland argues “the critics consistently advocate policies that will benefit better-off workers at the expense of worse-off ones. ” Effects of accepting criticisms: * Reduce employment in formal sector (sweatshops) * Lower incomes in informal sector * Reduce chances to enter formal sector * Reduce investment * Reduce exports * Increase inequality and povertyMaitland says “the best cure for the ills of sweatshops is more sweatshops. ” Firms should pay prevailing market wage and workers can judge their own employment opportunities. It may be “ethically unacceptable” to pay wages that exceed market levels because it will reduce employment opportunities and discourage new investment.
Possible response background:Although sweatshops have proven to decrease unemployment rates and increase the standard of living, companies must take into account how poor the situations were before. They should not be content with the fact that they have “improved” peoples’ lives, because in reality their employees are still living in conditions far worse that the average population here in the US. If sweatshops were intended to help the economy create jobs to absorb the massive numbers of unemployed/underemployed, why are the jobs being sent overseas when the unemployment rates in the US are continually increasing? Factory jobs in underdeveloped countries are in high demand.
Applicants for factory jobs are plentiful and are willing to accept “low wages” with full knowledge of the working conditions. That is, it is ethical to offer a job with low wages if a reasonable person freely accepts it. Critics say offshore factories are exploiting poor nations. However, Maitland contends that foreign investment associated with the factories actually lead to economic prosperity. He cites Taiwan, Korea, Singapore, and Hong Kong as examples of nations that have emerged from a labor-intensive manufacturing economy. Countries are self-ruling and hence can choose not to accept foreign investment. In fact, some countries actually seek out foreign corporations by offering tax incentives!
Therefore, it is possible that there is nothing unethical associated with countries establishing factories in foreign nations. A country that accepts foreign investment and manufacturing factories can potentially transform itself into a developed nation. When a nation progresses, so too does its citizens. It is not surprising that many countries that host sweatshops have repressive governments. This could be because nations that are economically and politically unstable require a repressive government to maintain stability. Maitland believes that factories in underdeveloped countries build wealth. That wealth can translate into political freedom.
Investment in countries with repressive regimes is ethical provided the multinational corporations do not use repressive practices inside their factories. For example, it would be unethical if a factory used coercion to force workers to work without pay or for extended hours against their will. Maitland asserts that a mandated minimum wage is unethical. He contends that most factory workers get paid well above other workers outside the factories. He states that enforcing a minimum wage will reduce the profitability of the factory. A country that implements (and enforces) a minimum wage will become less desirable to multinational companies. However, to advocate reduced worker safety is unethical and inhuman.
Whether working in a factory in India or the United States, an employer should guaranteed the same standard of safety. Granted, that a worker in India will have a much cheaper cost of living than a worker in the United States, but both workers value life equally. Both workers need to provide for their families and need some assurance from their employers that there is a low probably of getting injured on the job. You can use almost ANY theory with this question, depending on how you want to argue. But to me, it seems the most obvious ones are: * Nozick’s Rights Theory in favor of sweatshops * Rawls’ Theory of Justice (or even Care) greatest opportunity for least advantaged |