Corporate Ethics (1)

From the original Robber Barons of the 19^th century to the soldiers of fortune of the 21^st century, corporate governance has not seen much of an ideological evolution. While it is important to distinguish between entrepreneurial capitalists and their political counterparts, the Barons’ logic has virtually been similar, unchanged: employ the principles of Ethical Egoism to drive their bottom line.  The former used private monies to monopolize particular industries; the latter influenced the government as a mean to that very end. Political entrepreneurs gamed the system through lobbyism, which usually resulted in huge subsidies from the government and/or regulations that either helped crush competitors or allowed them unfettered access to unlimited resources. Some of them, more recently, have destroyed reputable companies diving off the cliff of profitability while trying to feed their enormous appetite for cash. Lehman Brothers Holdings Inc. is a perfect example of exploitive capitalism. Experts concurred that their filing marked the largest bankruptcy in U.S. history.

Over the past two decades, people have watched in horror as “too big to fail” empires turned into sinkholes, literally. The list of these companies is rather extensive with Enron at the very top, Bernie Madoff, WorldCom, Lehman Brothers, HealthSouth, Tyco, Satyam, AIG, Waste Management, Freddie Mac, Adelphia Communications, Arthur Andersen, InClone Systems just to name a few.

First, some novice on Wall Street would pitch a green idea: one that would make investors rich. As a result, financial gurus would line up like migratory birds, would abandon previously held values, and would follow the money. Initially, ideas would be greenest and they would bathe in vast piles of money. Consequently, novices would be called geniuses, pioneers, innovators and the like. However, once ideas would start to bleed, names such as mercenaries and robber barons would start to float around. Inevitably, people would be left distraught and bankrupt.  

In the case of Enron, greed overshadowed any scruples the hierarchical leadership may have had. At the pinnacle of their success, investors became tropical flamingos seeking favorable climates during winter months. With the wind at their tails and a cloudless sky, Enron executives flew at very high altitude avoiding predatory eagles, governmental regulations.

According to Bethany McLean, the Fortune magazine reporter who was the first to question how energy giant Enron made its money, there was a linear relationship between profitability and the confidence level of Enron executives. Increases in the company’s profit margin, an elaborated scam, emboldened their confidence level, created a false sense of invulnerability, and gave birth to an Everest of arrogance. Hence, what might have seemed unethical and/or even demented to common criminals constituted ingenious strategies to Enron elites. Nevertheless, when gravity got hold of this floating feather, the company’s free fall outdid Newton's Law of Universal Gravitation. Naturally, the ripple effects were an avalanche of lawsuits, scapegoats, suicides, reactive policies, shocks and dismay, anger and distrust. Some were accused, arrested, trialed, convicted, and jailed while the stolen moneys exchanged hands from culprits to lawyers, judges, and the like.

More recently, towards the end of 2006, green ideas flooded the financial sector causing an unprecedented migration. These ideas were not indigenous to US investors because flamingos around the globe caught the wind of tropical climates and followed the mainstream. Predictably, like in all previous Wall Street exploitive scams, Armageddon came. The only difference was that it showed up in the form of $700 billion. The usual suspects played their roles until the stories outlived its cycle in the headlines. Meanwhile, anguish and distrust lingered.

           Rarely mentioned though, is the fact that at the heart of all corporate greed and disappointments lay the theory of destruction, Ethical Egoism. Virtually, any corporation that has touched that model has fallen to its inevitable death, yet time after time the theory reincarnates as a new, innovative paradigm. While in fact, there is nothing new under the sun of that theory.


Rapadoo
Part 2 follows.

Corporate Ethics (2)

In her book, “the virtue of selfishness” (1961), Ayn Rand argued that the achievement of his own happiness is a man’s highest moral purpose. She was and still is closely associated with ethical egoism. Ayn Rand argued against the ethics of altruism saying that it was a totally destructive idea; rather, she fiercely advocated for what she called the “reality of the individual person.” According to that logic, when people decided to help others, they were sacrificing the self at their expense. Those rules, she insisted, were imposed by a society that treated people as “sacrificial animals” because an attempt at helping others constituted a surrender of obligations to the self. In essence, take all you can at the expense of others if necessary because ultimately your only obligations are egocentric.

            In spite of the widespread refutation of the theory of Ethical Egoism by philosophers and theorists alike, in particular James and Stuart Rachels, the corporate world seems oblivious to its destructive nature not only on struggling individuals but also even on the entire economic infrastructure of a society. In their book “The Elements of Moral Philosophy,” Rachels argued that the theory of Ethical Egoism was an arbitrary doctrine that was equitable to the principles of racism. Because, according to them, both doctrines violated the Principle of Equal Treatment, they were unacceptable. The following argument exposed the weaknesses of the theory of destruction. “It {Ethical Egoism} advocates that each of us divide the world into two categories of people—ourselves and all the rest—and that we regard the interest of those in the first group as more important that the interests of those in the second group” (2007, 87). This ideology has conflict written all over it. Nevertheless, Corporate Capitalism continues to jump off of the same cliff singing its best mantra “the customer is always right.”

            Meanwhile, on the surface, corporations advocate for truth and honesty. For instance, they put all new applicants to extensive psychological assessments in search of the brightest and most honest candidates. They also have zero tolerance policies in place to prevent theft and dishonesty. Further, they employ reputable public relations firms to paint an attractive portrait of their companies.

On the other hand, they build ambitious marketing departments to create deceptive strategies to gain and retain the public’s attention. Further, they hire merciless hangmen, their CEOs, to see their profit margins through the roof. The double standard couldn’t be more evident. Sing lullabies to customers while conspiring against them. Executives always say that they are acting on behalf of the shareholders, yet when, through their ill-advised practices, they destroy an entire company, shareholders and workers alike lose everything. Even worse, we now know that such practices can send the world economy spinning on its tail, leaving companies’ scrambling for government bailouts in an effort to stay afloat.

            How then do victims, the consumer, trust such entities that know no ethical boundaries or have any moral standards? Thus far, the well being of the consumer those companies rely on for growth is virtually non-existent. Moreover, the hangmen rarely get punished and those who do get leniency. In addition, the most cunning of mercenaries jump off and ride their golden parachutes into the shadows of luxury. Eventually, the stories fall off the media’s radar. These so-called watchdogs that are only concerned with tomorrow’s big highlights and their ratings. This is a win-win scenario for the egoists’ ideologists and a lose-lose for the impotent worker or consumer.

            In all fairness, a selective democracy such as ours thrives on a healthy private sector. The government cannot be the sole driver of the economy. The inevitable result would be a socialist society, an ideograph that would send chills down the spines of citizens of any free and democratic society. Capitalism’s dependency upon an honest and prosperous private sector is that of entrepreneurship on consumerism and vice versa. Hence, we must find a way to coexist absent any ethical egoist greed.

            This problem calls for a paradigm shift; a new business model that would emphasize innovations over greed.  Consumers should no longer be handed the tab of highway robbers whose wealth is made at their expense. The message should be clear and concise: There is no reward for deviance. The out-dated and arbitrary doctrine of ethical egoism must be thrown out and replaced.

If corporations really want to reestablish the rusted trust and respect of consumers in corporate capitalism, they need to get back to basics and treat the customers not as prey, but individuals with needs. A new paradigm based on mutual respect and equal treatment would not hinder profitability. In fact, it would ensure consumer loyalty and guarantee long-term success as it always has. After all, research has revealed that we are habitual users, which tend to migrate continually to the same or similar activities. Eventually, customers even show a degree of identification with products and/or service providers, whoever they may be. Instead of destroying the lives of individuals, communities and even societies, it serves a greater purpose to ensure stability, prosperity, and ultimately happiness for all.

Rapadoo

Structural Erosion

           I will never forget the late Mr. Desire, my math teacher. Sadly, the recent earthquake that ravaged Haiti dawned on his life. He once argued that one should never get married for the sake of love, rather because it is an obligation. What we call love was attitudinal, he explained fervently, and as we know, attitude is anything but constant. Being a firm believer in romance and chivalry, that statement did not sit well with my inexperienced naïveté. Romance, in my view, was the flaming passion that ignited love and made it exciting. Hence, I vehemently disagreed with his logic referencing the Romeos and Juliets of history. Lately, however, I have been pondering the validity of his statement.  Could it be true that people eventually grow out of love? Could priorities such as children, employment, and debts have buried the passions of love so deep that divorce would become the inevitable result? One thing is evident: the stats on successful marriages over the past half-century are grim, which beg the question if romantic marriages actually work.  Even more sobering, the success rate of marriages among church members has declined to 45 percent. How can the church claim moral supremacy if it cannot even keep its devout members committed beyond an average of two years?

            Naturally, some attribute this failure to eroding values in the American society; however, I wonder if people aren’t simply getting to the altar for the wrong reasons.  We could blame Hollywood and their ideology, which seems to idolize wealth, its moral compass for conjugal life. Fame and popularity are not bound by the same ethical standards, as do ordinary people, yet they are the role models and main source of entertainment for mainstream America. Furthermore, It could be the case that parents have become too selfish to sacrifice a lifetime for the sake of children and dysfunctional marriages. It certainly seems easier to get a fresh start with someone new.  Surely, anything else must feel better than their current status; however, the rate of success for second marriages is even more hopeless.  Moreover, we could blame the advent of technology for the lack of patience and tolerance we demonstrate when dealing with significant others. According to some experts, we learn to become helpless through the use of technology. This point of view infers that people tend to equate life to a game in which they can start over at the mere sight of failures and difficulties. We could even go as far as blaming Capitalism for our failures. After all, money is the driving factor in that system. Nevertheless, the problem persists, as the declining rate of success of the sacred union shows no promising signs.

Perhaps my teacher was right in inferring that the passions of love wane over time. As a result, we end up with transitory commitments, which leave generations of children to be raised by the fist of anger and vindication. If we cannot convincingly argue that romance is essential to successful marriages, we need a new paradigm. Love should indisputably be the foundation of any marriage for it would be pointless tolerating someone in the absence of love. However, instead of putting so much emphasis on the “shining prince on a white unicorn” as the main reason to be swept away, we should try to find a soul mate that we can tolerate through the toughest of times.  After all, the Romeo and Juliet formula have, thus far, failed on many cylinders.

My greatest fear is that people will eventually develop an increased tolerance for the current trend, which would lead to negative attitudes towards the institution of marriage. This logic would certainly be understandable in a postmodern society that relies so much on statistical data to make informed decisions. It would then be a matter of time before people no longer found value in something that fails on so many levels.

Finally, beyond looks, financial stability, romantic flares, and shortsighted pleasures; it may be useful to perceive marriage as an obligation that requires careful consideration, and patience. At the risk of sounding simplistic, should people take more time to find out how tolerable their potential partners could be and how they would deal with pressure, the eroding family could perhaps be saved. What would the family be without lasting marriages? More importantly, what would become of a society deprived of the fundamental structures of the family?

Rapadoo