writing assignment

Why is this an ethical issue?

The ethical issue arises from the fact that Luke faces the dilemma between choosing to conform to company confidentiality and thus break his responsibility as a brother and a well-wisher and choosing to be the ideal brother and well-wisher but break his responsibility as an employee of the company. There is a clear-cut demarcation between the two actions and he has to choose one out of them.

What should Luke do?

“I agree with you that the right way of testing actions by their consequences, is to test them by the natural consequences of the particular action, and not by those which would follow if everyone did the same. But, for the most part, the consideration of what would happen if everyone did the same is the only means we have of discovering the tendency of the act in the particular case.” (John Stuart Mill, 1977)

The case that has been presented can be viewed on two fronts. The first front is that of ‘rule utilitarianism’, which states that an action is right if it conforms to a rule that maximizes utility. In the case that we have been presented, the rule that maximizes utility for everyone is the rule that the company’s confidentiality has to be maintained by its employees. If everyone conforms to the rule, then it is a rule that maximizes the utility of the company, and hence of all its stakeholders.

However, it has been argued that rule utilitarianism collapses into act utilitarianism, because for any given rule, in the case where breaking the rule produces more utility, the rule can be refined by the addition of a sub-rule that handles cases like the exception. In this case, the exception is that the informing of Owen about the company’s venture would not directly hurt the company or its stakeholders (under the assumption that Owen follows the code of confidentiality strictly), but Owen himself would be better off causing Luke to be better off as well.

It is necessary, in this light, to explore further the meaning of ‘act utilitarianism’. Act utilitarianism is a utilitarian theory of ethics , which states that a person's act is morally right if and only if it produces the best possible results in that specific situation. Considering the particular situation in which Luke is, his act of informing Owen about the company opening an adult entertainment retail store in the neighbourhood would be morally right since it does produce the best possible results in that situation. In this light, it is important to distinguish how we have arrived at the answer that it is the best possible result. For this, we compare the two possible results and see what happens to aggregate utility of all involved parties.

Here, utility is assumed to be measured in terms of money since everyone has financial stakes in this situation except for Luke himself, who is concerned about the financial position of his brother but even that can be considered in financial terms of his brother’s gain because of having prior knowledge that asset prices of that area were going to bust. The first result is that Luke does not inform his brother about the adult entertainment retail store coming up and as a result imparts negative utility to his brother and himself in terms of the financial loss that Owen has to face. The stakeholders of the company, however, are not affected by this result and their utility continues to remain positive for the fact that the store is going to come up remains a secret before they have announced it.

The second result is that Luke informs Owen about the upcoming fall in real estate prices of the neighbourhood and influences him to sell in order to avoid the blip in financial standing. Under such a scenario, both Owen and Luke earn positive utilities from the financial profit made by Owen whereas the stakeholders of the company are still indifferent to the outcome as long as there is the assumption that Owen does not make this information public in any way.

Hence, on a simple evaluation of the aggregate utilities under the two outcomes it can be easily ascertained that the approach of telling Owen given a crucial assumption is the better outcome using the theory of act utilitarianism. Hence, it would be advised to Luke to be discreet about the matter and inform his brother Owen about the upcoming store but also entrust in him the responsibility of not letting the matter further out.