BMGT 464 - Cultural Relativism - Due Tomorrow (3/26)

BMGT 496 - Week 2 Citations

(60 Minutes Investigates High-Frequency Trading, 2014)

(Brusseau, Chapter 3: Theories of Consequence Ethics: Traditional Tools for Making Decisions in Business when the Ends Justify the Means, 2012)

(Brusseau, Chapter 4: Theories Responding to the Challenge of Cultural Relativism, 2012)

(CrashCourse, 2016)

(CrashCourse, 2016)

(Egan, 2018)

(Khan Academy, n.d.)

(Peirce, 2018)

(Rachels, 1999)

(Socially-Responsible Investing for Long Term Safety and Returns: Tom Van Dyck at TEDxNewWallStreet, 2013)

(U.S. Supreme Court Clarifies Standards for "Tippee" Insider Trading Liability, 2016)

(Westacott, 2020)

Bibliography 60 Minutes Investigates High-Frequency Trading (2014). [Motion Picture]. Retrieved

March 24, 2021, from https://www.cbsnews.com/video/60-minutes-investigates- high-frequency-trading/

Brusseau, J. (2012). Chapter 3: Theories of Consequence Ethics: Traditional Tools for Making Decisions in Business when the Ends Justify the Means. In J. Brusseau, The Business Ethics Workshop (pp. 91-125). Washington, DC: Saylor Academy. Retrieved March 24, 2021, from https://resources.saylor.org/wwwresources/archived/site/textbooks/The%20Bus iness%20Ethics%20Workshop.pdf

Brusseau, J. (2012). Chapter 4: Theories Responding to the Challenge of Cultural Relativism. In J. Brusseau, The Business Ethics Workshop (pp. 137-176). Washington, DC: Saylor Academy. Retrieved March 24, 2021, from https://resources.saylor.org/wwwresources/archived/site/textbooks/The%20Bus iness%20Ethics%20Workshop.pdf

CrashCourse. (2016, December 5). Aristotle & Virtue Theory: Crash Course Philosophy #38. YouTube. Retrieved March 24, 2021, from https://youtu.be/PrvtOWEXDIQ

CrashCourse. (2016, November 21). Utilitarianism: Crash Course Philosophy #36. YouTube. Retrieved March 24, 2021, from https://youtu.be/-a739VjqdSI

Egan, M. (2018, September 7). The two-year Wells Fargo horror story just won't end. Retrieved March 24, 2021, from CNN Business: https://money.cnn.com/2018/09/07/news/companies/wells-fargo-scandal-two- years/index.html

Khan Academy. (n.d.). Cultural relativism article. Retrieved March 24, 2021, from Khan Academy: https://www.khanacademy.org/test-prep/mcat/society-and- culture/culture/a/cultural-relativism-article

Peirce, H. M. (2018, July 24). What’s in a Name? Regulation Best Interest v. Fiduciary. Retrieved March 24, 2021, from U.S. Securities and Exchange Commission: https://www.sec.gov/news/speech/speech-peirce-072418

Rachels, J. (1999). Chapter 2: Cultural Relativism. In The Elements of Moral Philosophy (pp. 15-29). McGraw-Hill, Inc. Retrieved March 24, 2021

Socially-Responsible Investing for Long Term Safety and Returns: Tom Van Dyck at TEDxNewWallStreet (2013). [Motion Picture]. YouTube. Retrieved March 24, 2021, from https://youtu.be/00Q3X0-Rihw

U.S. Supreme Court Clarifies Standards for "Tippee" Insider Trading Liability. (2016, December). Retrieved March 24, 2021, from Jones Day: https://www.jonesday.com/en/insights/2016/12/us-supreme-court-clarifies- standards-for-tippee-insider-trading-liability

Westacott, E. (2020, August 26). Moral Philosophy According to Immanuel Kant. Retrieved March 24, 2021, from ThoughtCo: https://www.thoughtco.com/kantian-ethics- moral-philosophy-immanuel-kant-4045398

Chapter 3: Theories of Consequence Ethics: Traditional Tools for Making Decisions in Business

when the Ends Justify the Means from The Business Ethics Workshop was adapted by Saylor

Academy and is available under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0

Unported license without attribution as requested by the work's original creator or licensor.

UMGC has modified this work and it is available under the original license.

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Chapter 3

Theories of Consequence Ethics: Traditional Tools for Making Decisions in Business when the Ends Justify

the Means

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Chapter Overview

Chapter 3 "Theories of Consequence Ethics: Traditional Tools for Making Decisions in Business when the

Ends Justify the Means" examines some theories guiding ethical decisions in business. It considers ethics

that focuses on the consequences of what is done instead of prohibiting or allowing specific acts.

3.1 What Is Consequentialism?

L E A R N I N G O B J E C T I V E

1. Define consequentialism in ethics.

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Consequentialism Defined

What’s more important in ethics—what you do or what happens afterward because of what you did?

People who believe ethics should be about what happens afterward are labeled consequentialists. They

don’t care so much about your act; they want to know about the consequences.

If someone asks, “Should I lie?,” one answer is, “No, lying’s wrong. We all have a duty not to lie and

therefore you shouldn’t do it, no matter what.” That’s not the consequentialist answer, though.

Consequentialists will want to know about the effects. If the lie is about Bernie Madoff assuring everyone

that he’s investing clients’ money in stocks when really he plans to steal it, that’s wrong. But if a

defrauded, livid, and pistol-waving client tracks Madoff down on a crowded street and demands to know

whether he’s Bernie Madoff, the ethically recommendable response might be, “People say I look like him,

but really I’m Bill Martin.” The question, finally, for a consequentialist isn’t whether or not I should lie,

it’s what happens if I do and if I don’t?

Since consequentialists are more worried about the outcome than the action, the central ethical concern

is what kind of outcome should I want? Traditionally, there are three kinds of answers: the utilitarian,

the altruist, and the egoist. Each one will be considered in this chapter.

K E Y T A K E A W A Y

 Consequentialist ethicists focus on the results of what you do, not what you do.

R E V I E W Q U E S T I O N S

1. Under what scenario could a consequentialist defend the act of stealing?

2. Could a consequentialist recommend that a toy company lie about the age level a toy is designed for?

What would be an example?

3.2 Utilitarianism: The Greater Good

L E A R N I N G O B J E C T I V E S

1. Define utilitarian ethics.

2. Show how utilitarianism works in business.

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3. Distinguish forms of utilitarianism.

4. Consider advantages and drawbacks of utilitarianism.

The College Board and Karen Dillard

“Have you seen,” the blog post reads, “their parking lot on a Saturday?” [1]

Its packed. The lot belongs to

Karen Dillard College Prep (KDCP), a test-preparation company in Dallas. Like the Princeton Review,

they offer high schoolers courses designed to boost performance on the SAT. Very little real learning goes

on in these classrooms; they’re more about techniques and tricks for maximizing scores. Test takers

should know, for example, whether a test penalizes incorrect answers. If it doesn’t, you should take a few

minutes at each section’s end to go through and just fill in a random bubble for all the questions you

couldn’t reach so you’ll get some cheap points. If there is a penalty, though, then you should use your time

to patiently work forward as far as you can go. Knowing the right strategy here can significantly boost

your score. It’s a waste of brain space, though, for anything else in your life.

Some participants in KDCP—who paid as much as $2,300 for the lessons—definitely got some score

boosting for their money. It was unfair boosting, however; at least that’s the charge of the College Board,

the company that produces and administers the SAT.

Here’s what happened. A KDCP employee’s brother was a high school principal, and he was there when

the SATs were administered. At the end of those tests, everyone knows what test takers are instructed to

do: stack the bubble sheets in one pile and the test booklets in the other and leave. The administrators

then wrap everything up and send both the answer sheets and the booklets back to the College Board for

scoring. The principal, though, was pulling a few test booklets out of the stack and sending them over to

his brother’s company, KDCP. As it turns out, some of these pilfered tests were “live”—that is, sections of

them were going to be used again in future tests. Now, you can see how getting a look at those booklets

would be helpful for someone taking those future tests.

Other stolen booklets had been “retired,” meaning the specific questions inside were on their final

application the day the principal grabbed them. So at least in these cases, students taking the test-prep

course couldn’t count on seeing the very same questions come exam day. Even so, the College Board

didn’t like this theft much better because they sell those retired tests to prep companies for good money.

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When the College Board discovered the light-fingered principal and the KDCP advantage, they launched a

lawsuit for infringement of copyright. Probably figuring they had nothing to lose, KDCP sued back. [2]

College Board also threatened—and this is what produced headlines in the local newspaper—to cancel the

scores of the students who they determined had received an unfair advantage from the KDCP course.

As Denton Record-Chronicle reported (and as you can imagine), the students and their families freaked

out. [3]

The scores and full application packages had already been delivered to colleges across the country,

and score cancellation would have amounted to application cancellation. And since many of the students

applied only to schools requiring the SAT, the threat amounted to at least temporary college cancellation.

“I hope the College Board thinks this through,” said David Miller, a Plano attorney whose son was

apparently on the blacklist. “If they have a problem with Karen Dillard, that’s one thing. But I hope they

don’t punish kids who wanted to work hard.”

Predictably, the episode crescendo with everyone lawyered up and suits threatened in all directions. In the

end, the scores weren’t canceled. KDCP accepted a settlement calling for them to pay $600,000 directly to

the College Board and provide $400,000 in free classes for high schoolers who’d otherwise be unable to

afford the service. As for the principal who’d been lifting the test booklets, he got to keep his job, which

pays about $87,000 a year. The CEO of College Board, by the way, gets around $830,000. [4]

KDCP is a

private company, so we don’t know how much Karen Dillard or her employees make. We do know they

could absorb a million-dollar lawsuit without going into bankruptcy. Finally, the Plano school district in

Texas—a well-to-do suburb north of Dallas—continues to produce some of the nation’s highest SAT score

averages.

One Thief, Three Verdicts

Utilitarianism is a consequentialist ethics—the outcome matters, not the act. Among those who focus on

outcomes, the utilitarian’s distinguishing belief is that we should pursue the greatest good for the

greatest number. So we can act in whatever way we choose—we can be generous or miserly, honest or

dishonest—but whatever we do, to get the utilitarian’s approval, the result should be more people happier.

If that is the result, then the utilitarian needs to know nothing more to label the act ethically

recommendable. (Note: Utility is a general term for usefulness and benefit, thus the theory’s name. In

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everyday language, however, we don’t talk about creating a greater utility but instead a greater good or

happiness.)

In rudimentary terms, utilitarianism is a happiness calculation. When you’re considering doing

something, you take each person who’ll be affected and ask whether they’ll end up happier, sadder, or it

won’t make any difference. Now, those who won’t change don’t need to be counted. Next, for each person

who’s happier, ask, how much happier? Put that amount on one side. For each who’s sadder, ask, how

much sadder? That amount goes on the other side. Finally, add up each column and the greater sum

indicates the ethically recommendable decision.

Utilitarian ethics function especially well in cases like this: You’re on the way to take the SAT, which will

determine how the college application process goes (and, it feels like, more or less your entire life). Your

car breaks down and you get there very late and the monitor is closing the door and you remember

that…you forgot your required number 2 pencils. On a desk in the hall you notice a pencil. It’s gnawed and

abandoned but not yours. Do you steal it? Someone who believes it’s an ethical duty to not steal will

hesitate. But if you’re a utilitarian you’ll ask: Does taking it serve the greater good? It definitely helps you

a lot, so there’s positive happiness accumulated on that side. What about the victim? Probably whoever

owns it doesn’t care too much. Might not even notice it’s gone. Regardless, if you put your increased

happiness on one side and weigh it against the victim’s hurt on the other, the end result is almost certainly

a net happiness gain. So with a clean conscience you grab it and dash into the testing room. According to

utilitarian reasoning, you’ve done the right thing ethically (assuming the pencil’s true owner isn’t coming

up behind you in the same predicament).

Pushing this theory into the KDCP case, one tense ethical location is the principal lifting test booklets and

sending them over to his brother at the test-prep center. Everything begins with a theft. The booklets do

in fact belong to the College Board; they’re sent around for schools to use during testing and are meant to

be returned afterward. So here there’s already the possibility of stopping and concluding that the

principal’s act is wrong simply because stealing is wrong. Utilitarian’s, however, don’t want to move so

quickly. They want to see the outcome before making an ethical judgment. On that front, there are two

distinct outcomes: one covering the live tests, and the other the retired ones.

Live tests were those with sections that may appear again. When students at KDCP received them for

practice, they were essentially receiving cheat sheets. Now for a utilitarian, the question is, does the

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situation serve the general good? When the testing’s done, the scores are reported, and the college

admissions decisions made, will there be more overall happiness then there would’ve been had the tests

not been stolen? It seems like the answer has to be no. Obviously those with great scores will be smiling,

but many, many others will see their scores drop (since SATs are graded on a curve or as a percentile). So

there’s some major happiness for a few on one side balanced by unhappiness for many on the other. Then

things get worse. When the cheating gets revealed, the vast majority of test takers who didn’t get the edge

are going to be irritated, mad, or furious. Their parents too. Remember, it’s not only admission that’s at

stake here but also financial aid, so the students who didn’t get the KDCP edge worry not only that maybe

they should’ve gotten into a better school but also that they end up paying more too. Finally, the colleges

will register a net loss: all their work in trying to admit students on the basis of fair, equal evaluations gets

thrown into question.

Conclusion. The theft of live tests fails the utilitarian test. While a few students may come out better off

and happier, the vast majority more than balances the effect with disappointment and anger. The greater

good isn’t served.

In the case of the theft of “retired” tests where the principal forwarded to KDCP test questions that won’t

reappear on future exams, it remains true that the tests were lifted from the College Board and it remains

true that students who took the KDCP prep course will receive an advantage because they’re practicing the

SAT. But the advantage doesn’t seem any greater than the one enjoyed by students all around the nation

who purchased prep materials directly from the College Board and practiced for the exam by taking old

tests. More—and this was a point KDCP made in their countersuit against the College Board—stealing the

exams was the ethically right thing to do because it assured that students taking the KDCP prep course

got the same level of practice and expertise as those using official College Board materials. If the tests

hadn’t been stolen, then wouldn’t KDCP kids be at an unfair disadvantage when compared with others

because their test practices hadn’t been as close to the real thing as others got? In the end, the argument

goes, stealing the tests assured that as many people as possible who took prep courses got to practice on

real exams.

Conclusion. The theft of the exams by the high school principal may conceivably be congratulated by a

utilitarian because it increases general happiness. The students who practiced on old exams purchased

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from the College Board can’t complain. And as for those students at KDCP, their happiness increases since

they can be confident that they’ve prepared as well as possible for the SAT.

The fact that a utilitarian argument can be used to justify the theft of test booklets, at least retired ones,

doesn’t end the debate, however. Since the focus is on outcomes, all of them have to be considered. And

one outcome that might occur if the theft is allowed is, obviously, that maybe other people will start

thinking stealing exam books isn’t such a bad idea. If they do—if everyone decides to start stealing—it’s

hard to see how anything could follow but chaos, anger, and definitely not happiness.

This discussion could continue as more people and consequences are factored in, but what won’t change is

the basic utilitarian rule. What ought to be done is determined by looking at the big picture and deciding

which acts increase total happiness at the end of the day when everyone is taken into account.

Should the Scores Be Canceled?

After it was discovered that KDCP students got to practice for the SATs with live exams, the hardest

question facing the College Board was, should their scores be canceled? The utilitarian argument

for not canceling is straightforward. Those with no scores may not go to college at all next year. This is

real suffering, and if your aim is to increase happiness, then counting the exams is one step in that

direction. It’s not the last step, though, because utilitarian’s at the College Board need to ask

about everyone else’s happiness too: what’s the situation for all the others who took the exam but has

never heard of KDCP? Unfortunately, letting the scores be counted is going to subtract from their

happiness because the SAT is graded comparatively: one person doing well means everyone getting fewer

correct answers sees their score drop, along with college choices and financial aid possibilities. Certainly

it’s true that each of these decreases will be small since there were only a handful of suspect tests. Still, a

descent, no matter how tiny, is a descent, and all the little bits add up.

What’s most notable, finally, about this decision is the imbalance. Including the scores of KDCP students

will weigh a tremendous increase in happiness for a very few against a slight decrease for very many.

Conversely, a few will be left very sad, and many slightly happier. So for a utilitarian, which is it? It’s hard

to say. It is clear, however, that this uncertainty represents a serious practical problem with the ethical

theory. In some situations you can imagine yourself in the shoes of the different people involved and,

using your own experience and knowledge, estimate which decision will yield the most total happiness. In

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this situation, though, it seems almost impossible because there are so many people mixed up in the

question.

Then things get still more difficult. For the utilitarian, it’s not enough to just decide what brings the most

happiness to the most individuals right now; the future needs to be accounted for too. Utilitarianism is a

true global ethics; you’re required to weigh everyone’s happiness and weigh it as best as you can as far into

the future as possible. So if the deciders at the College Board follow a utilitarian route in opting to include

(or cancel) the scores, they need to ask themselves—if we do, how will things be in ten years? In fifty?

Again, these are hard questions but they don’t change anything fundamental. For the utilitarian, making

the right decision continues to be about attempting to predict which choice will maximize happiness.

Utilitarianism and the Ethics of Salaries

When he wasn’t stealing test booklets and passing them on to KDCP, the principal in the elite Plano

school district was dedicated to his main job: making sure students in his building receive an education

qualifying them to do college-level work. Over at the College Board, the company’s CEO leads a

complementary effort: producing tests to measure the quality of that preparation and consequently

determine students’ scholastic aptitude. The principal, in other words, is paid to make sure high schoolers

get an excellent education, and the CEO is paid to measure how excellent (or not) the education is.

Just from the job descriptions, who should get the higher salary? It’s tempting to say the principal.

Doesn’t educating children have to be more important than measuring how well they’re educated?

Wouldn’t we all rather be well educated and not know it than poorly educated and painfully aware of the

fact?

Regardless, what’s striking about the salary that each of these two actually receives isn’t who gets more;

it’s how much. The difference is almost ten times: $87,000 for the principal versus the CEO’s $830,000.

Within the doctrine of utilitarianism, can such a divergence be justified?

Yes, but only if we can show that this particular salary structure brings about the greatest good, the

highest level of happiness for everyone considered as a collective. It may be, for example, that objectively

measuring student ability, even though it’s less important than instilling ability, is also much harder. In

that case, a dramatically higher salary may be necessary in order to lure high-quality measuring talent.

From there, it’s not difficult to fill out a utilitarian justification for the pay divergence. It could be that

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inaccurate testing would cause large amounts of unhappiness: students who worked hard for years would

be frustrated when they were bettered by slackers who really didn’t know much but managed to score well

on a test.

To broaden the point, if tremendous disparities in salary end up making people happier, then the

disparities are ethical. Period. If they don’t, however, then they can no longer be defended. This differs

from what a libertarian rights theorist might say here. For a libertarian—someone who believes

individuals have an undeniable right to make and keep whatever they can in the world, regardless of how

rich or poor anyone else may be—the response to the CEO’s mammoth salary is that he found a way to

earn it fair and square, and everyone should quit complaining about it. Generalized happiness doesn’t

matter, only the individual’s right to try to earn and keep as much as he or she can.

Can Money Buy Utilitarian Happiness? The Ford Pinto Case

Basic questions in business tend to be quantitative, and money is frequently the bottom line: How many

dollars is it worth? What’s my salary? What’s the company’s profit? The basic question of utilitarianism

is qualitative: how much happiness and sadness is there? Inevitably, it’s going to be difficult when

businesses accustomed to bottom-line number decisions are forced to cross over and decide about general

happiness. One of the most famous attempts to make the transition easier occurred back in the 1970s.

With gas prices on the rise, American car buyers were looking for smaller, more efficient models than

Detroit was manufacturing. Japanese automakers were experts in just those kinds of vehicles and they

were seizing market share at an alarming rate. Lee Iacocca, Ford’s president, wanted to rush a car into

production to compete. His model was the Pinto. [5]

A gas sipper slated to cost $2,000 (about $12,000 today); Ford rushed the machine through early

production and testing. Along the way, unfortunately, they noticed a design problem: the gas tank’s

positioning in the car’s rump left it vulnerable to rear-end collisions. In fact, when the rear-end hit came

faster than twenty miles per hour, not only might the tank break, but gasoline could be splattered all the

way up to the driver’s compartment. Fire, that meant, ignited by sparks or anything else could engulf

those inside.

No car is perfectly safe, but this very scary vulnerability raised eyebrows. At Ford, a debate erupted about

going ahead with the vehicle. On the legal end, the company stood on solid ground: government

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regulation at the time only required gas tanks to remain intact at collisions under twenty miles per hour.

What about the ethics, though? The question about whether it was right to charge forward was

unavoidable because rear-end accidents at speeds greater than twenty miles per hour happen—every day.

The decision was finally made in utilitarian terms. On one side, the company totaled up the dollar cost of

redesigning the car’s gas tank. They calculated

 12.5 million automobiles would eventually be sold,

 eleven dollars would be the final cost per car to implement the redesign.

Added up, that’s $137 million total, with the money coming out of Pinto buyers’ pockets since the added

production costs would get tacked onto the price tag. It’s a big number but it’s not that much per person:

$11 is about $70 today. In this way, the Pinto situation faced by Ford executives is similar to the test

cancellation question for the College Board: one option means only a little bit of suffering for specific

individuals, but there are a lot of them.

On the other side of the Pinto question—and, again, this resembles the College Board predicament—if the

decision is made to go ahead without the fix, there’s going to be a lot of suffering but only for a very few

people. Ford predicted the damage done to those few people in the following ways:

 Death by burning for 180 buyers

 Serious burn injuries for another 180 buyers

 Twenty-one hundred vehicles burned beyond all repair

That’s a lot of damage, but how do you measure it? How do you compare it with the hike in the price tag?

More generally, from a utilitarian perspective, is it better for a lot of people to suffer a little or for a few

people to suffer a lot?

Ford answered both questions by directly attaching monetary values to each of the injuries and damages

suffered:

 At the time, 1970, US Government regulatory agencies officially valued a human life at $200,000. (That

would be about $1.2 million today if the government still kept this problematic measure.)

 Insurance companies valued a serious burn at $67,000.

 The average resale value on subcompacts like the Pinto was $700, which set that as the amount lost after a

complete burnout.

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The math coming out from this is (180 deaths × $200,000) + (180 injuries × $67,000) + (2,100 burned-

out cars × $700) = $49 million. The result here is $137 million worth of suffering for Pinto drivers if the

car is redesigned and only $49 million if it goes to the streets as is.

Ford sent the Pinto out. Over the next decade, according to Ford estimates, at least 60 people died in fiery

accidents and at least 120 got seriously burned (skin-graft-level burns). No attempt was made to calculate

the total number of burned vehicles. Shortly thereafter, the Pinto was phased out. No one has final

numbers, but if the first decade is any indication, then the total cost came in under the original $49

million estimate. According to a utilitarian argument, and assuming the premises concerning dollar

values are accepted, Ford made the right decision back in 1970.

If every Pinto purchaser had been approached the day after buying the car, told the whole Ford story, and

been offered to change their car along with eleven dollars for another one without the gas tank problem,

how many would’ve handed the money over to avoid the long-shot risk? The number might’ve been very

high, but that doesn’t sway a utilitarian conclusion. The theory demands that decision makers stubbornly

keep their eye on overall happiness no matter how much pain a decision might cause certain individuals.

Versions of Utilitarian Happiness

Monetized utilitarianism attempts to measure happiness, to the extent possible, in terms of money. As the

Ford Pinto case demonstrated, the advantage here is that it allows decisions about the greater good to be

made in clear, objective terms. You add up the money on one side and the money on the other and the

decision follows automatically. This is a very attractive benefit, especially when you’re dealing with large

numbers of individuals or complex situations. Monetized utilitarianism allows you to keep your happiness

calculations straight.

Two further varieties of utilitarianism are hedonistic and idealistic. Both seek to maximize human

happiness, but their definitions of happiness differ. Hedonistic utilitarian’s trace back to Jeremy Bentham

(England, around 1800). Bentham was a wealthy and odd man who left his fortune to the University

College of London along with the stipulation that his mummified body be dressed and present at the

institution. It remains there today. He sits in a wooden cabinet in the main building, though his head has

been replaced by a wax model after pranking students repeatedly stole the real one. Bentham believed

that pleasure and happiness are ultimately synonymous. Ethics, this means, seeks to maximize the

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pleasures—just about any sensation of pleasure—felt by individuals. But before dropping everything and

heading out to the bars, it should be remembered that even the most hedonistic of the utilitarian’s believe

that getting pleasure right now is good but not as good as maximizing the feeling over the long term.

(Going out for drinks, in others words, instead of going to the library isn’t recommendable on the evening

before midterms.)

A contemporary of Bentham, John Stuart Mill, basically agreed that ethics is about maximizing pleasure,

but his more idealistic utilitarianism distinguished low and highbrow sensations. The kinds of raw, good

feelings that both we and animals can find, according to Mill, are second-rate pleasures. Pleasures with

higher and more real value include learning and learnedness. These aren’t physical joys so much as the

delights of the mind and the imagination. For Mill, consequently, libraries and museums are scenes of

abundant pleasure, much more than any bar.

This idealistic notion of utilitarianism fits quite well with the College Board’s response to the KDCP

episode. First, deciding against canceling student scores seems like a way of keeping people on track to

college and headed toward the kind of learning that rewards our cerebral inclinations. Further, awarding

free prep classes to those unable to pay seems like another step in that direction, at least if it helps get

them into college.

Versions of Utilitarian Regulation

A narrow distinction with far-reaching effects divides soft from hard utilitarianism. Soft utilitarianism is

the standard version; when people talk about a utilitarian ethics, that’s generally what they mean. As a

theory, soft utilitarianism is pretty laid back: an act is good if the outcome is more happiness in the world

than we had before. Hard utilitarianism, on the other hand, demands more: an act is ethically

recommendable only if the total benefits for everyone are greater than those produced by any other act.

According to the hard version, it’s not enough to do well; you must do the most good possible. As an

example, think about the test-prep company KDCP under the microscope of utilitarian examination.

 When a soft utilitarian looks at KDCP, the company comes out just fine. High schoolers are learning test-

taking skills and tricks that they’ll only use once but will help in achieving a better score and leave behind

a sense that they’ve done all they can to reach their college goals. That means the general happiness level

probably goes up—or at worst holds steady—because places like KDCP are out there.

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 When a hard utilitarian looks at KDCP, however, the company doesn’t come off so well. Can we really say

that this enterprise’s educational subject—test taking—is the very best use of teaching resources in terms

of general welfare and happiness? And what about the money? Is SAT prep really the best way for society

to spend its dollars? Wouldn’t a hard utilitarian have to recommend that the tuition money collected by

the test-prep company get siphoned off to pay for, say, college tuition for students who otherwise wouldn’t

be able to continue their studies at all?

If decisions about businesses are totally governed by the need to create the most happiness possible, then

companies like KDCP that don’t contribute much to social well-being will quickly become endangered.

The demands of hard utilitarianism can be layered onto the ethical decision faced by the College Board in

their courtroom battle with KDCP. Ultimately, the College Board opted to penalize the test-prep company

by forcing it to offer some free classes for underprivileged students. Probably, the result was a bit more

happiness in the world. The result wasn’t, however, the most happiness possible. If hard utilitarianism

had driven the decision, then the College Board would’ve been forced to go for the jugular against KDCP,

strip away all the money they could, and then use it to do the most good possible, which might have meant

setting up a scholarship fund or something similar. That’s just a start, though. Next, to be true to hard

utilitarianism, the College Board would need to focus on itself with hard questions. The costs of creating

and applying tests including the SAT are tremendous, which makes it difficult to avoid this question:

wouldn’t society as a whole be better off if the College Board were to be canceled and all their resources

dedicated to, for example, creating a new university for students with learning disabilities?

Going beyond KDCP and the College Board, wouldn’t almost any private company fall under the threat of

appropriation if hard utilitarian’s ran the world? While it’s true, for example, that the money spent on

steak and wine at expensive Las Vegas restaurants probably increases happiness a bit, couldn’t that same

cash do a lot more for the general welfare of people whose income makes Las Vegas an impossibly

expensive dream? If it could, then the hard utilitarian will propose zipping up Las Vegas and rededicating

the money.

Finally, since utilitarianism is about everyone’s total happiness, don’t hard questions start coming up

about world conditions? Is it possible to defend the existence of McDonald’s in the United States while

people are starving in other countries?

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Conclusion. In theory, there’s not much divergence between soft and hard utilitarianism. But in terms of

what actually happens out in the world when the theory gets applied, that’s a big difference. For private

companies, it’s also a dangerous one.

Two further versions of utilitarian regulation are act and rule. Act utilitarianism affirms that a specific

action is recommended if it increases happiness. This is the default form of utilitarianism, and what

people usually mean when they talk about the theory. The separate rule-based version asserts that an

action is morally right if it follows a rule that, when applied to everyone, increases general happiness.

The rule utilitarian asks whether we’d all be benefitted if everyone obeyed a rule such as “don’t steal.” If

we would—if the general happiness level increases because the rule is there—then the rule utilitarian

proposes that we all adhere to it. It’s important to note that rule utilitarian’s aren’t against stealing

because it’s intrinsically wrong, as duty theorists may propose. The rule utilitarian is only against stealing

if it makes the world less happy. If tomorrow it turns out that mass stealing serves the general good, then

theft becomes the ethically right thing to do.

The sticky point for rule utilitarian’s involves special cases. If we make the rule that theft is wrong,

consider what happens in the case from the chapter’s beginning: You forgot your pencil on SAT test day,

and you spot one lying on an abandoned desk. If you don’t take it, no one’s going to be any happier, but

you’ll be a lot sadder. So it seems like rule utilitarianism verges on defeating its own purpose, which is

maximizing happiness no matter what.

On the other hand, there are also sticky points for act utilitarian’s. For example, if I go to Wal-Mart

tonight and steal a six-pack of beer, I’ll be pretty happy. And assuming I don’t get caught, no one will be

any sadder. The loss to the company—a few dollars—will disappear in a balance sheet so huge that it’s

hard to count the zeros. Of course if everyone starts stealing beers, that will cause a problem, but in

practical terms, if one person does it once and gets away with it, it seems like an act utilitarian would have

to approve. The world would be a happier place.

Advantages and Disadvantages of Utilitarian Ethics in Business

Basic utilitarianism is the soft, act version. These are the theory’s central advantages:

 Clarity and simplicity. In general terms, it’s easy to understand the idea that we should all act to

increase the general welfare.

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 Acceptability. The idea of bringing the greatest good to the greatest number coheres with common and

popular ideas about what ethical guidance is supposed to provide.

 Flexibility. The weighing of individual actions in terms of their consequences allows for meaningful and

firm ethical rules without requiring that everyone be treated identically no matter how different the

particular situation. So the students whose scores were suspended by the College Board could see them

reinstated, but that doesn’t mean the College Board will take the same action in the future (if, say, large

numbers of people start stealing test booklets).

 Breadth. The focus on outcomes as registered by society overall makes the theory attractive for those

interested in public policy. Utilitarianism provides a foundation and guidance for business regulation by

government.

The central difficulties and disadvantages of utilitarianism include the following:

 Subjectivity. It can be hard to make the theory work because it’s difficult to know what makes happiness

and unhappiness for specific individuals. When the College Board demanded that KDCP give free classes

to underprivileged high schoolers, some paying students were probably happy to hear the news, but

others probably fretted about paying for what others received free. And among those who received the

classes, probably the amount of resulting happiness varied between them.

 Quantification. Happiness can’t be measured with a ruler or weighed on a scale; it’s hard to know

exactly how much happiness and unhappiness any particular act produces. This translates into confusion

at decision time. (Monetized utilitarianism, like that exhibited in the case of the Ford Pinto, responds to

this confusion.)

 Apparent injustices. Utilitarian principles can produce specific decisions that seem wrong. A quick

example is the dying grandmother who informs her son that she’s got $200,000 stuffed into her mattress.

She asks the son to divide the money with his brother. This brother, however, is a gambling alcoholic

who’ll quickly fritter away his share. In that case, the utilitarian would recommend that the other

brother—the responsible one with children to put through college—just keep all the money. That would

produce the most happiness, but do we really want to deny grandma her last wish?

 The utilitarian monster is a hypothetical individual who really knows how to feel good. Imagine that

someone or a certain group of people were found to have a much greater capacity to experience happiness

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than others. In that case, the strict utilitarian would have no choice but to put everyone else to work

producing luxuries and other pleasures for these select individuals. In this hypothetical situation, there

could even be an argument for forced labor as long as it could be shown that the servants’ suffering was

minor compared to the great joy celebrated by those few who were served. Shifting this into economic and

business terms, there’s a potential utilitarian argument here for vast wage disparities in the workplace.

 The utilitarian sacrifice is the selection of one person to suffer terribly so that others may be pleasured.

Think of gladiatorial games in which a few contestants suffer miserably, but a tremendous number of

spectators enjoy the thrill of the contest. Moving the same point from entertainment into the business of

medical research, there’s a utilitarian argument here for drafting individuals—even against their will—to

endure horrifying medical experiments if it could be shown that the experiments would, say, cure cancer,

and so create tremendous happiness in the future.

K E Y T A K E A W A Y S

 Utilitarianism judges specific decisions by examining the decision’s consequences.

 Utilitarianism defines right and wrong in terms of the happiness of a society’s members.

 Utilitarian ethics defines an act as good when its consequences bring the greatest good or happiness to

the greatest number of people.

 There are a variety of specific forms of utilitarianism.

 Theoretically, utilitarianism is straightforward, but in practical terms it can be difficult to measure the

happiness of individuals.

R E V I E W Q U E S T I O N S

1. What is a utilitarian argument in favor of a college education? How does it differ from other reasons you

might want to go to college or graduate school?

2. How could a utilitarian justify cheating on an exam?

3. What is a “global ethics”?

4. What practical problem with utilitarianism is (to some degree) resolved by monetized utilitarianism?

5. What are two advantages of a utilitarian ethics when compared with an ethics of duties?

6. What are two disadvantages of a utilitarian ethics when compared with an ethics of duties?

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7. What’s an example from today’s world of a utilitarian monster?

8. What’s an example from today’s world of a utilitarian sacrifice?

[1] “CB-Karen Dillard Case Settled-No Cancelled Scores,” College Confidential, accessed May 15,

2011, http://talk.collegeconfidential.com/parents-forum/501843-cb-karen-dillard-case-settled-no-cancelled-

scores.html.

[2] Paulina Mis, “College Board Sues Test-Prep Company, Countersuit Filed,” Scholarships.com, February 26, 2008,

accessed May 15, 2011,http://www.scholarships.com/blog/high-school/college-board-sues-test-prep-company-

countersuit-filed/161.

[3] Staci Hupp, “SAT Scores for Students Who Used Test Prep Firm May Be Thrown Out, “Denton Record Chronicle,

February 22, 2008, accessed May 15, 2011.

[4] “AETR Report Card,” Americans for Educational Testing Reform, accessed May 15,

2011, http://www.aetr.org/college-board.php.

[5] Case facts taken from Manuel Velasquez, Business Ethics, Concepts and Cases, 6th ed. (Upper Saddle River, NJ:

Pearson Prentice Hall, 2006), 60–61.

3.3 Altruism: Everyone Else

L E A R N I N G O B J E C T I V E S

1. Define altruistic ethics.

2. Show how altruism works in and with business.

3. Consider advantages and drawbacks of altruism.

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TOMS Shoes

There is no Tom at TOMS Shoes. The company’s name actually came from the title for its social cause:

Shoes for Tomorrow. Tomorrow shoes—TOMS Shoes. The shoes are given away to needy children in

Argentina at a one-to-one rate: for every pair bought in the United States, TOMS delivers a pair down

there.

They’re needed in Argentina’s poverty-stricken regions to prevent the spread of an infectious disease, one

that flourishes in the local soil and rises up through the feet. A pair of shoes is all that’s needed to block

the problem.

The project started when young Texan entrepreneur Blake Mycoskie vacationed in Argentina. Not the type

to luxuriate in the hotel pool, he got out and learned about the country, good and bad, the food, the

sweeping geography, the poverty and diseases. The foot infection, he discovered, was so devastating yet so

easy to block that, according to his company’s website, he decided he had to do something about

it. [1]

Initially, he contemplated a charitable fund to buy shoes for the needy children, but that left his

project subject to the ebb and flow of others’ generosity. It’d be better and more reliable, he determined,

to link the community-service project with private enterprise and use revenues from a company to fund

the charity. Quickly, Mycoskie determined that he could make the whole machine work most efficiently by

starting a shoe company. Simultaneously, he could produce shoes for donation and shoes for sale to

finance the effort. So we have TOMS Shoes.

Next, a kind of shoe to produce and sell was required. Mycoskie found inspiration in Argentina’s

traditional alpargata. This is a cheap, workingman’s shoe, a slip-on made from canvas with rope

soles. [2]

For the American adaptation, Mycoskie strengthened the sole, styled and colored the canvas, and

added a brand label. The price also got jacked up. The originals cost a few dollars in Argentina; the

adaptations cost about forty dollars here.

They’re a splashy hit. You find TOMS Shoes at trendy footwear shops, at Whole Foods grocery stores, and

all over the Internet. At last check, about half a million pairs have been sold and an equal number

donated. Total sales in seven figures aren’t far off, and the company was recently featured on a CNBC

segment as an American business success story. Notably, TOMS achieved recognition on national TV

sooner after its inception than almost any other enterprise in the program’s history. It all happened in

fewer than four years.

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Question: how did it get so big so fast? How did some guy transform from a wandering tourist to a captain

of the shoe industry in less time than it takes to get a college degree? Answer: celebrities.

Blake Mycoskie’s got a warm, round face and a perfect smile. He’s got money from his pre-shoe projects

and he’s smart too. He’s also got that contemporary bohemian look down with his bead necklace and

wavy, shoulder-length hair. There’s no letdown beneath the chin line either; he’s fit (he was a tennis pro

until nineteen). You get the idea. He commands attention from even Hollywood women, and he ended up

coupled with the midrange star Maggie Grace. He introduced her to his TOMS Shoes concept, gave her a

few pairs to wear around and show friends, and the ball started rolling. [3]

A few parties later, Scarlett Johansson, Jessica Biel, Benicio Del Toro, Tobey Maguire, Sienna Miller, and

Karl Lagerfeld were parading around in TOMS Shoes. There was no stopping it. [4]

Today, when Blake Mycoskie introduces himself, it’s not as the CEO of his company; he says he’s the Chief

Shoe Giver at TOMS Shoes, reflecting the idea that charity drives the thriving business, not the other way

around.

Is TOMS Shoes Altruistic?

An action is morally right according to the altruist, and to the ethical theory of altruism, if the action’s

consequences are more beneficial than unfavorable for everyone except the person who acts. That means

the actor’s interests aren’t considered: the altruist does whatever can be done so that others will be

happier.

It’s common to imagine the altruist as poverty stricken and self-sacrificing. When you live for everyone

else as the altruist does, it’s no surprise that you can end up in pretty bad shape. You might get lucky and

run into another altruist like yourself, but if you don’t, there’s not going to be anyone particularly

dedicated to your well-being. On the positive side there’s nobility to the idea of dedicating everything to

everyone else, but the plain truth is not many of us would choose to live like Gandhi or Mother Teresa.

It doesn’t have to be that way, though. A suffering life may be an effect of altruism, but it’s not a

requirement. Living for others doesn’t mean you live poorly, only that there’s no guarantee you’ll live well.

You might, however, live well. Blake Mycoskie demonstrates this critical element at the heart of altruism:

it’s not about suffering or sacrificing; it’s about making clear-eyed decisions about the best way to make as

many others as happy as possible. If you happen to live the good life along the way—partying with Maggie

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Grace, Sienna Miller, and friends because that’s the fastest route to publicize the TOMS Shoes

enterprise—that doesn’t count against the project. It doesn’t count in favor either. All that matters, all that

gets tallied up when the question gets asked about whether the altruist did good, is how things ended up

for everyone else.

In the case of TOMS Shoes, the tallying is easy. The relatively wealthy shoe buyers in the United States

come off well; they get cool, politically correct footwear to show friends along with a psychological lift

from knowing they’re helping the less fortunate. On the other side, the rural Argentines obviously benefit

also.

Some Rules of Altruism

Altruism is a consequentialist ethics. Like utilitarianism, no specific acts are prohibited or required; only

outcomes matter. That explains why there aren’t lifestyle requirements for the altruist. Some live stoically

like Gandhi while others like Mycoskie get the high life, but they’re both altruists as long as the goal of

their lives and the reason for their actions is bringing happiness to others. Similarly, the altruist might be

a criminal (Robin Hood) or a liar (see Socrates’ noble lie).

Like the utilitarian, most of the hard questions altruists face concern happiness. They include:

 The happiness definition. Exactly what counts as happiness? In the case of TOMS donating shoes to rural

Argentines, the critical benefit is alleviation of disease and the suffering coming with it. Happiness, in

other words, is defined here as a release from real, physical pain. On the other hand, with respect to the

shoes sold in the States, the happiness is completely different; it’s a vague, good feeling that purchasers

receive knowing their shopping is serving a social cause. How do we define happiness in a way that ropes

in both these distinct experiences?

 Once happiness has been at least loosely defined, another question altruist’s face is the happiness

measure: how do we know which is worth more, the alleviation of suffering from a disease or the warm

happiness of serving a good cause? And even if the answer to that question is clear, how great is the

difference, how can it be measured?

 Another altruism difficulty is happiness foresight. Even if donating shoes helps in the short term, are the

recipients’ lives really going to be happier overall? Conditions are hard in the abandoned regions of the

third world, and alleviation of one problem may just clear the way for another. So TOMS Shoes saves

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poverty-stricken Argentines from suffering a debilitating foot disease, but how much good are you really

doing if you save people only so that they’re free to suffer aching hunger, miserable sickness in places

lacking antibiotics, and hard manual labor because there’s no other work?

Altruism is a variety of selflessness, but it’s not the same thing; people may deny themselves or they may

sacrifice themselves for all kinds of other reasons. For example, a soldier may die in combat, but that’s not

altruism; that’s loyalty: it’s not sacrificing for everyone else but for a particular nation. The same may go

for the political protestor who ends up jailed and forgotten forever. That’s self-sacrifice, but she did it for

the cause and not for all the others. The fireman may lose his life rescuing a victim, but this is because he’s

doing his job, not because he’s decided to live for the sake of others. All altruists, finally, are selfless, but

not all those who sacrifice themselves are altruists.

Personal versus impersonal altruism distinguishes two kinds of altruists: those who practice altruism on

their own and leave everyone else alone and those who believe that everyone should act only to benefit

others and without regard to their own well-being.

The Altruist in Business and the Business That Is Altruistic

TOMS Shoes shows that a business can be mounted to serve the welfare of others. A company aiming to

serve an altruistic purpose doesn’t have to be organized altruistically, however. An individual truly

dedicated to everyone else could start a more traditional company (a real estate firm, for example), work

like a dog, turn massive profits, and in the end, donate everything to charity. It may even be that during

the profit-making phase the altruist CEO is ruthless, exploiting workers and consumers to the maximum.

All that’s fine as long as the general welfare is served in the end when all the suffering is toted up on one

side and the happiness on the other. A business operation that isn’t at all altruistic, in other words, can be

bent in that direction by an altruistic owner.

Going the other way, the business operation itself may be altruistic. For example, this comes from the

College Board’s website, the About Us page: The College Board is a not-for-profit membership association

whose mission is to connect students to college success and opportunity. [5]

That sounds like a good cause. The company doesn’t exist to make money but to implement testing that

matches students with their best-fit colleges. It is, in other words, an altruistic enterprise, and the world,

the argument could be made, is a better place because the College Board exists. But—and this is the

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important distinction—that doesn’t mean everyone who works at the College Board is selfless. Far from it,

the CEO takes home $830,000 a year. That money would buy a lot of shoes for the poverty-stricken in

Argentina. So, there can be altruistic business organizations driven by workers who aren’t altruists.

A church is also a business organization with cash flows, budgets, and red and black ink. The same goes

for Goodwill. Here’s their mission statement: “Goodwill Industries International enhances the dignity and

quality of life of individuals, families and communities by eliminating barriers to opportunity and helping

people in need reach their fullest potential through the power of work.” [6]

So, the Salvation Army fits into

the group of altruistic enterprises, of organizations that exist, like the College Board, to do public good.

It’s distinct from the College Board, however, in that a very healthy percentage of those working inside the

organization are themselves altruists—they’re working for the cause, not their own welfare. Think of the

Salvation Army red kettle bell ringers around Christmas time.

Conclusion. Altruism connects with business in three basic ways. There are altruists who use normal,

profit-driven business operations to do well. There are altruistic companies that do good by employing no

altruistic workers. And there are altruistic organizations composed of altruistic individuals.

Advocating and Challenging Ethical Altruism

The arguments for and against an altruistic ethics overlap to a considerable extent with those listed under

utilitarianism. The advantages include:

 Clarity and simplicity. People may disagree about exactly how much good a company like TOMS Shoes

is really doing, but the overall idea that the founder is working so that others can be happier is easy to

grasp.

 Acceptability. The idea of working for others grants an ethical sheen. No matter what you might think of

someone as a person, it’s very difficult to criticize them in ethical terms if they really are dedicating

themselves to the well-being of everyone else.

 Flexibility. Altruists have many ways of executing their beliefs.

The disadvantages of altruism include:

 Uncertainty about the happiness of others. Even if individuals decide to sacrifice their own welfare

for the good of others, how do they know for sure what makes others happy?

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 Shortchanging yourself. Even though altruism doesn’t require that the altruist live a miserable life,

there doesn’t seem to be any clear reason why the altruist shouldn’t get an at least equal claim to

happiness as everyone else (as in a utilitarian approach). Also, some critics suspect that altruism can be a

way of escaping your own life: if you spend all your time volunteering, could it be that deep down you’re

not a good soul so much as just afraid of going out into the competitive world and trying to win a good

place for yourself?

K E Y T A K E A W A Y S

 Altruism defines ethically good as any act that ends up increasing net happiness (or decreasing net

unhappiness) when everything is taken into account except the actor’s increased or diminished happiness.

 Altruism doesn’t require living a miserable life.

 Altruism intersects with the business world in various ways.

R E V I E W Q U E S T I O N S

1. Theoretically, could the most devoted altruist in a society also be its richest and happiest member? How?

2. Does Blake Mycoskie have to be an altruist for TOMS Shoes to be considered an altruistic enterprise?

3. Does TOMS Shoes have to be an altruistic enterprise for Mycoskie to be considered an altruist?

4. What are some other motives that may lead someone to live the life of an altruist?

[1] TOMS Shoes, “One for One Movement,” accessed May 15, 2011,http://www.toms.com/our-movement.

[2] TOMS Shoes, accessed May 15, 2011,http://cdn2.tomsshoes.com/images/uploads/2006-oct-vogue.jpg.

[3] Sharon_b, December 14, 2008 (5:24 p.m.), “Blake Mycoskie—he’s handsome, rich and helps children in the

Third World,” Gossip Rocks, accessed May 15, 2011,http://www.gossiprocks.com/forum/news/90958-blake-

mycoskie-hes-handsome-rich-helps-children-third-world.html.

[4] Lesley M. M. Blume, “You Are What You Wear,” Huffington Post, July 30, 2008, accessed May 15,

2011, http://www.huffingtonpost.com/lesley-m-m-blume/you-are-what-you-wear_b_65967.html.

[5] “About Us,” College Board accessed May 15, 2011, http://about.collegeboard.org.

[6] “Our Mission,” Goodwill Industries International, Inc., accessed May 15, 2011,http://www.goodwill.org/about-

us/our-mission.

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3.4 Egoism: Just Me

L E A R N I N G O B J E C T I V E S

1. Define ethical egoism.

2. Show how egoism works in and with business.

3. Consider advantages and drawbacks of egoism.

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Ethical Egoism

Ethical egoism: whatever action serves my self-interest is also the morally right action. What’s good for

me in the sense that it gives me pleasure and happiness is also good in the sense that it’s the morally right

thing to do.

Ethical egoism mirrors altruism: If I’m an altruist, I believe that actions ought to heighten the happiness

of others in the world, and what happens to me is irrelevant. If I’m an egoist, I believe that actions ought

to heighten my happiness, and what happens to others is irrelevant.

Could someone like Blake Mycoskie—someone widely recognized as an altruistic, social-cause hero—

actually is an egoist? Yes. Consider things this way. Here’s a young guy and he’s out looking for money,

celebrity, good parties, and a jaw-dropping girlfriend. It wouldn’t be the first time there was a guy like

that.

Put yourself in his shoes and imagine you’re an ethical egoist: whatever’s good for you is good. Your

situation is pretty clear, your moral responsibility lists what you should be trying to get, and the only

question is how can I get it all?

That’s a tall order. Becoming a rock star would probably work, but there are a lot of people already out

there going for it that way. The same goes for becoming a famous actor. Sports are another possibility;

Mycoskie, in fact, made a run at pro tennis as a younger man, but like most who try, he couldn’t break into

the upper echelon. So there are paths that may work, but they’re hard ones, it’s a real fight for every step

forward.

If you’re smart—and Mycoskie obviously is—then you might look for a way to get what you want that

doesn’t force you to compete so brutally with so many others. Even better, maybe you’ll look for a way that

doesn’t present any competition at all, a brand new path to the wish list. The idea of a celebrity-driven

shoe company that makes a profit but that also makes its founder a star in the eyes of the Hollywood stars

is a pretty good strategy.

Obviously, no one can look deep into Mycoskie’s mind and determine exactly what drove him to found his

enterprise. He may be an altruist or an egoist or something else, but what’s important is to outline how

egoism can actually work in the world. It can work—though of course it doesn’t work this way every time—

just like TOMS Shoes.

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Egoism and Selfishness

When we hear the word egoist, an ugly profile typically comes to mind: self-centered, untrustworthy,

pitiless, and callous with respect to others. Some egoists really are like that, but they don’t have to be that

way. If you’re out to maximize your own happiness in the world, you might find that helping others is the

shortest and fastest path to what you want. This is a very important point. Egoists aren’t against other

people, they’re for themselves, and if helping others work for them, that’s what they’ll do. The case of

TOMS Shoes fits right here. The company improves the lives of many; it raises the level of happiness in

the world. And because it does that, the organization has had tremendous success, and because of that

success, the Blake Mycoskie we’re imagining as an egoist is getting what he wants: money, great parties,

and everyone loving him. In short, sometimes the best way to one’s own happiness is by helping others be

happier.

That’s not always the way it works. Bernie Madoff destroyed families, stole people’s last dimes, and lived

the high life all the way through. For an ethical egoist, the only blemish on his record is that he got caught.

Madoff did get caught, though, and this too needs to be factored into any consideration of egoists and how

they relate to others. Just as egoists may help others because that serves their own interests, so too they

may obey social customs and laws. It’s only important to note that they obey not out of deference to others

or because it’s the morally right thing to do; they play by the rules because it’s the smart thing to do. They

don’t want to end up rotting in jail.

A useful contrast can be drawn in this context between egoism and selfishness. Where egoism means

putting your welfare above others’, selfishness is the refusal to see beyond yourself. Selfishness is the

inability (or unwillingness) to recognize that there are others sharing the world, so it’s the selfish person,

finally, who’s callous and insensitive to the wants and needs of others. For egoists, on the other hand,

because working with others cooperatively can be an excellent way to satisfy their own desires, they may

not be at all selfish; they may be just the opposite.

Enlightened Egoism, Cause Egoism, and the Invisible Hand

Enlightened egoism is the conviction that benefitting others—acting to increase their happiness—can

serve the egoist’s self-interest just as much as the egoist’s acts directly in favor of him or herself. As

opposed to altruism, which claims that it’s our ethical responsibility to serve others, the enlightened

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egoist’s generosity is a rational strategy, not a moral imperative. We don’t help others because we ought

to: we help them because it can make sense when, ultimately, we only want to help ourselves.

One simple and generic manifestation of enlightened egoism is a social contract. For example, I agree not

to steal from you as long as you agree not to steal from me. It’s not that I don’t take your things because I

believe stealing is morally wrong; I leave you alone because it’s a good way to get you to leave me alone.

On a less dramatic level, all of us form mini social contracts all the time. Just think of leading a group of

people through one of those building exits that makes you cross two distinct banks of doors. If you’re first

out, you’ll hold the door for those coming after, but then expect someone to hold the next door for you.

Sure, some people hold the door because it’s good manners or something like that, but for most of us, if no

one else ever held a door open for us, pretty soon we’d stop doing them the favor. It’s a trivial thing, of

course, but in the real world people generally hold doors open for others because they’ve agreed to a social

contract: everyone else does it for me; I’ll do it for them. That’s enlightened egoism, and it frequently

works pretty well.

TOMS Shoes can be understood as a more sophisticated version of the same mentality. It’s hard to discern

exactly what the contract would look like if someone tried to write it down, but it’s not hard to see the

larger notion of enlightened egoism. Shoes are donated to others not because of a moral obligation but

because serving the interests of others helps Blake Mycoskie serve his own. As long as shoe buyers keep

holding up their end of the bargain by buying his product, Mycoskie will continue to help them be

generous and feel good about themselves by donating pairs to people who need them.

Cause egoism is similar to, but also distinct from, enlightened egoism. Enlightened egoism works from the

idea that helping others is a good way of helping me. Cause egoism works from the idea that giving

the appearance of helping others is a promising way to advance my own interests in business. As opposed

to the enlightened egoist who will admit that he is out for himself but happy to benefit others along the

way, the cause egoist claims to be mainly or only interested in benefiting others and then leverages that

good publicity to help him. Stated slightly differently, enlightened egoists respect others while pursuing

their own interests, while cause egoists just fake it.

Adam Smith (1723–90) is known for making a connected point on the level of broad economic trade and

capitalism. In the end, it usually doesn’t matter whether people actually care about the well-being of

others, Smith maintains, because there exists an invisible hand at work in the marketplace. It leads

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individuals who are trying to get rich to enrich their society as well, and that enrichment happens

regardless of whether serving the general welfare was part of the original plan. According to Smith, the

person in business generally

Intends only his own gain, but is led by an invisible hand to promote an end which was no part of

the original intention. By pursuing his own interest he frequently promotes that of the society and

does so more effectively than when he directly intends to promote it. [1]

What’s the invisible hand? It’s the force of marketplace competition, which encourages or even requires

individuals who want to make money to make the lives of others better in the process.

The invisible hand is a central point defenders of egoism in business often make when talking about the

virtues of a me-first ethics. Egoism is good for me, but it frequently ends up being good for everyone else,

too. If that’s right, then even those who believe the utilitarian ideal of the general welfare should guide

business decisions may be forced to concede that we should all just become egoists.

Here’s a quick example. If you open a little takeout pizza shack near campus and your idea is to clear the

maximum amount of money possible to pay your tuition, what kind of business are you going to run?

Does it make sense to take a customer’s twelve dollars and then hand over an oily pie with cheap plastic

cheese and only three pepperonis? No, in the name of pursuing your own happiness, you’re going to try to

charge a bit less than Domino’s and give your customers something slightly better—maybe you’ll spread

richer cheese, or toss on a few extra pepperonis. Regardless, you’re not doing this for the reason an

altruist would; you’re not doing it because you sense an ethical obligation to make others’ lives better. As

an egoist, you don’t care whether your customers are happier or not. But if you want your business to

grow, you better care. And because you’re ethically required to help your business grow in order to make

tuition money and so make yourself happier, you’re going to end up improving the pizza-eating

experience at your school. Better food, less money. Everyone wins. We’re not talking Mother Teresa here,

but if ethical goodness is defined as more happiness for more people, then the pizza place is ethically

good. Further, anybody who wants to start up a successful pizza restaurant is, very likely, going to end up

doing good. If you don’t, if you can’t offer some advantage, then no one’s going to buy your slices.

Going beyond the quality-of-life benefits of businesses in society, Smith leaned toward a second claim

that’s far more controversial. He wrote that the entrepreneur trying to do well actually promotes society’s

well-being more effectively than when directly intending to promote it. This is startling. In essence, it’s

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the claim that for the most dedicated altruist the most effective strategy for life in business is…to act like

an egoist. Within the economic world at least, the best way for someone who cares only about the well-

being of others to implement that conviction is to go out and run a successful profit-making enterprise.

Clearly, this is a very powerful argument for defenders of ethical egoism. If it’s true that egoists beat

altruists at their own game (increasing the happiness of everyone else), then egoism wins the debate by

default; we should all become egoists. Unfortunately, it’s impossible to prove this claim one way or the

other. One thing is clear, however: Smith’s implicit criticism of do-gooders can be illustrated. Sometimes

individuals who decide to act for the good of others (instead of seeking profit for themselves) really do end

up making the world a worse place. Dr. Loretta Napoleoni has shown how attempts by Bono of U2 to help

the destitute in Africa have actually brought them more misery. [2]

Bono threw a benefit concert and

dedicated the proceeds to Africa are most needy. The intention was good, but the plan wasn’t thought all

the way through and the money ended up getting diverted to warlords who used it to buy guns and bullets.

Still, the fact that some altruistic endeavors actually make things worse doesn’t mean they’re all doomed.

Just as surely as some fail, others succeed.

The same mixed success can be attributed to businesses acting only for their own welfare, only for profit.

If it’s true that the pizza sellers help improve campus life, what about the entrepreneurial honor student

who volunteers to write your term paper for a price? It’s hard to see how a pay-for-grades scheme benefits

students in general, even though the writer may make a tidy profit, and that one student who paid for the

work may come out pretty well.

The invisible hand is the belief that businesses out in the world trying to do well for themselves tend to do

good for others too. It may even be that they do more good than generous altruists. It’s hard to know for

sure, but it can be concluded that there’s a distance between ethical egoism in reality and the image of the

egoist as a ruthless destroyer of broad social happiness.

Some Rules of Egoism

Egoism, like altruism, is a consequentialist ethics: the ends justify the means. If an egoist were at the helm

of TOMS Shoes and he cared only about meeting beautiful people and making huge money, he’d have no

scruples about lying all day long. There’d be no problem with smiling and insisting that the reason TOMS

Shoes exists is to generate charitable shoe donations to the poor. All that matters for the egoist is that the

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lie works, that it serves the goal of making TOMS as attractive and profitable as possible. If it does, then

deviating from the truth becomes the ethically recommendable route to follow.

Personal egoism versus impersonal egoism distinguishes these two views: the personal egoist in the

business world does whatever’s necessary to maximize his or her own happiness. What others do,

however, is considered their business. The impersonal egoist believes everyone should get up in the

morning and do what’s best for themselves and without concern for the welfare of others.

An impersonal egoist may find comfort in the invisible hand argument that the best way for me to do right

with respect to society in general is to get rich. Of course it’s true that there’s something crude in

shameless money grubbing, but when you look at things with rational eyes, it is hard to avoid noticing

that the kinds of advances that make lives better—cars affordably produced on assembly lines; drugs from

Lipitor to Chap Stick; cell phones; spill-proof pens; whatever—often trace back to someone saying, “I want

to make some money for myself.”

Rational egoism versus psychological egoism distinguishes two reasons for being an ethical egoist. The

rational version stands on the idea that egoism makes sense. In the world as it is, and given a choice

between the many ethical orientations available, egoism is the most reasonable. The psychological egoist

believes that, for each of us, putting our own interests in front of everyone else isn’t a choice; it’s a reality.

We’re made that way. Maybe it’s something written into our genes or it’s part of the way our minds are

wired, but regardless, according to the psychological egoist, we all care about ourselves before anyone else

and at their expense if necessary.

Why would I rationally choose to be an egoist? Maybe because I figure that if I don’t look out for myself,

no one will. Or maybe I think almost everyone else is that way, too, so I better play along or I’m going to

get played. (The Mexicans have a pithy phrase of common wisdom for this, “O te chingas, o te chingan,”

which means “either you screw everyone else, or they’ll screw you.”) Maybe I believe that doing well for

myself helps me do well for others too. The list could be drawn out, but the point is that there are

numerous reasons why an intelligent person may accept ethical egoism as the way to go.

As for those who subscribe to the theory of psychological egoism, obviously there’s no end of examples in

business and history to support the idea that no matter how much we may want things to be otherwise,

the plain truth is we’re made to look out for number one. On the other hand, one problem for

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psychological egoists is that there do seem to be examples of people doing things that are irreconcilable

with the idea that we’re all only trying to make ourselves happier:

 Parents sacrificing for children. Any mom or dad who works overtime at some grinding job for cash to pay

their children’s college tuition seems to be breaking the me-first rule. Here, the psychological egoist

responds that, when you really think about it, there may be something there for the parents after all: it

could be the pride in telling friends that their children are getting their degrees.

 Mother Teresa or similar religious-based advocates for the needy. Anyone spending their time and energy

making things better for others, while living painfully modestly, seems like a good candidate to break the

rule of psychological egoism. Here, the psychological egoist responds that perhaps they see a different

reward for themselves than earthly pleasures. They may believe, for example, that their suffering on this

earth will be more than compensated by paradise in heaven.

The Four Relations between Egoism and Business

Structurally, there are four possible relations between ethical egoism and business life:

1. You can have egoists in egoist organizations. This is mercenary capitalism. Individuals do whatever work

is required so long as it benefits them to the maximum. Naturally, this kind of person might find a good

home at a company entirely dedicated to maximizing its own health and success, which can mean one

looking to maximize profits without other considerations. A good example is executives at the

Countrywide mortgage firm. They OK’ed thousands of mortgages to clients who had no way to repay the

money. Then they bundled and sold these mortgages to banks and other financial institutions, making a

quick profit. When the loans later collapsed, those institutions fell into bankruptcy. The Countrywide

executives quickly formed a new company to buy those same loans back at pennies on the dollar, thus

once again turning millions in profits. [3]

2. You can have egoists in nonegoist organizations. Possibly, the CEO of the College Board fits into this

category. His salary of just under a million dollars annually sounds pretty good, especially when you

consider that he gets it working for a nonprofit company that exists to help high school students find the

college best fitted to them. It’s also possible that Blake Mycoskie of TOMS Shoes fits this profile: he lives

an extremely enviable life in the middle of a company set up to help people who almost no one envies.

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3. You can have nonegoists in egoist organizations. Somewhere in the Countrywide mortgage company we

could surely find someone who purchased shoes from TOMS because they wanted to participate in the

project of helping the rural poor in Argentina.

4. You can have nonegoists in nonegoist organizations. Think of the red kettle bell ringers popping up

outside malls around the holiday season.

Advocating and Challenging Ethical Egoism

The arguments for an egoistic ethics include the following:

 Clarity and simplicity. Everybody understands what it means to look out for them first.

 Practicality. Many ethical theories claim to protect our individual interests, but each of us knows

ourselves and our own interest’s best. So doesn’t it make sense that we as individuals take the lead?

Further, with respect to creating happiness for ourselves, there’s no one closer to the action than us. So,

again, doesn’t it make sense that each of us should be assigned that responsibility?

 Sincerity. For those subscribing to psychological egoism, there’s a certain amount of honesty in this

ethics not found in others. If our real motive beneath everything else is to provide for our own happiness

first, then shouldn’t we just recognize and say that? It’s better to be sincere and admit that the reason we

don’t steal is so that others don’t steal from us instead of inventing some other explanations which sound

nice but are ultimately bogus.

 Unintended consequences. In the business world, the concept of the invisible hand allows egoists to

claim that their actions end up actually helping others and may help them more than direct charity or

similar altruistic actions.

 Finally, there’s a broad argument in favor of egoism that concerns dignity. If you’re out in the world being

altruistic, it’s natural to assume that those benefiting from your generosity will be grateful. Sometimes

they’re not, though. Sometimes the people we try to help repay us with spite and resentment. They do

because there’s something condescending about helping others; there’s a message wrapped up in the aid

that those who receive it are incapable of taking care of them and need someone superior to look out for

them. This is especially palpable in the case of panhandlers. If you drop a dollar into their hat, it’s hard to

not also send along the accusation that their existence is base and shameful (you refuse to look them in

the eye; you drop the money and hurry away). To the extent that’s right, an egoism that expects people to

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look out for themselves and spurns charity may actually be the best way to demonstrate respect for others

and to acknowledge their dignity.

Arguments against ethical egoism include the following:

 Egoism isn’t ethics. The reason we have ethics is because there are so many people in the world and in

business who care only about themselves. The entire idea of ethics, the reasoning goes, is to set up some

rules for acting that rescue us from a cruel reality where everyone’s just looking out for number one.

 Egoism ignores blatant wrongs. Stealing candy from a baby—or running a company selling crappy

baby food—strikes most of us as unacceptable, but the rules of egoism dictate that those are

recommendable actions as long as you can be assured that they’ll serve your interests.

 Psychological egoism is not true. The idea that we have no choice but to pursue our own welfare

before anything else is demonstrated to be false millions of times every day; it’s wrong every time

someone makes an anonymous contribution to a cause or goes out of their way to help another without

expecting anything in return.

K E Y T A K E A W A Y S

 Egoism defines ethically good as any act that raises the actor’s overall happiness (or decreases

unhappiness) without counting anyone else’s increased or diminished happiness.

 Egoism does not mean ignoring the existence and welfare of others, though they are not necessarily

advocated either.

 Though egoists act in the name of their own happiness, others may benefit.

 Egoism intersects with the business world in various ways.

R E V I E W Q U E S T I O N S

1. What’s the difference between egoism and selfishness?

2. In what situation would an egoist decide that a lie is morally wrong?

3. In the real world, is there any way to distinguish an enlightened egoist from a cause egoist?

4. What are some reasons someone may become a rational egoist?

5. What is the invisible hand?

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6. If you were starting a small business, would you prefer that your partner is a utilitarian, an altruist, or an

egoist? Why?

[1] Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: Strahan and Cadell,

1776), bk. 4, chap. 2.

[2] Can Tran, “Celebrities Raising Funds for Africa End Up Making Things ‘Worse,’” Ground Report, May 14, 2008,

accessed May 15, 2011,http://www.groundreport.com/World/Celebrities-Raising-Funds-For-Africa-End-Up-

Making/2861070.

[3] Eric Lipton, “Ex-Leaders of Countrywide Profit from Bad Loans,” New York Times, March 3, 2009, accessed May

15, 2011,http://www.nytimes.com/2009/03/04/business/04penny.html.

3.5 Case Studies

Cheaters

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KDCP is Karen Dillard’s company specialized in preparing students to ace the Scholastic Aptitude Test. At

least some of the paying students received a solid testing-day advantage: besides teaching the typical tips

and pointers, KDCP acquired stolen SAT tests and used them in their training sessions. It’s unclear how

many of the questions that students practiced on subsequently turned up on the SATs they took, but some

certainly did. The company that produces the SAT, the College Board, cried foul and took KDCP to court.

The lawsuit fell into the category of copyright infringement, but the real meat of the claim was that KDCP

helped kids cheat, they got caught, and now they should pay.

The College Board’s case was very strong. After KDCP accepted the cold reality that they were going to get

hammered, they agreed to a settlement offer from the College Board that included this provision: KDCP

would provide $400,000 worth of free SAT prep classes to high schoolers who couldn’t afford to pay the

bill themselves. [1]

Q U E S T I O N S

1. Can you form a quick list of people who’d benefit because of this decision and others who’d end up on the

losing side? Then, considering the situation globally and from a utilitarian perspective, what would need to

be true for the settlement offer to be ethically recommendable?

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2. As for those receiving the course for free—it’s probably safe to assume that their happiness

increases. Something for nothing is good. But what about the students who still have to pay for

the course? Some may be gladdened to hear that more students get the opportunity, but others

will see things differently; they’ll focus on the fact that their parents are working and saving

money to pay for the course, while others get it for nothing. Some of those who paid probably

actually earned the money themselves at some disagreeable, minimum wage McJob. Maybe they

served popcorn in the movie theater to one of those others who later on applied and got a

hardship exemption.

o Starting from this frustration and unhappiness on the part of those who pay full price, can you

form a utilitarian case against the settlement’s free classes?

o From a utilitarian perspective, could the College Board have improved the settlement by adding

the stipulation that the settlement’s terms (and therefore the free classes) not be publicly

disclosed?

o Once word got out, could a utilitarian recommend that the College Board lie or that it release a

statement saying, “No free classes were part of the settlement”?

3. There was talk about canceling the scores of those students who took the SAT after benefitting from the

KDCP classes that offered access to the stolen exam booklets. The students and their parents protested

vigorously, pointing out that they’d simply signed up for test prep, just like students all across the nation.

They knew nothing about the theft and they presumably didn’t know they were practicing on questions

that might actually appear on their exam day. From the perspective of rule utilitarianism, what’s the case

for canceling their scores? From the perspective of act utilitarianism, what’s the case for reinstating the

scores?

4. The College Board CEO makes around $830,000 a year.

o What is a utilitarian case for radically lowering his salary?

o If you were a utilitarian and you had the chance—and you were sure you wouldn’t get caught—

would you steal the money from the guy’s bank account? Why or why not?

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5. It could be that part of what the College Board hoped to gain through this settlement requiring

free classes for the underprivileged was some positive publicity, some burnishing of their image as

the good guys, the socially responsible company, the ones who do the right thing.

o Outline the case for this being an act of an altruistic company.

o Outline the case for this being an act of an egoistic company.

UFC

Ultimate Fighting Championship (UFC) got off to a crushing start. In one of the earliest matches, Tank

Abbott, a six-footer weighing 280 pounds, faced John Matua, who was two inches taller and weighed a

whopping four hundred pounds. Their combat styles were as different as their sizes. Abbott called himself

a pit fighter. Matua was an expert in more refined techniques: he’d honed the skills of wrestling and

applying pressure holds. His skill—which was also a noble and ancient Hawaiian tradition—was the

martial art called Kuialua.

The evening went poorly for the artist. Abbott nailed him with two roundhouses before applying a skull-

cracking head butt. The match was only seconds old and Matua was down and so knocked out that his

eyes weren’t even closed, just glazed and staring absently at the ceiling. The rest of his body was

convulsing. The referee charged toward the defenseless fighter, but Abbott was closer and slammed an

elbow down on Matua’s pale face. Abbott tried to stand up and ram another, but the referee was now close

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enough to pull him away. As blood spurted everywhere and medics rushed to save the loser, Abbott stood

above Matua and ridiculed him for being fat. [2]

The tape of Abbott’s brutal skills and pitiless attitude shot through the Internet. He became—briefly—

famous and omnipresent, even getting a guest appearance on the goofy, family-friendly sitcom Friends.

A US senator also saw the tape but reacted differently. Calling it barbaric and a human form of

cockfighting, he initiated a crusade to get the UFC banned. Media executives were pressured to not beam

the matches onto public TVs, and doctors were drafted to report that UFC fighters (like professional

boxers) would likely suffer long-term brain damage. In the heat of the offensive, even diehard advocates

agreed the sport might be a bit raw, and the UFC’s original motto—“There are no rules!”—got slightly

modified. Head butting, eye-gouging, and fish-hooking (sticking your finger into an opponent’s orifice and

ripping it open) were banned.

No matter what anyone thinks of UFC, it convincingly demonstrates that blood resembles sex. Both sell

and people like to watch. The proof is that today UFC events are among the most viewed in the world,

among the most profitable, and—this is the one part that hasn’t changed since the gritty beginning—

among the most brutal.

Q U E S T I O N S

1. Two of the common arguments against ultimate fighting—and the two main reasons the US

senator argued to get the events banned—are the following:

o They’re brutal; UFC celebrates violence and hatred and injury, and therefore, it’s immoral.

o Besides the bumps, bruises, and broken bones—which usually heal up—the fighters also suffer

long-term and incurable brain damage. Therefore, the sport is immoral even though it might be

true that in their prime, the fighters make enough money to compensate the physical suffering

endured in the octagon.

How could a utilitarian defend the UFC against these two criticisms?

2. How could the concept of the utilitarian sacrifice apply to John Matua?

3. How would a hedonistic utilitarian’s reaction to UFC differ from an idealistic utilitarian’s reaction? Is there

anything at all in UFC that might convince an idealistic utilitarian to promote the sport as ethically

positive?

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4. How could a proponent of monetized utilitarianism begin portioning up the experiences of Abbott, Matua,

the UFC sponsors, and the spectators in order to construct a mathematical formula (like Ford did with the

Pinto) to decide whether UFC should be banned?

5. Think of UFC as a business, one compared to a biotech company that pioneers cutting-edge, life-saving

drugs. Now, how would a utilitarian decide which one of these two companies was the more ethically

respectable?

6. Why might an altruist sign up to be a UFC fighter? Why might an egoist sign up to be a UFC fighter?

Lottery

In her blog Majikthise, Lindsay Beyerstein writes, “State lotteries are often justified on the grounds that

they raise money for social programs, especially those that target the neediest members of society.

However, the poorest members of society tend to spend (and, by design lose) the most on lottery tickets.

Some state lottery proceeds fund programs that benefit everyone, not just the poor. Often state lottery

money is being systematically redistributed upward—from lotto players to suburban schools, for

example.” [3]

Q U E S T I O N S

1. How is the lottery an example of the utilitarian monster?

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2. How can you set yourself up to argue in favor of or against the ethical existence of the lottery in terms of

monetized utilitarianism?

3. Lotteries are about money and about fun—that is, even for the losers, there’s a benefit in the thrill of

watching the numbers turn up. Could the case be made that, from a hedonistic utilitarian standpoint, the

lottery is ethically recommendable because it serves the welfare not only of the winner but also of the

millions of losers?

4. One of Lindsay Beyerstein’s concerns is that the lottery tends to redistribute money from the poor

toward the rich.

o Does a utilitarian necessarily consider this redistribution unethical?

o What kinds of things would a utilitarian have to look into to decide whether the inverse Robin

Hooding is necessarily a bad thing?

5. The lotteries under discussion here are run by states, and Lindsay Beyerstein is not a big fan. She calls

these lotteries “a tax on idiocy” meaning, presumably, that people are just throwing their money away

every time they buy a ticket. Now, one of the arguments in favor of egoism as an ethical stance is that no

one knows what makes each of us happy better than each of us. So, it follows, we should all just try to get

what we want and leave other people alone. How can this view of egoism be fashioned to respond to the

idea that the lottery is a tax on idiocy?

Honest Tea

Seth Goldman founded Honest Tea in 1998. He calls himself the Tea EO (as opposed to CEO) and his

original product was a bottled tea drink with no additives beyond a bit of sugar. Crisp and natural—that

was the product’s main selling point. It wasn’t the only selling point, though. The others aren’t in the

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bottle; they’re in the company making it. Honest Tea is a small enterprise composed of good people. As

the company website relates, “A commitment to social responsibility is central to Honest Tea’s identity

and purpose. The company strives for authenticity, integrity and purity, in our products and in the way we

do business…Honest Tea seeks to create honest relationships with our employees, suppliers, customers

and with the communities in which we do business.” [4]

Buy Honest Tea, the message is, because the people behind it are trustworthy; they are the kind of

entrepreneurs you want to support.

The mission statement also relates that when Honest Tea gives business to suppliers, “we will attempt to

choose the option that better addresses the needs of economically disadvantaged communities.” [5]

They’ll

give the business, for example, to the company in a poverty-stricken area because, they figure, those

people really need the jobs. Also, and to round out this socially concerned image, the company promotes

ecological (“sustainability”) concerns and fair trade practices: “Honest Tea is committed to the well-being

of the folks along the value chain who help bring our products to market. We seek out suppliers that

practice sustainable farming and demonstrate respect for individual workers and their families.” [6]

Summing up, Honest Tea provides a natural product, helps the poor, treats people with respect, and saves

the planet. It’s a pretty striking corporate profile.

It’s also a profile that sells. It does because when you hand over your money for one of their bottles, you’re

confident that you’re not fattening the coffers of some money grubbing executive in a New York penthouse

who’d lace drinks with chemicals or anything else that served to raise profits. For many consumers, that’s

good to know.

Honest Tea started selling in Whole Foods and then spread all over, even to the White House fridges

because it’s a presidential favorite. Revenues are zooming up through the dozens of millions. In 2008, the

Coca-Cola Company bought a 40 percent share of Honest Tea for $43 million. It’s a rampantly successful

company.

Featured as part of a series in the Washington Post in 2009, the company’s founder, Seth Goldman, was

asked about his enterprise and his perspective on corporate philanthropy, meaning cash donations to

good causes. Goldman said, “Of course there’s nothing wrong with charity, but the best way for companies

to become good citizens is through the way they operate their business.” Here are two of his examples: [7]

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 Switching from Styrofoam to postconsumer waste might help a packaging company make a more

meaningful contribution to sustainability than a token donation to an environmental nonprofit.

 Investing in a local production facility or even a community bank could help support a local economy

more effectively than a donation to a nearby jobs program.

Organizations in the economic world, Goldman believes, can do the most good by doing good themselves

as opposed to doing well (making money) and then outsourcing their generosity and social responsibility

by donating part of their profits to charities. That may be true, or it may not be, but it’s certain that

Goldman is quite good at making the case. He’s had a lot of practice since he’s outlined his ideas not just

in the Post but in as many papers and magazines as he can find. Honest Tea’s drinks are always featured

prominently in these flattering articles, which are especially complimentary when you consider that

Honest Tea doesn’t have to pay a penny for them.

Q U E S T I O N S

1. Make the case that Seth Goldman founded Honest Tea as an expression of his utilitarian ethics.

o What kinds of people are affected by the Honest Tea organization? Which groups might benefit

from Honest Tea and how? Which groups might not benefit?

o Would this be a hedonistic or idealistic utilitarianism? Why?

o Would it be possible to construe Honest Tea within a framework of monetized utilitarianism?

o Would this be a soft or hard utilitarianism?

2. Make the case that Seth Goldman founded Honest Tea as an expression of his ethical altruism.

o Altruists serve the welfare of others. How does Honest Tea serve people’s welfare?

o What would have to be true about Goldman in terms of his particular abilities and skills for this

enterprise to fall under the heading of altruism?

o Does Goldman sound more like a personal or an impersonal altruist?

3. Make the case that Seth Goldman founded Honest Tea as an expression of his ethical egoism.

o What are some of the benefits Goldman could derive from Honest Tea?

o Before running Honest Tea, Goldman was a big-time mutual fund manager. What kind of benefits

could Honest Tea have offered that he couldn’t find in the world of finance?

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o Does Goldman sound more like a personal or an impersonal egoist?

o In the real world, does it make any difference whether Goldman does enlightened egoism or

cause egoism?

4. In this case study, two kinds of drink manufacturers are contrasted: Honest Tea and the hypothetical drink

company run by some mercenary businessman lacing drinks with bad chemicals to maximize profits.

Looking at this contrast, how could a defender of egoism claim that the best way for healthy drinks to

make their way into the general public’s hands (in the medium and long term, anyway) is for

Goldman and the mercenary businessman and everyone else to all be egoists?

5. Assume that Seth Goldman is a cause egoist, someone faking concern for the general welfare in order to

provide for his own happiness and pleasure. How could the concept of the invisible hand be introduced to

make the claim that Goldman is actually doing more good for the general welfare than he would if he were

a utilitarian or even an altruist?

Your Business

Think about something you do with passion or expertise—a dish you like to cook and eat, a sport you play,

any unique skill or ability you’ve developed—and figure out a way to turn it into a small business. For

example, you like baking cookies, so you open a bake shop, or you like hockey and could imagine an

improved stick to invent and market.

Im age

rem ove

d d ue

to c opy

righ t is

sue s.

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Q U E S T I O N S

1. If your business is like most others, you’re going to need some money to get it up and going, more money

than you’ve got right now. That means you’ll need to find a partner for your venture, someone to help you

get the cash together and then run things afterward. Would you prefer a utilitarian, an altruist, or an

egoist for your partner? Why?

2. Do you think the invisible hand would be in effect for your business? Just by trying to make money, do you

imagine you’d end up improving people’s lives? If this business works, is it even possible that you’d help

others more than you would by volunteering time for a charity organization? Elaborate.

3. Assume that doing well in society and not just doing well (making money) is important to you.

Within the business you have in mind, with which of these three options do you suspect you’d

accomplish more general good?

o Just making money and trusting the invisible hand to take care of the rest

o Making money and donating part of it to charity—that is, to people specialized in serving the

general welfare

o Attempting to do good within your business by, for example, buying recycled materials or by

paying wages slightly above what people could get for the same work at other companies

4. Is there a potential cause egoism angle to your business? Could you set it up to make it seem like

the reason you’re running your enterprise is to help others when really you’re just trying to make money?

For a consequentialist, is there anything wrong with that?

[1] missypie, April 29, 2008 (2:22 p.m.), “CB-Karen Dillard case settled-no cancelled scores,” College Confidential,

accessed May 15, 2011,http://talk.collegeconfidential.com/parents-forum/501843-cb-karen-dillard-case-settled-

no-cancelled-scores.html.

[2] David Plotz, “Fight Clubbed,” Slate, November 17, 1999, accessed May 15,

2011,http://www.slate.com/id/46344.

[3] Lindsay Beyerstein, “Lotteries as Regressive Taxes,” Majikthise (blog), January 23, 2006, accessed May 15,

2011,http://majikthise.typepad.com/majikthise_/2006/01/lotteries_as_re.html.

[4] “Our Mission,” Honest, accessed May 15, 2011,http://www.honesttea.com/mission/about/overview.

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[5] “Our Mission,” Honest, accessed May 15, 2011,http://www.honesttea.com/mission/about/overview.

[6] “Our Mission,” Honest, accessed May 15, 2011,http://www.honesttea.com/mission/about/overview.

[7] “On Leadership: Seth Goldman,” Washington Post, accessed May 15,

2011,http://views.washingtonpost.com/leadership/panelists/2009/11/the-biggest-dollars.html.

Chapter 4: Theories Responding to the Challenge of Cultural Relativism from The Business

Ethics Workshop was adapted by Saylor Academy and is available under a Creative Commons

Attribution-NonCommercial-ShareAlike 3.0 Unported license without attribution as requested by

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Chapter 4

Theories Responding to the Challenge of Cultural Relativism

Chapter Overview

Chapter 4 "Theories Responding to the Challenge of Cultural Relativism" examines some theories guiding

ethical decisions in business. It considers reactions to the possibility that there are no universal

definitions of right and wrong, only different customs that change from one society to another.

4.1 What Is Cultural Relativism?

L E A R N I N G O B J E C T I V E S

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1. Define cultural relativism.

2. Show how cultural relativism defies traditional ethics.

Nietzsche and the End of Traditional Ethics

“God is dead,” the declaration attributed to Friedrich Nietzsche, stands along with “I think, therefore I

am” (René Descartes, 1641) as philosophy’s most popularized—and parodied—phrases. The t-shirt

proclaiming “Nietzsche is dead, signed, God” is funny, but it doesn’t quite answer what Nietzsche was

saying in the late 1800s. What Nietzsche meant to launch was not only an assault on a certain religion but

also a suspicion of the idea that there’s one source of final justice for all reality. Nietzsche proposed that

different cultures and people each produce their own moral recommendations and prohibitions, and

there’s no way to indisputably prove that one set is simply and universally preferable to another. The

suspicion that there’s no final appeal—and therefore the values and morality practiced by a community

can’t be dismissed as wrong or inferior to those practiced elsewhere—is called cultural relativism.

Example: For most of us, the killing of a newborn would be among the most heinous of immoral acts; a

perpetrator would need to be purely evil or completely mad. The Inuit Eskimos, however, regularly

practiced female infanticide during their prehistory, and it was neither evil nor insane. Their brutal living

conditions required a population imbalance tipped toward hunters (males). Without that gender

selecting, the plain fact was the entire group faced starvation. At another place and time, Bernal

Diaz’s The Conquest of New Spain recounts the Spanish invasion of the Americas and includes multiple

reports of newborns sacrificed in bloody ceremonies that made perfect sense to the locals, but left

Spaniards astonished and appalled. The ethics of infanticide, the point is, differ from one culture and time

to another. Further, these differences seem irreconcilable: it’s extremely difficult to see how we could

convince the Inuit of the past to adopt our morality or how they could convince us to adopt theirs. And if

that’s right, then maybe it no longer makes sense to talk about right and wrong in general terms as though

there’s a set of rules applying to everyone; instead, there are only rights and wrongs as defined within a

specific society.

Finally, if you accept the cultural relativist premise, then you’re rejecting the foundation of traditional

ethics. You’re rejecting the idea that if we think carefully and expertly enough, we’ll be able to formulate

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rules for action that everyone—people in all times, places, and communities—must obey if they want to

consider themselves ethically responsible.

Cultural Relativism in Business Ethics

In the world of international business, Entrepreneur magazine introduces the pitfalls of ethical variation

across cultures with this statement from Steve Veltkamp, president of Biz$hop, an American import-

export business: “Bribery is a common way of doing business in a lot of foreign places.” [1]

If that’s true, then US businesses trying to expand into markets abroad—and competing with local

businesses already established there—are probably going to consider doing what everyone else is doing,

which means getting in on the bribery action. As the Entrepreneur article points out, however, this leads

to a problem: “While bribes are expected in many countries, the United States’ 1977 Foreign Corrupt

Practices Act prohibits payments made with the aim of gaining or maintaining business.”

So American hands are tied. If a construction company is bidding on the contract to build an airport in a

foreign nation, one where the local politicians will be expecting to get their palms greased, they’re at a

distinct disadvantage since they’re not allowed to play by the local rules. Still there is (as there almost

always is) a loophole: “Not all payments are prohibited by the act. Some payments are acceptable if they

don’t violate local laws. Gifts, for instance, to officers working for foreign corporations are legal.”

There’s no bribing, but gifting, apparently, gets a green light. There’s a problem here, too, however: “It can

be difficult to determine the difference between a gift and a bribe in a given situation. ‘If you give a gift to

someone and it leads to a business deal, is that a bribe or a gift?’ asks Veltkamp. ‘In some cultures, gift-

giving is an entrenched part of doing business. If you look at it in a certain sense, maybe it’s a bribe, since

they won’t talk to you until you’ve made that gesture.’”

Now what? Over there, cash changes hands and it’s called an acceptable gift, while those watching from

back here see an illegal bribe.

There are two ways of looking at this dilemma. One is to say, well, this has to be one or the other, either a

gift or a bribe; it has to be either moral or immoral. Given that, we need to take out our traditional tools—

our basic duties, the utilitarian doctrine that we should act to serve the greater good, and so on—and

figure out which it is. Nietzsche went the other way, though. He said that situations like this don’t show

that we need to use ethics to figure out which side is right; instead, the situation shows what moral

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rules really are: just a set of opinions that a group of people share and nothing more. In the United States

we believe it’s wrong to grease palms, and so it is. In some other places they believe it’s honorable to hand

money under the table, and so it is.

If that’s true, then specific convictions of right and wrong in business ethics will never be anything but

cultural fashions, beliefs some community somewhere decides to hold up for a while until they decide to

believe something else. Anything, the reasoning goes, may be morally good or bad in the economic world;

it just depends on where you happen to be, at what time, and who else is around.

K E Y T A K E A W A Y S

 Cultural relativism is the suspicion that values and morality are culture specific—they’re just what the

community believes and not the result of universal reason.

 For cultural relativists, because all moral guidelines originate within specific cultures, there’s no way to

dismiss one set of rules as wrong or inferior to those developed in another culture.

R E V I E W Q U E S T I O N S

1. Why do you imagine the term cultural relativism was chosen to mean what it does?

2. Do you believe cultures are irreconcilably different? Or is it that deep down people are people and we’re

really all the same? How does this distinction relate to the difference between cultural relativism and

traditional theories of ethics?

[1] Moira Allen, “Here Comes the Bribe,” Entrepreneur, October 2000, accessed May 12,

2011, http://www.entrepreneur.com/magazine/entrepreneur/2000/october/32636.html.

4.2 Nietzsche’s Eternal Return of the Same

L E A R N I N G O B J E C T I V E S

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1. Define Nietzsche’s eternal return of the same.

2. Show how the idea of the eternal return provides guidance for professional life.

3. Consider the advantages and a drawback of the eternal return.

Responding to Cultural Relativism by Leaving Common Morality Behind

If, along with cultural relativists, you accept that rules distinguishing right from wrong shift around from

place to place and time to time, it becomes difficult to keep faith in morality. It’s difficult because verdicts

seem flimsy and impermanent, and because this hard question seems inescapable: Why should I go out of

my way to do the right thing today if what counts as the right thing might change tomorrow?

One response to the question is to give up on morality, disrespect the whole idea by labeling all the

customary regulations—don’t lie, don’t steal, strive for the greatest good for the greatest number—a giant

sham. Then you can live without the inhibiting limits of moral codes. You can go beyond any idea of good

and evil and lead an unconstrained life exuberantly celebrating everything you want to do and be.

Wallace Souza: TV Reporter, Politician, and Dealer

Some careers are more vivid and alive than others. TV crime reporting is intense work, especially the

action-type shows where the reporter races to the scene, interviews witnesses, and tracks down shady

characters. Politics is another throbbing life; the adrenalin of crime chasing isn’t there, but you get the

brimming confidence and energy that comes with power, with deciding what others can and can’t do.

Drug dealing excites too, in its way, with thrilling danger and the pleasures of fast money. People, finally,

who want to live exuberantly, who prefer risk to caution and find it easy to say things like “you only go

around once” are probably going to find something attractive in these lines of work and may opt for one or

another.

Then there’s Wallace Souza. He opted for all three. At the same time. The most visible of his roles—TV

reporter—also yielded the most visible success. His program aired from the Brazilian state of Amazonas, a

jungley place far from cosmopolitan São Paulo and touristy Rio de Janeiro. Known as a haven for cocaine

cartels, and as a training ground for revolutionary militants charging into neighboring Columbia and

Venezuela, it’s a natural spot to bring cameras and look for dramatic action. A number of reporters were

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stationed in the region, but none seemed so uncannily skilled at reaching scenes first and getting video

over the airwaves than Mr. Souza. In fact, on occasion, he even reached scenes before the police.

The dogged TV reporting, along with Souza’s editorializing complaints about the region’s jaded criminals,

made him a popular hero and sealed his bid for a seat in the local congress. He didn’t allow his state

capital work to interfere with his TV role, however. Actually, the two jobs fit together well: one day he was

reporting on the deplorable free-for-all in the jungle and the next he was in the capital meeting with high-

ranking police officers, reviewing their strategies and proposing laws to fix things.

The perfect image began to crack, though, when it was revealed that the reason Souza so frequently

reached the best crime scenes first is that he was paying hit men to assassinate local drug dealers. He

wasn’t, it turned out, just the first to know about the crimes, he knew even before they happened. In an

especially brazen move, during one of his last TV programs, he put up pictures of several notorious

criminals and asked his viewers to phone in and votes on which one they’d like to see killed.

At this point, Souza seemed like an overzealous crusader: he was drawing vivid attention to the crime

plague and doing something about it with his hit men. You could doubt his methods, but his dedication to

his community’s welfare seemed noble—until it was revealed that he was actually also a major drug

dealer. And the criminals getting killed and shown on his program weren’t just random outlaws; they were

Souza’s drug-trade competitors. [1]

What Is the Eternal Return of the Same?

One report on Souza’s exploits included the suggestion that his willingness to cross every moral line—to

lie, traffic drugs, order killings, whatever—fit him for the title of the Antichrist. [2]

That title, as it turns out, was one Nietzsche enjoyed assigning to himself. It’s definitely also a fit for Souza

in the sense that he seemed to live without shame, fear, or regard for good and evil. What’s notable about

Souza’s business ventures is that they pay no heed to the very idea of morals. It’s not that they skirt some

rules or follow some guidelines while disobeying others; it’s not like he’s trying to get away with

something—it’s much more like morality doesn’t exist. Now, bringing this back to Nietzsche, who shared

the sentiments, the question Nietzsche asked himself was, if morality really is canceled, then what? How

should we live? The answer was a thought experiment called the eternal return of the same.

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Imagine, Nietzsche proposed, that every decision you make and everything you feel, say, and do will have

to be repeated forever—that is, at the end of your life, you die and are immediately reborn right back in

the same year and place where everything started the time before, and you do it all again in exactly the

same way. Existence becomes an infinite loop. With that disturbing idea established, Nietzsche converted

it into a proposal for life: we should always act as though the eternal return were real. Do, Nietzsche says,

what you would if you had to live with the choice over and over again forever. The eternal return, finally,

gives us a reason to do one thing and not another: it guides us in a world without morals.

How Does the Eternal Return Work?

Start with the eternal return as it could be applied to an altruist, to someone dedicating life to helping

others. One way to do altruism would be by working for a nonprofit international organization that goes

to poverty-wrecked places like Amazonas and helps coca farmers (the coca leaf is the base for cocaine)

shift their farms to less socially damaging crops. This would be difficult work. You might figure on doing it

though, getting through it, and feeling like you’ve done some good in the world. But would you do it

infinitely? Would you be willing to suffer through that existence once and again forever? Remember, the

world would never get better; every time you’d just go back to being born on earth just the way it was

before. Obviously, people can make their own decisions, but it seems fairly likely that under the condition

of the eternal return there’d be fewer people dedicating themselves—and sacrificing their own comfort

and interests—to social well-being.

What about some other lines of work? Would there be fewer snowplow operators, long-haul pilots,

teachers willing to work in troubled schools? What kind of professional lives, Nietzsche forces us to ask,

would be too hellish, bothersome, or exhausting to be repeated forever? Those lives, whatever they are,

get filtered by the eternal return; they get removed from consideration.

If certain careers and aspirations are out, then what’s in? What kind of existence in the economic world

does the eternal return recommend? One possibility is Wallace Souza. The question is, why

would his career trajectory fit the eternal return?

The job of a reporter is fast and dramatic, the kind of thing many imagine themselves doing if they weren’t

tied down by other commitments. People with children frequently feel an obligation to get into a safe and

conservative line of work, one producing a steady paycheck. Others feel a responsibility toward their aged

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parents and a corresponding obligation to not stray too far just in case something goes wrong. So trekking

off into the Brazilian jungle in search of drug operations may well be exciting—most of us would probably

concede that—but it’d be irreconcilable with many family responsibilities. One thing the eternal return

does, however, is seriously increase the burden of those responsibilities. When you sacrifice something

you want to do because of a sense of obligation, you may be able to swallow the loss once, but Nietzsche is

demanding that you take it down over and over again. Family responsibilities may count, but at what

point do you say “enough”? Can anyone oblige you to sacrifice doing what you really want forever?

Taking the next step into Souza’s amoral but dramatic career, assuming you do decide to become a crime

reporter, and you’re inside the eternal return where everything will recur infinitely, then aren’t you going

to go about making your reporting work as exciting and successful as possible? Probably, yes. So why not

hire some hit men to fire things up a bit? Normally, of course, our moral compass tells us that killing

others to get ahead isn’t really an option. But with all morality canceled, it becomes an option, one just

like any other. Be a banker, be a reporter, be a killer, there’s no real difference. Just choose the one you’d

most like to do repeatedly without end.

Souza also chose to be a drug dealer. Again, this is one of those jobs many would find exciting and

satisfying. Thrills and easy money are attractive; that’s part of the reason Hollywood produces so many

films about traffickers and their lives. Most of us wouldn’t actually do something like that, though, at least

partially because dealing drugs feels morally wrong. But inside the eternal return, that shame factor falls

away; when it does, the number of people entering this field of work might well increase.

It’s critical to note that Nietzsche’s eternal return is not the idea that you should go off and be a crime-

reporting, hit man–hiring drug dealer. Instead, Souza’s life just exemplifies one thing that could happen

in the world of your career if you accept Nietzsche’s proposal of living beyond any traditional moral limit.

Regardless, what the eternal return definitely does do is force you to make decisions about your

professional life in very different terms than those presented by traditional ethical theories. There’s no

consideration of sweeping duties; there’s just you and a simple decision: the life you choose now will be

repeated forever, so which will yours be?

What’s the Reward of Morality?

One of the strengths of Nietzsche’s idea is that it forces a very important question: Why should I want to

be morally responsible? Why should a salesman be honest when lying could win her a healthy

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commission? Why should a factory owner worry about pollution spewing from his plant when he lives in a

city five hundred miles away? Now, a full elaboration of this question would be handled in an airy

philosophy class, not an applied course in business ethics. Nietzsche, however, allows a taste of the

discussion by puncturing one of the basic motivations many feel for being virtuous: the conviction

that there’ll be a reward later for doing the right thing today.

The certainty of this reward is a critical element of many religious beliefs: when you die, there’ll be a final

judgment and you’ll enjoy heaven or suffer punishment at the other extreme, depending on how you

behaved on earth. A similar logic underwrites Hinduism’s concept of reincarnation: the life you are born

into next will be determined by the way you live now. This discussion could be drawn out in more

directions, but no matter what, Nietzsche spoils the idea that you take the moral high road because you’ll

be repaid for it later. Within the eternal return, there is no later; all that ever happens is exactly the same

thing again.

Advantages and a Drawback of the Eternal Return

One advantage of the eternal return is that it adds gravity to life. Forcing you to accept every decision you

make as one you’ll repeat forever is compelling you to take those decisions seriously, to think them

through. Another connected advantage of the eternal return is that it forces you to make your own

decisions. By getting rid of all guidelines proposed by ethics, and by making your reality the one that will

repeat forever, Nietzsche forces you to be whom you are.

The disadvantage of the eternal return is Wallace Souza. If everyone is just out there being themselves,

how are we going to live together? How can we make peaceful and harmonious societies when all anyone

ever thinks about is what’s best for themselves forever?

K E Y T A K E A W A Y S

 The eternal return is a thought experiment in which you imagine that the life you choose will repeat

forever.

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 According to the eternal return, when faced with a dilemma in the business world—what career should I

choose, should I kill (or maybe just lie or cheat) to get ahead?—you should imagine living the decision over

and over again forever.

 The eternal return maximizes individuality but does little to help individuals live together in a community.

R E V I E W Q U E S T I O N S

1. In your own words, what is the eternal return?

2. Why might the eternal return be considered a reasonable response to cultural relativism?

3. Write down some factors leading to a significant decision you’ve made. It could be about choosing a field

of study or a career path. Now, can you walk through each of the factors within the eternal return? Are

there any decisions you made that you’d take back and change?

4. If you knew the eternal return was true, could you still make the reasonable decision to choose an

altruistic profession? Why or why not?

[1] Dom Phillips, “Brazil Crime Show Host ‘Used Murder to Boost Ratings,’” Times, August 13, 2009, accessed May

12, 2011,http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6793072.ece.

[2] Danny Gallagher, “Brazilian Crime Show Host Kills for Ratings?,” TV Squad, August 14, 2009, accessed May 12,

2011, http://www.tvsquad.com/2009/08/14/brazilian-crime-show-host-kills-for-ratings.

4.3 Cultural Ethics

L E A R N I N G O B J E C T I V E S

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1. Define cultural ethics.

2. Consider how cultural ethics works in the business world.

3. Examine the truth of cultural ethics.

4. Consider advantages and drawbacks of a culturist’s ethics.

What Is Cultural Ethics?

Culturists embrace the idea that moral doctrines are just the rules a community believes, and they accept

that there’s no way to prove one society’s values better than another. Culturists don’t, however, follow

Nietzsche in taking that as a reason to turn away from all traditional moral regulation; instead, it’s a

reason to accept and endorse whichever guidelines are currently in effect wherever you happen to be. The

old adage, “when in Rome, do as the Romans do,” isn’t too far from where we’re at here.

Gift or Bribe or Both?

The Entrepreneur magazine article posed a problem for Americans going overseas to do business. In

some places, passing money under the table is necessary to spark negotiations and win contracts.

However, bribery is illegal in the United States, and US law makes it illegal for Americans to do that kind

of thing abroad. Gifts, on the other hand, are allowed. But, according to the Entrepreneur article, it can be

difficult to determine the difference between a gift and a bribe. In some cultures, a gesture may be seen as

a gift, and in others it looks like a bribe.

Looking at this uncertainty, what a culturist sees is not ambiguity about whether handing the money over

to a potential client is a legal gift or an illegal bribe. That’s not it at all. A culturist sees it as both a gift and

a bribe. In one culture—a nation overseas where the payment is occurring and where similar payments

always occur when business is getting done—there are no moral qualms. It’s right to give a cash gift

because that’s the rule of the country; it’s the way things are commonly and properly done there. By

contrast, from the perspective of American business culture, the conclusion that’s drawn with equal force

is that it’s an immoral bribe because that’s what US customs and normal practices tell us.

Cultural Ethics and International Bribery

Culturists see moral rules as fixed onto specific societies, but that doesn’t help anyone know what to do

when confronted with an unfamiliar set of beliefs. How, the really important question is, does a

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culturist act when forced to make decisions in a place and among people whose beliefs are different and

unfamiliar? The Entrepreneur interview with Steve Veltkamp provides one answer.

What can you do if your overseas associate demands a bribe? Veltkamp doesn't recommend

asking embassies or consulates for assistance, as “they have to stick to the official line.” Instead,

he believes “the best resource in almost every country of the world is the U.S. Chamber of

Commerce, where you can find Americans who live in the country and understand how things

are done.” [1]

Immediately you can see how different the culturist approach is to moral dilemmas. The message is: get in

touch with the locals and try to do as they would in the same situation.

Most traditional ethical theories go in exactly the opposite direction. They say that it doesn’t necessarily

matter what people are actually doing. Stronger, the entire point of studying ethics has normally been

to escape conventional wisdom and ingrained habits; the idea of doing what we ought to do requires a

step away from those things and a cold, rational look at the situation. So, a morality based on duties sets

up guidelines including don’t lie, don’t steal and appeals to men and women in business to follow them.

Acting in an ethically responsible way in the world means obeying the dictates and refusing to be swayed

by what the guy in the next cubicle is up to. Handing someone money under the table, consequently, while

publicly insisting that everything’s on the up and up can’t be condoned no matter what anyone else does;

it can’t be right because it entails at least implicit lying.

More specifically for the culturist, Entrepreneur advises overseas business people to avoid seeking

guidance from embassies or consulates because those people have to stick to “the official line.” What’s the

official line? Presumably, it’s the set of practices delineated and approved by the State Department back in

Washington, DC. The strength of these practices is that they’re formed to be universal, to work at every

embassy everywhere in the world. A culturist, however, looks at that and says it’s silly. There are no

practices that work everywhere in the world. The advice government bureaucrats give is worthless; it’s

less than worthless because it departs from the error of conceiving ethics as a set of rules fitting a

transnational reality. What people in business should actually do is get in contact with people who really

know something about ethics, and that requires turning to the locals, including the chamber of commerce,

because they’re on the scene.

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Conclusion. The culturist deals with the question about whether a bribe is ethically respectable by

ignoring all dictates received from other places and obeying the customs and standard practices of those

who live and work where the decision is being made.

Cultural Ethics and the News Reporting of Wallace Souza

Another example of how culturist ethics works comes from the flamboyant TV reporter Wallace Souza.

Like many action crime reporters the world over, he raced to violent scenes hoping to get the first and best

video. What counts, however, as good video in Brazil is different from what typically gets shown in the

United States. Here’s a description of what Souza sent over the airwaves: “In one of Mr. Souza’s shows on

his Canal Livre programme, a reporter approached a still-smoldering body in a forest. ‘It smells like a

barbecue,’ he says. ‘It is a man. It has the smell of burning meat. The impression is that it was in the early

hours…it was an execution.’” [2]

This is not the kind of report we see in the US media, and one of the differences is the ethics. Typically in

the United States, a certain respect is accorded to the deceased, even if they’re criminals. It’s considered

an exploitation to directly show dead bodies, especially smoldering ones. There’s quite a bit of cultural

analysis that would go into this prohibition, but simplifying, it’s not just that reporters hold an ethical

responsibility to others to not exploit their deaths graphically; they also have a responsibility to viewers to

not show images that may be (or probably would be) disturbing. By contrast, and as the Souza report

shows, in Brazil the rules are different and this kind of visual makes it over the airwaves without raising

eyebrows or triggering moral objections.

More generally, the question about what you’re allowed to show on TV to boost the ratings and so make

more money is an extremely rich area of examples for cultural ethics. How graphic is the violence allowed

to be on CSI Miami? How far is the wardrobe malfunction allowed to go on the Real Housewives of

Orange County? These kinds of basic questions about decency and ratings (which means advertising

revenue) seem tailor made for those who believe the answers don’t depend on anything more than what

people in a certain culture will accept. They seem cut out for those believing that the value we call decency

is nothing more (or less) than the line drawn between the number of people who will watch and the

number who turn the TV off in disgust.

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Is Culturalist Ethics True?

If it’s true that there’s no ethics but the kind a culturalist proposes, then this book loses a good deal of its

usefulness. It’s lost because the main object is to help readers form and justify rules to guide their

professional lives. Conceding that the culturalists are right, however, is also admitting that there’s no

reason to carefully analyze problems: you’re far better served just checking around to see what most other

people are doing in similar situations. Ethics isn’t a test of your ability to think reasonably and

independently; it’s more a responsibility to follow the crowd.

Culturalism isn’t true, however, at least not necessarily. You can see that in the reasoning underneath the

cultural approach. The reasoning starts with an observation:

In certain societies, handing money under the table is commonly considered an appropriate,

ethically respectable part of business activity, and in others it’s considered both illegal and

unethical.

And moves quickly to a conclusion:

Right and wrong in the business world is nothing more than what’s commonly considered right

and wrong in a specific community.

On the surface, this argument looks all right, but thinking it through carefully leads to the conclusion that

it’s not valid. A valid argument is one where the conclusion necessarily follows from the premises. For

example, if you start from the definition that all unmarried men are bachelors, and then you observe that

your friend John is an unmarried man, you can, in fact, conclude that he’s a bachelor. You must conclude

that. But that’s not the situation with the culturalist argument because the conclusion doesn’t necessarily

follow from the premise. Just because no broad international agreement has been reached about what

counts as bribery doesn’t mean no agreement will ever be reached. Or making the same point more

generally, just because no trans-cultural theory based on universal reason has yet to conquer all local

beliefs and habits everywhere on the globe doesn’t mean no such theory will ever accomplish that goal.

Taking the same situation in the less ambiguous world of the physical sciences, there was a time when

some believed the earth centered the sun and planets, while others believed the sun was at the center, but

that didn’t mean the dispute would linger forever. Eventually, tools were found to convince everyone that

one side was right. So too in business ethics: one day an enterprising ethicist may find a way to

indisputably prove on the grounds of a universal and reasonable argument that greasing palms is a bribe

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and not a gift, and it’s immoral, not moral. We don’t know if that will happen, but it might. Consequently,

the fact that we’re unsure now as to whether any single ethics can deal with the whole world doesn’t

require shooting to the other extreme and saying there’ll never be anything but what people in specific

nations believe and that’s it. The culturalist argument, in other words, isn’t necessarily persuasive.

It is worrisome, though. And until someone can find a way to do for ethics what scientists did for the

question about the earth’s relation to the planets, there will always be individuals who suspect that no

such proof will ever come. Count Nietzsche among them. In the field of contemporary philosophy and

ethics, those who share the suspicion—those who doubt that no matter how hard we try we’ll never be able

to get beyond our basic cultural perspectives and disagreements—belong to a movement

named postmodernism.

What Are Some Advantages and Drawbacks of Culturalist Ethics?

One general advantage of a culturalist ethics is that it allows people to be respectful of others and their

culture. A deep component of any society’s existence, uniqueness, and dignity in the world is its signature

moral beliefs, what the people find right and wrong. A culturalist takes that identity seriously and makes

no attempt to change or interfere. More, a culturalist explicitly acknowledges that there’s no way to

compare one culture against another as better and worse. Though you can describe differences, you can’t

say one set of moral truths is better than another because all moral truths are nothing more than what a

society chooses to believe.

A more specific advantage of a culturalist ethics in the economic and business world is that it adapts well

to contemporary reality. Over the last decades we’ve seen an explosion of international commerce, of large

corporations tearing loose from specific nations and functioning globally. This economic surge has

outpaced the corresponding understanding surge: we have no trouble switching dollars for euros or for

yen, and we can buy Heineken beer from Germany and ride in a Honda made in Japan, but few of us

speak English, German, and Japanese. In that kind of situation, one where some dilemmas in business

ethics end up involving people we can’t really talk to, culturalism provides a reasonable way to manage

uncertainties. When we’re in the United States, we follow American customs. If we’re sent on an overseas

trade venture to Germany or Japan, we pretty much do as they normally do there. Just in practical terms,

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that may well be the easiest way to work and succeed in the world, and a culturalist ethics allows a

coherent justification for the strategy.

The Disadvantages

The major disadvantage of a culturalist ethics is that it doesn’t leave any clear path to making things

better. If a community’s recommended ethical compass is just their customs and normal practices, then

it’s difficult to see how certain ingrained habits—say business bribery—can be picked up, examined, and

then rejected as unethical. In fact, there’s no reason why bribery should be examined at all. Since moral

right and wrong is just what the locals do, it makes no sense to try to change anything.

This view stands in stark contrast with what we usually believe—or at least would like to believe—about

ethics: there can be progress; we can become better. In science, we know progress occurs all the time. Our

collective knowledge about the sun’s position relative to the planets went from wrong to right with time

and effort, and we’d like the same to happen for moral uncertainties. That’s why it’s so easy to imagine

that bribery is a dirty, third-world practice, and part of our responsibility as a wealthy and developed

nation is to lead the way in cleaning it up. We clean the moral world of bad business ethics just like our

scientists rid the physical world of misperceptions. More, that’s a central aim of America’s anti-bribery

legislation as it applies to overseas acts: it’s to cure other cultures of their bad habits. If you’re a

culturalist, however, then the bad habit isn’t bribery; it’s one nation trying to impose a morality on

another.

However you may come down on the question about whether nations should be trying to improve ethical

customs in other places, what’s inescapable is that if you’re a culturalist, you don’t have any ground to

stand on when it comes to criticizing the moral practices of businessmen and women in foreign countries.

You don’t because what’s going on elsewhere is an independent and legitimate ethical system and can’t be

judged inferior to our own.

Another problem with a culturalist ethics is that it provides few routes to resolving conflicts within a

society. For example, should I be allowed to go into business for myself on the land I bought in the middle

of a residential neighborhood by opening a motorcycle bar? In Houston, the answer’s yes. There’s a

community consensus there that owning a piece of land allows you to do (almost) whatever you want with

it. In legal terms, that translates into Houston being the only major American city without zoning

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regulations. Up the road in Dallas, however, there’s a similar community consensus that the rights of

landownership are curtailed by the rights of nearby landowners. The result is strict zoning laws likely

prohibiting Harley conventions in the middle of family neighborhoods. At this point, a culturalist has no

problem; people in Houston have their codes of right and wrong and people in Dallas have theirs. What

happens, though, in Austin, Texas, which is about midway between Houston and Dallas? What if about

half the population believes in landowner rights at all costs and the other half goes for a more community-

oriented approach? A cultural ethics provides few tools for resolving the dispute beyond sitting and

waiting for one side or the other to take control of the town. This means ethics isn’t helping us solve

disagreements; it only arrives when, really, it’s no longer needed.

K E Y T A K E A W A Y S

 Proponents of cultural ethics embrace the idea that moral doctrines are just the rules, beliefs, and

customs of specific communities.

 Doing the right thing within a culturalist framework relies less on traditional ethical reasoning and more on

detecting local habits.

 The culturalist view of ethics is neither true nor false. It’s a reaction to the world as it is: a place with vastly

divergent sets of moral codes.

 A culturalist ethics respects other societies and their practices but loses solid hope for ethical progress.

R E V I E W Q U E S T I O N S

1. If you’re doing business overseas as a cultural ethicist, why would it make sense to consult the local

chamber of commerce? Who else might you consult for moral guidance? Why?

2. You go abroad to win a contract and discover that a cash gift is necessary, so you hand it over and win the

business. On returning to the United States, you put the $200 gift on your expense report. The boss is

infuriated, calls your act an “unethical, wrongheaded bribe” and says she won’t reimburse you the $200.

What arguments could you use to convince her that you did the right thing and should be reimbursed?

3. Souza’s bloody TV program is popular in Brazil, especially the parts where he shows video of horridly dead

bodies. How could a culturalist argue that the episodes should not be shown on American TV?

4. A cultural ethics is neither true nor false. Explain.

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[1] Moira Allen, “Here Comes the Bribe,” Entrepreneur, October 2000, accessed May 12,

2011, http://www.entrepreneur.com/magazine/entrepreneur/2000/october/32636.html.

[2] Dom Phillips, “Brazil Crime Show Host ‘Used Murder to Boost Ratings,’” Times, August 13, 2009, accessed May

12, 2011,http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6793072.ece.

4.4 Virtue Theory

L E A R N I N G O B J E C T I V E S

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1. Define virtue ethics.

2. Elaborate basic virtues and show how they work in business.

3. Indicate how virtue is acquired.

4. Note an advantage and drawback of the theory.

What Is Virtue Ethics?

Contemporary virtue ethics is an updated version of a theory first proposed in ancient Greece. Today’s

proponents acknowledge that it’s very difficult to set up a list of moral rules that are going to solve ethical

dilemmas across cultural lines. Typically, they don’t go quite so far as the culturalists; they don’t believe

that basic regulations of right and wrong are completely independent from one community to another. In

practical terms, however, there’s agreement that the world is too diverse and changing to be controlled by

lists of recommendations and prohibitions. So proponents of virtue suggest that we change the focus of

our moral investigations. Instead of trying to form specific rules for everyone to follow—don’t bribe, don’t

exploit the deceased on TV—they propose that we build virtuous character. The idea is that people

who are good will do the good and right thing, regardless of the circumstances: whether they’re at home

or abroad, whether they’re trying to win new clients or making a decision about what kind of images are

appropriate for public TV.

In a vague sense, we all know what it means to have a virtuous character; we all know people who can be

counted upon to do the right thing. Think of a business situation where true character shines through. A

local TV station has seen advertising revenue plummet and layoffs have to be made. Who should go?

Should Jim get to stay because his wife just had their first child? Should Jane get to stay because she’s

fifty-seven and probably won’t be able to find another job? Should John—who’s a tireless worker and the

station’s best film editor—be laid off because he was hired only two months ago? It’s a hard choice and

there’s no way to know for sure what’s right. It is certain, however, that there are better and worse ways of

handling the situation.

One strategy is to not think too much about it, to just know that two employees have to go, so you take the

names that happen to come to mind, you send them an e-mail, and you instruct security to make sure

they’re escorted from the building. Then you go hide in the bathroom until they’re gone. In other words,

you weasel out. In the same situation, another person will draw up criteria for making the decision and

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will stand up and inform those who are being let go why the decision was made. The thoughts

(complaints, regrets, excuses) of those being released will be honored and heard attentively, but the

decision will stand. From the person in charge of deciding, there’ll be honesty, respect, and firmness. This

is virtue. You can’t read it in a book, you can’t memorize principles, and you can’t just follow some

precooked decision-making process. You have to have certain qualities as a person to do the right thing in

a hard situation.

Virtue ethics is the idea that we can and should instill those qualities in people and then let them go out

into the complex business world confident that they’ll face dilemmas well. What decisions will they make?

What will they do when faced with questions about who should be laid off or, in another case, whether to

hand over a bribe in a place where everyone is bribing? We don’t know. But we rely on their good

character to be confident they’ll do right.

Under this conception, these are the primary tasks of ethics:

 Delineate what the virtues are.

 Provide experience using the virtues.

The experience is especially important because virtue isn’t so much a natural characteristic like height or

hair color; it’s more of an acquired skill: something you need to work at, practice, and hone. Also, like

many acquired skills, doing it—once a certain level of mastery has been reached—is rewarding or

satisfying. Typically, a person driven by virtue has nurtured a moral instinct for acting in consonance with

the virtues. Doing right feels right. Conversely, not acting in consonance with the virtues is discomforting;

it leaves a bad taste in the mouth. At the risk of trivializing the subject, there’s a very limited comparison

that can be made between learning virtue and learning more rudimentary activities like golf or dancing.

When someone has acquired the skill, hitting a good shot or taking the right steps in perfect time feels

good. Conversely, missing a putt or stepping on your partner’s foot leaves you consternated.

What Are the Virtues and Vices?

Every advocate of virtue ethics will present a constellation of virtues that they believe captures the essence

of what needs to be acquired to be virtuous. Typically, there’ll also be a set of anti-virtues or vices to be

avoided to fill out the picture. Here’s a set of virtues overlapping with what most proponents will offer:

 Wisdom (both theoretical and practical)

 Fairness

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 Courage

 Temperance

 Prudence

 Sincerity

 Civility

On the outer edges, here’s a common pair of vices to be avoided. Notice that what counts as a vice here

isn’t synonymous with the common use of the word, which implies a weakness of the physical body

manifested as the inability to resist drunkenness, drugs, and similar:

 Cowardice

 Insensibility

How Do the Virtues and Vices Work in a Business Environment?

Wisdom as a virtue is frequently divided into theoretical and practical variations. Theoretical wisdom is

what you get reading books and hearing college lectures. It’s the acquired ability to concentrate and

understand sentences like the one you’re reading now, even though it’s not very exciting and allows

almost no cheap thrills—words like sex and drugs don’t come up much. Those possessing theoretical

wisdom know the scholarly rules of the world in the abstract but not necessarily in practice. In the world

of business, for example, someone may be able to explain the fine points of Immanuel Kant’s complicated

and dense ethical ideas, but that doesn’t mean they’ll be able to apply the lessons when sitting in

someone’s office in a foreign country.

Practical wisdom (sometimes called prudence) is the learned ability to take a deep breath and respond to

situations thoughtfully. For example, everyone feels like exploding sometimes, especially at work after

you’ve had too much coffee and you didn’t get the raise you wanted. After that, some guy in a meeting

takes a cheap shot and jokes about how you didn’t win an overseas account because you didn’t bribe the

right person. What do you do? Scream the guy’s head off? Talk about it quietly after the meeting? Let it

pass like nothing happened? Practical wisdom doesn’t give an answer, but in the heat of the moment, it’s

the virtue of making the decision coolly, of doing something you won’t regret later. Frequently, an

association is set between practical wisdom and finding a spot between extremes. In this case, perhaps it

would be excessive to go off right there in the meeting room (because the outburst would tend to confirm

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that you’re not real smart), but it might also be excessive to let the jab go as though nothing had happened

(because the same guy may feel emboldened to keep poking at you). So practical wisdom would be the

ability to navigate a middle, prudent, route—perhaps one leading to the decision to discuss the matter

quietly but sternly after the meeting.

Fairness is the virtue of judging people’s acts dispassionately, evenhandedly, and from all points of view.

When forming judgments about a potential client who seems to be asking for a bribe, the verdict is going

to partially depend on where the client is. If he’s in the United States, that’s one thing; if he’s in a country

where clients customarily get cash under the table, that’s another. No one is saying the first is wrong and

the second right, but the different contexts need to be considered, and fairness is the ability to consider

them, to make evenhanded judgments even in very different situations.

Courage is the virtue of moderate boldness. If you’re an action crime reporter, you won’t hide in a bush

while pushing your cameraman out into the open to try to get some exciting footage. You won’t, in other

words, be a coward. At the same time, you won’t be rash either, you’ll know that sometimes you need to

take a risk to get a good story, but it doesn’t make a lot of sense to stand up and film from the middle of a

gunfight.

Temperance is the virtue of self-control with respect to pleasure, especially the pleasures of the body and

the senses. Curiously, Wallace Souza stands as an embodiment of this skill. As a major league drug dealer,

he no doubt had constant access to good, cheap, feel-good substances. Even so, he managed to control his

intake, not letting it interfere with his day job as a TV reporter, and his other day job as a legislator.

More generally in the workplace, temperance mixes well with the learned ability to delay gratification. For

example, doing good work is frequently rewarded with a better job, but it’s hard to find someone who feels

as though they get everything they deserve every time. Temperance enters here as the ability to bear down

and keep trying. It’s also, on the other side, the ability to know when a larger change (perhaps looking for

work at another company) may be necessary to get ahead.

Sincerity is the ability to reveal yourself to others with confidence that you’ll be respected. It fits between

the extremes of frigidity and emoting. Souza or any TV reporter has to do more than just give cold facts;

some human, emotional component must be added to the mix. On the other hand, no one’s going to watch

a reporter who arrives at a crime scene, reports that he feels sad, and breaks down in tears. Similarly in

international business negotiations, to establish good contact across cultures, there has to be some

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sharing of humanity. You need to reveal what kind of food you like or something similar to the people on

the other side. You don’t want to go too far, though, and talk about how Japanese food reminds you of a

childhood vomiting episode (especially when doing business in Tokyo).

Civility is the virtue of showing consideration for others without humiliating yourself. As a virtue it

doesn’t mean eating with the right fork or remembering to say “thank you” to clients. Instead, it’s the

disposition to show others that you take them seriously while also respecting yourself. This means

establishing ground rules for behavior that are independent and neutral. In essence, the idea is, when

having lunch with your boss, you don’t eat like you’re sitting in front of the TV in your family room; you

respect her, and you expect the same from her. Civility is the virtue of habitually being and expressing

yourself in a way that establishes your presence solidly without threatening or impinging on others.

Vices

On the outside of the virtues, there are vices. Just as the accomplishment of a virtue—acting in harmony

with it—yields a sense of satisfaction and confidence that you’re living well, living a good life, so too the

vices produce a sensation of unease. It’s not exactly a sting of conscience (like a child feels when caught

stealing); it’s more a sense of weakness, deflation, and failure. Cowardice, for example, is a vice. It may

save your job if you mess up and don’t confess to the problem being your fault; but for the person trained

in virtue, the job will have lost its dignity. Insensibility is another vice. Had Souza understood that, he

may have thought twice about those people’s dead bodies he rolled out for television. He may have

thought of their living parents, their children. And even if he hadn’t, after he’d presented the images he

would’ve felt that he’d lapsed, that he hadn’t done as well as he could.

How Do I Become Virtuous?

Virtues aren’t a list of actions you can write on the back of your hand and refer to; they’re ways of living,

and the only route to becoming virtuous is to actually live those ways. Every society will have its own

institutions for instilling virtue, and within societies different institutions will seem more apt for some

than for others. In the United States, the kinds of groups that are sought out as instillers of virtue include

the family, churches, schools, sports teams, Boy and Girl Scouts, volunteer and community organizations,

the armed forces, AmeriCorps, and similar.

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Companies play a role, too. The virtuous organization will be led by individuals who are virtuous, and it

will reward workers—at least partially—based on their progress toward being good people. This kind of

organization won’t rely on employee handbooks and compliance rules to dictate behavior; instead, it will

devise strategies for nurturing the skills of a good life. They may include mentor programs, carefully

calibrated increases in responsibility and independence for employees, and job performance assessments

that not only measure numerical results but also try to gauge an individual’s moral contributions to the

organization’s undertaking.

Finally, when confronted with moral questions—“What kind of images should I broadcast on my TV

report?” or “Should I hand money under the table?”—the answer won’t be yes or no. It’s never a yes or no;

it’s always to do what my good character dictates.

An Advantage and Drawback of Virtue Ethics

The principal advantage of virtue ethics is its flexibility, the confidence that those who are virtuous will be

equipped to manage unforeseeable moral dilemmas in unfamiliar circumstances. The principal drawback

is the lack of specificity: the theory doesn’t allow clear, yes-or-no responses to specific problems like

whether I should offer a bribe.

K E Y T A K E A W A Y S

 Virtue ethics concentrates on forming good character and then trusting people to do the right thing. At the

heart of ethics, the formation of good character replaces the defining of specific guidelines for action.

 A society’s institutions play a key role in instilling virtue.

 The basic virtues tend to stress moderation, the ability to avoid taking extreme action in the face of

dilemmas.

 Virtue ethics grants flexibility insofar as those who are virtuous should manage any situation well.

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R E V I E W Q U E S T I O N S

1. Would you call Souza’s colorful professional life a profile of the virtue of courage? Why or why not?

2. How might the virtue of civility come forward in the case of international bribery, in the case that you’ve

gone abroad in pursuit of a contract and the prospective client demands some cash under the table?

3. What are some societal institutions you’ve come in contact with that could be understood as teaching

virtue? What virtue(s) do they instill, and how?

4.5 Discourse Ethics

L E A R N I N G O B J E C T I V E S

1. Define discourse ethics.

2. Show how discourse ethics can function in a business context.

3. Note an advantage and drawbacks to the theory.

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What Is Discourse Ethics?

Proponents of discourse ethics reverse the order in which we normally address ethical uncertainties.

Instead of starting with one theory or another and then taking it out into the world to solve problems, they

start with a problem and try to create a moral structure to solve it. Ethical solutions become ad hoc,

custom generated to resolve specific conflicts. It doesn’t matter so much, therefore, that people come to an

issue like bribery from divergent moral terrains because that difference is erased by the key element of

discourse ethics: a foundational decision to cut away from old ideas and make new ones.

How Does Discourse Ethics Work?

When a dilemma is faced, those involved gather and try to talk it out. The discussion is constrained by two

basic limits: conversation must be reasonable and civil, and the goal is a peaceful and consensual

resolution. As long as these ideals control what we say, we can call the result ethically respectable.

Take the dilemma of international bribery: you’ve left your home office in New Jersey and gone to

Somalia seeking to win construction business on a new airport. As the recent Transparency

International Corruption Perception Index shows, [1]

you’re going to discover that its customary to pass

some cash to a prospective client before he’ll be willing to do serious business. Company policy, however,

prohibits bribes.

What do you do? If you’re playing by hometown, American rules, your responsibility to company policy

and to broad honesty and fairness requires you to walk away. But if you’re playing Somali rules where

greasing a palm seems fair and acceptable, your obligation to win contracts for the company that’s paying

your salary requires you to pass some cash. Discourse ethics comes in here with this: instead of trying to

impose one side’s convictions on the other, the effort will be to overcome the divide by constructing a new

and encompassing moral framework through common agreement. American rules and Somali rules are

both thrown out, and new ones get sought. Here are steps on the way:

1. Define the immediate stakeholders—that is, those who’re most affected by the dilemma and may be

gathered to resolve it. In this case, they include you and your client. Since your responsibilities to the

company are reported through your supervisor, she too could be included.

2. Establish a language for discussion. In the international world this is actually a real problem. Sensibilities

must be respected, and if you’re in Somalia, just assuming that everyone will speak English might be a

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step backward. On the other hand, you probably don’t speak Somali. This step then becomes a rehearsal

for the larger problem—just as you’re separated by moral codes, so too you’re separated by languages—

and you’re going to have to find a solution. You may choose a third language, you may hire an interpreter,

or maybe your client will be able to speak English. In any case, an agreement must be reached.

3. Establish the goal, which in discourse ethics is always the peaceful and consensual resolution to the

dilemma.

4. Define the problem. Here, it’s that when cash passes from you to the client, you feel like you’re handing

over an illegitimate bribe, but he feels like he’s receiving a typical and acceptable gift. This stage of the

process would require fairly lengthy elaborations by all those involved of exactly what they understand

their obligations and interests to be. Your supervisor would need to explain the company policy, why it

exists and how she’s responsible for upholding it. Your client might point out that his salary is quite low,

and the reason for that is simple: everyone accepts that his income will be supplemented by gifts. (Here,

he might sound something like a waitress in New York City explaining to a foreign diner that her salary is

absurdly small, but everyone expects there’ll be some tipping, and it’ll be more than two shiny quarters.)

You, finally, explain how you’re being stretched between two obligations: the one to respect company

policy and the other to do the job of winning contracts.

5. Propose solutions. Discourse ethics is open, a kind of ethical brainstorming: those involved offer

solutions, modify each other’s’ proposals, and try to discern whether a common ground can be mapped. In

this case, someone may propose that the prospective client offer substantial evidence that money is

expected and customary for someone in his position in Somalia. If the evidence can be produced, if it

shows that payments are nearly universal, and it shows about how much they normally are, then perhaps

all parties can be satisfied. Your supervisor, seeing that the amount actually forms part of a normal salary

and isn’t some extraordinary payment, may be able to reason that the money isn’t a bribe because it’s not

doing what bribes typically do, which is afford an unfair advantage. In this case, if everyone’s paying, then

no advantage will be had. It’s important to note here that the logic isn’t if everyone does it then it’s all

right, because discourse ethics doesn’t generalize like that. All conversations and solutions are about

getting agreement on this one case. So your supervisor feels like handing cash over isn’t a bribe any more

than tipping a waitress is. Your client, having received the money, will obviously be satisfied. You, finally,

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will be free to fulfill your professional obligation to win the client without sacrificing your obligation to

respect company policy and your obligation to yourself to work in a way that’s honest.

If this—or any—solution is reached, then discourse ethics will have done what it promised: open a way for

concerned parties to reach agreements alleviating conflicts. Whatever the agreement is, it’s an ethically

recommendable solution because the definition of what’s ethically recommendable is just agreements

reached through discussion.

An Advantage and Drawbacks to Discourse Ethics

The main advantage of discourse ethics is that the search for solutions opens the door all the way.

Everything’s on the table. That gives those involved just about the best hope possible for a resolution

benefitting everyone joined in the discussion.

There are two main drawbacks to discourse ethics. The first is that everything’s on the table. If what’s

morally acceptable can be as broad as anything a group agrees to, there’s the potential for ugly solutions.

On the face of it, the international bribery resolution—hand some money over because it’s not really a

bribe and it’s more like tipping a waiter—seems pretty harmless. But it doesn’t take much to see a

slippery slope developing. If this kind of gifting is OK in Somalia where salaries are low, then why not in

the United States too if it happens that a particular client has a low salary relative to others in that line of

work? Or why not every client because, really, pay in that line of work is substandard? This can go on and

on, and before you know it, the entire economy is corrupted. Obviously, that won’t necessarily happen,

but it could, and this is one of the reasons so many insist that any serious attempt to do ethics must begin

with some basic defining of inbounds and out-of-bounds, some dividing of right from wrong. Discourse

ethics doesn’t do that.

The second drawback to discourse ethics is that for every ethical dilemma faced, you have to start over.

Since the entire idea is to clear the deck and make a new solution, anyone facing a significant number of

ethical dilemmas in their line of work is going to be constantly clearing the deck and beginning anew. Of

course there may be some components of past discussions that could be carried forward—what you

learned on the trip to Somalia may be helpful in Uzbekistan—but that doesn’t change the fact that the

ethical recommendation to start from zero and talk problems out is going to lead to a lot of talking.

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K E Y T A K E A W A Y S

 Discourse ethics solves dilemmas by asking those involved to discuss the matter reasonably until they can

find a consensual and peaceful solution.

 Discourse ethics allows tremendous latitude in the search for solutions to conflicts, but it risks allowing

solutions that many would consider unethical.

R E V I E W Q U E S T I O N S

1. A five-step process was discussed to chart the advance of discourse ethics. Summarize each of these steps

in your own words.

2. Describe a business situation where discourse ethics might work well. Why might it succeed?

3. Describe a business situation where discourse ethics might not work well. Why might it fail?

[1] “Corruption Perceptions Index 2009,” Transparency International, accessed May 12,

2011,http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table.

4.6 Ethics of Care

L E A R N I N G O B J E C T I V E S

1. Define the ethics of care.

2. Show how an ethics of care functions in a business context.

3. Note advantages and drawbacks to the theory.

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The Rules of an Ethics of Care

Sometimes advocated under the titles of community ethics or feminist ethics, an ethics of care switches

the focus of moral regulation from the individual to networks of social relationships. The basic question

isn’t about yourself; it’s not “What should I do?” Instead, it’s always about a larger us: “What should be

done to nurture the connections among those of us closest to each other?”

A quick example dilemma: There’s a flaming car wreck involving your sister and a Nobel Prize–winning

medical scientist, and you have the strength to rescue only one of the two. Which should you save? A strict

utilitarian—someone believing we should always act to bring the greatest good to the greatest number—

will go for the scientist. Saving him will likely produce future medical breakthroughs in turn saving many

others, which means the greater good will be served by dragging him out. But how many of us would

actually do that? Wouldn’t you go for your own sister before some scientist you’ve never met? And

wouldn’t most of the rest of us agree that we’d do the same thing? If the answer is yes, an ethics of care

provides a way of understanding and justifying the impulse, which is, before anything else, to protect

those bound to us.

There are three critical steps on the way to formalizing care as a coherent ethical orientation. Each is a

shift away from traditional ethics.

1. At the center of attention, independent actors are replaced by a web of interrelated individuals. (Ethics is

not about me and you; it’s about us.)

2. The impartial application of abstract principles is replaced by the maintenance and harmonizing of

human relationships. (Ethics is less about the fair imposition of rules and more about crafting social

integration.)

3. Tensions between the rights of individuals get replaced by conflicts of responsibility to others in

established relationships. (Ethical tensions aren’t my rights versus yours; it’s me being torn between those

I care for.)

In the international bribery example up to now, we’ve treated all those involved as anonymous

individuals: it hasn’t mattered whether or how long they’ve known each other. It’s only important to know

that there’s a supervisor X back at the US company headquarters, and there’s the person Y who’s gone

abroad to win a contract, and there’s the prospective client Z expecting a bribe. That’s it. Maybe the three

have never exchanged more than fifty words in a single conversation, or maybe they’re all cousins who

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meet for family blowouts every two months. We haven’t asked because it hasn’t mattered what their

personal relationships may be. That will have to change, however, within an ethics of care because there

are no anonymous, single individuals: everyone has a place—near or far, integral or accidental—within a

social network. For that reason, all morality resembles the car wreck. It’s charged with human

attachment, and because the ethics of care makes those attachments the center of deliberation, you have

to know how people are related to each other before beginning to know how they should treat each other.

Turning this perspective toward the bribery example, the overseas client, let’s say, is an old and loyal

client of the company, and also one who’s always gotten a little extra from one or another employee.

About the company, it’s not an anonymous multinational but a medium-sized, extended-family concern.

Brothers, uncles, nieces and nephews, and a hodgepodge of others all work there. For years, it can be

added, this overseas contract has been vital to the company’s success. Now all this counts for something

within an ethics of care. As opposed to the traditional idea that the best moral lessons show us how to

coldly, impersonally, and impartially apply abstract rules, here we’re checking to see who’s involved,

because the reason we have morality is to vitalize our human relationships.

An ethics geared to strengthen bonds isn’t necessarily easy to enact. Take a company like Oil-Dri, about

which Forbes recounts,

Oil-Dri now makes about $240 million a year in revenues. At the company’s 50th anniversary

party, the CEO asked anyone related to anyone else at the organization to stand up. Of the

company’s 700 or so employees, almost 500 rose. [1]

This is obviously an organization where relationships matter and where management is accounting for

human concerns and networks when hiring people. No doubt there’s a lot of camaraderie in this

workplace, but imagines how difficult it must be to dole out promotions when everyone knows everyone

else in that personal, almost familial way. Within a more traditional ethics, one of the first steps to making

a promotion decision is to clear away all the personal stuff before evaluating each employee directly and

simply assess his or her professional merits. Within an ethics of care, however, any promotion decision—

more or less any decision at all, for that matter—is going to require the subtle, complex, and difficult

balancing of many individual and highly emotional situations and circumstances.

Something similar happens within typical families. Most parents trot out the idea of treating all their

children identically—they all get their first car at the same age and so on—but if a sibling has special

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problems at one stage of their development, they’ll normally get special treatment in the name of

preserving the family unit. The other brothers and sisters probably complain, but if they’re old enough

they understand that protecting those who are vulnerable is one of the first imperatives of caring for each

other as a group. An ethics of care in essence takes that model from the family and extends it out into the

world of business. Applying it to the promotion question, if there’s a member of Oil-Dri saddled by, let’s

say, a difficulty with alcohol, then that might actually be a positive consideration within care-based

thought. Promoting someone who has had problems and reinforcing their attempt to get past them may

serve the general harmony of the entire group. As a result, someone who’s less qualified in purely

professional terms may get the promotion in the name of caring for the social web.

How Might the Case of International Bribery Be Managed within an Ethics of

Care?

Traditionally, ethics features questions about the competing rights of individuals. For example, when I

offer a bribe, am I impinging on the right of another to compete on a level playing field for the same

business? Starting from an ethics of care poses a different question: does giving a bribe reinforce or

weaken the bonds of human relationships defining my place in the world? The answer, obviously,

depends. If the company is Oil-Dri where everyone’s deeply connected, and it’s an old client, and a little

gift of cash has always been slid under the table, then the maintenance of that network’s vitality and

human health becomes a powerful argument in favor of continuing the practice.

Keeping the wheels turning isn’t the only solution, however. Discomfort with doing something that seems

underhanded may lead the overseas representative to try a different way of keeping the contract going,

one that’s based less on money under the table and more on aboveboard selling points. Quality of service

as proven by work performed in previous years may offer a way to keep the business and personal link

intact. There may be, in other words, a less controversial route to the same end of maintaining and

enforcing existing relationships.

Alternatively, a different client, one not demanding a bribe, may be sought to purchase the company’s

goods and services. Nothing in an ethics of care requires those participating to preserve every bond.

Sometimes it happens in families that a member becomes so toxic and damaging to the rest that the

connection needs to be severed in the name of maintaining the larger whole. The overseas bribery

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relationship may be one of those cases. It’s hard, of course, to break away, but there are other potential

clients out in the world and going after them may, in the final analysis, do more for the social health of the

core group than clinging to a problem at all costs.

Finally, enrolling in an ethics of care doesn’t mean going blind to what’s going on outside the circle of

care. One fact from the larger world that should be taken account of comes from a recent article in

the Washington Post about foreign business bribes: prosecutions of international bribery by the US

government are picking up. [2]

Ethical concerns should normally be distinguished from legal

considerations, but there’s no doubt that few events interrupt human relationships like a jail term. Cutting

the bribery relationship, therefore, may be necessary regardless of how important the particular client and

business are for the larger whole.

Conclusion. The activation of an ethics of care may justify continuing to pay money under the table. Or it

may lead toward a less controversial way of maintaining the business relationship. Or it may cause a break

between the company offering services and the overseas client demanding a bribe. There’s no way to know

for sure which path will be the right one, but in every case the choice will be made in the name of

preserving and nurturing the human relationships surrounding the decision.

Advantages and Drawbacks of an Ethics of Care

The advantages of a care-based ethics include the following:

 It can cohere with what we actually do and think we ought to do, at least in cases like the car accident

cited at this section’s beginning. In a certain sense, it corresponds with our natural instincts to act in favor

of and protect those under our care and those involved in our lives.

 It humanizes ethics by centering thought on real people instead of cold rules. Presumably, everyone

agrees that ethics is ultimately about people: unlike the hard sciences, the end results of morality are

tallied in human lives. To the extent that’s right, an emphasis on care seems well suited to the general

practice of ethics.

 It allows us to focus our energy and concern on those who are closest to us. Everyone knows that there’s

injustice in the world, just as we all know we can’t solve every problem. The ethics of care allows us to

focus our energy naturally on the most immediate human needs.

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The main disadvantage of an ethics of care is that it threatens to devolve into tribalism: There’s my group,

and I take care of them. As for all the rest of you, you’re in your groups and in charge of yourselves. This

isn’t every man for himself, but it comes close to every social group for itself.

K E Y T A K E A W A Y S

 An ethics of care makes the nurturing of our immediate communities and the protecting of those closest

to us the highest moral obligation.

 In business, an ethics of care asks us to review decisions not in terms of hard rules but in terms of how

they will affect the people with whom we share our lives.

 An ethics of care humanizes moral decisions, but it threatens tribalism.

R E V I E W Q U E S T I O N S

1. What are the three major steps an ethics of care takes away from most traditional theories? Can you put

each one in your own words?

2. An ethics of care is frequently compared to the morality guiding a family. Can you think of another

comparison that encapsulates how this ethics works?

3. Imagine that you had two parents and a sister working for Oil-Dri in the United States. The overseas client

you’ve been sent to do business with is a half-brother from your father’s first marriage. He demands a

bribe. How could the ethics of care be used to justify accepting or refusing?

[1] Klaus Kneale, “Is Nepotism So Bad?,” Forbes, June 20, 2009, accessed May 12,

2011,http://www.forbes.com/2009/06/19/ceo-executive-hiring-ceonewtork-leadership-nepotism.html.

[2] Carrie Johnson, “U.S. Sends a Message by Stepping Up Crackdown on Foreign Business Bribes,” Washington

Post, February 8, 2010, accessed May 12, 2011,http://www.washingtonpost.com/wp-

dyn/content/article/2010/02/07/AR2010020702506.html.

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4.7 The Cheat Sheet: Rules of Thumb in Applied Ethics

The following tables summarize the theories considered in this textbook. The first includes the

traditional theories and the second encapsulates the contemporary theories built to respond to

cultural relativism.

Table 4.1 The Traditional Theories

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Name

Guidance

for ethical

action

Focus of our

efforts

Typical

questions

asked in

the effort

to fulfill

obligations

Conception

of the

person

implied by

the theory

Strengths and

weaknesses Type of theory

Duty

Learn the

basic duties

to ourselves

and others,

and obey

them. The duties.

 To whom do

I have

obligations?

 What are the

obligations?

 How do the

obligations

weigh

against each

other?

We are

rational

actors.

Gives clear

guidance in

many

situations but

is inflexible in

the face of

special cases.

Non-

consequentialist

Fairness

Treat

people

identically

unless they

differ in

ways

relevant to

the

situation.

(Treat

equals

equally and

un-equals

unequally.)

Resist

prejudice and

personal

feelings.

Does

everyone

get an

equal

chance? (If

they don’t,

how are

the

differences

justified?)

We are

rational

actors.

Promises

egalitarianism,

but can be

difficult to

implement in

complex

reality.

Non-

consequentialist

Kant

Learn the

basic duties

to ourselves

and others,

and obey

The categorical

imperative in

two

articulations:

actions must

 Is the act

I’m

considering

We are

rational

actors.

Gives clear

guidance in

many

situations but

is inflexible,

Non-

consequentialist

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Name

Guidance

for ethical

action

Focus of our

efforts

Typical

questions

asked in

the effort

to fulfill

obligations

Conception

of the

person

implied by

the theory

Strengths and

weaknesses Type of theory

them. be

universalizable

and treat

others as ends

and never as

means.

universaliza

ble?

 Am I being

careful not

to treat

others as

means to an

end?

especially in

the face of

special cases.

Rights theory

Maximize

freedom.

Learn the

individual’s

basic rights,

live them, and

respect others’

right to live

them.

Does doing

what I want

impinge on

the basic

freedoms

of others?

We are

distinguished

by the

possession of

dignity.

Allows

individuality,

but does little

to resolve

conflicts

between

individuals.

Non-

consequentialist

Egoism

Increase my

well-being

and

happiness.

Learn about

my desires and

welfare, and

serve them

What

makes me

happy over

the long

term? How

can I get

that?

We are

driven

toward

pleasure and

away from

pain.

Good for me in

the short term,

but might not

help us live

together as a

society. Consequentialist

Altruism

Increase the

well-being

and

happiness

of others.

Learn about

others’ desires

and welfare,

and serve

them.

What

makes

others

happy over

the long

term? How

can I help

We are

driven

toward

pleasure and

away from

pain.

Others benefit,

but it may be

difficult to

justify

devaluing

yourself. Consequentialist

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Name

Guidance

for ethical

action

Focus of our

efforts

Typical

questions

asked in

the effort

to fulfill

obligations

Conception

of the

person

implied by

the theory

Strengths and

weaknesses Type of theory

them get

that?

Utilitarianism

Increase the

well-being

and

happiness

of everyone

collectively.

Learn about

the desires and

welfare of

everyone,

understood as

an aggregate,

and serve

them.

What

brings the

greatest

happiness

and good

to the

greatest

number

over the

long term?

How can I

help us get

that?

We are

driven

toward

pleasure and

away from

pain.

The general

welfare is

served, but

injustices at

the individual

level may

persist. Consequentialist

Table 4.2 The Contemporary Theories Responding to Cultural Relativism

Guidance for

ethical action

Focus of our

efforts

Typical

questions asked

in the effort to

fulfill

obligations

Strengths and

weaknesses

Reaction to

cultural

relativism

Eternal Be myself.

Think through Would I do this if Maximizes individual Abandons

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Guidance for

ethical action

Focus of our

efforts

Typical

questions asked

in the effort to

fulfill

obligations

Strengths and

weaknesses

Reaction to

cultural

relativism

return of

the same

the eternal

return.

it had to be

repeated in the

same life, which

recurred

forever?

authenticity but

provides no specific

recommendations for

action.

morality

altogether.

Cultural

ethics

Follow local

customs and

practices.

Learn local

customs and

practices.

What do the

locals do?

Helps you fit in but

allows little hope for

ethical improvement.

Accepts the

proposal that

moral rules are

just a particular

community’s

beliefs.

Virtue

ethics

Develop good

moral

character.

Learn and

practice the

virtues.

Am I acting with

integrity and in

accordance with

values learned?

Allows flexibility but

provides little specific

guidance.

Tries to protect

against cultural

relativism by

developing an

adoptable but

consistently

moral character.

Discourse

ethics

Produce

solutions to

moral

dilemmas.

Talk it out: use

rational

conversation to

reach a

peaceful,

consensual

agreement.

What do you

think? How

about this

possibility?

Provides a broad

range of possible

solutions but every

conflict must be

addressed from

scratch.

Replaces a

culture’s moral

rules with the

attempt to

fabricate new

rules to function

in specific

situations.

Ethics of

care

Nurture and

protect

immediate

relationships.

Respond to the

needs of those

nearest us.

Which solution

preserves

healthy and

harmonious

relationships

among those

Humanizes morality

but risks tribalism.

Replaces a

culture’s moral

rules with loyalty

to those whose

lives touch our

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Guidance for

ethical action

Focus of our

efforts

Typical

questions asked

in the effort to

fulfill

obligations

Strengths and

weaknesses

Reaction to

cultural

relativism

involved? own.

4.8 Case Studies

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I Wouldn’t Change a Thing

Tamica Tanksley graduated from Temple University in Philadelphia in 2000. About a decade later she

worked her way into an important role in the office of Pennsylvania State Senator Vincent Hughes: she’s

co-director of his community affairs outreach and efforts. Though not a celebrity or mightily important in

politics, what she’s done with her life up to now earned her a brief write-up and a chance to answer a few

interview questions in Temple’s Internet Alumni magazine. [1]

She describes her job responsibilities as linking the senator with “community leaders, educators, religious

organizations, constituents and various institutions within the public and private sector.” It all comes

naturally to her. As she puts it, “I didn’t choose politics, politics chose me. And if I had to do it all over

again, I wouldn’t change a thing…Working in the government sector where my daily responsibilities

afford me the opportunity to empower and inspire everyday people is a career that ignites my passion for

people.”

It’s not just heavy, public service trudging, though; Tanksley also finds the job “fun” because it allows her

“creative juices to flow into a sea of possibilities,” and in a different part of the interview she calls the

work, in a sense, victorious: “As a citizen and voter, I’ve learned that this game of life is not won by

standing on the sidelines. In order to provoke change and improve the quality of life for everyone, we

must get into the game because victories are won on the field.”

How’d she get the job? The way a lot of people start off in politics, by serving in that same office as a

volunteer worker.

Ima ge

rem ove

d d ue

to cop

yrig ht

issu es.

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Finally, since it’s a Temple University website, the interviewer tries to get in a plug for the school and

succeeds with this memory Tanksley produces of Dr. Jean Brody’s public relations course and the prof’s

infamous (at least on the Temple campus) red pen: “While I was often saddened by my white paper being

flooded by red pen marks, I quickly learned that Dr. Brody and her red pen refined the best in me. With

each passing assignment, the red marks lessened and my knowledge and experience increased. Moreover,

it was the red that encouraged me to do my best work, which has ultimately contributed to the dedicated

worker I am today.”

Q U E S T I O N S

1. Tanksley reports about her young life up to this point that “if I had to do it all over again, I

wouldn’t change a thing.” Can you use this as a point of departure for

o defining Nietzsche’s eternal return and showing how it works?

o characterizing Tanksley’s professional life as one fit for approval by Nietzsche’s eternal return?

2. The values guiding Wallace Souza’s work as a news reporter in remote Brazil—especially the kinds of

images judged appropriate for TV there—are quite different from those guiding TV reporting in the United

States. Why does Nietzsche believe this kind of cultural clash is a reason to subscribe to the eternal return

and simultaneously abandon traditional ethical theories, which attempt to pertain universally?

3. Tanksley reports about her young life up to this point that “working in the government sector where my

daily responsibilities afford me the opportunity to empower and inspire everyday people is a career that

ignites my passion for people.” How might an advocate of the eternal return respond to this sentiment?

Explain.

4. Whose life seems more in tune with how you imagine yourself living the eternal return, Souza’s or

Tanksley’s? Why?

5. For virtue ethics, knowing what to do with your life—responding to its problems, choosing goals

to reach for—isn’t something you can just figure out no matter how intelligent you may be or how

many ethics classes you’ve taken. To succeed, you also need a good society, one that does two

things:

o Teaches the virtues through its institutions

o Provides a way to practice using the virtues

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How could Dr. Jean Brody be considered a teacher of virtue? What particular virtues did she teach

Tanksley, and how did she provide a way to practice using them?

Mordidas

In Mexico City, police salaries are extremely low. They live decently enough, though, by adding bribes

(mordidas in Spanish) to their wages. During a typical week they pull in bribe money that more or less

equals their monthly salary. All the locals know how it works, especially when it comes to the most avid

collectors, the traffic cops. In the standard procedure, the officer pulls a car over, takes out his codebook,

walks up, and hands it to the driver. Ostensibly, he’s allowing confirmation that the law actually prohibits

whatever was done. This is what actually happens: the driver slips about fifty pesos (a little under five

dollars) into the book, closes it, hands it back, and is free to go. [2]

The practice is so routine that frequently

the procedure is abbreviated and participants don’t even bother trying to hide the payoff or going through

the codebook pantomime. They may approach the officer’s patrol car and directly drop the money onto

the guy’s lap. [3]

Or they may stay in their own car and just hand cash out to be directly

pocketed. [4]

Regardless, the transaction is smooth and efficient.

Despite the bribery’s efficiency and its penetration to society’s core, not everyone in Mexico City is happy

with the constant mordidas. According to a story in the city’s largest circulation daily, a mayor in one of

the suburbs decided to take a lonely stand against the informal police action. Since all the police are in on

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it, he couldn’t resort to an Untouchables-styled internal affairs operation. And since all the citizens

considered the payoffs perfectly normal, he couldn’t appeal to them for help either. Really, he was left

with only one choice. To interrupt the habit, he made traffic tickets illegal. His suburb became a free

driving zone where anybody could do whatever they wanted in their car and the police couldn’t respond. A

lot happened after that, but there’s no doubt that the payoffs stopped. [5]

Q U E S T I O N S

1. About the bribery in Mexico City, not only is it the way things have been done as long as anyone

can remember, but the process actually makes a lot of sense; it’s even very economically efficient

because the middlemen are being cut out. Instead of having to pay an administrative staff to

process traffic tickets, then accept deposits into the city’s account, and then redistribute the

money back out as part of police salaries, here the money goes straight into the officer’s pocket.

o What is cultural relativism, and how does the vision of ethics associated with it diverge from the

traditional ethical theories?

o The Mexico City process of getting and paying off a traffic ticket is different from the US process.

What values and advantages can be associated with the process in Mexico City? How can it be

justified in ethical terms?

o The Mexico City process of getting and paying off a traffic ticket is different from the US process.

What values and advantages can be associated with the process in the United States? How can it

be justified in ethical terms?

o The Mexico City process of getting and paying off a traffic ticket is different from the US process.

How can that difference be converted into an argument in favor of the idea that cultural relativism

is the right way to look at things? Does the argument convince you? Why or why not?

o Your company, FedEx, has sent you to Mexico to open a branch in Mexico City. You’ll be there for

three months, with all expenses paid. Can you make the case with a culturalist ethics that FedEx

should reimburse not only your car rental and gas but also the two mordidas you had to pay even

though you obviously don’t have any receipts?

o After you return from your successful overseas experience, FedEx assigns you to train a set of

recruits to go to Mexico and open more branch offices. When you to talk about the police and

Saylor URL: http://www.saylor.org/books Saylor.org 181

mordidas, would you counsel a culturalist approach, or would you advise them to go by the book

(as that phrase is understood in the United States)? How would you justify your decision?

o For owners of office buildings in Mexico City, FedEx is a great client. They pay their rent every

month and they’re probably willing to negotiate an amount in dollars, which is extremely

attractive because the Mexican peso is prone to the occasional and steep devaluation. As a result,

if you’re opening up a new FedEx office, you’re going to have building owners lining up, trying to

rent you space. Does a decision to play by local rules and pay mordidas to cops also allow you to

play by local real estate rules, which allow you to take a generous cash gift in exchange for renting

in one building instead of the place across the street? Why or why not?

o You are sent to Mexico City to rent office space. You find two equally good spaces only

distinguished by the fact that one owner offers a larger bribe than the other. No one’s watching,

no one will ever know, you can do whatever you want. What do you do? Why?

2. Think of yourself as a virtue ethicist.

o Very quickly, what are some of the virtues you personally attempt to live by, and what social

institutions played a role in shaping your character?

o If you were sent to Mexico on a work assignment and found yourself in the situation typically

faced by local drivers after being caught driving a bit fast, how would you handle the situation?

Which virtues might come into play?

o Most advocates of virtue ethics believe companies—like other organizations including schools,

churches, and community associations—play a role in instilling virtue. If you were training FedEx

recruits destined to open branch offices in Mexico City and you wanted to prepare them for the

ethical challenges of bribery, what virtues would you seek to instill in them? Can you think of any

life experiences that some recruits may have had that may have formed their character to

respond well to the situation on the Mexican streets?

o The mayor in suburban Mexico City who decided to cancel traffic tickets was, in fact, fighting

against what he saw as corruption. Most advocates of virtue ethics believe government

organizations play a role in instilling virtue in its citizens. Could this action be considered part of

that effort? What virtues might it instill? How would it help people become better practitioners of

those virtues?

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3. The video Mordida in the Booklet (http://businessethicsworkshop.com/Chapter_4/C4.html) shows

a motorcycle officer getting paid off. One curious aspect is how long and intense the discussion

stretches between the officer and the pulled-over driver. What they’re doing is negotiating the

amount. The fifty peso price tag is a good average, but the number can drop or climb depending

on the give and take. [6]

o What is the five-step process of discourse ethics? How could this bribery negotiation be

understood within it?

o According to Transparency International’s Corruption Perception Index, Mexico is a place where

people doing business make many informal agreements involving bribery, kickbacks, insider

dealing, and all sorts of similar practices. Except for the fact that those involved are wearing suits,

most of these scenes resemble the one between the motorcycle police officer and the driver:

people talk for a while, come to a mutually satisfying, peaceful conclusion, and some money

changes hands. Do you see this as an indictment of discourse ethics, a justification of the

approach, or something else? Justify.

4. In the newspaper article about the Mexico City suburb where the Mayor decided to ban traffic

tickets, the reporter interviewed a police officer described as “an old transit cop whose juicy

bribes had helped buy his gold necklaces and bracelets.” This was the old cop’s reaction to the

situation (translated from Spanish): “I got my buddies together and I told them, ‘This sucks, now

what’re we going to do for money?’”

An ethics of care shifts the focus of moral thought away from the fair imposition of rules and

toward the maintenance of immediate personal relationships. Ethics isn’t about treating everyone

equally so much as it is about keeping companions together.

o Listening to this officer, who do you suppose exists within his web of social responsibility?

o Assuming this officer practiced the ethics of care, would he treat these two drivers differently

after pulling them over: his nephew and some out-of-towner he’s never seen before? Why might

he (not) treat them differently? Are there circumstances under which he’d actually demand more

money from the nephew? What could those be?

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o According to the newspaper article, in the first two months of ticketless existence in the suburb,

about two hundred people were struck by moving vehicles, and twenty were killed. From the

perspective of the ethics of care, can these numbers be used to form an argument against this

policy and in favor of a return to the previous, corrupted reality?

Money for Nothing

In his blog the z spot, author Z raises two questions about people receiving unemployment paychecks.

Both are laced with suspicion of fraud. First, people who are collecting unemployment checks are required

to show they’re at least trying to get a job, but Z writes that some are “showing up for interviews in jeans

and t-shirts.” Then he asks, “Do these people really want the job, or are they just showing up to say that

they are actively seeking work?” [7]

He goes from there to a second critical point. “Some people,” Z says, “are collecting unemployment checks

even though they’re actually working.” What they do is turn in their unemployment form listing the days

they worked, and those are deducted from the check they receive. That sounds OK in the abstract, but, he

adds, “The problem is that these people who are ‘on call’ are not taking shifts that are offered to them.

Those shifts don’t get deducted from their unemployment. So, while there are people who are actually

unemployed, struggling and looking to find work, there are Union employees sitting at home deciding

when they do and don’t want to come in. And collecting unemployment.”

From the posting’s response section, here are two contributions:

1. It’s not easy for me to swallow that my taxes are supporting people who could be working.

Ima ge

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2. I have a question. I live in Wisconsin and I know of somebody who is collecting unemployment but is not

actually going to any job interviews or is even applying for jobs. Is this illegal? If so, how can I report this

without them knowing?

Q U E S T I O N S

1. If you were using the eternal return to chart your way through life, would you have any problem “sitting at

home deciding when you do and don’t want to come in while collecting unemployment”? If you’re all right

with that, how would you respond to the complaint from the response section that someone is paying

taxes to support your lifestyle?

2. Thinking about the people showing up for job interviews in jeans and t-shirts, what might be lacking in

their character according to a virtue ethicist? If the government is one of those institutions proponents of

virtue look to for the instillation of good character, what might the government do in this situation in the

name of encouraging virtue?

3. The second cited response to Z is a question about how an unemployment cheat can be reported

“without them knowing.”

o About this silent reporting, why is this not what a proponent of discourse ethics would

recommend?

o How could the five-step process of discourse ethics be applied to the situation? Would the guy

complaining about paying taxes be included in the discussion? What kind of proposals might be

voiced to rectify the situation?

4. Starting from the ethics of care, is there a situation you could imagine that would justify the actions of

workers who take some shifts but decline others, and collect unemployment for those declined hours?

A Single Parent in the Army

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The post of cook in the mess hall is probably one of the Army’s least dangerous assignments, the closest

you get to actual battle is a food fight, but it’s still a military job where you go and do what your orders

command. For Specialist Alexis Hutchinson, a twenty-one-year-old Army cook, that meant catching a

flight to Afghanistan. She missed hers, though, intentionally. She regretted abandoning her unit, but felt

she had no choice. The single mother of a ten-month-old, she says she couldn’t find anyone to care for her

child during the absence; the only potential help, her mother, was already overwhelmed by caring for

three other relatives with health problems. Hutchinson’s fear, according to her lawyer, was that if she

showed up at the airport, the Army “would send her to Afghanistan and put her son with child protective

services.”

For its part, a military spokesman says, “the Army would not deploy a single parent who had nobody to

care for a child.”

The situation is under review, but for the present, just like anyone else who refuses deployment, she’s

under military arrest on her base in Georgia. [8]

Q U E S T I O N S

1. Virtue ethics

o The military is cited by virtue ethicists as a potential character-building institution, one of the

places a society molds a good citizenry. What are some of the virtues the military could be

expected to instill? How are those reflected in this situation?

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ues .

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o Families are a cited source of virtue. What values should we expect family life to instill? How are

those virtues reflected in this situation?

o Is there any way to bring the military virtues and the family virtues together for Hutchinson? If so,

what might it be? If not, why not and what should she do?

2. Proponents of discourse ethics walk through a five-step process on the way to reaching a negotiated

settlement to moral conflicts. What might the five steps look like here?

3. One of the objections to discourse ethics is that it can set up a slippery slope—that is, the people involved

can form a solution that bends the rules a little bit, and next someone else wants a little flexibility too, and

then someone wants a little more, and before long, the rules have completely disappeared and everyone’s

doing whatever they want. Could you sketch out how this process could happen here, with the end result

being the Army more or less losing the values at the core of its existence?

4. Ethics of care

o One of the key elements composing an ethics of care and distinguishing it from traditional ethical

theories is this: At the center of attention, independent actors are replaced by a web of

interrelated individuals. Ethics, in other words, isn’t about me and you, it’s about us. In

Hutchinson’s case, she finds herself in the midst of at least two networks of “us,” two

communities of people to whom she owes an allegiance and care. Describe these communities

and the links binding them.

o Another of the key elements composing an ethics of care and distinguishing it from traditional

ethical theories is this: The impartial application of abstract principles is replaced by the

maintenance and harmonizing of human relationships. Ethics, in other words, is less about the fair

imposition of rules and more about crafting social integration. Can you find an example of this

conflict between an ethics of rules on one side, and an ethics of relationships on the other, in

Hutchinson’s situation?

o Another of the key elements composing an ethics of care and distinguishing it from traditional

ethical theories is this: Tensions between the rights of individuals get replaced by conflicts of

responsibility to others in established relationships. Ethical tensions, in other words, aren’t my

rights versus yours, it’s me torn between those I care for. In the case of Hutchinson, how is she

torn?

Saylor URL: http://www.saylor.org/books Saylor.org 187

o In general, do you believe there’s a place for an ethics of care in the military? If so, where? If not,

why not?

[1] “Tamica Tanksley, SCT ’00,” Temple University, accessed May 12,

2011,http://www.myowlspace.com/s/705/index.aspx?sid=705&gid=1&pgid=1021&cid=1612&ecid=

1612&ciid=3725&crid=0.

[2] Business Ethics Workshop video, accessed May 12,

2011,http://businessethicsworkshop.com/Chapter_4/Mordida%20in%20the% 20booklet.html.

[3] Business Ethics Workshop video, accessed May 12,

2011,http://businessethicsworkshop.com/Chapter_4/How_to_purchase_a_police_ officer.html.

[4] Business Ethics Workshop video, accessed May 12,

2011,http://businessethicsworkshop.com/Chapter_4/Quick_mordida.html.

[5] Alejandro Almazán, “Fin de la mordida,” El Universal, November 16, 2003, accessed May 12,

2011, http://www2.eluniversal.com.mx/pls/impreso/noticia.html?id_nota= 54910&tabla=ciudad.

[6] Business Ethics Workshop video, accessed May 12,

2011,http://businessethicsworkshop.com/Chapter_4/Mordida%20in%20the% 20booklet.html.

[7] Business Ethics Workshop, accessed May 12,

2011,http://businessethicsworkshop.com/Chapter_4/Unemployment_fraud.html.

[8] “Mother Refuses Deployment,” New York Times, November 16, 2009, accessed May 12,

2011, http://www.nytimes.com/2009/11/17/us/17soldier.html.

The two-year Wells Fargo horror story just won't end by Matt Egan @MattEganCNNSeptember 7, 2018: 11:43 AM ET https://money.cnn.com/2018/09/07/news/companies/wells-fargo-scandal-two-years/index.html

Buffett acknowledges Wells Fargo's 'cardinal sin'

Wells Fargo can't wake up from the nightmare that began exactly two years ago. What sounded at first like a run-of-the-mill bank settlement — a $185 million payment to atone for "sales practices" — has morphed into a cascade of scandals that has rocked one of America's most storied banks to its core. It started in September 2016, when Wells Fargo shocked the nation and announced it had fired 5,300 workers over several years for creating millions of fake accounts. Wells Fargo (WFC) has since replaced longtime CEO John Stumpf, discarded the wildly unrealistic sales goals that led to the bad behavior and apologized for mistreating workers. The bank hired the respected Elizabeth Duke to lead its board, installed fresh directors and pledged in a splashy marketing campaign to clean up its act. New CEO Tim Sloan vowed to uncover mistakes of the past. Yet America's third-largest bank remains in turmoil from the fake-account controversy — and other scandals keep emerging. It paints the picture of a bank that has repeatedly abused its customers. The nightmare is hurting Wells Fargo's business, not just its reputation. Bottom-line growth has stalled, and the bank remains in the penalty box with regulators.

"Wells Fargo is still trying to sweep up broken glass — but they're finding it all over the place," said William Klepper, a management professor at Columbia Business School. "The problems are far more pervasive than in just retail banking," said Klepper, who conducted a case study on the crisis at Wells Fargo.

More abuses uncovered Beyond opening as many as 3.5 million unauthorized bank and credit card accounts, Wells Fargo has admitted to charging customers for mortgage fees they didn't deserve and forcing them into car insurance they didn't need. Some people even had their cars repossessed as a result. More recently, Wells Fargo started refunding customers who were charged for pet insurance and other products they didn't fully understand. It set aside $285 million to refund foreign-exchange and wealth-management clients for incorrect pricing and fees. And the bank discovered that some workers altered documents about business customers — a finding that reportedly sparked a Justice Department investigation. (The department declined to comment.) Worse, in early August, Wells Fargo said it was "very sorry" for a computer glitch that caused hundreds of people to have their homes foreclosed on.

Regulators still swirling Not surprisingly, the Federal Reserve has yet to remove the bruising penalties it imposed on Wells Fargo in February for "widespread consumer abuses." The unprecedented sanctions handcuff Wells Fargo by preventing the bank from growing. "It was incredibly tough and a shock, but the scale and scope of the misdeeds warranted it," said Isaac Boltansky, senior policy analyst at Compass Point Research & Trading. The Fed has said it won't lift the asset cap until it's satisfied Wells Fargo has cleaned up its act. Wells Fargo remains in legal hot water beyond the Federal Reserve. Federal government agencies, including the Justice Department, SEC and Labor Department, and state attorneys general have launched inquiries into Wells Fargo's sales tactics, according to recent SEC filings that described the probes as at "varying stages." Wells Fargo also faces lawsuits and other legal actions from former and current employees who alleged they were retaliated against after raising sales

practice misconduct issues. Almost half a dozen Wells Fargo workers told CNNMoney in 2016 they were fired after calling the bank's ethics hotline.

Wells Fargo stock left in the dust In a statement to CNNMoney, Wells Fargo said it's "focused on closely examining our company, fixing issues we find and making things right for all our stakeholders." Wells Fargo highlighted the progress it's made by completing an exhaustive third-party review, revamping its sales goals and reaching an $142 million class-action settlement with customers. "While there's more work to do, rebuilding trust with our team members, customers, communities, shareholders and regulators remains our top priority," Wells Fargo said. Wells Fargo's stumbles have left its stock price badly behind rivals. Although Wells Fargo is up 16% since the scandal erupted two years ago, that's far behind the 47% rally for Citigroup (C) and 70% spike for JPMorgan Chase (JPM). Bank of America (BAC) has nearly doubled over that span. "There's no question that Wells Fargo's scandals are responsible for seriously eroding shareholder value," said Klepper.

Pressure on CEO That has led some to question about whether Sloan, a three-decade veteran of the bank, is the right person to transform Wells Fargo. Democratic Senator Elizabeth Warren, another vocal Wells Fargo critic, loudly called for Sloan's resignation a year ago. John Taylor, the CEO of the National Community Reinvestment Coalition, an alliance of 600 activist groups that pushes banks to loan to underserved communities, credited Sloan with launching a stakeholder advisory council last year that Taylor sits on. "It's the real deal. We believe it's an honest attempt to be a better bank," said Taylor, who is not compensated for the role. However, Taylor conceded he's worried about "another shoe to drop" at Wells Fargo and can't say for sure if Sloan is the right person for the job.

"I'm happy to give him a chance," Taylor said. Klepper said it is very difficult for an entrenched insider like Sloan to enact the kind of dramatic cultural change needed at Wells Fargo. "He's part of the culture. He's embedded in it," Klepper said. CNNMoney (New York)First published September 7, 2018: 11:43 AM ET

3/23/2021 What Is Cultural Relativism?

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4.1 What Is Cultural Rela�vism?

L E A R N I N G O B J E C T I V E S

1. Define cultural rela�vism.

2. Show how cultural rela�vism defies tradi�onal ethics.

Nietzsche and the End of Tradi�onal Ethics

“God is dead,” the declaration attributed to Friedrich Nietzsche, stands along with “I think, therefore I am” (René

Descartes, 1641) as philosophy’s most popularized—and parodied—phrases. The t-shirt proclaiming “Nietzsche is

dead, signed, God” is funny, but it doesn’t quite answer what Nietzsche was saying in the late 1800s. What

Nietzsche meant to launch was not only an assault on a certain religion but also a suspicion of the idea that there’s

one source of final justice for all reality. Nietzsche proposed that different cultures and people each produce their

own moral recommendations and prohibitions, and there’s no way to indisputably prove that one set is simply and

universally preferable to another. The suspicion that there’s no final appeal—and therefore the values and morality

practiced by a community can’t be dismissed as wrong or inferior to those practiced elsewhere—is called cultural

relativism.

Example: For most of us, the killing of a newborn would be among the most heinous of immoral acts; a perpetrator

would need to be purely evil or completely mad. The Inuit Eskimos, however, regularly practiced female infanticide

during their prehistory, and it was neither evil nor insane. Their brutal living conditions required a population

imbalance tipped toward hunters (males). Without that gender selecting, the plain fact was the entire group faced

starvation. At another place and time, Bernal Diaz’s The Conquest of New Spain recounts the Spanish invasion of

the Americas and includes multiple reports of newborns sacrificed in bloody ceremonies that made perfect sense to

the locals, but left Spaniards astonished and appalled. The ethics of infanticide, the point is, differ from one culture

and time to another. Further, these differences seem irreconcilable: it’s extremely difficult to see how we could

convince the Inuit of the past to adopt our morality or how they could convince us to adopt theirs. And if that’s

right, then maybe it no longer makes sense to talk about right and wrong in general terms as though there’s a set of

rules applying to everyone; instead, there are only rights and wrongs as defined within a specific society.

Finally, if you accept the cultural relativist premise, then you’re rejecting the foundation of traditional ethics.

You’re rejecting the idea that if we think carefully and expertly enough, we’ll be able to formulate rules for action

that everyone—people in all times, places, and communities—must obey if they want to consider themselves

ethically responsible.

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Cultural Rela�vism in Business Ethics

In the world of international business, Entrepreneur magazine introduces the pitfalls of ethical variation across

cultures with this statement from Steve Veltkamp, president of Biz$hop, an American import-export business:

“Bribery is a common way of doing business in a lot of foreign places.”Moira Allen, “Here Comes the

Bribe,” Entrepreneur, October 2000, accessed May 12,

2011, http://www.entrepreneur.com/magazine/entrepreneur/2000/october/32636.html.

If that’s true, then US businesses trying to expand into markets abroad—and competing with local businesses

already established there—are probably going to consider doing what everyone else is doing, which means getting

in on the bribery action. As the Entrepreneur article points out, however, this leads to a problem: “While bribes are

expected in many countries, the United States’ 1977 Foreign Corrupt Practices Act prohibits payments made with

the aim of gaining or maintaining business.”

So American hands are tied. If a construction company is bidding on the contract to build an airport in a foreign

nation, one where the local politicians will be expecting to get their palms greased, they’re at a distinct

disadvantage since they’re not allowed to play by the local rules. Still there is (as there almost always is) a loophole:

“Not all payments are prohibited by the act. Some payments are acceptable if they don’t violate local laws. Gifts, for

instance, to officers working for foreign corporations are legal.”

There’s no bribing, but gifting, apparently, gets a green light. There’s a problem here, too, however: “It can be

difficult to determine the difference between a gift and a bribe in a given situation. ‘If you give a gift to someone

and it leads to a business deal, is that a bribe or a gift?’ asks Veltkamp. ‘In some cultures, gift-giving is an

entrenched part of doing business. If you look at it in a certain sense, maybe it’s a bribe, since they won’t talk to you

until you’ve made that gesture.’”

Now what? Over there, cash changes hands and it’s called an acceptable gift, while those watching from back here

see an illegal bribe.

There are two ways of looking at this dilemma. One is to say, well, this has to be one or the other, either a gift or a

bribe; it has to be either moral or immoral. Given that, we need to take out our traditional tools—our basic duties,

the utilitarian doctrine that we should act to serve the greater good, and so on—and figure out which it is. Nietzsche

went the other way, though. He said that situations like this don’t show that we need to use ethics to figure out

which side is right; instead, the situation shows what moral rules really are: just a set of opinions that a group of

people share and nothing more. In the United States we believe it’s wrong to grease palms, and so it is. In some

other places they believe it’s honorable to hand money under the table, and so it is.

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If that’s true, then specific convictions of right and wrong in business ethics will never be anything but cultural

fashions, beliefs some community somewhere decides to hold up for a while until they decide to believe something

else. Anything, the reasoning goes, may be morally good or bad in the economic world; it just depends on where

you happen to be, at what time, and who else is around.

K E Y TA K E A W AY S

Cultural rela�vism is the suspicion that values and morality are culture specific—they’re just what the community

believes and not the result of universal reason.

For cultural rela�vists, because all moral guidelines originate within specific cultures, there’s no way to dismiss

one set of rules as wrong or inferior to those developed in another culture.

R E V I E W Q U E S T I O N S

1. Why do you imagine the term cultural rela�vism was chosen to mean what it does?

2. Do you believe cultures are irreconcilably different? Or is it that deep down people are people and we’re really all

the same? How does this dis�nc�on relate to the difference between cultural rela�vism and tradi�onal theories

of ethics?

3/23/2021 Cultural relativism: definition & examples (article) | Khan Academy

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How is culture defined?

What if someone told you their culture was the internet? Would that make

sense to you? Culture is the beliefs, behaviors, objects, and other

characteristics shared by groups of people. Given this, someone could very

well say that they are influenced by internet culture, rather than an ethnicity or

a society! Culture could be based on shared ethnicity, gender, customs,

values, or even objects. Can you think of any cultural objects? Some cultures

place significant value in things such as ceremonial artifacts, jewelry, or even

clothing. For example, Christmas trees can be considered ceremonial

or cultural objects. They are representative in both Western religious and

commercial holiday culture.

In addition, culture can also demonstrate the way a group thinks, their

practices, or behavioral patterns, or their views of the world. For example, in

some countries like China, it is acceptable to stare at others in public, or to

stand very close to others in public spaces. In South Africa, if you board a

nearly empty bus or enter a nearly empty movie theater, it is regarded as

polite to sit next to the only person there. On the other hand, in a recent study

of Greyhound bus trips in the US, a researcher found that the greatest

unspoken rule of bus-taking is that if other seats are available, one should

never sit next to another person. Numerous passengers expressed that “it

makes you look weird”. These are all examples of cultural norms that people

in one society may be used to. Norms that you are used to are neither right

nor wrong, just different. Picture walking into a nearly empty movie theater

when visiting another country, and not sitting next to the only person in the

theater. Another person walks up and tells you off for being rude. You, not

Cultural relativism article

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used to these norms, feel confused, and anxious. This disorientation you feel

is an example of culture shock.

What is cultural relativism?

Have you ever seen or eaten food from another country, such as dried squid

or fried crickets and think of it as weird and gross? This is an example of

ethnocentrism! That means you use your own culture as the center and

evaluate other cultures based on it. You are judging, or making assumptions

about the food of other countries based on your own norms, values, or

beliefs. Thinking “dried squid is smelly” or “people shouldn’t eat insects” are

examples of ethnocentrism in societies where people may not eat dried squid

or insects.

Is ethnocentrism bad or good? On the one hand, ethnocentrism can lead to

negative judgments of the behaviors of groups or societies. It can also lead to

discrimination against people who are different. For example, in many

countries, religious minorities (religions that are not the dominant religion)

often face discrimination. But on the other hand, ethnocentrism can create

loyalty among the same social group or people in the same society. For

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example, during the World Cup or Olympics, you may tend to root for your

own country and believe that the players or teams representing your country

are much better. National pride is also part of ethnocentrism.

To avoid judging the cultural practices of groups that are different to yours,

we can use the cultural relativism approach. Cultural relativism refers to not

judging a culture to our own standards of what is right or wrong, strange or

normal. Instead, we should try to understand cultural practices of other

groups in its own cultural context. For example, instead of thinking, “Fried

crickets are disgusting! ” one should instead ask, “Why do some cultures eat

fried insects?”. You may learn that fried crickets or grasshoppers are full of

protein and in Mexico, it is famous Oaxaca regional cuisine and have been

eaten for thousands of years as a healthy food source!

Some people worry that the concept of culture can also be abused and

misinterpreted. If one culture behaves one way, does that mean all cultures

can behave that way as well? For example, many countries and international

organizations oppose the act of whaling (the fishing of whales) for

environmental reasons. These environmental organizations say that there are

not many whales left and such fishing practices should be stopped. However,

other countries argue that whaling is a cultural practice that has been around

for thousands of years. Because it may be part of a country’s oceanic culture,

this country may say that such a cultural practice should not be opposed

based on cultural differences, say, by an inland country that does not

understand. Who gets to define what a moral cultural behavior is? Is whaling

immoral? Two different cultures may have very different answers, as we saw

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in the above example. Another more extreme instance would be female

genital cutting in some parts of the world. Locally, it is argued that the

practice has cultural roots, but such a practice has raised concerns among

many international human rights organizations.

Anthropologists say that when we think about different cultures and societies,

we should think about their customs in a way that helps us make sense of

how their cultural practices fit within their overall cultural context. For

example, having several wives perhaps makes economic sense among

herders who move around frequently. Through such an understanding,

polygamy makes cultural sense.

What is the Sapir-Whorf hypothesis (linguistic relativism) and how does it impact us?

In the 1930s, two anthropologists Edward Sapir and Benjamin Lee Whorf,

noticed that the Hopi Indians in the United States had no words to

differentiate between the past, present, and future. This was a surprising

discovery. In English, we can easily think of tense and know what time frame

someone is referring to. The two scholars found that the way language is

used affected the way we think about and perceive the world. In other words,

worldviews and cultural influences are largely embedded within the language

we use, even if we are saying things like coffee. When we talk about coffee in

the US, we would think of a large mug, and the coffee would come from a pot

of coffee. When Europeans talk about coffee, they are most likely thinking

about little espresso cups filled with strong coffee.

How a language affects the way we think about the world is called linguistic

relativism or the Sapir-Whorf hypothesis. Linguistic relativism means that

there are certain thoughts we have in one language (e.g. English) that cannot

be understood by those who exist in another language context (e.g. Spanish).

The way we think is also strongly affected by our native languages. For

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example, the Inuits (northern aboriginals) have dozens of ways to convey the

word snow. In English, how many ways can you think of to express snow?

Maybe four or five ways? Snow, flurry, sleet,...?

Let’s think about another everyday example. Imagine that we are watching an

American teen movie on TV. The main character walks into the high school

cafeteria, and sees the students sitting in a particular arrangement: the jocks,

the mean girls, the nerds, the band geeks, the stoners, the goths. If you went

to an American high school, you may immediately understand what the

groupings mean. However, even among those of you that did go to an

American high school, the definition of mean girls may be completely

different. Now think, on the other side of the world, a high school student

watching this movie in China would be very confused. If you try to explain

these groupings to someone outside the linguistic cultural context, it becomes

very difficult. Why are people in bands geeks? What is a stoner, can

someone be both a nerd and a stoner at the same time?

So, learning a language does not mean only learning words. It also means

that we need to learn the cultural contexts that are embedded in the language

itself. Languages reflect our cultural experiences. For example, if you hear

someone say that ginger is warm food, and melons are chilly food, in English,

it may make little sense. However, for those who are well-versed in Chinese

or Ayurvedic medicine will likely understand that warm foods would be good

for the sniffles or even rheumatoid arthritis, while chilly foods would be good

for constipation or mouth ulcers. Sometimes doctors in a US hospital are

confused when Chinese language speakers express pain symptoms in

English as hotand cold. These are all examples of cultural and linguistic

differences and the importance of understanding language and culture.

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What’s in a Name? Regulation Best Interest v.

Fiduciary

Washington D.C.

July 24, 2018

Remarks before the NAPA DC Fly-in Forum

Thank you for that kind introduction. I am excited to be with a group of people who play such a vital role in helping

to provide peace of mind to workers planning for and heading into retirement.  The Commission also has a role to

play in helping to enhance retirement security for Americans.  I want to focus today’s remarks on our work in

overseeing the broker-dealers and investment advisers that work with investors to secure their retirements.  You

will not be surprised to hear that my particular focus will be on the recently proposed standards for broker-dealers

and investment advisers providing investment assistance to investors.  Before proceeding, I must, as always,

provide the standard disclaimer that the views I express today are my own, and do not necessarily reflect the

views of the Commission or my fellow Commissioners.

I.   Words –What do They Mean?

I am going to start with a little Latin, but it may not be what you are thinking; I am not going to start with the Latin

etymology of the word “fiduciary.”[1]  Instead, the Latin lesson of the day is “Malo malo malo malo.”  I struggled

through a lot of years of Latin in school, but for all that study, I still was stumped by “malo malo malo malo” when

someone challenged me with that sentence recently.  It is the same word four times in a row, so how hard could it

be?  I assumed it was “bad, bad, bad, bad” or “evil, evil, evil, evil,” which might be a pretty good sentence to have

handy in connection with a lot of financial regulatory policy debates. 

In Latin, however, the same word can have a number of different meanings and word endings really matter.  I have

seen the sentence, “Malo malo malo malo” translated—perhaps a bit loosely—as “I prefer to be a bad man in an

apple tree, rather than the mast of a ship”[2] or “I would rather be in an apple tree than a wicked man in

adversity”[3] or some variant thereof.[4]  Regardless of which translation one chooses, my point in sharing it with

you today is that the same word seems to have a lot of different possible meanings.

It is not just in Latin that words can mean different things to different people and in different contexts.  When a

word has multiple meanings or no clear meaning, its use can confuse rather than shed light.  For retirement

investors, for example, confusion arises from the use of the word “adviser” (or “advisor”) by both investment

advisers and broker-dealers and their representatives.  Studies have shown that, as a result of loose language,

Commissioner Hester M. Peirce

Speech

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investors are confused regarding the nature of the services offered by, and the standards of conduct applicable to,

broker-dealers and investment advisers, and regarding whether their firm or financial professional is a broker-

dealer or an investment adviser, or both.[5]  The fact that investors are confused does not mean they are

dissatisfied with the service they are getting.[6]  To reduce investor confusion in the marketplace for firm services,

the Commission recently proposed to limit the use of the word “adviser” (or “advisor”) by certain broker-dealers

and their registered representatives when communicating with a retail investor.[7]

Some commenters would have liked us to go further.  According to these commenters, we should instead force

broker-dealers to call themselves “salespeople.”[8]    Back in the day when brokers did call themselves

salespeople, some were nevertheless able to cultivate trust and abuse it.  In a 1963 speech, Allan Conwill, the

director of the SEC’s predecessor to the Division of Investment Management, described trust-building tactics then

in vogue for mutual fund salesmen, including the garage trick—approach a young mechanic working in a repair

shop and tell him that if he invests with you, he will be able to buy the place—and the young mother trick—identify

a new mother through the birth announcements in the paper and tell her that she only has to invest with you to

guarantee the funds for a fine education for her new infant.[9]  The young mother being targeted in that instance

worked at the SEC as a financial analyst, so no sale.[10]

In the end, it really is not the title someone uses, but the standard to which he is held that matters. In his 1963

speech, Mr. Conwill suggested a standard—back to Latin here—“caveat venditor”—seller beware: “the salesman

must be scrupulously fair; he cannot be deceptive; he must consider his customer’s need and financial capacity. 

His responsibility far exceeds that of salesmen of other wares.”[11]  We too, in our April proposal, tackled the

question of what standards should apply to both investment advisers and broker-dealers.[12]  Again, however, the

words we are using need close consideration.

II.   Are the Soothing Sounds of Legalese in Investors’ Best Interest?

The word “fiduciary” hangs heavily over any discussion about standards for financial professionals.  The word

carries a lot of different meanings, and legal context matters.  A fiduciary under the Employee Retirement Income

Security Act (“ERISA”), for example, means something other than a fiduciary under the Investment Advisers Act of

1940.  Even within the same legal context, the term “fiduciary” can change over time.  The Department of Labor

(“DOL”), for example, changed the definition of “fiduciary” for its purposes in its 2016 rulemaking.[13]  Yet, that rule

was marketed—quite effectively I might add—by appealing to a purported uniform understanding of “fiduciary” by

the American population.  Daring to call into question that such a uniform understanding of “fiduciary” actually

existed was deemed as acting against the interest of investors. 

Never mind that it took many pages of regulation and lots of interpretation to explain what “fiduciary” meant in the

new DOL iteration.  Never mind that even lawyers and financial professionals do not have a universal

understanding of what the term means.  Never mind that the Commission felt it necessary, at the same time it

proposed Regulation Best Interest, to propose an interpretive release “to address in one release and reaffirm –

and in some cases clarify – certain aspects of the fiduciary duty that an investment adviser owes to its clients

under section 206 of the Advisers Act.”[14]  We may not have even gotten the interpretation right yet.  In fact, I

take issue with one important aspect of the proposed interpretation of an adviser’s fiduciary duty.  The Commission

states that the duty of loyalty component of an adviser’s fiduciary duty requires the adviser to acquire “informed

consent” from its clients to any material conflict of interest that could affect the advisory relationship.[15]  However,

as authority for this position the Commission cites, not a court decision or other weighty legal precedent, but an

Instruction to Form ADV.[16]  An early commenter raised other issues with the proposed interpretation.[17]  In

short, the term fiduciary duty is not easy to define even within the advisory context. 

The term “fiduciary” has become such an oft-repeated mantra that I worry it will have the perverse effect of

harming investors.  Investors are told repeatedly that all they need to ask is one simple question about their

financial professional: Are you a fiduciary?  Suggesting that a single word assures you that the person with whom

you are dealing will serve you well dissuades investors from asking the questions they should ask before choosing

a financial professional.  It provides a false sense of reassurance to retail investors.

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The word “fiduciary” is so powerful that some people seem to be assessing our proposed Regulation Best Interest

solely based on the absence of the word in the new standard.  If we are not calling the standard fiduciary, it must

not be good, in the minds of some.  Instead, we used another term, but one that also gives me pause—“best

interest.” 

The term “best interest” may not be as old as “fiduciary,” but it is not new either.  It has been bandied about

Washington over the last decade as if it were an incantation that could cure all that is wrong in the retail investor

space.[18]  Just as the word “fiduciary” seems to carry with it mystical medicinal powers, so too—in some quarters

—the term “best interest” is apparently imbued with special healing abilities.

As with the fiduciary standard, however, one has to ask: regardless of how nice it sounds, what does “best

interest” actually mean?  The Commission spent hundreds of pages describing the new “best interest” standard,

but it is not clear that people understand it.  We have yet to receive many letters in our comment file, but some of

the most vocal critics are the same people who said that the current “suitability” standard is insufficient because it

allows broker‑dealers to place their own financial interests ahead of those of their customers.[19]  The Commission now has proposed to require that a broker-dealer

when making a recommendation of any securities transaction or investment strategy involving securities to a

retail customer act in the best interest of the retail customer at the time the recommendation is made, without

placing the financial or other interest of the broker, dealer . . . ahead of the interest of the retail customer.[20] 

The critics remain unsatisfied, but the basis for their dissatisfaction seems to be that we have not used the favored

“fiduciary” terminology. 

A bigger concern for me is that the best interest standard suffers from the same problem the fiduciary standard

does—a term that is wonderful for marketing purposes, but potentially misleading for investors.  Just as “fiduciary”

has been used to lull investors into not asking questions about their financial professional, so “best interest” runs

the risk of becoming a term that encourages investors simply to rely on the fact that their best interest is being

taken care of.  If we retain the term, we—as regulators—and you—as advisers and brokers—ought to make an

effort to encourage investors to look beyond nice terms to the substance of what their financial professional is

doing—or not doing—for them and how much she is charging.

III.   “Best Interest” or “Fiduciary Duty” Standard – Is there a Practical Difference?

In that vein, I am going to move beyond words to the substance of what we proposed in Regulation Best Interest. 

In light of the continued claims that the best interest standard is inferior to the hallowed “fiduciary duty,” it is

interesting to look at the proposed best interest standard alongside the Commission’s proposed interpretation of an

adviser’s fiduciary duty to its clients.  They are very similar.  In fact, I only see two major differences between the

standards.  One of these differences makes the fiduciary standard seem stronger, and the other makes it seem

weaker than Regulation Best Interest.

Proposed Regulation Best Interest requires a broker-dealer when making a recommendation of any securities

transaction or investment strategy involving securities to a retail customer, to act in the best interest of the retail

customer at the time the recommendation is made without placing the financial or other interest of the broker-

dealer ahead of the interest of the retail customer.  The proposed rule does not define best interest but provides

that the best interest obligation shall be satisfied if: (i) the broker-dealer reasonably discloses to the retail

customer, in writing, the material facts relating to the scope and terms of the relationship with the retail customer

and all material conflicts of interest that are associated with the recommendation; (ii) the broker-dealer, in making

the recommendation, exercises reasonable diligence, care, skill, and prudence;[21] (iii) the broker-dealer

establishes, maintains, and enforces written policies and procedures reasonably designed to identify and at a

minimum disclose, or eliminate, all material conflicts of interest that are associated with such recommendations;

and (iv) the broker-dealer establishes, maintains, and enforces written policies and procedures reasonably

designed to identify and disclose and mitigate, or eliminate, material conflicts of interest arising from financial

incentives associated with such recommendations.[22]  Regulation Best Interest would supplement broker-dealers’

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existing specific obligations, including suitability, best execution, and fair and reasonable compensation.[23] 

Broker-dealers would comply with the new Regulation Best Interest obligations under the watchful eye of FINRA.

The fiduciary duty standard that investment advisers owe to their clients, at least as described in the Commission’s

proposed interpretive release, includes a duty of care and a duty of loyalty.  The duty of care includes, among

other things: (i) the duty to act and to provide advice that is in the best interest of the client; (ii) the duty to seek

best execution of a client’s transactions where the adviser has the responsibility to select broker-dealers to

execute client trades; and (iii) the duty to provide advice and monitoring over the course of the relationship.[24] 

The duty to act in the best interest of the client is the same as proposed in Regulation Best Interest and includes

that any advice given be suitable for the client.[25]  The duty to seek best execution is the same as a broker-

dealer’s obligation to seek best execution.  The only difference between the duty of care an investment adviser

owes to a client and a broker-dealer’s duty to its clients is that an adviser generally must provide continuous advice

and monitoring at a frequency that is both in the best interest of the client and consistent with the scope of advisory

services agreed upon between the investment adviser and the client.[26]  By contrast, a broker-dealer, absent a

contractual agreement to the contrary, is not required to monitor a retail customer’s account.[27]

The proposed adviser’s duty of loyalty requires the adviser to put its client’s interests first, prohibits the adviser

from favoring itself or another client, requires disclosure of material facts about the advisory relationship, and

requires avoidance or, at a minimum, disclosure of material conflicts of interest.[28]  Although proposed Regulation

Best Interest does not include an explicit “duty of loyalty” component, as we just discussed, a broker-dealer would

be required to have procedures in place to ensure disclosure of all material conflicts of interest and mitigation or

elimination of any material financial conflicts of interests.

In comparing the proposed Regulation Best Interest standard as well as a broker-dealer’s other requirements

under the securities laws to an adviser’s fiduciary duty as described in the proposed interpretive release, only two

differences stand out.  First, an adviser generally has an ongoing duty to monitor over the course of its relationship

with its client, while a broker-dealer generally does not.  Second, a broker-dealer must either mitigate or eliminate

any material financial conflict of interest it may have with its client.  An adviser is required only to disclose such a

conflict.  Rhetoric aside, arguably proposed Regulation Best Interest would subject broker-dealers to an even more

stringent standard than the fiduciary standard outlined in the Commission’s proposed interpretation. 

The Commission acknowledged concerns that the imposition of a new higher standard of conduct on broker-

dealers could result in retail customers losing access to advice they receive through recommendations from

broker-dealers, and customers that do not have the option of moving to fee-based accounts would in effect be

unable to obtain investment assistance.[29]  At a minimum, their costs of obtaining such assistance might rise

markedly.  Although we tried to be cognizant of these access concerns, given the relative balance of the two

standards, I fear that more and more broker-dealers will decide to become advisers that offer only fee-based

accounts resulting in many Americans being shut out from receiving any investment advice.[30] 

We are already seeing this dynamic at work.  Brokers are taking a hard look at the existing regulatory framework

coupled with FINRA arbitrations in which sometimes a fiduciary standard is applied.[31]  Then they look over the

fence to the adviser world with its principles-based fiduciary standard, less frequent exams, absence of arbitration,

and predictable revenue streams.  Having engaged in this comparative exercise, many firms and individual

financial professionals say farewell to FINRA, hop on the fiduciary bandwagon, and never look back.  Regulation

Best Interest could exacerbate this trend.

IV.   What Would a Simpler Standard of Conduct Look Like?

I would have preferred a simpler approach.  First, I would not refer to the standard as, or include within the

standard, the term “best interest.”  Proposed Regulation Best Interest does not attempt to define best interest

because nobody can explain what it means.[32]  More importantly, we are sending investors a message that they

need not ask questions—precisely the opposite of the message investors need to hear. 

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Second, despite what critics have said, the suitability standard applicable to broker‑dealers has teeth and has been effective.  Therefore, I would have preferred that the new standard had included suitability as one component

while adding as a second component that a broker‑dealer cannot put its interest ahead of the interest of the retail customer.  This simplified approach would be clear and concise with the suitability component being well

established within the financial community and with the additional piece giving the Commission the ability to reach

practices that harm retail investors.  Together with the proposed customer relationship summary, prohibiting a

broker from putting its own interest ahead of its clients should sufficiently address conflict of interest concerns. 

Finally, I will add a concern that was highlighted in a comment letter—obligations should be imposed through the

rule text, not through language in the rulemaking release.[33]  Especially in an area like this in which investors and

registered representatives need to know what the rules are, a lengthy rulemaking release that supplements the

rule text can breed confusion.

Speaking of breeding confusion, I will close with a few comments on the proposed relationship summary. 

V.   Will Four More Pages of Legalese Speak to Investors?

Investor friendly disclosure should be the focus of the Commission’s disclosure regime.  Our public disclosure

requirements should focus on information that investors find useful and important in making their investment

decisions presented in a format that draws them in, rather than repels them.  I think everyone here can agree that

the current disclosure regime is not investor friendly.  It is geared toward avoiding legal liability and satisfying

regulators.  The result is lengthy documents with an overabundance of information of limited interest and use to

investors presented in an unwelcoming format.  Frankly, we might as well require that disclosures be presented in

Latin.

A very important piece of our standards of conduct rulemaking is the investor disclosure component.  New Form

CRS—which stands for Customer or Client Relationship Summary—is a four-page (at most) document to be

delivered in addition to—not in place of—any of the current disclosure documents that broker-dealers and advisers

currently provide.[34]  I like the idea of encouraging investors to think carefully about the nature of the relationship

they have with their financial professional.  I support the objective of encouraging investors to ask questions about

the services their financial professionals provide, the products they offer, and the fees and commissions they pay. 

I remain concerned, however, that the approach we have proposed ties your hands when it comes to

communicating with investors.

I look forward to feedback on Form CRS from investors and others with experience in communicating with retail

customers.  I am particularly interested in hearing from commenters on a number of issues.  First, taking a step

back from this particular proposal, should we engage in a comprehensive review—including investor-testing—of

the disclosures already provided to investors to identify information that is not material to most investors?  Second,

is Form CRS enough, or do we also need the disclosures mandated in Regulation Best Interest?  Third, how can

we modify the rule to allow for experimentation with more multi-media based approaches as opposed to the paper-

based Form CRS?  To engage investors firms should be encouraged to experiment with the use of videos, mobile

apps, interactive web-based disclosure, and social media to find out how investors prefer to receive information. 

Fourth, as modeled in the proposal, Form CRS is chock full of legalese and technical terms.  Is this approach,

which seeks to familiarize investors with terms they might encounter in their interactions with financial firms,

appropriate?

Finally, I am interested in hearing comments on the nature of the items contained in Form CRS.  Form CRS is

structured as a comparative form—setting broker-dealer and advisory services side-by-side.  Is it appropriate to

require firms to disclose information about services they do not provide or that are otherwise not available to the

investor receiving the form?  Does the form work for all types of firms?  Content-wise, I would posit that the

information most important to investors and upon which they would be most likely to base their investment

decisions is the total fees they will pay.  While Form CRS contains information on fees, the information does not

appear until Item 4 and does not provide the total fee a particular investor will pay.  Form CRS may not be the

place for investor-specific cost disclosure, but, as technology improves, offering investors a clear picture of the

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costs they have incurred during the previous year is a possibility.  Former SEC Chief Economist Mark Flannery

offered a suggested sample report designed to “collect[] all fees and costs associated with assembling or

maintaining an investor’s portfolio into a single place.”[35]  I hope that commenters on Form CRS will shed light on

the current ability to provide personalized total fee information to investors.

VI.   Conclusion

The appropriate standard of care for those who provide investment advice to retail investors has been a hotly

debated issue over at least the last decade.  As former Commissioner Michael Piwowar said almost four years ago

when addressing this same conference, “this question is not just really hard to answer.  It is really, really, really

hard – with three ‘reallys’.”[36]  The exercise is “malo malo malo malo,” I might say—meaning “evil, evil, evil, evil,”

given the hours so many have poured into it.  That said and despite the concerns I laid out today, I think the

outcome of this exercise can be good.  Chairman Clayton, to his credit, made it a priority to address this difficult

set of issues in a carefully considered proposed rulemaking.  I am committed to working with the Chairman to get

this rule finalized.  Now we need feedback from you, the investors you serve, and others to get the final version

right. 

Thank you for the opportunity to share my thoughts.  I am happy to take questions, although I know you have a

busy schedule for the rest of the afternoon and tomorrow.

[1] “Fiduciary,” which means “of, relating to, or involving a confidence or trust: such as a: held or founded in trust or

confidence a fiduciary relationship a bank's fiduciary obligations b : holding in trust c : depending on public

confidence for value or currency,” is derived from the Latin word “fiducia,” which, in turn, means “confidence,

trust.”  Merriam-Webster Online Dictionary, https://www.merriam-webster.com/dictionary/fiduciary (last visited July

20, 2018).

[2] Malo: A Sentence in Itself, Latin Reference (Apr. 16, 2011 7:47 AM), available at

https://latinreference.wordpress.com/2011/04/16/malo-a-sentence-in-itself/. 

[3] Henry Thomas Riley, ed., A Dictionary of Latin and Greek Quotations, Proverbs, Maxims, and Mottos 217

(1909).

[4] A friend of mine, who is a far better Latin scholar than I, suggests that I am treading on shaky ground by

suggesting that anyone would ever use “malo malo malo malo” in everyday conversation to convey anything of this

sort, but since most of us do not use Latin in everyday conversation, I am willing to go out on a limb (of an apple

tree) for the sake of the argument.

[5] See, e.g., Angela A. Hung et al., RAND Institute for Civil Justice, Investor and Industry Perspectives on

Investment Advisers and Broker‑Dealers (2008) (“RAND Report”), available at http://www.sec.gov/news/press/2008/2008-1_randiabdreport.pdf.  The Rand Study examined broker-dealers’ and

investment advisers’ practices in marketing and providing financial products and services to individual investors

and investors’ understanding of the differences between broker-dealers’ and investment advisers’ financial

products and services and their duties and obligations.  Participants in the study “commented that the

interchangeable titles and ‘we do it all’ advertisements [by broker-dealers] made it difficult to discern broker-

dealers from investment advisers.”  Id. at xix.

[6] See, e.g., id. at 118 (“[d]espite their apparent confusion about titles, duties, and fees, investors expressed high

levels of satisfaction with the services they receive from their own financial service providers”). 

[7] See Form CRS Relationship Summary; Amendments to Form ADV; Required Disclosures in Retail

Communications and Restrictions on the Use of Certain Names or Titles, Investment Advisers Act Release No.

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4888 (Apr. 18, 2018) [83 FR 21416 (May 9, 2018)] (“Form CRS Proposing Release”) at Summary, available at

https://www.gpo.gov/fdsys/pkg/FR-2018-05-09/pdf/2018-08583.pdf.  

[8] See, e.g., Letter from The Committee for the Fiduciary Standard to Jay Clayton (Jan. 12, 2018), available at

https://www.sec.gov/comments/ia-bd-conduct-standards/cll4-2902376-161829.pdf  (“Specifically, we recommend

that the Commission require that any title they use clearly denote their role as salespersons. Titles can range from

‘salesperson’ to ‘broker’ but may not include terms that suggest a level of advice beyond that of stimulating the

sale of product.”).  See also Comment Letter from Jacob D. Kuebler (July 2, 2018), available at

https://www.sec.gov/comments/s7-07-18/s70718-167198.htm (“Consumers are ok with commission transactions;

car buying, house buying, etc.  However, they know that those professionals are commissioned and in a sales

role.  We can keep the same simple distinction for true planning and advice vs. sales in our industry.”).

[9] Allan F. Conwill, Director, Division of Corporate Regulation, Securities and Exchange Commission, The Minority

Menace to Mutual Fund Selling 1-2, 4 (Apr. 23, 1963).

[10] Id. at 4.

[11] Id. at 5.

[12] Regulation Best Interest, Exchange Act Release No. 83062 (Apr. 18, 2018), [83 FR 21574 (May 9, 2018)]

(“Regulation Best Interest”), available at https://www.gpo.gov/fdsys/pkg/FR-2018-05-09/pdf/2018-08582.pdf;

Proposed Commission Interpretation Regarding Standard of Conduct for Investment Advisers; Request for

Comment on Enhancing Investment Adviser Regulation, Investment Advisers Act Release No. 4889 (Apr. 18,

2018) [83 FR 21208 (May 9, 2018)] (“Interpretive Release”) available at https://www.gpo.gov/fdsys/pkg/FR-2018-

05-09/pdf/2018-08679.pdf.

[13] Definition of the Term “Fiduciary”; Conflict of Interest Rule-Retirement Investment Advice, 81 FR 20945,

20946 (Apr. 8, 2016) (“With this regulatory action, the Department will replace the 1975 regulations with a

definition of fiduciary investment advice that better reflects the broad scope of the statutory text and its purposes

and better protects plans, participants, beneficiaries, and IRA owners from conflicts of interest, imprudence, and

disloyalty.”).

[14] See Interpretive Release, supra note 12, at notes 7-8 and accompanying text.

[15] See id. at notes 39-40 and accompanying text, note 46 and accompanying text. 

[16] See General Instruction 3 to Part 2 of Form ADV (stating that an adviser’s disclosure obligation “requires that

[the adviser] provide the client with sufficiently specific facts so that the client is able to understand the conflicts of

interest [the adviser has] and the business practices in which [the adviser] engage[s], and can give informed

consent to such conflicts or practices or reject them”).

[17] See Comment Letter of the Committee on Investment Management Regulation, New York City Bar

Association (June 26, 2018), available at https://www.sec.gov/comments/s7-09-18/s70918-3937033-167034.pdf

(raising concerns about the proposed interpretation’s suggestion that disclosure alone is not sufficient for some

conflicts and the subjectivity of the informed consent concept under the proposal)

[18] Commissioner Hester Peirce, Statement at Open Meeting on Standards of Conduct for Investment

Professionals (Apr. 18, 2018) available at https://www.sec.gov/news/public-statement/statement-peirce-041818.

[19] See, e.g., Letter from Barbara Roper, Director for Investor Protection, Consumer Federation of America to

Chairman Jay Clayton, SEC (Sept. 14, 2017) at 2 (“The problem is that investors are being misled into relying on

biased sales recommendations as if they were objective, best interest advice and are suffering significant financial

harm as a result.”); at 12 (“At the most basic level, investors who go into the market seeking investment advice are

harmed when they are misled into instead hiring a mere ‘salesperson.’  Instead of getting the best interest advice

they expect and need, they receive what industry trade associations have described as arm’s length commercial

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sales recommendations.  Because investment advice and sales recommendations are often indistinguishable,

investors are misled into relying on those sales recommendations as if they were best interest advice.”).   

[20] Proposed rule 240.15l-1(a).

[21] The broker-dealer must exercise reasonable diligence, care, skill and prudence to: (1) understand the

potential risks and rewards associated with the recommendation, and have a reasonable basis to believe that the

recommendation could be in the best interest of at least some retail customers; (2) have a reasonable basis to

believe that the recommendation is in the best interest of a particular retail customer based on that retail

customer’s investment profile and the potential risks and rewards associated with the recommendation; and (3)

have a reasonable basis to believe that a series of recommended transactions, even if in the retail customer’s best

interest when viewed in isolation, is not excessive and is in the retail customer’s best interest when taken together

in light of the retail customer’s investment profile.  Proposed Rule 240.15l-1(a)(2)(ii).

[22] Proposed rule 15l-1 under the Securities Exchange Act of 1934 (17 CFR 240.15L-1) (emphasis added).

[23] As noted in the proposing release, the Commission did not propose “to amend or eliminate existing broker-

dealer obligations, and compliance with Regulation Best Interest would not alter a broker-dealer’s obligations

under the general antifraud provisions of the federal securities laws.  Regulation Best Interest applies in addition to

any obligations under the Exchange Act, along with any rules the Commission may adopt thereunder, and any

other applicable provisions of the federal securities laws and related rules and regulations.” Regulation Best

Interest, supra note 12, at text accompanying note 87.  See also Form CRS Proposing Release, supra note 7, at

note 33 and accompanying text (“the relationship summary would be in addition to, and not in lieu of, current

disclosure and reporting requirements for broker-dealers and investment advisers”).

[24] Interpretive Release, supra note 12, at section II.A.

[25] Id. at section II.A.i.

[26] Id. at section II.A.iii.

[27] Regulation Best Interest, supra note 12, at text accompanying note 144.

[28] Interpretive Release, supra note 12, at notes 38-40 and accompanying text. 

[29] Regulation Best Interest, supra note 12, at text accompanying note 84.  

[30] In 2013, the United Kingdom (“UK”) introduced the Retail Distribution Review (“RDR”), which was designed to

promote transparency in the financial advice industry.  The RDR bans advisers from taking a commission for

selling products and requires that all fees, paid only by clients, had to be agreed upon in advance.  Prior to the

RDR, advisers did not charge clients for advice, but instead earned commissions from asset managers for selling

their products.  Researchers found substantial negative effects on competition, with a reduction of more than 44%

in bank advisers and 20% in independent financial advisers after the RDR was implemented.  See Deloitte,

Recognising RDR Reality -- The Need to Challenge Planning Assumptions (July 2013), available at

http://www.deloitte.com/view/en_GB/uk/industries/financial-services/issues-trends/retail-distribution-

review/794d59a825daf310VgnVCM3000003456f70aRCRD.htm.

[31] See Gochnauer v. A.G. Edwards & Sons, 810 F.2d 1042, 1050 (11th Cir. 1987).

[32] Commissioner Hester Peirce, Statement at Open Meeting on Standards of Conduct for Investment

Professionals (Apr. 18, 2018).

[33] See Comment Letter of Kent A. Mason (July 20, 2018) (noting that “critical ‘rules’ are buried in the preamble,

not in the regulation”).

[34] Form CRS envisions a brief relationship summary (no more than four pages) that informs investors about the

relationships and services the firm offers, the standard of conduct and the fees and costs associated with those

services, specified conflicts of interest, a comparison of brokerage and investment advisory services (for

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standalone broker-dealers and investment advisers), and whether the firm and its financial professionals currently

have reportable legal or disciplinary events.  Form CRS Proposing Release, supra note 7.

[35] Comment Letter of Mark Flannery (July 27, 2017), available at https://www.sec.gov/comments/ia-bd-conduct-

standards/cll4-2145300-157724.pdf.

[36] See Commissioner Michael S. Piwowar, Remarks at the National Association of Plan Advisors D.C. Fly-In

Forum, Washington, D.C. (Sept. 30, 2014), available at https://www.sec.gov/news/speech/2014-spch093014msp.

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James Rachels’ The Elements of Moral Philosophy Lecture notes by Dan Gaskill

Chapter 2: Cultural Relativism In the last chapter, we examined a variety of arguments in support of

different positions on various ethical matters of life and death. These

arguments invoked competing ethical principles and led to conflicting

conclusions, but they all had one thing in common: all of them assumed that

there was just one right answer to the ethical question at issue. In other

words, they all assumed that there was objective moral truth. Now we will

consider some challenges to this notion. The first of these is Cultural

Relativism.

Cultures differ with respect to what is deemed morally acceptable.

Rachels illustrates this with the story of the ancient King Darius, the Callations

and the Greeks. (The Callations were an Indian tribe who had a custom of

eating their dead fathers, while the Greeks cremated their dead; according to

the story, each regarded the others’ practice as abhorrent). Other examples:

Most people in America consider polygamy to be a moral outrage, but it is

common and accepted for men to have more than one wife in some cultures,

including Islamic countries. In America, no legal or moral distinction is made

between killing infants, the elderly, or anyone in between (all are condemned,

of course). But among Eskimos, infanticide is permitted at the discretion of the

parents. Killing of the elderly (by abandoning them in the snow) has been

practiced by Eskimos and the native peoples of northern Greenland. Lending

money for interest was considered sinful in medieval Europe, and it is still

regarded as such in some parts of the world. In America, male circumcision

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has been the norm since the late 19th century, and parents who opt against it

are often roundly criticized or condemned; it is quite the opposite in Europe

and most of the rest of the world. Female circumcision, on the other hand, is

condemned in America and Europe but widely practiced in many African

countries. There is no shortage of such examples.

There is no doubt that cultures exhibit differences --often radical

differences-- in their ethical stances on food, sex, punishment, political

expression, human rights, and matters of life and death. The existence of

differing ethical norms in different cultures has convinced many people of

Cultural Relativism, the doctrine that ethics is culturally relative and that

there are no objective moral standards.

As Rachels points out, Cultural Relativists have advanced several

distinct claims:

(1) Different societies have different moral codes. (2) The moral code of a society determines what is right within that society;

that is, if the moral code of a society says that a certain action is right, then that action is right, at least within that society.

(3) There is no objective standard that can be used to judge one society’s

code better than another’s. (4) The moral code of our own society has no special status; it is merely

one among many. (5) There is no “universal truth” in ethics; that is, there are no moral truths

that hold for all peoples at all times. (6) It is mere arrogance for us to try to judge the conduct of other peoples.

We should adopt an attitude of tolerance toward the practices of other cultures.

As we shall see, these claims need not be accepted or rejected as a package:

some of them may be true even if others are false.

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The following are examples of the kind of reasoning that convinces

people of Cultural Relativism: 1. The Greeks believed it was wrong to eat the dead, whereas the Callations believed that it was right to eat the dead. ________________________________________________________________ Therefore, eating the dead is neither objectively right nor objectively wrong. It is merely a matter of opinion that varies from culture to culture. 1. The Eskimos see nothing wrong with infanticide, whereas Americans believe infanticide is immoral. ________________________________________________________________ Infanticide is neither objectively right nor objectively wrong. It is merely a matter of opinion, which varies from culture to culture.

More generally, we have:

The Cultural Differences Argument 1. Different cultures have different moral codes. ________________________________________________________________ Therefore, there is no objective “truth” in morality. Right and wrong are only matters of opinion, and opinions vary from culture to culture. Is this a sound argument? No. It is not a sound argument because the conclusion does not follow from

the premise (in other words, it is not valid). The fact that cultures have differing

beliefs about what is moral does not imply that morality is culturally relative. It

is easy to see this if we consider an analogous argument: 1. Historically, cultures have had a variety of different views about the size, shape and motion of the earth, its relation to celestial bodies, and astronomy generally. _________________________ Therefore, there is no objective “truth” in astronomy. The size, shape and motion of the earth (e.g. whether the earth is flat), whether there are other planets, etc. are only matters of opinion which vary from culture to culture.

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Not very convincing, is it? We are inclined to say that many cultures have

simply been wrong on various points. The Medieval Europeans believed that

the earth was flat, that the planets were perfect spheres moving in perfect

circles, and that the earth was stationary. We now reject all of these claims on

the basis of well-supported scientific theory. The bottom line: mere

disagreement does not imply relativism. This is not to say that we have shown

Cultural Relativism to be false. The present point is just that the Cultural

Differences Argument fails to establish Cultural Relativism. However, there are some powerful objections to Cultural Relativism that

have convinced many people that it is false: (O1) We could no longer say (truthfully) that the customs of other societies are morally inferior to our own. To many people, this may sound like a good result, at first. But now consider

some of the customs that would not be morally inferior, according to Cultural

Relativism: · Waging war for the purpose of taking slaves · Genocide · Rigid and oppressive caste systems · The subjugation of women or of any other group · [INSERT ABORRANT PRACTICE HERE]

It hardly seems enlightened or morally progressive to hold that none of

these practices are wrong, but according to Cultural Relativism, are all morally

right so long as they are culturally sanctioned. (O2) We could decide whether actions are right or wrong just by consulting the standards of our society.

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This implication is problematic for Cultural Relativism in a couple of ways.

First, it seems to imply that the phenomenon of moral deliberation --and moral

reasoning generally-- is a complete waste of time. If we want to know what is

right, then we ought to do a survey of our culture’s laws, practices and

commonly held beliefs. Moral reasoning doesn’t enter into the picture at all. At

the very least, the cultural relativist owes us a good explanation of why we

have held the mistaken belief that moral deliberation is a good way to decide

what we ought to do. Second, Cultural Relativism has the very surprising

result that those who have been hailed as great moral reformers and

revolutionaries: Jesus Christ, Mahatma Gandhi, Martin Luther King Jr., etc.,

were all wrong whenever they went against the prevailing moral code.

Moreover, we can know this just by knowing that they were in the minority and

without hearing what they had to say. By contrast, those figures who maintain

the moral status quo --whatever that is-- are automatically deemed right by the

lights of Cultural Relativism. As Rachels points out, “Cultural Relativism not

only forbids us from criticizing the codes of other societies; it also stops us

from criticizing our own.” This brings us to a third and closely related objection: (O3) The idea of moral progress is called into doubt. We like to think that, at least in some ways, the moral standards of our

society have changed for the better. Most would agree, for example, that the

criminalization of slavery in America is an improvement over the 18th century.

But “to say that we have made progress implies a judgment that present-day

society is better, and that is just the sort of transcultural judgment that,

according to Cultural Relativism, is impossible”.

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Each of these objections can be viewed as a reductio ad absurdum

against Cultural Relativism. A reductio ad absurdum is an argument in which

an opposing position is assumed, for the sake of argument, and then is

rejected when it is shown that the opposing position leads to an “absurd”

consequence. For example: 1. Larry is a married bachelor (reductio assumption). 2. Bachelors are, by definition, unmarried. 3. Thus, Larry is both married and unmarried (follows from 1 and 2). 4. But premise 3 is absurd -- it cannot possibly be true. _______________________________________________________

Therefore, Larry is not a married bachelor. (rejection of reductio assumption) In the case of Cultural Relativism, we have: 1. The moral code of a society determines what is right within that society;

that is, if the moral code of a society says that a certain action is right, then that action is right, at least within that society (reductio assumption).

2. It is possible for there to be a society with a moral code that promotes genocide.

(uncontroversial premise) 3. Therefore, it is possible for there to be a society where genocide is morally right.

(follows from 1 and 2) 4. But genocide could not be morally right relative to any society. _____________________________________________________

Therefore, Cultural Relativism is false. As an exercise, try to construct the two other reductio ad absurdum arguments on your own. Why Cultural Relativism does not really support Tolerance towards other cultures Let’s take another look at the list of claims typically espoused by Cultural Relativists. In particular, we have (2) The moral code of a society determines what is right within that society; that is, if the moral code of a society says that a certain action is right, then that action is right, at least within that society.

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This is the central thesis of Cultural Relativism. Now consider

(6) It is mere arrogance for us to try to judge the conduct of other peoples. We should adopt an attitude of tolerance toward the practices of other cultures. Here we are told how we should react to other cultures. It is not clear exactly

what is required of us in being tolerant, but presumably it would require that we

not interfere in other cultures for the purposes of imposing our own moral

standards on them. The question now arises: is the claim that we should be

tolerant of other cultures supposed to be an objective moral truth, or is it just

part of our own moral code? If the tolerance requirement is supposed to be

an objective moral truth, then it is incompatible with cultural relativism,

for cultural relativism tells us that there are no objective moral truths.

So, the Cultural Relativist who wants to support the tolerance requirement

must hold that (6) is part of our own moral code, but not necessarily true for

other cultures. There are a couple of serious problems with this, however.

First, it just seems to be false that the tolerance requirement is part of the

moral code of the U.S.A. At this moment, the U.S.A. is attempting a massive

restructuring of the social institutions of Iraq, including the creation of a

western style democracy. While many Americans have objected to this, the

objections have been mostly practical ones (the cost in lives and dollars, the

potential to make more enemies than friends, and the risk of failure). Only a

tiny minority has complained that it would be immoral to impose democracy on

a non-democratic society (although many people have noted that it would be

extremely difficult). If the tolerance requirement were really part of our moral

code, then we would expect this to be the main objection to the current Iraq

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campaign. But if the tolerance requirement isn’t part of our moral code, then

by the Cultural Relativists own standards we have no reason to abide by it.

Secondly, if it were part of our moral code, then it would actually prohibit us

from criticizing other intolerant cultures. After all, if those other cultures are

acting in accordance with their own moral codes, then the tolerance

requirement tells us that we must tolerate them, even if their behavior is

imperialistic. Ironically, then, the tolerance requirement implies that it is

arrogant and inappropriate for us to pass judgment on imperialist cultures of

the past, such as the great colonial empires of Europe. This is exactly the

opposite of what the proponent of (6) wants to say, but it is just a logical

consequence of Cultural Relativism in conjunction with (6).

There is a lesson here: Those who do not think through the logical

implications of their beliefs do so at the risk of having beliefs that don’t hold up

to logical scrutiny.

Why There is Less Disagreement Than it Seems But first, here is some more terminology: moral standard: A moral standard is a rule for governing behavior, such as “Be kind to strangers” or “Don’t steal”. justified moral standard: We say that a moral standard is justified when it would be immoral for someone to violate it. Not all moral standards are justified. “Don’t kill people just for laughs” is a justified moral standard, whereas “Don’t wear shorts to school” is not (or so I claim!) moral code of a society: This is the collection of moral standards that are generally accepted in the society in question. We can also speak hypothetically about moral codes, as in “Would our society be better off if we adopted this as our moral code?” justified moral code of a society: This is the collection of moral standards that are justified in a particular society, regardless of whether that society actually accepts them.

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Is it really true that different cultures have radically different moral

codes? We noted earlier that in Eskimo culture, there is no prohibition against

infanticide, whereas there is a very strong prohibition in our own culture. This

difference can be explained by the very different circumstances in which our

respective societies exist. Eskimos live in extremely harsh conditions where

there is little food or other resources to spare. A family may want to nourish its

babies but be unable to do so. If parents determine that there aren’t enough

resources to support a child, then they may decide that it is better for the infant

to die immediately; if the infant consumes precious resources first, then others

will be deprived of them and this could result in even more hardship or death.

This apparent justification of infanticide raises the question of how much

difference there really is between the moral code of the Eskimos and our own

moral beliefs. Compare the following principles:

P1: Infanticide is always morally wrong.

P2: Infanticide is always morally acceptable.

P3: Infanticide is wrong, except in cases where there are not enough

resources to care for the infant.

In American society, there are always enough resources to care for an

infant: even if the parents do not have enough money themselves, they can

give the child up for adoption and know that it won’t starve to death. So, in

American society, there is no practical difference between P1 and P3: in

neither case would infanticide ever be justified for us. This makes it difficult to

determine how far apart the two cultures really are on this issue. When

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Americans say that infanticide is always wrong, is this simply because they are

not imagining being in a situation where the infant cannot be cared for?

Likewise, if Eskimos say that infanticide is not immoral, is this because they

are not imagining living in a wealthy society where the infant can be cared for?

It is possible that the two cultures are closer than they appear, and that both

accept something closer to P3 than the other alternatives.

Arguably, all cultures must have certain values in common. This is

because certain values are necessary for the survival of any society. For

example, any society must value caring for its infants. Any society that didn’t

care for its infants would die out. So, in any society where infanticide is

acceptable, it must be the exception to the rule (as in P3). If infanticide were

the norm, or if the acceptance of infanticide was part of a general disregard for

the welfare of children, then the society could not survive. Similar reasoning

suggests that certain moral standards must be more or less universal: · tell the truth

· keep your promises

· be loyal to your friends

· don’t steal

· don’t murder

· discourage wrongdoing

The list above could use quite a bit of clarification and filling out, and

probably some revision. There are many questions we can ask, including:

What does loyalty to friends require? Why is friendship necessary for the

survival of a society? Does discouraging wrongdoing necessarily involve

severe punishments for criminals? And so on.

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I do not mean to suggest that all cultures really do have the same moral

code or that the apparent differences in moral codes are an illusion. The point

is that there appear to be limits on the extent to which much the moral codes of

societies can diverge.

This brings us to:

Moderate Cultural Relativism (MCR): There are some universally justified

moral standards, and there are other moral standards that are justified in

some societies but not in others.

There are a couple of important things to note about MCR. First, it does

not say that the moral standards justified in a society are the ones that are

accepted in that society. In other words, it doesn’t assume that the moral code

of a society is the right one for that society. This is good, because it means

that O2 and O3, two of the objections against Cultural Relativism, do not arise.

Second, MCR tells us nothing about what justifies a moral standard in a

society. (In contrast, Cultural Relativism told us, in effect, that the moral code

of a society justified itself, with the result that the moral code of a society can’t

be wrong relative to that society. As we saw, this led to a lot of trouble.)

Unlike Cultural Relativism, MCR is not a meta-theory: it doesn’t tell us

what makes moral claims true or false. However, it does tell us that certain

moral claims will be true across cultures. One consequence of this is that it is

possible to make transcultural moral judgments, at least about certain matters.

Thus, MCR also avoids O1, the first objection raised against Cultural

Relativism.

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If we want to explain what makes a moral standard justified, we still

need a theory about this. As it happens, there are lots of meta-theories

available that are compatible with MCR. Here is an example of one such

theory:

Society Centered Rule Utilitarianism (SCRU): A moral standard is justified relative to a society if and only if it is part of the moral code that, if generally accepted and enforced, would maximize happiness in that society.

We won’t be concerned about whether SCRU is actually true. But do take note

of the fact that it is very congenial to MCR. Plausibly, certain prohibitions

(those against murder and vandalism, for example) would help to maximize the

happiness of any society, and so would be justified standards in any society,

according to SCRU. But it also plausible that many other standards (perhaps

those pertaining to funerary practices, for example) would be justified in some

societies and not in others, owing to the different histories and circumstances

of those societies. Eating the dead makes the Callations happy, but not the

Greeks. Burning the dead pleases the Greeks, but not the Callations. Thus,

SCRU is one example of an ethical theory that is compatible with Moderate

Cultural Relativism.

3/11/2021 U.S. Supreme Court Clarifies Standards for "Tippee" Insider Trading Liability | Insights | Jones Day

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INSIGHTS

U.S. Supreme Court Clari�es Standards for "Tippee" Insider Trading Liability

DECEMBER 2016 | COMMENTARIES

On December 6, 2016, the U.S. Supreme Court addressed a disagreement in the lower courts regarding the scope of insider trading liability for "tippees"—individuals who trade in a corporate security based on material nonpublic information received from corporate insiders. Under Dirks v. S.E.C., 463 U.S. 646 (1983), tippee liability can exist only if the tipper personally bene�ted from the disclosure of the inside information. In Salman v. United States, 580 U.S. __ (2016), authored by Justice Alito, the Court unanimously concluded that a tipper's gift of inside information to a trading friend or relative su�ces to satisfy this personal bene�t element for insider trading liability—even if the tipper did not receive a pecuniary or tangible bene�t in return.

Salman is most notable for rejecting the Second Circuit's narrow view of tippee liability, announced in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), which required the U.S. government to prove that the tipper received a pecuniary or similar bene�t for liability to attach. However, it is also notable that the Court refrained from adopting the very broad interpretation proposed by the government, which would have imposed liability whenever the tipper discloses inside information to anyone for any noncorporate purpose. As a result, the Court's decision leaves a good deal of uncertainty concerning the scope of tippee liability—leaving courts and litigants to grapple with what kinds of bene�ts to tippers resulting from disclosures will give rise to such liability.

The Personal-Bene�ts Test for "Tippee" Insider Trading Liability

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In Dirks v. S.E.C., 463 U.S. 646 (1983), the Supreme Court held that tippees will be liable for insider trading only when "the insider receives a direct or indirect personal bene�t from the disclosure" of the material nonpublic information at issue. To determine liability under this test, Dirks directed courts to examine "objective criteria," such as whether the tipper's disclosure resulted in a "pecuniary gain or a reputational bene�t that will translate into future earnings." The Court observed that liability under this standard could attach when "an insider makes a gift of con�dential information to a trading relative or friend," since the "tip and trade resemble trading by the insider himself followed by a gift of the pro�ts to the recipient." Yet, Dirks acknowledged that "[d]etermining whether an insider personally bene�ts from a particular disclosure, a question of fact, will not always be easy for courts."

While prosecutors vigorously pursued tippees in the decades after Dirks, a recent Second Circuit decision created signi�cant uncertainty regarding the scope of tippee liability. In United States v. Newman, the Second Circuit adopted a narrow reading of the Dirks personal-bene�ts test, holding that a tipper's "gift" of inside information to another person will give rise to liability only when there is "proof of a meaningfully close personal relationship that generates an exchange that is objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature."

The Salman Case

In 2011, Bassam Salman was indicted for insider trading as a tippee. The ultimate source of the inside information was Maher Kara, a former Citigroup insider. Maher shared inside information with his brother, Michael Kara, with the knowledge that Michael intended to trade on that information. Michael, in turn, shared this inside information with Bassam Salman, who was Michael's friend and Maher's brother-in-law. Salman traded on this information, knowing that the information came from Maher and that Maher intended to bene�t Michael by his disclosure.

Salman was convicted, and he appealed to the Ninth Circuit. He argued that his conviction should be reversed based on the Second Circuit's Newman decision, since Maher had not received any bene�t of "a pecuniary or similarly valuable nature" in exchange for providing tips to Michael. The Ninth Circuit rejected this argument and declined to follow Newman's narrow reading of the personal-bene�ts test. The Supreme Court granted certiorari to resolve the tension between the Ninth Circuit's decision and Newman.

The Court's Decision

In a unanimous decision, the Supreme Court rejected Newman's narrow view of liabilityand a�rmed Salman's conviction. The Court reasoned that Dirks's "discussion of gift giving resolves this case." It explained that "when a tipper gives inside information to 'a trading relative or friend,'" the tipper "bene�ts personally because giving a gift of trading information is the same

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thing as trading by the tipper followed by a gift of the proceeds." Therefore, because Maher disclosed inside information "as a gift to his brother with the expectation that [his brother] would trade on it," Maher personally bene�tted from the disclosure—which in turn rendered Salman, who knew these facts, liable. The Court rejected Newman to the extent it required any additional bene�t to the tipper to be shown in these circumstances, such as a bene�t of a "'pecuniary or similarly valuable nature.'"

At the same time, the Court also declined the government's invitation to go beyond Dirks and adopt an expansive reading of the personal-bene�ts test. The government argued that "a gift of con�dential information to anyone, not just a 'trading relative or friend,' is enough to prove securities fraud," and that "a tipper personally bene�ts whenever the tipper discloses con�dential trading information for a noncorporate purpose," whether to a "friend, a family member, or anyone else." The Court found it unnecessary to pass on this argument, deeming Dirks's more limited discussion of gift-giving su�cient to resolve the case. As a result, the Court's opinion leaves a number of open questions, such as how to draw the line between a "friend" and an acquaintance, and what sorts of intangible or psychic bene�ts to a tipper might be deemed to satisfy the "personal bene�t" requirement of Dirks.

It is also worth noting that the Court had no occasion to question Newman's alternative holding that conviction of an indirect tippee such as Salman requires proof that the tippee had knowledge that the tipper personally bene�ted from the disclosure of the inside information—a rule that is of particular signi�cance when, as has often been the case in recent years, the government pursues the prosecution of remote tippees. In Salman, this element did not play a major role, because the evidence established that Salman knew that the tipper Maher had "improperly disclosed" the inside information to his brother Michael.

Having thus provided little guidance beyond the "trading relative or friend" language of Dirks, the Court acknowledged that "in some factual circumstances[,] assessing liability for gift-giving will be di�cult." The Court recognized that, just as in the wake of Dirks, lower courts will be left to grapple with the thorny "fact[ual]" question of "whether an insider personally bene�ts from a particular disclosure"—which "will not always be easy for courts."

Takeaways and Implications

Salman changes little in terms of how individuals and entities should conduct themselves in handling sensitive corporate information. Often discussions regarding insider trading focus on theories of liability, but the goal of all individuals and entities should be to avoid being investigated in the �rst instance. Investigations are costly in terms of time, money, and reputations. While the questionable trading is often done by individuals, when the matter is investigated and a case is �led, the matter is often known by the name of the corporation whose stock was traded. That corporation often would also have had to expend considerable

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time and resources responding to FINRA and then to an SEC request for chronologies and documents. Additionally, the potential for entity violations does exist if the entity carelessly mishandled the material nonpublic information in its control. For individuals, the harm of an investigation that can lead to loss of employment, impaired reputation, and direct �nancial costs of defense is clear and direct, even in instances where the individual is ultimately not charged by the government.

The best advice for entities continues to be to have policies, systems, and training with the goal of avoiding even questions that could lead to a governmental investigation. Individuals should recognize that there is no such thing as �ying under the radar with the government, both in terms of dollar amounts of trades and in terms of government surveillance and other resources for �nding potential violations. The SEC now uses data analytics and can detect aberrational trading in seconds, doing investigative work in the blink of an eye that previously took months. Simply put, they can much more easily detect trading anomalies and suspicious patterns than in the past, and the chances of not even being investigated have been greatly reduced.

The SEC, which has the lower civil standard in litigation, and criminal authorities will now be emboldened to continue to explore the outer contours of insider trading liability. The best advice is to avoid being the test case.

Conclusion

In sum, the Supreme Court's decision leaves many questions unanswered regarding what kinds of personal bene�ts to a tipper will su�ce to render the tippee liable for insider trading. But for companies, as always, the ultimate takeaway is to be attentive to instituting and maintaining policies, systems, and training that will ensure the prevention of questionable activity that could attract an investigation.

Attachments US Supreme Court Clari�es Standards for Tippee

Jones Day publications should not be construed as legal advice on any speci�c facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our “Contact Us” form, which can be found on our website at www.jonesday.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily re�ect those of the Firm.

MEIR FEDER Partner

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3/23/2021 The Challenge of Cultural Relativism

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The Challenge of Cultural Relativism

JAMES RACHELS

Adapted from The Elements of Moral Philosophy by James Rachels, Chapter 2, pp. 15-29. � 1999 by McGraw-Hill, Inc. Reprinted by permission of the McGraw-Hill Companies, Inc.

Morality differs in every society, and is a convenient term for socially approved habits.

-- Ruth Benedict (Patterns of Culture, 1934)

2.1 How Different Cultures Have Different Moral Codes

Darius, a king of ancient Persia, was intrigued by the variety of cultures he encountered in his travels. He had found, for example, that the Callatians (a tribe of Indians) customarily ate the bodies of their dead fathers. The Greeks, of course, did not do that�the Greeks practiced cremation and regarded the funeral pyre as the natural and fitting way to dispose of the dead. Darius thought that a sophisticated understanding of the world must include an appreciation of such differences between cultures. One day, to teach this lesson, he summoned some Greeks who happened to be present at his court and asked them what they would take to eat the bodies of their dead fathers. They were shocked, as Darius knew they would be, and replied that no amount of money could persuade them to do such a thing. Then Darius called in some Callatians, and while the Greeks listened asked them what they would take to burn their dead fathers' bodies. The Callatians were horrified and told Darius not even to mention such a dreadful thing.

This story, recounted by Herodotus in his History illustrates a recurring theme in the literature of social science: Different cultures have different moral codes. What is thought right within one group may be utterly abhorrent to the members of another group, and vice versa. Should we eat the bodies of the dead or burn them? If you were a Greek, one answer would seem obviously correct; but if you were a Callatian, the opposite would seem equally certain.

It is easy to give additional examples of the same kind. Consider the Eskimos. They are a remote and inaccessible people. Numbering only about 25,000, they live in small, isolated settlements scattered mostly along the northern fringes of North America and Greenland. Until the beginning of the 20th century, the outside world knew little about them. Then explorers began to bring back strange tales.

Eskimos customs turned out to be very different from our own. The men often had more than one wife, and they would share their wives with guests, lending them for the night as a sign of hospitality. Moreover, within a community, a dominant male might demand and get regular sexual access to other men's wives. The women, however, were free to break these arrangements simply by leaving their husbands and taking up with new partners�free, that is, so long as their former husbands chose not to make trouble. All in all, the Eskimo practice was a volatile scheme that bore little resemblance to what we call marriage.

But it was not only their marriage and sexual practices that were different. The Eskimos also seemed to have less regard for human life. Infanticide, for example, was common. Knud Rasmussen, one of the most famous early explorers, reported that be met one woman who bad borne 20 children but had killed 10 of them at birth. Female babies, he found, were especially liable to be destroyed, and this was permitted simply at the parents' discretion, with no social stigma attached to it. Old people also, when they became too feeble to contribute to the family, were left out in the snow .to die. So there seemed to be, in this society, remarkably little respect for life.

To the general public, these were disturbing revelations. Our own way of living seems so natural and right that for many of us it is hard to conceive of others living so differently. And when we do hear of such things, we tend immediately to categorize those other peoples as "backward" or "primitive." But to anthropologists and sociologists, there was nothing particularly surprising about the Eskimos. Since the time of Herodotus, enlightened observers have been accustomed to the idea that conceptions of right and wrong differ from culture to culture. If we assume that our ideas of right and wrong will be shared by all peoples as all times, we are merely naive.

2.2 Cultural Relativism

� �

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To many thinkers, this observation�"Different cultures have different moral codes"� has seemed to be the key to understanding morality. The idea of universal truth in ethics, they say, is a myth. The customs of different societies are all that exist. These customs cannot be said to be "correct" or "incorrect," for that implies we have an independent standard of right and wrong by which they may be judged. But there is no such independent standard; every standard is culture-bound. The great pioneering sociologist William Graham Sumner, writing in 1906, put the point like this:

The "right" way is the way which the ancestors used and which has been handed down. The tradition is its own warrant. It is not held subject to verification by experience. The notion of right is in the folkways. It is not outside of them, of independent origin, and brought to test them. In the folkways, whatever is, is right. This is because they are traditional, and therefore contain in themselves the authority of the ancestral ghosts. When we come to the folkways we are at the end of our analysis.

This line of thought has probably persuaded more people to be skeptical about ethics than any other single thing. Cultural Relativism, as it has been called, challenges our ordinary belief in the objectivity and universality of moral truth. It says, in effect, that there is not such thing as universal truth in ethics; there are only the various cultural codes, and nothing more. Moreover, our own code has no special status; it is merely one among many.

As we shall see, this basic idea is really a compound of several different thoughts. It is important to separate the various elements of the theory because, on analysis, some parts turn out to be correct, while others seem to be mistaken. As a beginning, we may distinguish the following claims, all of which have been made by cultural relativists:

1. Different societies have different moral codes. 2. There is no objective standard that can be used to judge one societal code better than another. 3. The moral code of our own society has no special status; it is merely one among many. 4. There is no "universal truth" in ethics; that is, there are no moral truths that hold for all peoples at all

times. 5. The moral code of a society determines what is right within that society; that is, if the moral code of a

society says that a certain action is right, then that action is right, at least within that society. 6. It is mere arrogance for us to try to judge the conduct of other peoples. We should adopt an attitude of

tolerance toward the practices of other cultures.

Although it may seem that these six propositions go naturally together, they are independent of one another, in the sense that some of them might be false even if others are true. In what follows, we will try to identify what is correct in Cultural Relativism, but we will also be concerned to expose what is mistaken about it.

2.3 The Cultural Differences Argument

Cultural Relativism is a theory about the nature of morality. At first blush it seems quite plausible. However, like all such theories, it may be evaluated by subjecting it to rational analysis; and when we analyze Cultural Relativism we find that it is not so plausible as it first appears to be.

The first thing we need to notice is that at the heart of Cultural Relativism there is a certain form of argument. The strategy used by cultural relativists is to argue from facts about the differences between cultural outlooks to a conclusion about the status of morality. Thus we are invited to accept this reasoning:

1. The Greeks believed it was wrong to eat the dead, whereas the Callatians believed it was right to eat the dead.

2. Therefore, eating the dead is neither objectively fight nor objectively wrong. It is merely a matter of opinion, which varies from culture to culture.

Or, alternatively:

1. The Eskimos see nothing wrong with infanticide, whereas Americans believe infanticide is immoral. 2. Therefore, infanticide is neither objectively right nor objectively wrong. It is merely a matter of opinion,

which varies from culture to culture.

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Clearly, these arguments are variations of one fundamental idea They are both special cases of a more general argument, which says:

1. Different cultures have different moral codes. 2. Therefore, there is no objective "truth" in morality. Right and wrong are only matters of opinion, and

opinions vary from culture to culture.

We may call this the Cultural Differences Argument. To many people, it is persuasive. But from a logical point of view, is it sound?

It is not sound. The trouble is that the conclusion does not follow from the premise� that is, even if the premise is true, the conclusion still might be false. The premise concerns what people believe.In some societies, people believe one thing; in other societies, people believe differently. The conclusion, however, concerns what really is the case. The trouble is that this sort conclusion does not follow logically from this sort of premise.

Consider again the example of the Greeks and Callatians. The Greeks believed it was wrong to eat the dead; the Callatians believed it was right. Does it follow, from the mere fact that they disagreed, that there is no objective truth in the matter? No, it does not follow; for it could be that the practice was objectively right (or wrong) and that one or the other of them was simply mistaken.

To make the point clearer, consider a different matter In some societies, people believe the earth is flat In other societies, such as our own, people believe the earth is (roughly) spherical. Does it follow, from the mere fact that people disagree, that there is no "objective truth" in geography? Of course not; we would never draw such a conclusion because we realize that, in their beliefs about the world, the members of some societies might simply be wrong. There is no reason to think that if the world is round everyone must know it. Similarly, there is no reason to think that if there is moral truth everyone must know it. The fundamental mistake in the Cultural Differences Argument is that it attempts to derive a substantive conclusion about a subject from the mere fact that people disagree about it.

This is a simple point of logic, and it is important not to misunderstand it. We are not saying (not yet, anyway) that the conclusion of the argument is false. It is still an open question whether the conclusion is true or false. The logical point is just that the conclusion does not follow from the premise. This is important, because in order to determine whether the conclusion is true, we need arguments in its support. Cultural Relativism proposes this argument, but unfortunately the argument turns out to be fallacious. So it proves nothing.

2.4 The Consequences of Taking Cultural Relativism Seriously

Even if the Cultural Differences Argument is invalid, Cultural Relativism might still be true. What would it be like if it were true?

In the passage quoted above, William Graham Sumner summarizes the essence of Cultural Relativism. He says that there is no measure of right and wrong other than the standards of one's society: "The notion of right is in the folkways. It is not outside of them, of independent origin, and brought to test them. In the folkways, whatever is, is right."

Suppose we took this seriously. What would be some of the consequences?

1. We could no longer say that the customs of other societies are morally inferior to our own. This, of course, is one of the main points stressed by Cultural Relativism. We would have to stop condemning other societies merely because they are "different:' So long as we concentrate on certain examples, such as the funerary practices of the Greeks and Callatians, this may seem to be a sophisticated, enlightened attitude.

However, we would also be stopped from criticizing other, less benign practices. Suppose a society waged war on its neighbors for the purpose of taking slaves. Or suppose a society was violently anti-Semitic and its leaders set out to destroy the Jews. Cultural Relativism would preclude us from saying that either of these practices was wrong. We would not even be able to say that a society tolerant of Jews is better than the anti- Semitic society, for that would imply some sort of transcultural standard of comparison. The failure to condemn these practices does not seem enlightened; on the contrary, slavery and anti-Semitism seem wrong wherever they occur. Nevertheless, if we took Cultural Relativism seriously, we would have to regard these social practices as also immune from criticism.

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2. We could decide whether actions are right or wrong just by consulting the standards of our society. Cultural Relativism suggests a simple test for determining what is right and what is wrong: All one need do is ask whether the action is in accordance with the code of one's society. Suppose in 1975, a resident of South Africa was wondering whether his country's policy of apartheid�a rigidly racist system�was morally correct. All he has to do is ask whether this policy conformed to his society's moral code. If it did, there would have been nothing to worry about, at least from a moral point of view.

This implication of Cultural Relativism is disturbing because few of us think that our society's code is perfect; we can think of ways it might be improved. Yet Cultural Relativism would not only forbid us from criticizing the codes of other societies; it would stop us from criticizing our own. After all, if right and wrong are relative to culture, this must be true for our own culture just as much as for other cultures.

3. The idea of moral progress is called into doubt. Usually, we think that at least some social changes are for the better. (Although, of course, other changes may be for the worse.) Throughout most of Western history the place of women in society was narrowly circumscribed. They could not own property; they could not vote or hold political office; and generally they were under the almost absolute control of their husbands. Recently much of this has changed, and most people think of it as progress.

If Cultural Relativism is correct, can we legitimately think of this as progress? Progress means replacing a way of doing things with a better way. But by what standard do we judge the new ways as better? If the old ways were in accordance with the social standards of their time, then Cultural Relativism would say it is a mistake to judge them by the standards of a different time. Eighteenth-century society was, in effect, a different society from the one we have now. To say that we have made progress implies a judgment that present-day society is better, and that is just the sort of transcultural judgment that, according to Cultural Relativism, is impermissible.

Our idea of social reform will also have to be reconsidered. Reformers such as Martin Luther King, Jr., have sought to change their societies for the better. Within the constraints imposed by Cultural Relativism, there is one way this might be done. If a society is not living up to its own ideals, the reformer may be regarded as acting for the best: The ideals of the society are the standard by which we judge his or her proposals as worthwhile. But the "reformer" may not challenge the ideals themselves, for those ideals are by definition correct. According to Cultural Relativism, then, the idea of social reform makes sense only in this limited way.

These three consequences of Cultural Relativism have led many thinkers to reject it as implausible on its face. It does make sense, they say, to condemn some practices, such as slavery and anti-Semitism, wherever they occur. It makes sense to think that our own society has made some moral progress, while admitting that it is still imperfect and in need of reform. Because Cultural Relativism says that these judgments make no sense, the argument goes, it cannot be right.

2.5 Why There Is Less Disagreement Than It Seems

The original impetus for Cultural Relativism comes from the observation that cultures differ dramatically in their views of right and wrong. But just how much do they differ? It is true that there are differences. However, it is easy to overestimate the extent of those differences, Often, when we examine what seems to be a dramatic difference, we find that the cultures do not differ nearly as much as it appears.

Consider a culture in which people believe it is wrong to eat cows. This may even be a poor culture, in which there is not enough food; still, the cows are not to be touched. Such a society would appear to have values very different from our own. But does it? We have not yet asked why these people will not eat cows. Suppose it is because they believe that after death the souls of humans inhabit the bodies of animals, especially cows, so that a cow may be someone's grandmother. Now do we want to say that their values are different from ours? No; the difference lies elsewhere. The difference is in our belief systems, not in our values. We agree that we shouldn't eat Grandma; we simply disagree about whether the cow is (or could be) Grandma

The point is that many factors work together to produce the customs of a society. The society's values are only one of them. Other matters, such as the religions and factual beliefs held by its members, and the physical circumstances in which they must live, are also important. We cannot conclude, then, merely because customs differ, that there is a disagreement about values. The difference in customs may be attributable to some other aspects of social life. Thus there may be less disagreement about values than there appears to be.

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Consider again the Eskimos, who often kill perfectly normal infants, especially girls. We do not approve of such things; a parent who killed a baby in our society would be locked up. Thus there appears to be a great difference in the values of our two cultures. But suppose we ask why the Eskimos do this. The explanation is not that they have less affection for their children or less respect for human life. An Eskimo family will always protect its babies if conditions permit. But they live in a harsh environment, where food is in short supply. A fundamental postulate of Eskimos thought is: "Life is hard, and the margin of safety small:' A family may want to nourish its babies but be unable to do so.

As in many "primitive" societies, Eskimo mothers will nurse their infants over a much longer period of time than mothers in our culture. The child will take nourishment from its mother's breast for four years, perhaps even longer. So even in the best of times there are limits to the number of infants that one mother can sustain. Moreover, the Eskimos are a nomadic people�unable to farm, they must move about in search of food. Infants must be carried, and a mother can carry only one baby in her parka as she travels and goes about her outdoor work. Other family members help whenever they can.

Infant girls are more readily disposed of because, first, in this society the males are the primary food providers�they are the hunters, according to the traditional division of labor�and it is obviously important to maintain a sufficient number of food providers. But there is an important second reason as well. Because the hunters suffer a high casualty rate, the adult men who die prematurely far outnumber the women who die early. Thus if male and female infants survived in equal numbers, the female adult population would greatly outnumber the male adult population. Examining the available statistics, one writer concluded that "were it not for female infanticide�there would be approximately one-and-a-half times as many females in the average Eskimo local group as there are food-producing males."

So among the Eskimos, infanticide does not signal a fundamentally different attitude toward children. Instead, it is a recognition that drastic measures are sometimes needed to ensure the family's survival. Even then, however, killing the baby is not the first option considered. Adoption is common; childless couples are especially happy to take a more fertile couple's "surplus." Killing is only the last resort. I emphasize this in order to show that the raw data of the anthropologists can be misleading; it can make the differences in values between cultures appear greater than they are. The Eskimos' values are not all that different from our values. It is only that life forces upon them choices that we do not have to make.

2.6 How AU Cultures Have Some Values in Common

It should not be surprising that, despite appearances, the Eskimos are protective of their children. How could it be otherwise? How could a group survive that did not value its young? It is easy to see that, in fact, all cultural groups must protect their infants:

1. Human infants are helpless and cannot survive if they are not given extensive care for a period of years. 2. Therefore, if a group did not care for its young, the young would not survive, and the older members of the group would not be replaced. After a while the group would die out. 3. Therefore, any cultural group that continues to exist must care for its young. infants that are not cared for must be the exception rather than the rule.

Similar reasoning shows that other values must be more or less universal. Imagine what it would be like for a society to place no value at all on truth telling. When one person spoke to another, there would be no presumption at all that he was telling the truth for he could just as easily be speaking falsely. Within that society, there would be no reason to pay attention to what anyone says. (I ask you what time it is, and you say "Four o'clock:' But there is no presumption that you are speaking truly; you could just as easily have said the first thing that came into your head. So I have no reason to pay attention to your answer; in fact, there was no point in my asking you in the first place.) Communication would then be extremely difficult, if not impossible. And because complex societies cannot exist without communication among their members, society would become impossible. It follows that in any complex society there must be a presumption in favor of truthfulness. There may of course be exceptions to this rule: There may be situations in which it is thought to be permissible to lie. Nevertheless, there will be exceptions to a rule that is in force in the society.

Here is one further example of the same type. Could a society exist in which there was no prohibition on murder? What would this be like? Suppose people were free to kill other people at will, and no one thought there was anything wrong with it. In such a "society," no one could feel secure. Everyone would have to be

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constantly on guard. People who wanted to survive would have to avoid other people as much as possible. This would inevitably result in individuals trying to become as self-sufficient as possible� after all, associating with others would be dangerous. Society on any large scale would collapse. Of course, people might band together in smaller groups with others that they could trust not to harm them. But notice what this means: They would be forming smaller societies that did acknowledge a rule against murder: The prohibition of murder, then, is a necessary feature of all societies.

There is a general theoretical point here, namely, that there are some moral rules that all societies will have in common, because those rules are necessary for society to exist. The rules against lying and murder are two examples. And in fact, we do find these rules in force in all viable cultures. Cultures may differ in what they regard as legitimate exceptions to the rules, but this disagreement exists against a background of agreement on the larger issues. Therefore, it is a mistake to overestimate the amount of difference between cultures. Not every moral rule can vary from society to society.

2.7 Judging a Cultural Practice to Be Undesirable

In 1996, a 17-year-old girl named Fauziya Kassindja arrived at Newark International Airport and asked for asylum. She had fled her native country of Togo, a small west African nation, to escape what people there call excision.

Excision is a permanently disfiguring procedure that is sometimes called "female circumcision," although it bears little resemblance to the Jewish ritual. More commonly, at least in Western newspapers, it is referred to as "genital mutilation." According to the World Health Organization, the practice is widespread in 26 African nations, and two million girls each year are "excised." In some instances, excision is part of an elaborate tribal ritual, performed in small traditional villages, and girls look forward to it because it signals their acceptance into the adult world. In other instances, the practice is carried out by families living in cities on young women who desperately resist.

Fauziya Kassindja was the youngest of five daughters in a devoutly Muslim family. Her father, who owned a successful trucking business, was opposed to excision, and he was able to defy the tradition because of his wealth. His first four daughters were married without being mutilated. But when Fauziya was 16, he suddenly died. Fauziya then came under the authority of his father, who arranged a marriage for her and prepared to have her excised. Fauziya was terrified, and her mother and oldest sister helped her to escape. Her mother, left without resources, eventually had to formally apologize and submit to the authority of the patriarch she had offended.

Meanwhile, in America, Fauziya was imprisoned for two years while the authorities decided what to do with her. She was finally granted asylum, but not before she became the center of a controversy about how foreigners should regard the cultural practices of other peoples. A series of articles in the New York Times encouraged the idea that excision is a barbaric practice that should be condemned. Other observers were reluctant to be so judgmental�live and let live, they said; after all, our practices probably seem just as strange to them.

Suppose we are inclined to say that excision is bad. Would we merely be applying the standards of our own culture? If Cultural Relativism is correct, that is all we can do, for there is no cultural-neutral moral standard to which we may appeal. Is that true?

Is There a Culture-Neutral Standard of Right and Wrong? There is, of course, a lot that can be said against the practice of excision. Excision is painful and it results in the permanent loss of sexual pleasure. Its short-term effects include hemorrhage, tetanus, and septicemia. Sometimes the woman dies. Long term effects include chronic infection, scars that hinder walking, and continuing pain.

Why, then, has it become a widespread social practice? It is not easy to say. Excision has no obvious social benefits. Unlike Eskimo infanticide, it is not necessary for the group's survival. Nor is it a matter of religion. Excision is practiced by groups with various religions, including Islam and Christianity, neither of which commend it.

Nevertheless, a number of reasons are given in its defense. Women who are incapable of sexual pleasure are said to be less likely to be promiscuous; thus there will be fewer unwanted pregnancies in unmarried women. Moreover, wives for whom sex is only a duty are less likely to be unfaithful to their husbands; and because they will not be thinking about sex, they will be more attentive to the needs of their husbands and children.

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Husbands, for their part, are said to enjoy sex more with wives who have been excised. (The women's own lack of enjoyment is said to be unimportant.) Men will not want unexcised women, as they are unclean and immature. And above all, it has been done since antiquity, and we may not change the ancient ways.

It would be easy, and perhaps a bit arrogant, to ridicule these arguments. But we may notice an important feature of this whole line of reasoning: it attempts to justify excision by showing that excision is beneficial� men, women, and their families are all said to be better off when women are excised. Thus we might approach this reasoning, and excision itself, by asking which is true: Is excision, on the whole, helpful or harmful?

Here, then, is the standard that might most reasonably be used in thinking about excision: We may ask whether the practice promotes or hinders the welfare of the people whose lives are affected by it. And, as a corollary, we may ask if there is an alternative set of social arrangements that would do a better job of promoting their welfare. If so, we may conclude that the existing practice is deficient.

But this looks like just the sort of independent moral standard that Cultural Relativism says cannot exist. It is a single standard that may be brought to bear in judging the practices of any culture, at any time, including our own. Of course, people will not usually see this principle as being "brought in from the outside" to judge them, because, like the rules against lying and homicide, the welfare of its members is a value internal to all viable cultures.

Why Thoughtful People May Nevertheless Be Reluctant to Criticize Other Cultures. Although they are personally horrified by excision, many thoughtful people are reluctant to say it is wrong, for at least three reasons.

First, there is an understandable nervousness about "interfering in the social customs of other peoples." Europeans and their cultural descendents in America have a shabby history of destroying native cultures in the name of Christianity and Enlightenment, not to mention self-interest. Recoiling from this record, some people refuse to make any negative judgments about other cultures, especially cultures that resemble those that have been wronged in the past. We should notice, however, that there is a difference between (a) judging a cultural practice to be morally deficient and (b) thinking that we should announce the fact, conduct a campaign, apply diplomatic pressure, or send in the army to do something about it. The first is just a matter of trying to see the world clearly, from a moral point of view. The second is another matter altogether. Sometimes it may be right to "do something about it," but often it will not be.

People also feel, rightly enough, that they should be tolerant of other cultures. Tolerance is, no doubt, a virtue�a tolerant person is willing to live in peaceful cooperation with those who see things differently. But there is nothing in the nature of tolerance that requires you to say that all beliefs, all religions, and all social practices are equally admirable. On the contrary, if you did not think that some were better than others, there would be nothing for you to tolerate.

Finally, people may be reluctant to judge because they do not want to express contempt for the society being criticized. But again, this is misguided: To condemn a particular practice is not to say that the culture is on the whole contemptible or that it is generally inferior to any other culture, including one's own. It could have many admirable features. In fact, we should expect this to be true of most human societies� they are mixes of good and bad practices. Excision happens to be one of the bad ones.

2.8 What Can Be Learned from Cultural Relativism

At the outset, I said that we were going to identify both what is right and what is wrong in Cultural Relativism. Thus far I have mentioned only its mistakes: I have said that it rests on an invalid argument, that it has consequences that make it implausible on its face, and that the extent of moral disagreement is far less than it implies. This all adds up to a pretty thorough repudiation of the theory. Nevertheless, it is still a very appealing idea, and the reader may have the feeling that all this is a little unfair. The theory must have something going for it, or else why has it been so influential? In fact, I think there is something right about Cultural Relativism, and now I want to say what that is. There are two lessons we should learn from the theory, even if we ultimately reject it.

Cultural Relativism warns us, quite rightly, about the danger of assuming that all our preferences are based on some absolute rational standard. They are not. Many (but not all) of our practices are merely peculiar to our society, and it is easy to lose sight of that fact. In reminding us of it, the theory does a service.

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Funerary practices are one example. The Callatians, according to Herodotus, were "men who eat their fathers"�a shocking idea, to us at least. But eating the flesh of the dead could be understood as a sign of respect. It could be taken as a symbolic act that says: We wish this person's spirit to dwell within us. Perhaps this was the understanding of the Callatians. On such a way of thinking, burying the dead could be seen as an act of rejection, and burning the corpse as positively scornful. If this is hard to imagine, then we may need to have our imaginations stretched. Of course we may feel a visceral repugnance at the idea of eating human flesh in any circumstances. But what of it? This repugnance may be, as the relativists say, only a matter of what is customary in our particular society.

There are many other matters that we tend to think of in terms of objective right and wrong that are really nothing more than social conventions. Should women cover their breasts? A publicly exposed breast is scandalous in our society, whereas in other cultures it is unremarkable. Objectively speaking, it is neither right nor wrong�there is not objective reason why either custom is better. Cultural Relativism begins with the valuable insight that many of our practices are like this; they are only cultural products. Then it goes wrong by inferring that, because some practices are like this, all must be.

The second lesson has to do with keeping an open mind. In the course of growing up, each of us has acquired some strong feelings: We have learned to think of some types of conduct as acceptable, and others we have learned to reject. Occasionally, we may find those feelings challenged. We may encounter someone who claims that our feelings are mistaken. For example, we may have been taught that homosexuality is immoral, and we may feel quite uncomfortable around gay people and see them as alien and "different." Now someone suggests that this may be a mere prejudice; that there is nothing evil about homosexuality; that gay people are just people, like anyone else, who happen, through no choice of their own, to be attracted to others of the same sex. But because we feel so strongly about the matter, we may find it hard to take this seriously. Even after we listen to the arguments, we may still have the unshakable feeling that homosexuals must, somehow, be an unsavory lot.

Cultural Relativism, by stressing that our moral views can reflect the prejudices of our society, provides an antidote for this kind of dogmatism. When he tells the story of the Greeks and Callatians, Herodotus adds:

For if anyone, no matter who, were given the opportunity of choosing from amongst all the nations of the world the set of beliefs which he thought best, he would inevitably, after careful consideration of their relative merits, choose that of his own country. Everyone without exception believes his own native customs, and the religion he was brought up in, to be the best.

Realizing this can result in our having more open minds. We can come to understand that our feelings are not necessarily perceptions of the truth�they may be nothing more than the result of cultural conditioning. Thus when we hear it suggested that some elements of our social code is notreally the best, and we find ourselves instinctively resisting the suggestion, we might stop and remember this. Then we may be more open to discovering the truth, whatever that might be.

We can understand the appeal of Cultural Relativism, then, even though the theory has serious shortcomings. It is an attractive theory because it is based on a genuine insight that many of the practices and attitudes we think so natural are really only cultural products. Moreover, keeping this insight firmly in view is important if we want to avoid arrogance and have open minds. These are important points, not to be taken lightly. But we can accept these points without going on to accept the whole theory.

COMMENTARY

© 2016 Jones Day. All rights reserved.

December 2016

As a result, the court’s decision leaves a good deal of

uncertainty concerning the scope of tippee liability—

leaving courts and litigants to grapple with what kinds

of benefits to tippers resulting from disclosures will

give rise to such liability.

The Personal-Benefits Test for “Tippee” Insider Trading Liability In Dirks v. S.E.C., 463 U.S. 646 (1983), the Supreme court

held that tippees will be liable for insider trading only

when “the insider receives a direct or indirect personal

benefit from the disclosure” of the material nonpublic

information at issue. To determine liability under this

test, Dirks directed courts to examine “objective crite-

ria,” such as whether the tipper’s disclosure resulted

in a “pecuniary gain or a reputational benefit that will

translate into future earnings.” The court observed

that liability under this standard could attach when

“an insider makes a gift of confidential information to

a trading relative or friend,” since the “tip and trade

resemble trading by the insider himself followed by a

gift of the profits to the recipient.” Yet, Dirks acknowl-

edged that “[d]etermining whether an insider person-

ally benefits from a particular disclosure, a question of

fact, will not always be easy for courts.”

On December 6, 2016, the U.S. Supreme court

addressed a disagreement in the lower courts regard-

ing the scope of insider trading liability for “tippees”—

individuals who trade in a corporate security based on

material nonpublic information received from corpo-

rate insiders. Under Dirks v. S.E.C., 463 U.S. 646 (1983),

tippee liability can exist only if the tipper personally

benefited from the disclosure of the inside informa-

tion. In Salman v. United States, 580 U.S. __ (2016),

authored by Justice Alito, the court unanimously

concluded that a tipper’s gift of inside information

to a trading friend or relative suffices to satisfy this

personal benefit element for insider trading liabil-

ity—even if the tipper did not receive a pecuniary or

tangible benefit in return.

Salman is most notable for rejecting the Second

circuit’s narrow view of tippee liability, announced in

United States v. Newman, 773 F.3d 438 (2d cir. 2014),

which required the U.S. government to prove that the

tipper received a pecuniary or similar benefit for liabil-

ity to attach. However, it is also notable that the court

refrained from adopting the very broad interpreta-

tion proposed by the government, which would have

imposed liability whenever the tipper discloses inside

information to anyone for any noncorporate purpose.

U.S. Supreme Court Clarifies Standards for “Tippee” Insider Trading Liability

2

Jones Day Commentary

While prosecutors vigorously pursued tippees in the decades

after Dirks, a recent Second circuit decision created signifi-

cant uncertainty regarding the scope of tippee liability. In

United States v. Newman, the Second circuit adopted a nar-

row reading of the Dirks personal-benefits test, holding that

a tipper’s “gift” of inside information to another person will

give rise to liability only when there is “proof of a meaningfully

close personal relationship that generates an exchange that

is objective, consequential, and represents at least a poten-

tial gain of a pecuniary or similarly valuable nature.”

The Salman Case In 2011, bassam Salman was indicted for insider trading as

a tippee. The ultimate source of the inside information was

maher Kara, a former citigroup insider. maher shared inside

information with his brother, michael Kara, with the knowledge

that michael intended to trade on that information. michael,

in turn, shared this inside information with bassam Salman,

who was michael’s friend and maher’s brother-in-law. Salman

traded on this information, knowing that the information came

from maher and that maher intended to benefit michael by

his disclosure.

Salman was convicted, and he appealed to the Ninth circuit.

He argued that his conviction should be reversed based on

the Second circuit’s Newman decision, since maher had

not received any benefit of “a pecuniary or similarly valu-

able nature” in exchange for providing tips to michael. The

Ninth circuit rejected this argument and declined to follow

Newman’s narrow reading of the personal-benefits test. The

Supreme court granted certiorari to resolve the tension

between the Ninth circuit’s decision and Newman.

The Court’s Decision In a unanimous decision, the Supreme court rejected

Newman’s narrow view of liability and affirmed Salman’s con-

viction. The court reasoned that Dirks’s “discussion of gift giv-

ing resolves this case.” It explained that “when a tipper gives

inside information to ‘a trading relative or friend,’” the tipper

“benefits personally because giving a gift of trading informa-

tion is the same thing as trading by the tipper followed by a

gift of the proceeds.” Therefore, because maher disclosed

inside information “as a gift to his brother with the expectation

that [his brother] would trade on it,” maher personally benefit-

ted from the disclosure—which in turn rendered Salman, who

knew these facts, liable. The court rejected Newman to the

extent it required any additional benefit to the tipper to be

shown in these circumstances, such as a benefit of a “‘pecu-

niary or similarly valuable nature.’”

At the same time, the court also declined the government’s

invitation to go beyond Dirks and adopt an expansive reading

of the personal-benefits test. The government argued that

“a gift of confidential information to anyone, not just a ‘trad-

ing relative or friend,’ is enough to prove securities fraud,”

and that “a tipper personally benefits whenever the tipper

discloses confidential trading information for a noncorporate

purpose,” whether to a “friend, a family member, or anyone

else.” The court found it unnecessary to pass on this argu-

ment, deeming Dirks’s more limited discussion of gift-giving

sufficient to resolve the case. As a result, the court’s opinion

leaves a number of open questions, such as how to draw the

line between a “friend” and an acquaintance, and what sorts

of intangible or psychic benefits to a tipper might be deemed

to satisfy the “personal benefit” requirement of Dirks.

It is also worth noting that the court had no occasion to ques-

tion Newman’s alternative holding that conviction of an indi-

rect tippee such as Salman requires proof that the tippee

had knowledge that the tipper personally benefited from the

disclosure of the inside information—a rule that is of particu-

lar significance when, as has often been the case in recent

years, the government pursues the prosecution of remote

tippees. In Salman, this element did not play a major role,

because the evidence established that Salman knew that the

tipper maher had “improperly disclosed” the inside informa-

tion to his brother michael.

Having thus provided little guidance beyond the “trading rel-

ative or friend” language of Dirks, the court acknowledged

that “in some factual circumstances[,] assessing liability for

gift-giving will be difficult.” The court recognized that, just

as in the wake of Dirks, lower courts will be left to grapple

with the thorny “fact[ual]” question of “whether an insider per-

sonally benefits from a particular disclosure”—which “will not

always be easy for courts.”

Jones Day publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general infor- mation purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our “Contact Us” form, which can be found on our website at www.jonesday.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.

Takeaways and Implications

Salman changes little in terms of how individuals and enti-

ties should conduct themselves in handling sensitive corpo-

rate information. Often discussions regarding insider trading

focus on theories of liability, but the goal of all individuals

and entities should be to avoid being investigated in the first

instance. Investigations are costly in terms of time, money,

and reputations. While the questionable trading is often done

by individuals, when the matter is investigated and a case is

filed, the matter is often known by the name of the corpora-

tion whose stock was traded. That corporation often would

also have had to expend considerable time and resources

responding to FINrA and then to an Sec request for chro-

nologies and documents. Additionally, the potential for entity

violations does exist if the entity carelessly mishandled the

material nonpublic information in its control. For individuals,

the harm of an investigation that can lead to loss of employ-

ment, impaired reputation, and direct financial costs of

defense is clear and direct, even in instances where the indi-

vidual is ultimately not charged by the government.

The best advice for entities continues to be to have poli-

cies, systems, and training with the goal of avoiding even

questions that could lead to a governmental investigation.

Individuals should recognize that there is no such thing as

flying under the radar with the government, both in terms of

dollar amounts of trades and in terms of government surveil-

lance and other resources for finding potential violations. The

Sec now uses data analytics and can detect aberrational

trading in seconds, doing investigative work in the blink of an

eye that previously took months. Simply put, they can much

more easily detect trading anomalies and suspicious pat-

terns than in the past, and the chances of not even being

investigated have been greatly reduced.

The Sec, which has the lower civil standard in litigation, and

criminal authorities will now be emboldened to continue to

explore the outer contours of insider trading liability. The best

advice is to avoid being the test case.

Conclusion

In sum, the Supreme court’s decision leaves many questions

unanswered regarding what kinds of personal benefits to a

tipper will suffice to render the tippee liable for insider trad-

ing. but for companies, as always, the ultimate takeaway is to

be attentive to instituting and maintaining policies, systems,

and training that will ensure the prevention of questionable

activity that could attract an investigation.

Lawyer Contacts For further information, please contact your principal Firm

representative or one of the lawyers listed below. General

email messages may be sent using our “contact Us” form,

which can be found at www.jonesday.com/contactus/.

Meir Feder

New York

+1.212.326.7870

[email protected]

Harold K. Gordon

New York

+1.212.326.3740

[email protected]

Samidh Guha

New York

+1.212.326.3721

[email protected]

Henry Klehm III

New York

+1.212.326.3706

[email protected]

Joan E. McKown

Washington

+1.202.879.3647

[email protected]

Peter J. Romatowski

Washington

+1.202.879.7625

[email protected]

Pat Swan

San Diego

+1.858.703.3132

[email protected]

David Woodcock

Dallas / Washington

+1.214.969.3681 / +1.202.879.5490

[email protected]

Joshua S. Stillman

New York

+1.212.326.3638

[email protected]

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Moral Philosophy According to Immanuel Kant Kantian Ethics in a Nutshell

By

Updated August 31, 2019

Table of Contents

Emrys Westacott

Immanuel Kant (1724-1804) is generally considered to be one of the most profound and original

philosophers who ever lived. He is equally well known for his metaphysics–the subject of his

"Critique of Pure Reason"—and for the moral philosophy set out in his "Groundwork to the

Metaphysics of Morals" and "Critique of Practical Reason" (although "Groundwork" is the far

easier of the two to understand).

A Problem for the Enlightenment

To understand Kant’s moral philosophy, it's crucial to be familiar with the issues that he, and

other thinkers of his time, were dealing with. From the earliest recorded history, people’s moral

beliefs and practices were grounded in religion. Scriptures, such as the bible and the Quran, laid

out moral rules that believers thought to be handed down from God: Don’t kill. Don’t steal. Don’t

commit adultery, and so on. The fact that these rules supposedly came from a divine source of

wisdom gave them their authority. They were not simply somebody’s arbitrary opinion, they were

God's opinion, and as such, they offered humankind an objectively valid code of conduct.

Moreover, everyone had an incentive to obey these codes. If you “walked in the ways of the

Lord,” you would be rewarded, either in this life or the next. If you violated the commandments,

you'd be punished. As a result, any sensible person brought up in such a faith would abide by

the moral rules their religion taught.

With the scientific revolution of the 16th and 17th centuries that led to the great cultural

movement known as the Enlightenment, these previously accepted religious doctrines were

increasingly challenged as faith in God, scripture, and organized religion began to decline

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among the intelligentsia—that is, the educated elite. Nietzsche famously described this shift

away from organized religion as “the death of God.”

This new way of thinking created a problem for moral philosophers: If religion wasn’t the

foundation that gave moral beliefs their validity, what other foundation could there be? If there is

no God—and therefore no guarantee of cosmic justice ensuring that the good guys will be

rewarded and the bad guys will be punished—why should anyone bother trying to be good?

Scottish moral philosopher Alisdair MacIntrye called this “the Enlightenment problem.” The

solution moral philosophers needed to come up with was a secular (non-religious) determination

of what morality was and why we should strive to be moral.

Three Responses to the Enlightenment Problem

Social Contract Theory—One answer to the Enlightenment Problem was pioneered

by English philosopher Thomas Hobbes (1588-1679) who argued that morality was

essentially a set of rules that human beings agreed upon amongst themselves in

order to make living with one another possible. If we didn’t have these rules—many

of which took the form of laws enforced by the government—life would be absolutely

horrific for everyone.

Utilitarianism—Utilitarianism, another attempt to give morality a non-religious

foundation, was pioneered by thinkers including David Hume (1711-1776) and

Jeremy Bentham (1748-1742). Utilitarianism holds that pleasure and happiness have

intrinsic value. They are what we all want and are the ultimate goals that all our

actions aim toward. Something is good if it promotes happiness, and it is bad if it

produces suffering. Our basic duty is to try to do things that add to the amount of

happiness and/or reduce the amount of misery in the world. 

Kantian Ethics—Kant had no time for Utilitarianism. He believed in placing the

emphasis on happiness the theory completely misunderstood the true nature of

morality. In his view, the basis for our sense of what is good or bad, right or wrong, is

our awareness that human beings are free, rational agents who should be given the

respect appropriate to such beings—but what exactly does that entail?

The Problem With Utilitarianism

In Kant’s view, the basic problem with utilitarianism is that it judges actions by their

consequences. If your action makes people happy, it’s good; if it does the reverse, it’s bad. But

is this actually contrary to what we might call moral common sense? Consider this

question: Who is the better person, the millionaire who gives $1,000 to charity in order to score

points with his Twitter following or the minimum-wage worker who donates a day’s pay to charity

because she thinks it's her duty to help the needy?

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If consequences are all that matter, then the millionaire’s action is technically the "better" one.

But that’s not how the majority of people would see the situation. Most of us judge actions more

for their motivation than by their consequences. The reason is obvious: the consequences of our

actions are often out of our control, just as the ball is out of the pitcher’s control once it's left his

hand. I could save a life at the risk of my own, and the person I save could turn out to be a serial

killer. Or I could accidentally kill someone in the course of robbing them, and in doing so might

unwittingly save the world from a terrible tyrant.

The Good Will

Kant’s "Groundwork" opens with the line: “The only thing that is unconditionally good is a good

will.” Kant’s argument for this belief is quite plausible. Consider anything you think of in terms of

being "good"—health, wealth, beauty, intelligence, and so on. For each of these things, you can

also likely imagine a situation in which this so-called good thing is not good after all. For

instance, a person can be corrupted by their wealth. The robust health of a bully makes it easier

for him to abuse his victims. A person’s beauty may lead her to become vain and fail to develop

emotional maturity. Even happiness is not good if it is the happiness of a sadist torturing

unwilling victims.

By contrast, goodwill, says Kant, is always good—in all circumstances. What, exactly, does Kant

mean by goodwill? The answer is fairly simple. A person acts out of goodwill when they do what

they do because they think it is their duty—when they act from a sense of moral obligation.

Duty vs. Inclination

Obviously, we don’t perform every little action from a sense of obligation. Much of the time, we're

simply following our inclinations—or acting out of self-interest. There's nothing intrinsically wrong

with that, however, no one deserves credit for pursuing their own interests. It comes naturally to

us, just as it comes naturally to every animal.

What is remarkable about human beings, though, is that we can, and sometimes do, perform an

action from purely moral motives—for example, when a soldier throws himself on a grenade,

sacrificing his own life to save the lives of others. Or less dramatically, I pay back a friendly loan

as promised even though payday isn't for another week and doing so will leave me temporarily

short of cash.

In Kant’s view, when a person freely chooses to do the right thing simply because it is the right

thing to do, their action adds value to the world and lights it up, so to speak, with a brief glow of

moral goodness.

Knowing Your Duty

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Saying that people should do their duty from a sense of duty is easy—but how are we supposed

to know what our duty is? Sometimes we may find ourselves facing moral dilemmas in which it's

not obvious which course of action is morally correct.

According to Kant, however, in most situations are duty is obvious. If we're uncertain, we can

work out the answer by reflecting on a general principle that Kant calls the “Categorical

Imperative.” This, he claims, is the fundamental principle of morality and all other rules and

precepts can be deduced from it.

Kant offers several different versions of this categorical imperative. One runs as follows: “Act

only on that maxim that you can will as a universal law.”

What this means, basically, is that we should only ask ourselves, How would it be if everyone

acted the way I’m acting? Could I sincerely and consistently wish for a world in which everyone

behaved this way? According to Kant, if our action is morally wrong, the answers to those

questions would be no. For instance, suppose I’m thinking of breaking a promise. Could I wish

for a world in which everyone broke their promises when keeping them was inconvenient? Kant

argues that I could not want this, not least because in such a world no one would make promises

since everyone would know that a promise meant nothing.

The Ends Principle

Another version of the Categorical Imperative that Kant offers states that one should “always

treat people as ends in themselves, never merely as a means to one’s own ends." This is

commonly referred to as the “ends principle.” While similar in a way to the Golden Rule: "Do

unto others as you would have them do unto you," it puts the onus for following the rule on

humankind rather than accepting the strictures of divine influence.

The key to Kant’s belief regarding what makes humans moral beings is the fact that we are free

and rational creatures. To treat someone as a means to your own ends or purposes is to not

respect this fact about them. For instance, if I get you to agree to do something by making a

false promise, I am manipulating you. Your decision to help me is based on false information

(the idea that I’m going to keep my promise). In this way, I have undermined your rationality.

This is even more obvious if I steal from you or kidnap you in order to claim a ransom.

Treating someone as an end, by contrast, involves always respecting the fact that they are

capable of free rational choices which may be different from the choices you wish them to make.

So if I want you to do something, the only moral course of action is to explain the situation,

explain what I want, and let you make your own decision.

Kant’s Concept of Enlightenment

In his famous essay “What is Enlightenment?” Kant defines the principle as “man’s emancipation

from his self-imposed immaturity.” What does this mean, and what does it have to do with his

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ethics?

The answers go back to the problem of religion no longer providing a satisfactory foundation for

morality. What Kant calls humanity’s “immaturity” is the period when people did not truly think for

themselves, and instead, typically accepted moral rules handed down to them by religion,

tradition, or by authorities such as the church, overlord, or king. This loss of faith in previously

recognized authority was viewed by many as a spiritual crisis for Western civilization. If “God is

dead, how do we know what is true and what is right?"

Kant’s answer was that people simply had to work those things out for themselves. It wasn't

something to lament, but ultimately, something to celebrate. For Kant, morality was not a matter

of subjective whim set forth in the name of god or religion or law based on the principles

ordained by the earthly spokespeople of those gods. Kant believed that “the moral law”—the

categorical imperative and everything it implies—was something that could only be discovered

through reason. It was not something imposed on us from without. Instead, it's a law that we, as

rational beings, must impose on ourselves. This is why some of our deepest feelings are

reflected in our reverence for the moral law, and why, when we act as we do out of respect for it

—in other words, from a sense of duty—we fulfill ourselves as rational beings.

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