Business Ethics and Social Responsibility

Business Ethics and Social Responsibility Moderator Bob Adler, CPSC Panelists Nancy Cowles, Kids in Danger Rick Locker, Locker, Greenberg & Brainin Cindy Pellegrini, American Academy of Pediatrics Alan Schoem, Marsh Risk Consulting

Do Most People Have an Innate Moral Sense?

Haidt’s Five Innate Moral Systems • Don’t physically harm other people • Do as you would have done to you (reciprocity) • Be loyal to and show tolerance for the in-group • Be pure and demonstrate sanctity • Show respect for authority Source: “The Happiness Hypothesis” Jonathan Haidt (2005)

Michael Shermer on Ethics I believe that morality is the natural outcome of evolutionary and historical forces operating on both individuals and groups. The moral feelings of doing the right thing…or doing the wrong thing…were generated by nature as part of human evolution. Although cultures differ on what they define as right and wrong, the moral feelings of doing the right or wrong thing are universal to all humans. Source: The Science of Good & Evil (2004)

Marc Hauser on Morality [I believe] that all humans are endowed with a moral faculty – a capacity that enables each individual to unconsciously and automatically evaluate what is permissible, obligatory, or forbidden. Moral Minds: The Nature of Right and Wrong (2006)

Hauser’s Moral Sense Test • Ongoing test of moral sensibilities • Preliminary results = thousands of subjects from around the world • Anyone can take the test: http://moral.wjh.harvard.edu

The Runaway Trolley A runaway trolley is about to run over five people working on the tracks. A railroad worker is standing next to a switch that can turn the trolley onto a side track, killing one person, but allowing the five to survive. Flipping the switch is: Obligatory __________ Permissible _________ Forbidden __________

The Drowning Child You pass by a small child drowning in a shallow pond, and you are the only one around. If you pick up the child, she will survive but your pants will be ruined. Picking up the child is: Obligatory __________ Permissible _________ Forbidden __________

The Needed Organs Five people have just been rushed into a hospital in critical care, each immediately requiring an organ to survive. There is a healthy person in the hospital’s waiting room. If the surgeon takes this person’s organs, he will die, but the five in critical care will survive. Taking the healthy person’s organs is: Obligatory __________ Permissible _________ Forbidden __________

SPRAY CLAY CASE Professor Raymond Sheeky, an assistant professor of toxicology at State University in Fairview, just phoned the Federal Consumer Protection Agency (FCPA) to inform them that he had found two women in Fairview who had given birth to babies with severe life-threatening birth defects of a type that he had never seen before. As he reported, “The only thing that I could find in common between the two women that concerned me was their use of a new product, Spray Clay, that many artists use. When I looked at blood samples from the two women, I found possible white blood cell chromosome damage, but that’s a very hard determination to make. Nevertheless, I think the FCPA should do something immediately.” When the agency met with the manufacturer of Spray Clay, they responded that their animal testing did not show any harm from their product. Their chief toxicologist, Arnold Glick, noted that they used a new ingredient recently developed by the company, promium, as a drying agent. “We’ve tested it on mice, and we’ve found it to have a very low acute toxicity level. We’ve found no other problems with it in mice, but who the hell knows about its effects on humans? The fact is that we did every test required by law.” He conceded that it was a new chemical in the market, but insisted that it was safe. Alerted by Professor Sheeky, the media immediately pushed the story to front page news and women across the country began asking their obstetricians for advice on abortions. Newspaper reports indicated that at least three women had already had abortions. Editorials began calling for the agency to issue an immediate ban on Spray Clay and several citizen groups began picketing the FCPA offices demanding instant action.

Discussion Questions • What should the manufacturer of Spray Clay do in this situation? • What should the Federal Consumer Protection Agency do in this situation? • What should a consumer group/physicians group do in this situation?

Social Responsibility Questions In his famous article, “The Social Responsibility of Business is to Increase its Profits,” the late Nobel Prize Economist, Milton Friedman, argued that businesses that dedicated funds to social responsibility activities did a disservice to their shareholders. In essence, he argued as follows: • Business’ social responsibility is to make the best products and to provide the best services they can within the confines of the law. Businesses have no particular expertise in this area and should leave social responsibility activities to government. • Businesses that spend money on social responsibility activities are taking money from their shareholders and giving it to others to whom they do not have a fiduciary responsibility. Is Friedman right? If not, why not?

Questions Most large companies have a code of ethics that they point to with pride. In fact, many companies require employees to sign annual pledges that they will live up to the company’s ethics code. Does a code of ethics make any difference in the real world? If you were writing a code of ethics, what would you put in the code?

Questions Lord Chancellor Thurlow a British Chancellor, in 1844, said "Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?" • Is he right? • Do modern corporations operate without a conscience? • What sort of ethical standard should we expect from corporations?

Question Do you have a personal code of ethics that you follow in your daily life? If so, what is it?

Panel Members • Commissioner Robert (Bob) Adler, CPSC • radler@cpsc.gov • Nancy Cowles, Kids In Danger • Nancy@kidsindanger.org • F. B. (Rick) Locker, Locker, Greenberg & Brainin • fblocker@lockerlaw.com • Cynthia (Cindy) Pellegrini, American Academy of Pediatrics • cpellegrini@aap.org • Alan Schoem, Marsh Consulting • Alan.H.Schoem@marsh.com

Business Ethics and Social Responsibility