For this assignment I will examine how bribery affects multinational businesses today. In the paragraph below I used Russia as one example in which bribery is the norm in business. I countered with the second paragraph on how United States attacks bribery as an ethical issue in itself.
Russia is one of the most corrupt countries on the planet where bribes are happening multiple times daily. Transparency International would give Russia 2.1 points out of ten; meaning ten is no corruption and 0 is the most corruption. Corruption is about 20% of the country’s Grouse Domestic Product (GDP) at 300 billion. Eighty percent of businesses do bribes. It’s an endemic because the media, citizens and politicians have open discussions about the benefits of bribes. In some cases, companies used “Bribes for survival” in which case they use bribes in order to be left alone from the government. An interesting fact is that the Russian government governs for the state not the people so it is the state officials that reinforce the bribery that takes place in their country. There is one man who is trying to clean up the corrupt and his name is Dmitry Medvedev. He started legislation to clean up corruption by asking the bureaucrats to declare their own and family income and assets; however, families were defined as spouse and under-age children, which did not include adult children. An income in Russia is confidential and only available to other bureaucrats. As of March 4, 2009, a man named Mikhail Khodorkovsky, an oil typhoon in Yukos, Siberia, who was accused of embezzling $25 billion in laundering 13.9 billion from his oil company. He is presently on trial for his innocence vs. the state theory which is fraud and tax evasion. His oil company is already divided among state-owned companies. (economist x2, 2008), (Timeonline.uk, 2009)
Using Russia as an example, one can surmise that doing business in other countries, as well as in Russia, where bribery is second nature, ethical issues can arise. Bribery is an illegal act in itself. The United States has laws against bribery. The US has the Foreign Corrupt Practices Act (FCPA) which addresses two main purposes, one is accounting transparency requirements of Securities Exchange Act of 1934 and the second is concerns with bribery of foreign officials. FCPA cases filed continued to increase to this day, other countries are rapidly increase their investigation and prosecution of corrupt payments as well. Some of the countries that are presently changing their tune in corruption are China and Germany. China is campaigning against commercial bribery and Germany is investigating allegations that the country's largest companies made corrupt payments to government officials. In order for US companies to maintain legal and moral grounds, they need to say no to bribery and institute clear corporate codes that employees are bonded to. Violators face heavy corporate fines, executives may face imprisonment or additional fines or both and possibly be disqualified from doing business with the US government. Although FCPA encourages fair treatment in competition for business abroad, the US may be at a disadvantage, because the FCPA applies to only American business and not foreign business; thereby, making it tougher for an American business to compete with business from other countries where bribery is commonplace for their gain. However, in the present day, there is still room for US corporations to expand in Russia in products such as automotive products, household goods, financial services, retail products, a healthcare system, telecommunication, and major construction equipment even with the knowledge that their government has some input in our business. (OEC, 2009) (BuyUSA.gov, 2009)( University of Pennsylvania.edu, 2002) (Business Ethics, pp. 279-281, 2008)
It is clear to me, that our American businesses that wish to adventure and prosper with their business prospects in other countries desperately need to learn the country’s culture and the rule of law of their land. Knowledge is power and it defines how their business practices determine right or wrong actions accordingly to the particular culture of that country. Finally, the ‘no to bribery’ should be the upmost importance of any corporation’s culture when dealing with multi-national corporations.
References
Anonymous. (2008, September 18). Oil, politics and corruption
Retrieved March 14, 2009, from Economist.com:
http://www.economist.com/specialreports/displaystory.cfm?story_id=12080765
Anonymous. (2008, November 17). Grease My Palm
Retrieved March 14, 2009, from Economist.com:
http://www.economist.com/surveys/displaystory.cfm?story_id=12628030&fsrc=rss
Anonymous. (2002, October 23). How Bribery and Other Types of Corruption Threaten the Global
Marketplace Retrieved March 14, 2009, from University of Pennsylvania:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=646
Haplin, T. (2009, March 04). Russian oil tycoon, Mikhail Khodorkovsky, in court for fresh trial
Retrieved March 14, 2009, from Timesonline.uk.com:
http://www.timesonline.co.uk/tol/news/world/europe/article5840301.eceAnonymous. (2008). Doing Business In Russia: A Country Commercial Guide for U.S.
Companies – 2008 Retrieved March 14, 2009, from BuyUSA.com:
http://www.buyusa.gov/russia/en/ccg.html
Anonymous. (2009). OECD Convention on Combating Bribery of Foreign Public Officials
in International Business Transactions Retrieved March 14, 2009, from OECD.com:
http://www.oecd.org/document/21/0,3343,en_2649_34859_2017813_1_1_1_37447,00.html#text
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Bribery.
In Business Ethics Ethical Decision Making and Cases (pp. 279-281).
Boston, New York: Houghton Mifflin Company.
Tuesday, March 28, 2000
Monday, March 27, 2000
business ethic issues
At this time, United States is experiencing many economic difficulties. It is a great time to be studying business ethic issues. In this paper, I want to explore and analyze why assumedly competent CEOs end up damaging the very company, including the company’s stake holders that the CEOs should be representing. I plan to construct a personal profile on each of the CEOs. Under each profile, I will briefly review their accomplishments, career history and provide information on their illegal activity or presumably unethical business practices that have or possibly will end their productive life as they know it. I will also provide data that is presently provided at this time, on how and what the legal system is doing to convict these CEOs. Next, I will comment on the ethical issues that were created by these CEOs. Finally, I will provide some scenarios that I believe could have been done to possibly prevent the corruption in the first place or at least lessen the impact. The CEOs that I will be focusing on, in this paper, will be the following: Richard S. Fuld. Jr. of Lehman Brothers, Tom Petters of Petters Co., John Thain of Merrilll Lynch which merged into Bank of America and Bernie Madoff of Madoff Investment Securities.
I chose unethical business practices as an ethical issue, because most of these CEOs, that I mentioned previously, are essentially immoral. It is so hurtful to people and stakeholders when the CEO endorse deceptive activities. For instance people lost as much as 33-50% of their life savings, because a couple of these CEOs, especially Bernie Madoff and Tom Petters, found a way to take advantage of their trust. The other two CEOs, Mr. Thain and Mr. Fauld Jr., avoided transparency affecting the well-being of their company's stakeholders. The main question that needs to be raised, is how these CEOs practiced their unethical behavior for so long. You wonder about the complacency of the company as a whole. Is it possible that the CEO’s honesty, fairness, and integrity were misjudged by the stakeholders who trusted their CEOs to manage their money or conduct their business in an ethical responsible manner? The answer to this question is an obvious yes! [The Techniques of Inner Leadership, pp, 5, 9, 12, 205, 206, 221, 225, 2003]
In this paper, I will show by examples, how the actions of these CEOs has negatively affected stakeholders and employees. This paper is about the illegal acts of the CEOs that either wrongfully use the tax payers money or deceived people thorough so call ponzi schemes. The CEOs should have followed the rules especially Richard Fuld Jr, who committed a transparency issue prior to Lehman Brothers declaring chapter 11 and was unable to reorganize with no money. John Thain, Merrill Lynch CEO, who also had a transparency issue, padded his office, paid bonuses to his executives and himself which were exorbitant prior to a merger. Bernie Madoff had a ponzi scheme all over the world worth $50 billion. A financial investigation by Harry Markapolos warned the SEC about Mr. Madoff in the prior 10 years and SEC didn't do anything until it was too late. Tom Petters was a local CEO who also used a ponzi scheme to line his pockets. A needed strategic tactic is in order for the Securities and Exchanges Commissions to have quicker data collection of these CEOs. [The Techniques of Inner Leadership, pp, 5, 9, 12, 205, 206, 221,225, 2003]
The #1 CEO Bernie Madoff, who, at the present time, has already admitted using a ponzi scheme in order to obtain large sums of money for fraudulent investments. He defrauded investors approximately 50 billion dollars in the largest swindle in Wall-Street history. Madoff had a degree in Political Science, and attended a short time to Brooklyn Law School, but didn't finish. Madoff is an American businessman and former NASDAQ stock exchange chairman. He served as the Chairman of the Board of Directors and Board of Governors on the NASD. He founded the Bernard L Madoff Investment Securities LLC in 1960 and was chairman since 2007. By the 1980s, Madoff Securities handled approximately 5 % of trading of over- the- counter stocks on the New York Stock Exchange. In 2000, Mr. Madoff took advantage of the internet as a vehicle to advance his trade. Madoff Securities became one of the top ranking trading and securities firms in the nation. Madoff was masterful in his scheme. His success with dealing with Non-profit charities, the elite, while investing their charitable funds, keeping secretive and the knowledge of tax law helped him keep his old ponzi scheme a secret for all this time. The charities lost millions in form of an affinity fraud. Mr. Madoff was not a new name for the Security Exchange Commission and regulatory authorities. He was investigated earlier in 1992 for reportedly being involved in illegal activity with Madoff Securities LLC before. It all started in 1992 when SEC invested one of Madoff’s feeder funds, Avellino & Bienes who didn’t invest in anyone, but Madoff. Bernie Madoff denied that he knew about the illegal activity so he wasn’t arrested. In May 1999, a financial analyst, Harry Markopolos complained to the SEC that ‘he questioned the legally of how profits were made per Madoff’s claim when using Madoff investment strategy.’ Then in 1999 and 2000, the SEC found that the firm was hiding customer orders from traders and then Madoff took corrective measures. The SEC made two inquires at that time; however, they were unable make connections to illegal activity. Again, in 2005, the SEC’s investigated Madoff and found him in violation of three activities which were as follows: ‘the strategy used for customer accounts, the requirement of brokers to obtain the best possible price for customer orders, and operating as an unregistered investment advisor.’ For this misdeed, he only received a hand slap and SEC findings were not made public. Also, in 2005, again ‘Markapolo sent the SEC a detailed 7 page memo entitled “The World’s Largest Hedge Fund is a Fraud”.’ The SEC has been accused in missing many red flags; whereby, ignoring tips that were sent to them and not probing more. When Barnie suggested to his sons to pay off 200 million dollars in assets owned by the firm two months ahead of schedule, the sons questioned their father about this, at which time, the father admitted that the whole asset management arm of Madoff Investment Securities was a ponzi scheme. It was at this time December 10, 2008 his sons told the FBI about their dad’s ponzi scheme. It was the beginning of the end of Madoff’s dynasty. At present, he is still out on bail for $10 million, and is on house arrest and wearing an ankle bracelet. However, as of March 6, 2009, Bernie has pleaded guilty and is still waiting for sentencing. (Wikipedia, 2009) (infoplease, 2009) (New York Times, 2009)
Another charismatic person, similar to Bernie Madoff is Tom Petters, CEO and Chairman of Petters Group Worldwide. Tom Petters only had a high school education. His company had offices in North America, South America, Asia, and Europe. He started out his career by selling electronics to college students. He eventually moved to Colorado to manage a chain of electronic stores that eventually went bankrupted. He moved back to Minnesota and incorporated a solo operation called Amicus Trading Wholesale Company which eventually was renamed to Petter's Company. Mr. Petters was known for buying and reviving ailing companies that included Sun Country Airlines and Polaroid Corporation. Some of his awards where Corporate Leader of the year, 2001, Distinguished Humanitarian Award, 2003, and Big Brother, Big Sister Odyssey award in 2005. In 2004, his son was murdered in Italy. Shortly after, Tom Petters established the John T. Petters Foundation and provided endowments to universities throughout the United States. One interesting endowments went to John T. Petters Center for Leadership, Ethics and Skill development in the Richard T. Farmer School of Business of Miami University.
Tom Petters, CEO of Petters Company of Minnetonka, Minnesota was indicted for fraud which he was allegedly in a large scale ponzi scheme; whereby, new investors’ money was used to pay older investor's return. Tom Petters was apparently fabricating documents in order to obtain billions of dollars in loan from various investors and this also included hedge funds. He would use falsified purchase orders to nonexistent purchases of merchandise. Apparently the story is he took a new lender's loans to pay off outstanding loans or role in new loans from the same lender. He also took the proceeds from these loans to subsidize his own life style or funneled the money from these loans into his own company. The US Attorney's Office charges Petter with wire and mail fraud, money laundering, and obstruction of justice. Tom Petters may end up in prison for the seven counts of fraud which brings twenty years imprisonment for each count. To this date, Petters is being jailed without bond until his pending trial. Since his arrest, several Petters entities including two companies are filing for bankruptcy. (Hudgefund Law Report, 2009) (UofM, 2008)
John A. Thain is Chairman and CEO of Merril Lynch Company and was on the NYSE EuroNext Inc from January 2004, as well as Co-CEO of Goldman Sachs Group Inc. He received a BS degree from Massachusetts Institute of Technology, and a MBA from Harvard University. He is a member of the MIT Corporation, the Dean's Advisory Council – MIT/Sloan School of Management, INSEAD (US National Advisory Board), the James Madison Council of Library of Management, the US Stock Exchange prior to Merrill Lynch. John Thain was designed to become a present of the global banking, securities, and wealth management of the merger, but mysteriously resigned. Bank of America lost interest in Mr. Thain when he had mounting losses at Merrill. Since December 2008, he wanted a bonus of 10 million dollars for compensation on the last day before the merger, yet never obtained that bonus. When he went to Merrill Lynch, he was given a 15 million dollar sign-on bonus, 50 million dollars a year and then based on the company’s stock price, would be paid 120 million dollars a year. In 2007, Mr. Thain was the best paid out of the S&P 500. After the Bank of America resisted his request of 10 million dollars for merger compensation, he dropped his request in December 2008. When John Thain left, other executives left as well including brokerage chief Bob McCann, investment head Greg Fleming. Mr. Thain refurbished his office at a time Merrill Lynch was failing and along with the upcoming merger with Bank of America. He also paid himself and all his top executives a cushy bonus prior to leaving. He wasn’t transparent about his company’s collapse. The company was accused of artificially inflating the value of the Collateralized Debt Obligations (CDO) and other assets backed by the subprime mortgages; whereby, the company issued false and misleading statements about the bonds. (Wikipedia, 2009)
Richard Fuld Jr. was a CEO of Lehman Brothers who could face civil lawsuits for overseeing the bank’s collapse in Chapter 11 while transferring his 3.3 acre $13 million seaside home to his wife for $100. Richard Fuld Jr. earned a BS from the University of Colorado at Boulder in 1969 and his MBA from New York University's Stern School of Business. He trained at the Naval reserves Officer Training Corps and later became an Airforce pilot for a short time. Mr. Fuld Jr. joined Lehman Brokerage firm since 1969 as an intern and worked his way to the top and was known to pick up the company out of crisis four times prior to this event. Mr. Fuld. Jr. mislead investors in the state of the company prior to the Lehman Brothers’ collapse and the 700 billion dollar stimulus bill made to counter that. He was criticized for not being transparent on his failing bank to his stakeholders. (Wikipedia, 2009) (Reuters, 2009)
The facts are both Tom Petters and Barnard Madoff used large-scale fraudulent activity through ponzi schemes. Richard Fuld Jr. and John Thain both were not transparent in the well-being of their companies; whereby, has not only caused bankrupt, but also bailout issues to their companies. All of these CEOs were knowledgeable and experienced in their line of work; however, all the companies they worked for eventually went bankrupted. Not one of these CEOs had a conscience for their misdeeds. All of them didn't think twice in providing their financial needs first. So in other words, the greediness or ‘I deserve it’ attitude, became their philosophy instead of promoting ethical concepts such as the following: honesty, where stealing and theft is not a part of their makeup; fairness where having justice, equality, and morality plays in the forefront and lastly, integrity, where one is whole and sound; thereby, would not knowingly harm customers, clients, employees and other competitors through deception. Instead, all of these executives promoted unethical acts for greed, allowed their company to go bankrupt without transparency and finally for a couple CEOs, their willingness was to continue their fraudulent activities at all costs. Not even the Federal Sentencing Guidelines for Organizations (FSGO) or the Sarbanes-Oxley Act without the assistance of whistle blowers could have stopped them even though the SEC investigated the companies in question at prior times. (Business Ethics, pp 60-63, 2008) (Ferrell, O. C., LeClair D.T., Ferrell, L., PDF, 1998)
One ethical issue is executive compensation. Both Mr. Thain and Mr. Fuld Jr. had an extraordinary payout for their positions; whereby, the justification for the payouts where scrutinized by both the the media and the Congressional Panel. Secondly, the ineffectiveness of SEC monitoring the fraudulent activities of Tom Petters and Bernie Madoff without the use of internal reporting done by whistle blowers. Thirdly, the missing concepts of character in each one of these CEOs somehow were inhibiting good habits to be ethical. As in the quote from Admiral Larson, “true leaders know that characters is not about never failing; it is about never quitting the effort to be ethical regardless of the cost” (josephsoninstitute.org, 2008)
The primary alternatives for CEOs should have strong personal character in which they have moral values and ethical reasoning while living it and treat others the way they want to be treated. These CEOs have to have a passion to do right; whereby, they're able to face challenges and make tough choices with an ethical point-of-view. They also have to be proactive in which they are continuously reviewing potential ethical issue and trying to resolve it. They also have to have the stakeholders interest in mind where they're transparent and communicating to all about the status of their corporation. And lastly, they need to be role models for ethical behavior and they need to embrace an ethical culture in order for others to follow. “Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy” – General H. Norman Schwarzkopf, 1991 Gulf War. To apply to The Gramm-Leach-Bliley Act and Sarbanes-Oxley Act and have the SEC infiltrate faster an no procrastinating. Gramm-Leach Bililey Act was passed so that companies keep financial records and backups of those records else they face criminal charges. I believe the SEC should be more expedient and more aggressive when they have
I chose unethical business practices as an ethical issue, because most of these CEOs, that I mentioned previously, are essentially immoral. It is so hurtful to people and stakeholders when the CEO endorse deceptive activities. For instance people lost as much as 33-50% of their life savings, because a couple of these CEOs, especially Bernie Madoff and Tom Petters, found a way to take advantage of their trust. The other two CEOs, Mr. Thain and Mr. Fauld Jr., avoided transparency affecting the well-being of their company's stakeholders. The main question that needs to be raised, is how these CEOs practiced their unethical behavior for so long. You wonder about the complacency of the company as a whole. Is it possible that the CEO’s honesty, fairness, and integrity were misjudged by the stakeholders who trusted their CEOs to manage their money or conduct their business in an ethical responsible manner? The answer to this question is an obvious yes! [The Techniques of Inner Leadership, pp, 5, 9, 12, 205, 206, 221, 225, 2003]
In this paper, I will show by examples, how the actions of these CEOs has negatively affected stakeholders and employees. This paper is about the illegal acts of the CEOs that either wrongfully use the tax payers money or deceived people thorough so call ponzi schemes. The CEOs should have followed the rules especially Richard Fuld Jr, who committed a transparency issue prior to Lehman Brothers declaring chapter 11 and was unable to reorganize with no money. John Thain, Merrill Lynch CEO, who also had a transparency issue, padded his office, paid bonuses to his executives and himself which were exorbitant prior to a merger. Bernie Madoff had a ponzi scheme all over the world worth $50 billion. A financial investigation by Harry Markapolos warned the SEC about Mr. Madoff in the prior 10 years and SEC didn't do anything until it was too late. Tom Petters was a local CEO who also used a ponzi scheme to line his pockets. A needed strategic tactic is in order for the Securities and Exchanges Commissions to have quicker data collection of these CEOs. [The Techniques of Inner Leadership, pp, 5, 9, 12, 205, 206, 221,225, 2003]
The #1 CEO Bernie Madoff, who, at the present time, has already admitted using a ponzi scheme in order to obtain large sums of money for fraudulent investments. He defrauded investors approximately 50 billion dollars in the largest swindle in Wall-Street history. Madoff had a degree in Political Science, and attended a short time to Brooklyn Law School, but didn't finish. Madoff is an American businessman and former NASDAQ stock exchange chairman. He served as the Chairman of the Board of Directors and Board of Governors on the NASD. He founded the Bernard L Madoff Investment Securities LLC in 1960 and was chairman since 2007. By the 1980s, Madoff Securities handled approximately 5 % of trading of over- the- counter stocks on the New York Stock Exchange. In 2000, Mr. Madoff took advantage of the internet as a vehicle to advance his trade. Madoff Securities became one of the top ranking trading and securities firms in the nation. Madoff was masterful in his scheme. His success with dealing with Non-profit charities, the elite, while investing their charitable funds, keeping secretive and the knowledge of tax law helped him keep his old ponzi scheme a secret for all this time. The charities lost millions in form of an affinity fraud. Mr. Madoff was not a new name for the Security Exchange Commission and regulatory authorities. He was investigated earlier in 1992 for reportedly being involved in illegal activity with Madoff Securities LLC before. It all started in 1992 when SEC invested one of Madoff’s feeder funds, Avellino & Bienes who didn’t invest in anyone, but Madoff. Bernie Madoff denied that he knew about the illegal activity so he wasn’t arrested. In May 1999, a financial analyst, Harry Markopolos complained to the SEC that ‘he questioned the legally of how profits were made per Madoff’s claim when using Madoff investment strategy.’ Then in 1999 and 2000, the SEC found that the firm was hiding customer orders from traders and then Madoff took corrective measures. The SEC made two inquires at that time; however, they were unable make connections to illegal activity. Again, in 2005, the SEC’s investigated Madoff and found him in violation of three activities which were as follows: ‘the strategy used for customer accounts, the requirement of brokers to obtain the best possible price for customer orders, and operating as an unregistered investment advisor.’ For this misdeed, he only received a hand slap and SEC findings were not made public. Also, in 2005, again ‘Markapolo sent the SEC a detailed 7 page memo entitled “The World’s Largest Hedge Fund is a Fraud”.’ The SEC has been accused in missing many red flags; whereby, ignoring tips that were sent to them and not probing more. When Barnie suggested to his sons to pay off 200 million dollars in assets owned by the firm two months ahead of schedule, the sons questioned their father about this, at which time, the father admitted that the whole asset management arm of Madoff Investment Securities was a ponzi scheme. It was at this time December 10, 2008 his sons told the FBI about their dad’s ponzi scheme. It was the beginning of the end of Madoff’s dynasty. At present, he is still out on bail for $10 million, and is on house arrest and wearing an ankle bracelet. However, as of March 6, 2009, Bernie has pleaded guilty and is still waiting for sentencing. (Wikipedia, 2009) (infoplease, 2009) (New York Times, 2009)
Another charismatic person, similar to Bernie Madoff is Tom Petters, CEO and Chairman of Petters Group Worldwide. Tom Petters only had a high school education. His company had offices in North America, South America, Asia, and Europe. He started out his career by selling electronics to college students. He eventually moved to Colorado to manage a chain of electronic stores that eventually went bankrupted. He moved back to Minnesota and incorporated a solo operation called Amicus Trading Wholesale Company which eventually was renamed to Petter's Company. Mr. Petters was known for buying and reviving ailing companies that included Sun Country Airlines and Polaroid Corporation. Some of his awards where Corporate Leader of the year, 2001, Distinguished Humanitarian Award, 2003, and Big Brother, Big Sister Odyssey award in 2005. In 2004, his son was murdered in Italy. Shortly after, Tom Petters established the John T. Petters Foundation and provided endowments to universities throughout the United States. One interesting endowments went to John T. Petters Center for Leadership, Ethics and Skill development in the Richard T. Farmer School of Business of Miami University.
Tom Petters, CEO of Petters Company of Minnetonka, Minnesota was indicted for fraud which he was allegedly in a large scale ponzi scheme; whereby, new investors’ money was used to pay older investor's return. Tom Petters was apparently fabricating documents in order to obtain billions of dollars in loan from various investors and this also included hedge funds. He would use falsified purchase orders to nonexistent purchases of merchandise. Apparently the story is he took a new lender's loans to pay off outstanding loans or role in new loans from the same lender. He also took the proceeds from these loans to subsidize his own life style or funneled the money from these loans into his own company. The US Attorney's Office charges Petter with wire and mail fraud, money laundering, and obstruction of justice. Tom Petters may end up in prison for the seven counts of fraud which brings twenty years imprisonment for each count. To this date, Petters is being jailed without bond until his pending trial. Since his arrest, several Petters entities including two companies are filing for bankruptcy. (Hudgefund Law Report, 2009) (UofM, 2008)
John A. Thain is Chairman and CEO of Merril Lynch Company and was on the NYSE EuroNext Inc from January 2004, as well as Co-CEO of Goldman Sachs Group Inc. He received a BS degree from Massachusetts Institute of Technology, and a MBA from Harvard University. He is a member of the MIT Corporation, the Dean's Advisory Council – MIT/Sloan School of Management, INSEAD (US National Advisory Board), the James Madison Council of Library of Management, the US Stock Exchange prior to Merrill Lynch. John Thain was designed to become a present of the global banking, securities, and wealth management of the merger, but mysteriously resigned. Bank of America lost interest in Mr. Thain when he had mounting losses at Merrill. Since December 2008, he wanted a bonus of 10 million dollars for compensation on the last day before the merger, yet never obtained that bonus. When he went to Merrill Lynch, he was given a 15 million dollar sign-on bonus, 50 million dollars a year and then based on the company’s stock price, would be paid 120 million dollars a year. In 2007, Mr. Thain was the best paid out of the S&P 500. After the Bank of America resisted his request of 10 million dollars for merger compensation, he dropped his request in December 2008. When John Thain left, other executives left as well including brokerage chief Bob McCann, investment head Greg Fleming. Mr. Thain refurbished his office at a time Merrill Lynch was failing and along with the upcoming merger with Bank of America. He also paid himself and all his top executives a cushy bonus prior to leaving. He wasn’t transparent about his company’s collapse. The company was accused of artificially inflating the value of the Collateralized Debt Obligations (CDO) and other assets backed by the subprime mortgages; whereby, the company issued false and misleading statements about the bonds. (Wikipedia, 2009)
Richard Fuld Jr. was a CEO of Lehman Brothers who could face civil lawsuits for overseeing the bank’s collapse in Chapter 11 while transferring his 3.3 acre $13 million seaside home to his wife for $100. Richard Fuld Jr. earned a BS from the University of Colorado at Boulder in 1969 and his MBA from New York University's Stern School of Business. He trained at the Naval reserves Officer Training Corps and later became an Airforce pilot for a short time. Mr. Fuld Jr. joined Lehman Brokerage firm since 1969 as an intern and worked his way to the top and was known to pick up the company out of crisis four times prior to this event. Mr. Fuld. Jr. mislead investors in the state of the company prior to the Lehman Brothers’ collapse and the 700 billion dollar stimulus bill made to counter that. He was criticized for not being transparent on his failing bank to his stakeholders. (Wikipedia, 2009) (Reuters, 2009)
The facts are both Tom Petters and Barnard Madoff used large-scale fraudulent activity through ponzi schemes. Richard Fuld Jr. and John Thain both were not transparent in the well-being of their companies; whereby, has not only caused bankrupt, but also bailout issues to their companies. All of these CEOs were knowledgeable and experienced in their line of work; however, all the companies they worked for eventually went bankrupted. Not one of these CEOs had a conscience for their misdeeds. All of them didn't think twice in providing their financial needs first. So in other words, the greediness or ‘I deserve it’ attitude, became their philosophy instead of promoting ethical concepts such as the following: honesty, where stealing and theft is not a part of their makeup; fairness where having justice, equality, and morality plays in the forefront and lastly, integrity, where one is whole and sound; thereby, would not knowingly harm customers, clients, employees and other competitors through deception. Instead, all of these executives promoted unethical acts for greed, allowed their company to go bankrupt without transparency and finally for a couple CEOs, their willingness was to continue their fraudulent activities at all costs. Not even the Federal Sentencing Guidelines for Organizations (FSGO) or the Sarbanes-Oxley Act without the assistance of whistle blowers could have stopped them even though the SEC investigated the companies in question at prior times. (Business Ethics, pp 60-63, 2008) (Ferrell, O. C., LeClair D.T., Ferrell, L., PDF, 1998)
One ethical issue is executive compensation. Both Mr. Thain and Mr. Fuld Jr. had an extraordinary payout for their positions; whereby, the justification for the payouts where scrutinized by both the the media and the Congressional Panel. Secondly, the ineffectiveness of SEC monitoring the fraudulent activities of Tom Petters and Bernie Madoff without the use of internal reporting done by whistle blowers. Thirdly, the missing concepts of character in each one of these CEOs somehow were inhibiting good habits to be ethical. As in the quote from Admiral Larson, “true leaders know that characters is not about never failing; it is about never quitting the effort to be ethical regardless of the cost” (josephsoninstitute.org, 2008)
The primary alternatives for CEOs should have strong personal character in which they have moral values and ethical reasoning while living it and treat others the way they want to be treated. These CEOs have to have a passion to do right; whereby, they're able to face challenges and make tough choices with an ethical point-of-view. They also have to be proactive in which they are continuously reviewing potential ethical issue and trying to resolve it. They also have to have the stakeholders interest in mind where they're transparent and communicating to all about the status of their corporation. And lastly, they need to be role models for ethical behavior and they need to embrace an ethical culture in order for others to follow. “Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy” – General H. Norman Schwarzkopf, 1991 Gulf War. To apply to The Gramm-Leach-Bliley Act and Sarbanes-Oxley Act and have the SEC infiltrate faster an no procrastinating. Gramm-Leach Bililey Act was passed so that companies keep financial records and backups of those records else they face criminal charges. I believe the SEC should be more expedient and more aggressive when they have
Sunday, March 26, 2000
In this assignment, I have chosen to do the case study “Verizon: The Legacy of WorldCom and MCI” on pg 351 – 356 of Business Ethics: Ethical Decision Making and Cases. In the following paragraphs, I will address the following four questions: a.) What are the factors that caused WorldCom to crumble? b.) Why did MCI bail out WorldCom? c.) Why did Verizon and Qwest go after MCI? d.) Are there any ethical concerns in the future for Verizon, Qwest, and others?
The factors that caused WorldCom to crumble were illegal accounting practices by finance CFO Scott Sullivan, improper transparency of the well being of the company, and the improper use of company stock by unqualified, CEO Benard Ebbers in order to obtain a controversial loan worth $408 million dollars. CEO Bernard Ebbers also borrowed $2.65 billion from multiple banks which was supposed to be paid in one year; instead WorldCom used the entire amount in six weeks before the banks had a complete discloser. Even when WorldCom was audited by an outside auditor, the illegal activities either were not recognized, or for whatever reason, auditors assumed that WorldCom’s accounting practices were within legal guidelines; however, per the SEC inquiries, the outside auditor’s reply was questionable in its failure to recognize illegal accounting activities in WorldCom. The scenario broke down as following: WorldCom was paying its expenses and attributing that expense to another asset; whereby, not applying it to stockholders equity; which in essence, showed no decrease in net income when it should have. Normally, an accounting formula is assets [cash, land, building(s)] has to equal liabilities [what you owe] , plus stockholder’s equity [how much the company is worth to investors] . Due to their improper accounting practices, WorldCom was unable to pay their 7.7 billion dollars in debt and finally filed for Chapter 11 bankruptcy. The most interesting concept that was brought out in the failing WorldCom investigation was that the Board of Directors were bending to Bernard Ebbers demands and were not looking out for the shareholders; therefore, stock prices for the shareholders have dropped immensely to only 9 cents a share. It appears to me, another point that was brought out by the investigation was some of the accounting employees had a ‘differential association’ like syndrome; whereby, in this case the employees in the accounting department, learned unethical behavior by their fellow associates and used loyalty for superiors as a standard for their behavior. In the final conclusion, the whole ordeal with WorldCom had shattered trust of the shareholders and other stakeholders. (Business Ethics, pg 182, 2008) (Business Ethics, pp 354-355, 2008) (Wikipedia, 2009)
The reason why MCI bailed out WorldCom is initially MCI was subsidiary of WorldCom; whereby, it was only connected by its parent company which was WorldCom and it could still survive, because of Citigroup. MCI was WorldCom’s long distance giant subsidiary. MCI was still in service when WorldCom filed for Chapter 11, thereby, stayed afloat, with the support from Citigroup. To eliminate any uncertainties, Citigroup paid $2.65 billion to alleviate any protracted litigations. Citigroup’s CEO also created a global ‘compliance’ function and had a tight rein on stock ownership rules by making senior managers own 25% of the company’s shares. They also created an ethics hotline for staff issues (Business Ethics, pp 354-355, 2008) (Wikipedia, 2009)
Verizon and Qwest were competing for MCI merger, because MCI had the telecommunication technology with Fortune 500 companies and the federal government; however, Verizon won the merger agreement. Verizon was dominating in the Northeast. Verizon was already larger and in better shape than Qwest; whereby, this knowledge for compatibility was very alluring to MCI. To MCI’s advantage, it owned a portion of Internet backbone via Tier 1 ISP UUNET which in itself was very complimentary to Verizon. Verizon was well aware that customers demanded different high-tech products and services. The solution for Verizon was to buy MCI. Verizon was only a regional provider, but MCI would boost business with corporate clients with a sales force as competitive as AT&T. MCI brings a large residential customer base as well as cable TV services. (Business Ethics, pp 355-356, 2008) (MSNBC, 2005) (MSN Money, 2005)
The question that may be asked is whether there is any ethical concerns in the future. For starters, there are now just five major players for phone service which includes Verizon, Qwest, AT&T, Sprint and a newcomer Vontage. So far, competition among the five is good for the consumer, price-wise. One ethical issue that Verizon has already touch base with is allowing National Security Agency to obtain customer data. To some people this may be considered an invasion to their privacy. To others, they have nothing to fear, because they feel that it needs to be done to keep our homeland safe. This ethical issue is debatable; however, Verizon has experienced civil lawsuits arguing this issue. Another issue for Verizon is some employees are concerned about fair compensation. At the present, Verizon deducts sales commission when the employee fails to persuade directory advertisers to renew accounts. Verizon also deducts employees’ wages if the company has to credit advertisers, which is obviously out of the employees’ control. The outcome of this issue is the employees are now fighting back with a lawsuit. For Vontage, having based its business on Voice-over-IP, there are ethical concerns on packet sniffing and TCP/IP hijacking (both eavesdropping) which can be avoided with encryption streams. The Federal Communication Commission would enforce that if need be. The state-of-the-art G.729 speech codec can be in service over a regular phone line. (Business Ethics, pp 355-356, 2008) (PCworld, 2007) (Vocal, 2009) (ZDnet UK, 2003)
I believe the major point that I acknowledge in this assignment, is ethical issues will eventually arise when CEOs believe that their company can survive, be profitable, and not be accountable even though their ethical company’s culture is very tainted or non-existent. I believe it breeds corruption. Another point is mergers, in itself, is not a necessary evil, rather it can help a company become more competitive and profitable for the company and their stakeholder. It is only when the competition narrows to a limited few that it becomes dangerous to all of us, because now we’re entering the fixed-price-zone without competition, limits choices and may create dissatisfaction among its stakeholders.
References
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Differential Association In Business Ethics
Ethical Decision Making and Cases (pg 182). Boston, New York: Houghton Mifflin
Company
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). MCI Becomes WorldCom In Business Ethics
Ethical Decision Making and Cases (pp. 354-355). Boston, New York: Houghton Mifflin
Company
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Verizon in the Future In Business Ethics
Ethical Decision Making and Cases (pp. 355-356). Boston, New York: Houghton Mifflin
Company
Anonymous (2009). MCI Communications
Retrieved February 29, 2009, from Wikipedia website:
http://en.wikipedia.org/wiki/MCI_Communications
Shrader, K. (2006, May 16). NSA denied access to Qwest files by ex-CEO
Retrieved February 29, 2009, from Wikipedia website:
http://findarticles.com/p/articles/mi_qn4188/is_20060513/ai_n16369663?tag=content;col1
Anonymous (2005, February 14). Verizon to buy MCI for $6.7 billion
Retrieved February 29, 2009, from MSNBC website:
http://www.msnbc.msn.com/id/6964419/
Anonymous (2005, February 14). Verizon steals MCI away from Qwest
Retrieved February 29, 2009, from Money Central website:
https://moneycentral.msn.com/content/invest/extra/P109480.asp
Anonymous (2009). G.729 Speech Codec
Retrieved February 29, 2009, from Vocal website:
http://www.vocal.com/data_sheets/g729.html
Dunn, J. (2007, November 23) Expert scares world with VoIP hacking proof
Retrieved February 29, 2009, from PC World New Zealand website:
http://pcworld.co.nz/pcworld/pcw.nsf/feature/19161B2A5CDFF8E2CC25739B006A7693
McCullagh, D. (2007, November 23) FBI seeks power to eavesdrop on Net
Retrieved July 23, 2003, from ZDnet UK website:
http://news.zdnet.co.uk/security/0,1000000189,39115339,00.htm
The factors that caused WorldCom to crumble were illegal accounting practices by finance CFO Scott Sullivan, improper transparency of the well being of the company, and the improper use of company stock by unqualified, CEO Benard Ebbers in order to obtain a controversial loan worth $408 million dollars. CEO Bernard Ebbers also borrowed $2.65 billion from multiple banks which was supposed to be paid in one year; instead WorldCom used the entire amount in six weeks before the banks had a complete discloser. Even when WorldCom was audited by an outside auditor, the illegal activities either were not recognized, or for whatever reason, auditors assumed that WorldCom’s accounting practices were within legal guidelines; however, per the SEC inquiries, the outside auditor’s reply was questionable in its failure to recognize illegal accounting activities in WorldCom. The scenario broke down as following: WorldCom was paying its expenses and attributing that expense to another asset; whereby, not applying it to stockholders equity; which in essence, showed no decrease in net income when it should have. Normally, an accounting formula is assets [cash, land, building(s)] has to equal liabilities [what you owe] , plus stockholder’s equity [how much the company is worth to investors] . Due to their improper accounting practices, WorldCom was unable to pay their 7.7 billion dollars in debt and finally filed for Chapter 11 bankruptcy. The most interesting concept that was brought out in the failing WorldCom investigation was that the Board of Directors were bending to Bernard Ebbers demands and were not looking out for the shareholders; therefore, stock prices for the shareholders have dropped immensely to only 9 cents a share. It appears to me, another point that was brought out by the investigation was some of the accounting employees had a ‘differential association’ like syndrome; whereby, in this case the employees in the accounting department, learned unethical behavior by their fellow associates and used loyalty for superiors as a standard for their behavior. In the final conclusion, the whole ordeal with WorldCom had shattered trust of the shareholders and other stakeholders. (Business Ethics, pg 182, 2008) (Business Ethics, pp 354-355, 2008) (Wikipedia, 2009)
The reason why MCI bailed out WorldCom is initially MCI was subsidiary of WorldCom; whereby, it was only connected by its parent company which was WorldCom and it could still survive, because of Citigroup. MCI was WorldCom’s long distance giant subsidiary. MCI was still in service when WorldCom filed for Chapter 11, thereby, stayed afloat, with the support from Citigroup. To eliminate any uncertainties, Citigroup paid $2.65 billion to alleviate any protracted litigations. Citigroup’s CEO also created a global ‘compliance’ function and had a tight rein on stock ownership rules by making senior managers own 25% of the company’s shares. They also created an ethics hotline for staff issues (Business Ethics, pp 354-355, 2008) (Wikipedia, 2009)
Verizon and Qwest were competing for MCI merger, because MCI had the telecommunication technology with Fortune 500 companies and the federal government; however, Verizon won the merger agreement. Verizon was dominating in the Northeast. Verizon was already larger and in better shape than Qwest; whereby, this knowledge for compatibility was very alluring to MCI. To MCI’s advantage, it owned a portion of Internet backbone via Tier 1 ISP UUNET which in itself was very complimentary to Verizon. Verizon was well aware that customers demanded different high-tech products and services. The solution for Verizon was to buy MCI. Verizon was only a regional provider, but MCI would boost business with corporate clients with a sales force as competitive as AT&T. MCI brings a large residential customer base as well as cable TV services. (Business Ethics, pp 355-356, 2008) (MSNBC, 2005) (MSN Money, 2005)
The question that may be asked is whether there is any ethical concerns in the future. For starters, there are now just five major players for phone service which includes Verizon, Qwest, AT&T, Sprint and a newcomer Vontage. So far, competition among the five is good for the consumer, price-wise. One ethical issue that Verizon has already touch base with is allowing National Security Agency to obtain customer data. To some people this may be considered an invasion to their privacy. To others, they have nothing to fear, because they feel that it needs to be done to keep our homeland safe. This ethical issue is debatable; however, Verizon has experienced civil lawsuits arguing this issue. Another issue for Verizon is some employees are concerned about fair compensation. At the present, Verizon deducts sales commission when the employee fails to persuade directory advertisers to renew accounts. Verizon also deducts employees’ wages if the company has to credit advertisers, which is obviously out of the employees’ control. The outcome of this issue is the employees are now fighting back with a lawsuit. For Vontage, having based its business on Voice-over-IP, there are ethical concerns on packet sniffing and TCP/IP hijacking (both eavesdropping) which can be avoided with encryption streams. The Federal Communication Commission would enforce that if need be. The state-of-the-art G.729 speech codec can be in service over a regular phone line. (Business Ethics, pp 355-356, 2008) (PCworld, 2007) (Vocal, 2009) (ZDnet UK, 2003)
I believe the major point that I acknowledge in this assignment, is ethical issues will eventually arise when CEOs believe that their company can survive, be profitable, and not be accountable even though their ethical company’s culture is very tainted or non-existent. I believe it breeds corruption. Another point is mergers, in itself, is not a necessary evil, rather it can help a company become more competitive and profitable for the company and their stakeholder. It is only when the competition narrows to a limited few that it becomes dangerous to all of us, because now we’re entering the fixed-price-zone without competition, limits choices and may create dissatisfaction among its stakeholders.
References
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Differential Association In Business Ethics
Ethical Decision Making and Cases (pg 182). Boston, New York: Houghton Mifflin
Company
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). MCI Becomes WorldCom In Business Ethics
Ethical Decision Making and Cases (pp. 354-355). Boston, New York: Houghton Mifflin
Company
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Verizon in the Future In Business Ethics
Ethical Decision Making and Cases (pp. 355-356). Boston, New York: Houghton Mifflin
Company
Anonymous (2009). MCI Communications
Retrieved February 29, 2009, from Wikipedia website:
http://en.wikipedia.org/wiki/MCI_Communications
Shrader, K. (2006, May 16). NSA denied access to Qwest files by ex-CEO
Retrieved February 29, 2009, from Wikipedia website:
http://findarticles.com/p/articles/mi_qn4188/is_20060513/ai_n16369663?tag=content;col1
Anonymous (2005, February 14). Verizon to buy MCI for $6.7 billion
Retrieved February 29, 2009, from MSNBC website:
http://www.msnbc.msn.com/id/6964419/
Anonymous (2005, February 14). Verizon steals MCI away from Qwest
Retrieved February 29, 2009, from Money Central website:
https://moneycentral.msn.com/content/invest/extra/P109480.asp
Anonymous (2009). G.729 Speech Codec
Retrieved February 29, 2009, from Vocal website:
http://www.vocal.com/data_sheets/g729.html
Dunn, J. (2007, November 23) Expert scares world with VoIP hacking proof
Retrieved February 29, 2009, from PC World New Zealand website:
http://pcworld.co.nz/pcworld/pcw.nsf/feature/19161B2A5CDFF8E2CC25739B006A7693
McCullagh, D. (2007, November 23) FBI seeks power to eavesdrop on Net
Retrieved July 23, 2003, from ZDnet UK website:
http://news.zdnet.co.uk/security/0,1000000189,39115339,00.htm
Friday, March 24, 2000
moral philosophy
In this paper, I am going to address how a person’s individual moral philosophy influences their business decisions. Secondly, I will compare and contrast the two moral philosophies, teleology and deontology.
I believe of all the values that a person may inherit as their own, the one that stands out should be integrity, because without one’s integrity; all else fails. What integrity means is that the person takes the responsibility for his/her actions, right or wrong. In such jobs as firemen or nuclear engineers, there is no room for error and their decision-making skills have to be top notch. They need to have an ethical character in order to protect those around them such as individuals, environment, coworkers and society.
Their moral philosophy would rely on virtual ethics, such as, trust, self control, fairness, empathy truthfulness, gratitude, learning, civility, and moral leadership. In business activities, a quality such as trust is an aptitude for doing what you said you’re going to do. This promotes reliability in expectations that can be viewed as reliable. Self control is avoiding instant gratification for oneself in order to obtain long-term benefits. Empathy is the ability to share feelings of others; thereby, enabling to anticipate the needs of the customer or others. Fairness is to cultivate the balance in doing the right thing in smaller issues which can eventually promote long-term business relationships. Truthfulness is putting emphasis on the facts and correct information vs. deception. Gratitude knows that one does not succeed alone. Civility is respect, politeness, and consideration for others in order to be culturally correct; thereby increasing trust. And finally moral leadership, the contentment that one acknowledges about him/herself that provides behavior based on virtues. In summary, one could assume that integrity, character, personal virtues promotes good business sense as far as taking responsibility for society’s well being, as well being of the company he/she works for. [Business Ethics, pg 158, 2008]
There are two moral philosophies, teleology and deontology that one may use to evaluate activity of his or her ethical actions. Teleology is an act that is morally right if it produces some desired results. Consequentialist is a today's form of teleology which hold “the consequences whereby the end justifies the means.” a particular action that forms a basis for any valid moral judgment for action; whereby, the weight given to the consequences and evaluating the rightness and wrongness of the action.
A consequentialist is also a utilitarian. A utilitarian is also concerned with consequences; however, the utilitarian searches for the greatest good for the greatest number of people. An example of rule utilitarian would be philosophers David Hume, Jeremy Bentham, William Godwin, James Mill, John Stuart Mill, Henry Sidgwick, R. M. Hare, and Peter Singer because he determines behavior on the basis of principles. Rule utilitarianism would calculate the costs and benefits in society at large if everyone acted in a particular way. Ford Motor Company of the 1960s was a utilitarian company. The Ford Motor Company used that cost benefits over safety when they knew the Pinto’s fuel tank had the potential of exploding when rear ended and manufactured it anyway. [Business Ethics, pp 150-153, 2008] [raifoundation, pdf, 2009]
Deontology refers to moral philosophies that focuses on the rights of individuals and on the intentions associated with a particular behavior rather than on its consequences. Rule deontologists believe that rules dominate decision making; so his/her team is just as important such as a defense company working for the Pentagon. Deos is the Greek work for duty. Rule deontology is to carry out the duty according to the rules created even if the conclusion is wrong. Act deontologists believe that rules are useless from particular experiences and that that deciding on particular situations as they show up is best. Act deontologist differ on what how their judgments are made out. It promotes the greatest balance of good vs. bad. An example of a deontologist would be the automobile manufacturer, Hyundai, located in South Korea, who is conscientious in making a economical car with safety in mind. A 2007 Santa Fe or Veracruz was two cars which had a five star rating from the United States National Highway Traffic Safety Administration. An example of nonconsequentialist where rightness is focused on the individual, not society is the story of Admiral Charles Larson teaches his new midshipmen about ethics. The story goes where an Admiral ut his career at risk when he persisted in telling the truth about the design failures of magnetic torpedoes. This man used truth over consequences which ultimately relieved him of his command as a submarine lieutenant commander. This Admiral eventually became a commander to another submarine and received a Medal of Honor by Congress in 1944 for destroying a Japanese Convoy. [Business ethics, pp 153-156, 2008] [josephsoninstitute, 2009] [Streetdirectory, 2007]
A moral philosophy is based on how people make their ethical decisions. Teleologist and deontologist have their own advantages and disadvantages that benefits people in different industries. It is a choice they make based on their working principles. Most people do one or the other based on the perplexity of problem solving situations for which their ethical values are put into effect to get a desire outcome.
References
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Teleology. In Business
Ethics - Ethical Decision Making and Cases (pp. 150-153).
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Teleology. In Business
Ethics - Ethical Decision Making and Cases (pp. 153-155).
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). An Overview of Business Ethics. In Business
Ethics - Ethical Decision Making and Cases (pg. 158).
Boston, New York: Houghton Mifflin Company.
Anonymous (2009). Wildland firefighting values: duty, respect, integrity
Retrieved February 15, 2009, from Talkingproud website:
http://www.talkingproud.us/NewsClip072703.html
Anonymous (2009). Utilitarianism – It’s Meaning and Nature [data file: PDF]
Retrieved February 15, 2009, from Rai University website:
http://www.rocw.raifoundation.org/management/bba/businessethics/lecture-notes/lecture-06.pdf
Thomson, J. (2007). Hyundai receives excellent safety ratings
Retrieved February 15, 2009, from Streetdirectory website:
http://www.streetdirectory.com/travel_guide/53893/car_focus/hyundai_receives_excellent_safety_ratings.html
Anonymous (2009). The Power of Character: Training Leaders by Admiral Charles Larson
Retrieved February 15, 2009, from Josphsoninstitute.org website:
http://josephsoninstitute.org/business/resources/poc_larson_training-leaders.html
Anonymous (2009). Utilitarian Philosophers
Retrieved February 15, 2009, from Utilitarian.net website:
http://www.utilitarian.net
I believe of all the values that a person may inherit as their own, the one that stands out should be integrity, because without one’s integrity; all else fails. What integrity means is that the person takes the responsibility for his/her actions, right or wrong. In such jobs as firemen or nuclear engineers, there is no room for error and their decision-making skills have to be top notch. They need to have an ethical character in order to protect those around them such as individuals, environment, coworkers and society.
Their moral philosophy would rely on virtual ethics, such as, trust, self control, fairness, empathy truthfulness, gratitude, learning, civility, and moral leadership. In business activities, a quality such as trust is an aptitude for doing what you said you’re going to do. This promotes reliability in expectations that can be viewed as reliable. Self control is avoiding instant gratification for oneself in order to obtain long-term benefits. Empathy is the ability to share feelings of others; thereby, enabling to anticipate the needs of the customer or others. Fairness is to cultivate the balance in doing the right thing in smaller issues which can eventually promote long-term business relationships. Truthfulness is putting emphasis on the facts and correct information vs. deception. Gratitude knows that one does not succeed alone. Civility is respect, politeness, and consideration for others in order to be culturally correct; thereby increasing trust. And finally moral leadership, the contentment that one acknowledges about him/herself that provides behavior based on virtues. In summary, one could assume that integrity, character, personal virtues promotes good business sense as far as taking responsibility for society’s well being, as well being of the company he/she works for. [Business Ethics, pg 158, 2008]
There are two moral philosophies, teleology and deontology that one may use to evaluate activity of his or her ethical actions. Teleology is an act that is morally right if it produces some desired results. Consequentialist is a today's form of teleology which hold “the consequences whereby the end justifies the means.” a particular action that forms a basis for any valid moral judgment for action; whereby, the weight given to the consequences and evaluating the rightness and wrongness of the action.
A consequentialist is also a utilitarian. A utilitarian is also concerned with consequences; however, the utilitarian searches for the greatest good for the greatest number of people. An example of rule utilitarian would be philosophers David Hume, Jeremy Bentham, William Godwin, James Mill, John Stuart Mill, Henry Sidgwick, R. M. Hare, and Peter Singer because he determines behavior on the basis of principles. Rule utilitarianism would calculate the costs and benefits in society at large if everyone acted in a particular way. Ford Motor Company of the 1960s was a utilitarian company. The Ford Motor Company used that cost benefits over safety when they knew the Pinto’s fuel tank had the potential of exploding when rear ended and manufactured it anyway. [Business Ethics, pp 150-153, 2008] [raifoundation, pdf, 2009]
Deontology refers to moral philosophies that focuses on the rights of individuals and on the intentions associated with a particular behavior rather than on its consequences. Rule deontologists believe that rules dominate decision making; so his/her team is just as important such as a defense company working for the Pentagon. Deos is the Greek work for duty. Rule deontology is to carry out the duty according to the rules created even if the conclusion is wrong. Act deontologists believe that rules are useless from particular experiences and that that deciding on particular situations as they show up is best. Act deontologist differ on what how their judgments are made out. It promotes the greatest balance of good vs. bad. An example of a deontologist would be the automobile manufacturer, Hyundai, located in South Korea, who is conscientious in making a economical car with safety in mind. A 2007 Santa Fe or Veracruz was two cars which had a five star rating from the United States National Highway Traffic Safety Administration. An example of nonconsequentialist where rightness is focused on the individual, not society is the story of Admiral Charles Larson teaches his new midshipmen about ethics. The story goes where an Admiral ut his career at risk when he persisted in telling the truth about the design failures of magnetic torpedoes. This man used truth over consequences which ultimately relieved him of his command as a submarine lieutenant commander. This Admiral eventually became a commander to another submarine and received a Medal of Honor by Congress in 1944 for destroying a Japanese Convoy. [Business ethics, pp 153-156, 2008] [josephsoninstitute, 2009] [Streetdirectory, 2007]
A moral philosophy is based on how people make their ethical decisions. Teleologist and deontologist have their own advantages and disadvantages that benefits people in different industries. It is a choice they make based on their working principles. Most people do one or the other based on the perplexity of problem solving situations for which their ethical values are put into effect to get a desire outcome.
References
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Teleology. In Business
Ethics - Ethical Decision Making and Cases (pp. 150-153).
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Teleology. In Business
Ethics - Ethical Decision Making and Cases (pp. 153-155).
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). An Overview of Business Ethics. In Business
Ethics - Ethical Decision Making and Cases (pg. 158).
Boston, New York: Houghton Mifflin Company.
Anonymous (2009). Wildland firefighting values: duty, respect, integrity
Retrieved February 15, 2009, from Talkingproud website:
http://www.talkingproud.us/NewsClip072703.html
Anonymous (2009). Utilitarianism – It’s Meaning and Nature [data file: PDF]
Retrieved February 15, 2009, from Rai University website:
http://www.rocw.raifoundation.org/management/bba/businessethics/lecture-notes/lecture-06.pdf
Thomson, J. (2007). Hyundai receives excellent safety ratings
Retrieved February 15, 2009, from Streetdirectory website:
http://www.streetdirectory.com/travel_guide/53893/car_focus/hyundai_receives_excellent_safety_ratings.html
Anonymous (2009). The Power of Character: Training Leaders by Admiral Charles Larson
Retrieved February 15, 2009, from Josphsoninstitute.org website:
http://josephsoninstitute.org/business/resources/poc_larson_training-leaders.html
Anonymous (2009). Utilitarian Philosophers
Retrieved February 15, 2009, from Utilitarian.net website:
http://www.utilitarian.net
the Federal Sentencing Guidelines for Organizations and Sarbanes-Oxley Act
The first section includes three key dimensions of ethical compliance in the areas of competition, safety, and environment which are voluntary boundary, core practice, and mandated boundary along with examples. Second, I will give a brief summary of the Sarbanes-Oxley Act and details on its eleven titles. Lastly, I will explain how the Federal Sentencing Guidelines for Organizations (FSGO) keeps organizations ethical.
1.) Voluntary Practices: This is where management initiates boundaries of conduct which includes beliefs, values, voluntary polices and voluntary contractual obligations. An example of this is would be giving back to the community by investing in a piece of land for public usage such as a park that the surrounding community could enjoy, or providing employees with a good health coverage regardless of work hours (part-time vs. full time). (Business Ethics, pg 90-91, 2008)
2.) Core practices: Are usually best practices that are documented that ensure compliance in business. This usually includes legal requirements, industry self-regulation, and social implications. An example of a self-regulatory body would be Better Business Bureau which provides direction for solving customer disputes and reviews advertising cases. The board of directors is usually the people accountable for core practices and is required to oversee ethics and compliance of that particular business. (Business Ethics, pg 91, 2008)
3.) Mandated boundary is the external boundary of conduct. This includes laws, rules and regulations that can affect a company. These laws and regulations are established to protect the stakeholders. And usually these laws can change within time, because these laws encompass regulations that are acceptable by society at that certain time; therefore, what is acceptable during one era, may be changed tomorrow, because of different views by the courts and society. There are laws and regulations established by federal jurisdiction/Congress and state legislation; these laws encourage competition and protection for the consumers, workers and the environment. For any business/organization, ethical and legal standards need to be enforced in order to reduce legal risk and promote ethical standards in today’s society. (Business Ethics, pg 93, 2008) An example of laws promoting safety is OSHA. Laws that promote equality would be The Equal Pay Act of 1963 or Americans with Disabilities Act of 1990. Finally, an example of laws protecting the environment would be regulations of the Environment Protection Agency (EPA) which relates to air, water, and land pollution; this would include the clean air act that many establishments have now; recycling of computer parts, and cleaning up toxic waste caused by businesses, such as Minnesota Mining and Manufacturing Company (3M) dumping perfluorochemical waste in Woodbury Site or the Oakdale Dump in the past. [Minnesota Department of Health, 2005, 2007]
In 2002, the Sarbanes-Oxley Act was implemented to create a federal system that oversees business accounting practices. This law makes securities fraud a criminal offense and establishes harsher penalties for business fraud. This law also created an accounting oversight board that registers, established standards for audits, inspects, investigates, and enforces compliance for accounting practices in businesses. It also requires corporations to establish a code of ethics for financial reporting and develop greater transparency in financial reporting to its investors and stakeholders. This law also requires top management to sign off on their firm’s financial status and hold them responsible for any misrepresentation of their company's financial position through fines and perhaps incarnation. 'It also requires the executives of any company disclose stock sales immediately and prohibits companies from making loans to top executives' This law was established , because of all the deception and fraudulent activity done by businesses, that in itself, created a great distrust in their stakeholders. This act/law was put into effect to gain back the confidence of the stakeholders. A couple examples of companies that did fraudulent activities are Enron and WorldCom. (Business Ethics, pg 15, 102-108, 2008)
There are eleven titles :
Title I, Public Company Accounting Oversight Board – It provides auding services and oversight as stated as above [Sarbanes-Oxley, 2009]
Title II is to establish standards for external auditors independence and limits conflicts of interest. It addresses new auditor, approval requirements, audit partner rotation, and auditor reporter requirements. [Sarbanes-Oxley, 2009]
Title III is corporate responsibility for accuracy and completeness of corporate financials. [Sarbanes-Oxley, 2009]
Title IV is enhanced financial exposures. This includes reporting requirements for financial transactions, off balance transactions, stock transactions of corporate officers, and internal control to ensure accuracy. [Sarbanes-Oxley, 2009]
Title V describes measures to restore investors confidences. [Sarbanes-Oxley, 2009]
Title VI defines practices and conditions to restore investors confidence and security authority to censor or bar security professionals from practice. [Sarbanes-Oxley, 2009]
Title VII requires Comptroller General and Security Executive Commission to study and report their findings. [Sarbanes-Oxley, 2009]
Title VIII is the Corporate and Criminal Fraud Act of 2002 which describes criminal activities for fraudulent manipulation, destruction of financial records. [Sarbanes-Oxley, 2009]
Title IX is the White Collar Crime Penalty Enhancement Act of 2002 which increases criminal penalties created by white collar crime and conspiracies. [Sarbanes-Oxley, 2009]
Title X states that no matter what, the CEO must sign the company tax return. [Sarbanes-Oxley, 2009]
Title XI is a Corporate Accountability Act of 2002 was created to seek out corporate fraud and record tampering and charge the act of criminal offices. [Sarbanes-Oxley, 2009]
One disadvantage of this act is that the cost of compliance is high; therefore, some small businesses and companies outside the USA are opting out of the US market. [House.gov, 2005]
Congress passed the FSGO in 1991 in order for organizations to develop and promote ethical and legal compliance programs; whereby, these programs need to be continuously monitored and updated. The FSGO also made public the guidelines to govern sentencing for offenders by the federal judges. Penalties for sentencing are based on a point system for determining the severity of the offense.
‘The guidelines encourage organizations to develop ‘effective programs to prevent and detect violations of law’, and prescribe seven ‘types of steps’ that should be included in an effective program. Where organizations demonstrate an effort to implement the seven steps, lower sanctions are levied by Federal Judges.’ (Ethics.org, 2008)
The synopsis of this FSGO puts the responsibly of the program effectiveness directly ‘on the shoulders of the firm’s leadership’ Those companies who participate also have the responsibility to collect data and measure the impact on how well employees respond to various ethical and legal risks. [Business Ethics, pg 110, 2008]
Like the Wild West in the past, laws and regulations were passed in order to get crime under control. This is true with businesses that produces fraudulent activities and have a mindset they can get by with it. The Federal Guidelines for Organizations and the Sarbanes-Oxley Act are watch-dogs for the stakeholders, community where the business resides, and the environment of our country. These laws and regulations provide businesses with incentives to take a hard look at their ethical issues and be responsible for their actions. Like I said in the papers before “you do the crime, you do the time”.
Resources
Anonymous (2007, Feburary). 3M Woodbury Site
Retrieved January 31, 2009, from Health Department of Minnesota website:
http://www.health.state.mn.us/divs/eh/hazardous/sites/washington/3Mwoodbury.html
Anonymous (2005, June). 3M - Oakdale Disposal Site: Perfluorochemicals
Retrieved January 31, 2009, from Health Department of Minnesota website:
http://www.health.state.mn.us/divs/eh/hazardous/sites/washington/oakdale/oakdaledump.html
Anonymous (2005, April 04). Repeal Sarbanes-Oxley!
Retrieved January 31, 2009, from House of Representatives website:
http://www.house.gov/paul/congrec/congrec2005/cr041405.htm
Anonymous (2008). Federal Sentencing Guidelines
Retrieved January 31, 2009, from Ethics.org website:
http://www.ethics.org/erc-publications/federal-sentencing-guidelines.asp
Anonymous (2009). Sarbanes-Oxley Act of 2002 [11 titles]
Retrieved January 31, 2009, from Ethics.org website:
http://www.sarbanes-oxley.com/section.php?level=1&pub_id=Sarbanes-Oxley
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008) Sarbanes-Oxley Act In Business Ethics Ethical
Decision Making and Cases (pg. 15). Boston, New York: Houghton Mifflin Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Managing Ethical Risk Through Mandated and
Voluntary Programs. In Business Ethics Ethical Decision Making and Cases (pp. 90-91).
Boston, New York: Houghton Mifflin Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Laws Protecting the Environment. In Business
Ethics Ethical Decision Making and Cases (pg. 110). Boston, New York: Houghton Mifflin
Company.
1.) Voluntary Practices: This is where management initiates boundaries of conduct which includes beliefs, values, voluntary polices and voluntary contractual obligations. An example of this is would be giving back to the community by investing in a piece of land for public usage such as a park that the surrounding community could enjoy, or providing employees with a good health coverage regardless of work hours (part-time vs. full time). (Business Ethics, pg 90-91, 2008)
2.) Core practices: Are usually best practices that are documented that ensure compliance in business. This usually includes legal requirements, industry self-regulation, and social implications. An example of a self-regulatory body would be Better Business Bureau which provides direction for solving customer disputes and reviews advertising cases. The board of directors is usually the people accountable for core practices and is required to oversee ethics and compliance of that particular business. (Business Ethics, pg 91, 2008)
3.) Mandated boundary is the external boundary of conduct. This includes laws, rules and regulations that can affect a company. These laws and regulations are established to protect the stakeholders. And usually these laws can change within time, because these laws encompass regulations that are acceptable by society at that certain time; therefore, what is acceptable during one era, may be changed tomorrow, because of different views by the courts and society. There are laws and regulations established by federal jurisdiction/Congress and state legislation; these laws encourage competition and protection for the consumers, workers and the environment. For any business/organization, ethical and legal standards need to be enforced in order to reduce legal risk and promote ethical standards in today’s society. (Business Ethics, pg 93, 2008) An example of laws promoting safety is OSHA. Laws that promote equality would be The Equal Pay Act of 1963 or Americans with Disabilities Act of 1990. Finally, an example of laws protecting the environment would be regulations of the Environment Protection Agency (EPA) which relates to air, water, and land pollution; this would include the clean air act that many establishments have now; recycling of computer parts, and cleaning up toxic waste caused by businesses, such as Minnesota Mining and Manufacturing Company (3M) dumping perfluorochemical waste in Woodbury Site or the Oakdale Dump in the past. [Minnesota Department of Health, 2005, 2007]
In 2002, the Sarbanes-Oxley Act was implemented to create a federal system that oversees business accounting practices. This law makes securities fraud a criminal offense and establishes harsher penalties for business fraud. This law also created an accounting oversight board that registers, established standards for audits, inspects, investigates, and enforces compliance for accounting practices in businesses. It also requires corporations to establish a code of ethics for financial reporting and develop greater transparency in financial reporting to its investors and stakeholders. This law also requires top management to sign off on their firm’s financial status and hold them responsible for any misrepresentation of their company's financial position through fines and perhaps incarnation. 'It also requires the executives of any company disclose stock sales immediately and prohibits companies from making loans to top executives' This law was established , because of all the deception and fraudulent activity done by businesses, that in itself, created a great distrust in their stakeholders. This act/law was put into effect to gain back the confidence of the stakeholders. A couple examples of companies that did fraudulent activities are Enron and WorldCom. (Business Ethics, pg 15, 102-108, 2008)
There are eleven titles :
Title I, Public Company Accounting Oversight Board – It provides auding services and oversight as stated as above [Sarbanes-Oxley, 2009]
Title II is to establish standards for external auditors independence and limits conflicts of interest. It addresses new auditor, approval requirements, audit partner rotation, and auditor reporter requirements. [Sarbanes-Oxley, 2009]
Title III is corporate responsibility for accuracy and completeness of corporate financials. [Sarbanes-Oxley, 2009]
Title IV is enhanced financial exposures. This includes reporting requirements for financial transactions, off balance transactions, stock transactions of corporate officers, and internal control to ensure accuracy. [Sarbanes-Oxley, 2009]
Title V describes measures to restore investors confidences. [Sarbanes-Oxley, 2009]
Title VI defines practices and conditions to restore investors confidence and security authority to censor or bar security professionals from practice. [Sarbanes-Oxley, 2009]
Title VII requires Comptroller General and Security Executive Commission to study and report their findings. [Sarbanes-Oxley, 2009]
Title VIII is the Corporate and Criminal Fraud Act of 2002 which describes criminal activities for fraudulent manipulation, destruction of financial records. [Sarbanes-Oxley, 2009]
Title IX is the White Collar Crime Penalty Enhancement Act of 2002 which increases criminal penalties created by white collar crime and conspiracies. [Sarbanes-Oxley, 2009]
Title X states that no matter what, the CEO must sign the company tax return. [Sarbanes-Oxley, 2009]
Title XI is a Corporate Accountability Act of 2002 was created to seek out corporate fraud and record tampering and charge the act of criminal offices. [Sarbanes-Oxley, 2009]
One disadvantage of this act is that the cost of compliance is high; therefore, some small businesses and companies outside the USA are opting out of the US market. [House.gov, 2005]
Congress passed the FSGO in 1991 in order for organizations to develop and promote ethical and legal compliance programs; whereby, these programs need to be continuously monitored and updated. The FSGO also made public the guidelines to govern sentencing for offenders by the federal judges. Penalties for sentencing are based on a point system for determining the severity of the offense.
‘The guidelines encourage organizations to develop ‘effective programs to prevent and detect violations of law’, and prescribe seven ‘types of steps’ that should be included in an effective program. Where organizations demonstrate an effort to implement the seven steps, lower sanctions are levied by Federal Judges.’ (Ethics.org, 2008)
The synopsis of this FSGO puts the responsibly of the program effectiveness directly ‘on the shoulders of the firm’s leadership’ Those companies who participate also have the responsibility to collect data and measure the impact on how well employees respond to various ethical and legal risks. [Business Ethics, pg 110, 2008]
Like the Wild West in the past, laws and regulations were passed in order to get crime under control. This is true with businesses that produces fraudulent activities and have a mindset they can get by with it. The Federal Guidelines for Organizations and the Sarbanes-Oxley Act are watch-dogs for the stakeholders, community where the business resides, and the environment of our country. These laws and regulations provide businesses with incentives to take a hard look at their ethical issues and be responsible for their actions. Like I said in the papers before “you do the crime, you do the time”.
Resources
Anonymous (2007, Feburary). 3M Woodbury Site
Retrieved January 31, 2009, from Health Department of Minnesota website:
http://www.health.state.mn.us/divs/eh/hazardous/sites/washington/3Mwoodbury.html
Anonymous (2005, June). 3M - Oakdale Disposal Site: Perfluorochemicals
Retrieved January 31, 2009, from Health Department of Minnesota website:
http://www.health.state.mn.us/divs/eh/hazardous/sites/washington/oakdale/oakdaledump.html
Anonymous (2005, April 04). Repeal Sarbanes-Oxley!
Retrieved January 31, 2009, from House of Representatives website:
http://www.house.gov/paul/congrec/congrec2005/cr041405.htm
Anonymous (2008). Federal Sentencing Guidelines
Retrieved January 31, 2009, from Ethics.org website:
http://www.ethics.org/erc-publications/federal-sentencing-guidelines.asp
Anonymous (2009). Sarbanes-Oxley Act of 2002 [11 titles]
Retrieved January 31, 2009, from Ethics.org website:
http://www.sarbanes-oxley.com/section.php?level=1&pub_id=Sarbanes-Oxley
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008) Sarbanes-Oxley Act In Business Ethics Ethical
Decision Making and Cases (pg. 15). Boston, New York: Houghton Mifflin Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Managing Ethical Risk Through Mandated and
Voluntary Programs. In Business Ethics Ethical Decision Making and Cases (pp. 90-91).
Boston, New York: Houghton Mifflin Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Laws Protecting the Environment. In Business
Ethics Ethical Decision Making and Cases (pg. 110). Boston, New York: Houghton Mifflin
Company.
St. Augustine and Machiavelli
What defines a good society or state? Some will say that a good state could be
defined as one where a ruler and his followers live in peace and harmony under
the teachings of a religion that promotes healthy social behavior by promoting
moral and ethical values. Or, one can
argue that a good state should be run by promoting power under manipulation to
bring fear within the state so no common man would be able to question the
ruler. These are views that two early
philosophers, St. Augustine de Hippo and Niccolo Machiavelli, had
on how a state should be operated. Each philosopher’s
view of a perfect state is unique in their own way and has the potential to
raise a civil society. In the end, which
philosopher’s view could bring the best society?
A good society is one that brings
harmony and peace to the ruler and the state.
A civilized society benefits from a good ruler and the ruler requires
his followers to believe that he is the one that will bring this harmony. St. Augustine and Machiavelli each had their
own interpretations on how to bring forth this civilized state. However, each philosopher’s approach to
running this state can be open for different interpretations. As nations have grown over the centuries, we
can find traces of each philosopher’s views in today’s society and the
past. As two of the earliest minds
behind political thought, St. Augustine and Machiavelli have definitely etched
their work in history and their teachings have shaped many nations.
To find the meanings behind each
philosophers work, we have to look no farther than the fall of Rome. Both philosophers have used this reference in
history to outline how a good society should have been lead to prevent the
fall. In his book “De Civitate Dei”, translated as City
of God, St. Augustine wrote that Rome fell because the Romans lacked
protection from Christianity or God (Walsh, 1958). In the book City of God, Augustine preached to the refugees of Rome in Hippo
that the Romans fell because some of their beliefs were negatively influenced
by material goods, selfishness, violence, thievery and lust for power. Augustine felt that these sinful acts were
the reason Rome was beyond saving therefore it fell (Walsh, 1958). Therefore, he used the word of the Bible to
guide his followers that to show love toward God and your neighbors is the true
way to achieve a proper society (Deustch & Fornieri, 2009). Augustine suggests that by following the
Bible and word of God, once they have passed on they will be welcomed into
Jerusalem, or heaven (Walsh, 1958).
Machiavelli’s view of Rome was far
more erratic than that of Augustine.
Instead of faulting Rome for falling, Machiavelli praised the Roman for
its power (Machiavelli, n.d.). While
Augustine felt that Rome fell because of its sinful ways, Machiavelli preached
that Rome fell because the state started to elect lazy and corrupt leaders who
lacked intelligent or strength in its military (Machiavelli, n.d.). It’s for these reasons that Machiavelli used
Rome’s fall as a subject in his book “The
Prince”. Machiavelli’s view differs
from Augustine in that instead of doing the good deed for God to sustain a good
society, he insists that power and fear by manipulation is best. To back his statements, Machiavelli stated
(translated from Latin) “People are by nature changeable, It is easy to
persuade them about particular matter, but it is hard to hold them to that
persuasion. Hence it is necessary to
provide that when they no longer believe, they can be forced to believe” (Machiavelli,
n.d.).
There is much to be compared by both
philosophers and their opposing views of what can constitute a good
society. Augustine’s methodology is
based on the Bible where doing good is rewarded. Machiavelli promotes a more vile approach
that many can almost view as tyrannical.
But does having a leader who does good make a better society or does
having a strong leader that rule through fear and manipulation make more
sense? It’s hard to determine because
throughout time we have seen many nations run their state based on some of the
philosophies that Augustine and Machiavelli preached and history has shown that
neither has truly created a good society.
While some nations and leaders may not have significantly stated that
these philosopher’s works were in mind when determining how their state was
run, we can see evidence of their philosophies embedded within.
St. Augustine believed that the
people had a duty to serve the state and that the state must provide a
“sin-free” life to the people to prevent any wrong doing in order to keep
peace. Augustine put this theory into perception
by writing about a City of Man and a City of God (Deustch & Fornieri,
2009). Augustine describes the City of Man
as a temporary stage lived by
humans for material reasons before their transition to the City of God, or
heavenly life. In order to reach the
City of God, Augustine explained in Book XII of City of God (Walsh, 1958) that “all physical things, since they
exist and have therefore their own rank, design and, as it were, internal law
of peace, are surely good. And when they
are in places where they should be according to the natural order, they keep
their own beings safe and in such measure as they have received”. By his words, Augustine believed that as long
as a state does good by the law of the Bible, their time here will be rewarded
with eternal life in the City of God.
Machiavelli’s
view was not as positive as Augustine as he felt that a ruler or a “prince”
should get and retain power by a “willingness to not be good” (Deustch
& Fornieri, 2009). In his book The Prince, Machiavelli (Machiavelli,
nd) claims that a “prince must himself be bad in order to preserve his reign”
and that “good men cannot attain or maintain power in a world full of
deceit”. Machiavelli made no attempt to
disguise his ideals and feels that a ruler should exploit these attributes to
gain maximum political benefit (Deustch & Fornieri, 2009). Machiavelli’s view, compared to Augustine,
didn’t follow any religious belief and showed no moral values other than to
rule by all means necessary. His immoral
stance couldn’t be more true as Machiavelli has also emphasized that a prince
should only seem to be “compassionate, faithful, humane, honest, and religious”
to the public only to gain respect (Gorland, 2010).
In
comparison, both philosophers provide a good foundation on how each theory
could constitute a good society, but both views can also lead to a path of
tyranny and oppression. On one hand, any
state that would choose to follow Augustine’s view of
using religion to build a foundation for a good society has values and moral
responsibility to make things right for the citizens. If citizens feel that if they follow the
moral leadership of their ruler, in turn, they can be rewarded with peace and
harmony. The positive teachings that
Augustine promotes is that a state is a “divine gift” if it is “righteously
ruled” (Mattox, 2011). Augustine’s Christian
influence can be seen in modern politics here in the United States as noted by
former North Carolina Senator John East.
He wrote “From the Augustinian view the primary function of
government is to maintain the internal good order of society, to protect
against external enemies, and thereby enable men to order their own lives with
tranquility and predictability” (East, n.d.).
While envisioning a good state on the foundation of religion could be
rewarding, history has also shown that it can also be used to oppress.
Augustine’s preached heavily about Christian faith and by
following it would lead to rewards in the City of God. While this philosophy is a positive
influence, some could use his teachings for oppression. One such case of using religion to lead that
caused oppression was the Taliban. While
there were never any known indications that the Taliban used Augustine’s views,
one can relate to how the Taliban ruled Afghanistan to Augustine’s theory of
City of God. Under the rule of Mohammed
Omar, he enforced the Afghan citizens to follow a strict Islamic religion. His ideals mirror that of Augustine’s that if
the Afghan people lived under this rule, they would be rewarded in the
afterlife. The Taliban enforced such a
strict law that those who defied these laws would be punished by death
(Simpson, 2013). The Taliban’s rule
under Omar forced the Afghan people to live in a state of oppression for over a
decade until joint military operations by the US and Britain was able to
overthrow them during the battle against terrorism. Whether or not Augustine
would ever agree with how the Taliban ruled, it’s clear to see that leaders who
forcefully use religion onto their followers with the benefits of reward in the
afterlife could be done in a negative light.
In contrast to the moral values of how Augustine saw a
good society through guidance of religion, it’s hard to believe that any state
could find any positive out of Machiavelli’s philosophy. As stated in his work The Prince, the main purpose is to rule by any means
necessary. While in theory, it can be a
benefit to have a strong leader that will do whatever necessary to lead. Without any morals it’s hard to imagine if
there could be anything positive to reflect on.
Machiavelli preaches fear within his writings and concludes that a
prince should rather be “feared” than loved (Gorland, 2010). The reasoning for this as he states in his
book that a prince’s safety can only be guaranteed when others “fear” him
(Gorland, 2010) because “anyone who does not care about dying is able to harm
him” (Machiavelli, nd). While there have
been some controversy as to whether Machiavelli actually believed in what he
wrote or whether it was just his interpretation on how a prince should rule,
his teachings have made a big impact in our world (Deutsch & Fornieri,
2009).
Machiavelli’s influence is especially noticeable among
some of history’s worse dictators. Adolph
Hitler is a perfect example of how Machiavelli’s teachings in The Prince could’ve been an
influence. When we think about the
writings that Machiavelli wrote about showing fear to the people and doing
whatever necessary to rule, Hitler’s actions during World War II seems to have
been taking right out of The Prince. Machiavelli depicts a brutal world in of
duplicity, cruelty and savagery (Deutsch & Fornieri, 2009). Hitler’s reign of Germany during World War II
also depicted this image. Hitler stormed
across most of Europe and slaughtered millions of Jewish people without remorse. A quote from chapter XIV from The Prince that
best describes Hitler’s actions (Machiavelli, n.d.) states that “a prince must
have no other objective, no other thought , nor take up any profession but that
of war, it’s methods and it’s discipline, for that is the only art expected of
a ruler”. In seeing how Machiavelli’s
philosophy focusing so much on ruling by intimidation, it’s hard to see
anything positive to come from it. A
regime that would use Machiavelli’s words to rule could not exist today.
Each philosopher has provided much influence to political
thought and both have given different views on what could be a good
society. In the end, what
really matters the most is which philosopher provides the best stance on how a
good society could be created.
Augustine’s view of religion and how it can influence society is the
most logical because there are moral values that both state and ruler need to
follow. However, any ruler can seize
that opportunity to use religion to rule and brainwash the followers to live a
life that they may not agree with, as witnessed in the Taliban rule. Another thought is that there are so many
other religions in the world that it would be hard for one ruler to choose just
one religion for everybody to follow. In
doing so that can cause instability or civil unrest among the state.
Machiavelli’s rule by any means
necessary can only lead to unrest and oppression. A leader who places fear in to their
followers can only lead to war. We have
seen this in history during World War II and most recently in the Iraq
war. Dictators like Hitler and Saddam
rule by placing fear into their state and threaten death to anyone who
opposes. The times have shown that these
types of regime usually do not last long and in the aftermath, all that remains
will be a broken state. That is hardly
what I would call a good society.
In conclusion, while Augustine’s
view is flawed in some ways, it’s easiest to see that good morals and good
leadership is what creates a good society.
While we may not agree with what our governments may propose from time
to time, we can be assured that most decisions that are made were with good
intentions. At least in Augustine’s
view, morality over rules power. A good
society is one that makes us love our neighbor and hope to do good for the
better of man. What good is a society
when we are constantly live in fear?
Augustine believed that all living beings “possess and intrinsic and
natural yearning for peace” and when we find that peace “distinctive to our own
being”, that’s when we will find a good society that will make us whole
(Deustch & Fornieri, 2009).
References
Duestch, K & Fornieri, J. (2009). An
Invitation to political thought.
Wadsworth: Belmont, CA
East, J. P. (nd). The
political relevance of St. Augustine.
www.theimaginativeconservative.org.
Retrieved from http://www.theimaginativeconservative.org/2013/09/the-political-relevance-of-st-augustine.html
Gorland, C.
(2010, Dec 9). Power as an end itself. Boston University. Retrieved from https://bu.digication.com/chase_gorland_boston_university/Power_as_an_End_in_Itself/published
Machiavelli, N (nd). The
Prince. Translated by Simon and
Brown Publishing
Mattox, J.M.
(2011, Mar 18). Augustine:
political and social philosophy.
www.iep.utm.edu. Retrieved from http://www.iep.utm.edu/aug-poso/
Simpson, J.
(2013, Nov 1). Who are the Taliban? www.bbc.co.uk. Retrieved from http://www.bbc.co.uk/news/world-south-asia-11451718
Mohammad Omar. (2013). In Encyclopædia
Britannica. Retrieved from
http://www.britannica.com.ezproxy.rasmussen.edu/EBchecked/topic/1704228/Mohammad-Omar
Walsh, G (1958). The City of God
(translated by Walsh). Doubleday, Image
books: New York.
Thursday, March 23, 2000
Thomas Hobbes and Jean-Jacques Rousseau
In the United States today we have a lot of different views as to
how the country should be run. The two major political parties are at ends with
each other and every month we can see that there are wars waging inside the
Senate and House of Representatives. How do you decide who is correct? How do
we know what the correct political order is? To get to any conclusion you have
to ask yourself, what is the state of nature? How can mankind continue to make
strides in human development and the arts of science and nature? Jean-Jacques Rousseau
and Thomas Hobbes both attempted to tackle these questions and develop an
irrefutable conclusion as to what the state of nature is and how a nation
should be run to achieve the greatest success possible.
Thomas Hobbes and Jean-Jacques Rousseau were born almost 125 years
apart, but missed each other by only 33 years and were both a large part in the
enlightenment period of history. Both started with the same core idea that
every man is born free, but from that standpoint, they go into completely different
directions. Hobbes, for example, believed that man was evil by nature and that
we needed on sovereign to govern the masses and if you didn’t abide by the laws
of the sovereign you could leave. Rousseau, on the other hand, believed that
man was free to do as he wishes with only a morale code to abide by and a
representative government set up to work for the greater good of the people as
a whole unit (OSU, 2002). So how did these two great minds end up in completely
different end places? Rousseau adored and considered Hobbes as one of this
greatest influences and spent many years studying up on his teachings. While
Hobbes writes about “the mutual transferring of rights” (i.e. implied
contracts) (Hobbes, 1651) and extensively writes about what contracts we hold
as humans to one another, Rousseau writes about how man must be “forced to be
free” (Rousseau, 1762) by a form of democracy in which the duties of the
representatives are to enforce where the people are to enact (Bertram, 2013).
Jean-Jacques Rousseau was born in 1712 in the city-state of
Geneva. His father was a watchmaker and he did not know his mother since she
did nine days after he was born. During his formative years he received most of
his education from his father who, after Rousseau had learned to read on his
own, had him read many books about the Roman Empire and those written by
Plutarch, Plato, and others on the republic of Rome. When he was ten years old, his father had to
flee the city in order to escape arrest, and he was sent to live with a
Calvinist pastor and apprenticed as an engraver for six years until he left the
city to see the world and learn more of the world around him (Bertram, 2013).
It was during this time wandering that Rousseau converted to
Catholicism and first saw the corruption within himself when he falsely accused
another servant in a household he was working of stealing a ribbon (OSU, 2002).
He continued to travel and learn for many more years coming under the influence
of those he met – at one point writing operas, becoming a teacher, and becoming
the secretary to the French Ambassador (Bertram, 2013).
One day while he went to visit Diderot in prison, Rousseau saw a
newspaper that was holding an essay competition in which the Academy of Dijon
asked whether man’s progression in art and science has improved or corrupted
the minds and morals of the people. It
is then that the gears in his head went into overdrive and he formed his belief
that man is inherently good by nature, but that it is society which turns man
evil. Throughout his life, Rousseau debated many other philosophers on what
makes man good or evil and why, which pulled primarily from his own life
experiences including his putting all five of his children at a foundling
hospital shortly after birth, his visits to the Italian countryside where he
wrote many operas, and most importantly
his exile from Paris and Geneva. He lived the rest of his life in England
living with many friends he had made along his travels, but was sent through
periods of mental instability which got more frequent as he aged (Bertram, 2013).
During the high point of his life, Rousseau published The Social Contract which centered on
how we have progressed from being a free man in nature to a corrupt society.
Rousseau’s most popular quote, which helps to get a better understanding of his
world views is that “man is born free, and he is everywhere in chains”
(Rousseau, 1762). This brought the ideas of his first and second discourses
full circle to be proven correct in The
Social Contract, he argues that we began our lives as humans as complete
equals no matter who you were because we were originally solitary beings.
Everything and anything that we needed we were able to get from nature such as
food or shelter, but as we grew, we soon got concepts of ownership because we
were living in closer and closer proximity to each other. Where one man could
own the land, another had to work hard for it. However, in his book Rousseau
discusses the central problem with living in close proximity to one another; by
living together and forming a collective group of people you have to submit
your own personal wills to the wills of the people, otherwise known as the
general will of the people.
He argued that this is how we started the real foundation of
society and that by conforming as one we work towards the betterment of mankind
and the common good. The common good of the people meant, at the same time,
more progress in the arts which in turn meant giving up more of your own
inherent freedoms to the general will which is brought forward by
representatives of a specific collective to work through any and all issues a
person may have and make it the law of the entire land (Rousseau, 1762). This
many seem like a familiar process to many of us because in Rousseau’s The Social Contract he actually lays out
the foundation of republicanism and the democratic process which we still use
today.
On a
different end of the spectrum we have Thomas Hobbes who was born in 1588 to a
clergyman in Malmesbury, England. He was a highly educated man in that he
studied at Oxford University and later worked for a wealthy family that allowed
him the opportunity to continue to educate himself and his student by using the
family’s money to get access to books freely and allowed him to connect easily
with other philosophers and scientists, most notably with René Descartes and Francis Bacon (Stewart, 2013).
It is during a decade in exile from
England in France that Hobbes wrote his popular book to date, Leviathan. Leviathan is a dark story
that focuses on Hobbes’ beliefs that man is selfish, materialistic, and without
the help of a single sovereign the world would be in a constant state of war.
Hobbes, similarly to Rousseau, believed that man was originally entirely free
and all of humankind was equal, but that is where the similarities between
Rousseau and Hobbes end. Hobbes was in the belief that without some sort of
government that was more closely aligned to a monarchy rather than a democracy
(though it was more of a middle ground between the two during his time)
(Stewart, 2013), man was unable to function properly because in nature there
were no rules, no contracts outright, and that because there was no definite distinction
between good and evil (it is up to the individual to decide what he decides is
good or evil) that greed can always take over and that “the weakest has
strength enough to kill the strongest” (Hobbes, 1651). This meant that while
you may be the weakest man physically you still have enough strength to instill
fear into your fellow man’s heart and that you can muster up enough strength to
put a dagger into your enemy’s heart while he slept (Friend, 2012).
It is from this that Hobbes argues
we must have a contract with each other that we mutually transfer our natural
rights such. This means that I will give up my natural right to steal your
chickens because you also give up your right to steal mine. This brings forth
the idea that if another man will not “lay down their right, as well as he,
then there is no reason for anyone to divest himself of his… that is the law of
the gospel: Whatsoever you require that others should do to you, that do ye to
them” (Hobbes, 1651). This is what we know today as the Golden Rule, and he
took it rather seriously.
During his time, he believed that it was the work of a single
sovereign to dictate an equal punishment for those who did wrong to another,
similar to an eye for an eye and a tooth for a tooth. He stated that it is the sovereign’s
responsibility to dictate and rule over the “leviathan” that is the state or
commonwealth in order to keep it safe from itself and from others who have
gotten out of hand and broken the contracts we hold (Stewart, 2013).
So how did two philosophers who both believe that all men are
created equal in nature end up with two completely different ideas of what the
social contract theory is and how we need to operate in order to continue to
achieve greatness? A lot of this has to do with how each was brought up, Hobbes
believed that man was evil from the beginning and is good because of the works
of parliaments and others and this is likely because he had access to other
philosophers, books, scientists, and an Oxford education during his formative
years. Rousseau, on the other hand, had a rough childhood in that he was moved
around, had to take jobs in which he worked for little pay and made sacrifices
in order to just survive. He saw first-hand how one man will voluntarily throw
another man’s well-being to ruins without any thought or even any reason.
Their lives are reflected in their works and show what we
already know today in that a lot of what you view is politically correct or how
the government should act or react is based on how you were brought up. The
life of Rousseau was challenging not only from the beginning with his mother’s
death to his father’s abandonment but his own exile and at the end of his life
where he struggled with self-identity, and he wrote about how advancements in
the arts and wealth are what brought the world to lose its own freedom and
corrupt society. On the other hand, you have Hobbes’ life which was a lot
better off than Rousseau’s because of his almost unlimited access to knowledge
and had a more stable livelihood where he argued that it is from the privileges
that come with having advanced as a society we are able to learn to be good
beings and can work toward the good of society without losing our own freedoms.
References
Bertram, C. (2013). Jean Jacques Rousseau. Retrieved from
Stanford Encyclopedia of Philosophy website: http://plato.stanford.edu/entries/rousseau/
Friend, C. (2012). Social Contract Theory. Retrieved from
Internet Encyclopedia of Philosophy (IEP) website:
http://www.iep.utm.edu/soc-cont/
Hobbes, T. (1651). The
Leviathan.
Jean-Jacques, R. (1762). The
Social Contract.
Oregon State University Social Sciences Department (OSU).
(2002). Great Philosophers: Thomas Hobbes. Retrieved from Oregon State
University website:
http://oregonstate.edu/instruct/phl201/modules/Philosophers/Hobbes/hobbes.html
Stewart, D. (2013). Thomas Hobbes. Retrieved from Stanford
Encyclopedia of Philosophy website: http://plato.stanford.edu/entries/hobbes/
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