"The greatness and the genuine trait of your thought and writings lie on the fact that you positively and interestingly make use of philosophical thoughts and thoughtfulness in order to deeply and concretely cogitate about America's social issues. . . . This does not mean that your thought is reducible to your era: your thought, being inspired by issues characterizing your era . . . , overcomes your era and will still likely be up to date even after your era, for future generations." Bruno Valentin

Tuesday, April 11, 2017

Company Police-States: United Airlines Attacks a Passenger

A manager of United Airlines boarded on the ground in Chicago to have three security employees of the Chicago Department of Aviation bloody and drag a physician off the plane to make room for an employee not on the flight’s crew. Although the airline was technically within its rights to forcibly remove the man for refusing to give up his seat, which he had paid for, removing paid passengers at the last minute to make room for additional, non-essential staff showed a lack of judgment. Accordingly, the police-power of the company is problematic and should be dialed back.  In fact, the power of the industry, including its companies, may need to be reduced.

 A passenger--a physician--being dragged from his paid, reserved seat as a United manager looks on. (Source: Tyler Bridges)

Concerning the lack of good judgment, the airline only offered $800 to passengers willing to give up their seats when the airline policy states that as much as $1,350 can be offered. That a manager of the airline told the man that security would be called if he did not comply suggests that the manager was trigger-happy, and of course not respectful of even paid customers. That the man was attempting to call his lawyer should have been a wake-up call for the manager.
At the very least, the man’s attorney might want to have a judge look into the airline’s “right” to forcibly remove a paid passenger for such a spurious reason. Even if the airline industry had influenced lawmakers to pass a law written in the interests of the companies, paying customers have rights. In this case, the physician had paid for his seat and he had the right to expect to be transported to his destination in a reasonable time. That he had reserved his seat should contractually obligate the airline even if its management is uncomfortable with being obliged. The next flight would not leave until Monday and the man had patients to see that morning. It would be interesting if United’s manager had not even bothered to check other airlines, or if he refused to give the passenger the option.  

The physician seen here looks to have been the victim of disruptive and belligerent employees and their henchmen. (Source: CNN)
The CEO of the airline, Oscar Munoz, referred to the passenger as having been “disruptive and belligerent.”[1] Yet none of the passengers later confirmed this. In fact, a company spokesperson said “we had asked several times, politely” for the man to give up his seat, so it would be strange if a physician would answer politeness with being “disruptive and belligerent,” unless the airline employees perceived any push-back to their self-interests to be “disruptive and belligerent.”[2] I suspect that the company culture allows for a state of denial, for the spokesperson—rather strangely, and I might add pathologically—explained, We had “a number of passengers on board that aircraft, and they [wanted] to get to their destination on time and safely, and we [wanted] to work to get them there.”[3] Besides the unseemly bragging—as if the employees were simply serving customers—the spokesperson conveniently ignores the fact that the physician was one of those passengers, so the airlines failed even on this assertion!
Ethically, the spokesperson’s attempt at a utilitarian justification—that the airline employees were merely trying to further the greatest good for the greatest number—fails because the ethic ignores the rights of the individual customers—rights that should be reflected in the contracts. The physician had reserved his paid seat, which said customer legitimately relied on (so he could see patients in Louisville the next morning).
The stronger ethics are not in the company’s favor. Kant’s Categorical Imperative, for instance, declares that it is unethical to treat beings having a rational nature (so excluding the employees and manager on the plane)—such as a physician would doubtlessly have—as means only rather than also as ends in themselves. That the manager on board the plane could have offered the passengers considerably more money, and perhaps even a free round-trip to a vacation spot, such that a fourth willing-passenger could have been obtained, suggests that the resorting to force was not only arbitrary, but also needlessly at the expense of the physician’s inherent worth as a rational being—another human being. The lack of respect is palpable, in other words.
Rawls’ theory of the justice of systems as fairness also fails to redeem United Airlines. Rawls claims that in designing a system—whether in business, government, or society—the worst off in it should not be short-changed by the design of the system. That the manager on the plane went after passengers who had cheaper fares and were not frequent-flyers suggests that the company’s system was in this respect designed at the expense of the “lowest.” Rawls advocates that people designing a system should not know where they will be in the system so they could be among the worst off. Only then will the designers take care that the lowest positions bear a disproportionate burden. Clearly, United’s system was designed by people who knew that they would not be low-paying, non-frequent-flyer passengers. Hence, by Rawls’ reckoning, the company’s system is unethical.
It should thus come as no surprise that the company’s “businesslike” ex post facto reframing of the incident does not permit the ethical dimension to enter. The company’s CEO referred to the passenger as having been “re-accommodated,” for instance—a technical word that not only misleadingly implies satisfaction, but also leaves no room for the normative dimension of should and should not.[4] Furthermore, the term suggests that even the head of the airline was in a state of denial. Let’s be clear; the severe lapse in the manager’s judgement and the brutal treatment of the passenger was much worse than “re-accommodation” connotes. Minimizing the aggression of the security men and the airlines’ accomplices while perceiving the passenger as having somehow instigated the raw aggression by being “disruptive and belligerent” points to such a sordid mentality that it is likely that the company’s culture is infected. Trying to re-frame, or “see” the incident in business terms does not do justice to just how far from business practice and thus legitimacy the aggression, which was unnecessary given that the $1,350 maximum had not been reached, truly was. Businesses like United should not be able to reap a façade of legitimacy simply from being a business and putting the incident in business terms. The aggression was not business, so a business rationale does not pass muster; rather the criminality befits the mob, complete with henchmen. Only here, the mob benefits from societal legitimacy in being an established company. I submit that such legitimacy—that which large companies automatically get—is part of the problem, for it enabled a manager at United to over-step substantially as if with impunity.
The airline industry, moreover, may be at fault. Charles Leocha, founder of a passenger advocacy group, observed that airlines had been figuratively beating their own passengers down for some time. “Our expectations have been driven so low that passengers have begun to accept it. What they shouldn’t have to accept is being dragged off the flight to make way for an employee.”[5] Perhaps airline people working at airports and on aircraft have become too entitled with respect to power. Like the common man with drink, it has gone to their heads, forestalling virtually any accountability because the toxin has come to pervade the industry’s culture. I suspect that perspectival minutia from the daily tit-for-tats with complaining customers has enabled the squalid mentality. We need only recall the Stanford experiment in 1968 in which “prison guards” got carried away with their authority over the other students who were in the role of prisoners.
That the industry has gotten away with contracts that allow for even such excessive violence against a paid customer with a reserved seat suggests that the airlines have too much power over legislatures; doubtless this has been made possible by the sway inherent in campaign contributions. With the contract written in the airline’s favor at the expense of even paid customers and an aggressive security force at a manager’s beck and call, the public should indeed be alarmed and call for legislative reform penning in the airlines. Simply put, the companies and the managerial and other employees therein have amassed too much power. With great power over other people comes great responsibility—not an invitation to a power-trip under the subterfuge of service.

[2] Daniel Victor and Matt Stevens, “United Airlines Passenger Is Dragged from an Overbooked Flight,” The New York Times, April 10, 2017.
[3] Ibid.
[4] Joel Gunter, “United Airlines Incident: What Went Wrong?” BBC News, April 10, 2017.
[5] Ibid.

Saturday, March 18, 2017

A Religious Stockholder-Test for Wells Fargo: Confronting Mediocre Accountability

Orienting executive compensation to accountability is easier said than done. For example, it might be supposed that the cause of accountability was aptly served by John Stumpf’s forfeit of $41 million in unvested stock when he resigned under pressure as Wells Fargo’s CEO because of the bank’s systemic overzealousness in signing customers up for unwanted services. Unfortunately, he “realized pretax earnings of more than $83 million by exercising vested stock options, amassed over his 34 years at the bank, and receiving payouts on certain stock awards.”[1] In other words, the man who presided over unethical business practices at the expense of customers received double that which he was forfeiting. How can accountability have any meaning against $83 million? This figure connotes reward rather than punishment. Tim Sloan, who succeeded Stumpf as the bank’s CEO, received compensation in 2016 of $13, up from the $11 million in 2015. Interestingly, it may have been religion to the rescue.
 Where accountability is so lapsed concerning even such a sordid organizational culture as that of Wells Fargo, it is interesting that the Sisters of St. Francis of Philadelphia were taking an active role as stockholder activists. The sisters wanted the bankers to commit to “real, systemic change in culture, ethics, values, and financial sustainability,” according to Sister Nora Nash, who is the order’s director of corporate social responsibility.[2] With the secular business ethicists presumably on the sideline, an order of nuns had come out swinging. The nuns even had a proposal to be voted on at the 2017 shareholder meeting demanding a full accounting on the root causes of the bank’s fraudulent activity, and the steps being taken to prevent taking advantage of customers in the future. Given the bank’s own lack of accountability with respect to executive compensation, I’m not sure that an internal investigation even by the bank’s board could be trusted. To be sure, the bank had fired four senior executives—including the former chief risk officer of the bank’s retail banking division and two regional presidents—who had been accused of wrongdoing. Even so, changing a company’s culture—especially one as cut-throat as Wells Fargo’s—is difficult at best.
Perhaps what the bankers really needed were regular visits from the nuns volunteering their time to see that the bank’s wealth is rightly used. A manager from another major bank said at the time of the scandal that it was well-known in the industry that "when you go to work for Wells Fargo, you know you are selling your soul to the devil." Perhaps it is no accident that the stockholder activists would be nuns, for they doubtless have prayerful radar for that sort of thing. Getting the lost back to right use of wealth would be a step in the right direction, for right use is two degrees of separation from using wealth in ways that harm other people.
When profit-seeking and wealth began to be accepted by theologians in the context of the commercial revolution, the legitimacy was conditional on right use.[3] Aquinas’ allowance of moderate profit on trade, for instance, was predicated on the assumption that the profit would not be subsequently used to hurt people. Such a use would violate Jesus’ notion of self-giving neighbor love. Similarly, the theologians during the Italian Renaissance stressed the virtues of liberality and munificence in the use of wealth, as opposed to self-serving uses or even hoarding. From this standpoint, $83 million is difficult to justify.
So the nuns could have added a second proposal—one that would reduce executive compensation. Lest it be supposed that talent would flee or avoid the bank, consider what sort of “talent” $83 million had bought. Turning an organization based on the sin of usury—which is based on the taking advantage of others instead of helping them (the original purpose of lending!)—to right use would be right and proper religious activity for the sisters, as secular ethicists look on from the sidelines.

[1] Stacy Cowley, “Wells Fargo Leaders Reaped Lavish Pay Even as Account Scandal Unfolded,” The New York Times, March 16, 2017.
[2] Ibid.
[3] Skip Worden, God’s Gold (Seattle, WA: Amazon, 2016)

Friday, March 3, 2017

Uber Tricking Law Enforcement: An Unethical Corporate Culture Externalized

A company with a culture in which in-fighting andheavy-handed treatment of subordinates are not only tolerated, but also constitute the norm can have good financials. With operations in more than 70 countries and a valuation of close to $70 billion in 2017, Uber could be said to be a tough, but successful company. Yet the psychological boundary-problems that lie behind such an organizational culture can easily be projected externally to infect bilateral relations with stakeholders. In the case of Uber, those stakeholders include municipal law enforcement. Even more than as manifested within the company, the external foray demonstrates just how presumptuous “boundary issues” are. Such presumption can blind even upper-level managers to just how much their company has overstep. In reading this essay on Uber’s program to evade law enforcement, you may be struck by the sheer denial in the company.

“Uber has long flouted laws and regulations to gain an edge against entrenched transportation providers.”[1] This statement alone suggests a rather sordid mentality—a sense of entitlement. The evasion included “a worldwide program to deceive authorities in markets where its low-cost ride-hailing service was being resisted by law enforcement, or in some instances, had been outright banned.”[2] In particular, the company began using its Greyball (think “blackball”) app as early as 2014 as part of a broader program called VTOS “to identify and sidestep authorities in places where regulators said the company was breaking the law goes further in skirting ethical lines—and potentially legal ones, too.”[3] One method involved drawing a digital perimeter around city officials’ offices on a digital map of the city that Uber monitored. “The company watched which people frequently opened and closed the app . . . around that location, which signified that the user might be associated with city agencies.”[4] Another technique involved looking at the user’s credit card information and whether that card was tied directly to an institution such as a police credit-union. Uber would also search social media profiles. Once a user was tagged, fake digital cars would show up on the app used to hail a car.

In a statement, Uber states, “This program denies ride requests to users who are violating our terms of service—whether that’s people aiming to physically harm drivers, competitors looking to disrupt our operations, or opponents who collude with officials on secret ‘stings’ meant to entrap drivers.”[5] The stings were not meant to entrap drivers; instead, the aim was to catch Uber breaking the law. The company’s emphasis on “opponents” reflects the contentious atmosphere within the company rather than any actual collusion externally. In actuality, Uber’s program was designed to evade law enforcement. To an overreaching mentality, such enforcement is bound to be dismissed rather than accepted.

Put another way, a company that views local law enforcement in such terms (i.e., in collusion with opponents) and goes to such lengths in investigating and tricking city officials is not going to be very tolerant of employees who claim that using the Greyball app “to identify and sidestep authorities in places where regulators said the company was breaking the law” skirts “ethical lines—and potentially legal ones, too.”[6] In other words, the aggressive internal culture not only mirrors, but also protects the external ethical over-reaches. “Inside Uber, some [employees] who knew about the VTOS program and how the Greyball tool was being used were troubled by it.”[7] Yet they feared retaliation. The culture in which in-fighting and the heavy use of power have been the norm could not have been irrelevant in this regard. It is not surprising that some of those employees provided documents to The New York Times rather than trying to navigate through the sordid organizational culture. Hence we have a glimpse of how an unethical organizational culture characterized by aggression can be associated with the unethical treatment of stakeholders, which in turn can not bode well in terms of long-term financial performance.

[1] Mike Isaac, “How Uber Used Secret Greyball Tool to Deceive Authorities Worldwide,” The New York Times, March 3, 2017.
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Ibid.
[7] Ibid.

Tuesday, February 28, 2017

Biblically-Based Investment Funds: A Matter of Priorities

Is it biblical to say a Christian can serve both God and money? In the Gospels, Jesus speaks to this point directly; it is not possible. In early 2017, Inspire Investing established two new exchange-traded funds having a “biblically responsible” approach to investing—meaning that they would avoid buying shares in companies that have “any degree of participation in activities that do not align with biblical values.”[1] That such activities include even tolerance for gay employees raises the question of just how practical an evangelical investment strategy is after the U.S. Supreme Court made gay marriage legal in all of the 50 republics making up the U.S.

According to the New York Times at the end of February, 2017, 92% “of the Fortune 500 companies include ‘sexual orientation’ in their nondiscrimination policies and 82 percent include ‘gender identity.’”[2] Mark Synder of the Equality Federation pointed out that businesses “have been leading the fight for full equality over the last few years. L.G.B.T. people are part of the fabric of our nation.”[3] In short, the approach of the funds was “squarely at odds with that of nearly all of corporate America.”[4] Finding companies in which to invest in may not be so easy for the employees of the two funds. Put another way, the rate of return achieved may be compromised. Of course, an evangelical Christian would contend that compromise with sin is no virtue—certainly no Christian virtue.

Adding to the difficulties is the fact that not all evangelical Christians believe that discrimination is a biblical value, Snyder asserts. Of course, the very word discrimination is ideologically laden; it implies that the thing prohibited is salubrious rather than sordid in nature. Within evangelical Christianity, the tenet that sin explicitly listed in the Old Testament should not be supported or enabled is nothing short of an article of faith. Yet even here, that Jesus of the New Testament is silent on the matter of homosexuality may give even holders of that article some pause. At the very least, the question of priorities can be raised. Should not the funds avoid investing in companies that enable or contribute toward sins identified by Jesus? To put emphasis on a sin not mentioned by Jesus has the opportunity cost of the benefit foregone from focusing on sins that are important to Jesus in the Gospels.

In fact, that Jesus stood with the outcast might prompt an evangelical Christian to feel uncomfortable in taking on a marginalized group in society—especially the transsexuals. Yet Jesus tells the prostitute to sin no more, and gays today are not apt to view homosexuality as a sin and agree to abstain from sex. Gays would be on firmer ground in pointing out that Jesus preached love foremost—a sort of love not delimited to friends and family. Hence Jesus hangs out with the sinners, loving even the “unclean” rather than going after them or those who help them.

Hence the question: what would a biblical-oriented fund based on Jesus’s concept of love (i.e., agape) have as a metric? Companies in which people fight and insult each other, such as Uber, would presumably be off the list. So too would military contractors. But just as the traditional “sin” stocks involving tobacco, gambling, and alcohol would not necessarily be excluded, so too would the matter of a company’s HR policy on gays be of small import. In short, matching Jesus’s priorities in the Gospels would arguably be a sounder basis for a biblical-based Christian investment fund. In the end, the question is whether Christians truly understand Christ’s brand of love. I suspect that it is not as ideologically comfortable as the current practice indicates. I suspect that a truly Christian investment fund would not line up on one side of a general ideological division in society, for religion transcends ideology—otherwise faith reduces to self-idolatry.

[1] Liz Moyer, “Alongside Faith in Investing, Funds Offer Investment Rooted in Faith,” The New York Times, February 28, 2017.
[2] Ibid.
[3] Ibid.
[4] Ibid.

Thursday, December 8, 2016

The Golden Age of Innovation Refuted

“By all appearances, we’re in a golden age of innovation. Every month sees new advances in artificial intelligence, gene therapy, robotics, and software apps. Research and development as a share of gross domestic product [of the U.S.] is near an all-time high. There are more scientists and engineers in the U.S. than ever before. None of this has translated into meaningful advances in Americans’ standard of living.”[1] The question I address here is why.
For one thing, a lag follows big ideas before which they translate into increases in productivity related to labor and capital. Breakthroughs in electricity, aviation, and antibiotics did not reach their maximum impact until the 1950s, when “total factor productivity” stood at 3.4% a year.[2] In contrast, the figure for the first half of the 2010s was a paltry 0.5% a year. “Outside of personal technology, improvements in everyday life” were “incremental, not revolutionary,” during this period.[3] Houses, appliances, and cars looked much the same as they did twenty years earlier. Airplanes flew no faster than in the 1960s. This “innovation slump” is, according to the Wall Street Journal, “a key reason the American standards of living have stagnated since 2000.”[4] What had been revolutionary breakthroughs in the last century were still carrying the day into the next by means of incremental change based on product improvements. It could take a few decades before the fruitful research in AI, gene therapy, robotics, and software apps reach marketability and thus can impact productivity and radically alter daily life.
To be sure, the computer-tech revolution had altered daily life even by 2010—the smart-phone is a case in point. Yet personal computers go back to the 1970s so even in this respect the marketable innovations by Steve Jobs and Bill Gates can be viewed as incremental rather than revolutionary in nature. Software apps are themselves responsible for incremental changes based on the smartphone, which in turn is based on the personal computer. Even amid all the high-tech glitter, the developed world in 2016 stood as if a surfer waiting between two giant waves for the next one to hit.
Artificial intelligence, gene therapy, robotics, and software apps were poised to give rise to the next wave—first one of revolutionary change and then, after a lag, another wave—one of raised living standards. Unfortunately, revolutionary innovation “comes through trial and error, but society has grown less tolerant of risk.”[5] Furthermore, regulations “have raised the bar for commercializing new ideas.”[6] Lastly, “a trend toward industry concentration may have made it harder for upstart innovators to gain a toehold.”[7] In other words, the concentration of private capital may forestall the switch from continued incrementalism to revolutionary change. Breaking up oligopolies as a matter of public policy thus has more to it than merely preventing monopoly.
To be sure, companies and entrepreneurs in 2016 were “making high-risk bets on cars, space travel, and drones.”[8] Add in advances in AI and medical research—which could make death no longer inevitable for human beings—and some serious changes in daily life and productivity can be predicted. Yet, as potentially momentous as these efforts at innovation are, decades could separate the inventions and impacts on daily life and productivity. I suspect the world in 2016 was truly between two waves—the first of electricity, the telephone, sound recording, the automobile, the computer, and the airplane—and the second of space/astronomy, medical research, and AI/computer technology. Colonizing Mars, rendering death not inevitable, and combining AI, robotics, and software apps could result in wave that would dwarf the one of the previous century. The advent of smartphones, having all the glitter of a revolutionary product yet being an adaptation of the personal computer, whets appetites to look for the “big one” coming up on the horizon. Indeed, we have little time to waste; that wave could bring with it technology capable of arresting and even reversing the accumulations of CO2 and methane in the Earth’s atmosphere. The interesting dynamic of being able to save this planet just as we are able to colonize another is like the related one of making death something less than inevitable—due to stem-cell research on organ replacement, genetic therapy, and advances on curing diseases—just as we make the Earth habitable for our species for the indefinite future. Meanwhile, we are like children who have outgrown their clothes, still playing with adaptations of twentieth-century toys.

[1] Greg Ip, “Economic Drag: Few Big Ideas,” The Wall Street Journal, December 7, 2016.
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Ibid.
[7] Ibid.
[8] Ibid.

Wednesday, November 9, 2016

Societal Norms Understating Unethical Corporate Cultures: The Case of Wells Fargo

The case of Wells Fargo suggests that even when a massive scandal is revealed to the general public, the moral depravity of a company’s culture is skirted rather than fully perceived. Wells Fargo was fined a total of $185 million by regulatory agencies including the Consumer Financial Protection Bureau, which had accused the bank of creating as many as 1.5 million deposit accounts and 565,000 credit-card accounts that for which consumers never asked. The bank fired 5,300 employees over the course of about five years after it was revealed those employees had opened the accounts and credit cards.[1] Wells Fargo's CEO at the time, John Stumpf, "opted" for a cushy early retirement after an abysmal performance before a U.S. Senate committee; he walked away from the bank with around $130 million[2], and none of the other members of senior management were fired, or "retired," obliterating any hope societally that any of the senior managers would be held accountable. This result is particularly troubling, given the true extent to which that management had turned the bank into an ethically compromised organization.

"There is a serious problem with senior management at Wells Fargo," U.S. Senator Elizabeth Warren told CNBC in September, 2016.[3] "You can't have a scandal of this size and not have some senior management who are personally responsible," she said.[5] With so many sham accounts and fake credit-card applications, the problem must have gone beyond particular executives giving orders. As a former bank employee told me, “When we went to work there, we knew we were selling our souls to the devil.” To be sure, being willing to be hired anyway is a choice worthy of blame. We can be struck nonetheless at the unexpected banality of bank. It is truly remarkable both that a well-established institution could have such a sordid culture out of public view, and that senior managers could be fine with such “shared understandings” within the bank.

Besides the over-charged customers, aggrieved Wells Fargo workers--"people who say they were fired or demoted for staying honest and falling short of sales goals they say were unrealistic"--bore the brunt of the unethical senior and middle management[5]. For example, Yesenia Guitron, "a former banker, sued Wells Fargo in 2010--three years earlier than the bank has admitted it knew about the sham accounts . . . Intense sales pressure and unrealistic quotas drove employees to falsify documents and game the system to meet their sales goals, she wrote in her legal filing.” She “said she did everything the company had taught employees to do to report such misconduct internally. She told her manager about her concerns. She called Wells Fargo’s ethics hotline. When those steps yielded no results, she went up the chain, contacting a human resources representative and the bank’s regional manager. Wells Fargo’s response? After months of what Ms. Guitron described as retaliatory harassment, she was called into a meeting and told she was being fired for insubordination.”[6] Clearly, she had not gotten the memo on the requirement of selling her soul to the devil.

A memo to the rest of us could inform us that our designated watchdogs in the media do not go far enough in uncovering for us just how bad things are in companies run by unethical people. The extent of their moral depravity, and thus of the organizational culture, is not reaching us. As a result, we cannot push our elected representatives enough—the corporate lobbying notwithstanding—to enact legislation that is sufficient to meet such challenging cases. We suppose, for instance, that the replacement of a CEO can be sufficient to usher in restorative measures at the company level in spite of the extent of depravity.

1. Jon Marino, “Bove: Wells Fargo Will Make Retail Banks ‘Rethink’ Compensation,” CNBC.com, September 14, 2016.
2.Matt Egan, “Wells Fargo CEO Walks with $130 Million,” CNN Money, October 13, 2016.
3.John Marino, “Elizabeth Warren.”
4.Marino, “Elizabeth Warren.”
5. Stacy Cowley, “Wells Fargo Workers Claim Retaliation for Playing by the Rules,” The New York Times, September 26, 2016.
6. Cowley, “Wells Fargo Workers.”

Saturday, October 29, 2016

An Anti-Obesity, Anti-Poverty Philanthropist Joins PepsiCo.’s Board: A Case of Reform from Within

In October 2016, Darren Walker, president of the Ford Foundation, became the newest member of PepsiCo’s board of directors. Whereas Walker worked at the time for a more just and equitable society, Pepsi was making the bulk of its money by selling sugary drinks and fatty snacks and there being a well-established link between obesity and economic inequality. Would he be working at cross-purposes? “There’s a risk that he will be viewed as inconsistent,” said Michael Edwards, a former Ford Foundation executive at the time.[1] The company itself could also be viewed as being inconsistent—lobbying against anti-obesity public-health legislation while putting Walker on the board of directors.

To be sure, the Ford Foundation had not funded organizations working to combat obesity or diabetes, so there does not seem to be a direct conflict of interest for Walker.[2] Yet he did acknowledge, “I know that my own credibility and the credibility of the Ford Foundation is tied to this decision. Those of us in philanthropy have to be discerning about the corporate boards we join, and be discriminating to ensure that our service on a board is aligned with our values.”[3]

So rather than there being a conflict of interest, the issue for Walker was whether he could act as a reformer from within. Even though he planned bring the perspective of a social-justice organization and his own perspective “as someone who is deeply concerned about the welfare of people in poor and vulnerable communities,” he would still bear responsibility should PepsiCo’s board go in another direction.[4] He would not, in other words, be chairman of the board. That the company had just pledged to further reduce the amount of sugar, fat, and salt in its products by 2025, however, suggests an appetite for accommodation with Walker’s perspective. Additionally, Walker would not be responsible for the company’s past unethical lobbying against anti-obesity legislation, use of unethical suppliers of palm oil, and deceptive marketing, and the company had since taken steps to remedy these ethical problems.[5]

As in politics, the matter for Walker and the other board-members concerning would be whether together they could wield compromises taking into account both Walker’s vantage-point and the legal and ethical fiduciary duty to act as faithful stewards of the stockholders’ capital. Reform from “the inside,” moreover, can be more productive than merely staying in the philanthropic sphere. In terms of American politics, the analogue would be moving from the Green Party, for instance, to the Democratic Party so as to work toward reform that could actually manifest in legislation. Admittedly, idealism is tested in such a strategy, but consequentialism tells us that even 50% of 10 is more than 0% of 10.

1. David Gelles, “An Activist for the Poor Joins Pepsi’s Board. Is That Ethical?,” The New York Times, October 28, 2016.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.