Walmart: Encroaching on Employees' Private Lives

In 2023, Walmart relaxed its policy requiring anyone applying for a job at the company to get a drug test, including for marijuana, which at the time was legal in several U.S. member states. Once hired, however, employees were still subject to random testing. An employee in a member state in which the drug is legal could be fired even if the person is never affected by the drug while working. I contend that the practice is unfair, unethical, and an over-reach in terms of the nature of a labor contract. 

The ethical principle of fairness is violated because both marijuana and alcohol can impair the brain and yet the company only tests for one even where both drugs are legal. An argument can be made that the alcoholic personality is less than suitable, and yet taking marijuana outside of work (with no impact during work hours) is reason enough for an employee to be fired. Whereas alcohol can inducive hostility and even aggression, marijuana has a calming drug—something that could actually help busy cashiers.

Besides being unfair, the policy of even random tests for marijuana is invasive, beyond the legitimate scope of an employer’s reach—assuming that the employee using marijuana is never “high” at work. In selling one’s labor, an employee does not agree to a company’s management being able to control the employee’s legal activities outside of work if those activities do not affect the employee’s work. Sam Walton, the founder of Walmart, was against marijuana; for him to impose his ideological opposition on others where the drug is legal was over-reaching and impious; he was not a god. An argument can also be made that it is none of the company’s business, literally and figuratively, whether an employee uses the drug where it is illegal, again as long as the employee is not “high” at work. Law enforcement is the job of police, not a company’s managers. Of course, if an employee is convicted of a crime, an employer may not permit convicted employees to continue. In the case of Walmart, it hires people who have criminal records, which shows just how nonsensical the policy of random testing for marijuana is (especially as more and more U.S. member states legalize recreational use of the drug). In terms of a contract between an employer and an employee, an employer who presumes to dictate an employee’s recreational activities imposes a cost on employees that is not offset by the monetary compensation.

Imagine what would happen if a labor union informed a company’s management that an abrasive supervisor must be subject to drug and alcohol tests and fired for any positive results, or else the employees would strike. Suppose too that the supervisor does indeed have a problem with alcohol, but is not under its influence while at work. Still the union insists that the company fire that person. Suddenly, the company’s management would object with a mighty roar, How dare employees tell us what we cannot do on our days off! The nerve! Well, it goes both ways, folks. The attitude is the same: the unethical vice of invasiveness (in peoples’ personal, not work-related lives) is noxious and may even point to a toxic organizational culture.

See: Walmart: Bad Management as Unethical

Bankers or the Bank: Which Is Responsible?

Along with paying $2.6 billion to settle criminal and civil charges for having “failed, and failed miserably” to notify the SEC of warning signs that could have short-circuited Bernie Madoff’s $17 billion Ponzi operation, J.P. Morgan Chase only had to acknowledge that its actions were improper.[1] No criminal prosecution ensued. The electronic evidence against Madoff's operation was too damning for JP Morgan Chase to have missed it. Indeed, according to USA Today, “JPMorgan had suspicions about Madoff’s operation as early as December 1998, when a bank fund manager warned the investment returns were ‘possibly too good to be true.’”[2] Without submitting any “suspicious activity reports” to the U.S. Government as required by law, the bank had pulled $275 million of its own “feeder funds” from Madoff’s fund two months before Madoff’s financial services firm collapsed.[3] In other words, the bankers connected the dots well enough for the bank's financial interest and perhaps even their own, yet strangely  enough no one at the bank could manage to let the outside world  know, even though federal law mandated reporting the suspicions to the SEC.  and responsibility urged it.

Does being strenuously pressured into making a public acknowledgement of impropriety accomplishes any internal improvement in a bank's corporate culture, including the pervasive attitude toward responsibility relative to profits? JPMorgan Chase had to acknowledge the impropriety of the bank's failure to keep the SEC informed, but this admission does not, in itself, mean that the bankers came to realize a sense of responsibility to the other investors (and potential ones) so they would not continue in Madoff's scheme. A formal acknowledgement is external, and all to amenable to business, whereas a sense of responsibility is internal; it is either there or its not. It is not something that a person can get by attending a training class. I'm always amazed, by the way, when a supervisor tells a customer that an employee's attitude can be "retrained," as if all the values and beliefs that a person has acquired even from upbringing can suddenly be changed by attending a workshop on proper employee attitude. 

In fact, it is not clear to me whether a corporate acknowledgement of guilt or failure even makes sense. Stated in terms of organizational theory, I want to challenge the popular presupposition that an organization itself can admit to criminal or improper actions. If so, must we assume that a firm is more than the sum of its parts and that this more has human attributes? Just because human beings are members of organizations does not mean the organizations are themselves human in some respect, such as in having a sense of responsibility.

Anthropomorphism, the projection of human characteristics or attributes onto non-human animals or things including collectives such as a company, government, or religious organization, is the underlying problem behind the justice in this case being insufficient. Did JPMorgan acknowledge that its actions were improper? Can it even be said that a bank has actions, since only people can act. You might retort that a bank has people who act for the bank, but this is not the same as the bank having acted. Did JPMorgan have suspicions? Human minds have suspicions. An organization does not have a mind (and thus not a memory). In spite of the legal fiction of “personhood,” a company made up of people and things such as money and buildings has neither a consciousness nor mind. 

J.P. Morgan hitting a man. Was he demonstrating that criminal law applies to human beings in organizations?  Image Source: Wikimedia Commons

Dennis Kelleher (of Better Markets) answered the JPMorgan settlement by observing, “Banks do not commit crimes; bankers do.”[4] Kelleher made the dogmatic statement in support of his criticism of the lack of charges against the bank managers who decided to, and went along with, keeping their suspicions from the SEC and thus the outside world. Who decided to pull the money in the bank’s feeder funds from Madoff’s fund two months before Madoff himself informed government officials? Were those JPMorgan employees aware of the refusal to inform the SEC? If so, they, not "the bank," had some explaining to do, and from that perhaps some external accountability was needed. Ironically, five former Madoff employees charged with aiding that fraud were on trial at the time. 

To be sure, it could also be asked whether the SEC should have needed to depend on reports from suspicious institutional investors such as JPMorgan to discover Madoff's scheme? It was so big that the SEC came off looking rather badly. If that regulatory agency has suffered from inadequate staffing (or experience, do to the higher compensation on Wall Street), part of the larger problem is that political contributions and lobbying from financial institutions convince elected and appointed officials of the federal government to keep the SEC too lean to do any damage to those particular institutions. Of course, damage to the financial system itself, or even the wider economy, as occurred in the financial crisis of 2008, is apparently not within the purview of responsibility. Again, the outsiders be damned, or, insiders at the expense of others. The lack of sense of responsibility in the bank thus mirrored that of the politicians and their paymasters. It is an inner circle of power and money that forsakes the public good.  

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1. This was according to Manhattan U.S. Attorney Preet Bharara.Tim Mullaney and Kevin McCoy, “JPMorgan to Pay $2.6 billion in Madoff Case Settlements,” USA Today, January 8, 2014.

2. Ibid.

3. Ibid.

Does Refusing Rolling Stone Magazine's Use of a Criminal's Picture For Marketing Purposes Violate Corporate Social Responsibility?

In 2013, the editors at Rolling Stone must have been kicking themselves after several retail chains announced that they would not be selling the issue that displays Dzhokhar Tsarnaev as a young hottie. Criminal charges had been made against him for the Boston marathon bombing that took place in April of that year. Selling a magazine by playing off the good looks of a terrorist was more than several—but not all—retailers could stand. Were the offended retailers being socially responsible, or is the matter of CSR not as clear-cut as has typically been assumed.

This picture of Dzhokhar Tsarnaev was on the cover of an issue of the Rolling Stone. From a marketing perspective, why might the editors have selected this particular photo? To which market segment might the choice be oriented? Image Source: hdwallpaperfresh.com  

Tedeschi Foods, a grocery-store chain based in New England, issued a rather emotional statement for a company: “Tedeschi Food Shops supports the need to share the news with everyone, but cannot support actions that serve to glorify the evil actions of anyone. With that being said, we will not be carrying this issue of Rolling Stone. Music and terrorism don’t mix!”[1] Had Rolling Stone’s editors sought to glorify the evil actions of an alleged bomber, or had the intent been to profit from them? If the latter, couldn’t the news companies that splashed pictures of Tsarnaev on the television screen (while not showing commercials) be accused of the very same thing? Music and terrorism may not mix, but selling news and showcasing bombers apparently do. Is the Rolling Stones in the business of news or music?
Rite Aid issued a statement that it too would not be selling the paper, “Out of respect for those affected by the Boston Marathon Bombing.” CVS issued a similar statement. “As a company with deep roots in New England and a strong presence in Boston, we believe this is the right decision out of respect for the victims of the attack and their loved ones.”[2] Did the CVS executives really want to respect the victims, or did the underlying rationale have more to do with the positive PR impact on CVS’s image from “showing” compassion and respect in line with societal norms? The phrases “deep roots in New England” and “strong presence in Boston” can be read as advertisements using pathos, or emotion, to persuade New Englanders and Bostonians to identify with, and thus buy from, the “hometown” company.
Walgreens simply stated that it would not be selling the issue. K-Mart had a similar statement, according to the Huffington Post. Ironically, those two retailers might have been more principled in the decision, as they were less oriented to profiting from their respective announcements.
Bucking this collective push away from the controversial cover, the 7-Eleven convenience-store chain announced that it would be selling the issue. This decision raises the question of whether companies should have identical social policies, given that the relevant societal norm does not differ.[3] Did the 7-Eleven executives make the wrong decision, given the relevant societal norm? Or does that norm conflict with another—namely, that consumers should be the ones to make the decision through their purchasing decisions. The other retailers preempted the consumers from “voting with their wallets.” In other words, the societal norm against popularizing people who did bad things, allegedly or not, conflicts with the value of economic liberty in a market economy. Which is more in line with societal values in the U.S.:  compassion for victims or economic freedom? It depends on which value is or ought to be prioritized. In advocating a fit with societal norms and values, corporate social responsibility cannot say which norm or value should be prioritized—only that the company should closely fit itself with whichever societal norm or value is “picked.” To privilege particular societal norms or values over others as if the emphasis were mandated or implied in being socially responsible makes corporate social responsibility dogmatic in the sense of being arbitrary. That is, it makes CSR ideologically prescriptive rather than a theory explaining why only some companies survive in the long run and a tool being used by managers to steer their companies through choppy waters.
In terms of the Rolling Stone cover, it may indeed be arbitrary for retail chains to boycott the issue after television news networks made so much money off the story by showing the bomber’s picture. In other words, the double-standard may point to the arbitrariness in the corporate social responsibility movement. On the other hand, the retailers (excepting 7-Eleven) may have drawn the line at the magazine cover because the particular head shot together with the Rolling Stone context may have been designed to sell the bomber as a sexy guy—something the television coverage did not do. Whereas profiting by showing various pictures strains a societal norm but does not break it, profiting by sexualizing a young terrorist may indeed cross the line.
At any rate, this case study demonstrates that corporations do indeed differ with respect to how or whether to be socially responsible. That is to say, social responsibility is a judgment call on which people can and do differ.

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1. “Rolling Stone’s ‘The Bomber’ Issue Banned By CVS, Walgreens, Rite Aid And Kmart,” The Huffington Post, June 17, 2013.

2. “Rolling Stone’s ‘The Bomber’ Issue Banned By CVS, Walgreens, Rite Aid And Kmart,” The Huffington Post, June 17, 2013.
3. This assumption does not apply to the environment of international business, as different societies have differing societal norms on a given topic.

BP's Criminal Guilt in the Deepwater Horizon Oil Rig Disaster

More than two years after the worst oil disaster in U.S. history, BP agreed in 2012 “to accept criminal responsibility for the . . . disaster that killed 11 workers.” What does it mean for an association to “accept criminal responsibility”? The notion seems unwholesomely anthropomorphic, if not chimeric in nature. Taken even just practically, holding a corporation itself criminally responsible may not be make sense, even as a deterrent. I contend that the notion of criminality applies only to human beings, whereas civil charges are suitable for associations including corporations.

From a corporate perspective, criminality would of course be viewed in financial terms, ideally from the standpoint of the financial welfare of the stockholders. Accordingly, the “criminal responsibility” translates into $4.5 billion in “fines and restitution.” The figure includes nearly $1.3 billion in criminal fines. The settlement includes payments of $2.394 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences over five years, and $525 million to the Securities and Exchange Commission for having misled investors by lying to Congress. The fines relate to BP pleading guilty on 11 felony counts of misconduct or neglect of ships officers, one felony count of obstruction of Congress and one misdemeanor count each under the Migratory Bird Treaty Act and the Clean Water Act. The 11 counts related to the workers' deaths are under a provision of the Seaman's Manslaughter Act.

It is the outflow of cash, rather than “pleading guilty” to 11 felony counts of “seaman’s manslaughter” relating to the deaths of the 11 workers onboard the rig and one felony count of obstruction of Congress in providing false information on the rate that oil was gushing from the deep-water well, that “translates” directly into corporate terms. During the three months in which the well was gushing uncontrollably into the Gulf, the U.S. Government relied on BP for accurate information on the rate of output, and the company executives in turn were aware of this reliance and yet chose to lie—misleading investors as well as the U.S. Government. It could be argued that the fines are essentially the same as pleading guilty, but then such fines are generally perceived as qualitatively different than those in the civil cases against BP. It is this qualitative distinction that does not translate into a business calculus other than in terms of the negative financial impact in terms of reduced reputational capital from headlines such as, “Oil Giant to . . . Plead Guilty to Criminal Charges.” What really registers in the bewindowed albeit closed offices at BP is the “to Pay $4.5 Billion” part of the headline.

Fundamentally, a company’s management is geared in its very perspective to the interest of the company, and ideally its stockholders, rather than to the business environment, even when the company has created harm to the latter. How does a corporation even accept responsibility for something like manslaughter or lying? It is not as though an organization has a mind, much less a conscience. A business mindset is more like that of a shark—a feeding machine. It does not make sense to hold a shark responsible; it can only be kept out of Sydney’s swimming areas, for example, by nets.

Organizations are basically the people who run and operate them. “Company” is actually a plural noun, as in “a company of men.” Accordingly, the individuals who formulate, sign off on, and implement a policy, procedure or decision that results in harm to others (or the environment) can and should be held criminally responsible. Put another way, human beings rather than associations can feel punishment and thus can be subject to it.

Fortunately, besides the criminal settlement, “three former BP employees were charged by a federal grand jury with felonies in the incident, two of them for allegedly failing to carry out a critical safety test properly” and “to alert onshore engineers to problems with the drilling.” The two oil well supervisors were charged with 11 counts of “seaman’s manslaughter,” 11 counts of involuntary manslaughter and one violation of the Clean Water Act. The third, “David Rainey, BP’s former head of Gulf of Mexico exploration, who took a lead role in the disaster response, was charged with obstruction of Congress and making false statements to a law enforcement officer for allegedly lying about how much crude was spewing from the well.” Unless decided on his own to lie, others at BP should have been charged criminally too.

The fact that criminal charges were made against particular persons at BP is extremely important, both in itself (i.e., justice) and as a deterrent. Two years after the disaster, BP was still the largest oil producer in the Gulf of Mexico. Additionally, the oil giant was exploring for oil and gas in Texas, Oklahoma, Arkansas, Louisiana, and Ohio. The company would likely have to send executives to the Hill to testify in the future, and those executives should know that they could go to prison for deciding to lie or even “just following orders” to mislead Congress.

As for the criminal fines, they may actually be insufficient financially, given the wealth of the oil giant. The $4.5 billion is merely 17% of the company's profit in 2011 alone. To cover most of the cost of the criminal fines, the company simply sold its Texas City, Texas refinery—where fifteen people had been killed in an accident in 2005—for $2.5 billion. Meanwhile, the multinational company was able to maintain “strategically important” refineries in Washington, Ohio and Indiana in the U.S. alone. Although “leaner,” the well-publicized company might even benefit in terms of public relations in the future from being rid of the sordid refinery in Texas.

To be sure, the civil claims pending at the time could include up to $20 billion under the Clean Water Act if the company is held grossly negligent (i.e., “conscious and voluntary disregard”). Additionally, the company has spent about $14 billion on spill response and clean-up and more than $9 billion in claims to business and individuals. A related claim was up to $7.8 billion when BP announced the criminal settlement in late 2012. Also, Louisiana, Mississippi, and Florida were suing BP for civil fines. Clearly, these fines dwarf the monetary element of criminality. I contend that the other elements of criminality do not register at the company level.

In spite of having agreed to have BP plead guilty, the company’s executives did not seem particularly interested in admitting guilt. "We believe this resolution is in the best interest of BP and its shareholders," said Carl-Henric Svanberg, BP's Chairman. "It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims and to contest allegations of gross negligence in those cases." This is hardly an acknowledgement of criminal guilt. Rather, it is a statement of how the settlement benefits the company! This is like boy sent to his room as a punishment bragging about being able to play video-games from his bed. Surely his mother hearing this would wonder whether she had in fact just punished her son or rewarded him for bad behavior.

From BP’s standpoint, the decision to plead guilty on criminal charges was done in the best interest of the shareholders by reducing legal risk. This is not to accept and acknowledge being blameworthy in a criminal sense. Accordingly, on the day in which the criminal settlement was announced, shares of BP actually rose 14 cents, ending the day at $40.30. Relatedly, the Journal reports that analysts “reacted positively to BP’s settlement of its criminal liability.” There is no sense in this reaction of how you or I might react to a person who “pleads guilty to criminal charges.” We would not exactly buy stock in that person. A company is different—it is a financial machine wherein a settlement that provides a ceiling on the cash to be spent translates as “limiting legal risk.”

In my view, the various civil fines are what must have registered at the company level at BP because of the sheer amount of cash involved. It can be asked from this case whether it even makes sense to hold a company criminally guilty. “Fighting crime” could be more focused against the persons involved—expanding what counts as who is “in the know” on a given policy or a decision that harms others—while the monetary aspect to a company is in civil crimes.

Alternatively, if a corporation truly is to be held criminally guilty in a given country, then it would seem to me that “going to prison” would mean that the company could not do business inside or even with that country or its businesses during the length of its sentence. Lest it be answered that an oil giant would hardly agree to a settlement under those terms, I answer that criminals don’t necessarily agree to plead guilty and there is, after all, the alternative of a criminal trial and verdict. A company being found guilty rather than agreeing to plead guilty deprives it of its share of control while still implying the ethical obligation to admit rather than deny the guilt implied in the verdict. In short, either being criminally guilty should mean something besides reducing legal risk (i.e., something bad ) or concept should not apply at all—to companies, that is.

Sources:

Michael Kunzelman, “BP Oil Spill Settlement Announced,” The Huffington Post, November 15, 2012.

Tom Fowler, “BP Slapped With Record Fine,” The Wall Street Journal, November 16, 2012.

Angel Gonzalez and Daniel Gilbert, “Accident Fails to Dent British Firm’s Ambitions in U.S.,” The Wall Street Journal, November 16, 2012.

Google Executives Evaded Jail Time in Brazil: Is Business Too Powerful?

In late September 2012, the Brazilian state police detained the head of Google’s operations in the state after the company’s management failed to act on an electoral judge’s order to remove videos from its YouTube site criticizing a candidate in a rural county election. Separately, a judge ordered Google to remove a religiously-offensive video, which had sparked riots in the Middle East, within ten days or face fines. Google’s lawyers claim that the company is not responsible for what users upload. Earlier in the year, Brazil’s government threatened the head of Chevron’s operations there with arrest and passport-confiscation after a small leak occurred in the company.

Brazil, the largest South American state.   (World Atlas) 

The Wall Street Journal goes on to note the opinion of legal analysts that no executive at Google or Chevron was likely to “set foot in jail.” Brazil’s appeals process is long, and companies like Google and Chevron have deep pockets for legal defense. Consequently, even business practitioners convicted of major white-collar crimes are rarely, if ever, jailed in Brazil. Even so, the threats could thwart the South American state from being able to attract foreign direct investment. In other words, competition for foreign companies gives governments an incentive to look the other way in enforcing state law. Put another way, the lowest common denominator in terms of holding corporations accountable on the constraint of law and order could be one of the consequences of the spread of capitalism around the world. No public official wants to risk turning a potential “job creator” away.

Especially with the separation of ownership and control in the modern corporation, managerial accountability is crucial to ensuring that corporations abide by judicial orders. In many cases, senior managers can get away with making corporate-policy decisions that essentially ignore the constraints manifesting as judicial orders because deep corporate pockets can pay any resulting fines. Senior executives can be rather “free-wheeling” on corporate policies because the officials themselves—as citizens—are not subject to fines or imprisonment.

Corporations are not citizens; rather, the associations are creatures of the state created for particular purposes. Therefore, it can be said that the citizens operating the associations can and indeed should be held criminally liable for any “corporate” wrong-doing. Put another way, the actual decision-makers should be held accountable criminally for any decisions that violate a law or a judicial order. Otherwise, “corporations” can evade the law while their managers have little incentive to treat it as a constraint on profit-seeking.

Corporations do not act apart from the human beings within. An association just is its members. The people responsible for a “corporate” decision that violates the law can at least in many cases be identified, even if as scratched initials on the margins of a policy proposal. In fact, the police could charge a corporate official whose role the offending policy falls under even if that official had been negligent in not having kept up on the decision made by his or her subordinates. So coverage of responsibility is something that can be applied to particular people within the management of a company. Such coverage, if resulting in real jail time, would doubtless get managers’ attention rather quickly, as opposed to merely fining a company’s treasury. Unfortunately, Brazilian officials had a disincentive to implement such coverage with consequences with teeth, due to the countering pressure to attract businesses rather than repel their decision-makers.

Lest it be thought that creating an international body with the power to imprison executives of MNCs for crimes against an international code, the problem of how to enforce Brazil’s law on an international organization (e.g., Google) would go unanswered. One “consensus” global code would not touch on the regional and local specificities in criminal law. That people in Brazil were offended by a video does not mean that a global consensus would necessarily emerge in favor of criminalizing the video. For one thing, some governments support free speech even on opinions that are offensive to a majority.

The problem can be said to be that of cultural particularity vs. economic globalization. Both are viable and thus must be recognized. Multinational corporations must legally at least be multi-domestic in responding to cultural-legal particulars even while being the instruments of efficient international competition. Both values are legitimate, and yet they are in conflict at least in terms of the enforcement of local law. Statesmanship on behalf of such law even at the risk of losing a potential foreign business investing in local jobs is unfortunately all too rare, given the countervailing greed involved in attracting suitors away from other potential hosts.

All too often, leadership is gloss for greed rather than based on standards and principle. Put another way, the “principle” of efficient comparative advantage is often used by self-promoting governments as a means of obfuscating the real selling-out of the country’s own laws, which in turn ideally reflect moral values that are held by society. The question is perhaps whether governance structures geared to real accountability for business practitioners can be designed to counter the hegemony of greed over principled leadership. The political influence of the practitioners and their respective corporate treasuries over the governance itself—the creature coming to dominate its Creator—compounds the difficulty and suggests that it is no accident that corporate executives rarely see jail time.

Source:

Jeff Fick and John Lyons, “Google’s Brazil ChiefDetained; Court Bans Anti-Islam Video,” The Wall Street Journal, September 27, 2012.

Customers Give Uber a Pass: A Lapsed Enforcement of Business Ethics

A letter from a former security employee at Uber claims that the company’s Marketplace Analytics department “exists expressly for the purpose of acquiring trade secrets, codebase and competitive intelligence.”[1] The letter caused the judge to delay the trial in which Uber stood accused of stealing trade secrets involving self-driving cars from Waymo. “I can no longer trust the words of the lawyers for Uber in this case,” Judge Alsup said.[2] Ouch! The question remained whether Uber customers would punish the company by turning to Lyft instead. Unfortunately, the typical customer may overlook unethical practices at a company if a good deal is to be had. Economizing monetarily serves self-interest, whereas “walking with your wallet” oftentimes does not. Standing on principle may simply not register when people have their consumer hats on.

After its systemic customer-fraud was exposed, Wells Fargo’s management simply offered sweeter terms to entice existing customers to stay put and even to attract new ones. Although the bank had to pay in the form of offering better rates, society at large may have expected more in the form of an exodus of customers from the sordid bank for such institutions in which fraud is so systemic should arguably not continue to exist.

Even before the revealing letter was read to Uber’s judge, the company had gotten the attention of its customers by “grabbing headlines for ignoring complaints about sexual harassment at its headquarters as well for a variety of corporate practices” that had piqued the interest of regulators.[3]  Even so, Uber had reported a 10% increase in second-quarter (2017) bookings over the first quarter, according to Bloomberg.[4] Uber hit 5 billion rides in more than 70 countries during the summer of 2017. This suggests that “for a majority of consumers, disgust over corporate misconduct doesn’t always translate to ditching a reliable service.”[5]  Managements can thus buy themselves out of trouble by retaining the vast majority of customers by offering better terms.

Lest it be decried that such self-rescues should not be allowed, we have only to look at the customers who look the other way as they single-mindedly pursue their self-interest. Admittedly, they could point to government regulators as being the proper instruments for holding wayward managements accountable. Unethical conduct is not always illegal, however, and where such conduct is widespread and ingrained in a company, nothing short of bankruptcy may be just. Of the latter point, justice at the hands of a court of justice or a regulatory agency may not go far enough to exact what is just ethically.

 To be sure, Lyft was making inroads on Uber’s turf. TXN Solutions reported in 2017 that Uber’s market share had slipped to 75% from 90% in 2015.[6] Uber’s valuation may have fallen from a high of nearly $70 billion to close to $50 billion.[7] Of course, these trends could be from improvements at Lyft rather than any ethical fallout at Uber. Put another way, Lyft should arguably have been able to make more of a dent, given the sordid culture and practices at Uber’s headquarters. The sad truth may be that consumers don’t really care if a company’s management is ethical unless the consumers themselves are gouged; everyone is out for oneself without concern for principle. I submit that such a mentality—such a culture—is not in a society’s interest; the good of the whole is not merely the aggregate of individual, self-seeking choices. Even Adam Smith saw a need for government, and, moreover, of moral sentiments as enveloping a free market. Hence his text, A Theory of Moral Sentiments, should be read along with The Wealth of Nations to give the economist’s full theory.   

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[1] Becky Peterson, “Ex-Uber Staffer Says in Bombshell Letter that the Company Had a Unit Dedicated to Stealing Trade Secrets,” Business Insider, November 28, 2017.

[2] Ibid.

[3] Marco della Cava, “Underterred by Uber, Lyft Says It’s Destined to Be No. 1,” USA Today, November 29, 2019.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

Uncovering the Root of Poverty: An Addictive Habit

Addictive pain-killers killed 64,000 residents in the U.S. in 2016, in part because physicians tended to rely on patients’ self-determined ratings of pain on a scale of 1 to 10.[1] Such subjective ratings were of course vulnerable to self-seeking motives willfully negligent or even reckless in terms of health. A habit or marked tendency in favor of choices at the expense of a person’s own long-term well-being stems, I submit, from weak impulse-control. This factor can explain a lot about why poverty exists and goes on. 

Poverty, it has been said, is the cruelest form of war, for such war can go on and on and wreck subtle though tremendous damage on the afflicted. Yet the mentality that can get a person into such a war and associated bad choices can be easily overlooked by elites that deign to study the problem of poverty.

Attempting to explain escalating rates of suicide, overdoses, and alcoholism among uneducated Americans, Angus Deaton and Anne Case, who spoke at the CEO Council sponsored by The Wall Street Journal in November, 2017, pointed to the diminishing number of jobs “with a ladder up, with on-the-job training, with benefits.”[2] With less incentive to focus on doing well at work and less opportunity to get involved in a union, a person can easily feel despondent, especially given the breakdown of the nuclear and extended family and the decline of mainline Christianity. Drugs, including nicotine and alcohol, and ultimately even suicide, can remove the resulting sense of nihilism.

The job/family/religion explanation strikes me as overly formalistic, even external, however. For example, the rise of individualistic evangelical Christianity, which Deaton and Case claimed does not allow for a sense of community because of the theological emphasis on an individual's relationship with Jesus, can nonetheless provide social opportunities for people. A visit to any megachurch can demonstrate that “extra-curricular activities” go on in spite of the individualistic theological bent. Megachurches typically have coffee shops and fitness rooms, and even put on plays (e.g., at Easter). 
Similarly, not being able to get involved in a union does not exhaust the things a person can do with others in a group; political activism, for example, is open to workers outside of the work context (e.g., working on a political campaign).
I also take issue with the claim that uneducated workers do drugs because a promotion into management is no longer as easy as it may have been in the past. The work ethic is not predicated on advancement; rather, hard work itself is valued as a virtue. To be sure, the technologically and off-shore based relative loss of manufacturing jobs and the lack of satisfaction from working in a fast-food restaurant, for instance, have made it more difficult for uneducated people to find fulfilling jobs or jobs at all. Faced with loads of empty time--rather than trying to start an enterprise (e.g., a site online) or volunteer--drugs and alcohol are easy apparent fixes, or fillers. Yet the decision to have empty time is a course of least resistance rather than a fait accompli. The willingness to be lazy is itself significant, for it gets us closer to the underlying problem, which is internal. 
I submit that drug use, including alcohol and nicotine, does not stem from having lots of time from being unemployed. Rather, people who succumb to drug addition can be said to have weak impulse control; they do not have or use the strength of will to resist the urge to take another hit, or to try some drug in the first place. I've never tried heroine or cocaine even just to see what they are like because I know they are highly addictive so I have resisted offers to try them. So I'm surprised when I hear people who use those drugs treat them so casually, so conveniently, without any hint of impulse control. 
The lack of a college education is a contributing factor, for a surprising phenomenon of ignorance is its presumption to not being able to be wrong with respect to itself. So presuming to know all about heroine or cocaine and being able to manage them as if a physician fits with being uneducated. In college, students think through critiques of theories rather than taking them at face value; the professors model this. Being accustomed to critiquing other people's theories can get a person in the thought-habit of critiquing even one's own, even implicit, theories. In contrast, the assumption of ignorance that it must be right goes unchallenged by the uneducated. Interestingly, the difference is not just cognitive, for attitude is impacted by whether or not a person turns reason on oneself. The arrogance of ignorance contrasts with the humility that is ideally in putting one's own assumptions and beliefs about oneself and the world under the proverbial knife. Such an orientation necessitates the use of impulse-control, which in turn implies valuing it rather than conveniently assuming that it is not worthwhile. 

I submit that the “Two Americas” are separated by two trajectories of habitual thinking and values that stem from whether or not a person values and has good impulse-control. People who value such control loathe being around people who don't. Put another way, evading impulse-control is acceptable in some quarters while looked down on in others. The two respective cultures are each self-reinforcing, and social distance between those cultures naturally widens and is not just a matter of being educated or not. Unfortunately, I have been exposed to three "ghetto" apartment complexes, complete with "ghetto property-managements" whose mentality goes beyond garden-variety incompetence to reflect the lack of impulse-control evinced by many of the residents with respect to each other (e.g., being inconsiderate with noise late at night, and having a tendency to lie--failing to resist to impulse to take the easy out).  
Speaking once with a security guard whose company covered one such “ghetto complex” in addition to other, “non-ghetto” complexes, I was struck by how he distinguished the “ghetto” residents. “They think they live in houses, playing their music as if people are not on the other side of the wall. We don't have this problem at the other complexes we handle. The people in that area of town are not so inconsiderate.” I could see why uneducated poor people live together and other people avoid them; the difference is not merely monetary. People who resist the urge to play music or movies loud at night so not to disturb neighbors also resist the urge to lie when doing so would get them off the hook. In apartment complexes populated by poor, uneducated people, the mentality is exactly the opposite, and such a sordid mentality based in a convenient refusal to engage in impulse-control (for selfish reasons) is anathema to other people, who thus keep their distance and even perhaps urge public policy that hurts the poor. Regardless of how sordid the attitude is, I contend that poor people's human rights to sustenance should be respected and protected. This is particularly so because of how intractable the attitude truly is. A person who is used to dismissing impulse-control (i.e., not valuing it) is not likely to go down the other track, unless the motive comes from sustained suffering. 
In terms of not being employable, the lack of a college education again does not tell the whole story. A low-level employee interacting regularly with customers gets heat from a manager if the attitude is, "I can't be wrong about X." Lying about the customer is also not acceptable. Impulse control is vital to virtually any vocation. 
A day after Thanksgiving in 2017, I faced a middle-aged cashier who insisted that people could refuse to recognize that it was Thanksgiving and instead validly select another holiday to celebrate that day, including Christmas and even July 4th.  I countered that Thanksgiving and the other two holidays are set by the U.S. Government, and so are on determined days.  She dismissed this out of hand, which was insulting, and repeated, "It can be any holiday you select." She refused to resist her impulse that she must be right even though she was wrong. "No, yesterday was Thanksgiving and this is Thanksgiving weekend--not another holiday," I insisted, but she rigidly held on to her ignorance as if it could be right. Rather than use self-discipline even to consider that she may have been wrong, she failed to resist the impulse of the presumption of being right and being dismissive.

I submit that a culture exists in the poor America that involves not only a difference in wealth and even education-level, but and most crucially in the attitude toward and practice of impulse-control. That is, being inconsiderate, lying, and feeling entitled in being infallible about what a person thinks one knows can become salient norms where enough uneducated poor live. The attitude thinks it receives confirmation because other people in a similar way also have it. The poor are very susceptible to being rude, lying, and using drugs because of ill-used or perhaps impaired impulse-control. Viewing such restraint as of nugatory value, it is easy to be inconsiderate, rude, even highly aggressive (given the overblown or even imagined slights or provocations).
Biking in poor areas near universities, I have noticed the extreme “road-rage” that is distinct among poor drivers. Today in fact, I witnessed one driver get out of his car to shout at the driver in front of him at a red light. The aggressor showed absolutely no impulse-control; his emotions were out of control. Similarly, I've seen poor drivers much, much more than other drivers lose complete control of themselves emotionally and because apparently I had no right to bike on the side of the roads along the curbs! The sheer aggressiveness, outstripping any rational basis in the context itself, has both amazed me and formed in my mind an image of the typical poor driver. My reaction in observing such drivers has been that such people must surely live in a very different world. I couldn't imagine anyone with such pathetic impulse control being in college or holding a job. Clearly, another America exists, with its own mores and values that retain the inhabitants from entering (and being accepted in!) polite society. Being in the habit of evading impulse-control is so different than valuing such internal control that “Two Americas” can be so explained. Both in terms of wealth and, if the stats on drug and alcohol abuse are correct, impulse-control, the America that is expanding is not the one that should be.

If I am correct in my analysis here, simply providing more and better jobs, creating labor unions and other ways for poor people to “get involved” or be in a group only touch the surface, and thus cannot get the job done in eliminating poverty. Even if "ghetto" apartment complexes are "broken up," with the very poor being disbursed such that they cannot form a culture of least resistance, the internal attitude with respect to impulse-control is surely very difficult to change. So study of precisely how such a feat may be accomplished is needed. 

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[1] Gregory Korte, “U.S. Waging Tech War against Opioid Epidemic,” USA Today, November 24-26, 2017.

[2] Janet Adamy, “’Two Americas,’ Updated,” The Wall Street Journal, November 20, 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)

The full essay is in Cases of Unethical Business, available in print and as an ebook at Amazon.com.  

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.

The full essay is in Cases of Unethical Business, available in print and as an ebook at Amazon.com.  

Mass Shootings in the U.S.: Why Are Americans So Angry?

Even though the United States account for less than 5% of the world’s population, 31% of the total number of mass killings worldwide between 1966 and 2012 occurred there.[1] I contend that a rise in passive aggression and the related intolerance accounts for much of the difference. In other words, it could be that Americans generally are getting nastier and more angry at each other.

Although not a mass-shooting, Vester Flanagan shot two former co-workers in August 2015. While it is easy to relegate the story by simply concluding that the guy was nuts, a closer examination reveals the situation to be more complicated. The nuances may help us understand what lies behind the mass-killing violence that goes beyond the killers themselves and is disproportionately an American phenomenon. In analyzing the Flanagan case, I want to stress that even if his coworkers had been at fault, the double-murder was completely unjustified. My analysis is oriented to uncovering a hidden trend in American society rather than answering whether the shooting is justified.

In a lawsuit against another network in 2000, Flanagan had claimed that a producer had called him a "monkey" and that he had been "made aware that other black employees ... had been called monkeys by officials affiliated with defendant." He also claimed that a Caucasian "official" had told him that "it busted her butt that blacks did not take advantage of the free money," referring to scholarship funds. Additionally, he insisted that a supervisor at the station had said that "blacks are lazy,” and that that another employee had told a black tape-operator to "stop talking ebonics." WTWC-TV acknowledged that an employee "may have made similar comments to another employee," but denied that such comments are "indicative of unlawful employment practices." The case ended in a non-disclosed settlement.[2] The admission of race-oriented comments to another employee lends some credibility to Flanagan’s assertions.

Even so, Flanagan may have made his own contribution to the workplace tension. The news station denied that his termination was the result of discrimination. It instead cited "poor performance," budgetary reasons and "misbehavior with regards to co-workers."[3] The latter in particular resonates with what he wrote regarding the cameraman (Adam) and reporter (Alison) from his next station. After announcing that he filmed the shooting, he wrote, “Adam went to hr on me after working with me one time!!!”[4] Either Adam had overreacted or Flanagan’s treatment of co-workers was incredibly bad. Flanagan also wrote, “Alison made racist comments” to him, and that he had filed an EEOC report.[5] It could be a case of “white privilege,” or simply that Alison was racist (or that she took sides with Adam).

In any case, the shooting stemmed from anger in the workplace—people not getting along and not having the social skills to work things out rather than make things worse. Adam’s quick trip to the station’s human resources department may indicate a lack of tolerance, as well as a tendency to escalate matters rather than patiently work them out. If Alison made demeaning racial statements to Flanagan, then perhaps her attitude may have been condescending and thus inherently conflictual. Of course, both Adam and Alison may have simply been reacting to extraordinarily bad treatment from Flanagan—his report to the EEOC being an effort to go on the offensive rather than admit that he had treated his coworkers very badly.

I suspect that at least part of the problem is societal—Americans may be been becoming more passive aggressive, and this anger in turn might be kicking the outright aggression up a notch in some people. The lack of tolerance for disagreements shows up in the ideological fragmentation of the American news networks, for example, with Fox News and MSNBC employees on the air brazenly displaying utter disdain for progressives and conservatives, respectively. Dismissiveness toward others, or in other words being “too cool to talk,” stemming from an abject lack of respect for others, may have been increasing at least in the Millennial Generation. As the sordid attitude becomes more socially acceptable as a social more in America, then increasing anger and ensuing aggression can be expected. “Road rage” is a case in point: an extreme hostility toward other people ruffling feathers. Why are so many Americans angry? This may be part of the reason why the U.S. has a disproportionate number of mass killings, and I suspect that the same holds for workplace (and former workplace) violence.

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[1] Stan Ziv, “Study: Mass Shootings ‘Exceptionally American Problem’,” Newsweek, August 23, 2015.

[2] Dana Liebelson and Jessica Schulberg, “Shooting Suspect Sued Another Newsroom for Racism, Claimed He Was Called a Monkey,” The Huffington Post, August 26, 2015.

[3] Ibid.

[4] Ibid.

[5] Ibid.

Wage Theft: More Companies Flouting Trust

If you are playing by the rules, not trying to cut corners at others’ expense, you need not let the bastards get you down. Of course, if your detractors catch you with your hand in the cookie jar, then blaming them only confirms that a sordid character flaw undergirds the stealing. As a business strategy, accusing union officials of having an agenda simply because they have identified cases of wage theft by the company is not exactly good public relations; in fact, the ploy sends a message that the managers at the helm are more interested in shifting the spotlight onto distractions than “manning up” to take responsibility for the unethical and illegal conduct at the employees’ expense.

The full essay is in Cases of Unethical Business, which is available at Amazon.

Tyco’s Kozlowski: Isolation or Work-Release?

L. Dennis Kozlowski, a former CEO of Tyco, was denied parole “due to concern for the public safety and welfare,” according to the New York Department of Corrections.[1] A parole board ruled that releasing him in 2012 would have the effect of minimizing his corporate crimes and affect public safety. The board concluded that early release would “not be compatible with the welfare of society at large, and would tend to deprecate the seriousness” of his offenses.[2] He was convicted in 2005 of looting nearly $600 million in bonuses and other payments from Tyco in the 1990s.

As much of a sentence of 8 to 25 years in prison may seem to befit such a case of greed and abuse of corporate position, that Kozlowski was transferred three months before the denial of parole to a minimum-security facility in Manhattan and approved in a work-release program suggests that the seriousness of his crimes did not translate into the punishment after all.

Although white-collar convicts should not be conflated with murderers and rapists, prison should not be conflated with a dorm for the corporate criminals. Put another way, the punishment ought to fit the crime (rather than another, or none). If the sentence includes prison, then prison it should be.

It is worth asking, however, whether prison is suitable for white-collar crime. Put another way, would the public safety really have been compromised had Kozlowski been released early? Does stealing $600 from a corporation without any threat of violence put anyone’s safety at risk? If not, then only enough security to keep the criminals in the prison facility should be necessary, as they are not dangerous. This does not mean an open door policy or giving the inmates permission to go out of the facility to work.

Having to confront oneself for hours without distraction in a cell for a sustained period of time—as if a kid sent to his or her room for hours as a punishment—may well be fitting to the white-collar crime. Furthermore, taking the criminal’s wealth and property and requiring work to repay any losses to others also seems fitting. These two elements ought to be applied successively rather than concurrently so each can have its full effect.

1. Chris Dolmetsch, “Former Tyco Chief Kozlowski Is Denied Parole in New York,” Bloomberg, April 5, 2012; Kevin McCoy, “Former Tyco Chief Told No on Parole,” USA Today, April 6, 2012.

2. Ibid.

GlaxoSmithKline: Born Again Ethically?

GlaxoSmithKline, a drug company based in the E.U., agreed in 2011 to pay $3 billion to settle the U.S. Government’s civil and criminal investigations into the company’s Medicaid pricing practices and sales practices, including illegal marketing of Avandia, the diabetes drug linked to coronary problems. The settlement amount surpassed the previous record of $2.3 billion paid by Pfizer in 2009. Even so, it is doubtful that $3 billion proffered enough of a punch to motivate either Glaxo’s board or CEO to do what would be necessary to extirpate a corporate culture perhaps too comfortable with cutting corners.

The full essay is in the Introduction of Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.