American Airlines: Caring for People

What is the purpose of a business? According to Aristotle, there are different kinds of purposes. The final cause of a tree seed, for example, is a tree; the material cause is whatever biochemistry went into the seed. The final cause of a human sperm entering a human egg is an adult human being—hence the question of the ethics of abortion. A human embryo is potentially an adult human being. The material cause of an embryo lies in the biochemistry of the seed and the egg. But I digress. As regards a company, we can distinguish different kinds of purposes. Somewhat crudely, the real purpose can be distinguished from the ostensible purpose. The former has to do with what can be thought of as the bottom-line purpose: maximizing revenue or profit. Any ostensible purpose, such as feeding people or transporting them, is functional in nature, and can be viewed as a means of achieving the real purpose. A third kind of purpose can be labeled as a marketing purpose, the promotion of which is merely to serve the real purpose. In terms of Shankara’s Hindu metaphysical framework, the real purpose is in the real, the ostensible purpose is in the realm of appearance, and a marketing purpose is in that of illusion. I contend that business managers, especially in marketing, are accustomed to conflating these three types of purposes in being oriented to the real purpose. Not being transparent about the differences between these three purposes is, I submit, unethical in nature. I have an incident involving American Airlines in mind.

Eight Black men were ordered to leave a flight in early 2024 because a flight attendant complained about the men’s body odor. They were not seated together, and did not know each other, at least altogether, and yet presumably they all smelled the same. As far as business ethics cases go, this one is a whopper. When one of the men exclaimed, “So this is discrimination,” a woman wearing a badge (and thus was presumably an airline employee) replied, “I agree, I agree.”[1] With no other flights to the destination that day, the company reboarded the eight passengers on the same plane. To be sure, I don’t know whether any other reasons for the airline’s action in deplaning the eight men existed and, if so, whether any of them were valid but were not known to the press. Were all of the men covering their faces with masks or talking loudly or using fowl language, for instance, the airline may have had sufficient cause to remove the men. It seems odd that a company manager would take the decision to remove the men based only on an employee’s claim of a bad odor, especially given that none of the men reported having been told of the odor before being asked to leave the plane. In other words, I suspect that there is more to this story.

In any case, the airline’s statements can themselves be analyzed in terms of the real, ostensible, and marketing purposes of the company. One such statement is the following: “We take all claims of discrimination very seriously and want our customers to have a positive experience when they choose to fly with us.”[2] This is a very good statement, as it disavows the legitimacy of racial discrimination and is straight forward in situating a positive experience as something that, while relevant to the company in terms of providing a product/service, is not the company’s purpose.

I contend that the real purpose of American Airlines, and virtually any private company, is to make money. The company’s ostensible purpose is to transport people (and cargo). Next to these two purposes, it can be readily seen that providing a positive experience to customers does not in itself rise to the stature of being a purpose. Rather, providing a positive experience is a means. So far, the response of the company is fine.

The problem lies in the further statement, “Our teams are currently investigating the matter, as the claims do not reflect our core values or our purpose of caring for people.”[3] The choice of the word, “teams,” is immediately suspect, as companies have employees rather than bad sport analogies. The whiff of a marketer can thus be detected. Although the lack of honesty on this point is tedious, it points to a mindset that plays with words for effect. Gilding the lily is one way of expressing the mentality. The real problem lies in the second part of the statement, wherein caring for people is said to be the company’s purpose. Upon reading this part of the statement, my initial reflex was to think, an airline is not a nursing home. The latter does have as its main purpose the caring of people. The function of an airline is otherwise, being in transporting people from one place to another. So we don’t even have to go to the real purpose—that of maximizing profit—to catch a lower good being portrayed as a higher one. Aristotle refers to this as misordered concupiscence, and it is not ethical in nature. Placing the good of one’s car above the good that is in God is an example of placing a lower good above a higher one.

In actuality, stating “caring for people” as the airline’s purpose serves marketing. As if trying to turn lemons into lemonade, the manager who came up with that statement was using the incident to promote the airline, which in turn is in line with revenue and profits. I contend that using an error for self-promotion is morally squalid in nature, for the self-aggrandizement does not take seriously enough the need to accept the error publicly. Especially if no other reasons exist for having ordered the men off the plane, the seriousness of the harm to the Black men warrants significant attention be taken publicly by the airline. Beyond an easy apology that wouldn’t cost the company anything, an explanation was called for, and thus due publicly to the men at the very least. The airline was on much firmer ground in affirming that the company’s employees do try to give customers a positive experience. That employees are only human, and thus can make even bad mistakes, is more easily digested if a company does not invent feel-good purposes that are actually embellishments or even outright lies. Ecclesiastes has it that for everything there is a season. The season for atonement does not include self-aggrandizement.

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1. Marnie Hunter, “Black Passengers Sue American Airlines . . .,” CNN.com, May 29, 2024 (accessed June 2, 2024).
2. Ibid.
3. Ibid, italics added for emphasis.

Bucking Starbucks’ Star

Common sense would perhaps dictate that a company sporting a managerial culture of pathological lying as the default way of dealing with stakeholders must inevitably go under at some point. Kant’s categorical imperative insists that mendacity is unethical, for it violates the non-contradictory law of reason. What would the Prussian Kant say, however, to the good Germans who lied to NAZI Jew-hunters about hiding the enemies of the state? As laudable as such lies are, unsavory business managers seem instinctually wired to take advantage of the slippery slope by ignoring the rationale of avoiding extreme harm. What begins as a trickle can become a deluge. Perhaps that is what happened at Starbucks.

In late October, 2022, the director of the U.S. National Labor Relations Board “accused Starbucks of threatening to withhold benefits and wage increases from workers if they unionized; selectively enforcing work policies against union supporters; disciplining or firing workers who were activists; and failing to bargain in good faith.”[1] Starbucks had closed a store in Ithaca, New York. The lack of good faith can be seen in the Congressional testimony of Howard Schultz, Starbucks’ CEO, in 2023. He sanctimoniously “admitted” that people he had spoken with could erroneously infer intimidation. In other words, it’s on the other guy. Such toxic pomposity easily belies a mere patina of portrayed honesty.  

NLRB officials claimed in 2022, The “company has repeatedly broken the law by firing pro-union employees, cutting their hours and offering pay hikes and other benefits to those who decline to unionize.”[2] Least the company’s management’s denials of these claims be believed, fast-forward to April, 2023, when it was revealed that the company had lied that negative publicity and a related strike played no role in the company’s decision to permanently close another store in Ithaca.

The story begins back in April, 2022, when Starbucks’ public-relations firm notified its client that employees “went on strike due to repeated grease trap spills that caused an unsafe environment and lack of action from management.”[3] The lack of action regarding a known safety hazard at a store that the company had written had the “strongest real estate trade position in this area” such that “any relocation would be inferior” points to a single-minded and expedient orientation to money.[4] Such a mentality is ripe for pro-union votes. A managerial culture of mendacity just adds fuel to the flames.

Andrew Trull, a company spokesman, claimed, “Media attention had no bearing on our decision to close the store.”[5] In an internal email, however, Denise Nelsen, senior vice president of U.S. operations, wrote, “We have to solve these condition issues because we also keep getting media on the store condition there.”[6] A direct contradiction! In symbolic logic, A and not-A cannot both be true. A barista at the store at the time said regarding the closing of the lucrative store, “It was retaliation for the strike we went on because we were being forced to work in unsafe conditions. They didn’t care [before]. They cared all of a sudden now when we’re making national news.”[7] Admittedly, negative publicity can hurt the bottom-line. I venture to say nonetheless that the instinctual urge to retaliate, which Nietzsche claimed is out of control in the weak who seek to dominate, trumps the otherwise-hegemonic money-orientation in Starbucks’ managerial culture. The propensity to fabricate rather than tell the truth serves both the power-aggrandizing and economizing motives, especially when they are extreme urges out of control (i.e., not mastered, or channeled by the individual).  

The culture of mendacity in Starbucks’ managerial cadre reaches even the store-manager level. I know this from personal experience. At a Starbucks’ store in April, 2023, a store manager pointed to the last remaining seat. “It’s right below an air-duct that blows cold air.” I had been there in January. “We can adjust that for you,” the manager lied. “I though the temperature of stores is centrally controlled,” I countered. “Yes, it is; it reduces our carbon footprint.” He gave no outward sign that he had just contradicted himself, which can be construed as a lie on top of a lie. Perhaps he was assuming that customers are idiots and would not be likely to put two and two together. Well, I did, but I was polite enough not to tell him that I knew that he had just lied to me. Instead, I went after the accuracy of his claim that centralized control is environmentally friendly. “Well, I have lived in Phoenix, Arizona, where your stores are generally known to feel like refrigerators even when it is 116F degrees. I’d say that’s a pretty big footprint, wouldn’t you?” He stood there silent, like an idiot. The dumb shoes were on a different foot.

Meanwhile, employees of that store kept to their script—that they like their store manager so they would not vote to unionize. When on one occasion I overheard a shift-manager say that the company’s management had lied about giving the employees an additional day off, he was silent when I asked him if he still liked the management so much he would not vote to strike. He pretended like I had not overheard him, which itself is a kind of a lie. Even the employees, who are in no sense of the word “partners” as the company’s head management pretends and publicizes, lie to customers.

Lastly, when I was living in Arizona, I went to a Starbucks in area of Tempe north of the Salt River, which the city of Tempe lies is a lake even though it looks like any other river. Six police employees on their break on the 4^th of July will wandering around the customer area between tables. I approached a Starbucks employee to complain, as I was not used to looking up from my laptop and seeing so many guns passing by at close-range. She refused to act. Then when the group of guns were blocking the counter where drinks are available, I reapproached her and she finally decided to do something. She politely asked the police to hang out away from the bar. She was met with bloated egos, one of which, with his back to the customer area, kept turning his head to give us suspicious looks.

My thought was: if the guy feels such distrust for the public, perhaps he and his coworkers would feel more comfortable spending their breaks somewhere more comfortable. Somewhere more out of the way rather than front and center. This would also spare us, the taxpayers, from being subject to even the tacit intimidation of seeing bullet-proof vests and guns at such close range as we enjoy our coffee. No, I was not over-caffeinated, though maybe the police were, given all their pacing around the tables. Not that the police employees would have recognized their hyperactive state; after all, fish cannot see the water that they breathe, for they are always in it. I contend that such a blindness is conducive to literally and figuratively taking liberties, whether through intimidation or outright lashing out. 

I do contend that liberty includes freedom of the innocent from intimidation. It can be quite difficult to perceive, yet unconsciously it is surely felt. Notice, for instance, the policeman intently looking at me as I took the picture shown here. Is taking a picture suspicious enough to warrant such rapt attention as a hunting dog might have upon seeing a rabbit? As the youth of today would say, the guy needs to chill. Not that I would have walked over to him after taking the photo and say, Hey dude, just chill out a bit, huh? You're on your break. He would have sternly dismissed such an accusation and turned on me (hence proving my point for me) even though it was, after all, a holiday. July 4th, Freedom from Intimidation Day in the U.S.A. By the twenty-first century, the British Red Coats had all but been forgotten, even, I suspect, in Boston Massachusetts. In Arizona, the Red Coats are homegrown.

Fortunately for all concerned, the police huddle-formation soon broke up and the disgruntled cops left the store. I discovered only days later that the head of their local union had been broadcasting that Starbucks had demanded that the police leave the store, which was a lie. The egos were two degrees of separation from realizing that my complaint had some validity, and they felt the need to retaliate against the company just for being asked to move out of the way. Interestingly, the barista had refused to ask the police to stop wandering through the tight-knit customer area yet decided to act when the police were near her.

Laura Ingram of Fox News had decided that I must be a criminal. For its part, Starbucks sent in a vice president, who directly or indirectly told The New York Times that I must be “anxious” and that police of any number whatsoever are welcome in any Starbucks store. Considering the retaliation against employees, or “partners,” who have held strikes or sought to unionize, it is interesting that the vice president capitulated to the local police union—even scapegoating a customer in doing so. I wonder how many customers trust the company and its management; any such trust would surely not be deserved.

The esteemed Starbucks experience, which the company advertised at the time, apparently includes being thrown under the bus (i.e., sacrificed) for making a request that might upset the company’s cosy relationship with fellow power-aggrandizers. Mendacious birds of prey often fly together, for they understand each other, just as alcoholics and drug addicts do. Using people, whether for retaliation or more money, violates Kant’s moral imperative that rational beings (including us, even as we irrationally over-populate and, in doing so, risk even our own extinction) treat other such beings not just as means, but also as ends in themselves. Kant was insistent and adamant: Telling lies violates this moral requirement of what it means ultimately to be human—to partake in rational nature.

Furthermore, as Nietzsche emphasizes in his Genealogy of Morals, an unmastered and excessive instinctual urge of resentment, especially of the strong, and indeed of the ensuing retaliation too, is a mark of being weak. The strong are advised to keep their distance from the new birds of prey. Hence, job-seekers should avoid toxic managerial cultures if possible, and at the very least be on the lookout for the telltale signs—the red flags. A pattern of telling lies is such a flag, hence it is significant when a direct contradiction can be exposed. (Potential) customers should take notice too, though the want of local alternatives can make it difficult, practically speaking, to avoid the chain. Unfettered choices require a competitive market, which as the activities of companies such as Standard Oil, Walmart, and Facebook demonstrate, can be difficult to be maintained even in a republic.

See the booklet: "Bucking Starbucks' Star."

See the essay: "Starbucks Capitulates to an Overzealous Police Union in Spite of In-Store Intimidation."

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 1. Dave Jamieson, “Starbucks Broke Law By Closing Unionized Store In Ithaca, Labor Officials Say,” Huffington Post, November 1, 2022.
 2. Ibid.
 3. Dave Jamieson, “A Starbucks Closed Abruptly—And Its Workers Say It Was Retaliation,” The Huffington Post, April 29, 2023.
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid.

Christmas: A U.S. National Holiday Privatized by Logical Fallacy and Passive Aggression

On December 18, 2018, U.S. President Donald Trump issued an executive order, the first section of which states, “All executive departments and agencies of the Federal Government shall be closed and their employees excused from duty on Monday, December 24, 2018, the day before Christmas Day.” Christmas itself had not been an official federal holiday until an Act of Congress was signed by President Ulysses S. Grant in June, 1870. That Act also declared New Year’s Day and the 4^th of July would be national holidays too, and yet by the 21^st century a significant number of Americans, and especially business managers, were committing a gaping category mistake by treating Christmas as not commensurate with the other two holidays as public holidays. By Christmas in 2018, the self-ingratiating “mistake” was still not transparent. Hence, this essay.

On the federal holiday of Christmas Eve Day before Christmas of 2018, I went grocery shopping at a Bashas’ supermarket. Waiting in the cashier line, an elderly woman at the front and I confronted the cashier, who refused to name the two-day holiday by name. What was behind this rather obvious fit of passive aggression? After the cashier felt the need to inform us that his holiday had been two weeks earlier, I countered that a vital difference exists between private and public holidays. My birthday is a personal holiday to me, and yours is to you, but neither of us would presume that our individual holidays are commensurate with a public holiday; we would not expect and even insist that other people recognize our respective birthdays as holidays. We would not say to strangers, “Happy holiday.” Yet in replying, “My holiday was two weeks ago,” the cashier was treating Christmas, a public, national holiday, as if it too were the private holiday of some people. Herein lies the category mistake! Factually, a public holiday is not a private holiday, so a person errs in putting them into the same category.
Let's pretend that I shop at a Bashas at the end of June, and the cashier facing me says, "Happy Fourth of July!" I reply, "I hope you enjoy your holiday; my holiday was a week ago." I could have been referring to the Summer Solstice, for instance. My holiday is not commensurate with a national holiday, so my use of your and my would be inaccurate, and, frankly, insulting to the public holiday and the people who celebrate it, for it makes no difference to a public holiday how many people celebrate it. The holiday is still a national holiday. The subterranean "game players" either don't understand this, or they reject it without a sound rationale. My response to Independence Day would doubtless be considered very strange; it would also be strange were the cashier to go out of his way to refuse, like a stubborn child, just to say the name of the public holiday (i.e., Independence Day, or "July 4th"). Even so, these dynamics, or games, around Christmastime are accepted as valid on the strange assumption that just because some people might be offended, it is an affront just to with people in public a Merry Christmas. Put another way, the societal dysfunction, which had even become institutionalized thanks to American retailers, has faced a considerable blind-spot (or state of denial). This would not have been the case for Independence Day and New Year's Day in spite of the fact that these two holidays had been made legal public holidays in the same Act of Congress in which Christmas Day was included! 
Lest I be pronounced an ardent rationalist like Kant, who argued that logical contradiction in a maxim being universalized means it is unethical, I supplement my displeasure at the category mistakes with Nietzsche's theory in order to drill deeper, or diagnose the underlying weakness, or sickness. To whit, I submit that resentment and even jealousy, which are manifestations of weakness, are behind the warping of logic. 
To Nietzsche, the weak resent and are jealous of the strong simply because the weak lack it while the strong have a surplus. So the self-confident strong, who are (unlike me) not bothered by the pestilence of the weak not only because it is not a threat, but also because strength resides in itself even as it's benefits overflow to the fishing boats below. “What are those parasites to me!,” the strong say, for the latter are awash in their own strength, which the parasites cannot capture except through “moral” Thou Shalt Nots. This is why Nietzsche was so critical of modern morality; it can be, and has, been used like a club to gain power over the beguiled strong. Ironically, the weak who seek to dominate easily resort to cruelty, whereas the strong have enough of the pleasure of power, especially in mastering a stubborn instinctual urge. 

Speaking to a Bashas’ manager briefly on my way out of the store, I said that the cashier had been rude to another customer and myself by stubbornly staying with the claim that this one national holiday, Christmas, is, in his view, merely a private holiday like his own, thus below New Year’s Day and Independence Day. 

Perhaps part of the explanation of the warping of logic is simply ignorance of the U.S. Constitution, whose first amendment stipulates that the federal government cannot act to establish a religion. Even favoring a religious holiday is out of bounds for the federal (and state) government. So the Act of Congress signed by President Grant must have a non-religious basis; hence, the public holiday of Christmas has survived constitutionally to join Thanksgiving (signed by Lincoln not much before Grant’s Act) and the two other holidays of Grant’s Act as an official public, or national, holiday. So liking Christmas only as akin to the private holidays or individuals or associations thereof cannot merely be a matter of religious jealousy (out of some erroneous sense of equivalence on religious grounds). In other words, the claim that my (personal or associational) religious holiday is equivalent to yours even though yours is associated with a public holiday of the same name is erroneous. Beyond the logic lies resentment and jealousy, which are misplaced.
So saying “Happy Holiday” only for Christmas—a slogan whose passive aggressive core is masked by considerateness in not wanting to offend—is not justified by even the seemingly salubrious mask because the practice has not, at least by 2019, extended to the other public holidays in the United States in spite of the fact that some American Indians may be offended by Thanksgiving greetings, anarchists and other political protesters may be offended by “Happy Fourth of July!” and Quakers and other non-violence groups may be offended by Veterans Day, which is a major public holiday in Arizona. In other words, why is offence so significant only in the case of Christmas?  Because it is an official national holiday in the U.S., and thus a public holiday, Americans are not even ethically bound to omit entire mention of it even on it’s eve just because offence may be taken. The same applies to the other national holidays. My question is the following: why did so many Americans, and virtually all retail businesses, capitulated to Thou shalt not! of the resentful, irrational weak who seek to dominate even the strong. Nietzsche contends that the strong have enough mental strength to overcome their most intractable instinctual urges by mastering rather than repressing them. The weak, in contrast, cannot resist acting on the urge to dominate (even to be cruel if necessary!) even the strong, as if weakness were strength too. Both the cashier and the manager, who, by the way, merely gave me a diplomatic look evinced weakness; without sufficient power internally to change and liking their Thou Shalt Nots, they would no doubt continue even after having their category mistakes revealed. 
Would the American public too simply go on as herd animals once transparency is make possible? Or would Americans, as strong individuals, not be beguiled by mistakened, passive-aggressive false-narratives such as “Christmas is just a religious holiday, and thus equivalent to private religious holy-days, so Christmas is not really a public holiday”?

See On the Arrogance of False Entitlement, available at Amazon. The book applies Friedrich Nietzsche's philosophy to business managers and business ethicists.

Saving the Fisheries: Greenpeace Praised Safeway for its Ethical and Stately Leadership

In April 2011, Greenpeace gave fifteen supermarket chains a passing grade; five others failed. Surprisingly, Safeway came out on top, above even Whole Foods. Safeway pledged to stop selling Chilean sea bass (Patagonian toothfish) because current fishing levels are unsustainable. Furthermore, the grocer called on governing bodies to declare the area in the southern Antarctic where the bass is fished a marine reserve. According to Casson Trenor of Greenpeace, such an act of “corporate marine activism” had “never been done before.” Safeway also discontinued the sale of orange mughy, which is unsustainably being fished in the deep sea off New Zealand.  In fact, the company stopped adding red-list species to its inventory.

Beyond any added sales from the enhancement of Safeway’s reputational capital, the company’s moves, going even as far as activism, are in line with facilitating the future supply of the seafood products.  In other words, the moves represent a sort of long-term investment, with the cost being the additional money that could be made in the short term from selling the fish. That other grocers, such as Giant Eagle and Publix, failed in the Greenpeace grading suggests that other companies are profiting in the short term from Safeway’s self-imposed restraint for a long-term benefit available to every grocer. 

In other words, it goes against the law of externalities for one company to voluntary exclude an otherwise salable product from the shelves while competitors benefit from not only that exclusion, but also the long-term benefit of full fisheries available to any grocer. Ordinarily, this dynamic is why a cartel or government regulation is necessary—so all companies recognize the constraint in the short term for the good of the whole industry in the long term. As compelling as that long-term benefit may be, some people will refuse to shove the trough away while there is anything left in it—such is the instinct of instant gratification over deferred enjoyment in human nature.  Hence, it is amazing that any one business would observe a self-imposed constraint at the expense of expediency that is not being observed by others in the industry.

Safeway may represent a case of ethical leadership that is in line with statesmanship. In addition to being ethical (i.e., following an ethical principle such as sustainability), standing alone in the activism (i.e., the leadership) in this case forsakes immediate self-interest for the public good (i.e., statesmanship).  The three elements—ethics, leadership, and statesmanship—can thus be distinguished and related.

An interesting question is whether corporate managers are being ethical in terms of their fiduciary duty if ethical leadership in line with statesmanship is not in stockholders’ financial interest even in the long term. In the present case, it could be argued that the foregone profit is not worth the added profit in the long term from sustainable fisheries.  Additionally, it could be argued that Safeway could have continued to sell the unsustainable fish as Target and Wegmans sacrificed for the eventual benefit that Safeway too could enjoy. The problem of fiduciary duty could be obviated in such scenarios by securing stockholder approval at an annual meeting. 

At the level of property rights, profit-maximization is only a default that a company’s stockholders, as the owners, can modify or even replace.  Therefore, if a majority of shares vote to use the company to save the fisheries even at the overall financial detriment of the company, such a use of property/wealth is proper and legitimate for owners, with the caveat of minority stockholder rights being respected. Such rights can be satisfied by giving minority stockholders the right to sell at a worthwhile and fair price. Such selling would result in more solid ownership support for the new mission. Moreover, to use one’s property not only to make money, but also for a cause that one is passionate about can make life itself more enjoyable and thus worth living.   

Source:

Kim O’Donnel, “Safeway Scales the ‘Seafood Scoreboard’ by Greenpeace,” USA Today, April 18, 2011, p. 5D.

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.

Connecting the Dots: Zuckerberg's Facebook Stock

Why did Mark Zuckerberg unload $2.3 billion of his Facebook stock? The complete answer likely involves more than meets the eye, at least relative to what business reporters and editors had to say publicly in 2013. What was not said is itself a story worth publishing. Beyond Zuckerberg’s stratagem, what the media didn't say might be more significant than what made it through the filters.
Part of the answer concerning Zuckerberg’s sell-off involves his need for cash at the time to pay taxes that would be due from his exercising an option to purchase 60 million Class B shares in 2013. This move likely implies a belief that Facebook stock would not go much higher. Had Zuckerberg strongly believed at the time that Facebook was yet to cash in on advertising revenue beyond that which the market had already factored into the company’s stock price, the CEO would not have exercised the options in expectation of a wider spread. Even with the taxes coming due, the billionaire could probably have found an alternative way to come up with the cash. 
Like a deer frozen in an oncoming car’s headlights, the media did not analyze Zuckerberg’s motives beyond his public statements. Instead, the herd animals let themselves be led along, prancing in the tracks of positive correlation, which is does not in itself connote causation. That two things tend to occur together does not necessarily mean that one caused the other to act some way. For instance, we see umbrellas on rainy days. This does not mean that umbrellas cause rain, or that rain rather than manufacturing causes umbrellas. To assume causation from two things tending to occur at the same time is to commit what David Hume calls the naturalistic fallacy. 
So the media’s report that Zuckerberg’s stock sale and exercise came as the CEO was donating $1 billion worth of shares to the Silicon Valley Community Foundation to “boost his philanthropic efforts in education,” and Facebook was selling 27 million shares to raise an expected $1.46 billion for general purposes all count only as positive correlation; causation cannot be assumed.[1] In other words, we cannot conclude that Zuckerberg decided to sell off a chunk of his stock and exercise an option because he had decided to donate some stock and Facebook was raising more capital. In other words, the additional information conveniently provided does not get us any closer to a full answer. Worse still, Zuckerberg and his PR staff might have been throwing the media a tantalizing, diverting bone. This would have been in keeping with claims that Facebook's management was unethical.
One reporter took the bait, writing that with cash and marketable securities of $9.3 billion as of September 30, 2013, Facebook may not have needed another $1.46 billion.[2] Off reporter’s radar screen was the possibility that Zuckerberg had designed his philanthropy and the company’s additional stock offering as luring camouflage that would use even criticism of his company to keep the eye off his own trades and especially what they imply about his view of the company’s future. That shares of Facebook dropped only 1% to $55.05 in trading on the news suggests that investors were swallowing what Zuckerberg and the media were serving as dessert.
What of the market insiders? Were they also biting? As John Shinal puts it, “More important, insiders have detailed knowledge of a public company’s near-term prospects and thus are in a better position to know when to sell.”[3] I suspect that “people in the know” may have connected the dots. Two months earlier, a poll revealed that as the most important social media site for teenagers, Facebook fell from 42% in the autumn of 2012 to 23% a year later.[4] Can we suppose this poll somehow missed Zuckerberg’s attention? The media certainly did not connect the dots.
The theory behind my analysis is not financial; rather, I consider Mintzberg’s theory of the organizational life-cycle to be more revealing in this particular case. The theory suggests that just as empires rise and fall, so too do companies. Once past their peak, a “hardening of the arteries” sets in.

The organizational lifecycle. When Zuckerberg decided to sell a block of shares and exercise options, he already had a picture of Facebook already on the downward slope without much chance of revitalization. Image Source: www.sourcingideas.blogspot.com

The aging (i.e., a decreasing willingness or ability to adapt to a changing environment, and increasing dead weight internally) can be delayed as the downward slope bides its time; but like entropy as a final destination, the end is inevitable for humans and our organizational artifices. I suspect that Zuckerberg had come to view his company as past its prime, given the leading indicator shown in the poll. If I am right, the game has already changed to keeping the illusion alive long enough for the Facebook insiders to get out under the black shimmering cover of the Styx.

---

Sources:

1. Scott Martin, “Zuckerberg’s in Mood to Sell,” USA Today, December 20, 2013; John Shinal, “Facebook Shares May Underperform,” USA Today, December 20, 2013.

2. John Shinal, “Facebook Shares May Underperform,” USA Today, December 20, 2013.

3.Ibid.

4. Bianca Bosker, “Facebook’s Rapidly Declining Popularity with Teens in 1 Chart,” The Huffington Post, October 23, 2013.

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.  

Wal-Mart: Political Contributions as Bribery

In September 2005, “a senior Wal-Mart lawyer received an alarming e-mail from a former executive at the company’s largest foreign subsidiary, Wal-Mart de Mexico. In the e-mail and follow-up conversations, the former executive described how Wal-Mart de Mexico had orchestrated a campaign of bribery to win market dominance. In its rush to build stores, he said, the company had paid bribes to obtain permits in virtually every corner of the country. . . . Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville, Ark. In a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: ‘There is reasonable suspicion to believe that Mexican and USA laws have been violated.’”[1]

Critics protesting a new Wal-Mart store after the bribery scandal    John Moore/Getty

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

1. David Barstow, “Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle,” The New York Times, April 21, 2012.

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.

Transocean Executive Compensation Bonuses Ignored the Rig Explosion of 2010

Transocean, the world’s largest off-shore oil rig company, owned the Deep Water Horizon rig that exploded in the Gulf of Mexico in April of 2010. Astonishingly, the company awarded its managers healthy bonuses. Even more astonishing, safety was a major component in the calculation of the bonuses. Even without intending to, the compensation sets up managers in a conflict of interest—their compensation motivating them to keep up the good work rather than to correct for what went wrong in the management of the Horizon rig. In other words, the bonuses give all the wrong incentives, and there has been no principled leadership to point in the other direction.

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

BP Clips Societal Norms

In Senate testimony on May 11, 2010,  the three companies did their best to point the finger at each other, with the result that neither BP, Transocean or Halliburton would admit, undoubtedly for liability purposes, any contributory role. In the midst of such liability evasion, those of us in the wider society want to get to the bottom of the accident so future such accidents can be prevented. In pointing the finger at the other guy while ignoring one’s own role, the managers of the three companies are added insult to injury.  

The BP executive did not mention that several days before the explosion on the Deepwater Horizon oil rig, BP officials chose, partly for financial reasons, to use a type of casing for the well that the company knew was the riskier of two options, according to a BP document. Specifically, BP managers opted for a “long string” pipe for the well rather than a liner tieback that would have cost $7 million to $10 million but would have added barriers to prevent gas from reaching the surface.  BP managers were not unaware of this risk. The concern with the method BP chose, the document said, was that if the cement around the casing pipe did not seal properly, gases could leak all the way to the wellhead, where only a single seal would serve as a barrier. 

As another instance of cutting corners to save time and money, BP engineers used just six “centralizers,” rather than twenty-one as recommended by Halliburton, to stabilize the well before cementing it. According to an April 16, 2010 email from BP’s well team leader, the problem was that the extra centralizers would have taken ten hours to install. Another official wrote of the decision: “Who cares, it’s done, end of story, will probably be fine.”[1]   BP managers also decided not to take twelve hours to completely circulate the heavy drilling fluid in the well that would have enabled detection and removal of any leaking gas. BP also skipped a test to determine if the cement had properly bonded to the well and rock formations. A petroleum engineer independent of BP told a congressional committee that the decision was “horribly negligent.”[2]

Workers from the rig and company officials said that hours before the explosion, gases were leaking through the cement, which had been set in place by the oil services contractor, Halliburton, which Dick Cheney once ran. But it was not merely the casing and cement that were problematic. On 60 Minutes on May 16, 2010, a worker who was on the rig when the accident happened spoke of a BP manager overruling a Transocean manager to cut corners, such as beginning to drain the pressure fluid from the well before the third “cork” was installed.  The methane was able to reach the rig’s engines because there was insufficient pressure to keep the gas down in the well.  Also, a BP manager had earlier ignored the worker’s warning that there were shreds of rubber coming up in the drilling–the rubber being from the device that was supposed to take pressure readings (e.g., whether there is gas in the well).  Nevertheless, the BP manager who testified before the Senate blamed Transocean and Halliburton managers, and on the morning after the 60 Minutes interview BP’s COO said he was just focused on the clean-up and knew nothing of such “details” even though his specialty was in development and exploration. Both in cutting corners and in ignoring his job description, BP’s COO demonstrates a willful disregard for societal norms wherein society itself is protected and accountability is accepted.  Sadly, this attitude is not uncommon in the business world.

Perhaps as business operations expand in businesses too big to fail, the societal dangers in the attitude are magnified because more damage can result. In other words, it becomes increasingly dangerous to a society to allow such an attitude to exist.  Where societal norms are ignored by business managers, perhaps the societal norm that allows for their authority should be rescinded as well. This is a social contract reading of society, wherein if one side of the norms are broken, the other side is deemed invalid as well.  The problem is that social contracts unravel rather slowly or incrementally, such that a dangerous attitude can be allowed to remain in a position of authority.  It is worth investigating whether violating societal norms is actually detrimental to a company’s bottom line. 

To the extent that a social contract has a certain inertia, it may be that the bottom line can survive long enough to allow the attitude to survive and perhaps even prosper.   These matters are distinct from questions of justification, which lie in the field of business ethics, and from those of whether more government regulation is needed, which lie in the field of business and government. We can define corporate social responsibility as meeting the general expectation in a society that people admit to their wrong-doing or mistakes and make amends.  This is different from the ethical question of whether people should admit to their wrong-doing or mistakes and if so why.  It is also distinct from the question of the proper relationship between business and government.  Business and society involves the relationship of business interest and societal norms.  To treat the latter (or the former, for that matter) as ethical requires ethical justification, which is more than simply aligning business and societal norms.  In other words, a societal norm is not in itself ethically justifying (consider Nazi Germany as a case in point).  With these distinctions in mind, I turn now to the field of business and society.

I contend that the people at BP (and Halliburton) admitting to their role and paying for economic damages incurred by third parties would be more important than BP’s charitable giving, even if some people in the wider society may have let BP off the hook for the accident if the company’s managers had decided to announce a new philanthropical project unrelated to the accident. Working on another society problem does not make up for having not admitted to BP managers' negligence.  Culpability, on other words. cannot be obviated or transferred so easily.

Too often, business managers use the term “responsibility” even as they are evading it for financial reasons. BP initially estimated the daily output of the leaks at between one and fourteen thousand barrels a day; BP picked the low end-point because the amount of fines the company would pay was tied to the volume. That the company managers were misleading the wider society didn’t seem to factor into their financial decision. As a result, the anticipated damage to the Gulf (and the world) was not sufficiently appreciated in the wider society. The convenient use of  the term “responsibility” can be gleemed from the Senate testamony of Lamar McKay of BP.  “As a responsible party under the Oil Pollution Act,” he said, ”we will carry out our responsibilities.” But he quickly added that Transocean “had responsibility for the safety of the drilling operations.”[3]  That is to say, he acknowledged the obligation to be responsible for his mistakes while conveniently ignoring the mistakes made at his company. By pointing the finger at people at another company, McKay was contradicting his own asseveration on being responsible.  It is like he was lying even as he insisted that people shouldn’t lie.

Pointing the finger is childish, even if it is done for financial reasons. Steven L. Newman, president and chief executive of Transocean, did no better that the BP executive when he said that the accident had to have arisen from elements of the work done by other companies. “Were all appropriate tests run on the cement and the casing?” he asked, apparently implicating Halliburton. Tim Probert of Halliburton said in turn that all work on the casing by his company was carried out “as directed by the well owner,” meaning BP.[4]  Suggesting that the men act like adults and take responsibility for what their coworkers had done (or failed to d0), the ranking Republican minority member on the Senate Energy and Natural Resources Committee, Lisa Murkowski of Alaska, told them to stop the finger-pointing. “I would suggest to all three of you that we are all in this together,” she said.[5] Notice that she is pointing to a societal norm, rather than using an ethical rationale. She is essentially asking the executives to step up to societal standards. Unfortunately, there was no sign that the three boys would take responsibility for their actions, as they continued on, still oriented to the other guy.  The cost to society includes a more difficult route to uncovering the cause of the accident and possible accidents to come from BP. The company’s clean-up efforts do not address the cause of the accident; the spending does not go far enough. In other words, BP can’t spend its way out of it, or can it?  Are there societal norms that allow it to suffice?  My question is this: why hasn’t the social contract unravelled that has allowed the managers at BP to continue to hold their jobs (and BP to remain in business)?  Is economic liberty at play here–society saying that there is room in such liberty for a shirking attitude?

1. Ian Urbina, "BP Used Riskier Method to Seal Well Before Blast," The New York Times, May 26, 2010.

2. Neil King, Jr. and Russell Gold, “Congress Says BP Crew Focused on Costs,” The Wall Street Journal,  June 15, 2010, p. A5.

3. Ibid.

4. Ibid.

5. Ibid.