Fraud as Fair: Lehman as Beneficiary of Society's Pro-Business Cultural Values

In April, 2010, Richard Fuld, the former CEO of Lehman Brothers, told a congressional committee that he had "absolutely no recollection whatsoever of hearing anything" about Repo 105 at the time of the transactions. Lehman's demise, he claimed, was caused by "uncontrollable market forces" and the U.S. government's unwillingness to rescue the firm. Of course, Henry Paulson, the U.S. Treasury Secretary in 2008, had tried in vain to get Fuld to accept a buyer offering a reasonable price; Fuld had been holding out for more in spite of the financial condition of Lehman. It is stunning that a man who had been allowed to reach such a pristine and lofty office in the business world would not even permit himself to acknowledge any contributory role in the downfall of the organization he had run. Such an attitude alone seems worthy of a prison sentence (and the return of his salary and bonuses); how he and his "team" had manipulated the books to make the bank look wealthier than it was would seem to make such a sentence inevitable.

The full essay is at "Essays on the Financial Crisis."

The Conflict of Interest in a Silent Oligarchy Being Engaged in Its Public Policy

Goldman Sachs, which had played a role in enabling Greece to hide its public debt, urged investors in March of 2010 to buy shares in two big health insurance companies, UnitedHealth Group and Cigna. The reason: their rates were sharply up and competition was down. According to The New York Times, the White House claimed, “ the Goldman Sachs analysis shows that while insurers can be aggressive in raising prices, they also walk away from clients because competition in the industry is so weak.”[1] Rate increases ran as high as 50 percent, with most in “the low- to mid-teens” — far higher than overall inflation. 

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

1. David Herszenhorn, “Obama Wields Analysis of Insurers in Health Battle,” The New York Times, March 6, 2010.

Is Corporate Social Responsibility the Same as Business Ethics?

Corporate Social Responsibility (CSR) is typically thought to be a topic in the field of business ethics. If a company is socially responsible, it is typically presumed to be ethical in being socially responsible. Solidifying this attribution, some scholars of CSR have even sought to explicitly base it on specific ethical principles. However, contrasting a corporate policy with societal norms or specifying how corporations can get in line with them is not to provide an ethical justification.  Even if a societal norm is consistent with an ethical principle, the norm itself is something that is, rather than a justification for what ought to be. To attempt to derive ought from is is known as the naturalistic fallacy. It is like getting what ought to be from a melon ripening in a field. Is does not imply or justify ought.


This paragraph has been incorporated into the introduction in Cases of Unethical Business, which is available in print and as an ebook at Amazon.

Institutional Conflicts of Interest

Although conflicts of interest do not inevitably lead to unethical conduct, they raise the probability that it will occur. Just as a tornado watch indicates that conditions are favorable to the formation of a twister, a conflict of interest evinces conditions favorable to unethical decisions. Interests conflicting in a conflict of interest pit an obligation against either another obligation or self-interest. That is to say, such conflicts tend to involve deontology and egoism.

The full essay is at Institutional Conflicts of Interest, available at Amazon.

Conflicts of Interest: A Kantian Explanation

In a conflict of interest, either two duties conflict or a duty conflicts with self-interest—whether the “self” be an individual or an association of individuals (e.g., a department or an organization). Where two duties conflict, that which corresponds with the wider “constituency” is presumed to be ethically superior to that which is relatively narrow. For instance, a duty to society is typically thought (admittedly by the public) to ethically supersede a fiduciary duty to stockholders. This assumption is problematic because property rights are not charged with putting society first. Therefore the question of which duty is superior ethically-speaking may come down to one’s vantage-point. To be sure, the duty that is further from one’s self-interest can be said to be superior in most ethical theories with the notable exception of egoism. That theory defeats the typical ethical take on conflicts of interest even where a duty is pitted against self-interest itself.


The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.