November 2000, Volume 69, Number 1

The Discussion Friedman. Insider trading is a made-up crime, but given it's the law, then people ought to obey that law. I want to qualify that. Nobody really believes that it's an ethical precept that you obey every law. If you obey a law that requires you to do something that is unethical or amoral, I think everybody in the room would agree it's a proper human behavior to break that law as long as you're willing to accept the responsibility for that. That was the justification for conscientious objection during the war. Hanson. I want to push you. It seems what we talk about when we say business ethics really is a single ethic, and it applies to other areas of our lives. And when we talk about ethics in organizations, we're talking first about what the individual manager or employee ought to do. Critics of the tobacco companies try to say it is simply unethical to produce cigarettes, therefore the individuals who work for this company ought to resign. Friedman. You made a statement there that you don't mean - "It's unethical to produce cigarettes." Hanson. I believe it is unethical for me to produce cigarettes. Friedman. Maybe, but it's not unethical to produce cigarettes if it's clear what the facts are and the risks are. If it's unethical to produce cigarettes, then it's certainly unethical to produce skis, automobiles, bullets, guns. Hanson. I very much differ with you on the ethical obligation. I would argue my ethical obligation is not to do things that directly harm others. I'm not going to make your ethical decision for you. But I am saying the people making cigarettes for you ought not to make them. Brady. I served on the Stanford Committee for Socially Responsible Investing. The question of whether Stanford should invest in R.J. Reynolds came up. The majority had Kirk's position - that we should sell the shares -and they came up with a moral principle that would allow us to sell those shares. They said: You cannot have shares in any company where the sole intention of the company is to harm people. I said, that's fine, and I'm sure Mr. Packard will be delighted to know you're going to disinvest in Hewlett-Packard because HP makes missile-guidance defense systems. That clearly is a product whose sole purpose is to bomb people. They immediately backed up. The point is it's very hard to define what that set of products is. Hanson. Because it's hard, don't stop trying to do it.  Brady. I'm willing to try, but it's why I consistently come down on Milton's side in this argument. In that system it's clear what I should do. If you want to, sell the shares, but don't try to set up a principle, because it's difficult, it's fuzzy. Hanson. If I believe it's unethical, I may try to legislate too. I may try to abolish cigarettes or guns without locks. And isn't that my obligation as an individual? Brady. Because you succeed in getting legislation passed doesn't make it moral. In South Africa it was legislated that Blacks did not have rights, and in the United States of America for an extremely long period there was legislation that discriminated against women, Blacks, and Hispanics. That is the distinction between politics and ethics. In politics, by building majorities for positions you favor, you can force your view on other people. But the ethical judgment of whether legislation is moral or not is a separate judgment. McCoy. Kirk mentioned 90 percent of ethics and profits can be congruent. I'm not sure that's true. I'd say ethical norms are what you are willing to lose for. If you have to win all the time to be ethical, that's not being ethical. Hanson. I would say that most business ethicists in the United States spend their time trying to convince people that being ethical actually will help you win in the long term. Fulfilling Milton's dictum, we talk about the 90 percent of the time ethics is good for business-do the ethical thing if it is serving the shareholder and the bottom line in the long term. I believe the public is very sensitive to the impact of larger and larger global enterprises on people and the environment. And that's what ethics is about, the impact of my behavior or my organization's behavior on people. My ethical commitment includes both a free society and a set of ethical norms that may include human rights, the protection of human life, etc. My set of values includes your free society. Friedman. You can't include the free society there. Those of us who believe in the free society believe an organization in which individuals and enterprises are seeking to promote their own self-interest is the best way to achieve those rights. It's not that those rights are something in addition to a free society. It's what a free society is for. By this damn nonsense of social responsibility, what you're doing is pandering in a way to the instincts that say profit is bad, business is bad, everything has to be done through the government and for someone else. It's a philosophy you don't want to accept. A detailed transcript of the discussion plus audio clips are available online. Return to "A Question of Ethics: Part 1" Return to "A Question of Ethics: Part 2"