BMGT 496 – Ethics – Internet License

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Preface

Ethics is about determining value; it’s deciding what’s worth doing and what doesn’t matter so much.

ethics is the way we decide what kind of career to pursue, what choices we make on the job,

which companies we want to work with, and what kind of economic world we want to live in and then

leave behind for those coming after. There are no perfect answers to these questions, but there’s a

difference between thinking them through and winging it. The Ethics Workshop provides a

framework for identifying, analyzing, and resolving ethical dilemmas encountered through working life.

This text’s principles:

 It’s your call. Some of the book’s case studies ask for defenses of ethical positions that few agree with

(for example, the claim that a drug dealer’s job is better than a police officer’s). Exercises like this align

with the textbook’s aim: provoking reasoning freed from customary divisions between right and wrong. In

the end, no one completely resists their own habits of thinking or society’s broad pressures, but testing the

limits sharpens the tools of ethical analysis. These tools can be relied on later on when you face decisions

that you alone have to make. The aim of this book is to help make those decisions with coherent,

defensible reasoning.

 Keep it mostly real. Ethics is an everyday activity. It’s not mysterious, head-in-the-clouds ruminating

but determining the worth of things around us: Working at an advertising agency is exciting—actors,

lights, cameras, and TV commercials—but do I really want to hock sugary breakfast cereals to children?

Should I risk my reputation by hiring my college roommate, the one who’s habits of showing up late and

erratically to class have carried over to working life? These are the immediate questions of business ethics,

and while any textbook on the subject must address broad, impersonal questions including the

responsibilities of massive corporations in modern societies, this book’s focus stays as often as possible on

ordinary people in normal but difficult circumstances.

 Be current. The rules of ethical thinking don’t change much, but the world is a constant revolution. The

textbook and its cases follow along as closely as possible, citing from blog posts and recent news stories.

As a note here, to facilitate reading some of these citations have been slightly and silently modified.

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 Let’s talk about our problem. Case studies are the most important components of this text because it

was written for a discussion-intensive class. Ethics isn’t something we know; it’s something we do, and

trying out our reasoning is the best way to confirm that it’s actually working.

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Chapter 1

What Is Ethics?

Chapter Overview

Chapter 1 “What Is Ethics?” defines business ethics and sketches how debates within the field

happen. The history of the discipline is also considered, along with the overlap between business and

personal ethics.

1.1 What Is Ethics?

L E A R N I N G O B J E C T I V E S

1. Define the components of business ethics.

2. Outline how business ethics works.

Captive Customers

Ann Marie Wagoner studies at the University of Alabama (UA). She pays $1,200 a year for books, which is

exasperating, but what really ticks her off is the text for her composition class. Called A Writer’s Reference

(Custom Publication for the University of Alabama), it’s the same Writer’s Reference sold everywhere

else, with slight modifications: there are thirty-two extra pages describing the school’s particular writing

program, the Alabama A is emblazoned on the front cover, there’s an extra $6 on the price tag (compared

with the price of the standard version when purchased new), and there’s an added sentence on the back:

“This book may not be bought or sold used.” The modifications are a collective budget wrecker. Because

she’s forced to buy a new copy of the customized Alabama text, she ends up paying about twice what she’d

pay for a used copy of the standard, not-customized book that’s available at Assignment Guruh.com and similar used-

book dealers.

For the extra money, Wagoner doesn’t get much—a few additional text pages and a school spirit cover.

Worse, those extra pages are posted free on the English department’s website, so the cover’s the only

unambiguous benefit. Even there, though, it’d be cheaper to just buy a UA bumper sticker and paste it

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across the front. It’s hard to see, finally, any good reason for the University of Alabama English

Department to snare its own students with a textbook costing so much.

Things clear up when you look closely at the six-dollar difference between the standard new book cost and

the customized UA version. Only half that money stays with the publisher to cover specialized printing

costs. The other part kicks back to the university’s writing program, the one requiring the book in the first

place. It turns out there’s a quiet moneymaking scheme at work here: the English department gets some

straight revenue, and most students, busy with their lives, don’t notice the royalty details. They get their

books, roll their eyes at the cash register, and get on with things.

Wagoner noticed, though. According to an extensive article in the Wall Street Journal, she calls the cost

of new custom books “ridiculous.” She’s also more than a little suspicious about why students aren’t more

openly informed about the royalty arrangement: “They’re hiding it so there isn’t a huge uproar.”
[1]

While it may be true that the Tuscaloosa University is hiding what’s going on, they’re definitely not doing

a very good job since the story ended up splattered across the Wall Street Journal. One reason the story

reached one of the United States’ largest circulation dailies is that a lot of universities are starting to get in

on the cash. Printing textbooks within the kickback model is, according to the article, the fastest growing

slice of the $3.5 billion college textbook market.

The money’s there, but not everyone is eager to grab it. James Koch, an economist and former president

of Old Dominion University and the University of Montana, advises schools to think carefully before

tapping into customized-textbook dollars because, he says, the whole idea “treads right on the edge of

what I would call unethical behavior. I’m not sure it passes the smell test.”
[2]

What Is Ethics?

What does it mean to say a business practice doesn’t “pass the smell test”? And what would happen if

someone read the article and said, “Well, to me it smells all right”? If no substance fills out the idea, if

there’s no elaboration, then there probably wouldn’t be much more to say. The two would agree to

disagree and move on. Normally, that’s OK; no one has time to debate everything. But if you want to get

involved—if you’re like Wagoner who sounds angry about what’s going on and maybe wants to change it—

you’ll need to do more than make comments about how things hit the nose.

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Doing business ethics means providing reasons for how things ought to be in the economic world. This

requires the following:

 Arranging values to guide decisions. There needs to be a clearly defined and well-justified set of

priorities about what’s worth seeking and protecting and what other things we’re willing to compromise or

give up. For example, what’s more important and valuable: consumers (in this case students paying for an

education) getting their books cheaply or protecting the right of the university to run the business side of

its operation as it sees fit?

 Understanding the facts. To effectively apply a set of values to any situation, the situation itself must be

carefully defined. Who, for example, is involved in the textbook conflict? Students, clearly, as well as

university administrators. What about parents who frequently subsidize their college children? Are they

participants or just spectators? What about those childless men and women in Alabama whose taxes go to

the university? Are they involved? And how much money are we talking about? Where does it go? Why?

How and when did all this get started?

 Constructing arguments. This shows how, given the facts, one action serves our values better than other

actions. While the complexities of real life frequently disallow absolute proofs, there remains an absolute

requirement of comprehensible reasoning. Arguments need to make sense to outside observers. In simple,

practical terms, the test of an ethical argument resembles the test of a recipe for a cook: others need to be

able to follow it and come to the same result. There may remain disagreements about facts and values at

the end of an argument in ethics, but others need to understand the reasoning marking each step taken on

the way to your conclusion.

Finally, the last word in ethics is a determination about right and wrong. This actual result, however, is

secondary to the process: the verdict is only the remainder of forming and debating arguments. That’s

why doing ethics isn’t brainwashing. Conclusions are only taken seriously if composed from clear values,

recognized facts, and solid arguments.

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Bringing Ethics to Kickback Textbooks

The Wall Street Journal article on textbooks and kickbacks to the university is a mix of facts, values, and

arguments. They can be sorted out; an opportunity to do the sorting is provided by one of the article’s

more direct assertions:

Royalty arrangements involving specially made books may violate colleges’ conflict-of-interest

rules because they appear to benefit universities more than students.

A conflict of interest occurs when a university pledges to serve the interest of students but finds that its

own interest is served by not doing that. It doesn’t sound like this is a good thing (in the language of the

article, it smells bad). But to reach that conclusion in ethical terms, the specific values, facts, and

arguments surrounding this conflict need to be defined.

Start with the values. The priorities and convictions underneath the conflict-of-interest accusation are

clear. When university takes tuition money from a student and promises to do the best job possible in

providing an education to the student, then it better do that. The truth matters. When you make a

promise, you’ve got to fulfill it. Now, this fundamental value is what makes a conflict of interest

worrisome. If we didn’t care about the truth at all, then a university promising one thing and doing

something else wouldn’t seem objectionable. In the world of poker, for example, when a player makes a

grand show of holding a strong hand by betting a pile of chips, no one calls him a liar when it’s later

revealed that the hand was weak. The truth isn’t expected in poker, and bluffing is perfectly acceptable.

Universities aren’t poker tables, though. Many students come to school expecting honesty from their

institution and fidelity to agreements. To the extent these values are applied, a conflict of interest becomes

both possible and objectionable.

With the core value of honesty established, what are the facts? The “who’s involved?” question brings in

the students buying the textbooks, the company making the textbooks (Bedford/St. Martin’s in Boston),

and the University of Alabama. As drawn from the UA web page, here’s the school’s purpose, the reason it

exists in the first place: “The University of Alabama is a student-centered research university and an

academic community united in its commitment to enhancing the quality of life for all Alabamians.”

Moving to the financial side, specific dollar amounts should be listed (the textbook’s cost, the cost for the

non-customized version). Also, it may be important to note the financial context of those involved: in the

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case of the students, some are comfortably wealthy or have parents paying for everything, while others

live closer to their bank accounts edge and are working their way through school.

Finally, the actual book-selling operation should be clearly described. In essence, what’s going on is that

the UA English Department is making a deal with the Bedford/St. Martin’s textbook company. The

university proposes, “If you give us a cut of the money you make selling textbooks, we’ll let you make

more money off our students.” Because the textbooks are customized, the price goes up while the supply

of cheap used copies (that usually can be purchased through the Internet from stores across the nation)

goes way down. It’s much harder for UA students to find used copies, forcing many to buy a new version.

This is a huge windfall for Bedford/St. Martin’s because, for them, every time a textbook is resold used,

they lose a sale. On the other side, students end up shelling out the maximum money for each book

because they have to buy new instead of just recycling someone else’s from the previous year. Finally, at

the end of the line there is the enabler of this operation, the English department that both requires the

book for a class and has the book customized to reduce used-copy sales. They get a small percentage of

Bedford/St. Martin’s extra revenue.

With values and facts established, an argument against kickback textbooks at Alabama can be drawn up.

By customizing texts and making them mandatory, UA is forcing students to pay extra money to take a

class: they have to spend about thirty dollars extra, which is the difference between the cost of a new,

customized textbook and the standard version purchased, used. Students generally don’t have a lot of

money, and while some pass through school on the parental scholarship, others scrape by and have to

work a Mc Job to make ends meet. So for at least some students, that thirty dollars directly equals time

that could be spent studying, but that instead goes to flipping burgers. The customized textbooks,

consequently, hurt these students’ academic learning in a measurable way. Against that reality there’s the

university’s own claim to be a “student-centered” institution. Those words appear untrue, however, if the

university is dragging its own students out of the library and forcing them to work extra hours. To comply

with its own stated ideals—to serve the students’ interests—UA should suspend the kickback textbook

practice. It’s important to do that, finally, because fulfilling promises is valuable; it’s something worth

doing.

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Argument and Counterargument

The conclusion that kickback textbooks turn universities into liars doesn’t end debate on the question. In

fact, because well-developed ethical positions expose their reasoning so openly (as opposed to “it doesn’t

smell right”), they tend to invite responses. One characteristic, in other words, of good ethical arguments

is that, paradoxically but not contradictorily, they tend to provoke counterarguments.

Broadly, there are three ways to dispute an argument in ethics. You can attack the

1. facts,

2. values,

3. reasoning,

In the textbook case, disputing the facts might involve showing that students who need to work a few

extra hours to afford their books don’t subtract that time from their studying; actually, they subtract it

from late-night hours pounding beers in dank campus bars. The academic damage done, therefore, by

kickback textbooks is zero. Pressing this further, if it’s true that increased textbook prices translate into

less student partying, the case could probably be made that the university actually serves students’

interests—at least those who drink too much beer—by jacking up the prices.

The values supporting an argument about kickback textbooks may, like the facts, be disputed. Virginia

Tech, for example, runs a text-customization program like Alabama’s. According to Tech’s English

Department chair Carolyn Rude, the customized books published by Pearson net the department about

$20,000 a year. Some of that cash goes to pay for instructors’ travel stipends. These aren’t luxury retreats

to Las Vegas or Miami; they’re gatherings of earnest professors in dull places for discussions that reliably

put a few listeners to sleep. When instructors—who are frequently graduate students—attend, they’re

looking to burnish their curriculum vitae and get some public responses to their work. Possibly, the trip

will help them get a better academic job later on. Regardless, it won’t do much for the undergraduates at

Virginia Tech. In essence, the undergrads are being asked to pay a bit extra for books to help graduate

students hone their ideas and advance professionally.

Can that tradeoff be justified? With the right values, yes. It must be conceded that Virginia Tech is

probably rupturing a commitment to serve the undergrads’ interest. Therefore, it’s true that a certain

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amount of dishonesty shadows the process of inflating textbook costs. If, however, there’s a higher value

than truth, that won’t matter so much. Take this possibility: what’s right and wrong isn’t determined by

honesty and fidelity to commitments, but the general welfare. The argument here is that while it’s true

that undergrads suffer a bit because they pay extra, the instructors receiving the travel stipends benefit a

lot. Their knowledge grows, their career prospects improve, and in sum, they benefit so much that it

entirely outweighs the harm done to the undergrads. As long as this value—the greatest total good—

frames the assessment of kickback textbooks, the way is clear for Tech or Alabama to continue the

practice. It’s even recommendable.

The final ground on which an ethical argument can be refuted is the reasoning. Here, the facts are

accepted, as well as the value that universities are duty bound to serve the interests of the tuition-paying

undergraduate students since that’s the commitment they make on their web pages. What can still be

debated, however, is the extent to which those students may actually be benefitted by customizing

textbooks. Looking at the Wall Street Journal article, several partially developed arguments are presented

on this front. For example, at Alabama, part of the money collected from the customized texts underwrites

teaching awards, and that, presumably, motivates instructors to perform better in the classroom, which

ends up serving the students’ educational interests. Similarly, at Virginia Tech, part of the revenue is

apportioned to bring in guest speakers, which should advance the undergraduate educational cause. The

broader argument is that while it’s true that the students are paying more for their books than peers at

other universities, the sequence of reasoning doesn’t necessarily lead from that fact to the conclusion that

there’s a reproachable conflict of interest. It can also reach the verdict that students’ educational

experience is improved; instead of a conflict of interest, there’s an elevated commitment to student

welfare inherent in the kickback practice.

Conclusion. There’s no irrefutable answer to the question about whether universities ought to get involved

in kickback textbooks. What is clear, however, is that there’s a difference between responding to them by

asserting that something doesn’t smell right, and responding by uniting facts, values, and reasoning to

produce a substantial ethical argument.

K E Y T A K E A W A Y S

 ethics deals with values, facts, and arguments.

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 Well-reasoned arguments, by reason of their clarity, invite counterarguments.

R E V I E W Q U E S T I O N S

1. What is the difference between brainwashing and an argument?

2. What does it mean to dispute an argument on the basis of the facts?

3. What does it mean to dispute an argument on the basis of the values?

4. What does it mean to dispute an argument on the basis of the reasoning?

[1] John Hechinger, “As Textbooks Go ‘Custom,’ Students Pay: Colleges Receive Royalties for School-Specific

Editions; Barrier to Secondhand Sales,” Wall Street Journal, July 10, 2008, accessed May 11,

2011,http://online.wsj.com/article/SB121565135185141235.html.

[2] John Hechinger, “As Textbooks Go ‘Custom,’ Students Pay: Colleges Receive Royalties for School-Specific

Editions; Barrier to Secondhand Sales,” Wall Street Journal, July 10, 2008, accessed May 11,

2011,http://online.wsj.com/article/SB121565135185141235.html.

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1.2 The Place of Ethics

L E A R N I N G O B J E C T I V E S

1. Distinguish the place of business ethics within the larger field of decision making.

2. Sketch the historical development of business ethics as a coherent discipline.

The Boundaries and History of Ethics

Though both economic life and ethics are as old as history, business ethics as a formal area of study is

relatively new. Delineating the specific place of today’s business ethics involves

 distinguishing morality, ethics, and meta-ethics;

 dividing normative from descriptive ethics;

 comparing ethics against other forms of decision making;

 sketching some inflection points in the histories of ethics and business ethics.

Morality, Ethics, and Meta-ethics: What’s the Difference?

The back and forth of debates about kickback textbooks occurs on one of the three distinct levels of

consideration about right and wrong. Morals occupy the lowest level; they’re the direct rules we ought to

follow. Two of the most common moral dictates are don’t lie and don’t steal. Generally, the question to ask

about a moral directive is whether it was obeyed. Specifically in the case of university textbooks, the

debate about whether customized textbooks are a good idea isn’t morality. It’s not because morality

doesn’t involve debates. Morality only involves specific guidelines that should be followed; it only begins

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when someone walks into a school bookstore, locates a book needed for a class, strips out the little

magnetic tag hidden in the spine, and heads for the exit.

Above all morality there’s the broader question about exactly what specific rules should be instituted and

followed. Answering this question is ethics. Ethics is the morality factory, the production of guidelines

that later may be obeyed or violated. It’s not clear today, for example, whether there should be moral rule

prohibiting kickback textbooks. There are good arguments for the prohibition (universities are betraying

their duty to serve students’ interests) and good arguments against (schools are finding innovative sources

of revenue that can be put to good use). For that reason, it’s perfectly legitimate for someone like Ann

Marie Wagoner to stand up at the University of Alabama and decry the practice as wrong. But she’d be

going too far if she accused university administrators of being thieves or immoral. They’re not; they’re on

the other side of an ethical conflict, not a moral one.

Above both morality and ethics there are debates about meta-ethics. These are the most abstract and

theoretical discussions surrounding right and wrong. The questions asked on this level include the

following: Where do ethics come from? Why do we have ethical and moral categories in the first place? To

whom do the rules apply? Babies, for example, steal from each other all the time and no one accuses them

of being immoral or insufficiently ethical. Why is that? Or putting the same question in the longer terms

of human history, at some point somewhere in the past someone must have had a light bulb turn on in

their mind and asked, “Wait, is stealing wrong?” How and why, those interested in meta-ethics ask, did

that happen? Some believe that morality is transcendent in nature—that the rules of right and wrong

come from beyond you and me and that our only job is to receive, learn, and obey them. Divine command

theory, for example, understands earthly morality as a reflection of God. Others postulate that ethics is

very human and social in nature—that it’s something we invented to help us live together in communities.

Others believe there’s something deeply personal in it. When I look at another individual I see in the

depth of their difference from myself a requirement to respect that other person and his or her

uniqueness, and from there, ethics and morality unwind. These kinds of meta-ethical questions, finally,

are customarily studied in philosophy departments.

Conclusion. Morality is the rules, ethics is the making of rules, and meta-ethics concerns the origin of the

entire discussion. In common conversation, the words morality and ethics often overlap. It’s hard to

change the way people talk and, in a practical field like business ethics, fostering the skill of debating

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arguments is more important than being a stickler for words, but it’s always possible to keep in mind that,

strictly speaking, morality and ethics hold distinct meanings.

What’s the Difference between Normative Ethics and Descriptive Ethics?

ethics is normative, which means it concerns how people ought to act. Descriptive ethics depicts

how people actually are acting.

At the University of Alabama, Virginia Tech, and anywhere kickback textbooks are being sold, there are

probably a few students who check their bank accounts, find that the number is low, and decide to mount

their own kickback scheme: refund the entire textbook cost to themselves by sneaking a copy out of the

store. Trying to make a decision about whether that’s justified—does economic necessity license theft in

some cases?—is normative ethics. By contrast, investigating to determine the exact number of students

walking out with free books is descriptive. So too is tallying the reasons for the …