August 2008 Archive

The New York Times on Friday, August 22, 2008 reports that the Iraqi army is paying guerrillas to reduce violence. The United States commanders say that the practice, however unconventional, has saved the lives of hundreds of American soldiers.

Some public school programs advocate paying students for good grades. In New York City, high-school students, in more than 60 schools, are eligible to win as much as $500 for improving their scores on math and English tests.

Some support the idea. Greg Fleisher of the National Math and Science Initiative which run a seven-state program says that: "It is an incentive to get them [students] to basically make the right decision and choose a more rigorous class."

Others are against it. Bob Schaeffer of the National Center for Fair and Open Testing says that: "Bribing kids for higher test scores is similar to given them steroids. Short-term performance might improve but long-term effects can be very damaging."
The practice is not new to many parents that reward their children with a treat or even money for a good report card.

Incentives are tools used in public life such as corporate bonuses, taxes, medical research and trade.

Ruth Grant from Duke University and Jeremy Sugarman for John Hopkins University in an article published by the Journal of Medicine and Philosophy state that incentives are usually made in a context of an authority relationship whether from employer to employee, from government to citizens or government to organizations.

Incentives involve relations of power and influence behavior. Whenever we deal with power there is always the risk of abuse of that power.

Can an incentive be ethically suspect?

Answering the following questions might help us be wise in determining whether we should offer or accept an incentive:

1. Is it legal?
2. Is it transparent?
3. Is its purpose justifiable?
4. Does it exert undo influence (or is it manipulative)?

As, Naguib Mahfouz the Egyptian novelist once said:

"You can tell whether a man is clever by his answers. You can tell whether a man is wise by his questions."

The New York Times recently reported that Richard F. Syron, the CEO of Freddie Mac, received, back in 2003, a memo from David Andrukonis, the company’s chief risk officer warning him, that the firm was financing questionable loans that threatened the financial health of the company. In his memo, Mr. Andrukonis said that those bad loans "would likely pose an enormous financial and reputational risk to the company and the country." The article also revealed that more than two-dozen high-ranking executives said that Mr. Syron simply decided to ignore those warnings.

According to another New York Times’ article, UBS, the Swiss bank is under investigation by the SEC for violation of U.S. securities laws in regards to off-shore accounts held by U.S. citizens. The SEC prosecutors suspect that UBS helped their clients evade U.S. Taxes. Yet as early as 2005, some UBS executives had warned the chief the legal counsel of the Bank, Peter Kurer (who is now the Chairman) of those violations. Apparently the Bank did not take the appropriate action to address this issue.

Investigation of a catastrophe often reveals that someone, somewhere, had raised a red flag but no one in authority paid attention.

There were many warning signs of danger for the Jewish community in Germany before WWII, yet comparatively to the Jewish population in Germany at that time, very few saw the threat and left the country.

Warning signs are also critical in matter of health. Paying attention early save lives. An apparently insignificant symptom can be the indicator of pending major health disaster.

Why are warning signs often ignored?

It is probably because we naturally want to believe what is positive and have a tendency not to believe what is, or could be, negative.

How can we overcome this tendency?

Below are four ideas that might help.

- We should first make sure we identify a red flag. Past experiences and other people’s experience can help us do that. Norman Cousins once said: "History is a vast early warning system." Consulting with people with experience that we trust may also be wise to do.

- We should honestly ask ourselves whether we are in denial. The worst of all deception is self-deception. By seriously considering that possibility, we may very well become aware that we are indeed in denial.

- We should do a serious cost-benefit analysis, considering the potential cost of ignoring a warning sign. We may come to the conclusion that the benefit is really not worth the risk.

- Maybe the best advice to avoid ignoring a warning sign is that we should have to courage and take the time to not only listen to others but also to ourselves.

As Karl Jung once said:

"Through pride we are ever deceiving ourselves. But deep down below the surface of the average conscience a still, small voice says to us, ‘Something is out of tune.’"

If both Richard F. Syron of Freddie Mac and Peter Kurer of UBS had considered those ideas, they possible would not be confronted today with one of the greatest challenges facing their respective careers and companies.

Giving and receiving favors is part of life and friendship. Favoritism in the workplace is quite common. We often use connections, friends and family as sources of support in job hunting.

However, favors or favoritism is, by definition, unfair and fairness is a key value in ethics.
Judy Nadler, of the Markkula Center for Applied Ethics says that favoritism interferes with fairness because it gives undue advantage to someone who does not necessarily merit the treatment. She also makes the point that favoritism violates transparency because most of the time it is done in secret. Favoritism can also cause resentment and reduces moral in a company.

Favoritism can also lead to a conflict of interest situation. Countrywide Financial distributed significant favors to politicians in Washington such as Senators Christopher Dodd and Kent Conrad, reducing the costs of their mortgage applications. Countrywide was also, at the same time, lobbying Congress for favorable laws to mortgage industry. The favors to Senators Dodd and Conrad are now being investigated by the Senate Ethics Committee.

How do we know if the favor we are about to receive or give is acceptable or not?

Here are four basic questions we should ask ourselves before moving forward.

1. Is it legal?
2. What is the intention or motivation behind the favor?
3. Are there strings attached creating a quid pro quo situation?
4. Will the receiver of the favor be asked in the future to do something in return that would violate his or her values?

We should always be aware that giving and receiving favors involves serous risks and consider the possible consequences before make our decision.

Charles Dudley Warner, the 19th Century essayist and novelist understood this issue well when he wrote:

"The excellence of a gift lies in its appropriateness rather than in its value."