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Our Loss: Davos in the Rearview Mirror

In his book, “Antifragile: Things That Gain from Disorder,” Nassim Nicholas Taleb tells a story that may help put the disappointment of this year’s Davos gathering into some ethical perspective.

Welcomed as a best-selling author, Taleb was one of the celebrity thinkers brought to Davos to help the gathered global elite wrestle insight from the long, still unfolding aftermath of the financial crisis. Expecting critical and constructive dialogue, Taleb discovered the backstage reality to be dangerously out of sync with the on-stage declarations of concern. To his chagrin, he was approached while there by a former Vice-Chairman of the Federal Reserve Bank of the United States, who tried to sell him “a peculiar investment product that aims at legally hoodwinking taxpayers.” When Taleb asked if such a complex maneuver was ethical, he was told, “It’s perfectly legal… we have plenty of former regulators on staff.”

Here then is the problem in a nutshell: people go to Davos to do a sort of insider-trading on big ideas without turning that expanded consciousness into conscience. This willingness to be seen to care about big issues or big problems, while at the same time failing to appropriate their implications and responsibilities, provides the patina of trustworthiness, without any of the costs or sacrifices needed to earn and legitimize it.

This is a type of high-level corruption. Rather than exchange bribes for benefits, attendees exchange even more precious patronage – the peer permission to proceed with business as usual.

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T.O. Post-F.

Whether Toronto Mayor Rob Ford gets indicted or re-elected, the most pressing priority for the city will be to change the local and global narrative. A city with self-proclaimed aspirations to be “world class” has by association with this disturbing governance failure achieved the desired celebrity, albeit missing two key consonants. But more than mere reputation is at stake. A special city needs to refashion its self understanding, so as to begin to heal the divisions laid bare by this tragic-farce in leadership, and to set a vision for its future that better represents its amazing latent potential. In many ways Toronto also represents civil and social skills that the world desperately needs, so the rehabilitation may be of service to others hoping to develop the reality that we native Torontonians take for granted, and have let be tarnished these last months.

The ancient Greek word from which community is derived is koinonia. As well as convey precepts of “communion” and “joint participation,” the word means “a gift jointly contributed – a contribution.” With this perspective, what “gifts” does Toronto embody? What of our specialness can we reflect more precisely to ourselves as citizens, and contribute to the world around us?

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Be Wary: Ethicist at Work

Are ethicists more ethical than their peers in other disciplines? It’s an interesting question. A recent study published in the journal Metaphilosophy provides a limited data point, but the news, at least if you’re an ethicist like me, is not good. Comparing how university professors engage students, the researchers found no difference between ethics professors and other faculty. Even though the ethics experts set an ideal, and acknowledged that not following through on that standard was morally wrong, in action, the experts in ethics were indistinguishable from fellow academics.

Are you surprised? I’m not. But I am distressed.

I’m not surprised, because if ethics were truly relevant, or if we really understood them to be effective, we’d be invoking them with much more frequency and rigor. Canada is knee-deep is scandals, with Senators whitewashing expense reports, the Prime Minister’s Chief of Staff paying for the white paint, and the Mayor of Toronto careening from one violation of the public trust to another. Ethics are AWOL, and no one seems to be missing them.

The same is true in business. Ethics have become IKEA-like contraptions for compliance. All the imagination and enquiry have been purposefully engineered away, so that all ethics and compliance officers need to do is follow the illustrated instructions, and assemble the pre-cut pieces.

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Less Needs to be More: The Austerity Ethics for an Austerity Economy

Either as deliberate policy or by necessity, governments and companies are almost everywhere adopting austerity measures. The stringency in spending is required for the simple reason that debts aggregating over decades cannot be sustained.  As it happens, economists, politicians and chambers of commerce have focused their austerity demands on public spending, were deficits have become particularly onerous.  Mostly forgotten in this rush to cut spending is any acknowledgment that the current ballooning of public expenditure was in large part caused by having to extend trillions of dollars of liquidity, bailout and stimulus support for the economic crisis unleashed by the private sector.  No one has yet articulated an “ethics for austerity” that takes stock of the complex causes of our current fiscal disorder, or that envisions a framework for generating social, moral and economic possibilities out of this new reality defined by constraint.

There are indeed serious fiscal issues that need to be addressed in the public sphere relating to costs for healthcare, dealing with the social services for an aging population, and the cost of other so-called “social entitlements.”  However, while we have seen already radical and disruptive spending cuts in education, social services, and public sector jobs and pensions, companies have largely refused to share in any of the sacrifices that austerity brings in its wake. Bankers have rebuffed calls to change the sector’s compensation structures, despite the evidence that distorted incentives fueled the egregious behavior (more…)

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Mis-Firing: When Catharsis Foils Wisdom

I for one am the disappointed that BP CEO Tony Hayward has been fired.  From press reports about his response to the oil-spill disaster it is hard to argue against cause. Clearly overwhelmed by the emergency, Hayward committed numerous personal and corporate miscues during BP’s efforts to deal with the human, social and environmental fallout of the oil well explosion. He must have been a smart guy to earn the top-job at BP, however, when it counted most in crisis, he displayed much more insensitivity than intelligence. While I’m all for the principle of accountability, I can’t help feeling that firing Tony Hayward was too easy, and in some ways a missed opportunity.

First, the problems leading to the Gulf oil-spill precede Hayward’s tenure as CEO. (more…)

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“Much More, Much Faster”

With the world’s attention focused on BP’s troubles, the news that the Indian government this week convicted seven former employees of Union Carbide for “death by negligence” slipped under the radar. In fact, the Bhopal gas plant leak that killed thousands of people in 1984 deserves both the dignity of recognition, and respect for being a cautionary tale about what is unfolding in the Gulf. Critics such as Amnesty International have described the long-delayed legal convictions in India as “too little, too late”.  Forty tons of toxins released from the plant killed 3000 people at the time of the accident, and between as many as 7,000 – 15,000 since. A horrific toll continues to be paid by victims, many suffering disfigurement, blindness and other illnesses from the poisoning. Altogether, the Indian government estimates that nearly 600,000 people have been affected by the Bhopal disaster.

BP is not Bhopal in human suffering, although the eventual scope of the health consequences from the oil spill is hardly estimable or minor. As at Bhopal, people died in the accident. And now the spreading clouds of oil are destroying livelihoods for perhaps as many – if not more people – than were impacted in India. There are as many parallels as differences between Bhopal and BP, but the key lesson from this week’s court decision in India is that our global systems of accountability are inadequate for dealing with the global impacts of corporate negligence. (more…)

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The Mirror at Ground Zero

Some citizens of New York are roiled by the prospect of a new mosque to be built two blocks from the footprint marking the Twin Towers of the World Trade Center. I certainly have sympathy for the local residents who suffered the unspeakable trauma, and cannot imagine but that those who lost loved ones in the attack will feel their wounds ripped open by the debate concerning the now sacred ground.  Whatever the city planners may have decided, we owe a preferential option to the considerations of those who have suffered the most.

Even with this preference, I nonetheless believe that the possibility of a mosque near Ground Zero poses too important a question for Western culture, and for the economy of which that Wall Street neighborhood epitomizes, to not consider the issue more critically and carefully.

I need to disclose that as a business ethicist and a theologian-in-training, I have been a keen participant in interfaith dialogue, particularly in relation to the moral resources that we need to develop within globalization, and towards sustainable development. From this experience, and from the understanding of my religious tradition as a Roman Catholic, I stand with the Muslim community that has conceived, and won approval for building their house of worship in lower Manhattan.

On one level, we cannot quarantine tolerance.  History has shown us that when we exclude others, we in the end only ghettoize ourselves, compromising our dearest values.   (more…)

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‘Carmic’ Justice

Coincidence sometimes holds surprising significance. In only a few short months we have seen icon corporations on both sides of the carbon-energy complex stumble and fall.  First, Toyota took a global reputation-beating as problems with accelerators, brakes, and ineffectual-quick-fixes plagued models across both its mass and luxury brands. Now BP is writhing in the public spotlight over its own cumbersome response to the oil spill in the Gulf of Mexico. It’s as if the environmental gods, having taken umbrage at Copenhagen’s tepid response to Global Warming, have unleashed the fates to make mockery of two of the most prestigious players in the carbon economy.

If the karma seems justified, the lessons nonetheless have yet to be learned. Expert analysis and debate about causes will likely take years, but it is already clear that both companies over-extended themselves, operating with the hyper efficiencies demanded by global economies of scale to the point where capacities for dealing with mistakes, accidents, or engineering flaws, became severely curtailed.

By any measure both companies cast a huge ecological footprint, and both market products to customers that by aggregation are at the heart of our global sustainability quandaries. We consumers are obviously complicit in this exchange, but by their simultaneous missteps Toyota and BP are exposing just how fast that precarious threshold of viability is approaching. Still in the aftershocks of the financial crisis, global society again encounters the publicly shared risks from companies that are “too big to fail.” Especially with BP, the real lesson is that the failures by some these companies are just too big to be contained.

Another similarity binding Toyota and BP… (more…)

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The Anarchists On The Inside

The G 20 summit (soon to be replayed in Toronto) is supposed to be a ritual of global democracy, bringing together leaders of the world’s major economies to work together to solve urgent problems. Leave aside the irony that the people supposedly represented are increasingly held back further and further from the proceedings. The more ludicrous presumption implied by security arrangements is that the threats to social order are outside the barricades. What we’ve learned in the last two years as the financial crisis has continued to roil around the world is that the real anarchists are not the rock throwing youths wearing baklavas, but rather the bankers and bureaucrats ensconced in the establishment who make their bets for profit without any accountability for the consequences.

My thesaurus explains anarchy as chaos, turmoil, disorder, tumult and mayhem. Sounds like another day at the office with Goldman Sachs. Another descriptor for anarchy in the thesaurus is lawlessness. The New York Times reported that a group of bankers founded a new lobbying organization in the very early and darkest days of the financial crisis. Even as half the companies represent were receiving bailout funds, they had the strategic acuity (and time on their hands) to begin preempting Congress from making the regulatory changes that the situation warranted. Although legal, such self-serving lawlessness-through-lobbying is a form of stealth anarchy, happily risking further chaos to preserve faulty tactics for generating profits. Street protesters could never in their wildest dreams hope to unleash such havoc. Meanwhile, for wearing pinstripes, almost all of those who caused the financial maelstrom not only got to keep their jobs, bonuses, and privileges, but also inveigled their demands into the reforms meant to regulate them.  (more…)

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