George Noga; Business Ethics and Responsibility

By George Noga
More Liberty, Less Government

 
         Someone I know teaches a course in corporate ethics and responsibility at one of central Florida’s major universities. She recently called to ask if I would sit for a short video to provide my perspective about business ethics. Undoubtedly she made this request of me knowing full well that the end result would be provocative, outside the box and would offer a sharp contrast to the other area businessfolks also providing video for her classes. I did not disappoint.

“This is charged, no-apology, politically-incorrect and jolting.”

         I made a transcript of the video and am reprising it here for our readers. As advertised, it offers a charged, no-apology, politically-incorrect and jolting take on the subject of corporate ethics and business responsibility.

Question from professor: You did considerable service for the community; does this mean business leaders have a responsibility to give back to the community?

In one word – no. I did whatever I did solely because I wanted to and not because of some wrong-headed cliché. The responsibility of business leaders is to do the best they can for their company. By giving their best to their employer, they simultaneously are serving the community. Consider the example of Bill Gates and Steve Jobs. Through their businesses they make the lives of hundreds of millions of people more productive and enriched each day. They already have given much to the community and they have taken nothing without providing equal or greater value. They owe nothing further. The term giving back implies you have taken something. Gates and Jobs took nothing; they spawned entire industries, created jobs and improved countless lives.
 
          The people who do owe something are those who have taken from the community without providing anything of value in return. In that category are those who have committed crimes and who have received assistance from the community. That explains, at least in part, why many criminals are required to provide community service.

Question from professor: Does this mean companies should do nothing in the way of community service?

          Companies should act in their self interest. It may be in a company’s self interest to support certain community projects. Companies should maintain perspective; their mission is to provide the best possible products and services to consumers while providing value to shareholders. By accomplishing this, they are helping the community. If companies choose to be active in community projects, they need to do it for the right reason and not because of some platitude from a can or misguided notion that they owe something.

Question from professor: Should companies have a written code of ethics?

         In restaurant washrooms there are ubiquitous signs that read “Employees are required to wash their hands”. Such signs are posted to make customers more comfortable, not to remind employees. So it is with written codes of ethics. They are put in place for the ersatz comfort of the public rather than for the company and its employees; they shouldn’t be necessary. To be cynical – a written code of ethics may be expected and probably can’t cause any harm. Similarly, colleges are expected to offer courses about social responsibility and these probably don’t cause much harm either. Nevertheless, both are similar in principle to the washroom signs about employees washing their hands, i.e. they are there strictly for window dressing.

“Enron had a 64 page code of ethics distributed to all employees.”

         I like to tell about the court-marshal of Captain Bligh of the HMS Bounty – a true story. The court wrote in its conclusion: “If truth and justice are not embodied in the captain of a British ship, then truth and justice are not present aboard that ship.” If the British navy had a written code of ethics, would it have transformed Captain Bligh? I challenge anyone to find one example where a written code of ethics has altered behavior. Enron had a 64-page code of ethics distributed to all employees.

Question from professor: What about corporate sustainability and green initiatives?

         We live and do business in a highly politicized environment – much more so than in the past. The entertainment industry in particular is characterized by groupthink. It can be difficult for someone who is not in lockstep with groupthink. In my 40-year business career I never met one person who was against the environment, social responsibility, sustainability, transparency or any similar catch phrase. What you need to understand are the following:

  1. Most of these terms are code words for something else – usually political correctness or a political agenda or point of view.
  2. Green initiatives mainly are feel-good measures rather than substantive actions. They often are intended for public relations – just as the washroom signs. In fact, there is a name for this; it is called green washing.
  3. All measures of human and environmental well being are the best they ever have been in the past 50-75 years and are continuing to improve. That doesn’t mean you shouldn’t do more; however, always understand what really is going on.

 Question from professor: In closing, what is your best single bit of advice to students?

         Single-mindedly focus on truth; do not unquestioningly accept political correctness or conventional wisdom. I will cite just one of many examples where the truth is far different than most students have been taught.
 
          Students have been taught it is environmentally harmful to use paper products because it ultimately leads to the destruction of trees and creates waste. This is a shibboleth. The facts do not support either assertion. For the past 60 years (since records have been kept), in the USA growth of trees has exceeded harvest in each and every year. In commercial forestland the rate of growth exceeds harvest by an average of 40% per year. Eliminating paper products would not save a single tree and ultimately would lead to less planting of new trees. It would be more accurate to encourage people to use paper products to help save the forests. There isn’t time to discuss landfills except to note putative landfill shortages have been thoroughly discredited.

 “People should be encouraged to use more, not less, paper products to help save the forests.”

          If you want to know a real environmental catastrophe – it is ethanol. However, ethanol is politically correct whereas the paper industry is not. But that’s a story for another day. Finally, if you found the views I have expressed stimulating, I encourage you to visit the website of my More Liberty – Less Government Foundation at: www.mllg.us.

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