Category Archives: business

Are European Soccer Matches Won in Stadiums or in Boardrooms?

Wembley - Tor

Was it a goal or not? This question will forever cause a stir between English and German soccer fans. (Probably less of a stir for English fans since England were awarded the disputed goal in extra time of the 1966 World Cup final in Wembley Stadium: watch the disputed goal here, read about it here.) But this is not the only thing matter of debate between English and German soccer. Germans often complain that English football is just about money, finding a big sponsor, and less about sports and a fair competition.

Whenever we are talking about professional spectator sports there are always two overlapping competitions in play, so to speak. The one we are watching take place on the fields (court, ice, etc.) between the teams, and the one that goes on in the marketplace between rival businesses. The German complaint, in a nutshell, is that English football is driven too much by the pressures of the marketplace, and not enough by what the English fan’s themselves love to call “England’s game.”

In order to promote the sport over the marketplace, the German Bundesliga invented the “50+1 rule”. It says that clubs are allowed to compete in the Bundesliga only if they hold a majority of their own voting rights (50% + at least 1 additional vote; read more about the rule here.) By this rule the “on-field” sporting interests of a club should be protected from the “marketplace” economic interests of its investors. This way, financiers and businesses will be able to gain control over clubs and professional football teams. The Germans believe that this is exactly what has gone wrong with English football. For example, Manchester United is owned by the US-American business-family, Glazer. (You can read about the differences between English and German football policies in this BBC article from 2013.)

What does that mean for the sport? Is the competition in England and elsewhere unfairly manipulated by investors? Is it unfair that some clubs have wealthier or more generous investors than others? Does the German rule make it impossible for smaller teams to compete with the historic giants of the Bundesliga like Bayern Munich? Perhaps finding an investor is just part of the game if you really want to be able to compete on the field. Such are the dilemmas and paradoxes when two fundamentally different kinds of competitions – sports and markets – overlap so completely.

Why Lance Armstrong isn’t the “Bernie Madoff of cycling”

On another blog, at the end of the summer, I spent far too much space trying to figure out what we should think about Lance Armstrong after his quasi-implicit-wink’n’nudge-pseudo-confession. That statement from Armstrong came as he announced his decision to, in essence, plead “no contest” to the US Anti-Doping Agency’s public hearing of his case. My colleague Chris MacDonald follows up on the case on his Business Ethics Blog — and does so much more concisely, and with special attention to the “adversarial ethics” angle.

On Wednesday (October 10), the United States Anti-Doping Agency (USADA) released a small mountain’s worth of evidence against champion cyclist Lance Armstrong. Not surprisingly, comparisons to corruption in the world of business were not far behind. On Twitter, a number of wags referred to Armstrong as the “Bernie Madoff of cycling,” or variants on that.

The comparison with Madoff is to be expected. In both cases, you have wrongdoing of impressive scope. In both cases, the wrongdoing was truly brazen, going on right under the noses of regulators. In both cases, you can’t escape the feeling that someone should have been able to figure it all out sooner. And in both cases, you see the eventual fall of a man who was a hero to many.

But the comparison is also off target in important ways….

 

‘Utmost Good Faith’ Between Adversaries?

Not much has yet been written about the quasi-adversarial relationship that obtains between consumers and the companies from which they buy goods and services, at least not in those terms.

And it’s clear, I think, that the relationship is quasi-adversarial. In game-theoretic terms, it’s a ‘mixed motive’ game — one in which cooperation of some form is useful, but in which each party has some incentive to deviate from maximally cooperative behaviour. When Apple sells me a computer, they would ideally like to squeeze as much money out of me as possible, while giving me a product as cheap-to-produce as possible. And my own preferences are the exact opposite. We both benefit from doing business together, but our interests in the interaction are not quite aligned. In fact, in terms of pure dollars and cents, the transaction between Apple and me is a zero-sum game: every extra dollar they charge for their computer is a dollar out of my pocket and into their corporate coffers. It’s not a fully-adversarial relationship, but it’s still one that needs some rules to keep it civilized.

In this regard, it’s good to know about the legal concept of uberrima fides. This is a legal doctrine, relating specifically to insurance contracts, which says that “all parties to an insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal.” The relationship between insurer and insured, in other words, is a game that must be played by very strict rules.

The concept of uberrima fides doesn’t mean the insurer and insured are on the same team, metaphorically speaking. So it implies a relationship quite different from, say, a fiduciary one. A fiduciary relationship, as a famous legal judgment once put it, requires “the punctilio of an honor the most sensitive.” In a fiduciary relationship (e.g., the relationship between lawyer and client), the commercial aspect of the relationship takes a back seat, and one party (e.g., the lawyer) is expected to put the other party’s interests ahead of their own. In a relationship subject to the uberrima fides standard, the relationship is still at least partly adversarial, but the adversaries in question are expected to play very strictly according to the rules. This makes particular sense for the relationship between insurer and insured, presumably, because both parties are so highly vulnerable to gamesmanship and dissimulation on the part of the other.

This suggests, I think, that we think of various kinds of buyer/seller relationships as existing along a spectrum, from the aggressively adversarial to the utterly fiduciary. The question, then, is not which rules should apply to buyer/seller relationships in general. The question, rather, is which rules should apply to what kinds of buyer/seller relationships, and why.

Bi-Partisan Markets

Milton Friedman purports in Capitalism and Freedom that the free market allows the individual to express her individual desires, while the democratic system forces conformity.

“From this standpoint, the role of the market, as already noted, is that it permits unanimity without conformity; that it is a system of effectively proportional representation. On the other hand, the characteristic feature of action through explicitly political channels is that it tends to require or to enforce substantial conformity. The typical issue must be decides “yes” or “no”; at most, provision can be made for a fairly limited number of alternatives. Even the use of proportional representation in its explicitly political form does not alter this conclusion. The number of separate groups that can in fact be represented is narrowly limited, enormously so by comparison with the proportional representation of the market.”

Although Friedman argues for the benefits of proportional representation in the market, the economic system can potentially arrive at a similar conclusion as the political system. Consider the situation of the carbonated soda market, where advertising similarly enforces substantial conformity by raising the barriers to entry. Coke and Pepsi hold over 70% of the market share.[1] This sounds dangerously similar to the current political landscape in the United States, with Republicans and Democrats holding over 60% of the “voter market share.” 36% of registered voters are Democrats and 27% are registered Republicans.[2] The competitive landscape is actually slanted more in favor of Coke and Pepsi than our often-criticized bi-partisan political system.

The point that Friedman is trying to make is that 49.9% of the country may be forced to conform to a political situation to which they are opposed. Obviously, if Coke has a majority market share, you are not forced to consume only Coke. However, Friedman argues that the free market constitutes a system of proportional representation, but that is not consistent in the Coke/Pepsi situation. Due to wide awareness of Coke as a result of advertising expenditure, the consumer has a higher subconscious disposition to purchase Coke. It is not the result of actual product preference, but rather brand preference. Even if a company launches a cola competitor to Coke that is a healthier alternative with the exact taste, it will likely fail due to consumer’s requisite knowledge of the Coke brand. Essentially, a consumer purchasing RC Cola has the same effect of a citizen voting for the green party. The consumer is forced to conform to an economic situation in which they potentially are opposed, but is unable to view or obtain alternatives due to Coke’s stranglehold on the market.

One could argue that the consumer is not truly forced to consume Coke; she could simply purchase RC Cola in the supermarket. However, what about the situations in stadiums, theaters, or restaurants where there is only one option? These venue providers will rationally select the most prominent brand in order to appease the most consumers, and thus select Coke. But this leaves the consumer with a ‘yes’ or ‘no’ choice in those certain environments; the exact situation in which Friedman condemns. Thus, while liberal economists criticize the conformity in politics and espouse the virtues of the competitive marketplace, both systems are equally susceptible to the concentration of power.


[1]Esterl, Mike. “Pepsi Thirsty for a Comeback.” Wall Street Journal, 18 Mar. 2011. Web. <http://online.wsj.com/article/SB10001424052748703818204576206653259805970.html&gt;

[2] “Fewer Voters Identify as Republicans.” Pew Research Center. 20 Mar. 2008. Web. 04 Apr. 2012. <http://pewresearch.org/pubs/773/fewer-voters-identify-as-republicans&gt;.

Football, Business, and the Rules of the Game

The scandal currently engulfing Football’s New Orleans Saints illustrates some important points about adversarial ethics, and in particular holds lessons for business ethics.

The scandal concerns the fact that over a number of years, members of the team (and at least one assistant coach) maintained a “bounty pool,” which paid out money to players who succeeded in inflicting serious injuries on players from opposing teams. Football is a tough sport; so what’s the problem?

The problem, of course, is that even tough games need rules, including rules designed to keep the game worth playing.

Drawing on Joseph Heath’s work on adversarial ethics in business, I argue that the limits on adversarial behaviour in business can be defined as those limits that keep the ‘game’ beneficial from a social point of view. Free, competitive markets are enormously beneficial, and behaviour that threatens the benefits of markets robs them of their moral justification.

For the fuller version of my argument, see my blog posting for Canadian Business magazine: New Orleans Saints football scandal highlights limits of competition.

Can Adversarial Contexts Be Socially Integrating?

Recently, Michael Gillespie wrote an article on March Madness and the unifying character of sports in American culture.  What is it about sports, and March Madness in particular, that it is able to organize and direct a group of otherwise — to borrow a term from John Rawls — “mutually disinterested” individuals towards impassioned support of a common goal?  How can a mere game transform a diverse group of individuals into an almost singular consciousness, where personal identities dissolve into a shared communal existence?

Gillespie answers similar questions in terms of Nietzsche’s view of Greek tragedy, which is, at its core, a merging of both the individual and communal elements of life (or the Apollinian and Dionysian).  Nietzsche’s conclusion is ultimately that life is redeemed only as an aesthetic phenomenon, and a sense of meaning is derived from a sense of struggle in which the individual sacrifices his happiness for something greater.

College basketball, and indeed sports generally, might play this redemptive role in American culture, as it is through sports that we experience life in all its peaks and valleys — from the ecstasy of an unexpected win by a buzzer-beating three-pointer, to the despair over an impossible upset in a tournament’s first round.  Insofar as basketball is representative of the unifying character of adversarial institutions, how else might this dynamic play out towards a goal of social integration?  That is, how might conflict help transform a Gesellschaft (society) into a Gemeinschaft (community), to use Max Weber’s terminology.

A similar situation might be seen in the United States during World War II, where civilian support was widespread.  It is well documented that the U.S. contribution to the war effort increased U.S. GDP, through increased productivity and the better mobilization of the workforce.  This had a taxing effect on the U.S. population, but this struggle was tolerated because of, among other factors, some sense of unification expressed as patriotism.

Indeed, this point about economies and markets as an expression of social integration is interesting.  It has been argued* that Adam Smith’s Wealth of Nations, when interpreted in conjunction with his Theory of Moral SentimentsLectures on Jurisprudence, and Letters on Rhetoric and Belles Lettres, forms a comprehensive theory whereby markets are not exclusively constituted by interactions of “competitive and strategic individuals to secure their material preferences,” (553), but rather as a central mechanism for social order derived from the “inexorable struggle by human agents for moral approbation and social recognition” (ibid).  This reading, furthermore, goes on to state how Smith perceived markets as an analogue to the classical Greek polis, as the site where people seek mutual recognition.

Before we commit what Alfred North Whitehead termed the “fallacy of misplaced concreteness,” we would do well to recognize that this represents an idealization, which might be quite undersupported, especially in the context of contemporary market transactions.  While Smith’s Wealth of Nations argues for lack of government manipulation and intervention in markets, the events of recent years has made some people skeptical of the efficacy of this kind of unrestrained free-market capitalism.

Part of the problem is that there is rarely the sense of a common goal among actors within American corporations.  Some economists such as Paul Krugman claim that the U.S. economy has become dominated by the financial sector, and one criticism against financial institutions is that employee’s have no personal investment in the firm beyond their limited tenure.  Performance is usually assessed in terms of a very short time-horizon, and significantly long-term strategies to increase market capitalization might not be implemented if they sacrifice short-term performance.

Obviously, I have no resolution for these difficulties.  Perhaps adversarial contexts could be socially integrating, and the main issue is how might the unifying character of sports, for example, be applied to other adversarial contexts, like markets.  Smith’s model might have been descriptive for its time, but it’s a real question as to whether our contemporary economic climate is one that can ever be socially integrating in this way.  It might be that our attitudes towards the firm is unsupportive of individual responsibility towards the long-term financial health of corporations, insofar as this comes at the expense of short-term personal compensation.

* Kalyvas, A. and Katznelson, I.  “The Rhetoric of the Market: Adam Smith on Recognition, Speech, and Exchange,” The Review of Politics, Vol. 63, No. 3 (Summer, 2001), pp. 549-579.

David Brooks on Linsanity and the difference between the morality of religion and sports

Posted by Wayne

David Brooks, the New York Times‘s supposedly conservative columnist, regularly looks to sports as a way of making sense of our political and popular culture. This week he used the Jeremy Lin phenomenon as a pretext for some reflections on the gap between the ethos of sport and the ethos of religion (because Lin, like Tim Tebow, is a devote Christian). For Brooks the gap is a chasm that can probably not be fully or safely bridged.

The discussion is relevant for this blog because Brooks claims that the “sporting ethos pervades modern life and shapes how we think about business, academic and political competition.” Our ethical thinking in certain adversarial contexts or institutions will — and ought to — differ from the way we think ethically in other parts of our lives, even if we are deeply religious.

The moral universe of modern sport is oriented around victory and supremacy. The sports hero tries to perform great deeds in order to win glory and fame. It doesn’t really matter whether he has good intentions. His job is to beat his opponents and avoid the oblivion that goes with defeat.

The modern sports hero is competitive and ambitious. (Let’s say he’s a man, though these traits apply to female athletes as well). He is theatrical. He puts himself on display.

He is assertive, proud and intimidating. He makes himself the center of attention when the game is on the line. His identity is built around his prowess. His achievement is measured by how much he can elicit the admiration of other people — the roar of the crowd and the respect of ESPN.

His primary virtue is courage — the ability to withstand pain, remain calm under pressure and rise from nowhere to topple the greats.

This is what we go to sporting events to see

Brooks identifies this ethos with “modern sports,” but take away the inclusion of female athletes and ESPN, and the description of the virtues, goals, motivations, and glories of the athletic hero (or warrior) would not have looked out of place in Ancient Greece or Rome.

Of course, it is easy to see why these qualities are troubling for adherents of many traditional and religious moral traditions in the West and East. A “moral hero” in these traditions would not be described in any of the ways I have emphasized in bold font in long quotation from Brooks. (Although he or she would, presumably, be just as courageous as the sporting hero, even if this was not his or her primary virtue.) Brooks himself goes on to paint a similar broad-brush portrait of the religious life, and explains why he thinks the sporting and religious characters can never be fully reconciled. Following the Jewish theologian Joseph Soloveitchik, Brooks believes

that people have two natures. First, there is “Adam the First,” the part of us that creates, discovers, competes and is involved in building the world. Then, there is “Adam the Second,” the spiritual individual who is awed and humbled by the universe as a spectator and a worshipper.

Note that Brooks is focusing almost entirely on one component of a moral or ethical perspective — the part that concerns virtues or characters traits. But we also care about what rights, freedoms, and duties people have; and with the how to design just institutions (which will, in turn, assign various rights and duties to individuals occupying particular roles). So we might also ask whether the rights and duties of “players” in deliberately adversarial institutions will necessarily conflict with the dictates of a religious follower’s conscience.

Here too the answer seems to be Yes, but for very different reasons than the ones Brooks has highlighted. The best summary I know of for this case comes from Joseph Heath‘s important paper in the Journal of Business Ethics, “An Adversarial Ethics for Business: or When Sun-Tzu Met the Stakeholder” (2006). Here is how Heath sums up an argument explained over several pages:

Much of everyday morality has as its goal the prevention of a collective action problem. It is possible to secure certain advantages by lying, but if everyone did it, no one would believe what anyone said, and everyone would be worse off… This is why the… Golden Rule capture[s] much of the spirit of everyday morality. But because the central mechanism in a competition is an unresolved collective action problem, there are bound to be numerous prima facie conflicts between competitive imperatives and those imposed by everyday morality. This is reflected in the fact that a naïve or mechanical application of the Golden Rule in a competitive situation is likely to generate the wrong results. Before kicking the winning field goal, we do not want football players to be thinking, “How would I like it if the other team did that to me?” Similarly, before lowering prices, we do not want the gas-station owners to be thinking “How would I like it if the station across the street did that to me?”

The bolded phrase is the key to understanding the reason we actively encourage a different kind of ethical thinking or ethos in what we are calling deliberately adversarial institutions (like sports, markets, and democratic politics). These institutions regulate a competition in order to create benefits for “non players” outside the competition — what economists call “positive externalities.” So in all of these institutions we deliberately prevent the competitors from cooperating in ways that will be to their advantage but not to the advantage of outsiders.

Traditional morality is about cooperating and mutual assistance: adversarial ethics is about how to generate social benefits by preventing certain forms of cooperation; but also about how to make sure that the players use only appropriate tactics in their attempt to succeed. Heath’s article is as good a place as any to see the outlines of, and tensions between, these two features of adversarial ethics. But you should also find these tensions in almost every case study we highlight on this blog.

Incidentally, Heath’s article could be of some service to pious, but ferociously competitive athletes like Tim Tebow or Jeremy Lin. They can play hard to beat their opponents, but show self-restraint in doing so by embracing the “spirit of the rules” and by treating their opponents with respect. And of course, they can and should be as cooperative and humble as possible with their own team mates. Within the team itself, there is still no “I” in Golden Rule.

“From each according to ability, to each according to need?” Not in sports! Or Politics 101: Learn to play the game, fairly or not

Frank Knight, one of the founders of the so-called “Chicago School” of economics, took seriously the idea that markets are a kind of game. But he wondered whether something that is both a game and a system designed to satisfy wants could be fair.

“In a system which is at the same time a want-satisfying mechanism and a competitive game we seem to find three ethical ideals in conflict.  The first is the principle already mentioned, of distribution according to effort.  The second is the principal of ‘tools to those who can use them.’  This is a necessary condition of efficiency, but involves giving the best player the best hand, the fastest runner the benefit of the handicap, and thus flagrantly violates the third ideal, which is to maintain the conditions of fairness in the game.” (“The Ethics of Competition,” p. 54 [1923])

There is no reason to think the system or game can meet all of our ethical expectations. If winning is a priority for the team, can we expect them to play fair? Does being fair to the team and its fans (e.g. by giving them the best chance to win) require being unfair to certain players (e.g. not letting them play because they aren’t as good)? And are these notions of fairness in games appropriate in settings dealing with people’s livelihoods? Is it right for firms to give some workers benefits that others don’t get? Should firms be able to horde secrets that might make all firms more efficient if they were shared?

So what is fair and what is foul in sports or business? Knight seems to be suggesting that it is hard to tell because we have at least three “ethical ideals” for justice and they each give us different answers to this question.

A friendly chat about adversaries

This blog got plenty of free publicity last Friday when I (Wayne Norman) did a turn on Duke University’s weekly “Office Hours” live tweet-in show. For better or for worse, the conversation should be permanently accessible here:

Some of the topics of conversation were plucked from my other blog, This Sporting Life, including one on Why the NCAA Tournament is the American Idol of Sports, and What’s Wrong with the Wonderlic Test.

Bethany’s post here about what we learn about political ethics from primary elections also got a quote and a shout-out during the interview, and it can be found here. Stay tuned for some of her follow-up thoughts on that topic.

Race-to-the-Bottom Watch: Are We Drowning in Advertising

Advertisements are everywhere.  Cabs and busses are covered in full-size ads, billboards are placed every 50 yards along highways, YouTube now plays ads before you can watch the video you intended, TV events are created out of one-sentence announcements (e.g. Heisman Trophy presentation, American Idol final), pop-ups pervade web browsing while we simultaneously find ads for pop-up blocker applications, high school prom dances turn into ads for the usefulness of duct tape, and people are ever getting paid to get advertisements tattooed on their bodies.  A 2009 study suggests that the average American adult spends over an hour a day watching advertisements on TV alone.

But really, you’ve got to feel sorry for the advertisers, don’t you? Think about it: the more ads that are put into the public domain, the less effective each individual ad becomes.

This stems from the fact that advertisers are competing to satisfy the existing and limited demand of a consumer base, rather than creating new demand.  Think of the sheer volume of ads for food and drinks.  These companies are not assuming that without advertisements people will just not eat at all; rather, they assume that people are going to eat somewhere, and advertisements are intended to direct the consumers’ demand in their direction.

While there is a certain amount of demand created by advertisements, advertisers aren’t so naïve as to assume that they can convince you, with a single 30-second spot, to buy a brand new car out of the blue.  Rather, their primary interest is to direct, and at times exaggerate, a consumer’s existing desires.  This means that marketers are essentially competing to win the same consumer demand, and consequently, with each entrance of a new competitor, the old ones have to fight even harder to maintain its market share.

Imagine visiting a city for the first time and getting lost on your way to the hotel.  Contrast the following scenarios:

Scenario 1 –You pull over and ask someone for directions.  The person says they know where you are intending to go and gives you concise enough directions to follow.

Scenario 2 – You pull over and ask a group of people for directions.  They all say that they know where you are intending to go and each gives you concise enough directions that you believe you can execute—however; everyone in the group gives you a different set of directions that lead you to altogether distinct places!

Presumably in scenario 1, you would simply follow the directions you were given, but scenario 2 seems much more confusing.  Whose directions are you to follow?  The person who has lived in the city the longest?  The one who seemed most confident?  The one who claimed to be a taxi driver?  The one who claimed to be a doctor?  The one who was most well dressed?  In fact, the situation seems altogether so confusing that you will probably reject all of their opinions and ask a new person or try purchasing a map.

The same confusion arises when advertisers compete for your demands.  The more businesses that decide to advertise, the more the existing advertisers have to shout louder, in more places, and in smarter ways in order to get your attention.  This ultimately leads to more and more of our dollars and minutes being spent on advertisements every year. We are, in short, in a commercial race to the bottom wherein the more effort that is expended leads to not only fewer gains but higher costs for both businesses and consumers. 

Bringing a snake to a knife fight

(Continuing the theme of the previous post by K. Listenbee.) From this week’s issue of the eponymous magazine of the City so nice they named it twice: a cartoon on the ethics of deception in adversarial negotiations.

 

 

(This cartoon is retransmitted without permission and will be removed upon request.)

Is bluffing just business, or is it bad business?

Consent and fair play can both provide reasonable justifications for the deceptive behavior in some contexts. If you agree to play poker with me, you can’t complain if I bluff — though you certainly could complain if you caught me playing with a marked deck. But these reasons do not necessarily work in the case of all adversarial institutions.

To an extent, part of what adversaries do is deceive and coerce people in order to win the game that they are a part of. This deception amongst adversaries is part of the game, not accidental. The minute difference between a foul and an intentional foul in the sport of boxing is just one example. In order to win, some boxers try to disguise intentional fouls as mere accidents. In his book Ethics for Adversaries, Applbaum argues that those within adversarial institutions have a better chance of getting away with actions that might not be as acceptable in other situations.

“One cannot coherently claim that one aims at the good ends of a competitive system if one seeks to undermine features of the system that make it good. Perhaps the claims that adversaries make about their aims and the actions that they take cannot be made to cohere. Or perhaps the good ends of the system are for its practitioners a sort of idle hope that is unconnected to what their actions aim at. But there is no plausible way to redescribe the violation that adversaries aim at as accidental, a foreseen but unintended side effect. If, to pass a test of reasonable acceptance, actions cannot aim at violation, then much of the violation that results from adversary institutions does not pass the test” – Applbaum, p. 187

When one plays to win, it can often involve actions that undermine the aims of the game. If adversaries are aiming at good ends, then the violations they inflict upon one another can be reasonably justified. As the final sentence of the quote implies, however, not all violations of normal moral codes (like honesty) in adversarial institutions are accidental.

In short, for Applbaum, the good ends of deliberately adversarial institutions will not always justify the means if the means are deliberately unethical.

 

Diving in soccer is like [blank] in business

In the comment-thread to a post by “Matiok” about soccer dives, below, I suggested that diving is in some sense significantly worse that most other fouls in sport (say, among fouls that do not involve significantly injuring your opponent). This is because diving involves a player who was not able to better his opponent on the field, and so instead decides to accuse the opponent of a foul in order to gain an advantage. You can’t win fair and square, and not only do you cheat, but you accuse your opponent of being the cheater.

There isn’t a good word for “chickenshit” in formal academic ethics. “Hypocrite” doesn’t quite capture the ethical nastiness of that kind of competitive tactic. (Yes, I realize it’s much more complicated than that, and that we have to look at the way the institution of soccer has evolved, etc, etc. I’ve done some of that in my other blog, here and here.)

But in this post I want to think about how we might fill in the blank in the title of the post. What, in other adversarial realms (like business or politics), resembles diving in soccer?

Well, here’s something similar. In a Reuters story yesterday we learn that:

Nickolas Galiatsatos, owner of Nina’s Bella Pizzeria in Upper Darby, Pennsylvania, is accused of putting bags of mice at nearby competitors on Monday afternoon, according to Upper Darby Police Superintendent Michael Chitwood.

The owner of Verona Pizza watched Galiatsatos go into his restroom carrying a bag but emerge empty-handed, and alerted two patrol officers who were in the restaurant, Chitwood said.

The officers found a bag of mice and footprints on a toilet seat, suggesting someone had been trying to reach the ceiling tiles, he said.

The officers then found Galiatsatos near another pizza place, Uncle Nick’s, where he was seen putting something in a trash can. There, police found a bag containing five mice, Chitwood said.

“This guy planted them to put these guys out of business,” Chitwood said. “I’ve been at this for 47 years, and I’ve never seen mice used as a criminal tool.”

Like many divers in soccer, he claimed he had to do this because his opponents were doing the same to him:

Galiatsatos claimed his shop had been infested with mice, and he blamed his competitors for the problem, he said.

Chitwood said that Galiatsatos told police he bought the mice at a pet shop for $10.

He faces misdemeanor charges of cruelty to animals, criminal mischief, harassment and disorderly conduct.

A misdemeanor?! You can NOT be serious, ref! Surely that’s a red-cardable offense.

Who needs trade unions?

So far on this blog we have not talked much about the choices between adversarial and non-adversarial relations inside of firms. But this is a great context in which to sharpen our understanding of adversarial ethics, because we do have experience with much more and much less adversarial corporate cultures and industrial relations.

The legal recognition and buttressing of labor unions from the late 19th century until, say, the 1980s, could be described in two ways: either as instituting deliberately adversarial mechanisms in the governance and management of firms, or as making an already-adversarial relationship between owners of capital (and their managers) and laborers less unfair. There are other ways of describing this contested institution, for sure.

We’ll talk much more about what goes on inside the firm in the future; but at this point I would just like to flag a brief debate going on in the blog space at The Economist. Mark Thoma, an economist at the University of Oregon, proffers a brief answer to the question “What good are labour unions?” His one-sentence answer is, “Governments should replace unions as a protector of workers.” And of course, in many ways they have. Government occupational health and safety legislation, along with extensive bodies of employment law, now give to all workers what unions had to bargain tooth-and-nail for on behalf of their members.

But however important unions may have been in the past (and for Thoma this is an open question), he argues that:

In an increasingly globalised world where digital and other technology allow firms to easily escape unionised labour, unions have lost their ability to act as an equalising force in negotiations over wages and benefits.

Global labor organisations could provide an alternative, but this would require global institutions that do not presently exist, and that do not look likely to emerge anytime soon. For now, the answer has to come domestically and the only institution powerful enough to protect workers is government. Government-provided health and dental care, security in old age, workplace safety, insurance against job loss, higher education that is essentially free, and other such benefits would go a long way toward remedying what workers have lost since the 1970s. In addition, government redistribution of income may be needed to ensure that economic gains are shared more equitably. In combination, this would provide the things that unions fought to get for workers and maintain the current social protections that government provides.

There seems to be a general trend to make more institutions adversarial, competitive, or “market-like.” Ed Sullivan got people to watch singers and dancers on TV, but now we won’t watch them unless they’re competing against each other and we can vote on who wins. But here is a proposal to make one very important economic and social institution — the firm — less adversarial. Or maybe just less fair.

For Milton Friedman, life is but a game, sweetheart

(Note: This is the inaugural post by “tiaramer.”)

One big open question for those thinking about ethics in deliberately adversarial institutions concerns how literally or directly we can transplant the vocabulary of sports to other domains. Are markets, for example, just games, or just like games, or only metaphorically and very imperfectly like games?

For Nobel-prize-winning economist Milton Friedman, this question doesn’t seem very open at all. He seems to take it as obvious that not only markets, but life in society in general, is very similar in structure to a game.

The day-to-day activities are like the actions of the participants in a game when they are playing it; the framework, like the rules of the game they play. And just as a good game requires acceptance by the players both of the rules and of the umpire to interpret and enforce them, so a good society requires that its members agree on general conditions that will govern relations among them, on some means of arbitrating different interpretations of these conditions, and on some device for enforcing compliance with the generally accepted rules. As in games, so also in society, most of the general conditions are the unintended outcome of custom, accepted unthinkingly. At most, we consider explicitly only minor modifications in them, though the cumulative effect of a series of minor modifications may be a drastic alteration in the character of the game or of the society. In both games and society also, no set of rules can prevail unless most participants most of the time conform to them without external sanctions; unless that is, there is a broad underlying social census. But we cannot rely on custom or on census alone to interpret and enforce the rules; we need an umpire. These then are the basic roles of government in a free society: to provide a means whereby we can modify the rules, to mediate differences among us on the meaning of the rules,  and to enforce compliance with the rules on the part of those few who would otherwise not play the game.” (Milton Friedman, Capitalism and Freedom, 1962, p. 25; emphasis added)

So for Friedman we willingly, and usually unthinkingly, accept many of these “rules of the game” although we may not know their origins. And if we don’t, there is always an “umpire” there to enforce them anyway!

But his thorough-going acceptance of the direct parallel between good games and good societies raises more questions than it answers. Even if markets can be quite game-like, what does it mean for life in general to be compared to a game? Are we talking about the same kind of “goodness” when we think about a “good game” and a “good society”? Does a “good” society really require acceptance of rules by all of the citizens?

And what if you don’t want to “play” any more? Is it even possible to pick up your bat and ball and go home?

 

Jump quickly over the gap

Following from the aesthetic analysis of business cartoons in the previous post, here’s another old chestnut on the same theme.

(This comic is reposted without permission and will be removed upon request.)

The inevitable gap between what’s legal and what’s ethical

Every writer I’ve ever read on ethics in adversarial settings takes explicit note of the obvious: that is it neither possible, nor desirable, in a deliberately adversarial institution to regulate away all unethical behavior.

As Arthur Applbaum puts it in the book that shares the name of this blog, if “the best of regulatory worlds is understood as a set of rules and levels of detection and enforcement that best balances the gains of eliminating the costs and harms and liberty restrictions of the regulations themselves, then the best set of regulations will legally permit a great deal of adversary action that is economically inefficient, harmful, and liberty-restricting.” (p. 196)

So we cannot expect that “the invisible hand of competition, even in a well-regulated market, will channel all adversary action to good ends.”

In this inevitable gap between what’s legal and what’s ethical we can pack a significant percentage of the best comics about business. Like this one from a couple of days ago.

(This comic is reposted without permission and will be removed upon request.)

 

Farmers, Organics, & the Ethics of Industry Organizations

Over at my Food-Ethics blog, I just posted a short piece called “Caution on ‘Green’ Claims for Organics”. It’s about a suggestion, from the head of a UK farming organization, for organic farmers to be cautious about claims that their produce is, categorically, more environmentally-friendly than non-organic foods.

The interesting thing from the point of view of adversarial ethics has to do with the role of industry associations. Industry associations are a mechanism by which businesses that would normally compete against each other engage in certain forms of cooperation. The catch is that some forms of in-group cooperation are socially beneficial (or at least innocuous) while others are pernicious. For example, when companies cooperate on standard-setting (so that, e.g., competing models of computers can all use the same peripherals), that’s a good thing. When they cooperate on prices, that’s called price-fixing, and it’s bad for consumers (and is illegal in most places). In the case cited above, the organization is calling for a stop to in-fighting over the virtues (in the strong, moralized sense of that word) of various products. Whether that’s socially beneficial depends, in part, on the significance of the moral debate that the organization is hoping to stifle.

Skins and the Edge of Indecency

Last week there was some controversy over MTV’s “edgy” teen drama, “Skins.” I’m quoted giving a business-ethics perspective on the show in this story, by the NYT’s David Carr: “A Naked Calculation Gone Bad.”

What if one day you went to work and there was a meeting to discuss whether the project you were working on crossed the line into child pornography? You’d probably think you had ended up in the wrong room.

And you’d be right.

Last week, my colleague Brian Stelter reported that on Tuesday, the day after the pilot episode of “Skins” was shown on MTV, executives at the cable channel were frantically meeting to discuss whether the salacious teenage drama starring actors as young as 15 might violate federal child pornography statutes.

Over at my Business Ethics Blog, I focused on the way the Skins controversy serves as an example of how a kind of corporate group-think can end up producing a product that might, on second thought, not be such a good idea.

But it’s also worth noting (for purposes of this blog) that TV is fiercely competitive. Viewers generally benefit from that competition, as in any industry, but there are limits on competitive behaviour. What are the relevant limits, here? TV is relatively loosely regulated. The Federal Communications Commission does regulate TV (see their rules here) but their main focus is on avoiding ill-defined “indecency.” But their process has to begin with objections from someone in the community. And what we take to be “indecent” is surely evolving, a fact that broadcasters are both subject to and contributing to. Something more like “bright line” might be found in child pornography laws, the spectre of which has been raised in the controversy over Skins. But even there, there’s plenty of room for interpretation, and plenty of room for broadcasters, in a competitive game, to play along the edges of the rule.

How China Won…

We’ve featured a few posts over the last week on what seems to be a spike in the use of competitive rhetoric to characterize the new global economy. Even the President can’t resist motivating the economic and education policies he favors by suggesting that the road to success — victory — runs through a competitive showdown with our Chinese and Indian rivals. (See here, and here, for example.)

Well, in this context, I can hardly resist linking a recent BBC article that interviewed a handful of Duke students, including one of the best ones I ever taught here.

We put together a team of Duke’s best and brightest – including three Chinese-born students – to discuss America’s place in the globalised world. We showed them a slick and controversial advert aired during the recent congressional election campaign by a group called Citizens Against Government Waste. Set 20 years in the future, a Chinese professor is lecturing students about the fall of the American Empire. Reckless spending led to crushing debt, he explains, before adding: “Of course we owned most of their debt so now they work for us.” The message: America, be scared of China.

The students’ responses are all interesting, and the first couple in particular cast skeptical light on the “competition” metaphor or framework everyone, from the President on down, seems to be taking for granted.

Jack Zhang, who was born in China but grew up in Pennsylvania, was dismayed by the confrontational take.

“It portrays it as a zero-sum game and that somehow Communist China is just the mortal enemy of the US and that the way forward is through competition of some sort. I think that’s the wrong approach.”

Sharon Mei, who runs an “Understanding China” house course with Jack, said the advert played on fear.

“What I was most hurt by was when they had the audience of young people and everyone was yelling in a hostile and malicious manner – these are the people on the other side of the world who will take us over if we don’t do something about it.”

 

Bankers Bonuses and Multi-Level Structured Competition

Here’s an interesting story about structured competition within an organization. By Michael Flaherty and Sarah White, as appearing in the Globe and Mail: Gap in bankers’ bonuses spurs discontent

Annual bonuses at top global banks are causing friction that could drive an outsized round of defections as weaker profits and tougher rules widen the pay discrepancy between star performers and everybody else.

That growing difference between a small number of top-fee earning investment bankers and the bulk of their colleagues may see an exodus from big European and Wall Street banks to smaller upstarts or different industries in the weeks and months ahead….

Actually, what we see here are several nested levels of structured competition:

  • Competition between bankers, structured by the banks that employ them, in order to incentivize them for maximum productivity;
  • Competition between banks (structured by the legal and regulatory environment) to see who can offer an incentive structure that attracts (and retains) the best talent;
  • Competition between industries to see which industry can attract (and retain) the best talent, at least to the extent that such talent is mobile and involves transferrable skills.

Did I miss any layers?

Each of those competitive structures of course implies its own set of ethical norms, both for those who design the institution and for those who are subject to it. The intersection between, and conflict between, those alternative sets of competition-specific ethical regimes, seems a fertile ground for investigation.

Is Business (Like) War?

This Bnet blog entry by Margaret Heffernan is right up our alley: Debunking the Myth that Business is “War”

Much of what Heffernan says about the differences between business and war is true. But some of the disanalogies are more important than others. She notes, for example, that one important difference is that “It is possible for societies to flourish without war — but they won’t do so without business”. Others are weaker. She points out for example that “In business, your adversary will never be defeated.” That’s not always true (sometimes competitors are driven into bankruptcy). And sometimes adversaries are not defeated in war: sometimes one or both sides opts to limp off the field. Who won the Korean war in the 1950s or the Iran-Iraq war in the 1980s, for instance? Neither side was really “defeated”, though though both suffered serious losses.

There are significant similarities between war and business, and not just in the simplistic sense that is often appealed to as a way of justifying the most brutal of business behaviours.

Both war and business are, in the sense in which this blog is interested, structured competitions. In both cases, competitors seek to win, but they generally do so in a way that observes at least some rules. Focusing on the differences obscures the fact that both war and the market represent structured competitions with social benefits. Now, of course, the idea that war as an institution has benefits may be hard to swallow — at least until we make some qualifications.

First, I’m talking about the kind of limited war that we saw most frequently during the 20th century, wars fought by professional armies on battlefields, constrained (at least to some extent) by the laws of war, including most significantly the Geneva Conventions. Second, we need to think of the costs and benefits of that kind of war in comparison to other ways of doing things. To see the social benefit of that way of solving international disagreements, you only need to look at what the alternatives are: wars of population-against-population, wars fought using chemical and biological weapons, etc. So while war of a certain kind isn’t — unlike the market — a competition designed to produce a net benefit, it is a competition designed to produce less bad outcomes than might otherwise be obtained.