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|In: Business Ethics|Last Updated:

Marilyn vos Savant, the professional genius, proved that the egg came first. Heritable mutations happen only in sperm and ova, she reasoned, so something that was almost a chicken laid a true chicken egg. Makes sense to me.

As we sit in the rubble of Enron, ImClone, Worldcom, Tyco, AOL, and other, as-yet-undiscovered or unpublicized corporate implosions, it’s worthwhile to wonder which is the egg: The lack of accountability resulting from more than two decades of business deregulation, or the corrupt perspective of the corporate elite who acquired the resulting additional power.

Lord Acton notwithstanding, I think the corruption came first. It’s the egg, and it smells rotten.

Government regulation is what allows businesses to act ethically. Without regulation, those businesses that resort to any tactic to win have the advantage over those that restrict their behavior to conventional codes of ethics. Consequently, ethical CEOs should welcome government regulation, not fight it. It levels the proverbial playing field. The goal of an ethical CEO would be efficient regulation, not deregulation.

For more than two decades we’ve been subjected to unrelenting propaganda from the BIG/GAS (Business Is Great/Government and Academics are Stupid) contingent decrying any and all regulation as a fundamentally bad idea. Regulation, we’ve been assured, prevents American businesses from being competitive in world markets, harms productivity, and hampers profitability.

What bunk. The additional profitability stemming from deregulation turned out to be the result of an increased ability to cook the books. And if deregulation has made American business more competitive, it’s hard to find the evidence — trade deficits are at record levels — but it certainly has made it less accountable to anyone.

Business will be re-regulated. Current abuses are too simply too flagrant. The question is how; the probable answer is badly. The business community no longer has the credibility to be part of the process, which leaves it to Congress and executive-branch agencies to design the regulations. Their goal will be minimizing any chance of new abuses, unfettered by considerations of how hard or easy it will be to comply.

Every new regulation will result in reporting requirements, every reporting requirement will require new information technology, and nobody is going to care how hard it is to build.

Which means CIOs and CTOs will be reaching for the Excedrin.

Assuming, of course, that new regulation hasn’t turned Excedrin into a prescription drug.

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|In: Business Ethics|Last Updated:

According to our national philosophy, we have a government “… of the people, by the people and for the people.”

People, in other words, precede government, which is why people have inalienable rights. Corporations, in contrast, are legal fictions. They exist only within the framework of government and have whatever rights and privileges we give them. Government can revoke or extend any or all of those rights at any time without raising constitutional issues.

I mention this because of how frequently people talk about corporations as if they were people, only bigger. “Our budget is like your household budget,” is a favorite example, used by executives to explain why the company can’t afford something important.

The company budget, though, has little in common with my household budget. I subscribe to cable television, go to the movies, buy new clothes even when the old ones haven’t worn out, and enjoy a bunch of other stuff for which there’s no return on investment of any kind. Unlike most corporations, I spend a significant chunk of my budget on fun stuff.

Also, I’ve never downsized either of my children, no matter how tight the budget or how annoyed I am that one or the other left dirty socks on the couch.

Here’s another: “We do the right thing.” I don’t even know what that means, especially since the company also maximizes shareholder value. In biological terms, morality is a species-specific trait of Homo sapiens. John Wayne Gacy’s behavior was immoral (and nauseating). In contrast, when a seagull eats a chick in the next nest, it isn’t acting immorally at all. Morality applies only to human beings.

Corporations, not being big Homo sapiens, aren’t moral entities. (For more on this subject, check out Carlton Vogt’s excellent “Ethics Matters” column on Infoworld.com.) They are, however, supposed to obey the laws and regulations that define the acceptable boundaries of corporate behavior. It’s because corporations aren’t moral entities that we need extensive laws and regulations — they have no internal restraints.

Which creates a dilemma. You are a moral entity, and confine your actions to what’s allowed by your moral code. But you’re employed by a corporation, which isn’t one, and you’re supposed to act in that corporation’s best interests. I’ve even been told that this is a moral obligation.

Which is nonsense. “Maximizing shareholder value” is a financial proposition, not a moral one.

Which is why, if you want your company to behave morally, you’ll have to bring the morality there yourself.

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