Ethics Bob opens an ethics can of worms with his latest post, “Is It Ethical For Nike To Make It’s Shoes $4 a Day?” Among the worms, some older than dirt:
- If workers agree to work for a given price, is the company’s obligation to pay them more?
- Should any company pay less than a living wage for full-time work, whether or not desperate workers assent?
- Is it better for a company to pay fair wages and go out of business because it can’t compete with competitors who pay less, than to keep creating jobs, products and wealth for investors by keeping the business profitable?
- Is a US company justified in using local standards of fairness when it is doing business in a foreign country, rather than America’s ethical standards?
- Can a company wash its hands of the arrangements made by its foreign contractors, no matter how unjust or exploitive?
- Is it not per se unethical for a company like Nike to pay millionaire athletes obscene amounts of money for mere endorsements while it pays only $4 a day to the workers who make their shoes?
You can, and should, read Bob’s post here, and then we can argue about the above questions for the rest of our lives.
Ethics Alarms 
No they dont have an obligation to do any of those things. But they shouldnt be surprised if people stop buying their products if they dont.
You wrote the other day about how much money does a person really need after a point? Well how much profit does Nike need after a point? If its ok for a company to make as much profit as possible why not the individual?
You know the answer to that one:a corporation has a fiduciary duty to maximize profits; an individual has no such obligation.
Whew! I’m glad you posted questions. I was afraid you were posting the answers. here are my answers to your q’s:
Q: If workers agree to work for a given price, is the company’s obligation to pay them more?
A: Sometimes
Q: Should any company pay less than a living wage for full-time work, whether or not desperate workers assent?
A: Maybe
Q: Is it better for a company to pay fair wages and go out of business because it can’t compete with competitors who pay less, than to keep creating jobs, products and wealth for investors by keeping the business profitable?
A: No, never!
Q: Is a US company justified in using local standards of fairness when it is doing business in a foreign country, rather than America’s ethical standards?
A: Never. Well, hardly ever
Q: Can a company wash its hands of the arrangements made by its foreign contractors, no matter how unjust or exploitive?
A: Never. No, never!
Q: Is it not per se unethical for a company like Nike to pay millionaire athletes obscene amounts of money for mere endorsements while it pays only $4 a day to the workers who make their shoes?
A: I think it’s not unethical to pay huge amounts to millionaire athletes AND it is unethical to pay only $4 a day to its workers.
Sorry for the long response. My students are often frustrated to hear my “maybes” and “sometimeses” answers to their questions, and so am I. But that’s business ethics for you.
I’ll be writing more about this at EthicsBob.com.
I’m on board with every one of your answers, including the maybe’s. This the guts of business ethics, and there are no easy answers.
Aw, shucks. I was hoping there were easy answers somewhere. One of my grad students told me, “Professor, it seems like the answer to every question we ask is ‘Sometimes yes, sometimes no.’ “
Sorry Jack but if its alright for a company to make as much money as possible then I as an individual shouldn’t be condemned for doing the same thing as long as I do it legally.
Who’s condemning it? The difference is that an individual who decides some thing are more important than money is being altruistic, and the company that does is breaching a duty.
The company has a duty to make money.
I think what is unethical is consumers abdicating their ethical duty to make informed choices. In big business, “everybody does it” is self-propagating because there is no consumer pressure to be better than your competition. The “free market” assumes an informed consumer-base that punishes companies who disagree with their values by taking their business to those that do. This doesn’t happen, and while some fault lies with companies for using the EBDI rationalization, most, I think, lies with consumers for being apathetic. As long as American consumers don’t care about Chinese peasants working for a dollar a day because they don’t know any better, corporations like Nike have no reason to care.
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Chase is right: the company has a duty to make money.Jack is wrong: a company is not obligated to maximize profits at all costs–the officers have a fiduciary duty to guard the stockholders interests, but that doesn’t require them to operate in an inhuman manner (which is not easy to define).
Did I say at all costs? I think not!
Sorry–I thought that’s what you meant by “maximize.”.
The danger, in my case, of summarizing one of the most perplexing of all ethics balancing acts in too few words. I’M not even sure what “Maximize” means in this context. Presumably “maximize” means “maximize” without resort to illegal or unconscionable means, but many executives have concluded otherwise. Without any harm to the environment? Any long term harm? Any permanent harm? Any disproportionate harm? “Maximize” over the long term, or over the short term? Maximize for current investors, or investors yet unborn? Does behaving 1n honorable and in exemplary fashion ultimately maximize profits by maximizing market identification? Is penalty balancing part of the calculation?
Well, maximize profits makes me think of Milton Friedman, who wrote (around 1970, I think) that
“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.”
Much of business ethics thought is to debunk Friedman, since he apparently never thought of externalities (e.g., pollution, safety, et al.).
What business ethics tries to do is redefine the rules.
Yeah, we try, but frustratingly for many students (and teachers), many of the most important rules are unwritten and unenforceable.
But Bob—those “unwritten rules” are called “ethics”!
Yes, I call them “unenforceables.” Ethics is obedience to the unenforceables.