Prepared by L. Murphy Smith Texas A&M University Presentation on Ethics in Business and Society

Ethics What’s the fuss?

Why talk about ethics? The National Commission on Fraudulent Financial Reporting (Treadway Commission) recommended that [accounting] curricula should integrate the development of ethical values with the acquisition of knowledge and skills. In a keynote speech to the American Accounting Association, John Burton, Dean of the Columbia University Business School stated that a declining influence of social institutions has increased the role educators must play in shaping values.

American Institute of CPAs Code of Professional Conduct, Principles Article I: In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.

In his best-seller, The Closing of the American Mind, Allan Bloom says that the eternal conflict between good and evil has been replaced with “I’m okay, you’re okay.” Students unthinkingly embrace a blind tolerance in which they consider it “moral” never to think they are right because that mean someone else is wrong. [Allan Bloom, The Closing of the American Mind, New York, Simon and Schuster, Inc. 1987]

“... Life organized legalistically has... Shown its inability to defend itself against the corrosion of evil.” Aleksandr Solzhenitsyn – 1978 address at Harvard University

In a recent Wall Street Journal article, Psychology professor Steven Davis says that cheating by high school students has increased from about 20 percent in the 1940’s to 75 percent today. “Students say cheating in high school is for grades, cheating in college is for a career.”

If students lack ethics in high school and college, then there should be little surprise that they lack ethics in their careers. Greed and over-reaching ambition often end in disastrous personal consequences. Convicted inside trader, Dennis Levine, in a Fortune magazine article wrote: “I have painful memories of Sarah learning to walk in a prison visiting room, and of Adam pleading with a guard who wouldn’t let him bring in a Mickey Mouse coloring book.”

Is there an ethics crisis in America? One recent national election day poll indicated that 56 percent of voters thought that America’s problems are “primarily moral and social.” Only 36 percent thought that the nation’s problems were “primarily economic.”

Can ethics be taught? Teddy Roosevelt said, “To educate a person in mind and not in morals is to educate a menace to society.”

Ethics: What’s the Fuss?

When evaluating one’s goals and objectives, a vital question must be asked: What is your highest aspiration? A. Wealth B. Fame C. Knowledge D. Popularity E. Integrity

If integrity is second to any of the alternatives, then it is subject to sacrifice in situations where a choice must be made. Such situations will inevitably occur in every person’s life.

Wall Street “Greed is good.”

Freedom? Really, the freedom to do the right thing. United States is the only nation founded on a creed.

Declaration of Independence The second paragraph of America's founding document states: "We hold these truths to be self ‑ evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness."

Whereas it is the duty of all nations to acknowledge the providence of Almighty God, to obey His will, to be grateful for His benefits, and humbly to implore His protection and favor. George Washington’s Thanksgiving Proclamation of 1789

Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports… Reason and experience both forbid us to expect that national morality can prevail in the exclusion of religious principle. George Washington’s Farewell Address, September 17, 1796

More than 200 years ago, Professor Alexander Tyler wrote of the Athenian Republic, which had fallen 2,000 years earlier: “A democracy cannot exist as a permanent form of government… The average age of the world’s greatest civilizations has been 200 years. These nations have progressed through this sequence: From bondage to spiritual faith, to great courage, to abundance, to selfishness, to complacency, to apathy, to dependency, and back again to bondage.”

“We have no government armed with power capable of contending with human passions unbridled by morality and religion. Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other. President John Adams, 1789

Where Do We Start? Upon What Can We Agree?

Whether we derive a code of ethics from religious beliefs, a study of history and literature, or personal experience and observation: We can all agree upon some basic values.

Be sure you are right, then go ahead. Davy Crockett

In an issue of Management Accounting, James Brackner stated: The universities are responding with an increased emphasis on ethical training for decision making. For the most part, however, they ignore the teaching of values. For moral or ethical education to have meaning there must be agreement on the values that are considered “right.”

“Until about 50 years ago, it was commonly accepted that universities were to provide students not only with knowledge and skills, but also moral guidance based on the essentials of the Western tradition.” Business Prof Geoffrey Lantos

Michael Josephson, in Chapter 1 of Ethical Issues in the Practice of Accounting, describes the “Ten Universal Values: “Honesty, integrity, promise keeping, fidelity, fairness, caring, respect for others, responsible citizenship, pursuit of excellence, and accountability.”

If we want to produce people who share the values of a democratic culture, they must be taught those values and not be left to acquire them by chance. Cal Thomas, The Death of Ethics in America

A nation or a culture cannot endure for long unless it is undergirded by common values such as valor, public spiritedness, respect for others and for the law; It cannot stand unless it is populated by people who will act on the motives superior to their own immediate interest. Chuck Colson, Against the Night

If everyone else cheats, how do you measure success?

Legality is the minimum standard of action to follow. One’s standard of action should be based on what is right, not merely what is technically legal. Justice Elizabeth Lacy, Virginia Supreme Court

Can you make a difference?

"We Will Not Lie, Steal Or Cheat, Nor Tolerate Among Us Anyone Who Does" -- Which do you think is the harder part: Line 1 or Line 2? Why? Educational Institutions have established ethics codes for their students, e.g. the U.S. Air Force Academy:

“To sin by silence when they should protest makes cowards of men.” Abraham Lincoln Do you think this relates to line 2 of the U.S.A.F. Academy Code of Honor?

The reputation of a thousand years may be determined by the conduct of one hour. Japanese proverb

President Lincoln said: Honor is better than honors.

Power of One Vote 1645 – Oliver Cromwell gained control of England 1645 – Oliver Cromwell gained control of England 1776 – English became the national language 1776 – English became the national language 1845 – Texas became a state 1845 – Texas became a state 1941 – Selective Service System preserved 12 weeks before Pearl Harbor 1941 – Selective Service System preserved 12 weeks before Pearl Harbor 1923 – Adolph Hitler gained control of the Nazi Party 1923 – Adolph Hitler gained control of the Nazi Party

“Leadership is a potent combination of strategy and character. But if you must be without one, be without strategy.” General H. Norman Schwarzkopf

I am only one. But I am still one. I cannot do everything, But I can still do something; And because I cannot do everything I will not refuse to do the something that I can do. Edward Everett Hale

What do profs think? In a survey of college faculty, 187 professors responded to several statements about teaching ethics: 1. The importance of ethics and personal integrity should be stressed in the courses I teach The basis for ethics and personal integrity should be discussed (e.g. benefit to society as a whole, moral and religious foundations of society, etc.)4.11 Note: Scores are based on a scale from 1: Strongly Agree to 5: Strongly Disagree

“In the quest for educational reform, we would do well to turn not only to the great books, but the great exemplars of wisdom with which our country is blessed. To help reclaim our destiny as human beings and citizens, we need to rediscover the generation that really can claim to be the best and the brightest in American history, at least from the moral and political point of view: the founders of the American Republic.” Professor C.R. Kesler [Kesler, C.R. “Education, Cultural Relativism, and the American Founding.” The Intercollegiate Review, Vol. 24, No. 2, Spring 1989, pp ]

“Indeed I tremble for my country when I reflect that God is just, that His justice cannot sleep forever.” Th omas Jefferson “God who gave us life gave us liberty. Can the liberties of a nation be secure when we have removed a conviction that these liberties are the gift of God?”

At the Congressional Hearing on Accounting and Business Ethics in July 2002, Truett Cathy, the Founder of Chick-Fil-A quoted Proverbs 22:1 – "A good name is more desirable than great riches; to be esteemed is better than silver or gold." The truth is that fame and fortune are nothing compared to personal honor.