Political Ethics

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Sat, Jan 16, 2010, 5:00 am  //  Craig Mayberry

The Political Stakeholder Model

I teach business ethics. And as I talk about the importance of ethics in business, it is always interesting to see the similarities between business ethics and political ethics.  Given what is going on in Washington, D.C. and Olympia I thought it would be interesting to explore those similarities in more depth.  At the start of each quarter we explore the different stakeholders that business has to deal with.  The chart shows the business stakeholder model including shareholders, customers, employees, suppliers, communities, environment, and government as major stakeholders.  When any business makes a decision that is going to impact one or more of these stakeholders, it becomes an ethical issue.  As a class we talk about what is important to each of the different stakeholders and the result is about 100-150 different needs that businesses have to pay attention to.  I define business ethics as the responsibility of business to balance the needs of each of those stakeholders and make sure that decisions do not unnecessarily harm one stakeholder while benefiting another. For example, if you do have to terminate employees, at least do it in a manner to retain the dignity and respect of the employee.  The ultimate challenge a business leader faces is dealing with the wide variety of needs amongst all the various stakeholders.

Politicians face a similar stakeholder model.  Each politician has to deal with his/her political party as well as voters, special interest groups, citizens in their districts (who may or may not vote), citizens outside their district, business interests and other governments (for instance federal politicians have responsibilities to their state and local governments.)   Each of these stakeholders has a wide variety of needs and an ethical politician will learn to balance these needs and not make decisions that unduly impact one stakeholder over another.

One big issue in business is the power of the shareholders (or owners) of the company.  Often a decision is made that benefits the shareholders at the expense of other stakeholders.  In fact, many business classes teach that the primary responsibility of business is to make a profit for their shareholders/owners (a policy I then need to de-program).  Politicians face their own powerful stakeholder in the form of their political party.  The party is responsible for that politician's committee assignments, legislative support, campaign fundraising, and 'get out the vote' efforts.  This creates the business equivalent of shareholders and politicians face a lot of pressure to support one stakeholder, often at the expense of other political stakeholders. 

The second most powerful stakeholder for business is customers, who can inflict serious harm on a company if they choose to boycott that business's product.  There is such a direct link between customers and the financial health of a company that business has to watch its patrons very carefully to make sure decisions will not negatively impact the customer.  The equivalent of this relationship for a politician is the special interest groups who provide the bulk of campaign financing.  Like businesses monitoring customers, politicians have to monitor special interest groups who can make or break political futures.

In business, the dynamic that shareholders and customers have so much power makes it difficult for other stakeholders, who are often subject to harmful decisions in order to protect “more important” stakeholders.  This situation creates most of the ethical issues in business.  One of the foundations for successful market economies is that businesses must behave ethically, an increasingly difficult challenge.  Politicians face the same dynamic, but in that instance political parties and special interest groups hold more sway in decision making than other stakeholders. This creates one of the foundational pieces required for democracies to work, as politicians have to behave ethically and figure out how to balance all stakeholders, not just their political party and special interest groups.  As long as politicians behave unethically by shortchanging other stakeholders to maintain their ties with special interest groups and political parties, we will continue to struggle.

I also teach that transparency and communication are the two requirements for managing all stakeholders.  Businesses have to be completely transparent with everyone or, even if they are acting ethically, they may have the appearance of impropriety. To make sure needs are being met and issues dealt with in a timely fashion, business must communicate with all stakeholders on a regular basis. Politicians must act in a transparent manner as well.  If our politicians are not transparent, even if they are doing the right things they can be perceived as acting unethically, simply because it is easy to assume they are hiding things.  Secret meetings and closed-door negotiations, voting on 2,000 page bills before anyone can read them, special agreements with special interest groups, middle of the night debates and votes all lead to the appearance of a lack of ethics.  The health care bill may still pass, but the politicians advocating the bill have already lost.  Based on a political stakeholder model, there is no way any politician can say the process has been ethical.  When Washington is making Enron look ethical, you know you have a problem. 

 It is increasingly important that business balances the needs of all of their stakeholders, but it is even more important that politicians recognize they have to balance the needs of all their stakeholders.  There are some politicians who need to spend less time editorializing on the ethics of various industries, and spend more time worrying about their own lack of ethics.

David Camp  //  Sat, Jan 16, 2010, 12:13 pm

Craig,

I think it is naive to expect business institutions whose strongest motivation (as you point out) is profit to act ethically without strong regulation. Your stakeholder model is interesting, but business only considers stakeholders insofar as they affect profit - a business may regard customers as stakeholders but pleases them only in order to increase profits.

This is a stark statement of American capitalism, one which in my experience is widely held to be true. It is based on desire for profit, otherwise known as greed.

I know of no ethical system, nor religion (religions comprise the majority of ethical systems subscribed to by humans) which considers greed to be virtuous. On the contrary, ALL the monotheistic religions (Christianity, Islam, and Judaism) have multiple laws and injunctions against greed, usury, wealth accumulation for its own sake, and so on. Some Christian scripture: “it is harder for a rich man to enter the kingdom of heaven than for a camel to pas through the eye of a needle”; “forgive us our debts, as we forgive our debtors”; “blessed are the meek, for they shall inherit the earth”. Moreover, the Bible is quite clear that there should be a regular “Jubilee”, a festival when all debts are forgiven. The year 2000 should have been a Jubilee year; instead we got the orgy of corruption, greed, and unjust dominion which was the Bush administration, and we now are living with the consequences: an economy laid waste by greed and irresponsibility, supported by induced fear and war hysteria. And all for the profit of the greedy few.

This institutionalized greed is also, in my opinion, the source of the corruption in the federal government. Thie interests of the people are secondary to the moneyed corporate interests to which our “representatives” are beholden for the money which buys them their sinecures. The entire apparatus is corrupted by this dynamic.

I admit to disgust and fear at a federal government run amuck, but I have few solutions other than to stop supporting it. Vote with your dollars - why pay to watch the corporatist propaganda which infects the public airwaves? Why slave away to pay federal taxes and support the corrupt machine? Why put your trust in that which has clearly been taken over by interests hostile to yours?

Wherefore is Babylon to be found?

Tip Johnson  //  Sat, Jan 16, 2010, 4:04 pm

Whenever this conversation (frequently) comes up, I always try to refer folks to the Mondragon Cooperative Corporation.

Their model keeps capital subservient to the public good with education and employment at the core.

Gee, maybe that’s godless communism, but maybe not.  They have transformed the Basque region of Spain from the poorest areas in Europe to one of the wealthiest.  They have some of the best health and welfare programs.  They hew to equitable principals - the average wage disparity between workers being 5:1.  Management is rotated through the ranks. Business is built from stable sub-assemblies, lending flexibility and endurance to the system.

It’s an excellent model of alternative economics, but one which fails to get any traction in so-called capitalist (corporate welfare) states.  Obama’s bailout could have initiated community structures like the Mondragons employed to drag themselves out of abject poverty.  If the bailout had been distributed to communities on a population basis, Whatcom County would have received over $520 million for deposit, creating a lending capacity over $3 billion.  We could have fixed our local economies and let the big banks fend for themselves.

Now they are posting record profits, still not loaning money, still selling bunk paper, and gearing up for big, big bonuses, again.

Oh well.

Riley Sweeney  //  Sun, Jan 17, 2010, 1:08 pm

There is one important factor that I think makes business ethics and political ethics different. Customers can do IMMEDIATE damage to a company that they feel is acting poorly. They can stop buying their product tomorrow. Politicians often aren’t answerable for two, four or even six years later. This allows for plenty of time for the voters to forget, the special interests to be woo-ed, etc.

Look at the double stepping that Joe Lieberman can get away with, he isn’t up for reelection for another two years. Or Ben Nelson or Max Baucus. They are relying on the fact that no one will remember in two, four or six years.

On the other hand, when the politician IS immediately answerable, they tend to act more ethical. Still, it is very dicey.

This is why I am glad that Rob McKenna is looking into the unethical behavior of Ward Nelson in his quest for the appointment to Bob Kelly’s seat. We need accountability in all institutions, business or political.

Craig Mayberry  //  Sun, Jan 17, 2010, 10:22 pm

David,

If you think about it, all regulation is the result of unethical behavior.  If companies engage in unethical behavior, eventually people get frustrated and lobby their government officials to pass a law to stop the behavior.  You are correct that the more unethical business becomes, the more regulation that be put into place.  If businesses do not like the regulations, then act ethically in the first place.

Tip,

I knew you would bring up the Co-op model.  I was going to mention it for you, but thought I would give you the honors.

Riley,

That is the reason it is easier for politicians to act unethically then businesses.  Customers do have a more immediate response and if politicians engage in unethical behavior there is no one but the source of the problem to regulate the behavior, which obviously is not going to happen.

Lummi Ferry Petition is Linked

Wed, Sep 01, 2010, 2:40 pm  //  John Servais

A petition to the federal government online at skookum.us. It asks they step in to resolve the impasse between the Lummi and Whatcom County.

0 comments

Lummi Island - The Price of Admission

Thu, Aug 26, 2010, 3:01 pm  //  Tip Johnson

Legal or Political Football?

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Politics is like a pool of ice water. When men jump in their balls shrivel up.

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Lummi Island Softball

Fri, Aug 20, 2010, 3:26 pm  //  Tip Johnson

Islanders need a new game

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Wed, Aug 18, 2010, 4:07 pm  //  Tip Johnson

Ignoring the real problem

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Election Results

Tue, Aug 17, 2010, 8:05 pm  //  John Servais

A running blog this election night

0 comments

The Political Downzone of Responsible Land Use Planning

Mon, Aug 16, 2010, 12:55 pm  //  John Lesow

John Lesow rebuts Jack Petree's Herald oped article that strongly criticized county planning.

30 comments; last on Aug 25, 2010

Herald runs a beautiful smear of Rossi

Mon, Aug 16, 2010, 12:03 pm  //  John Servais

Headline and article paint U.S. Senate candidate Dino Rossi very badly on final day ballots are mailed. The Bellingham Herald editors print a perfect smear.

5 comments; last on Aug 18, 2010

Lummi Football

Sat, Aug 14, 2010, 12:20 pm  //  Tip Johnson

Time for hardball?

0 comments

Mail your ballot by Monday, 3 p.m.

Sat, Aug 14, 2010, 6:51 am  //  John Servais

Mailing even late Monday evening is gambling on its being counted. Mail in time.

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Deceptive Herald article on planning

Fri, Aug 13, 2010, 8:39 am  //  John Servais

Am looking for a writer to rebut Jack Petree's BIAW propaganda article the Herald saw fit to print.

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The Way I See It - Time to change

Wed, Aug 11, 2010, 4:00 pm  //  Ham Hayes

Fear and attack-rhetoric are leading us in the wrong direction.

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Candidate choices of John Servais

Mon, Aug 09, 2010, 3:15 pm  //  John Servais

Personal opinion and recommendations from an independent liberal and progressive. ADDED more on Tuesday, Aug 10.

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And in the 40th we have…..

Mon, Aug 09, 2010, 1:49 pm  //  Ham Hayes

Candidates, o candidates - where art thou? Monday Updates

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Where’s the Info?

Mon, Aug 09, 2010, 12:38 pm  //  Viki Warner

One week till the Primary, but no info?

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Cooperation no substitute for small libraries

Sat, Aug 07, 2010, 8:18 am  //  John Servais

A library card from any Whatcom County library can now be used at any library in the county

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Fri, Aug 06, 2010, 4:54 am  //  Ham Hayes

Tom answers our questions

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40th District State Representative Pos 2 Primary - Rep. Jeff Morris’ Responses

Fri, Aug 06, 2010, 4:50 am  //  Ham Hayes

Jeff answers our questions

0 comments

40th District State Representative Pos 1 Primary - Chuck Carrell’s Respones

Fri, Aug 06, 2010, 4:48 am  //  Ham Hayes

Chuck answers our questions

0 comments

Act of War or Act of Congress?

Thu, Aug 05, 2010, 1:50 pm  //  Tip Johnson

Where, oh where, are our federal representatives?

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A letter to the Bellingham City Council

Thu, Aug 05, 2010, 8:28 am  //  John Servais

We ask why the EIS extension was given to the Chuckanut Ridge developers when the city is negotiating to buy the property.

0 comments

City bumbles on Chuckanut Ridge extension

Wed, Aug 04, 2010, 8:12 am  //  John Servais

Bellingham Planning Department is giving quiet extensions to the Chuckanut Ridge developer - propping up the property value.

1 comments; last on Aug 04, 2010

Chuckanut Ridge Development Gets Extension

Mon, Aug 02, 2010, 1:30 pm  //  John Servais

Bellingham Planning Department gave a three month extension, till Oct 29, to Greenbriar

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John Powers death, in the words of a friend

Sat, Jul 31, 2010, 9:29 pm  //  John Servais

John Powers died yesterday. Ted expresses his remembrance.

0 comments

Raising a Village: Can the Bellingham Cooperative School be saved?

Fri, Jul 30, 2010, 10:54 am  //  Kamalla Rose Kaur

Mourning the loss of a valuable community asset

2 comments; last on Aug 01, 2010

The Way I See It - Mud resurrected

Wed, Jul 28, 2010, 4:39 am  //  Ham Hayes

It is time we gave “mud” back its good name.

0 comments

The Way I See It - En Garde

Wed, Jul 21, 2010, 4:42 am  //  Ham Hayes

“We have lots of robberies.” As I reported last week, that was the apocalyptic statement by the investigating officer to our recent plight in St.…

0 comments

Greed: The Shadowy So-called Non-profit Taecan

Mon, Jul 19, 2010, 11:53 am  //  Tip Johnson

For-Profit Non-Profits - Pulling the Plug on Services

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The Forsaken Constituents of Lummi Island

Mon, Jul 19, 2010, 11:20 am  //  Tip Johnson

Taxation without representation

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Libraries are still very valuable

Fri, Jul 16, 2010, 8:18 pm  //  John Servais

The New Spice Man tells us why libraries are useful and valuable. This applies to all libraries.

0 comments

Three Port Executive Finalists Withdraw

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In a surprise development, the Port of Bellingham is starting over again in their search for an executive director. Position now vacant for over a…

1 comments; last on Jul 18, 2010

Book Review:  Whole Earth Discipline

Fri, Jul 16, 2010, 4:44 am  //  Guest writer

Eric Hirst reviews this October 2009 book by Stewart Brand of Whole Earth Catalog fame. Stewart is critical of several mainstream environmental stances.

1 comments; last on Jul 19, 2010

 

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