Archive for the ‘Business ethics’ Category

Free Apps for your iPhone, or more likely your kid’s, can cost you a lot…$100? $500?

November 1, 2011

Ever wonder how people make money when you download a free app for your smart phone or tablet? So did I, until I read this article about Apple’s app store on, and downloaded the free Tap Pet Hotel on my iPhone. It’s a cute game app: you build a pet hotel and attract pets by building more rooms and giving treats.

It was free—I built a reception area and a washing room and was on my way to acquiring a panda—all I had to do was build a “jungle room” to house it. Then I got this notice:

“Purchasing a jungle room costs 75 coins. You only have 47 coins. Would you like to get more coins?”

I clicked “yes” and got the price list. I had these choices:

Vial of coins: 75 coins for $0.99

Pouch of coins: 165 coins for $1.99

Can of coins: 450 for $4.99

Bottle of coins: 938 for 9.99(25% extra for free)

Satchel of coins:  5250 for $49.99 (40% extra for free)

Trunk of coins:  11,250 for $99.99 (50% extra for free)

You can also buy treats for similar prices.

Apple aims games at kids, calls them “free,” then seduces them into spending big money to continue to play. There’s a warning on the download screen that purchases are available in the app, but I bet most kids won’t even read the warning, let alone heed it. That’s why this free app is Apple’s #2 grossing game app.

Apple should be ashamed.

What can a Nike worker in Indonesia do with a daily wage of $4.80? Rent a bare room, eat two meager meals, and ride to work. Jim Keady explains

October 20, 2011

Nike workers in Indonesia earn about 1,285,000 rupiahs a month, or about $4.80 a day. Jim Keady went there to find out what their earnings can buy. Here’s the result.

For comparison, 1000 rupiahs is about a dime. If the worker is single they can earn enough to rent a tiny room, buy two meals a day and a couple of small bananas, and have enough left over to pay their bus fare to work. If they have kids, tough luck.

Jim has been at this for fourteen years now. He’s begun to gain some traction with Nike. They used to say it wasn’t any of their business: Founding CEO Phil Knight famously defended Nike’s practice by disclaiming, “We don’t make shoes.”

Now Nike slowly follows Jim’s lead, gradually accepting some responsibility for some of the abuses Jim exposes.

Here’s an example of a recent kind-of-success: Nike acknowledging that workers were being forced to work unpaid overtime, then being pressured to keep quiet about it.

Hooray for Jim Keady.

Ethics: I’m giving it away

August 30, 2011

I’ve discovered that many corporate ethics officers don’t really have time for ethics, because they’re up to their necks in compliance training and issues. As important as compliance is—and it’s vital, especially, to comply with the Foreign Corrupt Practices Act and with Sarbanes-Oxley—it isn’t ethics.

Ethics is the Golden Rule, telling the truth, and other non-legal mandates. That’s my passion: ethics, to live it and to teach it. That’s what was behind the book that Mick Ukleja and I wrote, and it’s what I try to teach at the University Of Redlands School Of Business.

So here’s my proposal: if you provide the audience I’ll visit your place of business and do a one-hour seminar on ethics, really ethics. Here’s a brief synopsis:

The Ethics Challenge: Essential Skills for Leading and Living

This is unlike any mandatory ethics training: no talk about FCPA, SEC, or DOJ. It covers what it means to behave ethically, and how that differs from merely behaving legally or in compliance with the rules. I start with the basics: keep your word and follow the Golden Rule. I finish with three essential skills for living and leading. These skills are easy to describe, not so easy to live, but living them will sharpen one’s ethical sensitivity and make it easier to keep strong and to follow one’s good intentions.

I’ll do the seminar pro bono; if it’s out of the LA commuting area I’ll ask you to cover my reasonable expenses.

An Ethics Can of Worms, All Named “Nike”

August 26, 2011

Jack Marshall writes in his blog that I was “open[ing] an ethics can of worms” with the piece about Nike and its $4-a-day workers. He raises a terrific set of questions that need to be argued over before deciding whether a company doing international business is behaving ethically. They’re not easy to answer. I guess I’ll try them out on my business ethics students next month. Here they are

 Q: If workers agree to work for a given price, is the company’s obligation to pay them more?

 Q: Should any company pay less than a living wage for full-time work, whether or not desperate workers assent? (more…)

Is it ethical for Nike to pay people who make its shoes $4.00 per day?

August 23, 2011

Athletic shoes used to be made in Massachusetts. Now they’re all made overseas; Nike’s come largely from Indonesia, where its workers* earn $4.00 per day, barely enough to pay rent, transportation, water, and two small bowls of rice and vegetables..

In the courses I teach on business ethics we wrestle with this question: is Nike’s behavior ethical? In Nike’s corner are those who believe what Milton Friedman wrote fifty years ago: that business’s only social responsibility is to increase profits while staying within the rules of the game. Their argument is buttressed by the fact that the workers take the jobs voluntarily, so they must think they’re better off than if they weren’t making Nikes.

On the other side of the argument are those who believe that it’s just not fair for Nike to sell a pair of shoes for $80 that cost roughly $16.25 to produce, including just $2.43 for labor. Were Nike to pay a decent wage to its Indonesian workers, say double the current rate, it would reduce its profit margin by only three per cent, from $63.75 per pair to $61.32.

One man, Jim Keady, has been hard at work for thirteen years selflessly trying to get Nike to treat its Indonesian workers decently. Jim has even lived in Indonesia on $4.00 per day to see if it’s really a “living wage.” It’s not.

Jim came by his passion to change Nike while studying theology at Saint John’s University, where he was fired from his job as assistant soccer coach (more…)

Warren Buffett calls for fair—that is, higher—taxes on the super-rich

August 15, 2011

The battle in Congress over America’s budget problem is both practical and ideological. People on the left argue that the budget can never be brought under control without a blend of tax hikes on the rich and spending cuts. On the right tea-party-fueled passions oppose any tax increase on the grounds that the rich are already paying more than their fair share and, moreover, that raising their taxes will stifle job creation.

Into this battle rides Warren Buffett, the world’s third richest person with assets of $50 billion. In an op-ed in today’s New York Times, headlined “Stop Coddling the Super-Rich,” Buffett demolishes both arguments against higher taxes for the super-rich.

First he explains how under-taxed the wealthy are: his tax rate of 17.4 % of taxable income is the lowest of the twenty people in his office, including his secretary. And that’s not uncommon for the super-rich. His summary:

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks.

And as far as the argument that higher taxes will slow down investment by the super-rich in new jobs, America’s most successful investor puts it this way:

People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. (more…)

I love Amazon, and my state is hurting: any connection?

August 6, 2011

I love I buy all my books (electronic, of course) from them to read on my Amazon Kindle. I buy excellent coffee, all presents for grandchildren, electronic gadgets, and just about anything else. And thanks to Amazon Prime, after a yearly charge I get everything shipped for free.

Their customer service is amazing, too. Easy returns, and if you click on a link on their customer service page you’ll get a phone call from a person in seconds. Their prices are great. They don’t charge California sales tax, but California residents are liable anyway, so I estimate my on-line purchases and send the state a check.

But most people don’t. California estimates that it will lose $83 million this year in unpaid taxes on Amazon purchases, and $200 million from all on-line purchases. And the loss will grow as on-line sales continue their dramatic growth, crowding out traditional brick-and-mortar retailers.

I also love the University of California. Three of our four kids got low-cost, top-quality educations there. But today’s California kids don’t have it as good—the university is (more…)

Ethics: it’s tough even to give it away

August 2, 2011

Everybody talks about ethics but it seems nobody cares about it. The “ethics” talk is all about rules: bribery, conflict of interest, financial disclosure laws, nepotism, and the rest of the litany of rules of conduct that you can be fired or prosecuted for breaking.

If you subscribe to a Google alert for “ethics” you learned today that a key aide to the governor of Illinois was fined $500 and forced to resign for sending a campaign email on his state-issued cell phone. Or that the former Massachusetts State Auditor was fined $2,000 for by putting his unqualified 75-year-old cousin on the state payroll. Or that lobbyists are buying meals for Oklahoma lawmakers. That’s not about ethics, that’s about rules

Moreover, corporate ethics officers are so concerned with preventing criminal violations that they don’t have much (…any?) time for such things as the Golden Rule, arguing with the boss, or keeping one’s commitments. This became depressingly clear to me after I attended a meeting of ethics officers and academics. The meeting had focused on the Foreign Corrupt Practices Act, which makes it illegal for American companies to pay bribes overseas.

After the meeting I made an offer to the attendees that I thought they couldn’t refuse: (more…)

A lesson in ethics and professionalism from Adolfo Jimenez of Brent Air Towing and AAA

June 11, 2011

When my car won’t start I’m an innocent. I always guess it’s the battery, and usually I’m right, but that’s the extent of my automotive knowledge. So when the Brent Air Towing /AAA truck answered my call this morning I was prepared to shell out $100 to $150 for a new battery.

Brent’s serviceman, Adolfo Jimenez, lifted the hood, looked intently at the battery, then gave me a quick and easy jump start. To my surprise and relief he told me I didn’t need a new battery, just run the engine until the battery was recharged.

I thanked him and told him how relieved I was not to need a new battery. His response:

“I could have told you you needed a battery, and you wouldn’t have known any different, but that wouldn’t be right. I’ve always tried to be professional and have ethics, whether training horses or mopping floors or rescuing stranded drivers.


“The important thing in life is to be happy. You can be happy with one dollar, or you can be unhappy with a million dollars.


“If you’re ethical, and if your children see you’re ethical they don’t say, ‘I want to be like Batman or Superman.’ They say ‘I want to be like dad.’ That’s happiness.”


Thanks for the lesson, Adolfo. I’ll use it in my next business ethics class.

Got ethics? Some investment bankers do.

April 8, 2011


Last year the Senate held hearings into Goldman Sachs’s role in the financial crisis. I wrote at the time that it appeared that Goldman Sachs, the most respected house on Wall Street, had no ethical standards.

Now the other icon of financial rectitude, Berkshire-Hathaway, is under the ethics microscope because of questionable dealings by David Sokol, an executive widely considered to be a possible successor to the revered “Sage of Omaha,” Warren Buffett.

Sokol had purchased shares in Lubrizol Corporation, then recommended to Buffett that Berkshire Hathaway buy the company. He knew (or was pretty confident) that the shares would go up if a deal went through. It did, and they did, netting Sokol a quick $3,000,000 windfall.

Was Sokol unethical? Buffett defended his sidekick, even as he accepted Sokol’s resignation, saying, “Neither Dave nor I feel his Lubrizol purchases were in any way unlawful.” Notice that Buffett was not defending Sokol’s ethics, only his non-criminality.

So was Sokol being unethical? Sure—I think so, but more importantly, so do 21 of 23 top U.S. investment bankers, according to a poll by Reuters. Only one of the bankers in the poll said Sokol’s behavior breached no ethics or rules.

So investment bankers do have ethics. Now if Reuters would only ask them what they think about the top one per cent of the population earning 20 per cent of the national income and owning 35 per cent of the national wealth…