Is business success an outcome of practicing good ethics?

No

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by David Nuttle

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Most of us would like to think that success in business depends on the good ethics of many business owners. In actual practice, narcoterrorist groups and other criminal organizations have often been very successful in the operation of profitable businesses that have no ethics whatsoever unless you call evil a form of ethics. It was not too long ago that the large and profitable tobacco companies elected to hide research evidence confirming the many health hazards of using their tobacco products. In so doing, the tobacco companies demonstrated a lack of business ethics. When their deception was discovered, they suffered only minor economic losses.

When I was working in Vietnam, I discovered several illegal businesses run by an Asian version of the Mafia, the Ba Xinh. This powerful, and corrupt organization had several highly profitable businesses based on illegal drugs, gambling, prostition, and slave trading as well as piracy on the high seas. The Ba Xinh had a code of conduct to assure absolute control of personnel and operations, an the only thing some might consider a code of ethics was the policy to "profit at the great expense others." During my time in Vietnam, I met two U.S. weapons dealers who had come to Vietnam to test a new type of rifle ammunition they were trying to sell to the U.S. Dept. of Defense (DOD). The two dealers needed a test showing results of their new ammunition being used on human subjects. Thus, the dealers were offering a $10,000 bribe to arrange for a false prison escape so they could shoot prisoners thinking that they were escaping. The weapons company they represented was, and always has been, very profitable despite a near total lack of business ethics.

We are fortunate because there are companies that are very successful because they do have a high standard of business ethics. However, it is a proven fact that other companies succeed, or appear to succeed, because they have no business ethics. In some cases, a company may seem to have the right business ethics, and then they soon fail when it is discovered that appearances of good work are really a deception; e.g. Enron. Some companies plan acts of fraud, or racketeering well in advance of actual illegal acts. During the planning stage, it seems that the level of business ethics is high. Then the fraud starts, and any business ethics are soon forgotten. Such a transition occurred with the home mortgage lenders who created, placed, and sold subprime home loans to unqualified buyers knowing that foreclosures were a high probability when interest rates increased on ARMs (adjustable rate mortgages). These lenders paid over $1 million, in "political payola" (campaign contributions), to get Senator Phil Gramm to sponsor and promote legislation to end reporting and regulatory requirements that would have prevented their racketeering scheme. (Some of our Congressmen undertake acts of corruption because they have no ethics.)

If voters demanded that our Congressmen improve their standards of ethics, business ethics in the U.S. would improve. The public also needs to demand that legislation be created and passed to improve business ethics. Such change is not happening. Instead Congress is working to assure that, in the case of the subprime fiasco, that taxpayers pay for the damages in a effort to rescue lenders who were engaged in racketeering. Our total bill for this rescue of criminals may be more than $3 trillion. If Congress and businesses always did what was ethical, we would not be in this mess. Change will only occur, when voters are angry enough to force positive political corrections. When such improvements occurr, businesses will get the message and good business ethics will soon exist at all levels. As things stand now, we have a formula for disaster and more businesses will fail using the patterns of corruption that now prevail.

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