People vs. Profit

People vs. Profit

 

An independent lab went to various dollar stores and tested their products for dangerous chemicals. These stores had 81% of the products contained levels of hazardous chemicals that can be linked to birth defects, learning disabilities and cancer. Two of the stores response came back stating that they have policies and procedures for a third party testing lab to meet regulations. However, they also stated they required their suppliers to certify they have tested and meet compliance. 

The ethical issue here revolves around who is it to decide that profits for shareholders are more important than the health and safety of the human race. As Thomas Jefferson said, we have unalienable rights, absolute rights given to us by God; specifically the Declaration of Independence provides "protection from cruel and unusual punishment". Individuals are unknowingly being punished by the contamination in these items. Knowingly exposing individuals to chemicals that can cause long term injury and even death, is not how we ought to act. Money is not a motivator to violate another humans rights, based on the lessons in the Bible. One individual is not any more important than another, and their health and safety should not be negotiable for money. 

            The ethical theory of egoism would apply to the way companies are handling the allegations. Ethical Theory and Business (page 12), discusses psychosocial egoism as an explanation of human conduct, stating that individuals are motivated by to act in their own perceived self-interest. Ethical egoism states that an individual makes decisions based on the promotion of their own well-being over that of everyone else’s, which is how the companies in question are behaving (Ethical Theory and Business, page 14).

The companies in question have not reacted to the allegations in an appropriate fashion. A company that sources products from countries known to have a history of using dangerous chemicals, should act responsibility and have additional testing done by an impartial source. Accepting the certification from suppliers stating they follow the guidelines, may legally take off some of the accountability of the companies; however they are still responsible to their customers and their employees’ safety. 

The more ethical route that I would propose is that the company should request the results from the organization and have the same products independently tested to verify their stated results. If the results are consistent with the toxicity claims, they need to take steps to refine their supply base. Working with suppliers that will meet the standards set forth in the Environmental Protection Agency's The Toxic Substances Control Act of 1976. When sourcing to external countries, you can experience a variety of barriers, including communication misunderstandings. Companies should be required to perform sample testing to ensure that the product being sourced is in compliance with the applicable US laws.

If one company is allowed to “slip” by the laws, then the potential for others to begin cutting corners to save money is high. While they may profit, society may suffer.

 

Sources:

 http://www.abc6onyourside.com/news/features/top-stories/stories/Dollar-Store-Dangers-Study-Finds-Dangerous-Chemicals-in-Many-Products-77740.shtml#.VN2cwPnF-So

 http://www.bizjournals.com/louisville/blog/morning_call/2015/02/dollar-store-products-have-an-unsafe-amount-of.html 

References

 

Beauchamp, T. (1979). Ethical theory and business. Englewood Cliffs, N.J.: Prentice-Hall.

 

Ethical Evaluation of Insider Trading Scheme.

The SEC recently uncovered an insider trading ring that began in 2009 involving a high level employee at Applied Materials. Using confidential information obtained from Applied Materials and Rovi, Christian Keller advised a Barclay’s analyst to make stock purchases, prior to news releases, allowing them to collect profits, which were not legal.

The Securities and Exchange Commission defines “insider trading” as conduct that can be classified as legal or illegal. Legal conduct takes place when employees, corporate & directors buy and sell stock in their own company, reporting these sales to the SEC. Illegal conduct is explained as buying and selling stock while being in possession of nonpublic information or individuals who have been “tipped off” to the information and engage in securities trading. If it is both legal & illegal, is it an ethical issue? This question appears to be the source of many debates, as the legality of a situation does not always make it ethical or unethical.

The first issue that is noticeable is the issue of rights. If the individuals that have the advantage of proprietary information and use that advantage to their gain, they are assuming their right to succeed is higher than the traders whom are not privy to this information. Who is to decide that one person’s rights are higher ranking than other individuals? All individuals are subject to the base equal rights in today’s society, the postmodernism thought of everyman for themselves is encroaching upon our society in a negative light more and more each day.

                The second issue that can be caused is economic inequality. Individuals that have an unfair advantage can avoid large monetary losses or can gain large sums of money, dependent upon the information given, while those without that information do not have the same advantages.

Insider trading that is done in an illegal manner is unethical. There are a few ethical issues raised by insider trading, these issues are addressed in the Theory of Justice, contributed to by John Rawl.  This theory is based on inequalities, fairness and impartiality in relation to social contracts; it is a form of a rights based theory. (Ethical Theory, pg 608-609). The right to equal information in the securities market is touted on various blogs as being a first priority for those involved in the industry.  John Rawl states that social contracts should be made under a “veil of ignorance, essentially decisions should be made for the good of everyone.

Rawls theory agreeable as he theorizes that when entering into a social contract decisions are to be made without knowing what side of the issue you will be one, allowing decisions to be made that will not provide an advantage to one group over another. This is how business should be done, allowing equal opportunities to all involved. This does not mean that everyone involved will have an equal outcome; however they will go into the playing field on equal ground, and come out on top or bottom through their actions and decisions made. By using information gained in an unfair manner in order to obtain an advantage in the market, Keller and his associates were acting in a highly unethical manner.

Companies that are engaging in a market industry such as securities trading assume they have employees that are trusted to not use confidential information for personal advantage, as these acts reflect upon the company.  Companies that are publicly traded need to ensure that their employees are properly trained on their policy of confidentiality and sharing of resources as well as the legal implications faced in these rules and regulations are not followed.

In order to avoid these types of allegations publically traded companies should ensure that confidential information that could affect their stock value is only distributed to those whom MUST know. They individuals trusted with this information should be required to sign a non-disclosure agreement. Obviously this is NOT a fail all method, however it will provide a refresher to employees that they are not to use company information for personal gain; they cannot claim that they were unaware of the legalities. Although, morally this should be ingrained.

Source: http://dealbook.nytimes.com/2015/02/05/s-e-c-accuses-4-in-silicon-valley-of-insider-trading/?_r=0