Wednesday, December 17, 2008

Need For Stronger Control and Ethics

The following is an excerpt from a memo written by the head of a governmental department:

"Neither stronger ethics regulations nor stronger enforcement mechanisms are necessary to ensure ethical behavior by companies doing business with this department. We already have a code of ethics that companies doing business with this department are urged to abide by, and virtually all of these companies have agreed to follow it. We also know that the code is relevant to the current business environment because it was approved within the last year, and in direct response to specific violations committed by companies with which we were then working-not in abstract anticipation of potential violations, as so many such codes are."

Discuss how well reasoned . . . etc.

The above reasoning not only lacks data, it is also seriously flawed at a few counts.

The first part of the argument is built around the presence of an existing code of ethics and the agreement of all relevant companies to follow it. This, however, does not tell us if the companies have actually followed the code of ethics. Action, and not words, alone can warrant concessions. It does not matter what the companies say. What matters is what they have done. If the companies have not followed the code of ethics, making enforcement mechanisms stronger would be the logical recourse. 

Then the writer talks about the code being approved within the last year. The relevance of the code, however, is determined by when the code was made and not when it was passed. Without that information we cannot say for sure if new and stronger ethics regulations are needed or not.

The writer further mentions that the code was formulated in direct response of violations committed by companies with which the department is working. Since the companies have committed enough violations, there is absolutely no case for arguing for not bringing in stronger enforcement mechanisms. The violations show lack of fear due to absence of a deterrent. Mere word of companies that have blatantly violated the code of ethics cannot be trusted. 

Concluding, at best the writer can argue about not bringing in stronger ethics regulations if it is established that the current code was made pretty recently. On the other hand, as far as enforcement mechanisms are concerned, the writer does not have a case - by his own admission the companies have committed violations in the past. 

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