The Baruch College Faculty Handbook

Last updated on 4/4/2003

Ethics in America – an interdisciplinary elective
course

(first draft, July 17, 2002)

Prof. Josh Mills

Director, Master’s Program in Business Journalism

The recent wave of corporate wrongdoing seems to have ignited
a crisis of confidence in the United States. At the core of much
of the debate and discussion are ethical concerns; indeed it’s hard
to recall the last time that the ethical behavior of corporate leaders,
directors and public officials was so closely scrutinized.

Corporations are being castigated for misrepresenting their financial
results and for creating overly generous compensation plans for
many executives. Accounting firms are under fire for failure to
audit conscientiously. Regulatory agencies including the Securities
and Exchange Commission, the Federal Energy Regulatory Commission
and the Federal Communications Commission are being challenged for
how well they’ve overseen the industries in their portfolios. The
President, Vice President and at least one of their Cabinet officers
are being scrutinized for how they conducted themselves as businessmen.
Congress is being sharply criticized for creating tax loopholes
and tax breaks that seem to encourage unethical behavior.

Regulatory agencies and elected officials are scrambling to serve
the perceived public demand for stronger laws and rules that require
ethical behavior, in some cases promulgating concepts that seem
no matter than a matter of basic common sense, such as requiring
CEOs to be responsible for the financial statements their companies
issue.

How can students navigate their way through this landscape, develop
strong ethical values and be prepared to enter this minefield?

This course will provide a broad overview of ethical issues in contemporary
America. Subject matter will range from the lessons of history and
philosophy to the news of the week (who can tell what companies
will shrivel and die or file for bankruptcy by time this course
is offered, or what business and political leaders will be indicted
or forced from office?).

The following outline lists nine major units, each to be taught
by a distinguished member of the Baruch Community, drawing on the
strengths of all three schools (many of the topics are marked TBD,
faculty to be determined). Interspersed among the nine listed units
will be five special events, possibly including panel discussions,
Q&As with distinguished visitors or some other suitable event.
In creating these events, we should be creative. One possibility:
screen the film Wall Street, and follow the screening with a discussion
by the director, Oliver Stone, and a business leader about whether
the film was accurate when it was made and what has changed today.

[When I first proposed this course, I suggested it be limited to
seven topics, each of two weeks, with one lecture and one special
event. That is still a valid alternative to what follows, if a consensus
can be reached on which seven topics. Alternatively, people may
feel that other topics should be added.]

The course, interdisciplinary in nature, should be co-listed by
the three schools with an eye toward encouraging broad student enrollment.

[NOTE: The college administration should take appropriate steps
to offer this course through “distance learning” to students
around the nation and around the world. This would effectively spotlight
Baruch’s commitment to ethics and its distinguished faculty and
it would leverage the effort involved in creating this material.]

This outline leaves unresolved a number of key questions:

– What is the appropriate order for these different subjects? My
outline below should be viewed as no more than a preliminary ordering.


– What would be the assigned reading? If each lecturer chose a book,
the reading load (nine books) would be too heavy. Could the lecturers,
once designated, meet as a committee and agree on a reading list?


– How would students be evaluated? Would there be exams (written
and read by whom)? Would students write papers (read by whom)?

– How would this course be coordinated? Does it need a “lead
professor”? Or can an administrator – an associate provost
or dean – take this role?

– Would this course be limited to graduate students? Is it possible
to enroll both graduate and undergraduate students, with different
workloads for each group? Would lecture and discussion material
be suitable for both student populations?

– How could faculty be encouraged to participate in this unusual
course? Can they be compensated? (To my mind, a payment seems more
practical than counting this in the teaching load.)

– Could the course material be gathered into a publishable volume
on Ethics in America? How would this be done-who would take the
lead?

The proposed topics are:

The lessons of history: aberrations or repeatable scandals (History)

Corporate villains are just a few bad apples, President Bush said
recently, and former CEO of General Electric Jack Welch used exactly
the same words when he spoke at Baruch. Others, however, have suggested
that rather than a few bad apples we know have a mutant orchard
as our corporate landscape.

What context and insights do the lessons of history provide? Bribery,
misreporting and fraud have long been a part of the business world.
Scandals erupt at least once a decade. In some ways, today’s headlines
are nothing more than a rerun. In the past, corporate abuses led
to regulatory and legislative reforms – the Clayton and Sherman
Antitrust Acts, the Glass-Steagall Act. Under the pressure of globalization,
rapidly expanding and diversifying economies and intense lobbying,
many of these restraints have been undone.

“What experience and history teach is this-that people and
governments never have learned anything from history, or acted on
principles deduced from it,” Hegel told us. Do current events
in the business world prove him right?

Are ethics absolute, relative or situational? (Philosophy)

A photograph of a steel mill, its tall smokestacks spewing dark
smoke over the landscape, can be a powerful image. In the 1930s,
an image of job creation and prosperity. In the 1990s, an image
of pollution. Do economic circumstances and culture shape other
perceptions of business activity as well?

Is there an absolute right and wrong? Thou shalt not kill…unless
it’s to protect your family or property, or in time of war, or in
a national-security emergency….Do codes of ethical behavior
and values endure over time, or evolve from generation to generation?
Do changes in the nation’s wealth, its demographic makeup, its technology,
its relationships with neighbors lead to changes in ethical values?

Government and business (SPA)

Do American business culture and values grow organically out of
American society? Is the American system of government ethical and
fair? A wide range of ethical issues have been raised about the
governmental and political processes, from campaign finance to the
influence of lobbyists and special interest groups to an electoral
process that so heavily favors incumbents. In many areas-the tax
code and speed limits, for example-aggressive behavior is rewarded
and enforcement is not always fair.

Can it be a surprise, then, if business people play fast and loose
with laws and regulations?

Accounting standards (Carmichael)

Accountants and auditors have a special responsibility and a special
role in public life, Paul A. Volcker, former chairman of the Federal
Reserve Board, said recently. But that role has frequently been
compromised in recent years.

Of primary concern to experts who study the accounting industry
are two issues-the lack of oversight and outside regulation of accounting
and the widespread predisposition to focus on rules (and how to
follow them narrowly or evade them) rather than on broad principles.

Is accounting in crisis? Has it been damaged irreparably? Has it
consolidated to the point that competition has eroded and an oligopoly
divides up the largest clients?

Shareholder activism and corporate governance (TBD-Zicklin)

The corporate world can be viewed as a sort of democracy, with each
shareholder a voter and the board of directors the elected representatives
and legislators to enact and enforce the public will. But all too
often, corporate boards have been asleep at the switch (of course,
the same could be said for Congress and many state legislatures).
Some boards are dominated by insiders overly cozy with top management;
others are cluttered with former Cabinet officials or CEOs of other
companies who have neither the time nor the inclination to hold
management accountable for its decisions.

Shareholder activism is widely viewed as a remedy for the ills of
poor governance. State pension funds and large institutional investors
can do their own analyses and bring pressure to bear on management
and on directors. Are they up to the task? And are boards willing
to change?

The Ethical Investor (TBD-Zicklin)

In recent months, Treasury Secretary Paul O’Neill, Mayor Michael
Bloomberg of

New York and others have castigated greedy investors for their ignorance-for
their failure to scrutinize potential investments, for their willingness
to blindly follow the advice of analysts whose objectivity has long
been suspect and most of all for their refusal to accept any responsibility
for the investments decisions they made.

But what’s a conscientious and ethical investor to do? If auditors,
analysts and trained financial journalists cannot unravel the tangled
financial statements of a company, how can an investor? And how
can individual investors enforce their ethical concerns? Is “socially
responsible investing,” which until recent scandals been primarily
focused on tobacco companies, arms makers and polluters, now extending
its reach to the integrity of corporate reporting?

The business press: watchdog, shill or troublemaker? (MABJ/Mills)

The nation’s press prides itself on a watchdog role in defending
the public interest and fights vigorously for its First Amendment
rights in order to do. In an age of deregulation, runaway markets
and disappearing boundaries, has it been up to the task? Some press
critics say that press coverage of business is far too reactive,
cheering on investors and CEOs when times are good, eagerly doing
post-mortems on the decaying companies…but too rarely looking
ahead and helping the public see what might come next.

Are the nation’s journalists up to the task of vigorously surveilling
the corporate environment? Do they have the training needed to make
sense of what they find? Are they accorded the time they need by
their bosses? And has the consolidation of the news media curtailed
the ability of the press to perform its watchdog role?

For several years, the press blithely accepted Enron as the epitome
of a new, post-deregulation corporate model when it should have
been much more aggressive in probing the company’s opaque partnerships,
off-balance sheet maneuvers, and soaring leverage. As Business Week’s
editor, Steve Shepard, puts it, Enron “was not the press’s
finest hour.” (Reading the adulatory press coverage of the
AOL Time Warner merger and the Daimler-Chrysler deal only reinforces
this view.)

Heroes and villains-how business is reflected in popular culture
(TBD)

Even as the Enron scandal was unfolding, there was a movie in the
nation’s theaters about an evil energy company that increased its
profits by creating a false scarcity for its products. The film
was Monsters, Inc., a computer-animated children’s film about a
world where power was generated by harnessing children’s screams.
If this was pure fantasy, contemporary cinema has provided a good
many films about the evils of business, including Wall Street, The
Informant, Boiler Room, The China Syndrome and Silkwood, just to
name a few. Indeed, from the earliest days of cinema, Big Business
has been a character-and usually a villain. The CEO or banker as
hero (as in Frank Capra’s American Madness, loosely based on Bank
of America CEO A.P. Giannini) is unusual.

Do these depictions of business accurately reflect public attitudes?
Or is popular culture nothing more than a funhouse mirror, distorting
what it reflects? Most importantly, and central to this course,
is whether popular culture – movies, television, music, fictions
– teaches Americans about ethical behavior and whether that has
an impact on how people act.

Coming Clean-How companies disclose news to regulators, shareholders,
employees and customers (Corporation Communications)

This discussion could grow out of courses in Crisis Communication
(the nature of crisis in business and industry; the role of public
opinion and the media in the crisis process; strategies of crisis
management; the role of management communication in crisis management);
Employee Communication (strategic communication within the organization;
sustaining morale and goodwill; informing employees about reorganizations
and other changes; changing employee attitudes and behavior), and
Investor Relations.

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I look forward to your comments and thoughts on these ideas and
how this material can be sharpened and organized into a dynamic
course.