Ethics Newsline®

A letter this week got me thinking about negativity in the news.

“I look forward to your newsletter each week,” writes Geoff Roberts, headmaster of the Crescent School in Toronto, “and on occasion have forwarded sections of it to my staff at school. What strikes me, however, is that taken on the whole, the list of stories provided are often depressing — a compendium of flawed decisions and poor leadership.”

“While I find it useful to read the tales of woe and learn from others’ mistakes,” he continues, “I would find it uplifting, and I think others would as well, to have a regularly occurring section in the newsletter that outlined some degree of moral courage exhibited by ordinary and extraordinary individuals. Cautionary tales have their place in literature throughout the ages, but so do inspirational tales.”

Geoff need not apologize for his feelings. Remember what he’d been reading about last week:

• U.S. attorney general Alberto Gonzales, engulfed in various ethics scandals, announced his decision to leave the Bush administration amid bipartisan criticism and loss of trust.
• Atlanta Falcons quarterback Michael Vick pleaded guilty to one criminal count of financing dog-fighting gambling operations, reversing his emphatic denials of any wrongdoing.
• Idaho’s veteran Republican senator Larry Craig, after pleading guilty to disorderly conduct in a Minneapolis-St. Paul airport men’s room, announced his resignation under pressure from his party’s leadership.
• Congressman Rick Renzi (R-Ariz.), targeted by ethics questions and under investigation over a land deal related to his wife’s business, announced that he will not seek reelection.

Meanwhile, the news was awash with stories of unethical behavior in the subprime mortgage crisis, irresponsible government and private-sector responses to victims of hurricane Katrina, and immense scams involving vendors supplying materiel for the war in Iraq. And that’s just from the United States. Last week’s Ethics Newsline® also covered stories of complaints about Quebec police infiltrating protests at the North American Leaders’ Summit last month and of systematic résumé fraud uncovered among leading citizens in South Korea.

Given that Ethics Newsline® is a digest of the week’s ethics news, it goes without saying that our content will mirror that of the world’s news outlets. We report what we find in those sources. But does it stand to reason that those sources should be so routinely negative?

In one sense, yes. News is about what’s exceptional, not what’s expected. It’s about the new, the different, the unforeseen. So the fact that unethical behavior still qualifies as “news” is oddly encouraging: If a wholesale lack of integrity were seen as so ordinary as to be unworthy of reporting, the news would concentrate on rare and bizarre stories of people doing strangely right things. When rightness becomes the exception, the ethics deficit is severe indeed.

But there’s a more immediate question. Is the news these days more negative than five years ago, or than when we were growing up, or than it’s ever been? That’s tough to measure, but if we feel intuitively that it is (as Geoff clearly does), then we need to ask why. Here are three options:

1) The news really is worse, the world really is becoming more unethical, and integrity really is on the wane as never before.

2) The world’s news machinery is built on fads, and the fashion of the day is to uncover hypocrisy and explode complacency. Those are laudable journalistic goals. Editors attuned to these trends will elevate them to front-page status whenever their reporters sniff them out. The downside? Given such editorial incentives, reporters may begin seeing a this-ain’t-what-it-seems aspect to every story — and may find themselves deliberately or unconsciously spinning their stories to fit the pattern their editors expect.

3) We care more about integrity, and are more much more attentive to issues that we would have let slide in the past. Has no one ever before padded résumés, defrauded wartime governments, or lured the unwary with easy credit? Or do such things, which we once wrote off as sad but expected behaviors, now strike us as both exceptional and outrageous? Are we, in other words, demanding a higher standard of ourselves?

Whichever it is, Geoff is right: There’s a yearning for more stories of ethical leadership and moral courage. We may not find them in the national and global news sources we cover, since heroism is often most visible at the local level. The best way for us to get these stories is for you, our readers, to alert us to them.

So if you find story candidates tucked into your local news outlets, send them to us. And if you know of powerful but unreported stories of moral courage and clarion integrity in your community, let us know. While we’ll keep publishing cautionary tales, we’re keen to provide the uplifting ones as well. Like you, we also need reasons to be inspired.

©2007 Institute for Global Ethics

Last week’s commentary on the ripple effects of the subprime loan implosion asked readers to comment on the moral issues involved in the government stepping in to bail out homeowners facing default and foreclosure.

While there is a lot of latitude in what a bailout would eventually mean (an issue that surfaced in this week’s lead news story), a variety of intriguing ethics issues seem pretty clearly defined in the minds of most of our respondents.

Several writers, for example, cited the ethical obligations of elite investors to consider the overall effects of the new financial vehicles they invent. In the words of one: “In my mind this is the currently most urgent issue concerning ethical behavior. At what point should wealthy, influential, and powerful individuals stop and consider the consequences for the nation and the economy?”

One reader reflected the often-expressed view that those who took the loan should bear the responsibility, though there is plenty of blame to go around: “Many parties are to blame, not the least of whom is the consumer, who chose to believe the bubble would not burst, and that he/she had full control over circumstances that would impact his/her financial resources. While folks may have had unscrupulous lenders/mortgage brokers, nonetheless they had to sign papers that they had read and understood the terms of the loan. Unless a consumer is saying they never signed those papers but happily took the financing, the fault still lies with the consumer. But the creation of such bogus loans and the selling of them reflects the greed of the institutions and their representatives.”

Many writers honed in on the argument that homeowners got themselves into trouble and had no right to expect the government to step in. “If most of these homeowners got their fantastic mortgages with no money down,” wrote one reader, “and now they are ‘losing their homes,’ why should we, through the government, help them out? All they did was pay rent for a time.”

“I am 76 years old,” wrote another, “and always have had the ingrained philosophy that I had to live within my means and I was personally responsible for any debt obligations that I contracted and therefore I do not think the federal government or any other agency should step in.”

“If the government got involved,” echoed another reader, a college professor, “I’d argue it would reinforce the ever-emerging great American rationale: ‘Why take responsibility for my actions when I can blame someone else?’ “

Another reader reinforced the same concept: “One might think that since there is precedent for bailing out a troubled company/industry/sector of the economy, that to do so again would be appropriate. I don’t agree in this case. I think it would be rewarding bad lending practices and greed on the part of the lenders.”

But the view was not universal. While letters ran about eight-to-two opposed, some argued that a bailout would be the right thing to do in the long run. One reader commented: “I know it’s rewarding irresponsible behavior on the part of the monied poobahs but without federal help too many little guys will get hurt and possibly lose everything. Hell, if we have billions for war we can surely spare a few bucks to help some families keep their homes.”

And another offered this assessment: “Shouldn’t a perfect storm have a perfect haven? There must be. And a caring, concerned, and conscientious government (or agencies thereof) will find it, for the benefit of the innocent and the guilty and the world at large.”

“There’s a similar phrase in every state I’ve worked in. In a lot of cases it’s because the principals involved are powerful, and a lot of the people who know are aides or staff or lobbyists or even reporters who rely on these people for access. So you end up with this feeling of, ‘It’s just business, it’s not affecting their work.’ Once it starts affecting their work, then the rules change.”

– Republican consultant Rick Wilson, quoted in a New York Times piece examining how political circles handle open secrets, such as the “Three County Rule,” a tacit accommodation that requires lawmakers to keep their mistresses at least three counties distant from their home district

WASHINGTON
In the latest development in an unfolding story that touches on financial and ethics issues echoing worldwide, President Bush last week said the government will play a limited role in helping homeowners who cannot meet their mortgage obligations.

Investor’s Business Daily reports that Bush said he would not “bail out speculators or those who made the decision to buy a home they knew they could never afford.”

Rather, he pledged limited involvement through a series of smaller steps, including a plan to allow borrowers to refinance with government-insured loans and benefit from some changes in the tax code, according to a summary from MarketWatch.

The crisis evolved from a growing number of defaults and foreclosures caused in part by speculative loans, increasing interest rates, and a drop in housing values. Some of those loans represented what Bush characterized as “excesses in the lending industry,” including adjustable-rate mortgages that started with a low interest rate but are reset at much higher rates after a few years, NPR reports.

The housing crisis has been vigorously debated in moral as well as economic terms in recent weeks, with many lawmakers and industry observers wary of what has been termed the “moral hazard” of encouraging people to take out loans they can’t afford or to stop making payments to lenders, reports the Chicago Tribune.

In related news, Kathleen Corbet, the head of ratings agency Standard & Poor’s, announced last week that she is stepping down, according to a report from Dow Jones.

Standard and Poor’s, as well as other credit-rating agencies, have been stung by criticism over their initial high ratings of mortgage-backed securities that later plunged in the wake of the housing crisis.

A company spokesperson said she was leaving to “pursue other opportunities” and spend more time with her family.

WASHINGTON
Sen. Larry Craig (R-Idaho) announced on Saturday that he will resign, bowing to intense pressure from within his own party to avoid more political fallout from a scandal involving alleged sexual solicitation in an airport men’s room.

The issue had become the latest moral scandal to dominate national politics after it was revealed that Craig pleaded guilty to a misdemeanor disorderly conduct charge related to an incident in which an undercover police officer said Craig made signals used by men cruising for sex, reports CNN.

Craig has denied those allegations, saying he pleaded guilty to the related disorderly conduct charge in order to make the case go away.

Senate Republicans generally avoided directly calling for Craig’s resignation but GOP leaders stripped Craig of his committee leadership posts and requested an ethics committee probe of the matter, reports the Hill, a publication covering Congress.

Corruption and moral scandals among Republican lawmakers were blamed widely for contributing to last fall’s resounding repudiation of the GOP at the ballot box. Republican leaders, fearing similar fallout in the run-up to the 2008 election cycle, wanted Craig’s scandal snuffed out quickly, according to press reports.

Analysts, including the Washington Post’s Chris Cillizza, noted that the story gained unstoppable momentum at least in part because it occurred in late August — “a time when the political media is looking for a story to latch on to.”

“The deluge of TV, internet and newspaper reporting,” Cillizza wrote, “the bawdy jokes from late-night comedians and the almost gleeful mock video reenactments of Craig’s indiscretion fueled the clamoring among national and Idaho Republican leaders to force Craig out of office. Republican leaders including Senate Minority Leader Mitch McConnell (R-Ky.) were furious that Craig kept his guilty plea secret from the party and left the Republicans vulnerable to morality attacks heading into the 2008 presidential and congressional elections,” Cillizza added.

The Agence France-Presse reports that some Democratic leaders were quick to seize on the political implications of the issue, quoting Sen. Dick Durbin (D-Ill.) as reeling off a series of sex scandals linked to the GOP and saying they would be difficult for a party that has “paraded” its leadership on “family values.”

Craig’s resignation will take effect September 30.

WASHINGTON
Democrats are facing an ethics issue involving Norman Hsu, a prominent fundraiser reportedly under federal investigation for campaign-finance charges.

The Wall Street Journal reports that Hsu also is facing an unrelated grand-theft charge on which he was booked formally last week.

Hsu is one of the top fundraisers for Hillary Clinton’s presidential run, and has helped raise money for or donated funds to several other high-profile candidates, including New York governor Eliot Spitzer and Barack Obama during his 2004 Senate campaign in Illinois, according to MSNBC.

In one of her first public comments about the controversy, Sen. Clinton (N.Y.) told the Boston Globe that she will be more careful about vetting donors. She said she will turn over the money donated by Hsu to charity.

Sen. Clinton had declined comment on the Wall Street Journal’s report that the U.S. Justice Department was ramping up its current probe into campaign finance issues.

The San Jose Mercury News notes that the case is odd in many ways — including the fact that Hsu has led a very public life despite the fact that he has been a fugitive from California state authorities since 1991, when he was convicted in the case for which he surrendered last week. An attorney for Hsu had told the Mercury News that his client was unaware of the outstanding warrant against him.

VARIOUS DATELINES
Corruption-related stories were featured in the press of four continents last week:

• Corruption remains an ongoing part of everyday business life in Russia, according to a report from Seattle Times business reporter Melissa Allison, who writes that a major part of the problem lies in the low salaries paid to civil servants, who demand bribes to augment their incomes. In return, they cut through some of the bureaucratic red tape that constricts the growth of business in Russia. She reports that some U.S. businesses that refuse to pay bribes have clung on nevertheless, acknowledging that they face a “long haul.”
• Former Pakistani prime minister Benazir Bhutto, in exile on corruption charges, continued late last week to negotiate with the country’s current leader, Pervez Musharraf, for her return to the nation. MSNBC reports that the deal, if it actually evolves, probably would exonerate the popular Bhutto while also broadening the political base of Musharraf, whose support has plummeted in recent months.
• Kenya has been rocked by a report alleging that former president Daniel arap Moi stole $2 billion in state money. Reuters and the Kenya Broadcasting Corporation report that Moi’s spokespersons have denied the report. Moi stepped down in 2002 after nearly a quarter century of rule characterized by endemic graft, according to Reuters.
• Amid an ongoing anticorruption campaign, China replaced finance minister Jin Renqing last week for undisclosed reasons, though the International Herald Tribune notes that Jin has been linked to a prostitution scandal. The latest move appears to be part of a massive political restructuring that is aimed at both rooting out endemic corruption and claiming the scalps of allies once loyal to the rivals of China’s current leader, according to the report.
• Poland’s former interior minister was arrested last week in a case that is roiling politics in that nation. The BBC reports that Janusz Kaczmarek, who was fired earlier this month on suspicion of leaking information in an attempt to undermine a corruption probe, is formally accused of obstruction of justice. Members of the opposition party characterize the charges as politically motivated and say they are designed to influence coming elections.
• Brazil’s Supreme Court has indicted a former top aide to that nation’s president, reports the Voice of America. José Dirceu, who was once chief of staff to President Luiz Inácio Lula da Silva, will stand trial for his role in an alleged political bribery scheme. He denies the charges.

NEW YORK
With the sports world reeling from the dog fighting and gambling allegations that likely will send Atlanta Falcons quarterback Michael Vick to prison, and a case involving a basketball referee entwined with professional gamblers, tennis officials last week launched a preemptive strike against wagering.

ABC Sports reports that as the U.S. Open got into full swing in New York, the U.S. Tennis Association publicized its vigilance and its “zero-tolerance” policy on gambling.

Another tennis group, the ATP, which governs men’s tennis, also publicly reinforced its rules against gambling and providing any information to bettors about injuries or court conditions, Bloomberg reports.

Late last week, the ATP also said it will impose fines and suspensions against players who fail to show up at a tournament without a good excuse, according to a report from the Canadian Press.

The attention to players not showing up or withdrawing suddenly came about following a recent match in which an influx of online gambling money poured in — backing an underdog — shortly before his top-ranked opponent withdrew from the match, claiming a foot injury, reports the Los Angeles Times and the Times of London.

LONDON
A new report from a British market analysis firm shows that so-called ethical funds, far from being just a feel-good fad, are surging ahead of many traditional funds.

The Scotsman reports that a survey from Investment, Life & Pensions Moneyfacts showed that over the past 12 months the average ethical fund has grown 18.3 percent, compared to 13.7 percent for standard funds.

Ethical funds, which generally screen the companies in which they invest — typically avoiding firms involved in such areas as gambling, animal testing, tobacco, weapons, or activities destructive to the environment — have almost tripled their sales in the past three years, according to an analysis from the U.K. Guardian.

Richard Eagling, head of the firm that undertook the study, told the Reuters news agency that the latest results “helped to shatter the misguided belief that ethical investments will always underperform traditional investment funds and that sustainable business practices restrict company growth.”

In addition, reports the London Stock Exchange in its online newsletter, ethical investors are showing an increasing level of sophistication, becoming well versed in ethical issues and not being taken in by “greenwash” — ethical labels misleadingly and randomly slapped onto various financial vehicles.

From the Pew Research Center for the People & the Press:

“As official Washington winds down for its summer holiday, all three branches of government are coming under fire from the American public. Just 29% approve of the way President Bush is handling his job, and only slightly more, 33%, approve of the job performance of the Democratic leaders of Congress. Even the U.S. Supreme Court is not immune from the current round of public disaffection: The court’s favorable rating has fallen from 72% in January to 57% currently.

“…Bush’s approval rating stands at only 69% among Republicans and the Democratic leaders can claim just a 62% approval score among Democrats. In contrast, sizable majorities of independents disapprove of the job performance of the President and of Capitol Hill’s leadership….

“The Democratic leadership is criticized as often by congressional critics for ‘not doing enough’ as it is for ‘doing the wrong things.’ Republicans cite the latter, while roughly equal proportions of political independents are concerned about one or the other. Democrats themselves criticize their leaders for not achieving enough.

“While there is substantial criticism of the Democratic leadership, fully half of the public (50%) continues to say it is happy that the Democrats control Congress….

“Declining contentment with Democratic control of Congress tracks with ebbing confidence that Democratic leaders will be successful in passing legislation. Right after the election, 59% of the public thought they would be successful in doing so. That percentage dipped to 54% in March, and stands at just 43% in the current poll.

“The Supreme Court’s ratings have slumped across the board since January, but the declines have been greater among Democrats and independents than among Republicans, who still have largely positive views of that institution. Fewer than half of Democrats (48%) now say they have a positive opinion of the court, down from 67% in January. Ratings also fell among independents over this period (from 74% to 58%). Most Republicans continue to hold a favorable opinion of the Supreme Court û but it, too, has slipped since the beginning of the year (from 81% to 72%)….

“Fewer than one-in-three citizens (30%) have given a lot of thought to the candidates running for president. That percentage has not changed markedly in recent months even though a large share of the public says they been paying at least some attention to campaign news generally1 and to the televised debates, specifically.

“A backlash to the campaign may be part of the reason why there has been little increase in the public’s consideration of the candidates, even as many people are being exposed to the race. When Pew’s respondents were asked to come up with one word to describe the campaign, 52% gave a negative answer, 19% a positive one, and 10% offered a neutral phrase….

“Opinions about the war in Iraq remain entrenched as Washington braces for a new round of reports on the war scheduled for release in early September. By 63% to 29% the public wants their congressional representative to vote for a bill that calls for withdrawal from Iraq next year. And there continues to be considerable public reluctance to compromise….

“The poll finds little change in basic opinions about Iraq from earlier in the year: a 53% majority believes the U.S. made the wrong decision in going to war and 59% thinks the war is not going well. By a margin of 49% to 43% the public now concludes the U.S. will fail rather than succeed in achieving its goals in Iraq. Democrats and Republicans express fundamentally different opinions on all of these points, and political independents come closer to the views of Democrats than to Republicans.

“Public confidence in the Iraqi government, already low in previous years, has continued to fall. Nearly nine-in-ten say the government of Iraq is doing only a fair job (44%) or a poor job (40%) of running the country. A majority of Americans now believe that the people of Iraq do not support America’s policies.”

“What makes a nation great is not primarily its great men, but the stature of its innumerable mediocre ones.”

– José Ortega y Gasset (Spanish philosopher, 1883-1955)