For more information, see this week’s Research Report.

by Rushworth M. Kidder

Over the weekend my assistant emailed me to say she’d just spoken with a client. “He will be in a meeting from 4 to 5 P.M. today,” she wrote me, “but asked if you could call him on his cell phone, and he’ll step out of the meeting to talk.”

Good client, pressing message — so you reach for the phone, right? Except that it seemed a little odd. He and I had worked closely together last spring, but we hadn’t been in touch for several months. So why the urgency? Yet my assistant is a trusted source. So why doubt her message’s veracity?

As her email arrived, I was sitting down to write this column about the week’s major e-mess: the Google-facilitated debacle that caused United Airlines stock to shed more than $1 billion in market value in 12 minutes on September 8. The mess arose when a six-year-old news story about United’s pending bankruptcy mysteriously resurfaced — and was mistakenly republished as current news. Maybe that’s why, instead of picking up the phone, I checked the date on my assistant’s email: March 20, 2008. That’s when I remembered I’d seen it before.

Who knows how, in the netherworld inside our computer servers, the gremlins conspire to disguise six-month-old emails as new messages? Had I made the call, my friend would have been perplexed and I embarrassed. But at least nobody would have been out a billion dollars. And that’s the point: The gremlins we tolerate on the personal level become intolerable in the global arena.

In United’s case, the chain of events is clear — up to a point. On Sunday, September 7, a Google Web crawler, automatically trolling for interesting stories, found the notice of United’s bankruptcy in 2002 on a current Web page of the South Florida Sun-Sentinel. The crawler made the story accessible to an employee at Income Securities Advisors, a Florida investment advisory firm, who then posted the headline electronically on his company’s wire service.

That posting made the story available to the trading terminals at Bloomberg News, the widely followed financial news and data company. That exposure in turn triggered automatic sell orders by computers programmed to and react to breaking news within seconds. That selling trend was noticed by other computers, and the race for the bottom began. It ended only when United spotted the sell-off and refuted the rumor.

Could this juggernaut have been stopped? Google and the Tribune Company, whose Chicago Tribune published the 2002 United story and which owns the Sun-Sentinel, have been trading blame and doing further investigations. And what about the employee at the advisory service? Had he read further into the story, he would have recognized it as old news. But he didn’t read further since time was of the essence: The faster his clients (or their computers) got the news, the quicker they could react. Even if he hadn’t posted it, someone else might have.

What remains unclear — and oddly undiscussed — is how the story ever got from a six-year-old archive to the day’s current news. Was it the same gremlin that sent my six-month-old email, or did a human put it there? If it was the former, this is a story about our inability to exercise ethical and responsible control over the technologies we invent — and perhaps our unwillingness to do so, lest we impede the headlong pace of life in the financial world. All that was needed was the intervention of human judgment. But judgment slows you down — even if only for a minute or two, as editors confer in a newsroom about a story, a headline, or a placement. Yet judgment is why readers still turn to news organizations, rather than just mucking about on the Web for themselves. What does it tell us if, at a news organization as sophisticated as the Tribune Company, no human backstop was in place to keep old stories off new pages?

And what does it tell us if they did have a backstop? Could an unethical individual, holding such a position at some newspaper, conspire to launch such a story — a person, say, who loves to create havoc? A computer geek proving he can manipulate the world? A disgruntled former employee getting back at some company by targeting its stock? A savvy investor who buys when the shares hit bottom and sells when they regain their value? A terrorist seeking to wreck a market and bring down a nation?

In a world where computers now read our papers, assess our probabilities, and trigger our sales and purchases, the moral control of technology has never been more important. It’s long been true that technology leverages our ethics, megaphoning minor turpitudes into major calamities. It’s now clear that gremlins can create as much calamity as humans. And since we can’t teach ethics to gremlins, our only choice is to root out the gremlins with the same moral determination we bring to cracking down on hackers or disabling terrorists. We can’t afford to dismiss the cause of the United stock blip as just another glitch. When technology is this important in our lives, being pretty good isn’t enough. Either we control our technology, or it controls us.

©2008 Institute for Global Ethics

Questions or comments? Write to newsline@globalethics.org.

“I think we may have had an impact earlier in the campaign, but now we don’t seem to be having much of one.”

– Viveca Novak of FactCheck.org, talking to Slate in a piece examining the increasing amount of lies, distortions, and abuses in the campaign ads and speeches of presidential candidates John McCain and Barack Obama. Novak’s conclusion was echoed in a series of press reports last week.

Source: Slate, Sep. 10.

For more information, see: Related Newsline story, Sep. 15 — Washington Post, Sep. 10 — New York Times, Sep. 10.

Critics say both Obama and McCain ads twist facts and take statements out of context

WASHINGTON
Charges and countercharges about distortion in political ads and speeches dominated ethics-related news last week, with Sen. John McCain’s campaign coming under particularly harsh criticism for playing loose with the truth last week.

Critics and fact-checking sites blasted recent ads from the McCain campaign, citing distortions and outright falsehoods in ads accusing Barack Obama of supporting sex education for kindergarteners, raising taxes on the middle class, and insulting Republican vice-presidential candidate Sarah Palin by using a phrase about putting lipstick on a pig, the Associated Press reports.

Independent watchdog site FactCheck.org also charged that McCain’s ads had twisted meanings and taken quotes out of context, including distorting FactCheck.org’s own findings to impugn Obama’s behavior.

McCain’s running mate, Sarah Palin, also came under criticism for continuing to falsely claim, including in campaign speeches on Monday, that she told Congress “thanks, but no thanks” concerning the infamous “bridge to nowhere.” In fact, Palin supported the bridge proposal until it was condemned by Congress, at which point she reversed course but still accepted the earmark funding, note press reports.

While the McCain campaign’s distortions have been characterized as more egregious and numerous, FactCheck.org also trained its sights on Obama ads that mischaracterize several of McCain’s Senate votes as attempts to cut education funding — votes that actually were against new spending or were to increase spending at lower levels than opponents wanted, reports the Dallas Morning News.

As far as taking away money from public schools, FactCheck.org says McCain actually proposed an across-the-board freeze of nondefense, nonveteran discretionary spending for a year. The cut might prevent some educational grants from receiving an annual funding increase, says the group, but so would other government programs such as farm subsidies and NASA projects.

The level of recent falsehoods and distortion in the presidential campaign have trained a spotlight on whether lying even matters anymore — with many analysts concluding that in a competition between truth and flashy but false sound bites, the latter almost always win.

That conclusion was echoed last week by Republican strategist John Feehery, reports the Washington Post, which observed that the presidential “campaign is entering a stage in which skirmishes over the facts are less important than the dominant themes that are forming voters’ opinions of the candidates.”

The more the press “goes after” the record and statements ortions of “Sarah Palin, the better off she is, because there’s a bigger truth out there and the bigger truths are she’s new, she’s popular in Alaska, and she is an insurgent,” Feehery told the Post. “As long as those are out there, these little facts don’t really matter.”

Sources: Boston Globe, Sep. 13 — Dallas Morning News, Sep. 12 — Washington Post, Sep. 12 — AP, Sep. 12 — CBS News, Sep. 12 — Slate, Sep. 12 — New York Times, Sep. 11 — Slate, Sep. 10.

For more information, see: Related Newsline Commentary, Sep. 8 — Related Newsline story, Sep. 8 — Related Newsline story, Aug. 25 — Related Newsline story, Aug. 11 — Related Newsline story, Aug. 4 — FactCheck.org, Sep. 11.

Are government bailouts necessary rescues or inducements for future recklessness?

NEW YORK
The ethics and effectiveness of government bailouts of financial institutions remained a fixture on front pages last week as the plight of struggling Lehman Brothers raised what the Christian Science Monitor calls “the prospect of another U.S. salvage operation.”

While the federal government said it would not bail out Lehman Brothers, which declared bankruptcy over the weekend, Monitor reporter Peter Grier notes that “the Big Three automakers are in Washington this week with hats in hand, asking for loans to finance development of more fuel-efficient vehicles.”

Chicago Tribune correspondent Greg Burns, in an analysis of the previous bailouts of mortgage giants Fannie Mae and Freddie Mac, also notes a recurring theme in the debate over whether the expense of government bailouts is worth it: “Economists call it ‘moral hazard,’” Burns writes, “the idea that when you protect someone from risk, they become reckless. Insurance companies know all about it, since a person with coverage tends to act less carefully than a person responsible for everything themselves.”

“In the financial markets,” Burns continues, “moral hazard encourages big bets because somebody else — taxpayers, for instance — bears the brunt of losses.”

In a related story, four members of the Senate Banking Committee have asked the federal agency that took over Freddie Mac and Fannie Mae to put a hold on foreclosures for 90 days, reports the Boston Globe.

Sen. Charles Schumer (D-NY) told Newsday that loosening up the rules not only would help homeowners keep their property, but also would aid mortgage holders by maintaining the loans as a producing asset.

Sources: Christian Science Monitor, Sep. 12 — Newsday, Sep. 12 — Boston Globe, Sep. 12 — Chicago Tribune, Sep. 9.

For more information, see: Related Newsline story, Sep. 8 — Related Newsline story, Aug. 25 — Related Newsline story, July 28 — Related Newsline story, July 14 — Related Newsline story, June 9.

In other technology-ethics news, hackers raise some jitters by breaking into computer system of atom smasher, and a major college now offers a minor in Information Technology and Social Responsibility

NEW YORK and LONDON
The often unpredictable ways in which technology and ethics interact propelled several major stories last week. Among them:

• An outdated, archive news report caused United Airlines’ parent company UAL Corp. to lose a huge percentage of its stock value early last week. The Los Angeles Times reports that shares of UAL plummeted on Monday to as low as $3 a share from a high of $12.30 from the week. The reason: A six-year-old story about United filing for bankruptcy somehow was accidentally reposted and bounced around the Internet. As of late last week, fingers were still being pointed in several directions, with various media organizations claiming other media organizations accidentally resurrected the article, notes the International Herald Tribune. Shares of UAL eventually rebounded.
• Another reminder of an issue that won’t go away — the responsibility of those who maintain security on computer networks — surfaced last week when hackers invaded the networks of the newly opened Large Hadron Collider, the world’s largest “atom smasher” particle accelerator. Scientists in Switzerland, where the accelerator is housed, say no damage was done but the incident does raise security concerns, reports Scientific American. The hacking is believed to be the work of a group that claims to exploit security vulnerabilities in order to prod network administrators to fix them. The accelerator is expected to be fully operating by October and is expected to create experimental conditions never before encountered in the history of particle research, reports the Times of London.
• Students at Baruch College of the City University of New York now can minor in Information Technology and Social Responsibility, reports an information-industry trade journal. “A lot of people are concerned with the way data is used,” Linda Friedman, a professor at Baruch and one of the program’s creators, told CIO Insight. “The Internet allows information to travel at incredible speeds. At the same time, people are giving up personal information and acting anonymously.” In addition to privacy issues, students will study such ethical-technical flashpoints as intellectual property and security.

Sources: Times of London, Sep. 13 — Scientific American, Sep. 12 — International Herald Tribune, Sep. 12 — CIO Insight, Sep. 10 — Los Angeles Times, Sep. 9.

For more information, see: Related Newsline Commentary, Sep. 15 — Related Newsline story, Aug. 25 — Related Newsline story, Aug. 11 — Related Newsline story, July 7 — Related Newsline story, May 19 — Related Newsline story, May 5.

Inspector General, vowing to “restore the public trust,” says staffers were involved in sex, drugs, and gift scandal with employees of businesses they regulated

WASHINGTON
U.S. secretary of the Interior Dirk Kempthorne last week pledged to “take swift action to restore the public trust” following an investigation that uncovered alleged corruption in the department’s Minerals Management Service (MMS).

Reuters reports that the scandal involves MMS employees who allegedly had sex with, used drugs with, and took gifts from employees at oil companies the agency regulates.

A series of reports from the Interior Department’s inspector general claims that the officials, who are charged with collecting revenue from oil and gas companies drilling on federal lands, engaged in a “culture of ethical failure,” reports ABC News.

According to the San Francisco Chronicle, the MMS has come under fire before by critics who claim it is too close to the industry it regulates. The agency also was embarrassed by a bureaucratic foul-up two years ago when language in faulty leases was blamed for costing the government as much as $7 billion in revenue, notes the Chronicle.

The Jurist, a legal news site of the University of Pittsburgh Law School, reports that the investigation into the current scandal spanned more that two years and cost more than $5 million.

Sources: Jurist, Sep. 12 — San Francisco Chronicle, Sep. 12 — Reuters, Sep. 11 — ABC News, Sep. 10.

For more information, see: Related Newsline story, Sep. 8 — Related Newsline story, Mar. 17 — Related Newsline story, Mar. 26, 2007 — Related Newsline story, Jan. 16, 2007 — Related Newsline story, Sep. 25, 2006.

Norway takes shares of mining company out of its national pension fund; ethical investments hammered in United Kingdom; Australians embrace ethical eating, even if it’s confusing

VARIOUS DATELINES
The concept of ethical buying, selling, and trading was featured in a variety of news reports last week. Among the top stories:

• Norway is banning its national pension fund from investing in the mining firm Rio Tinto because of environmental concerns. The BBC reports that Norway, which invests under ethics guidelines and has blacklisted other investments involving nuclear arms or presumed human rights abuses, is abandoning Rio Tinto because of claims that the company’s goldmine in Papua, Indonesia, is responsible for river pollution. Rio Tinto said it has an exemplary record in environmental matters, notes the BBC.
• Ethical investors have been hammered harder than most by the recent downturn in the stock market, according to an analysis from the popular U.K. investment site ThisIsMoney. New data show that the average ethical fund in the United Kingdom has fallen 9.1 percent in the past 12 months, compared with an average 5.7 percent drop for a fund not designed to meet environmental or social guidelines. The recent performance reverses course from statistics last year, when the average ethical fund outperformed standard investments by 3.3 percent, according to the ThisIsMoney report.
• Australians are growing increasingly concerned about ethical eating, according to a report last week. Sydney Morning Herald writer Paula Goodyer contends that shopping in the twenty-first century is full of ethical dilemmas: “We might have swapped plastic bags for calico, but the supermarket dilemmas keep on coming. We know our hearts and brains need omega-3 fats, but what about overfishing? If I’m buying canned legumes in the supermarket, do I opt for the organic product from Europe or do I save food miles by buying the non-organic Australian version? Is corked or screw top wine better for the planet? And then there’s the labels — you know what an organic chicken is, but what’s a chemical-free chicken? What’s the difference between pork that’s labeled ‘free range’ and one that’s ‘bred free range’?” Goodyer makes her observations in a review of a popular new book Down Under, Ethical Eating by Angela Crocombe, described as an Australian guide to shopping with the planet’s health in mind.

Sources: BBC, Sep. 11 — Sydney Morning Herald, Sep. 11 — ThisIsMoney.com, Sep. 11.

For more information, see: Related Newsline story, Sep. 8 — Related Newsline story, Aug. 25 — Related Newsline story, Aug. 11 — Related Newsline story, Nov. 26, 2007 — Related Newsline story, July 9, 2007.

Graduate schools take action after website allegedly supplies admissions test answers; a mandatory ethics and religion course in Quebec is expected to prompt a court battle; engineering students at Columbia earn course credit for volunteer work

NEW YORK and MONTREAL
Several of last week’s top stories dealt with the intersection of ethics and education last week. Among them:

• The Wall Street Journal reports that the prestigious Wharton business school at the University of Pennsylvania says it will cancel the admissions test scores of three current or former students because they allegedly consulted a website that posted questions from recent standardized admissions tests. Several other graduate schools also have canceled admissions test scores, though none yet has decided what, if any, action to take, reports the Journal. After a lawsuit, the subscription site that supplied the answers was shut down, though the location of the operator, believed to be from China, was not located.
• A religious high school in Quebec is on a collision course with the provincial government over a new mandated ethics and religion culture program. The Montreal Gazette reports that Loyola High School, a private, Jesuit institution, wants to teach its own version of the course. Religious schools are allowed to teach their faiths, but only in addition to — not in place of — the government’s course. Quebec mandates the course in part to promote harmonious social relations among various sectors of society, according to the Gazette. Hundreds of requests for similar exemptions are pending, and the province expects the matter to be settled in court.
• About 500 engineering students at Columbia University in New York will earn academic credit for volunteer courses in Harlem, part of a new incarnation of the popular “service learning” concept, reports the New York Times. Student engineers are engaged in such projects as designing a better walker for residents of an area nursing home, building an environmentally sustainable greenhouse at a high school, and manufacturing a trash can that can be used by the severely disabled.

Sources: Wall Street Journal, Sep. 12 — Montreal Gazette, Sep. 12 — New York Times, Sep. 12 — MSNBC, Sep. 11 — Montreal Gazette, Sep. 9.

For more information, see: Related Newsline story, June 9 — Related Newsline story, May 5 — Related Newsline story, Mar. 31 — Related Newsline story, July 7, 2007.

China, sensitized to adulteration issues after series of similar scandals, again vows to crack down

BEIJING
Another scandal involving adulterated products is unfolding in China, where officials have vowed to track down whomever is responsible for contaminating milk powder fed to babies.

About 432 babies have developed kidney stones as a result of being fed the formula, which is contaminated with a chemical used to make plastics and fertilizers, CNN reports.

The cases have revived echoes of a 2004 incident in which at least 13 babies died after drinking fake formula that had no nutritional value, according to a report from the CBC.

U.S. Food and Drug Administration officials say consumers should avoid infant formulas manufactured in China, reports MarketWatch. While there are no Chinese manufacturers approved to sell baby formula in the United States, some Chinese-made powers might be on sale in specialty stores serving Asian communities.

In related news, Japan last week said it may return quantities of imported rice to their countries of origin after it was determined that some was tainted, according to a report from the Agence France-Presse.

Sources: CNN, Sep. 12 — AFP, Sep. 12 — MarketWatch, Sep. 12 — CBC, Sep. 11.

For more information, see: Related Newsline story, June 16 — Related Newsline story, Sep. 24, 2007 — Related Newsline story, July 16, 2007 — Related Newsline story, Apr. 9, 2007 — Related Newsline story, May 27, 2003.

Pew poll charts a “paradox in public attitudes” concerning gender and leadership

From the Pew Research Center:

“Americans believe women have the right stuff to be political leaders. When it comes to honesty, intelligence and a handful of other character traits they value highly in leaders, the public rates women superior to men, according to a new nationwide Pew Research Center Social and Demographic Trends survey.

“Nevertheless, a mere 6% of respondents in this survey of 2,250 adults say that, overall, women make better political leaders than men. About one-in-five (21%) say men make the better leaders, while the vast majority — 69% — say men and women make equally good leaders.

“The paradox embedded in these survey findings is part of a wider paradox in modern society on the subject of gender and leadership. In an era when women have made sweeping strides in educational attainment and workforce participation, relatively few have made the journey all the way to the highest levels of political or corporate leadership.

“Why not? In the survey, the public cites gender discrimination, resistance to change, and a self-serving ‘old boys club’ as reasons for the relative scarcity of women at the top. In somewhat smaller numbers, respondents also say that women’s family responsibilities and their shortage of experience hold them back from the upper ranks of politics and business.

“What the public does not say is that women inherently lack what it takes to be leaders. To the contrary, on seven of eight leadership traits measured in this survey, the public rates women either better than or equal to men.

“For example, half of all adults say women are more honest than men, while just one-in-five say men are more honest (the rest say they don’t know or volunteer the opinion that there’s no difference between the sexes on this trait). And honesty, according to respondents, is the most important to leadership of any of the traits measured in the survey.

“The next most important leadership trait, in the public’s view, is intelligence. Here again, women outperform men….

“Men and women tie on two of the next three traits on the public’s ranking of leadership qualities measured in this survey — hard work and ambition. Men prevail over women on decisiveness….

“Finally, women have big leads over men on the last three traits on the public’s rankings of the eight items measured….

“For anyone keeping score, that’s women over men by five to one, with two ties, on eight traits, each of which at least two-thirds of the public says is very important or absolutely essential to leadership….

“The survey also asked respondents to assess whether men or women in public office are better at handling a range of policy matters and job performance challenges. On the policy front, women are widely judged to be better than men at dealing with social issues such as health care and education, while men have a big edge over women in the public’s perception of the way they deal with crime, public safety, defense and national security.

“As for job performance skills, women get higher marks than men in all of the measures tested: standing up for one’s principles in the face of political pressure; being able to work out compromises; keeping government honest; and representing the interests of ‘people like you.’

“Overall, however, women emerge from this survey a bit like a sports team that racks up better statistics but still loses the game — witness the tiny 6% sliver of the public that says women generally make better political leaders than men….”

For the full press release from Pew, Aug. 25, click here.

“Discretion of speech is more than eloquence.”

– Francis Bacon (English philosopher, 1561-1626)