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

by Ethics Newsline editor Carl Hausman

The U.S. Supreme Court last week overturned a campaign-finance restriction that dates from the Roosevelt era — Teddy, not Franklin — and opened the door to virtually unlimited spending by corporations in federal campaigns. It’s expected that the ruling, which insists that corporations are like people and have protected First Amendment rights to political speech, will be interpreted to apply to unions and other organizations as well.

While there are many aspects of the ruling, it raises two interesting ethical questions. First, while most of us agree that people should enjoy a high level of freedom of speech, who or what constitutes the “people” who are granted that right? Second, how much should the government involve itself in the mechanisms of granting free speech? Does government have an obligation to mute the more powerful speaker in order to ensure that the little guy can be heard?

A note about the first question: The term “corporation” comes from the Latin word for body. A corporation is a body of people granted some of the same rights and responsibilities as its flesh-and-blood components. A corporation can take out loans, can sue and be sued, can be tried for crimes, can earn an income, and can pay tax.

But corporations enjoy some super-human capabilities as well. They can live forever, they can confer limitations in liability to their members, and they enjoy certain financial and tax privileges not available to mere mortals.

Should corporations enjoy the same rights as their flesh-and-blood components when it comes to donating to political campaigns? Teddy Roosevelt didn’t think so. Alarmed by corporate abuse and the monopolization of capital and power, he convinced Congress in 1907 to bar corporations and national banks from contributing to candidates for federal office. Similar strictures were extended to labor unions after World War II, and the Bipartisan Campaign Reform Act of 2002 (known as McCain-Feingold) added new restrictions on the use of so-called soft money — funds controlled by political parties, not individual candidates. McCain-Feingold also limited the airing of issue advocacy ads during certain time periods before primaries and general elections.

Last week’s Supreme Court decision swept away many of those provisions, although prohibitions against direct contributions to candidates or parties will remain in force. Now, corporations — and presumably unions and other interest groups — will be able to funnel unlimited amounts of money into advertising that backs any candidate or issue.

The sharply divided opinions in the court’s 5-4 ruling speak directly to the ethical question of whether free-expression rights granted to an individual apply to a corporation, and if so, whether the judiciary should put itself in the business of attempting to balance the power of the individual versus the corporation.

“The government may not suppress political speech on the basis of the speaker’s corporate identity,” justice Anthony Kennedy wrote in the majority’s opinion.

But a 90-page dissent written by justice John Paul Stevens maintains that rights granted to the individual do not necessarily apply to the corporate body. Stevens predicts the ruling will “cripple the ability of ordinary citizens, Congress and the states to adopt even limited measures to protect against corporate domination of the electoral process.”

Which course serves the public good? I’m going to invoke an easy answer and declare that there are no easy answers.

On one hand, it’s obvious that money talks, and opening the floodgates of corporate money carries the risk of distorting the ideal of democracy. What’s good for corporate America is not necessarily good for the body public. Also of concern is the fact that multinational corporations inevitably will have a far greater say in U.S. politics, effectively diluting the citizenry’s control of its government.

On the other hand, corporations are comprised of taxpaying stockholders who “speak” with their investments and have a say in the governance of the entity — and thus may argue that keeping corporations out of the political process is de facto censorship.

Chief justice John Roberts invoked this line of reasoning when he commented, according to the Los Angeles Times, that unless a broad free-speech ruling was granted in this case, the law would “would allow censorship not only of television and radio broadcasts, but of pamphlets, posters, the Internet and virtually any other medium that corporations and unions might find useful in expressing their views on matters of public concern.”

With some trepidation, alluded to earlier, I side with Roberts. Clearly, a civil and civilized society cannot allow entirely free expression (think copyright, harassment, and libel), but every restriction relating to expression carries a risk of diminishing commerce in the marketplace of ideas.

In fact, you can make the case that some well-intentioned restrictions on the flow of campaign money actually backfired and cut off the blood supply to the central players in politics — the candidates, who face not only sharp limits in the amounts that can be raised but also intricate requirements on where and how they can raise money. Those strictures, imposed in the 1970s, generally are thought to have increased the power of political action committees. Years later, McCain-Feingold left open a legislative door for the proliferation of so-called 527 Groups (the type of organizations that begat the infamous Swift Boat ad campaign).

The ultimate impact of both reforms has been to force candidates to expend more time and effort in the increasingly complex fundraising process and to inadvertently increase the importance of fringe players by granting more power to certain special interests who exploited the loopholes.

Maybe Milton had a point when he wrote, “We do injuriously by licensing and prohibiting [Truth's] strength. Let her and Falsehood grapple; who ever knew Truth put to the worse in a free and open encounter?”

Or perhaps Montgomery Scott, chief engineer or the Starship Enterprise, put it best in Star Trek III, when he grumbled about complex machinery in a line that the New York Times borrowed and dubbed “The Scotty Rule of Campaign Finance”: “The more they overthink the plumbing, the easier it is to stop up the drain.”

©2010 Institute for Global Ethics

Find this and previous weeks’ commentaries online as a podcast titled Ethicast™ now available on iTunes. Subscribe today!

For more information, see: Washington Post collection of essays on the decision, Jan. 24 — The Thread, a blog of the New York Times, Jan. 22.

“This is of serious concern to me and to the other commanders in Iraq and Afghanistan because, indeed, it conveys a perception that is absolutely contrary to what it is that we have sought to do…. It is disturbing to us, frankly, that this was done.”

– U.S. Gen. David Petraeus, condemning the decision by a U.S. contractor to carve Bible references onto the rifle scopes sent to military forces in Iraq and Afghanistan

Petraeus, who is responsible for U.S. military operations in 20 countries from Egypt to Pakistan, said the actions of Michigan-based Trijicon Inc. hurt U.S. efforts to “convince the Muslim world that the U.S. fight against al Qaeda militants should not be viewed as a war against Islam,” a view that spread after President Bush called his war on terrorism a “crusade,” notes the Reuters news agency.

Trijicon has been embossing rifle scopes with a reference to a Bible passage that reads, “For God, who commanded the light to shine out of darkness, hath shined in our hearts, to give the light of the knowledge of the glory of God in the face of Jesus Christ.” Trijicon’s president last week issued a statement saying the company would quit carving the reference into scopes for U.S. soldiers, calling the decision “both prudent and appropriate,” reports Reuters.

Source: Reuters, Jan. 22.

Critics, including President Obama, say the ruling will allow corporations to unduly influence U.S. elections

WASHINGTON
The U.S. Supreme Court last week ruled that corporations have a free-speech right to spend as much as they want to persuade the public to vote for or against federal candidates.

A sharply divided 5-4 court held that corporations have free-speech rights similar to individual citizens, according to the Baltimore Sun, ruling that restrictions on corporate expression amount to government censorship.

“When government seeks to use its full power, including the criminal law, to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought,” justice Anthony Kennedy wrote in the majority opinion.

Corporations, Kennedy said, “may possess valuable expertise, leaving them the best equipped to point out errors or fallacies in speech of all sorts.”

While corporations still will be prohibited from giving money directly to candidates, they now are allowed to fund unlimited advertising for candidates or issues.

In addition, the Supreme Court ruled that laws barring corporations from publicizing political messages right before primaries and general elections are unconstitutional.

CNN reports that the decision is expected to provide greater spending flexibility for unions and other types of advocacy groups.

President Obama said the ruling “opens the floodgates for an unlimited amount of special interest money into our democracy,” reports the Christian Science Monitor. “It gives the special interest lobbyists new leverage to spend millions on advertising to persuade elected officials to vote their way — or to punish those who don’t. That means that any public servant who has the courage to stand up to the special interests and stand up for the American people can find himself or herself under assault come election time. Even foreign corporations may now get into the act. I can’t think of anything more devastating to the public interest.”

The Boston Globe reports that reaction to the decision essentially divides along party lines. While Democrats largely agreed with Obama in denouncing the ruling, Republican National Committee chairman Michael Steele called it “an affirmation of the constitutional rights provided to Americans under the First Amendment. Free speech strengthens our democracy.”

Senate Republican leader Mitch McConnell of Kentucky called it “a monumental decision” that reflects “an important step in the direction of restoring the First Amendment rights of these groups by ruling that the Constitution protects their right to express themselves about political candidates and issues up until election day,” notes the Globe.

Sources: Christian Science Monitor, Jan. 23 — Baltimore Sun, Jan. 22 — Boston Globe, Jan. 22 — CNN, Jan. 21.

For more information, see: Related Newsline story, Jan. 19 — Related Newsline story, Jan. 11 — Related Newsline story, Jan. 4 — Related Newsline story, Nov. 23, 2009 — Related Newsline story, Oct. 19, 2009.

Law professor weighs in on the ethics of looting and survival; New York Times columnist says Haiti can be revitalized by industry, even if it’s the type we characterize as sweatshops; travelers engage in ethical back-and-forth over whether it’s right to vacation near a disaster area

VARIOUS DATELINES
Some thoughtful reports and think-pieces last week looked at moral issues in the wake of Haiti’s earthquake. Among the coverage:

• When disaster strikes, victims go into survival mode — and sometimes their reasonable efforts at self-preservation are characterized unfairly as looting, writes Anita Allan, a deputy dean at the University of Pennsylvania Law School. But she contends that even in a time of disaster, certain moral intuitions should not be compromised. “[T]here are still moral absolutes in disasters,” she wrote in an essay posted on National Public Radio’s website. “The breakdown of a society, even one that was already pretty broken down as Haiti was, could not justify gratuitous rape or reckless gun play, for example. But the demise of critical infrastructure can justify maiming and theft. You are not a doctor, but you have to amputate your neighbor’s hand to rescue her from a house on the verge of collapse. You then have to steal sheeting for warmth and gauze for bandages. The extreme circumstances turn you into a hero, not a criminal,” Allan writes. “Even when people violate ordinary moral principles to render aid to themselves and others, they nonetheless owe debts of repayment. Those debts are not best repaid by thank-you notes, flowers or refilling the cash register. They are ideally discharged by engaging to the best of one’s ability in aggressive acts of charity and public service to minimize the effects of future calamity.”
• Haiti may be revitalized by industries that some would characterize as sweatshops, argues New York Times columnist Nicholas Kristof. Kristof has argued in previous columns that low-income factories that seem exploitative by some are viewed as economic saviors in some deeply impoverished nations. He contends that there is hope for Haiti through industrialization: “Haiti in recent years has been much better managed under President René Préval and has shown signs of being on the mend…. Far more than most other impoverished countries — particularly those in Africa — Haiti could plausibly turn itself around. It has an excellent geographic location, there are no regional wars, and it could boom if it could just export to the American market.” Kristof notes that “a report for the United Nations by a prominent British economist, Paul Collier, outlined the best strategy for Haiti: building garment factories. That idea (sweatshops!) may sound horrific to Americans. But it’s a strategy that has worked for other countries, such as Bangladesh, and Haitians in the slums would tell you that their most fervent wish is for jobs. A few dozen major shirt factories could be transformational for Haiti.”
• The CBC reports that there is a brisk but thoughtful controversy about the ethical implications of luxury cruise ships stopping at beaches in Haiti and resorts in the Dominican Republic, which occupies the larger, western portion of the island. Visitors to the island, which is a popular destination for Canadians, were split over the morality of vacationing there. One traveler quoted in the CBC piece said it would be unthinkable to “choke down a burger” so close to a scene of utter devastation. Another, though, argued that vacationers will be providing much-needed income for Haitians. Cruise ships scheduled to stop at a beach leased from the Haitian government will be carrying extra food supplies that will be distributed to the needy, according to the report.

Sources: New York Times, Jan. 21 — NPR, Jan. 20 — CBC, Jan. 18.

For more information, see: Related Newsline Commentary, Jan. 19 — Related Newsline story, Jan. 19 — Related Newsline story, Jan. 19 — Related Newsline story, Nov. 10, 2008 — Related Newsline story, Jan.14, 2008.

Britain and France applaud the measure, although sources say the EU worries that such a plan could hinder trade among member nations

WASHINGTON
President Barack Obama last week demanded limits on the size and trading activities of U.S. financial institutions, saying he wants to impede reckless risk taking and avert another financial crisis.

The Financial Times reports that Obama’s proposals, bundled into a regulatory overhaul package being considered by Congress, would prohibit banks from sponsoring hedge funds and other investment vehicles that are run purely for the bank’s profits and are unrelated to the deposits of bank customers.

The measure also would limit the size of financial institutions by placing tighter caps on the size of accounts and liabilities, ostensibly reducing the chance that a single bank failure could drag down the entire economy, reports the Los Angeles Times.

Obama’s announcement tapped into populist ire against big business and came as Goldman Sachs announced it would pay about $16 billion in bonuses to employees this year, according to an analysis from Canada’s National Post.

The United Kingdom may follow Obama’s lead, reports Bloomberg, with the candidate likely to assume control of the Exchequer in the upcoming elections endorsing the basic structure of the measure. George Osborne, Treasury spokesman for the U.K. opposition Conservative Party, said he is “convinced that retail deposit-taking doesn’t sit easily with large-scale proprietary trading…. There are plenty of investment-banking activities that are serving the needs of customers and clients. It’s the riskiest end of investment banking; it’s when they’re taking huge bets with the bank’s own money and the bank’s balance sheet that I think we need to separate from retail banking.”

French Finance minister Christine Lagarde also praised Obama’s position, but sources within the EU tell Berlin-based news service Deutsche Welle that the 27-nation bloc is unlikely to adopt identical measures as a whole because it would limit crossborder financial services.

Sources: Deutsche Welle, Jan. 23 — Bloomberg, Jan. 22 — Los Angeles Times, Jan. 22 — National Post, Jan. 22 — Financial Times, Jan. 22.

For more information, see: Related Newsline story, Jan. 19 — Related Newsline story, Dec. 14, 2009 — Related Newsline story, Oct. 26, 2009 — Related Newsline story, Oct. 26, 2009 — Related Newsline Commentary, Oct. 26, 2009.

Ethics of censorship debated by governments, media

BEIJING
A clash of values and cultures continued to play out on the world stage last week as U.S. secretary of State Hillary Clinton criticized the Chinese government for its stance on internet censorship, and China retaliated by accusing the United States of meddling and hypocrisy.

The current turmoil began about three weeks ago when Google, which had allowed the Chinese government to censor search results within that nation, threatened to pack up its servers and go home after the company said it discovered China had hacked into the email accounts of human rights activists.

Clinton, in a bold speech that attracted global attention, followed up on the event and chastised China for restricting internet freedom, Forbes reports.

China’s official news service, Xinhua, called Clinton’s statement “inconsistent with the facts,” complaining that it exemplifies “the double standards that the United States applies.”

Xinhua said “freedom is always relative” and compared Chinese restrictions on the internet to the U.S. Patriot Act.

Google last week declared that it would not capitulate to any further censorship, noting that its stand could mean the end of its Chinese operation. By week’s end, however, the company was sounding a more conciliatory note, according to CNET, with Google CEO Eric Schmidt saying, “We like the Chinese people. We like our Chinese employees. We remain committed to being there.”

The spat evoked a wide spectrum of comment in the world press. Former Observer editor Jonathan Fenby, who has written several books about China, wrote in the Guardian: “The gulf between the two sides is enormous, built on different value systems and different political regimes. Whatever the faults of the American way, it has a basic belief in freedom of information. In China, on the other hand, control of information is an essential element in the power structure. For Li [Changchun, the Politburo Standing Committee member responsible for media], as for remnant Maoists in the 1980s, what used to be called ’spiritual pollution’ is not only a threat to the facade of puritanical Communist Party rule harking back to the Spartan days in their wartime base (even if it is hugely belied by the extent of corruption by Party officials); it also threatens one of the levers of authority.”

But BusinessWeek contributing editor Bruce Nussbaum, who recently returned from China, disputed the view that Chinese censorship is a draconian control technique imposed on an unwilling people.

“The stereotype of a distant, old, militaristic censor shutting down blogs and websites on whim is incorrect,” Nussbaum writes. “Both the young, high-tech entrepreneurs developing new online businesses and the government censors come from the same good universities, are extremely well-educated and know each other personally. The two sides are in constant contact every day, pushing and pulling, reshaping the zone and focus of censorship. In general, both sides, mostly men in their 20s and early 30s, I am told, are trying to increase the space of what is allowed. I am also told that one problem with Google in China was that it was not tied into this network of censor and censored as well as Baidu and other Chinese web companies. And Google didn’t share the accepted culture of dynamic censorship, further antagonizing the censors.”

Sources: Xinhua, Jan. 24 — Guardian, Jan. 23 — CNET, Jan. 22 — Forbes, Jan. 22 — BusinessWeek, Jan. 22.

For more information, see: Related Newsline story, Jan. 19 — Related Newsline story, Aug. 17, 2009 — Related Newsline story, Aug. 3, 2009 — Related Newsline story, July 20, 2009 — Related Newsline story, June 15, 2009.

In other news about politics and ethics, John Edwards and Mark Sanford both mark “lasts” in their careers

WASHINGTON
The colliding worlds of politics and ethics made for multiple headlines last week. Among the stories:

• The release of several books about Barack Obama’s campaign and administration reopened an ethics debate over an old journalism bugaboo: the use of anonymous sources. Game Change by John Heilemann and Mark Halperin, touched off the debate, reports Politico.com, but more fireworks are being launched. Bob Woodward and at least two other political journalists, Jonathan Alter and Ryan Lizza, have similar books coming out this year. Woodward, whom Politico characterizes as “the capital’s foremost fly-on-the-wall chronicler of political power,” defends his use of anonymous sources, saying that what he writes “was reported…. So-and-so was there and they said this. There are meeting notes and so forth.” Alter, an editor at Newsweek, told Politico that “long-form journalism or works of history benefit from narrative drive…. Most of my scenes are quite short, but it is necessary to include some dialogue in order to take the reader as close as possible to what happened. In my reporting experience, people tend to remember quite well what the president said. I often rely on their memories if the quotations are short.”
• Former U.S. vice presidential candidate John Edwards pulled the plug on his political career late last week after confessing that he had fathered a daughter with his former mistress, saying through a spokeswoman that he has no plans to return to public life and will look for “other ways to serve.” The News & Observer of Charlotte (North Carolina) reports: “Edwards finally admitted Thursday that he had fathered Frances Quinn Hunter, the daughter of former mistress Rielle Hunter. The day before, he pulled on a pair of blue jeans and headed to Haiti. He took a sleeping bag; he had no return ticket…. This, some say, is where Edwards can look for his redemption: an earthquake-ravaged country where he is just another American looking for survivors and bandaging their wounds.”
• During his final state-of-the-state address last week, South Carolina Gov. Mark Sanford apologized for what he said was the last time, giving his concluding mea culpa for his clandestine affair with an Argentine woman, the Washington Post reports. Last week, South Carolina legislators formally rebuked Sanford for the disgrace he brought upon the state. Sanford’s wife has filed for divorce, reports the Post.

Sources: Politico, Jan. 22 — News and Observer, Jan. 21– Charlotte News & Observer, Jan. 21.

For more information, see: Related Newsline story, Jan. 11– Related Newsline story, Jan. 4 — Related Newsline story, Dec. 21, 2009 — Related Newsline story, Dec. 14, 2009 — Related Newsline story, Nov. 23, 2009.

FBI mounts sting at convention of arms dealers; estate of cable-TV baron gives $7.5 million grant to promote business-ethics education in Mountain states; a car dealership says it undercharged a customer and now wants more money or it will take the car back

VARIOUS DATELINES
The intersection of business and ethics prompted several stories last week on ethics. Among them:

• Federal agents staged a sting at a weapons-industry trade convention, arresting nearly two dozen people on charges related to alleged bribery of foreign officials, reports the Wall Street Journal. FBI agents posed as representatives of a senior African government official and proposed a scheme in which they offered 20-percent “commissions” in order to win contracts to supply weapons to the unidentified African county’s presidential security force.
• Six universities in four U.S. mountain states will receive a $7.5 million grant to expand business-ethics education. The grants, called the Daniels Fund Ethics Initiative, named after late cable magnate Bill Daniels, fund a consortium of ethics programs at Colorado State University, New Mexico State University, the University of Colorado at Colorado Springs, the University of New Mexico, the University of Northern Colorado, and the University of Utah, according to reports from the Denver Post and other newspapers. The theory behind the consortium: Each college develops a unique ethics program in a particular business specialty and shares what they’ve learned at twice-yearly conferences.
• Is a deal a done deal? A Minnesota car dealership doesn’t think so, and is suing a woman because a clerical error resulted in a minivan being sold to her for about $6,000 less than its book value, reports the Minneapolis Star-Tribune. The dealership claims Tammie Townsend should have known the price was too good to be true and has revoked her financing, sent repo men to take the van, and filed suit. Townsend says she didn’t know she’d gotten an inadvertent bargain until the dealership informed her of the mistake, the Star-Tribune reports. A manager at the car dealership says she was informed of the correct price several times before the deal was closed. At last report, Townsend had the minivan hidden in a friend’s garage.

Sources: Wall Street Journal, Jan. 20 — Minneapolis Star-Tribune, Jan. 20 — Denver Post, Jan. 20 — Coloradoan, Jan. 20 — Salt Lake City Tribune, Jan. 19 — Wyoming Business Report, Jan. 18.

For more information, see: Related Newsline story, Jan. 19 — Related Newsline story, Jan. 19 — Related Newsline story, Dec. 14 — Related Newsline story, Dec. 7, 2009 — Related Newsline story, Dec. 7, 2009.

The Red Cross, Nature Conservancy, and AARP take tops spots on trusted list

From Harris Interactive:

“Among all adults who are familiar with them, the American Red Cross, the Nature Conservancy, AARP, the National Association of Home Builders and the U.S. Chamber of Commerce are seen as the most trusted among 12 large organizations that influence politics and business in Washington. PhRMA, the AFL-CIO, the NRA and the Sierra Club are perceived to be the least trusted. Organizations seen with the most power are the AFL-CIO, PhRMA, AARP and the NRA….

“Among those who are familiar with them, the most trusted organizations (based on those who trust them ‘a great deal’ or ‘a fair amount’) are:

• The American Red Cross – 86%
• The Nature Conservancy – 76%
• AARP – 70%
• Nat’l Association of Home Builders – 67%
• The U.S. Chamber of Commerce – 66%

“The least trusted organizations on the list are (also based on those who trust them ‘a great deal’ or ‘a fair amount:’

• PhRMA – 37%
• AFL-CIO – 38%
• The NRA – 56%
• Sierra Club – 60%

Power in Washington

“The organizations listed that are believed to have the most power, based on the number of people who are thought to have a ‘great deal’ or ‘a fair amount’ of power (as percentages of those who are familiar with them) are:

• The AFL-CIO – 90%
• PhRMA – 85%
• AARP – 80%
• The NRA – 80%
• National Education Association – 79%
• The U.S. Chamber of Commerce – 77%

“The organizations thought to have the least power are:

• The Nature Conservancy – 48%
• Sierra Club – 59%
• American Red Cross – 59%
• National Association of Homebuilders – 63%

“In the five years that The Harris Poll has been measuring public perceptions of these organizations, the results have generally been that those with the least power are most trusted while those with the most power are least trusted. For example, the American Red Cross and the Nature Conservancy receive very high marks for being trusted; at the same time they are seen as having less power. However, by their sheer size and scope of work they are still able to work around their lack of power.

“Groups such as the AFL-CIO, PhRMA and the NRA are the least trusted. Nonetheless they are thought to have lots of power. These groups have risen to power status by the sheer fact they survive on controversy and their ability to play politics very well.

“Two interesting case studies are worth noting. AARP and PhRMA are extremely involved in the health care reform debate. Both have seen their trust numbers go down while the perceptions of their power have gone up…. ”

For the full press release from Harris Interactive, Jan. 19, click here.

“If one man offers you democracy and another offers you a bag of grain, at what stage of starvation do you prefer the grain to the vote?”

– Bertrand Russell (English mathematician and philosopher, 1872-1970)

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

by Rushworth M. Kidder

In a fine think-piece on the underlying causes of Haiti’s tragedy, New York Times columnist David Brooks begins with a simple comparison. In 1989, a magnitude 7.0 earthquake struck the Bay Area of Northern California, and 63 people died. Last week a magnitude 7.0 quake shattered Haiti, and as many as 200,000 people died.

His point, paraphrased, is that Haiti’s tragedy was not seismic but economic: It was abject poverty, not plate tectonics, that caused so many deaths. Nations that can afford thoughtful zoning, good engineering, and quality construction can build to last and withstand such shocks. Nations forced by demographics and penury into haphazard sprawl must build for the moment and can’t survive natural disasters.

All of that is true, as far as it goes. But behind poverty lies a deeper cause: corruption. If we’re to compare Haiti and the Bay Area, let’s add one more set of facts. On the latest Corruption Perceptions Index published by Transparency International, the United States stands among the world’s least corrupt nations — 19th of the 180 countries ranked. That’s not as high as it should be, but it’s leagues apart from Haiti, which stands at 168, down there with Afghanistan and Somalia.

How is that relevant? Take the construction trades. In a culture where bribery, fraud, and extortion are endemic, it would be bizarre to imagine that you could build a five-star hotel or a slant-sided hovel without paying off somebody. Some of those payments help you get permits to build in unsafe areas. Some insure that building inspectors don’t look too closely at how much cheap sand you’re mixing with expensive cement to dilute its strength or how much steel you’re selling off under the table rather than using to reinforce your concrete. And some bribes go for protection, to keep thugs — or public officials — from attacking your building site, your home, or your business.

Corruption, say those who study it, is one of the world’s most regressive taxes, slamming the poor far harder than the rich: The poor pay more bribes, and the percentage of their income going to bribery is higher. Whether the corrupt cop stops the driver of a Lexus or a motor scooter, the sum he extorts will probably be tolerable for the former — and potentially disastrous for the latter.

If Haiti’s fatal poverty is a function of corruption, the question is what to do about it. Anti-poverty efforts alone, as Brooks points out, have been disappointingly ineffective. The reason, I suspect, is that they have too often accepted corruption as part of the embedded cultural landscape rather than as an imposed and correctible offense. It may be that you simply can’t defeat poverty without erasing corruption.

But how can you erase corruption in a place like Haiti? An encouraging hint comes from Hong Kong, which 35 years ago was arguably as bad as Haiti. Riddled with corruption, it was so rancid that the police superintendent himself kept meticulous hand-penciled notebooks detailing every street-corner business that had paid him off so that his officers would leave it alone. The notebooks are now on display at the new headquarters of the Independent Commission Against Corruption (ICAC), founded in 1974 to clean up Hong Kong.

The turn-around wasn’t pretty, involving public protests, police strikes, and the extradition of the superintendent, who had slipped away to England. Nor was it inexpensive: The ICAC, whose 900 investigators have the power to arrest, detain, interrogate, and bring to trial those suspected of public- or private-sector corruption, currently absorbs $800 million a year, or 0.3 percent of Hong Kong’s budget. But look at the results. Hong Kong, this year, sits in 12th place on Transparency International’s scale, well above the United States, Great Britain, and much of Europe. It’s a thriving financial center, where global investors trust that their funds will be safe. What’s more, as Hong Kongers will happily tell you, it essentially has no poverty.

I’m not saying that Haiti, the poorest country in the Western Hemisphere, will become the next Hong Kong. There’s a world of difference between the entrepreneurial culture of southern China and the slave-trade colonialism of the Caribbean. But there’s also a powerful similarity that binds people everywhere: a set of shared moral values that includes honesty, responsibility, respect, fairness, and compassion. Ask people which values most matter to them, we’ve found, and even in the deepest cultures of corruption, this list emerges — not as a description of their circumstances but as a testament to their aspirations. Do they experience corruption? Yes. Do they like it? No. Do they want something better? Absolutely.

Could an anti-corruption agency work in Haiti? Maybe not in the past. But if there’s any blessing lurking in last week’s awful tragedy, it’s that the past has ended. Old habits die hard, of course. In the aftermath of Hurricane Katrina in New Orleans, graft flourished, and it may do so again in Haiti as millions of dollars pour in. But we also may see a new determination to link corruption to poverty — and to fight both. If so, the global community may find that 0.3 percent of the budget is a modest price for cleaning up, permanently, the mental and moral rubble from this disaster.

©2010 Institute for Global Ethics

Find this and previous weeks’ commentaries online as a podcast titled Ethicast™ now available on iTunes. Subscribe today!

“A hotel has to be like a father, mother, everything at the same time. When (President Jean-Bertrand) Aristide was thrown out in 2004, it was tough. An Italian journalist had toothache, and when I took him to see a doctor, they nearly killed us at a roadblock. But this earthquake overshadows everything.”

– Frantz Rimpel, the general manager of the Hotel Villa Creole in Port-au-Prince, Haiti, talking to the Reuters news agency. The hotel, a once-elegant establishment, was damaged badly by last week’s earthquake, which is believed to have killed as many as 200,000 and destroyed entire towns. The Hotel Villa Creole is now “operating a hospital in its front entrance and allowing scores of aid workers, journalists and others to camp out on its grounds,” notes Reuters.

“My grandparents founded this hotel. We have lost priceless works of art,” co-owner Melissa Padberg told Reuters. “But this is nothing to do with money now. We are just trying to keep open to give basic services to our clients, and allow ourselves to somehow help.”

Source: Reuters, Jan. 15.

Former President Bill Clinton, drafted to help in recovery, says he will not tolerate corruption; BBC reports that shoddy construction and lax code enforcement amplified the scale of the tragedy

VARIOUS DATELINES
The calamitous earthquake in Haiti has prompted not only a global push for emergency aid but also scrutiny of ethical factors impacting the nation’s plight and impeding redevelopment.

In an editorial, the New York Times notes that Haiti “urgently needs relief to dig out and shelter survivors, and to nurse, feed and clothe people who had little to start with and now have nothing left. But Haiti needs more. It needs a commitment to finally move beyond the relentless poverty, despair and dysfunction that would be a disaster anywhere else but in Haiti are the norm.”

The devastation was “only partly a natural disaster,” contends the editorial. “Look at Haiti and you will see what generations of misrule, poverty and political strife will do to a country. Haiti, suffering forever, is in the direst straits. But Haitians do not need condolences. They need help and the ability to help themselves.”

Arguing that international aid is likely to be squandered in a nation with a history of corruption, the Miami Herald’s Andres Oppenheimer called on international agencies to establish a watchdog commission to monitor relief efforts.

The problem, according to the Oppenheimer opinion piece, is that once the earthquake drops from the media spotlight, any aid that continues to flow into the country — a necessity for long-term reconstruction — may be stolen in the darkness.

Former U.S. president Bill Clinton, recruited by Barack Obama to help lead a bipartisan aid effort, vowed that he will not tolerate corruption, according to a report from the Los Angeles Times.

The BBC reports that shoddy construction greatly contributed to the magnitude of the catastrophe. Sources tell the BBC that the Haitian government is lax in enforcing building codes and that in certain parts of the country the government hardly functioned at all in any capacity.

In addition, reports the BBC, concrete often was watered down to cut costs, creating a situation where weakened structures collapsed, with layers “pancaking” on top of one another.

In a related story, remarks by U.S. evangelist Pat Robertson elicited sharp criticism after he attributed the earthquake to the Haitian people’s “pact with the devil.” While spokespersons for Robertson later said his remarks meant only that Haiti had been cursed, some attributed the statement to ongoing hostility between more mainstream religions and the fluid mix of spiritual traditions in Haiti, reports ABC.

ABC’s Russell Goldman writes that while many Haitians are Catholic, about half of the population reportedly practices voodoo.

Sources: AP, Jan. 19 — Los Angeles Times, Jan. 15 — New York Times, Jan. 15 — BBC, Jan. 15 — ABC News, Jan. 15 — Miami Herald, Jan. 15.

For more information, see: Related Newsline story, Nov. 10, 2008 — Related Newsline story, June 2, 2008 — Related Newsline story, Jan. 14, 2008 — Related Newsline story, Dec. 4, 2006 — Related Newsline story, Oct. 24, 2005.

In Atlantic analysis, Harvard scholar examines the increasingly troubling dilemmas posed when corporate ethics collide with local laws

BEIJING
In a development that surprised many industry observers, Google changed course on an ethical dilemma that has nettled the company for several years: It announced last week that it no longer would cooperate with the Chinese government in censoring search results, warning that if China protests, the company may just fold operations there.

CNET reports that Google’s decision was prompted in part by what Google termed a “highly sophisticated and targeted attack” designed to hack information about human rights activists.

Google, which once had been blocked by the Chinese government’s firewall, entered the Chinese market in 2006 after agreeing to let the government censor its search results as long as the censorship was acknowledged on the result page.

At the time, reports Wired, Google, whose motto is “Do no evil,” rationalized that some access was better than none and that a strategy of engagement would eventually open markets in China.

But China continues to insist that it will govern internal Internet policy with its own laws, and official state media say there is no proof that the government was responsible for the attempted cyber-attack on Google, according to UPI.

Chinese official media also implied that Google shows too many links to pornographic material and has broken Chinese law, reports UPI.

In an Atlantic opinion piece, former GE corporate counsel and current Harvard research fellow Ben Heineman, Jr., examined the dilemma of a company whose moral values are in conflict with national laws in the country where it does business.

He recalled an incident when Chinese authorities demanded a list of GE employees to determine if they were members of the outlawed group Falun Gong.

“We told the Chinese authorities that such a request violated our global ethical standards protecting employees’ right to privacy and religious freedom,” Heineman wrote. “We never had to decide whether to resist the request or publicly protest it. On a private basis, we were able to convince enforcement superiors that it did not make sense to have a conflict over this hot-button issue and the request, while not withdrawn, was not pressed.”

“But we recognized that such a result, which avoided a choice between law enforcement and global ethics, was possible because there had been virtually no public attention to the matter and because it only involved one facility with several hundred workers. Clearly,” Heineman added, “a case like Google’s which involves huge publicity, the operations of a company across China, and a fundamental conflict between Chinese law and Google’s newly re-emphasized global standards cannot be resolved in such a way.”

“Indeed, Google’s remarkable statement yesterday will highlight for many corporations–not just in China but in many other difficult business environments around the world (Russia? Nigeria?) — the importance of seeing clearly, before others do, the collision between country law and company ethics and thinking ahead about how to resolve them in light of company values and stakeholder pressures.”

Sources: CNET, Jan. 15 — UPI, Jan. 15 — Wired, Jan. 14 — Atlantic, Jan. 13.

For more information, see: Related Newsline story, Aug. 17, 2009 — Related Newsline story, June 15, 2009 — Related Newsline story, June 15, 2009 — Related Newsline story, Nov. 3, 2008 — Related Newsline story, Oct. 27, 2008.

As commission probes who’s to blame for economic meltdown, Obama announces a punitive tax on financial institutions that are expected to start granting yearly bonuses in the coming weeks

WASHINGTON
Wall Street bankers last week apologized to a U.S. congressional panel for risky behavior that drove financial institutions into failure, but still maintained that their actions seemed appropriate at the time.

The Associated Press reports that the bankers, testifying before the Financial Crisis Inquiry Commission, offered no apologies for the anticipated run-up in this year’s executive pay and bonuses, although they did say they are changing some practices that led to excessive risk-taking in the past.

Commission members also heard from dueling regulators — the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve. In blunt remarks, FDIC chairman Sheila Blair said that “much of the crisis may have been prevented” if the Federal Reserve had not delayed for seven years in cracking down on subprime mortgage lending, reports the Financial Times.

The economic autopsy was being conducted during the same the week that President Obama announced a punitive “financial crisis responsibility fee” on large financial firms, many of which are expected to issue lavish bonuses in the coming weeks.

“My commitment is to recover every single dime the American people are owed,” Obama said, reports Politico.com. “And my determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people — folks who have not been made whole and who continue to face real hardship in this recession.”

The measure is aimed at recovering losses in the taxpayer-funded Troubled Asset Relief Program.

Controversy over who deserves the blame for the fiscal implosion reignited a variety of ethical debates, including the risks of “moral hazard” — the proposition that removing any real risk of loss encourages reckless behavior.

In a New Yorker essay, “Balance Sheet” columnist James Surowiecki posited a new twist on the contention, concluding that financial institutions were propelled not by avarice but by ignorance.

Surowiecki wrote that it’s improbable that banks were willing to let their share prices plummet in anticipation of a bailout. Rather, he points to testimony during the hearings indicating that J. P. Morgan never bothered to test its portfolio against the possibility that housing prices would fall.

“In a way,” Surowiecki concluded, “the moral-hazard argument ascribes far too much foresight, intelligence, and rationality to the banks. It assumes they were coldly calculating the chances and consequences of failure and forging ahead nonetheless, when the reality seems to be that for the most part they were blissfully ignorant and arrogant about the flaws in their lending and investment strategies. The crisis, in that sense, was caused less by the fact that the banks were too big to fail than it was by the fact that they never seriously considered the possibility that they might fail.”

Sources: Financial Times, Jan. 15 — Politico, Jan. 15 — New Yorker, Jan. 14 — AP, Jan. 13.

For more information, see: Related Newsline story, Dec. 14, 2009 — Related Newsline story, Oct. 26, 2009 — Related Newsline story, Oct. 26, 2009 — Related Newsline story, Oct. 26, 2009 — Related Newsline story, Oct. 19, 2009 — Financial Crisis Inquiry Commission website.

Upgraded standards are touted as hallmark of the “new UBS”

GENEVA
UBS, Switzerland’s biggest bank, publicly embarrassed by charges that it helped wealthy clients evade taxes, last week announced that all employees must read and sign a detailed ethics code.

The website Swissinfo.com, a branch of Switzerland’s public broadcasting corporation, reports that the code refers to the values of the “new UBS” and requires that all employees pledge to comply with the laws, rules, and regulations of the countries in which the bank operates.

UBS, which was rocked by the subprime crisis, sustained another blow when it was accused by the United States of helping Americans evade nearly $200 billion in taxes. In addition to $780 million in fines related to the evasion allegations, UBS was forced to hand over confidential records of thousands of clients, reports World Radio Switzerland.

According to the Agence France-Presse, the code reads, in part: “UBS complies with all applicable laws and regulations regarding tax records and tax reporting and does not provide assistance to clients in acts aimed at breaching their fiscal obligations…. We do not provide assistance to clients or colleagues in acts aimed at deceiving tax authorities nor do we support transactions where the tax efficacy relies on assumptions that are inconsistent with the commercial facts or on non-disclosure of material facts.”

All employees must pass a test demonstrating knowledge of the code.

Bloomberg reports that there’s some urgency attached to the ethics reform: Confidence sagged in the aftermath of the scandal, and investors have been fleeing and profits have been dropping for six consecutive quarters.

Sources: Swissinfo, Jan. 15 — World Radio Switzerland, Jan. 13 — AFP, Jan. 13 — Bloomberg, Jan. 12.

For more information, see: Related Newsline story, Aug. 24, 2009 — Related Newsline story, Aug. 23, 2004 — Related Newsline story, Oct. 20, 2003 — Related Newsline story, Apr. 21, 2003 — Related Newsline story, June 24, 2002 — Copy of the new UBS ethics code.

In one instance, CNN reports, Nidal Hasan was promoted under loosened standards because Army needed more majors in medical corps

WASHINGTON
A Pentagon inquiry into supervisory ethics has concluded that several officers negligently overlooked or failed to intervene when the alleged Fort Hood shooter demonstrated troubling traits and worrisome behavior throughout many phases of his career.

According to the Washington Post, supervisors of Army Maj. Nidal Hasan, the psychiatrist charged in the May mass shooting at the Texas military base, mishandled his performance reviews by overlooking incidents of erratic behavior and statements indicating that Hasan showed sympathy with suicide bombers.

“Had those failings been properly adjudicated, he wouldn’t have progressed” and could have been forced out of the armed services, an official familiar with the review told the Houston Chronicle, speaking on condition of anonymity.

CNN reports that the probe also concluded that clues to Hasan’s instability fell through the cracks because of a lack of communication between the U.S. military and a terrorism task force.

Other factors apparently involved bureaucratic foul-ups. In one instance, according to CNN, concerns over statements made by Hasan, a Muslim, that apparently indicated his increasing radicalization were overlooked. Hasan then was promoted from captain to major because of a shortage of majors in the medical corps and a special dispensation granted to promotion boards to advance candidates who would not normally qualify.

One suggestion in the Pentagon report is that officers be held more strictly accountable for their performance reviews.

Hasan is currently hospitalized, paralyzed from wounds received during the incident. He faces 13 counts of premeditated murder and 32 counts of attempted premeditated murder.

Sources: Washington Post, Jan. 15 — The Hill, Jan. 15 — Houston Chronicle, Jan. 14 — CNN, Jan. 13.

For more information, see: Related Newsline story, Dec. 17, 2009 — Related Newsline story, Nov. 23, 2009 — Related Newsline story, Nov. 9, 2009 — Related Newsline story, Sep. 8, 2009 — Related Newsline story, July 6, 2009.

There’s controversy over romantic and financial incidents in Northern Ireland; USA Today reports that congressional ethics office so far has issued no serious punishments; New York State legislators try to clean up their image; South Carolina’s House rebukes governor for “dishonorable” conduct; Baltimore mayor will keep her pension despite misdemeanor conviction on embezzlement charges

VARIOUS DATELINES
Ethics-related news was featured in a variety of world-press reports. Among the stories:

• Northern Ireland’s leader, first minister Peter Robinson, last week said he would temporarily step aside while dealing with the aftermath of his wife’s romantic and financial dealings with a 19-year-old man, the Irish Times reports. Iris Robinson, 60, reportedly solicited money for her lover to open a restaurant, and Peter Robinson faces criticism for not alerting authorities about the transaction after he learned about it. Iris Robinson has blamed her behavior on mental illness, reports the Times.
• Nearly three years after the U.S. Congress enacted sweeping ethics reform, none of its members has faced serious punishment for wrongdoing, according to an analysis from USA Today. Writes Fredreka Schouten: “In that time, allegations of sexual misconduct and financial impropriety have been lodged against lawmakers. The most serious rebuke in the past year: a ‘letter of qualified admonition’ to Sen. Roland Burris, D-Ill., after the Senate ethics panel concluded he misled lawmakers and inappropriately offered to raise campaign funds for then-governor Rod Blagojevich as Burris sought the Senate appointment.” But Schouten does note that some watchdog groups are content with the progress of the ethics panel created in 2008, and she reports that there are 10 ethics cases pending.
• Seeking to clean up the image of New York State government after a series of high-profile scandals, legislative leaders last week announced an agreement on a package of ethics reforms. The Albany Times-Union reports that the measures would create separate organizations to oversee lobbyists, legislators, and officials in executive agencies. The measure also would require legislators to publicly disclose their income from outside jobs.
• South Carolina’s House voted to formally rebuke Gov. Mark Sanford, who in June disappeared form public sight for six days while spending time with his mistress in Argentina. The measure formally condemns Sanford for dishonorable actions while in office, reports the Charleston, S.C., Post and Courier. A House Judiciary Committee hearing has determined that Sanford’s actions did not rise to the level needed for impeachment. The rebuke now moves to the state Senate, where it faces an uncertain future, reports the paper.
• There is a storm of protest over the fact that Baltimore mayor Sheila Dixon, who will resign in February following her conviction on embezzling gift cards meant for the needy, will receive an $83,000-per-year pension, the Baltimore Sun reports. “It’s understandable that people are very upset about the prospect of a lifetime pension,” mayor-to-be Stephanie Rawlings-Blake told the Sun’s editorial board. “I know there are ways we can look at other pension systems around the country, to kind of close these loopholes.” Dixon agreed to step aside on the day of her sentencing, February 4, as part of a plea agreement. Maryland law is unclear about whether someone convicted of a crime may stay in office.

Sources: Irish Times, Jan. 15 — Albany Times-Union, Jan. 14 — Post and Courier: Jan. 13 — USA Today, Jan. 12 — Baltimore Sun, Jan. 12 — Baltimore Sun, Jan. 6.

For more information, see: Related Newsline story, Jan. 11 — Related Newsline story, Jan. 4 — Related Newsline story, Dec. 21, 2009 — Related Newsline story, Dec. 14, 2009 — Related Newsline story, Nov. 23, 2009.