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Business Fraud

What is Ethics?

Defining Ethics

I have been blogging about ethics for some time so it is reasonable to ask what is my perspective on ethics? The term ethics is derived from the Greek word ethikos which itself is derived from the Greek word ethos, meaning custom or character.   In philosophy, ethical behavior is that which is “good.”  Acropolis The field of ethics or moral philosophy involves developing, defending, and recommending concepts of right and wrong behavior.  These concepts do not change as one’s desires and motivations change.  They are not relative to the situation.  They are immutable.

In a general sense, ethics (or moral philosophy) addresses fundamental questions such as: How should I live my life? That question leads to others such as: What sort of person should I strive to be? What values are important? What standards or principles should I live by? There are various ways to define “ethics.”  The simplest may be to say that ethics deals with “right” and “wrong.”  However, it is diffi­cult to judge what may be right or wrong in a particular situation without some frame of reference. 

Standards of Behavior

Ethics must be based on accepted standards of behavior.  For exam­ple, in virtually all societies and cultures it is wrong to kill someone or steal property from someone else.  These standards have developed over time and come from a variety of sources including:

(A)       The influence of religious writing and interpretations.

(B)       The influence of philosophical thought.

(C)       The influence of community (societal) values.

Norms, Values, and the Law

Ethics deals with well-based standards of how people ought to act.  Ethics does not describe the way people do act.  It deals with the way people should act. Ethical people always strive to make the right decision in all circumstances.  They do not ration­alize their actions based on their own perceived self-interests.  Ethical decision-making entails following certain well established norms of behavior. The best way to understand ethics may be to differentiate it from other concepts.

Values are basic and fundamental beliefs that guide or motivate attitudes or actions. Values are concerned with how a person will behave in certain situations whereas ethics is concerned with how a moral person should behave.  A person who values prestige, power, and wealth is likely to act out of self-interest whereas a person who values honesty, integrity and trust will typically act in the best interests of others.  It does not follow that acting in the best interests of others precludes acting in one’s own self-interest.  Indeed, the Golden Rule prescribes that we should treat others the way we want to be treated. 

Laws versus Ethics

Being ethical is not the same as following the law.  While ethical people always try to be law-abiding, there may be instances where your sense of ethics tells you it is best not to follow the law.  These situations are rare and should be based on sound ethical reasons. Here’s one example:

Assume you are coming home from the store one day and see a fast moving fire approach your neighbor’s house. You notice that the neighbor’s car is in the garage. The garage door entrance to the house is locked as is the main entrance. You bang on the door and no one answers. You call the neighbor on your cell phone and no one answers. You don’t think there is enough time to call the fire department ten miles away before serious damage is done to the house. What would you do next and why? If you break into the house to save your neighbor, you have broken the law. However, you have acted out of concern for the safety of your neighbor in a life-threatening situation thereby acting ethically.

Benjamin Disraeli (1804-1881), the noted English novelist, debater, and former prime minister, said that, “When men are pure, laws are useless; when men are corrupt, laws are broken.” A person of good will honors and respects the rules and laws and is willing to go beyond them when circumstances warrant.  As indicated by the above quote, such people do not need rules and laws to guide their actions.  They always try to do the right thing. On the other hand, the existence of specific laws prohibiting certain behaviors will not stop a person who is unethical (e.g., does not care about others) from violating those laws. Just think about a “Ponzi” scheme such as the one I previously blogged about whereby Bernie Madoff duped others to invest with him promising huge returns that, unbeknownst to the investor, would come from additional investments of scammed investors and not true returns.

Ethical people often do less than is permitted by the law and more than is required.  A useful perspective is to ask:

        What does the law require of me?

        What do ethical standards of behavior demand of me?

        How should I act to conform to both?

An ethical society is one that values a commitment to do the right thing regardless of personal costs. It’s not an easy standard to live by but one worth pursuing.