In the early 2000s, the U.S. public was shocked to learn that Enron, the giant energy trading company, had created off-the-books partnerships to unlawfully hide its debts and losses. The Enron disgrace soon was followed by more scandals at major companies like WorldCom, Tyco International, ImClone, HealthSouth, and Boeing. (See the Legal Briefcase box for a brief summary of a few of these cases.) In recent years, greedy borrowers and lenders alike were among those who brought the real estate, mortgage, and banking industries to the edge of a financial crisis that threatened the entire U.S. and world economies.1 Given the ethical lapses prevalent today, how can we restore trust in the free-market system and in leaders in general? First, those who have broken the law should be punished accordingly. New laws making accounting records more transparent (easy to read and understand) and businesspeople and others more accountable for their actions may also help.2 But laws alone don't make people honest, reliable, or truthful. If they did, crime would disappear. One danger in writing new laws to correct behavior is that people may begin to think that any behavior that is within the law is also acceptable. The measure of behavior then becomes “Is it legal?” A society gets into trouble when people consider only what is illegal and not also what is unethical. Ethics and legality are two very different things. Although following the law is an important first step, behaving ethically requires more than that. Ethics reflects people's proper relationships with one another: How should we treat others? What responsibility should we feel for others? Legality is narrower. It refers to laws we have written to protect ourselves from fraud, theft, and violence. Many immoral and unethical acts fall well within our laws. ETHICAL STANDARDS ARE FUNDAMENTAL
We define ethics as society's accepted standards of moral behavior, that is, behaviors accepted by society as right rather than wrong. Many Americans today have few moral absolutes. Many decide situationally whether it's OK to steal, lie, or drink and drive. They seem to think that what is right is whatever works best for the individual—that each person has to work out for himself or herself the difference between right and wrong. Such thinking may be part of the behavior that has led to the recent scandals in government and business.
This isn't the way it always was. When Thomas Jefferson wrote that all men have the right to life, liberty, and the pursuit of happiness, he declared it to be a self-evident truth. Going back even further in time, the Ten Commandments were not called the “Ten Highly Tentative Suggestions.”
In the United States, with so many diverse cultures, you might think it is impossible to identify common standards of ethical behavior. However, among sources from many different times and places—such as the Bible, Aristotle's Ethics, the Koran, and the Analects of Confucius—you'll find the following common statements of basic moral values: Integrity, respect for human life, self-control, honesty, courage, and self-sacrifice are right. Cheating, cowardice, and cruelty are wrong. Furthermore, all the world's major religions support a version of what some call the Golden Rule: Do unto others as you would have them do unto you.
ETHIC BEGINS WITH US
It is easy to criticize business and political leaders for moral and ethical shortcomings, and in a recent study both managers and workers cite low managerial ethics as a major cause of U.S. businesses' competitive woes.4 But employees also reported frequently violating safety standards and goofing off as much as seven hours a week. U.S. adults in general are not always as honest or honorable as they should be. Even though volunteerism is at an all-time high according to the U.S. Census Bureau, three of every four citizens do not give any time to the community in which they live.5...