Ep. 65: Patricia Werhane - The Ethics of Commerce During Crisis

May 14, 2020 | 20 Minutes

Patricia H. Werhane, Professor Emerita, was formerly the Ruffin Professor of Business Ethics at Darden School of Business, University of Virginia. She then accepted the Wicklander Chair in Business Ethics and director of the Institute for Business and Professional Ethics at De Paul University where she is also Professor Emerita. Currently she is adjunct professor at the University of Illinois Gies College of Business and a Fellow for the Center for Professional Responsibility in Business and Society. In this episode of Count Me In, Patricia tackles the difficult question of how commerce should be handled during this time of crisis. With a perspective on local and federal businesses and governments, she shares some ideas and plans to balance this difficult ethical question. Download and listen now!

Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. We are here for you today with episode 65 of our series. As we've addressed in many recent episodes, the Coronavirus has affected various aspects of accounting and finance. Today you will hear Adam speak with Patricia Werhane and adjunct professor at the University of Illinois, Gies College of Business and a fellow for the Center of Professional Responsibility in business and society. Patricia is also a co-producer of an Emmy award winning documentary television series in the Chicago area titled Big Questions. In this episode she talks about the ethics of commerce during these difficult business times. Let's head over and listen to their conversation now. 
Adam: (00:53)
So today in the podcast we have Patricia Werhane with us. Patricia, thanks so much for coming. 
Patricia: (00:57)
Thank you for having me. 
Adam: (00:59)
Now, Patricia, you've been speaking lately about ethical dilemmas facing the global economy in light of the pandemic that we are in. So I was hoping you can share some of those insights with us today. 
Patricia: (01:08)
Let me start by posing the question and then I want to give a couple of quotes from people who support that. So the real question I think we're facing right now as you know, how should we balance public health with the pandemic and social isolation with the financial health where massive unemployment will be economically disastrous? In fact, it already is. So is this an either or and we see this in the news all the time or is there a middle path? Let me give you two contrasting viewpoints. The first is from a Lieutenant Governor of Texas, Dan Patrick, and he argues that Americans should go back to work even if that causes the deaths of their grandparents who will willingly sacrifice their lives for the sake of economic growth. Well, I know some grandparents who may be not quite so willing, but we'll see. Now on the other side is Governor Cuomo from New York, and you know, of course who he is. He says, given the choice between economic prosperity and the preservation of human life, every life is worth saving at whatever costs to the economy. Now you can see these two balancing and contrasting views and we hear about them in the news all the time and we hear our governors and our presidents going back and forth about this and the center for disease control. We're just caught up in this dilemma, so I want us to think about the dilemma and then I'm going to make some comments about it and then we'll come to some sort of resolution. I hope. 
Adam: (02:45)
I was wondering if you could tackle the local identity versus the inner inactivity and the dependence on global commerce issue. 
Patricia: (02:51)
This one of the important things to think about in this dilemma, and you all know this, I'm sure and that is we live in this global world, although we focus locally on the people who are ill and some of them are our relatives and our friends,O f course. We are globally independent economically. There's an enormous interconnectivity in goods and services. For example, most of you are on your iPads or your cell phones or your computers. All of those are made with parts from many countries of the world. And I don't recommend taking them apart and looking whichI have done with an old cell phone and you can't tell where the parts are from actually. They're not all marked. But Dell computer for example, says their all their computers are made from parts from 22 countries. So you can see this interconnectivity and look at your clothes. I'm wearing clothes from Vietnam, Bangladesh, Korea, and Italy. I won't describe which ones. I don't have one single thing on me that is made in the United States. Over 20% of our food is imported. I hadn't realized that. The ventilators and the respirators and the other health care equipment we desperately need are made in parts from all over the world. Now this means that we have to think very carefully about this challenge. And as Martin Luther King actually said, some in the 1960s, if you can imagine, he says, we live in an inescapable network of mutuality. And that's that network in which this pandemic is, you'll remember that we all thought it was a China problem, but of course as we know it's a global problem. It's not just China. 
Adam: (04:36)
Then what's your theory on the perspective we should take on this issue? 
Patricia: (04:40)
How? How should we think about it? I'm a, I'm a business ethicists. I'm a professional ethicists. I think about these problems all the time. So I'm going to present us with kind of three perspectives from an ethical point of view that will help us think through this problem that I've created for us and actually I haven't created. It's been created and I'm just talking about it. The first is obviously we all know about this is basic human rights. In the United States, we have a bill of rights, but in 1948, the United Nations developed the universal declaration of human rights and everyone, every member country is supposed to sign onto it. Not actually they do sign onto it, but many of them forget after they sign on that they actually are supposed to enforce these rights. But anyway, the basic rights are obvious, the right to life, but also the right to survival. The right to survival means I have a right to work, to do whatever I can to survive. And then I have the basic freedoms, freedom to speech, freedom of movement, freedom of religion, or not, freedom to worship or not, freedom to work or freedom not to work actually, and many other rights. Actually United nations is very nice and said, we have a right to a vacation, but of course I love that, but I'm not many people honor that. Right. Actually. And then interestingly, because many of you are in business and commerce, in 2015, the United nations developed a protocol, a voluntary obviously for businesses arguing that the role of business is to respect, protect and remedy abuses of human rights wherever they are in operation, wherever they're operating. I think that's very interesting. It means that organizations as well as individuals have basic rights, but they also, we have obligations to each other. One of those obligations is to respect the dignity of every single human being. Sometimes, of course we don't. The second principle to think about is fairness. There are endless, endless literatures on fairness. I won't inflict on you, but one of the basic ones is to treat every person as an equal. Now that's the principle underlining delivery of healthcare. We don't have enough of anything. We don't have enough ventilators. We don't have enough respirators. We don't even have enough room in our emergency rooms to deliver healthcare to every person who needs it. So in the healthcare thinking, they do triage and you probably all know that that is, they take the, if you think about the people who are coming in, they take the sickest people first and also those who are likely to survive. So if you're very, very sick and you're not going to make it, you will be put probably in down back in the line. And this is the idea of treating everyone as an equal and trying to raise the sickest who are possibly going to survive up to, shall we say,well, we're, I'm not sure what normal is anymore, but at least to a decency so they can live. Now, interestingly in commerce we also have that principle of fairness. That is to treat every person as an equal. That is to give every individual equal opportunity, but in commerce we don't hire the sickest or the weakest. Obviously we hire those we think are the most qualified, so we see this treatment as an equal, as as defined differently in different contexts. Finally, the third principle philosophers call is utilitarianism. Well, you know that's a huge long word and one one doesn't have to remember, but you all know this as cost benefit analysis and in commerce and in the triage, in health triage, we are using that principle. In the triage, we're obviously doing cost bumps, which ones of my sick patients can I best serve, can I best cure, can I best help or can I best ameliorate their harm or their pain? Now that is a cost benefit analysis and also in commerce of course we do that all the time. That is we aim to create value added for all our stakeholders, including of course our owners or shareholders. And that is the idea of trying to maximize benefits or health versus sickness or hurt harms to either to just help people or to society in general. Now let's step back for a minute and do a thought experiment. Suppose many of you are accountants and suppose you know how to do this much better than I do a cost benefit analysis of and suppose you come up with a conclusion. I suspect you might, if it's just cost benefit of finances, that will be financially more feasible to go back to work and send back to normal unquote wherever we were before, what January or February of this go back to work, even if it costs us a number of lives.. Now, some of you aren't going to like that. You're not gonna like it because it doesn't put human beings into the equation and any utilitarian says no, you can't just leave human beings out of the equation. Even if you're doing costs and benefits. That's whatGovernor Cuomo would say. So where are we? How are we this Groundhog day? Are  we backto where we started, where I started. I don't think so. So let me step back a minute and argue. We have, as a result of this analysis, we have not one but two moral imperatives. The first is obvious. The first is from a human rights perspective and fairness and a cost benefit analysis to reduce the pandemic infections. Maybe of course the idea, the ideal is a virus. I mean, sorry, it is a virus, sorry, a vaccine that will eliminate them eventually.But there's a second moral imperative and that is to continue and encourage global commerce. Now, why is this a second moral imperative? It is a moral imperative for at least three reasons. First of all, without, without working, people suffer enormously. We're seeing people here who don't have enough food in the United States of all places and they suffered terribly without working. And also they suffer human worth. People like to identify, people identify with their work and what they do and when they're not doing it,it's a terrible psychological crisis as well as obviously an economic crisis. The second reason is with massive unemployment, we consumers will have little purchasing power and if we don't have purchasing power, then global commerce will shrink. And so what? So I'm just projecting in the future we'll have no imported food, no imported clothes. Oh, I have to go back to sewing my clothes?And worst, will have no new electronics. And that will be very difficult. Think if those of you, some of you have been to Cuba where the cars are 1950 cars, but are sort of glued pasted together with rubber bands and masking tape and they make their own parts. Why? Because they're not allowed to import any parts, and their cell phones are well beyond empty and it's very difficult to get the internet there as you, those of you who've been there, have tried. and, We won't live that way. We can't live that way. We don't want to live that way. And so maybe I'm going to have to go back. My great grandmother made soap and candles for heaven sakes, as well as her own clothes. And most of us aren't going to go back to making candles and we probably shouldn't. But there's a third, and this is the more most important imperative. We need commerce to provide the necessities to address the pandemic, hospital beds, masks, gowns, ventilators, respirators, and new medicines all often, many are imported. We can't, we cannot solve the physical pandemic without global commerce. Those two are interrelated. I have separated them out, but that's wrong. They're integrated, the pandemic needs global commerce, global commerce needs business. So we've got two basic imperatives that overlap with each other.
Adam: (13:28)
So then what do we do? 
Patricia: (13:31)
How does one deal with an either or situation? It's tempting to get locked in this. Oh, I should do this or do that. But if we can take five minutes, just five minutes of your life and step back for a minute and think about this. All of us are pretty smart. We can figure this out,. But if we get caught in this either or, we're unable to think clearly. So we need to step back and take a pause. Take a breath if you like and think for a minute. Is there another way to solve this dilemma which doesn't sacrifice global health or financial disaster? Now I will tell you if an autobiographicallynot too long, that when I began thinking about this, I got caught in miss either or, and I know this, this isn't right, but what, what should we do? And then I came upon the writing of Paul Romer. Paul Romer is a Nobel prize economist at New York University, and he proposes what he calls and what now others are adopting with, by the way, without giving him credit, the middle pack. He said, if we spend so much money anyway, obviously a hundred million dollars right now, sorry, a hundred billion dollars right now and get masks for everyone, which we don't have,as you know, in this country and testing equipment and test, test, test everyone. Everyone gets tested and protect ourselves. That is wear mask, wear protective gear. We can all go back to work. He says, and this is a quote from him, so at offices, manufacturing plants, service organizations and even restaurants where every employee manager and customer will be tested. So you'll be tested as you enter the restaurant, you'lltemperature will be taken. And if we all wear protective gear, commerce can can begin. He says at the rate it was before the outbreak. Now that may be optimistic, but it certainly can go ahead with this. And interestingly, the center for disease control and some other experts have arguing,wWe need, think of this 30 million tests a week. Now there's what, 330 million people that's country give or take or maybe off a little. So that would take a 10 11, maybe 11, 12 days to test everyone. But right at the moment we can't do that because we don't have enough testing kits. By the way, interestingly, we have plenty of labs. Universities have labs that are underutilized at the moment. There are labs that are all over the country. That could be doing testing. All they need is the equipment to do so. And of course, all we need to see equipment to be tested as well. So this can be done. This isn't some wild idea, but it's something that we really can do and we can do it well. 
Adam: (16:31)
Do you think people would actually go for that? The governments and everybody and the local governments would actually go with that plan? 
Patricia: (16:38)
I actually do because I think we're all, I think particularly, I think most of us are afraid. We don't say that, I think, but we know, for example, employees who could go back to work and are afraid to, we see that in the meat packing industry because there's been so much virus in those meat packing plants because they're so close together. It's not really the plant's fault, it's just the way it is that we see employees who don't want to go back, even though they have jobs and because they're afraid. And they should be afraid because of the last enormous infections in those plants. Interestingly, Volkswagen, we all know  Volkswagen are in Germany now has opened a factory again to make cars. And this time you at home, before you go to work, you get dressed up in protective gear. When you get there, your temperature is taken. If you have a temperature, of course you go home, you come into a protected absolutely clean factory that's been cleaned during the, between shifts. Then you take your shift but you're put six feet apart, you wear protective gear and masks if you get any closer to anyone. And then they have, so they've slowed down the assembly line obviously, but then they have a lot of robots and they of course don’t get the virus. And then between shifts they take a long break. Usually it's just, you know, five or 10 minutes, they take a long break, reclean the place and then start again with new people who have been tested. And I think, I haven't gotten the latest report, but they're going to try this, and I think that that work, that will work. And we can do this and I think people will be if they can go back to work and know that they're going to be fairly safe. If I can go out to a restaurant of desperate of course to go to a restaurant, if I can know I could go to a restaurant and I won't get ill. If I can walk down the street and say hello to people instead of ducking under my mask. I think people want to do that, but they want to be safe as well. So I, I'm pretty convinced and I know we can do it. We have the capability to do this. We haven't done it yet, but we can do it. So just to conclude, notice that when we're stuck in an either or situation, there are solutions to this and I think this is a solution that will address both the pandemic and the financial disaster that is going to continue to occur if we don't go back to work. But Romer argues, and I agree with him, that if we do one path, if we only focus on health or we only focus on finance, that will probably fail at both of these. 
Announcer: (19:28)
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