Greed and indeed all unethical actions might seem like a good idea at the time, but in the long run they’ll normally end badly. In this article I tell the story of a number of such examples involving both large and small organizations and reflect on possible impacts.

The Folly of Greed-mp3 ~ Left click to listen ~ Right click to download – 17.04 mins

The start of February 2019 saw the tropical provincial Australian city of Townsville inundated by a catastrophic storm event that was reported world-wide. Day after day the rain continued resulting in flood waters the like of which had never been seen before.  Some reports said it was a 1 in a 100 year flood, while others said it was a 1 in a 1000 year event. Sadly with climate change, events like this will be far more common.

For over two weeks the rain continued to pour down leaving thousands of people having to evacuate their damaged homes and many homes were completely destroyed by the savage flood waters. Crocodiles were seen roaming the streets searching for food as their normal food habitats had been washed away. And snakes were common swimming up and down the flooded streets.

And when the rain stopped and people began the clean-up at least one person died and ten others were hospitalised due to a deadly bacteria found in all the remaining mud. Of the thousands of affected families many have been told by their insurance companies that they were only covered for storm damage and not flood damage, despite the fact that the flooding was caused by a storm.

I could go on about the devastation in Townsville, but that’s sufficient to give you an idea of what those poor (or should that be pour) people are going through.  And that brings me to the point of this story—the folly of greed.

With so many people now homeless and penniless, reports are coming through of people in desperate need of rental accommodation—which is no surprise. But what was surprising was that unscrupulous property owners were attempting to charge these people exorbitant rents for the scarce accommodation. With a normal average rental price in Townsville being around $300 per week, people were now asking $800 to $1000 per week, which is unconscionable.

 

Reflection

In the late-1990s I put together a maxim for my MBA (Master of Business Administration) Business Ethics students, to always consider. It sums up ethical/unethical conduct and it’s always rung true. It goes like this:

Ethical actions can often entail short-term pain, but will always result in long-term gains. By contrast, unethical actions frequently have short-term gains, which make them so attractive. But I guarantee that unethical actions will eventually result in some form of long-term pain and ultimate collapse, frequently in unexpected ways.

I could leave this article at that. But keeping that maxim in mind, I’ll go on and give a couple of examples of how that edict played out in the past.

The first of these examples occurred in 2006. I was living in a little remote rural village in Far North Queensland and we were hit by a destructive cyclone, Cyclone Larry. The town was without electricity for about a week and because I lived out of town I was without power for over 3 weeks such was the damage of the cyclone.

But the town did have two places where petrol/gasoline could be purchased.  One was a normal albeit very tiny petrol station with two pumps in the main street.  The other was an engineering workshop in a side street, but they also had two petrol pumps. The other thing the engineering workshop had was a generator. And so they could use their generator to provide power to the petrol pumps and so were able to sell petrol while everyone else was closed. Needless to say within a couple of days after Larry went through the line of cars queued up to buy petrol from the engineering place went right down the street and around the corner.

However, the owners of the engineering place decided that the, often unethical, law of supply and demand should come into play.  And keeping in mind my maxim “unethical actions frequently have short-term gains” they first doubled the price per litre for the fuel.  Then they refused to give anyone any change, which I’m not even sure was legal.  But it was certainly unethical. So say the inflated price of the fuel you got showed up on the pump as $17.27 and you only had a $20 bill. They’d take the twenty dollars and not give any change.

Now first of all it would have been bad enough to have done that sort of thing in a big city where a large percentage of the population would be unaware of what you’d done.  But to do something like that in a small village where everyone knows and talks with everyone else is just plain stupid.

And so again as per my maxim—“unethical actions will eventually result in some form of long-term pain and ultimate collapse”.

Eventually the electricity came back to the town and the normal little petrol station in the main street was back in business. And from that day, not only did the local community refuse to buy petrol from the engineering place, but they also preferred to drive the 100 kilometre return journey to the next town to get any engineering work done there. Within 12 months the once thriving engineering place had gone broke and had to be sold.

 

Unethical actions will eventually result in some form of long-term pain and ultimate collapse

 

Now the same maxim applies to the same unethical actions occurring every day in major corporations. And the poster child there is ENRON, where not only did the company collapse but a number of executives rightly went to jail.

And again in Australia a Royal Commission investigating our banking and financial industry has recently concluded. A Royal Commission is the highest level of public inquiry, commissioned by the government, into the questionable actions of institutions.

The Royal Commission brought to light some almost unbelievable and totally unethical business practices that had been going on for years and years. The underpinning issue was mainly associated with the various banks and financial institutions putting profits at all costs before the people they are in business to serve. And unlike America with all its small private banks, in Australia we only have four major banks, “the Big Four” as they’re known. And combined they have around 80% of the market share.

Now following, are but three of the numerous examples of unethical and unconscionable conduct that was exposed during the Royal Commission on almost a daily basis.

(1) Time and time again it was common practice to force high interest loans on vulnerable people who couldn’t afford to meet the repayments and so the “victim” ended up bankrupt, homeless, and destitute.

(2) Staff were bullied by management into meeting “sales” targets. And to meet their targets some staff members regularly opened fraudulent bank accounts in the names of non-existent children.

(3) But the “best” one to come to light was the regular practice of continuing to charge people substantial fees for services that had not been supplied. And just one of the reasons that the services were not supplied was that the person had been dead for years and the organisations were well aware of this.

A number of the top executives lost their jobs and we’re still waiting to see if jail terms will be imposed.

But I have no doubt these same practices are happening world-wide, including in your country. It’s the unethical “The Big Short” approach to business all over again. So perhaps it’s time for a “Royal Commission” or its equivalent, into the banking and financial industry in your country too.

 

Milton Friedman

Amazingly many of these financial industry executives clearly could not even understand that they’d done anything really wrong.  Well surely not really wrong.

This could well be because so many large organisations are still guided by the often misquoted philosophies of the free-market capitalist economist, Milton Friedman. And Friedman’s view, as it’s generally understood, is that business only has one social responsibility and that is to maximize their profits for their shareholders.

And although I do think that’s exactly what Friedman meant, his most famous quote also added:” …  so long as it stays within the rules of the game, … without deception or fraud”.  And surely charging dead people for services they cannot possibly receive is both deceptive and fraudulent.

One of Friedman’s most influential articles, “The Social Responsibility of Business is to Increase its Profits” was published in 1970 at a time when the field of “business ethics” was seen as an oxymoron. But within the next ten years that would all change.

In 1983 the notion of stakeholder theory was discussed by Ian Mitroff in his book Stakeholders of the Organizational Mind, and shortly after was popularised by R. Edward Freeman. Not only does stakeholder theory demonstrate that the social responsibility fo business is to look at all stakeholders, not just the stockholders, but it also demonstrates that if you want to maximise your profits then all stakeholders need to be taken into consideration.

 

Conscious Business

Now today we’ve taken basic stakeholder theory to an even higher level with ”Conscious Business” that once again demonstrates that acting in a “conscious” manner is not only ethical but leads to greater financial returns. Conscious business mirrors the old adage Think Globally, Act Locally, and so also includes the global community in an organisation’s stakeholders. It’s about acknowledging that while the world of business has brought many benefits to society, it’s also at the root of many, if not most, of our global problems, not the least of which is climate change. Yet it’s because business is responsible for so many of our global problems that it’s business itself that’s best placed to rectify those same problems. And it’s the organisations that sign up to a conscious approach to business that are making that choice. These are the organisations that must be applauded and supported.

As I wrote in Together, We CAN Change the World (p312), the “American financier, philanthropist, and founder of the Soros Foundation, George Soros, said: The neoliberal doctrine of economic globalization known as ‘market fundamentalism’ is as dangerous as any other kind of fundamentalism” and “a greater threat than any totalitarian ideology”. Soros says that without the recognition of the flaws in our current global capitalist system, we’re heading for a global collapse.”

Unethical actions will result in ultimate collapse, frequently in unexpected ways.

 

Soros also explains that while: “Communism abolished the market mechanism and instead imposed collective control over all economic activities. Market fundamentalism seeks to abolish collective decision-making and instead impose the supremacy of market values over all political and social values. Both extremes are wrong.”

 

The Biggest Problem

It’s true that time and time again, in the long run “unethical actions will result in ultimate collapse, frequently in unexpected ways” as evidenced by the ENRON case and so many others. However the biggest problem is that in the meantime before that “ultimate collapse” occurs, so many innocent lives of everyday people have been at best hurt or totally destroyed.

And so in closing I’ll just repeat my aphorism.

Ethical actions can often entail short-term pain, but will always result in long-term gains. By contrast, unethical actions frequently have short-term gains, which make them so attractive. But I guarantee that unethical actions will eventually result in some form of long-term pain and ultimate collapse, frequently in unexpected ways.

 

 I’d love you to share your thoughts below

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