The scenario of the video focuses on the conflict of interest and proposes means to encourage moral behavior. The video provides plenty of examples that center around the conflicting incentives, which always leads to a poor outcome at some point (McCombs School of Business, 2019). Most vivid cases include episodes where people face a dilemma at the workplace. Sometimes incentives may seem too weak, and people do not perform their duties properly as a result. Therefore, it is of major importance not only to enforce the law but to promote codes of conduct for most professions and ethical behavior in general.
The Nature of Ethics
Society as a whole is based on numerous patterns of behavior determined by incentives that are instrumental in ensuring the wellbeing of an individual, a community, a nation. Those incentives are thoroughly designed in a way that helps people prioritize one option over another. This situation is most vivid in the case of professions which have codes of conduct when people are expected to act in an honest, straightforward way by society.
The examples provided by the video include doctors, real estate agents, and professors. Although most doctors prioritize their patients’ health and treat all of them equally, some may find it difficult to resist the desire to earn more by paying more attention to wealthy patients and promoting certain types of drugs for a reward by a pharmaceutical company. Real estate agents in many states can represent both the buyer and the seller, which undermines the original incentive of providing the client with the best option on the market. University professors generally want to be popular among students, as it leads to promotion in most cases. Therefore, some professors may deliberately make their courses easier in order to attract students who seek high grades and low workload.
Ethics in Investment
Investors who have the skills to convince people to give them sufficient amounts of money face a similar dilemma. A large number of Ponzi schemes have been set up since the 1920s. They led to numerous disastrous outcomes not only for thousands of people but for the founders as well. Nevertheless, people continue to start companies that often grow to become mighty corporations by luring people with returns, which are much higher than usual. Carlson (2019) describes the recent case of Bernie Madoff, which proves how widespread this practice is and raises concerns over the ethical principles which serve as the basis of this profession. In 2008, this prominent investor’s history was unveiled, and he turned out to be not only the founder of NASDAQ but also the founder of the longest-running Ponzi scheme. However, numerous investors who enjoy virtually the same level of trust and secrecy select another means to acquire wealth. Warren Buffett, for instance, chose a much more sustainable approach when starting a company.
From the very beginning, Warren Buffett worked alone and needed absolute control over the money. Moreover, Crippen (2008) claims that Buffet did not tell his partners anything and proposed a scheme in which investors could put money in or withdraw it only on December 31. People used to trust both Bernie Madoff and Warren Buffett. Nevertheless, only in 2008, it became clear the latter generated billions of dollars, while the former destroyed similar wealth.
Both investors might have seemed to have a lot in common for a person who was eager to invest. Maranjian (2017) notes that both of them seemed to offer too-good-to-be-true returns while enjoying secrecy. These two factors are usually a reliable warning sign and point at high risks (if not frauds) associated with the whole enterprise. Nevertheless, the difference between the two approaches becomes vivid when one looks at the clientele, and the way it was originally treated. Warren Buffet did not provide the investors with much information except for an annual letter to shareholders. However, those letters contained a full analysis of all the financial operations and earnings, which proved to be reliable and beneficial for encouraging future investors to pour money. Moreover, the first investors who trusted Buffett and believed in his abilities were his family and friends, who invited other investors. Thus, from the very beginning, Buffett’s undertaking was based on trust.
Buffett and Madoff faced the same dilemma but chose completely different paths. Warren Buffet used to say: “Lose money for the firm, even a lot of money, and I will be understanding; lose reputation for the firm, even a shred of reputation, and I will be ruthless” (Byars & Stanberry, 2018, p. 16). He has praised reputation and emphasized the importance of encouraging ethical business behavior on a personal level numerous times in his interviews. Therefore, the prominent investor provides an example that such an attitude is not only generally good but is also lucrative in the long run.
Professional Ethics
Introducing more regulations or codes of conduct should be considered a great tool for discouraging people from taking false actions in the future. The sums of money modern investors allocate make the profession an extremely important one. Society should reinvent the core of this profession and promote different approaches when it comes to holding responsibility for the future of thousands of people.
Moreover, some professions require deontological ethics, which emphasize people’s actions, not the consequences of these actions. Stealing, telling lies, and breaking promises are considered to be bad things by definition in duty-based ethics. Therefore, outcomes, according to deontological ethics, cannot justify actions. Such an approach should be adopted by numerous professions, as workers cannot take full responsibility and conceal the truth even if they have good intentions and are sure that their strategy can succeed. Concealing the truth from the client can be especially harmful now, as many spheres of people’s lives are controlled by data-driven technologies. A doctor, for instance, should provide full information to the client as soon as he/she gets it, as only the patient can make decisions concerning his/her health. Moreover, sometimes patients are the only ones who possess full health information. That is why always doing the right thing frees from the uncertainty, which is an integral part of consequentialist ethical theories (“Introduction to ethics,” n.d.). Setting rules for certain professions has already proven to be instrumental in maintaining the proper functioning of major institutions, which form the cornerstone of society.
Conclusion
Being rewarded for performing actions that result in the outcomes that are beneficial for other people and humanity as a whole is one of the basic principles of capitalism. Imitating hard work while searching for illegal paths to acquire riches undermines the core of any society. Thinking about one’s future and the legacy left behind encourages people to always prefer doing the right thing. Thus, it is important to institutionalize such an attitude and promote being creative and industrious in an honest and straightforward way using codes of conduct, visual symbols, and other tools which have been historically used by many societies.
References
Byars, S. M, & Stanberry, K. (2018). Business ethics. OpenStax.
Carlson, R. (2019). What Bernie Madoff did and who he defrauded. The Balance Small Business. Web.
Crippen, A. (2008). Warren Buffett: People thought “I was doing some sort of Ponzi scheme.” CNBC. Web.
Introduction to ethics: Duty-based ethics. (n.d.). BBC. 2020, Web.
Maranjian, S. (2017). What Buffett and Madoff have in common. The Motley Fool. Web.
McCombs School of Business. (2019). Concepts unwrapped: Conflict of interest [Video]. YouTube. Web.