Ethics in a Flat World

The Case of Wal-Mart and the Chinese Connection

Teri Shaffer Yamada, 7 May 2007

Mapping the Problem

“Flat World” : metaphor of the trend in ‘extreme cheating’

-Frankfurt’s “On Bullshit” as the antidote The social content of cheating within the U.S. since the 1980sThe winners and losers of the global greed game

- winners: multinational corp./Wal-mart, etc.

- losers: workers and the U.S. middle class

- the ethics of winning and loosing Extreme cheating as a “flat world” trend

-Cheating in China

--Student cheating in the U.S.

Thomas L. Friedman, “The World is Flat: A Brief History of the

Twenty-First Century” (2005)

Thomas L. Friedman, “The World is Flat: A Brief History of the

Twenty-First Century” (2005) “Because it is flattening and shrinking the world,

Globalization 3.0 is going to be more and more driven not only by individuals but also by a much more diverse -- non-Western, non-white -- group of individuals. Individuals from every corner of the flat world are being empowered. Globalization 3.0 makes it possible for more people to plug in and play, and you are going to see every color of the human rainbow take part.” (p. 11)

“And the phenomenon that is enabling, empowering, and enjoining individuals and small groups to go global so easily and so seamlessly is what I call the flat-world platform…: The flat-world platform is the product of a convergence of the personal computer (which allowed every individual suddenly to become the author of his or her own content in digital form) with fiber-optic cable (which suddenly allowed all those individuals to access more and more digital content around the world for next to nothing) with the rise of work flow software, which enabled individuals all over the world to collaborate on that same digital content form anywhere, regardless of the distances between them. “ (p. 10) 2005

“Because it is flattening and shrinking the world, Globalization 3.0 is going to be more and more driven not only by individuals but also by a much more diverse -- non-Western, non-white -- group of individuals. Individuals from every corner of the flat world are being empowered. Globalization 3.0 makes it possible for more people to plug in and play, and you are going to see every color of the human rainbow take part.” (p. 11)

“And the phenomenon that is enabling, empowering, and enjoining individuals and small groups to go global so easily and so seamlessly is what I call the flat-world platform…: The flat-world platform is the product of a convergence of the personal computer (which allowed every individual suddenly to become the author of his or her own content in digital form) with fiber-optic cable (which suddenly allowed all those individuals to access more and more digital content around the world for next to nothing) with the rise of work flow software, which enabled individuals all over the world to collaborate on that same digital content form anywhere, regardless of the distances between them. “ (p. 10) 2005

January 28, 2007, NY Times Bestseller List

#9 “The World Is Flat” (93 weeks on the list)

Ronald Aronica & Mtetwa Ramdoo,“The World is Flat ? A Critical Analysis of Thomas L. Friedman’s New York Times

Bestseller“ (2006)

Ronald Aronica & Mtetwa Ramdoo,“The World is Flat ? A Critical Analysis of Thomas L. Friedman’s New York Times

Bestseller“ (2006)

Friedman misrepresents David Ricardo’s theory of comparative advantage and Nobel Prize winner of Economics Joseph Siglitz’ theory on the impossibility of a free market.

“With all due respect to Tom Friedman, there’s nothing flat about this unbalanced global economy. Clearly, the Chinese producer on the supply side and the American consumer on the demand side are the two major engines of the world economy. In a flat world, these two engines would be working together in near perfect harmony. In today’s world, however, they are like passing ships in the night -- cruising full speed ahead on their own journeys in increasingly choppy seas. Globalization at this point in time is far more about disparities between nations than the assimilation of a flat world.”

Steven Roach, Chief Economist, Morgan Stanley

Friedman misrepresents David Ricardo’s theory of comparative advantage and Nobel Prize winner of Economics Joseph Siglitz’ theory on the impossibility of a free market.

“With all due respect to Tom Friedman, there’s nothing flat about this unbalanced global economy. Clearly, the Chinese producer on the supply side and the American consumer on the demand side are the two major engines of the world economy. In a flat world, these two engines would be working together in near perfect harmony. In today’s world, however, they are like passing ships in the night -- cruising full speed ahead on their own journeys in increasingly choppy seas. Globalization at this point in time is far more about disparities between nations than the assimilation of a flat world.”

Steven Roach, Chief Economist, Morgan Stanley

Ronald Aronica & Mtetwa Ramdoo’s Antidote:

Moral Philosopher Harry G. Frankfurt’s “On Bullshit”

Princeton University Press, 2005

Ronald Aronica & Mtetwa Ramdoo’s Antidote:

Moral Philosopher Harry G. Frankfurt’s “On Bullshit”

Princeton University Press, 2005 Indifference to how things really are is “the essence of

bullshit” (9). Bullshitting is closer to bluffing than telling a lie. “Lying and

bluffing are both modes of misrepresentation or deception.” The essence of bullshit is not that it is false but that it is phony (46).

[The bullshitter] is neither on the side of the true nor on the side of the false. His eye is not on the facts at all, as the eyes of the honest man and of the liar are, except insofar as they may be pertinent to his interest in getting away with what he says. He does not care whether the things he says describe reality correctly. He just picks them out, or makes them up, to suit his purpose (56)

Through excessive indulgence in the latter activity (bullshitting), which involves making assertions without paying attention to anything except what it suits one to say, a person’s normal habit of attending to the ways things are may become attenuated or lost….He does not reject the authority of the truth, as the liar does, and oppose himself to it. He pays no attention to it at all. By virtue of this, bullshit is a greater enemy of the truth than lies are (61)

Indifference to how things really are is “the essence of bullshit” (9).

Bullshitting is closer to bluffing than telling a lie. “Lying and bluffing are both modes of misrepresentation or deception.” The essence of bullshit is not that it is false but that it is phony (46).

[The bullshitter] is neither on the side of the true nor on the side of the false. His eye is not on the facts at all, as the eyes of the honest man and of the liar are, except insofar as they may be pertinent to his interest in getting away with what he says. He does not care whether the things he says describe reality correctly. He just picks them out, or makes them up, to suit his purpose (56)

Through excessive indulgence in the latter activity (bullshitting), which involves making assertions without paying attention to anything except what it suits one to say, a person’s normal habit of attending to the ways things are may become attenuated or lost….He does not reject the authority of the truth, as the liar does, and oppose himself to it. He pays no attention to it at all. By virtue of this, bullshit is a greater enemy of the truth than lies are (61)

Social ContextU.S. in the ‘80s and Beyond: the Age of

Dissimulation

Social ContextU.S. in the ‘80s and Beyond: the Age of

Dissimulation “…in the midst of the '80s bull market, there were few films that didn't play up the money-happiness connection. One of the few that went against the grain was Oliver Stone's "Wall Street" (1987), which placed Charlie Sheen's low-level stock trader in the world of avaricious tycoon Gordon Gekko (Michael Douglas).

Thanks to Douglas' magnetic Oscar-winning performance, however, Gekko became the character everyone remembered, and his "Greed is good" speech -- "Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit" -- was quoted endlessly, and sometimes seriously.

Indeed, the '80s had a way of reflecting all sides of the looking glass. Pop culture mixed with real life as never before. Jokes became serious; the serious was tossed off as a joke. The zeitgeist tended to move forward, back upon itself and do a 180.

As satirist Paul Slansky wrote in his diary of the decade, "The Clothes Have No Emperor," ["My book] is the response of ... an observer whose very sanity was threatened by the ease with which illusion -- an actor is playing the president! -- was embraced as reality.”(President loomed over the '80s, an era at odds with itself”By Todd LeopoldCNNWednesday, June 16, 2004 Posted: 1:28 PM EDT (1728 GMT)

Zeitgeist: Greed Rules in an Alice in Wonderland World

“…in the midst of the '80s bull market, there were few films that didn't play up the money-happiness connection. One of the few that went against the grain was Oliver Stone's "Wall Street" (1987), which placed Charlie Sheen's low-level stock trader in the world of avaricious tycoon Gordon Gekko (Michael Douglas).

Thanks to Douglas' magnetic Oscar-winning performance, however, Gekko became the character everyone remembered, and his "Greed is good" speech -- "Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit" -- was quoted endlessly, and sometimes seriously.

Indeed, the '80s had a way of reflecting all sides of the looking glass. Pop culture mixed with real life as never before. Jokes became serious; the serious was tossed off as a joke. The zeitgeist tended to move forward, back upon itself and do a 180.

As satirist Paul Slansky wrote in his diary of the decade, "The Clothes Have No Emperor," ["My book] is the response of ... an observer whose very sanity was threatened by the ease with which illusion -- an actor is playing the president! -- was embraced as reality.”(President loomed over the '80s, an era at odds with itself”By Todd LeopoldCNNWednesday, June 16, 2004 Posted: 1:28 PM EDT (1728 GMT)

Zeitgeist: Greed Rules in an Alice in Wonderland World

While about 20% of college students admitted to cheating in high school during the 1940's, today between 75 and 98% of college students surveyed each year report having cheated in high school.

Students who cheat often feel justified in what they are doing. They cheat because they see others cheat and they think they will be unfairly disadvantaged. The cheaters are getting 100 on the exam, while the non-cheaters may only get 90's. Cheating is seen by many students as a means to a profitable end.

Research about cheating among middle school children (Ages 12-14) has shown that: There is increased motivation to cheat because there is more emphasis on grades; Even those students who say it is wrong, cheat; If the goal is to get a good grade, they will cheat.

According to the 1998 poll of Who's Who Among American High School Students, 80% of the country's best students cheated to get to the top of their class. More than half the students surveyed said they don't think cheating is a big deal – and most did not get caught.

Cheating does not end at graduation. For example, résumé fraud is a serious issue for employers concerned about the level of integrity of new employees.

While about 20% of college students admitted to cheating in high school during the 1940's, today between 75 and 98% of college students surveyed each year report having cheated in high school.

Students who cheat often feel justified in what they are doing. They cheat because they see others cheat and they think they will be unfairly disadvantaged. The cheaters are getting 100 on the exam, while the non-cheaters may only get 90's. Cheating is seen by many students as a means to a profitable end.

Research about cheating among middle school children (Ages 12-14) has shown that: There is increased motivation to cheat because there is more emphasis on grades; Even those students who say it is wrong, cheat; If the goal is to get a good grade, they will cheat.

According to the 1998 poll of Who's Who Among American High School Students, 80% of the country's best students cheated to get to the top of their class. More than half the students surveyed said they don't think cheating is a big deal – and most did not get caught.

Cheating does not end at graduation. For example, résumé fraud is a serious issue for employers concerned about the level of integrity of new employees.

U.S. Student Cheating Trends

Educational Testing Services, “Academic Cheating Fact Sheet,” 1999

U.S. Student Cheating Trends

Educational Testing Services, “Academic Cheating Fact Sheet,” 1999

Social Consequences

Social Consequences

“Cheating…is no longer the exclusive purview of lowlife criminals…Now everyone's doing it and because everyone sees everyone else doing it, they keep on doing it. Callahan says the trouble begins in America's brutally competitive economic climate, which rewards results and looks the other way when it comes to the ethical and even criminal transgressions of those who come out on the winning end. Certainly there is no shortage of examples of cheating from the business community, and Callahan nimbly dissects the dishonest actions of the usual suspects (Enron, WorldCom, Global Crossing) to demonstrate how that same mentality extends out to our educational system....Further, Callahan posits that otherwise upright folks who would not cheat are drawn into the practice out of fear that they simply won't be able to make it in modern society otherwise.”(Amazon.com, John Moe, Editorial Review; The Cheating Culture, David Callahan, 2004)

“With revelations of corporate accounting scandals dominating the news in the summer of 2002, United States Federal Reserve Chairman Alan Greenspan told a Senate banking committee in Washington that leaders of America’s business community appeared to be in the grip of “infectious greed.”(Robert Frank, What Price the Moral High Ground? Ethical Dilemmas in Competitive Environments 2004, vi)

THE WINNERS: Flat WorldersMultinational corporations (Wal-Mart) : their lobbyists, CEOS, upper-level

management, stock-holders

“In 1985, amid anxiety about trade deficits and the loss of American manufacturing jobs, Walton launched a ‘Made in America’ campaign that committed Wal-Mart to buying American-made products if suppliers could get within 5 percent of the price of a foreign competitor.…’Dateline NBC’ produced an expose on the company's sourcing practices. Although Wal-Mart's ‘Made in America’ campaign was still nominally in effect, ‘Dateline’ showed that store-level associates had posted ‘Made in America’ signs over merchandise actually produced in far away sweatshops.”(Washington Weekly 4/01/06)

“The world's largest retailer, Wal-Mart Stores Inc, says its inventory of stock produced in China is expected to hit US$18 billion this year (2004)…. More than 5,000 Chinese Enterprises have established steady supply alliances with Wal-Mart. Insiders point out Wal-Mart's imports from China have largely influenced the US trade deficit in China, which is expected to reach US$150 billion this year.” (China Business Weekly. 2004)

THE WINNERS: Flat WorldersMultinational corporations (Wal-Mart) : their lobbyists, CEOS, upper-level

management, stock-holders

“In 1985, amid anxiety about trade deficits and the loss of American manufacturing jobs, Walton launched a ‘Made in America’ campaign that committed Wal-Mart to buying American-made products if suppliers could get within 5 percent of the price of a foreign competitor.…’Dateline NBC’ produced an expose on the company's sourcing practices. Although Wal-Mart's ‘Made in America’ campaign was still nominally in effect, ‘Dateline’ showed that store-level associates had posted ‘Made in America’ signs over merchandise actually produced in far away sweatshops.”(Washington Weekly 4/01/06)

“The world's largest retailer, Wal-Mart Stores Inc, says its inventory of stock produced in China is expected to hit US$18 billion this year (2004)…. More than 5,000 Chinese Enterprises have established steady supply alliances with Wal-Mart. Insiders point out Wal-Mart's imports from China have largely influenced the US trade deficit in China, which is expected to reach US$150 billion this year.” (China Business Weekly. 2004)

Who’s Winning? Who’s Loosing the

Greed/Cheating Game?

Who’s Winning? Who’s Loosing the

Greed/Cheating Game?

Local Losers: American Middle Class

Local Losers: American Middle Class

Rising Gap in Wealth, Increasing Work Hours, Stagnant Wages, and More Stress

“The consistent trend is one of a shrinking proportion of families with middle incomes, and an even faster decline in neighborhoods with middle-income character. Only 23 % of central-city neighborhoods in the 12 large metropolitan areas had a middle-income profile in 2000, down from 45 % in 1970.” (“Where Did They Go? The Decline of Middle Income Neighborhoods in Metropolitan America,” Brookings Institute, 2006).

“The wealthy segment of society is growing, as is the impoverished segment, but the middle-income bracket is starting to hollow out. According to the U.S. Census Bureau, the number of employed Americans who earned between $25,000 and $75,000 fell in 2003, and the number of people earning both more and less than that increased. The number living below the official poverty line climbed by 1.3 million in 2003, to 35.9 million Americans. Overall, real wages—that is wages minus inflation--have been either stagnant or falling across the U.S. economy , while in some areas of manufacturing that decline has been striking.”

(China Shakes the World [2006] 126) “American workers are working harder and longer than they have in the past two decades just to maintain their standard of living. The predictable result, according to experts who took part in the recent "Work, stress and health '99" conference in Baltimore is a workforce more at risk than ever for psychological, physical and behavioral health problems.”

(“Worker Stress, Health Reaching Critical Point: A Joint Conference of APA and NIOSH Finds the landscape of Occupational Health Changing for the Worse” APA Monitor 30:5 [1999] online.)

Outsourcing of ‘White-Collar’ Jobs: A Flat World Trend

Corporations looking globally for knowledge workers….

Tom Lynch, director for global employee relations for IBM: “By 2015, we’re going to see over 3 million U.S. jobs move off shore. We’re looking for an emerging trend to move services abroad. Some of those services include engineering, financial services, accounting, places like India can do book- keeping for the fraction of the cost in the U.S.” (“When no job is safe,” On Point public radio program, aired July 24, 2003)

“White collar jobs, those requiring a college degree, can be outsourced overseas as well,” notes Jim Zarroli, National Public Radio business reporter.He reports that India alone receives some $13 billion in income from out-sourcing jobs from other countries. ( Nine Shift: Work, Life and Education in the 21st Century [2007] 186)

“The U.S. is the world’s most prolific outsourcer, with companies such as IBM and General Electric running huge operations in countries such as India where their software development of transaction processing activities are carried out for third world wages,” writers reporter Lesley Stones in the Johannesburg (South Africa) Business Day . ( Nine Shift: 186)

Outsourcing of ‘White-Collar’ Jobs: A Flat World Trend

Corporations looking globally for knowledge workers….

Tom Lynch, director for global employee relations for IBM: “By 2015, we’re going to see over 3 million U.S. jobs move off shore. We’re looking for an emerging trend to move services abroad. Some of those services include engineering, financial services, accounting, places like India can do book- keeping for the fraction of the cost in the U.S.” (“When no job is safe,” On Point public radio program, aired July 24, 2003)

“White collar jobs, those requiring a college degree, can be outsourced overseas as well,” notes Jim Zarroli, National Public Radio business reporter.He reports that India alone receives some $13 billion in income from out-sourcing jobs from other countries. ( Nine Shift: Work, Life and Education in the 21st Century [2007] 186)

“The U.S. is the world’s most prolific outsourcer, with companies such as IBM and General Electric running huge operations in countries such as India where their software development of transaction processing activities are carried out for third world wages,” writers reporter Lesley Stones in the Johannesburg (South Africa) Business Day . ( Nine Shift: 186)

And Their Future?And Their Future?

The Historical Context of Cheating

All of the world’s great religions have injunctions against greed and its potential companions, cheating and lying:

“If the merchant cheat the agent, in that as the latter has returned to him all that had been given him, but the merchant denies the receipt of what had been returned to him, then shall this agent convict the merchant before God and the judges, and if he still deny receiving what the agent had given him shall pay six times the sum to the agent.” #107 Code of Hammurabi c. 1810 bce.

Saint Augustine, “On Lying” (De Mendacio) 395 A.D.

What about China? In the Past…

The (bureaucratic) exam system (in place since the Han dynasty) contained the seeds of corruption, and corruption did occur, in spite of elaborate preventive measures. In one scheme in the mid-19th century, code words allowed examiners to identify favored candidates, whose poor papers could be then replaced with promising ones. The offending examiners were caught and beheaded, and the cheating candidates lost all the qualifications previously gained. Some candidates armed themselves with miniature copies of the Confucian classics. One candidate even wore an undershirt covered with some 500, 000 Hanzi the Confucian Five Classics and Four Books with commentaries .(http://mmtaylor.net/Literacy_Book/DOCS/pt1.html)

The Historical Context of Cheating

All of the world’s great religions have injunctions against greed and its potential companions, cheating and lying:

“If the merchant cheat the agent, in that as the latter has returned to him all that had been given him, but the merchant denies the receipt of what had been returned to him, then shall this agent convict the merchant before God and the judges, and if he still deny receiving what the agent had given him shall pay six times the sum to the agent.” #107 Code of Hammurabi c. 1810 bce.

Saint Augustine, “On Lying” (De Mendacio) 395 A.D.

What about China? In the Past…

The (bureaucratic) exam system (in place since the Han dynasty) contained the seeds of corruption, and corruption did occur, in spite of elaborate preventive measures. In one scheme in the mid-19th century, code words allowed examiners to identify favored candidates, whose poor papers could be then replaced with promising ones. The offending examiners were caught and beheaded, and the cheating candidates lost all the qualifications previously gained. Some candidates armed themselves with miniature copies of the Confucian classics. One candidate even wore an undershirt covered with some 500, 000 Hanzi the Confucian Five Classics and Four Books with commentaries .(http://mmtaylor.net/Literacy_Book/DOCS/pt1.html)

“Extreme” Cheating As a Flat-World Trend

“Extreme” Cheating As a Flat-World Trend

The vast industry for counterfeit products and the violation of intellectual property rights…is part of the general crisis. But the problem goes much deeper than that. The influence of artifice is almost omnipresent, and identity is an item to be bought and sold. In Beijing and other cities, the cell phone numbers scrawled with spray paint on walls and under overpasses have been put there by scam artists advertising fake papers -- residence permits, work permits, university degrees, identity cards, you name it. A whole identity makeover with a Ph.D. in rocket science can be bought for less than $100. People use these to assume new identities, launder a dubious past, and secure city jobs.

In a nation where a uniform bestows unquestioning respect, the number of people impersonating police and military officers is astonishing. Beijing authorities said that in the five years up to 2002, they had apprehended more than 10,000 phony police officers in the capital, along with 320,000 fake uniforms, badges, and weapons.

(James Kynge, China Shakes the World, 2006, 163-4)

The vast industry for counterfeit products and the violation of intellectual property rights…is part of the general crisis. But the problem goes much deeper than that. The influence of artifice is almost omnipresent, and identity is an item to be bought and sold. In Beijing and other cities, the cell phone numbers scrawled with spray paint on walls and under overpasses have been put there by scam artists advertising fake papers -- residence permits, work permits, university degrees, identity cards, you name it. A whole identity makeover with a Ph.D. in rocket science can be bought for less than $100. People use these to assume new identities, launder a dubious past, and secure city jobs.

In a nation where a uniform bestows unquestioning respect, the number of people impersonating police and military officers is astonishing. Beijing authorities said that in the five years up to 2002, they had apprehended more than 10,000 phony police officers in the capital, along with 320,000 fake uniforms, badges, and weapons.

(James Kynge, China Shakes the World, 2006, 163-4)

And Cheating in China Now?And Cheating in China Now?

And Cheating in China Now?And Cheating in China Now? The Perfection of FakeChina is the epicenter of the counterfeits boom…Just a few years ago, counterfeiting was all Gucci bags and fake perfume. Now it’s everything… from cigarette lighters to automobiles to pharmaceutical fakes that can endanger a life. I would bet that there are companies in this country [the U.S.] that don’t even know they’re getting screwed around the world.

(Frank Vargo, VP of International Economic Affairs National Association of Manufacturers.)

As worldwide production of counterfeit goods has leaped by 1,700% since 1993, China accounts for two thirds of all the world’s pirated and counterfeited goods and fully 80% of all counterfeit goods seized at U.S. borders.

Fake Books: “Harry Potter and Leopard Walk up to Dragon” attributed to J. K. Rowling (24)

Fake Car Parts: As reported in Automotive News, some of the ‘many horror stories’ include “brake linings made of compressed grass, sawdust or cardboard, transmission fluid made of cheap oil that is dyed; and oil filters that use rags for the filter element” (29)

Fake Pharmaceuticals: “China’s highly skilled pirates are able to produce the so-called blister packaging, vacuum-formed clamshells, fake holograms, and distinctive pills so artfully and faithfully that drug companies typically can only detect fakes by using complex lab testing.” (33) (Peter Navarro, The Coming China Wars, 2006)

In the context of unregulated China’s population and employment pressures,counterfeiting is being smart.