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Business Ethics: Concepts & Cases: Chapter 6 Outline

The Ethics of Consumer Production and MarketingCONTAINS EXTREMELY FLAMABLE BUTANE GAS UNDER PRESSURE.  EXERCISE CARE IN USE.  KEEP AWAY FROM FACE WHEN IGNITING.  BE SURE FLAME IS COMPLETELY EXTINGUISHED AFTER EACH USE.  KEEP AWAY FROM HEAT OR FLAME.  DO NOT PUNCTURE OR INCINERATE.  DO NOT ATTEMPT TO REFILL.  KEEP OUT OF REACH OF CHILDREN.

Introduction

 Three Cases (5th edition)1. Cigarettes

contain an addictive substance: nicotine according to a 1996 estimate responsible for 400,000 deaths per

year more than AIDS, alcohol, car accidents, murders, suicides, illegal

drugs, and fires combined Being Aggressively advertised especially to children &

adolescents (still: despite the death of Joe Camel), minorities, and women

2. Lawn herbicides contain toxic chemicals: including dioxin 1996 study showed that post spraying levels in houses were up to

10 to 100 times greater than on the lawn!3. BIC-type lighters

occasionally explode with disastrous consequences pose risks to children from accidental ignition some 200 people/year -- 1/2 of them children -- killed in lighter

related accidents  "on balance,

the high social value placed on the safety of people and property threatened by childhood fires, the high gravity of risk, the considerable probability of risk, and the likelihood of a reasonably available alternative

may outweigh BIC's interest in producing its lighters without childproofing."

Examples (6th edition)

o Bridgestone/Firestone tires for Ford Excursions (2000-2003): over 200 killed & hundreds more injured in rollover crashes caused by tread separation on the tires.

o Herbal supplements ephedra supplements (now banned) linked to 155 deaths & serious

injuries other supplements (still available) linked to kidney failure, cancer,

heart and respiratory failure, liver failureo Miscellaneous

window blind cords with loops have killed more than 160 children by strangulation

halogen torchier floor lamps are known to have caused more than 290 fires and 25 deaths since 1992

non child-resistant disposable lighters: cause some 2400 fires resulting in 70 deaths and 480 injuries yearly (judging from a recent year)

Overview:

o Primary costs imposed by Consumer Products: Accidental injury and death: annual estimates for U.S.

20 million serious accidental injuries 100,000 deaths trending upwardly again since 1992

o Additional costs borne by consumers in 2003 = $700 billion (Consumer Product Safety Commission Estimate)

due to deceptive selling practices shoddy construction other product failures

6.1 Markets and Consumer Protection

1992 Figures (5th edition)o 585,000 injuries requiring hospital treatment inflicted on children &

adults by toys, nursery equipment, playground equipmento 322,00 people mangled using home workshop equipmento 2,055,000 people needed emergency treatment for injuries involving

home furnishings

o 3,467,000 treated for injuries involving home construction materials 2003 Auto accidents: 53,270 per week

o causing 117 deaths per dayo financial losses of $479 million per day

Laissez faire or "market" approach holds consumers will automatically be protected from injury & other loss (due to product breakdown, etc.) by the operations of free and competitive markets

o thanks to consumer sovereignty product safety features consumers want and are willing to pay for

will be produced producers will have to respond to consumer demand for safer

products or risk losing customers to others who doo government interference only interferes with the working of markets and

producers' abilities to give the consumers what they want ends up forcing costly safety features on consumers that

consumers may not really want at the costo Criticism: these free market benefits falsely assume a perfectly

competitive market Seven defining features (review)

1. distribution: numerous buyers and sellers2. openness: anyone can freely enter3. perfect information: buyers and sellers have full and perfect

information about products and prices4. interchangeable goods: goods in the market like enough to

be substitutable5. nonsubsidization: no external costs or subsidies6. rational agency: buyers and sellers are rational self

interested utility maximizers7. nonregulation: the market is unregulated

Consumers commonly have imperfect information and make irrational choices

imperfect information: often consumers do not understand the risks

due to deceptive marketing or advertising misinforming consumers about risks

or simply not informing

due to their simply lacking requisite information and expertise

rejoinder: market mechanisms will create a market for information consumers need & want

in theory it would seem consumers who want information can turn to organizations such as Consumers Union that make a business of acquiring and selling product information

in practice it's hard to make a go of selling this sort of information due to

leakage to people who don't pay: making the number of people willing to pay too few to cover the costs of acquiring the information

consumers often unwilling to pay for information because they're unable to appreciate its value before they get it

in real world such organizations only make a go of it by relying on contributions

irrational agency consumers are often irrational in assessing risks rationalizations, denial & other interfering mechanisms:

example "Cigarettes won't kill me I'll quit in a couple of years."

rational choice involves estimating probabilities & people are bad at this

irrational confidence: typically underestimate the chance of being injured by

driving, smoking, eating high cholesterol diets irrational fears: overestimate the chance of being

injured by tornados, grizzly bear attacks, suicide

bombings, etc. personal example: friend who wouldn't wear a

seatbelt because "if my car goes into the water I don't want to be tied in and unable to get out."

trusting & optimistic natures: tend to believe we think the products we buy will work not

malfunction. and we will use them aright

woman I dated (once): when I asked her, "Please, fasten your seatbelt,"

said, "Why, are you planning to have an accident?"

probabilistic fallacies gambler's fallacy: tendency to think a run of

one sort of outcome makes further outcomes of the sort less likely

example: if a coin comes up heads three times in a row people tend to think it's due to come up tails

this is irrational: if it's a fair coin odds are 50/50 regardless

if the coin isn't fair: then it's more likely to come up the same again

hasty generalization: estimating probabilities on the basis of skewed or biased or undersized samples

my uncle smoked all his life and lived to 100

so probably smoking won't hurt me people believe they exert control over purely

chance events by sitting in their lucky chair or

wearing their lucky hat pulling the arm instead of pressing the

button to turn the wheel on the slot machine

o Furthermore: Oligopoly conditions are more the norm than the exception violating conditions 1 & 2, distribution & openness even if consumers are wise enough to want safe products,

oligopolies may be unresponsive to their wants Conclusion, Limitation, & Central Issue

o Conclusion: "On balance . . . it does not seem that market forces by themselves can deal with all consumer concerns for safety, freedom from risk, and value."

o Limitation: the world can't be made perfectly safe: producers can't be expected to protect people from extremes of ignorance and foolishness

people who remove safety guards from power tools smoke while they're pouring gasoline into their lawnmowers, etc.

o Central Issue: Where does the consumer's duty to protect their own interests end and the manufacturer's duty to protect consumers' interests begin?

Three theories (going politically from right to left)

1. Contract view: places the greatest responsibility on the consumer2. "due care" places more responsibility on the producer3. social costs view: places the most responsibility on the producer

Nested character of the theories

o producer responsibilities under "social cost" include all "due care" responsibilities

o producer responsibilities under "due care" include all "contract" responsibilities

6.2 The Contract View of Businesses Duties to Consumers

Summary statemento When a customer buys a product they enter into a "sales contract" with

the firm the firm freely & knowingly agrees to give the buyer a product

with certain characteristics the consumer similarly agrees to pay a certain sum of money to

the firm for the producto Rights & Duties Created

the firm: the duty to provide a product with the specified characteristics

the consumer: the right to receive such a producto Reminder: Moral Conditions on Contractual Obligation

Without which the agreement is not really a free agreement Moral Conditions

Full knowledge: both parties have full knowledge of the terms of the agreement

Faithful representation: neither party must intentionally misrepresent other pertinent facts

No undue influence: neither party must enter the contract under duress or undue influence.

Consequent four main moral duties of a business to its customers

1. Compliance: to comply with the terms of the contract2. Disclosure: to fully disclose the nature of the product

3. True representation: not to misrepresent the nature of the product or agreement

4. No undue influence: not to persuade the customer to buy under duress.

The Duty to Comply

Most basic duty that a business owes its customerso to provide the customer with a product that lives up to those claims

the business expressly made about it which induced the customer to buy it

o plus any reasonably implied claims which formed the customers understanding of what they were

purchasing and led to freely contract to buy it Sturdivant's list of key types of implied claims as concerning

Reliability Service Life Maintainability Safety

Reliability: concerns whether the product will function as the customer has been led to expect

o Issue concerning devices containing many interdependent components the more interdependent components a product incorporates the greater reliability is demanded of each component since the probability of the whole functioning correctly is the

product of the parts. example a unit with four components each with a 10% chance of

failing has a 34% chance of failing: .9 * .9 * 9 * .9 = .66 Service Life: concerns the length of time the product will continue to function

effectively in the manner in which the customer has been led to understand it will function.

o Understandings concerning service life: customer generally expected to understand that service life will

depend on use: on the amount of wear and tear the customer subjects the product to

can rely on explicit guarantees from the manufacturer or seller obsolescence: seller who knows that a product will become

obsolete has a duty to correct any mistaken beliefs the buyer may be

expected to form concerning the service life that may be expected

Maintainability: concerns how easily the product can be kept in operating condition and repaired (if needs be)

o Frequently such claims are spelled out in express warrantieso Implicit claims by the seller of continued maintainability after the

warranty expires implied by the seller reasonably understood by the buyer

Product Safety: concerns the degree of risk associated with using the product.o Acceptable known levels of risk is the operative concept

no product is absolutely risk free the issue is what levels of risk are acceptable or reasonable

o A product is safe if its attendant risks are known and judged to be acceptable by the buyer in view of the benefits the buyer has been led to believe they will

obtain from the producto obligation of the seller: to provide a product that involves only those

risks they represent it to the customer as havingo National Product Safety Commissions Checklist: a risk is unreasonable

when consumers do not know it exists though aware of it, they are unable to properly estimate its

frequency or severity consumers don't know how to cope with it & are thus likely to

incur harm unnecessarily when the risk could be eliminated at a cost the customer would

willingly pay if they knew the facts and had the choice

o Summary: the seller has a duty to provide a product with a level of risk no higher than they have expressly or implicitly represented to the customer, which the customer has freely and knowingly agreed to assume.

The Duty of Disclosure

The seller has a duty to discloseo the terms of the sales contracto information about the product that would reasonably influence the

customer's purchase decision risks: included by all accounts others (more stringent views)

performance characteristics & costs of operation product ratings & applicable standards

o Basis of the duty: the moral force of contracts derives from their being free agreements

freedom depends on knowledge the more the buyer knows about the product and competing

products the more one can say the buyer's agreement was voluntary

Criticism & Replyo Criticism: provision of product information is itself a service for which

the customer should payo Reply: if the buyer had to bargain for relevant information

the information would be less readily obtainable: a lot less and the resulting contract would be less free: a lot less

The Duty not to Misrepresent

Misrepresentation is to nondisclosure as commission to omissiono nondisclosure: not tellingo misrepresentation: lying

A seller misrepresents a product when they represent it in a wayo intended to get the buyer to believe something about the producto that they (the seller) know is false

May be express or implicito express: e.g., a dryer marked "NEW" when it's reconditionedo implicit: the reconditioned dryer is placed unmarked, on the floor, amidst

several new models Rogue's gallery of misrepresentative practices

o brand name look-alikes: it's a "Rollex"o fronting the expensive ingredient (SILK blend)o fictitious regular prices to give the impression the item is marked downo higher prices than advertisedo "bait and switch"o paid testimonials

The Duty not to Coerce

undue influence or coercion is exercised by the seller, typically, when the seller takes advantage of a buyer's fear or emotional stress to extract an agreement that the buyer would not agree to if thinking rationally

o Other factors that the seller has a duty not to exploit: gullibility, immaturity, ignorance

o alleged examples the unscrupulous funeral director who oversells the "high pressure" bridal salesman who extracted a binding

agreement from my niece without her mother being there

Problems with the Contractual Theory

Chief criticism: it's based on unrealistic assumptions:1. that manufacturers who really know the product enter into direct

agreement with the customer in reality there are usual many levels of middle-merchants

who may know no more about the product than the consumer

and sometimes less contractarian reply: doctrine of indirect agreements

manufacturers promote their products through their own advertising campaigns

these advertisements supply the claims that customers rely on in their purchase decisions

the intermediate retailers merely function as "conduits" for the manufacturers product

so, the manufacturers forge both direct & indirect agreements

directly with the retailer indirectly with the customer

2. that sales contracts naturally provide protection to the consumer underlying idea: contracts will adequately protect the customer's

interest by underwriting claims against the manufacturer for

product defects but contractual disclaimers can be used to nullify contractual

obligations of the manufacturer by expressly disclaiming that the product is reliable,

serviceable, safe, etc. many manufacturers affix such disclaimers to their

products3. that buyer and seller meet as equals in the sales agreement

assuming buyer and seller are equal "adversaries" in contracting the sale:

caveat emptor (let the buyer beware) seems fair and reasonable

each looks out for their own interests but there are inequalities disadvantaging the consumer

knowledge of the product: the manufacturer is in a much better position to know the product

buyers must often rely on sellers for information which advantages the seller -- especially the

unscrupulous seller understanding of the contract

the manufacturer/seller knows just what's in the contract:

their lawyers drew it up with an eye to their protection, not the

consumers the buyer generally just accepts the terms, often with

little more than a cursory glance at the contract Salesperson: "Oh, it's just the usual legal

mumbo jumbo. I don't understand it myself " Customer (needing the product this

afternoon): "Where do I sign?"

6.3 The Due Care Theory

Based on the idea that the consumer is in a disadvantaged positiono sellers and buyers are not equals in consumer markets: LH v. Wal-Mart,

Sears, GMo consumers interests are particularly vulnerable to harm by manufacturers

& vendors due to the manufacturers superior knowledge about the product

o therefore manufacturers have a duty to take special care to ensure that consumers' interests are not harmed by their product

due to their superior knowledge of the product Caveat vendor (let the seller take care) supplements caveat emptor (let the

buyer beware)o manufacturer not only has a duty to deliver a product that lives up to its

express and implied claimso has an additional duty to exercise "due care" to prevent others from

being injured by the product even if the manufacturer expressly disclaims such responsibility and the buyer agrees to the disclaimer

the manufacturer who violates this duty is "negligent" This creates a positive duty (for the manufacturer) and right (for the consumer)

o manufacturer's duty: to take due care to make sure that the product is as safe as possible

o for the consumer: to a product in which due care was taken in its · design, choice of materials, & manufacture testing & quality control and labeling with warnings, instructions, etc.

The Duty to Exercise Due Care

Manufacturers exercise sufficient care when they take adequate steps to prevent whatever injurious effects they can foresee the use of their products may have

o after having conducted inquiries into how the product will be usedo and after having tried to anticipate possible misuses of the product: e.g.,

glue sniffing In general the manufacturer's responsibilities extend to three areas:

1. Design2. Production3. information

Design: to ascertain whether the design of the product conceals any dangers

o To anticipate & incorporate all feasible safety features given the latest technology

o To ascertain whether the materials are adequate for the purposes the product is intended to serve throughout the product's expected service life & beyond:

given the effects of wear and aging given the way consumers are likely to use (and misuse) the

product Production: to insure that adequate care is taken and quality control exercised

in the production processo to eliminate faulty unitso to identify weaknesses that might become apparent during productiono to ensure against economizing measures that would compromise the

final product shortcuts in the assembly, testing or other processes substitution of inferior materials

o to exercise quality control over materials used throughout the manufacturing process

Information: to affix and include labels, notices, and instructions to the product

o to warn the user of all dangers involved in using or misusing the product in a way that's

clear simple prominent

o to take into consideration the capacities of the persons who will use the product:

relevant capacities: maturity, intelligence, literacy, disability, etc. moral requirement: if the manufacturer anticipates that the product

will be used by individuals with restricted capacities then the manufacturer owes a greater degree of care in the manufacture, labeling, etc.

o manufacturers should not oppose regulative measures when it is reasonable to help safeguard users against hazardous products, e.g.,

alcohol: not allowed to be sold after 2 am: not to be sold to minors cigarettes: not to be sold to minors: not to be specifically

advertised to minors: not to be smoked in public buildings, etc. gasoline: to be dispensed only into approved containers automobiles:

not to be operated without a license subject to periodic safety inspections (in some states)

Problems With Due Care

Vagary of the notion of "due care" (compare care ethics generally)o to be told "a reasonable amount" is not very helpful: e.g., how much salt

to put in the soup I already knew that (a reasonable amount) what I want to know is how much is a reasonable amount

o no clear method or hard and fast rule for determining how much care is "due"

o one (vaguely utilitarian) proposal for removing some of the vagary the greater the possible harm to the greater number the greater

care must be exercised e.g., nuclear power plants v. windmill construction

o Limited utility: issues remain (compare utilitarianism generally) re: trade offs

risk is never totally eliminable: every product involves some

how much cost is warranted in removing which risks? measurement problems:

how much is a life or a limb worth? what's an acceptable level of risk to life & limb?

justice: whatever the acceptable risk point (one in a million say) the poor sap who is that one bears the whole cost

Unforeseeable risks won't be eliminated by due care (from the left)o sometimes risks of products don't become apparent until after many

years of use example: asbestos

o issue remains: who should bear the cost injuries due to these risks manufacturer: "Why me?" injured users: "Why me?" the taxpayers: "Why me?"

Paternalism of Due Care (from the right)o assumes the manufacturer should make decisions for the consumer

regarding acceptable levels of risko that decision is better left up to the consumers themselves: it's their

money and their risk

6.4 The Social Costs Theory

Overview Imposes responsibilities on manufacturers over and above sales contractual duties & due care

Caveat vendor (let the seller take care) is the complete watchwordo the manufacturer should pay the costs of any injuries sustained through

any defects in the product. even when the manufacturer has taken due care in the

manufacture and production and has exercised due care in informing users about remaining

risks and in instructing them in the product's proper use.

o follows the legal doctrine of "strict liability" under which absence of negligence and lack of knowledge or intent are not excusatory: only consequences -- the resultant harm -- matters

o non consumer liability examples: statutory rape ... even if she showed you a forged birth certificate

& looked more like 20 than 15 workplace sexual harassment Sharia law?

Defense of the Social Costs View: Based on Utilitarian Remedy of Internalizing External Costs

o injuries resulting from product defects -- even if they're unavoidable defects -- are part of the total social cost of producing & using the product

o internalizing these costs would lead to

1. fairer distribution of costs injury related costs would be added to the cost of the

product and hence spread out among all users: not borne entirely by

the unlucky sap more efficient use of resources

2. the market price reflecting the true social cost of producing & using the product

insuring the product won't be overproduced which wastes of social resources

society gets taken: e.g., taxpayer expenses due to smoking related

illness3. safer products: if producers assume all the risks then they'll be

highly motivated to eliminate risks

Problems with the Social Costs View

It's Unfairo Violates the basic principles of compensatory justice that one is

obligated to compensate parties for consequences of one's acts only those consequences were

1. foreseeable2. preventable.

o Parties treated unfairly include

manufacturers others who had to pay for unwanted safety features insurance companies

Won't reduce the number of accidentso extra motivation for producers to make a safer product will be offset by

decrease in motivation for users to use the product safely and correctlyo "safer planes" result in more "pilot error"

Unfair to Insurance Providers?o The claim

they'll be faced with spiraling settlement costs under "strict liability"

forced to raise their rates to unreasonably high levels to cover these costs

this would be unfair to small business operators unable to afford insurance they'll have to go out of business

o Rebuttal costs aren't as great as claimed: insurance companies exaggerate

the insurance industry remains highly profitable high insurance rates due to other factors like excessive

profits Life's Unfair: It seems there's no just solution to the problem about

unforeseeable risks which the Social Costs view tries to solveo Which of two parties -- manufacturer or consumer --should bear the

expense for injuries for which they were not responsible? which they could not foresee or could not prevent

o Whoever bears the cost, it's unfair.o NOTE (LH): this would-be counsel of despair could also argue for the

utilitarian approach ... since justice can't be done, that leaves utility!

6.5 Advertising Ethics

Economics of ito A massive multi-billion-dollar/year businesso Cost ultimately borne by the consumer

Consumer Opinion Surveys have showno 66% believe advertising does not reduce priceso 65 % believe advertising makes people buy things they shouldn'to 63% believe advertisements are untruthfulo 54% believe it insults their intelligence

Nevertheless -- when they vote with their walletso many buy advertised brandso often willing paying extra

In defense of advertising it is said advertising provides a useful communication service informing customers about products available to them

Question: Is advertising a waste or a benefit, on balance?

A Definition

Defenders of advertising appeal to its informative functiono some such defenders even define

advertising as a form of information an "advertiser" as a kind of information giver

o Yet advertisements, we all know, are notoriously long on image: "Image is everything" (Nike slogan) long on allure: New Yorker & fashion magazine ads long on entertainment value

Budweisser frogs & Frankie the Lizard the Taco Bell chihuahua: "you are getting hungry, very

hungry" Joe Camel

and short on information: parade cases

those frogs, Nike, fashion magazine ads though not completely uninformative: I learned from that

little dog about the existence & approximate character of Taco

Bell products e.g., Gorditas of course they're also portrayed as deee-

lectable which is sometimes not the case (misrepresentation?)

and maybe some of that stuff should come with a cautionary High Fat High Salt warning (duty of disclosure?)

The Primary Function of Advertisingo not to provide objective information

of course if your product really is superior providing objective information probably won't hurt

but it still might not help as much as projecting a sexy imageo it's all about SELLING THE PRODUCT

Velasquez's definition: An advertisement is communication between sellers and potential buyers

o addressed to a mass audience (as distinct from a private message to a specific individual) and

o  intended to induce some members of that audience to buy some product from the seller

by creating a desire for the product in the consumer or by creating a belief that the product is a means to satisfy some

desire the consumer already has

Three topics concerning the morality of advertising

1. social effects2. effects on consumer desires3. effects on consumer beliefs

Social Effects of Advertising

Frequently heard criticismso degrades peoples tasteso wastes valuable resourceso sustains monopoly & oligopoly power

Psychological Effects of Advertisingo Some complain of the vulgarity of it: it's distasteful and debases tastes:

an aesthetic criticism not an ethical one? being strident, intrusive, and repetitive a way of getting people's

attention Billboard advertising TV Car ads: Terry Hanks

ads for toilet bowl cleaners, deodorants, Preparation H, etc. show images and focus peoples minds on things some think

are not particularly edifying or elevating things to fix your mind on.

o Moral Criticism: Debases values by inculcating and reinforcing materialistic conceptions of

what happiness is: having lots of toys and going on cruises and how to get it: "VISA it's everywhere you want to be."

alleged consequence: people neglect and underestimate the importance of other, more basic, values. and the existence of other ways of finding self fulfillment

besides buying. alleged consequence: people lead more selfish lives

energies diverted away from nonmaterialistic pursuits beneficial to many & all

service & camaraderie towards selfish pursuit of acquisition

Debatable that advertising is so powerful or values so malleable as this criticism would have us think

values are formed early & run deep: shaped & influenced by

parents & friends: mostly

church & school & work: considerably arts & entertainment: not inconsiderably advertising: very little

plausibly advertising can't to much to really change people's basic values

all it can do is appeal to values people already have Advertising and Waste

o Economist's Distinction: Two Kinds of Costs Production Costs: go into changing the product

development production improvement

Selling Costs do not go into changing the product, such as costs that go into persuading people to buy the product

o Utilitarian Argument Sellers costs and advertising in particular don't add anything to the

utility of the product to the consumer. Therefore, from the standpoint consumer utility, advertising

expenditures are wastedo Reply: Advertising produces broader social benefits: so it's not wasted

expense Benefits

It informs consumers about available products & their characteristics

produces an economically beneficial rise in demand for all products, thus,

encouraging mass production and economies of scale and an economy in which products are manufactured

more efficiently and cost less than they otherwise would.

Dueling Rejoinders

1. advertising doesn't affect total consumption: it only shifts consumption from one product to another

increasing overall consumption is a good thing but advertising doesn't do it

2. increasing total consumption is a curse not a blessing it's a bad thing: the threat of resource depletion

requires stabilizing or even decreasing consumption and advertising does it

Advertising and Market Power

o Worry: advertising resources large corporations command enable them to consolidate monopoly & oligopoly control of markets.

massive advertising campaigns of the major players establish brand name loyalties

the small player may be effectively closed out of the marketo Reply: there's no evidence this really is the case

absence of a firm correlation between advertising expenditure & degree of concentration:

some concentrated industries (soaps, detergents, breakfast cereals) feature heavy advertising

other concentrated industries (drugs, cosmetics) do not [?drugs & cosmetics?]

in some oligopoly industries -- autos, e.g. -- smaller firms spend more per unit than large

Advertising and the Creation of Consumer Desires

John Kenneth Galbraith's Criticism:o Advertising is manipulative:

it creates desires in consumers for the sole purpose of absorbing industrial output

thus it uses people: whether it's in their interest to consume more is not a consideration

o Two types of desires physiological:

characterization: of physiological origin: originate in the buyer and are relatively immune to being

changed by persuasion. examples: food, shelter

psychic: of psychological origin characterization: highly subject to being changed by

persuasion originating from the would-be seller: advertising can

swayed & expand & even create them example: social status

Galbraith's charge: advertising exploitatively manipulates our psychic desireso that it manipulates: perhaps obviouso the case that this is exploitative

psychic desires are easily manipulated to excess

demand created by physical needs are finite . . . only so much you can eat

but psychic demands are virtually infinite: "more, more, is the cry of the deluded soul" (Blake)

it uses the consumer as means alone advertisements' express purpose is selling their product not the consumers welfare [maybe not if it's a product you

really believe in?] would be redeeming social benefit: fuels ever expanding economy

is a dubious benefit a kind of systemic compulsion there's cause to worry about long-term sustainability of

growth given finitude of depletable resourceso ideal of consumer sovereignty is undermined: producers usurp it

rather than production being molded to serve human desires human desires are molded to serve the needs of production

Assessment of Galbraith's Criticismo Dubious of empirical assumption about the manipulability of psychic

desires mentioned above regarding advertising alleged abilities to change

peoples values. advertising has no monopoly on creation of psychic wants:

arguably plays a very small role in shaping people's basic preferences

o Nevertheless, some advertising is clearly intended to manipulate: to arouse in the consumer a psychological desire for the product

without the consumer's knowledge which interferes with the consumer being able to rationally weigh

whether purchase of the product is in his or her own best interest examples

ads using "subliminal suggestion" ads that attempt to make consumers associate unreal sexual

or social fulfillment with the product advertising aimed at exploiting children's gullibility

about the wonderful feats of the animated action character

misrepresent the characteristics and capabilities of the plastic action figure doll

modeled on the character: or vice versa it often happens these days

for sale near you.

such advertising is manipulative in intent because it seeks to circumvent conscious reasoning & hence undermine the

rational agency of the consumer  to influence the consumer to do what the advertiser wants

regardless of what is in the consumer's best interests

Advertising and its Effects on Consumer Beliefs

Much criticism of advertising focuses on its communicative aspect and its deceptive use

o can communicate truths: informationo but also falsehoods: misinformation & disinformation

Pertinent to the would-be defense of the utility of advertising -- against the charge of wastefulness -- since

o if information has value: if being informed is a benefito disinformation presumably has disvalue: being misinformed is a cost

Deceptive advertising unarguably wrong on both Kantian & Utilitarian groundso Kantian grounds:

violation of consumer's rights to rational self determination lying is a paradigm case of a nonuniversalizable practice

o Utilitarian grounds: breeds distrust of communication in general false beliefs have disutility: leads to wrong (more costly, less

beneficial) choices interferes with the beneficial workings markets by undermining

the free rational agency of buyers All communication involves three terms

1. the author(s) who originate it2. the medium that carries it3. the audience who receives it

Authors

o Have moral duty not to deceiveo Whether an advertisement is culpably deceptive depends on the intent of

the author the author must intend the audience to believe something false that the author knows is false which the author intentionally leads the audience to believe

whether through explicit assertion or implication or otherwise: e.g., in subliminal ads

In the case of vulnerable audiences like children duty not to exploit their vulnerabilities

Mediao Have a duty to ensure the ads they transmit are not misleading.o In the case of vulnerable audiences like children

duty not to exploit their vulnerabilities Audience

o Have a right not to be deceived.o In the case of vulnerable audiences (like children)

have a right not to have their vulnerabilities exploited Ethical Checklist: "the main factors that should be taken into consideration

when determining the ethical nature of a given advertisement"o Social Effects

What does the author intend the effects to be? What are the actual effects?

o Effects on Desire Is the argument intended to be informative or merely persuasive? If mainly persuasive does it attempt to create a desire that is

irrational or possibly injurious?o Effects on Belief

Is the content of the advertisement truthful? Does the advertisement have a tendency to mislead its target

audience? True claims can be misleading

9-10 dentists use the Oral-B toothbrush supposed to conclude: dentists overwhelming judge

Oral-B the best toothbrush why else would they choose it?

but they don't exactly "choose" it: they're distributed free to dentists

6.6 Consumer Privacy

Threats to privacy in the computer ageo British firms are known (from reports they file) to collect highly detailed

and very personal information about their customers including sexual information political information

o MIB (the Medical Information Bureau) -- "a company founded in 1902 to provide insurance companies with information about the health of

individuals applying for life insurance to detect fraudulent applications" -- currently has medical histories on about 15 million people

o Credit Bureauso Other

Privacy rightso right to privacy: the right of persons to determine what, to whom, and

how much information about themselves will be disclosed to other parties

o psychological privacy: privacy with respect to a person's inner lifeo physical privacy: privacy with respect to a person's physical activities

Protective functions of privacy

1. prevents others from acquiring information about us that would expose us to shame, ridicule, or even blackmail

2. keeps others out of our business: leaves room for unconventionality3. protects those we love from having their beliefs about us shaken4. protects us from self-incrimination

Enabling functions of privacy

o privacy enables intimacy: intimacy involves sharing confidences which requires having confidences

o privacy enables various professional relations to exist attorney-client doctor-patient

o enables individuals to sustain distinct social roleso enables individuals to control their own image or self-presentation

Consumers' rights to privacy need to be balanced with legitimate business needs for information: key concerns:

o relevance: databases 'should include only information that is directly relevant to the purpose for which the database is being maintained"

o informed: consumers should be informed about what information is being collected and why

o consent: consumers should explicitly or implicitly consent to any information collection

o accuracy: data collecting agencies must take care that the data is accurate

o purpose: the purpose for which the information is collected must be legitimate, i.e., if its collection is generally beneficial to those about whom it is being collected.

o recipients and security: data collectors "must insure that information is secure and not available to parties that the individual has not explicitly or implicitly consented to be a recipient of that information"

Cases for Discussion

Becton Dickinson and Needle Sticks

1. In your judgment, did Becton Dickinson have an obligation to provide the safety syringe in all its sizes in 1991.  Justify your position, using materials from this chapter and the principles of utilitarianism, rights, justice, and caring?

2. Should manufacturers be held liable for failing to market all the products for which they hold exclusive patents when someone's injury could have been avoided if they had marketed those products?  Explain.

3. In your judgment, who was morally responsible for Maryann Rockwood's accidental needle stick: Maryann Rockwood?  The clinic that employed her?  The government agencies that merely issued guidelines?  Becton Dickinson?

4. Evaluate the ethics of Becton Dickinson's use of the GPO system in the late 1990s.  Are the GPO's monopolies?  Are they ethical?  Explain.

The Ford/Firestone Debacle

Ford Explorero in the 1990s became the most popular SUV in the U.S.o overall a safe vehicle for its drivers & passengers

fatality rate 27% lower than passenger cars 17% lower than other SUVs

o SUVs are generally safer for those riding in them due to their greater mass

o SUVs were more profitable for Ford profit on sedans = $1000 profit on Explorers = $8000

Rollover pronenesso SUVs generally are built higher off the ground than sedans giving them

higher centers of gravityo the higher center of gravity makes them more tippy: the Explorer's twin

I-Beam suspension gives it an even higher center of gravityo Consumers Union tests Explorers proved more tip over prone than other

SUVso More expensive fixes proposed by Ford engineers rejected

replacing the Twin I-Beam suspension

lowering the engine mounting the wheels 2" further apart

o Less expensive remedies enacted stiffen the springs shorten the suspension lower the tire pressure

from 30-35 p.s.i. as recommended by Firestone, the tire manufacturer

to 26 p.s.i. Firestone

o had supplied tires for Ford since 1896o in 1975 began supplying steel belted radialso by 1978 failures of Firestone's steel belted radials were involved

hundreds of accidents resulting in many injuries and 34 deathso Firestone argued that these failures were not due to any defect but caused

by under inflation: nevertheless it recalled 14.5 million tires at a cost of $160 million

o in 1988 Firestone was purchased by the Japanese tire manufacturer Bridgestone

o July 1994 strike by 4000 workers strike dragged on for 2.5 years Firestone hired 900 replacement workers to permanently replace

striking workers at the Decatur plant where a large percentage of Explorer tires were made, a move the union claimed would put untrained and unskilled workers on the assembly line

Problems with Explorer and its ATX and Wilderness AT tires begin to emergeo in 1993 five lawsuits charges that the tires were prone to catastrophic

failures that were causing rollovers on Explorerso Firestone data "indicated that the tread sometimes separated from the

tires and peeled off" particularly under hot conditionso by 1998 Ford had replaced all its Firestone tires on Explorers in the

Middle East with Goodyear tires after rollover accidents caused by tire separation. resulting in at least 14 deaths across the region

at Firestone's insistence Ford called this a "consumer satisfaction program" not a recall

Firestone disclaimed responsibility, once again claiming the failures were caused by under inflation

o in May 2000, the NHTSA notified Ford and Firestone that it was launching an investigation of the tires in question

after receiving 193 complaints that the rubber came off the tire casing resulting in 21 fatalities

Ford & Firestone's own investigation revealed a steady upward trend in separations over the past several years: the rate of failure for tires made at the Decatur plant was 3 to 6 times greater than for tires manufactured at other plants

Denouemento August 2000: Ford & Firestone recall 6.5 million tireso Ford's stock lost 15% and Bridgestone's 50%o Firestone announced plans to close the Decatur planto May 2001: Ford announces that it will no longer use Firestone tires on

Explorers recalled another 13 million Wilderness AT tires despite

Firestone's continuing claims that the tires weren't defective pledged to make design modifications to the 2002 Explorer to

reduce rollover tendencieso Estimated total costs of recalls

to Ford: $3 billion to Firestone: $750 million

o By the end of 2001 NHTSA had counted 175 deaths and 500 injuries related to Firestone tire failures on Ford Explorers

o According to the NHTSA design flaws or shoddy manufacturing caused Firestone radials to be more prone to tread separation.

o Firestone's own internal study showed the low inflation pressure of 26 p.s.i. increased the internal tire temperature and this contributed to the tread separation.

Questions

1. What systemic, corporate, and individual ethical issues are raised by the Explorer/Firestone case?

2. In your view, and in light of the three theories of manufacturer's responsibilities, what, if anything, did Ford do wrong, and what, if anything, should it have done differently?  What if anything did Firestone do wrong, and what, if anything, should it have done differently.

3. Who, in your view, is morally responsible for the deaths that occurred?