Archive for Thursday, February 21, 2002

Scared ethical?

February 21, 2002


A Maryland professor exposes students to an unusual prison climate to draw attention to the importance of business ethics.

Academic people often are accused of allowing themselves to become too detached from everyday life because they sequester themselves in those legendary "ivory towers" and become out of touch with reality. In light of recent financial scandals, such as the Enron disaster, and renewed emphasis on "doing the right thing," projects of people like accounting professor Stephen Loeb of the Baltimore area help shake off the reputation of being out of touch.

As Michael Hill of the Baltimore Sun points out, every spring, Loeb takes a group of business students on a field trip "not to the New York Stock Exchange or some other lofty aerie of American capitalism. It is to a federal correction facility in Cumberland, Md., or Allenwood, Pa."

The Loeb trip is part of a noncredit course on ethics required of all full-time students working on master's degrees in business administration at Maryland University's Smith School of Business. At the low-security prison camps, the students hear from white-collar criminals who have made the kinds of mistakes that have made so many big headlines of late.

"The visit has an effect on the students that is palpable," Hill writes. "The men who speak to them once wore three-piece suits and fashionable suspenders; now they are in prison garb. Their lives are controlled by guards and strict schedules; a few years before, they might have been students working on MBAs. As a student, it's easy to think that cutting corners, pushing the envelope, maybe stepping over the line a time or two, is part of the world you are about to enter. These things happen. Big-time business is not a garden party."

Prisoners tell the students how tempting it was to step across the lines of morality and ethics for "the deal," some self-serving project to gain attention or make "a score." Loeb is proud of the results of this project he devised and comments: "Business ethics as a discipline tends to take a secondary role because it doesn't make you money. But ultimately the people who are ethical are the ones who prosper, in part because they stay out of trouble," Loeb says.

The recent frequency of Enron-type shockers causes some to wonder whether anybody in business is honest and decent. An encouraging note comes from Louis Galambos, a professor at the Johns Hopkins University. "It has always happened, is happening today and will always be happening. I do think that the increasing complexity of financial transactions, the complexity of the instruments that can be used in financial transactions, probably changed the environment in that it may have created more opportunities (for fraud) than in the recent past." Yet Galambos sees no major breakdown in American business values. "If anything, it seems to me we have a higher set of values than we used to."

Loeb and Galambos say they are impressed at the eagerness of modern college students to discuss ethical issues. The graduate students who have worked before returning for advanced degrees are even more deeply involved and offer good prospects for a better climate as they leave for upper-level jobs.

Exposing students to the fallen angels of finance seems to make quite an impression. We hear often about taking young people to jails and prisons where they see the costly impact that lives of harder crime can make on humans. It's also good to take into account the white-collar criminals and their distorted ethics which can create so many victims such as those Enron employees and stockholders who put their faith in con men with such terrible results.

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