The Separateness of Ethics and Legality in Contemporary America

America, a nation “of laws,” has never had a clear fix on the role — or even relevance — of ethics in our business or personal lives. While Americans rightly demand accountability and rightly expect the imposition of consequences for wrongdoing, the very basis for measuring the existence of that wrongdoing is oftentimes clouded by the confusing interplay between legality and ethics.

There is frequently a strong sense that while something may be legal,  it may not be ethical. For example, there is an almost tangible disdain for the use of tax gimmicks and predatory business practices. We are conflicted in our feelings when a corporation cleverly, but legally, minimizes its taxes by pi0neering evermore tangled tax strategies like Apple did in 2011. Despite massive corporate profits, it was able to reduce its corporate taxes down to 9.4% by the use of the “now-popular accounting technique known as the ‘Double-Irish with a Dutch Sandwich’ (whereby a corporation minimizes its taxes) “by routing profits through subsidiaries in Ireland, the Netherlands, and the Caribbean” and by “(shunting) some functions from one state (in this case, California) to (a tax-free state like Nevada.” The Week, May 11, 2012, quoting Charles Duhigg and David Kocieniewski of The New York Times.

On the one hand —  legal and fair. On the other hand, troublesome and possibly unethical — the pulls of economic Darwinism and shareholder obligations aside.

There are parallel confusions, if not hypocrisies, in our social culture as well.

The government recently spent a reported $2.0-$3.0M to unsuccessfully prosecute Roger Clemens for his allegedly lying about steroid use. The United States Anti-Doping Agency recently stripped Lance Armstrong of his 7 Tour de France titles, annulled his record book back to August, 1998, and banned him from all competitive cycling as the result of his alleged doping and blood-transfusions. In July the Olympic authorities drug-tested athletes down to each milligram of this and that. But while Clemens’ prosecution may have been right, while Armstrong’s loss of his titles may have been necessary, and while the Olympic athletes — under risk of lifetime banishment from their sports – may be required, a certain level of hypocrisy exists when we consider, for example, how we “apply” such drug-use standards to, say, our demands upon and expectations of our singers and actors.

We criticize Clemens, we clamor after Armstrong, we look askance  at disgraced Olympic athletes, and then we settle in to watch Steve Tyler, a judge until recently, on American Idol — despite the fact that he has been in rehab 8 times. God bless him, I like him, and he is entertaining, but one the cornerstone of societal ethics must be an aspired degree of consistency.

As asked recently by Graydon Carter in Vanity Fair, “(w)hen an actor gives a cocaine-fueled, Oscar-winning performance, do we take his award away? Do we reclaim a singer’s Grammy, or put an asterisk after it in the record books, when we discover that he was ramped up on illegal substances?” (Vanity Fair, Sept., 2012, p. 108). To the contrary,  we look the other way or, in my case in the context of one of my favorite, actor Robert Downey, Jr., I root for his recovery and await his return.

Ethics — as it applies in our business lives and our family lives and as it is applied in the world of sports and the world of (other) entertainment needs to be fairly, responsibly, and consistently applied. I don’t have the wisdom to propose the answers, but I here take the liberty of laying down the challenge.

America has far too long tolerated — and at times suffered — from the separateness between ethics and legality and from the inconsistencies of their application. Even though the relevance of ethics (as opposed to possible legality) may be muddled by a thousand excuses — all presented as airtight defenses, technical exceptions, and condescending explanations — we, as a nation, must start working through them. We must expand the relevance of ethics, consistently applied.

Interesting Fact of the Week

Percentage of Wall Street Executives Who Believe Illegal or Unethical Conduct Is Necessary for Success.

24% — Approximately 1  in 4 of those surveyed. Time, Jul. 30, 2012.