Day 5: Utilitarianism/Pinto, "Black Money", Fraud/Whistleblowing

Key themes: finished utilitarianism/Pinto case, PBS documentary (“Black Money”) and chapter 6 on Fraud and Whistleblowing

I started the day checking in with a few students who’d been quiet the day before, I asked if they really prefer to live under a “looser” (i.e. somewhat corrupt) system, like Panama or a somewhat stricter system like the U.S. Again the students I asked seemed to like the Panama system, citing the ease of getting away with things (it’s definitely cheaper to be caught committing a crime or fraud here). I thought about asking what the larger costs/problems are, but I decided against asking this question. I want to be careful about not appearing as if I’m attacking their system.

We finished a powerpoint set on the Pinto controversy. I have two students that argued forcefully that Ford was wrong to allow the car to be designed, manufactured and sold as is. I tried to press the the point that there are always tradeoffs, no car, especially one at the bottom of the pricing structure, could be perfectly safe. Still, to their credit, they stuck with their positions. There may be many tradeoffs but this one seems especially noteworthy. I didn’t get much response to the “value of a human life” angle. It’s entirely likely I didn’t ask it appropriately.

I started a section on “fraud”, quickly touching on some key points (definition, basic characteristics) from Chapter 6. I also presented a recent example of a Maryland state employee that was caught in a scheme where she swindled a state health program out of $1.7 million over ten years. The value of this example is that she was caught after her bank became suspicious. Also the corrective action implemented by the state is more division of labor and oversight; arguably more bureaucracy but it makes fraudulent schemes less likely.

after the first break we watched “Black Money” video (PBS frontline show). The interesting element now is that maybe the developed nations of the world (BAE in the U.K. and Siemens in Germany) are involved in corruption, not the petty kind we so often see in the developing world (like Panama) but the really big kind (at the top, with lots and lots of money at stake).

A student asked almost as soon as it was over, “doesn’t this prove that corruption is everywhere? It always goes on.”

I answered “sort of.” Then I pointed out that two factors still make the BAE/Siemens scandals volatile and difficult to draw a “corruption” is everywhere conclusion. First, that the OECD is still “pushing” the case, though I admit I’m still unclear exactly what type of enforcement powers the OECD has. Second, the U.S. is still vigorously investigating the case (as far as we can tell).

After the second break the president of the university asked for a few minutes to address the class. He did a nice job encouraging them to do well, even pointing out that professors don’t give grades students earn them. This was a nicely timed sentiment, we have our first exam in the next class session. The president took about a half an hour, which left me forty minutes to finish the fraud section (COSC), very quick mention of crisis management and some material on whistleblowers. I came back to Sherron Watkins and Peter Gardiner (BAE case) as examples. We considered reasons why they might want to come forward. When it comes to things that discourage whistleblowers I quickly touched on those elements in the text. I particularly like to pause at “fear of retribution” as a dissuading factor. I cite my fondness for mafia movies (Godfather, Good Fellas, Sopranos) and discuss the concept of being “made” in a crime family. Businesses can also “make” whistleblowers. They seem to like this example.

Exam 1 is next class, we’ll see if we’re ready.