AIG: Between Legally Right and Ethically Wrong
The AIG bailout is one case study that shows that things could be legally right but ethically wrong. It is a case that seem to violate many principles of ethical systems yet the actions of the company were upheld by law. It is ironic because law are supposed to reflect the highest of ethical standards (Ming, 1908).
AIG has been one of those companies that are being blamed for worldwide financial crisis that started in 2008. Its officers mismanaged its investments and led to the collapse of the company and many of its investors. Since AIG is such a big company, it could not just be allowed to fail. So, the US government decided to provide AIG with funds so it would recover. Unfortunately, among the first steps that AIG took was to give bonuses to its managers—the very persons that caused company’s collapse. AIG justified its actions by saying that they need to give the bonuses so the managers would not leave. Unfortunately, AIG could not be sued for its actions. The distribution of the bonuses were protected by contracts protected by law. (Gandel, 2011) Recenty, AIG is again taking action to sue the US government for cheating their shareholders (Protess and dela Merced, 2013).
On the part of the officers who received the bonuses, they do not seem to leading ethical lives at the same time. They could have at least declined or rejected the bonuses. They were getting bonuses from a losing company.
On Ethics
The Christian Concept of the Natural Law
While the concept the natural law may be attributed to ancient philosophers, Aquinas treatise on the subject (Q 94) is perhaps the most convincing ethical system. For one thing, it avoids potential problems that could arise from ethical relativism (Hartman and DeJardins, p.99). The whole system is anchored on the belief that there could only be one truth or good (Aquinas, Q 94). It does not leave the judgment of what good and bad to the individual as Kant’s philosophy does. Nor is it a very materialistic system that consider only the utility of everything (including persons) to enjoyment or satisfaction of the greater number of people as the utilitarian system espouses.
However, Aquinas treatment of the natural law ultimately leads to a belief in God. Devoid of this, Aquinas arguments still hold.
Necessity of Universal Ethical Principles
A key underlying issue with regard to questions in and conflicts of ethics is the lack of an agreement to what fundamentally is the truth or what is righ are ethical disagreements between people and cultures, the ethical relativist concludes that there is no way to resolve that dispute and prove that one side is right or more reasonable than the other.” (Hartman and DeJardins, p.99)
Unfortunately, no civilized society can exist with order unless there is some form of agreement with regard to what is the truth and what is right among the people or the society’s authorities. Laws exist precisely so to avoid ethical relativism. Still, problems arise in the interpretation of the laws. Thus, an important ethical concept that may apply in many cases is the utilitarian objective of “the greatest good for the greatest number” (Hartman and DeJardins, p.100).
A problem with utilitarian philosophy is that it could lead to fallacious conclusions (“argumentum ad populum,” Introduction to Logic). The opinion of the majority of the people does not make that position right. There are laws, principles and standards that have to be upheld in any society.
The concept of the common good can be useful in addressing the utilitarian view’s weaknesses, in particular with regard to human dignity. “The natural law is the foundation of all human law inasmuch as it ordains that man shall live in society” (Ming, 1908).
While ethical and moral relativism are sometimes attributed to Immanuel Kant, his views on human dignity are very useful. He “argued that, at bottom, there is essentially one fundamental moral duty, one categorical imperative: respect the dignity of each human individual. (Hartman and DeJardins, p.110). Hartman and DeJardins (2011) add, “a more simple way to say this is to say that every individual human being has a human right to be treated with respect.” Ethics is essentially about people, about protecting their rights and upholding their dignity as human persons. Even issues that may seem remotely to affect any human being can actually have impact on the decision-maker concerned or anyone else that could be affected by that decision.
In sum, the question of conflicts in ethics arise when there is failure to uphold the common good and protect the dignity of the human person and the rights of individuals in this regard.
Fundamental Principles of Ethics
Since Aquinas’ interpretation of the natural law has been chosen as the best ethical system, his principles may be the ones apply. Aquinas moral principles are anchored one key item: conscience. Conscience needs to be educated or infused with knowledge so it could make the right judgment on things. (Fissin, 2011) To make those judgments, it has to be guided or strengthened by the practice of four virtues: fortitude, justice, prudence and temperance (Aquinas, Q 64). The practice of the virtues puts control on a person’s self-interest and puts ahead the common good of the people over the individual.
Achieving a Good Life
Following the principles of Aquinas’ natural law, a person can achieve an ethically or morally good life by practicing the four cardinal virtues discussed: fortitude, justice, prudence and temperance (Aquinas, Q 64). Even without a belief in God, the practice of these would guide a person on how to live happily and at peace with everyone else in society. The practice of these virtues are essentially what the laws of the land are forcing people to abide by.
A Natural Behavior
An Ethically Bad Life
An ethically bad life is essentially a life lived not according to the standards of what is expected of what an ethical life should be. An ethical life simply follows the standards set by a person for himself or by society. Society and perhaps the individual himself would have some set definitions of what is good and bad. A person needs only to look at these standards and compare his actions to them to know if a person’s cumulative actions and behavior would amount to an ethically bad life.
Between Good and Bad
Humans can disintguish between good and bad in two ways. First, man can differentiate good and bad from the level of his instincts and conscience. Instincts—especially those related to survival—are natural to man and animals. They provide them with a way to recognize what is good and bad for his own survival. However, man applies his instincts on a higher level. So, his decisions are not only about his own survival but also those of his community. At higher plane, man has a conscience that allow him to determine whether certain actions are good or bad. Seeing people have hurt feelings as a result of one’s actions, a person may feel guilty because he did something bad. This is an example of a natural tendency for man to recognize good and bad.
Second, since man would be living in a community, man would be able to differentiate good and bad based on the standards set by society. Most societies would have its own laws which in themselves define for people the standards, what is good and bad for a peaceful living. Religion too can provide some people with certain guides.
However, the definition of “good and bad” may vary from different ethical and philosophical perspectives. The decision on which principles to follow rests on the individual or community.
Value of Ethical Actions
Ethical actions will always have value regardless of their outcomes. For one thing, they set a standard for people living together in a community should live by. Another, they guide people to lead ethically good lives. Leading ethically good lives at the individual level leads to less problems in society. If people agree on the same truths and abide by the same principles, there would always be order in society and thus lesser conflicts.
Human Responsibility
Humans are always free to decide how to act. Man has a natural tendency or a conscience to recognize right for wrong. Given that knowledge, man should act responsibly to do what is right (Kant). However, man can always choose to do otherwise. He may do so because he needs to protect or to enjoy himself to the detriment of other people.
Conclusion
Given all the arguments and discussion above on ethics, the AIG case would have been clearly a very unethical action on both the part of the AIG officers and the government. The problem seems to lie mainly with the law that was applied. The law seems to have failed in taking into consideration the common good and the rights of the majority of the population. More at fault however are the AIG officials for taking advantage the loopholes or weaknesses in law for their own benefit.
References
Argumentum ad populum. In Introduction to logic. Retrieved 10 Jan 2013 from http://philosophy.lander.edu/logic/popular.html
Aquinas, Thomas. (n.d.). Summa theologica. Retrieved 10 Jan 2013 from http://www.newadvent.org/summa/2002.htm
Brink, David (2008). Mill's moral and political philosophy. The Stanford Encyclopedia of Philosophy. Retrieved 11 Jan 2013 http://plato.stanford.edu/archives/fall2008/entries/mill-moral-political/
Finnis, John (2011). Aquinas. moral, political, and legal philosophy. The Stanford Encyclopedia of Philosophy. Retrieved 11 Jan 2013 from http://plato.stanford.edu/archives/fall2011/entries/aquinas-moral-political/
Gandel, Stephen. (2011). Bailout wonder: how the government turned a profit on AIG. Time. Retrieved Sept. 17, 2011 from http://curiouscapitalist.blogs.time.com/2011/05/25/bailout-wonder-how-the-government-turned-a-profit-on-aig/
Hartman, Laura and DesJardins, Joseph. (2011). Business ethics: decision-making for personal integrity & social responsibility (2nd Ed.). New York, NY: McGraw-Hill.
Ming, J. (1908). Categorical imperative. In The Catholic Encyclopedia. Retrieved 10 Jan 2013 from http://www.newadvent.org/cathen/03432a.htm
Protess, Ben and dela Merced (7 Jan 2013). Rescued by a bailout, AIG may sue its savior.” The New York Times. Retrieved 10 Jan 2013 from http://dealbook.nytimes.com/2013/01/07/rescued-by-a-bailout-a-i-g-may-sue-its-savior/
