Good Honest Dollar $$

Factories within the Kaesong Industrial Complex (image via Wikipedia)

It’s probably not all that usual for a business ethics blogger to argue against a significant wage increase for full time workers in poor countries whose monthly salary is a paltry seventy five American dollars per month.

But when the majority of the increase (which would take the monthly wage to $300) would flow not to the worker but to one of the most repressive governments on earth, this is certainly one increase which I would could certainly not support at all.

 
About the increase
The increase relates to workers at the Kaesong Industrial Complex (shown above), an industrial park in North Korea located approximately six kilometers north of the border between North Korea and South Korea. The park represents a specially designated area whereby South Korean companies are allowed to operate within North Korean territory, utilizing the plentiful supply of low-cost labor from the North.

On a tour a few weeks ago to the DMZ, a heavily fortified and controlled area representing the border between South Korea and North Korea, our tour guide was telling us that North Korean workers employed at the park currently earn the equivalent of USD$75 per month.

However, in a somewhat extreme measure, the North Korean government is now demanding a four hundred per cent increase in this amount, to take the monthly wage up to $300.

 
Problem is, it’s all going to government coffers
Under normal circumstances, I would fully support wage increases for those who are poorly paid.

Those workers who perform an honest day’s work should be entitled to receive a fair and equitable level of financial reward for their effort. I have absolutely no idea what would be considered a good level of income by North Korean standards, but even if the workers got to keep the majority of their earnings, I could not imagine that earnings of $75 per month would represent a fair level of compensation compared to the value of the services which the workers provide.

Just one problem – little, or any of the increase will actually go to the workers.

Of the seventy-five American dollars per month that workers at the complex earn now, our tour guide informed us that the North Korean government takes seventy dollars, leaving just five dollars – yes, that’s right, just five American dollars per month, to be kept by the worker.

The workers keep only a tiny portion of what they earn now and it is highly unlikely that they will keep much of the benefit from any ‘wage increase.’

Instead, the vast majority of this increase, if it does indeed occur, will flow through to the coffers of the North Korean government - helping to finance a regime which appears to be hell-bent on the development of weapons of mass destruction and whose human rights record is not a great deal better than Sudan, Zimbabwe or Myanmar.

This cannot be supported under any circumstances. Wage rises which flow through into genuine benefits for workers and their families in poor countries can easily be supported on social grounds. But not ‘wage rises’ which merely mean more money for bomb making oppressive governments, and I certainly hope that the North does not receive its demands in this regard.

(Refer article for further information on this topic)

A recent case in which two American journalists were arrested in North Korea on charges of illegal entry earlier this year has prompted me to reflect upon the matter of whether indeed there are types of circumstances whereby businesses and their staff are actually doing the right thing from an ethical viewpoint if they purposefully engage in conduct is considered to be illegal within the jurisdiction in which they operate.

In brief, the two journalists concerned, Laura Ling and Euna Lee are said to have been working on a documentary relating to the trafficking of North Korean women across the border between North Korea and China when they were arrested by North Korean guards. They were sentenced on June 08 to twelve years of hard labor (read more about the case here)

It is indeed possible that the actions of the two did indeed represent a breach of North Korean law (there is some dispute about the facts of the case). But if that is indeed the case, this is because of the oppressive nature of North Korean law, not because of any lack of personal ethics on the part of either journalist.

Furthermore, in my view, the case illustrates the point that there may be an extremely limited range of circumstances whereby actions on the part of companies or their staff do not indeed represent a form of unethical conduct even if they result in a breach of regulations to which the organization concerned is subject.

 
Generally, companies and their staff must respect the law ..
In the vast majority of cases, the situation is clear-cut, and ethical considerations dictate full compliance with all applicable laws and regulations in every jurisdiction in which the company concerned operates.

Moreover, ethical considerations aside, I certainly would have thought that in the vast majority of circumstances, business case considerations dictate that companies observe complete respect for and full compliance with all relevant legal requirements. This is not only due to the desire to avoid any adverse reputational impact of run-ins with the law (not to mention fines and penalties), but also because of the ability of government officials at all levels to make life difficult for those who get on their wrong side.

 
.. but there are exceptions
But are there exceptions?

I would think so - especially concerning firms which operate in countries whose practices are repressive from a human rights perspective.

I could think of at least three examples:

 
• Media coverage.

The plight of those who suffer from war, famine, poverty or oppression should never be hidden from the broader global community, and I feel that media organizations do have a fundamental duty to raise worldwide awareness in cases where such conditions do indeed occur.

Such a duty extends to parts of the world where the law attempts to place unreasonable restrictions upon the activities of local and/or foreign media, whereby media organizations and journalists would be more than justified, in my viewpoint, in undertaking whatever forms of action which are reasonably necessary to report on the plight of the people, even if this necessitates a breach of some forms of legal restrictions in the country concerned.

(Naturally, media correspondents who enter countries illegally should do so only where absolutely necessary and should observe appropriate regard for their own personal safety at all times)

 
• Protection of individual privacy.

Firms which are required to sensitive information (such as contact details or information pertaining to patterns of online activity) with regard to individuals such as political activists or opponents, prominent religious leaders or prominent academics would, under certain circumstances, be more than justified in withholding such information this may constitute a breach of legal requirements.

This is particularly the case where there is a reasonable likelihood that the provision of such information will either: (a) place the safety of the individual concerned in unwarranted jeopardy; or (b) assist in any form of government attempt to crack down on any form of expression of political or religious freedom.

 
• Organization of labor unions.

This is one issue which relates more to the workers that businesses employ rather than businesses themselves. Nevertheless, since employees represent such a critical group of stakeholders (it’s hard to imagine businesses running without them), I feel that the formation of unions in countries where labor organizations are not legal is well worth a mention in this discussion.

The right of workers to organize themselves into unions is specifically recognized under the Universal Declaration of Human Rights as a basic form of human right. In countries where the abuse of employee rights represents a common practice, I would be more than supportive of any attempt by workers to organize some form of labor union, even in (and especially in) countries where labor organizations are prohibited.

 
Over to you
Can you think of any other cases whereby you think firms may be justified in refusing to act according to the law?

For the Obama administration, maintaining an appearance of pro-activity with respect to environmental management when compared to the previous administration was never going to a particularly difficult task

Indeed, no matter how messy the approach adopted in the Clean Energy and Security Act may appear to be, the fact that it seems to finally represent some action on the part of the American government towards responding to the challenges associated with global warming is certainly pleasing.

Surely, any form of action at all was always going to beat the ‘zero meaningful action’ policy approach adopted under Bush.

 
How carbon permits should have been allocated
That said, the approach adopted under the bill toward the allocation of permits for carbon emissions under the proposed cap and trade system appears not only be unnecessarily complicated but also somewhat unfair and lacking in transparency.

As I understand it, one of the key features of the bill is the adoption of a new cap and trade system with respect to carbon emissions, which is envisaged to operate in a manner which is somewhat similar to that currently in place in Europe.

The fairest (and most logical) approach toward the allocation of permits for carbon emissions under this system would be for the government to sell a given number of permits, either each year or otherwise on a periodic basis, via an auction process. Companies would submit bids for a sufficient number of permits to cover their anticipated volume of emissions.

As well as being beneficial for government coffers, since sales of the permits would raise much needed revenue, such an approach would be completely transparent and fair, allowing all firms across all sectors the equal opportunity to secure the required level of permits to cover their anticipated level of emissions, regardless of any political influence or otherwise which is commanded by the industry in which they operate.

 
But this approach is strange
But instead, under the current bill, the vast majority of the permits issued (approximately eighty-five per cent) will simply be handed out for free, leaving just fifteen per cent to be allocated through a transparent auction process (refer article).

Not only does the idea of doling out free permits to the worst polluters seem to be somewhat strange and contradictory to what the scheme is trying to achieve, but the process of deciding exactly who is to receive such handouts is inevitably political, with some industries being able to secure a better deal than others based on their political power and influence.  

Even if it were free of political influence, the process of deciding who gets such permits would appear to be horribly complex, not to mention the lack of transparency from an accountability viewpoint.

Instead, the whole lot should have been auctioned through a straightforward auction process, which would have represented a simpler, fairer, more transparent and better approach.

 
America must lead, not wait for others
But messy action is surely better than no action, and it is pleasing to see that America finally appears to be on the move with respect to action on global warming.

Kudos to Europe for it efforts to date, but climate change is a global problem in need of a global solution. Any form of effective response to the challenges which it poses requires the support of all major players within the global landscape, not just those of one continent.

In addition, given its status as the single most influential leading nation with respect to many aspects of global society, any lack of action on the part of the emerging or developing world does not provide any form of justification whatsoever for inaction on the part of America. (Equally, inaction on the part of America does not provide any justification for inaction on the part of my home country of Australia)

Leadership is about action. Leaders step out and act first – they don’t sit back and wait for others.

This concept applies not just to individuals, but to nations as well, and given its unique leadership position, America must not wait for countries like China and India to come on board.

Instead, it must step out and join Europe in taking the lead in responding to the world’s global warming challenges, and no matter how awkward its approach, it’s pleasing to see that the American government finally seems to be getting serious in this regard.

Only once the leaders move, will others do likewise.

Image by Chris Solnordal via Wikipedia

(This discussion represents the second part of my contribution to Robert Hruzek’s group writing project, “What I learned from .. a mountain-top experience.”)

I have always believed in the concept of climbing to great heights in terms of ones business or career direction - that one should ’shoot for the top,’ so as to speak.

In addition, my family, in particular, my mother, have always been supportive of my endeavors.

That is, when we are talking about figurative heights. But the situation is somewhat different when the ‘heights’ we are talking about actually refer in a literal sense to the process of seeking employment at a ski resort which is situated on top of a mountain almost two kilometers above sea level.

This was indeed the case for me in late 2004, when I applied for a job as a Finance Assistant with the Mount Hotham Alpine Resort Management Board. The office in which I would have been working was situated in a ski resort village at the top of Mount Hotham, a famous mountain in the North Eastern part of my home state of Victoria (South East Australia), which at it’s highest peak reaches a height of 1,861m (6,105 feet) above sea level.

At the time, I regarded the position concerned as a wonderful opportunity not only to further my career by taking on a challenging role in an area which was different to those to which I was accustomed.

But my mother expressed a great deal of anxiety, especially due to safety concerns relating to the daily commuting process. Having never actually been to the mountain before, I regarded such concerns as being coming from a loving heart but being somewhat over-cautious.

 
The day of the interview 
That was, until the day of the interview, and it wasn’t until I actually started the thirty kilometer ascent up the mountain that I started to realize that my mother had a valid point. The narrow, windy road had been virtually carved out of a cliff face, with gigantic drops out to the left leaving little doubt about one’s fate in the event of the vehicle slipping off the side of the road.

Even on that clear, late spring day, the ascent represented a downright frightening experience. I could only imagine what it would be like in the middle of winter, with the likelihood of thick snow and fog adding the daunting prospect of virtually zero vision or road grip to the already treacherous enough as it is commuting process. 

Ten kilometers into the climb, I reach the first opportunity for a turning point, and seriously rethink my options - should I just turn around and forget the whole thing? Kudos, I thought, to those who do actually manage to perform this commute on a daily basis.

Upon reaching the village resort, I had a mountaintop experience which was somewhat different in nature to the kind of emotional euphoria to which people usually refer when talking about such an experience. This was literally a mountain-top experience – i.e. an experience, literally speaking, at the top of a mountain, and any sense of positive emotion which I felt was tempered by concerns as to whether indeed this commute was one which I was prepared to undertake on a daily basis.

Yes, one should strive to climb to great heights in terms of one’s business or career. But this is a figure of speech, and the principle does not necessarily apply in a literal sense to the performance of daily commutes up perilous mountain roads.

In the event, I was not the successful candidate and was not offered the position. Nevertheless, I must say that the process involved was quite an experience and I am certainly glad that I went for the job an application even though my application was not successful.

 
Lessons Learned
• Messages in self-help books about climbing the highest mountain and reaching great peaks in one’s business or career do not necessarily apply in a literal sense.

  
• One should look far and wide for opportunities.

In my profession of accounting, often the best opportunities are considered to be in large office towers in the city, either working for a large accounting firm or within the finance department of a large corporation.

These more conventional types of opportunities certainly have a great deal of potential. But what I personally found was that expanding my horizons to include positions which were outside the sphere of more conventional environments not only provided for an interesting and rewarding experience in itself, but also resulted in a much broader range of opportunities being available to me.

Image via Wikipedia

It perhaps may appear to be somewhat of an irony that a person could be two meters tall (six foot six and a half) and still suffer from a fear of heights.

But that is indeed the case with yours truly, and the experience of going up the Eiffel Tower in Paris in 2002 was one which I personally found to be downright frightening, even when using the glass elevator.

This discussion represents the first part of my contribution toward Robert Hruzek’s group writing project, entitled “What I learned from .. a mountain top experience.” If I have a chance, I will describe a second experience in tomorrow’s discussion.

In actual fact, when asking for participants to describe their mountain-top experiences, Robert is referring to an emotional experience more than an experience of a physical nature. What he is talking about is an experience of a feeling of elation, that being on top of the world from an emotional viewpoint more so than a physical viewpoint.

Nevertheless, the experience of going up the tower did involve a fair degree of emotion for me (fear and anxiety at the bottom, elation and euphoria at the top), so I feel that it is appropriate for me to relate this experience as the first part of my contribution to Robert’s project.

(Unfortunately, I do not have a personal photograph of this experience to share, I had not been introduced to the world of digital cameras at that point and do not have a picture of the experience in digital form)

 
The fear factor
Sensing the extent of my trepidation, my brother, who had already made the trip on a previous occasion, assured me at the bottom that we did not have to actually go to the top if I did not want to. But fearful though I was, I knew that it was not likely that I would have the opportunity to visit Paris again for a very long time, that this was more than likely my one and only opportunity, and that I would most certainly regret it if I held back.

Getting up the first two floors was difficult enough, particularly as the curved structure at the base of the building mandates a somewhat angled ascent as far as the first floor. But the final leg of the journey was downright frightening.

My sunglasses certainly came in handy, not only by enabling me to hide my facial expressions to some extent, and therefore the extent of my trepidation, but also by enabling me to close my eyes without anyone noticing, thereby making the ascention process somewhat bearable.

What did not help, on the other hand, was the commentary of the gentleman beside me, whose running description of how high we were was not what the doctor ordered as far as I was concerned.

Somewhat more helpful was my brother, who, knowing that my eyes were closed, assured me that we were not much more than ten meters from the top. Whilst the reality at the time was that there was more than fifty meters to go, the thought of being almost there (no matter how false) did help me to hang on.

Making it safely to the top, and there I opened my eyes to a splendid view across the city of Paris – a view which I would say would be second to none in terms of views across any city, or at least those which I have come across anyway.

 
Lessons Learned
Non serious:

• don’t forget to pack a pair of sunglasses if you think that you will need to hide a facial expression of some kind (fear, embarrassment, etc);
• whenever you are a short way off great heights, you can bet your bottom dollar that there will be someone to describe how far you have to fall; and
• you can always be sure to have some well meaning family member indicate that you are indeed closer to your goals than what you indeed actually are.

Serious:
• When you’ve only got one shot, take it – don’t hold back. If you do, you’ll be glad that you did for the rest of the life. If you don’t, you may harbor regrets for years to come.