Business EthicsSummer 2022 (1)Week 5, Lecture 3Chaeyoung

Business Ethics
Summer 2022 (1)
Week 5, Lecture 3
Chaeyoung Paek
In today’s class…
Contrary to Ian Maitland, Denis Arnold and Laura Hartman
argue for the necessity to regulate sweatshops, based on the
value of human rights.
There will be one in-class activity at the end of the class.
Argument for sweatshops
Denis Arnold and Laura Hartman point out that there’s a
utilitarian intuition behind the argument for creating &
maintaining sweatshops.
For instance, Maitland argues that paying higher wages for
sweatshop workers (which, by definition, would make
sweatshops disappear) may decrease workers’ utility (or
happiness).
Arnold and Hartman argue that this utilitarian assumption
cannot be maintained when we consider how basic human rights
may be violated under improper labor conditions.
Cf. Preference Utilitarianism
We’ll see one argument for sweatshops that Arnold & Hartman
reconstruct in their article: the utilitarian argument for

sweatshops.
It is based on the main thesis of Preference Utilitarianism,
which is a special kind of Utilitarianism.
Preference Utilitarianism:
An agent ought to do X if and only if X maximizes the degree to
which X achieves whatever is desired or preferred.
(ex) Experience Machine + Desire fulfillment
Argument for sweatshops
The utilitarian argument for sweatshops
P1. We have a moral obligation to perform actions that best
enhance the preference satisfaction of the most people possible.
P2. Creating and maintaining sweatshops best enhances the
preference satisfaction of those affected by sweatshops
(sweatshop employees, via higher wages than they would
otherwise receive; consumers, via lower prices for sweatshop
goods; and MNCs and their shareholders, through lower labor
costs).
C. Therefore, as many sweatshops as possible should be created
and maintained.
Against the utilitarian argument
Arnold and Hartman reject the utilitarian argument for two
reasons:
Proper understanding of basic human rights provides a better
foundation for evaluating the ethical legitimacy of sweatshops.
Creating & maintaining sweatshops with regulations can yield
better results than doing so without any restriction.
By (1), they reject (P1); by (2), they reject (P2).

Basic human rights & Sweatshops
Q. What are human rights?
Human rights are moral rights that apply to all persons.
(ex) The right to life/freedom from slavery
When X is basic human right, all people have moral obligation
to refrain from interfering with X.
(ex) The right to life + Murder
Some of the basic human rights include freedom and
subsistence.
The right to freedom = the right to control one’s own behavior
with knowledge of the relevant circumstances and without
undue external pressure.
(ex) What to do after you get your bachelor’s degree
The right to freedom includes other, more specific rights, such
as the right to physical security, the right to freedom of belief
and expression, and the right to freedom of association.
(ex) The right to adequate housing/The right to freedom of
religion
The right to subsistence = the right to minimal economic
security that allows one to secure food, clothing, housing,
transportation and access to basic, preventative health care, as
well as clean air and water.
The right to subsistence is the right to minimal conditions for a
person to be able to act autonomously.
In this sense, subsistence is necessary for freedom; without
subsistence, you cannot secure freedom.
If the rights to freedom and subsistence are basic human rights,

then it is morally impermissible not to refrain from interfering
with these rights.
Therefore, MNCs who manage sweatshops have moral
obligations not to interfere with the workers’ rights to freedom
and subsistence.
Arnold & Hartman suggest that they can carry out this duty by
protecting the basic labor rights that are universally accepted.
Some of the basic labor rights include…
Just and favourable working conditions, including a limit to the
number of hours a human should have to work each day and a
healthy working environment;
Minimum age and working conditions for child labour;
Non-discrimination requirements regarding the relative amount
that a worker should be paid and the right to equal pay for equal
work;
Freedom from forced labor;
Free association, including the right to organize and to bargain
collectively in contract negotiations.
Arnold and Hartman claims that the right to be paid a l iving
wage should be one of the basic labor rights.
As Maitland points out, it is difficult to pin down what amount
of money would be the right living wage in each society.
Arnold and Hartman suggest that MNCs could employ the US
government’s method; calculating the cost of a market basket of
food needed to meet minimum dietary requirements and then
adding the cost of other basic needs.

A potential objection:
“But the reason why MNCs operate in developing countries is
because they have more relaxed laws for labor standards. If
MNCs ought to protect the basic labor rights, then they would
stop investing in sweatshop factories in developing countries.”
Arnold and Hartman would point out that no act of
violating/interfering with basic human rights can be morally
permissible, even when it yields a great consequence.
Furthermore, they believe that MNCs can stay profitable
without interfering basic labor rights.
(ex) Nike’s changes from 1998
After receiving criticism, Nike CEO committed to taking
several measures to fix the problems, including increasing
minimum age requirements for workers in factories, improving
factory health and safety conditions so that they comply with
US standards, etc..
Nike also made a structural revision to monitor and remedy the
harms of sweatshops; Corporate Responsibility Committee of
the Board is responsible to review and report whether Nike
aligns with the corporate responsibilities.
Offsetting the cost
Such changes allow MNCs to protect workers’ rights to freedom
and subsistence.
But Arnold and Hartman point out that making such changes
provide strategic advantages to MNCs as well.
1) Productivity
As workers are paid more wages & are treated better in safer

environment, workers become more loyal to their employers.
Managers also report higher employee morale when MNCs take
measures to protect the basic labor rights, which improve the
quality & the quantity of the products.
Offsetting the cost
2) Reputation
In Market and Opinion Research International (2000),
researchers found that 70% of European consumers report that a
company’s commitment to social responsibility, including
‘looking after employees’, is important when buying a product
or service.
When MNCs treat their workers right, their reputation can
actually save MNCs the cost for recruitment and training of new
employees too; and they become the employer of choice among
the best workers in local labor markets.
Offsetting the cost
3) More earnings
(ex) Pollin et al. (2004):
“The surveys consistently find that most consumers have a
strong preference to purchase products made under “good”
working conditions as opposed to sweatshop conditions, and are
generally willing to pay more to support their preferences. For
example, the most recent of these surveys found that on
average, consumers said they were willing to pay 28 percent
more on a $10 item and 15 percent more on a $100 item in
support of their preference for products made under good
conditions (including as zeros the 19 percent of consumers who
said they were unwilling to pay extra for the assurance; Elliot
and Freeman 2000, p. 2).”

Offsetting the cost
Arnold and Hartman conclude that the benefits outweigh the
cost for MNCs to protect sweatshop workers’ basic labor rights.
They note that the primary reason why MNCs should pay living
wage, provide safer working conditions, etc., should be based
on basic human rights; the utilitarian assumption just cannot
capture how important human rights are.
So, they reject (P1) of the utilitarian argument for sweatshops.
Offsetting the cost
But they point out that even if we accept the utilitarian
assumption, MNCs should protect basic labor rights.
MNCs are better off protecting workers’ basic labor rights!
They also reject (P2) of the utilitarian argument; to satisfy the
preferences of more people over all time, it’s better for MNCs
to protect their workers’ basic human rights.
Exercise
Click ”5-3 In-class Activity” below the lecture video.
Click “Write Submission”; fill in your answers & click
“Submit.”
This should take about 5 minutes, but feel free to take more/less
time as needed.
For the next class…
We all agree that it is morally permissible for business owners
to choose which service they provide to their customers & to
choose not to provide service to certain customers.

But it’s also morally impermissible to discriminate other people
for their traits, such as gender, sexual orientation, race, etc..
Which makes the Masterpiece Bakery case a tricky moral
conundrum!
Watch the following video: "A Clash of Cake and Faith",
NYTimes Video
(https://www.nytimes.com/video/us/100000003302856/a-clash-
of-cakeand-faith.html)
Then read the following two articles:
Adam Liptak, “In Narrow Decision, Supreme Court Sides With
Baker Who Turned Away Gay Couple”, New York Times
(https://www.nytimes.com/2018/06/04/us/politics/supreme-
courtsides-with-baker-who-turned-away-gay-couple.html)
Jim Campbell, "The Supreme Court puts a baker's business—
and artistic freedom—on the line", Washington Post
(https://www.washingtonpost.com/opinions/the-supreme-court-
puts-abakers-business--and-artistic-freedom--on-the-
line/2017/06/28/c0a4407e-5b8d-11e7-9b7d-
14576dc0f39d_story.html)
Business Ethics
Summer 2022 (1)
Week 5, Lecture 1
Chaeyoung Paek

In Week 5…
In Week 4, we discussed whether certain advertising
techniques/certain forms of advertising could be harmful.
Arrington defends the use of puffery/indirect information
transfer/subliminal advertising, on the ground that ads that use
them do not undermine one’s autonomy.
Cathy O’Neil & Daniel Susser, Beate Roessler, and Helen
Nissenbaum focus on online ads.
In Week 5…
While O’Neil focuses on how online ads can be so effective to
so many people, Susser et al. focus on the nature of (many of)
online ads.
According to them, many of online ads are cases of online
manipulation; all cases of manipulation carry significant harm;
so, many of online ads carry significant harm.
But in 4-1 in-class activity responses, many people were on the
fence about whether many of the ads we see are really
manipulative.
About Allstate ad: “The ad certainly is full of puffery and gives
a false impression, however I’m not certain its completely
manipulative. It certainly leaving the impression that of puffery
with the song choice, their claims of making money by saving
money with them as your insurance, and even with the car
blowing up and it being okay because you’re covered.”
About (probably Lay’s?) potato chips: “I think the ad was
slightly manipulative since it was showing other packs of chips
and openly wanted customers to ignore other brands and buy
their chips instead.”
About a new car, Genesis: “The ad was promoting the car and
glorifying it. I do not believe its manipulative to exaggerate or
we would all be considered manipulative human beings.

However, glorifying it might persuade consumers it is a good
car for them in terms of status or what not.”
In Week 5…
What was interesting was that even though some people said
that the ads they’ve seen were not so manipulative, they also
said that something seemed problematic.
Maybe this shows that advertising can have some ethical
problems not because it is manipulative but because of
something else!
According to Andrew Johnson, this indeed is the case; by
borrowing Harry Frankfurt’s famous account on “bullshit,” he
argues that most ads are bullshit and therefore morally
problematic.
We’ll look at Andrew Johnson’s account of “bullshit” and why
he believes that most advertisements are cases of bullshit.
There will be an in-class activity at the end of the class.
On Bullshit
Harry Frankfurt’s essay, “On Bullshit,” offers a philosophical
analysis of commonly used term, bullshit.
According to Frankfurt…
A statement, X, used by the speaker, A, is bullshit when A is
not concerned about or indifferent towards whether X is true or
not.
(ex) ”Your call is important to us; please hold.”
Cf. Lying ≠ bullshitting
When you lie, you must be concerned about the truth (or falsity)
of your statement!

On Bullshit
On Frankfurt’s account, the reason why we think that
bullshitting is wrong is because it is “reprehensible intellectual
negligence.”
(ex) Mayor saying “This is the greatest city” vs. 5-year-old kid
saying “This is the greatest city”
(Johnson) Perhaps Frankfurt’s account is too vague to capture
what really makes bullshitting blameworthy.
Johnson On Bullshit
A person is guilty of bullshitting when, and only when:
the person implicitly or explicitly asserts a proposi tion;
in the assertion of the proposition, or in the prior process of
coming to accept the proposition, any impartial interest in what
is true is subordinated to or supplanted by a competing interest;
there is no exculpatory reason for such subordination or
supplantation; and
if the proposition is explicitly asserted, it is not believed to be
false.
Johnson On Bullshit
According to Johnson, his definition provides more plausible
account of bullshit than Frankfurt’s.
Johnson’s account is weaker in a more plausible way.
It is too strong to claim that a bullshitter is indifferent to truth.
Bullshitters may generally care about truth and speaking truth;
it’s just that they are ready to ignore their impartial interest in
truth to promote other competing interests.
(ex) Advocators of the Intellectual Design theory of evolution

Johnson On Bullshit
2. Johnson’s account captures the sense in which the bullshitter
is “guilty” of something.
When someone is guilty of something, it usually means that
there’s nothing that could exculpate the person from the wrong
they did.
(ex) Coercion at gun point + Renouncing Darwinian theory of
evolution
3. Johnson’s account explains the difference between lying and
bullshitting better.
Liars believe & know what they explicitly assert is false;
bullshitters do not believe so.
(ex) Fourth-of-July oration by a politican
Advertising & Bullshit
Johnson claims that given the purpose of advertising (creating
more demands for the advertised product), it’s not surprising
that most ads are bullshit.
But bullshit ads are different from deceptive ads.
Deceptive ads lie about the advertised products.
(ex) Activia + “immunity-boost”
Bullshit ads may contain false claims as well, but they do not
deliberately lie; they commit certain fallacies in order to serve
their own purpose.
Advertising & Bullshit: Fallacies
According to Johnson, bullshit ads often commit fallacies such
as…
False analogy
(ex) John McCain’s campaign against Obama in 2008
2. False dichotomy
(ex) Duracell ad
3. Appeals to emotion

(ex) Chevy commercial
(ex) Prescription medicine for kids with ADHD
Advertising & Bullshit: Fallacies
Ads that make use of puffery are also cases of bullshit.
(ex) TAG body spray commercial
...And many others too!
“A more complete cataloging of types of bullshit advertising
would include inappropriate appeals to authority, bandwagon
arguments ("everybody's using X'), self-image ads, fine-print
ads, ads utilizing weasel words, and fake-news-report
advertisements.” (23)
Advertising & Bullshit: What’s So Bad?
Such advertisements are examples of bullshit because
advertisers subordinate their impartial interest in truth to their
competing interest—interest in promoting certain products and
create more revenue.
Johnson claims that much advertising is bullshit; since all
bullshit is unethical, much advertising is unethical too.
Q. But the very purpose of ads is to promote certain products
and create more revenue; can’t we morally justify bullshitting in
ads based on the fact that they’re doing something they’re
supposed to do?
(Kimbrough) Sometimes, bullshitting helps maximizing utility.
(ex) Bullshit apology + better relationship
Kimbrough’s utilitarian argument for advertising
P1. Advertising promotes certain products and creates revenue

in result.
P2. Most advertising is bullshit and ethically wrongs the
audience.
P3. The utility created by advertising outweighs the utility
diminished by advertising with its bullshit.
P4. [The main thesis of Utilitarianism] X is morally permissible
if and only if X maximizes utility.
C. Most advertising is morally permissible.
Johnson claims that (P3) is wrong; when you’re trying to
maximize everyone’s utility over all time, then you should not
allow bullshitting to flourish in your society!
He points out that the reason why most utilitarianists consider
lying morally wrong applies to bullshitting too.
Instances of lying cumulatively shape the way the members of
the society communicate with each other.
In a society where all lie, people cannot believe each other; then
all should do their own background research on others whenever
they engage in any sort of conversation to verify what others
say.
This costs the society so much of time and energy!
While bullshitting may not be not as bad as lying, it is still
likely that the harms of bullshit would outweigh whatever
benefits that bullshit advertising can provide.
Then even from Utilitarian perspective, allowing bullshit to
flourish in our society (as a form of advertising) is not morally
permissible.
Cf. Kantian Ethics on bullshit
Bullshitters use the audience as mere means, not as their own

ends; so bullshitting is not morally permissible.
Conclusion
Johnson concludes that most advertising campaigns are
unethical.
Even from Utilitarian perspective, bullshitting is morally
impermissible.
And from Kantian perspective, bullshitting is straight-forwardly
impermissible!
Given that most advertising is bullshit, we need to be aware of
how unethical most advertising is & start thinking about the
ways to solve the problem.
Some remaining thoughts
Bullshitting is bad; but perhaps certain cases of bullshitting is
not so bad as other cases of bullshitting?
(ex) Puffery ad for deodorant vs. Bullshit support for anti -
immigration law
So advertising could be unethical in two ways:
[O’Neil/Susser et al.] Advertising is unethical when it
manipulates the audience.
[Johnson] Advertising is unethical when it bullshits.
Q. Is there any other way(s) in which advertising could be
unethical?
Exercise: Advertising Techiniques
Click ”5-1 In-class Activity” below the lecture video.
Click “Write Submission”; fill in your answers & click
“Submit.”

This should take about 5 minutes, but feel free to take more/less
time as needed.
We’ll move on to a new topic: exploitation and sweatshop labor.
Ian Maitland argues that most criticisms of international
sweatshops are not valid; Dennis Arnold and Hartman argue that
the conditions of international sweatshops should be bettered
for employees & employers.
Read Ian Maitland, "The great non-debate over international
sweatshops."
Business Ethics
Summer 2022 (1)
Week 5, Lecture 2
Chaeyoung Paek
Exploitation & Sweatshop
Sweatshop: Workplace in which workers are employed at low
wages and under unhealthy or oppressive conditions.
Many sweatshops are in the clothing industry; most of them are
in Asia and Central and South America.
Many of the products for fast-fashion retailers (e.g., ASOS,
H&M) come from sweatshops; other popular brands, such as
Nike, Adidas, and Disney also gets their products from
sweatshops in Asian countries.
- NYT “Who Made Your Clothes?”

Many people argue for the needs to regulate the international
sweatshop; we’ll see what Ian Maitland says in opposition to
this quite common position.
There will be no in-class activity.
For Regulations re: Sweatshops
Many critics argue that multi-national companies(MNCs) have
moral obligations to offer better wages and better working
conditions for the workers in international sweatshops.
Many sweatshop workers are paid below minimum wage; many
of them report that their wage cannot cover the living costs of
their family.
(ex) “Made for Next to Nothing. Worn by You?”
Many sweatshop workers are also working under the dangerous
conditions.
(ex) “Nightmare conditions at Chinese factories where Disney
and Hasbro toys are made”
Against Regulations re: Sweatshops
Maitland, on the other hand, argues that the current
international sweatshops are being run with appropriate labor
standards.
He argues that international sweatshops are not exploiting the
workers & offering higher wage and better labor standards may
harm the workers.
What are ethically permissible labor standards?
1. Home-country standard
International corporations have ethical duty to pay the same

wages & provide the same labor standard regardless where they
operate.
2. “Living wage” standard
International corporations have ethical duty to pay, at a
minimum, a “living wage.”
Classical liberal standard
The labor standard (wage or labor practice) of international
corporations is ethically acceptable if it is freely chosen by
informed workers.
What are ethically permissible labor standards?
Most business ethicists reject the home-country standard and
the classical liberal standard.
The reason why they reject these standards is practical;
employing these standards will erase the benefit of running
international sweatshops.
Most critics of international sweatshops also accept that the
“living wage” standard is the most appropriate.
But the issue is exactly how to pin down the living cost &
whether workers could really benefit from earing the living
wage.
Against International Sweatshops
Maitland introduces some of the most important criticism
against international sweatshops.
Unconscionable wages
Most workers work long hours, which prevents them from
working two jobs; but in many cases, their wage is lower than

the minimum living cost for their own country.
(ex) Nike in 1992 paid workers in Indonesian factories $1.03
per day, which was less than the Indonesian government’s
figure for “minimum physical need.”
2. Immiserization thesis
Some critics argue that low-wage workers in sweatshops often
experience decline in living standards.
This may happen due to the “bidding war” between countries
that host sweatshops; the governments intentionally lower the
minimum living cost so their countries could be more hospitable
for MNCs.
This may lead to another problem: promoting further inequality.
3. Widening the gap between the rich and the poor
The GNP (Gross National Product) of a country that hosts
sweatshops may increase; but the workers in sweatshops may
not benefit from it.
The critics argue that this shows how MNCs contribute to
inequality in developing countries by running sweatshops.
By allowing MNCs to run sweatshops in their countries, elites
in developing countries benefit; MNCs benefit from running
sweatshops; and the workers remain poor.
4. Collusion with repressive regimes
Since MNCs prefer countries with lax labor laws, to host
sweatshops, repressive regimes in developing countries may
suppress workers harder.
The critics point out that therefore, MNCs profit from political
repression.

(ex) In 2016, Bangladesh workers protested for raising
minimum wage; the government fire rubber bullets and arrested
several protesters; Bangladesh hosts sweatshops for Gap, Zara,
and H&M.
Evaluating the Charges
Maitland concedes that the critics are right about many things.
For instance…
It is true that MNCs are chasing cheap labors.
The wages they pay for their workers are often shockingly low,
partly because some developing countries have minimum wage
that is below poverty line.
The governments of developing countries often repress workers
in various aspects (and MNCs may benefit from it).
Some suppliers do employ children.
Nevertheless, Maitland points out that many of the charges
against sweatshops are often inaccurate & fail to further address
what truly benefits workers.
Wages and conditions
MNCs pay higher or comparable wages to their workers; the
critics also acknowledge this.
In many cases, sweatshop workers learn much more money than
other people in their community, many of whom are farmers.
(ex) In 1996, young women working in the plant of a Nike
supplier in Serang, Indonesia, were earning the Indonesian l egal
minimum wage of 5,200 rupiahs (about $2.28 each day); half of
adults are farmers, who earn 2,000 rupiahs each day.
Maitland also points out that many workers take the job at

sweatshops voluntarily & consider themselves lucky to work
there.
(ex) From NYT, “Who Made Your Clothes?”:
“Most of my co-workers and I are all old-timers,” said Ms.
Rumsinah, who has been working at the same factory for 26
years. “It’s a good factory, so no one really quits. There’s
seldom any job openings — only if someone retires.”
He argues that the critics dismiss the workers’ experiences
based on their own standards.
2. Immiseration and Inequality
Maitland claims that many countries that used to host
sweatshops have not only increased GNP/GDP but also
increased living standards for all people.
They could do so by attracting foreign investors for cheap labor
and gradually moving onto developing their own industrial base.
And in many of these countries, inequality has become less
severe.
(https://worldpopulationreview.com/country-rankings/wealth-
inequality-by-country)
Since they could not have made such developments without
hosting sweatshops and gathering enough money, Maitland
argues that hosting sweatshops can actually help developing
countries to mend the gap between the rich and the poor.
3. Profitting from Repression?
Maitland claims that although it is true that many developing
countries politically oppress workers, economic growth may
help relaxing the oppression.

For instance, what repressive regimes should fear most is a high
unemployment rate; it could “aggravate” citizens and motivate
protests against their government.
But if they can keep the unemployment rate low by hosting
sweatshops, they do not need to take extremely oppressive
stance towards people.
Labor Standards or Painful Trade-offs?
After fighting off the charges against sweatshops, Maitland
claims that what the critics are asking from MNCs may harm
sweatshop workers.
The critics claim that MNCs must pay higher wages for their
workers; but imposing higher wages may drive MNCs away
from developing countries.
Paying their workers “living wage” may broaden the wealth gap
between factory workers and farmers, which could widen the
economic disparity in developing countries.
Labor Standards or Painful Trade-offs?
3) MNCs may pay higher wages and keep their sweatshops
running; but then they cannot provide more job opportunities
for poorer workers.
This may lead to several other serious issues, such as widening
the wealth gap or keeping the unemployment rate high, which
could make the governments employ more oppressive stance
towards the citizens.
Conclusion
Maitland concludes that while the critics make good poi nts

about some of the problems of sweatshops, they are wrong that
MNCs have moral obligations to pay more wages for sweatshop
workers.
He does concede that there is one objection that he has not
considered in his article: the objection based on human rights.
We’ll see what Dennis Arnold & Laura Hartman say about
sweatshop labor based on human rights.
Q1. Maitland seems to believe that hosting sweatshops may
naturally lead to some positive consequences, e.g., repressive
regimes relaxing their oppression. But what if these positive
consequences do not really happen? Do MNCs then have moral
obligations to actively try and make these changes in the
community?
Q2. It seems true that some critics do not take the sweatshop
workers’ experiences seriously; but it is also true that
sometimes, we shouldn’t take the report of someone’s
experience at its face value.
For instance, domestic violence survivors often report that they
acted as if they were fine in their abusive relationship &
sometimes actually believed that they were doing fine.
Maybe what they experienced at that particular moment was a
genuine happiness, but it is objectively bad to be treated
without dignity; and maybe the critics can say similar things
about certain cases of sweatshop labor.
Read Denis Arnold and Laura Hartman, excerpt from "Beyond
sweatshops: Positive deviancy and global labour practices."

ONLY the section "Basic Human Rights" (pp. 210-212) and
from "Positive Deviance in the Apparel and Footwear Sector"
(p. 215) to the end. The rest is not required reading.

Business EthicsSummer 2022 (1)Week 5, Lecture 3Chaeyoung

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