Deontological Ethical Philosophies
Lecture
Rights
Merriam-Webster defines "right" as "something to which one has a just claim." That which he or she claims can be a tangible object, a privilege, the opportunity to behave in a certain way, or to have others behave towards him or her in a certain way. Some rights are legal and others are moral. If one's rights are protected by law, we consider them to be legal rights. Boatright also points out a distinction between specific and general rights. General rights might be considered “human rights” as they apply to all people. Specific rights are those that particular people possess due to their circumstances, such as an employment contract.
Rights can also be described as positive or negative. Negative rights act as barriers that keep others from limiting our rights, while a positive right obligates others to support our right or position in some way. My right to life is a negative right that keeps others from taking my life. However, it does not require others (individual people, organizations, or governments) to do anything or give anything to give me life.
Immanuel Kant developed an approach to decision making that requires one to act in a certain way simply because it is the right thing to do. He calls the approach the "categorical imperative," and communicates this imperative in various formulations. In addition to the categorical imperative, Kant wrote about hypothetical imperatives. These are conditional requirements, so that if a person wants something or believes he should do something, then he or she should take the necessary steps to fulfill that desire or that sense of obligation. The categorical imperative is not conditional in nature. There are two primary formulations of the categorical imperative.
First, Kant stated, "I ought never to act except in such a way that I can also will that my maxim should become a universal law." Do you think the decision makers who took Enron down the wrong road would recommend their decisions for all business people everywhere and at all times? Most likely not.
This formulation includes the concept of reversibility, which sounds like the Golden Rule. Basically, I must be willing for others to use my same rationale against me if the roles are reversed. Further, the concept also includes the element of universalizability. Every person at all times should be able to follow the rationale I use.
Kant's second formulation says, "Act in such a way that you always treat humanity, whether in your own person or in the person of any other, never simply as means, but always at the same time as an end."
People should follow these formulations, according to Kant, even if breaking them seems to have more of a utilitarian benefit. Holding down one person or one class of persons might benefit society in general, but does not pass the test of reversibility or universalizability. For example, slavery is a very efficient means of increasing work productivity and keeping co.
1. Deontological Ethical Philosophies
Lecture
Rights
Merriam-Webster defines "right" as "something to which one
has a just claim." That which he or she claims can be a tangible
object, a privilege, the opportunity to behave in a certain way,
or to have others behave towards him or her in a certain way.
Some rights are legal and others are moral. If one's rights are
protected by law, we consider them to be legal rights. Boatright
also points out a distinction between specific and general rights.
General rights might be considered “human rights” as they
apply to all people. Specific rights are those that particular
people possess due to their circumstances, such as an
employment contract.
Rights can also be described as positive or negative. Negative
rights act as barriers that keep others from limiting our rights,
while a positive right obligates others to support our right or
position in some way. My right to life is a negative right that
keeps others from taking my life. However, it does not require
others (individual people, organizations, or governments) to do
anything or give anything to give me life.
Immanuel Kant developed an approach to decision making that
requires one to act in a certain way simply because it is the
right thing to do. He calls the approach the "categorical
imperative," and communicates this imperative in various
formulations. In addition to the categorical imperative, Kant
wrote about hypothetical imperatives. These are conditional
requirements, so that if a person wants something or believes he
should do something, then he or she should take the necessary
steps to fulfill that desire or that sense of obligation. The
categorical imperative is not conditional in nature. There are
two primary formulations of the categorical imperative.
First, Kant stated, "I ought never to act except in such a way
that I can also will that my maxim should become a universal
2. law." Do you think the decision makers who took Enron down
the wrong road would recommend their decisions for all
business people everywhere and at all times? Most likely not.
This formulation includes the concept of reversibility, which
sounds like the Golden Rule. Basically, I must be willing for
others to use my same rationale against me if the roles are
reversed. Further, the concept also includes the element of
universalizability. Every person at all times should be able to
follow the rationale I use.
Kant's second formulation says, "Act in such a way that you
always treat humanity, whether in your own person or in the
person of any other, never simply as means, but always at the
same time as an end."
People should follow these formulations, according to Kant,
even if breaking them seems to have more of a utilitarian
benefit. Holding down one person or one class of persons might
benefit society in general, but does not pass the test of
reversibility or universalizability. For example, slavery is a
very efficient means of increasing work productivity and
keeping costs low. However, we do not accept slavery as a
viable option because it does not treat people as free or equal. If
the roles were reversed, the slave owner would not want to
become a slave. Slavery cannot be accepted universally. Finally,
slavery treats people as objects, or as a means to an end, rather
than as an end in themselves.
Justice: Justice deals with the fair and equal distribution of
benefits and burdens in society. We usually talk about three
types of justice: distributive justice, retributive justice, and
compensatory justice.
Distributive Justice: The equal distribution of justice is
challenging to tackle and brings up many emotional issues. The
problem lies in the multiple claims on society's benefits and
avoidance of burdens that a society must bear.
Retributive Justice: Retributive justice has to do with blame and
punishment. When someone breaks a law (legal or moral), we
expect that person to be punished in some way.
3. Compensatory Justice: You may have heard the term
compensatory damages used in a court verdict. Compensatory
justice deals with issues of restoration and restitution and how
someone should be compensated when wronged by someone
else.
Equality Approach: The egalitarian approach states that equals
must be treated equally. For instance, no one would claim that
men and women should be paid differently for doing the same
job. Further, unequals should be treated unequally. What I mean
here is that if your job requires you to work longer hours, take
on more responsibilities, or produce more output than me, then
you should be paid more than me. All seems pretty obvious so
far. However, let's take a closer look. All people may be created
equally, but all people are not equal in every way. You may be
smarter than me. I might be faster than you. We each have our
strengths and weaknesses. If society values your intelligence
more than my speed, should I get paid the same amount as you
or have the same job opportunities available to me?
Second, equal does not always seem fair. If we consider jobs
where we are measured by output, and if I am handicapped in
some way that prevents me from producing as much as you, then
I get paid less.,My handicap may cause me great expense, so I
need the income more than you and perhaps work longer and
harder than you. So, equality is a bit more challenging to
accomplish than it first appears.
Contribution Approach: Others might say that benefits should
go to the persons who contribute the most to society. Most
companies in America use this approach in determining salaries
and benefits. Interestingly, this approach fosters individualism
and competition among employees, whereas Japanese and other
Asian-based companies seek to foster cooperation and team
building.
The challenge of this approach is in determining the measure of
contribution. Do you measure a person's efforts or do you
measure his or her output? Focusing on effort can have the
adverse effect of rewarding incompetence or inefficiency. On
4. the other hand, rewarding output can overlook the need for
training or compensation for other employees. Focusing on
output as the measure can ignore the needs of various
disadvantaged groups.
Fairness Approach: In an effort to establish a comprehensive
theory of distributive justice, let's take a look at the ideas
established by John Rawls. Rawls has established several
principles of justice.
1. Principle of equal liberty - Various freedoms, such as voting,
owning property, speech, worship, and various civil liberties,
must be protected and provided equally among all people. Rawls
calls these “liberties” and suggests that one should not give up
his own or others’ liberties simply for an improvement in
"welfare."
2. Difference principle – This second principle can only be
considered once the first principle is established. However,
when each person has been granted fundamental liberties, a
person might not have to have an equal share of welfare with
everyone in society if the inequality means that all society will
be better off. I think we can agree that all people are better off
(welfare) if we have access to capable medical doctors. I don’t
mind getting paid less than a doctor (difference in welfare) if it
means that we have access to their services. As long as those
who are least off (in terms of welfare) are better off than they
would be otherwise, then the difference in the distribution of
benefits is not unethical.
3. Principle of equal opportunity - "Everyone should be given
an equal opportunity to qualify for the more privileged positions
in society's institutions." Everyone would agree that job
qualifications should relate to job requirements. However, this
principle also holds that each person should have access to the
training and education necessary to qualify for good jobs. If this
occurs, then all the issues we talked about so far (efforts,
abilities, and contributions) work together to determine a fair
distribution of benefits.
So, how do we determine what is a fair distribution of benefits
6. for Developing a Spreadsheet
ModelSALES422,733COGS/SALES0.38OPERATING
EXPENSES/SALES0.50INTEREST RATE0.06TAX
RATE0.30DIVIDENDS (Thousand pounds)10,900CURR.
ASSETS/SALES0.32CURR. LIABS./SALES0.28FIXED
ASSETS110,600STARTING EQUITY121,600INCOME
STATEMENT2002SALESCOGSOPERATING
EXPENSESINTEREST EXPENSE (INCOME)PROFIT BEFORE
TAXTAXPROFIT AFTER TAXDIVIDENDSEARNINGS
RETAINEDBALANCE SHEET2002CURRENT ASSETSFIXED
ASSETSTOTAL ASSETSCURRENT
LIABILITIESDEBTEQUITYTOTAL LIAB. & NET WORTH
Exhibit 2Exhibit 2The Body Shop Plc 2001:Spreadsheet
Formulas to Forecast 2002 Financials:Input
DataSALES422,733COGS/SALES0.38OPERATING
EXPENSES/SALES0.50INTEREST RATE0.06TAX
RATE0.30DIVIDENDS (Thousand pounds)10,900CURR.
ASSETS/SALES0.32CURR. LIABS./SALES0.28FIXED
ASSETS110,600STARTING EQUITY121,600INCOME
STATEMENT2002SALES+B3COGS+B4*B16OPERATING
EXPENSES+B5*B16INTEREST EXPENSE
(INCOME)+B6*B33PROFIT BEFORE TAX+B16-B17-B18-
B19TAX+B7*B20PROFIT AFTER TAX+B20-
B21DIVIDENDS+B8EARNINGS RETAINED+B22-
B23BALANCE SHEET2002CURRENT
ASSETS+B9*B16FIXED ASSETS+B11TOTAL
ASSETS+B28+B29CURRENT
LIABILITIES+B10*B16DEBT+B30-B32-
B34EQUITY+B12+B24TOTAL LIAB. & NET
WORTH+B32+B33+B34
Exhibit 3Exhibit 3The Body Shop Plc 2001:Basic Forecasting
Results for 2002Input
DataSALES422,733COGS/SALES0.38OPERATING
EXPENSES/SALES0.50INTEREST RATE0.06TAX
RATE0.30DIVIDENDS (Thousand pounds)10,900CURR.
ASSETS/SALES0.32CURR. LIABS./SALES0.28FIXED
7. ASSETS110,600STARTING EQUITY121,600INCOME
STATEMENT2002SALES422,733COGS160,639OPERATING
EXPENSES211,367INTEREST EXPENSE
(INCOME)(1,171)PROFIT BEFORE
TAX51,899TAX15,570PROFIT AFTER
TAX36,329DIVIDENDS10,900EARNINGS
RETAINED25,429BALANCE SHEET2002CURRENT
ASSETS135,275FIXED ASSETS110,600TOTAL
ASSETS245,875CURRENT
LIABILITIES118,365DEBT(19,520)EQUITY147,029TOTAL
LIAB. & NET WORTH245,875
Exhibit 4Exhibit 4The Body Shop Plc 2001:Adjusting to Reflect
Excess CashInput
DataSALES422,733COGS/SALES0.38OPERATING
EXPENSES/SALES0.50INTEREST RATE0.06TAX
RATE0.30DIVIDENDS (Thousand pounds)10,900CURR.
ASSETS/SALES0.32CURR. LIABS./SALES0.28FIXED
ASSETS110,600STARTING EQUITY121,600INCOME
STATEMENT2002SALES422,733COGS160,639OPERATING
EXPENSES211,367INTEREST EXPENSE
(INCOME)+(B6*B34)-(B6*B28)PROFIT BEFORE
TAX40,706TAX14,247PROFIT AFTER
TAX26,459DIVIDENDS10,900EARNINGS
RETAINED15,559BALANCE SHEET2002EXCESS
CASH=IF(B40<0,-B40,0)CURRENT ASSETS135,275FIXED
ASSETS110,600TOTAL ASSETS+B29+B30+B28CURRENT
LIABILITIES118,365DEBT=IF(B40>0,+B40,0)EQUITY137,15
9TOTAL LIAB. & NET WORTH+B33+B34+B35TRIAL
ASSETS+B29+B30TRIAL LIABILITIES AND
EQUITY+B33+B35PLUG: DEBT (EXCESS CASH)+B38-B39
Exhibit 5Exhibit 5The Body Shop Plc 2001:Finished Results for
2002, Reflecting Excess CashInput
DataSALES422,733COGS/SALES0.38OPERATING
EXPENSES/SALES0.50INTEREST RATE0.06TAX
RATE0.30DIVIDENDS (Thousand pounds)10,900CURR.
ASSETS/SALES0.32CURR. LIABS./SALES0.28FIXED
8. ASSETS110,600STARTING EQUITY121,600INCOME
STATEMENT2002SALES422,733COGS160,639OPERATING
EXPENSES211,367INTEREST EXPENSE
(INCOME)(1,171)PROFIT BEFORE
TAX51,899TAX15,570PROFIT AFTER
TAX36,329DIVIDENDS10,900EARNINGS
RETAINED25,429BALANCE SHEET2002EXCESS
CASH19,520CURRENT ASSETS135,275FIXED
ASSETS110,600TOTAL ASSETS265,395CURRENT
LIABILITIES118,365DEBT0EQUITY147,029TOTAL LIAB. &
NET WORTH265,395TRIAL ASSETS245,875TRIAL
LIABILITIES AND EQUITY265,395PLUG: DEBT (EXCESS
CASH)(19,520)
Exhibit 6Exhibit 6The Body Shop Plc 2001:Set up for a
Forecast with Data TableInput
DataSALES422,733COGS/SALES0.38OPERATING
EXPENSES/SALES0.50Sensitivity AnalysisINTEREST
RATE0.06Of Debt and Excess CashTAX RATE0.30To
COGS/SALES RatioDIVIDENDS (Thousand
pounds)10,900CURR.
ASSETS/SALES0.32COGS/SALESDEBTEx. CASHCURR.
LIABS./SALES0.28=B34=B28FIXED
ASSETS110,6000.35STARTING
EQUITY121,6000.380.40INCOME
STATEMENT20020.420.44SALES422,7330.45COGS160,6390.4
8OPERATING EXPENSES211,367INTEREST EXPENSE
(INCOME)(1,171)PROFIT BEFORE
TAX51,899TAX15,570PROFIT AFTER
TAX36,329DIVIDENDS10,900EARNINGS
RETAINED25,429BALANCE SHEET2002EXCESS
CASH19,520CURRENT ASSETS135,275FIXED
ASSETS110,600TOTAL ASSETS265,395CURRENT
LIABILITIES118,365DEBT- 0EQUITY147,029TOTAL LIAB.
& NET WORTH265,395TRIAL ASSETS245,875TRIAL
LIABILITIES AND EQUITY265,395PLUG: DEBT (EXCESS
CASH)(19,520)
9. Exhibit 7Exhibit 7The Body Shop Plc 2001:Finished Forecast
with Data TableInput
DataSALES422,733COGS/SALES0.38OPERATING
EXPENSES/SALES0.50Sensitivity AnalysisINTEREST
RATE0.06Debt and Excess CashTAX RATE0.30By
COGS/SALESDIVIDENDS (Thousand pounds)10,900.00CURR.
ASSETS/SALES0.32COGS/SALESDEBTEx. CASHCURR.
LIABS./SALES0.28+B34+B28FIXED
ASSETS110,6000.35028,787STARTING
EQUITY121,6000.38019,5200.40013,342INCOME
STATEMENT20020.4207,1650.440987SALES422,7330.452,102
0COGS160,6390.4811,3690OPERATING
EXPENSES211,367INTEREST EXPENSE
(INCOME)(1,171)PROFIT BEFORE
TAX51,899TAX15,570PROFIT AFTER
TAX36,329DIVIDENDS10,900EARNINGS
RETAINED25,429BALANCE SHEET2002EXCESS
CASH19,520CURRENT ASSETS135,275FIXED
ASSETS110,600TOTAL ASSETS265,395CURRENT
LIABILITIES118,365DEBT0EQUITY147,029TOTAL LIAB. &
NET WORTH265,395TRIAL ASSETS245,875TRIAL
LIABILITIES AND EQUITY265,395PLUG: DEBT (EXCESS
CASH)(19,520)
Exhibit 8Exhibit 8The Body Shop Plc 2001:Historical Financial
Statements ( in GBP millions)Fiscal Year Ended February
28Assumptions 2002-
2004Forecast199919992000200020012001200220032004(GBP)(
% sales)(GBP)(% sales)(GBP)(% sales)Income
StatementTurnover303.7100.0330.1100.0374.1100.0Growth
rateX%Cost of sales127.742.0130.939.7149.039.8% of
SalesX%Gross profit176.058.0199.260.3225.160.2Operating
expenses:–excluding exceptional
costs151.449.9166.250.3195.752.3–exceptional
costs14.51.50.00.011.23.0Restructuring
costs216.65.52.70.81.00.3Net interest
expense0.10.01.50.54.41.2% of DebtProfit before
10. tax3.41.128.88.712.83.4Tax expense8.02.610.43.23.50.9% of
Profit b4 taxProfit (loss) after
tax(4.6)(1.5)18.45.69.32.5Ordinary
dividends10.93.610.93.310.92.9Profit (loss)
retained(15.5)(5.1)7.52.3(1.6)(0.4)Fiscal Year Ended February
28199919992000200020012001200220032004Balance
Sheet(GBP)(% sales)(GBP)(% sales)(GBP)(%
sales)AssetsCash34.011.219.25.813.73.7Accounts
receivable27.89.230.39.230.38.1Inventories38.612.744.713.551.
313.7Other current assets12.54.115.64.717.54.7Net fixed
assets87.828.9104.731.7110.629.6Other
assets30.00.06.01.86.71.8Total
assets200.766.1220.566.8230.161.5Liabilities and
equityAccounts payable13.04.320.56.210.72.9Taxes
payable11.33.711.73.57.11.9Accruals10.83.615.64.711.53.1Ove
rdrafts0.00.00.30.10.70.2Other current
liabilities21.67.113.34.016.94.5Long-term
liabilities28.09.236.711.161.216.4Other
liabilities41.70.61.00.30.40.1Shareholders'
equity114.337.6121.436.8121.632.5Total liabilities and
equity200.766.1220.566.8230.161.5
1 Exceptional costs in 2001 included redundancy costs (4.6
million), costs of supply chain development (2.4 million) and
impairment of fixed assets and goodwill (4.2 million). The
exceptional costs of 4.5 million in 1999 were associated with
closing unprofitable shops and an impairment review of the
remaining shops in the USA.
2 Restructuring costs in 2001 and 2000 relate to the sale of
manufacturing plants in Littlehampton, England, and to
associated reorganization costs. Restructuring costs in 1999
arose from the realignment of the management structure of the
business in the US and the UK.
3 Other assets in 2001 and 2000 represented receivables relating
to the sale of the company's Littlehampton manufacturing plant.