US Interest in Ethics Greater Than Rivals'
FEDERAL prosecutors this week filed four felony charges against Paul Mozer, the central figure in Salomon Brothers' Treasury auction bidding scandal. In Europe or Japan, the government likely would not prosecute a similar incident.
"The `ethics gap' between the United States and the rest of the developed world remains substantial," writes David Vogel, a professor at the Haas School of Business, University of California, Berkeley. "By any available measure, the level of public, business, and academic interest in issues of business ethics in the United States far exceeds that in any other capitalist country.
"Nor does this gap shown any signs of diminishing; while interest in the subject in Europe has increased in recent years, its visibility in America has increased even more."
Mr. Vogel is not aware of any laws or regulations abroad to prevent an investment banker from buying a huge proportion of a treasury issue, in effect cornering the market for those bonds.
That example hints at the key reason why there appears to be so much more white-collar crime in the US: There are so many more laws regulating business in the US to be broken.
Moreover, says Vogel in an article in the latest issue of his school's California Management Review, regulations governing business tend to be more strictly enforced in the US. And thanks to more aggressive journalism, as well as to government disclosure requirements, business misdeeds are more likely to be exposed in the US. An unrestricted and uninhibited news media places "high priority" on investigative reporting. Congressional committees with substantial budgets and staff conduct investigations. Nin ety-five US district attorneys chase crime vigorously.
Looking at the rash of business scandals in the 1980s - on Wall Street and in savings-and-loan institutions, for example - some European managers have concluded that Americans are more preoccupied with business ethics because there is more misconduct in the US.
Vogel does not find that view persuasive. "Certainly Japan has experienced at least as many major business scandals, and yet there is less interest in business ethics in Japan than in any other major capitalist nation," he notes. Nor does he see evidence that, considering the size of the US economy, there are either more, or more important, cases of misconduct by businessmen in the US.
During the last 15 years, more corporate officers and prominent businessmen have been jailed or fined in the US than in all other capitalist nations combined, Vogel calculates. Further, the fines imposed on corporations in the US have been substantially greater than in other capitalist nations.
Vogel sees "America's Protestant heritage" as an important element in the keen interest of Americans in business ethics. "By arguing that one can and should do `God's work' by creating wealth, Protestantism raised the public's expectations of the moral behavior of business managers.... Compared to the citizens of other capitalist nations, Americans are more likely to believe that business and morality are, and should be, related to each other, that good ethics is good business, and that business activity
both can and should be consistent with high personal moral values."
In Europe the moral status of capitalism has traditionally been more questionable. "There appears to be much more cynicism about the ethics of business in Europe and Japan. Europeans, in part due to the legacy of aristocratic and pre-capitalist values, have always tended to view the pursuit of profit and wealth as somewhat morally dubious, making them less likely to be surprised - let alone enraged - when companies and managers are discovered to have been `greedy.' " Europeans often regard the American i nterest in business ethics as somewhat excessive.
Vogel sees a substantial increase in interest in business ethics in a number of European countries, and to a lesser extent in Japan where under-the-table favors seem part of the culture and tradition. Environmental regulation is tightening in virtually all capitalist nations. Legal restrictions on insider trading have spread to Europe. Some European nations have enacted laws against sexual harassment. But fundamental national differences leave a gap "in the ways in which business ethics is defined, debat ed, and judged," he concludes.