The general public believes that business people’s ethics are low. In surveys of public trustworthiness, for example, business people fare poorly, although they are generally trusted more than politicians. The media loves to trumpet outrageous examples of business malfeasance. Enron, Bernard Madoff, and Wall Street bankers are just the more recent examples of business people run amok. A moment’s reflection, however, should give pause to generalizing from the headline makers. In our day-to-day lives, we rely upon business people to provide us with goods and services.
Is Your Banker the next Bernie Madoff? Probably Not.
Many Americans send their hard-earned savings off to a group of investment people they’ve never met. We trust them to act honorably and responsibly. This is a far cry from the days when one might have an on-going relationship with the local banker or investment advisor.
On the way home from work, Americans think nothing of buying groceries from the local supermarket. They may know the owner or the manager of the store, but there is no way they can know the producers and distributors of the thousands of various items in the store. Was that beef diseased? Was there residue of insecticide on those vegetables? Few of us give much thought to these questions; we implicitly rely, if not consciously trust, upon these strangers.
Business People have to be Trustworthy in Order to be Successful
There are three reasons why business people strive to earn and to maintain your trust. The first is not chimeric; I suspect most business people are simply honest and trustworthy and adhere to their personal code of morality. They take pride in offering good-quality products or services at reasonable cost. The second protection is that, in most cases, being unethical does not pay, either in the short-run or the long-run. Even a firm that inadvertently makes an error is often swiftly and dramatically punished by consumers and vendors in the market. Years ago, in the Tylenol tampering case, the manufacturer scrambled to re-assure the public of their efforts to ensure the product’s integrity; there are numerous examples of businesses that folded in the wake of bad behavior (and many who succumbed to the ramifications of honest accidents). To be sure, there may be some firms currently prospering by offering adulterated products, but people often discover and punish such shenanigans. The third protection is the law. Although many regulations are self-serving or detrimental, some do help keep producers and vendors to adhere to the straight and narrow.
The American economy is incredibly complex; large reservoirs of trust help keep the market working relatively smoothly. If business people’s ethics deteriorated to the point where there was widespread distrust, consumers would have to devote more time and other resources in ascertaining how honest a potential trading partner is. In a sense, honesty, trustworthiness, and reliability serve as lubricants for the economic engine.
The views and opinions expressed are those of the author and do not imply endorsement by the University of Northern Iowa.