Prof discusses cures for economic ails
Students were encouraged to follow the ethical example of pelicans and pond slime during the Huntsman School of Business Dean’s Convocation on Feb. 17.
Thomas Donaldson, a professor at the Wharton School of the University of Pennsylvania, addressed students about the ethical roots of the current economic crisis and provided his solution to the problem.
“I want to turn to lower-life forms, because I think that they’re smarter than we often are,” Donaldson said. “They celebrate competition … but at key moments in the animal kingdom, cooperation inside groups turns out to be what saves them from long-term systemic risks.”
Donaldson said pond slime algae link together to support each other when resources are scarce in order to ensure long-term survival. Ultimately, this saves their gene pool, he said.
Pelicans can be extremely competitive on an individual basis but cooperate at critical times, Donaldson said. The males, who are usually more competitive, share some of their prized nesting materials, used to attract a mate, with other male pelicans, he said. Donaldson called this sort of sharing between competitors “the pelican’s gambit.”
“It reflects the importance of cooperation in key moments,” Donaldson said. “A gambit in chess … looks as if it brings sacrifice to you, but in the long run you win.”
This type of cooperation between groups and industries is what Donaldson said will bring society out of its state of economic crisis.
Scott Harward, a junior studying international business, said he agrees.
“I think this is pretty useful just in our normal lives,” Harward said. “The pelican’s gambit is a principle that could be applied not only in corporations and industries, it can be applied in small business or within your family or community to help you get through anything.”
For maximum cooperation, companies must be willing to make ethical decisions and share beneficial information, tools or techniques with other companies and the public, benefiting society as a whole, Donaldson said.
“We’re dealing with an information asymmetry that is pernicious,” Donaldson said.
“You’ve got to have good business leaders in general,” said Jared Winings, a senior studying engineering. “It just comes down to everyone’s got to have good ethics.”
Donaldson said there are three ethical sources from which the current economic problem arose and continues to grow.
The first problem, which Donaldson called “pay for peril,” involves companies taking unethical risks that could take the company down but they make a lot of money if done successfully — essentially, it’s a gamble.
“That kind of pay for peril temptation is no doubt part of what fueled the crisis,” Donaldson said.
The development of new technology, or “tech shock,” is the second big problem, Donaldson said. Because technology is always developing, problems arise that have never been seen before.
For example, ethical dilemmas arose as new life-extending technology was developed. With things like oxygen, food tubes and respirators life was potentially extended, but the question of whether these tools were ethical, or not, remained, Donaldson said.
“However, we started to slowly get our arms around it,” Donaldson said. “As we invent new stuff, we don’t know how to get around it. It plays a role and will in the future.”
The third and biggest problem fueling the economic crisis, Donaldson said, is the normalization of questionable behavior, which he related to a dance floor.
“‘When the music is playing, you’ve got to get up and dance,'” Donaldson said, quoting former CEO of Citigroup, Chuck Prince. “Everybody does this questionable behavior that has become normalized within the industry, so that even though everyone knows it’s questionable, they stay in the danger zone.”
“The longer we’re around it, the more we accept it,” said Justin Yates, a senior majoring in business administration. “We’ve just accepted that (CEOs and politicians) are crooks and after a while, it just becomes more acceptable, which is sad.”
It is the acceptance of questionable behavior that keeps us in the economic crisis, Donaldson said. In order to solve the problem and get out of the crisis, Donaldson said, society should follow the example of pond slime and pelicans by supporting one another and sharing, rather than keeping, beneficial information.
The best thing for companies to do is try to foresee future problems and then act accordingly in a beneficial way, Wining said.
“I think if industries were able to do what (Donaldson) said, and they’d agree on something, then it would really help society,” Yates said. “The problem is too many people want to do what’s best for them. They don’t want to do what’s best for everyone.”
Sophomore Valerie Jenkins, an interior design major, said Donaldson talked about points of business she had never thought about before.
“(Donaldson) seemed to have a strong grasp on ethics, and he believes that ethics are what makes America great,” Jenkins said. “I feel like I understand more about business in general, and it helped me to understand the reasons behind why our economy is the way that it is today.”
– allie.jeppson3@gmail.com