1
Q
Relativism:
A
What is considered good or bad should be evaluated relative to the values and morality of the society in which they reside and to their personal background, not to some standard of behaviour.
There is no absolute right or wrong, but acts are said to be morally acceptable so long as they conform to society’s approved practices and beliefs.
What is considered morally right in one culture could be seen as wrong in another.
Morality (if it’s good or bad) depends on society’s approved practices and beliefs.
2
Q
Consequentialism:
A
Acts are good if they have good/ fair consequences.
The morality of an action is determined by its results. If an action produced good consequences -> good, produces bad consequences -> bad.
Morality depends on the consequences.
3
Q
Egoism:
A
The theory that acts are good if they benefit me.
Actions are considered morally right if they benefit the person.
Egoists believe that should act in ways that promote their own self-interests.
Morality is based on the benefits one gets from doing the action.
4
Q
Utilitarianism:
A
Acts are good if they raise social welfare (outcome-based = consequentialism).
The best action is the one that gives the highest net positive effect on overall well-being.
Morality (if it’s good or bad) is determined by every’s overall happiness and wellbeing.
5
Q
Golden rule:
A
“Do unto others as you would have others do unto you.”
Treat others the way you would like to be treated.
About empathy and putting yourself in someone’s shoes.
6
Q
Kant’s 1st Rule, the Categorical Imperative:
A
Act in a way that you believe could be a Universal law.
“Would it be okay if everyone did this?” -> No -> Don’t do it/ -> Yes -> Can do it.
7
Q
Kant’s 2nd Rule, the Practical Imperative:
A
“Do not treat purely as a means (for oneself).”
Never use someone to get what you want without considering their own goals and humanity (feelings and needs).
8
Q
A
9
Q
Ethics of Care:
A
Ethics of care focuses on the importance of relationships and responsibilities. Actions should be guided by our duties for others, especially those who are dependent or vulnerable.
Emphasizes empathy, compassion, nurturing relationships > strict rules or principles.
10
Q
Challenges with relativism:
A
- Cultures have different moral standards (what is considered wrong or right).
- Leads to conventionalism (what is right depends on what one’s what immediate environment dictates).
- Problems: Changes based on one’s environment.
- There are things that are considered universally wrong: genocide, torture, slavery.
11
Q
Problems with Consequentialism:
A
- What is considered a “good” outcome varies between people (ex: material gains, success and achievements)
- Aims to maximize overall well-being, but how should the overall wellbeing be increased and be measured? (utilitarianism, egoism, or altruism?)
12
Q
Ethical egoism:
A
It’s good for people to act on their self-interests.
It leads to better outcomes for everyone, resources are used more efficiently, people are motivated to achieve their best.
Smith: Collectively better off, trying to help others isn’t the best because we impose our own preferences over the others and charity is degrading.
Rand: Egoism recognizes the supreme value of each persons’ life and sacrificing one’s self for another, destroys one’s highest value.
13
Q
Psychological egoism:
A
It claims that all human actions, even those that appear altruistic, are ultimately driven by self-benefit.
Self-interest is what motivates people.
14
Q
Prisoner’s Dilemma and Egoism:
A
Egoism makes both parties worse off than cooperation.
15
Q
Problems with utilitarianism:
A
- Justifies harming individuals for the greater good.
- Justifies torture for the greater good.
- Impartiality (treating everyone’s happiness equally) -> equal treatment of innocent, guilty, family and strangers.
- Justifies dishonest behaviours even if leads to the greater good (lying for the greater good).
- Monetizes everything, even someone’s life to quantify happiness (can diminish its worth).
16
Q
Moral rules:
A
Not based on outcomes/ consequences but based on the idea that one should follow principles/ rules that one wants everyone to follow.
A moral rule should satisfy Universality and Reversibility.
The duty of all to be honest establishes a right for all to expect honest dealings.
17
Q
Moral rules: Universality:
A
“I want everyone to follow that rule.”
Ensuring that a moral rule is one you want everyone to follow.
18
Q
Moral rules: Reversibility:
A
“The rule should apply to me.”
Ensuring that the rule applies to you the same way it applies to others.
19
Q
Limitations with the Golden Rule:
A
“Treat others how you would like to be treated.”
- Differences in preferences (how one wants to be treated).
- Does not provide guidance for actions that primarily affects oneself (realizing one’s talents).
- Lenient law enforcer (treating offenders with leniency because that’s how they’d like to be treated in the same situation).
Good for empathy and reciprocity though.
20
Q
Kant’s Categorical Imperative:
A
A rule for making moral decisions. Tells you to act in an way that you would want everyone else to act (Universality) and that the actions respect others (others are valuable in their own right).
Determining if an action is morally right: Universalize & Respect.
- Think of an Action (I want to borrow money and not repay it) 2. Create A Rule for That Action (It’s okay to borrow money and not repay it). 3. Make it Universal 4. Respect Others.
21
Q
Limitations with Kant’s Categorical Imperative:
A
- Strictly following the universalizable rules (even if it’d be better not to in a inquiring murder situation for example).
- One-size-fits-all rule can be difficult for complex human situations.
- If a rule leads to an unworkable society or contradiction then according to Kant it’s not a good rule, but there are differences in what one considers an unworkable society/ contradiction.
22
Q
Rule utilitarianism:
A
Not to assess one act, but used to assess a rule. If the rule maximizes total utility if it is always followed, then it is a good rule.
Obey moral rules, which if universally followed would maximize social welfare.
Assess the morality of actions based on adherence to rule that, if followed by everyone, would maximize overall happiness (based on overall utility if applied universally).
Ex: More flexible as it considers the outcomes of following moral rules (if it maximizes social welfare). A rule against lying might generally lead to trust and better outcomes, but in the case of the “Inquiring Murderer,” lying might lead to a better outcome (saving a life).
23
Q
Kant’s Imperative:
A
A principle says that we should never treat people as a means to an end, but respect their autonomy and inherent worth as individuals.
For others: Acknowledge their effort and humanity, allow individuals to make informed decisions about their participation.
24
Q
Carol Gilligan/ Nel Noddings: Ethics of Care:
A
Principles that focuses on relationships (its importance) and care & responsibility (caring for others and being responsible for their well-being)
Moral actions depends on interpersonal relationships, care.
25
Act utilitarianism:
Take actions that add to the sum of human happiness.
Assess each individual action based on its specific consequences (greater happiness = do).
26
Milton Friedman & CSR/ Profit Maximization
1. Manager's responsibility as an employee and agent of the principle > social responsibilities.
2. Pursuing social responsibilities instead of profit maximization is like "taxation without representation."
3. Pursuing profits leads to Pareto efficiency (Invisible hand).
27
Milton Friedman: Corporate activity that aims to help the community but reduces profits is:
1. Undemocratic because not made under a democratic process (if shareholders agree in a vote -> it is democratic).
2. Business person does not have the expertise to identify and fix social profits (actually there know more about the harm they are causing than outsiders).
3. Ineffective -> manager might go elsewhere, or be fired for not profit maximizing (not if shareholders and consumers like their CSR goals).
He ignores:
- Market failure due to negative externalities.
28
Kenneth Arrow: Profit Maximization (problems with it)
Argues that profit maximization fails to yield efficient results due to:
- Negative externalities.
- Assymmetric (imperfect information): Firms knows more about their product/ processes/ workplace safety than others.
29
Potential Solutions to Market Failure:
1. Regulations: Production standards, maximum emission levels, safety inspections, competition policy etc.
2. Taxes (negative externalities) and subsidies (positive externalities): Tax pollution, subsidize abatement (reducing something).
3. Legal responsibility: Damage suits or "torts", legalistation for labout and consumer protection.
4. Government produces public goods.
5. Industry led solutions (guarantees, warrantees, and volunteer labelling -> to mitigate assymmetric information).
6. CRS: Moral obligations to meet ethical codes (diminish negative externalities).
30
Corporate Social Responsibility:
A concept that captures
the responsibility of business to the environment, its
stakeholders and to the broader society (workers [safe working conditions], customers [safety regulations], neighbours).
31
Shared value:
Where firms have benefit to their (financial) bottom line from doing CSR initiatives. Some firms (e.g. those with consumer brands) find it easier to create shared value than others.
32
ESG investing:
Where investors invest in equities of firms that score highly on an ESG index. It is an important means of incentivising firms to engage in CSR.
33
Greenwashing:
Firms appear socially responsible but
without having much impact.
34
Triple Bottom Line:
Where firms expand their
objectives beyond just making money to include having a positive impact on the environment and the community (People/Planet/Profit).
35
Michael Porter's 4 justifications for doing CSR:
* Moral obligation: Moral duty to do the right thing.
* Sustainability: Companies should operate in ways to
secure long-term economic performance by avoiding
detrimental short-term behaviour. Aligns with the Triple Bottom Line approach
* Freedom to operate: Operating (ability to commercialize a product or process) without infringing on the rights of others.
Realistic and practical appraoch where companies look to satisfy stakeholders based on best pratice to ensure that everyone is well with the operations (more positive for everyone - avoid conflicts).
* Reputation: Improve image, strengthen brands and increase moral.
36
Problem with Michael Porter's 4 justifications for doing CSR:
* Moral obligation: Difficult because of competing values, interests, costs.
* Sustainability: It’s challenging to balance short-term costs with long-term benefits. There is uncertainty over the tangible long-term benefits and advantages of sustainability initiatives, especially when dealing with abstract concepts like transparency.
* Freedom to operate: The agenda is often ceded to outside groups. Stakeholder groups, which may include activists, NGOs, and the public, often do not fully understand the firm's operations, trade-offs, and the importance of different issues. This can lead to external pressures that may not align with the firm's strategic interests.
* Reputation: Measuring the social impact and its benefit to firms can be difficult. Companies may struggle to quantify the impact of their social initiatives and how these initiatives enhance their reputation and business performance.
37
The issue Porter saw with traditional CSR initiatives are that they...
they often focus on the tensions between business and society rather than their interdependence.
38
Porter's solution to the tensions between CSR and companies' goals:
Porter suggests that companies should strategically integrate CSR initiatives in a way that aligns with their core business strategies and considers the mutual impact between society and the firm.
Aligning CSR with Business Strategy: Integrating CSR initiatives with the company's core business strategies to ensure that they contribute to the firm's competitive advantage while benefiting society.
Creating Shared Value: Focusing on creating shared value by addressing societal needs and challenges in ways that also benefit the business. This means finding intersections where social and business interests align.
Strategic Integration: Ensuring that CSR activities are not just peripheral efforts but are embedded in the firm's strategy and operations, creating a synergy between societal impact and business performance.
39
Economic systems: Market capitalism (private enterprise)
Private individuals and businesses own the means of production and operate for profit.
The allocation of resources and distribution of goods are determined primarily through free markets and voluntary exchange.
* Private Ownership: Individuals and businesses own and control property and resources.
* Free Markets: Prices and production levels are dictated by supply and demand.
* Profit Motive: The primary goal is to generate profit for owners and shareholders.
* Minimal Government Intervention: The government typically plays a limited role, mainly to enforce contracts and protect property rights.
40
Economic systems: Monopoly capitalism
Centralized & Private
Centralized: A few large firms dominate the market and control a significant share of production and distribution. This centralizes decision-making power within these firms, as they have the ability to set prices and influence market trends.
Private: They own the means of production, benefit from profits, goal is to maximize profits, operate independently from government control.
Inefficiency: While large firms can benefit from economies of scale, leading to lower costs and potentially lower prices, their market power can also lead to inefficiencies such as higher prices and reduced innovation due to lack of competition.
41
Economic systems: Market socialism
Market Socialism is an economic system that blends elements of socialism and capitalism:
* Public Ownership: Key industries and resources are owned and controlled by the state or public entities.
* Market Mechanisms: Prices and resource allocation are determined by supply and demand.
* Economic Incentives: Firms aim for efficiency and profitability, competing in the market, but profits benefit the public (re-invested into schools and hospitals, for example).
* Wealth Distribution: Income and wealth are distributed more equitably, with state profits funding public services like healthcare and education.
* Democratic Decision-Making: Workers and communities often have a say in business management and economic decisions.
Imagine a country where the government owns major industries like utilities and healthcare. These industries compete in the market and use their profits to fund public services, ensuring both efficiency and social equity.
Ex: China
42
Economic systems: State-directed socialism
Centralized (gov controls all major economic activities) & Public
The state makes decisions regarding what to produce, how to produce (owns the means of production) and for whom to produce.
Ex: Soviet Union
43
Political systems: Democracy
Democracy is all about people having a direct say in decisions through voting. leaders are elected by the citizens to represent their interests and run the country. Leaders are accountable to the people (this means they have to listen to our concerns, follow the rules set by the country’s constitution, and can be voted out if they don’t do a good job).
44
Political systems: Republic
Republic focuses more on having leaders who represent the people’s interests and are chosen by them. Accountable to the people.
45
Political systems: Monarchy
Monarchy is a political system where a single ruler (monarch) serves as the head of state. Can be constitutional or absolute (doesn't need to follow the constitution).
46
Political systems: Communism
Typically, there's a single ruling party controlling political power. System based on communism (principles of common ownership and social equality [equitable distribution of resources).
Government owns all property and controls all resources.
47
Political systems: Despotism
A single person or a group of people has all the power, authoritarian rule (political decisions are made without the consent of the people, often through coercion and repression).
48
Direct (pure) democracy:
Individual citizens directly vote on alternatives (on laws, policies, etc). Individuals have direct participation, no representatives.
Examples: Direct democracy is practiced in small communities or organizations where all members can gather to discuss and vote on issues. It is also facilitated through initiatives and referendums in some countries.
49
Representative democracy:
Representatives are elected and hold the power to vote on alternatives on a decision based on the interests of the individuals they represent.
50
Government failure is when government acts...
...in a way that is contrary to what normative analysis suggests.
Normative analysis: It focuses on identifying optimal policies that promote economic efficiency, fairness, and other desirable outcomes according to theoretical frameworks.
The main goal of normative analysis is to prescribe or recommend policies that maximize societal welfare, promote economic efficiency, and uphold principles of fairness and justice.
51
Winston Churchill's quote:
Democracy has its flaws but its the best out of all the other alternatives.
52
Healthy democracies require...
1. An educated electorate (understand politics, economics, and social issues to make well-informed choices and for represents to truly represent the interests of the people).
2. A free press (provides information and investigates important issues independently of the government).
3. An independent judiciary (an independent judiciary ensures that politicians and government officials follow the law, protects the rights and freedoms of the people).
They promote transparency, accountability, and fairness in governance, safeguarding the rights and interests of citizens.
53
Liberal democracy rests on the protection of...
1. Property rights. Protect owners and investors from expropriation.
2. Political rights: That the voted party will get power, the right to vote, form political parties, and participate in the political process freely.
3. Civil rights: Equal treatment and equal access to public services.
54
Illiberal/ partial/ empty democracy:
Elections take place but citizens are cut off from knowledge about the activities of those who exercise real power because of the lack of civil
liberties (citizens may face restrictions on their ability to express dissent, criticize the government, or organize protests).
55
Direct democracy is not necessarily superior to representative democracy because...
- Expensive (costly to vote on every issue).
- Lack of expertise to make well-informed decisions (costly to make it so).
- Does not represent the overall preference: Voting does not capture nuances such as how strongly people feel about specific issues or their relative priorities (does not represent strenght of preference)
56
Median voter theory:
The theory states that in elections with two main candidates or parties, the policies and positions of these candidates tend to converge towards the center of the political spectrum, where the median voter’s preferences lie.
Candidates adjust their positions to align with the preferences of the "median voter" to get the most votes and succeed.
Median voter: The theory states that in elections with two main candidates or parties, the policies and positions of these candidates tend to converge towards the center of the political spectrum, where the median voter’s preferences lie.
In elections, especially in systems with two main candidates or parties, the median voter's preferences are crucial. This is because they represent the tipping point where a majority of voters lean towards one side or the other.
Can get the most people by being more in "the middle."
57
Left-sided:
People who emphasize distributional fairness.
58
Right-sided:
People who emphasize efficiency and procedural fairness.
59
Electoral systems:
Electoral systems determine how votes are translated into seats or representation in government.
60
Electoral systems: Majoritarian system:
The winning candidate or party must secure an absolute majority of votes, which means more than 50% of the total votes cast. If no candidate achieves this in the first round, a second round or runoff may be held between the top candidates.
61
Electoral systems: Plurality system/ First-Past-The-Post:
The candidate or party with the most votes wins, regardless of whether they have an absolute majority. More votes than other parties.
The overall winner of the election is determined by the number of ridings won, not the total number of votes received across all ridings.
62
Electoral systems: Proportional system:
Aims to ensure that the distribution of seats in parliament reflects the proportion of votes received by each party.
- Aims to enhance representation of diverse viewpoints and minority parties, promoting fairness by ensuring that all votes contribute to parliamentary representation.
63
Dominated winner paradox:
A party winning more seats despite getting less votes than another party, because of the structure of the electoral system.
Happens in the plurality system -> Can lead to a party winning more seats with fewer total votes compared to another party.
64
Rent-seeking:
The act of individuals or firms trying to gain economic benefits through manipulation or exploitation of the political or legal environment, rather than through productive economic activities.
65
3 main consequences of transfer-seeking:
1. Transfer of wealth of society to the rent seeker (they obtain wealth without creating new value).
2. Resources are wasted from a social point of view (resources towards transfer-seeking is not valued by society).
3. The policy usually causes pure waste (market inefficiency - not to benefit society or what it values) since they are essentially self-serving.
ex: Lobbying
66
Lobbying:
Paid efforts to influence the decisions of government officials, often legislators or members of regulatory agencies.
67
Lobbying: Economic Interest Groups (EIGs):
Primarily concerned with their own economic self-interest.
These groups represent specific economic sectors, such as unions, industries, professional associations, and regional interests.
Examples:
Unions advocating for workers' rights and better wages.
Industry associations, like the restaurant association, pushing for favorable regulations.
Professional groups, such as engineers, seeking standards and practices that benefit their profession.
Regional groups lobbying for local economic development.
68
Lobbying: Social Interest Groups:
Tries to promote specific moral or social values.
These groups promote particular values, moral views, or social causes.
Examples:
Mothers Against Drunk Driving (MADD) advocating for stricter drunk driving laws.
Environmental groups pushing for policies to combat climate change.
Lobbying costs = transfer-seeking costs ($ not going towards being productive -> inefficient).
69
Pollution abatement:
Efforts to eliminate, reduction or control pollution.
70
PMB (Private Marginal Benefit) of Abatement:
This represents the benefit that an individual or a firm receives from reducing pollution.
For example: A factory that reduces its emissions might save on potential future pollution fines or improve its public image, which can lead to higher sales or investment.
71
DWL for under-abatement:
When pollution abatement is not carried out when MB=MC -> loss of benefits to society -> social welfare is not maximized in this area -> deadweight loss.
72
Carbon Capture and Sequestration (CCS):
It involves capturing CO₂ emissions, transporting them to a storage location, and securely storing them underground.
73
Solutions to environment externalities:
1. Property Rights or Internalizing the Externality via Unified Ownership (Mergers)
- Property Rights or Internalizing the Externality via Unified Ownership (Mergers)
2. Legal Remedies (Torts) and Regulation (e.g., Quantity Controls or Standards)
- Legal action can be taken against those who cause environmental harm, and governments can set regulations that limit the amount of pollution (quantity controls) or set specific standards for emissions.
3. Taxes on Polluting Activities
- Known as Pagovian taxes -> taxes of negative externalities for pollution.
Ex: Carbon taxes.
4. Subsidies for Abatement Technologies
- Governments can provide financial incentives to companies that invest in technologies or practices that reduce pollution. Subsidies lower the cost of adopting cleaner technologies.
Ex: Grants or tax credits for installing solar panels, wind turbines, or other renewable energy sources.
5. Creation of a Market: Tradable Permits.
- Also known as cap-and-trade systems, these create a market for pollution permits. Companies are given a certain number of permits, which they can trade. This sets a cap on total emissions but allows flexibility in how reductions are achieved. Incentivizes them to reduce emissions to sell excess permits.
6. Social Responsibility and Utilitarian Ethics
- Encouraging firms and individuals to act in socially responsible ways based on ethical considerations. Utilitarian ethics promotes actions that maximize overall happiness and reduce harm.
Ex: Corporations adopting green policies and practices not just for regulatory compliance but also to enhance their reputation and fulfill their ethical obligations.
74
Carrying capacity:
The maximum population size of a species that an environment can sustain indefinitely.
75
Harvest equilibria:
Harvest equilibria refer to the **sustainable balance between the extraction** (harvesting) of renewable natural resources and the **natural replenishment** or growth of those resources. It represents a state where the **rate of harvesting is matched by the rate of resource renewal,** ensuring the resource can be **utilized indefinitely without depletion.**
We should only take from natural resources (like fish or forests) as much as can grow back naturally. This keeps the resource healthy and available for the future.
76
Crowding effect:
There are too many individuals in a given space. Individuals within the population experience reduced growth rates, productivity, or overall health. This phenomenon occurs due to increased competition for limited resources such as food, water, space, and mates.
77
Tragedy of the commons/ Open access problem:
Lack of property rights/ goods that are rival and non-excludable leads to overuse of the common. resource.
Can lead to depletion to extinction of a resource.
78
Sustainable standard of living (Hartwick’s rule):
Requires investments in productive assets (innovation that grows resources faster and better) to make up for resource depletion.
Invest all the surplus profits generated by resource extraction into various forms of capital.
The goal of Hartwick’s rule is to keep the citizens from falling into poverty when natural resources are exhausted.
79
Tipping points & feedback loop:
Tipping points: A point where a small change can lead to irreversible and significant changes in the climate system, that self-perpetuate due to feedback loops.
Melting ice -> albedo effect
Changing ocean circulation -> changing temperatures (in Europe for example)
Changing air circulation -> more extreme weather
Threatened large-scale ecosystems -> like boreal forests.
80
Kyoto protocol
- Signing nations agreed to reduce GHG emissions to 5.2% below 1990 levels.
- No penalties for non-compliance! -> no incentive to decrease GHG emissions.
-> Canada was 24.2% above 1990 levels in 2003.
-> Canada pulled out in 2011.
- Some countries did lower their emissions -> Overall developed countries 5.9% down.
81
Paris Agreement
- Aims to limit global warming to less than 2 deg Celsius above pre-industrial levels.
- No penalties for non-compliance. Countries can also withdraw -> low incentives to do it.
- “Binding” as at least 55 countries, together representing at least 55% of emmissions, signed by April 2017.
- Some critics say that it is also too vague and doesn’t do enough for the poor.
82
Michael Mann in his book ‘The New Climate War’ argues for the following:
- Widespread carbon pricing.
- Allowing renewable energy to compete fairly with fossil fuels (e.g. removing subsidies for oil and gas).
- Debunking false arguments (e.g. “it’s up to individuals”).
- Combatting climate “doomism”.
83
Malthusian trap:
Also known as the Malthusian Crisis, refers to a situation where population growth tends to outpace the growth of resources of food and water leading to famine, disease, and other hardships that restrains population growth.
84
Solutions to over-capacity: Prophets (apocalytic environmentalism)
- William Vogt
- Only reducing consumption and limiting population will save us.
- Affluence (abundance of material goods) is not our greatest achievement but our biggest problem.
▶ Unless we change, the unavoidable result will be environmental destruction.
▶ “Cut back, cut back!”
Use less resources.
85
Solutions to over-capacity: Wizards (techno optimism)
Science and technology, properly applied, will save us.
▶ Green movement of 1960s: High yielding crop varieties and agronomic techniques increased grain harvests averting tens of millions of deaths.
▶ Only getting richer and more knowledgeable will resolve our environmental crises.
▶ “Innovate, innovate!”
86
Not In My Backyard
- Benefits for lots of people but for those away from the waste location.
- Locate waste where it generates the lowest costs.
- Those who bear those costs should be compensated by
the rest.
87
Policy can only solve problems if it is possible to...
- assign property-rights
- levy taxes, impose standards/quotas
- internalize externalities
- or, provide public-good (removal of public-bad) services
88
Struggles of international policies...
- no international government
- often transfer-seeking by countries
- prisoner's dilemna (countries doing what's in their self interest).\
- monitoring is challenging.
89
COMM 394: ESG
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