Do Australian corporations have the courage to rebuild public trust?
Corporate Australia is having a rough time in 2023.
PwC made headlines for selling out Australian citizens by flogging details of the government’s tax avoidance schemes to potential corporate tax avoiders. Qantas has been raked over the coals for, amongst other things, lying to customers and illegally sacking workers. Elsewhere corporations are pilloried for scandalously excessive executive pay, Dickensian industrial relations standards, wilfully aggressive tax avoidance, and heartless profiteering.
Research by the market researchers at Roy Morgan recently revealed that the level of trust Australians have in corporations is at the lowest it has ever been since they started measuring it. The downward trend started with COVID but has been in free fall since the middle of 2022. Roy Morgan CEO Michelle Levine describes what is going on as the result of ‘moral blindness’ of corporations.
There is an apparent irony in play. Today’s corporations are accused of this moral blindness, while many publicly embrace ethics by taking increasingly active roles in important matters of public purpose and social impact. Corporations are weighing in on a variety of crucial political issues, such as the Indigenous Voice to Parliament, LGBTQIA+ rights, and the climate crisis.
Business as a force for good?
In the era of ‘woke capitalism’ the business world seems to feel little cognitive dissonance, let alone hypocrisy, about parading their ethical credentials in public while acting like ruthless and exploitative profiteers in the market. Being economically exploitative and socially progressive is the name of the game for many corporations.
The socially progressive position regards businesses as having the potential to be a ‘force for good’, especially by adopting progressive positions on social and environmental causes. Think of Qantas’ ‘pride flights’, PwC’s commitment to social impact, or the broad adoption of diversity and climate change initiatives by businesses of all kinds.
Many regard corporate engagement with political causes as being genuinely motivated by ethical care for their ‘stakeholders’. This view is not universal. Others see corporate activism as comprising of shallow, inauthentic and self-interested grandstanding. Between green-washing, woke-washing and virtue-signalling, corporations have been accused of using ethics to feather their own nests.
Yet others see corporate social and environmental engagement as incontrovertible evidence that CEOs have been held captive by radical left-wing activists. By this account weak-willed executives are being exploited by nefarious militants trying to use corporations as a Trojan Horse to infiltrate mainstream society.
The ‘vile maxim’ of corporate selfishness
Whichever position you might be aligned with, so-called ‘woke’ practices are in apparent contrast to the exploitative and ruthless competitive behaviours of companies like Qantas and PwC that have contributed to the demise of trust in corporations. When it comes to business, the ethical principle at play is akin to what, many years ago, economist Adam Smith condemned as the ‘vile maxim’. As he wrote in The Wealth of Nations back in 1776:
“All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons.”
It is clear that many people running businesses today are enthusiastic followers of this vile maxim. To suggest this is ‘moral blindness’ can be misleading because (no matter how vile) there is an ethics at play here, and one that is widely accepted. Ayn Rand notoriously championed such an ethics as being beholden to ‘the virtue of selfishness’. By Rand’s account, pursuing self-interest is a valid, if not desirable, moral position. She stood against sacrifice as being a moral principle, instead seeing merit in “concern with one’s own interests”.
Free market capitalism was, for Rand, an ideal manifestation of her ethics. This all suggests that selfishness is not moral blindness, it is part of an ethical system that drives much business behaviour. It is also the ethics that is at the heart of Australia’s lack of confidence in the corporate world.
How to build trust
Between the twin poles of ‘woke capitalism’ and the ‘vile maxim’ we have something of a corporate identity crisis. Increasingly selfish profit-seeking in the economic sphere is matched with attestations to the pursuit of public good in the social sphere. That is not to say that all companies are vile or woke, clearly many are not. It is a fair call that enough of them are that it has led to a breakdown of public confidence in corporate Australia.
What does this all mean for how Australian corporations can build public trust? One answer is resolving their identity crisis by truly embracing and communicating the role of business in a liberal-democratic society. While businesses are responsible for returns on capital investment, that is neither their sole nor primary purpose. Neither is supporting progressive social positions without concern for the economy.
In its present condition Australian corporate capitalism is characterised by skyrocketing economic inequality, excessive executive pay, inflation fuelled by profiteering, and increasingly precarious employment. That Australian citizens do not trust corporations is an entirely rational assessment.
Corporate Australia’s challenge is to actively recognise and pursue its real social purpose. This purpose is about driving innovation and economic growth for shared prosperity, providing meaningful and secure jobs with decent pay, paying taxes that fund public services, as well as ensuring investors get a reasonable return.
Rebuilding trust is simple. What remains to be seen is which of Australia’s fallen corporations will have the courage to abandon their attachment to the vile maxim.
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BY Carl Rhodes
Carl Rhodes is Dean and Professor of Organization Studies at the University of Technology Sydney Business School. Carl writes about the ethical and democratic dimensions of business and work. Carl’s most recent books are Woke Capitalism: How Corporate Morality is Sabotaging Democracy (Bristol University Press, 2022), Organizing Corporeal Ethics (Routledge, 2022, with Alison Pullen) and Disturbing Business Ethics (Routledge, 2020).
One giant leap for man, one step back for everyone else: Why space exploration must be inclusive
Greater representation of women and minoritised groups in the space sector would not only be ethical but could also have great benefits for all of humanity.
The systematic exclusion of women – and other minoritised groups – from all parts of the space sector gravely impacts on our future ability to ‘make good’ our space ambitions and live out the principle of equality. Minoritised groups refer to groups that might not be a minority in the global population (women, for instance) but are minoritised in a particular context, like the space sector.
Currently, more than half of humanity is treated as an afterthought for space tech billionaires and some government space agencies, amplifying dangerous warning signs already heralded by space ethicists and philosophers, including us. If these warning signs are ignored, we are set to repeat earthly inequalities in space.
Addressing the kind of society we want in space is crucial to fair and good decision making that benefits all, helping to mitigate risk and protecting future generations.
What does diversity in the space sector look like right now?
Research reveals that women have held 1 in 5 space sector positions over the past three decades. Across much of the sector, representation is at best marginally improving in public sector roles, whilst at worst, stagnating or regressing over a period where we should have seen the greatest improvements.
For example, of the 634 people that have gone to space, just over 10% have been women.
Our research has found that from the publicly available data, only 3 out of 70 national space agencies have achieved gender parity in leadership. Both horizontal and vertical segregation limits women – even in agencies that are doing well – pushing them down the organisational hierarchy and pigeonholing them out of leadership and operational, engineering and technical roles, which are often better paid and have higher status.
It is not just the most visible part of the space sector that is struggling to address the issue of gender inequality. Exclusion and discrimination have been reported by women occupying roles from astrophysicists and aerospace engineers to space lawyers and academics.
Prejudice is a moral blight for many workplaces, not least because it holds industry back from realising its fullest potential. Research finds that more diverse teams typically do this better and are more innovative – having a diverse mix of perspectives, experience, and knowledge ultimately helps conquer groupthink and allows a broader range of opportunities and complications to be considered. In the intelligence sector, diversity further helps “limiting un-predictability by foreseeing or forecasting multiple, different futures” which may be similarly relevant for the space sector.
Space exploration is a gamble, but getting more women and people from diverse backgrounds into the space sector will improve humanity’s odds.
In the context of space, failing to act on such insights would be morally irresponsible, given the risk taken by the sector on humanity’s behalf every single day.
Space is defined by the Outer Space Treaty as a global commons, meaning it is a resource that is unowned by any one nation or person – yet critically, able to be ‘used’ by any, so long as they have the resources to do so. As it stands, the cost and inaccessibility of space technology means that only a privileged few individuals, companies, and countries are currently represented in the space domain. In broader society, these privileged few are predominantly white, wealthy, connected men.
Being ‘good ancestors’ in the new space age
We might consider the principle of intergenerational justice espoused by governments or the ‘cathedral thinking’ metaphor by Greta Thunberg to describe the trade-off between small sacrifices now for huge benefits moving forward.
To further her metaphor, our ethical legacy is not shaped solely by our past, but also by our ability to be regarded as ‘good ancestors’ for future generations. These arguments are already being spurred in Australia by movements like EveryGen, Orygyn, the Foundation for Young Australians and Think Forward (among others) who are aiming for more intergenerational policymaking across many domains.
As the philosopher Hannah Pitkin notes, our moral failings arise not from malevolent intent, but from refusing to thinking critically about what we are doing.
A new space ethics
Whilst it will take some time to see gender parity occur in the space industry even if quotas or similar approaches are taken, there are still ‘easy wins’ to be had that would help elevate women’s and minoritised voices.
We found many women in the space industry who were interested in forming networks both within and between agencies and organisations. These typically serve a wide range of functions, from networking in the strict sense of the word to enabling a safe space to discuss diversity and inclusion or drive advocacy efforts. Research shows diversity networks having benefits for career development, psychological safety and community building.
Beyond this individualised, sometimes siloed approach, organisations also need to deeply commit to tackling inequality at a systematic level and invest in diversity, inclusion, belonging and equity policies which many in the space sector currently lack. Without transparently defined goals and targets in this area, it is difficult for organisations to measure their progress and, moreover, for us to hold them accountable.
Finally, looking to the next generation, the industry needs to engage a diverse range of students from different educational and demographic backgrounds. This means offering internships and educational opportunities to students that might not adhere to the current ‘mould’ of what someone looking in space looks like. For instance, the National Indigenous Space Academy offers First Nations STEM students a chance to experience life at NASA, whilst other initiatives across the sector include detangling the STEM-space link, to demonstrate the range of roles and opportunities available in the space sector for even non-STEM career paths.
In the height of the Soviet-American space race, JFK said: “we choose to go to the Moon in this decade and do other things, not because they are easy, but because they are hard”. Transforming the exclusive structures and patriarchal history of the space sector may not always be a simple task, but it is fundamentally critical on both a practical and moral level.
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BY Dr Elise Stephenson
Dr Elise Stephenson is the Deputy Director of the Global Institute for Women's Leadership at the Australian National University. Elise is a multi award-winning researcher and entrepreneur focused on gender, sexuality and leadership in frontier international relations, from researching space policy, to AI, climate, diplomacy, national security and intelligence, security vetting, international representation, and the Asia Pacific. She is a Gender, Space and National Security Fellow of the National Security College, an adjunct in the Griffith Asia Institute and a Fulbright Fellow of the Henry M Jackson School of International Studies at the University of Washington.
BY Isabella Vacaflores
Isabella is currently working as a research assistant at the Global Institute for Women’s Leadership. She has previously held research positions at Grattan Institute, Department of Prime Minister & Cabinet and the School of Politics and International Relations at the Australian National University. She has won multiple awards and scholarships, including recently being named the 2023 Australia New Zealand Boston Consulting Group Women’s Scholar, for her efforts to improve gender, racial and socio-economic equality in politics and education.
People first: How to make our digital services work for us rather than against us
Advancements in technology have shown greater efficiency and benefits for many. But if we don’t invest in human-centric thinking, we risk leaving our most vulnerable behind.
As businesses from the private and public sector continue to invest in improved digital processes, tools and services, we are seeing users empowered with greater information, accessibility and connectivity.
However as critical services for healthcare, lifestyle and support systems have become increasingly digitised, the barriers for vulnerable, remote or digitally excluded individuals must also be considered against these benefits.
It’s no wonder the much-maligned MyGov app underwent an audit review earlier this year, resulting in a major overhaul of the service. Reading through their chat rooms and forums where customers can express their experiences, comments like these fill the pages:
“…If you’re trying to do something online, even if you’ve got a super reliable connection, you can spend hours wandering around in a fog because there’s no transparency about – they’re not trying to make it easy for people.”
“You need to have acquired the technology to do it, but you get on their websites, and I don’t know who designs their systems. But you’ve got to be psychic to be able to follow what they want. In order to get what you need, you’ve got to run through this maze, it’s complete bullshit.”
“And you’re already putting elderly people and keeping them in a home, it all goes online and digital, they stop having that outside interaction. It’s another chip away of community. That’s where the isolation comes in.”
Reading these statements, you get a sense of the frustration and confusion felt, not just due to time wasted but also the loss of a personal connection and agency. These experiences can lead users to doubt the reliability of business’ processes and chip away at the trust in their systems.
The Australian Digital Inclusion Index cites digital inclusion as “one of the most important challenges facing Australia.” Their 2023 key findings presented that digital inclusion remains closely linked to age and increases with education, employment and income.
So, as technology becomes more ubiquitous in our lives, how do we maintain human centric thinking? How do we avoid exacerbating existing inequalities while maintaining respect, autonomy and dignity for all?
Looking for some answers, I spoke to Jordan Hatch, a First Assistant Secretary at the Australian Government and someone who is passionate about designing for user needs. Hatch is currently working with the care and support economy task force in the Department of Prime Minister and Cabinet, exploring some of the challenges and opportunities across the care sector.
Hatch is acutely aware that amidst this digital transformation, the welfare of vulnerable individuals remains a priority. He explains human-centered design principles must play a crucial role in shaping digital solutions. Importantly, understanding the user base, including different cohorts and their specific needs, is foundational to designing inclusive services. Extensive research and involvement of First Nations communities, individuals with low digital literacy, or limited internet access are also essential to developing solutions that address their unique challenges.
Hatch explains how technology is transforming the face-to-face experience. He says the digitisation of services has prompted a re-evaluation of the role of physical service centres. The integration of digital and in-person channels is allowing for streamlined processes and improved customer experiences.
A great example is Service NSW, which has become a centralised hub offering access to several support services. The availability of digital options has not led to the exclusion of those who prefer face-to-face interactions. On the contrary, it has allowed for a more comprehensive and improved service for individuals seeking in-person assistance. The digital transformation has become a means to augment the service experience, rather than replacing it. When visiting a Service NSW centre, you are met by a representative who directs you to a computer and, if required, walks you through the online process, offering personalised support. This evolution caters to diverse needs, ensuring that the face-to-face experience remains valuable while offering alternative modes of engagement.
Of course, increasing the capability and use of technology has its downside. Digital interactions have become a societal norm and an opportunity for scams. This has led to a number of digital hoops users are obliged to make in an attempt to protect their data and privacy. This process can impact the users’ wellbeing as passwords are lost or forgotten and the digital path is often confusing.
Hatch explains in this learning journey, how a shift in his perception occurred regarding the relationship between security and usability. Previously, it was believed that security and usability were at opposite ends of the spectrum—either systems were easy to use but lacked security, or they were secure but difficult to navigate. However, recent technological advancements have challenged this notion. Innovations emerged, offering enhanced security measures that were user-friendly. For example, modern password theories promoted the use of longer passphrases consisting of simple words, resulting in both stronger security and increased user-friendliness.
Technological transformation is a process and technology is not a panacea – it is a steppingstone and an opportunity for simplification and identifying unique solutions. What we can’t do is allow technology to overshadow the need to address regulation and the complexity it can create.
Hatch shares an insight from Edward Santos, the former Human Rights Commissioner to Australia: the prevalent mindset of the technology world being, “move fast and break things”. This is often seen as innovation, and an opportunity to learn from failure and adapt. However, in the realm of public service, where real people’s lives are at stake, the stakes are higher. The margin for error in this context can have tangible consequences for vulnerable individuals.
Slowing down is not necessarily the solution, particularly when you see or experience the harm caused by a misalignment between requirements and the capacity to meet them. It is the work Jordan Hatch describes where the issue is not when, but how services are designed and delivered that will make the difference.
The intersection between technology and policy creates an opportunity for regulators and digital experts to come together. Rather than digitise what exists, they can identify the unnecessary complexities and streamline the rules. This then creates a win-win situation – through the lens of human-centred design, it facilitates the digitisation process and creates a simpler regulatory framework for those who choose not to use a digital process.
With this approach we can design technology to work for us rather than against us.
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BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
Self-interest versus public good: The untold damage the PwC scandal has done to the professions
The unfolding PwC scandal could be considered nothing more than an especially egregious example of ethical failure with dire consequences.
However, there are deeper issues to be examined. The most obvious concerns the proper role of the Australian Public Service, and whether or not efforts by successive governments to hollow it out have caused damage that will take a generation to repair. Less obvious is the damage done to an essential component of Australia’s ethical infrastructure: the professions.
Australian governments have long been captivated by physical and technical infrastructure. Few politicians can resist the opportunity to don a hard hat and hi-vis vest when announcing new investment in road, rail, bridge and dam projects. There is equal pride in initiatives including the National Broadband Network, quantum computing and improved cybersecurity.
Unfortunately, there is little interest in the ethical “infrastructure” that determines the extent of public trust in major public- and private-sector institutions. Without that trust, reform becomes almost impossible – or only after untimely delays and great cost.
As with physical and technical infrastructure, the quality of a nation’s ethical infrastructure has tangible effects on a nation’s economy. For example, Deloitte Access Economics has estimated that just a 10% improvement in ethics, across Australia, would generate an extra A$45 billion in GDP each year.
What is ethical infrastructure?
There are many components to this ethical infrastructure. However, one of the most important is the professions – whose members influence nearly every aspect of our lives. To understand their distinctive role, one needs to recognise the difference between two “worlds”: those of the market on one hand, and the professions on the other.
The essential character of the market was defined by Scottish economist and philosopher Adam Smith. It is a place where self-interested actors satisfy the wants of others. Smith prohibits lying, cheating or the oppressive use of power – as all harm the free market. Self-interested conduct is mediated by the so-called invisible hand, which Smith argues leads to an increase in the stock of common good. Indeed, that is the test any market must pass: does it, in practice, make us all better off?
The second world – the professions – is, in two respects, the opposite of the market. First, members of the professions do not satisfy the wants of others; they are obliged to serve the interests of others. For example, a diabetic might want to consume a large block of chocolate. The market will happily satisfy this want as long as the customer can pay the tariff. However, a doctor will refuse to provide the chocolate because it is not in the interests of their patient to do so.
Second, professionals are obliged to put aside self-interest in favour of the public good. For example, as officers of the court, lawyers are obliged to help in the administration of justice. This takes precedence over duties to the client and to the profession. Only after all other interests have been served may a lawyer look to their self-interest. The same holds for the members of every true profession.
In recognition of this practice, society enters into a social compact with the professions. It accords status, and gives them access to certain work that others may not do. It establishes privileges (such as the shield laws that protect journalists’ sources). The quality of the social compact waxes and wanes over time – but can exist only for as long as the professions honour their commitment to reject the logic of the market.
The importance of independence
It is the ethical foundations of the professions – in particular the putting aside of self-interest – that makes it possible for Australian governments to outsource public-sector functions to large, professional consulting firms such as PwC. After all, governments have an inalienable duty to act solely in the public interest. It is inconceivable they would turn over any of their functions to a self-interested entity. That would be to invite the fox into the hen house.
Central to each of the “Big Four” consulting firms is their auditing practice. Compared with consulting, auditing is a minnow in terms of revenue and influence. However, there lies the core of accounting’s professional ethos with its commitment to what is true and fair.
Auditors should be the quintessential professionals – independent and divorced from the ethos of the market. So, when an auditing firm, like PwC, works for government, it is assumed they can be trusted. Until they cannot.
What impact will PwC’s behaviour have on other professions?
We do not know the full extent of what happened at PwC. However, it seems likely that, at some point, some part of the firm abandoned the world of the professions in favour of the market – placing self-interest before all other considerations.
Now we are left to wonder. Was this just a small part of PwC, or has the rot infected larger parts of the company? If the professional ethos of PwC has been corrupted, how is this risk being managed in other, similar organisations?
Most troubling of all, can society still rely on the social compact it has struck with the professions more generally? Or has this once-vital piece of ethical infrastructure fallen into disrepair?
Whether you care about the quality of our society, or the economy, or the possibility of progress, you should care about the quality of our nation’s ethical infrastructure. It’s time to reinforce what remains so it’s not all lost, through neglect, cynicism or indifference, and to our considerable cost.
This article was originally published in The Conversation.
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BY Simon Longstaff
Simon Longstaff began his working life on Groote Eylandt in the Northern Territory of Australia. He is proud of his kinship ties to the Anindilyakwa people. After a period studying law in Sydney and teaching in Tasmania, he pursued postgraduate studies as a Member of Magdalene College, Cambridge. In 1991, Simon commenced his work as the first Executive Director of The Ethics Centre. In 2013, he was made an officer of the Order of Australia (AO) for “distinguished service to the community through the promotion of ethical standards in governance and business, to improving corporate responsibility, and to philosophy.” Simon is an Adjunct Professor of the Australian Graduate School of Management at UNSW, a Fellow of CPA Australia, the Royal Society of NSW and the Australian Risk Policy Institute.
The future does not just happen. It is made. And we are its authors.
Of late, I have been thinking about how to describe the impact of the work done by The Ethics Centre. It’s a surprisingly difficult thing to do because our greatest impact typically lies in our influence on what does NOT happen.
For example, when we assist or inspire a person to step back from making a disastrous decision, there is nothing to measure. We can measure the cost of disasters. We can measure the impact of the response to disasters. However, how do we measure the impact of a disaster averted?
Let’s consider this in a wider context. My abiding sense of today’s world is that we remain on the cusp of epoch-defining change. The sense of what is before us has led me back to binge-reading vast swathes of science fiction – and the worlds I encounter there are recognisably connected to our own. Yet, the unbounded power of the authors’ imagination invites the reader to be equally bold in contemplating ‘what might be’. Wondering about ‘what might be’ leads us to the realisation that we are each responsible, at least in part, for the future that actually emerges.
The future does not just happen. It is made. And we are its authors.
And that is why ethics matters. It is humanity’s best tool for the avoidance of disastrously bad decisions – and the nightmare worlds that emerge from them. More optimistically, ethics equips us to make brilliantly good decisions – and the wonderous possibilities that they entail.
We can see this at work in one topical example; the rise and rise of CHATGPT – the most famous of a growing suite of expert systems that already have the capacity to transform our lives. Predictably, there has been a slew of prophecies about the likelihood of both utopian and dystopian futures. The emergence of new technology is always accompanied by excessively optimistic and pessimistic views about its likely effects.
Less predictably, some of the architects of this technology have urged caution. Their call for a measure of self-restraint is not grounded in fear. They simply argue that it is irresponsible to unleash a powerful, transformative force without understanding what we do. In essence, we need to set the ethical parameters within which AI should be developed and deployed. If we get this right, then sound ethics will inform policy and practice that averts all manner of mischief. Yet, the impact of ethical restraint will go unmeasured. Despite this, The Ethics Centre remains actively engaged in work to support the development of ‘responsible AI’ – as evidenced by our joining the Responsible AI Network (RAIN) being led by the CSIRO.
The Centre’s work is aligned to three strategic priorities. First, we seek to exemplify and support good decision making. Second, we work to maintain an open civic space within which the issues facing our society can be discussed – even when there is much room for disagreement. Finally, we seek to strengthen the ‘ethical infrastructure’ of our society – so that they become trustworthy to the extent that the community will rely on its key institutions to exercise good judgement in the public interest. This is especially important to any society that faces major change. For example, the transition from fossil fuels to renewable energy raises the spectre that some communities (typically linked to older forms of power generation) will bear a disproportionate share of the burdens, while others reap the benefits. If we cannot trust our governments, businesses, regulators, or other institutions to get the balance right, then reform will be slowed or halted – to the detriment of all.
The economic cost of broken ‘ethical infrastructure’ is immense. As Deloitte Access Economics has estimated, a mere ten percent increase in ethics would, by itself, generate an additional $45 Billion dollars per annum in improved GDP. Even more remarkable is that this economic return could be generated, over time, with a one-off investment of only $30 Million in funds. It’s hard to think of a better return on investment. Yet, it remains elusive.
What Australia needs is a truly national institution to help the nation lean into the challenges we face. It needs to become a trusted source of advice for governments and other key decision makers. It needs to build the capacity of our nation’s leaders, in the public and private sectors, to make good decisions – across the board. It needs to support our institutions in their efforts to regain public trust. Only then, will the community allow itself to accept the fundamental reforms that will be necessary to make the most of the future.
The establishment of such an institution will be especially important in its implications for the generations of younger Australians who so readily embrace ethics – in a way that surpasses earlier generations who looked to organised religion for guidance. That is why the Centre is investing in a new youth strategy to engage, at an early stage, with the ethical leaders of the future.
The immediate effects of a significant investment in ethics will be impossible to see. The increase in prosperity will inevitably be attributed to the wisdom of those in power. What will remain invisible are the many acts of folly that sound ethics will have prevented.
That is our conundrum. It is also why we are so deeply grateful for the support provided to us by the individuals, foundations and organisations who support our work. The Ethics Centre begins every financial year without a cent of income ‘locked in’. Nobody ‘needs’ ethics … until they do. So, we remain vulnerable. But, perhaps, that might be one of our greatest strengths – because it keeps the Centre attuned to the fundamental needs of society. Irrelevance is not an option.
So, next time things go better than expected, spare a thought for the possibility that it was the invisible hand of ethics (and not the market) that produced the result. With luck – and the generous support of our donors – we can strengthen that hand for a better future.
With your support, The Ethics Centre can continue to be the leading, independent advocate for bringing ethics to the centre of everyday life in Australia. Click here to make a tax deductible donation today.
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BY Simon Longstaff
Simon Longstaff began his working life on Groote Eylandt in the Northern Territory of Australia. He is proud of his kinship ties to the Anindilyakwa people. After a period studying law in Sydney and teaching in Tasmania, he pursued postgraduate studies as a Member of Magdalene College, Cambridge. In 1991, Simon commenced his work as the first Executive Director of The Ethics Centre. In 2013, he was made an officer of the Order of Australia (AO) for “distinguished service to the community through the promotion of ethical standards in governance and business, to improving corporate responsibility, and to philosophy.” Simon is an Adjunct Professor of the Australian Graduate School of Management at UNSW, a Fellow of CPA Australia, the Royal Society of NSW and the Australian Risk Policy Institute.
It’s time to increase racial literacy within our organisations
In order establish more culturally diverse and inclusive workplaces, we need to increase our racial literacy.
We only need to look at the pay gap and underrepresentation in leadership to identify systemic racial issues within our organisations. In 2022, the Everyday Respect Report released from EB & Co identified racism as one of the factors impacting psychological safety and workplace culture. While new research from diversity and consultancy firm, MindTribes uncovered a non-Anglo pay gap within Australian organisations.
Workplace norms, systems and biases have sanitised racism to the point where not only it can affect individual’s mental wellbeing, pay and career progression, but also an organisation’s productivity, culture and consumer response. As ethical leaders we have a responsibility to unveil how racial discrimination plays out in our businesses and what strategies we can use to combat them.
An Ethics Exchange gathering in May 2023, welcomed Diversity Council of Australia (DCA) CEO Lisa Annese and Ethics Alliance members as they shared personal experiences and strategies used when developing Diversity and Inclusion (D&I) programs, and how they recognise and tackle racism within their workplaces.
The DCA has evolved over the last 40 years to become a leading entity which promotes and advances more diverse and inclusive workplaces for the benefit of individuals, organisations and the broader community. Annese says to build strategies that tackle racism in our organisations, we need to start with language.
Let’s start with language
It’s important to understand the difference in language when it comes race and culture, particularly within the Australian D&I context. Culture is defined as a combination of characteristics including ethnicity, ancestry, language, and place of origin, whereas race is generally seen as a social construct related to physical characteristics and group identity.
In response to the White Australian policy there was an effort by Gough Whitlam in the late 1960s to remove “race” from common language in order to reduce racism. This shift resulted in a focus on culture over race, and the country adopted terms such as “non-English speaking background”, embracing the concept of multiculturalism. For instance, since the United Nations created their Elimination of Racial Discrimination Day, Australia is the only country globally that doesn’t use the word race. We instead call it Harmony Day with a focus on harmony for the week. That is what is taught in our public schools and celebrated in our workplaces.
Annese suggests this avoidance of the term “race” in favour of “culture” was also an effort to maintain an existing Eurocentric power structure. For example, the term “culturally and linguistically diverse” was introduced, which broadly referred to anyone who couldn’t trace their origins back to Britain – essentially anyone non-Anglo Celtic. This excludes a large group of people with different experiences and perpetuates a sense of “otherness.”
Once we identify the other it can become easy to treat people differently and not afford them the same respect we would expect ourselves.
While understanding people’s culture is useful, it’s crucial to talk about race and to acknowledge the lived experiences of Australians who experience racism.
DCA research suggests that in Australia today, those who experience racism and racial marginalisation are people from non-European backgrounds, and the main cause of racism has less to do with language and culture and focuses more on race – features such as phenotype, visible difference, religious dress, skin tone, and hair texture.
If we want to build more inclusive and diverse businesses, we need to talk about race. And to do so, we must know what it is.
By developing an understanding of how history has sanitised our language and normalised racism in our workplace, we are able to discuss the concept of race in a way that avoids unnecessary distress. It’s important not to make assumptions that the harm felt by malintent, or overt racism is any different from the racism embedded in well-meaning or curious comments about an individual’s appearance or background.
Principles and a framework that emerged from The Ethics Exchange and DCA research to bring racial literacy to the workplace included:
- Build Racial Literacy: Before tackling racism, businesses must first educate their employees about the concept of race. They should understand what race is, how racialisation occurs, and the impact it has on people. This is important because most people have low levels of racial literacy.
- Build Confidence: The second step involves helping employees become confident in their understanding of race and racial issues. This stage ensures employees feel comfortable discussing these topics and are prepared for the next step.
- Talk About Anti-Racism: The final stage is to discuss what it means to be actively anti-racist. It is important that employees understand how they can contribute to an anti-racist environment. This stage of the process can only be effectively implemented once employees have a clear understanding of race and are confident discussing it.
One of the most impactful ways of understanding racism is to hear it from those who have been subject to it, however this carries a huge burden or cultural load. How can their voices be included to develop strategies to combat racism?
- Centre Voices: The experiences and perspectives of those affected by racism must be central to any initiatives addressing it. For instance, if a business is developing a Reconciliation Action Plan (RAP) in Australia, it should involve Indigenous employees in the process.
- Respect Cultural Labour: Organisations should acknowledge the cultural emotional and intellectual labour of employees with different social identities involved in initiatives addressing racism.
- Remunerate Appropriately: If individuals are asked to participate in initiatives to combat racism, particularly if they’re asked to share personal experiences or provide additional insights, they should be appropriately compensated.
- Respect Personal Choice: Not everyone will want to be involved in such initiatives, and that choice should be respected.
- Avoid Overgeneralisation and Presumption: One individual cannot represent an entire group. Avoid making assumptions about an entire race or culture based on the perspectives or experiences of one individual.
- Use Available Resources: In an age where information is readily available, it’s possible to educate oneself about different cultures and races without overly relying on individuals from those backgrounds to teach others.
We’d like to thank Lisa Annese and the Ethics Alliance members who contributed to this important conversation.
Find out more about the DCA’s research here.
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BY The Ethics Alliance
The Ethics Alliance is a community of organisations sharing insights and learning together, to find a better way of doing business. The Alliance is an initiative of The Ethics Centre.
Corporate whistleblowing: Balancing moral courage with moral responsibility
Calling out corporate wrongdoing requires the moral courage to stand up for what you believe in, but also involves recognising the moral agency of others.
The story of Jeff Morris is both inspiring and daunting; inspiring because he decided to take on one of the largest banks in Australia alone by exposing corrupt practices that placed customers in financial danger, and daunting because of the fate that he suffered as a result.
Commonwealth Bank Australia’s (CBA) financial planners knowingly gave harmful financial advice to elderly and vulnerable customers that led them to severe financial losses and emotional distress. Morris spent five years trying to get the CBA and ASIC to confront the wrongdoing and set it right, attempting to force a Parliamentary Inquiry before he finally decided that the only way to protect customers from these practices was to go to the media with his story in 2013. This led to the firing of rogue CBA financial planners involved in these practices and triggered the landmark financial services royal commission.
Today, Jeff Morris stands as an admirable figure, having been awarded the Order of Australia for blowing the whistle on his employer. However, in the immediate aftermath of blowing the whistle on CBA, Morris was fired from the bank, his family left him due to the financial stress his actions put them under, he was diagnosed with PTSD and suffered constant surveillance and harassment.
The whistleblower’s moral dilemma
Corporate whistleblowers, like Morris, face a moral dilemma of balancing competing responsibilities to the organisation they work for and the responsibility they have to the consumer.
As an employee of the CBA, Morris was presumably hired with the condition that he must keep confidential information about the bank’s internal practices. This is often non-controversial. Corporations have valid reasons for not wanting their internal practices revealed, like wanting to protect their unique products and services from competitor corporations. When signing an employment contract, we often find that we’re being asked to sign a confidentiality agreement. We’re essentially promising to keep the organisation’s secrets secret.
By blowing the whistle on corporate wrongdoing, we are breaking this very promise. While promise-breaking itself is not necessarily morally wrong, often there is “moral residue” left over. What this means is, we might be justified in breaking a promise, but it might incur an obligation to remedy, say in apologising for breaking the promise, or making up for the broken promise in some compensatory way. This indicates that the breach of contract, in such a sense, does not necessarily leave us “morally clean”.
This is the first moral transgression: the breach of promissory obligation.
When we work for an organisation or corporation, we may find that there is an internal culture of loyalty or expected loyalty to both the organisation itself and to our fellow employees. By blowing the whistle on corporate wrongdoing, we could potentially be harming our fellow colleagues who may be out of work as a result of the disclosures. The organisational culture might be harmed in that we have introduced dissent into a culture that benefits from employee solidarity; the result, a sense of broader distrust.
This is the second moral transgression: a breach of loyalty.
However, as a member of an organisation or corporation that delivers products and services to the public, we also have an obligation toward the public consumer. If, like in Morris’ case, the corporation is delivering a service that is harming the consumer, we might feel an obligation to protect the broader public from these harmful practices.
To not publicly disclose the wrongdoing, we might be committing a third transgression: a breach of a natural duty to not cause harm to others.
A corporate whistleblower’s framework for harm minimisation
If there is sufficient wrongdoing that needs to be called out, it’s important to take appropriate steps to produce the best outcome. The best outcome, in these circumstances, would be one in which harm is minimised to all relevant stakeholders. Business ethicist, Richard T. De George developed, what the field of business ethics today considers the standard ethics framework for responsibly blowing the whistle on corporate wrongdoing.
He sets out the following conditions that suggest when we are morally permitted to blow the whistle and what moral consideration we ought to keep in mind before we do so:
- The firm, through its product or policy, will do serious or considerable harm, to employees or to the public, whether in the person of the user of its product, an innocent bystander or the general public.
- Once the employees identify a serious threat to the user of its product or to the general public, they should report it to their immediate supervisor and make their moral concern known. Unless they do so, their act of whistleblowing is not clearly justifiable.
- If one’s immediate supervisor does nothing effective about the concern or complaint, the employee should exhaust the internal procedures and possibilities within the firm. This usually will involve taking the matter up the managerial ladder, and if necessary – and possible – to the board of directors.
- The whistleblower must have, or have accessible, documented evidence that would convince a reasonable, impartial observer that one’s view of the situation is correct, and that the company’s product or practice poses a serious and likely danger to the public or to the user of the product.
Before we take action, we need moral courage
What De George does not account for, however, is that to follow his guidelines, we must have the moral courage to take action in the first place.
Associate Professor of Philosophy at Eastern Kentucky University, Matthew Pianalto writes that moral courage involves “facing other persons while upholding some morally motivated cause and enduring resistance or retaliation that may occur in response to one’s actions”.
We often think of courage as involving being brave when taking an action that presents a danger to ourselves. It takes courage to jump into dangerous surf to save someone from drowning. In this sense, courage is an enabling device.
Morris demonstrated this aspect of courage: he was aware of the retaliation that he would experience as a result of blowing the whistle yet did so anyway.
However, moral courage involves something else: a requirement to face others. This requirement, Pianalto writes, involves resisting “the objectification of others, even those [we] oppose in value and action”. Corporate whistleblowers are exercising moral agency by taking actions that uphold or preserve what we think is morally right and just. However, moral courage also involves recognising the moral agency of others. It is easy to other-ise those we consider our moral adversaries. We can justify taking action against them easier if we denounce them as being morally depraved.
By not considering the corporation as being made up of other humans, i.e., other moral agents just like ourselves, we may become more inclined to ignore the conditions of harm minimisation set out above. We might be prioritising the moral values we are trying to uphold at the expense of the moral responsibility we have to those that might be adversely affected by our actions. As Pianalto writes, by offering justifications for our actions, we are “[acknowledging] the capacity of others to give and receive reasons, to modify their views, revise their intentions and to change their minds…”.
Morris seems to have exhibited moral courage. He took every precaution necessary, heeding (whether he was aware of it or not) the guidelines set by ethicists like De George to protect not only his family (who raised concerns about how they might be affected by his actions), but also those other moral agents working for ASIC and the CBA that may not have been involved in the wrongdoing.
Whistleblowing on corporate wrongdoing is a serious act, one that requires us to take mindful steps. If these steps are taken, they can reduce the moral courage required of us to act.
If you’re struggling with navigating a difficult decision in your professional or personal life, our free independent helpline, Ethi-call can provide expert and impartial guidance to examine all aspects of the situation and help you find a path forward. Book a call now.
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BY Kristina Novakovic
Dr. Kristina Novakovic is an ethicist and Associate Researcher at RAND Australia. Her current areas of research include the ethics and governance of emerging technologies and issues in military ethics.
ESG is not just about ticking boxes, it’s about earning the public’s trust
If businesses want to earn the public’s trust, they need to take ESG seriously, and communicate what they’re doing authentically and transparently.
In the eyes of today’s public, businesses must do more than just provide quality products and services, they also have a responsibility to be good corporate citizens and make a positive contribution to society and the environment. This is one reason why so many businesses have made a commitment to Environmental, Social and Governance (ESG) standards.
ESG is a framework used to assess a business’s activities and performance on ethical and sustainable issues. This includes an organisation’s ability to safeguard the environment, manage relationships with employees, supply chains and the community, and how company leadership, shareholder rights and internal controls monitor the outcomes. Importantly, the framework serves as a tool to assess how an organisation manages risks and opportunities in our changing world.
The problem is that most members of the public don’t have a good understanding of ESG. According to the SEC Newgate ESG Monitor report, only 12% of Australians had a “good understanding” of ESG. This disconnect between ESG activities and public perception is a problem because it undermines trust in business, especially if ESG activities have been misrepresented.
Members of the Ethics Alliance gathered in April 2023 to discuss the importance of SEC Newgate’s research and consider challenges that organisations face in the way they address ESG and community expectations.
For starters, the ESG Monitor indicated that 38% of Australians feel completely uninformed about companies’ ESG activities. Interestingly, it also suggested 72% of people either “never” or “rarely” look at the ESG reporting, while only a mere 8% of people trust ESG reporting.
Some of this scepticism around ESG may have been cultivated due to it politicisation. In April 2023 the leader of the opposition, Peter Dutton, commented: “To be frank, some business leaders need to stop craving popularity on social media by signing up to every social cause, even though they may not believe in it.” This attitude acts in contrast to the global research from the 2023 Edelman Trust Barometer that shows 82% of people expect CEOs to take a public stand on climate change. And to Dutton’s point, they certainly expect authenticity.
The public holds high expectations for businesses to use their influence for good. SEC Newgate’s study showed that of those surveyed, 80% agree that companies have a responsibility to behave like good citizens and consider their impact on other people and the planet. It also showed that 66% of people are also willing to give a company a second chance if it was transparent about its mistake and stated how it would do better in the future.
If businesses want to live up to community expectations and strengthen their social value, then they need to carefully choose which ESG initiatives to focus on and ensure they have legitimacy in those areas. When evaluating, they should ask the following: Is it genuine? Is it meaningful? Is the organisation committed? And how do I know for sure or where is the proof?
By demonstrating a clear link between sustainability efforts and overall strategy, businesses can better align their initiatives with community expectations.
One starting point is a materiality assessment, which is a process to identify and prioritise the most relevant and significant ESG factors that have a substantial impact on the business’s operations, financial performance and stakeholder interests. This exploration can help identify the most pressing issues that align with the purpose and resonate with the community.
Other principles for organisations to consider when developing their ESG framework that emerged from The Alliance’s discussions were:
- Ethical conduct – including treating employees fairly, avoiding unethical practices, and minimising environmental harm.
- Giving back – which may involve investing in local communities, adopting environmentally friendly practices, or supporting social initiatives.
- Transparency and accountability –stakeholders, including consumers, employees, and shareholders, often have differing perspectives on ESG issues, making it challenging for businesses to balance these conflicting demands and trade-offs.
Communication also needs to be well considered by organisations in order to address the disconnect between the community’s need for transparent ESG information and their desire to learn about it. Connecting with stakeholders transparently about an organisation’s progress and mistakes can help meet these challenges.
ESG is about more than just accounting. It’s demonstrating a business’s responsibility and recognising the importance of sustainable practices in safeguarding our planet. ESG needs to be a whole company effort that is undertaken authentically and communicated transparently to the public that reflects its purpose, values and principles. The more businesses that do this, the more the public will understand what ESG is and the more they will come to trust businesses as being responsible corporate citizens.
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BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
BY The Ethics Alliance
The Ethics Alliance is a community of organisations sharing insights and learning together, to find a better way of doing business. The Alliance is an initiative of The Ethics Centre.
The ethical dilemma of the 4-day work week
Ahead of an automation and artificial intelligence revolution, and a possible global recession, we are sizing up ways to ‘work smarter, not harder’. Could the 4-day work week be the key to helping us adapt and thrive in the future?
As the workforce plunged into a pandemic that upended our traditional work hours, workplaces and workloads, we received the collective opportunity to question the 9-5, Monday to Friday model that has driven the global economy for the past several decades.
Workers were astounded by what they’d gained back from working remotely and with more flexible hours. Not only did the care of elderly, sick or young people become easier from the home office, but also hours that were previously spent commuting shifted to more family and personal time.
This change in where we work sparked further thought about how much time we spend working. In 2022, the largest and most successful trial of a four-day working week delivered impressive results. Some 92% of 61 UK companies who participated in a two-month trial of the shorter week declared they’d be sticking with the 100:80:100 model in what the 4 Day Week director Joe Ryle called a “major breakthrough moment” for the movement.
Momentum Mental Health chief executive officer Debbie Bailey, who participated in the study, said her team had maintained productivity and increased output. But what had stirred her more deeply was a measurable “increase in work-life balance, happiness at work, sleep per night, and a reduction in stress” among staff.
However, Bailey said, the shorter working week must remain viable for her bottom line, something she ensures through a tailor-made ‘Rules of Engagement’ in her team. “For example, if we don’t maintain 100 per cent outputs, an individual or the full team can be required to return to a 5-day week pattern,” she explained.
Beyond staff satisfaction, a successful implementation of the 4-day week model could also boost the bottom line for businesses.
Reimagining a more ethical working environment, advocates say, can yield comprehensive social benefits, including balancing gender roles, elongated lifespans, increased employee well-being, improved staff recruitment and retention and a much-needed reduction in workers’ carbon footprint as Australia works towards net-zero by 2050.
University of Queensland Business School’s associate professor Remi Ayoko says working parents with a young family will benefit the most from a modified work week, with far greater leisure time away from the keyboard offering more opportunity for travel and adventure further afield, as well as increased familial bonding and life experiences along the way.
However, similar to remote work, the 4-day working week has not been without its criticisms. Workplace connectivity is one aspect that can fall by the wayside when implementing the model – a valuable culture-building part of work, according to the University of Auckland’s Helen Delaney and Loughborough University’s Catherine Casey.
Some workers reported that “the urgency and pressure was causing “heightened stress levels,” leaving them in need of the additional day off to recover from work intensity. This raises the question of whether it is ethical for a workplace to demand a more robotic and less human-focussed performance.
In November last year, Australian staff at several of Unilever’s household names, including Dove, Rexona, Surf, Omo, TRESemmé, Continental and Streets, trialed a 100:80:100 model in the workplace. Factory workers did not take part due to union agreements.
To maintain productivity, Unilever staff were advised to cut “lesser value” activities during working hours, like superfluous meetings and the use of staff collaboration tool Microsoft Teams, in order to “free up time to work on items that matter most to the people we serve, externally and internally”.
If eyebrows were raised by that instruction, they needed only look across the ditch at Unilever New Zealand, where an 18-month trial yielded impressive results. Some 80 staff took a third (34%) fewer sick days, stress levels fell by a third (33%), and issues with work-life balance tumbled by two-thirds (67%). An independent team from the University of Technology Sydney monitored the results.
Keogh Consulting CEO Margit Mansfield told ABC Perth that she would advise business leaders considering the 4-day week to first assess the existing flexibility and autonomy arrangements in place – put simply, looking into where and when your staff actually want to work – to determine the most ethically advantageous way to shake things up.
Mansfield says focussing on redesigning jobs to suit new working environments can be a far more positive experience than retrofitting old ones with new ways. It can mean changing “the whole ecosystem around whatever the reduced hours are, because it’s not just simply, well, ‘just be as productive in four days’, and ‘you’re on five if the job is so big that it just simply cannot be done’.”
New modes of working, whether in shorter weeks or remote, are also seeing the workplace grappling with a trust revolution. On the one hand, the rise of project management software like Asana is helping managers monitor deliverables and workload in an open, transparent and ethical way, while on the other, controversial tracking software installed on work computers is causing many people, already concerned about their data privacy, to consider other workplaces.
It is important to recognise that the relationship between employer and employee is not one-sided and the reciprocation of trust is essential for creating a work environment that fosters productivity, innovation and wellbeing.
While employees now anticipate flexibility to maintain a healthy work-life balance, employers also have expectations – one of which is that employees still contribute to the culture of the organisation.
When employees are engaged and motivated they are more likely to contribute to the culture of the organisation which can inform the way the business interacts with society more broadly. Trust reciprocation is not just about meeting individual needs but also working together on a common purpose. By prioritising the well-being of their employees and empowering them to contribute to the culture of the organisation a virtuous cycle is being created. Whether this is a 4-day working week or a hybrid structure is for the employer and employee to explore.
CEO of Microsoft, Satya Nadella says forming a new world working relationship based on trust between all parties can be far more powerful for a business than building parameters around workers. After all, “people come to work for other people, not because of some policy”.
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BY The Ethics Centre
The Ethics Centre is a not-for-profit organisation developing innovative programs, services and experiences, designed to bring ethics to the centre of professional and personal life.
Can philosophy help us when it comes to defining tax fairness?
Nothing is certain, except death and taxes. We can’t make the former fair but we can at least try when it comes to taxation.
Tax is fundamental to government. It is essential to fund the services we require to live in a modern society, including military, police, judiciary, roads, healthcare and education. It has also become more important in recent decades. At the time of Federation, the Australian tax system collected around 5% of GDP. Today this number stands at around 29%.
But is it fair? Are we paying too little or too much tax? Should those with greater means pay more? These are questions that must be asked of any tax system, and two works by philosophers offer very different answers.
The first is Robert Nozick’s Anarchy State and Utopia. It argues that individuals (and, by extension, the corporations they own) ought to own 100% of their income. Individual property rights are paramount, and any taxation beyond what is required to protect borders and protect these property rights is unjust. In short: only public expenditure on the police and military can be justified.
One of Nozick’s more colourful claims is that taxation is on par with forced labour. Tax forces workers to work in part for themselves, and in part for government.
But while Anarchy State and Utopia is a cult favourite of many modern-styled libertarians arguing for lower taxes, most people consider its position on tax unfair. Many find the consequences of the gross inequalities Nozick permits objectionable, while others argue a child’s right to public education, or a citizen’s right to universal healthcare, outweighs the right individuals or corporations have to their pre-tax wealth and income.
An additional issue for Nozick is how to determine who funds the military and police. Should it be a fee for service? And if so, does this mean only the very wealthy who pay tax should enforce property rights, given they have the most to benefit and lose without military and police? Or should everyone pay an equal amount of tax, regardless of their income or wealth or their ability to pay? (The fallout of this was seen in the 1990’s in the UK when a Thatcher Government head tax proposal was met with violence and riots in the street).
The other side of the tax coin
The second perspective comes from Thomas Nagel and Liam Murphy in their book The Myth of Ownership. They tackle the definition of tax fairness in a nearly opposite way to Nozick. They argue that it does not make sense that citizens have full (or any) rights to their pre-tax income and wealth because income and wealth cannot exist without government. Individual and corporate incomes, and the level of incomes, occur because of the existence of government, not despite it.
They have a point. A successful Australian economy requires the enforcement of law, market regulation, monetary policy (not least for the currency we use), and regulation that prohibits collusion, intimidation and other forms of business malpractice. A banker earns money because the government has mandated a currency – and she keeps her money because property rights exist. A lawyer’s income occurs because of the legal system, not despite it. We might also argue that a successful Australian economy requires investments in public education and public healthcare.
Yet, while individual and corporate income may be contingent on the existence of government, and markets might not be considered perfectly fair nor free, it doesn’t follow that market determined outcomes are completely arbitrary. We often say that someone deserves to earn more if they work harder. So if someone decides to go to university or undertake a trade, rather than surf all day, we might think they deserve a higher salary.
This very simple point (not to mention the very real practical issues with discarding market-based outcomes) mean Nagel and Murphy, like Nozick, fail to provide a complete blueprint for us to determine tax fairness. Nozick fails because he assumes market distributions are 100% fair; Nagel and Murphy fail because they assume market distributions (and any and all inputs that determine these distributions such as hard work and effort) are irrelevant.
And yet both philosophies help us focus on important tax fairness elements. Nagel and Murphy show it is important to focus on people’s post-tax positions and effectively highlight that pre-tax market determined income and wealth are not necessarily “fair”, largely because these incomes and wealth cannot exist without tax and government. Nozick effectively highlights that income and corporate tax can only be justified if associated government expenditure can also be justified.
Even if you find that neither of these perspectives to be the right one, they help establish the parameters of a fair tax system. It’s then up to us to inject our values to determine which system is right for the kind of society we wish to live in.
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