Saturday, May 22, 2010

Better Leadership: the Danger of Corruption

The American Leadership Crisis
America's economy is broken following decades of poor leadership. An important step towards better leadership would be incorruptible leaders.
What is Corruption?

Merriam-Webster says corruption is an "impairment of integrity, virtue, or moral principle." Notice this definition presumes the existence of integrity, virtue, or moral principle. In our post-modern society I do not believe we can count on ambitious people believing in the existence of integrity, virtue, or moral principle. Some ambitious people know these words and might use these words the way adults speak of Santa Claus or the Easter Bunny to children, but they believe as little in integrity, virtue, or moral principle as they do Santa Claus or the Easter Bunny. Many ambitious people are amoral: they are outside of the moral order.

I suggest defining corruption as a betrayal of public or corporate trust. One's actions could be both legal and corrupt. In complex business and government activities it is effectively impossible to write enough laws to make all corrupt acts illegal.

When talking about corruption in business to a business owner he segued into a discussion on "gaming the system." After our discussion I agree with him: gaming-the-system is a form of corruption.

Here is a great explanation of gaming-the-system: "Gaming the System means using the rules, policies and procedures of a system against itself for purposes outside what these rules were intended for. When a system puts too many rules in place, makes them too vague, or otherwise fails to know the consequences of these rules, people who study the rules closely can then use this massive (often contradictory) rule-set to play the 'game' their own, unexpected way."

Gaming-the-system fits within the definition of corruption as a betrayal of public or corporate trust in the sense that if you join a system governed by rules and others expect you to follow the rules, then they expect you to follow the rules to meet the ends promoted by those rules. But if you game the system, then you follow the letter of the rules in a way that subverts the intent of those rules.

When a bank takes loans off of its books just before the accounting for the quarterly financial report, then puts the loans back on the books after the accountants are gone, this is gaming the system.

Now that we have a practical definition of corruption that works in our society, I suggest that corruption is dangerous to our society, I suggest we should face the problem of corruption in American society, and I suggest we strive to reduce the amount of corruption in the United States before our country is irreparably damaged by the present levels of corruption.

Corruption Causes Hardships

Corruption within business and government leads to financial losses. Lehman Brothers went bankrupt in the Crash of 2008, and America is still suffering in 2010. In October 17, 2008, U.S. News and World Report ran the article "The Crash of 2008, How bad is it, and when will it end?" by Kirk Shinkle.

We are still seeing the financial fallout of corrupt business practices. Goldman Sachs structured an investment vehicle, Abacus 2007-AC1, some say was designed to fail because it "was jam-packed with highly leveraged, exotic trades ," as reported by the Telegraph. Goldman Sachs customers lost fortunes and the Securities and Exchange Commission has accused Goldman of securities fraud.

Remember I said a corrupt act could still be legal? Goldman Sachs might beat the charges in court, but Abacus 2007-AC1 could still be a corrupt business deal. It is impossible to write enough laws to force a clever person to be honest.

Corruption Kills

When the project manager decided it was too cold to launch the Challenger space shuttle on January 28, 1986, he was told to take off his engineering hat, put on his management hat, and rethink his decision. The project manager was pressured to do what he knew was wrong -- launch the shuttle under dangerous conditions. The most common form of corruption in America is for a senior manger to pressure a junior manager into doing something wrong. In the case of the Challenger space shuttle disaster, this form of corruption killed the crew of seven, including school teacher Christa McAuliffe.

Early Childhood Training in Ethics

The key to ethical behavior is to teach it early. An essay by Drake Bennett in the Dallas Morning News on May 28, 2010, asked "Can an 'MBA oath' fix business?" The answer is, "No." Ethical behavior needs to be instilled at at young age. I have in the past recommended all the children of Plano recite the Pledge to Justice daily after the pledges to the flags.

The Pledge to Justice: "I do not cheat. I do not steal. I do not hurt other people."

Good leadership is ethical leadership, free of corruption. The foundation for good leadership is created in childhood.

Robert Canright

This blog is about Confucianism.  The word "corruption" is not in the Analects.  Here are the closest Analects related to corruption:

BOOK XII, CHAP. XVIII. Chi K'ang, distressed about the number of thieves in the state, inquired of Confucius how to do away with them. Confucius said, 'If you, sir, were not covetous, although you should reward them to do it, they would not steal.'

Telling this leader Chi K'ang that he was covetous is as close as he could get to politely call him corrupt. Here Confucius gives Chi K'ang advice on good government.

BOOK XII, CHAP. XVII. Chi K'ang asked Confucius about government. Confucius replied, 'To govern means to rectify. If you lead on the people with correctness, who will dare not to be correct?'

Who was  Chi K'an.  Here is an article on the internet that says this about him.

Confucius probably owed his position in Lu to the influence of the Chi family, which was still the dominant power. We know from the Analects that he was on especially good terms with Chi K'ang-tzu, the son of the head of the Chi clan. Several of Confucius' disciples were employed by the Chi family. Because of his close association with the Chi clan, which in effect was a usurper of the ducal power, it might be supposed that Confucius had compromised his integrity. However, Confucius and his disciples actually seem to have worked to reduce the power of the three clans. For example, in 498 they were able to extract promises from the Chi, Meng, and Shu families to demolish their fortified cities, which were their bases of power. The Chi and Shu actually had begun preparations to dismantle their cities when the Meng reneged and the plan was abandoned. Nevertheless, the episode is a clear example of Confucius' interest in restoring legitimacy in Lu.

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