Editorials

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Ira Smolowitz, Ph.D. Professor of Finance and Dean, Bureau of Business Research and Program Development at the American International College, Springfield, MA.

Some of Ira's past articles of interest:

• A View of Education From Both Sides: An Assessment of the American Education System
• Ramifications of the 24/7 Economy
• A Half-'DUH’zen Examples of Poor Organizational Practices
• Work-place Gossip: A Reassessment
• The Disappearance of Courtesy in America: Implications for Business
• Dynamics of Corporate Assumptions
• The Outlook for American Competitiveness
• Consumer Marketing: A Flawed Strategy
• A Healthy Workforce: The Driver of Corporate Financial Performance
• The Use and Misuse of Forecasts

Federal Reserve Vice Chairman, Roger W. Ferguson, Jr., has made the following insightful observations:

“...that a good education is more than just the classroom-based learning of facts, or even the skill of critical thinking. A truly outstanding education also encourages moral behaviors and appropriate decisions."

. . . .

Some of you may have noticed that I encouraged this focus on teaching and practicing ethical and cooperative behaviors as an economic policy maker. In that role, shouldn’t I encourage you to be only a coolly self-centered, utility-maximizing, homo economicus? The answer is no. Economic outcomes are improved when market participants “play by the rules.” This fact has a strong grounding in economic theory and empirical research. In fact, you may be surprised to know that the economics profession, even with its hard-headed assumption of rational actors pursuing their own self interest, has for the last few decades, also focused on the role of moral and cooperative behaviors in leading to better economic outcomes.

. . . .

The negative effect from lapses in corporate governance at the macroeconomic level in the United States is a very visible example of the national costs of poor corporate governance. Social scientists have also found that at the level of the individual company, poor corporate governance costs and good corporate governance pays, quite literally. Some researchers have found that investments in firms which engage in unethical behavior earn abnormally negative returns for prolonged periods. Others find that firms that have better corporate governance also have higher stock market valuations, higher profitability and faster sales, and there is evidence that buying shares of firms that score high in corporate governance and selling shares in firms that do not, yields abnormally positive returns.

All of this is true not just in the United States, but globally as well. At the macroeconomic level, the World Bank has identified corruption as the single greatest obstacle to economic and social development. The Bank states that “corruption undermines development by distorting the rule of law and weakening the institutional foundation on which economic growth depends.” Fortunately, there is some evidence from studies of emerging markets that firm-level corporate governance matters more in countries with weak legal systems, and one can infer from this work that firms can partially compensate for ineffective legal systems by practicing ethical behavior. 1

How well are we teaching ethical behavior to our students? Consider the following disturbing event that happened in Piper, Kansas.

High school teacher Christine Pelton wasted no time after discovering that nearly a fifth of her biology students had plagiarized their semester projects from the Internet.

She had received her rural Kansas district’s backing before when she accused students of cheating, and she expected it again this time after failing the 28 sophomores.

Her principal and superintendent agreed. It was plagiarism and the students should get a zero for the assignment. But after parents complained, the Piper School Board ordered her to go easier on the guilty. Pelton resigned in protest in an episode that some say reflects a national decline in integrity.

Pelton, 26, resigned days after the board ordered her to give the students partial credit and to decrease the project’s value from 50 percent of the final course grade to 30 percent. 2

In my opinion, plagiarism is a litmus test for ethics. As such, U.S. ethics and U.S. global competitiveness is highly questionable. Consider two recent examples of plagiarism:

1. William Swanson – Raytheon Co. Chief Executive will not get a pay raise this year. The Waltham-based company’s board denied Swanson a pay raise this year, cut his stock compensation next year by 20 percent, and issued a statement citing “deep concern” over his admitted failure to properly credit others for the folksy business advice in his booklet, “Swanson’s Unwritten Rules of Management.” The board’s penalties amount to around $1 million for an executive whose 2005 compensation totaled more than $7 million. It will hit the 57-year-old hard emotionally, acquaintances said.

Similarities between rules in Swanson’s booklet and W.J. King’s 1944 book, “The Unwritten Laws of Engineering” were reported by The New York Times on April 24 after a blogger compared passages from King’s book with the Swanson rules. At least 16 of the 33 aphorisms in Swanson’s booklet are similar or identical to the adages published by King. 3

2. Consider the case of Kaavya Viswanathan: The Harvard sophomore got a $500,000 advance from publishing firm Little, Brown and Co. for her book, “How Opal Metha Got Kissed, Got Wild, and Got a Life.” But her own life took a sour turn after she was accused of copying several passages of her novel either directly or indirectly from books by Megan McCafferty, Sophie Kinsella, Meg Cabot and Salman Rushdie. It’s the most high-profile accusation of plagiarism in a recent spate of scandals that have implicated a variety of figures in a variety of fields.

…A month ago, researchers from the Brookings Institute in Washington, D.C., unveiled their proof that Russian President Vladimir Putin had copied whole sections of William R. King and David I. Cleland’s “Strategic Planning and Policy” in his dissertation. Three years earlier, the newspaper industry had suffered a blow when The New York Time’s Jayson Blair was shown to have copied or fabricated dozens of his stories.

Whether in the professional word or the classroom, plagiarism appears to be everywhere. And according to experts, it’s on the rise.

“The main reason is the advent of the Internet,” says Donald McCabe, a professor at Rutgers University who has studied plagiarism in secondary and higher education for more than a decade. According to his research, 58 percent of high school students admitted to having committed an act of plagiarism in the past year.

"A lot of students in their early education do not get a very good grounding from their instructors about when it’s acceptable to use somebody else’s material,” says Jane Kirtley, who teaches Media Ethics and Law at the University of Minnesota. “There’s also a sense among students today that if it’s something they can find on the Internet, then by definition, they can use it freely without attributing it to anybody."

The Internet provides plenty of temptations for would-be plagiarists, from essay-writing services to millions of web pages. The easy availability of such resources can cloud judgment and lead to misuse or abuse of information. “On the part of students, there’s an eerie logic to justify cheating,” says Denise Pope, a lecturer at the School of Education at Stanford University and author. “It’s three o’clock in the morning, you’re exhausted, you’ve worked hard...rather than getting a zero, you’d take your chances with plagiarism. 4

As you would expect, the comedian Jay Leno made reference to the Kaavya Viswanathan incident of plagiarism as follows:

A Harvard University sophomore had her novel pulled and her book deal canceled because readers kept finding incidents of plagiarism in the novel. Today, she released a statement: “It was the best of times, it was the worst of times.” 5

Jay Leno, a talented comic, generated laughter from the above-mentioned incident of plagiarism. In my opinion, plagiarism is not a laughing manner. Plagiarism is a highly counter-productive action. It undermines individual and group ethics, quality mandates, responsible behavior. If unchecked, it will seriously weaken the moral fiber of society. As such, it does not enhance America’s global competitive position.

References

1. Remarks by Vice Chairman Roger W. Ferguson, Jr., Sidwell Friends School, Washington, D.C., May 22, 2004 - downloaded 5/16/06 from http:/www.federalreserve.gov/boarddocs/speeches/2004/20040522/ default.htm pp 1-2.

2. “Teacher Resigns over Plagiarism Fight!” CNN Student News – February 7, 2002 - downloaded 5/16/06 from http://cnnstudentnews.cnn.com/2002/fyi/teachersednews 02/07/plagarism.dispute.ap/index.html pp 1-2.

3. Jewell, Mark “Raytheon Rocked by Plagiarism Scandal – CEO’s 33-Year Career Blemished” The Associated Press. Downloaded 5/16/06 from http://english.ohmynew.com/articl pp 1-2

4. Demirjian, Karoun “What Is the Price of Plagiarism?” The Christian Science Monitor, May 11, 2006 – downloaded 5/16/05 from http://www.csmonitor.com/2006/0511 p.1.

5. “Laugh Lines” – The New York Times, May 7, 2006 – downloaded 5/16/06 from http://query.nytimes.com/ fullpage html(?p.)

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Articles printed with the permission of Dr. Ira Smolowitz, Professor of Finance and Dean, Bureau of Business Research and Program Development at American International College, Springfield, MA.