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Integrity and Lies, and Reputation


My father made a huge deal about living with integrity. He believed in honesty and commitment. He believed that success with integrity is the real challenge of living a human life. He died penniless ;-)

I'm sure he ran into his share of liars and cheats along the way. Accounting scandals are not a new invention, despite all the recent news about Enron & Arthur Andersen.

He occasionally told me stories of people he worked with who used their positions for personal gain, using lies, fraud, and secret handshakes. We've probably all witnessed stuff like this, both on the job, and in personal relationships.

The media are depressingly full of such stories. No political party, legislature, or executive administration is immune -- somebody somewhere is always in it for themselves.

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Some would argue, following Ayn Rand, that there is nothing wrong with being selfish and acting to further your own interests. Rand's novels make it look like the selfish people are heroes, while the seemingly selfless people are the ones engaging in violent fraud. She seems to assume that rational selfish people will automatically adhere to a moralistic code of conduct -- an ideal form of the free market. However, in the real world there are plenty of amoral and criminal people who take advantage of the free market, or any system, to fraudulently grab gains for themselves. The constant presence of criminal activity is a main purpose for the existence of government. It is the reason the founders of the United States set up a system of checks and balances.

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Why do people lie? The term "pathological liar" is used to describe people who lie so much they can't help themselves, but I bet most of the time people lie because they expect benefits from doing so. More money, more sex, avoiding punishment ... knocking off a rival, staying in power, avoiding criticism.

Every religious or moral code I'm aware of claims that lying is (almost?) always a bad thing. In particular, Buddhism sees lying as a refusal to accept reality -- and Buddhism teaches that all suffering results from refusing to accept reality. Christians believe in an omniscient God -- so lying is useless if God always knows the truth anyway, lying means running away from your personal relationship with God, and refusing to trust in God's wise plan.

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More interesting to me, is why people tell the truth when doing so hurts them. Well, telling the truth -- even when it hurts -- creates a reputation for telling the truth. People who have a good reputation are favored by those who know about it, leading to more opportunities for friendship, better and deeper romantic relationships, more fulfilling business relationships, and other transactional benefits. People who have a reputation for lying usually have to run away or prey on strangers, and their relationships won't last very long.

One problem resulting from urbanization and career mobility is the lack of reputational guidance when we interact with other people. Some people believe that America is suffering from a morality deficit, and that God is the answer. I think that God could be part of the answer, for those who follow a religious path, but the real problem is one of proper enforcement. By allowing our culture to become driven by mobility and cost control, reputational factors have lost their strength.

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Just this morning I read in the Wall Street Journal that Circuit City fired 2900 of its top sales agents. According to the article, the top 2900 performers were let go, because they had the highest salaries. The sole criterion for the mass firing was salary. Those top performers had the highest salaries because they were paid, in part, by commission. They made those high commissions because they had developed good reputations with their repeat customers!

The management of Circuit City decided that reputation does not matter in today's marketplace. They immediately replaced the fired agents with newly hired sales agents who would be paid an hourly rate without commission.

Amazingly stupid? Or a good business decision? You and I will be the people who decide that, based on whether we ever shop at Circuit City again. Do you shop based on reputation, or based on lowest cost?


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