CHAPTER NINE

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Dodging Brazil

Nearly every year for the past decade a group of M.B.A. students from Pepperdine University in California have made an unusual road trip to Las Vegas. They go not to gamble or catch glitzy shows. They go, ironically, to polish their conscience.

The visit kicks off in a hotel conference room with evening lectures by two former business executives, Mark Morze and Ted Wolfram, who have spent time in prison for white-collar crimes.

Mark Morze is the more dynamic of the two men. A loud, high-energy man, he used to be the chief financial officer of ZZZZ Best Carpets, where he helped orchestrate a $100 million fraud. ZZZZ Best claimed to be making millions of dollars cleaning carpets when, in fact, its sole function was to rip off investors. Morze did seven-and-a-half years in prison. Ted Wolfram is an older man, a devout Catholic who used to be a banker in the Midwest and served ten years after he started making loans to himself—to the tune of $47 million. The clear-cut thefts of both men set them apart from many white-collar criminals in that they actually got serious prison time.

The Pepperdine students are mostly midlevel business managers on leave from their jobs or working nights and weekends to get through Pepperdine’s executive M.B.A. program. They listen, rapt, as Morze and Wolfram explain the missteps that led them into a life of crime and to prison. The two ex-cons filter their past in very different ways. Wolfram is a sad man, who talks of forever losing his honor. “I spent ten years in prison and deserved every minute of it,” Wolfram likes to say. Mark Morze seems to still be the pushy con artist he was in his ZZZZ Best days. Morze does these speeches for a living and, with the recent corporate scandals, he is very much in demand, taking home between $3,000 and $5,000 a speech. He tells funny stories about fabricating documents or sharing a prison cell with a former congressman. “The students have commented that they listen to Mark and realize that he’s sorry he got caught, and listen to Ted and realize he is sorry for what he did and the effect it had on his bank and his company,” says Scott Sherman, a Pepperdine professor who helps organize the sessions.

The morning after the presentations in Las Vegas, the Pepperdine students journey by bus to Nellis Prison Camp, a federal minimum-security prison located on the Nellis Air Force Base outside of Las Vegas, which houses a number of white-collar criminals. The prison visits were started in 1987 by Pepperdine finance professor Jim Martinoff, and they are intended to give M.B.A. students a hard look at the consequences of corporate crime. The program is reminiscent of the Scared Straight initiatives begun in the ’80s which brought groups of young juvenile delinquents to state penitentiaries to meet hardened convicts and get a glimpse of what lies in their future if they don’t change their ways.

“Usually there is a panel of about six inmates,” explains Sherman. “Each is given forty-five minutes to talk about what they did and what message they want to get across to the students, and what they would do differently.” The longer the inmates have been incarcerated, the more honest they tend to be about how they screwed up. “Generally speaking, they were successful,” Jim Martinoff says about the inmates. “They were in a rat race and had to get better and better. Their crimes start small in a gray area, and then they get into a little more of a gray area, and then they do more. . . . One of the things they always say is ‘Everybody else was doing it and I needed to be competitive, otherwise the company was going to fail.’”

The vivid tales of how each of the inmates sprawled down a slippery slope often have a profound effect on the M.B.A. students. “Some students get uncomfortable,” says Sherman. “Something is said that reminds them of something going on at work, or something they are thinking about doing—they move near the back until they are practically hugging the back wall of the room. . . . Usually the ones in the back of the room are trying to disengage and don’t ask questions. One of the classic questions was an executive from Xerox, a wonderful woman, who asked, At what point in time did your gut tell you that maybe you were doing something you shouldn’t have been?' The inmate said, ‘It was once I was no longer willing to share with my spouse and my family what I was doing.’”

Sherman says about this exchange: “That has become what we refer to as ‘the mama rule.’ If you can’t tell mama, why are you doing it?”

Sherman and Martinoff also talk of a "2 percent rule.” That is, about 2 percent of the students who go through the prison visit are deeply unsettled and change their career as a response. Some of these students also tell Sherman and Martinoff that they need to contact law enforcement officials to discuss things happening at their company.

The business school at the University of Maryland also has a Scared Straight component in its curriculum. Visits to the federal minimum-security prison in Allenwood, Pennsylvania, are scheduled for the weeks immediately prior to graduation, in hopes that memories will remain fresh as their graduates face real-life ethical dilemmas in the workplace. This initiative, too, seems to have an impact on students. “We’re brought up on the concept of competition,” explained one M.B.A. student after the prison visit. “But once you get into that competitive spirit and the adrenaline gets going it’s easy to take shortcuts and overlook principles.” Having witnessed the high price of noncompliance, the student said he would “take extra precautions to be sure I’m on the right side.”

There is no data on the long-term effectiveness of dragging business-school students into white-collar prisons, and only a few schools undertake such visits. Maybe this has an impact, maybe not. But these Scared Straight initiatives are impressively energetic and imaginative efforts to prevent cheating. More of this same spirit is needed nowadays, and then some.¹

America’s epidemic of cheating does not lend itself to easy antidotes. While cheating does boil down to choices made by individuals, these choices are heavily shaped by cultural, political, and economic forces. Even people determined to lead a life of integrity may find themselves cheating at different moments—and rationalizing it with surprising ease.

Taking on America’s cheating culture requires taking on the societal forces that are driving this epidemic. It also entails new crusades for integrity in our schools and workplaces. I see the work ahead as broadly boiling down to three tasks: We must forge a new social contract in the United States. We must reform key professions and instill new codes of conduct in the workplace. And, to have any hope of an honest future, we must strengthen the ethics of new generations of Americans. Sounds like a piece of cake, right?

 

 

A New Social Contract

 

Cheating thrives where unfairness reigns, along with economic anxiety. It thrives where government is the weak captive of wealthy interests and lacks the will to do justice impartially. It thrives where money and success are king, and winners are fawned over whatever their daily abuses of power. If we want to reduce cheating, we must tackle these root causes. We need to create a new social contract in America that gives people faith in a few simple principles: Anyone who plays by the rules can get ahead. Everyone has some say in how the rules get made. Everyone who breaks the rules suffers the same penalties. And all of us are in the same boat, living in the same “moral community” and striving together to build a society that confers respect on people based on a wide variety of accomplishments.

Rediscovering these principles doesn’t require an archaeological expedition. These principles are at the heart of the American Dream; they are deeply embedded in our psyche. Nearly all Americans embrace them at some level. This ethos is what the United States, at its best, is all about.

But as has happened before, these basic tenets of Americanism are being elbowed aside by another central element of our national identity, namely, unfettered capitalism. We are learning once more—as leaders like Teddy Roosevelt learned a century ago—that our noblest aspirations for America cannot be realized when we allow economic competition to grow too harsh. Creating a new social contract requires taming the free market, as we have done in past eras. It means striking a healthier balance between humanistic values like shared responsibility, mutual respect, and compassion for the weak—and market values like maximum efficiency, individual autonomy, and admiration for the strong. Both of these sets of values have deep roots in our society. In fact, you can think of most Americans as having a split personality, as my colleague, Tamara Draut, has put it. The Tough American embraces the rigors of the market as the best way to ensure wealth creation and personal liberty. She isn’t interested in a lot of coddling of those who reject hard work. But there’s another side to her, the Fair American. She wants to live in a society where everyone’s treated equally and the weak aren’t left by the roadside. Creating a new social contract means finding the right public-policy medication to deal with America’s split personality. These days we need less Tough American and more Fair American.

Nowhere is this more true than in the economic sphere. Competition has grown too harsh in our postindustrial Banana Republic economy. Dog-eat-dog norms have conspired with long-term trends to create, on the one hand, fantastic concentrations of wealth and, on the other, profound insecurities among a vast swath of Americans. Neither is conducive to a society with strong ethics.

While crusades against inequality typically don’t get very far in the United States—Americans admire the rich too much to want to redistribute their wealth to the masses—what can fly are efforts to help more Americans join the middle class, or feel more financially secure as members of the middle class. And today, there are plenty of commonsense ways to work toward these goals, ways that appeal to both sides of our split personality.

First, we need to make work pay. One of the cardinal principles of the social contract in America is that everyone who can work should work, and that those who work have a chance to climb up the economic ladder. Yet today at least a third of working households in the United States can’t even make ends meet, much less secure a place in the middle class. Raising the minimum wage to around $8.50 an hour and then indexing it to inflation is one way to make sure that people who work are decently rewarded. Polls show very strong public support for a higher minimum wage—over 80 percent in most surveys—and research shows that the impact on business would probably be minimal, despite the hysterical warnings of industry groups. Tax credits offer another promising strategy to help low-income families get their heads above water. The Earned Income Tax Credit now funnels over $30 billion a year in tax refunds to families making under $30,000 a year, and it has historically enjoyed strong bipartisan support. Making the EITC more generous and complementing it with other tax credits targeted at the bottom third of households would also go a long way toward guaranteeing the basic promise of work, namely, that it gets one ahead in life.²

Likewise—and perhaps most critically—high levels of economic growth are needed to ensure a payoff from work and an expanding middle class. When the economy is booming, tight labor markets help ensure that wages go up for everyone, even for workers at the bottom. When the economy slows and unemployment rises, wages go down. How to keep things booming? Among other things, the federal government must be ready to prime the pump in ways that yield long-term dividends—through investments in transportation infrastructure, scientific research, energy efficiency, and so on. The best government intervention in the economy kills two birds with one stone: it keeps growth zipping along while laying the groundwork for even greater future prosperity.³

A second strategy to help people get ahead is to expand access to higher education. Want to make something of yourself? Then go to school and work your ass off. So says the Tough American, and the Fair American couldn’t agree more. Yet lately, even as the United States has moved into an information age in which education counts more than ever, we’ve been cutting support for higher education. Students are paying higher tuition and shouldering heavier debts when they graduate. While more kids than ever are starting college, many can’t afford to finish and others can’t go at all. Here again, people who are playing by the rules confront a system that is stacked against them. Legions of undereducated workers languish in dead-end service jobs—not as a stepping stone to something better, but as a permanent reality. And guess what? They aren’t too happy about this.

A major new investment in higher education would help restore a critical element of America’s distinctive social contract—that anyone who wants to improve their station in life can use education to achieve this goal. The United States should seriously commit itself to building a system of universal higher education for the twenty-first century. Most of the components of that system are already in place, including ubiquitous community colleges across the country and strong state universities. What’s missing is the money. A new initiative that marshals the resources of public, private, and nonprofit sectors is needed to ensure that every young person who wants a K–16 education—or serious vocational training—can get one through a combination of affordable tuition, grants and scholarships, and low-interest loans. Easier said than done, I know. But this is an essential foundation for fairness in the new century.

Third, we need to help people build wealth and personal assets. Wealth has traditionally been a linchpin of the American Dream. If you want to build a better life for yourself and your children, the Tough American will tell you to tighten your belt and think long term: pay off a mortgage through years of hard work; skip the new DVD player and build your savings; work fourteen-hour days at a family business that can be passed down to the next generation. The Fair American agrees with all of this. What’s lacking in the United States right now, though, is the opportunity for many people to build wealth. Too many families aren’t making enough money to save for the future and instead are accumulating high-interest debts. Most people don’t have financial reserves they can fall back on if they lose their job or have a health crisis. Homeownership rates may be at a historic high, but a third of families still aren’t part of the ownership class, and many people who are ostensibly part of this class actually have a negative net worth. People without any savings, or those carrying a lot of debt, move through life shadowed by insecurity and may find it easier to rationalize doing “whatever it takes” to improve their financial situation.

Smart proposals abound for how to help more people create personal wealth: birth endowments that give every child a nest egg on day one and, through the miracle of compound interest, translate into real assets by adulthood; Individual Development Accounts that leverage government money to encourage poorer Americans to save; special housing programs that offer low-interest loans to first-time homeowners; micro-credit loans that allow more people to start a small business. The ideas are all there. What is needed now are serious investments aimed at creating a true “stakeholder society.”⁴

Fourth, more needs to be done to reduce key insecurities that are part of our postindustrial economy. Americans may never again have the kind of job security that was common forty years ago. The days of strong labor unions and benevolent employers who provide good benefits may never return. More and more workers in the new economy will increasingly operate as free agents and have responsibility for meeting their own pension, health-care, and child-care needs. All of this can be a good thing, giving people more freedom, organizations more flexibility, and the economy greater dynamism.

Yet even the Tough American will agree that workers today face too many insecurities. As many as 60 million Americans are without health-care coverage at some point during any given year. Nearly half of workers are not covered by employer pensions and are not saving enough to retire securely. Tens of millions of working parents face an ongoing child-care emergency that limits their ability to participate in the economy and causes intense stress. Many workers don’t have enough flexibility in their jobs to deal with a family illness and other personal problems—or the resources to sustain themselves financially when they are out of work for very long.

None of the Tough American’s nostrums are going to get America out of this pickle. More hustle or more planning for the future is not going to solve these insecurities, which are caused by a basic failure of the market to deliver vital public goods. Instead, only the government has the resources and clout to help ensure affordable health care, child care, and housing. A new commitment along these lines—in partnership with business and nonprofit groups—is long overdue.

Taken together, these four strategies would reduce the financial anxieties that stalk many households and help restore people’s faith that the “system works,” that if they play by the rules they will be rewarded with a decent life. These steps should appeal to both sides of the American character: each asks a lot of people, as the Tough American demands; yet each holds out real rewards, as the Fair American suggests. And all four envision government not as the sole solution to our problems but as a catalyst for action that leverages its resources in partnership with the private and nonprofit sectors.

How should we pay for all of this? Alas, that is always the big sticking point. As Jennifer Hochschild and other scholars of the American Dream have discussed, it’s one thing for people in principle to embrace core American ideas of equal opportunity; it’s another thing for them to put up the money so the nation can realize these ideals. This is particularly true around education, where Americans at once deplore—and tolerate—“savage inequalities” in opportunity.

At the same time, if Americans can reach a deeper agreement on why and how to foster equity, the obstacle of money might not loom as large. If we find analyses and approaches that unite us ideologically, we’ll have fewer things to fight about and it will be easier to muster the resources needed for the job. Clearly the money exists in our $10 trillion economy. In his book, The Two Percent Solution, Matthew Miller lays out a far-reaching bipartisan strategy for fulfilling the promise of equal opportunity—one that parallels some of the ideas above and would cost just 2 percent more of the national wealth we generate annually to implement.

A word of caution, however: expanding opportunity will not get rid of inequality. Even if we heavily tax the rich, high levels of inequality are here to stay thanks to changes in the economy. Public policy can’t alter the fact that someone with a Ph.D. in biology or a natural knack for writing software code is going to be paid a lot more than someone with a certificate in dental hygiene or a gift for nursing the elderly. The winner-take-all dynamics of economic competition are especially intractable. Government can’t realistically do much about a ball team that wants to pay sluggers fifty times more than benchwarmers or a university that wants to pay star professors ten times more than adjuncts. There will always be a Winning Class, along with legions of people desperate to join it. And there will always be those who are winners and yet feel that they don’t have enough money or status. In the end, we will never fully eliminate the gap between what people want and what most of us can get through legitimate means. Even if we did greatly reduce inequality and achieve broad gains in absolute well-being across U.S. society, many people would still think negatively about their relative position. Wherever they are on the economic ladder, people will always be able to gaze longingly upward at someone who has more. Incentives to cheat will endure.

This reality means that it is all the more important to pursue equality in the political, legal, and social arenas of American life. To curb the cynicism among ordinary Americans and to rein in the hubris of wealthy Americans, the laws governing our society must be made fairly, enforced fairly, and seen as fair.

For starters, we must adjust the scales of influence within our political system. You can forget about getting money out of politics entirely, mainly because of the First Amendment. But money will talk less loudly if we have public financing of elections and also provide free television and radio airtime for candidates. Both of these measures would allow candidates to run viable campaigns—without prostituting themselves to wealthy donors. Curbing lobbying through stricter rules on the gifts politicians can accept and what jobs former government officials may take is another reform that is needed to rein in the influence of the wealthier classes and corporations.⁵

Meanwhile, ordinary Americans need to get more involved in elections and thus in shaping the laws that govern their lives. Instant runoff voting that allows voters to rank candidates in order of their preference would give the public more choices and more reasons to show up at the polls. Allowing voters to register on election day (a process that exists in six states) would also make a difference, since most people only get interested in electoral contests—if they pay attention at all—in the final few weeks or even days leading up to an election. Making election day a holiday, or holding elections on a weekend as other countries do, would mean that people don’t have to squeeze voting into their workday.⁶

Cracking down on the financial cheating of wealthier Americans and corporations must be the next order of business, although it won’t be easy. Three steps are particularly important to reverse the trends of the past two decades: give the IRS real muscle to ensure fairness in tax collection efforts; strengthen the SEC and better police financial markets; and give law enforcement agencies more resources to put away white-collar crooks.

The fairer enforcement of tax laws is an obvious priority. Not only should the IRS get the huge budget increases it needs to do its job, but it should also get new marching orders that compel equity in how it pursues tax evasion. Enforcement priorities should be determined by whose cheating is most costly, as opposed to who the easiest targets are. Following the money will naturally lead to a much greater focus on upper-income earners, a shift which is long overdue. But it is important that these earners do not feel unfairly singled out by the IRS. In the end, our tax laws will only have legitimacy if they are applied equally—and if all Americans perceive that they are applied equally.

The financial markets are another key focus for any effort to scrub clean the upper reaches of American society. The reforms enacted in 2002 and 2003 mark an important step forward in policing financial markets and corporate behavior. The Sarbanes-Oxley Act makes CEOs legally accountable for the numbers contained in company earnings reports and dramatically increases the penalties for financial fraud—up to twenty-five years in prison in some cases. It also mandates that corporate directors be more independent, and it creates a new public office to oversee the accounting profession. Elsewhere, the 2003 agreement between leading investment banks and regulators—led by Eliot Spitzer—calls for big changes at financial services firms to reduce lying by research analysts and other abuses. Finally, new legal and regulatory changes promise to help clean up accounting firms by prohibiting these firms from doing consulting work for the same companies that they are auditing.

In short, we do seem to have learned something from the recent corporate scandals. Yet while all these reforms are important, and all are overdue, government responses to the corporate scandals have not gone nearly far enough. The overwhelming majority of high-level wrongdoers have walked away from these scandals unscathed and phenomenally wealthy. As of this writing, the two men at the very top of Enron, Kenneth Lay and Jeffrey Skilling, have faced no criminal action; Bernard Ebbers of WorldCom has not been indicted; prosecutors have declined to go after Gary Winnick of Global Crossing; Jack Grubman and Henry Blodget escaped criminal prosecution in their settlement with Spitzer; Sanford Weill of Citigroup has not been pursued by prosecutors; Philip Anschutz of Qwest agreed only to a small settlement with Spitzer; and the list goes on and on and on.

There are good reasons why these villains have not been punished—mainly that successful legal action against them is difficult given the complex or ambiguous nature of their misdeeds. But the message being sent here is highly troubling. Future wrongdoers may not be deterred; and the public, for sure, will come away from this period feeling even more cynical about the notion of equal justice.

Worst of all, government still lacks the capacity—or legal authority—to fully police financial markets. “The truth is that the markets have been, and are, spinning out of control,” writes regulatory expert Frank Partnoy. “The antiquated system of financial regulation, developed in the 1930s and designed to prevent another market crash after 1929, no longer fits modern markets . . . the markets are now Swiss cheese, with the holes—the unregulated places—getting bigger every year, as parties transacting around legal rules eat away at the regulatory system from within.” Partnoy observes that the value of trading in volatile financial derivatives, where people bet on the future value of anything from the yen to mortgages, is now larger than the trading in stocks and bonds. He and many other observers fear that it is only a matter of time before another wave of scandals sweeps through the financial markets.⁷

In July 2002, Alan Greenspan testified before a Senate panel that “It is not that humans have become any more greedy than in generations past. It is that the avenues to express greed have grown so enormously.”⁸ The new laws designed to curb yesterday’s abuses, along with a little extra money for the SEC, fall way short of what is needed to block off these avenues. The federal government needs the regulatory muscle to do more than just keep its head above water; it must be able to keep pace with more sophisticated attempts to manipulate financial markets in order to anticipate where future abuses will occur and to take regulatory action before those abuses unfold on a large scale. One positive step would be to turn the SEC into a far larger and more entrepreneurial agency—beginning by allowing the agency to “eat what it kills.”

The SEC currently takes in up to $2 billion annually in processing fees for corporate filings. It rakes in other funds from fines and settlements. Congress originally intended such funds to go directly toward covering the cost of SEC operations, but they now go into general government revenues. Allowing the SEC to keep all the funds it generates would enable it to grow the fangs it needs and stay on top of sophisticated global financial markets that operate twenty-four hours a day at lightning speed. It could pay much higher salaries to rope in the talented professionals it needs to grasp the regulatory challenges posed by high finance in the twenty-first century; and it could staff an enforcement division that has the capacity to unravel sophisticated scams, as well as to go after all the wrongdoers that catch its eye—as opposed to always operating in triage fashion due to budgetary constraints.

The effective policing of financial markets also requires a major new investment in prosecuting white-collar crime. The SEC has no authority to throw people in prison; it can only bring civil complaints and refer cases to law enforcement agencies. Justice doesn’t get done if these law enforcement agencies lack the resources to go up against individuals who rank among the world’s most sophisticated and wealthy criminals. Deterring and punishing financial crimes—but also white-collar abuses in other areas—requires a major expansion of federal prosecutorial powers. That expansion should begin by dramatically beefing up the securities fraud unit in the U.S. attorney’s office in New York, which will remain ground zero in the fight for clean financial markets. Yet in this day and age of the populist stock market, with more brokerage services operating in every part of the United States and large public companies spread across the country, law enforcement expertise around securities fraud must also be beefed up in many other places beyond New York.

On another front, law enforcement agencies must step up their assault on illegal practices within the health-care and pharmaceutical industries. These industries have become among the most corrupt in the United States. At a time when health-care and prescription drug costs are already spiraling out of control, and the coming old age of the baby boomers promises to badly strain health-care entitlement programs, various forms of fraud are costing the nation tens of billions of dollars a year. This trend is unfair and demoralizing. Even as many Americans are unable to afford decent health care, they hear constantly about stealing and profiteering by wealthy pharmaceutical companies and hospital chains. The repeated failure to punish specific individuals responsible for these crimes can only deepen public anger around a health-care system that already stands as the leading symbol of a broken social contract.

Law enforcement agencies are already getting serious about health-care rackets. The Justice Department has recently issued new rules governing the marketing of prescription drugs, and it has also gone up against large health-care providers in several high-profile cases over the past few years. Typically, though, the cases against wrongdoers have taken years to fully investigate and few tough penalties have been meted out. For example, the government’s case against Parke-Davis for its illegal marketing of Neurontin has already been under way for years and will probably continue for several more. The Columbia/HCA case of the 1990s involved massive billing fraud—outright theft, effectively—and yet only a few indictments were handed down. Other, smaller cases in the health-care field have followed the same pattern: long, drawn-out investigations followed by a slap on the wrist. The difficulty investigators face in achieving more decisive results is due to the same challenges of prosecuting securities fraud: a combination of ambiguous evidence and a lack of prosecutorial manpower. It’s time for some serious muscle in this area.

 

THE STEPS I’ve suggested so far to create a new social contract should not be very controversial. Helping more people to get ahead is as American as apple pie. So, too, is the notion of making everyone—rich and poor alike—equal before the law. If you believe, as I do, that cheating partly reflects how far America’s culture has drifted from the core values of fairness and opportunity, then it follows that new efforts to align our society with those values should reduce cheating.

But this is only part of what needs to be done. Other ailments must also be attacked, especially pervasive materialism, extreme individualism, and the social alienation that thrives amid weak communities and broken families. These conditions degrade our collective sense of moral purpose—the sense that we are part of something larger and that fellow citizens are teammates in this quest. Absent such shared moral purpose, it seems rational to look after yourself and forget about everyone else.

Changing the social and cultural fabric of our society will be no easy thing. A focus on personal freedom and material well-being is deeply ingrained in our national culture. There is nothing wrong with these traits—except when they grow too powerful, rationalizing our worst impulses and dividing people from each other.

Robert Putnam is one of many thinkers who has suggested ways to strengthen civic bonds in America. Others have put forth proposals for shoring up the family in an era where divorce is common and both parents typically work, and for expanding the role of religion and spirituality in people’s lives.⁹ I would add four other priorities to the mix.

First, we need to give Americans more opportunities to derive meaning from life—and enjoy status in the eyes of others—that aren’t about making money and flaunting it. Historically, such opportunities have existed mainly in spaces that stand apart from the free market, including public service, charity, higher education, and the arts. Such opportunities also existed in parts of the private sector that were somewhat insulated from market pressures, like book publishing, journalism, and long-term scientific research for major companies such as IBM or Xerox.

The bad news is that the places where you used to be able to make your mark without worrying about meeting your quota have been squeezed hard in recent years. The public sector has been demeaned and downsized, while the private sector has become a less tenable place for those who lack commercial sensibilities. The good news is that the nonprofit sector is now bigger than ever, offering people more opportunities to make a living, and a difference, in relative isolation from market values. Some $200 billion a year in contributions from individuals and philanthropic foundations is now flowing into more than a million nonprofit organizations, including private universities, religious institutions, international aid organizations, museums, charities, and myriad community groups. The recent philanthropic downturn aside, the nonprofit sector is expected to expand considerably in the years ahead as the endowments of foundations grow through investment in the stock market and as vast new fortunes are harnessed for charitable ends. Among other things, this means more grants for artists, poets, and documentary filmmakers, and more jobs for pastors, environmentalists, and community organizers.

Looking ahead over the next few decades, there is much we can do to expand peoples’ opportunities for rewarding careers outside the confines of an ever-harsher market economy. Sustaining the growth of the nonprofit sector is one clear priority, and a critical thing here is to preserve the estate tax, now under attack from Republicans in Washington, since bequests make up a large portion of monies going into the sector. Renewing the vitality of the public sector is an even bigger priority. More robust government is a prerequisite to economic fairness and equal justice under the law, but we also need a flourishing public sector so that those who wish to give back to their nation or community will be respected and well-compensated. Public school teachers and administrators stand as exhibit A of how much this is not the case today.

A second way to humanize our society and pull people closer together is to create more livable communities. The pervasive sprawl in the United States has had a devastating effect on social connectedness. Americans are spending more time in their cars and less time with family and friends. In areas where you need to “burn a pint of gas to buy a quart of milk,” people have little occasion to get to know their neighbors. A spirited citizens’ movement is trying to change these patterns, imagining a society where every child is within a five-minute walk of an ice-cream cone; where many more people can easily use mass transit and are not prisoners of their cars; where streets have sidewalks and are interconnected, as opposed to ending in cul-de-sacs; where homes are closer together and front porches, not two-car garages, face the street; and where more “third places” exist outside of work and family that allow people to mingle easily with others.

It’s a nice vision. But the livable-communities movement faces an uphill battle in a society that too often lets residential growth unfold chaotically, along terms dictated by real estate developers. During the 1990s, the federal and state governments finally began to provide support to communities that were working to become more livable. But much more needs to be done. Major new investments should be made to buy and protect green space from development, as well as to reclaim polluted urban areas, or “brownfields,” for redevelopment and to incentivize rezoning efforts that would allow for livable communities. Here again, public funds should be used to catalyze action, not to solve every problem.¹⁰

Third, we must tackle the problem of excessive consumption. The grotesque materialism of U.S. society is not only bad because it makes people look endlessly inward, creating competitive anxieties about status, looks, and class position. It is not only bad because it has created intense spending pressures on people at a time when many households have been running in place economically. Nor is it only bad because of its destructive environmental consequences. Excessive personal consumption is also bad because it drains national resources away from more important spending that could strengthen our communities and elevate our quality of life. While the U.S. economy now generates over $10 trillion in wealth every year, our political leaders constantly complain that the nation cannot afford many of the things that the majority of Americans say are needed to improve their lives—like better-paid teachers and smaller classes, subsidized health care and child care, better transportation systems, more parks and open space, more affordable housing, more help in caring for the elderly, and on and on. One reason we cannot afford these things is because so much of the wealth generated in U.S. society goes straight into personal consumption. Nearly everyone is buying more stuff than they need—even as nearly everyone complains that our society lacks so many things it requires.

Public policy over the past half century has aimed to promote consumerism. Now it’s time to move in the opposite direction. We should use public policy—and particularly the tax system—to reduce excessive consumption. A progressive consumption tax would provide incentives against consumption, increase rates of personal savings, and generate new government revenues. As the economist Robert Frank and others have described it, such a tax could be structured so as to only affect luxury spending. Consumption up to a certain level, that which is needed to cover all of one’s necessities, would not be taxed, nor would money put into savings. Consumption beyond these expenditures would be taxed at a progressive rate, with the rate getting higher the more one engaged in luxury consumption. According to Frank’s plan, the consumption tax would be collected through the current system of year-end tax filing, and not through sales taxes.¹¹

A consumption tax would address the most intractable aspect of today’s consumerism, namely that excessive consumption is often rational. The “right” wardrobe or car or home sends critical status signals to other people and can shape one’s prospects for a better life. The only way to counterbalance these self-interested motives for consumption is with a more powerful set of financial incentives that run in a counter direction.

A fourth critical change needed to foster a greater sense of shared moral purpose in the United States concerns racial diversity. Nowhere is America’s social contract more frayed than when it comes to race. Many nonwhite Americans feel deprived of opportunities to get ahead economically and locked out of any meaningful role in democratic deliberation. The evidence bears out their perception that the social contract isn’t working: nonwhites are less likely to have access to good schools, more likely to have been born into poor families without significant wealth assets, more likely to be trapped in dead-end low-wage jobs that do not include health and pension benefits, and more likely than whites to receive harsh punishments in the criminal justice system. Communities of color also have lower voting turnout, make fewer campaign contributions, and overall have weaker political representation than white communities. Not surprisingly, blacks and Latinos tend to be less trusting of government, corporations, and the media, as well as less trusting of other people.

At the same time, many whites see some minority Americans as not doing their part to uphold the social contract. The powerful white backlash following the Civil Rights movement and the war on poverty was partly rooted in plain racism; but it was also rooted in concerns about higher crime in communities of color and a perception of a lax work ethic, low levels of personal responsibility, and little commitment to self-improvement. Carol Swain’s book The New White Nationalism in America provides a troubling look at how these sentiments are playing out today in different ways than in the past.¹² While there is much evidence that the racial polarization of American society is ebbing, vast divisions persist. These could worsen as the United States becomes radically more diverse in the next few decades, moving toward a point sometime in the middle of this century where whites will no longer be a majority. There is the real potential for growing ethnic tensions in the United States akin to what has occurred in multiethnic countries abroad. If America heads down this road, nothing else we do to foster shared moral community will matter. Social distrust will deepen as people place narrow ethnic self-interest above all else.

This dark possibility makes it all the more urgent that we work to ensure that every American can become a true stakeholder in our society, with special attention given to communities of color where feelings of alienation and disenfranchisement are most intense. Serious wealth-building efforts are needed to address a racial wealth gap that has left an estimated 60 percent of African American households with no assets or a negative net worth. Communities of color—historically marginalized in the political process—should also be the locus of new initiatives to foster civic education and participation. Jurisdictional boundaries that isolate nonwhite urban communities from surrounding suburban areas must be redrawn. And affirmative action must continue until the day comes when leaders across all the nation’s institutions have legitimacy in an America of tomorrow destined to look very different than that of today.

 

 

A Different Bottom Line

 

Far-reaching efforts to create a new social contract in America are only part of the solution to today’s cheating epidemic. To crack the culture of cheating, we must reform business and leading professions through a combination of government pressure from the outside and change from the inside. Along the way, the private sector must unshackle itself from narrow, bottom-line ideas that too often foster dishonesty.

In 1987, William Morrow & Company published The Complete Book of Wall Street Ethics—a gag book of blank pages. The book underscored the view of many that the term “business ethics” was something of an oxymoron. However, while ethics codes may often only scratch the surface of deeply amoral systems, they do offer important ways to attack cultures of dishonesty or prevent such cultures from emerging.

Business ethics got a major boost in 1991, when the Federal Sentencing Guidelines were established. Under the guidelines, a company’s penalty for any wrongdoing is determined in light of its commitment to preventing ethical lapses through codes of ethics and compliance programs; strong ethics programs could save companies a lot of money if they ever got into trouble. By 2000, most companies had a written code of ethics and many offered some training in ethics—a big increase from the early 1990s. A 1998 study showed correlation between beefed-up ethics programs and more ethical behavior in U.S. corporations.¹³ But other experts have cast doubt on whether the corporate ethics boom of the ’90s has made any difference. A 2001 study found ethics programs tended to rely too heavily on asking individual employees to do the right thing and disregarded the impact of organizational culture on people’s behavior. The authors of this study insisted that ethics programs would remain ineffective until companies developed the means to integrate ethical values into daily routines.¹⁴

The recent corporate scandals underscore that many of these programs were little more than window dressing. Enron broadcast its ethics code—Respect, Integrity, Community, Excellence (or RICE)—on everything from coffee mugs to T-shirts and workplace banners, while Kenneth Lay gave speeches at conferences on corporate ethics.¹⁵ But when ethics really counted, Enron’s board of directors waived its ethics policies to let Andrew Fastow engage in shady business deals. Elsewhere, the ethics compliance officer at Tyco is one of the corporate executives under indictment. The case of Arthur Andersen is especially ironic. Even as it made hundreds of millions of dollars in its ethics consulting division, Andersen refused to establish an internal ethics-compliance program—an omission that came back to haunt it later.¹⁶

Leaving aside all the scandals, the ethics at many companies remain dismal. A 2003 survey by the Ethics Resource Center found that 22 percent of employees said that they had witnessed misconduct either often or occasionally during the previous year. A large survey of corporate employees in 2000 by KPMG found that half of the respondents had observed violations of the law or company standards during the previous year, and many reported that these violations were quite serious. In yet another study, less than half of the employees surveyed felt that “their senior leaders are people of high integrity.” Given all this bad news, who would believe that there’s been a revolution in corporate ethics in the past decade?¹⁷

Still, the new ethics programs are far from worthless. These codes work better some places than others, and there is much to be learned from past successes. Nearly all experts agree that the defense industry offers the most instructive model for effective reform. Defense contractors were synonymous with dirty business dealings during the 1970s and 1980s. This began to change in 1986, with the initiation of Operation Ill Wind, a Defense Department sting operation against corrupt defense contractors that found pervasive illegal behavior. In response to the scandal, leading defense firms subscribed to the Defense Industry Initiative (DII), a sweeping program designed to “aggressively self-govern and monitor adherence to [the DII] code and to federal procurement laws.”¹⁸

Businesses that are serious about creating an ethical climate would be wise to follow practices that have become common in the defense industry. These include regular employee training in ethics codes, more ways for employees to blow the whistle, and genuinely open ties to government regulators. Most of this is pretty basic stuff. Running an honest business is not rocket science, it turns out.¹⁹

The real challenge is that many business leaders just don’t buy the idea that more integrity means higher profits. Apostles of socially responsible business promote this idea as gospel, but it has yet to be backed up with convincing research, according to Lynn Sharp Paine, a professor at the Harvard Business School and one of the world’s leading experts on corporate ethics. But business leaders are slowly beginning to pay more attention to thinkers like Paine who advocate adding ethics to the bottom-line calculus. As Paine sees it, changing public attitudes around the world are forcing corporations in this direction. “Today’s leading companies are expected not only to create wealth and produce superior goods and services but also to conduct themselves as ‘moral actors’—as responsible agents that carry out their business within a moral framework . . . society has endowed the corporation with a moral personality.” Paine backs up this assertion with survey data about the changed views of employees, citizens, consumers, and even some investors. This new outlook is diametrically opposed to the trend within corporations over the past two decades, which has been to strip companies of moral purpose and focus solely on profit maximization. Ordinary people, it appears, aren’t so keen on that trend.

Paine is prodding corporate leaders to get in step with the public by pointing out ways that an investment in ethics pays. She emphasizes four points, all of which jibe with common sense: It helps companies to manage risk, especially the risk of a fatal scandal. It enhances the functioning of companies by building positive and cooperative values among employees. It strengthens the brand identity and market position of companies by enhancing or protecting their reputation. And it improves companies’ “civic positioning,” thus allowing them to better get along with communities and governments.²⁰

Conservative commentators have often been right to point out the great inefficiencies incurred by government regulation. It is costly to have government constantly looking over the shoulder of business. Yet time and time again, even the most respected companies have shown that they cannot be trusted when it comes to the money of investors, the health or safety of consumers and workers, or the protection of the environment. A beefed-up commitment to ethics in the business world will not take away the need for vigilant government regulation in the near future. But it may not be too farfetched to imagine that, over the next few decades, this commitment could become deeply institutionalized, that the notion of self-policing could actually come to have meaning, and that the need for intervention by government could diminish.

Such a shift toward stronger ethics is more likely to occur in a business world where today’s conception of the bottom line has less influence. In so many professions, ethical problems have escalated in tandem with growing bottom-line pressures. Neither outside regulation nor internal ethics programs can force the private sector to abandon the extreme bottom-line thinking that it has embraced over the past two decades. However, both types of reform can curb the worst abuses associated with this shift and push companies to not measure performance by earnings alone. Despite the laissez-faire revolution of the ’80s and ’90s, the profit motive has never achieved total dominance in the business world and midcentury notions of responsibility to multiple stakeholders have not been extinguished entirely. Many of the reform challenges that face the private sector boil down to the task of reinventing these notions for a new era—and, here again, putting market values back in their proper place.

 

 

Teaching Integrity

 

There is nothing fantastical about the society I am sketching out—a place where people believe that the rules are fair and that if they play by the rules, they will get ahead; where people feel more connected to each other and less obsessed with piling up possessions; where business is serious about following both the letter and the spirit of the law.

We don’t have to alter the DNA of Americans to create this kind of society. Most of us want it already. However, in addition to other sweeping reforms, we do need to alter the attitudes of young people. If the next generations of Americans are to help build a more ethical society and sustain it, they must come of age within institutions that are far less tolerant of cheating than today’s high schools and universities. They also must learn early on to commit themselves to principles beyond their own individual self-interests.

One important step is character education in our schools that starts at a young age. Many children are not taught much about ethics and honesty at home. Parents are working longer hours than ever before and a lot of them don’t have time for moral discussions. They may also lack the skills or vocabulary to have such talks in an effective way. Worse, many parents may be caught up in the cheating culture themselves and set a negative example for their children. Polling shows that parents are deeply worried about their ability to inculcate their children with strong values, while young people today are acutely aware of the moral crisis facing America.²¹

Educators in recent years have increasingly embraced the idea that character education should be part of school curriculums. Most character programs take into account the obvious potential for controversy in such work and steer clear of divisive issues. “Character programs are based on commonly held values—like respect, responsibility, fairness, honesty, justice—that we believe should be adopted by the community,” says Esther Schaeffer, who runs the Character Education Partnership, a national nonprofit organization. Character programs tend to be flexible and are often shaped to fit local needs with the input of the community. By the late 1990s, public schools in almost all states promoted character education at some level, although this commitment is typically very small and made possible with the support of a pilot program sponsored by the federal Department of Education.²²

These programs work in different ways, explains Schaeffer. The notion of establishing the legitimacy of authority is often very important. “In an elementary school class, it might be rules put up at the beginning of the year—but instead the teacher lets the kids help develop the rules of how to behave together. The kids usually come up with better rules, and they have developed them, so they feel more a part of it. Or perhaps the teacher will start the day with a classroom meeting, and students can talk about anything that troubled them the previous day, or they might share ideas about a specific topic. So there is a definite effort to have kids bring up and handle issues. . . . A school where you’ve got good character education is one where the culture of the school puts a high premium on respect, honesty, and kids being responsible for their actions and adults doing the same.”

Character-education programs are still relatively new. But some research suggests that they have real impact, reducing cheating and other forms dishonesty among students. These programs work as a natural complement to honor codes, which are a more well-established strategy for reducing cheating.²³

Honor codes in schools have been around for over a century. They range from simple edicts—“cadets will not lie, cheat or steal, or tolerate those who do”—to highly elaborate written codes supported by accumulated case history. Like character-education programs, many of these codes let students play a key role in enforcing the rules.

Research by Donald McCabe and other experts shows that honor codes do reduce cheating—with some caveats. Honor codes must go hand in hand with a strong institutional commitment to academic integrity. High schools and universities need to educate students and faculty about honor codes in an ongoing way, and use creative strategies to foster an environment where cheating is not socially acceptable. Some schools, such as Washington and Lee University, even discuss the campus honor code with students during the admissions process. Many schools include dialogue and ceremonies around the honor code as part of their orientation process for new students. At Vanderbilt, for example, each freshman signs a class banner affirming their commitment to the school’s honor code. Banners for all of the classes enrolled at Vanderbilt hang in the school’s student center for everyone to see. The larger point here is that students must be constantly reminded of their solemn obligation to academic integrity.²⁴

A school’s commitment to integrity must aim to change not just students’ attitudes but also those of faculty. Right now, faculty are a big part of the cheating problem—with students commonly reporting that teachers and professors let cheating go on. Many teachers don’t seem to think that policing integrity standards, and all of the hassles that entails, falls under their job description. But obviously it does. Schools must make it clear to faculty that keeping students honest is as important as their other obligations, such as teaching and publishing. Schools should measure whether faculty live up to that obligation, just as they measure performance in other areas.

Teaching young people to look beyond their own narrow self-interest is even more important over the long run than strengthening standards of academic integrity. Young people must be pushed to explore the world beyond their MP3 players and to develop themselves as more than consumers and future workers. Myriad programs exist that encourage young people to do exactly that—by helping the elderly or homeless, improving public spaces, and working in politics, the arts, or education. Many high schools and universities now have community service requirements. While there is much debate about exactly what approaches work best to elevate young people out of a self-centered mind-set, we have more knowledge about this than ever before, including many insights from the AmeriCorps program and such large-scale nonprofit organizations like City Year. Here, as elsewhere, it is not that we lack solutions to the flaying moral fabric of our society; it’s that we lack the political will and resources to enact these solutions on a greater scale.

Finally, we must get serious about teaching ethics in business and professional schools. These programs represent the last chance educators get to shape the attitudes of future leaders. Right now this chance is largely squandered, particularly at business schools, where many students arrive with dishonest instincts and often leave in even worse shape. One 1998 study revealed practically no difference in the moral orientation of business students and convicted felons when making hypothetical decisions about ethics in the workplace. If anything, the study’s authors contended, the results of their surveys showed more integrity among the felons, who were less likely than business students to raid competitors for desirable employees and to slight the needs of their customers in favor of stockholders.²⁵

The Association of Advanced Collegiate Schools of Business requires accredited M.B.A. programs to educate students about ethics, allowing schools to choose their own method for integrating ethics into the business curriculum. The results of this requirement are not impressive. A study conducted by the Aspen Institute’s Initiative for Social Innovation Through Business between 1999 and 2001 found that students left graduate business programs with a weaker ethical orientation than they had when they arrived.²⁶

Getting serious attention for ethics has traditionally been an uphill battle in business schools. Business school faculties often resist ethics initiatives, and ethics requirements are frequently shunted to the sidelines—with students and professors alike simply going through the motions to get the requirement out of the way. For example, in the wake of the insider trading scandals in the late 1980s, former SEC chairman John Shad gave Harvard Business School a $20 million personal gift to establish an ethics program. Today most people agree that the school has largely wasted the money—and missed the opportunity to be a leader on teaching ethics.²⁷

That’s a shame. Creative ideas do exist that can make M.B.A.s really stop and think about ethics, but they need to be popularized and legitimized. Forays to federal prisons are one such idea. Class visits by corporate ethics officers and executives who’ve faced ethical dilemmas can also have an impact. Learning to stay honest in business, one would hope, is not all that hard. The real challenge is making business school a place that teaches such lessons.

Preprofessionals in law, accounting, and medicine also badly need stronger ethics training. A study of undergraduate accounting programs in 2000 showed that these programs failed abysmally to instill integrity. Accounting students were queried during their sophomore year and again as seniors about their willingness to falsify data on financial reports. The results showed that seniors were more willing than underclassmen to cheat on the balance sheets.²⁸ Students in all law schools are required to pass a course in professional responsibility, as well as to pass the Multistate Professional Responsibility Examination as part of most state bar exams. But these requirements provide future lawyers with little real-life guidance for dealing with ethical quandaries on the job, particularly around billing. Elsewhere, medical schools do little to prepare students for the ethical minefield that is modern medicine.²⁹

In all of these fields, there exist plenty of ideas for how to teach ethics in ways that will have traction in real life. The problem is that teaching preprofessionals how to act honestly is nearly always an afterthought. It’s past time for leaders within professional schools to put ethics front and center.

 

AMERICA’S CHEATING CULTURE will not be dismantled overnight. The reforms I’ve suggested are just part of what needs to be done, and any comprehensive agenda to curb cheating will take years to put into place—if our society makes a real commitment to take action.

That’s a big “if.” Some reforms, like improving honor codes in schools, are relatively easy because they will not encounter much opposition or because they can advance institutional self-interests. Others, like reducing the influence of money in politics, run up against powerful interests that will fight to the death to preserve the status quo.

Certainly, many of the reforms needed to curb cheating will be harder to enact as long as the United States remains so deeply in the grips of laissez-faire ideology and market values continue to reign with such influence in our culture and our economy.

How long will the present era of extreme capitalism last? That is hard to predict, but I’ll offer a few encouraging thoughts. First, as the historian Zachary Karabell and others have argued, American history has been characterized by the rise and fall of particular ideas that dominate American life for a few decades before giving way to the next big idea. Religion dominated American life in the colonial era. Expansionism and the drive for national unity dominated U.S. society in the nineteenth century. Government played a dominant role in shaping American life during the mid-twentieth century. And, since the 1970s, the market has been the guiding force in American life. Each stage in American history has given way to something else and often the new stage is a backlash to what existed before.³⁰

Given this record, the present hegemony of the market is unlikely to last indefinitely. There are already signs that a new big idea may be on the rise—a concept of “life balance,” or what Karabell calls “connectedness.” A drive toward balancing work and acquisition with stronger community and greater personal well-being is emerging amid growing public dissatisfaction with our consumerist, work-obsessed society. Signs of such a trend can be seen in the “downshifting” movement, the fight against sprawl, rising interest in eco-tourism, and much else. However, exactly when—or whether—these disparate trends will metastasize into a full-blown cultural shift remains to be seen.

A backlash to the market extremism now dominant in U.S. society could also take a more familiar, cyclical path, as has occurred several times in the past century. The early twentieth century saw a revolt against the excesses of the Gilded Age and the undemocratic power of the trusts. The 1930s saw a backlash to the laissez-faire economics of the 1920s and the lords of the financial sector. The 1960s saw a backlash to the consumerism and conformity of the 1950s, as well as the overreach of corporate power in U.S. society. Americans love the free market, but again and again they have risen in revolt when market forces became too powerful.

It is too early to say whether the United States is on the verge of one of these periodic revolts. But many of the conditions that have catalyzed such backlashes in the past are now present: growing public concerns about unchecked private power; high-profile scandals that underscore the corrupt role that corporations play in America’s politics; and mounting unease with the social and cultural consequences of extreme competition and materialism. It is worth adding that every past popular revolt against laissez-faire excesses has come on the heels of a Republican presidency in which the White House was widely seen as too cozy with big business. We can only hope that George W. Bush’s presidency—a presidency made possible by money from corporations and the superwealthy, and largely geared toward serving these constituencies—will also go down in the history books as the last stand of a deeply corrupt social order.

Banishing the latest plague of market fundamentalism from U.S. society, forging a new social contract, reforming business and professions, teaching integrity to the young—these are the changes needed to dismantle the cheating culture. Some of us are positioned to be actively involved in such reform efforts; all of us can work as individuals, in our daily lives, to strengthen the moral fabric of U.S. society. Yes, the cheating epidemic writ large can be traced back to large-scale shifts in America over recent decades, but that doesn’t mean that as individuals we’re not responsible for our actions.

For what it’s worth, my advice to those who cheat or are around cheating boils down to two simple ideas: one, go ahead and be a chump; and two, don’t hesitate to be a pain in the ass.

Be the chump who files an honest tax return, even if you believe that “everybody else” is cheating. And be the person, also, who gives your friends a hard time for cheating on their taxes.

Be the chump who pays $18 for a CD at the store, even though record companies are monsters and you can get the music for free over the Internet. And when a friend sends you a file of a recent hit song, send it back to him with a lecture on copyright law.

Be the chump who tells Allstate that your boyfriend—the one with sixteen points on his license—does, in fact, live with you and does share your car. Auto insurance companies are a bunch of bloodsucking profiteers, but fraud isn’t going to solve this problem and actually makes it worse.

Be the chump at work who doesn’t tell that endless blizzard of white lies that helps people get ahead in business. And, whenever you get the chance, blow the whistle on corruption at the office.

If you’re a lawyer, be the chump who only bills your actual hours. If you’re a doctor, stay away from Big Pharma reps bearing gifts. If you’re an athlete, stay clean even if it means a life of amateur sports.

All of this is easier said than done, I know. There are a lot of people who feel unable or are unwilling to stop cheating until broader structural changes are in place. And who am I, really, to lecture people about the sacrifices they should make to improve our society’s ethical climate—a goal that’s pretty abstract compared to providing for one’s family.

In the end, one of the most important changes needed to reduce cheating in many places is to banish the perception that “everybody does it.” If you don’t cheat, the category of “everybody” will include one less person. And if you set an example, or persuade others not to cheat, than “everybody” could become “some people” and maybe, in time, “a few people.” The tipping-point phenomenon can go both ways: cheating can become common enough to be normalized and socially acceptable; but it also can turn uncool, thanks to ordinary people who decide to take an active moral leadership role. Each of us has real power to help influence the climate of social norms that surrounds various kinds of cheating. Use that power.

A special word to parents. If you’re a parent, don’t wait for the educational system to adopt character-education programs or serious honor codes. Make a commitment to integrity in your own home. Talk to your kids about why they should play by the rules—and honestly challenge rules they think are wrong. Teach them how to work through the tough ethical dilemmas in life. Create an environment where money and status do not loom in your children’s lives as the greatest good.

One last piece of advice to those who have read this far: beware of ATMs that appear to be dispensing free cash. In this electronic age, alas, nothing is ever forgotten.