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Human Values and Corporate Social Impact: The Case of JPMorgan Chase

3p Contributor | Thursday July 24th, 2014 | 0 Comments

Editor’s Note: This is the first post in a six-part series written by Donald J. Munro of the University of Michigan. You can follow the whole series here

4156356364_a4475d94cd_zBy Donald J. Munro

The Supreme Court’s 2010 “Citizens United” decision affirms the legality of treating corporations as persons — having a right to free speech, manifested in money contributions in elections. But, corporations should not be treated as people, because they do not act like people.

Why do people act the way they do? In part, because of the values we share with others. The focus of the following six posts in this series is to show how certain human moral values and some corporate behaviors are incompatible, using JPMorgan Chase as an example.

These specific moral values are derived from beliefs and attitudes linked to human biology, even though they find varying expressions between cultures. These values are fundamental aspects of human nature, and decisions based on them contribute to cooperation, a basic necessity for humans to survive and flourish.

What are moral values?

Morality answers the question: How should we live as individual humans, including with other people? Moral values, involving feelings and knowledge, flag what we consider right and wrong and serve as our standards, by which to weigh choices that lead to actions.

There are priorities among them. The values addressed in the posts in this series are found in most societies with various names and cultural adaptations

Something becomes a legitimate moral duty only if we can perform it. What we believe ought to be done should not put unreasonable demands on our ordinary motives and attitudes. The six values I cite in this series meet that standard because they are linked to our biology — our bodies are predisposed to seek them.

Health and well-being of the body/mind

The neuroscientist Antonio Damasio wrote,“We happen to be biologically structured in a certain way — mandated to survive and to maximize pleasurable rather than painful survival…” Joy and sorrow are the signals of our organ and tissue functions, immune system, stress/tranquility, and certain drives such as for hunger and thirst. (See this review of “Looking for Spinoza.”)

In part, health and well-being are objective, subject to medical measurements: reflexes, temperature, tissue repair, and the state of our neurotransmitters (serotonin) and hormones (cortisol). But other parts are more subjective, including special interests and goals unique to ourselves, that influence our choices and the resulting joy or sorrow, which are always subjective.

The quants and consequences

Corporations hired physicists and mathematicians –“quants” — to make predictions about profit and loss. They could have attended to the consequences for human health and well being of policies about loans and mortgages, or human joy and suffering, but that was not their mission.

If we want to find out whether or not JPMorgan’s recent behavior has affected the health and well-being of people, where might we look? One place is foreclosures. A study of 798 people by the Leonard Davis Institute of Health Economics found:

“Foreclosure is associated with high rates of major depression, hypertension, and heart disease. …The investigators found physical and mental health problems among those facing foreclosure that were significantly more severe than among similarly vulnerable individuals in the general populations. These results suggest that poor health may be either a cause or an effect of foreclosure.”

JPMorgan Chase’s record on foreclosures

GMIRatings gives ongoing ratings on corporations based on an evaluation of their meeting standards of corporate governance, social impact and environmental impact. It provides investors with risk factors for the corporations and lists the facts leading to the evaluations, such as legal charges against the company. It found:

  1. February, 2012: JPMorgan Chase and four other firms agreed to a settlement with the Department of Justice, the Department of Housing and Urban Development, the Consumer Financial Protection Bureau, and the State Attorneys General, relating to the servicing and origination of mortgages. The settlement requires the bank to (1) Make cash payments of about $1.1 billion (part of which will be set aside for payments to borrowers). (2) Provide about $500 million in refinancing relief to some underwater borrowers. And (3) give about $3.7 billion of additional relief to certain borrowers.
  2. June 14, 2013: A federal judge ruled that JPMorgan Chase must face a lawsuit accusing the largest U.S. bank of illegally imposing marked-up or unnecessary fees on delinquent mortgage borrowers.
  3. Sept. 5, 2013: JPMorgan Chase and a major insurer agreed to a $300 million settlement to resolve accusations that they forced homeowners into over-priced property insurance and entered into kickback arrangements that inflated the policies’ prices.

Are corporations people?

1 United States Code Chapter 1 defines corporations and companies, as well as individuals, as persons.

“In determining the meaning of any Act of Congress, unless the context indicates otherwise—the words ‘person’ and ‘whoever’ include corporations, companies, associations, firms, partnership, societies, and joint stock companies, as well as individuals.”

With the “Citizens United” decision, corporations, like individuals, have “free speech” to promote their interests and can contribute money to advocate for the election or defeat of candidates.

But the free speech of individuals usually reflects their human values. Corporations have so many different values and interest groups within the organization or without (those affected by “externalities“) that they may either not represent the human values of the employees or violate them.

The CEOs or other officers usually determine who gets the money, and they do not consult shareholders. In contrast, union members can refuse to have their dues spent for political ends. How can a corporation be a person, when individual human values are often so different from those inside the corporate accounting office?

Next: Love, Compassion, Empathy and Altruism

Image credit: Flickr/michaelpremo

Donald J. Munro is professor emeritus of philosophy and Chinese at the University of Michigan. Munro connects venerable philosophical traditions to modern scientific discoveries, always with a concern for the ethics of human action. His books include The Concept of Man in Contemporary China, Images of Human Nature: A Song Portrait, and Individualism and Holism: Studies in Confucian and Taoist Values. In recent years he has been the Ch’ien Mu Lecturer in Chinese History and Culture (2006) and the Tang Junyi Visiting Professor (2009) at the Chinese University of Hong Kong. For many years he was a participant in faculty seminars in evolutionary psychology in the Psychology Department at Michigan. He is also a founding member of the Interfaith Partnership for Political Action (IPPA.US).


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