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Discuss how regular employees of certain large corporations (such as Enron or Goldman...

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gwan | Honors

Posted June 25, 2013 at 1:10 AM via web

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Discuss how regular employees of certain large corporations (such as Enron or Goldman Sachs, etc.) could ignore or support highly unethical and/or illegal financial activities, devised by their company’s leadership, resulting in a massive negative economic impact on a large portion of the population using the Milgram experiment as a resource.

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Ashley Kannan | Middle School Teacher | (Level 3) Distinguished Educator

Posted June 25, 2013 at 1:32 AM (Answer #1)

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In Milgram's experiment, the subject was willing to engage in repugnant acts so long as an "authority" figure gave consent to do so.  If authority indicated that heinous behavior is permissable, nearly 66% of all test subjects proceeded with such behavior.  Milgram's results regarding obedience and decision making reflects how people conform, suppressing their own individual autonomy, in order to be accepted by authority and social groupings, in general.  It is in this light where one can see how corporate malfeasance in settings like Enron and Goldman- Sachs was able to happen on such a wide level.

In such corporate settings, the attitude from those in the position of power was one that permitted such unhealthy risk taking.  Individuals like Jeffrey Skilling, Ken Lay, and Andrew Fastow were critical elements in defining such a culture at Enron. The vast extensions of Goldman Sachs employees that occupied positions of political power around the world felt that it was permissible to embrace a culture in which members of such a fraternity benefited while so many others suffered.  In both settings, regular employees felt that since corporate leadership enabled such behavior that it was acceptable to engage in practices that benefitted the very few at the cost of the many. 

The cultures that both companies defined were ones in which short term gain was acceptable at all costs.  Enron's "Mark to Market" Accounting schemes were the embodiment of short term gain.  Employees were regularly demanded to exceed all projections and discard all contrary evidence otherwise in order to make the company money.  Evaluation procedures helped to reaffirm this, almost suggesting to regular employees that if management wanted this behavior to continue and grow, it was their responsibility to do so.  At Goldman- Sachs, regular level employees followed the examples of their superiors, who met with Greek officials and convinced them to "push debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards."  In both settings, management approved of certain behaviors for their employees to follow. 

Similar to Milgram's Experiment, many regular employees understood that if management told them that such behavior was "acceptable," there would be nothing gained from objecting to it.  The cultures that those in the position of power established conspired to remove the voice of these regular employees. They believed that they were doing the company good, and that their behavior was something that would either benefit them personally or ensure the company's viability.  These employees saw coporate acceptance as essential.  In this, one sees the tenets from Milgram's experiment demonstrated.  When an authority figure, such as the leadership of Goldman- Sachs or Enron, deems specific behaviors as legitimate, the desire to conform or belong allows such behaviors to continue on a wide scale.  The implications to a vast majority of the public was not contemplated because management did a good enough job in convincing the "regular employees" that this was not needed to be included in their calculations.  Certainly, some employees must have voiced their discontent.  However, the vast majority of regular employees complied, demonstrating what Milgram would call the worst of "the perils of obedience."

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