xll How are we to ive? Preface xi around the world and see what a mess it is in, it seems worth ethics and I-can now draw on a solid background giving that optimistic hope the best possible chance of success. as well as on the research and writings of Every book reflects personal experience, no matter how many why anyone should act morally or ethi layers of scholarship the reflection may be filtered through. My cally, I can give a bolder and more positive response than I did interest in the topic of this book began when I was a graduate in my earlier thesis. I can point to people who have chosen to student in philosophy at the University of Melbourne. I wrote live an ethical life, and have been able to make an impact on the my Masters thesis on the topic 'Why Should I Be Moral? "The world. In doing so they have invested their lives with a signifi thesis analyzed this question, and examined the answers that cance that many despair of ever finding. They find, as a result, have been offered by philosophers over the past two and half that their own lives are richer, more fulfilling, more exciting thousand years. I reluctantly concluded that none of these answers even, than they were before they made that choice as really satisfactory. Then I spent twenty-five years studying Peter Singer and teaching ethics and social philosophy at universities in Eng land, America and Australia. In the early part of that period I lanuary 1993 took part in opposition to the war in Vietnam. This formed the ackground to my first book, Democracy and Disobedience, about the ethical issue of disobedience to unjust laws. My second book Animal Liberation. argued that our treatment of animals is eth cally indefensible. That book played a role in the birth and growth of what is now a worldwide movement. I have worked in that movement not only as a philosopher but also as an active member of groups working for change. I have been involved, again both as an academic philosopher and in more everyday ways, in a variety of other with a strong ethical basis: aid for developing nations, support for refugees, the legalization of voluntary euthanasia, wilderness preservation and more general environmental concerns. All of this has given me the chance to get to know people who give up their time, their money and and it has given me a deeper sense of what it is to try to livea sometimes much of their private lives for an ethically based ca ethical life Since writing my Masters thesis I have written about the question 'Why act ethically? ' in the final chapter of Practical Ethics. and I have touched on the theme of ethics and selfishness in The Expanding Circle. In turning once again to the link between
xii Ho w ar e we t o live ? around the world and see what a mess it is in, it seems worth giving that optimistic hope the best possible chance of success. Every book reflects personal experience, no matter how many layers of scholarship the reflection may be filtered through. My interest in the topic of this book began when I was a graduate student in philosophy at the University of Melbourne. I wrote my Master's thesis on the topic 'Why Should I Be Moral?' The thesis analyzed this question, and examined the answers that have been offered by philosophers over the past two and half thousand years. I reluctantly concluded that none of these answers was really satisfactory. Then I spent twenty-five years studying and teaching ethics and social philosophy at universities in England, America and Australia. In the early part of that period I took part in opposition to the war in Vietnam. This formed the background to my first book, Democracy and Disobedience, about the ethical issue of disobedience to unjust laws. My second book, Animal Liberation, argued that our treatment of animals is ethically indefensible. That book played a role in the birth and growth of what is now a worldwide movement. I have worked in that movement not only as a philosopher but also as an active member of groups working for change. I have been involved, again both as an academic philosopher and in more everyday ways, in a variety of other causes with a strong ethical basis: aid for developing nations, support for refugees, the legalization of voluntary euthanasia, wilderness preservation and more general environmental concerns. All of this has given me the chance to get to know people who give up their time, their money and sometimes much of their private lives for an ethically based cause; and it has given me a deeper sense of what it is to try to live an ethical life. Since writing my Master's thesis I have written about the question 'Why act ethically?' in the final chapter of Practical Ethics, and I have touched on the theme of ethics and selfishness in The Expanding Circle. In turning once again to the link between Prefac e xiii ethics and self-interest, I -can now draw on a solid background of practical experience, as well as on the research and writings of other scholars. If asked why anyone should act morally or ethically, I can give a bolder and more positive response than I did in my earlier thesis. I can point to people who have chosen to live an ethical life, and have been able to make an impact on the world. In doing so they have invested their lives with a significance that many despair of ever finding. They find, as a result, that their own lives are richer, more fulfilling, more exciting even, than they were before they made that choice. Peter Singer January 1993
CHAPTER I The ultimate e choice Ivan Boesky,s choice In 1985 Ivan Boesky was known as 'the king of the arbitra ge ries that were the target of takeover offers. He made profits a specialized form of investment in the shares of com- of $40 million in 1981 when Du Pont bought Conoco: S80 million in 1984 when Chevron bought Gulf Oil. and in the ame year, $100 million when Texaco acquired Getty Oil There were some substantial losses too, but not enough to stop Boesky making Forbes magazine's list of America's wealthiest 400 people. His personal fortune was estimated at between $150 million and $200 million Boesky had achieved both a formidable reputation, and substantial degree of respectability. His reputation cam part, from the amount of money that he controlled. 'lvar said one colleague, 'could get any Chief Executive Officer in the country off the toilet to talk to him at seven o'clock in the morning. But his reputation was also built on the belief that he had brought a newscientific' approach to investment, based on an elaborate communications system that he claimed was like NASAs. He was featured not only in business maga- s. but also in the Ney york Times living section. He watch chain was prominently displayed. He owned a twelve bedroom Georgian mansion set on 190 acres in Westchester
CHAPTE R 1 The ultimate choice Ivan Boesky's choice In 1985 Ivan Boesky was known as 'the king of the arbitragers', a specialized form of investment in the shares of companies that were the target of takeover offers. He made profits of $40 million in 1981 when Du Pont bought Conoco; $80 million in 1984 when Chevron bought Gulf Oil; and in the same year, $100 million when Texaco acquired Getty Oil. There were some substantial losses too, but not enough to stop Boesky making Forbes magazine's list of America's wealthiest 400 people. His personal fortune was estimated at between $150 million and $200 million.1 Boesky had achieved both a formidable reputation, and a substantial degree of respectability. His reputation came, in part, from the amount of money that he controlled. 'Ivan', said one colleague, 'could get any Chief Executive Officer in the country off the toilet to talk to him at seven o'clock in the morning'.2 But his reputation was also built on the belief that he had brought a new 'scientific' approach to investment, based on an elaborate communications system that he claimed was like NASA's. He was featured not only in business magazines, but also in the New York Times Living section. He wore the best suits, on which a Winston Churchill-style gold watch chain was prominently displayed. He owned a twelvebedroom Georgian mansion set on 190 acres in Westchester
2 How are we to live The ultimate choice 3 County, outside New York City. He was a notable member In the same year that this autobiography was published, at of the Republican Party, and some thought he cherished the height of his success, Boesky entered into an arrangement political ambitions. He held positions at the American Ballet for obtaining inside information from Dennis Levine. Levine Theater and the Metropolitan Museum of Art who was himself earning around $3 million annually in sala Unlike other arbitragers before him, Boesky sought to pub- and bonuses, worked at Drexel Burnham Lambert, the phe licize the nature of his work, and aimed to be recognized as nomenally successful Wall Street firm that dominated the expert in a specialized area that aided the proper function- junk bond market. Since junk bonds were the favoured way 085 he published a book about arbi- of raising funds for takeovers, Drexel was involved in almo trage entitled Merger Mania. The book claims that arbitrage every major takeover battle, and Levine privy to infor contributes to 'a fair, liquid and efficient market' and states nation that, in the hands of someone with plenty of capital, that undue profits are not made: there are no esoteric tricks could be used to make hundreds of millions of dollars vir- that enable arbitragers to outwit the system.. profit oppor tually without risk tunities exist only because risk arbitrage serves an important The ethics of this situation are not in dispute. When Boesky market function. Merger Mania begins with a toucher was buying shares on the basis of the information Levine gave dedication him, he knew that the shares would rise in price. The share holders who sold to him did not know that. and hence sold the shares at less than they could have obtained for them Dedication later, if they had not sold. If Drexel,s client was someone who My father, my mentor, William H. Boesky (1900-1964),of wished to take a company over, then that client would have beloved memory, whose courage brought him to these shores to pay more for the company if the news of the intended from his native Ykaterinoslav, Russia, in the year 1912. My takeover leaked out, since Boesky's purchases would push up life has been profoundly influenced by my father's spirit and the price of the shares. The added cost might mean that the strong commitment to the well-being of humanity, and by his bid to take over the target company would fail; or it might mean that, though the bid succeeded after the takeover more emphasis on learning as the most important means to justice, mercy, and righteousness. His life remains an example of of the companys assets would be sold off, to pay for the increased borrowings needed to buy the company at the higher ommunity the benefits he had received price. Since Drexel, and hence Levine, had obtained the infor- hrough the exercise of God-given talents. mation of the intended takeover in confidence from their With this inspiration I write this book for all who wish to clients, for them to disclose it to others who could profit from learn of my specialty, that they may be inspired to believe that it, to the disadvantage of their clients, was clearly contrary to confidence in one s self and determination can allow one to all accepted professional ethical standards. Boesky has never become whatever one may dream. May those who read my suggested that he dissents from these standards. or believed book gain some understanding for the opportunity which exists that his circumstances justified an exception to them. Boesky niquely in this great land. 3 also knew that trading in inside information was illegal
2 How ar e we to live ? County, outside New York City. He was a notable member of the Republican Party, and some thought he cherished political ambitions. He held positions at the American Ballet Theater and the Metropolitan Museum of Art. Unlike other arbitragers before him, Boesky sought to publicize the nature of his work, and aimed to be recognized as an expert in a specialized area that aided the proper functioning of the market. In 1985 he published a book about arbitrage entitled Merger Mania. The book claims that arbitrage contributes to 'a fair, liquid and efficient market' and states that 'undue profits are not made: there are no esoteric tricks that enable arbitragers to outwit the system . . . profit opportunities exist only because risk arbitrage serves an important market function'. Merger Mania begins with a touching dedication: Dedication My father, my mentor, William H. Boesky (1900-1964), of beloved memory, whose courage brought him to these shores from his native Ykaterinoslav, Russia, in the year 1912. My life has been profoundly influenced by my father's spirit and strong commitment to the well-being of humanity, and by his emphasis on learning as the most important means to justice, mercy, and righteousness. His life remains an example of returning to the community the benefits he had received through the exercise of God-given talents. With this inspiration I write this book for all who wish to learn of my specialty, that they may be inspired to believe that confidence in one's self and determination can allow one to become whatever one may dream. May those who read my book gain some understanding for the opportunity which exists uniquely in this great land.3 T h e ultimat e choic e 3 In the same year that this autobiography was published, at the height of his success, Boesky entered into an arrangement for obtaining inside information from Dennis Levine. Levine, who was himself earning around $3 million annually in salary and bonuses, worked at Drexel Burnham Lambert, the phenomenally successful Wall Street firm that dominated the 'junk bond' market. Since junk bonds were the favoured way of raising funds for takeovers, Drexel was involved in almost every major takeover battle, and Levine was privy to information that, in the hands of someone with plenty of capital, could be used to make hundreds of millions of dollars, virtually without risk. The ethics of this situation are not in dispute. When Boesky was buying shares on the basis of the information Levine gave him, he knew that the shares would rise in price. The shareholders who sold to him did not know that, and hence sold the shares at less than they could have obtained for them later, if they had not sold. If Drexel's client was someone who wished to take a company over, then that client would have to pay more for the company if the news of the intended takeover leaked out, since Boesky's purchases would push up the price of the shares. The added cost might mean that the bid to take over the target company would fail; or it might mean that, though the bid succeeded, after the takeover more of the company's assets would be sold off, to pay for the increased borrowings needed to buy the company at the higher price. Since Drexel, and hence Levine, had obtained the information of the intended takeover in confidence from their clients, for them to disclose it to others who could profit from it, to the disadvantage of their clients, was clearly contrary to all accepted professional ethical standards. Boesky has never suggested that he dissents from these standards, or believed that his circumstances justified an exception to them. Boesky also knew that trading in inside information was illegal
4 How are we to live? The ultimate choice 5 Nevertheless. in 1985 he went so far as to formalize the rainforests, you join a coalition to raise public awareness of arrangement he had with Levine, agreeing to pay him 5 per- the continuing destruction of the forests. Another person wants cent of the profits he made from purchasing shares about well-paid and interesting career, so she studies law. In each which Levine had given him information of these choices, the fundamental values are already Why did Boesky do it? Why would anyone who has $150 and the choice is a matter of the best means of achieving what ty, and- as is evader is valued. In ultimate choices, however, the fundamental val- from the dedication to his book- values at least the appear ues themselves come to the fore. We are no longer choosing ance of an ethical life that benefits the community as a whole, ithin a framework that assumes that we want only to maxi- risk his reputation, his wealth, and his freedom by doing mize our own interests. nor within a framework that takes it omething that is obviously neither legal nor ethical? Granted, for granted that we are going to do whatever we consider to Boesky stood to make very large sums of money from his be best, ethically speaking. Instead, we are choosing between arrangement with Levine. The Securities and Exchange Com- different possible ways of living: the way of living in which was later to describe several transactions in which self-interest is paramount, or that in which ethics is para Boesky had used information obtained from Levine; his profits mount,or perhaps some trade-off between the two. (I take on these deals were estimated at $50 million. Given the pre- ethics and self-interest as the two rival viewpoints because vious track record of the securities and Exchange commis- they are, in my view, the two strongest contenders. Other sion, Boesky could well have thought that his illegal insider possibilities include, for example, living by the rules of eti- trading was likely to go undetected and unprosecuted. So it quette, or living in accordance with ones own aesthetic stand- was reasonable enough for Boesky to believe that the use of ards, treating one's life as a work of art; but these possibilities inside information would bring him a lot of money with little are not the subject of this book.) chance of exposure. Does that mean that it was a wise thing Ultimate choices take courage. In making restricted choices, for him to do? In these circumstances, where does wisdom our fundamental values form a foundation on which we can lie? In choosing to enrich himselffurther, in a manner that he stand when we choose. To make an ultimate choice we must justify ethically, Bo making a choice put in question the foundations of our lives. In the fifties, between fundamentally different ways of living. I shall call French philosophers like Jean-Paul Sartre saw this kind of this type of choice an 'ultimate choice. When ethics and self- hoice as an expression of our ultimate freedom. We are free Interest to be in conflict. we face an ultimate choic to choose what we are to be. because we have no essential How are we to choose? nature, that is, no given purpose outside ourselves. Unlike, Most of the choices we make in our everyday lives are say, an apple tree that has come into existence as a result of restricted choices, in that they are made from within a given someone else's plan, we simply exist, and the rest is up to us framework or set of values. Given that I want to keep reason- (Hence the name given to this group of thinkers: existential- ably fit, I sensibly choose to go for a walk rather than slouch ists. )Sometimes this leads to a sense that we are standing on the sofa with a can of beer, watching the football on before a moral void. We feel vertigo, and want to get out of television. Since you want to do something to help preserve that situation as quickly as possible. So we avoid the ultimate
4 How ar e we to live ? Nevertheless, in 1985 he went so far as to formalize the arrangement he had with Levine, agreeing to pay him 5 percent of the profits he made from purchasing shares about which Levine had given him information. Why did Boesky do it? Why would anyone who has $150 million, a respected position in society, and — as is evident from the dedication to his book - values at least the appearance of an ethical life that benefits the community as a whole, risk his reputation, his wealth, and his freedom by doing something that is obviously neither legal nor ethical? Granted, Boesky stood to make very large sums of money from his arrangement with Levine. The Securities and Exchange Commission was later to describe several transactions in which Boesky had used information obtained from Levine; his profits on these deals were estimated at $50 million. Given the previous track record of the Securities and Exchange Commission, Boesky could well have thought that his illegal insider trading was likely to go undetected and unprosecuted. So it was reasonable enough for Boesky to believe that the use of inside information would bring him a lot of money with little chance of exposure. Does that mean that it was a wise thing for him to do? In these circumstances, where does wisdom lie? In choosing to enrich himself further, in a manner that he could not justify ethically, Boesky was making a choice between fundamentally different ways of living. I shall call this type of choice an 'ultimate choice'. When ethics and selfinterest seem to be in conflict, we face an ultimate choice. How are we to choose? Most of the choices we make in our everyday lives are restricted choices, in that they are made from within a given framework or set of values. Given that I want to keep reasonably fit, I sensibly choose to go for a walk rather than slouch on the sofa with a can of beer, watching the football on television. Since you want to do something to help preserve The ultimat e choic e 5 rainforests, you join a coalition to raise public awareness of the continuing destruction of the forests. Another person wants a well-paid and interesting career, so she studies law. In each of these choices, the fundamental values are already assumed, and the choice is a matter of the best means of achieving what is valued. In ultimate choices, however, the fundamental values themselves come to the fore. We are no longer choosing within a framework that assumes that we want only to maximize our own interests, nor within a framework that takes it for granted that we are going to do whatever we consider to be best, ethically speaking. Instead, we are choosing between different possible ways of living: the way of living in which self-interest is paramount, or that in which ethics is paramount, or perhaps some trade-off between the two. (I take ethics and self-interest as the two rival viewpoints because they are, in my view, the two strongest contenders. Other possibilities include, for example, living by the rules of etiquette, or living in accordance with one's own aesthetic standards, treating one's life as a work of art; but these possibilities are not the subject of this book.) Ultimate choices take courage. In making restricted choices, our fundamental values form a foundation on which we can stand when we choose. To make an ultimate choice we must put in question the foundations of our lives. In the fifties, French philosophers like Jean-Paul Sartre saw this kind of choice as an expression of our ultimate freedom. We are free to choose what we are to be, because we have no essential nature, that is, no given purpose outside ourselves. Unlike, say, an apple tree that has come into existence as a result of someone else's plan, we simply exist, and the rest is up to us. (Hence the name given to this group of thinkers: existentialists.) Sometimes this leads to a sense that we are standing before a moral void. We feel vertigo, and want to get out of that situation as quickly as possible. So we avoid the ultimate
The ultimate choice 7 choice by carrying on as we were doing before. That ourselves, we will admit that, at least sometimes, where self- the simplest and safest thing to do. but we do not reall interest and ethics clash, we choose self-interest, and this is making the ultimate choice in that way. We make it by not just a case of being weak-willed or irrational. We are default, and it may not be safe at all. Perhaps Ivan Boesky genuinely unsure what it is rational to do, because when the continued to do what would make him richer because to do clash is so fundamental, reason seems to have no way of anything else would have involved questioning the founda solving it. tions of most of his life. He acted as if his essential nature was We all face ultimate choices, and with equal intensity, to make money. But of course it was not: he could have whether our opportunities are to gain, by unethical means, chosen living ethically ahead of money-making $50 or $50 million. The state of the world in the late twen- Even if we are ready to face an ultimate choice, however tieth century means that even if we are never tempted at all by unethical ways of making money, we have to decide to choice situations we know how to get expert advice. There what extent we shall live for ourselves. and to what extent for are financial consultants and educational counsellors and health others. There are people who are hungry, malnourished, lack care advisers, all ready to tell you about what is the best for I, or care. a your own interests. Many people will be eager to offer you ganizations that raise money to help these people. True, the their opinions about what would be the right thing to do, problem is so big that one individual cannot make much too. But who is the expert here? Suppose that you have the impact on it; and no doubt some of the money will be swal- opportunity to sell your car, which you know is about to need ed up in administrat major repairs, to a stranger who is too innocent to have th other reason will not reach the people who need it most ar checked properly. He is pleased with the cars appearance Despite these inevitable problems, the discrepancy between and a deal is about to be struck, when he casually asks if the the wealth of the developed world and the poverty of the car has any problems. If you say, just as casually, 'No, nothing poorest people in developing countries is so great that if only that I know of, the stranger will buy the car, paying you at a small fraction of what you give reaches the people who need east $1,000 more than you would get from anyone who that fraction will make a far greater difference to the peo- knew the truth. He will never be able to prove that you were ole it reaches than the full amount you give could make to lying. You are convinced that it would be wrong to lie to your own life. That you as an individual cannot make an him, but another $1,000 would make your life more comfort mpact on the entire problem seems scarcely relevant, since able for the next few months. In this situation you don't see ou can make an impact on the lives of particular families. So d to ask anyone for advice about what is in your best will you get involved with one of these organizations? Will nor do you need to ask what it would be right to do you yourself give, not just spare change when a tin is rattled you still ask what to do? under your nose, but substantial amounts that will reduce Of course you can. Some would say that if you know that your ability to live a luxurious lifestyle? it would be wrong to lie about your car, that is the end of the Some consumer products damage the ozone layer, contrib matter, but this is wishful thinking. If we are honest with ute to the greenhouse effect, destroy rainforests, or pollut
6 Ho w ar e we to live ? T h e ultimat e choic e 7 choice by carrying on as we were doing before. That seems the simplest and safest thing to do. But we do not really avoid making the ultimate choice in that way. We make it by default, and it may not be safe at all. Perhaps Ivan Boesky continued to do what would make him richer because to do anything else would have involved questioning the foundations of most of his life. He acted as if his essential nature was to make money. But of course it was not: he could have chosen living ethically ahead of money-making. Even if we are ready to face an ultimate choice, however, it is not easy to know how to make it. In more restricted choice situations we know how to get expert advice. There are financial consultants and educational counsellors and health care advisers, all ready to tell you about what is the best for your own interests. Many people will be eager to offer you their opinions about what would be the right thing to do, too. But who is the expert here? Suppose that you have the opportunity to sell your car, which you know is about to need major repairs, to a stranger who is too innocent to have the car checked properly. He is pleased with the car's appearance, and a deal is about to be struck, when he casually asks if the car has any problems. If you say, just as casually, 'No, nothing that I know of, the stranger will buy the car, paying you at least $1,000 more than you would get from anyone who knew the truth. He will never be able to prove that you were lying. You are convinced that it would be wrong to lie to him, but another $1,000 would make your life more comfortable for the next few months. In this situation you don't see any need to ask anyone for advice about what is in your best interest; nor do you need to ask what it would be right to do. So can you still ask what to do? Of course you can. Some would say that if you know that it would be wrong to lie about your car, that is the end of the matter; but this is wishful thinking. If we are honest with ourselves, we will admit that, at least sometimes, where selfinterest and ethics clash, we choose self-interest, and this is not just a case of being weak-willed or irrational. We are genuinely unsure what it is rational to do, because when the clash is so fundamental, reason seems to have no way of resolving it. We all face ultimate choices, and with equal intensity, whether our opportunities are to gain, by unethical means, $50 or $50 million. The state of the world in the late twentieth century means that even if we are never tempted at all by unethical ways of making money, we have to decide to what extent we shall live for ourselves, and to what extent for others. There are people who are hungry, malnourished, lacking shelter, or basic health care: and there are voluntary organizations that raise money to help these people. True, the problem is so big that one individual cannot make much impact on it; and no doubt some of the money will be swallowed up in administration, or will get stolen, or for some other reason will not reach the people who need it most. Despite these inevitable problems, the discrepancy between the wealth of the developed world and the poverty of the poorest people in developing countries is so great that if only a small fraction of what you give reaches the people who need it, that fraction will make a far greater difference to the people it reaches than the full amount you give could make to your own life. That you as an individual cannot make an impact on the entire problem seems scarcely relevant, since you can make an impact on the lives of particular families. So will you get involved with one of these organizations? Will you yourself give, not just spare change when a tin is rattled under your nose, but substantial amounts that will reduce your ability to live a luxurious lifestyle? Some consumer products damage the ozone layer, contribute to the greenhouse effect, destroy rainforests, or pollute