Now that is a Score ... GMAT Cheat Sheet Scandal

Last week GMAC won a lawsuit against ScoreTop on copyright violation. GMAC administers the GMAT test, a requirement for MBA admission in top schools. All the schools will say that GMAT score is not a criteria. It is true except when your score is low. GMAT is a gruelling 4 hour test, with 2 half hour essays, 1 quantitative skills section and 1 verbal and logic session. In this Computer Adaptive Test, the test takers get progressively more difficult questions as they answer more correctly. On the other hand, the test takers get easier questions as they answer more incorrectly. As the Business Week reports, some applicants used a service ScoreTop.com to get answers to questions in GMAT's question bank. Obviously, there are only limited number of questions and GMAC recycles them. ScoreTop is like a User Generated Content site with test takers contributing a few questons after they take a test. GMAC won the lawsuit that it retains the copyright for these questions that prevents anyone from publishing them. The bigger impact of the outcome is what GMAC is going to do with those who used ScoreTop services.

There's trouble in MBA Land, and it's not just the ultratight job market. A cheating scandal involving the use of a test prep Web site to get a sneak peek at questions on the B-school entrance exam, the Graduate Management Admission Test (GMAT), may result in thousands of prospective MBA students having their results rescinded.

It is not clear whether GMAC can summarily cancel scores of anyone who used the ScoreTop. How will they prove intent? What if they had used an untraceable credit card? I do not think this is going to cause much repercussions for those who are already in. In the future these people will just use other means to get to the cheatsheets and won't use their own credit card. If GMAC and schools want this to be foolproof they need to think of other ways.

Economics or Emotions

Professor Robert Shiller of Yale, wrote for The New York Times on the human side of foreclosures and supporting Rep. Barney Frank's plan. He argues:

It’s easy to take a stern view of this spectacle.
...
This stern view may, in fact, be winning the battle of public opinion.
...
But instead of having sympathy for these homeowners, many people blame them for their predicaments. That isn’t surprising. It’s an example of a general tendency that was documented by social psychologists decades ago.

To put things in perspective:

1. Homeownership rate is about 68% (i.e, 68% of the housing units are occupied by owners). The rest that are occupied by renters who chose not to buy, because they understand the responsibilities that come with a mortgage one can't afford and because some can never afford a house.
   
2. Is there another higher purpose for the $300 billion proposed package to help homeowners? There are 43 million people without medical insurance in America. Can we achieve a much better impact and improve the lives of a vast number of people if we employ the funds to insure the uninsured?
   
3. Shiller paints a picture of 243,353 families losing their homes, moving to other side of town. Compared to the number of renters who move continuously and are always at the mercy of the owners this is still a small number.
4. Shiller described the economical view as "stern" and referred to studies that found people attributing predicaments to one' behavior. Then how would you reconcile the enormous amounts of contributions from the public after man-made and natural disasters? Americans gave $295.2 billion to charity in 2006. Is that not helping people in predicament?
5. From Kant's Universality principle, would a similar legislation be enacted to help everyone who gets into trouble with finances? Many of the uninsured families are just one medical disaster away from bankruptcy. Should they not be helped?
   

I tend to lean on the economic side. I am however confused about what is the minimum responsibility the society has. As Kant would ask, "What moral minimum or basic human rights am I duty bound to honor?"

Corporations, Societies, Responsibilities

Milton Friedman said, "the business of business is business". He described the primary responsibility of the executive officers is to enrich the stakeholders by employing the capital in profitable ways. He further argued that the discussions on the need for social responsibility are "loose and lack the rigor".

I chose the case of Unocal (now part of Chevron) in Burma for my Ethics paper. I am struggling with this case, trying to reconcile my emotional side which believes CSR is a given vs. my business training which makes me want to agree with Friedman.

While I tend to agree with Friedman, I am siding with John Ruggie, Professor at Kennedy School of Government, that a corporation cannot be complicit with a despot and should not trample on human rights even indirectly.

Corporations and Human Rights

What is a corporation's role in dealing with countries whose Governments have questionable human rights? Should a corporation be singularly focused on generating shareholder value and spend its precious capital on non-core and non profit generating activities?
Is the economy that generates so much of wealth in the developed countries applicable to even countries that have no democracies or rules of law?
Is the argument to not interfere with the market forces a valid one when the former depends on the existence of democracy and rule of law?

John Ruggie answers (PDF) these in his special report to UN on Human rights.

The root cause of the business and human rights predicament today lies in the governance gaps created by globalization - between the scope and impact of economic forces and actors, and the capacity of societies to manage their adverse consequences. These governance gaps provide the permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation. How to narrow and ultimately bridge the gaps in relation to human rights is our fundamental challenge.