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Ethical awareness affects people involved in the real estate industry.  There is a lot of money at stake and, because investors are separated from their real estate by distance or expertise or uncertainty, lots of exciting operational challenges.  Research has shown that these same features also create opportunities to mislead or to be misled.  So, operations and ethics in the real estate business cannot be separated.

Being ethically aware is a good thing.  Many industry associations have codes of conduct or courses which include an ethical dimension.  Unfortunately, it is hard to teach a 20 year old how to be ethically aware, especially if the “good answer” seems obvious in a two-hour test.  60 year olds have more life experience and know that distinguishing “good” and “evil” is not so simple.

So, the discussions about potentially unethical behaviour by the next president of the United States represent a teachable moment about an important topic.

The public discussions show that boring stuff should not be forgotten: such as, “trying your best” is useful regardless of a particular outcome and lying makes a problem worse.  More complicated things are less obvious: such as the difference between “ethical” and “legal” and the implications of working in an organization with an ethical culture.

Ethics is about process, not outcome.  This idea is easy to forget since it is easy to be overwhelmed by day to day details, since a person who is unethical need not be evil every day to have a negative effect and since producing a good outcome does not guarantee that a more ethical person could not have produced a better outcome.

With this in mind, I find it instructive aspect to see how the story told by Trump keeps changing as he continues to be challenged.  During the campaign, he claimed that he could be trusted because he was so rich (and because others had rigged the system against him).  When challenged for long enough, he argued that maybe his business could be put into a trust.  When challenged on that, maybe his business could be put into a blind trust managed by his children (i.e. not a “blind trust”).  When challenged on that, maybe an employee could be hired as an “independent” ethics advisor/overseer.  After  his press conference last week, more than one late night talk show host wondered why the large pile of folders (which were supposed to show Trump implementing the separation of him from his business)  were not labelled: did he just buy a large pile from Staples and filled them with blank pieces of paper?

An evolving position on an important issue implies a lack of sincerity concerning any one of the statements (which makes it hard to have a serious conversation about anything).

It is almost equally important to note that “what is ethical” is not equivalent to “what is legal”.  Trump has tried to argue that the Office of the President is governed by a different set of rules than even cabinet members.  That statement is sort of true, but irrelevant.

The problem with a “conflict of interest” is that, after a decision has been made, it is not clear which interest (personal vs. public) had an effect.  Predictably and immediately after the election, the media reported on examples of people ingratiating themselves to the president-elect.  The political process involves a lot of information that is hidden from others and often the full consequences of a decision may not be known for a long time.  These features always create worries about exploiting power for personal profit.

(Complaints about real estate agents often fit into this category.  Some land developers are accused of exploiting conflicts of interest amongst municipal politicians.)

Since most solutions use up much more energy and political/reputational capital, it is worth remembering that “Sunlight is the best disinfectant.”

Especially in the top office of a large organization, ethics is about influencing “corporate culture” and the process of doing business.  Ethical ambiguity at the top may give permission for people at lower levels of the organization to misbehave.  (The early proposal by the new Congress to restrict the Office of Congressional Ethics is an excellent example of this potential for misbehaviour.)  On the other hand, if everybody around you is ethically aware then you making an unethical decision becomes less likely.  So, we encourage our graduates to investigate this aspect of their future jobs.

Ethics is important because trust lowers the cost of doing business.  It is the nature of the real estate business to have many slippery slopes and many banana peels waiting for unwary people, which is why you should not take ethics for granted.  Due to the intense scrutiny, observing a new presidency is an opportunity to learn in real time (vs. reading a report years later).

On the other hand, maybe Trump has no problem: one media outlet noted that Trump’s business interests may be so broad, with so many conflicts within his empire, that there is no conflict overall.