Review the Case Study (Cheaters) on page 70 of the attached PDF and answer the following questions. Minimum 250 words and 2 references. No format required. The questions DO NOT count as part of the word count.
- From the perspective of rule utilitarianism, what’s the case for canceling their scores?
- From the perspective of act utilitarianism, what’s the case for reinstating the scores?
- The College Board CEO makes $830,000 a year, what is the utilitarian case for radically lowering his salary?
- If you were a utilitarian and you had the chance—and you were sure you wouldn’t get caught—would you steal the money from the guy’s bank account? Why or why not?
C H A P T E R 1
What is business ethics?
CHAPTER OVERVIEW Chapter 1 defines business ethics and sketches how debates within the field happen. The history of the
Discipline is also considered, along with the overlap between business and personal ethics.
1. WHAT IS BUSINESS ETHICS?
1.1 Captive Customers
Ann Marie Wagoner studies at the University of Alabama (UA). She pays $1,200 a year for books, which is exasperating, but what really ticks her off is the text for her composition class. Called A Writer’s Reference (Custom Publication for the University of Alabama), it’s the same Writer’s Reference sold everywhere else, with slight modifications: there are thirty-two extra pages describing the school’s particular writing program, the Alabama A is emblazoned on the front cover, there’s an extra $6 on the price tag (compared with the price of the standard version when purchased new), and there’s an added sentence on the back: “This book may not be bought or sold used.” The modifications are a collective budget wreck. Because she’s forced to buy a new copy of the customized Alabama text, she ends up paying about twice what she’d pay for a used copy of the standard, not-customized book that’s available at Chegg.com and similar used-book dealers.
For the extra money, Wagoner doesn’t get much—a few additional text pages and a school spirit cover. Worse, those extra pages are posted free on the English department’s website, so the cover’s the only unambiguous benefit. Even there, though, it’d be cheaper to just buy a UA bumper sticker and paste it across the front. It’s hard to see, finally, any good reason for the University of Alabama English Department to snare its own students with a textbook costing so much.
Things clear up when you look closely at the six-dollar diff erence between the standard new book cost and the customized UA version. Only half that money stays with the publisher to cover specialized printing costs. The other part kicks back to the university’s writing program, the one requiring the book in the first place. It turns out there’s a quiet moneymaking scheme at work here: the English de- partment gets some straight revenue, and most students, busy with their lives, don’t notice the royalty details. They get their books, roll their eyes at the cash register, and get on with things.
Wagoner noticed, though. According to an extensive article in the Wall Street Journal, she calls the cost of new custom books “ridiculous.” She’s also more than a little suspicious about why students aren’t more openly informed about the royalty arrangement: “They’re hiding it so there isn’t a huge up- roar.”[1]
While it may be true that the Tuscaloosa university is hiding what’s going on, they’re definitely not doing a very good job since the story ended up splattered across the Wall Street Journal. One reason the story reached one of the United States’ largest circulation dailies is that a lot of universities are starting to get in on the cash. Printing textbooks within the kickback model is, according to the article, the fast- est growing slice of the $3.5 billion college textbook market.
The money’s there, but not everyone is eager to grab it. James Koch, an economist and former president of Old Dominion University and the University of Montana, advises schools to think care- fully before tapping into customized-textbook dollars because, he says, the whole idea “treads right on the edge of what I would call unethical behavior. I’m not sure it passes the smell test.”[2]
L E A R N I N G O B J E C T I V E S
1. Define the components of business ethics.
2. Outline how business ethics works.
6 THE BUSINESS ETHICS WORKSHOP
1.2 What Is Business Ethics?
What does it mean to say a business practice doesn’t “pass the smell test”? And what would happen if someone read the article and said, “Well, to me it smells all right”? If no substance fills out the idea, if there’s no elaboration, then there probably wouldn’t be much more to say. The two would agree to dis- agree and move on. Normally, that’s OK; no one has time to debate everything. But if you want to get involved—if you’re like Wagoner who sounds angry about what’s going on and maybe wants to change it—you’ll need to do more than make comments about how things hit the nose.
Doing business ethics means providing reasons for how things ought to be in the economic world. This requires the following:
Arranging values to guide decisions. There needs to be a clearly defined and well-justified set of priorities about what’s worth seeking and protecting and what other things we’re willing to compromise or give up. For example, what’s more important and valuable: consumers (in this case students paying for an education) getting their books cheaply or protecting the right of the university to run the business side of its operation as it sees fit?
Understanding the facts. To eff ectively apply a set of values to any situation, the situation itself must be carefully defined. Who, for example, is involved in the textbook conflict? Students, clearly, as well as university administrators. What about parents who frequently subsidize their college children? Are they participants or just spectators? What about those childless men and women in Alabama whose taxes go to the university? Are they involved? And how much money are we talking about? Where does it go? Why? How and when did all this get started?
Constructing arguments. This shows how, given the facts, one action serves our values better than other actions. While the complexities of real life frequently disallow absolute proofs, there remains an absolute requirement of comprehensible reasoning. Arguments need to make sense to outside observers. In simple, practical terms, the test of an ethical argument resembles the test of a recipe for a cook: others need to be able to follow it and come to the same result. There may remain disagreements about facts and values at the end of an argument in ethics, but others need to understand the reasoning marking each step taken on the way to your conclusion.
Finally, the last word in ethics is a determination about right and wrong. This actual result, however, is secondary to the process: the verdict is only the remainder of forming and debating arguments. That’s why doing ethics isn’t brainwashing. Conclusions are only taken seriously if composed from clear val- ues, recognized facts, and solid arguments.
1.3 Bringing Ethics to Kickback Textbooks
The Wall Street Journal article on textbooks and kickbacks to the university is a mix of facts, values, and arguments. They can be sorted out; an opportunity to do the sorting is provided by one of the art- icle’s more direct assertions:
A conflict of interest occurs when a university pledges to serve the interest of students but finds that its own interest is served by not doing that. It doesn’t sound like this is a good thing (in the lan- guage of the article, it smells bad). But to reach that conclusion in ethical terms, the specific values, facts, and arguments surrounding this conflict need to be defined.
Start with the values. The priorities and convictions underneath the conflict-of-interest accusation are clear. When a university takes tuition money from a student and promises to do the best job pos- sible in providing an education to the student, then it better do that. The truth matters. When you make a promise, you’ve got to fulfill it. Now, this fundamental value is what makes a conflict of interest worrisome. If we didn’t care about the truth at all, then a university promising one thing and doing something else wouldn’t seem objectionable. In the world of poker, for example, when a player makes a grand show of holding a strong hand by betting a pile of chips, no one calls him a liar when it’s later re- vealed that the hand was weak. The truth isn’t expected in poker, and bluffing is perfectly acceptable. Universities aren’t poker tables, though. Many students come to school expecting honesty from their institution and fidelity to agreements. To the extent these values are applied, a conflict of interest be- comes both possible and objectionable.
With the core value of honesty established, what are the facts? The “who’s involved?” question brings in the students buying the textbooks, the company making the textbooks (Bedford/St. Martin’s
Royalty arrangements involving specially made books may violate colleges’ conflict-
of-interest rules because they appear to benefit universities more than students.
business ethics
Providing reasons for how things ought to be in the economic world.
values
In business ethics, the priorities selected to guide decisions.
facts
In business ethics, the people and things involved in a decision.
argument
In business ethics, showing how, given the facts, one action serves specific values better than other actions.
CHAPTER 1 WHAT IS BUSINESS ETHICS?
7
in Boston), and the University of Alabama. As drawn from the UA web page, here’s the school’s pur- pose, the reason it exists in the first place: “The University of Alabama is a student-centered research university and an academic community united in its commitment to enhancing the quality of life for all Alabamians.”
Moving to the financial side, specific dollar amounts should be listed (the textbook’s cost, the cost for the noncustomized version). Also, it may be important to note the financial context of those in- volved: in the case of the students, some are comfortably wealthy or have parents paying for everything, while others live closer to their bank account’s edge and are working their way through school.
Finally, the actual book-selling operation should be clearly described. In essence, what’s going on is that the UA English Department is making a deal with the Bedford/St. Martin’s textbook company. The university proposes, “If you give us a cut of the money you make selling textbooks, we’ll let you make more money off our students.” Because the textbooks are customized, the price goes up while the supply of cheap used copies (that usually can be purchased through the Internet from stores across the nation) goes way down. It’s much harder for UA students to find used copies, forcing many to buy a new version. This is a huge windfall for Bedford/St. Martin’s because, for them, every time a textbook is resold used, they lose a sale. On the other side, students end up shelling out the maximum money for each book because they have to buy new instead of just recycling someone else’s from the previous year. Finally, at the end of the line there is the enabler of this operation, the English department that both requires the book for a class and has the book customized to reduce used-copy sales. They get a small percentage of Bedford/St. Martin’s extra revenue.
With values and facts established, an argument against kickback textbooks at Alabama can be drawn up. By customizing texts and making them mandatory, UA is forcing students to pay extra money to take a class: they have to spend about thirty dollars extra, which is the diff erence between the cost of a new, customized textbook and the standard version purchased used. Students generally don’t have a lot of money, and while some pass through school on the parental scholarship, others scrape by and have to work a McJob to make ends meet. So for at least some students, that thirty dollars directly equals time that could be spent studying, but that instead goes to flipping burgers. The customized textbooks, consequently, hurt these students’ academic learning in a measurable way. Against that real- ity there’s the university’s own claim to be a “student-centered” institution. Those words appear un- true, however, if the university is dragging its own students out of the library and forcing them to work extra hours. To comply with its own stated ideals—to serve the students’ interests—UA should suspend the kickback textbook practice. It’s important to do that, finally, because fulfilling promises is valuable; it’s something worth doing.
1.4 Argument and Counterargument
The conclusion that kickback textbooks turn universities into liars doesn’t end debate on the question. In fact, because well developed ethical positions expose their reasoning so openly (as opposed to “it doesn’t smell right”), they tend to invite responses. One characteristic, in other words, of good ethical arguments is that, paradoxically but not contradictorily, they tend to provoke counterarguments.
Broadly, there are three ways to dispute an argument in ethics. You can attack the
1. facts,
2. values,
3. reasoning.
In the textbook case, disputing the facts might involve showing that students who need to work a few extra hours to aff ord their books don’t subtract that time from their studying; actually, they subtract it from late-night hours pounding beers in dank campus bars. The academic damage done, therefore, by kickback textbooks is zero. Pressing this further, if it’s true that increased textbook prices translate into less student partying, the case could probably be made that the university actually serves students’ in- terests—at least those who drink too much beer—by jacking up the prices.
The values supporting an argument about kickback textbooks may, like the facts, be disputed. Vir- ginia Tech, for example, runs a text-customization program like Alabama’s. According to Tech’s Eng- lish Department chair Carolyn Rude, the customized books published by Pearson net the department about $20,000 a year. Some of that cash goes to pay for instructors’ travel stipends. These aren’t luxury retreats to Las Vegas or Miami; they’re gatherings of earnest professors in dull places for discussions that reliably put a few listeners to sleep. When instructors—who are frequently graduate stu- dents—attend, they’re looking to burnish their curriculum vitae and get some public responses to their work. Possibly, the trip will help them get a better academic job later on. Regardless, it won’t do much for the undergraduates at Virginia Tech. In essence, the undergrads are being asked to pay a bit extra for books to help graduate students hone their ideas and advance professionally.
Can that tradeoff be justified? With the right values, yes. It must be conceded that Virginia Tech
8 THE BUSINESS ETHICS WORKSHOP
is probably rupturing a commitment to serve the undergrads’ interest. Therefore, it’s true that a certain
CHAPTER 1 WHAT IS BUSINESS ETHICS?
9
K E Y T A K E A W A Y S
Business ethics deals with values, facts, and arguments.
Well-reasoned arguments, by reason of their clarity, invite counterarguments.
R E V I E W Q U E S T I O N S
1. What is the diff erence between brainwashing and an argument?
2. What does it mean to dispute an argument on the basis of the facts?
3. What does it mean to dispute an argument on the basis of the values?
4. What does it mean to dispute an argument on the basis of the reasoning?
amount of dishonesty shadows the process of inflating textbook costs. If, however, there’s a higher value than truth, that won’t matter so much. Take this possibility: what’s right and wrong isn’t determ- ined by honesty and fidelity to commitments, but the general welfare. The argument here is that while it’s true that undergrads suff er a bit because they pay extra, the instructors receiving the travel stipends benefit a lot. Their knowledge grows, their career prospects improve, and in sum, they benefit so much that it entirely outweighs the harm done to the undergrads. As long as this value— the greatest total good—frames the assessment of kickback textbooks, the way is clear for Tech or Alabama to continue the practice. It’s even recommendable.
The final ground on which an ethical argument can be refuted is the reasoning. Here, the facts are accepted, as well as the value that universities are duty bound to serve the interests of the tuition- pay- ing undergraduate students since that’s the commitment they make on their web pages. What can still be debated, however, is the extent to which those students may actually be benefitted by customizing textbooks. Looking at the Wall Street Journal article, several partially developed arguments are presen- ted on this front. For example, at Alabama, part of the money collected from the customized texts un- derwrites teaching awards, and that, presumably, motivates instructors to perform better in the classroom, which ends up serving the students’ educational interests. Similarly, at Virginia Tech, part of the revenue is apportioned to bring in guest speakers, which should advance the undergraduate edu- cational cause. The broader argument is that while it’s true that the students are paying more for their books than peers at other universities, the sequence of reasoning doesn’t necessarily lead from that fact to the conclusion that there’s a reproachable conflict of interest. It can also reach the verdict that stu- dents’ educational experience is improved; instead of a conflict of interest, there’s an elevated commit- ment to student welfare inherent in the kickback practice.
Conclusion. There’s no irrefutable answer to the question about whether universities ought to get involved in kickback textbooks. What is clear, however, is that there’s a diff erence between responding to them by asserting that something doesn’t smell right, and responding by uniting facts, values, and reasoning to produce a substantial ethical argument.
2. THE PLACE OF BUSINESS ETHICS
2.1 The Boundaries and History of Business Ethics
Though both economic life and ethics are as old as history, business ethics as a formal area of study is relatively new. Delineating the specific place of today’s business ethics involves
distinguishing morality, ethics, and metaethics;
dividing normative from descriptive ethics;
L E A R N I N G O B J E C T I V E S
1. Distinguish the place of business ethics within the larger field of decision making.
2. Sketch the historical development of business ethics as a coherent discipline.
10 THE BUSINESS ETHICS WORKSHOP
comparing ethics against other forms of decision making;
sketching some inflection points in the histories of ethics and business ethics.
2.2 Morality, Ethics, and Metaethics: What’s the Difference?
The back and forth of debates about kickback textbooks occurs on one of the three distinct levels of consideration about right and wrong. Morals occupy the lowest level; they’re the direct rules we ought to follow. Two of the most common moral dictates are don’t lie and don’t steal. Generally, the question to ask about a moral directive is whether it was obeyed. Specifically in the case of university textbooks, the debate about whether customized textbooks are a good idea isn’t morality. It’s not because morality doesn’t involve debates. Morality only involves specific guidelines that should be followed; it only be- gins when someone walks into a school bookstore, locates a book needed for a class, strips out the little magnetic tag hidden in the spine, and heads for the exit.
Above all morality there’s the broader question about exactly what specific rules should be insti- tuted and followed. Answering this question is ethics. Ethics is the morality factory, the production of guidelines that later may be obeyed or violated. It’s not clear today, for example, whether there should be a moral rule prohibiting kickback textbooks. There are good arguments for the prohibition (universities are betraying their duty to serve students’ interests) and good arguments against (schools are finding innovative sources of revenue that can be put to good use). For that reason, it’s perfectly le- gitimate for someone like Ann Marie Wagoner to stand up at the University of Alabama and decry the practice as wrong. But she’d be going too far if she accused university administrators of being thieves or immoral. They’re not; they’re on the other side of an ethical conflict, not a moral one.
Above both morality and ethics there are debates about metaethics. These are the most abstract and theoretical discussions surrounding right and wrong. The questions asked on this level include the following: Where do ethics come from? Why do we have ethical and moral categories in the first place? To whom do the rules apply? Babies, for example, steal from each other all the time and no one accuses them of being immoral or insufficiently ethical. Why is that? Or putting the same question in the longer terms of human history, at some point somewhere in the past someone must have had a light- bulb turn on in their mind and asked, “Wait, is stealing wrong?” How and why, those interested in metaethics ask, did that happen? Some believe that morality is transcendent in nature—that the rules of right and wrong come from beyond you and me and that our only job is to receive, learn, and obey them. Divine command theory, for example, understands earthly morality as a reflection of God. Oth- ers postulate that ethics is very human and social in nature—that it’s something we invented to help us live together in communities. Others believe there’s something deeply personal in it. When I look at another individual I see in the depth of their diff erence from myself a requirement to respect that other person and his or her uniqueness, and from there, ethics and morality unwind. These kinds of metaethical questions, finally, are customarily studied in philosophy departments.
Conclusion. Morality is the rules, ethics is the making of rules, and metaethics concerns the origin of the entire discussion. In common conversation, the words morality and ethics often overlap. It’s hard to change the way people talk and, in a practical field like business ethics, fostering the skill of debating arguments is more important than being a stickler for words, but it’s always possible to keep in mind that, strictly speaking, morality and ethics hold distinct meanings.
2.3 What’s the Difference between Normative Ethics and
Descriptive Ethics?
Business ethics is normative, which means it concerns how people ought to act. Descriptive ethics depicts how people actually are acting.
At the University of Alabama, Virginia Tech, and anywhere kickback textbooks are being sold, there are probably a few students who check their bank accounts, find that the number is low, and de- cide to mount their own kickback scheme: refund the entire textbook cost to themselves by sneaking a copy out of the store. Trying to make a decision about whether that’s justified—does economic necessity license theft in some cases?—is normative ethics. By contrast, investigating to determine the exact num- ber of students walking out with free books is descriptive. So too is tallying the reasons for the theft: How many steal because they don’t have the money to pay? How many accuse the university of acting dishonestly in the first place and say that licenses theft? How many question the entire idea of private property?
The fields of descriptive ethics are many and varied. Historians trace the way penalties imposed for theft have changed over time. Anthropologists look at the way diff erent cultures respond to thievery. Sociologists study the way publications, including Abbie Hoff man’s incendiary book titled Steal This Book, have changed public attitudes about the ethics of theft. Psychologists are curious about the
morals
Direct rules we ought to follow.
ethics
The production of morals.
metaethics
The study of the origin and rules of ethics and morality.
normative ethics
The discussion about what ought to be done.
descriptive ethics
The study of what people actually do and why.
CHAPTER 1 WHAT IS BUSINESS ETHICS?
11
subconscious forces motivating criminals. Economists ask whether there’s a correlation between indi- vidual wealth and the kind of moral rules subscribed to. None of this depends on the question about whether stealing may actually be justifiable, but all of it depends on stealing actually happening.
2.4 Ethics versus Other Forms of Decision
When students stand in the bookstore flipping through the pages of a budget buster, it’s going to cross a few minds to stick it in the backpack and do a runner. Should they? Clear-headed ethical reflection may provide an answer to the question, but that’s not the only way we make decisions in the world. Even in the face of screaming ethical issues, it’s perfectly possible and frequently reasonable to make choices based on other factors. They include:
The law
Prudence (practicality)
Religion
Authority figures
Peer pressure
Custom
Conscience
When the temptation is there, one way to decide whether to steal a book is legal: if the law says I can’t, I won’t. Frequently, legal prohibitions overlap with commonly accepted moral rules: few legislators want to sponsor laws that most believe to be unjust. Still, there are unjust laws. Think of downloading a text (or music, or a video) from the web. One day the downloading may be perfectly legal and the next, after a bill is passed by a legislature, it’s illegal. So the law reverses, but there’s no reason to think the eth- ics—the values and arguments guiding decisions about downloading—changed in that short time. If the ethics didn’t change, at least one of the two laws must be ethically wrong. That means any necessary connection between ethics and the law is broken. Even so, there are clear advantages to making de- cisions based on the law. Besides the obvious one that it’ll keep you out of jail, legal rules are frequently cleaner and more direct than ethical determinations, and that clarity may provide justification for ap- proving (or disapproving) actions with legal dictates instead of ethical ones. The reality remains, however, that the two ways of deciding are as distinct as their mechanisms of determination. The law results from the votes of legislators, the interpretations of judges, and the understanding of a policeman on the scene. Ethical conclusions result from applied values and arguments.
Religion may also provide a solution to the question about textbook theft. The Ten Command- ments, for example, provide clear guidance. Like the law, most mainstream religious dictates overlap with generally accepted ethical views, but that doesn’t change the fact that the rules of religion trace back to beliefs and faith, while ethics goes back to arguments.
Prudence, in the sense of practical concern for your own well-being, may also weigh in and finally guide a decision. With respect to stealing, regardless of what you may believe about ethics or law or re- ligion, the possibility of going to jail strongly motivates most people to pay for what they carry out of stores. If that’s the motivation determining what’s done, then personal comfort and welfare are guiding the decision more than sweeping ethical arguments.
Authority figures may be relied on to make decisions: instead of asking whether it’s right to steal a book, someone may ask themselves, “What would my parents say I should do? Or the soccer coach? Or a movie star? Or the president?” While it’s not clear how great the overlap is between decisions based on authority and those coming from ethics, it is certain that following authority implies respecting the experience and judgment of others, while depending on ethics means relying on your own careful thinking and determinations.
Urges to conformity and peer pressure also guide decisions. As depicted by the startling and funny Asch experiments (see Video Clip 1.1), most of us palpably fear being labeled a deviant or just diff ering from those around us. So powerful is the attraction of conformity that we’ll deny things clearly seen with our own eyes before being forced to stand out as distinct from everyone else.
12 THE BUSINESS ETHICS WORKSHOP
Custom, tradition, and habit all also guide decisions. If you’re standing in the bookstore and you’ve never stolen a thing in your life, the possibility of appropriating the text may not even occur to you or, if it does, may seem prohibitively strange. The great advantage of custom or tradition or just doing what we’ve always done is that it lets us take action without thinking. Without that ability for thought- lessness, we’d be paralyzed. No one would make it out of the house in the morning: the entire day would be spent wondering about the meaning of life and so on. Habits—and the decisions flowing from them—allow us to get on with things. Ethical decisions, by contrast, tend to slow us down. In ex- change, we receive the assurance that we actually believe in what we’re doing, but in practical terms, no one’s decisions can be ethically justified all the time.
Finally, the conscience may tilt decisions in one direction or another. This is the gut feeling we have about whether swiping the textbook is the way to go, coupled with the expectation that the wrong decision will leave us remorseful, suff ering palpable regret about choosing to do what we did. Con- science, fundamentally, is a feeling; it starts as an intuition and ends as a tugging, almost sickening sen- sation in the stomach. As opposed to those private sensations, ethics starts from facts and ends with a reasoned argument that can be publicly displayed and compared with the arguments others present. It’s not clear, even to experts who study the subject, exactly where the conscience comes from, how we develop it, and what, if any, limits it should place on our actions. Could, for example, a society come into existence where people stole all the time and the decision to not shoplift a textbook carries with it the pang of remorse? It’s hard to know for sure. It’s clear, however, that ethics is fundamentally social: it’s about right and wrong as those words emerge from real debates, not inner feelings.
2.5 History and Ethics
Conflicts, along with everything necessary to approach them ethically (mainly the ability to generate and articulate reasoned thoughts), are as old as the first time someone was tempted to take something from another. For that reason, there’s no strict historical advance to the study: there’s no reason to con- fidently assert that the way we do ethics today is superior to the way we did it in the past. In that way, ethics isn’t like the physical sciences where we can at least suspect that knowledge of the world yields technology allowing more understanding, which would’ve been impossible to attain earlier on. There appears to be, in other words, marching progress in science. Ethics doesn’t have that. Still, a number of critical historical moments in ethics’ history can be spotted.
In ancient Greece, Plato presented the theory that we could attain a general knowledge of justice that would allow a clear resolution to every specific ethical dilemma. He meant something like this: Most of us know what a chair is, but it’s hard to pin down. Is something a chair if it has four legs? No, beds have four legs and some chairs (barstools) have only three. Is it a chair if you sit on it? No, that would make the porch steps in front of a house a chair. Nonetheless, because we have the general idea of a chair in our mind, we can enter just about any room in any home and know immediately where we should sit. What Plato proposed is that justice works like that. We have—or at least we can work to- ward getting—a general idea of right and wrong, and when we have the idea, we can walk into a con- crete situation and correctly judge what the right course of action is.
Moving this over to the case of Ann Marie Wagoner, the University of Alabama student who’s out- raged by her university’s kickback textbooks, she may feel tempted, standing there in the bookstore, to
Video Clip
Asch Experiments
View the video online at: http://www.youtube.com/v/sno1TpCLj6A
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