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Are we honest by nature ... or only when watched?

Fingers "Integrity," the old saying goes, "is doing the right thing when no one is looking."

How many of us measure up?

Reporter Dave Kestenbaum looked at that question during a recent episode of "This American Life." What he found depressed the heck out of me.

The story (highlighted by MACPA member Jim McKinney on the awesome AECM listserv) centers on Kestenbaum's cousin, Dan Weiss, who was hired in the late 1970s to figure out why the gift shop at the Kennedy Center for the Performing Arts was hemorrhaging money. Staffed largely by volunteers, the shop was seeing annual "shrinkage" -- the loss of sales revenue and merchandise -- of about 40 percent. Forty cents of every dollar in sales and merchandise were simply disappearing.

There were two problems, Weiss discovered. Problem No. 1: Volunteers were stealing. They weren't taking a lot, mind you -- a t-shirt here, a few bucks for cab fare there. But it added up. And it was exacerbated by Problem No. 2: There were no internal controls.

So what did Weiss do? "He reinvented, on his own, what any normal retail business would call 'record keeping,'" Kestenbaum said. Weiss set up an inventory system and posted price lists in the gift shop. He told the volunteers to keep track of every sale.

The result? The gift shop's shrinkage ... well, shrank, to next to nothing. The stealing stopped almost completely.

And that left Weiss feeling downright pessimistic about human nature.

"It wasn't a particularly optimistic lesson -- that many people need controls around them in order to do the right thing," he said. "If there aren't any controls or supervision around them, they may not do the right thing."

Kestenbaum offered this conclusion:

"Dan discovered that not-so-nice truth that we all know but prefer not to think about: That we set up security cameras, we put locks on doors, we have paperwork and passwords, and those things aren't there just for criminals. They're there, as the saying goes, to keep honest people honest."

Is that why we have Sarbanes-Oxley? Why we need finance reform in the wake of the worst recession of our lives? To keep honest people honest? Are we hard-wired to do the wrong thing?

Someone tell me, "No." Please. Then listen to the TAL episode in its entirety (the story in question begins at about the 45-minute, 35-second mark):

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