Perhaps Jims' friend is himself a minority (or a woman with a very culturally unsuited name). In that case it may not be so immoral - according to those criteria.
I think you're right about it jeapordizing the relationship, but I don't think it's inevitable that the relationship will deteriorate to the point of destruction. There are bound to be plenty of cases where these situations have worked out quite well and the relationship between the two friends or relatives has grown even stronger. I don't know Jim, or Paul, so I can't say with any certainty what may transpire between them. I could speculate, based on my own experiences and information - but that's all it would be. The future nature of their relationship in this case would surely depend on the nature of the individuals themselves and the situations that emerge during the course of their employment together.
So immoral seems to me to be too strong a word to describe his decision. If there was an extremely high probability, or even certainty, of the relationship going down, and Jim knew this in advance - or if Jim were willingly taking unfair advantage of Pauls' need for employment to Pauls' future detriment - then immoral would be a good description. In this case though 'unwise' might be a better description. A lot of good relationships do fall apart in situations like this - but certainly not all of them.
Barring any portents of that event happening in the future though, I think his decision was good and entirely moral or ethical. In fact, it may have been the best decision. The crux in these cases, I believe, is qualification. As stated, Paul was sufficiently qualified for the job. The other applicant was too (maybe overqualified?), as were probably any number of other people, but he is also unknown. Jim probably has only the brief encounters of the interview process, which are extremely superficial and possibly contrived, to assess his character and its suitability to the position and the company. He already knows Paul and should not even be considering him if there are any issues in terms of his character or ethics that would negatively impact the company.
And I tend to agree with the sentiment "If you can't help your friends, then who can you help?" ... as long as they are qualified (or even could soon be qualified - depending on the position). The good ol' boy network too often neglected this criteria to the detriment of the workforce and society as a whole. Familiarity should not be the sole criteria of inclusion, just as it should not be a criteria for exclusion - in most cases.
Besides, not hiring his friend could be just as detrimental to their relationship, or even more so, than giving him preferential consideration. I'd be pretty pissed off if I were in Pauls' position and knew I had been passed over because Jim feared some kind of conflict of interest or moral horn. Especially if I really needed that job. More often than not when looking for work it's not what you know but who you know. Most everybody knows this - or will realize it at some point in the future. So, when even that starts to fail, then what the hell do you have?
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