Monday, May 17, 2010
Regina Cloyd - Friedman and Social Responsibility (THURS)
Milton Friedman believe that a business only responsibility is to increase the profits of the shareholders and if a businessman “is to make expendi tures on reducing pollution beyond the amount that is in the best interests of the cor poration or that is required by law”, he is not taking into account the best interest of the shareholders; however, the following thought-experiment will show that businesses should go beyond the rules of the game of being socially and environmentally responsible. At a time when population growth, energy, land resources, and environmental constraints are a problem all at once, stakeholders are expected to decrease their carbon footprint and actively participate in the eco-friendly movement. If corporations continue to follow Friedman’s theory, they will be exposing themselves to third-party liability claims, clean-up costs, business interruption, and damaging publicity. These million dollar consequences, sometimes deadly, are definitely not in the best interest of the shareholder for it kills their profit and their brand. To stay functional and profitable, businesses use an abundance of natural resources and the development of new products, service, or buildings always impact the environment. Corporations like Exxon-Mobile, Chevron, and ConAgra have all witnessed and paid the price for the negative externalities that were damaging to the environment; therefore, imposed on the stakeholders. Certain philosophies like Utilitarianism, cost-benefit and cost effective analysis are committed to the thesis by their other views, though they do not come out and explicitly endorse the thesis. Businesses fail to be more environmentally friendly for multiple reasons, but mainly because of its developmental expense and the lack of consensus on the importance of taking the necessary steps. If businesses can get pass their short-term objectives of achieving fast profits and “meet the needs of the present without compromising the ability of future generations to meet their own needs”, they have no choice, but to excel in long-term profits, receive governmental incentives and loose regulations for playing beyond the rules of the game. For corporations to acquire the eco-friendly expense in the beginning, they will avoid long-term liabilities by doing the greatest good for the greatest amount of people—maximizing the interest of the shareholders.
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How does Ethical Egoism fit in with your hypothesis? What initiatives are you proposing that businesses take to forgo these long term liabilities, and how do we get businesses to see that the initial eco-friendly expenses are worth forgoing future damages?
ReplyDeleteOne of the government's purposes is to work toward a better community for individuals and businesses. Therefore, wouldn't it be ethical for the government to offer corporations a tax-break or subsidy for moving toward a more environmentally sustainable way of production? I think that this would be an environmentally responsible act, that could motivate companies to adopt greener forms of production.
ReplyDeleteAre you going to work the current BP oil spill into this? And if you are, what consumer consequences did you find, if those data are available?
ReplyDeleteWhat is the root of this problem? Business practices, competetive capitalistic society, poor environmental education? Are these people malicious, apathetic, or ignorant? Would becoming more eco-friendly be irrational or Altruistic?
ReplyDeleteAlso, I know I should know this, but what the hell does Milton Friedman do? I can look it up easy enough, but I really shouldn't have to do that.
Is the problem of not willing to be a more sustainable company due to the long-term costs in any way the shareholders/ investors fault? Do we as consumers stimulate these corporations to act the way they do? Also, is there a way, as investors/ consumers, to do something about this?
ReplyDeleteWhat if businesses don't maximize profit, and at the same time, they don't solve the environmental problems? What I am saying is that business tries to maximize the gain from trade, and that's by first maximizing profit, then take out money from the positive profit, and then use it to solve environmental problems, I got a sense where you assume if business doesn't maximize profit, it is better, because they are going to use it to solve the environmental problems, but that assumption doesn't hold always. They can spend the money on anything they want. My question is that how would a business survive without a clearly mind of approximately trying to maximize its profit? Firms have the decisions to shut down when it is not doing well. Is it better when businesses set several goals, 1, try to maximum profit. 2, solve environmental and other type of problems using the huge profit available. 3, Able to give workers a rise. 4, grow the business faster.
ReplyDeleteShould profit be the only motive in adopting a more environmentally friendly company? If so, how does this affect the implementation of a MORAL land ethic? If a company is only adopting new policies and regulations because of profit, will the underlying cause of environmental irresponsibility ever disappear?
ReplyDeleteAlso, in using the utilitarian theory, wouldn't the greatest good come from adopting a environmentally friendly business not because of the profit to the shareholders, but because of a universal benefit? Wouldn't EVERYONE benefit from a universal land ethic?
If these types of companies are in the business for long-term profits, shouldn't they see the hazards of putting all their efforts into new energy resources and becoming more environmentally conscious? Wouldn't "greening" their businesses only result in a longer-lasting business because oil is a finite resource? How could the utilitarian view be misleading in the sense that if they maximize profits in the short run and depleting resources at can increasing rate will result in less resources later?
ReplyDeleteIs the greatest good for the greatest number taken into account during the production side of business? Often, we forget that a lot of the damage that a company incurs on the environment is on the production side. Giving back is only a post-hoc decision. It also does not help change the system, which is really the problem. Does social responsibility actually hinder the progress that it is working to achieve?
ReplyDeleteDo you think there are legal solutions to this problem, or will it require a paradigm shift in the minds of businessmen?
ReplyDeleteWhere does capitalism fit in all of this? It seems that you're trying to imply that capitalism can coexist with eco-friendly practices. If this is true then how would you account for the time-discount rate in a capitalistic system as companies have a tendency to only look at short term goals and profits?
ReplyDeleteWhat about the relationship between the corporation and non-shareholders? Are the only ones who count? Is it right to just count the people who take stock in the company but not those who your negative externalities effect?
ReplyDeleteIts seems to me that your paper is talking about how the businesses are acting egotistically and only concerned about profit, and that makes sense because that is their function. If they do not make a profit they can not afford to stay in existence. So they have no real incentive to change other than to avoid fines, etc that will be placed on them by the government. But what philosophy does the government possess that allows them to not just be paid off by the companies in order to avoid the changes? what incentives does the government have and do they really put much pressure on the businesses?
ReplyDelete