In September 1970, the late Milton Friedman published a bold manifesto entitled “The Social Responsibility of Business is to Increase its Profits” in the New York Times Magazine, where he argued that businesses do not need to engage in various charitable or public-spirited activities, even those that generally meet with approval from shareholders. The best defense of the Friedman thesis is that any discrete corporate effort to advance collateral ends will not enjoy the unanimous consent of all corporate shareholders, so that the contribution operates like an implicit tax on dissenting shareholders. The better track is for the corporation to make the shareholders rich, so that they in turn can embark on their own charitable operations, without having to bind their fellow shareholders...Someone who thinks "you didn't build that" probably disagrees.
Unfortunately, government efforts to impose socially responsible regulation in a top-down manner can easily go awry, by limiting the ability of a firm to develop efficient supply chain practices, which might for a whole host of reasons require rapid shift from one supplier to another, perhaps in response to unanticipated regulation from the host state. Diversification of supplies is often the best response to sovereign risk.
The point here is not that corporations should cease socially-responsible activities, but rather that they should organize them independently of their production efforts. Thus if a corporation wants to show good will to a developing country, either by voluntary choices to improve worker conditions or to make charitable gifts entirely apart from the core business operations, it should be allowed to do just that. It may well be better, for example, to send aid to local schools than to enter into inefficient agricultural contracts. link
Education, politics, and anything else that catches my attention.
Tuesday, September 23, 2014
Corporate "Responsibility"
I'm still of the belief that a corporation's only goal should be to make money for its shareholders. Let the shareholders do what they want with their own money:
This person who loves Friedman believes it. Just to play devil's advocate, though ... it IS possible that by being 'socially responsible' the firm COULD increase good will and profits ... in which case they should, and it doesn't contradict Friedman at all. The other case is ... they should not be allowed to do social harm which they don't pay for like, dumping radioactive waste in a river ...
ReplyDeleteI can imagine scenarios in which a man could be raped by a woman; if he's bound; if he his physically weaker than the woman; if the woman is older and has some level power over him, like being his boss; if he has a wife or girlfriend and was thinking about cheating and decides not to. Maybe others ... but in general? I think it would be very difficult for a woman to rape a man...first off, we tend to think of sex like pizza ... even if it's bad, it's still pretty good. Second, in general, we are unlikely to be dominated by a woman (unless we're in to that) due to size differences. But when it happens --and I would guess most rape by women is statutory-- they should be prosecuted and sentenced the same way a man would be. And when they make a false claim? Perjury charges, every time.
ReplyDeleteAnd this person, playing devil's advocate's opponent sets a somewhat higher standard for corporate social posturing.
ReplyDeleteIf installing solar cells or some other lefty extravagance doesn't result in measurably greater profits then the primary purpose of the enterprise, the production of lawful profits, is being sacrificed to satisfy the conceits of those who support the expenditure. That is a lousy reason to dissipate corporate resources.
As usual Uncle Miltie's right and even better directly confronts one of the more successful misrepresentations of the left. Sticking a finger in the eye of the left benefits all of society, even the lefties, who as a result, get hysterical.
Like a vaccination the pain of having your smug preconceptions pricked is gone quickly but the benefit goes on and on.
allen -- thank you for restating my point almost exactly. I disagree with nothing you said.
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