One of the most frustrating aspects of our discussions on matters dealing with the economy and the way forward is the question of right and wrong. The problem is the question of right and wrong can be answered a variety of ways depending on your perspective. The standard business method is fiduciary responsibility. This is used to explain away what often can seem as insensitive and sometimes immoral business strategies. People often argue that business are amoral, neither good nor evil. yet at the same time it is popular opinion that corporations should have the ability to participate in public discussions on policy and government interference. I personally have a problem with this because I believe governments are meant to be a reflection of a societies morals, ethics, and aspirations. Governments are the social contract acted out. However if the public discussion and policy is dominated by amoral corporations then we have left the role of government in the hands of psychopaths.
Dramatic interpretations of the Calculus of Negligence aside it is important to realize it is truly the most efficient method of determining the course of action for a given business. What is missing from all of this is of course the human factor, let’s call that factor u. The reason why u never enters the equation is u’s very unpredictable. Factor u changes over time, u sometimes acts very irrationally. From a business stand point relying on u to act a certain way is a recipe for disaster. As a result when building any sort of global business model the goal is to make u’s impact as small as possible. While it is perfectly logical to try to eliminate u it has some societal impact. When businesses eliminate u jobs move over seas, homes are foreclosed on, people u wouldn’t want to elect enact policies that work against u.
Recently when news broke about the conditions in apple’s factories my friend emailed me half in jest to tell me I was right, apple was in fact evil. Truth is apple isn’t evil, apple is a psychopath, and that is what it means to be a mega corporation. When BP irrevocable damaged the gulf everyone wanted to show how evil the CEO was, but in truth all they could show was him acting unaffected by the tragedy. That isn’t being evil, it’s being indifferent to the suffering of others, a trait high in the characteristics of psychopaths.
Conservatives will tell you because corporations are made up of people by some miss-use of the transitive property corporations are people. Corporations as an institution are designed in such a way as to minimize the human equation within it. Corporations respond to the bottom line to maximize profits for their shareholders. This isn’t a choice on their part, the law says they have a legal responsibility to act in this way. One of the big things coming out about the upcoming Facebook IPO was the fact that they had to disclose many of their business practices, including how they pay their employees, including bonuses. If a corporation decides to “do the right thing” and give their employees what an investor might consider an excessive raise the corporation risks the viability of the company based solely on the loss of investments. Theoretically the check on that would be public perception, if say a company had a history of abusing it’s employees and the public was made aware it would have a negative impact on the brand and that could eventually rebound to the value of the company. If this were the case though Walmart wouldn’t be the largest big box store in the world, and apple wouldn’t have just cracked $500 a share.
The truth is investors rarely really care about public perception. Unless an investor is running for some sort of elected office and can’t claim ignorance of the investment you will never hear a peep out of investors about the bad behavior of a company. As long as the company delivers back on the investment they can literally be responsible for the death and destruction of peoples lives and still lure money, as BP proves every day. The motives of corporations are clear and consistent, they will always want to make more money. As a result their motives will almost universally be around profit, however the profit motives of one company or even on industry do not necessarily align with the needs a mores of a nation. So the question becomes how much influence should psychopaths (or should I say entities relatively indifferent to the needs of others) have on our democracy.
Narrator: A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one.
Woman on plane: Are there a lot of these kinds of accidents?
Narrator: You wouldn't believe.
Woman on plane: Which car company do you work for?
Narrator: A major one.
Fight Club
Dramatic interpretations of the Calculus of Negligence aside it is important to realize it is truly the most efficient method of determining the course of action for a given business. What is missing from all of this is of course the human factor, let’s call that factor u. The reason why u never enters the equation is u’s very unpredictable. Factor u changes over time, u sometimes acts very irrationally. From a business stand point relying on u to act a certain way is a recipe for disaster. As a result when building any sort of global business model the goal is to make u’s impact as small as possible. While it is perfectly logical to try to eliminate u it has some societal impact. When businesses eliminate u jobs move over seas, homes are foreclosed on, people u wouldn’t want to elect enact policies that work against u.
Recently when news broke about the conditions in apple’s factories my friend emailed me half in jest to tell me I was right, apple was in fact evil. Truth is apple isn’t evil, apple is a psychopath, and that is what it means to be a mega corporation. When BP irrevocable damaged the gulf everyone wanted to show how evil the CEO was, but in truth all they could show was him acting unaffected by the tragedy. That isn’t being evil, it’s being indifferent to the suffering of others, a trait high in the characteristics of psychopaths.
Conservatives will tell you because corporations are made up of people by some miss-use of the transitive property corporations are people. Corporations as an institution are designed in such a way as to minimize the human equation within it. Corporations respond to the bottom line to maximize profits for their shareholders. This isn’t a choice on their part, the law says they have a legal responsibility to act in this way. One of the big things coming out about the upcoming Facebook IPO was the fact that they had to disclose many of their business practices, including how they pay their employees, including bonuses. If a corporation decides to “do the right thing” and give their employees what an investor might consider an excessive raise the corporation risks the viability of the company based solely on the loss of investments. Theoretically the check on that would be public perception, if say a company had a history of abusing it’s employees and the public was made aware it would have a negative impact on the brand and that could eventually rebound to the value of the company. If this were the case though Walmart wouldn’t be the largest big box store in the world, and apple wouldn’t have just cracked $500 a share.
The truth is investors rarely really care about public perception. Unless an investor is running for some sort of elected office and can’t claim ignorance of the investment you will never hear a peep out of investors about the bad behavior of a company. As long as the company delivers back on the investment they can literally be responsible for the death and destruction of peoples lives and still lure money, as BP proves every day. The motives of corporations are clear and consistent, they will always want to make more money. As a result their motives will almost universally be around profit, however the profit motives of one company or even on industry do not necessarily align with the needs a mores of a nation. So the question becomes how much influence should psychopaths (or should I say entities relatively indifferent to the needs of others) have on our democracy.
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