Social Requirements of Businesses … Essay
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Corporate Social Responsibility
The author of this report has been asked to address the commonly asked question about corporate social responsibility and how far it should go. Indeed, there are two extremes to the argument with the Friedman acolytes asserting that a business should be primarily (or even only) be oriented towards a profit. There is the other side, as espoused by Mintzberg and his fellow writers, which states that there needs to be some social payback when it comes to businesses. Mintzberg and others assert that a business taking profits and not giving anything back to the community are being selfishness and that the term "self-interest" is not accurate when describing the supposed "selfish" actions of businesses that do not "give back" enough to the community. While there are arguments in both directions, businesses do not have an inherent and absolute obligation to give back to the community above and beyond legally mandated items such as taxes and the like.
The two YouTube videos in the reference list as well as the 1970 article from the same all come from the Friedman point-of-view. Friedman's basic take was that businesses have no such compunction or duty to "serve" the community above and beyond following the letter of the law. In a 1970 article he wrote on the subject, he was exceedingly blunt when he said "businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades." While this article was written nearly two generations ago, the subject at hand is no less pressing and omnipresent than it is now. Even with that fairly strong verbiage, Friedman does moderate his tone a tad when he says that businesses have the requirement of complying with the "basic rules of society." He also makes a prescient point about "corporations" not having the ability to have duties and such as this would fall to people, not something as intangible as a business. The cash, resources and people of a business are real and definite but a business is a more abstract concept (Friedman, 1970).
The YouTube videos are based on an event that happened in 1978. There were plenty of takeaway quotes and events from those videos, but the author of this report shall only focus on a few. In part one of the video, the onset is a pretty contentious exchange between a gentlemen in an orange t-shirt and Friedman himself. In the first part, Friedman is presented with a case study example of a person from Ohio who had his electricity shut off due to non-payment. It is further stated that the man died subsequent to that shut off. Friedman presumes for the sake of argument that the story is accurate (but also says that the actual details could indeed be quite different) and says that going to a policy of no shutoffs would lead to people paying only if they did so willingly. The author of this report would go a step further and would assert that many (but certainly not all or even most, probably) would actively abuse the no shutoff policy. The author of this report knows (at least nowadays) that there are typically laws against shutting off electricity when the temperatures are too cold and that is a good thing. However, Friedman asserts that the neighbors would be the best people to ask as it should be the neighbors that should be watching out for him rather than people that run a distant corporation (YouTube, 1978).
The second part of the video, it becomes clear that the young man has good intentions but his word choice, at the very least, is very flawed. For example, he asserts that "all" Ford Pintos in a rear-end collision would explode. That is patently false. It is true that Ford pushed through a car that was extremely dangerous but the certitude of a gas tank explosion/fire was not one hundred percent. Anyhow, the content then delves into what the core part of the argument is against Ford and the Pinto situation. Friedman seems to be missing the point at first but comes to the right conclusion when he points out that the cost of a life is really not what Ford did wrong. Rather, they knowingly put together a very dangerous car and they lied about it after the fact. The latter is what went wrong and thus that is the way it should be looked at. The Pinto vs. Mack truck comparison also "nailed it" in that a person that has a wreck in a Mack truck will almost certainly survive but this is not the case nearly as much when comparing to a smaller vehicle like the Pinto, bad gas tank assembly or not (YouTube, 1978).
As for Mintzberg, the author has a hard time finding agreement with that author and his colleagues given the way that the argument is approached. Mintzberg rightly refers to cases like Enron as "criminality." However, the sanctimony gets a little thick when he derides self-interest as "legal corruption." The Shaw story on the bottom of page 68 which refers to a woman that is considered to be a whore (without using the word) and then Mintzberg goes into his talk about prostitutes. Mintzberg's assertion that everyone has a price may be largely true. However, to suggest it is absolute is another patently false statement. Presuming and assuming that all people will compromise their moral values given the right price is probably true more than it is not but it is not going to be true for everyone. Some people would never lower themselves to being a whore (which is the word Mintzberg should have used because it makes a firmer point) no matter what. For example, some people in poverty might feel it acceptable, at least given the circumstances, to steal bread to have a full stomach. Other people would not. Some men would absolutely cheat if a beautiful woman propositioned them. Other men would not. To use the absolutist and hyperbolic language that Mintzberg uses is unfortunate and is the sign of a person that is not intellectually honest. Rather than try to make a valid point, they demagogue the situation. Lastly, the "fifth fabrication" because it devolves into the same brow-beating rhetoric. Mintzberg asserts that the concept of a rising tide lifting all boats is a myth. The author of this report would like Mintzberg to point out one economist who says that with no qualifications. Of course there will be losers and even Friedman himself asserted this in the YouTube videos. At the same time, Friedman was not inclined to question or limit the people that he saw smoking, for example. Indeed, he said it was their right even if it is extremely bad for him. He also admitted that he himself used to smoke (Mintzberg, Simons & Basu, 2002).
What Mintzberg needs to understand (and Friedman as well, to a lesser extent) is that neither extreme is realistic and thus one cannot make arguments from those extremes. There will always be people that suffer and need assistance. The amount of people in question swells when there is economic discord and regression. However, a bigger economy means more jobs. More jobs and more revenue means more taxes going into the public coffers and this means the ability for the government to provide better services. In a world where there is Social Security, Medicare, Medicaid (not to mention that those three programs take up half the federal budget right now) and unemployment insurance is all in place, there would seem to be plenty of investment in avoiding people being left behind (CBPP, 2015). Indeed, many (but not all) of people that are homeless are on drugs, are mentally ill or a combination of the two (PBS). However, these are issues that the government must deal with and they are not doing so.
In the end, businesses that are not operating as efficiently and as profitably as they could be are really just causing tax dollars to evade the public coffers. Beyond that, setting a "line" that defines what business should do from a corporate social responsibility standpoint would be exceedingly difficult given that everyone would have a different viewpoint on what should be required and what should not be required. As such, businesses should have the freedom to do as little or as much as they wish. If they break the law, there are mechanisms in place to deal with that. If customers deem that their business of choice is not socially responsible, the customer can go to another business. The government should not be mandating social responsibility and they should not be encouraging or rewarding bad choices and bad behavior on the part of certain citizens. To answer the question posed by the assignment, businesses should absolutely be allowed and encouraged to engage in social endeavors if they so choose but it should not be… [END OF PREVIEW]
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