Shortcuts Taken In the Past

I just heard that there are documents that show that the top management of the power plants in Japan resigned because the were found to have taken shortcuts and falsifiedhat reports concerning the saftey of the plants.

What is wrong here?

Corporations have an obligation to maximize profits for their shareholders. That’s actually a good thing because there is really nothing wrong with making money. The problem is that profit is the only measure of corporate success… and, as the New Testament tells us, the love of money is the root of evil. When it comes to corporations, the problem is that social responsibility does not seem to fit into our current economic thinking.

Imagine a world in which social responsibility was in some way included in the profit and loss statement of a company. WOW!

The beauty of the USA is that it was founded on the basis of checks and balances. Congress checked the President, the courts checked Congress, and so on. The thing most people don’t realize is that the free market system is also based on the idea of checks and balances. The theory is that when companies do bad things they will suffer the economic consequences because people will stop buying their goods and services. Nice theory, but only a theory. It might have worked in the 1700s, when entrepeneurs were really local in nature, but the theory collapses in a world of multi-national corporations that are constantly spinning their message in national media.

So, that’s where government has stepped in. They have established the rules by which corporations could play in the economic sandbox. So, it was a fine thing for a food company to make a profit as long as the food they provided did not poison the people that consumed it.

But corporations really want to make as much money as they can, so we have evolved into an interesting situation in which corporations operate in a free market when it comes to profits, but in a system of socialism when it comes to corporate risks and blunders. The chemical plant can rake in all the profits from the great chemicals they make, but it is up to the community to clean up the mess they cause by dumping byproducts into the nearby river.

So, how do we get social responsibility back into the equation? That is what will result in a better world where companies and company executives and stockholders are actually held financial responsbility for the disasters that they cause.

What can you yourself do? The only way to get social responsibility into the equation for profit and loss is for you as an individual to deprive corporations of their profit when they do socially irresponsible things. That’s right. When they do bad stuff stop buying their stuff.

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