Corporate Responsibility - What obligation? Maximise what?

[Skeptic Ginger]

Originally Posted by Darat

Who has argued that in this thread, I certainly haven't.

And as a shareholder you can have a lot of influence however what you can't do is get the officers of your company to break the law.

I fail to see how anyone has argued for what to me reads as an extended strawman.

Perhaps we are misinterpreting eachother's posts. I'm not sure what you are saying about such corporate decisions as Enron's schemes to manipulate power prices, not just their manipulation of stock prices, Shell Oil's polluting the Niger Delta, sweatshop labor and so on. I keep referring to these egregious atrocities and you and Francesca keep claiming corporate decision makers are more responsible to assure shareholder profits and not only excused from any responsibility for such decisions involving great harm, but down right obligated to screw people over in the name of profits.

So if this is a straw man, then please explain how those and similar caliber ethical decisions fit into your perception of this profit mandate.

Originally Posted by Francesca R

Yes. Sorry if you are "lost" but I have said that a few times now. Of course it is usually more profitable to get around the law rather than blatantly break it. But if breaking it is profitable a company will do that. Your own examples show this.

Er . . . not a great deal of what Enron the company did was illegal. Enron's successful lobbying of the (Clinton) administration to have electric power regulations dismantled, which allowed it to influence (manipulate) the spot price of electricity was fundamentally not illegal. What it was, is a manifestation of a company exerting efforts to circumvent the law (rather than break it) in order to increase profits. And yes that is normal corporate behaviour. Enron may have been spectacularly effective at it. Although Enron essentially went broke because it bet wrong on the electricity price, not because the company was breaking the law.

Enron's CEOs Jeffrey Skilling and Kenneth Lay were (mostly) convicted on insider trading charges whereby they were attemtping to illegally enrich themselves at the expense of stockholders. That is a non-semantic and important difference to what we are talking about here. (In addition they were falsifying accounts with Andersen's collusion after they knew that they had badly damaged Enron's finances and wanted to keep this truth from investors)

And another school of thought is that what is actually "abnormal" is people getting caught (in Enron's case, because of a disastrous bet on electicity).

(some bolding mine)

So from this you claim I am asserting a straw man. Yet what I read in this post is that you don't think the purposeful shutting down of power sources to create the appearance of shortages in order to raise prices is an issue if you can get away with it. Just skirting the law, just a profit generating decision, no big deal. But cheat shareholders and that is a crime.

And for the record, I have been referring to these guys' actions, not just which charges they were convicted of. There was the additional crime of falsely inflating prices in addition to all the other frauds. In the case of Enron's faking power shortages, there were other lawsuits from states who paid some of those increased fees. While maybe these legal actions were overshadowed by the shareholder lawsuits, the crime nonetheless was part of the whole picture.

State files suit against Enron

Quote:

Attorney General Bill Lockyer filed a lawsuit Thursday against Enron to recover potentially hundreds of millions of dollars from the company "for the massive, unlawful market manipulation and fraud it committed during the California Energy Crisis of 2000-01."...

... "While the state reeled from the combined impact of sky high power prices, supply shortages and rolling blackouts, the Enron defendants enjoyed massive, unprecedented profits, and extracted millions of dollars in ill-gotten gains from utilities and their customers ...

...On the tapes, according to a press release issued by Lockyer, the traders not only brazenly talk about exporting power and gaming the market, they spew profanity-laced boasts about bringing California to its knees, inflicting financial pain on "Grandma Millie" and Enron's influence with President Bush. Seeing profit in destruction, they express hope fires will torch California power lines, chanting, "Burn baby, burn."

...Additionally, Lockyer said, the tapes indicate Enron's top two executives, Ken Lay and Jeff Skilling, had knowledge of the market manipulation and received briefings on how it enriched the company.

(emphasis mine)



Perhaps the reason you think I am resorting to straw men is because you are ignoring what I've been talking about, blatant egregious atrocious unethical decisions. If you ignore the fact that is what I am referring to and confabulate some nonsense I am talking about mere everyday somewhat cutthroat business decisions, then it is no wonder my comments sounded like straw men. I assume you are referring to the grossly immoral business decisions I have described when you tout the reasonableness of "skirting the law", not some minor cutthroat competition.

Originally Posted by Francesca R

No. It is very different. People who run companies may have ethics. Companies do not. And there is nothing "nebulous" about the legal entity status of a company

I would rather you didn't retain the ability to move your goalposts. A corporate entity is not the same as the people who work for it. In this topic that distinction is actually essential so please be clear about it.

Here you go again. Corporations have no incentive to act for the public interest unless that is aligned with shareholder interests too (perhaps because of credibly enforcable laws and/or public opinion). And anyway, what does shareholders' money spent on firing CEOs have to do with the public?

This is your straw man which you have repeated several times now despite the fact I corrected you on the meaning of my statements.

Originally Posted by Francesca R

What has severance pay got to do with your prior question? And what does it have to do with ethics?

That was a separate discussion. I was refuting the claim that the private sector always does a better job than the pubic sector. Go back to the original discussion. Perhaps you didn't know the gist of the discussion when you joined it with your examples of fired execs.

[Skeptic Ginger]

I found this interesting document while looking at the Enron stuff just now. I assume it is a real document and it looks legit, but I have not confirmed that.

Enron's Corporate Code of Ethics

Quote:

Principles of Human Rights...Enron's Visions and Values are the platform upon which our human rights principles are built...

Business Ethics....highest ethical standards...Moral as well as legal obligations will be fullfilled...Advertising and promotion will be truthful, not exaggerated or misleading...

Compliance with the Foreign Corrupt Practices Act...

Compliance with antitrust laws ...Both the spirit and the letter of antitrust laws are to be followed...

Compliance with environmental laws...the company is committed to environmental protection....

(emphasis mine)

This certainly seems to contradict the claims corporations don't put these kind of considerations on paper or as a corporation cannot address morality and other issues as they are not in keeping with profit mandates.

[Skeptic Ginger]

Originally Posted by Francesca R

...

Er . . . not a great deal of what Enron the company did was illegal. Enron's successful lobbying of the (Clinton) administration to have electric power regulations dismantled, which allowed it to influence (manipulate) the spot price of electricity was fundamentally not illegal. ...

And I don't want to sidetrack the thread but this was more the doing of Republican Senator Phil Gramm than it was "the Clinton Administration".

Quote:

Clearing the way for that California price gouging, Gramm, as a powerful Texas senator in 2000, slipped an Enron-backed provision into the Commodities Futures Modernization Act that exempted from regulation energy trading on electronic platforms.

Not that I am pleased with or saying Clinton wasn't responsible for continuing the deregulation trend of his predecessors. There have been other negative consequences besides in the cost of utilities. Consolidation of the media worsened under Clinton.

[Francesca R]

Originally Posted by skeptigirl

So from this you claim I am asserting a straw man.

No. Post 75 is a straw man.

Quote:

Yet what I read in this post is that you don't think the purposeful shutting down of power sources to create the appearance of shortages in order to raise prices is an issue if you can get away with it.

There goes another one. You are not following this well and you do not seem to get the difference between people explaining the way things are and what people think. You seem more interested in brandishing your personal opinions and inferring that disinterest in such irrelevance is some kind of opposing stance. Why not grab a soapbox and join a forum for the promotion of personal opinions instead? This is not (to my mind) that place.

Quote:

There was the additional crime of falsely inflating prices in addition to all the other frauds. In the case of Enron's faking power shortages, there were other lawsuits from states who paid some of those increased fees. While maybe these legal actions were overshadowed by the shareholder lawsuits, the crime nonetheless was part of the whole picture.

This is getting rather off topic and does not affect any of my arguments. PS--"lawsuits" are not proof of crimes, do you know this?

Quote:

some minor cutthroat competition.

Way to go with an oxymoron there

Quote:

This is your straw man which you have repeated several times now despite the fact I corrected you on the meaning of my statements

Incorrect and nonsensical. Again I have to quote you to yourself:

Originally Posted by skeptigirl

Corporations can act counter to the public good and give away billions when they do fire CEOs.

1) Spending shareholders' money on firing CEOs has nothing to do with the public and 2) Corporations are not formed to serve the public interest and will not do so unless it coincides with their owners' interest. Kindly challenge either of these or drop it.

Quote:

That was a separate discussion. I was refuting the claim that the private sector always does a better job than the pubic sector. Go back to the original discussion. Perhaps you didn't know the gist of the discussion when you joined it with your examples of fired execs.

And away you go again. Nobody here made that claim. You are the only one talking about it. In my book that is not a discussion. Perhaps you are having the discussion in your mind?

[Francesca R]

Originally Posted by skeptigirl

This certainly seems to contradict the claims corporations don't put these kind of considerations on paper.

Nobody has claimed this. But then of course if they had, you would be able to point that out, wouldn't you?

And it is ironic in the extreme that you use Enron Inc. as an example of a company ostensibly proffessing to act on the basis of ethics, since this rather makes my earlier point (and that of at least three others in this thread) that:

Originally Posted by Francesca R

"Choosing to make ethics part of the brand" means precious little.

Originally Posted by skeptigirl

And I don't want to sidetrack the thread but this was more the doing of Republican Senator Phil Gramm than it was "the Clinton Administration".

Enron's efforts to remove government interference in its actions stretch back to the prior Bush government when Wendy Gramm headed the CFTC. The actual colour of the government matters little--Enron donated to both your parties. I refer to the Commodity Futures Modernisation Act which was signed into law by Clinton in December 2000. This was what led to the events you referred to.

[balrog666]

Originally Posted by Francesca R

And away you go again. Nobody here made that claim. You are the only one talking about it. In my book that is not a discussion. Perhaps you are having the discussion in your mind?

She seems to consistently rail against silly, strawman ideas of what others "really mean" instead of what they actually post. That she might be listening to the oddball voices in her head would indeed be one possible cause. Very sad to watch.

[Skeptic Ginger]

Francesca, instead of complaining that I don't understand/recognize/whatever what you've said, how about recognizing that communication is a two way street and posting what your position is on the subject I have asked you about?

How do you view the morality of corporate decision makers who claim the excuse of a mandate to maximize shareholder profits as an excuse to make the most atrociously unethical decisions such as Shell Oil allowing life altering pollution of the Niger Delta because they can?

Seems to me you are avoiding any direct discussion of that and similar caliber issues.

[Francesca R]

Originally Posted by skeptigirl

Francesca, instead of complaining that I don't understand/recognize/whatever what you've said

I think it is also that you do not understand what you have said, in respect of corporations, what drives them, the difference between corporations and the people that work at them, and the role or otherwise of ethics and the law.

Quote:

How do you view the morality of corporate decision makers who claim the excuse of a mandate to maximize shareholder profits as an excuse to make the most atrociously unethical decisions such as Shell Oil allowing life altering pollution of the Niger Delta because they can?

Seems to me you are avoiding any direct discussion of that and similar caliber issues.

I do not know anything about the specific matter you are mentioning regarding Royal Dutch Shell, so I have no position on it and have made no responses about it. There is no "street" at all--so far only you are mentioning it.

Quote:

how about recognizing that communication is a two way street

On the other hand, you have made what I think are incorrect or inconsistent statements about the general matter of corporate responsibility and you seem to reach wrong conclusions about what others (myself included) have said--yet you do not respond to challenges and seem to shift the focus to something else. That is not a two way street. Perhaps we would all be in a better position to learn here if you could stick with it. But that's your choice.

I recommend you start a separate thread about Shell.

[Skeptic Ginger]

Originally Posted by Francesca R

I think it is also that you do not understand what you have said, in respect of corporations, what drives them, the difference between corporations and the people that work at them, and the role or otherwise of ethics and the law.

This is BS. You have made these false assumptions about me based totally on talking past what I have been posting.

Originally Posted by Francesca R

I do not know anything about the specific matter you are mentioning regarding Royal Dutch Shell, so I have no position on it and have made no responses about it. There is no "street" at all--so far only you are mentioning it.

Another dodge. Even if you know nothing of the specifics in the Shell Oil case, you could answer the general principle, does anything go or not?

Originally Posted by Francesca R

On the other hand, you have made what I think are incorrect or inconsistent statements about the general matter of corporate responsibility and you seem to reach wrong conclusions about what others (myself included) have said--yet you do not respond to challenges and seem to shift the focus to something else. That is not a two way street. Perhaps we would all be in a better position to learn here if you could stick with it. But that's your choice.

I'm not shifting anything. I'm telling you that I am well aware of the difference between a corporation and a decision maker within a corporation. You insisted I spell out that I was referring to individuals then after I have consistently done so and corrected your false assumption about what I had been talking about, you just kept on repeating the same thing.

I KNOW THE DIFFERENCE. I HAVE BEEN TALKING ABOUT INDIVIDUAL DECISION MAKERS THE WHOLE TIME. I TOLD YOU THAT NOW, AND THIS MAKES FOR THE FOURTH TIME.

Originally Posted by Francesca R

I recommend you start a separate thread about Shell.

And the dodge continues. Shell Oil is an example of an extreme immoral behavior. That is the question I have asked you. The issue is not about Shell, it is about the limits of the supposed profit mandate. And it takes about 2 minutes to read about the Shell Oil case. Are there no examples of extreme indifference for human life that you are aware of? I am familiar with many more.

[Skeptic Ginger]

I'm still waiting for a comment on post 83. I wouldn't want that direct contradiction to the idea corporations never include topics of morality within their business discussions to get lost in the debate on the limits of ethical behavior on behalf of a company.

[Francesca R]

Originally Posted by skeptigirl

[ . . . ]

If you wish to know my position on "corporate responsibility" then start with post 19 and work from there. I will not be typing it out again, since I think it is completely clear the first time.

Now--what is yours again?

[Francesca R]

Originally Posted by skeptigirl

I'm still waiting for a comment on post 83. I wouldn't want that direct contradiction to the idea corporations never include topics of morality within their business discussions to get lost in the debate on the limits of ethical behavior on behalf of a company.

Then you have not read post 85 have you? . I bolded the first sentence to attempt to cath your attention away from building strawladies. I see that has not worked. Oh well.

(PS--You mean post 82--which is the one in your link, not 83)

[Darat]

skeptigirl - the likes of Francesca R, Jaggy Bunnet and I have been posting and talking about "corporate responsibility" as it is defined in laws and regulations and used in the opening post. Does that help make you understand why you have been creating strawmen of our points?

From what I have read of their posts in this and other threads I doubt very much that Francesca R, Jaggy Bunnet believe that individuals do not have a moral and/or/perhaps an ethical duty, even when they are officers of a company, however an individuals personal stance is not what this thread was about.

[Darat]

Originally Posted by Jaggy Bunnet

It may have changed as the Companies Act 2006 codified much of it in s172.

"172 Duty to promote the success of the company (1) A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to—
(a) the likely consequences of any decision in the long term,
(b) the interests of the company’s employees,
(c) the need to foster the company’s business relationships with suppliers, customers and others,
(d) the impact of the company’s operations on the community and the environment,
(e) the desirability of the company maintaining a reputation for high standards of business conduct, and
(f) the need to act fairly as between members of the company.
(2) Where or to the extent that the purposes of the company consist of or include purposes other than the benefit of its members, subsection (1) has effect as if the reference to promoting the success of the company for the benefit of its members were to achieving those purposes.
(3) The duty imposed by this section has effect subject to any enactment or rule of law requiring directors, in certain circumstances, to consider or act in the interests of creditors of the company."

Basic duty remain to act in the interests of the members, but the factors they should "have regard to" (whatever that means) give plenty of "wriggle room" - which always existed anyway in practice.

I'm pretty sure that codification wasn't in place when I was a director. However as you say the big number 1 is still a clear and simple "success of the company for the benefit of its members as a whole" everything else follows from that. So yes a company's officers could consider an environmental issue but only in light of the "...success of the company for the benefit of its members as a whole..". In other words they came up with something that reads quite nice but when it gets down to it is still about the brass tacks!

[Francesca R]

Originally Posted by Darat

skeptigirl - the likes of Francesca R, Jaggy Bunnet and I have been posting and talking about "corporate responsibility" as it is defined in laws and regulations and used in the opening post. Does that help make you understand why you have been creating strawmen of our points?

I am using logic also. A corporation is set up purely as a money-making entity. It is subservient to laws but it does not obey laws for ethical reasons, or because it "agrees they are a good idea for the public interest". A corporation can not respond to anything connected with public interest. It is nothing more than an entity that responds logically to financial incentives. Laws that are intended to serve the public interest can only motivate companies to comply if their financial interest is served by doing that. Public opinion can also compel companies to adopt certain behaviours (or appear to adopt them) if that furthers their financial interests too. But in no sense is "responsible" corporate behaviour (which is aligned with public interest) made manifest because it serves public interest.

The ethical stance of company executives is--in the limit--quite irrelevant. Logically, a "very ethical" person and a "completely unethical" person--should they both act for a company and should they both do their job as effectively as is possible--would end up doing the same thing as a company executive.

The issue of compelling companies to behave in ways that serve public interest better (or damage it less) is in my view one of optimally rigging financial incentives so that desired behaviour is rewarded and undesired behaviour penalised. A lot of the time this is "naturally" the case, but a lot of the time it is not and can not be the case that a company's financial interest is naturally aligned with a public one.*

*ETA: I suppose in an "efficient market" environment where every company action was instantly and fully disseminated and therefore discounted into share prices and public knowledge, then the issue could theroetically go away.

[Francesca R]

I found another thread from last year about this subject (try to ignore myself and tkingdoll almost falling out)

http://forums.randi.org/showthread.php?t=93064

[Skeptic Ginger]

Originally Posted by Francesca R

If you wish to know my position on "corporate responsibility" then start with post 19 and work from there. I will not be typing it out again, since I think it is completely clear the first time.

Now--what is yours again?

Post 19

Originally Posted by Francesca R

I concur that the legal mandate of a corporation should consist of a duty to maximise shareholder value above all else, this being subservient to obeying the law in principle (although breaking the law can be seen to be logically rational if the financial consequences of doing that are expected to be higher than obeying it).

The only credible way to align this with socially responsible behaviour is to rig incentives so that socially responsible decisions are also good business decisions, and so that socially irresponsible ones are bad business decisions. Friedmanites would not tend to think any great regulation is required to do this. Others (including myself) would disagree. The attitude of the public influences what those incentives are.

It is technically impossible to mandate a company to "behave responsibly" unless there is a (relative) financial payoff IMO. In most cases there is, as long as the constructs essential for market-capitalism exist in a strong form, even in the absence of regulatory oversight. Not always by any means.

So in other words, you think the subject of the consequences of a decision which will assuredly end up screwing over thousands of people in the name of company profits should never enter the discussion. I can see why you don't want to clarify this position. It is pretty atrocious.

I think my opinion has been clearly stated, however it is continually distorted into some absurd communism premise by those who don't hold similar views. So I will be happy to clarify it once again.

Capitalism is the most productive and efficient economic system. However, because the range of human behaviors extends from pure personal greed to pure altruistic humanitarianism, one cannot rely strictly on market forces to result in the best outcome for humanity of which we are all a part. The tragedy of the commons must be considered.

Regulated capitalism is the best system. And a true free flow of information is crucial to reaching as close to the goal of the best world for everybody as is possible in an imperfect world. The best world for everybody does not mean equal distribution of the wealth, because that is not compatible with a capitalist economic system. But it does require recognition of the fact that employees are also customers. Providing sufficient incomes for employees results in better profitability in the long term. Providing sufficient income for employees results in political stability which is also better for profitability in the long term.

Where the system is going wrong currently is twofold.

One is free flow of accurate information. If shareholders knew, for example, what the decision makers in Shell Oil were doing in the Niger Delta, the majority of the shareholders would not approve. The mainstream news media in the US and in many other Western countries is not currently functioning to keep people informed of such inhumane decision making. So those who can easily turn their faces away and blame someone else are not confronted with the consequences of their decisions. They are instead comforted by the fabricated excuse such as you are repeating here that their only goal is short term profitability.

But corporate responsibility is not a barrier from which behind it personal responsibility enjoys a free for all. That is a contrived claim. And additionally, claiming a single judge in a side comment in some appeals court ruling made it so, does not make it so. That is not a mandated conclusion, as the paper linked to in this thread points out. One court ruling by one person does not provide a blanket excuse for all the individuals who have ever made a decision with atrocious consequences in the name of some shareholder profit mandate.


Taking this a little further, however, it is my belief that decisions which have been bad for many populations were made because the decision makers did not view the people involved as human. Profits and a good life for Americans was considered while some of the decision makers considered the people in other countries as less than human. That's how one kills in a war, and that is how one ignores human tragedy in a distant land.

But now we are becoming more and more a global community. We can still ignore the suffering in Darfur, but it is harder to ignore the workers making Nike shoes in Indonesia. The way I see it, the corporate decision makers had it wrong all along. Had they allowed union organizers and decent wages in third world countries for the last century, they'd have customers instead of insurgents. Had they supported real democracies in third world countries instead of paying off dictators to do the dirty work of suppressing whole populations, all corporations would have had a little less in short term profits and a lot more in long term gains instead of short term gains outweighed by long term losses. Like I said, they'd have customers instead of insurgents.

Are corporations responsible for the immoral decisions of the corporate decision makers? Why the hell not?


The second issue is simpler and doesn't involve morals, it involves free market forces. Free market forces are not functioning when the cost of the pollution of a product or the disposal of a product is not incorporated into the cost of the product to the consumer. Nor are free market forces operating when corporations can lobby the US government at taxpayer expense to rally forth the troops to defend the literal theft of the natural resources of a foreign country.

In order for the market to function, the actual cost of the product needs to be charged to the consumer. And the US government should not be getting involved in the artificial lowering of the cost of goods sold. That is where regulation needs to come in, and US intervention in third world countries needs to get out. The law must require the producer be responsible for the product's waste and pollution. And our military cannot be defending corporate rights to natural resources in other countries. Otherwise capitalism cannot function properly.

So that is where I stand on the issue of corporate responsibility. I see no reason why what is best for the individual is not also best for the commons. We just need a lot of tweaking to correct for a lot of individual decision maker fallibility.

[Skeptic Ginger]

Originally Posted by Francesca R

Then you have not read post 85 have you? . I bolded the first sentence to attempt to cath your attention away from building strawladies. I see that has not worked. Oh well.

(PS--You mean post 82--which is the one in your link, not 83)

Meant post 82, sorry. But you seem to have recognized the issue.

The issue is, since you've been claiming morals are never discussed in board meetings, the Enron materials contradicts that.

Post #85

Originally Posted by Francesca R

Nobody has claimed this. But then of course if they had, you would be able to point that out, wouldn't you?

But you said in post 68, "Show us a publicly traded company whose investor relations literature states that it pursues ethics to the detriment of shareholder value. You can't do that. "Choosing to make ethics part of the brand" means precious little."

It seems to me that the Enron policy statement contradicts your assertion. Certainly companies whose brand incorporates corporate responsibility such as Ben and Jerry's contradicts your assertion.

Originally Posted by Francesca R

And it is ironic in the extreme that you use Enron Inc. as an example of a company ostensibly proffessing to act on the basis of ethics, since this rather makes my earlier point (and that of at least three others in this thread) that:

The point wasn't that Enron kept to its written policies, the point was even a corporation that flouted such policies in practice, promoted them in writing. Your post says I cannot show such considerations in writing. But I did.

[Skeptic Ginger]

Originally Posted by Darat

skeptigirl - the likes of Francesca R, Jaggy Bunnet and I have been posting and talking about "corporate responsibility" as it is defined in laws and regulations and used in the opening post. Does that help make you understand why you have been creating strawmen of our points?

From what I have read of their posts in this and other threads I doubt very much that Francesca R, Jaggy Bunnet believe that individuals do not have a moral and/or/perhaps an ethical duty, even when they are officers of a company, however an individuals personal stance is not what this thread was about.

How are you separating an individual's decision as a corporate decision maker from the corporation's actions? Are you claiming it offers an excuse for the individual or not?

[Darat]

skeptigirl - you are still not getting the point I was making - that the legal obligations on a company's officers are one thing i.e. legally binding, ethics are another thing, i.e. not legally binding.

[Jaggy Bunnet]

Originally Posted by skeptigirl

But you said in post 68, "Show us a publicly traded company whose investor relations literature states that it pursues ethics to the detriment of shareholder value. You can't do that. "Choosing to make ethics part of the brand" means precious little."

It seems to me that the Enron policy statement contradicts your assertion. Certainly companies whose brand incorporates corporate responsibility such as Ben and Jerry's contradicts your assertion.

Could you highlight / link to the parts of the Enron policy statement that you think confirm they will act to the detriment of shareholder value?

[Skeptic Ginger]

Originally Posted by Darat

skeptigirl - you are still not getting the point I was making - that the legal obligations on a company's officers are one thing i.e. legally binding, ethics are another thing, i.e. not legally binding.

I get your point. I just don't agree with it. The single legal ruling on profit mandate has been questioned by top legal experts. Why should I then assume this position is backed by some ultimate authority? My point was, there was a legal limit to corporate decision making. The idea that limit only considers profit ignores the fact it considers legal limits. The idea some judge would decide a corporate decision maker was obligated to pay Ford workers the going rate and not more than that is one thing. Having some judge declare the corporate decision makers were obligated to leave a trail of destruction in the Niger Delta is quite another.


And in addition, Francesca claims the law is to be ignored in the name of profits if one can get away with it. So is she saying legal responsibility toward company profit outweighs other legal responsibilities?

[Skeptic Ginger]

Originally Posted by Jaggy Bunnet

Could you highlight / link to the parts of the Enron policy statement that you think confirm they will act to the detriment of shareholder value?

I did.

Quote:

Principles of Human Rights...Enron's Visions and Values are the platform upon which our human rights principles are built...

Business Ethics....highest ethical standards...Moral as well as legal obligations will be fullfilled...Advertising and promotion will be truthful, not exaggerated or misleading...

Compliance with the Foreign Corrupt Practices Act...

Compliance with antitrust laws ...Both the spirit and the letter of antitrust laws are to be followed...

Compliance with environmental laws...the company is committed to environmental protection....

Where in here do you read, "unless it isn't in the interest of our profits"?

[Francesca R]

Originally Posted by skeptigirl

So in other words, you think the subject of the consequences of a decision which will assuredly end up screwing over thousands of people in the name of company profits should never enter the discussion. I can see why you don't want to clarify this position. It is pretty atrocious.

It can only enter the discussion to the extent that it affects shareholder value. And there are various ways in which it can do that--some of which you mention yourself. But this is the truth of the way it works, however much you dislike it.

Quote:

Capitalism is the most productive and efficient economic system. However, because the range of human behaviors extends from pure personal greed to pure altruistic humanitarianism, one cannot rely strictly on market forces to result in the best outcome for humanity of which we are all a part.

I don't think anyone has said that one can/should. What I have taken issue with is the idea that the corporate mandate can or should be magically re-interpreted so that things take care of themselves.

Quote:

Regulated capitalism is the best system.

I completely agree.

Quote:

Where the system is going wrong currently is twofold.

One is free flow of accurate information. If shareholders knew, for example, what the decision makers in Shell Oil were doing in the Niger Delta, the majority of the shareholders would not approve. The mainstream news media in the US and in many other Western countries is not currently functioning to keep people informed of such inhumane decision making. So those who can easily turn their faces away and blame someone else are not confronted with the consequences of their decisions.

You are blaming the media for not exposing information about corporate behaviour that the corporations themselves have a vested interest in concealing. How do you expect to incentivise the flow of that information? Wishing for it won't make it appear.

Quote:

Taking this a little further, however, it is my belief that decisions which have been bad for many populations were made because the decision makers did not view the people involved as human. Profits and a good life for Americans was considered while some of the decision makers considered the people in other countries as less than human. That's how one kills in a war, and that is how one ignores human tragedy in a distant land.

If you see my case example of Anderson v GMC, you will appreciate that it is routine that cost-benefit analysis is the basis of company decisions. Human beings are viewed as human beings to the extent that they are agents that affect profitability. That is the way it is.

Quote:

it is harder to ignore the workers making Nike shoes in Indonesia. The way I see it, the corporate decision makers had it wrong all along. Had they allowed union organizers and decent wages in third world countries for the last century, they'd have customers instead of insurgents. Had they supported real democracies in third world countries instead of paying off dictators to do the dirty work of suppressing whole populations, all corporations would have had a little less in short term profits and a lot more in long term gains instead of short term gains outweighed by long term losses. Like I said, they'd have customers instead of insurgents.

That may be so. If it is, then the corporations were guilty of not acting in their owners' best interests. It would not be that their mandate is wrong, but that they did not pursue it optimally.

Quote:

Are corporations responsible for the immoral decisions of the corporate decision makers? Why the hell not?

Yes they are. Who said otherwise?

Quote:

Free market forces are not functioning when the cost of the pollution of a product or the disposal of a product is not incorporated into the cost of the product to the consumer.

I almost agree. In an ideal situation the external cost of every action should be transferred by pricing mechanisms back to whoever intiated the action. That means to the company. How the company then deals with it is it's own decision.

Quote:

Nor are free market forces operating when corporations can lobby the US government at taxpayer expense to rally forth the troops to defend the literal theft of the natural resources of a foreign country.

The use of public money in departmental lobbying is a matter for governments and their electorates. In fact, lobbying is sufficiently lucrative that it is (I think) usually private money that is spent on this. And private money is accountable to shareholders only. In fact--as a result of this--many fans of government regulation of business (not including myself) go the opposite way to you and argue that taxpayers (=the public) should be the only ones paying for business lobbying and that company donations should be banned. That way, the public (theoretically) has control of how much is spent and for what. It is bizzare if you were to imply that companies should use more of their own money to pay for lobbying governments. I don't know exactly what you are calling for here though--please say.

Quote:

In order for the market to function, the actual cost of the product needs to be charged to the consumer. And the US government should not be getting involved in the artificial lowering of the cost of goods sold.

As a blanket statement I disagree. What about subsidies for medical research which is in the public interest?

Quote:

The law must require the producer be responsible for the product's waste and pollution.

That is an ideal, yes. But don't you see that you are agreeing with my (and others') points? Up to now you seem to have suggested that companies should somehow be expected to do this themselves without laws. If you did not mean that, it is surprising that you railed against me saying that the law has to do it because companies will not willingly do it on their own.

Quote:

And our military cannot be defending corporate rights to natural resources in other countries. Otherwise capitalism cannot function properly.

Is this just about the public (government financed) military? What about companies hiring private armies to protect their interests in the realm of natural resources abroad? Do you think it is better that Evo Morales can at any time dispatch his own soldiers to a US oil company in Bolivia and confiscate assets that the company legally acquired?

Quote:

I see no reason why what is best for the individual is not also best for the commons.

This is very odd. Your (long) list of issues in this thread proves beyond a scintilla of doubt that what is best for an individual (or a company shareholder) is not always best for society.

Quote:

We just need a lot of tweaking to correct for a lot of individual decision maker fallibility.

I think it is fully incorrect that you label this "fallibility". If you said "incentive structure incompatibility" you would be making strides. It is not fallacious for company decision makers to prioritise shareholder profits above public interest.

[Francesca R]

Originally Posted by skeptigirl

The issue is, since you've been claiming morals are never discussed in board meetings, the Enron materials contradicts that.

Incorrect, I have not, please retract that or post proof I said it.

Quote:

But you said in post 68, "Show us a publicly traded company whose investor relations literature states that it pursues ethics to the detriment of shareholder value. You can't do that. "Choosing to make ethics part of the brand" means precious little."

It seems to me that the Enron policy statement contradicts your assertion. Certainly companies whose brand incorporates corporate responsibility such as Ben and Jerry's contradicts your assertion.

No, they do not. Unless you are able to furnish evidence that they promise to do this in cases where it is detrimental to shareholders. Which it seems you are not.

ETA: Even Enron's code of ethics document contains as the company's "vision" (which you did not quote and which typically shapes a company's "values"): "Enron's vision is to become the world's leading energy company [ . . . ]"

Doesn't sound like any sacrifice is being made on behalf of shareholders here.

For someone who is apparently concerned about the negative externalities of company behaviour, why are you simultaneously willing to swallow a line that a company will ever look out for public interest or ethics for their own merit?

[Jaggy Bunnet]

Originally Posted by skeptigirl

I did. Where in here do you read, "unless it isn't in the interest of our profits"?

Wrong question. You were asked to produce a document that stated they would act in an ethical manner to the detriment of shareholder value. So the question is:

Where in here do you read "to the detriment of shareholder value."?

And the answer is, you don't. Because it doesn't say that.

[Almo]

Originally Posted by skeptigirl

The problem with claiming the law delineates what is the ethical limit of behavior is the fact we are in a global economy. All countries are not run by functioning democracies and therefore the laws in many countries are not within ethical limits.

I gotta say that certain democracies aren't really doing that well on the ethics scoreboard. But your point that various countries don't keep good ethical standards in their law is a valid one.

[Skeptic Ginger]

Since I'm being accused in another thread of not remaining in this one long enough to have repeated myself to their satisfaction...

Originally Posted by Darat

skeptigirl - the likes of Francesca R, Jaggy Bunnet and I have been posting and talking about "corporate responsibility" as it is defined in laws and regulations and used in the opening post. Does that help make you understand why you have been creating strawmen of our points?

From what I have read of their posts in this and other threads I doubt very much that Francesca R, Jaggy Bunnet believe that individuals do not have a moral and/or/perhaps an ethical duty, even when they are officers of a company, however an individuals personal stance is not what this thread was about.

This fails to address the link to legal opinion citing the claim of corporate decision makers being bound by some profit motive to be a side note in another case and not something that has the rule of case law as it is often cited as having. The link can be found in this post:

Originally Posted by fxm

Most famous, to the point of legendary. Take a look at this paper for more information.

"Maximizing profits" really is an oversimplification of corporate purpose, like "survival of the fittest" is an oversimplification of evolution.

I am not necessarily arguing about anyone's personal ethical views here. But I don't buy the legal obligation premise and I see it as an excuse for an individual's unethical corporate decisions. If you all are going to argue it is simply the law, then you need to support why that is given the nature of the trial finding (a side note) that the premise is cited from. It seems to me that a willingness to accept such a premise adds to the likelihood one would fail to question its validity.

[Skeptic Ginger]

Originally Posted by Jaggy Bunnet

Wrong question. You were asked to produce a document that stated they would act in an ethical manner to the detriment of shareholder value. So the question is:

Where in here do you read "to the detriment of shareholder value."?

And the answer is, you don't. Because it doesn't say that.

From post 82 again:

Quote:

Enron's Corporate Code of Ethics
Principles of Human Rights...Enron's Visions and Values are the platform upon which our human rights principles are built...
Business Ethics....highest ethical standards...Moral as well as legal obligations will be fullfilled...Advertising and promotion will be truthful, not exaggerated or misleading...
Compliance with the Foreign Corrupt Practices Act...
Compliance with antitrust laws ...Both the spirit and the letter of antitrust laws are to be followed...
Compliance with environmental laws...the company is committed to environmental protection....

Where in here anywhere does it say that profit outweighs these principles? Where does it say anywhere in this document profit is supreme to these principles?

And the reason I posted it in the first place is claims were made in this thread that if ethics were discussed in a board meeting as an important decision criteria regardless of its impact on profits, the board would be violating the corporation's profit motive obligations.

While Francesca claims I have falsely attributed that to her, this post suggests the same thing and the following post by Darat gets specifically to the point.

Originally Posted by Francesca R

I concur that the legal mandate of a corporation should consist of a duty to maximise shareholder value above all else, this being subservient to obeying the law in principle (although breaking the law can be seen to be logically rational if the financial consequences of doing that are expected to be higher than obeying it).

The only credible way to align this with socially responsible behaviour is to rig incentives so that socially responsible decisions are also good business decisions, and so that socially irresponsible ones are bad business decisions. Friedmanites would not tend to think any great regulation is required to do this. Others (including myself) would disagree. The attitude of the public influences what those incentives are.

It is technically impossible to mandate a company to "behave responsibly" unless there is a (relative) financial payoff IMO....

(emphasis mine)

Originally Posted by Francesca R

...Companies do not have ethics, unless appearing to have them (with no actual sincerity) produces financial benefits....

Originally Posted by Darat

I have to agree with you, the only time that I've ever seen or heard "breaking the law" being considered by a board in terms of anything bar financial repercussions was when it might result in criminal action directly against the directors.

I am not saying all companies operate in this way but many do.

(emphasis mine)



Maybe these members feel they are merely describing the world that is. That this behavior is common is not in doubt. But it seems to me they are describing the world as they accept it. I do not. And if corporate decision makers feel their profit mandate excuses their unethical behavior, I and others do not agree. The premise should be challenged just as one challenges the emperor's invisible clothes.




I thought these positions were already clear. Sorry for the redundancy. I certainly don't have any illusion this clarification will change anyone's views.

[ladyattis]

On the issue of responsibility and corporations... You won't get any, because these sorts of institutions are protected by law through the State. In many ways, you could call a corporation a mini-State in its own right in as much as it can do things you as a person cannot. A corporation can get a government to annex your house. A corporation can take on an infinite debt liability, but none of that ever has to transfer to the people that ran up the debt (btw, you can't as a person do this by law.). A corporation can violate human rights (you can't without getting taken to the pokey). And so on. Why? Because the corporation is simply a business that has given moral sanction to the State by incorporating or becoming corpus (a body of) the State. Be it New York, Kansas, Washington (state), and so on.

Thus, you won't get any real responsibility out of them. Besides, the only real responsibility any business should have is three fold. First, to its investors to give back on their returns honestly (no cooked books, no tax write offs and such). Second, to provide its products and services honestly to its customers. Third, to make money.

Any other so-called responsibilities like giving to the United Way or some such is utter rubbish. I'd rather see a corporation be held legally accountable for something more substantial like a polluter pays law instead of me or anyone else through our tax dollars paying to clean up modern pollution disasters (in which the corporation or business in question is still in existence and can pay to clean it up). Or that EULAs on software get struck down unless they're honestly two-way agreements (not the current kind where a software maker can literally yank your CD away from you if they don't like what you do with it even if it's truly not criminal).

Those are the sorts of responsibilities that make sense because they follow from the economy as anything that impedes it is a negative externality that each business must pay for just as we pay for it everyday in our own individual lives.

[balrog666]

Originally Posted by skeptigirl

From post 82 again:Where in here anywhere does it say that profit outweighs these principles? Where does it say anywhere in this document profit is supreme to these principles?

Do you really think a corporation's "Code of Ethics", "Code of Conduct", "Credo", or "Ethics Policy" is anything more than window dressing?

[volatile]

Originally Posted by balrog666

Do you really think a corporation's "Code of Ethics", "Code of Conduct", "Credo", or "Ethics Policy" is anything more than window dressing?

I'm sure she doesn't - in fact, that's exactly why she's pissed off. And why I agree with her.

[Skeptic Ginger]

Originally Posted by volatile

I'm sure she doesn't - in fact, that's exactly why she's pissed off. And why I agree with her.

I vacillate on the percentages. Sometimes it seems self-serving greed is rampant in corporate board rooms and other times I have to think that the majority of the world's people are not self serving greedy pigs and some people with consciences must work in some corporate executive positions.

What I really disagree on with people in this thread is the argument that because unethical behavior is often the norm, we should just accept that as a fact or we must be commie pinkos or naive. There is the alternative of calling bull on the claim that profit goals trump ethics. There is the option of at least speaking up against such a concept that there is a profit mandate excuse for unethical corporate behavior, especially in this case where it supposedly rests in case law which as has been pointed out, is a stretch of the facts.

[Skeptic Ginger]

Originally Posted by balrog666

Do you really think a corporation's "Code of Ethics", "Code of Conduct", "Credo", or "Ethics Policy" is anything more than window dressing?

That policy was from Enron. Your question suggests you are missing the point.

[balrog666]

Originally Posted by skeptigirl

That policy was from Enron. Your question suggests you are missing the point.

Your answer suggests that you simply don't understand corporations qua corporations. Again.

Perhaps you overlooked the fact that all of them have and use similar window dressing whenever it serves their purpose.

[marting]

Originally Posted by icerat

Note that privately held companies are a different kettle of fish.

Actually, they aren't. At least in the United States. Private, for profit, companies have the same fiduciary obligations to legally maximize shareholder value that public companies do. These are obligations of both public and private companies under state law, not federal. A public company is simply a company who's stock is publicly tradeable as regulated by securities laws. This involves major regulation of disclosure requirements but does not directly affect the corporation's purpose nor the fiduciary obligations of it's directors and officers.

In the case of Ford, he explicitly stated a goal that he felt was of more importance and at the expense of shareholder value. The only way the directors can do this legally is with the consent of all shareholders.

Generally, happy customers and employees are key ingredients in maximizing shareholder value. But it is more necessary than sufficient.

[marting]

Originally Posted by skeptigirl

What I really disagree on with people in this thread is the argument that because unethical behavior is often the norm, we should just accept that as a fact or we must be commie pinkos or naive. There is the alternative of calling bull on the claim that profit goals trump ethics.

A major portion of corporate law is trying to deal with conflicts of interest, especially self interest. This involves the dynamics of shareholders, board directors and officers. These often reduces the checks and balances corporate law tries to embed. Check out the writings of Nell Minow and R. A. G. Monks. They document how these conflicts of interest often lose money for shareholders. As for externalities, this is the proper area for government regulation and regulatory disclosure. The latter was a major failure at Enron while out and out fraud was the problem at WorldCom.

[balrog666]

Originally Posted by marting

A major portion of corporate law is trying to deal with conflicts of interest, especially self interest. This involves the dynamics of shareholders, board directors and officers. These often reduces the checks and balances corporate law tries to embed. Check out the writings of Nell Minow and R. A. G. Monks. They document how these conflicts of interest often lose money for shareholders. As for externalities, this is the proper area for government regulation and regulatory disclosure. The latter was a major failure at Enron while out and out fraud was the problem at WorldCom.

She's just arguing against another of her delusional, self-made strawmen. No one is actually arguing that we must condone, or accept, or even ignore, unethical behavior.

[Skeptic Ginger]

Originally Posted by balrog666

Your answer suggests that you simply don't understand corporations qua corporations. Again.

Perhaps you overlooked the fact that all of them have and use similar window dressing whenever it serves their purpose.

Your one way thinking is getting in your way here, balrog. The point of the post had nothing to do with what you seem to think it had to do with.

The comment was made that if language discussing ethics were to be recorded at an executive board meeting, the board members would be in trouble. That is what I was refuting.

[Skeptic Ginger]

Originally Posted by marting

...fiduciary obligations to legally maximize shareholder value that public companies do.

Making my same point yet again for the benefit of those who think I haven't (not you), every decision maker draws the line somewhere within this obligation. Does the obligation require the decision maker to break the law and risk jail if that makes the shareholders more money? Is the decision maker obligated to bribe Nigerian officials and allow the deaths of thousands of Ogoni people as the result of oil pollution directly destroying the environment they depend on if the bribe is cheaper than pollution cleanup? Is the decision maker obligated to ignore pollution law violations and discharge toxins into the rivers in the USA at night because it makes more money for shareholders?

There is a continuum here. Do you really think a court is going to come along and say, you didn't maximize shareholder value because you didn't dump toxins in the river when you could have gotten away with it?

So the idea shareholder profit is a mandate above all other mandates is simply false. I am not talking about employee Christmas bonuses here. I am talking about clearly ethical and unethical, legal and illegal decisions with grave consequences.

Originally Posted by marting

...In the case of Ford, he explicitly stated a goal that he felt was of more importance and at the expense of shareholder value. The only way the directors can do this legally is with the consent of all shareholders.....

Again, this example ignores the kind of decisions corporate executives make that are not as clearly defined as following a profit mandate. I think the chances are pretty high that if the executives told the shareholders about some of the executive's decisions there would be many unanimous shareholder objections.