Friday, December 09, 2005

wsj wants to know 1.2

Wsj "Question of The Day" [poll 3712], How important should social concerns be to a company?

As of 12/9/05, responses to the question, removed from the virtual masthead, totaled 1937. The distribution was 664 [very important], 834 [somewhat important], 435 [not important]. The editors amended their introduction of the prompt context to the panelists’ lengthy debate (recorded elsewhere) by summarizing the argument of each in lieu of summarizing the c.v. of each.

Benjamin W. Heineman, Jr., senior vice president for law and public affairs at General Electric. He says, "Societies must develop institutional infrastructure, not just economic infrastructure, that will allow investment, growth, rule of law, and a meaningful balance between equity and efficiency. That is a task far beyond the capabilities or proper mission of corporations."

Ilyse Hogue, director of the global finance campaign for Rainforest Action Network. She says, "Arguing against responsibility is a sign of failed imagination...People are desperate for a definition of wealth that expands to centralize the health of individuals and communities."

Fred L. Smith, Jr., president and founder of the Competitive Enterprise Institute, a free market public policy group, and former senior policy analyst for the Environmental Protection Agency. He says, "The firm is a civilizing influence on society -- but its primary and most important role should not be sacrificed to utopian dreams."

This editorial strategem keeps wsj forum chat on virtual life support. At this time, wsj.com reported 44 approved comments or 2% of total respsonses, up from 31 as of midday, 12/6/05. Following are short-hand empirical references to my earlier observation.

From: Guest Dec-6 12:48 pm
To: WSJ.com Editors Poll (23 of 44) 3721.23 in reply to 3721.1

Businesses are successful, that is they are profitable, only when they provide goods and services that people need or want. If they are providing goods or services that people need and want at fair market prices, then by design they care about social concerns. Additionally, and this should be obvious, a business can only be successful if human beings exist who can buy, design, and make these products. So the logical conclusion is that all businesses must care about the well-being of its customers, employees, suppliers, etc. If capitalism works, then corporations that do not place a high degree of importance on social concerns should not survive. If we find that many corporations without social concerns are surviving and thriving, then we should ask why.

When people try to hide their actions from others, it is usually because the know they are doing something that they already know is wrong. Corporations that behave in socially and environmentally destructive ways also try to hide their actions from the public because they already know it is wrong.

Further, I think that a corporation actually has more of a responsibility to do what is best for long-term growth and wealth for its shareholders more than it has an obligation to create quick short-term wealth for its shareholders. With a view on the long run, any corporation will see that it is in the interest of all of its stakeholders for it be occupied with social concerns. Besides, shareholders are not an abstract idea. They are people who live in communities, buy products, have jobs, have families, want to be healthy,etc.

Placing a high importance on social concerns does not mean a corporation should give all of its profits away to charity. It means creating value without exploiting employees and consumers, and without dumping the environmental and social costs of production onto those communities who are least represented by the market, i.e. the poor. It also means other things, but you get the point.

Milton Friedman stated that while the social responsibility of a corporation is to increase its profits, it must do so in a manner consistent with the laws and customs of society. What do we want our customs to be?
Bill Conway
Philadelphia, PA


From: Donald Johnson Dec-6 2:36 pm
To: James Potter Poll (26 of 44) 3721.26 in reply to 3721.25

James,
Minimizing domestic abuse certainly is important, but no business that isn't in the business of reducing domestic abuse should be distracted by domestic abuse or any other social issues. Dometic abuse should be the business of the police, health care providers, churches, non profit organizations and various governmental agencies. Corporations shouldn't even contribute to the nonprofits involved in this or other issues, and they shouldn't let United Way harrass employees for contributions.

Instead, domestic abuse services and agencies must depend on taxpayers and contributors to support them, not employers. If employers are allowed to be the best in their businesses and aren't distracted by the hundreds of nonprofits that think they deserve corporate support, both the employers and the agencies will be better off.

From: James Potter Dec-7 12:05 pm
To: Donald Johnson unread Poll (44 of 44) 3721.44 in reply to 3721.26

Don
Perhaps I did not make myself clear on this point. I'm not suggesting that businesses subplant government and private agencies in combating social ills such as child abuse, domestic violence, and drug abuse. I'm saying companies should take a greater role in becoming more aware of these so-called silent crimes and, hence learn how such criminal acts directly and indirectly affect their employees and corporate profitablility. A long time ago, I learned in business that if you ignore a problem without addressing it head-on, you'll generally pay an unppleasantly high price. The same principal applies to addressing and trying to prevent social ills in society. In my opinion, anyone who thinks otherwise, is being fairly naive.

Jim

From: Donald Johnson Dec-6 2:19 pm
To: WSJ.com Editors Poll (33 of 44) 3721.33 in reply to 3721.2

Fred Smith's comments should be read by every member of a corporate board and top executives and managers in all organizations as well as by politicians and trial lawyers.

His message that creating wealth raises living standards, encourages education, improves health and nutrition and creates middle classes needs to be drilled into the heads of social idealists, corporate leadrs and the politicans.

Ben Heineman apparently has had tremendous influence on GE and its CEO, who appears to be bent on regulating GE's customers into buying their energy-related products and services. No wonder the company's stock is stuck in a narrow trading range. It's so busy satisfying the egoes of its top executives that it's not paying attention to its bottom line—short term nor long term. GE sells to utilities and other large organizations. We can only hope that their executives read this "debate" and tell GE to knock it off, which it will do if there is a big enough backlash.

Ilyse Hogue is what she posts—a narrow-minded, idealistic and power-hungry lobbyist who doesn't care how the cause that is making her career will hurt so many more people than it will help. Read her comments three times and you'll realize she has little of consequence to say.

What should all business executives and owners do, regardless of the size and power of their enterprises?

1. Recruit smart, honest and strong directors for their boards, and make sure that those boards hire executives who reflect their values and strengths.

2. Follow GE's example of both obeying the spirt and letters of the law and requiring that their employees and suppliers do likewise. Treat customers, suppliers and neighbors like you treat your employees and shareholders.

3. Operate the business to make satisfactory profits that are generally acceptable (a judgment call) to all involved in the business, not maximum profits that attract competitors, political predators and the ultimate destruction of their enterprises.

4. Avoid getting sucked into contributing to charities that support higher taxes so you'll contribute more to get bigger tax deductions, academics who produce misleading scientific reports on global waming and other topics in an effort to generate new research grants, the performing arts whose practitioners think the markets don't apply to them and religious and social issues advocates who want to tell us what to believe and how to live.

5. Make your organization as open and transparent as possible, because there are no secrets worth keeping in organizations that can't execute their plans (Sears and Montgomery Wards) and secrecy only breeds rumors, suspicion, conspiracy theories and political predators.

6. Refuse to lobby for laws and regulations that give your organization a competitive advantage and harm society, your employees, your shareholders, your contributors and your customers. Oppose laws that favor your industry and company over customers and competitors. (I know, large companies around the world use their legislators to regulate competitors out of business and to protect themselves from disruptive technologies and changes in their markets. Just because everybody does it doesn't make it ethical.) Bribing politicians with campaign contributions is as wrong as bribing them with paper sacks full of cash. What's GE's record on campaign contributions?

7. Remember, without integrity at all levels, you have nothing, including no self respect.

From: Guest Dec-6 3:42 pm
To: Guest unread Poll (31 of 44) 3721.31 in reply to 3721.20

Louise: Your leftie agenda was tried in communist Russia and guess what, it did not work. There is no country in the world that has become great or will become great if its economy is controlled by its government.

Corporations exist solely to make profit for their owners; its the owners risk and the owners reward. This simple, greed based concept results in an economic engine which creates the wealth of nations. By the way in the American economy most of the owners are the citizens at large and they are known as stockholders. Any of them can share in the success, know as profits, of the company through ownership, and in some cases have done very well. Have you heard of the number of millionaire employees at Microsoft?

I feel sorry for anyone who believes they must depend on the government to succeed in life.
Lynn Hoover

From: Guest Dec-5 11:51 pm
To: WSJ.com Editors Poll (5 of 44) 3721.5 in reply to 3721.1

Corporation should not be allowed to do anything except make money. Political, religious, and charity decisions can be made by the individual shareholders. How can we trust corporations to be civic, moral, ethical, or righteous?
Louise Jones
New York, NY

From: Guest Dec-7 6:33 am
To: Guest unread Poll (41 of 44) 3721.41 in reply to 3721.5

Ah, but my dear you are missing the point. Corporations ARE made up of shareholders, management, workers. All individuals. Those at the top - the people - are the one's who can't be trusted. Money begets power, under capitalism, and power translates to corruption in far too many instances.

So I say YES, it is righteously incumbent upon The Company to be beholden to have a social conscience built into it's mission statement, there should be profit sharing amongst every worker not just those at the top of the food chain. Additionally, major corporations such as pharmaceuticals and insurance companies should be made to share their profits, publically.

That's all for now.
Louise Friedman

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