Sunday, October 24, 2010

For Poor Countries, The Problem is Not Unethical Businesses, But That There Aren't Enough of Them

"In South Africa, where more than a third of the workforce is jobless, the problem is not that corporations are unethical but that there are not enough of them. One reason is that South Africa’s leaders blithely heap social responsibilities on corporate shoulders. Strict environmental laws cause long delays in building homes. This is nice for endangered butterflies, but tough for South Africans who live in shacks. Such laws also slow the construction of power plants, contributing to the rolling blackouts that crippled South Africa in 2008. South African labour laws make it hard to fire workers, which deters companies from hiring them in the first place. And a programme of “Black Economic Empowerment”, which pressures firms to transfer shares to blacks, has made a few well-connected people rich while discouraging investment."

~The Economist article "Companies Aren’t Charities"

32 Comments:

At 10/24/2010 5:00 PM, Blogger sethstorm said...

Unfortunately, there can be a ton of businesses and all of them act without said ethics. See the larger Third World countries, and it's a whole lot of literal terminations of life for critics.

But don't let that get in the way of defending the indefensible.


South African labour laws make it hard to fire workers, which deters companies from hiring them in the first place

Make it hard not to hire uniquely, and directly. Businesses are not to be the Almighty by being able to play that role.

 
At 10/24/2010 5:05 PM, Blogger sethstorm said...

This comment has been removed by the author.

 
At 10/24/2010 6:07 PM, Blogger sethstorm said...


Companies have virtually no powers of coercion

Threaten to move jobs out of a place if they don't get their way? Coercion, more powerful than a gun.

The author of that article is wrong, simply trying to cleanse entities that cannot be cleansed.

 
At 10/24/2010 6:26 PM, Blogger geoih said...

Quote from sethstorm: "Threaten to move jobs out of a place if they don't get their way? Coercion more powerful than a gun."

The people with the guns (i.e., the state) are creating a deficiency in all jobs by coercively stiffling the market, and you're calling the people using their property as they please coercive.

Maybe the people of South Africa should just use a different government to run the country. Oh yeah, the government has a monopoly on coercive force, and anybody not wanting to do work under their rules have only one option: work someplace else.

 
At 10/24/2010 7:59 PM, Blogger sethstorm said...


The people with the guns are creating a deficiency in all jobs by coercively stiffling the market, and you're calling the people .... coercive.


But it does not change the fact that the business is coercive.

 
At 10/24/2010 8:25 PM, Blogger morganovich said...

seth-

your definition of "coercive" is too inclusive to mean anything.

if a business is coercive by hiring cheaper workers, then a worker is also coercive by threatening to leave if their wage demands are not met or even demanding high wages for low wage work.

they will drive a company out of business if their demands are too high.

so who is coercing whom?

if you demand $10 to work and a company offers $6, who is being coercive?

you also seem to have this notion that you are entitled to a job and if a company fails to hire you, they are doing wrong by you and unfairly keeping you out of the job to which you have a right.

that's not how it works. people willingly choose employment and a firm willingly chooses to employ them. that's consensual, not coercive.

of course there will be bargaining over terms, but a company no more coerces you by failing to hire you at your demanded wage than you coerce a corner store by not buying candy you think is overpriced.

businesses hire people to do jobs. this provides mutual benefit. if it doesn't, the hire won't happen (at least not in a fair marketplace). you are arguing against coercion where there is none by recommending coercion by government.

by your definition, a girl who breaks up with you for another guy is coercing you. hell, she would have coerced you by not dating you in the first place.

can you really not see that by making it more expensive to hire people, governments lessen the number of jobs? price goes up, demand goes down. this is utterly fundamental.

 
At 10/25/2010 8:06 AM, Blogger Hydra said...

"...can you really not see that by making it more expensive to hire people, governments lessen the number of jobs?"

=================================

Well, yes, but which jobs don't happen?

The least profitable ones. The government may well have a valid interest in having fewer jobs and better ones.

Anyway, assume the title is correct. You might solve one problem, not enough jobs by having more businesses, but if they are all unethical businesses you may have swapped one problem for a worse one. It is hard to see how a swarm of unethical businesses are good for anyone other than the owners.

 
At 10/25/2010 10:16 AM, Blogger morganovich said...

in a country with unemployment as high as south africa, are you seriously suggesting that they ought to demand only high paying jobs as opposed to creating lots of them and the positive economic cycle that builds?

 
At 10/25/2010 10:19 AM, Blogger Buddy R Pacifico said...

The corporate tax rate in South Africa has been lowered from 37.8% to 28%. The tax on dividends is now 10%. Contrast that with the U.S. which has a 35% corporate tax rate and a dividend rate that will likely rise from the temporary 15% to probably 20 to 25%. Social stability is very important though, so it may take a long time to show positive results in SA.

 
At 10/25/2010 10:38 AM, Blogger morganovich said...

buddy-

tax policy alone is not the whole picture. they key problems in SA are demands that employers pay for health care and housing as effective arms of the government driving up effective wages and laws making it very difficult to fire workers making companies cautious.

their tax cut is laudable, but it's not enough if there are too many other cost burdens.

they seem to be letting the perfect be the enemy of the good.

broader employment would start a variety of virtuous cycles that are being blocked by the current policy.

 
At 10/25/2010 3:19 PM, Blogger geoih said...

Quote from Hydra: "It is hard to see how a swarm of unethical businesses are good for anyone other than the owners."

What is an "unethical" business?

 
At 10/25/2010 4:40 PM, Blogger Mike said...

I'll answer your question, geoih.
An unethical business is a person or company that wants to make as much profit on the goods they produce and/or sell, based on what the market will bear.

I would like all the folks complaining about unethical businesses (ya know, all those evil folks trying to get the best price for their products and labor in order to keep/make more money) to email me when you decide to sell your home or other appreciating assets.
I'm certain that with your high moral standards you would begin and end the negotiation process at a price that gives you next to nothing over original cost + inflation. Anything more than that and you are clearly in collusion with the market.
Fortunately, I don't share your morals, so I should be able to flip your goods for a profit with little effort.

I'll be waiting to hear from you....and waiting....and waiting....

 
At 10/25/2010 11:55 PM, Blogger Ron H. said...

"by your definition, a girl who breaks up with you for another guy is coercing you. hell, she would have coerced you by not dating you in the first place."

I didn't realize Seth was having trouble with his social life, but I guess it only makes sense. Being unemployed for so long and having no marketable skills and living in his mother's basement likely makes it hard to attract serious dates.

 
At 10/26/2010 12:07 AM, Blogger Hydra said...

I have no problem with profits. My companies all depend on profits.

I have a problem with lying, cheating, stealing, chiselling, misrepresentation, substandard products, obfuscation, engineered obsolescence, unrepairability, excessivel complication, procrastination, and premature failure.

If you are so stupid that you do not understand the difference between profits and ethics, then your business dwarves to fail, or better yet, be investigated by government.

 
At 10/26/2010 12:20 AM, Blogger Hydra said...

It is not a positive economic cycle if the job does not pay enough to live on, or if the working conditions are such to kill you.

 
At 10/26/2010 2:28 AM, Blogger sethstorm said...


your definition of "coercive" is too inclusive to mean anything.


You try to make it sound innocent, but the reality is that businesses do use that to coerce. If they don't get a favor or get it in a large enough sum, they threaten to take jobs out. The loss of jobs and tax revenue is as powerful as any physical weapon.


that's not how it works. people willingly choose employment and a firm willingly chooses to employ them. that's consensual, not coercive.

The problem with that is you leave out how they made the decision. If you add all that surrounding information that you omit (in order to make your point), the "consent" between employer and the employed disappears quickly.



What is an "unethical" business?

One that tries to play the government like a fiddle. One that acts dishonestly when talking about subjects like offshoring (with regards to their company's practices). One that attempts to whitewash their support for labor practices in Third World countries.

 
At 10/26/2010 2:33 AM, Blogger sethstorm said...


Anyway, assume the title is correct. You might solve one problem, not enough jobs by having more businesses, but if they are all unethical businesses you may have swapped one problem for a worse one. It is hard to see how a swarm of unethical businesses are good for anyone other than the owners.

Case in point, the entirety of work that is being offshored to the Third World. Plenty of businesses, plenty of disappeared critics. Those countries have had plenty of time to change, yet have firmly remained despotic. The only change is that the Third World uses business to whitewash government action.

 
At 10/26/2010 9:34 AM, Blogger juandos said...

"I have a problem with lying, cheating, stealing, chiselling, misrepresentation, substandard products, obfuscation, engineered obsolescence, unrepairability, excessivel complication, procrastination, and premature failure"...

Well hydra do what people with common sense do, they take their money somewhere else and shop for the goods or services from a company that has their 'ethical standards'...

Are you from California by chance?

 
At 10/26/2010 9:38 AM, Blogger juandos said...

"It is not a positive economic cycle if the job does not pay enough to live on, or if the working conditions are such to kill you"...

Well hydra get a different job then...

Let morganovich explain to you about 'value added' which he does an excellent job of...

 
At 10/26/2010 9:39 AM, Blogger juandos said...

"Case in point, the entirety of work that is being offshored to the Third World"...

Well sethstorm here's your chance to start an 'on shore' business so you can pay people whatever you think is eithical and good...

 
At 10/26/2010 5:48 PM, Blogger Mike said...

Hydra,
You say you have no problem with profits since all your companies depend on them. I believe you're a consultant and not an owner...
I do have a few questions for you:

1. With all the "lying, cheating, stealing, etc" going on in all these businesses, what are you currently doing to blow the whistle, naming names and specifically calling out all of these horrible people....or, do you only work/deal with saints?
If your client companies are terrible, and you aren't specifically, loudly screaming from the rooftop (while taking money for yourself) aren't you part of the machine? Or, perhaps, worse...since you find them so repulsive?
On the other hand, if your clients are mostly good (proving, even to yourself, that some or many companies are fine) why would you broad-brush others?

2. You say a swarm of unethical businesses wouldn't help anyone... wouldn't the swarm itself help? It's certainly better to have companies competing than not, and I can't see any way you can dispute that the consumer must necessarily benefit in price, service or some other way - or company #2 through #50 would have no model in the first place. I do know one thing about businesses; they care much more about beating their competition than ripping off consumers and there's really only one way to do that...getting and keeping more customers. If you know of another way, please advise. I'd prefer to make easy money rather than trying to figure out how to beat my competition all day.

3. Are you sure you've never sacrificed ethics for profit in any transaction? Did you really change the oil every 3k miles before you sold that car? Did you make sure to tell the realtor/inspector that your oven only works most of the time?
Ever sign a contract with a client, knowing you were getting more than you probably should, based on the job?
If you can tell me you've never done anything like that, congrats! You're the best person I have ever had any conversation with.

If not, ooops. You may be one of....them.....

I may be too stupid to understand the difference between ethics and profits, but I am smart enough to understand reality from fantasy. I also have a pretty good idea what the difference is between a civil exchange of ideas and the angry ramblings of a condescending egomaniac.

 
At 10/26/2010 9:09 PM, Blogger Hydra said...

You assume perfect knowledge and true competition. Iwould never fly on an airplane juandos repaired, due to his advertised low ethical standards, but how would I know? I could pick another airline, but maybe he works for a job shop and there is no real alternative.

No, I have never done any of those things. I have never found it necessary to misrepresent a sale in order to make a profit and stay in business. I could not hold the job I have without the highest standards. (One of my clients hired me.) I own or manage five different small businesses in my spare time, and each of them is profitable. I pay my employees above the local customary wage, and they are worth it.

I like the swarm argument. Problem is it takes too long. You could chew up a lot of lives before you see any improvement. Besides, competition works in both directions. In one of my businesses I know I provide a better product, yet I am no threat to my competitors. I'm too small to notice.

In a world of perfect theory and instant gratification, and perfect knowledge and savagery, you guys would be right.

What you are missing is a true level playing field. No one is out there regulating how the wildebeests organize for their own protection. I see no reason why labor cannot organize to compete, same as businesses organize to compete.

 
At 10/26/2010 9:15 PM, Blogger Hydra said...

I have customers that buy my goods and flip them for a profit. I could do the same, but then I'd have to hire a salesman. It profits me to let my customers do that work, because it is time consuming and my plate is more than full.

 
At 10/26/2010 9:39 PM, Blogger Hydra said...

Actually, I scream a lot. I have created quite an uproar in numerous business establishments when I found something shady. I have a whole John Belushi / Mel Gibson act that consists of convincing some hapless clerk that I'm a raving maniac about to come over the counter and take my money back.

If I go over the top the cops are called and other customers are headed for the door.

If I get the tone just right they are nodding their heads and high fiving.

By and large we are a nation of courteous sheep. Its astonishing what a little leadership can do.

The important thing is not to lose your head over it. It is all an act I can turn on and off like a light. That really confuses people.

I actually had a plumber pull out a baseball bat from behind the counter. That told me all I needed to know about his customer relation policy.

Crap, all I wanted was my drawings back, after he repeatedly failed to show!

Needless to say he lost my account, but I know the asshole is still in business and still screwing people. He stiffer a contractor friend for fifty grand, which was eventually collected. After the contractor went broke.

Ahh well that's business, juandos style.

 
At 10/26/2010 9:45 PM, Blogger Hydra said...

Angry ramblings of a condescending egomaniac.

I love that, can I use it?

You are talking about juandos, right?

I dropped a graduate school course once. The professor was an obvious nut and I left after the first class.

Turned out he never had a degree, and he was teaching at 6 schools.

 
At 10/26/2010 11:38 PM, Blogger Hydra said...

I don't know all of what my clients do. They could be cheating customers. All I know is what I do for them and what they get in return.

I do get a flavor of the corporate culture from the people I work with.

One company had bad personnel management and bad business strategy ( not diversified). They got acquired, which support your theory.

1 had a bad smell That I could not Put my finger on. Executives went to jail.

1 I refuse to work for. That turned out to be arthur
Anderson.

So my experience is competition one, government interference
, two.

Everybody else seems to muddle through, honest or not so much.

Competitive or not, including my businesses.

 
At 10/26/2010 11:38 PM, Blogger Hydra said...

I don't know all of what my clients do. They could be cheating customers. All I know is what I do for them and what they get in return.

I do get a flavor of the corporate culture from the people I work with.

One company had bad personnel management and bad business strategy ( not diversified). They got acquired, which support your theory.

1 had a bad smell That I could not Put my finger on. Executives went to jail.

1 I refuse to work for. That turned out to be arthur
Anderson.

So my experience is competition one, government interference
, two.

Everybody else seems to muddle through, honest or not so much.

Competitive or not, including my businesses.

 
At 10/27/2010 6:41 AM, Blogger geoih said...

Quote from sethstorm: "The loss of jobs and tax revenue is as powerful as any physical weapon."

Again, you highlight the main issue. You assume that there is some sort of right to jobs and taxes.

 
At 10/27/2010 6:46 AM, Blogger geoih said...

Quote from Hydra: "You assume perfect knowledge and true competition."

You are correct that there is no such thing, but then you are willing to grant monopoly power to the state to control and manipulate the market based on the same assumptions.

 
At 10/27/2010 8:53 AM, Blogger Hydra said...

" willing to grant monopoly power to the state "

=============================

States do not have monopoly power, that is why we have wars.

I believe the preamble states why we have government. What you call manipulating the market, I call equalizing property rights.

Otherwise free market just means I get a club and take what I want, then you get a gun and a gand to protect yourself, and someone else creates a bigger and stonger corporation, until we have one big enough to call a state and it goes to war against its neighbors to take what it needs.

Free competition, right?


The system we have isn't perfect, but it is better than nothing. We know that because we tried it once.

 
At 10/27/2010 9:01 AM, Blogger Hydra said...

I used change my oil every 5000 miles because the 3000 mile crap is just a (partially untruthful) sales gimmick promoted by the oil changers. My new car is certified for 10,000 miles between oil changes, if you use synthetic oil.

Either way, it isn't worth lieing over, just to make a sale.

Sorry, an unethical business that is preying on its customers, employees, and country, isnt doing anyone any good. It's not a case where you can lose on every transaction and make it up in volume.

 
At 10/27/2010 11:47 AM, Blogger Mike said...

Hydra,

It is official....you are the most moral of all and have never done anything unethical in your life.
You are online a lot...hope these aren't billable hours.

Oh, and please don't take everything so literally. I didn't really want to know how often you changed your oil.

May God bestow many blessings on you and your spotless soul.

 

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