Moral Decay: Part II

Once again, this is a Saurkraut inspired blog post.

Do companies have a "right" to make profit? And if so, at what cost?

AH HA! You think you know the answer to the first question, but what the hell is up with the follow up question?

Right now, the dominate world viewpoint is that companies do have a "right" to profit, providing they do so using "sound business practices". Go to any nation, and you will see the same thing. Companies making profit. It does not matter if you are in the United States, the United Kingdom, India - even China or Venezuela.

Of course, profit is good right? I mean, that is what it is all about! Profit means progress!

But lets investigate this a little deeper. How does one make profit? Well that is easy, sell something for more than it cost you to make it. If you are making cars, you take all your costs - raw materials, machinery, energy, labor, distribution, marketing, research and devlopment, and most importantly big bonuses for top executives - add all that up, then add some more on top of everything. That "some more" is profit.

So what is wrong with all that? Well, at the surface nothing. For many years I thought that this was the way it should be.

But then I thought about it for a bit. I quit burning the Colonel's secret blend of 11 herbs and spices. I took business classes. And here are some questions I came up with, that I asked in various business classes - and got dirty looks from the professor.

1. Is it ethical for drug companies to reap untold profits, selling life saving pills for $10 a pop when it only costs a few cents to actually make the pill?

We will just end with that one question. Yea yea I know all about how much research costs to make new drugs. But I also know that while one company sits on patents for some chemical that can save lives, selling it only to those who can afford it while letting everyone else just have kidney failure, society is not really any better off.

And what about all this "social responsibility" bullcrap they talk about in business school? What about all this "goodwill" crap that accountants put on balance sheets as an "intangible asset"? Does any of that stuff really exist?

No. There is no such thing as social responsibility, or goodwill. Companies do not give a squirt of rat piss about any of that stuff. All that matters is increasing shareholder wealth by reaping as much profit as possible.

For example, when was the last time a major company announced a pay raise for everyone when earnings expitations were above what the market was looking for? Never that is when. But the top level executives, who really do not do anything (ever seen a guy in a suit weld anything?), take all the credit and reap all the big bonuses. Plus, they make even more once you add in stock options.

And how about the recent stunt by the oil companies? Reaping record profits while pushing prices at the pump to all time highs? Was that ethical? Was putting the entire economy at risk of inflation worth it? For them it was - they made an ass load of money. The executives, who could afford to flush gas down the toilet even if it were $20 a gallon, will get huge bonuses out of it. Do you think that any of them cared about some schlob who suddenly found it cost $60 to fill a tank? Hell no.

Do you think Wal-Mart cares about all the other small business that it kills? Hell no. And for what? So some idiots can trample grandma to get a $20 DVD player? But Wal-Mart creates jobs! Yea, a lot of part time low wage jobs that come with no benefits at all. Of course, by keeping labor costs low they keep prices low - but the hidden costs are taken on by everyone - even myself and I do not go anywhere near a stupid Wal-Mart.

Everytime any worker with no insurance goes to the County Hospital emergency room - that is a hidden cost that everyone pays. So that $20 DVD player costs a lot more than $20.

And how about goodwill? Union Carbide racked up a lot of that in India.

Now we arrive at the $64,000 question. At what point do profits become excessive? How much social responsibility should society impose on business? When will business become ethical enough that the EPA is no longer needed, because companies will see to it that enviornmental standards are enforced?

Under our system - never. Social responsibility cost money, and we already saw how profits depend on selling for more than it costs to produce. So we would end up paying for our own social responsibility anyway - unless you are crazy enough to think that companies would simply allow some of that profit margin to drop so that costs to the consumer does not change.

Left up to company executives, thinking only about their next big bonus and what they can buy with it and who would gladly market asbestos blankets to pre-schools, benzene dumping into rivers would be perfectly fine.

I do not think that our economic system can last. For all the reasons I have posted here, and more. Capitalism as we know it at this moment in time can not possibily be sustained. Anyone who seriously thinks that it can is the modern day equal to people who thought that France would ALWAYS have a king in the days of Louis XIV.

As long as profits are more important than social responsibility, and money is more important than people, ALL the social woes will only get worse.