January 25, 2011

The Corporate Duty to Rescue

Here's a nice example confirming a thesis I'm arguing in a research article in progress. The view is that with great power comes great responsibility. And just as natural human persons have a moral duty to rescue, that is, to come to the assistance of others in distress, so do artificial corporate persons. Several companies, including Wal-Mart, FedEx, and Office Depot did so in the aftermath of hurricane Katrina, for example.

Now Wal-Mart has pledged to make its food much healthier and reduce the price of fresh fruits and vegetables over the next five years. Furthermore, the company says it is covering those costs itself. It says it is doing so essentially because it is moved by the appeal of Michelle Obama's public-interest campaign against obesity. It hopes to recoup the costs over the longer term in increased sales. Presumably, this means attracting more educated health-conscious consumers to its shelves.

This is a perfect example of enlightened self-interest. But I would go further to argue that it is also a moral obligation. For as the article above aptly states:
"Some say the company has almost as much power as federal regulators to shape the marketplace.
“A number of companies have said they are going to make voluntary reductions in sodium over the next several years, and numerous companies have said they are going to try to get trans fat out of their food,” said Michael Jacobson, executive director of the Center for Science and the Public Interest. “But Wal-Mart is in a position almost like the Food and Drug Administration. I think it really pushes the food industry in the right direction.”
With great power comes great responsibility. And just as we frown on bad samaritans who do nothing but the barest moral minimum in their everyday lives, we should frown on bad corporate citizens that do the same, especially on those who possess great power yet flout much of their corresponding greater social responsibilities.

January 17, 2011

More on Microfinance Morals

Muhammad Yunus, seen here admiring the positive effects of his microloans, is now chiming in, much as I did recently on the dark side of for-profit microlending, or rather, "commercialized" microlending as he puts it. For he claims his non-commercial Grameen Bank still turns a decent profit. Only that it's more interested in helping the poor than in maximizing profits. He thus says, there is a troubling mission drift in the microlending investment sector.

Here is the essence of his argument from his NYT op-ed:
"Commercialization has been a terrible wrong turn for microfinance, and it indicates a worrying “mission drift” in the motivation of those lending to the poor. Poverty should be eradicated, not seen as a money-making opportunity.
There are serious practical problems with treating microcredit as an ordinary profit-maximizing business. Instead of creating wholesale funds dedicated to lending money to microfinance institutions, as Bangladesh has done, these commercial organizations raise larger sums in volatile international financial markets, and then transmit financial risks to the poor.
Furthermore, it means commercial microcredit institutions are subject to demands for ever-increasing profits, which can only come in the form of higher interest rates charged to the poor, defeating the very purpose of the loans.
Some advocates of commercialization say it’s the only way to attract the money that’s needed to expand the availability of microcredit and to “liberate” the system from dependence on foundations and other charitable donors. But it is possible to harness investment in microcredit — and even make a profit — without working through either charities or global financial markets.