The Forbes link is really interesting. On the eagerness of some to receive a sanction to be greedy: In such a world, it is therefore hardly surprising, says Roger Martin in his book, Fixing the Game, that the corporate world is plagued by continuing scandals, such as the accounting scandals in 2001-2002 with Enron, WorldCom, Tyco International, Global Crossing, and Adelphia, the options backdating scandals of 2005-2006, and the subprime meltdown of 2007-2008. Banks and others have been gaming the system, both with practices that were shady but not strictly illegal and then with practices that were criminal. They include widespread insider trading, price fixing of LIBOR, abuses in foreclosure, money laundering for drug dealers and terrorists, assisting tax evasion and misleading clients with worthless securities. Martin writes: “It isn’t just about the money for shareholders, or even the dubious CEO behavior that our theories encourage. It’s much bigger than that. Our theories of shareholder value maximization and stock-based compensation have the ability to destroy our economy and rot out the core of American capitalism. These theories underpin regulatory fixes instituted after each market bubble and crash. Because the fixes begin from the wrong premise, they will be ineffectual; until we change the theories, future crashes are inevitable.” CEOs and management have been looking to be told that greed is good. So a book like Hardball or Milton Friedman's 1970 article are manna from heaven. That article by the way, by Friedman, is gross. First paragraph: How do we make greed less sexy? Or "not wanting to pollute" more sexy?The supposed management dynamic of maximizing shareholder value was to make money, by whatever means are available. Self-interest reigned supreme. The logic was continued in the perversely enlightening book, Hardball (2004), by George Stalk, Jr. and Rob Lachenauer. Firms should pursue shareholder value to “win” in the marketplace. These firms should be “willing to hurt their rivals”. They should be “ruthless” and “mean”. Exponents of the approach “enjoy watching their competitors squirm”. In an effort to win, they go up to the very edge of illegality or if they go over the line, get off with civil penalties that appear large in absolute terms but meager in relation to the illicit gains that are made.
When I hear businessmen speak eloquently about the "social responsibilities of business in a free-enterprise system," I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned "merely" with profit but also with promoting desirable "social" ends; that business has a "social conscience" and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously–preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.
That's not what Milton Friedman is saying. So here's the hairy battle of externality: Friedman is saying that business managers have a responsibility to the metrics that are directly quantifiable and directly measurable to the charters of that business. If it's a bank, it needs to make money. If it's a hospital chartered to help as many people as possible, it needs to help as many people as possible. Those are the metrics that are available, those are the goals that should be pursued. By the way, ever seen the word "eleemosynary" before? I haven't. Apparently it means "charitable." So here's the basic problem: Friedman is saying externalities don't fucking count because they aren't part of the equation. He argued that what does matter is what is in the equation, and if it mattered it would be legislated: In other words, "render unto caesar." Corporations need to make money and the government needs to take care of social needs such that all externalities are appropriately taxed and penalized to force the corporation to make money only in such a way that is socially responsible. But it doesn't take a genius to argue that the government moves hella slower than a predatory corporation. To which Friedman says: Aside from the question of fact–I share Adam Smith's skepticism about the benefits that can be expected from "those who affected to trade for the public good"–this argument must be rejected on grounds of principle. What it amounts to is an assertion that those who favor the taxes and expenditures in question have failed to persuade a majority of their fellow citizens to be of like mind and that they are seeking to attain by undemocratic procedures what they cannot attain by democratic procedures. In a free society, it is hard for "evil" people to do "evil," especially since one man's good is another's evil. TL;DR: TOO FUCKING BAD. So Friedman's answer to your question is "tax the shit out of greed and pollution so it's no longer so attractive." The fact that you will never get a legislature to move as quickly as a corporate board is, to Milton Friedman, proof that your society doesn't actually want clean air or charity all that much. Because Milton Friedman was an asshole. Peculiarly enough, the article practically begs for fascism. But I'll bet the average business pundit never reads that far.The discussions of the "social responsibilities of business" are notable for their analytical looseness and lack of rigor. What does it mean to say that "business" has responsibilities?
This process raises political questions on two levels: principle and consequences. On the level of political principle, the imposition of taxes and the expenditure of tax proceeds are governmental functions. We have established elaborate constitutional, parliamentary and judicial provisions to control these functions, to assure that taxes are imposed so far as possible in accordance with the preferences and desires of the public–after all, "taxation without representation" was one of the battle cries of the American Revolution. We have a system of checks and balances to separate the legislative function of imposing taxes and enacting expenditures from the executive function of collecting taxes and administering expenditure programs and from the judicial function of mediating disputes and interpreting the law.
Many a reader who has followed the argument this far may be tempted to remonstrate that it is all well and good to speak of Government's having the responsibility to impose taxes and determine expenditures for such "social" purposes as controlling pollution or training the hard-core unemployed, but that the problems are too urgent to wait on the slow course of political processes, that the exercise of social responsibility by businessmen is a quicker and surer way to solve pressing current problems.
Some environmental activists, impatient with legislative processes, sought relief from the Supreme Court. In 1992, the SCOTUS was like naw. There are other negative externalities that could be challenged in the courts, but my sense is that the SCOTUS repeatedly tells these people, "Do work in the legislature or gtfo." And they're not wrong per se. But then the conversation winds all the way back to our favorite topic on hubski: monied influence trumps a disorganized and apathetic population, and we need campaign finance reform.The fact that you will never get a legislature to move as quickly as a corporate board is, to Milton Friedman, proof that your society doesn't actually want clean air or charity all that much.
Holding: Plaintiffs did not have standing to bring suit under the Endangered Species Act, because the threat of a species' extinction alone did not establish an individual and nonspeculative private injury.