The objective of a business is to make profit. That is the nature of capitalism; the invisible hand, not the government, shall regulate the market.
For most cases, the idea works beautifully. Manufacturers will provide goods and services that suit our needs in hopes of generating a profit.
But for obvious reasons, we refrain from allowing invisible hand control every aspect of our lives. Imagine a society where police refuses to rescue a rape victim because she cannot pay for their services. How about a society where fire fighters will only extinguish 50% of your house because you can only pay for half of their services?
There is little debate surrounding utility of these services, since the single most important function of the government is to provide security.
The real debate, like every other issue, exists in the gray area - in industries that “sort of” deal with our safety and necessities, such as airplane and automotive safety, health insurance, and utilities (gas, electricity and water). What happens when there is a conflict of interest between – say between their profit vs. your safety? What will they choose?
(Most college students will often answer this question by saying, “of course businesses will choose profit over our well-being.” But can you name any evidence? Folks, you shouldn’t claim anything without evidence unless you’re stating an opinion. I really hope my readers can at least name 3 instances besides Erin Brockovich and recent Toyota scandal.)
1. DC-10.
DC-10, a plane manufactured by McDonnell Douglas, had a small problem of… the cargo door ripping out during middle of flight due to a faulty lock. Even after a near crash that resulted in an emergency landing, McDonnell Douglas ignored NTSB warnings and allowed the plane to operate with minimal corrective measures, one of which included adding a caution label on the door in English (as if every cargo door operator in the world knows how to speak English). About 2 years later, a DC-10 plane, operated by Turkish airlines, crashed shortly after take off in a forest near Paris, killing everyone on board. An investigation later revealed that McDonnell Douglas had known about the problem since its manufacturing stages – the company that designed the door had sent them a memo, warning them of fatal design flaws and urged McDonnell Douglas not to use the door. After multiple lawsuits, McDonnell Douglas followed NTSB’s advice and permanently fixed the cargo door.
McDonnell Douglas was bought out by Boeing in 1997.
2. GM vs. Ralph Nader
When Henry Ford Jr. came up with the idea of “safety” package, where consumers could choose to buy cars with seatbelts and other various safety measures, GM threatened a price war against Ford if they didn’t get rid of the safety package, which would eventually drive up the cost of building a car. Ford yielded to the threat and removed the safety features.
Years later, a young lawyer out of Harvard, named Ralph Nader, began his investigation of automotive industry and lack of safety measures. As he successfully began to sway American voters, automotive safety became a national issue and GM tried to discredit the young lobbyist’s image by hiring a prostitute to seduce him. They failed. The congress eventually passed waves of automobile safety laws lobbied by Ralph Nader, including mandatory buckling of seatbelts.
GM recently filed for chapter 11 bankruptcy and had to use American tax payer’s money to avoid complete wiped out.
3. Ford Pinto: “a barbeque that seats four”
Ford executives knew that their newest car, Pinto, had a good chance of spontaneously catching on fire when rear-ended by another car. The cost of projected law suits, including death and burn injuries, came out to be less than the cost of fixing the car. The executive’s memo was later leaked and revealed to the American public. The company’s image has been tarnished ever since.
Shall I name more? What about profit vs. necessities, such as electricity and water?
4. Enron: the smartest guys in the room
Remember the rolling blackouts in California? Have you ever wondered why we haven’t had any since? The rolling blackouts were actually an artificial shortage caused by a company named Enron. They made astronomical profits through “vaticinating” electric shortages.
Enron was later involved with one of the most scandalous corporate fraud ever, as 60 billion dollars of their stocks were wiped out. Chairman Kenneth Lay escaped indictment by dying. CEO Jeffery Skilling was not as fortunate(?); he is currently serving time, and his entire personal assets were wiped out. What’s even scarier is, Kenneth Lay was almost named as secretary of energy by none other than President George Bush.
5. PG&E, Erinbrockovich, and hexo… something chromium.
Everyone is familiar with this I believe.
6. Health insurances & HMO: the human murder organization
Don’t even get me started here. This is a whole separate entry.
Of course, I’m not trying to argue that all companies always choose profit over our safety, but it seems clear, from time to time, that businesses from all types of industries will in fact choose profit over our safety or well-being.
Most companies, such as Apple or Really Useful Group (the company that brought to you musical “cats” and “phantom of the opera”), may face ethical considerations, but they are not ridden with serious safety or “near-absolute necessity” issues noted above. But there is one more major industry (there are more but this one’s major) yet mentioned. This industry deals with both “near-absolute necessities” and our safety.
The answer? Meat industry.
What’s in our meat? Who prepares our meat, and how are they treated? What kind of breeds of chickens are we eating, and how are they raised and cared for? What kind of political games go on behind the closed doors?