Here is an interesting article about how Wal-Mart, the bete noire of the anti-globalistas, acted much more effectively and efficiently in helping the victims of Hurricane Katrina a few years ago than was the case with Federal or other state agencies.
What the article does not really discuss, however, is whether companies ought to be doing things like this at all. There is the old Milton Friedman line that a company has one duty only: to benefit its shareholders by making a profit. But of course if shareholders vote in company meetings in favour of allowing their company to spend some money in certain civic endeavours, then as a supporter of private property rights – of shareholders – then I have no problem with that at all. If a company whose shares I own starts to engage in all manner of “social” projects that I think show the firm is increasingly being run by twerps, I can always dump the stock or even, assuming it is not banned, short-sell the shares to punish the firm for not being professionally run.
That approach is, of course, very different from those advocates of what is called “corporate social responsibility” who might want to legislate to force firms into such activities, which blurs the political and business spheres. It enables politicians, for example, to bring about changes without having to explicitly say how these are going to be paid for. Such public-private partnerships are all too often about concealment of cost.
As I recall the reports at the time (I was not there), there were several factor’s to consider:
The goods involved were, or would be damaged no matter what and therefore could not have been sold.
The goodwill created was likely to be large with respect to the loss.
The Walmart way of doing things required the actions of the managers, and the Walmart image in the view of its customer base would have been irreparably damaged with any other action.
The simple fact is: taking care of your customers is, in the long run, good business.
Of course companies and all other private groups in society have the right to do as they wish; but as you point out Johnathan, we now face the issue of the total state; companies become part of government. Everything is part of government. It is like the latest buzzword “social justice” in which everyone is made a policeman. It’s the very antithesis of policing in a free society, in which the police are just citizens who enforce the law full time with a few more resources. Rather than policemen being ordinary citizens, ordinary citizens become policemen.
In a free society, government is simply a body appointed to fulfill certain functions by the populace; it has duties and not (in theory) power. In the total state, the people have duties but no power and the government has the power but no duties. On a simple level; in a free society, the (local) government may be appointed to collect garbage. This is its duty. In the total state the (local) government has power over your garbage and you have a duty of appopriate garbage disposal to the state, as defined by the state.
But bleh, we all know this. I guess one point to make here is that for libertarians an argument just about government has been rendered redundant to some extent; the enemy is now everywhere, including within business. Thus strangely, the paranoia of the Left regarding “corporations” becomes valid in the total state, as the big corporations become another arm of government. Of course in a society of (genuine) liberty there would be no such problem. As always, the Left create the problem they pretend to address.
A wonderful paragraph there Ian B, may have to steal it for future reference in debates.
ACS, thanks 🙂
I made a mistake though; when I said “social justice” I meant “Community Justice”.
There were failures at all levels of government (city, state, federal) during Katrina. Do you think anyone, in any level of government, lost their job? Of course not.
OTOH, at Wal-Mart, if someone had failed to do their job during Katrina would they have kept their job? Doubtful.
Funny how that that connection between job performance and continued employment seems to work.
Another way to look at it is it’s of no benefit to your company if the potential customers aren’t. Then what do you do?
It’s a community outreach thing. Tesco do it. I was involved with one of theirs once, on a major level and several on a minor. These people only do it if there’s money in it.
I believe IBM manufactured boats at one of its factories to help the local town during a flood. That would have been back in the beginning of the last century when IBM manufactured lots of things, including shoes. It’s amazing how those old timers could set up and build pretty much anything overnight.
The goodwill created was likely to be large with respect to the loss
Indeed. Good will is a valuable form of capital.
Look, just give up. We all know that the general population has been so brainwashed by the sock-puppet media and have had their capacity for critical thinking so crippled by government education that they can not even begin to comprehend the fact that governemnt at all levels simply can not be the universal sugar daddy they have been taught to expect and demand.
The failures of FEMA, Bush, Louisiana and Mayor NagLingent are already so far down the waste-disposal of the memory hole that the remains are rotting in the sea.
Actually, David Crawford, the then-head of FEMA did lose his job over the failures of Katrina. Of course, he was not really an “employee” but a political appointee, which I suppose makes a difference. And the fact that FEMA was the least culpable entity (since the Governor woundn’t let the federal government get involved until it was too late) probably doesn’t enter into it at all, does it?
Back to the topic at hand, though, this has all been subsumed into the completely bogus concept of corporate “stakeholders”. Back when I was in business school (bet you didn’t know that a course in “Business Ethics” is a part of the MBA curriculum, did you?) I had many arguments with a leftist professor about that. The whole concept is merely a justification for groups (primarily government, of course) to claim a quasi-ownership of company assets.
The best (most passionate and succinct, anyway) argument I’ve ever seen on this point is (of all things) the speech delivered by Danny deVito’s character at the shareholders’ meeting in the movie “Other People’s Money.” A thoroughly entertaining film, by the way; I highly recommend it.
“advocates of what is called “corporate social responsibility” who might want to legislate to force firms into such activities, which blurs the political and business spheres. It enables politicians, for example, to bring about changes without having to explicitly say how these are going to be paid for.”
Such as the Community Reinvestment Act as a classic “for example”. Three words which, if included in any sentence together screams “Left Wing Failure”
This is a bit of a misstatement of Milton Friedman. Companies can have any duties their owners/shareholders desire. What Friedman is saying that, absent any direction from the owners, an employee’s duty is to maximize company profit. It’s not a duty of companies, but a duty of employees. Obviously, if a company has some other ends besides maximum cash, the employee’s job is to maximum whatever ends are given.
Wal-Mart, the company that everyone except the public hates.
I understand that FEMA met their performance targets (which are not demanding) during Katrina. That was sufficient in those cities that carried out their end of the plan. It was not in New Orleans because they screwed up royally, and blamed the Federal Government. Of course the Governor, who refused to declare an emergency when begged to do so by President Bush (because it would allow him to deploy the National Guard) did eventually lose her job. Nagin kept his because apparently the alternative was worse. In the wider public’s mind, however, the failings were all federal. The BBC, bless them, demonstrated no understanding whatever about who was responsible for what, and, to a man, blamed Bush for anything and everything.
Sanity Inspector: very well put:-)
I was there in Louisiana after Katrina. The rescue effort by first responders (fire and rescue, coast guard, wild life and fisheries, nat’l guard, etc) and the good old boys (guys with their own boats just doing the right thing) was actually pretty good. The tough part was getting FEMA to bring in buses to get people out. Security was a big problem for these people. You have to remember there is no electricity and communications are basically gone.
It was the post rescue efforts that have gone poorly. FEMA is a huge Gov’t bureaucracy and hence very inefficient.
Walmart, Home Deport and other smaller retailers can do what they wish. They do not have to follow gov’t (congressionally mandated) rules and regulations. They are also much more efficient.
I bought a chain saw a couple of days after the storm at a reasonable price with little wait. There were plenty more to be had.
I think we need to make a clear distinction between ad hoc behaviour and systemic behavious, when it comes to “helping hands” activity.
In response to sudden natural catastrophe (an “ad hoc” situation by definition), Wal-Mart’s response was admirable.
However, if Wal-Mart started to do this on a full-time (“systemic”) basis, to address ongoing problematic situations, the shareholders would be concerned, and rightly so.
Giving away supplies to those in immediate need is one thing, and laudable: doing the same for the rest of time, isn’t — both from a philosophical- and shareholder perspective.
Mayor Nagin is still Mayor because of race – he ran a blatently racist campaign (“keep New Orleans a chocolate city” and so on) and the mainstream media gave him a pass on it.
Still Governor Blanco is out, as is Congressman Jefferson – 70,000 Dollars of bribe money found in his fridge and film of him demanding bribes were just too much.
So now it is Congessman Cao – good for the A.R.V.N.
As for hurricanes (and earthquakes and other such) the first thing the government does afterwards is impose price controls – and then complain their are shortages. Having removed any material incentive for people to make the effort to get in supplies.
As for moral efforts – govenrments often ban those as well, as they did after Kartina.
Wal-Mart was clearly more helpful towards the people than the government, but they should have put a limit to how many, or, even more specifically, which products were to be free for the public. Even the police themselves began to take free, useless items. A video played on the news at the time showed a man taking home what looked like a toy quad bike. Next time there should be some restrictions. Anyone in agreement?