MIDTERM BEFORE YOU KNOW WHERE REVIEW Flashcards
who is Milton Friedman and what does he believe
Economist:
corporations exist to generate profits, as long as they operate within the rules.
instrumentalism
all decisions are made for the ultimate goal (END) of maximizing profit for shareholders.
STA said
greed is “justly reprehensible” for “it serves the desire for profit which knows no limit”
Albert Carr believes
(business as gamesmanship) would take this position.
what is the legal compliance view
Meaning: a corporation’s only true obligations are its legal obligations.
-Believers: Milton Freidman, Albert Carr.
what is the legal compliance view
Meaning: a corporation’s only true obligations are its legal obligations.
-Believers: Milton Freidman, Albert Carr.
What happened to the Grand Bank Fisheries of New Foundland?
1960s-70s, advances in fishing technology allowed “dramatically large seasons“ in the Grand Banks, causing fish populations to drop, forcing Canadian fisherman to sail farther to maintain large catch sizes each season. By the 1990s, the cod stocks had been irreparably damaged and the Grand Banks fishing industry collapsed. Some sign of recovery but many scientists doubt whether the Grand Banks ecosystem will ever recover. Unenlightened self-interest (Greed) is short term, and ultimately fails to actually further our own interest.
summary: greed and unenlightened self interest.
(1) When people act according to their own myopic, short-term selfishness, the group suffers (decreased efficiency and productivity). (2) The venture Fails long-term. (3) But the self suffers as well because we are members of a group
What are the two reasons Simon marks introduced nutritious meals
Two Possible Reasons
Reason 1: Instrumental Reasoning
- Marks did a calculation; If I provide nutritious meals, x number of workers won’t faint, so I’ll make y dollars more. Nutritious meals are valuable only in their ability to increase profits.
Reason 2: Non-Instrumental Reasoning
- Marks considered the effect on employees the meals would have in itself. As “Marks is focused on the sense of participation, which cannot be supplied by the best of wages or the most generous bonuses, but only by signs of personal trust…” (Israel Sieff).
- Created an employee welfare service, a no-smoking rule, and allowed guide dogs in stores. Led to Marks and Spencer’s reputation for quality, staff loyalty, which in turn increased profits.
Two types of Stakeholders
- Primary stakeholders (Narrow): “any group [or individual] who [is] vital to the survival and success of the corporation”.
- Secondary stakeholders (Broad): “any group or individual who can affect or be affected by the corporation”
GM Auto Market Crisis, what happened, and how was it solved?
Key Example of Enlightened Self-Interest: General Motors Canada Case - Probably on Midterm.
In 2009 the North American automotive industry was facing a serious financial crisis with two of the big three north American automakers facing bankruptcy unless they were given access to public funding. The largest of these automakers is GM. In Canada, the federal government offered to make funds available to GM Canada, provided the automaker agree to take significant and material cost-cutting measures. A large portion of the costs cut would necessarily have to come from employee wages and benefits. This would require GM to engage in negotiations with Canadian Auto Works union (CAW). CAW has a long history of fighting fiercely on behalf of its members for increased wages and benefits. Because of the dire financial situation facing the company, the CAW agreed to accept a wage free through 2012 (three years), shorter vacations, and higher employee contributions to benefit plans. This concession were made in hope that they would enough to unlock billions of dollars in Canadian funding for General Motors. Since then, the automotive industry has significantly recovered.
Summary, enlightened self interest.
What is moral person and moral actor view
- The moral person view:
- corporations are like persons in that their actions can affect others
- corporations are full moral agents with moral rights and responsibilities
- e.g. Since Ford’s actions (e.g. producing cars people will drive) affect people, these actions must be evaluated from a moral point of view- The moral actor view:
- corporations have a special moral status that is similar to, but not exactly like, that of persons
- corporations have legal rights but they are not persons with a full set of moral rights (e.g. right to life)
- corporations do have some moral responsibilities, e.g. not to harm others
- The moral actor view:
who is George Merck and what did he do?
- 1942: penicillin still a new drug; made by Merck for the first time
- March 14, 1942: Anne Miller, 33 years old, lies dying in a hospital streptococcal septicemia (blood infection). Becomes the first American to be treated with penicillin and makes a full recovery
- Merck shared the secrets of how to make penicillin with its competitors so they could do so also, saving thousands of lives in WWII. Merck: we try never to forget that medicine is for the people, not for the profits
- Revenue: $48.7 billion (2020)
“it is possible to make a profit and do the ethical thing at the same time. “
Who is Edward Freeman and what did he do?
Edward Freeman; b. 1951, University of Virginia Professor of Philosophy and Business Administration:
Shareholder theory is an outdated idea, we learned this from the financial crisis, the 21st century is about managing for stakeholders.
Businesses exist for purposes other than just profit as there is social value to businesses.
What is CSR
Corporate Social Responsibility
(CSR): corporation is a member of the moral community with relevant responsibilities:
Benneton Ads, what was wrong with them?
they do not convey any information about their product line.
SHOCK-BRANDING: The case of Benetton Ads (~1990s and early 2000s).
- created the most shocking, controversial advertisements of Mafia Killings, Aids Patient Dying, Death Row Mugshots.
Unethical Advertising, no communication of virtues and services, information is ambiguous and false: Daughter of Mafia Victim: “How does my father’s death enter into publicity for sweaters?”
logical fallacy,
