Tension between Wall Street and Main Street: A Case beyond the Reach of Corporate Social Responsibility

In October 2011, Gerald Seib wrote that political and economic pressures in the wake of the financial crisis were “pushing business leaders into the public cross hairs.”[1] I submit that the very existence of the largest American banks was becoming an issue. In such a case in which a gulf between business and society is so fundamental or deep, corporate social responsibility programs do not suffice and may even backfire. While it is normal for the norms and values of a business sector to differ from those of the wider whole (i.e., society), it is uncommon for a rupture to be so deep that corporate marketing and CSR are not sufficient business responses. I submit that in such cases and where corporations have a lot of power over government officials, CEOs extend their toolset to government to fill in the trench. The "Occupy Wall Street" protests is a case in point. 

From the corporate standpoint, the time was ripe for the field of business and society, whose topics include corporate social responsibility, corporate citizenship, and stakeholder management. The fundamental matter to be “managed,” or assuaged, in that field of business concerns divergent norms as well as values between the individual corporations or the business sector and the wider society. Tension is not always or invariably present, but the fact that a corporation and even the business sector is a part of a wider whole (i.e., a society) suggests that the respective interests, perspectives, norms, and values are likely to differ. Generally speaking, the interests of a part are not identical to the interests of the whole of which the part is a subunit or part. An externality such as from dumping chemicals in a river or polluting the air means that a company's interest, norms, and values can differ from those of a society. 

Self-interest can obviously affect norms and values. A powerful corporation's executives and board may believe that the company's power over members of the U.S. Congress is normal and right because such dominance is in the corporation's financial interest. Meanwhile, voters may feel that such a distended dominance by the moneyed interest harms democracy and is thus a norm that should not exist. 

According to Seib, societal populists and corporate executives were not on the same page in 2011. In as much as the executives were utilizing corporate social responsibility to create the impression that the corporate norms and values being espoused were in line with societal norms and values, the field of business and society may not have been equipped to deal with divergent talking points that are grounded in antipodal, or antithetical, social realities. In short, corporate social responsibility as marketing or "window-dressing" can be detected as fake, thereby increasing the rift rather than reducing it. Indeed, it can be said that the topic began as an ideal  to bridge the gap between corporations and societies only to end up in marketing.[2] Foisting the illusion of convergent corporate and societal values can backfire by illuminating boardrooms as places where only a narrow perspective of short-term profit pervades.

In the context of the “Occupy Wall Street” protests spreading across the U.S. during the Fall of 2011, Seib pointed to the existence of “a radical disconnect between the picture populist critics paint from the outside, and the one business leaders describe from inside.”[3] This disconnect had gone back to September 2008, when bankers viewed the collapse of the housing market (and those of related financial products, such as CDOs) as a result of over-reaching, dishonest and languid mortgage borrowers. 

Meanwhile, the wider society saw greedy and fraudulent mortgage originators and investment bankers behind the adjustable-arm steep mortgages and the "crap" bonds that were based on those risky mortgages. This disconnect infuriated the general public, especially because contrition would not come from Wall Street. Greed refuses any constraint, including even acknowledging even some responsibility. Banks would engage in mass foreclosures without a hint of guilt for having misled people into going for oversized houses. The mortgage producers at Countrywide and other companies conveniently made the bad assumption that a few years of mortgage payments would enable the mortgage borrowers to shift from step-wise increasing-rate to fixed 20-year mortgages so as to avoid the higher interest payments. This flawed assumption was no doubt helped out by the fact that more mortgages would be sold, and thus higher bonues received. The interest of the economy, not to mention society as a whole, was of lesser concern. Hence the clash in norms and values between the part and the whole. 

In the populist protests, the crowd also saw American companies with enough profit and cash to create jobs domestically yet without the will to do so. In the first decade of the twenty-first century, American corporations had cut their work forces in the U.S. by nearly 3 million, while increasing employment abroad by almost 2.5 million. In the fall of 2011, Standard & Poor predicted corporate earnings growth of 13.5% for the third quarter, which, according to Seib, suggested “to Wall Street protesters that companies were hoarding profits without creating work.”[3] Saving money by moving factories "off shore" fits the business value of efficiency, and even the maxim in trade that goods should be produced where doing so is cheapest (e.g., where the goods are most plentiful). The cost of such a norm of and value on going abroad is externalized to the host country, which is left with the impaired social contract between a large corporation and the society. 

Generally speaking, a government says, in effect, to a company: We'll let you incorporate and even expand into multinational corporations but we expect you to provide jobs in addition to benefiting your customers with goods and services. This version of the social contract that includes the obligation to provide as many jobs as possible (i.e., while still allowing for a reasonable profit, and thus dividends) is controversial, however, because CEOs could retort that providing goods and services that reduce suffering and increase happiness is sufficient. From a utilitarian standpoint, therefore, such CEO's could even claim an ethical justification. Such a justification would likely merely be marketing to craw back some of the lost reputational capital, a long-term intangible asset. 

According to Seib, business leaders cited more practical factors that more easily fit into the traditional business calculus. From the business perspective, third-quarter expectations were less than expected. The managers pointed to the benefits of an artificially weak dollar that had already strengthened at the expense of exports. More broadly, businesses were looking at weak consumer demand and increasing costs with government regulations, which make augmenting the domestic work force more costly. Seib juxtaposes this business view of a hostile business environment with the societal view that looked angrily at unpatriotic and greedy corporate chieftains. 

I submit that when a divide is so gaping, depating the factors in the business environment doesn't fit. Corporate social responsibility programs, such as having employees volunteer at soup kitchens, are not restorative. Firstly, the benefit from such programs would not come close to the original costs borne by society from the reckless and even fraudulent banking practices. Secondly, the people hurt from those practices are not necessarily helped by a program. This is especially true if the "restorative" program in oriented to another society problem, such a disease. Thirdly, corporations benefit from the good public relations from a CSR program. An angry populist is not likely to be pleased that one of the selfish, reckless banks is actually benefiting as it makes contrition. Fourthly, the gap between the business sector (or an industry, but not likely an individual company) and a society can be so deep enough that capitalism itself is severely questioned at large. Filling in such a deep trench goes beyond what CSR can do; a bulldozer rather than some shovels are needed in such cases. I contend that the "Occupy Wall Street" protests that took place three years after the financial crisis deepened or perhaps only exposed such a trench. I suspect this is why the U.S. Government, which was refusing to hold mortgage producers and investment bankers criminally accountable for the fraud--protecting the powerful financial sector--took an active role in stopping the protests. To have the very legitimacy of corporate America, or even just the banking sector, even questioned in such a public way was likely too much for a government whose elected officials could receive unlimited campaign contributions. 

1. Gerald F. Seib, “Populist Anger Over Economy Carries Risks for Big Business,” The Wall Street Journal, October 11, 2011. More generally, see Skip Worden, Essays on the Financial Crisis.

2. William C. Frederick, my doctoral professor in the field of Business & Society, came to this conclusion, as did I. When upon retirement from teaching he turned to the application of the natural sciences to economizing and power-aggrandizement in relation to societal "ecologizing" forces, and then to management, I truly became one of his students (for twenty years). I gave a conference paper, for example, on how a company could be run on ecologizing rather than profit-maximizing principles. The field of Business & Society is indeed wider and more abstract than the CSR topic. 

3. Seib, “Populist Anger Over Economy Carries Risks for Big Business.”

CSR and Corporate Governance Reform: An Opporunity for BlackRock as an Activist Shareholder

In 2019, BlackRock’s management and board publically fired two executives in the Hong Kong office for breaching company rules on dating subordinates. The firings demonstrated to employees that the company would enforce its employee policies and sent the message that employees would be “free to point out problems in the workplace.”[1] This would not be so extraordinarily significant but for the fact that BlackRock is the “world’s largest money manager with $7.4 trillion under management,” which enables the company, through the funds it runs, to be “one of the five largest shareholders in nearly every corporation in the S&P 500.”[2] So BlackRock “can cast votes and pressure boardrooms to effect change.”[3] The company would be hypocritical in using its power as a major stockholder to get managements to have and enforce good workplace policies if the company were not doing so itself. From the standpoint of self-regulatory capitalism in society, BlackRock could make a significant contribution far beyond improving workplace policies.

In January 2020, BlackRock’s management announced that it “would take a tougher stance against corporations that aren’t providing a full accounting of environmental risks.”[4] This was “part of a slew of moves by the investment giant to show it is doing more to address investment challenges posed by climate change.”[5] BlackRock CEO Laurence Fink wrote, “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.”[6] The long-term viability of companies is a salient variable in recalculations.

As much as issue-specific stockholder activism narrows the gap between the values and priorities held by business and society, the matter of corporate governance is also important. In particular, companies whose managements control their respective boards of directors suffer from a deficit of accountability in their governance system. Board members could be influenced on issue-specific stockholder activism and yet a CEO could ignore any pressure from members if he or she controls the board, whose functions include holding the CEO accountable. BlackRock had the power as of 2020 to pressure boards to break up the conflict of interest when a CEO is also the chair of the board of directors at a company. Because of BlackRock’s reach in overseeing so many companies, corporate governance could effectively get a remake such that greater accountability would be part of the governance systems. Because outside directors would theoretically have more sway over a company’s management, wider issue-specific stockholder activism could have greater resonance with management. The gap between corporate and societal values and norms could thus be narrowed. Indeed, the capitalist system within a society would be more self-regulated in terms of corporate governance.

In short, BlackRock could improve the business sector significantly beyond responding to particular issues. Perhaps business itself is vulnerable to missing the big picture at the scale of governance systems, and thus opportunities to improve them. Even though the focus on quarterly earnings and, moreover, on profit-seeking may play a role, I submit that even CEOs do not typically cast a wide enough eye such that governance systems (not only in business, but also government!) are entirely in view as systems. Focusing on particular stockholder issues is closer to the focus on profitability, and thus primary.

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[1] Dawn Lim, Steven Russolillo, and Jing Yang, “At BlackRock, Public Firings, Overseas Probe Send Message About Office Misbehavior,” The Wall Street Journal, February 3, 2020.

[2] Ibid.

[3] Ibid.

[4] Dawn Lim and Julie Steinberg, “BlackRock to Hold Companies and Itself to Higher Standards on Climate Risk,” The Wall Street Journal, January 14, 2020.

[5] Ibid.

[6] Ibid.

Corporate Social Responsibility or Increased Market-Share: The Case of Juul Labs on Youth Vaping

If the beneficial consequences for a society or the world are what externally validate corporations being socially responsible, does it really matter whether or not such benefits serve as the validators within the corporations? In other words, how much does the motive matter if stuff is getting done such that society is benefitting? To be sure, the motive can influence how much is getting done and for how long, but if the societal results are the same, would the nature of the motive really matter? I lay to the side the perfectly valid point that providing goods and services of value to customers benefits a society because consumers are, after all, a part of society. The interesting cases tend to be those in which profits can be expected to be negatively impacted from a socially responsible policy or program. Of course, a corporate management may announce the expectation of reduced revenue even as the management has carefully calculated how acting responsibly will be likely to be a profit-oriented strategy in the long term (including the related enhancement of reputational capital from appearing to have been self-sacrificial. The case of Juul Labs, Inc., the vaping industry leader in 2019 with a market share of 64 percent, shows just how difficult it is to get to corporate motives, even though the beneficial consequences to a society are arguably more important.

In 2019, Juul “voluntarily pulled its sweet, fruity and mint-flavored refill pods from the U.S. market.”[1] The company’s CEO pointed out in a meeting at the White House that flavors can help adult cigarette smokers switch to a less harmful alternative, so the company “would defer to the science-based approach of the Food and Drug Administration.”[2] President Trump had announced his intention to ban all flavors except that of tobacco. In refusing to follow Juul’s lead, NJOY and Reynolds American, Inc., makers of the second and third most popular vapers, kept selling all of their respective flavors, including those especially popular with teenagers.

Joseph Fragnito, a manager at Reynolds, said at the meeting, “We believe we can market flavors responsibly.”[3] At that meeting, President Trump, fearful of banned flavors being sold on the street and thus unsafe, was coming to the same stance. So had Juul gone too far in having taking kid flavors off the shelves if even those flavors could be marketed responsibly? In other words, had Juul lost revenue when the company could have changed how it marketed the inflammatory flavors? On the other hand, can flavors so attractive to teenagers be marketed in such a way that teenagers do not vape? In such a case, responsibly market may be an oxymoron, especially given that NJOY and Reynolds supported raising the minimum vaping age to 21. U.S. Sen. Mitt Romney, also at the White House meeting, supported Juul’s ban on certain flavors. “Putting out cotton-candy flavor and what is it, unicorn poop flavor?,” he said in reference to Juul’s competitors. “Look, this is kid product,” he added. “We have to put the kids first.”[4] Therefore, I submit that Juul applied responsibility better in banning such “kid product” than NJOY and Reynolds did in applying the concept to marketing the kid flavors.

This does not, however, absolve Juul with respect to its motive. At the White House meeting, the company’s rivals claimed that Juul’s management had voluntarily pulled its flavored products because it could sit out and wait for authorization from the Federal Drug Administration (FDA) as smaller companies went out of business. Then Juul would be able to come back with even more market share. Juul’s CEO countered that the company had banned its flavored products to address the problem of youth use. Whether or not the company’s socially responsible action was ultimately designed to increase market share or reduce the youth use of vaping—that is, to increase profits in the long-term or reduce teen vapers—the question is: Does this make any difference if the benefit to society in terms of less youth vaping is the same? I contend that the difference is ethical in nature, except from a consequentialist standpoint. In other words, an ethical basis exists—that of consequentialism—that essentially treats the question of motive as a non-issue.

Of course, if the societal benefits differ according to motive, the motive would matter even from a consequentialist ethical basis. If the motive of Juul’s management was to increase market share rather than see fewer kids vaping, then should the market-share strategy become compromised or fail, the societal benefits could be expected to be less than had the company’s management been intending to reduce youth vaping, which in turn could be expected to result in less government intrusion and greater reputational capital.  

Regarding the market-share strategy, could not young Juul customers simply start buying the sweet flavors from the other companies? Although they would have to justify their flavors to the FDA, the president was inclined to allow the flavors to be sold because otherwise kids might get them on the street. Would not Juul eventually go back to competing in those flavors? The other companies would not have gone out of business because the FDA would have approved the flavors. Juul’s management had pulled its flavors when President Trump was inclined to ban them industrywide. The changed politics, likely influenced by industry pressure (and perhaps campaign contributions), may have taken the wind out of the market-share motive, in which case the societal benefit would be less than had the motive been that of reducing youth vaping.

In conclusion, motive can matter even from a consequentialist standpoint because the amount of benefit to society can differ. In cases in which such benefits are the same even if the motive is one thing or another, the motive does not matter from a consequentalist standpoint. Even so, we want to think it does, ethically speaking. We want to assume that a management acting in a socially responsible way values doing so, rather than merely using social responsibility to earn more profit even in the long term. The field of business and society looks at the degree of fit between societal and company values, norms, or policies (as the corporate values may not matter), whereas business ethics delves into the ethical basis of a management’s motive. For example, is it enough that society benefits? Shouldn’t a company’s management want that consequence even if it comes with some financial loss (or opportunity cost)? These two fields are typically conflated at this point of contact. To say that Juul’s motive was in line with societal values is not to say what the motive should be. More than description is needed to get to normativity: the matter of should. We want to believe that Juul’s motive was the right one, but this is an ethical point that may not be relevant from a consequentialist standpoint. In terms of the degree of fit between corporate policies and societal values, the extent to which a society benefits is the litmus test.

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1. Jennifer Maloney and Alex Leary, “Trump Warns of Dangers in Banning Vape Flavors,” The Wall Street Journal, November 22, 2019.

2. Ibid.

3. Ibid.

4. Ibid.

Managing Externalities in Business: Heliogen’s Breakthrough in Combatting Climate Change

A company’s values and norms can resonate to some extent with their societal counterparts by the company providing goods and services of value to customers resulting in a reduction of their suffering or increase in their happiness. Providing a net-value (the value to the customer less the price) to people can resonate with societal values and norms that esteem happiness and frown on suffering from want. Indeed, a utilitarian ethic can apply to the provision of as much value as possible in the form of goods and services that reduce the suffering or increase the happiness of as many people as possible. Legitimate wealth can “result from having provided a significant amount of value to a significant number of people.”[1] Even fortunes, according to this ethic, are justified by the provision of “a very unusual form of value to a very unusual number of people.”[2] Utilitarianism is popularly known from the expression, the greatest good to the greatest number (i.e., of people). Of course, an ethic justifies what should be, whereas the extent to which a company’s values and norms approach those of society is a descriptive matter. Describing the degree of fit is not to say that a company’s values and norms should (i.e., normatively) have that degree of fit, or even more. Ethical reasoning would be needed to supply the normative contention; such reasoning involves argumentation that the extant societal values and norms should be held generally speaking and specifically by companies. The fact that the values and norms of many German companies in the NAZI era resonated with societal values and norms is not to say that the managements should have sought to fit organizational values and norms with NAZI values and norms. The field of business & society, which is oriented to the degree of fit that exists descriptively between a company (or the business sector) and a society (or internationally-held values and norms), is thus distinct from business ethics, which is oriented to providing ethical justification for what managers and companies should do. With regard to the former field, companies can orient themselves even closer to societal values and norms than by providing value to customers and even taking other stakeholder interests into account by being primarily oriented to taking on a serious societal or global problem. In terms of business ethics, such an orientation can be said to be one that a company should have because an unusual number of people (even beyond customers and other stakeholders) could receive an unusual amount of value. Climate-change is such a problem, and Heliogen’s breakthrough exemplifies such an extraordinary mission.

Generally speaking, a mission that is primarily geared to solving a serious societal (or global) problem goes beyond providing value to customers and even taking into account the interests of other stakeholders. In such a mission, a society or even the species itself is the main recipient of the extraordinary value even though customers receive value too. Whereas the traditional business model is geared to profiting by selling value to customers, a company’s mission that is dominated by providing extraordinary value to a society or to humanity worldwide views profiting from sales to customers as a means. An opportunity cost thus exists in such a mission due to the profit forgone from customers due to the orientation being foremost to the macro problem.

Even though spending capital to solve a macro problem is not the same as paying externalized costs of the problem, an opportunity cost can arise if the net present value of the profits in the long-term is less than the R&D spending up-front. Even if the mission fits within the traditional business model (i.e., the net present value is more rather than less), the risk taken on because the substantial R&D outlays are not met with immediate profits can be said to be an opportunity cost in pursuing an intractable societal or global problem by coming up with a breakthrough. The opportunity cost can be viewed as paying such that future externalized costs of the problem will not occur. Of course, if a company solves the entire problem, rather than merely reducing that which has been making and would otherwise make the problem worse, most or all of the current externalized costs may disappear and thus not need to be paid. Such a company has in effect taken upon itself the relevant externalities (i.e., covering those costs otherwise left to society).

By externality, I mean a cost that under the traditional business model is borne by society (or humanity) rather than by a company or the business sector. For example, as of 2020, companies had not had to pay even a fraction of the costs of climate change even though the business sector had contributed to the problem by polluting. The default stance under the traditional profit model is typically defensive; a less common proactive stance is to reduce the company’s contribution of the problem, such as airlines did in using more efficient engines. An even less common stance is to be primarily oriented to reducing the contributions from other sources and even to solving the macro problem itself. As argued above, just the risk taken on can put this stance beyond the traditional business model. Such a stance, in being oriented beyond customers and even other stakeholders to focus on a societal problem, fits under another paradigm. This is not to say that it is based on corporate social responsibility, for a company does not have a responsibility to orient itself to reducing or solving a societal problem except as may happen as a result of providing value to customers. Indeed, a company’s founding investors and management may want to tackle a societal problem, rather than feeling obligated. In the case of climate change, the likely downside for the species already known in 2019 could be enough of a motivation even if the founding investors and management do not feel responsible for the problem.

Even though a responsibility may not pertain, the organizational values and norms of a company oriented to minimizing or solving a societal problem stand a good chance of approaching their societal counterparts—closer than from merely satisfying customers and even other stakeholders. That is to say, beyond stakeholder management, externalities management can be said to be oriented to societal (or macro) level problems. Such management had been rare, at least by 2020, because few companies had been principally oriented to societal or global problems without simply relegating them to a corporate social responsibility program as if out of a sense of responsibility. Whereas the literature on stakeholder management and CSR had been around for decades by 2020, not much was written on externalities management that subordinates profit-seeking to reducing or solving a societal problem. 

 

Management geared to externalities can be problematic, especially for publically-traded companies, whose managements are bound by fiduciary duty to look primarily at the short-term returns to stockholders. This duty is firmly grounded in property rights. Can such managements afford to put solving societal problems as foremost? Heavy R&D spending upfront with (admittedly healthy) profits only if and after a breakthrough has been invented and implemented by customers is not the typical way of attracting and retaining equity capital. Language in the charters would have to specify the primary purpose of the company as meaning that expedited profiting would be excluded or subordinated to reducing or solving a particular societal problem. A company’s default purpose is admittedly to make a profit, but property-rights give the owners (i.e., the stockholders) the right to set another purpose in place of the default, in which case investors have no reason to be upset when the purpose is pursued even at the expense of quarterly earnings and dividends.

By 2020, climate change had emerged as a major problem facing humanity with dire consequences being predicted to occur in decades rather than centuries. Heliogen, a start-up funded in part by Bill Gates, the founder of Microsoft, and at least one other billionaire, commenced as such a company oriented to inventing a product that, when sold to industrial customers, would significantly reduce carbon emissions and thus hopefully stave off the worst of the dire consequences. That is, Heliogen put its capital toward discovering a breakthrough that would reduce future externalizable costs even though the company’s high R&D costs would not be met with profits for some time. With a focus on achieving a breakthrough that would be of significant value to the world even beyond stakeholders, the company’s management must have known that profits would be long-term-oriented, rather than relatively short-term profits from incremental values sold to customers.

The secretive clean-energy company announced in November 2019 that artificial intelligence and a field of mirrors could be used together to significantly reduce greenhouse emissions by industry. The invention could generate extreme heat above 1,000 degrees Celsius—a temperature that is about a quarter of that which is on the surface of the Sun. “The breakthrough means that, for the first time, concentrated solar energy can be used to create the extreme heat required to make cement, steel, glass and other industrial processes. In other words, carbon-free sunlight can replace fossil fuels in a heavy carbon-emitting corner of the economy that has been untouched by the clean energy revolution.”[3] These industries were “responsible for more than a fifth of global emissions, according to the EPA.”[4] Accordingly, Soon-Shiong, who sat at the time on the Heliogen board, said, “The potential to humankind is enormous  . . . The potential to business is unfathomable.”[5]  Indeed, the company’s mission was of such scope, rather than merely to finding a better way to make cement and steel, that a breakthrough could result. Externalities management is geared to making an enormous contribution to humanity. Even having an unfathomable potential to other industries can be viewed as lying within the purview of such management, as distinct from stakeholder management. Of course, this is not to say that something of value would or could not be sold to customers for a profit, but the emphasis lying elsewhere makes both Heliogen and externalities management distinct.

Such a mission as does not prioritize the traditional business model can be attractive to investors who have already made their fortunes by prioritizing that model and have gone on to worry about problems facing humanity not currently being adequately addressed by business and government. Heliogen provided a way for Bill Gates and at least one other billionaire to put their wealth to use on a global problem that could even render the species itself extinct. Start-up companies can be vehicles for rich former titans to turn their attention to such serious problems with a feeling not of responsibility, but, rather, of satisfaction from having saved the species. In other words, having been satisfied by playing within the traditional business model, the aspirations of former titans can shift to the societal or global level even if without having given up profiting completely.

In the early twentieth century, Andrew Carnegie and John D. Rockefeller retired from business to turn to charities. Among other things, Carnegie sponsored a library in Pittsburgh and Rockefeller founded a university in Chicago. In fact, Rockefeller, through his foundation, gave away roughly half of his fortune.[6] Both men had been ruthless in business; whether their respective giving afterward justified their business conduct (e.g., Carnegie against labor and Rockefeller against competitors) is another question. Rockefeller went so far as to view both his monopoly and charitable giving in Christian terms. In God’s Gold, I untangle whether Rockefeller’s monopolistic tactics (i.e., his business ethic, or lack thereof) can be justified by his religious mission in business and giving. For my purposes here, it suffices to say that neither titan would have viewed his respective company and charitable giving as being oriented to making a breakthrough on a humungous global problem. Indeed, Rockefeller filtered requests for his charitable giving by how efficient the money would be used; he was primarily oriented to using his fortune to solve a hitherto intractable serious problem facing mankind as Bill Gates was. Gate’s orientation was doubtless on keeping climate change from being an existential threat to future generations.

Externalities management is admittedly not a good fit for the vast majority of companies, which are oriented to maximizing profits while minimizing risks, but not every company must be made to fit within the traditional business model. A company can be formed and utilized in a way that puts profit-making through the funnel of externalities management geared to reducing or solving macro problems. Such a raison d’etre is distinct from undertaking a social responsibility program or being motivated by a sense of responsibility because such a company is not likely to be responsible for the problem even if some of its investors, as former titans of industry, were in their “other life.” The priority in such a company is that of reducing the costs of, or solving outright, an intractable societal or global problem, rather than self-blame or blaming others. This priority is why profit-seeking is regarded as secondary.

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1. Rod Burylo, The Wealthy Buddhist: Buddhist Ethics, Right Livelihood, and the Value of Money (Nepean, Canada: The Sumeru Press, 2018).

2. Ibid.

3. Matt Egan, “Secretive Energy Startup Backed by Bill Gates Achieves Solar Breakthrough,” CNN Business, November 19, 2019.

4. Ibid.

5. Ibid.

6. Skip Worden, God’s Gold: Shifting Sands of Christian Thought on Profit-Seeking and Wealth, available at Amazon.

Goodwill Dismisses a Solid Societal Norm: A Mentality beyond Unethical Conduct

When managers of a business or non-profit interact with a societal norm by openly rejecting any obligation to act in accord with the norm, the reaction from stakeholders can be utter disbelief. The refusal to act in accordance with the norm as it impacts the organization can be beyond bad management and even unethical conduct. The refusal to acknowledge a societal norm even as its impact on the business and stakeholders has been arranged by the business is beyond, though it can include, unethical conduct. Norms are not in themselves ethical, for as David Hume wrote, you can’t get an ought from an is; rational justification by ethical principles must be added before we can get to, “You ought to do X” from “X is the practice.” Yet ethical principles can be in norms, in which case we can say, “You ought to act in accordance with the norm because it is ethical.” In some cases, the norm-business relationship (i.e., Business and Society) can be more salient than an ethical principle in the norm itself. A managerial practice at Goodwill, a non-profit retailer based on donations for the poor, serves as a case in point.

Goodwill stores have tags of several colors on the merchandise. During yellow tag week, merchandise with a yellow tag is half off. Every other Saturday, all of the colors are half off. By the time the doors open, customers have likely formed a long line out in front. Such lines can cover most of the front length of a store. On one such morning at one store, I saw a customer stand by the front doors opposite of the line just five minutes before the opening. I saw the store manager let that customer in second, even though it was obvious that she was not in line. Curious, I entered the store to interview that manager. He told me that his responsibility is only to open the doors, not to determine that some people can come in and others cannot. His lapse would have been easily fixed not by telling the woman, who did not evidently think that store lines applied to her, that she could not enter the store, but, rather, that she would have to go to the back of the line. I asked the manager whether he believed that the line did not pertain to his store. “It is not on our property,” he answered. “We can’t say what people can do out there.” Observing my facial expression, he said he would make sure that customers come in first who are in line, and he even made an announcement lightly chastising “the individuals” who had not waited in line.

Nevertheless, later the same day, I returned to the store to interview two of the associate store managers, both of whom also touted the property point. “So if I come here just before 9am in two weeks, I don’t have to stand in line; I could go second or third?” I asked. “Yes,” one of the associate managers said, even as her hesitation in answering came, I suspect, from a recognition that her answer violates the ethical principle of fairness. This recognition should have given her the sense that something was wrong with the policy she was supporting.

Even though the violation of justice as fairness—it is just that people enter a building in order hence via making a line—is salient in this case, the fact that managers of a store disassociated it from the line to get into the store, hence pertaining directly to the store, is even more bizarre and thus significant. The societal norm here is that customers forming a line outside a store before doors open are to be let in first. For a manager to open a store door and assume that the norm does not apply to his store, and thus does not form an obligation on his part to see that the customers in line go in first, removes him, in effect, from the society or environment in which the store functions.

Even the narrow property-limits rationale is bizarre, for Goodwill leased rather than bought the land and building, and the line of customers pertained to the store even though it did not extend to the sidewalk in front between the building and the parking lot. That the line pertained exclusively to getting into the store overrides the question of property in terms of the incurrence of an obligation because the customers in line had the societal expectation of being able to enter the store in order whether or not the sidewalk was owned by Goodwill. The managers with whom I spoke dismissed the customer’s expectation, whose legitimacy is societal (a societal norm) rather than company-based. The sheer dismissiveness is rude, not to mention bad customer service. Even though the ethical principle of fairness is in the societal norm, the bad attitude toward the customers, the lazy approach to opening the store’s front door, and the decision that the societal norm does not apply to that store are not necessarily unethical (or at least an ethical argument would need to be made).

Narrow self-interest, which business managers tend to adopt, is not in itself unethical. For one thing, the business and financial systems have infrastructures and norms that virtually necessitate it at the firm level. Even so, if stakeholders (or others) are harmed as a consequence, then the narrowness is culpable ethically. In this case study, the harm to the customers in line from one person entering second from opposite the line is small. Few of the customers in line could even see the interloper, and none of the customers—in line or afterward—would have guessed that the store manager’s initial position (and those of two of his associate managers) regarding the store’s responsibility to let the people in line in first.

In fact, that the associate manager who answered affirmatively that I would not need to stand in line (because Goodwill is only concerned, by right, with what goes on inside the stores) had come to such a nonsensical conclusion (and stood behind it) is not in itself unethical. She was not lying, for instance; she really believed herself. Moreover, that a person could believe anything so nonsensical (including the property argument) is also not unethical. Perhaps in the field of business and society, psychology figures in more than does even ethics. Of course, the norms-based field of business and society is (or ought to be!) distinct from business ethics even though the two relate, such as in there being an ethical principle (e.g., fairness) in a societal norm that is not in itself ethical because it merely is.

When Retail Marketing Goes Too Far

Marketing by retailers can go too far; this claim should be no surprise. That this has been so even when the marketing comes at the expense of existing customers may be less well-known and thus be in need of some elaboration. The underlying culprit, I submit, is psychological: difficulty with keeping within even societal and even self-imposed constraints. Put simply, the difficulty is with limits. The mentality is thus at the child-stage of development.

Service to the customer is a business mantra. In fact, an increasing number of retailers refer to their respective customers as guests. Target was among the first to do so. Then restaurants followed and even some of the services. One hair salon in Scottsdale, Arizona, even has guest parking, but the signs are technically lies; the slots are actually for customers, who have been conveniently renamed guests. It might be concluded that American business has been trying to outdo itself in how the customer is treated.

Some indications, however, suggest that existing customers may have been increasingly overlooked, at least as of 2019, in favor of gaining additional customers. In some fast-food restaurants in the U.S., for example, promotional signs on the large windows adjacent to the tables obstructed the ability of sitting customers to look outside the building. After spending money for a meal, who wants to look at giant promotions geared to prospective customers approaching or passing by the restaurant?

On an increasing number of city buses, advertisements covering the side windows made it more difficult for existing customers to see outside the bus, whether to enjoy the ride or determine where to get off the bus. In effect, all this says to the existing customers: the people outside are more important than you so regrettably we have to disrupt or detract your experience with us in some small ways. The regret is a lie, as is the lack of choice in the matter, and the impact on customer experience can be large. 

When the value given to existing customers is lessened while the price held constant or even increased, the gain goes to the business and the loss to the existing customers. Even in being hampered in trying to see outside a bus, the passenger suffers a loss because he or she would otherwise get the benefits of being able to see clearly through the windows. In fact, why even have windows if they are to be covered in various colors? Even the feeling of having been passively slighted in some way is part of the loss. From the standpoint of the business, existing customers are a given; the aim is to "grow" the business by attracting new customers even if at the expense of the current ones. 

The practice of taking away from the value that customers receive implies an unwillingness to be constrained even by the value-exchange set up by the companies. Perhaps the hope is that few passengers would notice the change and eventually it would be regarded as part of the status quo. The expectation of being able to see clearly through a bus window is replaced. 

Even in terms of cultural norms regarding the American holidays, retailers have gradually pushed up Christmas displays to September. You know something is wrong when you see Christmas trees and decorations then in front of the Halloween decorations and costumes. This shows that some manager did not even feel constrained to give each holiday its due. This can be viewed as an extension of not feeling constrained (by the existing value-exchange) to give existing customers their due. 

At another Lowes, the Christmas displays completely blocked the Halloween pumkins from being visible from the front aisle. 

Managers Going too Far: Targeting Linguistic Over-Reaches

The practice of using words beyond their contexts such that the words’ meanings are tortured and yet are pretended not to be was a trend in modern America during the 2010’s. The business manager instigated the trend in order to “gild the lily,” which means to claim more than is warranted or merited. Astonishingly, people dismissed or perhaps even didn’t recognize such over-reaches. Perhaps as long as people have used language, egos gripped in the pursuit of gain have presumed that keeping to a word’s extant meanings in a language is somehow optional.

To be sure, the malleability of words is one way in which a language changes in order to incorporate societal changes.  “I’ll text you tomorrow,” for instance, uses the noun text as a verb. Similarly, “I’ll email you later today.” These two verbifications did a lot to bring the English language up to date in the twenty-first century. Such adaptations are natural rather than pushed from an agenda.

A motive from an agenda pushes through, insisting that a word can be used all of a sudden in another context in which the meaning does not apply. In other words, the agenda reverberates from the sheer over-intensity of the insistence, or declaration, even above objections that are correct. Once a manager of a Target retail store insisted to me that the shoppers are guests rather than mere customers. Her tone was so forceful I could hear aggression in it. That manager was like arrogance on stilts during a flood; her claim should have been underwater.

Gilding the lily even more, some of those guests are members. It was strange indeed to be asked by a cashier, “Are you a member?” “Of what,” I would naturally wonder, as clubs had members and Target was not a club because it had customers who were not members (and even the members didn’t have to pay dues!). In short, the company was going too far in insisting that its customers be called guests and members, as if the company were a house or club, respectively. When I have guests over and I give them gifts, I don’t charge them for it. In no sense is a customer a guest, especially considering how bad customer service can be. To find an employee referring to a customer as a guest and yet treating the person very badly demonstrates a real disconnect within the employee’s mind, and yet this has been common even since customers “became” (as if naturally) guests and members. Nothing had changed on the store end in terms of customer service, so insisting that customers are to be called guests and members was to pretend that the commercial relationship was something more than it really is. It is this something more that points to the underlying motive: trying to get something more by pretending something that really is not the case. Wanting to pretend that the customer is something better, rather than that word somehow had been sullied and thus naturally to be jettisoned, was the motive. Telling customers that they are guests rather than customers would reflect instead on the company’s arrogance and being in a state of denial.
As another example of going too far in order to claim more than is warranted, Target also designated its retail-area heads as area owners. So, one employee is the owner of the home furnishings, for instance. In a corporation, the stockholders own the corporate wealth collectively. To bestow the title of owner onto an employee simply because he or she is in charge of a given area of the store implies that the employee’s authority is more than it really is. In the process, the meaning of the word owner is violated without even an acknowledgement. Again, a state of denial plays the mental function of protecting the over-reach such that even the over-reach is not recognized as such. It is almost like the managers were living in fantasy lands governed by the simple rule: if changing a word’s meaning helps the business, then make the change and pretend that no such change was made. .