# 1. by bending to CSR, Corp management is deciding that the external forces will give them less trouble than if they fight (remember, if competitors are also taking this approach, then the defiant one sticks out like a sore thumb and gets all the flak, causing a competitive disadvantage. The corp can’t change millions of minds brainwashed by the ed system, the news media, and the entertainment industry all by itself.

# 2. It may be good for a Company B, esp if a competitor A is trying the defiance route and will get dumped on badly by it.

As to how execs act and pay themselves, that’s a topic for another time — well, actually no, because it may be, and often is, in the execs’ best personal interest to play the CSR game to get the good press and get invited to the right parties while the company as a whole starts to underperform (Exhibit A — BP and Lord Browne). There is not generally not a good alignment between execs’ and shareholder interests, and it is the Achilles heel of the way business is done today.

I don’t get the car safety example, unless you’re going all the way back to the 1960s, when the Big Three and hte UAW essentially operated in a non-competitive industry that passed along mediocre crap to drivers who couldn’t do much about it. Was safety enhanced because the govt mandated it, or because other car cos came in and showed the Big Three how to do safety (and reliability, and service, and any number of other things) right? I think it’s more the latter than the former.

Your water co example is problematic precisely because it’s a monopoly situation and the only choice is either customer resistance or more regulation.

I don’t agree that CSR is just another example of how changes and societal improvement get done. There’s very little attempt to persuade or change hearts and minds. In fact, it’s more of a presumption of “we’re right, you’re wrong, bleep you, the debate’s over (e.g., “global warming/climate change”). It’s more a matter of bringing a form of coercion to bear and seeing if it is enough to force a targeted company to do something it would not have done without the coercion. Do it enough and you reduce returns to shareholders and to the economy as a whole. Next thing you know, you’re France or Germany and can’t figure out why you can’t grow the economy faster than 1.5% to 2%, if that.

I don’t disagree with your last two sentences. I’m not at all optimistic that the new Congress is less immune to inducements than the old one. Just look at the Dems who supported BK “reform” without any kind of reciprocity from the lending industry.

1. The corporate management is weak and bending to external forces it should not and hence they should be replaced if their actions are to the detriment of the company.

2. The corporate management have weighed the particular “CSR” before them and concluded that it would be good for business.

It seems to me, and I am not alone in this observation, that company executives of too many companies have long ceased to behave and manage in the best interests of their shareholders, and have indeed formulated the situation such that shareholders have very limited ability to control their own company. Executive compensation is the obvious example, but also the make up of BoD’s too. This situation has led to an utter collapse of accountability to shareholders for performance - by another group of “experts” - the company executives.

When it comes to pressure for responsibility we have seen numerous times that adherence to the customers view has been in the best interests of the company. For example car safety.

there’s a local example in the Dispatch today . Customers biggest objection to increased water prices stem from poor water quality and service. While the water company might adhere to minimum standards, their customers want the standards to be higher. This seems right to me.

That’s the choice companies have to make. Weigh the added costs of compliance with customer demands with potential loss of sales if they don’t.

CSR advocates manage to sometimes get their way even though they would have no chance of enacting their point of view into law.

Isn’t that how all change starts? People advocate for change and bring pressure and sometimes that change is them legislated. It isn’t unusual at all, it’s how things work. People advocated the abolition of slavery before that was legislated and many believed that too was unlikely to pass, with the south believing that abolitionists were exerting influence they were not entitled too - so much so they ceded from the Union. Again an extreme example to highlight the point.

For me it is a sign of a system that works. Some argue for more social responsibility from corporations while others argue for less regulation and a free hand. where it is breaking down currently is in the lop sided access to power via financial inducements to politicians via lobbyists. the bankruptcy bill is a fine example of this.

Friedman himself says:

In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business. He has direct re­sponsibility to his employers. That responsi­bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con­forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.

The LAW is not CSR. The minute something become LAW (e.g., FCC, child labor restrictions, sugar subsidies), persumably because society has agree that something has to be done about a problem area or some other concern, it becomes something Friedman would agree the corporation has to abide by and/or leverage, whether it is in reality socially desirable or not. To the extent Coke has influenced corn subsidies (I don’t know whether they have or haven’t), shame on them. To the extent that politicians continue to allow one company (Archer Daniels Midland) to have such a death-grip over sugar subsidies, or Coke to unduly influence policy (if they do), shame on them.

CSR as it is generally understood operates totally outside the law, and short-circuits it by trying to move the perceived bar of “ethical custom.” They are somewhat successful at it, thanks to the biz-bad, govt-good mantra (which I agree, is “stupid”) that has been inculcated into too many skulls full of mush. CSR advocates manage to sometimes get their way even though they would have no chance of enacting their point of view into law. It’s best seen as an extra-legal means by which a small vocal group exerts influence they are not entitled to.

The coca-cola riff. Seems like a two way street to me. Coke is made using large quantities of high fructose corn syrup (it’s cheaper than sugar and more, well, sugary). The corn industry is heavily subsidized (Iowa is first in the nation after all !). While I hear coca cola bitch and moan about people being upset about selling their product to kids, especially in schools as some kind of public meddling in business - I don’t hear them complaining about the public subsidizing one of their largest ingredients to the tune of billions of dollars.

The question isn’t regulation yes or no. But how much and how heavy or light. This post seems very simplistic to me. For example. We have lots of laws about accounting practices. It’s quite burdensome to business to comply. It reduces their profitability. Would you argue that we eliminate that social responsibility to honestly account in order to increase profit ?

Should we allow business to use child labor to reduce costs ? I’m going to the margins of extreme here simply to highlight the point.

Finally, because businesses are naturally narrowly focused on their business, they aren’t appropriate organizations to develop an environment that is best for everyone.

Take the FCC for example. It regulates spectrum that broadcasters can use. Without it a socially irresponsible company could “pollute” the airwaves making everyones services from TV and radio, to cell phones and emergency services useless. Therefore having this imposed “CSR” benefits all business because it guarantees their services will work. Meeting FCC requirements is expensive and time consuming, but without it their business would be pointless. The free market alone does not solve this complex problem.

The business bad, government good or vice-versa is such a stupid frame to argue from. It’s neither and it’s both. The key is finding the right balance between public and private partnership to create the best possible environment for business to fuel a healthy society.

I think there are a whole bunch of ridiculous regulations that should be scrapped and I think there are a whole bunch of under-regulated businesses that should be regulated (California energy deregulation was a disaster).