Jun 2, 2017
Myths That Are Destroying America
Myth #4: Public Corporations Have Ethical Standards Just Like People Do
By David Grace (www.DavidGraceAuthor.com)
Public corporations are artificial constructs that have no ethics whatsoever beyond their one, self-perceived obligation: No Matter What, Get More Money!
Corporations Are Not Human Beings
Lawyers have created the legal fiction that corporations are “persons” that have the same rights as human beings: the right to due process of law, the right to be immune from illegal search and seizure, the right to freedom of speech, etc.
This often fools us into thinking that corporations are like people. They are not.
In point of fact, public corporations are like the robots in science fiction movies, not the cute ones in Star Wars, but models like the Omni Consumer Products ED-209 in Robocop.
Except for true psychopaths, most human beings have an ethical matrix with varying levels of empathy, and some degree of emotional awareness — regret, anger, sorrow, joy, etc.
Public corporations, like other artificial life forms, have none of those things. They have programming, targets and goals. The one and only ethical rule they acknowledge is: Maximize Shareholder Value.
Understand The Difference Between A Human And A Robot
That Waymo car may look like somebody is driving it, but it’s only a set of lasers and computer chips executing a very advanced matrix of IF-THEN choices. It doesn’t care if it hits you or misses you because it doesn’t care about anything at all. It can’t care.
It can only do what it’s programmed to do.
When a human sniper picks up his rifle and finds the target in his scope he may or may not decide to blow out the brains of that nine-year-old little girl who’s standing between himself and his assignment.
A smart bomb has no such limitations. It can’t. If it sees the target it kills the target.
If you’re the CEO of your family-owned dairy, you may or may not decide to continue to ship ice cream after you find out that products from your plant have repeatedly tested positive for the listeria bacteria.
What you decide to do will depend on all kinds of factors including your personal levels of common sense, greed, empathy, honor and integrity.
If you’re the CEO of a public corporation you will probably continue to ship ice cream from the facility that tested positive for listeria for another two years until five of your customers contract listeria, three of whom die from the disease.
You see, that public corporation is not a human being with human emotions, ethics or character. It is an artificial construct whose one and only purpose is to make as much money as possible as fast as possible. It feels nothing and it has no moral code beyond: Make More Money.
It not only cares about nothing, it can care about nothing beyond making the maximum amount of money as quickly as possible.
There Is No Soul In The Machine
You can dress a robot up in a suit, slap a toupee on its head, and give it a classy AI voice, but that’s all window dressing. At its core, it’s only a machine.
It has no more personality, heart, or empathy than Siri does, which, contrary that incredibly stupid movie, has none.
A public corporation, just like a robot, isn’t a real person. It can’t care and it doesn’t care about anything beyond its prime directive — Get more money.
A Thought Experiment
You think I’m exaggerating? You think I’m just saying this for effect?
Let’s take this little mental test.
You’re the CEO of MegaPharma, a $50 Billion/year company. You learn that your new “big” drug, Maximill, that’s in its final stages of human testing, has been discovered to cause total kidney failure in nine percent of the patients who take it for more than nine months.
You have halted the clinical trail and you have not submitted these results to the FDA. You realize that you will not be able to get the drug past the FDA.
You’ve also learned that Maximill has an unexpected off-label use — it’s effective at treating malaria. The malaria treatment period is three months and the kidney failure rate is estimated to fall to four percent over that time period.
Your staff tells you that you can get the drug approved for sale in Africa based on the initial human tests already completed, none of which discovered the kidney failure problem. African sales of Maximill are projected to exceed $2 Billion per year.
Now, you as a human being might feel that it would be wrong to sell a drug that’s going to kill four percent of the people who take it, but that’s not your call.
When the board meets on the 38th floor of the company’s headquarters in New York, you tell them about the problem with Maximill and you also tell them that you’ve found a way to gross $2 Billion per year by selling it in Africa as an anti-malaria drug.
[I admit that this is a somewhat unrealistic scenario because the CEO wouldn’t actually say any of this at a Board meeting because people keep records of what’s discussed at Board meetings and the lawyers would have a fit if there were any records proving that the Board knew about this problem. In the real world this would all be done verbally, quietly and without any witnesses. But, since this is just a thought experiment, we’ll suspend disbelieve a bit here.]
As you look down that big, oak table you think about telling them, “But it would be wrong to sell a drug that’s going to kill 4% of the people who take it.” Then you consider who’s sitting at that table.
They’re not your high school civics teacher and kindly old Doc Johnson who used to give you your flu shots. They’re all heavy hitters. Each of them is on the board of directors of at least three other Fortune 500 companies — Ford, Walmart, GE, Kraft.
What do you think their reaction will be if you say, “Guys, we can make $2 Billion a year for the next five to ten years, almost all of it pure profit because it costs us next to nothing to actually make and ship the pills, but we shouldn’t do that because it would be morally wrong. No, we should just cancel Maximill and move on”?
One of them might mumble something like, “Yes, Bill, we need to consider all these issues, but this kidney problem could be a statistical anomaly. After all, the trials were shut down before they were completed. And, as you said, that 9% figure was only after nine months of treatment. The 4% figure is only a projection, a guess. We don’t know for sure that it will be that high. It could be much less than that or even zero.”
Then another board member will add, “We’ve spent over a billion dollars developing Maximill and if we don’t pursue the alternative market that’s a dead loss. I wish we had the luxury of just writing it off but we have an obligation to our shareholders. I don’t think we can just throw away a billion dollars in costs and two billion dollars a year in revenue because of an untested theory that some tiny percentage of patients might have an adverse reaction.”
Then the board will look expectantly at you. You will have two choices.
You can say, “No, we shouldn’t ship Maximill, but if we do decide to go ahead we’ll need to make a full disclosure of the preliminary results from the uncompleted test to the licensing authorities and include prominent warnings to all potential patients, if the authorities will allow its sale at all” or you can say, “I’ll have my staff begin working on the regulatory approvals for sales in the African market.”
Here’s what will happen: MegaPharma will ship the drug based on the trials that didn’t discover the kidney problem and the package insert will have a statement in fine print: “May cause kidney problems in certain patients. Notify your physician if you experience adverse kidney issues.”
You think I’m exaggerating? Take a look at the case of Merck and Vioxx and decide for yourself.
Vioxx (Rofecoxib) on Wikipedia
You can generally expect the reaction of public-corporation executives to ethical issues to be similar to the response of the sergeant of the guard at Auschwitz when asked pointed questions about his conduct — “What I’m doing is legal. I’m just doing my job.”
That really advanced AI robot would tell you the same thing.
Public Corporations Have No Ethical Awareness
I don’t care how much you think that the Bengal tiger you raised from a three-month-old cub is really a nice little pussy cat, it isn’t. I don’t care how much you think that your now-adult Bengal tiger is a nice pet who loves you.
It’s really a wild animal with wild-animal instincts, and if they’re triggered it will kill you.
You may want to think that Volkswagen or Wells Fargo or British Petroleum or Enron or United Airlines or GM or Carrier or Lehman Brothers or any other public corporation is like some ethical, decent “person” that cares about its employees and its products and its customers, but it doesn’t care about any of that because it can’t care, because there is no “there” there.
There is no emotion there. There is no integrity there. There is no heart or soul there. It’s only a thing.
Public corporations are just emotionless, artificial entities. The humans who run them have forsworn all work-related ethics, emotions and morals and replaced them with one and only one ethical duty: Do everything possible to maximize shareholder value.
- Yes, firing these 2,000 employees and moving their jobs to Mexico will devastate the community but we owe it to the shareholders to maximize profit.
- Yes, we’ve had reports that these quotas for opening new accounts are driving our employees to mistreat our customers but we’re not going to get rid of them because we owe it to the shareholders to maximize profit.
- Yes, we could test that wellhead’s integrity but if we do that we might find out that it isn’t safe so we’re not going to test it because we owe it to the shareholders to maximize profit.
- Yes, we can’t meet the emissions standards for our diesel engines so we’re going to cheat on the emissions tests because we owe it to the shareholders to maximize profit.
- Yes, the product from that facility has twice tested positive for listeria bacteria but we’re not going to shut down that plant and replace all that equipment because we owe it to the shareholders to maximize profit.
- Yes, we’re getting reports of severe heart damage to some of the long-term users of this drug but we’re not going to pull it or warn them because we owe it to the shareholders to maximize profit.
- Yes, it would only cost us a couple of dollars per vehicle to fix this ignition switch problem but we’re not going to do it because we owe it to the shareholders to maximize profit.
- Yes, these sub-prime mortgage securities are total junk but we’re going to continue selling them because we owe it to the shareholders to maximize profit.
Public Corporation, Great White Shark — Six Of One, Half Dozen Of The Other
Maybe the closest analog to a public corporation is the great white shark who knows only two things: swim and feed. Public corporations know only one thing: More profit.
- When right-wing politicians tell us that we need to “turn business loose” they’re telling us that we need to let the great whites into the pool with our kids.
- When right-wing politicians tell us that businesses are restrained by too many regulations, they’re telling us that we need to let the great whites into the pool with our kids.
- When right-wing politicians tell us that we don’t need to police public corporations, that they will self-regulate themselves, they’re telling us that we need to let the great whites into the pool with our kids.
- When right-wing politicians tell us that what’s good for public corporations is good for America, they’re telling us that we need to let the great whites into the pool with our kids.
It’s pointless to blame the tiger for killing its trainer. It was only acting in accordance with its nature. The proper response is to create an environment where the tiger can’t kill its trainer.
It’s pointless to blame the great white for eating the kids in the pool. You have to set up an environment where the great white and the kids aren’t in the same pool.
It’s pointless to blame the ED-209 for trying to kill Murphy. You have to take the ED-209 out of service.
It’s pointless to blame public corporations for acting like rapacious beasts. You have to change their programming so that their highest duty is no longer to maximize profits.
How can you do that? Lots of ways. Here are some of them:
Could This Be The New Trillion-Dollar Product That Vastly Reduces Bureaucracy?
– David Grace (www.DavidGraceAuthorl.com)
