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For well over a decade people of a libertarian bent have been arguing that businesses will naturally seek to do good in order to do well — that businesses won’t do things that create viciously horrible externalities (pouring toxic solvents into streams, employing 8-year-old kids rather than grown women to embroider shirts in Asia) because those things will reflect so badly on their public image that they will hurt the business. I’m in China at the moment, where the theory that corporate social responsibility is a workable substitute for government enforcement of workplace and environmental norms has led to a generally very positive phenomenon of footwear and textile manufacturers inviting private inspection companies into factories to ensure they comply with their own voluntary corporate responsibility compacts and so forth.
But the flip side of this proposition is that if corporations do things that are bad for the world, they have to expect to be criticized. Matthew Yglesias points to Doug Bandow of CATO saying Obama shouldn’t be criticizing hedge funds for insisting on conditions that sank Chrysler into bankruptcy. That’s silly. When individuals and corporations do things in their own financial interests that are bad for the rest of society, the rest of society should savage them in public and, if it sees fit, take steps to make it impossible for such businesses to take similar actions in the future. Businesses ought to have to reckon with public opinion as part of their decisionmaking process; we congratulate Google for starting a foundation that does a lot of good worldwide, and we rail against hedge funds for throwing a lot of American workers out of their jobs. That’s the deal with being a member of society.
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