For Business, 'Socially Responsible' Should Mean Earning A Big Profit

IBD ^ | February 14, 2008 | Henry I. Miller

[Kaslin]

Bill Gates may be the world's richest person — and also the most generous, as measured by amount of philanthropy — but we shouldn't assume those characteristics make him the most perspicacious.

In a Jan. 24 speech to the World Economic Forum in Davos, Switzerland, Gates laid out his vision of "creative capitalism," which encourages companies to spend money on worthwhile causes or on money-losing projects that are judged to be socially desirable.

According to Gates' fuzzy logic, this is "market-based social change" that does "work that eases the world's inequities."

Good goals, bad strategy. Gates is not the first paragon of capitalism to endorse such actions. Daniel Vasella, the chairman and CEO of Switzerland-based Novartis, the world's fifth-largest pharmaceutical company, declared that multinational companies "have a duty to adhere to fundamental values and to support and promote them."

If he were referring to the corporate values of honesty, innovation, voluntary transactions and the wisdom of the marketplace, he'd be right. But what he meant was "collaborating constructively with the U.N. and civil society to define the best way to improve human rights."

Reduction of inequities and expansion of human rights are worthy goals, to be sure, but Gates' and Vasella's altruism brings to mind economist Milton Friedman's reproachful observation:

[Jaysun]

What a load of crap.

[adorno]

,I.What a load of crap.,/I.

Did you read the article.

I thought it was very worthwhile reading and very informative and very instructive as to what capitalism is supposed to be about.

If capitalism is allowed to work as designed, then the "social" part will take care of itself by providing the many jobs that make society work.

If Bill Gates had been allowed to run the business side of Microsoft, Microsoft would never have gotten to be what it is today. Gates was a geek with a great idea, but it took good businessmen to make Microsoft succeed.

[theBuckwheat]

Profit is the measure of the value a business is creating. Simply put, it is the difference between the price the public is willing to pay for what it sells as compared to the cost of the item or service being performed.

[Jaysun]

Right. The load of crap is the idea that businesses are supposed to be “good citizens” or whatever. I think it’s a bunch of collectivist nonsense.

[adorno]

The load of crap is the idea that businesses are supposed to be “good citizens” or whatever. I think it’s a bunch of collectivist nonsense.

Ok, fine.

But, your original remark did not make the distinction your're making now and it sounded like you were calling the article or its contents "crap".

[rabscuttle385]

If the stockholders demand "social responsibility," then by all means, the company should deliver. If the customers also demand "social responsibility," then make the customers happy.

If none of the above apply, then yes, it's the company's duty to create value for its owners (or, in other words, profits for its shareholders).

[Jaysun]

No. I should have been more clear.

[ovrtaxt]

Exactly right. Business entities have no obligation to social improvement, that’s the responsibility of free individuals.

I own a business. My business exists to make me money. I exist to serve God and mankind, and I use my money to do so.

[1FreeAmerican]

If Bill Gates was getting laid in college do you think there’d be a Microsoft??? Hell No!!!!! (lyrics from some stupid rap song i heard once.)

[the invisib1e hand]

If capitalism is allowed to work as designed,

designed, eh?

[the invisib1e hand]

bwahahhahah!

[adorno]

designed, eh?

Perhaps, not "designed", but "as it was meant".

But, when it comes to economic systems, there has not been a "design" for a better one than capitalism. But, the design of capitalism is perhaps a natural one. Supply and demand is a natural design. Buy low and sell high is kind of natural design when it comes to making money. Create a product for which there exists a demand is also kind of a natural design. In essence, the is a natural design or common-sense approach to capitalism or a free market system.