When did we buy into the notion that corporations have the community’s best interest in mind?
Now before you think this is a blog post about bashing big corporations, consider this. Corporations by civil and criminal law are to make as much money as possible for their stock holders. If they don’t, CEO’s will be fired, boards replaced, investors will withdraw their money, civil suits will be filed and legal action will be taken. The western culture makes it very clear that corporations are to place making money above any fiduciary responsibility they may have to the communities they serve.
We could all take on the Wall Street bankers as a prime example of making money over serving their community, but there is a more current example buried in stories about BP’s oil spill in the Gulf of Mexico. It comes from an article in the New York Times entitled, “Regulator Deferred to Oil Industry on Rig Safety.” It states that the Minerals Management Service, the Interior Department agency charged with regulating the oil industry “continue[d] to allow the industry largely to police itself, saying that the best technical experts work for industry, not for the government.”
The key phrase in the sentence above is, “work for”. The technical experts that the agency relied on were people that work for the oil industry, not the agency or an independent source. When an oil industry corporation, like any other corporation, makes a risk assessment, their decisions are based on making money. The risk of oil spills, accidents and other things do factor in based on the actual monetary cost and the cost to their public image. But, in the end, the question is how much money can be made.
The people that work for the corporation didn’t want this oil spill. They, it is reasonable to believe, did all they could to prevent it. But, the experts that work for the corporation are all directed to make plans that are cost effective. They will likely convince themselves that the plan will work. If they don’t get outside assessment of their plans, they could be involved in “group think.” It is, in the simplest of terms, a concept that the original premise is correct and that members of a deeply cohesive group will convince each other that it is correct. Regulators should not rely on the industry people to assess their own plans.
The mandate of corporations should be first and foremost to serve the community instead of making money. Yes, of course, they need to make money. But they must create jobs, provide a product or service that the community needs and protect the environment first. They should be held accountable to that mandate.
If a specific corporation can’t do that, let another one that can.