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Source link: http://archive.mises.org/5933/let-the-consumer-decide/

Let The Consumer Decide

November 24, 2006 by

This morning’s Wall Street Journal (Nov 24) has an op-ed by Henry Manne (Dean emeritus of the George Mason University School of Law) commenting on Milton Friedman. Now, hold your fire – I know Milton is not perfect in Austrian eyes (neither is Albert Schweitzer) Among other points, Manne comments on Friedman’s dislike of public corporations that strayed “off the reservation to join the altruists” – the question of corporate social responsibility. Milton frowned on such behavior, as you would expect. Like most of us he believed that profitability, not warm-heartedness should rule the corporate mission statement. Friedman suggested corporate legislation to prevent such a violation of fiduciary responsibility to stockholders.

At the time Manne (an expert on the congruence of law and economics) disagreed. Things are not always what they seem, he maintained. This seemingly “altruistic” behavior was really maximizing profits, so leave it alone.

This discussion of 34 years ago, brings to mind an amazingly simple suggestion made by somebody (maybe my Economist son) pointing out to me that it was wiser, for say Wal-Mart, to offer low prices and let the consumer (if he choses) distribute the resulting savings to the charity of HIS choice. Better than allowing corporate management swayed by personal motives and responsible to 1000′s of stockholders, make that decision. Makes sense to me.


Matthew November 24, 2006 at 4:58 pm

While I may be in disagreement with a lot of libertarians on the subject, I have no problem with corporations adopting socially responsible behaviour. Simply because the term “socially responsible” is entirely subjective.
If said companies make these strategies publicly known, then investors are free to choose their portfolios based on how they think these policies will affect the overall return on their investment. Just as we are sovereign as consumers, so are we sovereign as investors.

M E Hoffer November 24, 2006 at 6:53 pm

Mr. Roberts,

This observation: “amazingly simple suggestion made by somebody…” is truer, in facr, than you may have intended.

That “somebody” would do well by dialing up:
The High(Economic) Cost of Low(Financial) Prices is a story best illuminated by what can be known about WMT, though, certainly, by no means–we’re not so lucky–is it limited to WMT alone.

The idea, that the charitable donations of the pennies one is able save by ‘shopping’ at Wal-Mart, would, somehow, be able salve the pound(s) of flesh extracted, from us all, in its(WMT’s) continuation, would be laughable, but for the sobering reality that it can be freely communicated, without opposition, among, otherwise, cognitive beings.

To Matthew’s point, above: 2X

Horatio November 25, 2006 at 6:53 am

Which investment has a greater NPV?

Wal-Mart already offers significantly lower prices than its competitors so it can raise them a bit without losing much business. Taking this extra cash and giving it to charity or to their employees may very well disarm a few statists who would otherwise have prevented the opening of another Wal-Mart.

The alternative is to allow consumers to distribute (or keep) the savings. It is doubtful these consumers in Anytown USA will come to the aid of Wal-Mart in Anywhere Else USA the next time a group of statists attempts to prevent a store opening.

billwald November 25, 2006 at 12:48 pm

Unless the electronic banking system crashes and blasts the world back to the 14th century, a world wide mercantilist government is a done deal. It is a social return to an 80% working poor class, 15% or so of middle class professionals, and the rest, stinking rich.

This new world is being expedited by the world wide breakdown of the old social barriers – race, religion, national origin, & etc. The result of the breakdown is that young people are, for the first time in 8,000 years, able to freely choose their mates. On what basis are the young people choosing mates?

From my observation, on the basis of intelligence, ambition, education, and, I suppose, appearance, because in this life, appearance aids ambition. In other words, we are voluntarially self segregating into social classes. The rising economic tide will not lift all people equally. The deadheads will stay on the bottom.

M E Hoffer November 25, 2006 at 3:18 pm

Somewhat along the vector that billwald delineates, with this splice: “a world wide mercantilist government / is being expedited by the world wide breakdown of the old social barriers…”– Lies:

M E Hoffer November 25, 2006 at 3:28 pm

Also, Horatio,

By starting your post with this interrogative: “Which investment has a greater NPV?”
And, in view of the onomatapoeia of your Nom de ‘Net. Are you cracking wise?

M E Hoffer November 25, 2006 at 3:43 pm

My error,

onomatapoeia, should be: homonym

Horatio November 26, 2006 at 6:58 am

I’m just pointing out that Wal-Mart may create more value for its shareholders by feigning concern for some popular charity.

Horatio is the English spelling of my first name.

ted roberts November 26, 2006 at 10:13 am

Horatio, absolutely correct. In fact the WSJ piece by Manning suggests that Walmart’s charity could be a form of profit enhancement. I see it that way too. Thanks for you clarification, ted

M E Hoffer November 26, 2006 at 1:53 pm

“suggests that Walmart’s charity could be a form of profit enhancement”

Much in the same way of the Arms Dealer donating to the USO.

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