Norway and business ethics

May 4, 2007

I took a college course on Environmental Business Ethics, where you get the rude awakening how a-moral most businesses are.  If the cost savings of dumping chemicals in the river and the PR damage of the event is less than the fine, will a company do it? (Short answer: Yes).  Further, once the company starts saving money through unethical practices and shortcuts, will others follow to remain cost competitive? (Short answer: Yes).
Recall the Fight Club narrative: “A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don’t do one.”

I’ve actually had family members lose jobs in small towns due to Walmart entering the area – and they still blissfully shop at Walmart weekly with no sense of correlation or causation.

So the article on Norway’s recent investment decision making puts a smile on my face.  Nicely done.  Now, hopefully we can avoid some of the posturing and political statements of recent Nobel prize choices.


3 Responses to “Norway and business ethics”

  1. Mark Says:

    Tit for tat. If Norway is going to be a bunch of assholes by singling out Walmart then the U.S. government should invoke reprisals.

  2. Ian Monroe Says:

    I read that article and indeed, hooray Norway.

    Mark: yes, I think we should by not investing all that extra money we have in Norway. Oh wait, I forgot, we’re billions of dollars in /debt/.

    Seriously, Wal-Mart didn’t even take Norway’s call until they sold their shares. For ethical investing to work at all, companies need to be responsive to the demands of their share holders (which *surprise* doesn’t always have to be *make more money*). Norway was correct to withdraw just for Wal-Mart failing that basic test.

  3. Hank Miller Says:

    As I recall Wal-Mart ran out all those stores that charged way too much for garbage and did way with a frown.

    I don’t miss those old tiny stores at all – you could rarely find what you wanted in them. When you did you paid way too much for it. When I was in a hurry I used to drive 1/2 hour (one way) to the nearest city with a real mall because odds were I’d have to do that anyway, and the nearest small stores were 10 minutes the other way.

    Maybe your experience is different, but I say good riddance to those stores. I didn’t want them anyway.

    P.S. There are some stores that are still in business 15 years after wal-mart came to town. They are the ones that provided good service, and had what I was looking for. (of course I would look for shoes in a hardware store) Come to think of it, most of them sold quality, so that their prices were more than Wal-Mart was worth it for the quality.

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