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Friedman: social responsibility of business is to increase its profits (1970)
Image by ocean.flynn
Economist Milton Friedman, propagated 18th century values in the Post-WWII global economy. Like Adam Smith he preached the gospel of minimal government, laissez-faire. The triad, Hayek’s The Road to Serfdom (1944), Ayn Rand’s Atlas Shrugged (1957), and Milton Friedman’s Capitalism and Freedom (1962) pit economic efficiency against social justice.
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Footnotes
I compiled this digitized collage, inspired by Deborah Barndt's
Tangled Routes: Women, Work and Globalization on the Tomato Trail on November 16, 2006. I used a Google earth generated globe to situate as a kind of circumtomato globe. I developed the concept of John Elkington's Cannibals with Forks for the image of a world being devoured by those who choose to make decisions based on only one bottom line.
See also oceanflynn.wordpress.com/2006/11/17/friedmansocial-respon...
Barndt, Deborah (2001) Tangled Routes: Women, Work and Globalization on the Tomato Trail, Aurora, ON, Garamond Press.
Davis, Ian. 2005. "The biggest contract: By building social issues into strategy, big business can recast the debate about its role, argues Ian Davis." The Economist. May 28.
"The great, long-running debate about business's role in society is currently caught between two contrasting, and tired, ideological positions. On one side of the current debate are those who argue that (to borrow Milton Friedman's phrase) the “business of business is business”. This belief is most established in Anglo-Saxon economies. On this view, social issues are peripheral to the challenges of corporate management. The sole legitimate purpose of business is to create shareholder value. On the other side are the proponents of “Corporate Social Responsibility” (CSR), a rapidly growing, rather fuzzy movement encompassing both companies which claim already to practise CSR and sceptical campaign groups arguing they need to go further in mitigating their social impacts. As other regions f the world—parts of continental and central Europe, for example— move towards the Anglo-Saxon shareholder-value model, debate between these sides has increasingly taken on global significance. That is a pity. Both perspectives obscure in different ways the significance of social issues to business success. They also caricature unhelpfully the contribution of business to social welfare. It is time for CEOs of big companies to recast this debate and recapture the intellectual and moral high ground from their critics. Large companies need to build social issues into strategy in a way which reflects their actual business importance. They need to articulate business's social contribution and define its ultimate purpose in a way that has more subtlety than “the business of business is business” worldview and is less defensive than most current CSR approaches. It can help to view the relationship between big business and society in this respect as an implicit “social contract”: Rousseau adapted for the corporate world, you might say. This contract has obligations, opportunities and mutual advantage for both sides." See The Economist premium content.
Elkington, John (1997) Cannibals with Forks: The Triple Bottom Line of 21st Century Business, New Society Publishers, Limited.
Elkington, John (2003) Chrysalis Economy: How Citizen CEOs and Corporations Can Fuse Values and Value Creation, Wiley, John and Sons, Incorporated.
CBC, 2006. “In Depth: Wealth Canada's super-rich,” CBC News, Last Updated December 4, 2006, accessed December 12, 2006. Canadian Business magazine lists 1. the Ken Thomson family (media) .4 Billion Cdn or 19.6 Billion US); 2. Galen Weston (groceries) .1 .4 Billion Cdn; 3. The Irving family (oil) .45 Billion Cdn; 4. Ted Rogers Jr. (media) .54 Billion Cdn; 5. Paul Desmarais Sr. (Power Corp.) .41 Billion Cdn; 6. Jimmy Pattison (entrepreneur) .35 Billion Cdn; 7. Jeff Skoll (eBay) .93 .41 Billion Cdn; 8. Barry Sherman (Apotex drugs) .23 Billion Cdn; 9. David Azrieli (real estate) .44 Billion Cdn; Fred and Ron Mannix (mining) .38 Billion Cdn as ten of the 22 Canadian families who are part of the uber wealthy group of 793 billionaires who control .6 trillion US of the world's wealth. Others include Alexander Schnaider (steel) baron, Calvin Ayre (online gambling), John MacBain (classified ads), Guy Laliberté (Cirque du Soleil) 1 Billion Cdn. of this group of 22 billionaires their money came from pharmaceuticals, media, oil and gas, food retailing, printing, money management, construction and the BlackBerry. Five of the 22 are in their forties. Danko, William D. The Millionaire Next Door Danko, William D. Richer Than A Millionaire Drummond, Don, Tulk, David. 2006. “Lifestyles of the Rich and Unequal: an Investigation into Wealth Inequality in Canada.” Special Report. TD Bank Financial Group. December 13, 2006. Accessed December 14, 2006.
Drummond explains how the wealthier quintile of the Canadian population will continue to become wealthier while the middle quintiles will suffer with lower wage gains intensifying wealth disparities. The assets of of the lowest quintile fell by 9. 1% since 1999. This is the group which includes single women, Canada's children who live in poverty and seniors.
What is also interesting is that there is a significant amount of inequality within the highest wealth quintile of Canadians. One can get an appreciation of this fact by noting the pronounced difference between the mean and median asset holdings. While median net worth for the top 20% is 2,900, the average stands at ,264,200 suggesting a significant skew towards the extremely wealthy. This difference is even more pronounced when holdings of individual assets are compared for those who hold them within the highest quintile. The largest source of the skew towards the wealthy comes from the holdings of bonds which has a mean-median ratio of 7.9 (the larger the ratio, the greater the share of the asset is held by the top segment of the wealthy). The nebulous category of “other non-financial assets” also has a significant concentration in the super-wealthy. Included within this category are such items as the contents of the residence, valuables, collectables, as well as such high value and sparsely-held items as copyrights and patents. [...] Within this category, the share of employer-sponsored pension plans (18.5%) is twice as large as individual pension assets (10.5%) such as Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), and Locked-in Retirement Accounts (LIRAs). Holdings of non-pension financial assets (10.4%) and equity in business (10.5%) each represent a comparatively smaller portion of total asset holdings.
Morissette, René, Zhang, Xuelin. 2006. "Revisiting wealth inequality: Perspectives on Wealth and Income," Statistics Canada. http://www.statcan.ca/english/freepub/75-001-XIE/11206/high-1.htm
Vol. 7, no. 12. December 13, 2006. Accessed December 14, 2006.
"When all families are considered, real average wealth rose 70% from [1999 to 2005] however wealth inequity increased as well. Real average wealth increased between 51% to 70% reflecting large increases for the wealthiest 10% of Canadians who held 58% of the wealth, a percentage that continues to rise as it has since 1984. For fifteen years prior to the deep cuts made in the post-1984 period of deficit panic wealth inequity fell then plateaued. Canadian families will continue to become more at-risk to social exclusion as their debts increase, equities are reduced and they face little or no wage increase.Morissette and Zhang (2006) reveal how challenging it is to estimate the share of total wealth controlled by the upper quintile, particularly the UHNW. See also Davies (1993). While 10% may control 58% of Canadian wealth less than 1% of Canadian families may in effect hold up to 46% of the wealth.While Morissette and Zhang (2006) claim that elderly unattached individuals saw their median wealth double, from roughly ,000 in 1984 to 0,000 in 2005, they did not qualify that the extremes of wealth and poverty skew the statistics. See the article on the large number of senior Canadians who live below the poverty line.While the wealthiest quintile, particularly the top 1% benefited since 1984, the lowest quintile, mainly female lone-parent families remain as by far the most financially vulnerable. "In all years, more than 40% of persons in these families were in low income and would have stayed in that state even after liquidating their financial assets." This is where Canada's children who live in poverty in a rich country live. Lower quintile included those with median wealth no higher than ,000, families with no assets at their disposal to lessen the impact of unexpected expenses or earnings disruptions. The average wealth of the most vulnerable families fell to -00 between 1999 and 2005 from zero assets/debt ratio through the 1980s to negative (about -,000) in both 1999 and 2005. The value of their real estate, for those who did have a modest home, did not rise. "it fell substantially among those in which the major income recipient was aged 25 to 34. In 2005, these families had median wealth of ,400 (in 2005 dollars), much lower than the ,000 and ,400 registered in 1984 and 1999 respectively." While in the middle quintile there was a modest rise of average wealth rose of about ,000, families in the most wealthy quintile experienced a substantial increase in the value of their real estate. They allocated more of their financial assets to RRSPs and LIRA holdings. They sharply increased their investments in RRSPs between 1986 and 2003.
"Median wealth more than doubled between 1970 and 2005, having grown by c.20-25% since 1984. While the median wealth of young families fell by half between 1984 and 2005, it rose by almost 40% for those in which the major income recipient was a university graduate aged 35 to 54."
Stenner, Thane, Bower, Rod, Currie, John, O.Connor, Rory. 2006. “True Wealth Report: Values and Views of Ultra-Affluent Individuals,” www.truewealthreport.com/downloads/2006_TWR_low.pdf
Researchers for the True Wealth report surveyed 165 Ultra High Net Worth (UHNW) individuals, those whose assets are over .
Helping Md. Municipalities Go Green to Save: New UMD Initiative
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Image by University of Maryland Press Releases
University of Maryland News
June 27, 2011
Helping Md. Municipalities Go Green to Save: New UMD Initiative
Municipal League, UMD Team Up To Guide Communities to Sustainability
COLLEGE PARK, Md. - The University of Maryland and the Maryland Municipal League are teaming up to help communities plan and implement green, sustainable practices that may help them cope with tight budgets.
Based on a successful model in New Jersey, the free, voluntary program will guide communities through a series of steps that will ultimately earn them a "certificate of sustainability."
The program - Sustainable Maryland Certified - is expected to be attractive to smaller communities, and may eventually earn participating municipalities preferences in competition for state and federal grants, the organizers say.
"Planning for and adopting green, sustainable practices can be intimidating at first, so our idea is to create a menu of options that will help and encourage local officials to get on the path," says Joanne Throwe, director of the University of Maryland's Environmental Finance Center. "Municipal leaders tell us they'd like to green their communities, especially because they think it will cut their long-run costs. Our goal is to give them a free, voluntary entry point to help them begin, and then guide them through the process."
Throwe and her team unveiled the program and began recruiting communities to get involved at yesterday's annual meeting of the Maryland Municipal League. Local officials can now register online at the program's new interactive website: www.sustainablemaryland.com/index.php .
An advisory panel of about a dozen mayors in the league has been guiding Throwe's team as they put Sustainable Maryland Certified (SMC) together over the past several months.
"Maryland cities and towns have long searched for a systematic approach for accessing existing sustainability tools and resources available in our state," says Scott A. Hancock, the Maryland Municipal League's executive director. "Sustainable Maryland Certified is the right solution providing the proper incentives and enticements to encourage 100 percent municipal participation in sustainability efforts."
The program provides a framework, training, planning tools and an incentive to guide communities' greening efforts. The certification will prove to be a rigorous and meaningful designation, the organizers say. Certifications will be awarded at a ceremony in the fall of 2012.
Communities won't have to pay the Environmental Finance Center (EFC) to participate, and will be steered toward public or private funding that may help defray the costs of projects.
Eventually, the EFC hopes that communities that earn certification will get priority when they apply for state development funds. Communities can navigate the process at their own pace and tailor activities to fit their budgets.
INITIAL INTEREST FROM MAYORS
In Prince George's County, the Port Towns community of Colmar Manor says it wants to be one of the first municipalities to earn certification.
"Sustainability and healthy living go hand in hand," says Colmar Manor Mayor Michael Hale, a member of the program advisory panel. "It's all part of the ecosystem we live in."
Hale says he hopes to earn certification points for rooftop solar panels, rain gardens, and community gardens the town has recently worked to put in place.
"We need to create a stable relationship between human activities and the natural world by addressing economic, social, and environmental values," says Chestertown Mayor Margo Bailey on the Eastern Shore, stressing the need for the program.
"If municipalities are looking for cost-effective and strategic ways to protect their assets, revitalize their communities, and improve their long-term quality of life, we're there to help," Throwe says.
Communities can potentially see long-range economic benefits by incorporating energy saving measures, improving water quality and land preservation, strengthening local economic development, and addressing local health needs and inequities, she explains.
"We want to leverage our expertise to assist local officials across the state as they embark on sustainability programs," says University of Maryland President Wallace D. Loh. "This can stimulate economic development and community wellbeing, and that's a vital part of our service mission as a Land Grant institution focused on the statewide needs of Maryland citizens"
HOW IT WORKS
The program establishes a point system - earn 150 points and the community wins certification. Points are earned by setting up programs to address a range of issues such as global warming, energy, pollution, land use, air and water quality, health equity, support for local businesses, sustainable agriculture, green buildings, transportation, and more.
If the municipal initiatives meet established standards, the actions will be accepted and counted towards certification. Also, communities can earn points for new or pre-existing programs deemed to be "innovative demonstration projects."
More program details are available online:
newsdesk.umd.edu/pdf/2011/SMCinfo.pdf.
FUNDING
Funding for the creation and administration of Sustainable Maryland Certified is provided by the U.S. Environmental Protection Agency and the Town Creek Foundation. Program partners include the Maryland Municipal League, EFC's sister center, the National Center for Smart Growth Research and Education at the University of Maryland, as well as 87 other organizations from the public and private sectors, nonprofits, and academia.
The EFC is one of ten university-based centers across the country whose mission is to help communities identify sustainable strategies for financing their resource protection goals.
MEDIA CONTACTS
Joanne Throwe
Director, UMD Environmental Finance Center
443-262-5286
jthrowe@umd.edu
Neil Tickner
Senior Media Relations Association
University of Maryland
301-405-4622
ntickner@umd.edu
