What Were They Thinking?

The question was posed in the headline of a New York Times editorial.  It concerned Volkswagen, accused of rigging auto software to manipulate emission readings and evade regulatory limits.

But it could have just as easily applied to the CEO of Turing Pharmaceuticals who bought the rights to a drug used to treat a rare but life-threatening infection and promptly jacked the price up from $13.50 a pill to $750.

It could even have applied to Ben Carson, neurosurgeon-turned-presidential-candidate, who said Muslims aren't fit to seek the office.

Carson sought shelter in the current campaign against "political correctness." The ostensible concern, explains the New Yorker's Jelani Cobb, "is that the parameters of polite (or at least non-bigoted) discussion get in the way of truth-telling, leaving us with good feelings and palliative falsehoods."

Of course, as Cobb also points out, there is no necessary relationship between truthfulness and offensiveness. One does not naturally flow from the other. A lot of what passes for political correctness -- e.g., using gender neutral sentence construction, avoiding racist and homophobic slurs, etc. -- is actually an effort to conform our language to more enlightened ethics. Carson's offense was not failing to respect political correctness, but engaging in religious bigotry. 

Similarly, Volkswagen and Turing's behavior represent ethical failures. Some will argue that Turing was simply attempting to price its drug to what the market will bear. The "market" reacted and now the company will adjust. That's how capitalism works.

It will be harder for Volkswagen to cloak itself in the principles of the free market. Even Milton Friedman, outspoken apologist for capitalism, cautioned that, in the pursuit of "shareowner value," companies had to "follow the rules of the road." 

Unfortunately, the only limit most companies put on trying to shape those rules is what they can get away with. And it isn't a long leap from that to trying to circumvent the rules entirely. Especially if you think your basic purpose -- or reason for being -- is to generate profits.

That, alas, is what the people at Volkswagen and Turing who were ultimately responsible for this behavior were thinking. But they misunderstood their purpose. Sure it's to create value, but not just for the people who own the company. They also need to create value for everyone who contributes to their company's successes and bears the risk of its failures.  

That is a company's true ethical purpose. And that's what should guide every capitalist's thinking.

 

 

 

 

 

Comments

[John Gilfeather]

Nicely said, Dick. Hard to say which is worst, but VW is deception on a grand scale.