One of Milton Friedman’s best essays dealt with this issue about 30 years ago. His argument was that since corporate managers are hired by the stockholders for the purpose of getting the best return on their investment, for managers to act in ways that make them feel good but reduce profitability is a derelection of duty. It’s the same as politicians being generous with other people’s tax money.
The argument is asymmetrical. If a worker finds a better paying job, or decides to go into business for himself, no one condemns him for turning his back on his faithful employer. Similarly, if a business finds a lower cost source of supply, no one sheds crocodile tears if it switches to the less expensive supplier. And of course, shoppers rarely show a “conscience” when they look for better deals than they had been getting in the past. It’s all just competition.
Ah, but if an employer finds a lower-cost labor source and chooses to utilize it, then we have some great moral failing, especially if the lower-cost source happens to be in another country. The ethicists will rant on about “heartless” capitalism and we’ll hear maudlin speeches from politicians. Being laid off, however, is not a death sentence. Nearly everyone finds new work, although sometimes not as as desirable as the former job, before the unemployment benefits run out.
Forget all the blather about “social responsiblity” of business. To the extent that mangers pay higher than necessary costs for any of their inputs, they are wasting resources and ignoring their obligation to the people whose property they manage.
