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Business Ethics ­MGT610
VU
LESSON 28
THE ETHICS OF POLLUTION CONTROL
Businesses have been ignoring their impact on the natural environment for centuries, largely
because the economic costs and harmful effects of this impact have been unclear. Businesses
have treated air and water as free goods that no one owns. Since the carrying capacity of both is
so large, each individual firm sees its own contribution to pollution as negligible. Combined,
however, the effects are enormous. The harm comes not only from the direct activity of
businesses. Pollution also occurs as a result of consumer use of manufactured items. The
problems of pollution have a variety of origins, and will require a similarly varied set of
solutions. The rest of this chapter concentrates on a single range of problems, the ethical issues
raised by pollution from commercial and industrial enterprises.
Because our environment is so complex and its parts are so interwoven, many theorists believe
that our duty to protect the environment extends beyond the welfare of humans to other
nonhuman parts of the system. This idea, called ecological ethics or deep ecology, maintains
that the environment deserves to be preserved for its own sake, regardless of whether or not this
directly benefits humanity. Because the various parts of an ecological system are interrelated,
the activities of one of its parts will affect all the other parts. Because the various parts are
interdependent, the survival of each part depends on the survival of the other parts. Business
firms (and all other social institutions) are parts of a larger ecological system, "spaceship
earth."
Several supporters of this approach have formulated their views in a platform consisting of the
following statements:
i.
The well-being and flourishing of human and nonhuman life on earth have value in
themselves. These values are independent of the usefulness of the nonhuman world for
human purposes.
ii.
Richness and diversity of life forms contribute to the realization of these values and are
also values in themselves.
iii.
Humans have no right to reduce this richness and diversity except to satisfy vital needs.
iv.
The flourishing of human life and cultures is compatible with a substantial decrease of
the human population. The flourishing of nonhuman life requires such a decrease.
v.
Present human interference with the nonhuman world is excessive, and the situation is
rapidly worsening.
vi.
Policies must therefore be changed. The changes in policies affect basic economic,
technological, and ideological structures. The resulting state of affairs will be deeply
different from the present.
vii.
The ideological change is mainly that of appreciating life quality, rather than adhering
to an increasingly higher standard of living.
viii.
Those who subscribe to the foregoing points have an obligation directly or indirectly to
participate in the attempt to implement the necessary changes.
An ecological ethic, therefore, claims that the welfare of at least some nonhumans is
intrinsically valuable and deserving of respect and protection. Utilitarian and rights arguments
both support such a view. Under either system, for instance, it would be wrong to raise animals
for food in painful conditions.
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Business Ethics ­MGT610
VU
Though some of the views of deep ecology are unusual and controversial, two traditional views
of ethics can also help us to develop an environmental ethic: utilitarianism and concern for
human rights.
William T. Blackstone has argued that the possession of a livable environment is something to
which every human being has a right. To some extent, U.S. federal law recognizes this concept.
The main difficulty with Blackstone's view, however, is that it fails to provide any nuanced
guidance on several pressing environmental choices. This lack of nuance in the absolute rights
approach is especially problematic when the costs of removing certain amounts of pollution are
high in comparison to the benefits that will be attained.
Utilitarianism can answer some of the difficulties with Blackstone's theory. Utilitarians see
environmental problems as market defects, arguing that pollution should be avoided because it
harms society's welfare.
To make this position clear, it is helpful to distinguish between private costs and social costs.
Private costs are the actual cost; a firm incurs to produce a commodity. Social costs include the
costs that the firm does not pay­the costs of pollution and medical care that result from the
manufacture of the commodities. The divergence of private and social costs is problematic
because the divergence means that price no longer accurately reflects all of the costs of a
commodity. This means that resources are not being allocated efficiently, and society's welfare
consequently declines.
When markets do not take all costs into account, more of a commodity will be produced than
society would demand if it could measure what it is actually paying for the commodity. In
addition, producers ignore these costs and do not try to minimize them. Since goods are no
longer efficiently distributed to consumers, pollution violates the utilitarian principles that
underlie the market system.
The remedy for external costs, according to utilitarians, is to internalize them to ensure that the
producer pays all of the real costs of production and uses these costs to determine the price of
the commodity. To internalize the costs of pollution, a firm may be required to pay all those
harmed by pollution. A problem with this way of internalizing the costs of pollution, however,
is that when several polluters are involved, it is not always clear just who is being harmed and
by whom. Alternatively, the firm might install pollution control devices and stop the harm at its
source.
This way of dealing with pollution is consistent with the requirements of distributive justice.
Since pollution's external costs are largely borne by the poor, pollution produces a net flow of
benefits away from the poor and towards the rich. Internalizing these costs can reverse this
flow. However, if a firm makes basic goods, such as food, then internalizing costs may place a
heavier burden on poorer people.
Internalizing external costs is also consistent with retributive and compensatory justice, because
those who are responsible for pollution bear the burden of rectifying it and compensating those
who have been harmed. Taken together, these requirements imply that (a) the costs of pollution
control should be borne by those who cause pollution and who have benefited from pollution
activities, whereas (b) the benefits of pollution control should flow to those who have had to
bear the external costs of pollution. Internalizing external costs seems to meet these two
requirements: (a) The costs of pollution control are borne by stockholders and customers, both
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Business Ethics ­MGT610
VU
of whom benefit from the polluting activities of the firm; and (b) the benefits of pollution
control flow to those neighbors who once had to put up with the firm's pollution.
Since the effects of pollution are so harmful, it might seem that no action to remedy pollution
could be too drastic. However, if a firm spends a greater amount on a pollution control device
than the amount of damage the pollution would cause, then the firm should not install it; the
economic utility of society will be damaged if they do. The amount a firm should invest in
pollution control, then, must rest on a cost-benefit analysis: a precise calculation of what the
device or practice would cost and what its expected benefits would be. Thomas Klein
summarized the procedures for cost-benefit analysis as follows:
i.
Identify costs and benefits of the proposed program and the person or sectors incurring
or receiving them. Trace transfers.
ii.
Evaluate the costs and benefits in terms of their value to beneficiaries and donors. The
standard of measure is the value of each marginal unit to demanders and suppliers
ideally captured in competitive prices. Useful refinements involve:
a. Incorporating time values through the use of a discount rate.
b. Recognizing risk by factoring possible outcomes according to probabilities and,
where dependent, probability trees.
iii.
Add up costs and benefits to determine the net social benefit of a project or program.
The problems involved in getting accurate measurements of the benefits and costs of pollution
control are also illustrated by the difficulties businesses have encountered in trying to construct
a social audit (a report of the social costs and social benefits of the firm's activities). This can
be difficult, however. How do we measure the costs and benefits of pollution control when they
involve damages to human life or health? Measurement itself is also difficult when the effects
of pollution are uncertain and therefore hard to predict. In fact, getting accurate pollution
measurements is sometimes nearly impossible, and the problem only is multiplied when there
are a number of polluters in a single area. Measuring benefits is likewise difficult, which poses
significant technical problems for utilitarian approaches to pollution.
Even where measurement is not a problem, another problem remains for the utilitarian
approach. Is it morally permissible to impose costs on unwilling or unknowing citizens? Can
some unilaterally impose costs on others without their consent? Even getting consent is tricky,
because many pollution problems involve information and risks that are extremely technical
and difficult to understand. It is perhaps impossible in principle to get informed consent from a
segment of the public on some complicated issues.
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Table of Contents:
  1. INTRODUCTION:Business Issues
  2. INTRODUCTION (CONTD.)
  3. THEORY OF ETHICAL RELATIVISM
  4. MORAL DEVELOPMENTS AND MORAL REASONING
  5. MORAL REASONING:Arguments For and Against Business Ethics
  6. MORAL RESPONSIBILITY AND BLAME
  7. UTILITARIANISM:Utilitarianism: Weighing Social Costs and Benefits
  8. UTILITARIANISM (CONTD.):rule utilitarianism, Rights and Duties
  9. UNIVERSALIZABILITY & REVERSIBILITY:Justice and Fairness
  10. EGALITARIANS’ VIEW
  11. JOHN RAWLS' THEORY OF JUSTICE:The Ethics of Care
  12. THE ETHICS OF CARE:Integrating Utility, Rights, Justice, and Caring
  13. THE ETHICS OF CARE (CONTD.):Morality in International Contexts
  14. MORALITY IN INTERNATIONAL CONTEXTS:Free Markets and Rights: John Locke
  15. FREE MARKET & PLANNED ECONOMY:FREE TRADE THEORIES
  16. LAW OF NATURE:Theory of Absolute Advantage, Comparative Advantage
  17. FREE MARKETS AND UTILITY: ADAM SMITH:Free Trade and Utility: David Ricardo
  18. RICARDO & GLOBALIZATION:Ricardo’s Assumptions, Conclusion
  19. FREE MARKET ECONOMY:Mixed Economy, Bottom Line for Business
  20. COMPETITION AND THE MARKET:Perfect Competition
  21. PERFECT COMPETITION
  22. MONOPOLY COMPETITION:Oligopolistic Competition
  23. OLIGOPOLISTIC COMPETITION:Crowded and Mature Market
  24. OLIGOPOLIES AND PUBLIC POLICY:Ethic & Environment, Ozone depletion
  25. WORLDWATCH FIGURES:Population Year, Agriculture, Food and Land Use
  26. FORESTS AND BIODIVERSITY:The Ethics of Pollution Control
  27. THE ETHICS OF POLLUTION CONTROL:Toxic Chemicals in Teflon
  28. THE ETHICS OF POLLUTION CONTROL
  29. THE ETHICS OF POLLUTION CONTROL:Recommendations to Managers
  30. COST AND BENEFITS:Basis of social audit, Objectives of social audit
  31. COST AND BENEFITS:The Ethics of Conserving Depletable Resources
  32. COST AND BENEFITS:The Club of Rome
  33. THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:DSA Comments
  34. THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:Should Consumers Bear More Responsibility?
  35. THE CONTRACT VIEW OF BUSINESS' DUTIES TO CONSUMERS
  36. THE CONTRACT VIEW OF BUSINESS' DUTIES TO CONSUMERS:The Due Care Theory
  37. THE SOCIAL COSTS VIEW OF THE MANUFACTURER’S DUTIES
  38. ADVERTISING ETHICS:The Benefits of Advertising, The harm done by advertising
  39. ADVERTISING ETHICS:Basic Principles, Evidence, Remedies, Puffery
  40. ADVERTISING IN TODAY’S SOCIETY:Psychological tricks
  41. ADVERTISING IN TODAY’S SOCIETY:Criticism of Galbraith's Work
  42. ADVERTISING IN TODAY’S SOCIETY:Medal of Freedom
  43. ADVERTISING IN TODAY’S SOCIETY:GENERAL RULES, Substantiation
  44. ADVERTISING IN TODAY’S SOCIETY:Consumer Privacy, Accuracy
  45. THE ETHICS OF JOB DISCRIMINATION:Job Discrimination: Its Nature