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Business Ethics

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Business Ethics ­MGT610
VU
LESSON 29
THE ETHICS OF POLLUTION CONTROL
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
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.
From an ecology-based organizational ethic are:
a. Organizations' responsibilities go beyond the production of goods and services at a
profit.
b. These responsibilities involve helping to solve important social problems, especially
those they have helped create.
c. Corporations have a broader constituency than stockholders alone.
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Business Ethics ­MGT610
VU
Corporations have impacts that go beyond simple marketplace transactions.
d
Corporations serve a wider range of human values than just economics.
Green Marketing, Environmental Justice, and Industrial Ecology
1. Green marketing is the practice of "adopting resource-conserving and environmentally-
friendly strategies in all stages of the value chain."
2. Environmental justice is "the pursuit without discrimination based on race, ethnicity,
and/or socioeconomic status concerning both the enforcement of existing environmental
laws and regulations and the reformation of public health policy."
Rights of Future Generations and Right to a Livable Environment
1. The debate about the rights of future generations centers on the extent to which present
generations should bear responsibility for the preservation of the environment for future
generations. According to the ethicist John Rawls, "Justice requires that we hand over
to our immediate successors a world that is not in worse condition than the one we
received from our ancestors."
2. This "environmental right" supersedes individuals' legal property rights and is based on
the belief that human life is not possible without a livable environment. Therefore, laws
must enforce the protection of the environment based on human survival.
Recommendations to Managers
Boards of directors, business leaders, managers, and professionals should ask four questions
regarding their actual operations and responsibility toward the Environment:
a) How much is your company really worth?
b) Have you made environmental risk analysis an integral part of your strategic planning
process?
c) Does your information system "look out for" environmental problems?
d) Have you made it clear to your officers and employees that strict adherence to
environmental safeguarding and sustainability requirements are a fundamental tenet of
company policy?
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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