Let’s start by admitting that these guys are scoundrels. They manipulated their product to make it more addictive. They sold the deadly stuff to kids. And they stonewalled to try to cover up the whole sordid business. All in the name of bigger and better profit margins.
It’s no wonder Big Tobacco recently agreed to pay the state of Minnesota $6 billion to settle a lawsuit, rather than take their case to a jury.
But despite all the misdeeds of the tobacco barons, some basic facts remain: They make a legal product. And a lot of people want it.
What do we expect the people who run tobacco companies to do? Think up ways to make fewer people want their product? So they can generate less sales and less profits? And take home smaller salaries? Smaller bonuses? Fewer stock options?
If the Benedictine monkswho earn a nice penny making a tasty brandywere to discover that their concoction was somehow poisoning children all over the world, I presume they would stop making it. But the executives who run tobacco companies are not monks, sworn to poverty.
They arewellcorporate executives, who are sworn, quite literally, to the task of making as much money as they can for the companies they run. It’s what they have to do, if they want to keep their jobs.
There are legal limits, of course, to the methods companies can use to maximize their earnings. Just recently, in fact, prosecutors have started to investigate whether Big Tobacco’s marketing schemes ran afoul of federal law.
I’m all in favor of throwing the book at the tobacco barons, although as a general principle, I’m soft on crime. Show me a teen-age crack dealer, and I’ll give you a speech about the grinding effects of poverty and a rationale for how good people can make bad choices when they find themselves in a bad environment.
I’m willing to apply the same bleeding-heart logic to tobacco executives, because I think it’s grounded in some hard-headed social reality. You can’t really fight crimein the suites or in the streetssimply by attacking the irresponsible actions of individual criminals. You have to attack the social conditions that lead those individuals to act irresponsibly in the first place.
The unhealthy economy
In the case of youthful crack dealers, that means creating legitimate economic opportunities that offer a realistic alternative to life on the street.
In the case of wayward corporate executives, it means crafting concrete incentives for companies that behave responsiblyand imposing harsh penalties on those that don’t.
That would require taking a long, hard look at the role and function of the modern corporation, in a way that goes far beyond attacking the evils of a single industry. Indeed, the ritual tobacco-bashing now taking place in Washington, D.C., allows our political leaders to adopt a populist pose and pretend they are being “tough” on big business.
In reality, our present legal and regulatory structure is anything but tough on business. It’s no wonder that corporate leaders misbehave so often. What reason do they have to do otherwise?
The reckless pursuit of profit, without regard to social consequences, is hardly a practice exclusive to the tobacco industry. Pick your poison: Asbestos. Lead paint. The Dalkon shield. Breast implants. Exploding fuel tanks.
In case after case, instead of informing the public about possible safety hazards, the firms involved behaved just like the tobacco barons. They hired a phalanx of lawyers to keep the bad news buried, and they spared no effort to keep selling their goods, no matter how damaged.
Johns Manville, for example, sold asbestos for decades after life insurers stopped writing policies on asbestos miners, because so many of them were dropping dead from lung disease.
Then there’s Glidden, Dutch Boy, Pittsburgh Paint, and other makers of lead paint, who developed a lead-free alternative to protect farm animals as far back as the 1920s. (Cows, it so happens, like to lick fencesand farmers noticed that cows who licked freshly painted fences tended to croak soon afterwards.) Despite this information, paint makers kept selling lead-based paint for use in places where humans live for another 50 years.
And how about the people who make Odwalla apple juice, who made unwelcome news in 1996 when a 16-month-old girl named Anna Grace Gimmestad died after drinking juice contaminated with deadly e. coli bacteria?
Odwalla is an “organic” product, sold unpasteurized because the company doesn’t believe in artificial food processing. But as a New York Times investigation revealed, Odwalla failed to take appropriate steps to weed out rotten, bacteria-laden fruit from its production process on the day the fatal batch of juice was produced. A quality inspector told the firm it needed more fruit pickers on its assembly line that daybut a production manager, not wanting to slow down the line, overruled her.
Who’s more culpable? Tobacco executives, who help hundreds of thousands of people kill themselves by selling a product everyone now knows is dangerous? Or the juice merchants who killed a single innocent child by selling her parents a deadly product that was supposed to be safe?
It’s chilling to think that someone might knowingly sell a product that can hurt, maim, or kill, rather than spend a few bucks to make it safer. But risk assessment is a common management tool, and corporate managers get paid based on how well they minimize their risks and their costseven if it means maximizing yours.
We can rail all we want about the amoral corporate culture that produces this kind of decision-making. We can threaten corporations with huge legal penalties and even talk about jail terms for corporate criminals. But none of that is going to change the basic calculus of corporate behavior, until we rethink the fundamental political, economic, and legal structure of the modern corporation. Such a rethinking is long overdue, especially in the context of the emerging global economy, in which corporate entities are becoming more powerful than the units of government that originally created them.
The corporate charter was, at first, a limited grant of authority from government to business owners who preferred a joint operating structure to limit their individual liability for potential wrongdoing. But the corporate form has since metastasized, leading to ever-larger private agglomerations of economic power that are no longer properly accountable to the public at large.
There’s been much talk in recent years of term limits for politicians, in order to rein in the power of government. But the real power center on the planet today isn’t in Washington, D.C.; it’s across the Chesapeake in Delaware, where most of America’s corporations are headquartered. (They are headquartered there becausethanks to the influence of the DuPontscorporate law in Delaware is decidedly favorable to business interests.)
Isn’t it time we imposed term limits on the people who really control our lives: The barons of tobacco? The lords of auto? The dukes of oil, steel, software, and media?
What if all corporate charters were like television licenses, granted for a limited time period and subject to strict review by government regulators? What if the regulators were actually tough on corporate crime and refused to renew the charter of any company that repeatedly polluted the environment, sold faulty products, mistreated workers, or engaged in other acts of corporate irresponsibility?
And what if executives and directors of companies that flunked their charter review were barredforeverfrom serving in a similar capacity elsewhere?
If we want corporate executives to behave responsibly, we have to create strong incentives for responsible behavior. Executives who needlessly endanger the public should loseforevertheir perch among America’s economic elite. No more wheeling and dealing. No more limos. No more private planes. No more fat paychecks.
Putting the structural reform of America’s corporations on today’s political agenda is no small task. But it’s a discussion we very much need to haveand one that will be more productive, in the long run, than the continual public flogging of the people who sell us cigarettes.
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