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SOCB58 Lesson 3 Summary

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University of Toronto Scarborough

Critiquing: Milton Friedman:  “Social ends” is “socialism”  Person has responsibilities, because corporations are treated like people;  Owners ignored, executives produced; executives are serving owners, but execs still make decisions, but when owners disagree owners can overturn decisions  The executive can always choose to leave if he doesn’t like where the company is going; how practical is that? Most people would not leave a high paying executive job; even if you leave you will probably end up going to another similar corporate structure  Principal vs. Agent: people tend to ignore their conscious when they are at work and just agree with what the company is doing; agent means working for someone else, principal means your first, with no responsibility and have workers working for you  Rhetoric vs. Logic; rhetoric is the effectiveness of your language to persuade an audience about anything, might not even be morally correct; using emotions, metaphors and gestures  Logic is what you accept as morally acceptable  Shareholders; people who have bought ownerships of the company, the actions the company is to make as much profit as possible for shareholders  Stakeholders; don’t own the company but are influenced and affected by the actions and activities of the company  Friedman says if people have a problem with corporations, stakeholders can do something about it; this is too simple of a solution as you stakeholders have little power compared to stakeholders  Executives are causing more taxes without representation; they are willing to take less profits and posing a potentially lost revenue on their shareholders, which is bad for the population because tax is not fairly created with the consent with everyone  Working class gets much of their income taxed; US is in major debt because they were printing too much money and did not have the gold standard to back it up  He says market systems are free (no price fixing, no client stealing) and not regulated and Friedman thinks this is fair; it is not fair because corporations can do the illegal act and if the fine is less than the money they will earn from it, then they will happily pay the fine Stone: Why Shouldn’t Corporations be socially responsible?  There are 4 arguments to answer this question by Stone  Stone says Friedman is wrong and says there is a built in obligation for corporations to be socially responsible 1. Promissory argument: Investors only care about themselves, and actions taken in the financial market are sometimes not for the good of the company but the good of themselves; ex. Conrad Black owned many newspaper li
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