Sounds neutral to the layman while legitimizing the "brushing under the rug" of all the sins possible without severe legal recourse. Then promptly followed by some hand waving that really puts the you-know-what in fiduciary, Mr. Potter.
Friedman's assumption was that regulations work towards social/general good so a company can just focus on maximizing shareholder value within existing law and that combination would keep everything OK. However, in practice regulation was often faulty so the maximization of shareholder value often led to many negative internal and external effects. It's like applying machine learning trained at times of plenty to times of crisis.
Or more specifically, it assumes that those two systems remain completely separate from one another.
In reality, as the system for maximizing shareholder value can interact with the system creating the regulations. Thus:
> in practice regulation was often faulty
wasn't a coincidence of a situation, but rather was a direct result of the shareholder-value-maximizing machine working towards the removal of regulations that hindered shareholder value.
This is a huge letting off the hook of the people who write the regulations. Companies always want regulations changed, because regulations are not handed down from on high as perfect stone tablets full of rules. They're sometimes bad. So there needs to be a mechanism by which companies lobby to have them changed.
If that is misused, the blame lies with the regulation writers. They get to take free money from people as taxes solely so they can be impartial and write good regulations. If they can't even do that, then why give them free money?
My intention is not to let regulation writers off the hook, but rather to share the blame between the regulation writers and the corporations that lobby to have regulations changed in a way that they know is bad for society but good for them.
Everybody hates corrupt government officials already, but as a society (in the US) we tend to handwave away companies doing destructive self-interested things as "oh of course they do that", when it's not actually something we need to tolerate.
Oil companies in the 70s knowing that they were causing global warming but engaging in a campaign to pretend that didn't exist? Should be jail for the regulation writers, and jail for the oil company execs who signed off on it.
The Sacklers pretending that their special opioids aren't addictive and causing the opioid crisis? Should be jail for the regulators they bribed, and jail for the people at the company who knew.
Cause the 2008 financial crisis by deliberately mis-grading subprime mortgages? Should be jail for everyone who let that fly.
Originally governments didn't just give out corperations whilly-nilly so if you weren't doing something that benefited the public you just didn't get one.
Which really wasn't a big deal since you could always do business as yourself although you (and not the corporation) also got liability then.
I don't see why this matters. Whether they "give out corporations" or they regulate corporations, they can still choose to throw you in jail because they have power. Corporations should obey the law, but they should chase shareholder value.
That doesn't mean short-termism at all costs, which is what some people hear when that is said, but it means, say, if you're Disney don't release a string of movies that all lose incredible amounts of money. Or if you do, then senior management needs changing pronto.
It's really not. Profits are taxed. Losses are lost by investors. The environment should be protected by regulations, not by relying on good will. That way the boundaries are clear and companies can do what they do best: allocate resources efficiently, towards demand, within rules.
Regulations should be a backstop after decency and goodwill fails. No one facet of the structure society is made of can support all of society, there needs to be safety factors in the building materials.
> Regulations should be a backstop after decency and goodwill fails
People won't know the implications of decisions without regulations to help them. Of course businesses are populated by people, who will try and do the right thing if that's how they are, but that doesn't mean they know what the right thing is.
> No one facet of the structure society is made of can support all of society, there needs to be safety factors in the building materials.
I can't parse this, sorry. Happy to have a read if you reword.
> "...In it, he argued that a company has no social responsibility to the public or society; its only responsibility is to its shareholders."
the demon friedman strikes again.