Thursday, March 17, 2005

A Libertarian Utopia?

I find it interesting that a libertarian wants to dictate what goes into a corporate document.
Change corporate governing documents to put the environment, community, and employees on an equal footing with shareholders.

Perhaps I don't understand libertarianism, but what's wrong with removing interference and letting the marketplace govern corporate behavior?

A corporation exists as a business to maximize return to the shareholders. I know there are those who don't think this should be the case, but it is.

Maximizing return to the shareholders means pleasing the customers. If the customers don't want your product, whether services or goods, you don't sell anything or bring in any revenue. If the customers' abhorrence of your corporate behavior is more significant to them than the product you make available, they won't purchase your product.

So, there will be a balance between the corporation's behavior and the relative importance of that behavior to the customer, and by extension, to the shareholder. After all, what is important to the customer is important to the shareholder. And the collective will of the shareholders establishes the priorities of the corporation.

If the portion of customers who want a particular behavior are significant to the corporate bottom line, the corporation with behavior consistent with that desire. For example, when Target decided to prohibit the Salvation Army bell ringers. They heard quickly from their customers and corporate behavior changed. This didn't have to be dicated in a corporate document.

Likewise, the corporation will be sensitive to environmental issues if these issues are of signficant importance to their customers. If not, why should you, me or some other minority try to dicate it?