Sunday, November 14, 2004

Bleeding Hearts and Bloody Bodies

Melanie Mattson over at Just A Bump in the Beltway alerted me to an article in the Washington Post today by Fortune Magazine writer Marc Gunther arguing that Despite the understandable cynicism about the corporate world that has been fed by Enron and other scandals, the truth is that many of America's big companies are becoming more socially responsible, more green, more diverse, more transparent and more committed to serving the common good -- as well as the bottom line?

In fact, according to Gunther, "Corporate America is grappling with those social issues in some surprising -- dare we say liberal -- ways." Melanie blogged it (here and here) and wanted to know what I thought. (By the way, this cross-pollinating is one of the great features of the blogging community.) As long as I sent a long response back to her, I figured I might as well take advantage and write a slightly expanded version for Confined Space.

Gunther uses a few fairly well-known examples:
despite the understandable cynicism about the corporate world that has been fed by Enron and other scandals, the truth is that many of America's big companies are becoming more socially responsible, more green, more diverse, more transparent and more committed to serving the common good -- as well as the bottom line.

Here's a recent example: Hewlett Packard, Dell and IBM have agreed on a far-reaching code of conduct to protect the health, safety, labor and human rights of people who work for their suppliers in the developing world. Their suppliers, who make electronics in Mexico, China and Southeast Asia, will be audited to ensure compliance. Factories that fail the tests will have to reform or lose business. Social activists praised the computer makers, ordinarily arch rivals, for joining together to protect workers' rights. No law requires them to do so.

Or consider gay rights. Voters from Mississippi to Oregon approved resolutions opposed to same-sex marriages, and fewer than a dozen states provide health care benefits to the domestic partners of gay and lesbian employees. The federal government under George W. Bush certainly does not do so, and won't. But at last count, 227 companies in the Fortune 500, including General Motors, Ford and ChevronTexaco, offer domestic partner benefits. A decade ago, only a handful did. More join them every year because firms need to compete for talent and want to be seen as treating everyone fairly.
Why this alleged tilt to the left. G.E?s CEO says that "The reason why people come to work for GE is that they want to be about something that is bigger than themselves." Gunther also mentions political activists and "socially responsible" investors as good infuences on corporate behavior.

Now, anyone who reads Confined Space may suspect that I would be slightly skeptical of this article, particularly considering the railroad company stories I wrote about earlier, as well as a story in the NY Times today about the failure of Merck and the FDA to take action on suspicions as far back as 2000 that Vioxx increases the risk of heart attack. And you'd be right. Not that I deny that these good things are happening. Gunther's examples are real to a large extent (although there are activists out there who know more about his specifics than I). So are we entering a new era of "Compassionate capitalism" rendering obsolete regulatory agencies, regulations, lawsuits, trial lawyers, environmental organizations and labor unions?

I think not.

Most of the real good deeds and policies aren't being done out of the goodness of corporate hearts or because of the growing idealism of their employees; it's from pressure (in the form of boycotts and corporate campaigns), bad media from those few reporters still out there willing to seriously investigate and report on corporate malfeasance, as well as lawsuits.

And clearly, such public pressure works most effectively on "name brand" companies whose products and services you see on the shelves and television commercials. Smaller companies and "middlemen" are comparatively immune from public pressure. And unfortunately, the McWanes, Union Pacifics, Johns Mansvilles and Enrons are the tip of the iceberg. Talk to any worker. It is not uncommon for companies to cut corners on worker, consumer and environmental safety -- if they think they can get away with it. For most, their luck holds out. A few get caught. And sometimes disaster strikes -- an event as large a Bhopal or as small as a trench collapse. Some, like chemical plant explosions or workplace fatalities are hard to hide, but information about previous "close calls" are easier to hide, as is evidence that the hazard was well known to the employer, especially with the assistance of accommodating political appointees in the regulatory agencies. Health hazards, such as chemicals that destroy workers' lungs may be caught by observant physicians, but those that cause more common illnesses or cancers (or even heart attacks) may never be caught.

And, of course, the fact that there really are at least a few companies out there doing the right thing adds weight to the argument of those who say we don't need no stinkin' regulations. Just voluntary alliances and "safety pays" programs.

I'm not trying to badmouth individuals who work for these companies. I think most people want to believe they're doing the right thing, but the logic of capitalism, the logic of profit maximization pushes companies to cut corners, and, at times even hide or cover up incriminating information.

I've generally had good relationships with most corporate safety managers I've met. They're in the business because they're interested in workplace safety. They generally see the need for strong regulation and enforcement -- both because they're interested in safety and to help justify their existence to the higher-ups and the bean counters who don't necessarily seen accident prevention as contributing significantly to the bottom line.

The problem is that safety programs are often the first thing to be cut when costs need to be trimmed -- especially if tough enforcement isn't likely. In addition, those who make the political decision about whether and how hard to oppose regulations and enforcement tend to be the "government affairs" people who are more in tune with their peers at the Chamber of Commerce and National Association of Manufacturers than they are with their own company's workers or safety supervisors.

While at OSHA, I would frequently talk to company safety directors who had implemented highly successful ergonomics programs and saw no major problems with OSHA?s proposed ergonomics standard, only to receive a fax from the company?s CEO claiming that ergonomics was a bunch of unscientific garbage that would drive them out of business, and probably cause the fall of Western Civilization to boot. (Followed, of course, by major contributions to Republican candidates.)

In conclusion, I see nothing wrong with articles extolling the virtues of companies who try to make the earth greener, workplaces more fair and safe for workers, and generally strive to become better corporate citizens. These are good things that need to be encouraged.

But we need to be very clear that these efforts are the result of pressure by workplace safety and environmental activists, by socially conscious investors, assertive reporters, lawsuits and government regulation and enforcement. In other words instead of letting these stories be used an excuse to reduce oversight over industry, we need to make sure that these stories are used to show the importance of government oversight, the need to listen to and support labor and environmental activists and the importance of fighting "tort reform."