1. According to the novel Saving Adam Smith, greed is not good for society and it is not the correct basis for a free market economy. The author, Jonathan B. Wight, presents the views of Smith to show how greed leads to the regulation and government control of free market economies, thereby effectively limiting the freedom within them. In the novel, the channeled Adam Smith says, "Society can't subsist among those who are at all times ready to injure one another" (p. 85 SAS). When talking about greed, he says, "Selfishness is an egoist attachment to your own needs when they conflict with the legitimate rights of others" (p. 63 SAS). Regarding your own needs as paramount to the rights of others brings about the "injury" referred to in the previous statement and according to Smith, this is not conducive to the subsistence of society. Instead, Smith believed that the correct basis for society and free market economies lay within the idea of self-interest as opposed to greed.
At first glance the two terms could be easily confused to mean the same thing. To explain this misconception, the channeled Adam Smith explains, "Self-love means you take prudent steps to provide for your own needs and security and not be a leech on society" (p.63 SAS). He goes on further to say, "in looking out for oneself, others could benefit, too. Self-interest is morally virtuous in that narrow sense" (p. 64 SAS). These remarks indicate that although both self-interest and greed share the component of promoting individual interest, greed does so by ignoring the rights of others to profit, whereas self-interest does not infringe upon others rights.
2 Adam Smith believed a free market economy must be based off of the morals of society. This is explained by the author of Saving Adam Smith as he uses the channeled Adam Smith to say: "I envision a society in which the least amount of government control is needed. For that to happen, humans must have within themselves the ability to reflect on what is right and wrong, and the desire to discipline their self-love accordingly" (p. 143 SAS). The channeled Smith begins the novel by explaining that he believes economists have left out important facets in their analysis of society. When asked what he specifically believed had been overlooked, he responded, "The vital interplay betwixt human beings that makes a society, the 'fellow-feeling' that is the foundation of moral conduct" (p.26 SAS). In other words, without "fellow-feeling" free market economies would no longer be truly free. Government would need to take too heavy a role, limiting the effectiveness of the economy.
This can also be connected to Smith's belief that self-interest as opposed to greed is the right approach for society to take in free market economies. Greed is interested in getting ahead even if it means stepping all over the rights of others in the process. Self-interest is the idea that you take care of yourself while also being aware or the rights of others and not infringing upon them in your search for personal security (p.63 SAS). In order to decipher between what is wrong is and right using morals, Saving Adam Smith presents the view that these morals are obtained naturally from our sympathy towards others: "... humans have an innate instinct to seek approval. We do this by being in sympathy with others. By sympathy I mean no particular emotion, either good or bad, but rather an understanding of the passions of another. It is the 'Fellow-feeling' shared with others" (p. 193 SAS). Fellow-feeling, in essence, is the basis for morals, which allows free market economies to be operated by society properly.
Peter Chen, a business owner and manager in Saving Adam Smith, exemplified Adam Smith's views of business management by running his company with a commitment to the fellow-feeling that Smith believed is so important for free market economies. Peter recognized the importance of not simply making decisions based on where the most money would be coming from regardless of his employees. In one instance in the novel, Peter makes a decision to discontinue business with a major customer after the customer had shown a pattern of disrespect to Mr. Chen's staff (p. 219-221 SAS). He believed that compromising his company's stand relating to fellow-feeling, even in the face of possible business failure, would not turn out in the long run. Peter explains that without a commitment to these higher values, workers feel as if they are "just a piece of meat, disposable items on the bottom line." This would lead to discontentment and a lack of fulfillment and, in turn decreased productivity and creativity (p. 217 SAS).
One of the strengths of this type of business management is that it creates extremely committed employees. Employees that feel as though they are an essential part of a business will go to much farther lengths to promote the well being of the company they work for than employees that feel as if they are expendable. Peter Chen explains in the novel: "We follow our higher aspirations for what kind of 'family' we want at work, and our customer service and profits are natural by-products of doing that well" (p. 217 SAS). The productivity and creativity created by such pursuits are essential for businesses to reach success in today's business environment. A possible weakness in this approach is that it can be difficult to survive if you are committed to running your company with fellow-feeling when large decisions (such as Peter calling of business with his largest customer) are made to favor your employees over potential profits. Peter acknowledges this by saying, "It's all very fine to talk about empowering workers, but that means if this company goes belly-up" (p. 218 SAS). This makes it essential to run a business without being frivolous in order to survive if a decision in favor of employees over profit is to be made without bankrupting the company (p. 218 SAS).
3. Ricardo believed strongly in promoting free international trade using comparative advantage. In the book, The Choice, the ghost of Ricardo explains the idea of comparative advantage by saying, "The idea is that even if a nation is relatively poor at doing everything, there are some things it does relatively well. And a nation that is really good at many things should still specialize in producing some items and import the rest" (p. 10 The Choice). He advocated the use of a countries limited resources to specialization in areas which they excel while leaving other necessities to be traded with other countries. When it came to this trading with other countries, he believed in free trade without government limitations placed on the import of foreign goods. The author, Russell Roberts, uses Ricardo's ghost to explain how tariffs, quotas, and other forms of protectionism hindered rather than helped countries (p. 37-48 The Choice). Finally, Ricardo believed that although in the short run, some people are hurt by free trade, the benefits outweigh the costs as new technology and new jobs are created to replace those that have been outsourced or lost. This view was expressed in The Choice when his ghost says, "The essence of free trade is how it affects people's lives and the lives of their children" (p. 20 The Choice). One must go beyond a limited view of the effects of free trade and look at the bigger picture: the creation of wealth and opportunity for society as a whole (p. 21 The Choice).
Ed Johnson was a character in The Choice, which struggled with the views Ricardo's ghost was presenting to him. In the end it appeared that he bought into Ricardo's beliefs, but what would have happened if he had two angels, one good and one bad, responding to the views that Ricardo's ghost presented? If the good angel represented the views of Adam Smith, it would agree with the basic ideas the Ricardo was promoting. In the novel Saving Adam Smith, the channeled Adam Smith shows that he also believed in free trade by saying, "I envision a society in which the least amount of government control is needed" (p. 143 SAS). Adam Smith did not believe that excessive protectionism would help a free market economy. He did, however, believe that there were specific times when it was necessary to institute such policies to protect citizens of countries that are being mistreated or treated unfairly. This is evident in his support of "fellow-feeling": doing what is best for oneself while also not infringing upon the rights of others (p. 135 SAS). In a sense, Adam Smith would more likely be in favor of "fair" trade, while Ricardo supported "free" trade.
If the bad angel was represented by Gordon Gekko from the movie Wall Street, he would tell Ed Johnson to throw out everything Ricardo advocated and think solely about himself and the television company he owned. In Wall Street, Gekko speaks the famous line: "Greed is good." It is evident through clips from the movie that Gekko tells everyone to look out for number one while all the while he himself was only looking out for what he could gain from a situation. This stands in stark contrast to both Ricardo and Smith's views.
4. Common types of protectionist policies that are used by governments include tariffs, quotas, subsidies, and anti-dumping legislation. Russell Roberts discusses each of these policies in his book, The Choice. In the book, the ghost of David Ricardo shows the owner of a television factory, Ed Johnson, the way America would look if protectionist policies are introduced.
The first protectionist policy that is addressed is the use of tariffs. Using the example of televisions, Ricardo's ghost explains, "A tariff on imported televisions increases the price of both foreign and domestically produced televisions" (p.38 The Choice). It may seem unusual to think that a tariff would cause the price of American made goods to increase, but Ricardo goes on to explain how this occurs. As American products become the cheaper alternative to foreign made goods, demand for their products goes up, resulting in a raising of price due to expansion in the American industry, or an effective raising of price due to the extra time and effort it takes for consumers to buy the product that now has much more demand than before the tariff was introduced. This cycle continues until the price reaches the amount that was charged as a tariff (p. 39-40 The Choice). As far as jobs are concerned, an illusion is created that a benefit of a tariff is the production of more jobs. Ricardo refutes this idea, however, pointing out that while jobs in the specially protected industry are created, the necessity for Americans to buy goods built on their home soil means other industries will not be able to grow because the human resources needed to develop new industries while providing the same amount of other desired products will not be capable of covering the necessary requirements (p. 43 The Choice). In return, other countries that once benefited from trade with America will be forced to start producing their own necessary products because they will not have the means to exchange for American goods. When asked why this is, Ricardo replies:
And where will those dollars come? Remember, Americans won't be buying any Japanese televisions. Before trade restrictions, America produced some of its televisions in the roundabout way. America produced drugs and swapped them for televisions. If fewer Japanese television come into the United States, the Japanese have fewer dollars. They, or the nations that trade with Japan to get dollars, will buy less of those things that dollars can buy, such as pharmaceuticals. American exporting industries will suffer (p. 45 The Choice).
The resources that other countries will need to apply to produce their necessary products will hinder their economic growth in the same way America's was hindered. Foreign countries can also counter tariffs by introducing tariffs of their own on American imports. Ricardo believes, "the retaliation can leave America worse off than before" (p. 64 The Choice).
A second policy used by governments to protect industries in their counties is the introduction of a quota. In the words of Ed Johnson, a quota is simply "...reduces the amount of foreign supply that can come in [to a country]. A quota gets the American consumer to substitute an American-made product for the foreign one" (p. 49 The Choice). Although it takes a different approach, the same effects result when a quota is enacted as when a government introduces a tariff on goods. When there are less foreign goods available, their prices increase and consumers' demand becomes higher for American made products. This results in the same cycle that came about with the tariff (p. 49 The Choice).
A third protectionist policy instituted by governments is the subsidy of certain industries in their countries. A government can provide funding to certain industries if they believe the industry to be important enough to the economic growth of the country. By using government funds, it is harder for private companies to compete against the government backed organizations. This strategy has yet to have a positive example stemming from it. Ricardo explains using the a computer chip company, Sematech, to display what typically happens:
Their efforts were small compared to the privately funded research and development. Rather than augment total research and development, Sematech seems to have had very little impact�firms cut back on some of their basic research because they saw that Sematech was doing it. By the end of the 1990s, Sematech allowed foreign members to join. It was no longer a roll of American industrial policy (p. 68 The Choice).
Ricardo further goes on to explain that everyone benefits from technological development regardless of where it originates because the consumers option to now purchase the technology is in the end a great benefit (p.68 The Choice).
The final form of protectionist policy mention in The Choice is anti-dumping legislation. This legislation is introduced when a country believes foreign countries are selling their exports at a price below the cost of which it took to make the products. The motivation behind this would be to gain market share, drive competitors out of business, and then raise prices when competitors have dropped out. Anti-dumping legislation charges a fee on exported products for countries accused of dumping. In reality, this again acts like a tariff, driving up demand for American products, leading to an increase in price, and then beginning the cycle that occurred for the introduction of both tariffs and quotas (p. 82-83 The Choice).
5. "When in Rome, do as the Romans do," would not be a suitable guideline for MNCs doing business in developing countries with respect to ethical practices and social responsibility according to the utilitarian view of ethics. The world seems to be getting smaller as globalization brings people and MNCs together around the world. However, there is no global culture within which all individuals and companies belong to that defines a set of moral and ethical guidelines to follow in all situations regardless of location. Religion and various other factors contribute to the diversity in business environments around the world. It is often seen in less developed areas of the world that a nation's culture changes the accepted practices used in business. It is obvious that developed countries with large international integration will have more established codes of conduct in regards to ethics and social responsibility, and it becomes increasingly important that international managers know how to react when faced with situations that do not present a readily available answer. MNCs must respect the beliefs and practices of whichever country they decide to do business in, but it is important that they do not lower their ethical and social standards simply to compete in an environment where typically frowned upon practices are allowed. Examples of this include the use of bribes and the unfair treatment of workers. Both practices are common in many developing countries but must not be adopted by MNCs as they are the leaders in business innovation and can influence the business cultures in which they operate. Even when a practice such as paying small bribes comes into play, an MNC should not engage in the conduct for fear that this may blur the line of what is acceptable to the point where larger bribes are deemed appropriate (p. 45, 48 International Management).
This stance is appropriate given a utilitarian viewpoint of ethics. Although a corporation might be able to benefit personally from the use of bribery or unfair labor practices, this is not good for society as a whole. The right decision would be to stand against such practices in order to attain the most good for the largest amount of people.
6. There are several issues a firm would have to deal with when attempting to take the "Great Leap Downward" to develop a sustainable business environment at the "Base of the Pyramid." One issue is avoiding targeting the bottom of the pyramid by adapting technology designed for wealthy members of the society to bottom of the pyramid consumers. An example of this is given in Capitalism at a Crossroads when the author, Stuart Hart, describes the attempts of a chemical manufacturer, Monsanto, to provide genetically engineered seeds to farmers around the world. Monsanto ignored the outcry by small farmers and instead only listened to larger potential customers. The outcry turned into a large issue soon after and the company could not continue to market the product (p. 17-19 CAC).
Another issue a firm could face is in marketing and distributing the product in a way that discourages bottom of the pyramid consumers from using it. Nike fell into this trap when they tried to introduce a new shoe for lower income individuals in China. According the Stuart Hart, "Nike was also singularly unsuccessful in resolving the contradictions that existed between its current business model and the one that would be required to appropriately serve the need for affordable athletic footwear" (p. 184 CAC).
A third issue that a firm must be careful not break down elements of the culture in which they are operating. Walking in and "taking over" or dominating the environment you have entered, whether intentionally or unintentionally will cause major problems and destroy the firm's ability to gain sustainability (p. 21 CAC). A deontological view on this issue mandates that a firm not tear down the self esteem or opportunity of individuals in countries that you target.
The only way to avoid falling into these situations is through radical transactiveness. Through radical transactiveness, a firm will "engage in a two-way dialogue with stakeholders so that each influences and is influenced by the other" (CAC p. 177). Communicating in this manner assures that the bottom of the pyramid stakeholders' needs are being met instead of the perceived needs that a firm assumes. Knowing the environment and consumers you are targeting helps a firm to find the right ways to market and distribute their products because they know the habits and thought patterns of those they are serving. It also enables the firm to not step on the dignity or culture of the people they are serving. Sustainability can be attained by using radical transactiveness and discovering the true needs, desires and issues facing the consumers at the bottom of the pyramid.
7. Globalization offers many opportunities and many challenges to the world, and there are many positives and negatives associated with the advancement. In "The Other Side of Outsourcing" some of these positives and negatives were shown in India. Some of the positives included the empowerment of Indian citizens as well as more specifically, the empowerment of Indian women. Call centers and other technological firms have entered the Indian market and Indians that otherwise may have to work very low paying jobs are able to become consumers. A movement has also started out of the globalization in India that is encouraging children from the lower caste ("untouchables") to go to advanced schools and learn skills that may help them to become the future leaders in India.
The negatives seen in India include some small local producers are forced out of business when big corporations move in that have large economies of scale and can charge much lower prices with their large supply. The movie talked about how Indian women that made incense sticks to burn have lost what little profits they made because a large producer entered the market. Another negative is that sometimes the culture of a country can be greatly affected by globalization in a way that its citizens do not want. The older generation in India seemed like they wanted to keep old traditions and were worried that their children would completely abandon them after being disillusioned by the pursuit of wealth and prosperity.
In "Is Walmart Good for America?", it was harder to find positives concerning Walmart's role in globalization. Consumers definitely benefit from the lower prices that Walmart offers, but at what cost to others? Walmart's suppliers are at the mercy of Walmart. They are often forced to outsource to produce products with lower costs just because Walmart wants to save a penny on each one. American jobs have been lost due to outsourcing which does seem bad at first glance but might really be opening other opportunities in America if you follow the logic of Ricardo (The Choice p.21).
"The Debate on Globalization" touched on many of the same points the first two films presented. The opportunities that are presented to citizens that would otherwise be struggling to find worthwhile work is a great plus, but corporations must be careful not to take advantage of the cheap labor and less stringent labor practices in developing countries while justifying it by saying they have brought development to these countries.
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