The Wall Street investment firm has apologised for its role in the financial crisis. Helped by its biggest investor Warren Buffett (pictured), it’s going to give out 500 million dollars to help small businesses through their economic troubles.
This is what the firm’s CEO Lloyd Blankfein asked:
“What are we going to do to fulfill our commitment and our obligation to the world to be good allocators of capital and make sure we’re doing the right thing, making sure we’re helping the country pull out of recession, grow businesses that help generate jobs?”
Obligation? Really? It’s already paid back the bailout money it received from the US government.
So does this show that big businesses have changed their mentality following the financial crisis? Or do you agree with bloggers here and here that this is all a big PR stunt? (The firm’s also set aside 16.7 BILLION dollars for bonuses this year.) And will the handout help anyway?
In India, a government minister has suggested a system where companies earn credits for doing “good works” – which they could then trade as a commodity.
Do you think big businesses in your part of the world should be obliged to use their profits to help you?
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Well no!
g
Not doing “bad work” does not amount to doing “good work”; it means either doing “no work” or “measly work”. The mentality of the big businesses may not change for the better, but from now on they must be contemplating and planning to ensure that they ought never again be caught off-guard, so as to avoid having to deal with another face-saving from the investors, and that the aftermath and the uncertain future-face of the economy shouldn’t be able to get the better of them, or directly put any blame on them. All that it means or implies is, that, they would devise new ways and means to manipulate the money for high-profiteering. As regards their said “obligation” to help others, that is those who had to financially suffer at their hands or because of them, I think that should be shared squarely/equally by the governments and the concerned regulatory authorities; after all, they too are as much, if not more, to blame for the economic catastrophe..
Legal obligation? Obviously not.
Moral obligation? Debatable.
Marketing obligation? Definitely!
Providing a company does everything legally, the profits are either directed to the owner who can re-invest as he/she sees fit or divided amongst shareholders who can vote to re-invest, etc etc….
One could make a decent case that a company that makes substantial profits (hundreds of millions or billions) from the populous should direct some of that money back to the society from which it’s profiting under moral grounds… but the more realistic reason to do so is for additional gains.
Your company looks good when it donates $1million in scholarships to financially needy students. Your company looks good when it funds 25% of the new Art Gallery or Opera House. Your company looks good when it gives a chunk of money to foreign aid agencies. All this means more business for you.
All philanthropy has a selfish, marketing spin… well the bulk of it. Otherwise why are there so many buildings (and entire universities – i.e. Harvard) named after people or companies? Because they want some return for their “generosity”.
Under this category also falls the Bill & Melinda Gates Foundation… the Stephen Lewis Foundation … and more. I’m not saying this is wrong – hell I’d do it too if I had the money. But the point is donating money has a marketing angle most of the time and for that reason alone, profitable companies should. They have an obligation to their bottom line to invest in their image.
Profitable businesses helping others should be strictly voluntary, I think.
do governments have the right to take money from hard working people and redistribute it to lazy or continue to raise taxes when they obviously don’t know how to run a budget or account for dramatic losses? do governments have the right to force gen x to subsidize the baby boomers?
Nobody is obliged to do anything! If most of the people said yes, they have an obligation. Then what? Govt’s already tax their citizens and buisnesses, what for?.
RE “” (The firm’s also set aside 16.7 BILLION dollars for bonuses this year.) “”
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———— Foxes run the hen house now, so the self-serving sociopath stocked Washington & Wallstreet, INCs dictate the terms.
We, the People, the voters and nonvoters, have given up the Constitution to the birdcage. Might as well be illegal immigrants for what being a citizen is worth these days.
Steve in Kenya said: Marketing obligation? Definitely!
You’re so right. I work for one of those massive household name companies that does a tremendous amount of charity work around the world and it’s been a tremendous benefit to the organisation. The praise in rankings and business journals alone has been amazing. Plus, it’s just kind of nice to work for a decent company that places relationships with employees and responsibility as a global entity at the heart of it’s corporate ethos – and then actually lives up to that ethos.
Obligation: none whatsoever!
Historically, capitalism was about to create wealth and distribute some of their surplus to show during their lifetime that they have been compassionated as suggested by protestantism believes. So, in culturally protestant country such as the USA, I guess some might feel compelled to provide “assistance” to other citizens. It is also good for reputation when you are broadly hold responsible for a crisis. Therefore, in case of later formal investigation, you can then claim corporate citizenship as a “core value” of your company.
As a non-USA investor, my sole purpose, if investing in the USA, is to maximize my profits. Therefore, I would consider outrageous such additional expenses if it affects by any means my profitability. After all, I already give to the country via corporate and other taxes. So, that mentioned obligation is an aberration unless I can be explained (privately of course) how such donation can improve my return rather quickly. It might sound cynical but we are talking about global companies exposed to global competitions.
So invest wisely!
I agree. Legally no.
It’s seems clear that not a lot of the company CEO’s have enough morals to care.
How many backs were used for these companies to make their money on?
How many are unemployed?
We are having a very lean holiday season this year. I wonder about theirs…
There is a smack of hypochrisy between the lines. These are the guys who sucked the markets dry. It is not just mere do gooder attitude. The fact of the matter is, most companies now find themselves in a sea of uncertainty. When others collapse the business cycle is broken, sales decline and the only option is to be wise and reinvest in the market and even put aside competition greed to reclaim vibrancy in circulation. It works like the stimulous kits though these companies have to make a publicity score on that. Not a bad idea to realize a single store street cannot attract sales.
Yes they do. But in reality, first it’s always what’s in this for us? How do we spin this to our advantage (and maximum profit)? Unchecked corporate greed (much of today’s “capitalism”) is no excuse to blindly continue down that path.
To whatever extent the businesses profit from government subsidies or protectionist legislature, I believe they have an obligation to help other businesses when times are tight, as they are now. If they’ve accepted no taxpayer money, or have no special legislation protecting them, including but not limited to tax breaks when doing business overseas, they have no obligation. But it would be the moral thing to do, for the sake of those less fortunate than themselves.
Indiana, USA
The only obligation they have is to see that they continue to prosper. They would be foolish to not realize that sometimes spending money out of the direct business or dropping prices may actually help their customer base grow. This will help their business grow. Capitalism is not all about making the most possible money in the short run. It is about developing a thriving, sustainable future.
Those businesses made their money by creating poverty, joblessness, homelessness, despair, hopelessness, suicides, family problems, the death of hundreds of thousands of small businesses, etc, and now they want to buy what the Catholic Church used to sell as “Indulgences” for a mere US $500 million?
I suggest that we regulate and tax them into submission to the public good, to the good of the Nation and the World. Put limits on their outrageous Unregulated Destructive Greed.
I addition, I have been thinking that since Corporations are legally “persons”, we actual living and breathing humans ought to put limits on Corporate lifespans, so that they die after a similar number of years of “life” just like all other “persons”.
Humans ought to go back to controlling Corporations instead of Corporations controlling humans like they do now.
No, as we know, they just help themselves. It sounds selfish but it is a fact.
Contributions for the public good is very desireable but requiring the successful businesses to carry the weak without regard for sound economics is a formula for failure Supporting educational efforts to mentor small business is sensible as well as good business.when the government negotiated a deal with firms being rescued it would have made good sense to have a share of future profits for fo a reasonable time which then could have been available as loans to viable but struggling small business.Don’t penalyze success!
If you think about it, those businesses, aided by the 1996 law that Conservative Republicans lead by South Carolina Senator Lindsey Graham pushed through to prevent any Regulation or oversight of Derivatives, have created more financial and economic destruction than Osama Bin laden ever dreamed of even in his wildest dreams.
Bin Laden has caused tens of Billions of dollars in damage, but those guys have caused hundreds of Billions, maybe even Trillions of dollars, in damage to the Western world and even to the rest of the world.
At what point would they be, should they be, recognized as Financial Terrorists who ought to be fought against and finally Regulated into submission? The facts on the ground have demonstrated that they are a worse threat than Osama Bin Laden, so when will they be brought to heel?
It is just too weird that they are still loosed on The Civilized People of the World.