So. This debate got me thinking about incentives and unintended consequences and social responsibility. Bear with me while I pooh pooh Ben and Jerry’s for a minute. All of the following quotes are taken directly from Ben and Jerry’s webpage, titled “Leading with Progressive Values across Our Business.”
Ben and Jerry’s “strives to create economic opportunities for those who have been denied them.” Their strategy for accomplishing this is primarily through higher wages and benefits for their employees. But higher paying jobs compete with other higher paying jobs. If I am paying someone $20/hour, they wouldn’t otherwise be working for $10/hour; they would be working in a comparable $20/hour job. I’m not claiming that job creation isn’t good or that higher paying jobs aren’t better. One more job is one more job. But it is a complete fallacy to assume high paying jobs employ low-skilled workers. They do not.
Ben and Jerry’s “strives to minimize our negative impact on the environment.” I have no doubt that many of the company's environmentally conscious practices lead to some positive results. But as noted elsewhere, they only buy milk from cows not supplemented with artificial growth hormone. BGH increases milk production by 10%. That means that it takes 10% more cows to produce Ben and Jerry’s products and 10% more arable land to feed those cows. Changing their policy on BGH alone would likely reduce the company’s environmental impact more than all other efforts combined. This, of course, would be difficult to print on their labels and to advertise to their consumers. Striving to minimize environmental impact? Not quite.
All of Ben and Jerry’s progressive practices do accomplish one thing. They cause prices to go up. Evidently, the company’s “new model for economic justice” doesn’t include making products as affordable as possible. The same people who Ben and Jerry’s think have been left behind by the “gap” created by “capitalism and the wealth it provides” are sadly left behind to eat generic ice cream. Economic justice, indeed.
Ben and Jerry’s sell a product. Just like any other profit seeking capitalist. Their product just happens to be a bundle of ice cream AND a warm fuzzy feeling. Good for Ben and Jerry’s. They have found a market and they are successfully serving a demand. I support that. All the better if they and their consumer can engage in a transaction while under the complete delusion that they are somehow being socially responsible. I encourage anyone to patronize Ben and Jerry’s. They make some delicious freakin’ ice cream. But don’t be fooled by smoke and mirrors. Give other businesses that safely and efficiently produce high quality, low cost products without all the frills their due credit—that’s real social responsibility.
Addendum: William Easterly in the WSJ today says, “History has shown that profit-motivated capitalism is still the best hope for the poor.”
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9 comments:
Consider this: at a given skill level, there are good jobs and bad jobs (or less categorically, better jobs and worse jobs). Ben and Jerry want their jobs to "good jobs." Also, I have to disagree with you: a low-skilled worker could, in fact, earn significantly more in one job than another, depending on the industry.
You seem disturbed that Ben and Jerry are committing some kind of sacrilege against economic principles. What if they think they are attracting a certain type of worker this way? What if they value social responsibility over profits, and/or over the ability to produce cheaper ice cream?
You seem to think that it would be socially responsible to pay workers lower wages and produce a product that more people can afford. Ben and Jerry seem to think it's socially responsible to pay their workers more, so as to offer them a better quality of life, even though it means that fewer people will be able to afford the ice cream. As you point out, there are markets for both cheap and fancy ice cream.
As far as I know, there is no single, national definition of economic justice or social responsibility (short of things like child labor being illegal which, if violated, could certainly get us all cheaper ice cream). Ben and Jerry aren't using smoke and mirrors -- they're just using different definitions than you are.
See you at free cone day.
The term “low-skilled worker” refers to an individual’s marginal productivity. You are correct that there can be high paying jobs that require little skill. Those jobs will not, however, employ low-skilled workers in the economic sense. I’m sure Ben and Jerry’s jobs are “good jobs”, but they will not, on average, employ individuals who would otherwise be earning lower wages. Your claim that individuals will work in jobs that pay other than their marginal productivity requires the assumption of a non-competitive labor market (specifically, it requires that low-skilled workers are exercising some kind of collusive market power). This is a very difficult assumption to defend, particularly in the service industry.
You seemed to have missed my point—or perhaps I did not make it clearly enough. I am merely saying that Ben and Jerry’s claim of corporate responsibility is an illusion. They are operating under the same economic principles as every other business. In most cases they are failing to accomplish the goals explicitly in their mission statement and the end result are production practices and a business strategy that is not more or less virtuous than that of any other profit maximizing enterprise. I’m sure they do value social responsibility above profits. Unfortunately valuing something and actually achieving it are two entirely different things.
I should add: "Free cone day" is brilliant marketing. The fact that it is also generous in the sense that it creates consumer surplus is only convenient, it isn't particularly altruistic. You say "generosity", I say "market capture". You say "tomayto", I say "tomahto".
I find it humorous that most people see good intentions and then look no further. Why not search for good outcomes?!? I think good intentions are admirable, but I find truth and clarity far more appealing. That's the beauty of economic intuition: it allows you to peel back the layers to reveal the moving parts.
Maybe there is an economic definition of low-skilled that I'm not aware of, but I was describing people who either haven't finished high school or haven't gone beyond that. It does seem plausible that a low-skilled worker could be more productive in one industry as opposed to another. I made no claim that individuals were being paid something other than their marginal productivity.
As for good outcomes, yes, they're extremely important, but "outcome" is a vague term -- it can refer to a lot of things (such as a few families better off vs. lots of people with cheaper ice cream). I also think that it's important that people think about whether their values match the process that leads to the outcomes. For some people, sometimes it's also about the journey -- not just the destination.
If only Ben and Jerry knew how much time you've spent thinking about them.
Again, you miss my point. The fact that I might have a different definition of social responsibility and economic justice is secondary. My main argument is that B and J aren't even accomplishing their own definitions. I agree that we should measure outcomes based on values. But in this case, B and J is all values and no outcomes.
Emphasizing the value of "the journey" over "the destination" is good and all...if the destination you seek is blissful stagnation and poverty.
I don't think I missed your point. I think the issue is that I don't believe that the market is the be all and end all, and neither do your friends Ben and Jerry.
Okay. So what do you propose as an alternative? I've provided evidence for why the objectives of corporate responsibility will rarely be accomplished and that a competitive market will produce better results in the long run. I agree that the intuition is frustrating and counter to conventional wisdom, but I challenge you to prove otherwise.
In short, I think klr needs to remember that multiple viewpoints exist for a reason. If there was an end all answer, we would have an end all solution. Endless evidence and explanations will still end in opposing viewpoints, such is human nature. I propose that all intuition has its limit. Ideas and theories become dysfunctional when taken in extreme. Ben and Jerry seem to accept some important ideals that you don't and in their social responsibility choose to honor those ideals. They may be using more cows, but they also adhere to principles of agroecology and their milk is healthier for humans. Trade -offs are inevitable and B&J have found the lesser of two evils. (new anonymous)
Sadly, faith in a thing does not prove its validity.
I applaud B and J and others for the niche they serve. My goal here is to remind that it is the virtues of consumerism and capitalism that allow them to do so. In fact, I encourage the recognition and appreciation of individuals, business, and organizations that do the same, but with greater efficiency and success...and without the facade.
Which leads to my secondary goal of correcting the misplaced faith in good-intentions which lack substance and the misguided infatuation with empty corporate responsibility. Alas, a strawman is a worthy adversary.
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