Friday, December 16, 2011

How to tell if a corporation is evil

I made up this checklist as a quick way to gauge whether a company is (or might be considered) evil. It's not a definitive list, by any means, and there is no right or wrong way to score a company against this list. In the end, you have to decide whether you think a given company is evil or not. This list is meant only as a guide, a starting point for discussion.

1. Does your company value profits over people? This is easy to check. When earnings are threatened, does the company simply lay off workers? Most companies follow this kneejerk policy, since "people costs" (salaries and benefits) constitute the single biggest cost for most companies.

2. Does your company engage in deceptive, monopolistic, or anti-competitive business practices?

3. Does your company routinely lie to customers in its advertising?

4. Does your company engage in unfair or deceptive HR practices, such as billing a 50-hr/week job as being 40 hours per week, or hiring two part-time workers (without benefits) in lieu of one full-time worker with benefits, or failing to promote women or minorities? (E.g., are executives mostly men?)

5. Does your company pay zero taxes? Many large companies (e.g., General Electric) manage to escape paying taxes altogether even in profitable years (http://www.reuters.com/article/2011/11/03/us-usa-tax-corporate-idUSTRE7A261C20111103). Whether this is done legally or illegally doesn't matter: If (as some say) corporations are "persons," not paying your fair share in taxes makes you a bad "person" regardless of what the law says.

6. Does your company accept corporate welfare (subsidies or bailout money from government)? According to the Cato Institute, the U.S. federal government spent $92 billion on corporate welfare during fiscal year 2006 (a year in which there was no recession). Recipients that year included Boeing, Xerox, IBM, Motorola, Dow Chemical, and General Electric.

7. Does your company spend money on lobbying? Check your company's lobbying track record at http://www.opensecrets.org/. Lobbying, by definition, is an attempt to exert influence on lawmakers by circumvention of normal democractic processes. Which is inherently unethical.

8. Does your company endorse political candidates or contribute to their campaigns? It should be obvious that corporations have no legitimate role in politics. They should not tell workers how to vote and shouldn't spend shareholder money on politicians' (re))election campaigns.

9. Does your company pollute the environment? (What is your company's green agenda? Does it even have one?) Does your company have overseas subsidiaries or contractors who pollute the environment?

10. Does your company routinely outsource jobs to countries where labor is cheap and labor laws are lax? Suppose your company hires workers from North America, Europe, and Asia during good times but tends to lay off workers in North America or Europe preferentially during bad times (allowing Asians to remain on the payroll). This is the same as exporting jobs to Asia. It's a very common tactic, and it escapes notice because in good times, the company does not appear to be favoring any one geo.

11. Does your company use layoffs as a way to tailor HR ratios? This is a very common tactic. For example, in technology, companies often go out of their way to try to obtain more female employees since women traditionally have not been drawn to technology, and the ratio of male to female workers in tech is (consequently) high. Big companies like to beef up their female-to-male percentages as much as possible to avoid lawsuits (so that when a woman is fired, she can't claim sexual discrimination). When layoffs occur, many companies will preferentially lay off male workers to "balance the ratios." I have personally seen this practice in action, at one large company, where layoffs were viewed as an opportunity to balance all kinds of HR ratios. I believe it is one reason (but certainly not the only reason) why the most recent recession was particularly hard on men (see for example http://www.spiegel.de/international/germany/0,1518,622373,00.html, and http://mjperry.blogspot.com/2008/12/2008-male-recession-gender-jobs-gap.html, and http://healthland.time.com/2011/03/01/why-the-recession-may-trigger-more-depression-among-men/).

12. Do the company's top people earn more than 20 times the median of all workers? The Economic Policy Institute and the Institute for Policy Studies have both studied CEO pay ratios across a variety of industries in a variety of countries. In most of the industrialized world, the CEO pay ratio is 20 or less. In the U.S., it tends to be well over 100:1 (and in some years it has been 250:1 or higher; see http://articles.moneycentral.msn.com/Investing/Extra/CEOsNearRecordPayRatios.aspx and http://www.aflcio.org/corporatewatch/paywatch/). There is no reason for any one human being in any one company to make 100 times what another human being makes, and in fact most companies could find talented volunteers to fill CxO positions for far less money than 20:1. Certainly anything in excess of 20:1 is just that -- needless excess. Steve Jobs paid himself a dollar a year at Apple. (He did own a lot of stock, of course.) More CEOs should follow his example.

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