Abi, over at Sunpig, asks the question: “Is nothing sacred?”

Yes. One thing.

Corporate Greed.

But at least one writer wants to lay the blame with consumers.

I like his argument. After all, I live in a capitalistic society and lately I’ve been feeling pretty miserable over the doubts I’ve developed about the benefits of unchecked capitalism. As Mark Perry — oops! excuse me, I mean “Dr. Mark Perry” — puts it,

Consumers are the kings and queens of the market economy, and ultimately they reign supreme over corporations and their employees. When corporations make mistakes and introduce products that consumers don’t want, which happens frequently, you can count on consumers voicing their opinions forcefully and immediately by their lack of spending.

There’s just one thing wrong with this. It is — to cut to the chase — pure and utter bullshit. If we lived in a world of greater choices and full disclosure, perhaps this might be true.

Saying that consumers are to blame for ills like exploding Pintos, Tyco, WorldCom, Enron, Global Crossing, Qwest Communications and Peregrine Systems is like blaming the victims of murderers for their own deaths. After all, if they hadn’t gotten in the way of the murderers, they wouldn’t have had to be killed.

What Perry is saying would make a lot more sense if corporations could not profit while meeting the demands of consumers. Yet cutting costs by removing shielding from gas tanks or by funding government torture of indigenous people who get in the way of mining operations is not the only choice for a corporation intent on making a profit.

Another choice might be for them to pay only reasonable salaries to high-level managers. In 2002, at a time when the average CEO compensation package — which includes more than mere salaries — was $10.83 million dollars a year, median CEO pay increased by 6 percent. (Did your paycheck increase by 6 percent last year? Do you think the paycheck of any regular employee did?) And these salaries continue to rise in spite of the troubled U.S. economy.

When Sears stock fell 49 percent in 2002, was their response to a) fire CEO Alan Lacy, b) test “Dr.” Mark Perry’s theory by addressing investor concerns or c) to triple the CEO’s bonus to $1.8 million dollars that year? If you guessed either a or b, please contact me. I’ve several business propositions I can’t seem to turn into moneymakers and I need a few customers like you.

Consumers are not responsible for the abuses of corporations simply by virtue of the fact that they’d like to retain some of their own meager salaries by buying cheaper products. Consumers can only buy what is available. The reality is that cheaper products become available because of corporate greed. Knowing one way to capture more consumers is to lower prices, many corporations choose immoral methods to cut costs. Consumers trying to keep families clothed and fed while hopefully not living a totally impoverished life naturally gravitate towards the lower prices. This is why Perry thinks they’re to blame!

But since when did it become necessary to pay CEOs incredibly high salaries, maintain (rising) corporate profits in the billions of dollars while simultaneously delivering to the consuming public exploding cars, poisoned water supplies and increasingly shoddy products? Do consumers make those choices? Or do the corporations that make the products and deliver the “services”?

It is not consumers making decisions to pay millions of dollars in compensation to corporate executives while refusing to spend more than $2.40 per car to prevent burning people to death when the actual cost would have been approximately $4.50 per car. (GMC v. McGee (2002) 837 So. 2d 1010.) It is not consumers who decided for Firestone that they should dump hazardous wastes in reckless disregard for the health of those who drank water from nearby wells. (Potter v. Firestone Tire & Rubber Co. (1993) 863 P.2d 795, 818-819.)

(In the latter case, the court noted: “The materials were known to be and specifically designated as hazardous. It was clear that there was a great probability of these materials infiltrating and contaminating neighboring wells. Defendant had to realize that the eventual discovery of such a condition by those drinking the contaminated water would almost certainly result in their suffering severe emotional distress. In fact, with the knowledge that the defendant had at this time there also would have come an understanding of the dangerous condition that had been created by the dumping that had taken place over previous years. Nevertheless, defendant went ahead with its illegal dumping. This not only displayed a reckless disregard of the probability of causing emotional distress but also amounted to a ratification of its past acts in this regard.” The court then determined that plaintiffs suffered severe emotional distress as a direct result of Firestone’s intentional acts.)

Furthermore, consumers are normally unaware of the corporate decision-making process that exposes them to these risks. As Gerald Tietz notes,

If the debate about the appropriate doctrine for determining manufacturer liability for defectively designed products is to be fully informed, participants must recognize the nature of corporate decision-making as it relates to product design. Legal commentators have too often minimized the extent of corporate knowledge concerning product design risks and the ability of corporations to eliminate those risks. They have consistently down-played, ignored or failed to recognize corporate decision-making in the design process – decision-making that consciously and inappropriately exposes consumers to serious design risks. (Teitz, Strict Products Liability, Design Defects and Corporate Decision-Making: Greater Deterrence Through Stricter Process (1993) 38 Vill. L. Rev. 1361, 1363-1364, fn. omitted.)

Even where the public has access to some information regarding products, the information is usually inadequate to determine the degree of risk involved in using the product or engaging in the activity. Henderson and Rachlinski note that risks are unavoidable, but that corporations undermine the consumer’s ability to assess these risks through advertising that obfuscates by sending mixed messages.

This barrage of mixed messages, combined with an underlying dearth of public information about risk and a plethora of cognitive impediments to accurate risk assessment, ensures that consumers cannot make choices that result in anything like optimal levels of product-related safety. People’s incomplete and inaccurate understanding of risk confounds efforts to identify the system of products liability that would best encourage appropriate patterns of product design, production, marketing, use and consumption. (Henderson & Rachlinski, Product-Related Risk and Cognitive Biases: The Shortcomings of Enterprise Liability (2000) 6 Roger Williams U. L. Rev. 213, 213-214.)

There is nothing in the capitalist system that requires corporations to make what are essentially immoral choices. Nothing in capitalism requires corporations to decide that your life isn’t worth an extra $4.50 expense on their part. Nothing in capitalism prevents them from making up the corporate profits by not giving CEOs $2 million signing bonuses. (The argument that this is necessary to obtain good CEOs falls flat when you realize that the outgoing CEO in this situation — who left after the company’s stock went from $100 per share to $2 per share in just one year under his management — received $1.5 million during that last year and was negotiating a severance package expected to be worth well over $1 million! Nothing in the capitalist system requires that corporations hide information from consumers in order to separate them from their money.

Ultimately, Perry’s argument rests on the premise that consumers wishing to obtain a good bargain are greedy. Concomitantly, his theory denies that corporations are greedy even when they do the things noted above in order to ensure that the perceived good bargain consumers think they are getting actually benefits the corporation, even when these corporations know that a certain number of these consumers will be injured, maimed or killed by these products.

Ask yourself, “Who is greedy here?” Is it uninformed — even mislead — consumers looking to stretch meager salaries as far as they will go? Or is it corporations refusing to spend the equivalent of one hamburger for every car they sell, while knowing people will die because of that?

Yes, Abi, one thing really is sacred. So sacred that we aren’t allowed to think sanely or rationally about it.

Corporate Greed.