class: middle, title-slide # Business Ethics — Ethics and Economics ## The Environment ### Dennis A. V. Dittrich ### 2022 --- layout: true <div class="my-footer"> <span><img src="img/tcb-logo.png" height="40px"></span> </div> --- # Introduction .row[.col-7[ The effects of environmental recklessness by manufacturing, industry, and consumers are now being seen. Humankind has scarred the globe, polluted the air, contaminated the soil, and used up the resources. ] .col-5[ .question[What are the responsibilities of businesses regarding the environment, plants and animals, and all other resources? ]] ] --- .row[.col-7[ ![](img/Shaw9e_PPT_Ch071.jpg) ] .col-5[ “A home that was flooded with toxic sludge following the coal-ash spill at the Kingston Fossil Plant in Tennessee. Even if an environmental calamity like this does not directly affect our lives, should it still be a cause of concern?” ]] --- # Business and Ecology .row[.col-7[ **Definition of ecology** The science of the interrelationships among organisms (especially humans) and their environments. **Ecosystems** A total ecological community, both living and nonliving, webs of interdependency structure ecosystems – a change in one element can have ripple effects through the system. Business inevitably intrudes into ecosystems as it produces the things we want – but not all or all kinds of intrusions are justifiable. ]] --- # The Ethics of Environmental Protection .row[.col-7[ It's not wrong to harm the environment in all contexts, but that it is wrong in at least some contexts. * It's morally permissible to take resources from the Earth * to attain food, * clothing, * homes, and * other resources needed for our survival, even though that almost always causes some harm the environment and nonhuman animals. * It seems unreasonable to make it impossible for companies to make a profit because of harsh environmental regulations. ] .col-5[ .question[ When is it morally wrong to damage the environment or pollute? Is it always morally wrong when it harms human beings? When is it wrong to cause environmental damage or pollution that harms animals? ] ] ] --- # Business’s Attitudes Toward the Environment .row[.col-5[ **Traditionally**, business has regarded the natural world as a free and unlimited good – pollution and the depletion of natural resources is the result. **The “tragedy of the commons”** Damage to the environment can also be explained as the result of a situation in which each person’s or business’s pursuit of self-interest can make everyone worse off – the reverse of Adam Smith’s invisible hand. People pursuing their self-interest and profit can make everyone worse off * the opposite of what Adam Smith's invisible hand argument concludes ] .col-7[ If we let everyone compete in a “free market” to pursue profit and provide the best products at affordable prices, they are likely to pollute and harm the environment. An advocate of free market capitalism could argue that the pollution that harms people in this way would violate their right to noninjury and they must be compensated for the harm done by environmental damage. .question[ Does the tragedy of the commons give us a good reason to reject Adam Smith's argument? If so, what implications does that have for the moral legitimacy of capitalism? If not, should people be compensated for being harmed by environmental damage, and how can they be fairly compensated? ] ] ] ??? After all, it is very difficult to prove that pollution causes any particular illness and several companies could contribute to the pollution. --- # The Ethics of Environmental Protection .row[ .col-6[ **Spillover** Unintended costs to third parties from transactions; also called “externalities” In viewing things strictly in terms of private industrial costs, business overlooks spillover So business often derives a profit from a product without considering the overall social cost – the damage the product or the production process has caused to the environment and human populations ] .col-6[ **The “free rider” problem** Protecting the environment is in everyone’s self-interest, but a company may rationalize (unfairly) that the little bit it adds to the total pollution problem doesn’t make any difference. So, it benefits from the efforts of others to prevent pollution but “rides for free” by not making the same effort itself. Some philosophers maintain that every human being has a right to a livable environment. ]] --- # The Ethics of Environmental Protection .row[.col-6[ **Questions about the costs of pollution control** What kind of environment do we want? What is required to bring about the kind of environment we want? **The costs of pollution control** Determining the cost of pollution control requires cost-benefit analysis – which is difficult because it involves controversial factual assessments and value judgments. ] .col-6[ **Ecological economics** A new discipline, which attempts to expand the boundaries of environmental cost-benefit analysis. It calculates the value of an ecosystem in terms of what it would cost to provide the benefits and services it now furnishes us. For example, the worth of a wetland in terms of the cost of constructing structures that provide the same flood control and storm protection that natural wetlands do. ]] --- # The Ethics of Environmental Protection .row[.col-7[ **Who should pay the cost?** This is a question of social justice. Two popular answers are currently in circulation: 1. Those responsible for causing the pollution ought to pay 2. Those who stand to benefit from protection and restoration should pick up the tab ]] --- # Environmental Protection: ## Who should pay the cost? .row[.col-6[ **Those responsible** Business has profited greatly from treating the environment as a free good, but **consumers** have paid lower costs for products. Some would blame **consumers**, not businesses, for pollution because they create demand for products whose production impairs the environment. But, this argument fails to recognize the deep-rooted causes of pollution – population growth, increasing urbanization, and rising affluence. ] .col-6[ **Those who would benefit** Critics of this argument point out that every individual, rich or poor, and every institution, large or small, stands to benefit from environmental protection and restoration, albeit not necessarily to the same degree. **The problem** If pollution concerns all of us to a different degree, how would we determine the amount individuals and companies should pay, based on the degree to which they benefit? ]] --- # Achieving Our Environmental Goals .row[.col-5[ **Regulations** The use of direct public (state and federal) regulation and control in determining how the pollution bill is paid. Four drawbacks: ] .col-7[ 1. Requiring firms to use the strongest feasible means of pollution control is problematic. 2. Although regulations treat all parties equally, this often comes at the cost of ignoring the special circumstances of particular industries and individual firms. 3. Regulation can take away an industry’s incentive to do more than the minimum required by law. (No polluter has an incentive to discharge less muck than regulations allow. No entrepreneur has an incentive to devise technology that will bring pollution levels below the registered maximum.) 4. Regulation can also cause plants to shut down or relocate. ]] --- # Achieving Our Environmental Goals .row[.col-6[ **Incentives** A widely supported approach to the problem of cost allocation for environmental improvement through **government investment**, **subsidy**, and **general economic incentive** (e.g. by means of tax cuts, grants or awards). The advantage is that it minimizes regulatory interference and coercion. The disadvantage is that it moves slowly, pays polluters not to pollute, and is not always cost-effective. ] .col-6[ **Pricing mechanisms** Also called **effluent charges**, they spell out the cost for a specific kind of pollution in a specific area at a specific time. Prices are tied to the amount of damage caused so may vary from place to place and time to time. **Pollution permits** Allow companies to discharge a limited amount of pollution or trade pollution “rights” with other companies. Critics argue that this approach entails an implicit right to pollute, and reject this as immoral. ]] --- # Delving Deeper into Environmental Ethics .row[.col-7[ To satisfy its disproportionate consumption of nonrenewable resources, America turns to foreign lands. This raises two critical moral questions: 1. How is the continued availability of foreign resources to be secured? 2. Does any nation have a right to consume the world’s irreplaceable resources at a rate so grossly out of proportion to the size of its population? ] .col-5[ .question[ “The U.S. represents 4.6 percent of the world’s population and consumes 30 percent of the world’s refined oil. Is the U.S. obligated to reduce its oil consumption?” ] ]] --- # Obligations to future generations .row[ .col-6[ Our remote descendants are not yet alive and thus cannot claim a right to a livable environment. In fact, since these generations do not yet exist, they cannot at present, it seems, be said to have any interests at all. ] .col-6[ .question[ How can they then have rights? Can we talk meaningfully of future generations having a right that we not despoil the world they inherit? ] ] ] --- # Obligations to future generations .row[.col-7[ A broader view of environmental ethics considers our duties to other societies and upcoming generations. Some say we must respect the right of future generations to inherit an environment that is not seriously damaged. Others argue that by putting ourselves in the “original position,” we can balance our interests against those of our descendants. ] ] --- # The value of nature .row[.col-7[ A radical approach to environmental ethics challenges the human-centered assumption that preserving the environment is good only because it is good for us. Adopting a **naturalistic**, **non-anthropocentric ethic** would change our way of looking at nature, but many philosophers are skeptical of the idea that nature has any intrinsic value. ]] --- # Our treatment of animals .row[.col-7[ We often destroy the “homes” of animals and seem to assume that they can't have property rights. ] .col-5[ .question[ Do animals have rights? ] ] ] --- # Our treatment of animals .row[.col-6[ Business affects the welfare of animals very substantially. One way is through experimentation and the testing of products on animals. Critics such as Peter Singer contend that most experiments and tests are unjustified on moral grounds because animals have **moral rights**. Utilitarians stress the moral necessity of taking into account animal pain and suffering. ] .col-6[ **Factory farming** Business’s largest and most devastating impact on animals is the production of animal-related products—in particular, meat. The economizing of the meat and animal-products industries leads to their treating animals in ways that many reject as cruel and immoral. **Is it wrong to eat meat?** The answer depends on whether animals have moral rights, and whether and to what extent these rights are on a par with human rights. ]]