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To whom do these companies owe loyalty? What does loyalty mean? Well it turns out that that was a rather naive concept anyways as corporations are always owed obligation to themselves to get large and to get profitable. In doing this it tends to be more profitable to the extent it can make other people pay the bills for its impact on society. There's a terrible word that economists use for this called externalities. An externality is the effect of a transaction between two individuals on a third party who has not consented to or played any role in the carrying out of that transaction. And there are real problems in that area. There's no doubt about it. Running a business is a tough proposition. There are costs to be minimized at every turn and at some point the corporation says you know let somebody else deal with that. Let's let somebody else supply the military power to the middle east to protect the oil at its source. Let's let somebody else build the roads that we can drive these automobiles on. Let's let somebody else have those problems. And that is where externalities come from that notion of let somebody else deal with that. I got all I can handle myself. A corporation is an externalizing machine in the same way that a shark is a killing machine. Each one is designed in a very efficient way to accomplish particular objectives. In the achievement of those objectives there isn't any question of malevolence or of will. The enterprise has within it and the shark has within it. Those characteristics that enable it to do that for which it was designed. The pressure is on the corporation to deliver results NOW and to externalize any cost that this unwary or uncaring public will allow it to externalize.

Video Details

Duration: 2 minutes and 12 seconds
Country: United States
Language: English
Views: 153
Posted by: rafaelmatheus on May 30, 2010

What is an externality? Milton Friedman describes it as the effect of a transaction between two parties on a third party who is not involved in the transaction. A technical
sounding term that basically means let somebody else deal with the problems the corporation creates.

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