Wednesday, September 17, 2008

You Mean, Corporations Really Don't Care???

The Chinese baby-milk scandal continues:

As Chinese officials warned Tuesday that contaminated milk powder may have sickened more than the 1,200 babies already identified, the scandal revealed more than a recurrent regulatory problem, Chinese and foreign experts suggested.

Rather, they said, it pointed to a deeper malaise in Chinese society where private profit often trumps the public good as the country races to create a market economy that has outstripped government regulators.

"China has the problems of any transitional economy," says Yanzhong Huang, a global health expert at Seton Hall University in South Orange, N.J. "But the deeper and more fundamental challenge China faces is a systematic lack of business ethics."

"You cannot fully police the whole food chain," adds Dali Yang, a politics professor at the University of Chicago. "A lot depends on changes in social norms. People have to recognize that integrity does matter."

Three babies have died so far, and many more are seriously ill. All because the company wanted to boost the milk's protein value cheaply:

Investigators say it appears that milk merchants, selling to Sanlu the raw milk they had bought from farmers, had added the chemical – normally used in plastics and fertilizers – to boost the milk's apparent protein content.

Two brothers who owned a milk collection center in Shijiazhuang, Sanlu's home base, were arrested Monday on charges of adulterating the milk they had sold to the company, the state news agency Xinhua reported. Two additional milk suppliers were also arrested later that day. Seventeen others have been detained, including one man suspected of illegally selling melamine.[...]

Not only did Sanlu fail to detect the melamine in its milk powder, the company has also so far failed to explain why it did not publicly reveal the problem until Sept. 11, although it had received complaints from worried parents as early as last March, and identified the contamination on Aug. 6.

The incident became public only after Sanlu's New Zealand partner, Fonterra, which holds three seats on the company board, informed New Zealand diplomats who told Chinese government officials in Beijing of the problem.

Fonterra has "been trying for weeks to get official recall, and the local authorities in China would not do it," New Zealand prime minister Helen Clark told her country's state TV broadcaster on Monday. "At the local level ... I think the first inclination was to try to put a towel over it."

China, of course, is a Communist nation. But this problem is the sort that could easily happen in a "pure capitalist" nation, the kind where there's no government oversight and only the market is allowed to determine the safety or price of goods.

It's important to remember that corporations exist outside of such labels as "democracy" or "republic" or "communist nation" or "monarchy" or "oligarchy." Multi-national corporations owe no loyalty to the company where they are headquartered, especially if their factories are halfway across the globe and their target market in yet another country, or scattered throughout several countries. And these giant multi-nationals exist for one purpose: to make money.

Sometimes the desire to make money collides with the need to follow local safety regulations, but there will always be someone, somewhere, greedy enough or dishonest enough to ignore corporate policy for the sake of a profit increase.

It would be nice to think such things couldn't happen in America, but they have before, and can again. We may not be able to trust the government all that much, either, but it's better to have a government which is an adversary of big business than a government who is on board with it.

This is something I wish people would remember when they clamor for government run health care. We see time and again in countries like China what happens when the government is on the same side of the cover-up as the business; and health care, though we hate to admit it, is big business in America.

This tragedy in China may be a warning sign of the dangers of letting corporations get too cozy with the government. Even healthcare corporations. Because when it comes to protecting the bottom line, corporations really don't care.


Anonymous said...

I can't help but think, though, that in the case of this Chinese company, they made a stupid decision economically (as well as an evil moral decision, of course). Who is going to buy their product if it sickens infants? No one will. They chose a very short term gain that comes with a huge long-term loss. I agree that government and laws are necessary to prosecute and try to prevent things like this, but a free market will punish the act as well.

--Elizabeth B.

Red Cardigan said...

True, Elizabeth, but what if the government had successfully covered the whole problem up? From what I understand, it was the NZ partner that raised the alarm, and the Chinese government had been trying to keep things quiet because of the Olympics.

Children would still have gotten sick and died, but the "official" reason would have been something other than a tainted product.

Anonymous said...

Perhaps there is a possibility that, it may be very difficult to actually understand the Chinese CULTURE, as well as history, and compare THEIR government to a western tradition and OUR American concept of corporations. As Chinese history has/is rarely taught in the public schools, it is my sincere doubt that most Americans 'get it' when it comes to the Far East, as I speak from Vietnam-era experience when the 'kids' in the history classes in the small college attended far away from my hometown got up and walked out when the professor attempted to lecture on this region of the world.

Anonymous said...

Oh definitely true, Red. If consumers don't have real information and actual free choices (and in China I imagine that is often the case) then corporations have very little danger to the bottom line from exploiting their customers.

I do think that in a "pure capitalist" society, if that society has at least, say, a free press, I think the kind of activity this Chinese company engaged in would be a rarity. But I don't think a "pure capitalist" society actually exists anywhere, anyway.

I completely agree that when government is on the side of promoting and profiting from a business (as would be the case with government run health care) the possibilities for exploitation of consumers is huge.

--Elizabeth B.

freddy said...

Further proof that capitalism only really has the ghost of a chance of working (or even forming) in a Christian society. No, I'm not preaching some sort of manifest destiny here. I'm only pointing out that without moral restraints that can never be legislated or imposed, the free market will devolve into the market of lie, cheat and steal, and let the buyer beware. Look where our own, post-Christian markets are heading.

My heart goes out to all those poor families, and my prayers are with them.

Susan said...

Red Cardigan,

I think it is extreme to say that government should be the adversary of business. Or even of "big business." Businesses after all are the creators of wealth. Governments do not extract raw materials, manufacture products, or, usually, provide services. Businesses, usually organized as corporations, do this. Surely we don't want to try again for a society in which the government owns the means of production? I didn't think so.

The government's place is reasonable regulation to protect the safety of consumers, and a court system in which reasonable torts can be compensated. That sort of regulation often actually helps corporations keep from getting into situations where their greed destroys them.

And, freddy, some moral restraints can be imposed. Or, rather, companies can be prevented from doing some things that morals ought to prevent them from doing but never will.

Susan Peterson

Red Cardigan said...

Susan, let me clarify: I simply meant "adversary" in the sense of being an opponent, not necessarily an enemy. Government and business will sometimes have similar goals and aims, but I think it's healthy when they both act to "keep each other honest" so to speak. Too much friendly collaboration between government and business is just as bad as not enough, in other words.

Tony said...

Oversight doesn't have to be government. Companies who want to enhance the public trust in their products might pay an outside company to audit their books.

Do you remember the "good housekeeping seal of approval", or "underwriter's laboratories" certification?

People concerned with safety will buy those products, those who are willing to take a chance for a lower price will choose other companies.

Either way, the market can take care of itself.