Who's Responsible?

I believe Robert B. Reich is adopting a very negative and potentially dangerous position in his January article, "No Obligations." It has taken corporate America many decades to move beyond Milton Friedman's statement that the No. 1 goal of business is to make a profit and boost shareholder value. Only recently have companies begun to realize that being socially responsible is not just the right thing to do; it can also have a bottom-line impact. Giving back is no longer just something that's nice to do; it is part of the business imperative. Much of this pressure is a direct result of communities not offering companies a license to operate unless they show that they are supportive of and engaged in the community.

We've all seen cases where, because a business would bring environmental consequences or a developer hasn't paid its dues, citizens have prevented big-box stores and large developments from being built. It would be a true setback for society if the public stopped encouraging companies to do what's right. Reich contends that we need more government. Clearly we do not. PACs do allow companies to influence legislation, but no more than special-interest groups of all types. Part of being in a democracy is having the ability to present your ideas and positions to your representative in government. Money may buy access and votes, but it's not just companies that have money. Lots of people and groups do too. As long as pressure is kept on companies to do right by their employees, customers, and communities, legislation should not be necessary. And if this can have an impact on a company's bottom line at the same time, so much the better. Then we all benefit: shareholders, communities, and the public at large.

—Linda Gornitsky, Stamford, Connecticut

It is difficult to grasp the main point of Reich's criticism of corporate social responsibility in America. According to Reich, any effort by a company to act in a socially responsible manner that also helps the bottom line just doesn't count. Is Alcoa's reduction in energy use somehow negated by the resulting $100 million in cost savings? If the behavior benefits society and shareholders, what difference does it make how the company came to the decision? Why should we care that corporations use socially responsible actions to burnish their reputations? If less oil is consumed, advertising to children is cleaned up, or some segment of the workforce gets a health plan, society wins. Why the need to qualify it?

Despite the evidence he cites in his own article, Reich fails to acknowledge that harnessing market forces for good is an efficient and cost-effective way to deal with some of these problems. Millions of customers asking for carrot sticks with those McNuggets for their kids have far more leverage than Washington does.

Government can play a role by educating the public and threatening to encourage action through legislation, but more often than not, the medicine it eventually delivers is either the wrong drug or the wrong dosage. Shareholders and society alike are better off when the market provides a solution that can adapt to the problem before government has the chance to screw it up.

—Tony Barchetto, Waldwick, New Jersey

Nobody wants big companies to have more power than the government does, but Reich's worldview is fundamentally different from that of most capitalists. He doesn't seem to trust the market to agree with his views, so he calls for government to mandate them. And he fails to mention that for every government mandate placed on a business, there is a direct cost to that business. More costs equal higher prices. That doesn't sound like a consumer-friendly idea to me.

Contrast Reich's article with Roger Lowenstein's review of Daniel de Faro Adamson and Joe Andrew's The Blue Way ["The Wild Blue Yonder of Markets," January]. The book's authors note that companies that back Democrats and populist causes outperform those that do not. They are 100 percent correct.

I mention this because it gives proper credit to the real driver of the economy and the government: the individual. We get what we ask for, on the shelf and in our government. Reich thinks that price is the sole driver of consumer preference and that the people aren't capable of driving social change. Tell that to Toyota as it sells the Prius in high volume. Tell that to Method, whose safer, cleaner, more environmentally sound cleaning products are selling like hotcakes. Tell that to Patagonia, which leads the apparel industry in social causes as well as performance outdoor wear.

Why are these companies successful? Not simply because they are more socially conscious, but because that social consciousness is combined with great design, quality, service, and a reasonable price.

—Robert Wallace, Chandler, Arizona

Noblesse Oblige

A disturbing theme in Duff McDonald's generosity ranking ["Wall Street Family Values," January] is that all of the educational donations made, except one, went to private institutions. Most of these institutions already have huge endowments, while public schools are cutting programs because of a lack of funding. Although a portion of the private-school-donation total probably goes toward providing scholarships, such scholarships are few in relation to the number of people who wish to attend these schools.

—David Berman, Forest Hills, New York

Which Crisis?

Jesse Eisinger's column on commercial real estate ["Wall Street's Next Crisis," January] is a bit bleak, don't you think? As an investment analyst, I am pretty bearish on the commercial real estate outlook, but the article reads as if a crash were inevitable. Eisinger does point out that supply and demand are in check but doesn't seem to give this fact much weight in his argument. Yes, financial underwriting needed to be tightened. Yes, investors do need to actually have skin in the game. Yes, there will be some foreclosures, but they will certainly not be as widespread as the author believes. If there are widespread foreclosures, that means the vacancy rates will shoot up because the economy will have tanked and businesses will not be renting space anymore. If that happens, the headlines won't be about the commercial real estate collapse but about the collapse of the national economy.

—Marty Busekrus, Fort Lauderdale, Florida

Spies Like Us

Douglas Frantz's January article, "Spy vs. Spy," with its tales of corporate dumpster diving and private emails made public, reminds me of some advice my mother gave me years ago that obviously holds true today: Don't write anything down that you wouldn't want the world to read. And she was only talking about passing notes in junior high.

—Sandie Rabena, Phoenixville, Pennsylvania

The Future Is Now

In January's "Eye Phone," Mary Bridges writes that "the videophone remains a mainstay of sci-fi classics." Actually, there are several systems now in operation in the real world. The reason most people don't know about them is that they're set up for the deaf and hard of hearing. Gallaudet University, the world's only liberal arts university specifically for deaf and hard-of-hearing students, is almost 95 percent wired to use Sorenson Communications' videophone system. Sorenson and other vendors have installed their systems in the homes of thousands of deaf and hard-of-hearing Americans. So if I'm at work and need to call my wife to let her know I'm running late, all I have to do is pick up the handheld remote and dial. A light at home flashes, telling my wife that she has a call. She answers, and there we are, chatting—albeit in sign language—like two hearing people would be on their cell phones. The videophone system has been a boon to the deaf and hard of hearing. Will this service ever become available to the hearing masses? Who knows. But at least for those of us who've never had the luxury of picking up a telephone to chat, the future of the eye phone is here—today.

—Michael Walton, Chantilly, Virginia

The Conversation

What does the $100 barrel of oil really mean?

The knives came out during the online discussion of John Cassidy's January column, "The Coming Oil Crash." His thoughts on oil prices and the oil supply earned plaudits from some—and LOLs from others. Cassidy's suggestion that you think twice before trading in your Escalade for a Prius, as cheaper gas might be around the corner, elicited such commentary as "Great article! This is the perfect time to buy your dream S.U.V. or R.V.," from Dinopello. "While you're at it, pick one up for each of your kids—they're priced to sell because of all this worry about the oil supply being finite."

Others were less sarcastic. "I think it's a good article, despite the fact that I disagree," wrote Gerben. "The supply of oil is limited, so production must decrease, whatever investment you make to increase it."

Cassidy contends that increased production, brought on by higher profits and more research, will allow consumers to buy increasingly cheaper gas. "Yes, the price of oil will come down, but most of this benefit will have been eaten away by the huge costs of investment in developing alternative sources or more efficient vehicles," wrote Gmaynardkrebs. "The economy can choose between cheap gas or cheap vehicles, but it can't have both."

Some readers pointed out that because petroleum is priced in dollars, a weaker dollar means higher prices. "With the U.S. dollar devalued by 50 percent," asked Rthompson, "what other choice have oil producers than to raise the price of oil to offset the lost value of the currency they trade in?"

And a number took exception to Cassidy's Western-consumer slant. "You fail to mention that the rise in demand for oil is going to come, for the most part, from developing countries like India and China," wrote Shariflabo. "Western nations may look for and find alternatives to crude oil, but developing countries will more than make up for any drop in aggregate demand." But some pointed out that China, for instance, along with producers like Iran and Venezuela, subsidize the cost of energy for their consumers. If these subsidies become too expensive, market forces will cause demand to fall. "Nymex futures peaked at a then-high of $34.79 on November 18, 1985. By April 1986, they were down to $11," Alden reminded us. "The price of oil dropped by two-thirds in six short months. Never say, 'Never again.'"

Correction

In "The Coming Oil Crash" (January), we incorrectly stated the decrease in oil consumption between 1979 and 1983. It fell by 6 million barrels a day during that period.

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