Business Ethics: Liability, Pricing, and Environmental Responsibility

Corporate Liability and the Limits of Consumer Protection

Does business have a role in putting a value on a human life? Should it take the lead from government agencies or from an individual's own spending preferences? These questions become especially pressing when consumers act recklessly — speeding, performing amateur body piercing, misusing over-the-counter medications, or using products in unintended ways, such as using a lawnmower to trim a hedge. In such cases, the question becomes whether government should step in, and whether business should be held liable.

Past a certain point, there is only so much liability that a corporation can reasonably be expected to bear for the misuse of its products. If every car company were held liable for every accident caused by speeding, commerce as we know it would collapse — and even reverting to horses and buggies would not eliminate liability entirely. Consumers retain the right to sue when they are injured by a product used under normal circumstances, without any misuse on their part. For example, if a car that is lightly bumped from behind explodes into a fireball — killing the driver and innocent bystanders — the manufacturer is clearly at fault. However, if the manufacturer produces a sound vehicle and a teenager is killed while drag-racing at 120 mph, personal judgment and legal compliance are also demanded. The teen's parents cannot seek damages simply because the car was capable of reaching such speeds.

All products can be misused. Anyone who has a bottle of Tylenol in their medicine cabinet could, in theory, use it for harmful purposes. There is no way the government can create a completely "safe space" for all adults without severely restricting both consumer and business freedoms. Nevertheless, the government should strive to strike a reasonable balance.

Government Regulation and the Balance of Consumer Freedom

A useful example of this balance is the regulation requiring drug stores to track individual purchases of pseudoephedrine-based cold medications such as Sudafed. In small doses, the medication is an effective cold remedy; in large quantities, it can be used to manufacture crystal methamphetamine, an illegal drug. Under this framework, the business is not held liable for the misuse of Sudafed when it is not used according to the manufacturer's directions or intentions. However, a retailer will be held liable if it violates the law regulating the amount a consumer may purchase at one time. This arrangement illustrates how targeted regulation can address harm without stifling commerce or personal freedom.

Consider the following scenario: as head of a student activities committee, you have arranged a campus visit by a singing group. You signed them before their latest release became a surprise hit, so you paid relatively little for the booking. Tickets could now command very high prices, especially if students buy them at face value and resell them. How should pricing policy be set? Should reselling be banned? And how should you respond if a group offers $300 per ticket for a block of 50 — particularly if they indicate the money could go to the university, a charity of your choice, or as an off-the-books transaction that would resolve your college loan problem?

Ethical Ticket Pricing for Campus Events

The intended use of the money is irrelevant — the ethical issue lies in the means by which it is obtained. Limiting ticket reselling is ethically sound in all cases, as scalpers benefit no one except themselves, while pricing out the very audience the event is meant to serve. Limiting purchases to one or two tickets per person is a reasonable and fair restriction.

Given the group's surprise popularity and the opportunity to generate additional revenue for the student activities committee, a limited number of premium-priced tickets could be offered. However, since the booking is for a student-centered venture, it is essential that the majority of tickets remain reasonably priced so that students can actually attend. Offering discounts for students, or keeping most seats at a standard non-excessive price, is consistent with the spirit of the institution. One common criticism of Broadway is that ticket prices are prohibitively high; to cultivate a new generation of theatergoers, many theaters offer scaled pricing, including student discounts. A campus event should follow a similar philosophy.

Environmental Responsibility and the Myth of the Morally Neutral Business

In the case of industries such as pharmaceuticals — where companies price drugs artificially high — a similar moral question arises about exploiting people's necessity and desperation. Alienating students from campus events, just as depriving communities of access to necessities like food and medicine, ultimately harms the entire community. These effects will damage the long-term health of the institution, even if short-term financial returns appear to improve.

As for the offer of an off-the-books transaction to resolve personal college loan debt — this is straightforwardly unethical, regardless of the amount involved or the apparent personal benefit. Accepting such an arrangement would constitute a corrupt use of a position of institutional trust.

Some people enjoy gambling in Las Vegas. They willingly direct their resources toward businesses that are, by most measures, not environmentally friendly — consuming massive amounts of energy to cool desert facilities, diverting water to maintain golf courses used by relatively few visitors, and so on. Such businesses might argue that they are morally neutral, simply responding to consumer demand. Elkington's triple-bottom-line framework challenges this position, calling on businesses to be more accountable for their environmental practices. Does it matter that a highly profitable company — such as a casino — could publish an honest account of its activities and face no meaningful societal sanction or penalty? Should society regulate such businesses? Should they be expected to operate more sustainably?

No company operates in a vacuum. One could argue that it is solely up to the business to fulfill whatever demand the consumer expresses, ethical or otherwise. But in the long term, if all enterprises ignore the environmental consequences of their operations, everyone suffers. Consumer demand for massive air conditioning, fuel-inefficient vehicles, and other high-carbon-footprint products affects the broader physical well-being of society. It also burdens other businesses that must contend with air pollution, escalating fuel costs, and the strain that unhealthy citizens place on the healthcare system and other private enterprises.