When it comes to the consumer or the regulators we still made a risk decision based on dollars. If we thought misleading customers might lead to an extra $500 million in sales, we compared that to the risk that we might get fined $50 million so we would walk away with a net of over $450 million. That made the decision to go ahead very easy.After reading this I wondered what part of my posts gave him the impression that I think companies would be motivated by anything other than making money? That is what companies are supposed to do. That is their purpose, and to expect them to operate with any other motivation in mind would definitely be naive. My position is that a free market, with the few (but pervasive) regulations that I have suggested, means that the choices that consumers make will effect the bottom line of these companies and they will change, not because of federal regulation, but because people will only buy their product if it will actually benefit them more than it will cost them. Thinking that government regulation will prevent companies from taking advantage of consumers is the real naivety in this debate.
I'll give you an example that might hit closer to home, the Group Insurance operations. For example, on a Long Term Disability case where the potential payout might be a half to a million dollars. We would hire a private investigator not to determine whether or not the person was disabled (we had our own docs examination to handle that question) but to determine the psychology of the claimant on whether he was the type, or had the connections, to sue. Denying benefits was based on the money saved vs the probability of a lawsuit.
...everyone should be aware that corporations are amoral (ie neither moral or immoral). Every single decision is simply based on money.
Further, his examples support my point. I expect companies to make a decision that will net them $450 million after they factor in lawsuits. But if the government found that a company lied to consumers, the real question is what are they going to do about it? What if they didn’t allow the company to do business for a fiscal year? Would companies be more careful about lying to consumers? Perhaps we could also make a government website that listed every company who had been convicted of lying to consumers and how many times. Then the “unprotected” consumer can easily find out where they are likely to be exploited. It would soon be in every company’s best interest ($) to be honest.
His disability and healthcare examples don’t surprise me either. We need to assume that companies work in this way. Consumers need to assume that companies work in this way! For instance, a responsible consumer would, before purchasing long-term disability from his company, hire a private investigator to determine if they were the type of person, or had the connections, to sue. If they weren’t, than they saved a ton of money by not purchasing long-term disability from a company that would never give benefits to them anyway. Furthermore, if they asked the company if it hired private investigators to help determine the probability of their customer’s suing, and the company lied, it would fall under my one regulation for businesses.
The best regulations for a market are the ones that are based on the truth of the situation. Companies’ only objective is to make money. Consumers’ only objective is to get products in exchange for something they value less than the product. If companies don’t make money they are not good companies. If consumers don’t get what they pay for they are either not responsible consumers or were lied to.
It is with these assumptions that a free market system, with only two regulations, is the most simple and logical way to hold everyone responsible for their economic actions.