International Business There Should Be

International Business

There should be no ethical constraints on a corporation that wants to move production to an LDC, even if it means the loss of jobs for the workers back home. There may be strategic reasons -- companies like FedEx and Southwest try to avoid layoffs in order to attract and retain better employees -- but ethically, there can be no issue.

The classic argument, put forth by Milton Friedman (1970) is that business only has a social responsibility to increase its profits. The managers of the business are charged as agents of the shareholders to maximize the firm's value. This is because the shareholders are rational investors, who seek only to maximize the gains from their investment. Other considerations -- with the exception of upholding the law -- are simply not relevant.

Still, there are other ethical approaches that could be taken into consideration. A utilitarian point-of-view would hold that the company should undertake the strategy that delivered the greatest good for the greatest number. This is a popular ethical system, requiring only that one estimate the outcomes for all of the different stakeholders and then weight them against one another. In this ethical calculus, the benefits of cheaper goods to American consumers are factored, as is the increase in profits. These are weighed against the loss of American jobs, but the job creation elsewhere cannot be understated -- under no known ethical system are American lives inherently more valuable than the lives of any other people. Even though there are specific negative consequences to the firm's American workforce, outsourcing in all likelihood delivers greater good to the greater number.

A deontological argument would hold that it is not right to export these jobs, because it is part of the moral code. Protecting U.S. jobs is something that is embedded into the social contract all Americans are party to. As a society, we allow government to help companies from time to time with tax and trade policy, because those companies create jobs. Part of the social contract of Americans is that we shall help each other out in times of crisis. Yet, this nation is a democracy, and the laws of the land should therefore reflect the will of the people who elected the politicians who wrote those laws and appointed those judges. As such, the categorical imperative is equivalent to the laws, and there are no laws forbidding this outsourcing. Additionally, a case could be made that there exists no social contract to protect American jobs. Our society is a free one, where liberty is valued above all. Employees are hired "at-will" and they have freedom to sever the employer-employee relationship equivalent to the freedom held by corporations. There is no mutual obligation, in absence of a valid contract, for either party to assume lifetime employment.