Social Responsibility and Business

¶ … Offshoring an Ethical Business Practice? The practice of offshoring jobs is one that has been discussed at length by both by critics and proponents. Proponents argue that it is an unavoidable outcome of trade agreements that are both necessary and helpful to the global economy. Critics disagree and find offshoring to be destructive to the economy.

As Sir James Goldsmith has pointed out in his argument against the General Agreement on Tariffs and Trade (GATT), offshoring wrecks the domestic infrastructure by removing jobs from American cities, which negatively impacts American families. The North Atlantic Free Trade Agreement (NAFTA) serves as another example: nearly one million American jobs were lost within the first five years of the trade deal taking effect (Muhho, 2014). From the standpoint of of Buddhist Ethics, refraining from harming living things is a precept that one should follow.

This same idea has been perpetuated by numerous other ethical frameworks, from the Christian to the Utilitarian. The point is that for offshoring to be viewed as an ethical business practice, it would have to be something that does not destroy or undermine the lives of families. The evidence shows, unfortunately, that offshoring does harm the domestic infrastructure and, for that reason, it should be viewed as an unethical business practice. At the same time, given the fact that corporations in the U.S.

are taxed at such a high rate compared to the rest of the world, it is understandable that companies would seek to offset costs by pursuing cheaper labor abroad. Still, two wrongs do not make a right; therefore, this paper will discuss this and other issues to show why offshoring is an unethical business practice. What Does It Mean to Be Ethical? First, it is important to define ethics.

Resnick (2011) defines ethics as a set of "norms for conduct that distinguish between acceptable and unacceptable behavior." While this definition helps to provide an understanding of what it means to be ethical, it is not quite good enough. The terms acceptable and unacceptable are susceptible to relativistic interpretations. For example, what may be acceptable by some now may not be acceptable tomorrow. Or what some find to be acceptable may not be acceptable to others.

Moreover, what is determined to be acceptable by all could very well be based on false information and, were the actuality to be exposed, the majority would disapprove. A better or more precise definition of ethics can be obtained from classical philosophy. Aristotle in The Nichomachean Ethics asserts that ethics is the habit of right action (Cahn, Markie, 2011). Whether action is acceptable or unacceptable is beside the point. The nature of the action is what qualifies the behavior as ethical or unethical.

The nature of action is judged, according to Aristotle, by whether it is in line with its natural aim or purpose. To gauge the ethics of offshoring, therefore, it is essential to understand the purpose of business and the context in which offshoring is conducted. Doing this will help to answer the question of whether offshoring is an ethical business practice. The Situation in Context Why do corporations offshore jobs? The primary reason that companies offshore is that they find more affordable tax rates in other parts of the world.

Pomerleau (2016) notes that rates in the U.S. are higher than all other countries, with the exception of Puerto Rico and the United Arab Emirates. This alone offers companies incentive to find a separate labor base. It is not, however, the only factor. In the U.S., the tax rate on foreign-source income is much lower, which means that the U.S. tax code virtually enables and supports the offshoring of jobs by corporations (Hersh, Gurwitz, 2014). The phenomenon, moreover, is not limited to the U.S.

Sir James Goldsmith, a big business owner and advocate of the working class, has stated that "in France the economy has grown by 80%" as a result of trade deals like GATT (Quijones, 2012). What Goldsmith goes on to say is that this figure of growth is misleading because it does not represent growth for the whole of the citizens of France but rather for only a small segment who benefit from this growth.

The key metric, he asserts, is employment, because it tells how many people are actually working and making money to support families, which in turn support the domestic infrastructure of nations: in France, Goldsmith states, "the number of unemployed has gone from 420,000 to 5.1 million," which is a catastrophic expansion, prompting him to ask, "What is the good of having an economy that grows by 80% if your unemployed -- the people excluded from active economic life -- goes from 420,000 to 5.1 million?" (Quijones, 2012).

Publius (2015) notes that "the economy is there to serve the fundamental needs of society, which are prosperity, stability and contentment. If you have a situation whereby the economy grows but you create poverty and unemployment and you destabilise society, you're in trouble." A modern economy that supports the 1% at the top while denying the bottom 99% the basic means of earning an income and supporting a community is an economy that is not living up to its name. It is an economy of greed and disaster waiting to strike.

Businesses that do not support the common good of society show no social responsibility, and as Goldsmith argues, businesses have a duty to be socially responsible. Indeed, the good of the community for which they produce commodities to sell depends upon sound corporate social responsibility policies. The Purpose of Business and Labor: A Buddhist Economics Perspective According to Buddhist Economic theory, labor may be defined as an endeavor that provides three different positive outcomes for the individual and for society as a whole (Schumacher, 1966).

Instead of viewing work as a "necessary evil," which casts labor in negative terms that can later be used to justify a "lesser of two evils" approach to answering the ethical question of offshoring, Schumacher (1966) asserts that labor should be viewed in positive terms because it does yield positive fruits both personally and communally when pursued ethically (p. 2).

The ways in which one should view labor, according to the philosophy of Buddhist Economics consist of the following: 1) labor is a means of providing "man a chance to utilize and develop his faculties" 2) labor assists individuals in overcoming their self-centeredness through the process of "joining with other people in a common task" 3) labor allows a community "to bring forth the goods and services needed for a becoming existence" (Schumacher, 1966, p. 2).

One can see in these three points associated with a positive view of labor that work, far from hindering man, actually helps him to grow; that it promotes less egoism and more community; that it fosters a spirit of utility. When work is offshored, i.e., taken away from a community (jobs being sent overseas), it deprives the people of that community that opportunity to grow, to become more united under a common task, and to provide goods and services to others.

In effect, offshoring undermines what it means to be a community. It completely undercuts the values and objectives that a society should have by taking away one of the fundamental aspects of a functioning society -- the ability for individuals to work. If there is no work, there is no way for a society to live. Corporations and companies employ people not so as to give people jobs but rather that those individuals might help in the production of goods or services for consumers.

The outcome is that individuals have jobs and receive income, which supports the social, political and economic frameworks of society. When corporations and companies find alternative means of obtaining labor (at far less cost to themselves) and are incentivized to do so (as is the case in the modern United States with what essentially amount to its tax breaks for companies that offshore), the temptation to send jobs overseas can be quite strong.

The problem is that it is inherently unethical and bears all the hallmarks of a lack of corporate social responsibility. From a practical point of view, the problem can be seen not just for individual laborers but also for corporations. As the American economy shrinks and GDP fails to grow, corporations look for new markets abroad where they can peddle their wares. Jobs already being offshored, markets follow.

Had companies remained based in their native nations, however, and not been incentivized to move, those nations would still be more robust than they are today -- there would be more jobs, more laborers, more income and more capital to spend on the goods and services produced by businesses. By cutting out their domestic employees, businesses undermine their own productivity in the long run. At some point, the infrastructure needed to support the global marketplace is eroded as businesses put profits before people.

In the end, businesses must realize that to be successful means to put people before profits. Examples of this type of philosophy are evident in many sectors -- from Kroger to Southwest and Virgin Airlines -- these are businesses that have excelled by putting their workers first, by promoting a positive workplace culture, and by incentivizing their workers through excellent health care plans (Gallo, 2013; Dudlicek, 2014).

As Buddhist Economic theory holds, the purpose of labor is to benefit both individual man (by lessening his egoism and allowing him to develop skills to better his condition in life) and society (by bringing people together under a common purpose and creating a community).

When labor is viewed negatively or even caustically -- i.e., materialistically (as in the sense that labor is simply a means of making money and has no connection to any spiritual or social purpose whatsoever), then it is inevitable that an unethical approach to business will be indulged. The rise of offshoring in the modern economy is a clearest indication that the materialistic approach to labor has indeed been accepted by business and political leaders around the world.

The root cause of this deviation into an immoral and unethical view of labor in such a materialistic and negative lens is, of course, a materialistic and negative worldview -- such as that espoused by Milton Friedman who viewed that the sole purpose of business was to make money. Such a view is only half correct and is akin to Jesus leaving his people with only one commandment -- love God -- instead of the two, which he gave: 1) Love God, and 2) Love thy neighbor.

An incomplete view of Jesus's commandment is like Friedman's incomplete view of labor. Business is there to make a profit, yes -- but not at the expense of the laborer or of the community in which the business is situated. The exploitation of the laboring class is akin to the crime of defrauding the laborer -- and the practice of offshoring falls within this same vein, as the cheap labor hired abroad is paid in what amounts to slave wages.

In short, when a Buddhist Economics perspective is not followed, the world sees via offshoring a new form of slavery taking hold around the world. Offshoring may seem like a competitive and smart practice on the surface because it allows businesses to profit from what could be defined as an arbitrage opportunity in labor. This is undoubtedly how Friedman (1970) would describe it. However, such opportunities are not ethical simply because they allow businesses to profit.

Materialistic gain is not the measure that one should use when discerning whether a thing is ethical or not. As the classical philosophers have shown, that which is ethical must be measured by whether or not it is in conformity with the good -- i.e., with the natural aim and purpose of the thing. To dissociate business from people and from communities, all of which need to work together to achieve a common good, is to dislocate the business from its natural purpose and aim.

To view business solely as a profit-producing machine without any stipulations or duties is to disconnect the business from reality and put greed at the heart of the juncture. The day that greed becomes recognized as a virtue -- which is what Friedman did in the 1970s -- is the day that society begins to crumble. Business is a social enterprise -- not a materialistic one. It must observe the social, ethical, natural and moral laws that govern life. To do anything less is to invite disaster.

To engage in offshoring is to announce that one is perfectly willing to sacrifice ethics and the long-run stability of a nation for a few momentary years of profit and greed. A Business's Moral Responsibility The moral responsibility of businesses in the modern era has taken the shape of corporate social responsibility (CSR) initiatives. These can range from such activities as partnering with other stakeholders in a community to offer scholarships or grants to implementing green technology so as to help conserve energy and look after the environment.

Offshoring is one such topic that could be discussed under the umbrella of CSR, as it touches on all stakeholders in a business -- leaders, employees, stockholders (if there are any) and community members. In terms of corporate social responsibility, a business has a duty to look after the community in which it does business. This means that for citizens, consumers, partners, workers, and administrators, the life and well-being of the community is at the fore of the business's thoughts.

Everything the business does should reflect well on the community and produce positive outcomes for that community. Environmental awareness is one way to do this, as are the offering of grants, etc. Refusing to offshore is another way. By not sending jobs overseas and exploiting the cheap (slave) labor of foreign workers, a business sends a message to its community that it is committed to it and committed to fostering strong social bonds.

By establishing these bonds, a business can deepen its ties with stakeholders and dig its roots deeply into the fabric of society, as it will be viewed as a protector of social values and social well-being. Castka, Bambar and Sharp (2005) show that CSR policies are meant to positively impact and promote the well-being of the "social, environmental and economic environment in which" the business operates (p. vii). A business that offshores and sends its jobs overseas clearly does not achieve the CSR objectives as put forward here.

It neglects the social environment of its own community by taking jobs out of its neighborhoods and sending them to foreign countries. It neglects the economic environment of its consumers, who are not of the same 1% who benefit handsomely from offshoring, as the profits go into their pockets. It neglects the environment as well, as foreign countries typically have less stringent oversight of what goes on in their workplaces. The ship-recycling yards of Bangladesh are a perfect example of how offshoring can lead to environmental and social problems.

On the beaches of Bangladesh, ships that have reached the end of their life cycle and beached and deconstructed by workers who lack safety equipment, resulting in high death tolls year after year, on top of environment pollution that contaminates the water and soil of the region (Hossain, 2015). The many social, political, and environmental problems that have resulted from Western shippers' offshoring of the process of ship-recycling from Western ship yards to Asian beaches have served as the focus of numerous studies and conferences.

The motive for the shippers who send their end-of-life ships to these beaches is financial: they find that recycling the ships in Western ship yards is too costly and would impact their bottom line (Hossain, 2015). They show little concern for the life of the Bangladeshi workers or for the Bangladeshi environment, essentially indicating that it is none of their concern and not their business as to how the Bangladeshis go about recycling ships.

Such an attitude betrays the trust of stakeholders and betrays the spirit of community, solidarity, and ethical goodness that fosters true growth. It is an attempt to exploit a less developed country's lack of oversight and regulation, its poverty and its people (who are willing to work for far less than Western workers). It is a vicious cycle of exploitation that really has its roots in the financial industry itself.

Why, for instance, are Western workers seeking ever-increasing wages? The simple fact of the matter is that the Western world has suffered from decades of inflation -- i.e., the purchasing power of the currency has decreased as central banks have flooded markets with fiat currency -- new money that reduces the value of the existing pool of currencies. As a result, individuals must spend more today for goods than was the case years ago.

This is most notable in higher priced goods and services such as health care, housing, education and automobiles. Businesses seek to protect profits by keeping costs low. This is a sound business practice and businesses that do not engage in this practice are not likely to last long. However, by exporting jobs overseas, businesses undercut their domestic workers and the communities at home that depend on jobs for income. They weaken their own nation's economy so that they can protect their bottom line.

Sometimes they even engage in violating international laws set in place to keep corruption and exploitation from occurring -- and this is the case with Bangladeshi ship-recycling, as Western shippers are prohibited by law from sending their ships to such yards, as they are unsafe for people and for environments (the shippers get around the law by selling their ships to third parties who then have the titles changed and the ships recycled).

Verdict So while businesses may feel inclined to assert their need to make profits, as Friedman (1970) has inclined them to feel and promoted in his own rhetoric, the ethical bottom line of the matter is that when businesses send jobs overseas they are neglecting and negatively impacting their own domestic communities and undermining, undercutting, and damaging the people they should be valuing. The livelihood of communities, in economic terms, depends upon those communities having access to labor and fair wages.

When labor is taken away, communities' ability to sustain themselves is reduced to nothing. One need only look at once thriving cities in America, like Detroit, to see what happens when manufacturing jobs are offshored. The cities quickly decay and the communities turn to ruins. Entire blocks of homes and neighborhoods in Detroit are now worthless as a result of the manufacturing exodus that transpired following the implementation of trade deals like NAFTA. Goldsmith warned of what such trade deals would bring.

As a big business owner, Goldsmith was well-aware of the duties that he owed the.