A set of individuals makes up the society as a whole, which lives in an environment that it needs to preserve in order to survive. Individual’s goal is to make his life better by being able to afford as many goods as possible. By pursuing profit, most successful individuals of our society establish profit-seeking structures called companies. Companies, aside from producing goods for individuals’ use and generating profit for their owners, create negative effects on the environment and therefore on the society. Government’s job is to protect the society and keep its environment healthy. If we simplify the structure of the world we live in, we might understand the motives that guide each of these subjects and what are the negative effects on the whole society, on their way to achieving their goal. Well-being of one of them shouldn’t exclude the other.
Consumers are usually led by “the more, the better” way of thinking. Striving toward satisfying that principle has led to the kind of consumer community we are today. We have become a society with an ever-growing rate of consumption and disposal of used products. By decreasing the demand for various kinds of goods that are not of the vital necessity, we might actually do good for the society as a whole. By reducing waste, we are preserving the environment.
Government’s main concern should be protection of society and setting laws and ground rules that would allow the market to operate freely. Government’s interventions in the market have proven to be faulty on several occasions. The reason for that might be that the government officials haven’t taken into consideration all the facts because of the scope or complexity of an issue, or they haven’t accurately predicted what the impact of a regulatory measure would be. Since those measures are arbitrarily set, the outcome might be different from expected.
We live in meritocracy and successful individuals are rewarded for their innovation, hard work and knowledge by being allowed to put their ideas to use through companies that would generate profit. However, it is government’s job to make companies reduce their negative impact on the environment. By making it mandatory for companies to take responsibility for the pollution they are creating, we are avoiding the problem of managers’ having to worry what is the right thing to do regarding the environment, their owners and how to reconcile the two, which is what Edward Freeman is pointing at in “Managing for Stakeholders”. Companies shouldn’t be held accountable for any kind of social responsibility other than reducing their own negative externalities. Since the only way government could ensure this is by setting the rules that would include additional costs for the company, this might lead to several outcomes. In order to cover the costs, a company might include them in the price of the product. This would lead to a decrease in demand which, as I already explained, isn’t necessarily a bad thing...