IS ANYBODY LISTENING TO CAMPUS VIEWS?
BUSINESSMEN ARE.
Three chief executive officers—The Goodyear Tire & Rubber Company's Chairman, Russell DeYoung, The Dow Chemical Company's President, H. D. Doan, and Motorola's Chairman, Robert W. Galvin—are responding to serious questions and viewpoints posed by students about business and its role in our changing society and from their perspective as heads of major corporations are exchanging views through means of a campus/corporate Dialogue Program
on specific issues raised by leading student spokesmen.
All of these Dialogues will appear in this publication, and other campus newspapers across the country, throughout this academic year. Campus comments are invited, and should be forwarded to Mr. DeYoung, Goodyear, Akron, Ohio; Mr. Doan, Dow Chemical, Midland, Michigan; or Mr. Galvin, Motorola, Franklin Park, Illinois, as appropriate.
Here, David M. Butler, completing his studies in Electrical Engineering at Michigan State, is
questioning Mr. Doan. A member of the Dean's Advisory Committee,Mr. Butler also participates actively in professional engineering organizations on campus; anticipates graduate studies before developing his career.
Mr. Doan:
In the course of the entire Dialogue Program. Stan Chess, Journalism major at Cornell, also will probe issues with Mr. Doan; as will Mark Bookspan, a Chemistry major at Ohio State, and David G. Clark, in graduate studies at Stanford, with Mr. DeYoung, and similarly, Arthur M. Klebanoff, in Liberal Arts at Yale, and Arnold Shelby, Latin American Studies at Tulane, with Mr. Galvin.
LET'S TALK ABOUT PROFITS, TAXES, AND HEDGING ON COMMUNITY INVOLVEMENT.
Dear Mr. Doan :
There currently is a great deal of debate about social responsibility in today's society. People have become much more aware of their responsibilities which accompany the many personal benefits in our society. Business firms should be just as aware of their social responsibilities: firms can no longer ignore racial injustice, the inner city, pollution of our environment, and the many other problems that face our society. But they would seem to on the basis of indirect evidence.
For example, increasing local tax revenues is one way to promote local action in problem solution. Why is it, then, that an "attractive" tax base is one of the main selling points for Chambers of Commerce trying to lure firms to locate in their area? The clear implication is that firms want to bypass their obligation to pay for the services they receive from the community. Why should others, who make up the remainder of the tax base, take up slack for business? Firms benefit from the educational system, utilities, roads, and the many other community services. Even more so, perhaps, than any other single taxpayer.
A better approach would be to see that tax revenues are effectively utilized in the best interest of the community. Businessmen should apply their special abilities to the problem of creating efficiency in both revenue collection and expenditure. Business could lead rather than appear to exploit society in this connection.
Today's student would be much more interested in working for a firm that emphasized providing constructive advice rather than one that is quibbling over a few extra dollars in assessments. An active, sincere interest in society not just superficial action such as joining the local Chamber of Commerce would do much to change young peoples view of business and its motives. Profit is a necessary but not sufficient condition for a firm's existence in today's society. Students are as much concerned about how companies utilize their resources to shoulder a fair share of responsibility in society as for the generation of profits.
Sincerely yours,
I need it. Martin
David M. Butler Electrical Eng neering Michigan State
Dear Mr. Butler:
Let's consider your proposition—that today's student is terribly concerned about social responsibilities, and that profit is not a sufficient condition for a firm's existence in society—from the perspective of business' basic objectives.
Business exists because it is of service to humanity. It accomplishes this service using the discipline of profits as a relatively impartial measure of performance, and through the development of the individual. There must be a balance between these three factors... an imperfect but direct correlation.
Maximum long-term profits is consistent with, and cannot be achieved without maximum service to society. Maximum service to society can be achieved only through the maximum development and release of the ability of individuals. And maximum release of individual abilities brings about maximum profit growth.
Take industry's efforts to reduce the pollution of our environment, as an instance. Many companies have been instituting controls over air and water wastes at their production facilities. At Dow Chemical, we have expended approximately $10-million at our plants in Midland, Michigan, alone, with an annual upkeep cost of a million dollars.
This does not mean that business is indifferent to social problems or that it is not working toward practical solutions.
In the structure of our society, of the free enterprise system, business essentially is an economic instrument, and it can be of service as a social instrument only indirectly. If it charges in to straighten out the nation's social problems, as many on the campus would like to see, it will cease to perform effectively its basic functions as an economic instrument.
Along with this program, we have made a "business" out of Environmental Control. Research and development alone costs $1-million annually. This program has been made possible only through the discipline of profit, which brings me back to my starting point: Service to society is achieved only through accomplishment of our primary objective- maximum long term profit growth.
To me, the social involvement from this is quite clear. If business is to respond to the challenge of the times, to work toward solutions worthy of human effort and skill, there must be value systems, and an environment that favors highly moral ethical behavior. This is the responsibility of management.t industry at large, and society as a whole. Implicitly, there is a
need for government policies and rules to match these much improved value systems, and to insure that industry's efforts are of maximum benefit to all.
On this basis, let me turn your question on taxes around. There is not a single thriving community today whose health doesn't come from jobs ; primarily, jobs provided by industry.
Look at the impact made on any community through a new industry moving in. For every hundred people on its payroll, there will be 165 new jobs throughout the community, bank deposits increase by over $229,000 annually and retail sales jump accordingly.
So, Chambers of Commerce, in their competitive efforts to promote community growth,historically have offered tax incentives to attract industries to their area. I say historically because I don't think this is now the paramount consideration for plant re-location. It simply is a factor along with other business reasons and aspects of community environment: availability of decent housing and convenient retail shopping . . . of properly accredited schools with sufficient classroom space . . . of churches . . . of recreational facilities . . . and the whole range of municipal services. And no responsible business enterprise will shirk payment of its proportionate share of the taxes required for the support of its community.
I disagree with your suggestion, however that it is up to business to assure effective utilization of tax revenues. This would attribute powers to business that it doesn't have, smacks strongly of paternalism, and implies a better ability on the part of an industrial concern to solve the community's problems than the community itself has.
This is not to say that individual businessmen shouldn't advise their communities on taxes or other matters within their personal competence and experience . but as private citizens with a sense of civic responsibility, and not speaking for a particular business entity.
What it all boils down to is that the objectives of society's principal institutions are well-defined. By each continuing in its own orbit, doing what it best can do, the social responsibilities of the times can be met more effectively and society's needs better served.
Sincerely,
H. D. Doan President, The Dow Chemical Company