Ethical Realism

May 16, 2011

Moral Issues Related to Consumers

Filed under: ethics,philosophy — JW Gray @ 3:55 am
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There are many moral issues in the business world relevant to consumers. In particular, businesses have moral duties to consumers and some actions taken in business are morally preferable that have an impact on consumers. I will discuss (a) the responsibilities of business to consumers, (b) product safety, and (c) advertising. This discussion is largely based on chapter ten of Business Ethics (Third Edition, 1999) by William Shaw.

The responsibilities of business to consumers

Businesses have at least the following two general ethical duties to consumers, according to any theory of justice or morality that recognizes (a) that contractual relationships give us obligations and (b) that we have a right to non-injury:

  1. Businesses must give us what we pay for. Whenever we trade, we are exchanging goods and services within an implicit or explicit contract. One person is obligated to give one thing in exchange for another. People should not be deceived about what they are buying. For example, when we buy a TV set we expect (i) to get the TV set, (ii) that the TV set will function, (iii) that the TV set has minimally sufficient quality, and (iv) that the TV set will not harm us when used in ordinary ways.
  2. Businesses must not harm anyone, including consumers.

Additionally, businesses can make moral decisions that are not necessarily “ethical duties.” Some moral decisions are morally favorable and some are morally unfavorable. For example, utilitarians will argue that a business ought to help people flourish and live better lives, even though it’s not necessarily obligated to do so. One popular argument for a free market that allows trade unrestricted by a government is the “invisible hand argument”—that free trade between rational self-interested and profit-seeking individuals leads to competition, and a productive and flourishing society. However, this implies that consumers are rational and informed and yet consumers tend to know very little about the products they buy despite requiring them. For that reason it seems preferable for companies to be open and honest about the products and services they sell. Consumers need ways to be informed about the products and services they buy without becoming experts, or we have no reason to expect free trade to lead to a prosperous society.

The facts that (1) consumers are no longer well-informed and (2) consumers are no longer self-sufficient both have bearing on the importance of business ethics regarding consumers:

First, at one point in time consumers might have been able to assess the quality of products and services they bought on their own, but that is no longer the case (354). Products and services are now often created by experts who have spent years within a specialized field. This makes it very important for companies to be honest with consumers who can no longer know on their own if the product or service they buy is of sufficient quality or even has the function they consider buying it for.

Second, at one point in time consumers might have been able to refuse to buy products and services without penalty (353-354). Such people could be self-sufficient and farm all the food they need to survive on their own. However, that is no longer the case. People are increasingly dependent on the goods and services that require the machines, resources, and expertise of others. This gives consumers little choice but to trust the honesty and good intentions of companies, and makes it all the more important that companies look out for the best interest of their customers.

Product safety

Product safety is an ethical obligation insofar as companies have a duty to provide consumers with whatever it is they pay for and products are assumed to be safe for ordinary use. Nonetheless, “statistics indicate that the faith consumers must place in manufacturers is often misplaced. Every year millions of Americans require medical treatment from product-related accidents” (354). For example, drugs often have harmful side effects (including death) and many children’s toys contain harmful chemicals such as lead.

The legal liability of manufacturers

We originally had a legal doctrine of “caveat emptor”—let the buyer beware” because consumers were expected to know if the products they purchased were of sufficient quality (355). This doctrine was eventually phased out, which was clearly seen after the 1916 landmark court case MacPherson v. Buick Motor Car embraced the view that manufacturers could be sued rather than merely sellers, and it marked a change in law where manufacturers were seen as having a duty towards customers despite not always having a direct contractual relationship with them (ibid.). This duty is what can be described as being based on “due care,” the view that “consumer’s interests are particularly vulnerable to being harmed by the manufacturer, who has knowledge and expertise the consumer does not have” (354-355).

In 1916 the doctrine of “due care” at the time assumed that (a) companies were innocent until proven guilty and (b) that manufacturers aren’t responsible for harming consumers after taking sufficient precautions (355). It was the customer’s job to prove that the manufacturer had been negligent, but it can be very difficult to prove that a company is negligent and products could be very dangerous even when many precautions are taken.

However, we now use the legal doctrine of “strict liability” and companies are now liable even when they take precautions, so consumers no longer have to prove negligence. Companies have a duty to have safe products and taking precautions can no longer get them off the hook (ibid.). Strict liability isn’t absolute liability because the product must be “defective” and consumers must use caution.

The justification for strict liability is utilitarian. It’s a good source of motivation for companies to take every precaution possible because any harm a defective product causes can cost them a lot of money from legal battles (356). Taking some precautions is no excuse for a defective product because more precautions can often still be taken.

Protecting the public

The government regulates product safety of manufacturing industries using various agencies, such as the Consumer Product Safety Commission. “The five-member commission sets standards for products, bans products presenting undue risk of injury, and in general polices the entire consumer-product marketing process from manufacture to final sale” (ibid.).

Although it might sound like a good idea for the government to protect consumers, it comes at a cost. First, we have to expand the government and hire more government officials. Second, high safety standards are often expensive for both manufacturers and consumers (ibid.). For example, “[t]he cost to Panasonic to recall and repair 280,000 television sets, as ordered by the commission because of harmful radiation emission, was probably equal to the company’s profits in the United States for several years” (ibid.). Safety regulations can raise prices for consumers because it can prevent consumers from buying less safe goods at a reduced price (357). There might be less people who can afford to buy cars because they can only afford cars without the added cost of high safety standards.

Government regulation over manufacturing safety standards is often a form of legal paternalism—treating the government as a protective parent (357). Cars need to be safe enough to prevent car accidents because we don’t have the right to harm (or endanger) other people. However, some safety standards only protect consumers who own the products. For example, cars are now legally required to be made with safety belts, but such a legal requirement is paternalistic because it is trying to protect people from themselves by disallowing them to risk their own safety. Many people assume that paternalism is totally unjustified because people have a right to live their own lives and know how to protect their own interests better than anyone else (ibid.) However, Shaw argues that (a) consumers are not fully rational and informed, and (b) we have to balance the value of freedom against the value of safety (ibid.). Knowledge of safety often requires expertise that most of us lack, so it seems plausible that people don’t understand when a product is sufficiently safe. Paternalism could be justified on the grounds that (i) companies would be disrespectful to exploit our ignorance, (ii) companies would be respectful to give us products that are safe to use when possible, and (iii) it will lead to the “greatest good” insofar as safety is a vital part of our well being.

How effective is regulation?

Government regulation is often effective, but not always. For example, the Food and Drug Administration (FDA) banned cyclamate, a sweetener perhaps because of questionable reasons. Abbott Laboratories, the maker of cyclamate, found “compelling evidence of the FDA’s abuse of both regulatory process and scientific method, as well as a massive attempt at a cover up” that lead to the ban despite the fact that cyclamate was proven to be safe (358). Nonetheless the FDA “commissioner conceded that cyclamate was safe but would remain banned for political reasons” (ibid.).

Although some people have argued that the government should let companies regulate themselves, there’s evidence that there’s often a good reason for the government to step in because companies often refuse to accept sufficient safety standards on their own (359). For example, the auto industry preferred to have low safety and pollution regulation for cars and fought against legislation for stricter standards. The lower standards enjoyed by car companies might have saved the them money, but they cost the public lives, suffering, and high medical bills. “[T]he federal government delayed the requirement to equip cars with air bags or automatic seat belts. Each year of the delay saved the industry $30 million. But the price paid by consumers has been high: Passive restraints reduce highway deaths by 3,000 a year and injuries by tens of thousands” (ibid.)

The responsibilities of business

As noted earlier, businesses are required to give us sufficiently safe products whether they are regulated or not. The following six steps should be taken by manufacturers to assure consumers that safety standards are sufficiently high:

  1. Business should give safety the priority warranted by the product” (360) – Companies shouldn’t dismiss safety standards whenever they would cost the company money. Safety standards are a requirement other than profit. The seriousness and frequency that a product causes harm determines how important safety standards are. Products that cause serious injuries often are the products that need the highest safety standards.
  2. Businesses should abandon the misconception that accidents occur exclusively as a result of product misuse and that it is thereby absolved of all responsibility” (360-361) – First, consumers should be educated about the proper use of products that can cause harm. Second, some consumers are harmed even when they use products appropriately. Third, if products are continually being misused, there might be ways to make misuse less dangerous.
  3. Business must monitor the manufacturing process itself” (361) – There are often product defects from mismanaged manufacturing processes, and companies must oversee that people making the products are qualified and predict possible problems in the manufacturing process and ways to identify when such problems occur. Additionally, products should be rigorously tested to make sure they are adequately safe. Sometimes other companies should be hired to assure that the testing process is unbiased.
  4. When a product is ready to be marketed, companies should have their product-safety staff review their market strategy and advertising for potential safety problems” (361-62) – Advertisements and product images can have an impact on how a product is used and irresponsible advertising and product images can encourage people to use the product in unsafe ways. For example, advertisers shouldn’t show people driving cars while using their phones to send text messages.
  5. When a product reaches the marketplace, firms should make available to consumers written information about the product’s performance” (362) – To prevent the misuse of products, information about proper and improper use of a product should be clearly explained and available to the public. This is why many products have a warning label.
  6. Companies should investigate consumer complaints” (ibid.) – Consumers are a good source of product safety testing that can go beyond a company’s expectations, and complaints can be a good source of information concerning safety standards and misuse of products.

Other areas of business responsibility

Product safety might be the most important concern of consumers considering that it’s often a matter of life and death, but it’s not the only concern of consumers. In this section Shaw discusses product quality, pricing, and packaging and labeling.

Product quality

When a product is purchased, customers aren’t usually just buying an unknown object—they are usually buying an item of sufficient quality that performs a certain expected function (363). A broken TV set shouldn’t be sold as a “regular TV set.” It should be clear that it’s broken. Products must either conform to reasonable customer expectations or to the explicit claims made about it. This is especially important now that the quality of many products can’t be assessed quickly or without adequate expertise. We tend not to have adequate time to test an item before buying it, and we tend to lack the expertise required to know its quality.

Many products are sold with a guaranteed level of quality, which is known as a warranty. For example, the manufacturer can promise that a TV set will last for two years without needing any repairs.

There are express and implied warranties. Express warranties are explicitly given, but implied warranties aren’t. Any sale without an express warranty has an implied one, which is that the product will have the adequate quality needed to be used for ordinary use.

Prices

Pricing practices are often meant to “manipulate people” Consider the following:

  1. Price tags often have 99 cents included because many people don’t think of it as a dollar. For example, something could be sold for $19.99 instead of $20 (365).
  2. Prices can be raised in the hopes to sell more products because sometimes people will be willing to buy something if the price is high—perhaps with the assumption that it has a higher quality (ibid.).
  3. Sometimes similar products sell more often if they are available at different prices. This can give the illusion that the products are of varying qualities, when they might have nearly identical quality (ibid.).
  4. Prices are often higher than they appear due to “hidden fees” (ibid.)
  5. Prices are often raised by reducing quality or quantity (ibid.). For example, a container of peanuts can stay the same size but contain less.
  6. Sometimes products aren’t labeled with a price tag to make it more difficult for customers to compare prices (ibid.).
  7. Electronic scanners used to charge customers often have errors and charge customers more money than the item was supposed to cost (ibid.).
  8. Prices can start at artificially high values so that they can be “on sale” and appear to be a better deal than they really are (366). Sometimes these originally high values are the retail prices suggested by the manufacturer (365).
  9. Companies often have promotions for sales, but only one or two products are marked for sale and the promotion was just a lure to get customers into the store.

It is certainly more respectful to customers to do business without psychological manipulation, but it’s not clear if businesses are obligated to do business without such manipulation. Either way, it seems to be morally preferable considering that psychological manipulation can harm people and encourage irrational choices to be made. When dealing with the well being of people, it’s better to be safe than sorry.

Price fixing – Sometimes stores engage in price fixing and sell products for inflated prices by refusing to do business with manufacturers who sell the same products to competing stores that are willing to sell the same product for less. Other times manufacturers require stores to sell their products for the retail value or they will refuse to do business with the stores in the future. Either way, price fixing is illegal and probably immoral given that the “free market” requires supply and demand to determine the value of products (366). In fact, price fixing is usually only used by monopolies—companies that lack competition. If the product was being sold for too much, then a competitor could sell the same product for less; but there is no concern for such competition when there isn’t any.

However, it’s not always monopolies that engage in price fixing. Sometimes an entire industry can refuse to be competitive and can keep prices high (367). Such industries are still more likely to be run by large businesses rather than several small ones.

Price gouging – Price fixing is often a sort of price gouging—charging too much for a product, but there could be other reasons for price gouging and it’s not entirely clear when high prices are examples of price gouging. For example, it’s not obvious if it’s immoral to raise the price of umbrellas during a rainy season or the price of snow shovels after it starts snowing (ibid.).

Price gouging raises the question, “What’s a fair price?” This is not an easy question to answer and seems related to the costs of producing a product and the profits being made for it (ibid.). If a price is so high that it seems disrespectful, then we have a reason to find it immoral on deontological grounds. If a price is so high that it ends up hurting people that wouldn’t be harmed if prices were lower, then it’s morally preferable that the price should be lower on utilitarian grounds.

Predatory pricing – Shaw doesn’t discuss predatory pricing, but it’s something worth thinking about. Although we like low prices, predatory pricing is the use of such low prices that little to no profit is made. It is suggested that large companies can engage in predatory pricing to harm the competition because large companies can afford not to make any profit for quite some time while other companies can’t. Predatory pricing is an unfair tactic that undermines the free market.

To identify predatory pricing, consider the following:

  1. Is the company selling something for little to no profit? If not, it’s not predatory pricing. Sometimes low prices are still profitable enough for a large company when it wouldn’t be sufficiently profitable for small businesses.
  2. Is it an unusual promotion? If it’s a promotion, then the company might just be trying to get some customers into the store.

If a company is selling something for little to no profit and it’s not a promotion, then it could be a form of predatory pricing.

Some people have argued that predatory pricing never happens and/or is irrational, but there is game-theoretic evidence that it is rational, James A. Dalton and Louis Esposito argue that there was considerable evidence that Standard Oil engaged in predatory pricing from 1892 to 1894 (2006, PDF), and in 2003 Germany found Wal-Mart guilty of predatory pricing (due to the simple fact that Wal-Mart was engaging in “below cost pricing.)”

“Below cost pricing” is the practice of charging less for a product than the cost. Germany forbids all “below cost pricing” as a form of predatory pricing. Even if below cost pricing isn’t meant to destroy the competition, it could still do so. As noted above, many small businesses can’t afford to compete with extremely low prices and “below cost pricing” would certainly be included in that. It’s not entirely clear that below cost pricing is always immoral, but there could be utilitarian considerations against it that could be used to justify legislation against it.

Extremely low prices are generally not seen as being immoral, but highly efficient and powerful corporations can end up putting small companies out of business when they can keep prices low, and some people think there’s value to be found in small businesses that can’t be found in large corporations. Sometimes corporate efficiency is little more than being large enough to get discounts based on volume—companies that can afford to buy enough from manufacturers can buy them for cheaper. It seems a bit unfair to give wealthy and powerful corporations a huge discount just because they can afford to buy more goods. It’s a form of rewarding the wealthy for being wealthy.

Labeling and packaging

Customers have a right to know what the products are that they purchase, and labels and packaging are the customer’s “primary source of product information” (368). I already mentioned that safety information and warnings should be included with a product, and in many cases such information should be on the package. The most important moral issue involving packaging is misleading packaging. Packaging must not be misleading because (a) it’s important for consumers to know what they are buying for the transaction to be legitimate and (b) it’s disrespectful to try to manipulate people. Customers might not want a product if they find out it’s unsafe or unhealthy, such as tobacco.

Despite a customer’s right to know what they are buying, companies often lie or prefer for their products to remain a mystery. In egregious cases, labels can be used as false advertising. For example, in 2008 Purely Juice sold juice labeled as “100% pomegranate juice” that contained mostly water and high fructose corn syrup (sugar). Another example is Taco Bell, which has been charged with misleading customers by advertising the use of “100% beef” when the meat substance is only partially beef.

Vague or ambiguous words, like “all natural” and “99% fat free” are often misleading. Arsenic is all natural, and 2% milk contains 35% fat in terms of calories. (It’s 2% fat by weight.)

Packaging can also be misleading by using large packages full of air or optical illusions (369). Cereal boxes look larger when they are tall and narrow rather than box-shaped, and shampoo bottles often have a pinched waist to look larger than they really are.

Deception and unfairness in advertising

The goal of advertising tends to be to persuade people to buy a product rather than to convey information (370). False advertising is only one form of morally questionable advertising. There’s also the question of manipulative and uninformative advertising.

Advertising is morally relevant not only because some companies advertise, but also because we are saturated by it. Back in 1999 William Shaw stated that companies spend so much on advertising that around $500 is spent for each person annually in the US (369). In 2010 around $425 was spent on each person for advertising in the US.1

Deceptive techniques

False advertising is the most egregious form of deceptive advertising, and not all deceptive advertising is blatant. Deceptive advertising usually makes use of ambiguity and vagueness, concealed facts, exaggeration, and psychological appeals.

Ambiguity and vagueness – A statement is ambiguous when it can be taken two different ways, but a vague statement is when it’s not clear where to draw the line. Shaw’s main point is merely that advertisers use manipulative language and he treats ambiguity and vagueness as equivalent, but they aren’t. To say that 2% milk contains 2% fat is ambiguous because it could be 2% by weight, volume, or calories; and the company will use whatever criteria is most convenient. To say that a product is “healthy” is vague because it might be healthy in moderation or merely healthier than some other product on the market.

Shaw argues that Sara Lee’s “Light Classic” deserts is preying on ambiguity because people tend to think that the word “light” refers to the calories, but it actually refers to “the texture of the product” (370).

Shaw gives examples of “weasel words” that are intentionally ambiguous or vague that can easily be used to deceive consumers. For example, “like,” “virtual” or “virtually,” “can be,” and “up to,” and “as much as.” The statement “up to 50% fat free” is almost meaningless because it might not be fat free at all.

Concealed facts – Advertisers suppress information that customers should know about. For example, alcoholic products advertised on television don’t mention that alcohol is addictive. Sometimes the suppressed information is merely used to play on the manipulative language used. For example, “American Home Products was advertising its Anacin-3 by claiming that ‘hospitals recommended acetaminophen, the aspirin-free pain reliever in Anacin-3, more than any other pain reliever’—without telling consumers that the acetaminophen hospitals recommend is, in fact, Tylenol” (ibid.).

Exaggeration – Exaggeration can be nothing less than false information, but it can also be a form of puffery. When Nabisco claimed that it’s bran cereal was “flavored with two naturally sweet fruit juices” it exaggerated its use of healthy sweeteners because it failed to mention that it mostly uses sugar and only trace amounts of fruit juice (373). Puffery is the use of “harmless superlatives,” like when a company describes their product as the “king of beers” (ibid.). The main purpose of puffery is to appeal to our emotions rather than reason, and it could be considered to be an inappropriate “psychological appeal” despite being relatively harmless rather than deceitful.

Psychological appeals – Attempts to deceive people through poor reasoning or emotional appeals are deceitful forms of psychological appeals. Many advertisements seem to promise or imply a possible connection between a product and a good family, a good sex life, intimate friendships, and happiness. Usually this is implied by showing family, friends, and lovers enjoying their intimate time together with the product. Also, consider a blatant example of advertising by Coca-Cola on youtube that promises happiness. It says, “A Coca-Cola vending machine is transformed into a happiness machine delivering ‘doses’ of happiness. Where will happiness strike next?” The video shows a Coca-Cola machine that provides free bottles of Coca-Cola and a large subway sandwich to high school students.

Some psychological appeals could be at the subconscious level and we might not even be aware of the effects subliminal advertising has on our decision making (374-375).

The Federal Trade Commission’s Role

The FTC was originally created in 1914 to combat monopolies and unfair business practices that harm competition, but it has been expanded to “regulate deceptive advertising and [fraudulent] commercial practices” (375). However, many people don’t think it does enough to protect consumers, so many people have sued companies for false advertising and the punishments for false advertising have been more harmful to companies than the fines that would be required by the FTC if it took a more active role (376). Historically when suing companies for false advertising, it must be shown that a reasonable person could be deceived by the advertisement (ibid.). However, the courts now often try to protect less than reasonable consumers (and adopt an ignorant-consumer standard) because half the population has a less-than-average ability to reason and it doesn’t seem fair to let companies manipulate large numbers of people (377). If large numbers of people are deceived, that’s enough to show that the advertising is deceitful.

Ads directed at children

Children are especially vulnerable to deceptive advertising because they can’t be expected to be very reasonable. Some companies advertise to children despite not wanting to sell to children. They want to foster “brand loyalty” because they think their commercials can persuade children to prefer their brand at an early age that will continue into adulthood (378).

The debate over advertising

It’s not just deceptive advertising that people dislike. Many people find some advertising to be immoral based on other factors, and some people even think advertising should be banned entirely. This debate relates to consumer needs, market economics, and free speech.

Consumer needs

Theodore Levitt argued that advertising helps fulfill consumer needs by seeing products as more than mere products—as part of being a happy person. Levitt says, “Without distortion, embellishment, and elaboration… life would be drab, dull, anguished, and at its existential worst” (379). Advertising can make us feel more satisfied with life (perhaps because we bought many products that guarantee it).

However, others argue that products rarely live up to their promises of making us live better lives, and I personally think it is warped to value one’s life more based on owning products. That seems like a blatant distortion of the sorts of values that are appropriate. Advertising shouldn’t convince people that being happy is about buying lot of stuff, nor should it convince people to feel unsatisfied with life when they refuse to buy products they don’t need. (See George Carlin’s skit on stuff.)

I find that advertisements that manipulate us to buy products isn’t just disrespectful, but it could cause materialism or consumerism—a superficial emphasis of the importance of owning products at the expense of more important values. First, this in itself can cause irrational behavior, such as spending too much time shopping rather than doing something more important. Second, consumerism is wasteful because it encourages us to waste our money better used on something else. Third, consumerism encourages us to buy products that use the world’s resources that can harm the environment and cause pollution (which harms both people and nonhuman animals).

John Kenneth Galbraith argues in The Affluent Society and The New Industrial State that advertising can create new desires in people (380). For example, an advertisement for a product that can reduce dandruff can also show people get upset about dandruff and it might manipulate people to dislike dandruff who care little about it beforehand.

Advertising often attempts to make people feel inadequate and in need of something that might have little to nothing to do with living a better life. Many people think advertising often attempts to make us feel inadequate with our appearance in an attempt to motivate us to buy more products that can help us look better. Research by Regan Gurung and Jennifer Otto seems to indicate that advertising is successful at making men feel inadequate with their appearance, even if that’s not the intention.

I personally don’t think it matters whether advertising creates new desires or merely deceives people. Consider the following explanations for why advertising showing intimate relationships can be successful:

  1. The advertisement implies that the product can satisfy our desires for close relationships with others, and tricks us into believing it. It’s simply a form of false advertising meant to deceive the gullible.
  2. The advertisement can create a subconscious association between something we desire (close relationships) and the product, causing many people to desire the product even if they don’t consciously believe the association is real. Perhaps the advertisement arouses positive emotions in many people that we they confuse with the product, and the advertisement can create a new desire in them that didn’t exist before.

I think there is at least some evidence that the second option is right at least some of the time—that advertising can create desires that didn’t exist before. For example, we might all desire physical beauty, but giving beauty attention and praising it could completely change a person’s priorities. Additionally, many cultures see beauty differently and attempt to satisfy their desire for beauty in different ways as a result. For example, the US has a problem with anorexia because it values thinness and many other places do not suffer from this problem. The desire to lose weight can be harmful, irrational, and “created” by a culture.

Market Economics

Many people think that advertising is part of having a “free market” and defend advertising using the same arguments used to argue for capitalism and a libertarian theory of justice (381). However, it’s not obvious that advertising is really part of having a free market. First, the “free market” could be justified on utilitarian grounds with the assumption that buyers are informed and rational, but advertising rarely has anything to do with rational thought or objects that really make our lives better. Second, as it’s unclear that advertising is necessary for economic growth or benefits people in general. As I mentioned earlier, some people argue that “advertising in general reinforces mindless consumerism. It corrupts our civilization and misdirects our society’s economic effort towards private consumption and away from the public realm” (382).

Free speech and the media

Some businesses argue that advertising is a form of free speech, and the Supreme Court has upheld this argument. However, it’s not obvious that advertising should be part of free speech. The law could be changed in the future. And even if it should be, free speech is not unlimited—we don’t have the right to use free speech to significantly harm other people, and advertising might significantly harm people in general (or perhaps just specific forms of manipulative advertising are harmful) (382). Although advertising subsidizes television to keep it free, it’s not clear that it’s good for us in the long run. “[T]he very fact that it’s free results in far more consumption than would otherwise be the case and probably, as many think, far more than is good for us” or animals due to distorted values, pollution, damage to the environment, time wasted, and so on (ibid.).

Conclusion

Businesses are responsible to their consumers based on the contract implied by trade and potential harm that can be done to the public. Advertising and product labeling are both very important because it is the potential customer’s primary source of information, and companies have responsibilities to everyone that could be harmed by their advertising. Although Shaw’s book is highly comprehensive, he neglects to discuss pollution and environmental considerations in detail here even though such issues are relevant to how companies treat their customers insofar as environmental damage can harm them. However, environmental issues are saved for Shaw’s final chapter and are discussed in more detail there.

It’s not entirely clear what all the moral obligations companies have towards their customers and potential customers. Companies must be honest with customers and sell products that are adequately safe or people will be cheated. Every theory of justice will forbid coercive and deceptive trade. However, there’s a lot of gray area. It’s not entirely clear when advertising is overly deceptive or how much harm manipulative advertising does to people. However, it seems reasonable to think that it is morally preferable for companies to be honest and reject manipulative practices whenever it’s unclear how much harm it could cause. It’s better to be safe than sorry when we are dealing with the well being of people.

Notes

1 According to Kantar Media, $131 billion was spent on advertising in 2010, and the US population was 308 million, according to the US Census Bureau.

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