Thursday, September 14, 2006

The Scorpion, The Frog, and the Corporation

A scorpion, eager to get to the other side of a stream and unable to swim, pleads with a frog to allow him to ride on the frog's back, across the stream.

"Certainly not," said the frog. "You would kill me."

"Preposterous!," replied the scorpion. "If I stung you, it would kill the both of us."

Thus assured, the frog invited the scorpion to climb aboard, and halfway across, sure enough, the scorpion delivered the fatal sting.

"Now why did you do that," said the frog, "you've killed us both."

"I am a scorpion," he replied, "this is what I do."

What corporations do is strive to maximize the returns on the investments of their stockholders. As Milton Friedman put it, "The social responsibility of business is to increase profits." Unfortunately, if corporations are unconstrained by law or regulation, they can, by simply "doing what they do," suck the life out of the economy that sustains them. Like cancer cells, lethal parasites, and the scorpion, unconstrained corporations can destroy their "hosts," without which they cannot survive, much less flourish.


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