Watch "The Corporation" if you get the chance (although it's 4 hours long). Essentially, corporations have the legal rights of a person, but none of the incentives to "be good". Their sole imperative is to maximise value for shareholders, leading to behaviour -- as characterised in the documentary -- that would be classified as sociopathic in an actual person.
I wonder if there were more and better fair trade organizations, then investors and customers would be more picky as to who to associate, and corporations comply as a result. Who'd bear the cost of compliance? How successful has corporate social responsibility actually been? Will it ever reach China?
If large numbers of investors made decisions based on reasons other than profitability, other investors would buy more so-called "evil" companies' stock until the prices are back to what they would have been.
That's not necessarily true. Investor psychology shifts the demand curve for the company's stock - if large numbers of investors made decisions based on reasons other than profitability, then they'd demand more shares of "good" companies and fewer shares of "evil" companies. Some of that price difference would get arbitraged away by amoral opportunists just looking to make a buck, but the equilibrium price is less than the "evil" companies would get otherwise.
We see some of this effect in actual stock market data, today, where "sinful" companies like Altria or defense contractors tend to trade at lower P/E ratios than "good" companies like Google or Merck. Of course, this means that sinful companies tend to pay higher dividend yields, and evil investors end up with more money in their pocket. This is the price of not being evil.
Got it. Evil companies will exist so long as there are evil customers and evil investors who associate. As such, evil would have to be legislated out of existence if it can't be shamed: both of which impossible.
btw, how do you know that you're evil? does the evilness change? how so?
