Comment by renegade-otter
2 years ago
This kind of moral fraud - unethical behavior - is tolerated for some reason. It's almost like investors want to be fooled. There is no room for due diligence. They squeel like excited Taylor Swift fans as they are being lied to.
This shouldn't be a surprise. Companies optimize for what benefits shareholders. Or if there's an agency conflict of interest, companies optimize for what benefits managements' career and bonuses (perhaps at the expense of shareholders). Companies pay lip service to external stakeholders, but really that's a ploy to reduce attention and the risk of regulation, there is no fundamental incentive to treat all stakeholders well.
If lying helps, which can happen if there aren't large legal costs or social repercussions on brand equity, or if the lie goes undetected, then they'll lie. This is what we necessarily get from the upstream incentives. Fortunately, lying in a marketing video is fairly low on the list of ethical violations that have happened in the recent past.
We've effectively got a governance alignment problem that we've been trying to solve with regulations, taxes and social norms. How can you structure guardrails in the form of an incentive system to align companies with ethical outcomes? That's the question and it's a difficult one. This question also applies to any form of human organization, including governments.
As long as you’re not the last one out, “being fooled” can be very profitable